<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
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 (IRS Employer Identification No.)
incorporation or organization)
9100 EAST MINERAL CIRCLE,
ENGLEWOOD, COLORADO 80112
- ------------------------------------------- -----------------------------
(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 August 12, 1997 - 114,778,792
shares
Total Pages - 286
Exhibit Index Located on Pages 2-3
1
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The purported stockholder derivative action titled Harbor Finance
--------------
Partners V. Allen born, et al has been settled, pending approval of
-----------------------------
the Court of Chancery of Delaware. In connection with the settlement,
the number of shares of Common Stock issued by the Company in
connection with the Kubaka transaction was reduced by approximately
600,000.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
This Form 10-Q/A has been filed to amend Exhibits (10.2), (10.3),
(10.6) and (10.7) to add language contained in the original agreements
that was inadvertently omitted from the prior Form 10-Q filing.
(a) Exhibits
Exhibit Number Exhibit
-------------- -------
(10.1) Loan Agreement, dated as of May 1, 1997,
between Alaska Development Export Authority
and Fairbanks Gold Mining, Inc.;
Reimbursement Agreement, dated as of May 1,
1997, between Fairbanks Gold Mining, Inc. and
Union Bank of Switzerland, New York Branch;
Guaranty, dated May 22, 1997, of Cyprus Amax
in favor of Union Bank of Switzerland, New
York Branch; and Reimbursement Agreement,
dated May 22, 1997, of the Company in favor
of Cyprus Amax.
(10.2) Finance Agreement, dated as of June 30, 1995,
between Omolon and Overseas Private
Investment Corporation ("OPIC"); First
Amendment to Finance Agreement, dated as of
April 22, 1996, between Omolon Gold Mining
Company and OPIC, amending the Finance
Agreement dated June 30, 1995 between Omolon
and OPIC; and Second Amendment to Finance
Agreement, dated as of January 28, 1997,
between Omolon and OPIC, amending the Finance
Agreement dated June 30, 1995 between Omolon
and OPIC.
2
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(10.3) Loan Agreement, dated as of June 30, 1995,
between Omolon and European Bank for
Reconstruction and Development ("EBRD");
Amendment Agreement to Loan Agreement, dated
November 7, 1995, between Omolon and EBRD,
amending the Loan Agreement dated June 30,
1995 between Omolon and EBRD; Second
Amendment Agreement to Loan Agreement, dated
April 22, 1996, between Omolon and EBRD,
amending the Loan Agreement dated June 30,
1995 between Omolon and EBRD; and Third
Amendment to Loan Agreement, dated November
20, 1996, between Omolon and EBRD, amending
the Loan Agreement dated as of June 30, 1995
between Omolon and EBRD.
(10.4) Support Agreement, dated as of August 30,
1995, among Omolon, Cyprus Amax, Cyprus
Magadan Gold Corporation, EBRD and OPIC; and
Amendment Agreement to Support Agreement,
dated as of January 28, 1997 among Omolon,
Cyprus Amax, Cyprus Magadan Gold Corporation
and EBRD, amending the Support Agreement
dated as of August 30, 1995 among the
parties.
(10.5) Guaranty Agreement, dated as of August 30,
1995, among Cyprus Amax, EBRD and OPIC; and
Amendment Agreement to Cyprus Amax Guaranty,
dated January 30, 1997, among Cyprus Amax,
EBRD and OPIC, amending the Guaranty
Agreement dated as of August 30, 1995 among
the parties.
(10.6) Loan Agreement, dated as of November 29,
1996, between Omolon and ABN Amro Bank
(Moscow) Ltd.; and Guaranty and Indemnity
Agreement, dated as of November 26, 1996, by
Cyprus Amax in favor of ABN Amro Bank NV.
(10.7) Agreement, dated April 8, 1997, between
Omolon Gold Mining Company and ABN Amro Bank
(Moscow) Ltd.; and Guaranty and Indemnity
Agreements, dated as of April 1, 1997, by
Cyprus Amax in favor of ABN Amro Bank N.V.
(10.8) Third Amendment Agreement, dated as of March
24, 1997, among the Company, Fairbanks Gold
Mining, Inc., Guanaco Mining Company, Inc.,
Lassen Gold Mining, Inc., Melba Creek Mining,
Inc., Nevada Gold Mining, Inc. and a group of
banks, amending the Term Loan Agreement dated
October 31, 1995 among the parties.
(27) Financial Data Schedule
(b) Reports on Form 8-K - None
3
<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/ Leland O. Erdahl
----------------------------------
Leland O. Erdahl
Vice President and Chief Financial Officer
(principal accounting officer)
Dated: August 15, 1997
4
<PAGE>
[Execution Copy]
================================================================================
FINANCE AGREEMENT
between
OMOLON GOLD MINING COMPANY
and
OVERSEAS PRIVATE INVESTMENT CORPORATION
Dated as of 30 June 1995
OPIC-118-94-130-IG
================================================================================
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<TABLE>
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS, FINANCIAL CALCULATIONS, GOVERNING LAW..........................1
Section 1.01. General Definitions .............................................1
Section 1.02. Interpretation ..................................................24
Section 1.03. Financial Calculations ..........................................25
Section 1.04. English Language ................................................26
Section 1.05. Governing Law ...................................................26
ARTICLE II REPRESENTATIONS AND WARRANTIES ............................................26
Section 2.01. Project, Project Costs and Financing Plan .......................26
Section 2.02. Representations as to the Company ...............................27
Section 2.03. Representations as to the Financing and Project Agreements.......29
Section 2.04. Acknowledgement and Warranty ....................................31
ARTICLE III CREDIT FACILITY ..........................................................31
Section 3.01. Commitment ......................................................31
Section 3.02. Disbursement Limitations ........................................32
Section 3.03. Disbursement Procedure ..........................................33
Section 3.04. Interest ........................................................33
Section 3.05. Principal Repayment .............................................35
Section 3.06. Mandatory Prepayment ............................................36
Section 3.07. Voluntary Prepayment ............................................38
Section 3.08. Default Interest ................................................39
Section 3.09. Taxes ...........................................................41
Section 3.10. Cancellation of Commitment by Company ...........................41
Section 3.11. Fees ............................................................42
Section 3.12. Costs and Expenses ..............................................43
Section 3.13. Payments ........................................................44
Section 3.14. Insufficient Payments ...........................................45
Section 3.15. OPIC's Books and Records ........................................46
ARTICLE IV CONDITIONS OF DISBURSEMENT ................................................46
Section 4.01. Conditions of First Disbursement .......................................46
Section 4.02. Conditions for Any Disbursement ........................................51
</TABLE>
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ARTICLE V AFFIRMATIVE COVENANTS ......................................................53
Section 5.01. Project Implementation ..........................................53
Section 5.02. Maintenance and Conduct of Business .............................53
Section 5.03. Insurance .......................................................53
Section 5.04. Accounting ......................................................53
Section 5.05. continuing Governmental and Other Approvals .....................54
Section 5.06. Security ........................................................54
Section 5.07. Compliance with Other Obligations ...............................54
Section 5.08. Taxes; Stamp Duties .............................................54
Section 5.09. Project Agreements ..............................................55
Section 5 10. Offshore Bank Account ...........................................55
Section 5 11. Disbursement Subaccount .........................................55
Section 5 12. Sales and Revenue Subaccounts ...................................55
Section 5 13. Cash Collateral Subaccount ......................................58
Section 5 14. Russian Bank Accounts ...........................................58
Section 5 15. Debt Service Coverage Ratios ....................................59
Section 5.16. Further Documents ...............................................59
Section 5.17. [Reserved] ......................................................59
Section 5.18. Annual Budgets ..................................................59
Section 5.19. Furnishing of Information .......................................60
Section 5.20. Development Plan ................................................63
ARTICLE VI NEGATIVE COVENANTS ........................................................63
Section 6.01. Dividends .......................................................63
Section 6.02. Capital Expenditures ............................................64
Section 6.03. Leases ..........................................................64
Section 6.04. Indebtedness ....................................................64
Section 6.05. Liens ...........................................................65
Section 6.06. Hedging .........................................................66
Section 6.07. Arm's Length Transactions .......................................66
Section 6.08. Profit-Sharing and Management Arrangements ......................66
Section 6.09. Investments .....................................................66
Section 6.10. Changes in Business, Capital and Charter .......................67
Section 6.11. Prepayment of Long-term Debt ....................................67
Section 6.12. Sale of Assets; Merger ..........................................68
Section 6.13. Workers' Rights .................................................68
</TABLE>
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Omolon - iii - OPIC Finance Agreement
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ARTICLE VII EVENTS OF DEFAULT, JURISDICTION, ARBITRATION .............................68
Section 7.01. Events of Default ..............................................68
Section 7.02. Acceleration in Events of Default ..............................71
Section 7.03. Automatic Acceleration .........................................72
Section 7.04. Jurisdiction, Service of Process; Waiver of Jury ...............72
Section 7.05. Arbitration ....................................................74
Section 7.06. Waiver of Sovereign Immunity ...................................79
ARTICLE VIII MISCELLANEOUS ...........................................................79
Section 8.01. Term of Agreement; Survival ....................................79
Section 8.02. Entire Agreement; Amendment and Waiver .........................80
Section 8.03. Notices ........................................................80
Section 8.04. Certificate of Incumbency and Authority ........................81
Section 8.05. [Reserved] .....................................................81
Section 8.06. [Reserved] .....................................................81
Section 8.07. Rights, Remedies and Waivers ...................................81
Section 8.08. Indemnification ................................................82
Section 8.09. Severability ...................................................82
Section 8.10. [Reserved] .....................................................83
Section 8.11. [Reserved] .....................................................83
Section 8.13. Successors and Assigns .........................................83
Section 8.14. Counterparts ...................................................83
</TABLE>
Exhibits
Exhibit A Form of Disbursement Request
Exhibit B Form of Self Monitoring Questionnaire
<PAGE>
FINANCE AGREEMENT
FINANCE AGREEMENT, dated as of 30 June 1995 between:
THE CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY", a closed
joint stock company organized and existing under the laws of the
Russian Federation (the "Company"), and
OVERSEAS PRIVATE INVESTMENT CORPORATION, an agency of the United States
of America ("OPIC").
RECITALS
The Company intends to construct and operate the Project (as hereinafter
defined). To secure a portion of the financing for the Project, the Company has
requested that OPIC provide a credit facility to the Company in any amount up to
U.S. $52,500,000, pursuant to Section 234(b) of the Foreign Assistance Act of
1961, as amended, which OPIC is willing to to do on the terms and conditions set
forth herein.
Now, therefore, in consideration of the premises and the agreements
contained herein, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS, FINANCIAL CALCULATIONS, GOVERNING LAW
SECTION 1.01. GENERAL DEFINITIONS
Wherever used in this Agreement, including the Exhibits hereto, unless
the context otherwise requires, the following terms have the following meanings:
"Affiliate" means, with respect to any entity, any other
entity or Person, directly or indirectly,
controlling, controlled by, or under common
control with, such entity. For the purposes of
this definition, "control" (including, with
correlative meanings, the terms "controlled by"
and "under common control with"), as used with
respect to any entity, shall mean the
possession, directly or indirectly, of the power
to direct or cause the direction of the
management and policies of such entity, whether
through the ownership of voting shares or by
contract or otherwise.
<PAGE>
Omolon - 2 - OPIC Finance Agreement
"Agreement" means this Finance Agreement between OPIC and
the Company.
"Amax Gold" means Amax Gold, Inc., a corporation organized
and existing under the laws of the State of
Delaware.
"Application Documents" means the Preliminary Application for Financing
dated August 9, 1993, the Commitment Letter, and
the Sponsor Disclosure Report dated November 12,
1993.
"Association of
Native Peoples" means the Association of Northern Native Peoples
of the Severo-Evensk District.
"Auditors" means such firm of independent public
accountants as the Company may from time to time
appoint as auditors of the Company in accordance
with Section 5.04.
"Authorized Officer" means any officer of the Company designated in
writing by the Company pursuant to Section 8.04
as having been authorized to execute and deliver
this Agreement, the Financing Agreements,
Project Agreements, Disbursement Requests, and
any other notice, instrument, certificate, or
other document contemplated by this Agreement
and any other Financing Agreement.
"Banking Day" means a day that is both a British Banking Day
and a Business Day.
"Base Rate" means, with respect to the Tranche 2 Loan, the
rate set forth as the "Base Rate" in the Tranche
2 Note, and shall equal the interest rate on the
Tranche 2 Certificates of Participation (as
defined in the Funding Agreement).
"Blocked Account
Agreement" means a blocked account agreement to be entered
into among the Company, Roskomdragmet, Citibank,
NA, London Branch and such other parties as may
be agreed by OPIC , regarding the Roskomdragmet
Sales Subaccount, which agreement shall be as
contemplated by the Roskomdragrnet Agreement and
in form and substance satisfactory to OPIC.
"British Banking Day" means any day (other than a Saturday or Sunday)
on which commercial banks are not authorized or
required to close in London, England.
<PAGE>
Omolon - 3 - OPIC Finance Agreement
"Business Day" means any day (other than a Saturday or Sunday) on
which commercial banks are not authorized or
required to close in New York, New York.
"Cancellation Fee" has the meaning set forth in Section 3.11 (b).
"Cash Collateral means the subaccount of the Offshore Bank Account
Subaccount designated as such in accordance with Section 5.10.
Certficates of
Participation" has the meaning set forth in the Funding Agreement.
"Charter" means, in respect of any company, corporation,
partnership, governmental agency or other
enterprise, its founding act, articles of
incorporation and bylaws, memorandum and articles
of association, statute or similar instrument.
"Commitment" means, as of any day during the Commitment Period,
the amount of $52,500,000, less any Disbursements,
and less the portion thereof which has expired or
been canceled pursuant to this Agreement.
"Commitment Date" means June 27, 1994.
"Commitment Fee" has the meaning set forth in Section 3.11 (a).
"Commitment Letter" means the letter among the Company, Cyprus, and
OPIC dated as of June 27, 1994, as amended.
"Commitment Period" means the period commencing on the date of this
Agreement and terminating on the Commitment
Termination Date.
"Commitment Termination
Date" means the date of the first to occur of the
following:
(1) the first date on which the amount of all
Disbursements equals the Commitment;
(2) the cancellation or termination of the
Commitment by the Company or OPIC pursuant to this
Agreement;
(3) the fifth Disbursement Date with respect to
the Tranche 1 Commitment;
(4) the cancellation or termination of the EBRD
Commitment;
<PAGE>
Omolon - 4 - OPIC Finance Agreement
(5) the first Tranche 1 Repayment Date; or
(6) June 30, 2000.
"Construction Contract" means, collectively, such construction
management and engineering services contract to
be entered into between the Company and/or
Cyprus Magadan and the Contractor in connection
with the Project, which shall be in form and
substance satisfactory to OPIC.
"Contractor" means Davy International Canada Limited, a
corporation organized under the laws of the
Province of Ontario, Canada and a subsidiary of
Davy International, a division of Trafalgar
House, Inc., or such other Subsidiary of
Trafalgar House, Inc., as may be approved by
OPIC.
"Contract Pledge" means the instrument pursuant to which the
Company grants to the Project Lenders a security
interest in all of its rights, interests and
benefits under the Management Agreement, the
Construction Contract, the Supply Contracts, the
Marketing Agreements and the Reclamation
Agreement, and all performance bonds,
warranties, guaranties and undertakings issued
thereunder (including subcontractor's warranties
issued directly to the Company under the
Construction Contract), together with the
notices and acknowledgements and consents in the
forms attached thereto, which instrument shall
be substantially in the form of Schedule A to
the EBRD Loan Agreement.
"Covered Taxes" means all present and future Taxes now or at any
time hereafter levied or imposed by the
government of the Russian Federation or by any
department, agency, political subdivision or
taxing or other authority thereof or therein, or
by any organization of which the Russian
Federation is a member (or any successor of any
of them), or any other jurisdiction on or in
connection with the payment or repayment of any
or all principal, interest, or other amounts due
under this Agreement.
"Cyprus Amax" means Cyprus Amax Minerals Company, a
corporation organized and existing under the
laws of the State of Delaware.
"Cyprus Amax Guaranty" means the irrevocable guaranty to be entered
into by Cyprus Amax in favor of the Project
Lenders, which guaranty shall be substantially
in the form of Schedule B to the EBRD Loan
Agreement.
<PAGE>
Omolon - 5 - OPIC Finance Agreement
"Cyprus Gold" means Cyprus Gold Company, a corporation
organized and existing under the laws of the
State of Delaware.
"Cyprus Magadan" means Cyprus Magadan Gold Corporation, a
corporation organized and existing under the
laws of the State of Delaware.
"Cyprus Magadan
Guaranty" means the irrevocable guaranty to be entered
into by Cyprus Magadan in favor of the Project
Lenders, which guaranty shall be substantially
in the form of Schedule C to the EBRD Loan
Agreement.
"Cyprus Magadan
Share Pledge" means the agreement to be entered into pursuant
to which Cyprus Gold pledges in favor of the
Project Lenders all of the issued and
outstanding shares of Cyprus Magadan, which
agreement shall be substantially in the form of
Schedule D to the EBRD Loan Agreement.
"Cyprus Support
Agreement" means the Project support agreement to be
entered into among the Company, Cyprus Amax,
Cyprus Magadan and the Project Lenders, which
agreement shall be substantially in the form of
Schedule E to the EBRD Loan Agreement.
"Debt" means the aggregate (as of the date of
calculation) of all obligations of the Company
then outstanding for the payment or repayment of
money including, without limitation:
(a) any amounts payable by the Company under
leases or similar arrangements over their
respective periods;
(b) any credit to the Company from a supplier of
goods or under any instalment purchase or other
similar arrangement; and
(c) the aggregate amount then outstanding of
liabilities and obligations of third parties
to the extent that they are guaranteed by
the Company.
"Default Interest Rate" means the interest rate applicable to amounts
overdue under this Agreement, as determined in
accordance with Section 3.08.
"Development Plan" means the development plan for the Project
approved by the Project Lenders in accordance
with Section 5.20, as such development plan may
be amended from time to time in accordance with
the requirements of Section 6.10(a).
<PAGE>
Omolon - 6 - OPIC Finance Agreement
"Disbursement" means any amount of the Loan which is disbursed
from time to time.
"Disbursement Date" means any date on which a Disbursement is made.
"Disbursement Request" means a document in the form of Exhibit A and
otherwise in form and content satisfactory to
OPIC.
"Disbursement Subaccount" means the subaccount of the Offshore Bank
Account designated as such in accordance with
Section 5.10.
"Discount Rate" means, for each calendar year, the weighted
average (expressed as a rate per annum) of all
interest charges which are projected (on the
basis of the Financial Model) to be applicable
to all amounts of the Tranche 1 Loan and the
EBRD Tranche I Loan outstanding from time to
time during such calendar year.
"Dollars" or "$" means the lawful currency of the United States
of America.
"Dukat" means Dukatsky Mining and Beneficiation Complex.
"EBRD" means European Bank for Reconstruction and
Development.
"EBRD Commitment" means the obligation of EBRD to make
disbursements of the EBRD Loan during the EBRD
Commitment Period in accordance with the EBRD
Loan Agreement.
"EBRD Commitment
Period" means "Commitment Period" as defined in the EBRD
Loan Agreement.
"EBRD Loan" means, collectively, the EBRD Tranche 1 Loan and
the EBRD Tranche 2 Loan or, as the context may
require, the aggregate of the principal mounts
thereof from time to time outstanding.
"EBRD Loan Agreement" means the Loan Agreement dated as of the date
hereof between the Company and EBRD.
"EBRD's Proportionate
Share" means, with respect to any amount as of any date
of calculation, a percentage of such amount
(calculated to the nearest 100th of a percent)
calculated as follows:
EPS = B/(A+B)
<PAGE>
Omolon - 7 - OPIC Finance Agreement
where
EPS = EBRD's Proportionate Share,
A = the outstanding principal balance of the
Loan, and
B = the outstanding principal balance of the
EBRD Loan.
"EBRD Tranche 1 Loan" means the loan specified in Section 3.01(a) of
the EBRD Loan Agreement or, as the context may
require, the principal amount thereof from time
to time outstanding.
"EBRD Tranche 2 Loan" means the loan specified in Section 3.01(b) of
the EBRD Loan Agreement or, as the context may
require, the principal amount thereof from time
to time outstanding.
"Elektrum" means Elektrum Limited Liability Company.
"Enterprise Mortgage" means a mortgage in favor of the Project Lenders
over all of the equipment, assets and property
of the Company, which mortgage shall be
substantially in the form of Schedule F to the
EBRD Loan Agreement.
"Environmental Standards" means the environmental performance criteria,
standards, practices and procedures for the
Project set forth in Schedule G to the EBRD Loan
Agreement, as amended by the Company from time
to time with the prior written approval of OPIC
(such approval not to be unreasonably withheld).
"Equipment Pledge" means the instrument pursuant to which the
Company grants to the Project Lenders a security
interest in all of the Company's equipment and
other tangible movable assets, which instrument
shall be substantially in the form of Schedule H
to the EBRD Loan Agreement.
"Evenskoye Field" means the Evenskoye gold and silver field
located in the Magadan Region of the Russian
Federation as described in Section 2.1 of the
License Agreement.
"Event of Default" means any one of the events specified in Section
7.01.
"Excess Cash Flow" means, for any period, the Gross Revenues during
such period less the sum of (a) all amounts paid
out of the Revenue Subaccount during such period
in accordance with Sections 5.12(d)(1) through
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Omolon - 8 - OPIC Finance Agreement
<S> <C>
5.12(d)(6), and (b) reasonable and prudent reserves
established during such period in respect of
contingent liabilities.
"Export Sales Subaccount" means the subaccount of the Offshore Bank Account
designated as such in accordance with Section 5.10.
"Facility Fee" has the meaning set forth in Section 3.11(c).
"Fees" means the Commitment Fee, Cancellation Fee, and the
Facility Fee.
"Financial Model" means the financial model agreed by the Company and
used by OPIC to prepare the financial projections
for the Project, as amended from time to time
pursuant to the provisions of Schedule I to the
EBRD Loan Agreement.
"Financial Statements" means the unconsolidated financial statements of
the Company prepared in a manner consistent with
its books of account and in accordance with
Generally Accepted Accounting Principles in the
United States.
"Financial Year" means the accounting year of the Company commencing
each year on 1 January and ending on the following
31 December, or such other accounting period of the
Company as the Company may, with OPIC's consent,
from time to time designate as the accounting year
of the Company.
"Financing Agreements" means this Agreement, the EBRD Loan Agreement, the
Notes, the Application Documents, the Disbursement
Requests, the EBRD Loan disbursement applications,
the promissory notes issued under the EBRD Loan
Agreement, the Cyprus Magadan Guaranty, the Cyprus
Amax Guaranty, the Security Documents, the Security
Sharing Agreement, the Cyprus Support Agreement,
the Russian Shareholders Support Agreement, the
Funding Documents, the Letter of Credit, and any
other agreements entered into by the parties hereto
in connection with this Agreement or the
transactions contemplated hereby, and, in the
singular, means any one of such agreements.
"Financing Plan" means the financing plan set out in Section
2.01(c).
"Force Majeure Event" means an event which is not within the reasonable
control of the Company and that has a material
adverse effect on the ability of the Company to
construct the Project or to mine, produce, process,
transport or market ore or dore as contemplated by
the Development Plan, including;
</TABLE>
<PAGE>
Omolon - 9 - OPIC Finance Agreement
(a) fire, landslide, earthquake, adverse weather
conditions or other acts of God;
(b) explosion, breakage or accident to Project
equipment and facilities;
(c) strikes (excluding, for the avoidance of
doubt, any strike or series of related strikes,
to the extent that the duration of such strike
or series of related strikes is in excess of 30
days, by employees of the Company, the
Contractor or any subcontractor relating solely
to disputes with management of the Company, the
Contractor or such subcontractor and not to the
mining sector generally or other matters); or
(d) political events, shortages of material or
labor resulting directly from control or
diversion by the Russian government, embargo or
terrorism.
"Foundation Agreement" means the foundation agreement on establishment
of the Company dated 26 February 1993, as
amended by a first amendment and supplemental
agreement with respect to the foundation
agreement on establishment of the Company dated
4 September 1993, a second amendment to the
foundation agreement on the establishment of the
Company and the charter of the Company dated I 0
January 1994, and a third amendment to the
foundation agreement on the establishment of the
Company and the charter of the Company dated 24
March 1995 and a fourth amendment agreement to
the foundation agreement on the establishment of
the Company and the charter of the Company to be
entered into in form and substance satisfactory
to OPIC.
"Funding Agreement" means the Funding and OPIC Guaranty Agreement to
be entered into among the Company, OPIC, and the
Paying Agent, which shall be in form and
substance satisfactory to OPIC.
"Funding Documents" means:
(1) the Funding Agreement;
(2) the Purchase Contract (as defined in the
Funding Agreement);
(3) the Placement and Remarketing Agreement (as
defined in the Funding Agreement);
<PAGE>
Omolon - 10 - OPIC Finance Agreement
(4) the Liquidity Facility (as defined in the
Funding Agreement); and
(5) all other agreements, documents, and
instruments required in connection with the
funding of the Loan.
"Future Net Income" means, for any period, the projected Gross
Revenues expected to be realized by the Company
during such period less the sum of the Operating
Costs payable in currencies other than Roubles
which are projected for such period, all in
accordance with the Financial Model.
"Generally Accepted
Accounting Principles" means accounting principles generally accepted
in the United States consistently applied.
"Geometal" means Geometal Joint Stock Gold-Mining Company.
"Goods Pledge" means the instrument pursuant to which the
Company grants to the Project Lenders a security
interest in all of the Company's gold, silver
and dore, and all receivables, receipts and
proceeds from the sale or transfer thereof,
which instrument shall be substantially in the
form of Schedule J to the EBRD Loan Agreement.
"Gross Revenues" means, for any period, the Company's gross
revenues in freely convertible currencies other
than Roubles from all sources during such period
(including, without limitation, all revenues
from the sale of dore, the proceeds of any
insurance or other claim with respect to delay
in completion, business interruption or loss or
destruction of gold or dore and all refunds of
taxes, but excluding interest earned on the
Offshore Bank Account or the Russian Bank
Accounts) which are received in the Revenue
Subaccount and are not subject to mandatory
conversion into Roubles or, at such time,
transfer to the Russian Federation.
"Guaranteed Portion" means, at any time with respect to any amount
payable under this Agreement:
(a) prior to the Project Completion Date, 100%
of such amount; and
(b) thereafter, in the case of any amount other
than the principal amount of the Tranche 2 Loan
and interest accruing thereon after the Project
Completion Date, the portion of such
<PAGE>
Omolon - 11 - OPIC Finance Agreement
amount which is, at such time, guaranteed by
Cyprus Magadan pursuant to the Cyprus Magadan
Guaranty.
"Immovables Mortgage" means a mortgage in favor of the Project
Lenders over all of the Company's immovable
property, which mortgage shall be substantially
in the form of Schedule K to the EBRD Loan
Agreement.
"Indebtedness" means, in regard to any person:
(a) all indebtedness of such Person for
borrowed money or arising out of any credit
facility or financial accommodation or for the
deferred purchase price of property or
services;
(b) all guarantees of such Person (or other
obligations of such Person which are the
economic equivalent of a guarantee, including
without limitation any obligation of such
Person to purchase, to provide funds for
payment, to supply funds to or otherwise to
invest in any other Person) in respect of the
indebtedness of any other Person for borrowed
money or arising out of any credit facility or
financial accommodation or for the deferred
purchase price of property or services;
(c) all indebtedness or other obligations of
any other Person for borrowed money or arising
out of any credit facility or financial
accommodation or for the deferred purchase
price of property or services secured by (or
for which the holder of such indebtedness has
an existing fight, contingent or otherwise, to
be secured by) any Lien upon property
(including without limitation accounts
receivable and contract rights) owned by such
Person, whether or not such Person has assumed
or become liable for the payment of such
indebtedness or obligations; and
(d) obligations of such Person in respect of
any lease of goods (or property which, if not
affixed to realty, would be personalty) by such
Person which under Generally Accepted
Accounting Principles would be required to be
capitalized on the balance sheet of such
Person.
"Independent Engineer" means Pincock Allen & Holt Inc. or such other
firm of engineers as may be selected from time
to time by the Project Lenders after
consultation with the Company, and any
subcontractors of such engineer.
"Insurance Assignment" means the assignment pursuant to which the
Company assigns to the Project Lenders all of
its rights, interests and benefits under all
<PAGE>
Omolon - 12 - OPIC Finance Agreement
insurance maintained by the Company and all other
insurance relating to the design, construction,
operation and maintenance of the Project, together
with the notices and acknowledgements and consents
in the forms attached thereto (or in such other
forms as may be approved by OPIC), which assignment
shall be substantially in the form of Schedule L to
the EBRD Loan Agreement.
"Interest Payment Date" means any day which is 15 June or 15 December in
any year; provided, however, that, if any Interest
Payment Date would fall on a day which is not a
Business Day, such Interest Payment Date shall be
changed to the next succeeding Business Day.
"Interest Period" means each period commencing on an Interest Payment
Date to but excluding the next following Interest
Payment Date, except in the case of the first
Interest Period applicable to the first
Disbursement when it shall have the following
meaning:
(1) if such disbursement is made at least 15
Business Days prior to the next Interest Payment
Date, the period commencing on the date on which
such Disbursement is made to but excluding the next
Interest Payment Date, and
(2) if such disbursement is made less than 15
Business Days prior to the next Interest Payment
Date, the period commencing on the date on which
such Disbursement is made to but excluding the
Interest Payment Date succeeding the next Interest
Payment Date.
"Interest Rate" means, in respect of the Tranche 1 Loan, the
Tranche 1 Interest Rate, and in respect of the
Tranche 2 Loan, the Tranche 2 Interest Rate.
"Issuing Instructions" has the meaning set forth in the Funding Agreement.
"Kubaka Field" means the Kubaka gold and silver field located in
the Magadan Region of the Russian Federation
approximately 600 miles north-northeast of the City
of Magadan, as described in Section 2.1 of the
License Agreement.
"Letter of Credit" means an irrevocable "evergreen" standby letter of
credit, substantially in the form of Schedule M,
issued in accordance with paragraph l(b)(1) of
Schedule Q to the EBRD Loan Agreement in favor of
OPIC and EBRD by a financial institution acceptable
to OPIC in a face amount not to exceed $2,500,000
securing principal and interest payable by the
Company under this Agreement and the EBRD Loan
Agreement.
<PAGE>
Omolon - 13 - OPIC Finance Agreement
"License" means the license for the right to use the
subsurface, series MAG, number 10141, license
type AC, issued to the Company by the Committee
of the Russian Federation for Geology and Use of
the Subsurface and the Magadan Regional Soviet
of People's Deputies, including all annexes
thereto, as amended by an amendment dated 24
March 1995 among the Magadan Oblast Duma, the
Committee of the Russian Federation for Geology
and Use of the Subsurface and the Company.
"License Agreement" means the license agreement between the Magadan
Oblast Duma (as successor to the Magadan
Regional Soviet of People's Deputies) and the
Committee of the Russian Federation for Geology
and Use of the Subsurface and the Company, which
is attached as Annex 1 to the License.
"Lien" means any mortgage, pledge, charge, privilege,
priority, hypothecation, encumbrance,
assignment, lien, attachment, set-off or other
security interest of any kind upon or with
respect to, or any segregation of or other
preferential arrangement with respect to, any
present or future assets, revenues or rights,
including, without limitation, any designation
of loss payees or beneficiaries or any similar
arrangement under any insurance policy.
"Loan" means, collectively, the Tranche 1 Loan and the
Tranche 2 Loan or, as the context may require,
the aggregate of the principal amounts thereof
from time to time outstanding.
"Loan Life Debt Service
Coverage Ratio" means, on any date, (a) the net present value,
discounted at the Discount Rate, of all Future
Net Income for the period from such date to 15
June 2001, divided by (b) the aggregate
principal amount of the Tranche 1 Loan and the
EBRD Tranche 1 Loan outstanding on such date
less the sum of the amount on deposit in the
Cash Collateral Subaccount and the face amount
of the Letter of Credit (if any) on such date.
"Long-term Debt" means the aggregate (as of the date of
calculation) of all those component parts of the
Debt which fall due or whose final payment is
due more than one year after such date of
calculation.
"Make-Whole Premium" has the meaning set forth therefor in the
Tranche 2 Note.
"Management Agreement" means the amended and restated management,
technical and other services agreement dated as
of April 13, 1995 between Cyprus Magadan and the
Company.
<PAGE>
Omolon - 14 - OPIC Finance Agreement
"Marketing Agreements" means, collectively, the Roskomdragmet
Agreement, the Rosvneshtorgbank Agreement and
any other marketing, sales or dore
transportation agreements entered into by the
Company in accordance with the terms of this
Agreement, and, in the singular, means any one
of such agreements.
"Material Adverse Effect" means a material adverse effect on:
(1) the Project, including without limitation
the projected costs of construction of the
Project in accordance with the Development Plan
(to the extent that funding of such costs has
not been committed) or the projected costs of
operation or maintenance of the Project in
accordance with the Development Plan;
(2) the business, operations or condition of the
Company, Cyprus Amax or Cyprus Magadan;
(3) the ability of any party to any Financing
Agreement or Project Agreement to timely perform
its obligations thereunder in full in accordance
with the terms thereof;
(4) the validity or enforceability of any
Financing Agreement or Project Agreement or the
rights or remedies of either Project Lender
thereunder; or
(5) the Security;
provided that a reduction in the market price
of gold shall not, by itself, be considered to
have a Material Adverse Effect unless the
average market price of gold over the preceding
30 days falls below $275 per ounce.
"Memorandum of
Understanding" means the protocol of the meeting on the Kubaka
project development held in Anchorage, Alaska on
20 and 21 November 1994.
"Note(s)" Tranche 1 Notes (in the case of the Tranche 1
Loan) and Tranche 2 Notes (in the case of the
Tranche 2 Loan), evidencing the indebtedness of
the Company to OPIC resulting from a
Disbursement, or any promissory note issued by
the Company at the request of OPIC in extension,
renewal or substitution therefor.
"Offshore Account Pledge" means, collectively, the instruments pursuant to
which the Company grants to the Project Lenders
a security interest in the
<PAGE>
Omolon - 15 - OPIC Finance Agreement
Company's right, title and interest in and to the
Offshore Bank Account, including the account
agreement among the Company, Citibank, N.A., London
Branch and Moscow Narodny Bank Limited relating
thereto, together with the notices and
acknowledgements and consents in the forms attached
thereto, which instruments shall be substantially
in the form of Schedule O to the EBRD Loan
Agreement.
"Offshore Bank Account" has the meaning given to it in Section 5.10.
"Offshore Bank Account
Agreement" means the accounts agreement to be entered into
among the Company, Citibank, N.A., London Branch
and Moscow Narodny Bank Limited relating to the
Offshore Bank Account, which agreement shall be in
form and substance satisfactory to OPIC.
"Omolon Share Pledge" means, collectively, the instruments pursuant to
which the Shareholders pledge in favor of the
Project Lenders all of the issued and outstanding
shares of the Company, which instrument shall be
substantially in the form of Schedule P to the EBRD
Loan Agreement.
"Operating Costs" means:
(a) all costs and expenses (including capital
expenditures) incurred by the Company in operating
and maintaining the Project, including
transportation costs, reimbursement at cost for
goods and services procured by Cyprus Amax or its
Affiliates on behalf of the Company from
unaffiliated entities on an arm's length basis and
an amount not to exceed (unless otherwise approved
by OPIC, such approval not to be unreasonably
withheld) $500,000 (or the equivalent thereof in
other currencies at then current rates of exchange)
per year in properly documented travel and other
reimbursable expenses payable to Cyprus Magadan
under the Management Agreement;
(b) all license fees paid by the Company under the
License;
(c) insurance premiums paid by the Company in
maintaining any of the insurance required by this
Agreement;
(d) administrative overhead expenses incurred by
the Company from time to time, including
engineering, data processing, accounting, legal and
purchasing costs and charges, which are
attributable to the Project, but excluding any such
amount in respect of which the Company is entitled
to be
<PAGE>
Omolon - 16 - OPIC Finance Agreement
reimbursed by any Person (until such mount is
converted on the accounts of the Company to a loss
following non-payment);
(e) any fees payable by the Company to the banks at
which the Offshore Bank Account and the Russian
Bank Accounts are located and to any security
trustee with respect to such accounts;
(f) any fees, commissions, charges, costs and
expenses due and payable pursuant to this
Agreement, the EBRD Loan Agreement and the other
Financing Agreements to either Project Lender,
including the fees and expenses of the Independent
Engineer and OPIC's insurance and environmental
consultants; and
(g) all taxes, rates, charges, assessment, duties
and tariffs which at any time are imposed or
assessed on the Company or its income, profits,
revenues, imports of goods and services,
production, sales or exports;
but excluding, for the avoidance of doubt,
depreciation, amortization and other non-cash
items, costs met from insurance proceeds not
required to be reflected in the Company's financial
accounts under Generally Accepted Accounting
Principles in the United States, management fees,
reimbursable expenses in excess of the amount
referred to in (a) above and other amounts payable
to Cyprus Magadan or any Affiliate of Cyprus
Magadan under the Management Agreement or otherwise
except to the extent referred to in (a) above,
principal and interest due and payable under this
Agreement or the EBRD Loan Agreement and any
insurance premiums payable to OPIC.
"OPIC Prepayment
Premium" has the meaning set forth in Section 3.07(b).
"OPIC's Proportionate
Share" means, with respect to any amount as of any date of
calculation, a percentage of such amount
(calculated to the nearest 100th of a percent)
calculated as follows:
OPS = A/(A+B)
where
<PAGE>
Omolon - 17 - OPIC Finance Agreement
OPS = OPIC's Proportionate Share,
A = the outstanding principal balance of the
Loan, and
B = the outstanding principal balance of the
EBRD Loan.
"Paying Agent" means Chemical Bank, a New York banking
corporation, or any successor or successors
thereto as "Paying Agent" under the Funding
Agreement.
"Permitted Liens" means the Liens set forth in Sections 6.05(1),
6.05(2), 6.05(3) and 6.05(4).
"Person" means any individual, partnership, company,
corporation, joint venture, governmental body,
trust, unincorporated organization, or any other
entity.
"Placement and
Remarketing Agent" has the meaning set forth in the Funding
Documents.
"Potential Event of Default" means any event which, with lapse of time or
notice and lapse of time as specified in Section
7.01, may become an Event of Default.
"Pre-Completion
Spread" means 3.25% per annum.
"Prepayment Premium" means any OPIC Prepayment Prepayment plus any
Make-Whole Premium.
"Process Agent(s)" has the meaning set forth in Section 7.04(b).
"Project" means the commercial development of the Kubaka
Field, containing proven and probable
recoverable reserves of approximately 2,200,000
ounces of gold and 1,700,000 ounces of silver to
be produced during a mine life of approximately
7 years, providing for open pit mining of the
ore and processing, at a rate of 1,750 tons per
day, of the ore into "dore" (an alloy of gold
and silver produced from initial melting) which
will be sold by the Company for further refining
into gold and silver, as further described in
the Development Plan.
"Project Agreements" means the License (including the License
Agreement), the Construction Contract, the
Management Agreement, the
<PAGE>
Omolon - 18 - OPIC Finance Agreement
Memorandum of Understanding, the Marketing
Agreements, the Offshore Bank Account Agreement,
the Blocked Account Agreement, the Russian
Blocked Account Agreement, the Reclamation
Agreement, the Foundation Agreement and the
Company's Charter, and, in the singular, means
any one of such agreements.
"Project Completion" has the meaning given to it in Schedule Q to the
EBRD Loan Agreement
"Project Completion Date" means the date on which OPIC and EBRD have
jointly delivered to the Company a written
notice stating that they are satisfied that
Project Completion has occurred.
"Project Costs" means costs incurred by the Company in
connection with the design and construction of
the Project, including interest, commitment
charge and other financing costs payable by the
Company under this Agreement and the EBRD Loan
Agreement during design and construction of the
Project, Operating Costs incurred by the Company
during construction of the Project and insurance
premiums payable to OPIC during construction of
the Project, as such costs are estimated in
Section 2.01(b).
"Project Lenders" means, collectively, OPIC and EBRD.
"Qualified Political Event" has the meaning given to it in the Cyprus
Magadan Guaranty.
"Rate Period" means, with respect to the Tranche 1 Loan, the
period during which the Treasury Rate and
Tranche 1 Funding Spread components of the
Tranche 1 Interest Rate will remain in effect as
set forth in Section 3.04(e)(1).
"Reclamation Agreement" means an agreement between the Company and
Cyprus Amax, Cyprus Magadan and the Russian
Shareholders, substantially in the form of
Schedule R to the EBRD Loan Agreement.
"Repayment Date(s)" means each of the Tranche 1 Repayment Dates and
the Tranche 2 Repayment Date.
"Retrospective Debt
Service Coverage Ratio" means, for any Interest Period, the result
obtained by dividing:
(x) the Gross Revenues for such Interest Period
less the sum of the Operating Costs payable in
currencies other than Roubles during such
Interest Period
<PAGE>
Omolon - 19 - OPIC Finance Agreement
by
(y) the sum of all principal and interest due
and payable in respect of the Tranche 1 Loan and
the EBRD Tranche 1 Loan at the end of such
Interest Period.
"Revenue Subaccount" means the subaccount of the Offshore Bank
Account designated as such in accordance with
Section 5.10.
"Roskomdragrnet" means the Committee of the Russian Federation
for Precious Metals and Precious Stones.
"Roskomdragmet
Agreement" means the purchase-sales contract dated 29 May
1995 between the Company and Roskomdragmet.
"Roskomdragmet Sales
Subaccount" means the subaccount of the Offshore Bank
Account designated as such in accordance with
Section 5.10.
"Rosvneshtorgbank" means the Bank for Foreign Trade of Russia, an
authorized Russian bank.
"Rosvneshtorghank
Agreement" means the agency agreement dated 9 June 1995
between the Company and Rosvneshtorgbank.
"Roubles" or "Rb." means the lawful currency of the Russian
Federation.
"Russian Account Pledge" means the instrument pursuant to which the
Company grants to the Project Lenders a security
interest in the Company's right, title and
interest in and to the Russian Bank Accounts,
together with the notices and acknowledgements
and consents in the forms attached thereto,
which instrument shall be substantially in the
form of Schedule S to the EBRD Loan Agreement.
"Russian Bank Accounts" has the meaning given to it in Section 5.14.
"Russian Blocked
Account Agreement" means the Russian blocked account agreement to
he entered into among the Company, Roskomdragmet
and Citibank T/O regarding the Russian Bank
Account into which sales proceeds in Roubles
under the Roskomdragmet Agreement are to be
paid, which agreement shall be as contemplated
by the Roskomdragmet Agreement and in form and
substance satisfactory to OPIC.
<PAGE>
Omolon - 20 - OPIC Finance Agreement
"Russian Shareholders" means, collectively, the Association of Native
Peoples, Geometal, Dukat, Magadan Gold, Elektrum
and Rossiisky Kredit Commercial Bank.
"Russian Shareholders
Support Agreement" means the Project support agreement to be entered
into among the Company, the Russian Shareholders
and the Project Lenders, which agreement shall be
substantially in the form of Schedule T to the EBRD
Loan Agreement.
"Security" means the security created in favor of the Project
Lenders by the Company over all of its assets, by
the Shareholders over all of their shares in the
Company and by Cyprus Gold over all of its shares
in Cyprus Magadan to secure all amounts owing by
the Company to the Project Lenders under this
Agreement, the EBRD Loan Agreement and the other
Financing Agreements.
"Security Documents" means the Contract Pledge, the Cyprus Magadan Share
Pledge, the Enterprise Mortgage, the Equipment
Pledge, the Goods Pledge, the Immovables Mortgage,
the Insurance Assignment, the Offshore Account
Pledge, the Omolon Share Pledge and the Russian
Account Pledge, and, in the singular, means any one
of such documents.
"Security Sharing
Agreement" means the security sharing agreement to be entered
into between the Project Lenders providing for,
inter alia, the sharing of the Security between the
Project Lenders, which agreement shall be
substantially in the form of Schedule U to the EBRD
Loan Agreement.
"Self-Monitoring
Questionnaire" means the Annual Self-Monitoring Questionnaire
attached hereto as Exhibit B, as the same may be
revised and supplemented by OPIC from time to time.
"Shareholder Distribution" means any payment or transfer from the Offshore
Bank Account or the Russian Bank Accounts for any
purpose other than (a) a payment to OPIC or EBRD
pursuant to this Agreement, the EBRD Loan Agreement
or any other Financing Agreement, and (b) a payment
of Project Costs or Operating Costs in accordance
with the Development Plan or as otherwise approved
by OPIC.
"Shareholders" means, collectively, the Russian Shareholders and
Cyprus Magadan (and "Shareholder" means any one of
them).
<PAGE>
Omolon - 21 - OPIC Finance Agreement
"Short-term Debt" means all Debt (as of the date of calculation)
other than the Long-term Debt.
"Subordinated
Shareholder Loans" means Debt of the Company owing to any
Shareholder and which is subordinated to the
payment of all mounts payable under this
Agreement and the EBRD Loan Agreement pursuant
to the Cyprus Support Agreement or the Russian
Shareholders Support Agreement.
"Subsidiary" means, with respect to any entity, any other
entity over 50% of whose capital is owned,
directly or indirectly, by the entity or which
is otherwise effectively controlled by the
entity.
"Taxes" means all taxes, levies, imposts, stamps,
duties, fees, assessments, deductions,
withholdings, and other governmental charges,
and all liabilities with respect thereto.
"Tranche 1 Commitment" has the meaning set forth in Section 3.01(a).
"Tranche 1 Day Count
Fraction" means 365 or 366-day year, as the case may be,
and the actual number of days elapsed.
"Tranche 1 Funding
Spread" means the number of basis points from time to
time in excess of or less than the Treasury
Rate, as established by the Placement and
Remarketing Agent in accordance with the Funding
Documents, that is required to effect the
placement or remarketing of the Certificates of
Participation with respect to the Tranche 1
Loan.
"Tranche 1 Interest Rate" means, with respect to the Tranche 1 Loan, the
Tranche 1 Pre-Completion Interest Rate and the
Tranche 1 Post-Completion Interest Rate.
"Tranche 1 Loan" means the principal amount from time to time
outstanding with respect to the Tranche 1
Commitment.
"Tranche 1 Note" means a promissory note in the form of Exhibit A
to the Funding Agreement, duly executed by two
Authorized Officers of the Company.
"Tranche 1 Post-Completion
Interest Rate" has the meaning set forth in Section 3.04(b).
"Tranche 1 Post-Completion
<PAGE>
Omolon - 22 - OPIC Finance Agreement
Spread" means:
(a) with respect to the Guaranteed Portion of
the Tranche 1 Loan, 3.25% per annum; and
(b) with respect to the Unguaranteed Portion
of the Tranche 1 Loan, 4.25%per annum.
"Tranche 1 Pre-Completion
Interest Rate" has the meaning set forth in Section 3.04(b).
"Tranche 1 Principal
Installment(s)" has the meaning set forth in Section 3.05(a).
"Tranche 1 Repayment
Date" has the meaning set forth in Section 3.05(a).
"Tranche 2 Commitment" has the meaning set forth in Section 3.01(b).
"Tranche 2 Day Count
Fraction" 365-day or 366-day years, as the case may be,
based on the actual number of days elapsed.
"Tranche 2 Interest Rate" means, with respect to the Tranche 2 Loan, the
Tranche 2 Pre-Completion Interest Rate and the
Tranche 2 Post-Completion Interest Rate.
"Tranche 2 Loan" means the principal amount from time to time
outstanding with respect to the Tranche 2
Commitment.
"Tranche 2 Note" means a promissory note in the form of Exhibit B
to the Funding Agreement, duly executed by two
Authorized Officers of the Company.
"Tranche 2 Post-Completion
Spread" means 4.25% per annum.
"Tranche 2 Pre-Completion
Interest Rate" has the meaning set forth in Section 3.04(3).
"Tranche 2 Repayment
Date" has the meaning set forth in Section 3.05(b).
<PAGE>
Omolon - 23 - OPIC Finance Agreement
"Tranche 2 Supplemental
Spread" means a percent per annum equal to the
difference between:
(x) 14.00%, and
(y) the sum (expressed as a percentage, rounded
to the nearest 100th of a percent) of the Base
Rate plus the Tranche 2 Post-Completion Spread.
"Treasury Cost" means, with respect to any amount, the fixed
borrowing cost that would be charged to OPIC for
such amount by the United States Department of
Treasury (which will approximate the interest
rate on U.S. Treasury notes with a similar
maturity).
"Treasury Rate" means, with respect to any Rate Period, a rate
per annum equal to the sum of the weighted
average per annum discount rate (expressed as a
bond equivalent yield on the basis of a year of
365 or 366 days, as the case may be, and applied
on a daily basis) for direct obligations of the
United States of America with a maturity of
three months ("91-day Treasury Bill") set at the
most recent 91-day Treasury Bill auction, as
published by the Board of Governors of the
Federal Reserve System (in Statistical Release
H. 15 or any successor publication, or in the
absence of such publication, by a press
release). If the results of any auction of 91-
day Treasury Bills are not published as provided
in the preceding sentence, the results of the
most recently reported auction of 91-day
Treasury Bills will continue to apply until such
time, if any, as the results of any subsequent
auction of 9l-day Treasury Bills shall again be
so published.
"Unguaranteed Portion" means, at any time after the Project Completion
Date:
(a) with respect to the principal amount of the
Tranche 2 Loan and interest accruing thereon
after the Project Completion Date, 100% of such
amount; and
(b) with respect to the Tranche 1 Loan,
principal thereof and interest accruing thereon,
and any other amount payable by the Company
under this Agreement, the portion of such amount
which is not, at such time, guaranteed by Cyprus
Magadan pursuant to the Cyprus Magadan Guaranty.
"Voluntary Prepayment
Amount" has the meaning set forth in Section 3.07(a)(4).
<PAGE>
Omolon - 24 - OPIC Finance Agreement
"Washington, D.C." means the District of Columbia, United States of
America.
"Weekly Interest Rate" means, with respect to the Tranche 1 Interest
Period, the Treasury Rate established for each
Rate Period during each Interest Period in
accordance with the Funding Documents.
SECTION 1.02. INTERPRETATION
In this Agreement:
(a) Unless the context otherwise requires, words denoting the
singular include the plural and vice versa;
(b) Words denoting Persons shall include their successors and
permitted assigns.
(c) Unless otherwise expressly stated, references to a specified
Article, Section, Subsection, Exhibit, or Schedule shall be
construed as a reference to that specified Article, Section,
Subsection, Exhibit or Schedule of this Agreement;
(d) The headings and the Table of Contents are inserted for
convenience of reference only and shall not affect the
interpretation of this Agreement.
(e) Reference to and the definition of any document (including this
Agreement) shall be deemed a reference to such document as it
may be amended, extended, restated, or modified from time to
time, unless otherwise expressly stated;
(f) Accounting terms used herein but not defined in Section 1.01
shall have the respective meanings given to them under
Generally Accepted Accounting Principles;
(g) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of
this Agreement;
(h) The use of the word "including" means "including without
limitation," and the use of the word "or" is not exclusive;
(i) Any reference herein to a time of day means New York City-time
unless other wise expressly stated;
(j) Any time an action requires OPIC's consent, agreement, or
waiver, such consent, agreement, or waiver shall be at OPIC's
sole discretion (unless otherwise expressly stated) without any
express or implied agreement or understanding that OPIC will
provide such consent, agreement, or waiver;
<PAGE>
Omolon - 25 - OPIC Finance Agreement
(k) In this Agreement, references to statutes, laws, rules,
regulations and decrees of the Russian Federation, or any
political subdivision thereof, including environmental, health
and safety standards and requirements promulgated thereunder,
shall refer only to such statutes, laws, rules, regulations and
decrees which are published or publicly available or of which
the Company otherwise has knowledge or which the Company could
have ascertained upon reasonable investigation; and
(l) The Company shall be deemed to know or be able to know a
Russian statute, law, rule, regulation and decree of the
Russian Federation, or any political subdivision thereof,
including environmental, health and safety standards and
requirements promulgated thereunder, or a fact, event, or other
circumstance whenever such law, rule, regulation and decree,
fact, event, or other circumstance is known by any chief
executive officer, chief financial officer, chief operating
officer, chief accounting officer, or chief legal officer of
the Company (or any Person acting in such capacity on a regular
basis), or any other employee of the Company who in the
ordinary course of his or her duties is responsible for
monitoring the Company's compliance with its material
obligations hereunder or any of the other Financing Agreements
to which the Company is a party or its legal affairs.
(m) References to Schedules to the EBRD Loan Agreement refer to
such Schedules attached to the EBRD Loan Agreement as of the
date hereof, except to the extent OPIC has agreed in writing to
any changes thereto.
(n) To the extent provisions of this Agreement setting forth
details with respect to the operation of the Offshore Bank
Account differ from the operating provisions of the Offshore
Bank Account Agreement, the Offshore Bank Account Agreement
shall control.
SECTION 1.03. FINANCIAL CALCULATIONS.
(a) General. All financial calculations to be made under, or for
the purposes of, this Agreement shall be determined in accordance with Generally
Accepted Accounting Principles in the United States and, except as otherwise
required to conform to the definitions contained in Section 1.01 or any other
provisions of this Agreement, shall be calculated from the then most recently
issued quarterly Financial Statements which the Company is obligated to furnish
to OPIC from time to time, as provided in Section 5.19(a); provided, however,
that:
(1) if the relevant quarterly Financial Statements should be in
respect of the last quarter of a Financial Year then, at OPIC's
option, such calculations may instead be made from the audited
Financial Statements for the relevant Financial Year, and
<PAGE>
Omolon - 26 - OPIC Finance Agreement
(2) if there should occur any material adverse change in the financial
condition of the Company after the end of the period covered by the
relevant Financial Statements, then such material adverse change
shall also be taken into account in calculating the relevant
figures.
(b) Banking Case. The Company shall, in consultation with OPIC and
EBRD and using the Financial Model, prepare a banking case once every six months
in accordance with the procedures set forth in Schedule I to the EBRD Loan
Agreement. The first such banking case shall be prepared prior to the first
Tranche 1 Repayment Date or, if earlier, the first Interest Payment Date
following the Project Completion Date. All calculations of Loan Life Debt
Service Coverage Ratios shall be made on the basis of such banking cases.
SECTION 1.04. ENGLISH LANGUAGE.
All documents to be furnished or communications to be given or made under
this Agreement shall be in the English language or, if in another language,
shall be accompanied by a translation into English certified by an Authorized
Officer of the Company (except as otherwise specifically provided or otherwise
requested by OPIC), which translation shall be the governing version between the
Company and OPIC.
SECTION 1.05. GOVERNING LAW.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK, UNITED STATES OF AMERICA, AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. PROJECT, PROJECT COSTS AND FINANCING PLAN.
The Company represents and warrants as follows:
(a) The total estimated cost of the Project is approximately
$180,000,000.
(b) Under the Financing Plan, the proposed sources of financing the
approximate Project costs referred to in Section 2.01(a) are as follows:
Source Dollars
<PAGE>
Omolon - 27 - OPIC Finance Agreement
<TABLE>
<CAPTION>
<S> <C>
Equity
Association of Native Peoples 5,280,000
Geometal 14,345,000
Magadan Gold 5,280,000
Elektrum 7,840,000
Rossiisky Kredit Commercial Bank 4,800,000
Dukat 2,455,000
Cyprus Magadan 40,000,000
Total Equity 80,000,000
Long-term Debt
Tranche 1 Loan 47,500,000
Tranche 2 Loan 5,000,000
EBRD Tranche 1 Loan 42,500,000
EBRD Tranche 2 Loan 5,000,000
Total Long-term Debt 100,000,000
Total Financing 180,000,000
</TABLE>
SECTION 2.02. REPRESENTATIONS AS TO THE COMPANY
The Company represents and warrants as follows:
(a) The Company is a closed joint stock company duly organized and
validly existing under the laws of the Russian Federation and registered with
all relevant registration bodies in the Russian Federation and has full power to
own the properties which it owns and proposes to own for the purposes of the
Project and to carry out the business which it carries out and proposes to carry
out for the purposes of the Project. The Company has no Subsidiaries.
(b) The Company has an authorized capital of Rb. 388,480,000,000 (the
equivalent of $80,000,000) consisting of 80,000 shares with a nominal value of
Rb. 4,856,000 each. The following is a list of the shareholders in the Company
as of the date of this Agreement, together with the number of shams and the
percentage of all shares in the Company that will be held by each of such
shareholders upon execution and registration of the fourth amendment agreement
to the foundation agreement on the establishment of the Company and the charter
of the Company:
<PAGE>
Omolon - 28 - OPIC Finance Agreement
<TABLE>
<CAPTION>
Shareholder Number of Shares Percentage
<S> <C> <C>
Association of Native Peoples 5,280 6.60000
Geometal 14,345 17.93125
Magadan Gold 5,280 6.60000
Elektrum 7,840 9.80000
Rossiisky Kredit Commercial Bank 4,800 6.00000
Dukat 2,455 3.06875
Cyprus Magadan 40,000 50.00000
Total 80,000 100.00000
</TABLE>
The only issued shares of the Company are registered shares. There are no
options, warrants or instruments convertible into shares or other agreements
relating to the existing shares of the Company or for the issuance of additional
shares of any class or description of the Company, except for the Foundation
Agreement. No Person has any right (other than as a shareholder, OPIC in respect
of the Tranche 2 Loan, and EBRD in respect of the EBRD Tranche 2 Loan) to share
in the profits of the Company.
(c) [Reserved.]
(d) The balance sheet of the Company as at 1 January 1995 and the
related statement of profit and loss of the Company for the Financial Year
ending on that date, certified by the Chairman of the Board of Directors of the
Company, fairly and accurately present the financial condition of the Company as
of the date of such balance sheet and were prepared in conformity with generally
accepted accounting principles in Russia. The Company had, as of the date of
such balance sheet, no material contingent obligations, liabilities for taxes or
unusual forward or long term commitments not disclosed by, or reserved against
in, such balance sheet or the notes thereto. Since the date of such balance
sheet, the Company has not suffered any change in its business prospects or
financial condition which has a Material Adverse Effect, incurred any
substantial or unusual loss or liability, or undertaken or agreed to undertake
any substantial or unusual obligation (except under the Financing Agreements and
the Project Agreements), in any such case, of a type which would appear on the
Financial Statements in accordance with Generally Accepted Accounting
Principles.
(e) The Company owns, free of all Liens other than Permitted Liens, all
of its assets (including real property, personal property, intellectual property
and any other assets the ownership of which is reflected on its most recent
balance sheet referred to in Section 2.02(c) or which are referred to in the
Security Documents, but excluding the Kubaka Field and the Evenskoye Field which
the Company has the exclusive right to use pursuant to the License for the
purposes of commercial development of the Kubaka Field and exploration and
subsequent development of the Evenskoye Field) that have a book value in excess
of $10,000 equivalent each. The Company's assets are not subject to any Lien,
and the Company is not subject to any contract, arrangement or statute, whether
conditional or unconditional, pursuant to which any such Lien may be created,
except for Permitted Liens. The Company's assets are insured against such risks
and in such amounts as are customary internationally for businesses of a like
nature.
<PAGE>
Omolon - 29 - OPIC Finance Agreement
(f) As of the date hereof, the Company is not a party to, or committed
to enter into, any agreement, other than the Financing Agreements and the
Project that would or might affect the judgment of a prospective lender.
(g) The Company is not in violation of any material statute, law,
regulation, judgment, rule, order or decree presently in effect which is
applicable to the Company or its assets. To the best of the Company's knowledge
after due inquiry, no statute, law, rule, regulation or decree has been proposed
and no judgment or order is expected which may have a Material Adverse Effect.
All tax returns and reports of the Company required by law to be filed have been
duly filed and all tax assessments, fees and other governmental charges upon the
Company, its properties and its income, which are due and payable, have been
paid, other than those currently payable without penalty or interest. The
Company is not in default under any agreement, obligation or duty to which it is
a party or by which it or any of its properties or assets is bound and there
exists no Event of Default and no Potential Event of Default.
(h) To the best of the Company's knowledge after due inquiry, the
Company and its businesses, operations, assets, equipment, property, leaseholds
and other facilities are in compliance with the Environmental Standards. As of
the date of this Agreement, the Company has been issued all permits, licenses,
certificates and approvals then required under applicable law relating to, and,
except as disclosed to OPIC in writing, has received no material complaint,
order, directive, claim, citation or notice from any governmental authority or
any other material public complaint with respect to, (l) air emissions, (2)
discharges to surface water or ground water, (3) noise emissions, (4) solid or
liquid waste disposal, (5) the use, generation, storage, transportation or
disposal of toxic or hazardous substances or wastes, or (6) other environmental,
health or safety matters.
(i) The Company is not engaged in nor, to the best of its knowledge,
threatened by, any litigation, arbitration or administrative proceeding, the
outcome of which may reasonably be expected to have a Material Adverse Effect.
(j) All documents, reports or other written information pertaining to
the Project (including, without limitation, the Application Documents, this
Agreement, and the other Financing Documents) that have been furnished to OPIC
by or on behalf of the Company are true and correct and do not contain any
material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained herein or therein not materially
misleading. There is no fact known to the Company, that has not been disclosed
to OPIC in writing, the existence of which could have a Material Adverse Effect.
No condition has arisen since the date of the Application Documents that has or
could have a Material Adverse Effect.
SECTION 2.03. REPRESENTATIONS AS TO THE FINANCING AND PROJECT AGREEMENTS
The Company represents and warrants as follows:
(a) The Company has the corporate power to enter into and perform this
Agreement and the other Financing Agreements and Project Agreements to which it
is a party.
<PAGE>
Omolon - 30 - OPIC Finance Agreement
(b) This Agreement has been and the other Financing Agreements and
Project Agreements to which the Company is a party when executed and delivered
will have been duly authorized by the Company. This Agreement has been duly
executed by the Company and this Agreement constitutes, and the other Financing
Agreements and Project Agreements to which the Company is a party when executed
and delivered (in the case of the Notes and the promissory notes issued under
the EBRD Loan Agreement, for value) will constitute, valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms. The making of this Agreement and the other Financing Agreements and
Project Agreements and the compliance with the terms thereof(l) will not result
in violation of the Company's Charter or any provision contained in any statute,
law, rule, regulation, judgement, decree or order applicable to the Company, (2)
will not conflict with or result in the breach of any provision of, or require
any consent under, or result in the imposition of any Lien under, any agreement
or instrument to which the Company is a party or by which the Company or any of
its assets is bound, and (3) will not constitute a default or an event that,
with the giving of notice or the passing of time or both, would constitute a
default under any such agreement or instrument.
(c) As of the date of this Agreement, no governmental licenses,
approvals, consents, filings or registrations are required for the due
execution, delivery or performance by the Company of this Agreement, any other
Financing Agreement or any Project Agreement, or the validity or enforceability
thereof, except for (1) the authorization of the Central Bank of Russia for the
incurrence and repayment of the Indebtedness incurred under this Agreement and
the EBRD Loan Agreement and the establishment and operation of the Offshore Bank
Account as contemplated herein, (2) registration of the Enterprise Mortgage with
the Local Registration Chamber and the State Registration Chamber attached to
the Ministry of the Economy of the Russian Federation, (3) registration of the
Immovables Mortgage with the local land registry and the municipal department
which registers buildings, (4) those listed in Schedule X to the EBRD Loan
Agreement, (5) the major construction, environmental and operating permits and
approvals listed in Schedule V to the EBRD Loan Agreement, and (6) other
construction, environmental and operating permits and approvals not listed in
Schedule V to the EBRD Loan Agreement which are routinely issued in the course
of designing, constructing and operating the Project and which there is no
reason to believe the Company will not be able to obtain at the time such
permits and approvals are needed for the Project.
(d) This Agreement constitutes a direct, unconditional and secured
general obligation of the Company and ranks in priority of payment at least pari
passu with all other present and future indebtedness of the Company.
(e) Each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when executed and delivered and when the documents,
recordings, filings, notifications and registrations listed in Schedule X to the
EBRD Loan Agreement have been executed or made, constitute a valid and completed
security interest in, and a Lien of first priority on, the collateral covered by
such Security Document, securing payment of all principal, interest and other
amounts payable by the Company under this Agreement, the EBRD Loan Agreement and
the other Financing Agreements, which security interest and Lien will rank
senior to all other security interests and Liens on such collateral other than
Permitted Liens. The Company is not a
<PAGE>
Omolon - 31 - OPIC Finance Agreement
party to any other security agreement or instrument creating or purporting to
create a security interest in and Lien on such collateral.
(f) Each of the Licence, the Management Agreement, and the Marketing
Agreements is in full force and effect without material modification from the
form referred to in Section 1.01. There has occurred no breach, and no event
which with the giving of notice or the passing of time or both would constitute
a breach, by the Company of any such Project Agreement. The Company has no
knowledge of any breach, or event which with the giving of notice or the passing
of time or both would constitute a breach, by any other party of any such
Project Agreement.
(g) All permits, licenses, trademarks, patents and agreements with
respect to the usage of technology and other intellectual property necessary for
the Project have been obtained and are in full force and effect. All utility
services necessary for the Project, including, to the extent necessary, water
supply, storm and sanitary sewer, gas, electric and telephone services and
facilities, are available or will be made available to the Project and
arrangements in respect thereof have been made on commercially reasonable terms.
SECTION 2.04. ACKNOWLEDGEMENT AND WARRANTY
The Company acknowledges that it has made the representations referred
to in Sections 2.01, 2.02 and 2.03 with the intention of persuading OPIC to
enter into this Agreement and that OPIC has entered into this Agreement on the
basis of, and in full reliance on, each of such representations. The Company has
no knowledge of any additional facts or matters which would or might reasonably
affect the judgment of a prospective lender regarding lending to the Company.
The Company warrants to OPIC that each of such representations is true and
correct in all material respects as of the date of this Agreement and that none
of them omits any matter the omission of which makes any of such representations
misleading.
ARTICLE III
CREDIT FACILITY
SECTION 3.01. COMMITMENT.
Subject to the terms and conditions of this Agreement, OPIC agrees to
lend up to $52,500,000 to the Company from time to time during the Commitment
Period. The Loan shall not be of a revolving nature. Any portion of the Loan
that is repaid (whether prepaid or otherwise) shall not be re-advanced to the
Company. The Loan shall consist of two tranches:
(a) the Tranche 1 Loan in an amount not to exceed $47,500,000 (the
"TRANCHE 1 COMMITMENT"); and
<PAGE>
Omolon - 32 - OPIC Finance Agreement
(b) the Tranche 2 Loan in the amount of $5,000,000 (the "TRANCHE 2
COMMITMENT").
SECTION 3.02. DISBURSEMENT LIMITATIONS.
(a) COMMITMENT PERIOD. The Company may only submit Disbursement Requests
(as provided in Section 3.03) during the period beginning as of the date hereof
and ending 30 Business Days before the Commitment Termination Date.
(b) NUMBER AND MINIMUM AMOUNT. The Company may request:
(1) no more than 5 Disbursements with respect to the Tranche 1
Commitment, each in the minimum amount of $5,000,000 and in integral
multiples of $500,000; and
(2) one Disbursement with respect to the Tranche 2 Commitment in the
full amount of $5,000,000.
The Tranche 2 Commitment shall be fully disbursed prior to or concurrently with
any Disbursement with respect to the Tranche 1 Commitment.
(c) DEDUCTIONS. The Company irrevocably authorizes OPIC (in OPIC's sole
discretion) to deduct (or authorize the deduction of) from any Disbursement an
amount equal to any amounts due from the Company to OPIC or to any party to a
Funding Document as of such Disbursement Date.
(d) ACCOUNT. Disbursements shall only be made to the Disbursement
Subaccount, unless otherwise agreed by OPIC.
(e) DATES. The Company shall only request that a Disbursement be made,
and Disbursements shall only be made, on a dam that is both a Business Day and a
British Banking Day.
(f) PARI PASSU WITH EBRD. OPIC shall have no obligation to make a
requested Disbursement in any amount:
(1) if EBRD has suspended or canceled its obligation to make
disbursements under the EBRD Loan Agreement;
(2) if, after any Disbursement of the Tranche 1 Loan, the Tranche 1 Loan
will exceed the EBRD Tranche 1 Loan by more than $5,000,000; or
(3) in the case of a Disbursement with respect to the Tranche 2
Commitment, unless EBRD will simultaneously disburse or previously
disbursed an equal amount of its Tranche 2 Loan pursuant to the EBRD
Loan Agreement.
<PAGE>
Omolon - 33 - OPIC Finance Agreement
(g) CONDITIONS PRECEDENT. OPIC shall have determined that each of the
conditions precedent set forth in Article 4 have been satisfied.
SECTION 3.03. DISBURSEMENT PROCEDURE.
(a) DOCUMENTS. The Company shall deliver each of the following in
connection with each proposed Disbursement, each in form and substance
satisfactory to OPIC, at least 30 Business Days prior to the proposed date of
Disbursement:
(1) DISBURSEMENT REQUEST. A Disbursement Request dated at least 30 days
prior to the requested Disbursement Date, executed by an Authorized
Officer of the Company;
(2) EBRD LOAN DISBURSEMENT APPLICATION. A copy of any concurrent
disbursement application submitted to EBRD in accordance with the
EBRD Loan Agreement; and
(3) NOTE. A duly executed but undated Tranche 1 Note or Tranche 2 Note
(or both) (as appropriate).
(b) EFFECT. A Disbursement Request shall be effective upon receipt by
OPIC and irrevocable by the Company as of the date OPIC sends Issuing
Instructions (by facsimile) with respect to the requested Disbursement to the
Paying Agent.
(c) SPECIAL AUTHORIZATION. Upon the making of the relevant Disbursement,
the Company irrevocably authorizes OPIC to date the applicable Note (or Notes)
the date of the applicable Disbursement Date and, with respect to the Tranche 2
Note, insert the Base Rate.
SECTION 3.04. INTEREST.
(a) TRANCHE 1 INTEREST RATE UNTIL PROJECT COMPLETION DATE. On each
Interest Payment Date occuring on or before the Project Completion Date, the
Company shall pay interest in arrears to the order of OPIC on the daily
outstanding principal balance of the Tranche 1 Loan at an adjustable rate per
annum equal to sum of the following (the "TRANCHE 1 PRE-COMPLETION INTEREST
RATE"):
(1) the Weekly Interest Rate, plus
(2) the Tranche 1 Funding Spread, plus
(3) the Pre-Completion Spread.
<PAGE>
Omolon - 34 - OPIC Finance Agreement
(b) TRANCHE 1 LOAN INTEREST RATE AFTER PROJECT COMPLETION DATE. On each
Interest Payment Date occuring after the Project Completion Date, the Company
shall pay interest in arrears to the order of OPIC on the daily outstanding
principal balance of the Tranche 1 Loan at an adjustable rate per annum equal to
sum of the following (the "TRANCHE 1 POST-COMPLETION INTEREST RATE"):
(1) the Weekly Interest Rate, plus
(2) the Tranche 1 Funding Spread, plus
(3) the Tranche 1 Post-Completion Spread.
(c) TRANCHE 2 LOAN INTEREST RATE BEFORE PROJECT COMPLETION DATE. On each
Interest Payment Date occuring before the Project Completion Date, the Company
shall pay interest in arrears to the order of OPIC on the daily outstanding
principal balance of the Loan at an adjustable rate per annum equal to sum of
the following (the "TRANCHE 2 PRE-COMPLETION INTEREST RATE"):
(1) Base Rate, plus
(2) the Pre-Completion Spread.
(d) TRANCHE 2 LOAN INTEREST RATE AFTER PROJECT COMPLETION DATE. On each
Interest Payment Date occuring after the Project Completion Date, the Company
shall pay interest in arrears to the order of OPIC on the daily outstanding
principal balance of the Tranche 2 Loan at an adjustable rate per annum equal to
sum of the following (the "TRANCHE 2 POST-COMPLETION INTEREST RATE"):
(1) the Base Rate, plus
(2) the Tranche 2 Post-Completion Spread, plus
(3) the Tranche 2 Supplemental Spread,
provided that, if, as of four Banking Days preceding any Interest Payment Date
occurring after the Project Completion Date, the Company is not permitted,
pursuant to Section 6.08(c)(3) or 6.08(c)(4), to make payments of management
fees to Cyprus Magadan under the Management Agreement, the Tranche 2
Supplemental Spread shall accrue and be due and payable by the Company only in
respect of such period and at such time as the Company is no longer prohibited,
pursuant to Section 6.08(c)(3) or 6.08(c)(4), from making such payments of
management fees.
(e) DETERMINATION, ACCRUAL, AND CALCULATION.
(1) TRANCHE 1 LOAN.
<PAGE>
Omolon - 35 - OPIC Finance Agreement
(A) WEEKLY INTEREST RATE. The Weekly Interest Rate component
of the Tranche 1 Interest Rate shall be reset weekly.
The initial Weekly Interest Rate shall be determined on
or before the date of the first Disbursement of the
Tranche 1 Loan and shall remain in effect through the
next succeeding Tuesday. Thereafter, the Weekly Interest
Rate shall be redetermined as of each succeeding
Wednesday and such rate shall remain in effect during
the period commencing on such Wednesday and ending on
the next succeeding Tuesday.
(B) TRANCHE 1 FUNDING SPREAD. The Tranche 1 Funding Spread
component of the Tranche 1 Interest Rate shall be reset
as of each Interest Payment Date. The initial Weekly
Interest Rate shall be determined on or before the date
of the first Disbursement of the Tranche 1 Loan.
(C) DETERMINATION. The Weekly Interest Rate and the Tranche
1 Funding Spread shall be determined by the Placement
and Remarketing Agent as provided in the Funding
Documents for so long as the Funding Documents are in
effect. The initial determination and each
redetermination of the Weekly Interest Rate and Tranche
1 Funding Spread by the Placement and Remarketing Agent
shall be conclusive and binding upon OPIC and the
Company. The Tranche 1 Interest Rate shall accrue from
day to day, begin to accrue with respect to each
Disbursement from and including the Disbursement Date,
and be pro-rated on the basis of the Tranche 1 Day Count
Fraction for each Interest Period.
(2) TRANCHE 2 LOAN. The Base Rate component of the Tranche 2
Interest Rate shall be established on or before the Disbursement
of the Tranche 2 Loan. The Base Rate shall thereafter remain
fixed. The Tranche 2 Interest Rate shall accrue from day to day,
begin to accrue with respect from and including the Tranche 2
Disbursement Date. The Base Rate shall be pro-rated on the basis
of the Tranche 2 Day Count Fraction for each Interest Period,
and the Tranche 2 Post Completion Spread and the Tranche 2
Supplemental Spread shall be pro-rated on the basis of the
Tranche 1 Day Count Fraction for each Interest Period. The
Tranche 2 Supplemental Spread shall be determined by the Company
as of the fourth Banking Day preceding each Interest Payment
Date occuring after the Project Completion Date, subject to
confirmation by OPIC thereafter. The Company shall promptly send
notice to OPIC of its calculation of the Tranche 2 Supplemental
Spread.
SECTION 3.05. PRINCIPAL REPAYMENT
(a) TRANCHE 1 LOAN. The Tranche 1 Loan shall be repaid in eight equal
(or as nearly equal as possible) semi-annual installments (each such payment
being a "TRANCHE 1 PRINCIPAL INSTALLMENT") on the following dates:
<PAGE>
Omolon - 36 - OPIC Finance Agreement
<TABLE>
<CAPTION>
TRANCHE 1
PRINCIPAL
INSTALLMENT # DATE
<S> <C>
1 15 December 1997
2 15 June 1998
3 15 December 1998
4 15 June 1999
5 l5 December 1999
6 15 June 2000
7 15 December 2000
8 15 June 2001
</TABLE>
provided that if any such 15 June or 15 December falls on a day which is not a
Business Day, such payment date shall be changed to the next succeeding Business
Day (each such date a "TRANCHE 1 REPAYMENT DATE").
(b) TRANCHE 2 LOAN. The Tranche 2 Loan shall be repaid in full in a
single installment in the amount of $5,000,000 on 15 December 2001, provided
that if 15 December 2001 is day that is not a Business Day, such payment date
shall be changed to the next succeeding Business Day (the "TRANCHE 2 REPAYMENT
DATE").
SECTION 3.06. MANDATORY PREPAYMENT.
(a) PREPAYMENT OF TRANCHE 1 LOAN WITH EXCESS CASH FLOW.
(1) GENERAL. On each Tranche 1 Repayment Date, the Company shall prepay
the Tranche 1 Loan in an aggregate principal amount equal to OPIC's
Proportionate Share of:
(A) 50% of the Company's Excess Cash Flow for the Interest Period
preceding the Interest Period then ending, if, on the date 60
days prior to such Repayment Date, the Loan Life Debt Service
Coverage Ratio is less than 2.0; or
(B) 30% of the Company's Excess Cash Flow for the Interest Period
preceding the Interest Period then ending, otherwise;
(2) LIMITATION. The Company shall concurrently prepay the EBRD Tranche 1
Loan in accordance with the EBRD Loan Agreement in an amount equal
to EBRD's Proportionate Share, provided that the Company shall not
be required to prepay the Tranche 1 Loan ((pursuant to this
Subsection 3.06(a)) and the EBRD Tranche 1 Loan ((pursuant to
Section 3.07C0) of the EBRD Loan Agreement)) in an aggregate amount
exceeding $9,000,000 during any 12-month period.
<PAGE>
Omolon - 37 - OPIC Finance Agreement
(3) APPLICATION. Mandatory prepayments of the Tranche 1 Loan pursuant to
this Subsection 3.06(a) shall be applied to each Tranche 1 Principal
Installment in the inverse order of maturity.
(4) RELATED NOTICES. Not less than 60 days prior to each Tranche 1
Repayment Date, the Company shall furnish to OPIC and EBRD a
certificate setting forth the amount of the mandatory prepayment of
the Tranche 1 Loan required to be made by the Company pursuant to
this Subsection 3.06(a). The Company shall also provide OPIC and
EBRD with sufficient detail and information as may be required by
OPIC or EBRD as to the Company's calculation of Excess Cash Flow for
the Interest Period preceding the Interest Period ending on such
Tranche 1 Repayment Date. Such certificates shall be accompanied by
such other supporting documentation as OPIC or EBRD may request.
(b) PREPAYMENT OF ENTIRE LOAN UPON A TOTAL LOSS. In the event that the
assets comprising the Project become an actual, constructive, compromised or
arranged total loss, at the request of OPIC, the Company shall, on any date as
OPIC may select, prepay the Loan in full, together with all accrued interest
thereon to such date and all other amounts payable hereunder and the other
Financing Agreements. The Company shall concurrently prepay the EBRD Loan in
full in accordance with the EBRD Loan Agreement.
(c) PREPAYMENT OF LOAN WITH UNUTILIZED LOSS PROCEEDS. In the event that
all or any portion of the tangible assets comprising the Project shall have been
lost, damaged, or destroyed and, in accordance with the provisions of the
Insurance Assignment, if the Project Lenders shall have retained the proceeds of
troy related claim under any insurance policy as additional security for amounts
payable to the Project Lenders under the Financing Agreements, the Company
shall, at the request of OPIC, forthwith prepay on any date as OPIC may select,
the Loan (together with all accrued interest thereon to such date and all other
amounts payable hereunder as of such date) in an aggregate principal amount
equal to OPIC's Proportionate Share of the amount of such proceeds, together
with all accrued interest on the principal amount of the Loan. Such proceeds
shall first be applied to each Tranche 1 Principal Installment in the inverse
order of maturity, and only after the Tranche 1 Loan has been repaid in full
shall such proceeds be applied to the Tranche 2 Loan. The Company shall
concurrently prepay the EBRD Loan in an amount equal to EBRD's Proportionate
Share.
(d) EBRD LOAN PREPAYMENTS. The Company shall prepay:
(1) the Tranche 1 Loan in a pro rata amount (based on the outstanding
principal balance of the Tranche 1 Loan and the EBRD Tranche 1 Loan)
of any voluntary prepayment of the EBRD Tranche 1 Loan made
pursuant to Section 3.11 (c) of the EBRD Loan Agreement (together
with all accrued interest thereon to such date) (to be applied to
each Tranche 1 Installment in the inverse order of maturity); and
<PAGE>
Omolon - 38 - OPIC Finance Agreement
(2) the Tranche 2 Loan in an amount equal to 100% of any voluntary
prepayment of the EBRD Tranche 2 Loan made pursuant to Section
3.11(c) of the EBRD Loan Agreement (together with all accrued
interest thereon to such date).
(e) PREPAYMENT PREMIUM.
(l) TRANCHE 1 LOAN. No Prepayment Premium shall be payable in respect of
any mandatory prepayment of the Tranche 1 Loan pursuant to this
Section 3.06.
(2) TRANCHE 2 LOAN. In the case of any mandatory prepayment of the
Tranche 2 Loan pursuant to Subsection 3.06(b), (c), or (d), the
Company shall concurrently pay OPIC any Make-Whole Premium payable
at such time. In the case of acceleration of the Loan upon the
occurrence of an Event of Default, the Company shall concurrently
pay OPIC any Make-Whole Premium due at such time.
(f) ADVANCE DEPOSIT. The Company shall deposit the amount of each
mandatory prepayment required by this Section 3.06 with the Paying Agent by the
dates set forth in and in accordance with Section 3.13, and shall concurrently
send (by facsimile with a hard copy to follow) confirmation of such deposit. The
prepayment shall be irrevocable upon receipt thereof by the Paying Agent in
accordance with the Funding Agreement and Section 3.13.
SECTION 3.07. VOLUNTARY PREPAYMENT
(a) GENERAL. The Company may at its option prepay the Tranche 1 Loan in
part or in full, and all, but not part only, of the Tranche 2 Loan, on any
Tranche 1 Repayment Date, subject to all of the following:
(1) in the case of any prepayment of the Tranche 2 Loan, the Tranche 1
Loan shall either concurrently be prepaid or shall have been
previously been prepaid in full;
(2) each partial prepayment with respect to the Tranche 1 Loan shall be
in an amount of not less than $1,000,000 and integral multiples of
$1,000,000 in excess thereof;
(3) the Company shall provide OPIC, EBRD, and the Paying Agent not less
than 45 days' prior irrevocable written notice thereof;
(4) the Company shall concurrently pay all accrued interest on the
principal amount be prepaid to the prepayment date, any Prepayment
Premium with respect to the Tranche 2 Loan to be prepaid, and all
other amounts then due and owing from the Company to OPIC under any
of the Financing Agreements (together with the principal amount
being prepaid, the "VOLUNTARY PREPAYMENT AMOUNT");
<PAGE>
Omolon - 39 - OPIC Finance Agreement
(5) the Company shall deposit the Voluntary Prepayment Amount with the
Paying Agent at least fifteen Business Days prior to such prepayment
date (in accordance with Section 3.13 and the Funding Agreement);
(6) partial prepayments of the Tranche 1 Loan shall be applied against
the Tranche 1 Principal Installments in the inverse order of
maturity; and
(7) in the case of a voluntary prepayment of the Tranche 1 Loan, the
Company shall simultaneously prepay a pro rata amount of the EBRD
Tranche 1 Loan; and
(8) in the case of a voluntary prepayment of the Tranche 2 Loan, the
Company shall simultaneously prepay the EBRD Tranche 2 Loan in an
equal amount.
(b) OPIC PREPAYMENT PREMIUM AND MAKE-WHOLE PREMIUM. In the case of
prepayment of the Tranche 2 Loan (whether under Section 3.06 or 3.07), the
Company shall pay OPIC, on the date of prepayment, a prepayment premium equal to
the Make-Whole Premium plus the following percentage of the principal amount of
the Tranche 2 Loan ( the following being the "OPIC Prepayment Premium"):
<TABLE>
<CAPTION>
DATE OF PREPAYMENT PERCENTAGE
If on or before:
<S> <C>
15 December 1997 44
15 June 1998 40
15 December 1998 35
15 June 1999 30
15 December 1999 25
15 June 2000 20
15 December 2000 13
15 June 2001 7
thereafter 0
</TABLE>
SECTION 3.08. DEFAULT
(a) PRINCIPAL AND INTEREST. If the Company fails to pay in full any
amount of principal or interest when due (whether at the stated due date or by
acceleration after the occurrence of an Event of Default), the Company shall on
demand pay OPIC default interest on such unpaid amount (in lieu of the
applicable Interest Rate) from its due date until paid at either of the
following rates per annum (as determined by OPIC in its sole discretion):
(1) in the case of the Tranche 1 Loan,
<PAGE>
Omolon - 40 - OPIC Finance Agreement
(A) at a rate per annum equal to the sum of (i) the Treasury Cost,
(ii) the Tranche 1 Funding Spread, and (iii) 2.0% from the date
of such payment default until the date on which such defaulted
amount is paid in full; or
(B) at a rate per annum equal to 2% per annum in excess of the
applicable Interest Rate; and
(2) in the case of the Tranche 2 Loan,
(A) at a rate per annum equal to the sum of (i) the Treasury Cost,
(ii) the amount (as of the Disbursement Date with respect
thereto) by which the Base Rate exceeded the interest rate of
Treasury notes of similar maturity (based on the notice of such
amount requited to be provided by the Company and OPIC by the
Placement and Remarketing Agent in accordance with the Funding
Documents), and (iii) 2.0% from the date of such payment default
until the date on which such defaulted amount is paid in full;
or
(B) at a rate per annum equal to 2% per annum in excess of the
applicable Tranche 2 Interest Rate;
in either event to the extent permitted by applicable law.
(b) OTHER AMOUNTS. If the Company fails to make full payment when due of
any form or type of payment to OPIC required by this Agreement (whether at the
stated due date or by acceleration after the occurrence of an Event of Default)
other than principal or interest, the Company shall pay default interest to OPIC
on such payment default on demand from its due date until paid at a rate equal
to 2%per annum in excess of the Tranche 1 Interest Rate (to the extent permitted
by applicable law). If any such payment is due at a time when no portion of the
Loan is outstanding, then such default interest rate shall be calculated as if a
Disbursement had been made on the day when such payment became due and payable.
<PAGE>
Omolon - 41 - OPIC Finance Agreement
SECTION 3.09. TAXES
(a) GENERAL. The Company shall pay directly to all appropriate taxing
authorities any and all present and future Taxes, and all liabilities with
respect thereto imposed by law or by any taxing authority on or with regard to
any aspect of the transactions contemplated by this Agreement, the execution,
delivery, registration, or notarization of this Agreement, any other Financing
Agreement, any Project Agreement, and any other documents related to this
Agreement. The Company hereby indemnifies OPIC and holds OPIC harmless from and
against any and all liabilities, fees or additional expense with respect to or
resulting from any delay in paying, or omission to pay, such Taxes. Within 30
days after the payment by the Company of any such Taxes, the Company shall
furnish OPIC with the original or a certified copy of the receipt evidencing
payment thereof, together with any other information OPIC may reasonably require
to establish to its satisfaction that full and timely payment of such Taxes has
been made.
(b) REIMBURSEMENT. OPIC shall notify the Company of any payment of
such Taxes required or requested of OPIC and shall give due consideration to any
advice or recommendation given in response thereto by the Company, and upon
notice from OPIC that such Taxes or any liability relating thereto (including
penalties and interest) have been paid by or on behalf of OPIC, the Company
shall pay or reimburse OPIC therefor within 30 days of such notice.
(c) SURVIVAL. Without prejudice to the survival of any other agreement
of the Company hereunder, the agreements and obligations of the Company
contained in this Section 3.09 shall survive the payment in full of principal
and interest hereunder and under the Notes.
SECTION 3.10. CANCELLATION OF COMMITMENT BY COMPANY.
(a) GENERAL. The Company may at its option cancel all or part of the
Commitment provided that:
(1) NOTICE. The Company shall give not less than 30 days' prior
irrevocable written notice to OPIC of such cancellation;
(2) TRANCHE 2 COMMITMENT. The Tranche 2 Commitment may only be cancelled
in whole (and the Company shall concurrently cancel EBRD's
obligation to make a disbursement of the EBRD Tranche 2 Loan in full
and provide OPIC with a copy of the notice of cancellation the
Company has provided EBRD in connection therewith);
(3) PRO RATA WITH EBRD. In the case of a cancellation of the Tranche 1
Commitment, the Company shall simultaneously cancel its right to
further disbursements of a pro rata amount (based on the available
Tranche 1 Commitment hereunder and the unutilized right to request
disbursements from EBRD of the EBRD Tranche 1 Loan) of EBRD's
obligation to make disbursements of the EBRD Tranche 1 Loan pursuant
to the EBRD Loan
<PAGE>
Omolon - 42 - OPIC Finance Agreement
Agreement and provided OPIC with a copy of the notice of
cancellation the Company has delivered to EBRD in connection
therewith;
(4) TRANCHE 1 COMMITMENT. A notice from the Company of cancellation of
the Tranche 2 Commitment shall be deemed also to constitute notice
of cancellation in full of the Tranche 1 Commitment;
(5) AMOUNT. In the case of partial cancellation of the Tranche 1
Commitment, such cancellation shall be in an amount of not less than
$1,000,000 and in integral multiples thereof;
(6) FEES. The Company shall pay, on or before the effective date of the
proposed cancellation:
(A) the Cancellation Fee as set forth in Section 3.11(b);
(B) the accrued and unpaid Commitment Fee with respect to the
cancelled portion of the Commitment to the date on which such
cancellation becomes effective; and
(C) any fees owed to EBRD pursuant to the EBRD Loan Agreement in
connection the Company's simultaneous cancellation of the fight
of the Company with respect to further disbursements of the EBRD
Loan.
(b) UNUTILIZED COMMITMENT. Any part of the Commitment not disbursed at
the end of the Commitment Period shall be deemed cancelled and the Company shall
pay the Cancellation Fee and Commitment Fee in respect of such unutilized and
deemed cancelled Commitment.
(e) NO REINSTATEMENT. Any amount of the Commitment that is cancelled
shall not be reinstated.
SECTION 3.11. FEES
(a) COMMITMENT FEE. Beginning as of the Commitment Date, and continuing
to the Commitment Termination Date, the Company shall pay a commitment fee to
OPIC of(the "Commitment Fee") equal to 0.50% per annum of the aggregate amount
of the unutilized portion of the Commitment. The Commitment Fee shall accrue on
a daily basis (including the Commitment Date, but excluding the Commitment
Termination Date), shall be calculated for each day during such period, and
shall be computed on the basis of the Tranche 1 Day Count Fraction. The Company
shall pay accrued Commitment Fees in accordance with the Commitment Letter to
the date hereof on or before the date this Agreement is executed and delivered
by the Company. Thereafter the Company shall pay the Commitment Fee in arrears
to
<PAGE>
Omolon - 43 - OPIC Finance Agreement
OPIC on each Interest Payment Date (whether or not interest is payable) and the
Commitment Termination Date.
(b) CANCELLATION FEE. If the Company elects to cancel all or a portion
of the 1 Commitment in accordance with Section 3.10, the Company shall pay OPIC
a cancellation fee equal to 0.125% of any amount of the Commitment that is
cancelled. ,any part of the Commitment that is not disbursed (or been previously
cancelled) as of the Commitment Termination Date shall be deemed to have been
cancelled and the Company shall pay the applicable Cancellation Fee in respect
thereof.
(c) FACILITY FEE. The Company shall pay to OPIC a non-refundable
facility fee in the amount of 1.00% of the Commitment (the "Facility Fee"), of
which OPIC hereby acknowledges receipt of $300,000. The remaining balance shall
be paid to OPIC within five Business Days after the Company executes this
Agreement.
SECTION 3.12. COSTS AND EXPENSES
(a) GENERAL. The Company shall, whether or not any Disbursement is made,
pay to OPIC, or as OPIC may direct, within 30 days of OPIC furnishing to the
Company the invoice therefor, and shall indemnify and hold OPIC harmless from
each and all of the following:
(1) all documented outside mining, engineering, environmental and other
consulting fees and expenses incurred by OPIC in connection with
this Agreement and the other Financing Agreements, including without
limitation the fees and expenses of the Independent Engineer and
OPIC's insurance and environmental consultants;
(2) the documented fees and expenses of outside legal counsel to OPIC
and all other documented out-of-pocket costs and expenses incurred
by OPIC in connection with:
(A) the assessment and arrangement of the Loan by OPIC;
(B) the preparation, review, negotiation, execution and, where
appropriate, registration and notarization of this Agreement,
the other Financing Agreements, the Project Agreements and any
other documents related to this Agreement;
(C) the obtaining of any legal opinions required by OPIC hereunder;
and
(D) the implementation and administration of this Agreement and the
other Financing Agreements;
(3) any insurance premiums paid by OPIC on behalf of the Company in
connection with insurance that is not obtained by the Company as
required hereunder;
<PAGE>
Omolon - 44 - OPIC Finance Agreement
(4) all documented costs of preparing, in a manner satisfactory to OPIC,
Russian translations of any Financing Agreements as requested by
OPIC from time to time;
(5) all documented costs incurred in connection with the discharge and
satisfaction of any Liens or other claims existing in violation of
any of the Financing Agreements;
(6) all documented costs incurred by OPIC in connection with creating,
perfecting, maintaining and enforcing the Security;
(7) all fees, costs, expenses, liabilities, and other charges pursuant
to any of the Funding Documents;
(8) the documented costs of providing OPIC with four bound copies and
one unbound copy of all Financing Agreements, all Project Agreements
and all other documents delivered by the Company or any other party
hereunder; and
(9) all other documented costs and expenses incurred by OPIC in
connection with this Agreement, any other Financing Agreement and
any Project Agreement or any action contemplated thereby.
(b) ATTORNEYS' FEES AND OTHER COSTS AND EXPENSES. The Company shall pay
to OPIC, or as OPIC may direct, on demand all lawyers' and other fees, costs and
expenses incurred by OPIC:
(1) in the determination of whether there has occurred an Event of
Default or Potential Event of Default;
(2) in respect of the preservation or enforcement of any of its rights
under this Agreement or any other Financing Agreement and the
collection of any amount owing to OPIC, including in any action or
proceeding to protect OPIC's rights in any proceeding relating to
any bankruptcy or insolvency proceeding involving the Company; and
(3) the assessment, preparation, review, execution and, when:
appropriate, registration of any amendment of or waiver to this
Agreement, any other Financing Agreement, any Project Agreement or
any other document related to this Agreement.
SECTION 3.13. PAYMENTS.
(a) PAYING AGENT. To assure prompt payment of all amounts due
hereunder, the Company shall make all payments required by this Agreement to be
made to the Paying Agent on behalf of OPIC (to be held by the Paying Agent in
trust as provided in the Funding Agreement) at the times specified in and in
accordance with the Funding Agreement, unless, until, and to the
<PAGE>
Omolon - 45 - OPIC Finance Agreement
extent OPIC gives the Company written notice otherwise. Interest on amounts
delivered to the Paying Agent shall accrue interest as provided in the Funding
Agreement.
(b) OPIC. If OPIC shall from time to time direct that any payments due
under this Agreement be made directly to OPIC, such payments shall be made when
due in accordance with the following wire instructions (via a United States
domestic bank):
U.S. Treasury Department
ABA No. 0210-3000-4 TREASNYC/CTR/BNF=AC71000001
OBI=OPIC Loan No. 118-94-130-IG
(c) DOLLARS. The Company shall make each payment due under this
Agreement in Dollars in immediately available funds on the date when due. This
is an international loan transaction in which the specification of Dollars is of
the essence, and such currency shall be the currency of payment in all events.
The payment obligations of the Company hereunder shall not be novated,
discharged, or satisfied by an amount paid in another currency, whether pursuant
to a judgment or otherwise, to the extent that the amount so paid on prompt
conversion to Dollars or transfer to the Paying Agent (at its Corporate Trust
Office, as defined in the Funding Agreement) or OPIC ((as provided in Subsection
3.13(b)) under normal banking procedures does not yield the amount of Dollars
then due. If any payment by the Company, whether pursuant to a judgment or
otherwise, upon conversion and transfer, does not result in the payment of such
amount of Dollars at the place such amount is due, OPIC shall be entitled to
demand immediate payment of, and shall have a separate cause of action against
the Company for, the additional amount necessary to yield the amount then due.
If OPIC, upon the conversion of such judgment into Dollars, receives (as a
result of currency exchange rate fluctuations) an amount greater than that to
which it was entitled, OPIC shall reasonably promptly reimburse any excess
amount.
(d) WITHOUT DEDUCTION OR WITHHOLDING. The Company shall make each
payment of principal, interest, and every other amount due pursuant to this
Agreement:
(1) without any offset, defense, or counterclaim for any reason
whatsoever; and
(2) free of any withholding or other deduction for Covered Taxes.
(e) GROSS-UP FOR COVERED TAXES. If the Company is prevented by law or
otherwise from making any payment due hereunder free of any Covered Taxes, then
the Company shall pay such additional principal, interest, or other amount (as
the case may be) as may be necessary so that the actual amount received after
such deduction or withholding of Covered Taxes (and after deduction of an amount
equal to any additional taxes or other charges payable as a consequence of the
payment of such additional amounts) shall equal the amount that would have been
received if such deduction or withholding of Covered Taxes were not required.
SECTION 3.14. INSUFFICIENT PAYMENTS.
<PAGE>
Omolon - 46 - OPIC Finance Agreement
If OPIC shall at any time receive less than the full amount then due and
payable to it under this Agreement, 0PIC shall have the right to allocate and
apply such payment in any way or manner and for such purpose or purposes under
this Agreement as OPIC in its sole discretion shall determine, notwithstanding
(a) any instruction that the Company or any other Person may give to the
contrary, or (b) any allocation of payments set forth in the Funding Agreement.
SECTION 3.15. OPIC's BOOKS AND RECORDS.
The books and records of OPIC showing:
(1) Disbursements, prepayments, and repayments;
(2) the computation and payment of interest, Default Interest,
Commitment Fees, Cancellation Fees, Facility Fees; and
(3) any other amounts due from the Company hereunder or the receipt
thereof
shall be conclusive and binding on the Company, absent manifest error.
ARTICLE IV
CONDITIONS OF DISBURSEMENT
SECTION 4.01. CONDITIONS OF FIRST DISBURSEMENT
Unless OPIC otherwise agrees in writing, the obligation of OPIC to
deliver Issuing Instructions to the Paying Agent and to authorize the making of
the first Disbursement of the Loan shall be subject to the performance by the
Company of all its obligations theretofore to be performed under this Agreement
and to the fulfillment, in form and substance satisfactory to OPIC in its sole
discretion, prior to or concurrently with the making of such first Disbursement,
of the following conditions and their continued fulfillment on the date of the
first Disbursement:
(a) Financing Agreements. The following agreements, each in form and
substance satisfactory to OPIC, shall have been duly executed by the respective
parties thereto (if they have not already been entered into) and shall have
become (or, as the case may be, shall remain) unconditional and fully effective
as to every party thereto in accordance with their respective terms without
default (except for this Agreement having become unconditional and fully
effective, if that is a condition of any of such agreements):
(1) the EBRD Loan Agreement;
(2) the Funding Documents;
<PAGE>
Omolon - 47 - OPIC Finance Agreement
(3) the Cyprus Magada Guaranty;
(4) the Cyprus Amax Guaranty;
(5) the Security Sharing Agreement;
(6) the Cyprus Support Agreement; and
(7) the Russian Shareholders Support Agreement;
and OPIC shall have received a duly executed original (or, in the case of the
EBRD Loan Agreement, a certified copy) of each such agreement.
(b) PROJECT AGREEMENTS. The following agreements, each in form and
substance satisfactory to OPIC, shall have been duly executed by the respective
panics thereto (if they have not already been entered into) and shall have
become (or, as the case m ay be, shall remain) unconditional and fully effective
as to each party thereto in accordance with their respective terms (except for
this Agreement having become unconditional and fully effective, if that is a
condition of any of such agreements):
(1) the License (including the License Agreement);
(2) the Construction Contract;
(3) the Management Agreement;
(4) the Roskomdragmet Agreement;
(5) the Rosvneshtorgbank Agreement;
(6) the Offshore Bank Account Agreement;
(7) the Blocked Account Agreement;
(8) the Russian Blocked Account Agreement;
(9) the Reclamation Agreement;
(10) the Foundation Agreement; and
(11) the Memorandum of Understanding.
and OPIC shall have received a certified copy of each such agreement.
<PAGE>
Omolon - 48 - OPIC Finance Agreement
(c) SECURITY. The Security shall have been validly created and perfected
in a manner satisfactory to OPIC pursuant to the following Security Documents:
(1) the Contract Pledge;
(2) the Cyprus Magadan Share Pledge;
(3) the Enterprise Mortgage;
(4) the Equipment Pledge;
(5) the Goods Pledge;
(6) the Immovables Mortgage;
(7) the Insurance Assignment;
(8) the Offshore Account Pledge;
(9) the Omolon Share Pledge; and
(10) the Russian Account Pledge;
and OPIC shall have received a duly executed original of each such Security
Document, together with any other documents, recordings, filings, notifications
and registrations which are required for the creation, validity, perfection or
priority of the Security and the Liens of the Project Lenders in or under the
Security Documents as listed in Schedule X to the EBRD Loan Agreement.
(d) CHARTERS. The Charter of the Company shall be in form and substance
satisfactory to OPIC, and OPIC shall have received certified copies of (1) the
Charter of the Company, (2) the certificates of registration of the Company with
the Russian Agency for International Cooperation and Development and the
Administration of the Magadan Region, and (3) the Charters (and, if relevant,
the certificates of registration and certificates of good standing) of Cyprus
Amax, Cyprus Gold, the Shareholders, the Contractor and, at the request of OPIC,
any other parties to the Financing Agreements and Project Agreements, each as
amended to date.
(e) APPROVALS. There shall have been obtained or made all governmental,
corporate, creditors', shareholders' and other necessary licenses, approvals,
consents, filings and registrations for:
(1) the financing and funding by OPIC under this Agreement and the
Funding Documents,and by EBRD under the EBRD Loan Agreement, and by
any Shareholder under any Subordinated Loans;
(2) the carrying on of the business of the Company as it is presently
carried on and is contemplated to be carried on in accordance with
the Development Plan;
<PAGE>
Omolon - 49 - OPIC Finance Agreement
(3) the construction and operation of the Project and the carrying out
of the Financing Plan;
(4) the due execution and delivery of, and performance under, this
Agreement, the Financing Agreements, the Project Agreements and the
Security, and any other documents in implementation thereof, by the
Company, the Shareholders, the Contractor and the other parties
thereto, and the validity and enforceability thereof;
(5) the establishment and maintenance of the Offshore Bank Account, the
Disbursement Subaccount, the Roskomdragmet Sales Subaccount, the
Export Sales Subaccount, the Revenue Subaccount and the Cash
Collateral Subaccount;
(6) the sale and export of dore and gold as contemplated by the
Development Plan and the Marketing Agreements; and
(7) the remittance to OPIC or its assigns as provided for in this
Agreement of all monies payable in respect of this Agreement and the
Security;
including, without limitation, (A) the authorizations of the Persons signing the
Financing Agreements and Project Agreements on behalf of the Company, Cyprus
Amax, Cyprus Gold, the Shareholders, the Contractor and the other parties
thereto to sign such documents and to bind the respective parties thereby, (B)
the authorization of the Central Bank of Russia for the incurrence and repayment
of the Indebtedness incurred under this Agreement and the EBRD Loan Agreement
and the establishment and operation of the Offshore Bank Account as contemplated
herein, and (C) the major construction, environmental and operating permits and
approvals listed in Schedule V to the EBRD Loan Agreement (other than any such
construction, environmental or operating permit or approval which (i) is not
then needed for the Project, (ii) because it is premature, cannot then be
obtained, and (iii) there is no reason to believe the Company will not be able
to obtain at the time such permit or approval is needed for the Project); and
OPIC shall have received certified copies of all such licenses, approvals,
consents, filings and registrations.
(f) SPECIMEN SIGNATURES. OPIC shall have received (1) the certificate of
incumbency and authority referred to in Section 8.04, substantially in the form
of Schedule Y to the EBRD Loan Agreement and (2) a certificate of an appropriate
officer of Cyprus Amax, Cyprus Gold, each Shareholder, the Contractor and, at
the request of OPIC, any other party to the Financing Agreements and Project
Agreements certifying the name and specimen signature of each Person authorized
to sign on behalf of such party the Financing Agreements and Project Agreements
to be entered into and performed by such party.
(g) EQUITY. OPIC shall have received satisfactory evidence that (1) the
Shareholders have contributed in a manner satisfactory to the OPIC at least
$80,000,000 (or the equivalent thereof in other currencies at then current rates
of exchange) in paid-in capital to the Company, and (2) the Company has
expended, or allocated for expenditure on imports of goods and services,
substantially all of such paid4n capital on Project Costs, including a list of
Project Costs paid by the Company to Shareholders, which list shall be
satisfactory to OPIC.
<PAGE>
Omolon - 50 - OPIC Finance Agreement
(h) INSURANCE. OPIC shall have received the insurance certificate
referred to in Section 5.19(d) showing that all insurance referred to in such
report and all other insurance policies, certificates and endorsements required
pursuant to Section 5.03 are in full force and effect.
(i) DEVELOPMENT PLAN. OPIC shall have received the Development Plan, in
form and substance satisfactory to OPIC and the Independent Engineer.
(j) BANK ACCOUNTS. OPIC shall have received evidence satisfactory to
OPIC that the Offshore Bank Account, the Disbursement Subaccount, the Revenue
Subaccount, the Cash Collateral Subaccount and the Russian Bank Accounts have
been duly established.
(k) SURFACE RIGHTS. OPIC shall have received evidence satisfactory to
OPIC that the Company has been granted all appurtenant surface rights required
for the Project.
(l) AUDITORS LETTER. OPIC shall have received a certified copy of a
letter to the Auditors from the Company substantially in the form of Schedule Z
to the EBRD Loan Agreement.
(m) PROCESS AGENT APPOINTMENTS. OPIC shall have received written
confirmations from the agents for service of process appointed by the Company
pursuant to Section 7.04.B, by Cyprus Magadan pursuant to Cyprus Magadan
Guaranty, the Cyprus Support Agreement and the Omolon Share Pledge, by Cyprus
Amax pursuant to the Cyprus Amax Guaranty and the Cyprus Support Agreement, by
Cyprus Gold pursuant to the Cyprus Magadan Share Pledge and by the Russian
Shareholders pursuant to the Russian Shareholders Support Agreement and the
Omolon Share Pledge of their acceptances of such appointments, each
substantially in the form of Schedule AA to the EBRD Loan Agreement.
(n) LEGAL OPINIONS. OPIC shall have received:
(1) the favorable opinion of special Russian counsel to the Company
acceptable to OPIC regarding such matters incident to the
transactions contemplated by this Agreement as OPIC shall reasonably
request, which opinion shall be in form and substance satisfactory
to OPIC, together with a reliance opinion thereon of Coudert
Brothers, special New York counsel to the Borrower, substantially in
the form of Schedule BB to the EBRD Loan Agreement;
(2) the favorable opinion of Coudert Brothers, special English counsel
to the Company, substantially in the form of Schedule CC to the EBRD
Loan Agreement;
(3) the favorable opinion of Coudert Brothers, special New York counsel
to the Company, substantially in the form of Schedule DD to the EBRD
Loan Agreement;
<PAGE>
Omolon - 51 - OPIC Finance Agreement
(4) the favorable opinion of Freshfields, special Russian counsel to the
Project Lenders, regarding such matters incident to the transactions
contemplated by this Agreement as OPIC shall reasonably request,
which opinion shall be in form and substance satisfactory to OPIC;
and
(5) the favorable opinion of Freshfields, special English counsel to the
Project Lenders, substantially in the form of Schedule EE to the
EBRD Loan Agreement.
SECTION 4.02. CONDITIONS FOR ANY DISBURSEMENT
The obligation of OPIC to deliver Issuing Instructions to the Paying
Agent and to authorize the making of a Disbursement shall also be subject to the
fulfillment, in form and substance satisfactory to OPIC, of the conditions that,
on the date of the applicable Disbursement Request and on the date of such
Disbursement:
(a) CONTINUING VALIDITY OF DOCUMENTS. All documents and instruments
delivered to OPIC pursuant to Section 4.01 shall be in full force and effect.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
confirmed or made by the Company in Article II and all other representations and
warranties made by the Company, Cyprus Amax, Cyprus Gold, the Shareholders and
the Contractor in the Financing Agreements and the Project Agreements shall be
true on and as of such dates with the same effect as though such representations
and warranties had been made on and as of such dates.
(c) NO DEFAULT. No Event of Default and no Potential Event of Default
shall have occurred and be continuing and the Company shall not, as a result of
such Disbursement, be in violation of its Charter, any provision contained in
any agreement or instrument to which the Company is a party (including this
Agreement) or by which the Company is bound or any law, statute, rule,
regulation, judgment, decree or order applicable to the Company.
(d) NO MATERIAL ADVERSE CHANGE. Nothing shall have occurred which might
have a Material Adverse Effect.
(e) NO POLITICAL EVENT. No Qualified Political Event and no event that,
with the passage of time or otherwise, might become a Qualified Political Event
shall have occurred and be continuing and no political violence claim in respect
of a material or substantial part of the Company's assets or expropriation claim
shall have been made under any contract of insurance issued by OPIC in support
of the Project.
(f) USE OF PROCEEDS. The proceeds of such Disbursement shall, at the
time of request therefor, be needed by the Company solely for the purpose of
financing Project Costs and OPIC shall have received such evidence as to the
proposed utilization of the proceeds of such Disbursement and the utilization of
the proceeds of any prior Disbursement as OPIC shall reasonably require,
including, in the case of any Disbursement which is being used in whole or in
<PAGE>
Omolon - 52 - OPIC Finance Agreement
part to finance amounts owing under the Construction Contract or any supply or
other contract entered into thereunder, the invoice of the Contractor or the
relevant supplier.
(g) DISBURSEMENT REQUIREMENTS AND LIMITATIONS. The requested
Disbursement satisfies all of the requirements set forth in Section 3.02, and
the Company has timely complied with the Disbursement procedures set forth in
Section 3.03.
(h) FUNDING ARRANGEMENTS. Suitable arrangements shall have been made for
funding the Disbursement, in accordance with the Funding Documents, which
funding arrangements shall be satisfactory to OPIC in form and substance,
including without limitation, satisfaction by the Company of all conditions
precedent to the obligations of any other party to the Funding Documents and
performance by the Company of all other obligations on its pan to be performed
prior to the making of the first Disbursement pursuant to any Financing
Agreement, and OPIC shall have received immediately available funds in the
amount of the proposed Disbursement pursuant to the Funding Documents (or such
funds are available at the direction of OPIC pursuant to the Funding Documents).
(i) COST OVERRUNS. OPIC shall be satisfied, on the basis of the opinion
of the Independent Engineer, that the Project Costs (including, without
limitation, financing costs) necessary to achieve physical completion of the
Project will not exceed by more than $10,000,000 (or the equivalent thereof in
other currencies at then current rates of exchange) the total amount thereof set
forth in Section 2.01(b) or, if OPIC is not so satisfied as a result of delay in
completion or otherwise, OPIC shall have received satisfactory evidence that the
Shareholders have contributed not less than 50% of the full amount of such
excess in paid-in capital or Subordinated Shareholder Loans to the Company and
that the Company has expended 100% of such paid-in capital and Subordinated
Shareholder Loans on the Project.
(j) TRANCHE 2 LOAN. In the case of any Disbursement of the Tranche 1
Loan, the Tranche 2 Loan shall have previously been disbursed in full in the
amount of $5,000,000.
(k) EBRD. EBRD shall have confirmed to OPIC its intention to make a
disbursement pursuant to the EBRD Loan Agreement on or before the Disbursement
Date, and have advised OPIC that all of the conditions precedent to EBRD making
such disbursement as required by the EBRD Loan Agreement have been (or are
reasonably expected to be) satisfied or waived by the proposed Disbursement
Date.
(i) OTHER. OPIC shall have received such other documents and opinions as
OPIC may reasonably request.
(m) DEVELOPMENT PLAN. The Project as developed to date shall conform in
all material respects with the detailed description thereof included in the
Development Plan for such stage of development, except as otherwise agreed with
the Project Lenders.
<PAGE>
Omolon - 53 - OPIC Finance Agreement
ARTICLE V
AFFIRMATIVE COVENANTS
Unless OPIC shall otherwise agree in writing:
SECTION 5.01. PROJECT IMPLEMENTATION
The Company shall carry out the Project substantially in accordance with
the Development Plan and cause the financing specified in the Financing Plan to
be applied exclusively to the Project.
SECTION 5.02. MAINTENANCE AND CONDUCT OF BUSINESS
(a) The Company shall (1) maintain its corporate existence in compliance
with all applicable laws and regulations, (2) conduct its business efficiently,
in accordance with sound engineering, financial and business practices, in a
good workmanlike manner, with due regard for the environment and in compliance
with all applicable statutes, laws, regulations, rules, orders and decrees of
the Russian Federation and any other applicable jurisdiction, (3) keep and
maintain all of its assets required for the Project in good repair, working
order and condition, and (4) ensure that the Project is constructed, maintained
and operated in accordance with good international practices in the gold mining
industry. Without limiting the foregoing, the Company shall comply with the
Environmental Standards and its obligations under the Reclamation Agreement.
(b) [Reserved.]
SECTION 5.03. INSURANCE
The Company shall keep its properties and business insured with
financially sound and reputable insurers against loss or damage in accordance
with the requirements of Schedule FF to the EBRD Loan Agreement.
SECTION 5.04. ACCOUNTING
The Company shall promptly and diligently install, and thereafter
maintain, an accounting and cost control system satisfactory to OPIC and
maintain books of account and other records adequate to reflect truly and fairly
the financial condition of the Company and the results of its operations
(including the progress of the Project) in conformity with Generally Accepted
Accounting Principles. The Company shall maintain Price Waterhouse, or such
other firm of independent public accountants as may be acceptable to OPIC, as
Auditors of the Company and authorize, by letter substantially in the form of
Schedule Z to the EBRD Loan Agreement, the
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Omolon - 54 - OPIC Finance Agreement
Auditors to communicate directly with OPIC at any time regarding the Company's
accounts and operations. OPIC shall provide notice to the Company of any
intended communications with the Auditors and, for the purpose of minimizing
expenses, shall, in the case of any requested information, give the Company a
reasonable opportunity to provide such information directly to OPIC, provided
that, if OPIC is not satisfied with the response of the Company to its request
for information, OPIC may communicate directly with the Auditors.
SECTION 5.05. CONTINUING GOVERNMENTAL AND OTHER APPROVALS
The Company shall obtain or make, and shall maintain in force (or, where
appropriate, renew), all governmental, corporate, creditors', shareholders' and
other necessary licenses, approvals, consents, filings and registrations
required for the purposes described in Section 4.01(e) (other than any
construction, environmental or operating permit or approval which (i) is not
then needed for the Project, (ii) because it is premature, cannot then be
obtained, and (iii) there is no reason to believe the Company will not be able
to obtain at the time such permit or approval is needed for the Project), and
comply in all material respects with all conditions and obligations to which
such licenses, approvals, consents, filings and registrations may be subject.
SECTION 5.06. SECURITY
The Company shall, at its own cost, create, perfect and maintain (or,
where appropriate, renew) the Security in a manner satisfactory to OPIC and take
all actions requested by OPIC which are necessary to ensure that the Liens
created by the Security Documents constitute valid and perfected Liens of first
priority over the collateral purported to be covered thereby, securing payment
of all obligations of the Company under this Agreement and the other Financing
Agreements and ranking senior to the claims of all third parties other than
claims secured by Permitted Liens.
SECTION 5.07. COMPLIANCE WITH OTHER OBLIGATIONS
The Company shall comply with all agreements to which it is a party or
by which it or any of its properties or assets is bound.
SECTION 5.O8. TAXES; STAMP DUTIES
(a) The Company shall pay when due all of its Taxes including without
limitation any Taxes against any of its properties, other than Taxes which are
being contested in good faith and by proper proceedings and as to which adequate
reserves have been set aside for the payment thereof. The Company shall make
timely filings of all Tax returns and governmental reports required to be filed
or submitted under any applicable law or regulation.
(b) [Reserved].
<PAGE>
Omolon - 55 - OPIC Finance Agreement
SECTION 5.09. PROJECT AGREEMENTS
(a) The Company shall maintain all Project Agreements and Financing
Agreements to which the Company is a party in full force and effect without
material modification and perform its obligations under, and not commit any
material breach of or default under, any such Project Agreement.
(b) The Company shall not terminate, amend in any material respect or
grant any material waiver in respect of any provision of any oft he Project
Agreements or Financing Agreements to which it is a party, or consent to any
assignment of any Project Agreement by any other party thereto; provided that
OPIC shall not unreasonably withheld its consent to a termination of a Project
Agreement if the Company enters into a substitute agreement in form and
substance satisfactory to OPIC with a third party acceptable to 0PIC and grants
to the Project Lenders a security interest in all of its rights, interests and
benefits under such substitute agreement pursuant to an amendment to the
Contract Pledge in form and substance satisfactory to 0PIC, in which case such
substitute agreement shall become a Project Agreement hereunder.
SECTION 5.10. OFFSHORE BANK ACCOUNT
The Company shall establish and maintain a bank account denominated in
Dollars at the principal London branch of Citibank, N.A. (the "Offshore Bank
Account"), which account shall be pledged to Moscow Narodny Bank Limited, as
security trustee for the Project Lenders, as security for all amounts payable by
the Company under this Agreement, the EBRD Loan Agreement and the other
Financing Agreements. The Company shall maintain five subaccounts of the
Offshore Bank Account designated as the Disbursement Subaccount, the
Roskomdragrnet Sales Subaccount, the Export Sales Subaccount, the Revenue
Subaccount and the Cash Collateral Subaccount.
SECTION 5.11. DISBURSEMENT SUBACCOUNT
All Disbursements under this Agreement and all disbursements under the
EBRD Loan Agreement shall be deposited into the Disbursement Subaccount. Amounts
in the Disbursement Subaccount may be withdrawn by the Company without the prior
approval or authorization of OPIC only for the purpose of paying Project Costs
in accordance with the Development Plan and the annual capital expenditure and
operating budgets approved by OPIC pursuant to Section 5.18.
SECTION 5.12. SALES AND REVENUE SUBACCOUNTS
(a) The Company shall ensure that (1) all amounts paid to the Company by
Roskomdragmet under the Roskomdragmet Agreement in currencies other than Roubles
are deposited into the Roskomdragrnet Sales Subaccount, and (2) upon release of
such amounts in accordance with Article 9 of the Roskomdragmet Agreement and
with the Blocked Account Agreement, such amounts are transferred from the
Roskomdragmet Sales Subaccount to the Revenue Subaccount. Amounts may be
withdrawn from the Roskomdragmet Sales Subaccount
<PAGE>
Omolon - 56 - OPIC Finance Agreement
only for the purpose of transferring such amounts to the Revenue Subaccount or
paying such amounts back to Roskomdragmet in accordance with Article 9.2(a) of
the Roskomdragrnet Agreement and with the Blocked Account Agreement. The Company
shall not withdraw funds from the Roskomdragmet Sales Subaccount for any other
purpose without the prior written consent of OPIC.
(b) The Company shall ensure that all amounts paid to the Company in
respect of the sale of dore outside of the Russian Federation, whether through
Rosvneshtorgbank pursuant to the Rosvneshtorgbank Agreement or otherwise, and
all other export revenues are, except as provided in Section 5.14, deposited
into the Export Sales Subaccount. If any such amounts are received by the
Company in any other account or place, it shall immediately transfer such
amounts to the Export Sales Subaccount. Amounts may be withdrawn from the Export
Sales Subaccount only for the purpose of transferring such amounts to one of the
Russian Bank Accounts to the extent (and only to the extent) that such amounts
are subject, in accordance with then applicable law, to mandatory conversion
into Roubles and transfer to the Russian Federation. The Company shall ensure
that any amounts remaining in the Export Sales Subaccount after any such
mandatory. conversion and transfer to the Russian Federation are transferred to
the Revenue Subaccount. The Company shall not withdraw funds from the Export
Sales Subaccount for any other purpose without the prior written consent of
OPIC.
(c) Except as provided in Sections 5.12(a) and 5.12(b), the Company
shall ensure that all revenues of the Company and any other payments made to the
Company, including without limitation any payment made to the Company under the
Construction Contract, the Supply Contracts, the Marketing Agreements and the
other Project Agreements, other than any such amounts which are received in
Roubles or which the Company is required by applicable law to convert into
Roubles or retain in or remit to the Russian Federation and other than refunds
of Russian value added tax financed by the value added tax facility referred to
in Section 6.04(a)(5), are deposited into the Revenue Subaccount.
(d) As long as no Event of Default or Potential Event of Default has
occurred and is continuing, amounts in the Revenue Subaccount may be withdrawn
by the Company pursuant to payment instructions issued in accordance with the
Offshore Account Pledge without the prior approval or authorization of OPiC only
for the purpose of transferring funds to the Russian Bank Accounts to the extent
(and only to the extent) required by the authorization issued by the Central
Bank of Russia for the establishment and operation of the Offshore Bank Account
or for the purpose of making the following payments in the following order:
(1) Operating Costs denominated in currencies other than Roubles in
accordance with the Development Plan and annual capital expenditure
and operating budgets approved by OPIC in accordance with Section
5.18;
(2) interest due and payable on the Loan and the EBRD Loan (other than
the Tranche 2 Supplemental Spread and interest due and payable on
the Unguaranteed Portion of the EBRD Tranche 2 Loan to the extent
exceeding interest accruing at the rate specified in Section
3.02(c)(3)(A) of the EBRD Loan Agreement);
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Omolon - 57 - OPIC Finance Agreement
(3) scheduled repayment installments of principal of the EBRD Loan due
and payable under Section 3.06(a) of the EBRD Loan Agreement and
scheduled repayment installments of principal of the Tranche l Loan
and Tranche 2 Loan due and payable under Section 3.05 hereof;
(4) transfers to the Cash Collateral Subaccount until the balance of the
Cash Collateral Subaccount equals the lesser of the amount specified
in Section 5.13(1 ) and the amount specified in Section 5.13(2);
(5) in equal amounts, (A) Tranche 2 Supplemental Spread and interest due
and payable on the Unguaranteed Portion of the EBRD Tranche 2 Loan
to the extent exceeding interest accruing at the rate specified in
Section 3.02(c)(3)(A) of the EBRD Loan Agreement, and (B) to the
extent permitted by Section 6.09(c), management fees payable under
the Management Agreement in an amount not to exceed 4% of the
Company's gross sales;
(6) management fees due and payable under the Management Agreement to
the extent that such management fees exceed those payable under sub-
category (5)(B) above;
(7) prepayment of principal of the Loan as required by Section 3.06(a)
of this Agreement and prepayment of principal of the EBRD Loan as
required by Section 3.07(b) of the EBRD Loan Agreement; and
(8) to the extent that, after payments are made in respect of categories
(1) through (7) above, the balances of the Revenue Subaccount and
the Russian Bank Accounts exceed in the aggregate the lesser of (A)
the equivalent of $3,000,000 and (B) estimated Operating Costs for
the next following 45 days, prepayment of principal of the Loan in
accordance with Section 3.07, prepayment of principal of the EBRD
Loan in accordance with Section 3.07(a) of the EBRD Loan Agreement
and transfers to the Russian Bank Accounts for the purpose of making
Shareholder Distributions to the extent permitted by Section 6.01.
The amounts of the payments to be made by the Company out of the Revenue
Subaccount under categories (2) through (8) above shall be calculated on the
date two Banking Days prior to each Interest Payment Date and payments shall be
made by the Company out of the Revenue Subaccount under categories (2) through
(8) above only in accordance with the amounts as so calculated. In the event
that the balance of the Revenue Subaccount is insufficient to pay any such
category (or any sub-category) in full as of such date, the Company shall,
except as otherwise specified for category (5) and except in the case of
category (8) (but subject to Section 6.12), apply the amounts available in the
Revenue Subaccount to pay each party entitled to payment in such category (or
sub-category) on a pro rata basis in accordance with the amount due to each such
party in such category (or sub-category).
<PAGE>
Omolon - 58 - OPIC Finance Agreement
(e) If an Event of Default or Potential Event of Default has occurred
and is continuing, the Company shall not be permitted to withdraw any amounts
from the Revenue Subaccount for any purpose without the prior written consent of
OPIC.
SECTION 5.13. CASH COLLATERAL SUBACCOUNT
At all times on and after the Project Completion Date, the Company shall
maintain a balance in the Cash Collateral Subaccount equal to not less than the
lesser of:
(1) an amount equal to (A) $13,500,000 less the face amount of the
Letter of Credit, if any, issued in accordance with Schedule Q of
the EBRD Loan Agreement, multiplied by (B) a fraction, the
denominator of which is $100,000,000 and the numerator of which is
the aggregate amount of all Disbursements and all disbursements made
under the EBRD Loan Agreement; and
(2) an amount equal to the sum of(A) the outstanding principal amount of
the Tranche 1 Loan, (B) the outstanding principal amount of the EBRD
Tranche 1 Loan, and (C) $5,000,000, less (D) the face amount of the
Letter of Credit, if any, issued in accordance with paragraph
l(b)(1) of Schedule Q to the EBRD Loan Agreement.
Amounts may be withdrawn by the Company from the Cash Collateral
Subaccount only for the purpose of paying principal and interest under this
Agreement and the EBRD Loan Agreement or to transfer any amount in excess of the
minimum balance set forth above to the Revenue Subaccount to the extent (and
only to the extent) required by the authorization issued by the Central Bank of
Russia for the establishment and operation of the Offshore Bank Account. The
Company shall not withdraw funds from the Cash Collateral Subaccount for any
other purpose without the prior written consent of OPIC.
SECTION 5.14. RUSSIAN BANK ACCOUNTS
The Company shall establish and maintain one or more bank accounts at
such banks located in the Russian Federation as may be proposed by the Company
and approved by OPIC (the "Russian Bank Accounts"), which accounts shall be
pledged to the Project Lenders as security for all amounts payable by the
Company under this Agreement, the EBRD Loan Agreement and the other Financing
Agreements. The Company shall ensure that all revenues of the Company and any
other payments made to the Company which, in either case, are received in
Roubles or which the Company is required by applicable law to convert into
Roubles or remit to or retain in the Russian Federation, including without
limitation any payments made to the Company in Roubles under the Construction
Contract, the Supply Contracts, the Marketing Agreements and the other Project
Agreements are deposited into one of the Russian Bank Accounts. As long as no
Event of Default or Potential Event of Default has occurred and is continuing,
amounts in the Russian Bank Accounts may be withdrawn by the Company to pay
Project Costs and Operating Costs, to pay dividends to the Shareholders to the
extent permitted by Section 6.01 and to convert such amounts into Dollars and
transfer such amounts to the
<PAGE>
Omolon - 59 - OPIC Finance Agreement
Revenue Subaccount, in each case without the prior approval of OPIC. The Company
shall not withdraw funds from the Russian Bank Accounts for any other purpose
without the prior written consent of OPIC. If an Event of Default or Potential
Event of Default has occurred and is continuing, the Company shall not be
permitted to withdraw any amounts from the Russian Bank Accounts without the
prior written consent of OPIC.
SECTION 5.15. DEBT SERVICE COVERAGE RATIOS
The Company shall, at all times after the first Repayment Date or, if
earlier, the first Interest Payment Date occurring after the Project Completion
Date, maintain (1) a Retrospective Debt Service Coverage Ratio for the preceding
Interest Period of not less than 1.25, and (2) a Loan Life Debt Service Coverage
Ratio of not less than 1.25.
SECTION 5.16. FURTHER DOCUMENTS
The Company shall execute all such other documents and instruments and
do all such other acts and things as OPIC may determine is necessary or
desirable to give effect to the provisions of this Agreement and the other
Financing Agreements and to cause the Financing Agreements-to be duly
registered, notarized and stamped in any applicable jurisdiction. The Company
hereby irrevocably appoints and constitutes OPIC as the Company's true and
lawful attorney with right of substitution (in the name of the Company or
otherwise) to execute such documents and instruments and to do such acts and
things in the name of and on behalf of the Company in order to carry out the
provisions hereof if, within a reasonable period of time (as specified by OPIC)
after notice from OPIC, the Company shall fail to do so.
SECTION 5.17. [RESERVED]
SECTION 5.18. ANNUAL BUDGETS
As soon as available but, in any event, not less than 90 days prior to
the beginning of each Financial Year, the Company shall furnish to OPIC the
Company's proposed annual budget for such Financial Year in form and level of
detail reasonably satisfactory to OPIC, including without limitation capital
expenditure, operating cost and revenue budgets and, prior to the end of the
Commitment Period, a financing plan showing a schedule of the estimated
Disbursements of the Loan and disbursements of the OPIC Loan during such
Financial Year. Within 30 days of receiving such annual budget, OPIC shall
notify the Company whether it approves such budget, which approval shall be
given if such budget does not materially vary from the Development Plan. In the
event that OPIC does not approve such budget, it shall advise the Company of the
reasons therefor and the Company shall make necessary adjustments and amendments
to such budget and resubmit such budget to OPIC for approval. If OPIC fails to
notify the Company within 30 days after receiving any budget that it approves or
disapproves of such budget, such budget shall, to the extent that such budget
does not materially vary from the Development Plan,
<PAGE>
Omolon - 60 - OPIC Finance Agreement
be deemed approved by OPIC. Once approved by OPIC, such budget shall not be
amended in any material respect without the prior written consent of OPIC.
SECTION 5.19. FURNISHING OF INFORMATION
(a) QUARTERLY. As soon as available but, in any event, within 60 days
after the end of each quarter of each Financial Year, the Company shall furnish
to OPIC:
(1) two copies of the Company's complete Financial Statements for such
quarter in form satisfactory to OPIC and certified by an Authorized
Officer of the Company, which Financial Statements shall specify the
balances of the Offshore Bank Account and each subaccount thereof
and the Russian Bank Accounts at the end of such quarter;
(2) a report on any factors materially affecting or which might
materially affect the Company's business and operations or its
financial condition;
(3) during the period prior to the physical completion of the Project, a
report, in a form satisfactory to OPIC and the Independent Engineer,
on the implementation and progress of the Project, including details
of capital expenditures and use of funds withdrawn from the
Disbursement Subaccount during such quarter, changes in Project
Costs and reserves and any other factors materially affecting or
which would reasonably be expected to materially affect the carrying
out of the Project or the implementation of the Financing Plan, with
sufficient detail and information as may be required by OPIC;
(4) during the period after the physical completion of the Project, a
report, in a form satisfactory to OPIC, on Project production,
including data on processing, output and prices achieved for
production, with sufficient detail and information as may be
required by OPIC; and
(5) a statement, in level of detail reasonably satisfactory to OPIC, of
all material financial transactions between the Company and each of
its Affiliates (including Cyprus Amax) and Shareholders, including
without limitation all payments made to Cyprus Magadan and Cyprus
Amax pursuant to the Management Agreement.
(b) ANNUALLY. As soon as available but, in any event, within 120 days
after the end of each Financial Year, the Company shall furnish to OPIC:
(1) two copies of its complete Financial Statements for such Financial
Year, together with an audit report thereon of the Auditors, all in
form satisfactory to OPIC;
(2) a letter from the Auditors commenting on, among other matters, the
adequacy of the Company's financial control procedures and
accounting systems, together with a copy of any other communication
sent by the Auditors to the Company or to its
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Omolon - 61 - OPIC Finance Agreement
management in relation to the Company's financial, accounting and other systems,
management and accounts;
(3) a report of the Auditors certifying that the Company was in
compliance with the financial covenants contained in this Article V
(other than Section 5.15) and in Article VI as of the end of such
Financial Year or, as the case may be, detailing any non-compliance;
(4) a management discussion and analysis of results for such Financial
Year, including a report on any factors materially affecting or
which might materially affect the Company's business and operations
or its financial condition, together with a certificate of an
Authorized Officer of the Company certifying that the Company is in
compliance with all of its obligations under this Agreement, the
other Financing Agreements and the Project Agreements and that there
exists no Event of Default or Potential Event of Default;
(5) a statement, in level of detail reasonably satisfactory to OPIC, of
all financial transactions between the Company and each of its
Affiliates (including Cyprus Amax) and Shareholders, including
without limitation details of all payments made to Cyprus Magadan
and Cyprus Amax pursuant to the Management Agreement;
(6) a report prepared in accordance with the Environmental Standards;
and
(7) a Self Monitoring Questionnaire.
(c) MONTHLY PROJECT PROGRESS REPORTS. Prior to the physical completion
of the Project, the Company shall furnish to OPIC and the Independent Engineer
as soon as available but, in any event, within 30 days after the end of each
calendar month, a report, in a form satisfactory to OPIC, of the Contractor on
the implementation and progress of, and expenditures on, construction of the
Project through the end of such calendar month, including estimates of remaining
construction-related costs and an explanation of any material deviations from
the budgeted amounts set forth in the Development Plan, with sufficient detail
and information as may be required by OPIC.
(d) INSURANCE. Prior to the first Disbursement and, thereafter, not less
than 30 days prior to the expiration date of any expiring insurance policy, the
Company shall, in accordance with the requirements of Schedule GG to the EBRD
Loan Agreement, submit to OPIC a certificate of insurance for each policy or
renewal policy required by Section 5.03 and such Schedule GG to the EBRD Loan
Agreement to be in effect.
(e) CONSULTANT; ACCOUNTS. The Company shall furnish promptly to OPIC,
the Independent Engineer and OPIC's environmental consultants such information
as OPIC, the Independent Engineer or OPIC's environmental consultants may from
time to time reasonably request. Without limiting the foregoing, the Company
shall, at the request of OPIC, furnish
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Omolon - 62 - OPIC Finance Agreement
promptly to OPIC statements of all transactions in relation to the Offshore Bank
Account and the Russian Bank Accounts.
(f) ACCESS. The Company shall permit, and shall procure that the
Contractor permits, representatives of OPIC, the Independent Engineer and OPIC's
environmental consultants, on reasonable notice and during normal business
hours, to visit the Project or any of the other premises where the business of
the Company is conducted or where the Project is being carried out and to have
access to its books of account and records. Without limiting the foregoing, the
Independent Engineer shall, at OPIC's direction and at the Company's expense,
visit the Kubaka Field once in each calendar year for the purpose of confirming
residual ore body reserves,
(g) CHANGES. The Company shall promptly inform OPIC of:
(1) any proposed change in any material respect in the nature or scope
of the Project or of the Development Plan or the business or
operations of the Company;
(2) any event, condition or change of circumstances, including without
limitation any pending or threatened litigation, arbitration, claim
or government investigation, which might have a Material Adverse
Effect;
(3) any proposed change of Russian law of which the Company has
knowledge which might have a Material Adverse Effect; and
(4) any material claims under insurance policies.
(h) ADVERSE EVENTS. Forthwith upon becoming aware of the occurrence of
any Event of Default, any Potential Event of Default, any Qualified Political
Event or any event that, with the passage of time or otherwise, might become a
Qualified Political Event or cause compensation to become payable under any
contract of insurance issued by OPIC in support of the Project, the Company
shall give OPIC notice thereof by facsimile transmission specifying the nature
of such Event of Default, Potential Event of Default, Qualified Political Event
or event and any steps the Company is taking to remedy the same.
(i) ENVIRONMENTAL; WORKER HEALTH AND SAFETY. Forthwith upon the
occurrence of any incident or accident relating to the Project, including but
not limited to any such incident or accident likely to have a material adverse
effect on the environment or worker health or safety, the Company shall give
OPIC notice thereof by facsimile transmission or telex specifying the nature of
such incident or accident and any steps the Company is taking to remedy the
same. Without limiting the generality of the foregoing, an incident or accident
is likely to have a material adverse effect on the environment or worker health
or safety if (1) any relevant Russian law requires notification of such incident
or accident to the authorities, (2) such incident or accident involves worker
fatality or multiple serious injuries requiring hospitalization, or (3) such
incident or accident has become public knowledge whether through media coverage
or otherwise.
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Omolon - 63 - OPIC Finance Agreement
(j) SHAREHOLDER AND DIRECTORS. Company shall give to OPIC notice
of the calling of any meeting of its shareholders or board of directors
indicating the agenda thereof no later than at the time that it gives official
notice of any such meeting to its shareholders or directors, as relevant. and
furnish promptly to OPIC two copies of(1) all notices, reports and other
communications of the Company to its shareholders, and (2) the minutes of all
meetings of its shareholders and board of directors. The Company shall permit a
representative of OPIC to attend, at the Company's expense, the annual meeting
of the Company's shareholders, which meeting shall immediately follow the
meeting of the Company's board of directors at which the Company's annual budget
is discussed.
(k) ENVIRONMENTAL AUDITS. The Company shall conduct environmental audits
of the Project in accordance with the Environmental Standards and engage a
reputable environmental consulting firm of international standing acceptable to
OPIC to confirm the results of such audits. Promptly after completion of each
such audit, the Company shall furnish the results thereof to OPIC.
(l) EXPLORATORY WORK RESULTS. The Company shall undertake such
additional development drilling and exploration work in the Kubaka Field which a
prudent operator of a comparable gold mine would undertake under similar
circumstances, including without limitation in-fill and development drilling and
additional check sampling of the unsampled exploration adits (or, if not
possible, other exploratory work) during the summer of 1995 and furnish all
results of such exploratory work to the Independent Engineer and OPIC.
SECTION 5.20. DEVELOPMENT PLAN
Not later than 30 days prior to the date of the first Disbursement, the
Company shall submit to OPIC for approval the proposed Development Plan for the
Project, including, without limitation, detailed technical plans and
specifications, a financing plan, an estimated construction schedule and budget,
operating plans and procedures, descriptions of proposed transportation and
marketing arrangements and a list of major equipment. Upon approval of such plan
by the Project Lenders, such plan shall constitute the Development Plan for
purposes of this Agreement.
ARTICLE VI
NEGATIVE COVENANTS
Unless OPIC shall otherwise agree in writing:
SECTION 6.01. DIVIDENDS
The Company shall not declare or pay any dividend, or make any
distribution on its share capital, or purchase, redeem or otherwise acquire any
shares of capital of the Company or any
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Omolon - 64 - OPIC Finance Agreement
option over the same, or make any payment of principal or interest on any
Subordinated Shareholder Loan or any other Shareholder Distribution (other than
payments of management fees pursuant to the Management Agreement as provided in
Section 5.12(d), to the extent permitted by Section 6.09(c)) prior to the later
of(A) the Project Completion Date and (B) 15 December 1997, and then only if:
(1) the Loan Life Debt Service Coverage Ratio is not less than 1.4 and
the Retrospective Debt Service Coverage Ratio for the preceding
Interest Period is not less than 1.25;
(2) no Event of Default, no Potential Event of Default, no Qualified
Political Event and no event that, with the passage of time or
otherwise, might become a Qualified Political Event or cause
compensation to become payable under any contract of insurance
issued by OPIC in support of the Project has occurred and is
continuing or is likely to occur;
(3) the Company gives OPIC and EBRD not less than 45 days' prior written
notice of such payment together with evidence in reasonable detail
that the conditions set forth in clause (1) have been satisfied;
(4) such payment is made only on a Interest Payment Date; and
(5) to the extent that such payment is in a currency other than Roubles,
such payment is made only in accordance with the provisions of
Section 5.12(d).
SECTION 6.02. CAPITAL EXPENDITURES
The Company shall not incur expenditures or commitments for expenditures
for fixed and other non-current assets, other than expenditures required for
carrying out the Project or for maintenance, repairs or replacements essential
to the operation of the Project, in an aggregate amount in excess of $500,000
(or the equivalent thereof in other currencies at then current rates of
exchange) in any Financial Year.
SECTION 6.03. LEASES
The Company shall not enter into any agreement or arrangement to acquire
by lease the use of any property or equipment of any kind, except to the extent
that the aggregate payments by the Company in respect of such leases do not
exceed $250,000 (or the equivalent thereof in other currencies at then current
rates of exchange) in any Financial Year.
SECTION 6.04. INDEBTEDNESS
(a) The Company shall not incur, assume or permit to exist any
Indebtedness except:
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Omolon - 65 - OPIC Finance Agreement
(1) that provided in the Financing Plan, including the Loan and the OPIC
Loan;
(2) Subordinated Shareholder Loans to finance Project Cost overruns;
(3) Short-term Debt incurred in the ordinary course of business other
than for money borrowed, including without limitation prepayments by
Roskomdragmet to the Company under the Roskomdragmet Agreement;
(4) Short-term Debt in Roubles in an aggregate amount not to exceed the
equivalent in Roubles of $4,000,000 (or such higher amount as may be
agreed by OPIC), incurred solely to finance the Company's working
capital requirements in Roubles; and
(5) Indebtedness in an aggregate amount not to exceed the equivalent in
Roubles of $5,000,000 (or such proper amount as may be agreed by
OPIC), incurred solely to finance refundable Russian value added tax
paid in connection with construction of the Project.
(b) The Company shall not enter into any agreement or arrangement to
guarantee or, in any way or under any condition, to become obligated for all or
any pan of any financial or other obligation of another Person.
SECTION 6.05. LIENS
The Company shall not create or permit to exist any Lien on any
property, revenues or other assets, present or future, of the Company, except:
(1) the Security;
(2) Liens over refunds of Russian value added tax to secure the
Indebtedness referred to in Section 6.04(a)(5);
(3) the right of Roskomdragmet, in accordance with Article 9.2(a) of the
Roskomdragmet Agreement, to refunds from the Roskomdragmet Sales
Subaccount of prepayments made under the Roskomdragmet Agreement; or
(4) any tax or other non-consensual Lien arising by operation of law or
other statutory Lien arising in the ordinary course of business,
provided that such Lien is for a sum which is not yet delinquent or
the validity or amount of such Lien or the sum secured by such Lien
is being contested in good faith and by proper proceedings and
adequate reserves have been set aside for the payment of such sum.
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Omolon - 66 - OPIC Finance Agreement
SECTION 6.06. HEDGING
The Company shall not, without the prior written consent of OPIC (not to
be unreasonably withheld), enter into any interest rate or currency swap,
interest rate cap or collar, forward rate agreement or other interest rate,
currency or commodity (including gold) hedge.
SECTION 6.07. ARM'S LENGTH TRANSACTIONS
The Company shall not enter into any transaction with any Person except
in the ordinary course of business, on ordinary commercial terms and on the
basis of arm's-length arrangements, or enter into any transaction whereby the
Company would pay more than the ordinary commercial price for any purchase or
would receive less than the full ex-works commercial price (subject to normal
trade discounts) for its products.
SECTION 6.08. PROFIT-SHARING AND MANAGEMENT ARRANGEMENTS
(a) The Company shall not enter into any partnership, profit-sharing or
royalty agreement or other similar arrangement whereby the Company's income or
profits are, or might be, shared with any third party other than pursuant to the
Management Agreement, the License, the Tranche 2 Loan and the EBRD Tranche 2
Loan.
(b) The Company shall not enter into any management contract or similar
arrangement whereby its business or operations are managed by any other Person
except as contemplated by the Management Agreement and the Construction
Contract.
(c) The Company shall not pay any management fee to Cyprus Magadan under
the Management Agreement (1) prior to the later of the Project Completion Date
and 15 December 1997, (2) on a day other than an Interest Payment Date, (3) if
an Event of Default or a Potential Event of Default has occurred and is
continuing, or (4) if Cyprus Magadan has notified OPIC, pursuant to the Cyprus
Magadan Guaranty, that a Political Event (as defined in the Cyprus Magadan
Guaranty) has commenced and such notification has not been withdrawn by Cyprus
Magadan pursuant to the Cyprus Magadan Guaranty. Except to the extent permitted
by Section 6.01 and this Section 6.09(c), the Company shall not make any
payments to Cyprus Magadan or Cyprus Amax or any Affiliate thereof other than of
Operating Costs consisting of reimbursable expenses payable pursuant to the
Management Agreement.
SECTION 6.09. INVESTMENTS
The Company shall not form or have any Subsidiary, or make or permit to
exist loans or advances (other than an interest free loan to the new subsurface
user of the Evenskoye Field in an amount not to exceed $8,000,000, if such loan
is required by Section 4.9 of the License Agreement) to, or deposits (other than
deposits in the Offshore Bank Account, the Russian Bank Accounts and the
accounts established in connection with the working capital facility referred to
in Section 6.04(a)(4) and the value added tax facility referred to in Section
6.04(a)(5)) with, other
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Omolon - 67 - OPIC Finance Agreement
Persons or equity or other investments in any Person or enterprise; provided,
however, that the funds deposited in the Offshore Bank Account and the Russian
Bank Accounts may be invested by the banks at which such accounts are located in
short-term investment grade marketable securities. Without limiting the
foregoing, the Company shall not open or maintain any bank accounts other than
the Offshore Bank Account, the Russian Bank Accounts and the accounts
established in connection with the working capital facility referred to in
Section 6.04(a)(4) and the value added tax facility referred to in Section
6.04(a)(5) and shall not open or maintain any subaccounts of the Offshore Bank
Account other than the Disbursement Subaccount, the Roskomdragmet Sales
Subaccount, the Export Sales Subaccount, the Revenue Subaccount and the Cash
Collateral Subaccount.
SECTION 6.10. CHANGES IN BUSINESS, CAPITAL AND CHARTER
(a) The Company shall not make changes to the nature of its contemplated
business or operations. The Company shall not make any material change in the
nature or scope of the Project or the Development Plan, including without
limitation any such change which would involve an increase in Project Costs of
more than 15% or a delay in Project Completion of more than 120 days.
(b) The Company shall not carry out any business or activity other than
businesses or activities substantially related to the Project as contemplated by
the Development Plan.
(c) The Company shall not make changes, or permit changes to be made, to
its capital except in accordance with the Financing Plan. The Company shall not
permit any change in the equity interest of, or any transfer of any shares held
in its registered capital by, any Shareholder other than a transfer of shares in
the Company by one Russian Shareholder to another Russian Shareholder provided
that such shares remain subject to the Omolon Share Pledge.
(d) The Company shall not make changes, or permit changes to be made, to
its Charter in any manner which would be inconsistent with the provisions of
this Agreement.
SECTION 6.11. PREPAYMENT OF LONG-TERM DEBT
The Company shall not (whether voluntarily or involuntarily) make any
prepayment, repurchase or early redemption of any Long-term Debt (including,
without limitation, the OPIC Loan, but excluding prepayments under the
Construction Contract in exchange for discounts), or make any repayment of any
Long-term Debt pursuant to any provision of any agreement or note which provides
directly or indirectly for acceleration of repayment in time or amount, unless
in any such case it shall contemporaneously make a proportionate prepayment of
the principal amount then outstanding of the Loan in accordance with the
provisions of Section 3.07(a).
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Omolon - 68 - OPIC Finance Agreement
SECTION 6.12. SALE OF ASSETS; MERGER
(a) The Company shall not sell, transfer, lease, grant a license to use
or otherwise dispose of all or a substantial part of its capital assets (whether
in a single transaction or in a series of transactions, related or otherwise).
(b) The Company shall not undertake or permit any merger, consolidation
or reorganization.
SECTION 6.13. WORKERS' RIGHTS.
The Company agrees not to take action to prevent its employees from
lawfully exercising their right of free association and their right to organize
and bargain collectively. The Company further agrees to observe all laws
relating to minimum age for employment of children, acceptable conditions of
work with respect to minimum wages, hours of work, and occupational health and
safety, and not to use forced labor. The Company is not responsible under this
Section 6.13 for actions of the Russian government.
ARTICLE VII
EVENTS OF DEFAULT, JURISDICTION, ARBITRATION
SECTION 7.01. EVENTS OF DEFAULT
Each of the following events and occurrences shall constitute an Event
of Default under this Agreement:
(a) PAYMENT DEFAULT. The Company shall have failed to pay when due any
principal of, or interest on, the Loan as required by this Agreement or the EBRD
Loan as required by the EBRD Loan Agreement.
(b) NEGATIVE COVENANT DEFAULT. The Company shall have failed to perform
any of its obligations under Article VI.
(c) OTHER OBLIGATIONS DEFAULT. The Company or any other party (other
than a Project Lender) shall have failed to perform any of its obligations under
this Agreement, any other Financing Agreement, any Project Agreement or any
other agreement between the Company on the one hand and OPIC or EBRD on the
other hand, the failure to perform which is not an Event of Default referred to
elsewhere in this Section 7.01, and any such failure to perform shall have
continued for a period of 30 days (in the case of a failure to perform by the
Company, any Affiliate of the Company or any Shareholder) or 60 days (in the
case of a failure to perform by any other party) after notice thereof shall have
been given to the Company by OPIC.
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Omolon - 69 - OPIC Finance Agreement
(d) REPRESENTATION DEFAULT. Any representation or warranty made or
confirmed by the Company, Cyprus Amax, Cyprus Gold, any Shareholder or the
Contractor in Article II, in any Financing Agreement, in any Project Agreement
or in any request for a Disbursement under this Agreement or for a disbursement
under the EBRD Loan Agreement shall have been false, incorrect or misleading in
respect of a material fact when made or confirmed.
(e) NATIONALIZATION DEFAULT. Any government or governmental authority
shall have condemned, nationalized, seized or otherwise expropriated all or any
substantial part of the property or other assets of the Company or of its share
capital or shall have assumed custody or control of such property or other
assets or of the business or operations of the Company or of its share capital
or shall have taken any action for the dissolution or disestablishment of the
Company or any action that would prevent the Company from carrying on its
business or operations. or a substantial part thereof, or otherwise prevent the
completion or operation of the Project; or the Company or any Shareholder shall
have made a claim under any insurance issued by OPIC (or similar insurance
issued by any other insurer) in connection with the Project.
(f) BANKRUPTCY DEFAULT. There shall have been entered against the
Company, Cyprus Amax, Cyprus Gold, or any Shareholder a decree or order by a
court adjudging the Company, Cyprus Amax, Cyprus Gold, or such Shareholder
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company, Cyprus Amax or such Shareholder under any applicable law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company, Cyprus Amax, Cyprus Gold, or such Shareholder or of any
substantial part of its property or assets, or ordering the winding up or
liquidation of its affairs; or the Company, Cyprus Amax, Cyprus Gold, or any
Shareholder shall have instituted proceedings to be adjudicated bankrupt or
insolvent, or consented to the institution of bankruptcy or insolvency
proceedings against it, or filed a petition or answer or consent seeking
reorganization or relief under any applicable law, or consented to the filing of
any such petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company, Cyprus Amax,
Cyprus Gold, or such Shareholder or of any substantial part of its property, or
made an assignment for the benefit of creditors, or admitted in writing its
inability to pay its debts generally as they become due; or any other event
shall have occurred which under any applicable law would have an effect
analogous to any of the events listed in this subsection; provided that any such
event in respect of a Russian Shareholder shall be an Event of Default only if
it has a Material Adverse Effect.
(g) CROSS DEFAULT. A default shall have occurred with respect to any
Indebtedness of Cyprus Amax in excess of $20,000,000 (or the equivalent thereof
in other currencies) or any Indebtedness of the Company (other than the Loan or
the OPIC Loan) or Cyprus Magadan or under any agreement pursuant to which there
is outstanding any such Indebtedness, and such default shall have continued
beyond any applicable period of grace; or an event of default shall have
occurred under the EBRD Loan Agreement.
(h) ABANDONMENT DEFAULT. The Company shall have ceased to carry on its
business; or the Project shall have been abandoned by the Company; or, following
the Project Completion Date, the operation of the Project shall have been
interrupted for a period in excess of 90
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Omolon - 70 - OPIC Finance Agreement
consecutive days or any periods in the aggregate in excess of 120 days during
any period of 12 consecutive months.
(i) PROJECT COMPLETION DEFAULT. Physical completion of the Project (as
certified by the Company and Cyprus Magadan in accordance with Schedule Q to the
EBRD Loan Agreement) shall not have occurred by the date 24 months from the date
of this Agreement, as such date shall be extended for a period (not to exceed,
in the aggregate, 12 months) equal to the duration of any suspension by EBRD of
the right of the Company to disbursements pursuant to Section 3.04 of the EBRD
Loan Agreement and for a period (not to exceed, in the aggregate, six months)
equal to the duration of any Force Majeure Event occurring during the Commitment
Period; or the Project Completion Date shall not have occurred by the date 18
months after physical completion of the Project.
(j) AGREEMENT DEFAULT. Any Financing Agreement or Project Agreement or
any other agreement required in connection with the construction or operation of
the Project or ancillary services shall have been terminated, rescinded or
cancelled for any reason (unless OPIC shall have consented to such termination
in accordance with Section 5.09('o)); or any Project Agreement shall have been
modified or amended without the prior written consent of OPIC; or any Financing
Agreement or Project Agreement shall be or become void or unenforceable or shall
be claimed to be so by any party thereto (other than a Project Lender).
(k) JUDGMENT DEFAULT. A final judgment or order for the payment of money
in excess of $2,000,000 (or the equivalent thereof in other currencies at then
current rates of exchange) shall be rendered against the Company or any of its
properties and such judgment or order shall continue to be unsatisfied for a
period of 30 consecutive days; or any legal proceeding (whether criminal or
civil) shall be instituted which, if adversely determined, might have a Material
Adverse Effect; or any injunction or other judicial order which might have a
Material Adverse Effect shall be issued against the Company.
(l) SECURITY DEFAULT. Any Security Document (other than the Immovables
Mortgage or the Enterprise Mortgage) for any reason (other than an act or
omission of OPIC or by OPIC) shall have ceased to constitute a valid and
perfected first priority security interest in and Lien on any of the collateral
purported to be covered thereby; or the Company shall have created or permitted
to exist any Lien (other than a Permitted Lien) on any of its property, revenues
or assets.
(m) APPROVALS DEFAULT. Any license, approval, consent, filing or
registration now or hereafter required for the execution, delivery or
performance by any party of any Financing Agreement or Project Agreement or to
construct, own, operate or maintain the Project or exploit the Kubaka Field
shall have been modified, revoked, withdrawn or withheld or shall have ceased to
remain in full force and effect, and such occurrence shall have a Material
Adverse Effect.
(n) CYPRUS AMAX DEFAULT. The credit rating given to Cyprus Amax by
Standard & Poor's Corporation shall have fallen below BB- at any time that any
amounts are guaranteed by Cyprus Magadan pursuant to the Cyprus Magadan
Guaranty; or Cyprus Amax or Amax Gold shall have failed at any time to own
indirectly 50% of the shares in the Company; or Cyprus
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Omolon - 71 - OPIC Finance Agreement
Amax or Amax Gold shall have ceased at any time to be entitled, either directly
or indirectly, to exercise such control over the management of the Company as is
provided for Cyprus Amax in the Company's Charter as it exists on the date
hereof or such management control shall have been reduced from that provided for
in the Company's Charter as it exists on the date hereof; or all or part of
Cyprus Amax's indirect shareholding in Cyprus Magadan shall have been
transferred to Amax Gold and Amax Gold shall have ceased to be an Affiliate of
Cyprus Amax.
(o) ADVERSE CHANGE DEFAULT. There shall have occurred a change of law or
of any regulation having the force of law which has a Material Adverse Effect;
or it shall have become unlawful for the Company, Cyprus Amax, Cyprus Gold, any
Shareholder or the Contractor to perform any material obligation under this
Agreement, any other Financing Agreement or any Project Agreement; or there
shall have occurred any action by any governmental body or agency or any
enactment, modification or change in the interpretation of any law, decree,
order or regulation which restricts or prohibits in any material way the
performance by the Company, Cyprus Amax, Cyprus Gold, any Shareholder or the
Contractor of their respective obligations under this Agreement, any other
Financing Agreement or any Project Agreement; or there shall have occurred a
change in the political or economic situation in the Russian Federation or other
adverse change in circumstances or in the business situation of the Company, any
Shareholder or the Contractor which, in the reasonable opinion of OPIC, has a
Material Adverse Effect.
(p) ENVIRONMENT DEFAULT. The Company or its businesses, operations,
assets, equipment, property, leaseholds or other facilities shall have failed in
any respect to comply with the Environmental Standards.
(q) COST OVERRUN DEFAULT. OPIC shall have determined that the Project
Costs (including, without limitation, financing costs) necessary to achieve
physical completion of the Project will, as a result of delays in completion or
otherwise, exceed by more than $10,000,000 (or the equivalent thereof in other
currencies at then current rates of exchange) the total amount thereof set forth
in Section 2.01(b) and the Shareholders shall have failed, within 60 days of
such determination, to make cash contributions of paid-in capital or
Subordinated Shareholder Loans to the Company in the amount of 50% of the full
amount of such excess.
(r) BANK ACCOUNT DEFAULT. The Company shall have withdrawn any funds
from the Offshore Bank Account, or any subaccount thereof, or the Russian Bank
Accounts for any purpose not permitted by this Agreement or otherwise in any
manner contrary to the terms of this Agreement, the Offshore Account Pledge or
the Russian Account Pledge; or, at any time after the Project Completion Date,
the balance of the Cash Collateral Subaccount shall be less than the minimum
amount specified in Section 5.13 for a period in excess of 15 consecutive days.
SECTION 7.02. ACCELERATION IN EVENTS OF DEFAULT
If any one or more Events of Default has occurred and is continuing,
OPIC may at any time in its sole discretion, do any or all of the following:
(1) Suspend or terminate the Commitment;
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Omolon - 72 - OPIC Finance Agreement
(2) Declare, by written demand for payment to the Company, any portion
or all of the outstanding principal amount of the Loan to be due and
payable whereupon such portion of the Loan shall immediately mature
and become due and payable together with interest accrued thereon
(together with any other amounts accrued or payable under this
Agreement or Notes, including any Make,Whole Premium, if any),
without any other presentment, demand, diligence, protest, notice of
acceleration, or other notice of any kind, all of which the Company
hereby expressly waives; and
(3) Without notice of default or demand, proceed to protect and enforce
its rights and remedies by appropriate proceedings, whether for
damages or the specific performance of any provision of this
Agreement, or in aid of the exercise of any power granted in this
Agreement or by law.
SECTION 7.03. AUTOMATIC ACCELERATION
Notwithstanding Section 7.02, if the Company shall have become
voluntarily or involuntarily dissolved, or becomes bankrupt or insolvent
(however such bankruptcy or insolvency may be evidenced):
(1) The Commitment shall be automatically terminated without notice of
any kind; and
(2) The principal of, and all accrued interest on, the Loan (together
with any other amounts accrued or payable under this Agreement and
the Notes, including a Make-Whole Premium, if any) shall thereupon
become immediately due and payable (anything in this Agreement to
the contrary notwithstanding) without any presentment, demand,
protest or notice of any kind, all of which are hereby expressly
waived by the Company.
SECTION 7.04. JURISDICTION, SERVICE OF PROCESS; WAIVER OF JURY.
(a) Jurisdiction. Without prejudice to the rights of OPIC to bring suit
in any appropriate domestic or foreign jurisdiction, any proceeding to enforce
this Agreement, the Notes, or any of the other Financing Agreements, or the
arbitral tribunal's decision pursuant to Section 7.05, may, at the option of
OPIC, be brought by OPIC in:
(1) any state or federal court of competent jurisdiction in the District
of Columbia of the United States of America;
(2) any state or federal court of competent jurisdiction in New York
City;
(3) the High Court of Justice in London, England; or
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Omolon - 73 - OPIC Finance Agreement
(4) any other jurisdiction where the Company or any of its property may
be found.
The Company hereby irrevocably consents and submits unconditionally to the non-
exclusive jurisdiction for itself and in respect of any of its property of any
such court. The Company hereby irrevocably waives:
(a) any objection which it may now or hereafter have to the laying of
the venue of any such legal action or proceeding in New York City,
Washington, D.C., or London, and
(b) any claim that New York City, Washington, D.C., or London is not a
convenient forum for any such legal action or proceeding.
The Company further agrees that final judgment against it in any such action or
proceeding arising out of or relating to this Agreement shall be conclusive and
may be enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and of the amount of the Company's
obligation.
(b) SERVICE OF PROCESS. The Company hereby agrees that service of
process, writ, judgment, or other notice of legal process shall be deemed and
held in every respect to be effective personal service upon it in any such
action or proceeding brought in:
(1) Washington, D.C., if made upon CT Corporation System, a corporation
organized and existing under the laws of the State of Delaware,
located on the date hereof at 1025 Vermont Avenue, NW, 4th Floor,
Washington DC 20005;
(2) New York City, if made upon CT Corporation System, a corporation
organized and existing under the laws of the State of Delaware,
located on the date hereof at 1633 Broadway, New York, New York
10019; and
(3) London, if made upon upon The Law Debenture Corporation p.l.c.,
located on the date hereof at Princes House, 95 Gresham Street,
London EC2V 7LY.
(collectively, the "PROCESS AGENTS" and each a "PROCESS AGENT"). Concurrently
with the execution of this Agreement, The Company shall provide OPIC with
evidence (in form and content satisfactory to OPIC):
(a) that each such Process Agent has been irrevocably designated and
appointed as the Company's authorized agent to receive, accept, and
acknowledge on The Company's behalf service of process in any such
action or proceeding in the jurisdiction of its offices; and
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Omolon - 74 - OPIC Finance Agreement
(b) that the fees of each such Process Agent have been paid through the
date that is six months after the Tranche 2 Prepayment Date.
The Company shall maintain such appointments of each of the Process Agents (or
that of successors satisfactory to OPIC) continuously in effect at all times
while any obligation hereunder exists. Nothing in this Agreement shall affect
OPIC's right to serve process in any other manner permitted by applicable law.
(c) JURY WAIVER. THE COMPANY AND OPIC EACH HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM ESTABLISHED BY THIS OR ANY OTHER
INSTRUMENT, DOCUMENT, OR AGREEMENT ENTERED INTO IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(d) WAIVER OF LITIGATION PAYMENTS. The Company, to the fullest extent
permissible under applicable law, hereby (i) irrevocably waives its right to,
and agrees not to request, plead or claim that OPIC and its successors,
transfers, and assigns (any such Person, an "OPIC Plaintiff') post, pay or
offer, any caution judicatum solvi bond, litigation bond or any other bond, fee,
payment or security measure provided by any provision of applicable law as a
condition to commencing or maintaining any such legal action or proceeding (any
such bond, fee, payment, or measure, a "Litigation Payment"), and (2)
irrevocably waives any objection that it may now or hereafter have to an OPIC
Plaintiff's claim that such OPIC Plaintiff should be exempt or immune from
posting, paying, making or offering any such Litigation Payment.
(e) The Company understands and agrees that the Company may only
initiate an action against OPIC in the United States Court of Claims in
Washington, D.C. Nothing in this Agreement or any other Financing Agreement
shall be construed as a waiver of such privilege and immunity, and no action by
OPIC shall be construed as a submission to the jurisdiction to the jurisdiction
of any other court with respect to any action other than one initiated by OPIC.
SECTION 7.05. ARBITRATION
OPIC shall have the option in its sole discretion to refer any dispute,
controversy or claim arising out of or relating to this Agreement, the Notes or
any other Financing Agreement to which the Company and OPIC are parties or are
among the parties, or the breach, termination or validity hereof or thereof,
including any dispute concerning the scope of this Section 7.05, for final
settlement by arbitration. In no event shall the Company be entitled to refer
any such dispute, controversy or claim to arbitration pursuant to this Section
7.05 or otherwise. UPOn the election by OPIC to refer any such dispute,
controversy or claim to arbitration pursuant hereto, the Company shall be
obligated to settle such dispute, controversy or claim by arbitration as
provided herein. The Company hereby expressly and irrevocably submits to the
jurisdiction of the arbitral tribunal appointed in accordance with the
procedures set forth below with respect to any dispute, controversy or claim
that is referred by OPIC to arbitration, to the exclusion of the jurisdiction of
<PAGE>
Omolon - 75 - OPIC Finance Agreement
the legal, equitable or arbitral courts of the Russian Federation or of any
other country or jurisdiction. The following provisions shall apply to any such
arbitration:
(1) Except as otherwise provided herein, such arbitration shall be
governed by the International Arbitration Rules of the American
Arbitration Association in effect at the time of such arbitration
(for purposes of this Section 7.05, the "AAA Rules").
(2) The seat of such arbitration shall be New York, New York, unless
OPIC determines that the seat of such arbitration shall instead be
London, England or Washington, D.C. The language of the arbitration
proceedings and of all written decisions shall be English. All
pleadings and documentary evidence shall be presented in English,
except that, if any original documentary evidence is not in English,
the offering party shall provide English translations thereof
(which, in the event of any dispute with respect to such
translation, the arbitral tribunal may require to be certified
translations) to the arbitral tribunal and to the other party.
(3) The arbitral tribunal shall consist of three arbitrators, each of
whom, in addition to meeting the qualification requirements of the
AAA Rules:
(A) shall be fluent in the English language; and
(B) shall be an attorney qualified to practice law in the State of
New York with experience in representing lenders and borrowers
in international project finance lending to private sector
borrowers.
One arbitrator shall be appointed by OPIC and one arbitrator shall
be appointed by the Company. Each party shall notify the other of
the name of its appointee within 10 days of the receipt by the
Company of notice from OPIC of its election to refer any dispute,
controversy or claim to arbitration pursuant hereto. The third
arbitrator shall be appointed by OPIC with the concurrence of the
Company. The third arbitrator shall be the chair of the arbitral
tribunal. The Company shall be deemed to accept OPIC's nomination of
the third arbitrator if the Company fails to object to such
nomination (or any subsequent nomination) within seven days of
receiving notice.. from OPIC of such nomination. If the Company does
not accept (and has not been deemed to have accepted) OPIC's first
nomination, OPIC shall submit a second nomination for the third
arbitrator. If the Company does not accept (and has not been deemed
to have accepted) such second nomination, OPIC shall submit a third
nomination for the third arbitrator. If the Company fails to appoint
its arbitrator for any reason in the manner or within the period
specified above or the Company does not accept (and has not been
deemed to have accepted) the third arbitrator nominated by OPIC,
then the arbitrator that the Company failed to appoint or such third
arbitrator or both such arbitrators, as the case may be, shall be
appointed by the Administrator (as defined in the AAA Rules).
<PAGE>
Omolon - 76 - OPIC Finance Agreement
(4) Each party shall send any challenge to the appointment of an
arbitrator to the Administrator within seven days after receiving
notice of the appointment of such arbitrator. The Administrator
shall rule on any challenge to the appointment of an arbitrator as
quickly as reasonably possible and, in any event, within seven days.
If an arbitrator appointed by OPIC withdraws or must be replaced for
any reason, OPIC shall appoint a substitute arbitrator in accordance
with Section 7.05(a)(3) within a reasonable period of time. If an
arbitrator appointed by the Company withdraws or must be replaced
for any reason, the Company shall appoint a substitute arbitrator in
accordance with Section 7.05(a)(3) within three days. If the
arbitrator appointed by OPIC with the concurrence of the Company
withdraws or must be replaced, OPIC shall nominate a substitute
arbitrator with the concurrence of the Company in accordance with
Section 7.05(a)(3). If an arbitrator appointed by the Administrator
withdraws or must be replaced, the Administrator shall appoint a
substitute arbitrator.
(5) In the event that EBRD commences an arbitration in accordance with
the EBRD Loan Agreement or any other Financing Agreement and OPIC
and EBRD agree to consolidate such arbitration with any arbitration
hereunder, OPIC and EBRD shall jointly exercise the rights of OPIC
under Sections 7.05(a)(2), 7.05(a)(3) and 7.05(a)(4), but otherwise
OPIC shall be entitled to exercise independently the rights granted
to it herein.
(6) Between the date of appointment of an arbitrator and the date the
arbitral tribunal is fully constituted, all communications between
the parties and such arbitrator shall be made through the
Administrator. Each party shall provide the other with copies of any
communication with the arbitral tribunal.
(7) OPIC shall communicate its statement of claim in writing to the
Company and the arbitral tribunal within a period of time to be
determined by the arbitral tribunal. OPIC's statement of claim shall
include a statement of facts supporting its claim, the points at
issue and the relief or remedy sought. A copy of this Agreement
shall be attached to OPIC's statement of claim.
(8) The Company shall file a statement of defense in writing within 20
days of its receipt of OPlC's statement of claim. The Company's
statement of defense shall reply to the particulars of OPIC's
statement of claim. The Company shall attach to its statement of
defense all documents on which it relies for its defense and
identify all documents or other evidence it will submit. The failure
to timely and completely file such statement of defense (absent good
cause) shall be construed by the arbitral tribunal as an admission
of the allegations made by OPIC in its statement of claim and the
arbitral tribunal shall enter an award for the relief or remedy
requested by OPIC without any further hearing or review of evidence.
(9) In any arbitral proceeding, the certificate of OPIC or the Paying
Agent as to any amount due to OPIC under this Agreement shall be
prima facie evidence of such amount.
<PAGE>
Omolon - 77 - OPIC Finance Agreement
(10) Each arbitral tribunal established hereunder shall make its
decisions entirely on the basis of the evidence adduced and on the
basis of the governing law set forth in Section 8.10. No such
arbitral tribunal shall have the power to reform any provisions of
this Agreement or to impose any obligation on any of the parties to
the arbitration or take any other action which could not be imposed
or taken by a federal court located in the State of New York.
(11) The parties irrevocably agree that, if the seat of any arbitration
hereunder is London, England:
(A) no leave to appeal under section l(3)(b) of the U.K.
Arbitration Act of 1979 shall be sought with respect to any
question of law arising from an award;
(B) if OPIC has directed that the arbitral tribunal issue a written
award stating only its conclusions and not the reasons
therefor, no application shall be made under section l(5)(b) of
the U.K. Arbitration Act of 1979 with respect to any award; and
(C) no application shall be made under section 2(1)(a) of the U.K.
Arbitration Act of 1979 with respect to any question of law.
(12) Each party may be represented or assisted by legal counsel of its
choice. The names and addresses of such legal counsel shall be
communicated in writing to the other party in its statement of
claim or statement of defense (as the case may be) specifying
whether the appointment is being made for the purposes of
representation or assistance.
(13) The parties shall agree on the date on which the arbitral tribunal
will commence taking evidence in respect of the matter in issue,
which date shall not be more than 20 days after the Company's
submission of its statement of defense (unless OPIC otherwise
directs). Decisions or rulings on questions of procedure shall be
made by a majority of the arbitral tribunal. Both parties shall
have a right to be heard at the hearing, unless the parties have
agreed to a documents-only arbitration or unless, in the case of
the Company, the Company has not filed a timely statement of
defense in accordance with Section 7.05(a)(8).
(14) At least 10 days before the first hearing date, there shall be an
exchange of exhibits, brief descriptions of the testimony the
parties propose to offer, the names of those who will testify
(including expert witnesses) and any additional documents or other
written evidence that will be submitted to the arbitral tribunal
for consideration.
(15) The arbitral tribunal shall have the discretion to allow, refuse or
limit the appearance of witnesses, whether witnesses of fact or
expert witnesses. Any witness who gives evidence may be questioned
by the other party or its attorneys
<PAGE>
Omolon - 78 - OPIC Finance Agreement
under the control of the arbitral tribunal. The arbitral tribunal
may put questions at any stage of the examination of the witnesses.
The testimony of witnesses may be presented in written form, either
as signed statements or by duly sworn affidavits. Subject to the
discretion of the arbitral tribunal, either party may request that
such witness should attend for oral examination at a hearing. If
the witness fails to attend, the arbitral tribunal may place such
weight on the written testimony as it thinks fit or exclude it all
together. If any expert is appointed by the arbitral tribunal, the
parties hereto shall have the right to examine such expert's report
to the arbitral tribunal and, subject to the discretion of the
arbitral tribunal, to question such expert at an oral hearing.
Subject to mandatory provisions of applicable procedural law, any
party or its attorneys shall have the right to interview any
witness or potential witness (including expert witnesses) prior to
his appearance at any hearing.
(16) To facilitate the comprehensive and consistent resolution of all
disputes arising out of or in connection with any of the Financing
Agreements, OPIC may, at its sole option, direct the arbitral
tribunal to, and upon such direction the arbitral tribunal shall,
consolidate with the arbitration proceeding hereunder any other
arbitration or other dispute proceeding involving any of the
parties to any of the Financing Agreements and arising out of or in
connection with any of the- Financing Agreements. In the event of
any such consolidation, any arbitral tribunal constituted in
respect of such other proceeding shall be dissolved effective upon
such consolidation, the arbitral tribunal constituted hereunder
shall determine all matters referred to arbitration in accordance
with the rules and procedures applicable to the proceeding
hereunder and no party shall have any right to challenge any
arbitrator already nominated or appointed to such arbitral
tribunal. Such arbitral tribunal shall be authorized to determine,
in a manner consistent with the general tenor of the AAA Rules, the
appropriate procedure to achieve the above objective and shall
issue one final and comprehensive arbitral award in respect of all
such disputes so consolidated.
(17) The arbitral tribunal shall issue a written decision and award
stating the conclusions of the arbitral tribunal and the reasons
upon which its conclusions are based, unless OPIC directs, in its
sole discretion, that the arbitral tribunal issue a written
decision and award stating only its conclusions and not the reasons
therefor. The arbitral tribunal shall issue its award as soon as
possible and, in any event, within one month after the conclusion
of the relevant proceedings. Any money award shall be made and
shall be payable in Dollars. Any award in favor of OPIC shall
include an award of attorneys' fees and costs of arbitration,
payable in Dollars. The award shall otherwise be limited to the
scope of the submission. In no circumstance shall the arbitral
tribunal render an award ex aequo et bono or as amiable
compositeurs. Any award of the arbitral tribunal shall be final and
binding and judgment upon any arbitral award may be entered and
enforced by any court or judicial authority of competent
jurisdiction.
<PAGE>
Omolon - 79 - OPIC Finance Agreement
(18) Either party may, within l0 days after any award, submit a request
that the arbiual tribunal interpret the award, correct any
clerical, typographical or computation errors or make an additional
award as to claims presented but omitted from the award. If the
arbitral tribunal considers such request justified after
considering the contention of the parties, the arbitral tribunal
shall promptly comply with such request.
(19) Neither the arbitral tribunal nor the Company shall be authorized
to seek from any judicial authority, and the arbitral tribunal
shall not be authorized to take or provide, any interim measures or
pre-award relief against OPIC, any provisions of the AAA Rules
notwithstanding.
SECT[ON 7.06. WAIVER OF SOVEREIGN IMMUNITY
The Company represents and warrants that this Agreement, the Notes, the
other Financing Agreements and the incurring by the Company of the Loan are
commercial rather than public or governmental acts and that the Company is not
entitled to claim immunity from legal or other proceedings with respect to
itself or any of its assets on the grounds of sovereignty or otherwise under any
law or in any jurisdiction where an action may be brought for the enforcement of
any of the obligations arising under or relating to this Agreement, the Notes,
or the other Financing Agreements. To the extent that the Company or any of its
assets has or hereafter may acquire any right to immunity from set-off, legal,
or other proceedings, attachment prior to judgment, other attachment or
execution of judgment on the grounds of sovereignty or otherwise, the Company
hereby irrevocably waives such rights to immunity in respect of its obligations
arising under or relating to this Agreement, the Notes or the other Financing
Agreements.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. TERM OF AGREEMENT; SURVIVAL
This Agreement shall continue in force until all monies payable
hereunder shall have been fully paid in accordance with the provisions hereof;
provided that the Company's obligations and indemnities as set forth in Section
3.09, 3.12, 7.04, 7.05, and 8.08 shall survive repayment of the Loan.
<PAGE>
Omolon - 80 - OPIC Finance Agreement
SECTION 8.02. ENTIRE AGREEMENT; AMENDMENT AND WAIVER
This Agreement and the documents referred to herein constitute the
entire obligation of the parties hereto with respect to the subject matter
hereof and shall supersede all prior agreements, expressions of intent, or
understandings (whether written or oral) with respect to the subject matter of
this Agreement. Any amendment hereto or waiver of any of the terms hereof shall
be in writing, signed by each party to be bound or burdened thereby.
SECTION 8.03. NOTICES
Any notice, demand, report, or other communication to be given or made
under this Agreement to OPIC or the Company shall be in writing. Subject to the
provisions of Sections 5.3 l(f), 5.3 l(g) and 5.3 l(h), such notice, demand,
report, or other communication shall be deemed to have been duly given or made
when it shall be delivered by hand, airmail, or facsimile transmission to the
party to which it is required or permitted to be given or made at such party's
address specified below or at such other address as such party shall have last
specified by notice to the party giving or making such notice, demand, report,
or other communication.
To the Company:
Omolon Gold Mining Company
Proletariat Street, 14
685000 Magadan
Russian Federation
(Attn: Chairman)
Fax: (70) (413) (22) 2-45-15
To OPIC:
Overseas Private Investment Corporation
1100 New York Avenue, N.W.
Washington, D.C. 20527
United States of America
(Atto: Vice President, Finance)
Fax: (202) 408-9859
with a separately transmitted copy to Treasurer
Fax: (202) 408-9859
<PAGE>
Omolon - 81 - OPIC Finance Agreement
SECTION 8.04. CERTIFICATE OF INCUMBENCY AND AUTHORITY
The Company shall furnish or cause to be furnished to OPIC evidence, in
substantially the form of Schedule Y to the EBRD Loan Agreement and in substance
satisfactory to OPIC, of the authority of the Person or Persons who will, on
behalf of the Company, sign the Disbursement Requests and certifications
provided for in this Agreement or take any other action or execute any other
document required or permitted to be taken or executed by the Company under this
Agreement, and the authenticated specimen signature of each such Person.
SECTION 8.05. [RESERVED]
SECTION 8.06. [RESERVED]
SECTION 8.07. RIGHTS, REMEDIES AND WAIVERS
(a) The rights and remedies of OPIC in relation to any
misrepresentations or breach of warranty on the part of the Company shall not be
prejudiced by any investigation by or on behalf of OPIC into the affairs of the
Company, by the execution or the performance of this Agreement or by any other
act or thing which may be done by or on behalf of OPIC in connection with this
Agreement and which might, apart from this Section, prejudice such rights or
remedies.
(b) No course of dealing or waiver by OPIC in connection with any
condition of Disbursement under this Agreement shall impair any right, power or
remedy of OPIC with respect to any other condition of Disbursement, or be
construed to be a waiver thereof; nor shall the action of OPIC in respect of any
Disbursement affect or impair any right, power or remedy of OPIC in respect of
any other Disbursement.
(c) Unless otherwise notified to the Company by OPIC and without
prejudice to the generality of Section 8.07(b), the right of OPIC to require
compliance with any condition under this Agreement which may be waived by OPIC
in respect of any Disbursement is expressly preserved for the purposes of any
subsequent Disbursement.
(d) No course of dealing and no delay in exercising, or omission to
exercise, any right, power or remedy accruing to OPIC upon any default under
this Agreement or any other agreement shall impair any such right, power or
remedy or be construed to be a waiver thereof or an acquiescence therein; nor
shall the action of OPIC in respect of any such default, or any acquiescence by
it therein, affect or impair any right, power or remedy of OPIC in respect of
any other default.
(e) Notwithstanding anything herein to the contrary, no provision of
this Agreement shall be construed as a waiver by OPIC of any of the immunities,
privileges, and exemptions granted to OPIC (and any officer, director, employee,
or agent of OPIC) under applicable law.
<PAGE>
Omolon - 82 - OPIC Finance Agreement
SECTION 8.08. INDEMNIFICATION
(a) The Company assumes full liability for, and agrees to and shall
indemnify and hold harmless OPIC and its officers, directors, employees, agents
and servants and any manager appointed by OPIC pursuant to any Security Document
against and from any and all liabilities, obligations, losses, damages
(compensatory, punitive or otherwise), penalties, claims, actions, taxes,
duties, suits, costs and expenses (including, without limitation, legal
counsel's reasonable fees and expenses and costs of investigation) of whatsoever
kind and nature, including, without prejudice to the generality of the
foregoing, those arising in contract or tort (including, without limitation,
negligence) or by strict liability or otherwise, which are imposed on, incurred
by or asserted against OPIC or any of its officers, directors, employees, agents
or servants or any manager appointed by OPIC pursuant to any Security Document
(whether or not also indemnified by any other Person under any other document)
and which in any way relate to or arise out of, whether directly or indirectly,
(l) any of the transactions contemplated by any Financing Agreement or Project
Agreement or the execution, delivery or performance thereof, (2) the
development, design, construction, completion, operation or maintenance of the
Project, the Kubaka Field or the Evenskoye Field or the ownership, control or
possession thereof by the Company, or (3) the exercise by OPIC of any of its
rights and remedies under any of the Security Documents or any of the other
Financing Agreements; provided that OPIC shall not have any right to be
indemnified hereunder for its own gross negligence or willful misconduct.
(b) Without limiting the generality of the foregoing, the Company agrees
to and shall indemnify and hold harmless OPIC and its officers, directors,
employees, agents and servants against and from any such liabilities,
obligations, losses, damages, penalties, claims, actions, Taxes, duties, suits,
costs or expenses arising under any environmental law or other applicable law as
a result of the past, present or future operations of the Company (or any
predecessor or successor in interest to the Company), or the past, present or
future condition of any site or facility owned, operated or leased by the
Company (or any such predecessor or successor in interest), or any release or
use or threatened release of any pollutants or hazardous materials at any such
site or facility, including any such release or use or threatened release which
shall occur during any period when either Project Lender shall be in possession
of any such site or facility following the exercise by either Project Lender of
any of its rights and remedies hereunder or under any Financing Agreement.
(c) The Company agrees that OPIC is not responsible or liable for, and
the Company irrevocably waives, any claim it may now or in the future have
against OPIC arising out of or in relation to any action or omission of any
party to a Funding Document.
SECTION 8.09. SEVERABILITY
If any provision of this Agreement is prohibited or held to be invalid,
illegal, or unenforceable in any jurisdiction, OPIC and the Company agree to the
fullest extent permitted by law that:
<PAGE>
Omolon - 83 - OPIC Finance Agreement
(1) the validity, legality, and enforceability of the other provisions
of this Agreement in such jurisdiction shall not be affected or
impaired thereby; and
(2) any such prohibition, invalidity, illegality, or unenforceability
shall not render such provision prohibited, invalid, illegal, or
unenforceable in any other jurisdiction.
SECTION 8.10. [RESERVED]
SECTION 8.11. [RESERVED]
SECTION 8.13. SUCCESSORS AND ASSIGNS
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto, except that the Company may not
assign or otherwise transfer all or any part of its rights or obligations under
this Agreement without the prior consent of OPIC.
SECTION 8.14. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same agreement.
[Signature page to follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto, acting through their duly
authorized representatives, have caused this Agreement to be signed in their
respective names as of the date first above written.
THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY"
By: /s/ J.S. Rosenblum
------------------------
Name: J.S. Rosenblum
Its: Chairman
By: /s/ S.W. Harapiak
------------------------
Name: S.W. Harapiak
Its: General Director
By: /s/ E.S. Ryzhaikina
------------------------
Name: E.S. Ryzhaikina
Its: Chief Assisant
OVERSEAS PRIVATE INVESTMENT
CORPORATION
By: /s/ Ruth R. Harkin
------------------------
Name: Ruth R. Harkin
Its: President and Chief
Executive Officer
[Signature page to Finance Agreement dated as of 30 June, 1995, between Overseas
Private Investment Corporation and Omolon Gold Mining Company.]
<PAGE>
FIRST AMENDMENT TO FINANCE AGREEMENT
THIS FIRST AMENDMENT is made as of the 22nd day of April 1996 between:
THE CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY"
(the "Company"), and
OVERSEAS PRIVATE INVESTMENT CORPORATION ("OPIC").
Recitals
A. The Company has entered into a Finance Agreement dated as of 30
June 1995, (the "Agreement"), with OPIC, pursuant to which OPIC has agreed to
make provide a loan to the Company in an mount not to exceed US$52,500,000,
subject to the terms and conditions of the Agreement.
B. The Company has entered into a Loan Agreement dated as of 30
June 1995, as amended as of 7 November 1995, (the "EBRD Loan Agreement"), with
the European Bank for Reconstruction and Development ("EBRD"), pursuant to which
EBRD has agreed to make provide a loan to the Company in an mount not to exceed
US$47,500,000, subject to the terms and conditions of the EBRD Loan Agreement.
C. EBRD and the Company, with OPIC's consent, have executed a
Second Amendment Agreement to Loan Agreement dated as of 22 April 1996.
D. OPIC and the Company have agreed to amend the Agreement as
provided and subject to the terms and conditions of this First Amendment.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
SECTION 1. DEFINITIONS.
Wherever used in this First Amendment, unless the context shall
otherwise require, the terms defined in the Agreement and not separately defined
herein shall have the same meanings when used in this First Amendment.
SECTION 2. AMENDMENT TO AGREEMENT.
Section 8.03 of the Agreement is hereby amended by:
<PAGE>
Omolon -2- First Amendment
(1) deleting "Sections 5.3l(f), 5.3 l(g) and 5.3 (h)" in the third line; and
(2) inserting "Sections 5.19(h) and 5.19(i)" in place thereof.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to OPIC as follows:
(a) the Company has all requisite power and authority, corporate or
otherwise, to execute, deliver and perform all of its obligations
under this Amendment and the Agreement as amended by this First
Amendment;
(b) the Company has taken all necessary action to authorize the
execution, delivery and performance by the Company of tiffs First
Amendment and the Agreement as amended by this First Amendment;
(c) this First Amendment has been duly executed and delivered by the
Company and this First Amendment and the Agreement as amended by
this First Amendment constitute valid and legally binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms;
(d) all consents, authorizations and actions of any kind necessary for
the valid execution, delivery, and performance by the Company of
this First Amendment and the Agreement as amended by this First
Amendment have been obtained and are in full force and effect;
(e) the execution, delivery and performance by the Company of this
First Amendment and the Agreement as amended by this First
Amendment do not require the consent or approval of any of the
Company's creditors (other than EBRD, whose consent has been
obtained) and wi11 not conflict with or constitute a breach or
default under of violate any provision of the Company's Charter or
any agreement, law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the
Company; and
(f) each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when the documents, recordings,
filings, notifications and registrations listed in Schedule X of
the EBRD Loan Agreement have been executed or made, constitute a
valid and completed Security Document, securing payment of all
principal, interest and other amounts payable under the Agreement
as amended by this First Amendment; which security interest and
Lien ranks senior to all other security interests and Liens on
such collateral other than Permitted Liens.
<PAGE>
Omolon -3- First Amendment
SECTION 4. EFFECTIVENESS.
Section 2 Of this First Amendment shall become effective as of the date
hereof subject to the due execution of this First Amendment by Cyprus Amax,
Cyprus Magadan and Cyprus Gold.
SECTION 5. EXPENSES
Without limiting the generality of Section 5.17 of the Agreement, the
Company shall pay to OPIC, or as OPIC may direct, all expenses incurred by OPIC,
including but nor limited to fees and expenses of counsel, in connection with
the preparation, negotiation, execution, registration, administration and
enforcement of this First Amendment.
SECTION 6. MISCELLANEOUS.
A. All references to the Agreement in the Agreement, the Security
Documents and the other Financing Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the Agreement as amended by
this First Amendment.
B. Except to the extent each is expressly amended by the terms of this
First Amendment, all Terms and conditions of the Agreement, the Security
Documents and the other Financing Agreements and all other merits and agreements
executed thereunder remain in full force and effect. This First Amendment may be
amended only by an instrument in writing signed by the Company and OPIC.
C. This First Amendment may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
SECTION 7. GOVERNING LAW.
This First Amendment shall be governed by and construed in accordance
with the laws of the State of New York in the United States of America.
SECTION 8. COUNTERPARTS.
This First Amendment may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
[Signature page to follow.]
<PAGE>
Omolon -4- First Amendment
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Finance Agreement to be executed by their duly authorized representatives on the
day and year first above written.
THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY"
By: /s/ Stephen W. Harapiak By Power of Attorney
----------------------------------
Name: Stephen W. Harapiak
----------------------------------
Title: General Manager
----------------------------------
By: /s/ Elena S. Ryzhaikina By Power of Attorney
----------------------------------
Name: Elena S. Ryzhaikina
----------------------------------
Title: Chief Accountant
----------------------------------
OVERSEAS PRIVATE INVESTMENT
CORPORATION
By: /s/ Alexandra H. Coburn
-----------------------------------
Name: Alexandra H. Coburn
-----------------------------------
Title: Investment Officer
-----------------------------------
[Signature page to First Amendment to Finance Agreement between Overseas Private
Investment Corporation and The Closed Joint Stock Company "Omolon Gold Mining
Company" dated as of April 22, 1996.]
<PAGE>
Omolon - 5 - First Amendment
Cyprus Amax, Cyprus Magadan and Cyprus Gold hereby (a) acknowledge and consent
to the foregoing First Amendment, (b) confirm that the Cyprus Amax Guaranty, the
Cyprus Magadan Guaranty, the Cyprus Support Agreement and the Cyprus Magadan
Share Pledge remain in full force and effect, and (c) agree that all references
to the Agreement in the Cyprus Amax Guaranty, the Cyprus Magadan Guaranty, the
Cyprus Support Agreement and the Cyprus Magadan Share Pledge shall for all
purposes refer to the Agreement as amended by the foregoing First Amendment
CYPRUS AMAX MINERALS COMPANY
By: /s/ Dale E. Huffman
--------------------------
Name: Dale E. Huffman
--------------------------
Title: Assistant Secretary
--------------------------
CYPRUS MAGADAN GOLD CORPORATION
By: /s/ Dale E. Huffman
--------------------------
Name: Dale E. Huffman
--------------------------
Title: Assistant Secretary
--------------------------
CYPRUS GOLD COMPANY
By: /s/ Dale E. Huffman
---------------------------
Name: Dale E. Huffman
---------------------------
Title: Assistant Secretary
---------------------------
<PAGE>
[Execution Copy]
- --------------------------------------------------------------------------------
SECOND AMENDMENT TO FINANCE AGREEMENT
between
OMOLON GOLD MINING COMPANY
and
OVERSEAS PRIVATE INVESTMENT CORPORATION
Dated as of January 28, 1997
OPIC/118-94-130/IG
OPIC/118-96-554/IG
- --------------------------------------------------------------------------------
<PAGE>
SECOND AMENDMENT TO FINANCE AGREEMENT
THIS SECOND AMENDMENT TO FINANCE AGREEMENT is made as of the 28th day of January
1997 by and between:
(1) THE CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY" (the
"Company"); and
(2) OVERSEAS PRIVATE INVESTMENT CORPORATION, an agency of the United States
of America ("OPIC").
RECITALS
A. The Company and OPIC have entered into a Finance Agreement dated as of
30 June 1995, as amended by a First Amendment to Finance Agreement dated as of
22 April 1996 (collectively, the "Agreement"). Pursuant to the Agreement OPIC
has loaned to the Company $52,500,000.
B. The Company and European Bank for Reconstruction and Development
("EBRD") have entered into a Loan Agreement dated as of 30 June 1995, amended by
an Amendment Agreement to Loan Agreement Dated as of 7 November 1995 and a
Second Amendment Agreement to Loan Agreement dated as of 22 April 1996
(collectively, the "EBRD Loan Agreement"). Pursuant to the EBRD Loan Agreement
EBRD has loaned to the Company $47,500,000.
C. The Company and Cyprus Amax Minerals Company, a Delaware corporation
("Cyprus Amax") have requested that OPIC and EBRD loan the Company an additional
$30,000,000 to finance a portion of certain cost overruns. The Company and
Cyprus Amax have requested that OPIC provide up to an additional $15,000,000 and
that EBRD provide up to an additional $15,000,000.
D. This Second Amendment to Finance Agreement (hereinafter the "Second
Amendment") sets forth certain amendments to the Agreement and other conditions
related to providing the Company with a capacity to borrow additional funds from
OPIC pursuant to Section 234(b) of the Foreign Assistance Act of 1961, as
amended.
Now, therefore, in consideration of the premises and the agreements
contained herein, it hereby agreed as follows:
<PAGE>
Omolon Gold Mining Company - 2 - Second Amendment
AGREEMENT
SECTION 1. DEFINITIONS.
Wherever used in this Second Amendment, unless the context shall otherwise
require, the terms defined in the Agreement and not separately defined herein
shall have the same meanings when used in this Second Amendment.
SECTION 2. AMENDMENTS TO FINANCE AGREEMENT
A. Amendments to Section 1.01.
(1) Commitment. The definition of "Commitment" in Section 1.01
of the Agreement is hereby amended by deleting "$52,500,000" in the 11th line
and inserting "$67,500,000" in place thereof.
(2) Commitment Date. The definition of "Commitment Date" in
Section 1.01 of the Agreement is hereby amended in its entirety as follows:
"Commitment Date" means,
(i) with respect to the Original Commitment, June
27, 1994; and
(ii) with respect to the Supplementary
Commitment, September 25, 1996.
(3) Commitment Letter. The definition of "Commitment Letter in
Section 1.01 of the Agreement is hereby amended in its entirety as follows:
"Commitment Letter(s)" means,
(i) with respect to the Original Commitment, the
letter among the Company, Cyprus, and OPIC dated
as of June 27, 1994, as amended; and
(ii) with respect to the Supplementary
Commitment, the letter among the Company, Cyprus
Amax, Cyprus Magadan, and OPIC dated as of
September 25, 1996.
(4) Commitment Termination Date. The definition of "Commitment
Termination Date" in Section 1.01 of the Finance Agreement is hereby deleted in
its entirety, and replaced with the following:
<PAGE>
Omolon Gold Mining Company - 3 - Second Amendment
"Commitment
Termination Date" means the date of the first to occur of the
following:
(1) the first date on which the amount of all
Disbursements equals the Commitment;
(2) the cancellation or termination of the
Commitment by the Company or OPIC pursuant to
this Agreement;
(3) the cancellation or termination of the EBRD
Commitment; or
(4) March 31, 1997."
(5) Letter of Credit. The definition of "Letter of Credit"
in Section 1.01 of the Agreement is hereby amended by deleting "paragraph
1(b)(1)" in the third line and inserting "paragraph l(b)" in place thereof.
(6) Original Commitment. Section 1.01 of the Agreement is
hereby amended by adding a new definition for "Original Commitment" as follows:
"Original Commitment" means:
(1) with respect to the Tranche 1 Commitment,
$47,500,00; and
(2) with respect to the Tranche 2 Commitment,
$5,000,000.
(7) Permitted Liens. The definition of "Permitted Liens" in
Section 1.01 of the Agreement is hereby amended in its entirety to read as
follows:
"Permitted Liens" means the Liens set forth in Sections 6.05(1),
6.05(2), and 6.05(3)."
(8) Subordinated Shareholder Loans. The definition of
"Subordinated Shareholder Loans" in Section 1.01 of the Finance Agreement is
hereby amended in its entirety to read as follows:
"Subordinated Shareholder
Loans" means Debt of the Company owing to any
Shareholder or guaranteed by any Shareholder (or
an affiliate of any Shareholder) and which is
subordinated to the payment of all amounts
payable under this Agreement and the EBRD Loan
Agreement pursuant to the Cyprus Support
<PAGE>
Omolon Gold Mining Company - 4 - Second Amendment
Agreement, the Russian Shareholders Support
Agreement, or otherwise on terms acceptable to
the Project lenders."
(9) Subordinated Third Party Debt. A new definition is
hereby added to Section 1.01 of the Agreement after the definition of
"Subordinated Shareholder Loans" as follows:
"Subordinated Third
Party Debt" means Long-Term Debt of the Company provided by
a bank acceptable to OPIC in its sole discretion
which shall be subordinated to the payment of
all amounts payable under this Agreement and the
EBRD Loan Agreement on terms acceptable to
OPIC."
(10) Supplementary Commitment. Section 1.01 of the Agreement
is hereby amended by adding a new definition for "Original Commitment" as
follows:
"Supplementary
Commitment" means:
(1) with respect to the Tranche 1 Commitment,
$11,250,000; and
(2) with respect to the Tranche 2 Commitment,
$3,750,000.
(11) Tranche 1 Post-Completion Spread. The definition of
"Tranche 1 Post-Completion Spread" in Section 1.01 of the Finance Agreement is
hereby amended by deleting "4.25% per annum" in the fourth line and inserting
"4.40% per annum" in place thereof.
(12) Tranche 2 Post-Completion Spread. The definition of
"Tranche 2 Post-Completion Spread" in Section 1.01 of the Agreement is hereby
amended by deleting "4.25% per annum" and inserting "4.40% per annum" in place
thereof.
B. Section 2.01.
(1) Section 2.01(a). Section 2.01(a) of the Agreement is
hereby amended by deleting "$180,000,000" and inserting "$230,000,000" in place
thereof.
(2) Section 2.01(b). Section 2.01(b) of the Agreement is
hereby amended by replacing the table therein with the following table:
<PAGE>
Omolon Gold Mining Company - 5 - Second Amendment
Source Dollars
Equity
Association of Native Peoples 5,676,000
Geometal 24,052,039
Magadan Gold 5,676,000
Rossiisky Kredit Commercial Bank 5,160,000
Dukat 2,453,961
Cyprus Magadan 43,000,000
Total Equity 86,000,000
Cyprus Magadan Subordinated Shareholder Loan 14,000,000
Long-term Debt
Tranche 1 Loan 58,750,000
Tranche 2 Loan 8,750,000
EBRD Tranche 1 Loan 53,750,000
EBRD Tranche 2 Loan 8,750,000
Total Long-term Debt 130,000,000
Total Financing 230,000,000
C. Section 2.02(b). Section 2.02(b) of the Agreement is hereby
amended in its entirety to read as follows:
"The Company has an authorized capital of Rb. 420,880,000,000 (the
equivalent of $86,000,000 as of the date hereof) consisting of 80,000
shares with a nominal value of Rb. 5,261,000 each. The following is a
list of the Shareholders in the Company as of 20 November 1996,
together with the number of shares owned by each Shareholder and the
approximate percentage of all shares in the Company:
Shareholder Number of Percentage
Shares Ownership
Association of Native Peoples 5,676 6.6
Geometal 24,033 27.9
Magadan Gold 5,676 6.6
Rossiisky Kredit Commercial Bank 5,160 6.0
Dukat 2,455 2.9
Cyprus Magadan 43,000 50.0
Total 86,000 100.0
<PAGE>
Omolon Gold Mining Company - 6 - Second Amendment
The only issued shares of the Company are registered shares. There are
no options, warrants or instruments convertible into shares or other
agreements relating to the existing shares of the Company or for the
issuance of additional shares of any class or description of the
Company, except for the Foundation Agreement. No Person has any right
(other than as a shareholder, OPIC in respect of the Tranche 2 Loan,
and EBRD in respect of the EBRD Tranche 2 Loan) to share in the profits
of the Company."
D. Section 3.01. Section 3.01 of the Agreement is hereby amended in its
entirety to read as follows:
"Subject to the terms and conditions of this Agreement, OPIC agrees to
lend up to $67,500,000 to the Company from time to time during the
Commitment Period. The loan shall not be of a revolving nature. Any
portion of the Loan that is repaid (whether prepaid or otherwise) shall
not be re-advanced to the Company. The Loan shall consist of two
tranches:
(a) the Tranche 1 Loan in an amount not to exceed
$58,750,000; (the "Tranche 1 Commitment"); and
(b) the Tranche 2 Loan in the amount of $8,750,000 (the
"Tranche 2 Commitment")."
E. Section 3.02(b). Section 3.02(b) of the Agreement is hereby amended
in its entirety to read as follows:
"The Company may request:
(1) no more than 5 Disbursements with respect to the Tranche
1 Commitment, each in the minimum amount of $5,000,000
and in integral multiples of $500,000; and
(2) two Disbursements with respect to the Tranche 2
Commitment, the first of which shall not be less than
$5,000,000 and the second of which shall be in the
amount of $3,750,000.
The first Disbursement of the Tranche 2 Commitment shall occur
concurrently with the first Disbursement of the Tranche 1 Commitment,
and the second Disbursement of the Tranche 2 Commitment shall occur
concurrently with any Disbursement of the Tranche 1 Commitment in
excess of $52,500,000."
F. Section 3.05. Section 3.05 of the Agreement is hereby amended in its
entirety as follows:
"(a) Tranche 1 Loan. The Tranche l Loan shall be repaid in
nine equal (or as nearly equal as possible) semi-annual installments
(each such payment being a "Tranche 1 Principal Installment") on the
following dates:
<PAGE>
Omolon Gold Mining Company - 7 - Second Amendment
Tranche 1
Principal Date
Installment #
1 15 December 1997
2 15 June 1998
3 15 December 1998
4 15 June 1999
5 15 December 1999
6 15 June 2000
7 15 December 2000
8 15 June 2001
9 15 December 2001
provided that if any such 15 June or 15 December falls on a day that is
not a Business Day, such payment date shall be changed to the next
succeeding Business Day (each such date a "Tranche 1 Repayment Date").
(b) Tranche 2 Loan. The Tranche 2 Loan shall be repaid in full
in a single installment in the amount of $8,750,000 on 15 December
2001, provided that if 15 December 2001 shall fall on a day that is not
a Business Day, such "Tranche 2 Repayment Date").
G. Section 3.06(a)(2). Section 3.06(a)(2) of the Agreement is hereby
amended by deleting "$9,000,000" in the sixth line and inserting "$11,250,000"
in place thereof.
H. Section 3.11(a). Section 3.11(a) of the Agreement is hereby amended
in its entirety as follows:
"Beginning as of June 27, 1994 with respect to the Original Commitment,
and beginning as of September 25, 1996 with respect to the Supplementary
Commitment, and continuing to the Commitment Termination Date, the Company shall
pay a commitment fee to OPIC of (the "Commitment Fee") equal to 0.50% per annum
of the aggregate amount of the unutilized portion of the total Commitment. The
Commitment Fee shall accrue on a daily basis (including June 2, 1994 with
respect to the Original Commitment and September 25, 1996 with respect to the
Supplementary Commitment, but excluding the Commitment Termination Date), shall
be calculated for each day during such period, and shall be computed on the
basis of the Tranche 1 Day Count Fraction. The Company shall pay accrued
Commitment Fees in accordance with the Commitment Letters to the date hereof on
or before the date this Agreement is executed and delivered by the Company.
Thereafter the Company shall pay the Commitment Fee in arrears to OPIC on each
Interest Payment Date (whether or not interest is payable) and the Commitment
Termination Date."
<PAGE>
Omolon Gold Mining Company - 8 - Second Amendment
H. Section 4.02.(i). Section 4.02(i) of the Finance Agreement is hereby
amended in its entirety to read as follows:
"OPIC shall be satisfied, on the basis of the opinion of the Independent
Engineer, that the Project Costs (including, without limitation,
financing costs) necessary to achieve physical completion of the Project
will not exceed the total amount thereof set forth in Section 2.01(a),
or, if OPIC is not so satisfied as a result of delay in completion or
otherwise, OPIC shall have received satisfactory evidence that the
Shareholders have contributed not less than the full amount of such
excess in paiding capital or Subordinated Shareholder Loans to the
Company and that the Company has expended 100% of such paid-in capital
and Subordinated Shareholder Loans on the Project."
I. Section 4.02(j). Section 4.02(j) of the Agreement is hereby amended
in its entirety as follows:
"In the case of the first Disbursement of the Tranche 1 Commitment, the
Tranche 2 Commitment shall have been previously disbursed in the amount
of not less than 55,000,000; and in the case of any Disbursement from
the Tranche 1 Commitment in excess of $52,500,000, the Tranche 2
Commitment shall have been previously and concurrently disbursed in the
amount of not less than $3,750,000."
J. Section 5.13.
(1) Section 5.13(1) of the Agreement is hereby amended by
deleting "$13,500,000" in the first line and inserting "$16,500,000" in place
thereof and by deleting "$100,000,000" in the third line and inserting
"$130,000,000" in place thereof.
(2) Section 5.13(2) of the Agreement is hereby amended by
deleting "$5,000,000" in the third line and inserting "$8,750,000" in place
thereof.
K. Section 5.18. Section 5.18 of the Agreement is hereby amended by
deleting "90" in the first line and inserting "45" in place thereof.
L. Section 6.04(a). Section 6.04(a) of the Agreement is hereby amended
by:
(i) inserting "and" at the end of Section 6.04(a)(3);
(ii) amending Section 6.04(a)(4) in its entirety to read as follows:
"(4) Short-term Debt in an aggregate amount not to exceed
$20,000,000 (or the equivalent thereof in other currencies
at then current rates of exchange) or, if less, 100% of the
Company's short-term assets;" and
(iii) deleting Section 6.04(a)(5) in its entirety.
M. Section 6.05. Section 6.05 of the Agreement is hereby amended by
deleting subparagraph (2) and renumbering existing sub-paragraphs (3) and (4) as
sub-paragraphs (2) and (3), respectively.
<PAGE>
Omolon Gold Mining Company - 9 - Second Amendment
N. Section 6.13. Section 6.13 of the Agreement shall be amended by
adding the following:
The Company shall not practice anti-union discrimination. The Company
shall not interfere with or coerce any of its employees on the basis of
trade union activities or membership. The Company shall not terminate,
suspend, demote, or transfer any employees of the Company on the basis
of trade union activities or membership by such employees or by an
officer, agent, or other representative of the Company's employees. The
Company shall allow its employees to remove themselves from hazardous
or life-threatening work situations without jeopardy to such employees'
continued employment with the Company.
O. Section 6.14. A new Section 6.14 shall be added to the Agreement as
follows:
"SECTION 6.14. CORRUPT PRACTICES LAWS.
The Company, Cyprus Amax, and Cyprus Magadan shall each comply
with all applicable Corrupt Practices Laws. "Corrupt Practices Laws"
means (i) the Foreign Corrupt Practices Act of 1977 (Pub. L. No. 95-
213, (S)(S)101-104), as amended, and (ii) any other law, regulation,
order, decree, or directive having the force of law and relating to
bribery, kick-backs, or similar business practices."
P. Section 7.01(i). Section 7.01(i) of the Finance Agreement is hereby
amended by deleting "24" in the third line and inserting "27" in place thereof
and by deleting "18" in the eighth line and inserting "24" in place thereof.
Q. Section 7.01(q). Section 7.01(q) of the Agreement is hereby amended
in its entirety to read as follows:
"(q) Cost Overrun Default. OPIC shall have determined that the Project
Costs (including, without limitation, financing costs) necessary to achieve
physical completion of the Project will, as a result of delays in completion or
otherwise, exceed $230,000,000 (the "Excess"), and the Shareholders shall have
failed, within 60 days of such determination, to make cash contributions of
paid-in capital or Subordinated Shareholder Loans to the Company in the full
amount of such Excess."
SECTION 3. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the OPIC as follows:
A. The Company has all requisite power and authority, corporate or
otherwise, to execute, deliver and perform all of its obligations under this
Second Amendment and the Agreement as amended by this Second Amendment.
<PAGE>
Omolon Gold Mining Company - 10 - Second Amendment
The Company has taken all necessary action to authorize the
execution, delivery and performance by it of this Second Amendment and the
Agreement as amended by this second Amendment.
C. This Second Amendment has been duly executed and delivered by
the Company and this Second Amendment and the Agreement as amended by this
Second Amendment constitute its valid and legally binding obligations,
enforceable against it in accordance with their respective terms.
D. All consents, authorisations and actions of any kind necessary for
its valid execution, delivery and performance of this Second Amendment and the
Agreement as amended by this Second Amendment have been obtained and are in full
force and effect.
E. The execution, delivery and performance by the Company of this
Second Amendment and the Agreement as amended by this Second Amendment do not
require the consent or approval of any of the Company's creditors (other than
EBRD, whose consent has been obtained) and will not conflict wit. or constitute
a breach or default under or violate any provision of its Charter or any
agreement, law, rule, regulation, order, writ, judgement, injunction, decree,
determination or award applicable to it.
F. Each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when the Amendments to Financing Agreements (as
defined below) have been executed and delivered, constitute a valid and
completed security interest in, and a Lien of first priority on, the collateral
covered by each such Security Document, securing payment of all principal,
interest and other amounts payable under the Agreement and Notes as amended by
this Second Amendment, which security interest and Lien will rank senior to all
other security interests and Liens on such collateral other than Permitted
Liens.
G. As of the date of this Second Amendment:
(i) the directors of the Company are I.S. Rosenblum, S.W. Harapiak,
L.D. Clark, V.I: Karchavets, F.S. Hakimi, L.E. Yefanova and S.S.
Shellhaas; and
(ii) the General Manager of the Company is S.W. Harapiak, the Vice-
General Manager of the Company is Valery Glazatov, the Financial
Manager of the Company is K. Smith, and the Chief Accountant of
the Company is Elena Ryzhaikina.
H. The revised Development Plan delivered to OPIC pursuant to Section
4.C of this Second Amendment will not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements and
information contained therein not misleading in light of the circumstances under
which such statements are made or such information is furnished provided that to
the extent that any such statement of information is based upon estimated
forecasts or professional opinions, such estimates forecasts of opinions (except
as otherwise warranted herein or therein) will be made in good faith and based
upon the best available information but otherwise the Company does not warrant
that such estimates forecasts or opinions will ultimately prove to be correct.
<PAGE>
Omolon Gold Mining Company - 11 - Second Amendment
SECTION 4. CONDITIONS PRECEDENT.
Section 2 of this Second Amendment shall not become effective unless and
until the following conditions precedent shall have been satisfied in form and
substance satisfactory to OPIC:
A. EBRD Amendments. OPIC shall have received a duly executed copy of the
Third Amendment to Loan Agreement duly executed by EBRD and the Company in form
and content satisfactory to OPIC (the "EBRD Amendments"), and the EBRD
Amendments shall have become unconditional and fully effective in accordance
with their respective terms (except for this Second Amendment having become
unconditional and fully effective, if that is a condition of such EBRD
Amendments).
B. Amendments to Financing Agreements. OPIC shall have received duly
executed originals of amendments to the following Financing Agreements (the
"Amendments to Financing Agreements"), each in form and substance satisfactory
to OPIC, and the Amendments to Financing Agreements shall have become
unconditional and fully effective in accordance with their respective terms
(except for this Second Amendment having become unconditional and fully
effective, if that is a condition of any such document):
(1) an amendment to the Cyprus Support Agreement;
(2) an amendment to the Security Sharing Agreement;
(3) an amendment to each Security Document; and
(4) amendments to the Funding Documents;
together with any other documents, legal opinions, recordings, filings,
notifications and registrations which are required thereunder for the continued
validity, perfection or priority, of the Liens of the Project Lenders under the
Security Documents (other than the Immovables Mortgage and the Enterprise
Mortgage) as amended thereby and to ensure that each Security Document(other
than the Immovables Mortgage and the Enterprise Mortgage) constitutes a valid
and completed security interest in, and a Lien of first priority on, the
collateral covered by such Security Document, securing payment of all principal,
interest and other amounts payable under the Agreement as amended hereby, the
EBRD Loan Agreement as amended by the EBRD Amendments and the other Financing
Agreements as amended by the Amendments to Financing Agreements, and that each
such security interest and Lien ranks senior to all other security interests and
Liens on such collateral.
C. Revised Development Plan. OPIC shall have received a revised
Development Plan, in form and substance satisfactory to OPIC.
D. Subordinated Third Party Debt. OPIC shall:
<PAGE>
Omolon Gold Mining Company - 12 - Second Amendment
(i) be satisfied with the form and content of all documentation with
respect to Subordinated Third Party Debt in the principal amount
of not less than $14,000,000;
(ii) be satisfied that such Subordinated Third Party Debt is fully
subordinated to all Indebtedness owed by the Company to either of
the Project Lenders on terms satisfactory to OPIC; and
(iii) have received evidence, satisfactory to OPIC in its sole
discretion, that the Company has received Subordinated Third
Party Debt in the principal amount of not less than $14,000,000
and that all of such Subordinated Long-term Debt has been
expended for or committed to the payment of Project Costs in
accordance with the Agreement.
E. Additional Paid-In Capital. OPIC shall have received satisfactory
evidence that:
(1) (a) the Russian Shareholders have contributed, in a manner
satisfactory to OPIC, at least $3,000,000 (or the equivalent
thereof in other currencies at then ( current rates of exchange)
as additional paid-in capital to the Company; (b) the Company has
expended substantially all of such additional paid-in capital on
Project Costs; and
(2) Cyprus Magadan has committed to contribute, in a manner
satisfactory to OPIC, at least $3,000,000 (or the equivalent
thereof in other currencies at then current rates of exchange) as
additional paid-in capital either in cash or in kind, to the
Company by not later than (a) the date on which the Company and
Cyprus Magadan deliver the Final Completion Certificate referred
to in Schedule Q to the EBRD Loan Agreement or (b) 15 April 1997,
whichever occurs first.
F. Approvals and Consents. OPIC shall have received, in form and
substance satisfactory to OPIC, certified copies of all governmental, corporate,
creditors', shareholders' and other necessary licenses, approvals, consents,
filings and registrations for the due execution, delivery and performance by the
Company, the Shareholders, Cyprus Gold, and Cyprus Amax of this Second
Amendment, the Loan Agreement as amended by this Second Amendment, the EBRD
Amendments, the EBRD Loan Agreement and Funding Documents as amended by the
Amendments to Financing Agreements and the other documents contemplated hereby.
G. Authorizations. OPIC shall have received satisfactory evidence of
the authorization of the persons signing this Second Amendment, the EBRD
Amendments, the Amendments to Financing Agreements and the other documents
contemplated hereby on behalf of the Company, the Shareholders, Cyprus Gold and
Cyprus Amax to sign such documents and to bind the Company, the Shareholders,
Cyprus Gold and Cyprus Amax thereto.
H. Legal Opinions. OPIC shall have received favourable legal opinions
of special Russian and English counsel to the Project Lenders and of special
Russian, English
<PAGE>
Omolon Gold Mining Company - 13 - Second Amendment
and New York counsel to the Company regarding the matters set forth in Sections
3, 4A, 4.B, 4.C, 4.D, 4.E, 4.F and 4.G of this Second Amendment.
I. Attorneys' Fees. The Company shall have paid to OPIC, or as OPIC may
direct, all expenses incurred by OPIC, including but not limited to fees and
expenses of counsel, in connection with the preparation, negotiation, and
execution of this Second Amendment, the EBRD Amendments, the Amendments to
Financing Agreements, and the other documents contemplated hereby and thereby
for which the Company has received an invoice therefor.
J. Other. OPIC shall have received such other documents and opinions as
OPIC may reasonably request.
SECTION 5. REGISTRATION OF AMENDED AND RESTATED CHARTER.
The Company shall procure that the first amendment to the Amended and
Restated Charter of the Company, in form and substance satisfactory to the Bank,
shall have been registered with the State Registration Chamber by no later than
(1) the date on which the Company and Cyprus Magadan deliver the Final
Completion Certificate referred to in Schedule Q to the EBRD Loan Agreement or
(2) 15 May 1997, whichever occurs first.
SECTION 6. EXPENSES.
Without limiting the generality of Section 3.12 of the Agreement, the
Company shall pay to OPIC, or as OPIC may direct, all expenses recurred by OPIC,
including but not limited to fees and expenses of counsel, in connection with
the preparation, negotiation, execution, registration, administration and
enforcement of this Second Amendment (including in respect of preserving OPIC's
rights in any bankruptcy proceeding involving the Company), the EBRD Amendments,
the Amendments to Financing Agreements, and the other documents contemplated
hereby and thereby.
SECTION 7. MISCELLANEOUS.
A. All references to the Agreement in the Agreement, the Security
Documents and the other Financing Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the Agreement as amended by
this Second Amendment. All references to the EBRD Loan Agreement in the EBRD
Loan Agreement, the Security Documents and the other Financing Agreements and
all instruments and agreements executed thereunder shall for all purposes refer
to the EBRD Loan Agreement as amended by the EBRD Amendments. All references to
the other Financing Agreements in the Agreement, the Security Documents and the
other Financing Agreements and all instruments and agreements executed
thereunder shall for all purposes refer to the Financing Agreements as amended
by the Amendments to Financing Agreements.
B. Except to the extent each is expressly amended by the terms of this
Second Amendment, all terms and conditions of the Agreement, the Security
Documents and the
<PAGE>
Omolon Gold Mining Company - 14 - Second Amendment
other Financing Agreements and all other instruments and agreements executed
thereunder remain in full force and effect. This Second Amendment may be amended
only by an instrument in writing signed by an Authorized Officer of the Company
and an Authorized Officer of OPIC.
SECTION 8. COUNTERPARTS.
This Second Amendment may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
SECTION 9. SEVERABILITY.
If any provision of this Second Amendment is prohibited or held to be
invalid, illegal, or unenforceable in any jurisdiction, OPIC and the Company
agree to the fullest extent permitted by law that:
(1) the validity, legality, and enforceability of the other
provisions of this Second Agreement in such jurisdiction
shall not be affected or impaired thereby; and
(2) any such prohibition, invalidity, illegality, or
unenforceability shall not render such provision prohibited,
invalid, illegal, or unenforceable in any other jurisdiction.
SECTION 10. GOVERNING LAW.
This Second Amendment shall be governed by and construed in accordance
with the laws of the State of New York, United States of America.
SECTION 11. INTEGRATION.
This Second Amendment embodies the entire understanding of OPIC and the
Company, and supersedes all prior negotiations, understandings, and agreements
between them with respect to the subject matter hereof.
[Signature page to follow]
<PAGE>
Omolon Gold Mining Company - 15 - Second Amendment
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
executed by their duly authorized representatives as of the day and year first
above written.
THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY"
By: /s/ Ilya S. Rosenblum
---------------------------------
[SEAL LOGO] Name: Ilya S. Rosenblum
---------------------------------
Title: For General Director (by power of attorney)
----------------------------------
By: /s/ Ilya S. Rosenblum
--------------------------------
Name: Ilya S. Rosenblum
--------------------------------
Title: For Chief Accountant (by power of attorney)
--------------------------------
By: /s/ Larry D. Clark
--------------------------------
Name: Larry D. Clark
--------------------------------
Title: Director
--------------------------------
OVERSEAS PRIVATE INVESTMENT CORPORATION
By: /s/ James C. Polan
--------------------------------
Name: James C. Polan
--------------------------------
Title: Manager, Project Finance
--------------------------------
[Signature page to Second Amendment to Finance Agreement dated as of January 28,
1997.]
<PAGE>
Omolon Gold Mining Company - i - Second Amendment
ACKNOWLEDGMENT AND AGREEMENTS ADDENDUM TO SECOND AMENDMENT
TO FINANCE AGREEMENT
Cyprus Amax, Cyprus Magadan and Cyprus Gold each hereby:
(a) acknowledges and consents to the foregoing Second Amendment,
including without limitation the increase in the Commitment and
the amendments to the definition of Project Completion in Schedule
Q of the EBRD Loan Agreement, as provided therein;
(b) confirms that the Cyprus Amax Guaranty, the Cyprus Magadan
Guaranty, the Cyprus Support Agreement and the Cyprus Magadan
Share Pledge remains in full force and effect;
(c) agrees that all references to the Agreement in the Cyprus Amax
Guaranty, the Cyprus Magadan Guaranty, the Cyprus Support
Agreement and the Cyprus Magadan Share Pledge shall for all
purposes refer to the Agreement as amended by the foregoing Second
Amendment;
(d) agrees that all references to the Agreement in the Cyprus Amax
Guaranty, the Cyprus Magadan Guaranty, the Cyprus Support
Agreement, and the Cyprus Magadan Share Pledge shall for all
purposes refer to such Financing Agreements as amended by the
Amendments to the Financing Agreements;
(e) agree that, in respect of the additional $3,000,000 to be
advanced to the Company in accordance with this Second Amendment
and the EBRD Amendments, no failure of the State Registration
Chamber to register the first amendment to the Amended and
Restated Charter of the Company or of the Ministry of Finance to
register or reregister the issuance of shares by the Company
shall constitute a Political Event under the Cyprus Magadan
Guaranty; provided that this paragraph (e) shall not affect the
rights of Cyprus Magadan under Section 4.01(3) of the Cyprus
Magadan Guaranty in respect of any other event; and
[Signatures to follow]
<PAGE>
Omolon Gold Mining Company - ii - Second Amendment
CYPRUS AMAX MINERALS COMPANY
By: /s/ Farukh S. Hakimi
------------------------------
Name: Farukh S. Hakimi
------------------------------
Title: Assistant Treasurer
------------------------------
CYPRUS MAGADAN GOLD CORPORATION
By: /s/ Farukh S. Hakimi
------------------------------
Name: Farukh S. Hakimi
------------------------------
Title: Assistant Treasurer
------------------------------
CYPRUS GOLD COMPANY
By: /s/ Farukh S. Hakimi
------------------------------
Name: Farukh S. Hakimi
------------------------------
Title: Assistant Treasurer
------------------------------
[Signature page to Acknowledgment and Agreements Addendum to Second Amendment to
Finance Agreement dated as of January 28, 1997.]
<PAGE>
[EXECUTION COPY]
(Operation Number 209)
LOAN AGREEMENT
between
OMOLON GOLD MINING COMPANY
and
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
Dated as of 30 June 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - DEFINITIONS .............................................. 1
Section 1.01. General Definitions ............................. 1
Section 1.02. Interpretation .................................. 19
ARTICLE II - REPRESENTATIONS AND WARRANTIES .......................... 9
Section 2.01. Project Costs and Financing Plan ................ 19
Section 2.02. Representations as to the Company ............... 20
Section 2.03. Representations as to the Financing and Project
Agreements ...................................... 22
Section 2.04. Acknowledgement and Warranty .................... 24
ARTICLE. III - LOAN .................................................. 24
Section 3.01. Amount and Currency ............................. 24
Section 3.02. Interest ........................................ 25
Section 3.03. Disbursements ................................... 26
Section 3.04. Suspension and Cancellation ..................... 26
Section 3.05. Commitment Charge and Commission ................ 27
Section 3.06. Repayment ....................................... 28
Section 3.07. Voluntary and Mandatory Prepayment .............. 28
Section 3.08. Payments ........................................ 30
Section 3.09. Insufficient Payments ........................... 31
Section 3.10. Default Interest ................................ 32
Section 3.11. Increased Costs ................................. 32
Section 3.12. Taxes ........................................... 34
Section 3.13. Unwinding Costs ................................. 34
Section 3.14. Illegality ...................................... 35
Section 3.15. Loan Account .................................... 35
ARTICLE IV - CONDITIONS OF DISBURSEMENT .............................. 35
Section 4.01. Conditions of First Disbursement ................ 35
Section 4.02. Conditions for Any Disbursement ................. 40
Section 4.03. Pari Passu Disbursement ......................... 41
ARTICLE V - AFFIRMATIVE COVENANTS .................................... 41
Section 5.01. Project Implementation .......................... 41
Section 5.02. Maintenance and Conduct of Business ............. 42
Section 5.03. Insurance ....................................... 42
Section 5.04. Accounting ...................................... 42
Section 5.05. Continuing Governmental and Other Approvals ..... 43
Section 5.06. Security ........................................ 43
Section 5.07. Compliance with Other Obligations ............... 43
Section 5.08. Taxes; Stamp Duties ............................. 43
Section 5.09. Project Agreements .............................. 44
Section 5.10. Offshore Bank Account ........................... 44
Section 5.11. Disbursement Subaccount ......................... 44
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
Section 5.12. Sales and Revenue Subaccounts ................. 44
Section 5.13. Cash Collateral Subaccount .................... 47
Section 5.14. Russian Bank Accounts.......................... 47
Section 5.15. Debt Service Coverage Ratios .................. 48
Section 5.16. Further Documents ............................. 48
Section 5.17. Costs and Expenses ........................... 48
Section 5.18. Annual Budgets ................................ 50
Section 5.19. Furnishing of Information ..................... 50
Section 5.20. Development Plan .............................. 53
ARTICLE VI - NEGATIVE COVENANTS .................................... 54
Section 6.01. Dividends ..................................... 54
Section 6.02. Capital Expenditures .......................... 54
Section 6.03. Leases ........................................ 55
Section 6.04. Indebtedness .................................. 55
Section 6.05. Liens ......................................... 55
Section 6.06. Hedging ....................................... 56
Section 6.07. Arm's Length Transactions ..................... 56
Section 6.08. Profit-Sharing and Management Arrangements .... 56
Section 6.09. Investments ................................... 57
Section 6.10. Changes in Business, Capital and Charter ...... 57
Section 6.11. Prepayment of Long-term Debt .................. 58
Section 6.12. Sale of Assets; Merger ........................ 58
ARTICLE VII - EVENTS OF DEFAULT .................................... 58
Section 7.01. Events of Default ............................. 58
Section 7.02. Acceleration in Events of Default ............. 62
Section 7.03. Automatic Acceleration ........................ 62
ARTICLE VIII - MISCELLANEOUS ...................................... 62
Section 8.01. Term of Agreement ............................. 62
Section 8.02. Entire Agreement; Amendment and Waiver ........ 62
Section 8.03. Notices ....................................... 62
Section 8.04. Certificate of Incumbency and Authority ....... 63
Section 8.05. English Language .............................. 63
Section 8.06. Financial Calculations ........................ 64
Section 8.07. Rights, Remedies and Waivers .................. 64
Section 8.08. Indemnification ............................... 65
Section 8.09. Severability .................................. 65
Section 8.10. Governing Law ................................. 66
Section 8.11. Arbitration and Jurisdiction .................. 66
Section 8.12. Waiver of Sovereign Immunity .................. 72
Section 8.13. Successors and Assigns ........................ 72
Section 8.14. Counterparts .................................. 73
</TABLE>
Schedule A - Form of Contract Pledge
Schedule B - Form of Cyprus Amax Guaranty
(ii)
<PAGE>
Schedule C - Form of Cyprus Magadan Guaranty
Schedule D - Form of Cyprus Magadan Share Pledge
Schedule E - Form of Cyprus Support Agreement
Schedule F - Form of Enterprise Mortgage
Schedule G - Environmental Standards
Schedule H - Form of Equipment Pledge
Schedule I - Banking Case Procedures
Schedule J - Form of Goods Pledge
Schedule K - Form of Immovables Mortgage
Schedule L - Form of Insurance Assignment
Schedule M - Form of Letter of Credit
Schedule N - Form of Note
Schedule O - Form of Offshore Account Pledge
Schedule P - Form of Omolon Share Pledge
Schedule Q - Project Completion
Schedule R - Form of Reclamation Agreement
Schedule S - Form of Russian Account Pledge
Schedule T - Form of Russian Shareholders Support Agreement
Schedule U - Form of Security Sharing Agreement
Schedule V - Major Construction, Environmental and Operating Permits and
Approvals
Schedule W - Form of Disbursement Application
Schedule X - Security Perfection Requirements
Schedule Y - Form of Certificate of Incumbency and Authority
Schedule Z - Form of Letter to Auditors
Schedule AA - Form of Process Agent Acceptance
Schedule BB - Form of Opinion of Special Russian Counsel to the Company
(iii)
<PAGE>
Schedule CC - Form of Opinion of Special English Counsel to the Company
Schedule DD - Form of Opinion of Special New York Counsel to the Company
Schedule EE - Form of Opinion of Special English Counsel to the Project
Lenders
Schedule FF - Insurance Requirements
(iv)
<PAGE>
LOAN AGREEMENT
AGREEMENT, dated as of 30 June 1995 between THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY", a closed joint stock company organized and
existing under the laws of the Russian Federation (herein called the "Company"),
and EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein called the "Bank").
ARTICLE I - DEFINITIONS
Section 1.01. General DeFinitions
Wherever used in this Agreement, including the Schedules hereto, unless the
context otherwise requires, the following terms have the following meanings:
"Affiliate" means, with respect to any entity, any other entity or
person, directly or indirectly, controlling, controlled by,
or under common control with, such entity. For the purposes
of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common
control with"), as used with respect to any entity, shall
mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies
of such entity, whether through the ownership of voting
shares or by contract or otherwise.
"Amax Gold" means Amax Gold, Inc., a corporation organized
and existing under the laws of the State of Delaware.
"Association of
Native Peoples" means the Association of Northern Native
Peoples of the Severo-Evensk District
"Auditors" means such firm of independent public accountants as the
Company may from time to time appoint as auditors of the
Company in accordance with Section 5.04.
"Blocked Account
Agreement" means a blocked account agreement to be entered into among
the Company, Roskomdragmet, Citibank, N.A., London Branch
and such other parties as may be agreed by the Bank,
regarding the Roskomdragmet Sales Subaccount, which
agreement shall be as contemplated
1
<PAGE>
by the Roskomdragmet Agreement and in form and substance
satisfactory to the Bank.
"Business Day" means a day which is both a New York Banking Day and a
London Banking Day.
"Cash Collateral
Subaccount" means the subaccount of the Offshore Bank Account designated
as such in accordance with Section 5.10.
"Charter" means, in respect of any company, corporation, partnership,
governmental agency or other enterprise, its founding act,
articles of incorporation and bylaws, memorandum and
articles of association, statute or similar instrument.
"Commitment Period" means the period commencing on the date of this
Agreement and terminating on the earliest of (a) the date
24 months from the date of this Agreement, as such date
shall be extended for a period (not to exceed, in the
aggregate, 12 months) equal to the duration of any
suspension by the Bank of the right of the Company to
Disbursements pursuant to Section 3.04 and for a period (not
to exceed, in the aggregate, six months) equal to the
duration of any Force Majeure Event occurring during the
Commitment Period, (b) the date Disbursements in an
aggregate principal amount of $47,500,000 have been made by
the Bank, (c) the first Repayment Date, and (d) the date the
obligation of the Bank to make Disbursements hereunder
terminates in accordance with the terms of this Agreement.
"Construction
Contract" means, collectively, such construction management
and engineering services contracts as may be entered into
between the Company and/or Cyprus Magadan and the Contractor
in connection with the Project, which contracts shall be in
form and substance satisfactory to the Bank.
"Contractor" means Davy International Canada Limited, a corporation
organized under the laws of the Province of Ontario, Canada
and a subsidiary of Davy International, a division of
Trafalgar House, Inc., or such other Subsidiary of Trafalgar
House, Inc. as may be approved by the Bank.
"Contract Pledge" means the instrument pursuant to which the Company
grants to the Project Lenders a security interest in all of
its rights, interests and benefits under the Management
Agreement, the Construction Contract, the Marketing
2
<PAGE>
Agreements and the Reclamation Agreement, and all
performance bonds, warranties, guaranties and undertakings
issued thereunder (including subcontractor's warranties
issued directly to the Company under the Construction
Contract), together with the notices and acknowledgements
and consents in the forms attached thereto, which instrument
shall be substantially in the form of Schedule A.
"Cyprus Amax" means Cyprus Amax Minerals Company, a corporation
organized and existing under the laws of the State of
Delaware.
"Cyprus
Amax Guaranty" means the irrevocable guaranty to be entered into by Cyprus
Amax in favor of the Project Lenders,which guaranty shall
be substantially in the form of Schedule B.
"Cyprus Gold" means Cyprus Gold Company, a corporation organized and
existing under the laws of the State of Delaware.
"Cyprus Magadan" means Cyprus Magadan Gold Corporation, a corporation
organized and existing under the laws of the State of
Delaware.
"Cyprus Magadan
Guaranty" means the irrevocable guaranty to be entered into by Cyprus
Magadan in favor of the Project Lenders, which guaranty
shall be substantially in the form of Schedule C.
"Cyprus Magadan
Share Pledge" means the instrument pursuant to which Cyprus Gold pledges
in favor of the Project Lenders all of the issued and
outstanding shares of Cyprus Magadan, which instrument shall
be substantially in the form of Schedule D.
"Cyprus Support
Agreement" means the Project support agreement to be entered into among
the Company, Cyprus Amax, Cyprus Magadan and the Project
Lenders, which agreement shall be substantially in the form
of Schedule E.
"Debt" means the aggregate (as of the date of calculation) of all
obligations of the Company then outstanding for the payment
or repayment of money including, without limitation:
(a) any amounts payable by the Company under leases or
similar arrangements over their respective periods;
3
<PAGE>
(b) any credit to the Company from a supplier of goods or
under any installment purchase or other similar arrangement;
and
(c) the aggregate amount then outstanding of liabilities and
obligations of third parties to the extent that they are
guaranteed by the Company.
"Default Interest
Period" means, with respect to any amount overdue under this
Agreement, a period commencing on the Business Day on which
such payment becomes overdue or, as the case may be, on the
last Business Day of the previous Default Interest Period,
and ending on a Business Day selected by the Bank or, as the
case may be, determined in accordance with Section 3.10(d).
"Default Interest
Rate" means the interest rate applicable to amounts overdue under
this Agreement, as determined in accordance with
Section 3.10.
"Development Plan" means the development plan for the Project approved by the
Project Lenders in accordance with Section 5.20, as such
development plan may be amended from time to time in
accordance with the requirements of Section 6.10(a).
"Disbursement" means any amount of the Loan which is disbursed from time to
time pursuant to Section 3.03.
"Disbursement
Subaccount" means the subaccount of the Offshore Bank Account designated
as such in accordance with Section 5.10.
"Discount Rate" means, for each calendar year, the weighted average
(expressed as a rate per annum) of all interest charges
which are projected (on the basis of the Financial Model) to
be applicable to all amounts of the Tranche 1 Loan and the
OPIC" Tranche 1 Loan outstanding from time to time during
such calendar year
"Dollars" or "$" means the lawful currency of the United States of America.
"Dukat" means Dukatsky Mining and Beneficiation Complex.
"Elektrum" means Elektrum Limited Liability Company.
"Enterprise
Mortgage" means a mortgage in favor of the Project Lenders over all of
the equipment, assets and property of the
4
<PAGE>
Company, which mortgage shall be substantially in the form
of Schedule F.
"Environmental
Standards" means the environmental.performance criteria,
standards, practices and procedures for the Project set
forth in Schedule G, as amended by the Company from time to
time with the prior written approval of the Bank (such
approval not to be unreasonably withheld).
"Equipment Pledge" means the instrument pursuant to which the Company
grants to the Project Lenders a security interest in all of
the Company"s equipment and other tangible movable assets,
which instrument shall be substantially in the form of
Schedule H.
"Evenskoye Field" means the Evenskoye gold and silver field located in
the Magadan Region of the Russian Federation as described in
Section 2. 1 of the License Agreement.
"Event of Default" means any one of the events specified in Section
7.01.
"Excess Cash Flow" means, for any period, the Gross Revenues during
such period less the sum of (a) all amounts paid out of the
Revenue Subaccount during such period in accordance with
Sections 5.12(d)(1) through 5.12(d)(6), and (b) reasonable
and prudent reserves established during such period in res
of contingent liabilities.
"Export Sales
Subaccount" means the subaccount of the Offshore Bank
Account designated as such in accordance with Section 5.10.
"Financial Model" means the financial model agreed by the Bank and used
by the Company to prepare the financial projections for the
Project, as amended from time to time pursuant to the
provisions of Schedule I.
"Financial
Statements" means the unconsolidated financial statements of
the Company prepared in a manner consistent with its books
of account and in accordance with Generally Accepted
Accounting Principles in the United States.
"Financial Year" means the accounting year of the Company commencing
each year on 1 January and ending on the following 31
December, or such other accounting period of the Company as
the Company may, with the Bank"s consent, from time to time
designate as the accounting year of the Company.
5
<PAGE>
"Financing
Agreements" means this Agreement, the OPIC Finance Agreement, the Notes,
the promissory notes issued under the OPIC Finance
Agreement, the Cyprus Magadan Guaranty, the Cyprus Amax
Guaranty, the Security Documents, the Security Sharing
Agreement, the Cyprus Support Agreement, the Russian
Shareholders Support Agreement, the OPIC Funding Documents,
the Letter of Credit, the letter agreement relating to the
front-end commission referred to in Section 3.05Co), the
Disbursement applications referred to in Section 3.03(a) and
any other agreements entered into by the parties hereto in
connection with this Agreement or the transactions
contemplated hereby, and, in the singular, means any one of
such agreements.
"Financing Plan" means the financing plan set out in Section 2.01(b).
"Force Majeure
Event" means an event which is not within the reasonable control of
the Company and that has a material adverse effect on the
ability of the Company to construct the Project or to mine,
produce, process, transport or market ore or dore as
contemplated by the Development Plan, including;
(a) fire, landslide, earthquake, adverse weather conditions
or other acts of God;
(b) explosion, breakage or accident to Project equipment and
facilities;
(c) strikes (excluding, for the avoidance of doubt, any
strike or series of related strikes, to the extent that the
duration of such strike or series of related strikes is in
excess of 30 days, by employees of the Company, the
Contractor or any subcontractor relating solely to disputes
with management of the Company, the Contractor or such
subcontractor and not to the mining sector generally or
other matters); or
(d) political events, shortages of material or labor
resulting directly from control or diversion by the Russian
government, embargo or terrorism.
"Foundation
Agreement" means the foundation agreement on establishment of the
Company dated 26 February 1993, as amended by a first
amendment and supplemental agreement with respect to the
foundation agreement on establishment of the Company dated 4
September 1993, a second amendment to the foundation
agreement on the establishment of the
6
<PAGE>
Company, the charter of the Company dated 10 January 1994, a
third amendment to the foundation agreement on the
establishment of the Company and the charter of the Company
dated 24 March 1995 and a fourth amendment agreement to the
foundation agreement on the establishment of the Company
and the charter of the Company to be entered into in form
and substance satisfactory to the Bank.
"Future Net Income" means, for any period, the projected Gross Revenues expected
to be realized by the Company during such period less the
sum of the Operating Costs payable in currencies other than
Roubles which are projected for such period, all in
accordance with the Financial Model.
"Generally
Accepted
Accounting
Principles" means accounting principles generally accepted in the United
States or Russia, as the case may be, and in each case
consistently applied.
"Geometal" means Geometal Joint Stock Gold-Mining Company.
"Goods Pledge" means the instrument pursuant to which the Company grants to
the Project Lenders a security interest in all of the
Company"s gold, silver and dore, and all receivables,
receipts and proceeds from the sale or transfer thereof,
which instrument shall be substantially in the form of
Schedule J.
"Gross Revenues" means, for any period, the Company"s gross revenues in
freely convertible currencies other than Roubles from all
sources during such period (including, without limitation,
all revenues from the sale of dore, the proceeds of any
insurance or other claim with respect to delay in
completion, business in--on or loss or destruction of gold
or dore and all refunds of taxes, but excluding interest
earned on the Offshore Bank Account or the Russian Bank
Accounts) which are received in the Revenue Subaccount and
are not subject to mandatory conversion into Roubles or, at
such time, transfer to the Russian Federation.
"Guaranteed
Portion" means, at any time with respect to any amount payable under
this Agreement:
(a) prior to the Project Completion Date, 100% of such
amount; and
7
<PAGE>
(b) thereafter, in the case of any amount other than the
principal amount of me Tranche 2 Loan and interest accruing
thereon after the Project Completion Date, the portion of
such amount which is, at such time, guaranteed by Cyprus
Magadan pursuant to the Cyprus Magadan Guaranty.
"Immovables
Mortgage" means a mortgage in favor of the Project Lenders
over all of the Company's; removable property, which
mortgage shall be substantially in the form of Schedule K.
"Increased Costs" has the meaning given to it in Section 3.11.
"Indebtedness" means, in regard to any person:
(a) all indebtedness of such person for borrowed money or
arising out of any credit facility or financial
accommodation or for the deferred purchase price of property
or services;
(b) all guarantees of such person (or other obligations of
such person which am the economic equivalent of a guarantee,
including without limitation any obligation of such person
to purchase, to provide funds for payment, to supply funds
to or otherwise to invest in any other person) in respect of
the indebtedness of any other person for borrowed money or
arising out of any credit facility or financial
accommodation or for the deferred purchase price of property
or services;
(c) all indebtedness or other or1igations of any other
person for borrowed money or aris out of any credit facility
or financial accommodation or for the deferred purchase
price of property or services secured by (or for which the
holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon
property (including without limitation accounts receivable
and contract rights) owned by such person, whether or not
such person has assumed or become liable for the payment of
such indebtedness or obligations; and
(d) obligations of such person in respect of any lease of
goods (or property which, if not affixed to realty, would be
personalty) by such person which under Generally Accepted
Accounting Principles would be required to be capitalized on
the balance sheet of such person.
8
<PAGE>
"Independent
Engineer" means Pincock Allen & Holt Inc. or such other firm
of engineers as may be selected from time to time by the
Project Lenders after consultation with the Company, and any
subcontractors of such engineer.
"Insurance
Assignment" means the assignment pursuant to which the Company
assigns to the Project Lenders all of its rights,
interests and benefits under all insurance maintained by the
Company and all other insurance relating to the design,
construction, operation and maintenance of the Project,
together with the notices and acknowledgements and consents
in the forms attached thereto (or in such other forms as may
be approved by the Bank), which assignment shall be
substantially in the form of Schedule L.
"Interbank Rate" means, for each Interest Period; the offered rate
which appears on the Telerate Page 3750 as of 11:00 am.,
London time, on the Interest Determination Date for such
Interest Period for one month, two months, three months,
four months, five months or six months, whichever period is
closest to the duration of the relevant Interest Period (or,
if two periods are equally close to the duration of the
relevant Interest Period, the average of the two relevant
rates); provided that, if, for any reason, the Interbank
Rate cannot be determined by .reference to the Telerate Page
3750 on such Interest Determination Date or the services of
the Telerate Page 3750 cease to be available as a re.suit of
discontinuation of such services, the Interbank Rate shall
be the interest rate per annum which the Bank determines to
be the arithmetic " mean (rounded upwards, if necessary, to
the nearest 1/16%) of the offered rates advised to the Bank
by three major banks active in the Dollar interbank market
in London selected by the Bank after consultation with the
Company.
"Interest
Determination
Date" means, for any Interest Period, the date two London
Banking Days prior to the first day of such
Interest Period.
"Interest Payment
Date" means any day which is 15 June or 15 December in any
year, provided, however, that, if any Interest Payment Date
would fall on a day which is not a New York Banking Day,
such Interest Payment Date shall be changed to the next
succeeding New York Banking Day.
9
<PAGE>
"Interest Period" means each period of six months commencing on an
Interest Payment Date and ending on the next following
Interest Payment Date,. except in the case of the first
Interest Period applicable to each Disbursement when it
shall have the following meaning:
(1) if such disbursement is made at least 15 Business Days
prior to the next Interest Payment Date, the period
commencing on the date on which such Disbursement is made
and ending on the next Interest Payment Date, and
(2) if such disbursement is made less than 15 Business Days
prior to the next Interest Payment Date, the period
commencing on the dam on which such Disbursement is made and
ending on the Interest Payment Date succeeding the next
Interest Payment Date.
"Interest Rate" means, for each Interest Period with respect to each
portion of each tranche of the Loan, the rate of interest
payable on such portion of such tranche of the Loan during
such Interest Period, determined in accordance with Section
3.02.
"Kubaka Field" means the Kubaka gold and silver field located in the
Magadan Region of the Russian Federation approximately 600
miles north-northeast of the City of Magadan, as described
in Section 2.1 of the License Agreement.
"Letter of Credit" means an irrevocable "evergreen" standby letter of credit,
substantially in the form of Schedule M, issued in
accordance with paragraph l(b)(1) of Schedule Q in favor of
the Bank and OPIC by a financial institution acceptable to
the Bank in a face amount not to exceed $2,500,000 securing
principal and interest payable by the Company under this
Agreement and the OPIC Finance Agreement.
"License" means the license for the right to use subsurface, series
MAP, number 10141, license type 53, issued to the Company by
the Committee of the Russian Federation for Geology and Use
of the Subsurface and the Magadan Regional Soviet of
People's Deputies, including all annexes thereto, as amended
by an amendment dated 24 March 1995 among the Magadan Oblast
Duma, the Committee of the Russian Federation for Geology
and Use of the Subsurface and the Company.
10
<PAGE>
"License Agreement" means the license agreement between the Magadan
Oblast Duma (as successor to the Magadan Regional Soviet of
People's Deputies) and the Committee of the Russian
Federation for Geology and Use of the Subsurface and the
Company, which is attached as Annex 1 to the License.
"Lien" means any mortgage, pledge, charge, privilege, priority,
hypothecation, encumbrance, assignment, lien, attachment,
set-off or other security interest of any kind upon or with
respect to, or any segregation of or other preferential
arrangement with respect to, any present or future assets,
revenues or rights, including, without limitation, any
designation of loss payees or beneficiaries or any similar
arrangement under any insurance policy.
"Loan" means, collectively, the Tranche 1 Loan and the Tranehe 2
Loan or, as the context may require, the aggregate of the
principal amounts thereof from time to time outstanding.
"Loan Life Debt
Service Coverage
Ratio" means, on any date, (a) the net present value, discounted at
the Discount Rate, of all Future Net Income for the period
from such date to 15 June 2001, divided by (b) the aggregate
principal mount of the Tranche 1 Loan and the OPIC Tranche 1
Loan outstanding on such date less the sum of the mount on
deposit in the Cash Collateral Subaccount and the face
amount of the Letter of Credit (if any) on such date.
"London Banking means a day on which commercial banks and foreign exchange
Day" markets are open for the transaction of business in the
Dollar interbank market in London, England.
"Long-term Debt" means the aggregate (as of the date of calculation) of
all those component parts of the Debt which fall due or
whose final payment is due more than one year after such
date of calculation.
"Magadan Gold" means Magadan Gold and Silver Joint Stock Company.
"Management
Agreement" means the amended and restated management,
technical and other services agreement dated as of 13 April
1995 between Cyprus Magadan and the Company.
"Margin" means (a) with respect to the Guaranteed Portion of the
Loan, 3.25% per annum, and (b) with respect to the
Unguaranteed Portion of the Loan, 4.25 % per annum.
11
<PAGE>
"Marketing
Agreements" means, collectively, the Roskomdragmet Agreement, the
Rosvneshtorgbank Agreement and any other marketing, sales or
dore transportation agreements entered into by the Company
in accordance with the terms of this Agreement, and, in the
singular, means any one of such agreements.
"Material
Adverse Effect" means a material adverse effect on:
(1) the Project, including without limitation the projected
costs of construction of the Project in accordance with the
Development Plan (to the extent that funding of such costs
has not been committed) or the projected costs of operation
or maintenance of the Project in accordance with the
Development Plan;
(2) the business, operations or condition of the Company,
Cyprus Amax or Cyprus Magadan;
(3) the ability of any party to any Financing Agreement or
Project Agreement to timely perform its obligations
thereunder in full in accordance with the terms thereof;
(4) the validity or enforceability of any Financing
Agreement or Project Agreement or the fights or remedies of
either Project Lender thereunder; or
(5) the security;
provided that a reduction in the market price of gold shall
not, by itself, be considered to have a Material Adverse
Effect unless the average market price of gold over the
preceding 30 days falls below $275 per ounce.
"Memorandum of
Understanding" means the protocol of the meeting on the Kubaka project
development held in Anchorage, Alaska on 20 and 21 November
1994.
"New York Banking
Day" means a day (other than a Saturday or Sunday) on which
commercial banks are not authorized or required to close in
New York.
"Note" means a promissory note issued by the Company to the Bank,
substantially in the form of Schedule N, evidencing the
indebtedness of the Company to the Bank resulting ::ore a
Disbursement or any promissory note issued by the Company at
the request of the Bank in extension, renewal or
substitution therefor.
12
<PAGE>
"Offshore
Account Pledge" means the instrument pursuant to which the Company grants to
Moscow Narodny Bank Limited, as security trustee for the
Project Lenders, a security interest in the Company"s right,
rifle and interest in and to the Offshore Bank Account,
together with the notices and acknowledgements and consents
in the forms attached thereto, which instruments shall be
substantially in the form of Schedule O.
"Offshore Bank
Account" has the meaning given to it in Section 5.10.
"Offshore Bank
Account Agreement" means the accounts agreement to be entered into among the
Company, Citibank, N.A., London Branch and Moscow Narodny
Bank Limited relating to the Offshore Bank Account, which
agreement shall be in form and substance satisfactory to the
Bank.
"Omolon Share
Pledge" means, collectively, the instruments pursuant to which the
Shareholders pledge in favor of the Project Lenders all of
the issued and outstanding shares of the Company, which
instruments shall be substantially in the form of Schedule
P.
"Operating Costs" means:
(a) all costs and expenses (including capital expenditures)
incurred by the Company in operating and maintaining the
Project, including transportation costs, reimbursement at
cost for goods and services procured by Cyprus Amax or its
Affiliates on behalf of the Company from unaffiliated
entities on an ann"s length basis and an amount not to
exceed (unless otherwise approved by the Bank, such approval
not to be unreasonably withheld) $500,000 (or the equivalent
thereof in other currencies at then current "rates of
exchange) per year in properly documented travel and other
reimbursable expenses payable to Cyprus Magadan under the
Management Agreement;
(b) all license fees paid by the Company under the License;
(c) insurance premiums paid by the Company in maintaining
any of the insurance required by this Agreement;
(d) administrative overhead expenses incurred by the Company
from time to time, including engineering, data
13
<PAGE>
processing, accounting, legal and purchasing costs and
charges, which axe attributable to the Project, but
excluding any "such amount in respect of which the Company
is entitled to be reimbursed by any person (until such
amount is converted on the accounts of the Company to a loss
following non-payment);
(e) any fees payable by the Company to the banks at which
the Offshore Bank Account and the Russian Bank Accounts
axe located and to any security trustee with respect to such
accounts;
(f) any fees, commissions, charges, costs and expenses due
and payable pursuant to this Agreement, the OPIC Finance
Agreement and the other Financing Agreements to either
Project Lender, including the fees and expenses of the
Independent Engineer and the Bank"s insurance and
environmental consultants; and
(g) all taxes, rates, charges, assessment, duties and
tariffs which at any rime arc imposed or assessed on the
Company or its income, profits, revenues, imports of goods
and services, production, sales or exports;
but excluding, for the avoidance of doubt, depreciation,
amortization and other non-cash items, costs met from
insurance proceeds not ire to be reflected in the Company"s
financial accounts under Generally Accepted Accounting
Principles in the United States, management fees,
reimbursable expenses in excess of the amount referred to in
(a) above and other amounts payable to Cyprus Magadan or any
Affiliate of Cyprus Magadan under the Management Agreement
or otherwise except to the extent referred to in (a) a bove,
principal and interest due and payable under this Agreement
or the OPIC Finance Agreement and any insurance premiums
payable to OPIC.
"OPIC" means the Overseas Private Investment Corporation, an agency
of the United States of America.
"OPIC Finance
Agreement" means the finance agreement dated as of the date hereof
between the Company and OPIC.
"OPIC Funding
Documents" means the agreements pursuant to which OPIC receives formal
and binding commitments from one or more financial
institutions to fund the full amount of the OPIC Loan.
14
<PAGE>
"OPIC Loan" means, collectively, the OPIC Tranche 1 Loan and the
OPIC Tranche 2 Loan or, as the context may require, the
aggregate of the principal amounts thereof from time to time
outstanding.
"OPIC Tranche 1
Loan" means the loan specified in Section 3.01(a) of the OPIC
Finance Agreement or, as the context may require, the
principal amount thereof from time to time outstanding.
"OPIC Tranche 2
Loan" means the loan specified in Section 3.01(b) of the OPIC
Finance Agreement or, as the context may require, the
principal amount thereof from time to time outstanding.
"Permitted Liens" means the Liens set forth in Sections 6.05(1), 6.05(2),
6.05(3) and 6.05(4).
"Potential Event
of Default" means any event which, with lapse of time or notice and
lapse of time as specified in Section 7.01, may become an
Event of Default.
"Project" means the commercial development of the Kubaka Field,
containing proven and probable recoverable reserves of
approximately 2,200,000 ounces of gold and 1,700,000 ounces
of silver to be produced during a mine life of approximately
seven years, providing for open pit mining of the ore and
processing, at a rate of 1,750 tons per day, of the ore into
"dore" (an alloy of gold and silver produced from initial
melting) which will be sold by the Company for further
refining into gold and silver, as further described in the
Development Plan.
"Project
Agreements" means the License (including the License Agreement), the
Construction Contract, the Management Agreement, the
Memorandum of Understanding, the Marketing Agreements, the
Offshore Bank Account Agreement, the Blocked Account
Agreement, the Russian Blocked Account Agreement, the
Reclamation Agreement, the Foundation Agreement and the
Company's Charter, and, in the singular, means any one of
such agreements.
"Project
Completion" has the meaning given to it in Schedule Q.
"Project
Completion Date" means the date on which the Bank and OPIC have jointly
delivered to the Company a written notice stating that they
are satisfied that Project Completion has occurred.
"Project Costs" means costs incurred by the Company in connection
with the design and construction of the Project, including
interest, commitment charge and other financing costs
15
<PAGE>
payable by the Company under this Agreement and the OPIC
Finance Agreement during design and construction of the
Project, Operating Costs incurred by the Company during
construction of the Project and insurance premiums payable
to OPIC during construction of the Project, as such costs
are estimated in Section 2.01(a).
"Project Lenders" means, collectively, the Bank and OPIC.
"Qualified
Political Event" has the meaning given to it in the Cyprus Magadan Guaranty.
"Reclamation
Agreement" means an agreement between the Company and Cyprus Amax,
Cyprus Magadan and the Russian Shareholders, substantially
in the form of Schedule R.
"Repayment Date" means each of the dates for repayment of principal of
the Loan as set forth in Section 3.06(a).
"Retrospective
Debt Service
Coverage Ratio" means, for any Interest Period, the result obtained by
dividing (a) the Gross Revenues for such Interest Period
less the sum of the Operating Costs payable in currencies
other than Roubles during such Interest Period by (b) the
sum of all principal and interest due and payable in of the
Tranche 1 Loan and the OPIC Tranche 1 Loan at the end of
such Interest Period.
"Revenue
Subaccount" means the subaccount of the Offshore Bank Account designated
as such in accordance with Section 5.10.
"Roskomdragmet" means the Committee of the Russian Federation for Precious
Metals and Precious Stones.
"Roskomdragmet
Agreement" means the purchase-sales contract dated 29 May 1995 between
the Company and Roskomdragmet.
"Roskomdragmet
Sales Subaccount" means the subaccount of the Offshore Bank Account designated
as such in accordance with Section 5.10.
"Rosvneshtorgbank" means the Bank for Foreign Trade of Russia, an authorized
Russian bank.
"Rosvneshtorgbank
Agreement" means the agency agreement dated 9 June 1995 between the
Company and Rosvneshtorgbank.
16
<PAGE>
"Roubles" or "Rb." means the lawful currency of the Russian Federation.
"Russian Account
Pledge" means the instrument pursuant to which the Company grants to
the Project Lenders a security interest in the Company's
right, title and interest in and to the Russian Bank
Accounts, together with the notices and acknowledgements and
consents in the forms attached thereto, which instrument
shall be substantially in the form of Schedule S.
"Russian Bank
Accounts" has the meaning given to it in Section 5.14.
"Russian Blocked
Account Agreement" means the Russian blocked account agreement to be entered
into among the Company, Roskomdragmet and Citibank T/O
regarding the Russian Bank Account into which sales proceeds
in Roubles under the Roskomdragmet Agreement are to be paid,
which agreement shall be as contemplated by the
Roskomdragmet Agreement and in form and substance
satisfactory to the Bank.
"Russian
Shareholders" means, collectively, the Association of Native Peoples,
Geometal, Dukat, Magadan Gold, Elektrum and Rossiisky Kredit
Commercial Bank.
"Russian
Shareholders
Support Agreement" means the Project support agreement to be entered into among
the Company, the Russian Shareholders and the Project
Leaders, which agreement shall be substantially in the form
of Schedule T.
"Security" means the security created in favor of the Project Leaders
by the Company over all of its assets, by the Shareholders
over all of their shares in the Company and by Cyprus Gold
over all of its shares in Cyprus Magadan to secure all
amounts owing by the Company to the Project Lenders under
this Agreement, the OPIC Finance Agreement and the other
Financing Agreements.
"Security
Documents" means the Contract Pledge, the Cyprus Magadan Share Pledge,
the Enterprise Mortgage, the Equipment Pledge, the Goods
Pledge, the Immovables Mortgage, the Insurance Assignment,
the Offshore Account Pledge, the Omolon Share Pledge and the
Russian Account Pledge, and, in the singular, means any one
of such documents.
17
<PAGE>
"Security
Sharing Agreement" means the security sharing agreement to be entered into
between the Project Lenders providing for, inter alia, the
sharing of the Security between the Project Lenders, which
agreement shall be substantially in the form of Schedule U.
"Shareholder
Distribution" means any payment or transfer from the Offshore Bank Account
or the Russian Bank Accounts for any purpose other than (a)
a payment to the Bank or OPIC pursuant to this Agreement,
the OPIC Finance Agreement or any other Financing Agreement,
and (b) a payment of Project Costs or Operating Costs in
accordance with the Development Plan or as otherwise
approved by the Bank.
"Shareholders" means, collectively, the Russian Shareholders and Cyprus
Magadan.
"Short-term Debt" means all Debt (as of the date of calculation) other than
the Long-term Debt.
"Subordinated
Shareholder Loans" means Debt of the Company owing to any Shareholder and which
is subordinated to the payment of all amounts payable under
this Agreement and the OPIC Finance Agreement pursuant to
the Cyprus Support Agreement or the Russian Shareholders
Support Agreement.
"Subsidiary" means, with respect to any entity, any other entity over
50% of whose capital is owned, directly or indirectly, by
the entity or which is otherwise effectively controlled by
the entity.
"Telerate Page
3750" means the display of London interbank offered rates
(commonly known as "LIBOR") of major banks for deposits in
Dollars, designated as page 3750 on the Telerate Service (or
such other page as may replace the Telerate Page 3750 for
the purpose of displaying such London interbank offered
rates for deposits in Dollars).
"Tranche 1 Loan" means the loan specified in Section 3.01(a) or, as the
context may require, the principal amount thereof from time
to time outstanding.
"Tranche 2 Loan" means the loan specified in Section 3.01(b) or, as the
context may require, the principal amount thereof from time
to time outstanding.
"Unguaranteed
Portion" means, at any time after the Project Completion Date:
18
<PAGE>
(a) with respect to the principal amount of the Tranche 2
Loan and interest accruing thereon after the Project
Completion Date, 100% of such amount; and
(b) with respect to any other amount payable by the Company
under this Agreement, the portion of such amount which is
not, at such time, guaranteed by Cyprus Magadan pursuant to
the Cyprus Magadan Guaranty.
Section 1.02. Interpretation
(a) In this Agreement, unless the context otherwise requires, words denoting the
singular include the plural and vice versa, and words denoting persons include
corporations, partnerships, and other legal persons.
(b) In this Agreement, references to a specified Article, Section or Schedule
shall be construed as a reference to that specified Article, Section or Schedule
of this Agreement.
(c) The headings and the Table of Contents are inserted for convenience of
reference only and shall not affect the interpretation of this Agreement.
(d) In this Agreement, references to statutes, laws, rules, regulations and
decrees of the Russian Federation, or any political subdivision thereof,
including environmental, health and safety standards and requirements
promulgated thereunder, shall refer only to such statutes, laws, rules,
regulations and decrees which are published or publicly available or of which
the Company otherwise has knowledge or which the Company could have ascertained
upon reasonable investigation.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
Section 2.01. Project Costs and Financing Plan
The Company represents as follows:
(a) The total estimated cost of the Project is approximately $180,000,000.
19
<PAGE>
(b) Under the Financing Plan, the proposed sources of financing the approximate
Project costs referred to in Section 2.01(a) are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Source Dollars
<S> <C>
Equity
Association of Native Peoples 5,280,000
Geometal 14,345,000
Magadan Gold 5,280,000
Elektrum 7,840,000
Rossiisky Kredit Commercial Bank 4,800,000
Dukat 2,455,000
Cyprus Magadan 40,000,000
Total Equity 80,000,000
Long-term Debt
Tranche 1 Loan 42,500,000
Tranche 2 Loan 5,000,000
OPIC Tranche 1 Loan 47,500,000
OPIC Tranche 2 Loan 5,000,000
Total Long-term Debt 100,000,000
Total Financing 180,000,000
- ------------------------------------------------------------------------
</TABLE>
Section 2.02. Representations as to the Company
The Company represents and warrants as follows:
(a) The Company is a closed joint stock company duly organized and validly
existing under the laws of the Russian Federation and registered with all
relevant registration bodies in the Russian Federation and has full power to own
the properties which it owns and proposes to own for the purposes of the Project
and to carry out the business which it carries out and proposes to carry out for
the purposes of the Project. The Company has no Subsidiaries.
(b) The Company has an authorized capital of Rb. 388,480,000,000 (the
equivalent of $80,000,000) consisting of 80,000 sea with a nominal value of Rb.
4,856,000 each. The following is a list of the shareholders in the Company as of
the date of this Agreement, together with the number of shares and the
percentage of all shares in the Company that will be held by each of such
shareholders upon execution and registration of the fourth amendment agreement
to the foundation agreement on the establishment of the Company and the charter
of the Company:
20
<PAGE>
<TABLE>
<CAPTION>
Shareholder Number of Shares Percentage
<S> <C> <C>
Association of Native Peoples 5,280 6.60000
Geometal 14,345 17.93125
Magadan Gold 5,280 6.60000
Elektrum 7,840 9.80000
Rossiisky Kredit Commercial Bank 4,800 6.00000
Dukat 2,455 3.06875
Cyprus Magadan 40,000 50.00000
Total 80,000 100.00000
</TABLE>
The only issued shares of the Company axe registered shares. Them axe no
options, warrants or instruments convertible into shares or other agreements
relating to the existing shares of the Company or for the issuance of additional
shares of any class or description of the Company, except for the Foundation
Agreement. No person has any right (other than as a shareholder or in res of the
Tranche 2 Loan and the OPIC Tranche 2 Loan) to share in the profits of the
Company.
(c) As of the date of this Agreement, the Directors of the Company are I.S.
Rosenblum, A.I. Nevolin, R.A. Kauffman, S.W. Harapiak, L.D. Clark and V.P.
Krachavets, the General Manager of the Company is S.W. Harapiak the ViceGeneral
Manager of the Company is Valery Glazatov, the Financial Manager of the Company
is Sergey Trofimov and the Chief Accountant of the Company is Elena Ryzhaikina.
(d) The balance sheet of the Company as at 1 January 1995 and the related
statement of profit and loss of the Co any for the Financial Year ending on that
date, certified by the Chairman of the Board of Directors of the Company, fairly
and accurately present the financial condition of the Company as of the date of
such balance sheet and were prepared in conformity with Generally Accepted
Accounting Principles in Russia. The Company had, as of the date of such balance
sheet, no material contingent obligatio ns, liabilities for taxes or unusual
forward or long term commitments not disclosed by, or reserved against in, such
balance sheet or the notes thereto. Since the date of such balance sheet, the
Company has not suffered any change in its business prospects or financial
condition which has a Material Adverse effect, incurred any substantial or
unusual loss or liability or undertaken or agreed to undertake any substantial
or unusual obligation (except under the Financing Agreements and the Project
Agreements), in any such case, of a type which would appear on the Financial
Statements in accordance with Generally Accepted Accounting Principles in the
United States.
(e) The Company owns, free of all Liens other than Permitted Liens, all of its
assets (including real property, personal property, intellectual property and
any other assets the ownership of which is reflected on its most recent balance
sheet referred to in Section 2.02(d) or which are referred to in the Security
Documents, but excluding the Kubaka Field and the Evenskoye Field which the
Company has the exclusive right to use pursuant to the License for the purposes
of commercial development of the
21
<PAGE>
Kubaka Field and exploration and subsequent development of the Evenskoye Field)
that have a book value in excess of $10,000 equivalent each. The Company's
assets axe not subject to any Lien, and the Company is not subject to any
contract, arrangement or statute, whether conditional or unconditional, pursuant
to which any such Lien may be created, except for Permitted Liens. The Company's
assets axe insured against such risks and in such amounts as are customary
internationally for businesses of a like nature.
(f) As of the date hereof, the Company is not a party to, or committed to
enter into, any agreement, other than the Financing Agreements and the Project
Agreements, that would or might affect the judgment of a prospective lender.
(g) The Company is not in violation of any material statute, law, regulation,
judgment, rule, order or decree presently in effect. which is applicable to the
Company or its assets. To the best of the Company!s knowledge after due inquiry,
no statute, law, rule, regulation or decree has been proposed and no judgment or
order is expected which may have a Material Adverse Effect. All tax returns and
reports of the Company required by law to be filed have been duly filed and all
tax assessments, fees and other governmental charges upon the Company, its
properties and its income, which are due and payable, have been paid, other than
those currently payable without penalty or interest. The Company is not in
default under any agreement, obligation or duty to which it is a party or by
which it or any of its properties or assets is bound and there exists no Event
of Default and no Potential Event of Default.
(h) To the best of the Company's knowledge after due inquiry, the Company and
its businesses, operations, assets, equipment, property, leaseholds and other
facilities are in compliance with the Environmental Standards. AS of the date of
this Agreement, the Company has been issued all permits, licenses, certificates
and approvals then required under applicable law relating to, and, except as
disclosed to the Bank in writing, has received no material complaint, order,
directive, citation or notice from any governmental authority or any other
material public complaint with to, (1) air emissions, (2) discharges to surface
water or ground water, (3) noise emissions, (4) solid or liquid waste disposal,
(5) the use, generation, storage, transportation or disposal of toxic or
hazardous substances or wastes, or (6) other environmental, health or safety
matters.
(i) The Company is not engaged in nor, to the best of its knowledge,
threatened by, any litigation, arbitration or administrative proceeding, the
outcome of which may reasonably be expected to have a Material Adverse Effect.
Section 2.03. Representations as to the Financing and Project Agreements
The Company represents and warrants as follows:
(a) The Company has the corporate power to enter into and perform this
Agreement and the other Financing Agreements and Project Agreements to which it
is a party.
22
<PAGE>
(b) This Agreement has been, and the other Financing Agreements and Project
Agreements to which the Company is a party when executed and delivered will have
been, duly authorized by the Company. This Agreement has been duly executed by
the Company and this Agreement constitutes, and the other Financing Agreements
and Project Agreements to which the Company is a party when executed and
delivered (in the case of the Notes and the promissory notes issued under the
OPIC Finance Agreement, for value) will const itute, valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms. The making of this Agreement and the other Financing Agreements and
Project Agreements and the compliance with the terms thereof (1) will not
result in violation of the Company's Charter or any provision contained in any
statute, law, role, regulation, judgement, decree or order applicable to the
Company, (2) will not conflict with or result in the breach of any provision of,
or require any consent under, or result in the imposition of any Lien under, any
agreement or instrument to which the Company is a party or by which the Company
or any of its assets is bound, and (3) will not constitute a default or an event
that, with the giving of notice or the passing of time or both, would constitute
a default under any such agreement or instrument.
(c) As of the date of this Agreement, no governmental licenses, approvals,
consents, CUings or registrations axe required for the due execution, delivery
or performance by the Company of this Agreement, any other Financing Agreement
or any Project Agreement, or the validity or enforceability thereof, except for
(1) the authorization of the Central Bank of Russia for the incurrence and
repayment of the Indebtedness incurred under this Agree eat and the OPIC Finance
Agreement and the establishment and operat ion of the Offshore Bank Account as
contemplated herein, (2) registration of the Enterprise Mortgage with the Local
Registration on Chamber and the State Registration Chamber attached to the
Ministry of the Economy of the Russian Federation, (3) registration of the
Immovables Mortgage with the local and registry and the municipal department
which registers buildings, (4) those listed in Schedule X, (5) the major
construction, environmental and operating and listed in Schedule V, and (6)
other construction, environmental and operating permits and approvals not fisted
in Schedule V which are routinely issued in the course of designing,
constructing and operating the Project and which there is no reason to believe
the Company will not be able to obtain at the time such permits and approvals
are needed for the Project.
(d) This Agreement constitutes a direct, unconditional and secured general
obligation of the Company and ranks in priority of payment at least pari passu
---- -----
with all other present and future indebtedness of the Company.
(e) Each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when executed and delivered and when the documents,
recordings, filings, notifications and registrations listed in Schedule X have
been executed or made, constitute a valid and completed security interest in,
and a Lien of first priority on, the collateral covered by such Security
Document, securing payment of all principal, interest and other amounts payable
by the Company under this Agreement, the OPIC Finance Agreement and the other
Financing Agreements, which security interest and Lien will rank senior to all
other security interests and Liens on
23
<PAGE>
such collateral other than Permitted Liens. The Company is not a party to any
other security agreement or instrument creating or purporting to create a
security interest in and Lien on such collateral.
(f) Each of the License, the Management Agreement and the Marketing Agreements
is in full force and effect without material modification from the form referred
to in Section 1.01. There has occurred no breach, and no event which with the
giving of notice or the passing of time or both would constitute a breach, by
the Company of any such Project Agreement. The Company has no knowledge of any
breach, or event which with the giving of notice or the passing of time or both
would constitute a breach, by any other party of any such Project Agreement.
(g) All permits, licenses, trademarks, patents and agreements with respect to
the usage of technology and other intellectual property necessary for the
Project have been obtained and are in full force and effect. All utility
services necessary for the Project, including, to the extent necessary, water
supply, storm and sanitary sewer, gas, electric and telephone services and
facilities, are available or will be made available to the Project and
arrangements in respect thereof have been made on commercially reasonable terms.
Section 2.04. Acknowledgement and Warranty
The Company acknowledges that it has made the representations referred
to in Sections 2.01, 2.02 and 2.03 with the intention of persuading the Bank to
enter into thin Agreement and that the Bank has entered into this Agreement on
the basis of, and in full reliance on, each of such representations. The Company
has no knowledge of any additional facts or matters which would or might
reasonably affect the judgment of a prospective lender regarding leading to the
Company. The Company warrants to the Bank that each of such reputations is true
and correct in all material respects as of the date of thin Agreement and that
none of them omits any matter the omission of which makes any of such
representations misleading.
ARTICLE III - LOAN
Section 3.01. Amount and Currency
Subject to the terms and conditions of this Agreement, the Bank agrees to
lend to the Company, and the Company agrees to borrow from the Bank, a Loan in
an amount not to exceed $47,500,000 made up of:
(a) the Tranche 1 Loan in an amount not to exceed $42,500,000; and
(b) the Tranche 2 Loan in the amount of $5,000,000.
24
<PAGE>
Section 3.02. Interest
Except as otherwise provided under Section 3.11, interest on the Loan
shall be determined, and the Company shall pay interest on the Loan, as follows:
(a) The principal amount of the Loan from time to time outstanding (or, in the
case of the first Interest Period in respect of each Disbursement, the principal
amount of such Disbursement from time to time outstanding) shall bear interest
during each Interest Period, calculated in accordance with this Section:
(1) in the case of the Guaranteed Portion of the Loan, at the Interest
Rate for such Interest Period with respect to the Guaranteed Portion of
the Loan;
(2) in the case of the Unguaranteed Portion of the Tranche 1 Loan, at
the Interest Rate for such Interest Period with respect to the
Unguaranteed Portion of the Tranche 1 Loan; and
(3) in the case of the Unguaranteed Portion of the Tranche 2 Loan, at
the Interest Rate for such Interest Period with respect to the
Unguaranteed Portion of the Tranche 2 Loan.
(b) Interest shall accrue from day to day, be pro-rated on the basis of a
360-day year for the actual number of days in the relevant Interest Period and
be due and payable on the Interest Payment Date which is the last day of the
relevant Interest Period; provided that, if, on such Interest Payment Date, the
Company is not permitted, pursuant to Section 6.08(c)(3) or 6.08(c)(4), to make
payments of management fee to Cyprus Magadan under the Management Agreement,
interest on the Unguaranteed Portion of the Tranche 2 Loan shall, to the extent
accruing at a rate exceeding the rate specified in Section 3.02(c)(3)(A), be
due and payable by the Company only at such time as the Company is no longer
prohibited, pursuant to Section 6.08(c)(3) or 6.08(c)(4), from making such
payments of management fee.
(c) The Interest Rate for each Interest Period shall be:
(1) with respect to the Guaranteed Portion of the Loan, the sum of the
Margin for the Guaranteed Portion of the Loan and the Interbank Rate for
such Interest Period;
(2) with respect to the Unguaranteed Portion of the Tranche I Loan, the
sum of the Margin for the Unguaranteed Portion of the Loan and the
Interbank Rate for such Interest Period; and
(3) with respect to the Unguaranteed Portion of the Tranche 2 Loan, the
greater of (A) the sum of the Margin for the Unguaranteed Portion of the
Loan and the Interbank Rate for such Interest Period, and (B) to the
extent that funds are available in the Revenue Subaccount on the relevant
Interest Payment Date or on the next succeeding Interest Payment Date for
the purpose of paying interest in accordance with Section 5.12(d)(5), 14%
per annum.
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<PAGE>
(d) On each Interest Determination Date, the Bank shall, in accordance with
this Section, determine the Interest Rates applicable for the relevant Interest
Period and promptly give notice thereof to the Company. Each determination by
the Bank of the Interest Rates shall be final and conclusive and shall be
binding upon the Company unless shown by the Company to the satisfaction of the
Bank that any such determination has involved any error.
Section 3.03. Disbursements
(a) The Loan shall be disbursed by the Bank from time to time on any Business
Day during the Commitment Period upon the Company's application therefor in the
form of Schedule W and in substance satisfactory to the Bank, an original of
which shall be delivered to the Bank at least 15 Business Days prior to the
proposed date of the Disbursement.
(b) Disbursements of the Tranche 1 Loan shall be made in amounts (except with
respect to the last such Disbursement) of not less than $5,000,000 and in
integral multiples thereof. The Tranche 2 Loan shall be disbursed in a single
Disbursement in the amount of $5,000,000.
(c) Against each Disbursement, the Company shall deliver to the Bank an
original promissory note in the form of Schedule N and in substance satisfactory
to the Bank.
Section 3.04. Suspension and Cancellation
(a) From time to time while the all is being disbursed, the Bank may, by notice
to the Company, suspend or cancel the right of the Company to further
Disbursements as follows:
(1) if the first Disbursement shall not have been made by the date 12
months from the date hereof, or such other date as may be agreed by the
parties hereto; or
(2) if the Board of Governors of the Bank shall have decided in
accordance with Article 8, paragraph 3, of the Agreement Establishing the
Bank that access by the Russian Federation to Bank resources should be
suspended or otherwise modified.
Upon the giving of such notice, the right of the Company to further
Disbursements shall be suspended or cancelled as indicated in the notice. The
exercise by the Bank of the right of suspension shall not preclude the Bank from
exercising its right of cancellation as provided in this Section 3.04(a), either
for the same or another reason, and shall not limit any other provision of this
Agreement.
(b) From time to time while the Loan is being disbursed, the Bank may, by
notice to the Company, suspend the right of the Company to further Disbursements
as follows:
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<PAGE>
(1) if an Event of Default or a Potential Event of Default shall have
occurred and be continuing, or if the Event of Default specified in Section
7.01(e) shall, in the reasonable opinion of the Bank, be imminent;
(2) if at any time there shall have occurred a change of circumstances
which, in the reasonable opinion of the Bank, has a Material Adverse
Effect; or
(3) if OPIC shall have suspended the fight of the Company to further
disbursements of the OPIC Loan.
Upon the giving of such notice, the fight of the Company-to further
Disbursements shall be suspended for so long as such event shall, in the opinion
of the Bank, be continuing. The exercise by the Bank of the fight of suspension
shall not preclude the Bank from exercising its fight of cancellation as
provided in Section 3.04(a) and shall not limit any other provision of this
Agreement.
(c) At any time, the Company may, by not less than 30 days' prior written
notice to the Bank, cancel in whole or in part the fight of the Company to
further Disbursements of the Tranche 1 Loan and in whole but not in part the
fight of the Company to the Disbursement of the Tranche 2 Loan, provided that:
(1) all accrued commitment charge on the principal mount of the Loan to
be cancelled is paid at the same time;
(2) in the case of partial cancellation of the Tranche 1 Loan, such
cancellation shall be in an amount of not less than $1,000,000;
(3) a notice from the Company of cancellation of the Tranche 2 Loan shall
be deemed also to constitute notice of cancellation in full of the
Tranche 1 Loan;
(4) the Company shall simultaneously cancel its fight to further
disbursements of a pro rata amount of the OPIC Tranche 1 Loan and the
OPIC Tranche 2 Loan; and
(5) the Company shall pay to the Bank on the date of cancellation a
cancellation administrative fee of 0.125 % of the principal amount of the
Loan to be cancelled.
Upon termination of the Commitment Period, the Company shall be deemed to have
cancelled any then undisbursed portion of the Loan and shall pay to the Bank on
the date of such termination the cancellation administrative fee referred to
above. Amounts of the Loan which are cancelled by the Company may not be
reinstated.
Section 3.05. Commitment Charge and Commission
(a) The Company shall pay to the Bank a commitment charge which shall be at the
rate of 0.5 % per annum on so much of the Loan as shall not, from time to time,
have been cancelled by the Bank or the Company or disbursed to the Company. The
commitment charge shall accrue from day to day from the date which is 30 days
after
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<PAGE>
the date of this Agreement. The commitment charge shall be prorated on the basis
of a 360-day year for the actual number of days elapsed in the relevant period.
The commitment charge shall be payable on Interest Payment Dates (even though no
interest may be payable on such date), the first such payment to be due on the
first Interest Payment Date after the date hereof.
(b) The Company shall also pay to the Bank a front-end commission in an amount
as separately agreed between the Company and the Bank in a letter agreement
dated the date hereof, to be paid within 30 days after the date of this
Agreement, but in any event before any Disbursement.
Section 3.06. Repayment
(a) The Company shall repay the Loan to the Bank as follows:
(1) The Tranche 1 Loan shall be repaid in eight equal (or as nearly equal
as possible) semi-annual installments on 15 December 1997, 15 June 1998, 15
December 1998, 15 June 1999, 15 December 1999, 15 June 2000, 15 December
2000 and 15 June 2001.
(2) The Tranche 2 Loan shall be repaid in full in a single installment in
the amount of $5,000,000 on 15 December 2001.
(b) The dates for payment of principal of the Loan are intended to coincide
with the relevant Interest Payment Dates. If, in any case, the corresponding
Interest Payment Date is affected by the proviso to the definition of "Interest
Payment Date", then the corresponding date for payment of principal set out in
Section 3.06(a) shall be changed to coincide with the relevant Interest Payment
Date.
Section 3.07. Voluntary and Mandatory Prepayment
(a) In addition to the prepayment rights set out in Section 3.11(c), the
Company shall have the right at any time, on not less than 45 days' notice to
the Bank, to prepay, on any Interest Payment Date, all or part of the principal
amount of the Tranche 1 Loan then outstanding and all, but not part only, of the
principal amount of the Tranche 2 Loan then outstanding; provided that:
(1) all accrued interest and Increased Costs (if any) on the principal
amount of the Loan to be prepaid and all other amounts due hereunder are
paid at the same time;
(2) in the case of partial prepayment of the Tranche 1 Loan, such
prepayment shall be in an amount of not less than $1,000,000 and shall be
applied to prepay the outstanding repayment installments of the Tranche I
Loan in inverse order of maturity;
(3) the Company shall not prepay the Tranche 2 Loan unless the Tranche 1
Loan has been repaid (or, as the case may be, prepaid) in full;
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<PAGE>
(4) the Company shall simultaneously prepay a pro rata amount of the OPIC
Tranche 1 Loan and the OPIC Tranche 2 Loan; and
(5) in the case of prepayment of the Tranche 2 Loan, the Company shall
pay the Bank, on the date of prepayment, a prepayment charge equal to the
following percentage of the principal amount of the Tranche 2 Loan to be
prepaid:
<TABLE>
<CAPTION>
Date of Prepayment Percentage
<S> <C>
On or prior to December 1997 44
June 1998 40
December 1998 35
June 1999 30
December 1999 25
June 2000 20
December 2000 13
June 2001 7
</TABLE>
Upon delivery of such notice, the Company shall be obligated to effect
prepayment in accordance with the terms thereof.
(b) On each Repayment Date for the Tranche 1 Loan, the Company shall prepay the
Tranche 1 Loan and the OPIC Tranche 1 Loan in an aggregate principal amount
equal to:
(1) 50 % of the Excess Cash Flow for the Interest Period preceding the
Interest Period then ending, if, on the date 60 days prior to such
Repayment Date, the Loan Life Debt Service Coverage Ratio is less than 2.0;
or
(2) 30 % of the Excess Cash Flow for the Interest Period preceding the
Interest Period then ending, otherwise;
or, if less, the aggregate principal amount of the Tranche 1 Loan and OPIC
Tranche 1 Loan then outstanding, provided that:
(A) the Company shall not be required to pre-pay the Tranche 1 Loan
and the OPIC Tranche 1 Loan pursuant to this Section 3.07(i) in an
aggregate amount exceeding $9,000,000 during any 12-month period;
(B) such prepayment shall be applied to prepay the Tranche 1 Loan
and the OPIC Tranche 1 Loan pro rata in accordance with the principal
amounts thereof then outstanding;
(C) such prepayment shall be applied to prepay the outstanding
repayment instalments of the Tranche 1 Loan in inverse order of
maturity; and
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<PAGE>
(D) no prepayment charge shall be payable in respect of such
prepayment.
Not less than 45 days prior to each Repayment Date, the Company shall furnish to
the Bank a certificate setting forth, in a form satisfactory to the Bank and
with sufficient detail and information as may be required by the Bank, the
Company's calculation of the Excess Cash Flow for the Interest Period preceding
the Interest Period ending on such Repayment Date and the amount of the
mandatory prepayment of the Tranche 1 Loan required to be made by the Company on
such Repayment Date. Such certificate shall be accompanied by such supporting
documentation as the Bank may request.
(c) In the event that the assets comprising the Project become an actual,
constructive, compromised or arranged total loss, the Company shall, at the
request of the Bank, forthwith prepay in full the aggregate principal amount of
the Loan and the OPIC Loan then outstanding, together with all accrued interest
and Increased Costs (if any) thereon and all other amounts payable hereunder and
under the OPIC Finance Agreement and the other Financing Agreements. In the
event that all or any portion of the tangible assets comprising the Project
shall otherwise have been lost, damaged or destroyed and, in accordance with the
provisions of the Insurance Assignment, the Project Lenders shall have retained
the proceeds of any related claim under any insurance policy as additional
security for amounts payable to the Project Lenders under the Financing
Agreements, the Company shall, at the request of the Bank, forthwith prepay the
Loan and the OPIC Loan in an aggregate principal amount equal to the amount of
such proceeds or, if less, the aggregate principal amount of the Loan and the
OPIC Loan then outstanding, together with all accrued interest and Increased
Costs (if any) on the principal amount of the Loan and the OPIC Loan to be
prepaid, provided that:
(1) such prepayment shall be applied to prepay the Loan and the OPIC Loan
pro rata in accordance with the principal amounts thereof then outstanding;
and
(2) in the case of partial prepayment of the Tranche 1 Loan, such
prepayment shall be applied to prepay the outstanding repayment
installments of the Tranche 1 Loan in inverse order of maturity.
No prepayment charge shall be payable in respect of any such prepayment.
(d) Amounts of the Loan prepaid by the Company may not be reborrowed.
Section 3.08. Payments
(a) Payments of principal, interest, commitment charge, from-end commission,
prepayment administrative fee, prepayment charge, default interest and any other
amount due to the Bank under thin Agreement shall be made in Dollars, for value
on the date one New York Banking Day prior to the due date, at such bank or
banks in New York, New York, as the Bank shall from time to time designate.
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<PAGE>
(b) The sums to be disbursed by the Bank to the Company hereunder shall be
payable in Dollars in New York, New York, for value on the date of the
Disbursement, to the account of the Bank for the benefit of the Company. In the
case of such sums disbursed by the Bank to the Company to pay interest due and
payable on the Loan or commitment charge, the Company hereby irrevocably
authorizes and instructs the Bank to apply such sums in payment of such interest
and commitment charge. In the case of all other such sums, the Company hereby
irrevocably authorizes and instructs the Bank, at the Company's expense, to
transfer such sums to the Disbursement Subaccount.
(c) If any date for any payment under this Agreement shall not be a New York
Banking Day, then such payment shall be made on the next succeeding New York
Banking Day and interest (or commitment charge) shall continue to accrue until
such next succeeding New York Banking Day.
(d) The Bank shall have the right, to the fullest extent permitted by law, to
apply any amount on deposit or account with the Bank or any of its branches,
Subsidiaries or Affiliates to or for the credit of the Company in any currency
and whether or not matured, in reduction of amounts past due hereunder, whether
or not the Bank shall have demanded payment hereunder. The Bank may deduct from
any Disbursement any fees and expenses then due and payable by the Company to
the Bank under this Agreement or any other Financing Agreement and the credit
advice of the Bank shall reflect such deduction.
Section 3.09. Insufficient Payments
(a) If the Bank shall at any time receive less than the full amount then due
and payable to it under this Agreement, the Bank shall allocate and apply such
payment in the following order: first, against costs, expenses and indemnifies;
second, against front-end commission, commitment charge and other fees,
commissions and charges; third, against default interest, if any; fourth,
against interest due on the Loan (other than interest on the Unguaranteed
Portion of the Tranche 2 Loan to the extent exceeding interest accruing at the
rate specified in Section 3.02(c)(3)(A)), fifth, against principal of the
Tranche 1 Loan then due and payable; sixth, against principal of the Tranche 2
Loan then due and payable; seventh, against interest due on the ; Unguaranteed
Portion of the Tranche 2 Loan to the extent exceeding interest accruing at the
rate specified in Section 3.02(c)(3)(A); eighth, against prepayment of the
Tranche 1 Loan; and, ninth, against prepayment of the Tranche 2 Loan.
(b) The obligation of the Company to make payments in Dollars in accordance
with Section 3.08(a) shall not be deemed to have been novated, discharged or
satisfied by any tender of (or recovery under judgement expressed in) any
currency other than Dollars, except to the extent to which such tender (or
recovery) shall result in the effective payment of such aggregate amount in
Dollars at the place specified pursuant to this Agreement and, accordingly, the
amount (if any) by which such tender (or recovery) shall fall short of such
aggregate amount shall be and remain due to the
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<PAGE>
Bank as a separate obligation, unaffected by judgment having been obtained (if
such is the case) for and other amounts due under or in respect of this
Agreement.
Section 3.10. Default Interest
(a) If the Company fails to pay any amount payable by it under this Agreement,
the overdue amount shall bear interest at the relevant Default Interest Rate,
calculated in accordance with this Section.
(b) Default interest in respect of the Loan shall (1) accrue from day to day
from the due date to the date of actual payment, after as well as before
judgment, (2) be prorated on the basis of a 360-day year for the actual number
of days in the relevant Default Interest Period, (3) be compounded at the end of
each Default Interest Period, and (4) be payable upon demand.
(c) Except as provided in Section 3.10(d), the Default Interest Rate for any
overdue amount shall be the sum of (1) 2 % per annum, (2) in the case of the
Guaranteed Portion of such overdue amount, the Margin for the Guaranteed Portion
of the Loan and, in the case of the Unguaranteed Portion of such overdue amount,
the Margin for the Unguaranteed Portion of the Loan, and (3) the rate of
interest offered in the London interbank market for a deposit in Dollars of an
amount comparable to the overdue amount for a period equal to the Default
Interest Period for such overdue amount; provided, however, that, if the Bank
determines that deposits in Dollars are not being offered in the London
interbank market in such amounts or for such period, the Default Interest Rate
shall be determined by reference to the cost of funds to the Bank from whatever
sources it selects.
(d) If the overdue amount is of principal of the Loan and has become due on a
date other than an Interest Payment Date, the first Default Interest Period with
respect to such overdue amount shall end on the next Interest Payment Date and
the Default Interest Rate during such period shall be the sum of (1) 2% annum,
and (2) the Interest Rate applicable to that amount immediately before it became
due.
(e) Each determination by the Bank of the Default Interest Period and the
Default Interest Rate shall be final and conclusive and shall be binding upon
the Company absent manifest error.
Section 3.11. Increased Costs
(a) On each Interest Payment Date, the Company shall pay, in addition to
interest on the Loan, such amount, if any, which the Bank may notify to the
Company as being the aggregate of the Increased Costs accrued and unpaid prior
to such Interest Payment Date.
(b) For the purposes of this Agreement, the following terms shall have the
following meanings:
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<PAGE>
(1) "Increased Costs" means the amount of any net incremental costs to
the Bank of making or maintaining the Loan, evidence of which shall be
provided to the Company in an Increased Costs Certification, which result
from:
(A) any change in applicable law or regulations or in the
interpretation thereof by any governmental or regulatory authority
charged with the administration thereof; and/or
(B) any compliance with any request from, or requirement of, any
central bank or other monetary or other authority;
which in either case, subsequent to the date of this Agreement, shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirements against assets held by, or
deposits with or for the account of, or loans by, the Bank;
(ii) impose a cost on the Bank as a result of its having made
the Loan or reduce the rate of return on the overall capital of
the Bank which it would have been able to achieve if it had not
made the Loan;
(iii) change the basis of taxation on payments received by the
Bank in respect of the Loan otherwise than by a change in
taxation of the overall net income of the Bank; or
(iv) impose on the Bank any other condition regarding the
making or maintaining of the Loan.
(2) "Increased Costs Certification" means a certification furnished by
the Bank, within 90 days of the incurrence of any cost certified therein,
certifying:
(A) the circumstances giving rise to the Increased Costs;
(B) that such net costs have increased;
(C) that, in the opinion of the Bank, it has exercised reasonable
efforts to minimize or eliminate such increase; and
(D) the amount of the Increased Costs.
(c) Notwithstanding anything in Section 3.07, the Company shall have the right
on any Interest Payment Date, upon not less than 30 days' prior written notice
to the Bank (which notice shall be irrevocable and shall bind the Company to
make the prepayment specified below) and upon payment of all accrued interest
and Increased Costs (if any) on the amount to be prepaid and any costs, losses
and expenses in accordance with Section 3.13 (but without any prepayment charge
or prepayment administrative fee), to prepay that portion of the Loan on which
the Bank informs the Company that Increased Costs are then being charged.
33
<PAGE>
Section 3.12. Taxes
The Company shall pay or cause to be paid all present and future taxes,
duties, fees and other charges of whatsoever nature, if any, now or at any time
hereafter levied or imposed by the Government of the Russian Federation, or by
any department, agency, political subdivision or taxing or other authority
thereof or therein or by any organization of which the Russian Federation is a
member, on or in connection with the payment of any and all amounts due under
this Agreement (other than taxes levied on the overall net income of the Bank).
All payments of principal, interest and other amounts due to the Bank under
this Agreement shall be made without set-off or counterclaim and free and clear
of, and without deduction for or on account of, any such taxes, duties, fees or
other charges; provided, however, that, in the event that the Company is
prevented by operation of law or other from paying or causing to be paid such
taxes, duties, fees or other charges, the principal or (as the case may be)
interest or other amounts.due under this Agreement shall be increased to such
amount as may be necessary to yield and remit to the Bank the full amount it
would have received had such payments been made without deduction of such taxes,
duties, fees or other charges.
Section 3.13. Unwinding Costs
(a) Upon request by the Bank, the Company shall pay to the Bank any costs,
expenses and losses incurred by the Bank as a result of:
(1) any failure by the Company to pay any amount payable under this
Agreement on its due date;
(2) any failure by the Company to borrow in accordance with a request for
a Disbursement made pursuant to Section 3.02;
(3) any failure by the Company to make any prepayment in accordance with
a notice of prepayment pursuant to Section 3.07 or 3.11(c);
(4) any prepayment for any reason of all or any portion of the Loan on a
date other than an Interest Payment Date; or
(5) the occurrence of an Event of Default.
(b) For the purposes of Section 3.13(a), "costs, expenses and losses' shall
include, without limitation, any interest paid or payable to carry any unpaid
amount and any loss, premium, penalty or expense (excluding lost profit) which
may be incurred in liquidating or employing deposits of or borrowings from third
parties in order to make, maintain or fund the Loan or any portion thereof (but
in the case of a late payment, after taking into account any default interest
received under Section 3.10). The Bank shall certify such costs, expenses and
losses (including a reasonable description thereof) to the Company.
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<PAGE>
Section 3.14. Illegality
Notwithstanding anything in this Agreement, if, subsequent to the date of
this Agreement, any change made in any applicable law or regulation or the
interpretation or application thereof by arty governmental authority charged
with the administration thereof shall make it unlawful for the Bank to continue
to maintain or to fund the Loan, the Company shall, upon request by the Bank
(but subject to the approval of the Central Bank of Russia, which the Company
agrees to take all reasonable steps to obtain as quickly as possible, if such
approval is then required), prepay in full and immediately, the principal amount
of the Loan, together with all accrued interest and Increased Costs (if any)
thereon and/or, as the case may be, the right of the Company to disbursement of
that part of the Loan which shall not theretofore have been disbursed shall
terminate immediately.
Section 3.15. Loan Account
The Bank shall open and maintain on its books a loan account in the
Company's name showing the Disbursements and repayments and prepayments (if any)
thereof and the computation and payment of interest, commitment charge and other
amounts due and sums paid hereunder. Such loan account shall be conclusive and
binding on the Company as to the amount at any time due from the Company
hereunder, absent manifest error.
ARTICLE IV - CONDITIONS OF DISBURSEMENT
Section 4.01. Conditions of First Disbursement
The obligation of the Bank tO make the first Disbursement of the Loan
shall be subject to the performance by the Company of all its obligations
theretofore to be performed under this Agreement and to the fulfilment, in form
and substance satisfactory to the Bank, prior to or concurrently with the making
of such first Disbursement, of the following further conditions:
(a) Financing Agreements. The following agreements, each in form and substance
satisfactory to the Bank, shall have been entered into by the respective parties
thereto (if they have not already been entered into) and shall have become (or,
as the case may be, shall remain) unconditional and fully effective in
accordance with theft respective terms (except for this Agreement having become
unconditional and fully effective, if that is a condition of any of such
agreements):
(1) the OPIC Finance Agreement;
(2) the OPIC Funding Documents;
(3) the Cyprus Magadan Guaranty;
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<PAGE>
(4) the Cyprus Amax Guaranty;
(5) the Security Sharing Agreement;
(6) the Cyprus Support Agreement; and
(7) the Russian Shareholders Support Agreement;
and the Bank shall have received a duly executed original (or, in the case of
the OPIC Finance Agreement and OPIC Funding Documents, a certified copy) of each
such agreement.
(b) Project Agreements. The following agreements, each in form and substance
satisfactory to the Bank, shall have been entered into by the respective parties
thereto (if they have not already been entered into) and shall have become (or,
as the case may be, shall remain) unconditional and fully effective in
accordance with their respective terms (except for this Agreement having become
unconditional and fully effective, if that is a condition of any of such
agreements):
(1) the License (including the License Agreement);
(2) the Construction Contract;
(3) the Management Agreement;
(4) the Roskomdragmet Agreement;
(5) the Rosvneshtorgbank Agreement;
(6) the Offshore Bank Account Agreement;
(7) the Blocked Account Agreement;
(8) the Russian Blocked Account Agreement;
(9) the Reclamation Agreement;
(10) the Foundation Agreement; and
(11) the Memorandum of Understanding;
and the Bank shall have received a certified copy of each such agreement.
(c) Security. The Security shall have been validly created and perfected in a
manner satisfactory to the Bank pursuant to the following Security Documents:
(1) the Contract Pledge;
(2) the Cyprus Magadan Share Pledge;
(3) the Enterprise Mortgage;
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<PAGE>
(4) the Equipment Pledge;
(5) the Goods Pledge;
(6) the Immovables Mortgage;
(7) the Insurance Assignment;
(8) the Offshore Account Pledge;
(9) the Omolon Share Pledge; and
(10) the Russian Account Pledge;
and the Bank shall have received a duly executed original of each such Security
Docent, together with any other documents, recordings, filings, notifications
and registrations which am required for the creation, validity, perfection or
priority of the Security and the Liens of the Project Lenders in or under the
Security Documents as listed in Schedule X.
(d) Charters. The Charter of the Company shall be in form and substance
satisfactory to the Bank, and the Bank shall have received certified copies of
(1) the alter of the Company, (2) the certificates of registration on of the
Company with the Russian Agency for International Cooperation and Development
and the Administration of the Magadan Region, and O) the Char (and, if relevant,
the certificates of registration and certificates of good standing) of Cyprus
Amax, Cyprus Gold, the Shareholders, the Contractor and, at the request of the
Bank, any other parties to the Financing Agreements and Project Agreements, each
as amended to date.
(e) Approvals. There shall have been obtained or made all governmental,
corporate, creditors', shareholders' and other necessary licenses, approvals,
consents, filings and registrations for:
(1) the financing by the Bank under this Agreement and by OPIC under the
OPIC Finance Agreement and any Subordinated Shareholder Loans;
(2) the carrying on of the business of the Company as it is presently
carried on and is contemplated to be carried on in accordance with the
Development Plan;
(3) the construction and operation of the Project and the carrying out of
the Financing Plan;
(4) the due execution and delivery of, and performance under, this
Agreement, the Financing Agreements, the Project Agreements and the
Security, and any other documents in implementation thereof, by the Company,
the Shareholders, the Contractor and the other parties thereto, and the
validity and enforceability thereof;
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<PAGE>
(5) the establishment and maintenance of the Offshore Bank Account, the
Disbursement Subaccount, the Roskomdragmet Sales Subaccount, the Export
Sales Subaccount, the Revenue Subaccount and the Cash Collateral Subaccount;
(6) the sale and export of dore and gold as contemplated by the Development
Plan and the Marketing Agreements; and
(7) the remittance to the Bank or its assigns as provided for in thin
Agreement of all monies payable in respect of this Agreement and the
Security;
including, without limitation, (A) the authorizations of the persons signing the
Financing Agreements and Project Agreements on behalf of the Company, Cyprus
Amax, Cyprus Gold, the Shareholders, the Contractor and the other parties
thereto to sign such documents and to bind the respective parties thereby, {B)
the authorization of the Central Bank of Russia for the incurrence and repayment
of the Indebtedness incurred under this Agreement and the OPIC Finance Agreement
and the establishment and operation of the Offshore Bank Account as contemplated
herein, and (C) the major construction, environmental and operating permits and
approvals listed in Schedule V (other than any such construction, environmental
operating permit or approval which (i) is not then needed for the Project, (h')
because it is premature, cannot then be obtained, and (iii) there is no reason
to believe the Company will not be able to obtain at the time such permit or
approval is needed for the Project); and the Bank shall have received certified
copies of an such licenses, approvals, consents, filings and registrations.
(f) Specimen Signatures. The Bank shall have received (1) the certificate of
incumbency and authority referred to in Section 8.04, substantially in the form
of Schedule Y, and (2) a certificate of an appropriate officer of Cyprus Amax,
Cyprus Gold, each Shareholder, the Contractor and, at the request of the Bank,
any other party to the Financing Agreements and Project Agreements certifying
the name and specimen signature of each person authorized to sign on behalf of
such party the Financing Agreements and Project Agreements to be entered into
and performed by such party.
(g) Equity. The Bank shall have received satisfactory evidence that (1) the
Shareholders have contributed in a manner satisfactory to the Bank at least
$80,000,000 (or the equivalent thereof in other currencies at then current rates
of exchange) in paid-in capital to the Company, and (2) the Company has
expended, or allocated for expenditure on imports of goods and services,
substantially all of such paid-in capital on Project Costs, including a list of
Project Costs paid by the Company to Shareholders, which list shall be
satisfactory to the Bank.
(h) Insurance. The Bank shall have received the insurance certificate referred
to in Section 5.19(d) showing that all insurance policies, certificates and
endorsements required to be in effect at such time pursuant to Section 5.03 are
in full force and effect.
(i) Development Plan. The Bank shall have received the Development Plan, in
form and substance satisfactory to the Bank and the Independent Engineer.
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(j) Bank Accounts. The Bank shall have received evidence satisfactory to the
Bank that the Offshore Bank Account, the Disbursement Subaccount, the Revenue
Subaccount, the Cash CoLlateral Subaccount and the Russian Bank Accounts have
been duly established.
(k) Surface Rights. The Bank shall have received evidence satisfactory to the
Bank that the Company has been granted all appurtenant surface rights required
for the Project.
(1) Auditors Letter. The Bank shall have received a certified copy of a letter
to the Auditors from the Company Substantially in the form of Schedule Z.
(m) Process Agent Appointments. The Bank shall have received written
confirmations from the agents for service of process appointed by the Company
pursuant to Section 8.11Co), by Cypras Magadan pursuant to tiao Cyprus Magadan
Guaranty, the Cyprus Support Agreement and the Omolon Sham Pledge, by Cyprus
Amax pursuant to the Cyprus Amax Guaranty and the Cyprus Support Agreement, by
Cyprus Gold pursuant to the Cyprus Magadan Share Pledge and by the Russ
Shareholders pursuant to the Russian Shareholders Support Agreement and the
Omolon Share Pledge of their acceptances of such appointments, each
substantially in the form of Schedule AA.
(n) Legal Opinions. The Bank shall have received:
(1) the favorable opinion of special Russian counsel to the Company
acceptable to the Bank regarding such matters incident to the transactions
contemplated by thin Agreement as the Bank shall reasonably request, which
opinion shall be in form and substance satisfactory to the Bank, together
with a reliance opinion thereon of Coudert Brothers, special New York
counsel to the Borrower, substantially in the form of Schedule BB;
(2) the favorable opinion of Coudert Brothers, special English counsel to
the Company, substantially in the form of Schedule CC;
(3) the favorable opinion of Coudert Brothers, special Now York counsel to
the Company, substantially in the form of Schedule DD;
(4) the favorable opinion of Freshfields, special Russian counsel to the
Project Lenders, regarding such matters incident to the transactions
contemplated by this Agreement as the Bank shall reasonably request, which
opinion shall be in form and substance satisfactory to the Bank; and
(5) the favorable opinion of Freshfields, special English counsel to the
Project Lenders, substantially in the form of Schedule EE.
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Section 4.02. Conditions for Any Disbursement
The obligation of the Bank to make any Disbursement shall also be subject to
the fulfillment, in form and substance satisfactory to the Bank, of the
conditions that, on the date of the Company's request for such Disbursement and
on the date of such Disbursement:
(a) Continuing Validity of Documents. All documents and instruments delivered
to the Bank pursuant to Section 4.01 shall be in full force and effect.
(b) Representations and Warranties. The representations and warranties confirmed
or made by the Company in Article II and all other representations and
warranties made by the Company, Cyprus Amax, Cyprus Gold, the Shareholders and
the Contractor in the Financing Agreements and the Project Agreements shall be
true on and as of such dams with the same effect as though such representations
and warranties had been made on and as of such dates.
(c) No Default. No Event of Default and no Potential Event of Default shall have
occurred and be continuing and the Company shall not, as a result of such
Disbursement, be in violation of its Charter, any provision contained in any
agreement or instrument to which the Company is a party (including this Agree
eat) or by which the Company is bound or any law, statute, rule, regulation,
judgment, decree or order applicable to the Company.
(d) No Material Adverse Change. Nothing shall have occurred which might have
a Material Adverse Effect.
(e) No Political Event. No Qualified Political Event and no event that, with the
passage of time or otherwise, might become a Qualified Political Event shall
have occurred and be continuing and no political violence claim in respect of a
material or substantial part of the Company's assets or expropriation claim
shall have been made under any contract of insurance issued by OPIC in support
of the Project.
(f) Use of Proceeds. The proceeds of such Disbursement shall, at the time of
request therefor, be needed by the Company solely for the purpose of financing
Project Costs and the Bank shall have received such evidence as to the proposed
utilization of the proceeds of such Disbursement and the utilization of the
proceeds of any prior Disbursement as the Bank shall reasonably require,
including, in the case of any Disbursement which is being used in whole or in
part to finance amounts owing under the Construction Contract or any supply or
other contract entered into thereunder, the invoice of the Contractor or the
relevant supplier.
(g) Disbursement Application. The Bank shall have received the Company's
timely Disbursement application substantially in the form of Schedule W.
(h) Note. The Bank shall have received an undated Note evidencing such
Disbursement duly executed by the Company.
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(i) Development Plan. The Project as developed to date shall conform in all
material respects with the detailed description thereof included in the
Development Plan for such stage of development, except as otherwise agreed with
the Project Lenders.
(j) Cost Overruns. The Bank shall be satisfied, on the basis of the opinion of
the Independent Engineer, that the Project Costs (including, without limitation,
financing costs) necessary to achieve physical completion of the Project will
not exceed by more than $10,000,000 (or the equivalent thereof in other
currencies at then current rates of exchange) the total amount thereof set forth
in Section 2.01(a) or, if the Bank is not so satisfied as a result of delay in
completion or otherwise, the Bank shall h ave received satisfactory evidence
that the Shareholders have contributed not less than 50 % of the full amount of
such excess in paid-in capital or Subordinated Shareholder Loans to the Company
and that the Company has expended 100% of such paid-in capital and Subordinated
Shareholder Loans on the Project.
(k) Tranche 2 Loan. In the case of any Disbursement of the Tranche 1 Loan, the
Tranche 2 Loan shall have previously been disbursed in full in the amount of
$5,000,000.
(1) Other. The Ball shall have received such other documents and opinions as the
Bank may reasonably request.
Section 4.03. Pari Passu Disbursement
Notwithstanding anything provided in the Agreement, the obligation of the
Bank to make any Disbursement shall also be subject to the condition that the
total amount of the Loan disbursed by the Bank shall not at any time exceed by
more than $5,000,000 the amount of the OPIC Loan theretofore or
contemporaneously disbursed by OPIC under the OPIC Finance Agreement.
ARTICLE. V- AFFIRMATIVE COVENANTS
Unless the Bank shall otherwise agree in writing:
Section 5.01. Project Implementation
The Company shall carry out the Project substantially in accordance with
the Development plan and cause the financing specified in the Financing Plan to
be applied exclusively to the Project.
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Section 5.02. Maintenance and Conduct of Business
(a) The Company shall (1) maintain its corporate existence in compliance with
all applicable laws and regulations, (2) conduct its business efficiently, in
accordance with sound engineering, financial and business practices, in a good
workmanlike manner, with due regard for the environment and in compliance with
all applicable statutes, laws, regulations, rules, orders and decrees of the
Russian Federation and any other applicable jurisdiction, (3) keep and maintain
all of its assets required for the Project in good repair, working order and
condition, and (4) ensure that the Project is constructed, maintained and
operated in accordance with good international practices in the gold mining
industry. Without limiting the foregoing, the Company shall comply with the
Environmental Standards and its obligations under the Reclamation Agreement.
(b) Without limiting the foregoing, the Company shall (1) observe all applicable
laws relating to the minimum age of employment of children, minimum wages, hours
of work and occupational health and safety, (2) not take any action to prevent
its employees from lawfully exercising their rights of association and to
organize and bargain collectively, and (3) not utilize forced labor.
Section 5.03. Insurance
The Company shall keep its properties and business insured with financially
sound and reputable insurers against loss or damage in accordance with the
requirements of Schedule FF.
Section 5.04. Accounting
The Company shall promptly and diligently install, and thereafter maintain,
an accounting and cost control system satisfactory to the Bank and maintain
books of account and other records adequate to reflect truly and fairly the
financial condition of the Company and the results of its operations (including
the progress of the Project) in conformity with Generally Accepted Accounting
Principles. The Company shall maintain Price Waterhouse, or such other firm of
independent public accountants as may be acceptable to the Bank, as Auditors of
the Company and authorize, by letter substantially in the form of Schedule Z,
the Auditors to communicated directly with the Bank at any time regarding the
Company's accounts and operations. The Bank shall provide notice to the Company
of any intended communications with the Auditors and, for the purpose of
minimizing expenses, shall, in the case of any requested information, give the
Company a reasonable opportunity to provide such information directly to the
Bank, provided that, if the Bank is not satisfied with the response of the
Company to its request for information, the Bank may communicate directly with
the Auditors.
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Section 5.05. Continuing Governmental and Other Approvals
The Company shall obtain or make, and shall maintain in force (or, where
appropriate, renew), all governmental, corporate, creditors', shareholders' and
other necessary licenses, approvals, consents, filings and registrations
required for the purposes described in Section 4.01(e) (other than any
construction, environmental or operating permit or approval which (i) is not
then needed for the Project, (ii) because it is premature, cannot then be
obtained, and (iii) there is no reason to believe the Company will not be able
to obtain at the time such permit or approval is needed for the Project), and
comply in all material respects with all conditions and obligations to which
such licenses, approvals, consents, filings and registrations may be subject.
Section 5.06. Security
The Company shall, at its own cost, create, perfect and maintain (or,
where appropriate, renew) the Security in a manner satisfactory to the Bank and
take all actions requested by the Bank which are necessary to ensure that the
Liens created by the Security Documents constitute valid and perfected Liens of
first priority over the collateral purported to be covered thereby, securing
payment of all obligations of the Company under this Agreement and the other
Financing Agreements and ranking senior to the claims of all third parties other
than claims secured by Permitted Liens.
Section 5.07. Compliance with Other Obligations
The Company shall comply with all agreements to which it is a party or by
which it or any of its properties or assets is bound.
Section 5.08. Taxes; Stamp Duties
(a) The Company shall pay when due all of its taxes, rates, charges and
assessments, including without limitation any taxes, rates, charges and
assessments against any of its properties, other than taxes, rates, charges or
assessments which are being contested in good faith and by proper proceedings
and as to which adequate reserves have been set aside for the payment thereof.
The Company shall make timely filings of all tax returns and governmental
reports required to be filed or submitted under any applicable law or
regulation.
(b) The Company shall pay all taxes (including stamp taxes), duties, fees or
other charges payable on, or in connection with, the execution, issue, delivery,
registration or notarization of this Agreement, any other Financing Agreement,
any Project Agreement and any other documents related to this Agreement. Upon
notice from the Bank, the Company shall reimburse the Bank or its assigns for
any such taxes, duties, fees or other charges paid by the Bank or its assigns
thereon.
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Section 5.09. Project Agreements
(a) The Company shall maintain all Project, Agreements and Financing Agreements
to which the Company is a party in full force and effect without material
modification and perform its obligations under, and not commit any material
breach of or default under, any such Project Agreement.
(b) The Company shall not terminate, amend in any material respect or grant any
material waiver in respect of any provision of any of the Project Agreements or
Financing Agreements to which it is a party, or consent to any assignment of any
Project Agreement by any other party thereto; provided that the Bank shall not
unreasonably withheld its consent to a termination of a Project Agreement if the
Company enters into a substitute agreement in form and substance satisfactory to
the Bank with a third party acceptable to the Bank and grants to the Project
Lenders a security interest in all of its rights, interests and benefits under
such substitute agreement pursuant to an amendment to the Contract Pledge in
form and substance satisfactory to the Bank, in which case such substitute
agreement shall become a Project Agreement hereunder.
Section 5.10. Offshore Bank Account
The Company shall establish and maintain a bank account denominated in
Dollars at the principal London branch of Citibank, N.A. (the "Offshore Bank
Account"), which account shall be pledged to Moscow Narodny Bank Limited, as
security trustee for the Project Lenders, as security for all amounts payable by
the Company under this Agreement, the OPIC Finance Agreement and the other
Financing Agreements. The Company shall maintain five subaccounts of the
OffShore Bank Account designated as the Disbursement Subaccount, the
Roskomdragmet Sales Subaccount, the Export Sales Subaccount, the Revenue
Subaccount and the Cash Collateral Subaccount.
Section 5.11. Disbursement Subaccount
All Disbursements under this Agreement and all disbursements under the OPIC
Finance Agreement shall be deposited into the Disbursement Subaccount. Amounts
in the Disbursement Subaccount may be withdrawn by the Company without the prior
approval or authorization of the Bank only for the purpose of paying Project
Costs in accordance with the Development Plan and the annual capital expenditure
and operating budgets approved by the Bank pursuant to Section 5.18.
Section 5.12. Sales and Revenue Subaccounts
(a) The Company shall ensure that all amounts paid to the Company by
Roskomdragmet under the Roskomdragmet Agreement in currencies other than Roubles
are deposited into the Roskomdragmet Sales Subaccount, and (2) upon release of
such amounts in accordance with Article 9 of the Roskomdragmet
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Agreement and with the Blocked Account Agreement, such mounts are transferred
from the Roskomdragmet Sales Subaccount to the Revenue Subaccount. Amounts may
be withdrawn from the Roskomdragmet Sales Subaccount only for the purpose of
transferring such amounts to the Revenue Subaccount or paying such amounts back
to Roskomdragmet in accordance with Article 9.2(a) of the Roskomdragmet
Agreement and with the Blocked Account Agreement. The Company shall not withdraw
funds from the Roskomdragmet Sales Subaccount for any other purpose without the
prior written consent of the Bank.
(b) The Company shall ensure that all amounts paid to the Company in respect of
the sale of dore outside of the Russian Federation, whether through
Rosvneshtorgbank pursuant to the Rosvneshtorgbank Agreement or otherwise, and
all other export revenues are, except as provided in Section 5.14, deposited
into the Export Sales Subaccount. If any such amounts axe received by the
Company in any other account or place, it shall immediately transfer such
amounts to the Export Sales Subaccount. Amounts may be withdrawn from the
Export Sales Subaccount only for the purpose of transferring such amounts to one
of the Russian Bank Accounts to the extent (and only to the extent) that such
amounts axe subject, in accordance with then applicable law, to mandatory
conversion into Roubles and transfer to the Russian Federation. The Company
shall ensure that any amounts remaining in the Export Sales Subaccount after any
such mandatory conversion and transfer to the Russian Federation are transferred
to the Revenue Subaccount. The Company shall not withdraw funds from the Export
Sales Subaccount for any other purpose without the prior written consent of the
Bank.
(c) Except as provided in Sections 5.12(a) and 5.12(b), the Company shall ensure
that all revenues of the Company and any other payments made to the Company,
including without limitation any payment made to the Company under the
Construction Contract, the Marketing Agreements and the other Project
Agreements, other than any such amounts which are received in Roubles or which
the Company is required by applicable law to convert into Roubles or retain in
or remit to the Russian Federation and other than refunds of Russian value added
tax financed by the value added tax facility referred to in Section 6.04(a)(5),
are deposited into the Revenue Subaccount.
(d) As long as no Event of Default or Potential Event of Default has occurred
and is continuing, amounts in the Revenue Subaccount may be withdrawn by the
Company pursuant to payment instructions issued in accordance with the Offshore
Account Pledge without the prior approval or authorization of the Bank only for
the purpose of transferring funds to the Russian Rank Accounts to the extent
(and only to the extent) required by the authorization issued by the Central
Bank of Russia for the establishment and operation of the Offshore Bank Account
or for the purpose of making the following payments in the following order.
(1) Operating Costs denominated in currencies other than Roubles in
accordance with the Development plan and annual capital expenditure and
operating budgets approved by the Bank in accordance with Section 5.18;
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(2) interest due and payable on the Loan and the OPIC Loan (other than
interest due and payable on the Unguaranteed Portion of the Tranche 2
Loan to the extent exceeding interest accruing at the rate specified in
Section 3.02(c)(3)(A) and the portion of interest due and payable on the
Unguaranteed Portion of the OPIC Tranche 2 Loan which is attributable to
the "Tranche 2 Supplemental Spread" as defined in the OPIC Finance
Agreement);
(3) scheduled repayment installments of principal of the Loan due and
payable under Section 3.06(a) and scheduled repayment installments of
principal of the OPIC Loan due and payable under Section 3.05 of the OPIC
Finance Agreement;
(4) transfers to the Cash Collateral Subaccount until the balance of the
Cash Collateral Subaccount equals the lesser of the mount specified in
Section 5.13(1) and the mount specified in Section 5.13(2);
(5) in equal amounts, (A) interest due and payable on the Unguaranteed
Portion of the Tranche 2 Loan to the extent exceed!rig interest accruing
at the rate specified in Section 3.02(c)(3)(A) and the portion of interest
due and payable on the Unguaranteed Portion of the OPIC Tranche 2 Loan
which is attributable to the "Tranche 2 Supplemental Spread" as defined
in the OPIC Finance Agreement, and (B) to the extent permitted by Section
6.08(c), management fees payable under the Management Agreement in an
amount not to exceed 4% of the Company's gross sales;
(6) management fees due and payable under the Management Agreement to the
extent that such management fees exceed those payable under sub-category
(5)(B) above;
(7) prepayment of principal of the Loan as required by Section 3.07(b)
and prepayment of principal of the OPIC Loan as required by Section
3.06(a) of the OPIC Finance Agreement; and
(8) to the extent that, after payments are made in respect of categories
(1) through (7) above, the balances of the Revenue Subaccount and the
Russian Bank, accounts exceed in the aggregate the lesser of (A) the
equivalent of $3,000,000 and (3) estimated Operating Costs for the next
following 45 days, prepayment of principal of the Loan in accordance with
Section 3.07(a), prepayment of principal of the OPIC I. Loan in
accordance with Section 3.07 of the OPIC Finance Agreement and transfers
to the Russian Bank Accounts for the purpose of making Shareholder
Distributions to the extent permitted by Section 6.01.
The amounts of the payments to be made by the Company out of the Revenue
Subaccount under categories (2) through (8) above shall be calculated on the
date two Business Days prior to each Interest Payment Date and payments shall be
made by the Company out of the Revenue Subaccount under categories (2) through
(8) above only in accordance with the amounts as so calculated. In the event
that the balance of the Revenue Subaccount is insufficient to pay any such
category (or any sub-category) in
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full as of such date, the Company shall, except as otherwise specified for
category (5) and except in the case of category (8) (but subject to Section
6.11), apply the mounts available in the Revenue Subaccount to pay each party
entitled to payment in such category (or sub-category) on a pro rata basis in
accordance with the amount due to each such party in such category (or
sub-category).
(e) If an Event of Default or Potential Event of Default has occurred and is
continuing, the Company shall not be permitted to withdraw any amounts from the
Revenue Subaccount for any purpose without the prior written consent of the
Bank.
Section 5.13. Cash Collateral Subaccount
At all times on and after the Project Completion Date, the Company shall
maintain a balance in the Cash Collateral Subaccount equal to not less than the
lesser of:
(1) an amount equal to (A) $13,500,000 less the face amount of the Letter
of Credit, if any, issued in accordance with Schedule Q, multiplied by
(B) a fraction, the denominator of which is $100,000,000 and the
numerator of which is the aggregate mount of all Disbursements and all
disbursements made under the OPIC Finance Agreement; and
(2) an amount equal to the sum of (A) the outstanding principal amount of
the Tranche 1 Loan, (B) the outstanding principal amount of the OPIC
Tranche 1 Loan, and (C) $5,000,000, less (D) the face amount of the
Letter of Credit, if any, issued in accordance with paragraph l(b)(1) of
Schedule Q.
Amounts may be withdrawn by the Company from the Cash Collateral Subaccount only
for the purpose of paying principal and interest under this Agreement and the
OPIC Finance Agreement or to transfer any amount in excess of the minimum
balance set forth above to the Revenue Subaccount to the extent (and only to the
extent) required by the authorization issued by the Central Bank of Russia for
the establishment and operation of the Offshore Bank Account. The Company shall
not withdraw funds from the Cash Collateral Subaccount for any other purpose
without the prior written consent of the Bank.
Section 5.14. Russian Bank Accounts
The Company shall establish and maintain one or more bank accounts at such
banks located in the Russian Federation as may be proposed by the Company and
approved by the Bank (the "Russian Bank Accounts"), which accounts shall be
pledged to the Project Lenders as security for all amounts payable by the
Company under this Agreement, the OPIC Finance Agreement and the other Financing
Agreements. The Company shall ensure that all revenues of the Company and any
other payments made to the Company which, in either case, are received in
Roubles or which the Company is required by applicable law to convert into
Roubles or remit to or retain in the Russian Federation, including without
limitation any payments
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made to the Company in Roubles under the Construction Contract, the Marketing
Agreements and the other Project Agreements, are deposited into one of the
Russian Bank Accounts. As long as no Event of Default or Potential Event of
Default has occurred and is continuing, amounts in the Russian Bank Accounts may
be withdrawn by the Company to pay Project Costs and Operating Costs, to pay
dividends in Roubles to the Shareholders to the extent permitted by Section 6.01
and to convert such amounts into Dollars and transfer such amounts to the
Revenue Subaccount, in each case without the prior approval of the Bank. The
Company shall not withdraw funds from the Russian Bank Accounts for any other
purpose without the prior written consent of the Bank. If an Event of Default or
Potential Event of Default has occurred and is continuing, the Company shall
not be permitted to withdraw any amounts from the Russian Bank Accounts without
the prior written consent of the Bank.
Section 5.15. Debt Service Coverage Ratios
The Company shall, at all times after the first Repayment Date or, if
earlier, the first Interest Payment Date occurring after the Project Completion
Date, maintain (1) a Retrospective Debt Service Coverage Ratio for the preceding
Interest Period of not less than 1.25, and (2) a Loan Life Debt Service Coverage
Ratio of not less than 1.25.
Section 5.16. Further Documents
The Company shall execute all such other documents and instruments and do
all such other acts and things as the Bank may determine is necessary or
desirable to give effect to the provisions of this Agreement and the other
Financing Agreements and to cause the Financing Agreements to be duly
registered, notarized and stamped in any applicable jurisdiction. The Company
hereby irrevocably appoints and constitutes the Bank as the Company's true and
lawful attorney with right of substitution (in the name of the Company or
otherwise) to execute such documents and instruments and to do such acts and
things in the name of and on behalf of the Company in order to carry out the
provisions hereof if, within a reasonable period of time (as specified by the
Bank) after notice from the Bank, the Company shall fail to do so.
Section 5.17. Costs and Expenses
(a) The Company shall, whether or not any Disbursement is made, pay to the Bank,
or as the Bank may direct, within 30 days of the Bank furnishing to the Company
the invoice therefor:
(1) all documented outside mining, engineering, environmental and other
consulting fees and expenses incurred by the Bank in connection with this
Agreement and the other Financing Agreements, including without limitation
the fees and expenses of the Independent Engineer and the Bank's insurance
and environmental consultants;
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(2) the documented fees and expenses of outside legal counsel to the Bank
and all other documented out-of-pocket costs and expenses incurred by the
Bank in connection with:
(A) the assessment and arrangement of the Loan by the Bank;
(B) the preparation, review, negotiation, execution and, where
appropriate, registration and notarization of this Agreement, the
other Financing Agreements, the Project Agreements and any other
documents related to this Agreement;
(C) the obtaining of any legal opinions required by the Bank
hereunder; and
(D) the implementation and administration of this Agreement and the
other Financing Agreements;
(3) any insurance premiums paid by the Bank on behalf of the Company in
connection with insurance that is not obtained by the Company as required
hereunder;
(4) all documented costs of preparing, in a manner satisfactory to the
Bank, Russian translations of any Financing Agreements as requested by the
Bank from time to time;
(5) all documented costs incurred in connection with the discharge and
satisfaction of any Liens or other claims existing in violation of any of
the Financing Agreements;
(6) all documented costs incurred by the Bank in connection with creating,
perfecting, maintaining and enforcing the Security;
(7) the documented costs of providing the Bank with four bound copies and
one unbound copy of all Financing Agreements, all Project Agreements and
all other documents delivered by the Company or any other party hereunder;
and
(8) all other documented costs and expenses incurred by the Bank in :
connection with this Agreement, any other Financing Agreement and any
Project Agreement or any action contemplated thereby.
(b) The Company shall pay to the Bank, or as the Bank may direct, on demand all
lawyers' and other fees, costs and expenses incurred by the Bank:
(1) in the determination of whether them has occurred an Event of Default
or Potential Event of Default;
(2) in respect of the preservation or enforcement of any of its rights
under this Agreement or any other Financing Agreement and the collection of
any amount owing to the Bank; and
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(3) the assessment, preparation, review, execution and, where appropriate,
registration of any amendment of or waiver to this Agreement, any other
Financing Agreement, any Project Agreement or any other document related to
this Agreement.
Section 5.18. Annual Budgets
As soon as available but, in any event, not less than 90 days prior to the
beginning of each Financial Year, the Company shall furnish to the Bank the
Company's proposed annual budget for such Financial Year in form and level of
detail reasonably satisfactory to the Bank, including without limitation capital
expenditure, operating cost and revenue budgets and, prior to the end of the
Commitment Period, a financing plan showing a schedule of the estimated
Disbursements of the Loan and disbursements of the OPIC Loan during such
Financial Year. Within 30 days of receiving such annual budget, the Bank shall
notify the Company whether it approves such budget, which approval shall be
given if such budget does not materially vary from the Development Plan. In the
event that the Bank does not approve such budget, it shall advise the Company of
the reasons therefor and the Company shall make necessary adjustments and
amendments to such budget and resubmit such budget to the Bank for approval. If
the Bank fails tO notify the Company within 30 days after receiving any budget
that it approves or disapproves of such budget, such budget shall, to the extent
that such budget does not materially vary from the Development Plan, be deemed
approved by the Bank. Once approved by the Bank, such budget shall not be
amended in any material respect without the prior written consent of the Bank.
Section 5.19. Furnishing of Information
(a) As soon as available but, in any event, within 60 days after the end of each
quarter of each Financial Year, the Company shall furnish to the Bank:
(1) two copies of the Company's complete Financial Statements for such
quarter in form satisfactory to the Bank and certified by an officer of the
Company, which Financial Statements shall specify the balances of the
Offshore Bank Account and each subaccount thereof and the Russian Bank
Accounts at the end of such quarter;
(2) a report on any factors materially affecting or which might materially
affect the Company's business and operations or its financial condition;
(3) during the period prior to the physical completion of the Project, a
report, in a form satisfactory to the Bank and the Independent Engineer, on
the implementation and progress of the Project, including details of
capital expenditures and use of funds withdrawn from the Disbursement
Subaccount during such quarter, changes in Project Costs and reserves and
any other factors materially affecting or which would reasonably be
expected to materially affect
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the carrying out of the Project or the implementation of the Financing
Plan, with sufficient detail and information as may be required by the
Bank;
(4) during the period after the physical completion of the Project, a
report, in a form satisfactory to the Bank, on Project production,
including data on processing, output and prices achieved for production,
with sufficient detail and information as may be required by the Bank; and
(5) a statement, in level of detail reasonably satisfactory to the Bank, of
all material financial transactions between the Company and each of its
Affiliates (including Cyprus Amax) and Shareholders, including without
limitation all payments made to Cyprus Magadan and Cyprus Amax pursuant to
the Management Agreement.
(b) As soon as available but, in any event, within 120 clays after the end of
each Financial Year, the Company shall furnish to the Bank:
(1) two copies of its complete Financial Statements for such Financial
Year, together with an audit report thereon of the Auditors, all in form
satisfactory to the Bank;
(2) a letter from the Auditors commenting on, among other matters, the
adequacy of the Company's financial control procedures and accounting
systems, together with a copy of any other corem,relation sent by the
Auditors to the Company or to its management in relation to the Company's
financial, accounting and other systems, management and accounts;
(3) a report of the Auditors certify that the Company was in compliance
with the financial covenants contained in this Atticle V (other than
Section 5.15) and in Article VI as of the end of such Financial Year or, as
the case may be, detailing any non-compliance;
(4) a management discussion and analysis of results for such Financial
Year, including a report on any factors materially affecting or which might
materially affect the Company's business and operations or its financial
condition, together with a certificate of a duly authorized officer of the
Company certifying that the Company is in compliance with all of its
obligations under this Agreement, the other Financing Agreements and the
Project Agreements and that there exists no Event of Default or Potential
Event of Default;
(5) a statement, in level of detail reasonably satisfactory to the Bank, of
all financial transactions between the Company and each of its Affiliates
(including Cyprus Amax) and Shareholders, including without limitation
details of all payments made to Cyprus Magadan and Cyprus Amax pursuant to
the Management Agreement; and
(6) a report prepared in accordance with the Environmental Standards.
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(c) Prior to the physical completion of the Project, the Company shall furnish
to the Bank and the Independent Engineer, as soon as available but, in any
event, within 30 days after the end of each calendar month, a report, in a form
satisfactory to the Bank, of the Contractor on the implementation and progress
of, and expenditures on, construction of the Project through the end of such
calendar month, including estimates of remaining construction-related costs and
an explanation of any material deviations from the budgeted amounts set forth in
the Development Plan, with sufficient detail and information as may be required
by the Bank.
(d) Prior to the first Disbursement and, thereafter, not less than 30 days prior
to the expiration date. of any expiring insurance policy, the Company shall, in
accordance with the requirements of Schedule FF, submit to the Bank a
certificate of insurance for each policy or renewal policy required by Section
5.03 and Schedule FF to be in effect.
(e) The Company shall furnish promptly to the Bank, the Independent Engineer and
the Bank's environmental consultants such information as the Bank, the
Independent Engineer or the Bank's environmental consultants may from time to
time reasonably request. Without limiting the foregoing, the Company shall, at
the request of the Bank, furnish promptly to the Bank statements of all
transactions in relation to the Offshore Bank Account and the Russian Bank
Accounts.
(f) The Company shall permit, and shall procure that the Contractor permits,
representatives of the Bank, the Independent Engineer and the Bank's
environmental consultants, on reasonable notice and during normal business
hours, to visit the Project or any of the other premises where the business of
the Company is conducted or where the Project is being carried out and to have
access to its book/of account and records. Without limiting the foregoing, the
Independent Engineer shall, at the Bank's direction a nd at the Company's
expense, visit the Kubaka Field once in each calendar year for the purpose of
confirming residual ore body reserves.
(g) The Company shall promptly inform the Bank of:
(1) any proposed change in any material respect in the nature or scope of
the Project or of the Development Plan or the business or operations of
the Company;
(2) any event, condition or change of circumstances, including without
limitation any pending or threatened litigation, arbitration, claim or
government investigation, which might have a Material Adverse Effect;
(3) any proposed change of Russian law of which the Company has knowledge
which might have a Material Adverse Effect; and
(4) any material claims under insurance policies.
(h) Forthwith upon becoming aware of the occurrence of any Event of Default, any
Potential Event of Default, any Qualified Political Event or any event that,
with the passage of time or otherwise, might become a Qualified Political Event
or cause
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compensation to become payable under any contract of insurance issued by OPIC in
support of the Project, the Company shall give the Bank notice thereof by
facsimile transmission or telex specifying the nature of such Event of Default,
Potential Event of Default, Qualified Political Event or event and any steps
the Company is taking to remedy the same.
(i) Forthwith upon the occurrence of any incident or accident relating to the
Project, including but not limited to any such incident or accident likely to
have a material adverse effect on the environment or worker health or safety,
the Company shall give the Bank notice thereof by facsimile transmission or
telex specifying the nature of such incident or accident and any steps the
Company is taking to remedy the same. Without limiting the generality of the
foregoing, an incident or accident is likely to have a material adverse effect
on the environment or worker health or safety if (1) any relevant Russian law
requires notification of such incident or accident to the authorities, (2) such
incident or accident involves worker fatality or multiple serious injuries
requiring hospitalization, or (3) such incident or accident has become public
knowledge whether through media coverage or otherwise.
(j) The Company shall give to the Bank, by telex or facsimile transmission,
notice of the calling of any meeting of its shareholders or board of directors
indicating the agenda thereof no later than at the time that it gives official
notice of any such meeting to its shareholders or directors, as relevant, and
furnish promptly to the Bank two copies of (1) all notices, reports and other
communications of the Company to its shareholders, and (2) the minute of all
meetings of its shareholders and board of directors. The Company shall permit a
representative of the Bank to attend, at the Company's, the annual meeting of
the Company's shareholders, which meeting shall immediately follow the meeting
of the Company's board of directors at which the Company's annual budget is
discussed.
(k) The Company shall conduct environmental audits of the Project in accordance
with the Environmental Standards and engage a reputable environmental consulting
firm of international standing acceptable to the Bank to confirm the results of
such audits. Promptly after completion of each such audit, the Company shall
furnish the results thereof to the Bank.
(l) The Company shall undertake such additional development drilling and
exploration work on the Kubaka Field which a prudent operator of a comparable
gold mine would undertake under similar circumstances, including without
limitation in-fill and development drilling and additional check sampling of the
unsampled exploration adits (or, if not possible, other exploratory work) during
the summer of 1995, and furnish all results of such exploratory work to the
Independent Engineer and the Bank.
Section 5.20. Development Plan
Not later than 30 days prior to the date of the first Disbursement, the
Company shall submit to the Bank for approval the proposed development plan for
the Project, including, without limitation, detailed technical plans and
specifications, a financing plan, an estimated construction schedule and budget,
operating plans and procedures,
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descriptions of proposed transportation and marketing arrangements and a list of
major equipment. Upon approval of such plan by the Project Lenders, such plan
shall constitute the Development Plan for purposes of this Agreement.
ARTICLE VI - NEGATIVE COVENANTS
Unless the Bank shall otherwise agree in writing:
Section 6.01. Dividends
The Company shall not declare or pay any dividend, or make any
distribution on its share capital, or purchase, redeem or otherwise acquire any
shares of capital of the Company or any option over the same, or make any
payment of principal or interest on any Subordinated Shareholder Loan or any
other Shareholder Distribution (other than payments of management fees pursuant
to the Management Agreement as provided in Section 5.12(d), to the extent
permitted by Section 6.08(c)) prior to the later of (A) the Project Completion
Date and (15) 15 December 1997, and then only if;
(1) the Loan Life Debt Service Coverage Ratio is not less than 1.4 and
the Retrospective Debt Service Coverage Ratio for the preceding Interest
Period is not less than 1.25;
(2) no Event of Default, no Potential Event of Default, no Qualified
Political Event and no event that, with the passage of time or otherwise,
might become a Qualified Political Event or cause compensation to become
payable under any contract of insurance issued by OPIC in support of the
Project has occurred and is continuing or is likely to occur;
(3) the Company gives the Bank not less than 45 days' prior written
notice of such payment;
(4) such payment is made only on a Interest Payment Date; and
(5) to the extent that such payment is in a currency other than Roubles,
such payment is made only in accordance with the provisions of Section
5.12(d).
Section 6.02. Capital Expenditures
The Company shall not incur expenditures or commitments for expenditures
for fixed and other non-current assets, other than expenditures required for
carrying out the Project or for maintenance, repairs or replacements essential
to the operation of the Project, in an aggregate amount in excess of $500,000
(or the equivalent thereof in other currencies at then current rates of
exchange) in any Financial Year.
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Section 6.03. Leases
The Company shall not enter into any agreement or arrangement to
acquire by lease the use of any property or equipment of any kind, except to the
extent that the aggregate payments by the Company in respect of such leases do
not exceed $250,000 (or the equivalent thereof in other currencies at then
current rates of exchange) in any Financial Year.
Section 6.04. Indebtedness
(a) The Company shall not incur, assume or permit to exist any Indebtedness
except:
(1) that provided in the Financing Plan, including the Loan and the OPIC
Loan;
(2) Subordinated Shareholder Loans to finance Project Cost overruns;
(3) Short-term Debt incurred in the ordinary course of business other
than for money borrowed, including without limitation prepayments by
Roskomdragmet to the Company under the Roskomdragmet Agreement;
(4) Short-term Debt in Roubles in an aggregate amount not to exceed the
equivalent in Roubles of $4,000,000 or, if less, 50% of the Company's
short-term assets, incurred solely to finance the Company's working
capital requirements in Roubles; and
(5) Indebtedness in an aggregate amount not to exceed the equivalent in
Roubles of $5,000,000 (or such higher amount as may be agreed by the
Bank), incurred solely to finance refundable Russian value added tax paid
in connection with construction of the Project.
(b) The Company shall not enter into any agreement or arrangement to
guarantee or, in any way or under any condition, to become obligated for all or
any part of any financial or other obligation of another person.
Section 6.05. Liens
The Company shall not create or permit to exist any Lien on any
property, revenues or other assets, present or future, of the Company, except:
(1) the Security;
(2) Liens over refunds of Russian value added tax to secure the
Indebtedness referred to in Section 6.04(a)(5);
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(3) the right of Roskomdragmet, in accordance with Article 9.2(a) of the
Roskomdragmet Agreement, to refunds from the Roskomdragmet Sales Subaccount
of prepayments made under the Roskomdragmet Agreement; or
(4) any tax or other non-consensual Lien arising by operation of law or
other statutory Lien arising in the ordinary course of business, provided
that such Lien is for a sum which is not yet delinquent or the validity or
amount of such Lien or the sum secured by such Lien is being contested in
good faith and by proper proceedings and adequate reserves have been set
aside for the payment of such sum.
Section 6.06. Hedging
The Company shall not, without the prior written consent of the Bank (not
to be unreasonably withheld), enter into any interest rate or currency swap,
interest rate cap or collar, forward rate agreement or other interest rate,
currency or commodity (including gold) hedge.
Section 6.07. Arm's Length Transactions
The Company shall not enter into any transaction with any person except in
the ordinary course of business, on ordinary commercial terms and on the basis
of arm's length arrangements, or enter into any transaction whereby the Company
would pay more all the ordinary commercial price for any purchase or would
receive less than the full ex-works commercial price (subject to normal trade
discounts) for its products.
Section 6.08. Profit-Sharing and Management Arrangements
(a) The Company shall not enter into any partnership, profit-sharing or royalty
agreement or other similar arrangement whereby the Company's income or profits
are, or might be, shared with any third party other than pursuant to the
Management Agreement, the License, the Tranche 2 Loan and the OPIC Tranche 2
Loan.
(b) The Company shall not enter into any management contract or similar
arrangement whereby its business or operations are managed by any other person
except as contemplated by the Management Agreement and the Construction
Contract.
(c) The Company shall not pay any management fee to Cyprus Magadan under the
Management Agreement (1) prior to the later of the Project Completion Date and
15 December 1907, (2) on a day other than an Interest Payment Date, 3) if an
Event of Default or a Potential Event of Default has occurred and is continuing,
or (4) if Cyprus Magadan has notified the Bank, pursuant to the Cyprus Magadan
Guaranty, that a Political Event (as defined in the Cyprus Magadan Guaranty) has
commenced and such notification has not been withdrawn by Cyprus Magadan
pursuant to the Cyprus Magadan Guaranty. Except to the extent permitted by
Section 6.01 and this
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Section 6.08(c), the Company shall not make any payments to Cyprus Magadan or
Cyprus Amax or any Affiliate thereof other than of Operating Costs consisting of
reimbursable expenses payable pursuant to the Management Agreement.
Section 6.09. Investments
The Company shall not form or have any Subsidiary, or make or permit to
exist loans or advances (other than a loan to the new subsurface user of the
Evenskoye Field in an amount not to exceed $8,000,000, if such loan is required
by Section 4.9 of the License Agreement) to, or deposits (other than deposits in
the Offshore Bank Account, the Russian Bank Accounts and the accounts
established in connection with the working capital facility referred to in
Section 6.04(a)(4) and the value added tax facility referred to in Section
6.04(a)(5)) with, other persons or equity or other investments in any person or
enterprise; provided, however, that the funds deposited in the Offshore Bank
Account and the Russian Bank Accounts may be invested by the banks at which such
accounts are located in short-term investment grade marketable securities.
Without limiting the foregoing, the Company shall not open or maintain any bank
accounts other than the Offshore Bank Account, the Russian Bank Accounts and the
accounts established in connection with the working capital facility referred
to in Section 6.04(a)(4) and the value added tax facility referred to in Section
6.04(a)(5) and shall not open or maintain any subaccounts of the Offshore Bank
Account other than the Disbursement Subaccount, the Roskomdragmet Sales
Subaccount, the Export Sales Subaccount, the Revenue Subaccount and the Cash
Collateral Subaccount.
Section 6.10. Changes in Business, Capital and Charter
(a) The Company shall not make changes to the nature of its contemplated
business or operations. The Company shall not make any material change in the
nature or scope of the Project or the Development Plan, including without
limitation any such change which would involve an increase in Project Costs of
more than 15% or a delay in Project Completion of more than 120 days.
(b) The Company shall not carry out any business or activity other than
businesses or activities substantially related to the Project as contemplated by
the Development Plan.
(c) The Company shall not make changes, or permit changes to be made, to its
capital except in accordance with the Financing Plan. The Company shall not
permit any change in the equity interest of, or any transfer of any shares held
in its registered capital by, any Shareholder other than a transfer of shares in
the Company by one Russian Shareholder to another Russian Shareholder provided
that such shares remain subject to the Omolon Share Pledge.
(d) The Company shall not make changes, or permit changes to be made, to its
Charter in any manner which would be inconsistent with the provisions of this
Agreement.
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Section 6.11. Prepayment of Long-term Debt
The Company shall not (whether voluntarily or involuntarily) make any
prepayment, repurchase or early redemption of any Long-term Debt (including,
without limitation, the OPIC Loan, but excluding prepayments under the
Construction Contract in exchange for discounts), or make any repayment of any
Long-term Debt pursuant to any provision of any agreement or note which provides
directly or indirectly for acceleration of repayment in time or amount, unless
in any such case it shall contemporaneously make a proportionate prepayment of
the principal amount then outstanding of the Loan in accordance with the
provisions of Section 3.07(a).
Section 6.12. Sale of Assets; Merger
(a) The Company shall not sell, transfer, lease, grant a license to use or
otherwise dispose of all or a substantial part of its capital assets (whether in
a single transaction or in a series of transactions, related or otherwise).
(b) The Company shall not undertake or permit any merger, consolidation or
reorganization.
ARTICLE VII- EVENTS OF DEFAULT
Section 7.01. Events of Default
Each of the following events and ocurrences shall constitute an Event of
Default under this Agreement:
(a) Payment Default. The Company shall have failed to pay when due any principal
of, or interest on, the Loan as required by this Agreement or the OPIC Loan as
required by the OPIC Finance Agreement.
(b) Negative Covenant Default. The Company shall have failed to perform any of
its obligations under Article VI.
(c) Other Obligations Default. The Company or any other party (other than a
Project Lender) shaft have failed to perform any of its obligations under this
Agreement, any other Financing Agreement, any Project Agreement or any other
agreement between the Company on the one hand and the Bank or OPIC on the other
hand, the failure to perform which is not an Event of Default referred to
elsewhere in this Section 7.01, an.d any such failure to perform shall have
continued for a period of 30 days (in the case of a failure to perform by the
Company, any Affiliate of the Company or any Shareholder) or 60 days (in the
case of a failure to perform by any other party) after notice thereof shall have
been given to the Company by the Bank.
(d) Representation Default. Any representation or warranty made or confirmed by
the Company, Cyprus Amax, Cyprus Gold, any Shareholder or the Contractor in
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Article II, in any Financing Agreement, in any Project Agreement or in any
request for a Disbursement under this Agreement or for a disbursement under the
OPIC Finance Agreement shall have been false, incorrect or misleading in respect
of a material fact when made or confirmed.
(e) Nationalization Default. Any government or governmental authority shall have
condemned, nationalized, seized or otherwise expropriated all or any substantial
part of the property or other assets of the Company or of its share capital or
shall have assumed custody or control of such property or other assets or of the
business or operations of the Company or of its share capital or shall have
taken any action for the dissolution or disestablishment of the Company or any
action that would prevent the Company from carrying on its business or
operations, or a substantial part thereof, or otherwise prevent the completion
or operation of the Project; or the Company or any Shareholder shall have made a
claim under any insurance issued by OPIC (or similar insurance issued by any
other insurer) in connection with the Project.
(f) Bankruptcy Default. There shall have been entered against the Company,
Cyprus Amax, Cyprus Gold or any Shareholder a decree or order by a court
adjudging the Company, Cyprus Amax, Cyprus Gold or such Shareholder bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company, Cyprus
Amax, Cyprus Gold or such Shareholder under any applicable law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company, Cyprus Amax, Cyprus Gold or such Shareholder or of any
substantial part, of its property or assets, or ordering the winding up or
liquidation of its affairs; or the Company, Cyprus Amax, Cyprus Gold or any
Share older shall have instituted ' proceedings to be adjudicated bankrupt or
insolvent, or consented to the institution of bankruptcy or insolvency
proceedings against it, or filed a petition or answer or consent seeking
reorganization and or relief under any applicable law, or consented to the
filing of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company, Cyprus
Amax, Cyprus Gold or such Shareholder or of any substantial part of its
property, or made an assignment for the benefit of creditors, or admitted in
writing its inability to pay its debts generally as they become due; or any
other event shall have occurred which under any applicable law would have an
effect analogous to any of the events listed in thin subsection; provided that
any such event in respect of a Russian Shareholder shall be an Event of Default
only if it has a Material Adverse Effect.
(g) Cross Default. A default shall have occcured with respect to any
Indebtedness of Cyprus Amax in excess of $20,000,000 (or the equivalent thereof
in other currencies) or any Indebtedness of the Company (other than the Loan or
the OPIC Loan) or Cyprus Magadan or under any agreement pursuant to which there
is outstanding any such Indebtedness, and such default shall have continued
beyond any applicable period of grace; or an event of default shall have
occurred under the OPIC Finance Agreement.
(h) Abandonment Default. The Company shall have ceased to carry on its business;
or the Project shall have been abandoned by the Company; or, following the
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Project Completion Date, the operation of the Project shall have been
interrupted for a period in excess of 90 consecutive days or any periods in the
aggregate in excess of 120 days during any period of 12 consecutive months.
(i) Project Completion Default. Physical completion of the Project (as certified
by the Company and Cyprus Magadan in accordance with Schedule Q) shall not have
occurred by the date 24 months from the date of this Agreement, as such dam
shall be extended for a period (not to exceed, in the aggregate, 12 months)
equal to the duration of any suspension by the Bank of the fight of the Company
to Disbursements pursuant to Section 3.04 and for-a period (not to exceed, in
the aggregate, six months) equal to the duration of any Force Majeure Event
occurring during the Commitment Period; or the Project Completion Date shall not
have occurred by the date 18 months after physical completion of the Project.
(j) Agreement Default. Any Financing Agreement or Project Agreement or any other
agreement required in connection with the construction or operation of the
Project or ancillary services shall have been terminated, rescinded or cancelled
for any reason (unless the Bank shall have consented to such termination in
accordance with Section 5.09(b)); or any Project Agreement shall have been
modified or amended without the prior written consent of the Bank; or any
Financing Agreement or Project Agreement shall be or become void or
unenforceable or shall be claimed to be so by any party thereto (other than a
Project Lender).
(k) Judgment Default. A final judgment or order for the payment of money in
excess of $2,000,000 (or the equivalent thereof in other currencies at then
current rates of exchange) shall be rendered against the Company or any of its
properties and such judgment or order shall continue to be unsatisfied for a
period of 30 consecutive days; or any legal proceeding (whether criminal or
civil) shall be instituted which, if adversely determined, might have a Material
Adverse Effect; or any injunction or other judicial order which might have a
Material Adverse Effect shall be issued against the Company.
(1) Security Default. Any Security Document (other than the Immovables Mortgage
or the Enterprise Mortgage) for any reason (other than an act or omission of the
Bank or OPIC) shall have ceased to constitute a valid and perfected first
priority security interest in and Lien on any of the collateral purported to be
covered thereby; or the Company shall have created or permitted to exist any
Lien (other than a Permitted Lien) on any of its property, revenues or assets.
(m) Approvals Default. Any license, approval, consent, filing or registration
now or hereafter required for the execution, delivery or performance by any
party of any Financing Agreement or Project Agreement or to contract, own,
operate or maintain the Project or exploit the Kubaka Field shall have been
modified, revoked, withdrawn or withheld or shall have ceased to remain in full
force and effect, and such occurrence shall have a Material Adverse Effect.
(n) Cyprus Amax Default. The credit rating given to Cyprus Amax by Standard &
Poor's Corporation shall have fallen below BB- at any time that any amounts are
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guaranteed by Cyprus Magadan pursuant to the Cyprus Magadan Guaranty; or Cyprus
Amax or Amax Gold shall have failed at any time to own indirectly 50% of the
shares in the Company; or Cyprus Amax or Amax Gold shall have ceased at any time
to be entitled, either directly or indirectly, to exercise such-control over the
management of the Company as is provided for Cyprus Amax in the Company's
Charter as it exists on the date hereof or such management control shall have
been reduced from that provided for in the Company's Charter as it exists on
the date hereof; or all or pan of Cyprus Amax's indirect shareholding in Cyprus
Magadan shall have been transferred to Amax Gold and Amax Gold shall have ceased
to be an Affiliate of Cyprus Amax.
(o) Adverse Change Default. There shall have occurred a change of law or of any
regulation having the force of law which has a Material Adverse Effect; or it
shall have become unlawful for the Company, Cyprus Amax, Cyprus Gold, any
Shareholder or the Contractor to perform any material obligation under this
Agreement, any other Financing Agreement or any Project Agreement; or there
shall have occurred any action by any governmental body or agency or any
enactment, modification or change in the interpretation of any law, de, order
or regulation which restricts or prohibits in any material way the perform by
the Company, Cyprus Amax, Cyprus Gold, any Shareholder or the Contractor of
their respective obligations under this Agreement, any other Financing Agreement
or any Project Agreement; or there shall have occurred a change in the political
or economic situation in the Russian Federation or other adverse change in
circumstances or in the business situation of the Company, any Shareholder or
the Contractor which, in the reasonable opinion of the Bank, has a Material
Adverse Effect.
(p) Environment Default. The Company or its businesses, operations, assets;
equipment, progeny, leaseholds or other facilities shall have failed in any
respect to comply with the Environmental Standards.
(q) Cost Overrun Default. The Bank shall have determined that the Project Costs
(including, without limitation, financing costs) necessary to achieve physical
completion of the Project will, as a result of delays in completion or
otherwise, exceed by more than $10,000,000 (or the equivalent thereof in other
currencies at then current rates of exchange) the total amount the thereof set
forth in Section 2.01(a) and the Shareholders shall have failed, within 60 days
of such determination, to maim cash contributions of paid-in capital or
Subordinated Shareholder Loans to the Company in the amount of 50% of the full
amount of such excess.
(r) Bank Account Default. The Company shall have withdrawn any funds from the
Offshore Bank Account, or any subaccount thereof, or the Russian Bank Accounts
for any purpose not permitted by this Agreement or otherwise in any manner
contrary to the terms of this Agreement, the Offshore Account Pledge or the
Russian Account Pledge; or, at any time after the Project Completion Date, the
balance of the Cash Collateral Subaccount shall be less than the minimum amount
specified in Section 5.13 for a period in excess of 15 consecutive days.
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Section 7.02. Acceleration in Events of Default
If any one or more Events of Default shall have occurred and be
continuing, then the Bank may, by notice to the Company, declare the principal
of, and all accrued interest on, the Loan (together with any other amounts
accrued or payable under this Agreement) to be, and the same shall thereupon
become, immediately due and payable (anything in this Agreement to the contrary
notwithstanding) without any further notice and without any presentment, demand
or protest of any kind, all of which are hereby expressly waived by the
Company.
Section 7.03. Automatic Acceleration
If the Company shall have become voluntarily or involuntarily dissolved, or
become bankrupt or insolvent (however such bankruptcy or insolvency may be
evidenced), the principal of, and all accrued interest on, the Loan (together
with any other amounts accrued or payable under thin Agreement)shall thereupon
become immediately due and payable (anything in this Agreement to the contrary
notwithstanding) without any presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived by the Company.
ARTICLE VIII - MISCELLANEOUS
Section 8.01. Term of Agreement
This Agreement shall continue in force until all monies payable hereunder
shall have been fully paid in accordance with the provisions hereof; provided
that the indemnities of the Company shall survive repayment of the Loan.
Section 8.02. Entire Agreement; Amendment and Waiver
This Agreement and the documents referred to heroin constitute the entire
obligation of the parties hereto with respect to the subject matter hereof and
shall supersede any prior expressions of intent or understandings with respect
to this transaction, including the LeVer of Information dated 6 June 1994 from
the Company to the Bank. Any amendment hereto or waiver of any of the terms
hereof shall be in writing, signed by each party to be bound or burdened
thereby.
Section 8.03. Notices
Any notice, application or other communication to be given or made under
this Agreement to the Bank or the Company shall be in writing. Subject to the
provisions of Sections 5.31(f), 5.31(g) and 5.31(h), such notice, application or
other communication shall be deemed to have been duly given or made when it
shall be delivered by hand, airmail, telex or facsimile transmission to the
party to which it is
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required or permitted to be given or made at such party's address specified
below or at such other address as such party shall have designated by notice to
the party giving or making such notice, application or other communication.
For the Company:
Omolon Gold Mining Company
Proletariat Street, 14
685000 Magadan
Russian Federation
Telex: 145122
Answerback: NEGA SU
Fax: (70) (413) (22) 2-45-15
For the Bank:
European Bank for Reconstruction and Development
One Exchange Square
London EC2A 2EH
United Kingdom
Attention: Operation Administration Unit
Telex: 8812161
Answerback: EBRD L G
Fax: (44) (171) 338-6100
Section 8.04. Certificate of Incumbency and Authority
The Company shall furnish or cause to be furnished to the Bank evidence,
in the form of Schedule Y and in substance satisfactory to the Bank, of the
authority of the person or persons who will, on behalf of the Company, sign the
applications and certifications provided for in this Agreement or take any other
action or execute any other document required or permitted to taken or executed
by the Company under this Agreement, and the authenticated specimen signature of
each such person.
Section 8.05. English Language
All documents to be furnished or communications to be given or made under
this Agreement shall be in the English language or, if in another language,
shall be accompanied by a translation into English certified by a representative
of the Company. The English language version or translation of each Financing
Agreement shall be the governing version between the Company and the Bank.
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Section 8.06. Financial Calculations
(a) All financial calculations to be made under, or for the purposes of, this
Agreement shall be determined in accordance with Generally Accepted Accounting
Principles in the United States and, except as otherwise required to conform to
the definitions contained in Section 1.01 or any other provisions of this
Agreement, shall be calculated from the then most recently issued quarterly
Financial Statements which the Company is obligated to furnish to the Bank from
time to time, as provided in Section 5.19(a) ; provided, however, that, (1) if
the relevant quarterly Financial Statements should be in respect of the last
quarter of a Financial Year then, at the Bank's option, such calculations may
instead be made from the audited Financial Statements for the relevant Financial
Year, and (2) if there should occur any material adverse change in the financial
condition of the Company after the end of the period covered by the relevant
Financial Statements, then such material adverse change shall also be taken into
account in calculating the relevant figures.
(b) The Company shall, in consultation with the Bank and using the Financial
Model, prepare a banking case once every six months in accordance with the
procedures set forth in Schedule I. The first such banking case shall be
prepared prior to the first Repayment Date or, if earlier, the first Interest
Payment Date following the Project Completion Date. All calculations of Loan
Life Debt Service Coverage Ratios shall be made on the basis of such banking
cases.
Section 8.07. Rights, Remedies and Waivers
(a) The rights and remedies of the Bank in relation to any misrepresentations or
broach of warranty on the part of the Company shall not be prejudiced by any
investigation by or on behalf of the Bank into the affairs of the Company, by
the execution or the performance of this Agreement or by any other act or thing
which may be done by or on behalf of the Bank in connection with thin Agreement
and which might, apart from this Section, prejudice such rights or remedies.
(b) No course of dealing or waiver by the Bank in connection with any condition
of Disbursement under this Agreement shall impair any right, power or remedy of
the Bank with respect to any other condition of Disbursement, or be construed to
be a waiver thereof; nor shall the action of the Bank in respect of any
Disbursement affect or impair any right, power or remedy of the Bank in respect
of any other Disbursement.
(c) Unless otherwise notified to the Company by the Bank and without prejudice
to the generality of Section 8.07(b), the fight of the Bank to require
compliance with any condition under this Agreement which may be waived by the
Bank in respect of any Disbursement is expressly preserved for the purposes of
any subsequent Disbursement.
(d) No course of dealing and no delay in exercising, or omission to exercise,
any right, power or remedy accruing to the Bank upon any default under this
Agreement or any other agreement shall impair any such right, power or remedy or
be construed
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to be a waiver thereof or an acquiescence therein; nor shall the action of the
Bank in respect of any such default, or any acquiescence by it therein, affect
or impair any fight, power or remedy of the Bank in respect of any other
default.
Section 8.08. Indemnification
(a) The Company assumes full liability for, and agrees to and shall indemnify
and hold harmless the Bank and its officers, directors, employees, agents and
servants and any manager appointed by the Bank pursuant to any Security Document
against and from any and all liabilities, obligations, losses, damages
(compensatory, punitive or otherwise), penalties, claims, actions, taxes,
duties, suits, costs and expenses (including, without limitation, reasonable
legal counsel's fees and expenses and costs of inves tigation) of whatsoever
kind and nature, including, without prejudice to the generality of the
foregoing, those aria g in contract or tort (including, without limitation,
negligence) or by re, Set liability or otherwise, which are imposed on, incurred
by or asserted against the Bank' or any of its officers, directors, employees
agents or servants or any manager appointed by the Bank pursuant to any Security
Document (whether or not also indemnified by any other person under any other
document) and which in any way relate to or arise out of, whether directly or
indirectly, (1) any of the transactions contemplated by any Financing Agreement
or Project Agreement or the execution, delivery or performance thereof, (2) the
development, design, construction, completion, operation or maintenance of the
Project, the Kubaka Field or the Evenskoye Field or the ownership, control or
posen thereof by the Company, or (3) the exercise by the Bank of any of its
rights and remedies under any of the Security Documents or any of the other
Financing Agreements; provided that the Bank shall not have any right to be
indemnified hereunder for its own gross negligence or willful misconduct.
(b) Without limiting the generality of the foregoing, the Company agrees to and
shall indemnify and hold harmless the Bank and its officers, directors,
employees, agents and servants against and from any such liabilities,
obligations, losses, damages, penalties, claims, actions, taxes, duties, suits,
costs or expenses arising under any environmental law or other applicable law as
a result of the past, present or future operations of the Company (or any
predecessor or successor in interest to the Company), or the past, present or
future condition of any site or facility owned, operated or leased by the
Company (or any such predecessor or successor in interest), or any release or
use or threatened release of any pollutants or ham materials at any such site or
facility, including any such release or use or threatened release which shall
occur during any period when either Project Lender shall be in possession of any
such site or facility following the exercise by either Project Lender of any of
its rights and remedies hereunder or under any Financing Agreement.
Section 8.09. Severability
If any one or more of the provisions contained in this Agreement or any
document executed in connection herewith shall be invalid, illegal or
unenforceable,
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the validity, legality and enfoceability of the remaining provisions contained
herein shall not in any way be affected or impaired.
Section 8.10. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York in the United States of America.
Section 8.11. Arbitration and Jurisdiction
(a) The Bank shall have the option in its sole discretion to refer any dispute,
controversy or claim arising out of or relating to thisAgreement, the Notes or
any other Financing Agreement to which the Company and the Bank are parties or
axe among the parties, or the breach, termination or validity hereof or thereof,
including any dispute concerning the scope of this arbitration clause, for final
settlement by arbitration. In no event shall the Company be entitled to refer
any such dispute, controversy or claim to arbitration pursuant to this section
or otherwise . Upon the election by the Bank to refer any such dispute,
controversy or claim to arbitration pursuant hereto, the Company shall be
obligated to settle such dispute, controversy or claim by arbitration as
provided herein. The Company hereby expressly and irrevocably submits to the
jurisdiction of the arbitral tribunal appointed in with the procedures set forth
below with respect to any dispute, controversy or claim that is referred by the
Bank to arbitration, to the exclusion of the jurisdiction of the legal,
equitable or arbitral courts of the Russian Federation or of any other country
or jurisdiction. The following provisions shall apply to any such arbitration:
(1) Except as otherwise provided herein, such arbitration shall be governed
by the International Arbitration Rules of the American Arbitration
Association in effect at the time of such arbitration (for purposes of this
section, the "AAA Rules").
(2) The seat of such arbitration shall be New York, New York, unless the
Bank determines that the seat of such arbitration shall instead be London,
England or Washington, D.C. The language of the arbitration proceedings and
of all written decisions shall be English. All pleadings and documentary
evidence shall be presented in English, except that, if any original
documentary evidence is not in English, the offering patty shall provide
English translations thereof (which, in the event of any dispute with re
spect to such translation, the arbitral tribunal may require to be
certified translations) to the arbitral tribunal and to the other party.
(3) The arbitral tribunal shall consist of three arbitrators, each of whom,
in addition to meeting the qualification requirements of the AAA Rules:
(A) shall be fluent in the English language; and
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(B) shall be an attorney qualified to practice law in the State of New
York with experience in representing lenders and borrowers in
international project finance lending to private sector borrowers.
One arbitrator shall be appointed by the Bank and one arbitrator shall be
appointed by the Company. Each party shall notify the other of the name of
its appointee within 10 days of the receipt by the Company of notice from
the Bank of its election to refer any dispute, controversy or claim to
arbitration pursuant hereto. The third arbitrator shall be appointed by the
Bank with the concurrence of the Company. The third arbitrator shall be the
chair of. the arbitral tribunal. The Company shall be deemed to a ccept the
Bank's nomination of the third arbitrator if the Company fails to object to
such nomination (or any subsequent nomination) within seven days of
receiving notice from the Bank of such nomination. If the Company does not
accept (and has not been deemed to have accepted) the Bank's first
nomination, the Bank shall submit a second nimination for the third
arbitrator. If the Company does not accept (and has not been deemed to have
accepted) such second nomination, the Batik shall submit a third nomina
tion for the third arbitrator. If the Company fails to appoint its
arbitrator for any reason in the manner or within the period specified
above or the Company does not accept (and has not been deemed to have
accepted) the third arbitrator nominated by the Bank, then the arbitrator
that the Company failed to appoint or such third arbitrator or both such
arbitrators, as the case may be, shall be appointed by the Administrator
(as defined in the AAA Rules).
(4) Each party shall send any challenge to the appointment of an arbitrator
to the Administrator within seven days after receiving notice of the
appointment of such arbitrator. The Administrator shall nile on any
challenge to the appointment of an arbitrator as quickly as reasonably
possible and, in any event, within seven days. If an arbitrator appointed
by the Bank withdraws or must be replaced for any reason, the Bank shall
appoint a substitute arbitrator in accordance with Section 8.11(a)O) within
a re asonable period of time. If an arbitrator appointed by the Company
withdraws or must be replaced for any reason, the Company shall appoint a
substitute arbitrator in accordance with Section 8.11(a)(3) within three
days. If the arbitrator appointed by the Bank with the concurrence of the
Company withdraws or must be replaced, the Bank shall nominate a substitute
arbitrator with the concurrence of the Company in accordance with Section
8.11(a)(3). If an arbitrator appointed by the Administrator withdraws or
must be replaced, the Administrator shall appoint a substitute arbitrator.
(5) In the event that OPIC commences an arbitration in acco anco with the
OPIC Finance Agreement or any other Financing Agreement and the Bank and
OPIC agree to consolidate such arbitration with any arbitration hereunder,
the Bank and OPIC shall jointly exercise the rights of the Bank under
Sections 8.11 (a)(2), 8.11 (a)(3) and 8.11 (a)(4), but otherwise the Bank
shall be entitled to exercise independently the rights granted to it
herein.
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(6) Between the date of appointment of an arbitrator and he date the
arbitral tribunal is fully constituted, all communications between the
parties and such arbitrator shall be made through the Administrator Each
party shall provide the other with copies of any communication with the
arbitral tribunal.
(7) The Bank shall communicate its statement of claim in writing to the
Company and the arbitral tribunal within a period of time to be determined
by the arbitral tribunal. The Bank's statement of claim shall include a
statement of facts supporting its claim, the points at issue and the relief
or remedy sought. A copy of this Agreement shall be attached to the Bank's
statement of claim.
(8) The Company shall file a statement of defense in writing within 20 days
of its receipt of the Bank's statement of claim. The Company's statement of
defense shall reply to the particulars of the Bank's statement of claim.
The Company shall attach to its statement of defense all documents on which
it relies for its defense and identify all documents or other evidence it
will submit. The failure to timely and completely file such statement of
defense (absent good cause) shall be construed by the arbitral tribunal as
an admission of the allegations made by the Bank in its statement of claim
and the arbitral tribunal shall enter an award for the relief or remedy
requested by the Bank without any further hearing or review of evidence.
(9) In any arbitral proceeding, the certificate of the Bank as to any
amount due to the Bank under this Agreement shall be prima facie evidence
of such amount.
(10) Each arbitral tribunal established hereunder shall make its decisions
entirely on the basis of the evidence adduced and on the basis of the
governing law set forth in Section 8.10. No such arbitral tribunal shall
have the power to reform any provisions of this Agreement or to impose any
obligation on any of the parties to the arbitration or take any other
action which could not be imposed or taken by a federal court located in
the State of New York.
(11) The parties irrevocably agree that, if the seat of any arbitration
hereunder is London, England:
(A) no leave to appeal under section 1 (3)(b) of the U.K. Arbitration
Act of 1979 shall be sought with respect to any question of law
arising from an award;
(B) if the Bank has directed that the arbitral tribunal issue a
written award stating only its conclusions and not the reasons
therefor, no application shall be made under section l(5)(b) of the
U.K. Arbitration Act of 1979 with respect to any award; and
(C) no application shall be made under section 2(1)(a) of the U.K.
Arbitration Act of 1979 with respect to any question of law.
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(12) Each party may be represented or assisted by legal counsel of its
choice. The names and addresses of such legal counsel shall be communicated
in writing to the other party in its statement of claim or statement of
defense (as the case may be) specifying whether the appointment is' being
made for the purposes of representation or assistance.
(13) The parties shall agree on the date on which the arbitral tribunal
will commence taking evidence in respect of the matter in issue, which date
shaft not be more than 20 days after the Company's submission of its
statement of defense (unless the Bank otherwise directs). Decisions or
rulings on questions of procedure shall be made by a majority of the
arbitral tribunal. Both parties shall have a right to be heard at the
hearing, unless the parties have agreed to a documents-only arbitration or
unless, in the case of the Company, the Company has not filed a timely
statement of defense in accordance with Section 8.1l(a)(8).
(14) At least 10 days before the first hearing date, there shall be an
exchange of exhibits, brief descriptions of the testimony the parties
propose to offer, the names of those who will testify (including expert
witnesses) and any additional documents or other written evidence that will
be submitted to the arbitral tribunal for consideration.
(15) The arbitral tribunal shall have the discretion to allow, refuse or
limit the appearance of witnesses, whether witnesses of fact or expert
witnesses. Any witness who gives evidence may be questioned by the other
pan or its attorneys under the control of the arbitral tribunal. The
arbitral tribunal may put questions at any stage of the examination of the
witnesses. The testimony of witnesses may be presented in written form,
either as signed statements or by duly sworn affidavits. Subject to the
discretion of the arbitral tribunal, either party may request that such
witness should attend for oral examination at a hearing. If the witness
fails to attend, the arbitral tribunal may place such weight on the written
testimony as it thinks fit or exclude it all together. If any expert is
appointed by the arbitral tribunal, the parties hereto shall have the right
to examine such experts report to the arbitral tribunal and, subject to the
discretion of the arbitral tribunal, to question such expert at an oral
hearing. Subject to mandatory provisions of applicable procedural law, any
party or its attorneys shall have the right to interview any witness or
potential witness (including expert witnesses) prior to his appearance at
any hearing.
(16) To facilitate the comprehensive and consistent resolution of all
disputes arising out of or in connection with any of the Financing
Agreements, the Bank may, at its sole option, direct the arbitral tribunal
to, and upon such direction the arbitral tribunal shall, consolidate with
the arbitration proceeding hereunder any other arbitration or other dispute
proceeding involving any of the parties to any of the Financing Agreements
and arising out of or in connection with any of the Financing Agreements.
In the event of any such consolidation, any arbitral tribunal constituted
in respect of such other proceeding shall be dissolved effective upon such
consolidation. the arbitral tribunal constituted hereunder
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shall determine all matters referred to arbitration in accordance with the
rules and procedures applicable to the proceeding hereunder and no party
shall have any right to challenge any arbitrator already nominated or
appointed to such arbitral tribunal. Such arbitral tribunal shall be
authorized to determine, in a manner consistent with the general tenor of
the AAA Rules, the appropriate procedure to achieve the above objective and
shall issue one final and comprehensive arbitral award in respect of all
such disputes so consolidated.
(17) The arbitral tribunal shall issue a written decision and award stating
the conclusions of the arbitral tribunal and the reasons upon which its
conclusions am based, unless the Bank directs, in its sole discretion, that
the arbitral tribunal issue a written decision and award stating only its
conclusions and not the reasons therefor. The arbitral tribunal shall issue
its award as soon as possible and, in any event, within one month after the
conclusion of the relevant proceedings. Any money award shall be made and
shall be payable in Dollars. Any award in favor of the Bank shall include
an award of attorneys' fees and costs of arbitration, payable in Dollars.
The award shall otherwise be limited to the scope of the submission. In no
circumstance shall the arbitral tribunal render an award ex aequo et bono
-- ----- -- ----
or as amiable compositeurs. Any award of the arbitral tribunal shall be
------- ------------
final and binding and judgment upon any arbitral award may be entered and
enforced by any court or judicial authority of competent jurisdiction.
(18) Either party may, within 10 days after any award, submit a request
that the arbitral tribunal interpret the award, correct any clerical,
typographical or computation errors or make an additional award as to
claims presented but omitted from the award. If the arbitral tribunal
considers such request justified after considering the contention of the
parties, the arbitral tribunal shall promptly comply with such request.
(19) Neither the arbitral tribunal nor the Company shall be authorized to
seek from any judicial authority, and the arbitral tribunal shall not be
authorized to take or provide, any interim measures or pre-award relief
against the Bank, any provisions of the AAA Rules notwithstanding.
(b) The Company hereby irrevocably consents that any legal action or proceeding
against it or any of its properties or assets with respect to any of its
obligations arising under or relating to this Agreement, the Notes or any of the
other Financing Agreements or the arbitral tribunal's decision pursuant to
Section 8.11(a) may, at the option of the Bank, be brought in any court of the
State of New York or any Federal court of the United States of America located
in the City and State of New York or in the District of Columbia or the courts
of England, as the Bank may elect, and, by execution and delivery of thin
Agreement, the Company hereby submits to and accepts with regard to any such
action or proceeding for itself and in respect of its properties and assets,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Company hereby irrevocably designates, appoints and empowers (1) CT Corporation
System. presently located at 1633 Broadway, New York, New York 10019, U.S.A. as
its agent to receive for and on its behalf service of process in the State of
New
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York, (2) CT Corporation System, presently located at 1025 Vermont Avenue, N.W.,
4th Floor, Washington, D.C. 20005, U.S.A. as its agent to receive for and on its
behalf service of process in the District of Columbia, and (3) The Law Debenture
Corporation p.l.c., presently located at Princes House, 95 Gresham Street,
London EC2V 7LY, England as its agent to receive for and on its behalf service
of process in England in any legal action or proceeding with respect to this
Agreement, the Notes or any of the other Financing Documents. A copy of any such
process served on such agent shall be promptly forwarded by airmail by the Bank
to the Company at its address referred to in Section 8.03, but the failure of
the Company to receive such copy shall not affect in any way the service of such
process as aforesaid. The Company further irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies thereof by
registered or certified airmail, postage prepaid, to the Company at its address
referred to in Section 8.03. The foregoing, however, shall not limit the rights
of the Bank to serve process in any other manner permitted by law or to bring
any legal action or proceeding or to obtain execution of judgment in any other
jurisdiction, including without limitation the Russian Federation. The Company
further agrees that, to the extent permitted by law, final judgment against it
in any such action or proceeding shall be conclusive and may be enforced in any
other jurisdiction within or outside the United States of America or England by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and of the amount of its indebtedness.
(c) The Company hereby irrevocably waives (1) any right it may have under the
laws of any jurisdiction to a trial by jury in respect of any legal action or
proceeding with respect to this Agreement, the Notes or any of the other
Financing Agreements, (2) any right it may have under the laws of any
jurisdiction (other than New York) to commence by publication any such legal
action or proceeding, (3) any objection which it may now or hereafter have to
the laying of the venue of any such legal action or proceeding in the State of
New York, the District of Columbia or England, and (4) any claim that the State
of New York, the District of Columbia or England is not a convenient forum for
any such legal action or proceeding.
(d) The Company hereby (1) irrevocably waives its right to, and agrees not to
request, plead or claim that the Bank post, pay or offer, any cautio judicatum
------ ---------
solvi bond, litigation bond or any other bond, fee, payment or security measure
- -----
provided by any provision of applicable law as a condition to commencing or
maintaining any such legal action or proceeding and (2) irrevocably waives any
objection that it may now or hereafter have to the Bank's claim that the Bank
should be exempt or immune from posting, paying, making or offering any such
bond, fee, payment or security measure.
(e) Notwithstanding anything herein to the contrary, no provision of this
Agreement shall be construed as a waiver by the Bank of any of the immunities,
privileges and exemptions granted to the Bank under the Agreement Establishing
the European Bank for Reconstruction and Development and applicable law.
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Section 8.12. Waiver of Sovereign Immunity
The Company represents and warrants that this Agreement and the Loan and
the incurring by the Company of the Loan are commercial rather than public or
governmental acts and that the Company is not entitled to claim immunity from
legal proceedings with respect to itself or any of its assets on the grounds of
sovereignty or otherwise under any law or in any jurisdiction where an action
may be brought for the enforcement of any of the obligations arising under or
relating to this Agreement, the Notes or the other Financing Agreements. To the
extent that the Company or any of its assets has or hereafter may acquire any
right to immunity from set-off, legal proceedings, attachment prior to
judgment, other attachment or execution of judgment on the grounds of
sovereignty or otherwise, the Company hereby irrevocably waives such rights to
immunity in respect of its obligations arising under or relating to this
Agreement, the Notes or the other Financing Agreements.
Section 8.13. Successors and Assigns
(a) This Agreement shall bind and inure to the benefit of the respective supra
and assigns of the parties hereto, except that the Company may not assign or
otherwise transfer all or any part of its rights or obligations under this
Agreement without the prior consent of the Bank. The Bank may sell, transfer,
assign or otherwise dispose of (other than by means of a participation) all or
part of its rights or obligations under this Agreement and the other Financing
Agreements with the consent of the Company (not to be unreasonably withheld
and-not to be withheld solely on the basis thai the assignee might at some
future date be entitled to claim mounts in respect of tax reimbursements or
gross-ups pursuant to Section 3.12). The Bank may grant participations in its
rights or obligations under this Agreement without the consent of the Company,
provided that (1) the Bank shall promptly notify the Company of such
participation and (2) the participant would not, on the basis of facts and
circumstances in effect on the date of the participation, be entitled to claim
amounts in respect of tax reimbursements or gross-ups, Increased Costs or other
mounts pursuant to Section 3.11, 3.12 or 3.14 and Section 8.13(b) exceeding
those claimed by the Bank (it being understood that nothing in this sentence
shall in any way limit any rights of such participant under Section 3.11, 3.I2
or 3.14 and under Section 8.13(b) with respect to circumstances or conditions
arising after the date of such participation).
(b) Upon any sale, transfer, assignment, participation or other disposition by
the Bank, the purchaser, transferee, assignee or participant shall be entitled,
to the extent of the interest transferred, to all of the benefits of this
Agreement as if originally named as a party hereto, including without limitation
the benefits of the indemnities, Increased Costs and tax reimbursements and
gross-ups provided for pursuant to the provisions of this Agreement and any
rights of set-off as permitted by law. The acts of the Bank or the failure of
the Bank to act hereunder shall in all circumstances be conclusive and binding
on any purchaser, transferee, assignee or participant of the Bank's interest
hereunder.
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Section 8.14. Counterparts
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same agreement.
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized
representatives, have caused this Agreement to be signed in their respective
names as of the date first above written.
THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY"
By: /s/ J. S. Rosenblum
--------------------------
Name: J. S. Rosenblum
--------------------------
Title: Chairman
--------------------------
By: /s/ S. W. Haraplak
--------------------------
[SEAL APPEARS HERE] Name: S. W. Haraplak
--------------------------
Title: General Director
--------------------------
By: /s/ E. S. Ryzhaikina
--------------------------
Name: E. S. Ryzhaikina
--------------------------
Title: Chief Accountant
--------------------------
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
By: /s/ Jacque de Larosiere
--------------------------
Name: Jacque de Larosiere
--------------------------
Title: President
--------------------------
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[EXECUTION COPY]
AMENDMENT AGREEMENT TO LOAN AGREEMENT
THIS AMENDMENT AGREEMENT is made as of the 7th day of November 1995 between THE
CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY" (the "Company") and
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank").
WHEREAS:
(A) the Company has entered into a loan agreement dated as of 30 June 1995
(the "Loan Agreement") with the Bank, pursuant to which the Bank has agreed to
make a loan to the Company in an amount not to exceed US$47,500,000, subject to
the terms and conditions of the Loan Agreement; and
(B) the Company has requested that the Loan Agreement be amended in certain
respects and the Bank has agreed to so amend the Loan Agreement, subject to the
terms and conditions of this Amendment Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions
Wherever used in this Amendment Agreement, unless the context shall
otherwise require, the terms defined in the Loan Agreement and not separately
defined herein shall have the same meanings when used in this Amendment
Agreement.
Section 2. Amendments to Loan Agreement
(a) The definition of "Russian Blocked Account Agreement" in Section 1.01 of the
Loan Agreement is hereby amended by deleting "Citibank T/O" in the third line
and inserting "Rossiisky Kredit Commercial Bank" in place thereof.
(b) Section 5.14 of the Loan Agreement is hereby amended by deleting "in
Roubles" in the 14th and 15th lines.
(c) Annex 2 to Schedule Q to the Loan Agreement is hereby amended by inserting
"per metric ton of ore processed" after "$_______ "in the second line of
paragraph (g), by deleting "$5,200,000" in footnote 12 and inserting "$35 per
metric ton of ore processed" in place thereof, and by deleting paragraph (h) in
its entirety.
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(d) Annex 4 to Schedule Q to the Loan Agreement is hereby amended by inserting
"material" before "claim or dispute" in the last line of paragraph (g).
Section 3. Representations and Warranties
The Company represents and warrants to the Bank as follows:
(a) it has all requisite power and authority, corporate or otherwise, to
execute, deliver and perform all of its obligations under this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement;
(b) it has taken all necessary action to authorize the execution, delivery and
performance by it of this Amendment Agreement and the Loan Agreement as amended
by this Amendment Agreement;
(c) this Amendment Agreement has been duly executed and delivered by it and this
Amendment Agreement and the Loan Agreement as mended by this Amendment Agreement
constitute its valid and legally binding obligations, enforceable against it in
accordance with their respective terms;
(d) all consents, authorizations and actions of any kind necessary for its valid
execution, delivery and performance of this Amendment Agreement and the Loan
Agreement as amended by this Amendment Agreement have been obtained and are in
full force and effect;
(e) the execution, delivery and performance by it of this Amendment Agreement
and the Loan Agreement as amended by this Amendment Agreement do not require the
consent or approval of any of its creditors (other than OPIC, whose consent has
been obtained) and will not conflict with or constitute a breach or default
under or violate any provision of its Charter or any agreement, law, rule,
regulation, order, writ, judgement, injunction, decree, determination or award
applicable to it; and
(f) each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when the documents, recordings, filings,
notifications and registrations listed in Schedule X of the Loan Agreement have
been executed or made, constitute a valid and completed security interest in,
and a Lien of first priority on, the collateral covered by such Security
Document, securing payment of all principal, interest and other amounts payable
under the Loan Agreement as amended by this Amendment Agreement, which security
interest and Lien ranks senior to all other security interests and Liens on such
collateral other than Permitted Liens.
Section 4. Effectiveness
Section 2 of this Amendment Agreement shall become effective as of the date
hereof subject to the due execution of this Amendment Agreement by Cyprus Amax,
Cyprus Magadan and Cyprus Gold.
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Section 5. Expenses
Without limiting the generality of Section 5.17 of the Loan Agreement, the
Company shall pay to the Bank, or as the Bank may direct, all expenses incurred
by the Bank, including but not limited to fees and expenses of counsel, in
connection with the preparation, negotiation, execution, registration,
administration and enforcement of this Amendment Agreement.
Section 6. Miscellaneous
(a) All references to the Loan Agreement in the Loan Agreement, the Security
Documents and the other Financing Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the Loan Agreement as
amended by this Amendment Agreement.
(b) Except to the extent each is expressly amended by the terms of this
Amendment Agreement, all terms and conditions of the Loan Agreement, the
Security Documents and the other Financing Agreements and all other instruments
and agreements executed thereunder remain in full force and effect. This
Amendment Agreement may be amended only by an instrument in writing signed by
the Company and the Bank.
(c) This Amendment Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
Section 7. Governing Law
This Amendment Agreement shall be governed by and construed in accordance
with the laws of the State of New York in the United States of America.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to
be executed by their duly authorized representatives on the day and year first
above written.
THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY"
By: /s/ Faroikh S. Hakimi
--------------------------
Name: Faroikh S. Hakimi
--------------------------
Title: General Director/Manager
--------------------------
(By Power of Attorney)
By: /s/ Faroikh S. Hakimi
--------------------------
Name: Faroikh S. Hakimi
--------------------------
Title: Chief Accountant
--------------------------
(By Power of Attorney
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
By: /s/ Gunther Vowinckel
--------------------------
Name: Gunther Vowinckel
--------------------------
Title: Acting Co-Team Leader
--------------------------
Cyprus Amax, Cyprus Magadan and Cyprus Gold hereby (a) acknowledge and consent
to the foregoing Amendment Agreement, (b) conf'irm that the Cyprus Amax
Guaranty, the Cyprus Magadan Guaranty, the Cyprus Support Agreement and the
Cyprus Magadan Share Pledge remain in full force and effect, and (c) agree that
all references to the Loan Agreement in the Cyprus Amax Guaranty, the Cyprus
Magadan Guaranty, the Cyprus Support Agreement and the Cyprus Magadan Share
Pledge shall for all purposes refer to the Loan Agr eement as amended by the
foregoing Amendment Agreement.
CYPRUS AMAX MINERALS COMPANY
By: /s/ Faroikh S. Hakimi
--------------------------
Name: Faroikh S. Hakimi
--------------------------
Title: Director Finance/Assistant
--------------------------
Treasurer
4
<PAGE>
CYPRUS MAGADAN GOLD CORPORATION
By: /s/ Faroikh S. Hakimi
--------------------------
Name: Faroikh S. Hakimi
--------------------------
Title: Assistant Treasurer
--------------------------
CYPRUS GOLD COMPANY
By: /s/ Faroikh S. Hakimi
--------------------------
Name: Faroikh S. Hakimi
--------------------------
Title: Assistant Treasurer
--------------------------
5
<PAGE>
[EXECUTION COPY]
SECOND AMENDMENT AGREEMENT TO LOAN AGREEMENT
THIS AMENDMENT AGREEMENT is made as of the 22nd day of April 1996 between THE
CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY" (the "Company") and
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank").
WHEREAS:
(A) the Company has entered into a loan agreement dated as of 30 June 1995, as
amended by an amendment agreement to loan agreement dated as of 7 November 1995
(such loan agreement as so amended, the "Loan Agreement"), with the Bank,
pursuant to which the Bank has agreed to make a loan to the Company in an amount
not to exceed U$$47,500,000, subject to the terms and conditions of the Loan
Agreement; and
(B) the Bank and the Company have agreed to amend the Loan Agreement, subject
to the terms and conditions of this Amendment Agreement.
NOW, THEREFORE the parties hereto agree as follows:
Section 1. Definitions
Wherever used in this Amendment Agreement, unless the context shall
otherwise require, the terms defined in the Loan Agreement and not separately
defined herein shall have the same meanings when used in this Amendment
Agreement.
Section 2. Amendments to Loan Agreement
(a) Section 8.03 of the Loan Agreement is hereby amended by deleting "Sections
5.31(f), 5.31(g) and 5.31(h)" in the third Line and inserting "Sections
5.19(h), 5.19(i) and 5.19(j)" in place thereof.
(b) Annex 4 to Schedule Q to the Loan Agreement is hereby amended by inserting
", and such balance has been generated by Project revenues" at the end of
paragraph (o).
(c) Annex 4 to Schedule Q to the Loan Agreement is hereby amended by inserting
"other than the Cash Collateral Subaccount" after "all subaccounts thereof" in
the first line of paragraph (s).
1
<PAGE>
Section 3. Representations and Warranties
The Company represents and warrants to the Bank as follows:
(a) it has all requisite power and authority, corporate or otherwise, to
execute, deliver and perform all of its obligations under this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement;
(b) it has taken all necessary action to authorize the execution, delivery and
performance by it of this Amendment Agreement and the Loan Agreement as amended
by this Amendment Agreement;
(c) this Amendment Agreement has been duly executed and delivered by it and this
Amendment Agreement and the Loan Agreement as amended by this Amendment
Agreement constitute its valid and legally binding obligations, enforceable
against it in accordance with their respective terms;
(d) all consents, authorizations and actions of any kind necessary for its valid
execution, delivery and performance of this Amendment Agreement and the Loan
Agreement as amended by this Amendment Agreement have been obtained and are in
full force and effect;
(e) the execution. delivery and performance by it of this Amendment Agreement
and the Loan Agreement as amended by this Amendment Agreement do not require
the consent or approval of any of its creditors (other than OPIC, whose consent
has been obtained) and will not conflict with or constitute a breach or default
under or violate any provision of its Charter or any agreement, law, rule,
regulation, order, writ, judgement, injunction, decree, determination or award
applicable to it; and
(f) each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when the documents, recordings, filings,
notifications and registrations listed in Schedule X of the Loan Agreement have
been executed or made, constitute a valid and completed security interest in,
and a Lien of first priority on, the collateral covered by such Security
Document, securing payment of all principal, interest and other amounts payable
under the Loan Agreement as amended by this Amendment Agreement, which security
interest and Lien ranks senior to all other security interests and Liens on such
collateral other than Permitted Liens.
Section 4. Effectiveness
Section 2 of this Amendment Agreement shall become effective as of the date
hereof subject to the due execution of this Amendment Agreement by Cyprus Amax,
Cyprus Magadan and Cyprus Gold.
Section 5. Expenses
Without limiting the generality of Section 5.17 of the Loan Agreement, the
Company shall pay to the Bank, or as the Bank may direct, all expenses incurred
by
2
<PAGE>
the Bank, including but not limited to fees and expenses of counsel, in
connection with the preparation, negotiation, execution, registration,
administration and enforcement of this Amendment Agreement.
Section 6. Miscellaneous
(a) All references to the Loan Agreement in the Loan Agreement, the Security
Documents and the other Financing Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the Loan Agreement as
amended by this Amendment Agreement.
(b) Except to the extent each is expressly amended by the terms of this
Amendment Agreement, all terms and conditions of the Loan Agreement, the
Security Documents and the other Financing Agreements and all other instruments
and agreements executed thereunder remain in full force and effect. This
Amendment Agreement may be amended only by an instrument in writing signed by
the Company and the Bank.
(c) This Amendment Agreement may be executed in several counterparts, each of
which shah be deemed an original, but all of which together shall constitute one
and the same agreement.
Section 7. Governing Law
This Amendment Agreement shall be governed by and construed in accordance
with the laws of the State of New York in the United States of America.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to
be executed by their duly authorized representatives on the day and year first
above written.
THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY"
By: /s/ Farokh S. Hakimi
--------------------------
by Power of Attorney on
behalf
Name: S. V. Haradiak
--------------------------
Title: General Manager
--------------------------
By: /s/ Farokh S. Hakimi
--------------------------
by Power of Attorney on
behalf
Name: E. S. Ryzhaikina
--------------------------
Title: Chief Accountant
--------------------------
3
<PAGE>
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
By: /s/ [SIGNATURE ILLEGIBLE]
--------------------------
Name: [SIGNATURE ILLEGIBLE]
--------------------------
Title: Deputy Vice President
--------------------------
Cyprus Amax, Cyprus Magadan and Cyprus Gold hereby (a) acknowledge and consent
to the foregoing Amendment Agreement, (b) confirm that the Cyprus Amax Guaranty,
the Cyprus Magadan Guaranty, the Cyprus Support Agreement and the Cyprus Magadan
Share Pledge remain in full force and effect, and (c) agree that all references
to the Loan Agreement in the Cyprus Amax Guaranty, the Cyprus Magadan Guaranty,
the Cyprus Support Agreement and the Cyprus Magadan Share Pledge shall for all
purposes refer to the Loan Agreement as amended by the foregoing Amendment
Agreement.
CYPRUS AMAX MINERALS COMPANY
By: /s/ Farokh S. Hakimi
--------------------------
Name: Farokh S. Hakimi
--------------------------
Title: Assistant Treasurer
--------------------------
CYPRUS MAGADAN GOLD CORPORATION
By: /s/ Farokh S. Hakimi
--------------------------
Name: Farokh S. Hakimi
--------------------------
Title: Assistant Treasurer
--------------------------
CYPRUS GOLD COMPANY
By: /s/ Farokh S. Hakimi
--------------------------
Name: Farokh S. Hakimi
--------------------------
Title: Assistant Treasurer
--------------------------
4
<PAGE>
[EXECUTION COPY]
THIRD AMENDMENT AGREEMENT TO LOAN AGREEMENT
THIS AMENDMENT AGREEMENT is made as of the 20th day of November, 1996 between
THE CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY" (the "Company") and
EUROPEAN. BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank").
WHEREAS:
(A) the Company has entered into a loan agreement dated as of 30 June 1995, as
amended by an amendment agreement to loan agreement dated as of 7 November 1995
and a second amendment agreement to loan agreement dated as of 22 April 1996
(such loan agreement as so amended, the "Loan Agreement"), with the Bank
pursuant to which the Bank has agreed to make a loan to the Company in an amount
not to exceed US$47,500,000 subject to the terms and condition of the Loan
Agreement; and
(B) the Company has requested that the Loan Agreement be amended, inter alia, to
increase the maximum principal amount of the loan under the Loan Agreement to
US$62,500,000 and the Bank has agreed to so amend the Loan Agreement subject
to the terms and conditions of this Amendment Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions
Wherever used in this Amendment Agreement, unless the context shall
otherwise require, the terms defined in the Loan Agreement and not separately
defined herein shall have the same meanings when used in this Amendment
Agreement.
Section 2. Amendments to Loan Agreement
(a) The definition of "Commitment Period" in Section 1.01 of the Loan Agreement
is hereby amended by deleting "$47,500.000" in the 11th line and inserting
"$62,500,000" in place thereof.
(b) The definition of "Letter of Credit" in Section 10.1 of the Loan Agreement
is hereby amended by deleting "paragraph l(b)(1)" in the third line and
inserting "paragraph 1(b)" in place thereof.
(c) The definition of "Margin" in Section 1.01 of the Loan Agreement is hereby
amended by deleting "425% per annum" in the third line and inserting "4.4% per
annum" in place thereof.
<PAGE>
(d) The definition of "Permitted Liens" in Section l.01 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"Permitted Liens" means the Liens set forth in Sections 6.05(1), 6.05(2)
and 6.05(3)."
(e) The definition of "Subordinated Shareholder Loans" in Section 1.01 of the
Loan Agreement is hereby amended in its entirety to read as follows:
""Subordinated
Shareholder Loans" means Debt of the Company owing to or
guaranteed by any Shareholder (or an
Affiliate of any Shareholder) and which is
subordinated to the payment of all amounts
payable under this Agreement and the OPIC
Finance Agreement pursuant to the Cyprus
Support Agreement or the Russian
Shareholders Support Agreement or otherwise
on terms acceptable to the Project Lenders."
(f) Section 2.01(a) of the Loan Agreement is hereby amended by deleting
"$180,000,000" and inserting "$230,000,000" in place thereof.
(g) Section 2.01(b) of the Loan Agreement is hereby amended by replacing the
table therein with the following table:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Source Dollars
<S> <C>
Equity
Association of Native Peoples 5,676,000
Geometal 24,052,039
Magadan Gold 5,676,000
Rossiisky Kredit Commercial Bank 5,160,000
Dukat 2,435,961
Cyprus Magadan 43,000,000
Total Equity 86,000,000
Cyprus Magadan Subordinated Shareholder Loan 14,000,000
Long-term Debt
Tranche 1 Loan 53,750,000
Tranche 2 Loan 8,750,000
OPIC Tranche 1 Loan 58,750,000
OPIC Tranche 2 Loan 8,750,000
Total Long-term Debt 130,000,000
Total Financing 230,000,000
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
(h) The first two sentences of Section 2.02(b) of the Loan Agreement are hereby
amended in their entirety, to read as follows:
"The Company has an authorized capital of Rb, 420,880,000,000 (the
equivalent of $86,000,000) consisting of 80,000 shares with a nominal value
of Rb. 5,261,000 each. The following is a list of the shareholders in the
Company as of 20 November 1996, together with their percentage
shareholdings in the Company:
<TABLE>
<CAPTION>
Shareholder Percentage
<S> <C>
Association of Native Peoples 6.6000000000
Geometal 27.9674871698
Magadan Gold 6.6000000000
Rossiisky Kredit Commercial 6.0000000000
Bank
Dukat 2.8325128302
Cyprus Magaden 50.0000000000
Total 100.0000000000"
</TABLE>
(i) Section 3.01 of the Loan Agreement is hereby amended in its entirety to read
as follows:
"Section 3.01. Amount and Currency.
Subject to the terms and conditions of this Agreement, the Bank agrees
to lend to the Company, and the Company agrees to borrow from the Bank, a
Loan in an amount not to exceed $62,500,000 made up of:
(a) the Tranche 1 Loan in an amount not to exceed $53,750,000: and
(b) the Tranche 2 Loan in the amount of $8,750,000."
(j) The last sentence of Section 3 03(b) of the Loan Agreement is hereby
amended in its entirety to read as follows:
"The Tranche 2 Loan shall be disbursed in two Disbursements in the amounts
of $5,000,000 and $3,750,000. respectively."
(k) The second sentence of Section 3.05(a) of the Loan Agreement is hereby
amended in its entirety to read as follows:
"The commitment charge shall accrue from day to day, (1) in the case of a
portion of the Tranche 1 Loan in the amount of $42,500,000 and a portion of
the Tranche 2 Loan in the amount of $5,000,000, from 30 July 1995, and (2)
in the case of the remainder of the Loan, from 18 December 1996."
(l) Section 306(a) of the Loan Agreement is hereby amended in its entirety to
read as follows:
<PAGE>
"(a) The Company shall repay the Loan to the Bank as follows:
(1) The Tranche 1 Loan shall be repaid in nine equal (or as nearly
equal as possible) semi-annual installments on 15 December 1997, 15
June 1998, 15 December 1998, 15 June 1999. 15 December 1999, 15 June
2000, 15 December 2000, 15 June 2001 and 15 December 2001.
(2) The Tranche 2 loan shall be repaid in full in a single installment
in the amount of $8,750,000 on 15 December 2001."
(m) Section 307(b)(A) of the Loan Agreement is hereby amended by deleting
"$9,000,000" in the third line and inserting "$11,250,000" in place thereof.
(n) Section 4.02(j) of the Loan Agreement is hereby amended in its entirety to
read as follows:
"(j) Cost Overruns. The Bank shall be satisfied. on the basis of the opinion
of the Independent Engineer, that the Project Costs including, without
limitation financing costs) necessary to achieve physical completion of the
Project will not exceed the total amount thereof set forth m Section 2.01(a)
or, if the Bank is not so satisfied as a result of delay in completion or
otherwise. the Bank shall have received satisfactory evidence that the
Shareholders have contributed not less than the full amount of such excess
in paid-in capital or Subordinated Shareholder Loans to the Company and that
the Company has expended 100% of such paid-in capital and Subordinated
Shareholder Loans on the Project."
(o) Section 4.02(k) of the Loan Agreement is hereby amended by deleting "in the
amount of $5,000,000" in the second and third lines.
(p) Section 5.13(1) of the Loan Agreement is hereby amended by deleting
"$13.500.000" in the first line and inserting "$16,500,000" in place thereof and
by deleting "$100,000,000" in the third line and inserting "$130,000,000" in
place thereof.
(q) Section 5.13(2) of the Loan Agreement is hereby amended by deleting
"$5,000,000" in the third line and inserting "$8,750,000" in place thereof.
(r) Section 5.18 of the Loan Agreement is hereby amended by deleting "90" in the
first line and inserting "45" in place thereof.
(s) Section 604(a) of the Loan Agreement is hereby amended by inserting "and" at
the end of Section 604(a)(3), deleting Section 604(a)(5) and amending Section
604(a)(4) in its entirety to read as follows:
"(4) Short-term Debt in an aggregate amount not to exceed $20,000,000
(or the equivalent thereof in other currencies at then current rates of
exchange) or, if less, 100% of the Company's short-term assets."
4
<PAGE>
(t) Section 6.05 of the Loan Agreement is hereby amended by deleting sub-
paragraph (2) and renumbering existing sub-paragraphs (3) and (4) as sub-
paragraphs (2) and (3), respectively.
(u) Section 7.01(i) of the Loan Agreement is hereby amended by deleting "24" in
the third line and inserting "27" in place thereof anti by deleting "18" in the
eighth line and inserting "24" in place thereof.
(v) Section 7.01(q) of the Loan Agreement is hereby amended in its entirety to
read as follows:
"(q) Cost Overrun Default. The Bank shall have determined that the Project
Costs (including without limitation. financing costs) necessary. to achieve
physical completion of the Project will, as a result of delays in
completion or otherwise. exceed the total amount thereof set forth in
Section 2.01(a) and the Shareholders shall have failed, within 60 days of
such determination, to make cash contributions of paid-in capital or
Subordinated Shareholder Loans to the Company in the full amount of such
excess. "
(w) Paragraph 2.10 of Schedule G to the Loan Agreement is hereby amended by
inserting the following sentence after the first sentence of Such paragraph:
"Such technical environmental person shall until at least 30 June 1997,
be a qualified expatriate environmental specialist."
(x) Paragraph 1(b) of Schedule Q to the Loan Agreement is hereby amended in its
entirety to read as follows:
"(b) Letter of Credit. The Project Lenders shall have received a duly
executed original of the Letter of Credit. if any, used in calculating the
minimum balance of the Cash Collateral Subaccount in accordance with
Section 5.13"
(y) Paragraph l(d) of Schedule Q to the Loan Agreement is hereby amended by
inserting the following new sub-paragraph (I) and renumbering existing
sub-paragraphs (1), (2) and (3) as sub-paragraphs (2), (3) and (4),
respectively:
"(1) paid, from Project revenues, $25,000,000 in the aggregate to the Bank
and OPIC by way of repayments or prepayments of principal of the Tranche 1
Loan and the OPIC Tranche 1 Loan:"
(z) Schedule Q to the Loan Agreement is hereby amended by inserting the
following new paragraph 1(j):
"(j) Successor to Roskomdragmet. The Project Lenders shall have received
satisfactory evidence that the Ministry of Finance of the Russian
Federation or another entity acceptable to the Project Lenders has
succeeded to the obligations of Roskomdragmet under the Roskomdragmet
Agreement and that the Roskomdragmet Agreement is valid and legally binding
on such entity and enforceable against such entity in accordance with its
terms."
5
<PAGE>
(aa) Annex 4 of Schedule Q to the Loan Agreement is hereby amended by deleting
paragraph (s) and renumbering existing paragraph (t) as paragraph (s).
Section 3. Representations and Warranties
The Company represents and warrants to the Bank as follows:
(a) The Company has all requisite power and authority, corporate or otherwise.
to execute, deliver and perform all of its obligations under this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement.
(b) The Company has taken all necessary action to authorize the execution.
deliver, and performance by it of this Amendment Agreement and the Loan
Agreement as amended by this Amendment Agreement.
(c) This Amendment Agreement has been duly executed and delivered by the 1
Company and this Amendment Agreement and the Loan Agreement as amended by this
Amendment Agreement constitute its valid and legally binding obligations,
enforceable against it in accordance with their respective terms.
(d) All consents, authorisations and actions of any kind necessary. for the
valid execution. delivery and performance by the Company of this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement have
been obtained and are in full force and effect.
(e) The execution, delivery and performance by the Company of this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement do not
require the consent or approval of any of its creditors (other than OPIC, whose
consent has been obtained) and will not conflict with or constitute a breach or
default under or violate any provision of its Charter or any agreement, law,
rule, regulation, order, with judgement, injunction, decree, determination or
award applicable to it.
(f) Each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when the Amendments to Financing Agreements (as
defined below) have been executed and delivered, constitute a valid and
completed security interest in, and a Lien of first priority on, the collateral
covered by such Security Document securing payment of all principal merest and
other amounts payable under the Loan Agreement as amended by this Amendment
Agreement, which security merest and Lien will rank senior to all other security
interests and Liens on such collateral other than Permitted Liens.
(g) As of the date of this Amendment Agreement, the Directors of the Company are
I.S. Rosenblum, S W. Harapiak L.D. Clark. VP. Karchavets, F.S. Hakim. L.E
Yefanova and S.S. Shellhaas, the General Manager of the Company is S.W.
Harapiak. the Vice-General Manager of the Company is Valery. (Glazarov, the
Financial Manager of the Company is K. Smith and the Chief Accountant of the
Company is Elena Ryzhaikina.
(h) The revised Development Plan delivered to the Bank pursuant to Section 4(c)
of this Amendment Agreement will not contain any untrue statement of a material
fact or
6
<PAGE>
omit to state any material fact necessary to make the statements and
information contained therma not misleading in light of the circumstances under
which such statements are made or such information is furnished, provided that,
to the extent that any such statement or information is based upon estimates,
forecasts or professional opinions, such estimates, forecasts or opinions
(except as otherwise warranted herein or therein) will be made in good faith
and based upon the best available information, but otherwise the Company does
not warrant that such estimates forecasts or opinions will ultimately prove to
be correct.
Section 4. Conditions Precedent
Section 2 of this Amendment Agreement shall not become effective unless
and until the following conditions precedent shall have been satisfied in form
and substance satisfactory to the Bank:
(a) The Bank shall have received certified copies of amendments to the OPIC
Finance Agreement and the OPIC Funding Documents (the "OPIC Amendments"), each
in form and substance satisfactory, to the Bank, pursuant to which the OPIC
Finance Agreement and the OPIC Funding Documents shall have been amended, inter
alia, to increase the maximum principal amount of the loan under the OPIC
Finance Agreement to S67,500,000, and the OPIC Amendments shall have become
unconditional and fully effective in accordance with their respective terms
(except for this Amendment Agreement having become unconditional and fully
effective, if that is a condition of any such amendment).
(b) The Bank shall have received duly executed originals of the following
amendments to the Financing Agreements (the "Amendments to Financing
Agreements"), each in form and substance satisfactory, to the Bank and the
Amendments to Financing Agreements shall have become unconditional and fully
effective in accordance with their respective terms (except for this Amendment
Agreement having become unconditional and fully effective, if that is a
condition of any such document):
(1) an amendment to the Cyprus Support Agreement;
(2) an amendment to the Security Sharing Agreement; and
(3) an amendment to each Security Document;
together with any other documents, recordings, filings, notifications and
registrations which are required thereunder for the continued validity,
perfection or priority of the Security and the Liens of the Project Lenders
under the Security Documents (other than the Immovables Mortgage and the
Enterprise Mortgage) as amended thereby and to ensure that each Security
Document (other than the Immovables Mortgage and the Enterprise Mortgage)
constitutes a valid and completed security interest in, and a Lien of first
priority on, the collateral covered by such Security Document, securing payment
of all principal, interest and other amounts payable under the Loan Agreement as
amended hereby, the OPIC Finance Agreement as amended by the OPIC Amendments and
the other Financing Agreements as amended by the Amendments to Financing
Agreements
7
<PAGE>
and that such security interest and Lien ranks senior to all other security
interests and Liens on such collateral.
(c) The Bank shall have received the revised Development Plan, in form and
substance satisfactory to the Bank.
(d) The Bank shall have received a front-end commission in respect of this
Amendment Agreement in an amount as separately agreed between the Company and
the Bank in a letter agreement entered into on or prior to the date hereof.
(e) The Bank shall have received satisfactory evidence that:
(1) the Russian Shareholders have contributed, in a manner satisfactory to
the Bank, at least $3,000,000 (or the equivalent thereof in other
currencies at men current rates of exchange) as additional paid-m capital
to the Company and Cyprus Magadan has contributed, in a manner satisfactory
to the Bank, at least $14,000,000 (or the equivalent thereof in other
currencies at then current rates (of exchange) as Subordinated Shareholder
Loans to the Company and the Company has expended substantially all of such
additional paid-in capital and Subordinated Shareholder Loans on Project
Costs; and
(2) Cyprus Magadan has committed to contribute, in a manner satisfactory to
the Bank, at least $3,000,000 (or the equivalent thereof in other
currencies at then current rates of exchange) as additional paid-in capital
either in cash or in kind to me Company not later than (A) the date on
which the Company and Cyprus Magadan deliver the Final Completion
Certificate referred to in Schedule Q to the Loan Agreement or (B) 15 April
1997, whichever occurs first.
(f) The Bank shall have received, in form and substance satisfactory to the
Bank, certified copies of all governmental, corporate, creditors', shareholders'
and other necessary licenses, approvals, consents, filings and registrations
for the due execution, delivery. and performance by the Company, the
Shareholders, Cyprus Gold and Cyprus Amax of this Amendment Agreement, the Loan
Agreement as amended by this Amendment Agreement, the OPIC Amendments, the OPIC
Finance Agreement and OPIC Funding Documents as amended by the OPIC Amendments,
the Amendments to Financing Agreements, the Financing Agreements as amended by
the Amendments to Financing Agreements and the other documents contemplated
hereby.
(g) The Bank shall have received satisfactory evidence of the authorisation of
the persons signing this Amendment Agreement, the OPIC Amendments, the
Amendments to Financing Agreements and the other documents contemplated hereby
on behalf of the Company, the Shareholders, Cyprus Gold and Cyprus Amax to sign
such documents and to bind the Company, the Shareholders, Cyprus Gold and Cyprus
Amax thereto.
(h) The Bank shall have received the first amendment to the Amended and Restated
Charter of the Company, in form and substance satisfactory to the Bank.
(i) The Bank shall have received favorable legal opinions of special Russian and
English counsel to the Project Lenders and of special Russian, English and New
York
8
<PAGE>
counsel to the Company regarding the matters set forth in Sections 3, 4(a),
4(b), 4(f), 4(g) and 4(h) of this Amendment Agreement.
(j) The Bank shall have received such other documents aria opinions as the Bank
may reasonably request.
Section 5. Condition Subsequent
The Company shall procure that the first amendment to the Amended and
Restated Charter of the Company, in form and substance satisfactory to the Bank.
shall have been rendered with the State Registration Chamber by no later than
(1) the date on which the Company and Cyprus Magadan deliver the Final
Completion Certificate referred to in Schedule Q to the Loan Agreement or (2) 15
May 1997, whichever occurs first.
Section 6. Expenses
Without limiting the generality of Section 5.17 of the Loan Agreement, the
Company shall pay to the Bank, or as the Bank may direct, all expenses incurred
by the Bank. including but not limited to fees and expenses of counsel in
connection with the preparation, negotiation, execution, registration,
administration and enforcement of this Amendment Agreement, the OPIC Amendments,
the Amendments to Financing Agreements and the other documents contemplated
hereby.
Section 7. Miscellaneous
(a) All references to the Loan Agreement in the Loan Agreement, the Security
Documents and the other Financial Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the Loan Agreement as
amended by this Amendment Agreement. All references to the OPIC Finance
Agreement and OPIC Funding Documents in the Loan Agreement the Security
Documents and the other Financing Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the OPIC Finance Agreement
and the OPIC Funding Documents as amended by the OPIC Amendments. All references
to the other Financing Agreements in the Loan Agreement the Security Documents
and the other Financing Agreements and all instruments and agreements executed
thereunder shall for all purposes refer to such Financing Agreements as amended
by the Amendments to Financing Agreements.
(b) All references to the Financing Agreements in the Loan Agreement, the
Security Documents and the other Financing Agreements and all instruments and
agreements executed thereunder shall include this Amendment Agreement.
(c) Except to the extent each is expressly amended by the terms of this
Amendment Agreement all terms and conditions of the Loan Agreement, the Security
Documents and the other Financing Agreements and all other instruments and
agreements executed thereunder remain in full force and effect. This Amendment
Agreement may be amended only by an instrument in writing signed by the Company
and the Bank.
9
<PAGE>
(d) This Amendment Agreement cement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
Section 8. Governing Law
This Amendment Agreement shall be governed by and construed in accordance
with the laws of the State of New York in the United States of America.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement, to
be executed by their duly authorized representatives as of the day and year
first above written.
THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY"
By: /s/ I. S. Rosenblum
-----------------------
Name: I. S. Rosenblum
-----------------------
Title: Chairman of the Board
-----------------------
By: /s/ S. W. Harapiak
-----------------------
[SEAL APPEARS HERE] Name: S. W. Harapiak
-----------------------
Title: General Manager
-----------------------
By: /s/ E. Ryzhaikina
-----------------------
Name: E. Ryzhaikina
-----------------------
Title: Secretary and Chief
-----------------------
Accountant
-----------------------
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
By: /s/ Gunther Vowinckel
-----------------------
Name: Gunther Vowinckel
-----------------------
Title: Acting Co-Team Leader
-----------------------
10
<PAGE>
Cyprus Amax, Cyprus Magadan and Cyprus Gold hereby:
(a) acknowledge and consent to the foregoing Amendment Agreement, including
without limitation the increase in the maximum principal amount of the Loan and
the amendments to the definition of Project Completion in ScheduLe Q of the Loan
Agreement, as provided therein;
(b) confirm that the Cyprus Amax Guaranty, the Cyprus Magadan Guaranty, the
Cyprus Support Agreement and the Cyprus Magadan Share Pledge remain in full
force and effect;
(c) agree that all references to the Loan Agreement in the Cyprus Amax Guaranty,
the Cyprus Magadan Guaranty, the Cyprus Support Agreement and the Cyprus
Magadan Share Pledge shall for all purposes refer to the Loan Agreement as
amended by the foregoing Amendment Agreement;
(d) agree that all references to the OPIC Finance Agreement in the Cyprus Amax
Guaranty, the Cyprus Magadan Guaranty, the Cyprus Support Agreement and the
Cyprus Magadan Share Pledge shall for all purposes refer to the OPIC Finance
Agreement as amended by the 0PIC Amendments; and
(e) agree that in respect of the additional $30,000,000 to be advanced to the
Company in accordance with this Amendment Agreement and the second amendment
agreement to the OPIC Finance Agreement, no failure of the State Registration
Chamber to register the first amendment to the Amended and Restated Charter of
the Company or of the Ministry of Finance to register or reregister the issuance
of shares by the Company shall constitute a Political Event under the Cyprus
Magadan Guaranty; provided that this paragraph (e) shall not affect the rights
of Cyprus Magadan under Section 4.01(3) of the Cyprus Magadan Guaranty in
respect of any other event.
CYPRUS AMAX MINERALS COMPANY
By: /s/ Faroikh S. Hakimi
-----------------------
Name: Faroikh S. Hakimi
-----------------------
Title: Assistant Treasurer
-----------------------
CYPRUS MAGADAN GOLD CORPORATION
By: /s/ Faroikh S. Hakimi
-----------------------
Name: Faroikh S. Hakimi
-----------------------
Title: Assistant Treasurer
-----------------------
11
<PAGE>
CYPRUS GOLD COMPANY
By: /s/ Faroikh S. Hakimi
-----------------------
Name: Faroikh S. Hakimi
-----------------------
Title: Assistant Treasurer
-----------------------
12
<PAGE>
Exhibit 10.6
LOAN AGREEMENT
between
OMOLON GOLD MINING COMPANY
Borrower
and
ABN AMRO BANK (MOSCOW) LTD.
Lender
US$14,000,000 Subordinated Debt
Dated as of November 29, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. DEFINITIONS....................................................1
SECTION 2. THE LOAN.......................................................4
SECTION 2.1 Agreement to Lend.............................................4
SECTION 2.2 Purposes of the Loan..........................................4
SECTION 2.3 Procedures for Borrowing......................................4
SECTION 2.4 Interest......................................................5
SECTION 2.5 Default Interest..............................................5
SECTION 2.6 Repayment of the Loan.........................................6
SECTION 2.7 Pre Payment of the Loan.......................................6
SECTION 2.8 Payments......................................................6
SECTION 2.9 Loan Account..................................................7
SECTION 2.10 Bank Accounts................................................7
SECTION 2.11 Subordinated Nature of the Loan..............................7
SECTION 3. FEES AND EXPENSES..............................................7
SECTION 3.1 Administration Fee............................................7
SECTION 3.2 Expenses......................................................7
SECTION 3.3 Amendment and Enforcement Costs...............................8
SECTION 3.4 Withholding and other Taxes...................................8
SECTION 4. REPRESENTATIONS AND WARRANTIES.................................8
SECTION 4.1 Representations as to the Borrower............................8
SECTION 4.2 Representations as to the Loan................................9
SECTION 5. COVENANTS.....................................................10
SECTION 5.1 Senior Credit Agreements.....................................10
SECTION 5.2 Promissory Notes.............................................10
SECTION 5.3 Conduct of Operations........................................11
SECTION 5.4 Performance and Notice.......................................11
SECTION 5.5 Government Approvals.........................................11
SECTION 5.6 Insurance....................................................11
SECTION 5.7 Maintenance of Corporate Records.............................12
SECTION 5.8 Negative Pledge..............................................12
SECTION 5.9 Subordination of the Loan....................................12
SECTION 5.10 Dividend Payments...........................................12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 6. CONDITIONS PRECEDENT..........................................12
SECTION 6.1 Conditions of the First Disbursement.........................12
SECTION 6.2 Conditions to Any Disbursement...............................12
SECTION 7. SUBORDINATED DEBT EVENTS OF DEFAULT...........................13
SECTION 7.1 Subordinated Debt Events of Default..........................13
SECTION 7.2 Consequences of Default......................................14
SECTION 8. LOAN ADMINISTRATION...........................................14
SECTION 8.1 Entire Agreement: Amendments................................14
SECTION 8.2 Cumulative Rights; Waivers..................................14
SECTION 8.3 Assignment...................................................14
SECTION 8.4 Indemnification..............................................15
SECTION 8.5 Governing Law................................................16
SECTION 8.6 Arbitration..................................................16
SECTION 8.7 Waiver of Sovereign Immunity.................................16
SECTION 9. MISCELLANEOUS.................................................17
SECTION 9.1 Notices......................................................17
SECTION 9.2 Severability.................................................17
SECTION 9.3 Specified Currency...........................................18
SECTION 9.1 Language.....................................................18
SECTION 9.5 Counterparts.................................................18
</TABLE>
<PAGE>
THIS LOAN AGREEMENT dated as of November 29, 1996 by and between
OMOLON GOLD MINING COMPANY, a closed joint stock company organized and existing
under the laws of the Russian Federation ("Borrower"), and ABN AMRO BANK
(MOSCOW) LTD., a bank organized, licensed and existing under the laws of the
Russian Federation ("Lender"), sets forth the binding agreement of the parties.
SECTION 1. DEFINITIONS
Except as defined as below, terms defined in the EBRD Loan Agreement
between Borrower and the EBRD as of June 30, 1995 (as amended November __, 1996
and as further amended from time to time) (the "EBRD Loan Agreement") shall have
the same meanings in this Agreement and the following terms shall have the
meanings set forth below:
"Availability Period" shall mean the period commencing on the date of this
Agreement and terminating on the earliest of (a) the first Repayment Date, (b)
the Project Completion Date and (c) the date the obligations of Lender to make
Disbursements under this Agreement terminate earlier in accordance with the
terms of this Agreement.
"Banking Day" shall mean a day on which banks are open for commercial
business in Moscow, New York City, and London.
"Borrower" shall mean the entity designated above as Borrower.
"Borrower's Account" shall mean the Disbursement Subaccount defined in
Section 5.11 of the EBRD Loan Agreement.
"Capitalized Interest" shall mean any amount of unpaid interest under the
Loan which would otherwise be due on an Interest Payment Date, which amount
shall be added to the principal amount of the Loan then outstanding pursuant to
Section 2.4 hereof.
"Cyprus Amax Minerals Company" shall mean the corporation organized and
existing under the laws of the State of Delaware in the United States of
America.
"Default Rate" shall mean the Interest Rate plus 2% per annum.
"Disbursement" shall mean any amount of the Loan which is disbursed from
time to time pursuant to Section 2.3 hereof.
"Disbursement Request" shall mean the request letter signed by Borrower
substantially in the form provided in Exhibit A hereof.
"Dollars" and the sign "$" shall mean dollars in the lawful money of the
United States of America.
<PAGE>
"EBRD" shall mean the European Bank of Reconstruction and Development.
"Government Approvals" shall mean any approvals or authorization of, or
filings or registrations with, any governmental agency or authority.
"Guarantee" shall mean that certain Guarantee and Indemnity Agreement dated
November __, 1996 by Cyprus Amax Minerals Company, a Delaware Corporation, in
favor of ABN Amro Bank N.V. and its Amsterdam and Chicago offices and
Hollandische Bank--Unie N.V.
"Guarantor" shall mean Cyprus Amax Minerals Company.
"Increased Costs" shall mean the amount of any net incremental costs to the
Lender of making or maintaining the Loan, evidence of which shall be provided to
the Borrower in writing, which result from any change in applicable law or
regulations or in the interpretation thereof by any governmental or regulatory
authority charged with the administration thereof and/or any compliance with any
request form, or requirement of, any central bank or other monetary or other
authority which, in either case, shall: (i) impose, modify or deem applicable
any reserve, special deposit, or similar requirements against assets held by, or
deposits with or for the account of, or loans, by the Lender; (ii) impose a cost
on the Lender as a result of its having made the Loan or reduce the rate of
return on the overall capital of the Lender which it would have been able to
achieve if it had not made the Loan; (iii) change the basis of taxation on
payments received by the Lender in respect of the Loan otherwise than by a
change in taxation of the overall net income of the Lender; or (iv) impose on
the Lender any other condition regarding the making or maintenance of the
Loan.
"Indebtedness" shall mean with respect to Borrower, or any other obligor
or obligors referred to in the context in which the term is used, all
indebtedness (including guaranties and other contingent obligations) with
respect to borrowed money or for the deferred purchase price of property or
services, and all rent obligations under any lease which, in accordance with
generally accepted accounting principles in the United States of America, should
be capitalized on the balance sheet of Borrower or such obligor(s), as the case
may be.
"Interbank Rate" shall mean, for each relevant Interest Period, the rate
per annum determined by the Lender to be the offered rate (if any) appearing on
page 3750 of the Telerate screen which displays British Bankers Association
Interest Settlement Rates for deposits in Dollars for the duration of such
Interest Period or any equivalent successor to such page at or about 11:00 a.m.
London time on the day falling two London Banking Days before the beginning of
such period; provided, however, that if no such offered rate appears on the
Telerate screen then the rate per annum determined by the Lender to be equal to
the arithmetic mean (rounded upwards, if not already such a multiple, to the
nearest whole multiple of one-eighth of one percent) of the rates at which it
was offering to prime banks in the London Interbank Market deposits in Dollars
and for the duration of such Interest Period at or about 11:00 a.m. London time
on the day falling two London Banking Days before the beginning of such
period.
<PAGE>
"Interest Determination Date" shall mean, for any Interest Period, the date
two Banking Days prior to the first day of such Interest Period.
"Interest Payment Date" shall mean any day which is a 15 June or 15
December in any year during which principal amounts under the Loan remain
outstanding; provided, however, that, if any Interest Payment Date would fall on
a day which is not a Banking Day, such Interest Payment Date shall be changed to
the next succeeding Banking Day.
"Interest Period" shall mean each period of six months from and including
an Interest Payment Date to but excluding the next following Interest Payment
Date.
"Interest Rate" shall mean the sum of 6.075% per annum and the Interbank
Rate for the respective Interest Period.
"Junior Indebtedness" means all present and future liabilities of Borrower
other than the Senior Debt.
""Law" shall mean any constitution or treaty, any law, ordinance, decree,
rule, directive or regulation, any judicial or arbitral decision, or any
voluntary restraint, policy or guideline not having the force of law, or any of
the provisions thereof binding on or affecting the party referred to in the
context in which the term is used.
"Lender" shall mean ABN AMRO BANK (MOSCOW) LTD., a bank organized and
existing under the laws of the Russian Federation.
"Lien" shall mean any lien, attachment, set-off, charge, mortgage, pledge,
encumbrance or other security interest, or any segregation of assets or revenues
or other preferential arrangement (whether or not constituting a security
interest and whether or not enforceable in law), with respect to any present or
future assets, revenues, or rights to the receipt of income of the party
referred to in the context in which the term is used.
"Loan" shall mean the sum of (i) the term loan made pursuant to this
Agreement, in the aggregate principal amount of $14,000,000 to be advanced by
Lender to Borrower and which is drawable in multiple disbursements as set forth
in Section 2 and (ii) any Capitalized Interest.
"Note" shall have the meaning set forth in Section 5.2 hereof.
"Notice" shall mean notice delivered by a party to this Agreement to the
other party hereto in the manner provided in Section 9.1 hereof.
"OPIC" shall mean the Overseas Private Investment Corporation.
<PAGE>
"OPIC Finance Agreement" shall mean the finance agreement dated as of June
30, 1995, as amended November __, 1996 and as further amended from time to time,
between Borrower and OPIC.
"Repayment Date" shall mean, with respect to the Loan, a date on which any
payment of principal under the Loan is due, as set forth in Section 2.6 hereof.
"Revenue Subaccount" shall mean the Revenue Subaccount defined in Section
5.12 of the EBRD Loan Agreement.
"Senior Debt" shall mean any and all of Borrower's obligations to make
payments of principal, interest, fees, charges, commissions, indemnities and
other amounts to the Senior Lenders under the Senior Credit Agreements."
"Senior Credit Agreements" shall mean the EBRD Loan Agreement and the OPIC
Finance Agreement and any and all documents executed by the Borrower in
connection with either the EBRD Loan Agreement or the OPIC Finance Agreement.
"Senior Lenders" shall mean the EBRD and OPIC and their respective
successors and assigns.
"Subordinated Debt Event of Default" shall mean a default under this
Agreement as provided in Section 7.1 hereof.
"Subordination Agreement" shall mean the Subordination Agreement dated as
of the date hereof among Borrower, Lender, the EBRD, and OPIC.
"Withholding Tax" shall have the meaning set forth in Section 3.3 hereof.
SECTION 2. THE LOAN
SECTION 2.1 Agreement to Lend
-----------------
Subject to the terms and conditions of this Agreement, Lender hereby agrees
to make a term loan to the Borrower in a total principal amount not to exceed
the sum of $14,000,000, which shall be disbursed to Borrower during the
Availability Period in accordance with the procedures set forth in Section 2.3
hereof, plus any Capitalized Interest (the "Loan").
The Loan shall not be of a revolving nature. Any portion of the Loan that
is repaid, whether prepaid or otherwise, shall not be readvanced to the
Borrower.
<PAGE>
SECTION 2.2 Purposes of the Loan
--------------------
Borrower agrees that the Loan will be used solely to provide additional
funds to cover cost overruns related to the Project.
SECTION 2.3 Procedures for Borrowing
------------------------
(a) Subject to the conditions set forth in this Section 2.3, in order to
request a Disbursement under this Agreement, Borrower shall submit to Lender a
Disbursement Request substantially in the form attached hereto as Exhibit A on
any Banking Day during the Availability Period specifying in accordance with the
terms of this Agreement (i) the principal amount and (ii) the proposed date of
Disbursement.
(b) Each Disbursement Request must be received by Lender at least 3 banking
Days prior to the proposed date of Disbursement. A Disbursement Request shall
be effective upon receipt of such request by Lender and shall be irrevocable by
Borrower as of that date unless otherwise agreed upon by Borrower and Lender.
(c) Borrower may only submit Disbursement Requests, and Lender will only
accept Disbursement Requests and make Disbursements, during the Availability
Period. Borrower may request Disbursements, each in the minimum amount of
$1,000,000 and each being an multiple of $250,000.
(d) Upon receipt of the Disbursement Request by Lender, subject to the
satisfaction of the conditions precedent set forth in Section 6 hereof and the
requirements set forth in this Section 2.3, Lender shall make available to
Borrower the requested amount as provided in the Disbursement Request to
Borrower's Account on the date proposed by Borrower in the Disbursement Request,
provided that if the proposed Disbursement date is not a Banking Day or does not
fall at least 15 Banking Days after receipt of the Disbursement Request by
Lender, Lender shall pay the Disbursement on the next Banking Day following the
proposed Disbursement date that is at least 15 Banking Days after the date of
receipt by Lender of the Disbursement Request.
SECTION 2.4 Interest
--------
(a) Subject to the subordination provisions of the Subordination Agreement
and the terms and conditions set forth in the Senior Credit Agreements
(including Section 6.01 thereof), Borrower shall pay interest on the outstanding
principal amount of the Loan from time to time outstanding at the Interest Rate
for the relevant Interest Period. Interest shall accrue from day to day, be
prorated on the basis of a 360-day year for the actual number of days in the
relevant Interest Period and be due and payable on each Interest Payment Date.
Any unpaid interest due and payable on an Interest Payment Date shall
automatically be converted to Capitalized Interest, such Capitalized Interest to
be repaid in accordance with the terms of Section 2.6 hereof.
<PAGE>
(b) On each Interest Determination Date, Lender shall, in accordance with
this Section, determine the Interest Rate applicable for the relevant Interest
Period and give prompt notice thereof to Borrower. Each determination by Lender
of the Interest Rate shall be final and conclusive and shall be binding upon
Borrower unless shown by Borrower to the satisfaction of Lender that any such
determination has involved manifest error.
(c) On each Interest Payment Date, Borrower shall pay, in addition to
interest on the Loan, such amount, if any, which Lender may notify to Borrower
as being the aggregate of the Increased Costs accrued and unpaid prior to such
Interest Payment Date.
SECTION 2.5 Default Interest
----------------
If Borrower shall fail to make payment when due of any amounts owed
hereunder in respect of the Loan (whether at its stated maturity, or by
acceleration or otherwise), Borrower shall pay to Lender, to the extent
permitted by applicable Law, interest on such past due amounts from an including
such due date until payment in full thereof (after as well as before judgment)
at a rate equal to the Default Rate. For the avoidance of doubt, the deferral
of payments and principal and interest pursuant to Section 2.6 or 2.7 hereof due
to a lack of cash flow available for distribution and service of subordinated
debt shall not constitute a default of payment requiring payment of interest at
the Default Rate.
SECTION 2.6 Repayment of the Loan
---------------------
Subject to the subordination provisions of the Subordination Agreement, the
terms and conditions set forth in the Senior Credit Agreements (including
Section 6.01 thereof) and Section 2.7 of this Agreement, Borrower shall repay
each Disbursement and Capitalized Interest from Borrower's Revenue Subaccount in
nine equal (or as nearly equal as possible) semi-annual installments beginning
on the later of 15 December 1997 or the Project Completion Date with subsequent
installments being due and payable thereafter on each successive 15 June and 15
December.
In the event all or any portion of Borrower's payment on a Repayment Date
would contravene the terms of the Subordination Agreement or any other provision
of the Senior Credit Agreements (including Section 6.01 thereof), then such
portion shall be aggregated and carried forward to the next Repayment Date and
interest on such total amount of principal outstanding shall be calculated in
accordance with Section 2.4.
Borrower shall pay to Lender, and shall indemnify and hold Lender harmless
from, all costs and expenses incurred by Lender as a result of any payment
deferred in accordance with this Section 2.6.
<PAGE>
SECTION 2.7 Pre-Payment of the Loan
-----------------------
Notwithstanding the repayment provisions set forth in Section 2.6, in the
event that there is at any time any amount in Borrower's Revenue Subaccount
after payments are made in respect of categories (1) through (8) as provided in
Section 5.12(d) of the EBRD Loan Agreement such that Borrower would otherwise be
entitled to make Shareholder Distributions to the extent permitted by Section
6.01 of the EBRD Loan Agreement, such amount shall immediately be used to pay
any outstanding principal and interest and, to the extent possible, to prepay
the Loan. In the case of partial prepayment of the Loan, such prepayment shall
be applied first against fees, costs, expenses and indemnities due hereunder;
then against default interest, if any, then due; then against interest then due
on the outstanding amount of the Disbursements; and then against the outstanding
principal balance of the Disbursements then due; and then towards the prepayment
of the outstanding principal in the inverse order of maturity.
SECTION 2.8 Payments
--------
(a) All sums payable to Lender or Borrower hereunder shall be paid without
set-off or counterclaim in the same day funds on the payment day at such account
as may be designated in writing by Lender or Borrower from time to time.
(b) All payments by the Borrower hereunder shall be applied first against
fees, costs, expenses and indemnities due hereunder; then against default
interest, if any, then due; then against interest then due on the outstanding
account of the Disbursements; and then against the outstanding principal balance
of the Disbursements then due; and then towards the prepayment of the
outstanding principal in the inverse order of maturity.
SECTION 2.9 Loan Account
------------
Lender shall open and maintain on its books a loan account in Borrower's
name showing prepayments and repayment of the Loan and the computation and
payments of interest and other amounts cue and sums paid hereunder. In the
absence of manifest error, such loan account shall be conclusive and binding on
the parties hereto.
SECTION 2.10 Bank Accounts
-------------
Borrower shall establish and maintain such bank accounts as are
contemplated under the terms of the Senior Credit Agreements and in accordance
with the terms of the licenses granted by the Central Bank of Russia. All
Disbursements shall be made to such accounts and all repayment of principal and
interest due hereunder shall be made in accordance with the terms of the Senior
Credit Agreements and the licenses granted by the Central Bank of Russia.
<PAGE>
SECTION 2.11 Subordinated Nature of the Loan
-------------------------------
Notwithstanding anything in this Agreement to the contrary, in accordance
with, and in the manner provided by, the terms of the Subordination Agreement,
the Loan made pursuant to this Agreement and all other amounts payable hereunder
shall be subordinate to the Senior Debt in both right of payment and in the
event of liquidation (or similar proceeding) of Borrower. The parties hereby
confirm that obligations under this Agreement constitute Junior Indebtedness (as
such term is defined in the Subordination Agreement). As provided in the
Subordination Agreement, Borrower may make payments to Lender on account of the
Junior Indebtedness contemplated hereunder only so long as no Event of Default
or Potential Event of Default (as those terms are defined in the Senior Credit
Agreements) has occurred and is continuing and such payment is otherwise
permitted under the terms of the Senior Credit Agreements (including Section
6.01 thereof).
SECTION 3. FEES AND EXPENSES
SECTION 3.1 Administration Fee
------------------
Borrower shall pay a one time administration fee of US $10,000, such fee to
be deducted directly from the first Disbursement.
SECTION 3.2 Expenses
--------
Borrower shall reimburse Lender on demand for all expenses, including
without limitation fees and expenses of counsel, fees and expenses of other
professional advisors, and all other out-of-pocket costs incurred by Lender in
connection with the administration of this Agreement or the Notes, the
enforcement of this Agreement or the Notes, or the collection of amounts due
hereunder or thereunder, from and after the occurrence of a Subordinated Debt
Event of Default, whether or not the Lender gives Notice of such Subordinated
Debt Event of Default, demands acceleration of the Loan or takes any other
action available to it under this Agreement or applicable Law to enforce this
Agreement or the Notes.
SECTION 3.4 Withholding and other Taxes
---------------------------
Borrower shall pay all amounts due hereunder (including, without
limitation, VAT) to Lender free and clear of any deductions or withholding or
other taxes or governmental charges imposed in connection with the making of any
Loan hereunder ("Withholding Tax"). If any
<PAGE>
such taxes or charges are imposed on any payments made by Borrower (including
payments pursuant to this paragraph), Borrower shall pay such taxes or charges
and will also pay to Lender any additional amount which Lender specifies as
necessary to preserve the after-tax yield that Lender would have received if
such taxes or charges had not been imposed. Borrower shall confirm that it has
paid such taxes or charges by providing to Lender official tax receipts (or
notarized copies) within 30 days after the due date therefor. Borrower shall
hold Lender harmless from any liability with respect to the delay or the failure
by Borrower to pay any such taxes or charges. In the event of any change in law
which would subject Lender to Withholding Tax on interest payments made to
Lender's foreign funding entities, Borrower shall pay Lender any additional
amount which Lender specifies as necessary to preserve the after-tax yield such
foreign funding entity would have received if such Withholding Tax had not been
imposed: provided, however, that Borrower shall not be liable for any
Withholding Tax for which such foreign funding entity, with reasonable
diligence, could have obtained an advance exemption under an applicable
convention with the Russian Federation for the Avoidance of Double Taxation.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
SECTION 4.1 Representations as to the Borrower
----------------------------------
(a) Borrower is a closed joint stock company duly organized and validly
existing under the laws of the Russian Federation and registered with all
relevant registration bodies in the Russian Federation and has full power to
carry out the Project and any business for which it intends to use the money
loaned to it pursuant to this Agreement.
(b) Borrower is not in violation of any material statute, law, regulation,
judgment, rule, order or decree presently in effect which is applicable to
Borrower or its assets. To the best of Borrower's knowledge after due inquiry,
no statute, law, rule, regulation or decree has been proposed and no judgment on
order is expected which may have a materially adverse effect on Borrower.
Borrower is not engaged in nor, to the best of its knowledge, threatened by, any
litigation, arbitration, or administrative proceeding, the outcome of which may
reasonably be expected to have a materially adverse effect on Borrower.
(c) Borrower has the corporate power to enter into and perform this
Agreement. This Agreement has been duly executed by Borrower and this Agreement
constitutes, and the Notes (when executed and delivered) will constitute, valid
and legally binding obligations of Borrower, enforceable in accordance with
their respective terms. The making of this Agreement and compliance with the
terms thereof (1) will not result in violation of Borrower's charter or any
provision contained in any statute, law, rule, regulation, judgment, decree or
order applicable to Borrower or its assets and (2) will not conflict with or
result in the breach of any provision of, or require any consent under, or
result in the imposition of any Lien under any agreement or instrument to which
Borrower is a party or by which Borrower or any of its assets is bound.
<PAGE>
The officers of Borrower who have executed and delivered this Agreement and
the Notes are duly and validly authorized to do so and have bound Borrower by
such actions.
(d) Borrower is not in default in the performance of any obligation,
covenant or condition under any agreement, contract or undertaking to which it
is a party or by which it or any of its assets or property are bound. No
Subordinated Debt Event of Default, or event which, with the passing of time or
the giving of Notice, or both, would constitute a Subordinated Debt Event of
Default, has occurred and is continuing.
(e) As of the date of the Agreement, no governmental licenses, approvals,
consents, filings or registrations are required for the due execution, delivery
or performance by Borrower of the Agreement or the validity or enforceability
thereof, except for the authorization of the Central Bank of Russian for the
incurrence and repayment of the indebtedness incurred under this Agreement.
(f) Borrower has filed or caused to be filed all federal, regional and
local tax returns that it is required to file by applicable Laws, and has paid
or caused to be paid all taxes as shown on such returns, and any assessment
imposed on it, to the extent that such taxes or assessments have become due,
other than taxes or assessments the validity of which is being contested by
Borrower in good faith and with due diligence by appropriate proceedings and as
to which Borrower has set up reserves which are believed by Borrower to be
adequate for the payment of additional taxes or assessments for years which have
not been audited by tax or other government authorities.
(g) Borrower has good title to all its properties and assets, free and
clear of all Liens, except for Permitted Liens.
SECTION 4.2 Representations as to the Loan
------------------------------
Borrower's obligations under Section 3.3 hereof notwithstanding,
Borrower hereby represents and warrants that, in accordance with the Law "On
Amendments and Additions to the Value Added Tax Law" dated March 20, 1996, as
implemented by Presidential Decree No. 25-FZ dated April 1, 1996, the Loan is
not subject to VAT.
SECTION 5. COVENANTS
In addition to its other undertakings in the Agreement, Borrower hereby
covenants to Lender that, during the term hereof, Borrower shall perform and act
as follows:
SECTION 5.1 Senior Credit Agreements
------------------------
For so long as the Indebtedness under the Senior Credit Agreements is
outstanding, Borrower shall comply with all of the covenants provided in the
Senior Credit Agreements.
SECTION 5.2 Promissory Notes
----------------
On or before the date of any Disbursement by Lender to Borrower hereunder,
or on such date as any interest becomes Capitalized Interest, Borrower agrees to
execute and deliver to Lender a promissory note (each a "Note" and collectively
the "Notes") substantially in the form of Exhibit B hereto evidencing Lender's
Disbursements, Borrower's borrowings and other repayment obligations under this
Agreement.
SECTION 5.3 Conduct of Operations
---------------------
Borrower shall conduct its operations in accordance with the terms of this
Agreement and the Senior Credit Agreements and in accordance with all Laws
applicable to Borrower.
SECTION 5.4 Performance and Notice
----------------------
Borrower shall promptly give Notice to Lender of (i) the commencement of
any litigation, arbitration or other proceeding involving a substantial claim
against Borrower; (ii) any change in taxes, levies, duties, or other fees
imposed by any government agency or authority or any significant change in any
Law applicable to any aspect of the transactions contemplated by this Agreement
and the Notes; (iii) the occurrence of any Subordinated Debt Event of Default
hereunder or Event of Default under the Senior Credit Agreements or any event
which, with the giving of notice or the passing of time, or both, would
constitute a Subordinated Debt Event of Default hereunder or an Event of Default
under the Senior Credit Agreements; (iv) any circumstances which could
materially adversely affect the operations, business, property or condition,
financial or otherwise, of Borrower or the performance by Borrower of its
obligations under this Agreement, the Notes and the Senior Credit Agreements;
and (v) any changes in the ownership, control or nature of the business of
Borrower.
Section 5.5 Government Approvals
--------------------
Borrower, at its own expense, shall obtain and ensure the continued
effectiveness of all Governmental Approvals which may be necessary or desirable
during the term hereof to effect the execution and delivery of this Agreement,
the Notes and the Senior Credit Agreements, and the performance by Borrower of
its obligations hereunder and thereunder, and shall promptly deliver to Lender
true and correct copies thereof.
SECTION 5.6 Insurance
---------
Borrower shall at all times maintain insurance with financially sound and
reputable insurers against all risks normally insured against and in amounts
normally considered prudent by companies carrying on a similar business or
another business in a similar location. Borrower shall, upon request by Lender,
furnish to Lender true and complete copies of all such insurance policies or
contracts, together with evidence of the payment of premiums required thereby.
<PAGE>
SECTION 5.7 Maintenance of Corporate Records
--------------------------------
Borrower shall keep proper corporate and financial records and books of
account and shall, at the request of Lender, promptly provide Lender with true
and correct copies thereof, and shall discuss with Lender its affairs, finances
and accounts.
SECTION 5.8 Negative Pledge
---------------
Except as consented to in advance by Lender, Borrower shall not create,
assume or suffer to exist any lien, except Permitted Liens. Borrower shall
ensure that at all times its obligations hereunder constitute unconditional
general obligations of Borrower ranking at least pari passu in priority of
---- -----
payment with all other Junior Indebtedness of Borrower for so long as such
indebtedness is outstanding.
SECTION 5.9 Subordination of the Loan
-------------------------
In accordance with the terms of the Subordination Agreement, Borrower shall
mark in its books and records, so as to clearly indicate that, for as long as
the Senior Debt is outstanding, the Loan made pursuant to this Agreement is
subordinated to the Senior Debt in accordance with the terms of the
Subordination Agreement.
SECTION 5.10 Dividend Payments
-----------------
So long as any of the Loan remains outstanding, no dividends shall be paid
by the Borrower to its shareholders.
SECTION 5. CONDITIONS PRECEDENT
The obligation of Lender to make the first Disbursement to Borrower under
this Agreement is subject to the fulfillment of the following conditions
precedent;
(a) Resolution of Borrower. Borrower shall have executed and delivered to
----------------------
lender an original copy of a resolution of the Borrower's Board or Directors
confirming that Borrower is authorized to enter into this Agreement and incur
the obligations related hereto under (i) all applicable laws of the Russian
Federation; (ii) any agreement to which Borrower is a party or by which any of
its assets or property are bound; and (iii) its charter.
(b) Delivery of Agreement. Lender shall have received a signed copy of
---------------------
this Agreement, duly executed by an authorized representative of Borrower.
(c) Delivery of the Guarantee. Lender shall have received a signed copy of
-------------------------
the Guarantee, duly executed by an authorized representative of the Guarantor.
<PAGE>
(d) Establishment of Accounts. All accounts necessary for the
-------------------------
Administration of the Loan shall have been established with ABN Amro Bank
(Moscow) Ltd.
SECTION 6.2 Conditions to Any Disbursement
------------------------------
The obligations of Lender to make cash Disbursement under this Agreement
shall also be subject to the fulfillment of the following conditions precedent:
(a) Disbursement Application. Lender shall have received from Borrower a
------------------------
timely Disbursement Request as set forth in Section 2.3.
(b) Note. Lender shall have received an undated Note evidencing such
----
Disbursement duly executed by Borrower.
SECTION 7. SUBORDINATED DEBT EVENTS OF DEFAULT
SECTION 7.1 Subordinated Debt Events of Default
-----------------------------------
Each of the following events and occurrences shall constitute a
Subordinated Debt Event of Default under this Agreement and any Note:
(a) Payment Default. Taking into consideration any permitted deferral of
---------------
principal or interest, Borrower shall fail for any reason whatsoever to make
payment of any amount due under this Agreement or the Note on the date on which
such amount is due an payable whether by the terms hereof or thereof or by
acceleration. Acceptance by Lender of partial payment shall not constitute a
waiver by Lender of Borrower's obligation to make payment in full of amounts due
under this Agreement and the Note.
(b) Representation Default. Any representation or warranty made by
----------------------
Borrower in this Agreement shall prove to have been incorrect, untrue or
misleading in any material respect when made.
(c) Breach of Covenant. Borrower shall breach or fail to fulfill its
------------------
obligations set forth in Section 5.7 or 5.9 hereof. Borrower shall breach or
fail to fulfill any of its obligations set forth in Section 5 hereof (other than
Section 5.7 or 5.9) and, if such breach or failure is remediable, shall fail to
remedy such breach or failure to the satisfaction of Lender within 30 days after
the occurrence of such breach or failure.
(d) Bankruptcy. Borrower shall permit the occurrence of any act of
----------
bankruptcy by or against Borrower.
(e) Cross-Default. Borrower shall default under any other agreement
-------------
involving any Indebtedness of Borrower (including, but not limited to, the
Senior Debt), if the effect of such
<PAGE>
default is to accelerate, or to permit the holder of such Indebtedness to
accelerate, the due date of such Indebtedness.
SECTION 7.2 Consequences of Default
-----------------------
(a) If a Subordinated Debt Event of Default shall occur and be continuing,
Lender may, subject to the terms of the Subordination Agreement and the terms
and conditions of the Senior Credit Agreements (including Section 6.01), by
Notice to Borrower, (i) terminate its undertaking to make Disbursements
hereunder; (ii) declare the entire amount of the Loan, together with accrued
interest and other sums payable thereon, to be immediately due and payable;
(iii) apply all amounts on deposit with or otherwise in the possession of Lender
in payment or prepayment of all amounts payable hereunder and under the Notes;
or (iv) take one or more of the preceding actions.
(b) In the event that the Loan shall become due and payable by acceleration
as provided above, the Loan, together with accrued interest and other sums
payable thereon, shall, upon the giving of such Notice by Lender but subject to
the terms of the Subordination Agreement and the terms and conditions of the
Senior Credit Agreements (including Section 6.01 thereof), become immediately
due and payable without presentment, demand, protest or notice of any kind other
than the Notice specifically required by this Section, all other notice being
expressly waived by Borrower. If a Subordinated Debt Event of Default shall
occur, it may be waived by Notice form Lender; however, any such waiver shall be
subject to the Lender's rights under Section 8.2.
(c) Borrower shall pay to Lender, and shall indemnify and hold Lender
harmless from, all costs and expenses incurred by Lender as a result of any
permitted accelerated payments in accordance with this Section 7.2.
SECTION 8. LOAN ADMINISTRATION
SECTION 8.1 Entire Agreement: Amendments
-----------------------------
This agreement, together with the Notices, certificates, opinions, and
other documents delivered in accordance with the provisions hereof, constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes any prior expressions of intent or understanding with respect to
this transaction. This Agreement may be amended only by an instrument in
writing executed by the parties hereto.
SECTION 8.2 Cumulative Rights: Waivers
---------------------------
The failure or delay of Lender to require performance by Borrower of its
Obligations hereunder or to enforce Lender's rights under any provisions of the
Agreement or the Notes shall not affect Lender's right to require performance
and to enforce its rights with respect to such provision unless and until such
performance or right has been expressly waived
<PAGE>
in writing by Lender. Any waive of a Subordinated Debt Event of Default shall be
effective only in accordance with its terms and may be restricted or conditioned
n any way. No waiver of any Subordinated Debt Event of Default shall constitute
a waiver of continuance or recurrence of such Subordinated Debt Event of Default
or of any other Subordinated Debt Event of Default, except as provided in such
waiver. The rights granted to Lender hereunder, under the Notes or under any
other document or instrument delivered hereunder or thereunder and any rights
available to it at law or in equity shall be cumulative and may be exercised in
part or in whole from time to time.
SECTION 8.3 Assignment
----------
(a) This Agreement and the Notes shall be binding upon and shall be
enforceable by Borrower and Lender and their respective successors and assigns,
except that Borrower shall have no right to assign or transfer its rights or
obligation hereunder or under the Notes without the prior written consent of
Lender. Subject to the terms of the Subordination Agreement, Lender may grant
participations in the Loans and may sell, assign or transfer part or all of its
rights hereunder and under the Note. Borrower shall, from time to time at the
request of Lender, execute and deliver to Lender or Lender's assignee or
participant such documents as Lender may reasonably request to give full force
and effect to such sale, assignment, transfer or participation. Such assignee or
participant shall be entitled, to the extent of its interest, to the benefits
and rights granted to Lender under this Agreement and under the Notes; provided
that no assignee or participant shall be entitled to indemnification for higher
amounts or other costs than those which were subject to indemnity to Lender at
the date of assignment or participation; and also provided that such assignee or
participant consent to the subordination provisions of the Subordination
Agreement. Such assignee or participant shall, however, be entitled, subject to
Section 2.11, to full indemnification by reason of changes which cause costs to
be incurred or increased subsequent to the date or such assignment or
participation irrespective of whether such changes affect or would have affected
Lender.
(b) Pursuant to the terms of the Subordination Agreement, Lender has
created a pledge of rights in favor of the Senior Lenders over (1) all of
Lender's right, title, benefit and interest (present and future) in and to
Borrower's indebtedness hereunder, (2) all monies whatsoever payable to or to
the account of Lender in respect of Borrower's indebtedness hereunder, and (3)
all other rights and benefits whatsoever accruing to Lender in connection with
Borrower's indebtedness hereunder. Borrower acknowledges the existence of such
pledge, the value of which on the date of this Agreement is $14,000,000.
SECTION 8.4 Indemnification
---------------
Borrower agrees to indemnify and hold harmless Lender from and against any
and all losses, claims, damages and liabilities caused or resulting from any
breach of the representations and warranties or covenants contained herein.
<PAGE>
SECTION 8.5 Governing Law
-------------
This agreement shall be governed by and construed and interpreted in
accordance with the laws of the Russian Federation.
SECTION 8.6 Arbitration
-----------
Any dispute, controversy or claim arising out of or related to this
Agreement or any Note or the breach, termination or validity hereof or thereof
shall be submitted for final settlement by arbitration to the International
Commercial Arbitration Court under the auspices of the Chamber of Commerce and
Industry of the Russian Federation. By its execution of this agreement,
Borrower hereby irrevocably submits to the exclusive jurisdiction of the
arbitral tribunal appointed in accordance with the procedures set forth herein.
Arbitration shall be governed by the Rules of the International Commercial
Arbitration Court under the auspices of the Chamber of Commerce and Industry of
the Russian Federation in effect at the time of such arbitration. The seat of
arbitration will be Moscow, Russian Federation. The arbitration proceedings,
documentary evidence and pleadings shall all be presented in Russian.
The arbitral tribunal shall consist of three arbitrators. One arbitrator
shall be appointed by Lender and One by Borrower. The third arbitrator shall be
appointed by the other tow arbitrators. If either party fails to appoint its
arbitrator within a period of 15 days after the other party has appointed its
arbitrator, or if the two arbitrators cannot agree on the third arbitrator with
a period of 20 days after the appointment of the second arbitrator, then the
arbitrator of the failing party and/or the third arbitrator shall be appointed
by the president of the Chamber of Commerce and Industry of the Russian
Federation at the request of the interested party.
All decisions of the tribunal shall be final and binding on the parties and
may be entered against them in a court of competent jurisdiction. The tribunal
shall determine the costs or arbitration in its award, and such costs shall be
allocated between the parties as determined by the tribunal.
SECTION 8.7 Waiver of Sovereign Immunity
----------------------------
Borrower represents and warrants that this Agreement is a commercial rather
than a public or governmental act and that Borrower is not entitled to claim
immunity from legal proceedings with respect to itself or any of its assets on
the grounds of sovereignty or otherwise under law or in any jurisdiction where
an action may be brought for the enforcement of any of the obligations arising
under or related to this Agreement. To the extent that Borrower or any of its
assets has or hereafter may acquire any right to immunity from set-off, legal
proceedings, attachment prior to judgment, other attachment or execution of
judgment on the grounds of sovereignty or otherwise. Borrower hereby irrevocably
waives such rights to immunity in respect of its obligations arising under or
relating to this Agreement.
<PAGE>
SECTION 9. MISCELLANEOUS
SECTION 9.1 Notices
-------
(a) Except as provided in Section 2.3, any Notice required or permitted to
be given hereunder shall be in writing and shall be either personally delivered,
sent to postage prepaid mail (airmail if international), or transmitted by telex
or facsimile transmitter to the parties as follows, as elected by the party
giving such Notice:
To Borrower:
Omolon Gold Mining Company
Proletariat Street, 14
68500 Magadan
Russian Federation
Telex: 145122
Answerback: NEGA SU
Fax: 907-887-3000
Attention: Steven W. Harapiak
To Lender:
ABN Amro Bank (Moscow) Ltd.
Bolshaya Nikitskaya 17, Building 1
103009 Moscow
Russian Federation
Fax: 931-9140
Attention: Paulus J. Elberse
With a copy to:
Cyprus Amax Minerals Company
9100 East Mineral Circle
P.O. Box 3299
Englewood, Colorado 80112-3299
Fax: 303-643-5181
Attention: President
<PAGE>
(b) All Notices and other communications shall be effective on (I) the
date of receipt if delivered personally; (ii) the date of receipt if sent by
mail or facsimile transmitter; or (iii) the date of transmission with confirmed
answerback if transmitted by telex, whichever shall first occur. Any party may
change its address for purposes hereof by Notice to the other party.
SECTION 9.2 Severability
------------
In case any provision of this Agreement or in any other document relating
to the Loans shall be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not in any way affect or impair any other
provision of this Agreement or of any such other document.
SECTION 9.3 Specified Currency
------------------
The requirement for the payment in Dollars is of the essence, and the
denominated currencies of the Loan shall be the respective currencies of
account, of advance and of payment in all events. The obligation of Borrower to
repay shall not be discharged by an amount paid in another currency, whether
pursuant to a judgment or otherwise, except to the extent that payment in the
currency in which such payment is due is actually received. In the event that
any such payment does not satisfy the obligations in such specified currency of
Borrower hereunder, Borrower shall indemnify Lender for the deficiency relating
to the Loan.
SECTION 9.4 Language
--------
All documents to be furnished or communications to be given or made under
this Agreement shall be in the English language or, if in another language,
shall be accompanied by a translation into English certified by a representative
of Borrower.
SECTION 9.5 Counterparts
------------
The Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized signatories on the
date first written above.
BORROWER OMOLON GOLD MINING COMPANY
/s/ Stephen Harapiak
------------------------------
Name: Harapiak, Stephen
Title: General Director
/s/ Elena Ryzhaikira
------------------------------
Name: Ryzhaikira, Elena
Title: Chief Accountant
LENDER ABN AMRO BANK (MOSCOW) LTD.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
<PAGE>
GUARANTEE AND INDEMNITY
AGREEMENT
Guarantee and indemnity, dated as of November 26, 1996, by Cyprus Amax
Minerals Company, a Delaware corporation (the "Guarantor"), in favor of ABN AMRO
Bank N.V. and its Amsterdam and Chicago offices (collectively, the "Bank").
Section 1. Guarantee.
For value received, and to induce the Bank to make loans or otherwise
extend credit from time to time to or for the account of Omolon Gold Mining
Company (the "Borrower") pursuant to the Loan Agreement concurrently being
entered into between the Borrower and ABN AMRO Bank (Moscow) Ltd. ("ABN AMRO
Moscow") (the "Omolon Facility"), the Guarantor, as its own primary and
independent obligation hereby unconditionally and irrevocably guarantees to the
Bank, its successors, endorsees and assigns, the prompt payment when and as due
of 100% (the "Guaranteed Percentage") of all present and future obligations and
liabilities of the Borrower to ABN AMRO Moscow under the Omolon Facility (the
"Obligations"). Terms defined in the Omolon Facility and used herein without
definition have the same meaning herein as in the Omolon Facility. If any of
the Obligations are not paid when and as due (whether by demand, lapse of time,
acceleration or otherwise), the Bank may, either by notice to the Guarantor of
such non-payment or its certification that the Bank is legally precluded from
providing such notice, cause the liability of the Guarantor under this Section 1
to become fixed and determined as to such unpaid Obligations on the date of
sending such notice or making such certification, as the case may be, at the
Guaranteed Percentage (namely, 100% for the Guarantor) of the amount of such
unpaid Obligations, subject to increase for interest thereafter accruing on such
Obligations and for the existence or future incurrence of additional
Obligations. The liability of the Guarantor under this Section 1 in connection
with such unpaid Obligations shall not after such time be reduced by any
payments on the Note or on any other Obligations from any source except the
Guarantor, whether such payment is received from the Borrower, any other
guarantors or otherwise, unless and until all Obligations then due and owing
have been paid in full. The Guarantor agrees it will pay to the Bank the
Guaranteed Percentage of such unpaid Obligations whether or not any other person
or entity shall then or thereafter pay any amount of the Obligations unless and
until all Obligations then due and owing have been paid in full. This Section 1
is intended to permit the Bank to receive from the Guarantor payment of the
Guaranteed Percentage of any Obligations unless and until all Obligations are
paid in full but is not intended to permit the Bank to receive payment from the
Guarantor of any amount previously due and owing on any Obligation that has been
paid when and as due by any other person (and which payment if received by the
Bank within the Russian Federation is freely transferable by the Bank outside
the Russian Federation) or to receive freely transferable payment from any
person of more than the amount due and owing on any Obligations. The Bank may
make repeated and successive demands for recoveries on unpaid Obligations under
this Section 1, subject to the foregoing, notwithstanding any recovery from any
other source in payment of any Obligations, and this Guarantee shall remain in
full force and effect and shall apply to each and every subsequent default in
payment of the Obligations. The Bank may allocate payments received from any
source other than the Guarantor to the Obligations in any order it desires.
Without limiting the foregoing, the Guarantor acknowledges and agrees that the
Bank's extensions of credit under the Omolon Facility shall, as between the
Guarantor and the Bank, in
<PAGE>
all events be deemed to mature and be fully payable on the date three hundred
and sixty days from the date hereof (the "Termination Date") and upon such date
the Guarantor, as its own primary and independent obligation, unconditionally
and irrevocably agrees to pay all such amounts to the Bank in full
notwithstanding that such Obligations are not otherwise due and payable or
permitted to be paid by the Borrower under the Omolon Facility, provided,
however, that if the Bank, in its sole and absolute discretion, decides to
extend such Termination Date, the Guarantor's payment obligation, as provided in
this sentence, shall likewise be extended to the new Termination Date as
notified by the Bank to the Guarantor. In addition, the term "Obligations"
guaranteed hereby and payable by the Guarantor hereunder, shall also include
(whether or not expressly provided for under the Omolon Facility) any loss
(including any reemployment loss), cost, expense or liability that ABN AMRO
Moscow or the Bank may incur or be exposed to arising out of:
a. any failure by the Borrower to take down any portion of the Omolon
Facility after giving notice of a drawdown,
b. any prepayment made by the Borrower on other than the last day of
any Interest Period,
c. the failure by the Borrower to make any interest or principal
payment expressed to be due on the last day of each Interest Period even if
such failure is caused by any provisions of the Omolon Facility permitting
or requiring that such principal or interest payment be deferred,
capitalized or otherwise not due and payable at the end of any Interest
Period; and
d. the occurrence of any Subordinated Debt Event of Default.
The term "Obligations" guaranteed hereby and payable by the Guarantor shall also
include (whether or not expressly provided for under the Omolon Facility) any
increased reserve cost, special deposit requirement, supplemental capital
requirement or the imposition of any tax or other condition, which increases the
cost to ABN AMRO Moscow or the Bank of making or agreeing to make the extensions
of credit under the Omolon Facility or which would reduce the amount received or
receivable by ABN AMRO Moscow or the Bank thereunder, which amounts shall be
payable by the Guarantor hereunder as its own primary and independent
obligation.
Section 2. Guarantee Fee.
In consideration for the Guarantor's consenting to guarantee and pay the
Obligations and provide its indemnity hereunder, the Bank shall pay to the
Guarantor at the time of each Interest Payment Date under the Omolon Facility a
fee equal to the Guaranteed Percentage of 5.4% per annum applied to the average
daily outstanding principal balance of Loans during the period ending on such
date, subject to the Bank's receipt in full and free transferability of all
amounts owed to it on such date under the Omolon Facility and the amounts due
hereunder.
Section 3. Indemnity.
In addition to the foregoing guarantee, the Guarantor as its own primary
and independent obligation agrees as follows:
-2-
<PAGE>
3.1 In order to enable ABN AMRO Moscow to grant the Omolon Facility,
Hollandsche Bank-Unie N.V. ("HBU") will make one or more interbank facilities
available to the Abn Amro Moscow for the purpose of funding the Omolon Facility
(such interbank facilities from HBU to Abn Amro Moscow to be referred to as the
"AA Funding Facility") and Abn Amro Bank N.V. Chicago Branch ("Abn Amro
Chicago") will issue its guarantee in favor of Abn Amro Moscow and HBU for the
purpose of allocating credit risk to Abn Amro Chicago (such interbank guarantee
from Abn Amro Chicago to Abn Amro Moscow and to HBU to be referred to as the "AA
Guarantee Facility"). The AA Funding Facility and the AA Guarantee Facility
shall be referred to together as the "AA Facility" and the agreements evidencing
the AA Funding Facility and the AA Guarantee Facility shall be referred to
together as the "AA Facility Agreements". In order to induce HBU and Abn Amro
Chicago to enter into the AA Facility Agreements, the Guarantor hereby agrees to
provide the below described indemnities to the Bank indemnifying against any and
all costs, liabilities and losses which may be incurred under the AA Facility
Agreements or as a result of any AA Facility Repayment Restriction, any new
Money Credit, any Restructuring, any ineffectiveness of the Operative Documents
(as hereinafter defined) or any recharacterization risks, (as defined below).
(a) AA Facility Repayment Restriction means:
Any Act of State or any Political Risk Event affecting either party
to the AA Facility in relation to the AA Facility, or its obligations
under the AA Facility or the performance or enforceability thereof.
(b) Act of State means any of the following affecting any party to the
Omolon Facility in relation to the AA Facility or the AA Facility:
Any law, rule or regulation of the Russian Federation, or any
political subdivision thereof, or any order, decree, decision, award,
directive, instruction, or other measure, or action of the Russian
Federation or any political subdivision thereof, or of any Governmental
Authority, or the interpretation of any of the foregoing, and any demand,
request, application or other action filed with any Governmental
Authority, or any other court or authority of competent jurisdiction,
which purports or seeks to, or has the effect of:
- terminating, extending, increasing or otherwise modifying the
Omolon Facility or the AA Facility or any provision thereof;
- prohibiting, reducing, delaying, or suspending, or modifying the
agreed manner or currency of, any payment to be made under or
pursuant to the Omolon Facility or the AA Facility, or otherwise
affecting the performance or enforceability of the Omolon
Facility or the AA Facility by or against any party thereto;
- expropriating, confiscating or seizing (control over), or
changing or adversely affecting the ownership, control, operation
or management of the Borrower or ABN AMRO Moscow, of all or a
substantial part of its business or assets, with or without
compensation.
The foregoing notwithstanding, no Act of State shall be deemed to
have occurred if the performance or enforceability of the Omolon Facility
or the AA Facility is affected as a
-3-
<PAGE>
result of the Bank's or ABN AMRO Moscow's knowing and material violation of
any law or regulation generally applicable to banking institutions in the
Russian Federation.
(c) Governmental Authority means:
Any court, ministry, or other central or local governmental or
regulatory authority, department, commission, bureau or agency of the
Russian Federation or any political sub-division thereof, including, but
not limited to, the Central Bank of the Russian Federation.
(d) New Money Credit means:
Any loan or granting of credit by the Bank to or on the credit of (i)
the Russian Federation, (ii) any Governmental Authority, (iii) any person
which is citizen of, or is organized or exists under the laws of the
Russian Federation or the majority of the ownership interest of which is
owned, directly or indirectly by the Russian Federation or any Governmental
Authority or (iv) any person which conducts business in the Russian
Federation ((i) through (iv) jointly the "Russian Federation Persons"),
which loan or extension of credit is made in a foreign currency pursuant to
an agreement or agreements entered into at the request of the Russian
Federation or any Governmental Authority following negotiations and
consultations between the Russian Federation or any Governmental Authority
and the Bank and other holders of foreign currency indebtedness of Russian
Federation Persons, but only to the extent that the amount of such loan or
granting of credit is determined by reference to the Bank's commitment,
advances under the Omolon Facility or prior New Money Credits.
(e) Political Risk Event means:
Any type of war, invasion, embargo, rebellion, revolution, riot or
sabotage and any politically motivated work stoppage or slowdown, labor
unrest or violence in the Russian Federation or any political sub-division
thereof which affects the performance or enforceability of the Omolon
Facility or the AA Facility by or against any party thereto.
(f) Restructuring means:
(i) Any postponement of a date or reduction of an amount of any
payment to be made by the Borrower under the Omolon Facility;
(ii) any termination or modification of the AA Facility Agreement or
this Guarantee and Indemnity, or any other security arrangement
with respect to the Omolon Facility; and
(iii) any changes in the currency or manner in which the obligations
of the Borrower under the Omolon Facility are payable,
which postponement, reduction, change, termination or modification is made
pursuant to an agreement or agreements entered into at the request of the
Russian Federation or a Governmental Authority following negotiations and
consultations between the Russian Federation or a Governmental Authority
and the Bank or the holders of foreign currency indebtedness of natural
persons or juridical entities resident in, formed under, or otherwise
-4-
<PAGE>
subject to the laws of the Russian Federation in connection with a
restructuring or re-negotiation of foreign currency indebtedness of such
persons or entities, or pursuant to any Russian Federation law, rule, order
or regulation adopted after the date of either the AA Facility or Omolon
Facility.
3.3. The Guarantor hereby irrevocably and unconditionally, as its own
primary and independent obligation, indemnifies ABN AMRO Chicago and holds it
harmless with respect to all payments at any time made or to be made by ABN AMRO
Chicago pursuant to a payment request made by ABN AMRO Moscow under the AA
Guarantee Facility, and all legal and other costs, charges and expenses of
whatever nature incurred by ABN AMRO Chicago in connection with its performance
thereunder and to pay to ABN AMRO Chicago, without set-off or counterclaim,
within forty-eight hours of receipt of the first written request, all amounts
stated by ABN AMRO Chicago to be due and owing by the Guarantor to ABN AMRO
Chicago hereunder, including interest and other costs.
3.4. The Guarantor hereby irrevocably and unconditionally, as its own
primary and independent obligation, agrees, within forty-eight hours of receipt
of the Bank's first written notice (the "Notice") that an AA Facility Repayment
Restriction has occurred, to pay to ABN AMRO Chicago or to HBU all amounts (the
"Amount") which, as stated in the Notice, have or will at any time thereafter
become due and owing by ABN AMRO Moscow to HBU under the AA Funding Facility
Agreement. If an AA Facility Repayment Restriction has occurred, the Amount
will become due and owing from that date. The Amount will not include any
amount paid by the Borrower to ABN AMRO Moscow under the Omolon Facility
Agreement which prior to the occurrence of such AA Facility Repayment
Restriction ABN AMRO Moscow has failed to apply to pay its corresponding
liability to HBU under the AA Funding Facility Agreement. The Guarantor shall
forthwith notify the Borrower of any notice received by the Guarantor under this
Section 3.4. The obligations of the Guarantor under this Agreement will be
enforceable whether or not any payment by the Borrower is due and payable under
the Omolon Facility Agreement at the time when the Notice is received by the
Guarantor in accordance with this Section 3.4.
3.5. The Guarantor hereby irrevocably and unconditionally, as its own
primary and independent obligation, agree, within forty-eight hours of receipt
of the Bank's first written notice to indemnify the Bank for all amounts which,
in accordance with the statement of the Bank have been paid by the Bank or ABN
AMRO Moscow in order to extend the New Money Credit in its own name. The
Guarantor shall have the option to purchase, if legally permissible, by way of
assignment from the Bank such New Money Credit or a 100% participating interest
therein, without recourse except as to title and amount at a price equal to the
amount of the New Money Credit extended by the Bank. In the event the Guarantor
has so indemnified the Bank, the Bank agrees to assign or transfer to the
Guarantor any claim it may have against the Russian Federation Persons under the
New Money Credit without recourse except as to title and amount. The Bank shall
give the Guarantor notice of any New Money Credit request and the Guarantor
shall have the option prior to any extension of New Money Credit to pay in full
all Obligations of the Borrower as provided in Section 1 as if a Termination
Date had occurred thereunder.
3.6. The Guarantor hereby irrevocably and unconditionally, as its own
primary and independent obligation agrees, upon written notice from the Bank
that if a Restructuring has occurred, the Guarantor will pay on the due date
therefor, as in effect immediately before such Restructuring, the amount which,
but for the Restructuring would be payable or which would have been payable by
the Borrower to ABN AMRO Moscow under the OMOLON Facility Agreement.
-5-
<PAGE>
The Bank will apply the net amount actually received by it pursuant to this
Section 3.6 in reducing the amount payable by ABN AMRO Moscow to HBU under the
AA Funding Facility Agreement.
3.7. The Guarantor acknowledges and agrees as its own primary and
independent obligation for the benefit of the Bank, that:
(a) the Bank is not making any representation with respect to the
legality, validity, enforceability or effect of any of the provisions of
the Omolon Facility Agreement, the AA Facility Agreements, or this
Agreement (together the "Operative Documents"), or any of them, or any of
the transactions contemplated thereby except that the Bank is a licensed
lender in the Russian Federation and is legally permitted to extend the
Omolon Facility and to obtain funding in a manner consistent with the AA
Facility;
(b) the Bank will not have any liability with respect to any failure
or inability of the Borrower or the Guarantor to realize any tax or other
benefit anticipated by either of them from the Operative Documents, or any
of them, or any of the transactions contemplated thereby; and
(c) the Guarantor hereby irrevocably and unconditionally, as its
primary and independent obligation hereby indemnifies and holds the Bank,
including HBU, harmless from, and promptly upon their request indemnifies
each of them for, any loss, damage, cost or expense that either of them may
incur as a result of (i) the illegality, invalidity, unenforceability or
ineffectiveness of any of the provisions of the Operative Documents, or any
of the transactions contemplated thereby, or (ii) the characterization of
the Omolon Facility Agreement as anything other than a loan facility from a
local Russian Federation commercial banking institution to a local Russian
Federation borrower, by any Governmental Authority.
Section 4.
The Guarantor agrees to pay on demand interest on each amount demanded of
it under this Agreement from the date of demand until actual payment (whether
before or after judgment) at a rate per annum equal to the rate from time to
time quoted by the Bank as its prime rate for U.S. dollar loans plus one
percent.
Section 5. Absolute Guarantee.
The Guarantor's obligations hereunder shall be primary and independent and
not be affected by the genuineness, validity, regularity or enforceability of
the Obligations or the Operative Document, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations or the amounts indemnified hereunder
which might otherwise constitute a defense to this Agreement. The Bank makes no
representation or warranty with respect to any such circumstance and has no duty
or responsibility whatsoever to the Guarantor with respect to the management and
maintenance of the Obligations, the Operative Documents, or any collateral
therefor. In the event that any payment to the Bank with respect to any
Obligations or other amounts due hereunder is rescinded or must otherwise be
returned or is not freely transferable outside the Russian Federation, the
Guarantor shall remain liable hereunder with respect to such Obligations as if
such payment had not been made. The
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<PAGE>
Guarantor represents that the execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate action and that
this Agreement constitutes its legal, valid and binding obligation.
Section 6. Consents, Waivers and Renewals.
The Guarantor agrees that the Bank may at any time and from time to time,
either before or after the maturity thereof, without notice to or further
consent of the Guarantor, extend the time of payment of or renew any of the
Obligations or the AA Facility and may also make any agreement with the Borrower
for the extension, renewal, payment, compromise, discharge or release thereof,
in whole or in part, or for any modification of the terms thereof or of any
agreement between the Bank and the Borrower, without in any way impairing or
affecting this Guarantee. The Guarantor acknowledges, consents and approves the
terms of the Omolon Facility, including, without limitation, those terms thereof
which subordinate, capitalize interest or otherwise defer payment under the
Omolon Facility.
Section 7. Expenses.
The Guarantor agrees to pay on demand all reasonable out-of-pocket costs,
charges and expenses (including the reasonable fees and expenses of counsel)
incurred by the Bank in connection with the enforcement or protection of the
rights of the Bank hereunder.
Section 8. Subrogation.
The Guarantor shall not be subrogated to the rights of the Bank to receive
payments and distributions of cash, property and securities applicable to the
Obligations or the AA Funding Facility until all amounts due to the Bank in
connection with the Obligations or this Agreement and the AA Facility shall have
been paid in full in lawful money of The United States and in immediately
available and freely transferable currency and until such time the Guarantor
will not exercise any rights which they may acquire by way of subrogation or by
any indemnity, reimbursement or other agreement. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, such amount shall be held
in trust for the benefit of the Bank and shall forthwith be paid to the Bank to
be credited and applied to the Obligations, and other amounts due hereunder,
whether matured or unmatured.
Section 9. Continuing Agreement.
This is a continuing Agreement and shall remain in full force and effect
and be binding upon the Guarantor and its successors and assigns until written
notice of its revocation shall actually be received by the Bank. No such
revocation shall release the Guarantor or affect in any manner the rights,
remedies or powers of the Bank under this Agreement with respect to any of the
Obligations arising, or as to which the Bank is committed to extend, prior to
actual receipt by the Bank of such written notice of revocation nor shall it
release the Guarantor from any of its indemnities hereunder which shall in all
events survive. If any of the present or future Obligations are guaranteed by
persons, partnerships or corporations in addition to the Guarantor, the death,
release or discharge in whole or in part, or the bankruptcy, liquidation or
dissolution of one or more of them shall not discharge or affect the liabilities
of the Guarantor under this Agreement.
-7-
<PAGE>
Section 10. No Waiver; Cumulative Rights.
No failure on the part of the Bank to exercise, and no delay in exercising,
any right, remedy or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by the Bank of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy or
power. Each and every right, remedy and power hereby granted to the Bank or
allowed them by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Bank from time to time.
Section 11. Covenants and Agreements.
The Guarantor agrees to observe, perform and comply with all the covenants
and agreements set forth in the Amended and Restated Competitive Advance and
Revolving Credit Facility Agreement dated as of August 25, 1995 (without giving
effect to any amendment, waiver or other modification thereto not consented to
by the Bank in writing expressly for purposes of this Guarantee, the "Credit
Agreement") among the Guarantor, the Lenders from time to time party thereto,
Chemical Bank, as Administrative Agent, and Chemical Bank Delaware, as Fronting
Bank whether or not the Credit Agreement remains in effect, and such covenants
and agreements will be deemed to continue in effect for the benefit of the Bank
whether or not any commitment remains in effect, or any sum remains payable,
under the Credit Agreement so that its terms remain in effect for the benefit of
the Bank even after its termination or expiration, provided that any
documentation to be delivered to the "Administrative Agent" or any "Lender"
under the Credit Agreement shall be delivered to the Bank and all references to
the "Agreement" and the "Loan Documents" contained therein shall be deemed to
refer to this Guarantee. The Guarantor acknowledges and agrees that upon the
occurrence of an Event of Default under the Credit Agreement, without giving
effect to any requirement that the "Administrative Agent" or the "Required
Lenders" give any notice or make any determination required under the Credit
Agreement, but only requiring that such notice be given or any determination be
made by the Bank, and without regard to whether the "Required Lenders" or
"Administrative Agent" have terminated the "Commitments" or accelerated the
"Loans" under the Credit Agreement, the Bank may, as between the Guarantor and
the Bank, deem all Obligations outstanding under the Omolon Facility and
hereunder to be immediately due and payable by the Guarantor hereunder. The
Guarantor agrees to pay to the Bank or its assignee the Guaranteed Percentage of
the unpaid principal amount and interest owing on all Obligations so accelerated
regardless of whether such acceleration is effective against the Borrower.
Section 12. Waiver of Notice.
The Guarantor waives notice of the acceptance of this Agreement and of the
making of any loans or extensions of credit to the Borrower, and to ABN AMRO
Moscow, presentment to or demand or payment from anyone whomsoever liable upon
any of the Obligations, presentment, demand, notice of dishonor, protest and all
other notices whatsoever.
Section 13. Governing Law and Place of Payment.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York. All amounts payable by the Guarantor hereunder
shall be paid at the principal New York office of the Bank at 500 Park Avenue,
New York, New York 10022 or at such other
-8-
<PAGE>
place as may be specified by the Bank to the Guarantor from time to time in
writing. All such payments shall be made at such place of payment in immediately
available and freely transferable funds and in lawful currency of the United
States of America, free and clear of, and without reduction for any present or
future taxes, duties, charges, offsets, counterclaims or other deductions
whatsoever. All payments to be made under this Agreement related to the
Obligations, the AA Facilities, New Money Credit, the Restructuring and other
amounts shall be made without any set-off or counterclaim whatsoever and free
and clear of any deduction or withholding on account of any taxes or otherwise.
In the event that any payment by the Guarantor under this Agreement, or by Abn
Amro Moscow under the AA Facility Agreement, or by the Bank under the New Money
Credit is subject to any set-off, counterclaim, withholding tax or any tax
required by any law or any competent authority, the Guarantor will indemnify the
Bank (as its primary and independent obligation) for any such payment and will
ensure that the Bank receives (free of any taxes, other deduction or
withholding) the full amount which it would have received if no such deduction
or withholding had been required. If, at the time any amount of principal,
interest or costs becomes due and payable under the Omolon Facility, as a result
of any governmental or monetary authority action in the Russian Republic or as a
result of any change in any law or regulation or in the interpretation thereof
by any authority or court in the Russian Republic, the Bank, if it were to
receive such amount from the Borrower, would be unable to transfer the same out
of the Russian Republic, then, in any such case, the Bank will be entitled to
refuse to receive such amount or, upon receipt, return it to the Borrower, and
this Agreement shall continue to be fully applicable to the Obligation(s) in
question to the same extent as though the payment so refused or repaid had never
been made originally on such Obligation(s), provided, however, that the Bank
will under no circumstances be allowed to refuse to receive such amount or
return such amount if its inability to transfer such amount out of the Russian
Federation arises solely from the Bank's knowing and material violation of any
law or regulation generally applicable to banking institutions in the Russian
Federation which must be complied with in order to transfer hard U.S. dollar
currency abroad.
Section 14. Consent to Jurisdiction.
The Guarantor hereby irrevocably submits to the non-exclusive jurisdiction
of any New York State or Federal court in any action or proceeding arising out
of or relating to this Guarantee.
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<PAGE>
In Witness Whereof, this Agreement has been duly executed and delivered by
the Guarantor to the Bank as of the date first above written.
Cyprus Amax Minerals Company
By
Name:
Title:
Address:
9100 East Mineral Circle
P.O. Box 3299
Englewood, Colorado 80155
Agreed and Accepted as of the
date first above written:
ABN AMRO Bank N.V.
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
-10-
<PAGE>
AGREEMENT
DATED 8 April 1997
U.S. $15,000,000.00
REVOLVING CREDIT FACILITY
BETWEEN
OMOLON GOLD MINING COMPANY
as the Borrower
AND
ABN AMRO BANK (MOSCOW) LTD.
as the Lender
Moscow
<PAGE>
Index
<TABLE>
<CAPTION>
Clause Page
<C> <S> <C>
1. Interpretation.....................................................3
2. Facility...........................................................9
3. Purpose...........................................................10
4. Conditions precedent..............................................10
5. Drawdown..........................................................10
6. Repayment.........................................................11
7. Prepayment and cancellation.......................................12
8. Interest periods..................................................14
9. Interest..........................................................14
10. Payments..........................................................15
11. Taxes.............................................................17
12. Increased costs...................................................18
13. Illegality........................................................18
14. Collateral/guarantee..............................................19
15. Representations and warranties....................................19
16. Undertakings......................................................21
17. Default...........................................................22
18. Facility repayment restriction and interbank facility repayment
restriction.......................................................23
19. Fees..............................................................23
20. Expenses..........................................................24
21. Stamp duties......................................................24
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
22. Indemnities.......................................................24
23. Evidence and calculations.........................................25
24. Amendments and waivers............................................26
25. Changes to the parties............................................26
26. Disclosure of information.........................................26
27. Set-off...........................................................27
28. Severability......................................................27
29. Counterparts......................................................27
30. Notices...........................................................27
31. Language..........................................................28
32. Jurisdiction......................................................29
33. Governing law.....................................................29
<CAPTION>
Schedules
<C> <S> <C>
1. Conditions precedent documents....................................24
2. Form of request...................................................25
Signatories.............................................................27
</TABLE>
<PAGE>
THIS AGREEMENT is dated 8 April 1997 between:
(1) OMOLON GOLD MINING COMPANY, a closed joint stock company, duly organized
and existing under the laws of the Russian Federation with its office at
Proletarskaya Str. 14, 685000 Magadan, Russian Federation (the "Borrower");
and
(2) ABN AMRO BANK (MOSCOW) LTD., a closed joint stock company having its office
at Bolshaya Nikitskaya 17, building 1, 102009 Moscow, Russian Federation
(the "Lender").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement:
"Act of State"
means any law, rule or regulation of the Russian Federation or any
political subdivision thereof, or any order, decree, decision, award,
directive, instruction or other measure or action of the Russian Federation
or any political subdivision thereof, or of any Governmental Authority or,
the interpretation of any of the foregoing, and any demand, request,
application or other action filed with any Governmental Authority, or any
other court or authority of competent jurisdiction, which purports to seek
to, or has the effect of:
(a) terminating, extending, increasing, deviating or otherwise modifying
(or affecting the performance or enforceability of) this Agreement or
the Interbank Facility Agreement or any provision thereof or the
obligations thereunder of (or against) any party thereto; or
(b) expropriating, confiscating or seizing (control over), or changing or
adversely affecting the ownership, control, operation or management of
the Borrower or the Lender, of all or a material part of their
business or assets with or without compensation.
"Affiliate"
means a Subsidiary or a Holding Company of a person or any other Subsidiary of
that Holding Company.
"Borrower's Current Account"
means the current account 5015642 USD in the name of the Borrower with the
Lender at
1
<PAGE>
Bolshaya Nikitskaya 17, building, 1, 103009 Moscow, Russia.
"Business Day"
means a day (other than a Saturday or a Sunday) on which banks are open for
business in each of Amsterdam, London, Moscow and Chicago.
"Default"
means an Event of Default or an event which, with the giving of notice, lapse of
time, determination of materiality or fulfilment of any other applicable
condition (or any combination of the foregoing), would constitute an Event of
Default.
"Dollars" or "U.S.S."
means the lawful currency for the time being of the United States of America.
"Drawdown Date"
means the date of the advance of a Loan.
"Event of Default"
means an event specified as such in Clause 17.1 (Events of Default).
"Extension Request"
means an extension request made by the Borrower for a Loan, substantially in the
form of Part II of Schedule 2.
"Facility"
means the facility referred to in Clause 2 (Facility).
"Facility Amount"
means the aggregate amount which is available to the Borrower subject to the
terms of this Agreement, which amount will not exceed the lowest of:
(a) U.S. $15,000,000.00 (Fifteen Million);
(b) any applicable legal lending limit applicable to banks in the Russian
Federation; and
(c) the amount which the Lender, with due observance of any applicable
Interbank Facility Repayment Restriction or Facility Repayment Restriction
is permitted to borrow or lend or to transfer in or out of the Russian
Federation.
2
<PAGE>
The Facility Amount shall be reduced by the amount of any prepayment in
accordance with Clause 7 (Prepayment and Cancellation) hereof.
"Facility Period"
means, subject to Clauses 7 (Prepayment and Cancellation), 17 (Default) and 18
(Facility Repayment Restriction and Interbank Facility Repayment Restriction),
the period from the date of this Agreement up to an including the Final Maturity
Date.
"Facility Repayment Restriction"
means any Act of State and/or any Political Risk Event affecting either party to
this Agreement, any provision thereof or the performance or enforceability
thereof or any obligation thereunder by or against any party thereto.
"Final Maturity Date"
means the date 360 (three hundred sixty) days from the date of this Agreement or
such other date as is agreed in writing between the parties.
"Governmental Authority"
means any court, ministry or other central or local governmental or regulatory
authority, department, commission, bureau or agency of the Russian Federation or
any political subdivision thereof, including without limitation, the Central
Bank of the Russian Federation.
"Guarantee"
means the guarantee and payment undertaking referred to in Clause 14(a)
(Collateral/Guarantee).
"Guarantor"
means ABN AMRO Bank N.V., Chicago Branch, who is guarantor under the Guarantee.
"Holding Company"
means in relation to a person, an entity of which that person is a Subsidiary.
"Indebtedness"
means any indebtedness in respect of any obligation (whether a financial
obligation for payment of money or otherwise)
"Interbank Facility"
3
<PAGE>
means one or more interbank facilities made available to the Lender for the
purpose of funding the Facility.
"Interbank Facility Agreement"
means one or more interbank facilities made available to the Lender for the
purpose of funding the Facility.
"Interbank Facility Agreement"
means the Interbank Facility pursuant to a facility agreement dated 28 March
1997.
"Interbank Facility Repayment Restriction"
means any Act of State and/or any Political Risk Event affecting either party to
the Interbank Facility Agreement, any provision thereof or, the performance or
enforceability thereof or of any obligation thereunder by or against any party
therein.
"Interest Period"
means each period determined in accordance with Clause 8 (Interest Periods).
"Law"
means any law, statute, rule, regulation, order, ordinance, decree, directive,
instruction, decision or award.
"LIBOR"
means the rate determined by the Lender to be:
(a) the British Bankers Association interest settlement rate which appears on
Reuters Money 2000 Page LIBOR01; or
(b) if no such rate appears on the Reuters Screen, the arithmetic mean (rounded
upward to the nearest one eighth of one percent) of the rates, as supplied
to the Lender at its request, quoted by leading banks (as selected by the
Lender) in the London interbank market.
at or about 11:00 a.m. (London time) on the Rate Fixing Day for the offering of
Dollar deposits for a period comparable to the Interest Period of the relevant
Loan.
"Loan"
means the principal amount of each borrowing by the Borrower under this
Agreement or the principal amount outstanding of that borrowing.
4
<PAGE>
"Margin"
means 6.075 percent, per annum.
"Maturity Date"
means the last day of the Interest Period of a Loan.
"Party"
means a party to this Agreement.
"Political Risk Event"
means any type of war, invasion, embargo, rebellion, revolution, riot or
sabotage, and any politically motivated work stoppage or slowdown, labor unrest
or violence in the Russian Federation or any political subdivision thereof.
"Prepayment"
means a payment made pursuant to clause 7 (Prepayment and Cancellation) or
Clause 13 (Illegality).
"Rate Fixing Day"
means the second Business Day before the first day of an Interest Period for a
Loan.
"Repayment"
means a payment made pursuant to Clause 6 (Repayment).
"Request"
means a request made by the Borrower for a Loan, substantially in the form of
Part 1 of Schedule 2.
"Security Interest"
means any mortgage, pledge, lien, charge, assignment, hypothecation or security
interest or any other agreement or arrangement having the effect of conferring
security.
"Senior Agreements"
mean both the agreement signed between the Borrower and the European Bank for
5
<PAGE>
Reconstruction and Development, dated 30 June, 1995, and the agreement signed
between Borrower and the Overseas Private Investment Corporation, dated 30 June
1995.
"Subsidiary"
means an entity from time to time of which a person has direct or indirect
control or owns directly or indirectly more than fifty percent (50%) of the
share capital or similar right of ownership.
"Taxes"
includes all present and future taxes charges (other than income and/or asset
based taxes), imposts, duties, levies, deductions, withholdings, or fees of any
kind whatsoever, or any amount payable on account of or as security for any of
the foregoing, payable at the instance of or imposed by any Governmental
Authority, together with any penalties, additions, fines, surcharges or interest
relating thereto and "Taxation" and "Tax" shall be construed accordingly.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) an "amendment" includes a supplement, novation or re-enactment and
"amended" is to be construed accordingly;
"assets" includes present and future properties, revenues and rights
of every description;
an "authorization" includes an authorization, consent, approval,
resolution, license, exemption, filing or registration;
"control" means the power to direct the management and policies of
an entity, whether through the ownership of voting capital, by
contract or otherwise;
a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in
the next calendar month, except that:
(1) if there is no numerically corresponding day in the month in
which that period ends, that period shall end on the last
Business Day in the next calendar month; or
(2) if an Interest Period commences on the last Business Day of a
calendar month that Interest Period shall end on the last
business Day in the calendar month in which it is to end;
(ii) a provision of Law is a reference to that provision as amended or
re-enacted;
6
<PAGE>
(iii) a Clause or a Schedule is a reference to a clause of or a schedule
to this Agreement;
(iv) a person includes its successors and assigns; and
(iv) a person includes its successors and assigns; and
(v) this Agreement or any other agreement or document is a reference to
this Agreement or, as the case may be, such other agreement or
document as amended, novated or supplemented.
(b) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
2. FACILITY
(a) Subject to the terms of this Agreement, the Lender has agreed, on an
uncommitted basis, to make Loans during the Facility Period to the Borrower
up to an aggregate principal amount not exceeding the Facility Amount.
(b) The Lender is not obligated to lend more than the Facility Amount.
3. PURPOSE
The Borrower shall apply each Loan towards prepayment of operational costs.
Without affecting the obligations of the Borrower in any way, the Lender is
not bound to monitor or verify the application of any Loan.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The Borrower may not deliver the first Request until the Lender has
notified the Borrower that it has received all of the documents set out in
Schedule 1 I form and substance satisfactory to the Lender.
4.2 Further conditions precedent
The obligation of the Lender to make any Loan under Clause 5.3 (Advance of
Loan) is subject to the further conditions precedent that:
(a) on both the date of the Request and the Drawdown Date:
(I) the representations and warranties in Clause 15
(Representations and
7
<PAGE>
Warranties) to be repeated on those dates are correct and will
be correct immediately after the Loan is made;
(ii) no Default is outstanding or might result from the Loan; and
(iii) no Facility Repayment Restriction or Interbank Facility
Repayment Restriction has occurred and is continuing or, in the
opinion of the Lender, is likely to occur;
(b) the Lender agreeing to the relevant Request to make that Loan
available.
5. DRAWDOWN
5.1 Facility Period
The Borrower may borrow a Loan during the Facility period if the Lender
receives, not later than 11:00 a.m. (Moscow time) three Business Days
before the proposed Drawdown Date, a duly completed Request in respect of
such Loan. Each Request is irrevocable.
5.2 Completion of Requests
A Request will not be regarded as having been duly completed unless:
(a) the Drawdown Date is a Business Day falling before the Final Maturity
Date;
(b) the amount of the Loan is:
(i) a minimum of U.S. $1,000,000.00 and an integral multiple of U.S.
$250,000.00; or
(ii) the balance of the undrawn Facility Amount; or
(iii) such other amount as the Lender may agree;
(c) the Interest Period selected complies with Clause 8 (Interest Periods);
and
(d) the payment instructions comply with Clause 5.3 (Advance of Loan).
Each Request must specify one Loan only, but the Borrower may, subject to
the other terms of this Agreement, deliver more than on Request on any one
Business Day.
5.3 Advance of Loan
Subject to the terms of this Agreement, the Lender shall make the Loan
available to the Borrower on the relevant Drawdown Date by crediting the
Borrower's Current Account
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or, as otherwise requested by the Borrower and agreed by the Lender.
6. REPAYMENT
6.1 Repayment
Subject to Clause 6.3 (New Interest Period), the Borrower shall repay each
Loan in full on its Maturity Date.
6.2 Re-borrowing
Subject to the other terms of this Agreement, any amounts paid under Clause
6.1 (Repayment) will be available to be re-borrowed pursuant to a Request
agreed to by the Lender.
6.3 New Interest Period
(a) The Borrower may defer repayment of a Loan from its Maturity Date if (I)
the Lender receives, not later than 11:00 a.m. (Moscow time) three Business
Days before the Maturity Date in respect of the Loan, a duly completed
Extension Request in respect of such Loan and (ii) the Lender confirms to
the Borrower by close of business on such third Business Day before the
Maturity Date that the Lender approves such Extension Request. Each
Extension Request is irrevocable.
(b) An Extension Request will not be regarded as having been duly completed
unless it specifies a new Interest Period for that Loan. The Interest
Period selected in the Extension Request shall comply with Clause 8
(Interest Periods).
(c) If the Lender agrees to the Extension Request:
(I) the Borrower shall pay interest in accordance with Clause 9
(interest) on the initial unextended Maturity Date;
(ii) without prejudice to sub-paragraph (I) above, the Loan shall continue
for the new Interest Period as requested in the Extension Request;
and
(iii) the new Maturity Date for the Loan shall be the last day of such new
Interest Period.
(d) If the Lender does not approve an Extension Request, such Extension Request
shall be of no effect and the Borrower shall repay the Loan, together with
interest and all other amounts payable hereunder, on the unextended
Maturity Date.
(e) The provisions of this Clause 6.3 shall apply, mutatis mutandis, in respect
of the new Maturity Date.
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7. PREPAYMENT AND CANCELLATION
7.1 Automatic cancellation of Facility
The Facility Amount shall be automatically canceled at the close of
business sin Moscow on the Final Maturity Date and no further Requests may
be made after such date.
7.2 Voluntary cancellation of Facility
(a) The Borrower may at any time with immediate effect cancel the unutilized
portion of the Facility Amount in whole or in part (but, if in part, in a
minimum of U.S. $1,000,000.00 and an integral multiple of U.S.
$250,000.00).
(b) (I) The Lender may at any time with immediate effect (including after it
receives a Request from the Borrower under Clause 5.1 (Facility
Period) and notwithstanding that it may have previously notified the
borrower of its agreement to the relevant Request pursuant to Clause
4.2(c) (Further conditions precedent) cancel the unutilized portion
of the Facility Amount in whole or in part.
(ii) If prior to any cancellation of the Facility Amount, the Lender
has already received a Request from the Borrower, and the Facility
Amount, following cancellation, is reduced to zero (if canceled in
whole) or is less than the amount of the proposed Loan (if canceled
in part), the Lender shall not be obliged to make a Loan available to
the Borrower on the relevant Drawdown Date specified in any such
Request.
(iii) The Lender shall promptly give notice to the Borrower of any such
cancellation.
7.3 Additional right of prepayment and cancellation
If:
(a) the Borrower is required to pay to the Lender any additional amounts
under Clause 11 (Taxes); or
(b) the Borrower is required to pay to the Lender any amount under Clause
12 (Increased costs),
then, without prejudice to the obligations of the Borrower under those
Clauses, the Borrower may, while the circumstances continue, serve a notice
of prepayment an cancellation on the Lender. On the date falling five
Business Days after the date of service of the notice:
(I) the Borrower shall prepay all the affected Loans then outstanding;
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(ii) all outstanding affected Requests shall be deemed revoked and the
Lender shall have no obligation to advance any Loans in respect of
them;
(iii) the Facility Amount shall be reduced by an amount equal to the
aggregate amount of the affected Loans and the affected Requests.
7.4 Legal lending limit prepayment and cancellation
By notice to the Borrower that the Facility Amount has been or will be
reduced in connection with a reduction in any applicable legal lending
limit:
(a) the Borrower shall within a reasonable time (as determined by the
Lender taking into account the interests of the Borrower), prepay to
the Lender the excess, if any, at such time of the aggregate amount of
all the Loans then outstanding over the amount of the reduced Facility
Amount; and
(b) the Facility Amount shall be reduced by an amount equal to the excess.
7.5 Miscellaneous provisions
(a) any notice of prepayment and/or cancellation and/or reduction under this
Agreement is irrevocable.
(b) Where any payment is made other than on the last day of an Interest Period,
the Borrower shall pay to the Lender al fee in respect of administration
costs in the amount of U.S. $200.
(c) All payments under this Agreement shall be made together with accrued
interest on the amount prepaid and, subject to Clause 7.5(b) and Clause
22.2 (Other indemnities), without premium or penalty.
(d) No prepayment or cancellation is permitted except in accordance with the
express terms of this Agreement.
(e) No amount of the Facility Amount canceled under this Agreement may
subsequently be reinstated.
(f) No amount Prepaid under this Agreement may subsequently be reborrowed.
8. INTEREST PERIODS
8.1 General
(a) The Borrower may select an Interest Period for a Loan in the relevant
Request or, if applicable Extension Request. Each Interest Period for a
Loan will commence on its
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Drawdown Date or, if applicable, on the first day of the new Interest
Period under Clause 6.3 (New Interest Period).
(b) Subject to the following provisions of this Clause 8, each Interest Period
will be one, two or three months, one hundred and eighty days or any other
period agreed by the Borrower and the Lender.
8.3 Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business
Day, that Interest Period shall instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if
there is not).
8.4 Coincidence with the final Maturity Date
If an Interest Period would otherwise overrun the Final Maturity Date, it
shall be shortened so that it ends on the Final Maturity Date.
9. INTEREST
9.1 Interest rate
The rate of interest on each Loan for its Interest Period is the rate per
annum determined by the Lender to be the aggregate of:
(a) the Margin; and
(b) LIBOR.
9.2 Due dates
Except as otherwise provided in this Agreement, accrued interest on each
Loan is payable by the Borrower on its Maturity Date.
9.3 Default interest
(a) If the Borrower fails to pay any amount payable by it under this Agreement,
it shall, forthwith on demand by the Lender, pay interest on the overdue
amount from the due date up to the date of actual payment, as well after as
before judgment, at a rate (the "default rate") determined by the Lender to
be two percent, per annum above the rate which would have been payable if
the overdue amount had, during the period of non-payment, constituted a
Loan of the overdue amount for such successive Interest Periods of such
duration as the Lender may determine (each a "Designated Interest Period").
( b) The default rate will be determined by the Lender on each business Day or
the first day of, or two Business Days before the first day of, the
relevant Designated Interest Period,
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as appropriate.
(c) Default interest will be compounded at the end of each Designated Interest
Period.
(d) In respect of any failure by the Borrower to pay any amount payable by it
under this Agreement, the Lender may (but shall not be obligated to) debit
the Borrower's Current Account for all or part of any such amount
(notwithstanding that such debit shall result in the Borrower's current
Account becoming overdrawn or any overdraft thereof being increased or any
of the Borrower's borrowing limits in respect thereof being breached) and,
to the extent deemed to have paid and discharged such amount payable by it
under this Agreement (but without prejudice to the Borrower's obligations
to the Lender in respect of amounts due from the Borrower to the Lender on
or in respect of the Borrower's Current Account).
(e) Clause 9.3(d) of itself in no way implies the granting of an overdraft
facility by the Lender to the Borrower. Any such overdraft facility shall
be granted on express written terms signed by both the Lender and the
Borrower.
9.4 Notification
The Lender shall promptly notify the Borrower of the determination of a
rate of interest under this Agreement.
10. PAYMENTS
10.1 Method of Payment
(a) All payments by the Borrower under this Agreement shall ordinarily be made
to the Lender by the Lender automatically debiting the borrower's Current
Account or, if so requested by the Lender to its account with such office
or bank in New York as it may notify the borrower for this purpose.
(b) Except where the Lender grants to the Borrower an overdraft facility in
relation to its Current Account, the Borrower shall ensure that, at all
times, it maintains sufficient funds in its Current Account so as not to be
overdrawn at any time as a result of the Lender exercising its rights under
Clause 9.3(d).
10.2 Funds
Payments under this Agreement to the Lender (whether by debiting the
borrower's current Account or otherwise) shall be made for value on the due
date at such time as the Lender may specify to the Borrower and in
immediately available and freely transferable funds.
10.3 Currency
(a) All amounts payable under this Agreement are, except as otherwise provided
in this
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Agreement, payable in Dollars.
(b) Amounts payable in respect of costs, expenses and Taxes and the like where
incurred in a currency other than Dollars are payable in Dollars converted
by the Lender a market rate of exchange in its usual course of business on
the date such costs, expenses or Taxes were incurred.
10.4 Set-off, counterclaim and Deduction
All payments made by the Borrower under this Agreement shall be made
without set-off, deduction or counterclaim.
10.5 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business Day
(if there is not).
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on that principal at the rate payable on
the original due date.
10.6 Partial payments
(a) If the Lender receives a payment insufficient to discharge all the amounts
then due and payable by the Borrower under this Agreement, the Lender shall
apply that payment towards the obligations of the Borrower under this
Agreement in the following order: including any Law relating to Taxation,
monetary union or reserve assets, special deposit, cash ratio, liquidity or
capital adequacy requirements or any other form of banking or monetary
control.
(b) In this Agreement "increased cost" means;
(I) an additional cost incurred by the Lender or any of its Affiliates
as a result of the Lender having entered into, or performing,
maintaining or funding its obligations under, this Agreement; or
(ii) an additional cost incurred by the Lender or any of its Affiliates
in making, funding or maintaining all or any advances made or to be
made under this Agreement; or
(iii) a reduction in any amount payable to the Lender or any of its
Affiliates or a reduction in the effective return to the Lender or
any of its Affiliates under this Agreement or (to the extent that it
is attributable to this Agreement) on its capital; or
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(iv) the amount of any payment made by the Lender or any of its
Affiliates, or the amount of any interest or other return foregone
by the Lender or any of its Affiliates, calculated by reference to
any amount received or receivable by the Lender or any of its
Affiliates from the Borrower under this Agreement.
(i) first, in or towards payment pro rata of any unpaid fees, costs and
expenses of the Lender under this Agreement.
(ii) secondly, in or towards payment pro rata of any accrued interest due but
unpaid under this Agreement;
(iii) thirdly, in or towards payment pro rata of any principal due but unpaid
under this Agreement; and
(iv) fourthly, in or towards payment pro rata of any other sum due but unpaid
under this Agreement.
(b) The Lender may vary the order set out in paragraph (a) above or allocate
the payments other than pro rata.
(c) Paragraphs (a) and (b) above will override any appropriation made by the
Borrower.
11. TAXES
11.1 Gross-up
(a) All payments by the Borrower under this Agreement shall be made free and
clear of an without deduction for or on account of any Taxes, except to
the extent that the Borrower is required by Law to make payment subject to
any Taxes.
(b) If any Tax or amounts in respect of Tax must be deducted, or any other
deductions must be made, from any amounts payable or paid by the Borrower
under this Agreement, the Borrower shall pay such additional amounts as
may be necessary to ensure that the Lender receives a net amount equal to
the full amount which it would have received had payment not been made
subject to Tax or any other deduction.
11.2 Tax receipts
All Taxes required by Law to be deducted or withheld by the Borrower from
any amounts paid or payable under this Agreement shall be paid by the
Borrower when due and the Borrower shall, within 15 days of the payment
being made, deliver to the Lender evidence satisfactory to the Lender
(including all relevant Tax receipts) that the payment has been duly
remitted to the appropriate authority.
12. INCREASED COSTS
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12.1 Increased costs
(a) Subject to Clause 12.2 (Exceptions), the Borrower shall forthwith on demand
by the Lender pay to the Lender the amount of any increased cost incurred
by it or any of its Affiliates as a result of:
(i) the introduction of, or any change in, or any change in the
interpretation or application of, any Law; or
(ii) compliance with any Law made after the date of this Agreement,
12.2 Exceptions
Clause 12.1 (Increased costs) does not apply to any increased cost
compensated for by the operation of Clause 11 (Taxes).
13. ILLEGALITY
If it is or becomes unlawful in any jurisdiction for the Lender to give
effect to any of its obligations as contemplated by this Agreement or to
fund or maintain any Loan (or for any Affiliate of the Lender to fund the
Lender so as to fund or maintain any Loan), then:
(a) the Lender may notify the Borrower accordingly; and
(b) (i) the Borrower shall forthwith prepay all of the Loans then
outstanding;
(ii) all outstanding Requests shall be deemed revoked and the Lender
shall have no obligation to advance any Loans in respect of
them; and
(iii) the Facility Amount shall forthwith be canceled.
14. COLLATERAL/GUARANTEE
(a) By way of security for the fulfilment by the Borrower of all its present
and future obligations to the Lender under this Agreement, a guarantee and
payment undertaking shall be issued by the Guarantor in form and substance
satisfactory to the Lender.
(b) The Borrower hereby acknowledges that the Guarantor has entered (or will
enter) into the Guarantee in favor of the Lender. The Borrower hereby
irrevocably authorizes the Guarantor to pay any amount which may be or may
at any time become due and owing by the Borrower to the Lender under this
Agreement in accordance with the Guarantee. The Lender hereby stipulates
on behalf and for the benefit of the Guarantor, and the Borrower agrees,
that the Guarantor shall be subrogated in the rights of the Lender against
the Borrower under this Agreement, or shall otherwise have the right to
claim payment from the Borrower, with respect to any amount paid by the
Guarantor pursuant to the Guarantee.
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(c) The Borrower agrees that the Guarantor may, at any time assign or transfer
any of its rights against the Borrower under this Agreement by virtue of
payments under the Guarantee to any other person without the consent of
the Borrower.
15. REPRESENTATIONS AND WARRANTIES
15.1 Representations and warranties
The Borrower makes the representations and warranties set out in this
Clause 15 to the Lender.
15.2 Status
Borrower is a closed joint stock company duly organized and validity
existing under the laws of the Russian Federation and registered with all
relevant registration bodies in the Russian Federation and has full power
to carry out any business for which it intends to use the money loaned to
it pursuant to this Agreement.
15.3 Non-conflict; Litigation
Borrower is not in violation of any material Law presently in effect which
is applicable to Borrower or its assets. To the best of Borrower's
knowledge after due inquiry, no Law has been proposed and no judgment or
order is expected which may have a materially adverse effect on Borrower.
Borrower is not engaged in nor, to the bet of its knowledge, threatened
by, any litigation, arbitration or administrative proceeding, the outcome
of which may reasonably be expected to have a materially adverse effect on
Borrower.
15.4 Powers and authority; Legal Validity
Borrower has the corporate power to enter into and perform this Agreement.
This Agreement has been duly executed by Borrower and this Agreement
constitutes valid and legally binding obligations of Borrower, enforceable
in accordance with their respective terms. The making of this Agreement
and compliance with the terms thereof (I) will not result in violation of
Borrower's charter or any provision contained in any Law applicable to
Borrower or its assets and (2) will not conflict with or result in the
breach of any provision of, or require any consent under, or result in the
imposition of any Security Interest under any agreement or instrument to
which Borrower is a party or by which Borrower or any of its assets is
bound. The officers of Borrower who have executed and delivered this
Agreement are duly and validly authorized to do so and have bound Borrower
by such actions.
15.5 No default
Borrower is not in default in the performance of any obligation, covenant
or condition
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under any agreement, contract or undertaking to which it is a party or by
which it or any of its assets or property are bound. No Event of Default,
or event which, with the passing of time or the giving of notice, or both,
would constitute an Event of default, has occurred and is continuing.
15.6 Authorisations
As of the date of this Agreement, no governmental licenses, approvals,
consents, filings or registrations are required for the due execution,
delivery or performance by Borrower of this Agreement or the validity or
enforceability thereof.
15.7 Taxes
Borrower has filed or caused to be filed all federal, regional and local
Tax returns that it is required to file by applicable Law and has paid or
caused to be paid all Taxes as shows on such returns, and any assessment
imposed on it, to the extent that such Taxes or assessments have become
due, other than Taxes or assessments the validity of which is being
contested by Borrower in good faith and with due diligence by appropriate
proceedings and as to which Borrower has set up reserves which are
believed by Borrower to be adequate for the payment of additional Taxes or
assessments for years which have not been audited by Tax or other
governmental authorities.
15.8 Title
Borrower has good title to all its properties and assets, free and clear
of all Security Interest, except for permitted Security Interest under the
Senior Agreements.
15.9 Representations as to the Loan
Borrower hereby represents and warrants that, in accordance with the Law
of the Russian Federation on Value Added Tax, as latest amended by Federal
Law No. 45-FZ dated 22 May 1996, the Loan is not subject to VAT.
16. UNDERTAKINGS
16.1 Duration
The undertakings in this Clause 16 remain in force from the date of this
Agreement for so long as any amount is or may be outstanding under this
Agreement or any Facility Amount is outstanding.
16.2 Notification of Default
The Borrower shall notify the Lender of any Default (and the steps, if
any, being taken to remedy it) promptly upon its occurrence.
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16.3 Compliance certificates
The Borrower shall supply to the Lender promptly at any time, if the
Lender so requests, a certificate signed by two of its senior officers on
its behalf certifying that no Default is outstanding or, if a default is
outstanding, specifying the Default and the steps, if any, being taken to
remedy it.
16.4 Authorisation
The Borrower shall promptly:-
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Lender of,
any authorisation required under any Law to enable it to perform its
obligations under, or for the validity or enforceability of, this
Agreement.
16.5 Pari passu ranking
The Borrower shall procure that its obligations under this Agreement do
and will rank at least pari passu with all its other present and future
unsecured obligations, except for obligations mandatorily preferred by Law
applying to companies generally.
16.6 Maintenance of status
The Borrower shall:-
(a) do all such things as are necessary to maintain its corporate
existence; and
(b) ensure that it has the right and is duly qualified to conduct its
business as it is conducted in all applicable jurisdictions.
17. DEFAULT
17.1 Events of Default
Each of the events set out in this Clause 17 is an Event of Default
(whether or not caused by any reason whatsoever outside the control of
either the Borrower or Guarantor or any other person).
17.2 Payment Default
Borrower shall fail for any reason whatsoever to make payment of any
amount due under
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this Agreement on the date on which such amount is due and payable whether
by the terms hereof or by acceleration. Acceptance by Lender of partial
payment shall not constitute a waiver by Lender of Borrower's obligation
to make payment in full of amounts due under this Agreement.
17.3 Representation Default
Any representation or warranty made by Borrower in this Agreement shall
prove to have been incorrect, untrue or misleading in any material respect
when made.
17.4 Undertakings
Borrower shall breach or fail to fulfill any of its obligations under
Clause 16 (Undertakings), which is not cured within 10 Business Day after
receipt of notice from the Lender.
17.5 Breach of other obligations
The borrower does not comply with any provision of this Agreement other
than those referred to in Clause 17.2 (Payment Default) and 17.4
(Undertakings).
17.6 Bankruptcy
Borrower shall permit the occurrence of any act of bankruptcy by or
against Borrower.
17.7 Cross-Acceleration
Borrower shall default under any other agreement involving any
Indebtedness of borrower of over US$1,000,000.00 (one million) if the
effect of such defaults is to accelerate the due date of such
Indebtedness.
17.8 Acceleration
On and at any time after the occurrence of an Event of Default the Lender
may, by notice to the Borrower:-
(a) cancel the Facility Amount; and/or
(b) demand that all or part of the Loans, together with accrued interest
and all other amounts accrued under this Agreement be immediately due
and payable, whereupon they shall become immediately due and payable.
18. FACILITY REPAYMENT RESTRICTION AND INTERBANK FACILITY REPAYMENT
RESTRICTION
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18.1 Occurrence
Upon the occurrence or threatened occurrence of a Facility Repayment
Restriction or an Interbank Facility Repayment Restriction the provisions
of Clause 17.6 (Acceleration) will apply as if an Event of Default under
Clause 17 (Default) had occurred.
18.2 Notice
The Borrower shall notify the Lender of the occurrence or threatened
occurrence of any Facility Repayment Restriction or Interbank Facility
Repayment Restriction forthwith upon it becoming aware thereof.
19. FEES
19.1 Facility fee
The Borrower shall pay to the Lender an administration fee in Dollars of
$10,000.00 within 7 days of the date of this Agreement or before the first
drawdown, whichever is earliest.
19.2 VAT
Any fee referred to in this Clause 19 is exclusive of any value added tax
or any other Tax which might be chargeable in connection with that fee. If
any value added tax or other Tax is so chargeable, it shall be paid by the
Borrower at the same time as it pays the relevant fee.
20. EXPENSES
20.1 Initial and special costs
The Borrower shall forthwith on demand pay the Lender the amount of all
costs and expenses (including legal fees) incurred by the Lender in
connection with:-
(a) the negotiation, preparation and execution of this Agreement and any
other documents referred to in this Agreement and the preparation of
certified translations thereof; and
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of the
Borrower and relating to this Agreement or a document referred to in
this Agreement.
20.2 Enforcement costs
The Borrower shall forthwith on demand pay to the Lender the amount of all
costs and
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expenses (including legal fees) incurred by it in connection with the
enforcement of, or the preservation of any rights under, this Agreement.
21. STAMP DUTIES
The Borrower shall pay, and forthwith on demand indemnify the Lender
against any liability it incurs in respect of, any stamp, registration and
similar Tax which is or becomes payable in connection with the entry into,
performance or enforcement of this Agreement.
22. INDEMNITIES
22.1 Currency Indemnity
(a) If the Lender receives an amount in respect of the borrower's
liability under this Agreement or if that liability is converted into
a claim, proof, judgment or order in a currency other than the
currency (the "contractual currency") in which the amount is
expressed to be payable under this Agreement:-
(i) the borrower shall indemnify the Lender as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
(ii) if the amount received by the Lender, when converted into the
contractual currency at a market rate in the usual course of
its business is less than the amount owed in the contractual
currency, the Borrower concerned shall forthwith on demand pay
to the Lender an amount in the contractual
currency equal to the deficit; and
(iii) the borrower shall forthwith on demand pay to the Lender any
exchange costs and Taxes payable in connection with any such
conversion.
(b) The Borrower waives any right it may have in any jurisdiction to pay
any amount under this Agreement in a currency other than that is
which it is expressed to be payable.
22.2 Other indemnities
The Borrower shall forthwith on demand indemnify the Lender against any
loss or liability which the Lender incurs as a consquence of:-
(a) the occurrence of any Default;
(b) the operation of Clause 17.6 (Acceleration) or Clause 18.1
(Occurrence);
(c) any payment of principal or an overdue amount being received from any
source
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otherwise than on the Maturity Date relative to the amount so
received and, for the purposes of this paragraph (d), the Maturity
Date of an overdue amount is the then current Designated Interest
Period (as defined in Clause 9.3 (Default interest)); or
(d) a Loan (or part of a Loan) not being prepaid in accordance with a
notice of prepayment or a Loan not being made after the Borrower has
delivered a Request.
The Borrower's liability in each case includes any loss of margin or other
loss or expense on account of funds borrowed, contracted for or utilised
to fund any amount payable under this Agreement, any amount repaid or
prepaid or any Loan.
23. EVIDENCE AND CALCULATIONS
23.1 Accounts
Accounts maintained by the Lender in connection with this Agreement are
prima facie evidence of the matters to which they relate.
23.2 Certificates and determinations
Any certification or determination by the Lender of a rate or amount under
this Agreement is, in the absence of manifest error, conclusive evidence
of the matters to which it related.
23.3 Calculations
Interest accrues from day to day and is calculated on the basis of the
actual number of days elapsed and a year of 360 days.
24. AMENDMENTS AND WAIVERS
24.1 Procedure
Any term of this Agreement may be amended or waived with the written
agreement of the Borrower and the Lender.
24.2 Waivers and remedies cumulative
The rights of the Lender under this Agreement:-
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general Law;
and
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(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
25. CHANGES TO THE PARTIES
25.1 Transfer by the Borrower
The Borrower shall not assign, transfer, novate or dispose of any of, or
any interest in, its rights and/or obligations under this Agreement.
25.2 Transfer by the Lender
(a) The Lender (the "Existing Lender") may, with the consent of the
Borrower, at any time assign or transfer any of its rights and/or
obligations under this Agreement to another bank or financial
institution (the "New Lender").
(b) The Borrower hereby acknowledges that any New Lender shall assume the
rights and/or obligations of the Existing Lender under this Agreement
and shall have the right to claim payment from the Borrower with
respect to any payment in respect thereof made by the New Lender to
the Existing Lender.
(c) Nothing in this Agreement restricts the ability of the Existing
Lender to sub-contract an obligation if the Existing Lender remains
liable under this Agreement for that obligation.
26. DISCLOSURE OF INFORMATION
The Lender may disclose to any of its Affiliates or any person with whom
it is proposing to enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this Agreement:-
(a) a copy of this Agreement; and
(b) any information which the Lender has acquired under or in connection
with this Agreement.
27. SET-OFF
The Lender may set off any matured obligation owed by the Borrower under
this Agreement (to the extent owed by the Lender) against any obligation
(whether or not matured) owed by the Lender to the Borrower, regardless of
the place of payment, booking branch or currency of either obligation at a
market rate of exchange in its usual course of business for the purpose of
the set-off. If either obligation is unliquidated or unascertained, the
Lender may set off in an amount estimated by it in good faith to be the
24
<PAGE>
amount of that obligation.
28. SEVERABILITY
If a provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect;-
(a) the validity or enforceability in that jurisdiction of any other
provision of this Agreement; or
(b) the validity or enforceability in other jurisdictions of that or any
other provision of this Agreement.
29. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this has
the same effect as the signatures on the counterparts were on a single
copy of this Agreement.
30. NOTICES
30.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing and, unless otherwise stated, may be
made by letter, telex or facsimile. Any such notice will be deemed to be
given as follows:-
(a) if by letter, when delivered personally or on actual receipt;
(b) if by telex, when despatched, but only if, at the time of
transmission, the correct answerback appears at the start and at the
end of the sender's copy of the notice; and
(c) if by facsimile, when received in legible form.
However, a notice given in accordance with the above but received on a
non-Business Day or after business hours in the place of receipt will only
be deemed to be given on the next Business Day in that place.
30.2 Addresses for notices
(a) The address, telex number and facsimile number of the Borrower are:-
Address: Proletarskaya Str. 14,685000 Magadan, Russia
telex number: 145122NEGA SU
25
<PAGE>
fax number: 907-887-3000
or such other as the Borrower may notify to the Lender by not less
than five Business Days' notice.
(b) The address, telex number and facsimile number of the Lender are:-
Address: Bolshaya Nikitskaya 17, building 1, 103009 Moscow, Russia
telex number: 413301 ABAM.RU
fax number: +7 095 931 9140
or such other as the Lender may notify to the Borrower by not less
than five Business Day's notice.
31. LANGUAGE
(a) This Agreement shall be executed in English and, if so requested by
the Borrower, the Lender will provide the Borrower with a certified
Russian translation.
(b) Any notice given and all other documents provided under or in
connection with this Agreement shall be in English, and, if requested
by either party, accompanied by a certified Russian translation.
(c) The English version of this Agreement and any notice given or other
document provided under or in connection with this Agreement shall
have prevailing force.
32. JURISDICTION
All disputes arising out of or in connection with this Agreement, shall be
submitted in the first instance to the International Commercial
Arbitration Court at the Russian Federation Chamber of Commerce and
Industry in Moscow. Three (3) arbitrators are to be appointed, one each by
the Lender and the Borrower, and one jointly by the arbitrators so
appointed. The arbitration will be held in accordance with the rules of
the International Commercial Arbitration Court. The proceedings of any
arbitration will be held in the English language.
33. GOVERNING LAW
This Agreement shall be governed by, and shall be constituted in
accordance with, the laws of the Russian Federation.
This Agreement has been entered into on the date stated at the beginning
of this Agreement.
26
<PAGE>
SCHEDULE I
CONDITIONS PRECEDENT DOCUMENTS
1. A copy of the Charter of the Borrower.
2. A copy of a resolution of the authorised governing body of the Borrower:
(i) approving the terms of, and the transactions contemplated by, this
Agreement;
(ii) authorising specified persons to execute this Agreement on its
behalf, and
(iii) authorising specified persons, on its behalf to sign and/or despatch
all documents and notices to be signed and/or despatched by it under
or in connection with this Agreement.
3. A notarised copy of a specimen of the signature of each person authorised
to sign this Agreement on behalf of the Borrower and to sign and/or
despatch all documents and copies to be signed and/or despatched by the
Borrower under or in connection with this Agreement.
4. A copy of any other authorisation or other document, opinion or assurance
which the Lender considers to be necessary or desirable in connection with
the entry into and performance of, and the transactions contemplated by,
this Agreement or for the validity and enforceability of this Agreement.
5. A certificate of the General Director of the Borrower certifying that each
copy document described in points 1, 2 and 4 above and delivered under this
Schedule I is correct, complete and in full force and effect as at the date
of this Agreement and that there has been no changes.
6. The Guarantee duly executed by the Guarantor by way of security from the
Guarantor for the fulfilment by the Borrower of all its present and future
obligations to the Lender under this Agreement, in form and substance
satisfactory to the Lender.
<PAGE>
SCHEDULE 2
PART I
FORM OF REQUEST
To: ABN AMRO BANK (MOSCOW) LTD
Bolshaya Nikitskaya 17,
building 1,
103009 Moscow
Russian Federation
Attn: []
Fax: +7 095 931 9140
From: [BORROWER] Date: [ ]
[BORROWER] U.S.$[AMOUNT] Credit Agreement dated [DATE]
1. We wish to borrow a Loan as follows:
(a) Drawdown Date: [ ]
(b) Amount: [ ]
(c) Interest Period: [ ]
(d) Payment instructions: [ ].
2. We confirm that each condition specified in Clause 4.2 (Further conditions
precedent) is satisfied on the date of this Request.
By: and
----------------------------- -------------------------------
[BORROWER]
Authorised Signatories
<PAGE>
SIGNATORIES
Borrower
[BORROWER]
By: and
----------------------------- -------------------------------
Lender
ABN AMRO BANK (MOSCOW) LTD.
By: and
----------------------------- -------------------------------
<PAGE>
GUARANTEE AND INDEMNITY
AGREEMENT
Guarantee and Indemnity, dated as of April 1, 1997, by Cyprus Amax Minerals
Company, a Delaware corporation (the "Guarantor"), in favor of ABN AMRO Bank
N.V. and its Amsterdam and Chicago offices (collectively, the "Bank").
Section 1. Guarantee.
For value received, and to induce the Bank to make loans or otherwise
extend credit from time to time to or for the account of Omolon Gold Mining
Company (the "Borrower") pursuant to the Loan Agreement concurrently being
entered into between the Borrower and ABN AMRO Bank (Moscow) Ltd. ("ABN AMRO
Moscow") on or about April 1, 1997 (the "Omolon Facility"), the Guarantor, as
its own primary and independent obligation hereby unconditionally and
irrevocably guarantees to the Bank, its successors, endorsees and assigns, the
prompt payment when and as due of 100% (the "Guaranteed Percentage") of all
present and future obligations and liabilities of the Borrower to ABN AMRO
Moscow under the Omolon Facility (the "Obligations"). Terms defined in the
Omolon Facility and used herein without definition have the same meaning herein
as in the Omolon Facility. If any of the Obligations are not paid when and as
due (whether by demand, lapse of time, acceleration or otherwise), the Bank may,
either by notice to the Guarantor of such non-payment or its certification that
the Bank is legally precluded from providing such notice, cause the liability of
the Guarantor under this Section 1 to become fixed and determined as to such
unpaid Obligations on the date of sending such notice or making such
certification, as the case may be, at the Guaranteed Percentage (namely, 100%
for the Guarantor) of the amount of such unpaid Obligations, subject to increase
for interest thereafter accruing on such Obligations and for the existence or
future incurrence of additional Obligations. The liability of the Guarantor
under this Section 1 in connection with such unpaid Obligations shall not after
such time be reduced by any payments on the Note or on any other Obligations
from any source except the Guarantor, whether such payment is received from the
Borrower, any other guarantors or otherwise, unless and until all Obligations
then due and owing have been paid in full. The Guarantor agrees it will pay to
the Bank the Guaranteed Percentage of such unpaid Obligations whether or not any
other person or entity shall then or thereafter pay any amount of the
Obligations unless and until all Obligations then due and owing have been paid
in full. This Section 1 is intended to permit the Bank to receive from the
Guarantor payment of the Guaranteed Percentage of any Obligations unless and
until all Obligations are paid in full but is not intended to permit the Bank to
receive payment from the Guarantor of any amount previously due and owing on any
Obligation that has been paid when and as due by any other person (and which
payment if received by the Bank within the Russian Federation is freely
transferable by the Bank outside the Russian Federation) or to receive freely
transferable payment from any person of more than the amount due and owing on
any Obligations. The Bank may make repeated and successive demands for
recoveries on unpaid Obligations under this Section 1, subject to the foregoing,
notwithstanding any recovery from any other source in payment of any
Obligations, and this Guarantee shall remain in full force and effect and shall
apply to each and every subsequent default in payment of the Obligations. The
Bank may allocate payments received from any source other than the Guarantor to
the Obligations in any order it desires. Without limiting the foregoing, the
Guarantor acknowledges and agrees that the Bank's extensions of credit under the
Omolon
<PAGE>
Facility shall, as between the Guarantor and the Bank, in all events be
deemed to mature and be fully payable on the date three hundred and sixty days
from the date hereof (the "Termination Date") and upon such date the Guarantor,
as its own primary and independent obligation, unconditionally and irrevocably
agrees to pay all such amounts to the Bank in full notwithstanding that such
Obligations are not otherwise due and payable or permitted to be paid by the
Borrower under the Omolon Facility, provided, however, that if the Bank, in its
sole and absolute discretion, decides to extend such Termination Date, the
Guarantor's payment obligation, as provided in this sentence, shall likewise be
extended to the new Termination Date as notified by the Bank to the Guarantor.
In addition, the term "Obligations" guaranteed hereby and payable by the
Guarantor hereunder, shall also include (whether or not expressly provided for
under the Omolon Facility) any loss (including any reemployment loss), cost,
expense or liability that ABN AMRO Moscow or the Bank may incur or be exposed to
arising out of:
a. any failure by the Borrower to take down any portion of the Omolon
Facility after giving notice of a drawdown,
b. any prepayment made by the Borrower on other than the last day of
any Interest Period, and
c. the failure by the Borrower to make any interest or principal
payment expressed to be due on the last day of each Interest Period.
The term "Obligations" guaranteed hereby and payable by the Guarantor shall also
include (whether or not expressly provided for under the Omolon Facility) any
increased reserve cost, special deposit requirement, supplemental capital
requirement or the imposition of any tax or other condition, which increases the
cost to ABN AMRO Moscow or the Bank of making or agreeing to make the extensions
of credit under the Omolon Facility or which would reduce the amount received or
receivable by ABN AMRO Moscow or the Bank thereunder, which amounts shall be
payable by the Guarantor hereunder as its own primary and independent
obligation.
Section 2. Guarantee Fee.
In consideration for the Guarantor's consenting to guarantee and pay the
Obligations and provide its indemnity hereunder, the Bank shall pay to the
Guarantor at the time of each Interest Payment Date under the Omolon Facility a
fee equal to the Guaranteed Percentage of 5.325% per annum applied to the
average daily outstanding principal balance of Loans during the period ending on
such date, subject to the Bank's receipt in full and free transferability of all
amounts owed to it on such date under the Omolon Facility and the amounts due
hereunder.
Section 3. Indemnity.
In addition to the foregoing guarantee, the Guarantor as its own primary
and independent obligation agrees as follows:
3.1 In order to enable ABN AMRO Moscow to grant the Omolon Facility,
Hollandsche Bank-Unie N.V. ("HBU") will make one or more interbank facilities
available to the Abn Amro Moscow for the purpose of funding the Omolon Facility
(such interbank facilities from HBU to Abn Amro Moscow to be referred to herein
as the "AA Funding Facility") and Abn Amro Bank
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<PAGE>
N.V. Chicago Branch ("Abn Amro Chicago") will issue its guarantee in favor of
Abn Amro Moscow and HBU for the purpose of allocating credit risk to Abn Amro
Chicago (such interbank guarantee from Abn Amro Chicago to Abn Amro Moscow and
to HBU to be referred to as the "AA Guarantee Facility"). The AA Funding
Facility and the AA Guarantee Facility shall be referred to together as the "AA
Facility" and the agreements evidencing the AA Funding Facility and the AA
Guarantee Facility shall be referred to together as the "AA Facility
Agreements". In order to induce HBU and Abn Amro Chicago to enter into the AA
Facility Agreements, the Guarantor hereby agrees to provide the below described
indemnities to the Bank indemnifying against any and all costs, liabilities and
losses which may be incurred under the AA Facility Agreements or as a result of
any AA Facility Repayment Restriction, any new Money Credit, any Restructuring,
any ineffectiveness of the Operative Documents (as hereinafter defined) or any
recharacterization risks, (as defined below).
(a) AA Facility Repayment Restriction means:
Any Act of State or any Political Risk Event affecting either party
to the AA Facility in relation to the AA Facility, or its obligations under
the AA Facility or the performance or enforceability thereof.
(b) Act of State means any of the following affecting any party to the
Omolon Facility in relation to the AA Facility or the AA Facility:
Any law, rule or regulation of the Russian Federation, or any
political subdivision thereof, or any order, decree, decision, award,
directive, instruction, or other measure, or action of the Russian
Federation or any political subdivision thereof, or of any Governmental
Authority, or the interpretation of any of the foregoing, and any demand,
request, application or other action of or filed with any Governmental
Authority, or any other court or authority of competent jurisdiction, which
purports or seeks to, or has the effect of:
- terminating, extending, increasing or otherwise modifying the
Omolon Facility or the AA Facility or any provision thereof;
- prohibiting, reducing, delaying, or suspending, or modifying the
agreed manner or currency of, any payment to be made under or
pursuant to the Omolon Facility or the AA Facility, or otherwise
affecting the performance or enforceability of the Omolon
Facility or the AA Facility by or against any party thereto;
- expropriating, confiscating or seizing (control over), or
changing or adversely affecting the ownership, control, operation
or management of the Borrower or ABN AMRO Moscow, of all or a
substantial part of its business or assets, with or without
compensation.
The foregoing notwithstanding, no Act of State shall be deemed to
have occurred if the performance or enforceability of the Omolon Facility
or the AA Facility is affected as a result of the Bank's or ABN AMRO
Moscow's knowing and material violation of any law or regulation generally
applicable to banking institutions in the Russian Federation.
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<PAGE>
(c) Governmental Authority means:
Any court, ministry, or other central or local governmental or
regulatory authority, department, commission, bureau or agency of the
Russian Federation or any political sub-division thereof, including, but
not limited to, the Central Bank of the Russian Federation.
(d) New Money Credit means:
Any loan or granting of credit by the Bank to or on the credit of (i)
the Russian Federation, (ii) any Governmental Authority, (iii) any person
which is citizen of, or is organized or exists under the laws of the
Russian Federation or the majority of the ownership interest of which is
owned, directly or indirectly by the Russian Federation or any Governmental
Authority or (iv) any person which conducts business in the Russian
Federation ((i) through (iv) jointly the "Russian Federation Persons"),
which loan or extension of credit is made in a foreign currency pursuant to
an agreement or agreements entered into at the request of the Russian
Federation or any Governmental Authority following negotiations and
consultations between the Russian Federation or any Governmental Authority
and the Bank and other holders of foreign currency indebtedness of Russian
Federation Persons, but only to the extent that the amount of such loan or
granting of credit is determined by reference to the Bank's commitment,
advances under the Omolon Facility or prior New Money Credits.
(e) Political Risk Event means:
Any type of war, invasion, embargo, rebellion, revolution, riot or
sabotage and any politically motivated work stoppage or slowdown, labor
unrest or violence in the Russian Federation or any political sub-division
thereof which affects the performance or enforceability of the Omolon
Facility or the AA Facility by or against any party thereto.
(f) Restructuring means:
(i) Any postponement of a date or reduction of an amount of any
payment to be made by the Borrower under the Omolon Facility;
(ii) any termination or modification of the AA Facility Agreement or
this Guarantee and Indemnity, or any other security arrangement
with respect to the Omolon Facility; and
(iii) any changes in the currency or manner in which the obligations
of the Borrower under the Omolon Facility are payable,
which postponement, reduction, change, termination or modification is made
pursuant to an agreement or agreements entered into at the request of the
Russian Federation or a Governmental Authority following negotiations and
consultations between the Russian Federation or a Governmental Authority
and the Bank or the holders of foreign currency indebtedness of natural
persons or juridical entities resident in, formed under, or otherwise
subject to the laws of the Russian Federation in connection with a
restructuring or re-negotiation of foreign currency indebtedness of such
persons or entities, or pursuant to any
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<PAGE>
Russian Federation law, rule, order or regulation adopted after the date
of either the AA Facility or Omolon Facility.
3.3. The Guarantor hereby irrevocably and unconditionally, as its own
primary and independent obligation, indemnifies ABN AMRO Chicago and holds it
harmless with respect to all payments at any time made or to be made by ABN AMRO
Chicago pursuant to a payment request made by ABN AMRO Moscow under the AA
Guarantee Facility, and all legal and other costs, charges and expenses of
whatever nature incurred by ABN AMRO Chicago in connection with its performance
thereunder and to pay to ABN AMRO Chicago, without set-off or counterclaim,
within forty-eight hours of receipt of the first written request, all amounts
stated by ABN AMRO Chicago to be due and owing by the Guarantor to ABN AMRO
Chicago hereunder, including interest and other costs.
3.4. The Guarantor hereby irrevocably and unconditionally, as its own
primary and independent obligation, agrees, within forty-eight hours of receipt
of the Bank's first written notice (the "Notice") that an AA Facility Repayment
Restriction has occurred, to pay to ABN AMRO Chicago or to HBU all amounts (the
"Amount") which, as stated in the Notice, have or will at any time thereafter
become due and owing by ABN AMRO Moscow to HBU under the AA Funding Facility
Agreement. If an AA Facility Repayment Restriction has occurred, the Amount
will become due and owing from that date. The Amount will not include any
amount paid by the Borrower to ABN AMRO Moscow under the Omolon Facility
Agreement which prior to the occurrence of such AA Facility Repayment
Restriction ABN AMRO Moscow has failed to apply to pay its corresponding
liability to HBU under the AA Funding Facility Agreement. The Guarantor shall
forthwith notify the Borrower of any notice received by the Guarantor under this
Section 3.4. The obligations of the Guarantor under this Agreement will be
enforceable whether or not any payment by the Borrower is due and payable under
the Omolon Facility Agreement at the time when the Notice is received by the
Guarantor in accordance with this Section 3.4.
3.5. The Guarantor hereby irrevocably and unconditionally, as its own
primary and independent obligation, agree, within forty-eight hours of receipt
of the Bank's first written notice to indemnify the Bank for all amounts which,
in accordance with the statement of the Bank have been paid by the Bank or ABN
AMRO Moscow in order to extend the New Money Credit in its own name. The
Guarantor shall have the option to purchase, if legally permissible, by way of
assignment from the Bank such New Money Credit or a 100% participating interest
therein, without recourse except as to title and amount at a price equal to the
amount of the New Money Credit extended by the Bank. In the event the Guarantor
has so indemnified the Bank, the Bank agrees to assign or transfer to the
Guarantor any claim it may have against the Russian Federation Persons under the
New Money Credit without recourse except as to title and amount. The Bank shall
give the Guarantor notice of any New Money Credit request and the Guarantor
shall have the option prior to any extension of New Money Credit to pay in full
all obligations of the Borrower as provided in Section 1 as if a termination
date had occurred thereunder.
3.6. The Guarantor hereby irrevocably and unconditionally, as its own
primary and independent obligation agrees, upon written notice from the Bank
that if a Restructuring has occurred, the Guarantor will pay on the due date
therefor, as in effect immediately before such Restructuring, the amount which,
but for the Restructuring would be payable or which would have been payable by
the Borrower to ABN AMRO Moscow under the Omolon Facility Agreement. The Bank
will apply the net amount actually received by it pursuant to this Section 3.6
in reducing the amount payable by ABN AMRO Moscow to HBU under the AA Funding
Facility Agreement.
-5-
<PAGE>
3.7. The Guarantor acknowledges and agrees as its own primary and
independent obligation for the benefit of the Bank, that:
(a) the Bank is not making any representation with respect to the
legality, validity, enforceability or effect of any of the provisions of
the Omolon Facility Agreement, the AA Facility Agreements, or this
Agreement (together the "Operative Documents"), or any of them, or any of
the transactions contemplated thereby except that the Bank is a licensed
lender in the Russian Federation and is legally permitted to extend the
Omolon Facility and to obtain funding in a manner consistent with the AA
Facility;
(b) the Bank will not have any liability with respect to any
failure or inability of the Borrower or the Guarantor to realize any tax or
other benefit anticipated by either of them from the Operative Documents,
or any of them, or any of the transactions contemplated thereby; and
(c) the Guarantor hereby irrevocably and unconditionally, as its
primary and independent obligation hereby indemnifies and holds the Bank,
including HBU, harmless from, and promptly upon their request indemnifies
each of them for, any loss, damage, cost or expense that either of them may
incur as a result of (i) the illegality, invalidity, unenforceability or
ineffectiveness of any of the provisions of the Operative Documents, or any
of the transactions contemplated thereby, or (ii) the characterization of
the Omolon Facility Agreement as anything other than a loan facility from a
local Russian Federation commercial banking institution to a local Russian
Federation borrower, by any Governmental Authority.
Section 4.
The Guarantor agrees to pay on demand interest on each amount demanded of
it under this Agreement from the date of demand until actual payment (whether
before or after judgment) at a rate per annum equal to the rate from time to
time quoted by the Bank as its prime rate for U.S. dollar loans plus one
percent.
Section 5. Absolute Guarantee.
The Guarantor's obligations hereunder shall be primary and independent and
not be affected by the genuineness, validity, regularity or enforceability of
the Obligations or the Operative Document, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations or the amounts indemnified hereunder
which might otherwise constitute a defense to this Agreement. The Bank makes no
representation or warranty with respect to any such circumstance and has no duty
or responsibility whatsoever to the Guarantor with respect to the management and
maintenance of the Obligations, the Operative Documents, or any collateral
therefor. In the event that any payment to the Bank with respect to any
Obligations or other amounts due hereunder is rescinded or must otherwise be
returned or is not freely transferable outside the Russian Federation, the
Guarantor shall remain liable hereunder with respect to such Obligations as if
such payment had not been made. The Guarantor represents that the execution,
delivery and performance of this Agreement has been duly authorized by all
necessary corporate action and that this Agreement constitutes its legal, valid
and binding obligation.
-6-
<PAGE>
Section 6. Consents, Waivers and Renewals.
The Guarantor agrees that the Bank may at any time and from time to time,
either before or after the maturity thereof, without notice to or further
consent of the Guarantor, extend the time of payment of or renew any of the
Obligations or the AA Facility and may also make any agreement with the Borrower
for the extension, renewal, payment, compromise, discharge or release thereof,
in whole or in part, or for any modification of the terms thereof or of any
agreement between the Bank and the Borrower, without in any way impairing or
affecting this Guarantee. The Guarantor acknowledges, consents and approves the
terms of the Omolon Facility, including, without limitation, those terms thereof
which subordinate, capitalize interest or otherwise defer payment under the
Omolon Facility.
Section 7. Expenses.
The Guarantor agrees to pay on demand all reasonable out-of-pocket costs,
charges and expenses (including the reasonable fees and expenses of counsel)
incurred by the Bank in connection with the enforcement or protection of the
rights of the Bank hereunder.
Section 8. Subrogation.
As to any payments made by the Guarantor hereunder, the Guarantor shall be
subrogated to the rights of the Bank to receive payments and distributions of
cash, property and securities applicable to the Obligations or the AA Funding
Facility, provided, that the Guarantor shall not be entitled to exercise any
such subrogation rights or any other rights which it may acquire by way of such
subrogation or by any indemnity, reimbursement or other agreement or accept any
payments or distributions with respect thereto until all amounts due to the Bank
in connection with the Obligations or this Agreement and the AA Facility shall
have been paid in full in lawful money of the United States and in immediately
available and freely transferable currency. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, such amount shall be held in
trust for the benefit of the Bank and shall forthwith be paid to the Bank to be
credited and applied to the Obligations, and other amounts due hereunder,
whether matured or unmatured.
Section 9. Continuing Agreement.
This is a continuing Agreement and shall remain in full force and effect
and be binding upon the Guarantor and its successors and assigns until written
notice of its revocation shall actually be received by the Bank. No such
revocation shall release the Guarantor or affect in any manner the rights,
remedies or powers of the Bank under this Agreement with respect to any of the
Obligations arising, or as to which the Bank is committed to extend, prior to
actual receipt by the Bank of such written notice of revocation nor shall it
release the Guarantor from any of its indemnities hereunder which shall in all
events survive. If any of the present or future Obligations are guaranteed by
persons, partnerships or corporations in addition to the Guarantor, the death,
release or discharge in whole or in part, or the bankruptcy, liquidation or
dissolution of one or more of them shall not discharge or affect the liabilities
of the Guarantor under this Agreement.
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<PAGE>
Section 10. No Waiver; Cumulative Rights.
No failure on the part of the Bank to exercise, and no delay in exercising,
any right, remedy or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by the Bank of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy or
power. Each and every right, remedy and power hereby granted to the Bank or
allowed them by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Bank from time to time.
Section 11. Covenants and Agreements.
The Guarantor agrees to observe, perform and comply with all the covenants
and agreements set forth in the Amended and Restated Competitive Advance and
Revolving Credit Facility Agreement dated as of August 25, 1995 (without giving
effect to any amendment, waiver or other modification thereto not consented to
by the Bank in writing expressly for purposes of this Guarantee, the "Credit
Agreement") among the Guarantor, the Lenders from time to time party thereto,
Chemical Bank, as Administrative Agent, and Chemical Bank Delaware, as Fronting
Bank whether or not the Credit Agreement remains in effect, and such covenants
and agreements will be deemed to continue in effect for the benefit of the Bank
whether or not any commitment remains in effect, or any sum remains payable,
under the Credit Agreement so that its terms remain in effect for the benefit of
the Bank even after its termination or expiration, provided that any
documentation to be delivered to the "Administrative Agent" or any "Lender"
under the Credit Agreement shall be delivered to the Bank and all references to
the "Agreement" and the "Loan Documents" contained therein shall be deemed to
refer to this Guarantee. The Guarantor acknowledges and agrees that upon the
occurrence of an Event of Default under the Credit Agreement, without giving
effect to any requirement that the "Administrative Agent" or the "Required
Lenders" give any notice or make any determination required under the Credit
Agreement, but only requiring that such notice be given or any determination be
made by the Bank, and without regard to whether the "Required Lenders" or
"Administrative Agent" have terminated the "Commitments" or accelerated the
"Loans" under the Credit Agreement, the Bank may, as between the Guarantor and
the Bank, deem all Obligations outstanding under the Omolon Facility and
hereunder to be immediately due and payable by the Guarantor hereunder. The
Guarantor agrees to pay to the Bank or its assignee the Guaranteed Percentage of
the unpaid principal amount and interest owing on all Obligations so accelerated
regardless of whether such acceleration is effective against the Borrower.
Section 12. Waiver of Notice.
The Guarantor waives notice of the acceptance of this Agreement and of the
making of any loans or extensions of credit to the Borrower, and to ABN AMRO
Moscow, presentment to or demand or payment from anyone whomsoever liable upon
any of the Obligations, presentment, demand, notice of dishonor, protest and all
other notices whatsoever.
Section 13. Governing Law and Place of Payment.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York. All amounts payable by the Guarantor hereunder
shall be paid at the principal New York office of the Bank at 500 Park Avenue,
New York, New York 10022 or at such other
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<PAGE>
place as may be specified by the Bank to the Guarantor from time to time in
writing. All such payments shall be made at such place of payment in immediately
available and freely transferable funds and in lawful currency of the United
States of America, free and clear of, and without reduction for any present or
future taxes, duties, charges, offsets, counterclaims or other deductions
whatsoever. All payments to be made under this Agreement related to the
Obligations, the AA Facilities, New Money Credit, the Restructuring and other
amounts shall be made without any set-off or counterclaim whatsoever and free
and clear of any deduction or withholding on account of any taxes or otherwise.
In the event that any payment by the Guarantor under this Agreement, or by Abn
Amro Moscow under the AA Facility Agreement, or by the Bank under the New Money
Credit is subject to any set-off, counterclaim, withholding tax or any tax
required by any law or any competent authority, the Guarantor will indemnify the
Bank (as its primary and independent obligation) for any such payment and will
ensure that the Bank receives (free of any taxes, other deduction or
withholding) the full amount which it would have received if no such deduction
or withholding had been required. If, at the time any amount of principal,
interest or costs becomes due and payable under the Omolon Facility, as a result
of any governmental or monetary authority action in the Russian Republic or as a
result of any change in any law or regulation or in the interpretation thereof
by any authority or court in the Russian Republic, the Bank, if it were to
receive such amount from the Borrower, would be unable to transfer the same out
of the Russian Republic, then, in any such case, the Bank will be entitled to
refuse to receive such amount or, upon receipt, return it to the Borrower, and
this Agreement shall continue to be fully applicable to the Obligation(s) in
question to the same extent as though the payment so refused or repaid had never
been made originally on such Obligation(s), provided, however, that the Bank
will under no circumstances be allowed to refuse to receive such amount or
return such amount if its inability to transfer such amount out of the Russian
Federation arises solely from the Bank's knowing and material violation of any
law or regulation generally applicable to banking institutions in the Russian
Federation which must be complied with in order to transfer hard U.S. dollar
currency abroad.
Section 14. Consent to Jurisdiction.
The Guarantor hereby irrevocably submits to the non-exclusive jurisdiction
of any New York State or Federal court in any action or proceeding arising out
of or relating to this Guarantee.
Section 15. Additional Agreement.
This Agreement is given in addition to, and not in supercession of, any
other existing guarantees or indemnity agreements issued by the Guarantor in
favor of the Bank.
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<PAGE>
In Witness Whereof, this Agreement has been duly executed and delivered by
the Guarantor to the Bank as of the date first above written.
Cyprus Amax Minerals Company
By
Name:
Title:
Address:
9100 East Mineral Circle
P.O. Box 3299
Englewood, Colorado 80155
Agreed and Accepted as of the
date first above written:
ABN AMRO Bank N.V.
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
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