<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
----------------------------
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 MARCH 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------------------
----------------------------
COMMISSION FILE NUMBER 0-12207
PEGASUS GOLD INC.
(Exact name of registrant as specified in its charter)
PROVINCE OF BRITISH COLUMBIA NONE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 W. FIRST AVE., SUITE 1500, SPOKANE, WASHINGTON 99204
(Address of principal executive offices) (Zip Code)
(509)624-4653
(Registrant's telephone number, including area code)
----------------------------
----------------------------
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
41,000,236
----------
Common Shares, without par value, outstanding at April 30, 1996
<PAGE>
PEGASUS GOLD INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
PART I. FINANCIAL INFORMATION
Page
Item #1
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996, AND DECEMBER 31, 1995. . . . . . . . . . . . 3
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996, AND 1995. . . . . . . . . 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996, AND 1995. . . . . . . . . 5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996, AND
YEAR ENDED DECEMBER 31, 1995 . . . . . . . . . . . . . . . . 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . 7
Item #2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . 11
PART II. OTHER INFORMATION
Item #6
EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . 15
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . 16
In this Report, unless otherwise indicated, all dollar amounts are expressed in
U.S. Dollars.
2
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED BALANCE SHEETS
March 31, 1996, and December 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
1996 1995
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . $44,919 $32,907
Short-term investments . . . . . . . . . . . . . . . . . . . . . . 47,148 20,083
Due from sales of products . . . . . . . . . . . . . . . . . . . . 23,093 28,545
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,216 38,590
Other current assets . . . . . . . . . . . . . . . . . . . . . . . 6,952 9,549
---------- ----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 168,328 129,674
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,106 18,679
Property, plant, and equipment, net. . . . . . . . . . . . . . . . . 460,273 427,112
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,697 4,776
---------- ----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . $652,404 $580,241
---------- ----------
---------- ----------
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities . . . . . . . . . . $18,984 $20,281
Accrued salaries, wages, and benefits. . . . . . . . . . . . . . . 7,540 9,223
Mining taxes payable . . . . . . . . . . . . . . . . . . . . . . . 4,428 5,397
Current portion of long-term debt. . . . . . . . . . . . . . . . . --- 12,719
Current portion of obligations under capital lease . . . . . . . . 3,252 3,015
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . 34,204 50,635
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,000 121,099
Obligations under capital lease. . . . . . . . . . . . . . . . . . . 24,267 22,792
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . 44,831 44,901
Deferred site closure and remediation. . . . . . . . . . . . . . . . 38,138 38,180
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . 8,725 9,188
Other deferred liabilities . . . . . . . . . . . . . . . . . . . . . 5,670 4,742
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 270,835 291,537
---------- ----------
Commitments and contingencies (Note 5)
SHAREHOLDERS' EQUITY
Class A preferred shares, Series 1, C$10 par value:
Authorized - 20,000,000 shares; none issued
Common shares, without value:
Authorized - 200,000,000 shares; issued
and outstanding, 1996 - 40,997,580 shares
and 1995 - 34,825 203 shares . . . . . . . . . . . . . . . . . . . 424,409 334,214
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . (49,118) (49,131)
Foreign currency translation adjustment. . . . . . . . . . . . . . . 6,278 3,621
---------- ----------
Total shareholders' equity. . . . . . . . . . . . . . . . . . 381,569 288,704
---------- ----------
Total liabilities and shareholders' equity. . . . . . . . . . $652,404 $580,241
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1996, and 1995
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $48,790 $55,360
---------- ----------
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,569 38,171
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . 9,217 8,688
43,786 46,859
---------- ----------
Gross profit 5,004 8,501
---------- ----------
Operating expenses:
General and administrative . . . . . . . . . . . . . . . . . . . . 3,373 3,193
Royalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,126 1,428
Exploration and evaluation . . . . . . . . . . . . . . . . . . . . 1,456 5,426
Provision for closure, remediation, and related costs. . . . . . . 534 370
---------- ----------
6,489 10,417
---------- ----------
Loss from operations (1,485) (1,916)
---------- ----------
Other income (expense):
Interest and other income. . . . . . . . . . . . . . . . . . . . . 1,347 1,057
Interest expense, net of amounts capitalized . . . . . . . . . . . (1,110) (1,137)
Equity in net income (loss) of affiliates. . . . . . . . . . . . . 742 (112)
Gain (loss) on disposition of assets . . . . . . . . . . . . . . . (190) 31
---------- ----------
789 (161)
---------- ----------
Minority interest in consolidated subsidiary . . . . . . . . . . . . --- 267
---------- ----------
Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . (696) (1,810)
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . (709) ----
---------- ----------
Net income (loss) $13 $(1,810)
---------- ----------
---------- ----------
Net income (loss) per share $0.00 $(0.05)
---------- ----------
---------- ----------
Weighted average common shares outstanding 39,869 34,658
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996, and 1995
(In Thousands)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . $13 $(1,810)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . 9,365 8,649
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,146) (125)
Change in working capital accounts . . . . . . . . . . . . . . . . (5,045) 3,409
------- -------
Net cash provided by operating activities. . . . . . . . . . . . . . 2,187 10,123
------- -------
Investing activities:
Additions to property, plant, and equipment, net . . . . . . . . . (34,287) (5,261)
Purchase of short-term investments . . . . . . . . . . . . . . . . (27,065) ----
Purchase of investments. . . . . . . . . . . . . . . . . . . . . . --- (5,000)
Acquisition of additional investment in subsidiary . . . . . . . . --- (4,792)
------- -------
Net cash used in investing activities (61.352) (15,053)
------- -------
Financing activities:
Proceeds from issuance of common shares. . . . . . . . . . . . . . 90,193 361
Payments of long-term debt . . . . . . . . . . . . . . . . . . . . (19,189) (32,674)
Payments of obligations under capital lease. . . . . . . . . . . . (204) ---
------- -------
Net cash provided by (used in) financing activities 70,800 (32,313)
------- -------
Effect of exchange rate changes on cash and cash equivalents . . . . 377 (139)
------- -------
Net increase in cash and cash equivalents. . . . . . . . . . . . . . 12,012 (37,382)
Cash and cash equivalents, beginning of period . . . . . . . . . . . 32,907 89,316
------- -------
Cash and cash equivalents, end of period $44,919 $51,934
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
5
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Three Months Ended March 31,1996, and the Year Ended December 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
Retained Foreign
Common Shares Earnings Currency
---------------------
Number of (Accumulated Translation
Shares Amount Deficit) Adjustment
------- ------ ------- ----------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 34,629,523 $332,110 $(46,178) $6,410
Net loss . . . . . . . . . . . . . . . . . . . . (2,953)
Common shares issued for:
Stock option plan. . . . . . . . . . . . . . . 157,925 1,686
Employee savings plan and other. . . . . . . . 37,755 418
Foreign currency translation adjustment. . . . . (2,789)
---------- -------- -------- -------
Balance, December 31, 1995 34,825,203 334,214 (49,131) 3,621
Net income (loss). . . . . . . . . . . . . . . . 13
Common shares issued for:
Cash . . . . . . . . . . . . . . . . . . . . . 6,000,000 88,362
Stock option plan. . . . . . . . . . . . . . . 170,042 1,796
Employee savings plan and other. . . . . . . . 2,335 37
Foreign currency translation adjustment. . . . . 2,657
---------- -------- -------- -------
Balance, March 31, 1996 40,997,580 $424,409 ($49,118) $6,278
---------- -------- -------- -------
---------- -------- -------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
6
<PAGE>
PEGASUS GOLD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Company, which is organized in British Columbia, presents all
financial statements in United States dollars and under generally
accepted accounting principles as practiced in the United States.
2. These unaudited consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K. In the opinion of
management, the financial information set forth in the accompanying
unaudited interim consolidated financial statements reflects all
adjustments necessary for a fair statement of the periods reported,
and all such adjustments were of a normal and recurring nature.
3. INVENTORIES
Inventories consist of the following:
March 31, Dec. 31,
1996 1995
---- ----
(IN THOUSANDS )
Processed metals. . . . . . . . . . . . $383 $107
Stockpiled ore. . . . . . . . . . . . . 3,944 3,435
Deferred mining costs . . . . . . . . . 34,597 27,781
Materials and supplies. . . . . . . . . 7,292 7,267
------- -------
$46,216 $38,590
------- -------
------- -------
4. SHAREHOLDER'S EQUITY
In January 1996, the Company completed a public offering in the U.S. and Canada
for 6,000,000 Common Shares at a price of C$21.00 per share (US$15.38). The net
proceeds to the Company, after deducting expenses, were $88.4 million. The
proceeds of the offering will be used to fund portions of the Mt. Todd Phase II,
Pullalli and Zortman Extension capital projects. The Company also may use
proceeds from this offering for the future acquisition of mineral properties and
their subsequent exploration and development, and for other general corporate
purposes.
5. COMMITMENTS AND CONTINGENCIES
HEDGED PRODUCTION
At March 31, 1996, the Company's hedging program consists of the following:
Average
Price Delivery
Per Unit Period
-------- ------
GOLD
Forward sales 686,298 ounces $448 1996-1999
Call options sold 307,160 ounces $454 1996-1997
Put options purchased 200,000 ounces $390 1996-1997
SILVER
Forward sales 3,085,014 ounces $5.19 1996-2001
LEAD
Forward sales 9,424,665 pounds $0.29 1996
ZINC
Forward sales 18,105,278 pounds $0.49 1996
7
<PAGE>
PEGASUS GOLD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
COMMON SHARES ISSUABLE
At March 31, 1996, a total of 10,797,512 shares of authorized common stock were
reserved for the following:
Convertible Notes . . . . . . . . . . . 7,709,067
Stock options . . . . . . . . . . . . . 2,982,991
Employee Savings Plan . . . . . . . . . 105,454
----------
10,797,512
----------
----------
ZORTMAN EXTENSION
At the Zortman Mine, a plan of operation for the Zortman Extension was submitted
to the regulatory agencies in May 1992. The Final Environmental Impact
Statement ("FEIS") was issued in March 1996 and issuance of the Record of
Decision on the FEIS could occur as early as the second quarter of 1996. Mining
operations ceased during the first quarter of 1996 and construction of the
Zortman Extension cannot proceed until the FEIS is approved, accordingly, the
Company expects the interruption of mining operations to continue for up to 12
months from the date approval is received. Gold production will continue from
leaching ore previously mined and loaded on the heap leach pads, but at a
significantly reduced rate. Although the Company believes that it will likely
receive approval for the construction and operation of the Zortman Extension, it
is possible that an unfavorable decision could be issued, or a favorable
decision could be appealed by third parties, creating further delays or causing
the project to be abandoned. If the Zortman Extension does not proceed as
planned, the Company would be required to write off the deferred development
costs associated with the project, which amounted to $13,200,000 at March 31,
1996. In addition, the Company would be required to accrue a liability of at
least $15,300,000 for reclamation and the construction of environmental
treatment facilities, subject to negotiation and approval of changes to the
final reclamation and closure requirements by State and Federal agencies.
LEGAL PROCEEDINGS
In 1993, the Department of Health and Environmental Sciences of the State of
Montana ("DHES") filed a complaint in Montana First Judicial District Court
against Pegasus Gold Corporation and Zortman Mining, Inc., alleging that they
were discharging pollutants in violation of the Montana Water Quality Act. On
June 6, 1995, a lawsuit filed by the U.S. Environmental Protection Agency
("EPA") in United States District Court for the District of Montana alleged
similar violations under the Federal Clean Water Act. On June 6, 1995, the
Island Mountain Protectors Association and the Assiniboine and Gros Ventre
Tribes filed citizens' suits in the same court alleging similar violations as
well as violations of discharge reporting requirements and claiming injury to
their water rights. Although the Company denies the allegations in the
complaints, the Company faces the possibility of a civil fine and additional
water control, collection, and treatment programs. Construction costs
associated with any required compliance program will be capitalized and
amortized over the life of the Zortman Extension using the units of production
method. Each of the three lawsuits has been stayed pending the outcome of
settlement negotiations. The Company continues to make progress in negotiations
to settle the outstanding lawsuits, and is attempting to include all claims by
all parties into one settlement.
8
<PAGE>
PEGASUS GOLD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS AND CONTINGENCIES, CONTINUED:
Technical and legal requirements associated with these matters are evolving as
liabilities are evaluated. It is reasonably possible that the ultimate
liability for these matters could be higher than the amount accrued at March 31,
1996.
In addition to the above, various lawsuits, claims, and proceedings have been or
may be instituted or asserted against the Company. While the ultimate liability
cannot be determined at this time, management believes the disposition of the
matters described above and other matters that are pending or asserted will not
have a material adverse effect on the financial position of the Company or its
results of operations.
Based on the Company's best estimate of its liability for these and other
matters, $3,776,000 and $5,425,000 are included in deferred site closure and
remediation for such liabilities at March 31, 1996, and December 31, 1995,
respectively.
PURCHASE COMMITMENTS
At March 31, 1996, the Company had capital expenditure purchase commitments
relating to the construction of Phase II at Mt. Todd, of approximately
$60,400,000.
9
<PAGE>
PEGASUS GOLD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM DEBT
During the first quarter of 1996, Pegasus Gold Australia Pty Ltd. ("PGA")
elected to prepay the entire A$25,300,000 ($US19,189,000) outstanding under its
bank term loan and overdraft facility. No gain or loss resulted from the
prepayment.
SUBSEQUENT EVENT
On April 19, 1996, the Company entered into a multi-currency reducing revolving
credit facility with a syndicate of banks which provides for borrowings of up to
$150,000,000. Borrowing under the facility may occur in the U.S., Canada and
Australia, and in U.S., Canadian or Australian dollars with certain
restrictions. Amounts borrowed under the facility bear interest at various
rates (depending on the location of the borrowing) plus a spread tied to the
Company's performance. The annual interest rate spread over these rates ranges
from 0.65 percent to 1.75 percent. In addition, the Company is obligated to pay
letter of credit fees which range from 0.65 percent per annum to 1.75 percent
per annum on the aggregate amount of outstanding letters of credit, and
commitment fees which range from 0.20 percent per annum to 0.50 percent per
annum on the unused amount of the revolving credit facility. The amount
available under the facility reduces annually, commencing in 1999, as follows:
(In Thousands)
1999. . . . . . . . . . . . . . . . . . $20,000
2000. . . . . . . . . . . . . . . . . . 35,000
2001. . . . . . . . . . . . . . . . . . 45,000
2002. . . . . . . . . . . . . . . . . . 50,000
--------
$150,000
--------
--------
Indebtedness under the facility is collateralized by a pledge of the shares of
the Company's significant subsidiaries. The agreement includes restrictive
covenants with respect to leverage ratios, interest coverage, tangible net
worth, ore reserve adequacy and gold hedging. Funds available under the
facility will be used to finance capital expenditures, for letters of credit and
for general corporate purposes.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GOLD PRODUCTION
The following chart details gold production, cash production costs(1) and
non-cash operating costs per ounce by location.
Three Months Ended
March 31,
1996 1995
---- ----
ZORTMAN MINE:
Ounces of gold produced. . . . . . . . . . . . 12,207 19,170
Average cost per ounce produced:
Cash production cost . . . . . . . . . . . . $333 $289
Depreciation and amortization. . . . . . . . 119 82
Royalties. . . . . . . . . . . . . . . . . . --- 11
---- ----
Total Production Cost $452 $382
---- ----
---- ----
MONTANA TUNNELS MINE:
Ounces of gold produced. . . . . . . . . . . . 20,174 22,443
Average cost per ounce produced:
Cash production cost . . . . . . . . . . . . $181 $175
Depreciation and amortization. . . . . . . . 149 132
Royalties. . . . . . . . . . . . . . . . . . 11 10
---- ----
Total Production Cost $341 $317
---- ----
---- ----
FLORIDA CANYON MINE:
Ounces of gold produced. . . . . . . . . . . . 24,484 29,822
Average cost per ounce produced: . . . . . . .
Cash production cost . . . . . . . . . . . . $255 $255
Depreciation and amortization. . . . . . . . 74 50
Royalties. . . . . . . . . . . . . . . . . . 10 10
---- ----
Total Production Cost $339 $315
---- ----
---- ----
11
<PAGE>
Three Months Ended
March 31,
1996 1995
---- ----
BEAL MOUNTAIN MINE:
Ounces of gold produced . . . . . . . . . . . . 6,808 7,318
Average cost per ounce produced:
Cash production cost. . . . . . . . . . . . . $305 $249
Depreciation and amortization . . . . . . . . 99 117
Royalties . . . . . . . . . . . . . . . . . . 6 19
---- ----
Total Production Cost $410 $386
---- ----
---- ----
BLACK PINE MINE:
Ounces of gold produced . . . . . . . . . . . . 18,864 28,746
Average cost per ounce produced:
Cash production cost. . . . . . . . . . . . . $279 $243
Depreciation and amortization . . . . . . . . 46 29
Royalties . . . . . . . . . . . . . . . . . . 27 20
---- ----
Total Production Cost $352 $292
---- ----
---- ----
MT. TODD:
Ounces of gold produced . . . . . . . . . . . . 15,623 14,724
Attributable to Pegasus(2). . . . . . . . . . . 15,623 8,540
Average cost per ounce produced:
Cash production cost. . . . . . . . . . . . . $395 $323
Depreciation and amortization . . . . . . . . 88 62
Royalties . . . . . . . . . . . . . . . . . . --- ---
---- ----
Total Production Cost $483 $385
---- ----
---- ----
CONSOLIDATED TOTALS:
Ounces of gold produced . . . . . . . . . . . . 98,160 122,223
Attributable to Pegasus(2). . . . . . . . . . . 98,160 116,039
Average cost per ounce produced:
Cash production cost. . . . . . . . . . . . . $280 $251
Depreciation and amortization . . . . . . . . 94 70
Royalties . . . . . . . . . . . . . . . . . . 11 12
---- ----
Total Production Cost $385 $333
---- ----
---- ----
Average price per ounce sold $428 $391
---- ----
---- ----
(1) Cash production costs include all operating costs at the mines, including
overhead and applicable mining taxes and credit for by-product revenues.
(2) The Company's ownership percentage in Pegasus Gold Australia was 58
percent through July 1995, 100 percent since August 1995.
REVENUES
GOLD: Revenue from the sale of gold decreased 12 percent to $42.0 million during
the first quarter of 1996 compared to $47.8 million in 1995. Lower revenues are
attributable to a 20 percent decline in gold production and lower by-product
revenues, offset partially by a 9 percent increase in the realized gold price.
Production declined as a result of the temporary cessation of mining at Zortman,
lower grades at all of the properties, slower recovery from transition ore at
Mt. Todd, and lower-than-expected solution application rates and crusher
throughput at Florida Canyon.
The average realized gold prices for the first three months of 1996 and 1995
were $428 and $391 per ounce, respectively; compared to average first quarter
COMEX gold prices of $400 and $380, in 1996 and 1995, respectively. The
increased realized price per ounce of gold reflects higher spot gold prices and
higher realized US Dollar prices on Australian Dollar denominated sales.
12
<PAGE>
OTHER METALS: Sales of other metals decreased $0.7 million to $6.8 million in
the first quarter of 1996. Lower production of zinc, silver and lead resulting
from lower mill feed grades at Montana Tunnels were partially offset by
increased prices for zinc and silver. Realized prices were $5.24 per ounce,
$0.51 per pound, and $0.16 per pound for silver, zinc, and lead, respectively;
compared to $4.49, $0.44, and $0.25, respectively, in the first quarter of 1995.
OPERATING COSTS
The average cash cost of production increased to $280 per ounce of gold compared
to $251 per ounce in the first quarter of 1995. Increased cash costs reflect
the decline in production. Cash costs increased at Zortman as a result of the
temporary cessation of mining. At Montana Tunnels and Black Pine, increased
cash costs resulted from lower production. The cash cost per ounce at Florida
Canyon was unchanged as the effect of lower production was offset by lower costs
from the implementation of self-mining during the quarter. The cost per ounce at
Beal Mountain increased as a result of lower ore grade and a higher strip ratio,
and at Mt. Todd, cash costs increased as a result of lower grade, an increase in
the stripping ratio and slower recovery from the transition ore mined during the
quarter.
The depreciation charge increased 32 percent to $94 per ounce in 1996, compared
to $71 per ounce in 1995. The increase relates to lower production, increased
property, plant, and equipment balances and higher amortization for reclamation
and closure costs which increased late in 1995. Royalty expense decreased 8
percent to $11 per ounce in the first quarter of 1996 because of lower royalties
at Beal Mountain and Zortman.
Exploration and evaluation expenses of $1.5 million in the first quarter of 1996
are 73 percent lower than during the same period in 1995. In 1996, expenditures
at Pullalli and Diamond Hill have been capitalized as a result of development
decisions while exploration and evaluation expense for the first quarter of 1995
included $2.1 million for ongoing resource delineation work on these properties.
General and administrative expenses increased 6 percent to $3.4 million in the
first quarter of 1996 primarily as a result of increased travel costs associated
with the Company's foreign operations and increased fees for outside services.
OTHER INCOME (EXPENSE) AND TAXES
Interest and other income increased $0.3 million to $1.3 million during the
first quarter of 1996. The increase results from higher average cash and short-
term investment balances. Investment yields averaged 5.7 percent and 5.8
percent for the periods ended March 31, 1996 and 1995, respectively.
Interest expense was unchanged at $1.1 million for the quarter. Increased
interest cost associated with $115 million of subordinated convertible notes
issued in April 1995 was offset by the capitalization of $1.6 million of
interest in connection with construction projects. No interest was capitalized
during the first quarter of 1995.
Equity in net income of affiliates comprises the Company's proportionate share
of earnings from the Emerging Markets Gold Fund offset by the Company's share of
losses from USMX. The income tax benefit results from the recognition of
certain refund claims allowed upon resolution of certain periods reviewed by
the IRS.
FINANCING, CAPITAL INVESTMENT AND LIQUIDITY
The Company's liquidity and capital structure improved during the quarter with
the issuance of 6,000,000 common shares for net proceeds of $88.4 million.
At March 31, 1996, the Company had working capital of $134.1 million, compared
to working capital of $79.0 million at the end of 1995. Cash and short-term
investments totaled $92.1 million at March 31, 1996, compared with $53.0 million
at the end of 1995.
13
<PAGE>
Cash flow provided by operating activities for the first quarter was $2.2
million, compared to $10.1 million during the same period in 1995. The decrease
relates primarily to increased inventory from the addition of ounces to heap
leach pads at Florida Canyon and Mt. Todd. During the quarter, the Company
raised $88.4 million, net of expenses, from the issuance of 6,000,000 common
shares in Canada and the U.S. In addition, the Company invested $34.3 million
on capital additions, $27.1 million in short-term investments, and made payments
on outstanding long-term debt amounting to $19.2 million during the quarter.
On April 19, 1996, the Company entered into a six-year $150 million multi-
currency revolving credit facility with a syndicate of banks. Borrowings under
the facility may occur in the U.S., Canada and Australia, and in U.S., Canadian
or Australian dollars with certain restrictions. Funds available under the
facility may be used for general corporate purposes including the financing of
construction costs at Mt. Todd, Zortman or Pullalli.
Capital requirements during 1996 are expected to exceed operating cash flow.
However, the Company believes that the $92.1 million in cash and short-term
investments on hand, along with cash flows from operations, and funding
available under the revolving credit facility described above, will be adequate
to meet its cash requirements during that period.
HEDGING
Profitability of the Company is tied directly to the price of gold and, to a
lesser extent, the prices of its by-products, particularly zinc. The price of
gold is unpredictable and affected by many factors beyond the Company's control.
Through the use of hedging strategies, the Company manages its exposure to price
risk, without eliminating all favorable price exposure. In addition, the
Company enters into interest rate swaps and foreign currency exchange agreements
to manage fluctuations in interest and foreign exchange rates.
14
<PAGE>
PART II. OTHER INFORMATION
PEGASUS GOLD INC.
Items 2, 3, 4, and 5 of Part II are omitted from this report as inapplicable.
Item 1. Legal Proceedings
See Part 1 - Item 1 - "Notes to Consolidated Financial Statements."
Note 5, Paragraph 4 under "Legal Proceedings" which information is
incorporated herein by reference.
Item 6. Exhibits and Report on Form 8-K
(a) Exhibits
10.0 Multi-currency Reducing Revolving Credit Facility dated
April 19, 1996
11.0 Computation of Earnings Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
One report on Form 8-K was filed during the quarter ended March
31, 1996. The report, dated January 8, 1996, as amended, was
submitted in accordance with item 5 "Other Events", reported the
public offering of common shares, changes in Company management,
share ownership of directors and executive officers of the
Company, and updated certain exhibits relevant to the Company's
registration statement on Form S-3 (Registration No. 33-72410).
15
<PAGE>
PEGASUS GOLD INC.
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.
PEGASUS GOLD INC.
(Registrant)
Date: May 14 , 1996 By: /s/ Phillips S. Baker, Jr.
------- --------------------------------
Phillips S. Baker, Jr.
Vice President, Finance,
Chief Financial Officer, and
Principal Accounting Officer
16
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
(US$150,000,000 or Equivalent)
Dated as of April 17, 1996
Among
PEGASUS GOLD INC.
PEGASUS GOLD CORPORATION
AND
PEGASUS GOLD AUSTRALIA PTY LTD
(FORMERLY KNOWN AS ZAPOPAN N.L.)
AS BORROWERS
and
THE INITIAL LENDERS AND THE INITIAL ISSUING BANKS
AS INITIAL LENDERS and INITIAL ISSUING BANKS
and
ABN AMRO AUSTRALIA LIMITED
AS THE NON-PRO RATA LENDER
and
ABN AMRO BANK N.V., CANADIAN IMPERIAL BANK OF COMMERCE,
DRESDNER BANK AG, NEW YORK BRANCH AND
THE FIRST NATIONAL BANK OF CHICAGO
AS CO-AGENTS
and
CITIBANK, N.A., CITIBANK CANADA
AND
CITIBANK LIMITED
AS ADMINISTRATIVE AGENTS
<PAGE>
T A B L E O F C O N T E N T S
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . 37
1.03. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
1.04. Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE II
AMOUNTS AND TERMS OF THE ACCOMMODATIONS
AND THE LETTERS OF CREDIT
2.01. The Accommodations and the Letters of Credit; Designation of
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.02. Making the Advances . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.03. Drawings of BA Obligations; Re-Liquifying Bills . . . . . . . . . . . 45
2.04. Issuance of and Drawings and Reimbursement Under Letters of Credit. . 49
2.05. Repayment of Accommodations . . . . . . . . . . . . . . . . . . . . . 51
2.06. Termination or Reduction of the Commitments . . . . . . . . . . . . . 53
2.07. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.08. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
2.09. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
2.10. Conversion of Advances. . . . . . . . . . . . . . . . . . . . . . . . 63
2.11. Renewal and Conversion of BA Obligations. . . . . . . . . . . . . . . 64
2.12. Increased Costs, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 66
2.13. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . 68
2.14. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
2.15. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . 74
2.16. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
2.17. Defaulting Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit . . . . . . . . . 78
3.02. Conditions Precedent to Each Borrowing, Drawing and Issuance. . . . . 82
3.03. Determinations Under Section 3.01 . . . . . . . . . . . . . . . . . . 82
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrowers . . . . . . . . . . . 82
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . 87
5.02. Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 91
5.03. Reporting Requirements. . . . . . . . . . . . . . . . . . . . . . . . 98
5.04. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 101
<PAGE>
Section Page
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 103
6.02. Actions in Respect of the Letters of Credit and BA Obligations upon
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
ARTICLE VII
THE ADMINISTRATIVE AGENTS
7.01. Authorization and Action. . . . . . . . . . . . . . . . . . . . . . . 106
7.02. Agent's Reliance, Etc.. . . . . . . . . . . . . . . . . . . . . . . . 106
7.03. Citibank, Citibank Canada, Citibank Australia and Affiliates. . . . . 107
7.04. Lender Party Credit Decision. . . . . . . . . . . . . . . . . . . . . 107
7.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
7.06. Successor Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . 110
7.07. Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc.; Release of Collateral . . . . . . . . . . . . . . . 111
8.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
8.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 113
8.04. Costs, Expenses; Indemnification, Etc . . . . . . . . . . . . . . . . 113
8.05. Right of Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . . 114
8.06. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
8.07. Assignments and Participations. . . . . . . . . . . . . . . . . . . . 115
8.08. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . 118
8.09. No Liability of the Issuing Banks . . . . . . . . . . . . . . . . . . 118
8.10. Jurisdiction, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.11. Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
8.12. Direct Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . 120
8.13. Ratification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
8.14. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
8.15. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . 121
ii
<PAGE>
SCHEDULES
Schedule I - Commitments, Applicable Lending Offices, Etc.
Schedule II - Performance Pricing Schedule
Schedule 1.01(a) - Existing Hedge Agreements; Existing Hedge Banks;
Surviving Hedge Agreements
Schedule 1.01(b) - Existing Letters of Credit
Schedule 3.01(b) - Surviving Debt
Schedule 4.01(b) - Subsidiaries; Restricted Subsidiaries; Capital Stock
Schedule 4.01(d) - Authorization and Approvals
Schedule 4.01(s) - Existing Debt
Schedule 4.01(u) - Existing Liens
Schedule 4.01(v) - Investments
EXHIBITS
Exhibit A - Form of Assignment and Acceptance
Exhibit B-1 - Form of Australian Borrower Note
Exhibit B-2 - Form of Canadian Borrower Note
Exhibit B-3 - Form of US Borrower Note
Exhibit C-1 - Form of Draft for Citibank Canada
Exhibit C-2 - Form of Generic Draft
Exhibit D - Form of Commitment Designation Notice
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Notice of Drawing
Exhibit G - Form of Pledge Agreement
Exhibit H - Form of Guaranty
Exhibit I - Form of Acknowledgment Deed
Exhibit J - Form of Solvency Certificate
Exhibit K-1 - Form of Opinion of Borrower's New York Counsel
Exhibit K-2 - Form of Opinion of Robert A. Lonergan, Esq.
Exhibit K-3 - Form of Opinion of Borrower's Canadian Counsel
Exhibit K-4 - Form of Opinion of Borrower's Australian Counsel
Exhibit K-5 - Form of Opinion of PGC's Nevada Counsel
Exhibit L - Form of Amendment to Guaranty
Exhibit M - Form of Amendment to Pledge Agreement
Exhibit N - Permitted Hedge Agreement Termination Provisions
iii
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT dated as of April
17, 1996 among PEGASUS GOLD INC., a company organized under the laws of British
Columbia, Canada ("PGI" or the "CANADIAN BORROWER"), PEGASUS GOLD CORPORATION,
a Nevada corporation and a wholly owned subsidiary of PGI ("PGC" or the "US
BORROWER"), PEGASUS GOLD AUSTRALIA PTY LTD (formerly known as Zapopan N.L.) (ACN
009 628 924), an Australia corporation and a wholly owned subsidiary of PGI
("PGA" or the "AUSTRALIAN BORROWER" and, together with the Canadian Borrower and
the US Borrower, each a "BORROWER" and, collectively, the "BORROWERS"), the
banks, financial institutions and other institutional lenders listed on the
signature pages hereof as the Initial Lenders (the "INITIAL LENDERS") and the
Initial Issuing Banks (as hereinafter defined), CITIBANK, N.A. ("CITIBANK"), as
administrative agent in the United States and as a collateral agent (in such
capacity, together with any successor appointed pursuant to Article VII, the "US
ADMINISTRATIVE AGENT") for the Lender Parties and the other Secured Parties
(each as hereinafter defined), CITIBANK CANADA ("CITIBANK CANADA"), as
administrative agent in Canada and as a collateral agent (in such capacity,
together with any successor appointed pursuant to Article VII, the "CANADIAN
ADMINISTRATIVE AGENT") for the Lender Parties, CITIBANK LIMITED (ACN 004 325
080) ("CITIBANK AUSTRALIA"), as administrative agent in Australia and as a
collateral agent (in such capacity, together with any successor appointed
pursuant to Article VII, the "AUSTRALIAN ADMINISTRATIVE AGENT") for the Lender
Parties, ABN AMRO AUSTRALIA LIMITED, (ACN 000 862 797) as the Non-Pro Rata
Lender (as hereinafter defined) and ABN AMRO BANK N.V., CANADIAN IMPERIAL BANK
OF COMMERCE, DRESDNER BANK AG, NEW YORK BRANCH and THE FIRST NATIONAL BANK OF
CHICAGO, as Co-Agents.
PRELIMINARY STATEMENTS:
(1) The Borrowers have requested the Lender Parties (as hereinafter
defined) to extend revolving credit facilities (including issuances of letters
of credit) to the Borrowers in an aggregate principal amount of up to
US$150,000,000 (or the Equivalent (as hereinafter defined) thereof in Canadian
Dollars, Australian Dollars or, subject to the limitations set forth herein, any
combination of such currencies) at any time outstanding.
(2) The Lender Parties have indicated their willingness to agree to
extend such credit facilities on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACCOMMODATION" means (a) an Advance made by any Lender as part of any
Borrowing or a Letter of Credit Advance, or (b) the acceptance and purchase of
Drafts or the purchase of BA Equivalent Notes, as the case may be, by any Lender
as part of any Drawing.
"ACKNOWLEDGMENT DEED" has the meaning specified in Section 3.01(f)(ix).
"ADDITIONAL INVESTMENT AMOUNT" means the sum of (i) US$89,000,000, PLUS
(ii) the aggregate amount of net cash proceeds received by PGI as consideration
for the issuance of its capital stock after the Closing Date, PLUS (iii) in the
case of capital stock of PGI not issued for cash, the aggregate additions to net
tangible assets on the consolidated balance sheet of PGI attributable to assets
acquired in exchange for the issuance of such capital stock after the Closing
Date, PLUS (iv) the aggregate amount of net cash proceeds received by Finance
Corp. as consideration for the issuance of Permitted Preferred Stock.
"ADJUSTED CURRENT ASSETS" of any Person means (a) all assets of such Person
that would, in accordance with GAAP, be classified as current assets of a
company conducting a business the same as or similar to that of such Person,
after deducting appropriate reserves in each case in which a reserve is proper
in accordance with GAAP, PLUS (b) in the case of any Borrower, any unused amount
of the Revolving Credit Commitments under this Agreement and any undrawn and
available amounts under any agreement governing or evidencing Debt of such
Borrower permitted under Section 5.02(b)(ii), in each case that, if borrowed,
would constitute a liability that would not be included in Adjusted Current
Liabilities, LESS (c) the sum of (i) all amounts included in clause (a) of this
definition that are subject to any Lien (but only to the extent of the lesser of
(A) the fair market value of the assets subject to such Lien, and (B) the amount
of the Obligation secured by such Lien), and (ii) in the case of any Restricted
Subsidiary, all affected amounts included in clause (a) of this definition where
the ability of such Restricted Subsidiary to dividend or advance 100% of net
working capital is legally or contractually restricted.
"ADJUSTED CURRENT LIABILITIES" of any Person means (a) all Debt of such
Person (including the current portion of Debt in respect of Prepaid Forward
Sales Agreements), except Funded Debt, that by its terms is payable on demand or
matures within one year after the date of determination (excluding any Debt
renewable or extendible, at the option of such Person, to a date more than one
year from such date or arising under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period of more
than one year from such date), PLUS (b) all amounts of Funded Debt of such
Person required to be paid or prepaid within one year after the date of
determination, PLUS (c) all other items (including, without limitation, taxes
accrued as estimated) that in accordance with GAAP would be classified as
current liabilities of such Person, LESS (d) to the extent otherwise included in
the foregoing clause (a), (b) or (c), those current liabilities the repayment of
which is secured by a Lien on current assets but only to the extent (i) such
current assets are excluded from the definition of Adjusted Current
2
<PAGE>
Assets by clause (c)(i) of such definition, and (ii) such Lien is permitted
hereunder, and LESS (e) to the extent otherwise included in the foregoing clause
(a), (b) or (c), all Debt in respect of Hedge Agreements except the current
portion of Debt in respect of Prepaid Forward Sales Agreements.
"ADJUSTED PRO RATA SHARE" of any amount means, with respect to any Risk
Participant at any time, the product of such amount TIMES a fraction the
numerator of which is the amount of such Risk Participant's Maximum Revolving
Credit Commitment (without giving effect to any termination thereof) at such
time and the denominator of which is the aggregate Maximum Revolving Credit
Commitments (without giving effect to any termination thereof) of all Risk
Participants at such time.
"ADMINISTRATIVE AGENTS" means the US Administrative Agent, the Canadian
Administrative Agent and the Australian Administrative Agent.
"ADVANCE" means a Revolving Credit Advance or a Letter of Credit Advance.
"AFFILIATE" means, as to any Person, (a) any other Person (other than any
Borrower and any Restricted Subsidiary) that, directly or indirectly, controls,
is controlled by or is under common control with such Person or is a director or
officer of such Person, and (b) any Joint Venture in which such Person, or any
Restricted Subsidiary of such Person, is a Joint Venture Partner. For purposes
of this definition, the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 10% or more of the Voting
Stock of such Person or to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
contract or otherwise.
"AGREEMENT" means this Reducing Revolving Credit Agreement, as it may be
amended, supplemented or otherwise modified from time to time.
"APPLICABLE DESIGNATED COMMITMENT PERCENTAGE" means, at any time of
determination, with respect to (a) the US Borrower, US Borrower Advances, US
Letters of Credit, the Letter of Credit Commitments of the US Issuing Banks and
the US Lenders and their respective Revolving Credit Commitments, the percentage
of the Revolving Credit Facility designated in the Commitment Designation Notice
most recently delivered to the US Administrative Agent in accordance with
Section 2.01(e) as the US Percentage, (b) the Canadian Borrower, Canadian
Borrower Advances, BA Obligations, Canadian Letters of Credit, the Letter of
Credit Commitments of the Canadian Issuing Banks and the Canadian Lenders and
their respective Revolving Credit Commitments, the percentage of the Revolving
Credit Facility designated in the Commitment Designation Notice most recently
delivered to the US Administrative Agent in accordance with Section 2.01(e) as
the Canadian Percentage, and (c) the Australian Borrower, Australian Borrower
Advances, Australian Letters of Credit, the Letter of Credit Commitments of the
Australian Issuing Banks, the Australian Lenders and their respective Revolving
Credit Commitments and the Risk Participants and their respective Revolving
Credit Commitments, the percentage of the Revolving Credit Facility designated
in the Commitment Designation Notice most recently delivered to the US
Administrative Agent in accordance with Section 2.01(e) as the Australian
Percentage.
3
<PAGE>
"APPLICABLE INTERBANK RATE" means, with respect to (a) Advances denominated
in US Dollars, the Federal Funds Rate, (b) Accommodations denominated in
Canadian Dollars, the Canadian Interbank Rate, and (c) Advances denominated in
Australian Dollars, the Australian Interbank Rate.
"APPLICABLE L/C FEE" means, at any time of determination, with respect to
each Financial Letter of Credit and each Commercial Letter of Credit, a
percentage per annum equal to the applicable percentage set forth on the
Performance Pricing Schedule beneath the headings "Financial Letter of Credit
Fee" and "Commercial Letter of Credit Fee," respectively, and opposite the
Performance Pricing Level in effect at such time.
"APPLICABLE MARGIN" means, at any time of determination, with respect to
each Type of Advance, a percentage per annum equal to the applicable percentage
set forth on the Performance Pricing Schedule beneath such Type of Advance and
opposite the Performance Pricing Level in effect at such time; PROVIDED,
HOWEVER, that, notwithstanding the foregoing, (a) at any time that the
Performance Pricing Level is Level I, the "Applicable Margin" with respect to
each Non-Pro Rata Advance that is an Australian Prime Rate Advance shall be
0.20%, and (b) at any time that the Performance Pricing Level is Level II or
Level III, the "Applicable Margin" with respect to each Non-Pro Rata Advance
that is an Australian Prime Rate Advance shall be 0.25%.
"APPLICABLE UNUSED COMMITMENT FEE" means, at any time of determination, a
percentage per annum equal to the applicable percentage set forth on the
Performance Pricing Schedule beneath the heading "Unused Commitment Fee" and
opposite the Performance Pricing Level in effect at such time.
"APPROPRIATE ADMINISTRATIVE AGENT" means, at any time, with respect to
(a) any of US Borrower Advances, US Borrower Borrowings, US Letters of Credit or
any US Issuing Bank, any matter in connection with the Collateral or the
Collateral Documents, fees payable by the US Borrower hereunder or the US
Borrower, the US Administrative Agent, (b) any of Canadian Borrower Advances,
Canadian Borrower Borrowings, Canadian Letters of Credit or any Canadian Issuing
Bank, BA Obligations, fees payable by the Canadian Borrower hereunder or the
Canadian Borrower, the Canadian Administrative Agent, (c) any of Australian
Borrower Advances, Australian Borrower Borrowings, Australian Letters of Credit
or any Australian Issuing Bank, fees payable by the Australian Borrower
hereunder or the Australian Borrower, the Australian Administrative Agent.
"APPROPRIATE ADMINISTRATIVE AGENT'S ACCOUNT" means, with respect to (a) the
US Administrative Agent, the account of the US Administrative Agent maintained
by the US Administrative Agent with Citibank at its office at 399 Park Avenue,
New York, New York 10043, Account No. 40696831, Reference: Pegasus Gold, (b) the
Canadian Administrative Agent, (i) in the case of amounts to be deposited in
Canadian Dollars, the account of the Canadian Administrative Agent maintained by
the Canadian Administrative Agent with Citibank Canada at its office at 123
Front Street West, Toronto, Ontario M5J 2M3, via Ips, SWIFT Code Citicatt,
Reference: Pegasus, attn: Ms. Sawrupa, and (ii) in the case of amounts to be
deposited in US Dollars, the account of the Canadian Administrative Agent
maintained by the Canadian Administrative Agent with Citibank at its office at
399 Park Avenue, New York, New York, 10043, Account No. 3600-6535, Reference:
Pegasus, attn: Ms. Sawrupa, (c) the Australian Administrative Agent, (i) in the
case of amounts to be deposited in Australian Dollars, the account of the
Australian Administrative Agent maintained by the Australian Administrative
4
<PAGE>
Agent with Citibank Australia at its office at Level 25, Waterfront Place, 1
Eagle Street, Brisbane, QLD 4000, Australia, BSB244-000 Account No. 400600-007,
Reference: Citi Brisbane/Pegasus, and (ii) in the case of amounts to be
deposited in US Dollars, the account of the Australian Administrative Agent
maintained by the Australian Administrative Agent with Citibank at its office at
111 Wall Street, New York, New York 10043, Account No. 3605 8247, Reference:
Citi Brisbane/Pegasus, and (d) any Administrative Agent, such other account
maintained by such Administrative Agent and designated by such Administrative
Agent in a written notice to the Appropriate Borrower, the US Administrative
Agent, the Appropriate Lenders (and, if such notice relates to an account of the
Australian Administrative Agent, the Risk Participants) and the Appropriate
Issuing Banks.
"APPROPRIATE BORROWER" means, with respect to (a) US Borrower Advances, US
Borrower Borrowings and US Letters of Credit, the US Borrower, (b) with respect
to BA Obligations, Canadian Borrower Advances, Canadian Borrower Borrowings and
Canadian Letters of Credit, the Canadian Borrower, and (c) with respect to
Australian Borrower Advances, Australian Borrower Borrowings and Australian
Letters of Credit, the Australian Borrower.
"APPROPRIATE BORROWER'S ACCOUNT" means, with respect to (a) the US
Borrower, the account of the US Borrower maintained by the US Borrower with U.S.
Bank of Washington, N.A. at its office at 1420 5th Avenue, Seattle, Washington,
98101, Swift Code USBKUS6W, ABA No. 125-000-105, Branch: Spokane Main, (b) the
Canadian Borrower, (i) in the case of amounts to be deposited in Canadian
Dollars, the account of the Canadian Borrower maintained by the Canadian
Borrower with Royal Bank of Canada, Main Branch Royal Centre, 1025 West Georgia
Street, Vancouver, British Columbia V6E 3N9, Account No. 171-880-8, and (ii) in
the case of amounts to be deposited in US Dollars, the account of the Canadian
Borrower maintained by the Canadian Borrower with Royal Bank of Canada, Main
Branch Royal Centre, 1025 West Georgia Street, Vancouver, British Columbia V6E
3N9, Account No. 405-748-5, (c) the Australian Borrower, (i) in the case of
amounts to be deposited in Australian Dollars, the account of the Australian
Borrower maintained by the Australian Borrower with ANZ Banking Group Limited,
Allendale Square, 77 St. Georges Terrace, Perth WA 6000 Australia, BSB Number
016-002, Account No. 8336 70105, and (ii) in the case of amounts to be deposited
in US Dollars, the account of the Australian Borrower designated by the
Australian Borrower and approved by the Administrative Agent and the US
Administrative Agent, and (d) any Borrower, such other account of such Borrower
as is agreed from time to time in writing between such Borrower and the
Appropriate Administrative Agents (including, in all cases, the US
Administrative Agent).
"APPROPRIATE ISSUING BANK" means, with respect to (a) US Letters of Credit,
each US Issuing Bank, (b) Canadian Letters of Credit, each Canadian Issuing
Bank, and (c) Australian Letters of Credit, each Australian Issuing Bank;
PROVIDED, HOWEVER, that each Existing Issuing Bank, in its capacity as such,
shall be an Appropriate Issuing Bank only with respect to the Existing Letters
of Credit issued by it.
"APPROPRIATE LENDER" means, with respect to (a) matters relating to US
Borrower Advances, US Letter of Credit Advances and US Letters of Credit, each
US Lender, (b) matters relating to Canadian Borrower Advances, Canadian Letter
of Credit Advances, Canadian Letters of Credit and BA Obligations, each Canadian
Lender, and (c) matters relating to Australian Borrower Advances, Australian
Letter of Credit Advances and Australian Letters of Credit, each Australian
Lender and the Non-Pro Rata Lender.
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"APPROPRIATE LENDING OFFICE" means, with respect to (a) each US Lender, (i)
in the case of US Base Rate Advances, such Lender's US Domestic Lending Office,
and (ii) in the case of Eurodollar Rate Advances, such Lender's US Eurodollar
Lending Office, (b) each Canadian Lender, (i) in the case of Canadian Base Rate
Advances and Canadian Prime Rate Advances, such Lender's Canadian Domestic
Lending Office, (ii) in the case of Eurodollar Rate Advances, such Lender's
Canadian Eurodollar Lending Office, and (iii) in the case of a Drawing, such
Lender's BA Lending Office, (c) each Australian Lender, the Non-Pro Rata Lender
and each Risk Participant, (i) in the case of Australian Prime Rate Advances and
Bank Bill Rate Advances, such Lender's Australian Domestic Lending Office, and
(ii) in the case of Eurodollar Rate Advances, such Lender's Australian
Eurodollar Lending Office, and (d) each Issuing Bank, its Letter of Credit
Lending Office for all purposes under this Agreement.
"APPROPRIATE REFERENCE LENDERS" means, at any time, with respect to (a)
determination of the BA Rate, the Canadian Base Rate and the Canadian Prime
Rate, the Canadian Reference Lenders, and (b) determination of the Australian
Prime Rate and the Australian Interbank Rate, if applicable pursuant to the
definitions of such terms, the Australian Reference Lenders.
"ARRANGER" means Citicorp Securities, Inc.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender Party and an Eligible Assignee, and accepted by the US
Administrative Agent, in accordance with Section 8.07 and in substantially the
form of Exhibit A hereto.
"AUSTRALIAN ADMINISTRATIVE AGENT" has the meaning specified in the recital
of parties to this Agreement.
"AUSTRALIAN BANK GUARANTEE" means a bank guarantee issued by an Australian
Issuing Bank for the account of the Australian Borrower.
"AUSTRALIAN BORROWER" has the meaning specified in the recital of parties
to this Agreement.
"AUSTRALIAN BORROWER ADVANCE" has the meaning specified in Section
2.01(b)(i).
"AUSTRALIAN BORROWER BORROWING" means a borrowing consisting of
simultaneous Australian Borrower Advances of the same Type pursuant to Section
2.01(b).
"AUSTRALIAN BORROWER NOTE" means a promissory note of the Australian
Borrower payable to the order of any Australian Lender or the Non-Pro Rata
Lender, in substantially the form of Exhibit B-1 hereto, evidencing the
aggregate indebtedness of the Australian Borrower to such Lender resulting from
the Australian Borrower Advances made by or otherwise owing to such Lender.
"AUSTRALIAN BUSINESS DAY" means a day of the year on which banks are not
required or authorized by law to close in Darwin, Australia or Sydney, Australia
and, if the applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London interbank market.
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"AUSTRALIAN CASH COLLATERAL ACCOUNT" has the meaning specified in Section
5.01(k).
"AUSTRALIAN CASH EQUIVALENTS" means any of the following: (a) stocks,
bonds, notes and other securities issued or guaranteed by the Government of
Australia or any State or Territory of Australia; or (b) bills of exchange,
promissory notes or other negotiable instruments drawn, accepted or endorsed by,
or deposits with or certificates of deposit or any other security issued by, any
Australian Lender or any bank (as defined in Section 5(1) of the Banking Act
1959 of Australia) whose shareholders funds is not less than A$500 million; or
(c) securities, deposits or loans guaranteed by the Government of Australia or
any State or Territory of Australia or secured by irrevocable letters of credit
established or confirmed by any Australian Lender or any bank (as defined in
section 5(1) of the Banking Act 1959 of Australia) whose shareholders funds is
not less than A$500 million; or (d) securities denominated in Australian Dollars
and rated long term not less than A/A or short term not less than A1/P1 by S&P
and Moody's, respectively.
"AUSTRALIAN CORPORATIONS LAW" means the Corporations Law of the Northern
Territory of Australia and, where applicable, of any other State or Territory of
Australia.
"AUSTRALIAN DOLLAR ADVANCES" means Advances denominated in Australian
Dollars.
"AUSTRALIAN DOLLARS" and "A$" each means lawful money of Australia.
"AUSTRALIAN DOMESTIC LENDING OFFICE" means (a) with respect to each
Australian Lender and the Non-Pro Rata Lender, the office of such Lender
specified as its "Domestic Lending Office" opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which it became a Lender,
as the case may be, and (b) with respect to each Risk Participant that has
purchased (or is purchasing) a portion of any Non-Pro Rata Advance, the office
of such Lender specified in writing to the Australian Administrative Agent for
such purpose at the time of such purchase (or, if no such office is so
specified, its or its Affiliate's US Domestic Lending Office (in its or such
Affiliate's capacity as a US Lender)), or, in each case, such other office of
such Lender as such Lender may from time to time specify to the Australian
Borrower, the US Administrative Agent and the Australian Administrative Agent.
"AUSTRALIAN EURODOLLAR LENDING OFFICE" means (a) with respect to any
Australian Lender and the Non-Pro Rata Lender, the office of such Lender
specified as its "Eurodollar Lending Office" opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which it became a Lender,
as the case may be, and (b) with respect to each Risk Participant that has
purchased (or is purchasing) a portion of any Non-Pro Rata Advance, the office
of such Lender specified in writing to the Australian Administrative Agent for
such purpose at the time of such purchase (or, if no such office is so
specified, its or its Affiliate's US Eurodollar Lending Office (in its or such
Affiliate's capacity as a US Lender)), or, in each case, such other office of
such Lender as such Lender may from time to time specify to the Australian
Borrower, the US Administrative Agent and the Australian Administrative Agent.
"AUSTRALIAN INTERBANK RATE" means, in respect of a day: (a) the rate
displayed on the page of the Reuters Monitor System designated "RBAX" as the
rate for loans from clients for the period in which that day falls, or (b) if
that rate is not displayed on that page at or about 3:00 p.m. (Sydney time) on
the second Business Day after the end of that period or that page no longer
displays a rate for settlements
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between official dealers and clients, the rate (expressed as a rate per centum
per annum and rounded up to two decimal places) determined by the Australian
Administrative Agent to be the arithmetic average of the rates quoted to the
Australian Administrative Agent at or around that time on that day by the
Australian Reference Lenders as the rate used by official dealers for interbank
settlements with clients during the period in which that day falls.
"AUSTRALIAN ISSUING BANK" means (a) the Initial Australian Issuing Bank, so
long as it has a Letter of Credit Commitment hereunder, and (b) each Eligible
Assignee to which all or any portion of the Letter of Credit Commitment of an
Australian Issuing Bank hereunder has been assigned pursuant to Section 8.07, in
each case, in its capacity as such.
"AUSTRALIAN LENDER" means each Lender listed under the heading "Australian
Lenders" on Schedule I hereto (other than the Non-Pro Rata Lender in its
capacity as such) or identified as an Australian Lender in the Assignment and
Acceptance pursuant to which such Lender became a Lender, as the case may be, in
each case, in its capacity as such.
"AUSTRALIAN LETTER OF CREDIT" means (a) a letter of credit issued hereunder
by an Australian Issuing Bank for the account of the Australian Borrower, and
(b) an Australian Bank Guarantee.
"AUSTRALIAN PRIME RATE" means, in respect of a day: (a) the rate (expressed
as a rate per centum per annum and rounded up to two decimal places) the
Australian Administrative Agent calculates by determining the arithmetic average
of the rates displayed on the pages of the Reuters Monitor System designated
"ABPR" and "ABPS" at or about 10:30 a.m. (Sydney time) on that day (after
excluding the highest and lowest or, in the case of equality, one of the highest
and one of the lowest of the rates), or (b) if less than five rates are
displayed on pages ABPR and ABPS at that time on that day, the rate (expressed
as a rate per centum per annum and rounded up to two decimal places) the
Australian Administrative Agent calculates to be the arithmetic average of the
rates quoted to the Australian Administrative Agent at or around that time on
that day by each of the Australian Reference Lenders as the rate quoted by such
Australian Reference Lender to prime customers in Australia for unsecured
accommodations in Australian Dollars in excess of A$100,000.
"AUSTRALIAN PRIME RATE ADVANCE" means an Australian Borrower Advance that
bears interest as provided in Section 2.08(b)(v).
"AUSTRALIAN REFERENCE LENDERS" means Citibank Australia, ABN AMRO Australia
Limited and Dresdner Australia Limited; PROVIDED that, if any of the foregoing
shall cease to be an Australian Lender, the term "Australian Reference Lenders"
shall no longer include such Australian Lender and shall thereafter include such
Australian Lender as the US Administrative Agent and the Australian
Administrative Agent shall designate as a replacement Australian Reference
Lender, which designation shall be made with the consent of such replacement
Australian Reference Lender and PGI (such consent of PGI not to be unreasonably
withheld or delayed).
"AVAILABLE AMOUNT" of any Letter of Credit means, at any time, the maximum
amount available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing) (it being understood
that, for purposes hereof, the "maximum amount available
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<PAGE>
to be drawn" under any Australian Bank Guarantee at any time is the maximum
amount stated therein to be payable at any time under such Australian Bank
Guarantee).
"BA EQUIVALENT NOTES" has the meaning specified in Section 2.01(c).
"BA LENDING OFFICE" means, with respect to each Canadian Lender, the office
of such Lender set forth as its "BA Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender or such other office of such Lender as such Lender may from time
to time specify to the Canadian Borrower, the Canadian Administrative Agent and
the US Administrative Agent for such purpose.
"BA OBLIGATIONS" means, collectively, Bankers' Acceptances and BA
Equivalent Notes.
"BA RATE" means, for all BA Obligations comprising part of the same Drawing
to be purchased by a Canadian Lender, the arithmetic average of the discount
rates (calculated on an annual basis for a 365 day year or, in the case of a
leap year, a 366 day year) and rounded up to the nearest multiple of 1/16th of
1%, if such average is not such a multiple, quoted by each Canadian Reference
Lender at 9:30 a.m. (Toronto time) on the date of such Drawing as the discount
rate at which such Canadian Reference Lender would purchase, on such date, its
own bankers' acceptances having an aggregate Face Amount equal to and with a
term to maturity the same as the BA Obligations to be acquired by such Canadian
Lender as part of such Drawing. The BA Rate for each BA Obligation comprising
part of the same Drawing shall be determined by the Canadian Administrative
Agent on the basis of applicable rates furnished to and received by the Canadian
Administrative Agent from the Canadian Reference Lenders on the date of the
applicable Drawing, SUBJECT, HOWEVER, to the provisions of Section 2.08.
"BANK BILL RATE" means, for any Interest Period for all Bank Bill Rate
Advances comprising part of the same Borrowing:
(a) unless clause (b), (c) or (d) below is applicable, the average bid
rate displayed at or about 10:30 a.m. (Sydney time) on the first day of
such Interest Period on the Reuters screen BBSY page for Bills having a
term equivalent (or most nearly equivalent) to such Interest Period; or
(b) if, on the date of determination of the Bank Bill Rate for any
Interest Period, (i) there is a manifest error in the calculation of the
average bid rate as set forth in the foregoing clause (a) (or such average
bid rate is not displayed by 10:30 a.m. (Sydney time) on such date), and
(ii) at least five bid rates for Bills having a term equivalent (or most
nearly equivalent) to such Interest Period are displayed on the Reuters
screen BBSW page at such time on such date, the rate (expressed as a rate
percent per annum and rounded up, if necessary, to the nearest two decimal
places) determined by the Australian Administrative Agent to be the
arithmetic mean of such bid rates after excluding the highest and the
lowest of such bid rates (or, in the case of equality, one of the highest
and one of the lowest of such bid rates); or
(c) if, on the date of determination of the Bank Bill Rate for any
Interest Period, (i) there is a manifest error in the calculation of the
average bid rate as set forth in the foregoing clause
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<PAGE>
(a) (or such average bid rate is not displayed by 10:30 a.m. (Sydney time)
on such date), and (ii) less than five bid rates for Bills having a term
equivalent to such Interest Period are displayed on the Reuters screen BBSW
page at such time on such date, the rate (expressed as a rate percent per
annum and rounded up, if necessary, to the nearest two decimal places)
determined by the Australian Administrative Agent to be the arithmetic mean
of the bid rates quoted to the Australian Administrative Agent by each of
three Australian banks selected by the Australian Administrative Agent at
or about that time on that date for Bills accepted by such bank having a
term equivalent (or most nearly equivalent) to such Interest Period; or
(d) if, on the date of determination of the Bank Bill Rate for any
Interest Period, (i) there is a manifest error in the calculation of the
average bid rate as set forth in the foregoing clause (a) (or such average
bid rate is not displayed by 10:30 a.m. (Sydney time) on such date), and
(ii) the Australian Administrative Agent is unable to determine a rate
under the foregoing clause (b) (due to an insufficient number of displayed
rates) and the foregoing clause (c) (due to the inability to obtain the
required number of quotes), the rate (expressed as a rate percent per annum
and rounded up, if necessary, to the nearest two decimal places) specified
in good faith by the Australian Administrative Agent at or about such time
on such date having regard, to the extent possible, to the rates otherwise
bid for bank accepted Bills having a term equivalent (or most nearly
equivalent) to such Interest Period at such time.
"BANK BILL RATE ADVANCE" means an Australian Borrower Advance that bears
interest as provided in Section 2.08(b)(vi).
"BANK HEDGE AGREEMENT" means any Hedge Agreement required or permitted
under Article V that is entered into by and between any Borrower and any Lender
Party (including, without limitation, any Surviving Hedge Agreement between any
Borrower and any Lender Party).
"BANKERS' ACCEPTANCE" has the meaning specified in Section 2.01(c).
"BILL" means a "bill" as defined in the Australian Bills of Exchange Act
1909 (Cth), as amended (the "ACT"), and references to a drawing, acceptance or
endorsement of, or other dealing with, a Bill shall be interpreted in accordance
with the Act.
"BORROWER" and "BORROWERS" have the respective meanings specified in the
recital of parties to this Agreement.
"BORROWING" means a US Borrower Borrowing, a Canadian Borrower Borrowing or
an Australian Borrower Borrowing.
"BUSINESS DAY" means: (a) with respect to (i) any notice required or
permitted to be delivered hereunder to or by the US Borrower or the US
Administrative Agent, and (ii) any US Borrower Advances and US Letters of
Credit, determinations of interest rates and fees applicable thereto and
payments in respect thereof, a US Business Day; (b) with respect to (i) any
notice required or permitted to be delivered hereunder to or by the Canadian
Borrower or the Canadian Administrative Agent, and (ii) any Canadian Borrower
Advances, BA Obligations and Canadian Letters of Credit, determinations of
interest
10
<PAGE>
rates, discount rates and fees applicable thereto and payments in respect
thereof, a Canadian Business Day; and (c) with respect to (i) any notice
required or permitted to be delivered hereunder to or by the Australian Borrower
or the Australian Administrative Agent, and (ii) any Australian Borrower
Advances and Australian Letters of Credit, determinations of interest rates,
discount rates and fees applicable thereto and payments in respect thereof, an
Australian Business Day.
"CANADIAN ADMINISTRATIVE AGENT" has the meaning specified in the recital of
parties to this Agreement.
"CANADIAN BASE RATE" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the average (rounded upward to the nearest whole multiple of 1/16
of 1% per annum, if such average is not such a multiple) of the rates per
annum which the principal office of each of the Canadian Reference Lenders
in Toronto, Ontario announces publicly from time to time as its reference
rate of interest for commercial loans in US Dollars made by it to Canadian
borrowers in Canada; and
(b) 1/2 of 1% per annum above the Federal Funds Rate.
"CANADIAN BASE RATE ADVANCE" means a Canadian Borrower Advance that bears
interest as provided in Section 2.08(b)(iii).
"CANADIAN BORROWER" has the meaning specified in the recital of parties to
this Agreement.
"CANADIAN BORROWER ADVANCE" has the meaning specified in Section 2.01(a).
"CANADIAN BORROWER BORROWING" means a borrowing consisting of simultaneous
Canadian Borrower Advances of the same Type made by the Canadian Lenders.
"CANADIAN BORROWER NOTE" means a promissory note of the Canadian Borrower
payable to the order of any Canadian Lender, in substantially the form of
Exhibit B-2 hereto, evidencing the aggregate indebtedness of the Canadian
Borrower to such Lender resulting from the Canadian Borrower Advances made by or
otherwise owing to such Lender.
"CANADIAN BORROWER SUBLIMIT" means (i) at all times prior to April 17,
1998, US$50,000,000 (or the Equivalent thereof in Canadian Dollars), (ii) from
and including April 17, 1998 to and including April 16, 1999, US$75,000,000 (or
the Equivalent thereof in Canadian Dollars), and (iii) from and after April 17,
1999, an amount equal to the aggregate Revolving Credit Commitments of the
Canadian Lenders in effect from time to time.
"CANADIAN BUSINESS DAY" means a day of the year on which banks are not
required or authorized by law to close in Toronto, Ontario, Canada and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
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"CANADIAN CASH COLLATERAL ACCOUNT" has the meaning specified in Section
5.01(k).
"CANADIAN CASH EQUIVALENTS" means any of the following: (a) readily
marketable direct obligations of or obligations unconditionally guaranteed by
the Government of Canada or the government of any province thereof (other than
Quebec); (b) insured certificates of deposit, deposit notes or term deposit
receipts of any Canadian Lender or any other commercial bank listed on Schedule
I of the Bank Act (Canada); or (c) commercial paper in an aggregate amount of no
more than CN$10,000,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of Canada or any province thereof (other
than corporations organized under the laws of, or whose principal place of
business is located in, Quebec) and rated at least A-1 (or the then equivalent
grade) by the Canada Bond Rating Service or R-1 (middle)/low (or the then
equivalent grade) by the Dominion Bond Rating Service (but with no lower rating
from either rating agency).
"CANADIAN DOLLAR ADVANCES" means Advances denominated in Canadian Dollars.
"CANADIAN DOLLARS" and "CN$" each means lawful money of Canada.
"CANADIAN DOMESTIC LENDING OFFICE" means, with respect to each Canadian
Lender, the office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender or such other office of such Lender as such
Lender may from time to time specify to the Canadian Borrower, the US
Administrative Agent and the Canadian Administrative Agent.
"CANADIAN EURODOLLAR LENDING OFFICE" means, with respect to each Canadian
Lender, the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender or such other office of such Lender as such
Lender may from time to time specify to the Canadian Borrower, the US
Administrative Agent and the Canadian Administrative Agent.
"CANADIAN INTERBANK RATE" means the interest rate, expressed as a
percentage per annum, which is customarily used by the Canadian Administrative
Agent when calculating interest due by it or owing to it arising from or in
connection with correction of errors between it and other Canadian chartered
banks.
"CANADIAN ISSUING BANK" means the Initial Canadian Issuing Bank, so long as
it has a Letter of Credit Commitment hereunder, and each Eligible Assignee to
which all or any portion of the Letter of Credit Commitment of a Canadian
Issuing Bank hereunder has been assigned pursuant to Section 8.07, in each case,
in its capacity as such.
"CANADIAN LENDER" means each Lender listed under the heading "Canadian
Lenders" on Schedule I hereto or identified as a Canadian Lender in the
Assignment and Acceptance pursuant to which such Lender became a Lender, as the
case may be, in each case, in its capacity as such.
"CANADIAN LETTER OF CREDIT" means a letter of credit issued hereunder by a
Canadian Issuing Bank for the account of the Canadian Borrower.
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"CANADIAN PRIME RATE" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the average (rounded upward to the nearest whole multiple of 1/16
of 1% per annum, if such average is not such a multiple) of the rates per
annum which the principal office of each of the Canadian Reference Lenders
in Toronto, Ontario announces publicly from time to time as its prime rate
for determining rates of interest on commercial loans in Canadian Dollars
made by it in Canada; and
(b) 3/4 of 1% per annum above the rate quoted for 30-day Canadian
Dollar bankers acceptances of Citibank Canada that appears on the Reuters
Screen CDOR Page (or any replacement page) as of 10:00 a.m. (Toronto,
Ontario time) on the date of determination.
"CANADIAN PRIME RATE ADVANCE" means a Canadian Borrower Advance that bears
interest as provided in Section 2.08(b)(iv).
"CANADIAN REFERENCE LENDERS" means Citibank Canada, Canadian Imperial Bank
of Commerce and The Bank of Nova Scotia; PROVIDED that, if any of the foregoing
shall cease to be a Canadian Lender, the term "Canadian Reference Lenders" shall
no longer include such Canadian Lender and shall thereafter include such
Canadian Lender as the US Administrative Agent and the Canadian Administrative
Agent shall designate as a replacement Canadian Reference Lender, which
designation shall be made with the consent of such replacement Canadian
Reference Lender and PGI (such consent of PGI not to be unreasonably withheld or
delayed).
"CAPITALIZED LEASES" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"CASH COLLATERAL ACCOUNTS" means the US Cash Collateral Account, the
Canadian Cash Collateral Account and the Australian Cash Collateral Account.
"CASH EQUIVALENTS" means any of the following, to the extent (a) owned by
any Borrower or any Restricted Subsidiary free and clear of all Liens other than
Liens created under the Collateral Documents and (b) having a maturity of not
greater than one year from the date of acquisition thereof (except as otherwise
specified with respect to clause (v) below): (i) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (ii) insured
certificates of deposit of or time deposits or overnight deposits with any
commercial bank that is a US Lender or a member of the Federal Reserve System,
which issues (or the parent of which issues) commercial paper rated as described
in clause (iii), which is organized under the laws of the United States or any
State thereof and which has combined capital and surplus of at least $500
million, (iii) commercial paper in an aggregate amount of no more than
$10,000,000 per issuer outstanding at any time, issued by any corporation
organized under the laws of any State of the United States and rated at least
"Prime-2" (or the then equivalent grade) by Moody's or "A-2" (or the then
equivalent grade) by S&P (but with no lower rating from either Moody's or S&P),
(iv) readily marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof and rated
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at least "Prime-2" (or the then equivalent grade) by Moody's or "A-2" (or the
then equivalent grade) by S&P (but with no lower rating from either Moody's or
S&P), (v) repurchase obligations of any US Lender or of any commercial bank
satisfying the requirements of clause (ii) of this definition, having a term of
not more than 30 days, with respect to securities issued or fully guaranteed or
insured by the Government of the United States, (vi) Australian Cash
Equivalents, and (vii) Canadian Cash Equivalents.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.
"CITIBANK" has the meaning specified in the recital of parties to this
Agreement.
"CITIBANK AUSTRALIA" has the meaning specified in the recital of parties to
this Agreement.
"CITIBANK CANADA" has the meaning specified in the recital of parties to
this Agreement.
"CLOSING DATE" means the date on which each of the conditions set forth in
Section 3.01 is satisfied or waived.
"COLLATERAL" means all "Collateral" referred to in the Collateral Documents
and all other property that is or is intended to be subject to any Lien in favor
of any Administrative Agent for the benefit of the Secured Parties.
"COLLATERAL AGENT" means Citibank, Citibank Canada or Citibank Australia,
or any successor or assignee of Citibank, Citibank Canada or Citibank Australia,
acting in such capacity under the Collateral Documents or any Collateral
Document.
"COLLATERAL DOCUMENTS" means the Pledge Agreement, any agreement relating
to cash collateral entered into by any Borrower pursuant to Section 5.01(k) and
each other agreement (including, without limitation, each Supplemental Pledge
Agreement) that creates or which the parties intend to create a Lien in favor of
any Collateral Agent for the benefit of the Secured Parties.
"COLLATERAL GRANTORS" means each of the Borrowers and each Restricted
Subsidiary.
"COLLATERAL RELEASE DATE" means the first date to occur on which (i) the US
Administrative Agent receives evidence reasonably satisfactory to it that the
Total Funded Debt to EBITDA Ratio has been, for two consecutive quarters
commencing on or after January 1, 1997, less than 3.50:1.0, and (ii) no Default
has occurred and is continuing.
"COMMERCIAL LETTER OF CREDIT" means any Letter of Credit that is issued
under the Letter of Credit Facility for the benefit of a supplier of inventory
(other than gold) or equipment to any Borrower or any Restricted Subsidiary to
effect payment for such inventory or equipment, the conditions to drawing under
which include the presentation to the Issuing Bank that issued such Letter of
Credit of negotiable
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bills of lading, invoices and related documents sufficient, in the judgment of
such Issuing Bank, to create a valid and perfected lien on or security interest
in such inventory, bills of lading, invoices and related documents in favor of
such Issuing Bank.
"COMMITMENT" means a Revolving Credit Commitment or a Letter of Credit
Commitment.
"COMMITMENT DESIGNATION NOTICE" has the meaning specified in Section
2.01(e).
"COMMITMENT REDUCTION DATE" has the meaning specified in Section
2.06(b)(i).
"CONSOLIDATED" refers to the consolidation of accounts in accordance with
GAAP; PROVIDED that the assets, liabilities, earnings and expenses of or
attributable to, or attributable to Investments in, Unrestricted Subsidiaries
will not be included for purposes of calculating Consolidated Funded Debt, Total
Adjusted Interest Expense, EBITDA and Tangible Net Worth of PGI and its
Subsidiaries.
"CONVERSION", "CONVERT" and "CONVERTED" each refer to (a) a conversion of
Advances of one Type into Advances of another Type pursuant to Section 2.10 or
2.12 or (b) a conversion of BA Obligations into Canadian Prime Rate Advances
pursuant to Section 2.11(b), 2.11(c) or 2.12.
"CORE PROPERTIES" means (i) all ownership interests and rights (including
any mineral deed, interest, lease, right, royalty, servitude, mining tenement or
similar right) in the properties known as Zortman/Landusky, Montana Tunnels,
Mount Todd, Florida Canyon and Pullalli, (ii) the stock of the entities which
own such properties, (iii) all equipment and other assets used in connection
with such properties, and (iv) ore production from such properties.
"DEBT" of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person for the
deferred purchase price of property or services (other than trade payables not
overdue by more than 60 days incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all obligations of
such Person as lessee under Capitalized Leases, (f) all obligations, contingent
or otherwise, of such Person under acceptance, letter of credit or similar
facilities, (g) all obligations of such Person in respect of Hedge Agreements,
(h) all obligations of such Person for production payments from property
operated by or on behalf of such Person and other similar arrangements with
respect to natural resources, (i) all obligations of such Person in respect of
Prepaid Forward Sales Agreements, (j) all Debt of other Persons referred to in
clauses (a) through (i) above or clause (k) below as to which such Person has
liability (contingent or otherwise) by virtue of being a general partner or a
Joint Venture Partner of such other Person or which is guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such Debt
or to advance or supply funds for the payment or purchase of such Debt, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Debt or to assure the holder of such Debt against loss, (iii) to supply
funds to or in any other manner invest in the debtor
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(including any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) for the purpose of
enabling the debtor to make payment of such Debt or to assure the holder of such
Debt against loss or (iv) otherwise to assure a creditor against loss, and
(k) all Debt referred to in clauses (a) through (j) above of another Person
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt.
"DEFAULT" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"DEFAULTED ACCOMMODATION" means, with respect to any Lender Party at any
time, the portion of any Accommodation required to be made by such Lender Party
to any Borrower pursuant to Section 2.01, 2.02 or 2.03 at or prior to such time
that has not been made by such Lender Party or by the Appropriate Administrative
Agent for the account of such Lender Party pursuant to Section 2.02(d) or
Section 2.03(e), as the case may be, as of such time; PROVIDED, HOWEVER, that
any Accommodation which is not made by a Lender Party as a result of a
determination by any Administrative Agent or the Required Lenders that the
conditions in Section 3.02 are not satisfied shall not, under any circumstances,
constitute a "Defaulted Accommodation." If a portion of a Defaulted
Accommodation shall be deemed made pursuant to Section 2.17(a), the remaining
portion of such Defaulted Accommodation shall be considered a Defaulted
Accommodation originally required to be made pursuant to Section 2.01 or 2.03,
as the case may be, on the same date as the Defaulted Accommodation so deemed
made in part.
"DEFAULTED AMOUNT" means, with respect to any Lender Party at any time, any
amount required to be paid by such Lender Party to any Administrative Agent or
any other Lender Party hereunder or under any other Loan Document at or prior to
such time which has not been so paid as of such time, including, without
limitation, any amount required to be paid by such Lender Party to (a) the Non-
Pro Rata Lender pursuant to Section 2.01(b) to purchase a portion of a Non-Pro
Rata Advance made by the Non-Pro Rata Lender, (b) any Issuing Bank pursuant to
Section 2.04(c) to purchase a portion of a Letter of Credit Advance made by such
Issuing Bank, (c) any Administrative Agent pursuant to Section 2.02(d) or
2.03(e) to reimburse any Administrative Agent for the amount of any
Accommodation made by such Administrative Agent for the account of such Lender
Party, (d) any other Lender Party pursuant to Section 2.15 to purchase any
participation in Advances owing to such other Lender Party and (e) any
Administrative Agent or any Issuing Bank or the Non-Pro Rata Lender pursuant to
Section 7.05 to reimburse such Administrative Agent or such Issuing Bank or the
Non-Pro Rata Lender for such Lender Party's ratable share of any amount required
to be paid by the Lender Parties to such Administrative Agent or such Issuing
Bank or the Non-Pro Rata Lender as provided therein. In the event that a
portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.17(b),
the remaining portion of such Defaulted Amount shall be considered a Defaulted
Amount originally required to be paid hereunder or under any other Loan Document
on the same date as the Defaulted Amount so deemed paid in part.
"DEFAULTING LENDER" means, at any time, any Lender Party that, at such
time, (a) owes a Defaulted Accommodation or a Defaulted Amount or (b) shall take
any action or be the subject of any action or proceeding of a type described in
Section 6.01(f).
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"DRAFT" means a blank bill of exchange, within the meaning of the Bills of
Exchange Act (Canada), drawn by the Canadian Borrower on any Canadian Lender, in
substantially the form of Exhibit C-1, with respect to any such bill of exchange
drawn on Citibank Canada, or Exhibit C-2, with respect to any such bill of
exchange drawn on any other Canadian Lender, and which, except as otherwise
provided herein, has not been completed or accepted by such Lender.
"DRAWING" means (a) the simultaneous acceptance of Drafts and purchase of
Bankers' Acceptances by the Canadian Lenders, and (b) for any Canadian Lender
which is not a bank under the Bank Act (Canada), the purchase of a BA Equivalent
Note, in each case in accordance with Section 2.03(a).
"DRAWING FEE" means, with respect to each BA Obligation, an amount equal to
(a) the percentage set forth on the Performance Pricing Schedule beneath the
heading "Drawing Fee" and opposite the Performance Pricing Level in effect on
the date of the Drawing or renewal, as the case may be, of such BA Obligation
MULTIPLIED BY (b) the Face Amount of such BA Obligation, calculated on the basis
of the term to maturity of such BA Obligation and a year of 365 (or, in the case
of a leap year, 366) days.
"DRAWING PURCHASE PRICE" means, with respect to each BA Obligation to be
purchased and/or accepted by any Canadian Lender at any time, the amount
(adjusted to the nearest whole cent or, if there is no nearest whole cent, the
next higher whole cent) obtained by dividing (i) the aggregate Face Amount of
such BA Obligation, by (ii) the sum of (A) one and (B) the product of (1) a
fraction the numerator of which is the BA Rate in effect at such time and the
denominator of which is 100 MULTIPLIED BY (2) a fraction the numerator of which
is the number of days in the term to maturity of such BA Obligation and the
denominator of which is 365 (or, in the case of a leap year, 366) days.
"EBITDA" means, with respect to any Person for any period, net income (or
net loss) of such Person for such period PLUS, to the extent deducted in
computing such net income (or net loss), the sum of (a) interest expense,
(b) income tax expense, (c) depreciation expense and (d) amortization expense,
in each case determined in accordance with GAAP for such period.
"ELIGIBLE ASSIGNEE" means (a) with respect to the Revolving Credit
Facility, (i) a Lender; (ii) an Affiliate of a Lender; (iii) a commercial bank
organized under the laws of the United States, Canada or Australia, as
appropriate, or any State, Province or Territory thereof, and having total
assets in excess of $1,000,000,000; (iv) a commercial bank organized under the
laws of any other country that is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow or of the Cayman Islands, or a political
subdivision of any such country, and having total assets in excess of
$1,000,000,000, so long as such bank is acting through a branch or agency
located in the United States, Canada or Australia, as appropriate; (v) the
central bank of any country that is a member of the OECD; (vi) a finance
company, insurance company or other financial institution or fund (whether a
corporation, partnership, trust or other entity) that is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business and having total assets in excess of $1,000,000,000; and (vii) any
other Person approved by the US Administrative Agent, and (b) with respect to
the Letter of Credit Facility, a Person that is an Eligible Assignee under
subclause (iii) or (iv) of clause (a) of this definition and is approved by the
US
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Administrative Agent; PROVIDED, HOWEVER, that neither any Loan Party nor any
Affiliate of a Loan Party shall qualify as an Eligible Assignee under this
definition.
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or any
Hazardous Material or arising from alleged injury or threat to health or safety
(but only if such alleged injury or threat to health or safety is related to the
environment) or the environment, including, without limitation, (a) by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages relating to the environment and
(b) by any governmental or regulatory authority or third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
relating to the environment.
"ENVIRONMENTAL ENCUMBRANCES" means a restraint under Environmental Laws on
dealing with any property or a charge or Lien in force under Environmental Laws
affecting any property, in each case as, or in effect as, security for the
payment of a monetary obligation or the observance of any obligation.
"ENVIRONMENTAL LAW" means (a) any federal, state, provincial, territorial,
local or foreign statute, law, ordinance, rule, regulation, code, order, writ,
judgment, injunction, decree or judicial or binding agency interpretation,
policy or guidance relating to the use of land, planning, environmental
assessment, noise, soil or ground water contamination, chemicals, pesticides,
nuisance, the ozone layer, waste, pollution or protection of the environment,
health or safety (but only to the extent they are affected by the environment),
or natural resources, including, without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials, and (b) any cause of action in nuisance, negligence,
trespass or otherwise or which gives or may give rise to equitable relief or
which results or may result in an award of damages or compensation where such
cause of action concerns directly or indirectly the environment, or the health
or safety of Persons (but only to the extent they are affected by the
environment).
"ENVIRONMENTAL LIABILITY" means any of the following liabilities which
arise, directly or indirectly, from and in relation to any Core Property or
other asset or operation of any Loan Party or Restricted Subsidiary: (a) all
costs and expenses associated with complying with the lawful requirements of, or
any order, notice, directive, decree or other binding obligation issued or
imposed by, any government or governmental agency or other authority under an
Environmental Law or in connection with an Environmental Permit; (b) any
compensation or other moneys that a government or governmental agency or
authority requires to be paid to any person under an Environmental Law; (c) any
fines or penalties paid or payable under Environmental Laws or Environmental
Permits; (d) all costs and expenses incurred in complying with or avoiding a
contravention of Environmental Laws or Environmental Permits including, without
limitation, the costs and expenses of establishing and implementing an
environmental management plan; (e) all losses, costs and expenses (including,
without limitation, all reasonable legal and consultancy costs) which are
incurred as a result of any contravention or alleged contravention of any
Environmental Law or Environmental Permit; and (f) all other legal liability,
claims, demands, suits, proceedings, causes of action, losses (including
consequential losses), damages, costs and expenses, legal or consulting fees and
interest, howsoever arising, in connection with an Environmental Law or an
Environmental Permit.
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"ENVIRONMENTAL PERMIT" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"EQUIVALENT" means (a) in US Dollars of Canadian Dollars, on any date of
determination, the equivalent thereof determined by using the quoted spot rate
at which Citibank's principal office in Toronto, Ontario offers to exchange US
Dollars for Canadian Dollars in Toronto, Ontario at 11:00 a.m. (New York City
time) on such date and (b) in Canadian Dollars of US Dollars on any date of
determination, the equivalent thereof determined by using the quoted spot rate
at which Citibank's principal office in New York City, New York offers to
exchange Canadian Dollars for US Dollars in New York City, New York at
11:00 a.m. (New York City time) on such date, (c) in US Dollars of Australian
Dollars on any date of determination, the equivalent thereof determined by using
the quoted spot rate at which Citibank's principal office in Sydney, Australia
offers to exchange US Dollars for Australian Dollars in Sydney, Australia at
11:00 a.m. (Sydney time) on such date, (d) in Australian Dollars of US Dollars,
on any date of determination, the equivalent thereof determined by using the
quoted spot rate at which Citibank's principal office in New York City, New York
offers to exchange Australian Dollars for US Dollars in New York City, New York
at 11:00 a.m. (New York City time) on such date, (e) in any other currency of US
Dollars, Canadian Dollars or Australian Dollars, the equivalent thereof
determined by using the quoted spot rate at which Citibank's principal office in
New York City, New York offers to exchange such other currency for US Dollars,
Canadian Dollars or Australian Dollars, as the case may be, in New York City,
New York at 11:00 a.m. (New York City time) on such date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of ERISA
is a member of the controlled group of any Loan Party, or under common control
with any Loan Party, and is treated as a single employer within the meaning of
subsection (b) or (c), or for purposes of Sections 302 or 303 of ERISA or
Section 412 of the Internal Revenue Code, subsection (m) or (o), of Section 414
of the Internal Revenue Code.
"ERISA EVENT" means (a)(i) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
is reasonably expected to occur with respect to such Plan within the following
30 days; (b) the application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a notice of intent
to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of any Loan Party or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA;
(e) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a
lien under Section 302(f) of ERISA shall have been met with respect to any Plan;
(g) the adoption of an amendment to a Plan requiring the provision of security
to such Plan pursuant to Section 307 of
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ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, such Plan.
"EURODOLLAR RATE" means, for any Interest Period for all Eurodollar Rate
Advances comprising part of the same Borrowing, an interest rate per annum equal
to the rate per annum listed on Telerate Page 3750 for deposits in US Dollars,
in amounts approximately equal to US$1,000,000 and with a maturity equal to such
Interest Period, at 11:00 a.m. (New York time) two Business Days before the
first day of such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest as provided
in Section 2.08(b)(ii).
"EVENTS OF DEFAULT" has the meaning specified in Section 6.01.
"EXCHANGE PREFERRED DIVIDENDS" means dividends payable in respect of
Exchange Preferred Stock.
"EXCHANGE PREFERRED STOCK" means preferred stock of PGI issued in exchange
for, and upon the conversion of, Permitted Preferred Stock on the terms
described in the registration statement relating to such Permitted Preferred
Stock.
"EXISTING CREDIT AGREEMENT" means the Credit Agreement dated as of August
23, 1991 among PGC, the Guarantors (as defined therein), the banks listed
therein and U.S. Bank of Washington, National Association, as agent, as amended.
"EXISTING DEBT" has the meaning specified in Section 4.01(s) hereof.
"EXISTING HEDGE AGREEMENTS" means the Hedge Agreements identified under the
heading "Existing Hedge Agreements" on Schedule 1.01(a), as in effect on the
date hereof (which Hedge Agreements are required to be, and shall be, secured by
the Collateral); provided that each such Hedge Agreement shall cease to be an
"Existing Hedge Agreement" for purposes hereof and for purposes of the Guaranty
and the Collateral Documents on the earliest scheduled expiration date of such
Hedge Agreement or any confirmation thereunder without giving effect to any
optional renewals, rollovers or extensions thereof.
"EXISTING HEDGE BANKS" means the Persons listed under the heading "Existing
Hedge Banks" on Schedule 1.01(a).
"EXISTING ISSUING BANK" means each Lender that issued an Existing Letter of
Credit.
"EXISTING LETTERS OF CREDIT" means the letters of credit identified on
Schedule 1.01(b) hereto.
"EXISTING SUBORDINATED DEBT" means the 6 1/4% Convertible Subordinated
Notes of PGI issued under the Indenture dated as of April 15, 1995 with PGI as
Issuer and The Bank of New York, as Trustee, as the same may be amended,
supplemented or otherwise modified from time to time.
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"FACE AMOUNT" means, with respect to any BA Obligation, the amount payable
to the holder of such BA Obligation on its then existing Maturity Date.
"FACILITY" means the Revolving Credit Facility or the Letter of Credit
Facility.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day for such
transactions received by the US Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FEE LETTER" means the fee letter dated January 17, 1996 among Citibank,
the Arranger and the Borrowers.
"FINANCIAL LETTER OF CREDIT" means (a) any Australian Bank Guarantee, (b)
any Letter of Credit which is a standby letter of credit and (c) any other
Letter of Credit issued under the Letter of Credit Facility, other than a
Commercial Letter of Credit.
"FINANCE CORP." means a Restricted Subsidiary to be formed after the date
hereof solely for purposes of issuing Permitted Preferred Stock.
"FISCAL YEAR" means a fiscal year of PGI and its Subsidiaries ending on
December 31 in any calendar year.
"FIXED RATE ADVANCE" means a Bank Bill Rate Advance or Eurodollar Rate
Advance.
"FLUCTUATING RATE ADVANCE" means a US Base Rate Advance, a Canadian Base
Rate Advance, a Canadian Prime Rate Advance or an Australian Prime Rate Advance.
"FOREIGN SUBSIDIARY" means any "controlled foreign corporation" within the
meaning of Section 957(a) of the Internal Revenue Code as to which any Borrower
or any of its Subsidiaries is a "United States shareholder" as defined in
Section 951(b) of the Internal Revenue Code.
"FUNDED DEBT" means, as to any Person, as of any date of determination,
without duplication, (i) all Debt of such Person in respect of Accommodations
hereunder, (ii) all Debt of such Person in respect of Prepaid Forward Sales
Agreements and all other Debt of such Person that, in each case under this
clause (ii), by its terms matures more than one year after the date of its
creation, (iii) any such Debt under clause (ii) maturing within one year from
such date that is renewable or extendible at the option of the obligor to a date
more than one year from such date, and (iv) the Preferred Dividend Amount as of
such date, including for purposes of clauses (ii) and (iii), without limitation,
guarantees issued in connection with project financings for Unrestricted
Subsidiaries but excluding, in any event for purposes of clauses (ii) and (iii),
(a) Capitalized Leases for mining equipment, (b) Debt of the types described in
clause (f) of the definition of Debt, and (c) Debt in respect of Hedge
Agreements that are not Prepaid Forward Sales Agreements.
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"GAAP" has the meaning specified in Section 1.03.
"GOLD PRICE HEDGE AGREEMENTS" means agreements entered into to protect
against fluctuations in the market spot price per ounce of gold.
"GOLD MINING BUSINESS" means any business where mining and sales of gold
are the major components of its revenues or expected revenues.
"GUARANTOR" means each Borrower (with respect to the Obligations of each
other Borrower under the Loan Documents) and each Restricted Subsidiary of PGI
which executes or otherwise becomes a party to a Guaranty.
"GUARANTY" has the meaning specified in Section 3.01(f)(viii).
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products, by-
products or hazardous breakdown products, radioactive materials, asbestos-
containing materials, polychlorinated biphenyls and radon gas, (b) any other
chemicals, materials or substances designated, classified or regulated as
hazardous or toxic or as a pollutant or contaminant under any Environmental Law,
and (c) any other substance (solid, liquid or gaseous) having toxic, corrosive,
flammable, explosive, infectious or otherwise dangerous or harmful
characteristics.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts, forward rate transactions, commodity swap
agreements, commodity futures, forwards, long-term forwards and option contracts
and other similar agreements (including, without limitation, Gold Price Hedge
Agreements).
"HEDGE BANK" means any Lender Party in its capacity as a party to a Bank
Hedge Agreement.
"INDEMNIFIED PARTY" has the meaning specified in Section 8.04(b).
"INFORMATION MEMORANDUM" means the information memorandum dated November
1995 used by the Arranger in connection with the syndication of the Commitments.
"INITIAL AUSTRALIAN ISSUING BANK" means The First National Bank of Chicago,
Australian Branch, in its capacity as such.
"INITIAL CANADIAN ISSUING BANK" means NBD Bank, Canada, in its capacity as
such.
"INITIAL EXTENSION OF CREDIT" means the earlier to occur of the initial
Borrowing, the initial Drawing and the initial issuance of a Letter of Credit
hereunder.
"INITIAL ISSUING BANKS" means the Initial US Issuing Bank, the Initial
Canadian Issuing Bank and the Initial Australian Issuing Bank.
"INITIAL LENDERS" has the meaning specified in the recital of parties to
this Agreement.
"INITIAL US ISSUING BANK" means The First National Bank of Chicago, in its
capacity as such.
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"INSOLVENCY EVENT" means the happening of any of the following events with
respect to any Loan Party: (a) except to reconstruct or amalgamate while
solvent on terms permitted hereunder or otherwise approved by the Required
Lenders, a body corporate enters into, or resolves to enter into, a scheme of
arrangement, deed of company arrangement or composition with all or any class of
its creditors, or it proposes a moratorium or other administration involving any
of them; (b) a body corporate is presumed by a court to be insolvent under
section 459C(2)(a) or (b) of the Australian Corporations Law (except that, so
long as such presumption is being diligently contested in good faith, such
presumption shall not constitute an "Insolvency Event" unless not rebutted for a
period of 60 days); or (c) an administrator is appointed to a body corporate.
"INTEREST PERIOD" means, for each Fixed Rate Advance comprising part of the
same Borrowing, the period commencing on the date of such Fixed Rate Advance or
the date of the Conversion of any other Type of Advance into such Fixed Rate
Advance, and ending on the last day of the period selected by the Borrower
requesting such Borrowing or Conversion pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
the Borrower requesting such Borrowing or Conversion pursuant to the provisions
below. The duration of each such Interest Period shall be one, two, three or
six months (or such greater number of months as shall be available to each
Appropriate Lender), in the case of any Interest Period relating to Eurodollar
Rate Advances, and 30, 60, 90 or, if available to each Australian Lender and the
Non-Pro Rata Lender, 180 days in the case of any Interest Period relating to
Bank Bill Rate Advances, in each case as the Borrower requesting such Borrowing
or Conversion may, upon notice received by the US Administrative Agent not later
than 12:00 noon (New York City time) on a US Business Day for the applicable
Type of Fixed Rate Advance (i) at least three Canadian Business Days prior to
the first day of such Interest Period in the case of Canadian Borrower Advances,
(ii) at least three US Business Days prior to the first day of such Interest
Period in the case of US Borrower Advances, and (iii) at least four Australian
Business Days prior to the first day of such Interest Period in the case of
Australian Borrower Advances, select; PROVIDED, HOWEVER, that:
(a) No Borrower may select any Interest Period with respect to any
Fixed Rate Advance that ends after any Commitment Reduction Date unless,
after giving effect to such selection, the aggregate principal amount of
Fluctuating Rate Advances and of Fixed Rate Advances having Interest
Periods that end on or prior to such Commitment Reduction Date shall be at
least equal to the aggregate principal amount of Advances due and payable
on or prior to such date;
(b) Interest Periods may only be selected with respect to Fixed Rate
Advances of the same Type in an aggregate principal amount of US$5,000,000
(or A$5,000,000, if denominated in Australian Dollars, or CN$5,000,000, if
denominated in Canadian Dollars) and integral multiples of US$1,000,000 (or
A$1,000,000, if denominated in Australian Dollars, or CN$1,000,000, if
denominated in Canadian Dollars) in excess thereof;
(c) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
PROVIDED, HOWEVER, that, with respect to Interest Periods applicable to
Eurodollar Rate Advances only, if such extension would cause the last day
of such Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding Business
Day; and
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(d) with respect to Interest Periods applicable to Eurodollar Rate
Advances only, whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial calendar
month by the number of months equal to the number of months in such
Interest Period, such Interest Period shall end on the last Business Day of
such succeeding calendar month.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"INVESTMENT" in any Person means any loan or advance to such Person, any
purchase or other acquisition of any capital stock or other ownership or profit
interest, warrants, rights, options, obligations or other securities of such
Person, any capital contribution to such Person or any other investment in such
Person, including, without limitation, any arrangement pursuant to which the
investor incurs Debt of the types referred to in clause (j) or (k) of the
definition of "DEBT" in respect of such Person, PROVIDED that in no event shall
the term Investment include amounts recorded as an expense item in accordance
with GAAP (but such term shall include such amounts as should be reflected on
the balance sheets as additions to assets and liabilities in accordance with
GAAP).
"ISSUING BANK" means each US Issuing Bank, Canadian Issuing Bank and
Australian Issuing Bank.
"ITAA" means the Income Tax Assessment Act of 1936 of Australia, as amended
from time to time.
"JOINT VENTURE" means (a) any Partnership in which any Borrower or any
Restricted Subsidiary is a general partner, and (b) any Partnership, corporation
or other Person in which any Borrower and/or one or more Restricted Subsidiaries
directly or indirectly (i) owns or controls 20% or more of any class of equity
interests thereof, or (ii) has the ability (through contractual arrangement or
otherwise) to direct or cause the direction of the management and policies
thereof; PROVIDED, HOWEVER, that the term Joint Venture shall not include any
Subsidiary of any Borrower.
"JOINT VENTURE PARTNER" means, with respect to any Joint Venture, (a) in
the case of any Joint Venture which is a Partnership, any general partner
thereof, and (b) in the case of any Joint Venture which is a Partnership,
corporation or other entity, any Borrower or any Restricted Subsidiary to the
extent such Person has any direct equity interest therein.
"L/C RELATED DOCUMENTS" has the meaning specified in Section 2.05(b)(ii).
"LENDER PARTY" means any Administrative Agent, any Lender or any Issuing
Bank.
"LENDERS" means the Initial Lenders, the Risk Participants, the Non-Pro
Rata Lender and each Person that shall become a Lender hereunder pursuant to
Section 8.07 and includes each US Lender, Canadian Lender and Australian Lender.
"LETTER OF CREDIT" means a US Letter of Credit, a Canadian Letter of Credit
or an Australian Letter of Credit.
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"LETTER OF CREDIT ADVANCE" means an advance made by an Issuing Bank or any
Lender pursuant to Section 2.04(c).
"LETTER OF CREDIT AGREEMENT" has the meaning specified in Section 2.04(a).
"LETTER OF CREDIT COMMITMENT" means, with respect to (a) any Issuing Bank
(other than an Existing Issuing Bank in its capacity as such) at any time, the
amount set forth opposite such Issuing Bank's name on Schedule I hereto under
the caption "Letter of Credit Commitment" or, if such Issuing Bank has entered
into one or more Assignments and Acceptances, the amount set forth for such
Issuing Bank in the Register maintained by the US Administrative Agent pursuant
to Section 8.07(d) as such Issuing Bank's "Letter of Credit Commitment" as such
amount may be reduced at or prior to such time pursuant to Section 2.06, and (b)
each Existing Issuing Bank in its capacity as such, an amount equal to the
aggregate Available Amount (as of the Closing Date) of the Existing Letters of
Credit issued by such Existing Issuing Bank, as such Available Amount may be
reduced by the terms of such Letters of Credit (it being understood that no
Existing Issuing Bank, in its capacity as such, shall have any obligation to
issue any other Letters of Credit hereunder and that upon termination or
expiration of, or the drawing of the full Available Amount under, all Existing
Letters of Credit issued by any Existing Issuing Bank, such Existing Issuing
Bank shall have no further Letter of Credit Commitment hereunder).
"LETTER OF CREDIT FACILITY" means, at any time, an amount equal to
US$50,000,000 (or the Equivalent thereof), as such amount may be reduced at or
prior to such time pursuant to Section 2.06.
"LETTER OF CREDIT LENDING OFFICE" means, with respect to each Issuing Bank,
the office of such Issuing Bank specified as its "Letter of Credit Lending
Office" opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became an Issuing Bank or such other office of
such Issuing Bank as such Issuing Bank may from time to time specify to the
Appropriate Borrower, the US Administrative Agent and the Appropriate
Administrative Agent.
"LIEN" means any lien, security interest or other charge or encumbrance of
any kind, any notice under sections 218 or 255 of the ITAA (or any successor
statute) or under section 74 of the Sales Tax Assessment Act 1992 of Australia
(or any successor statute) or under any similar provision of law of a State or
Territory of Australia, or any other type of arrangement with any creditor to
have such creditor's claims satisfied from any assets of a Person prior to the
general creditors of the owner of such assets, including, without limitation,
the lien or retained security title of a conditional vendor and any easement,
right of way or other encumbrance on title to real property.
"LOAN DOCUMENTS" means (a) for purposes of this Agreement and the Notes and
any amendment or modification hereof or thereof and for all other purposes other
than for purposes of the Guaranty and the Collateral Documents, (i) this
Agreement, (ii) the Notes, (iii) the Guaranty, (iv) the Collateral Documents,
(v) each Letter of Credit Agreement, and (vi) the Acknowledgment Deed, and (b)
for purposes of the Guaranty and the Collateral Documents, (i) this Agreement,
(ii) the Notes, (iii) the Guaranty, (iv) the Collateral Documents, (v) each
Letter of Credit Agreement, (vi) each Bank Hedge Agreement (PROVIDED THAT, so
long as no Default under Section 6.01(f) exists at such time, each Bank Hedge
Agreement shall cease to be a "Loan Document" upon the later to occur of (A) the
payment in full in cash of all Obligations hereunder, and (B) the later of (1)
the Termination Date, and (2) the expiration or termination of all Letters of
Credit and BA Obligations), and (vii) the Acknowledgment Deed, in each case as
amended or otherwise modified from time to time.
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<PAGE>
"LOAN PARTIES" means, collectively, the Borrowers and the Restricted
Subsidiaries.
"LONDON GOLD FIX" means, on any day, the sale price per troy ounce of gold
(quoted in US Dollars) as determined by the London Bullion Market at its
afternoon fixing on such day.
"MARGIN STOCK" has the meaning specified in Regulation U.
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
business, condition (financial or otherwise), operations, performance or
properties of PGI and its Subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance or
properties of PGI and its Subsidiaries, taken as a whole, (b) the material
rights and remedies of any Administrative Agent or any other Lender Party under
any Loan Document or (c) the ability of the Loan Parties taken as a whole to
perform their Obligations under the Loan Documents.
"MATURITY DATE" means, for each BA Obligation comprising part of the same
Drawing, the date on which the Face Amount for such BA Obligation becomes due
and payable in accordance with the provisions set forth below, which shall be a
Business Day occurring 30, 60, 90 or, if available to all Canadian Lenders
purchasing Bankers' Acceptances in connection with the applicable Drawing, 180
days after the date on which such BA Obligation is purchased and/or accepted as
part of any Drawing, as the Canadian Borrower may select upon notice received by
the US Administrative Agent not later than 10:00 a.m. (New York City time) on a
US Business Day at least three Canadian Business Days prior to the date on which
such BA Obligation is to be accepted and purchased (whether as a new Drawing, by
renewal or by Conversion); PROVIDED, HOWEVER, that:
(a) such Borrower may not select any Maturity Date for any BA
Obligation that occurs after the then scheduled Termination Date;
(b) such Borrower may not select any Maturity Date with respect to
any BA Obligation that ends after any Commitment Reduction Date unless,
after giving effect to such selection, the aggregate principal amount of
Fluctuating Rate Advances and of Fixed Rate Advances having Interest
Periods or Maturity Dates, as the case may be, that end on or prior to such
Commitment Reduction Date shall be at least equal to the aggregate
principal amount of Advances due and payable on or prior to such date;
(c) the Maturity Date for all BA Obligations comprising part of the
same Drawing shall occur on the same date; and
(d) whenever the Maturity Date for any BA Obligation would otherwise
occur on a day other than a Business Day, such Maturity Date shall be
extended to occur on the next succeeding Business Day.
"MAXIMUM REVOLVING CREDIT COMMITMENT" means, with respect to any Lender at
any time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Maximum Revolving Credit Commitment" or, if such Lender has
entered into one or more Assignments and
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Acceptances, set forth for such Lender in the Register maintained by the US
Administrative Agent pursuant to Section 8.07(d) as such Lender's "Maximum
Revolving Credit Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.06; PROVIDED, HOWEVER, that, except as otherwise
expressly set forth herein, the Non-Pro Rata Lender, in its capacity as such,
shall have no Maximum Revolving Credit Commitment.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, that is subject to Title IV of ERISA and to which
any Loan Party or any ERISA Affiliate is making or accruing an obligation to
make contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that is subject to Title IV of ERISA and that
(a) is maintained for employees of any Loan Party or any ERISA Affiliate and at
least one Person other than the Loan Parties and the ERISA Affiliates or (b) was
so maintained and in respect of which any Loan Party or any ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in the event such plan
has been or were to be terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer or
other disposition of any asset or the sale or issuance of any Debt by any
Person, the aggregate amount of cash received from time to time (whether as
initial consideration or through payment or disposition of deferred
consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (a) reasonable
and customary brokerage commissions, underwriting fees and discounts, legal
fees, finder's fees and other similar fees and commissions and (b) the amount of
taxes paid or payable by PGI or any other Loan Party within 24 months in
connection with or as a result of such transaction (including taxes estimated in
good faith by PGI to be payable by PGI or any other Loan Party within 24 months
in connection with or as a direct result thereof), and (c) the amount of any
Debt owed to a Person that is not a Loan Party and secured by a Lien on such
asset that, by the terms of such transaction, is required to be repaid upon such
disposition, in each case to the extent, but only to the extent, that (i) the
amounts so deducted are, at the time of receipt of such cash, actually paid or
payable to a Person that is not a Loan Party and are properly attributable to
such transaction or to the asset that is the subject thereof, and (ii) any
amounts so deducted in respect of payments to any Loan Party or any Affiliate of
any Loan Party are paid or payable on terms, and in amounts, that would be
permitted under Section 5.01(j). For purposes of determining the amount of Net
Cash Proceeds received in any currency other than US Dollars, such amount shall
be converted to the Equivalent in US Dollars.
"NON-PRO RATA ADVANCE" means an Australian Borrower Advance or a Letter of
Credit Advance made by the Non-Pro Rata Lender in its capacity as such.
"NON-PRO RATA LENDER" means ABN AMRO Australia Limited in its capacity as
such or any Eligible Assignee to which such Person's rights and obligations as
the Non-Pro Rata Lender hereunder shall have been assigned pursuant to Section
8.07.
"NOTE" means a US Borrower Note, a Canadian Borrower Note or an Australian
Borrower Note.
"NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).
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"NOTICE OF DRAWING" has the meaning specified in Section 2.03(a).
"NOTICE OF ISSUANCE" has the meaning specified in Section 2.04(a).
"NOTICE OF RENEWAL" has the meaning specified in Section 2.01(d).
"NOTICE OF TERMINATION" has the meaning specified in Section 2.01(d).
"NPL" means the National Priorities List under CERCLA.
"OBLIGATION" means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any creditor
to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 6.01(f).
Without limiting the generality of the foregoing, the Obligations of the Loan
Parties under the Loan Documents include (a) the obligation to pay principal,
interest, Letter of Credit commissions, the Face Amount of any BA Obligation,
charges, expenses, fees, attorneys' fees and disbursements, indemnities and
other amounts payable by any Loan Party under any Loan Document and (b) the
obligation of any Loan Party to reimburse any amount in respect of any of the
foregoing that any Lender Party, in its sole discretion, may elect, in
accordance with the terms of the Loan Documents, to pay or advance on behalf of
such Loan Party.
"OECD" means the Organization for Economic Cooperation and Development or
any successor.
"OPEN YEAR" means, with respect to any Person, any year for which United
States, Australian or Canadian federal income tax returns have been filed by or
on behalf of such Person and for which the expiration of the applicable statute
of limitations for assessment, reassessment or collection has not occurred
(whether by reason of extension or otherwise).
"OTHER TAXES" has the meaning specified in Section 2.14(b).
"PARTNERSHIP" means a general partnership or a limited partnership.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor).
"PERFORMANCE PRICING LEVEL" means, at any time of determination, whichever
of Performance Pricing Level I, Performance Pricing Level II, Performance
Pricing Level III, Performance Pricing Level IV, Performance Pricing Level V or
Performance Pricing Level VI is in effect at such time. The Performance Pricing
Level in effect at any time of determination shall be the Performance Pricing
Level set forth below opposite the Total Funded Debt to EBITDA Ratio in effect
at such time:
- ---------------------------------------------------------------------------
PERFORMANCE
PRICING TOTAL FUNDED DEBT
LEVEL TO EBITDA RATIO
- --------------------------------------------------------------------------------
I Less than or equal to 3.0 to 1.0
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
II Greater than 3.0 to 1.0 and less than or equal to 3.50
to 1.0
- --------------------------------------------------------------------------------
III Greater than 3.50 to 1.0 and less than or equal to 4.0
to 1.0
- --------------------------------------------------------------------------------
IV Greater than 4.0 to 1.0 and less than or equal to 4.50
to 1.0
- --------------------------------------------------------------------------------
V Greater than 4.50 to 1.0 and less than or equal to 5.0
to 1.0
- --------------------------------------------------------------------------------
VI Greater than 5.0 to 1.0
- --------------------------------------------------------------------------------
Notwithstanding the foregoing, (a) no change in the Performance Pricing Level
shall be effective until three Business Days after the date on which the US
Administrative Agent receives financial statements pursuant to Section 5.03(b)
or (c) and a certificate of the chief financial officer of PGI demonstrating a
Total Funded Debt to EBITDA Ratio resulting in such change, and (b) if the US
Administrative Agent has not received the information described in the foregoing
clause (a) as and when required under Section 5.03(b) or (c), as the case may
be, the Performance Pricing Level shall be deemed to be the higher of (i) the
Performance Pricing Level most recently determined pursuant to the foregoing
clause (a), and (ii) Performance Pricing Level IV for so long as such
information has not been received by the US Administrative Agent.
"PERFORMANCE PRICING SCHEDULE" means the Performance Pricing Schedule
attached hereto as Schedule II.
"PERMITTED LIENS" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for taxes, assessments and governmental charges or levies to the
extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed
by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's
Liens and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue or are being contested in good faith
by appropriate legal or administrative proceedings as to which, to the extent
required by GAAP, adequate reserves are being maintained; (c) pledges or
deposits to secure obligations under workers' compensation laws, unemployment
insurance or similar legislation or to secure public or statutory obligations or
to secure the performance of bids, tenders, leases, contracts (other than for
the repayment of borrowed money or gold obligations) incurred in the ordinary
course of business; and (d) easements, rights of way and other encumbrances on
title to real property that do not render title to the property encumbered
thereby unmarketable or materially adversely affect the value of such property
or the use of such property for its present purposes.
"PERMITTED PREFERRED DIVIDENDS" means dividends payable in respect of
Permitted Preferred Stock.
"PERMITTED PREFERRED STOCK" means preferred stock of a Restricted
Subsidiary which (i) is not mandatorily redeemable at the option of the holders
thereof, (ii) may provide for cumulative dividends
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<PAGE>
in an amount which, on a pro forma basis on the date of issuance thereof, would
not cause an Event of Default under Section 5.04, and (iii) may provide for
conversion to common stock of PGI or preferred stock of PGI upon the occurrence
of certain events to be satisfactory to, and on a basis satisfactory to, the
Required Lenders.
"PERMITTED SUBORDINATED DEBT" means unsecured Debt of any Borrower incurred
after the date hereof which (i) is subordinated in right of payment to all
Obligations of the Borrowers under the Loan Documents (including, without
limitation, the Credit Agreement, the Notes and the Guaranty), (ii) requires no
amortization or other principal repayment prior to, and matures no sooner than,
one year after the Termination Date, and (iii) is on terms and conditions no
less favorable to the Borrowers and the Lender Parties than the Existing
Subordinated Debt.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PGA" has the meaning specified in the recital of parties to this
Agreement.
"PGC" has the meaning specified in the recital of parties to this
Agreement.
"PGI" has the meaning specified in the recital of parties to this
Agreement.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PLEDGE AGREEMENT" has the meaning specified in Section 3.01(f)(vii).
"PREFERRED DIVIDEND AMOUNT" means, at any time of determination, the
aggregate maximum amount of dividends payable in respect of all then outstanding
Permitted Preferred Stock and Exchange Preferred Stock from such date through
the fifth anniversary of such date.
"PREFERRED STOCK" means, with respect to any corporation, capital stock
issued by such corporation that is entitled to a preference or priority over any
other capital stock issued by such corporation upon any distribution of such
corporation's assets, whether by dividend or upon liquidation.
"PREPAID FORWARD SALES AGREEMENTS" means (a) physical delivery contracts
(other than Hedge Agreements) for which a Person has received, or has the right
to receive, a cash payment in advance of physical delivery of the subject
commodity and which would be reflected as a liability in the financial
statements or footnotes thereto of such Person in accordance with GAAP, (b) each
Hedge Agreement for which the termination value immediately after the inception
of such Hedge Agreement or at any time thereafter is not zero based upon spot
and forward prices existing at the inception of such Hedge Agreement (excluding
customary bid/ask differentials for market level transactions), and (c) loans of
gold bullion.
"PROJECT AREA" means the freehold, leasehold and other land the subject of
or covering the same area as the Project Tenements and the Titles.
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"PROJECT TENEMENTS" means (a) Mineral Lease N1070, Mineral Lease N1071,
Mineral Lease N1127 and Mineral Lease Application N1140, and (b) any mining
tenement, exploration license or exploration retention license issued in renewal
or replacement of any of the mineral leases referred to in the foregoing clause
(a) or upon a consolidation or subdivision of any of those mineral leases, each
issued, or taken to be issued, and held under the Mining Act of the Northern
Territory of Australia.
"REDUCTION AMOUNT" has the meaning specified in Section 2.07(b)(iv).
"REGISTER" has the meaning specified in Section 8.07(d).
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"REQUIRED LENDERS" means at any time Lenders holding at least 60% of the
aggregate Maximum Revolving Credit Commitments at such time or, if the
Commitments have expired or have been terminated, Lenders owed or holding (or
deemed owed or holding, as set forth below) at least 60% of the sum of (a) the
aggregate principal amount of the Advances outstanding at such time, (b) the
aggregate Face Amount of all BA Obligations outstanding at such time, and
(c) the aggregate Available Amount of all Letters of Credit outstanding at such
time; PROVIDED, HOWEVER, that if any Lender shall be a Defaulting Lender at such
time, there shall be excluded from the determination of Required Lenders at such
time (i) the aggregate principal amount of the Advances and the aggregate Face
Amount of the BA Obligations owing to such Lender (in its capacity as a Lender)
and outstanding at such time, (ii) such Lender's ratable share (determined as
set forth in Section 2.04(c)) of the aggregate Available Amount of all Letters
of Credit issued by such Lender and outstanding at such time, and (iii) the
Maximum Revolving Credit Commitment of such Lender at such time. For purposes
of this definition, the aggregate principal amount of (A) Letter of Credit
Advances owing to any Issuing Bank and the Available Amount of each Letter of
Credit shall be considered to be owed to the Appropriate Lenders in accordance
with their respective ratable shares (determined as set forth in Section 2.04(c)
except that the ratable share of the Non-Pro Rata Lender shall be allocated to
the Risk Participants in accordance with their respective Adjusted Pro Rata
Shares) of such Letter of Credit Advances and Available Amounts, and (B) all
Non-Pro Rata Advances shall be considered to be owed to the Risk Participants in
accordance with their respective Adjusted Pro Rata Shares.
"RESPONSIBLE OFFICER" means any one of the Chief Executive Officers, the
Chief Operating Officers, the Chief Financial Officers or the Treasurers of any
of the Borrowers.
"RESTRICTED SUBSIDIARY" means (i) each Subsidiary of PGI (other than PGC
and PGA) in existence on the Closing Date and designated as a "Restricted
Subsidiary" on Schedule 4.01(b), and (ii) each wholly owned Subsidiary of any
Loan Party created or acquired after the Closing Date which is designated by the
Borrowers as a "Restricted Subsidiary" and with respect to which the provisions
of Section 5.01(m)(i) have been complied with.
"REVOLVING CREDIT ADVANCE" means a US Borrower Advance, a Canadian Borrower
Advance or an Australian Borrower Advance.
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<PAGE>
"REVOLVING CREDIT COMMITMENT" means, with respect to any Lender at any
time, the product of (a) such Lender's Maximum Revolving Credit Commitment at
such time, and (b) the Applicable Designated Commitment Percentage at such time;
PROVIDED, HOWEVER, that, except as otherwise expressly set forth herein, the
Non-Pro Rata Lender, in its capacity as such, shall have no Revolving Credit
Commitment.
"REVOLVING CREDIT FACILITY" means, at any time, the aggregate amount of the
Revolving Credit Commitments of the Lenders at such time.
"RISK PARTICIPANT" means each Person listed under the heading "Risk
Participants" on Schedule I hereto or identified as a Risk Participant in the
Assignment and Acceptance pursuant to which it became a Lender Party, as the
case may be, in each case, in its capacity as such.
"S&P" means Standard & Poors Ratings Group.
"SECURED PARTIES" means the Administrative Agents, the other Lender
Parties, the Hedge Banks, the Existing Hedge Banks and the other Persons, if
any, the Obligations owing to which are or are purported to be secured by the
Collateral under the terms of the Collateral Documents.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that is subject to Title IV of ERISA and that
(a) is maintained for employees of any Loan Party or any ERISA Affiliate and no
Person other than the Loan Parties and the ERISA Affiliates or (b) was so
maintained and in respect of which any Loan Party or any ERISA Affiliate could
have liability under Section 4069 of ERISA in the event such plan has been or
were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay such debts
and liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital, (e) in
addition, in the case of any Person incorporated or conducting business in
Australia, that no Insolvency Event has occurred and is continuing with respect
to such Person on the date of determination, and (f) in addition, in the case of
any Person incorporated in British Columbia, Canada, that such Person is able to
pay its debts as they become due in the usual course of its business, as those
terms are interpreted pursuant to the laws of British Columbia. The amount of
contingent liabilities at any time shall be computed as the amount that, in
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
"SUBSIDIARY" of any Person means (a) any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (i) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall
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or might have voting power upon the occurrence of any contingency), (ii) the
interest in the capital or profits of such partnership, joint venture or limited
liability company or (iii) the beneficial interest in such trust or estate is,
in any such case, at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries, and (b) any other entity that is a
subsidiary of such Person or any of such Person's other Subsidiaries within the
meaning of part 1.2, division 6 of the Australian Corporations Law.
"SUPPLEMENTAL PLEDGE AGREEMENT" means each pledge agreement entered into
pursuant to Section 5.01(m), as the same may be amended, supplemented or
otherwise modified from time to time.
"SURVIVING DEBT" has the meaning specified in Section 3.01(b).
"SURVIVING HEDGE AGREEMENTS" means the Hedge Agreements identified under
the heading "Surviving Hedge Agreements" on Schedule 1.01(a), as in effect on
the date hereof (which Hedge Agreements are not required to be, and shall not
be, except in the case of a Surviving Hedge Agreement which is a Bank Hedge
Agreement, secured by the Collateral); provided that each such Hedge Agreement
shall cease to be a "Surviving Hedge Agreement" for purposes hereof on the
earliest scheduled expiration date of such Hedge Agreement without giving effect
to any optional renewals, rollovers or extensions thereof.
"TANGIBLE NET WORTH" means, with respect to any Person, at any time, the
excess of total assets over total liabilities, with total assets and total
liabilities each to be determined in accordance with GAAP, EXCLUDING, HOWEVER,
from the determination of total assets: (i) goodwill, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications, and
rights in any thereof, and other similar intangibles (but not in any event
deferred mining costs or excess purchase price), (ii) all reserves carried and
not deducted in determining total assets, (iii) treasury stock and any minority
interest in Subsidiaries, and (iv) any items not included in clauses (i) through
(iii) above which are treated as intangibles in conformity with GAAP.
"TAXES" has the meaning specified in Section 2.14(a).
"TERMINATION DATE" means the earlier of January 29, 2002 and the date of
termination in whole of the Revolving Credit Commitments pursuant to
Section 2.06 or 6.01.
"TITLES" means any freehold land, leasehold interest or other interest in
land owned or held by PGA or on its behalf at or adjacent to the Project
Tenements.
"TOTAL ADJUSTED INTEREST EXPENSE" means as to any Person for any period,
the sum, without duplication, of (a) the amount of interest expense of such
Person (including, without limitation, capitalized interest), determined in
accordance with GAAP, for such period but excluding amortization of Debt
issuance costs, and (b) with respect to the Canadian Borrower, discounts
applicable to such period which are reflected in the Drawing Purchase Price for
BA Obligations, and (c) all fees paid by such Person pursuant to Sections
2.09(a) and (g) during such period which are applicable to such period, and (d)
the aggregate amount of Permitted Preferred Dividends and Exchange Preferred
Dividends payable during such period.
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"TOTAL FUNDED DEBT TO EBITDA RATIO" means, at any time of determination,
the ratio of (i) the Funded Debt of the Borrowers and the Restricted
Subsidiaries on a Consolidated basis as of the then most recently ended fiscal
quarter of PGI to (ii) the Consolidated EBITDA of the Borrowers and the
Restricted Subsidiaries on a Consolidated basis for the four fiscal quarter
period ending as of the then most recently ended fiscal quarter of PGI.
"TYPE" refers to the distinction (i) with respect to US Borrower Advances,
between such Advances bearing interest at the US Base Rate and such Advances
bearing interest at the Eurodollar Rate, (ii) with respect to Canadian Borrower
Advances, among such Advances bearing interest at the Canadian Base Rate, such
Advances bearing interest at the Canadian Prime Rate, and such Advances bearing
interest at the Eurodollar Rate, and (iii) with respect to Australian Borrower
Advances, among such Advances bearing interest at the Australian Prime Rate,
such Advances bearing interest at the Eurodollar Rate and such Advances bearing
interest at the Bank Bill Rate.
"UNRESTRICTED SUBSIDIARY" means any direct or indirect Subsidiary of PGI
that is not a Restricted Subsidiary.
"UNUSED REVOLVING CREDIT COMMITMENT" means, with respect to any Lender at
any time, (a) such Lender's Revolving Credit Commitment at such time MINUS
(b) the sum of (i) the aggregate principal amount of all Revolving Credit
Advances (other than Non-Pro Rata Advances) and Letter of Credit Advances (other
than Non-Pro Rata Advances) made, and the aggregate Face Amount of all BA
Obligations purchased and/or accepted by such Lender (in its capacity as a
Lender) and outstanding at such time, PLUS (ii) such Lender's ratable share
(determined as set forth in Section 2.04(c) except that the ratable share of the
Non-Pro Rata Lender shall be allocated to the Risk Participants in accordance
with their respective Adjusted Pro Rata Shares) of (A) the aggregate Available
Amount of all Letters of Credit outstanding at such time as to which such Lender
has a contingent obligation to purchase Letter of Credit Advances pursuant to
Section 2.04(c), and (B) the aggregate principal amount of all Letter of Credit
Advances made by the Issuing Banks pursuant to Section 2.04(c) and outstanding
at such time as to which such Lender has a contingent obligation to purchase
Letter of Credit Advances pursuant to Section 2.04(c), PLUS (iii) in the case of
each Risk Participant, such Risk Participant's Adjusted Pro Rata Share of each
Non-Pro Rata Advance; PROVIDED, HOWEVER, that, except as otherwise expressly set
forth herein, the Non-Pro Rata Lender, in its capacity as such, shall have no
Unused Revolving Credit Commitment. All determinations as to the Unused
Revolving Credit Commitment of any Lender shall be made in US Dollars. For
purposes of determining the Unused Revolving Credit Commitment of any Lender at
any time, the Available Amount of any Letter of Credit denominated in Canadian
Dollars or Australian Dollars and the amount of all outstanding Accommodations
denominated in Canadian Dollars or Australian Dollars shall be deemed to be the
Equivalent thereof in US Dollars at such time. For purposes of determining the
availability of any Drawing or any Borrowing requested to be denominated in
Canadian Dollars or Australian Dollars, the amount so requested shall be deemed
to be the Equivalent thereof in US Dollars.
"US BASE RATE" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the highest
of:
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(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of 1% per
annum, PLUS (ii) the rate obtained by dividing (A) the latest three-week
moving average of secondary market morning offering rates in the United
States for three-month certificates of deposit of major United States money
market banks, such three-week moving average (adjusted to the basis of a
year of 360 days) being determined weekly on each Monday (or, if such day
is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by the US Administrative
Agent on the basis of such rates reported by certificate of deposit dealers
to and published by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of quotations
for such rates received by the US Administrative Agent from three New York
certificate of deposit dealers of recognized standing selected by such
Administrative Agent, by (B) a percentage equal to 100% minus the average
of the daily percentages specified during such three-week period by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not limited to,
any emergency, supplemental or other marginal reserve requirement) for
Citibank with respect to liabilities consisting of or including (among
other liabilities) three-month U.S. dollar non-personal time deposits in
the United States, PLUS (iii) the average during such three-week period of
the annual assessment rates estimated by the US Administrative Agent for
determining the then current annual assessment payable by Citibank to the
Federal Deposit Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank in the United States; and
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"US BASE RATE ADVANCE" means a US Borrower Advance that bears interest as
provided in Section 2.08(b)(i).
"US BORROWER" has the meaning specified in the recital of parties to this
Agreement.
"US BORROWER ADVANCE" has the meaning specified in Section 2.01(a).
"US BORROWER BORROWING" means a borrowing consisting of simultaneous US
Borrower Advances of the same Type made by the US Lenders.
"US BORROWER NOTE" means a promissory note of the US Borrower payable to
the order of any US Lender, in substantially the form of Exhibit B-3 hereto,
evidencing the aggregate indebtedness of the US Borrower to such Lender
resulting from the US Borrower Advances made by or otherwise owing to such
Lender.
"US BUSINESS DAY" means a day of the year on which banks are not required
or authorized by law to close in New York City and, if the applicable Business
Day relates to any Eurodollar Rate Advances, on which dealings are carried on in
the London interbank market.
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"US CASH COLLATERAL ACCOUNT" has the meaning specified in Section 5.01(k).
"US COLLATERAL AGENT" has the meaning specified in the Pledge Agreement.
"US DOLLARS" and "US$" and "$" each means lawful money of the United
States.
"US DOMESTIC LENDING OFFICE" means, with respect to any US Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, as the case may be, or such other office of such Lender as
such Lender may from time to time specify to the US Borrower and the US
Administrative Agent.
"US EURODOLLAR LENDING OFFICE" means, with respect to any US Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, as the case may be, or such other office of such Lender as
such Lender may from time to time specify to the US Borrower and the US
Administrative Agent.
"US ISSUING BANK" means (a) the Initial US Issuing Bank, so long as it has
a Letter of Credit Commitment hereunder, (b) each Eligible Assignee to which all
or any portion of the Letter of Credit Commitment of a US Issuing Bank hereunder
has been assigned pursuant to Section 8.07, and (c) each Existing Issuing Bank
that issued an Existing Letter of Credit which is a US Letter of Credit, in each
case, in its capacity as such.
"US LENDER" means each Lender listed under the heading "US Lenders" on
Schedule I hereto or identified as a US Lender in the Assignment and Acceptance
pursuant to which such Lender became a Lender, as the case may be, in each case,
in its capacity as such.
"US LETTER OF CREDIT" means (a) a letter of credit issued hereunder by a US
Issuing Bank for the account of the US Borrower, and (b) each Existing Letter of
Credit issued for the account of the US Borrower.
"VOTING STOCK" means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
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SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(f) ("GAAP").
SECTION 1.04. STATUTES. In this Agreement, a reference to a statute,
code or other law of Australia includes regulations and other instruments under
such statute, code or other law and consolidations, amendments, re-enactments or
replacements thereof.
ARTICLE II
AMOUNTS AND TERMS OF THE ACCOMMODATIONS
AND THE LETTERS OF CREDIT
SECTION 2.01. THE ACCOMMODATIONS AND THE LETTERS OF CREDIT;
DESIGNATION OF COMMITMENTS.
(A) THE US BORROWER ADVANCES AND THE CANADIAN BORROWER ADVANCES.
(I) US BORROWER ADVANCES. Each US Lender severally agrees, on the
terms and conditions hereinafter set forth, to make advances (each a "US
BORROWER ADVANCE") in US Dollars to the US Borrower from time to time on
any Business Day during the period from the date hereof until the
Termination Date in an amount for each such Advance not to exceed such
Lender's Unused Revolving Credit Commitment at such time (after giving
effect to the repayment of any Letter of Credit Advances in respect of US
Letters of Credit with the proceeds of such Advance). Each Borrowing
(other than a Borrowing the proceeds of which will be used solely to repay
outstanding Letter of Credit Advances in respect of US Letters of Credit)
under this Section 2.01(a)(i) shall be in an aggregate amount of
US$5,000,000 or an integral multiple of US$1,000,000 in excess thereof and
shall consist of US Borrower Advances made simultaneously by the US Lenders
ratably according to their Revolving Credit Commitments. Within the limits
of each US Lender's Unused Revolving Credit Commitment in effect from time
to time, the US Borrower may borrow under this Section 2.01(a)(i), prepay
pursuant to Section 2.07(a) and reborrow under this Section 2.01(a)(i).
(II) CANADIAN BORROWER ADVANCES. Each Canadian Lender severally
agrees, on the terms and conditions hereinafter set forth, to make advances
(each a "CANADIAN BORROWER ADVANCE") in either US Dollars or Canadian
Dollars to the Canadian Borrower, in each case, from time to time on any
Business Day during the period from the date hereof until the Termination
Date in an amount for each such Advance (in the case of any such Advance
denominated in Canadian Dollars, determined in the Equivalent thereof in US
Dollars) not to exceed such Lender's Unused Revolving Credit Commitment at
such time (after giving effect to the repayment of any Letter of Credit
Advances in respect of Canadian Letters of Credit with the proceeds of such
Advance); PROVIDED, HOWEVER, that no Canadian Borrower Advance shall be
made if after giving effect to such Advance the sum of the aggregate
principal amount of outstanding Canadian Borrower Advances and outstanding
Letter of Credit Advances in respect of Canadian Letters of Credit PLUS the
aggregate Face Amount of BA Obligations and the aggregate Available Amount
of all Canadian Letters of Credit then outstanding would exceed the
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Canadian Borrower Sublimit in effect at such time. Each Borrowing (other
than a Borrowing the proceeds of which will be used solely to repay
outstanding Letter of Credit Advances in respect of Canadian Letters of
Credit or a Borrowing of Canadian Prime Rate Advances pursuant to Section
2.03(a) in connection with any Drawing) under this Section 2.01(a)(ii)
shall be in an aggregate amount of US$5,000,000 (or, if denominated in
Canadian Dollars, CN$5,000,000) or an integral multiple of US$1,000,000
(or, if denominated in Canadian Dollars, CN$1,000,000) in excess thereof
and shall consist of Canadian Borrower Advances made simultaneously by the
Canadian Lenders ratably according to their Revolving Credit Commitments.
Within the limits of the Canadian Borrower Sublimit and each Canadian
Lender's Unused Revolving Credit Commitment, in each case as in effect from
time to time, the Canadian Borrower may borrow under this
Section 2.01(a)(ii), prepay pursuant to Section 2.07(a) and reborrow under
this Section 2.01(a)(ii).
(B) AUSTRALIAN BORROWER ADVANCES; PURCHASE BY RISK PARTICIPANTS.
(I) AUSTRALIAN BORROWER ADVANCES. Each Australian Lender and the
Non-Pro Rata Lender severally agree, on the terms and conditions
hereinafter set forth, to make advances (each an "AUSTRALIAN BORROWER
ADVANCE") in either US Dollars or Australian Dollars to the Australian
Borrower, from time to time on any Business Day during the period from the
date hereof until the Termination Date in an amount for each such Advance
(in the case of any such Advance denominated in Australian Dollars,
determined in the Equivalent thereof in US Dollars) not to exceed, after
giving effect to the repayment of any Letter of Credit Advances in respect
of Australian Letters of Credit with the proceeds of such Advance, (A) in
the case of each such Australian Lender, such Lender's Unused Revolving
Credit Commitment at such time, and (B) in the case of the Non-Pro Rata
Lender in its capacity as such, the aggregate Unused Revolving Credit
Commitments of the Risk Participants at such time (even if, in the case of
this clause (B), after giving effect to such Advance the sum of the
aggregate principal amount of all outstanding Advances made by, and the
aggregate Face Amount of all BA Obligations owing to, the Non-Pro Rata
Lender in such capacity and by the Non-Pro Rata Lender and its Affiliates
in each of their other capacities hereunder, plus the aggregate Available
Amount of all Letters of Credit outstanding at such time as to which the
Non-Pro Rata Lender or any of its Affiliates has a contingent obligation to
purchase Letter of Credit Advances pursuant to Section 2.04(c), exceeds the
aggregate Revolving Credit Commitments of the Non-Pro Rata Lender, in its
capacity as an Australian Lender, and its Affiliates at such time). Each
Borrowing (other than a Borrowing the proceeds of which will be used solely
to repay outstanding Letter of Credit Advances in respect of Australian
Letters of Credit) under this Section 2.01(b)(i) shall be in an aggregate
amount of US$5,000,000 (or, if denominated in Australian Dollars,
A$5,000,000) or an integral multiple of US$1,000,000 (or, if denominated in
Australian Dollars, A$1,000,000) in excess thereof and shall consist of
Australian Borrower Advances made simultaneously by the Australian Lenders
and the Non-Pro Rata Lender ratably in accordance with their respective
Revolving Credit Commitments (it being understood that for such purposes
the Non-Pro Rata Lender's Revolving Credit Commitment shall be deemed to be
the aggregate Revolving Credit Commitments of the Risk Participants).
Within the limits of the aggregate Unused Revolving Credit Commitments of
the Australian Lenders and the Risk Participants in effect from time to
time, the Australian
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Borrower may borrow under this Section 2.01(b)(i), prepay pursuant to
Section 2.07(a) and reborrow under this Section 2.01(b)(i).
(II) PURCHASE BY RISK PARTICIPANTS OF NON-PRO RATA ADVANCES. Upon (A)
the occurrence and during the continuance of an Event of Default, and (B)
written demand (whether or not the conditions specified in Section 3.02 are
satisfied at such time and notwithstanding any other fact or circumstance)
by the Non-Pro Rata Lender to the US Administrative Agent (with a copy of
such demand to each Risk Participant PGI, and the Australian Borrower) with
respect to any outstanding Non-Pro Rata Advance, each Risk Participant
shall purchase from the Non-Pro Rata Lender without recourse to the Non-Pro
Rata Lender (except in the case of a breach of the representation and
warranty set forth below in this Section 2.01(b)(ii)), and the Non-Pro Rata
Lender shall sell and assign to each such Risk Participant, such Risk
Participant's Adjusted Pro Rata Share of such outstanding Non-Pro Rata
Advance as of the date of such demand. Such Risk Participant shall effect
such purchase, sale and assignment by making available for the account of
its Appropriate Lending Office to the Australian Administrative Agent for
the account of the Non-Pro Rata Lender, by deposit to the Appropriate
Administrative Agent's Account, in same day funds in the currency in which
such Non-Pro Rata Advance is denominated, an amount equal to such Risk
Participant's Adjusted Pro Rata Share of such outstanding Non-Pro Rata
Advance. Each Borrower hereby agrees to each such purchase, sale and
assignment. Each Risk Participant agrees to purchase its Adjusted Pro Rata
Share of an outstanding Non-Pro Rata Advance on (1) the Business Day on
which demand therefor is made by the Non-Pro Rata Lender, PROVIDED that
notice of such demand is given not later than 11:00 a.m. (Sydney, Australia
time) on such Business Day or (2) the first Business Day next succeeding
such demand if notice of such demand is given after such time. Upon any
such sale and assignment by the Non-Pro Rata Lender to any Risk Participant
of a portion of a Non-Pro Rata Advance, the Non-Pro Rata Lender represents
and warrants to such Risk Participant that the Non-Pro Rata Lender is the
legal and beneficial owner of such interest being sold and assigned by it,
but makes no other representation or warranty and assumes no responsibility
with respect to such Non-Pro Rata Advance, the Loan Documents or any Loan
Party. If and to the extent that any Risk Participant shall not have so
made the amount of its purchase price with respect to such Non-Pro Rata
Advance available to the Appropriate Administrative Agent, such Risk
Participant agrees to pay to such Appropriate Administrative Agent
forthwith on demand such amount together with interest thereon, for each
day from the date of demand by the Non-Pro Rata Lender to the date such
amount is paid to the Appropriate Administrative Agent, at the Applicable
Interbank Rate. If such Risk Participant shall pay to the Appropriate
Administrative Agent such amount for the account of the Non-Pro Rata Lender
on any Business Day, such amount so paid in respect of principal shall
constitute an Australian Borrower Advance made by such Risk Participant in
its capacity as a Lender (and for such purposes such Lender shall be deemed
to be an Australian Lender with respect to such Advance) on such Business
Day for purposes of this Agreement, and the outstanding principal amount of
the Non-Pro Rata Advance made by the Non-Pro Rata Lender shall be reduced
by such amount on such Business Day. Each Risk Participant and the
Australian Borrower acknowledge that this Section 2.01(b)(ii) is entered
into by the Risk Participants at the request, and for the benefit, of the
Australian Borrower. Each Risk Participant acknowledges and agrees that,
notwithstanding anything in this Agreement to the contrary, its obligation
to purchase its Adjusted Pro-Rata Share of any Non-Pro Rata Advance
hereunder is absolute and unconditional and shall
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not be affected by any circumstance whatsoever, including, without
limitation, (i) the occurrence and continuance of any Default or Event of
Default, (ii) the failure of any condition described in Article II to be
satisfied, (iii) the existence of any claim, set-off, defense or other
right that such Risk Participant may have at any time against the Non-Pro
Rata Lender, any other Lender Party, any Borrower or any other Person,
whether in connection with the transactions contemplated by this Agreement
or any unrelated transaction or (iv) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, such Risk
Participant.
(III) CASH COLLATERAL ON DEFAULT OR RATING DECLINE OF RISK
PARTICIPANT. If, and for so long as (A) any Default has occurred and is
continuing, or (B) any Risk Participant's public debt rating (as defined
below) is below BBB or Baa2 by S&P or Moody's, respectively (or, with
respect to any Risk Participant that does not have such a public debt
rating at any time of determination, the Non-Pro Rata Lender shall
determine that such Risk Participant's ability to meet such Risk
Participant's obligations under Section 2.01(b)(ii) has declined since the
date such Risk Participant became a Risk Participant hereunder), (1) in the
case of the foregoing clause (A), each Risk Participant and, in the case of
the foregoing clause (B), such Risk Participant shall, immediately upon
demand by the Non-Pro Rata Lender, cash collateralize its Adjusted Pro Rata
Share of all outstanding Non-Pro Rata Advances and all outstanding
Australian Letters of Credit by depositing an amount equal to such Adjusted
Pro Rata Share into a cash collateral account (but not any Cash Collateral
Account) designated by the Australian Administrative Agent (and, if
necessary, established for such purposes and, so long as no Event of
Default has occurred and is continuing, established in such location as
determined after consultation with PGI), and (2) each such Risk Participant
shall, if so demanded by the Non-Pro Rata Lender in its sole discretion by
written notice to the US Administrative Agent, PGI and such Risk
Participant, prior to the funding by the Non-Pro Rata Lender of any Non-Pro
Rata Advance in connection with each additional Australian Borrower
Borrowing and prior to the issuance of each additional Australian Letter of
Credit, deposit to such cash collateral account an amount equal to such
Risk Participant's Adjusted Pro Rata Share of the aggregate amount of such
Borrowing or the Available Amount of such Letter of Credit, as the case may
be. If such Risk Participant shall fail to make any deposit required
pursuant to this Section 2.01(b)(iii), then for so long as such failure
shall continue (I) such Risk Participant shall cease to be a Risk
Participant as to each Australian Borrower Borrowing occurring, and each
Australian Letter of Credit issued, on or after the date of the related
demand by the Non-Pro Rata Lender for cash collateral, (II) such Risk
Participant shall be an Australian Lender with respect to each such
Borrowing and Letter of Credit (but, any provision hereof to the contrary
notwithstanding, such Risk Participant shall not be entitled to make any
claim under Section 2.14 in respect of any such Borrowing or Letter of
Credit), and (III) any provision hereof to the contrary notwithstanding,
the Non-Pro Rata Lender shall have no obligation with respect to the
Revolving Credit Commitment or the Unused Revolving Credit Commitment of
such Risk Participant. Amounts deposited by any Risk Participant in any
such cash collateral account shall be held for the benefit of the Non-Pro
Rata Lender, shall be applied by the Appropriate Administrative Agent to
satisfy such Risk Participant's obligations under Section 2.01(b)(ii) and
shall, to the extent such amounts exceed at any time such Risk
Participant's Adjusted Pro Rata Share of all outstanding Non-Pro Rata
Advances and all outstanding Australian Letters of Credit, be returned to
such Risk Participant. The term "public debt rating" means, as of any date
with respect to any Person, the rating that has been most
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recently announced by either S&P or Moody's, as the case may be, for any
class of non-credit enhanced long-term senior unsecured debt issued by such
Person.
(C) DRAWINGS. Each Canadian Lender that is able to create bankers'
acceptances in Canada severally agrees, on the terms and conditions hereinafter
set forth, to accept Drafts (each Draft so accepted, a "BANKERS' ACCEPTANCE")
for the account of the Canadian Borrower, and to purchase such Bankers'
Acceptances from time to time on any Business Day during the period from the
date hereof until the Termination Date having a Face Amount (determined in the
Equivalent thereof in US Dollars) for all such Bankers' Acceptances purchased by
such Lender at the time of such Drawing not to exceed such Lender's Unused
Revolving Credit Commitment at such time. Each Canadian Lender that is unable
to create bankers acceptances in Canada severally agrees, on the terms and
conditions hereinafter set forth, to purchase completed Drafts (which have not
been and will not be accepted by such Lender or any other Person) (each, a "BA
EQUIVALENT NOTE") for the account of the Canadian Borrower from time to time on
any Business Day during the period from the date hereof until the Termination
Date having a Face Amount (determined in the Equivalent thereof in US Dollars)
for all such BA Equivalent Notes purchased by such Lender at the time of such
Drawing not to exceed such Lender's Unused Revolving Credit Commitment at such
time. Any provision of this Agreement to the contrary notwithstanding, no
Lender shall accept or purchase any Draft or Bankers' Acceptance or BA
Equivalent Note if, after giving effect thereto, the sum of the aggregate
principal amount of outstanding Canadian Borrower Advances and outstanding
Letter of Credit Advances in respect of Canadian Letters of Credit PLUS the
aggregate Face Amount of BA Obligations and the aggregate Available Amount of
all Canadian Letters of Credit then outstanding would exceed the Canadian
Borrower Sublimit in effect at such time. Each Drawing shall be comprised
solely of Canadian Dollars, shall be in an aggregate Face Amount which, together
with any Canadian Prime Rate Advances made in connection with such Drawing,
equals CN$5,000,000 or an integral multiple of CN$1,000,000 in excess thereof
and shall consist of the creation and purchase of Bankers' Acceptances or the
purchase of BA Equivalent Notes at or about the same time by the Canadian
Lenders ratably in accordance with their respective Revolving Credit
Commitments. Within the limits of the Canadian Borrower Sublimit and each
Canadian Lender's Unused Revolving Credit Commitment, in each case as in effect
from time to time, amounts drawn by the Canadian Borrower under this Section
2.01(c) and repaid or prepaid from time to time may be redrawn by the Canadian
Borrower under this Section 2.01(c).
(D) LETTERS OF CREDIT. Each US Issuing Bank severally agrees, on the
terms and conditions hereinafter set forth, to issue US Letters of Credit
available for drawing in US Dollars. Each Canadian Issuing Bank severally
agrees, on the terms and conditions hereinafter set forth, to issue Canadian
Letters of Credit available for drawing in US Dollars or Canadian Dollars. Each
Australian Issuing Bank severally agrees, on the terms and conditions
hereinafter set forth to issue Australian Letters of Credit available for
drawing in US Dollars or Australian Dollars. Each Appropriate Issuing Bank
severally agrees to issue Letters of Credit from time to time on any Business
Day during the period from the date hereof until 30 days before the Termination
Date (i) in an aggregate Available Amount for all Letters of Credit (including
Existing Letters of Credit) issued by such Issuing Bank not to exceed at any
time such Issuing Bank's Letter of Credit Commitment at such time LESS the
aggregate Available Amount of all other Letters of Credit issued by such Issuing
Bank's Affiliates, (ii) in an Available Amount for each such Letter of Credit
not to exceed an amount equal to the Unused Revolving Credit Commitments of the
Appropriate Lenders at such time (PLUS, with respect to each Australian Letter
of Credit, the
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aggregate Unused Revolving Commitments of the Risk Participants at such time),
and (iii) in an aggregate Available Amount for all Letters of Credit not to
exceed at any time the Letter of Credit Facility at such time; PROVIDED,
HOWEVER, that no Existing Issuing Bank, in its capacity as such, shall issue any
Letters of Credit hereunder other than the deemed issuance of the Existing
Letters of Credit as set forth herein. As of the Closing Date, each Existing
Letter of Credit shall constitute, for all purposes of this Agreement and the
other Loan Documents, a Letter of Credit issued and outstanding hereunder and
shall, for purposes of Section 2.09(c), be deemed to be issued hereunder on the
Closing Date. No Letter of Credit (other than an Australian Bank Guarantee)
shall have an expiration date (including all rights of any Borrower or the
beneficiary to require renewal) later than the earlier of 10 days before the
Termination Date and (A) in the case of a Financial Letter of Credit, one year
after the date of issuance thereof (but any Financial Letter of Credit may by
its terms be renewable annually upon notice (a "NOTICE OF RENEWAL") given to the
Issuing Bank that issued such Letter of Credit and the US Administrative Agent
on or prior to any date for notice of renewal set forth in such Letter of Credit
but in any event at least three Business Days prior to the date of the proposed
renewal of such Letter of Credit and upon fulfillment of the applicable
conditions set forth in Article III unless such Issuing Bank has notified the
Appropriate Borrower (with a copy to the US Administrative Agent) on or prior to
the date for notice of termination set forth in such Letter of Credit but in any
event at least 30 days prior to the then scheduled expiration date of its
election not to renew such Financial Letter of Credit (a "NOTICE OF
TERMINATION"), which election may be made by such Issuing Bank only if it no
longer has a Letter of Credit Commitment hereunder), and (B) in the case of a
Commercial Letter of Credit, 120 days after the date of issuance thereof;
PROVIDED that the terms of each Financial Letter of Credit that is renewable
annually shall not permit the expiration date (after giving effect to any
renewal) of such Financial Letter of Credit in any event to be extended to a
date later than 10 days before the Termination Date. If either a Notice of
Renewal is not given by the Appropriate Borrower or a Notice of Termination is
given by the relevant Issuing Bank pursuant to the immediately preceding
sentence, the applicable Letter of Credit shall expire on the date on which it
otherwise would have been automatically renewed; PROVIDED, HOWEVER, that even in
the absence of receipt of a Notice of Renewal with respect to any Financial
Letter of Credit, the Issuing Bank that issued such Letter of Credit may in its
discretion (but shall have no obligation to), unless instructed to the contrary
by the US Administrative Agent, the Required Lenders, or the Appropriate
Borrower, deem that a Notice of Renewal with respect to such Letter of Credit
had been timely delivered and in such case, a Notice of Renewal with respect to
such Letter of Credit shall be deemed to have been so delivered for all purposes
under this Agreement and such Letter of Credit may be renewed by such Issuing
Bank as if such Notice of Renewal had been so delivered. Except as may be
required by the beneficiary of any Australian Bank Guarantee, no Australian Bank
Guarantee shall have an expiration date (including all rights of any Borrower or
the beneficiary to require renewal) later than 10 days before the Termination
Date (it being understood that, if required by the beneficiary of any Australian
Bank Guarantee, such Australian Bank Guarantee may have an expiration date which
extends beyond the Termination Date or may have no expiration date). Within the
limits of the Letter of Credit Commitments of the Appropriate Issuing Banks and
the Unused Revolving Credit Commitments of the Appropriate Lenders (and, with
respect to Australian Letters of Credit, the aggregate Unused Revolving Credit
Commitments of the Risk Participants) in effect from time to time, and subject
to the limits referred to above, each Borrower may request the issuance of
Letters of Credit under this Section 2.01(d), repay any Letter of Credit
Advances resulting from drawings thereunder pursuant to Section 2.04(c) or
2.05(b) and request the issuance of additional Letters of Credit under this
Section 2.01(d).
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(E) DESIGNATION OF COMMITMENTS. Prior to the Closing Date, the
Borrowers shall deliver to the US Administrative Agent (which shall promptly
thereafter deliver a copy to each other Administrative Agent and each Lender) a
notice in the form of Exhibit D (a "COMMITMENT DESIGNATION NOTICE"), which
Commitment Designation Notice shall be effective upon such delivery. After the
Closing Date, the Borrowers may deliver to the US Administrative Agent (which
shall promptly thereafter deliver a copy to each other Administrative Agent and
each Lender) a Commitment Designation Notice not more frequently than eight
times in any calendar year, each such Commitment Designation Notice complying
with the provisions of this Section 2.01(e) to be effective at 10:00 a.m. (New
York City time) five US Business Days (and at least three Canadian Business Days
and Australian Business Days) after receipt by the US Administrative Agent.
Each Commitment Designation Notice shall be executed by each Borrower and shall
set forth therein the percentage of the Revolving Credit Facility which will be
available to each Borrower until the effectiveness of a replacement Commitment
Designation Notice; PROVIDED that (i) the sum of such percentages for all of the
Borrowers must equal 100%, (ii) the percentage of the Revolving Credit Facility
designated with respect to any Borrower may not be less than the percentage of
the Revolving Credit Facility (including the Available Amount of all outstanding
Letters of Credit) outstanding to, and subject to then pending Notices of
Borrowing, Notices of Issuance and Notices of Drawing, as applicable, of, such
Borrower on the date such notice is received by the US Administrative Agent and
on the date of effectiveness of such notice, (iii) the percentage designated
with respect to the Canadian Borrower may not at any time be such as would
permit Accommodations to the Canadian Borrower and Canadian Letters of Credit in
excess of the Canadian Borrower Sublimit in effect at such time, and (iv) upon
the effectiveness of each such Commitment Designation Notice, such Commitment
Designation Notice shall be binding on the Borrowers until the effectiveness of
a replacement Commitment Designation Notice. No Commitment Designation Notice
may be delivered hereunder so long as any Event of Default has occurred and is
continuing. Any contrary provision of this Agreement or any other Loan Document
notwithstanding, during the effectiveness of each such Commitment Designation
Notice, no Borrower may request, and no Lender or Issuing Bank shall have any
obligation to make or issue Accommodations or Letters of Credit for such
Borrower at any time which would cause the aggregate principal amount and Face
Amount of Accommodations and the aggregate Available Amount of Letters of Credit
outstanding to such Borrower to exceed the amount equal to the product of the
Applicable Designated Commitment Percentage set forth for such Borrower in such
Commitment Designation Notice MULTIPLIED BY the Revolving Credit Facility at
such time.
SECTION 2.02. MAKING THE ADVANCES. (A) NOTICES OF BORROWING.
Except as otherwise provided in Section 2.03 or 2.04, each Borrowing shall be
made on notice by the Appropriate Borrower to the US Administrative Agent, given
not later than 12:00 noon (New York City time), on a US Business Day (i) at
least four Australian Business Days prior to the date of the proposed Borrowing
in the case of an Australian Borrower Borrowing consisting of Fixed Rate
Advances, (ii) at least three US Business Days or Canadian Business Days prior
to the date of the proposed Borrowing in the case of any US Borrower Borrowing
or Canadian Borrower Borrowing, respectively, consisting of Fixed Rate Advances,
(iii) at least two Australian Business Days prior to the date of the proposed
Borrowing in the case of an Australian Borrower Borrowing consisting of
Fluctuating Rate Advances, and (iv) at least one US Business Day or Canadian
Business Day prior to the date of the proposed Borrowing in the case of any US
Borrower Borrowing or Canadian Borrower Borrowing, respectively, consisting of
Fluctuating Rate Advances. Upon receipt of any such notice of a Borrowing
(each, a "NOTICE OF BORROWING"), the US Administrative Agent shall give each
other Administrative Agent and each Appropriate Lender (and,
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if such Notice of Borrowing relates to Australian Borrower Advances, each Risk
Participant) prompt notice thereof by telex or telecopier. Each such Notice of
Borrowing shall be in writing (including by telex or telecopier), in
substantially the form of Exhibit E hereto and shall be confirmed by telephone
immediately by the Borrower delivering such Notice of Borrowing, specifying
therein the requested (i) date of such Borrowing, (ii) currency and Type of
Advances comprising such Borrowing (subject to Sections 2.01 and 2.08(a)),
(iii) aggregate amount of such Borrowing (stated in the requested currency) and
(iv) in the case of a Borrowing consisting of Fixed Rate Advances, initial
Interest Period for each such Advance. Each Appropriate Lender shall, before
11:00 a.m. (New York City time), with respect to US Borrower Borrowings and
Canadian Borrower Borrowings, and before 11:00 a.m. (Sydney time), with respect
to Australian Borrower Borrowings, on the date of such Borrowing, make available
for the account of its Appropriate Lending Office to the Appropriate
Administrative Agent at the Appropriate Administrative Agent's Account, in same
day funds, such Lender's ratable portion of such Borrowing in accordance with
Section 2.01. Upon the fulfillment of the applicable conditions set forth in
Article III (which fulfillment each Administrative Agent may assume in the
absence of actual knowledge, or notice received from any Borrower or the
Required Lenders, to the contrary), such Administrative Agent will make the
funds it has received from the Appropriate Lenders available to the Borrower
requesting such Borrowing by crediting the Appropriate Borrower's Account;
PROVIDED, HOWEVER, that the Appropriate Administrative Agent shall first make a
portion of such funds equal to the aggregate principal amount of any Letter of
Credit Advances made by any Appropriate Issuing Bank and by any other
Appropriate Lender and outstanding on the date of such Borrowing, plus interest
accrued and unpaid thereon to and as of such date, available to such Issuing
Bank and such other Lenders for repayment of such Letter of Credit Advances.
(B) LIMITATIONS ON BORROWINGS AND INTEREST PERIODS. Anything in
Section 2.02(a) to the contrary notwithstanding, (i) no Borrower may select
Fixed Rate Advances for any Borrowing if the aggregate amount of such Borrowing
is less than US$5,000,000 (or C$5,000,000 or A$5,000,000, as the case may be),
(ii) no Borrower may select any Type of Fixed Rate Advance for any Borrowing if
the obligation of the Appropriate Lenders to make such Type of Fixed Rate
Advances shall then be suspended pursuant to Section 2.10 or Section 2.12 and
(iii) there may not be more than 15 Interest Periods in effect at any one time.
(C) BINDING EFFECT OF NOTICES OF BORROWING. Each Notice of Borrowing
shall be irrevocable and binding on the Borrower that gave such Notice of
Borrowing. In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Fixed Rate Advances, the Borrower requesting
such Borrowing shall indemnify each Appropriate Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified for such Borrowing in such Notice of Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss (excluding loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.
(D) ASSUMPTIONS OF ADMINISTRATIVE AGENTS. Unless the Appropriate
Administrative Agent shall have received notice from an Appropriate Lender prior
to the date of any Borrowing that such Lender will not make available to the
Appropriate Administrative Agent such Lender's ratable portion of
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such Borrowing as determined in accordance with Section 2.01, the Administrative
Agents may assume that such Lender has made such portion available to the
Appropriate Administrative Agent on the date of such Borrowing in accordance
with Section 2.02(a) and the Appropriate Administrative Agent may, in reliance
upon such assumption, make available to the Borrower requesting such Borrowing
on such date a corresponding amount. If and to the extent that any such Lender
shall not have so made such ratable portion available to the Appropriate
Administrative Agent, such Lender and the Borrower that requested such Borrowing
severally agree to repay or pay to the Appropriate Administrative Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to such Borrower until the
date such amount is repaid or paid to the Appropriate Administrative Agent, at
(i) in the case of such Borrower, the interest rate applicable at such time
under Section 2.08 to Advances comprising such Borrowing and (ii) in the case of
such Lender, the Applicable Interbank Rate. If such Lender shall pay to the
Appropriate Administrative Agent such corresponding amount, such amount so paid
shall constitute such Lender's Advance as part of such Borrowing for all
purposes.
(E) FAILURE TO MAKE ADVANCES. The failure of any Lender to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Advance on the date of
such Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of any
Borrowing.
SECTION 2.03. DRAWINGS OF BA OBLIGATIONS; RE-LIQUIFYING BILLS.
(A) REQUEST FOR DRAWING. Each Drawing shall be made on notice, given
not later than 12:00 noon (New York City time) on a US Business Day at least two
Canadian Business Days prior to the date of the proposed Drawing, by the
Canadian Borrower to the US Administrative Agent, which shall give each
Administrative Agent and each Canadian Lender prompt notice thereof by telex or
telecopier. Each notice of a Drawing (a "NOTICE OF DRAWING") shall be in
writing (including by telex or telecopier), in substantially the form of Exhibit
F hereto, and shall be confirmed by telephone immediately by the Canadian
Borrower, specifying therein the requested (i) date of such Drawing (which shall
be a Business Day), (ii) aggregate Face Amount of such Drawing and (iii) the
initial Maturity Date for each BA Obligation comprising part of such Drawing;
PROVIDED, HOWEVER, that, if the Canadian Administrative Agent determines in good
faith (which determination shall be conclusive and binding upon the Canadian
Borrower) that the Drafts to be accepted and purchased or the BA Equivalent
Notes to be purchased as part of any Drawing cannot, due solely to the requested
aggregate Face Amount thereof, be accepted and/or purchased ratably by the
Canadian Lenders in accordance with Section 2.01(c), then the aggregate Face
Amount of such Drawing (or the Face Amount of BA Obligations to be created by
any Canadian Lender) shall be reduced to such lesser amount as the Canadian
Administrative Agent determines will permit such Drafts and/or BA Equivalent
Notes comprising part of such Drawing to be so accepted and purchased and each
Canadian Lender shall fund the difference between such Lender's ratable portion
of the original aggregate Face Amount of such Drawing and the Face Amount of the
BA Obligations to be created by such Lender after giving effect to such
reduction in the form of a Canadian Prime Rate Advance, which shall be deemed
for all purposes hereof to be a Canadian Borrower Advance made pursuant to
Section 2.01(a)(ii). Each Draft and BA Equivalent Note in connection with any
requested Drawing (A) shall be in a minimum amount of CN$100,000 or an integral
multiple of CN$100,000 in
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excess thereof, and (B) shall be dated the date of the proposed Drawing. Each
Canadian Lender shall, before 1:00 p.m. (Toronto time) on the date of each
Drawing, (1) in the case of each Canadian Lender able to create bankers'
acceptances in Canada, complete one or more Drafts in accordance with the
related Notice of Drawing, accept such Drafts and purchase the Bankers'
Acceptances created thereby for the Drawing Purchase Price, or (2) in the case
of each Canadian Lender that is not able to create bankers' acceptances in
Canada, complete one or more BA Equivalent Notes in accordance with the related
Notice of Drawing and purchase such completed BA Equivalent Notes for the
Drawing Purchase Price, and, in any case, shall, before 1:00 p.m. (Toronto time)
on such date, make available for the account of its Appropriate Lending Office
to the Canadian Administrative Agent at its Appropriate Administrative Agent's
Account, in same day funds, the Drawing Purchase Price payable by such Lender
for such Drawing less the Drawing Fee payable to such Lender with respect
thereto under Section 2.09(g). Upon the fulfillment of the applicable
conditions set forth in Article III (which fulfillment the Canadian
Administrative Agent may assume in the absence of actual knowledge, or notice
received from any Borrower or the Required Lenders, to the contrary), the
Canadian Administrative Agent will make the funds it has received from the
Canadian Lenders available to the Canadian Borrower by crediting its Appropriate
Borrower's Account.
(B) LIMITATIONS ON DRAWINGS. Anything in Section 2.03(a) to the
contrary notwithstanding, the Canadian Borrower may not select a Drawing if the
obligation of the Canadian Lenders to purchase and accept Bankers' Acceptances
shall then be suspended pursuant to Section 2.03(d) or 2.12.
(C) BINDING EFFECT OF NOTICES OF DRAWING. Each Notice of Drawing
shall be irrevocable and binding on the Canadian Borrower. In the case of any
proposed Drawing, the Canadian Borrower shall indemnify each Canadian Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in the Notice of Drawing for
such Drawing the applicable conditions set forth in Article III, including,
without limitation, any loss (excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Drawing Purchase Price to be
paid by such Lender as part of such Drawing when, as a result of such failure,
such Drawing is not made on such date.
(D) CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE. (i)
If, with respect to any proposed Drawing, the Canadian Administrative Agent
determines in good faith that circumstances affecting the money markets at
the time any related Notice of Drawing is delivered or is outstanding will
result in no market for the Bankers' Acceptances to be created in connection
with such Drawing or an insufficient demand for such Bankers' Acceptances to
allow the Lenders creating such Bankers' Acceptances to sell or trade the
Bankers' Acceptances to be created and purchased or discounted by them
hereunder in connection with such Drawing, then, upon notice to the Canadian
Borrower and the Canadian Lenders thereof, (A) the Notice of Drawing with
respect to such proposed Drawing shall be cancelled and the Drawing requested
therein shall not be made and (B) the right of the Canadian Borrower to
request a Drawing shall be suspended until the Canadian Administrative Agent
shall notify such Borrower that the circumstances causing such suspension no
longer exist. In the case of any such cancellation of a Notice of Drawing,
unless the Canadian Borrower shall give written notice to the contrary to the
US Administrative Agent and the Canadian Administrative Agent, the
cancellation of any such Notice of
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Drawing shall be deemed to be the giving by the Canadian Borrower of a Notice
of Borrowing for Canadian Borrower Advances consisting of Canadian Prime Rate
Advances in an aggregate principal amount equal to the aggregate Face Amount
of such proposed Drawing and the Canadian Lenders shall, subject to the terms
and conditions hereof applicable to the making of Canadian Borrower Advances,
make such Advances available to the Canadian Borrower, if practicable, on the
same Business Day, and otherwise on the next Business Day.
(ii) Upon the occurrence and during the continuance of any Default,
the obligation of the Canadian Lenders to purchase and/or accept BA Obligations
shall be suspended.
(E) ASSUMPTIONS OF THE APPROPRIATE ADMINISTRATIVE AGENT. Unless the
Canadian Administrative Agent shall have received notice from a Canadian Lender
prior to the date of any Drawing that such Lender will not make available to it
such Lender's ratable share of such Drawing in accordance with Section 2.03(a),
such Administrative Agent may assume that such Lender has made such ratable
share available to it on the date of such Drawing in accordance with
Section 2.03(a) and such Administrative Agent may, in reliance upon such
assumption, make available to the Canadian Borrower on such date a corresponding
amount. If and to the extent that any such Lender shall not have so made such
ratable share available to the Canadian Administrative Agent, such Lender and
the Canadian Borrower severally agree to repay or pay to the Canadian
Administrative Agent forthwith on demand such corresponding amount, together
with interest thereon, for each day from the date such amount is made available
to such Borrower until the date such amount is repaid or paid to such
Administrative Agent, at (i) in the case of the Canadian Borrower, a rate per
annum equal to the BA Rate used in calculating the Drawing Purchase Price with
respect to such Drawing, and (ii) in the case of such Lender, the Applicable
Interbank Rate. If such Lender shall pay to the Canadian Administrative Agent
such corresponding amount, such amount so paid shall constitute such Lender's BA
Obligation as part of such Drawing for all purposes under this Agreement.
(F) PRESIGNED DRAFT FORMS. To enable the Canadian Lenders to create
Bankers' Acceptances or to complete BA Equivalent Notes in accordance with
Section 2.01(c) and this Section 2.03, (i) the Canadian Borrower shall supply
each Canadian Lender, upon the Canadian Borrower's execution of this Agreement,
with such number of Drafts and signed blank BA Equivalent Notes provided to the
Canadian Borrower by the Canadian Administrative Agent as the Canadian
Administrative Agent may from time to time reasonably request, duly endorsed and
executed on behalf of the Canadian Borrower by any one or more of its duly
authorized officers. Each Canadian Lender shall exercise such care in the
custody and safekeeping of any Drafts and BA Equivalent Notes in its possession
from time to time as it would exercise in the custody and safekeeping of similar
property owned by it. The signatures of officers of the Canadian Borrower on
Drafts and BA Equivalent Notes may be mechanically reproduced in facsimile and
Bankers' Acceptances and BA Equivalent Notes bearing such facsimile signatures
shall be binding upon the Canadian Borrower as if they had been manually signed
by such officers. Notwithstanding that any of the individuals whose manual or
facsimile signature appears on any Draft or BA Equivalent Note as one of such
officers may no longer hold office at the date of such draft or at the date of
its acceptance by a Lender hereunder or at any time thereafter, any Draft or
Bankers' Acceptance or BA Equivalent Note so signed shall be valid and binding
upon, and enforceable against, the applicable Borrower.
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(G) DISTRIBUTION OF BANKERS' ACCEPTANCES. Bankers' Acceptances
purchased by a Canadian Lender in accordance with the terms of Section 2.01(c)
and this Section 2.03 may, in such Lender's sole discretion, be held by such
Lender for its own account until the applicable Maturity Date or sold,
rediscounted or otherwise disposed of by it at any time prior thereto in any
relevant market therefor.
(H) FAILURE TO FUND IN RESPECT OF DRAWINGS. The failure of any
Canadian Lender to fund the Drawing Purchase Price to be funded by it as part of
any Drawing shall not relieve any other Canadian Lender of its obligation
hereunder to fund its Drawing Purchase Price on the date of such Drawing, but no
Canadian Lender shall be responsible for the failure of any other Canadian
Lender to fund the Drawing Purchase Price to be funded by such other Canadian
Lender on the date of any Drawing.
(I) RE-LIQUIFYING BILLS.
(i) Within three Business Days of request by any Australian Lender or
the Non-Pro Rata Lender, the Australian Borrower shall draw Bills without
recourse to the Australian Borrower in the manner required by such
Australian Lender or the Non-Pro Rata Lender, as the case may be; PROVIDED
that the discounted value of such Bills when added to the aggregate
discounted value of all other outstanding Bills drawn under this clause in
respect of such Australian Lender or the Non-Pro Rata Lender, as the case
may be, may not exceed the aggregate principal amount of all then
outstanding Bank Bill Rate Advances made by such Australian Lender or the
Non-Pro Rata Lender, as the case may be. In calculating the aggregate
discounted value of Bills that any Australian Lender or the Non-Pro Rata
Lender is entitled to have drawn under this clause, the aggregate
discounted value of Bills drawn by the Australian Borrower under this
clause in respect of any other Australian Lender or any former Australian
Lender is to be disregarded.
(ii) The Australian Borrower irrevocably appoints each Australian
Lender and the Non-Pro Rata Lender as its attorney to draw Bills in the
Australian Borrower's name or on its behalf under clause (i) and agrees to
ratify all action taken by the Australian Lender or the Non-Pro Rata
Lender, as the case may be, as its attorney under this clause (ii).
(iii) The requirement to draw Bills under clause (i) and the
appointment under clause (ii) will cease and be revoked without necessity
for notice, on the later to occur of (i) repayment by the Australian
Borrower of all outstanding Bank Bill Rate Advances, and (ii) the
termination in full of the Commitments of the Australian Lenders and the
Risk Participants. Nothing in clauses (i) or (ii) requires the Australian
Borrower or authorizes any Australian Lender or the Non-Pro Rata Lender as
attorney to draw a Bill which matures after the Termination Date.
(iv) Each of the Australian Lenders and the Non-Pro Rata Lender
indemnifies the Australian Borrower against liability on any Bill drawn by
the Australian Borrower at the request of such Australian Lender or the
Non-Pro Rata Lender, as the case may be, under clause (i) or drawn by such
Australian Lender or the Non-Pro Rata Lender, as the case may be, under
clause
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(ii). Each Australian Lender agrees to pay the costs of preparation of, and all
stamp duty on, each Bill drawn under this Section 2.03(i) on its behalf.
SECTION 2.04. ISSUANCE OF AND DRAWINGS AND REIMBURSEMENT UNDER
LETTERS OF CREDIT. (A) REQUEST FOR ISSUANCE. Each Letter of Credit (other
than the Existing Letters of Credit) shall be issued upon notice, given not
later than 12:00 noon (New York City time) on a US Business Day at least five
Business Days prior to the date of the proposed issuance of such Letter of
Credit, by any Borrower to any Appropriate Issuing Bank, which shall give to the
US Administrative Agent and each Lender prompt notice thereof by telex or
telecopier. Each such notice of issuance of a Letter of Credit (a "NOTICE OF
ISSUANCE") shall be in writing (including by telex or telecopier), and shall be
confirmed by telephone immediately by the Borrower requesting such Letter of
Credit, specifying therein the requested (i) date of such issuance (which shall
be a Business Day), (ii) Available Amount of such Letter of Credit,
(iii) expiration date of such Letter of Credit, (iv) name and address of the
beneficiary of such Letter of Credit and (v) form of such Letter of Credit, and
shall be accompanied by such application and agreement for letter of credit as
such Issuing Bank may specify to the Borrower requesting such Letter of Credit
for use in connection with such requested Letter of Credit (a "LETTER OF CREDIT
AGREEMENT"). If (A) the requested form of such Letter of Credit is acceptable
to such Issuing Bank in its reasonable discretion and (B) such Issuing Bank has
not received notice of objection to such issuance from the Required Lenders
based on a failure to fulfill the applicable conditions set forth in Article
III, such Issuing Bank will, upon fulfillment of the applicable conditions set
forth in Article III (which fulfillment each Issuing Bank may assume in the
absence of actual knowledge, or notice from any Borrower, any Administrative
Agent or the Required Lenders, to the contrary), make such Letter of Credit
available to the Appropriate Borrower at such Issuing Bank's office referred to
in Section 8.02 or as otherwise agreed with the Borrower requesting such Letter
of Credit in connection with such issuance. In the event and to the extent that
the provisions of any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.
(B) LETTER OF CREDIT REPORTS. Each Issuing Bank shall furnish (i) to
the US Administrative Agent and PGI, substantially concurrently with the payment
of any drawing under any Letter of Credit, notice of such drawing setting forth
the amount and currency of such drawing and identifying the Letter of Credit
under which such drawing was made, (ii) to the US Administrative Agent,
concurrently with the issuance of any Letter of Credit, notice of such issuance
setting forth the maximum Available Amount and the expiration date of such
Letter of Credit, (iii) to the US Administrative Agent and PGI on the first
Business Day of each week, a written report summarizing issuance and expiration
dates of Letters of Credit issued by such Issuing Bank during the previous week
and drawings during such week under all Letters of Credit issued by such Issuing
Bank (but no such report need be furnished if no such Letters of Credit were
issued or no such drawings were made), (iv) to each Lender on the first Business
Day of each month, a written report summarizing issuance and expiration dates of
Letters of Credit issued by such Issuing Bank during the preceding month and
drawings during such month under all Letters of Credit issued by such Issuing
Bank (but no such report need be furnished if no such Letters of Credit were
issued or no such drawings were made), and (v) to the US Administrative Agent,
each Lender and PGI on the third Business Day preceding the last Business Day of
each calendar quarter, a written report setting forth the average daily
aggregate Available Amount during such calendar quarter of all Letters of Credit
issued by such Issuing Bank.
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(C) DRAWING AND REIMBURSEMENT. The payment by any Issuing Bank of a
draft drawn under any Letter of Credit and the payment by any Australian Issuing
Bank of any amount under any Australian Bank Guarantee (any such payment being a
"drawing" for purposes hereof) shall constitute for all purposes of this
Agreement the making by such Issuing Bank of a Letter of Credit Advance in the
amount of such draft or payment, as the case may be, which shall be (i) a US
Base Rate Advance, in the case of a drawing under a US Letter of Credit, (ii) a
Canadian Base Rate Advance, in the case of a drawing under a Canadian Letter of
Credit denominated in US Dollars, (iii) a Canadian Prime Rate Advance, in the
case of a drawing under a Canadian Letter of Credit denominated in Canadian
Dollars, and (iv) an Australian Prime Rate Advance, in the case of a drawing
under an Australian Letter of Credit (and, if such Australian Letter of Credit
is denominated in US Dollars, the amount of such drawing, and of the resulting
Letter of Credit Advance, shall be immediately and automatically converted to
the Equivalent thereof in Australian Dollars). Upon written demand by any
Issuing Bank with an outstanding Letter of Credit Advance, with a copy of such
demand to the US Administrative Agent, each Appropriate Lender shall purchase
from such Issuing Bank, and such Issuing Bank shall sell and assign to each such
Lender, such Lender's ratable share (based on the Maximum Revolving Commitments
of such Appropriate Lenders, it being understood that for purposes of
determining such ratable share as to any Letter of Credit Advance in respect of
an Australian Letter of Credit, the Maximum Revolving Commitment of the Non-Pro
Rata Lender shall be deemed to be the aggregate Maximum Revolving Commitments of
the Risk Participants) of such outstanding Letter of Credit Advance as of the
date of such purchase, by making available for the account of its Appropriate
Lending Office to the Appropriate Administrative Agent for the account of such
Issuing Bank, by deposit to the Appropriate Administrative Agent's Account, in
same day funds, an amount equal to the portion of the outstanding principal
amount of (and in the same currency as) such Letter of Credit Advance to be
purchased by such Lender. Promptly after receipt thereof, such Administrative
Agent shall transfer such funds to such Issuing Bank. The Borrowers hereby
agree to each such sale and assignment. Each Appropriate Lender agrees to
purchase its ratable share (as set forth above) of an outstanding Letter of
Credit Advance on (i) the Business Day on which demand therefor is made by the
Issuing Bank which made such Advance, provided notice of such demand is given
not later than 11:00 a.m. (New York City time) (or 11:00 a.m. (Sydney time) with
respect to any such demand by any Australian Issuing Bank) on such Business Day,
or (ii) the first Business Day next succeeding such demand if notice of such
demand is given after such time. Upon any such assignment by an Issuing Bank to
any Appropriate Lender of a portion of a Letter of Credit Advance, such Issuing
Bank represents and warrants to such Appropriate Lender that such Issuing Bank
is the legal and beneficial owner of such interest being assigned by it, free
and clear of any liens, but makes no other representation or warranty and
assumes no responsibility with respect to such Letter of Credit Advance, the
Loan Documents or any Loan Party. If and to the extent that any Appropriate
Lender shall not have so made the amount of such Letter of Credit Advance
available to the Appropriate Administrative Agent, such Appropriate Lender
agrees to pay to the Appropriate Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
such Issuing Bank until the date such amount is paid to the Appropriate
Administrative Agent, at the Applicable Interbank Rate for such Appropriate
Administrative Agent's account or the account of such Issuing Bank, as
applicable. If such Lender shall pay to the Appropriate Administrative Agent
such amount for the account of such Issuing Bank on any Business Day, such
amount so paid in respect of principal shall constitute a Letter of Credit
Advance made by such Lender on such Business Day for purposes of this Agreement,
and the outstanding principal amount of the Letter of Credit Advance made by
such Issuing Bank shall be reduced by such amount on such Business Day.
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(D) FAILURE TO MAKE LETTER OF CREDIT ADVANCES. The failure of any
Appropriate Lender to make the Letter of Credit Advance to be made by it on the
date specified in Section 2.04(c) shall not relieve any other Appropriate Lender
of its obligation hereunder to make its Letter of Credit Advance on such date,
but no Lender shall be responsible for the failure of any other Lender to make
the Letter of Credit Advance to be made by such other Lender on such date.
(E) CASH COLLATERAL ON RATING DECLINE OF LENDER. If, and for so long
as, any Appropriate Lender's public debt rating (as defined below) is below BBB
or Baa2 by S&P or Moody's, respectively (or, with respect to any Appropriate
Lender that does not have such a public debt rating at any time of
determination, any Appropriate Issuing Bank shall determine that such Lender's
ability to meet such Lender's obligations under Section 2.04(c) has declined
since the date such Lender became a Lender hereunder), such Lender shall,
immediately upon demand by any Appropriate Issuing Bank, cash collateralize its
ratable share (determined as set forth in Section 2.04(c)) of the aggregate
Available Amount under all Letters of Credit issued by such Issuing Bank and
outstanding at such time by depositing such amount into a cash collateral
account (but not any Cash Collateral Account) designated by the Appropriate
Administrative Agent (and, if necessary, established for such purposes).
Amounts deposited by any Lender in any such cash collateral account shall be
applied by the Appropriate Administrative Agent to satisfy such Lender's
obligations under Section 2.04(c) to the Issuing Bank requesting such cash
collateral and shall, to the extent such amounts exceed at any time such
Lender's ratable share (determined as set forth in Section 2.04(c)) of the
aggregate Available Amount under all outstanding Letters of Credit issued by
such Issuing Bank as to which such Lender has a contingent obligation to
purchase Letter of Credit Advances pursuant to Section 2.04(c), be returned to
such Lender. The term "public debt rating" means, as of any date with respect
to any Person, the rating that has been most recently announced by either S&P or
Moody's, as the case may be, for any class of non-credit enhanced long-term
senior unsecured debt issued by such Person.
SECTION 2.05. REPAYMENT OF ACCOMMODATIONS.
(A) REVOLVING CREDIT ADVANCES; BA OBLIGATIONS.
(I) REVOLVING CREDIT ADVANCES. The US Borrower shall repay to the US
Administrative Agent for the ratable account of the US Lenders on the
Termination Date the aggregate principal amount of the US Borrower Advances
then outstanding. The Canadian Borrower shall repay to the Canadian
Administrative Agent for the ratable account of the Canadian Lenders on the
Termination Date the aggregate principal amount of the Canadian Borrower
Advances then outstanding. The Australian Borrower shall repay to the
Australian Administrative Agent for the ratable account of the Australian
Lenders (and, if any Risk Participants have purchased Non-Pro Rata
Advances, such Risk Participants with respect to such Advances) and the
Non-Pro Rata Lender (with respect to any outstanding Non-Pro Rata Advances)
on the Termination Date the aggregate principal amount of the Australian
Borrower Advances then outstanding.
(II) BA OBLIGATIONS. The Canadian Borrower shall, subject to Sections
2.11(a) and 2.11(b), pay to the Canadian Administrative Agent for the
ratable account of the Canadian Lenders on the Maturity Date of any BA
Obligations an amount equal to the sum of (1) the
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aggregate Face Amount of all such BA Obligations maturing on such date and
(2) the aggregate principal amount of all Canadian Prime Rate Advances made
pursuant to Section 2.03(a) in connection with the Drawing of such BA
Obligation. Any payment by the Canadian Borrower of any BA Obligations in
accordance with this Section 2.05(a)(ii) shall, to the extent of such
payment, satisfy the obligations of the Canadian Borrower under the BA
Obligations to which it relates and, in the case of a Bankers' Acceptance,
the Lender that has accepted such Bankers' Acceptance shall, to the extent
of such payment to such Lender, thereafter be solely responsible for the
payment thereof.
(B) LETTER OF CREDIT ADVANCES. (i) Each Borrower shall repay to
the Appropriate Administrative Agent for the account of each Issuing Bank and
each other Lender that has made a Letter of Credit Advance in respect of any
Letter of Credit issued for the account of such Borrower, on the earlier of the
seventh Business Day after the date on which such Advance was made and the
Termination Date, the outstanding principal amount of each Letter of Credit
Advance made by each of them.
(ii) The Obligations of each Borrower under this Agreement with
respect to Letters of Credit issued for the account of such Borrower, under any
Letter of Credit Agreement relating thereto and under any other agreement or
instrument relating to any Letter of Credit issued for the account of such
Borrower shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement and
such other agreement or instrument under all circumstances, including, without
limitation, the following circumstances (it being understood that any such
payment by any Borrower is without prejudice to, and does not constitute a
waiver of, any rights such Borrower might have or might acquire as a result of
the payment by any Issuing Bank of any draft or the reimbursement by such
Borrower thereof):
(A) any lack of validity or enforceability of any Loan Document, any
Letter of Credit Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (all of the foregoing being, collectively, the
"L/C RELATED DOCUMENTS");
(B) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of any Borrower in respect of
any L/C Related Document or any other amendment or waiver of or any
consent to departure from all or any of the L/C Related Documents;
(C) the existence of any claim, set-off, defense or other right that
any Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), any Issuing Bank or any other Person,
whether in connection with the transactions contemplated by the L/C Related
Documents or any unrelated transaction;
(D) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
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(E) payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate or a demand that does not strictly
comply with the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral or
other collateral, or any release or amendment or waiver of or consent to
departure from the Guaranty or any other guarantee, for all or any of the
Obligations of any Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Borrower or a guarantor.
SECTION 2.06. TERMINATION OR REDUCTION OF THE COMMITMENTS. (A)
OPTIONAL. Any Borrower may, upon at least five Business Days' notice to the US
Administrative Agent, terminate in whole or reduce in part the unused portion of
the Letter of Credit Facility and the Unused Revolving Credit Commitments;
PROVIDED, HOWEVER, that (i) each partial reduction of a Facility shall be in an
aggregate amount of US$5,000,000 or an integral multiple of US$1,000,000 in
excess thereof and (ii) each partial reduction of the Revolving Credit Facility
shall reduce ratably the Maximum Revolving Credit Commitments of (A) the US
Lenders by an aggregate amount equal to the amount of such partial reduction,
(B) the Canadian Lenders by an aggregate amount equal to the amount of such
partial reduction, and (C) the Australian Lenders and the Risk Participants in
an aggregate amount equal to the amount of such partial reduction. Each
reduction of the Revolving Credit Commitments pursuant to this Section 2.06(a)
shall reduce, on a dollar-for-dollar basis, the amount of the mandatory
reductions of the Revolving Credit Commitments required pursuant to Section
2.06(b)(i) in the direct order of such mandatory reductions.
(B) MANDATORY.
(I) AUTOMATIC REDUCTIONS OF COMMITMENTS. On each date set forth
below (each such date being a "COMMITMENT REDUCTION DATE"), the Revolving Credit
Facility and the Maximum Revolving Credit Commitments of the Lenders shall be
reduced (as set forth below and without further action by or notice to any
Administrative Agent, any Lender or any Borrower) by the amount set forth
opposite such date below (as such amount may have been reduced prior to such
time pursuant to this Section 2.06):
<TABLE>
<CAPTION>
REVOLVING COMMITMENT COMMITMENT REDUCTION
REDUCTION DATE AMOUNT
-------------------- --------------------
<S> <C>
April 17, 1999 $20,000,000
April 17, 2000 $35,000,000
April 17, 2001 $45,000,000
January 29, 2002 $50,000,000
</TABLE>
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Each such reduction of the Revolving Credit Facility shall reduce ratably the
Maximum Revolving Credit Commitments of (A) the US Lenders by an aggregate
amount equal to the amount of such reduction, (B) the Canadian Lenders by an
aggregate amount equal to the amount of such reduction, and (C) the Australian
Lenders and the Risk Participants in an aggregate amount equal to the amount of
such reduction.
(II) REDUCTIONS IN CONNECTION WITH MANDATORY PREPAYMENTS. The
Revolving Credit Facility and the Maximum Revolving Credit Commitments of the
Lenders shall be automatically and permanently reduced (as set forth below) on
each date on which prepayment of Advances is required to be made pursuant to
Section 2.07(b)(i) in an amount equal to the applicable Reduction Amount. Each
such reduction of the Revolving Credit Facility shall reduce ratably the Maximum
Revolving Credit Commitments of (A) the US Lenders by an aggregate amount equal
to the amount of such reduction, (B) the Canadian Lenders by an aggregate amount
equal to the amount of such reduction, and (C) the Australian Lenders and the
Risk Participants in an aggregate amount equal to the amount of such reduction.
Reductions of the Maximum Revolving Credit Commitments pursuant to this Section
2.06(b)(ii) shall reduce, on a dollar-for-dollar basis, the amount of the
mandatory reductions of the Revolving Credit Commitments required pursuant to
Section 2.06(b)(i) in the direct order of such mandatory reductions.
(III) REDUCTIONS IN LETTER OF CREDIT FACILITY. The Letter of Credit
Commitments of the Issuing Banks shall be permanently and ratably reduced from
time to time on the date of each reduction in the Revolving Credit Facility by
the amount, if any, by which the aggregate amount of the Letter of Credit
Commitments of the US Issuing Banks, the Canadian Issuing Banks and the
Australian Issuing Banks exceeds the aggregate Maximum Revolving Commitments of
the US Lenders (with respect to the US Issuing Banks), the Canadian Lenders
(with respect to the Canadian Issuing Banks) and the Australian Lenders and the
Risk Participants (with respect to the Australian Issuing Banks) after giving
effect to such reduction of the Revolving Credit Facility.
SECTION 2.07. PREPAYMENTS. (A) OPTIONAL. Any Borrower may, upon at
least one Business Day's (or, in the case of any prepayment of Australian
Borrower Advances which are Fluctuating Rate Advances, two Business Days')
notice with respect to Fluctuating Rate Advances and upon at least three
Business Days' (or, in the case of any prepayment of Australian Borrower
Advances which are Fixed Rate Advances, four Business Days') notice with respect
to Fixed Rate Advances to the US Administrative Agent stating the proposed date
and aggregate principal amount of the prepayment and the application of such
prepayment, and if such notice is given such Borrower shall, prepay the
outstanding aggregate principal amount of the Advances owing by such Borrower
comprising part of the same Borrowing in whole or ratably in part, together with
accrued interest to the date of such prepayment on the aggregate principal
amount prepaid; PROVIDED, HOWEVER, that (x) each partial prepayment shall be in
an aggregate principal amount of US$5,000,000 (or CN$5,000,000, in the case of
any prepayment of Canadian Dollar Advances, or A$5,000,000, in the case of any
prepayment of Australian Dollar Advances) or an integral multiple of
US$1,000,000 (or CN$1,000,000, in the case of any prepayment of Canadian Dollar
Advances, or A$1,000,000, in the case of any prepayment of Australian Dollar
Advances) in excess thereof, (y) no partial prepayment of Fixed Rate Advances
pursuant to this Section 2.07(a) shall reduce the aggregate unpaid principal
amount of Fixed Rate Advances comprising any Borrowing to less than US$5,000,000
(or A$5,000,000 if denominated in Australian Dollars or
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CN$5,000,000 if denominated in Canadian Dollars), and (z) if any prepayment of a
Fixed Rate Advance is made on a date other than the last day of an Interest
Period for such Advance, the Borrower making such prepayment shall also pay any
amounts owing pursuant to Section 8.04(c). BA Obligations may not be prepaid at
any time except as expressly required by, and in accordance with, Section
2.07(b).
(B) MANDATORY.
(I) NET CASH PROCEEDS OF CERTAIN ASSET SALES AND DEBT ISSUANCES.
Each Borrower shall, on the date of receipt by such Borrower or any of its
Subsidiaries of the Net Cash Proceeds from (A) the sale, lease, transfer or
other disposition of any assets comprising the Core Properties permitted under
Section 5.02(e) (other than (1) the sale, lease, transfer or other disposition
of commodities in the ordinary course of business, and (2) any sale in
connection with a sale and leaseback transaction permitted under Section
5.02(c)), or (B) the incurrence or issuance of any Debt permitted pursuant to
Section 5.02(b)(ii), prepay an aggregate principal amount (or an aggregate Face
Amount) of the Accommodations outstanding to such Borrower comprising part of
the same Borrowings or Drawings, as the case may be, and the Letter of Credit
Advances equal to the amount of such Net Cash Proceeds; PROVIDED, HOWEVER, that
no Borrower shall be required to make any such prepayment in connection with any
transaction described in the foregoing clause (A) to the extent that (I) the
aggregate amount of Net Cash Proceeds received by the Borrowers and their
Subsidiaries from all such transactions in any fiscal year does not exceed
US$5,000,000 (or the Equivalent thereof in any other currency) or (II) if such
Net Cash Proceeds are, at the time of the transaction giving rise thereto,
intended to be (and, within six months of such transaction, have been)
reinvested in the business of the Borrowers and the Restricted Subsidiaries (it
being understood that any Net Cash Proceeds described in this clause (II) not so
reinvested as of the expiration of the applicable six month period shall be
prepaid as aforesaid upon such expiration). Subject to Section 2.07(b)(iv),
each such prepayment shall be applied to the Obligations under the Revolving
Credit Facility of the Borrower making such prepayment as specified by such
Borrower.
(II) ADVANCES IN EXCESS OF COMMITMENTS; EXCHANGE RATE FLUCTUATIONS.
Each Borrower shall, on the Business Day following notice from the US
Administrative Agent that a prepayment under this Section 2.07(b)(ii) is
required, prepay an aggregate principal amount (or an aggregate Face Amount) of
the Accommodations outstanding to such Borrower comprising part of the same
Borrowings or Drawings, as the case may be, and the Letter of Credit Advances
equal to the amount by which (A) the sum of (x) the aggregate principal amount
of the Revolving Credit Advances outstanding to such Borrower PLUS (y) the
Letter of Credit Advances then outstanding in respect of Letters of Credit
issued for the account of such Borrower and the aggregate Available Amount of
all Letters of Credit issued for the account of such Borrower then outstanding
PLUS (z) in the case of the Canadian Borrower, the aggregate Face Amount of the
BA Obligations then outstanding exceeds (B) the aggregate Revolving Credit
Commitments of the Appropriate Lenders (the Revolving Credit Commitment of the
Non-Pro Rata Lender being deemed to be the aggregate Revolving Credit
Commitments of the Risk Participants) on such Business Day (after giving effect
to any permanent reduction thereof on or prior to such Business Day pursuant to
Section 2.06). In addition to the foregoing, the Canadian Borrower shall, prior
to April 17, 1999, on the Business Day following notice from the US
Administrative Agent that a prepayment under this Section 2.07(b)(ii) is
required, prepay an aggregate principal amount (or an aggregate Face Amount) of
the Accommodations comprising part of the same Borrowings or Drawings, as the
case may be, equal to the amount by which (I) the sum of (1) the aggregate
principal amount of Canadian Borrower Advances
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and Letter of Credit Advances in respect of Canadian Letters of Credit then
outstanding, and (2) the aggregate Face Amount of BA Obligations and the
aggregate Available Amount of Canadian Letters of Credit then outstanding
exceeds (II) the Canadian Borrower Sublimit on such Business Day. For purposes
of determining the principal amount of any outstanding Accommodations
denominated in Canadian Dollars or Australian Dollars, such amounts shall be
calculated by the US Administrative Agent (and each such calculation shall be
conclusive for purposes hereof, absent manifest error) on the basis of the
Equivalent thereof in US Dollars on each Business Day and it is expressly
understood and agreed that fluctuations in currency exchange rates will result
in mandatory prepayments (or cash collateralization with respect to Letters of
Credit) hereunder to the extent any such fluctuation results in the aggregate
amount of outstanding Accommodations plus the aggregate Available Amount of
outstanding Letters of Credit, in each case measured in US Dollars, being in
excess of the Revolving Credit Facility measured in US Dollars. Subject to
Section 2.07(b)(iv), each such prepayment shall be applied to the Obligations
under the Revolving Credit Facility of the Borrower making such prepayment as
specified by such Borrower.
(III) CASH COLLATERALIZATION OF LETTERS OF CREDIT. (A) Each
Borrower shall, on the Business Day following notice from the Appropriate
Administrative Agent that cash collateralization under this Section 2.07(b)(iii)
is required, pay to such Administrative Agent for deposit in a Cash Collateral
Account in the control of such Administrative Agent (or, during the continuance
of any Event of Default, any Cash Collateral Account) an amount sufficient to
cause the aggregate amount on deposit in such Account for such purpose to equal
the amount by which the aggregate Available Amount of all Letters of Credit
issued by any Issuing Bank for the account of such Borrower and then outstanding
exceeds the Letter of Credit Commitment of such Issuing Bank on such Business
Day (after giving effect to any permanent reduction thereof on or prior to such
Business Day pursuant to Section 2.06).
(B) The Australian Borrower shall, upon written demand by any
Australian Issuing Bank at any time on or after the date which is 90 days prior
to the Termination Date, cash collateralize the Available Amount of each
Australian Bank Guarantee which does not have an expiration date occurring prior
to the Termination Date by depositing an amount equal to the aggregate Available
Amount of all such Australian Bank Guarantees into a cash collateral account
designated by the Australian Administrative Agent (and, if necessary,
established for such purposes). Amounts deposited by the Australian Borrower in
any such cash collateral account shall be applied to satisfy the Australian
Borrower's obligations in respect of amounts drawn under any such Australian
Bank Guarantee and shall, to the extent such amounts exceed at any time the
aggregate Available Amount under all such Australian Bank Guarantees, be
returned to the Australian Borrower.
(IV) APPLICATION OF PREPAYMENTS. Each prepayment of the Revolving
Credit Facility made pursuant to clause (i) or (ii) above shall be allocated to
the Accommodations outstanding to the Borrower or Borrowers making such
prepayment and shall be applied to such Accommodations as directed by the
Borrower or Borrowers making such prepayment so long as no Event of Default has
occurred and is continuing on the date of such prepayment and, if an Event of
Default has occurred and is continuing or any applicable Borrower has not
specified the application of any such prepayment, shall be applied:
(A) in the case of Accommodations outstanding to the US Borrower,
FIRST to prepay Letter of Credit Advances then outstanding in respect of
drawings under US Letters of Credit
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until such Advances are paid in full, SECOND to prepay (ratably among the
Lenders holding such Advances) US Borrower Advances then outstanding
comprising part of the same Borrowings until such Advances are paid in
full and THIRD deposited in the US Cash Collateral Account to cash
collateralize 100% of the Available Amount of all US Letters of Credit
then outstanding;
(B) in the case of Accommodations outstanding to the Canadian
Borrower, FIRST to prepay Letter of Credit Advances then outstanding in
respect of drawings under Canadian Letters of Credit until such Advances
are paid in full, SECOND to prepay (ratably among the Lenders holding such
Advances) Canadian Borrower Advances then outstanding comprising part of
the same Borrowings until such Advances are paid in full, THIRD deposited
in the Canadian Cash Collateral Account to cash collateralize 100% of the
Face Amount of all BA Obligations then outstanding, and FOURTH deposited in
the Canadian Cash Collateral Account to cash collateralize 100% of the
Available Amount of all Canadian Letters of Credit then outstanding; and
(C) in the case of Accommodations outstanding to the Australian
Borrower, FIRST to prepay Letter of Credit Advances then outstanding in
respect of drawings under Australian Letters of Credit until such Advances
are paid in full, SECOND to prepay (ratably among the Lenders holding such
Advances) Australian Borrower Advances then outstanding comprising part of
the same Borrowings until such Advances are paid in full, and THIRD
deposited in the Australian Cash Collateral Account to cash collateralize
100% of the Available Amount of all Australian Letters of Credit then
outstanding;
and, in the case of prepayments of the Revolving Credit Facility required
pursuant to clause (i) above, the amount remaining (if any) after the prepayment
in full of the Accommodations then outstanding to the applicable Borrower and,
if applicable, the 100% cash collateralization of the aggregate Available Amount
of Letters of Credit issued for the account of such Borrower and, with respect
to the Canadian Borrower, the aggregate Face Amount of BA Obligations then
outstanding (the sum of such prepayment amounts, cash collateralization amounts
and remaining amount being referred to herein as the "REDUCTION AMOUNT") may be
retained by the applicable Borrower and its Subsidiaries and the Revolving
Credit Facility shall be permanently reduced as set forth in Section 2.06(b)(ii)
by an amount equal to the Reduction Amount. Upon the drawing of any Letter of
Credit, or the Maturity Date of any BA Obligation, for which funds are on
deposit in any Cash Collateral Account, such funds shall be applied to reimburse
the relevant Issuing Bank or Lenders, as applicable.
(V) DEPOSIT OF CERTAIN PREPAYMENTS; EFFECT OF PREPAYMENT OF BA
OBLIGATION. Notwithstanding any of the other provisions of this Section
2.07(b), so long as no Default shall have occurred and be continuing, if any
prepayment of Eurodollar Rate Advances or BA Obligations is required to be made
under clause (i) of this Section 2.07(b) other than on the last day of the
Interest Period therefor or the Maturity Date thereof, respectively, the
Appropriate Borrower may, with respect to any such Eurodollar Rate Advances and
BA Obligations, deposit the amount of any such prepayment otherwise required to
be made hereunder in a Cash Collateral Account, as appropriate, until the last
day of such Interest Period or such Maturity Date, at which time the US
Administrative Agent shall be authorized (without any further action by any
Borrower) to apply, or to direct the Canadian Administrative Agent or the
Australian Administrative Agent to apply, such amount to the prepayment of such
Advances or such BA Obligations in accordance with this Section 2.07(b). Any
prepayment by the Canadian Borrower of
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any BA Obligations in accordance with this Section 2.07(b) shall, upon the
application thereof at the applicable Maturity Date therefor, satisfy, to the
extent of such application, the obligations of the Canadian Borrower under such
BA Obligations to which it relates and, in the case of a Bankers' Acceptance,
the Lender that has accepted such Bankers' Acceptance shall thereafter, to the
extent of such application, be solely responsible for the payment thereof.
(VI) PREPAYMENTS TO INCLUDE INTEREST AND BREAKAGE. All prepayments
under this Section 2.07 shall be made together with accrued interest to the date
of such prepayment on the principal amount prepaid. If any payment required to
be made under this Section 2.07 on account of Fixed Rate Advances or BA
Obligations is made other than on the last day of the applicable Interest Period
therefor, the applicable Borrower shall also pay any amounts owing pursuant to
Section 8.04(c).
SECTION 2.08. INTEREST. (A) AVAILABILITY OF TYPES OF ADVANCES.
Subject in each case to the provisions of Sections 2.10 and 2.12: (i) US
Borrower Advances may be US Base Rate Advances or Eurodollar Rate Advances only;
(ii) Canadian Borrower Advances in US Dollars may be Canadian Base Rate Advances
or Eurodollar Rate Advances only and Canadian Borrower Advances in Canadian
Dollars may be Canadian Prime Rate Advances only; and (iii) Australian Borrower
Advances in US Dollars may be Eurodollar Rate Advances only and Australian
Borrower Advances in Australian Dollars may be Australian Prime Rate Advances or
Bank Bill Rate Advances only.
(B) SCHEDULED INTEREST. Each Borrower shall pay interest on the
unpaid principal amount of each Advance made to such Borrower from the date of
such Advance until such principal amount shall be paid in full, at the following
rates per annum and at the following times:
(I) US BASE RATE ADVANCES. During such periods as such Advance is a
US Base Rate Advance, a rate per annum equal at all times to the sum of
(A) the US Base Rate in effect from time to time PLUS (B) the Applicable
Margin for US Base Rate Advances in effect from time to time, payable in
arrears monthly on the last Business Day of each calendar month during such
periods and on the date such US Base Rate Advance shall be Converted or
paid in full.
(II) EURODOLLAR RATE ADVANCES. During such periods as such Advance is
a Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to (A) the Eurodollar Rate for such
Interest Period for such Advance PLUS (B) the Applicable Margin for
Eurodollar Rate Advances in effect on the first day of such Interest
Period, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three months, on each day
that occurs during such Interest Period every three months from the first
day of such Interest Period and on the date such Eurodollar Rate Advance
shall be Converted or paid in full.
(III) CANADIAN BASE RATE ADVANCES. During such periods as such
Advance is a Canadian Base Rate Advance, a rate per annum equal at all
times to the sum of (A) the Canadian Base Rate in effect from time to time
PLUS (B) the Applicable Margin for Canadian Base Rate Advances in effect
from time to time, payable in arrears monthly on the last Business Day of
each calendar month during such periods and on the date such Canadian Base
Rate Advance shall be Converted or paid in full.
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(IV) CANADIAN PRIME RATE ADVANCES. During such periods as such
Advance is a Canadian Prime Rate Advance, a rate per annum equal at all
times to the sum of (A) the Canadian Prime Rate in effect from time to time
PLUS (B) the Applicable Margin for Canadian Prime Rate Advances in effect
from time to time, payable in arrears monthly on the last Business Day of
each calendar month during such periods and on the date such Canadian Prime
Rate Advance shall be Converted or paid in full.
(V) AUSTRALIAN PRIME RATE ADVANCES. During such periods as such
Advance is an Australian Prime Rate Advance, a rate per annum equal at all
times to the sum of (A) the Australian Prime Rate in effect from time to
time PLUS (B) the Applicable Margin for Australian Prime Rate Advances in
effect from time to time, payable in arrears monthly on the last Business
Day of each calendar month during such periods and on the date such
Australian Prime Rate Advance shall be Converted or paid in full.
(VI) BANK BILL RATE ADVANCES. During such periods as such Advance is
a Bank Bill Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (A) the Bank Bill Rate for
such Interest Period for such Advance PLUS (B) the Applicable Margin for
Bank Bill Rate Advances in effect on the first day of such Interest Period,
payable in arrears on the last day of such Interest Period and, if such
Interest Period has a duration of more than three months, on each day that
occurs during such Interest Period every three months from the first day of
such Interest Period and on the date such Bank Bill Rate Advance shall be
Converted or paid in full.
(C) DEFAULT INTEREST. Upon the occurrence and during the continuance
of an Event of Default, each Borrower shall pay interest on (i) the unpaid
principal amount of each Advance made to such Borrower, payable in arrears on
the dates referred to in Sections 2.08(b)(i) through (b)(vi) above and on
demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid on such Advance pursuant to Sections 2.08(b)(i)
through (b)(vi) above, (ii) to the fullest extent permitted by law, the amount
of any interest, fee or other amount payable hereunder that is not paid when
due, from the date such amount shall be due until such amount shall be paid in
full, payable in arrears on the date such amount shall be paid in full and on
demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid, in the case of interest, on the Type of Advance
on which such interest has accrued pursuant to Sections 2.08(b)(i) through
(b)(vi) above, and, in all other cases, on US Base Rate Advances pursuant to
clause (b)(i) above, and (iii) the fees payable in respect of Letters of Credit
then outstanding shall be increased as set forth in Section 2.09(c).
(D) NOTICE OF INTEREST RATE. Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.02(a), the Appropriate Administrative Agent
shall give notice to the Borrower that delivered such Notice of Borrowing and to
each Appropriate Lender (and, if such Notice of Borrowing relates to Australian
Borrower Advances, to each Risk Participant) of the applicable interest rate
determined by such Administrative Agent for purposes of Sections 2.08(b)(i)
through (vi), if applicable, and the applicable rate, if any, furnished by each
Appropriate Reference Lender for the purpose of determining the applicable
interest rate under Section 2.08(b) and the dates on which interest is payable
with respect to each such Borrowing.
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(E) INTEREST RATE DETERMINATION. (i) Each Canadian Reference Lender
agrees to furnish to the Appropriate Administrative Agent timely information for
the purpose of determining the BA Rate. If any one or more of such Canadian
Reference Lenders shall not furnish such timely information to the Appropriate
Administrative Agent for the purpose of determining any such interest rate, the
Appropriate Administrative Agent shall determine such interest rate on the basis
of timely information furnished by the remaining Canadian Reference Lenders.
(ii) If fewer than two Canadian Reference Lenders are able to furnish
timely information to the Canadian Administrative Agent for determining the BA
Rate for any BA Obligations,
(A) the Canadian Administrative Agent shall forthwith notify the
Canadian Borrower and the Canadian Lenders that the interest rate cannot be
determined for such Accommodations, and
(B) the obligation of the Canadian Lenders to make, or to Convert
Accommodations into, BA Obligations shall be suspended until the Canadian
Administrative Agent shall notify the Canadian Borrower and the Canadian
Lenders that the circumstances causing such suspension no longer exist.
SECTION 2.09. FEES. (A) COMMITMENT FEE. The US Borrower shall pay
or cause to be paid to the US Administrative Agent for the account of each US
Lender a commitment fee, payable in US Dollars, on the average daily Unused
Revolving Credit Commitment of such Lender. The Canadian Borrower shall pay or
cause to be paid to the Canadian Administrative Agent for the account of each
Canadian Lender a commitment fee, payable in US Dollars, on the average daily
Unused Revolving Credit Commitment of such Lender. The Australian Borrower
shall pay or cause to be paid to each Risk Participant (in consideration of such
Risk Participant's obligation to purchase such Risk Participant's Adjusted Pro
Rata Share of Australian Borrower Advances) and to the Australian Administrative
Agent, for the account of each Australian Lender, a commitment fee, payable in
US Dollars, on the average daily Unused Revolving Credit Commitment of such
Lender (PROVIDED that any such amount payable to any Risk Participant which is a
Defaulting Lender owing a Defaulted Amount shall, subject to Section 2.17(a), be
paid to the Australian Administrative Agent for application in accordance with
Section 2.17). In each case such payment will be in respect of the relevant
Lender's Unused Revolving Credit Commitment from the date hereof in the case of
each Initial Lender and from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other Lender
until the Termination Date at a rate per annum at all times equal to the
Applicable Unused Commitment Fee in effect from time to time, payable in arrears
on the last Business Day of each March, June, September and December, commencing
June 30, 1996, and on the Termination Date; PROVIDED, HOWEVER, that any
commitment fee accrued with respect to any of the Commitments of a Defaulting
Lender during the period prior to the time such Lender became a Defaulting
Lender and unpaid at such time shall not be payable by the applicable Borrower
so long as such Lender shall be a Defaulting Lender except to the extent that
such commitment fee shall otherwise have been due and payable by the applicable
Borrower prior to such time; and PROVIDED FURTHER that no commitment fee shall
accrue on any of the Commitments of a Defaulting Lender so long as such Lender
shall be a Defaulting Lender.
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(B) CLOSING FEES. The US Borrower shall pay to the US Administrative
Agent on the Closing Date for the account of each US Lender's US Domestic
Lending Office a Closing Fee, payable in US Dollars, in the amount set forth in
the allocation memorandum distributed to the Lenders by the US Administrative
Agent.
(C) LETTER OF CREDIT FEES, ETC. (i) The US Borrower shall pay or
cause to be paid to the US Administrative Agent for the account of each US
Lender a commission with respect to US Letters of Credit. The Canadian Borrower
shall pay or cause to be paid to the Canadian Administrative Agent for the
account of each Canadian Lender a commission with respect to Canadian Letters of
Credit. The Australian Borrower shall pay or cause to be paid to each Risk
Participant (in consideration of such Risk Participant's obligation to purchase
such Risk Participant's Adjusted Pro Rata Share of Non-Pro Rata Advances made in
respect of Australian Letters of Credit) and to the Australian Administrative
Agent, for the account of each Australian Lender, a commission with respect to
Australian Letters of Credit (PROVIDED THAT any such amount payable to any Risk
Participant which is a Defaulting Lender owing a Defaulted Amount shall, subject
to Section 2.17(a), be paid to the Australian Administrative Agent for
application in accordance with Section 2.17). In each case such commission
shall be payable in the currency in which the applicable Letter of Credit is
denominated and shall be payable in arrears quarterly on the last Business Day
of each March, June, September and December, commencing June 30, 1996, and on
the Termination Date, on such Lender's ratable share (determined as set forth in
Section 2.04(c) except that, for purposes of this Section 2.09(c), the ratable
share of the Non-Pro Rata Lender shall be allocated to the Risk Participants in
accordance with their respective Adjusted Pro Rata Shares) of the average daily
aggregate Available Amount during such quarter of (A) all Financial Letters of
Credit issued for the account of such Borrower and outstanding from time to time
at a rate per annum at all times equal to the Applicable L/C Fee for Financial
Letters of Credit in effect from time to time, and (B) all Commercial Letters of
Credit issued for the account of such Borrower and then outstanding at a rate
per annum at all times equal to the Applicable L/C Fee for Commercial Letters of
Credit in effect from time to time; PROVIDED that, upon the occurrence and
during the continuance of an Event of Default, the fee payable in respect of
each Letter of Credit then outstanding shall be increased by 2% per annum;
PROVIDED FURTHER that (i) any fee accrued with respect to such ratable share of
a Defaulting Lender during the period prior to the time such Lender became a
Defaulting Lender and unpaid at such time shall not be payable by the applicable
Borrower so long as such Lender shall be a Defaulting Lender except to the
extent that such fee shall otherwise have been due and payable by the applicable
Borrower prior to such time; and PROVIDED FURTHER that no fee shall accrue on
such ratable share of a Defaulting Lender so long as such Lender shall be a
Defaulting Lender.
(ii) The Appropriate Borrower shall pay to each Appropriate Issuing
Bank, for its own account, (A) except with respect to any Existing Letter of
Credit, an issuance fee, payable in the currency in which the applicable Letter
of Credit is denominated, for each Letter of Credit issued by such Issuing Bank
in an amount equal to 0.125% of the Available Amount of such Letter of Credit on
the date of issuance of such Letter of Credit (or, with respect to any increase
in such Available Amount, 0.125% of such increase payable on the date of such
increase), payable on such date and (B) such other transfer fees and other
customary fees and charges in connection with the administration of each such
Letter of Credit as such Borrower and such Issuing Bank shall agree.
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(D) ADMINISTRATIVE AGENTS' FEES AND OTHER FEES. The Borrowers shall
pay to the US Administrative Agent and its Affiliates, for their own account,
such fees, on such dates, as may from time to time be agreed between the
Borrowers and such Person, including, without limitation, those fees set forth
in the Fee Letter.
(E) NON-PRO RATA LENDER'S FEE. The Australian Borrower shall pay to
the Non-Pro Rata Lender such fees, on such dates, as may from time to time be
agreed between the Australian Borrower and the Non-Pro Rata Lender.
(F) RISK PARTICIPATION FEES. On each date that the Australian
Borrower is required to pay interest in respect of any Non-Pro Rata Advance, the
Australian Borrower shall deduct from such payment in respect of such Advance
the portion of such payment (the "DISTRIBUTABLE PORTION") attributable to the
Applicable Margin for such Advance and shall pay to each Risk Participant, in
consideration of such Risk Participant's obligation to purchase such Risk
Participant's Adjusted Pro Rata Share of such Advance, an amount equal to such
Risk Participant's Adjusted Pro Rata Share of such Distributable Portion
(PROVIDED that any such amount payable to any Risk Participant which is a
Defaulting Lender owing a Defaulted Amount shall, subject to Section 2.17(a), be
paid to the Australian Administrative Agent for application in accordance with
Section 2.17).
(G) DRAWING FEES. The Canadian Borrower shall, on the date of each
Drawing and on the date of each renewal of any outstanding BA Obligations, pay
to the Canadian Administrative Agent, in Canadian Dollars, for the ratable
account of the Canadian Lenders accepting Drafts and purchasing Bankers'
Acceptances or BA Equivalent Notes, the Drawing Fee with respect to such BA
Obligations. The Canadian Borrower irrevocably authorizes each such Lender to
deduct the Drawing Fee payable with respect to each BA Obligation of such Lender
from the Drawing Purchase Price payable by such Lender in respect of such BA
Obligation in accordance with Section 2.03 and to apply such amount so withheld
to the payment of such Drawing Fee for the account of the Canadian Borrower and,
to the extent such Drawing Fee is so withheld and legally permitted to be so
applied, the Canadian Borrower's obligations under the preceding sentence in
respect of such Drawing Fee shall be satisfied.
SECTION 2.10. CONVERSION OF ADVANCES. (A) OPTIONAL. Each Borrower
may on any Business Day, upon notice given to the US Administrative Agent not
later than 12:00 noon (New York City time) on a US Business Day (i) at least
four Australian Business Days prior to the date of the proposed Conversion with
respect to Australian Borrower Advances, and (ii) at least three US Business
Days or Canadian Business Days prior to the date of the proposed Conversion with
respect to US Borrower Advances and Canadian Borrower Advances, respectively,
and, in each case subject to the provisions of Sections 2.08 and 2.12, Convert
all or any portion of the Advances made to such Borrower of one Type comprising
the same Borrowing into Advances of any other Type available with respect to
such Advances as set forth in Section 2.08(a); PROVIDED, HOWEVER, that any
Conversion of Fixed Rate Advances into Fluctuating Rate Advances shall be made
only on the last day of an Interest Period for such Fixed Rate Advances, any
Conversion of Fluctuating Rate Advances into Fixed Rate Advances shall be in an
amount not less than the minimum amount specified in Section 2.02(b), no
Conversion of any Advances shall result in more Interest Periods being in effect
than is permitted under Section 2.02(b) and each Conversion of Advances
comprising part of the same Borrowing shall be made ratably among the Lenders
holding the Advances comprising such Borrowing in accordance with the respective
amounts of
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such Advances so held. Each such notice of Conversion shall, within the
restrictions specified above, specify (i) the date of such Conversion, (ii) the
Advances to be Converted and (iii) if such Conversion is into Fixed Rate
Advances, the duration of the initial Interest Period for such Advances. Each
notice of Conversion shall be irrevocable and binding on the Borrower giving
such notice.
(B) MANDATORY. (i) On the date on which the aggregate unpaid
principal amount of Fixed Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than US$5,000,000 (or
A$5,000,000 if denominated in Australian Dollars or C$5,000,000 if denominated
in Canadian Dollars), such Advances shall automatically Convert into (A) US Base
Rate Advances, in the case of Eurodollar Rate Advances comprising part of any US
Borrower Borrowing, (B) Canadian Base Rate Advances, in the case of Eurodollar
Rate Advances comprising part of any Canadian Borrower Borrowing and (C)
Australian Prime Rate Advances, in the case of Fixed Rate Advances comprising
part of any Australian Borrower Borrowing (and, if such Australian Borrower
Borrowing was, immediately prior to such conversion, a Eurodollar Rate Advance,
the principal amount of each such Advance shall be immediately and automatically
converted to the Equivalent thereof in Australian Dollars).
(ii) If any Borrower shall fail to select the duration of any Interest
Period for any Fixed Rate Advances made to such Borrower in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Appropriate Administrative Agent will forthwith so notify such Borrower and the
Appropriate Lenders (and, if such Advances are Australian Borrower Advances, the
Risk Participants), whereupon each such Fixed Rate Advance will automatically,
on the last day of the then existing Interest Period therefor, Convert into (A)
a US Base Rate Advance, in the case of a Eurodollar Rate Advance comprising part
of any US Borrower Borrowing, (B) a Canadian Base Rate Advance, in the case of a
Eurodollar Rate Advance comprising part of any Canadian Borrower Borrowing, and
(C) an Australian Prime Rate Advance, in the case of a Fixed Rate Advance
comprising part of any Australian Borrower Borrowing (and, if such Australian
Borrower Borrowing was, immediately prior to such conversion, a Eurodollar Rate
Advance, the principal amount of such Advance shall be immediately and
automatically converted to the Equivalent thereof in Australian Dollars).
(iii) Upon the occurrence and during the continuance of any
Default, (A) each Fixed Rate Advance will automatically, on the last day of the
then existing Interest Period therefor, Convert into (x) a US Base Rate Advance,
in the case of a Eurodollar Rate Advance comprising part of any US Borrower
Borrowing, (y) a Canadian Base Rate Advance, in the case of a Eurodollar Rate
Advance comprising part of any Canadian Borrower Borrowing, and (z) an
Australian Prime Rate Advance, in the case of a Fixed Rate Advance comprising
part of any Australian Borrower Borrowing (and, if such Australian Borrower
Borrowing was, immediately prior to such conversion, a Eurodollar Rate Advance,
the principal amount of such Advance shall be immediately and automatically
converted to the Equivalent thereof in Australian Dollars) and (B) the
obligation of the Lenders to make, or to Convert Advances into, Fixed Rate
Advances and the obligation of the Canadian Lenders to create or renew BA
Obligations shall be suspended.
SECTION 2.11. RENEWAL AND CONVERSION OF BA OBLIGATIONS. (A)
OPTIONAL RENEWAL. The Canadian Borrower may on any Business Day, upon notice
given to the US Administrative Agent not later than 12:00 noon (New York City
time) on a US Business Day at least two Canadian Business Days
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prior to the date of the proposed renewal and subject to the provisions of
Section 2.12, renew all or any portion of the BA Obligations comprising part of
the same Drawing; PROVIDED, HOWEVER, that:
(i) any renewal of BA Obligations shall be made only on the then
existing Maturity Date for such BA Obligations;
(ii) each renewal of BA Obligations comprising part of the same
Drawing shall be made ratably among the Lenders holding such BA Obligations
in accordance with the respective amount of such BA Obligations so held;
and
(iii) no renewal of any BA Obligation may be made at any time that
a Default has occurred and is continuing.
Each such notice of renewal shall, within the restrictions set forth above,
specify (A) the date of such renewal (which shall be the then existing Maturity
Date of such BA Obligations and shall be a Business Day), (B) the BA Obligations
to be renewed, (C) if less than all of the BA Obligations comprising part of any
Drawing are to be renewed, the aggregate Face Amount for such renewal and (D)
the term to maturity of the renewed BA Obligations (which shall comply with the
definition of "Maturity Date" in Section 1.01); PROVIDED, HOWEVER, that, if the
Canadian Administrative Agent determines in good faith (which determination
shall be conclusive and binding upon the Canadian Borrower) that the BA
Obligations cannot, due solely to the requested aggregate Face Amount thereof,
be renewed ratably by the Canadian Lenders, the aggregate Face Amount of such
renewal (or the Face Amount of BA Obligations to be created by any Canadian
Lender) shall be reduced to such lesser amount as the Canadian Administrative
Agent determines will permit such renewal to be so made and each Canadian Lender
shall fund the difference between such Lender's ratable portion of the original
aggregate Face Amount of such renewal and the Face Amount of the BA Obligations
to be created by such Lender after giving effect to such reduction in the form
of a Canadian Prime Rate Advance, which shall be deemed for all purposes hereof
to be a Canadian Borrower Advance made pursuant to Section 2.01(a)(ii). Each
notice of renewal under this Section 2.11 shall be irrevocable and binding on
the Canadian Borrower. Upon any renewal of BA Obligations comprising part of
any Drawing in accordance with this Section 2.11(a), the Lenders holding the BA
Obligations to be renewed shall exchange such maturing BA Obligations for new BA
Obligations containing the terms set forth in the applicable notice of renewal,
and the Drawing Purchase Price payable for each such renewal shall be applied,
together with other funds, if necessary, available to the Canadian Borrower, to
reimburse the BA Obligations otherwise maturing on such date in accordance with
Section 2.05(a)(ii). The Canadian Borrower hereby irrevocably authorizes and
directs each Canadian Lender to apply the proceeds of each renewed BA Obligation
owing to it to the reimbursement, in accordance with this Section 2.11(a), of
the BA Obligations owing to such Lender and maturing on such date.
(B) OPTIONAL CONVERSION. The Canadian Borrower may on any Business
Day, upon notice given to the US Administrative Agent not later than 12:00 noon
(New York City time) on a US Business Day at least two Canadian Business Days
prior to the date of the proposed Conversion and subject to the provisions of
Section 2.12, Convert all or any portion of the BA Obligations comprising part
of the same Drawing to a Canadian Borrower Borrowing comprised of Canadian Prime
Rate Advances; PROVIDED, HOWEVER, that:
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(i) any Conversion of BA Obligations shall be made only on the then
existing Maturity Date for such BA Obligations;
(ii) each Conversion of Accommodations comprising part of the same
Drawing shall be made ratably among the Lenders holding such Accommodations
in accordance with the respective amounts of such Accommodations so held;
and
(iii) no Conversion may be made if (A) the amount of the Advance
to be made by any Canadian Lender in connection with such Conversion would
exceed such Lender's Unused Revolving Credit Commitment in effect at the
time of such Conversion, or (B) after giving effect to such Conversion, the
sum of the aggregate principal amount of outstanding Canadian Borrower
Advances and Letter of Credit Advances in respect of Canadian Letters of
Credit outstanding PLUS the aggregate Face Amount of BA Obligations and the
aggregate Available Amount of all Canadian Letters of Credit then
outstanding would exceed the Canadian Borrower Sublimit in effect at such
time.
Each such notice of Conversion shall, within the restrictions set forth above,
specify (A) the date of such Conversion (which shall be the then existing
Maturity Date of such BA Obligations and shall be a Business Day), (B) the BA
Obligations to be Converted and (C) if less than all of the Accommodations
comprising part of any Drawing are to be Converted, the aggregate Face Amount of
such Conversion. Each notice of Conversion under this Section 2.11 shall be
irrevocable and binding on the Canadian Borrower. Upon any Conversion of BA
Obligations comprising part of the same Drawing in accordance with this
Section 2.11(b), the obligation of the Canadian Borrower to reimburse the
Lenders under Section 2.13 in respect of the BA Obligations otherwise maturing
on such date shall, to the extent of such conversion, be Converted to an
obligation to reimburse the Lenders making the Canadian Borrower Advances made
in respect of such maturing BA Obligations on such date ratably in accordance
with the amount of the Advances held by such Lender at the time of
reimbursement. The Canadian Borrower hereby irrevocably authorizes and directs
each Canadian Lender to apply the net proceeds of each Canadian Prime Rate
Advance made by such Lender pursuant to this Section 2.11(b) to the
reimbursement of the BA Obligations owing to such Lender and maturing on such
date.
(C) MANDATORY CONVERSION. If any Default shall have occurred and be
continuing or if the Canadian Borrower shall fail (i) to deliver a properly
completed notice of renewal under Section 2.11(a) or a properly completed notice
of Conversion under Section 2.11(b) indicating its intention to renew or to
Convert any maturing BA Obligations or (ii) to reimburse the Canadian Lenders
for any BA Obligations comprising part of the same Drawing pursuant to Section
2.05, the Canadian Administrative Agent will forthwith so notify the US
Administrative Agent, the Canadian Borrower and the Canadian Lenders, whereupon
each such BA Obligation will automatically, on the then existing Maturity Date
of such BA Obligations, Convert into a Canadian Prime Rate Advance.
SECTION 2.12. INCREASED COSTS, ETC. (a) If, due to either (i) the
introduction of or any change (including any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation after the date hereof or (ii) the compliance with any law,
regulation, order, official policy directive, requirement, guideline or request
from any central bank, any
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government or any other governmental authority (whether or not having the force
of law) adopted or made after the date hereof, there shall be:
(A) any increase in the cost to any Lender Party of agreeing to make
or of making, funding or maintaining any Fixed Rate Advances or of agreeing
to issue or of issuing or maintaining Letters of Credit or of agreeing to
make or of making or maintaining Letter of Credit Advances;
(B) any increase in the cost to any Lender Party of agreeing to
perform or of performing its obligations under this Agreement under or in
respect of any BA Obligations; or
(C) any reduction in any amount payable to, or any increase in any
payment required to be made by, or any forgiveness or reduction of
effective return to, any Lender Party under this Agreement under or in
respect of any BA Obligations
(excluding for purposes of this Section 2.12 any such increased costs resulting
from taxes, levies, imposts, deductions, charges, or withholdings and all
liabilities or penalties with respect thereto (as to which Section 2.14 shall
govern)), then the Borrower to which the applicable Accommodations were made or
for whose account the applicable Letters of Credit were issued shall from time
to time, upon demand by such Lender Party (with a copy of such demand to the US
Administrative Agent and, if different, the Appropriate Administrative Agent)
but subject to Section 2.12(f), pay to the Appropriate Administrative Agent for
the account of such Lender Party additional amounts sufficient to compensate
such Lender Party for such increased cost or reduction of return. A certificate
as to the amount of such increased cost or reduction of return, submitted to the
applicable Borrower by such Lender Party, shall be conclusive and binding for
all purposes, absent manifest error. Such certificate shall identify the
relevant law, regulation or other circumstance pursuant to which such increased
cost or reduction was incurred and shall set forth in reasonable detail the
calculations used in determining the amount thereof.
(b) If any Lender Party determines that compliance with any law or
regulation or any directive, guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) adopted or made
after the date hereof affects or would affect the amount of capital required or
expected to be maintained by such Lender Party or any corporation controlling
such Lender Party and that the amount of such capital is increased by or based
upon the existence of such Lender Party's commitment to lend, to accept,
purchase and/or discount BA Obligations or to issue Letters of Credit hereunder
and other commitments of such type or the purchase and/or acceptance and
maintenance of the BA Obligations or the issuance or maintenance of the Letters
of Credit (or similar contingent obligations), then the Borrowers shall from
time to time, upon demand by such Lender Party (with a copy of such demand to
the US Administrative Agent and, if different, the Appropriate Administrative
Agent) but subject to Section 2.12(f), pay to the Appropriate Administrative
Agent for the account of such Lender Party additional amounts sufficient to
compensate such Lender Party in the light of such circumstances, to the extent
that such Lender Party reasonably determines such increase in capital to be
allocable to the existence of such Lender Party's commitment to lend, to accept,
purchase and/or discount BA Obligations or to issue Letters of Credit hereunder,
or to the acceptance, purchase, discount and/or maintenance of the BA
Obligations or to the issuance or maintenance of any Letters of Credit. A
certificate as to such amounts submitted to the Borrowers by such Lender Party
shall be conclusive and
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binding for all purposes, absent manifest error. Such certificate shall
identify the relevant law, regulation or other circumstance pursuant to which
such increased cost or reduction was incurred and shall set forth in reasonable
detail the calculations used in determining the amount thereof.
(c) If, with respect to any Fixed Rate Advances, Lenders holding not
less than a majority in interest of the aggregate principal of such Fixed Rate
Advances (or which would hold a majority in interest of the principal amount of
any proposed Fixed Rate Advances) notify the US Administrative Agent that the
Fixed Rate for any Interest Period for such Advances will not adequately reflect
the cost to such Lenders of making, funding or maintaining their Fixed Rate
Advances for such Interest Period, the US Administrative Agent shall forthwith
so notify the Borrowers and the Appropriate Lenders (and, if such Advances are
Australian Borrower Advances, the Risk Participants), whereupon (i) each such
Fixed Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into (A) a US Base Rate Advance, in the case
of a Eurodollar Rate Advance comprising part of any US Borrower Borrowing, (B) a
Canadian Base Rate Advance, in the case of a Eurodollar Rate Advance comprising
part of any Canadian Borrower Borrowing, and (C) an Australian Prime Rate
Advance, in the case of a Fixed Rate Advance comprising part of any Australian
Borrower Borrowing (and, if such Australian Borrower Borrowing was, immediately
prior to such conversion, a Eurodollar Rate Advance, the principal amount of
such Advance shall be immediately and automatically converted to the Equivalent
thereof in Australian Dollars), and (ii) the obligation of the Lenders to make,
or to Convert Advances into, Fixed Rate Advances of such Type shall be suspended
until the US Administrative Agent shall notify the Borrowers that such Lenders
have determined that the circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation or official directive shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful, for any Lender or
its Appropriate Lending Office to perform its obligations hereunder to make or
purchase interests in any Type of Fixed Rate Advances or to continue to fund or
maintain any Type of Fixed Rate Advances hereunder, then, on notice thereof and
demand therefor by such Lender to each Borrower through the US Administrative
Agent, (i) each Fixed Rate Advance of such Type will automatically, on the last
day of the Interest Period applicable to such Fixed Rate Advance (or on such
earlier date as may be required by law), Convert into (A) a US Base Rate
Advance, in the case of a Eurodollar Rate Advance comprising part of any US
Borrower Borrowing, (B) a Canadian Base Rate Advance, in the case of a
Eurodollar Rate Advance comprising part of any Canadian Borrower Borrowing, and
(C) an Australian Prime Rate Advance, in the case of a Fixed Rate Advance
comprising part of any Australian Borrower Borrowing (and, if such Australian
Borrower Borrowing was, immediately prior to such conversion, a Eurodollar Rate
Advance, the principal amount of such Advance shall be immediately and
automatically converted to the Equivalent thereof in Australian Dollars), and
(ii) the obligation of the Lenders to make, or to Convert Advances into, Fixed
Rate Advances of such Type shall be suspended until the US Administrative Agent
shall notify the Borrowers that such Lender has determined that the
circumstances causing such suspension no longer exist.
(e) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in the interpretation of any law or regulation
(including, without limitation, any change in acceptance limits imposed on any
Lender) shall make it unlawful, or any central bank or other
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governmental authority shall assert that it is unlawful, for any Lender or any
of their respective BA Lending Offices to perform its obligations hereunder to
complete and accept Drafts, to purchase Bankers' Acceptances or BA Equivalent
Notes or to continue to fund or maintain BA Obligations hereunder, then, upon
notice thereof and demand therefor by such Lender to the Canadian Borrower
through the US Administrative Agent (i) an amount equal to the aggregate Face
Amount of all BA Obligations outstanding at such time shall, upon such demand
(which shall only be made if deemed necessary by the applicable Lender to comply
with applicable law), be deposited by the Canadian Borrower into the Canadian
Cash Collateral Account until the Maturity Date of each such BA Obligation, (ii)
upon the Maturity Date of any BA Obligation in respect of which any such deposit
has been made, the US Administrative Agent shall be, and hereby is, authorized
(without notice to or any further action by any Borrower) to apply, or to direct
the Canadian Administrative Agent to apply, such amount (or the applicable
portion thereof) to the reimbursement of such BA Obligation and (iii) the
obligation of the Canadian Lenders to complete and accept Drafts and/or to
purchase Bankers' Acceptances or BA Equivalent Notes shall be suspended until
the US Administrative Agent shall notify the Canadian Borrower that such Lender
has determined that the circumstances causing such suspension no longer exist.
(f) No Lender Party shall be entitled to compensation under this
Section 2.12 for any costs incurred or reductions suffered with respect to any
event or circumstance unless such Lender Party shall have notified PGI in
writing, not more than 120 days after the date an officer of such Lender Party
responsible for the administration of this Agreement becomes aware, or
reasonably should have become aware, of such event or circumstance, that it will
demand compensation for such costs or reductions.
SECTION 2.13. PAYMENTS AND COMPUTATIONS. (a) (i) Except as
expressly set forth in the following clauses (ii) and (iii), each Borrower shall
make each payment hereunder and under the Notes, irrespective of any right of
counterclaim or set-off (except as otherwise provided in Section 2.17), not
later than 12:00 noon (New York City time) (or, with respect to amounts payable
to the Australian Administrative Agent, not later than 12:00 noon (Sydney time))
on the day when due in US Dollars to the Appropriate Administrative Agent at the
Appropriate Administrative Agent's Account in same day funds; (ii) the Canadian
Borrower shall make each payment hereunder and under the Notes with respect to
principal of and interest on any Canadian Borrower Advances denominated in
Canadian Dollars and with respect to BA Obligations and with respect to fees
relating to Letters of Credit denominated in Canadian Dollars, irrespective of
any right of counterclaim or set-off (except as otherwise provided in Section
2.17), not later than 12:00 noon (New York City time) on the day when due in
Canadian Dollars to the Canadian Administrative Agent at the Appropriate
Administrative Agent's Account in same day funds; and (iii) the Australian
Borrower shall make each payment hereunder and under the Notes with respect to
principal of and interest on any Australian Borrower Advances denominated in
Australian Dollars and with respect to fees relating to Letters of Credit
denominated in Australian Dollars, irrespective of any right of counterclaim or
set-off (except as otherwise provided in Section 2.17 and except that fees
payable to any Risk Participant under Section 2.09 shall be paid directly to
such Risk Participant by 12:00 noon (New York City time) on the day when due in
the same currency as the Obligations to which such fees relate), not later than
12:00 noon (Sydney time) on the day when due in Australian Dollars to the
Australian Administrative Agent at the Appropriate Administrative Agent's
Account in same day funds. Each Administrative Agent to which any such payment
is made will promptly thereafter cause like funds to be distributed (A) if such
payment by any Borrower is in respect of principal, interest, Face Amount,
commitment fees or any other Obligation then payable hereunder or
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under the Notes to more than one Lender Party, to such Lender Parties for the
account of their respective Appropriate Lending Offices ratably in accordance
with the amounts of such respective Obligations then payable to such Lender
Parties (it being understood that interest payments received with respect to any
Non-Pro Rata Advance as to which any Risk Participant has purchased its Adjusted
Pro Rata Share pursuant to Section 2.01(b)(ii) shall be distributed to the Non-
Pro Rata Lender and each such Risk Participant in accordance with the relative
periods during which the Non-Pro Rata Lender and such Risk Participant held such
Advance) and (B) if such payment by any Borrower is in respect of any Obligation
then payable hereunder to one Lender Party, to such Lender Party for the account
of its Appropriate Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon acceptance of an Assignment and Acceptance by
the US Administrative Agent and recording of the information contained therein
in the Register pursuant to Section 8.07(d), from and after the effective date
of such Assignment and Acceptance, each Administrative Agent shall make all
payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender Party assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) If any Administrative Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, such Administrative Agent may, but shall
not be obligated to, elect to distribute such funds to each Lender Party ratably
in accordance with the aggregate principal amount of all Advances and the
aggregate Face Amount of BA Obligations outstanding at such time and the
aggregate Available Amount of all Letters of Credit outstanding at such time, in
repayment or prepayment of such of the outstanding Accommodations or other
Obligations owed to such Lender Party as the US Administrative Agent shall
direct.
(c) Each Borrower hereby authorizes each Lender Party, if and to the
extent payment owed to such Lender Party is not made when due hereunder or, in
the case of a Lender, under the Note held by such Lender, to charge from time to
time against any or all of the Borrower's accounts with such Lender Party any
amount so due.
(d) All computations of interest, fees and Letter of Credit
commissions and of the BA Rate shall be made by the Appropriate Administrative
Agent on the basis of a year of 365 days (or, in the case of a leap year, 366
days), except with respect to computations of interest regarding Eurodollar Rate
Advances and Canadian Base Rate Advances, which shall be made by the Appropriate
Administrative Agent on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, fees or commissions are
payable. Each determination by any Administrative Agent of an interest rate,
fee or commission hereunder shall be conclusive and binding for all purposes,
absent manifest error. For purposes of this Agreement, whenever interest is
calculated on the basis of a year of 360 days, each rate of interest determined
pursuant to such calculation expressed as an annual rate for the purposes of the
Interest Act (Canada) is equivalent to such rate so determined multiplied by the
actual number of days in the calendar year in which the same is to be
ascertained (whether 365 or 366, as the case may be) and divided by 360.
(e) Whenever any payment hereunder or under the Notes or in respect
of any BA Obligation shall be stated to be due on a day other than a Business
Day, such payment shall be made on
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the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest or commitment fees, as the
case may be; PROVIDED, HOWEVER, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Appropriate Administrative Agent shall have received
notice from the Borrower owing or otherwise obligated to make any payment
hereunder prior to the date on which such payment is due to any Lender Party
hereunder that such Borrower will not make such payment in full, such
Administrative Agent may assume that such Borrower has made such payment in full
to such Administrative Agent on such date and such Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party. If
and to the extent such Borrower shall not have so made such payment in full to
such Administrative Agent, each such Lender Party shall repay to such
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to such Administrative Agent, at the Applicable Interbank Rate.
SECTION 2.14. TAXES. (a) Any and all payments by or on behalf of
the Borrowers hereunder or under the Notes or in respect of any BA Obligation
shall be made, in accordance with Section 2.13, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, EXCLUDING (i)
in the case of each Lender Party, net income taxes that are imposed by the
United States and net income taxes (or franchise taxes imposed in lieu thereof)
that are imposed on such Lender Party by the state or foreign jurisdiction under
the laws of which such Lender Party is organized or any political subdivision
thereof, (ii) in the case of each Lender, net income taxes (or franchise taxes
imposed in lieu thereof) that are imposed on such Lender by the state or foreign
jurisdiction of such Lender's Appropriate Lending Office or any political
subdivision thereof, (iii) in the case of each Lender Party, net income taxes
(or franchise taxes imposed in lieu thereof) imposed on such Lender Party as a
result of a present or former connection between such Lender Party and the
jurisdiction of the governmental authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from such Lender Party having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement, any Note, any other Loan Document or any BA Obligation) and, (iv) in
the case of each Lender Party, any tax, levy, impost, deduction, charge or
withholding, and all liabilities with respect thereto, payable by that Lender
Party by reason of any cash collateralization made by such Lender Party pursuant
to Section 2.01(b)(iii) or Section 2.04(e), but not excluding any such tax or
other amount imposed pursuant to Division 15 of Part III of the ITAA on or with
respect to any risk participation fee, commitment fee, letter of credit fee or
other amount paid or payable to a Risk Participant from any Borrower pursuant to
this Agreement or under the Notes (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes or in respect of a BA Obligation being hereinafter
referred to as "TAXES"). If any Taxes are required to be withheld or deducted
by any Person from any amounts payable to any Lender Party hereunder or under
any Note or in respect of any BA Obligation, (A) the sum payable by the
Appropriate Borrower in respect of any such amount shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14) such Lender Party
receives an amount equal to the sum it would have received had no such
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deductions been made, (B) such Borrower shall make such deductions and (C) such
Borrower shall pay the full amount deducted to the relevant taxation or other
authority in accordance with applicable law. In the case of any Taxes, or other
amounts, required to be paid, withheld, deducted or otherwise imposed in each
case pursuant to Division 15 of Part III of the ITAA with respect to any amounts
paid or payable to any Risk Participant, the Australian Borrower shall pay to
the relevant Risk Participant on demand, an amount that (after any taxes,
deductions or other amounts applicable thereto or to additional sums payable
under this Section 2.14) is equal to the aggregate amount of any taxes or other
liability (including interest, penalties, fines, additions to tax, interest and
expenses) imposed on or paid by the relevant Risk Participant as a result of its
failure to so pay, withhold or deduct. If any Taxes are assessed on the taxable
income of any Lender Party under Division 15 of Part III of the ITAA in
connection with payments made under this Agreement, such Lender Party will
promptly notify the Australian Borrower. If the Australian Borrower has not
paid the Taxes assessed to the Australian taxation office, the Australian
Borrower shall pay to that Lender Party an amount equal to the amount of Taxes
assessed.
(b) In addition, the Borrowers shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made or receipt hereunder or under the Notes or in respect of
any BA Obligation or from the execution, delivery or registration of, performing
under, or otherwise with respect to, this Agreement, the Notes, any BA
Obligation or any other Loan Document, including without limitation any purchase
of any portion of a Non-Pro Rata Advance pursuant to Section 2.01(b)(ii) or any
purchase of any portion of a Letter of Credit Advance pursuant to Section
2.04(c) or any assignment pursuant to Section 8.07 (hereinafter referred to as
"OTHER TAXES").
(c) The Borrowers shall indemnify each Lender Party for the full
amount of Taxes and Other Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 2.14, imposed on or paid by
such Lender Party and any liability (including penalties, fines, additions to
tax, interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender Party
makes written demand therefor, but in no event shall such indemnification be
required to be made prior to 15 days before the earlier of (i) the date such
Lender Party pays such Taxes or other Taxes or (ii) the date such Taxes or Other
Taxes are due to the relevant taxing authority.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower making such payment shall furnish to the US Administrative Agent, at
its address referred to in Section 8.02, the original receipt of payment thereof
or a certified copy of such receipt. In the case of any payment hereunder or
under the Notes or in respect of any BA Obligation by or on behalf of any
Borrower (i) through an account or branch outside the United States, in the case
of the US Borrower; Canada, in the case of the Canadian Borrower; or Australia,
in the case of the Australian Borrower, or (ii) by a payor that is not a United
States person, in the case of the US Borrower; a person Resident in Canada, in
the case of the Canadian Borrower; or a person Resident in Australia, in the
case of the Australian Borrower, if such Borrower determines that no Taxes are
payable in respect thereof, such Borrower shall furnish, or shall cause such
payor to furnish, to each Administrative Agent, at such address, an opinion of
counsel acceptable to the Administrative Agents stating that such payment is
exempt from Taxes. For purposes of this subsection (d) and subsection (e), the
terms "UNITED STATES" and "UNITED STATES PERSON" shall have the meanings
specified in Section 7701 of the Internal Revenue Code, the terms "CANADA" and
"RESIDENT
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IN CANADA" shall have the meanings they have for the purposes of the Income Tax
Act (Canada) and the terms "AUSTRALIA" and "RESIDENT IN AUSTRALIA" shall have
the meanings they have for Australian income tax purposes.
(e) Each US Lender and each US Issuing Bank organized under the laws
of a jurisdiction outside the United States shall, on or prior to the date of
its execution and delivery of this Agreement in the case of each such Initial
Lender or Initial Issuing Bank, as the case may be, and on the date of the
Assignment and Acceptance pursuant to which it became a Lender Party in the case
of each other such Lender Party, and from time to time thereafter as requested
in writing by the US Borrower or the US Administrative Agent (but only so long
as such Lender Party remains lawfully able to do so), provide each of the US
Administrative Agent and the US Borrower with two original Internal Revenue
Service forms 1001 or 4224 or (in the case of a US Lender or US Issuing Bank
that has certified in writing to the US Administrative Agent that it is not a
"bank" as defined in Section 881(c)(3)(A) of the Internal Revenue Code) form W-8
(and, if such Lender or Issuing Bank delivers a form W-8, a certificate
representing that such Lender Party is not a "bank" for purposes of Section
881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of any Borrower
and is not a controlled foreign corporation related to any Borrower (within the
meaning of Section 864(d)(4) of the Internal Revenue Code)), as appropriate, or
any successor or other form prescribed by the Internal Revenue Service,
certifying that such Lender or Issuing Bank is exempt from or entitled to a
reduced rate of United States interest withholding tax on payments pursuant to
this Agreement or the Notes or, in the case of a Lender Party providing a form
W-8, certifying that such Lender Party is a foreign corporation, partnership,
estate or trust and, if required, in the case of any other US Lender, an
Internal Revenue Service form W-9, or any successor form, certifying that such
Lender Party is entitled to an exemption from United States backup withholding
tax. If the forms provided by any such Lender Party at the time such Lender
Party first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Lender Party provides the
appropriate form certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such form; PROVIDED, HOWEVER, that, if at the date of the Assignment
and Acceptance pursuant to which a Lender Party becomes a party to this
Agreement, the Lender Party assignor was entitled to payments under
subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date.
(f) For any period with respect to which a US Lender or US Issuing
Bank has failed to provide the US Borrower with the appropriate form described
in subsection (e) (OTHER THAN if such failure is due to a change in law
occurring after the date on which a form originally was required to be provided
or if such form otherwise is not required under subsection (e)), such Lender
Party shall not be entitled to indemnification under subsection (a) or (c) with
respect to Taxes imposed by the United States by reason of such failure;
PROVIDED, HOWEVER, that should a Lender Party become subject to Taxes because of
its failure to deliver a form required hereunder, the Borrowers shall take such
steps as such Lender Party shall reasonably request to assist such Lender Party
to recover such Taxes.
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(g) The Australian Borrower acknowledges that Section 261 of the ITAA
may render void its obligation to make a payment under this Section 2.14 (or
failure by a Guarantor to make a payment under any clause equivalent to this
Section 2.14 in any guarantee and indemnity). However, the Australian Borrower
warrants that even if this is the case, and it would not otherwise be obliged to
make a payment under this Section 2.14, it will make such payment as
contemplated by this Section 2.14 and that it is in its interests to do so. The
Australian Borrower acknowledges that each Lender Party relies on the warranty
in this Section 2.14(g) in entering into this Agreement and that breach of such
warranty is to the detriment of each Lender Party. Failure by the Australian
Borrower to make a payment under this Section 2.14 does not constitute an Event
of Default under Section 6.01(a)(i) or (ii) or under Section 6.01(d). The
Australian Borrower waives any right it may have to reimbursement of money paid
under this Section 2.14(g) (including any payment made in accordance with the
warranty contained in this Section 2.14(g)) and also releases each Lender Party
from any claim the Australian Borrower may have against such Lender Party to
refund or repay amounts so paid, whether that right or claim arises by reason of
the obligations under this Section 2.14 being void under section 261 of the ITAA
or by reason of money paid under mistake of any nature as to the extent of the
Australian Borrowers' obligations having regard to section 261 or for any other
reason relating to laws as to insolvency.
(h) In the event that an additional payment is made under Section
2.14(a) or (c) for the account of any Lender and such Lender determines that it
has received or been granted a refund or a credit (other than a foreign tax
credit) against or release or remission for, or repayment of, any tax paid or
payable by it in respect of or calculated with reference to the deduction or
withholding giving rise to such payment, such Lender shall, to the extent that
it can do so without prejudice to the retention of the amount of such refund,
credit, relief, remission or repayment, pay to the Borrower that made such
additional payment such amount as such Lender shall have determined to be
attributable to such deduction or withholding and which will leave such Lender
(after such payment) in no better or worse position than it would have been in
if such Borrower had not been required to make such deduction or withholding.
If any Lender shall become aware that it is entitled to receive a refund and
that the receipt of such refund would give rise to an obligation under this
Section 2.14(h) to pay an amount to any Borrower, such Lender shall, within a
reasonable time of becoming so aware, notify such Borrower of the availability
of such refund and shall, upon written request of such Borrower, make reasonable
efforts, at such Borrower's expense, to obtain such refund. Nothing herein
contained shall interfere with the right of each Lender to arrange its tax
affairs in whatever manner it thinks fit nor oblige any Lender to claim any tax
credit (except as expressly provided in the preceding sentence) or to disclose
any information relating to its tax affairs or any computations in respect
thereof. Nothing herein contained shall require any Lender to do anything that
would prejudice its ability to benefit from any other credits, reliefs,
remissions or repayments to which it may be entitled.
(i) Any Lender Party claiming any additional amounts payable pursuant
to this Section 2.14 agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to file any certificate
or document reasonably requested by any Borrower or to change the jurisdiction
of its Appropriate Lending Office if filing such certificate or document or
making such change would avoid the need for, or reduce the amount of, any such
additional amounts that may thereafter accrue and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to such Lender
Party.
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(j) Without prejudice to the survival of any other agreement of the
Borrowers, the agreements and obligations of the Borrowers contained in this
Section 2.14 and in Sections 8.04(c) shall survive the expiration of this
Agreement, including the payment in full of principal and interest hereunder,
under the Notes and in respect of any BA Obligation or Letter of Credit.
SECTION 2.15. SHARING OF PAYMENTS, ETC. If any Lender Party shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) (a) on account of Obligations
due and payable to such Lender Party hereunder and under the Notes and under any
BA Obligations at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations due and payable to such Lender
Party at such time to (ii) the aggregate amount of such Obligations due and
payable to all Lender Parties hereunder and under the Notes and under any BA
Obligations at such time) of payments on account of such Obligations due and
payable to all Lender Parties hereunder and under the Notes and under any BA
Obligations at such time obtained by all the Lender Parties at such time or
(b) on account of Obligations owing (but not due and payable) to such Lender
Party hereunder and under the Notes and under any BA Obligations at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations owing to such Lender Party at such time to (ii) the aggregate
amount of such Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes and under any BA Obligations at such time) of
payments on account of such Obligations owing (but not due and payable) to all
Lender Parties hereunder and under the Notes and under any BA Obligations at
such time obtained by all of the applicable Lender Parties at such time, such
Lender Party shall forthwith purchase from the other applicable Lender Parties
such participations in such Obligations due and payable or owing to them, as the
case may be, as shall be necessary to cause such purchasing Lender Party to
share the excess payment ratably with each of them; PROVIDED, HOWEVER, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender Party, such purchase from each other applicable Lender Party
shall be rescinded and such other applicable Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such applicable
Lender Party's ratable share (according to the proportion of (i) the purchase
price paid to such applicable Lender Party to (ii) the aggregate purchase price
paid to all applicable Lender Parties) of such recovery together with an amount
equal to such applicable Lender Party's ratable share (according to the
proportion of (i) the amount of such other applicable Lender Party's required
repayment to (ii) the total amount so recovered from the purchasing Lender
Party) of any interest or other amount paid or payable by the purchasing Lender
Party in respect of the total amount so recovered. The Borrowers agree that any
Lender Party so purchasing a participation from another Lender Party pursuant to
this Section 2.15 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender Party were the direct creditor of the
Borrowers in the amount of such participation.
SECTION 2.16. USE OF PROCEEDS. The proceeds of the Accommodations
shall be available (and the Borrowers agree to use such proceeds and Letters of
Credit) to prepay certain existing indebtedness (other than any indebtedness
raised to fund (directly or indirectly) the acquisition of shares in the
Australian Borrower), to provide working capital and for other general corporate
purposes; PROVIDED that (i) proceeds of Accommodations may not be used to
finance the acquisition or attempted acquisition of any Person that has not (or
the Board of Directors of which has not) consented to such
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acquisition prior to any such use of proceeds, and (ii) proceeds of Australian
Borrower Advances which are Eurodollar Rate Advances may only be used in the
Australian Borrower's Australian business.
SECTION 2.17. DEFAULTING LENDERS. (a) In the event that, at any one
time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting
Lender shall owe a Defaulted Accommodation to any Borrower and (iii) such
Borrower shall be required to make any payment hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then such Borrower
may, so long as no Default shall have occurred and be continuing at such time
and to the fullest extent permitted by applicable law, set off and otherwise
apply the Obligation of such Borrower to make such payment to or for the account
of such Defaulting Lender against the obligation of such Defaulting Lender to
make such Defaulted Accommodation. In the event that, on any date, such
Borrower shall so set off and otherwise apply its obligation to make any such
payment against the obligation of such Defaulting Lender to make any such
Defaulted Accommodation on or prior to such date, the amount so set off and
otherwise applied by such Borrower shall constitute for all purposes of this
Agreement and the other Loan Documents an Accommodation by such Defaulting
Lender made on the date under the Facility pursuant to which such Defaulted
Accommodation was originally required to have been made pursuant to
Section 2.01, 2.02 or 2.03. Such Accommodation shall be considered, for all
purposes of this Agreement, to comprise part of the Borrowing or Drawing in
connection with which such Defaulted Accommodation was originally required to
have been made pursuant to Section 2.01, 2.02 or 2.03 and shall be a US Base
Rate Advance (if such Borrowing is a US Borrower Borrowing), a Canadian Base
Rate Advance (if such Borrowing is a Canadian Borrower Borrowing denominated in
US Dollars), a Canadian Prime Rate Advance (in respect of any such Drawing or if
such Borrowing is a Canadian Borrower Borrowing denominated in Canadian Dollars)
or an Australian Prime Rate Advance (if such Borrowing is an Australian Borrower
Borrowing (but the amount of such Accommodation, if denominated in US Dollars,
shall be immediately and automatically converted to the Equivalent thereof in
Australian Dollars)), in each case even if the other Accommodations comprising
such Borrowing or Drawing shall be Fixed Rate Advances on the date such
Accommodation is deemed to be made pursuant to this subsection (a). Each
Borrower shall notify the US Administrative Agent at any time such Borrower
exercises its right of set-off pursuant to this subsection (a) and shall set
forth in such notice (A) the name of the Defaulting Lender and the Defaulted
Accommodation required to be made by such Defaulting Lender and (B) the amount
set off and otherwise applied in respect of such Defaulted Accommodation
pursuant to this subsection (a). Any portion of such payment otherwise required
to be made by such Borrower to or for the account of such Defaulting
Accommodation which is paid by such Borrower, after giving effect to the amount
set off and otherwise applied by any Borrower pursuant to this subsection (a),
shall be applied by the Appropriate Administrative Agent as specified in
Section 2.17(b) or (c).
(b) In the event that, at any one time, (i) any Lender Party shall be
a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
any Administrative Agent or any of the other Lender Parties and (iii) any
Borrower shall make any payment hereunder or under any other Loan Document to
any Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent receiving such payment may, on its behalf or on behalf of
such other Lender Parties and to the fullest extent permitted by applicable law,
apply at such time the amount so paid by such Borrower to or for the account of
such Defaulting Lender to the payment of each such Defaulted Amount to the
extent required to pay such Defaulted Amount. In the event that the
Administrative Agent receiving any such payment shall so apply any such amount
to the payment of any such Defaulted Amount on any
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date, the amount so applied by such Administrative Agent shall constitute for
all purposes of this Agreement and the other Loan Documents payment, to such
extent, of such Defaulted Amount on such date. Any such amount so applied by
such Administrative Agent shall be retained by such Administrative Agent or
distributed by such Administrative Agent to such other Lender Parties, ratably
in accordance with the respective portions of such Defaulted Amounts payable at
such time to such Administrative Agent and such other Lender Parties and, if the
amount of such payment made by such Borrower shall at such time be insufficient
to pay all such Defaulted Amounts owing at such time to such Administrative
Agent and the other Lender Parties, in the following order of priority:
(i) FIRST, to each Administrative Agent for any such Defaulted
Amount then owing to the Administrative Agents, ratably in accordance
with such respective Defaulted Amounts then owing to such Administrative
Agents;
(ii) SECOND, to each Issuing Bank for any such Defaulted Amounts
owing to such Issuing Bank, ratably in accordance with such respective
Defaulted Amounts then owing to such Issuing Banks;
(iii) THIRD, to the Non-Pro Rata Lender for any such Defaulted
Amounts owing to the Non-Pro Rata Lender; and
(iv) FOURTH, to any other Lender Parties for any such Defaulted
Amounts then owing to such other Lender Parties, ratably in accordance with
such respective Defaulted Amounts then owing to such other Lender Parties.
Any portion of such amount paid by any Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by any
Administrative Agent pursuant to this subsection (b), shall be applied by such
Administrative Agent as specified in subsection (c) of this Section 2.17.
(c) In the event that, at any one time, (i) any Lender Party shall be
a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
Advance or a Defaulted Amount and (iii) any Borrower, any Administrative Agent
or any other Lender Party shall be required to pay or distribute any amount
hereunder or under any other Loan Document to or for the account of such
Defaulting Lender, then such Borrower or such other Lender Party shall pay such
amount to the Appropriate Administrative Agent to be held by such Administrative
Agent, to the fullest extent permitted by applicable law, in escrow or such
Administrative Agent shall, to the fullest extent permitted by applicable law,
hold in escrow such amount otherwise held by it. Any funds held by any
Administrative Agent in escrow under this subsection (c) shall be deposited by
such Administrative Agent in an account in the name and under the control of
such Administrative Agent, but subject to the provisions of this
Section 2.17(c). The terms applicable to such account, including the rate of
interest payable with respect to the credit balance of such account from time to
time, shall be Citibank's standard terms applicable to escrow accounts
maintained with it. Any interest credited to such account from time to time
shall be held by the US Administrative Agent in escrow under, and applied by the
US Administrative Agent from time to time in accordance with the provisions of,
this Section 2.17(c). The US Administrative Agent shall, to the fullest extent
permitted by applicable law, apply all funds so held in escrow from time to time
to the extent necessary to make any Accommodations required to be made by such
Defaulting Lender and
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to pay any amount payable by such Defaulting Lender hereunder and under the
other Loan Documents to the US Administrative Agent or any other Lender Party,
as and when such Accommodations or amounts are required to be made or paid and,
if the amount so held in escrow shall at any time be insufficient to make and
pay all such Accommodations and amounts required to be made or paid at such
time, in the following order of priority:
(i) FIRST, to the Administrative Agents for any amount then due
and payable by such Defaulting Lender to the Administrative Agents
hereunder, ratably in accordance with such respective amounts then due and
payable to the Administrative Agents;
(ii) SECOND, to each Issuing Bank for any amount due and payable to
such Issuing Bank by such Defaulting Lender, ratably in accordance with
such respective amounts then due and payable to such Issuing Banks;
(iii) THIRD, to the Non-Pro Rata Lender for any amounts then due and
payable to the Non-Pro Rata Lender by such Defaulting Lender;
(iv) FOURTH, to any other Lender Parties for any amount then due
and payable by such Defaulting Lender to such other Lender Parties
hereunder, ratably in accordance with such respective amounts then due and
payable to such other Lender Parties; and
(v) FIFTH, to the Borrowers for any Accommodation then required to
be made by such Defaulting Lender pursuant to a Commitment of such
Defaulting Lender, ratably in accordance with the respective amounts of any
Accommodations then required to be made to the Borrowers by such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the US Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by such Administrative Agent to such Lender Party and applied by
such Lender Party to the Obligations owing to such Lender Party at such time
under this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.17 are in addition to other rights and remedies that any Borrower may
have against such Defaulting Lender with respect to any Defaulted Accommodation
and that any Administrative Agent or any Lender Party may have against such
Defaulting Lender with respect to any Defaulted Amount.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT.
The obligation of each Lender to make an Advance or of any Issuing Bank to issue
a Letter of Credit on the occasion of the Initial Extension of Credit hereunder
is subject to the satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:
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(A) CAPITAL STOCK OF SUBSIDIARIES. PGI shall directly or
indirectly own 100% of the capital stock of PGC, PGA and each of PGI's
other Subsidiaries listed on Schedule 4.01(b), in each case free and clear
of all Liens (other than Liens created by the Collateral Documents).
(B) SURVIVING DEBT; EXISTING CREDIT AGREEMENTS. The Lender
Parties shall be satisfied that all Existing Debt, other than the Debt
identified on Schedule 3.01(b) (the "SURVIVING DEBT"), has been prepaid,
redeemed or defeased in full or otherwise satisfied and extinguished.
Without limiting the generality of the foregoing, all letters of credit,
commitments and other obligations of the lenders under each Existing Credit
Agreement shall have been terminated; all accrued interest, fees and other
amounts payable by any of the Borrowers or any of their respective
Restricted Subsidiaries shall have been paid in full and all Liens and
security interests created in connection with or otherwise to secure the
obligations under each Existing Credit Agreement shall have been released.
(C) ABSENCE OF MATERIAL ADVERSE CHANGE. Since December 31, 1994,
there shall have occurred no Material Adverse Change.
(D) LITIGATION, ETC. There shall exist no action, suit,
investigation, litigation or proceeding affecting any Loan Party or any of
its Subsidiaries pending or threatened before any court, governmental
agency or arbitrator that (i) would be reasonably likely to have a material
adverse effect on the business, condition (financial or otherwise),
operations, performance or properties of any Loan Party or any of its
Restricted Subsidiaries or (ii) purports to affect the legality, validity
or enforceability of this Agreement, any Note, any other Loan Document or
the consummation of the transactions contemplated hereby.
(E) PAYMENT OF FEES. The Borrowers shall have paid all accrued
fees and expenses of the Administrative Agents and the Lender Parties
provided for in this Agreement or in the Fee Letter and payable on or prior
to the Initial Extension of Credit (including the accrued fees and expenses
of counsel (including local counsel) to the US Administrative Agent).
(F) DELIVERY OF DOCUMENTS. The US Administrative Agent shall have
received on or before the day of the Initial Extension of Credit the
following, each dated such day (unless otherwise specified), in form and
substance satisfactory to the Lender Parties (unless otherwise specified)
and (except for the Notes) in sufficient copies for each Lender Party:
(i) The Notes payable to the order of the Appropriate
Lenders.
(ii) A certificate of a Responsible Officer and the
Secretary of each Loan Party attaching and certifying as to copies of
the resolutions of the Board of Directors of such Loan Party approving
this Agreement, the Notes and each other Loan Document to which it is
or is to be a party and, with respect to each Loan Party incorporated
in Australia, acknowledging that the Loan Documents will benefit such
Loan Party and setting forth the reasoning behind such conclusion.
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(iii) A copy of the charter or articles (or other similar
organizational document) of each Loan Party, and each amendment
thereto, certified (as of the date of the Initial Extension of Credit)
as being a true and complete copy thereof by the Secretary of such
Loan Party.
(iv) (A) A copy of a certificate of the Secretary of State
of the jurisdiction of incorporation of each Loan Party incorporated
under the laws of the United States or any state thereof, dated not
prior to January 15, 1996, and certifying that such Person is duly
incorporated and in good standing under the laws of the jurisdiction
of its incorporation, and (B) a certificate of the Secretary of each
Loan Party, dated the date of the Initial Extension of Credit,
certifying that (1) such Person has paid all franchise taxes and
filing fees (or the equivalent thereof) to the date of such
certificate and (2) with respect to each Loan Party incorporated,
continued or amalgamated under the laws of Canada or any province
thereof or under the Australian Corporations Law, that such Person is
duly incorporated, continued or amalgamated, as the case may be, under
the laws of the jurisdiction of its incorporation, continuation or
amalgamation and is not being dissolved and is Solvent and attaching
certificates of compliance, status or good standing, as the case may
be, dated reasonably near the date of the Initial Extension of Credit.
(v) A certificate of each Loan Party, signed on behalf of
such Loan Party by a Responsible Officer and its Secretary, dated the
date of the Initial Extension of Credit (the statements made in which
certificate shall be true on and as of the date of the Initial
Extension of Credit), certifying as to:
(A) the accuracy and completeness of the bylaws (or
other similar organizational document) of such Loan Party as
in effect on the date of the Initial Extension of Credit (a
copy of which shall be attached to such certificate); and
(B) the due incorporation and good standing of such
Loan Party as a corporation organized under the laws of the
jurisdiction of its incorporation, and the absence of any
proceeding for the dissolution or liquidation of such Loan
Party.
(vi) A certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying the names and true signatures
of the officers of such Loan Party authorized to sign this Agreement,
the Notes and each other Loan Document to which it is or is to be a
party and the other agreements, instruments and documents to be
delivered hereunder and thereunder.
(vii) A pledge agreement in substantially the form of
Exhibit G (as amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "PLEDGE AGREEMENT"), duly
executed by each Borrower and each Restricted Subsidiary (other than
Pegasus Minera de Chile Limitada and Pegasus do Brasil Mineracao
Ltda):
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(A) certificates representing the Pledged Shares
referred to therein accompanied by undated stock powers
executed in blank;
(B) with respect to any Pledged Shares issued by a
corporation subject to the Australian Corporations Law: (1) a
standard transfer form executed in blank by the shareholder;
(2) a certified copy of an amendment to the Articles of
Association of such corporation confirming that any transfer
of the shares the subject of the Pledge Agreement tendered to
the directors of such corporation will be registered; and (3)
duly completed Corporations Law forms 309 and 350 pursuant to
which the Pledge Agreement would be recorded at the Australian
Securities Commission against each Loan Party subject to the
Australian Corporations Law which granted the pledge;
(C) proper financing statements (or other similar
filings) for filing under the Uniform Commercial Code and the
Personal Property Security Acts of British Columbia (or any
similar law in any other jurisdiction) in all jurisdictions
that the US Administrative Agent or the Required Lenders may
deem necessary or desirable in order to perfect and protect
the Liens and security interests created under the Pledge
Agreement, covering the Collateral described in the Pledge
Agreement;
(D) evidence of the completion of all other recordings
and filings of or with respect to the Pledge Agreement (or
delivery to the US Administrative Agent of all documents,
executed as appropriate, necessary to complete such recordings
and filings) that the US Administrative Agent may deem
necessary or desirable in order to perfect and protect the
Liens created thereby; and
(E) evidence that all other action that the US
Administrative Agent or the Required Lenders may deem
necessary or desirable in order to perfect and protect the
liens and security interests created under the Pledge
Agreement has been taken.
(viii) A guaranty in substantially the form of Exhibit H (as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "GUARANTY"), duly executed by each
Borrower and each Restricted Subsidiary (other than Pegasus Minera de
Chile Limitada and Pegasus do Brasil Mineracao Ltda (it being
understood that Pegasus do Brasil Mineracao Ltda shall, to the extent
feasible (as determined by the US Administrative Agent) taking into
account applicable tax and other laws, execute the Guaranty on or
prior to the Closing Date).
(ix) An acknowledgment deed in substantially the form of
Exhibit I (as amended, supplemented or otherwise modified from time to
time, the "ACKNOWLEDGMENT DEED"), duly executed by the Australian
Borrower.
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(x) Certificates, in substantially the form of Exhibit J,
attesting to the Solvency of each Borrower after giving effect to the
transactions contemplated hereby from the chief financial officer of
such Borrower.
(xi) Favorable opinions of (A) Simpson Thacher & Bartlett,
special New York counsel for the Borrowers, in substantially the form
of Exhibit K-1 hereto, (B) Robert A. Lonergan, Esq., General Counsel
of the Borrowers, in substantially the form of Exhibit K-2 hereto, (C)
Lawson Lundell Lawson & McIntosh, Canadian counsel for the Borrowers,
in substantially the form of Exhibit K-3 hereto, (D) Allen Allen &
Hemsley, Australian counsel to the Borrowers, in substantially the
form of Exhibit K-4 hereto, and (E) Erwin Thompson & Hascheff, Nevada
counsel to PGC, in substantially the form of Exhibit K-5 hereto, and
in each case as to such other matters as any Lender Party through the
US Administrative Agent may reasonably request.
(xii) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agents, in form and substance satisfactory to the
Administrative Agents.
(xiii) A schedule, in form and substance satisfactory to the
US Administrative Agent, setting forth the current hedging position of
the Loan Parties in respect of all Surviving Hedge Agreements and
Existing Hedge Agreements.
SECTION 3.02. CONDITIONS PRECEDENT TO EACH BORROWING, DRAWING AND
ISSUANCE. The obligation of each Lender to make an Accommodation (other than a
Letter of Credit Advance made by an Issuing Bank or any Lender pursuant to
Section 2.04(c) and other than an Australian Borrower Advance made by a Risk
Participant pursuant to Section 2.01(b)(ii)) on the occasion of each Borrowing
and Drawing (including the Initial Extension of Credit), and the obligation of
each Issuing Bank to issue a Letter of Credit (including the initial issuance)
or renew a Letter of Credit, shall be subject to the further conditions
precedent that on the date of such Borrowing, Drawing or issuance or renewal the
following statements shall be true (and each of the giving of the applicable
Notice of Borrowing, Notice of Drawing, Notice of Issuance or Notice of Renewal
and the acceptance by any Borrower of the proceeds of such Borrowing, Drawing or
of such Letter of Credit or the renewal of such Letter of Credit shall
constitute a representation and warranty by such Borrower that both on the date
of such notice and on the date of such Borrowing, Drawing or issuance or renewal
such statements are true):
(a) the representations and warranties contained in each Loan
Document are correct on and as of such date, before and after giving effect
to such Borrowing, Drawing or issuance or renewal and to the application of
the proceeds therefrom, as though made on and as of such date other than
any such representations or warranties that, by their terms, are made as of
a specific date other than the date of such Borrowing, Drawing or issuance
or renewal, in which case as of such specific date; and
(b) no event has occurred and is continuing, or would result from
such Borrowing, Drawing or issuance or renewal or from the application of
the proceeds therefrom, that constitutes a Default.
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SECTION 3.03. DETERMINATIONS UNDER SECTION 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties or any of
them unless an officer of the US Administrative Agent responsible for the
transactions contemplated by the Loan Documents shall have received notice from
such Lender Party prior to the Initial Extension of Credit specifying its
objection thereto and if the Initial Extension of Credit consists of a Borrowing
or Drawing, such Lender Party shall not have made available to the Appropriate
Administrative Agent such Lender Party's ratable portion of such Borrowing or
Drawing, as the case may be.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. Each
Borrower represents and warrants as follows:
(A) DUE ORGANIZATION; GOOD STANDING; CORPORATE AUTHORITY. Each
Loan Party (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, continuance or
amalgamation, (ii) is duly qualified and in good standing as a foreign
corporation, extra-provincial or extra-territorial corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not reasonably be expected to have a Material
Adverse Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses, permits and other
approvals) to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted.
(B) SUBSIDIARIES. Set forth on Schedule 4.01(b) hereto is a
complete and accurate list, as of the Closing Date, of all Subsidiaries of each
Loan Party, showing as of the Closing Date (as to each such Subsidiary) the
jurisdiction of its incorporation, continuance or amalgamation and, with respect
to PGC, PGA and each Restricted Subsidiary, the number of shares of each class
of capital stock authorized, and the number outstanding, on the Closing Date and
the percentage of the outstanding shares of each such class owned (directly or
indirectly) by such Loan Party and the number of shares covered by all
outstanding options, warrants, rights of conversion or purchase and similar
rights at the Closing Date. All of the outstanding capital stock of each of
such Subsidiaries has been validly issued, is fully paid and non-assessable and
is owned by one or more of the Loan Parties, as set forth on Schedule 4.01(b),
free and clear of all Liens, except those created under the Loan Documents.
(C) DUE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by each Loan Party of this Agreement, the Notes and each other
Loan Document to which it is or is to be a party, and the consummation of the
transactions contemplated hereby, are within such Loan Party's corporate powers,
have been duly authorized by all necessary corporate action, and do not
(i) contravene such Loan Party's charter or bylaws or other constituent
documents, (ii) violate any foreign or domestic law (including, without
limitation, the Securities Exchange Act of 1934 and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including, without limitation, Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System),
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order, writ, judgment, injunction, decree, determination or award applicable to
any Loan Party, (iii) result in the breach of any material provision of, or
constitute a default under, any material contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting any
Loan Party or any of their properties or (iv) except for the Liens created under
the Loan Documents, result in or require the creation or imposition of any Lien
upon or with respect to any of the properties of any Loan Party. No Loan Party
is in violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in breach of any such contract,
loan agreement, indenture, mortgage, deed of trust, lease or other instrument,
the violation or breach of which would reasonably be expected to have a Material
Adverse Effect. No Loan Party is entering into any Loan Document in the
capacity of a trustee of any trust or settlement. Each Loan Party benefits by
executing the Loan Documents to which it is a party and the interest, fees and
other amounts payable hereunder are fair and reasonable. Each Loan Party
incorporated in Australia has complied with Section 289 of the Australian
Corporations Law since the later of the date of its incorporation and January
1, 1993.
(D) AUTHORIZATIONS AND APPROVALS. No consent of any other Person
and no authorization or approval or other action by, and no notice to or filing
with, any foreign or domestic governmental authority or regulatory body or any
other third party is required for (i) the due execution, delivery or performance
by any Loan Party of this Agreement, the Notes or any other Loan Document to
which it is or is to be a party, or for the consummation of the transactions
contemplated hereby, (ii) the grant by any Loan Party of the Liens granted by it
pursuant to the Collateral Documents or for the pledge by any Loan Party of the
Collateral pursuant to the Collateral Documents, (iii) the perfection or
maintenance of the Liens created by the Collateral Documents (including the
first priority nature thereof and any recordation or filings required in
connection therewith) or (iv) the exercise by the US Administrative Agent or any
other Lender Party of its rights under the Loan Documents or the remedies in
respect of the Collateral pursuant to the Collateral Documents, except for the
authorizations, approvals, actions, notices and filings listed on Schedule
4.01(d), all of which have been duly obtained, taken, given or made and are in
full force and effect except for (A) such actions indicated on Schedule 4.01(d)
to be taken after the Closing Date, and (B) except for authorizations,
approvals, actions, notices and filings required after the Closing Date in
connection with any Supplemental Pledge Agreement, all of which authorizations,
approvals, actions, notices and filings under this clause (B) shall have been
duly obtained, taken or made, as the case may be, as of the later of the date of
such Supplemental Pledge Agreement and the date required under any Supplemental
Pledge Agreement.
.
(E) DUE EXECUTION AND DELIVERY; ENFORCEABILITY. This Agreement
has been, and each of the Notes and each other Loan Document when delivered
hereunder will have been, duly executed and delivered by each Loan Party party
thereto. This Agreement is, and each of the Notes and each other Loan Document
when delivered hereunder will be, the legal, valid and binding obligation of
each Loan Party party thereto, enforceable against such Loan Party in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
(F) FINANCIAL STATEMENTS. The Consolidated and consolidating
balance sheets of PGI and its Subsidiaries as at December 31, 1994, and the
related Consolidated and consolidating statements of income and Consolidated
statement of cash flows of PGI and its Subsidiaries for the fiscal year then
ended, accompanied, in the case of such Consolidated balance sheet and
statements of income and cash
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flows, by an opinion of Coopers & Lybrand, independent certified public or
chartered accountants, and the Consolidated and consolidating balance sheets of
PGI and its Subsidiaries as at September 30, 1995, and the related Consolidated
and consolidating statements of income and Consolidated statement of cash flows
of PGI and its Subsidiaries for the nine months then ended, duly certified by
the chief financial officer of PGI, copies of which have been furnished to each
Lender Party, fairly present, subject, in the case of said balance sheets as at
September 30, 1995, and said statements of income and cash flows for the nine
months then ended, to year-end audit adjustments, the Consolidated and
consolidating financial condition of PGI and its Subsidiaries as at such dates
and the Consolidated and consolidating results of the operations of PGI and its
Subsidiaries for the periods ended on such dates, all in accordance with
generally accepted accounting principles applied on a consistent basis, and
since December 31, 1994, there has been no Material Adverse Change.
(G) FORECASTED FINANCIAL STATEMENTS. The Consolidated forecasted
balance sheets, income statements and cash flows statements of PGI, PGC, PGA and
the Restricted Subsidiaries and the forecasted income statements and cash flows
for the Core Properties delivered to the Lender Parties prior to the Closing
Date and the financial statements delivered pursuant to Section 5.03 were
prepared in good faith on the basis of the assumptions stated therein, which
assumptions were, at the time of delivery of such forecasts, believed in good
faith by the Borrowers to be reasonable, it being understood that such
projections are subject to significant uncertainties and contingencies, many of
which are beyond the control of the Borrowers.
(H) ACCURACY OF INFORMATION. Neither the Information Memorandum
nor any other written information, exhibit or report furnished by any Loan Party
to the US Administrative Agent or any other Lender Party in connection with the
negotiation of the Loan Documents or pursuant to the terms of the Loan
Documents, taken as a whole, contained any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements made
therein not materially misleading.
(I) LITIGATION, ETC. There is no action, suit, investigation,
litigation or proceeding affecting any Loan Party, including any Environmental
Action, pending or, to the best knowledge of any Borrower, threatened before any
court, governmental agency or arbitrator that (i) would reasonably be expected
to have a Material Adverse Effect, or (ii) purports to affect the legality,
validity or enforceability of this Agreement, any Note, any other Loan Document
or the consummation of the transactions contemplated hereby.
(J) PURCHASE OF MARGIN STOCK. Neither any Borrower nor any
Restricted Subsidiary is engaged in the business of extending credit for the
purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance
or drawings under any Letter of Credit will be used to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock.
(K) OWNERSHIP OF MARGIN STOCK. Following application of the
proceeds of each Advance or drawing under each Letter of Credit, not more than
25 percent of the value of the assets (either of any Borrower only or of any
Borrower and its Subsidiaries on a Consolidated basis) subject to the provisions
of Section 5.02(a) or 5.02(e) or subject to any restriction contained in any
agreement or
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instrument between any Borrower and any Lender Party or any Affiliate of any
Lender Party relating to Debt and within the scope of Section 6.01(e) will be
Margin Stock.
(L) ERISA EVENTS. (i) No ERISA Event has occurred or is
reasonably expected to occur with respect to any Plan and (ii) neither any Loan
Party nor any ERISA Affiliate has incurred or is reasonably expected to incur
(A) any Withdrawal Liability to any Multiemployer Plan or (B) liability as a
result of the reorganization or termination of a Multiemployer Plan, except to
the extent that any or all of the foregoing in the aggregate has not had, and is
not reasonably expected to have, a Material Adverse Effect.
(M) CERTAIN ERISA LIABILITIES. As of the last annual actuarial
valuation date, the funded current liability percentage, as defined in Section
302(d)(8) of ERISA, of each Plan exceeds 90%, except with respect to Plans the
unfunded current liability of which does not exceed $500,000 in the aggregate;
and there has been no material adverse change in the funding status of any such
Plan since such date.
(N) ENVIRONMENTAL MATTERS. (i) Each Loan Party is in compliance
with all applicable Environmental Laws, except as would not reasonably be
expected to result in a Material Adverse Effect.
(ii) None of the properties currently owned or operated by any Loan
Party includes a site listed or, to the best knowledge of the Loan Parties,
proposed to be listed, on the NPL.
(iii) To the best knowledge of each Loan Party, the properties
currently owned or operated by such Loan Party do not contain any Hazardous
Materials in amounts or concentrations that could reasonably be expected to
give rise to liability under any Environmental Law that would result in a
Material Adverse Effect.
(O) PERFECTION OF SECURITY INTERESTS. At all times prior to the
Collateral Release Date, the Collateral Documents create, a valid and, assuming
the continued possession in the State of New York by the US Administrative Agent
of the Pledged Shares under the Pledge Agreement, perfected first priority
security interest in the Collateral in favor of the US Collateral Agent for the
benefit of the Secured Parties, securing the payment of the Secured Obligations
(as defined in such Collateral Documents), and all filings and other actions
necessary or desirable to perfect and protect such security interest have been
duly taken. The Loan Parties are the legal and beneficial owners of the
Collateral free and clear of any Lien, except for the Liens and security
interests created or permitted under the Loan Documents.
(P) TAX RETURNS; PAYMENT OF TAXES. Each Loan Party and each of
its Subsidiaries has filed, has caused to be filed or has been included in all
federal tax returns (United States, Canadian and Australian) and, except to the
extent that the failure to so file or be included, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect,
in all other tax returns (state, provincial, territorial and otherwise) required
to be filed and has paid all taxes, assessments, fees and other charges shown
thereon to be due, together with applicable interest and penalties.
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(Q) INVESTMENT COMPANY ACT. No Loan Party is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(R) SOLVENCY. Each Borrower is, individually and together with
its respective Subsidiaries, Solvent. As of the Closing Date, each Borrower and
each Guarantor is Solvent except that no representation is made with respect to
Pegasus Gold Montana Mining, Inc.
(S) EXISTING DEBT. Set forth on Schedule 4.01(s) hereto is a
complete and accurate list, as of the Closing Date, of all Debt (other than
Surviving Debt) of the Borrowers and the Restricted Subsidiaries (the "EXISTING
DEBT"), showing as of the Closing Date the principal amount outstanding
thereunder.
(T) SURVIVING DEBT. Set forth on Schedule 3.01(b) hereto is a
complete and accurate list of all Surviving Debt constituting Debt for borrowed
money, showing as of the Closing Date the principal amount outstanding
thereunder, the maturity date thereof and the amortization schedule therefor.
(U) LIENS. Set forth on Schedule 4.01(u) hereto is a complete and
accurate list, as of the Closing Date, of all Liens affecting any properties of
any Loan Party other than (i) Permitted Liens, and (ii) other Liens securing
Obligations not constituting Debt for borrowed money which Obligations are not
in excess of $50,000 individually or $5,000,000 in the aggregate.
(V) INVESTMENTS. Set forth on Schedule 4.01(v) hereto is a
complete and accurate list, as of the Closing Date, of all Investments (other
than Cash Equivalents and other than Subsidiaries of the Loan Parties identified
on Schedule 4.01(b)) held by any Loan Party showing as of the Closing Date the
amount, obligor or issuer and maturity, if any, thereof.
(W) MOUNT TODD. Except as would not prevent the Loan Parties from
complying with the provisions of Section 5.02(n): (i) PGA has good title to or
(in the case of any Project Tenement or Title not yet issued or acquired) the
right to acquire or have issued to it the Project Tenements and the Titles free
from Liens and is in compliance with all material provisions of the Project
Tenements; (ii) there has been no failure to comply with any of the conditions
of the Project Tenements or Titles or failure to observe obligations thereunder
so as to render such Project Tenement or Title liable to revocation,
cancellation, withdrawal, termination, forfeiture or suspension; and (iii) there
are no caveats, land claims, native title claims, sacred site applications or
claims of any other nature whatsoever made in respect of the Project Tenements,
the Titles or the Project Area.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any Advance shall
remain unpaid, any Letter of Credit or BA Obligation shall be outstanding or any
Lender Party shall have any Commitment hereunder, each Borrower will:
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(A) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Restricted Subsidiaries to comply, with all applicable laws, rules, regulations
and orders, such compliance to include, without limitation, compliance with
ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the
Organized Crime Control Act of 1970 except to the extent the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
(B) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of
its Restricted Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if unpaid,
might by law become a Lien upon its property; PROVIDED, HOWEVER, that neither
any Borrower nor any Restricted Subsidiary shall be required to pay or discharge
any such tax, assessment, charge or claim that is being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom relating to an
Obligation in excess of $1,000,000 (or the Equivalent thereof) attaches to its
property and becomes enforceable against its other creditors.
(C) COMPLIANCE WITH ENVIRONMENTAL LAWS. (i) Comply, and cause
each of its Restricted Subsidiaries to comply, with all applicable Environmental
Laws and (ii) comply with and maintain, and cause each of its Restricted
Subsidiaries to comply with and maintain, all applicable Environmental Permits,
except in the case of each of the foregoing clauses (i) and (ii) where the
failure to so comply or maintain would not reasonably be expected to result in a
Material Adverse Effect.
(D) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Restricted Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which such Borrower or such Restricted
Subsidiary operates.
(E) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and
maintain, and cause each of its Restricted Subsidiaries to preserve and
maintain, its legal existence, and its material rights (charter and statutory),
permits, licenses, approvals, privileges and franchises; PROVIDED, HOWEVER, that
any Borrower and any Restricted Subsidiary may consummate any merger or
consolidation permitted under Section 5.02(d) and PROVIDED FURTHER that neither
any Borrower nor any Restricted Subsidiary shall be required to preserve any
right, permit, license, approval, privilege or franchise, or the legal existence
of any Restricted Subsidiary, if the Board of Directors of such Borrower or such
Restricted Subsidiary shall determine that the preservation thereof is no longer
desirable in the conduct of the business of any Borrower and its Subsidiaries
taken as a whole and that the loss thereof is not disadvantageous in any
material respect to any Borrower and its Subsidiaries taken as a whole or the
Lender Parties.
(F) VISITATION RIGHTS. At any reasonable time and from time to
time, permit any Administrative Agent or any of the other Lender Parties or any
agents or representatives thereof, to examine and make (at such Lender Party's
expense) copies of and abstracts from the records relating to the past and
projected financial and operational performance of, and books of account of, and
visit the properties of, any Borrower and any Restricted Subsidiary, and to
discuss the affairs, finances and accounts of the Borrowers and any Restricted
Subsidiary with any of their officers.
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(G) KEEPING OF BOOKS. Keep, and cause each of its Restricted
Subsidiaries to keep, proper books of record and account in which appropriate
and correct entries shall be made of all financial transactions and the assets
and business of such Borrower and each such Restricted Subsidiary in accordance
with generally accepted accounting principles in effect from time to time.
(H) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
cause each of its Restricted Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(I) PERFORMANCE OF OBLIGATIONS. Perform and observe, and cause
each of its Restricted Subsidiaries to perform and observe, all the terms and
provisions of all contractual obligations (including obligations in respect of
leases of real property) to be performed or observed by it, except (other than
with respect to any Loan Document) where the failure to do so, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(J) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its
Restricted Subsidiaries to conduct, all transactions otherwise permitted under
the Loan Documents with any of their respective Affiliates and with any Loan
Party on terms that are fair and reasonable and, with respect to transactions
with Affiliates, on terms no less favorable to such Borrower or such Restricted
Subsidiary than it would obtain in a comparable arm's-length transaction with a
Person not an Affiliate, provided that the provisions of this Section 5.01(j)
shall not prohibit transactions entered into by any Borrower or any Restricted
Subsidiaries with Joint Ventures to the extent that such Borrower or such
Restricted Subsidiary has determined in good faith that the business purposes
achieved by such transactions render the terms thereof reasonable.
(K) CASH COLLATERAL ACCOUNTS. Take such actions as may be
requested (i) by the US Administrative Agent to establish and maintain, and
create and maintain a perfected first priority security interest in favor of the
US Administrative Agent for the benefit of the Secured Parties in, one or more
non-interest bearing collateral accounts (collectively, the "US CASH COLLATERAL
ACCOUNT"), over which the US Administrative Agent shall have sole dominion and
control, for purposes of making and holding the deposits required or permitted
hereunder to be made to the US Cash Collateral Account, (ii) by the Canadian
Administrative Agent to establish and maintain, and create and maintain a
perfected first priority security interest in favor of the Canadian
Administrative Agent for the benefit of the Secured Parties in, one or more
interest bearing collateral accounts (collectively, the "CANADIAN CASH
COLLATERAL ACCOUNT"), over which the Canadian Administrative Agent shall have
sole dominion and control, for purposes of making and holding the deposits
required or permitted hereunder to be made to the Canadian Cash Collateral
Account, and (iii) by the Australian Administrative Agent to establish and
maintain, and create and maintain a perfected first priority security interest
in favor of the Australian Administrative Agent for the benefit of the Secured
Parties in, one or more interest bearing collateral accounts (collectively, the
"AUSTRALIAN CASH COLLATERAL ACCOUNT"), over which the Australian Administrative
Agent shall have sole dominion and control, for purposes of making and holding
the deposits required or permitted hereunder to be made to the Australian Cash
Collateral Account; PROVIDED, HOWEVER, that so long as no Event of Default has
occurred and is continuing, the Appropriate Administrative Agent shall
negotiate with PGI the terms governing such cash collateral accounts (including
the investment of amounts therein
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in Cash Equivalents and the location of such account, in each case permitting
such account to serve the purposes intended by this Agreement).
(L) GOLD PRICE HEDGE AGREEMENTS. Subject to Section 5.02(b)(iii),
enter into prior to the Closing Date, and maintain at all times thereafter, Gold
Price Hedge Agreements with counterparties with a minimum capital and surplus of
US$300,000,000 such that the weighted average realized price of gold over each
future rolling 12-quarter period ending as of the end of each fiscal quarter of
PGI shall be at least US$375 per ounce, based on an assumed market spot price
during such period of the lower of US$350 per ounce or the daily average market
spot price (determined by reference to the London Gold Fix) over the previous
six months, for the amount of gold production projected in the most recent
business plan furnished to the Lenders pursuant to Section 5.03.
(M) ADDITIONAL GUARANTORS AND COLLATERAL GRANTORS. (i)
Substantially concurrently with the designation by any Borrower of any
Subsidiary of such Borrower as a "Restricted Subsidiary," (A) cause each such
Subsidiary (other than a Foreign Subsidiary and other than Finance Corp.) to
guarantee the Obligations hereunder by executing and delivering to the US
Administrative Agent an Amendment to Guaranty in substantially the form of
Exhibit L, and (B) prior to the Collateral Release Date, (1) cause each such
Subsidiary to become a party to the Pledge Agreement by executing and delivering
to the US Administrative Agent an Amendment to Pledge Agreement in substantially
the form of Exhibit M, and (2) cause all shares of capital stock of such
Subsidiary (or, in the case of a Foreign Subsidiary, 65% of each class of
capital stock of such Subsidiary) to be pledged pursuant to the Pledge
Agreement; PROVIDED, HOWEVER, that (I) any such Subsidiary incorporated under
the laws of Australia or any Territory thereof may not be designated as a
Restricted Subsidiary unless concurrently with the execution by such Subsidiary
of such Amendment to Guaranty and, if applicable, such Amendment to Pledge
Agreement, such Subsidiary and the applicable Borrower shall certify in writing
to the US Administrative Agent that such Subsidiary has not contravened and will
not contravene, and shall provide such other evidence as the US Administrative
Agent may reasonably request to demonstrate that such Subsidiary has not
contravened and will not contravene, Section 205, 243H or 243ZE of the
Australian Corporations Law by entering into or participating in any Loan
Document or any transaction contemplated by any Loan Document, and (II) any such
Subsidiary incorporated under the laws of Canada or any province thereof may not
be designated as a Restricted Subsidiary unless concurrently with the execution
by such Subsidiary of such Amendment to Guaranty and, if applicable, such
Amendment to Pledge Agreement, such Subsidiary and the applicable Borrower shall
cause an opinion of counsel satisfactory to the US Administrative Agent to be
delivered to the US Administrative Agent to the effect that the Amendment to
Guaranty and the Guaranty as amended thereby (and, if applicable, the Amendment
to Pledge Agreement and the Pledge Agreement as amended thereby) are enforceable
against such Subsidiary.
(ii) Within 45 days after the Closing Date, (A) cause 65% of
each class of equity interests in Pegasus Minera de Chile Limitada and
Pegasus do Brasil Mineracao Ltda to be pledged to the US Administrative Agent
pursuant to one or more pledge agreements, in form and substance reasonably
satisfactory to the US Administrative Agent, effective to create in favor of
the US Administrative Agent for its benefit and the benefit of the other
Lender Parties a perfected first priority security interest in such equity
interests to secure the Secured Obligations (as defined in the Pledge
Agreement), and (B) deliver to the US Administrative Agent one or more
opinions of counsel, in form and substance reasonably
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satisfactory to the US Administrative Agent, as to the due organization of
such Restricted Subsidiary, the due authorization, execution, delivery and
enforceability of each such pledge agreement (and, if applicable, Amendment
to Guaranty) and the perfection and priority of the security interests
thereunder and as to such other matters as the US Administrative Agent may
reasonably request.
(N) MAINTENANCE OF CORPORATE SEPARATENESS. Cause each of its
Unrestricted Subsidiaries to conduct its business and operations separately from
that of each Borrower and its Restricted Subsidiaries, including, without
limitation, (i) not allowing funds or other assets of any of its Unrestricted
Subsidiaries to be commingled with the funds or other assets of any Borrower or
its Restricted Subsidiaries except to the extent segregated in the Borrowers'
books and records and by intercompany accounts, (ii) maintaining with respect to
each Unrestricted Subsidiary corporate and financial records separate from those
of any Borrower and its Restricted Subsidiaries and observing all corporate or
other organizational formalities, including, without limitation, maintaining
corporate or other organizational minute books and acting pursuant to corporate
or other organizational resolutions, (iii) causing each Unrestricted Subsidiary
to pay (directly or indirectly) its material liabilities from the assets of such
Unrestricted Subsidiary and not from the assets of any Borrower or its
Restricted Subsidiaries, (iv) causing each Unrestricted Subsidiary to maintain
(or be entitled to coverage under) insurance adequate to meet its business
needs, and (v) causing each of its Unrestricted Subsidiaries to conduct its
dealings with third parties in their own names and as separate and independent
entities from any Borrower and its Restricted Subsidiaries.
(O) PROJECT TENEMENTS AND TITLES. In the case of PGA, ensure,
except as would not prevent the Loan Parties from complying with the provisions
of Section 5.02(n), that it: (i) holds its respective interest in any Project
Tenements presently held, (ii) has good title to its respective interest in any
Project Tenement or Title presently held, and (iii) is otherwise entitled to
acquire or have issued to it any Project Tenements or Titles not presently held
by it, in each case free of Liens and that it is in compliance with all
provisions of and its obligations under the Project Tenements and the Titles and
that it has rights of access to and entry upon all relevant freehold, leasehold
and other land and rights to carry out all activities required for the purposes
of the Mount Todd Project upon such freehold, leasehold or other land.
SECTION 5.02. NEGATIVE COVENANTS. So long as any Advance shall
remain unpaid, any Letter of Credit or BA Obligation shall be outstanding or any
Lender Party shall have any Commitment hereunder, each Borrower will not, at any
time:
(A) LIENS, ETC. Create, incur, assume or suffer to exist, or
permit any of its Restricted Subsidiaries to create, incur, assume or suffer to
exist, any Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or assign, or permit any of its Restricted Subsidiaries to assign, any
accounts or other right to receive income, EXCLUDING, HOWEVER, from the
operation of the foregoing restrictions the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
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(iii) Liens existing on the date hereof and described on
Schedule 4.01(u) hereto;
(iv) purchase money Liens upon or in real property or equipment
acquired or held by such Borrower or any of its Restricted Subsidiaries in
the ordinary course of business to secure the purchase price of such
property or equipment or to secure Debt incurred solely for the purpose of
financing the acquisition, construction or improvement of any such property
or equipment to be subject to such Liens, or Liens existing on any such
property or equipment at the time of acquisition (other than any such Liens
created in contemplation of such acquisition that do not secure the
purchase price), or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount; PROVIDED, HOWEVER, that no such
Lien shall extend to or cover any property other than the property or
equipment being acquired, constructed or improved, and no such extension,
renewal or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed or replaced; and
PROVIDED FURTHER that the aggregate principal amount of the Debt secured by
Liens permitted by this clause (iv) shall not exceed the amount permitted
under Section 5.02(b)(viii) at any time outstanding;
(v) Liens arising in connection with Capitalized Leases permitted
under Section 5.02(b)(v); PROVIDED that no such Lien shall extend to or
cover any Collateral or assets other than the assets subject to such
Capitalized Leases;
(vi) other Liens securing Debt outstanding in an aggregate
principal amount not to exceed at any time 5% of the Tangible Net Worth of
the Borrowers and the Restricted Subsidiaries on a Consolidated basis as of
the then most recently ended fiscal quarter for which the financial
statements and certificates required pursuant to Section 5.03(b) or (c), as
applicable, have been received by the US Administrative Agent, provided
that no such Lien shall extend to or cover any Collateral; and
(vii) the replacement, extension or renewal of any Lien permitted by
clause (iii) above upon or in the same property theretofore subject thereto
or the replacement, extension or renewal (without increase in the amount or
change in any direct or contingent obligor) of the Debt secured thereby.
(B) DEBT. Create, incur, assume or suffer to exist, or permit any
of its Restricted Subsidiaries to create, incur, assume or suffer to exist, any
Debt other than:
(i) Permitted Subordinated Debt;
(ii) unsecured Debt of any Borrower for borrowed money, maturing
after, and requiring no amortization on or prior to, the Termination Date
and otherwise on terms and conditions satisfactory to the Required Lenders;
(iii) Debt of any Borrower in respect of Hedge Agreements comprised
solely of (1) the Existing Hedge Agreements and the Surviving Hedge
Agreements, (2) Hedge Agreements required pursuant to Section 5.01(l), and
(3) other Hedge Agreements not prohibited by Section 5.02(m) which are
designed to hedge against fluctuations in commodity and equity prices,
interest
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rates or foreign exchange rates incurred in the ordinary course of business
and consistent with prudent business practice; PROVIDED that each Hedge
Agreement permitted under the foregoing clause (2) or (3) shall contain no
termination provisions more burdensome on any Loan Party than the
termination provisions set forth in Exhibit N;
(iv) Debt consisting of guarantees of project financings of
Unrestricted Subsidiaries so long as (1) no Default exists at the time any
such guaranty is executed or would result therefrom, and (2) the aggregate
principal amount of all Debt so guaranteed by the Borrowers, or any of
them, does not, at any time prior to the Collateral Release Date, exceed
US$50,000,000;
(v) (A) Capitalized Leases with respect to mining equipment not to
exceed in the aggregate, at any time prior to the Collateral Release Date,
US$75,000,000 at any time outstanding, and (B) other Capitalized Leases not
to exceed in the aggregate US$10,000,000 at any time outstanding;
(vi) Debt owed to any Borrower or to any Restricted Subsidiary
(other than Debt owing by Finance Corp.);
(vii) Debt under the Loan Documents;
(viii) Debt secured by Liens permitted by Section 5.02(a)(iv) in an
aggregate principal amount not to exceed $5,000,000 at any time
outstanding;
(ix) the Surviving Debt;
(x) PGI may guarantee, on an unsecured subordinated basis, the
payment of Permitted Preferred Dividends, PROVIDED that (A) such guarantee
is subordinated to the prior payment in full of all existing and future
Debt of PGI (including guarantees by PGI of existing and future Debt of its
Subsidiaries), and (B) no more than the lesser of (1) $15,000,000 per
fiscal year of Permitted Preferred Dividends, and (2) the actual Preferred
Dividend Amount payable in any fiscal year may be so guaranteed; and
(ix) other unsecured Debt (other than Debt in respect of Hedge
Agreements) in an aggregate principal amount not to exceed US$5,000,000 at
any time outstanding.
Any provision hereof to the contrary notwithstanding, the aggregate principal
amount of all Debt (other than Debt in respect of Hedge Agreements), if any, the
terms of which include cross-default or cross-acceleration provisions more
restrictive than the provisions of Section 6.01(e) shall not at any time exceed
US$5,000,000.
(C) LEASE OBLIGATIONS. Create, incur, assume or suffer to exist,
or permit any of its Restricted Subsidiaries to create, incur, assume or suffer
to exist, any obligations as lessee (i) for the rental or hire of real or
personal property in connection with any sale and leaseback transaction (other
than any sale and leaseback transaction involving the sale and lease of any
asset within 180 days of the
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acquisition of such asset), or (ii) for the rental or hire of other real or
personal property of any kind under leases or agreements to lease including
Capitalized Leases having an original term of (or extendible at the option of
the lessee to a term of) one year or more (but excluding any such lease
requiring annual payments of less than US$25,000) that would cause the aggregate
direct and contingent liabilities of the Borrowers and the Restricted
Subsidiaries, on a Consolidated basis, in respect of all such obligations
(including all such obligations arising as a result of any permitted sale and
leaseback transaction) to exceed US$17,500,000 payable in any period of 12
consecutive months; PROVIDED, HOWEVER, that the foregoing restrictions shall not
apply to obligations as lessee with respect to mining and exploratory real
property.
(D) MERGERS, ETC. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Restricted Subsidiaries
to do so, except that, so long as immediately prior thereto and immediately
after giving effect thereto, no Default has occurred and is continuing (i) any
Solvent Subsidiary (other than PGC and PGA) of the Borrowers may be merged into
any Borrower or a Restricted Subsidiary (except that a Restricted Subsidiary
which is not a Foreign Subsidiary immediately prior to any such merger may not
be merged into a Foreign Subsidiary unless immediately prior to, and immediately
after giving effect to, any such merger, no Default exists under Section
5.02(f)(iii)(B)), (ii) any Borrower or any Restricted Subsidiary may be merged
with another Solvent Person in a transaction in which such Borrower, or such
Restricted Subsidiary, as the case may be, is the surviving entity, and (iii)
any Restricted Subsidiary may be merged with or into or consolidated with
another Solvent Person in a transaction in which the surviving entity is a
direct wholly owned Subsidiary of any Borrower and is or simultaneously becomes
a Restricted Subsidiary which is not (unless the Restricted Subsidiary party to
such merger was a Foreign Subsidiary immediately prior to the effectiveness of
such merger or unless immediately prior to, and immediately after giving effect
to, any such merger, no Default exists under Section 5.02(f)(iii)(B)) a Foreign
Subsidiary.
(E) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
dispose of, or permit any of its Restricted Subsidiaries to sell, lease,
transfer or otherwise dispose of, any Collateral or the Core Properties or any
portion thereof, or grant any option or other right to purchase, lease or
otherwise acquire any Collateral or the Core Properties or any portion thereof,
except: (i) sales, leases, transfers or other dispositions of any portion of the
Core Properties in the ordinary course of business (but not sales of any Loan
Party's property interests in proved and probable reserves); (ii) in a
transaction authorized by Section 5.02(d); and (iii) the grant of any option or
other right to purchase any asset in a transaction which would be permitted
under Section 5.02(e)(i).
(F) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of
its Restricted Subsidiaries to make or hold, any Investment in any Person other
than:
(i) Investments existing on the date hereof and described on
Schedule 4.01(v);
(ii) Investments by PGI, PGC and PGA in any of PGI, PGC or PGA;
(iii) Investments by the Borrowers and their respective Restricted
Subsidiaries in (A) their respective Restricted Subsidiaries (other than
Finance Corp.) which are not Foreign Subsidiaries, (B) their respective
Restricted Subsidiaries (other than Finance Corp.) which are Foreign
Subsidiaries in an aggregate unrecovered amount with respect to all
Investments under
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this clause (B) (exclusive of any Investments in such Subsidiaries
permitted under Section 5.02(f)(vii)) not to exceed at any time 15% of the
Tangible Net Worth of the Borrowers and the Restricted Subsidiaries on a
Consolidated basis as of the then most recently ended fiscal quarter of PGI
for which the financial statements and certificates required pursuant to
Section 5.03(b) or (c), as applicable, have been received by the US
Administrative Agent, and (C) Finance Corp. in an aggregate amount for all
such Investments not to exceed $5,000,000;
(iv) loans and advances to employees in the ordinary course of the
business of the Borrowers and their Restricted Subsidiaries as presently
conducted in an aggregate principal amount not to exceed $3,000,000 at any
time outstanding;
(v) Investments by the Borrowers and the Restricted Subsidiaries
in Cash Equivalents;
(vi) Investments by any Borrower in Hedge Agreements permitted
under Section 5.02(b)(iii);
(vii) Investments consisting of intercompany Debt permitted under
Section 5.02(b)(vi);
(viii) Investments in Unrestricted Subsidiaries consisting of
guaranties permitted under Section 5.02(b)(iv);
(ix) Investments in Unrestricted Subsidiaries and Restricted
Subsidiaries which are Foreign Subsidiaries (in addition to those permitted
above) in an aggregate amount for all such Investments since the Closing
Date not to exceed the sum of (A) $25,000,000, PLUS (B) the difference
between (1) the Additional Investment Amount MINUS (2) the amount, if any,
by which the aggregate amount of Investments since the Closing Date under
Section 5.02(f)(xiii) exceeds US$25,000,000 or, if the Collateral Release
Date has occurred, US$75,000,000;
(x) Investments made with respect to the Core Properties,
properties substantially adjacent to the Core Properties and the properties
known as Beal Mountain, Black Pine and Diamond Hill;
(xi) Investments in the Emerging Market Gold Fund in an aggregate
unrecovered amount not to exceed US$20,000,000 at any time;
(xii) a loan or loans to USMX in connection with the monetization of
a royalty payable by PGC to USMX in an aggregate principal amount not to
exceed US$3,600,000; and
(xiii) Investments in the Gold Mining Business (in addition to those
permitted above) so long as the aggregate amount of all such Investments
under this Section 5.02(f)(xiii) after the date hereof shall not exceed the
sum of (A) prior to the Collateral Release Date, $25,000,000, and, after
the Collateral Release Date, $75,000,000, PLUS (B), the difference between
(1) the Additional Investment Amount MINUS (2) the amount, if any, by which
the aggregate amount of Investments since the Closing Date under Section
5.02(f)(ix) exceeds US$25,000,000.
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(G) DIVIDENDS, ETC. Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, or permit any of its
Restricted Subsidiaries to do any of the foregoing or permit any of its
Restricted Subsidiaries to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of any Borrower or any warrants, rights or
options to acquire such capital stock or to issue or sell any capital stock or
any warrants, rights or options to acquire such capital stock, except that:
(i) PGI may
(A) declare and pay dividends and distributions payable only
in common stock of PGI,
(B) issue and sell shares of its capital stock for fair value
for cash or other consideration (including, without limitation, the
issuance of common stock of PGI in connection with the conversion of
the Existing Subordinated Debt to the extent any redemption of the
Existing Subordinated Debt is permitted hereunder), and
(C) so long as immediately prior and immediately after giving
effect thereto no Event of Default has occurred and is continuing,
purchase, redeem, retire, defease or otherwise acquire shares of its
redeemable preferred stock to the extent the consideration therefor
consists solely of shares of its capital stock with equal or inferior
voting powers, designations, preferences and rights,
(D) on and after February 1, 1998, so long as immediately
prior and immediately after giving effect thereto no Event of Default
has occurred and is continuing, declare and pay cash dividends in an
aggregate amount for all such dividends not to exceed the sum of (1)
US$10,000,000, (2) 50% of cumulative Consolidated net income (to the
extent positive) of the Borrowers and the Restricted Subsidiaries for
all fiscal quarters ending on or after December 31, 1995, and (3) 50%
of the net cash proceeds from the issuance by PGI after the Closing
Date of any common stock of PGI for cash (other than in connection
with the conversion of any Permitted Preferred Stock), and
(E) declare or pay dividends, purchase, redeem, retire,
defease or otherwise acquire its capital stock or any warrants, rights
or options to acquire such capital stock, and make distributions of
its capital stock, warrants, rights or options to acquire such capital
stock, in each case to the extent solely related to employee
(including employees of Subsidiaries of PGI) stock option plans,
employee savings plans or similar arrangements.
(ii) PGC and PGA may declare and pay dividends to PGI;
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(iii) PGC, PGA and each Restricted Subsidiary may issue redeemable
preferred stock to the Borrower or Restricted Subsidiary, as the case may
be, which is its corporate parent and may redeem such preferred stock (it
being understood that any stock so issued shall be pledged pursuant to the
Pledge Agreement and shall be automatically released from the Lien of the
Pledge Agreement upon such redemption);
(iv) any Restricted Subsidiary of any Borrower may (A) declare and
pay dividends to such Borrower and (B) declare and pay dividends to any
other Restricted Subsidiary of such Borrower of which it is a Restricted
Subsidiary;
(v) Finance Corp. may (A) issue Permitted Preferred Stock so long
as the net proceeds thereof are loaned to or otherwise invested in PGI or
any of its Subsidiaries (subject to the provisions of this Agreement), and
(B) so long as no Event of Default has occurred and is continuing or would
result therefrom, pay Permitted Preferred Dividends; and
(vi) PGI may (A) issue common stock in exchange for, and upon the
conversion of, Permitted Preferred Stock on the terms described in the
registration statement relating to such Permitted Preferred Stock, (B)
issue Exchange Preferred Stock, and (C) so long as no Event of Default has
occurred and is continuing or would result therefrom, pay Exchange
Preferred Dividends.
(H) CHANGE IN NATURE OF BUSINESS. Make, or permit any of its
Restricted Subsidiaries to make, any material change in its lines of business as
carried on at the date hereof.
(I) ACCOUNTING CHANGES. Make or permit, or permit any of its
Restricted Subsidiaries to make or permit, any change in (i) accounting policies
or reporting practices, except as required or permitted by generally accepted
accounting principles or (ii) its Fiscal Year.
(J) PREPAYMENTS, ETC. OF DEBT. (i) Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, the
Existing Subordinated Debt, any Permitted Subordinated Debt or any Debt
permitted under Section 5.02(b)(ii), other than (A) the prepayment of the
Advances in accordance with the terms of this Agreement, (B) regularly scheduled
or required repayments or redemptions of Surviving Debt, and (C) the redemption
by PGI of the Existing Subordinated Debt so long as not less than 90% of the
principal amount of such Existing Subordinated Debt outstanding at the time of
such redemption is converted to common stock of PGI pursuant to the terms of the
Existing Subordinated Debt Indenture in connection with such redemption, or (ii)
amend, modify or change in any manner that could be adverse to the
Administrative Agents or the other Lender Parties any term or condition of the
Existing Subordinated Debt, any Permitted Subordinated Debt or any Debt
permitted under Section 5.02(b)(ii), or permit any of its Restricted
Subsidiaries to do any of the foregoing.
(K) PAYMENT RESTRICTIONS. Enter into, or permit any Restricted
Subsidiary to enter into, any agreement, instrument or other document, other
than this Agreement and the other Loan Documents, which directly or indirectly
prohibits or restricts in any manner the ability of PGC, PGA or any Restricted
Subsidiary to (i) pay dividends or make any other distributions in respect of
its capital stock
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or any other equity interest or participation in its profits owned by any Loan
Party, or pay or repay any Debt owed to any Borrower or any Restricted
Subsidiary, (ii) make loans or advances to any Loan Party, or (iii) transfer any
of its properties or assets to any Loan Party.
(L) PARTNERSHIPS, ETC. Become a general partner in any general or
limited partnership, or permit any Restricted Subsidiary to do so, except that
the foregoing shall not prohibit any Borrower or any Restricted Subsidiary from
entering into (i) joint ventures, or (ii) any partnership in which the Loan
Parties own at least 99% of the equity interests.
(M) SPECULATIVE TRANSACTIONS. Engage in or enter into, or permit
any of its Restricted Subsidiaries to engage in or enter into, (i) any hedging
transaction pursuant to which the obligations of the parties are determined on
any basis other than a direct linear function of a price or index based upon the
notional amount of such transaction, (ii) any Hedge Agreement relating to any
commodity if, upon the effectiveness of such Hedge Agreement, the aggregate
quantity of such commodity subject to any Hedge Agreement of any Borrower or any
Restricted Subsidiary would exceed 100% of the projected production of the
Borrowers and the Restricted Subsidiaries of such commodity through the
Termination Date, (iii) any Hedge Agreement relating to interest rates if, upon
the effectiveness of such Hedge Agreement, the aggregate notional amount of all
Hedge Agreements of the Borrowers and the Restricted Subsidiaries relating to
interest rates would exceed the aggregate principal amount of Funded Debt of the
Borrowers and the Restricted Subsidiaries then outstanding, or (iv) any Hedge
Agreement relating to currency exchange rates if, upon the effectiveness of such
Hedge Agreement, the aggregate notional amount of all Hedge Agreements of the
Borrowers and the Restricted Subsidiaries relating to currency exchange rates
would exceed the aggregate projected net foreign exchange exposure of the
Borrowers and the Restricted Subsidiaries at such time.
(N) MOUNT TODD DEVELOPMENT. Permit the development, construction,
completion or projected operating results of the Phase II Development of Mount
Todd (the "PHASE II DEVELOPMENT") to deviate from the projections therefor
provided to the US Administrative Agent prior to closing as part of the
feasibility study and the engineering review regarding the Phase II Development
(collectively, the "ORIGINAL PHASE II PROJECTIONS") in such a manner as would
reasonably be expected to result in the inability of the Borrowers to timely
satisfy their respective monetary obligations under the Loan Documents after
taking into account the Consolidated financial resources of the Borrowers and
the Restricted Subsidiaries available for the repayment of such monetary
obligations. Deviation from the projections of the Phase II Development shall
include all aspects of the Phase II Development, including, without limitation,
(i) the projected and actual aggregate cost of completion of the Phase II
Development, (ii) the projected and actual completion date of the Phase II
Development, (iii) the projected and actual annual aggregate production, and the
costs associated therewith, of gold from the Phase II Development, and (iv)
projected and actual aggregate reserves. The provisions of this Section 5.02(n)
shall cease to be operative as to events or circumstances occurring after the
Collateral Release Date.
(O) CHARTER AMENDMENTS. Amend, or permit the amendment of, the
charter documents of any Loan Party incorporated under the laws of Australia or
any province thereof in any manner that could adversely affect the rights and
remedies of the Collateral Agent under the Pledge Agreement.
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(P) CERTAIN COVENANTS REGARDING FINANCE CORP. Any contrary
provision of this Agreement or any other Loan Document notwithstanding, PGI
shall not and shall not permit any of its Restricted Subsidiaries to (i) sell,
contribute or otherwise transfer any assets to or for the benefit of Finance
Corp. except as expressly permitted by Section 5.02((f)(iii), or (ii) permit
Finance Corp. to have any assets or liabilities (other than liabilities, such as
franchise tax obligations, required by law in connection with the maintenance of
its corporate existence) or to engage in any business activities other than
liabilities and business activities incidental to the issuance of Permitted
Preferred Stock.
SECTION 5.03. REPORTING REQUIREMENTS. So long as any Advance shall
remain unpaid, any Letter of Credit or BA Obligation shall be outstanding or any
Lender Party shall have any Commitment hereunder, the Borrowers will furnish to
the Lender Parties:
(A) DEFAULT NOTICE. Within two Business Days after any
Responsible Officer is aware of the occurrence of any Default or any event,
development or occurrence that would reasonably be expected to have a Material
Adverse Effect continuing on the date of such statement, a statement of the
chief financial officer of PGI setting forth details of such Default, event,
development or occurrence and the action that the Borrowers have taken and
propose to take with respect thereto.
(B) QUARTERLY FINANCIALS. As soon as available and in any event
within 48 days after the end of each of the first three quarters of each Fiscal
Year, Consolidated and consolidating balance sheets of PGI and its Subsidiaries
as of the end of such quarter and Consolidated and consolidating statements of
income and a Consolidated statement of cash flows of PGI and its Subsidiaries
for the period commencing at the end of the previous fiscal quarter and ending
with the end of such fiscal quarter and Consolidated and consolidating
statements of income and a Consolidated statement of cash flows of PGI and its
Subsidiaries for the period commencing at the end of the previous Fiscal Year
and ending with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding period of the
preceding Fiscal Year, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the chief financial officer of PGI as having been
prepared in accordance with GAAP, together with (i) a certificate of said
officer stating that no Default has occurred and is continuing or, if a Default
has occurred and is continuing, a statement as to the nature thereof and the
action that the Borrowers have taken and propose to take with respect thereto
and (ii) a schedule in form satisfactory to the US Administrative Agent of (A)
the position of the Loan Parties under all Hedge Agreements, and (B) the
computations used by PGI in determining compliance with the covenants contained
in Sections 5.04(a) through (e), PROVIDED that in the event of any change in
GAAP used in the preparation of such financial statements, PGI shall also
provide, if necessary for the determination of compliance with Section 5.04, a
statement of reconciliation conforming such financial statements to GAAP.
(C) ANNUAL FINANCIALS. As soon as available and in any event
within 93 days after the end of each Fiscal Year, a copy of the annual audit
report for such year for PGI and its Subsidiaries, including therein
Consolidated and unaudited consolidating balance sheets of PGI and its
Subsidiaries as of the end of such Fiscal Year and Consolidated and unaudited
consolidating statements of income and a Consolidated statement of cash flows of
PGI and its Subsidiaries for such Fiscal Year, in each case accompanied by an
unqualified opinion or an opinion otherwise acceptable to the Required Lenders
of Coopers & Lybrand or other independent certified public or chartered
accountants of nationally recognized
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standing in the United States, together with (i) a certificate of such
accounting firm to the Lender Parties stating that in the course of the regular
audit of the business of PGI and its Subsidiaries, which audit was conducted by
such accounting firm in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge that a Default has occurred and
is continuing, or if, in the opinion of such accounting firm, a Default has
occurred and is continuing, a statement as to the nature thereof, (ii) a
schedule in form satisfactory to the US Administrative Agent of (A) the position
of the Loan Parties under all Hedge Agreements, and (B) the computations used by
such accountants in determining, as of the end of such Fiscal Year, compliance
with the covenants contained in Sections 5.04(a) through (e), PROVIDED that in
the event of any change in GAAP used in the preparation of such financial
statements, the Borrowers shall also provide, if necessary for the determination
of compliance with Section 5.04, a statement of reconciliation conforming such
financial statements to GAAP and (iii) a certificate of the chief financial
officer of PGI stating that no Default has occurred and is continuing or, if a
default has occurred and is continuing, a statement as to the nature thereof and
the action that the Borrowers have taken and propose to take with respect
thereto.
(D) ANNUAL FORECASTS. As soon as available and in any event no
later than 60 days after the end of each Fiscal Year, forecasts prepared by
management of PGI, in form satisfactory to the US Administrative Agent, of
balance sheets, income statements and cash flow statements on a quarterly basis
for the Fiscal Year following such Fiscal Year then ended and on an annual basis
for each Fiscal Year thereafter until the Termination Date.
(E) MOUNT TODD PROGRESS REPORTS. Prior to the Collateral Release
Date, the Borrowers shall prepare and deliver to the US Administrative Agent
projections and reports, in form satisfactory to the US Administrative Agent and
the Required Lenders and certified by the Borrowers as having been prepared in
good faith, as to (i) the actual aggregate costs incurred by the Borrowers in
connection with the Phase II Development as of such time versus the amount of
such costs projected to have been incurred as of such time in the Original Phase
II Projections, (ii) the then projected aggregate cost of completion of the
Phase II Development versus the cost of completion set forth in the Original
Phase II Projections, (iii) the actual progress to date in completion of the
Phase II Development versus the projected progress as of such time set forth in
the Original Phase II Projections, (iv) the then projected completion date for
the Phase II Development versus the projected completion date set forth in the
Original Phase II Projections, (v) the then projected aggregate annual
production of gold from the Phase II Development, and the costs associated
therewith, versus the projected aggregate annual production of gold from the
Phase II Development, and the costs associated therewith, set forth in the
Original Phase II Projections, (vi) the then projected aggregate reserves versus
the projected aggregate reserves set forth in the Original Phase II Projections,
and (vii) such other matters regarding the Phase II Development as any
Administrative Agent or the Required Lenders may reasonably request.
Projections and reports under clauses (i), (iii) and (iv) above shall be
provided monthly by the 10th day of each calendar month and all others shall be
provided quarterly together with the financial statements delivered pursuant to
Section 5.03(b). Projections and reports with respect to the foregoing clauses
(i) and (iv) shall not be required after the completion of the Phase II
Development.
(F) LITIGATION. Promptly after the commencement thereof, notice
of all actions, suits, investigations, litigation and proceedings before any
court or governmental department, commission,
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board, bureau, agency or instrumentality, domestic or foreign, affecting any
Loan Party or any Restricted Subsidiary of the type described in
Section 4.01(i).
(G) SECURITIES REPORTS. Promptly after the sending or filing
thereof, copies of all press releases and all proxy statements, financial
statements and reports that PGI sends to its stockholders, and copies, but
without duplication, of all regular, periodic and special reports, and all
registration statements, that PGI files with the Securities and Exchange
Commission, the British Columbia Securities Commission, the Ontario Securities
Commission or any governmental authority that may be substituted therefor, or
with any national securities exchange.
(H) CREDITOR REPORTS. Promptly after the furnishing thereof,
copies of any material statement or report furnished to any other holder of the
securities of any Loan Party or of any Restricted Subsidiaries pursuant to the
terms of any indenture, guaranty, loan or credit or similar agreement and not
otherwise required to be furnished to the Lender Parties pursuant to any other
clause of this Section 5.03.
(I) ENVIRONMENTAL CONDITIONS. Promptly after the assertion or
occurrence thereof, notice of (i) any Environmental Action against or (ii) any
noncompliance by any Loan Party or any Restricted Subsidiary with any
Environmental Law or Environmental Permit, in either case that would reasonably
be expected to have a Material Adverse Effect.
(J) FOREIGN COMPANY REGISTRATION. Promptly after any application
by a Collateral Grantor for registration under Part 4.1 of the Australian
Corporations Law, notice thereof and copies of any documents lodged under
Section 263 of the Australian Corporations Law with the application for
registration.
(K) OTHER INFORMATION. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any Restricted Subsidiary (or any
Joint Venture) as any Lender Party (through the US Administrative Agent) may
from time to time reasonably request.
SECTION 5.04. FINANCIAL COVENANTS. So long as any Advance shall
remain unpaid, any Letter of Credit or BA Obligation shall be outstanding or any
Lender Party shall have any Commitment hereunder, the Borrowers will:
(A) TANGIBLE NET WORTH. Maintain at all times Tangible Net Worth
of the Borrowers and the Restricted Subsidiaries on a Consolidated basis in an
amount not less than the sum of (i) US$279,500,000, PLUS (ii) 50% of cumulative
Consolidated net income of the Borrowers and the Restricted Subsidiaries for all
fiscal quarters ending on or after December 31, 1995 (and including such
Consolidated net income for any fiscal quarter for which such Consolidated net
income is a negative number), provided that the amount determined by reference
to this clause (ii) shall in no event be less than zero, PLUS (iii) 50% of the
net cash proceeds from the issuance after the Closing Date of any common stock
by PGI for cash (and 50% of the aggregate additions to net tangible assets on
the Consolidated balance sheet of PGI attributable to assets acquired in
exchange for the issuance of any common stock issued after the Closing Date for
consideration other than cash), PLUS (iv) 100% of the net cash proceeds from the
issuance after the Closing Date of any preferred stock by PGI or Finance Corp.
for cash (and
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100% of the aggregate additions to net tangible assets on the Consolidated
balance sheet of PGI attributable to assets acquired in exchange for the
issuance of any preferred stock issued after the Closing Date for consideration
other than cash).
(B) TOTAL FUNDED DEBT TO EBITDA RATIO. Maintain at all times
after March 31, 1996 a Total Funded Debt to EBITDA Ratio of not more than the
amount set forth below for each period set forth below:
PERIOD RATIO
March 31, 1996 to March 30, 1997 6.50 to 1.0
March 31, 1997 to June 29, 1997 6.25 to 1.0
June 30, 1997 to September 29, 1997 6.00 to 1.0
September 30, 1997 to December 30, 1997 5.75 to 1.0
December 31, 1997 to March 30, 1998 5.50 to 1.0
March 31, 1998 to June 29, 1998 5.25 to 1.0
June 30, 1998 to September 29, 1998 5.00 to 1.0
September 30, 1998 to December 30, 1998 4.75 to 1.0
December 31, 1998 to March 30, 1999 4.50 to 1.0
March 31, 1999 to June 29, 1999 4.25 to 1.0
June 30, 1999 to September 29, 1999 4.00 to 1.0
September 30, 1999 to December 30, 1999 3.75 to 1.0
December 31, 1999 and thereafter 3.50 to 1.0
(C) EBITDA TO TOTAL ADJUSTED INTEREST EXPENSE RATIO. Maintain at
all times after March 31, 1996 a ratio of (i) Consolidated EBITDA of the
Borrowers and the Restricted Subsidiaries on a Consolidated basis for the four
fiscal quarter period ending as of the then most recently ended fiscal quarter
of PGI to (ii) Total Adjusted Interest Expense of the Borrowers and the
Restricted Subsidiaries on a Consolidated basis for such period of not less than
the amount set forth below for each period set forth below:
PERIOD RATIO
March 31, 1996 to March 30, 1997 1.80 to 1.0
March 31, 1997 to June 29, 1997 2.10 to 1.0
June 30, 1997 to September 29, 1997 2.40 to 1.0
September 30, 1997 to December 30, 1997 2.70 to 1.0
December 31, 1997 to March 30, 1998 3.00 to 1.0
March 31, 1998 to June 29, 1998 3.10 to 1.0
June 30, 1998 to September 29, 1998 3.40 to 1.0
September 30, 1998 to December 30, 1998 3.70 to 1.0
December 31, 1998 and thereafter 4.00 to 1.0
(D) ORE RESERVE ADEQUACY RATIO. Maintain at all times a ratio of
(i) the aggregate proven and probable gold ore reserves of the Borrowers and the
Restricted Subsidiaries as of the last day
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of then most recently ended fiscal quarter of PGI to (ii) the aggregate ounces
of gold production of the Borrowers and the Restricted Subsidiaries for the four
fiscal quarter period ending as of the then most recently ended fiscal quarter
of PGI of not less than the amount set forth below for each period set forth
below:
PERIOD RATIO
December 31, 1995 to March 30, 1997 11.00 to 1.0
March 31, 1997 to June 29, 1997 10.00 to 1.0
June 30, 1997 to September 29, 1997 9.00 to 1.0
September 30, 1997 to June 29, 1998 8.00 to 1.0
June 30, 1998 to December 30, 1998 7.50 to 1.0
December 31, 1998 to September 29, 1999 7.00 to 1.0
September 30, 1999 and thereafter 6.00 to 1.0
(E) ADJUSTED CONSOLIDATED CURRENT RATIO. Maintain at all times
when the aggregate value of assets which secure any Hedge Agreement (other than
pursuant to the Collateral Documents) equals or exceeds $US 5,000,000 (or the
Equivalent thereof) a ratio of Adjusted Current Assets to Adjusted Current
Liabilities of the Borrowers and the Restricted Subsidiaries on a Consolidated
basis of not less than 1.0 to 1.0.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) (i) any Borrower shall fail to pay any principal of any
Advance or any portion of any BA Obligation when the same shall become due and
payable or (ii) any Borrower shall fail to pay any interest on any Advance, or
any Loan Party shall fail to make any other payment under any Loan Document, in
each case under this clause (ii) within 3 Business Days after the same becomes
due and payable, or (iii) the Australian Borrower shall fail to pay any money
payable by it under Section 2.14(a) or any money it has warranted it will pay
under Section 2.14(g), in the case of this clause (iii) within 3 Business Days
after the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any
of its officers) herein, in any other Loan Document or in any certificate,
document or other statement furnished under or in connection with any Loan
Document shall prove to have been incorrect in any material respect when made;
or
(c) any Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 2.16, 5.01(e), 5.02 or 5.04; or
(d) any Loan Party shall fail to perform any other covenant or
agreement contained in any Loan Document on its part to be performed or observed
if such failure shall remain unremedied
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for 15 days after the earlier of the date on which (A) a Responsible Officer
becomes aware of such failure or (B) written notice thereof shall have been
given to any Borrower by any Administrative Agent or any other Lender Party; or
(e) any Loan Party shall fail to pay any principal of, premium or
interest on or any other amount payable in respect of any Debt that is
outstanding in a principal or notional amount of at least US$5,000,000
individually or US$10,000,000 in the aggregate (but excluding Debt outstanding
hereunder) of such Loan Party when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt or otherwise to cause, or to permit the holder thereof to cause, such
Debt to mature; or any such Debt shall be declared to be due and payable or
required to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof; or
(f) any Loan Party shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against any Loan Party seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, provisional
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding shall
remain undismissed or unstayed for a period of 60 days or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or any substantial part of its property) shall
occur; or an Insolvency Event occurs in respect of any Loan Party incorporated
in Australia or a controller (as defined in the Australian Corporations Law) is
appointed in respect of any property of any such Loan Party; or any Loan Party
shall take any corporate action to authorize any of the actions set forth above
in this Section 6.01(f); or
(g) any judgment or order for the payment of money in excess of
US$5,000,000, or any non-monetary judgment that could reasonably be expected to
have a Material Adverse Effect, shall be rendered against any Loan Party and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order and such judgment or order has not been paid,
vacated, discharged or stayed or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
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(h) any material provision of any Loan Document after delivery
thereof pursuant to Section 3.01 or 5.01(m) shall for any reason cease to be
valid and binding on or enforceable against any Loan Party party to it, or any
such Loan Party shall so state in writing; or
(i) any Collateral Document after delivery thereof shall for any
reason (other than pursuant to the terms thereof or hereof) cease to create a
valid and perfected first priority lien on and security interest in the
Collateral purported to be covered thereby; or
(j) (i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of Voting Stock of PGI (or other securities convertible
into such Voting Stock) representing 25% or more of the combined voting power of
all Voting Stock of PGI; or (ii) during any period of up to 24 consecutive
months, commencing before or after the date of this Agreement, individuals who
at the beginning of such 24-month period were directors of PGI shall cease for
any reason to constitute a majority of the board of directors of PGI; or
(iii) any Person or two or more Persons acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence over the management or
policies of PGI or control over Voting Stock of PGI (or other securities
convertible into such securities) representing 25% or more of the combined
voting power of all Voting Stock of PGI; or
(k) (i) any ERISA Event shall have occurred with respect to a Plan
or (ii) any Loan Party or any ERISA Affiliate shall have incurred (A) Withdrawal
Liability to a Multiemployer Plan or (B) liability as a result of the
reorganization or termination of a Multiemployer Plan, and as a result of any or
all of the foregoing, any Loan Party or any ERISA Affiliate has incurred or is
reasonably expected to incur liability in excess of $5,000,000 in the aggregate;
then, and in any such event, the US Administrative Agent (i) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrowers, declare the obligation of each Lender to make Advances (other than
Letter of Credit Advances by an Issuing Bank or a Lender pursuant to Section
2.04(c) and other than Australian Borrower Advances by a Risk Participant
pursuant to Section 2.01(b)(ii)), of each Canadian Lender to accept and/or
purchase BA Obligations and of each Issuing Bank to issue Letters of Credit to
be terminated, whereupon the same shall forthwith terminate, and (ii) shall at
the request, or may with the consent, of the Required Lenders, by notice to the
Borrowers, declare the Notes, all interest thereon and all other amounts payable
under this Agreement and the other Loan Documents to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; PROVIDED, HOWEVER, that in the event of an actual or deemed entry of
an order for relief with respect to any Loan Party or any Restricted Subsidiary
under the Federal Bankruptcy Code or a similar order under the Bankruptcy and
Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada),
Australian Corporations Law or any other Canadian or Australian statute relating
to protection of debtors, (x) the obligation of each Lender to make Advances
(other than Letter of Credit Advances by an Issuing Bank or a Lender pursuant to
Section 2.04(c) and other than Australian Borrower Advances by a Risk
Participant pursuant to Section 2.01(b)(ii)) and of each Issuing Bank to issue
Letters of Credit shall automatically be terminated and
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(y) the Notes, all such interest and all such amounts shall automatically become
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by each Borrower.
SECTION 6.02. ACTIONS IN RESPECT OF THE LETTERS OF CREDIT AND BA
OBLIGATIONS UPON DEFAULT.
(a) If any Event of Default shall have occurred and be continuing,
or if any Letter of Credit shall be outstanding on or after the Termination
Date, the US Administrative Agent may, or shall at the request of the Required
Lenders, irrespective of whether it is taking any of the actions described in
Section 6.01 or otherwise, make demand upon the Borrowers to, and forthwith upon
such demand each Borrower will, pay to the Appropriate Administrative Agent on
behalf of the Appropriate Lenders and the Issuing Banks in same day funds at the
Administrative Agent's office designated in such demand, for deposit in the Cash
Collateral Accounts, as appropriate, an amount equal to the aggregate Available
Amount of all Letters of Credit issued for the account of such Borrower and then
outstanding.
(b) If any Event of Default shall have occurred and be continuing,
or if any BA Obligation shall be outstanding on or after the Termination Date,
the US Administrative Agent may, or shall at the request of the Required
Lenders, irrespective of whether it is taking any of the actions described in
Section 6.01 or otherwise, make demand upon the Canadian Borrower to, and
forthwith upon such demand such Borrower will, pay to the Canadian
Administrative Agent on behalf of the Canadian Lenders, in same day funds, at
the Administrative Agent's office designated in such demand, for deposit in the
Canadian Cash Collateral Account, an amount equal to the aggregate Face Amount
of all BA Obligations then outstanding.
(c) If, at any time after an Event of Default, any Administrative
Agent determines that any funds held in any Cash Collateral Account are subject
to any right or claim of any Person other than the Secured Parties or that the
total amount of such funds is less than the aggregate Face Amount of all
outstanding BA Obligations or the aggregate Available Amount of all outstanding
Letters of Credit, respectively, (i) the Canadian Borrower will, forthwith upon
demand by the Canadian Administrative Agent, pay to the Canadian Administrative
Agent as additional funds to be deposited and held in the Canadian Cash
Collateral Account, an amount equal to the excess of (A) the aggregate Face
Amount of all outstanding BA Obligations over (B) the total amount of funds, if
any, then held in the Canadian Cash Collateral Account that the Canadian
Administrative Agent determines to be free and clear of any such right or claim,
and (ii) each Borrower will, forthwith upon demand by the US Administrative
Agent, pay to the Appropriate Administrative Agent, as additional funds to be
deposited and held in the Cash Collateral Accounts, as appropriate, an amount
equal to the excess of (A) the aggregate Available Amount of all outstanding
Letters of Credit issued for the account of such Borrower over (B) the total
amount of funds, if any, then held in the Cash Collateral Accounts in respect of
such Available Amounts that the US Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE VII
THE ADMINISTRATIVE AGENTS
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SECTION 7.01. AUTHORIZATION AND ACTION. Each Lender Party (in its
capacities as a Lender, an Issuing Bank (if applicable) and a potential Hedge
Bank) and each Existing Hedge Bank by its acceptance of the benefits of the
Collateral Documents hereby (a) appoints and authorizes each Administrative
Agent and each Collateral Agent to take such action as agent on its behalf and
to exercise such powers and discretion under this Agreement and the other Loan
Documents as are delegated to such Administrative Agent or such Collateral Agent
by the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto, and (b) accepts that it acquires an interest in
the Pledge Agreement and each other Collateral Document upon the applicable
Collateral Agent entering into the Pledge Agreement and such Collateral
Document. As to any matters not expressly provided for by the Loan Documents
(including, without limitation, enforcement or collection of the Notes), no
Administrative Agent or Collateral Agent shall be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lender Parties and all holders of Notes; PROVIDED, HOWEVER,
that no Administrative Agent or Collateral Agent shall be required to take any
action that exposes such Administrative Agent to personal liability or that is
contrary to this Agreement or applicable law. Each Appropriate Administrative
Agent and each Collateral Agent agrees to give to each Appropriate Lender (and
each Risk Participant, as to any notice given to the Australian Lenders) prompt
notice of each notice given to it by any Borrower pursuant to the terms of this
Agreement.
SECTION 7.02. AGENT'S RELIANCE, ETC. Neither any Administrative
Agent, any Collateral Agent nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with the Loan Documents, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, each Administrative Agent and each Collateral
Agent: (a) may treat the payee of any Note as the holder thereof until the US
Administrative Agent receives and accepts an Assignment and Acceptance entered
into by the Lender that is the payee of such Note, as assignor, and an Eligible
Assignee, as assignee, as provided in Section 8.07 and notifies each other
Administrative Agent and each Collateral Agent of such acceptance; (b) may
consult with legal counsel (including counsel for any Loan Party), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (d) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of any Loan Document on the part of any Loan
Party or to inspect the property (including the books and records) of any Loan
Party; (e) shall not be responsible to any Lender Party for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, any Loan Document or any other
instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
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SECTION 7.03. CITIBANK, CITIBANK CANADA, CITIBANK AUSTRALIA AND
AFFILIATES. With respect to its Commitments, the Advances made by it and the
Notes issued to it, each of Citibank, Citibank Canada and Citibank Australia
shall have the same rights and powers under the Loan Documents as any other
Lender Party and may exercise the same as though it were not an Administrative
Agent; and the term "Lender Party" or "Lenders Parties" shall, unless otherwise
expressly indicated, include each of Citibank, Citibank Canada and Citibank
Australia in its individual capacity. Each of Citibank, Citibank Canada and
Citibank Australia and their respective Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party or any of its Subsidiaries and any Person who may do business with or own
securities of any Loan Party, all as if Citibank, Citibank Canada or Citibank
Australia, as the case may be, were not an Administrative Agent or a Collateral
Agent and without any duty to account therefor to the other Lender Parties.
SECTION 7.04. LENDER PARTY CREDIT DECISION. Each Lender Party
acknowledges that it has, independently and without reliance upon any
Administrative Agent, any Collateral Agent or any other Lender Party and based
on the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender Party also acknowledges that
it will, independently and without reliance upon any Administrative Agent, any
Collateral Agent or any other Lender Party and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
SECTION 7.05. INDEMNIFICATION. (a) Each Lender Party severally
agrees to indemnify each Administrative Agent and each Collateral Agent (to the
extent not promptly reimbursed by the Borrowers) from and against such Lender
Party's ratable share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against such Administrative Agent or Collateral
Agent in any way relating to or arising out of the Loan Documents or any action
taken or omitted by such Administrative Agent or Collateral Agent under the Loan
Documents; PROVIDED, HOWEVER, that no Lender Party shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such
Administrative Agent's or such Collateral Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender Party agrees to
reimburse each Administrative Agent and each Collateral Agent promptly upon
demand for such Lender Party's ratable share of any costs and expenses
(including, without limitation, fees and expenses of counsel) payable by any
Borrower under Section 8.04, to the extent that such Administrative Agent or
such Collateral Agent is not promptly reimbursed for such costs and expenses by
such Borrower. For purposes of this Section 7.05(a), the Lender Parties'
respective ratable shares of any amount shall be determined, at any time,
according to the sum of (a) the aggregate principal amount of the Advances and
Face Amount of the BA Obligations outstanding at such time and owing to the
respective Lender Parties, (b) with respect to each Lender Party, its ratable
share (determined as set forth in Section 2.04(c)) of the aggregate Available
Amount of all Letters of Credit outstanding at such time as to which such Lender
Party has a contingent obligation to purchase Letter of Credit Advances pursuant
to Section 2.04(c) (except that, for purposes of this Section 7.05(a), the
ratable share of the Non-Pro Rata Lender shall be allocated to the Risk
Participants in accordance with their respective Adjusted Pro Rata Shares), and
(c) their respective
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Unused Revolving Credit Commitments at such time; PROVIDED, that the aggregate
principal amount of Letter of Credit Advances owing to any Issuing Bank shall be
considered to be owed to the Appropriate Lenders ratably in accordance with
their respective obligations to purchase such Letter of Credit Advances as set
forth in Section 2.04(c) (except that, for purposes of this Section 7.05(a), the
ratable share of the Non-Pro Rata Lender shall be allocated to the Risk
Participants in accordance with their respective Adjusted Pro Rata Shares) and
the aggregate principal amount of all outstanding Non-Pro Rata Advances shall be
considered to be owing to the Risk Participants in accordance with their
respective Adjusted Pro Rata Shares. In the event that any Defaulted Advance
shall be owing by any Defaulting Lender at any time, such Lender Party's
Commitment with respect to the Facility under which such Defaulted Advance was
required to have been made shall be considered to be unused for purposes of this
Section 7.05(a) to the extent of the amount of such Defaulted Advance. The
failure of any Lender Party to reimburse any Administrative Agent or any
Collateral Agent promptly upon demand for such Lender Party's ratable share of
any amount required to be paid by such Lender Party to such Administrative Agent
as provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse such Administrative Agent or such Collateral Agent for
its ratable share of such amount, but no Lender Party shall be responsible for
the failure of any other Lender Party to reimburse such Administrative Agent or
such Collateral Agent for such other Lender Party's ratable share of such
amount. Without prejudice to the survival of any other agreement of any Lender
Party hereunder, the agreement and obligations of each Lender Party contained in
this Section 7.05(a) shall survive the payment in full of principal, interest
and all other amounts payable hereunder and under the other Loan Documents.
(b) Each Lender Party severally agrees to indemnify each
Issuing Bank (to the extent not promptly reimbursed by the Borrowers) from
and against such Lender Party's ratable share (determined as provided below)
of any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against such
Issuing Bank in any way relating to or arising out of the Loan Documents or
any action taken or omitted by such Issuing Bank under the Loan Documents;
PROVIDED, HOWEVER, that no Lender Party shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such
Issuing Bank's gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender Party agrees to reimburse such Issuing Bank
promptly upon demand for its ratable share of any costs and expenses
(including, without limitation, fees and expenses of counsel) payable by any
Borrower under Section 8.04, to the extent that such Issuing Bank is not
promptly reimbursed for such costs and expenses by such Borrower. For
purposes of this Section 7.05(b), the Lender Parties' respective ratable
shares of any amount shall be determined, at any time, according to the sum
of (a) the aggregate principal amount of the Advances and Face Amount of the
BA Obligations outstanding at such time and owing to the respective Lender
Parties, (b) with respect to each Lender Party, its ratable share (determined
as set forth in Section 2.04(c)) of the aggregate Available Amount of all
Letters of Credit outstanding at such time as to which such Lender Party has
a contingent obligation to purchase Letter of Credit Advances pursuant to
Section 2.04(c) (except that, for purposes of this Section
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7.05(b), the ratable share of the Non-Pro Rata Lender shall be allocated to
the Risk Participants in accordance with their respective Adjusted Pro Rata
Shares), PLUS (c) their respective Unused Revolving Credit Commitments at
such time; PROVIDED that the aggregate principal amount of Letter of Credit
Advances owing to any Issuing Bank shall be considered to be owed to the
Appropriate Lenders ratably in accordance with their respective obligations
to purchase such Letter of Credit Advances as set forth in Section 2.04(c)
(except that, for purposes of this Section 7.05(b), the ratable share of the
Non-Pro Rata Lender shall be allocated to the Risk Participants in accordance
with their respective Adjusted Pro Rata Shares) and the aggregate principal
amount of all outstanding Non-Pro Rata Advances shall be considered to be
owing to the Risk Participants in accordance with their respective Adjusted
Pro Rata Shares. In the event that any Defaulted Advance shall be owing by
any Defaulting Lender at any time, such Lender Party's Commitment with
respect to the Facility under which such Defaulted Advance was required to
have been made shall be considered to be unused for purposes of this Section
7.05(b) to the extent of the amount of such Defaulted Advance. The failure
of any Lender Party to reimburse such Issuing Bank promptly upon demand for
its ratable share of any amount required to be paid by the Lender Parties to
such Issuing Bank as provided herein shall not relieve any other Lender Party
of its obligation hereunder to reimburse such Issuing Bank for its ratable
share of such amount, but no Lender Party shall be responsible for the
failure of any other Lender Party to reimburse such Issuing Bank for such
other Lender Party's ratable share of such amount. Without prejudice to the
survival of any other agreement of any Lender Party hereunder, the agreement
and obligations of each Lender Party contained in this Section 7.05(b) shall
survive the payment in full of principal, interest and all other amounts
payable hereunder and under the other Loan Documents.
(c) (i) Each Risk Participant agrees to indemnify the Non-Pro Rata
Lender (to the extent not promptly reimbursed by the Australian Borrower in
accordance with Section 2.14(a) and (c)) for the full amount of any taxes,
levies, imposts, deductions, charges, withholdings or other amounts of any kind
(including penalties, fines, additions to tax, interest, expenses or any other
liabilities) imposed on or paid by the Non-Pro Rata Lender as a result of the
failure of the Non-Pro Rata Lender to pay, withhold or deduct an amount required
to be so paid, withheld or deducted by the Non-Pro Rata Lender in respect of any
payments to a Risk Participant hereunder and for the amount of any loss suffered
by the Non-Pro Rata Lender as a result of any failure by the Australian Borrower
to make any payment to the Non-Pro Rata Lender required pursuant to the terms of
Section 2.14 (all such payments being increased as may be necessary so that
after the payment of any taxes, or the making of any required deductions in
respect thereof, the Non-Pro Rata Lender receives an amount equal to the sum it
would have received in the absence of such taxes or deductions). This
indemnification shall be made within 30 days from the date the Non-Pro Rata
Lender makes written demand therefor.
(ii) Each Risk Participant agrees to indemnify the Non-Pro Rata
Lender (to the extent not timely paid by the Borrower), within 5 Business Days
of written demand therefor, for the full amount of (A) interest payable to the
Non-Pro Rata Lender by the Australian Borrower in respect of Non-Pro Rata
Advances, and (B) amounts payable to the Non-Pro Rata Lender pursuant to Section
8.04(c) in respect of any Non-Pro Rata Advances.
SECTION 7.06. SUCCESSOR AGENTS. Any Administrative Agent and any
Collateral Agent may resign at any time by giving written notice thereof to the
other Lender Parties and the Borrowers and may be removed at any time with or
without cause by the Required Lenders. Upon any such resignation or removal,
the Required Lenders shall have the right to appoint a successor Agent to assume
the duties of such resigning or removed Administrative Agent or Collateral
Agent; PROVIDED that any such successor Agent shall be approved by PGI, such
approval not to be unreasonably withheld or delayed except that, if an Event of
Default has occurred and is continuing, the approval of PGI shall not be
required with respect to any successor Agent that is a Lender. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent's
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giving of notice of resignation or the Required Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lender Parties, appoint a
successor Agent, which shall, unless an Event of Default has occurred and is
continuing, be approved by PGI and which shall be (a) if the US Administrative
Agent or the US Collateral Agent is the retiring Agent, a commercial bank
organized under the laws of the United States or of any State thereof and having
(or together with its Affiliates having) a combined capital and surplus of at
least US$250,000,000, (ii) if the Canadian Administrative Agent or the Canadian
Collateral Agent is the retiring Agent, a commercial bank chartered under the
Bank Act (Canada) and having (or together with its Affiliates having) a combined
capital and surplus of at least CN$250,000,000, and (c) if the Australian
Administrative Agent or the Australian Collateral Agent is the retiring Agent, a
commercial bank organized under the laws of Australia or of any Territory
thereof and having (or together with its Affiliates having) a combined capital
and surplus of at least A$250,000,000. Upon the acceptance of any appointment
as an Administrative Agent or a Collateral Agent hereunder by a successor Agent
and upon the execution and filing or recording of such financing statements, or
amendments thereto and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Agent shall succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents. After any retiring Agent's resignation or removal hereunder as
an Administrative Agent, the provisions of this Article VII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Administrative Agent under this Agreement.
SECTION 7.07. CO-AGENTS. The Co-Agents, in their capacity as such,
have no rights, duties or responsibilities under this Agreement or any other
Loan Document.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. AMENDMENTS, ETC.; RELEASE OF COLLATERAL. (A)
AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or
the Notes or any other Loan Document, nor consent to any departure by any
Borrower or any other Loan Party therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Required Lenders (and, in the case of
any such amendment, signed by each Loan Party party to such Loan Document), and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; PROVIDED, HOWEVER, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Lenders
(other than any Lender Party that is, at such time, a Defaulting Lender), do any
of the following at any time: (i) waive any of the conditions specified in
Section 3.01 or, in the case of the Initial Extension of Credit, Section 3.02,
(ii) change the number of Lenders or the percentage of (x) the Commitments, (y)
the aggregate unpaid principal amount of the Advances or (z) the aggregate
Available Amount of outstanding Letters of Credit that, in each case, shall be
required for the Lenders or any of them to take any action hereunder,
(iii) further reduce or limit the obligations of any Guarantor under Section 1
of the Guaranty or otherwise further limit any Guarantor's liability with
respect to the Obligations owing to the Administrative Agents and the other
Lender Parties, (iv) subject to Sections 8.01(b) and (c), release any material
portion of the Collateral in any transaction or series of related transactions
or permit the creation, incurrence,
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assumption or existence of any Lien on any material portion of the Collateral in
any transaction or series of related transactions to secure any Obligations
other than Obligations owing to the Secured Parties under the Loan Documents,
(v) amend this Section 8.01, (vi) increase the Commitments (other than pursuant
to a Commitment Designation Notice) or the Maximum Revolving Commitments of the
Lenders or subject the Lenders to any additional obligations, (vii) reduce the
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (viii) postpone any Commitment Reduction Date or any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder (except that the Required Lenders may amend or waive
the provisions of Sections 2.06(b)(ii) and 2.07(b)(i)), or (ix) further limit
the liability of any Loan Party under any of the Loan Documents; PROVIDED
FURTHER that no amendment, waiver or consent shall, unless in writing and signed
by each Issuing Bank or the Non-Pro Rata Lender, as the case may be, in addition
to the Lenders required above to take such action, affect the rights or
obligations of the Issuing Banks or the Non-Pro Rata Lender, as the case may be,
under this Agreement; and PROVIDED FURTHER that no amendment, waiver or consent
shall affect the rights or duties of any Administrative Agent under this
Agreement, unless such amendment, waiver or consent is in writing and signed by
such Administrative Agent in addition to the Lenders required above to take such
action.
(B) RELEASE OF COLLATERAL PRIOR TO THE COLLATERAL RELEASE DATE.
So long as no Default under Section 6.01(a), (e), or (f) and no Event of Default
has occurred and is continuing, upon the request of the Borrowers, and without
the consent of the Required Lenders or any other Lender Party, the US
Administrative Agent is authorized to and, subject to the provisions of this
Section 8.01(b), shall release from the Lien of any Collateral Document any item
or items of Collateral comprising less than all or substantially all of the
Collateral at the time of such release (and is authorized to, and subject to the
provisions of this Section 8.01(b), shall execute any documents or instruments
reasonably requested by the applicable Borrower in connection therewith) if (A)
such release is requested in conjunction with the consummation of any sale or
other disposition of such Collateral by any Borrower or any Restricted
Subsidiary that is not prohibited by this Agreement, and (B) the Borrowers have
delivered to the US Administrative Agent an officer's certificate, signed by a
Responsible Officer, certifying that no Default under Section 6.01(a), (e), or
(f) and no Event of Default has occurred and is continuing and that such sale or
other disposition is not prohibited by this Agreement.
(C) RELEASE OF COLLATERAL ON OR AFTER THE COLLATERAL RELEASE DATE.
Notwithstanding any other provision hereof or of any Collateral Document, all
Liens created by and other obligations under the Collateral Documents (except
for indemnification, expense reimbursement and similar obligations arising
thereunder on or prior to the Collateral Release Date and except for Liens
relating to the cash collateralization of Letters of Credit and BA Obligations
as required hereunder) shall be automatically released without further action on
the part of any Administrative Agent or any other Lender Party on the Collateral
Release Date. At any time on or after the Collateral Release Date so long as no
Event of Default has occurred and is continuing, the US Administrative Agent
shall, upon the request, and at the sole cost and expense, of the Borrowers,
execute and deliver to the Borrowers such documents and instruments as the
Borrowers may reasonably request (each of which shall be in form and substance
reasonably satisfactory to the US Administrative Agent) to evidence such release
of the Liens created by and such other obligations under the Collateral
Documents and shall deliver to the applicable Persons any Collateral covered
thereby previously delivered to the US Administrative Agent and not either
previously returned or disposed of pursuant to the Collateral Documents.
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SECTION 8.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered,
if to any Borrower, at its address set forth beneath its signature on the
signature pages hereto; if to any Initial Lender or any Initial Issuing Bank, at
its Domestic Lending Office specified opposite its name on Schedule I hereto; if
to any Risk Participant, at its Domestic Lending Office in its capacity as a US
Lender or a Canadian Lender, as the case may be; if to any other Lender Party,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender Party; and if to any Administrative Agent,
at its address set forth beneath its signature on the signature pages hereto;
or, as to any Borrower or any Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrowers and the Administrative Agents. All
such notices and communications shall, when mailed, telegraphed, telecopied or
telexed, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier or confirmed by telex answerback,
respectively, except that notices and communications to any Administrative Agent
pursuant to Article II, III or VII shall not be effective until received by such
Administrative Agent. Delivery by telecopier of an executed counterpart of any
amendment or waiver of any provision of this Agreement or the Notes or of any
Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of a manually executed counterpart thereof.
SECTION 8.03. NO WAIVER; REMEDIES. No failure on the part of any
Lender Party or any Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.04. COSTS, EXPENSES; INDEMNIFICATION, ETC.
(A) COSTS AND EXPENSES. Each Borrower agrees to pay on demand
(i) all costs and expenses of the Administrative Agents in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of counsel (including local
counsel) for any Administrative Agent with respect thereto, with respect to
advising such Administrative Agent as to its rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under the Loan
Documents, with respect to negotiations with any Loan Party or with other
creditors of any Loan Party or any Restricted Subsidiary arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors' rights
generally and any proceeding ancillary thereto), (ii) all costs and expenses of
the Non-Pro Rata Lender in connection with the preparation, execution and
delivery of the Loan Documents (including, without limitation, the reasonable
fees and expenses of counsel (including local counsel) for the Non-Pro Rata
Lender with respect thereto), and (iii) all costs and expenses of each
Administrative Agent and each other Lender Party in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation,
any bankruptcy, insolvency or other similar
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proceeding affecting creditors' rights generally (including, without limitation,
the reasonable fees and expenses of counsel for each Administrative Agent and
each other Lender Party with respect thereto).
(B) INDEMNIFICATION. Each Borrower agrees to indemnify and hold
harmless each Administrative Agent, each other Lender Party and each of their
Affiliates and their officers, directors, employees, agents and advisors (each,
an "INDEMNIFIED PARTY") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) the Facilities, the actual or proposed use of the proceeds
of the Advances or the Letters of Credit, the Loan Documents or any of the
transactions contemplated thereby, including, without limitation, any
acquisition or proposed acquisition or (ii) the actual or alleged presence of
Hazardous Materials on any property of any Loan Party or any Restricted
Subsidiary or any Environmental Action or Environmental Liabilities relating in
any way to any Loan Party or any Restricted Subsidiary or any of their
properties, in each case whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party or any Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are consummated,
except to the extent such claim, damage, loss, liability or expense is found in
a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
Each Borrower also agrees not to assert any claim against any Administrative
Agent, any other Lender Party or any of their Affiliates, or any of their
respective officers, directors, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to the Facilities, the actual or proposed use of
the proceeds of the Advances or the Letters of Credit, the Loan Documents or any
of the transactions contemplated thereby.
(C) EXPENSES IN CONNECTION WITH PREPAYMENT OF FIXED RATE
ADVANCES. If any payment of principal of, or Conversion of, any Fixed Rate
Advance is made by any Borrower to or for the account of a Lender Party other
than on the last day of the Interest Period for such Advance or a payment is
made by a Risk Participant to the Non-Pro Rata Lender under Section 2.01(b)(ii)
in respect of a Fixed Rate Advance other than on the last day of the Interest
Period for such Advance, as a result of a payment, purchase or Conversion
pursuant to Section 2.01(b)(ii), 2.10(b)(i) or 2.12(d), acceleration of the
maturity of the Notes pursuant to Section 6.01 or for any other reason, the
Appropriate Borrower shall, upon demand by such Lender Party (with a copy of
such demand to the Administrative Agents), pay to the Appropriate Administrative
Agent for the account of such Lender Party any amounts required to compensate
such Lender Party for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment or purchase, including, without
limitation, any loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation (or, in the case of such Risk Participant,
the acquisition) or reemployment of deposits or other funds acquired by any
Lender Party to fund or maintain such Advance (including, with respect to any
Advance purchased by a Risk Participant pursuant to Section 2.01(b)(ii) prior to
the end of the Interest Period for such Advance, any such loss, cost or expense
which would not have been incurred by such Risk Participant if such Risk
Participant had match funded such Advance on the first day of such Interest
Period). Each demand for compensation pursuant to this Section 8.04(c) shall
include a certificate setting forth in reasonable detail the calculations used
in determining the amount of compensation demanded.
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(D) LENDER PARTIES MAY PERFORM. If any Loan Party fails to pay
when due any costs, expenses or other amounts payable by it under any Loan
Document, including, without limitation, fees and expenses of counsel and
indemnities, such amount may be paid on behalf of such Loan Party by any
Administrative Agent or any other Lender Party, in its sole discretion.
(E) SURVIVAL. Without prejudice to the survival of any other
agreement of any Loan Party hereunder or under any other Loan Document, the
agreements and obligations of the Borrowers contained in Sections 2.12 and 2.14
and this Section 8.04 shall survive the payment in full of principal, interest
and all other amounts payable hereunder and under any of the other Loan
Documents.
SECTION 8.05. RIGHT OF SET-OFF. Upon (a) the occurrence and during
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agents to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of any Borrower against any and
all of the Obligations of such Borrower now or hereafter existing under this
Agreement, the Note or Notes (if any) held by such Lender Party or the Guaranty,
irrespective of whether such Lender Party shall have made any demand under this
Agreement or such Note or Notes and although such obligations may be unmatured.
Each Lender Party agrees promptly to notify the applicable Borrower after any
such set-off and application; PROVIDED, HOWEVER, that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Lender Party and its respective Affiliates under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender Party and its respective Affiliates may
have.
SECTION 8.06. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed and delivered by each Borrower and each other
party hereto and thereafter shall be binding upon and inure to the benefit of
each Borrower, each Administrative Agent and each other Lender Party and their
respective successors and assigns, except that no Borrower shall have the right
to assign its rights hereunder or any interest herein without the prior written
consent of the Lender Parties.
SECTION 8.07. ASSIGNMENTS AND PARTICIPATIONS. (A) ASSIGNMENTS.
Each Lender may, and if demanded by PGI (which demand may only be made
following a demand by such Lender or any of such Lender's Affiliates which is a
Lender for (A) additional compensation pursuant to Section 2.12 or (B) amounts
in respect of Taxes or Other Taxes pursuant to Section 2.14 in excess of amounts
such Lender or such Affiliate was entitled to claim (and with respect to each
Lender that is not an Initial Lender, if requested by PGI, disclosed that it was
entitled to claim) on the date it became a Lender) upon at least ten Business
Days' notice to such Lender and the US Administrative Agent shall, assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, the Advances owing to it and the Note or Notes held
by it); PROVIDED, HOWEVER, that (i) except with respect to any assignment to an
Affiliate, each Lender may enter into any such assignment (including any
assignment at the demand of PGI) only if each of such Lender's Affiliates which
is a Lender hereunder simultaneously assigns to an Affiliate of the proposed
assignee a percentage of its Maximum Revolving
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Credit Commitment equal to the percentage of the Maximum Revolving Credit
Commitment of such Lender being assigned and each such assignment shall be of a
uniform, and not a varying, percentage of all rights and obligations under and
in respect of all of the Facilities, (ii) except in the case of an assignment to
a Person that, immediately prior to such assignment, was a Lender or an
assignment of all of a Lender's rights and obligations under this Agreement, the
amount of the Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than US$5,000,000 (or, if
less, the amount equal to 3.33% of the Revolving Credit Facility), (iii) except
in the case of an assignment of all of a Lender's rights and obligations under
this Agreement, the amount of the Commitment of the assigning Lender remaining
after giving effect to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than US$5,000,000 (or, if less, the amount equal to 3.33% of the Revolving
Credit Facility), (iv) each such assignment made as a result of a demand by PGI
pursuant to this Section 8.07(a) shall be arranged by PGI after consultation
with the US Administrative Agent and shall be either an assignment of all of the
rights and obligations of the assigning Lender and its Affiliates under this
Agreement or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that
together cover all of the rights and obligations of the assigning Lender and its
Affiliates under this Agreement, (v) no Lender shall be obligated to make any
such assignment as a result of a demand by PGI pursuant to this Section 8.07(a)
unless and until such Lender shall have received one or more payments from
either the Borrowers or one or more Eligible Assignees in an aggregate amount at
least equal to the aggregate outstanding principal amount and Face Amount of the
Accommodations owing to such Lender, together with accrued interest thereon to
the date of payment of such principal amount and all other amounts payable to
such Lender under this Agreement, (vi) each such assignment shall be to an
Eligible Assignee and shall be consented to by the US Administrative Agent and,
unless an Event of Default has occurred and is continuing, by PGI, such consent
of PGI not to be unreasonably withheld or delayed, and (vii) the parties to each
such assignment shall execute and deliver to the US Administrative Agent, for
its acceptance and recording in the Register, an Assignment and Acceptance,
together with any Note or Notes subject to such assignment and a processing and
recordation fee of US$3,000. The parties hereto expressly agree that the US
Administrative Agent may withhold its consent to any proposed assignment to an
assignee with a public debt rating (as defined in Section 2.04(e)) below BBB or
Baa2 by S&P or Moody's and may also withhold its consent to any proposed
assignment which would result in increased funding obligations on the part of
the Non-Pro Rata Lender.
(B) EFFECT OF ASSIGNMENT. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in such
Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a US Lender, Canadian Lender, Risk Participant or Issuing Bank, as the case
may be, hereunder and (i) the Lender or Issuing Bank assignor thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's or Issuing Bank's rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).
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(C) CONFIRMATIONS OF ASSIGNEE AND ASSIGNOR. By executing and
delivering an Assignment and Acceptance, the Lender Party assignor thereunder
and the assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such Assignment and
Acceptance, such assigning Lender Party makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, this
Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower or any other Loan Party or the performance
or observance by any Loan Party of any of its obligations under any Loan
Document or any other instrument or document furnished pursuant thereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon any
Administrative Agent, such assigning Lender Party or any other Lender Party and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes each Administrative Agent
to take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Documents as are delegated to such Administrative
Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender or Issuing
Bank, as the case may be.
(D) REGISTER. The US Administrative Agent shall maintain at its
address referred to in Section 8.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lender Parties and the Commitment of, and principal amount
of the Advances owing to, each Lender Party from time to time (the "REGISTER").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and each Borrower, each Administrative Agent and the
other Lender Parties may treat each Person whose name is recorded in the
Register as a Lender Party hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrowers or any Lender Party
at any reasonable time and from time to time upon reasonable prior notice.
(E) ASSIGNMENTS AND ACCEPTANCES; NEW NOTES. Upon its receipt of
an Assignment and Acceptance executed by an assigning Lender Party and an
assignee, together with any Note or Notes subject to such assignment, the US
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit A hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrowers. In the case of any
assignment by a Lender or in the case of any purchase by a Risk Participant of
Non-Pro Rata Advances in accordance with Section 2.01(b)(ii), within five
Business Days after its receipt of request therefor, the Borrowers, at their own
expense, shall execute and deliver to the US Administrative Agent in exchange
for the applicable surrendered Note or Notes a new Note to
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the order of such Eligible Assignee or such Risk Participant, as the case may
be, in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance or the Non-Pro Rata Advances purchased by it and, if
the assigning Lender or the Non-Pro Rata Lender has retained a Commitment
hereunder or, in the case of the Non-Pro Rata Lender, any Non-Pro Rata Advances,
a new Note to the order of the assigning Lender or the Non-Pro Rata Lender in an
amount equal to the Commitment or the Non-Pro Rata Advances, as the case may be,
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit B-1, B-2
or B-3 hereto, as the case may be.
(F) ASSIGNMENTS BY ISSUING BANKS. Each Issuing Bank may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under the undrawn portion of its Letter of Credit Commitment at any time;
PROVIDED, HOWEVER, that (i) each such assignment shall be to an Eligible
Assignee and shall be consented to by the US Administrative Agent and, unless an
Event of Default has occurred and is continuing, by PGI, such consent of PGI not
to be unreasonably withheld or delayed, and (ii) the parties to each such
assignment shall execute and deliver to the US Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance.
(G) PARTICIPATIONS. Each Lender Party may sell participations to
one or more Persons (other than any Loan Party or any of its Affiliates) in or
to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it and the Note or Notes (if any) held by it); PROVIDED,
HOWEVER, that (i) such Lender Party's obligations under this Agreement
(including, without limitation, its Commitments) shall remain unchanged,
(ii) such Lender Party shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender Party shall
remain the holder of any such Note for all purposes of this Agreement, (iv) each
Borrower, each Administrative Agent and the other Lender Parties shall continue
to deal solely and directly with such Lender Party in connection with such
Lender Party's rights and obligations under this Agreement and (v) no
participant under any such participation shall have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Notes or
any fees or other amounts payable hereunder, in each case to the extent subject
to such participation, postpone (other than in connection with an amendment or
waiver of Section 2.06(b)(ii) or 2.07(b)(i), as to which a participant shall
have no right of approval) any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release all or
substantially all of the Collateral other than as provided in Section 8.01.
(H) DISCLOSURES TO ASSIGNEES AND PARTICIPANTS. Any Lender Party
may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 8.07, disclose to the assignee or
participant or proposed assignee or participant, any information relating to any
Loan Party furnished to such Lender Party by or on behalf of any Loan Party;
PROVIDED, HOWEVER, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential information received by it from such Lender
Party.
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(I) SECURITY INTERESTS IN FAVOR OF FEDERAL RESERVE BANK.
Notwithstanding any other provision set forth in this Agreement, any Lender
Party may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
SECTION 8.08. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement, any other Loan Document or any consent, waiver or amendment relating
hereto or thereto by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement, such other Loan Document or such
consent, waiver or amendment, as the case may be.
SECTION 8.09. NO LIABILITY OF THE ISSUING BANKS. Each Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit issued for the account of such Borrower with respect to
such beneficiary's use of such Letter of Credit. Neither any Issuing Bank nor
any of its officers or directors shall be liable or responsible for: (a) the
use that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (b) the validity, sufficiency
or genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by such Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, EXCEPT that each Borrower shall have
a claim against such Issuing Bank, and such Issuing Bank shall be liable to such
Borrower, to the extent of any direct, but not consequential, damages suffered
by such Borrower that such Borrower proves were caused by (i) such Issuing
Bank's willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit issued for the account of such Borrower
comply with the terms of such Letter of Credit or (ii) such Issuing Bank's
willful failure to make lawful payment under a Letter of Credit issued for the
account of such Borrower after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of such Letter of
Credit. In furtherance and not in limitation of the foregoing, such Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 8.10. JURISDICTION, ETC. (A) SUBMISSION TO JURISDICTION.
Each of the parties hereto hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or any of the other Loan Documents to which
it is a party, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in any
such New York State court or, to the extent permitted by law, in such federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
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provided by law. Each Borrower hereby agrees that service of process in any
such action or proceeding may be made upon CT Corporation Systems, 1633
Broadway, New York, New York, 10019 (the "PROCESS AGENT") and each Borrower
hereby irrevocably appoints the Process Agent its authorized agent to accept
such service of process, and agrees that the failure of the Process Agent to
give any notice of any such service of process shall not impair or affect the
validity of such service or of any judgment rendered in any action or proceeding
based thereon. Each Borrower hereby further irrevocably consents to the service
of process in any action or proceeding in such courts by the mailing thereof by
any parties hereto by registered or certified mail, postage prepaid, to such
Borrower at its address specified pursuant to Section 8.02. Nothing in this
Agreement shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Agreement or any of the other Loan
Documents in the courts of any jurisdiction. To the extent that any Borrower
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, such Borrower hereby irrevocably waives such immunity
in respect of its obligations under this Agreement and the other Loan Documents.
(B) WAIVERS REGARDING VENUE, INCONVENIENT VENUE. Each of the
parties hereto irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents to which it is a
party in any New York State or federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
SECTION 8.11. JUDGMENT. (A) RATE OF EXCHANGE. If, for the purpose
of obtaining judgment in any court, it is necessary to convert a sum due
hereunder, under any Note or Notes or under the other Loan Documents (including,
without limitation, all or any part of the Guaranteed Obligations) in another
currency into US Dollars, Canadian Dollars or Australian Dollars, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which, in accordance with normal banking
procedures, a Lender Party could purchase such other currency with US Dollars in
New York City, New York or Canadian Dollars in Toronto, Ontario at 9:00 a.m.
(New York City time or Toronto time, respectively) or Australian Dollars in
Sydney, Australia at 9:00 a.m. (Sydney time), as the case may be, on the
Business Day immediately preceding that on which final judgment is given,
together with any premiums and costs of exchange payable in connection with such
purchase.
(B) INDEMNITY. The obligation of each Loan Party in respect of
any sum due from it to any Administrative Agent or any Lender Party hereunder,
under any Note or Notes or under any other Loan Document shall, notwithstanding
any judgment in a currency other than US Dollars, Canadian Dollars or Australian
Dollars, as the case may be, be discharged only to the extent that on the
Business Day next succeeding receipt by such Administrative Agent or such Lender
Party of any sum adjudged to be so due in such other currency, such
Administrative Agent or such Lender Party, as the case may be, may, in
accordance with normal banking procedures, purchase US Dollars, Canadian Dollars
or Australian Dollars, as the case may be, with such other currency. If the US
Dollars, Canadian Dollars or Australian Dollars, as the case may be, so
purchased are less than the sum originally due to such
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Administrative Agent or such Lender Party in US Dollars, Canadian Dollars or
Australian Dollars, as the case may be, each Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify such
Administrative Agent or such Lender Party against such loss, and if the US
Dollars, Canadian Dollars or Australian Dollars so purchased exceed the sum
originally due to any Administrative Agent or any Lender Party in US Dollars,
Canadian Dollars or Australian Dollars, as the case may be, such Administrative
Agent or such Lender Party agrees to remit to such Borrower such excess.
SECTION 8.12. DIRECT OBLIGATIONS. Each Borrower agrees that its
Obligations hereunder and under any Notes and BA Obligations issued by such
Borrower, in each case whether any of such Obligations are joint and several
Obligations of any other Borrower or otherwise, are direct obligations of such
Borrower and that such Obligations of such Borrower shall not be, or be deemed
to be, suretyship or guarantee obligations. If, notwithstanding the foregoing,
any Obligation of any Borrower hereunder or under any Note or BA Obligation
issued by such Borrower shall, for any reason, be deemed or determined to be a
suretyship or guarantee obligation, such Borrower hereby waives, to the fullest
extent permitted by applicable law, any and all defenses to such Obligation of
such Borrower that may arise by virtue of such Obligation being so deemed or
determined to be a suretyship or guarantee obligation.
SECTION 8.13. RATIFICATION. PGI, as the sole shareholder of PGA,
hereby ratifies and confirms the execution, delivery and performance by PGA of
this Agreement and each other Loan Document to which PGA is a party.
SECTION 8.14. GOVERNING LAW. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 8.15. WAIVER OF JURY TRIAL. Each Borrower, each
Administrative Agent and each other Lender Party irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the Advances or the actions of any Administrative Agent or any Lender
Party in the negotiation, administration, performance or enforcement thereof.
120
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE BORROWERS:
PEGASUS GOLD INC.
By: /s/ P.S. BAKER
-------------------------------
Title: Chief Financial Officer
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier: 609-838-8317
PEGASUS GOLD CORPORATION
By: /s/ P.S. BAKER
-------------------------------
Title: Chief Financial Officer
Address for Notice:
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier: 609-838-8317
S-1
<PAGE>
SIGNED, SEALED AND DELIVERED )
ON BEHALF OF PEGASUS GOLD ) /s/ P.S. BAKER
AUSTRALIA PTY LTD BY ITS ) -------------------------
ATTORNEY IN THE PRESENCE OF: ) Signature:
Print Name: P.S. BAKER
/s/ MICHELLE G. VIAU Address for Notice:
- ------------------------------
Witness:
Print Name: c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier: 609-838-8317
S-2
<PAGE>
THE ADMINISTRATIVE AGENTS:
CITIBANK, N.A.,
as US Administrative Agent
By: /S/ ALLEN B. MACOMBER
-------------------------------
Title: Vice President
1 Court Square
7th Floor/Zone 1
Long Island City, New York 11120
Attn: Margarita Deus
Tel: 718-248-7183
Fax: 718-248-7393
CITIBANK CANADA,
as Canadian Administrative Agent
By: /S/ W. TERRY MARSHALL
------------------------------
Title: Vice President
123 Front Street West, 10th Floor
Toronto, Ontario,
Canada M5J 2M3
Attn: Sawrupa Manamperi
Tel: 416-947-2913
Fax: 416-947-5510
CITIBANK LIMITED
(ACN 004 325 0080),
as Australian Administrative Agent
By: /S/ ALLEN B. MACOMBER
------------------------------
Title: Vice President
Level 25
Waterfront Place
1 Eagle Street
Brisbane, QLD 4000
Australia
Attn: Stephen Godfrey
Tel: 617-3227-9431
Fax: 617-3227-9430
S-3
<PAGE>
INITIAL LENDERS AND ISSUING BANKS:
CITIBANK, N.A., as a US Lender
By: /S/ ALLEN B. MACOMBER
-----------------------------------
Title: Vice President
S-4
<PAGE>
CIBC INC., as a US Lender
By: /S/ R.A. MENDOZA
-----------------------------------
Title: Director
S-5
<PAGE>
DRESDNER BANK AG, NEW YORK BRANCH,
as a US Lender
By: /S/ WAYDE COLOUHOUN
-----------------------------------
Title: Assistant Vice President
By: /S/ P. DOUGLAS SHERROD
-----------------------------------
Title: Vice President
S-6
<PAGE>
ABN AMRO BANK N.V., SEATTLE BRANCH,
as a US Lender
By: ABN AMRO NORTH AMERICA, INC.,
as agent
By: /S/ WILLIAM HEISSENHUTTEL
-----------------------------------
Title: Vice President
By: /S/ PAUL R. CALDERON
-----------------------------------
Title: Vice President and Director
S-7
<PAGE>
THE BANK OF NOVA SCOTIA,
as a US Lender
By: /S/ WERNER TILLINGER
-----------------------------------
Title: Relationship Manager
S-8
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
as a US Lender and the Initial US Issuing Bank
By: /S/ GARY S. GAGE
----------------------------------------
Title: Senior Vice President
S-9
<PAGE>
SEATTLE-FIRST NATIONAL BANK,
as a US Lender
By: /S/ J. POOLE
-----------------------------------
Title: Vice President
S-10
<PAGE>
NM ROTHSCHILD & SONS LIMITED,
as a US Lender
By: /S/ MICHAEL A. PRICE
-----------------------------------
Title: Director
By: /S/ ANDREW WRIGHT
-----------------------------------
Title: Assistant Director
S-11
<PAGE>
BANK OF MONTREAL, as a US Lender
By: /S/ MICHAEL SASSOS
-----------------------------------
Title: Director
S-12
<PAGE>
REPUBLIC NATIONAL BANK OF NEW YORK,
as a US Lender
By: /S/ RICHARD J. WARD
----------------------------------------
Title: Vice President
S-13
<PAGE>
U.S. BANK OF WASHINGTON, N.A.,
as a US Lender
By: /S/ WADE BLACK
-----------------------------------
Title: Vice President
S-14
<PAGE>
CITIBANK CANADA, as a Canadian Lender
By: /S/ W. TOWNSEND
-----------------------------------------
Title: Vice President - Corporate Finance
S-15
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE,
as a Canadian Lender
By: /S/ R.A. MENDOZA
----------------------------------------
Title: Director
S-16
<PAGE>
DRESDNER BANK AG, NEW YORK BRANCH,
as a Canadian Lender
By: /S/ WAYDE COLOUHOUN
-----------------------------------
Title: Assistant Vice President
By: /S/ P. DOUGLAS SHERROD
-----------------------------------
Title: Vice President
S-17
<PAGE>
ABN AMRO BANK CANADA, as a Canadian Lender
By: /S/ DAVID J. SLATER
-----------------------------------
Title: Vice President
By: /S/ P.K. CHAN
-----------------------------------
Title: Vice President, Credit
S-18
<PAGE>
THE BANK OF NOVA SCOTIA,
as a Canadian Lender
By: /S/ P. OLMSTED
-----------------------------------
Title: Manager
S-19
<PAGE>
FIRST CHICAGO NBD BANK, CANADA,
as a Canadian Lender and the
Initial Canadian Issuing Bank
By: /S/ JANET A. BEADLE
-----------------------------------
Title: Assistant Vice President
By: /S/ MICHAEL TAM
-----------------------------------
Title: Assistant Vice President
S-20
<PAGE>
BANK OF AMERICA CANADA,
as a Canadian Lender
By: /S/ MARK EHLLINGER
-----------------------------------
Title: Vice President & Manager
S-21
<PAGE>
NM ROTHSCHILD & SONS LIMITED,
as a Canadian Lender
By: /S/ MICHAEL A. PRICE
-----------------------------------
Title: Director
By: /S/ ANDREW WRIGHT
-----------------------------------
Title: Assistant Director
S-22
<PAGE>
BANK OF MONTREAL, as a Canadian Lender
By: /S/ MICHAEL P. SASSOS
-----------------------------------
Title: Director
S-23
<PAGE>
REPUBLIC NATIONAL BANK OF NEW YORK (CANADA),
as a Canadian Lender
By: /S/ OLIVE DUNN
----------------------------------------------
Title: Senior Vice President, Regional Manager
By: /S/ ANTHONY MATRUNDOLA
----------------------------------------------
Title: Vice President, Commercial Lending
S-24
<PAGE>
U.S. BANK OF WASHINGTON, N.A.,
as a Canadian Lender
By: /S/ WADE BLACK
-----------------------------------
Title: Vice President
S-25
<PAGE>
CITIBANK LIMITED, as an Australian Lender
By: /S/ ALLEN B. MACOMBER
-----------------------------------
Title: Vice President
S-26
<PAGE>
DRESDNER AUSTRALIA LIMITED,
as an Australian Lender
By: /S/ WAYDE COLOUHOUN
-----------------------------------
Title: Assistant Vice President
By: /S/ P. DOUGLAS SHERROD
-----------------------------------
Title: Vice President
S-27
<PAGE>
ABN AMRO AUSTRALIA LIMITED, as an
Australian Lender
By: /S/ WILLIAM HEISSENBUTTEL
-----------------------------------
Title: Vice President
By: /S/ PAUL R. CALDERON
-----------------------------------
Title: Vice President and Director
S-28
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
AUSTRALIAN BRANCH, as an Australian Lender and the
Initial Australian Issuing Bank
By: /S/ GARY S. GAGE
----------------------------------------
Title: Senior Vice President
S-29
<PAGE>
BANK OF AMERICA NT & SA, SYDNEY BRANCH,
as an Australian Lender
By: /S/ J. POOLE
----------------------------------------
Title: Vice President
S-30
<PAGE>
ROTHSCHILD AUSTRALIA LIMITED,
as an Australian Lender
By: /S/ MARK WILLIAMSON
-----------------------------------
Title: Attorney In Fact
S-31
<PAGE>
REPUBLIC MASE AUSTRALIA LIMITED,
as an Australian Lender
By: /S/ RICHARD J. WARD
-----------------------------------
Title: Vice President
S-32
<PAGE>
CIBC INC., as a Risk Participant
By: /S/ R.A. MENDOZA
-----------------------------------
Title: Director
S-33
<PAGE>
THE BANK OF NOVA SCOTIA,
as a Risk Participant
By: /S/ P. OLMSTED
-----------------------------------
Title: Manager
S-34
<PAGE>
BANK OF MONTREAL, as a Risk Participant
By: /S/ MICHAEL P. SASSOS
-----------------------------------
Title: Director
S-35
<PAGE>
U.S. BANK OF WASHINGTON, N.A.,
as a Risk Participant
By: /S/ WADE BLACK
-----------------------------------
Title: Vice President
S-36
<PAGE>
ABN AMRO AUSTRALIA LIMITED,
as the Non-Pro Rata Lender
By: /S/ WILLIAM HEISSENBUTTEL
-----------------------------------
Title: Vice President
By: /S/ PAUL R. CALDERON
-----------------------------------
Title: Vice President and Director
S-37
<PAGE>
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES; ETC.
A. US LENDERS
<TABLE>
<CAPTION>
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
MAXIMUM
REVOLVING LETTER OF
CREDIT CREDIT LETTER OF CREDIT EURODOLLAR
NAME OF INITIAL LENDER COMMITMENT COMMITMENT LENDING OFFICE DOMESTIC LENDING OFFICE LENDING OFFICE
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
Citibank, N.A. $21,000,000 ----- ----- Citibank, N.A. Citibank, N.A.
1 Court Square 1 Court Square
7th Floor/Zone 1 7th Floor/Zone 1
Long Island City, Long Island City,
New York 11120 New York 11120
Attn: Margarita Deus Attn: Margarita Deus
Tel: 718-248-7183 Tel: 718-248-7183
Fax: 718-248-7393 Fax: 718-248-7393
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
CIBC Inc. $17,000,000 ----- ----- CIBC Inc. CIBC Inc.
350 S. Grand Avenue # 2600 350 S. Grand Avenue # 2600
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Ray A. Mendoza Attn: Ray A. Mendoza
Tel: 213-617-6233 Tel: 213-617-6233
Fax: 213-617-1696 Fax: 213-617-1696
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
Dresdner Bank AG,
New York Branch $17,000,000 ----- ----- Dresdner Bank AG, Dresdner Bank AG,
New York Branch New York Branch
75 Wall Street 75 Wall Street
New York, NY 10005 New York, NY 10005
Attn: Douglas Sherrod Attn: Douglas Sherrod
Tel: 212-429-4312 Tel: 212-429-4312
Fax: 212-429-4399 Fax: 212-429-4399
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
I-1
<PAGE>
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
ABN AMRO Bank N.V. $17,000,000 ----- ----- ABN AMRO Bank N.V., ABN AMRO Bank N.V.,
Seattle Branch Seattle Branch
600 University Street 600 University Street
Suite 2323 Suite 2323
Seattle, WA 92101 Seattle, WA 92101
Attn: Paul R. Calderon Attn: Paul R. Calderon
Tel: 206-587-0358 Tel: 206-587-0358
Fax: 206-682-5641 Fax: 206-682-5641
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
The Bank of Nova Scotia $14,000,000 ----- ----- The Bank of Nova Scotia The Bank of Nova Scotia
580 California Street 580 California Street
Suite 2100 Suite 2100
San Francisco, CA 94111 San Francisco, CA 94111
Attn: Werner Tillinger Attn: Werner Tillinger
Tel: 415-986-1100 Tel: 415-986-1100
Fax: 415-397-0791 Fax: 415-397-0791
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
The First National Bank
of Chicago $14,000,000 $50,000,000 The First National The First National Bank The First National Bank
Bank of Chicago of Chicago of Chicago
One First National One First National Plaza, One First National Plaza,
Plaza, Suite 0363 Suite 0363 Suite 0363
Chicago, IL 60670 Chicago, IL 60670 Chicago, IL 60670
Attn: Frank Grossman Attn: Frank Grossman Attn: Frank Grossman
Tel: 312-732-1709 Tel: 312-732-1709 Tel: 312-732-1709
Fax: 312-732-3055 Fax: 312-732-3055 Fax: 312-732-3055
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
Seattle-First National Bank $14,000,000 ----- ----- Seattle First Seattle First
National Bank National Bank
W. 601 Riverside W. 601 Riverside
SFC-5 SFC-5
Spokane, WA 99201 Spokane, WA 99201
Attn: Joe Poole, VP Attn: Joe Poole, VP
Tel: 509-353-1475 Tel: 509-353-1475
Fax: 509-353-1492 Fax: 509-353-1492
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
I-2
<PAGE>
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
NM Rothschild & Sons Limited $13,000,000 ----- ----- Rothschild Denver, Inc. Rothschild Denver, Inc.
3020 Republic Plaza 3020 Republic Plaza
370 17th Street 370 17th Street
Denver, CO 80202 Denver, CO 80202
Attn: Mark Williamson Attn: Mark Williamson
Tel: 303-607-9890 Tel: 303-607-9890
Fax: 303-607-0998 Fax: 303-607-0998
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
Bank of Montreal $ 8,000,000 ----- ----- Bank of Montreal Bank of Montreal
115 LaSalle 115 LaSalle
Chicago, IL 60603 Chicago, IL 60603
Attn: Attn:
Tel: Tel:
Fax: Fax:
Copies of Notices to: Copies of Notices to:
Bank of Montreal Bank of Montreal
430 Park Avenue 430 Park Avenue
New York, New York 10022 New York, New York 10022
Attn: John Decoufle Attn: John Decoufle
Tel: 212-605-1428 Tel: 212-605-1428
Fax: 212-605-1618 Fax: 212-605-1618
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
Republic National Bank $10,000,000 ----- ----- Republic National Bank Republic National Bank
of New York of New York of New York
452 Fifth Avenue 452 Fifth Avenue
New York, NY 10018 New York, NY 10018
Attn: Richard D. Gibbons Attn: Richard D. Gibbons
Tel: 212-525-6562 Tel: 212-525-6562
Fax: 212-525-6535 Fax: 212-525-6535
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
U.S. Bank of Washington, $ 5,000,000 ----- ----- U.S. Bank of Washington, U.S. Bank of Washington,
N.A. N.A. N.A.
1420 5th Avenue, 1420 5th Avenue,
Floor 11 Floor 7
Seattle, WA 98101 Seattle, WA 98101
Attn: Wade Black Attn: Lorrie Smith - Loan
Tel: 206-587-5234 Servicing Dept.
Fax: 206-587-5259 Tel: 206-344-4696
Fax: 206-587-7022
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
</TABLE>
I-3
<PAGE>
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES; ETC.
B. CANADIAN LENDERS
<TABLE>
<CAPTION>
- ---------------------------- ----------- ------------ -------------------- --------------------------
MAXIMUM
REVOLVING LETTER OF
CREDIT CREDIT LETTER OF CREDIT
NAME OF INITIAL LENDER COMMITMENT COMMITMENT LENDING OFFICE DOMESTIC LENDING OFFICE
- ---------------------------- ----------- ------------ -------------------- --------------------------
<S> <C> <C> <C> <C>
Citibank Canada $21,000,000 ----- ----- Citibank Canada
123 Front Street West
10th Floor
Toronto, Ontario,
Canada M5J 2M3
Attn: Wayne Townsend
Tel: 416-947-5701
Fax: 416-947-5674
- ---------------------------- ----------- ------------ -------------------- --------------------------
Canadian Imperial Bank $17,000,000 ----- ----- Canadian Imperial
of Commerce Bank of Commerce
Commerce Tower West
Corner of King and
Bay Street
Toronto, Ontario
Canada M5L 1A2
Attn: Ken Richards
Tel: 416-980-2961
Fax: 416-359-0408
- ---------------------------- ----------- ------------ -------------------- --------------------------
Dresdner Bank AG, $17,000,000 ----- ----- Dresdner Bank AG,
New York Branch New York Branch
75 Wall Street
New York, NY 10005
Attn: Douglas Sherrod
Tel: 212-429-4312
Fax: 212-429-4399
- ---------------------------- ----------- ------------ -------------------- --------------------------
<CAPTION>
- ---------------------------- -------------------------- --------------------------
EURODOLLAR
NAME OF INITIAL LENDER BA LENDING OFFICE LENDING OFFICE
- ---------------------------- -------------------------- --------------------------
<S> <C> <C>
Citibank Canada Citibank Canada Citibank Canada
123 Front Street West 123 Front Street West
10th Floor 10th Floor
Toronto, Ontario, Toronto, Ontario,
Canada M5J 2M3 Canada M5J 2M3
Attn: Wayne Townsend Attn: Wayne Townsend
Tel: 416-947-5701 Tel: 416-947-5701
Fax: 416-947-5674 Fax: 416-947-5674
- ---------------------------- -------------------------- --------------------------
Canadian Imperial Bank Canadian Imperial Canadian Imperial
of Commerce Bank of Commerce Bank of Commerce
Commerce Tower West Commerce Tower West
Corner of King and Corner of King and
Bay Street Bay Street
Toronto, Ontario Toronto, Ontario
Canada M5L 1A2 Canada M5L 1A2
Attn: Ken Richards Attn: Ken Richards
Tel: 416-980-2961 Tel: 416-980-2961
Fax: 416-359-0408 Fax: 416-359-0408
- ---------------------------- -------------------------- --------------------------
Dresdner Bank AG, Dresdner Bank AG, Dresdner Bank AG,
New York Branch New York Branch New York Branch
75 Wall Street 75 Wall Street
New York, NY 10005 New York, NY 10005
Attn: Douglas Sherrod Attn: Douglas Sherrod
Tel: 212-429-4312 Tel: 212-429-4312
Fax: 212-429-4399 Fax: 212-429-4399
- ---------------------------- -------------------------- --------------------------
I-4
<PAGE>
- ---------------------------- ----------- ------------ -------------------- --------------------------
ABN AMRO Bank Canada $17,000,000 ----- ----- ABN AMRO Bank Canada
2500-650 West
Georgia Street
Vancouver, BC, Canada
V6B 4NB
Attn: David Slater
Tel: 604-640-3604
Fax: 604-682-2936
- ---------------------------- ----------- ------------ -------------------- --------------------------
The Bank of Nova Scotia $14,000,000 ----- ----- The Bank of Nova Scotia
44 King Street West
Toronto, Ontario,
Canada M5H 1H1
Attn: Wallace Yeung/
Nancy Buccat/Nancy Tong
Tel: 416-866-5901/
866-2816/866-4084
Fax: 416-866-5991
- ---------------------------- ----------- ------------ -------------------- --------------------------
First Chicago NBD Bank, $14,000,000 $50,000,000 First Chicago First Chicago
Canada NBD Bank, Canada NBD Bank, Canada
161 Bay Street 161 Bay Street
Suite 4240 Suite 4240
BCE Place BCE Place
P.O. Box 613 P.O. Box 613
Toronto, Ontario, Toronto, Ontario,
Canada M5J 2S1 Canada M5J 2S1
Attn:Janet A. Beadle Attn: Janet A. Beadle
Tel: 416-865-0466 Tel: 416-865-0466
Fax: 416-363-7574 Fax: 416-363-7574
- ---------------------------- ----------- ------------ -------------------- --------------------------
Bank of America Canada $14,000,000 ----- ----- Bank of America Canada
1055 Dunsmuir St.
Suite 574
P.O. Box 49295
Vancouver, BC, Canada
V7X 1LB
Attn: Loans Department
Tel: 604-684-7281
Fax: 604-683-1940
- ---------------------------- ----------- ------------ -------------------- --------------------------
- ---------------------------- -------------------------- --------------------------
ABN AMRO Bank Canada ABN AMRO Bank Canada ABN AMRO Bank Canada
2500-650 West 2500-650 West
Georgia Street Georgia Street
Vancouver, BC, Canada Vancouver, BC, Canada
V6B 4NB V6B 4NB
Attn: David Slater Attn: David Slater
Tel: 604-640-3604 Tel: 604-640-3604
Fax: 604-682-2936 Fax: 604-682-2936
- ---------------------------- -------------------------- --------------------------
The Bank of Nova Scotia The Bank of Nova Scotia The Bank of Nova Scotia
44 King Street West 44 King Street West
Toronto, Ontario, Toronto, Ontario,
Canada M5H 1H1 Canada M5H 1H1
Attn: Wallace Yeung/ Attn: Wallace Yeung/
Nancy Buccat/Nancy Tong Nancy Buccat/Nancy Tong
Tel: 416-866-5901/ Tel: 416-866-5901/
866-2816/866-4084 866-2816/866-4084
Fax: 416-866-5991 Fax: 416-866-5991
- ---------------------------- -------------------------- --------------------------
First Chicago NBD Bank, First Chicago First Chicago
Canada NBD Bank, Canada NBD Bank, Canada
161 Bay Street 161 Bay Street
Suite 4240 Suite 4240
BCE Place BCE Place
P.O. Box 613 P.O. Box 613
Toronto, Ontario, Toronto, Ontario,
Canada M5J 2S1 Canada M5J 2S1
Attn: Janet A. Beadle Attn: Janet A. Beadle
Tel: 416-865-0466 Tel: 416-865-0466
Fax: 416-363-7574 Fax: 416-363-7574
- ---------------------------- -------------------------- --------------------------
Bank of America Canada Bank of America Canada Bank of America Canada
1055 Dunsmuir St. 1055 Dunsmuir St.
Suite 574 Suite 574
P.O. Box 49295 P.O. Box 49295
Vancouver, BC, Canada Vancouver, BC, Canada
V7X 1LB V7X 1LB
Attn: Loans Department Attn: Loans Department
Tel: 604-684-7281 Tel: 604-684-7281
Fax: 604-683-1940 Fax: 604-683-1940
- ---------------------------- -------------------------- --------------------------
I-5
<PAGE>
- ---------------------------- ----------- ------------ -------------------- --------------------------
NM Rothschild & Sons Limited $13,000,000 ----- ----- Rothschild Denver, Inc.
3020 Republic Plaza
370 17th Street
Denver, CO 80202
Attn: Mark Williamson
Tel: 303-607-9890
Fax: 303-607-0998
- ---------------------------- ----------- ------------ -------------------- --------------------------
Bank of Montreal $13,000,000 ----- ----- Bank of Montreal
First Bank Tower
595 Burrard St.
6th Floor
Vancouver, BC,
Canada V7X 1L7
Attn: Ms. Mari Linehan
Tel: 604-665-7031
Fax: 604-665-7102
- ---------------------------- ----------- ------------ -------------------- --------------------------
Republic National Bank $10,000,000 ----- ----- Republic National Bank
of New York (Canada) of New York (Canada)
1 First Canadian Place
10th Floor
P.O. Box 35
Toronto, Ontario,
Canada
Attn: Anthony Matrundola
Tel: 416-367-1710/x312
Fax: 416-864-9061
- ---------------------------- ----------- ------------ -------------------- --------------------------
U.S. Bank of $ 5,000,000 ----- ----- U.S. Bank of
Washington, N.A. Washington, N.A.
1420 5th Avenue
Floor 11
Seattle, WA 98101
Attn: Wade Black
Tel: 206-587-5234
Fax: 206-587-5259
- ---------------------------- ----------- ------------ -------------------- --------------------------
- ---------------------------- -------------------------- --------------------------
NM Rothschild & Sons Limited Rothschild Denver, Inc. Rothschild Denver, Inc.
3020 Republic Plaza 3020 Republic Plaza
370 17th Street 370 17th Street
Denver, CO 80202 Denver, CO 80202
Attn: Mark Williamson Attn: Mark Williamson
Tel: 303-607-9890 Tel: 303-607-9890
Fax: 303-607-0998 Fax: 303-607-0998
- ---------------------------- -------------------------- --------------------------
Bank of Montreal Bank of Montreal Bank of Montreal
First Bank Tower First Bank Tower
595 Burrard St. 595 Burrard St.
6th Floor 6th Floor
Vancouver, BC, Vancouver, BC,
Canada V7X 1L7 Canada V7X 1L7
Attn: Ms. Mari Linehan Attn: Ms. Mari Linehan
Tel: 604-665-7031 Tel: 604-665-7031
Fax: 604-665-7102 Fax: 604-665-7102
- ---------------------------- -------------------------- --------------------------
Republic National Bank Republic National Bank Republic National Bank
of New York (Canada) of New York (Canada) of New York (Canada)
1 First Canadian Place 1 First Canadian Place
10th Floor 10th Floor
P.O. Box 35 P.O. Box 35
Toronto, Ontario, Toronto, Ontario,
Canada Canada
Attn: Anthony Matrundola Attn: Anthony Matrundola
Tel: 416-367-1710/x312 Tel: 416-367-1710/x312
Fax: 416-864-9061 Fax: 416-864-9061
- ---------------------------- -------------------------- --------------------------
U.S. Bank of U.S. Bank of U.S. Bank of
Washington, N.A. Washington, N.A. Washington, N.A.
1420 5th Avenue 1420 5th Avenue
Floor 11 Floor 11
Seattle, WA 98101 Seattle, WA 98101
Attn: Wade Black Attn: Lorrie Smith
Tel: 206-587-5234 Loan Servicing Center
Fax: 206-587-5259 Tel: 206-344-4696
Fax: 206-587-7022
- ---------------------------- -------------------------- --------------------------
</TABLE>
I-6
<PAGE>
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES; ETC.
B. AUSTRALIAN LENDERS
<TABLE>
<CAPTION>
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
MAXIMUM
REVOLVING LETTER OF
CREDIT CREDIT LETTER OF CREDIT EURODOLLAR
NAME OF INITIAL LENDER COMMITMENT COMMITMENT LENDING OFFICE DOMESTIC LENDING OFFICE LENDING OFFICE
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
Citibank Limited $21,000,000 ----- ----- Citibank Limited Citibank Limited
Level 25 Level 25
Waterfront Place Waterfront Place
1 Eagle Street 1 Eagle Street
Brisbane, QLD 4000 Brisbane, QLD 4000
Australia Australia
Attn: Stephen Godfrey Attn: Stephen Godfrey
Tel: 617-3227-9431 Tel: 617-3227-9431
Fax: 617-3227-9430 Fax: 617-3227-9430
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
Dresdner Australia Limited $17,000,000 ----- ----- Dresdner Bank Australia Dresdner Bank Australia
Limited Limited
Level 20 Level 20
2 Market Street 2 Market Street
Sydney, NSW 2000 Sydney, NSW 2000
Australia Australia
Attn: Richard Kovacs Attn: Richard Kovacs
Tel: 61-2-286-2019 Tel: 61-2-286-2019
Fax: 61-2-286-2150 Fax: 61-2-286-2150
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
I-7
<PAGE>
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
ABN AMRO Australia Limited $17,000,000 ----- ----- ABN AMRO Australia ABN AMRO Australia
Limited Limited
Level 14 Level 14
ABN AMRO House ABN AMRO House
10 Spring Street 10 Spring Street
Sydney NSW 2000 Sydney NSW 2000
Attn: Loans Administration Attn: Loans Administration
Mail: GPO Box 200, Mail: GPO Box 200,
Sydney NSW 2001 Sydney NSW 2001
Australia Australia
Attn: Chris Whittle Attn: Chris Whittle
Fax: 612-223-4310 Fax: 612-223-4310
Telex: 73145 ABNAUS Telex: 73145 ABNAUS
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
The First National Bank of $14,000,000 $50,000,000 The First National The First National The First National
Chicago, Australian Bank of Chicago Bank of Chicago Bank of Chicago
Branch Level 4 Level 4 Level 4
70 Hindmarsh Square 70 Hindmarsh Square 70 Hindmarsh Square
Adelaide SA 5000 Adelaide SA 5000 Adelaide SA 5000
Australia Australia Australia
Attn: Attn: Attn:
Mrs. Chris Mather Mrs. Chris Mather Mrs. Chris Mather
Tel: 61-8-223-3377 Tel: 61-8-223-3377 Tel: 61-8-223-3377
Fax: 61-8-223-2948 Fax: 61-8-223-2948 Fax: 61-8-223-2948
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
Bank of America NT & SA, $14,000,000 ----- ----- Bank of America NT & SA, Bank of America NT & SA,
Sydney Branch Sydney Branch Sydney Branch
Level 18 Level 18
135 King Street 135 King Street
Sydney, NSW 2000 Sydney, NSW 2000
Attn: Simon Wiadrowski Attn: Simon Wiadrowski
Tel: 612-9931-4224 Tel: 612-9931-4224
Fax: 612-221-1023 Fax: 612-221-1023
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
I-8
<PAGE>
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
Rothschild Australia $13,000,000 ----- ----- Rothschild Australia Rothschild Australia
Limited Limited Limited
Level 24 Level 24
Exchange Plaza Exchange Plaza
2 The Esplanade 2 The Esplanade
Perth, Western Perth, Western
Australia Australia
6000 Australia 6000 Australia
Attn: Clive Donner Attn: Clive Donner
Tel: 619-268-4600 Tel: 619-268-4600
Fax: 619-268-4646 Fax: 619-268-4646
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
Republic Mase Australia $10,000,000 ----- ----- Republic Mase Republic Mase
Limited Australia Limited Australia Limited
Level 6, AMP Centre Level 6, AMP Centre
50 Bridge Street 50 Bridge Street
Sydney, NSW 2000 Sydney, NSW 2000
Australia Australia
Attn: Colin MacArthur Attn: Colin MacArthur
Tel: 61-2-233-8566 Tel: 61-2-233-8566
Fax: 61-2-235-0950 Fax: 61-2-235-0950
- ---------------------------- ----------- ------------ -------------------- -------------------------- --------------------------
</TABLE>
I-9
<PAGE>
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES; ETC.
D. RISK PARTICIPANTS
---------------------- -------------
MAXIMUM
REVOLVING
NAME OF INITIAL LENDER CREDIT
COMMITMENT
----------------------------- -------------
CIBC Inc. $17,000,000
----------------------------- -------------
The Bank of Nova Scotia $14,000,000
----------------------------- -------------
Bank of Montreal $ 8,000,000
----------------------------- -------------
U.S. Bank of Washington, N.A. $ 5,000,000
----------------------------- -------------
I-10
<PAGE>
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES; ETC.
E. NON-PRO RATA LENDER
- ------------------ --------------------------- -------------------------
DOMESTIC EURODOLLAR
LENDING LENDING
OFFICE OFFICE
- ------------------ --------------------------- -------------------------
ABN AMRO Australia ABN AMRO Australia Limited ABN AMRO Australia Limited
Limited Level 14, ABN AMRO House Level 14, ABN AMRO House
10 Spring Street 10 Spring Street
Sydney NSW 2000 Sydney NSW 2000
Attn: Loans Administration Attn: Loans Administration
Mail: GPO Box 200, Mail: GPO Box 200,
Sydney NSW 2001 Sydney NSW 2001
Fax: 612-223-4210 Fax: 612-223-4210
Telex: 73145 ABNAUS Telex: 73145 ABNAUS
- ------------------ --------------------------- -------------------------
I-11
<PAGE>
SCHEDULE II
PERFORMANCE PRICING SCHEDULE
<TABLE>
<CAPTION>
U.S. BASE RATE
ADVANCES/
CANADIAN BASE
RATE ADVANCES/
CANADIAN PRIME EURODOLLAR FINANCIAL
PERFORMANCE RATE ADVANCES/ RATE ADVANCES/ LETTER OF COMMERCIAL UNUSED
PRICING AUSTRALIAN PRIME BANK BILL RATE DRAWING CREDIT LETTER OF COMMITMENT
LEVEL RATE ADVANCES ADVANCES FEE FEE CREDIT FEE FEE
- ----------- ---------------- -------------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
I 0.00% 0.65% 0.65% 0.65% 0.325% 0.20%
- ----------- ---------------- -------------- ------- --------- ---------- ----------
II 0.00% 0.75% 0.75% 0.75% 0.375% 0.25%
- ----------- ---------------- -------------- ------- --------- ---------- ----------
III 0.00% 1.00% 1.00% 1.00% 0.50% 0.3125%
- ----------- ---------------- -------------- ------- --------- ---------- ----------
IV 0.25% 1.25% 1.25% 1.25% 0.625% 0.375%
- ----------- ---------------- -------------- ------- --------- ---------- ----------
V 0.50% 1.50% 1.50% 1.50% 0.75% 0.375%
- ----------- ---------------- -------------- ------- --------- ---------- ----------
VI 0.75% 1.75% 1.75% 1.75% 0.875% 0.50%
- ----------- ---------------- -------------- ------- --------- ---------- ----------
</TABLE>
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
SCHEDULE 1.01(a)
PART I - EXISTING HEDGE BANKS
Bank of Nova Scotia
Chemical Bank
Citibank N.A.
Citibank Limited
Credit Suisse Bullion
Dresdner Bank AG
J. Aron & Company
Shearson Lehman Commercial Corporation
Mitsui & Co. (Australia) Ltd.
Morgan Guaranty Trust Company of New York
NM Rothschild & Sons Limited
Republic National Bank of New York
Seafirst Bank
Union Bank of Switzerland New York Branch
PART II - EXISTING HEDGE AGREEMENTS
ISDA Interest Rate and Currency Exchange Agreement dated as of 9/17/90, as
amended, between Chemical Bank and Pegasus Gold Corporation
<TABLE>
<CAPTION>
- ----------------- ----------- --------------------------------- -------------------------------------
SUMMARY OF OUTSTANDING
BANK CUSTOMER MASTER CONTRACT CONTRACTS AS OF MARCH 31, 1996
- ----------------- ----------- --------------------------------- -------------------------------------
<S> <C> <C> <C>
Chemical Bank PGC Interest Rate Gold Long Dated Gold Forwards:123,000 oz.
PGI Forward Transaction dated 9/17/90 Cumulative Value of Contracts
Guarantee Silver Long Dated Forward US$64,871,430
Transaction dated 7/1/91
Silver Long Dated Forward Silver Forwards:2,365,009 oz.
Transaction dated 4/28/93 Cumulative Value of Contracts
US$11,836,993
- ----------------- ----------- --------------------------------- -------------------------------------
</TABLE>
PART III - SURVIVING HEDGE AGREEMENTS
<TABLE>
<CAPTION>
- ----------------- ----------- --------------------------------- -------------------------------------
SUMMARY OF OUTSTANDING
BANK CUSTOMER MASTER CONTRACT CONTRACTS AS OF MARCH 31, 1996
- ----------------- ----------- --------------------------------- -------------------------------------
<S> <C> <C> <C>
Bank of Nova Scotia PGC, Gold & Silver Facility None
PGI Agreement dated 12/6/93
Guarantee
- ----------------- ----------- --------------------------------- -------------------------------------
Citibank Limited, PGI None Foreign Exchange: Cumulative Value of
Australia Contracts A$50,500,000
- ----------------- ----------- --------------------------------- -------------------------------------
</TABLE>
<PAGE>
PART III - SURVIVING HEDGE AGREEMENTS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------- ----------- --------------------------------- -------------------------------------
SUMMARY OF OUTSTANDING
BANK CUSTOMER MASTER CONTRACT CONTRACTS AS OF MARCH 31, 1996
- ----------------- ----------- --------------------------------- -------------------------------------
<S> <C> <C> <C>
Citibank N.A. PGC Bullion Dealing Gold Forwards:75,300 oz.
Master Agreement Cumulative Value of Contracts
dated 5/20/94 US$30,601,340
Gold Put Options : 40,000 oz.
Cumulative Value of Contracts
US$16,130,000
Gold Call Options: 40,000 oz.
Cumulative Value of Contracts
US$17,800,000
Silver Forwards: 200,000 oz.
Cumulative Value of Contracts
US$1,218,000
Lead Forwards: 3,250 tonnes
Cumulative Value of Contracts
US$2,054,000
Zinc Forwards: 6,000 tonnes
Cumulative Value of Contracts
US$6,489,000
- ----------------- ----------- --------------------------------- -------------------------------------
Credit Suisse PGA Gold Forward Facility Gold Forwards:22,000 oz.
Bullion, Agreement dated 5/21/92 Cumulative Value of Contracts
Australia A$14,136,100
Foreign Exchange: Cumulative Value of
Contracts A$73,197,533
- ----------------- ----------- --------------------------------- -------------------------------------
Dresdner Bank AG PGC None Gold Forwards: 5,200 oz.
Cumulative Value of Contracts:
US$2,142,801
Gold Put Options: 20,000 oz.
Cumulative Value of Contracts:
US$8,040,000
Gold Call Options: 20,000 oz.
Cumulative Value of Contracts:
US$8,900,000
- ----------------- ----------- --------------------------------- -------------------------------------
</TABLE>
<PAGE>
PART III - SURVIVING HEDGE AGREEMENTS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------- ----------- --------------------------------- -------------------------------------
SUMMARY OF OUTSTANDING
BANK CUSTOMER MASTER CONTRACT CONTRACTS AS OF MARCH 31, 1996
- ----------------- ----------- --------------------------------- -------------------------------------
<S> <C> <C> <C>
J Aron & Company PGC Letter Agreement 9/4/90, as Gold Forwards: 117,100 oz.
amended Cumulative Value of Contracts:
US$47,347,280
Gold Put Options: 70,000 oz.
Cumulative Value of Contracts:
US$26,920,000
Gold Call Options: 81,500 oz.
Cumulative Value of Contracts:
US$37,975,000
Lead Forwards: 750 tonnes
Cumulative Value of Contracts:
US$506,250
Zinc Forwards: 2,000 tonnes
Cumulative Value of Contracts:
US$2,193,100
- ----------------- ----------- --------------------------------- -------------------------------------
Shearson Lehman PGC Metals Account Agreement dated Gold Forwards: 159,143 oz.
Commercial PGI 4/14/92 Cumulative Value of Contracts:
Corporation Guarantee US$70,121,201
Gold Put Options: 50,000 oz.
Cumulative Value of Contracts:
US$70,121,201
Gold Call Options: 41,000 oz.
Cumulative Value of Contracts:
US$18,450,000
- ----------------- ----------- --------------------------------- -------------------------------------
Mitsui & Co. PGA Gold Forward Selling Facility Gold Forwards: 28,985 oz.
(Australia) Ltd. dated 11/5/90 Cumulative Value of Contracts:
A$18,361,997
Gold Call Options: 26,600 oz.
Cumulative Value of Contracts:
A$14,663,000
- ----------------- ----------- --------------------------------- -------------------------------------
Morgan Guaranty PGC ISDA Master Agreement dated Gold Forwards: 26,500 oz.
Trust Company 8/10/95 Cumulative Value of Contracts:
of New York US$10,826,053
Gold Call Options: 35,000 oz.
Cumulative Value of Contracts:
US$16,800,000
Silver Forwards: 300,000 oz.
Cumulative Value of Contracts:
US$1,812,300
Zinc Forwards: 1,125 tonnes
Cumulative Value of Contracts:
US$1,237,500
- ----------------- ----------- --------------------------------- -------------------------------------
</TABLE>
<PAGE>
PART III - SURVIVING HEDGE AGREEMENTS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------- ----------- --------------------------------- -------------------------------------
SUMMARY OF OUTSTANDING
BANK CUSTOMER MASTER CONTRACT CONTRACTS AS OF MARCH 31, 1996
- ----------------- ----------- --------------------------------- -------------------------------------
<S> <C> <C> <C>
NM Rothschild & PGC Letter Agreement dated 6/7/94 Gold Forwards: 153,561 oz.
Sons Limited PGA Cumulative Value of Contracts:
US$13,322,525
A$67,101,236
Gold Call Options: 50,000 oz.
Cumulative Value of Contracts:
A$28,800,000
Lead Forwards: 750 tonnes
Cumulative Value of Contracts:
US$464,749
- ----------------- ----------- --------------------------------- -------------------------------------
Republic PGC None Gold Put Options: 20,000 oz.
National Bank Cumulative Value of Contracts:
of New York US$8,900,000
Gold Call Options: 20,000 oz.
Cumulative Value of Contracts:
US$8,170,000
- ----------------- ----------- --------------------------------- -------------------------------------
Seafirst Bank PGC None Foreign Exchange: Cumulative Value of
Contracts A$38,500,000
- ----------------- ----------- --------------------------------- -------------------------------------
Union Bank of PGC Master Bullion Trading Agreement Silver Forwards: 200,004 oz.
Switzerland, dated 2/3/95 Cumulative Value of Contracts:
New York US$1,060,021
- ----------------- ----------- --------------------------------- -------------------------------------
</TABLE>
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
SCHEDULE 1.01(b) - EXISTING LETTERS OF CREDIT
1. US Bank of Washington Irrevocable Standby Letter of Credit
No. S097269 dated September 8, 1994, as amended;issued for
the account of Pegasus Gold Corporation; Beneficiary:
National Fire Insurance Company of Hartford; Expires
September 7, 1996; Principal amount outstanding as of March 31,
1996 US$3,999,104
2. US Bank of Washington Irrevocable Standby Letter of Credit No.
S061624 dated July 31, 1991, as amended;issued for the account of
Pegasus Gold Corporation; Beneficiary: The Aetna Casualty and
Surety Company; Expires May 31, 1996; Principal amount
outstanding as of March 31, 1995 US$5,300,000
3. Seattle-First National Bank Irrevocable Standby Letter of Credit
No. G193003 dated September 6, 1994, as amended; issued for the
account of Pegasus Gold Corporation; Beneficiary: Safeco
Insurance Company of America; Expires September 6, 1996;
Principal amount outstanding as of March 31, 1996 US$3,540,183
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
SCHEDULE 3.01(b) - SURVIVING DEBT
LOAN AGREEMENTS:
1. 6 1/4 % Convertible Subordinated Notes due April 30, 2002 dated
as of April 15, 1995 with Pegasus Gold Inc. , Issuer and The
Bank of New York, Trustee. The notes are convertible into
7,709,067 Common Shares of the company at a conversion price of
US$14.9175 per Common Share at any time after June 18, 1995
through the earlier of April 30, 2002, or the redemption date.
There is no sinking fund requirement on the Notes, and they may
not be redeemed until April 30, 1998, at such time they are
redeemable at 100% plus accrued interest to the redemption date.
Interest on the Notes is payable semiannually on April 30 and
October 31 of each year commencing on October 31, 1995.
Principal amount outstanding as of March 31, 1996 equals
US$115,000,000.
2. Master Premium Financing Agreement between Pegasus Gold
Corporation and Fireman's Fund Insurance Company dated as of
January 1, 1993, as amended. Aggregate amount of Notes as of
March 31, 1996 US$2,192,182. This amount represents deferred
premiums which may or may not be payable depending on the amount
of Workers Compensation claims in the years 1994-1996. Final
maturity of the notes outstanding are as follows: US$722,104 due
July 1, 1996; US$1,057,746 due July 1, 1997 and; $412,332 due
July 1, 1998. Payments are made on the notes based on an annual
review of workers compensation claims.
GUARANTEES:
1. Pegasus Gold Inc. Corporate 1 Year Guarantee to Citicorp and
each subsidiary or affiliate thereof for punctual payment of
Local Office Lease Obligation of Pegasus do Brasil Mineracao
Ltda dated March 20, 1996 in the amount of R$26,000 (Brazilian
Reals).
2. Pegasus Gold Inc. General Guarantee in favour of The Bank of
Nova Scotia in respect of the indebtedness and liability of
Pegasus Gold Corporation to the Bank dated December 6, 1993
(Guarantees Pegasus Gold Corporation's payment and performance
under the Gold and Silver Facility Agreement dated December 6,
1993).
3. Pegasus Gold Inc. Guarantee to Shearson Lehman Commercial Corp.
Dated as of January 25, 1991 (Guarantee's Pegasus Gold
Corporation's payment and performance under the Metals Account
Agreement dated April 14, 1992).
<PAGE>
GUARANTEES (CONTINUED):
4. Pegasus Gold Inc. Guaranty dated December 28, 1995 granted
in favor of Atel Leasing Corporation as regards the
punctual payment and performance of Pegasus Gold
Corporation under the Master Lease Agreement No. PEGA1
dated as of December 28, 1995.
5. Pegasus Gold Inc. Guaranty dated December June 15, 1991 granted
in favor of Caterpillar Financial Corporation as regards the
punctual payment and performance of Pegasus Gold Corporation
under the Lease Agreement dated as of June 21, 1991.
6. Pegasus Gold Inc. Guaranty dated December 20, 1993 granted in
favor of Caterpillar Financial Corporation as regards the
punctual payment and performance of Pegasus Gold Corporation
under the Master Lease Agreement dated as of December 20, 1993.
7. Pegasus Gold Corporation Guaranty granted in favor of US Bank
of Washington as regards the punctual payment and performance of
$400,000 loan to an employee.
HEDGE AGREEMENTS:
See schedule 1.01(a) which is incorporated herein by reference.
<PAGE>
SCHEDULE 3.01(b) - SURVIVING DEBT (CONTINUED)
OBLIGATIONS UNDER CAPITALIZED LEASES:
1. Master Lease Agreement No. PEGA1 Dated as of December 29, 1995
between Atel Leasing Corporation as Lessor and Pegasus Gold
Corporation as Lessee : Guaranteed by Pegasus Gold Inc. As of
March 31, 1996, capital lease liability equals US$6,850,000
calculated according to generally accepted accounting
principles.
2. Master Lease Agreement Between Caterpillar Financial Services
Corporation as Lessor and Pegasus Gold Corporation as Lessee
dated as of December 20, 1993 : Guaranteed by Pegasus Gold Inc.
Capital lease liability calculated according to generally
accepted accounting principles as of March 31, 1996 as follows:
Lease Supplement No. 5 dated December 28, 1995 US$18,700,000
Lease Supplement No. 6 dated March 1, 1996 US$ 1,920,000
Note that Lease Supplements 1-4 refer to operating leases.
MISC. OBLIGATIONS:
1. Counter Indemnity Agreement Guarantee Mineral Lease S153 for the
benefit of the Minister for Mines & Energy of the Northern
Territory of Australia dated as of March 30, 1992 between
Rothschild Australia Limited and Zapopan NL (Pegasus Gold
Australia Pty Ltd) in the amount of A$150,000.
2. Guarantee for Security Mineral Lease ML N1070, N1071, N1127 for
the benefit of the Minister for Mines & Energy of the Northern
Territory of Australia dated as of February 26, 1993 between
Rothschild Australia Limited and Zapopan NL (Pegasus Gold
Australia Pty Ltd) in the sum of A$400,000.
3. Guarantee for Security Exploration Lease EL 7989 for the benefit
of the Minister for Mines & Energy of the Northern Territory of
Australia dated as of July 28, 1993 between Rothschild Australia
Limited and Zapopan NL (Pegasus Gold Australia Pty Ltd) in the
sum of A$20,000.
4. Guarantee for Security Exploration License EL8863 for the
benefit of the Minister for Mines & Energy of the Northern
Territory of Australia dated as of November 15, 1993 between
Rothschild Australia Limited and Zapopan NL (Pegasus Gold
Australia Pty Ltd) in the sum of A$1,000.
5. Guarantee for Security Exploration License EL8864 for the
benefit of the Minister for Mines & Energy of the Northern
Territory of Australia, not dated, between Rothschild Australia
Limited and Zapopan NL (Pegasus Gold Australia Pty Ltd) in the
sum of A$2,000.
6. Guarantee for Security Exploration License EL9093 for the
benefit of the Minister for Mines & Energy of the Northern
Territory of Australia dated as of August 10, 1995 between
Rothschild Australia Limited and Zapopan NL (Pegasus Gold
Australia Pty Ltd) in the sum of A$1,000.
7. Guarantee for Security Exploration License EL9102 for the
benefit of the Minister for Mines & Energy of the Northern
Territory of Australia dated as of August 10, 1995 between
Rothschild Australia Limited and Zapopan NL (Pegasus Gold
Australia Pty Ltd) in the sum of A$2,000.
8. Guarantee for Security Exploration License EL 7941 for the
benefit of the Minister for Mines & Energy of the Northern
Territory of Australia dated as of April 13, 1993 between
Australia and New Zealand Banking Group Limited and Zapopan NL
(Pegasus Gold Australia Pty Ltd) in the sum of A$1,000.
<PAGE>
SCHEDULE 3.01(b) - SURVIVING DEBT (CONTINUED)
MISC. OBLIGATIONS:
9. Guarantee for Security Exploration License EL7942 for the
benefit of the Minister for Mines & Energy of the Northern
Territory of Australia dated as of April 13, 1993 between
New Zealand Banking Group Limited and Zapopan NL (Pegasus
Gold Australia Pty Ltd) in the sum of A$1,000.
10. Guaranty of Office Lease Obligations in the amount of R$27,000
(Brazilian Reals) issued by Citibank Brazil for the benefit of
Pegasus do Brasil Mineracao Ltda and Citibank Brazil.
11. Reimbursement Agreement for Letter of Guarantee to the Bank of
Nova Scotia, Georgetown, Guyana from Pegasus Gold International,
Inc. dated January 31, 1995. Letter of Guarantee in the
principal Amount of US$50,000 issued to Guyana Geology and Mines
Commission by the Bank of Nova Scotia.
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
SCHEDULE 4.01(b)- SUBSIDIARIES; RESTRICTED SUBSIDIARIES; CAPITAL STOCK
<TABLE>
<CAPTION>
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
LOAN PARTY RESTRICTED** JURISDICTION OF NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES LOAN PARTY
UNRESTRICED*** INCORPORATION AUTHORIZED ISSUED & OUTSTANDING OWNED BY LOAN OWNERSHIP
PARTY INTEREST
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Pegasus Gold NA Northern Common stock, A$.25 161,692,128 shares 161,692,128 shares Pegasus Gold
Australia Pty Ltd Territory, par value, Authorized Inc. (100%)
Australia 200,000,000 shares
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pegasus Gold NA Nevada Common stock, US$1.00 248,266 shares 248,266 shares Pegasus Gold
Corporation par Authorized Inc. (100%)
1,505,000 shares
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Zortman ** Montana Common stock, no par 1,567,092 shares 1,567,092 shares Pegasus Gold
Mining Inc. value, Authorized Corporation
2,000,000 shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Florida Canyon ** Washington Common stock, US$.001 1,130,000 shares 1,130,000 shares Pegasus Gold
Mining Inc. par value, Authorized Corporation
50,000,000 shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Montana Tunnels ** Nevada Common stock, no par 2 shares 2 shares Pegasus Gold
Mining Inc. value, Authorized Corporation
100,000 shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pegasus Gold ** Washington Common stock, no par 100 shares 100 shares Pegasus Gold
International, value, Authorized 100 Corporation
Inc. shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pegasus Gold ** Arizona Class A Common stock, 100 shares 100 shares Pangea
Montana Mining, no par value, International
Inc. Authorized 2,000,000 Holdings
shares Corporation
(100%)
Class B Common stock, None
US$100 par value,
Authorized 50,000
shares
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
LOAN PARTY RESTRICTED** JURISDICTION OF NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES LOAN PARTY
UNRESTRICED*** INCORPORATION AUTHORIZED ISSUED & OUTSTANDING OWNED BY LOAN OWNERSHIP
PARTY INTEREST
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Beal Mountain ** Montana Common stock, US$1.00 1 share 1 share Pegasus Gold
Mining, Inc. par value, Authorized Corporation
100,000 shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Black Pine ** Nevada Common stock, US$.10 3,000 shares 3,000 shares Pegasus Gold
Mining, Inc. par value, Authorized Corporation
1,000,000 shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Diamond Hill ** Montana Common stock, US$1.00 100 shares 100 shares Pegasus Gold
Mining, Inc. par value, Authorized Corporation
100,000 shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pangea ** Nevada Common stock, no par 2,500 shares 2,500 shares Pegasus Gold
International value, Authorized Corporation
Holdings 2,500 shares (100%)
Corporation
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pegasus Minera de ** Santiago, Limited Liability NA NA Pegasus Gold
Chile Limitada Chile Partnership Corporation 99%;
(Sociedad de Zortman
Responsabilidad Mining Inc. 1%
Limitada)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pegasus do Brasil ** Rio de Partnership by NA NA Pegasus Gold
Mineracao Ltda Janeiro, Limited Shares International
Brazil Responsibility: Inc. 99%;
Joint stock is R$100 Pegasus Gold
(one hundred reais) Corporation 1%
broken down in 100
shares in the amount
of R$1.00 (one real)
each share
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pegasus Gold *** Nevada Common stock, US$.01 1,000 shares 1,000 shares Pegasus Gold
Finance par value, Authorized Corporation
Corporation 1,000 shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pegasus Aviation *** Nevada Common stock, US$1.00 5,000 shares 5,000 shares Pegasus Gold
Services, Inc. par value, Authorized Corporation
25,000 shares (100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
LOAN PARTY RESTRICTED** JURISDICTION OF NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES LOAN PARTY
UNRESTRICED*** INCORPORATION AUTHORIZED ISSUED & OUTSTANDING OWNED BY LOAN OWNERSHIP
PARTY INTEREST
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Pegasus Gold *** Victoria, Common stock, A$1.00 695,388 shares 695,388 shares Pegasus Gold
Australia Australia par value, Authorized Inc. (100%)
Holdings Ltd. 1,000,000 shares
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pangea *** Arizona Class A Common stock, 140,000 shares 140,000 shares Pangea
Explorations, Inc. no par value, International
Authorized 1,000,000 Holdings
shares Corporation
(100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pangea Minerals *** Nevada Common stock, no par 100 shares 100 shares Pangea
Inc. value, Authorized International
25,000 shares Holdings
Corporation
(100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pangea Resource *** Nevada Common stock, no par 100 shares 100 shares Pangea
Explorations, Inc. value, Authorized International
25,000 shares Holdings
Corporation
(100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Pangea Gold *** Nevada Common stock, no par 100 shares 100 shares Pangea
Corporation value, Authorized International
25,000 shares Holdings
Corporation
(100%)
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
Hippocrene *** The Unknown Unknown Unknown Pegasus Gold
Holdings NV Netherlands Inc. (100%)
Antilles
- ----------------- -------------- --------------- --------------------- -------------------- ------------------ ---------------
</TABLE>
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
SCHEDULE 4.01(d)- AUTHORIZATIONS AND APPROVALS
1. With respect to the pledge pursuant to the Pledge Agreement of
the shares by a company subject to the Australian Corporation Law:
(a) ASC Form 309 (Notification of Details of a Charge); and
(b) ASC Form 350 (Certificaton of Compliance with Stamp Duty Law);
each duly completed by the relevant Pledgor (as defined in the
Pledge Agreement) and in each case filed with the Australian
Securities Commission. The above-referenced forms will be
executed and delivered to the U.S. Administrative Agent at
Closing, and will be filed thereafter.
2. Registration of a financing statement in the Personal Property
Registry for the Province of British Columbia. To be executed and
delivered to the US Administrative Agent at Closing, and will be
filed thereafter.
3. Filing of UCC Financing Statements under any applicable state's
Uniform Commercial Code (such filings are not required for the
perfection or maintenance of the Liens created by the Pledge
Agreement in the Pledged Shares (as defined in the Pledge
Agreement)).
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
SCHEDULE 4.01(s) - EXISTING DEBT
CREDIT AGREEMENT:
1. Credit Agreement dated as of August 23, 1991, as amended,
among Pegasus Gold Corporation, Pegasus Gold Inc., Beal
Mountain Mining Inc., Florida Canyon Mining Inc., Montana
Tunnels Mining, Inc., Pegasus Aviation Services Inc., Zortman
Mining Inc., Pangea Resources Pty Ltd., Pangea International
Holdings Corporation, Pegasus Gold Montana Mining Inc., Black
Pine Mining Inc., and U.S. Bank of Washington National
Association as Agent. Principal amount outstanding as of
March 31, 1996 equals zero.
AGREEMENTS RELATED TO LETTERS OF CREDIT:
1. Letter of Credit and Reimbursement Agreement dated as of June 4,
1992, as amended, among Pegasus Gold Corporation, as Borrower, and
U.S. Bank of Washington, National Association.
2. Letter of Credit and Reimbursement Agreement dated as of August 1,
1994 among Pegasus Gold Corporation, as Borrower, and Seattle-
First National Bank.
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
SCHEDULE 4.01(u)- EXISTING LIENS
1. Pegasus Gold Corporation granted a security interest in
property held by or in any account maintained with Shearson
Lehman Commercial Corporation under the Metals Account
Agreement dated April 14, 1992, Section 10.
2. Pegasus Gold Corporation granted a first priority continuing
security interest in, lien on and right of Set-off against all
posted collateral transferred to or received by (currently no
collateral posted) Morgan Guaranty Trust Company of New York in
the Credit Support Annex to the Schedule of the ISDA Master
Agreement dated August 10, 1995.
3. Pegasus Gold Corporation granted a security interest to Fireman's
Fund Insurance Company in the Master Premium Financing Agreement
dated January 1, 1993, Section XIII, in (i) all return premiums,
dividend advances, dividends or other amounts which may at any
time be owing from Fireman's Fund or its affiliates and (ii) all
monies and other assets in which Pegasus may have an interest
which are held from time to time by Fireman's Fund , to support
and assure payment and satisfaction of all Obligations.
<PAGE>
MULTICURRENCY REDUCING REVOLVING CREDIT AGREEMENT
SCHEDULE 4.01(v)- INVESTMENTS
<TABLE>
<CAPTION>
- --------------- --------------- ----------------- ---------------- ----------- ------------------
INVESTMENT LOAN PARTY SHARES HELD INVESTMENNT PERCENT COMMENTS
NAME CARRYING VALUE OWNED
- --------------- --------------- ----------------- ---------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
USMX, Inc. Pegasus Gold 4,862,000 $11,400,305 33% None
Corporation Common Shares
- --------------- --------------- ----------------- ---------------- ----------- ------------------
Emerging Pegasus Gold 160,000 $ 7,069,940 21% The Company is
Markets Gold Inc. Common Shares obligated to invest
Fund up to an additional
166,400 26% $8,236,800 at 30
Preferred days notice from
Shares the fund
- --------------- --------------- ----------------- ---------------- ----------- ------------------
Intermin On February 29,
Resource 1996 Pegasus Gold
Corporation Inc. agreed to
acquire a 19.9
percent equity
interest for A$5.1
million in Intermin
Resource
Corporation Limited,
an Australian gold
exploration company,
along with an option
to acquire up to 51
percent at an agreed
price of A$34.7
million within two
years.
- --------------- --------------- ----------------- ---------------- ----------- ------------------
</TABLE>
<PAGE>
EXHIBIT A
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Multicurrency Reducing Revolving Credit
Agreement dated as of April 17, 1996 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT")
among PEGASUS GOLD INC., a company organized under the laws of British Columbia,
Canada ("PGI" or the "CANADIAN BORROWER"), PEGASUS GOLD CORPORATION, a Nevada
corporation and a wholly owned subsidiary of PGI ("PGC" or the "US BORROWER"),
PEGASUS GOLD AUSTRALIA PTY LTD (formerly known as Zapopan N.L.) (ACN 009 628
924), an Australia corporation and a wholly owned subsidiary of PGI ("PGA" or
the "AUSTRALIAN BORROWER" and, together with the Canadian Borrower and the US
Borrower, each a "BORROWER" and, collectively, the "BORROWERS"), the banks,
financial institutions and other institutional lenders listed on the signature
pages hereof as the Initial Lenders (the "INITIAL LENDERS") and the Initial
Issuing Banks (as defined therein), CITIBANK, N.A. ("CITIBANK"), as
administrative agent in the United States and as a collateral agent (in such
capacity, together with any successor appointed pursuant to Article VII of such
Credit Agreement, the "US ADMINISTRATIVE AGENT") for the Lender Parties and the
other Secured Parties (each as defined therein), CITIBANK CANADA ("CITIBANK
CANADA"), as administrative agent in Canada and as a collateral agent (in such
capacity, together with any successor appointed pursuant to Article VII of such
Credit Agreement, the "CANADIAN ADMINISTRATIVE AGENT") for the Lender Parties,
CITIBANK LIMITED (ACN 004 325 080) ("CITIBANK AUSTRALIA"), as administrative
agent in Australia and as a collateral agent (in such capacity, together with
any successor appointed pursuant to Article VII of such Credit Agreement, the
"AUSTRALIAN ADMINISTRATIVE AGENT") for the Lender Parties, ABN AMRO AUSTRALIA
LIMITED, as the Non-Pro Rata Lender (as defined therein) and ABN AMRO BANK N.V.,
CANADIAN IMPERIAL BANK OF COMMERCE, DRESDNER BANK AG, NEW YORK BRANCH, and THE
FIRST NATIONAL BANK OF CHICAGO, as Co-Agents. Terms defined in the Credit
Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1
hereto agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor, an interest in
and to the Assignor's rights and obligations under the Credit Agreement as of
the date hereof equal to the percentage interest specified on Schedule 1 hereto
of all outstanding rights and obligations under the Credit Agreement. After
giving effect to such sale and assignment, the Assignee's Maximum Revolving
Credit Commitment and the amount of the Advances owing to the Assignee will be
as set forth on Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, the
Loan Documents or any other instrument or document furnished pursuant thereto;
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Loan Party or the performance or
observance by any Loan Party of any of its obligations under any Loan Document
or any other instrument or document furnished pursuant thereto; (iv) confirms
that, unless the Assignee is an Affiliate of the Assignor, each of the
Assignor's Affiliates which is a Lender under the Credit
<PAGE>
2
Agreement is simultaneously herewith assigning a percentage of such Affiliate's
Maximum Revolving Credit Commitment equal to the percentage of the Assignor's
Maximum Revolving Credit Commitment being assigned hereby; and (v) attaches the
Note or Notes held by the Assignor and requests that the US Administrative Agent
exchange such Note or Notes for a new Note or Notes payable to the order of the
Assignee in an amount equal to the Commitments assumed by the Assignee pursuant
hereto or new Notes payable to the order of the Assignee in an amount equal to
the Commitments assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitments retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the US Administrative Agent, the Assignor or any other
Lender Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) confirms that it is an
Eligible Assignee; (iv) appoints and authorizes each Administrative Agent and
each Collateral Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to such
Administrative Agent or such Collateral Agent by the terms thereof, together
with such powers and discretion as are reasonably incidental thereto; (v) agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of the Credit Agreement are required to be performed by it as a
Lender Party; and (vi) attaches any U.S. Internal Revenue Service forms required
under Section 2.14 of the Credit Agreement.
4. Following the execution of this Assignment and
Acceptance, it will be delivered to the US Administrative Agent for acceptance
and recording by the US Administrative Agent. The effective date for this
Assignment and Acceptance (the "EFFECTIVE DATE") shall be the date of acceptance
hereof by the US Administrative Agent, unless otherwise specified on Schedule 1
hereto.
5. Upon such acceptance and recording by the US
Administrative Agent, as of the Effective Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender Party thereunder and
(ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement.
6. Upon such acceptance and recording by the US
Administrative Agent, from and after the Effective Date, each Appropriate
Administrative Agent shall make all payments under the Credit Agreement and the
Notes in respect of the interest assigned hereby (including, without limitation,
all payments of principal, interest and commitment fees with respect thereto) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments under the Credit Agreement and the Notes for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery
<PAGE>
3
of an executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.
9. This Assignment and Acceptance is not to be executed in
any part of Australia other than the Australian Capital Territory; PROVIDED that
failure to comply with this Section 9 shall not affect the effectiveness hereof.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.
<PAGE>
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
Percentage of Assignor's Maximum Revolving Credit
Commitment interest assigned: %
----------
Assignee's Maximum Revolving Credit Commitment
(after giving effect to assignment): $
----------
Aggregate outstanding principal amount of Advances assigned: $
----------
Principal amount of US Borrower Note payable to Assignee: $
----------
Principal amount of Canadian Borrower Note payable
to Assignee: $
----------
Principal amount of Australian Borrower Note payable
to Assignee: $
----------
Principal amount of US Borrower Note payable to Assignor: $
----------
Principal amount of Canadian Borrower Note payable
to Assignor: $
----------
Principal amount of Australian Borrower Note payable
to Assignor: $
----------
Assignor is and Assignee shall, upon the effectiveness hereof,
be [a/an] [US/Canadian/Australian] [Lender] [Risk Participant].
Effective Date (if other than date of acceptance by US Administrative Agent):
1 , 199
---------- --- --
[NAME OF ASSIGNOR], as Assignor
By
----------------------------------
Title:
Dated: , 199
---------- --- --
- -------------------------
1 This date should be no earlier than five Business Days after the
delivery of this Assignment and Acceptance to the US Administrative
Agent.
<PAGE>
2
[NOTE: Pursuant to Section 9 of the foregoing Assignment and Acceptance, this
Schedule 1 is not to be executed in any part of Australia other than the
Australian Capital Territory.]
[NAME OF ASSIGNEE], as Assignee
By
--------------------------------------
Title:
Dated: , 199
------------- --
Domestic Lending Office:
-----------------------------------
-----------------------------------
-----------------------------------
Attn:
------------------------------
Telephone:
-------------------------
Telecopy:
--------------------------
Eurodollar Lending Office:
-----------------------------------
-----------------------------------
-----------------------------------
Attn:
------------------------------
Telephone:
-------------------------
Telecopy:
--------------------------
[BA Lending Office:]
[Letter of Credit Lending Office:]
Accepted, Consented to and Approved
this day of , 199
---- ----------- --
CITIBANK, N.A. as US Administrative Agent
By
---------------------------------
Title:
2 [Consented to this day
----
of , 199
------------- --
PEGASUS GOLD INC.
By
---------------------------------
Title:]
- -------------------------
2 PGI's consent is required pursuant to Section 8.07(a)(vi) unless an
Event of Default has occurred and is continuing.
<PAGE>
EXHIBIT B-1
FORM OF AUSTRALIAN BORROWER NOTE
[THE ORIGINAL OF THIS NOTE IS NOT TO BE TAKEN INTO AUSTRALIA]
$ Dated: , 199
------------- ---------- --- --
FOR VALUE RECEIVED, the undersigned, PEGASUS GOLD AUSTRALIA PTY
LTD (formerly known as Zapopan N.L.) (ACN 009 628 924), an Australia
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of
_________________________ (the "LENDER"), on the Termination Date, for the
account of its Appropriate Lending Office (as defined in the Credit Agreement
referred to below) the aggregate principal amount of the Australian Borrower
Advances (as defined below) owing to the Lender by the Borrower pursuant to the
Multicurrency Reducing Revolving Credit Agreement dated as of April 17, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein
defined) among the Borrower, Pegasus Gold Inc., a corporation formed under the
laws of British Columbia, Canada, as the Canadian Borrower, Pegasus Gold
Corporation, a Nevada corporation, as the US Borrower, the Lender and the other
Lender Parties party thereto, Citibank, N.A., as the US Administrative Agent,
Citibank Canada, as the Canadian Administrative Agent, Citibank Limited (ACN 004
325 080), as the Australian Administrative Agent, ABN AMRO Australia Limited, as
the Non-Pro Rata Lender and ABN AMRO Bank N.V., Canadian Imperial Bank of
Commerce, Dresdner Bank AG, New York Branch, and The First National Bank of
Chicago, as Co-Agents.
The Borrower promises to pay the Lender interest on the unpaid
principal amount of each Australian Borrower Advance from the date of such
Australian Borrower Advance until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in the Credit
Agreement.
Both principal and interest are payable to the Australian
Administrative Agent, at its Appropriate Administrative Agent's Account, in same
day funds (i) with respect to Australian Borrower Advances denominated in US
Dollars, in lawful money of the United States of America, and (ii) with respect
to Australian Borrower Advances denominated in Australian Dollars, in Australian
Dollars. Each Australian Borrower Advance owing to the Lender by the Borrower
and the maturity thereof, and all payments made on account of principal thereof,
shall be recorded by the Lender and, prior to any transfer hereof, endorsed on
the grid attached hereto, which is part of this Australian Borrower Note (but
the failure to make any such recordation or endorsement shall not affect the
Borrower's obligations hereunder).
This Australian Borrower Note is one of the Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i) provides for the making of advances (the
"AUSTRALIAN BORROWER ADVANCES") by the Lender to the Borrower from time to time
in an aggregate amount not to exceed at any time outstanding the US Dollar
amount first above mentioned (or the Equivalent thereof in Australian Dollars),
the indebtedness of the Borrower resulting from each such Australian Borrower
Advance being evidenced by this Australian Borrower Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
<PAGE>
2
The obligations of the Borrower under this Australian Borrower
Note, and the obligations of the other Loan Parties under the Loan Documents,
are secured by the Collateral as provided in the Loan Documents.
This Note shall be executed in the United States (but the
enforceability hereof shall not be affected by the place of execution).
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
SIGNED, SEALED AND DELIVERED )
ON BEHALF OF PEGASUS GOLD )
AUSTRALIA PTY LTD BY ITS ) ---------------------------------------
ATTORNEY IN THE PRESENCE OF: ) Signature:
Print Name:
- ------------------------------------
Witness:
Print Name:
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
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Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
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<PAGE>
EXHIBIT B-2
FORM OF CANADIAN BORROWER NOTE
$ Dated: , 199
------------- ---------- --- --
FOR VALUE RECEIVED, the undersigned, PEGASUS GOLD INC. , a
corporation formed under the laws of British Columbia, Canada (the "BORROWER"),
HEREBY PROMISES TO PAY to the order of _________________________ (the "LENDER"),
on the Termination Date, for the account of its Appropriate Lending Office (as
defined in the Credit Agreement referred to below) the aggregate principal
amount of the Canadian Borrower Advances (as defined below) owing to the Lender
by the Borrower pursuant to the Multicurrency Reducing Revolving Credit
Agreement dated as of April 17, 1996 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT";
terms defined therein being used herein as therein defined) among the Borrower,
Pegasus Gold Australia Pty Ltd, an Australia corporation, as the Australian
Borrower, and Pegasus Gold Corporation, a Nevada corporation, as the US
Borrower, the Lender and the other Lender Parties party thereto, Citibank, N.A.,
as the US Administrative Agent, Citibank Canada, as the Canadian Administrative
Agent, Citibank Limited (ACN 004 325 080), as the Australian Administrative
Agent, ABN AMRO Australia Limited, as the Non-Pro Rata Lender and ABN AMRO Bank
N.V., Canadian Imperial Bank of Commerce, Dresdner Bank AG, New York Branch, and
The First National Bank of Chicago, as Co-Agents.
The Borrower promises to pay the Lender interest on the unpaid
principal amount of each Canadian Borrower Advance from the date of such
Canadian Borrower Advance until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in the Credit
Agreement.
Both principal and interest are payable to the Canadian
Administrative Agent, at its Appropriate Administrative Agent's Account, in same
day funds (i) with respect to Canadian Borrower Advances denominated in US
Dollars, in lawful money of the United States of America, and (ii) with respect
to Canadian Borrower Advances denominated in Canadian Dollars, in Canadian
Dollars. Each Canadian Borrower Advance owing to the Lender by the Borrower and
the maturity thereof, and all payments made on account of principal thereof,
shall be recorded by the Lender and, prior to any transfer hereof, endorsed on
the grid attached hereto, which is part of this Canadian Borrower Note (but the
failure to make any such recordation or endorsement shall not affect the
Borrower's obligations hereunder).
This Canadian Borrower Note is one of the Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of advances (the "CANADIAN
BORROWER ADVANCES") by the Lender to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the US Dollar amount
first above mentioned (or the Equivalent thereof in Canadian Dollars), the
indebtedness of the Borrower resulting from each such Canadian Borrower Advance
being evidenced by this Canadian Borrower Note, and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
<PAGE>
2
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
The obligations of the Borrower under this Canadian Borrower
Note, and the obligations of the other Loan Parties under the Loan Documents,
are secured by the Collateral as provided in the Loan Documents.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
PEGASUS GOLD INC.
By
----------------------------
Title:
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<PAGE>
EXHIBIT B-3
FORM OF US BORROWER NOTE
$ Dated: , 199
------------- ---------- --- --
FOR VALUE RECEIVED, the undersigned, PEGASUS GOLD CORPORATION,
a Nevada corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of
_________________________ (the "LENDER"), on the Termination Date, for the
account of its Appropriate Lending Office (as defined in the Credit Agreement
referred to below) the aggregate principal amount of the US Borrower Advances
(as defined below) owing to the Lender by the Borrower pursuant to the
Multicurrency Reducing Revolving Credit Agreement dated as of April 17, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein
defined) among the Borrower, Pegasus Gold Australia Pty. Ltd., an Australia
corporation, as the Australian Borrower, and Pegasus Gold Corporation, a
corporation formed under the laws of British Columbia, Canada, as the Canadian
Borrower, the Lender and the other Lender Parties party thereto, Citibank, N.A.,
as the US Administrative Agent, Citibank Canada, as the Canadian Administrative
Agent, Citibank Limited (ACN 004 325 080), as the Australian Administrative
Agent, ABN AMRO Australia Limited, as the Non-Pro Rata Lender and ABN AMRO Bank
N.V., Canadian Imperial Bank of Commerce, Dresdner Bank AG, New York Branch, and
The First National Bank of Chicago, as Co-Agents.
The Borrower promises to pay the Lender interest on the unpaid
principal amount of each US Borrower Advance from the date of such US Borrower
Advance until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to the US Administrative Agent, at its Appropriate
Administrative Agent's Account, in same day funds. Each US Borrower Advance
owing to the Lender by the Borrower and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto, which is part of
this US Borrower Note (but the failure to make any such recordation or
endorsement shall not affect the Borrower's obligations hereunder).
This US Borrower Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of advances (the "US BORROWER
ADVANCES") by the Lender to the Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the US Dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such US Borrower
Advance being evidenced by this US Borrower Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
The obligations of the Borrower under this US Borrower Note, and
the obligations of the other Loan Parties under the Loan Documents, are secured
by the Collateral as provided in the Loan Documents.
<PAGE>
2
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
PEGASUS GOLD CORPORATION
By
--------------------------------
Title:
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
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Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
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<PAGE>
S&S (SPJ) DRAFT 04/04/96
EXHIBIT C-1
FORM OF DRAFT FOR
CITIBANK CANADA
BANKER'S ACCEPTANCE
ACCEPTATION DE BANQUE
Due_____________________
No. B.A._____________
On ____________________________recieved, pay to the order of the undersigned
drawer the sum of ___________
[same text in French]
To/A - Citibank Canada/Citibanque Canada, Toronto, Ontario
__________________________________________
Name of Drawer/nom du treur
__________________________________________
Authorized Signature/signature mandate
__________________________________________
Authorized Signature/signature mandate
ACCEPTED/ACCEPTEE
Date/Le_______________________, 19__
Payable at Toronto/payable a Toronto
Citibank Canada/Citibanque Canada
By:/Par_______________________________
Authorized Signature/signature mandate
By:/Par_______________________________
Authorized Signature/signature mandate
<PAGE>
EXHIBIT C-1
FORM OF DRAFT FOR
CITIBANK CANADA
GUARANTEE
[TEXT IN ENGLISH]
[TEXT IN FRENCH]
ACCEPTED/ACCEPTEE
Date/Le_______________________, 19__
Payable at Toronto/payable a Toronto
Citibank Canada/Citibanque Canada
By:/Par_______________________________
Authorized Signature/signature mandate
By:/Par_______________________________
Authorized Signature/signature mandate
<PAGE>
EXHIBIT C-2
FORM OF GENERIC DRAFT
ACCEPTATION BANCAIRE
No. B.A._____________
On/Te _______________________________, 19__ without grace for value received,
pay to the order of the undersigned drawer, the sum of / sans jours de grace
et contre valeur, sayes a j'orde dollars ($ ________________________________ $)
____________________________________________
Name of Drawer/nom du treur
____________________________________________
Authorized Signature/signataire autorise
____________________________________________
Authorized Signature/signataire autorise
NOTICE OF GUARANTEE
The acceptor, by its acceptance of the within banker's acceptance, certifies
that the holder thereof is entitled to the benefits of an (unconditional and)
irrevocable guarantee of the acceptor's parent bank of the acceptor's
obligations in connection with, or arising from its acceptance. A duly
executed copy of such guarantee is available for inspection by the holder at
the branch at the acceptor specified on the face hereof.
AVIS DE GARANTIE
L'accepteur, par son acceptation de Pacceiation bancaire' y contenue,
atteste que ie porteur de celleie a droit au benelice d'une garantie
(inconditionnelle al) irrevocable de la benque-mere de l'accepteur des
obligations ayant trait ou decoutant de son acceptation. Une copie dument
executee de cetto garantie peut eire consultee par le porteur a la surccursale
de l'accepteu indiquee au recto.
______________________________________
Name of Drawer/nom du treur
______________________________________
Authorized Signature/signataire autorise
______________________________________
Authorized Signature/signataire autorise
<PAGE>
EXHIBIT D
FORM OF COMMITMENT DESIGNATION NOTICE
Citibank, N.A., as US Administrative Agent
under the Credit Agreement
referred to below
1 Court Square
7th Floor/Zone 1
Long Island City, New York 11120
Telecopier No.: (718) 248-7393
Attn: Margarita Deus
[Date]
Ladies and Gentlemen:
The undersigned, Pegasus Gold Inc., a corporation formed under
the laws of British Columbia, Canada (the "CANADIAN BORROWER"), Pegasus Gold
Corporation, a Nevada corporation (the "US BORROWER") and Pegasus Gold Australia
Pty. Ltd. (formerly known as Zapopan N.L.)(ACN 009 628 924), an Australia
corporation (the "AUSTRALIAN BORROWER" and, together with the Canadian Borrower
and the US Borrower, collectively, the "BORROWERS") refer to the to the
Multicurrency Reducing Revolving Credit Agreement dated as of April 17, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT", the terms defined therein being used herein as
therein defined), among the Borrowers, the Lender Parties party thereto,
Citibank, N.A., as the US Administrative Agent, Citibank Canada, as the Canadian
Administrative Agent, Citibank Limited (ACN 004 325 080), as the Australian
Administrative Agent, ABN AMRO Australia Limited, as the Non-Pro Rata Lender and
ABN AMRO Bank N.V., Canadian Imperial Bank of Commerce, Dresdner Bank AG, New
York Branch, and The First National Bank of Chicago, as Co-Agents, and hereby
give you notice pursuant to Section 2.01(e) of the Credit Agreement that, upon
the effectiveness hereof, the Revolving Credit Facility shall be available to
each of the Borrowers as follows:
US Borrower: % (the "US PERCENTAGE")
-----
Canadian Borrower: % (the "CANADIAN PERCENTAGE")
-----
Australian Borrower: % (the "AUSTRALIAN PERCENTAGE")
-----
Total 100 %
-----
Each of the undersigned certifies that (i) the percentage of the Revolving
Credit Facility designated herein with respect to each Borrower is not less than
the percentage of the Revolving Credit Facility (including the Available Amount
of all outstanding Letters of Credit) outstanding to, and subject to pending
Notices of Borrowing, Notices of Issuance and Notices of Drawing, as applicable,
of, such Borrower either on the date hereof or on the date of effectiveness
hereof, (ii) the percentage designated with respect to the Canadian Borrower
would not permit Accommodations to the Canadian Borrower and Canadian Letters
<PAGE>
2
of Credit in excess of the Canadian Borrower Sublimit in effect on the date of
effectiveness hereof, and (iii) no Event of Default has occurred and is
continuing.
Very truly yours,
PEGASUS GOLD INC.
By
--------------------------
Title
PEGASUS GOLD CORPORATION
By
--------------------------
Title
PEGASUS GOLD AUSTRALIA PTY LTD
By
--------------------------
Title
<PAGE>
EXHIBIT D
FORM OF COMMITMENT DESIGNATION NOTICE
Citibank, N.A., as US Administrative Agent
under the Credit Agreement
referred to below
1 Court Square
7th Floor/Zone 1
Long Island City, New York 11120
Telecopier No.: (718) 248-7393
Attn: Margarita Deus
[Date]
Ladies and Gentlemen:
The undersigned, Pegasus Gold Inc., a corporation formed under
the laws of British Columbia, Canada (the "CANADIAN BORROWER"), Pegasus Gold
Corporation, a Nevada corporation (the "US BORROWER") and Pegasus Gold Australia
Pty. Ltd. (formerly known as Zapopan N.L.)(ACN 009 628 924), an Australia
corporation (the "AUSTRALIAN BORROWER" and, together with the Canadian Borrower
and the US Borrower, collectively, the "BORROWERS") refer to the to the
Multicurrency Reducing Revolving Credit Agreement dated as of April 17, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT", the terms defined therein being used herein as
therein defined), among the Borrowers, the Lender Parties party thereto,
Citibank, N.A., as the US Administrative Agent, Citibank Canada, as the Canadian
Administrative Agent, Citibank Limited (ACN 004 325 080), as the Australian
Administrative Agent, ABN AMRO Australia Limited, as the Non-Pro Rata Lender and
ABN AMRO Bank N.V., Canadian Imperial Bank of Commerce, Dresdner Bank AG, New
York Branch, and The First National Bank of Chicago, as Co-Agents, and hereby
give you notice pursuant to Section 2.01(e) of the Credit Agreement that, upon
the effectiveness hereof, the Revolving Credit Facility shall be available to
each of the Borrowers as follows:
US Borrower: % (the "US PERCENTAGE")
-----
Canadian Borrower: % (the "CANADIAN PERCENTAGE")
-----
Australian Borrower: % (the "AUSTRALIAN PERCENTAGE")
-----
Total 100 %
-----
Each of the undersigned certifies that (i) the percentage of the Revolving
Credit Facility designated herein with respect to each Borrower is not less than
the percentage of the Revolving Credit Facility (including the Available Amount
of all outstanding Letters of Credit) outstanding to, and subject to pending
Notices of Borrowing, Notices of Issuance and Notices of Drawing, as applicable,
of, such Borrower either on the date hereof or on the date of effectiveness
hereof, (ii) the percentage designated with respect to the Canadian Borrower
would not permit Accommodations to the Canadian Borrower and Canadian Letters
<PAGE>
2
of Credit in excess of the Canadian Borrower Sublimit in effect on the date of
effectiveness hereof, and (iii) no Event of Default has occurred and is
continuing.
Very truly yours,
PEGASUS GOLD INC.
By
--------------------------
Title
PEGASUS GOLD CORPORATION
By
--------------------------
Title
PEGASUS GOLD AUSTRALIA PTY LTD
By
--------------------------
Title
<PAGE>
EXHIBIT E
NOTICE OF BORROWING
Citibank, N.A., as US Administrative Agent
under the Credit Agreement
referred to below
1 Court Square
7th Floor/Zone 1
Long Island City, New York 11120
Telecopier No.: (718) 248-7393
Attn: Margarita Deus
[Date]
Ladies and Gentlemen:
The undersigned, [Name of Borrower], refers to the Multicurrency
Reducing Revolving Credit Agreement dated as of April 17, 1996 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT", the terms defined therein being used herein as therein
defined), among the undersigned, [Pegasus Gold Inc., a corporation formed under
the laws of British Columbia, Canada], [and] [Pegasus Gold Corporation, a Nevada
corporation] [and] [Pegasus Gold Pty Ltd, an Australia corporation] as the
Borrowers, certain Lender Parties party thereto, Citibank, N.A., as the US
Administrative Agent, Citibank Canada, as the Canadian Administrative Agent,
Citibank Limited (ACN 004 325 080), as the Australian Administrative Agent, ABN
AMRO Australia Limited, as the Non-Pro Rata Lender and ABN AMRO Bank N.V.,
Canadian Imperial Bank of Commerce, Dresdner Bank AG, New York Branch, and The
First National Bank of Chicago, as Co-Agents, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"PROPOSED BORROWING") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________
__, 199_.
(ii) The currency of the Proposed Borrowing is
[US$][A$][CN$].
(iii) The Type of Advances comprising the Proposed Borrowing
is [Bank Bill Rate][US Base Rate][Canadian Base Rate][Canadian Prime
Rate][Australian Prime Rate][Eurodollar Rate][Advances].
(iv) The aggregate amount of the Proposed Borrowing is
[US$__________] [A$____________][CN$___________].
[(v) The initial Interest Period for each [Bank Bill Rate
Advance] [Eurodollar Rate Advance] made as part of the Proposed
Borrowing is [__ days][__________ month[s].]
<PAGE>
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in each
Loan Document are correct on and as of the date of the Proposed
Borrowing, before and after giving effect to the Proposed Borrowing and
to the application of the proceeds therefrom, as though made on and as
of such date other than any such representations or warranties that, by
their terms, are made as of a specific date other than the date of the
Proposed Borrowing, in which case, as of such specific date; and
(B) no event has occurred and is continuing, or would result
from such Proposed Borrowing or from the application of the proceeds
therefrom, that constitutes a Default.
Very truly yours,
[NAME OF BORROWER]
By
----------------------------
- -----
Title:
<PAGE>
EXHIBIT F
FORM OF NOTICE OF DRAWING
Citibank, N.A., as US Administrative Agent
under the Credit Agreement
referred to below
1 Court Square
7th Floor/Zone 1
Long Island City, New York 11120
Telecopier No.: (718) 248-7393
Attn: Margarita Deus
[Date]
Ladies and Gentlemen:
The undersigned, Pegasus Gold Inc., a corporation formed under
the laws of British Columbia, Canada, refers to the Multicurrency Reducing
Revolving Credit Agreement dated as of April 17, 1996 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"; terms defined therein unless otherwise defined herein being used
herein as therein defined) among the undersigned, Pegasus Gold Corporation, a
Nevada corporation, Pegasus Gold Australia Pty. Ltd., an Australia corporation,
the Lender Parties parties thereto, Citibank, N.A., as the US Administrative
Agent, Citibank Canada, as the Canadian Administrative Agent, Citibank Limited
(ACN 004 325 080), as the Australian Administrative Agent, ABN AMRO Australia
Limited, as the Non-Pro Rata Lender and ABN AMRO Bank N.V., Canadian Imperial
Bank of Commerce, Dresdner Bank AG, New York Branch, and The First National Bank
of Chicago, as Co-Agents, and hereby gives you notice, irrevocably, pursuant to
Section 2.03 of the Credit Agreement that the undersigned hereby requests a
Drawing under the Credit Agreement and, in that connection, sets forth below the
information relating to such Drawing (the "PROPOSED DRAWING") as required by
Section 2.03(a) of the Credit Agreement:
(i) The Business Day of the Proposed Drawing is ___________,
____.
(ii) The aggregate Face Amount of the Proposed Drawing is
CN$__________.
(iii) The initial Maturity Date for each BA Obligation
comprising part of the Proposed Drawing is [30][60][90][180 [if
available to all Canadian Lenders purchasing Bankers' Acceptances in
connection with the Proposed Drawing]] days.
The undersigned hereby certifies that the following statements
are true on the date of this Notice of Drawing and will be true on the date of
the Proposed Drawing:
(A) the representations and warranties contained in each
Loan Document are correct on and as of such date, before and after
giving effect to such Proposed Drawing and to the application of the
proceeds therefrom, as though made on and as of such date other than any
such
<PAGE>
2
representations or warranties that, by their terms, are made as of a
specific date other than the date of the Proposed Drawing, in which
case, as of such specific date; and
(B) no event has occurred and is continuing, or would result
from the Proposed Drawing, or from the application of the proceeds
therefrom, that constitutes a Default.
Very truly yours,
PEGASUS GOLD INC.
By
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT G
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of April 17, 1996 made by Pegasus Gold
Inc., a company organized under the laws of British Columbia, Canada ("PGI"),
Pegasus Gold Corporation, a Nevada corporation and wholly owned subsidiary of
PGI ("PGC"), Pegasus Gold Australia Pty Ltd (formerly known as Zapopan N.L.)
(ACN 009 628 924), an Australian corporation and wholly owned subsidiary of PGI
("PGA"), Beal Mountain Mining, Inc., a Montana corporation ("BEAL MOUNTAIN"),
Black Pine Mining, Inc., a Nevada corporation ("BLACK PINE"), Florida Canyon
Mining, Inc., a Washington corporation ("FLORIDA CANYON"), Montana Tunnels
Mining, Inc., a Nevada corporation ("MONTANA TUNNELS"), Zortman Mining, Inc., a
Montana corporation ("ZORTMAN"), Pangea International Holdings Corporation, a
Nevada corporation ("PANGEA HOLDINGS"), Pegasus Gold Montana Mining, Inc., an
Arizona corporation ("MONTANA MINING"), Diamond Hill Mining, Inc., a Montana
corporation ("DIAMOND HILL") and Pegasus Gold International, Inc., a Washington
corporation ("PG INTERNATIONAL" and, together with PGI, PGC, PGA, Beal Mountain,
Black Pine, Florida Canyon, Montana Tunnels, Zortman, Pangea Holdings, Montana
Mining, Diamond Hill and each other person or entity hereafter agreeing to be
bound by the terms hereof, each a "PLEDGOR" and collectively, the "PLEDGORS") to
Citibank, N.A. ("CITIBANK"), as collateral agent (in such capacity together
with any successor in such capacity the "US COLLATERAL AGENT") for the Lender
Parties and the other Collateral Agents (as such terms are defined in the
Credit Agreement referred to below) and for the Existing Hedge Bank (as defined
below; such Lender Parties, Collateral Agents and Existing Hedge Bank, together
with the US Collateral Agent, each a "SECURED PARTY" and, collectively, the
"SECURED PARTIES").
PRELIMINARY STATEMENTS:
(1) PGI, PGC and PGA (each a "BORROWER" and, collectively,
the "BORROWERS") have entered into a Multicurrency Reducing Revolving Credit
Agreement dated as of April 17, 1996 (said Agreement, as it may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "CREDIT AGREEMENT"; capitalized terms used and not otherwise
defined herein have the meanings assigned to such terms in the Credit Agreement)
with the Lenders and Issuing Banks party thereto, Citibank Canada, as Canadian
Administrative Agent, Citibank Limited, as Australian Administrative Agent,
Citibank, as US Administrative Agent for the Lender Parties, ABN AMRO Australia
Limited, as the Non-Pro Rata Lender and ABN AMRO Bank N.V., Canadian Imperial
Bank of Commerce, Dresdner Bank AG, New York Branch, and The First National Bank
of Chicago, as Co-Agents. Pursuant to the Credit Agreement, the Lenders and the
Issuing Banks will, among other things and subject to the terms and conditions
set forth in the Credit Agreement, make Accommodations for the respective
accounts of the Borrowers and issue Letters of Credit for the respective
accounts of the Borrowers.
(2) Each Pledgor is the owner of the shares of stock
described and attributed to such Pledgor's ownership in Schedule I hereto (all
of such shares of the Pledgors, collectively, the "PLEDGED SHARES"). The
Pledgors, or any of them, may hereafter from time to time pledge other shares of
stock in PGA or, in accordance with Section 5.01(m) of the Credit Agreement, any
future Restricted Subsidiary incorporated under the laws of Australia or any
territory thereof, which may be identified in a notice in the form of Annex I
hereto ("NOTICE OF IDENTIFICATION") from the US Collateral Agent to the
applicable Pledgor given after the date of this Agreement (any such shares so
identified being "IDENTIFIED SHARES").
<PAGE>
(3) PGC has previously entered into a Hedge Agreement with
Chemical Bank (the "EXISTING HEDGE BANK"), the obligations under which are to be
secured hereby.
(4) It is a condition precedent to the making of
Accommodations and the issuance of Letters of Credit by the Lender Parties under
the Credit Agreement that each Pledgor shall have granted the assignment and
security interest and made the pledge and assignment contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to enter into the Credit Agreement, and to make
Accommodations and issue Letters of Credit from time to time thereunder, the
Pledgors hereby agree with the US Collateral Agent for its benefit and the
ratable benefit of the Secured Parties as follows:
SECTION 1. GRANT OF SECURITY. Each Pledgor hereby assigns and
pledges (and agrees to assign and pledge) to the US Collateral Agent for its
benefit and the ratable benefit of the Secured Parties, and hereby grants (and
agrees to grant) to the US Collateral Agent for its benefit and the ratable
benefit of the Secured Parties a security interest in, all of such Pledgor's
right, title and interest, whether now existing or hereafter arising and
wherever located, in and to the following (collectively, the "COLLATERAL"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;
(b) all Identified Shares described in each Notice of
Identification (unless, with respect to the Identified Shares identified
in any such Notice of Identification, the Pledgor receiving such Notice
provides the US Collateral Agent with written notice of such Pledgor's
rejection of such Notice of Identification prior to 9:00 a.m. New York
City time on the Business Day following receipt by such Pledgor of such
Notice), and the certificates representing such Identified Shares, and
all dividends, cash, instruments and other rights and property from time
to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such Identified Shares;
(c) all additional shares of stock of any issuer of Pledged
Shares and of any Person being designated as a Restricted Subsidiary
pursuant to Section 5.01(m) of the Credit Agreement and all options to
acquire any such shares of stock from time to time acquired by such
Pledgor in any manner after the date of this Agreement or which become
owned legally or beneficially by such Pledgor or by any Person
(including, without limitation, a trustee, nominee, broker or agent) on
behalf of such Pledgor, and the certificates representing such
additional shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such shares;
(d) all rights of such Pledgor arising under any
shareholders' agreement relating to Collateral of such Pledgor; and
(e) all proceeds of any and all of the foregoing Collateral
(including without limitation proceeds that constitute property and
assets of the types described in clauses (a) through (d) of this Section
1);
2
<PAGE>
PROVIDED, HOWEVER, that the foregoing clauses (a) through (e) shall not apply to
the capital stock of any Foreign Subsidiary to the extent (and only to such
extent) that the application of such clauses would require the pledge hereunder
of more than 65% of each class of the capital stock of any Foreign Subsidiary.
All Identified Shares and additional shares of stock or other securities pledged
to the US Collateral Agent pursuant to the terms of this Agreement shall
constitute "Pledged Shares" for all purposes of this Agreement from and after
the date of such pledge.
SECTION 2. SECURITY FOR OBLIGATIONS; LIMITED SECURITY. (a)
The Collateral pledged by each Pledgor pursuant to this Agreement secures the
payment of all Obligations of such Pledgor now or hereafter existing under (a)
the Loan Documents (including any amendments, modifications, extensions,
substitutions or renewals thereof), whether direct or indirect, absolute or
contingent and whether for principal (including, without limitation,
reimbursement of, and providing cash collateral for, amounts drawn or available
to be drawn under Letters of Credit or amount owing in respect of BA
Obligations), interest (including, without limitation, interest that, but for
the filing of a petition in bankruptcy would accrue on such obligations), fees,
expenses, charges, indemnification obligations or otherwise, and (b) the
Existing Hedge Agreements (all such Obligations under the foregoing clauses (a)
and (b) being the "SECURED OBLIGATIONS"). Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts that constitute
part of the Secured Obligations and would be owed by any Pledgor to the US
Collateral Agent or any Secured Party under the Loan Documents or the Existing
Hedge Agreements but for the fact that they are unenforceable or they are not
allowable due to the existence of an Insolvency Event or a bankruptcy,
reorganization or similar proceeding.
(b) Any provision hereof to the contrary notwithstanding,
the amount of the Secured Obligations is a limited amount. At any time until
this Agreement is released in accordance with Section 17, that limited amount is
the sum of all amounts then falling within the definition of Secured Obligations
which: (i) were present liabilities (within the meaning of Section 261 of the
Australian Corporations Law) at the time of execution of this charge, or (ii)
were, at the time of execution of this charge, prospective liabilities (within
the meaning of Section 261 of the Australian Corporations Law) of the nature
specified below up to the maximum amount specified below:
Nature of liabilities: The liabilities of any Pledgor to:
(A) repay all Advances which are made to it under the
Credit Agreement and amounts to be reimbursed or paid (including
the requirement to provide cash collateral) in respect of
amounts drawn or available to be drawn under Letters of Credit
or amounts owing in respect of BA Obligations;
(B) pay interest on those Advances and other amounts
payable under the Credit Agreement;
(C) pay moneys owing under the Credit Agreement, the
Notes, the Guaranty, this Agreement, any Bank Hedge Agreement,
any other Loan Document or any Existing Hedge Agreement;
(D) pay or reimburse any Secured Party for all costs,
charges and expenses and all indemnity obligations incurred in
connection with the Credit Agreement, the Guaranty, this
Agreement or any other Loan Document.
3
<PAGE>
Maximum amount: US$1,000,000,000 (or the Equivalent thereof in
any other currency or in US Dollars and any combination of any
other currencies).
SECTION 3. DELIVERY OF COLLATERAL. All certificates or
instruments representing or evidencing the Collateral shall be delivered to and
held by or on behalf of the US Collateral Agent pursuant to this Agreement and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the US Collateral Agent. The certificates
representing the Pledged Shares identified on Schedule I (and any shares
identified in a Notice of Identification delivered prior to the Closing Date)
shall be so delivered to the US Collateral Agent on or prior to the Closing Date
and all other such certificates or instruments shall be delivered to the US
Collateral Agent within five Business Days of any Pledgor obtaining possession
thereof. During the continuance of any Event of Default (or at any time if
deemed necessary by the US Collateral Agent to perfect the security interests
granted hereunder in any Collateral), (a) the US Collateral Agent shall have the
right, at any time in its discretion and without notice to any Pledgor, to
transfer to or to register in the name of the US Collateral Agent or any of its
nominees any or all of the Collateral subject only to the revocable rights
specified in Section 7(a), and (b) if requested by the US Collateral Agent, each
Pledgor shall promptly take or cause to be taken any action necessary to cause
any Collateral designated by the US Collateral Agent to be registered in the
name of the US Collateral Agent or such of its nominees as the US Collateral
Agent shall direct, subject only to the revocable rights specified in Section
7(a). In addition, the US Collateral Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Pledgor
represents and warrants as follows:
(a) The chief place of business and chief executive office
of such Pledgor are located at the address specified for such Pledgor in
Schedule II.
(b) Such Pledgor is the legal and beneficial owner of the
Collateral pledged by it hereunder free and clear of any Lien. No
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the US Collateral
Agent relating to this Agreement or any other Loan Document.
(c) The Pledged Shares and any other shares of stock pledged
to the US Collateral Agent pursuant to the terms of this Agreement have
been duly authorized and validly issued and are fully paid and
non-assessable. There are no existing options, warrants, calls or
commitments of any character whatsoever relating to the Pledged Shares.
(d) The Pledged Shares constitute the percentage of the
outstanding capital stock of the issuer thereof indicated on Schedule I
and the Identified Shares constitute the percentage of the outstanding
capital stock of the issuer thereof indicated on the Notice of
Identification with respect to such Identified Shares.
4
<PAGE>
(e) There is no unanimous shareholder agreement which
restricts, in whole or in part, the powers of the directors of any
Pledgor or of any issuer of Pledged Shares to manage or supervise the
business and affairs of such Pledgor or such issuer, as the case may be.
(f) Such Pledgor does not have or use a french form or name
or a combined english and french form of name.
(g) Such Pledgor benefits by the execution of this
Agreement.
SECTION 5. FURTHER ASSURANCES. (a) Each Pledgor agrees that
from time to time, at the expense of such Pledgor, it will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the US Collateral Agent may reasonably
request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted hereby or to enable the US
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
each Pledgor will: (i) at the request of the US Collateral Agent, mark
conspicuously each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to the US Collateral Agent, indicating that such
Collateral is subject to the security interest granted hereby; (ii) if any
Collateral shall be evidenced by a promissory note or other instrument, deliver
and pledge to the US Collateral Agent hereunder such note or instrument duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the US Collateral Agent; and (iii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments, forms or notices, as may be necessary or
desirable, or as the US Collateral Agent may reasonably request, in order to
perfect and preserve the pledge, assignment and security interest granted or
purported to be granted hereby or to register this Agreement as a charge on any
appropriate register.
(b) Each Pledgor hereby authorizes the US Collateral Agent
to file one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Collateral without the signature of
such Pledgor where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) Each Pledgor will furnish to the US Collateral Agent
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as the
US Collateral Agent may reasonably request, all in detail satisfactory to the US
Collateral Agent.
SECTION 6. PLACE OF PERFECTION; RECORDS. Each Pledgor shall
keep its chief place of business and chief executive office and the office where
it keeps its records concerning the Collateral at the location therefor
specified in Section 4(a) or, upon 30 days' prior written notice to the US
Collateral Agent, at such other locations in a jurisdiction where all actions
required by Section 5 shall have been taken with respect to the Collateral.
Each Pledgor will hold and preserve such records and will permit representatives
of the US Collateral Agent at any time during normal business hours to inspect
and make abstracts from such records.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC. (a) Prior to the
delivery of the notice referred to in Section 7(c):
5
<PAGE>
(i) Each Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral of such
Pledgor or any part thereof for any purpose not inconsistent with the
terms of this Agreement or the other Loan Documents; PROVIDED, HOWEVER,
that such Pledgor shall not exercise or refrain from exercising any such
right if such action would have a material adverse effect on the value
of the Collateral or any part thereof.
(ii) The US Collateral Agent shall execute and deliver (or
cause to be executed and delivered) to the relevant Pledgor all such
proxies and other instruments as such Pledgor may reasonably request for
the purpose of enabling such Pledgor to exercise the voting and other
rights that it is entitled to exercise pursuant to paragraph (i) above.
(b) Any and all dividends paid or payable other than as
permitted by the Credit Agreement shall be, and shall be forthwith
delivered to the US Collateral Agent to hold as, Collateral and shall,
if received by any Pledgor, be received in trust for the benefit of the
US Collateral Agent, be segregated from the other property or funds of
such Pledgor and be forthwith delivered to the US Collateral Agent as
Collateral in the same form as so received (with any necessary
indorsement).
(c) Upon notice to any Pledgor by the US Collateral Agent
following the occurrence and during the continuance of an Event of Default, all
rights of such Pledgor to exercise or refrain from exercising the voting and
other consensual rights that it would otherwise be entitled to exercise pursuant
to Section 7(a)(i) shall cease (and any proxies previously delivered by the US
Collateral Agent pursuant to Section 7(a)(ii) shall become ineffective), and all
such rights shall thereupon become vested in the US Collateral Agent, which
shall thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights.
SECTION 8. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES. (a)
Except as permitted by the Credit Agreement, no Pledgor shall (i) sell, assign
(by operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Collateral, or (ii) create or suffer to exist any
Lien upon or with respect to any of the Collateral except for the pledge,
assignment and security interest created by this Agreement.
(b) Each Pledgor shall (i) from and after the Closing Date,
cause each issuer of the Pledged Shares not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares, except to
such Pledgor, and (ii) upon its acquisition (directly or indirectly) of any
additional shares of such issuer's stock or other securities, deliver or
otherwise transfer such shares to the US Collateral Agent in accordance with
Section 3 hereof.
SECTION 9. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each
Pledgor hereby irrevocably appoints the US Collateral Agent such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time during the
continuance of an Event of Default in the US Collateral Agent's discretion, to
take any action and to execute any instrument that the US Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Agreement.
SECTION 10. COLLATERAL AGENT MAY PERFORM. If any Pledgor fails
to perform any agreement contained herein, the US Collateral Agent may itself
(but shall not be obligated to) perform,
6
<PAGE>
or cause performance of, such agreement, and the expenses of the US
Collateral Agent incurred in connection therewith shall be payable by such
Pledgor under Section 14(b).
SECTION 11. THE COLLATERAL AGENTS' DUTIES. The powers
conferred on the US Collateral Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the US
Collateral Agent shall have no duty as to any Collateral, as to ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Collateral, whether or not the US Collateral
Agent or any Secured Party has or is deemed to have knowledge of such matters,
or as to the taking of any necessary steps to preserve rights against any
parties or any other rights pertaining to any Collateral. The US Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Citibank accords its own property.
SECTION 12. REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) (i) The US Collateral Agent may exercise in respect of
the Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code in effect
in the State of New York at such time (the "N.Y. UNIFORM COMMERCIAL
CODE") (whether or not the N.Y. Uniform Commercial Code applies to the
affected Collateral) and also may (A) require each Pledgor to, and such
Pledgor hereby agrees that it will at its expense and upon request of
the US Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the US Collateral Agent and make it available
to the US Collateral Agent at a place to be designated by the US
Collateral Agent that is reasonably convenient to both parties and (B)
without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any of
the US Collateral Agent's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the US Collateral
Agent may deem commercially reasonable. Each Pledgor agrees that
(except as otherwise provided in Section 12(h)), to the extent notice of
sale shall be required by law, at least ten days' notice to such Pledgor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The US Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The US
Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned.
(ii) Each Pledgor recognizes that, by reason of
certain prohibitions contained in the Securities Act of 1933, as
from time to time amended (the "SECURITIES ACT"), the Securities
Act (Ontario), the Securities Act (British Columbia), the
Australian Corporations Law and other applicable foreign, state,
provincial or territorial securities laws (collectively,
including the Securities Act, the "APPLICABLE SECURITIES LAWS"),
the US Collateral Agent may be compelled, with respect to any
sale of all or any part of the Collateral conducted without
prior registration or qualification of such Collateral under the
Securities Act or any other Applicable Securities Laws, to limit
purchasers to those
7
<PAGE>
who will agree, among other things, to acquire the Collateral for their
own account, for investment and not with a view to the distribution or
resale thereof. Each Pledgor acknowledges that any such private sales
or otherwise restricted or limited sales may be at prices and on terms
less favorable to the US Collateral Agent than those obtainable through
a public sale without such restrictions (including, without limitation,
a public offering made pursuant to a registration statement under the
Securities Act) and, notwithstanding such circumstances, such Pledgor
agrees that any such private sale or otherwise restricted or limited
sale shall be deemed to have been made in a commercially reasonable
manner and that the US Collateral Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the issuer thereof
to register it for a form of public sale requiring registration under
the Securities Act or under any other Applicable Securities Laws even if
the issuer of the applicable Collateral would agree to do so.
(iii) If the US Collateral Agent determines to exercise its
right to sell any or all of the Collateral, upon written request, each
Pledgor shall and shall cause each issuer of the Pledged Shares from
time to time to furnish to the US Collateral Agent all such information
as the US Collateral Agent may reasonably request in order to determine
the number of shares and other instruments included in the Collateral
which may be sold by the US Collateral Agent as exempt transactions
under the Securities Act and the rules of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect, and
under any other Applicable Securities Laws.
(b) All cash proceeds received by the US Collateral Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the Collateral may, in the discretion of the US
Collateral Agent, be held by the US Collateral Agent as collateral for,
and/or then or at any time thereafter applied (after payment of any
amounts payable to the US Collateral Agent pursuant to Section 14) in
whole or in part by the US Collateral Agent for the ratable benefit of
the Secured Parties against, all or any part of the Secured Obligations
in such order as the US Collateral Agent shall elect; PROVIDED, HOWEVER,
that the US Collateral Agent shall not in any event be required or have
any obligation to make any distribution in respect of (or to include in
any calculation of the aggregate Secured Obligations then outstanding)
any Secured Obligations arising under any Existing Hedge Agreement
unless the US Collateral Agent has, at the time of any distribution of
proceeds received in respect of the Collateral, received written notice
from the holder of such Secured Obligations as to amounts due and owing
thereunder. Any surplus of such cash or cash proceeds held by the US
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) The US Collateral Agent may exercise any and all rights
and remedies of any Pledgor under or in respect of the Collateral.
(d) All payments received by any of the Pledgors under or in
respect of the Collateral shall be received in trust for the benefit of
the US Collateral Agent and the other Secured Parties, shall be
segregated from other funds of such Pledgor and shall be forthwith paid
over to the US Collateral Agent in the same form as so received (with
any necessary indorsement).
8
<PAGE>
(e) If the US Collateral Agent exercises its rights under
this Agreement, exercises its rights conferred by law or takes
possession of the Collateral, then it is not liable to account under the
laws of Australia or any territory thereof as mortgagee in possession.
(f) The US Collateral Agent may, in accordance with Section
8.01 of the Credit Agreement, release the Collateral, or any of it, at
any time.
(g) A purchaser from or other person dealing with the US
Collateral Agent or any attorney appointed under this Agreement or a
person to whom is tendered for registration an instrument duly executed
by any of them need not inquire: (i) whether the Secured Obligations
are in fact owing or payable, (ii) whether default has occurred, (iii)
whether a right, power or remedy which they have exercised or purported
to exercise has been properly exercised, or (iv) about any other thing
in connection with the exercise or purported exercise of a right, power
or remedy.
(h) With respect to any Pledged Shares issued by a
corporation incorporated under the laws of Australia or any territory
thereof ("AUSTRALIAN SHARES"), the US Collateral Agent need not give
notice or a demand to the Pledgor of such Collateral, or allow time to
elapse, before exercising any right, power or remedy under this
Agreement or conferred by law, unless notice or demand or a lapse of
time is required by a law which cannot be excluded. If the law
requires, with respect to any Australian Shares, that a period of notice
must be given or a lapse of time must occur or be permitted before a
right, power or remedy under this Agreement or conferred by law may be
exercised, then, with respect only to any Australian Shares:
(i) when a period of notice or lapse of time is mandatory,
that period of notice must be given or that lapse of
time must be permitted by the US Collateral Agent; or
(ii) when the law provides that a period of notice or lapse
of time may be stipulated or fixed by this agreement,
ten days is stipulated and fixed as that period of
notice or lapse of time and, without limitation, where
applicable, ten days is stipulated and fixed as the
period of notice or lapse of time during which:
(A) default must continue before a notice is given or
requirement otherwise made for payment of any
Secured Obligation or the observance of
obligations under this Agreement; and
(B) a notice or requirement for payment of any Secured
Obligation or the observance of obligations under
this Agreement must remain not complied with
before the US Collateral Agent's rights, powers
or remedies may be exercised.
The title of any person relying on this Section is not affected by express or
constructive notice of anything in connection with the matters referred to
above.
SECTION 13. REGISTRATION RIGHTS. If the US Collateral Agent
shall determine to exercise its right to sell all or any of the Collateral
consisting of shares of an issuer incorporated in the
9
<PAGE>
United States pursuant to Section 12, each Pledgor agrees that, upon request of
the US Collateral Agent, such Pledgor will, at its own expense:
(a) execute and deliver, and cause each issuer of the
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be
reasonably necessary or, in the opinion of the US Collateral Agent,
advisable to register such Collateral under the provisions of the
Securities Act of 1933, as from time to time amended (the "SECURITIES
ACT"), to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses are
required by law to be furnished and to make all amendments and
supplements thereto and to the related prospectus that, in the opinion
of the US Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable
thereto;
(b) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
the US Collateral Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act;
(d) provide the US Collateral Agent with such other
information and projections as may be reasonably necessary or, in the
opinion of the US Collateral Agent, advisable to enable the US
Collateral Agent to effect the sale of such Collateral; and
(e) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Collateral or any part thereof
valid and binding and in compliance with applicable law.
The US Collateral Agent is authorized, in connection with any sale of the
Collateral pursuant to Section 12, to deliver or otherwise disclose to any
prospective purchaser of the Collateral (i) any registration statement or
prospectus, and all supplements and amendments thereto, prepared pursuant to
clause (a) above, (ii) any information and projections provided to it pursuant
to clause (d) above and (iii) any other information in its possession relating
to the Collateral.
SECTION 14. INDEMNITY AND EXPENSES. (a) Each Pledgor agrees
to indemnify the US Collateral Agent from and against any and all claims, losses
and liabilities arising out of, resulting from or otherwise relating to this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the US Collateral Agent's gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.
(b) Each Pledgor will upon demand pay to the US Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that the US
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other
10
<PAGE>
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the US Collateral Agent or the Secured Parties hereunder or
(iv) the failure by such Pledgor to perform or observe any of the provisions
hereof.
SECTION 15. AMENDMENTS; WAIVERS; ETC. (a) No amendment or
waiver of any provision of this Agreement, and no consent to any departure by
any Pledgor herefrom, shall in any event be effective unless the same shall be
in writing and signed by the US Collateral Agent (with the consent or at the
direction of the Required Lenders) and, in the case of any such amendment, by
each Pledgor (except as set forth in Section 15(b)), and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of the US Collateral Agent to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.
(b) Upon the execution and delivery to the US Administrative
Agent by any Person of an Amendment to Pledge Agreement in substantially the
form of Exhibit M to the Credit Agreement, which Amendment to Pledge Agreement
need not be executed by any other Pledgor, such Person shall be and become a
Pledgor hereunder, and each reference in this Agreement to a "Pledgor" shall
include such Person and each reference in any other Loan Document to a "Pledgor"
or a "Loan Party" shall include such Person.
SECTION 16. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and, mailed, telegraphed, telecopied,
telexed, cabled or delivered to the applicable Pledgor or to the US Collateral
Agent, as the case may be, in each case addressed to it at its address specified
in Section 8.02 of the Credit Agreement (in the case of the US Collateral Agent
and each of the Borrowers) or its address specified on the signature pages
hereof or on the Amendment to Pledge Agreement pursuant to which it became a
Pledgor hereunder (in the case of each other Pledgor) or, as to any party, at
such other address as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this Section. All
such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, respectively, be effective when deposited in the
mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or delivered to the cable company, respectively, addressed as
aforesaid.
SECTION 17. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE
CREDIT AGREEMENT. This Agreement shall create a continuing security interest in
the Collateral and shall, subject to Section 8.01 of the Credit Agreement, (a)
remain in full force and effect until the payment in full in cash of all
Obligations under the Loan Documents, the termination of the Commitments and the
expiration or termination of all Letters of Credit and BA Obligations (it being
understood that each Bank Hedge Agreement and Existing Hedge Agreement shall,
unless a Default under Section 6.01(f) of the Credit Agreement then exists,
cease to be a Loan Document for purposes hereof and cease to be secured hereby
upon the payment in full in cash of all Obligations under the Credit Agreement,
the Notes and the termination of the Commitments, and the expiration or
termination of all Letters of Credit and BA Obligations), (b) be binding upon
each Pledgor, its successors and assigns and (c) inure, together with the rights
and remedies of the US Collateral Agent hereunder, to the benefit of the US
Collateral Agent, the Secured Parties and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), subject to Section 8.07 of the Credit Agreement, any Lender Party
11
<PAGE>
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitment, and the Accommodations owing to it and the Note
or Notes held by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
Party herein or otherwise, in each case as provided in Section 8.07 of the
Credit Agreement. Each Pledgor acknowledges that upon any Person becoming a
Lender Party such Person shall be a Secured Party hereunder.
SECTION 18. TERMINATION; RELEASE. (a) Upon the Collateral
Release Date, if any, or upon the payment in full in cash of all Obligations
under the Loan Documents, the termination of the Commitments and the expiration
or termination of all Letters of Credit and BA Obligations, the pledge,
assignment and security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the relevant Pledgor. Upon any such
termination, the US Collateral Agent will, at the relevant Pledgor's expense,
execute and deliver to such Pledgor such documents as such Pledgor shall
reasonably request to evidence such termination.
(b) The US Collateral Agent shall, upon the request of PGI,
release from the Lien hereunder any redeemable preferred stock that is redeemed
in accordance with Section 5.02(g)(iii) of the Credit Agreement (and shall, to
the extent then in the possession of the US Collateral Agent, deliver to the
applicable Pledgor the certificates representing such redeemable preferred
stock).
SECTION 19. GOVERNING LAW; TERMS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
except to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral is
governed by the laws of a jurisdiction other than the State of New York. Unless
otherwise defined herein or in the Credit Agreement, terms used in Article 8 or
Article 9 of the N.Y. Uniform Commercial Code are used herein as therein
defined.
SECTION 20. JURISDICTION, ETC. (a) SUBMISSION TO
JURISDICTION. Each Pledgor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or any of the other Loan Documents to which
it is a party, or for recognition or enforcement of any judgment, and each
Pledgor hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in any such New
York State court or, to the extent permitted by law, in such federal court.
Each Pledgor agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Each Pledgor hereby agrees that service
of process in any such action or proceeding may be made upon CT Corporation
Systems, 1633 Broadway, New York, New York 10019 (the "PROCESS AGENT") and each
Pledgor hereby irrevocably appoints the Process Agent its authorized agent to
accept such service of process, and agrees that the failure of the Process Agent
to give any notice of any such service of process shall not impair or affect the
validity of such service or of any judgment rendered in any action or proceeding
based thereon. Each Pledgor hereby further irrevocably consents to the service
of process in any action or proceeding in such courts by the mailing thereof by
any parties hereto by registered or certified mail, postage prepaid, to such
Pledgor at its address specified pursuant to Section 16. Nothing in this
Agreement shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Agreement or any of the other Loan
Documents in the courts of any jurisdiction. To the extent that any Pledgor has
or hereafter may
12
<PAGE>
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, such Pledgor hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the other Loan Documents.
(b) WAIVERS REGARDING VENUE, INCONVENIENT VENUE. Each Pledgor
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party in any New
York State or federal court. Each Pledgor hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 21. JUDGMENT. (a) RATE OF EXCHANGE. If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum due
hereunder, under any Note or Notes or under any other Loan Document (including,
without limitation, all or any part of the Guaranteed Obligations) in another
currency into US Dollars, Canadian Dollars or Australian Dollars, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which, in accordance with normal banking
procedures, a Lender Party could purchase such other currency with US Dollars in
New York City, New York or Canadian Dollars in Toronto, Ontario at 9:00 A.M.
(New York City time or Toronto time, respectively) or Australian Dollars in
Sydney, Australia at 9:00 A.M. (Sydney time), as the case may be, on the
Business Day immediately preceding that on which final judgment is given,
together with any premiums and costs of exchange payable in connection with such
purchase.
(b) INDEMNITY. The obligation of each Pledgor in respect of
any sum due from it to any Secured Party hereunder, under any Note or Notes or
under any other Loan Document shall, notwithstanding any judgment in a currency
other than US Dollars, Canadian Dollars or Australian Dollars, as the case may
be, be discharged only to the extent that on the Business Day next succeeding
receipt by such Secured Party of any sum adjudged to be so due in such other
currency, such Secured Party may, in accordance with normal banking procedures,
purchase US Dollars, Canadian Dollars or Australian Dollars, as the case may be,
with such other currency. If the US Dollars, Canadian Dollars or Australian
Dollars, as the case may be, so purchased are less than the sum originally due
to such Secured Party in US Dollars, Canadian Dollars or Australian Dollars, as
the case may be, each Pledgor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Secured Party against such
loss, and if the US Dollars, Canadian Dollars or Australian Dollars so purchased
exceed the sum originally due to any Secured Party in US Dollars, Canadian
Dollars or Australian Dollars, as the case may be, such Secured Party agrees to
remit to such Pledgor such excess.
SECTION 22. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement or any other Loan Document or any consent, waiver or amendment
relating hereto or thereto by telecopier shall be effective as delivery of a
manually executed counterpart of this Agreement, such other Loan Document or
such consent, waiver or amendment, as the case may be.
13
<PAGE>
SECTION 23. WAIVER OF JURY TRIAL. Each Pledgor hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement, any of the Loan Documents, the transactions
contemplated hereby or thereby or the actions of the US Collateral Agent or any
other Secured Party in the negotiation, administration, performance or
enforcement hereof or thereof.
SECTION 24. ACKNOWLEDGMENT. Each Pledgor hereby
acknowledges receipt of a copy of this Agreement and, with respect to PGI, a
copy of the financing statements or verification statements registered under the
Personal Property Security Acts of British Columbia and Ontario in respect of
the security interests created by PGI hereby.
14
<PAGE>
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
PEGASUS GOLD INC.
By
-----------------------------
Title:
PEGASUS GOLD CORPORATION
By
-----------------------------
Title:
SIGNED, SEALED and DELIVERED )
on behalf of PEGASUS GOLD )
AUSTRALIA PTY LTD by its ) -----------------------------
attorney in the presence of: ) Signature:
Print Name:
- -----------------------------
Witness:
Print Name:
BEAL MOUNTAIN MINING, INC.
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
S-1
<PAGE>
BLACK PINE MINING, INC.
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
FLORIDA CANYON MINING, INC.
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
MONTANA TUNNELS MINING, INC.
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
S-2
<PAGE>
ZORTMAN MINING, INC.
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
PANGEA INTERNATIONAL
HOLDINGS CORPORATION
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
PEGASUS GOLD MONTANA MINING, INC.
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
S-3
<PAGE>
DIAMOND HILL MINING, INC.
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
PEGASUS GOLD INTERNATIONAL, INC.
By
-----------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
S-4
<PAGE>
SCHEDULE I
PLEDGED SHARES
<TABLE>
STOCK CERTIFICATE PERCENTAGE OF
NO(S). NUMBER OF SHARES OUTSTANDING SHARES
PLEDGOR ISSUER CLASS OF STOCK ------ ---------------- ------------------
- ------- ------ --------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE I
LOCATION OF CHIEF EXECUTIVE OFFICE
<PAGE>
ANNEX I
FORM OF NOTICE OF IDENTIFICATION
Date: [ ]
----
To: [Insert Name and Address of Applicable Pledgor]
Re: Identified Shares under the Pledge Agreement dated as of April 17, 1996
(as amended, supplemented or otherwise modified from time to time, the
"PLEDGE AGREEMENT") made by Pegasus Gold Inc., a Canadian corporation,
Pegasus Gold Corporation, a Nevada corporation and wholly owned
subsidiary of PGI, Pegasus Gold Australia Pty. Ltd. (formerly known as
Zapopan N.L.) (ACN 009 628 924), an Australian corporation and wholly
owned subsidiary of PGI, and the other Pledgors thereunder to Citibank,
N.A. ("CITIBANK"), as collateral agent (in such capacity together with
any successor in such capacity the "US COLLATERAL AGENT") for the
Secured Parties (as defined therein). Capitalized terms used and not
otherwise defined herein have the meanings assigned to such terms in the
Pledge Agreement.
Gentlemen/Ladies:
You are hereby notified pursuant to the Pledge Agreement that
the shares of capital stock set forth below constitute Identified Shares and,
unless you shall provide the US Collateral Agent with written notice of your
rejection of this Notice of Identification prior to 9:00 a.m. New York City time
on the Business Day following your receipt of this Notice, shall thereafter
constitute Collateral and Pledged Shares for all purposes of the Pledge
Agreement.
<TABLE>
STOCK CERTIFICATE PERCENTAGE OF
NO(S). NUMBER OF SHARES OUTSTANDING SHARES
PLEDGOR ISSUER CLASS OF STOCK ------ ---------------- ------------------
- ------- ------ --------------
<S> <C> <C> <C> <C> <C>
</TABLE>
CITIBANK, N.A.,
as US Collateral Agent
By:
-------------------
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF GUARANTY
GUARANTY dated as of April 17, 1996 made by Pegasus Gold Inc., a
company organized under the laws of British Columbia, Canada ("PGI"), Pegasus
Gold Corporation, a Nevada corporation and a wholly owned subsidiary of PGI
("PGC"), Pegasus Gold Australia Pty Ltd (formerly known as Zapopan N.L.) (ACN
009 628 924), an Australian corporation and a wholly owned subsidiary of PGI
("PGA"), Beal Mountain Mining, Inc., a Montana corporation ("BEAL MOUNTAIN"),
Black Pine Mining, Inc., a Nevada corporation ("BLACK PINE"), Florida Canyon
Mining, Inc., a Washington corporation ("FLORIDA CANYON"), Montana Tunnels
Mining, Inc., a Nevada corporation ("MONTANA TUNNELS"), Zortman Mining, Inc., a
Montana corporation ("ZORTMAN"), Pangea International Holdings Corporation, a
Nevada corporation ("PANGEA HOLDINGS"), Pegasus Gold Montana Mining, Inc., an
Arizona corporation ("MONTANA MINING"), Diamond Hill Mining, Inc., a Montana
corporation ("DIAMOND HILL"), and Pegasus Gold International, Inc., a Washington
corporation ("PG INTERNATIONAL" and, together with PGI, PGC, PGA, Beal Mountain,
Black Pine, Florida Canyon, Montana Tunnels, Zortman, Pangea Holdings, Montana
Mining, Diamond Hill and each other person or entity hereafter agreeing to be
bound by the terms hereof, each a "GUARANTOR" and collectively, the
"GUARANTORS"), in favor of the Lender Parties and each Collateral Agent (as such
terms are defined in the Credit Agreement referred to below; such Lender
Parties, together with the Collateral Agents, each a "GUARANTEED PARTY" and,
collectively, the "GUARANTEED PARTIES").
PRELIMINARY STATEMENTS:
(1) PGI, PGC and PGA (each a "BORROWER" and, collectively, the
"BORROWERS") have entered into a Multicurrency Reducing Revolving Credit
Agreement dated as of April 17, 1996 (said Agreement, as it may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "CREDIT AGREEMENT"; capitalized terms used and not otherwise
defined herein have the meanings assigned to such terms in the Credit Agreement)
with the Lenders and Issuing Banks party thereto, Citibank Canada, as Canadian
Administrative Agent, Citibank Limited, as Australian Administrative Agent,
Citibank, as US Administrative Agent for the Lender Parties, ABN AMRO Australia
Limited, as the Non-Pro Rata Lender and ABN AMRO Bank N.V., Canadian Imperial
Bank of Commerce, Dresdner Bank AG, New York Branch and The First National Bank
of Chicago, as Co-Agents. Pursuant to the Credit Agreement, the Lenders and the
Issuing Banks will, among other things and subject to the terms and conditions
set forth in the Credit Agreement, make Accommodations and issue Letters of
Credit for the respective accounts of the Borrowers.
(2) Each Guarantor may receive a portion of the proceeds of the
Accommodations under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement and
the Board of Directors of each Guarantor has determined that it is in the best
interests of such Guarantor to enter into this Guaranty.
(3) It is a condition precedent to the making of Accommodations and
the issuance of Letters of Credit by the Lender Parties under the Credit
Agreement that each Guarantor shall have executed and delivered this Guaranty.
<PAGE>
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to enter into the Credit Agreement, and to make
Accommodations and issue Letters of Credit from time to time thereunder, each
Guarantor hereby agrees as follows:
SECTION 1. GUARANTY; LIMITATION OF CERTAIN GUARANTORS' LIABILITY.
(a) Each Guarantor hereby unconditionally and irrevocably guarantees, on a
joint and several basis, the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of each other Loan
Party now or hereafter existing under the Loan Documents (including any
amendments, modifications, extensions, substitutions or renewals thereof),
whether direct or indirect, absolute or contingent and whether for principal
(including, without limitation, reimbursement of, and providing cash collateral
for, amounts drawn or available to be drawn under Letters of Credit or amounts
owing in respect of BA Obligations), interest (including, without limitation,
interest that but for the filing of a petition in bankruptcy would accrue on
such obligations), fees, expenses or otherwise (such Obligations being the
"GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses (including,
without limitation, reasonable counsel fees and expenses) incurred by any of the
Guaranteed Parties in enforcing any rights under this Guaranty. Without
limiting the generality of the foregoing, each Guarantor's liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by any Loan Party to any Guaranteed Party under the Loan Documents
but for the fact that they are unenforceable or they are not allowable due to
the existence of an Insolvency Event or a bankruptcy, reorganization or similar
proceeding.
(b) Any provision of this Guaranty to the contrary notwithstanding,
the liability of each Guarantor (other than PGI, which shall be liable hereunder
to the full extent of the Guaranteed Obligations) under this Guaranty shall be
limited to such maximum aggregate amount as would not render such Guarantor's
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of any state or foreign law having similar effect.
SECTION 2. GUARANTY ABSOLUTE. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Guaranteed Party with respect thereto. The Obligations of each Guarantor under
this Guaranty are independent of the Guaranteed Obligations and any other
Obligations of any other Loan Party under the Loan Documents (and, in the case
of PGI, PGC and PGA, of its Obligations as a Borrower under the Credit
Agreement), and a separate action or actions may be brought and prosecuted
against such Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against any Borrower or any other Loan Party or whether any
Borrower or any other Loan Party is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and such Guarantor hereby irrevocably waives
any defenses it may now or hereafter have in any way relating to, any or all of
the following:
(a) any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto or any part of the Guaranteed
Obligations being irrecoverable;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any
2
<PAGE>
Loan Document, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional credit to
any Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Loan Party under the Loan Documents
or any other assets of any Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Borrower or any of its Subsidiaries;
(f) any failure of any Guaranteed Party to disclose to any Loan Party
(including such Guarantor) any information relating to the financial
condition, operations, properties or prospects of any other Loan Party or
any of its Subsidiaries now or in the future known to any Guaranteed Party
(such Guarantor hereby unconditionally and irrevocably waiving any duty on
the part of the Guaranteed Parties to disclose such information);
(g) the receipt of a dividend after an Insolvency Event or the
payment of a sum or sums into an account of the Borrower or any other
Person at any time (whether received or paid jointly, jointly and severally
or otherwise); or
(h) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by any Guaranteed Party that might otherwise constitute a
defense available to, or a discharge of, any Borrower, any Guarantor or any
other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Guaranteed Party or any other Person upon
the insolvency, bankruptcy or reorganization of any Borrower or any other Loan
Party or otherwise, all as though such payment had not been made.
SECTION 3. WAIVERS AND ACKNOWLEDGMENTS. (a) To the fullest extent
permitted by applicable law, each Guarantor hereby unconditionally and
irrevocably waives promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this Guaranty and
any requirement that any Collateral Agent or any other Guaranteed Party protect,
secure, perfect or insure any Lien or any property subject thereto or exhaust
any right or take any action against any Loan Party or any other Person or any
Collateral.
(b) To the fullest extent permitted by applicable law, each Guarantor
hereby unconditionally and irrevocably waives any right to revoke this Guaranty.
Each Guarantor acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
3
<PAGE>
(c) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in Section 2 above and this
Section 3 are knowingly made in contemplation of such benefits.
SECTION 4. SUBROGATION; SUSPENSION OF GUARANTORS' RIGHTS. (a) No
Guarantor will exercise any rights that it may now or hereafter acquire against
any Loan Party or any other insider guarantor that arise from the existence,
payment, performance or enforcement of such Guarantor's Obligations under this
Guaranty or any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any Collateral Agent or any other
Guaranteed Party against such Loan Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from such Loan Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Obligations under the Loan Documents shall have been paid in full in
cash and no Letter of Credit or BA Obligation shall remain outstanding and the
Commitments shall have expired or terminated. If any amount shall be paid to
any Guarantor in violation of the preceding sentence at any time prior to the
payment in full in cash of all Obligations under the Loan Documents, the
expiration or termination of all Letters of Credit and BA Obligations and the
termination of the Commitments, such amount shall be held in trust for the
benefit of the Guaranteed Parties and shall forthwith be paid to the
US Collateral Agent to be credited and applied to the Guaranteed Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held in a Cash
Collateral Account as Collateral for any Guaranteed Obligations or other amounts
payable under this Guaranty thereafter arising. If (i) any Guarantor shall make
payment to any Collateral Agent or any other Guaranteed Party of all or any part
of the Guaranteed Obligations, and (ii) all of the Obligations under the Loan
Documents shall be paid in full in cash, the Commitments shall have terminated
and no Letter of Credit or BA Obligation shall remain outstanding, the
Collateral Agents and the other Guaranteed Parties will, at such Guarantor's
request and expense, execute and deliver to such Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment by such Guarantor.
(b) As long as any Obligations under the Loan Documents remain
unpaid, no Australian Guarantor (as defined in Section 5) may without the prior
written consent of the Collateral Agent: (i) in reduction of its liability under
this Guaranty, raise a defense, set-off or counterclaim available to itself,
another Guarantor or a co-surety or co-indemnifier against a Guaranteed Party or
claim a set-off or make a counterclaim against a Guaranteed Party, (ii) make a
claim or enforce a right (including, without limitation, a Security Interest)
against any Guarantor or against their estate or property, or (iii) prove in
competition with a Guaranteed Party if an Insolvency Event occurs in respect of
a Guarantor whether in respect of an amount paid by the Guarantor under this
Guaranty, in respect of another amount (including the proceeds of any
Collateral) applied by any Collateral Agent or any Guaranteed Party in reduction
of the Guarantor's liability under this Guaranty, or otherwise.
SECTION 5. PAYMENTS FREE AND CLEAR OF TAXES, ETC. (a) Any and all
payments by or on behalf of any Guarantor hereunder shall be made, in accordance
with Section 2.13 of the Credit Agreement, free and clear of and without
deduction for any and all present or future Taxes. If any Taxes are required to
be withheld or deducted by any Person from any amounts payable to any Guaranteed
Party
4
<PAGE>
hereunder or under any Note or in respect of any BA Obligation, (i) the sum
payable by the Guarantors in respect of any such amount shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 5) such
Guaranteed Party receives an amount equal to the sum it would have received had
no such deductions been made, (B) the Guarantors (or a Guarantor) shall make
such deductions and (C) the Guarantor making such deductions shall pay the full
amount deducted to the relevant taxation or other authority in accordance with
applicable law.
(b) In addition, each Guarantor agrees to pay any present or future
Other Taxes.
(c) Each Guarantor shall indemnify each Guaranteed Party for the full
amount of Taxes and Other Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 5, imposed on or paid by such
Guaranteed Party and any liability (including penalties, fines, additions to
tax, interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Guaranteed Party
makes written demand therefor, but in no event shall such indemnification be
required to be made prior to 15 days before the earlier of (i) the date such
Guaranteed Party pays such Taxes or other Taxes or (ii) the date such Taxes or
Other Taxes are due to the relevant taxing authority.
(d) Within 30 days after the date of any payment of Taxes, the
Guarantor making such payment shall furnish to the US Administrative Agent, at
its address referred to in Section 8.02 of the Credit Agreement, the original
receipt of payment thereof or a certified copy of such receipt. In the case of
any payment hereunder by or on behalf of any Guarantor (i) through an account or
branch outside the United States, in the case of a Guarantor organized under the
laws of any State of the United States (each a "US GUARANTOR"), Canada, in the
case of a Guarantor organized under the laws of any province of Canada (each a
"CANADIAN GUARANTOR"); or Australia, in the case of any Guarantor organized
under the laws of Australia or any territory thereof (each an "AUSTRALIAN
GUARANTOR"), or (ii) by a payor that is not a United States person, in the case
of any US Guarantor; a person Resident in Canada, in the case of any Canadian
Guarantor; or a person Resident in Australia, in the case of any Australian
Guarantor, if such Guarantor determines that no Taxes are payable in respect
thereof, such Guarantor shall furnish, or shall cause such payor to furnish, to
each Administrative Agent, at such address, an opinion of counsel acceptable to
the Administrative Agents stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e), the terms "UNITED STATES"
and "UNITED STATES PERSON" shall have the meanings specified in Section 7701 of
the Internal Revenue Code, the terms "CANADA" and "RESIDENT IN CANADA" shall
have the meanings they have for the purposes of the Income Tax Act (Canada) and
the terms "AUSTRALIA" and "RESIDENT IN AUSTRALIA" shall have the meanings they
have for Australian income tax purposes.
(e) Each US Lender and each US Issuing Bank organized under the laws
of a jurisdiction outside the United States shall, on or prior to the date of
its execution and delivery of the Credit Agreement in the case of each such
Initial Lender or Initial Issuing Bank, as the case may be, and on the date of
the Assignment and Acceptance pursuant to which it became a Lender Party in the
case of each other such Lender Party, and from time to time thereafter as
requested in writing by any US Guarantor or the US Administrative Agent (but
only so long as such Lender Party remains lawfully able to do so), provide each
of the US Administrative Agent and the US Borrower with two original Internal
Revenue Service forms 1001 or 4224 or (in the case of a US Lender or US Issuing
Bank that has certified in writing to the US Administrative Agent that it is not
a "bank" as defined in Section 881(c)(3)(A) of the
5
<PAGE>
Internal Revenue Code) form W-8 (and, if such Lender or Issuing Bank delivers a
form W-8, a certificate representing that such Lender Party is not a "bank" for
purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of any Borrower and is not a controlled foreign corporation related to any
Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue
Code)), as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Lender or Issuing Bank is exempt
from or entitled to a reduced rate of United States interest withholding tax on
payments pursuant to this Agreement or the Notes or, in the case of a Lender
Party providing a form W-8, certifying that such Lender Party is a foreign
corporation, partnership, estate or trust and, if required, in the case of any
other US Lender, an Internal Revenue Service form W-9, or any successor form,
certifying that such Lender Party is entitled to an exemption from United States
backup withholding tax. If the forms provided by any such Lender Party at the
time such Lender Party first becomes a party to the Credit Agreement indicates a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from Taxes unless and until such
Lender Party provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; PROVIDED, HOWEVER, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender Party
becomes a party to this Agreement, the Lender Party assignor was entitled to
payments under subsection (a) in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Lender Party assignee on such date.
(f) For any period with respect to which a US Lender or US Issuing
Bank has failed to provide the US Borrower with the appropriate form described
in subsection (e) (OTHER THAN if such failure is due to a change in law
occurring after the date on which a form originally was required to be provided
or if such form otherwise is not required under subsection (e)), such Lender
Party shall not be entitled to indemnification under subsection (a) or (c) with
respect to Taxes imposed by the United States by reason of such failure;
PROVIDED, HOWEVER, that should a Lender Party become subject to Taxes because of
its failure to deliver a form required hereunder, the Guarantors shall take such
steps as such Lender Party shall reasonably request to assist such Lender Party
to recover such Taxes.
(g) Each Australian Guarantor acknowledges that Section 261 of the
ITAA may render void its obligation to make a payment under this Section 5.
However, each Australian Guarantor warrants that even if this is the case, and
it would not otherwise be obliged to make a payment under this Section 5, it
will make such payment as contemplated by this Section 5 and that it is in its
interests to do so. Each Australian Guarantor acknowledges that each Lender
Party relies on the warranty in this Section 5(g) in entering into this
Agreement and that breach of such warranty is to the detriment of each Lender
Party. Failure by any Australian Guarantor to make a payment under this Section
5 does not constitute an Event of Default under Section 6.01(a)(i) or (ii) of
the Credit Agreement or under Section 6.01(d) of the Credit Agreement. Each
Australian Guarantor waives any right it may have to reimbursement of money paid
under this Section 5(g) (including any payment made in accordance with the
warranty contained in this Section 5(g)) and also releases each Lender Party
from any claim such Australian Guarantor may have against such Lender Party to
refund or repay amounts so paid, whether that right or claim arises by reason of
the obligations under this Section 2.14 being void under section 261 of the ITAA
or by reason of money paid under mistake of any nature as to the extent of such
Australian Guarantors' obligations having regard to section 261 or for any other
reason relating to laws as to insolvency.
6
<PAGE>
(h) In the event that an additional payment is made under Section
5(a) or (c) for the account of any Lender and such Lender determines that it has
received or been granted a refund or a credit (other than a foreign tax credit)
against or release or remission for, or repayment of, any tax paid or payable by
it in respect of or calculated with reference to the deduction or withholding
giving rise to such payment, such Lender shall, to the extent that it can do so
without prejudice to the retention of the amount of such refund, credit, relief,
remission or repayment, pay to the Guarantor that made such additional payment
such amount as such Lender shall have determined to be attributable to such
deduction or withholding and which will leave such Lender (after such payment)
in no better or worse position than it would have been in if such Guarantor had
not been required to make such deduction or withholding. If any Lender shall
become aware that it is entitled to receive a refund and that the receipt of
such refund would give rise to an obligation under this Section 5(h) to pay an
amount to any Guarantor, such Lender shall, within a reasonable time of becoming
so aware, notify such Guarantor of the availability of such refund and shall,
upon written request of such Guarantor, make reasonable efforts, at such
Guarantor's expense, to obtain such refund. Nothing herein contained shall
interfere with the right of each Lender to arrange its tax affairs in whatever
manner it thinks fit nor oblige any Lender to claim any tax credit (except as
expressly provided in the preceding sentence) or to disclose any information
relating to its tax affairs or any computations in respect thereof. Nothing
herein contained shall require any Lender to do anything that would prejudice
its ability to benefit from any other credits, reliefs, remissions or repayments
to which it may be entitled.
(i) Any Lender Party claiming any additional amounts payable pursuant
to this Section 5 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to file any certificate or
document reasonably requested by any Guarantor or to change the jurisdiction of
its Appropriate Lending Office if filing such certificate or document or making
such change would avoid the need for, or reduce the amount of, any such
additional amounts that may thereafter accrue and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to such Lender
Party.
(j) Without prejudice to the survival of any other agreement of the
Guarantors hereunder or under any other Loan Document, the agreements and
obligations of the Guarantors contained in this Section 5 shall survive the
payment in full of the Guaranteed Obligations and all other amounts payable
under this Guaranty.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby
represents and warrants as follows:
(a) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(b) Such Guarantor has, independently and without reliance upon any
Administrative Agent or any other Guaranteed Party and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty, and such Guarantor has established means
satisfactory to such Guarantor of obtaining from each Loan Party on a continuing
basis information pertaining to the financial condition, operations, properties
and prospects of such other Loan Party.
(c) Such Guarantor benefits from executing this Guaranty.
7
<PAGE>
(d) Each Guarantor hereby confirms to the US Administrative Agent and
the other Guaranteed Parties that each of the representations and warranties set
forth in the Loan Documents that are made by, on behalf of, or with respect to
such Guarantor by any Borrower are true and correct. Each Guarantor hereby
confirms and agrees that, so long as any Obligations under the Loan Documents
shall remain unpaid, any Letter of Credit or BA Obligation shall be outstanding
or any Lender Party shall have any Commitment, such Guarantor will perform and
observe all of the terms, covenants and agreements set forth in the Loan
Documents on its part to be performed or observed or that any Borrower has
agreed to cause such Guarantor to perform or observe.
SECTION 7. AMENDMENTS, RELEASE, ETC. (a) No amendment or waiver of
any provision of this Guaranty and no consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the US Administrative Agent (with the consent or at the direction
of the Required Lenders) and, in the case of any such amendment, by each
Guarantor (except as set forth in Section 7(b)), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by all of the Lender Parties (other than any Lender
Party that is, at such time, a Defaulting Lender), (i) further reduce or limit
the liability of any Guarantor hereunder, (ii) postpone any date fixed for
payment hereunder or (iii) change the number of Lender Parties required to take
any action hereunder; PROVIDED, FURTHER, that upon any sale of 100% of the
capital stock of any Guarantor which is permitted under the Credit Agreement,
the US Administrative Agent is authorized to, and shall, release such Guarantor
from all obligations hereunder upon satisfaction of the conditions set forth in
Section 8.01(b) relating to the release of such capital stock from the Lien of
the Pledge Agreement.
(b) Upon the execution and delivery to the US Administrative Agent by
any Person of an Amendment to Guaranty in substantially the form of Exhibit L to
the Credit Agreement, which Amendment to Guaranty need not be executed by any
other Guarantor, such Person shall be and become a Guarantor hereunder, and each
reference in this Guaranty to a "Guarantor" shall include such Person and each
reference in any other Loan Document to a "Guarantor" or a "Loan Party" shall
include such Person.
SECTION 8. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to it, if to any Borrower, at its address specified in Section 8.02 of the
Credit Agreement, if to any other Guarantor, at its address set forth beneath
its signature on the signature pages hereto or in the Amendment to Guaranty
pursuant to which such Person became a Guarantor, as the case may be, if to the
US Administrative Agent or any Lender Party, at its address specified in the
Credit Agreement, or as to any party at such other address as shall be
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied or
telexed, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier or confirmed by telex answerback,
respectively.
SECTION 9. NO WAIVER; REMEDIES. No failure on the part of the
Collateral Agent or any other Guaranteed Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
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<PAGE>
SECTION 10. RIGHT OF SET-OFF. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the US Administrative Agent to declare the Notes due and payable
pursuant to the provisions of said Section 6.01, each Lender Party and each of
its respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of any Guarantor against any and
all of the Obligations of such Guarantor now or hereafter existing under this
Guaranty, whether or not such Lender Party shall have made any demand under this
Guaranty and although such Obligations may be unmatured. Each Lender Party
agrees promptly to notify the relevant Guarantor after any such set-off and
application; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its respective Affiliates may have.
SECTION 11. INDEMNIFICATION. Without limitation on any other
Obligations of any Guarantor or remedies of the Guaranteed Parties under this
Guaranty, each Guarantor shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless each Guaranteed Party from and
against, and shall pay on demand, any and all losses, liabilities, damages,
costs, expenses and charges (including the reasonable fees and disbursements of
such Guaranteed Party's legal counsel) suffered or incurred by such Guaranteed
Party as a result of any failure of any Guaranteed Obligations to be the legal,
valid and binding obligations of the relevant Borrower enforceable against such
Borrower in accordance with their terms.
SECTION 12. CONTINUING GUARANTY; ASSIGNMENTS UNDER THE CREDIT
AGREEMENT. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the payment in full in cash of all Obligations under the
Loan Documents, the expiration or termination of all Letters of Credit and BA
Obligations and the termination of the Commitments (it being understood that
each Bank Hedge Agreement and Existing Hedge Agreement shall, unless a Default
under Section 6.01(f) of the Credit Agreement then exists, cease to be a Loan
Document for purposes hereof and cease to be guaranteed hereby upon the payment
in full in cash of all Obligations under the Credit Agreement, the Notes and the
termination of the Commitments, and the expiration or termination of all Letters
of Credit and BA Obligations), (b) be binding upon each Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable by the
Collateral Agent and each other Guaranteed Party and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), subject to Section 8.07 of the Credit Agreement, any
Guaranteed Party may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Accommodations owing to it
and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Guaranteed Party herein or otherwise, in each case as and to the extent
provided in Section 8.07 of the Credit Agreement. Each Guarantor acknowledges
that upon any Person becoming a Lender Party such Person shall be a Guaranteed
Party hereunder.
SECTION 13. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York.
9
<PAGE>
SECTION 14. JURISDICTION, ETC. (A) SUBMISSION TO JURISDICTION.
Each Guarantor hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Guaranty or any of the other Loan Documents to which it is a
party, or for recognition or enforcement of any judgment, and each Guarantor
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each Guarantor
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Each Guarantor hereby agrees that service
of process in any such action or proceeding may be made upon CT Corporation
Systems, 1633 Broadway, New York, New York 10019 (the "PROCESS AGENT") and each
Guarantor hereby irrevocably appoints the Process Agent its authorized agent to
accept such service of process, and agrees that the failure of the Process Agent
to give any notice of any such service of process shall not impair or affect the
validity of such service or of any judgment rendered in any action or proceeding
based thereon. Each Guarantor hereby further irrevocably consents to the
service of process in any action or proceeding in such courts by the mailing
thereof by any parties hereto by registered or certified mail, postage prepaid,
to such Guarantor at its address specified pursuant to Section 8. Nothing in
this Guaranty shall affect any right that any party may otherwise have to bring
any action or proceeding relating to this Guaranty or any of the other Loan
Documents in the courts of any jurisdiction. To the extent that any Guarantor
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, such Guarantor hereby irrevocably waives such
immunity in respect of its obligations under this Guaranty and the other Loan
Documents.
(B) WAIVERS REGARDING VENUE, INCONVENIENT VENUE. Each Guarantor
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this
Guaranty or any of the other Loan Documents to which it is a party in any New
York State or federal court. Each Guarantor hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 15. JUDGMENT. (A) RATE OF EXCHANGE. If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due hereunder,
under any Note or Notes or under any other Loan Document (including, without
limitation, all or any part of the Guaranteed Obligations) in another currency
into US Dollars, Canadian Dollars or Australian Dollars, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which, in accordance with normal banking
procedures, a Lender Party could purchase such other currency with US Dollars in
New York City, New York or Canadian Dollars in Toronto, Ontario at 9:00 A.M.
(New York City time or Toronto time, respectively) or Australian Dollars in
Sydney, Australia at 9:00 A.M. (Sydney time), as the case may be, on the
Business Day immediately preceding that on which final judgment is given,
together with any premiums and costs of exchange payable in connection with such
purchase.
(B) INDEMNITY. The obligation of each Guarantor in respect of any
sum due from it to any Guaranteed Party hereunder, under any Note or Notes or
under any other Loan Document shall, notwithstanding any judgment in a currency
other than US Dollars, Canadian Dollars or Australian
10
<PAGE>
Dollars, as the case may be, be discharged only to the extent that on the
Business Day next succeeding receipt by such Guaranteed Party of any sum
adjudged to be so due in such other currency, such Guaranteed Party may, in
accordance with normal banking procedures, purchase US Dollars, Canadian Dollars
or Australian Dollars, as the case may be, with such other currency. If the US
Dollars, Canadian Dollars or Australian Dollars, as the case may be, so
purchased are less than the sum originally due to such Guaranteed Party in US
Dollars, Canadian Dollars or Australian Dollars, as the case may be, each
Guarantor agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify such Guaranteed Party against such loss, and if the US
Dollars, Canadian Dollars or Australian Dollars so purchased exceed the sum
originally due to any Guaranteed Party in US Dollars, Canadian Dollars or
Australian Dollars, as the case may be, such Guaranteed Party agrees to remit to
such Guarantor such excess.
SECTION 16. EXECUTION IN COUNTERPARTS. This Guaranty may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Guaranty or any other Loan Document or any consent, waiver or amendment relating
hereto or thereto by telecopier shall be effective as delivery of a manually
executed counterpart of this Guaranty, such other Loan Document or such consent,
waiver or amendment, as the case may be.
SECTION 17. WAIVER OF JURY TRIAL. Each Guarantor hereby irrevocably
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to
this Guaranty, any of the Loan Documents, the transactions contemplated hereby
or thereby or the actions of any Administrative Agent or any other Guaranteed
Party in the negotiation, administration, performance or enforcement hereof or
thereof.
11
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PEGASUS GOLD INC.
By
-------------------------------
Title:
PEGASUS GOLD CORPORATION
By
-------------------------------
Title:
SIGNED, SEALED AND DELIVERED )
ON BEHALF OF PEGASUS GOLD )
AUSTRALIA PTY LTD BY ITS ) -----------------------------------
ATTORNEY IN THE PRESENCE OF: ) Signature:
Print Name:
- ------------------------------
Witness:
Print Name:
BEAL MOUNTAIN MINING, INC.
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
S-1
<PAGE>
BLACK PINE MINING, INC.
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
FLORIDA CANYON MINING, INC.
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
MONTANA TUNNELS MINING, INC.
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
S-2
<PAGE>
ZORTMAN MINING, INC.
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
PANGEA INTERNATIONAL
HOLDINGS CORPORATION
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
PEGASUS GOLD MONTANA MINING, INC.
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
S-3
<PAGE>
DIAMOND HILL MINING, INC.
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
PEGASUS GOLD INTERNATIONAL, INC.
By
-------------------------------
Title:
Address for Notice:
c/o Pegasus Gold Corporation
601 West First Avenue, Suite 1500
Spokane, Washington 99204
Attn: General Counsel
Telephone: 609-624-4653
Telecopier No.: 609-838-8317
S-4
<PAGE>
EXHIBIT I
FORM OF ACKNOWLEDGMENT DEED
----------------------------------------------------------
DATED 1996
DEED POLL
PEGASUS GOLD AUSTRALIA
PTY LIMITED
("BORROWER")
IN FAVOUR OF
THE LENDER PARTIES TO THE
AGREEMENT
MALLESONS STEPHEN JAQUES
Solicitors
Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Telephone (02) 250 3000
Fax (02) 250 3133
DX 113 Sydney
Ref: MRJ
<PAGE>
1
- --------------------------------------------------------------------------------
DEED POLL
DATE: April 1996
PARTY: PEGASUS GOLD AUSTRALIA PTY LIMITED (ACN 009 628 924) of Edit Falls
Road, Katherine, Northern Territory ("BORROWER")
RECITALS:
A. At the date of this deed poll, the Borrower, together with
Pegasus Gold Inc. and Pegasus Gold Corporation, has entered into
the Multicurrency Reducing Revolving Credit Agreement dated
April 1996 ("AGREEMENT"), with the Initial Lenders and Initial
Issuing Banks, ABN AMRO Australia Limited, ABN AMRO Bank N.V.,
Canadian Imperial Bank of Commerce, Dresdner Bank A.G., Citibank
N.A., Citibank Canada and Citibank Limited.
B. The Borrower wants to execute this deed poll to formally
acknowledge the contractual obligations it owes to the Lender
Parties under the Agreement.
OPERATIVE PROVISIONS:
1 INTERPRETATION AND INTENTION
- --------------------------------------------------------------------------------
1.1 Capitalised words used but not defined in this deed have the same
meaning as that given to them in the Agreement.
1.2 The Borrower intends that the contractual obligations it owes to
the Lender Parties under the Agreement will become merged in the
specialty constituted by this deed poll.
2 COVENANTS
- --------------------------------------------------------------------------------
2.1 The obligations of the Borrower under the Agreement are merged in
this deed poll as if set out in full in this deed poll.
COVENANT
2.2 The Borrower covenants to observe all relevant obligations
contained in the Agreement, including, without limitation,
obligations to pay all amounts owing to the Lender Parties as
they fall due under the Agreement.
<PAGE>
2
- --------------------------------------------------------------------------------
BENEFIT
2.3 This deed poll is executed for the benefit of the Lender Parties
to the Agreement.
GOVERNING LAW
2.4 This deed poll is governed by the laws of the Australian Capital
Territory.
EXECUTED in as a deed.
EXECUTION
- --------------------------------------------------------------------------------
SIGNED, SEALED AND )
DELIVERED by )
as attorney for PEGASUS GOLD )
AUSTRALIA PTY LIMITED under )
power of attorney dated )
in the presence of: )
)
. . . . . . . . . . . . . . . . . )
Signature of witness )
)
. . . . . . . . . . . . . . . . . )
Name of witness (block letters) )
)
. . . . . . . . . . . . . . . . . ). . . . . . . . . . . . . . .
Address of witness ) By executing this deed the
) attorney states that the
. . . . . . . . . . . . . . . . . ) attorney has received no
Occupation of witness ) notice of revocation of the
) power of attorney
<PAGE>
EXHIBIT J
FORM OF SOLVENCY CERTIFICATE
Each of Pegasus Gold Inc., a corporation formed under the laws of
British Columbia, Canada (the "CANADIAN BORROWER"), Pegasus Gold Corporation,
a Nevada corporation (the "US BORROWER") and Pegasus Gold Australia Pty Ltd
(formerly known as Zapopan N.L.)(ACN 009 628 924), an Australia corporation
(the "AUSTRALIAN BORROWER" and, together with the Canadian Borrower and the
US Borrower, each a "BORROWER" and, collectively, the "BORROWERS"), hereby
certify that the person executing this Solvency Certificate on behalf of such
Borrower is duly authorized to execute this Solvency Certificate, which is
hereby delivered on behalf of such Borrower pursuant to Section 3.01(f)(x) of
the Multicurrency Reducing Revolving Credit Agreement dated as of April 17,
1996 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"; terms defined therein unless
otherwise defined herein being used herein as therein defined) among the
Borrowers, the Lender Parties parties thereto, Citibank, N.A., as the US
Administrative Agent, Citibank Canada, as the Canadian Administrative Agent,
Citibank Limited (ACN 004 325 080), as the Australian Administrative Agent,
ABN AMRO Australia Limited, as the Non-Pro Rata Lender and ABN AMRO Bank
N.V., Canadian Imperial Bank of Commerce, Dresdner Bank AG, New York Branch,
and The First National Bank of Chicago, as Co-Agents.
Each Borrower further certifies that such officer is generally
familiar with the properties, businesses and assets of such Borrower and has
reviewed the Loan Documents and the contents of this Solvency Certificate and,
in connection herewith, has reviewed such other documentation and information
and has made such investigations and inquiries as such Borrower and such officer
deem necessary and prudent therefor. Each Borrower further certifies that the
financial information and assumptions that underlie and form the basis for the
representations made in this Solvency Certificate were reasonable when made and
were made in good faith and continue to be reasonable as of the date hereof.
Each Borrower understands that each Administrative Agent and each
other Lender Party is relying on the truth and accuracy of this Solvency
Certificate in connection with the transactions contemplated by the Loan
Documents.
Each Borrower hereby further certifies that:
1. On the date hereof, after giving effect to the consummation of
the transactions contemplated by the Credit Agreement and the other Loan
Documents, the fair value of the property and assets of such Borrower is greater
than the total amount of liabilities (including contingent liabilities) of such
Borrower.
2. On the date hereof, after giving effect to the consummation of
the transactions contemplated by the Credit Agreement and the other Loan
Documents, the present fair saleable value of the property and assets of such
Borrower exceeds the amount that will be required to pay the probable
liabilities of such Borrower on its debts as they become absolute and matured.
3. On the date hereof, after giving effect to the consummation of
the transactions contemplated by the Credit Agreement and the other Loan
Documents, such Borrower is not engaged in business or in a transaction, and is
not about to engage in business or in a transaction, for which its property and
assets would constitute unreasonably small capital.
<PAGE>
2
4. Such Borrower does not intend or believe that it will incur debts
and liabilities that will be beyond its ability to pay as such debts and
liabilities mature.
5. Such Borrower does not intend, in consummating the transactions
contemplated by the Credit Agreement and the other Loan Documents, to hinder,
delay or defraud either present or future creditors or any other Person to which
such Borrower is or, on or after the date hereof, will become indebted.
6. In reaching the conclusions set forth in this Solvency
Certificate, such Borrower has considered, among other things:
(a) the cash and other current assets of such Borrower reflected in
the December 31, 1995 audited balance sheet of the Canadian Borrower and
its Subsidiaries;
(b) all contingent liabilities of such Borrower, including, without
limitation, any claims arising out of, pending or, to the best knowledge of
the undersigned, threatened litigation against such Borrower and, in so
doing, such Borrower has computed the amount of each such contingent
liability as the amount that, in light of all of the facts and
circumstances existing on the date hereof, represents the amount that can
reasonably be expected to become an actual or matured liability
(collectively, the "CONTINGENT LIABILITIES");
(c) the forecasted Financial Statements described in Section 4.01(g)
of the Credit Agreement;
(d) all obligations and liabilities of such Borrower (other than
Contingent Liabilities);
(e) historical and anticipated growth in the sales volume of such
Borrower and in the income stream generated by such Borrower as reflected
in, among other things, the cash flow statements delivered as part of the
forecasted Financial Statements referred to above;
(f) the customary sales terms and trade payables of such Borrower and
its Subsidiaries;
(g) the amount of the credit extended by and to customers of such
Borrower and its Subsidiaries;
(h) the anticipated interest payable by such Borrower on the Advances
under the Credit Agreement; and
(i) the level of capital customarily maintained by such Borrower and
its Subsidiaries and, to the extent that such Borrower has knowledge
thereof, other entities engaged in the same or similar business as the
businesses of such Borrower and its Subsidiaries.
Delivery of an executed counterpart of a signature page to this
Solvency Certificate by telecopier shall be effective as delivery of a manually
executed counterpart of this Solvency Certificate.
<PAGE>
3
IN WITNESS WHEREOF, each Borrower has caused this Solvency Certificate
to be executed outside of Australia by its Chief Financial Officer thereunto
duly authorized on this ___ day of April, 1996.
PEGASUS GOLD INC.
By
------------------------------------
Name:
Title:
PEGASUS GOLD CORPORATION
By
------------------------------------
Name:
Title:
PEGASUS GOLD AUSTRALIA PTY LTD
By
------------------------------------
Title
<PAGE>
[SIMPSON THACHER & BARTLETT - LETTERHEAD]
April 19, 1996
To the Lender Parties named on Schedule I
hereto that are parties to the
Credit Agreement referred to below
To Citibank, N.A., as US Administrative Agent,
Citibank Canada, as Canadian Administrative
Agent, and Citibank Limited (ACN 004 325 080),
as Australian Administrative Agent,
each under the Credit Agreement
referred to below
Ladies and Gentlemen:
We have acted as special New York counsel to (a) Pegasus Gold Inc., a
company organized under the laws of British Columbia, Canada ("PGI"), (b)
Pegasus Gold Corporation, a Nevada corporation and a wholly-owned subsidiary of
PGI ("PGC"), (c) Pegasus Gold Australia Pty Ltd, an Australian corporation and a
wholly-owned subsidiary of PGI ("PGA"; and together with PGI and PGC, the
"BORROWERS"), (d) each of the United States subsidiaries of PGI set forth on
Part I of Schedule II hereto (collectively, the "DOMESTIC SUBSIDIARIES"; and
together with PGC, the "DOMESTIC LOAN PARTIES") and (e) each of the foreign
subsidiaries of PGI listed on Part II of Schedule II hereto (the "FOREIGN
SUBSIDIARIES"; and together with the Borrowers and the Domestic Subsidiaries,
the "LOAN PARTIES"), in connection with the preparation, execution and delivery
of:
1. the US$150,000,000 Multicurrency Reducing Revolving Credit
Agreement, dated as of April 17, 1996 (the "CREDIT AGREEMENT"; capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to them in the Credit Agreement), among the Borrowers, the lenders
and issuing banks from time to time parties thereto (collectively, the
"LENDERS"), ABN AMRO Australia Limited, as the Non-Pro Rata Lender, ABN
AMRO Bank N.V., Canadian Imperial Bank of Commerce, Dresdner Bank AG, New
York Branch, and The First National Bank of Chicago, as Co-Agents, and
Citibank, N.A., Citibank Canada and Citibank Limited, as Administrative
Agents for the Lenders;
<PAGE>
-2-
April 19, 1996
2. the Notes executed and delivered on the date hereof;
3. the Guaranty; and
4. the Pledge Agreement.
The Credit Agreement, the Notes, the Guaranty and the Pledge Agreement are
collectively referred to herein as the "CREDIT DOCUMENTS".
This opinion is being delivered at the request of the Borrowers
pursuant to Section 3.01(f)(xi) of the Credit Agreement.
In connection with this opinion, we have examined the originals, or
certified, conformed or reproduction copies, of all records, agreements,
instruments and other documents and have made such other investigations as we
have deemed necessary in connection with the opinions expressed herein
(including, without limitation, an executed counterpart of the Credit Agreement,
each Note executed and delivered on the date hereof, the Guaranty and the Pledge
Agreement). As to questions of fact material to this opinion, we have relied
upon certificates as to matters of fact of public officials and of officers and
representatives of the Loan Parties. In addition, we have examined, and have
relied as to matters of fact upon, the representations made in the Credit
Documents.
In connection with the subject transaction, we have represented the
Loan Parties only in connection with the preparation, execution and delivery of
the Credit Documents and, as a result, we are not generally familiar with the
business, operations, properties, agreements or activities of the Loan Parties.
The opinions set forth herein with respect to the Loan Parties are limited and
qualified in all respects by the disclosure contained in this paragraph.
In rendering the opinions set forth below, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies, and the authenticity of the originals of such latter documents. In
addition, we have assumed that each Borrower will comply with the provisions of
Section 2.16 of the Credit Agreement.
To the extent our opinion expressed below relates to matters not
expressly covered hereby that are set forth in (a) the opinion of the General
Counsel of the Loan Parties, (b) the opinion of Erwin Thompson & Hascheff,
Nevada counsel to the Loan Parties, (c) the opinion of Lawson Lundell Lawson &
McIntosh, Canadian counsel to the Loan Parties or (d) Allen Allen & Hemsley,
Australian counsel to the Loan Parties, each dated even date herewith and
delivered to you in respect of the Credit Agreement, we have, with your
permission, but without having made any independent investigation with respect
thereto, assumed the correctness of the matters set forth therein, our opinion
being subject to the assumptions, qualifications and limitations set forth in
such opinions with respect thereto.
<PAGE>
-3-
April 19, 1996
In rendering the opinions expressed below, we have further assumed,
without any independent investigation or verification of any kind, that:
(i) each party to the Credit Documents (including each Loan Party) has
been duly organized and is validly existing and in good standing under the
laws of its jurisdiction of incorporation and of each other jurisdiction in
which the conduct of its business or the ownership of its property makes
such qualification necessary;
(ii) each party to the Credit Documents (including each Loan Party)
has full power and authority to execute, deliver and perform the Credit
Documents to which it is a party;
(iii) the execution, delivery and performance of the Credit Documents
by the parties thereto (including the Loan Parties) have been duly
authorized by all requisite corporate action on the part of such parties;
(iv) the Credit Documents have been duly executed and delivered by
each of the parties thereto (including the Loan Parties);
(v) the execution, delivery and performance of the Credit Documents by
the parties thereto (including the Loan Parties) do not (A) violate the
charter, certificate of incorporation, by-laws or other organizational
documents of any such party, (B) violate or require any order, consent,
approval, license, authorization, validation, filing, recording,
registration or exemption not obtained or made under, any applicable
provision of any law, statute, rule or regulation (other than any law,
statute, rule or regulation of the United States of America or the State of
New York) or any order, writ, injunction or decree of any court or other
governmental authority binding upon such party or (C) constitute a
violation or breach of, or require any consent not obtained under, any
agreement or instrument to which such party is a party or by which it is
bound;
(vi) the Credit Documents constitute the valid and legally binding
obligations of the parties to the Credit Documents (other than the Loan
Parties) enforceable against such parties in accordance with their
respective terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing; and
(vii) the shares of stock issued by PGA and identified in the Notice
of Identification dated April 18, 1996 (the "PGA PLEDGED SHARES") are
"certificated securities" as defined in the New York UCC.
Based on and subject to the foregoing, and subject to the
qualifications and exceptions set forth herein, we are of the opinion that:
<PAGE>
-4-
April 19, 1996
1. Each Credit Document constitutes the valid and legally binding
obligation of each Loan Party which is a party thereto, enforceable against such
Loan Party in accordance with its terms.
2. The execution and delivery by each of the Loan Parties of the
Credit Documents to which it is a party, the borrowings and the performance of
its payment obligations thereunder and the granting of the security interests to
be granted by it pursuant to the Collateral Documents, will not result in a
violation of any law, statute, rule or regulation of the United States of
America or the State of New York, applicable to such Loan Party and, in our
experience, applicable to transactions similar to transactions contemplated by
the Credit Documents generally.
3. No authorization, consent, or approval by, or filing with, any
United States federal or New York State governmental or regulatory authority
pursuant to any present law or regulation of the United States of America or the
State of New York applicable to such Loan Party and, in our experience,
applicable to transactions similar to transactions contemplated by the Credit
Documents generally is required for the execution or delivery by each of the
Loan Parties of each Credit Document to which it is a party the borrowings and
the performance of its payment obligations thereunder and the granting of the
security interests to be granted by it pursuant to the Collateral Documents,
except filings required for the perfection of security interests with respect to
Collateral granted pursuant to the Collateral Documents, other than the Pledged
Shares referred to below.
4. The Pledge Agreement, together with the delivery to the US
Collateral Agent (as defined in the Pledge Agreement) in the State of New York
of the certificates representing the PGA Pledged Shares and the shares of stock
of each Domestic Loan Party which are identified on Schedule I to the Pledge
Agreement and which are purported to be pledged by the respective Loan Party
thereunder (together with the PGA Pledged Shares, the "Pledged Shares") and
appropriately executed stock powers, creates in favor of the US Collateral Agent
a perfected security interest under the New York UCC in the Pledged Shares.
Assuming the US Collateral Agent acquires its interest in the Pledged Shares in
good faith and without notice of any adverse claims, the US Collateral Agent
will acquire its security interest in the Pledged Shares free of adverse claims.
5. The making of the Advances under the Credit Agreement and the
application of the proceeds thereof as provided in and in accordance with the
Credit Agreement do not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
6. No Loan Party is an "investment company" or a company
"controlled" by an "investment company" within the meaning of and subject to
regulation under the Investment Company Act of 1940, as amended.
Our opinions in paragraphs 1 and 4 above are subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether
<PAGE>
-5-
April 19, 1996
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing. Our opinion in paragraph 1 above also is subject to the
qualification that certain provisions of the Pledge Agreement and the Guaranty
are or may be unenforceable, ineffective and/or qualified in whole or in part
under the laws of the State of New York (including judicial decisions), although
(subject to the limitations in the preceding sentence) the Pledge Agreement and
the Guaranty and the laws of the State of New York contain adequate remedial
provisions for the practical realization of the principal rights and benefits
purported to be afforded thereby.
Our opinion in paragraph 4 is limited to Article 8 of the New York UCC
and, therefore, such opinion does not address (i) laws of jurisdictions other
than New York and New York except for Article 8 of the New York UCC and (ii)
collateral of a type not subject to Article 8 of the New York UCC.
We do not express any opinion as to:
(a) any provision of the Credit Documents which is intended to
establish any standard other than any standard set forth in the New York
UCC as the measure of the performance by any party thereto of such party's
obligations of good faith, diligence, reasonableness or care or the
fulfillment of the duties imposed on any secured party with respect to the
disposition or redemption of collateral, accounting for surplus proceeds of
collateral or accepting collateral in discharge of liabilities;
(b) any provision of the Credit Documents which is intended to permit
modification thereof only by means of an agreement signed in writing by the
parties thereto;
(c) Section 2.08(c) of the Credit Agreement (and corresponding
provisions in each of the other Credit Documents) insofar as they relate to
post-judgment interest rates;
(d) any provision of the Credit Documents (i) imposing penalties or
forfeitures or (ii) requiring payment of attorneys' fees, except to the
extent such fees are reasonable;
(e) except as set forth in paragraph 4, the attachment, creation or
perfection of any Liens purported to be created under the Pledge Agreement
or any other Credit Document;
(f) without limiting the opinion set forth in paragraph 4, the
priority of any Liens purported to be created under the Pledge Agreement or
any other Credit Document;
(g) the perfection of any security interest in any proceeds;
<PAGE>
-6-
April 19, 1996
(h) the right, title or interest of any Person in or to, or the
condition of title or ownership of, or the existence of, any property
purported to be subject to the Pledge Agreement;
(i) any provisions contrary to Section 9-311 of the New York UCC;
(j) the effect of the compliance or noncompliance with any federal or
state laws or regulations applicable to any of the Lenders or their
affiliates because of their legal or regulatory status or the nature of
their businesses;
(k) any provision of any Credit Document insofar as it provides that
any Lender or other Person may exercise set-off or similar rights other
than in accordance with applicable law;
(l) any provision of the Credit Documents relating to
indemnification, contribution or exculpation in connection with violations
of any securities laws or public policy, or in connection with willful,
reckless or criminal acts or gross negligence of the indemnified or
exculpated Person or the Person receiving contribution;
(m) any purported waiver, release, disclaimer, consent or other
agreement to similar effect (all of the foregoing, collectively, a
"Waiver") by any Person under any of the Credit Documents to the extent
limited by Section 1-102(3) or 9-501(3) of the New York UCC or other
provisions of applicable law (including judicial decisions), or to the
extent that such Waiver applies to a right, claim, duty, defense or ground
for discharge otherwise existing or occurring as a matter of law (including
judicial decisions) which cannot be waived as a matter of law (including
judicial decisions);
(n) any provision of the Credit Documents which relates to forum
selection (including, without limitation, any waiver of any objection to
venue in any court or of any objection that a court is an inconvenient
forum);
(o) any provision of the Pledge Agreement or the Guaranty that
provides that a Loan Party's liability thereunder shall not be affected by
actions or failures to act on the part of the recipient of such Credit
Document or by amendments or waivers of provisions of documents governing
the obligations;
(p) any provision in the Credit Documents that purports to permit the
US Administrative Agent or any other Person to sell or otherwise dispose
of, or purchase, any collateral subject to the lien of the Credit
Documents, or enforce any other right or remedy under the Credit Documents
(including, without limitation, any self-help remedy or remedy involving
taking possession), except in compliance with the New York UCC and other
applicable laws;
(q) changes in the status of the security interest of the US
Administrative Agent or any other Person in the Collateral under Sections
363, 364(d) or 1129(b) of the United States Bankruptcy Code (11 U.S.C.
Sections 363, 364(d) and 1129(b));
<PAGE>
-7-
April 19, 1996
(r) the effect of Section 552 of the United States Bankruptcy Code
(relating to property acquired by a pledgor after the commencement of a
case under the United States Bankruptcy Code with respect to such pledgor)
and Section 506(c) (relating to certain costs and expenses of a trustee in
preserving or disposing of collateral);
(s) the applicability to any transfer by, or obligations under the
Credit Documents of, the Loan Parties of Section 548 of the United States
Bankruptcy Code or Article 10 of the New York Debtor and Creditor Law
relating to fraudulent transfers and obligations;
(t) as to the enforceability of Section 8.11 of the Credit Agreement
(and corresponding provisions in each of the other Credit Documents);
(u) the provisions of the Credit Agreement or any other Credit
Document that purport to establish evidentiary standards or to make
determinations conclusive;
(v) the waiver by any Loan Party of any immunities from the
jurisdictions of courts (other than the New York State or Federal courts
sitting in The City of New York);
(w) whether or not a judgment by a New York state or federal court
would be given in a currency other than in US Dollars;
(x) without limiting the opinion set forth in paragraph 4, as to the
enforceability of any notice of identification issued pursuant to the
Pledge Agreement;
(y) any provision of the Credit Documents which provides for the
validity or perfection of any security interest created thereunder or any
remedy thereunder to be governed by the law of any jurisdiction other than
New York.
In addition, we express no opinion as to the enforceability of any provision of
any Credit Document whereby any Loan Party purports to submit to the subject
matter jurisdiction of the United States District Court for the Southern
District of New York. We note the limitations of 28 U.S.C. Section 1332 on
federal court jurisdiction where diversity of citizenship is lacking, and we
also note that such submissions cannot supersede that court's discretion in
determining whether to transfer an action from one federal court to another
under Section 28 U.S.C. Section 1404(a).
We are members of the Bar of the State of New York, and we do not
express any opinions herein concerning any law other than the laws of the State
of New York and the federal laws of the United States of America.
<PAGE>
-8-
April 19, 1996
This opinion is rendered only to you and is solely for your benefit in
connection with the execution and delivery of the Credit Documents. This
opinion may not be relied upon by you for any other purpose, or relied upon by,
or, except with respect to an Eligible Assignee, furnished to, any other person,
firm, or corporation for any purpose, without our prior written consent.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
SCHEDULE I
LENDERS
A. US Lenders
Citibank, N.A.
CIBC Inc.
Dresdner Bank AG, New York Branch
ABN AMRO Bank N.V.
The Bank of Nova Scotia
The First National Bank of Chicago
Seattle-First National Bank
NM Rothschild & Sons Limited
Bank of Montreal
Republic National Bank of New York
U.S. Bank of Washington
B. Canadian Lenders
Citibank Canada
Canadian Imperial Bank of Commerce
Dresdner Bank AG, New York Branch
ABN AMRO Bank Canada
The Bank of Nova Scotia
First Chicago NBD Bank, Canada
Bank of America Canada
NM Rothschild & Sons Limited
Bank of Montreal
Republic National Bank of New York (Canada)
U.S. Bank of Washington, N.A.
C. Australian Lenders
Citibank Limited
Dresdner Australia Limited
ABN AMRO Australia Limited
The First National Bank of Chicago, Australian Branch
Bank of America NT & SA, Sydney Branch
Rothschild Australia Limited
Republic Mase Australia Limited
<PAGE>
2
D. Risk Participants
CIBC Inc.
The Bank of Nova Scotia
Bank of Montreal
U.S. Bank of Washington, N.A.
E. Non-Pro Rata Lender
ABN AMRO Australia Limited
<PAGE>
SCHEDULE II
PART I - DOMESTIC SUBSIDIARIES
1. Beal Mountain Mining, Inc., a Montana corporation
2. Black Pine Mining, Inc., a Nevada corporation
3. Florida Canyon Mining, Inc., a Washington corporation
4. Montana Tunnels Mining, Inc., a Nevada corporation
5. Zortman Mining, Inc., a Montana corporation
6. Diamond Hill Mining, Inc., a Montana corporation
7. Pegasus Gold International, Inc., a Washington corporation
8. Pangea International Holdings Corporation, a Nevada corporation
9. Pegasus Gold Montana Mining, Inc., an Arizona corporation
PART II - FOREIGN SUBSIDIARIES
1. Pegasus Minera de Chile Ltda.
2. Pegasus do Brasil Mineracao Ltda.
<PAGE>
[PEGASUS GOLD - LOGO]
April 19, 1996
To the Lender Parties named on Schedule I
hereto that are parties to the
Credit Agreement referred to below
To Citibank, N.A., as US Administrative Agent,
Citibank Canada, as Canadian Administrative
Agent, and Citibank Limited (ACN 004 325 080),
as Australian Administrative Agent,
each under the Credit Agreement
referred to below
Ladies and Gentlemen:
I am General Counsel of Pegasus Gold Inc., a company organized under
the laws of British Columbia, Canada ("PGI"), and Pegasus Gold Corporation, a
Nevada corporation and a wholly-owned subsidiary of PGI ("PGC"). In connection
with the execution and delivery of the Credit Agreement referred to below, I
have been requested to render this opinion with respect to PGI, PGC and the
following subsidiaries of PGI:
(a) Pegasus Gold Australia Pty Ltd, an Australian corporation and a
wholly-owned subsidiary of PGI ("PGA"; and together with PGI and PGC, the
"BORROWERS");
(b) each of the United States subsidiaries of PGI set forth on Part I
of Schedule II hereto (collectively, the "DOMESTIC SUBSIDIARIES"; and
together with PGC, the "DOMESTIC LOAN PARTIES"); and
(c) each of the foreign subsidiaries of PGI listed on Part II of
Schedule II hereto (the "FOREIGN SUBSIDIARIES"; and together with the
Borrowers and the Domestic Subsidiaries, the "LOAN PARTIES").
In connection with this opinion, I have reviewed the following
documents:
1. the US $150,000,000 Multicurrency Reducing Revolving Credit
Agreement, dated as of April 17, 1996 (the "CREDIT AGREEMENT";
capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement), among the
Borrowers, the lenders and issuing banks from time to time parties
thereto (collectively, the "LENDERS"), ABN AMRO Australia Limited, as
the Non-Pro Rata Lender, ABN AMRO Bank N.V., Canadian Imperial Bank of
Commerce, Dresdner Bank AG, New York Branch and The First National
Bank of Chicago, as Co-Agents, and Citibank, N.A., Citibank Canada and
Citibank Limited, as Administrative Agents for the Lenders;
<PAGE>
2
2. the Notes executed and delivered on the date hereof;
3. the Guaranty; and
4. the Pledge Agreement.
The Credit Agreement, the Notes, the Guaranty and the Pledge Agreement are
collectively referred to herein as the "CREDIT DOCUMENTS".
This opinion is being delivered pursuant to Section 3.01(f) of the
Credit Agreement.
In connection with this opinion, I have examined the originals, or
certified, conformed or reproduction copies, of all records, agreements,
instruments and other documents and have made such other investigations as I
have deemed necessary in connection with the opinions expressed herein
(including, without limitation, an executed counterpart of the Credit Agreement,
each Note executed and delivered on the date hereof, the Guaranty and the Pledge
Agreement).
To the extent my opinion expressed below relates to matters not
expressly covered hereby that are set forth in (a) the opinion of Lawson Lundell
Lawson & McIntosh, Canadian counsel to the Loan Parties or (b) Allen Allen &
Hemsley, Australian counsel to the Loan Parties, each dated even date herewith
and delivered to you in respect of the Credit Agreement, I have, with your
permission, but without having made any independent investigation with respect
thereto, assumed the correctness of the matters set forth therein, my opinion
being subject to the assumptions, qualifications and limitations set forth in
such opinions with respect thereto.
In rendering the opinions expressed below, I have further assumed,
without any independent investigation or verification of any kind, that:
(i) each party to the Credit Documents (other than each Domestic Loan
Party) has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of incorporation and of each other
jurisdiction in which the conduct of its business or the ownership of its
property makes such qualification necessary;
(ii) each party to the Credit Documents (other than each Domestic Loan
Party) has full power and authority to execute, deliver and perform the
Credit Documents to which it is a party;
(iii) the execution, delivery and performance of the Agreements by the
parties thereto (other than each Domestic Loan Party) have been duly
authorized by all requisite corporate action on the part of such parties;
(iv) the Credit Documents have been duly executed and delivered by the
parties thereto (other than by each Loan Party);
(v) the execution, delivery and performance of the Credit Documents by
the parties thereto (other than by each Loan Party) do not (A) violate the
charter, certificate of incorporation, by-laws or other organizational
documents of any such party, (B) violate or require any order, consent,
approval, license, authorization, validation, filing, recording,
registration or exemption not obtained or made under, any applicable
provision of any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or other governmental authority binding
upon such party or (C) constitute a violation or breach of, or require any
consent not obtained under, any agreement or instrument to which such party
is a party or by which it is bound;
(vi) the Credit Documents constitute the valid and legally binding
obligations of the parties to the Credit Documents (other than the Loan
Parties) enforceable against such parties in
<PAGE>
3
accordance with their respective term, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing; and
(vii) the shares of stock issued by PGA and identified in the Notice
of Identification dated April 18, 1996 (the "PGA Pledged Shares"), are
"certificated securities" under the New York UCC.
Based on and subject to the foregoing, and subject to the
qualifications and exceptions set forth herein, I am of the opinion that:
1. Each Domestic Loan Party (a) has been duly incorporated and is
validly existing and in good standing as a corporation under the laws of its
jurisdiction of incorporation, (b) has the corporate power and authority to
execute, deliver and perform its payment obligations under each of the Credit
Documents to which it is a party and to grant the security interests to be
granted by it pursuant to the Collateral Documents and, with respect to PGC, to
borrow under the Credit Agreement, (c) has taken all necessary corporate action
to authorize the execution and delivery by it of the Credit Documents to which
it is a party and, with respect to PGC, its borrowings thereunder and the
performance of its payment obligations thereunder and (d) has duly executed and
delivered each Credit Document to which it is a party.
2. Each Credit Document constitutes the valid and legally binding
obligation of each Loan Party which is a party thereto, enforceable against such
Loan Party in accordance with the terms thereof.
3. The execution and delivery by each of the Loan Parties of the
Credit Documents to which it is a party, the borrowings and the performance of
its payment obligations thereunder and the granting of the security interests to
be granted pursuant to the Collateral Documents (a) will not result in a
violation of (i) the certificate of incorporation or by-laws of such Loan Party
(ii) any law, order, decree, statute, judgment, rule or regulation of the United
States of America or any State thereof, applicable to such Loan Party, (b) will
not breach or result in a default under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument binding on such Loan Party, and
(c) will not result in the creation of any Lien upon or with respect to the Loan
Parties' properties pursuant to the terms of any of such agreements, other than
pursuant to the Loan Documents.
4. No authorization, consent, or approval by, or filing with, any
United States federal or state governmental or regulatory authority pursuant to
any present law or regulation of the United States of America or any state
applicable to such Loan Party is required for the execution or delivery by each
of the Loan Parties of each Agreement to which it is a party, the borrowings and
the performance of its payment obligations thereunder and the granting of the
security interests to be granted pursuant to the Collateral Documents, except
filings required for the perfection of security interests with respect to
Collateral granted pursuant to the Collateral Documents, other than the Pledged
Shares referred to below.
5. All of the shares of capital stock described on Schedule I to the
Pledge Agreement that were issued by a Domestic Loan Party have been duly
authorized and validly issued and are fully paid and non-assessable.
6. The Pledge Agreement, together with the delivery to the US
Collateral Agent (as defined in the Pledge Agreement) in the State of New York
of the PGA Pledged Shares and the certificates representing the shares of stock
of each Domestic Loan Party which are identified on Schedule I to the Pledge
Agreement and which are purported to be pledged by the respective Loan Party
thereunder (together with the PGA Pledged Shares, the "Pledged Shares") and
appropriately executed stock powers, creates in favor of the US Collateral Agent
a perfected security interest under the New York UCC in such Pledged Shares.
Assuming the US Collateral Agent acquires its interest in the Pledged
<PAGE>
4
Shares in good faith and without notice of any adverse claims, the US Collateral
Agent will acquire its security interest in the Pledged Shares free of adverse
claims.
7. No litigation, proceeding, investigation or inquiry is pending
or, to my knowledge, threatened against any Loan Party with respect to the
Credit Documents or the transactions contemplated thereby.
8. The making of the Advances under the Credit Agreement and the
application of the proceeds thereof as provided in and in accordance with the
Credit Agreement do not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
9. No Loan Party is an "investment company" or a company
"controlled" by an "investment company" within the meaning of and subject to
regulation under the Investment Company Act of 1940, as amended.
My opinions in paragraphs 2 and 6 above are subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. My opinion in paragraph
2 above also is subject to the qualification that certain provisions of the
Pledge Agreement and the Guaranty are or may be unenforceable, ineffective
and/or qualified in whole or in part under the laws of the State of New York
(including judicial decisions), although (subject to the limitations in the
preceding sentence) the Pledge Agreement and the Guaranty and the laws of the
State of New York contain adequate remedial provisions for the practical
realization of the principal rights and benefits purported to be afforded
thereby.
My opinion in paragraph 6 is limited to Article 8 of the New York UCC
and, therefore, such opinion does not address (i) laws of jurisdictions other
than New York and New York except for Article 8 of the New York UCC and (ii)
collateral of a type not subject to Article 8 of the New York UCC.
I do not express any opinion as to:
(a) any provision of the Credit Documents which is intended to
establish any standard other than any standard set forth in the New York
UCC as the measure of the performance by any party thereto of such party's
obligations of good faith, diligence, reasonableness or care or the
fulfillment of the duties imposed on any secured party with respect to the
disposition or redemption of collateral, accounting for surplus proceeds of
collateral or accepting collateral in discharge of liabilities;
(b) any provision of the Credit Documents which is intended to permit
modification thereof only by means of an agreement signed in writing by the
parties thereto;
(c) Section 2.08(c) of the Credit Agreement (and corresponding
provisions in each of the other Credit Documents) insofar as they relate to
post-judgment interest rates;
(d) any provision of the Credit Documents (i) imposing penalties or
forfeitures or (ii) requiring payment of attorneys' fees, except to the
extent such fees are reasonable;
(e) except as set forth in paragraph 6, the attachment, creation or
perfection of any Liens purported to be created under the Pledge Agreement
or any other Credit Document;
(f) without limiting the opinion set forth in paragraph 6, the
priority of any Liens purported to be created under the Pledge Agreement or
any other Agreement;
(g) the perfection of any security interest in any proceeds;
<PAGE>
5
(h) the right, title or interest of any Person in or to, or the
condition of title or ownership of, or the existence of, any property
purported to be subject to the Pledge Agreement;
(i) any provisions contrary to Section 9-311 of the New York UCC;
(j) the effect of the compliance or noncompliance with any federal or
state laws or regulations applicable to any of the Lenders or their
affiliates because of their legal or regulatory status or the nature of
their businesses;
(k) any provision of any Credit Document insofar as it provides that
any Lender or other Person may exercise set-off or similar rights other
than in accordance with applicable law;
(l) any provision of the Credit Documents relating to
indemnification, contribution or exculpation in connection with violations
of any securities laws or public policy, or in connection with willful,
reckless or criminal acts or gross negligence of the indemnified or
exculpated Person or the Person receiving contribution;
(m) any purported waiver, release, disclaimer, consent or other
agreement to similar effect (all of the foregoing, collectively, a
"Waiver") by any Person under any of the Credit Documents to the extent
limited by Section 1-102(3) or 9-501(3) of the New York UCC or other
provisions of applicable law (including judicial decisions), or to the
extent that such Waiver applies to a right, claim, duty, defense or ground
for discharge otherwise existing or occurring as a matter of law (including
judicial decisions) and which cannot be waived as a matter of law
(including judicial decisions);
(n) any provision of the Credit Documents which relates to forum
selection (including, without limitation, any waiver of any objection to
venue in any court or of any objection that a court is an inconvenient
forum);
(o) any provision of the Pledge Agreement or the Guaranty that
provides that a Loan Party's liability thereunder shall not be affected by
actions or failures to act on the part of the recipient of such Credit
Document or by amendments or waivers of provisions of documents governing
the obligations;
(p) any provision in the Credit Documents that purports to permit the
US Administrative Agent or any other Person to sell or otherwise dispose
of, or purchase, any collateral subject to the lien of the Credit
Documents, or enforce any other right or remedy under the Credit Documents
(including, without limitation, any self-help remedy or remedy involving
taking possession), except in compliance with the New York UCC and other
applicable laws;
(q) changes in the status of the security interest of the US
Administrative Agent or any other Person in the Collateral under Sections
363, 364(d) or 1129(b) of the United States Bankruptcy Code (11 U.S.C.
Sections 363, 364(d) and 1129(b));
(r) the effect of Section 552 of the United States Bankruptcy Code
(relating to property acquired by a pledgor after the commencement of a
case under the United States Bankruptcy Code with respect to such pledgor)
and Section 506(c) (relating to certain costs and expenses of a trustee in
preserving or disposing of collateral);
(s) the applicability to any transfer by, or obligations under the
Credit Documents of, the Loan Parties of Section 548 of the United States
Bankruptcy Code or Article 10 of the New York Debtor and Creditor law
relating to fraudulent transfers and obligations;
(t) as to the enforceability of Section 8.11 of the Credit Agreement
(and corresponding provisions in each of the other Credit Documents);
<PAGE>
6
(u) the provisions of the Credit Agreement or any other Credit
Document that purport to establish evidentiary standards or to make
determinations conclusive;
(v) the waiver by any Loan Party of any immunities from the
jurisdictions of courts (other than the New York State or Federal courts
sitting in the City of New York);
(w) whether or not a judgment by a New York state or federal court
would be given in a currency other than in US Dollars;
(x) without limiting the opinion set forth in paragraph 6, as to the
enforceability of any notice of identification issued pursuant to the
Pledge Agreement;
(y) any provision of the Credit Documents which provides for the
validity or perfection of any security interest created thereunder or any
remedy thereunder to be governed by the law of any jurisdiction other than
New York.
In addition, I express no opinion as to the enforceability of any
provision of any Credit Document whereby any Loan Party purports to submit to
the subject matter jurisdiction of the United States District Court for the
Southern District of New York. I note the limitations of 28 U.S.C. Section 1332
on federal court jurisdiction where diversity of citizenship is lacking, and I
also note that such submissions cannot supersede the court's direction in
determining whether to transfer an action from one court to another under
Section 18 U.S.C. Section 1404(a).
I am a member of the Bar of the State of New York.
<PAGE>
7
A copy of this opinion letter may be delivered by any of you to any
Person that becomes a Lender in accordance with the provisions of the Credit
Agreement. Any such Lender may rely on the opinions expressed above as if this
opinion letter were addressed and delivered to such Lender on the date hereof.
This opinion letter speaks only as of the date hereof. I expressly
disclaim any responsibility to advise you or any other Lender who is permitted
to rely on the opinions expressed herein as specified in the next preceding
paragraph of any development or circumstance of any kind including any change of
law or fact that may occur after the date of this opinion letter even though
such development, circumstance or change may affect the legal analysis, a legal
conclusion or any other matter set forth in or relating to this opinion letter.
Accordingly, any Lender relying on this opinion letter at any time should seek
advice of its counsel as to the proper application of this opinion letter at
such time.
Very truly yours,
/s/ Robert A. Lonergan
Robert A. Lonergan
Vice President and General Counsel
<PAGE>
SCHEDULE I
LENDERS
US LENDERS
Citibank, N.A.
CIBC Inc.
Dresdner Bank AG, New York Branch
ABN AMRO Bank N.V.
The Bank of Nova Scotia
The First National Bank of Chicago
Seattle-First National Bank
NM Rothschild & Sons, Ltd.
Bank of Montreal
Republic National Bank of New York
U.S. Bank of Washington
CANADIAN LENDERS
Citibank Canada
Canadian Imperial Bank of Commerce
ABN AMRO Bank Canada
First Chicago, NBD Bank, Canada
Bank of America Canada
Republic National Bank of New York (Canada)
AUSTRALIAN LENDERS
Citibank Limited
Dresdner Australia Limited
ABN AMRO Limited
The First National Bank of Chicago, Australian Branch
Bank of America NT & SA, Sydney Branch
Rothschild Australia Limited
Republic Mase Australia Limited
<PAGE>
SCHEDULE II
PART I - DOMESTIC SUBSIDIARIES
1. Beal Mountain Mining, Inc., a Montana corporation
2. Black Pine Mining, Inc., a Nevada corporation
3. Florida Canyon Mining, Inc., a Washington corporation
4. Montana Tunnels Mining, Inc., a Nevada corporation
5. Zortman Mining, Inc., a Montana corporation
6. Diamond Hill Mining, Inc., a Montana corporation
7. Pegasus Gold International, Inc., a Washington corporation
8. Pangea International Holdings Corporation, a Nevada corporation
9. Pegasus Gold Montana Mining, Inc., an Arizona corporation.
PART II - FOREIGN SUBSIDIARIES
1. Pegasus Minera de Chile Ltda.
2. Pegasus do Brasil Mineracao Ltda.
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[ALLEN ALLEN & HAMSLEY LETTERHEAD]
19 April 1996
To: Each of the Lender Parties as defined in and party
to the Credit Agreement referred to below
c/- Citibank, N.A., as US Administrative Agent
399 Park Avenue,
New York, New York 10043
Dear Sirs
PEGASUS GOLD AUSTRALIA PTY LTD
We have acted for Pegasus Gold Inc (PGI), Pegasus Gold Corporation (PGC) and
Pegasus Gold Australia Pty Ltd (PGA) in connection with the Credit Agreement
(the CREDIT AGREEMENT) dated as of 17 April 1996 between PGI, PGC, PGA, the
Initial Lenders and Initial Issuing Banks named in the Credit Agreement,
Citibank, N.A, Citibank Canada and Citibank Limited as Administrative Agents,
ABN AMRO Australia Limited as Non-Pro Rata Lender and the Co-Agents named in the
Credit Agreement.
Definitions in the Credit Agreement apply in this opinion but Document means a
document listed in paragraph 1(a), (b), (c), (d) or (e) below, and RELEVANT
JURISDICTION means the Commonwealth of Australia, the Northern Territory, the
Australian Capital Territory or New South Wales. No assumption or qualification
in this opinion limits any other assumption or qualification in it.
1. DOCUMENTS
We have examined faxed copies or photocopies of the following documents:
(a) executed counterparts of the Credit Agreement;
(b) an executed counterpart of each Australian Borrower Note;
(c) executed counterparts of the Guaranty;
(d) executed counterparts of the Pledge Agreement;
(e) an executed counterpart of the Acknowledgment Deed;
(f) certified copies of the memorandum and articles of association of PGA;
(g) certified copies of extracts of resolutions passed by the Board of
Directors of PGA;
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(h) executed power of attorney (the POWER OF ATTORNEY) in connection with the
execution of the Documents by PGA;
(i) each certificate of the Secretary of PGA provided under Section
3.01(f)(iv), 3.01(f)(v), and 3.01(f)(vi) of the Credit Agreement;
(j) the documents furnished by PGA under Section 3.01(f)(vii)(B)(3) of the
Credit Agreement;
(k) the solvency certificate furnished by the chief financial officer of PGA
under Section 3.01(f)(x) of the Credit Agreement; and
(l) a certificate of the Secretary of PGA certifying a copy of the share
register of PGA and that the register is in the Northern Territory.
2. ASSUMPTIONS
For the purposes of giving this opinion we have assumed the following without
further enquiry. Nothing in the documents listed in paragraph 1 or of which
those who have worked for PGA in connection with the Facility became aware has
made us aware that any of the following assumptions are untrue.
(a) The authenticity of all seals and signatures and of any duty stamp or
marking.
(b) The completeness, and the conformity to original instruments, of all copies
submitted to us, and that any document (other than a Document and the Power
of Attorney) submitted to us continues in full force and effect.
(c) The Documents are within the capacity and powers of, and have been validly
authorized, executed and delivered by and are binding on, the parties to
them other than PGA.
(d) The Power of Attorney has been or will be registered in the Australian
Capital Territory.
(e) No entity has engaged or will engage in misleading or unconscionable
conduct or is or will be involved in or a party to any relevant transaction
or any associated activity in a manner or for a purpose not evident on the
face of the Documents which might render the Documents or any relevant
transaction or associated activity in breach of law, void or voidable.
(f) Our opinion in paragraph 4(i) assumes that:
(i) each Document has been or will be executed outside Australia; and
(ii) no other assets in Australia are charged by the Pledge Agreement
except for the shares in PGA.
(g) Insofar as any obligation under any Document is to be performed in any
jurisdiction other than a Relevant Jurisdiction, its performance will not
be illegal or unenforceable under the law of that jurisdiction.
(h) Each Document (other than the Acknowledgment Deed) constitutes or will on
execution constitute legal, valid and binding obligations of PGA under the
laws of New York enforceable in competent courts of that jurisdiction.
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(i) Formalities for execution by PGA required by the law of the place of
execution of each Document have been or will be complied with.
(j) The certificates referred to in paragraph 1(i), (j) and (l) are correct
as to factual matters.
(k) The Commissioner of Taxation of the Commonwealth of Australia will not give
any direction under Section 218 or 255 of the ITAA or Section 74 of the
Sales Tax Assessment Act 1992 requiring PGA to deduct from any payment to
any other party to a Document any amount in respect of Income tax or sales
tax payable by that other party in respect of that other party's other
Australian source income or sales.
3. Qualifications
Our opinion is subject to the following qualifications.
(a) We express no opinion as to any laws other than the laws of each Relevant
Jurisdiction as in force at the date of this opinion.
(b) Our opinion that an obligation or document is enforceable does not mean
that the obligation or document can necessarily be enforced in accordance
with its terms in all circumstances. In particular;
(i) equitable remedies, such as injunction and specific performance, are
discretionary; and
(ii) the enforceability or an obligation, document or Lien may be affected
by statutes of limitation, by estoppel and similar principles, by the
doctrine of frustration, by laws concerning insolvency, bankruptcy,
liquidation, administration, enforcement of Lien or reorganisation, or
by other laws generally affecting creditors' rights or duties.
(c) We have relied on a search of public records on file at the offices of the
Australian Securities Commission on 19 April 1996 and on a search
conducted by our agents in the Northern Territory in reliance on advice
from the Supreme Court of the Northern Territory on 18 April 1996. We have
also relied on a faxed copy of the ASC Form 304 - Notification of Change to
Officeholders signed by PGA on 15 April 1996.
(d) We have relied on the assumptions specified in section 164 of the
Australian Corporations Law and note that you may do so unless;
(i) you have actual knowledge that the matter that you would otherwise be
entitled to assume to be correct is not correct; or
(ii) your connection or relationship with PGA is such that you ought to
know that the matter that you would otherwise be entitled to assume to
be correct is not correct.
Nothing in the material set out in paragraph I or of which those who have
worked for PGA in connection with the Facility become aware indicates
anything that would contradict these assumptions.
(e) Any provision of a Document that certain calculations, determinations or
certificates will be conclusive and binding will not apply if calculations,
determinations or certificates are fraudulent or manifestly inaccurate.
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(f) Any clause providing for the severability of any provision of a
Document may not he enforceable in accordance with its terms, as a
court may reserve to itself a decision as to whether any provision is
severable.
(g) The obligation of a party under a Document to pay interest on overdue
amounts at a rate higher than the rate applying before the amount fell
due may be held to constitute a penalty and be unenforceable.
(h) We express no opinion on any provision in a Document requiring written
amendments and waivers insofar as it suggests that oral or other
modifications, amendments or waivers could not be effectively agreed
upon or granted between or by the parties.
(i) The courts might not give full effect to an indemnity for legal costs
or for penalties on Taxes.
(j) By reason of section 261 of the Income Tax Assessment Act 1936 the
undertaking by PGA in Section 2.14 of the Credit Agreement and in
Section 5 of the Guaranty to pay any amount of Australian withholding
tax or income tax imposed on any Lender Party in respect of interest
or to pay any additional amount in respect of Australian withholding
tax or income tax in respect of interest would be void under
Australian law.
The Credit Agreement and the Guaranty are governed by New York law.
It is arguable that a judgment requiring payment of an amount due
under Section 2.14 of the Credit Agreement or Section 5 of the
Guaranty, obtained in a court sitting in New York, may be enforced in
a court sitting in a Relevant Jurisdiction despite this provision, but
we express no concluded view.
(k) Our opinion in paragraph 4(f) assumes that:
(i) In relation to the pledge by PGA, PGI and Pegasus Gold
International, Inc.:
(A) the Pledge Agreement will be registered under the
Australian Corporations Law not later than 45 days after
the date on which it is executed; and
(B) no Lien over the Collateral will, before the time of
registration of the Pledge Agreement, have been so
registered.
(ii) No Secured Party (as defined in the Pledge Agreement) had on the
date the Pledge Agreement was created notice of any Lien over
any of the Collateral and there was not on that date any
existing equity, interest or right (excluding a Lien) in any of
the Collateral.
(iii) Each Pledgor (as defined in the Pledge Agreement) has beneficial
and legal title to the Collateral pledged by that Pledgor.
(l) That opinion is also qualified to the extent that (in addition to the
Liens which may in accordance with the Credit Agreement do so) certain
other claims may have or obtain priority over the Pledge Agreement:
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(i) in relation to the pledge by PGA, PGI and Pegasus Gold International,
Inc.:
(A) because the priority accorded by virtue of registration under
the Australian Corporations Law does not extend to Liens
insofar as they are not so registrable (eg Liens over
interests in choses in action other than book debts and
certain Liens under which the holder has possession of the
property subject to the Lien or of documents of title to that
property);
(B) by virtue of certain exceptions provided by the Australian
Corporations Law to the principle that registrable charges
take priority according to the order in which they are
registered; and
(C) because the provisions of Section 2(b) of the Pledge Agreement
setting a maximum prospective liability may not be effective;
and
(ii) because a mortgagee or chargee may in certain circumstances lose Its
priority, for example, to a purchaser of a legal estate buying for
value without notice, or to a subsequent equitable interest where the
chargee has been involved with some postponing conduct.
(m) The share register of a company is not conclusive evidence of the
shareholders of a company or title to shares because it:
(i) does not disclose equitable interests; and
(ii) is subject to rectification by a company or a person aggrieved by
virtue of section 216H of the Australian Corporations Law.
(n) Any transfer of Pledged Shares (as defined in the Pledge Agreement) in
accordance with the terms of the Pledge Agreement to a foreign person may
require approval under the Foreign Acquisitions and Takeovers Act.
(o) Our opinion in paragraph 4(i) is subject to the qualification that share
transfer stamp duty may he payable in connection with a transfer of the
Pledged Shares (as defined in the Pledge Agreement) following enforcement
of the Pledge Agreement.
(p) Our opinion in paragraph 4(k) assumes that no entity other than PGI, a
Canadian corporation, has a controlling interest in PGA.
(q) Our opinion in paragraph 4(l) assumes that:
(i) PGI acquired the shares in PGA with proceeds from a public debt
raising completed in 1995;
(ii) no financial accommodation provided under the Credit Agreement will
be used to repay the public debt referred to in sub-paragraph (l);
(iii) no financial assistance has otherwise been provided by PGA in
connection with the purchase of its shares by PGI.
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(r) Our opinion in paragraph 4(m) assumes that the solvency certificate
referred to in paragraph l(k) is true.
(s) Our opinion in paragraph 4(n) assumes that any interest or charges payable
under the Loan Documents are not extortionate. If the interest and charges
payable under the Loan Documents are market interest rates and market
charges, we have no reason to believe that the interest or charges payable
under the Loan Documents are extortionate.
(t) Our opinion in paragraph 4(o) is subject to the qualification that payments
to any Lender Party of interest and amounts in the nature of interest under
the Documents will be subject to interest withholding tax under section
128B of the ITAA if that Lender Party is either:
(i) not a resident of Australia and the relevant payment is not derived
by that party in carrying on a business at or through a permanent
establishment of that party in Australia; or
(ii) a resident of Australia and the relevant payment is derived by that
party in carrying on business at or through a permanent establishment
of that party outside Australia.
(u) We express no opinion as to any Liens as security over property situated
outside any Relevant Jurisdiction,
(v) We express no opinion on whether any shareholders agreement or instrument
included in the Collateral or debt is capable of being subject to a Lien or
as to the legality, validity or enforceability of any shareholders
agreement or instrument included in the Collateral or debt which may be
subject to a Lien.
(w) A judgment by a court in Australia may be given in some cases only in
Australian dollars. A judgment of a New York State court or Federal court
sitting in New York City would, for the purposes of enforcement, be
converted in the Relevant Jurisdiction to Australian dollars at the rate of
exchange prevailing on the date of payment or execution.
(x) Purported waivers of statutory rights or agreements not to sue or
agreements to agree or negotiate or consult may not be enforceable.
4. OPINION
Based on the assumptions and subject to the qualifications set out above we are
of the following opinion.
(a) PGA is incorporated and has not been dissolved under the laws of the
Northern Territory.
(b) PGA has the corporate power to:
(i) enter into and perform its obligations under each Document to
which it is a party and the Power of Attorney; and
(ii) conduct any business.
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(c) The execution, delivery and performance by PGA of each Document to which it
is a party and the Power of Attorney did not and will not violate in any
respect any existing provision of:
(i) any law of any Relevant Jurisdiction; or
(ii) its memorandum or articles of association.
(d) The Acknowledgment Deed will on execution by PGA constitute a legal, valid
and binding obligation of PGA enforceable in competent courts of the
Relevant Jurisdiction.
(e) (i) Each Document is validly executed by PGA in accordance with the law
of each Relevant Jurisdiction.
(ii) Under the law of each Relevant Jurisdiction, New York law will be
applied to each Document, and will be enforceable in competent
courts of each Relevant Jurisdiction, if the choice of that law was
made in good faith, and except to the extent that (without limiting
the assumptions and qualifications set out above).
(A) there are mandatory provisions of the law of the Relevant
Jurisdiction which must be applied to a transaction covered by
a Document;
(B) any term of a Document, or any provision of New York State law
applicable to a Document, is contrary to the public policy of
the Relevant Jurisdiction;
(C) the availability or enforceability of certain rights and
remedies may be governed or affected by the procedural laws of
the Relevant Jurisdiction in courts of the Relevant
Jurisdiction; and
(D) a court may determine that another court is a more appropriate
forum.
(iii) We are not currently aware:
(A) of any mandatory provisions within the terms of sub-paragraph
(ii) above that affect enforceability; or
(B) that any term of the Loan Documents is contrary to the public
policy of the Relevant Jurisdiction,
save, in each case, as set out in the qualifications above and in
particular as set out in paragraph 3(j).
(iv) There is no further corporate action necessary for PGA to enter into
or to perform its obligations under, the Documents.
(v) We are not aware of any further corporate action required to be
taken by PGA to ensure that each Document will be enforceable
against it in competent courts of the Relevant Jurisdiction.
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(f) If the Pledge Agreement is a valid security having the priority
contemplated by it under New York law, the Pledge Agreement will operate as
a valid security having the priority contemplated by it under the laws of
the Relevant Jurisdictions in relation to property in the Relevant
Jurisdiction.
(g) (i) The share register of PGA records that PGI is the registered holder
of all the issued shares of PGA and that such shares are fully paid.
(ii) Each share of PGA pledged by PGI under the Pledge Agreement is:
(A) registered on a register maintained by or on behalf of PGA and
is represented by a share certificate which certifies the name
of the registered holder of the number of fully paid shares
specified in the certificate and which states that the
certificate must be surrendered to PGA before any transfer of
the share can be accepted;
(B) of a type commonly issued by Australian proprietary or public
companies, including an Australian public company listed on
the Australian Stock Exchange; and
(C) one of the ordinary shares in the capital of PGA issued by
PGA.
A transfer of the shares may be registered upon a register
maintained on or on behalf of PGA.
(h) All authorisations or approvals or other action by, or notice to or filing
with, any governmental authority or regulatory body or other third party
under the laws of any Relevant Jurisdiction required as of the date of this
opinion in connection with the execution, delivery, performance, validity
or enforceability of the Documents and the Power of Attorney have been
obtained or effected and are in full force and effect.
(i) No stamp or registration or similar taxes or charges are payable under the
laws of any Relevant Jurisdiction in connection with the execution,
delivery, performance and enforcement of the Documents or any transaction
contemplated by them other than nominal duty, financial institutions duty
and debits tax.
(j) It is not necessary or advisable under the laws of any Relevant
Jurisdiction to file, register or record any Document other than the
registration of the Pledge Agreement with the Australian Securities
Commission and those filings, registrations or recordings that have been
duly effected or lodged at the date of this opinion.
(k) The execution, delivery and performance by PGA of each Document to which it
is a party does not breach section 243H of the Australian Corporations Law.
(l) The execution, delivery and performance by PGA of each Document to which it
is a party does not breach section 205 of the Australian Corporations Law.
(m) No transaction contemplated by a Document is an insolvent transaction
within the meaning of section 588FC of the Australian Corporations Law.
(n) No transaction contemplated by a Document is an unfair loan within the
meaning of section 588FD of the Australian Corporations Law.
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(o) All amounts payable by PGA under the Credit Agreement or the Australian
Borrower Note may be paid without deduction for or on account of any
Australian tax.
Although, it is not free from doubt, our view is that an amount payable by
PGA as Guarantor under the Guaranty which is not interest but which is
referable to what would be interest if paid by another Borrower, is not
interest or an amount in the nature of interest and, consequently, is not
liable to withholding tax. Interest is an amount paid by a borrower to a
lender to compensate the lender for being kept out of the use of its money.
A payment by a guarantor is a payment to discharge a separate guarantee
obligation.
The fees payable by PGA under Section 2.09(a), (c) and (f) of the Credit
Agreement are not payments of interest or amounts in the nature of
interest.
(p) Neither PGA nor any of its properties or assets has any immunity from the
jurisdiction of any court or from legal process under the laws of any
Relevant Jurisdiction.
(q) It is not necessary that any Lender Party should be licensed, qualified or
otherwise entitled to carry on business under the laws of any Relevant
Jurisdiction in order to enforce its rights under any Document or by reason
only of the execution, delivery and performance of any Document.
A Lender Party will not be a resident of or domiciled in Australia by
reason only of the execution, delivery and performance (as contemplated In
the Documents) of any Document.
(r) The irrevocable submission of PGA to the jurisdiction of the courts of the
State of New York or Federal courts sitting in New York city, and the
appointment of a process agent for service of process in New York are valid
and binding under the laws of each Relevant Jurisdiction subject to, when
the matter is before an Australian court, an overriding jurisdiction of the
courts of each Relevant Jurisdiction to determine that another court is a
more appropriate forum.
(s) Any final and conclusive judgment of a New York State court or Federal
court, sitting in New York city (a NEW YORK COURT) having jurisdiction
recognised by the Relevant Jurisdiction, in respect of an obligation of PGA
under a Document, which is for a fixed sum of money, would be enforceable
by action against the judgment debtor in the courts of each Relevant
Jurisdiction (other than the Commonwealth of Australia) without a re-
examination of the merits of the issues determined by the proceedings in
the New York Court unless;
(i) the proceedings in the New York Court involved a denial of the
principles of natural justice;
(ii) the judgment is contrary to the public policy of the Relevant
Jurisdiction;
(iii) the judgment was obtained by fraud or duress;
(iv) the judgment is a penal or revenue judgment; or
(v) there has been a prior judgment in another court between the same
parties concerning the same issues as are dealt with in the judgment
of the New York Court.
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This opinion is addressed to you for your sole benefit and for the benefit of
any Eligible Assignee of your interest in the Credit Agreement as permitted by
Section 8.07 of the Credit Agreement. It is not to he relied upon by any other
person or for any other purpose nor is it to be quoted or referred to in any
public document or filed with any Governmental Agency or other person without
our consent.
We consent to reliance on this opinion by Simpson Thacher & Bartlett, counsel to
the Loan Parties and Shearman & Sterling, counsel to the US Administrative Agent
for the purpose of rendering their opinions in accordance with Section 3.01 of
the Credit Agreement.
We accept no responsibility or obligation to update this opinion, to consider
its applicability or correctness to persons other than its addressee, or to take
into account changes in law, facts or any other development of which we may
later become aware.
Yours faithfully
/s/ ALLEN ALLEN & HEMSLEY
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[LAWSON LUNDELL LAWSON & McINTOSH - LETTERHEAD]
April 19, 1996
To each of the Lender Parties as defined
in and who is a signatory to the Credit
Agreement referred to below
c/o Citibank, N.A.,
as US Administrative Agent
399 Park Avenue
New York, New York
U.S.A. 10043
Ladies and Gentlemen:
PEGASUS GOLD INC.
This opinion is furnished to you pursuant to Section 3.01(f)(xi)(C) of the
Multicurrency Reducing Revolving Credit Agreement, dated as of April 17, 1996
(the "Credit Agreement"), among Pegasus Gold Inc., a corporation formed under
the laws of British Columbia, Canada ("Pegasus Canada"), Pegasus Gold
Corporation, a Nevada corporation ("Pegasus Nevada") and Pegasus Gold Pty. Ltd.
(formerly known as Zapopan N.L.) (ACN 009 628 924), an Australia corporation
("Pegasus Australia" and, together with Pegasus Canada and Pegasus Nevada,
collectively, the "Subject Loan Parties" and, individually, a "Subject Loan
Party"), as Borrowers, the financial institutions party thereto as Initial
Lenders and Initial Issuing Banks, ABN AMRO Australia Limited as the Non-Pro
Rata Lender, ABN AMRO Bank N.V., Canadian Imperial Bank of Commerce, The First
National Bank of Chicago and Dresdner Bank, A.G., New York Branch as Co-Agents,
and Citibank, N.A., Citibank Canada and Citibank Limited as Administrative
Agents. Terms defined in the Credit Agreement and not otherwise defined herein
are used herein as therein defined.
We have acted as Canadian counsel for Pegasus Canada in connection with the
preparation, execution and delivery of, and the Initial Extension of Credit
under, the Credit Agreement.
In that connection, we have examined the following (the documents referred to in
items 1, 2, 3 and 4 below being, for purposes of this opinion, the "Loan
Documents"):
1. The Credit Agreement executed by the Subject Loan Parties.
2. The Canadian Borrower Notes executed by Pegasus Canada.
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3. The Guaranty executed by the Subject Loan Parties and certain Restricted
Subsidiaries.
4. The Pledge Agreement executed by the subject Loan Parties and certain
Restricted Subsidiaries.
5. The document furnished by Pegasus Canada pursuant to Section 3.01 of the
Credit Agreement and listed on Exhibit A hereto.
6. The memorandum and articles of Pegasus Canada and all amendments thereto
(collectively, the "Articles").
7. Such other documents and such laws, rules, regulations and the like
(including treaties) as we have deemed necessary as a basis for the
opinions hereinafter expressed.
We have relied exclusively upon the certificate attached hereto with respect to
the accuracy of the factual matters contained therein; while we have not
performed any independent check or verification of such matters, other than as
set out in this opinion, nothing has come to our attention during our
participation with respect to the Loan Documents which leads us to believe such
certificate is incorrect.
For the purposes of the opinion in paragraph 4(e) hereof, we have assumed that
each of the other parties to the Loan Documents exists, has the corporate
capacity and power to execute and deliver the Loan Documents to which it is a
party and has duly and validly authorized, executed and delivered each of the
Loan Documents to which it is a party as its legal, valid and binding
obligation, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or is subject to the effect of general principles of equity
(including without limitation the discretionary nature of the remedies of
specific performance and injunction).
Based upon the foregoing and upon such investigation as we have deemed
necessary, we are of the following opinion:
1. Pegasus Canada (i) is a corporation duly incorporated and validly existing
under the COMPANY ACT (British Columbia); and (ii) has the corporate power
to own or lease and operate its property and assets and to carry on its
business as it is now conducted.
2. The execution, delivery and performance by Pegasus Canada of each Loan
Document, and the consummation by Pegasus Canada of the transactions
contemplated by the Credit Agreement, are within Pegasus Canada's corporate
powers, have been duly authorized by all necessary corporate action and
do not contravene the Articles or any law, rule of regulation applicable to
Pegasus Canada. Each Loan Document has been duly executed and delivered by
Pegasus Canada.
3. No authorization or approval or other action by, and no notice to or filing
with, any governmental, regulatory or administrative authority or other law
or rule-making entity of the federal government of Canada or of the
Province of British Columbia ("Governmental Authority") or any other third
party is required for (i) the due execution, delivery, recordation, filing
or performance by Pegasus Canada of any Loan Document, or for the
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consummation of the transactions contemplated by the Credit Agreement,
(ii) the grant by Pegasus Canada of the Lien granted by it pursuant to the
Pledge Agreement, (iii) the perfection or maintenance of the perfection or
priority of the Lien created by the Pledge Agreement or (iv) the exercise
by the US Administrative Agent or any other Lender Party of it rights
against Pegasus Canada under the Loan Documents or the remedies in respect
of the right, title and interest of Pegasus Canada in and to the Pledged
Shares (as defined in the Pledge Agreement) pursuant to the Pledge
Agreement, except for the authorizations, approvals, actions, notices and
filings listed on Exhibit B hereto, all of which have been duly obtained,
taken, given or made and are in full force and effect and except for such
actions indicated on the attached schedule to be taken after the Closing
Date. There are no waiting periods now applicable in connection with the
transactions contemplated by the Credit Agreement which would permit any
competent authority to restrain, prevent or impose materially adverse
conditions upon the rights of Pegasus Canada freely to transfer or to
otherwise dispose of, or to create any Lien on, any properties now owned or
hereafter acquire by it.
4. (a) The choice of New York law as the governing law of the Loan Documents
will be upheld as a valid choice of law by the courts of the Province
of British Columbia provided that such choice of law is BONA FIDE (in
the sense that it was not made with a view to avoiding the
consequences of the law of any other jurisdiction) (to the best of
our knowledge, such choice of law is BONA FIDE) and provided that
such choice of law is not contrary to public policy, as that term is
understood under the laws of the Province of British Columbia.
(b) A court in the Province of British Columbia would, subject to section
4(a) hereof, apply New York law, to the extent pleaded and proved, in
any action or proceeding against any of the Loan Parties arising out
of any Loan Documents to the extent that the parties have agreed to
its application therein, except that:
(i) a British Columbia court will apply only British Columbia
procedural laws;
(ii) a British Columbia court may not enforce an obligation
enforceable under the laws of the State of New York where
performance of the obligation would be illegal by the law of
the place of performance;
(iii) a British Columbia court will not enforce a foreign law that
is contrary to public policy or is of a revenue or penal
nature; and
(iv) a British Columbia court may reserve to itself an inherent
power to decline to hear such an action if it is contrary to
public policy, as such term is understood under the laws of
British Columbia, for it to do so, or if it is not the proper
forum to hear such action or if concurrent proceedings are
being brought elsewhere.
(c) A judgment of a court of the State of New York can be enforced in
the Province of British Columbia by suing on the judgment and the
courts of the Province of British Columbia would give a judgment in
Canadian currency based on any final
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and conclusive judgment validly and properly given by a court of
competent jurisdiction in the State of New York without
reconsideration of the merits, assuming proper service of the process
where:
(i) the judgment is not the subject of an appeal;
(ii) the judgment was for a definite and ascertained sum of money;
(iii) the judgment was not obtained by fraud or in a manner opposed
to the principles of natural justice;
(iv) the judgment was not obtained in proceedings of a penal or
revenue character; and
(v) recognition of the judgment is not contrary to public policy
as applied by the British Columbia courts.
(d) To the best of our knowledge after due inquiry, none of the terms of
the Loan Documents (including, without limitation, any choice of law
therein) violates an important public policy of British Columbia or
is of a revenue or penal nature.
(e) Although the Loan Documents contain choice of law provisions which
state that they shall be governed and construed in accordance with
the laws of the State of New York, in the event that in any action in
a British Columbia court to enforce the obligations of Pegasus Canada
under the Loan Documents New York law was not proven and the laws of
British Columbia were applied to govern the legality, validity and
interpretation of the Loan Documents, each of the Loan Documents
would constitute a legal, valid and binding obligation of Pegasus
Canada, enforceable against Pegasus Canada in accordance with its
terms, except that its enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and may be subject to the effect of
general principles of equity (including without limitation the
discretionary nature of the remedies of specific performance and
injunction).
5. Each of the Loan Documents is in proper legal form under the laws of
British Columbia and the laws of Canada applicable therein for the
enforcement thereof against Pegasus Canada under the laws of British
Columbia and the laws of Canada applicable therein; and to ensure the
legality, validity, enforceability or admissibility in evidence of the Loan
Documents in the courts of the federal government of Canada or the
provincial government of British Columbia, it is not necessary that any
Loan Documents or any other document be filed or recorded with any
Governmental Authority or court of the federal government of Canada or the
provincial government of British Columbia or that any stamp or similar tax
be paid on or in respect of the Loan Documents.
6. If the Pledge Agreement were governed by the law of the Province of British
Columbia, it would create a valid security interest in the right, title and
interest of Pegasus Canada in and to the Pledged Shares (as defined in the
Pledge Agreement) (the "Pegasus Pledged Shares") securing the payment of
the Obligations of Pegasus Canada as defined and to the
<PAGE>
Page 5
extent set forth in the Pledge Agreement. Once the US Administrative Agent
takes and provided that it maintains possession of the certificates
representing the Pegasus Pledged Shares and is without knowledge that any
of the Pegasus Pledged Shares was subject to a security interest in favour
of any other Person, the security interest of the US Administrative Agent
in the Pegasus Pledged Shares will be perfected and will have priority over
any other security interest granted by Pegasus Canada in the Pegasus
Pledged Shares perfected by registration or temporarily perfected under the
PERSONAL PROPERTY SECURITY ACT (British Columbia) ("PPSA"), other than a
purchase money security interest (as defined in PPSA) in respect of which
the holder thereof has registered a financing statement in the British
Columbia Personal Property Registry.
(a) within 15 days of Pegasus Canada or another Person at the request of
Pegasus Canada, obtaining possession of the relevant Pegasus Pledged
Shares; or
(b) where such purchase money security interest was perfected by
possession within 15 days of the Pegasus Canada or another Person at
the request of Pegasus Canada obtained possession of the relevant
Pegasus Pledged Shares and the holder of the purchase money security
interest has delivered the relevant Pegasus Pledged Shares to Pegasus
Canada for the purposes of ultimate sale or exchange, presentation,
collection or renewal, or registration of transfer, within 15 days of
the date of such delivery; or
(c) where any of the Pegasus Pledged Shares are proceeds of personal
property subject to the purchase money security interest, within 15
days of the date such Pegasus Pledged Shares become proceeds as
aforesaid.
A search conducted by us in the British Columbia Personal Property Registry
on April 19, 1996, having a currency date of April 16, 1996, revealed no
registrations against Pegasus Canada, other than that described in Exhibit
B hereto.
7. Except as described in the following sentence, there is no tax, levy,
impost, deduction, charge or withholding imposed by Canada or British
Columbia or any taxing authority thereof or therein either (i) on or by
virtue of the execution or delivery by Pegasus Canada of any Loan Document
or (ii) with respect to Lender Parties that are not incorporated and
existing under the laws of, or whose Applicable Lending Office is not
located in, Canada or any political subdivision thereof, (x) on or by
virtue of any payment to be made by Pegasus Canada pursuant to any Loan
Document or (y) on such Lender Parties with respect to receipt of such a
payment. Amounts paid or credited by or on behalf of Pegasus Canada to a
Lender who is a non-resident of Canada within the meaning of the INCOME TAX
ACT (Canada) as, on account or in lieu of payment of, or in satisfaction of
interest (as that term is used in the INCOME TAX ACT (Canada)), including
without limitation (i) interest payable under the terms of the Credit
Agreement, (ii) the amount by which the Face Amount of any BA Obligation
exceeds the Drawing Purchase Price of such BA Obligation, (iii) the Letter
of Credit fees payable by Pegasus Canada pursuant to section 2.09(c) of the
Credit Agreement, (iv) the commitment fee payable pursuant to section
2.09(a) of the Credit Agreement, (v) the Drawing Fees payable by Pegasus
Canada pursuant to section 2.09(g) of the Credit Agreement and (vi) all
amounts payable by
<PAGE>
Page 6
Pegasus Canada pursuant to the Guaranty in respect of obligations which
would constitute interest (as that term is used in the INCOME TAX ACT
(Canada) will generally be subject to withholding tax under Part XIII of
the INCOME TAX ACT (Canada) at the rate of 25% of the amount of the
payment. The rate of withholding tax may be reduced by an applicable
income tax treaty between Canada and the country of residence of the Lender
for Lenders resident in the United States of America or Australia the;
applicable rates are 10% and 15% respectively.
8. Provided that such execution, delivery, performance or enforcement is not
effected through an office or permanent establishment in Canada, none of
the Administrative Agents, Co-Agents, Lenders or Initial Issuing Banks
which is a signatory to any of the existing Loan Documents and which is not
otherwise resident, domiciled, carrying on business or subject to taxation
in Canada, will be resident, domiciled, carrying on business or subject to
taxation in Canada by reason only of the execution, delivery, performance
or enforcement of the Loan Documents.
9. The execution and delivery of the Loan Documents, the making of the
Accommodations to Pegasus Canada, the performance of their obligations to
Pegasus Canada under the Loan Documents and the enforcement of their rights
against Pegasus Canada under the Loan Documents by any Lender Parties which
are not residents of Canada do not contravene section 508 of the BANK ACT
(Canada), provided that such actions are not effected through an office or
permanent establishment in Canada.
10. It is not necessary under the laws of British Columbia or the federal laws
of Canada (i) in order to enable the Administrative Agents, the Initial
Lenders and the Initial Issuing Banks, or any of them, to enforce their
respective rights against Pegasus Canada under any Loan Document or (ii) by
reason only of the execution, delivery or performance of the Loan
Documents, that any of them be licensed, qualified or entitled to carry on
business in British Columbia or in Canada provided that it will be
necessary for any such Person, if a corporation, other than a Canadian
chartered bank or a federally-incorporated corporation, to register as an
extra-provincial corporation under the COMPANY ACT (British Columbia) in
order to maintain an action in the courts of British Columbia if, at the
time of commencement or during the continuance of such action, such Person
is carrying on business (as such term is defined in the COMPANY ACT
(British Columbia)) in the Province of British Columbia.
The opinions expressed above are subject to the following qualifications:
1. We are qualified to express opinions solely with respect to, and our
opinions are restricted to, the laws of the Province of British Columbia
and the applicable laws of Canada therein. In particular, without limiting
the generality of the immediately preceding sentence, no opinion is
expressed in this letter with respect to the laws of any other jurisdiction
to the extent that such laws may govern the validity, perfection, effect of
perfection or non-perfection or enforcement of any security interest
created by the Loan Documents as a result of the application of British
Columbia conflict of law rules, including, without limitation, sections 5
to 8 of the PPSA.
<PAGE>
Page 7
2. We have not reviewed, and we express no opinion about, the laws of any
other jurisdiction even though the Loan Documents refer to such other laws
or incorporate them by reference.
3. We express no opinion as to the legal or beneficial title of Pegasus Canada
in and to any of the Pledged Shares or, save as expressly provided in
paragraph 6 above, the priority of any Lien created therein by the Pledge
Agreement.
The opinions expressed in paragraphs 4 and 6 above are subject to the following
further qualifications:
1. The CURRENCY ACT (Canada) precludes a court in Canada from giving a
judgement in a currency other than Canadian Dollars.
2. If the Lender Parties were to demand payment of the indebtedness of Pegasus
Canada under the Loan Documents, the Lender Parties may be required to give
Pegasus Canada a reasonable time to raise funds to pay that indebtedness
prior to taking any action to enforce their right to payment or exercising
any of the rights and remedies expressed to be exercisable by the Lender
Parties.
3. We express no opinion as to the enforceability of any provision of the Loan
Documents which requires Pegasus Canada to pay the costs and expenses of
the Lender Parties on the basis that any such provision may only be
enforced in the discretion of a court.
4. We express no opinion as to the enforceability of any general waivers of
defences by Pegasus Canada included in the loan Documents.
5. We express no opinion as to the enforceability of any provision of the Loan
Documents which states that amendments or waivers of or with respect to
such Loan Documents that are not in writing will not be effective.
6. The post-judgement rate of interest applicable to the liabilities of
Pegasus Canada under the Loan Documents lies within the discretion of the
court.
7. Enforceability of any Lien created by any of the Loan Documents may be
subject to:
(a) the power of a court under the PPSA to grant relief from the
consequences of default;
(b) the detailed provisions of PPSA which set out procedures for the
enforcement of security agreements and impose duties with respect to
the exercise of rights or remedies thereunder, including a duty to
exercise or discharge rights, remedies, duties and obligations in
good faith and in a commercially reasonable manner;
(c) any estoppel based on incorrect information given in response to a
demand for information made pursuant to Section 18 of the PPSA; and
<PAGE>
Page 8
(d) in the event that the US Administrative Agent gives up possession of
any of the Pledged Shares, to Section 31 of the PPSA (a copy of which
is attached) which provides that, in certain circumstances, a
security interest may not be enforceable against a person who
acquires and takes possession of securities from a debtor.
We are aware that Simpson Thacher & Bartlett, counsel to the Loan Parties, and
Shearman & Sterling, counsel to the Co-Agents and the US Administrative Agent,
may rely upon this opinion in rendering their opinions furnished pursuant to
section 3.01 of the Credit Agreement.
At your request, we hereby consent to reliance hereon by any future participants
or Eligible Assignees of your interest in the Credit Agreement as permitted by
section 8.07 of the Credit Agreement, PROVIDED, that such participant or
Eligible Assignee is hereby notified that this opinion speaks only as of the
date hereof and to its addressees and that we have no responsibility or
obligation to update this opinion, to consider its applicability or correctness
to other than its addressees, or to take into account changes in law, facts or
any other development of which we may later become aware.
Yours very truly,
/s/ LAWSON LUNDELL LAWSON & McINTOSH
<PAGE>
EXHIBIT A
1. Certified copy of constating documents of Pegasus Canada delivered pursuant
to Section 3.01(f)(iii) of the Credit Agreement.
2. Certificate of officer delivered pursuant to Section 3.01(f)(ii) of the
Credit Agreement.
3. Certificate of officer delivered pursuant to Section 3.01(f)(iv)(B) of the
Credit Agreement.
4. Certificate of Good Standing of Pegasus Canada.
5. Certificate of officer delivered pursuant to Section 3.01(f)(v) of the
Credit Agreement.
6. Certificate of officer delivered pursuant to Section 3.01(f)(vi) of the
Credit Agreement.
7. Solvency certificate of Pegasus Canada, Pegasus Nevada and Pegasus
Australia.
<PAGE>
EXHIBIT B
AUTHORIZATIONS, APPROVALS, ACTIONS, NOTICES AND FILINGS
Registration of a financing statement on April 19, 1996 under No. 6336521 in the
Personal Property Registry for the Province of British Columbia with respect to
the Lien created by Pegasus Canada under the Pledge Agreement.
Any security interest created by Pegasus Canada under the Pledge Agreement and
not otherwise perfected by possession will cease to be perfected on the expiry
date of the aforesaid financing statement (April 19, 2006), unless a financing
change statement is registered prior to such expiry date, extending the expiry
date. Registering a financing change statement as contemplated by PPSA is
necessary to establish or preserve priority of a security interest in the
following circumstances:
(a) within 15 days after a secured party obtains knowledge of a change of
name of a debtor;
(b) within 15 days after a debtor transfers all or part of its
interest in any of the collateral with the consent of a secured party
and, in any event, within 15 days after a secured party obtains
knowledge that all or part of a debtor's interest in any collateral
has been transferred (which may include transfer by operation of
law); and
(c) if any collateral which is serial numbered goods (as defined in PPSA)
but not described by serial number in the aforesaid financing
statement is not or ceases to be inventory.
Registering financing change statements as contemplated by PPSA may be desirable
if a secured party transfers all or part of a security interest to another
person or if a secured party changes its name or address.
<PAGE>
CERTIFICATE
I, ROBERT A. LONERGAN, hereby certify as follows:
1. I am the Vice President of Pegasus Gold Inc., (the "Company") and as such
have personal knowledge of the matters herein certified.
2. This Certificate is delivered to Messrs. Lawson Lundell Lawson & McIntosh
to be relied upon by them for the purposes of their opinion to be provided
in connection with a Multicurrency Reducing Revolving Credit Agreement
dated as of April 17, 1996 among the Company, Pegasus Gold Corporation,
Pegasus Gold Pty. Ltd., certain financial institutions party thereto as
Initial Lenders and Initial Issuing Banks, ABN AMRO Australia Limited, ABN
AMRO Bank N.V., Canadian Imperial Bank of Commerce, Dresdner Bank, A.G.,
The First National Bank of Chicago, Citibank, N.A., Citibank Canada and
Citibank Limited ("Credit Agreement"). Capitalized terms used herein and
not otherwise defined shall have the meanings given to such terms in the
Credit Agreement.
3. The Company carries on no business other than the natural resource
extractive business and owns no properties or assets other than those used
in connection with the aforesaid business.
4. At the time of its execution of the Credit Agreement, the Canadian Borrower
Note, the Guaranty and the Pledge Agreement:
(a) the fair value of the property of the Company was greater than the
total amount of liabilities, including without limitation, contingent
liabilities, of the Company;
(b) the present fair saleable value of the assets of the Company was not
less than the amount that would be required to pay the probable
liability of the Company on its debts as they became absolute and
mature;
(c) the Company did not intend to and did not believe that it would,
incur debts or liabilities beyond its ability to pay such debts and
liabilities as they mature;
(d) the Company was not engaged in business or a transaction, and was not
about to engage in a business or transaction, for which the Company's
property would constitute an unreasonably small capital; and
<PAGE>
2
(e) the Company was able to pay its debts as they became due in the usual
course of its business.
For the purpose of the foregoing the amount of contingent liabilities at any
time has been computed as the amount that, in light of the facts and
circumstances existing at such time, represents the amount that could be
reasonably expected to become an actual or matured liability.
DATED the 19th day of April, 1996.
----
/s/ Robert A. Lonergan
- ------------------------------
Robert A. Lonergan,
Vice President,
Pegasus Gold Inc.
<PAGE>
PERSONAL PROPERTY SECURITY ACT
PROTECTION OF TRANSFEREES OF NEGOTIABLE AND QUASI-NEGOTIABLE COLLATERAL
31.(1) A holder of money has priority over a security interest in money
perfected under section 25, or temporarily perfected under section 28(3),
if the holder
(a) acquired the money without knowledge that it was subject to
a security interest, or
(b) is a holder for value whether or not the holder acquired the
money with knowledge that it was subject to a security
interest.
(2) A creditor who receives an instrument drawn or made by a debtor
and delivered in payment of a debt owing to the creditor by that debtor has
priority over a security interest in the instrument whether or not the
creditor has knowledge of the security interest at the time of delivery.
(3) A purchaser of an instrument or a security has priority over a
security interest in the instrument or security perfected under section 25
or temporarily perfected under section 26 or 28(3) if
(a) the purchaser gave value for the instrument or security,
(b) the purchaser acquired the instrument or security without
knowledge that it was subject to a security interest, and
(c) in the case of a security or instrument that
(i) is not a security with a clearing agency, the purchaser
took possession of the instrument or security, or
(ii) is a security with a clearing agency, an entry has been
made in the records of the appropriate clearing agency
indicating that the security has been transferred to
the purchaser.
(4) A holder of a negotiable document of title has priority over a
security interest in the document of title
5/95 A-41
<PAGE>
PPSA PRACTICE MANUAL
that is perfected under section 25 or temporarily perfected under section
26 or 28(3), if the holder
(a) gave value for the document of title, and
(b) acquired the document of title without knowledge that it was
subject to a security interest.
(5) For the purposes of subsections (3) and (4),
(a) a purchaser of an instrument or a security, or
(b) a holder of a negotiable document of title
who acquired his interest under a transaction entered into in the ordinary
course of the transferor's business has knowledge only if he acquired the
interest with knowledge that the transaction violates the terms of the
security agreement creating or providing for the security interest.
(6) A purchaser of chattel paper who takes possession of the chattel
paper in the ordinary course of business and for new value has priority
over any security interest in it that
(a) was perfected under section 25, if the purchaser does not
know at the time of taking possession that the chattel paper
is subject to a security interest, or
(b) has attached to proceeds of inventory under section 28,
whatever the extent of the purchaser's knowledge.
A-42 5/95
<PAGE>
[ERWIN THOMPSON & HASCHEFF LETTERHEAD]
April 18, 1996
Citibank, N.A.,
Citibank Canada and
Citibank Limited (ACN 004 325 0080),
Individually and as Administrative
Agents for the Lenders
and the other Lender Parties Party to
the Credit Agreement referred to below
399 Park Avenue
New York, New York 10043
Re: Pegasus Gold Inc.
Ladies and Gentlemen:
We have acted as special Nevada counsel for Pegasus Gold Corporation, a
Nevada corporation ("PGC"), in connection with the transactions contemplated by
that certain Multicurrency Reducing Revolving Credit Agreement (the "Agreement")
dated as of April 17, 1996, among Pegasus Gold Inc., a British Columbia, Canada
corporation ("PGI"), PGC, Pegasus Gold Australia Pty. Ltd., an Australian
corporation ("PGA"), the banks, financial entities and other institutional
lenders identified in the Agreement as the Initial Lenders (the "Initial
Lenders"), the Initial Issuing Banks, as defined in the Agreement, Citibank,
N.A., Citibank Canada and Citibank Limited (ACN 004 325 0080), an Australian
corporation and, together with Citibank and Citibank Canada, each an
"Administrative Agent" and, collectively, the "Administrative Agents", ABN AMRO
Australia Limited, ABN AMRO Bank N.V., Canadian Imperial Bank of Commerce,
Dresdner Bank, A.G., and the First National Bank of Chicago as Co-Agents. All
capitalized terms used in this opinion without definition have the meanings
specified in the Agreement.
In rendering our opinion, we have examined originals or copies of the
following documents:
1. The Agreement.
2. The Guaranty.
3. The Pledge Agreement.
4. The US Borrower Notes.
<PAGE>
April 18, 1996
Page 2
5. The Officer's Certificate of Robert A. Lonergan, as Vice President,
General Counsel and Secretary of PGC.
6. The Resolutions of the Directors of PGC.
7. The Certificate of Corporate Existence of the Secretary of State of
the State of Nevada dated April 2, 1996, certifying the corporate existence of
PGC in the State of Nevada.
8. The documents listed paragraphs in 1-4 above are sometimes
collectively referred to as the "Loan Documents".
In addition, to the extent our opinions involve factual matters, we have
examined and, with your knowledge and consent, we have relied upon the Officer's
Certificate as to factual matters described in the Officer's Certificate and the
Certificate of Corporate Existence for PGC issued by the Nevada Secretary of
State on April 2, 1996.
We have examined such other documents and considered such questions of law
as we have deemed necessary or desirable for the expression of our opinions. In
such examination, we have assumed the authenticity of all documents submitted to
us as originals, the conformity to the original documents of all documents
submitted to us as copies, the authenticity of the originals of the latter
documents and the genuineness and authorization of all signatures other than
those of and on behalf of PGC.
We have reviewed and our opinions are limited to the laws and regulations
of: (a) the State of Nevada; and (b) the United States. Except as expressly
stated in this opinion, we have not been called upon to review, nor have we
reviewed, or to render any opinion regarding the laws of any other jurisdiction
or any federal securities laws or tax laws (including laws governing sales and
use taxes) or regulations in connection with the transactions contemplated by
the Loan Documents, and, except as specifically stated in this opinion, we
express no opinion whatsoever as to the effect such laws or regulations may have
upon the transactions contemplated by the Loan Documents.
Our opinions are also subject to the following general qualifications:
A. This opinion is rendered as of the above date. We do not undertake to
advise you or any assignee or successor of an Initial Lender of matters which
may come to our attention after the above date and which may affect the opinions
we have expressed.
B. In rendering our opinions concerning the enforceability of the Loan
Documents, we have assumed, with your knowledge and consent, that all matters of
enforceability will be governed by the laws of the State of New York and that
the Agreement is enforceable in accordance with its terms under New York law,
subject to and as may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general and general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
<PAGE>
April 18, 1996
Page 3
C. Except as expressly stated in this opinion, we render no opinion
regarding the veracity of any representations or warranties contained in the
Loan Documents or in the Officer's Certificate.
Based upon and subject to the foregoing, we are of the opinion that:
1. PGC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and is qualified to transact
business in Nevada under the laws of the State of Nevada. PGC has all requisite
corporate power, authority and legal right to own or lease and operate its
properties and to carry on its business as now conducted and to enter into and
perform the Loan Documents.
2. PGC's execution, delivery and performance of the Loan Documents have
been duly authorized by all necessary corporate action of PGC, and the Loan
Documents to which PGC is a signatory have been duly executed and delivered by
PGC.
3. PGC's execution and delivery of the Loan Documents, and PGC's
performance of its obligations under the Loan Documents, do not: (a) violate
any Nevada law, regulation or rule applicable to PGC; (b) conflict with, result
in a breach of, or constitute a default under, any of the terms, conditions or
provisions of PGC's articles of incorporation or bylaws; or (c) require any
approvals, authorizations, consents, declarations, filings or registrations by
PGC under any Nevada law, regulation or rule applicable to PGC, except those
which PGC has obtained or which PGC will apply for and obtain in the ordinary
course of the conduct of its business operations in Nevada.
4. PGC's authorized capital stock consists of 1,505,000 shares of common
stock, of which 248,266 shares have been duly authorized and validly issued and
are fully paid and nonassessable. Based solely on our review of PGC's stock
records, all of the issued and outstanding shares of PGC are owned of record by
PGI. To the best of our knowledge, after due inquiry, there are no rights of
conversion, options or warrants, or other agreements, arrangements, commitments
or rights, relating to the capital stock of PGC which obligate PGC to issue or
sell any of its shares of capital stock.
This opinion is intended solely for the benefit of the Administrative
Agents, the Collateral Agents, the Initial Lenders, the Initial Issuing Bank and
the Co-Agents in connection with the transactions contemplated by the Loan
Documents, and is not to be relied upon by any other person or for any other
purpose or quoted in whole or in part or otherwise referred to in any document
filed or to be filed with any governmental or other administrative agency or
other person for any purpose without the prior written consent of this firm.
Notwithstanding the preceding sentence, a copy of this opinion letter may be
delivered by any of the Lender Parties to any assignee in connection with any
assignment of all or a portion of the rights and obligations of such Lender
Party under the Agreement in accordance with the provisions of the Agreement,
and such assignee may rely on the opinions expressed above as if this opinion
letter were addressed and delivered to the assignee on this date. This letter
speaks only as of this date. Assignees are informed that in accordance with
customary practice relating to opinion letters, we do not assume, and we
explicitly disclaim, any responsibility to advise any person who is permitted to
rely on any opinion expressed in this letter as specified in this paragraph
<PAGE>
April 18, 1996
Page 4
of any change of law or fact that may occur after the date of this opinion
letter even though such change may affect the legal analysis, a legal conclusion
or any other matter set forth in or relating to this opinion letter.
Accordingly, any person relying on this opinion letter at any time should seek
advice of its counsel as to the proper application of this opinion letter at
such time.
Very truly yours,
/s/ Erwin Thompson & Hascheff
<PAGE>
EXHIBIT L
FORM OF AMENDMENT TO GUARANTY
This Amendment to Guaranty (this "AMENDMENT"), dated as of_____ ___,
199___, relates to the Guaranty dated as of April 17, 1996 (as amended,
modified and supplemented to date, the "GUARANTY") executed by Pegasus Gold
Inc., a company organized under the laws of British Columbia, Canada (the
"CANADIAN BORROWER") and the Subsidiaries of the Canadian Borrower parties
thereto as Guarantors (collectively, including the Canadian Borrower, the
"GUARANTORS") in favor of the Guaranteed Parties (as defined in the Agreement).
In compliance with Section 5.01(m) of the Multicurrency Reducing
Revolving Credit Agreement dated as of April 17, 1996 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"; terms defined therein being used herein as therein defined) among
the Canadian Borrower, Pegasus Gold Australia Pty Ltd, an Australia corporation,
as the Australian Borrower, and Pegasus Gold Corporation, a Nevada corporation,
as the US Borrower, the Lender and the other Lender Parties party thereto,
Citibank, N.A., as the US Administrative Agent, Citibank Canada, as the Canadian
Administrative Agent, Citibank Limited (ACN 004 325 080), as the Australian
Administrative Agent, ABN AMRO Australia Limited, as the Non-Pro Rata Lender and
ABN ABN AMRO Bank N.V., Canadian Imperial Bank of Commerce, Dresdner Bank AG,
New York Branch, and The First National Bank of Chicago, as Co-Agents, [NAME OF
RESTRICTED SUBSIDIARY] (the "ADDITIONAL GUARANTOR") hereby agrees as follows:
1. AMENDMENT. The Guaranty is hereby amended to add as a party, and
more specifically, as a Guarantor, thereunder, the Additional Guarantor.
2. REPRESENTATIONS AND WARRANTIES. The Additional Guarantor
represents and warrants to each Guaranteed Party that each of the
representations and warranties of a Guarantor contained in the Guaranty is
hereby made by the Additional Guarantor as of the date hereof and is true and
correct as to the Additional Guarantor as of the date hereof.
3. ADDITIONAL GUARANTOR AS GUARANTOR. The Additional Guarantor
assumes all of the obligations and liabilities of a Guarantor under the
Guaranty, agrees to be bound thereby as if the Additional Guarantor were an
original party to the Guaranty and shall be a Guarantor for all purposes under
the Loan Documents.
4. EFFECTIVENESS. This Amendment shall become effective on the date
hereof upon the execution hereof by the Additional Guarantor and the delivery
hereof to the US Administrative Agent.
5. PLACE OF EXECUTION. This Amendment shall be executed outside of
Australia (but the effectiveness and enforceability hereof shall not be affected
by the place of execution).
<PAGE>
5
6. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
[ADDITIONAL GUARANTOR]
By:
-------------------------------
Title:
Notice Address:
-----------------------------------
-----------------------------------
Attention:
------------------------
<PAGE>
EXHIBIT M
FORM OF AMENDMENT TO PLEDGE AGREEMENT
This Amendment to Pledge Agreement (this "AMENDMENT"), dated as of
____________ ___, 199___, relates to the Pledge Agreement dated as of April 17,
1996 (as amended, modified and supplemented to date, the "AGREEMENT") executed
by Pegasus Gold Inc., a company organized under the laws of British Columbia,
Canada (the "CANADIAN BORROWER") and the Subsidiaries of the Canadian Borrower
parties thereto as Pledgers (collectively, including the Canadian Borrower, the
"PLEDGERS") in favor of Citibank, N.A., as collateral agent (in such capacity,
the "COLLATERAL AGENT") for the benefit of the Collateral Agent and the other
Secured Parties (as defined in the Agreement).
In compliance with Section 5.01(m) of the Multicurrency Reducing
Revolving Credit Agreement dated as of April 17, 1996 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"; terms defined therein being used herein as therein defined) among
the Canadian Borrower, Pegasus Gold Australia Pty Ltd, an Australia corporation,
as the Australian Borrower, and Pegasus Gold Corporation, a Nevada corporation,
as the US Borrower, the Lender and the other Lender Parties party thereto,
Citibank, N.A., as the US Administrative Agent, Citibank Canada, as the Canadian
Administrative Agent, Citibank Limited (ACN 004 325 080), as the Australian
Administrative Agent, ABN AMRO Australia Limited, as the Non-Pro Rata Lender and
ABN AMRO Bank N.V., Canadian Imperial Bank of Commerce, Dresdner Bank AG, New
York Branch, and The First National Bank of Chicago, as Co-Agents, [and in
conjunction with the execution by the parties hereto of the Amendment to
Guaranty dated of even date herewith,] [NAME OF RESTRICTED SUBSIDIARY] (the
"ADDITIONAL PLEDGOR") and the Collateral Agent hereby agree as follows:
1. AMENDMENT. The Agreement is hereby amended to add as a party,
and more specifically, as a Pledgor, thereunder, the Additional Pledgor.
2. REPRESENTATIONS AND WARRANTIES. The Additional Pledgor
represents and warrants to the Collateral Agent and the other Secured Parties
that each of the representations and warranties of a Pledgor contained in the
Agreement is hereby made by the Additional Pledgor as of the date hereof and is
true and correct as to the Additional Pledgor as of the date hereof.
3. GRANT OF SECURITY INTEREST. The Additional Pledgor, to secure,
subject to Section 2(b) of the Agreement, the payment of all of its Obligations
now or hereafter existing under the Guaranty and the other Loan Documents
(including any amendments, modifications, extensions, substitutions or renewals
thereof), whether direct or indirect, absolute or contingent and whether for
principal (including, without limitation, reimbursement of, and providing cash
collateral for, amounts drawn or available to be drawn under Letters of Credit
or amount owing in respect of BA Obligations), interest (including, without
limitation, interest that, but for the filing of a petition in bankruptcy would
accrue on such obligations), fees, expenses, charges, indemnification
obligations or otherwise, hereby assigns and pledges to the Collateral Agent for
its benefit and the ratable benefit of the Secured Parties, and hereby grants to
the Collateral Agent for its benefit and the ratable benefit of the Secured
Parties a security interest in, all of such Pledgor's right, title and interest,
whether now existing or hereafter arising and wherever located, in and to the
Collateral (as defined in the Agreement) of such Pledgor, whether now existing
or hereafter arising and wherever located.
4. SCHEDULE SUPPLEMENTS. The Additional Pledgor has attached hereto
supplements to Schedules I and II to the Agreement, and the Additional Pledgor
hereby certifies that such supplements have been prepared by the Additional
Pledgor in substantially the form of the Schedules to the Security Agreement and
are accurate and complete as of the date first above written.
<PAGE>
2
5. ASSUMPTION OF RIGHTS, OBLIGATIONS AND LIABILITIES. The
Additional Pledgor assumes all of the rights, obligations and liabilities of a
Pledgor under the Agreement and agrees to be bound thereby as if the Additional
Pledgor were an original party to the Agreement.
6. EFFECTIVENESS. This Amendment shall become effective as of the
date hereof upon the execution hereof by the Additional Pledgor and the
Collateral Agent and delivery hereof to the Collateral Agent.
7. PLACE OF EXECUTION. This Amendment shall be executed outside of
Australia (but the effectiveness and enforceability hereof shall not be affected
by the place of execution).
8. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
[ADDITIONAL PLEDGOR]
By:
-------------------------------
Title:
Notice Address:
-----------------------------------
-----------------------------------
Attention:
------------------------
CITIBANK, N.A.,
as Collateral Agent
By:
-------------------------------
Title:
<PAGE>
EXHIBIT N
PERMITTED HEDGE AGREEMENT
TERMINATION PROVISIONS
Reference is made to the form ISDA Master Agreement (Multicurrency -- Cross
Border) attached hereto for purposes of Section references and defined terms
referred to in this Exhibit N.
TERMINATION PROVISIONS:
Party A: Hedge Agreement Counterparty
Party B: Applicable Loan Party
"Credit Agreement" means the Credit Agreement to which this Exhibit is attached
In this Agreement:
(1) "Specified Entity" [may include Affiliates of Party A or Party
B].
(2) "Specified Transaction" will have the meaning specified in
Section 14.
(3) The "Cross-Default" provisions of Section 5(a)(vi) will apply to
Party A and Party B.
"Specified Indebtedness" means any obligation (whether present or
future, contingent or otherwise, as principal or surety or otherwise) in respect
of borrowed money, other than indebtedness in respect of deposits received.
"Threshold Amount" means (i) with respect to Party A, 2% of the
stockholders' equity of Party A and (ii) with respect to Party B, 2% of the
stockholders' equity of the Credit Support Provider with the greatest
stockholders' equity.
"Credit Support Provider" shall include, with respect to each Lender
or Lender Affiliate counterparty, each Borrower and, with respect to each Lender
and Lender Affiliate counterparty only, each Restricted Subsidiary.
(4) The "Credit Event Upon Merger" provisions of Section 5(b)(iv)
will apply to Party A and Party B.
(5) The "Automatic Early Termination" provision of Section 6(a) will
not apply to Party A or Party B; provided, however, where the Event of Default
specified in Section 5(a)(vii)(1), (3), (4), (5), (6) or to the extent analogous
thereto, (8), is governed by a system of law which does not permit termination
to take place after the occurrence of the
<PAGE>
2
relevant Event of Default, then the Automatic Early Termination provision of
Section 6(a) will apply to Party A and Party B.
(6) [intentionally omitted]
(7) "Termination Currency" means United States Dollars.
(8) Additional Termination Events.
(a) Section 5(b) of the Agreement is modified by adding at the end
thereof the following subsections (vi) and (vii):
(vi) Impossibility. Due to the occurrence of a natural or man-made
disaster, armed conflict, act of terrorism, riot, labor disruption or any
other circumstance beyond its control after the date on which a Transaction
is entered into, it becomes impossible (other than as a result of its own
misconduct) for such a party (which will be the Affected Party):
(1) to perform any absolute or contingent obligation, to make a
payment or delivery or to receive a payment or delivery in respect of
such Transaction or to comply with any other material provision of
this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support Document
relating to such Transaction.
(vii) Equal and Ratable Security. After the termination of the Credit
Agreement, any indebtedness under any Borrower's principal bank credit
facility or similar financing arrangement is guaranteed or secured and the
obligations of Party B under (or of any Credit Support Provider in respect
of) this Agreement are not equally and ratably guaranteed and secured.
[This provision to be included in Hedge Agreements with Lenders and Lender
Affiliate counterparties only and shall terminate as to any Hedge Agreement
if, at any time prior to the payment in full of all Obligations thereunder
and the termination of the Commitments, neither Party A to such Hedge
Agreement nor any of its Affiliates is a Lender Party under the Credit
Agreement.]
(b) An Impossibility shall be treated as an Illegality for all
purposes of the Agreement.
<PAGE>
3
(9) Netting Provisions. If any Early Termination Date is designated,
amounts determined in respect of all Terminated Transactions shall, to the
fullest extent permitted by law, be aggregated with and netted against one
another in performing the calculations contemplated by Section 6(e). Any
Terminated Transaction(s) that cannot be so aggregated and netted shall instead
be (and is hereby agreed always to have been) governed by, and subject to, the
terms and conditions set out in the relevant Confirmation(s) with respect to
such Transaction(s).
<PAGE>
EXHIBIT 11.0
<PAGE>
EXHIBIT 11.0
PEGASUS GOLD INC.
COMPUTATION OF EARNINGS PER SHARE
(in Thousands, except for share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
PRIMARY:
Earnings:
Net income (loss) applicable to primary
earnings per share calculation . . . . . . . . . . . . . . . $13 $(1810)
------ ------
------ ------
Weighted Average number of shares outstanding:
Common shares and equivalents. . . . . . . . . . . . . . . . . 39,441 34,653
Additional shares outstanding assuming
exercise of stock options reduced by the number
of shares which could have been purchased with
the proceeds from the exercise of such options . . . . . . 428 5
Weighted average number of shares outstanding,
as adjusted. . . . . . . . . . . . . . . . . . . . . . . . . . 39,869 34,658
------ ------
------ ------
Net income (loss) per share - Primary. . . . . . . . . . . . . . $0.00 ($0.05)
------ ------
------ ------
FULLY DILUTED:
Earnings:
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . $13 $(1,810)
Add:
Interest relating to 6.25% convertible subordinated
notes, net of amounts capitalized. . . . . . . . . . . . . . . 239 ---
Amortization of issuance costs relating to 6.25%
convertible subordinated notes . . . . . . . . . . . . . . . . 130 ---
------ ------
Net income (loss) applicable to fully diluted
earnings per share calculation . . . . . . . . . . . . . . . $382 $(1,810)
------ ------
------ ------
Weighted Average number of share outstanding:
Common Shares and Equivalents. . . . . . . . . . . . . . . . . 39,441 34,653
Additional shares outstanding assuming exercise
of stock options reduced by the number of shares
which could have been purchased with the proceeds
from the exercise of such options. . . . . . . . . . . . . . . 429 20
Additional average shares outstanding
assuming conversion of 6.25% convertible
subordinated notes . . . . . . . . . . . . . . . . . . . . . 7,709 ---
Weighted average number of shares outstanding,
as adjusted. . . . . . . . . . . . . . . . . . . . . . . . . . 47,579 34,673
------ ------
------ ------
Net income (loss) per share - fully diluted (a). . . . . . . . . $0.01 $(0.05)
------ ------
------ ------
</TABLE>
(a) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 44,919
<SECURITIES> 0
<RECEIVABLES> 23,093
<ALLOWANCES> 0
<INVENTORY> 46,216
<CURRENT-ASSETS> 168,328
<PP&E> 719,358
<DEPRECIATION> 259,085
<TOTAL-ASSETS> 652,404
<CURRENT-LIABILITIES> 34,204
<BONDS> 0
0
0
<COMMON> 424,409
<OTHER-SE> (42,840)
<TOTAL-LIABILITY-AND-EQUITY> 652,404
<SALES> 48,790
<TOTAL-REVENUES> 48,790
<CGS> 34,569
<TOTAL-COSTS> 43,786
<OTHER-EXPENSES> 4,590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,110
<INCOME-PRETAX> (696)
<INCOME-TAX> (709)
<INCOME-CONTINUING> 13
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.01
</TABLE>
