<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period MARCH 31, 1994
ended ____________________________
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission file number 1-9620
--------------
AMAX GOLD INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-1199974
- - -------------------------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9100 EAST MINERAL CIRCLE, ENGLEWOOD, COLORADO 80155
- - --------------------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (303) 643-5500
------------------------
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
----- -----
COMMON STOCK OUTSTANDING, $0.01 PAR VALUE, AS OF MAY 13, 1994 - 78,202,502
SHARES
- - --------------------------------------------------------------------------------
Total Pages - 200
Exhibit Index Located on Page 22
1
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
AMAX GOLD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
- - --------------------------------------------------------------------
1994 1993
- - --------------------------------------------------------------------
<S> <C> <C>
Sales $23,800 $ 18,400
- - --------------------------------------------------------------------
Costs and operating expenses-
Costs applicable to sales 21,000 17,100
Depreciation and depletion 5,900 5,800
Selling, general and administrative expenses 1,700 2,000
- - --------------------------------------------------------------------
Total costs and operating expenses 28,600 24,900
- - --------------------------------------------------------------------
GROSS OPERATING LOSS (4,800) (6,500)
EXPLORATION EXPENSES (300) (500)
- - --------------------------------------------------------------------
LOSS FROM OPERATIONS (5,100) (7,000)
Interest expense (2,400) (1,700)
Minority interest 400 -
Interest income and other - 200
- - --------------------------------------------------------------------
LOSS BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES (7,100) (8,500)
Income tax benefit 1,300 2,500
- - --------------------------------------------------------------------
LOSS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGES (5,800) (6,000)
Cumulative effect of accounting changes, net
of income tax benefits of $5,500 in 1993 - (15,200)
- - --------------------------------------------------------------------
NET LOSS $(5,800) $(21,200)
====================================================================
PER COMMON SHARE:
Loss before cumulative $ (.07) $ (.07)
effect of accounting changes
Cumulative effect of accounting changes - (.20)
- - --------------------------------------------------------------------
Net loss $ (.07) $ (.27)
====================================================================
DIVIDENDS DECLARED PER COMMON SHARE $ - $ .02
====================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 78,189 77,202
====================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
AMAX GOLD INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(DOLLARS IN THOUSANDS EXCEPT PAR VALUE OF STOCK)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
- - ------------------------------------------------------------------------------------------------
1994 1993
================================================================================================
ASSETS (UNAUDITED)
<S> <C> <C>
Cash and equivalents $ 4,900 $ 7,500
Inventories 15,900 16,600
Other assets 9,100 9,800
Receivables on open sales contracts 1,100 4,000
- - ------------------------------------------------------------------------------------------------
CURRENT ASSETS 31,000 37,900
Property, plant and equipment, net 315,000 315,800
Refugio equity investment 22,800 22,700
Other assets 6,900 4,600
- - ------------------------------------------------------------------------------------------------
TOTAL ASSETS $375,700 $381,000
================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, trade $ 3,800 $ 4,000
Accounts payable, affiliates 500 100
Accrued and other current liabilities 15,600 16,400
Reclamation reserve, current portion 2,000 2,000
Current maturities of long-term debt and unearned revenue 16,700 15,100
- - ------------------------------------------------------------------------------------------------
CURRENT LIABILITIES 38,600 37,600
Long-term debt and unearned revenue 110,900 111,800
Note payable to Cyprus Amax 25,400 24,700
Reclamation reserve, noncurrent portion 9,200 8,600
Other noncurrent liabilities 7,900 8,100
- - ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 192,000 190,800
- - ------------------------------------------------------------------------------------------------
Deferred taxes 15,300 16,900
- - ------------------------------------------------------------------------------------------------
Contingencies - -
- - ------------------------------------------------------------------------------------------------
Minority interest 700 -
- - ------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock, par value $1.00 per share, authorized
10,000,000 shares, issued and outstanding, none - -
Common stock, par value $.01 per share, authorized
200,000,000 shares, issued and outstanding 78,198,638
shares in 1994 and 78,185,057 shares in 1993 800 800
Paid-in capital 150,900 150,700
Retained earnings 16,000 21,800
Common stock in treasury, at cost (1,991 shares in 1994 and 1993) - -
- - ------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 167,700 173,300
- - ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $375,700 $381,000
================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
AMAX GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
- - -------------------------------------------------------------------------------
1994 1993
===============================================================================
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,800) $(21,200)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and depletion 5,900 5,800
Increase in reclamation reserves 600 500
Other, net 100 100
Decrease in deferred taxes (1,300) (2,800)
Minority interest (400) -
Cumulative effect of accounting changes - 15,200
Decrease (increase) in working capital, net of
effect of investing and financing activities:
Receivables on open sales contracts 2,900 (500)
Inventories 700 400
Accounts payable, affiliates 400 (600)
Other assets 300 (900)
Accrued and other current liabilities (600) (1,000)
Accounts payable, trade (300) (200)
- - -------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 2,500 (5,200)
- - -------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital and cash acquisition expenditures for property,
plant and equipment (4,100) (8,900)
Other (600) -
Refugio cash acquisition and investment costs (100) (1,000)
Advances to Amax under notes receivable - (10,500)
- - -------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (4,800) (20,400)
- - -------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from financings 49,400 19,600
Advances from Cyprus Amax under notes payable 700 -
Repayments of financings (48,700) (4,500)
Deferred financing costs (1,600) -
Other (100) (800)
Cash dividends paid - (500)
- - -------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (300) 13,800
- - -------------------------------------------------------------------------------
NET DECREASE IN CASH AND EQUIVALENTS (2,600) (11,800)
Cash and equivalents at January 1 7,500 23,700
- - -------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT MARCH 31 $ 4,900 $ 11,900
===============================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
AMAX GOLD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) FINANCIAL STATEMENT ADJUSTMENTS AND FOOTNOTE DISCLOSURES
--------------------------------------------------------
The accompanying financial statements are unaudited; however, in the
opinion of management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation have been made. These
financial statements and notes thereto should be read in conjunction with
the financial statements and related notes included in the annual report on
Form 10-K for Amax Gold Inc. (the "Company") for the fiscal year ended
December 31, 1993 on file with the Securities and Exchange Commission
(hereinafter referred to as "the Company's 1993 10-K"). All amounts are in
United States dollars ("U.S.$") unless otherwise stated.
As discussed in Note 1 to the Company's 1993 10-K Consolidated
Financial Statements, the Company changed its accounting policy from that
of subsequently capitalizing and restoring to earnings prior period
exploration expenses when a property became exploitable to a policy of
expensing exploration expenditures in the period incurred with future
expenditures being capitalized at such time that a property becomes
exploitable. Accordingly, all of the 1993 periods were restated to reflect
the adoption of this policy as of January 1, 1993 and, for the first
quarter of 1993, the Company recognized a $13.4 million after tax charge
(net of an income tax benefit of $4.5 million) relating to the cumulative
effect from such accounting change for periods prior to 1993. Also as
discussed in Note 4 to the Company's 1993 10-K Consolidated Financial
Statements, effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 112 "Employers' Accounting for
Postemployment Benefits" which resulted in a 1993 first quarter after tax
charge of $1.8 million (net of an income tax benefit of $1.0 million)
related to the cumulative effect of this accounting change.
5
<PAGE>
(2) INVENTORIES
-----------
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31, December 31,
1994 1993
--------- ------------
<S> <C> <C>
Precious metals refined and in-process $ 8,600 $ 9,000
Materials and supplies 7,300 7,600
------- ------
$15,900 $16,600
======= =======
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
-----------------------------
The components of property, plant and equipment are as follows (in
thousands):
<TABLE>
<CAPTION>
MARCH 31, December 31,
1994 1993
---------- ------------
<S> <C> <C>
Mining plants and equipment $ 163,600 $ 163,200
Mining properties 162,000 159,900
Development properties and
construction-in-progress 200,400 197,900
--------- ---------
526,000 521,000
Less:
Accumulated depreciation and depletion
and 1993 write-downs (211,000) (205,200)
--------- ---------
$ 315,000 $ 315,800
========= =========
</TABLE>
6
<PAGE>
(4) DEBT
----
The following table summarizes the Company's outstanding debt at March
31, 1994 (in thousands):
<TABLE>
<CAPTION>
Current Noncurrent Total
-------- ---------- --------
<S> <C> <C> <C>
Unearned Revenue:
Nevada Gold Mining, Inc. $ 1,600 $ - $ 1,600
Debt:
Lassen Gold Mining, Inc. 11,100 40,800 51,900
AGI Chile Credit Corp., Inc. 1,000 35,000 36,000
Amax Gold Inc. - 30,400 30,400
Compania Minera Amax Guanaco 3,000 4,700 7,700
------- -------- --------
Total unearned revenue and debt 16,700 110,900 127,600
Note payable to Cyprus Amax - 25,400 25,400
------- -------- --------
$16,700 $136,300 $153,000
======= ======== ========
</TABLE>
The market value of the total outstanding debt and unearned revenue as
of March 31, 1994 was $3.6 million higher than the carrying value of $153
million.
During the quarter ended March 31, 1994, the Company paid $4.5 million
of interest expense and fees, of which $1.6 million was deferred relating
to the Chilean debt refinancing discussed below. The annualized interest
rate for the $153 million of outstanding debt for the quarter ended March
31, 1994 was 6.2%.
AGI Chile Credit Corp., Inc.
----------------------------
In March 1994, the Company refinanced $34.2 million of outstanding
Chilean short-term bridge loans with a $36 million U.S. term loan agreement
through AGI Chile Credit Corp., Inc. (Chile Credit Corp.), a wholly-owned
domestic subsidiary of the Company. The final maturity date for this new
loan agreement is October 1997, with semi-annual amortization payments
commencing in October 1994. Amounts outstanding under this term loan bear
interest at the LIBOR interest rate plus 1.25%. This loan is
collateralized by guarantees from the Company and, initially, Cyprus Amax
Minerals Company (Cyprus Amax). As of March 31, 1994, Cyprus Amax owned
approximately 31.3 million common
7
<PAGE>
shares, or approximately 40%, of the Company's outstanding common stock.
In connection with the refinancing, the Company incurred approximately $1.6
million of interest, fees and expenses which were deferred and will be amortized
into interest expense over the life of the new loan.
Amax Gold Inc.
- - --------------
At March 31, 1994, the Company had outstanding borrowings of 86,863
gold ounces which were sold for $30.4 million. These ounces are scheduled
to be repaid as follows:
<TABLE>
<CAPTION>
MATURITY GOLD AMOUNT
DATE OUNCES (IN THOUSANDS)
-------- ------ --------------
<S> <C> <C>
August 1994 15,129 $ 5,000
December 1994 44,183 15,000
February 1995 27,551 10,400
------ -------
86,863 $30,400
====== =======
</TABLE>
While the March 31, 1994 market value of the total outstanding gold ounces
borrowed was $3.6 million higher than the $30.4 million carrying value (using
the spot market price for gold as of March 31, 1994), the Company has
contractual agreements with the lenders which set the gold price upon repayment
equal to the carrying value plus a 4% average annualized effective rate of
interest. As a result, the Company does not have any gold market price risk
associated with these borrowings.
During the quarter ended March 31, 1994, Cyprus Amax provided a guarantee
on $10 million of outstanding gold loans. This guarantee allowed the Company to
borrow 27,551 gold ounces in February 1994, which were sold for $10.4 million,
to repay $10 million of outstanding borrowings (or 30,303 gold ounces) due in
February 1994. The $10.4 million borrowing is due in February 1995. In April
1994, the Company reduced the $10.4 million borrowing to $10 million, or 25,708
gold ounces. Also during the quarter ended March 31, 1994, the Company borrowed
and repaid 7,692 gold ounces, which were sold and repaid for
8
<PAGE>
$3 million.
In April 1994, the Company borrowed an additional 7,772 gold ounces
which were sold for $3 million. These gold ounces are scheduled to be
repaid in June 1994.
On April 15, 1994, the Company and Cyprus Amax entered into an
agreement pursuant to which Cyprus Amax will provide the Company with a
$100 million double convertible line of credit. The outstanding
indebtedness under this line of credit will bear interest at the LIBOR
interest rate plus 0.3% and may be repaid by the Company issuing up to two
million shares of a newly created $2.25 Series A convertible preferred
stock. The holder of shares of preferred stock will be entitled to receive
dividends at an annual rate of $2.25 per share, which will be cumulative,
accruing without interest and will be payable in cash in equal semi-annual
installments. The Company may elect to pay any dividend due and payable in
shares of common stock in lieu of a cash dividend, unless the holder of
preferred stock delivers written notice stating that such holder elects to
receive cash. The Company will have the right to redeem the convertible
preferred stock by issuing up to 12,099,213 shares of the Company's common
stock at a maximum price of $8.265 per share and a minimum price of $5.854
per share. In the event the full 12,099,213 common shares have been issued
to redeem the preferred stock, any remaining preferred stock would be
redeemed with cash in lieu of the common shares if a full redemption is
desired by the Company, which would be payable in twelve consecutive
substantially equal quarterly installments. Cyprus Amax will have the
right to replace the line of credit and any outstanding indebtedness and/or
preferred stock with the purchase of 12,099,213 shares of the Company's
common stock at a purchase price of $8.265 per share, or $100 million. The
$8.265 per common share price represents a 20% premium to the ten-day
average closing price of the Company's common stock immediately prior to
the February 1994 signing of a commitment letter for the line of credit.
The transactions contemplated under this line of credit are subject to
stockholder approval. A Consent Solicitation Statement will be filed with
the Securities and Exchange Commission and sent to stockholders of record
as of May 13, 1994 for their approval of the transactions contemplated
under the $100 million line of credit and the purchase by Cyprus Amax of
three million Company common shares discussed below. Stockholder approval
for
9
<PAGE>
these transactions is expected in June or July 1994.
A portion of this $100 million credit line is expected to be
designated as support for $30 million of outstanding indebtedness under the
Lassen Gold Mining, Inc. financing and as replacement for the Cyprus Amax
guarantee on the new $36 million Chile Credit Corp. U.S. term loan. The
remaining line of credit will be available for working capital to enable
the Company to meet its on-going obligations, including the support of the
$30.4 million of outstanding gold loans. At March 31, 1994, the $30.4
million of outstanding gold loans were classified as long-term based on the
1994 refinancing activities.
Note Payable to Cyprus Amax
---------------------------
At March 31, 1994, $25.4 million was outstanding and payable to Cyprus
Amax under a demand promissory note payable. In February 1994, the
Company's Board of Directors approved the purchase by Cyprus Amax of three
million shares of its common stock as repayment of $20.7 million of the
amounts outstanding under such note. This share purchase is evidenced by a
Stock Purchase Agreement dated April 15, 1994 and is subject to stockholder
approval, as discussed above. The $6.888 per share purchase price for
these common shares under the Stock Purchase Agreement represented the ten-
day average closing price of the Company's common stock immediately prior
to the February 1994 signing of a commitment letter for the purchase of the
shares. This share purchase, together with the deferral by Cyprus Amax of
the repayment of the remaining balance until 1995, was the basis on which
the Company classified the $25.4 million outstanding indebtedness as long-
term at March 31, 1994. This share purchase, combined with the potential
conversion of the $100 million line of credit into Company common stock,
would increase Cyprus Amax's ownership of the Company's outstanding shares
to slightly under 50%.
(5) HEDGE CONTRACTS
---------------
Precious metal hedge contracts include forward sales contracts, spot
deferred forward sales and put and call options. Forward sales contracts
require the future delivery of gold
10
<PAGE>
at a specified price. Forward sales contracts that are made on a spot deferred
basis allow the Company to defer the delivery of gold under a forward sales
contract to a later date at a renegotiated market price, as long as certain
conditions are satisfied. Various factors influence the decision to close a spot
deferred forward sales contract or to roll the contract forward to a later date.
A put option gives the put buyer the right, but not the obligation, to sell gold
to the put seller at a predetermined price on or before a predetermined date. A
call option gives the call buyer the right, but not the obligation, to buy gold
from the call seller at a predetermined price on or before a predetermined date.
As of March 31, 1994, the Company's outstanding precious metal hedge
contracts are as follows:
<TABLE>
<CAPTION>
AVERAGE
GOLD PRICE
OUNCES PER OUNCE PERIOD
------- --------- ------
<S> <C> <C> <C>
Forward sales contracts/1/ 288,600 $410 April 1994 - June 1994
Option contracts:
Purchased put options 232,000 383 April 1994 - December 1995
Sold put options 67,500 351 April 1994 - November 1995
Purchased call options 112,000 424 April 1994 - March 1995
Sold call options 349,500 459 April 1994 - December 1995
</TABLE>
/1/ Represents the net forward sales position which was made primarily on a
spot deferred forward basis which allows the Company to defer the
delivery of gold ounces to a later date at a renegotiated gold price.
The market value of the Company's forward contracts and put and call option
contracts at March 31, 1994 was approximately $5.0 million and $1.6 million,
respectively. Future market valuations for these contracts are dependent on gold
market prices, option volatility and interest rates, which can vary
significantly. These contracts will be utilized in the future to hedge against
continued low gold market prices for the Company's future gold production to
provide cash flow for operations while maintaining benefits in the event of
higher gold market prices.
Interest rate hedge contracts entered into by the Company consist of
interest rate swap, option and cap agreements to reduce the impact of changes in
interest rates on its
11
<PAGE>
financing facilities. At March 31, 1994, the Company had five interest rate swap
agreements outstanding with commercial banks having a total principal amount of
$50 million, as follows:
<TABLE>
<CAPTION>
FIXED
BORROWINGS INTEREST RATE PERIOD
---------- ------------- --------------------------
<S> <C> <C>
$10 million 4.44% April 1994 - July 1994
$10 million 6.54% April 1994 - November 1994
$10 million 4.40% April 1994 - January 1995
$10 million 5.95% April 1994 - March 1996
$10 million 4.85% April 1994 - March 1996
</TABLE>
As of March 31, 1994, the Company would pay approximately $.1 million to
terminate these interest rate swap agreements, given the market interest rates
as of such date. The Company may be exposed to nonperformance by the other
parties to such agreements, thereby subjecting the Company to current interest
rates on its financings. However, the Company does not anticipate nonperformance
by the counterparties.
(6) CONTINGENCIES
-------------
Lassen Gold Mining, Inc. (Lassen Gold), a wholly-owned subsidiary of the
Company that owns the Hayden Hill Mine, received a letter from the California
Regional Water Quality Control Board (the Board), dated March 25, 1994, advising
that, among other things, no new leach pad cells beyond those under construction
will be approved by the Board with the current design. An alternative design for
future cells is required and leaching operations on future cells will require
new waste discharge permits.
In April 1994, Lassen Gold submitted a conceptual design for future cell
construction and a final design document is being developed for submittal, which
the Company believes will be acceptable. Formal Board approval of a new waste
discharge permit will be sought in the near future to allow Lassen Gold
sufficient opportunity to construct new cells in a timely manner. The Company
does not anticipate that the foregoing will have a material adverse effect on
its financial condition or results of operations.
12
<PAGE>
The Company's mining and exploration activities are subject to various
federal, state and Chilean laws and regulations governing the protection of the
environment. These laws and regulations are continually changing and generally
becoming more restrictive. The Company conducts its operations so as to protect
the public health and environment. The Company has made, and expects to make in
the future, significant expenditures to comply with such laws and regulations.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
The following table sets forth the Company's ounces of gold sold and
average realized prices as well as the ounces of gold production and production
costs for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
- - --------------------------------------------------------------------------------
1994 1993
================================================================================
<S> <C> <C>
SLEEPER MINE:
Ounces of gold produced 25,930 23,096
Average cost per ounce produced:
Cash production cost/(1)/ $ 273 $ 318
Depreciation and depletion/(2)/ 92 136
- - --------------------------------------------------------------------------------
Total production cost $ 365 $ 454
- - --------------------------------------------------------------------------------
WIND MOUNTAIN MINE:
Ounces of gold produced 3,274 6,273
Average cost per ounce produced:
Cash production cost/(1)/ $ 189 $ 129
Depreciation and depletion - -
- - --------------------------------------------------------------------------------
Total production cost $ 189 $ 129
- - --------------------------------------------------------------------------------
HAYDEN HILL MINE:
Ounces of gold produced 11,807 12,063
Average cost per ounce produced:
Cash production cost/(1)/ $ 499 $ 653
Depreciation and depletion/(2)/ 105 192
- - --------------------------------------------------------------------------------
Total production cost $ 604 $ 845
- - --------------------------------------------------------------------------------
GUANACO MINE:
Ounces of gold produced/(3)/ 15,592 -
Average cost per ounce produced:
Cash production cost/(1)/ $ 424 $ -
Depreciation and depletion 145 -
- - --------------------------------------------------------------------------------
Total production cost $ 569 $ -
- - --------------------------------------------------------------------------------
WAIHI MINE:
Ounces of gold produced/(4)/ - 6,053
Average cost per ounce produced:
Cash production cost/(1)/ $ - $ 224
Depreciation and depletion/(2)/ - 49
- - --------------------------------------------------------------------------------
Total production cost $ - $ 273
- - --------------------------------------------------------------------------------
TOTAL:
Ounces of gold produced 56,603 47,485
Ounces of gold sold 59,408 46,996
Average price per ounce sold $ 401 $ 391
Average cost per ounce produced:/(5)/
Cash production cost/(1)/ $ 357 $ 366
Depreciation and depletion/(2)/ 104 121
- - --------------------------------------------------------------------------------
Total production cost $ 461 $ 487
================================================================================
</TABLE>
(1) Cash production costs include all operating costs at the mine sites,
including overhead, and, where applicable, Nevada net proceeds tax,
royalties and credits for silver by-products.
(2) In September 1993, the Company changed its accounting policy for
exploration expenditures, effective January 1, 1993. Accordingly, the
first quarter of 1993 was restated to reflect the adoption of this
policy and, as a result, the 1993 unit depreciation and depletion costs
are lower.
(3) Production commenced at the Guanaco Mine in April 1993.
(4) Represents the Company's 33.53% share. During June 1993, the Company
completed a transaction which resulted in the realization of all future
economic benefit from its 33.53% interest, effective April 30, 1993.
(5) Average costs weighted by ounces of gold produced at each mine.
14
<PAGE>
FIRST QUARTER 1994 COMPARED WITH FIRST QUARTER 1993
- - ---------------------------------------------------
During the first quarter of 1994, the Company recognized a net loss of $5.8
million on revenues of $23.8 million compared to a net loss of $21.2 million on
revenues of $18.4 million for the first quarter of 1993. The first quarter of
1993 included a $15.2 million after tax charge relating to the cumulative effect
of accounting changes. Before these accounting changes, the loss for the first
quarter of 1994 was substantially the same as the loss for the first quarter of
1993. A further discussion of the significant factors affecting the 1994 first
quarter results follows.
Revenues for the 1994 first quarter increased by 29% from the prior year
quarter. This increase was due to higher production and sales volumes and a
higher average realized selling price. The increased production and sales
volumes were primarily attributable to 1994 production from the Guanaco Mine.
The Guanaco Mine commenced production in April 1993 and, as a result, there was
no production from Guanaco in the first quarter of 1993. The increased
production from Guanaco together with increased production from the Sleeper Mine
more than offset the elimination of production from the Waihi Mine as a result
of a transaction completed in June 1993, declining residual heap leach
production from the Wind Mountain Mine and slightly lower production from the
Hayden Hill Mine.
The Company realized an average selling price of $401 per gold ounce in the
1994 first quarter compared to $391 per gold ounce in the 1993 first quarter.
The average realized price for both periods included hedging benefits from
closing forward sales contracts and gold options at prices above market. The
average COMEX gold price for the 1994 first quarter was $384 per ounce compared
to $330 per ounce for the 1993 first quarter.
Production from the Sleeper Mine during the 1994 first quarter increased by
12% over the prior year quarter primarily due to higher average mill head grades
and increased mine efficiencies. Sleeper's 1994 first quarter average mill head
grade was 0.099 gold ounce per ton compared to 0.077 gold ounce per ton in the
1993 quarter. Total tons mined also increased to approximately 4.7 million tons
from approximately 4.0 million tons in the
15
<PAGE>
comparable quarter of 1993.
The Hayden Hill Mine was converted to a heap leach operation during the
last half of 1993. As of the end of the first quarter of 1994, the Hayden Hill
Mine had not achieved the designed level of production.
Costs applicable to sales rose by $3.9 million in the 1994 quarter compared
to the 1993 quarter, representing a 23% increase, primarily because of higher
sales volumes. Overall unit cash production costs decreased from $366 per ounce
in the 1993 first quarter to $357 per ounce in the 1994 first quarter. This
improvement was primarily the result of increased production from the Sleeper
Mine along with lower production costs from Hayden Hill due to the conversion of
that mine to a heap leach operation in 1993. These improvements were somewhat
offset by high production costs from the Guanaco Mine, which has not yet
achieved the optimum level of production due to water shortages, the elimination
of the lower cost production from the Waihi Mine and declining residual heap
leach production from the Wind Mountain Mine.
Unit depreciation and depletion costs declined by $17 per gold ounce.
Increased depreciation and depletion due to higher production was almost
entirely offset by a lower 1994 depreciation rate as a result of 1993 write-
downs of the Hayden Hill and Sleeper assets.
Selling, general and administrative expenses declined from $2.0 million in
the first quarter of 1993 to $1.7 million in the first quarter of 1994. On a per
gold ounce basis, selling, general and administrative expenses were $30 per gold
ounce produced in the 1994 first quarter compared to $42 per gold ounce produced
in the 1993 first quarter. These improvements were the result of the management
changes, staff reductions and the relocation of the headquarters office to the
Cyprus Amax headquarters office.
Interest expense for the 1994 quarter was $.7 million higher than the 1993
quarter as a result of increased borrowings to fund the Company's operating and
development
16
<PAGE>
activities together with the capitalization of approximately $.5 million of
interest in the 1993 quarter related to the construction of the Guanaco Mine.
Income tax benefits were recognized at an effective tax rate of 18% for the
1994 quarter compared to 29% for the 1993 quarter. The 1994 quarter reflected
higher losses from foreign operations than the 1993 quarter for which deferred
tax benefits are not being provided.
The 1993 quarter reflects a $13.4 million after tax ($17.9 million pre-tax)
charge relating to the cumulative effect of a change in the Company's
exploration accounting policy for periods prior to 1993 and $1.8 million after
tax ($2.8 million pre-tax) charge relating to the adoption of a new accounting
standard for postemployment benefits. Both of these accounting policy changes
were effective as of January 1, 1993.
17
<PAGE>
LIQUIDITY AND FINANCIAL POSITION
For the first quarter of 1994, the Company had operating cash flow of $2.5
million primarily due to the improved performance of the Sleeper Mine and the
continued low cost residual heap leach production from the Wind Mountain Mine,
which were somewhat offset by high cost production from both the Guanaco and
Hayden Hill mines. The operating cash flow together with existing cash balances
were more than sufficient to fund $4.2 million of capital expenditures and
Refugio investment costs. However, as a result of the Company's utilization of
its current assets to develop its long-term mining assets, the Company had
negative working capital of $7.6 million at March 31, 1994 compared to positive
working capital of $.3 million at December 31, 1993.
The $4.2 million capital and investment cash outlay for the March 1994
quarter represented $2.8 million of sustaining capital at the Hayden Hill,
Guanaco and Sleeper mines, $1.0 million of Fort Knox development costs, $.3
million of Haile development costs and $.1 million of Refugio investment costs.
Capital expenditures for fiscal 1994 are currently estimated to be approximately
$38 million, with $10 million representing sustaining capital for the Hayden
Hill, Guanaco and Sleeper mines and $28 million representing development
expenditures for the Fort Knox, Refugio and Haile projects. The development
expenditures are subject to receiving the necessary financing.
During the quarter ended March 31, 1994, the Company made additional
borrowings of $50.1 million, substantially all of which were utilized to
refinance existing indebtedness. At March 31, 1994, the Company had outstanding
debt obligations of $153 million, up from $151.6 million at December 31, 1993.
While the Company expects that its operating mines will generate positive
cash flow in 1994 (depending upon the performance of its Guanaco, Hayden Hill
and Sleeper mines), the Company recognized that it would be unable to service
its existing debt obligations and to continue development work on its new
projects without raising additional financing. In order to provide the Company
with more financial strength and flexibility to meet its
18
<PAGE>
outstanding debt obligations, a commitment letter was signed in February 1994
for Cyprus Amax to provide the Company with a $100 million double convertible
line of credit. The commitment letter also provided for the issuance of three
million shares of the Company's common stock to Cyprus Amax as repayment for
approximately $20.7 million of the $25.4 million outstanding amount owed to
Cyprus Amax under a demand promissory note as of March 31, 1994. On April 15,
1994, a definitive agreement for the $100 million double convertible line of
credit was signed. A Consent Solicitation Statement will be filed with the
Securities and Exchange Commission and sent to stockholders for their approval
of the transactions contemplated under the $100 million line of credit and the
purchase by Cyprus Amax of three million shares of the Company's common stock.
Stockholder approval for these transactions is expected in June or July 1994.
See Note 4 in Item 1 for a further discussion.
In addition to the $100 million line of credit and three million common
share issuance, as of March 31, 1994 Cyprus Amax had provided $53.7 million of
guarantees of the Company's indebtedness. It is expected that upon stockholder
approval of the transactions contemplated under the $100 million line of credit,
a portion of the line of credit would be designated as replacement for $36
million of such guarantees.
With the support of Cyprus Amax through the $100 million line of credit,
the three million common share issuance and debt guarantees, the Company expects
to be able to sustain its current operations, its 1994 operating mine capital
requirements and its current debt service requirements. However, additional
financings will be required to fund the total capital required to bring its Fort
Knox, Refugio and other development projects into production. While the Company
intends to seek additional equity and other financings in 1994 to meet its long-
term capital requirements, there can be no assurance that all of the required
financings can be obtained in the time frame desired.
Total capital requirements to construct and develop the Fort Knox property
in accordance with the preliminary design are currently estimated to be between
$250 million and $270 million, in addition to $183 million of capitalized
acquisition and development
19
<PAGE>
costs as of March 31, 1994. The Company intends to seek institutional financing
to fund a significant portion of the required future capital. In February 1994,
certain Alaska state permits were received. In May 1994, the U. S. Army Corps of
Engineers issued its dredge and fill permit under Section 404 of the Clean Air
Act. With this permit, the Company plans to perform detailed engineering for the
project, upgrade the access road to the project site and begin initial site
preparation. Timing of the construction is dependent on obtaining the final air
permits, securing financing on acceptable terms and the approval by the
Company's Board of Directors.
Total capital requirements to construct and develop the Refugio project are
estimated to be between $120 million and $140 million, of which the Company's
share is $60 million to $70 million. This is in addition to the Company's $22.8
million of capitalized exploration and acquisition costs as of March 31, 1994.
The Company and its 50% partner are attempting to secure institutional financing
to fund a significant portion of the required future capital. Each partner is
responsible for its own financing. Timing of development is dependent on
securing adequate financing.
An updated status report and revised reserve estimate incorporating results
from the 1993 drilling program are expected to be completed in the second
quarter of 1994 for the Haile joint venture. Depending upon the results and
conclusions reached in the updated status report, the project may move into the
engineering design phase or additional development drilling may be conducted.
The Company's share of 1994 development costs on the Haile project are estimated
to be approximately $3 million.
The 1994 first quarter results indicate improvements from the 1993 results
which are expected to continue in fiscal 1994. Production from the Hayden Hill
Mine is rising and unit production costs are declining as this heap leach
operation moves towards design capacity. Mill head grades at the Sleeper Mine
have increased resulting in higher production at lower unit production costs.
These operational improvements have somewhat been offset, however, by declining
residual heap leach production from the Wind Mountain Mine and an insufficient
water supply at the Guanaco Mine. Programs are currently
20
<PAGE>
underway to develop additional water supplies for the Guanaco Mine. Despite the
expected improvements in operating results for fiscal 1994 compared to fiscal
1993, combined with lower general and administrative expenses and exploration
expenditures, net losses are expected to continue to be realized in fiscal 1994,
assuming an average selling price of $400 per gold ounce. The expected 1994 net
loss is primarily the result of losses from operations as the total 1994 unit
production costs, including depreciation and depletion, are expected to exceed
the assumed 1994 average realized price per gold ounce sold.
The Company expects to realize a 1994 average selling price in the range of
$390 to $450 per gold ounce, depending upon the market price for gold. The
Company has an active hedging program in place which is intended to provide some
protection against low gold market prices while maintaining most of the
potential benefit in the event of higher market prices. The Company believes
that, given its current hedge positions, it could realize the benefit from
rising market prices for fiscal 1994 and 1995 up to a market price of $450 per
gold ounce. The Company also believes it can continue to obtain an average
realized sales price for fiscal 1994 and 1995 of at least $390 per ounce if gold
market prices decline to as low as $320 per ounce. However, the Company's
ability to sustain an average realized price substantially above the market
price for fiscal 1996 and beyond may be significantly diminished as its current
hedge positions are depleted and new positions are put in place at lower prices.
The Company's focus for the remainder of 1994 will be to maximize the
operating performance at all of its mines while at the same time attempting to
minimize capital and operating cash outlays and to secure the additional
financings required to further advance its development properties.
21
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
On February 1, 1994 certain litigation affecting the Registrant,
certain other affiliated corporations and several unnamed corporations
and individuals which had been filed in the Nevada State Court for
Washoe County by TMB Associates ("TMB"), a Nevada general partnership,
was effectively terminated as a result of the Court's denial of TMB's
motion for reconsideration of the Court's Order of August 1993 which
granted Registrant's motion to stay the litigation pending arbitration.
This litigation was previously reported in Registrant's Form 10-K for
fiscal year ended December 31, 1994 filed with the Securities and
Exchange Commission in March 1993. To date, no demand for arbitration
has been received by the Company and, at this time, the Company's
management does not anticipate any material adverse effect on the
Company's financial condition or results of operations from
arbitration, if subsequently initiated by TMB.
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(A) EXHIBITS -
Exhibit No. Exhibit
----------- -------
<C> <S>
EX-10(a) State of Alaska, Department of
Natural Resources, Division of
Mining, Upland Mining Lease, dated
February 15, 1994.
EX-10(b) Fairbanks Gold Mining, Inc.
Millsite Permit for Fort Knox Mine
Project, dated February 15, 1994.
EX-10(c) Term Loan Agreement Among AGI
Chile Credit Corp., Inc., NM
Rothschild & Sons Limited and
Citibank, N.A. - including
Continuing Corporate Guaranty of
Amax Gold Inc. and Continuing
Corporate Guaranty of Cyprus Amax
Minerals Company.
</TABLE>
22
<PAGE>
EX-10(d) Revolving Credit Agreement,
dated as of April 15, 1994, by
and between Amax Gold Inc. and
Cyprus Amax Minerals Company.
EX-10(e) Stock Purchase Agreement, dated
as of April 15, 1994, among
Amax Gold, Inc. and Cyprus Amax
Minerals Company.
(B) REPORTS ON FORM 8-K -
(i) Dated March 8, 1994, reporting a change in the Company's
independent accountants for fiscal 1994. On March 1, 1994,
the Company's Board of Directors, acting on the recommendation
of its Audit Committee, decided to appoint Price Waterhouse as
the Company's independent accountants for fiscal year 1994,
subject to ratification by the stockholders at the Annual
Meeting of Stockholders to be held May 5, 1994. Price
Waterhouse replaces Coopers & Lybrand who have been the
Company's independent accountants since the Company's
inception in 1987. Price Waterhouse are the independent
accountants for Cyprus Amax and have served as such since
1985. The change was made to realize certain synergies
between the Company and Cyprus Amax.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMAX GOLD INC.
By /s/ Pamela L. Saxton
---------------------------------------
Pamela L. Saxton
Vice President and Controller (principal
accounting officer)
Dated: May 13, 1994
24
<PAGE>
DOM 0250G
(Upland Mining)
(Revised 2/94)
DNR 10-4024
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINING
Upland Mining Lease
LEASE N0. ADL 535408
-------
This lease ("this lease") is entered into between the State of Alaska ("the
state"), whose address is c/o Department of Natural Resources, Division of
Mining, Suite 880, 3601 C Street, P.O. Box 107016, Anchorage, Alaska 99510-7016,
and Melba Creek Mining, Inc. (as to an undivided 51%) and Fairbanks Gold Mining,
----------------------------------------------------------------------------
Inc. (as to an undivided 49%) ("the lessee", whether one or more), whose
- - -----------------------------
address is: 701 Bidwill, P O Box 73726, Fairbanks, Alaska 99707-3726.
----------------------------------------------------------
The state and the lessee agree as follows:
1. GRANT.
(a) Subject to the provisions of this lease, the state grants to the
lessee
(1) the exclusive right to mine, extract, remove and dispose of all
minerals subject to AS 38.05.185 - AS 38.05.275 (referred to in this lease as
"locatable minerals"), lying within the boundaries of the following described
tract of land:
the lands within the state mining claims shown on the plat attached as
Exhibit A hereto and listed by name and ADL number in Exhibit B hereto,
which state mining claims are located within Sections 15-17 and 20-22,
Township 2 North, Range 2 East, Fairbanks Meridian,
containing approximately 1139.5 acres, more or less ("the leased
<PAGE>
area");
(2) the exclusive right to explore for locatable minerals within the
leased area; and
(3) subject to the lessee obtaining all necessary permits and subject to
all other terms of this lease, the right to place, construct, erect, install,
maintain, repair, use, replace, and remove excavations, openings, shafts,
ditches, drains settling ponds, tailings ponds, stockpiles, waste dumps, roads,
haulageways, buildings, structures, machinery, equipment, and buildings, dumps,
drains, roads, utility lines and equipment, pipelines, dams, impoundments,
reservoirs, pits and wells, and other improvements, structures, and facilities
as may be reasonably necessary for the prospecting for, extraction of, or basic
processing of locatable minerals on the leased area. Timber from the leased
area, except timberland, may be used by the lessee for the mining or development
of the leased area or adjacent state mining claims under common ownership.
(b) Subject to compliance with the terms of this lease, the lessee may
mine, extract, and remove locatable minerals by any method consistent with
good mining practice, including underground and surface mining. However, the
rights granted by this lease are subject to prior vested mineral rights, if
any, such as federal mining claims. In addition, the rights granted by this
lease shall be exercised in a manner that will not unreasonably interfere with
the rights of the state of its permittees, lessees, or grantees, consistent
with the principle of reasonable concurrent uses as set out in article VIII,
section 8 of the Alaska Constitution.
(c) The surface use rights granted by this lease may, in the lessee's
discretion, be exercised in support of mining on other land when it is
reasonably necessary to do so and is in conjunction with the mining of
locatable minerals on the leased area.
(d) For the purposes of this lease, the leased area contains the mining
locations shown on the attached plat marked Exhibit A. The Director of the
Division of Mining may require that the lessee survey the leased area's
exterior boundary under 11 AAC 86.311 (unless the state waives that survey
requirement). If the Director requires a survey, after the survey is
completed the legal description shown in (a)(1) of this paragraph will be
corrected as
Page 2 of 16
<PAGE>
necessary to conform to the surveyed location of that boundary.
(e) If this lease is issued without a prior determination that each
mining claim or leasehold location included within the leased area has a
discovery, the state reserves the right to require the lessee to show a
discovery on each such claim or location and to remove from the leased area any
claim or location that lacks a discovery.
(f) If the state's ownership of the locatable minerals within the leased
area is less than the entire and undivided interest, the grant under this
lease is effective only as to the state's interest in the locatable minerals.
The rentals provided for in this lease must be paid to the state only in the
proportion that the state's interest bears to the entire undivided interest.
In addition, royalties shall be due to the state on locatable minerals only to
the extent the state has an interest in those minerals.
(g) In the event that this lease is found to be void or voidable, for
reasons other than a default of the lessee requiring termination, then the
lessee's rights under the mining claims which predate this lease and which
were valid at the time of the lessee's application for this lease shall be
reinstated.
2. RESERVED RIGHTS.
(a) The state, for itself and others, reserves all rights not expressly
granted to the lessee by this lease. These reserved rights include but are
not limited to:
(1) the right to explore for, develop, lease, and remove from the
leased area all minerals other than locatable minerals;
(2) the right to establish or grant easements and rights-of-way upon,
through, or in the leased area for any lawful purpose, including roads,
railroads, well sites, pipelines, utility lines, drill holes, shafts, and
tunnels necessary or convenient for the working of the leased area for natural
resources other than locatable minerals or necessary or convenient for access
to or the working of other land for any purpose;
(3) the right to manage and to convey to third parties by grant, lease,
permit, or otherwise, any and all interests in the leased area other than
those granted by this lease, provided that
Page 3 of 16
<PAGE>
any such conveyance to a third party is made subject to the provisions of this
lease.
(b) The rights reserved pursuant to paragraph 2(a) shall not be exercised
in any manner that unreasonably interferes with the lessee's operations under
this lease. The state shall provide the lessee with prior notice of the
state's intent to exercise any rights reserved under paragraph 2(a) and the
opportunity to comment on the proposed exercise of these rights. The parties
shall work cooperatively to identify potential conflicts, and the state shall
require as a condition to the state's or any other party's exercise of any
reserved rights such stipulations as appear necessary to protect public safety
or to prevent unreasonable interference with the rights of the lessee.
3. TERM.
This lease is issued for an initial term of twenty (20) years from its
effective date. At the end of the initial lease term, if the lease is in good
standing and the lessee is in compliance with this lease, the lease may be
renewed for an additional term not to exceed fifty-five (55) years.
4. ANNUAL LABOR.
(a) Labor shall be performed or improvements made annually on or for the
benefit or development of this lease. Where one or more adjacent mining
claims, leasehold locations, or mining leases are held in common with this
lease, the expenditure may be made on any one mining claim, leasehold
location, or mining lease and credited to all claims, locations, or leases
held in common which are subject to a common plan of development.
(b) Labor shall be performed in accordance with AS 38.05.210. If more
work is performed than is required by AS 38.05.210 to be performed in any one
year, the excess value may be applied against labor required to be done during
the subsequent year or years as provided in AS 38.05.210. Instead of
performing annual labor, the lessee may make a cash payment to the state equal
to the value of the labor required by AS 38.05.210.
(c) During the year in which annual labor is required or within 90 days
after the close of that year, the lessee or some
Page 4 of 16
<PAGE>
other person having knowledge of the facts shall record with the recorder of
the district(s) in which this lease is located a signed statement setting out
the information, as required by the commissioner, concerning the annual labor
performed during said year, any labor in excess of that required for said
year, and any payment of cash instead of annual labor.
5. RENTAL.
The annual rent due under this lease shall be determined according to AS
38.05.211. The rental payment shall be paid each year in advance and is
subject to adjustment under AS 38.05.211(d). The rental payment is due on
September 1 of each year and must be paid on or before November 30 of each
year.
6. PRODUCTION ROYALTY.
In exchange for and to preserve the right to extract and possess locatable
minerals produced, the lessee shall pay a royalty on all minerals produced
from this lease during each year. The production royalty is three percent (3%)
of net income as determined under AS 38.05.212, AS 43.65, and regulations
adopted under these statutes.
7. ABANDONMENT.
Failure to submit timely a signed statement of annual labor, annual rental
payment, or production royalty payment constitutes abandonment under AS
38.05.265 and automatically terminates the lease without prior notice. If an
annual rental payment or production royalty payment is less than the amount
due, the lessee will be granted 30 days after receipt of a notice from the
state to submit the additional amount due. If the lessee does not correct the
default within the time allowed in the notice, this lease automatically
terminates without further notice, except that disputes regarding the amount
of production royalty due the state will be resolved under 11 AAC 86.760 - 11
AAC 86.796.
8. RECORDS.
(a) The lessee shall keep all records necessary to establish discovery, to
support statements of annual labor, and for a period
Page 5 of 16
<PAGE>
of six years, to support the calculation of production royalty. Upon request,
copies of those records must be submitted to the Division of Mining at the
address shown in paragraph 24 of this lease.
(b) If the lessee simultaneously requests in writing that the information
submitted pursuant to paragraph 8(a) be maintained as confidential, the state
will keep information submitted to the state under this paragraph confidential
in accordance with AS 38.05.035(a)(9).
9. PAYMENTS.
All payments to the state under this lease must be made payable to the
Alaska Department of Revenue in the manner directed by the state and, unless
otherwise specified upon 60 days' notice to the lessee, must be mailed to the
address specified below.
DEPARTMENT OF NATURAL RESOURCES
ATTENTION: FINANCIAL SERVICES
P.O. BOX 7036
ANCHORAGE, ALASKA 99510-7036
10. GENERAL PERMITTING REQUIREMENTS.
Before any particular activity requiring federal, state, or municipal
permits or authorizations occurs under this lease, all required federal,
state, and municipal permits and other authorizations for that particular
activity must be issued.
11. PLAN OF OPERATIONS.
(a) A plan of operations, as provided under regulations 11 AAC 86.800 -
11 AAC 86.815, must be submitted to and approved by the state before activities
requiring a plan of operations may occur under this lease.
(b) As part of the plan of operations, an approved reclamation plan as
required under AS 27.19 and its implementing regulations must also be
submitted to an approved by the state before activities requiring a plan of
operations may occur under this lease.
Page 6 of 16
<PAGE>
(c) All of the lessee's activities on the leased area must be in
conformance with the approved plan of operations insofar as a plan of
operations is required.
12. TITLE OF THE STATE; ACCESS.
The state makes no representations or warranties, express or implied, as
to title to, access to, or quiet enjoyment of the leased area. The state is
not liable to the lessee for any deficiency in title to or difficulty in
securing access to the leased area. The lessee or any successor in interest
to the lessee is not entitled to any refund of prior rentals paid under this
lease due to deficiency in title and is not entitled to a refund of rentals
paid under this lease due to difficulty in securing access. However, the
Department of Natural Resources will attempt to provide legal access in
accordance with state statutes and regulations across land it manages for
purposes reasonably related to the activities of the lessee under this lease
where such access is reasonably available and feasible along previously used
routes or other routes approved by the state.
13. CONVEYANCE BY STATE.
(a) The state may convey all or a portion of its ownership of the leased
area at any time to any entity allowed by law. Notice of such conveyance
shall be given by certified mail to FGMI no later than thirty (30) days prior
to such conveyance. If all or a portion of the state's ownership of the
leased area is conveyed or transferred to the future Mental Health Trust
Authority to be created pursuant to 1991 SLA ch. 66 (not yet effective), or to
any other entity, the conveyance shall identify this lease as an encumbrance
to the interest conveyed and said conveyance thus shall be subject to this
lease.
(b) Neither parties' rights, obligations, or responsibilities under this
lease shall be increased or decreased by virtue of any conveyance unless
mutually agreed otherwise by the parties. Upon any conveyance of the leased
area by the state the provisions of AS 38.05 and 11 AAC that are in effect on
the date of such conveyance and which govern this lease and the conduct of
operations hereunder shall be deemed to be incorporated into this lease as if
fully set
Page 7 of 16
<PAGE>
forth herein.
14. CONDUCT OF OPERATIONS.
(a) The lessee shall perform all operations under this lease in a lawful,
prudent, and skillful manner under the plan of operations and other required
permits. The lessee shall carry out at the lessee's expense all lawful orders
and requirements relative to the lessee's occupation and use of the leased
area. If the lessee fails to carry out these orders and requirements, the
state has the right to enter the leased area to repair damage or prevent waste
at the lessee's expense and may take such other actions and pursue such other
remedies as may be available to it under applicable law.
(b) The lessee shall apply for a production license in accordance with AS
38.05.207 before beginning to produce minerals for sale in commercial
quantities.
15. BINDING EFFECT.
This lease and all of its provisions and any attached stipulations extend
to and are binding on the heirs, executors, administrators, successors, and
assigns of the state and the lessee.
16. INSPECTION.
The lessee shall keep available for inspection (by any authorized
representative of the state at any reasonable time and with prior reasonable
notice) the leased area, all improvements, fixtures, and equipment on the
leased area, and all reports and records required by law and by paragraph 8,
except for such documents which are protected under any law, regulation, rule,
or court order. The lessee shall permit the state to copy and make extracts
from any such reports and records. All documents entitled to confidentiality
pursuant to paragraph 8(b) shall be kept confidential by the state in
accordance with state law.
17. ASSIGNMENT.
The lessee may assign, sublease, or transfer this lease, or any interest
in or rights under this lease, only upon approval of
Page 8 of 16
<PAGE>
the state as provided by 11 AAC 82.605.
18. SURRENDER.
The lessee may at any time surrender all or part of the leased area under
11 AAC 82.635.
19. DEFAULT AND TERMINATION.
(a) The failure of the lessee to timely perform its obligations under
this lease, or the failure of the lessee otherwise to abide by all provisions
of this lease, is a default in the lessee's obligations under this lease.
Whenever the lessee fails to comply with any of the provisions of this lease
(other than a provision that, by its terms, provides for automatic
termination), and fails to cure the default or to begin and diligently
continue to cure the default within 30 days after receipt of written notice of
the default and an opportunity to be heard, the state may order suspension of
operations on the leased area until compliance is achieved, and may terminate
this lease after additional written notice and an opportunity to be heard.
(b) After termination of this lease for any reason, the state may, if not
adequately covered by a bond issued pursuant to paragraph 22, take possession,
subject to any valid existing security interests of record on the date of
termination of this lease, of the property, improvements, and equipment of the
lessee on the leased area as security for the payment of rent due, or payment
against any loss or damage sustained by reason of the default of the lessee.
20. RIGHTS AND OBLIGATIONS UPON TERMINATION.
(a) Unless the state has invoked its rights under paragraph 19(b) of this
lease or has otherwise directed, under the terms of this lease, within one
year after the termination of this lease or the completion of reclamation,
whichever is later, as to all or any portion of the leased area, the lessee
shall remove from the leased area or portion of the leased area all machinery,
equipment, structures, tools, and materials owned or placed on the leased area
by the lessee. Upon the expiration of that period and at the option of the
state, any structures, machinery, equipment, tools,
Page 9 of 16
<PAGE>
or materials that the lessee has not removed from the leased area or portion
of the leased area may be declared abandoned and become the property of the
state and may be removed by the state at the lessee's expense.
(b) Subject to the conditions set out in this paragraph, the lessee shall
deliver up the leased area or portion of the leased area in accordance with
the approved plan of operations and reclamation plan.
21. DAMAGES AND INDEMNIFICATION.
(a) The lessee agrees to comply with AS 38.05.130 before exercising any
rights reserved by the state pursuant to AS 38.05.125 prior to the date(s) of
location of the mining locations subject to this lease. The lessee agrees to
pay for any damages that may become payable under AS 38.05.130 by reason of
the lessee's exercise of these rights and to indemnify the state and hold it
harmless from and against any claims, demands, liabilities, and expenses
arising from or in connection with such damages.
(b) The lessee assumes all responsibility, risk, and liability for all
activities conducted by the lessee on or in the leased area, including
construction, reclamation, and environmental and hazardous substance risks and
liabilities, whether accruing during or after the term of this lease. The
lessee shall defend, indemnify, and hold harmless the state and its employees
from and against any and all suits, claims, actions, losses, costs, penalties,
and damages of whatever kind or nature, including all attorney's fees and
litigation costs, arising out of, in connection with, or incident to any act
or omission by or on behalf of the lessee on the leased area, including acts
or omissions of independent contractors, unless the sole proximate cause of
the injury or damage is the negligence or willful misconduct of the state or
anyone acting on the state's behalf. Within 15 days the lessee shall accept
any such cause or action or proceeding upon tender by the state. This
indemnification shall survive the termination of this lease.
(c) The lessee shall require that all indemnities obtained from all
contractors and subcontractors of the lessee be extended to include the state
as an additional named indemnitee. The lessee
Page 10 of 16
<PAGE>
shall further require that the state be named as an additional insured on all
insurance policies taken out and maintained by all contractors and
subcontractors under their contracts with the lessee or that an appropriate
waiver or subrogation in favor of the state be obtained with respect to all
such insurance policies to effect the same purpose.
22. BOND.
The state may require a bond as provided in AS 27.19.040 and its implementing
regulations, and 11 AAC 86.805.
23. AUTHORIZED REPRESENTATIVES.
The Director of the Division of Mining, Department of Natural Resources,
State of Alaska, and the person executing this lease on behalf of the lessee
will be the initial authorized representatives of their respective principals
for the purposes of administering this lease. The state or the lessee may
change the authorized representative or the address to which notices to that
representative are to be sent by giving a notice pursuant to paragraph 24.
When operations under a plan of operations are underway, the lessee shall
also designate, in a notice given pursuant to paragraph 24, by name, job
title, and address, an agent who will be present in the state during all
operations under such plan.
24. NOTICE.
(a) All notices required or permitted under this lease shall be in writing
and shall be given
(1) by personal delivery to the respective addressee;
(2) by electronic communication, with the original paper document sent
immediately by registered or certified mail, return receipt requested, or
(3) by registered or certified mail, return receipt requested.
All such notices shall be sent to the following respective addresses:
Page 11 of 16
<PAGE>
The State:
---------
Director
Alaska Division of Mining
Department of Natural Resources
P.O. Box 107016
Anchorage, AK 99510-7016
or:
3601 C Street, Suite 880
Anchorage, Alaska
or:
Facsimile: 907-563-1853
(Telephone: 907-762-2165)
The lessee:
----------
Fairbanks Gold Mining, Inc. and
Melba Creek Mining, Inc.
P.O. Box 73726
Fairbanks, Alaska 99707-3726
or:
701 Bidwill Street
Fairbanks, Alaska
or:
Facsimile: 907-451-4305
(Telephone: 907-452-4653)
b. Any notice shall be effective and deemed delivered
(1) if by personal delivery, on the date of delivery if delivered during
normal business hours or on the next business day following delivery if not
delivered during normal business hours;
Page 12 of 16
<PAGE>
(2) if by electronic communication, on the day of receipt at the office
of the addressee if received during normal business hours or on the next
business day following receipt if not received during normal business hours;
and
(3) if solely by mail, on the day of actual receipt at the address of
the recipient if delivered by the postal service during normal business hours or
on the next business day following receipt if not delivered during normal
business hours.
25. STATUTES AND REGULATIONS.
This lease is subject to all applicable federal and state law, including
statutes and regulations in effect on the effective date of this lease, and,
to the extent constitutionally permissible, new statutes and regulations or
changes to existing statutes and regulations enacted or promulgated after the
effective date of this lease. In case of conflicting provisions, statutes and
regulations take precedence over this lease.
26. INTERPRETATION.
This lease is to be interpreted in accordance with the rules applicable to
the interpretation of contracts made in the state. The paragraph headings are
not part of this lease and are inserted only for convenience. The state and
the lessee expressly agree that the laws of the State of Alaska will apply in
any judicial proceeding affecting this lease.
27. INTEREST IN REAL PROPERTY.
It is the intention of the parties that the rights granted to the lessee
by this lease constitute an interest in real property in the leased area.
28. WAIVER OF CONDITIONS.
The state reserves the right to waive any breach of a provision of this
lease, but any such waiver extends only to the particular breach so waived and
does not limit the rights of the state with respect to any future breach; nor
will the waiver of a particular breach prevent termination of this lease for
any other cause or for the same cause occurring at another time. Any
Page 13 of 16
<PAGE>
amendment or modification to this lease to be effective must by in writing
signed by the state and the lessee. The state or the lessee shall not be
deemed to have waived any right to notice under paragraph 24 unless such
waiver is in writing and specifically waives such notice.
29. SEVERABILITY.
If it is finally determined in any judicial proceeding that any provision
of this lease is invalid, the invalid portion will be treated as severed from
this lease and the remainder of this lease will remain in effect.
30. DEFINITIONS.
All words and phases used in this lease are to be interpreted
consistently with AS 01.10.040
31. EFFECTIVE DATE.
This lease takes effect Feb. 15, 1994.
------- --
Page 14 of 16
<PAGE>
BY SIGNING THIS LEASE, the state as lessor and the lessee agree to be
bound by its provisions.
STATE OF ALASKA
By: /s/ Richard A. LeFebvre Date: Feb. 15, 1994
---------------------------- --------------
Title: Project Manager
-------------------------------
For Director Division of Mining
LESSEE
Fairbanks Gold Mining, Inc.
a Delaware corporation
By: /s/ Kenneth R. Pohle
---------------------------
Title: President Date: Feb. 15, 1994
------------------------ -------------
Melba Creek Mining, Inc.
By: /s/ Kenneth R. Pohle
---------------------------
Title: Vice President Date: Feb. 15, 1994
------------------------ -------------
Page 15 of 16
<PAGE>
ACKNOWLEDGEMENTS
STATE OF ALASKA )
) ss.
Fourth Judicial District )
The foregoing instrument was acknowledged before me this 15th day of
----
February, 1994, by Richard A. LeFebvre in his capacity for the Director,
- - -------- -------------------
Division of Mining, Department of Natural Resources, State of Alaska.
/s/ Christopher C. Milles
-------------------------------
[Seal] Notary public in and for Alaska
My commission expires: 1-31-95
--------
STATE OF ALASKA )
) ss.
Fourth Judicial District )
The foregoing instrument was acknowledged before me this 15th day of
----
February, 1994, by Kenneth R. Pohle, the President of Fairbanks Gold Mining,
- - -------- ---------------- ---------
Inc., a Delaware corporation, on behalf of the corporation.
/s/ Christopher C. Milles
-------------------------------
[Seal] Notary public in and for Alaska
My commission expires: 1-31-95
--------
STATE OF ALASKA )
) ss.
Fourth Judicial District )
The foregoing instrument was acknowledged before me this 15th day of
----
February, 1994, by Kenneth R. Pohle, the Vice-President of Melba Creek Mining,
- - -------- ---------------- --------------
Inc., a Delaware corporation, on behalf of the corporation.
/s/ Christopher C. Milles
-------------------------------
[Seal] Notary public in and for Alaska
My commission expires: 1-31-95
--------
Page 16 of 16
<PAGE>
FAIRBANKS GOLD MINING, INC.
MILLSITE PERMIT
Fort Knox Mine Project
ADL NOS. 414960 AND 414961
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. Parties........................................... 1
2. Definitions....................................... 1
3. Grant............................................. 5
4. Term.............................................. 7
5. Use Charge........................................ 7
6. Materials within Permit Area...................... 9
7. Reclamation Bond.................................. 11
8. Insurance......................................... 13
9. Commencement of Permit Operations................. 17
10. Maintenance; Obligations; Breach.................. 20
11. Inspection and Entry by the Division.............. 21
12. Environmental Audit............................... 22
13. Taxes and Liens on Permit Area.................... 25
14. Temporary Closure................................. 27
15. Abandonment or Cessation of Mining................ 27
16. Post-Permit Land Conditions....................... 28
17. Removal and Reclamation........................... 28
18. Termination for Breach............................ 29
19. Surrender of Permit Area.......................... 32
20. Indemnification................................... 32
21. Guaranty.......................................... 34
22. Modifications..................................... 35
23. Conveyance by State............................... 36
24. Transfer by FGMI.................................. 37
25. Corporate Authority; Authorized Representatives... 40
26. Notice............................................ 41
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
27. Statutes and Regulations.......................... 43
28. Payment to Multiple Parties....................... 43
29. Nonpossessory Interest in Real Property........... 43
30. Denial of Warranty................................ 44
31. Recording......................................... 44
32. Venue; Controlling Law............................ 44
33. Waiver or Forbearance............................. 44
34. Severability...................................... 45
35. Attorney's Fees................................... 45
36. Successors........................................ 45
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A: Permit Area Land Description
Exhibit B: Division of Land Appraisal Instructions
Exhibit C: Project Description Map
Exhibit D: Agreement for Funding Post-Reclamation Obligations
Exhibit E: List of FGMI Environmental Policies, Plans, and Procedures
and Environmental Management Systems and Policies
Exhibit F: Initial Reclamation Plan
Exhibit G: Amax Gold Inc. Guaranty
Exhibit H: Agreement to Convey
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE
<S> <C>
Schedule 1: Schedule of Activity
</TABLE>
<PAGE>
MILLSITE PERMIT
ADL Nos. 414960 and 414961
1. Parties. This Millsite Permit ("this Permit"), executed this
-------
15th day of February, 1994 , is issued by the State of Alaska, Department of
- - ---- --------
Natural Resources ("DNR"), Divisions of Land and Mining, to Fairbanks Gold
Mining, Inc. ("FGMI"), a Delaware corporation the address of which is P.O Box
73726, Fairbanks, Alaska 99707-3726, and which corporation is a wholly owned
subsidiary of Amax Gold Inc. ("AGI"), a Delaware corporation.
2. Definitions. For the purposes of this Permit, the following
-----------
terms have the following meanings:
a. "Division" means the Division of Mining within DNR, unless
otherwise indicated.
b. "Division Director" means the Director of the Division, unless
otherwise indicated.
c. "Effective Date" means the date this Permit is executed or the
first date upon which all of the following have occurred:
i. the executed guaranty of AGI is received and approved by the
-
Division;
ii. all insurance policies, policy endorsements, and
--
certificates of insurance required by Section 8 herein are received and approved
by the Division; and
Page 1 of 47
<PAGE>
iii. the executed Surface Deed pursuant to the Agreement to
---
Convey attached hereto as Exhibit H conveying the surface estate of those
patented mining claims within the Permit Area described in Exhibit A hereto is
delivered to and accepted by the Division of Land, whichever date occurs later.
d. "Hazardous Substance" means the same herein as in AS
46.03.826(5), with "oil" as defined in AS 46.03.826(7).
e. "Facility" or "Facilities" means any and all structures,
excavations, or improvements constructed or in the process of being constructed
in or on the Permit Area, including but not limited to buildings, roads, utility
lines and equipment, pipelines, dams, impoundments, reservoirs, pits, waste
dumps, and wells.
f. "Mining Operations" means those activities constituting the
normal and reasonable exercise of valid Mining Rights pursuant to Mining Lease
ADL 535408 or the exercise of other valid Mining Rights.
g. "Mining Rights" means the working interest in each and every
State mining claim or State mining lease (including but not limited to State
mining lease ADL 535408) (1) the working interest in which is owned or
controlled by FGMI now or at any time during the period when the Plan of
Operations or other plan of operations is in effect for the Permit Area and (2)
which is located within the following area: Township 2 North Range 2 East
Page 2 of 47
<PAGE>
(all Sections) and Township 2 North Range 3 East (Sections 4, 5, 6, 7, 8, 9, 16,
17, 18, 19, 20, and 21), Fairbanks Meridian.
h. "Permit Area" means those State lands described in Exhibit A
attached hereto and incorporated by reference herein, including the lands within
those patented federal mining claims described in Exhibit A that have been
conveyed (subject to a mineral reservation) or are under agreement to be
conveyed to the State by FGMI.
i. "Permit Operations" means those activities that are conducted in
or on the Permit Area pursuant to and in compliance with the Plan of Operations
or other plan of operations approved by the Division and the Reclamation Plan
and that are normally and reasonably associated with a millsite, including but
not limited to the following:
i. milling, processing, beneficiation, concentrating, vat
-
leaching, treating, storing, removing, transporting, and selling or otherwise
disposing of locatable minerals mined pursuant to State mining lease ADL 535408;
ii. placing, constructing, erecting, installing, maintaining,
--
repairing, using, replacing, and removing excavations, openings, shafts,
ditches, drains, settling ponds, tailings ponds, stockpiles, waste dumps, roads,
haulageways, buildings, structures, machinery, equipment, and other Facilities
at locations specified in the Plan of Operations and the Reclamation Plan, on or
below the surface of the Permit Area, as
Page 3 of 47
<PAGE>
may be reasonably necessary or desirable for the purpose of engaging in the
activities described in Subsection 2(i)(i) above;
iii. reclaiming the Permit Area in conformance with the
---
provisions of this Permit and the Reclamation Plan; and
iv. any and all other actions in or on the Permit Area which
--
may be reasonably necessary or desirable to carry on Permit Operations subject
to the limitations and restrictions of any and all other permits,
authorizations, statutes, laws, regulations, and ordinances existing at the
time of the action.
j. "Plan of Operations" means the plan of operations submitted to
the Division by FGMI in accordance with 11 AAC 86.800, for
i. the development and operation of an open pit gold mine on
-
State mining lease ADL 535408 and
ii. the conduct of Mining Operations and Permit Operations
--
within the Permit Area associated with said mine, as updated, revised, or
amended by FGMI and approved by the Division.
k. "Pollution" means the same herein as in AS 46.03.900(19) with
respect to water, land, or subsurface land and the same herein as AS
46.03.900(2) with respect to air.
l. "Project Description" means the "Project Description for the Fort
Knox Mine (August 1992)" submitted by FGMI to the Division describing (1) the
proposed open pit gold mine on State mining lease ADL 535408 and (2) the
proposed Mining
Page 4 of 47
<PAGE>
Operations and Permit Operations within the Permit Area associated with said
mine, as updated, revised, or amended.
m. "Reclamation" means rehabilitation of the lands within the Permit
Area pursuant to and in accordance with the Reclamation Plan.
n. "Reclamation Plan" means the reclamation plan for the Permit Area
submitted by FGMI and approved by the Division in compliance with AS 27.19 and
the regulations promulgated pursuant thereto, as updated, revised, or amended by
FGMI and approved by the Division thereafter.
o. "State" means the State of Alaska as sovereign and owner of the
lands within the Permit Area, and all agencies or authorized representatives
thereof.
p. "Temporary Closure" means a suspension or cessation of Mining
Operations and Permit Operations on the Permit Area not exceeding three (3)
years in duration.
q. "Transfer" means, as the context requires, (a) to sell, grant,
assign, encumber, pledge, or otherwise commit or dispose of, or (b) a sale,
grant, assignment, encumbrance, pledge or other commitment or disposition.
r. "Use Charge" means the fee as provided for in Section 5 herein.
3. Grant.
-----
a. Subject to the reservations, exceptions, exclusions, limitations,
conditions, and other provisions
Page 5 of 47
<PAGE>
contained in this Permit, the Divisions of Mining and Lands hereby grant to FGMI
and its successors and assigns the following nonpossessory surface use rights in
and to the Permit Area for the term set forth in Section 4 below:
i. the right to use the Permit Area in accordance with the
-
Project Description and as authorized in the Plan of Operations and the
Reclamation Plan, to conduct Permit Operations in conjunction with Mining
Operations on State mining lease ADL 535408; and
ii. subject to Division approval of any necessary amendments to
--
the Reclamation Plan for the Permit Area and to Division approval during the
term of the Plan of Operations of either an appropriate amendment to the Plan of
Operations or an additional plan of operations for the Permit Area, the right to
use the Permit Area to conduct Permit Operations in conjunction with Mining
Operations on valid Mining Rights other than State mining lease ADL 535408.
A graphic summary depicting the activities anticipated under this
Permit, the initial Plan of Operations, and the initial Reclamation Plan is
attached hereto as Schedule 1. It is anticipated that this Schedule will be
updated as necessary to reflect any amendments to this Permit, the Plan of
Operations, and the Reclamation Plan.
b. All rights to use are subject to any valid existing rights within
the Permit Area and the requirement of
Page 6 of 47
<PAGE>
reasonable multiple concurrent use as provided for in the Constitution of the
State of Alaska and AS 38.05.285; however, pursuant to 11 AAC 86.145, FGMI may
restrict public access to those areas of the Permit Area where such restriction
is necessary for public safety or to prevent unreasonable interference with
Permit Operations.
4. Term.
----
The term of this Permit commences on the Effective Date and shall
continue unless sooner terminated in accordance with the provisions of this
Permit, until completion of all requirements under and pursuant to:
a. the Plan of Operations or any other plan of operations approved
by the Division for lands within the Permit Area;
b. the Reclamation Plan;
c. FGMI's obligation to convey the previously reserved mineral
rights to the patented mining claims pursuant to the Agreement to Convey
attached hereto as Exhibit H; and
d. that portion of the Solid Waste Disposal Permit issued by the
Alaska Department of Environmental Conservation concerning closure of the
tailings impoundment.
5. Use Charge.
----------
a. On or before the close of business on the Effective Date of this
Permit and annually thereafter on or before the Effective Date for so long as
this Permit is in
Page 7 of 47
<PAGE>
effect, in order to continue this Permit in effect, FGMI shall pay a Use Charge
as follows:
i. The annual Use Charge for the first five years hereunder
-
shall be the rental value of the land, without improvements installed or
constructed by FGMI, calculated based on the appraised value determined by an
appraisal of the Permit Area to be carried out at FGMI's expense by an
independent appraiser selected by FGMI from an approved list of appraisers
provided by the Division of Land and in accordance with the additional appraisal
instructions issued by the Division of Land attached hereto as Exhibit B. The
initial Use Charge is $102,000 per year pursuant to Division of Land Appraisal
2598-1.
ii. The Use Charge for each succeeding five year period (e.g.,
--
starting in the sixth year of this Permit, the eleventh year, etc.) hereunder
shall be the rental value of the land, without improvements installed or
constructed by FGMI, calculated based on the current appraised value determined
by an appraisal of the Permit Area to be carried out at FGMI's expense by an
independent appraiser selected by FGMI from an approved list of appraisers
available from the Division of Land at least 90 days prior to each Effective
Date anniversary date upon which the Use Charge shall be adjusted and in
accordance with the additional appraisal instructions issued by the Division of
Land as updated, revised, and amended hereafter.
Page 8 of 47
<PAGE>
iii. Upon permanent cessation or abandonment of Mining Operations
---
under the Plan of Operations or any other approved plan of operations, the Use
Charge for lands then within the Permit Area shall be reduced to a nominal
charge to reflect the substantial decrease in use of the Permit Area, which
nominal charge shall not exceed one percent (1%) of the appraised value the
lands within the Permit Area.
b. All payments to the State under this Permit must be made payable
to the Alaska Department of Revenue in the manner directed by the State and,
unless otherwise specified upon sixty (60) days notice to FGMI, must be mailed
to the following address:
Department of Natural Resources
Attention: Financial Services
P.O. Box 7036
Anchorage, Alaska 99510
or delivered to the following address:
Department of Natural Resources
3601 C Street, Suite 200
Anchorage, Alaska
c. Failure to pay the Use Charge constitutes a material breach of
this Permit which shall result in termination unless cured as provided in
Section 18 herein.
6. Materials within Permit Area.
----------------------------
a. FGMI shall not sell or remove from the Permit Area for use
elsewhere any timber, waste rock, stone, gravel, peatmoss, topsoil, or any other
material valuable for building or
Page 9 of 47
<PAGE>
commercial purposes. Such material may be used within the Permit Area for or in
connection with Permit Operations. In developing construction plans and in
actual extraction of material, FGMI shall include an assessment of the potential
for incorporating borrow sites into the design of the water supply impoundment.
b. The Project Description anticipates both the use of material in
construction of impoundments and the permanent storage of material such tailings
and rock derived from the mine pit within the Permit Area during and as part of
Permit Operations, as generally depicted in the map attached hereto as Exhibit
C. The parties recognize that such use and storage result in benefits to all
parties, and therefore, the parties agree that the value, if any, of the right
to use such materials within the Permit Area for or in connection with Permit
Operations comprises an undifferentiable component of the Use Charge provided
for in Section 5 of this Permit. The parties further recognize and agree that
due to the interrelated balance of benefits derived by each party within the
Permit Area arising from the use of materials throughout the Permit Area as
described in the Project Description, any value attributable to the use of
materials is neither apportionable within the Permit Area for any purpose nor
allocable to any part of the Permit Area for any purpose. In the event of a
reconveyance by the State of the federal patented mining claims that are the
subject of the Agreement to Convey (attached as Exhibit H hereto), any materials
derived from state
Page 10 of 47
<PAGE>
lands other than said federal patented mining claims and placed on said federal
patented mining claims must either be removed from said claims by FGMI and
placed on other state lands prior to said reconveyance or paid for at the time
of said reconveyance by FGMI at the then appraised value.
c. All timber on the Permit Area that will be disturbed due to
Permit Operations shall be:
i. used for Permit Operations in or on the Permit Area;
-
ii. chipped and mulched by FGMI for use as a soil amendment for
--
incorporation into topsoil stockpiles and other suitable growth medium for the
purposes of enriching growth medium stockpiles, enhancing interim reclamation,
or increasing the resources to reclaim the mined area at closure, or upon
Division approval in consultation with State Division of Forestry, otherwise
incorporated into the soil; or
iii. after consultation with the State Division of Forestry and
---
where determined by FGMI to be of suitable size and located in affected areas
that are easily accessible, felled, limbed, bucked into log lengths, and decked
in areas easily accessible to the public for collection of firewood free of
charge.
7. Reclamation Bond.
----------------
a. Prior to commencement of construction or Permit Operations
resulting in land disturbance and prior to January 1
Page 11 of 47
<PAGE>
of each subsequent year, FGMI shall furnish to the Division a reclamation bond
which meets the requirements and standards of AS 27.19, the regulations
thereunder and the Reclamation Plan, securing FGMI's performance of the
Reclamation Plan excepting only the areas the reclamation of which is
specifically covered by a bond required by the State Department of Environmental
Conservation Solid Waste Disposal Permit issued for the Permit Area. FGMI, for
itself, its assigns and subrogees specifically waives any right to challenge the
amount of the bond based on the bond amount exceeding seven hundred and fifty
dollars ($750) per mined acre.
b. The reclamation bond amount for the first five years of this
Permit shall be mutually agreed upon prior to issuance of this Permit.
Thereafter, the reclamation bond amount shall be redetermined at intervals and
for intervals of no more than five years. At least 90 days prior to the
expiration of a reclamation bond interval, FGMI shall supply to the Division all
relevant information concerning FGMI's operations and reclamation planned for
the Permit Area for the succeeding interval. The Division shall notify FGMI of
the bond amount for the succeeding interval at least 45 days prior to the
expiration of the current bond interval.
c. FGMI shall provide evidence of bond renewal or a surety's
commitment for a new bond no later than 15 days prior to the expiration of the
existing bond. Failure to provide such
Page 12 of 47
<PAGE>
evidence of renewal or commitment timely is a breach of this Permit.
8. Insurance.
---------
a. During the term of this Permit, FGMI shall maintain the following
policies of insurance written by insurance companies with a financial rating of
"Very Good" as rated in the most recent edition of Best's Insurance Reports or
the equivalent of that rating as approved and accepted by the State, and be
authorized to provide insurance in Alaska.
i. Commercial General Liability insurance with a combined
- --------------------------------------
single limit (including umbrella liability coverage) of not less than Twenty-
five Million Dollars ($25,000,000.00) per occurrence/annual aggregate, which
shall include, but not be limited to: Premises and operations, Independent
Contractors, Owners and Contractors Protective, Products/Completed Operations,
Contractual including the indemnification clauses in Section 20, Explosion,
Collapse and Underground Property Damage, Personal Injury, Incidental
Malpractice and Errors and Omissions Coverage.
This insurance shall insure FGMI and the State against claims which
may arise out of, or result from FGMI's operations related to the Permit Area
whether such operations be conducted by FGMI or by their contractors, or
subcontractors, or by anyone directly or indirectly employed by either of them,
or by anyone for whose acts any of them may be liable. This insurance shall be
considered to be primary of any other insurance carried by the
Page 13 of 47
<PAGE>
Division through self-insurance or otherwise. This insurance shall also contain
a "cross liability" or "severability of interest" clause or endorsement. The
State shall be named as additional insured on all FGMI insurance policies
covering the Permit Area and on all insurance policies taken out and maintained
by all contractors and subcontractors under their contracts with FGMI, or
appropriate waivers of subrogation in favor of the State must be obtained with
respect to all such insurance policies to effect the same purpose.
ii. Auto Liability insurance with a combined single limit
-- ------------------------
(including umbrella liability coverage) of not less than Twenty-five Million
Dollars ($25,000,000.00) per occurrence/annual aggregate, which shall include,
but not be limited to: All Owned, Non-owned and Hired vehicles while used both
on and away from the Permit Area.
This insurance shall be considered to be primary of any other
insurance carried by the Division through self insurance or otherwise. This
insurance shall also contain a "cross liability" or "severability of interest"
clause or endorsement. The State shall be named as additional insured.
iii. Professional Liability Insurance providing coverage for all
--- --------------------------------
errors and omissions or negligent acts of any design/project professional
involved in the Permit Area with coverage limits of not less than Twenty-five
Million Dollars ($25,000,000) per claim and project aggregate with an extended
Page 14 of 47
<PAGE>
discovery period for a minimum of five years after the Division of Water/Dam
Safety issues its Certificates of Operation for each dam within the Permit Area.
iv. Statutory Alaska Workers' Compensation and Employer's
-- -----------------------------------------------------
Liability Insurance with a limit of not less than Ten Million Dollars
- - -------------------
($10,000,000.00) in compliance with the laws of the State, and, where
applicable, insurance which complies with any other statutory obligations,
whether Federal or State, pertaining to the compensation of injured employees,
and including Voluntary Compensation. The Worker's Compensation Insurance shall
contain a waiver of subrogation clause in favor of the State.
v. Pollution Liability Insurance if available at reasonably
- -----------------------------
cost with combined single limits not less than Twenty-five Million Dollars
($25,000,000.00) per occurrence for any claim arising out of or related to any
event or happening directly or indirectly caused by or resulting from the
dispersal, discharge, escape, release, removal or saturation of smoke, vapors,
soot, fumes, acids, alkalis, toxic chemicals, liquids, gasses, contaminants or
pollutants into the atmosphere, or in, onto, upon or into the surface or
subsurface of soil, water or watercourses, objects, or any tangible or
intangible matter, whether sudden and accidental or gradual.
vi. All Risk Property Insurance (including earthquake and
-- ---------------------------
flood), including business interruption, on the
Page 15 of 47
<PAGE>
dam structure, buildings, and equipment on or affixed to or otherwise connected
to the Permit Area, in such amounts and with such deductibles as under good
business practices are ordinarily provided for on similar buildings and
equipment, but in no event in an amount less than the replacement value of the
all insurable structures, buildings, improvements, and equipment on or in the
Parcel Area. During the course of construction, FGMI shall provide or cause the
contractor to provide "All Risks" Builders' Risk Insurance to the full value of
the project.
b. All required insurance policies with endorsements must be
submitted to the Division for approval. The Division shall approve or
disapprove the policies and endorsements within thirty (30) days of receipt by
the Division. Certificates of Insurance (or certified copies of the policies,
if requested by one of the parties) shall be provided to the Division. The
certificates shall provide that thirty (30) days advance written notice by
certified mail will be given the Division before cancellation or material change
in the coverage.
c. The requirements for insurance coverages of the kinds and with
the limits stated in this Section shall not be construed as a representation
that such insurance coverage is adequate or limits FGMI's liability.
d. Required insurance is subject to annual review and adjustment by
the Division, which may require reasonable changes based on changes in risks.
FGMI shall be provided with a written
Page 16 of 47
<PAGE>
explanation for any change and may appeal any change pursuant to 11 AAC 02 et
--
seq.
- - ---
e. All Property insurance policies shall contain a waiver of
subrogation in favor of the State who shall also be named as a loss payee on any
loss settlement paid. FGMI shall be obligated to pay all deductibles.
9. Commencement of Permit Operations.
---------------------------------
a. No particular Permit Operation shall commence in or on the Permit
Area until:
i. the Plan of Operations and the Reclamation Plan are approved
-
by the Division;
ii. the initial reclamation bond is received and approved by the
--
Division;
iii. all required certificates and proofs of insurance are
---
received and approved by the Division; and
iv. any and all other permits or authorizations necessary for
--
said particular Permit Operation are received by FGMI.
b. Before FGMI commences construction of the tailings impoundment
and water supply impoundment as described in the Project Description, FGMI shall
enter into an Agreement for Funding Post-Reclamation Obligations as shown in
Exhibit D with the Division and any other relevant parties. Such agreement
shall require that FGMI provide a fund to establish a perpetual endowment to
provide for post-closure management, repair, and
Page 17 of 47
<PAGE>
maintenance of the proposed water supply impoundment dam, the Solo Creek
causeway, the tailings impoundment dam, and any associated permits or
authorizations. Such agreement shall be a material part of the Reclamation
Plan. Notwithstanding the foregoing, nothing in this Permit, the Agreement for
Funding Post-Reclamation Obligations, the Reclamation Plan, or any other permit
or authorization may be construed to obligate FGMI to leave the water supply
impoundment in place if this Permit
i. is declared void or invalid,
-
ii. expires, or
--
iii. is terminated, except where such termination is caused by a
---
breach by FGMI,
prior to both the issuance of all permits and authorizations necessary to
conduct all Mining Operations contemplated in the Project Description and any
discharge of tailings into the tailings impoundment.
c. Prior to beginning construction, and as a requirement of the plan
of operations, FGMI shall provide site development plans and a construction
schedule for review by the Division. The facilities to be reviewed shall be
limited to improvements which could have an impact on the long-term value of the
State's land. Areas of specific interest include: roads, grading, drainageways,
waste dumps, tailing disposal facilities, buried utilities, environmental
controls or facilities which are not specifically being reviewed by other
agencies, soil or rock
Page 18 of 47
<PAGE>
cuts or embankments which are not being reviewed by the Division of Water (dam
safety), the general layout of the surface plant, and all geotechnical,
hydrologic, and other engineering reports providing the basis for design of the
above facilities. The plans provided shall be those intended for construction
of the specified facilities. If significant changes are made in the design
drawings before or during construction, revised drawings shall be submitted for
review. Construction plans and reports submitted for review shall be prepared
in accordance with state law.
d. The extent of review by the Division shall normally be limited to
assuring general conformance with terms of this Permit, the Mining Rights, the
Reclamation Plan, the Plan of Operations, an environmental audit pursuant to
section 12 herein, and other appropriate decision documents. This review is not
intended to consist of detailed technical review of any facility. However, the
Division may require additional information, if deemed necessary prior to
authorizing construction. There will normally be no review of detailed
architectural, structural, process, mechanical, or electrical plans. It is
understood that FGMI project design and construction documents will conform to
all applicable state and local codes, regulations, and statutes. Compliance
also includes plan submittal to the State Fire Marshal, mechanical department,
and electrical department when required by law.
Page 19 of 47
<PAGE>
e. Following review, the Division will advise FGMI in writing that
they are authorized to proceed with construction. FGMI shall not proceed with
construction prior to receiving appropriate authorization. An authorization for
construction may be issued by the Division for individual or groups of project
components, although complete submittals are desirable, when possible. The
final requirements under this section shall be coordinated with FGMI and other
appropriate agencies.
f. Prior to beginning ore processing, FGMI shall submit
certification(s) by an engineer or engineers that the roads, grading,
drainageways, tailings disposal facilities, buried utilities, and site
preparation for waste dumps were all constructed or prepared in accordance
with the plans which were submitted to the Division for review. All
certifications shall be made by properly licensed engineers. Representatives
of the Division shall periodically inspect project progress. If deviations
from the plans or schedule are observed, the Division representative shall
advise FGMI of the deviations and FGMI shall take appropriate action to
correct the deviations. Following completion of construction and any other
permit requirements, the Division shall issue an authorization to operate.
10. Maintenance; Obligations; Breach.
--------------------------------
a. FGMI shall maintain the Permit Area in a reasonably neat
and clean condition. FGMI shall maintain, in good condition, all portions of
the Permit Area, including but
Page 20 of 47
<PAGE>
not limited to, all Facilities and all of FGMI's personal property located in or
on the Permit Area. In addition to the obligations set forth in this Permit,
FGMI shall take all prudent precautions to prevent Pollution of the groundwater,
surface water, air, and land, to prevent or suppress grass, brush, or forest
fires, and to prevent erosion or destruction of the lands, features, and
resources within the Permit Area.
b. FGMI shall conduct all Permit Operations in compliance with the
Plan of Operations or other plan of operations approved by the Division for
lands within the Permit Area, the Reclamation Plan, all other permits or
authorizations issued by local, state, and federal agencies, and all applicable
laws, statutes, regulations, and ordinances including but not limited to
environmental statutes and regulations.
c. Failure to commence to cure a breach of any obligation set forth
in this Permit upon notice from the Division and within the time allowed after
notice by this Permit constitutes a material breach of this Permit and may
result in termination.
11. Inspection and Entry by the Division.
------------------------------------
a. FGMI shall permit the Division or its agents to enter into and
upon the Permit Area and Facilities at all reasonable times without notice,
subject to such safety and security procedures as FGMI may from time to time
adopt, for the purpose of inspecting the Permit Area and the activities thereon
Page 21 of 47
<PAGE>
including but not limited to activities involving Hazardous Substances.
b. Each year this Permit is in effect, during the third (3rd)
calendar quarter, FGMI shall meet with the Division to provide an update and
briefing describing the activities of the year immediately preceding and
activities planned for the immediately upcoming year with a copy of the update
and briefing materials to be provided ten (10) days prior to the meeting. At
the Division's discretion, this information may be made public in the context
and format mutually agreed upon by FGMI and the Division.
c. At least once a year, upon prior written notice, the Division
will formally inspect the Permit Area and all activities thereon.
d. At any time upon the Division's written request, FGMI shall
promptly make any and all records, documents, or other information required to
be kept or maintained by law, regulation, or ordinance available to the Division
for inspection and copying as reasonably required by the Division to determine
FGMI's compliance with local, state and federal laws applicable to Permit
Operations.
12. Environmental Audit.
-------------------
a. Prior to and in preparation for each scheduled update of the Plan
of Operations and any other approved plan of operations, prior to and in
preparation for termination of this
Page 22 of 47
<PAGE>
Permit, and as partial satisfaction of the requirements of section 7 of the
Agreement for Funding Post-Reclamation Obligations executed by the parties
hereto, an environmental audit shall be conducted at FGMI's expense. The
Division and FGMI shall mutually select a qualified auditor. To qualify, the
auditor must:
i. certify that no relationship exists through professional,
-
financial, or personal reasons that could bias the auditor's judgment or the
audit results and that no self-serving interest in the outcome of the audit
exists;
ii. demonstrate a commitment to professional and ethical standards
--
generally accepted in the environmental auditing profession; and
iii. demonstrate a professional proficiency in the specific areas of
---
hardrock mining, associated environmental issues, and current federal/state
regulatory programs and climate, and an appropriate working knowledge and
appreciation of management principles, quantitative methods, and computerized
information systems.
b. The scope of the audit to be conducted during the fifth (5th)
year of this Permit will be to determine if both the Environmental Management
Systems of FGMI and regulatory controls of FGMI provide reasonable assurances
that environmental objectives are being met and that the systems and controls
are functioning as intended. The scope of subsequent audits may be
Page 23 of 47
<PAGE>
revised as mutually agreed upon prior to initiation of each audit to address
specific issues or objectives not previously identified in Environmental
Management Plans of FGMI or permit terms. Identification of such issues or
objectives may be accomplished through a joint FGMI/State public meeting prior
to the audit.
c. The audit will be an objective, systematic, and documented review
of the conditions, operations, and practices related to environmental
requirements and environmental management of the Permit Operations conducted
under this Permit. The objectives of the audit will be to evaluate:
i. FGMI's compliance with all federal, State and local permits
-
and authorizations;
ii. FGMI's compliance with internal environmental policies,
--
plans, and procedures, and established environmental management systems and
policies, an initial list of which is attached hereto as Exhibit E and is
subject to updating, amendment, or revision upon mutual agreement of the
parties;
iii. the reliability and integrity of information relating to
---
environmental reporting and compliance;
iv. the adequacy of State oversight to protect State resources;
--
and
v. those conditions, operations, and priorities required by the
-
Department of Fish and Game permits.
Page 24 of 47
<PAGE>
d. The audit will evaluate, at a minimum and not limited to, all
items listed in Section 1.12 of the Department of Environmental Conservation
Solid Waste Disposal Permit regarding the facility audit required for that
permit.
e. The State and FGMI will use the audit results to assist in
updating, renewing, or issuing authorizations and permits, in updating
policies, plans, and procedures, and in determining compliance with permits and
authorizations.
13. Taxes and Liens on Permit Area.
------------------------------
a. During the term of this Permit, FGMI shall be solely responsible
for paying any and all real property taxes, assessments, and similar charges
levied by the State, any municipality, or any other governmental entity upon the
interest in the Permit Area granted to FGMI by this Permit. FGMI shall have the
right to contest, in courts or otherwise, the validity or amount of any such
taxes, assessments, or charges if FGMI deems them to be unlawful, unjust,
unequal, or excessive, or to undertake such other steps or proceedings as FGMI
may deem reasonably necessary to secure a cancellation, reduction, readjustment,
or equalization thereof before FGMI shall be required to pay them, but in no
event shall FGMI permit or allow its interest in the Permit Area granted by this
Permit to be lost or the State's title to the Permit Area to be clouded or
encumbered as a result of the nonpayment of any such taxes, assessments, or
charges.
Page 25 of 47
<PAGE>
b. During the term of this Permit, FGMI shall be solely responsible
for paying for all labor and services performed upon or materials furnished to
the Permit Area by, for, or at the request of FGMI. FGMI shall keep its
interest in the Permit Area granted by this Permit and the State's title to and
interest in the Permit Area free and clear of any and all mechanic's, mining,
labor, or materialmen's liens arising out of or resulting from the performance
of labor or services upon or the furnishing of materials to the Permit Area by,
for, or at the request of FGMI, except those liens arising by operation of law
for which payment is not yet due. FGMI shall have the right to contest, in the
courts or otherwise, the validity or amount of any such lien that may be filed.
If and when requested by the State, FGMI shall post and record notices of
nonresponsibility for the benefit of the State pursuant to AS 34.35.065 and AS
34.35.150 and any other similar applicable laws.
c. During the term of this Permit, FGMI shall not allow the State's
title to or interest in the Permit Area to be encumbered by any judgments
entered by a court of law against FGMI or FGMI's agents or contractors. If a
lis pendens is filed arising from pending or actual litigation against FGMI or
its agents or contractors that encumbers or purports to encumber the State's
title to or interest in any lands within the Permit Area lands, FGMI shall
diligently and with best efforts seek to effect immediate removal of said lis
pendens.
Page 26 of 47
<PAGE>
14. Temporary Closure.
-----------------
a. FGMI shall notify the Division in writing at least thirty (30)
days prior to any planned Temporary Closure of ninety (90) days or longer. FGMI
shall notify the Division of any unanticipated Temporary Closure expected to
last ninety (90) days or more within ten (10) days of the first day of the
Temporary Closure. The notice shall state the nature and reason for the
Temporary Closure, the anticipated duration of the Temporary Closure, and any
event which would reasonably be anticipated to result in the resumption or
abandonment of Mining Operations and Permit Operations. Mining Operations and
Permit Operations must resume for not less than ninety (90) consecutive days in
order to terminate the running of the Temporary Closure. If a Temporary Closure
extends beyond three (3) years, the Division may deem Mining Operations and
Permit Operations to be permanently abandoned or ceased, and whereupon final
Reclamation must commence unless otherwise agreed by the parties.
b. FGMI shall ensure that the Permit Area is maintained in a safe
and secure condition during a Temporary Closure and FGMI shall not allow the
Permit Area to be degraded or eroded during or as a result of the Temporary
Closure.
15. Abandonment or Cessation of Mining. Not later than 90 days after
----------------------------------
the permanent cessation or abandonment of Mining Operations or Permit
Operations, FGMI shall notify the Division of its intent to cease said
Operations.
Page 27 of 47
<PAGE>
16. Post-Permit Land Conditions. The parties agree that the
---------------------------
conditions to which lands in the Permit Area must be returned after cessation
of Mining Operations and Permit Operations shall be as provided for in the
initial Reclamation Plan as conditionally approved by the Division and
attached hereto as Exhibit F. Because such conditions have formed and will
continue to form a material basis for the planning, design, and conduct of the
Mining Operations and Permit Operations described in the Project Description
and approved in the initial Plan of Operations and initial Reclamation Plan,
any additional cost of incorporating and effecting a significant change in
such agreed upon post-Permit land conditions, including but not limited to
significant topographic or slope changes not necessary to meet the objectives
set forth in the initial Reclamation Plan, such that the Reclamation Plan must
be modified to accommodate such change, where such change does not arise or
result from a material change in facts or conditions as now understood by the
parties or a change in law or regulation, shall be paid for by the requesting
party.
17. Removal and Reclamation.
-----------------------
a. The removal of all Facilities constructed or placed on the Permit
Area shall be in accordance with the Reclamation Plan. Unless otherwise
provided in the Reclamation Plan, FGMI must reclaim land concurrently with the
conduct of Mining Operations and Permit Operations.
Page 28 of 47
<PAGE>
b. All reclamation not accomplished concurrently must be initiated
immediately upon a determination by the Division that a Temporary Closure has
resulted in permanent abandonment or cessation pursuant to Subsection 14(a)
herein, or within three years after permanent abandonment or cessation of Mining
Operations, whichever occurs first.
18. Termination for Breach.
----------------------
a. If FGMI shall materially breach any of the terms, covenants, or
conditions contained herein or attached hereto and said breach, except as
provided in Subsections 18(b) and 18(c) herein, shall not be cured to the
satisfaction of the Division within sixty (60) days after written notice of
such breach has been personally served or mailed by certified mail to FGMI and
any assignee of this Permit for security purposes of which the Division has
been previously notified by certified mail, the Division may terminate this
Permit by written notice.
b. If a material breach, except as provided in Subsection 18(c)
herein, cannot be reasonably cured within sixty (60) days of the written notice,
FGMI shall notify the Division within fourteen (14) calendar days of its receipt
of the written notice that the breach cannot be cured within sixty (60) days and
shall notify the Division of FGMI's timetable to cure the breach. The
timetable for cure is subject to Division approval, which approval shall not
be unreasonably withheld. FGMI shall commence to cure the breach within thirty
(30) days of the notice of
Page 29 of 47
<PAGE>
breach and diligently and in good faith continue to cure the breach to the
satisfaction of the Division.
c. If FGMI shall fail to timely pay the Use Charge and said failure
is not cured within ten (10) days after written notice of such failure has been
personally served or mailed by certified mail to FGMI and any assignee of this
Permit for security purposes of which the Division has been previously notified
by certified mail, the Division may terminate this Permit by written notice. If
a good faith attempt to pay the Use Charge is made and the payment is deficient
solely due to the amount paid being less than the amount actually due, FGMI
shall have thirty (30) days to cure such default after notice is given as
described in this Section.
d. Notice of breach or failure under this Section shall specify
the default and the applicable permit provision(s) and shall demand that FGMI
cure the default to the satisfaction of the Division within the applicable
timeframe. No notice shall be deemed a forfeiture or termination of this Permit
unless the Division so states in the notice.
e. FGMI may request, in writing, a hearing within fourteen (14)
calendar days of FGMI's receipt of a notice of termination. Upon receipt of
FGMI's request for a hearing, the time to cure the breach or breaches cited as
the cause for termination shall be tolled until the Director issues a final
decision on the termination for breach. Such tolling shall not
Page 30 of 47
<PAGE>
affect any other responsibilities, obligations, or performance under this Permit
or any other permit or authorization affecting the Permit Area.
f. The Division will hold the hearing within ten (10) business days
of the Division's receipt of FGMI's request unless mutually agreed otherwise by
the parties. The hearing shall be conducted informally and recorded
electronically. The parties may appear in person or through counsel, present
evidence and witnesses in their own behalf, and cross-examine opposing
witnesses. The Director's decision may be appealed pursuant to 11 AAC 02 et
--
seq.
- - ---
g. Upon termination of this Permit, the parties shall be relieved of
further rights, obligations, and liabilities under this Permit except for
rights, obligations and liabilities incurred or accrued prior to the date of
termination. The termination of this Permit shall not affect FGMI's obligations
under the Plan of Operations or any other plan of operations, the Reclamation
Plan, or any other permit, lease, or authorization issued by the Division or
other agency of federal, state, or local government. If this Permit is
terminated prior to completion of Reclamation, FGMI shall complete the
requirements of the Plan of Operations or other approved plan of operations, the
Reclamation Plan, and such other requirements as the Division may reasonably
require to protect the health, safety, and welfare of the public.
Page 31 of 47
<PAGE>
19. Surrender of Permit Area.
------------------------
a. Simultaneous with FGMI's receipt of the Division's written
concurrence that all Permit obligations and responsibilities have been
satisfied, FGMI shall deliver a deed in the form shown in Exhibit I hereto
conveying to the State all rights previously reserved by FGMI in and to the
patented federal mining claims within the Permit Area described in Exhibit A
hereto, and shall surrender the Permit Area. The parties agree that conveyance
of such previously reserved rights is necessary to assure the continued
effectiveness of the Permit Area reclamation as approved in the Reclamation
Plan.
b. Upon termination of this Permit for breach, FGMI shall cease all
Permit Operations and shall be permitted on the Permit Area solely for
Reclamation and timely removal of FGMI personal property. FGMI's obligation to
deliver a deed in the form shown in Exhibit H hereto conveying the rights
previously reserved by FGMI in and to the patented federal mining claims
within the Permit Area described in Exhibit A shall not terminate upon
termination of this Permit for breach and FGMI shall timely convey said rights
upon termination for breach.
20. Indemnification.
---------------
(a) FGMI assumes all responsibility, risk and liability for all
Permit Operations and other activities conducted by FGMI in connection with the
project described in the Project Description, including construction,
reclamation, and
Page 32 of 47
<PAGE>
environmental and Hazardous Substance risks and liabilities, whether accruing
during or after the term of this Permit. FGMI shall defend, indemnify, and hold
harmless the State and its employees from and against any and all suits, claims,
actions, losses, costs, penalties, and damages of whatever kind or nature,
including all attorney's fees and litigation costs, arising out of, in
connection with, or incident to any act or omission by or on behalf of FGMI on
the Permit Area, including acts or omissions of independent contractors, unless
the sole proximate cause of the injury or damage is the negligence or willful
misconduct of the State or anyone acting on the State's behalf. Within 15 days
FGMI shall accept any such cause or action or proceeding upon tender by the
State. This indemnification shall survive the termination of the Permit.
(b) FGMI shall require that all indemnities obtained from all
contractors and subcontractors on the Permit Area be extended to include the
State as an additional named indemnitee. FGMI shall further require that the
State be named as an additional insured on all insurance policies taken out and
maintained by all contractors and subcontractors under their contracts with
FGMI, or that appropriate waiver of subrogation in favor of the State be
obtained with respect to all such insurance policies to effect the same purpose.
Page 33 of 47
<PAGE>
21. Guaranty.
--------
a. FGMI shall cause AGI to guarantee FGMI's performance of this
Permit, including the Reclamation Plan and all permits and authorizations issued
by federal, state and local governments. The guaranty shall be in a form and
substance approved by the Division.
b. FGMI shall cause AGI to provide to the Division an opinion of
counsel dated the day FGMI executes the permit and satisfactory in form and
substance to the Division stating:
i. AGI is a corporation duly organized, validly existing and in
-
good standing under the laws of Delaware;
ii. AGI has full power and authority to execute said guaranty of
--
FGMI's performance of this Permit, which power and authority have been duly
authorized by all proper and necessary corporate action, and the execution,
delivery and performance by the guarantor of its obligations under this Permit
do not require any shareholder approval, and do not contravene any law,
regulation, rule or order binding upon it or its Articles of Incorporation or
Bylaws; and
iii. AGI's execution of said guaranty of the performance of
this Permit when duly executed and delivered, will constitute the valid, legal
and binding obligation of AGI, enforceable in accordance with its terms,
subject to (1) applicable bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally;
Page 34 of 47
<PAGE>
(2) laws imposing duties to act in good faith or in a commercially reasonably
manner, and (3) laws respecting or affecting the procedural or remedial
provisions of this Permit.
c. FGMI shall cause AGI to provide to the Division on the date of
execution of this Permit a copy of AGI's most recent balance sheet but dated not
more than one year prior to the date of execution of this Permit. The balance
sheet must be certified by a reputable accounting firm authorized to do business
in the state of AGI's main place of business or state of incorporation,
including certifications that:
i. The balance sheet fairly presents the financial condition
-
of AGI at such date in accordance with generally accepted accounting
principles; and
ii. There are no liabilities, direct or indirect, fixed or
--
contingent, of AGI as of the date of such balance sheet which are not
reflected therein or in the notes thereto other than liabilities or
obligations not material in amount which are not required to be reflected in a
corporate balance sheet prepared in accordance with generally accepted
accounting principles.
22. Modifications.
-------------
a. Any request by FGMI for modification of this Permit must be made
by written application to the Division. The application must contain a detailed
description, justification, maps, plats, and cross-sections as necessary, and
copies of
Page 35 of 47
<PAGE>
concurrent applications for modification of the Plan of Operations or other
approved plan of operations, Reclamation Plan, and any other affected permits or
authorizations. The Division may request further information and data based on
the individual modification requested. For any major or significant
modification to this Permit, including but not limited to an increase in Permit
Area acreage, a decrease in Permit Area acreage greater than forty (40) acres
cumulative, or any change in use, the Division, at its option and in its
discretion or at FGMI's request, may give public notice, solicit public comment,
and hold public hearings. No modification is effective until approved in
writing by the Division.
b. Any revisions, changes, or updates to other permits or
authorizations issued by federal, state, or local governments that affect the
Permit Area are automatically incorporated into the responsibilities,
requirements and obligations of this Permit unless otherwise provided in writing
by the Division.
23. Conveyance by State.
-------------------
a. The State may convey all or a portion of its ownership of the
Permit Area at any time to any entity allowed by law. Notice of such conveyance
shall be given by certified mail to FGMI no later than thirty (30) days prior to
such conveyance. If all or a portion of the State's ownership of the Permit
Area is conveyed or transferred to the future Mental Health Trust
Page 36 of 47
<PAGE>
Authority to be created pursuant to SLA 1991 ch. 66 (not yet effective) or any
other law, or to any other entity, the conveyance shall identify this Permit as
an encumbrance on the interest conveyed and said conveyance thus shall be
subject to this Permit.
b. Neither parties' rights, obligations, or responsibilities under
this Permit shall be increased or decreased by virtue of any conveyance unless
mutually agreed otherwise by the parties. Upon any conveyance of the Permit
Area by the State the provisions of AS 38.05 and 11 AAC that are in effect on
the date of such conveyance and which govern the Permit and the conduct of
Permit Operations hereunder shall be deemed to be incorporated into this Permit
as if fully set forth herein. Notwithstanding the State's conveyance of all or
a portion of the Permit Area to the future Mental Health Trust Authority to be
created pursuant to SLA 1991 ch. 66 (not yet effective) or any other law, or to
any other entity, a hearing pursuant to Subsection 18(f) of this Permit shall be
before the Division Director or his or her designee.
24. Transfer by FGMI.
----------------
a. FGMI may transfer all or part of its interest in, to, or under
this Permit solely as provided in this Section.
b. FGMI may Transfer all or part of its interest in, to, or under
this Permit only in conjunction with a similar Transfer of all or part of its
interest in, to, or under some or
Page 37 of 47
<PAGE>
all of the valid Mining Rights to which its interest in, to, or under this
Permit is appurtenant.
c. No Transfer permitted by this Section shall, as between the State
and FGMI, relieve FGMI of any liability, whether accruing before or after such
Transfer, which arises out of Permit Operations conducted prior to such
Transfer.
d. FGMI may Transfer less than its entire undivided interest in, to,
or under this Permit if such Transfer covers all lands within the Permit Area,
but FGMI may not Transfer any interest in, to, or under this Permit that covers
less than all of the lands within the Permit Area.
e. Except for a Transfer pursuant to Subsection 24(g) below, no
Transfer of any interest in, to or under this Permit is effective without the
express written approval of the Division. The Division is not bound by any
Transfer made without its express written approval.
f. The Division Director will approve a Transfer of this Permit or
any interest therein if this Permit is in good standing and the party to whom
FGMI proposes to Transfer this Permit or any interest therein:
i. is qualified to hold interests in State Mining Rights under
-
AS 38.05.190;
ii. is qualified to assume or acquire all other permits and
--
authorizations necessary to conduct Mining Operations and Permit Operations;
Page 38 of 47
<PAGE>
iii. is not on notice of default by any State agency on any
---
lease, reclamation bond, or other permit within the State, and is not subject
to an enforcement action, of which the Division Director has knowledge, for
default or breach on any mining lease, reclamation bond, permit, or similar
authorization issued by an entity other than the State, including the United
States and other states;
iv. has committed in writing to be bound by this Permit to the
--
same extent as FGMI; and
v. provides to the Division all proofs of insurance, bonds, or
-
undertakings required by this Permit, including any insurance, bonds, or
undertakings required under the Plan of Operations or any other approved plan of
operations, the Reclamation Plan, or other permit or authorization then in
effect relating to Permit Operations.
g. If the Transfer is the grant of a security interest by deed of
trust, mortgage, pledge, lien or other encumbrance in or on all or part of
FGMI's interest in, to, or under this Permit to secure a loan or other
indebtedness of FGMI in a bona fide transaction, such security interest shall be
subject to the terms of this Permit. FGMI must notify the Division by certified
mail of any security interest granted in FGMI's interest in, to, or under this
Permit within ten (10) days of the granting of said security interest. Until
such notice is received, the Division is under no obligation to send any notices
Page 39 of 47
<PAGE>
relating to this Permit to the security interest holder. Upon any foreclosure
or other enforcement of a security interest granted in compliance with this
subsection, the acquiring third party shall, upon compliance with the
requirements of Subsection 24(f) above, be deemed to have assumed the position
of FGMI with respect to this Permit.
h. In the event of a Transfer by FGMI of less than its entire
undivided interest in, to, or under this Permit, FGMI and its transferee shall
act and be treated as one party, except that the Division shall be required to
deliver copies of all notices permitted or required under this Permit to all
parties holding interests in this Permit pursuant to Transfers which have been
approved by the Division as provided in this Section or of which the Division
has received notice pursuant to Subsection 24(g) above.
i. Transfer of all or any of FGMI's interest in, to, or under this
Permit does not relieve AGI or any succeeding guarantor of the obligations of
the guaranty unless the requirements for such Transfer of the guaranty as
provided in the AGI guaranty attached hereto as Exhibit G have been satisfied.
25. Corporate Authority; Authorized Representatives.
-----------------------------------------------
a. FGMI shall deliver to the Division upon the execution of this
Permit a certified copy of a resolution of its board of directors authorizing
execution of this Permit and
Page 40 of 47
<PAGE>
naming the officers that are authorized to execute this Permit on behalf of the
corporation.
b. The Division Director and the person executing this Permit on
behalf of FGMI will be the authorized representatives of their respective
principals for the purposes of administering and enforcing this Permit. The
State or FGMI may change the authorized representative or the address to which
notices to that representative are to be sent by a notice given in accordance
with Section 26 below. Upon commencement of Permit Operations, FGMI shall also
designate by name, job title, and address, an agent and alternate agent who will
be present in the State during all Permit Operations.
26. Notice.
------
a. All notices required or permitted under this Permit shall be in
writing and shall be given (a) by personal delivery to the respective addressee;
(b) by electronic communication, with the original paper document sent
immediately by registered or certified mail, return receipt requested, or (c) by
registered or certified mail, return receipt requested. All such notices shall
be sent to the following respective addresses:
The State:
---------
Director
Alaska Division of Mining
Department of Natural Resources
P.O. Box 107016
Anchorage, AK 99510-7016
Page 41 of 47
<PAGE>
or:
3601 C Street, Suite 880
Anchorage, Alaska
or:
Facsimile: 907-563-1853
(Telephone: 907-762-2165)
FGMI:
----
Fairbanks Gold Mining, Inc.
P.O. Box 73726
Fairbanks, Alaska 99707-3726
or:
701 Bidwill Street
Fairbanks, Alaska
or:
Facsimile: 907-451-4305
(Telephone: 907-452-4653)
b. Any notice shall be effective and deemed delivered (i) if by
personal delivery, on the date of delivery if delivered during normal business
hours or on the next business day following delivery if not delivered during
normal business hours; (ii) if by electronic communication, on the day of
receipt at the office of the addressee if received during normal business hours
or on the next business day following receipt if not received during normal
business hours; and (iii) if solely by mail, on the day of actual receipt at the
address of the recipient if delivered by the postal service during normal
business hours or
Page 42 of 47
<PAGE>
on the next business day following receipt if not delivered during normal
business hours.
27. Statutes and Regulations. This Permit is subject to all
------------------------
applicable federal and state statutes, including federal, state, and local
statutes, regulations, and ordinances in effect on the Effective Date, new
statutes, regulations, and ordinances enacted or promulgated after the Effective
Date, and changes to existing statutes and regulations made after the Effective
Date, to the extent constitutionally permissible.
28. Payment to Multiple Parties. In the event that payments
---------------------------
initially due to the Division under this Permit become payable to two or more
parties due to conveyance of lands within the Permit Area by the State, all
parties to whom payment is due shall execute and deliver to FGMI a document
executed by all of those parties designating the amounts of payment due each
party and the name and address of each party to whom to payment is due. Until
FGMI receives such designation, FGMI shall continue to make all payments to the
Division and FGMI shall have no responsibility to see to the division of
payments made to the Division in accordance with the provisions of this Section.
29. Nonpossessory Interest in Real Property. The rights granted to
---------------------------------------
FGMI by this Permit constitute a nonpossessory interest in real property in the
nature of an easement appurtenant to valid Mining Rights, granted for the term
provided in Section 4 of this Permit, but subject to termination upon a
Page 43 of 47
<PAGE>
material breach of this Permit that is not cured in the manner provided in
Section 18 of this Permit. No estate in or to the lands within the Permit Area
is conveyed to FGMI by this Permit.
30. Denial of Warranty. The State makes no warranties whatsoever,
------------------
express or implied, including but not limited to any warranties regarding any
prior encumbrances on or conditions of the Permit Area, any warranties regarding
title to the Permit Area, any warranties regarding access to the Permit Area,
any warranties regarding quiet enjoyment of the Permit Area, or any warranties
regarding fitness of the Permit Area for any use. FGMI is not entitled to any
refund of prior Use Charge(s) paid which are excess due to deficiency in title.
31. Recording. Upon the execution, acknowledgment, and delivery of
---------
this Permit, FGMI at its sole cost may cause this Permit to be recorded in the
Fairbanks Recording District, State of Alaska.
32. Venue; Controlling Law. The venue for any appeal or civil action
----------------------
relating to this Permit shall be in the Fourth Judicial District, State of
Alaska. This Permit shall be interpreted and construed in accordance with the
laws of the State of Alaska.
33. Waiver or Forbearance. The receipt or acceptance of the Use
---------------------
Charge by the Division, with or without knowledge of any breach of the Permit by
FGMI, or of any default on the part of FGMI in the observance or performance of
any of the terms,
Page 44 of 47
<PAGE>
conditions or covenants of this Permit, shall not be deemed to be a waiver of
any of the Division's rights concerning any other defaults unless the contrary
effect is expressed in writing and signed by the Division. Any waiver by the
Division of any default of FGMI's performance under this Permit must be in
writing and shall not be a waiver of any other default concerning the same or
any other provision of the Permit. No delay or omission in the exercise of any
right or remedy of the Division on any default by FGMI shall impair such right
or remedy or be construed as a waiver.
34. Severability. If any clause or provision herein contained shall
------------
be adjudicated to be invalid, it shall not affect the validity or effect of any
other clause or provision of this Permit, nor constitute any cause of action in
favor of either party as against the other.
35. Attorney's Fees. If either party commences a judicial proceeding
---------------
against the other party rising out of or in connection with this Permit, the
prevailing party shall be entitled to have and recover from the losing party
full reasonable attorney's fees and costs of suit.
36. Successors. This Permit and each and every provision therein
----------
shall be binding on and inure to the benefit of the parties and their
successors.
Page 45 of 47
<PAGE>
DEPARTMENT OF NATURAL RESOURCES:
STATE OF ALASKA
By: /s/ Richard A. LeFebvre Date: Feb. 15, 1994
-------------------------------- -------------
Position: For Director
--------------------------
Division of Mining
STATE OF ALASKA
By: /s/ Richard A. LeFebvre Date: Feb. 15, 1994
------------------------------- -------------
Position: For Director
--------------------------
Division of Land
PERMITTEE:
FAIRBANKS GOLD MINING, INC.
a Delaware corporation
By: /s/ Kenneth R. Pohle Date: Feb. 15, 1994
---------------------------------- -------------
Its: President
---------------------------------
(Position)
Page 46 of 47
<PAGE>
ACKNOWLEDGMENTS
State of Alaska )
) ss.
4th Judicial District )
------
The foregoing instrument was acknowledged before me this 15th day of
--
February, 1994, by Richard A. LeFebvre, in his capacity for Director, Division
- - -------- -------------------
of Land, Department of Natural Resources, State of Alaska.
/s/ Christopher C. Milles
----------------------------------
[Seal] Notary in and for
the State of Alaska
My commission expires: 1-31-95
-----------
State of Alaska )
) ss.
4th Judicial District )
------
The foregoing instrument was acknowledged before me this 15th day of
--
February 1994, by Richard A. LeFebvre in his capacity for Director, Division of
- - -------- -------------------
Mining, Department of Natural Resources, State of Alaska.
/s/ Christopher C. Milles
----------------------------------
[Seal] Notary in and for
the State of Alaska
My commission expires: 1-31-95
-----------
State of Alaska )
) ss.
4th Judicial District )
-----
The foregoing instrument was acknowledged before me this 15th day of
--
February 1994, by Kenneth R. Pohle the President of Fairbanks Gold Mining, Inc.,
- - -------- ---------------- ---------
a Delaware corporation, on behalf of the corporation.
/s/ Christopher C. Milles
----------------------------------
[Seal] Notary in and for
the State of Alaska
My commission expires: 1-31-95
-----------
Page 47 of 47
<PAGE>
TERM LOAN AGREEMENT
among
AGI CHILE CREDIT CORP., INC.
as Borrower
N M ROTHSCHILD & SONS LIMITED
and
CITIBANK, N.A.
as Lenders
and
N M ROTHSCHILD & SONS LIMITED
as Agent
Dated as of March 15, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
ARTICLE I
DEFINITIONS 1
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS 5
SECTION 2.1 Loan Commitment......................... 5
SECTION 2.2 Notice and Manner of Borrowing.......... 5
SECTION 2.3 Notes................................... 6
SECTION 2.4 Interest Rate; Payments of Principal and
Interest.............................. 6
SECTION 2.5 LIBOR Rate.............................. 7
SECTION 2.6 Increased Costs; Capital Adequacy....... 8
SECTION 2.7 Mitigation.............................. 9
SECTION 2.8 Security................................ 10
SECTION 2.9 Fees, Costs and Expenses................ 10
SECTION 2.10 Prepayments............................. 11
SECTION 2.11 Payments and Computations............... 11
SECTION 2.12 Proration of Payments................... 11
SECTION 2.13 Payment on Non-Business Days............ 12
SECTION 2.14 Net Payments; Certain Taxes............. 12
ARTICLE III
CONDITIONS OF LENDING 14
SECTION 3.1 Conditions Precedent to Making the Loans 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER 15
SECTION 4.1 Organization and Qualification.......... 15
SECTION 4.2 Authority and Enforceability; No
Conflicts............................. 16
SECTION 4.3 Approvals............................... 16
SECTION 4.4 Financial Condition..................... 16
SECTION 4.5 Litigation.............................. 17
SECTION 4.6 Taxes................................... 17
SECTION 4.7 No Event of Default..................... 17
SECTION 4.8 Compliance with ERISA................... 17
SECTION 4.9 Environmental Matters................... 17
SECTION 4.10 Scope of Business; Subsidiaries......... 18
SECTION 4.11 Full Disclosure......................... 18
SECTION 4.12 Compliance with Laws.................... 18
ARTICLE V
COVENANTS OF THE BORROWER 19
SECTION 5.1 Use of Proceeds......................... 19
SECTION 5.2 Conduct of Business and Maintenance of
Existence............................. 19
SECTION 5.3 Compliance with Laws.................... 19
SECTION 5.4 ERISA Covenants......................... 20
SECTION 5.5 Taxes................................... 20
SECTION 5.6 Reporting Requirements.................. 21
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE VI
EVENTS OF DEFAULT 21
SECTION 6.1 Events of Default........................ 21
SECTION 6.2 Remedies Upon Occurrence of Event of
Default................................ 23
ARTICLE VII
THE AGENT 24
SECTION 7.1 Authorization and Action................. 24
SECTION 7.2 Agent's Reliance......................... 25
SECTION 7.3 Rothschild............................... 25
SECTION 7.4 Credit Decision.......................... 25
SECTION 7.5 Indemnification.......................... 25
SECTION 7.6 Successor Agent.......................... 26
SECTION 7.7 Rothschild as the Agent.................. 27
ARTICLE VIII
ASSIGNMENT AND TRANSFERS;
LOAN PARTICIPATIONS; PLEDGES 27
SECTION 8.1 Assignment of and Participation in Loans
and Notes; Compliance with Law........... 27
SECTION 8.2 Pledge of Notes.......................... 29
ARTICLE IX
MISCELLANEOUS 29
SECTION 9.1 Waivers, Amendments, etc................. 29
SECTION 9.2 Notices.................................. 30
SECTION 9.3 Remedies................................. 30
SECTION 9.4 Binding Effect; Successors and Assigns;
Subsequent Holders of Notes............ 30
SECTION 9.5 Expenses; Indemnification; Documentary
Taxes.................................. 30
SECTION 9.6 Governing Law: Submission to
Jurisdiction........................... 31
SECTION 9.7 Judgment in Non-US Currency.............. 32
SECTION 9.8 WAIVER OF JURY TRIAL..................... 32
SECTION 9.9 Right of Set-Off......................... 32
SECTION 9.10 Survival................................. 32
SECTION 9.11 Severability............................. 33
SECTION 9.12 Headings................................. 33
SECTION 9.13 Counterparts; Effectiveness.............. 33
SECTION 9.14 Entire Agreement......................... 33
SECTION 9.15 Other Transactions....................... 33
</TABLE>
ii
<PAGE>
TERM LOAN AGREEMENT
-------------------
Dated as of March 15, 1994
AGI Chile Credit Corp., Inc., a Delaware corporation with offices at 9100
East Mineral Circle, Englewood, Colorado 80112 (the "Borrower"), N M Rothschild
& Sons Limited ("Rothschild" or a "Lender"), a company organized under the laws
of England with offices at New Court, St. Swithin's Lane, London EC4P 4DU,
England, and Citibank, N.A. ("Citibank" or a "Lender"), a national banking
association with offices at 399 Park Avenue, New York, New York 10043, and N M
Rothschild & Sons Limited, acting in its capacity as agent (in such capacity,
the "Agent"), agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms are defined as follows:
"AGI" means Amax Gold Inc., a Delaware corporation with offices at 9100
East Mineral Circle, Englewood, Colorado 80112.
"AGI Guaranty" means the Continuing Corporate Guaranty of AGI of even date
herewith substantially in the form of Exhibit C attached to this Agreement, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"Agreement" means this Term Loan Agreement, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"Business Day" means any day on which banks are not required or authorized
to close either in New York City or London, England and that is also a day on
which dealings in U.S. dollars are carried on in the London interbank market.
"Code" means the Internal Revenue Code of 1986, as the same may be amended
from time to time.
"Cyprus Amax" means Cyprus Amax Minerals Company, a Delaware corporation
with offices at 9100 East Mineral Circle, Englewood, CO 80112.
"Cyprus Amax Guaranty" means the Continuing Corporate Guaranty of Cyprus
Amax of even date herewith substantially in the form attached hereto as Exhibit
D, as amended, supplemented or
1
<PAGE>
otherwise modified from time to time in accordance with the terms thereof.
"Effective Date" shall have the meaning given to that term in Section 9.13
of this Agreement.
"Environmental Laws" means any and all Federal, state and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the protection of human health, safety or the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without limitation, ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals or industrial
toxic or hazardous substances or wastes, which statutes and regulations shall
include, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et seq.; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et
seq., the Federal Water and Pollution Control Act, as amended, 33 U.S.C.
Sections 1251 et seq.; the Federal Clean Air Act, as amended, 42 U.S.C. Sections
7401 et seq.; the Emergency Planning and Community Substances Control Act, 154
U.S.C. Sections 2601-2629; the Safe Drinking Water Act, 42 U.S.C. Sections 300f-
300j; and the regulations issued under each of such statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is a member of a group of which the Borrower is a member and which is
treated as a single employer under Section 414 of the Code.
"Event of Default" shall have the meaning given to that term in Section 6.1
of this Agreement.
"GAAP" means United States generally accepted accounting principles,
applied consistently with the most recent audited financial statements of AGI
delivered to the Agent in connection with this Agreement and described in
Section 2.05 of the AGI Guaranty.
"Interest Period" means with respect to the Loans and any tranche thereof
selected pursuant to Section 2.4(c), initially, the period commencing on the
date the Loans are made and ending 1, 2, 3 or 6 months thereafter as selected by
the Borrower (or such other
2
<PAGE>
periods as may be mutually agreed by the Borrower and the Lenders), and
thereafter, each period commencing on the last day of the next preceding
Interest Period and ending 1, 2, 3 or 6 months thereafter (or such other periods
as may be mutually agreed by the Borrower and the Lenders) as selected by the
Borrower or such other periods as may be selected by the Agent pursuant to
Section 2.4(e); provided that the Borrower may not select an Interest Period
that expires after the Maturity Date. Each Interest Period that would otherwise
end on a day which is not a Business Day shall end on the immediately succeeding
Business Day, unless such immediately succeeding Business Day is the first
Business Day of a calendar month, in which case such Interest Period shall end
on the immediately preceding Business Day.
"LIBOR Rate" means (i) with respect to any Interest Period, the rate of
interest per annum at which U.S. dollar deposits, in an amount equal to the
aggregate principal balance of the Loans, are offered (as reasonably determined
by the Agent) at or about 11:00 a.m. London time on the date that is two
Business Days immediately prior to the beginning of such Interest Period in the
London Interbank Eurodollar Market for delivery on the first day of such
Interest Period for approximately the number of days contained therein (as
appearing on page "LIBOR" on the Reuters Monitor Money Rates Service or such
other page as may replace the LIBOR page on that service for the purpose of
displaying London Interbank Offered Rates for dollar deposits of major banks)
and, (ii) with respect to any determination of the overnight LIBOR Rate pursuant
to the last sentence of Section 2.4(c), the rate of interest per annum at which
overnight U.S. dollar deposits, in an amount equal to the aggregate principal
balance of the Loans, are offered (as reasonably determined by the Agent), at or
about 11:00 a.m. London time on each day in respect of which such determination
is to be made, in the London Interbank Eurodollar Market (as appearing on page
"LIBOR" on the Reuters Monitor Money Rates Service or such other page as may
replace the LIBOR page on that service for the purpose of displaying London
Interbank Offered Rates for dollar deposits of major banks); provided, however,
that if at least two such offered rates appear on the LIBOR page in respect of
such Interest Period, the arithmetic mean of all such rates (as determined by
the Agent and rounded upwards to the nearest 1/16th of 1%) will be the rate
used; and provided further, that if Reuters Monitor Money Rates Service ceases
to provide LIBOR quotations, such rate shall be the average rate of interest (as
determined by the Agent and rounded upwards to the nearest 1/16th of 1%) at
which U.S. dollar deposits are offered for the relevant Interest Period by three
of the leading banks selected by the Agent in the London interbank market as of
11:00 a.m. London time on the date which is two (2) Business Days prior to the
first day of such Interest Period.
3
<PAGE>
"Loan Documents" means this Agreement, the Notes, the AGI Guaranty, the
Cyprus Amax Guaranty and any other document creating any obligation of any of
the Borrower, AGI or Cyprus Amax delivered from time to time pursuant hereto or
thereto.
"Loans" shall have the meaning given to that term in Section 2.1 of this
Agreement.
"Majority of Lenders" means the Lenders holding at least fifty-one percent
(51%) of the outstanding principal balance of the Loans, or if no Loans have yet
been made, Lenders who have undertaken at least 51% of the commitment to lend
under Section 2.1 of this Agreement.
"Maturity Date" shall have the meaning given to that term in Section 2.3 of
this Agreement.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section
414 of the Code) 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.
"Notes" means the promissory notes made by the Borrower described in
Section 2.3 of this Agreement.
"Notice of Borrowing" means the notice described in Section 2.2 of this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Plan" means any pension plan (other than a Multiemployer Plan) subject to
the provisions of Title IV of ERISA or Section 412 of the Code which is
maintained for employees of the Borrower or any ERISA Affiliate.
"Reportable Event" means any reportable event as defined in Section 4043(b)
of ERISA or the regulations issued thereunder with respect to a Plan (other than
a Plan maintained by an ERISA Affiliate which is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code).
"Senior Officer" means, with respect to any of the Borrower, AGI and
Cyprus Amax, any of the President, Chief Operating Officer, Chief Executive
Officer, Chief Financial Officer, any Vice President and any Treasurer of such
entity.
4
<PAGE>
"Specified Currency" shall have the meaning given to that term in Section
9.7 of this Agreement.
"Subsidiary" means a corporation of which the applicable entity owns,
directly or indirectly, such number of outstanding shares as have more than 50%
of the ordinary voting power for the election of directors.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
SECTION 2.1 Loan Commitment. Each Lender hereby severally agrees to make
a single loan (each a "Loan" and collectively, the "Loans") to the Borrower in
the principal amount of Eighteen Million U.S. Dollars (US$18,000,000.00) per
Lender, for an aggregate principal amount of Thirty-Six Million U.S. Dollars
(US$36,000,000.00), all in accordance with the terms and conditions hereof. The
commitments of the Lenders to make the Loans under this Agreement are several
and not joint. The failure of any Lender to make its Loan under this Agreement
shall not relieve any other Lender of the obligation to make its Loan and no
Lender shall be responsible for the failure of any other Lender to make the Loan
to be made by such other Lender.
SECTION 2.2 Notice and Manner of Borrowing. The Borrower shall give the
Agent irrevocable written notice of its desire to receive the proceeds of the
Loans to be made under Section 2.1 of this Agreement substantially in the form
attached hereto as Exhibit A (the "Notice of Borrowing") specifying the date of
the borrowing, the initial Interest Period and that the amount of the borrowing
shall be US$36,000,000 to be drawn from the Lenders in equal shares. The Notice
of Borrowing shall be effective upon receipt by the Agent and shall be given no
later than 9:30 a.m. New York time, two Business Days prior to the date of the
borrowing. The date of borrowing specified in the Notice of Borrowing may not
be later than ten (10) Business Days following the date of this Agreement. Not
later than 11:00 a.m. New York time on the date specified in the Notice of
Borrowing and upon fulfillment of the applicable conditions set forth in Article
III of this Agreement, each Lender shall make its Loan to the Borrower by
providing to the Agent, by deposit in an account designated by the Agent,
US$18,000,000 in immediately available funds, and not later than 2:00 p.m. New
York time on such date the Agent shall pay
5
<PAGE>
over such funds to an account in the United States of the Borrower designated in
the Notice of Borrowing.
SECTION 2.3 Notes. Each Loan shall be evidenced by a promissory note of
the Borrower, substantially in the form of Exhibit B attached hereto (as amended
or modified from time to time, each a "Note" and collectively, the "Notes").
Entries made on the grid schedules of the Notes by the Lenders reflecting
payments and Interest Periods shall constitute, absent proven error, prima facie
evidence of the transactions represented by such entries, provided that any
failure to make such entries, and any error in making such entries, shall not
limit or otherwise affect the obligations of the Borrower to the Lenders. At
reasonable frequency and upon reasonable notice, the Lenders shall give the
Borrower written confirmation upon request of all entries made by the Lenders on
the grid schedules of the Notes, provided that the failure of the Lenders to
give such confirmation shall not impair the validity of any notation. The Notes
shall (i) be dated the date of the Loan evidenced thereby, (ii) be stated to
mature on October 1, 1997 (the "Maturity Date"), (iii) bear interest from the
date thereof on the unpaid principal amount outstanding thereon, in accordance
with the provisions of Section 2.4 of this Agreement, and (iv) provide for
principal repayments as specified in Section 2.4(d) of this Agreement as such
payments may be adjusted pursuant to the terms of this Agreement.
SECTION 2.4 Interest Rate; Payments of Principal and Interest.
(a) Each Loan (or tranche thereof selected pursuant to Section 2.4(c)
below) shall bear interest on the outstanding unpaid principal balance thereof
at a rate of 1.25% per annum above the applicable LIBOR Rate for each Interest
Period.
(b) Interest payable on the Loans shall be paid to the Agent on the last
day of the relevant Interest Period or, if the Interest Period is in excess of
three months, at the end of each three-month period and at the end of the
Interest Period.
(c) An Interest Period shall be selected by the Borrower by irrevocable
notice to the Agent given not later than 9:30 a.m. New York time not less than
two (2) Business Days prior to the beginning thereof. The outstanding principal
balance of the Loans may, at the Borrower's option, be divided into tranches,
and a different Interest Period may be selected by the Borrower for each
tranche, provided, that not more than four different tranches shall be
outstanding at any time and any tranche so designated shall apply to the Loans
pro rata. The Borrower shall notify the Agent of any election to divide the
Loans into tranches from time to time in, as the case may be, the Notice of
Borrowing or any notice delivered to the Agent pursuant to the first sentence of
6
<PAGE>
this Section. If the Borrower fails to select a subsequent Interest Period,
interest shall automatically accrue thereafter (i) on the Loan made by
Rothschild, at an annual rate equal to the sum of the overnight LIBOR Rate plus
1.25% until such selection is made and (ii) on the Loan made by Citibank, at an
annual rate equal to the sum of the overnight LIBOR Rate plus 1.25% for the
first five days for which no such selection is made, and then at an annual rate
equal to the sum of the base rate publicly announced from time to time by
Citibank in New York, New York plus 1.25% until such selection is made.
(d) The aggregate principal balance of the Loans shall be repaid in the
following amounts on the following dates:
<TABLE>
<CAPTION>
Payment Date Payment Amount
------------ --------------
<S> <C>
October 1, 1994 $ 1,000,000
April 1, 1995 3,000,000
October 1, 1995 5,000,000
April 1, 1996 5,000,000
October 1, 1996 5,000,000
April 1, 1997 5,000,000
October 1, 1997 12,000,000.
</TABLE>
(e) Whenever any amount shall become due and payable under this Agreement
or the Notes (whether at the stated maturity thereof, by acceleration or
otherwise), interest thereon shall thereafter be payable at a rate per annum
equal to 2% above the interest rate then currently in effect for such Interest
Periods as the Agent may select.
(f) All payments hereunder shall be applied by the Lenders first to all
unpaid fees, costs and expenses due under this Agreement and the Notes, if any,
second to interest due on the outstanding principal balance of the Loans and
then to the unpaid principal amount thereof. Voluntary prepayments pursuant to
Section 2.10 of this Agreement of all or a portion of the outstanding principal
balance of the Loans shall be applied by the Lenders to the principal amounts
due on the payment dates described in Section 2.4(d) above in inverse order of
maturity beginning with the principal payments due October 1, 1997.
SECTION 2.5 LIBOR Rate. At any time after the date hereof, if: (i) the
making or maintaining of a Loan at a LIBOR Rate has become illegal for a Lender
as the result of the introduction or phase-in of a change in an applicable law,
governmental regulation, guideline or order or a change in the interpretation or
administration of an applicable law, governmental regulation, guideline or order
by an authority charged with the administration
7
<PAGE>
thereof (in each such case whether or not having the force of law); (ii) the
making or maintaining of a Loan at the LIBOR Rate is determined by a Lender in
good faith to have become impracticable or impossible or has been materially
adversely effected because of a material adverse change in or the termination of
the London Interbank Eurodollar Market for U.S. Dollars; or (iii) there exists
no adequate or fair means of ascertaining a LIBOR Rate for any Interest Period,
then upon written notice thereof by the Agent to the Borrower, (x) the Borrower
may not select a new Interest Period for the affected Loan for so long as the
making or continuation of such Loan at a LIBOR Rate by the affected Lender
remains illegal, impossible, impracticable or adversely affected or the
selection of an Interest Period at a LIBOR Rate remains impracticable, as
provided in this Section 2.5, and the interest rate for the affected Loan shall
be the interest rate in effect for such Loan during the immediately preceding
Interest Period, (y) the affected Lender shall promptly and in good faith offer
to establish an alternate interest rate for the affected Loan, and (z) if the
Borrower elects not to continue the affected Loan at the alternate interest rate
offered by the affected Lender or if the illegality in question precludes the
offering of an alternate interest rate, the Borrower shall immediately upon
demand by the affected Lender prepay (without premium or penalty, except as
provided in Section 2.9(d)) any then outstanding amounts due to the affected
Lender under the applicable Note and this Agreement, but without giving effect
to the notice requirements provided in Section 2.10.
SECTION 2.6 Increased Costs; Capital Adequacy.
(a) If (i) the effect of any change occurring after the date hereof in an
applicable law, governmental regulation, guideline or order or in the
interpretation of an applicable law, governmental regulation, guideline or order
by any authority charged with the administration thereof (other than relating to
income taxes, which taxes are the responsibility of the Lenders) is, in the
reasonable opinion of such Lender, to directly increase the actual cost to a
Lender of making or maintaining a Loan (assuming for such purpose that the Loan
is funded by the Lender from sources referred to in the definition of the LIBOR
Rate) such as, but not limited to, any reserve (including, without limitation,
any reserves with respect to Eurocurrency liabilities or assets consisting of or
including Eurocurrency liabilities), special deposit or similar requirements
against assets held by, or deposits in or for the account of, or loans by, or
any other acquisition of funds for loans by such Lender, or to reduce the amount
of any payment of principal or interest in respect of any Loan received by such
Lender (whether or not any of the foregoing has the force of law); or (ii) after
the date hereof, a Lender shall have determined that the adoption of, or change
in, any applicable domestic or foreign law, rule or regulation regarding capital
adequacy, or any
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change in the interpretation or administration of any applicable domestic or
foreign law, rule or regulation by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of increasing such
Lender's cost of making or holding a Loan or of its obligations hereunder, then
in any such case the provisions of Subsection 2.6(b) shall apply.
(b) If any of the matters specified in Section 2.6(a) occur, then from time
to time on demand by the affected Lender, the Borrower shall promptly pay to the
affected Lender such additional amounts as will compensate the affected Lender
for such additional cost, such payments to be made on the next date when
interest is payable to the affected Lender pursuant to the relevant Note. The
affected Lender shall provide written notice to the Borrower as to such
additional cost containing an explanation of the additional cost and the manner
of calculation thereof. Any additional payments under this Section 2.6 will be
computed from the later of (i) the date which is ninety (90) days prior to the
date of receipt by the Borrower of such notice from the affected Lender, or (ii)
the first date on which such additional costs are incurred or such reduction
becomes effective. Notwithstanding any other provision of this Agreement, the
Borrower shall have the option, upon being notified by any Lender of any amount
payable to such Lender under this clause, to prepay the Loan without premium or
penalty (but subject to the Borrower's obligation to pay the additional amounts
due under Section 2.9(d), if any, to such Lender). Notwithstanding the
foregoing, no additional payments shall be made with respect to any change
relating to any income taxes or franchise taxes of a Lender assessed in the
jurisdiction of its incorporation or in any jurisdiction in which its lending
office through which it is making or maintaining its Loan is located, whether as
a result of a change in tax rates or otherwise, all of which shall be the
responsibility of such Lender.
SECTION 2.7 Mitigation. If, in respect of any Lender, circumstances arise
which would or would upon the giving of notice result in (a) any payment to be
made to it or for its account pursuant to Section 2.6, or (b) delivery of a
notice by the Agent to the Borrower under Section 2.5(a), then, (without in any
way limiting, reducing or otherwise qualifying the obligations of the Borrower
under or in respect of such Sections of this Agreement), the Borrower, the Agent
and such Lender shall consult together for a period not exceeding thirty (30)
days with a view to taking such reasonable steps as may reasonably be open to
such Lender to mitigate the effects of such circumstances, including the
transfer of the Loan to one of such Lender's offices in another jurisdiction
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or, subject to Section 8.1, the transfer of such Lender's rights and obligations
hereunder to another bank or financial institution, and each Lender agrees to
use reasonable efforts to take such steps or action; provided, that no Lender
(x) shall be obliged to take any such steps or actions, make any such transfer
or claim any such benefit if, in its sole opinion, the same would or might have
an adverse effect upon its business, operations or financial condition or (y)
shall be under any obligation to achieve any particular result or incur any
liability to the Borrower by virtue of any actions or inaction under this
Section 2.7.
SECTION 2.8 Security. Repayment of the Loans shall be secured by (i) the
AGI Guaranty and (ii) the Cyprus Amax Guaranty; provided, that the Borrower may,
at its option, provide other credit support in replacement of the Cyprus Amax
Guaranty if such other credit support is in form and substance acceptable to all
of the Lenders in their sole and absolute discretion.
SECTION 2.9 Fees, Costs and Expenses. The Borrower agrees to pay the
following fees, costs and expenses:
(a) Arrangement Fee. An arrangement fee of 0.9% of the aggregate amount of
the Loans, which amount is to be paid by the Borrower to the Agent upon
execution of this Agreement and shall be distributed by the Agent to the Lenders
based on the amount of each Lender's commitment to make a Loan to the Borrower.
(b) Agency Fee. An agency fee for the period commencing on the date hereof
through the Maturity Date, at the rate of Fifty Thousand U.S. Dollars
(US$50,000) for the first annual period commencing on the date hereof, and
thereafter, Thirty Thousand U.S. Dollars (US$30,000) per annum. Such agency fee
shall be payable to the Agent in arrears, in installments twice a year on the
last day of each calendar six-months' period and on the Maturity Date.
(c) Costs and Expenses. On demand, all costs and expenses as described
more fully in Section 9.5 below.
(d) Funding Losses. The Borrower shall compensate each Lender, upon
written request by such Lender (which request shall set forth in reasonable
detail the basis for requesting such amounts) for all reasonable losses,
expenses and liabilities (including, without limitation, any loss sustained by
such Lender in connection with the re-employment of funds), that such Lender may
sustain: (i) if for any reason (other than a failure by such Lender to make its
Loan after all conditions precedent thereto have been satisfied) a borrowing
with respect to any Loan does not occur on a date specified therefor in the
Notice of Borrowing or a successive Interest Period does not commence after
notice therefor is given pursuant to Section 2.4(c); (ii) if any repayment or
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prepayment of any Loan occurs on a date that is not the last day of an Interest
Period applicable to that Loan; or (iii) as a consequence of any default by the
Borrower to repay any Loan when required by the terms of this Agreement. The
provisions of this Section 2.9(d) shall survive the termination of this
Agreement, the repayment of the Loans and the discharge of the Borrower's other
obligations hereunder and under the Notes.
SECTION 2.10 Prepayments. The Borrower shall have the right to prepay the
Loans in whole or in part at any time; provided, however, that any partial
prepayment of principal shall be made in an amount of US$1,000,000 or an even
multiple thereof. Prepayments shall be paid to the Agent and distributed by the
Agent to the Lenders pro rata in accordance with the outstanding principal
balance of each Lender's Loan. Prepayments of principal may be made at any time
upon two (2) Business Days' prior written notice to the Agent, without premium
or penalty but together with interest accrued, if any, on the amount prepaid to
the date of prepayment; provided, however, that upon prepayment of the Loans
other than at the end of an Interest Period, the Borrower shall pay to the
Lenders the additional amount described in Section 2.9(d).
SECTION 2.11 Payments and Computations. All payments by the Borrower
pursuant to this Agreement or the Notes, whether in respect of principal,
interest or otherwise, shall except as otherwise expressly provided in this
Agreement be paid in U.S. dollars. All such payments shall be made by the
Borrower to the Agent for the pro rata account of each Lender entitled thereto
(or, in the case of the fees referred to in Section 2.9(b) or any other amount
payable hereunder which is for the sole account of the Agent, for the account of
the Agent), by delivery of U.S. dollars in immediately available funds to an
account of the Agent designated from time to time by notice to the Borrower from
the Agent. All such payments shall be made not later than 11:00 a.m., New York
time, on the date when due. Any payments received hereunder after the time and
date specified in this Section shall be deemed to have been received by the
Agent on the next following Business Day. The Agent shall promptly remit to
each Lender its share, if any, of such payments, by remittance to an account
designated by such Lender to the Agent by notice from time to time. All
interest and fees shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest or fee is payable over a year comprised of 360 days.
SECTION 2.12 Proration of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of the principal of or interest on its Loan in
excess of its pro rata share of payments then or therewith obtained by all
Lenders upon the principal of and interest on all Loans, such Lender shall
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purchase from the other Lenders such participations in Loans held by such other
Lenders as shall be necessary to cause such purchasing Lender to share the
excess payment or other recovery ratably with each of them; provided, however,
that if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing holder, the purchase shall be rescinded and the
purchase price repaid to the extent of such recovery, but without interest. The
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by
applicable law, exercise all its rights of payment with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.
SECTION 2.13 Payment on Non-Business Days. Whenever any payment to be
made hereunder or under a Note shall be stated to be due on a day other than a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
payment of interest; provided, however, in the event that the day on which any
such payment is due is not a Business Day but a day of the month after which no
further Business Day occurs in such month, then the due date thereof shall be
the next preceding Business Day.
SECTION 2.14 Net Payments; Certain Taxes.
(a) The Borrower agrees that all payments to be made hereunder shall be
made without set-off or counterclaim and free and clear of, and without
deduction for, any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings or restrictions or conditions of any nature whatsoever now or
hereafter imposed, levied, collected, withheld or assessed by any country or by
any political subdivision or taxing authority thereof or therein, excluding
income taxes or franchise taxes of the Agent or a Lender in the jurisdiction of
its incorporation or in which its lending office through which it is making or
maintaining its Loan is located and except to the extent that such withholding
or deduction results from the breach by the Agent or a Lender of its Exemption
Agreement (as defined below) or would not be required if the Agent's or such
Lender's Exemption Representation (as defined below) were true (all such non-
excluded taxes being hereinafter collectively referred to as "Taxes"). If any
Taxes are required to be withheld from any amounts payable hereunder, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional
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sums payable under this paragraph) the Agent and each Lender will receive an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law. In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes"). Within thirty (30) days of any payment of Taxes, the Borrower will
furnish to the Agent or each Lender, as appropriate, the original or a certified
copy of a receipt evidencing payment thereof. The Borrower will indemnify the
Agent and each Lender for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this paragraph) paid by the Agent or any such Lender or
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted, within thirty (30) days of the Agent's or such Lender's
request therefor. Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations of the Borrower contained in
this Section shall survive any termination of this Agreement.
(b) In consideration of the Borrower's agreements in Section 2.14(a) above,
the Agent and each Lender which is not organized under the laws of the United
States or a State thereof hereby agrees (each an "Exemption Agreement"), to the
extent permitted by applicable law, to execute and deliver to the Borrower (i)
on or before the first scheduled payment date hereunder, a United States
Internal Revenue Service Form 1001 or 4224 as appropriate (or successor forms),
properly completed and claiming a complete exemption, as the case may be, from
withholding or deduction for or on account of taxes of the Agent or such Lender,
and (ii) a new Form 1001 or 4224 (or successor form), as appropriate, upon the
expiration or obsolescence of any previously delivered Form 1001 or 4224 (or
successor form).
(c) The Agent and each Lender hereby represents and warrants (each an
"Exemption Representation") to the Borrower that on the Effective Date it is not
subject to any withholding taxes imposed by the United States with respect to
payments made hereunder to the Agent or such Lender.
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.1 Conditions Precedent to Making the Loans. The obligation
of the Lenders to make the Loans is subject to the following conditions
precedent:
(a) The Agent shall have received on or before the day the Loans are
made the following, in form and substance reasonably satisfactory to the
Lenders:
(i) The Notes, duly executed by the Borrower;
(ii) A Notice of Borrowing at least two Business Days in advance
of the day the Loans are made;
(iii) Copies of the resolutions of the sole Director of the
Borrower authorizing the borrowings contemplated by this Agreement and the
Notes, certified by the Secretary or an Assistant Secretary of the
Borrower;
(iv) A certificate of the Secretary or an Assistant Secretary of
the Borrower substantially in the form attached hereto as Exhibit E
certifying the names and true signatures of the officers of the Borrower
authorized to sign this Agreement and the Notes and the other documents to
be delivered hereunder and the authenticity of certain documents relating
to the Borrower;
(v) A favorable opinion of in-house counsel to the Borrower, as
to certain of the matters referred to in Article IV, the form of which is
attached hereto as Exhibit F;
(vi) The AGI Guaranty, duly executed by AGI;
(vii) Copies of the resolutions of the Board of Directors of AGI
authorizing the execution and delivery of the AGI Guaranty, certified by
the Secretary or an Assistant Secretary of AGI;
(viii) A certificate of the Secretary or an Assistant Secretary
of AGI substantially in the form attached hereto as Exhibit G certifying
the names and true signatures of the officers of AGI authorized to sign the
AGI Guaranty and the authenticity of certain documents relating to AGI;
(ix) A favorable opinion of in-house counsel to AGI,
substantially in the form attached hereto as Exhibit H;
(x) The Cyprus Amax Guaranty, duly executed by Cyprus Amax;
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(xi) A certificate of the Secretary or an Assistant Secretary of
Cyprus Amax substantially in the form attached hereto as Exhibit I
certifying the names and true signatures of the officers of Cyprus Amax
authorized to sign the Cyprus Amax Guaranty and the authenticity of certain
documents relating to Cyprus Amax;
(xii) A favorable opinion of Philip C. Wolf, Esq., counsel to
Cyprus Amax, substantially in the form attached hereto as Exhibit J;
(xiii) A favorable opinion of Mayer, Brown & Platt in form and
substance satisfactory to the Lenders; and
(xiv) A favorable opinion of Ballard Spahr Andrews & Ingersoll
with respect to the enforceability of the Cyprus Amax Guaranty in form and
substance satisfactory to the Lenders.
(b) On the date the Loans are made, the following statements
shall be true:
(i) The representations and warranties contained in Article III
of this Agreement and the other Loan Documents shall be true and correct as
if made on such date; and
(ii) No event has occurred and is continuing, or would result
from the making of the Loans, that constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
The acceptance by the Borrower of the proceeds of the Loans shall constitute a
representation that the above statements are true.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Lenders as follows:
SECTION 4.1 Organization and Qualification. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power to execute and
deliver, and perform its obligations under, this Agreement and the Notes. The
Borrower is qualified to do business in all jurisdictions where failure to be so
qualified could have a material adverse effect on the Borrower's ability to
perform its obligations under this Agreement.
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SECTION 4.2 Authority and Enforceability; No Conflicts. The
execution, delivery and performance by the Borrower of this Agreement and the
Notes have been duly authorized by all necessary corporate action, and do not
(a) violate any provision of the Certificate of Incorporation or By-Laws of the
Borrower or any law, order, writ, judgment, decree, determination or award, in
each case as presently in effect and having applicability to the Borrower, or
(b) result in a breach of or constitute a default under any indenture, bank loan
agreement, credit agreement or other agreement to which the Borrower is a party
or by which its properties may be presently bound or affected. This Agreement
is, and the Notes when delivered will be, legal, valid and binding obligations
of the Borrower enforceable against it in accordance with their respective terms
(subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles).
SECTION 4.3 Approvals. No authorization or approval of, or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Borrower of this Agreement or the Notes.
SECTION 4.4 Financial Condition.
(a) The statement of financial position as of December 31, 1993 and
the statement of earnings and retained earnings for the year ended December 31,
1993 of the Borrower heretofore delivered to the Lenders have been prepared in
accordance with GAAP and fairly present the financial condition of the Borrower
as of the date of such statements. There are no material contingent liabilities
affecting the Borrower that are not disclosed in such financial statements.
Since the date of such financial statements there has been no material adverse
change in the Borrower's financial condition, assets, liabilities or business
nor has any other event or condition of any character occurred or arisen that
materially and adversely affects or that could materially and adversely affect
the business or prospects or financial condition of the Borrower. No additional
material obligations have been entered into by the Borrower since the date of
its most recent financial statements other than as disclosed to the Lenders in
writing.
(b) No bankruptcy or insolvency proceedings are pending or
contemplated by the Borrower or, to the best of the Borrower's knowledge,
against the Borrower.
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SECTION 4.5 Litigation. There is no material action, suit or legal
proceeding pending or threatened (or, to the best knowledge of the Borrower, any
basis therefor) against the Borrower or affecting the properties or assets of
the Borrower, in any court or before any arbitrator of any kind or before or by
any governmental body. The Borrower is not in default with respect to any order
of any court, arbitrator or governmental body, and the Borrower is not subject
to or a party to any order of any court or governmental body arising out of any
action, suit or proceeding that would adversely affect the Borrower's ability to
perform its obligations under this Agreement or the Notes. For the purposes of
this section, the term "governmental body" includes any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and the term "order" includes any order,
writ, injunction, decree, judgment, award, determination, direction or demand.
SECTION 4.6 Taxes. The Borrower has filed all federal, state and
local tax returns that are required to be filed and has paid all taxes shown on
such returns and on all assessments received by it to the extent that such taxes
and assessments have become due. All federal and state income taxes and all
other taxes and assessments of any nature with respect to which the Borrower is
obligated have been paid when due or upon expiration of appropriate and lawful
extensions.
SECTION 4.7 No Event of Default. No event has occurred that
constitutes or, with notice or lapse of time or both, would constitute an Event
of Default.
SECTION 4.8 Compliance with ERISA. The Borrower and its ERISA
Affiliates have fulfilled their respective obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability, including Withdrawal Liability,
to the PBGC or any Plan or Multiemployer Plan (other than to make contributions
in the ordinary course of business) that materially adversely affects the
financial condition of the Borrower and its ERISA Affiliates taken as a whole.
SECTION 4.9 Environmental Matters. The Borrower has complied with
all Environmental Laws except for such failures to comply which the Borrower
reasonably believes would not be expected to materially and adversely affect the
Borrower. The Borrower does not manage any hazardous wastes, hazardous
substances, hazardous materials, toxic substances, toxic pollutants or
substances similarly denominated, as those terms or similar terms are used in
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response Compensation and Liability Act, the Hazardous Materials Transportation
Act, the Toxic Substance Control
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Act, the Clean Air Act, the Clean Water Act or any other applicable law relating
to environmental pollution or employee health and safety, in violation of any
law or any regulations promulgated pursuant thereto, except for violations that
the Borrower reasonably believes would not be expected to materially and
adversely affect the Borrower. The Borrower, after due inquiry, is aware of no
events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that could reasonably be expected to
result in material liability on the part of, or otherwise materially and
adversely to affect, the Borrower.
SECTION 4.10 Scope of Business; Subsidiaries. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended. The Borrower has no Subsidiaries.
SECTION 4.11 Full Disclosure. All material factual information
(including cash flow projections for AGI furnished to the Agent under cover of a
letter dated March 10, 1994), heretofore furnished by the Borrower in writing to
the Agent or any Lender for purposes of or in connection with this Agreement or
any transaction contemplated hereby is, and all such information hereafter or
contemporaneously furnished by the Borrower to the Agent or any Lender shall be,
true and accurate in all material respects on the date as of which such
information is stated or certified and as of the date of this Agreement, and
such information does not, and shall not omit to state any material fact
necessary to make such material factual information not misleading. The
Borrower has disclosed to the Lenders any and all facts known to Borrower after
due inquiry which materially and adversely affect or may affect (to the extent
the Borrower can now reasonably foresee), the business, operations or financial
condition of the Borrower or the ability of the Borrower to perform its
obligations under this Agreement.
SECTION 4.12 Compliance with Laws. The Borrower has complied in all
material respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder) where the
failure to so comply could have a material adverse effect on the business
assets, operations or condition, financial or otherwise, of the Borrower, AGI
and AGI's other subsidiaries taken as a whole, and except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings.
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ARTICLE V
COVENANTS OF THE BORROWER
The Borrower agrees with the Agent and each Lender that, until the
Loans and other obligations of the Borrower under this Agreement and the Notes
have been paid and performed in full, it will perform the covenants set forth in
this Article V.
SECTION 5.1 Use of Proceeds. The proceeds of the Loans shall be used
solely (a) to repay obligations (including principal and accrued interest)
outstanding under that certain Letter Agreement dated as of February 7, 1994 (as
extended pursuant to letters dated February 28, 1994 and March 11, 1994) between
the Borrower and N M Rothschild & Sons Limited and (b) for the purpose of
extending loans to Compania Minera Amax Guanaco ("CMAG") for loan refinancing
and for general corporate purposes of CMAG. The proceeds of the Loans shall not
be used by the Borrower to purchase "margin stock" as that term is used in
Regulation U adopted by the Board of Governors of the Federal Reserve System.
SECTION 5.2 Conduct of Business and Maintenance of Existence. The
Borrower will continue to engage in the business of financing mining ventures in
Chile, will not undertake other business operations without the prior written
consent of the Majority of Lenders, and will preserve, renew and keep in full
force and effect its corporate existence and material rights, privileges and
franchises necessary or desirable in the normal conduct of business except with
the prior consent of Lenders, provided that no consent shall be required for a
merger or consolidation of the Borrower with an affiliate if, after giving
effect thereto, no Event of Default exists and no event has occurred which, with
the passage of time, the giving of notice, or both, would constitute an Event of
Default and if, in connection with such merger or consolidation, the resulting
company, if other than the Borrower, delivers to the Lenders a written
instrument in form and substance reasonably acceptable to the Lenders by which
it assumes all of the obligations of the Borrower under this Agreement and the
Notes and agrees to be bound by all of the terms and conditions hereof and
thereof.
SECTION 5.3 Compliance with Laws. The Borrower will comply with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) where the failure to so comply
could have a material adverse effect on the business assets, operations or
condition, financial or otherwise, of the Borrower, AGI and AGI's other
subsidiaries taken as a whole, and except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
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SECTION 5.4 ERISA Covenants. The Borrower covenants and agrees as follows:
(a) It will comply in all material respects with the applicable provisions
of ERISA; and
(b) It will furnish to the Agent (i) as soon as possible and in any event
within thirty (30) days after any Senior Officer of the Borrower knows or has
reason to know that any Reportable Event has occurred that alone or together
with any other Reportable Event could reasonably be expected to result in
liability of the Borrower to the PBGC in an amount exceeding 5% of the tangible
net worth of AGI (determined in accordance with GAAP), a statement of a Senior
Officer of the Borrower setting forth details as to such Reportable Event and
the action that such corporation proposes with respect thereto, together with a
copy of the notice of such Reportable Event, if any, given to the PBGC, (ii)
promptly after receipt thereof, a copy of any notice that the Borrower or any of
its ERISA Affiliates may receive from the PBGC relating to the intention of the
PBGC to terminate any Plan or Plans (other than a Plan maintained by an ERISA
Affiliate which is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Code Section 414) or, to appoint a trustee to administer any such
Plan, (iii) within 10 days after the due date for a filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to make a required
installment or other payment (within the meaning of said Section 412(n)) with
respect to a Plan, a statement of a Senior Officer of the Borrower setting forth
details as to such failure and the action that such corporation proposes to take
with respect thereto and (iv) promptly and in any event within thirty (30) days
after receipt thereof by the Borrower or any ERISA Affiliate from the sponsor of
a Multiemployer Plan, a copy of each notice received by the Borrower or any
ERISA Affiliate concerning (A) the imposition of Withdrawal Liability or (B) a
determination that a Multiemployer Plan is, or is expected to be, terminated or
in reorganization, in each case within the meaning of Title IV of ERISA,
together with a copy of such notice given to the PBGC if such notices could
reasonably be expected to result in an Event of Default.
SECTION 5.5 Taxes. The Borrower will file all tax and information returns
and reports required by and prepared in accordance with applicable law and shall
pay or cause to be paid all license fees and related taxes and charges, and
shall pay or cause to be paid all real and personal property taxes, assessments
and charges and franchise, income, unemployment, use, excise, old age benefit,
withholding, sales and other taxes and other governmental charges assessed
against the Borrower, or payable by the Borrower, at such times and in such
manner as to prevent any penalty from accruing or any lien or charge from
attaching to the property of the Borrower, provided that the Borrower shall have
the
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right to contest in good faith, by appropriate proceeding promptly initiated and
diligently conducted, the validity, amount or imposition of any such tax, charge
or assessment, and upon such good faith contest, to delay or refuse payment
thereof.
SECTION 5.6 Reporting Requirements. The Borrower shall furnish to the Agent
the following, along with copies thereof in a number sufficient to enable the
Agent to distribute the same to the Lenders:
(a) As soon as publicly available and in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the annual unaudited
financial statements for such year for the Borrower;
(b) Promptly after any Senior Officer of the Borrower has learned of the
occurrence of each Event of Default, or any event which, with the giving of
notice or lapse of time or both, would constitute an Event of Default, a
statement of a Senior Officer of the Borrower setting forth details of such
Event of Default or other event and the action that the Borrower has taken and
proposes to take with respect thereto;
(c) Such other information respecting the condition or operations,
financial or otherwise, of the Borrower as the Agent may from time to time
reasonably request; and
(d) Within ninety (90) days of the end of each fiscal year of the Borrower
the Borrower shall deliver to the Agent a certificate signed by a Senior Officer
of the Borrower stating that (i) during the preceding fiscal year the Borrower
has observed and performed all of its covenants and agreements in this Agreement
and the Notes, except as disclosed in such certificate, and (ii) neither an
Event of Default nor any event which with the giving of notice or lapse of time,
or both, would constitute an Event of Default has occurred and is continuing
except as disclosed in such certificate.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1 Events of Default. The occurrence of any one or more of
the following events or existence of one or more of the following conditions
shall constitute an "Event of Default" under this Agreement:
(a) The Borrower shall fail to pay (i) the principal on any Note when
due, or (ii) any installment of interest on any Note when due, or (iii) any
other amount to be paid under
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this Agreement when due, and any such failure shall remain unremedied for two
(2) Business Days; or
(b) The Borrower shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement required to be performed or observed by
the Borrower, and any such failure shall remain unremedied for thirty (30) days
after written notice thereof shall have been given to the Borrower by the Agent,
or such longer period, if any, to which the Agent may agree in case of a default
not curable by the exercise of due diligence within such 30-day period, provided
that the Borrower shall have commenced to cure such default within such 30-day
period and shall complete such cure as quickly as reasonably possible with the
exercise of due diligence; or
(c) Any representation or warranty made (i) by the Borrower herein or in
connection with this Agreement, (ii) by AGI in or in connection with the AGI
Guaranty, or (iii) by Cyprus Amax in or in connection with the Cyprus Amax
Guaranty shall prove to have been incorrect in any material respect when made;
or
(d) The failure of AGI to (i) pay any Obligation (as defined therein) under
the AGI Guaranty when due, (ii) perform any agreement or covenant under Section
IV of the AGI Guaranty which failure is not cured within thirty (30) days after
notice thereof has been given to AGI, or (iii) perform any of its other
obligations under the AGI Guaranty; or
(e) The failure of Cyprus Amax to (i) pay any Obligation (as defined
therein) under the Cyprus Amax Guaranty when due, (ii) perform any agreement or
covenant under Sections 3.01, 3.02, 3.03, 3.04 and 3.05 of the Cyprus Amax
Guaranty which failure is not cured within thirty (30) days after notice thereof
has been given to Cyprus Amax, (iii) perform any agreement or covenant under
Section 3.06 of the Cyprus Amax Guaranty which failure is not cured within the
time allowed under the agreement referred to in said Section 3.06 (without
giving effect to any amendment, modification, waiver or termination of that
Agreement), or (iv) perform any of its other obligations under the Cyprus Amax
Guaranty; or
(f) Any of the Borrower, AGI or Cyprus Amax shall (i) fail to make payment
when due (whether by acceleration, demand or otherwise) of any principal of or
interest on any indebtedness for borrowed money (other than the Loans) having an
aggregate outstanding principal balance of not less than one million U.S.
dollars (US$1,000,000) in the case of the Borrower and AGI or five million U.S.
dollars (US$5,000,000) in the case of Cyprus Amax, or an equivalent amount
denominated in another currency, and such failure shall continue after the
applicable grace period, if any, specified in the governing agreement or
instrument, or (ii) if for any other reason any such indebtedness is in default
and such
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default shall continue after the applicable grace period, if any, specified in
the governing agreement or instrument, or (iii) default in the payment of any
other indebtedness owed to the Lenders beyond any applicable grace period; or
(g) Any of the Borrower, AGI or Cyprus Amax becomes insolvent or shall
admit in writing its inability to pay its debts, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against any of them seeking to adjudicate it a bankrupt or insolvent or
seeking reorganization, arrangement, adjustment, or composition of it or its
debts under the law of any jurisdiction relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property and, with respect to any involuntary proceeding instituted against any
of them, such proceeding shall not be dismissed within sixty (60) days; or
(h) A judgment or order by a court for the payment of money in excess of
one million U.S. dollars (US$1,000,000)in the case of the Borrower and AGI or
five million U.S. dollars (US$5,000,000) in the case of Cyprus Amax, or an
equivalent amount denominated in another currency, shall be rendered against any
of the Borrower, AGI or Cyprus Amax and such judgment or order shall not be
stayed by a court of competent jurisdiction pending appeal and shall continue
unsatisfied and in effect for a period of sixty (60) consecutive days if entered
by a court other than a court of the United States or of a state or territory
thereof, or for a period of fifteen (15) consecutive days if entered by a court
of the United States or of a state or territory thereof; or
(i) The AGI Guaranty or the Cyprus Amax Guaranty shall cease to be fully
effective before all indebtedness and all other amounts due hereunder and under
the Notes have been fully and finally paid; or
(j) The Majority of Lenders shall have determined in good faith that an
event has occurred or a condition exists that has or is reasonably likely to
have a material adverse effect on the ability of Cyprus Amax to timely and fully
perform any of its payment or other material obligations under the Cyprus Amax
Guaranty or any Substitute Cyprus Amax Credit Support; or
(k) AGI shall no longer own all of the issued and outstanding common stock
of the Borrower.
SECTION 6.2 Remedies Upon Occurrence of Event of Default. If an Event of
Default shall occur, then the Lenders may, at the option of a Majority of
Lenders, acting through the Agent, exercise any one or more of the following
rights and remedies, in
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addition to any other remedies available at law or in equity, upon written
notice to the Borrower:
(a) terminate the commitment to make Loans hereunder, whereupon
said commitment shall forthwith be terminated;
(b) declare the Loans and all interest accrued and unpaid
thereon, and any accrued fees, costs or expenses, and all other sums due
hereunder and under the Notes, to be due and payable (whereupon the same
shall forthwith become due and payable) without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly
waived by the Borrower; and/or
(c) exercise the rights and remedies available pursuant to the
AGI Guaranty or the Cyprus Amax Guaranty;
provided, however, that upon the occurrence of an Event of Default pursuant to
Section 6.1(g) above (which is not being contested during the sixty (60) day
period as provided therein), the commitment to make Loans hereunder shall
automatically and without further action terminate and the Loans, all interest
accrued and unpaid thereon, and any accrued fees, costs or expenses, and all
other sums due hereunder and under the Notes shall automatically be due and
payable, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.1 Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement or the other Loan Documents, the Agent shall not be required to
exercise any discretion to 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 Majority of Lenders, and such
instructions shall be binding upon all Lenders; provided, however, that the
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to applicable law. The Agent agrees to
give each Lender prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.
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SECTION 7.2 Agent's Reliance. Neither the Agent nor any of its 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 this Agreement, except for
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, the Agent (a) may consult with legal counsel
(including counsel for the Borrower), 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; (b) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement; (c) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of terms, covenants or conditions of this Agreement on the part of the Borrower
or to inspect the books and records of the Borrower; (d) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any document executed
pursuant to this Agreement; and (e) shall incur no liability under or in respect
of this Agreement or any document executed pursuant thereto by acting upon any
notice, consent, certificate or other instrument or writing (which may be by or
otherwise) believed by it to be genuine and signed or sent by the proper party
or parties.
SECTION 7.3 Rothschild. With respect to the Loan made by it and the Note
issued to it, Rothschild shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include Rothschild in its individual capacity. Rothschild may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower as if Rothschild were not the
Agent and without any duty to account therefor to the Lenders.
SECTION 7.4 Credit Decision. Each Lender acknowledges that it has,
independently and without reliance on the Agent or any other Lender, and based
on the financial statements provided to the Lenders by the Borrower 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 also
acknowledges that it will, independently and without reliance on the Agent or
any other Lender and based on such documents and information as it deems
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.5 Indemnification. The Lenders agree to indemnify the Agent (to
the extent not promptly reimbursed by the
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Borrower), ratably according to the respective outstanding principal amounts of
the Loans then held by each of them, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Agent under this
Agreement; provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its ratable share
of any costs and expenses payable by the Borrower under Section 2.9, to the
extent that the Agent is not reimbursed for such costs and expenses by the
Borrower. The Agent shall be under no obligation or duty to take any action
under this Agreement or to institute or defend any suit in respect hereof unless
the Agent shall have reasonably deemed such action necessary and shall have been
properly indemnified and provided security to its satisfaction.
SECTION 7.6 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause with the written approval of the Majority of Lenders.
Upon any such resignation or removal, the Majority of Lenders shall have the
right to appoint a successor Agent, which shall be one of the other Lenders or
such other major commercial bank reasonably acceptable to the Borrower. If no
successor Agent has been so appointed, and has accepted such appointment, within
thirty (30) days after the retiring Agent's giving of notice of resignation or
the Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be a major
commercial bank organized under the laws of the United States of America or of
any state thereof or the laws of England and having a combined capital and
surplus of at least five hundred million dollars ($500,000,000) or the
equivalent in Sterling. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from his duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as 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
agent under this Agreement.
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SECTION 7.7 Rothschild as the Agent. In acting as Agent for the Lenders,
the Credits and/or Treasury Division(s) of Rothschild shall be treated as a
separate entity from any other division of Rothschild (or similar units of
Rothschild in any subsequent reorganization) or affiliates of Rothschild and,
without detracting from the generality of the foregoing, in the event that any
of Rothschild's divisions (or similar units) or affiliates should act for the
Borrower, AGI, Cyprus Amax or any of their respective affiliates (the "Group")
in an advisory capacity in relation to any other matter, any information given
by any member of the Group to such divisions (or similar units) or affiliates of
Rothschild for the purpose of obtaining advice shall be treated as confidential
and shall not be available to the Lenders without the consent as the case may be
of the Borrower, AGI or Cyprus Amax or their respective affiliates; and
notwithstanding anything to the contrary expressed or implied herein and without
prejudice to the generality of the foregoing, Rothschild shall not as between
itself and the Lenders be bound to disclose to any Lender or other person any
information supplied by any member of the Group to Rothschild in its capacity as
the Agent hereunder which is identified by such member at the time of supply as
being unpublished price sensitive information relating to a proposed transaction
by a member of the Group and supplied solely for the purpose of evaluating in
consultation with Rothschild in such capacity whether such transaction might
require a waiver or amendment to any of the provisions contained herein or in
any other Loan Document.
ARTICLE VIII
ASSIGNMENT AND TRANSFERS;
LOAN PARTICIPATIONS; PLEDGES
SECTION 8.1 Assignment of and Participation in Loans and Notes; Compliance
with Law. Each Lender may assign, or sell participations in, its Loans and
Commitment to one or more other Persons in accordance with this Section 8.1.
(a) Any Lender, (i) with the written consents of the Borrower and the Agent
(which consents shall not be unreasonably delayed or withheld and which consent,
in the case of the Borrower, shall be deemed to have been given in the absence
of a written notice delivered by the Borrower to the Agent, on or before the
fifth Business Day after receipt by the Borrower of such Lender's request for
consent, stating, in reasonable detail, the reasons why the Borrower proposes to
withhold such consent) may at any time assign and delegate to one or more
commercial banks or other financial institutions, and (ii) with notice to the
Borrower and the Agent, but without the consent of the Borrower or the Agent,
may assign and delegate to any of its affiliates or to any other Lender (each
Person described in either of the foregoing clauses as being the Person to whom
such assignment and delegation is to be
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made, being hereinafter referred to as an "Assignee Lender"), all or any
fraction of such Lender's total Loan (which assignment and delegation shall be
of a constant, and not a varying, percentage of all the assigning Lender's
Loans) in a minimum aggregate amount of US$4,000,000; provided, however, that,
the Borrower and the Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until written notice of such assignment and
delegation, together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall have been given to the
Borrower and the Agent by such Lender and such Assignee Lender; and provided
further, that the Borrower shall not be required on the date of any such
assignment to pay amounts under Section 2.6(b) of this Agreement as a result of
such assignment that are greater than the amounts that it would have been
required to pay if no such assignment had been made, and the Borrower's
reasonable expectation of being required to pay increased amount under this
Agreement as a result of any such assignment shall be a basis for the Borrower
withholding any required consent to such assignment.
(b) Any Lender may at any time sell to one or more commercial banks or
other persons (each of such commercial banks and other persons being herein
called a "Participant") participating interests in any of the Loans, or other
interest of such Lender hereunder; provided, however, that
(i) no participation contemplated in this Section 8.1 shall
relieve such Lender from its commitment to lend or its other
obligations hereunder or under any other Loan Document,
(ii) such Lender shall remain solely responsible for the
performance of its commitment to lend and such other obligations,
(iii) the Borrower and the Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement and each of the other Loan
Documents,
(iv) no Participant, unless such Participant is an affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under
any other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b) or (c)
of Section 9.1, and
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(v) the Borrower shall not be required to pay any amount under
Section 2.6(b) of this Agreement that is greater than the amount which
it would have been required to pay had no participating interest been
sold.
SECTION 8.2 Pledge of Notes. Notwithstanding any other provision set forth
in this Agreement, any Lender may at any time create a security interest in all
or any portion of its rights under this Agreement (including, without
limitation, the Note 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.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Waivers, Amendments, etc. The provisions of this Agreement and
of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower, the Agent and the Majority of Lenders; provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Majority of Lenders shall be effective unless
consented to by each Lender;
(b) modify this Section 9.1, change the definition of "Majority of
Lenders", increase the Loan commitment stated in Section 2.1, reduce any fees
described in Section 2.9(a), or change the schedule of the repayment of
principal amounts provided for in Section 2.4(d) shall be made without the
consent of each Lender;
(c) extend the due date for, or reduce the amount of, any payment or
prepayment of principal of or interest on any Loan (or reduce the principal
amount of or rate of interest on any Loan) or subject any Lender to any
additional obligations shall be made without the consent of each Lender; or
(d) reduce any fees described in Section 2.9(b), affect adversely the
interest, rights or obligations of the Agent qua the Agent shall be made without
consent of the Agent.
No failure or delay on the part of the Agent or any Lender in exercising any
power or right under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on the Borrower in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval
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by the Agent or any Lender under this Agreement shall, except as may be
otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 9.2 Notices. All notices and other communications provided for
hereunder shall be in writing and mailed or transmitted by facsimile if to the
Borrower, at its address at 9100 East Mineral Circle, Englewood, Colorado 80112,
Attention: Corporate Secretary, facsimile: (303) 643-5181; and if to the
Lenders, to them at the address of the Agent at its address at New Court, St.
Swithin's Lane, London EC4P 4DU, England, Attention: Mike Thomson, facsimile:
011-4471-929-1643 or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and communications shall, when mailed or transmitted by facsimile, be
effective when deposited in the mails or when transmitted respectively,
addressed as aforesaid; except that notices to the Lenders pursuant to the
provisions of Section 2.4(c) shall not be effective until received by the Agent,
but such notices may be made by telephone and shall be effective when given by
telephone if, and only if, such telephone notice is confirmed in writing or by
facsimile on the same day.
SECTION 9.3 Remedies. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9.4 Binding Effect; Successors and Assigns; Subsequent Holders of
Notes. This Agreement shall be binding upon and inure to the benefit of the
Borrower and the Lenders and their respective successors and permitted assigns,
provided that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders. The terms and provisions of this Agreement shall inure to the benefit
of any assignee or transferee of any Loan or Note permitted under Section 8.1,
and in the event of such transfer or assignment, the rights and privileges
herein conferred upon the Lenders shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
SECTION 9.5 Expenses; Indemnification; Documentary Taxes.
(a) The Borrower shall pay (i) all out-of-pocket expenses of the
Agent, including fees and disbursements of special counsel for the Agent, in
connection with the preparation of this Agreement, any waiver or consent
hereunder or any amendment hereof or any default or alleged default hereunder
and (ii) if an Event of Default occurs, or upon the occurrence of an event that
with notice
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or the lapse of time or both would constitute an Event of Default, all out-of-
pocket expenses incurred by the Agent and each Lender, including fees and
disbursements of counsel, in connection with such actual or potential Event of
Default and collection, bankruptcy, insolvency and other enforcement
proceedings, actions or negotiations resulting therefrom. The Borrower shall
indemnify each Lender against any transfer taxes, documentary taxes, assessments
or charges made by any governmental authority by reason of the execution and
delivery of this Agreement, or any Note.
(b) The Borrower agrees to indemnify each Lender and hold each Lender
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by any Lender (or by the Agent
in connection with its actions as Agent hereunder) in connection with any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan, the entering into and performance of
this Agreement and each other document executed in connection herewith
(including any action brought as the result of any determination not to fund any
Loan), any investigative, administrative or judicial proceeding (whether or not
such Lender shall be designated a party thereto) relating to or arising out of
this Agreement or any actual or proposed use of proceeds of Loans hereunder;
provided that no Lender shall have the right to be indemnified hereunder for its
own gross negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 9.6 Governing Law: Submission to Jurisdiction. This
Agreement and each Note shall be governed by the laws of the State of New York
excluding such state's choice and conflict of laws provisions. The Borrower
hereby irrevocably (i) submits to the nonexclusive jurisdiction any New York
State or Federal court sitting in the Borough of Manhattan in any action or
proceeding arising out of or relating to this Agreement, any Note or
transactions contemplated hereby or thereby, (ii) agrees that all claims in
respect of such action may be heard in such New York State court or in such
Federal court, (iii) waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding, and (iv) consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to the Borrower at
the address stated in Section 9.2 above. The Borrower 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. Nothing herein shall affect the right of the Lenders to serve
legal process in any other manner permitted by law or affect the Agent's or
Lenders' right to bring any action or proceeding against the Borrower or the
Borrower's property in the courts of other
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jurisdictions. To the extent the Borrower has or hereafter may acquire
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 the Borrower or the
Borrower's property, the Borrower hereby waives such immunity with respect to
the Borrower's obligations under this Agreement and the Notes.
SECTION 9.7 Judgment in Non-US Currency. If the Borrower is required
by any judgment obtained by a Lender with respect to payments to be made under
this Agreement or the Notes to make such payments in a currency other than U.S.
dollars (the "Specified Currency"), the Borrower will, upon the Agent's request,
either make such payments in the Specified Currency or pay the Lender with the
equivalent of the amount in U.S. dollars calculated at the rate of exchange at
which, in accordance with normal banking procedures, such Lender buys the
Specified Currency in New York, New York on the date the Borrower makes such
payment.
SECTION 9.8 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
OF THE LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDERS ENTERING INTO THIS AGREEMENT AND ALL RELATED
DOCUMENTS.
SECTION 9.9 Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, or upon the occurrence of an event
described in Section 6.1(g) which, with the passage of time, the giving of
notice, or both, would constitute an Event of Default, each Lender 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 to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement and the Note held by such Lender, whether or not such
Lender shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such set-off and application made by such Lender, provided
that the failure to give such notice shall not affect the validity of such set-
off and application. The rights of each Lender under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Lender may have.
SECTION 9.10 Survival. The obligations of the Borrower under
Sections 2.6, 2.9, 2.14(a) and 9.5 of this Agreement and the obligations of the
Lenders under Section 7.5 shall, in each case,
32
<PAGE>
survive any termination of this Agreement. The representations and warranties
made by the Borrower in this Agreement shall survive the execution and delivery
of this Agreement.
SECTION 9.11 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 9.12 Headings. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof or thereof.
SECTION 9.13 Counterparts; Effectiveness. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
executed by the Borrower and the Agent and be deemed to be an original and all
of which shall constitute together but one and the same agreement. This
Agreement shall become effective on such date (the "Effective Date") when
counterparts hereof executed on behalf of the Borrower and each Lender (or
notice thereof satisfactory to the Agent) shall have been received by the Agent
and notice thereof shall have been given by the Agent to the Borrower and each
Lender.
SECTION 9.14 Entire Agreement. This Agreement and the other Loan
Documents constitute the entire understanding among the parties hereto with
respect to the subject matter hereof and thereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 9.15 Other Transactions. Without prejudice to the provisions
of Section 7.7, nothing contained herein shall preclude the Agent or any Lender
from engaging in any transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of its affiliates
in which the Borrower or such affiliate is not restricted hereby from engaging
with any other person.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
33
<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.
AGI CHILE CREDIT CORP., INC.
/s/ Mark A. Lettes
[CORPORATE SEAL] By: __________________________
Mark A. Lettes
Name: ____________________
Vice President
ATTEST: Title: ___________________
/s/ Paul J. Hemschoot, Jr.
_____________________________
Paul J. Hemschoot
Name: _______________________
Secretary
Title: ______________________
N M ROTHSCHILD & SONS LIMITED,
AS LENDER
/s/ Michael A. Price
By: __________________________
Michael Allan Price
Name: ____________________
Assistant Director
Title: ___________________
/s/ Donald F. Douglas
By: ___________________________
Donald Fisher Douglas
Name: _____________________
Assistant Director
Title: ____________________
CITIBANK, N.A.
/s/ Mark J. Lyons
By: __________________________
Mark J. Lyons
Name: ____________________
Vice President
Title: ___________________
ATTEST:
/s/ Michael T. Welch
___________________________
Michael T. Welch
Name: _____________________
Vice President
Title: ____________________
34
<PAGE>
N M ROTHSCHILD & SONS LIMITED,
AS AGENT
/s/ Michael A. Price
By: __________________________
Michael Allan Price
Name: ____________________
Assistant Director
Title: ___________________
/s/ Donald F. Douglas
By: ___________________________
Donald Fisher Douglas
Name: _____________________
Assistant Director
Title: ____________________
35
<PAGE>
LIST OF EXHIBITS
EXHIBIT A Notice of Borrowing
EXHIBIT B Form of Note
EXHIBIT C Form of AGI Guaranty
EXHIBIT D Form of Cyprus Amax Guaranty
EXHIBIT E Form of Certificate of Borrower
EXHIBIT F Form of Opinion of Borrower's Counsel
EXHIBIT G Form of Certificate of AGI
EXHIBIT H Form of Opinion of AGI's Counsel
EXHIBIT I Form of Cyprus Amax Certificate
EXHIBIT J Form of Opinion of Cyprus Amax's Counsel
36
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
-------------------
To: N M Rothschild & Sons Limited
New Court
St. Swithin's Lane
London, EC4P 4DU, England
Re: Notice of Borrowing under Term Loan Agreement dated as of March
__, 1994, among AGI Chile Credit Corp., Inc. as Borrower, N M
Rothschild & Sons Limited and Citibank, N.A. as Lenders, and N M
Rothschild & Sons Limited, as Agent
The undersigned AGI Chile Credit Corp., Inc. (the "Borrower"), hereby
notifies N M Rothschild & Sons Limited, acting in its capacity as Agent, of the
Borrower's desire to effect a borrowing under that certain Term Loan Agreement
described above, on the following term:
Date of Borrowing:
Interest Period:
[Specify tranches, if any]
Amount of Borrowing: US$36,000,000.00
Proceeds of the borrowing are to be deposited in accordance with Section 2.2 of
the Term Loan Agreement in the following account:
[insert account information]
AGI CHILE CREDIT CORP., INC.
By:___________________________
Title:________________________
A-1
<PAGE>
EXHIBIT B
NOTE
----
$18,000,000 Date: March 15, 1994
FOR VALUE RECEIVED, AGI Chile Credit Corp., Inc., a Delaware
corporation (the "Borrower"), promises to pay to Citibank, N.A. ("Lender"), at
such other place as the Agent may direct in writing, in lawful money of the
United States of America and in immediately available funds the principal amount
of Eighteen Million U.S. Dollars (U.S. $18,000,000), pursuant to Article II of
the Agreement referred to below. The Borrower further promises to pay interest
at said office in like money, from the date hereof on the unpaid principal
amount hereof outstanding from time to time, at the rates and at the times set
forth in Section 2.4 of the Agreement.
The Borrower further promises to pay the principal amount in
installments as follows on the following dates:
<TABLE>
<CAPTION>
Payment Date Payment Amount
---------------- --------------
<S> <C>
October 1, 1994 $ 500,000
April 1, 1995 1,500,000
October 1, 1995 2,500,000
April 1, 1996 2,500,000
October 1, 1996 2,500,000
April 1, 1997 2,500,000
October 1, 1997 6,000,000
</TABLE>
The maturity date of this Note shall be October 1, 1997. Prepayments
of principal due under this Note may be made as provided in the Agreement and
the principal payment amounts shall be adjusted thereafter as provided in the
Agreement.
Whenever any payment to be made hereunder shall be due on a day that
is not a Business Day as defined in the Agreement, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest; provided, however, in the
event that the day on which any such payment is due is not a Business Day but a
day of the month after which no further Business Day occurs in such month, then
the due date thereof shall be the next preceding Business Day.
B-1
<PAGE>
This Note is one of the Notes referred to in Section 2.3 of the Term
Loan Agreement between the Borrower, the Agent and the Lenders dated as of March
__, 1994, as the same may hereafter from time to time be amended or supplemented
in accordance with the terms thereof (the "Agreement"), and is entitled to the
benefits thereof and may be prepaid as provided therein.
Upon the occurrence of any of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note may be declared to be
or shall otherwise become immediately due and payable as provided therein.
AGI CHILE CREDIT CORP., INC.
[CORPORATE SEAL] By: /s/ Mark A. Lettes
------------------------
Name: Mark A. Lettes
------------------
Title: Vice President
-----------------
ATTEST:
/s/ Paul J. Hemschoot, Jr.
- - --------------------------
Secretary
[ATTACH GRID SCHEDULE]
B-2
<PAGE>
EXHIBIT C
AMAX GOLD INC.
CONTINUING CORPORATE GUARANTY
CONTINUING CORPORATE GUARANTY (as amended, supplemented or otherwise
modified from time to time in accordance with its terms, this "Guaranty"), dated
as of March 15, 1994, made by Amax Gold Inc. (the "Guarantor"), a corporation
organized under the laws of the State of Delaware, in favor of N M Rothschild &
Sons Limited, a company organized and existing under the laws of England (acting
in its capacity as Lender and in its capacity as Agent for the Lenders under the
Loan Agreement as defined below), and Citibank, N.A., a national banking
association organized under the laws of the United States of America (acting in
its capacity as Lender) (the Agent and the Lenders collectively, together with
their successors and assigns, the "Lender Parties").
W I T N E S S E T H
-------------------
WHEREAS, pursuant to that certain Term Loan Agreement (as amended,
supplemented or otherwise modified from time to time in accordance with its
terms, the "Loan Agreement") of even date herewith by and among AGI Chile Credit
Corp., Inc., a Delaware corporation (the "Borrower"), and the Lender Parties,
the Lenders have agreed to make Loans to the Borrower in the amounts and on the
terms and conditions stated in the Loan Agreement (capitalized terms not defined
herein shall have the meanings given to them in the Loan Agreement);
WHEREAS, on the date hereof, all of the outstanding shares of capital
stock of the Borrower are owned by the Guarantor; and
WHEREAS, the Guarantor will derive substantial direct and indirect
benefits from the extension of credit to the Borrower by the Lenders under the
Loan Agreement and by their funding the Loans thereunder.
NOW, THEREFORE, in consideration of the foregoing premises and in
order to induce the Lenders to make the Loans, the Guarantor hereby agrees as
follows:
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<PAGE>
ARTICLE 1. THE GUARANTY
SECTION 1.01. GUARANTY OF PAYMENT. The Guarantor unconditionally and
irrevocably guarantees to each of the Lender Parties the punctual payment of all
sums now owing or which may in the future be owing by the Borrower under the
Loan Agreement (including the Loans) and any other documents executed and
delivered by the Borrower in connection with the Loan Agreement and/or the Loans
(such documents, including but not limited to the Notes, being hereinafter
collectively referred to as the "Facility Documents"), when the same are due and
payable, whether on demand, at stated maturity, by acceleration or otherwise,
and whether for principal, interest, fees, expenses, indemnification or
otherwise (all of the foregoing sums being the "Obligations"). The Obligations
include, without limitation, interest accruing after the commencement of a
proceeding under bankruptcy, insolvency or similar laws of any jurisdiction at
the rate or rates provided in the Facility Documents. This Guaranty is a
guaranty of payment and not of collection only. The Lender Parties shall not be
required to exhaust any right or remedy or take any action against the Borrower
or any other person or entity or any collateral prior to being entitled to
payment of the Obligations by the Guarantor, and the Guarantor hereby waives all
rights it may have now or in the future to require the Lender Parties to exhaust
any such right or remedy. The Guarantor agrees that, as between the Guarantor
and each of the Lender Parties, the Obligations may be declared to be due and
payable for the purposes of this Guaranty notwithstanding any stay, injunction
or other prohibition that may prevent, delay or vitiate any such declaration as
regards the Borrower and that in the event of any such declaration or attempted
declaration, the Obligations shall immediately become due and payable by the
Guarantor for the purposes of this Guaranty.
SECTION 1.02. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations shall be paid strictly in accordance with the terms of the Facility
Documents (other than this Guaranty). The liability of the Guarantor under this
Guaranty is absolute and unconditional irrespective of: (a) any extension of
credit or final accommodation by any Lender Party to or for the account of the
Borrower other than that guaranteed hereunder; (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Facility Documents or Obligations, or any other amendment or waiver of or any
consent to departure from or failure to enforce any of the terms of any Facility
Documents or Obligations; (c) any exchange, release or non-perfection or the
provision of any collateral for all or any of the Facility Documents or
Obligations; (d) any present or future law, regulation or order of any
jurisdiction (whether of right or in fact) or of any agency thereof purporting
to reduce, amend, restructure or otherwise affect any term of any Facility
Document or Obligation or any rights of any Lender Party with respect
C-2
<PAGE>
thereto; (e) without being limited by the foregoing, any lack of validity or
enforceability of this Guaranty or any other Facility Document or Obligation;
(f) the existence of any claim, set-off or other rights which the Guarantor may
have at any time against the Borrower, any Lender Party or any other corporation
or person, whether in connection herewith or any unrelated transaction, provided
that nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim; (g) whether the Guarantor continues, directly
or indirectly, to own any equity interest in the Borrower; or (h) any other
defense whatsoever that might constitute a legal or equitable defense available
to, or discharge of, the Borrower or a guarantor (including the Guarantor).
SECTION 1.03. GUARANTY IRREVOCABLE. This Guaranty is a continuing
guaranty and shall remain in full force and effect until payment in full of all
Obligations and other amounts payable under this Guaranty and until the Facility
Documents are no longer in effect.
SECTION 1.04. RIGHTS NOT EXCLUSIVE. The rights and remedies granted
to the Lender Parties under this Guaranty are cumulative and are not exclusive
of any rights or remedies provided by law or under the other Loan Documents.
SECTION 1.05. REINSTATEMENT. 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 Obligations or of the obligations of the Guarantor under this
Guaranty is rescinded or must otherwise be returned by any Lender Party on the
insolvency, bankruptcy or reorganization of the Borrower or the Guarantor or
otherwise, all as though the payment had not been made.
SECTION 1.06. SUBROGATION. Notwithstanding any other provision of
this Guaranty, the Guarantor hereby irrevocably waives any right to assert,
enforce, or otherwise exercise any right of subrogation to any of the rights,
security interests, claims, or liens which any Lender Party has against the
Borrower in respect to the Obligations, and the Guarantor shall have no right of
recourse, reimbursement, contribution, indemnification, or similar right that
the Guarantor may have (by contract or otherwise) against the Borrower in
respect of the Obligations, and the Guarantor hereby irrevocably waives any and
all of the foregoing rights and also irrevocably waives the benefit of, and any
right to participate in any collateral or other security given to any Lender
Party to secure payment of the Obligations, such waivers to remain in effect
until the date (the "Revival Date") one year and one day after the date the
Obligations have been paid in full, unless the Borrower shall have filed, or
have had successfully filed against it, a petition under the United States
Bankruptcy Code between the date hereof and the Revival Date, in which case such
waivers shall
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<PAGE>
remain in effect. If any amount shall be paid to the Guarantor in violation of
this Section 1.06, the Guarantor shall promptly notify the Agent of such fact
and such amount shall be held by the Guarantor as trustee for the Lender Parties
and shall be paid over to the Agent on account of the Obligations but without
reducing or affecting in any manner the liability of the Guarantor under the
other provisions of this Guaranty.
SECTION 1.07. SUBORDINATION. Without limiting the rights of the
Lender Parties under any other agreement, any liabilities owed by the Borrower
to the Guarantor in connection with any extension of credit or financial
accommodation by the Guarantor to or for the account of the Borrower, including
but not limited to, interest accruing at the agreed contract rate after the
commencement of a bankruptcy or similar proceeding, are hereby subordinated to
the Obligations, and upon the occurrence of an Event of Default and for so long
as such Event of Default shall continue such liabilities of the Borrower to the
Guarantor (i) shall be collected, enforced and received by the Guarantor as
trustee for the Lender Parties and (ii) if the Agent so requests, shall be paid
over to the Agent on account of the Obligations but without reducing or
affecting in any manner the liability of the Guarantor under the other
provisions of this Guaranty.
SECTION 1.08. PAYMENTS GENERALLY. All payments by the Guarantor
shall be made in the manner, at the place and in the currency (the "Payment
Currency") required by the Facility Documents and payment in the Payment
Currency shall be of the essence; provided, however, at the request of any
Lender Party (if the Payment Currency is other than U.S. dollars), the Guarantor
shall pay, by delivery to an account of the Agent designated from time to time
by notice to the Guarantor from the Agent, the equivalent amount in U.S. dollars
computed at the rate of exchange at which, in accordance with normal banking
procedures, such Lender Party buys such Payment Currency in New York, New York
on the date the Guarantor makes such payment. In any case in which the
Guarantor makes payment in a currency other than the Payment Currency, the
Guarantor shall hold each Lender Party harmless from any loss incurred by such
Lender Party arising from any change in the value of such currency in relation
to the Payment Currency between the date the Obligation becomes due and the date
such Lender Party is actually able, following the conversion of such currency
paid by the Guarantor into the Payment Currency and remittance of such Payment
Currency to the place where such Obligation is payable, to apply such Payment
Currency to such Obligation.
SECTION 1.09. CERTAIN TAXES. The Guarantor further agrees that all
payments to be made hereunder shall be made without set-off or counterclaim and
free and clear of, and without deduction for, any taxes, levies, imposts,
duties, charges, fees,
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<PAGE>
deductions, withholdings or restrictions or conditions of any nature whatsoever
now or hereafter imposed, levied, collected, withheld or assessed by any country
or by any political subdivision or taxing authority thereof or therein,
excluding income taxes or franchise taxes of a Lender Party in the jurisdiction
of its incorporation or lending office through which a Lender makes or maintains
its Loan (all such non-excluded taxes being hereinafter collectively referred to
as "Taxes"). If any Taxes are required to be withheld from any amounts payable
to any Lender Party hereunder, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this paragraph) each Lender Party
will receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Guarantor shall make such deductions and (iii)
the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. In addition,
the Guarantor agrees to pay any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Guaranty or the Obligations (hereinafter
referred to as "Other Taxes"). Within 30 days of any payment of Taxes, the
Guarantor will furnish to each Lender Party the original or a certified copy of
a receipt evidencing payment thereof. The Guarantor will indemnify each Lender
Party for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this paragraph) paid by such Lender Party or any liability
(including, without limitation, penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted, within 30 days of such Lender Party's request
therefor. Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations of the Guarantor contained in this
paragraph shall survive the payment in full of the Obligations and any
termination of this Guaranty.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
The Guarantor hereby represents and warrants as follows:
SECTION 2.01. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION.
The Guarantor is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged or proposed to be engaged, and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required, except where failure to be
so qualified would not have a material
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<PAGE>
adverse effect on the ability of the Guarantor to perform its obligations under
this Guaranty.
SECTION 2.02. CORPORATE POWER AND AUTHORITY; NO CONFLICTS. The
execution, delivery and performance by the Guarantor of this Guaranty have been
duly authorized by all necessary corporate action, and do not (i) require any
consent or approval of its stockholders; (ii) violate any provision of, cause
the Guarantor to be in default under, or require any filing, registration,
consent or approval under, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Guarantor; (iii) result in a breach of or constitute a
default or require any consent under any indenture or loan or credit agreement
or any other agreement, lease or instrument to which the Guarantor is a party or
by which it or its properties may be bound or effected; (iv) result in, or
require, the creation or imposition of any lien, upon or with respect to any of
the properties now owned or hereafter acquired by the Guarantor; or (v) require
any authorization or approval of, or any other action by, any governmental
authority or regulatory body; in each case under clauses (iii) and (iv) where
the imposition of any such lien or the existence of any such default or breach
or failure to obtain such required consent would have a material adverse effect
on the ability of the Guarantor to perform its obligations under this Guaranty.
SECTION 2.03. LEGALLY ENFORCEABLE AGREEMENT. This Guaranty
constitutes the legal, valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally and except as any be limited
by principles of equity.
SECTION 2.04. LITIGATION. Except as otherwise disclosed in (i) the
Annual Report of Amax Gold Inc. on Form 10-K for the fiscal year ended December,
31, 1992, (ii) the Quarterly Reports of Amax Gold Inc. on Form 10-Q for the
quarters ended March 31, June 30, 1993 and September 30, 1993, and (iii) the
February 28, 1993 draft of the Annual Report of Amax Gold Inc. on Form 10-K for
the year ended December 31, 1993, which have been delivered to the Lender
Parties on or prior to the date hereof, or as disclosed in writing to the Lender
Parties on or prior to the date hereof, there are no actions, suits or
proceedings pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor or any of its consolidated subsidiaries before any court
or governmental agency or arbitrator, which may, if adversely decided, in any
one case or in the aggregate, materially and adversely affect the financial
condition, operations, properties, or business of the Guarantor and its
consolidated subsidiaries, taken as a
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whole, or the ability of the Guarantor to perform its obligations under this
Guaranty.
SECTION 2.05. FINANCIAL STATEMENTS. The (i) consolidated balance
sheet of Amax Gold Inc. and its consolidated subsidiaries as of December 31,
1992, and the related consolidated statements of income, shareholders' equity
and cash flows of Amax Gold Inc. and its consolidated subsidiaries for the year
ended December 31, 1992, each as contained in the Annual Report of Amax Gold
Inc. on Form 10-K for the year ended December 31, 1992, (ii) consolidated
balance sheet of Amax Gold Inc. and its consolidated subsidiaries as of March
31, 1993, June 30, 1993 and September 30, 1993 and the related consolidated
statements of income, shareholders' equity and cash flows of Amax Gold Inc. and
its consolidated subsidiaries for the quarters ended March 30, 1993, June 30,
1993 and September 30, 1993, each as contained in the Quarterly Report of Amax
Gold Inc. on Form 10-Q for the respective quarter, and (iii) the consolidated
balance sheet of Amax Gold Inc. and its consolidated subsidiaries as of December
31, 1993, and the related consolidated statements of shareholders' equity and
cash flows of Amax Gold Inc. and its consolidated subsidiaries for the year
ended December 31, 1993, as contained in the February 28, 1994 draft of the
Annual Report of Amax Gold Inc. on Form 10-K for the year ended December 31,
1993, together in each case with the notes thereto, copies of which have been
furnished to the Lender Parties on or prior to the date hereof, are complete and
correct and fairly present the financial condition of the Guarantor and its
consolidated subsidiaries, as the case may be, as at such dates and the results
of the operations of the Guarantor and its consolidated subsidiaries for the
periods covered by such statements, all in accordance with generally accepted
accounting principals consistently applied (subject to year-end adjustments in
the case of the interim financial statements). Since the date of such financial
statements, there has been no material adverse change in the financial condition
or operations of the Guarantor and its consolidated subsidiaries, taken as a
whole. There are no liabilities of the Guarantor and its consolidated
subsidiaries, taken as a whole, fixed or contingent, that are material but are
not reflected in such financial statements or in the notes thereto, other than
liabilities arising in the ordinary course of business since the date of such
financial statements. No information, exhibit or report furnished by the
Guarantor to the Lender Parties after November, 1993 in connection with the
negotiation of this Guaranty contains any material misstatement of fact or omits
to state a material fact or any fact necessary to make the statement contained
therein not misleading in a manner that would have a material adverse effect on
the financial condition of the Guarantor and its consolidated subsidiaries,
taken as a whole. Financial statements delivered to the Lender Parties by the
Guarantor after the date of this Guaranty shall be prepared by the Guarantor in
accordance with generally accepted accounting principles applied on
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a consistent basis (or if not consistently applied, all material inconsistencies
shall be completely and adequately disclosed in writing to the Lender Parties).
SECTION 2.06. TAXES. The Guarantor has duly, timely and accurately,
to the best of the Guarantor's knowledge, filed or caused to be filed all
Federal, state and local tax returns which to its knowledge are required to be
filed and has paid or caused to be paid all taxes shown on the returns as
required to be paid or on any assessment received by it (or (i) with respect to
taxes for the period prior to July 1, 1985, by Amoco Corporation and (ii) with
respect to taxes of Amax Inc. and its subsidiaries for the period prior to the
merger of Amax Inc. with and into the Guarantor (the "Merger"), by Amax Inc.) to
the extent that such taxes have become due, except (a) taxes the validity of
which are being contested in good faith by appropriate proceedings and with
respect to which the Guarantor shall have set aside on its books such reserves
as are required by generally accepted accounting principles, (b) taxes relating
to any period prior to July 1, 1985, with respect to the payment of which the
Guarantor has been indemnified by Amoco Corporation, (c) taxes relating to any
period prior to the Merger with respect to the payment of which the Guarantor
has been indemnified by Alumax Inc. or (d) taxes of Amax Gold Inc. or its
subsidiaries for any period prior to the Merger during which Amax Gold Inc. was
not part of the consolidated group of Amax Inc.
SECTION 2.07. BANKRUPTCY. There are no bankruptcy actions, suits or
proceedings pending or, to the knowledge of the Guarantor, threatened against
the Guarantor or any of its consolidated subsidiaries.
SECTION 2.08. BENEFITS. The Guarantor has determined that it will
derive substantial direct and indirect benefits from the extension of credit to
the Borrower by the Lenders under the Loan Agreement and by their funding the
Loans thereunder and that such benefits will adequately and fairly compensate
the Guarantor for entering into and performing this Guaranty.
SECTION 2.09. COMPLIANCE WITH LAWS. The Guarantor has complied in
all material respects with all applicable laws, ordinances, rules, regulations,
and requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder) where the
failure to so comply would have a material adverse effect on the business
assets, operations or condition, financial or otherwise, of the Guarantor and
its subsidiaries taken as a whole, and except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 2.10. MARGIN STOCK. This Guaranty is not being made and
delivered by the Guarantor for the purpose of making
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credit available to the Borrower for the purchase of "margin stock" as that term
is used in Regulation U adopted by the Board of Governors of the Federal Reserve
System.
ARTICLE 3. COVENANTS
The Guarantor agrees with each Lender Party that until the obligations
of the Guarantor under this Guaranty have been paid in full or otherwise
discharged, it will perform the covenants set forth in this Article 3.
SECTION 3.01. REPORTING REQUIREMENTS. The Guarantor shall furnish to
the Agent for delivery to the Lenders the following:
.15.0.0.0.1 As soon as publicly available and in any event
within 45 days after the end of each of the first three quarters of each
fiscal year of the Guarantor, quarterly reports on Form 10-Q of the
Guarantor and its consolidated subsidiaries as of the end of such quarter,
certified by the chief financial officer or other Senior Officer of the
Guarantor;
.15.0.0.0.2 As soon as publicly available and in any event
within 90 days after the end of each fiscal year of the Guarantor, a copy
of the annual report for such year for the Guarantor and its consolidated
subsidiaries on Form 10-K, containing financial statements for such year,
certified in a manner reasonably acceptable to the Agent by Price
Waterhouse or other independent public accountants reasonably acceptable to
the Agent;
.15.0.0.0.3 Promptly after a Senior Officer of the Guarantor has
learned of the occurrence of each Event of Default, or any event which,
with the giving or notice or lapse of time or both, would constitute an
Event of Default, a statement of the chief financial officer or other
Senior Officer of the Guarantor setting forth details of such Event of
Default or such other event and the action that the Guarantor has taken and
proposes to take with respect thereto;
.15.0.0.0.4 Promptly after the sending or filing thereof, copies
of all reports that the Guarantor sends to its public shareholders and
copies of registration statements and material filings made with the United
States Securities Exchange Commission or any national securities exchange;
and
.15.0.0.0.5 Such other information respecting the condition or
operations, financial or otherwise, of the Guarantor and its consolidated
subsidiaries as the Agent may from time to time reasonably request.
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SECTION 3.02. ANNUAL COMPLIANCE CERTIFICATE. Concurrent with the
material furnished under Section 3.01(b) above, the Guarantor shall also deliver
to the Agent a certificate signed by a Senior Officer of the Guarantor stating
that, to the best of such person's knowledge, no Event of Default nor any event
which with the giving of notice or lapse of time, or both, would constitute an
Event of Default has occurred and is continuing except as disclosed in such
certificate.
SECTION 3.03. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Guarantor and its consolidated Subsidiaries taken as a whole, will continue to
engage in business of the same general type substantially as now conducted and
the Guarantor and its consolidated Subsidiaries taken as a whole, will preserve,
renew and keep in full force and effect the material rights, privileges and
franchises necessary or desirable in the normal conduct of business where
failure so to comply or to preserve, renew and keep in full force and effect
such rights, privileges and franchises could have a material adverse effect on
the business, assets, operations or condition (financial or otherwise) of the
Guarantor and its consolidated Subsidiaries taken as a whole; provided that
nothing herein shall prohibit the Guarantor from being a party to a merger or
consolidation if no Event of Default, or event that with the giving of notice,
passage of time, or both, would constitute an Event of Default, has occurred or
would occur as a result of such merger or consolidation, and if, after giving
effect thereto, the resulting entity has shareholders' equity at least equal to
the shareholders' equity of the Guarantor prior to the consummation of such
transaction and if, in connection with such merger or consolidation, the
resulting company, if other than the Guarantor, delivers to the Lender Parties a
written instrument in form reasonably acceptable to the Lender Parties by which
it assumes all of the obligations of the Guarantor under this Guaranty and
agrees to be bound by all of the terms and conditions hereof, and provided
further that nothing herein shall limit the right of the Guarantor to merge or
consolidate its Subsidiaries, or to sell, dispose of, or otherwise transfer any
Subsidiary or operation or assets thereof, in whole or in part, so long as such
sale, disposition or transfer would not result in an Event of Default, or cause
an event which, with the giving of notice, the passage of time or both, would
constitute an Event of Default, or would have a material adverse effect on the
ability of Guarantor to perform its obligations under this Guaranty.
SECTION 3.04. COMPLIANCE WITH LAWS. The Guarantor and its
consolidated Subsidiaries taken as a whole will comply in all material respects
with all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) where the failure so to comply
would have a material adverse effect on the business,
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assets, operations or condition (financial or otherwise) of the Guarantor and
its consolidated Subsidiaries taken as a whole or except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings.
SECTION 3.05. ERISA COVENANTS. The Guarantor and its ERISA
Affiliates will comply in all material respects with the applicable provisions
of ERISA, and the Guarantor will furnish to the Agent (i) as soon as possible
and in any event within 30 days after any Senior Officer of the Guarantor knows
that any Reportable Event has occurred that alone or together with any other
Reportable Event could reasonably be expected to result in liability of the
Guarantor to the PBGC in an amount exceeding 5% of the shareholders' equity as
reported in the last balance sheet of the Guarantor, a statement of a Senior
Officer of the Guarantor setting forth details as to such Reportable Event and
the action that the Guarantor proposes with respect thereto, together with a
copy of the notice of such Reportable Event, if any, given to the PBGC; (ii)
promptly after receipt thereof, a copy of any notice that the Guarantor or any
of its ERISA Affiliates may receive from the PBGC relating to the intention of
the PBGC to terminate any Plan or Plans (other than a Plan maintained by an
ERISA Affiliate which is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Code Section 414) or, to appoint a trustee to
administer any such Plan; (iii) within 10 days after the due date for a filing
with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment (within the meaning of said Section
412(n)) with respect to a Plan, a statement of a Senior Officer of the Guarantor
setting forth details as to such failure and the action that the Guarantor
proposes to take with respect thereto; and (iv) promptly and in any event within
30 days after receipt thereof by the Guarantor or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received by the Guarantor
or any ERISA Affiliate concerning (A) the imposition of Withdrawal Liability or
(B) a determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, in each case within the meaning of Title IV of
ERISA, together with a copy of such notice given to the PBGC if such notices
could reasonably be expected to result in an Event of Default.
ARTICLE 4. MISCELLANEOUS
SECTION 4.01. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
therefrom, shall be effective unless it is in writing and signed by the Agent
and a Majority of Lenders, and then the 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 Agent or any Lender Party to exercise, and no delay
in exercising, any right under this Guaranty shall
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<PAGE>
operate as a waiver thereof, nor shall any single or partial waiver of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right.
SECTION 4.02. NOTICES. Unless the party to be notified otherwise
notifies the other parties in writing as provided in this Section, and except as
otherwise provided in this Guaranty, notices shall be given to the Agent, the
Lender Parties and the Guarantor by ordinary mail or facsimile transmission with
a copy to be sent by ordinary mail, addressed in the case of the Agent and the
Lender Parties to the address of the Agent as provided in the Loan Agreement and
in the case of the Guarantor to its address on the signature page of this
Guaranty. Notices shall be effective: (a) if given by mail, when deposited in
the mails with first class postage prepaid, addressed as aforesaid; and (b) if
given by facsimile when the facsimile is transmitted to the facsimile number as
aforesaid.
SECTION 4.03. EXPENSES. The Guarantor shall reimburse the Lender
Parties on demand for all costs, expenses and charges (including without
limitation, fees and charges of external legal counsel for the Lender Parties)
incurred by the Lender Parties in connection with the preparation, performance
or enforcement of this Guaranty. The Guarantor shall indemnify each Lender
Party against any transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and delivery of this
Guaranty. The obligations of the Guarantor under this Section shall survive the
termination of this Guaranty.
SECTION 4.04. FORMALITIES. The Guarantor waives diligence,
presentment, notice of dishonor, protest, notice of acceptance of this Guaranty
or incurrence of any Obligation and any other formality with respect to any of
the Obligations or this Guaranty. The Guarantor waives any requirement that any
of the Lender Parties exhaust any right or take any action against the Borrower
or any collateral security.
SECTION 4.05. SET-OFF. In addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim the Lender Parties may
otherwise have, the Lender Parties shall be entitled, at their option, to offset
balances (general or special, time or demand, provisional or final) held by them
for the account of the Guarantor at any of their offices, in U.S. dollars or in
any other currency, against any amount payable by the Guarantor under this
Guaranty which is not paid when due (regardless of whether such balances are
then due to the Guarantor), in which case the Lender Party taking such action
shall promptly notify the Guarantor thereof; provided that the failure of any
Lender Party to give such notice shall not affect the validity thereof.
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<PAGE>
SECTION 4.06. ASSIGNMENT; PARTICIPATIONS. This Guaranty shall be
binding on, and shall inure to the benefit of, the Guarantor, the Lender Parties
and their respective successors and assigns; provided that the Guarantor may not
assign or transfer its rights or obligations under this Guaranty. Without
limiting the generality of the foregoing, each of the Lender Parties may assign,
sell participations in or otherwise transfer its rights under the Facility
Documents to any other person or entity to the extent, and with the effect,
provided in the Loan Agreement. Each Lender Party may furnish any information
concerning the Guarantor in the possession of each such Lender Party from time
to time to assignees and participants (including prospective assignees and
participants); provided that each such Lender Party shall require any such
prospective assignee or such participant (prospective or otherwise) to agree in
writing to maintain the confidentiality (with appropriate exceptions) of any
such information which is confidential.
SECTION 4.07. CAPTIONS. The headings and captions in this Guaranty
are for convenience only and shall not affect the interpretation or construction
or this Guaranty.
SECTION 4.08. SEVERABILITY. The provisions of this Guaranty are
intended to be severable. If for any reason any provision of this Guaranty
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
SECTION 4.09. INTEGRATION. The Facility Documents set forth the
entire agreement among the parties thereto relating to the transactions
contemplated thereby and supersede any prior oral or written statements or
agreements with respect to such transactions.
SECTION 4.10. GOVERNING LAW. This Guaranty shall be governed by, and
construed and interpreted in accordance with, the internal laws of the State of
New York.
SECTION 4.11. JURISDICTION; IMMUNITIES. (a) The Guarantor hereby
irrevocably submits to the non-exclusive jurisdiction of any State or United
States Federal court sitting in the Borough of Manhattan, New York, New York,
over any action or proceeding arising out of or relating to this Guaranty, and
the Guarantor hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such State or Federal court.
The Guarantor irrevocably consents to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to the
Guarantor at its
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address specified in Section 4.02. The 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. The Guarantor further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of forum non
conveniens. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS GUARANTY.
(b) Nothing in this Section shall affect the right of the Lender
Parties to serve legal process in any other manner permitted by law or affect
the right of the Lender Parties to bring any action or proceeding against the
Guarantor or its property in the courts of any other jurisdictions.
(c) To the extent that the Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court of from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Guarantor
hereby irrevocably waives such immunity in respect of its obligations under this
Guaranty.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
AMAX GOLD INC.
By: /s/ Mark A. Lettes
----------------------------------
Name: Mark A. Lettes
----------------------------------
Title: Vice President & Chief Financial Officer
----------------------------------------
Address: 9100 E. Mineral Circle
----------------------
Englewood, CO 80112
----------------------
ATTEST:
By: /s/ Paul J. Hemschoot, Jr.
---------------------------
Name: Paul J. Hemschoot, Jr.
----------------------
Title: Secretary
----------------------
Address: 9100 E. Mineral Circle
----------------------
Englewood, CO 80112
----------------------
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<PAGE>
Acknowledged and Agreed to:
N M ROTHSCHILD & SONS LIMITED,
AS THE AGENT AND AS A LENDER
By: /s/ Michael A. Price
--------------------------------
Name: Michael Allan Price
-------------------------
Title: Assistant Director
------------------------
By: /s/ Donald F. Douglas
---------------------------------
Name: Donald Fisher Douglas
--------------------------
Title: Assistant Director
-------------------------
CITIBANK, N.A.,
AS A LENDER
By: /s/ Mark J. Lyons
--------------------------------
Name: Mark J. Lyons
-------------------------
Title: Vice President
------------------------
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<PAGE>
EXHIBIT D
CYPRUS AMAX MINERALS COMPANY
CONTINUING CORPORATE GUARANTY
CONTINUING CORPORATE GUARANTY (as amended, supplemented or otherwise
modified from time to time in accordance with its terms, this "Guaranty"), dated
as of March 15, 1994, made by Cyprus Amax Minerals Company (the "Guarantor"), a
corporation organized under the laws of the State of Delaware, in favor of N M
Rothschild & Sons Limited, a company organized and existing under the laws of
England (acting in its capacity as Lender and in its capacity as Agent for the
Lenders under the Loan Agreement as defined below), and Citibank, N.A., a
national banking association organized under the laws of the United States of
America (acting in its capacity as Lender) (the Agent and the Lenders
collectively, together with their successors and assigns, the "Lender Parties").
W I T N E S S E T H
-------------------
WHEREAS, pursuant to that certain Term Loan Agreement (as amended,
supplemented or otherwise modified from time to time in accordance with its
terms, the "Loan Agreement") of even date herewith by and among AGI Chile Credit
Corp., Inc., a Delaware corporation (the "Borrower"), and the Lender Parties,
the Lenders have agreed to make Loans to the Borrower in the amounts and on the
terms and conditions stated in the Loan Agreement (capitalized terms not defined
herein shall have the meanings given to them in the Loan Agreement);
WHEREAS, on the date hereof, all of the outstanding shares of capital
stock of the Borrower are owned by Amax Gold Inc., a Delaware corporation
("AGI");
WHEREAS, on the date hereof, approximately 40% of the outstanding
shares of common stock of AGI are held by the Guarantor; and
WHEREAS, the Guarantor will derive substantial direct and indirect
benefits from the extension of credit to the Borrower by the Lenders under the
Loan Agreement and by their funding the Loans thereunder.
NOW, THEREFORE, in consideration of the foregoing premises and in
order to induce the Lenders to make the Loans, the Guarantor hereby agrees as
follows:
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ARTICLE 1. THE GUARANTY
SECTION 1.01. GUARANTY OF PAYMENT. The Guarantor unconditionally and
irrevocably guarantees to each of the Lender Parties the punctual payment of all
sums now owing or which may in the future be owing by the Borrower under the
Loan Agreement (including the Loans) and any other documents executed and
delivered by the Borrower in connection with the Loan Agreement and/or the Loans
(such documents, including but not limited to the Notes, being hereinafter
collectively referred to as the "Facility Documents"), when the same are due and
payable, whether on demand, at stated maturity, by acceleration or otherwise,
and whether for principal, interest, fees, expenses, indemnification or
otherwise (all of the foregoing sums being the "Obligations"). The Obligations
include, without limitation, interest accruing after the commencement of a
proceeding under bankruptcy, insolvency or similar laws of any jurisdiction at
the rate or rates provided in the Facility Documents. This Guaranty is a
guaranty of payment and not of collection only. The Lender Parties shall not be
required to exhaust any right or remedy or take any action against the Borrower
or any other person or entity or any collateral prior to being entitled to
payment of the Obligations by the Guarantor, and the Guarantor hereby waives all
rights it may have now or in the future to require the Lender Parties to exhaust
any such right or remedy. The Guarantor agrees that, as between the Guarantor
and each of the Lender Parties, the Obligations may be declared to be due and
payable for the purposes of this Guaranty notwithstanding any stay, injunction
or other prohibition that may prevent, delay or vitiate any such declaration as
regards the Borrower and that in the event of any such declaration or attempted
declaration, the Obligations shall immediately become due and payable by the
Guarantor for the purposes of this Guaranty.
SECTION 1.02. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations shall be paid strictly in accordance with the terms of the Facility
Documents (other than this Guaranty). The liability of the Guarantor under this
Guaranty is absolute and unconditional irrespective of: (a) any extension of
credit or final accommodation by any Lender Party to or for the account of the
Borrower other than that guaranteed hereunder; (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Facility Documents or Obligations, or any other amendment or waiver of or any
consent to departure from or failure to enforce any of the terms of any Facility
Documents or Obligations; (c) any exchange, release or non-perfection or the
provision of any collateral for all or any of the Facility Documents or
Obligations; (d) any present or future law, regulation or order of any
jurisdiction (whether of right or in fact) or of any agency thereof purporting
to reduce, amend, restructure or otherwise affect any term of any Facility
Document or Obligation or any rights of any Lender Party with respect
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<PAGE>
thereto; (e) without being limited by the foregoing, any lack of validity or
enforceability of this Guaranty or any other Facility Document or Obligation;
(f) the existence of any claim, set-off or other rights which the Guarantor may
have at any time against the Borrower, any Lender Party or any other corporation
or person, whether in connection herewith or any unrelated transaction, provided
that nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim; (g) whether the Guarantor continues, directly
or indirectly, to own any equity interest in the Borrower; or (h) any other
defense whatsoever that might constitute a legal or equitable defense available
to, or discharge of, the Borrower or a guarantor (including the Guarantor).
SECTION 1.03. GUARANTY IRREVOCABLE. This Guaranty is a continuing
guaranty and shall remain in full force and effect until payment in full of all
Obligations and other amounts payable under this Guaranty and until the Facility
Documents are no longer in effect.
SECTION 1.04. RIGHTS NOT EXCLUSIVE. The rights and remedies granted
to the Lender Parties under this Guaranty are cumulative and are not exclusive
of any rights or remedies provided by law or under the other Loan Documents.
SECTION 1.05. REINSTATEMENT. 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 Obligations or of the obligations of the Guarantor under this
Guaranty is rescinded or must otherwise be returned by any Lender Party on the
insolvency, bankruptcy or reorganization of the Borrower or the Guarantor or
otherwise, all as though the payment had not been made.
SECTION 1.06. SUBROGATION. Notwithstanding any other provision of
this Guaranty, the Guarantor hereby irrevocably waives any right to assert,
enforce, or otherwise exercise any right of subrogation to any of the rights,
security interests, claims, or liens which any Lender Party has against the
Borrower in respect to the Obligations, and the Guarantor shall have no right of
recourse, reimbursement, contribution, indemnification, or similar right that
the Guarantor may have (by contract or otherwise) against the Borrower in
respect of the Obligations, and the Guarantor hereby irrevocably waives any and
all of the foregoing rights and also irrevocably waives the benefit of, and any
right to participate in any collateral or other security given to any Lender
Party to secure payment of the Obligations, such waivers to remain in effect
until the date (the "Revival Date") one year and one day after the date the
Obligations have been paid in full, unless the Borrower shall have filed, or
have had successfully filed against it, a petition under the United States
Bankruptcy Code between the date hereof and the Revival Date, in which case such
waivers shall
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remain in effect. If any amount shall be paid to the Guarantor in violation of
this Section 1.06, the Guarantor shall promptly notify the Agent of such fact
and such amount shall be held by the Guarantor as trustee for the Lender Parties
and shall be paid over to the Agent on account of the Obligations but without
reducing or affecting in any manner the liability of the Guarantor under the
other provisions of this Guaranty.
SECTION 1.07. SUBORDINATION. Without limiting the rights of the
Lender Parties under any other agreement, any liabilities owed by the Borrower
to the Guarantor in connection with any extension of credit or financial
accommodation by the Guarantor to or for the account of the Borrower, including
but not limited to, interest accruing at the agreed contract rate after the
commencement of a bankruptcy or similar proceeding, are hereby subordinated to
the Obligations, and upon the occurrence of an Event of Default and for so long
as such Event of Default shall continue such liabilities of the Borrower to the
Guarantor (i) shall be collected, enforced and received by the Guarantor as
trustee for the Lender Parties and (ii) if the Agent so requests, shall be paid
over to the Agent on account of the Obligations but without reducing or
affecting in any manner the liability of the Guarantor under the other
provisions of this Guaranty.
SECTION 1.08. PAYMENTS GENERALLY. All payments by the Guarantor
shall be made in the manner, at the place and in the currency (the "Payment
Currency") required by the Facility Documents and payment in the Payment
Currency shall be of the essence; provided, however, at the request of any
Lender Party (if the Payment Currency is other than U.S. dollars), the Guarantor
shall pay, by delivery to an account of the Agent designated from time to time
by notice to the Guarantor from the Agent, the equivalent amount in U.S. dollars
computed at the rate of exchange at which, in accordance with normal banking
procedures, such Lender Party buys such Payment Currency in New York, New York
on the date the Guarantor makes such payment. In any case in which the
Guarantor makes payment in a currency other than the Payment Currency, the
Guarantor shall hold each Lender Party harmless from any loss incurred by such
Lender Party arising from any change in the value of such currency in relation
to the Payment Currency between the date the Obligation becomes due and the date
such Lender Party is actually able, following the conversion of such currency
paid by the Guarantor into the Payment Currency and remittance of such Payment
Currency to the place where such Obligation is payable, to apply such Payment
Currency to such Obligation.
SECTION 1.09. CERTAIN TAXES. The Guarantor further agrees that all
payments to be made hereunder shall be made without set-off or counterclaim and
free and clear of, and without deduction for, any taxes, levies, imposts,
duties, charges, fees,
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<PAGE>
deductions, withholdings or restrictions or conditions of any nature whatsoever
now or hereafter imposed, levied, collected, withheld or assessed by any country
or by any political subdivision or taxing authority thereof or therein,
excluding income taxes or franchise taxes of a Lender Party in the jurisdiction
of its incorporation or lending office through which a Lender makes or maintains
its Loan (all such non-excluded taxes being hereinafter collectively referred to
as "Taxes"). If any Taxes are required to be withheld from any amounts payable
to any Lender Party hereunder, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this paragraph) each Lender Party
will receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Guarantor shall make such deductions and (iii)
the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. In addition,
the Guarantor agrees to pay any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Guaranty or the Obligations (hereinafter
referred to as "Other Taxes"). Within 30 days of any payment of Taxes, the
Guarantor will furnish to each Lender Party the original or a certified copy of
a receipt evidencing payment thereof. The Guarantor will indemnify each Lender
Party for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this paragraph) paid by such Lender Party or any liability
(including, without limitation, penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted, within 30 days of such Lender Party's request
therefor. Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations of the Guarantor contained in this
paragraph shall survive the payment in full of the Obligations and any
termination of this Guaranty.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
The Guarantor hereby represents and warrants as follows:
SECTION 2.01. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION.
The Guarantor is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged or proposed to be engaged, and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required, except where failure to be
so qualified would not have a material
D-5
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adverse effect on the ability of the Guarantor to perform its obligations under
this Guaranty.
SECTION 2.02. CORPORATE POWER AND AUTHORITY; NO CONFLICTS. The
execution, delivery and performance by the Guarantor of this Guaranty have been
duly authorized by all necessary corporate action, and do not (i) require any
consent or approval of its stockholders; (ii) violate any provision of, cause
the Guarantor to be in default under, or require any filing, registration,
consent or approval under, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Guarantor; (iii) result in a breach of or constitute a
default or require any consent under any indenture or loan or credit agreement
or any other agreement, lease or instrument to which the Guarantor is a party or
by which it or its properties may be bound or effected; (iv) result in, or
require, the creation or imposition of any lien, upon or with respect to any of
the properties now owned or hereafter acquired by the Guarantor; or (v) require
any authorization or approval of, or any other action by, any governmental
authority or regulatory body; in each case under clauses (iii) and (iv) where
the imposition of any such lien or the existence of any such default or breach
or failure to obtain such required consent would have a material adverse effect
on the ability of the Guarantor to perform its obligations under this Guaranty.
SECTION 2.03. LEGALLY ENFORCEABLE AGREEMENT. This Guaranty
constitutes the legal, valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally and except as any be limited
by principles of equity.
SECTION 2.04. LITIGATION. Except as otherwise disclosed in (i) the
Annual Report of Cyprus Minerals Company on Form 10-K for the fiscal year ended
December 31, 1992, (ii) the Annual Report of Amax Inc. on Form 10-K for the
fiscal year ended December, 31, 1992, and (iii) the Joint Proxy Statement of
Amax Inc. and Cyprus Minerals Company dated September 24, 1993, which have been
delivered to the Lender Parties on or prior to the date hereof, or as disclosed
in writing to the Lender Parties on or prior to the date hereof, there are no
actions, suits or proceedings pending or, to the knowledge of the Guarantor,
threatened against or affecting the Guarantor or any of its consolidated
subsidiaries before any court or governmental agency or arbitrator, which may,
if adversely decided, in any one case or in the aggregate, materially and
adversely affect the financial condition, operations, properties, or business of
the Guarantor and its consolidated subsidiaries,
D-6
<PAGE>
taken as a whole, or the ability of the Guarantor to perform its obligations
under this Guaranty.
SECTION 2.05. FINANCIAL STATEMENTS. The consolidated balance sheet
of each of Cyprus Minerals Company and its consolidated subsidiaries and Amax
Inc. and its consolidated subsidiaries as of December 31, 1992, and the related
consolidated statements of income, shareholders' equity and cash flows of each
of Cyprus Minerals Company and its consolidated subsidiaries and Amax Inc. and
its consolidated subsidiaries for the year ended December 31, 1992, and the
consolidated balance sheet of each of Cyprus Minerals Company and its
consolidated subsidiaries and Amax Inc. and its consolidated subsidiaries as of
March 31, 1993, June 30, 1993 and September 30, 1993 and the restated
consolidated statements of income, shareholders' equity and cash flows of each
of Cyprus Minerals Company and its consolidated subsidiaries and Amax Inc. and
its consolidated subsidiaries for the quarters ended March 30, 1993, June 30,
1993 and September 30, 1993, copies of which have been furnished to the Lender
Parties on or prior to the date hereof, are complete and correct and fairly
present the financial condition of the Guarantor and its consolidated
subsidiaries and Amax Inc. and its consolidated subsidiaries, as the case may
be, as at such dates and the results of the operations of the Guarantor and its
consolidated subsidiaries and Amax Inc. and its consolidated subsidiaries for
the periods covered by such statements, all in accordance with generally
accepted accounting principals consistently applied (subject to year-end
adjustments in the case of the interim financial statements). Since the date of
such financial statements, there has been no material adverse change in the
financial condition or operations of the Guarantor and its consolidated
subsidiaries, taken as a whole. There are no liabilities of the Guarantor and
its consolidated subsidiaries, taken as a whole, fixed or contingent, that are
material but are not reflected in such financial statements or in the notes
thereto, other than liabilities arising in the ordinary course of business since
the date of such financial statements. No information, exhibit or report
furnished by the Guarantor to the Lender Parties after November, 1993 in
connection with the negotiation of this Guaranty contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statement contained therein not misleading in a manner that would have
a material adverse effect on the financial condition of the Guarantor and its
consolidated subsidiaries, taken as a whole. Financial statements delivered to
the Lender Parties by the Guarantor after the date of this Guaranty shall be
prepared by the Guarantor in accordance with generally accepted accounting
principles applied on a consistent basis (or if not consistently applied, all
material inconsistencies shall be completely and adequately disclosed in writing
to the Lender Parties).
D-7
<PAGE>
SECTION 2.06. TAXES. The Guarantor has duly, timely and accurately,
to the best of the Guarantor's knowledge, filed or caused to be filed all
Federal, state and local tax returns which to its knowledge are required to be
filed and has paid or caused to be paid all taxes shown on the returns as
required to be paid or on any assessment received by it (or (i) with respect to
taxes for the period prior to July 1, 1985, by Amoco Corporation and (ii) with
respect to taxes of Amax Inc. and its subsidiaries for the period prior to the
merger of Amax Inc. with and into the Guarantor (the "Merger"), by Amax Inc.) to
the extent that such taxes have become due, except (a) taxes the validity of
which are being contested in good faith by appropriate proceedings and with
respect to which the Guarantor shall have set aside on its books such reserves
as are required by generally accepted accounting principles, (b) taxes relating
to any period prior to July 1, 1985, with respect to the payment of which the
Guarantor has been indemnified by Amoco Corporation, (c) taxes relating to any
period prior to the Merger with respect to the payment of which the Guarantor
has been indemnified by Alumax Inc. or (d) taxes of Amax Gold Inc. or its
subsidiaries for any period prior to the Merger during which Amax Gold Inc. was
not part of the consolidated group of Amax Inc.
SECTION 2.07. BANKRUPTCY. There are no bankruptcy actions, suits or
proceedings pending or, to the knowledge of the Guarantor, threatened against
the Guarantor or any of its consolidated subsidiaries.
SECTION 2.08. BENEFITS. The Guarantor has determined that it will
derive substantial direct and indirect benefits from the extension of credit to
the Borrower by the Lenders under the Loan Agreement and by their funding the
Loans thereunder and that such benefits will adequately and fairly compensate
the Guarantor for entering into and performing this Guaranty.
SECTION 2.09. COMPLIANCE WITH LAWS. The Guarantor has complied in
all material respects with all applicable laws, ordinances, rules, regulations,
and requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder) where the
failure to so comply would have a material adverse effect on the business
assets, operations or condition, financial or otherwise, of the Guarantor and
its subsidiaries taken as a whole, and except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 2.10. MARGIN STOCK. This Guaranty is not being made and
delivered by the Guarantor for the purpose of making credit available to the
Borrower for the purchase of "margin stock" as that term is used in Regulation U
adopted by the Board of Governors of the Federal Reserve System.
D-8
<PAGE>
ARTICLE 3. COVENANTS
The Guarantor agrees with each Lender Party that until the obligations
of the Guarantor under this Guaranty have been paid in full or otherwise
discharged, it will perform the covenants set forth in this Article 3.
SECTION 3.01. REPORTING REQUIREMENTS. The Guarantor shall furnish to
the Agent for delivery to the Lenders the following:
.15.0.0.0.6 As soon as publicly available and in any event
within 45 days after the end of each of the first three quarters of each
fiscal year of the Guarantor, quarterly reports on Form 10-Q of the
Guarantor and its consolidated subsidiaries as of the end of such quarter,
certified by the chief financial officer or other Senior Officer of the
Guarantor;
.15.0.0.0.7 As soon as publicly available and in any event
within 90 days after the end of each fiscal year of the Guarantor, a copy
of the annual report for such year for the Guarantor and its consolidated
subsidiaries on Form 10-K, containing financial statements for such year,
certified in a manner reasonably acceptable to the Agent by Price
Waterhouse or other independent public accountants reasonably acceptable to
the Agent;
.15.0.0.0.8 Promptly after a Senior Officer of the Guarantor has
learned of the occurrence of each Event of Default, or any event which,
with the giving or notice or lapse of time or both, would constitute an
Event of Default, a statement of the chief financial officer or other
Senior Officer of the Guarantor setting forth details of such Event of
Default or such other event and the action that the Guarantor has taken and
proposes to take with respect thereto;
.15.0.0.0.9 Promptly after the sending or filing thereof, copies
of all reports that the Guarantor sends to its public shareholders and
copies of registration statements and material filings made with the United
States Securities Exchange Commission or any national securities exchange;
and
.15.0.0.0.10 Such other information respecting the condition or
operations, financial or otherwise, of the Guarantor and its consolidated
subsidiaries as the Agent may from time to time reasonably request.
SECTION 3.02. ANNUAL COMPLIANCE CERTIFICATE. Concurrent with the
material furnished under Section 3.01(b) above, the Guarantor shall also deliver
to the Agent a certificate signed by
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<PAGE>
a Senior Officer of the Guarantor stating that, to the best of such person's
knowledge, no Event of Default nor any event which with the giving of notice or
lapse of time, or both, would constitute an Event of Default has occurred and is
continuing except as disclosed in such certificate.
SECTION 3.03. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Guarantor and its consolidated Subsidiaries taken as a whole, will continue to
engage in business of the same general type substantially as now conducted and
the Guarantor and its consolidated Subsidiaries taken as a whole, will preserve,
renew and keep in full force and effect the material rights, privileges and
franchises necessary or desirable in the normal conduct of business where
failure so to comply or to preserve, renew and keep in full force and effect
such rights, privileges and franchises could have a material adverse effect on
the business, assets, operations or condition (financial or otherwise) of the
Guarantor and its consolidated Subsidiaries taken as a whole; provided that
nothing herein shall prohibit the Guarantor from being a party to a merger or
consolidation if no Event of Default (as defined in the Loan Agreement and that
certain Competitive Advance and Revolving Credit Facility Agreement dated as of
December 16, 1993 among Cyprus Amax and the lenders named therein), or event
that with the giving of notice, passage of time, or both, would constitute an
Event of Default (as previously defined in this sentence) has occurred or would
occur as a result of such merger or consolidation, and if, after giving effect
thereto, the resulting entity has shareholders' equity at least equal to the
shareholders' equity of the Guarantor prior to the consummation of such
transaction and if, in connection with such merger or consolidation, the
resulting company, if other than the Guarantor, delivers to the Lender Parties a
written instrument in form reasonably acceptable to the Lender Parties by which
it assumes all of the obligations of the Guarantor under this Guaranty and
agrees to be bound by all of the terms and conditions hereof, and provided
further that nothing herein shall limit the right of the Guarantor to merge or
consolidate its Subsidiaries, or to sell, dispose of, or otherwise transfer any
Subsidiary or operation or assets thereof, in whole or in part, so long as such
sale, disposition or transfer would not result in an Event of Default, or cause
an event which, with the giving of notice, the passage of time or both, would
constitute an Event of Default, or would have a material adverse effect on the
ability of Guarantor to perform its obligations under this Guaranty.
SECTION 3.04. COMPLIANCE WITH LAWS. The Guarantor and its
consolidated Subsidiaries taken as a whole will comply in all material respects
with all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) where the failure so to
D-10
<PAGE>
comply would have a material adverse effect on the business, assets, operations
or condition (financial or otherwise) of the Guarantor and its consolidated
Subsidiaries taken as a whole or except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 3.05. ERISA COVENANTS. The Guarantor and its ERISA
Affiliates will comply in all material respects with the applicable provisions
of ERISA, and the Guarantor will furnish to the Agent (i) as soon as possible
and in any event within 30 days after any Senior Officer of the Guarantor knows
that any Reportable Event has occurred that alone or together with any other
Reportable Event could reasonably be expected to result in liability of the
Guarantor to the PBGC in an amount exceeding 5% of the shareholders' equity as
reported in the last balance sheet of the Guarantor, a statement of a Senior
Officer of the Guarantor setting forth details as to such Reportable Event and
the action that the Guarantor proposes with respect thereto, together with a
copy of the notice of such Reportable Event, if any, given to the PBGC; (ii)
promptly after receipt thereof, a copy of any notice that the Guarantor or any
of its ERISA Affiliates may receive from the PBGC relating to the intention of
the PBGC to terminate any Plan or Plans (other than a Plan maintained by an
ERISA Affiliate which is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Code Section 414) or, to appoint a trustee to
administer any such Plan; (iii) within 10 days after the due date for a filing
with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment (within the meaning of said Section
412(n)) with respect to a Plan, a statement of a Senior Officer of the Guarantor
setting forth details as to such failure and the action that the Guarantor
proposes to take with respect thereto; and (iv) promptly and in any event within
30 days after receipt thereof by the Guarantor or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received by the Guarantor
or any ERISA Affiliate concerning (A) the imposition of Withdrawal Liability or
(B) a determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, in each case within the meaning of Title IV of
ERISA, together with a copy of such notice given to the PBGC if such notices
could reasonably be expected to result in an Event of Default.
SECTION 3.06. COMPLIANCE WITH OTHER AGREEMENT. The Guarantor will
comply in all material respects with the agreements and covenants contained in
Articles VI and VII of that certain Competitive Advance and Revolving Credit
Facility Agreement dated as of December 16, 1993 among the Guarantor and the
lenders named therein as in effect on the date hereof and without regard to any
future amendment, modification, waiver or termination thereof by the parties to
said Competitive Advance and Revolving Credit Facility Agreement.
D-11
<PAGE>
ARTICLE 4. MISCELLANEOUS
SECTION 4.01. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
therefrom, shall be effective unless it is in writing and signed by the Agent
and a Majority of Lenders, and then the 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 Agent or any Lender Party to exercise, and no delay
in exercising, any right under this Guaranty shall operate as a waiver thereof,
nor shall any single or partial waiver of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.
SECTION 4.02. NOTICES. Unless the party to be notified otherwise
notifies the other parties in writing as provided in this Section, and except as
otherwise provided in this Guaranty, notices shall be given to the Agent, the
Lender Parties and the Guarantor by ordinary mail or facsimile transmission with
a copy to be sent by ordinary mail, addressed in the case of the Agent and the
Lender Parties to the address of the Agent as provided in the Loan Agreement and
in the case of the Guarantor to its address on the signature page of this
Guaranty. Notices shall be effective: (a) if given by mail, when deposited in
the mails with first class postage prepaid, addressed as aforesaid; and (b) if
given by facsimile when the facsimile is transmitted to the facsimile number as
aforesaid.
SECTION 4.03. EXPENSES. The Guarantor shall reimburse the Lender
Parties on demand for all costs, expenses and charges (including without
limitation, fees and charges of external legal counsel for the Lender Parties)
incurred by the Lender Parties in connection with the preparation, performance
or enforcement of this Guaranty. The Guarantor shall indemnify each Lender
Party against any transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and delivery of this
Guaranty. The obligations of the Guarantor under this Section shall survive the
termination of this Guaranty.
SECTION 4.04. FORMALITIES. The Guarantor waives diligence,
presentment, notice of dishonor, protest, notice of acceptance of this Guaranty
or incurrence of any Obligation and any other formality with respect to any of
the Obligations or this Guaranty. The Guarantor waives any requirement that any
of the Lender Parties exhaust any right or take any action against the Borrower
or any collateral security.
SECTION 4.05. SET-OFF. In addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim the Lender Parties may
otherwise have, the Lender Parties shall be entitled, at their option, to offset
balances (general or special,
D-12
<PAGE>
time or demand, provisional or final) held by them for the account of the
Guarantor at any of their offices, in U.S. dollars or in any other currency,
against any amount payable by the Guarantor under this Guaranty which is not
paid when due (regardless of whether such balances are then due to the
Guarantor), in which case the Lender Party taking such action shall promptly
notify the Guarantor thereof; provided that the failure of any Lender Party to
give such notice shall not affect the validity thereof.
SECTION 4.06. ASSIGNMENT; PARTICIPATIONS. This Guaranty shall be
binding on, and shall inure to the benefit of, the Guarantor, the Lender Parties
and their respective successors and assigns; provided that the Guarantor may not
assign or transfer its rights or obligations under this Guaranty. Without
limiting the generality of the foregoing, each of the Lender Parties may assign,
sell participations in or otherwise transfer its rights under the Facility
Documents to any other person or entity to the extent, and with the effect,
provided in the Loan Agreement. Each Lender Party may furnish any information
concerning the Guarantor in the possession of each such Lender Party from time
to time to assignees and participants (including prospective assignees and
participants); provided that each such Lender Party shall require any such
prospective assignee or such participant (prospective or otherwise) to agree in
writing to maintain the confidentiality (with appropriate exceptions) of any
such information which is confidential.
SECTION 4.07. CAPTIONS. The headings and captions in this Guaranty
are for convenience only and shall not affect the interpretation or construction
or this Guaranty.
SECTION 4.08. SEVERABILITY. The provisions of this Guaranty are
intended to be severable. If for any reason any provision of this Guaranty
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
SECTION 4.09. INTEGRATION. The Facility Documents set forth the
entire agreement among the parties thereto relating to the transactions
contemplated thereby and supersede any prior oral or written statements or
agreements with respect to such transactions.
SECTION 4.10. GOVERNING LAW. This Guaranty shall be governed by, and
construed and interpreted in accordance with, the internal laws of the State of
Colorado.
D-13
<PAGE>
SECTION 4.11. JURISDICTION; IMMUNITIES. (a) The Guarantor hereby
irrevocably submits to the non-exclusive jurisdiction of any State or United
States Federal court sitting in the City and County of Denver, Colorado, over
any action or proceeding arising out of or relating to this Guaranty, and the
Guarantor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such State or Federal court. The
Guarantor irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to the Guarantor
at its address specified in Section 4.02. The 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. The Guarantor further waives any objection to venue in such
State and any objection to an action or proceeding in such State on the basis of
forum non conveniens. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY.
(b) Nothing in this Section shall affect the right of the Lender
Parties to serve legal process in any other manner permitted by law or affect
the right of the Lender Parties to bring any action or proceeding against the
Guarantor or its property in the courts of any other jurisdictions.
(c) To the extent that the Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court of from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Guarantor
hereby irrevocably waives such immunity in respect of its obligations under this
Guaranty.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
CYPRUS AMAX MINERALS COMPANY
By: /s/ Francis J. Kane
--------------------------
Name: Francis J. Kane
---------------------
Title: Vice President Investor Relations
& Treasurer
---------------------------------
Address: 9100 East Mineral Circle
Englewood, CO 80112
-------------------------------
D-14
<PAGE>
Acknowledged and Agreed to:
N M ROTHSCHILD & SONS LIMITED,
AS THE AGENT AND AS A LENDER
By: /s/ Michael A. Price
--------------------------------
Name: Michael Allan Price
-------------------------
Title: Assistant Director
------------------------
By: /s/ M. Murdoch
--------------------------------
Name: Marion Murdoch
-------------------------
Title: Manager
------------------------
CITIBANK, N.A.,
AS A LENDER
By: /s/ Mark J. Lyons
--------------------------------
Name: Mark J. Lyons
-------------------------
Title: Vice President
------------------------
D-15
<PAGE>
EXHIBIT E
CERTIFICATE OF SECRETARY OF
AGI CHILE CREDIT CORP., INC.
----------------------------
The undersigned, Paul J. Hemschoot, Jr., DOES HEREBY CERTIFY that he
is the duly elected, qualified and acting Secretary of AGI Chile Credit Corp.,
Inc. (the "Company"), and DOES FURTHER CERTIFY that :
1. The following named persons are the duly elected, qualified and
acting officers of the Company holding the respective offices indicated below,
and the signature of such person indicated below is a true and correct specimen
of such person's signature:
Name Office Signature
---- ------ ---------
Mark A. Lettes Vice President /s/ Mark A. Lettes
and Treasurer
[list all officers executing Documents]
2. Annexed hereto as Exhibit A, is a true, correct and complete copy
of the Certificate of Incorporation of the Company, together with all amendments
thereto, as the same is in full force and effect on and as of the date hereof.
3. Annexed hereto as Exhibit B, is a true, correct and complete copy
of the By-laws of the Company, together with all amendments thereto, as the same
are in full force and effect on and as of the date hereof and at all times since
the day before the resolutions referenced in paragraph 4 below.
4. Annexed hereto as Exhibit C is a true, correct and complete copy of
resolutions duly adopted by the Sole Director of the Company on March 15, 1994,
authorizing the execution and delivery of the Term Loan Agreement dated as of
March 15, 1994, executed between the Company as Borrower and N M Rothschild &
Sons Limited and Citibank, N.A., and such resolutions have not been modified,
repealed or rescinded and are in full force and effect.
E-1
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand on this 15th day of
March, 1994.
/s/ Paul J. Hemschoot, Jr.
--------------------------
Paul J. Hemschoot, Jr.
Secretary
I, R. Craig Johnson, Assistant Secretary of AGI Chile Credit Corp.,
Inc., do hereby certify that Paul J. Hemschoot, Jr. is the duly elected,
qualified and acting Secretary of said corporation and that his signature set
forth above is his true and correct signature.
/s/ R. Craig Johnson
______________________________
Title: Assistant Secretary
E-2
<PAGE>
EXHIBIT F
FORM OF OPINION OF COUNSEL TO BORROWER
--------------------------------------
March 15, 1994
N M Rothschild & Sons Limited
New Court
St. Swithin's Lane
London EC4P 4DU
England
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Re: Term Loan Agreement dated as of March 15, 1994
---------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in pursuant to Section 3.1 of the Term
Loan Agreement dated as of March 15, 1994 (the "Term Loan Agreement") between
AGI Chile Credit Corp., Inc., as Borrower and N M Rothschild & Sons Limited and
Citibank, N.A. as Lenders, in connection with loans made to the Borrower by the
Lenders in the principal amounts of Eighteen Million U.S. Dollars
(US$18,000,000.00) by each Lender. Terms defined in the Term Loan Agreement are
used herein as therein defined.
I have acted as counsel for the Borrower in connection with the
preparation, negotiation, execution and delivery of the Term Loan Agreement and
the Notes. I am counsel to the Borrower and, as such, am familiar with the
legal affairs of the Borrower. I have in connection with this opinion,
examined, and am relying on, such documents, instruments, certificates and such
statements of various public officials and corporate officers of the Borrower
and have reviewed such questions of law, as I have considered necessary for
purposes of this opinion. I am a member of the Bar of the State of Colorado and
my opinion is limited to the laws of that State, the Federal laws of the United
States of America and the general corporate laws of the State of Delaware.
I have assumed the genuineness of all signatures, the legal capacity of
natural persons, and authenticity and accuracy of all documents submitted to me
as originals and conformity to the originals of all documents submitted to me as
copies. In addition, I have assumed that the Term Loan Agreement and other
documents executed in connection therewith or pursuant thereto, have been
F-1
<PAGE>
duly and validly authorized, executed and delivered by the parties thereto,
other than the Borrower, and that the Term Loan Agreement and such other
documents are valid and binding obligations of the parties thereto other than
the Borrower.
Based on the foregoing and with due regard to legal considerations that I
deem relevant, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
2. The Borrower has (a) the corporate power and authority to: (i) execute and
deliver the Term Loan Agreement, the Notes and any other required documentation
to be executed by it relating to the Term Loan Agreement to which it is a party,
and (ii) perform its obligations under the Term Loan Agreement and the Notes,
and (b) taken all necessary action to authorize such execution, delivery and
performance. The Term Loan Agreement and Notes have been duly executed and
delivered on behalf of the Borrower.
3. Such execution, delivery and performance do not violate or conflict with
(a) to the best of my knowledge after due inquiry, any law applicable to the
Borrower; (b) any provision of its certificate of incorporation or by-laws; (c)
any order or judgment of any court or other agency of government applicable to
it or any of its assets; or (d) any contractual restriction binding on or
affecting it.
4. No authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other person is required
for the due execution, delivery and performance by the Borrower of the Term Loan
Agreement or the Notes.
5. The obligations of the Borrower under the Term Loan Agreement and the Notes
constitute its legal, valid and binding obligations, enforceable in accordance
with their terms, except as the enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies.
6. To the best of my knowledge (after due inquiry), there is no pending or
threatened action or proceeding against the Borrower before any court,
governmental agency or arbitrator which purports to affect the legality,
validity, binding effect or enforceability of the Term Loan Agreement or the
Notes.
Very truly yours,
/s/ Paul J. Hemschoot, Jr.
F-2
<PAGE>
EXHIBIT G
CERTIFICATE OF SECRETARY OF AMAX GOLD INC.
------------------------------------------
The undersigned, Paul J. Hemschoot, Jr., DOES HEREBY CERTIFY that he
is the duly elected, qualified and acting Secretary of Amax Gold Inc. (the
"Company"), and DOES FURTHER CERTIFY that:
1. The following named persons are the duly elected, qualified and
acting officers of the Company holding the respective offices indicated below,
and the signature of such person indicated below is a true and correct specimen
of such person's signature:
Name Office Signature
---- ------ ---------
Mark A. Lettes Vice President and /s/ Mark A. Lettes
Chief Financial Officer
[list all officers executing Documents]
2. Annexed hereto as Exhibit A, is a true, correct and complete copy
of the Certificate of Incorporation of the Company, together with all amendments
thereto, as the same is in full force and effect on and as of the date hereof.
3. Annexed hereto as Exhibit B, is a true, correct and complete copy
of the By-laws of the Company, together with all amendments thereto, as the same
are in full force and effect on and as of the date hereof and at all times since
the day before the resolutions referenced in paragraph 4 below.
4. Annexed hereto as Exhibit C is a true, correct and complete copy of
resolutions duly adopted by the Board of Directors of the Company on March 1,
1994, authorizing the execution and delivery of a Continuing Corporate Guaranty,
dated as of March 15, 1994, executed by Amax Gold Inc. for the benefit of N M
Rothschild & Sons Limited and Citibank, N.A., and such resolutions have not been
modified, repealed or rescinded and are in full force and effect.
G-1
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand on this 15 day of
March, 1994.
/s/ Paul J. Hemschoot, Jr.
______________________________
Paul J. Hemschoot, Jr.
By: __________________________
Secretary, Vice President and General
Counsel
I, R. Craig Johnson, Assistant Secretary of Amax Gold Inc., do hereby
certify that Paul J. Hemschoot, Jr. is the duly elected, qualified and acting
Secretary of said corporation and that his signature set forth above is his true
and correct signature.
/s/ R. Craig Johnson
______________________________
Title: Assistant Secretary
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<PAGE>
EXHIBIT H
FORM OF OPINION OF COUNSEL TO AGI
---------------------------------
March 15, 1994
N M Rothschild & Sons Limited
New Court
St. Swithin's Lane
London EC4P 4DU, England
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Re: Continuing Corporate Guaranty of Amax Gold Inc. dated as of March
15, 1994 (the "Guaranty"), referencing that certain Term Loan
Agreement of even date therewith, between AGI Chile Credit Corp.,
Inc., N M Rothschild & Sons Limited and Citibank, N.A.
-----------------------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in pursuant to Section 3.1 of that certain
Term Loan Agreement dated as of March 15, 1994 (the "Term Loan Agreement")
between you and AGI Chile Credit Corp., Inc. (the "Borrower"). Terms defined in
the Term Loan Agreement are used herein as therein defined.
I have acted as counsel for Amax Gold Inc.("AGI") in connection with the
preparation, negotiation, execution and delivery of the Guaranty from AGI of
even date herewith, guaranteeing the obligations of the Borrower under the Term
Loan Agreement. I am counsel to AGI and, as such, am familiar with the legal
affairs of AGI. I have in connection with this opinion, examined, and am
relying on, such documents, instruments, certificates and such statements of
various public officials and corporate officers of AGI and have reviewed such
questions of law, as I have considered necessary for purposes of this opinion.
I am a member of the Bar of the State of Colorado and my opinion is limited to
the laws of that State, the Federal laws of the United States of America and the
general corporate laws of the State of Delaware.
I have assumed the genuineness of all signatures, the legal capacity of
natural persons, and authenticity and accuracy of all documents submitted to me
as originals and conformity to the originals of all documents submitted to me as
copies. In addition,
H-1
<PAGE>
I have assumed that the Agreement and other documents executed in connection
therewith or pursuant thereto, have been duly and validly authorized, executed
and delivered by the parties thereto, other than AGI, and that the Agreement and
such other documents are valid and binding obligations of the parties thereto
other than AGI.
Based on the foregoing and with due regard to legal considerations that I
deem relevant, I am of the following opinion:
1. AGI is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
2. AGI has (a) the corporate power and authority to: (i) execute and deliver
the Guaranty and any other required documentation to be executed by it relating
to the Guaranty to which it is a party, and (ii) perform its obligations under
the Guaranty, and (b) taken all necessary action to authorize such execution,
delivery and performance. The Guaranty has been duly executed and delivered on
behalf of AGI.
3. Such execution, delivery and performance do not violate or conflict with
(a) to the best of my knowledge after due inquiry, any law applicable to AGI;
(b) any provision of its certificate of incorporation or by-laws; (c) any order
or judgment of any court or other agency of government applicable to it or any
of its assets; or (d) any contractual restriction binding on or affecting it.
4. No authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other person is required
for the due execution, delivery and performance by AGI of the Guaranty.
5. The obligations of AGI under the Guaranty constitute its legal, valid and
binding obligations, enforceable in accordance with its terms, except as the
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies.
6. To the best of my knowledge (after due inquiry), there is no pending or
threatened action or proceeding against AGI or any of its subsidiaries before
any court, governmental agency or arbitrator which purports to affect the
legality, validity, binding effect or enforceability of the Guaranty.
Very truly yours,
/s/ Paul J. Hemschoot, Jr.
H-2
<PAGE>
EXHIBIT I
CERTIFICATE OF SECRETARY OF
CYPRUS AMAX MINERALS COMPANY
----------------------------
The undersigned, Philip C. Wolf, DOES HEREBY CERTIFY that he is
the duly elected, qualified and acting Secretary of Cyprus Amax Minerals Company
(the "Company"), and DOES FURTHER CERTIFY that:
1. The following named persons are the duly elected, qualified and
acting officers of the Company holding the respective offices indicated below,
and the signature of such person indicated below is a true and correct specimen
of such person's signature:
Name Office Signature
---- ------ ---------
Gerald J. Malys Senior Vice President /s/ Gerald J. Malys
and Chief Financial
Officer
Francis J. Kane Vice President Investor /s/ Francis J. Kane
Relations and Treasurer
[list all officers executing Documents]
2. Annexed hereto as Exhibit A, is a true, correct and complete copy
of the Certificate of Incorporation of the Company, together with all amendments
thereto, as the same is in full force and effect on and as of the date hereof.
3. Annexed hereto as Exhibit B, is a true, correct and complete copy
of the By-laws of the Company, together with all amendments thereto, as the same
are in full force and effect on and as of the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on this 15th day of
March, 1994.
/s/ Philip C. Wolf
______________________________
By: Philip C. Wolf
--------------------------
Secretary, Senior Vice President,
and General Counsel
I-1
<PAGE>
I, Farokh S. Hakimi, Assistant Treasurer of Cyprus Amax Minerals
Company, do hereby certify that Philip C. Wolf is the duly elected,
qualified and acting Secretary of said corporation and that his signature set
forth above is his true and correct signature.
Farokh S. Hakimi
______________________________
Title: Assistant Treasurer
I-2
<PAGE>
EXHIBIT J
FORM OF OPINION OF COUNSEL TO CYPRUS AMAX
-----------------------------------------
March 15, 1994
N M Rothschild & Sons Limited
New Court
St. Swithin's Lane
London EC4P 4DU, England
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Re: Continuing Corporate Guaranty of Cyprus Amax Minerals Company
dated as of March 15, 1994 (the "Guaranty"), referencing that
certain Term Loan Agreement of even date therewith, between AGI
Chile Credit Corp., Inc., N M Rothschild & Sons Limited and
Citibank, N.A.
---------------------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in pursuant to Section 3.1 of that certain
Term Loan Agreement dated as of March 15, 1994 (the "Term Loan Agreement")
between you and AGI Chile Credit Corp., Inc. (the "Borrower"). Terms defined in
the Term Loan Agreement are used herein as therein defined.
I have acted as counsel for Cyprus Amax Minerals Company ("Cyprus") in
connection with the preparation, negotiation, execution and delivery of the
Guaranty from Cyprus of even date herewith, guaranteeing the obligations of the
Borrower under the Term Loan Agreement. I am Senior Vice President, General
Counsel and Secretary of Cyprus and, as such, am familiar with the legal affairs
of Cyprus. I have in connection with this opinion, examined, and am relying on,
such documents, instruments, certificates and such statements of various public
officials and corporate officers of Cyprus and have reviewed such questions of
law, as I have considered necessary for purposes of this opinion. I am a member
of the Bar of the State of Colorado and my opinion is limited to the laws of
that State, the Federal laws of the United States of America and the general
corporate laws of the State of Delaware.
I have assumed the genuineness of all signatures, the legal capacity of
natural persons, and authenticity and accuracy of all documents submitted to me
as originals and conformity to the
J-1
<PAGE>
originals of all documents submitted to me as copies. In addition, I have
assumed that the Agreement and other documents executed in connection therewith
or pursuant thereto, have been duly and validly authorized, executed and
delivered by the parties thereto, other than Cyprus, and that the Agreement and
such other documents are valid and binding obligations of the parties thereto
other than Cyprus.
Based on the foregoing and with due regard to legal considerations that I
deem relevant, I am of the following opinion:
1. Cyprus is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
2. Cyprus has (a) the corporate power and authority to: (i) execute and
deliver the Guaranty and any other required documentation to be executed by it
relating to the Guaranty to which it is a party, and (ii) perform its
obligations under the Guaranty, and (b) taken all necessary action to authorize
such execution, delivery and performance. The Guaranty has been duly executed
and delivered on behalf of Cyprus.
3. Such execution, delivery and performance do not violate or conflict with
(a) to the best of my knowledge after due inquiry, any law applicable to Cyprus;
(b) any provision of its certificate of incorporation or by-laws; (c) any order
or judgment of any court or other agency of government applicable to it or any
of its assets; or (d) any contractual restriction binding on or affecting it.
4. No authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other person is required
for the due execution, delivery and performance by Cyprus of the Guaranty.
5. To the best of my knowledge (after due inquiry), there is no pending or
threatened action or proceeding against Cyprus or any of its subsidiaries before
any court, governmental agency or arbitrator which purports to affect the
legality, validity, binding effect or enforceability of the Guaranty.
Very truly yours,
/s/ Philip C. Wolf
J-2
<PAGE>
APPENDIX-B
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement, dated as of April 15, 1994 ("Agreement"), by
and between Amax Gold Inc., a Delaware corporation (the "Borrower"), and Cyprus
Amax Minerals Company, a Delaware corporation (the "Lender");
WITNESSETH:
WHEREAS, the parties previously have entered into that certain letter
agreement dated February 11, 1994 as extended by a letter agreement dated March
7, 1994 (the "Commitment Letter") providing for, among other things, agreed
upon share purchase prices and the preparation of definitive documents to
implement the terms thereof;
WHEREAS, this Revolving Credit Agreement is one of the definitive documents
contemplated in the Commitment Letter;
WHEREAS, on the date of this Agreement the Lender indirectly owns 31,313,709
shares of the Borrower's common stock, par value $0.01 per share ("Common
Stock"), which constitutes approximately 40% of the Borrower's outstanding
Common Stock;
WHEREAS, the Borrower needs financial support from the Lender to refinance
certain of the Borrower's short term debt, to make required amortization
payments on its Guanaco and Hayden Hill financings and to provide working
capital, and the Lender is willing to provide to the Borrower up to
$100,000,000 of financing for such needs, on the terms of this Agreement;
WHEREAS, the Borrower owns interests in several promising gold prospects,
including 100% of the Fort Knox Project near Fairbanks, Alaska, and 50% of the
Refugio Project in northern Chile, as well as certain other advanced stage
projects (collectively the "Projects"), each of which is expected to require
substantial additional development capital;
WHEREAS, the Borrower is developing one or more of its Projects and is
otherwise taking steps to increase its cash flow from operations to enable the
Borrower to fund its ongoing working capital requirements and required
development capital from operating cash flow or establish third party sources
of financing without reliance on guarantees or other financial support from the
Lender;
WHEREAS, each party has determined (in the Borrower's case, after consulting
with an independent investment banking firm) that it is in the best interest of
such party's stockholders (in the case of the Borrower, including but not
limited to, the Lender) that such financing from the Lender be provided on the
terms and conditions set forth in this Agreement;
WHEREAS, the Borrower and the Lender each have had the transactions
contemplated by this Agreement approved by its Board of Directors (and the
Borrower having had such transactions approved separately by the Audit
Committee of the Borrower's Board of Directors, which consists solely of those
Directors who are unaffiliated with the Lender), and having received a fairness
opinion from an independent investment bank, establishing that the transactions
contemplated herein are, on the whole, in the best interest of the Borrower and
the Lender respectively;
NOW THEREFORE, the parties hereby agree to the following terms and
conditions:
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<PAGE>
ARTICLE I
AMOUNTS AND TERMS OF THE LOAN
SECTION 1.01 Revolving Credit Commitment. Subject to the terms and conditions
hereof, the Lender agrees to make one or more loans (individually a "Loan" and
collectively the "Loans") to the Borrower from time to time during the period
that commences on the date hereof and ends on the earlier of (i) April 30, 1997
or (ii) the date on which the Commitment is terminated pursuant to this
Agreement inclusive (the expiration date determined by (i) or (ii) is herein
called the "Revolver Expiration Date"), in an aggregate principal amount up to
but not exceeding at any one time outstanding the sum of $100,000,000 (the
"Commitment"). During such period the Borrower may use the Commitment by
borrowing, paying and prepaying in whole or in any part and reborrowing, on a
revolving basis, all in accordance with the terms and conditions hereof. To the
extent that the Borrower pays (including any prepayment) any principal amount
of Loans in Preferred Stock pursuant to and as defined in Section 1.08 hereof
prior to the Revolver Expiration Date, the amount of the Commitment shall
automatically be reduced by the amount of any Preferred Stock so issued, based
upon the value of such Preferred Stock at the time of issuance as determined in
accordance with Section 1.08. Each borrowing and cash prepayment of principal,
if any, shall be in an amount equal to an integral multiple of $1,000,000.00.
Notwithstanding the foregoing, the Commitment shall terminate if the conditions
for making the initial Loan under Section 2.01 shall not have been satisfied on
or prior to January 4, 1995, unless extended by the parties.
SECTION 1.02 Making the Loans. The Borrower shall give the Lender notice of
each borrowing hereunder not later than 11:00 a.m. Denver, Colorado, time at
least two (2) Business Days prior to the date a Loan is requested to be made,
specifying the inception date, the amount thereof and the initial Interest
Period for such Loan. The Lender will arrange the loan and confirm the details
in writing to the Borrower. On the inception date of the borrowing, the Lender
will make the proceeds of the Loan available to the Borrower in immediately
available funds at the Borrower's account with Chemical Bank, New York, or as
the Borrower may otherwise direct in such notice.
The Loans to the Borrower shall be evidenced by a grid Note of the Borrower
substantially in the form of Exhibit A hereto (the "Note"). The Note will
evidence the obligation of the Borrower to pay the aggregate unpaid principal
amount of all Loans made by the Lender pursuant to Section 1.01 of this
Agreement, together with all accrued interest on such Loans. Entries made on
the grid schedules of the Note by the Lender reflecting borrowings, payments
and interest rate calculations under this Agreement shall constitute, absent
proven error, prima facie evidence of the transactions represented by such
entries. The Note shall (i) be dated the date of the initial Loan hereunder,
(ii) be payable in accordance with its terms and the terms of this Agreement
and (iii) evidence the obligation of the Borrower to pay interest on each Loan
made hereunder from the date of such Loan on the unpaid principal amount
thereof outstanding from time to time, calculated in accordance with the
provisions of Section 1.03 and the outstanding principal amount of such Loan in
accordance with Section 1.06 or Section 1.08 of this Agreement pursuant to the
repayment notice given by the Borrower under the applicable section of this
Agreement. Except for the payment referenced in Section 1.08 hereof, the
Borrower shall make each payment (including any cash prepayment) hereunder and
under the Note, not later than the close of business of the day when due by
wire transfer, in lawful money of the United States of America to the Lender,
at its address referred to in Section 7.02 or as otherwise directed by the
Lender, in immediately available funds.
SECTION 1.03 Payment of Interest. Each Loan made by the Lender pursuant to
this Agreement shall bear interest on the principal balance thereof from time
to time unpaid at an annual rate equal to the LIBOR Rate (as defined herein)
for the interest period selected by the Borrower at its option for a period of
one, three or six months, or such other periods as are agreed between the
Borrower and the Lender (each, an "Interest Period"), and as set forth in the
notice of borrowing referred to in Section 1.02 hereof or the notice of
Interest Period selection referred to in Section 1.05 hereof, as the case may
be, plus 0.30% except as otherwise provided in this Section. Interest on each
Loan shall be due and payable in full on the last day of
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<PAGE>
the Interest Period applicable to such Loan and, in the case of any Interest
Period in excess of three months, at the end of each calendar quarter occurring
during the term thereof. The term "LIBOR Rate" shall mean the rate of interest
per annum at which U.S. dollar deposits, in an amount equal to the aggregate
principal balance of the Loan are offered (as reasonably determined by the
Lender) at or about 11:00 a.m. Denver time on the date that is two Business
Days immediately prior to the beginning of such Interest Period in the London
Interbank Eurodollar Market for delivery on the first day of such Interest
Period for approximately the number of days contained therein (as appearing on
page "LIBOR" on the Reuters Monitor Money Rates Service or such other page as
may replace the LIBOR page on that service for the purpose of displaying London
Interbank Offered Rates for dollar deposits of major banks); provided, however,
that if at least two such offered rates appear on the LIBOR page in respect of
such Interest Period, the arithmetic mean of all such rates (as determined by
the Lender and rounded upwards to the nearest 1/16th of 1%) will be the rate
used; and provided further that if Reuters Monitor Money Rates Service ceases
to provide LIBOR quotations, such rate shall be the average rate of interest
(as determined by the Lender) and rounded upwards to the nearest 1/16th of 1%)
at which U.S. dollar deposits are offered for the relevant Interest Period by
three of the leading banks selected by the Lender in the London interbank
market as of 11:00 a.m. Denver time on the date which is two (2) Business Days
prior to the first day of such Interest Period, or as reasonably determined by
the Lender by reference to the LIBOR rate for an equivalent interest period in
the most recent edition of the Wall Street Journal under the section headed
"Money Rates", or otherwise as the Lender and the Borrower may mutually agree.
If the Borrower fails to make any payment to the Lender of the principal of or
interest on any Loan when such payment becomes due, such Loan shall accrue
interest at a rate that is 1.0% per annum higher than the rate otherwise
payable with respect to such Loan and such higher rate shall continue until
such default in payment by the Borrower is cured. All computations of interest
under the Note shall be made by the Lender on the basis of a year of 360 days,
consisting of twelve 30-day months, for the actual number of days (including
the first day but excluding the last day) elapsed.
SECTION 1.04 Prepayments in Cash. On any interest payment date, or as
otherwise agreed by the Lender, the Borrower may make cash prepayments of
principal (which, unless the commitment is earlier terminated pursuant to
Section 6.02, may be reborrowed on or prior to the Revolver Expiration Date but
not thereafter) of one or more Loans (which Loans shall be designated by the
Borrower) in an amount equal to an integral multiple of $1,000,000, and shall
be made without premium or penalty, but together with interest accrued, if any,
on the amount of each prepaid Loan (at the interest rate applicable to such
Loan) to the date of prepayment and shall be applied to the Loans in the
inverse order of maturity. The Borrower shall give Lender at least two Business
Days notice of any such prepayment. All such cash payments shall be made by
wire transfer in immediately available funds to an account designated by the
Lender.
SECTION 1.05 Interest Period Selection. The Borrower shall have the option to
select a new Interest Period for each Loan, which period shall take effect at
the end of the then current Interest Period with respect to such Loan. The
Borrower shall give the Lender notice of such Interest Period selection
pursuant to this Section 1.05 not later than 11:00 a.m. Denver, Colorado, time
at least two (2) Business Days prior to the last day of the applicable Interest
Period, specifying the new Interest Period for such Loan. If the Borrower does
not deliver such notice of Interest Period selection to the Lender as set forth
herein, the Interest Period for such Loan shall be the same number of months as
the immediately preceding Interest Period for such Loan. The selection of a
subsequent Interest Period shall not be deemed to constitute a reborrowing or a
new Loan for purposes of this Agreement.
SECTION 1.06 Amortization of Principal. On the Revolver Expiration Date all
accrued interest shall be paid and the aggregate principal balance of all Loans
outstanding shall become due and payable in twenty equal quarterly installments
on March 31, June 30, September 30, and December 31 of each of the following
five years with the first installment due on June 30, 1997; provided, however,
that the last such installment shall be in the amount necessary to repay in
full the unpaid principal amount thereof. The outstanding principal balance of
the Note shall bear interest in accordance with Section 1.03 until the Note is
paid in full. Accrued interest on the Note shall be added to and paid with each
such quarterly amortization payment.
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<PAGE>
SECTION 1.07 Payment on Non-Business Days. Whenever any payment to be made
hereunder or under the Note shall be stated to be due on a date which is a
Saturday, Sunday or a public holiday or the equivalent for Lender or for banks
generally under the laws of the State of Colorado (any other day being a
"Business Day"), such payment may be made on the next succeeding Business Day
and such extension of time shall in such case be included in the computation of
interest due.
SECTION 1.08 Payment in Preferred Stock. At the Borrower's election, which
may be exercised by its giving written notice to the Lender at least 20
Business Days prior to the date such repayment or prepayment of the Note or a
required amortization payment due under the Note is to be made, the Borrower
may (i) repay the entire principal balance of the Note, (ii) pay the required
amortization payment due under the Note, (iii) upon the Lender's prior consent
given not later than two Business Days prior to the payment date, pay the
required interest payment due under the Note, and/or (iv) prepay increments of
at least $5,000,000 of principal of Loans outstanding under the Note (which
Loans shall be designated by the Borrower), in each case by issuing to the
Lender the Borrower's $2.25 Series A Convertible Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), which shall have the powers,
preferences and relative participating, optional or other special rights and
qualifications, limitations or restrictions thereof as are set forth in Exhibit
B to this Agreement and otherwise as the Board of Directors of the Borrower may
determine (consistent with the provisions of such Exhibit B) by resolution or
resolutions adopted by the Board of Directors of the Borrower providing for the
issue of such Preferred Stock. The amount of such Preferred Stock issued to the
Lender shall (w) in the event the payment is to be made pursuant to clause (i)
above, be equal in value to the outstanding principal amount of all Loans
outstanding at the time of such payment, plus accrued interest thereon to the
date of such payment; (x) in the event the payment is to be made pursuant to
clause (ii) above, be equal in value to the amount of such required
amortization payment to be made plus accrued interest thereon to the date of
such payment; (y) in the event the payment is to be made pursuant to clause
(iii) above, be equal in value to the amount of such required interest payment
to be made on the date of such payment; or (z) in the event the payment is to
be made pursuant to clause (iv) above, be equal in value to the incremental
amount of such Loans that the Borrower elects to prepay, plus accrued interest
thereon to the date of such payment, in each case as specified in the notice
given to the Lender pursuant to this Section 1.08, except that no fractional
shares of Preferred Stock shall be issued. In lieu of a fraction of a share of
Preferred Stock, the Borrower shall pay the Lender in cash an amount equivalent
to such fraction of a share. The value of the Preferred Stock shall be
determined by multiplying the number of shares of Preferred Stock to be issued
to the Lender by $50.00 per share. The number of shares of Preferred Stock to
be issued to the Lender pursuant to this Section 1.08 (which shall not exceed
the number authorized in the Borrower's Restated Certificate of Incorporation,
as amended) will be determined by the Borrower based on the amount of the Loans
to be repaid or prepaid with such Preferred Stock, subject to adjustment for
arithmetic errors.
SECTION 1.09 Regulatory Approvals. As a condition precedent to issuing any
Preferred Stock to the Lender pursuant to Section 1.08 hereof, the Borrower
shall have obtained all authorizations and approvals of, and all other actions
required to be taken by, any applicable governmental authority or regulatory
body or stock exchange and shall have given all notices to, and made all
filings with, any such governmental authority or regulatory body or stock
exchange, that may be required in connection with such issuance of such
Preferred Stock.
SECTION 1.10 Failure to Obtain Regulatory Approvals. In the event the
Borrower is unable to obtain all authorizations and approvals required for the
issuance of any Preferred Stock pursuant to Section 1.09 hereof, such failure
shall not constitute a default but the written notice given by the Borrower to
the Lender with respect to making such repayment or prepayment by issuing
Preferred Stock shall be null and void, without prejudice to the rights of the
Borrower to exercise its option under Section 1.08 on any other occasion. If
the Preferred Stock was to be issued to pay an interest payment or required
amortization due under the Note, such payment shall be made by the Borrower in
immediately available funds on the date such payment is due in accordance with
Section 1.03 or 1.06 of this Agreement, as the case may be, and the Note.
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<PAGE>
SECTION 1.11 Restrictions on Transfer of Preferred Stock.
(i) Notice of Intended Dispositions. Except for dispositions pursuant to
this Section 1.11, if at any time the Lender desires to sell, assign,
transfer, pledge, encumber or otherwise dispose of any shares of Preferred
Stock held by it, then the Lender shall deliver written notice (a
"Disposition Notice") to the Borrower under Section 7.02, of its intention
to sell, setting forth the Lender's desire to make such sale, the identity
of the prospective purchaser, the number of shares of Preferred Stock
proposed to be sold (the "Offered Shares") the price ("Offer Price") at
which the Lender proposes to dispose of the Offered Shares and the other
material terms of such disposition. Such proposed sale, transfer, etc.,
shall be for cash only.
(ii) Borrower's First Refusal Option. Upon the receipt of the Disposition
Notice, the Borrower shall then have the right to purchase at the Offer
Price all, but not less than all, of the Offered Shares. In order to
exercise its first refusal option, the Borrower must give written notice (a
"First Refusal Exercise Notice") under Section 7.02, of such exercise to
the Lender, not more than 45 calendar days from the date of its receipt of
the Disposition Notice. In the event that the Borrower exercises its first
refusal option with respect to the Offered Shares, then the Lender shall
sell to the Borrower and the Borrower shall purchase the Offered Shares
within 30 calendar days after the date of receipt by the Lender of the
First Refusal Exercise Notice. Upon the consummation of any purchase by the
Borrower of Offered Shares, the Lender shall deliver certificates
evidencing the Offered Shares sold duly endorsed, or accompanied by written
instruments of transfer, free and clear of any liens and encumbrances,
against delivery of the Offer Price. From and after the time at which cash
necessary to pay the Offer Price for shares of Preferred Stock pursuant to
the exercise of the first refusal option irrevocably shall have been
deposited or set aside, then, notwithstanding that the certificates
representing the Offered Shares shall not have been surrendered, all rights
(other than the right to receive payment of the Offer Price with respect to
such shares of Preferred Stock) of the Lender with respect to the shares of
Preferred Stock for which tender has been made, including without
limitation all conversion, voting and dividend rights, permanently shall
cease and terminate, except only the right to receive payment for such
shares of Preferred Stock, and the Lender shall no longer be considered the
owner of such shares of Preferred Stock.
(iii) Permitted Dispositions. If the Disposition Notice has been duly
given and the Borrower shall not have timely given the First Refusal Notice
to exercise its first refusal option, then the Lender shall have the right,
for a period of 30 calendar days after expiration of the 45 day period
referred to in the second sentence of subsection (ii) of this Section 1.11,
to sell to the prospective purchaser referred to in such notice the Offered
Shares at no less than the Offer Price and on the other terms and
provisions set forth in the Disposition Notice.
ARTICLE II
CONDITIONS OF LENDING
SECTION 2.01 Conditions Precedent to Making the Initial Loan. The obligation
of the Lender to make the initial Loan is subject to the following conditions
precedent:
(a) The Lender shall have received on or before the day the initial Loan
is made all of the following, in form and substance reasonably satisfactory
to the Lender:
(i) The Note duly executed by the Borrower;
(ii) Copies of the borrowing resolutions of the Board of Directors of
the Borrower authorizing the execution and delivery of this Agreement
and the Note as well as the Borrower's performance of all of the
covenants, obligations and other undertakings of the Borrower
contemplated by this Agreement and the Note, (including the specific
authorization of the Preferred Stock to be issued pursuant to Section
1.08 of this Agreement on the terms of Exhibit B to this Agreement) and
of all documents evidencing other necessary corporate action and
governmental approvals, if any, with
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respect to this Agreement and the Note, certified by the Secretary or
an Assistant Secretary of the Borrower;
(iii) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of
the Borrower authorized to sign this Agreement and the Note and any
other documents to be delivered hereunder;
(iv) A favorable opinion of counsel of the Borrower, as to matters
referred to in Section 3.01 (except subsection (e) thereof) of this
Agreement;
(v) A Notice of Borrowing under Section 1.02; and
(vi) Evidence reasonably satisfactory to the Lender that the New York
Stock Exchange shall have accepted a listing application for the Common
Stock to be issued pursuant to this Agreement or upon conversion of the
Preferred Stock and if so required as a condition to listing, that the
majority of the shareholders of the Borrower have approved the issuance
of such Common Stock.
(b) On the date of such Loan the following statements shall be true:
(i) The representations and warranties of the Borrower contained in
Section 3.01 are true and correct in all material respects and the
covenants of the Borrower made in Article IV hereof shall be deemed to
have been made on and as of the date of such Loan (or of a subsequent
Loan for the purposes of Section 2.02);
(ii) No event has occurred and is continuing, or would result from
such Loan (or from a subsequent Loan for the purposes of Section 2.02),
which constitutes an Event of Default (as defined in Article V) or
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both; and
(c) The Borrower shall deliver to the Lender a certificate of the
Borrower's Chief Financial Officer stating the purpose of the borrowing,
which shall be consistent with Section 7.05 and the other terms and
conditions of this Agreement and, if required by Section 7.05, resolutions
of the Borrower's Board of Directors, which resolutions shall be certified
to Lender by the Secretary or an Assistant Secretary of the Borrower.
SECTION 2.02 Conditions Precedent to Subsequent Loans. The obligation of the
Lender to make each subsequent Loan is subject to the conditions precedent that
(i) on the date of any such subsequent Loan the statements made in Section
2.01(b)(i) and (ii) shall be true; and (ii) the condition set forth in Section
2.01(c), shall be satisfied with respect to such subsequent Loan.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(a) The Borrower is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has all
requisite corporate power to execute, deliver and perform its obligations
under this Agreement and the Note.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the Note have been, or in the case of the issuance of Common
Stock will be on or prior to the date of issuance, duly authorized by all
necessary corporate action (including authorization of the Board of
Directors of the Borrower to issue the Preferred Stock in the event the
Borrower elects to pay or prepay in Preferred Stock pursuant to Section
1.08 of this Agreement and to issue the Common Stock required to be issued
upon conversion of the Preferred Stock or pursuant to Articles of this
Agreement) and do not (and the issuance of such Preferred Stock on the
terms of Exhibit B or, in the case of the Common Stock, such Common Stock
will not at the time the same is to be issued):
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(i) violate any provision of the Restated Certificate of
Incorporation, as amended, or By-Laws of the Borrower or any law,
order, writ, judgment, decree, determination or award, in each case as
presently in effect and having applicability to the Borrower; or
(ii) result in a breach of or constitute a default under any material
indenture, bank loan agreement, credit agreement, bullion loan or other
material agreement to which the Borrower is a party or by which any of
its properties or the properties of any of its Subsidiaries, are
presently bound. As used in this Agreement, the term "Subsidiary" shall
mean, as to the Borrower, any corporation of which at least a majority
of the outstanding shares of stock, having by the terms thereof
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of
any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), is at the
time directly or indirectly owned or controlled by the Borrower or one
of more of its Subsidiaries.
(c) No authorization or approval of, or other action by, and no notice to
or filing with, any governmental authority or regulatory body, other than
the Securities and Exchange Commission ("SEC"), is required for the due
execution, delivery and performance by the Borrower of this Agreement
(except for such notices, any necessary shareholder approvals,
registrations, stock exchange listings or filings as may be required in
connection with issuing the Preferred Stock and the Common Stock) or the
Note.
(d) This Agreement is, and the Note when executed and delivered will be,
legal, valid and binding obligations of the Borrower enforceable against it
in accordance with their respective terms (subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles).
(e) The consolidated statements of financial position of the Borrower and
its consolidated Subsidiaries as at December 31, 1993, and the related
consolidated statements of operations, cash flows and changes in Common
Stock, paid-in capital and retained earnings of the Borrower and such
Subsidiaries for the period then ended (copies of which have been furnished
to the Lender) fairly present the financial condition of the Borrower and
such Subsidiaries as at such date and the results of the operations of the
Borrower and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles.
(f) Except as disclosed in the Borrower's most recent Annual Report on
Form 10-K filed with the SEC for the fiscal year then ended, the most
recent Quarterly Reports on Form 10-Q, or as otherwise disclosed in writing
to the Lender, there is not to the actual knowledge of the executive
officers of the Borrower any pending or threatened action or proceeding
against or affecting the Borrower before any court, governmental agency or
arbitrator that reasonably could be expected to materially and adversely
affect the ability of the Borrower to perform its obligations under the
Agreement or the Note.
(g) The Preferred Stock and the Common Stock, when issued in accordance
with the terms of this Agreement (and any Common Stock when issued on
conversion of or pursuant to the terms of the Preferred Stock), will be
validly issued, fully paid and nonassessable.
ARTICLE IV
COVENANTS OF THE BORROWER
SECTION 4.01 Payment of Principal, Premium and Interest. The Borrower duly
and punctually will pay or cause to be paid the principal of and interest on
the Loans evidenced by the Note according to the terms thereof.
SECTION 4.02 Reports, etc. The Borrower will furnish to the Lender the
following reports, information and documents:
(i) within 15 days after the Borrower is required to file the same with
the SEC, copies of the annual reports on Form 10-K, proxy statements,
quarterly reports on Form 10-Q, and of such reports, notices,
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documents and other information (or copies of such portions of any of the
foregoing as the SEC may from time to time by rules and regulations
prescribe) that the Borrower may be required to file with the SEC pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended, or with the principal securities exchange (or successor thereto)
in the United States on which securities of the Borrower are listed and,
upon distribution thereof, a copy of each report, proxy statement, notice,
document or other information sent by the Borrower to all of its
stockholders; and
(ii) promptly upon demand, such other information respecting the
financial condition, operations and properties of the Borrower and its
consolidated Subsidiaries as the Lender reasonably may request; provided
that the Lender shall maintain the confidentiality thereof in the same
manner as the Lender maintains the confidentiality of its own information
of like nature.
SECTION 4.03 Inspection. So long as the Lender is obligated to make Loans
under this Agreement or so long as the Note is outstanding, the Borrower will
permit the Lender or any of its authorized representatives, at the Lender's
expense, to inspect at all reasonable times all properties, books and records
of the Borrower or any of its consolidated Subsidiaries reasonably related to
the overall financial and business condition of the Borrower and its
consolidated Subsidiaries or to the observance and performance by the Borrower
of its obligations hereunder and under the Note, and to discuss the business
and affairs of the Borrower and its consolidated Subsidiaries with its officers
and independent accountants (and by this provision the Borrower authorizes said
accountants to discuss with the Lender or such authorized representatives, the
finances and affairs of the Borrower and its consolidated Subsidiaries), all as
often as reasonably may be requested, subject to appropriate obligations of
confidentiality.
SECTION 4.04 Payment of Taxes. The Borrower will pay and discharge, or cause
to be paid and discharged, all taxes, assessments and governmental charges
levied on it or against any of its properties or assets prior to the date on
which penalties are attached thereto, unless and to the extent only that the
same shall be contested in good faith and by appropriate proceedings by the
Borrower, or except to the extent that the failure to so pay or to so discharge
would not have a material adverse effect on the ability of the Borrower to
perform its obligations under this Agreement or the Note.
SECTION 4.05 Officers' Certificate. The Borrower will deliver a certificate
to the Lender on or before April 30 in each year (beginning with 1995), signed
by the Chairman of the Board or the President, the Chief Financial Officer, any
Senior Vice President or any Vice President (the foregoing being hereafter
referred to as "Senior Officers") and by the Secretary or any Assistant
Secretary of the Borrower, stating that in the course of the performance by the
signers of their duties as officers of the Borrower they normally would have
knowledge of any condition or event that constitutes or which, after the giving
of notice or lapse of time or both, would constitute, an Event of Default under
this Agreement or under the Note, stating whether or not they have knowledge of
any such condition or event and, if so, specifying each such condition or event
of which the signers have knowledge and the nature thereof, and the steps taken
by the Borrower to correct the same.
SECTION 4.06 Compliance With Laws. The Borrower shall comply, in all material
respects, with all applicable laws, rules, regulations and orders, except where
the failure would not have a material adverse effect on the Borrower's ability
to perform under this Agreement and the Note.
SECTION 4.07 Mergers and Consolidations. Without the Lender's prior consent
which will not be unreasonably withheld, the Borrower will not enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution). The Borrower
will not convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or substantially all of its
business or assets. Notwithstanding the foregoing provisions of this Section
4.07:
(a) Any Subsidiary of the Borrower may be merged or consolidated with or
into (x) the Borrower if the Borrower shall be the continuing or surviving
corporation, or (y) any such other Subsidiary;
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(b) Any Subsidiary of the Borrower may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or to a Subsidiary of the Borrower; and
(c) The Borrower or any of its Subsidiaries may merge or consolidate with
any other Person if (x) in the case of a merger or consolidation of the
Borrower, the Borrower is the surviving corporation and, in any other case,
the surviving corporation is a Subsidiary of the Borrower, and (y) after
giving effect thereto, no Event of Default would exist hereunder, and there
will be no material adverse impact on the ability of the Borrower to
perform any of its obligations hereunder or under the Note in accordance
with the respective terms thereof.
SECTION 4.08 Listing Approval. The Borrower promptly shall use all reasonable
efforts to obtain the acceptance of the New York Stock Exchange of a listing
application for the Common Stock to be issued pursuant to the terms of this
Agreement and, if so required as a condition to such listing, to obtain the
approval of a majority of its shareholders for the issuance for such Common
Stock.
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.01 Events of Default. If any of the following events (each, an
"Event of Default") shall occur and be continuing:
(a) The Borrower shall (i) fail to pay the principal of or any interest
on the Note when due, or (ii) fail to perform or observe any other term,
covenant or condition contained in this Agreement or in the Note on its
part to be performed or observed and any such failure shall remain
unremedied for five (5) Business Days in the case of clause (i) and thirty
(30) days in the case of clause (ii) after the same is discovered by any
Senior Officer of the Borrower; or
(b) Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) in any certificate or other document
delivered pursuant to this Agreement shall prove to have been incorrect in
any material respect when made and such incorrect representation or
warranty shall not have been corrected within ten (10) days after the same
is discovered by any Senior Officer of the Borrower; or
(c) The Borrower shall admit in writing its inability to pay its debts,
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Borrower or seeking to
adjudicate it a bankrupt or insolvent or seeking reorganization,
arrangement, adjustment, or composition of it or its debts under the law of
any jurisdiction relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and,
with respect to any involuntary proceeding instituted against the Borrower,
such proceeding shall not be dismissed within sixty (60) days;
then, and in any such event, the Lender, by notice to the Borrower, may take
either or both of the following actions: (i) terminate the Commitment,
whereupon the same shall terminate forthwith; or (ii) declare the principal
balance outstanding under the Note and all interest accrued and unpaid thereon,
and all other sums due hereunder, to be 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 upon the occurrence
of an Event of Default specified in subparagraph (c) above, (x) the Commitment
automatically shall be terminated and (y) the Note, all such principal and
interest and all such other sums due hereunder automatically shall become and
be due and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower.
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ARTICLE VI
LENDER'S STOCK PURCHASE OPTION
SECTION 6.01 Description of Lender's Option. At any time after the acceptance
by the New York Stock Exchange of a listing application for the issuance of the
shares of Common Stock described herein, and prior to the later of (i) the
Revolver Expiration Date or (ii) payment in full of the Note and all other
amounts, if any, due to the Lender under this Agreement, the Lender shall have
the option from time to time (the "Lender's Purchase Option") to purchase an
amount not to exceed 12,099,213 shares of the Borrower's Common Stock at a
purchase price per share (the "Purchase Price") of $8.265, subject to
adjustment in accordance with Section 6.03 hereof, and, in connection with the
consummation of such purchase (the "Closing"), to terminate such portion of the
Commitment as is equal to the product of (i) the number of shares so purchased
multiplied by (ii) the Purchase Price (as adjusted under Section 6.03);
provided if less than 12,099,213 shares are purchased (taking into account all
shares previously purchased under this provision), the number of shares shall
be an integral multiple of one million shares. The Lender may exercise any
Lender's Purchase Option under this Article VI by giving written notice to the
Borrower, if at all, at least 20 Business Days prior to the date stated in such
notice for the Closing of such stock purchase. If there are no amounts
outstanding under the Note at the time such notice is given, the Lender shall
give such notice to the Borrower at least 20 Business Days prior to the
Revolver Expiration Date. Such notice shall state the Lender's decision to
exercise its option hereunder and the date for Closing of such stock purchase.
Upon receipt of such notice, the Borrower and the Lender shall select a time
and place for the Closing and if the Borrower and the Lender are unable to
agree, the Closing shall take place at the Borrower's offices at 9:00 a.m.,
local time, on the date specified for Closing in the Lender's notice.
SECTION 6.02 Transactions at Closing. At the Closing, the Purchase Price for
the shares of the Borrower's Common Stock to be purchased by the Lender shall
be paid and applied by the Lender in the following order:
(i) First, to all accrued interest to the date of Closing and then to
such portion of and such portion of the principal amount of the outstanding
balance under the Note in stated order of maturity, as is determined by (y)
the product of (i) the number of shares so purchased multiplied by (ii) the
Purchase Price (as adjusted under Section 6.03); less (z) the amount of
accrued interest to the date of Closing; (which amount shall be deemed
repaid by the Borrower, irrespective of whether such amounts are then due
and payable, by the issuance of a credit against the Purchase Price payable
by the Lender for such Common Stock and the Lender shall deliver a receipt
to the Borrower for the amount of such payment). Amounts of principal paid
pursuant hereto may not be reborrowed.
(ii) Secondly, in the event the aggregate amount of the Purchase Price
shall exceed the amount in Section 6.02(i), the Lender shall deliver to the
Borrower the number of shares of Preferred Stock previously issued to the
Lender pursuant to Section 1.08, to the extent that such shares have not
been converted into or redeemed for shares of the Borrower's Common Stock
pursuant to the terms of such Preferred Stock as are equal in value to the
aggregate Purchase Price in excess of the amount applied in clause 6.02 (i)
above. To the extent that shares of Preferred Stock have been converted
into or redeemed for shares of the Borrower's Common Stock and to the
extent that any shares of Common Stock have been issued in lieu of cash
dividend payments on the Preferred Stock, the amount of Common Stock to be
purchased by the Lender pursuant to this Article VI first shall be reduced
by an amount equal to the number of such shares of Common Stock which have
been issued by the Borrower (x) on conversion or redemption of such shares
of Preferred Stock, or (y) in lieu of cash dividend payments on Preferred
Stock.
(iii) Thirdly, the amount of the excess of the aggregate Purchase Price
over the amounts applied in Section 6.02 (i) and (ii) above, if any, shall
next be applied by the Lender paying to the Borrower by wire transfer,
certified or official bank check payable in United States currency in
immediately available funds, to the account of the Borrower, or as the
Borrower shall direct by written notice given at least
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two Business Days prior to Closing, an amount up to the remainder of the
Commitment less the amount of the outstanding principal balance of the
Note.
Upon payment of the Purchase Price in the manner described above, the
Borrower shall deliver to the Lender a Certificate for the number of shares of
the Borrower's Common Stock purchased at Closing, together with a legal opinion
from the Borrower's General Counsel, or such other counsel as the Borrower may
choose, which other counsel shall be reasonably acceptable to the Lender, to
the effect that such shares of Common Stock purchased by the Lender have been
duly authorized, validly issued, and are fully paid and non-assessable. Upon
delivery of the certificate for the Common Stock and the legal opinion
described herein, such portion of the Commitment as is equal to the product
described in Section 6.01 above, shall terminate.
SECTION 6.03 Adjustment of Purchase Price and Number of Shares
Purchasable. The Purchase Price and the number of shares of Common Stock
purchasable upon the exercise of any Lender's Purchase Option shall be subject
to adjustment from time to time by the Borrower as follows:
(i) In case the Borrower shall (A) pay a dividend or make a distribution
on its Common Stock in shares of Common Stock (other than pursuant to a
dividend reinvestment or similar plan), (B) subdivide its outstanding
shares of Common Stock into a greater number of shares, (C) combine its
outstanding shares of Common Stock into a smaller number of shares, or (D)
issue by reclassification of its Common Stock any shares of capital stock
of the Borrower, then in each such case the number of shares of Common
Stock purchasable upon the exercise of the Lender's Purchase Option
immediately prior thereto shall be adjusted so that the Lender shall be
entitled to receive the kind and number of shares of Common Stock or other
securities of the Borrower which the Lender would have owned or have been
entitled to receive immediately following such action had such shares of
Common Stock been purchased immediately prior to the occurrence of such
event. An adjustment made pursuant to this subsection (i) shall become
effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this subsection (i), the Lender shall become
entitled to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the Borrower, the Audit
Committee of the Board of Directors of the Borrower (whose reasonable
determination shall be conclusive except for arithmetic errors and shall be
described in a statement filed by the Borrower with the Lender) shall
determine the equitable allocation of the adjusted Purchase Price between
or among shares of such classes of capital stock or shares of Common Stock
and other capital stock.
(ii) In case the Borrower shall issue rights, options or warrants to all
holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less
than the current market price per share (as determined pursuant to
subsection (iv) of this Section 6.03) of the Common Stock (other than
pursuant to any stock option, restricted stock or other incentive or
benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers or any dividend reinvestment plan of the
Borrower in effect at the time hereof or any other similar plan adopted or
implemented hereafter), to the extent that the same have not expired by
their terms prior to the exercise of the Lender's Purchase Option, then the
number of shares of Common Stock thereafter purchasable upon the exercise
of the Lender's Purchase Option shall be determined by multiplying the
number of shares of Common Stock theretofore purchasable upon exercise of
the Lender's Purchase Option immediately prior to the date of issuance of
such rights, options or warrants by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding on the date of issuance
of such rights, options or warrants (immediately prior to such issuance)
plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the number
of shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants (immediately prior to such issuance) plus the
number of shares which the aggregate offering price of the total number of
shares of Common Stock so offered would purchase at such current market
price. Such adjustment successively shall be made whenever any such rights,
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options or warrants are issued, and immediately shall become effective on
the date of issuance retroactive to the record date for the determination
of stockholders entitled to receive such rights, options or warrants;
provided, however, in the event that all the shares of Common Stock offered
for subscription or purchase are not delivered upon the exercise of such
rights, options or warrants, upon the expiration of such rights, options or
warrants the Purchase Price shall be readjusted to the Purchase Price that
would have been in effect had the numerator and the denominator of the
foregoing fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the exercise of
such rights, options or warrants rather than upon the number of shares of
Common Stock offered for subscription or purchase. In no event, however,
shall there be any adjustment made with respect any shares previously
issued pursuant to the exercise of the Lender's Purchase Option. In
determining whether any rights, options or warrants entitle the holders to
subscribe for or purchase shares of Common Stock at less than such current
market price and in determining the aggregate offering price of such shares
of Common Stock, there shall be taken into account any consideration
received by the Borrower for such rights, options or warrants. The value of
such consideration, if other than cash, shall be determined by the Audit
Committee of the Borrower's Board of Directors (whose reasonable
determination shall be conclusive, except for arithmetic errors, and shall
be described in a statement filed by the Borrower with the Lender).
(iii) In case the Borrower shall, by dividend or otherwise, distribute to
all holders of its outstanding Common Stock, evidences of its indebtedness
or assets (including securities and cash, but excluding any cash dividend
of the Borrower paid out of retained earnings and dividends or
distributions payable in stock pursuant to a dividend reinvestment or
similar plan or for which adjustment is made pursuant to subsection (i) of
this Section 6.03) or rights, options or warrants to subscribe for or
purchase securities of the Borrower (excluding those referred to in
subsection (ii) of this Section 6.03), then in each such case the number of
shares of Common Stock thereafter purchasable upon the exercise of the
Lender's Purchase Option shall be determined by multiplying the number of
shares of Common Stock theretofore purchasable upon the exercise of the
Lender's Purchase Option by a fraction of which the numerator shall be the
current market price per share of the Common Stock as determined pursuant
to subsection (iv) of this Section 6.03, and of which the denominator shall
be such current market price per share of Common Stock less the fair market
value on such record date (as determined by the Audit Committee of its
Board of Directors of the Borrower, whose reasonable determination shall be
conclusive except for arithmetic errors and shall be described in a
statement filed by the Borrower with the Lender) of the portion of the
capital stock or assets or the evidences of indebtedness or assets so
distributed to the holder of one share of Common Stock or of such
subscription rights, options or warrants applicable to one share of Common
Stock. Such adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
(iv) For the purpose of any computation under subsections (ii) and (iii)
of this Section 6.03, the current market price per share of Common Stock on
any date shall be deemed to be the average of the "Closing Price", as
defined below, for the shorter of (A) 30 consecutive trading days ending on
the last full trading day prior to the Time of Determination or (B) the
period commencing on the date next succeeding the first public announcement
of the issuance of such rights, options or warrants or such distribution
through such last full trading day prior to the Time of Determination. The
term "Closing Price" for any day in question shall be the last reported
sale price regular way or, in case no such reported sales take place on
such day, the average of the closing bid and asked prices regular way for
such day, in each case on the New York Stock Exchange Composite Tape or, if
not listed on the New York Stock Exchange, on the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if not listed or admitted to trading on a national
securities exchange, the last sale price regular way for the Common Stock
as published by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or if such last sale price is not so published
by NASDAQ or if no such sale takes place on such day, the average between
the closing bid and asked prices for the Common Stock as published by
NASDAQ. The term "trading day" shall mean a day on which the market used
for calculating the Closing Price is open for the transaction of business
or, if the
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shares of such securities are not so listed or admitted to trading, a
business day. The term "Time of Determination" shall mean the time and date
of the earlier of (I) the record date for determining stockholders entitled
to receive the rights, options, warrants or distributions referred to in
Section 6.03 (ii) and (iii) or (II) the commencement of "ex-dividend"
trading on the principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading or, if not listed or
admitted to trading on a national securities exchange, the NASDAQ.
(v) In any case in which this Section 6.03 shall require that an
adjustment be made immediately following a record date or an effective
date, the Borrower may elect to defer (but only until the delivery by the
Borrower of the notice required by subsection (viii) of this Section 6.03)
issuing to the Lender the shares of Common Stock issuable upon exercise of
the Lender's Purchase Option over and above the shares of Common Stock
issuable upon exercise of the Lender's Purchase Option on the basis of the
number of shares of Common Stock purchasable upon exercise of the Lender's
Purchase Option prior to adjustment, and paying to the Lender any amount of
cash in lieu of a fractional share.
(vi) Whenever the number of shares of Common Stock purchasable upon the
exercise of the Lender's Purchase Option is adjusted as herein provided,
the Purchase Price payable upon exercise of the Lender's Purchase Option
shall be adjusted by multiplying such Purchase Price immediately prior to
such adjustment by a fraction, of which the numerator shall be the number
of shares of Common Stock purchasable upon the exercise of the Lender's
Purchase Option immediately prior to such adjustment, and of which the
denominator shall be the number of shares of Common Stock so purchasable
immediately thereafter.
(vii) No adjustment in the number of shares of Common Stock purchasable
upon exercise of the Lender's Purchase Option shall be required to be made
unless such adjustment would require an increase or decrease of at least
1.0% of the number of shares of Common Stock purchasable upon exercise of
the Lender's Purchase Option; provided, however, that any adjustments which
by reason of this subsection (vii) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 6.03 shall be made to the nearest cent or
to the nearest 1/100th of a share, as the case may be. Anything in this
Section 6.03 to the contrary notwithstanding, the Borrower shall be
entitled to make such reduction in the Purchase Price, in addition to the
adjustments required by this Section 6.03, as it in its discretion shall
determine to be advisable in order that any stock dividend, subdivision of
shares, distribution of rights to purchase stock or securities, or
distribution of securities convertible into or exchangeable for stock
hereafter made by the Borrower to its stockholders shall not be taxable to
the recipients. Except as set forth in subsections (i), (ii) and (iii)
above, the Purchase Price shall not be adjusted for any such event
including, without limitation, the issuance of Common Stock, or any
securities convertible into or exchangeable for Common Stock or carrying
the right to purchase any of the foregoing, in exchange for cash, property
or services.
(viii) Whenever the Purchase Price is adjusted as herein provided, the
Borrower shall promptly deliver or mail, or cause to be delivered or mailed
by first class mail, postage prepaid, as soon as practicable to the Lender
a notice under Section 7.02 setting forth the Purchase Price and number of
shares of Common Stock purchasable upon the exercise of the Lender's
Purchase Option after such adjustment and a brief statement of the facts
requiring such adjustment and the manner of computing the same, which
certificate shall be conclusive evidence of the correctness of such
adjustment.
(ix) In the event that at any time, as a result of an adjustment made
pursuant to subsection (i) of this Section 6.03, the Lender shall become
entitled to receive any shares of the Borrower other than shares of Common
Stock, thereafter the Purchase Price of such other shares that the Lender
shall be entitled to purchase shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in this Section.
(x) The Borrower from time to time may decrease the Purchase Price by any
amount for any period of time if the period is at least 20 days and if the
decrease is irrevocable during the period. Whenever the Purchase Price is
so decreased, the Borrower shall deliver or mail to the Lender a notice of
the decrease
B-13
<PAGE>
at least 15 days before the date the decreased Purchase Price takes effect,
and such notice shall state the decreased Purchase Price and the period it
will be in effect.
Notwithstanding the foregoing provisions of this Section 6.03, no such
adjustments shall be made if the adjustment effectively duplicates the effect
of an adjustment made in connection with Section (5)(d) of the Certificate of
Designation relating to the Convertible Preferred Stock.
SECTION 6.04 Reservation of Shares of Common Stock. The Borrower covenants
that it will, at all times prior to the expiration of the Lender's Purchase
Option, reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock for the purpose
of enabling it to satisfy any obligation to issue shares of Common Stock upon
the exercise of the Lender's Purchase Option, the full number of shares of
Common Stock deliverable upon the exercise of the Lender's Purchase Option not
theretofore purchased and on or before (and as a condition of) taking any
action that would cause an adjustment of the Purchase Price resulting in an
increase in the number of shares of Common Stock deliverable upon the exercise
of the Lender's Purchase Option above the number thereof previously reserved
and available therefor, the Borrower shall take all such action so required.
Before taking any action that would cause an adjustment reducing the Purchase
Price below the then par value (if any) of the shares of Common Stock
deliverable upon exercise of the Lender's Purchase Option, the Borrower shall
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Borrower may validly and legally issue fully paid
and non-assessable shares of Common Stock at such adjusted Purchase Price.
SECTION 6.05 Transfer Taxes, Etc. The Borrower shall pay any and all
documentary stamp, issue or transfer taxes, and any other similar taxes payable
in respect of the issue or delivery of shares of Common Stock upon exercise of
the Lender's Purchase Option; provided, however, that the Borrower shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock in a name other than that of
the Lender and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Borrower the amount of
any such tax or has established, to the satisfaction of the Borrower, that such
tax has been paid.
SECTION 6.06 Consolidation or Merger or Sale of Assets. Notwithstanding any
other provision herein to the contrary, in case of any consolidation or merger,
sale or transfer to which the Borrower is a party and which is permitted under
Section 4.07 above or otherwise upon the Lender's prior written consent (which
shall not be unreasonably withheld) and pursuant to which there is a change in
the Common Stock of the Borrower, then lawful provision, in a manner and on
terms reasonably satisfactory to counsel for the Lender, shall be made by the
corporation formed by such consolidation or the corporation whose securities,
cash or other property will immediately after the merger or consolidation be
owned, by virtue of the merger or consolidation, by the holders of Common Stock
immediately prior to the merger or consolidation, or the corporation which
shall have acquired such assets or securities of the Borrower (collectively the
"Formed, Surviving or Acquiring Corporation"), as the case may be, providing
that the Lender shall have the right thereafter upon payment of the Purchase
Price in effect immediately prior to such action to purchase upon exercise of
the Lender's Purchase Option the kind and amount of securities, cash or other
property that the Lender would have owned or have been entitled to receive
after the happening of such consolidation, merger, sale, lease or transfer had
the Lender's Purchase Option been exercised immediately prior to such action
(provided that, if the kind or amount of securities, cash or other property
that the Lender would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, lease or transfer is not the
same for each share of Common Stock in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purposes of
this Section 6.06 the kind and amount of securities, cash or other property
which the Lender would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, lease or transfer for each
nonelecting share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). The Formed,
B-14
<PAGE>
Surviving or Acquiring Corporation, as the case may be, shall make provision in
a manner and on terms reasonably satisfactory to counsel for the Lender, in its
certificate or articles of incorporation or other constituent documents to the
end that the provisions set forth in this Section 6.06 shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in relation
to any shares of stock or other securities or property thereafter deliverable
upon exercise of the Lender's Purchase Option.
The above provisions of this Section 6.06 shall similarly apply to successive
consolidations, mergers, sales, leases or transfers.
SECTION 6.07 Transfer Restrictions.
(a) Legends on Common Stock.
(i) Until the third anniversary of the date of original issuance of the
shares of Common Stock, certificates representing the shares of Common
Stock purchased by the Lender upon exercise of the Lender's Purchase Option
and not otherwise registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities
Act") shall bear a legend substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY SIMILAR
STATE SECURITIES LAWS AND THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM
REGISTRATION, UNDER SAID ACT AND LAWS.
The shares of Common Stock purchased by the Lender upon exercise of the
Lender's Purchase Option and not otherwise registered pursuant to an effective
registration statement under the Securities Act shall be subject to the
restrictions on transfer set forth in the legends referred to above until the
third anniversary of the date of original issuance of such shares of Common
Stock; provided, however, and notwithstanding the foregoing, such shares of
Common Stock may be resold under and pursuant to the terms and conditions of
Regulation S of the Securities Act, prior to the end of the third anniversary
date of the issuance of such shares.
(ii) The certificates evidencing shares of Common Stock purchased by the
Lender upon exercise of the Lender's Purchase Option and not otherwise
registered pursuant to an effective registration statement under the
Securities Act shall bear, until such time as the Borrower and the transfer
agent for the Common Stock shall have received evidence satisfactory to
each of them that the transfer of such shares of Common Stock has been
effected in accordance with the limitations on transfer set forth in
paragraph (a)(i) above, the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES, OPINIONS OF COUNSEL AND
OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(b) Transfer Agent Requirements. The transfer agent and registrar for the
Common Stock shall not be required to accept for registration of transfer any
Common Stock bearing the legend contained in paragraph (a)(ii) above, except
upon presentation of satisfactory evidence that the restrictions on transfer of
the Common Stock referred to in the legend in paragraph (a)(i) have been
complied with, all in accordance with such reasonable regulations and
procedures as the Borrower may from time to time agree with the transfer agent
and registrar for the Common Stock.
B-15
<PAGE>
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or the Note, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender and the Borrower, in the case of an amendment, or by the party to
be charged, in the case of a waiver or a consent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 7.02 Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and delivered to an officer of the other party or
mailed or transmitted by facsimile; if to the Lender to its address at 9100
East Mineral Circle, Englewood, Colorado 80112-3299, Attention: Chief Financial
Officer (Fax No. 303-643-5269); if to the Borrower, to its address at 9100 East
Mineral Circle, Englewood, Colorado 80112-3299, Attention: Chief Financial
Officer (Fax No. 303-643-5505) or, as to each party, to such other address as
shall be designated by such party in a written notice to the other party. All
such notices and communications shall, when delivered to an officer of the
other party, be effective upon such delivery and, when mailed or transmitted by
facsimile, be effective when deposited in the mails or when transmitted
respectively, addressed as aforesaid; except that notices by the Borrower to
the Lender or by the Lender to the Borrower pursuant to the provisions of
Section 1.05 shall not be effective until received by the Lender or the
Borrower, as the case may be, but such notices may be given by telephone and
confirmed in writing or by facsimile on the same day and shall be effective
upon such telephonic notice.
SECTION 7.03 No Waiver; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under the Note,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder or under the Note 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 7.04 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Lender and their respective successors
and assigns, except that (i) the Borrower shall not have the right, to assign
its rights hereunder or any interest herein except to a successor by merger,
consolidation or sale of all or substantially all of the Borrower's assets, in
each case if permitted under Section 4.07 above, without the prior written
consent of the Lender, and (ii) the Lender shall not assign any of its rights
or obligations hereunder or under the Note, except to a successor by merger,
consolidation or sale of substantially all of the Lender's assets without the
prior written consent of the Borrower.
SECTION 7.05 Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower primarily for support of existing borrowings and working capital
needs. Specifically, (i) an amount equal to the aggregate amount of the
obligations outstanding under the credit facility referred to in this clause
(i) is designated solely for the repayment of obligations of the Borrower under
that certain Continuing Corporate Guarantee of the Borrower given to NM
Rothschild & Sons Limited and Citibank N.A. in support of borrowing by the
wholly owned subsidiary of the Borrower, AGI Chile Credit Corp., Inc., under
that certain Term Loan Agreement dated as of March 15, 1994; provided, however,
that such amount shall not exceed $36,000,000; (ii) an amount equal to the
aggregate amount of the obligations outstanding under the credit facility
referred to in this clause (ii) is designated solely for the repayment of
obligations of the Borrower under that certain Guarantee and Pledge Agreement
dated as of March 21, 1991 given to The Chase Manhattan Bank (National
Association) as Agent for the Banks which are party to that certain Bullion
Loan Agreement dated as of March 21, 1991, as amended (the "Loan Agreement") in
support of borrowings by the wholly owned subsidiary of the Borrower, Lassen
Gold Mining Inc. under the Loan Agreement; provided, however, that such amount
shall not exceed $30,000,000; and (iii) all proceeds of the Loans, if any,
remaining after giving effect to clauses (i) and (ii) of this Section 7.05
shall be used for the Borrower's general working capital requirements and for
any other purposes approved by the Borrower's Board of Directors or, within the
limits prescribed by the
B-16
<PAGE>
Board of Directors, by management of the Borrower, including but not limited to
general corporate purposes, working capital, capital expenditures for
development of the Projects or for the development or acquisition of other
properties and the acquisition of all or part of the capital stock or assets of
other companies; provided, however, that if on the date of any Loan the average
spot price of gold traded on the Commodity Exchange Inc. (COMEX) in New York
City for the thirty trading days immediately preceding the date of such Loan is
less than $300.00 per ounce, the purpose of such borrowing shall not be for
development of any of the Projects or for the development or acquisition of any
other properties or the acquisition of securities or assets of any other
company unless a resolution duly adopted by at lease two-thirds of the
Borrower's Board of Directors authorizes the specific amount to be borrowed
from the Lender for such purpose as in the best interest of the Borrower's
stockholders. If any Loans in an aggregate principal amount outstanding in
excess of $5,000,000.00, or such higher amount as may be approved from time to
time by its Board of Directors and certified to the Lender, are borrowed for
purposes other than as described in clause (i) or (ii), the Borrower shall, as
an additional condition precedent to the Lender's making of such Loans, be
required to obtain approval of its Board of Directors for such Loans and to
certify such resolutions to the Lender pursuant to Section 2.01 (c) of this
Agreement.
SECTION 7.06 Demand Registration Rights. (i) At any time after the earlier to
occur of (i) the conversion of the Preferred Stock into shares of Common Stock
or (ii) the exercise of the Lender's Purchase Option, the Lender may make one
or more written requests to the Borrower (a "Demand") for registration under
and in accordance with the provisions of the Securities Act of all or part (but
not less than 1,000,000 shares per Demand) of the shares of Common Stock issued
to the Lender pursuant to Section 1.08 or Section 6.01 of this Agreement
("Registrable Shares"). Each such request shall specify the aggregate number of
Registrable Shares proposed to be registered and the intended method of
disposition thereof.
(ii) Upon receipt of a Demand, the Borrower shall use its best efforts to
effect such registration to permit the sale of Registrable Shares in accordance
with the intended method of disposition thereof and pursuant thereto, the
Borrower shall as expeditiously as possible:
(a) execute and deliver all such instruments and documents and do or
cause to be done all such other acts and things as may be necessary or, in
the opinion of the Lender, advisable to register such Registrable Shares
under the provisions of the Securities Act, and 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
which, in the opinion of the Lender, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the SEC applicable thereto;
(b) use its best efforts to qualify the Registrable Shares under the
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Registrable Shares, as requested
by the Lender;
(c) make available to the Lender, as soon as practicable, an earnings
statement that will satisfy the provisions of Section 11(a) of the
Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Registrable Shares or any part thereof
valid and binding and in compliance with applicable law.
(iii) If any such Demand is made at a time when the Lender directly or
indirectly owns less than five percent 5% of the number of shares of Common
Stock outstanding, the Borrower may, if its Audit Committee of its Board of
Directors determines in the good faith exercise of its reasonable judgment that
it would be inadvisable to effect a demand registration, defer such demand
registration until the earliest practicable time at which such demand
registration can be reasonably effected, which period shall not exceed three
(3) months.
(iv) All Registration Expenses incurred in connection with the first
registration statement to be filed hereunder or under that certain Stock
Purchase Agreement between the Lender and the Borrower of even date herewith
(the "Stock Agreement") shall be paid by the Borrower. All Registration
Expenses incurred in
B-17
<PAGE>
connection with each additional registration statement to be filed hereunder or
under the Stock Agreement shall be paid by the Lender. For purposes of this
Agreement, "Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Section 7.06, including, without
limitation, (i) all SEC and stock exchange registration and filing fees, (ii)
all fees and expenses of complying with state securities or "Blue Sky" laws
(including fees and disbursements of counsel in connection with Blue Sky
qualifications of the Registrable Shares and determination of the eligibility
of the Registrable Shares for investment under the laws of such jurisdiction as
the Lender may indicate), (iii) all printing, messenger and delivery expenses,
(iv) all fees and expenses incurred in connection with the listing of
Registrable Shares on any exchange, and (v) the fees and disbursements of
counsel for the Borrower and of its independent public accountants, but
excluding underwriting discounts and commissions, brokerage fees, transfer
taxes, if any, fees and disbursements of counsel, accountants or other experts
or advisors to the Lender, and National Association of Securities Dealers Inc.
registration and filing fees.
SECTION 7.07 Expenses. The Borrower shall pay (i) all out-of-pocket expenses
of the Lender, including fees and disbursements of special counsel for the
Lender, in connection with the preparation of this Agreement, any waiver or
consent hereunder or any amendment hereof or any default or alleged default
hereunder and (ii) if an Event of Default occurs, or upon the occurrence of an
event that with notice or the lapse of time or both would constitute an Event
of Default, all out-of-pocket expenses incurred by the Lender, including fees
and disbursements of counsel, in connection with such actual or potential Event
of Default and collection, bankruptcy, insolvency and other enforcement
proceedings, actions or negotiations resulting therefrom. The Borrower shall
indemnify the Lender against any transfer taxes, documentary taxes, assessments
or charges made by any governmental authority by reason of the execution and
delivery to the Lender of this Agreement, or any Note.
SECTION 7.08 Prior Agreement. This Agreement and the Note issued hereunder
shall supersede in their entirety any prior negotiations, discussions,
understandings or arrangements between the Lender and the Borrower pertaining
to the subject matter of this Agreement.
SECTION 7.9 Governing Law. This Agreement and the Note shall be governed by,
and construed in accordance with, the laws of the State of Colorado.
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.
AMAX GOLD INC.
By /s/ Mark A. Lettes
-----------------------------
Title: Vice President & Chief
Financial Officer
ATTEST:
/s/ R. Craig Johnson
- - -------------------------------------
CYPRUS AMAX MINERALS COMPANY
By /s/ Francis J. Kane
-----------------------------
Title: Vice President Investor
Relations & Treasurer
ATTEST:
/s/ Philip C. Wolf
- - -------------------------------------
B-18
<PAGE>
EXHIBIT A
REVOLVING CREDIT NOTE
$100,000,000.00 Date: April , 1994
FOR VALUE RECEIVED, Amax Gold Inc., a Delaware corporation (the "Borrower"),
promises to pay to the order of Cyprus Amax Minerals Company, a Delaware
corporation (the "Lender") at the office of the Lender located at 9100 East
Mineral Circle, Englewood, Colorado 80112, or at such other place as the Lender
may direct in writing, in lawful money of the United States of America and in
immediately available funds, the principal amount of One Hundred Million
Dollars or, if less than such principal amount, the aggregate unpaid principal
amount of all Loans made by the Lender to the Borrower pursuant to Article I of
the Agreement referred to below in accordance with the respective Schedules
applicable to such Loans attached to and made part of this Note. All principal
amounts outstanding under this Note on April 30, 1997 shall be paid in twenty
equal quarterly installments in accordance with Section 1.06 of such Agreement;
provided, however, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount hereof; and, provided,
further, that the Lender, upon exercise of its Stock Purchase Option under
Article VI of such Agreement, may terminate or reduce the "Commitment", as
defined therein, whereupon such installments shall be due as of the date set
for closing such stock purchase pursuant to Section 6.01 of such Agreement.
The Borrower further promises to pay interest at said office in like money,
from the date hereof on the unpaid principal amount hereof outstanding from
time to time, at the rates and at the times set forth in Article I of such
Agreement. Notwithstanding anything contained herein to the contrary, at the
election of the Borrower the principal of this Note may be paid by the Borrower
in Preferred Stock of the Borrower in accordance with the provisions of Section
1.08 of the Agreement, subject to satisfaction of the conditions set forth in
Section 1.09 of such Agreement.
This Note is the Note referred to in Section 1.02 of the Revolving Credit
Agreement between the Borrower and the Lender dated as of April 15, 1994, as
the same may hereafter from time to time be amended or supplemented in
accordance with the terms thereof ("Agreement"), is entitled to the benefits
thereof and subject to the terms and conditions set forth therein (including,
without limitation, the Lender's rights to accelerate the due date hereof) and
may be paid and prepaid as provided therein.
Upon the occurrence of any of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note may be declared to be
or shall automatically become immediately due and payable as provided therein.
Amax Gold Inc.
By___________________________________
ATTEST:
-------------------------------------
Secretary
B-19
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS
MADE UNDER NOTE DATED APRIL , 1994,
FROM AMAX GOLD INC.*
TO CYPRUS AMAX MINERALS COMPANY
<TABLE>
<S> <C>
Principal Amount of the Initial Loan: $
Date of the Initial Loan:
Interest Rate for the Initial Loan:
</TABLE>
PRINCIPAL BORROWINGS
AND PAYMENTS OF THIS NOTE
<TABLE>
<CAPTION>
AMOUNT INTEREST PRINCIPAL UNPAID
DATE BORROWED RATE PAID PAID BALANCE
- - ---- -------- ---- -------- --------- -------
<S> <C> <C> <C> <C> <C>
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
</TABLE>
- - --------
* All terms used in this Schedule shall have the meanings given them in the
Agreement.
B-20
<PAGE>
APPENDIX C
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement dated as of April 15, 1994 among Amax Gold Inc., a
Delaware corporation ("AGI") and Cyprus Amax Minerals Company, a Delaware
corporation (the "Investor").
Whereas, the parties have previously entered into that certain letter
agreement dated February 11, 1994 as extended by a letter agreement dated March
7, 1994 (the "Commitment Letter") providing for, among other things, agreed
upon share purchase prices and the preparation of definitive documents to
implement the terms thereof;
Whereas, this Stock Purchase Agreement is one of the definitive documents
contemplated in the Commitment Letter that implements the agreement of the
parties therein;
Whereas, as of the date hereof, AGI is authorized by its Certificate of
Incorporation to issue capital stock consisting of 210,000,000 shares, of which
200,000,000 shares are shares of its Common Stock, par value $0.01 per share
(the "Common Stock"); and
Whereas, the Investor desires to purchase from AGI, and AGI desires to sell
to the Investor, 3,000,000 shares of Common Stock at a purchase price of $6.888
per share, as such price was established in the Commitment Letter;
Now Therefore, in consideration of the premises and of the mutual covenants
and agreements hereinafter set forth, the parties hereto agree, intending to be
legally bound, as follows:
1. Purchase of Subscription Shares. Subject to the terms and conditions
herein set forth, the Investor hereby subscribes for, and agrees to purchase,
and AGI agrees to issue and sell, 3,000,000 shares of Common Stock (the shares
of Common Stock subscribed for pursuant to this Agreement being collectively
referred to herein as the "Subscription Shares") at a purchase price of $6.888
per share.
2. Closing.
(a) The closing (the "Closing") of the purchase provided for in Section 1
shall take place at 10:00 a.m., Denver time, on the fifteenth (15th)
business day after the date upon which the Subscription Shares have been
accepted for listing by the New York Stock Exchange, or at such other date
and time as the parties may agree. The Closing shall occur at the offices
of the Investor, 9100 East Mineral Drive, Englewood, Colorado 80112. The
date and time of the Closing are referred to herein as the "Closing Date".
Should the Closing not occur on or before January 4, 1995, this Agreement
shall expire unless extended by mutual agreement.
(b) At the Closing, AGI will deliver to the Investor a certificate or
certificates evidencing the Subscription Shares purchased by the Investor,
registered in the Investor's name and bearing appropriate restrictive
legends, against delivery by the Investor to AGI of the total purchase
price of $20,664,000, which price shall be applied immediately by AGI to
reduce the indebtedness of AGI to the Investor under that certain demand
promissory note dated July 21, 1993 (the "AGI Note") with the payments
first to be applied against interest, if any, and then against principal.
At the Closing, the Investor will mark the AGI Note to evidence payment in
the amount of $20,664,000 against delivery by AGI to the Investor of
certificates evidencing the Subscription Shares.
(c) Each party shall bear its own expenses incurred in connection with
the transactions contemplated by this Agreement or otherwise associated
with the Closing.
3. Representations and Warranties of AGI. AGI represents and warrants that:
(a) AGI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. This Agreement has been
duly authorized, executed and delivered by AGI and is
C-1
<PAGE>
a valid and binding obligation of AGI, enforceable against AGI in
accordance with its terms subject only to the approvals that may be
required by the applicable stock exchange for the listing of the
Subscription Shares including, without limitation, the approval of a
majority of AGI's shareholders for the issuance of such Subscription
Shares, if so required as a consideration to such listing.
(b) When certificates evidencing the Subscription Shares have been
delivered against payment therefor as provided herein, such Subscription
Shares will be duly authorized, validly issued, fully paid and
nonassessable.
4. Purchase for Investment; Other Representations and Warranties of
Investor. The Investor represents and warrants that:
(a) This Agreement has been duly authorized, executed and delivered by
the Investor and is a valid and binding obligation of the Investor,
enforceable against the Investor in accordance with its terms.
(b) The Investor acknowledges that the offering and sale of the
Subscription Shares are intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"). In furtherance
thereof, the Investor represents and warrants to AGI that:
(i) The Investor is an accredited investor within the meaning of
Regulation D promulgated under the Securities Act ("Regulation D") and,
if there should be any change in such status prior to the Closing Date,
the Investor will immediately inform AGI of such change;
(ii) The Investor is aware of the merits and risks of an investment
in the Subscription Shares to be purchased pursuant hereto by the
Investor and, due to its knowledge and experience in financial and
business matters, is capable of evaluating, and has evaluated, the
merits and risks of such investment; and
(iii) The Investor has been given the opportunity to ask questions
of, and receive answers from, AGI concerning the terms and conditions
of the offering of the Subscription Shares to be purchased by the
Investor and other matters pertaining to an investment in the
Subscription Shares, and has been given the opportunity to obtain such
additional information necessary to evaluate the merits and risks of an
investment in the Subscription Shares to be purchased by the Investor
to the extent AGI possesses such information or can acquire it without
unreasonable effort or expense, and has not been furnished any offering
material in connection with the offering and purchase of the
Subscription Shares.
(c) The Investor has been advised that the Subscription Shares have not
been registered under the Securities Act, or any state securities or blue
sky laws and, therefore, cannot be resold unless they are registered under
such laws or unless an exemption from registration thereunder is available.
The Investor is purchasing the Subscription Shares for its own account for
investment, and not with a view to, or for resale in connection with, the
distribution thereof, and has no present intention of distributing or
reselling any of the Subscription Shares. In making the foregoing
representation, the Investor is aware that it must bear, and the Investor
is able to bear, the economic risk of such investment for an indefinite
period of time.
(d) The Investor acknowledges that AGI is entering into this Agreement in
reliance upon the Investor's representations and warranties in this
Agreement, including, without limitation, those set forth in this Section
4.
5. Demand Registration Rights. After issuance of the Subscription Shares, the
Investor may make one or more written requests to AGI (a "Demand") for
registration under and in accordance with the provisions of the Securities Act
of all or part (but not less than 1,000,000 shares per Demand) of the shares of
Common Stock issued to the Investor pursuant to this Agreement ("Registrable
Shares"). Each such request shall specify the aggregate number of Registrable
Shares proposed to be registered and the intended method of disposition
thereof.
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(ii) Upon receipt of a Demand, AGI shall use its best efforts to effect
such registration to permit the sale of Registrable Shares in accordance
with the intended method of disposition thereof and pursuant thereto, AGI
shall as expeditiously as possible:
(a) execute and deliver all such instruments and documents and do or
cause to be done all such other acts and things as may be necessary or,
in the opinion of the Investor, advisable to register such Registrable
Shares under the provisions of the Securities Act, and 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 which, in the opinion of the Investor, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the SEC applicable
thereto;
(b) use its best efforts to qualify the Registrable Shares under the
applicable state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Registrable
Shares, as requested by the Investor;
(c) make available to the Investor, as soon as practicable, an
earnings statement that will satisfy the provisions of Section 11(a) of
the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Registrable Shares or any part
thereof valid and binding and in compliance with applicable law.
(iii) If any such Demand is made at a time when the Investor directly or
indirectly owns less than five percent (5%) of the number of shares of
Common Stock outstanding, AGI may, if its Audit Committee of its Board of
Directors determines in the good faith exercise of its reasonable judgment
that it would be inadvisable to effect a demand registration, defer such
demand registration until the earliest practicable time at which such
demand registration can be reasonably effected, which period shall not
exceed three (3) months.
(iv) All Registration Expenses incurred in connection with the first
registration statement to be filed hereunder or under that certain
Revolving Credit Agreement between AGI and the Investor of even date
herewith (the "Credit Agreement") shall be paid by AGI. All Registration
Expenses incurred in connection with each additional registration statement
to be filed hereunder or under the Credit Agreement shall be paid by the
Investor. For purposes of this Agreement, "Registration Expenses" shall
mean any and all expenses incident to performance of or compliance with
this Section 5, including, without limitation, (i) all SEC and stock
exchange registration and filing fees, (ii) all fees and expenses of
complying with state securities or "Blue Sky" laws (including fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Shares and determination of the eligibility of the Registrable
Shares for investment under the laws of such jurisdiction as the Investor
may indicate), (iii) all printing, messenger and delivery expenses, (iv)
all fees and expenses incurred in connection with the listing of
Registrable Shares on any exchange, and (v) the fees and disbursements of
counsel for AGI and of its independent public accountants, but excluding
underwriting discounts and commissions, brokerage fees, transfer taxes, if
any, fees and disbursements of counsel, accountants or other experts or
advisors to the Investor, and National Association of Securities Dealers
Inc. registration and filing fees.
6. No Prior Offering of Common Stock. AGI agrees that neither it nor any
agent on its behalf will sell or offer, or attempt or offer to dispose of, any
shares of Common Stock to, or solicit any offers to buy any thereof from, or
otherwise approach or negotiate in respect thereof with, any person or persons
whomsoever (other than the Investor) so as to make it necessary in connection
with the sale and delivery hereunder of the Subscription Shares to the Investor
on the Closing Date to register such Subscription Shares under the Securities
Act.
7. Use of Proceeds. AGI covenants and agrees that it will use the net
proceeds received by it from the sale of the Subscription Shares to repay a
portion of the outstanding indebtedness owed by AGI to the Investor as set
forth in Section 2(b) hereof.
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8. Conditions to Obligations of the Investor. The Investor's obligations
hereunder are subject to the condition that, unless waived in writing by the
Investor the representations and warranties made by AGI in Section 3 shall be
true and correct at and as of the Closing Date as if made at such time.
9. Conditions to Obligations of AGI. AGI's obligations hereunder are subject
to the fulfillment, prior to or at the Closing Date, unless waived in writing
by AGI, of each of the following conditions:
(a) The representations and warranties made by the Investor in Section 4
shall be true and correct at and as of the Closing Date as if made at such
time.
(b) AGI and the Investor shall have executed and delivered that certain
Revolving Credit Agreement dated as of April 15, 1994, by and between AGI
and the Investor.
(c) A listing application for the shares to be issued hereunder shall be
accepted by the New York Stock Exchange and any other applicable exchange,
if necessary, and if so required as a condition to such listing, the
majority of the shareholders of AGI shall have approved the issuance of
such Subscription Shares, as to which acceptance and approvals AGI agrees
promptly to make all reasonable efforts to obtain.
10. Survival; Successors and Assigns. All agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the execution and delivery of this Agreement, the delivery to the
Investor of the Subscription Shares to be purchased pursuant hereto and the
payment therefor and, notwithstanding any investigation heretofore or hereafter
made by or on behalf of a party hereto, shall continue in full force and
effect. The rights and obligations of the Investor under this Agreement shall
not be assignable by the Investor without the prior written consent of AGI.
Nothing herein expressed or implied is intended to confer upon any person,
other than the parties hereto or their respective permitted assignees,
successors, heirs and legal representatives, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
11. Amendment and Modification. Subject to applicable law, this Agreement may
be amended, modified or supplemented only by written agreement of AGI and the
Investor.
12. Waiver of Compliance; Consents. The failure of any of the parties to
comply with any obligation, covenant, agreement or condition herein may be
waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver. Any such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
13. Notices. Any notice, request or other document to be given hereunder to
any party shall be effective upon receipt and shall be in writing and delivered
personally or sent by telecopy or certified mail, addressed to such address as
shall from time to time be designated in writing to the other by AGI or the
Investor, or until an address is so furnished, addressed to the address for
notices set forth on the signature pages hereof.
14. Entire Agreement. This Agreement, and the other agreements referred to
herein or expressly contemplated hereby, embody the entire agreement and
understanding between the Investor and AGI with respect to the purchase of
Subscription Shares by Investor contemplated hereby and supersede all prior
oral or written agreements, memoranda, understandings and undertakings among
the parties hereto relating to the subject matter hereof.
15. Construction. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado. The section headings
contained in this Agreement are for reference purposes and shall not affect in
any way the meaning or interpretation of this Agreement.
16. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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In Witness Whereof, the parties hereto have executed this Agreement or caused
it to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
Amax Gold Inc.
9100 East Mineral Drive
Englewood, Colorado 80112
/s/ Mark A. Lettes
By ____________________________________
Name:Mark A. Lettes
Title:Vice President & Chief
Financial Officer
Cyprus Amax Minerals Company
9100 East Mineral Drive
Englewood, Colorado 80112
/s/ Frank J. Kane
By ____________________________________
Name:Frank J. Kane
Title:Vice President Investor
Relations &
Treasurer
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