<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[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 - 464
Exhibit Index Located on Pages 12-13
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMAX GOLD INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
- -----------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 73.3 $25.6 $111.7 $ 51.2
- -----------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of sales 43.2 19.8 68.4 40.5
Depreciation and depletion 25.1 6.7 36.5 12.8
General and administrative 2.0 2.3 3.9 5.0
Exploration 1.5 0.8 2.3 1.4
- -----------------------------------------------------------------------------------------------------------
Total costs and expenses 71.8 29.6 111.1 59.7
- -----------------------------------------------------------------------------------------------------------
Income (loss) from operations 1.5 (4.0) 0.6 (8.5)
Interest expense (10.3) (6.9) (19.7) (12.5)
Capitalized interest - 5.6 4.2 10.2
Interest income 0.6 0.4 0.9 0.9
Other (0.9) (0.9) (1.2) (1.4)
- -----------------------------------------------------------------------------------------------------------
Loss before income tax expense and cumulative
effect of accounting change (9.1) (5.8) (15.2) (11.3)
Income tax expense (0.1) - (0.1) -
- -----------------------------------------------------------------------------------------------------------
Loss before cumulative effect of
accounting change (9.2) (5.8) (15.3) (11.3)
Cumulative effect of accounting change - - 4.5 -
- -----------------------------------------------------------------------------------------------------------
Net loss (9.2) (5.8) (10.8) (11.3)
Preferred stock dividends (1.7) (1.7) (3.4) (3.4)
- -----------------------------------------------------------------------------------------------------------
Loss attributable to common shares $(10.9) $(7.5) $(14.2) $(14.7)
===========================================================================================================
Per common share:
Loss before cumulative effect of
accounting change $ (.11) $(.08) $ (.18) $ (.15)
Cumulative effect of accounting change - - .04 -
----------------------------------------------------------------------------------------------------------
Loss per common share $ (.11) $(.08) $ (.14) $ (.15)
===========================================================================================================
Weighted average common
shares outstanding 103.6 96.5 101.5 96.5
===========================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
2
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AMAX GOLD INC.
CONSOLIDATED BALANCE SHEET
(Dollars in millions except share amounts)
<TABLE>
<CAPTION>
June 30,
1997 December 31,
(Unaudited) 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and equivalents, including restricted cash
of $4.7 million at June 30, 1997 $ 22.2 $ 11.1
Inventories 60.4 28.5
Receivables 30.5 3.2
Other 19.7 17.9
- -----------------------------------------------------------------------------------------------------------
Current assets 132.8 60.7
Property, plant and equipment, net 757.9 667.1
Other 29.4 34.4
- -----------------------------------------------------------------------------------------------------------
Total assets $ 920.1 $762.2
===========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Cyprus Amax demand loan $ 72.7 $130.0
Current maturities of long-term debt 73.3 39.3
Accounts payable, trade 37.2 14.7
Accrued and other current liabilities 32.2 23.8
Reclamation reserve, current portion 5.6 4.5
- -----------------------------------------------------------------------------------------------------------
Current liabilities 221.0 212.3
Long-term debt 383.4 272.6
Reclamation reserve, noncurrent portion 10.3 11.2
Other 6.5 6.7
- -----------------------------------------------------------------------------------------------------------
Total liabilities 621.2 502.8
Commitments and contingencies - -
Shareholders' equity:
Preferred stock, par value $1.00 per share, authorized
10,000,000 shares, of which 2,000,000 shares have been
designated as Series A Convertible Preferred Stock, no
shares issued and outstanding; and 1,840,000 shares have
been designated as $3.75 Series B Convertible Preferred Stock,
issued and outstanding 1,840,000 shares 1.8 1.8
Common stock, par value $.01 per share, authorized
200,000,000 shares, issued and outstanding 114,768,955
shares in 1997 and 99,308,979 shares in 1996 1.1 1.0
Paid-in capital 408.3 355.7
Accumulated deficit (104.7) (90.5)
Unearned equity-financing costs (7.6) (8.6)
- -----------------------------------------------------------------------------------------------------------
Total shareholders' equity 298.9 259.4
- -----------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 920.1 $762.2
===========================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
AMAX GOLD INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
- ------------------------------------------------------------------------------------
1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(10.8) $ (11.3)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and depletion 36.5 12.8
Cumulative effect of accounting change (4.5) -
Increase in reclamation reserves 0.2 0.5
Increase in working capital items 0.1 3.4
Other 0.3 0.3
- ------------------------------------------------------------------------------------
Net cash provided by operating activities 21.8 5.7
- ------------------------------------------------------------------------------------
Investing Activities:
Capital expenditures (17.0) (91.7)
Capitalized interest (4.2) (10.2)
Loan to joint venture partner - (2.0)
- ------------------------------------------------------------------------------------
Net cash used by investing activities (21.2) (103.9)
- ------------------------------------------------------------------------------------
Financing Activities:
Proceeds from financings 90.7 95.0
Repayments of financings (82.7) (6.5)
Deferred financing costs (1.1) (0.7)
Cash acquired in connection with
purchase of Kubaka investment 7.0 -
Cash dividends paid (3.4) (3.4)
- ------------------------------------------------------------------------------------
Net cash provided by financing activities 10.5 84.4
- ------------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents 11.1 (13.8)
Cash and equivalents at January 1 11.1 25.6
- ------------------------------------------------------------------------------------
Cash and equivalents at June 30 $ 22.2 $ 11.8
====================================================================================
Non-cash Transaction:
Issuance of common stock for purchase of
Kubaka investment, net of cash acquired:
Working capital, other than cash $ (10.3) $ -
Property, plant and equipment (114.2) -
Debt 79.5 -
- ------------------------------------------------------------------------------------
$ (45.0) $ -
====================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
AMAX GOLD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying interim unaudited financial statements include all adjustments
which are, in the opinion of management, necessary for a fair presentation.
Results for any interim period are not necessarily indicative of the results
that may be achieved in future periods. The financial information as of this
interim date should be read in conjunction with the financial statements and
notes thereto contained in Amax Gold Inc.'s ("Amax Gold" or the "Company")
Annual Report on Form 10-K for the year ended December 31, 1996. The Company is
currently approximately 58.8 percent owned by Cyprus Amax Minerals Company
("Cyprus Amax").
2. CHANGE IN ACCOUNTING POLICIES
During the first quarter of 1997 Amax Gold elected to change its method of
accounting for inventory from the last-in-first-out (LIFO) method to a three-
month rolling average method. In accordance with generally accepted accounting
principles when changing from the LIFO method, prior years' results have been
restated to reflect the effect of this change in policy. The effect of this
restatement on the second quarter and first six months of 1996 was to increase
the previously reported net loss by $3.3 million, or $.03 per share and $5.3
million, or $.05 per share, respectively. Additionally, as of January 1, 1997,
the Company changed its accounting policy to include depreciation and depletion
in inventory, which has the effect of recording depreciation and depletion
expense in the statement of operations as gold is sold rather than as it is
produced. The cumulative effect of this accounting change is a $4.5 million
reduction of the net loss as of January 1, 1997. On a pro forma basis this
change would have reduced the 1996 second quarter and first six months net loss
by $0.2 million and $0.3 million, respectively. Both accounting changes were
made in order to better match current costs with revenues and to conform with
prevailing gold industry practice.
3. INVENTORIES
Inventories consist of the following (in millions):
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Gold:
Finished goods $23.4 $16.7
Work-in-process 4.1 3.1
Materials and supplies 32.9 8.7
- --------------------------------------------------------------------------------
$60.4 $28.5
================================================================================
</TABLE>
4. LONG-TERM DEBT
During the second quarter, the Company completed a $71 million tax-exempt
industrial revenue bond financing for the solid waste disposal facility at the
Fort Knox mine. The 12-year variable rate bonds were issued by the Alaska
Industrial Development and Export Authority and are backed by a letter of credit
guaranteed by Cyprus Amax. The Company's interest rate on the bonds is
currently approximately 4.7 percent and an additional 1.75 percent interest
differential is paid to Cyprus Amax as a guaranty fee. Amax Gold has agreed to
reimburse Cyprus Amax for any payments made or costs incurred under the
guaranty.
5
<PAGE>
The Company received proceeds of approximately $66.3 million with the remaining
approximately $4.7 million maintained in an interest-bearing escrow account that
becomes available to the Company over the next three years as additional funds
are spent on the solid waste disposal facility. Proceeds were used to repay
amounts borrowed under the Cyprus Amax demand loan facility. See Note 6 for
discussion of the debt related to the Kubaka mine.
The Company borrowed $2.6 million and repaid $72.2 million during the second
quarter of 1997 under the Cyprus Amax demand loan facility, with a total of
$72.7 million outstanding under this facility as of June 30, 1997. The Company
pays interest on amounts outstanding at LIBOR plus 2.25 percent. Amounts
outstanding are payable to Cyprus Amax on demand in cash or, at the election of
Cyprus Amax, in shares of common stock of the Company, valued at the average
closing price over the five days before such election.
5. HEDGE CONTRACTS
Forward sales contracts, generally on a spot deferred basis, put and call option
contracts and compound options are entered into from time to time to protect the
Company from the effect of price changes on precious metals sales. As of June
30, 1997, the Company's outstanding hedge contracts were as follows:
<TABLE>
<CAPTION>
Average
Gold Realized Price
Ounces Per Ounce Period
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Forward sales contracts/(1)/ 252,300 $432 July 1997 - Jan. 1998
Option contracts:
Purchased put options 897,200 $377 July 1997 - Dec. 2000
Sold put options 348,200 $357 July 1997 - Sept. 1999
Purchased call options 565,000 $392 Dec. 1997 - Dec. 1998
Sold call options 131,000 $380 July 1997 - Dec. 1997
</TABLE>
/(1)/ Represents the net forward sales position made primarily on a spot
deferred basis which allows deferral of the delivery of gold ounces to a
later date at a renegotiated gold price.
The market value of the Company's forward contracts and put and call options at
June 30, 1997 was approximately $31.3 million. Market valuations for contracts
are dependent on gold prices, option volatility and interest rates, which can
vary significantly. Contracts will be utilized in the future to hedge against
declines in gold prices for the Company's future gold production while
maintaining benefits in the event of higher gold prices.
As a requirement of the Fort Knox financing, the Company entered into interest
rate swap option agreements to reduce the impact of changes in interest rates.
At June 30, 1997, the Company had interest rate swaps and swap option sales
contracts that if exercised between July and September 1997 would obligate the
Company to pay a fixed rate of 6.11 percent over an average term of 1.1 years on
a principal amount of $152 million. The Company also purchased swap options
with the right to pay 6.95 percent over an average term of 1.6 years on a
principal amount of $192 million which expire through 1999. The market value of
the Company's interest rate swap options at June 30, 1997 was approximately $0.1
million. Due to the requirements of the Fort Knox financing, the Company does
not expect to close these contracts.
6
<PAGE>
6. KUBAKA ACQUISITION
During May 1997, the Company completed the acquisition of a Cyprus Amax
subsidiary which owns 50 percent of Omolon Gold Mining Company (Omolon). Omolon
owns and operates the Kubaka gold mine, located in Far East Russia. Kubaka
poured its first gold in February 1997 and achieved commercial production
effective June 1, 1997. The project is expected to be completed at a total
capital cost of approximately $228 million.
Under terms of the transaction, Cyprus Amax received a total of approximately
15.4 million shares of Amax Gold common stock, increasing Cyprus Amax's
ownership of Amax Gold to approximately 58.8 percent. Additional Amax Gold
common stock may be issued to Cyprus Amax in the future if more reserves are
discovered in Russia outside of the Kubaka concession area.
The Kubaka acquisition has been recorded as a transfer between companies under
common control which requires the transfer of the assets and liabilities
acquired at their net book values. Approximately $114.2 million in property,
plant and equipment and $17.3 million in net working capital were acquired,
offset by the assumption of $79.5 million in debt and the issuance of $52
million in equity.
As of June 30, 1997, Kubaka has been funded through $86 million of equity
contributions from the partners, on a pro rata basis to their ownership
interests, and borrowings of $159 million. Project financing of $130 million
was provided by the European Bank for Reconstruction and Development and the
U.S. Overseas Private Investment Corporation while a bank licensed to do
business in Russia provided $14 million in subordinated debt and a $15 million
working capital line of credit. Interest on the project financing is variable
based upon LIBOR and currently is approximately 9 percent with final maturity in
December 2001. The subordinated debt and working capital line of credit also
have variable interest rates based on LIBOR which are both currently
approximately 12 percent. The subordinated debt does not have a defined term
for repayment but will be repaid out of available cash while the working capital
line of credit expires in April 1998. These financings are guaranteed by Cyprus
Amax and the Company agreed to reimburse Cyprus Amax under certain circumstances
for guaranty payments. As a guaranty fee for the subordinated debt and the
working capital line of credit, Cyprus Amax receives a portion of the interest.
Omolon also is seeking to arrange additional working capital financing.
Accounts payable includes approximately $22 million of advances to Omolon by
Cyprus Amax for which Amax Gold agreed to reimburse Cyprus Amax under certain
circumstances, offset in part by approximately $11 million in accounts
receivable, the net amount the Company would expect to receive.
7. COMMITMENTS AND CONTINGENCIES
Reclamation, site restoration and closure costs are accrued on a units-of-
production basis using estimates based upon current federal, state and
applicable foreign laws and regulations governing the protection of the
environment. These laws and regulations are continually changing and generally
becoming more restrictive. Any changes in these laws and regulations could
impact future estimated reclamation costs. Total reclamation costs for the
Company at the end of current operating mine lives are estimated to be
approximately $34 million.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the Company's gold production, production costs,
ounces of gold sold and average realized prices for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GOLD PRODUCTION (OUNCES)/(1)/
Fort Knox 94,831 - 124,055 -
Kubaka 17,432 - 17,432 -
Refugio 18,376 - 44,306 -
Guanaco 32,018 23,319 57,887 42,239
Hayden Hill 29,836 26,403 52,047 47,431
Sleeper - 12,301 - 31,521
- --------------------------------------------------------------------------------------------------------------------------
TOTAL GOLD PRODUCTION 192,493 62,023 295,727 121,191
- --------------------------------------------------------------------------------------------------------------------------
CASH OPERATING COSTS ($ PER OUNCE OF GOLD PRODUCED)/(2)/
Fort Knox $ 170 $ - $ 172 $ -
Kubaka 137 - 137 -
Refugio 305 - 272 -
Guanaco 199 300 222 323
Hayden Hill 185 239 207 264
Sleeper - 221 - 224
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE CASH OPERATING COSTS $ 187 $ 258 $ 201 $ 271
- --------------------------------------------------------------------------------------------------------------------------
TOTAL CASH COSTS ($ PER OUNCE OF GOLD PRODUCED)/(2)/
Fort Knox $ 170 $ - $ 172 $ -
Kubaka 160 - 160 -
Refugio 324 - 289 -
Guanaco 212 312 235 336
Hayden Hill 193 247 215 272
Sleeper - 227 - 229
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE TOTAL CASH COSTS $ 194 $ 268 $ 209 $ 283
- --------------------------------------------------------------------------------------------------------------------------
TOTAL PRODUCTION COSTS ($ PER OUNCE OF GOLD PRODUCED)/(2)/
Fort Knox $ $ $342 $ - $ 344 $ -
Kubaka 260 - 260 -
Refugio 420 - 385 -
Guanaco 346 472 369 495
Hayden Hill 285 362 308 385
Sleeper - 293 - 319
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE TOTAL PRODUCTION COSTS $ 337 $ 390 $ 342 $ 406
- --------------------------------------------------------------------------------------------------------------------------
OUNCES OF GOLD SOLD 195,971 62,070 295,049 124,34
AVERAGE PRICE PER OUNCE SOLD $ 374 $ 412 $ 379 $ 412
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Commercial production commenced at Kubaka on June 1, 1997, at Fort Knox on
March 1, 1997 and at Refugio on October 1, 1996. Consolidated total cash
costs exclude the impact of the write-down of heap leach inventories at
Guanaco in 1996. Mining at Guanaco is expected to be completed during the
third quarter of 1997 and mining at Hayden Hill is expected to be
completed during the fourth quarter of 1997, with residual leaching at
both mines continuing through mid-year 1998. Mining at Sleeper was
completed in September 1996.
/(2)/ Cash operating costs at the mine sites including overhead, net of credits
for silver by-products. Total cash costs include cash operating costs plus
royalties and applicable production taxes. Total production costs include
total cash costs plus reclamation and depreciation and depletion.
8
<PAGE>
RESULTS OF OPERATIONS
Amax Gold Inc. reported a second quarter 1997 net loss of $9.2 million, or $.11
per share, on revenue of $73.3 million compared with a second quarter 1996 net
loss of $5.8 million, or $.08 per share, on revenue of $25.6 million.
For the first six months of 1997, the Company had a net loss of $10.8 million,
or $.14 per share, on revenue of $111.7 million compared with a net loss of
$11.3 million, or $.15 per share, on revenue of $51.2 million, for the 1996
period. Excluding the $4.5 million cumulative effect of a first quarter
inventory accounting change, the Company's net loss for the first six months of
1997 was $15.3 million, or $.18 per share. The increased loss was primarily
attributed to higher interest expense and lower realized gold prices which more
than offset significant improvements in costs. See Note 2 for further
discussion of the changes in accounting policies during the first quarter of
1997.
The Company's operating income was $1.5 million for the second quarter of 1997
compared with an operating loss of $4.0 million in the 1996 second quarter.
Significantly lower cash costs of $194 per ounce coupled with higher production
and sales during the second quarter of 1997 resulted in improved operating
earnings.
During the second quarter of 1997, the Company completed the acquisition of the
Kubaka mine in Far East Russia from Cyprus Amax. See Note 6 for further
discussion of the acquisition.
Amax Gold's average realized price for the second quarter and the first six
months of 1997 was $374 per ounce and $379 per ounce, respectively, compared
with $412 per ounce for the comparable 1996 periods. This compares with an
average market gold price of $343 per ounce and $348 per ounce for the second
quarter and first six months of 1997. Revenues increased significantly during
the second quarter of 1997 due to higher gold sales attributed to commercial
production at Fort Knox, Kubaka and Refugio, partially offset by the absence of
production from the Sleeper mine, which is now in reclamation.
Gold production was a record 192,493 ounces for the second quarter of 1997, more
than triple the 62,023 ounces produced in the 1996 second quarter. Production at
Fort Knox, Kubaka and Refugio totaled 130,639 ounces. Fort Knox and Kubaka are
both proceeding through start-up more smoothly than expected and mill throughput
and grade at both mines have exceeded expectations. Mining operations were
suspended at Refugio for several weeks during June and July due to unusually
heavy snow and high winds at the mine, which is located at over 14,000 feet
above sea level. As a result, quarterly production decreased to 18,376 ounces
for the Company's account compared with 25,930 ounces during the first quarter
of 1997. Abnormal weather conditions at Refugio have continued and it is
anticipated that third quarter results at Refugio will be adversely impacted as
well. Guanaco and Hayden Hill both reported increased production and lower cash
costs compared with the 1996 second quarter. Guanaco produced 32,018 ounces in
the second quarter of 1997, a 37 percent increase over the 1996 second quarter,
primarily due to significantly higher grades and improved crusher throughput.
Hayden Hill's second quarter production of 29,836 ounces was 13 percent higher
than the second quarter of 1996 primarily due to higher grades. Both Hayden
Hill and Guanaco are expected to complete mining during 1997 with residual
leaching continuing into 1998.
The Company's second quarter 1997 cost of sales as a percentage of revenue
decreased to 59 percent compared with 77 percent for the prior year's second
quarter, reflecting lower average cash costs. Average total cash costs were
reduced by nearly 28 percent to $194 per ounce for the second quarter of 1997
from $268 per ounce in the second quarter of 1996. Fort Knox's cash costs of
$170 per ounce for the 1997 second quarter continue to outperform expectations
as crusher and mill throughput and grade have been
9
<PAGE>
higher than anticipated. Kubaka's cash costs of $160 per ounce for the first
month of commercial operations are also lower than anticipated as a result of
higher grades and mill throughput. Refugio's cash costs for the quarter were
$324 per ounce, which is higher than the prior two quarters, primarily due to
the adverse impact of the abnormal winter weather and certain operating
inefficiencies. Guanaco's cash costs of $212 per ounce improved $100 per ounce
compared with the 1996 second quarter and Hayden Hill's cash costs improved by
nearly 22 percent to $193 per ounce, both due to increased production.
Depreciation and depletion increased to $25.1 million during the second quarter
of 1997 primarily as a result of the additional Fort Knox, Kubaka and Refugio
production, partially offset by lower depreciation and depletion rates at
Guanaco and Hayden Hill.
Lower general and administrative expenses of $2.0 million for the 1997 second
quarter were primarily attributed to reduced salaries and benefits, which
resulted from a second quarter 1996 corporate reorganization.
Second quarter 1997 exploration expense of $1.5 million were nearly double
second quarter 1996 expense of $0.8 million. The increase was due to drilling
programs at the Company's Kubaka and Refugio mines, as well as increased
spending on several Canadian prospects. Based on 1997 drilling results to date,
the Company expects to evaluate reserve or resource additions at Fort Knox and
Refugio.
Interest expense of $10.3 million for the second quarter of 1997, a 49 percent
increase over the 1996 second quarter, was attributed to higher debt balances
necessary to complete construction of the Fort Knox mine, coupled with one month
of interest on $79.5 million in debt relating to the Kubaka construction. No
interest was capitalized during the second quarter of 1997 due to the completion
of the Company's construction projects.
LIQUIDITY AND CAPITAL RESOURCES
Amax Gold's cash flow from operations for the first six months of 1997 more than
tripled to $21.8 million compared with $5.7 million for the comparable 1996
period. The increased cash flow was primarily attributed to the addition of
Fort Knox, Kubaka and Refugio as well as lower total cash costs.
Completion of the Company's construction projects resulted in capital spending
of $17.0 million for the first six months of 1997, a significant reduction from
the $91.7 million in capital spending for the comparable 1996 period. Capital
spending, excluding capitalized interest, at Fort Knox totaled approximately
$9.0 million for the first six months of 1997 for a total project cost of about
$345 million, approximately $25 million below the revised capital cost estimates
announced in April 1996. The Kubaka mine is expected to be completed within its
revised capital budget of $228 million, also announced in April 1996. Capital
spending for the remainder of 1997 is expected to be approximately $10 million,
split about evenly at Fort Knox and Refugio.
Net financing activities generated $55.5 million during the first six months of
1997. During the second quarter of 1997, the Company borrowed $2.6 million
under the Cyprus Amax demand loan facility and repaid $72.2 million, reducing
outstanding borrowings under the demand loan at June 30, 1997, to $72.7 million.
In May 1997, the Company completed a $71 million tax-exempt industrial revenue
bond financing for the solid waste disposal facility at the Fort Knox mine.
Proceeds were used to repay amounts borrowed for construction of the Fort Knox
facilities under the Cyprus Amax demand loan facility. The Company currently has
available approximately $100 million under the Cyprus Amax demand loan facility.
10
<PAGE>
Depending upon future gold prices, cash flow from operations for the remainder
of 1997 is expected to be sufficient to fund the Company's remaining cash needs,
including scheduled third-party debt service, subject to further declines in
gold prices. The Company is currently considering various options to restructure
its debt and capital, which could include accessing public debt and equity
markets. The Company is also reviewing business combination possibilities.
Amax Gold paid regular dividends of $1.875 on the $3.75 Series B Convertible
Preferred Stock during the first half of 1997. At June 30, 1997, approximately
114.8 million shares of the Company's Common Stock were outstanding.
Statement of Financial Accounting Standards (SFAS) No. 128, Earning Per Share,
was issued in February 1997. SFAS No. 128 replaces the presentation of primary
earnings per share with a presentation of basic earnings per share. It
requires a reconciliation of the numerator and denominator of the basic earnings
per share computation. Basic earnings per share excludes dilution and is
computed by dividing income available to common shareholders by the weighted
average number of common share outstanding for the period. For the six months
ended June 30, 1997, basic earnings per share would be the same as primary
earnings per share presented.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
With the exception of historical matters, the matters discussed in this report
are forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from projected results. Such forward-
looking statements include statements regarding expected dates for commencement
of mining, gold production, projected quantities of future gold production,
estimated reserves and recovery rates, anticipated production rates, costs and
expenditures, prices realized by the Company, expected future cash flows,
anticipated financing needs, growth plans and sources of financing and repayment
alternatives and the effect of possible business combinations. Factors that
could cause actual results to differ materially include, among others: risks
and uncertainties relating to general domestic and international economic and
political conditions, the cyclical and volatile price of gold, the political and
economic risks associated with foreign operations, cost overruns, construction
delays, unanticipated ground and water conditions, unanticipated grade and
geological problems, metallurgical and other processing problems, availability
of materials and equipment, the timing of receipt of necessary governmental
permits and approvals, the occurrence of unusual weather or operating
conditions, force majeure events, lower than expected ore grades, the failure of
equipment or processes to operate in accordance with specifications or
expectations, labor relations, accidents, delays in anticipated start-up dates,
environmental risks, the results of financing efforts and financial market
conditions and other risk factors detailed in the Company's Securities and
Exchange Commission filings. Refer to the Risk Factors on pages 7 to 13 of
Amendment No. 1 to the Company's Registration Statement on Form S-3 (No. 333-
22598) as filed with the Securities and Exchange Commission on March 26, 1997,
for a more detailed discussion of risks. Many of such factors are beyond the
Company's ability to control or predict. Readers are cautioned not to put undue
reliance on forward-looking statements. The Company disclaims any intent or
obligation to update publicly these forward-looking statements, whether as a
result of new information, future events or otherwise.
11
<PAGE>
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
(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.
12
<PAGE>
(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
13
<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 13, 1997
14
<PAGE>
================================================================================
LOAN AGREEMENT
between
ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY
and
FAIRBANKS GOLD MINING, INC.
---------------------
$71,000,000
Alaska Industrial Development and Export Authority
Exempt Facility Revenue Bonds
(Fairbanks Gold Mining, Inc. Project)
Series 1997
---------------------
Dated
as of
May 1, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C>
Section 1.1 - Use of Defined Terms ............................... 2
Section 1.2 - Definitions ........................................ 2
Section 1.3 - Interpretation ...................................... 9
Section 1.4 - Captions and Headings .............................. 10
<CAPTION>
ARTICLE II
REPRESENTATIONS AND COVENANTS
<S> <C>
Section 2.1 - Representations and Covenants of the Issuer .............. 10
Section 2.2 - Representations and Covenants of the Company ............ 11
<CAPTION>
ARTICLE III
COMPLETION OF THE PROJECT;
ISSUANCE OF THE BONDS
<S> <C>
Section 3.1 -Acquisition, Purchase, Construction, Installation,
Equipment and Improvement ................................ 14
Section 3.2 - Description of Project .................................... 15
Section 3.3 - Issuance of the Bonds; Application of Proceeds ............ 15
Section 3.4 - Disbursements from the Project Fund ....................... 15
Section 3.5 - Company Required to Pay Costs in Event Project Fund
Insufficient ......................................... 17
Section 3.6 - Completion Date ........................................... 17
Section 3.7 - Investment of Fund Moneys ................................. 18
Section 3.8 - Rebate Fund ............................................... 19
<CAPTION>
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
<S> <C>
Section 4.1 - Loan by Issuer; Loan Repayment; Delivery of
Project Note............................................. 19
Section 4.2 - Additional Payments ....................................... 20
Section 4.3 - Place of Payments ......................................... 20
Section 4.4 - Obligations Unconditional ................................. 20
Section 4.5 - Assignment of Agreement, Project Note and Revenues ........ 21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
<S> <C>
Section 5.1 - Right of Inspection ....................................... 21
Section 5.2 - Lease or Grant of Use by Company .......................... 21
Section 5.3 - Company to Maintain its Existence; Sales of Assets or
Mergers .............................................. 21
Section 5.4 - Assignment of Loan Agreement .............................. 22
Section 5.5 - Indemnification ........................................... 23
Section 5.6 - Company Not to Adversely Affect Exclusion from Gross Income
of Interest on Bonds ................................. 24
<CAPTION>
ARTICLE Vl
REDEMPTION OF BONDS
<S> <C>
Section 6.1 - Optional Redemption ....................................... 25
Section 6.2 - Extraordinary Optional Redemption ......................... 25
Section 6.3 - Mandatory Redemption in Event of Inclusion in Gross Income
of Interest on Bonds .................................... 27
Section 6.4 - Actions by Issuer ......................................... 27
<CAPTION>
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
<S> <C>
Section 7.1 - Events of Default ......................................... 27
Section 7.2 - Remedies on Default ....................................... 29
Section 7.3 - No Remedy Exclusive ....................................... 30
Section 7.4 - Agreement to Pay Attorneys' Fees and Expenses ............. 30
Section 7.5 - No Waiver ................................................. 30
Section 7.6 - Notice of Default ......................................... 30
<CAPTION>
ARTICLE VIII
MISCELLANEOUS
<S> <C>
Section 8.1 - Term of Agreement ......................................... 30
Section 8.2 - Amounts Remaining in Funds ................................ 31
Section 8.3 - Notices ................................................... 31
Section 8.4 - Extent of Covenants of the Issuer; No Personal Liability... 31
Section 8.5 - Binding Effect ............................................ 32
Section 8.6 - Amendments and Supplements ................................ 32
Section 8.7 - Execution in Counterparts ................................. 32
Section 8.8 - Severability .............................................. 32
Section 8.9 - Governing Law ............................................. 32
</TABLE>
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement - Table of Contents
Page ii
<PAGE>
<TABLE>
<S> <C>
Section 8.10 - Continuing Disclosure..................................... 32
Exhibit A - Form of Project Note
Exhibit B - Description of Project Facilities
Exhibit C - Form of Disbursement Request
</TABLE>
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement - Table of Contents
Page iii
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into as of May 1, 1997 (as more
completely defined below, the "Agreement") between ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY (as more completely defined below, the
"Issuer") a governmental agency and a body politic and corporate constituting a
political subdivision of the State of Alaska duly organized and validly
existing under the provisions of Title 44, Chapter 88 of the Alaska Statutes,
and FAIRBANKS GOLD MINING, INC. (as more completely defined below, the
"Company"), a corporation duly organized and validly existing under the laws of
the State of Delaware and qualified to transact business in the State of
Alaska, under the following circumstances summarized in the following recitals
(the capitalized terms not defined in the recitals being used herein as defined
in Article I hereof):
WITNESSETH:
WHEREAS, the Issuer is authorized pursuant to the Act to issue and
sell its revenue bonds and thereby to make the loan to the Company contemplated
hereby; and
WHEREAS, the Company has requested that the Issuer issue its revenue
bonds for the purpose of financing the acquisition, purchase, construction.
improvement and equipping of the Project and, pursuant to Resolution No. G96-25
of the Issuer adopted November 26, 1996, the Issuer has authorized the issuance
and sale of said revenue bonds designated as its Exempt Facility Revenue Bonds
(Fairbanks Gold Mining, Inc. Project), Series 1997, in the principal amount of
$71,000,000 and the execution and delivery by the Issuer of the hereinafter
described Indenture; and
WHEREAS, the Issuer will loan the proceeds of the Bonds to the
Company for the purpose of financing the acquisition, purchase, construction,
improvement and equipping of the Project and the Company will make or cause to
be made payments under this Agreement sufficient to pay the principal of and
the premium, if any, and interest on and the Purchase Price of the Bonds; and
WHEREAS, the Issuer has entered into the Indenture dated as of May
1, 1997 by and between the Issuer and The First National Bank of Chicago, a
national banking association, as trustee, and pursuant thereto assigned the
Revenues received under this Agreement to the Trustee as security for and a
source of payment of the Bonds; and
<PAGE>
WHEREAS, to further secure payment of the Bonds, the Company has
entered into a Reimbursement Agreement dated as of May 1, 1997 (the
"Reimbursement Agreement") with Union Bank of Switzerland (the "Bank") pursuant
to which the Bank has issued its irrevocable, direct pay letter of credit (the
"Letter of Credit") in a face amount sufficient to pay principal of the Bonds
when due, whether by maturity, redemption, purchase, or acceleration, together
with 55 days of interest thereon at a maximum interest rate of 12% per annum
while the Bonds bear interest in the Daily Mode or the Weekly Mode (each as
defined in the Indenture); and
WHEREAS, to further secure payment of the Bonds, Amax Gold Inc. has
delivered to the Trustee a Guaranty Agreement dated as of May 1, 1997; and
WHEREAS, the Bonds shall be special and limited obligations of the
Issuer, payable by the Issuer solely from Revenues and from any amounts
otherwise available as described in the Indenture; and
WHEREAS, the Company acknowledges that the Issuer is providing
financing for the Project in furtherance of the Issuer's corporate purpose
under the Act, that the accomplishment of this purpose is dependent upon the
compliance of the Company with its covenants contained in this Agreement and
that the financing of the acquisition, purchase, construction, improvement and
equipping of the Project as provided hereby is in furtherance of the Issuer's
public purpose.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, covenants and agreements hereinafter set forth, the Issuer and
the Company, each binding itself, its successors and assigns, do mutually
promise, covenant, and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 - Use of Defined Terms. In addition to the words and
----------------------------------
terms defined elsewhere in this Agreement or by reference to another document,
the words and terms set forth in Section 1.2 hereof shall have the meanings set
forth therein unless the context or use clearly indicates another meaning or
intent. Such definitions shall be equally applicable to both the singular and
plural forms of any of the words and terms defined therein. Any capitalized
word or term used but not defined herein is used as defined in the Indenture.
Section 1.2 - Definitions. As used herein:
-------------------------
"Act" means Title 44, Chapter 88, Alaska Statutes.
---
AIDEA/Exempt Facilily Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement
2
<PAGE>
"Additional Payments" means the amounts required to be paid by the
-------------------
Company pursuant to the provisions of Section 4.2 hereof.
"Administrative Aqent" has the meaning ascribed thereto in the AGI
--------------------
Loan Agreement.
"AGI Loan AGREEMENT" means that certain Loan Agreement dated as of
------------------
October 31, 1995, as amended as of December 7, 1995 and as of March 19, 1996,
among the Guarantor as Borrower, the Principal Subsidiaries, the Arrangers, the
Lenders, the Syndication Agent, the Documentation and Technical Agent, the
Collateral Agent, and the Administrative Agent, as the same may be modified or
amended and in effect from time to time.
"AGI Loan Documents" means the Loan Documents, as such term is
------------------
defined in the AGI Loan Agreement.
"Agreement" means this Loan Agreement as amended or supplemented from
---------
time to time.
"Arrangers" has the meaning ascribed thereto in the AGI Loan Agreement.
---------
"Authorized Company Representative" means any of the persons at the
---------------------------------
time designated to act on behalf of the Company by written certificate
furnished to the Issuer and the Trustee, containing the specimen signature of
those persons and signed on behalf of the Company by its President or any Vice
President. That certificate may designate an alternate or alternates.
"Bond Counsel" means a law firm of nationally recognized standing in
------------
the field of municipal finance law whose opinions are generally accepted by
purchasers of public obligations, selected by the Issuer and reasonably
acceptable to the Trustee and the Company.
"Bond Fund" means the Bond Fund created in the Indenture.
---------
"Bonds" means the Issuer's $71,000,000 Exempt Facility Revenue Bonds
-----
(Fairbanks Gold Mining, Inc. Project), Series 1997.
"Bond Service Changes" means, for any period or payable at any time,
--------------------
the principal of, and premium, if any, and interest on the Bonds for that
period or payable at that time whether due at maturity or upon acceleration or
redemption, but excluding Purchase Price Payments.
AIDEA/Exernpt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement
3
<PAGE>
"Bond Year" means the annual period provided for computation of
---------
Excess Earnings under Section 148(f) of the Code beginning on the day after the
expiration of the preceding Bond Year. The first Bond Year with respect to the
Bonds begins on the date of original delivery of the Bonds and ends on April
30, 1998.
"Business Day" means a day on which the Trustee, any Paying Agent,
------------
the Remarketing Agent, the Bank or banks or trust companies in New York, New
York, are not authorized or required to remain closed and on which the New York
Stock Exchange is not closed.
"Code" means the internal Revenue Code of 1986, as amended from time
----
to time. References to the Code and Sections of the Code include relevant
applicable regulations (including temporary regulations) and proposed
regulations thereunder and under the Internal Revenue Code of 1954, as amended,
and any successor provisions to those Sections, regulations or proposed
regulations.
"Collateral Agent" has the meaning ascribed thereto in the AGI Loan
----------------
Agreement.
"Company" means Fairbanks Gold Mining, Inc., a corporation for profit
-------
duly organized and validly existing under the laws of the State of Delaware and
qualified to transact business in the State, and its lawful successors and
assigns to the extent permitted by this Agreement.
"Completion Date" means the date of completion of the Project
---------------
evidenced in accordance with the requirements of Section 3.6 hereof.
"Computation Date" means the last day of each Bond Year and the date
----------------
on which the final payment in full of all outstanding Bonds is made.
"Construction Period" means the period between the beginning of the
-------------------
construction, installation, equipment or improvement of the Project and the
Completion Date.
"Cyprus Amax" means Cyprus Amax Minerals Company, a Delaware
-----------
corporation.
"Documentation and Technical Agent" has the meaning ascribed thereto
---------------------------------
in the AGI Loan Agreement.
"Eligible Investments" means Eligible Investments as defined in the
--------------------
Indenture.
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement
4
<PAGE>
"Event of Default" means any of the events described as an Event of
----------------
Default in Section 7.1 hereof.
"Excess Earninqs" means as of each Computation Date an amount equal
---------------
to the sum of (i) plus (ii) where:
(i) is the excess of
(a) the aggregate amount earned from the date of issuance of the
Bonds on all nonpurpose investments in which gross proceeds of the Bonds are
invested (other than investments attributable to Excess Earnings described in
this clause (i)), over
(b) the amount which would have been earned if such nonpurpose
investments (other than amounts attributable to Excess Earnings described in
this clause (i)) had been invested at a rate equal to the yield on the Bonds;
and
(ii) is any income attributable to the excess described in clause (i)
taking into account any gain or loss on the disposition of nonpurpose
investments.
The foregoing sums shall be determined in accordance with Section 148(f) of
the Code. As used herein, the terms "gross proceeds", "nonpurpose investments"
and "yield" have the meanings assigned to them for purposes of Section 148 of
the Code.
"Force Majeure" means any of the causes, circumstances or events
-------------
described as constituting Force Majeure in Section 7.1. hereof.
"Fort Knox Economic Completion Date" has the meaning ascribed thereto
----------------------------------
in the AGI Loan Agreement.
"Guarantor" means Amax Gold Inc., a corporation for profit duly
---------
organized and validly existing under the laws of the State of Delaware and
qualified to transact business in the State.
"Guaranty Agreement" means the Guaranty Agreement, dated as of May 1,
------------------
1997, from the Guarantor to the Trustee, as may be amended or supplemented from
time to time.
"Holder" or "Holder of a Bond" means the Person in whose name a Bond
------ ----------------
is registered on the Register.
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement
5
<PAGE>
"Indenture" means the Trust Indenture, dated as of even date
---------
herewith, between the Issuer and the Trustee, as amended or supplemented from
time to time.
"Interest Payment Date" means each date set forth as such in the
---------------------
Indenture.
"Issuer" means Alaska Industrial Development and Export Authority, a
------
governmental agency and a body politic and corporate constituting a political
subdivision of the State.
"Lenders" has the meaning ascribed thereto in the AGI Loan Agreement.
-------
"Lien" has the meaning ascribed thereto in the AGI Loan Agreement.
----
"Loan" means the loan by the Issuer to the Company of the proceeds
----
received from the sale of the Bonds.
"Loan Payment Date" means any Business Day which is an Interest
-----------------
Payment Date, commencing July 2, 1997, or any other date on which any principal
of or interest or any premium on the Bonds shall be due and payable, whether at
maturity, upon acceleration, call for redemption or otherwise.
"Loan Payments" means the amounts required to be paid in repayment of
-------------
the Loan pursuant to the provisions of the Project Note and of Section 4.1
hereof.
"Notice Address" means:
--------------
Issuer: Alaska Industrial Development
and Export Authority
480 West Tudor Road
Anchorage, Alaska 99503
Attn: Executive Director
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement
6
<PAGE>
Company: Fairbanks Gold Mining, Inc.
#1 Fort Knox Road
P.O. Box 73726
Fairbanks, Alaska 99707-3726
Attn: Vice President and General Manager
With copies to the Guarantor and:
Cyprus Amax Minerals Company
9100 East Mineral Circle
Englewood, Colorado 80112
Attention: Treasurer
Guarantor: Amax Gold Inc.
9100 East Mineral Circle
Englewood, Colorado 80112
Attn: General Counsel
Trustee: The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0216
Attn: Corporate Trust Services Division
or such additional or different address, notice of which is given under
Section 8.3 hereof.
"Original Purchaser" means Merrill Lynch, Pierce, Fenner & Smith
------------------
Incorporated, as underwriter.
"Person" or words importing persons mean firms, associations,
------
partnerships (including without limitation, general and limited partnerships),
joint ventures, societies, estates, trusts, corporations, public or
governmental bodies, other legal entities and natural persons.
"Principal Subsidiaries" has the meaning ascribed thereto in the AGI
----------------------
Loan Agreement.
"Project" means, collectively, the Project Site and the Project
-------
Facilities.
"Project Costs" means the costs of the Project specified in Section 3.4
-------------
hereof.
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement
7
<PAGE>
"Project Facilities" means the Company's facilities described in
------------------
Exhibit B hereto.
"Project Fund" means the Project Fund created in the Indenture.
------------
"Project Note" means the promissory note of the Company, dated May
------------
22, 1997, in the form attached hereto as Exhibit A and in the principal amount
of $71,000,000 evidencing the obligation of the Company to make Loan Payments.
"Project Purposes" means acquiring, purchasing, constructing,
----------------
equipping or improving real and personal property comprising facilities to be
used for solid waste disposal purposes, or such use as may result from a change
in the Project authorized by Section 3.2 of this Agreement or which may
otherwise be permitted by this Agreement.
"Project Site" means the real estate generally located in the
------------
Fairbanks North Star Borough, 15 miles northeast of Fairbanks, Alaska, upon
which the Project Facilities are located.
"Purchase Agreement" means the Underwriting Agreement dated May 21,
------------------
1997, between the Issuer and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as underwriter, and approved by the Company and the Guarantor.
"Purchase Fund" means the Purchase Fund created in the Indenture.
-------------
"Purchase Price" has the meaning ascribed thereto in the Indenture.
--------------
"Purchase Price Payment" means any payment of Purchase Price on the
----------------------
Bonds due under the terms of the Indenture.
"Rebate Fund" means the Rebate Fund created in the Indenture.
-----------
"Register" means the books kept and maintained for the registration
--------
and transfer of the Bonds pursuant to Section 3.06 of the Indenture.
"Registrar" means the Registrar as defined in the Indenture.
---------
"Revenues" means (a) the Loan Payments, (b) all other moneys received
--------
or to be received by the Issuer or the Trustee in respect of repayment of the
Loan (including, but not limited to, amounts received pursuant to the terms of
the Letter of Credit and amounts received pursuant to the terms of the Guaranty
Agreement) and all moneys in the Bond Fund, (c) any moneys and investments in
the Project Fund, and (d) all income and profit from the investment of the
foregoing moneys; provided,
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement
8
<PAGE>
however, that "Revenues" does not include (i) any amounts held in the
Rebate Fund or any other investment income which is required to be rebated to
the United States of America in order to continue the exclusion of interest on
the Bonds from gross income for federal income tax purposes, or (ii) any
amounts held in the Purchase Fund.
"State" means the State of Alaska.
-----
"Syndication Aqent" has the meaning ascribed thereto in the AGI Loan
-----------------
Agreement.
"Trustee" means The First National Bank of Chicago, a national
-------
banking association validly existing and duly organized under the laws of the
United States of America, until a successor Trustee shall have become such
pursuant to the applicable provisions of the Indenture, and thereafter
"Trustee" shall mean the successor Trustee.
"Unassigned Issuer's Rights" means all of the rights of the Issuer to
--------------------------
receive Additional Payments under Section 4.2 hereof, to be held harmless and
indemnified under Section 5.5 hereof, to be reimbursed for attorney's fees and
expenses under Section 7.4 hereof, and to give or withhold consent to
amendments, changes, modifications, alterations and termination of this
Agreement under Section 8.6 hereof.
Section 1.3 - Interpretation. Any reference herein to the Issuer or
----------------------------
the Company or to any member or officer of either includes entities or
officials succeeding to their respective functions, duties or responsibilities
pursuant to or by operation of law or lawfully performing their functions.
Any reference to a section or provision of the Constitution of the
State or the Act, or to any statute of the United States of America, includes
that section, provision or chapter as amended, modified, revised, supplemented
or superseded from time to time; provided, that no amendment, modification,
revision, supplement or superseding section, provision or chapter shall be
applicable solely by reason of this provision, if it constitutes in any way an
impairment of the rights or obligations of the Issuer, the Holders, the Trustee
or the Company under this Agreement.
Words importing persons include firms, associations, partnerships
(including limited partnerships), trusts, corporations, and other legal
entities, including public bodies, as well as natural persons.
Except as otherwise expressly provided, all approvals, consents, and
acceptances required to be given to or made by any person or party hereunder
shall
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
Series 1997
Loan Agreement
9
<PAGE>
be at the sole discretion of the party whose approval, consent, or
acceptance is required.
All notices to be given hereunder shall be given within a reasonable
time unless otherwise specifically provided in the manner described in Section
8.3 hereof.
If any provision of this Agreement shall be ruled invalid by any
court of competent jurisdiction, the invalidity of such provision shall not
affect any of the remaining provisions hereof.
Unless the context indicates otherwise, words importing the singular
number include the plural number, and vice versa; the terms "hereof", "hereby",
"herein", "hereto", "hereunder" and similar terms refer to this Agreement; and
the term "hereafter" means after, and the term "heretofore" means before, the
date of delivery of the Bonds. Words of any gender include the correlative
words of the other genders, unless the sense indicates otherwise.
Section 1.4 - Captions and Headings. The captions and headings in
----------- ---------------------
this Agreement are solely for convenience of reference and in no way define,
limit or describe the scope or intent of any Articles, Sections, subsections,
paragraphs, subparagraphs or clauses hereof.
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1 - Representations and Covenants of the Issuer. The Issuer
---------------------------------------------------------
represents that: (a) it is duly organized and validly existing under the laws
of the State; (b) it has duly accomplished all conditions necessary to be
accomplished by it prior to the issuance and delivery of the Bonds and the
execution and delivery of this Agreement and the Indenture; (c) it is not in
violation of or in conflict with any provisions of the laws of the State which
would impair its ability to carry out its obligations contained in this
Agreement or the Indenture; (d) it is empowered to enter into the transactions
contemplated by this Agreement and the Indenture; (e) it has duly authorized
the execution, delivery and performance of this Agreement and the Indenture;
(f) the Project is located within the territorial boundaries of the Issuer; and
(g) the Bonds have been duly authorized, executed, authenticated, issued, and
delivered, constitute valid and binding special and limited obligations of the
Issuer payable by the Issuer solely from the Revenues and from any amounts
otherwise available under this Agreement, the Indenture and the Guaranty
Agreement and are entitled to the benefit of this Agreement, the Indenture and
the Guaranty Agreement.
The Bonds do not constitute an indebtedness or other liability of the
-- ---
State or of a political subdivision of the State, and neither the full faith
and credit nor the
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taxing power of the Issuer, the State, or of any political subdivision
thereof is pledged for the payment of the Bonds. The Issuer has no taxing power.
Section 2.2 - Representations and Covenants of the Company. The
----------------------------------------------------------
Company represents and covenants that:
(a) The Company has been duly incorporated and validly exists as
a Delaware corporation in good standing under the laws of the State of
Delaware, is duly qualified to do business as a corporation in the State, has
all corporate powers, authorizations, consents, and approvals required to carry
on its various businesses as now conducted, and is not in violation of any
provision of its Articles of Incorporation or its By-laws, each as amended,
which violation would affect its obligations under this Agreement, the Project
Note or any of the transactions contemplated hereby or thereby.
(b) It has full power and authority to execute, deliver and
perform this Agreement and the Project Note and to enter into and carry out the
transactions contemplated by those documents. Execution, delivery and
performance under this Agreement and the Project Note do not violate any
provision of law applicable to the Company or the Company's Certificate of
Incorporation or its By-laws, each as amended, and do not materially conflict
with or result in a default under any agreement or instrument to which the
Company is a party or by which it is bound (or, to the extent of any such
conflict or default, the same has been waived). This Agreement and the Project
Note have been duly authorized, executed and delivered by the Company and all
steps necessary have been taken to constitute this Agreement and the Project
Note valid and binding obligations of the Company in accordance with their
respective terms except as those terms may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
the enforcement of creditors' rights generally or by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) or, in the case of rights in the nature of
indemnity thereunder, as may be limited by applicable law and principles of
public policy.
(c) Any allocation of the proceeds of the Bonds used for
reimbursement of an original expenditure prior to the issuance date of the
Bonds will satisfy the requirements of Treasury Regulations (S)1.150-2.
(d) [RESERVED.]
(e) The Project Facilities will be operated and maintained in
such manner as to conform in all material respects with all applicable zoning,
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planning, building, environmental and other applicable governmental
regulations and as to be consistent with the Act.
(f) It presently intends to use the Project and operate the
Project Facilities in a manner consistent with the Project Purposes until the
date on which the Bonds have been fully paid and knows of no reason why the
Project and the Project Facilities will not be so used and operated. If, in the
future, there is a cessation of that operation, it will use commercially
reasonable efforts to resume that operation or accomplish an alternate use by
the Company or others which will be consistent with the Act, subject to the
rights of any creditor, including the Lenders, holding a security interest in
the Project (and, prior to the Fort Knox Economic Completion Date, the first
priority right of Cyprus Amax).
(g) At least ninety-five percent (95%) of the net proceeds of
the Bonds (as defined in Section 150 of the Code) will be used to provide
"solid waste disposal facilities" within the meaning of Section 142(a)(6) of
the Code and which constitute capital expenditures within the meaning of Treas.
Reg.(S)1.150-1(b). The Company will not request or authorize any disbursement
pursuant to Section 3.4 hereof, which, if paid, would result in less than
ninety-five percent (95%) of the net proceeds of the Bonds being so used. The
costs of issuance financed by the Bonds will not exceed two percent (2%) of the
proceeds of the Bonds (within the meaning of Section 147(g) of the Code), and
the Company will not request or authorize any disbursement pursuant to Section
3.4 hereof or otherwise, which, if paid, would result in more than two percent
(2%) of the proceeds of the Bonds being so used. None of the proceeds of the
Bonds will be used to provide working capital.
(h) In accordance with Section 147(b) of the Code, the average
maturity of the Bonds does not exceed one hundred twenty percent (120%) of the
average reasonably expected economic life of the facilities being financed by
the Bonds.
(i) None of the proceeds of the Bonds will be used to provide
any airplane, skybox or other private luxury box, or health club facility; any
facility primarily used for gambling; or any store the principal business of
which is the sale of alcoholic beverages for consumption off premises.
(j) None of the proceeds of the Bonds will be used directly or
indirectly to acquire land or any interest therein.
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(k) None of the proceeds of the Bonds will be used to acquire
existing property or any interest therein unless the first use of such property
or interest therein was pursuant to such acquisition.
(I) The information furnished by the Company for use by the
Issuer in preparing the certification pursuant to Section 148 of the Code and
information statement pursuant to Section 149(e) of the Code, is accurate and
complete as of the date of the issuance of the Bonds.
(m) In connection with any lease or grant by the Company of the
use of the Project, the Company shall require that the lessee or user of any
portion of the Project shall not (i) violate the covenant set forth in
subsection (f) and (ii) use that portion of the Project in any manner which
would violate the covenants set forth in subsections (g), (h), (i), (j), (k),
and (p) of this Section 2.2.
(n) After the expiration of any applicable temporary period
under Section 148(d)(3) of the Code, at no time during any bond year will the
aggregate amount of gross proceeds of the Bonds invested in higher yielding
investments (within the meaning of Section 148(b) of the Code) exceed 150
percent of the debt service on the Bonds for such bond year and the aggregate
amount of gross proceeds of the Bonds invested in higher yielding investments,
if any, will be promptly and appropriately reduced as the amount of outstanding
Bonds are reduced, provided however that the foregoing shall not require the
sale or disposition of any investments in higher yielding investments if such
sale or disposition would result in a loss which exceeds the amount which would
be paid to the United States pursuant to Section 6.09 of the Indenture (but for
such sale or disposition) at the time of such sale or disposition if a payment
under Section 6.09 of the Indenture were due at such time.
At no time will any funds constituting gross proceeds of the Bonds be used
in a manner as to constitute failure of compliance with Section 148 of the Code.
The terms "gross proceeds", "higher yielding investments", "yield", and
"debt service" have the meanings assigned to them for purposes of Section 148
of the Code.
(o) The Bonds are not "federally guaranteed" within the meaning
of Section 14g(b) of the Code.
(p) The Project Facilities do not include any office except for
offices (i) located at the site of the Project and (ii) at which not more than
a de
--
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minimis amount of the functions to be performed is not directly related to
- -------
the day-to-day operations of the Project Facilities.
(q) The Company agrees that as between itself and the Issuer,
the Company shall be solely responsible for the maintenance and operation of
the Project Facilities.
(r) The Company agrees that it will provide at all times that
service of process may be had in Alaska either personally or upon the
Authorized Company Representative.
(s) The Company represents and warrants to the Issuer and the
Trustee and their assignees that other than those used or to be used in the
normal operations of the Company and permitted by State and federal laws the
Company has no notice or knowledge that hazardous substances have been
generated, stored, or disposed of on the Project Site or have been transported
to or over the Project Site. "Hazardous substance" shall be interpreted broadly
to mean any substance or material defined or designated as hazardous or toxic
waste, hazardous or toxic material, hazardous or toxic or radioactive
substance, or other similar term by any federal, state, or local environmental
law, regulation, or rule presently in effect, and it shall be interpreted to
include, but not be limited to, any substance which after release into the
environment and upon exposure, ingestion, inhalation, or assimilation, either
directly from the environment or indirectly by ingestion through food chains or
otherwise, will or may reasonably be anticipated to cause sickness, death,
disease, behavior abnormalities, cancer, or genetic abnormalities. The Company
will hold the Issuer and the Trustee harmless from and indemnify the Issuer and
the Trustee against and from any damage, loss, expenses, or liability resulting
from any breach of this representation and warranty including all attorneys'
fees and costs incurred as a result thereof. This warranty shall survive the
termination of this Agreement.
(t) Except as provided in Section 5.3 or 5.4 hereof, the Company
agrees that it will not assign its rights, interests, or obligations hereunder.
ARTICLE III
COMPLETION OF THE PROJECT;
ISSUANCE OF THE BONDS
Section 3.1 - Acquisition. Purchase, Construction, Installation,
----------------------------------------------------------------
Equipment and Improvement. The Company shall construct and equip the Project
- -------------------------
Facilities on the Project Site with all reasonable dispatch, and (b) shall pay
when due all fees, costs and expenses incurred in connection with that
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construction, installation, equipment and improvement from funds made
available therefor in accordance with this Agreement or otherwise. It is
understood that the Project is that of the Company and any contracts made by
the Company with respect thereto, whether acquisition contracts, construction
contracts or otherwise, or any work to be done by the Company on the Project
are made or done by the Company in its own behalf and not as agent or
contractor for the Issuer.
Section 3.2 - Description of Project. The Company may revise the
------------------------------------
description of the Project from time to time, provided that no revision shall
be made which would change the Project Purposes, without the approval of the
Issuer and an opinion of Bond Counsel to the effect that such change will not
cause interest on the Bonds to be included in the gross income of the Holders
for federal income tax purposes, and no revision shall be made which would
change the Project Purposes to other than purposes permitted by the Act and
other than the project described in the TEFRA notice published pursuant to
Section 147(f) of the Code.
Section 3.3 - Issuance of the Bonds; Application of Proceeds. To
------------------------------------------------------------
provide funds to make the Loan for purposes of assisting in paying the Project
Costs, the Issuer will issue, sell and deliver the Bonds to the Original
Purchaser. The Bonds will be issued pursuant to the Indenture in the aggregate
principal amount, will bear interest, will mature and will be subject to
redemption and purchase as set forth therein. The Company hereby approves the
terms and conditions of the Indenture and the Bonds, and of the terms and
conditions under which the Bonds will be issued, sold and delivered.
The proceeds from the sale of the Bonds shall be loaned to the
Company and paid over to the Trustee for the benefit of the Company and the
Holders of the Bonds and deposited as follows: (a) a sum equal to any accrued
interest paid by the Original Purchaser shall be deposited in the Bond Fund,
and (b) the balance of the proceeds shall be deposited in the Project Fund.
Pending disbursement pursuant to Section 3.4 hereof, the proceeds so deposited
in the Project Fund, together with any investment earnings thereon, shall
constitute a part of the Revenues assigned by the Issuer to the payment of Bond
Service Charges as provided in the Indenture.
Section 3.4 - Disbursements from the Project Fund. Subject to the
-------------------------------------------------
provisions below, disbursements from the Project Fund shall be made only to
reimburse or pay the Company, or any person designated by the Company, for the
following Project Costs:
(a) Costs incurred directly or indirectly for or in connection
with the acquisition, construction, purchase, improvement and equipping of the
Project, including costs incurred in respect of the Project for preliminary
planning and studies: architectural, legal, engineering, accounting,
consulting, supervisory
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and other services; labor, services and materials; and recording of
documents and title work.
(b) Premiums attributable to any surety bonds and insurance
required to be taken out and maintained during the Construction Period with
respect to the Project Site and the Project Facilities.
(c) Taxes, assessments and other governmental charges in respect
of the Project that may become due and payable during the Construction Period.
(d) Costs incurred directly or indirectly in seeking to enforce
any remedy against any contractor or subcontractor in respect of any actual or
claimed default under any contract relating to the Project Facilities.
(e) Financial, legal, accounting, printing and engraving fees,
charges and expenses, and all other such fees, charges and expenses incurred in
connection with the authorization, sale, issuance and delivery of the Bonds,
including, without limitation, the fees and expenses of the Trustee and any
paying agent properly incurred under the Indenture that may become due and
payable during the Construction Period; provided that the costs of issuance of
the Bonds financed by the Bonds shall not exceed two percent (2%) of the
proceeds of the Bonds within the meaning of Section 147(g) of the Code.
(f) Any other costs, expenses, fees and charges properly
chargeable to the cost of acquisition, construction, purchase, improvement and
equipping of the Project.
(g) Payment of interest during the Construction Period.
(h) Payments made to the Rebate Fund.
(i) All sums required to reimburse the Company for advances made
by it for any of the above items or for any other costs incurred and for work
done by the Company, whether before or after the execution of this Agreement,
which are properly chargeable to the Project Facilities.
Any disbursements from the Project Fund for the payment of Project
Costs shall be made by the Trustee only upon the written order of the
Authorized Company Representative. Each such written order shall be in
substantially the form of the disbursement request attached hereto as Exhibit
C. Any disbursement for any item not described herein, or the cost for which
item is other than as described in, the information statement filed by the
Issuer in connection with the issuance of the Bonds
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as required by Section 149(e) of the Code, shall be accompanied by an
opinion of Bond Counsel to the effect that such disbursement will not cause the
interest on the Bonds to be included in the gross income of the Holders for
federal income tax purposes.
Any moneys in the Project Fund remaining after the Completion Date
and payment, or provision for payment, in full of the Project Costs, at the
direction of the Authorized Company Representative, promptly shall be
(i) used to acquire, purchase, construct, install, equip and
improve such additional real or personal property in connection with the
Project as is designated by the Authorized Company Representative and the
acquisition, purchase, construction, installation, equipment and improvement of
which will be permitted under the Act;
(ii) used for the purchase of Bonds in the open market for the
purpose of cancellation at prices not exceeding the fair market value thereof
plus accrued interest thereon to the date of payment therefor;
(iii) paid into the Bond Fund to be applied to the redemption of
the Bonds; or
(iv) a combination of the foregoing as is provided in that
direction.
In all such cases, any payments made pursuant to this paragraph shall be
made only to the extent that such use or application will not, in the opinion
of Bond Counsel or under a ruling of the Internal Revenue Service, cause the
interest on the Bonds to be included in the gross income of the Holders for
federal income tax purposes.
Section 3.5 - Company Required to Pay Costs in Event Project Fund
-----------------------------------------------------------------
Insufficient. If moneys in the Project Fund are not sufficient to pay all
- ------------
Project Costs, the Company, nonetheless, will complete the Project and shall
pay all such additional Project Costs from its own funds. The Company shall pay
all costs of issuing the Bonds in excess of the portion thereof permitted to be
payable from proceeds of the Bonds pursuant to Section 147(g) of the Code. The
Company shall not be entitled to any reimbursement for any such additional
Project Costs or payment of issuance costs from the Issuer, the Trustee or any
Holder; nor shall it be entitled to any abatement, diminution or postponement
of the Loan Payments on account thereof.
Section 3.6 - Completion Date. The Company shall notify the Issuer
-----------------------------
and the Trustee of the Completion Date by a certificate signed by the
Authorized Company Representative stating
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(a) the date on which the Project Facilities were
substantially completed,
(b) that substantially all other facilities reasonably
necessary in connection with the Project have been acquired or purchased or
substantially constructed, installed, equipped and improved,
(c) that the acquisition, purchase, construction, installation,
equipment and improvement of the Project Facilities and those other facilities
have been accomplished in such a manner as to conform in all material respects
with all applicable zoning, planning, building, environmental and other similar
governmental regulations,
(d) that except as provided in subsection (e) of this Section,
all costs of that acquisition, purchase, construction, installation, equipment
and improvement then or theretofore due and payable have been paid, and
(e) the amounts which the Trustee shall retain in the Project
Fund for the payment of Project Costs not yet due or for liabilities which the
Company is contesting or which otherwise should be retained and the reasons
such amounts should be retained.
That certificate may state that it is given without prejudice to any rights
against third parties which then exist or subsequently may come into being.
Section 3.7 - Investment of Fund Moneys. As provided in Section 6.05
---------------------------------------
of the Indenture, at the written direction of the Authorized Company
Representative, any moneys held as part of the Bond Fund, the Project Fund or
the Rebate Fund shall be invested or reinvested by the Trustee in Eligible
Investments to the extent permitted in the Indenture. The Company hereby
covenants that it will restrict that investment and reinvestment and the use of
the proceeds of the Bonds in such manner and to such extent, if any, as may be
necessary, after taking into account reasonable expectations at the time of
delivery of and payment for the Bonds or subsequent intentional acts, so that
the Bonds will not constitute arbitrage bonds under Section 148 of the Code and
the regulations prescribed under that Section.
The Company shall provide the Issuer with a certificate of an
appropriate officer, employee or agent of or consultant to the Company for
inclusion in the transcript of proceedings for the Bonds, setting forth the
reasonable expectations of the Company on the date of delivery of and payment
for the Bonds regarding the amount and use of the proceeds of the Bonds and the
facts, estimates and circumstances on which those expectations are based.
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Section 3.8 - Rebate Fund. To the extent required by Section 6.09 of
-------------------------
the Indenture, within thirty (30) days after the end of every fifth Bond Year
and within thirty (30) days after payment in full of all outstanding Bonds, the
Company shall calculate, or have calculated by an independent rebate consultant
(the "Rebate Consultant"), the amount of Excess Earnings as of the end of that
Bond Year or the date of such payment and shall notify the Trustee of that
amount. If the amount then on deposit in the Rebate Fund created under the
Indenture is less than the amount of Excess Earnings (computed by taking into
account the amount or amounts, if any, previously paid to the United States
pursuant to Section 6.09 of the Indenture and this Section), the Company shall,
within five (5) days after the date of the aforesaid calculation, pay to the
Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate
Fund to contain an amount equal to the Excess Earnings. The obligation of the
Company to make such payments shall remain in effect and be binding upon the
Company notwithstanding the release and discharge of the Indenture.
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
Section 4.1 - Loan by Issuer; Loan Repayment; Delivery of Project
-----------------------------------------------------------------
Note. Upon the terms and conditions of this Agreement, the Issuer will make the
- ----
Loan to the Company. In consideration of and in repayment of the Loan, the
Company shall make or cause to be made, as Loan Payments, payments which
correspond, as to amount, to the Bond Service Charges. All such Loan Payments
shall be paid to the Trustee in accordance with the terms of the Project Note
and shall be held and disbursed in accordance with the provisions of the
Indenture and this Agreement for application to the payment of Bond Service
Charges; provided, however, that, if Bond Service Charges are paid from amounts
drawn under the Letter of Credit, the Company shall be entitled to a credit
against the Loan Payments then required to be made under this Section to the
extent of such amounts drawn.
The Company shall be entitled to a credit against the Loan Payments
next required to be made to the extent that the balance of the Bond Fund is
then in excess of amounts required (a) for the payment of Bond Service Charges
and (b) to be deposited in the Bond Fund by the Indenture for use other than
for the payment of Bond Service Charges on the Interest Payment Date next
following the applicable Loan Payment Date. In any event, however, if on any
Interest Payment Date, the balance in the Bond Fund is insufficient to make
required payments of Bond Service Charges, the Company forthwith will pay to
the Trustee, for the account of the Issuer and for deposit into the Bond Fund,
any deficiency.
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Upon payment in full, in accordance with the Indenture, of all Bond
Service Charges on all Bonds, whether at maturity or by redemption or
otherwise, or upon provision for the payment thereof having been made in
accordance with the provisions of the Indenture, the Project Note shall be
deemed fully paid, the obligations of the Company thereunder shall be
terminated and the Project Note shall be surrendered by the Trustee to the
Company for cancellation. Unless the Company is entitled to a credit under
express terms of this Agreement or the Project Note, all payments on the
Project Note shall be in the full amount required thereunder.
Except for such interest of the Company as may hereafter arise
pursuant to Section 8.2 hereof or Section 6.08 of the Indenture, the Company
and the Issuer each acknowledge that neither the Company nor the Issuer has any
interest in the Bond Fund and any moneys deposited therein shall be in the
custody of and held by the Trustee in trust for the benefit of the Holders.
Section 4.2 - Additional Payments. (a) The Company shall pay to the
---------------------------------
Issuer, as Additional Payments hereunder, any and all reasonable costs and
expenses incurred or to be paid by the Issuer in connection with the issuance
and delivery of the Bonds or otherwise related to actions taken by the Issuer
under this Agreement or the Indenture.
(b) The Company shall pay to the Trustee its reasonable fees, charges
and expenses for acting as such under the Indenture.
(c) The Company shall pay or cause to be paid in immediately
available funds to the Paying Agent on each Purchase Date an amount equal to
the Purchase Price Payments due on such Purchase Date; provided, however, that,
if such Purchase Price Payments are paid from amounts held by the Trustee in
the Letter of Credit Purchase Account of the Purchase Fund or in the
Remarketing Proceeds Account of the Purchase Fund, the Company shall be
entitled to a credit against the Purchase Price Payments then required to be
made under this Section to the extent of such amounts.
Section 4.3 - Place of Payments. The Company shall make all Loan
-------------------------------
Payments directly to the Trustee in accordance with the payment instructions of
the Trustee. Additional Payments shall be made directly to the person or entity
to whom or to which they are due.
Section 4.4 - Obligations Unconditional. The obligations of the
---------------------------------------
Company to make Loan Payments, Additional Payments and any payments required of
the Company under Section 6.09 of the Indenture shall be absolute and
unconditional, and the Company shall make such payments without abatement,
diminution or
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deduction regardless of any cause or circumstances whatsoever including,
without limitation, any defense, set-off, recoupment or counterclaim which the
Company may have or assert against the Issuer, the Trustee or any other Person.
Section 4.5 - Assignment of Agreement, Project Note and Revenues. To
----------------------------------------------------------------
secure the payment of Bond Service Charges, the Issuer shall assign to the
Trustee, by the Indenture, its rights under and interest in this Agreement
(except for the Unassigned Issuer's Rights), the Project Note and the Revenues.
The Company hereby agrees and consents to those assignments.
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1 - Right of Inspection. Subject to reasonable security and
---------------------------------
safety regulations and upon reasonable notice and appropriate coordination with
the Company, the Issuer and the Trustee, and their respective agents, shall
have the right during normal business hours to inspect the Project.
Section 5.2 - Lease or Grant of Use by Company. Except as may
----------------------------------------------
otherwise be provided herein and subject to the provisions of Section 2.2(m),
the Company may lease or grant the right to occupy and use the Project, in
whole or in part, to others, provided that:
(a) No such grant or lease shall relieve the Company from its
obligations under this Agreement or the Project Note;
(b) In connection with any such grant or lease the Company shall
retain such rights and interests as will permit it to comply with its
obligations under this Agreement and the Project Note; and
(c) No such grant or lease shall impair materially the purposes
of the Act to be accomplished by operation of the Project Facilities as herein
provided.
It is expressly acknowledged that certain Liens on the Project (in which
Cyprus Amax has been granted a first priority right and interest prior to the
Fort Knox Economic Completion Date) have been granted to the Lenders pursuant
to one or more AGI Loan Documents.
Section 5.3 - Company to Maintain its Existence: Sales of Assets or
-------------------------------------------------------------------
Mergers. The Company shall do all things necessary to preserve and keep in full
- -------
force and effect its existence, rights and franchises, except as otherwise
permitted by this Section 5.3. In particular, the Company shall not (a) sell,
transfer or otherwise
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dispose of all, or substantially all, of its assets; (b) consolidate with
or merge into any other entity; or (c) permit one or more other entities to
consolidate with or merge into it. The preceding restrictions shall not apply,
however, to (i) transfers of assets by the Company to, or mergers or
consolidations with, wholly owned subsidiaries of the Company and (ii) a
transaction if the transferee or the surviving or resulting entity, if other
than the Company, by proper written instrument satisfactory to the Issuer and
the Trustee, irrevocably and unconditionally assumes the obligation to perform
and observe the agreements and obligations of the Company under this Agreement.
in connection with clause (a) above, it is expressly acknowledged that certain
Liens on the Project (in which Cyprus Amax has been granted a first priority
right and interest prior to the Fort Knox Economic Completion Date) have been
granted to the Lenders pursuant to one or more AGI Loan Documents.
Section 5.4 - Assignment of Loan Agreement. Notwithstanding anything
------------------------------------------
herein to the contrary, this Agreement may be assigned by the Company in whole
or in part and the Project may be sold, conveyed, transferred, leased or
otherwise disposed of, as a whole or in part by the Company. Any such
assignment, sale, conveyance, transfer, lease, or disposal, as the case may be,
shall be subject to the following conditions:
(a) The successor in interest shall assume the obligations of
the Company hereunder to the extent of the interest assigned, leased, or
otherwise conveyed;
(b) There shall be delivered to the Issuer and the Trustee, at
the expense of the Company, prior to the delivery of any such assignment, sale,
conveyance, transfer, lease, or other disposal (i) an opinion of Bond Counsel,
in form and substance reasonably acceptable to the Issuer and the Trustee, to
the effect that such assignment, sale, conveyance, transfer, lease, or other
disposal will not adversely affect the exclusion from gross income of the
holders of the Bonds of interest paid thereon for federal income tax purposes
and (ii) written confirmation from the Guarantor that its obligations under the
Guaranty Agreement will continue to be in effect after such assignment, sale,
conveyance, transfer, lease, or other disposal to the same extent as before any
such assignment, sale, conveyance, transfer, lease, or other disposal; and
(c) The Company shall, within ten (10) days after delivery of
any such assignment, sale, conveyance, transfer, lease, or other disposal
furnish or cause to be furnished to the Issuer and the Trustee a true and
complete copy thereof and of the instrument of assumption.
It is expressly acknowledged that certain Liens on the Project (in which
Cyprus Amax has been granted a first priority right and interest prior to the
Fort Knox Economic
AIDEA/Exempt Facility Revenue Bonds (Fairbanks Gold Mining, Inc. Project)
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Completion Date) have been granted to the Lenders pursuant to one or more
AGI Loan Documents.
Section 5.5 - Indemnification. The Company releases the Issuer from,
-----------------------------
agrees that the Issuer shall not be liable for, and indemnifies the Issuer
against, all liabilities, claims, costs and expenses imposed upon, incurred by
or asserted against the Issuer, without gross negligence or intentional
misconduct on the part of the Issuer relating to any of the following: (a) any
loss or damage to property or injury to or death of or loss by any person that
may be occasioned by any cause whatsoever pertaining to the construction,
maintenance, operation and use of the Project; (b) any breach or default on the
part of the Company in the performance of any covenant or agreement of the
Company under this Agreement, the Project Note or any related document, or
arising from any act or failure to act by the Company, or any of its agents,
contractors, servants, employees or licensees; (c) any violation by the Company
of any contract, agreement or restriction relating to the Project; (d) any
fraud or misrepresentation or omission contained in the information relating or
pertaining to the financial condition of the Company which, if known to a
purchaser of the Bonds might be considered a material factor in a decision
whether or not to purchase the Bonds; (e) the execution or performance of this
Agreement, the Indenture, the Reimbursement Agreement and the issuance and sale
of the Bonds; (f) the authorization, issuance, sale, trading, redemption or
servicing of the Bonds, and the provision of any information or certification
furnished in connection therewith concerning the Bonds, the Project or the
Company (including, without limitation, the Indenture, the Reimbursement
Agreement, this Agreement and any information furnished by the Company for, and
included in, or used as a basis for preparation of, any certifications,
information statements or reports furnished by the Issuer), and any other
information or certification obtained from the Company to assure the exclusion
of the interest on the Bonds from gross income for federal income tax purposes;
(g) the Company's failure to comply with any requirement of this Agreement or
the Code pertaining to such exclusion of that interest including the covenants
in Section 5.6 hereof; (h) any law, ordinance or regulation (including any
environmental law or hazardous waste law) violation in connection with the
Project; and (i) any claim, action or proceeding brought with respect to the
matters set forth in (a), (b), (c), (d), (e), (f), (g) and (h) above.
The Company agrees to indemnify the Trustee for and to hold it
harmless against all liabilities, claims, costs and expenses incurred without
negligence or bad faith on the part of the Trustee, on account of any action
taken or omitted to be taken by the Trustee in accordance with the terms of
this Agreement, the Bonds, the Project Note or the Indenture or any action
taken at the request of or with the consent of the Company, including the costs
and expenses of the Trustee in defending itself against any such claim, action
or proceeding brought in connection
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with the exercise or performance of any of its powers or duties under this
Agreement, the Bonds, the Indenture or the Project Note.
In case any action or proceeding is brought against the Issuer or the
Trustee in respect of which indemnity may be sought hereunder, the party
seeking indemnity promptly (but in any event within thirty (30) days of
learning of such action or proceeding) shall give notice (the "Company Notice")
of that action or proceeding to the Company, and the Company upon receipt of
that notice shall have the right to assume the defense of the action or
proceeding; provided, however, that if the party seeking indemnity has been
advised in an opinion of counsel that there may be legal defenses available to
it which are adverse to or in conflict with those available to the Company or
other indemnified parties, which in the opinion of counsel should be handled by
separate counsel, the Company shall not have the right to assume the defense of
such action on behalf of the indemnified party, but shall be responsible for
the reasonable fees and expenses of the indemnified party in conducting its
defense; provided, further, that failure of a party to give that notice shall
not relieve the Company from any of its obligations under this Section unless
that failure prejudices the defense of the action or proceeding by the Company;
and provided further that the Company shall not be obligated to make any
payments with respect to fees and expenses incurred prior to the giving of the
Company notice. At its own expense, an indemnified party may employ separate
counsel and participate in the defense. The Company shall not be liable for any
fees and expenses incurred without its consent, which consent shall not be
unreasonably withheld. The Company shall not be liable for any settlement made
without its consent, which consent may be withheld at the Company's sole
discretion.
The indemnification set forth above is intended to and shall include
the indemnification of all affected officials, directors, board members,
officers, legal counsel, staff and employees of the Issuer and the Trustee,
respectively. That indemnification is intended to and shall be enforceable by
the Issuer and the Trustee, respectively, to the full extent permitted by law.
Section 5.6 - Company Not to Adversely Affect Exclusion from Gross
------------------------------------------------------------------
Income of Interest on Bonds. The Company hereby represents that it has taken
- ---------------------------
and caused to be taken, and covenants that it will take and cause to be taken,
all actions that may be required of it, alone or in conjunction with the
Issuer, for the interest on the Bonds to be and remain excluded from gross
income for federal income tax purposes, and represents that it has not taken or
permitted to be taken on its behalf, and covenants that it will not take or
permit to be taken on its behalf, any actions that would adversely affect such
exclusion under the provisions of the Code.
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ARTICLE VI
REDEMPTION OF BONDS
Section 6.1 - Optional Redemption. Provided no Event of Default shall
---------------------------------
have occurred and be subsisting, at any time and from time to time, the Company
may deliver moneys to the Trustee in addition to Loan Payments or Additional
Payments required to be made and direct the Trustee to use the moneys so
delivered for the purpose of purchasing Bonds or of calling Bonds for optional
redemption in accordance with the applicable provisions of the Indenture
providing for optional redemption at the redemption price stated in the
Indenture. Pending application for those purposes, any moneys so delivered
shall be held by the Trustee in a special account in the Bond Fund and delivery
of those moneys shall not operate to abate or postpone Loan Payments or
Additional Payments otherwise becoming due or to alter or suspend any other
obligations of the Company under this Agreement.
Section 6.2 - Extraordinary Optional Redemption. The Company may
-----------------------------------------------
direct the redemption of the unpaid principal balance of the Bonds in
accordance with the applicable provisions of the Indenture upon the occurrence
of any of the following events:
(a) The Project shall have been damaged or destroyed to such an
extent that, in the Company's reasonable judgment, (1) the Project cannot
reasonably be expected to be restored, within a period of twelve (12) months,
to the condition immediately preceding such damage or destruction, or (2) the
normal use and operation of the Project are reasonably expected to be prevented
for a period of twelve (12) consecutive months.
(b) Title to, or the temporary use of, all or a significant part
of the Project shall have been taken under the exercise of the power of eminent
domain (1) to such extent that the Project cannot, in the Company's reasonable
judgment, reasonably be expected to be restored within a period of twelve (12)
months to a condition of usefulness comparable to that existing prior to the
taking, or (2) as a result of the taking, normal use and operation of the
Project are reasonably expected, in the Company's reasonable judgment, to be
prevented for a period of twelve (12) consecutive months.
(c) As a result of any changes in the Constitution of the State,
the Constitution of the United States of America, or state or federal laws or
as a result of legislative or administrative action (whether state or federal)
or by final decree, judgment or order of any court or administrative body
(whether state or federal) entered after the contest thereof by the Issuer or
the Company in good faith, this Agreement shall have become void or
unenforceable or impossible of performance in accordance with the intent and
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purpose of the parties as expressed in this Agreement, or if unreasonable
burdens or excessive liabilities shall have been imposed with respect to the
Project or the operation thereof including, without limitation, federal, state
or other ad valorem, property, income or other taxes not being imposed on the
date of this Agreement other than ad valorem taxes presently levied upon
privately owned property used for the same general purpose as the Project or
the facility of which it is a part.
(d) Changes in the economic availability of raw materials,
operating supplies, energy sources or supplies, or facilities (including, but
not limited to, facilities in connection with the disposal of industrial
wastes) necessary for the operation of the Project for its stated purposes
shall have occurred or technological or other changes shall have occurred which
the Company cannot reasonably overcome or control and which in the Company's
reasonable judgment render the Project uneconomic for the Project Purposes.
The Company shall, within ninety (90) days following the event requiring the
redemption of the Bonds, or at any time during the continuation of the
condition referred to in clause (d) above, give notice to the Issuer and to the
Trustee specifying the date on which the Company will deliver the funds
required for that redemption. which date shall be not more than ninety (90)
days from the date that notice is mailed and shall make arrangements
satisfactory to the Trustee for the giving of the required notice of redemption.
The amount payable by the Company in the event of an extraordinary
redemption shall be the sum of the following:
(i) An amount of money which, when added to the moneys and
investments held to the credit of the Bond Fund, will be sufficient pursuant to
the provisions of the Indenture to pay, at par, and discharge all then
outstanding Bonds on the earliest applicable redemption date, that amount to be
paid to the Trustee, plus
(ii) An amount of money equal to the Additional Payments
relating to the Bonds accrued and to accrue until actual final payment and
redemption of the Bonds, that amount or applicable portions thereof to be paid
to the Trustee or to the Persons to whom those Additional Payments are or will
be due.
The requirement of (ii) above with respect to Additional Payments to accrue
may be met if provisions satisfactory to the Trustee and the Issuer are made
for paying those amounts as they accrue.
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Section 6.3 - Mandatory Redemption in Event of Inclusion in Gross
-----------------------------------------------------------------
Income of Interest on Bonds. If, as provided in the Bonds and the Indenture,
- ---------------------------
the Bonds become subject to mandatory redemption because a Determination of
Taxability (as defined in the Indenture) shall have been made with respect
thereto, the Company shall deliver to the Trustee, upon the date requested by
the Trustee, the moneys needed to pay the redemption price of the Bonds in
accordance with the mandatory redemption provisions relating thereto set forth
in the Bonds and the Indenture.
Section 6.4 - Actions by Issuer. At the request of the Company or the
-------------------------------
Trustee, the issuer shall take all reasonable steps required of it under the
applicable provisions of the Indenture or the Bonds to effect the redemption of
all or a portion of the Bonds pursuant to this Article VI.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 - Events of Default. Each of the following shall be an
-------------------------------
Event of Default:
(a) Any Loan Payment or any payment due under Section 4.2(c)
hereof shall not be paid on or prior to the date on which that Loan Payment or
any such payment pursuant to Section 4.2(c) hereof is due and payable;
(b) The Company shall fail to deliver to the Trustee, or cause
to be delivered on its behalf, the moneys needed to redeem any outstanding
Bonds in the manner and upon the date requested in writing by the Trustee as
provided in Section 6.3 of this Agreement;
(c) The Company shall fail to observe and perform any other
agreement, term or condition contained in this Agreement, and the continuation
of such failure for a period of thirty (30) days after notice thereof shall
have been given to the Company by the Issuer or the Trustee, or for such longer
period as the Issuer and the Trustee may agree to in writing; provided, that if
the failure is other than the payment of money and is of such nature that it
can be corrected but not within the applicable period, that failure shall not
constitute an Event of Default so long as the Company institutes curative
action within the applicable period and diligently pursues that action to
completion;
(d) The Company shall: (i) admit in writing its inability to pay
its debts generally as they become due; (ii) have an order for relief entered
in any case commenced by or against it under the federal bankruptcy laws, as
now or hereafter in effect; (iii) commence a proceeding under any other federal
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bankruptcy, insolvency, reorganization or similar law, or have such a
proceeding commenced against it and either have an order of insolvency or
reorganization entered against it or have the proceeding remain undismissed and
unstayed for ninety (90) days; (iv) make an assignment for the benefit of
creditors; or (v) have a receiver or trustee appointed for it or for the whole
or any substantial part of its property;
(e) Any material representation or warranty made by the Company
herein or any statement in any report, certificate, financial statement or
other instrument furnished in connection with this Agreement or with the
purchase of the Bonds shall at any time prove to have been false or misleading
in any material respect when made or given; and
(f) The occurrence of an event of default under the Indenture or
the Guaranty Agreement.
Notwithstanding the foregoing, if, by reason of Force Majeure, the
Company is unable to perform or observe any agreement, term or condition hereof
which would give rise to an Event of Default under subsection (c) hereof, the
Company shall not be deemed in default during the continuance of such
inability. However, the Company shall promptly give notice to the Trustee and
the Issuer of the existence of an event of Force Majeure and shall use
commercially reasonable efforts to remove the effects thereof; provided that
the settlement of strikes, lockouts, or other industrial disturbances shall be
entirely within its discretion.
The term Force Majeure shall mean, without limitation, the following:
(i) acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders or restraints of any kind of the
government of the United States of America or of the State or any of their
departments, agencies, political subdivisions or officials, or any civil or
military authority; insurrections; civil disturbances; riots; epidemics;
landslides; lightning; earthquakes; fires; hurricanes; tornados; storms;
droughts; floods; arrests; restraint of government and people; explosions;
breakage, malfunction or accident to facilities, machinery, transmission pipes
or canals; partial or entire failure of utilities; shortages of labor,
materials, supplies or transportation; or
(ii) any cause, circumstance or event not reasonably within the
control of the Company that has a material adverse effect on the business,
operations, assets, financial condition or business prospects of the Company.
The occurrence of an Event of Default under subsection (d) above, and
the exercise of remedies upon any such default, shall be subject to any
applicable
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limitations of federal bankruptcy law affecting or precluding that default
or exercise during the pendency of or immediately following any bankruptcy,
liquidation or reorganization proceedings.
Section 7.2 - Remedies on Default. Whenever an Event of Default
---------------------------------
shall have happened and be subsisting, any one or more of the following
remedial steps may be taken:
(a) If acceleration of the principal amount of the Bonds has
been declared pursuant to Section 8.03 of the Indenture, the Trustee shall
declare all Loan Payments to be immediately due and payable, whereupon the same
shall become immediately due and payable;
(b) The Issuer or the Trustee may have access to, inspect,
examine and make copies of the books, records, accounts and financial data of
the Company pertaining to the Project; or
(c) The Issuer or the Trustee may pursue all remedies now or
hereafter existing at law or in equity to collect all amounts then due and
thereafter to become due under this Agreement or the Project Note or to enforce
the performance and observance of any other obligation or agreement of the
Company under those instruments.
Notwithstanding the foregoing, the Issuer and the Trustee shall not be
obligated to take any step which in its opinion will or might cause it to
expend time or money or otherwise incur liability unless and until a
satisfactory indemnity bond has been furnished to the Issuer and the Trustee at
no cost or expense to the Issuer or the Trustee. Any amounts collected as Loan
Payments or applicable to Loan Payments and any other amounts which would be
applicable to payment of Bond Service Charges collected pursuant to action
taken under this Section shall be paid into the Bond Fund and applied in
accordance with the provisions of the Indenture or, if the outstanding Bonds
have been paid and discharged in accordance with the provisions of the
Indenture, shall be paid as provided in Section 6.08 of the Indenture for
transfers of remaining amounts in the Bond Fund.
The provisions of this Section are subject to the further limitation
that the rescission by the Trustee of its declaration that all of the Bonds are
immediately due and payable also shall constitute an annulment of any
corresponding declaration made pursuant to paragraph (a) of this Section and a
waiver and rescission of the consequences of that declaration and of the Event
of Default with respect to which that declaration has been made, provided that
no such waiver or rescission shall extend to or affect any subsequent or other
default or impair any right consequent thereon.
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Section 7.3 - No Remedy Exclusive. No remedy conferred upon or
---------------------------------
reserved to the Issuer or the Trustee by this Agreement is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or the Project Note, or now or hereafter existing at law,
in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair that right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
the Issuer or the Trustee to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice, other than any notice
required by law or for which express provision is made herein.
Section 7.4 - Aqreement to Pay Attorneys' Fees and Expenses. If an
-----------------------------------------------------------
Event of Default should occur and the Issuer or the Trustee should incur
expenses, including reasonable attorneys' fees, in connection with the
enforcement of this Agreement or the Project Note or the collection of sums due
thereunder, the Company shall reimburse the Issuer and the Trustee, as
applicable, for the reasonable expenses so incurred upon demand.
Section 7.5 - No Waiver. No failure by the Issuer or the Trustee to
-----------------------
insist upon the strict performance by the Company of any provision hereof shall
constitute a waiver of their right to strict performance and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy
the failure by the Company to observe or comply with any provision hereof.
Section 7.6 - Notice of Default. The Company shall provide written
-------------------------------
notice to the Trustee immediately if it becomes aware of the occurrence of any
Event of Default hereunder or of any fact, condition or event which, with the
giving of notice or passage of time or both, would become an Event of Default.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 - Term of Aqreement. This Agreement shall be and remain
-------------------------------
in full force and effect from the date of delivery of the Bonds to the Original
Purchaser until such time as all of the Bonds shall have been fully paid (or
provision made for such payment) pursuant to the Indenture and all other sums
payable by the Company under this Agreement and the Project Note shall have
been paid, except for obligations of the Company under Sections 4.2 and 5.5
hereof, which shall survive any termination of this Agreement.
Notwithstanding any termination of this Agreement, any payment of any
or all of the Bonds or any discharge of the Indenture, if a Determination of
Taxability (as
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defined in the Indenture) shall occur with respect to the Bonds, the
Company shall pay all additional amounts it is required to pay under subsection
5.01(b) of the Indenture at the time provided therein.
Section 8.2 - Amounts Remaining in Funds. Any amounts in the Bond
----------------------------------------
Fund remaining unclaimed by the Holders of the Bonds for two (2) years after
the due date thereof (whether at stated maturity, by redemption or otherwise),
at the option of the Company, shall be deemed to belong to and shall be paid,
at the written request of the Company, to the Company by the Trustee as
overpayment of Loan Payments. With respect to that principal of and any premium
and interest on the Bonds to be paid from moneys paid to the Company pursuant
to the preceding sentence, the Holders of the Bonds entitled to those moneys
shall look solely to the Company for the payment of those moneys. Further, any
amounts remaining in the Bond Fund, the Project Fund and any other special
funds or accounts created under this Agreement or the Indenture after all of
the outstanding Bonds shall be deemed to have been paid and discharged under
the provisions of the Indenture and all other amounts required to be paid under
this Agreement, the Project Note, and the Indenture have been paid, shall be
paid to the Company to the extent that those moneys are in excess of the
amounts necessary to effect the payment and discharge of the outstanding Bonds.
Section 8.3 - Notices. All notices, certificates, requests or other
----------------------
communications hereunder shall be in writing to the respective party's Notice
Address and shall be deemed to be sufficiently given: (a)three (3) days after
mailing by certified mail, first class postage prepaid; (b) two (2) Business
Days after sending by expedited overnight delivery service; (c) the date of
receipt, if delivered by personal delivery; and (d) if sent by facsimile
transmission, the date of transmission, if receipt of such transmission is
telephonically confirmed on such day. A duplicate copy of each notice,
certificate, request or other communication given hereunder to the Issuer, the
Company or the Trustee shall also be given to the others. The Company, the
Issuer and the Trustee, by notice given hereunder, may designate any further or
different addresses to which subsequent notices, certificates, requests or
other communications shall be sent.
Section 8.4 - Extent of Covenants of the Issuer; No Personal
------------------------------------------------------------
Liability. All covenants, obligations and agreements of the Issuer contained in
- ---------
this Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or agreement shall be
deemed to be a covenant, obligation or agreement of any present or future
member, officer, agent or employee of the Issuer in other than her/his official
capacity, and no official executing the Bonds shall be liable personally on the
Bonds or be subject to any personal liability or accountability by reason of
the issuance thereof or by reason of the covenants,
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obligations or agreements of the Issuer contained in this Agreement or in
the Indenture.
Section 8.5 - Binding Effect. This Agreement shall inure to the
----------------------------
benefit of and shall be binding in accordance with its terms upon the Issuer,
the Company and their respective permitted successors and assigns provided that
this Agreement may not be assigned by the Company (except in connection with a
sale or transfer of assets pursuant to Section 5.3 hereof) and may not be
assigned by the Issuer except to the Trustee pursuant to the Indenture or as
otherwise may be necessary to enforce or secure payment of Bond Service
Charges. This Agreement may be enforced only by the parties, their assignees
and others who may, by law, stand in their respective places.
Section 8.6 - Amendments and Supplements. Except as otherwise
----------------------------------------
expressly provided in this Agreement or the Indenture, subsequent to the
issuance of the Bonds and prior to all conditions provided for in the Indenture
for release of the Indenture having been met, this Agreement may not be
effectively amended, changed, modified, altered or terminated except in
accordance with the provisions of Article XII of the Indenture, as applicable.
Section 8.7 - Execution in Counterparts. This Agreement may be
---------------------------------------
executed in any number of counterparts, each of which shall be regarded as an
original and all of which shall constitute but one and the same instrument.
Section 8.8 - Severability. If any provision of this Agreement or any
--------------------------
covenant, obligation or agreement contained herein is determined by a court to
be invalid or unenforceable, that determination shall not affect any other
provision, covenant, obligation or agreement, each of which shall be construed
and enforced as if the invalid or unenforceable portion were not contained
herein. That invalidity or unenforceability shall not affect any valid and
enforceable application thereof, and each such provision, covenant, obligation
or agreement shall be deemed to be effective, operative, made, entered into or
taken in the manner and to the full extent permitted by law.
Section 8.9 - Governing Law. This Agreement shall be deemed to be a
---------------------------
contract made under the laws of the State and for all purposes shall be
governed by and construed in accordance with the laws of the State.
Section 8.10 - Continuing Disclosure. The Company acknowledges and
------------------------------------
agrees that, should the Bonds become subject to Rule 15c2-12 of the Securities
and Exchange Commission (the "Rule"), the Issuer will not be an "obligated
person" (as defined in the Rule as of the date of execution of this Agreement)
with respect to the Bonds and represents that the Company and the Guarantor
currently are the only
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"obligated persons" (as defined in the Rule as of the date of execution of
this Agreement) with respect to the Bonds for purposes of the Rule. The Company
hereby covenants that at such time as the Bonds become subject to the Rule, as
it may be amended from time to time, it will enter into and will cause any
other "obligated person" (as defined in the Rule at such time) with respect to
the Bonds to enter into such written undertakings as may be required under
paragraph (b)(5) of the Rule, or any successor provision thereto.
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IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be duly executed in their respective names, all as of the date
hereinbefore written.
ALASKA INDUSTRIAL DEVELOPMENT
AND EXPORT AUTHORITY
By: /s/ D. Randy
----------------------
Title: Executive Director
[SEAL]
FAIRBANKS GOLD MINING, INC,
By: /s/ Leland O. Erdahl
----------------------
Title: Vice President and Treasurer
34
<PAGE>
EXHIBIT B
DESCRIPTION OF PROJECT FACILITIES
---------------------------------
The Project comprises the acquisition, purchase, equipping, improvement and
construction of a tailings disposal and embankment system along with a cyanide
detoxification facility at the Fort Knox gold mine (located in the Fairbanks
North Star Borough, 15 miles northeast of Fairbanks, Alaska).
B-1
<PAGE>
10.1(b)
================================================================================
REIMBURSEMENT AGREEMENT
BETWEEN
FAIRBANKS GOLD MINING, INC.
AND
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
---------------------
Dated as of May 1, 1997
---------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I LETTER OF CREDIT; PLEDGE OF BONDS
Section 1.01. Agreement to Issue the Letter of
Credit ............................ 1
Section 1.02. Reimbursement and Other Payments... 2
Section 1.03. Obligations Absolute .............. 4
Section 1.04. Pledge of Bonds ................... 5
Section 1.05. Credit for Amount Paid on Bonds.... 6
ARTICLE II CONDITIONS PRECEDENT
Section 2 01. Opinion of Counsel ................ 6
Section 2 02. No Default ........................ 6
Section 2 03. Representations and Warranties..... 6
Section 2 04. Officers' Certificates ............ 6
Section 2 05. Operative Documents ............... 7
Section 2 06. Guaranty .......................... 7
Section 2 07. Pledge Agreement .................. 7
Section 2 08. Opinion of Bond Counsel ........... 7
Section 2 09. Proceedings ....................... 7
Section 2 10. Payment of Fees ................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES
Section 3 01. Due Incorporation, Etc ............ 8
Section 3 02. Due Authorization, Etc ............ 8
Section 3 03. Approvals ......................... 8
Section 3 04. Enforceability .................... 9
Section 3 05. Operative Documents ............... 9
Section 3 06. Financial Statements .............. 9
Section 3 07. Actions Fending ................... 9
Section 3 08. Taxes ............................. 9
Section 3 09. Compliance with Laws .............. 10
ARTICLE IV COVENANTS
Section 4.01. Financial Statements of the
Company .......................... 10
Section 4.02. Compliance with Agreements ....... 11
Section 4.03. Inspection ....................... 11
Section 4.04. Company to Maintain Its Corporate
Existence ........................ 12
Section 4.05. Compliance with Laws ............. 12
Section 4.06. Certain Notices .................. 12
(i)
<PAGE>
Page
Section 4.07. Redemption of Bonds ................. 12
ARTICLE V EVENTS OF DEFAULT
Section 5.01. Events of Default ................... 13
Section 5.02. No Remedy Exclusive ................. 14
ARTICLE VI DEFINITIONS
Section 6.01. Certain Defined Terms ............... 15
ARTICLE VII MISCELLANEOUS
Section 7.01. Payment of Expenses, Etc ........... 19
Section 7.02. Actions Relating to the Letter of
Credit ............................. 20
Section 7.03. Certain Agreements ................. 20
Section 7.04. Amendment and Waiver ............... 20
Section 7.05. Governing Law ...................... 20
Section 7.06. Notices ............................ 20
Section 7.07. Waiver ............................. 21
Section 7.08. Table of Contents; Descriptive
Headings ........................... 21
Section 7.09. Benefit of Agreement ............... 21
Section 7.10. Counterparts; Entire Agreement...... 22
Section 7.11. Consent to Jurisdiction and venue... 22
Section 7.12. Consent of Bank .................... 22
EXHIBITS
Exhibit A - Form of Letter of Credit
Exhibit B-1 - Form of Opinion of Counsel to the Company
Exhibit B-2 - Form of Opinion of Willkie Farr &
Gallagher
Exhibit B-3 - Form of Opinion of Counsel to the
Guarantor
Exhibit B-4 - Form of Opinion of Sullivan & Cromwell
Exhibit C-1 - Form of Company Officers' Certificate
Exhibit C-2 - Form of Guarantor Officers' Certificate
Exhibit D - Form of Guaranty
Exhibit E - Form of Pledge and Security Agreement
(ii)
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REIMBURSEMENT AGREEMENT dated as of May 1, 1997 between FAIRBANKS GOLD
MINING, INC., a Delaware corporation (the "Company") and UNION BANK OF
SWITZERLAND, NEW YORK BRANCH, a branch licensed to do business under the laws
of the State of New York of a corporation organized under the laws of
Switzerland (the "Bank").
W I T N E S S E T H :
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WHEREAS, the Alaska Industrial Development and Export
Authority (the "Issuer"), pursuant to a Trust Indenture dated as of May 1, 1997
(as amended and supplemented from time to time, the "Indenture") between the
Issuer and The First National Bank of Chicago, as trustee (the "Trustee"), is
issuing $71,000,000 aggregate principal amount of its Exempt Facility Revenue
Bonds (Fairbanks Gold Mining, Inc. Project) Series 1997 (the "Bonds"); and
WHEREAS, the proceeds of the Bonds will be loaned by the
Issuer to the Company pursuant to a Loan Agreement dated as of May 1, 1997 (as
amended and supplemented from time to time, the "Loan Agreement") and will be
used, among other things, to finance the cost of the acquisition, construction,
improvement and equipping of the Project (as defined in the Loan Agreement); and
WHEREAS, as security for the payment of the Bonds, the
Company desires the Bank to issue an irrevocable letter of credit in favor of
the Trustee to support certain payments of the Company with respect to the
Bonds, and the Bank is willing to issue such letter of credit on the terms and
conditions herein contained;
NOW, THEREFORE, in consideration of the mutual promises
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
LETTER OF CREDIT; PLEDGE OF BONDS
Section 1.01. Agreement to Issue the Letter of Credit. The
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Bank agrees with the Company, on the terms and
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subject to the conditions herein set forth, to issue to the Trustee on the
Closing Date a letter of credit substantially in the form of Exhibit A hereto
attached (the "Letter of Credit") in the face amount of $72,307,179 (as it may
be reduced from time to time, hereinafter sometimes referred to as the "LC
Commitment").
Section 1.02. Reimbursement and Other Payments. (a) The
--------------------------------
Company hereby agrees to pay to the Bank: (i) by the close of business on the
Business Day that any payment by the Bank is made with respect to any drawing
other than a C Drawing upon the Letter of Credit, the amount (and interest on
such amount as provided in clause (iv) below) of such drawing; (ii) with
respect to any C Drawing made pursuant to Section 4.05 of the Indenture, by the
close of business on the Business Day that any payment by the Bank is made with
respect to such drawing, the amount (and interest on such amount as provided in
clause (iv) below) of such drawing, and with respect to any C Drawing made
pursuant to Section 4.01 or Section 4.03 of the Indenture, on the earlier to
occur of (A) 180 days following such C Drawing, (B) the date the Bonds for
which such C Drawing was made are remarketed and (C) the Termination Date, the
amount of such drawing, together with interest on such amount from the date of
such drawing until due at a fluctuating per annum rate equal to the Base Rate,
payable quarterly in arrears on the first day of each January, April, July and
October and on the date of payment of such amount (and interest on all such
amounts as provided in clause (iv) below); (iii) upon each drawing upon the
Letter of Credit a sum (and interest on such sum as provided in clause (iv)
below) equal to $250; (iv) interest on any and all amounts remaining unpaid
hereunder from the date such amounts become due until payment in full (after as
well as before judgment), payable on demand, at a fluctuating per annum rate
equal to the Base Rate plus two percent (2%); and (v) upon reasonable notice
from the Bank, any and all reasonable out-of-pocket charges and expenses which
the Bank may pay or incur relative to the Letter of Credit and any and all
reasonable expenses incurred by the Bank in enforcing any rights under this
Agreement.
(b) The Company hereby agrees to pay to the Bank an
annual commission (the "Letter of Credit Fee") with respect to the LC Commitment
equal to the product of the LC Fee Percentage times the LC Commitment, computed
on a daily basis. The Letter of Credit Fee shall be payable in arrears on
December, March and June thereafter and on the Termination Date.
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The Company further agrees to pay to the Bank the fees and other amounts
set forth in the Fee Letter.
(c) Interest and the Letter of Credit Fee payable
hereunder shall be computed on the basis of a 360-day year for the actual
number of days elapsed.
(d) If any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof, or in United States or Switzerland
generally accepted accounting principles, shall either (i) impose, modify or
deem applicable any reserve, special deposit or similar requirement against
letters of credit issued by the Bank or (ii) impose on the Bank any other
condition regarding this Agreement or the Letter of Credit, and the result of
any event referred to in clause (i) or (ii) of this Section 1.02(d) shall be to
increase the cost to the Bank of issuing or maintaining the Letter of Credit
(which increase in cost shall be the result of the Bank's reasonable allocation
of the aggregate of such cost increases resulting from such events), then, upon
demand by the Bank, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts which in the aggregate shall be
sufficient to compensate the Bank for such increased cost from the date of such
change, together with interest on each such amount from the date demanded until
payment in full thereof at the rate provided in clause (iv) of Section 1.02(a).
In addition, if a determination is made by the Bank in its sole discretion that
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directire regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's capital as a consequence of the Bank's obligations under this
Agreement or the Letter of Credit to a level below that which the Bank could
have achieved but for such adoption, change or compliance, then, upon demand by
the Bank, the Company shall pay to the Bank, from time to time as specified by
the Bank, additional amounts which in the aggregate shall be sufficient to
compensate the Bank for such reduction, together with interest on each such
amount from the date demanded until payment in full thereof at the rate
provided in clause (iv) of Section 1.02(a). A certificate setting forth in
reasonable detail
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any amount required to be paid by the Company pursuant to this Section
1.02(d) submitted by the Bank to the Company shall be conclusive, absent
manifest error.
(e) All payments by the Company to the Bank hereunder
shall be made in lawful currency of the United States by wire transfer of
immediately available funds to the Bank's Federal Reserve Bank of New York
account, ABA No. 026008439 (or to such other account as the Bank shall
designate in writing to the Company), and noting "payment with respect to
Irrevocable Letter of Credit No. SBY504662 issued on behalf of Fairbanks Gold
Mining, Inc.", or by any other method as may be agreed to by the Company and
the Bank. If any such payment becomes due and payable on a day other than a
Business Day, the same shall be payable on the next succeeding Business Day
with the same effect as if made on the nominal date for payment. As used in
this Agreement, "Business Day" shall mean (a) a day on which the Bank (at its
notice address) is open for the purpose of conducting a commercial banking
business and (b) a day on which banking institutions in New York, New York,
generally are open for the purpose of conducting a commercial banking business.
Section 1.03. Obligations Absolute. The obligations of the
--------------------
Company under this Agreement shall be absolute, unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances whatsoever, notwithstanding, without limitation, the
following:
(a) any lack of validity or enforceability of the Letter of
Credit, any Operative Document, any Bond or any other agreement or instrument
relating thereto;
(b) any amendment or waiver of or any consent to departure
from any Bond or any Operative Document;
(c) the existence of any claim, setoff, defense or other right
which the Company may have at any time against the Trustee, any beneficiary,
assignee or transferee of the Letter of Credit (or any Person for whom such
Trustee or any such beneficiary, assignee or transferee may be acting), the
Bank (other than the defense of payment to the Bank in accordance with the
terms of this Agreement) or any other Person, whether in connection with this
Agreement, any Operative Document, the Bonds or any unrelated transaction;
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(d) any statement or any document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement or information therein being untrue or inaccurate in
any respect whatsoever;
(e) payment by the Bank under the Letter of Credit against
presentation of a sight draft or certificate which does not comply with the
terms of the Letter of Credit, provided that such payment shall not have
constituted gross negligence, bad faith or willful misconduct of the Bank;
(f) any obligation of the Company for present or future taxes,
withholdings, impost, duty, levy or other deductions; and
(g) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, provided that such other circumstance or
happening shall not have been the result of gross negligence, bad faith or
willful misconduct of the Bank.
Section 1.04. Pledge of Bonds. As security for the payment
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of the obligations of the Company pursuant to Section 1.02(a)(ii) above, the
Company will pledge to the Bank, and grant to the Bank a security interest in,
its right, title and interest in and to Bonds delivered to the Trustee or the
Paying Agent for the account of the Bank in connection with any C Drawing
(herein called "Pledged Bonds"), pursuant to a pledge and security agreement in
the form of Exhibit B attached hereto (the "Pledge Agreement"). Any amounts
from time to time owing to the Bank pursuant to Section 1.02(a) (ii) above may
be prepaid (a) at any time by the Company on one Business Day's notice stating
the amount to be prepaid (which shall be $5,000 or a whole multiple thereof)
and (b) at any time on behalf of the Company on one Business Day's notice from
the Company directing the Bank to deliver a specified principal amount of
Pledged Bonds held by or on behalf of the Bank for sale pursuant to Section
4.08 of the Indenture. Upon payment to the Bank of the amount to be prepaid
pursuant to clause (a) or (b) above, together with accrued interest, as set
forth in Section 1.02(a) (ii), to the date of such prepayment on the amount to
be prepaid, the outstanding obligations of the Company under Section 1.02 above
shall be reduced by the amount of such prepayment, interest shall cease to
accrue on the amount prepaid and the Bank shall release from the pledge and
security interest created by the Pledge Agreement a principal amount of Pledged
Bonds
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equal to the amount of such prepayment; provided, however, that prior
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such release from the pledge and security interest created by the Pledge
Agreement of Bonds delivered to or on behalf of the Bank in connection with a C
Drawing, the Company shall have paid to the Bank the amount owing in respect of
the D Drawing, if any, made in conjunction with such C Drawing. Such Bonds
shall be delivered to the Company, in the event of a prepayment pursuant to
clause (a) above, or to the Paying Agent pursuant to Sections 4.06 and 4.08 of
the Indenture, in the event of a prepayment pursuant to clause (b) above, as
appropriate.
Section 1.05. Credit for Amount Paid on Bonds. The Company
-------------------------------
shall receive a credit against its payment obligations pursuant to Section
1.02(a) (ii) to the extent of any amounts actually paid to the Bank in respect
of any principal or interest due on any Pledged Bonds.
ARTICLE II
CONDITIONS PRECEDENT
This Agreement shall become effective, and the Bank will
issue the Letter of Credit, on May 22, 1997 (the "Closing Date"), provided that
all of the following conditions are met:
Section 2.01. Opinion of Counsel. There shall have been
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delivered to the Bank opinions of counsel to the Company or the Guarantor, each
dated the Closing Date and substantially in the form of Exhibits B-l, B-2, B-3
and B-4 hereto attached.
Section 2.02. No Default. On the Closing Date and after
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giving effect to the issuance of the Letter of Credit, there shall exist no
Event of Default or Default.
Section 2.03. Representations and Warranties. On the
------------------------------
Closing Date and after giving effect to the issuance of the Letter of Credit,
all representations and warranties of the Company contained herein or otherwise
made in writing in connection herewith shall be true and correct with the same
force and effect as though such representations and warranties had been made on
and as of such time.
Section 2.04. Officers' Certificates. The Bank shall have
----------------------
received a certificate, dated the Closing Date, signed by the President or any
Vice President of each of the
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Company and the Guarantor and attested to by the Secretary or any Assistant
Secretary of the Company and the Guarantor, respectively, in the form of
Exhibit C-1 and Exhibit C-2, respectively, hereto attached with appropriate
insertions, together with copies of the Certificates of Incorporation and
By-Laws of the Company and the Guarantor, as applicable, and the resolutions of
the Company and the Guarantor, as applicable, referred to in such certificate.
Section 2.05. Operative Documents. The Company shall have
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delivered to the Bank a copy of each Operative Document, certified by the
Company to be in the form of such Operative Document in effect on the Closing
Date.
Section 2.06. Guaranty. Cyprus Amax Minerals Company (the
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"Guarantor") shall have executed and delivered to the Bank a guaranty in the
form of Exhibit D hereto attached (the "Guaranty").
Section 2.07. Pledge Agreement. The Company shall have
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executed and delivered the Pledge Agreement.
Section 2.08. Opinion of Bond Counsel. There shall have
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been delivered to the Bank an opinion (or a signed copy of such opinion
together with a satisfactory reliance letter) of Wohlforth, Argetsinger,
Johnson & Brecht, P.C., Bond Counsel, dated the Closing Date and in form and
substance satisfactory the Bank, to the effect that the Bonds are legal, valid
and binding obligations of the Issuer and that interest on the Bonds is not
includible in gross income for federal income taxes under existing statutes,
regulations and rulings.
Section 2.09. Proceedings. All corporate and other
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proceedings in connection with the transactions contemplated by this Agreement,
the Operative Documents and the Letter of Credit shall be reasonably
satisfactory in substance and form to the Bank and its counsel, and the Bank
and its counsel shall have received all such counterpart originals or certified
or other copies of such documents as the Bank or such counsel may reasonably
request.
Section 2.10. Payment of Fees. The Company shall have paid
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to the Bank all fees due to the Bank on the Closing Date as set forth or
referenced in Section 1.02(b).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement
and to issue the Letter of Credit, the Company makes the following
representations and warranties to the Bank, which shall survive the execution
and delivery of this Agreement and the Letter of Credit, regardless of any
investigation made by or on behalf of the Bank:
Section 3.01. Due Incorporation, Etc. The Company is a
----------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, is duly qualified as a foreign corporation and
in good standing under the laws of Alaska and has all requisite corporate power
and authority to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under, this Agreement and each
Operative Document to which it is a party.
Section 3.02. Due Authorization, Etc. The execution,
----------------------
delivery and performance by the Company of this Agreement has been duly
authorized by the Company and, except where such violation, breach or default
would not have a material adverse effect on such execution, delivery and
performance, do not (a) result in any violation by the Company of any provision
of any law, rule, regu1ation (including, without limitation, Regulation G, T, U
and X of the Board of Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to the Company or of the Certificate of Incorporation or By-Laws
of the Company or (b) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Company is a party or by which it or its properties may
be bound or affected.
Section 3.03. Approvals. No consent, approval or other
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action by or any notice to or filing with any court or administrative or
governmental body which has not been obtained, made or waived as the case may
be, is necessary for the valid execution, delivery or performance by the
Company of this Agreement, other than such consents, approvals, notices,
filings or other actions that, if not obtained or made, would not have a
material adverse effect on the execution, delivery or performance by the
Company of this Agreement.
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Section 3.04. Enforceability. This Agreement constitutes a
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legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof may be
limited by (a) bankruptcy, insolvency, moratorium and other similar laws
affecting creditors' rights generally and (b) equitable principles (regardless
of whether enforcement is sought in a proceeding in equity or at law).
Section 3.05. Operative Documents. The Company makes each
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of the representations and warranties made by it in any of the Operative
Documents to and for the benefit of the Bank as if the same were set forth at
length in this Agreement.
Section 3.06. Financial Statements. The Company has
--------------------
furnished the Bank with a consolidated balance sheet of the Company as at March
31, 1997, certified by the Controller of the Company. Such balance sheet
(including any related schedules and/or notes) was internally prepared on a
basis consistent with financial statements of the Company. The balance sheet
fairly presents the financial condition of the Company and its consolidated
Subsidiaries as at the date thereof. There has been no material adverse change
in the business, financial condition or operations of the Company and its
consolidated Subsidiaries since March 31, 1997.
Section 3.07. Actions Pending. There is no action,
---------------
suit, investigation or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its properties as to which there is a
significant likelihood of an adverse determination and which, if adversely
determined, might result in any material adverse change in the business,
financial condition or operations of the Company or which involves the
possibility of materially adversely affecting the ability of the Company to
comply with this Agreement or any of the other Operative Documents to which the
Company is a party.
Section 3.08. Taxes. The Company has filed all federal,
-----
state and local income tax returns which are required to be filed, and has paid
all taxes as shown on such returns and on all assessments received by it to the
extent that such taxes have become due, except taxes the validity of which is
being contested in good faith by appropriate proceedings with respect to which
the Company shall have set aside on its books such reserves as are required by
GAAP as in effect at the time such reserves are made.
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Section 3.09. Compliance with Laws. The Company is in
--------------------
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, including, without limitation, all applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls or
ERISA, except where such failure to comply would not have a material adverse
effect on the business, financial condition or operations of the Company.
ARTICLE IV
COVENANTS
Section 4.01. Financial Statements of the Company. The
-----------------------------------
Company covenants that, so long as the Letter of Credit or any obligation of
the Company to the Bank hereunder remains outstanding, it will deliver to the
Bank:
(a) as soon as practicable and in any event within 60 days
after the end of each quarterly period (other than the last quarterly period)
in each fiscal year, a consolidated profit and loss statement of the Company
and its Subsidiaries for such quarterly period and a consolidated balance sheet
of the Company and its Subsidiaries as at the end of such quarterly period
(including any related schedules and/or notes), all to be prepared on a basis
consistent with financial statements of the Company and certified by the
Controller of the Company, provided that such profit and loss statement shall
first be provided at the end of the fiscal quarter in which the Company first
begins commercial production;
(b) as soon as practicable and in any event within 100 days
after the end of each fiscal year, a consolidated profit and loss statement of
the Company and its Subsidiaries for such year, and a consolidated balance
sheet of the Company and its Subsidiaries as at the end of such year, setting
forth in each case corresponding figures from the preceding fiscal year, all
prepared on a basis consistent with financial statements of the Company and
certified by the Controller of the Company, provided that such profit and loss
statement shall first be provided at the end of the fiscal year in which the
Company first begins commercial production; and
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(c) with reasonable promptness, such other financial data as
the Bank may reasonably request.
Together with each delivery of financial statements required by clause (a)
or (b) above, the Company will deliver to the Bank an officer's certificate
stating that there exists no Event of Default, or, if any such Event of Default
exists, specifying the nature thereof, the period of existence thereof and what
action the Company has taken or proposes to take with respect thereto. The
Company also covenants that forthwith upon the President or chief financial
officer of the Company obtaining knowledge of an Event of Default, it will
deliver to the Bank an officer's certificate specifying the nature thereof, the
period of existence thereof and what action the Company proposes to take with
respect thereto. The Bank is hereby authorized to deliver a copy of any
financial statement delivered to the Bank pursuant to this Section 4.01 to any
regulatory body having jurisdiction over the Bank.
Section 4.02. Compliance with Agreements. The Company
--------------------------
covenants that, so long as the Letter of Credit or any obligation of the
Company to the Bank hereunder remains outstanding, it will observe and perform
all of its obligations under this Agreement and the other Operative Documents
to which it is a party. The Company will not amend or otherwise modify, or
agree to the amendment, modification or termination of, any of the Bonds or the
Operative Documents, without the consent of the Bank, which consent shall not
be unreasonably withheld.
Section 4.03. Inspection. The Company covenants that, so
----------
long as the Letter of Credit or any obligation of the Company to the Bank
hereunder remains outstanding, it will permit any Person designated by the Bank
in writing at the Bank's expense to visit and inspect any of the properties of
the Company and its Subsidiaries (including, without limitation, the Project),
to examine the corporate books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of the Company, all at such reasonable times and as often as the Bank
may reasonably request, provided that (i) each such Person obtaining
information shall hold all information obtained in strict confidence and (ii)
this Section 4.03 shall not require the Company or any of its Subsidiaries to
permit access to records which it is prohibited from disclosing by law or by
the terms of any confidentiality agreement to which it is a
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party and by which it is bound; provided that the Company or any such
Subsidiary, as the case may be, shall use its best efforts to obtain a waiver
of any such prohibition in any such agreement.
Section 4.04. Company to Maintain Its Corporate Existence.
-------------------------------------------
The Company covenants that, so long as the Letter of Credit or any obligation
of the Company to the Bank hereunder remains outstanding, it will not dissolve
or otherwise dispose of all or substantially all of its assets, and (unless the
surviving corporation following any consolidation or merger is a subsidiary of
Amax Gold Inc.) will not, without the prior consent of Bank, such consent not
to be unreasonably withheld, consolidate with or merge into another Person or
permit one or more other Persons to consolidate with or merge into it.
Section 4.05. Compliance with Laws. The Company covenants
--------------------
that, so long as the Letter of Credit or any obligation of the Company to the
Bank hereunder remains outstanding, it will comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed
by, all governmental bodies, domestic or foreign, in respect of the conduct of
its business and the ownership of its property, including, without limitation,
all applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls or ERISA, except where such failure to
comply would not have a material adverse effect on the business, financial
condition or operations of the Company.
Section 4.06. Certain Notices. The Company covenants
---------------
that, so long as the Letter of Credit or any obligation of the Company to the
Bank hereunder remains outstanding, it will furnish to the Bank a copy of any
material notice, certification, demand or other writing or communication given
or received by the Company in connection with the Bonds or any Operative
Document, in each case promptly after the giving or receipt thereof.
Section 4.07. Redemption of Bonds. The Company covenants
-------------------
that, so long as the Letter of Credit or any obligation of the Company to the
Bank hereunder remains outstanding, it will not take any action to cause a
redemption of any of the Bonds without the prior written consent of the Bank,
such consent not to be unreasonably withheld.
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ARTICLE V
EVENTS OF DEFAULT
Section 5.01. Events of Default. If any of the following
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events (each an "Event of Default") shall occur and be continuing:
(a) the Company shall fail to make any payment required to be
made by it in connection with an A Drawing or a C Drawing upon the Letter of
Credit when due hereunder, or the Company shall fail to make any other payment
required to be made by it within three Business Days of the date such payment
is due hereunder (including, without limitation, pursuant to Section 1.02);
(b) any representation or warranty made by the Company in this
Agreement or in any of the other Operative Documents shall be false in any
material respect on the date as of which made;
(c) the Company shall fail to perform or observe any of its
obligations under Article IV or with respect to any other material term,
covenant or agreement contained in this Agreement, and any such failure remains
unremedied for 30 days after such failure shall first become known to any
executive officer of the Company; provided, however, that such grace period
-----------------
shall be extended for up to 90 days if the Company is diligently pursuing a
cure to such default;
(d) the Company fails to pay at final stated maturity (giving
effect to any extensions thereof) the principal amount of any indebtedness of
the Company for borrowed money, or the maturity of any such indebtedness is
accelerated, if the aggregate principal amount of such indebtedness, together
with the principal amount of any other such indebtedness in default for failure
to pay principal at final stated maturity or which has been accelerated
aggregates $5,000,000 or more at any time;
(e) the Company pursuant to or within the meaning of any
Bankruptcy Law commences a voluntary case, admits in writing its inability to
pay its debts generally as they become due, consents to the appointment of a
Custodian of it or for all or substantially all of its property or makes a
general assignment for the benefit of its creditors, or has an involuntary case
filed
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against it, or a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that is for relief against the Company or the
Guarantor in an involuntary case, appoints a Custodian of the Company or the
Guarantor for all or substantially all of its property or orders the
liquidation of the Company or the Guarantor and such order or decree remains
unstayed and in effect for more than 120 days;
(f) the Guaranty shall cease to be in full force and effect;
(g) the occurrence of an "Event of Default" as defined in any
Operative Document if such Event of Default is continuing three Business Days
after its occurrence; or
(h) one or more judgments or decrees shall be entered against
the Company involving in the aggregate a liability (not paid or fully covered
by insurance) of $1,000,000 or more and all such judgments or decrees shall not
have been vacated, discharged or bonded pending appeal within 90 days after the
entry thereof;
then, and in any such event, the Bank may, in its sole discretion, but shall
not be obligated to, (i) by notice to the Company, declare all amounts payable
by the Company hereunder (including, without limitation, amounts payable
pursuant to Section 1.02, regardless of whether such amounts are then due and
notwithstanding that any drafts payable under any Letter of Credit may not then
have been drawn, negotiated or presented) to be forthwith due and payable, and
the same shall thereupon become due and payable without demand, presentment,
protest or further notice of any kind, all of which are hereby expressly
waived, and/or (ii) give notice to the Trustee as provided in Section 4.05(a)
(2) (i) of the Indenture that the Interest Component of the Letter of Credit
will not be reinstated, and/or (iii) by notice to the Trustee, exercise its
right to terminate the Letter of Credit as provided in Section 4.05(a)(2)(ii)
of the Indenture and/or (iv) exercise any or all of its rights and remedies
otherwise available at law or in equity.
Section 5.02. No Remedy Exclusive. No remedy herein
------------------
conferred or reserved is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement, now or hereafter
existing at law or in equity or by statute. No delay
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<PAGE>
or omission to exercise any right or power accruing upon any default,
omission or failure of performance hereunder shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right or power
may be exercised from time to time and as often as may be deemed expedient. In
order to exercise any remedy reserved to the Bank in this Agreement, it shall
not be necessary to give any notice, other than such notice as may be herein
expressly required. In the event any provision contained in this Agreement
should be breached by any party and thereafter duly waived by the other party
so empowered to act, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder. No waiver,
amendment, release or modification of this Agreement shall be established by
conduct, custom or course of dealing, but solely by an instrument in writing
duly executed by the parties thereunto duly authorized by this Agreement.
ARTICLE VI
DEFINITIONS
Section 6.01. Certain Defined Terms. In addition to the
---------------------
terms defined elsewhere in this Agreement, the following terms shall have the
respective meanings set forth below (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"A Drawing" shall have the meaning given to such term in the
---------
Letter of Credit.
"Agreement" shall mean this Reimbursement Agreement as the
---------
same may be amended, supplemented or otherwise modified.
"Bankruptcy Law" shall mean Title 11 of the United States Code
--------------
or any similar Federal, state or foreign law for the relief of debtors.
"Base Rate" means a fluctuating rate of interest per annum
---------
equal to the higher of (a) the rate of interest most recently announced by the
Bank at its New York Branch as its prime rate for Dollar loans; and (b) the
Federal Funds Rate most recently determined by the Bank plus 1/2%. The Base
Rate is not necessarily intended to be the lowest rate of interest determined
by the Bank in connection with extensions of credit. Any change in the interest
rate resulting from a change in the Base
-15-
<PAGE>
Rate to be effective on the date each such change is announced or
determined by the Bank.
"C Drawing" shall have the meaning given to such term in the
---------
Letter of Credit.
"Closing Date" shall have the meaning given to such term in the
------------
preamble to Article II.
"Custodian" shall mean any receiver, trustee, assignee,
---------
liquidator or similar official under any Bankruptcy Law.
"D Drawing" shall have the meaning given to such term in the
---------
Letter of Credit.
"Default" shall mean any event which with notice or lapse of
-------
time, or both, or the happening of any further condition, event or act, would
become an Event of Default.
"ERISA" shall mean the Employee Retirement Income Security Act
-----
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Federal Funds Rate" shall mean, for any period, the rate per
------------------
annum at which the Bank, as a branch of a foreign bank, in its sole discretion,
can acquire federal funds in the interbank federal funds market, including
through brokers of recognized standing.
"Fee Letter" shall mean the letter dated November 13, 1996
----------
from Union Bank of Switzerland, Houston Agency to Fairbanks Gold Mining Inc.
setting forth, among other things, fees payable to the Bank in connection with
this Agreement.
"GAAP" shall mean generally accepted accounting principles.
----
"Guarantor. shall have the meaning given to such term in
---------
Section 2.06.
"Guaranty" shall have the meaning given to such term in Section
--------
2.06.
"Interest Component." shall have the meaning given to such term
------------------
in the Letter of Credit.
-16-
<PAGE>
"LC Commitment" shall have the meaning given to such term in
-------------
Section 1.01.
"LC Fee Percentage" shall mean on any date the applicable
-----------------
percentage set forth below based upon the ratings applicable on such date to
the Guarantor's senior, unsecured, non-credit-enhanced long-term indebtedness
for borrowed money ("Index Debt"):
Rating Catagory LC Fee Percentage
- -------------- ----------------
Category 1 0.300%
- ----------
A- or higher by S&P;
A3 or higher by Moody's
Category 2 0.350%
- ----------
BBB+ by S&P;
Baal by Moody's
Category 3 0.400%
- ----------
BBB by S&P;
Baa2 by Moody's
Category 4 0.450%
- ----------
BBB- by S&P;
Baa3 by Moody's
Category 5 0.625%
- ----------
BB+ by S&P;
Bal by Moody's
Category 6 1.000%
- ----------
BB or lower S&P;
Ba2 or lower by Moody's
For purposes of the foregoing, (i) if the ratings for Index Debt established
or deemed to have been established by Moody's and S&P shall fall within
different Categories, the LC Fee Percentage shall be determined by reference to
the numerically higher of such Categories; (ii) if Moody's or S&P shall not
have in effect a rating for Index Debt due (a) to the creditworthiness of the
Guarantor or (b) to any act or failure to act on the
-17-
<PAGE>
part of the Guarantor, then the LC Fee Percentage shall be determined by
reference to Category 6; and (iii) if any rating established or deemed to have
been established by Moody's or S&P shall be changed (other than as a result of
a change in the rating system of Moody's or S&P), such change shall be
effective as of the date on which it is first announced by the applicable
rating agency. Each change in the LC Fee Percentage shall apply during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the rating
system of Moody's or S&P shall change, or if either such rating agency shall no
longer have in effect a rating for Index Debt (other than for one of the
reasons referred to in clause (ii) above), the Guarantor and the Bank shall
negotiate in good faith to amend the reference to specific ratings in this
definition to reflect such changed rating system or the nonavailability of
ratings from such rating agency.
"Letter of Credit" shall have the meaning given to such term in
----------------
Section 1.01.
"Letter of Credit Fee" shall have the meaning given to such
--------------------
term in Section 1.02(b).
"Moody's" shall mean Moody's Investors Service, Inc.
-------
"Operative Documents" shall mean this Agreement, the Loan
-------------------
Agreement, the Indenture, the Pledge Agreement, the Guaranty and the
Remarketing Agreement.
"Paying Agent" shall have the meaning specified in the
------------
Indenture.
"Person" shall mean and include any of an individual, a
------
partnership, a limited liability company, a joint venture, a corporation, a
trust, an unincorporated organization or a government or any department or
agency thereof.
"Pledge Agreement" shall have the meaning given to such term in
----------------
Section 1.04.
"Pledged Bonds" shall have the meaning given to such term in
-------------
Section 1.04.
-18-
<PAGE>
"Remarketing Agent" shall have the meaning specified in the
-----------------
Indenture.
"Remarketing Agreement" shall mean the Remarketing Agreement
---------------------
dated as of date hereof between the Company and the Remarketing Agent, as
defined in the Indenture.
"S&P" shall mean Standard & Poor's Ratings Services, a
---
division of The McGraw-Hill Companies, Inc.
"Subsidiary" shall mean any corporation of which at least a
----------
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Company or one or more of its Subsidiaries or by the Company
and one or more of its Subsidiaries.
"Termination Date" shall mean the date the Letter of
----------------
Credit terminates or expires in accordance with its terms.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Payment of Expenses. Etc. The Company
-------------------------
agrees, whether or not the transactions hereby contemplated shall be
consummated, to pay, and save the Bank harmless against liability for the
payment of, all reasonable out-of-pocket costs and expenses arising in
connection with this transaction, including, without limitation, the
enforcement of, or the preservation of, any rights under this Agreement and the
Letter of Credit, any modification or consent under such documents and
instruments, the reasonable fees and expenses of White & Case, counsel for the
Bank, and all stamp, recording and documentary taxes (including interest and
penalties, if any) which may be payable in respect of such documents. The
Company also agrees to indemnify, defend and hold the Bank harmless from and
against all liability (including, without limitation, interest, penalties and
all reasonable attorneys' fees) to which the Bank may become subject insofar as
such liability arises out of or is based upon a suit, proceeding or
governmental action brought or
-19-
<PAGE>
taken in connection with any Operative Document, the issuance or sale of
any Bond or the use (or the proposed or potential use) of the proceeds of any
drawing under the Letter of Credit, except any such liability resulting from
the Bank's gross negligence, bad faith or willful misconduct.
Section 7.02. Actions Relating to the Letter of Credit. Any
----------------------------------------
action taken or omitted by the Bank, under or in connection with the Letter of
Credit or draft or document relating thereto, if taken or omitted without gross
negligence, bad faith or willful misconduct, shall be binding upon the Company
and shall not put the Bank under any resulting liability to the Company. The
Company hereby agrees at all times to protect, indemnify and save harmless the
Bank from and against any and all claims, actions, suits and other legal
proceedings, and from and against any and all losses, claims, demands,
liabilities, damages, costs, charges, counsel fees and other expenses which the
Bank may, at any time, sustain or incur by reason of, in consequence of or
arising out of the issuance of the Letter of Credit, other than as a result of
the Bank's gross negligence, bad faith or willful misconduct. The Bank shall
not, in any way, be liable for any failure by the Bank to pay any draft under
the Letter of Credit as a result of any act of a governmental authority or any
other cause beyond the control of the Bank. The obligations of the Company
under Section 7.01 and this Section 7.02 shall survive the payment of the Bonds
and the termination of this Agreement and the Letter of Credit.
Section 7.03. Certain Agreements. It is understood that the
------------------
Bank shall have no responsibility for any of the Operative Documents or the
Bonds, including the validity and sufficiency thereof.
Section 7.04 Amendment and Waiver. This Agreement and each
--------------------
provision hereof may be amended, changed, waived, discharged or terminated only
by an instrument in writing signed by the parties hereto.
Section 7.05. Governing Law. THIS AGREEMENT SHALL BE
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERET0
SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 7.06. Notices. Except as provided herein, all
-------
notices, requests, demands or other communications to or upon the respective
parties hereto shall be made by hand, mail, telegram, telex or telecopier and
shall be deemed to have been given or made only upon receipt, addressed, if to
-20-
<PAGE>
the Company, to #1 Fort Knox Road, P.O. Box 73726, Fairbanks, Alaska
99707-3726 (telecopier no. 907-490-2290), Attention: Vice President and General
Manager, with copies to (i) Amax Gold Inc., 9100 East Mineral Circle,
Englewood, Colorado 80112 (telecopier no. 303-643-5507), Attention: General
Counsel and (ii) Cyprus Amax Minerals Company, 9100 East Mineral Circle,
Englewood, Colorado 80112 (telecopier no. 303-643-5269), Attention: Treasurer,
and if to the Bank, to its New York Branch at 299 Park Avenue, New York, New
York 10171 (telecopier no. 212-821-3891), Attention: Letter of Credit
Department, with a copy to its Houston Agency at 1100 Louisiana, Suite 4500,
Houston, Texas 77002 (telecopier no. 713-655-6555), Attention: Dan O. Boyle,
Managing Director, or to such other address or number with respect to either
party hereto as such party shall notify the other in writing.
Section 7.07. Waiver. No failure or delay on the part of
------
the Bank in exercising any right, power or privilege under this Agreement or
the Letter of Credit and no course of dealing between the Company and the Bank
shall operate as a waiver hereof or thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any right, power or privilege. No
notice to or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of the Bank to any other or further action in
any circumstances without notice or demand.
Section 7.08. Table of Contents; Descriptive Headings. The
---------------------------------------
table of contents and descriptive headings of the several Articles and Sections
of this Agreement are inserted for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.
Section 7.09. Benefit of Agreement. This Agreement shall be
--------------------
binding upon and inure to the benefit of the Company and the Bank and their
respective successors and assigns, except that (a) the Company may not transfer
or assign any or all of its rights or obligations hereunder without the prior
written consent of the Bank, which consent shall not be unreasonably withheld,
and (b) the Bank may not transfer, assign or grant a participation in any of
its rights hereunder without the prior consent of the Company, which consent
shall not be unreasonably withheld. The provisions of Section 1.02(d), the
second sentence of Section 7.01 and the second sentence of Section 7.02 shall
inure to the benefit of any participant in the Letter of Credit as if such
participant were the Bank.
-21-
<PAGE>
Section 7.10. Counterparts; Entire Agreement. This
-------------------------------
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter addressed herein and supersedes all prior agreements,
whether written or oral, between such parties regarding such subject matter.
Section 7.11. Consent to Jurisdiction and Venue. The parties
---------------------------------
hereto irrevocably (a) agree that any suit, action or other legal proceeding
arising out of or relating to this Agreement may be brought in a court of record
in the State of New York or in the Courts of the United States of America
located in such State, (b) consent to the jurisdiction of each such court in any
such suit, action or proceeding and (c) waive any objection which it may have to
the laying of venue of any such suit, action or proceeding in any of such courts
and any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. The parties further agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Section 7.11 shall affect the right of either party to serve
legal process in any other manner permitted by law or affect the right of either
party to bring any suit, action or proceeding against the other party or its
property in the courts of any other jurisdiction.
Section 7.12. Consent of Bank. To the extent the Bank's
---------------
consent is required under any Operative Document to which the Bank is not a
party, such consent shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have caused this
------------------
Agreement to be executed and delivered by their respective duly authorized
officers as of the date first above written.
FAIRBANKS GOLD MINING, INC.
By:/s/ Leland 0. Erdahl
--------------------
Name: Leland 0. Erdahl
Title: Vice President and Treasurer
-22-
<PAGE>
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By:/s/ Dan O. Boyle
-------------------
Name: Dan O. Boyle
Title: Managing Director
By:/s/ J. Finley Biggerstaff
-------------------------
Name: J. Finley Biggerstaff
Title: Assistant Vice President
-23-
<PAGE>
GUARANTY
--------
GUARANTY, dated May 22, 1997, made by CYPRUS AMAX MINERALS
COMPANY, a corporation organized and existing under the laws of the State of
Delaware (the "Guarantor"). Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in Section 19
hereof.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Fairbanks Gold Mining, Inc. (the "Company") and
Union Bank of Switzerland, New York Branch (the "Bank"), have entered into a
Reimbursement Agreement, dated as of May 1, 1997 (as modified, supplemented or
amended from time to time, the "Reimbursement Agreement");
WHEREAS, the Company and the Guarantor are Affiliates; and
WHEREAS, it is a condition to the issuance of the Letter of
Credit pursuant to the Reimbursement Agreement that the Guarantor shall have
executed and delivered this Guaranty;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Guarantor, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby covenants to the Bank as follows:
1. The Guarantor irrevocably and unconditionally guarantees
the full and prompt payment when due (whether by acceleration or otherwise) of
any and all obligations and liabilities (including, without limitation,
reimbursement amounts, indemnities, fees and interest thereon) of the Company
now existing or hereafter incurred under or arising out of the Reimbursement
Agreement and the due performance and compliance with the terms of the
Reimbursement Agreement by the Company (all such obligations and liabilities,
collectively, the "Guaranteed Obligations").
2. The Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
presentment, demand of payment,
<PAGE>
protest, notice of dishonor or nonpayment of any such liability, suit or
taking of other action by the Bank against, and any other notice to, any party
liable thereon.
3. The Bank may at any time and from time to time without
the consent of or notice to the Guarantor, without incurring responsibility to
the Guarantor and without impairing or releasing the obligations of the
Guarantor hereunder, upon or without any term or condition and in whole or in
part:
(a) change the manner, place or terms of payment of, and/or
extend the time of payment of, any of the Guaranteed Obligations, any security
therefor or any liability incurred directly or indirectly in respect thereof,
and the guaranty herein made shall apply to the Guaranteed Obligations as so
changed or extended;
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever securing, the
Guaranteed Obligations or any liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the
Company or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and subordinate
the payment of all or any part thereof to the payment of any liability (whether
due or not) of the Company to creditors of the Company other than the Bank and
the Guarantor;
(e) apply sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Company to the Bank regardless of what
liabilities or liabilities of the Company remain unpaid; and/or
(f) consent to or waive any breach of, or any act, omission or
default under, any Operative Document, or otherwise amend, modify or supplement
any Operative Document other than this Guaranty.
-2-
<PAGE>
4. The obligations of the Guarantor under this Guaranty
are absolute and unconditional and shall remain in full force and effect
without regard to, and shall not be released, suspended, discharged, terminated
or otherwise affected by, any circumstance or occurrence whatsoever, including,
without limitation: (a) any action or inaction by the Bank as contemplated in
Section 3 of this Guaranty; or (b) any invalidity, irregularity or
unenforceability of all or any part of the Guaranteed Obligations or of any
security therefor. This Guaranty is a primary obligation of the Guarantor.
5. If and to the extent that the Guarantor makes any
payment to the Bank or to any other Person pursuant to or in respect of this
Guaranty, any claim which the Guarantor may have against the Company by reason
thereof shall be subject and subordinate to the prior payment in full of the
Guaranteed Obligations.
6. In order to induce the Bank to issue the Letter of
Credit, the Guarantor makes the following representations, warranties and
agreements:
(a) (i) Each of the Guarantor and the Restricted Subsidiaries
(A) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation; (B) has the corporate
power and authority to own its property and assets and to carry on its business
as now conducted and is qualified to do business in every jurisdiction where
such qualification is necessary except where the failure to so qualify would
not result in a material adverse effect on the business, assets, operations or
condition (financial or otherwise) of the Guarantor and the Subsidiaries taken
as a whole; and (ii) the Guarantor has the corporate power to execute, deliver
and perform this Guaranty.
(b) The execution, delivery and performance by the Guarantor
of this Guaranty, and the compliance by it with the terms and conditions
hereof: (i) have been duly authorized by all requisite corporate action;
(ii) will not violate (A) any provision of law, any order of any court, or any
rule, regulation or order of any other agency of government, (B) the
Certificate of Incorporation or By-laws of the Guarantor or (C) any provision
of any material indenture, agreement or other instrument to which the Guarantor
is a party, or by which the Guarantor or any of its properties or assets are or
may be bound; (iii) will not be in conflict with, result in a breach of
-3-
<PAGE>
or constitute (alone, with notice, with lapse of time, or with any
combination of these factors) a default under any indenture, agreement or other
instrument referred to in clause (ii) (C) above; and (iv) will not result in
the creation or imposition of any Lien upon any property or assets of the
Guarantor. Except for filings which may be required under the 1934 Act, no
registration with or consent or approval of, or other action by, any Federal,
state or other governmental authority or regulatory body is required in
connection with the execution, delivery and performance of this Guaranty.
(c) This Guaranty constitutes a legal, valid and binding
obligation of the Guarantor, enforceable in accordance with its terms, subject,
as to the enforcement of remedies only, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws of general applicability
relating to or affecting creditors' rights from time to time in effect and to
general principles of equity (regardless of whether such enforcement is
considered in a proceeding at law or in equity).
(d) It is not necessary in order to ensure the legality, validity
or enforceability of this Guaranty that any stamp, registration or similar duty
or tax be paid on or in relation to this Guaranty.
(e) The Guarantor has heretofore furnished to the Bank (i)
copies of its consolidated balance sheet as of December 31, 1996, and its
related consolidated statements of income, shareholders' equity and cash flows
for the year ended December 31, 1996, including the related notes, all reported
on by Price Waterhouse LLP, independent public accountants for the Guarantor,
and (ii) copies of its consolidated balance sheet as of March 31, 1997, and its
related consolidated statements of income, shareholders' equity and cash flows
for the three months ended on March 31, 1997. All such financial statements are
complete and correct and present fairly the consolidated financial condition of
the Guarantor and its subsidiaries, taken as a whole, as of the respective
dates thereof and the consolidated results of their operations and changes in
their financial position for the periods covered thereby. Such financial
statements and any notes thereto disclose as of the respective dates thereof
all material liabilities, direct or contingent, of the Guarantor and its
subsidiaries. All such financial statements, including related schedules and
notes thereto, have been prepared in accordance with GAAP.
-4-
<PAGE>
(f) Since March 31, 1997, there has been no material adverse
change in the business, operations, assets or condition (financial or otherwise)
of the Guarantor and its subsidiaries, taken as a whole (except as disclosed in
the financial statements referred to in Section 6(e) or in the 10-K (as defined
in Section 6(h) below)).
(g) The information, reports, financial statements, exhibits
and schedules prepared or furnished by or on behalf of the Guarantor to the
Bank in connection with this Guaranty or included herein or delivered pursuant
hereto did not and do not contain any material misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that any statements that are marked as projections are true
and correct projections as of such date and not as of any later date);
provided, however, that for purposes hereof only (i) the financial statements
referred to in Section 6(e), (ii) the 10-K (as defined in Section 6(h)) and
(iii) the exhibits and schedules hereto shall be deemed to have been furnished
by or on behalf of the Guarantor to the Bank prior to the date hereof.
(h) (i) Except as set forth in the Annual Report of the
Guarantor on Form 10-K for the fiscal year ended December 31, 1996 (the
"10-K"), or in the financial statements referred to in Section 6(e), there are
no actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency now pending or, to the knowledge
of the Guarantor, threatened against or affecting the Guarantor or any of the
Restricted Subsidiaries or any property or rights of the Guarantor or any of
the Restricted Subsidiaries as to which there is a significant likelihood of an
adverse determination and which, if adversely determined, could individually or
in the aggregate (A) impair the validity or enforceability of this Guaranty or
the ability of the Guarantor to perform under the terms of this Guaranty or
materially impair the ability of the Guarantor and the Subsidiaries taken as a
whole to carry on business substantially as now being conducted or (B) result
in any material adverse change in the business, assets, operations, or
condition (financial or otherwise) of the Guarantor and the Subsidiaries taken
as a whole.
-5-
<PAGE>
(ii) The Guarantor is not in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any governmental
instrumentality or other agency where such default could have a material and
adverse effect on the business, assets, operations or condition (financial or
otherwise) of the Guarantor and the Subsidiaries taken as a whole.
(i) The Guarantor is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(j) The Guarantor is not a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(k) The Guarantor has duly, timely and accurately, to the best
of the Guarantor's knowledge, filed or caused to be filed all Federal, state
and local tax returns which to its knowledge are required to be filed and has
paid or caused to be paid all taxes shown on the returns as required to be paid
or on any assessment received by it (or (i) with respect to taxes for the
period prior to July 1, 1985, by Amoco Corporation and (ii) with respect to
taxes of AMAX and its subsidiaries for the period prior to the Merger, by AMAX)
to the extent that such taxes have become due, except (a) taxes the validity of
which is being contested in good faith by appropriate proceedings and with
respect to which the Guarantor shall have set aside on its books such reserves
as are required by GAAP, (b) taxes relating to any period prior to July l,
1985, with respect to the payment of which the Guarantor has been indemnified
by Amoco Corporation, (c) taxes relating to any period prior to the Merger with
respect to the payment of which the Guarantor has been indemnified by Alumax
Inc. or (d) taxes of AMAX Gold or its subsidiaries for any period prior to the
Merger during which AMAX Gold was not part of the consolidated group of AMAX.
(1) Each of the Guarantor and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the regulations and published interpretations thereunder (or, to the extent
that the Guarantor and its ERISA Affiliates are not in
-6-
<PAGE>
such compliance, the failure to have complied would not have a material
adverse impact on the Guarantor) and no Reportable Event has occurred which
would have a material adverse impact on the Guarantor. The aggregate present
value of all benefit liabilities under all Plans (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date or dates
applicable thereto, exceed by an amount that is material to the Guarantor and
the Subsidiaries taken as a whole the aggregate value of the assets of such
Plans. Neither the Guarantor nor any ERISA Affiliate has incurred any
Withdrawal Liability that materially adversely affects the financial condition
of the Guarantor and its ERISA Affiliates taken as a whole. Neither the
Guarantor nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected
to be in reorganization or to be terminated, where such reorganization has
resulted or can reasonably be expected to result in an increase in the
contributions required to be made to such Plan that would materially and
adversely affect the financial condition of the Guarantor and its ERISA
Affiliates taken as a whole.
(m) (i) Except as set forth in the 10-K, each of the Guarantor
and the Restricted Subsidiaries has good and indefeasible title to, or valid
leasehold interests in, all their respective material properties and assets,
subject only to encumbrances, adverse claims and defects in title which do not
involve any risk of loss to the Guarantor and the Restricted Subsidiaries (A)
that is material to the Guarantor and the Subsidiaries taken as a whole and of
a nature significantly different from the risks customarily associated with the
properties of others engaged in the same or similar businesses in the same
localities or (B) that is materially likely to be incurred and if incurred
would have a material adverse effect on the business, assets, operations. or
condition (financial or otherwise) of the Guarantor and the Subsidiaries taken
as a whole. All such assets and properties are free and clear of all Liens
other than those permitted by Section 8(a).
(ii) Each of the Guarantor and the Restricted Subsidiaries has
complied with all obligations under all material leases to which it is a party
and under which it is in occupancy, and all such leases are in full force and
effect, except where the failure to comply would not
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<PAGE>
result in a material adverse change in the business, assets, operations or
condition (financial or otherwise) of the Guarantor and the Subsidiaries taken
as a whole.
(n) As of the date hereof, neither the Guarantor nor any of
the Subsidiaries is a party to any agreement or instrument or subject to any
charter or other corporate restriction which has a present material and adverse
effect on the business, properties, assets, operations or condition (financial
or otherwise) of the Guarantor and the Subsidiaries taken as a whole, as it
exists and is operating on the date hereof. As of the date hereof, neither the
Guarantor nor any of the Subsidiaries is in default in any material respect in
the performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any material agreement or instrument to
which it is a party.
(o) Except as disclosed in the 10-K, the financial statements
referred to in Section 6(e) or on Schedule 6(o), to the best knowledge of the
Guarantor, the Guarantor and each Subsidiary has complied with all Federal,
state, local and other statutes, ordinances, orders, judgments, rulings and
regulations relating to environmental pollution or to environmental regulation
or to employee health or safety (except for failures to comply which could not
reasonably be expected materially and adversely to affect the Guarantor and the
Subsidiaries taken as a whole). Except as disclosed in the 10K, the financial
statements referred to in Section 6(e) or on Schedule 6(o), to the best
knowledge of the Guarantor, the Guarantor's and the Subsidiaries' facilities do
not manage any hazardous wastes, hazardous substances, hazardous materials,
toxic substances, toxic pollutants or substances similarly denominated, as
those terms or similar terms are used in the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response Compensation and Liability Act,
the Hazardous Materials Transportation Act, the Toxic Substance Control Act,
the Clean Air Act, the Clean Water Act or any other applicable law relating to
environmental pollution or employee health and safety, in violation of any law
or any regulations promulgated pursuant thereto (except for violations which
could not reasonably be expected materially and adversely to affect the
Guarantor and the Subsidiaries taken as a whole). Except as disclosed in the
10-K, the financial statements referred to in Section 6(e) or on Schedule 6(0),
the Guarantor is aware of no
-8-
<PAGE>
events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that could reasonably be expected to
result in material liability on the part of, or otherwise materially and
adversely to affect, the Guarantor and the Subsidiaries taken as a whole.
7. The Guarantor hereby covenants and agrees that on and
after the date hereof and until the termination of the LC Commitment and the
payment of all amounts owing to the Bank under the Letter of Credit,
Reimbursement Agreement or any other Operative Document it will:
(a) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its corporate existence (subject to the
proviso in Section 8(c) (ii)), material rights, licenses, permits and
franchises and comply in all material respects with all laws, rules,
regulations and orders as applicable to it from time to time where the failure
so to comply and to preserve, renew and keep in full force and effect such
rights, licenses, permits and franchises could have a material adverse effect
on the business, assets, operations or condition (financial or otherwise) of
the Guarantor and the Subsidiaries taken as a whole and, with respect to the
Guarantor and the Subsidiaries taken as a whole, conduct its business in
substantially the same manner as heretofore conducted; take all action which
may be required to obtain, preserve, renew and extend all licenses, permits and
other authorizations which may be material to the operation of such businesses
where the failure to take such action could have a material adverse effect on
the business, assets, operations or condition (financial or otherwise) of the
Guarantor and the Subsidiaries taken as a whole; and, at all times maintain and
preserve all property used or useful in any material respect in the conduct of
its business as it may change from time to time and keep the same in good
repair, working order and condition (normal wear and tear excluded), and from
time to time make, or cause to be made, all needful and proper repairs,
renewals and replacements thereto, so that the business carried on in
connection therewith may be properly conducted at all times.
(b) Maintain adequate insurance by financially sound and reputable
insurers of all properties of a character usually insured by corporations
engaged in the same or a similar business operating in the same vicinity against
loss or damage resulting from fire, riot or other
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<PAGE>
risks insured against by extended coverage and of the kind customarily
insured against by such corporations, and maintain in full force and effect
public liability insurance against claims for personal injury, death or
property damage occurring upon, in, about or in connection with the use of any
properties occupied or controlled by it in such amounts as shall be customary
among corporations engaged in the same or similar businesses and similarly
situated and maintain such other insurance as may be required by law; provided,
--------
however, that nothing in this Section 7(b) shall preclude the Guarantor or any
- -------
of the Subsidiaries from being self-insured (to the extent customary with
companies in the same or similar business).
(c) Pay and discharge promptly any taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its material property (real or personal), before the same shall
become in default, as well as any material lawful claims for labor, materials
and supplies or otherwise which, if unpaid, might become a Lien or charge upon
any material properties or any part thereof; provided, however, that neither
-------- -------
the Guarantor nor any of the Subsidiaries shall be required to pay and
discharge or to cause to be paid and discharged any such indebtedness,
obligation, tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Guarantor or such Subsidiary, as appropriate, shall set aside on its books
such reserves as are required by GAAP with respect thereto.
(d) Furnish to the Bank copies of:
(i) within 100 days after the end of each fiscal year,
(A) a consolidated balance sheet of the Guarantor and the Subsidiaries and the
related consolidated statement of income showing the financial condition of the
Guarantor and the Subsidiaries as of the close of such fiscal year and the
results of operations during such year, (B) the Guarantor's consolidated
statement of shareholder's equity as of the close of such fiscal year and (C)
the Guarantor's consolidated statement of cash flows for such fiscal year, all
the foregoing financial statements to be prepared in accordance with GAAP
applied on a consistent basis (or if not consistently applied, all material
inconsistencies
-10-
<PAGE>
to be completely and adequately disclosed in writing to the Bank) and all
the foregoing financial statements to be reported on by Price Waterhouse LLP or
another accounting firm of nationally recognized standing, and to be in a form
reasonably acceptable to the Bank;
(ii) within 60 days after the end of each of the first
three fiscal quarters of each fiscal year of the Guarantor, an unaudited (A)
consolidated balance sheet, (B) consolidated statement of income and (C)
consolidated statement of cash flows, each showing the financial condition of
the Guarantor and the subsidiaries as of the end of such quarter and the
results of operations for the then-elapsed portion of the fiscal year,
certified by a Financial Officer of the Guarantor as being correct and complete
and as presenting fairly the financial position and results of operations of
the Guarantor and the Subsidiaries and as having been prepared in accordance
with GAAP applied on a consistent basis (or if not consistently applied, all
material inconsistencies to be completely and adequately disclosed in writing
to the Bank), in each case subject to normal year-end adjustments;
(iii) concurrently with (i) and (ii) above, a certificate of
the persons referred to therein (which certificate furnished by the independent
accountants referred to in paragraph (i) above may be limited to accounting
matters and disclaim responsibility for legal interpretations) (A) certifying
that to the best of its or his knowledge no Event of Default or Default has
occurred, or, if such an Event of Default or Default has occurred, specifying
the nature and extent thereof and, in the case of the certificate furnished by
a Financial Officer of the Guarantor, specifying any corrective action taken or
proposed to be taken with respect thereto, (B) setting forth in reasonable
detail the calculations (including the impact of any adjustments between GAAP
as in effect on the date of this Guaranty and GAAP as in effect at the time of
preparation of the financial statements referred to in (i) and (ii) above)
required to demonstrate the due observance and performance of the covenants,
conditions and agreements contained in Section 8 hereof and (C) setting forth a
list of the Restricted Subsidiaries as of the end of the
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<PAGE>
portion of the fiscal year to which the financial statements delivered
pursuant to (i) or (ii) above relate;
(iv) promptly upon their becoming available, copies of all
reports filed by the Guarantor or any of the Subsidiaries with the SEC or any
governmental authority succeeding to any or all of the functions of the SEC; and
(v) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of the
Guarantor and the Subsidiaries as the Bank may reasonably request.
(e) Give the Bank prompt (which shall be no more than 10
Business Days after any Financial Officer of the Guarantor is aware of such
event), written or telecopy notice of the following:
(i) any Event of Default or Default and the steps, if any,
proposed to be taken by the Guarantor with respect thereto;
(ii) levy of an attachment, execution or other process not
otherwise being contested in good faith by the Guarantor or any of the
Subsidiaries, as the case may be, against any of the property or assets, real
or personal, of the Guarantor or such Subsidiary, as the case may be, with
respect to a claim the amount of which exceeds available insurance, if any, by
at least $20,000,000;
(iii) the filing or commencement of any action, suit or
proceeding by or before any court or any Federal, state, municipal or other
governmental department, commission, instrumentality or agency in which there
is a reasonable probability of an adverse determination and which, if adversely
determined, could materially impair the ability, legal, financial or otherwise,
of the Guarantor to perform its obligations under this Guaranty or the rights
or benefits of the Bank under this Guaranty; and
(iv) any matter (other than those specified above as to
which the Bank has received due
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<PAGE>
notice and other than changes in general economic conditions) which has
resulted in, or which could reasonably be expected to result in, a material
adverse change in the business, operations, prospects or condition (financial
or otherwise) of the Guarantor and the Subsidiaries taken as a whole.
(f) Maintain financial records in accordance with GAAP, and
upon reasonable notice permit representatives of the Bank to have access to
such financial records and the premises of the Guarantor and any Subsidiary at
reasonable times and to make such excerpts from such records as such
representatives may deem necessary provided that (i) each person obtaining
information shall hold all information obtained in strict confidence and (ii)
this Section 7(f) shall not require the Guarantor or any of the Subsidiaries to
permit access to records which it is prohibited from disclosing by law or by
the terms of any confidentiality agreement to which it is a party and by which
it is bound; provided that the Guarantor or any such Subsidiary, as the case
may be, shall use its best efforts to obtain a waiver of any such prohibition
in any such agreement.
(g) (i) Comply in all material respects with the applicable
provisions of ERISA and (ii) furnish to the Bank (A) as soon as possible, and
in any event within 30 days after any Financial Officer of the Guarantor knows
or has reason to know that any Reportable Event has occurred that alone or
together with any other Reportable Event could reasonably be expected to result
in liability of the Guarantor to the PBGC in an amount exceeding 5% of
Consolidated Tangible Net Worth, a statement of a Financial Officer or the
chief accounting officer of such corporation setting forth details as to such
Reportable Event and the action that such corporation proposes with respect
thereto, together with a copy of the notice of such Reportable Event, if any,
given to the PBGC, (B) promptly after receipt thereof, a copy of any notice
that the Guarantor or any of its ERISA Affiliates may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or Plans (other
than a Plan maintained by an ERISA Affiliate which is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Code Section 414) or, to
appoint a trustee to administer any such Plan, (C) within 10 days after the due
date for a filing with the PBGC pursuant to Section 412(n) of the Code of a
notice of failure to make a required install-
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<PAGE>
ment or other payment (within the meaning of said section 412(n)) respect to a
Plan, a statement of a Financial Officer of the Guarantor, setting forth details
as to such failure and the action that such corporation proposes to take with
respect thereto and (D) promptly and in any event within 30 days after receipt
thereof by the Guarantor or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Guarantor or any ERISA
Affiliate concerning (1) the imposition of Withdrawal Liability or (2) a
determination that a Multiemployer Plan is, or is expected to be, terminated or
in reorganization, in each case within the meaning of Title IV of ERISA,
together with a copy of such notice given to the PBGC if such notices could
reasonably be expected to result in an Event of Default described in paragraph
(j) or (k) of Section 9.
8. The Guarantor hereby covenants and agrees that on and after
the date hereof and until the termination of the LC Commitment and the payment
of all amounts owing to the Bank under the Letter of Credit, Reimbursement
Agreement or any other Operative Document, it will not and will not cause or
permit any of its Subsidiaries to:
(a) Incur, create, assume or permit to exist any Liens on any
of its property or assets now owned or hereafter acquired by it or on any
income or rights in respect of any thereof, except Liens:
(i) for taxes, assessments or governmental charges or
levies on property of the Guarantor or any Subsidiary if the same shall not at
the time be delinquent or thereafter can be paid without penalty, or (A) are
being contested in good faith by appropriate proceedings and for which the
Guarantor or such Subsidiary shall have set aside adequate reserves in
accordance with GAAP with respect thereto, (B) relate to any period prior to
July 1, 1985, with respect to the payment of which the Guarantor has been
indemnified by Amoco -Corporation, (C) are taxes relating to any period prior
to the Merger with respect to the payment of which the Guarantor has been
indemnified by Alumax Inc. or (D) are taxes of AMAX Gold or its subsidiaries
for any period prior to the Merger during which AMAX Gold was not a part of the
consolidated group of AMAX;
(ii) imposed by law, such as carrier's, ware-
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<PAGE>
housemen's and mechanics' liens and other similar liens, which arise in the
ordinary course of business with respect to obligations not yet due or being
contested in good faith by appropriate proceedings and for which the Guarantor
or any Subsidiary, as the case may be, shall have set aside adequate reserves
in accordance with GAAP with respect thereto;
(iii) arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation;
(iv) incidental to the conduct of its business or the
ownership of its property and assets which were not incurred in connection with
the borrowing of money and which do not in the aggregate materially detract
from the value of its property or assets or materially impair the use thereof
in the operation of its business;
(v) deemed to arise in connection with (A) any leasing of
assets prior to October 31, 1993, including those created in connection with
the sale and leaseback of property or assets prior to such date, and (B) Sale
and Lease-Back Transactions after October 31, 1993 that are permitted by
Section 8(b), provided that any such Lien shall only cover the property or
--------
assets subject to the applicable lease;
(vi) created on property, assets or projects acquired or
constructed with the proceeds of Nonrecourse Indebtedness;
(vii) existing prior to the date of acquisition of any
property upon or with respect to such property acquired after the date hereof
and not incurred in connection with such acquisition and -any replacement or
amendment of such Liens; that such Lien does not apply to any other property or
assets of the Guarantor or any of the Subsidiaries, or secure obligations in an
amount greater than those originally secured;
(viii) on assets or property of the Guarantor and the
Subsidiaries listed on Schedule 8(a) hereto;
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<PAGE>
(ix) arising contemporaneously or substantially
contemporaneously with (A) the construction or acquisition of property by the
Guarantor or any of the Subsidiaries after the date hereof in the ordinary
course of business or (B) the financing of any project involving the
development in the ordinary course of business after the date hereof of
property of the Guarantor or any of the Subsidiaries with natural resource
reserves, in either case upon or with respect to such property and incurred to
secure Indebtedness for the construction, purchase or financing of the
development of such property and any replacement or amendment of such Liens,
provided that any replacement or amended Lien shall be limited to the property
or assets covered by the Lien replaced or amended, and that the obligations
secured by any such replacement or amended Lien shall not exceed those
obligations originally secured thereby;
(x) securing Indebtedness or obligations for taxes,
assessments, governmental charges or obligations imposed by law or incidental
to the conduct of its business (which are not otherwise excluded by (i), (ii)
or (iv) above) which in the aggregate do not exceed 10% of the Consolidated
Tangible Net Worth of the Guarantor and the Subsidiaries; or
(xi) existing on the property and assets of AMAX and its
subsidiaries immediately prior to the Merger (and not created in contemplation
thereof) and any replacement or amendment of such Liens, provided that (A) such
--------
Liens do not extend to any other property or assets of the Guarantor and the
Subsidiaries after the Merger and (B) any replacement or amended Lien shall be
limited to the property or assets covered by the Lien replaced or amended, and
that the obligations -secured by any such replacement or amended Lien shall not
exceed those obligations secured thereby as of December 16, 1993, except that
Liens replacing or amending Liens created pursuant to the financing
arrangements entered into as of September 1989 in connection with a sale of a
$435,000,000 coal production payment by Amax Coal Company to C.S.M., Inc. and
the financing thereof by SBC Resource Management, Inc. may secure
-16-
<PAGE>
obligations in an aggregate amount of up to $500,000,000.
(b) Enter into any arrangement, directly or indirectly,
with any person whereby it shall sell or transfer any property, real or
personal, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property that it intends to use for substantially the
same purpose or purposes as the property being sold or transferred (a "Sale and
LeaseBack Transaction"), provided that the Guarantor or any Subsidiary may
--------
enter into any Sale and Lease-Back Transaction in the ordinary course of
business if (i) such Sale and Lease-Back Transaction relates to property
acquired by the Guarantor or such Subsidiary, as the case may be, not more than
270 days prior to the date of such Sale and Lease-Back Transaction; (ii) such
Sale and Lease-Back Transaction relates to certain equipment, including but not
limited to mobile mining equipment, in an amount up to $180,000,000,
transferred on or before December 30, 1994 or (iii) other Sale and Lease-Back
Transactions so long as the aggregate purchase price of all property subject to
Sale and Lease-Back Transactions that are not permitted by clauses (i) and (ii)
of this proviso, after giving effect to such Sale and Lease-Back Transactions,
does not exceed $150,000,000.
(c) (i) Sell, lease, transfer or otherwise dispose
in one transaction or a series of transactions) all or a substantial portion of
its operations, properties or assets (including the stock of any of its
subsidiaries), tangible or intangible, now owned or hereafter acquired without
the prior written consent of the Bank to such sale, lease, transfer, or
disposition and the terms thereof; provided, however, that this Section 8(c)
-------- -------
shall not prohibit the sale of any of its operations, properties or assets
(including the capital stock of or other equity investments in other persons)
(A) in the ordinary course of its business or (B) in exchange for assets,
properties or operations (including capital stock or other equity investments)
of comparable value consistent with industry practice.
(ii) Consolidate with or merge with any other
corporation, or permit another corporation to merge into it; provided, however,
that (A) any Subsidiary of the Guarantor may be merged with the Guarantor, (B)
any Subsidiary may be merged with a different Subsidiary of the Guarantor,
provided, that, if one
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<PAGE>
of such Subsidiaries is a Restricted Subsidiary and the other Subsidiary is
not a Restricted Subsidiary, the surviving corporation shall be the Restricted
Subsidiary or, if the surviving corporation shall be the other Subsidiary, such
other Subsidiary shall be designated as a Restricted Subsidiary for the purpose
of this Guaranty, (C) any other corporation may be merged with or acquired by a
Subsidiary of the Guarantor, provided, that the surviving corporation shall be
a Subsidiary of the Guarantor and no Event of Default or Default has occurred
or would occur as a result of such merger or acquisition and (D) any other
corporation may be merged into or acquired by the Guarantor if the Guarantor
shall be the surviving corporation and no Event of Default or Default has
occurred or would occur as a result of such merger or acquisition.
(d) Incur, create or assume any indebtedness or other
liability or make any investment, capital contribution, loan, advance or
extension of credit or take or permit to be taken any other action or permit to
exist any event permitted by this Guaranty but for the provisions of this
Section 8(d), if such action or event would result in this Guaranty, the Letter
of Credit, the use of the proceeds thereof or the other transactions
contemplated hereby violating Regulation G, Regulation T, Regulation U or
Regulation X, as the same may from time to time be amended or modified.
(e) Permit the Leverage Ratio as of any date (i) during the
commencing on the date hereof and ending on August 1, 1998, to be greater than
0.65 to 1 and (ii) thereafter to be greater than 0.60 to 1.
(f) Take any action which will cause its payment obligations
under this Guaranty not to be direct, unsecured and general obligations of the
Guarantor which rank pari passu in right of payment with (i) all other
outstanding unsecured and unsubordinated present and future obligations of the
Guarantor for or in respect of borrowed money and (ii) all unsecured and
unsubordinated Capital Lease Obligations of the Guarantor.
9. Each of the following events, to the extent it be
continuing at the time, shall constitute an "Event of Default" hereunder:
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(a) the Guarantor shall fail to make any payment required to
be made by it when due hereunder or in connection herewith;
(b) any representation or warranty made or deemed made by the
Guarantor in connection with this Guaranty or in any report, certificate or
other instrument furnished by the Guarantor pursuant to this Guaranty shall
prove to have been false or misleading in any material respect when made or
delivered or when deemed made in accordance with the terms hereof;
(c) default shall be made in the due observance or performance
of any covenant or agreement to be observed or performed on the part of the
Guarantor contained in Sections 8(c), 8(d), 8(e) or 8(f);
(d) default shall be made in the due observance or performance
of any other covenant, condition or agreement to be observed or performed on
the part of the Guarantor pursuant to the terms hereof and such default shall
(i) with respect to covenants contained in Sections 8(a) or 8(b) continue
unremedied for 20 days or (ii) with respect to any other such covenant,
condition or agreement continue unremedied for 30 days, in each case after the
earlier of (A) the date when the Guarantor receives written or telecopy notice
thereof from the Bank or (B) after actual knowledge thereof by any Financial
Officer of the Guarantor; provided that if the Guarantor fails to give notice
--------
pursuant to Section 7(e) (i) within the time required by such Section, such
30-day period shall be shortened by the number of days of the delay in giving
such notice as required by Section 7(e);
(e) the Guarantor or any of the Restricted Subsidiaries, other
than AMAX Gold, shall fail to pay any Indebtedness in excess of $30,000,000
owing by the Guarantor or any of the Subsidiaries, as the case may be, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand-or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness, or the Guarantor or any of the
Subsidiaries, other than AMAX Gold shall fail to perform any term, covenant or
agreement on its part to be performed under any agreement or instrument
evidencing or securing or relating to such Indebtedness, if the effect of such
failure is to accelerate the maturity of such Indebted-
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<PAGE>
ness;
(f) the Guarantor or any of the Restricted Subsidiaries, other
than AMAX Gold, shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code or any other
Federal, state or foreign bankruptcy, insolvency or similar law, (ii) consent
to the institution of, or fail to controvert in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator
or similar official for such corporation or for a substantial part of its
property, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of the Guarantor or any of the Restricted
Subsidiaries, other than AMAX Gold, or of a substantial part of its property
under Title 11 of the United States Code or any other Federal, state or foreign
bankruptcy, insolvency or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the Guarantor or any
of the Restricted Subsidiaries, other than AMAX Gold, or for a substantial part
of the property of any of them, or (iii) the winding-up or liquidation of the
Guarantor or any of the Subsidiaries, other than AMAX Gold; and such proceeding
or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall continue unstayed and in
effect for 30 days;
(h) a Reportable Event or Reportable Events, or a failure to
make a required payment (within the meaning of Section 412(n) (1) of the Code)
shall have occurred with respect to any Plan or Plans that reasonably could be
expected to result in liability of the Guarantor to the PBGC or to a Plan in an
aggregate amount exceeding 5% of Consolidated Tangible Net Worth and, within 30
days after the reporting of any such Reportable Event to the Bank or after the
receipt by the Bank of the statement required pursuant to Section 7(h) (ii)
(C), the Bank shall have
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<PAGE>
notified such corporation in writing that (i) it has made a determination
that, on the basis of such Reportable Event or Reportable Events or the failure
to make such required payment, there are reasonable grounds (A) for the
termination of such Plan or Plans by the PBGC, (B) for the appointment by the
appropriate United States District Court of a trustee to administer such Plan
or Plans or (C) for the imposition of a lien in favor of a Plan and (ii) as a
result thereof an Event of Default exists hereunder; or a trustee shall be
appointed by a United States District Court to administer any such Plan or
Plans or the PBGC shall institute proceedings to terminate any Plan or Plans
which results or would result in liability of the Guarantor to the PBGC in an
aggregate amount exceeding 5% of Consolidated Tangible Net Worth;
(i) (i) the Guarantor or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Guarantor or such ERISA
Affiliate does not have reasonable grounds for contesting such Withdrawal
Liability or is not in fact contesting such Withdrawal Liability in a timely
and appropriate manner, and (iii) the amount of such Withdrawal Liability
specified in such notice, when aggregated with all other amounts required to be
paid to Multiemployer Plans in connection with Withdrawal Liabilities
(determined as of the date or dates of such notification), exceeds 5% of
Consolidated Tangible Net Worth or requires payments exceeding 3/4 of 1% of
Consolidated Tangible Net Worth in any year; or
(j) the Guarantor or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title IV of
ERISA, if solely as a result of such reorganization or termination the
aggregate annual contributions of the Guarantor and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or have been or are being
terminated have been or will be increased over the amounts required to be
contributed to such Multiemployer Plans for their most recently completed plan
years by an amount exceeding 1/2 of 1% of Consolidated Tangible Net Worth.
10. This Guaranty is a continuing one and all liabilities
to which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of the Bank
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<PAGE>
in exercising any right, power or privilege hereunder and no course of
dealing between the Guarantor and the Bank shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights, powers and remedies herein
expressly provided are cumulative and not exclusive of any rights, powers or
remedies which the Bank would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of the Bank to any other or further action in any circumstances without
notice or demand.
11. This Guaranty shall be binding upon the Guarantor and
its successors and assigns and shall inure to the benefit of the Bank and its
successors and assigns.
12. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated without the prior written consent of
the Bank.
13. The Guarantor acknowledges that an executed (or
conformed) copy of the Reimbursement Agreement has been made available to its
principal executive officers and such officers are familiar with the contents
thereof.
14. If an Event of Default shall have occurred and be
continuing under the Reimbursement Agreement or this Guaranty, the Bank is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account
of the Guarantor against any and all of the obligations of the Guarantor now or
hereafter existing under this Guaranty, irrespective of whether or not the Bank
shall have made any demand under this Guaranty and although such obligations
may be unmatured. The rights of the Bank under this Section are in addition to,
and not by way of limitation of, any other rights and remedies (including other
rights of setoff) which the Bank may have under applicable law or otherwise.
15. All notices and other communicated, communications
hereunder shall be made at the addresses, in the manner and with the effect
provided in Section 7.06 of the Reimbursement Agreement, provided that, for
this purpose, the address of the Guarantor shall be the one specified beneath
its signature
-22-
<PAGE>
below.
16. If claim is ever made upon the Bank for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and the Bank is required to repay all or part of
such amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over it or any of its property or (b)
any settlement or compromise of any such claim effected by the Bank with any
such claimant (including the Company), then and in such event the Guarantor
agrees that any such judgment, decree, order, settlement or compromise shall be
binding upon it, notwithstanding any revocation hereof or the cancellation of
any instrument evidencing any liability of the Company, and the Guarantor shall
be and remain liable to the Bank hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by the Bank.
17. Any acknowledgment or new promise, whether by payment
of principal or interest or otherwise and whether by the Company or others
(including the Guarantor), with respect to any of the Guaranteed Obligations
shall, if the statute of limitations in favor of the Guarantor against the Bank
shall have commenced to run, toll the running of such statute of limitations,
and if the period of such statute of limitations shall have expired, prevent
the operation of such statute of limitations.
18. This Guaranty and the rights and obligations of the
Bank and the Guarantor hereunder shall be construed in accordance with and
governed by the law of the State of New York.
19. In addition to the terms defined elsewhere in this
Guaranty, the terms defined in this Section 19 shall have the following
meanings when used herein:
"Affiliate" shall mean, when used with respect to a
specified person, another person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with the person specified. For this purpose, "Control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a person, whether through the
ownership of voting securities, by contract or otherwise, and "Controlling" and
"Controlled" shall have meanings correlative thereto.
-23-
<PAGE>
"AMAX" shall mean AMAX, Inc. a New York corporation.
"AMAX Gold" shall mean AMAX Gold Inc., a Delaware
corporation.
"Board" shall mean the Board of Governors of the
Federal Reserve System of the United States.
"Business Day" shall have the meaning given to such
term in the Reimbursement Agreement.
"Capital Lease Obligations" of any person shall mean
the obligations of such person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Guaranty, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986,
as the same may be amended from time to time.
"Consolidated Tangible Net Worth" shall mean, at any
time, the Tangible Net Worth of the Guarantor and the Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
"Default" shall mean any event or condition which upon
notice, lapse of time or both would constitute an Event of Default.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business
(whether or not incorporated) that is a member of a group of which the
Guarantor is a member and which is treated as a single employer under Section
414 of the Code.
"Event of Default" shall have the meaning assigned to
such term in Section 9.
"Excess Acquisition Costs" shall mean, for any
-24-
<PAGE>
person, the excess (net of any amortization or writedowns) of the
consideration paid for all persons acquired by such person, or by the previous
parent companies of such person, over the value allocated to the identifiable
tangible or intangible assets and liabilities of such acquired persons,
computed in accordance with GAAP.
"Financial Officer" of any corporation shall mean the
chief financial officer, principal accounting officer, treasurer or controller
of such corporation.
"GAAP" shall mean United States generally accepted
accounting principles, applied on a consistent basis.
"Guarantee" of or by any person shall mean any
obligation, contingent or otherwise, of such person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other person (the
"primary obligor") in any manner, whether directly or indirectly, and including
any obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness; provided, however,
-------- -------
that the term Guarantee shall not include endorsements for collection or
deposit, in either case in the ordinary course of business.
"Indebtedness" of any person shall mean, without
duplication, (a) all obligations of such person for borrowed money, (b) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such person upon which interest charges are
customarily paid (including zero coupon instruments), (d) all obligations of
such person under conditional sale or other title retention agreements relating
to property or assets purchased by such person, (e) all obligations of such
person issued or assumed as the deferred purchase price of property or services
(other than accounts payable to suppliers incurred in the ordinary course of
business and paid when due), (f) all Indebtedness of others secured by any Lien
-25-
<PAGE>
on property owned or acquired by such person (other than Liens permitted by
Section 8(a)), whether or not the obligations secured thereby have been
assumed, but only up to the amortized or depreciated book value of such
property owned or acquired, if such obligations are not assumed, (g) all
Capital Lease Obligations of such person and (h) all Guarantees by such person
of Indebtedness of others and; provided, however, that the term "Indebtedness"
-------- -------
shall not include Nonrecourse Indebtedness. In addition to other obligations
not included in Indebtedness as such term is defined in the preceding sentence,
such term shall not include obligations on operating leases.
"Letter of Credit" shall have the meaning given to
such term in the Reimbursement Agreement.
"Leverage Ratio" shall mean, at any time, the ratio
of (a) the aggregate outstanding amount of Indebtedness of the Guarantor and
the Subsidiaries at such time (including any Guarantee by the Guarantor or any
Subsidiary of Indebtedness of Omolon Gold Mining Company, Oakbridge PTY Limited
or Sociedad Contractual Minera E1 Abra (the "Excluded Entities")), determined
in accordance with GAAP to (b) the sum of (i) Consolidated Tangible Net Worth
of the Guarantor and the Subsidiaries at such time plus, if any Guarantee of
the Indebtedness of an Excluded Entity is included in the calculation of the
Indebtedness of the Guarantor, the product of (A) the Tangible Net Worth of
such Excluded Entity and (B) the percentage the Guarantor or the Subsidiaries
own of the capital stock of or other equity interests in such Excluded Entity
and (ii) the aggregate outstanding amount of Indebtedness of the Guarantor and
the Subsidiaries at such time (including any such Guarantee of Indebtedness of
an Excluded Entity), determined in accordance with GAAP.
"Lien" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Merger" shall mean the merger of Cyprus Minerals
Company and AMAX, pursuant to the Agreement and Plan of Reorganization and
Merger dated May 24, 1993, as
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<PAGE>
in effect on the date hereof (the "Merger Agreement"), which merger became
effective under the laws of the States of Delaware and New York as of November
15, 1993.
"Multiemployer Plan" shall mean a multiemployer plan
as defined in Section 4001(a) (3) of ERISA to which the Guarantor any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"1934 Act" shall mean the United States Securities
Exchange Act of 1934, as amended.
"Nonrecourse Indebtedness" shall mean indebtedness
incurred in (i) the construction or acquisition of assets not owned by the
Guarantor or any of the Subsidiaries on the date hereof or (ii) the financing
of a project involving the development of properties with natural resource
reserves of the Guarantor or any of the Subsidiaries, as to which the obligee
with respect to such indebtedness has no recourse to the general corporate
funds of the Guarantor or any of the Subsidiaries or any assets of the
Guarantor or any of the Subsidiaries other than (a) the assets which were
acquired with the proceeds of such indebtedness or other assets comprising part
of the project of which such acquired assets are a part (and funds generated by
such assets or project securing such indebtedness) and (b) the stock of any
company or the partnership interests in any partnership the only assets of
which are assets included within the immediately preceding clause (a) except
pursuant to a covenant to pay to such obligee or to the obligor of such
indebtedness an amount equal to all or a portion of the amount of any dividends
received from such obligor within the previous 12 months; provided, however,
-------- -------
that "Nonrecourse Indebtedness" shall not include indebtedness of the Guarantor
or any of the Subsidiaries under {i) the Indenture of Conveyance of Production
Payment dated as of September 1, 1989 between Amax Coal Company and C.S.M.,
Inc., (ii) the Production Payment Guaranty dated September 1, 1989 between Amax
Coal Company and C.S.M., Inc. and (iii) the Guarantee dated as of September 1,
1989 from AMAX to C.S.M., Inc.
"Operative Document" shall have the meaning given to
such term in the Reimbursement Agreement.
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<PAGE>
"PBGC" shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA.
"Person" shall have the meaning given to such term in
the Reimbursement Agreement.
"Plan" shall mean any pension plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code which is maintained for employees of the Guarantor or any ERISA
Affiliate.
"Regulation G" shall mean Regulation G of the Board as
from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board as
from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as
from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as
from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Reimbursement Agreement" shall have the meaning
given to such term in the first recital hereof.
"Reportable Event" shall mean any reportable event as
defined in Section 4043 of ERISA or the regulations issued thereunder with
respect to a Plan (other than a Plan maintained by an ERISA Affiliate which is
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section
414 of the Code).
"Restricted Subsidiaries" shall mean at any time (a)
any Subsidiary (other than Subsidiaries acquired, or substantially all the
assets of which were acquired, in whole or in part with Nonrecourse
Indebtedness so long as any portion of such Nonrecourse Indebtedness remains
outstanding) whose Tangible Net Worth, determined in accordance with GAAP,
constitutes at least 5% of the Consolidated Tangible Net Worth of the Guarantor
and the Subsidiaries at such time (which Restricted Subsidiaries as of the
Closing Date shall be listed on Schedule 19 hereto), and (b) any Subsidiary
that at such
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<PAGE>
time owns or controls a Restricted Subsidiary, provided that nothing herein
--------
shall prevent the liquidation of any such intermediate parent of a Restricted
Subsidiary or any action that would cause any Restricted Subsidiary to be owned
directly by the Guarantor; provided, however, that the term "Restricted
-------- -------
Subsidiary" shall not include any Restricted Subsidiary which has been merged
out of existence in compliance with Section 8(c) (ii) (A), (B) or (D).
"Sale and Lease-Back Transaction" shall have the
meaning assigned to such term in Section 8(b).
"SEC" shall mean the United States Securities and
Exchange Commission.
"Shareholders' Equity" shall mean, at any time, for
any person the sum of (i) capital stock outstanding (including preferred
stock), taken at par value, Plus (ii) capital surplus, plus (iii) retained
---- ----
earnings, minus (iv) treasury stock, all computed in accordance with GAAP.
"subsidiary" shall mean, with respect to any person
(herein referred to as the "parent"), any corporation, partnership, association
or other business entity of which more than 50% (in the number of votes) of the
outstanding securities or other ownership interests having ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) is, at the time as of which
any determination is being made, owned or controlled by the parent or by one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.
"Subsidiary" shall mean any subsidiary of the
Guarantor other than Omolon Gold Mining Company, Oakbridge PTY Limited and
Sociedad Contractual Minera E1 Abra.
"Tangible Net Worth" shall mean, at any time and for
any Person, (i) Shareholders' Equity for such Person, less (ii) Excess
Acquisition Costs for such Person, all computed in accordance with GAAP.
"Withdrawal Liability" shall mean liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms
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<PAGE>
are defined in Part I of Subtitle E of Title IV of ERISA.
Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time; provided, however, that, for
-------- -------
purposes of determining compliance with any covenant set forth in Section 8,
such terms shall be construed in accordance with GAAP as in effect on the date
of this Guaranty applied on a basis consistent with the application used in
preparing the Guarantor's audited financial statements referred to in Section
6(e).
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty
to be executed and delivered as of the date first above written.
CYPRUS AMAX MINERALS COMPANY
By /s/ Francis J. Kane
----------------------------
Title:
Address
9100 East Mineral Circle
Englewood, Colorado 80112
Attention: Treasurer
Facsimile No.: 303-643-5269
Accepted and agreed to as of
the date first above written:
UNION BANK OF SWITZERLAND
NEW YORK BRANCH
By /s/ Dan O. Boyle
------------------------------
Title: Managing Director
By /s/ J. Finley Biggerstaff
------------------------------
Title: Assistant Vice President
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<PAGE>
10.1(d)
AMAX GOLD INC.
9100 East Mineral Circle
Englewood, Colorado 80112
May 22, 1997
Cyprus Amax Minerals Company
9100 East Mineral Circle
Englewood, Colorado 80112
Dear Sirs:
Reference is made to (i) the Indenture, dated as of the date hereof,
between the Alaska Industrial Development and Export Authority (the
"Authority") and the First National Bank of Chicago, as trustee (the
"Trustee"), and the Alaska Industrial Development and Export Authority Exempt
Facilities Revenue Bonds issued thereunder (the "Bonds"); (ii) the Loan
Agreement, dated as of the date hereof,, between the Authority and Fairbanks
Gold Mining, Inc. ("Fairbanks"), a subsidiary of Amax Gold Inc. ("AGI"); (iii)
the Irrevocable Letter of Credit, dated as of the date hereof; issued by Union
Bank of Switzerland ("UBS") in favor of the Trustee; (iv) the Reimbursement
Agreement, dated as of the date hereof (the "Reimbursement Agreement"), between
Fairbanks and UBS; and (v) the Guaranty, dated as of the date hereof(the
"Guaranty"), by Cyprus Amax Minerals Company ("Cyprus Amax") in favor of UBS. A
copy of the Guaranty is attached to this letter.
In consideration of the execution and delivery by Cyprus Amax of the
Guaranty, AGI is entering into this letter agreement and undertaking the
obligations set forth below.
AGI hereby agrees to pay to Cyprus Amax a commitment fee (the
"Commitment Fee") on each date upon which accrued interest is payable on the
Bonds, or such later date as Cyprus Amax may designate, equal to the product
of(A) the principal of the Bonds at any time outstanding times (B) 1.75% per
annum, on the basis and at the times that interest is calculated and due on the
Bonds.
AGI further agrees to reimburse Cyprus Amax for (i) all payments made
by Cyprus Amax under the Guaranty, (ii) all reasonable out-of-pocket expenses
of Cyprus Amax, including reasonable fees and disbursements of counsel,
incurred in connection with (x) the preparation of the Guaranty, any waiver or
consent thereunder or any amendment thereof, (y) the performance of Cyprus
Amax's obligations under the Guaranty, and (z) if Cyprus Amax is required to
make any payments under the Guaranty, any collection, bankruptcy, insolvency or
other enforcement proceedings, actions or negotiations resulting therefrom, and
(iii) all transfer taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the performance of Cyprus Amax's
obligations under the Guaranty. Any such reimbursement obligation that arises
shall be in the nature of a demand loan obligation bearing interest as set
forth in the immediately succeeding paragraph and payable in cash (or such
other consideration as may be agreed by AGI and Cyprus Amax at the time of such
payment) by AGI to Cyprus Amax within five (5) Business Days (as defined in the
Reimbursement Agreement) after receipt by AGI of a written notice of demand
from Cyprus Amax.
<PAGE>
Any such demand loan obligation shall bear interest at an annual
rate equal to the LIBOR Rate (as defined herein) for an interest period
selected by Cyprus Amax at its option for a period of one. three or six months,
or such other periods as are agreed between AGI and Cyprus Amax (each. an
"Interest Period"), plus 3.25% per annum, except as otherwise provided herein.
Interest on each amount shall be due and payable in full on the earlier of (i)
the last day of the Interest Period applicable to such amount and (it) the date
upon which Cyprus Amax demands that the amount be repaid, and, in the case of
any Interest Period in excess of three months, at the end of each calendar
quarter occurring during the term thereof The term "LIBOR Rate" shall have the
meaning ascribed to it in the Revolving Credit Agreement, dated as of April 15,
1994, between Cyprus Amax and AGI, whether or not such Agreement shall have
been terminated at the time of such interest calculation All computations of
interest hereunder shall be made by Cyprus Amax on the basis of a year of 360
days, consisting of twelve 30-day months, for the actual number of days
(including the first day but excluding the last day) elapsed.
Cyprus Amax shall be subrogated to all (if any) rights of UBS against
Fairbanks and AGI in respect of any amounts paid to UBS by Cyprus Amax under
the Guaranty and any such payments shall constitute indebtedness of Fairbanks
and AGI due and owing to Cyprus Amax; provided, however, that no payment in
respect of any indebtedness of Fairbanks or AGI to Cyprus Amax incurred as a
result of a payment by Cyprus Amax under the Guaranty Agreement shall be
permitted to be made by Fairbanks or AGI at any time when a Relevant IRB
Default (as defined in the Third Amendment Agreement, dated May 22, 1997, to
the Loan Agreement, dated October 31, 1995, between AGI and the other parties
thereto) shall have occurred and be continuing at such time.
AGI agrees to indenmify and hold harmless Cyprus Amax for any losses,
claims, damages or liabilities to which Cyprus Amax may become subject as a
result of executing or delivering the Guaranty or performing the obligations
contemplated thereby.
This letter shall be governed by and construed in accordance with the
laws of the State of Colorado.
Very truly yours,
AMAX GOLD INC.
/s/ Leland O. Erdahl
- ------------------------------
Leland O. Erdahl
Vice President and Chief Financial Officer
2
<PAGE>
ACCEPTED AND ACKNOWLEDGED:
CYPRUS AMAX MINERALS COMPANY
/s/ Francis J. Kane
- ------------------------------
Francis J. Kane
Vice President and Treasurer
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
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE I DEFINITIONS, FINANCIAL CALCULATIONS, GOVERNING LAW..........................1
Section 1.01. General Definitions .............................................1
Section 1.02. Interpretation ..................................................4
Section 1.03. Financial Calculations ..........................................5
Section 1.04. English Language ................................................6
Section 1.05. Governing Law ...................................................6
ARTICLE H REPRESENTATIONS AND WARRANTIES .............................................6
Section 2.01. Project, Project Costs and Financing Plan .......................6
Section 2.02. Representations as to the Company ...............................7
Section 2.03. Representations as to the Financing and Project Agreements.......9
Section 2.04. Acknowledgement and Warranty ....................................1
ARTICLE HI CREDIT FACILITY ...........................................................1
Section 3.01. Commitment ......................................................1
Section 3.02. Disbursement Limitations ........................................2
Section 3.03. Disbursement Procedure ..........................................3
Section 3.04. Interest ........................................................3
Section 3.05. Principal Repayment .............................................5
Section 3.06. Mandatory Prepayment ............................................6
Section 3.07. Voluntary Prepayment ............................................8
Section 3.08. Default Interest ................................................9
Section 3.09. Taxes ...........................................................1
Section 3.10. Cancellation of Commitment by Company ...........................1
Section 3.11. Fees ..........................................................2
Section 3.12. Costs and Expenses ..............................................3
Section 3.13. Payments ........................................................4
Section 3.14. Insufficient Payments ...........................................5
Section 3.15. OPIC's Books and Records ........................................6
ARTICLE IV CONDITIONS OF DISBURSEMENT ................................................6
Section 4.01. Conditions of First Disbursement .......................................6
Section 4.02. Conditions for Any Disbursement ........................................1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Omolon - ii - OPIC Finance Agreement
<S> <C> <C>
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>
<PAGE>
<TABLE>
<CAPTION>
Omolon - iii - OPIC Finance Agreement
<S> <C> <C>
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. I l(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 1;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 I 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 I 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 I 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
<PAGE>
Omolon - 8 - OPIC Finance Agreement
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. I l(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;
<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 I Loan, the
period during which the Treasury Rate and
Tranche I Funding Spread components of the
Tranche I 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 ',he 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 9 l-day Treasury B ills 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.
(e) [Reserved.]
(d) The balance sheet of the Company as at I 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.
(I) 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
<PAGE>
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 with. out 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).
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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
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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
<PAGE>
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.
<PAGE>
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
<PAGE>
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;
<PAGE>
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
<PAGE>
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.
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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
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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.
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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 I. 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 Ms all requisite power and authority., corporate or
otherwise, to execute, deliver and perform all of its obligations
under this Amendment and the Agreement as mended 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 Fire Amendment and the Agreement as mended 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 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 Stale 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('0) 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 I 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('o) 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 2.020v) 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 3.020v). 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 a 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;
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<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
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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.
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<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
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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
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<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.
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<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.
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<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.
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"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.
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"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
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<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.
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<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.
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<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.
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"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.
25
<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:
26
<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
27
<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;
28
<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
29
<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.
30
<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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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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(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.
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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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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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(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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(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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(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
69
<PAGE>
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
70
<PAGE>
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.
71
<PAGE>
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.
72
<PAGE>
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
--------------------------
73
<PAGE>
[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.
1
<PAGE>
(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.
2
<PAGE>
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 5une 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 I(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(I), 6.05(2)
and 6.05(3)"
(e) The definition of "Subordinated Shareholder Loans" in Section 1.01 of the
Loan Agreement is hereby mended 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 I 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 I Loan in the amount of $42.500,000 and a portion of
the Tranche 2 Loan m 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 here~ 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 flail 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 .Tune 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, $2,5,000.000 in the aggregate to the Bask
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>
(a) 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 t 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 sen:or 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>
[EXECUTION COPY]
SUPPORT AGREEMENT
among
OMOLON GOLD MINING COMPANY
CYPRUS AMAX MINERALS COMPANY
CYPRUS MAGADAN GOLD CORPORATION
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
and
OVERSEAS PRIVATE INVESTMENT CORPORATION
Dated as of 30 August 1995
<PAGE>
SUPPORT AGREEMENT
AGREEMENT dated as of 30 August 1995 among:
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");
CYPRUS AMAX MINERALS COMPANY, a corporation organized and existing under
the laws of the State of Delaware in the United States of America ("Cyprus
Amax"), and CYPRUS MAGADAN GOLD CORPORATION, a corporation organized and
existing under the laws of the State of Delaware in the United States of
America ("Cyprus Magadan" and, together with Cyprus Amax, hereinafter
referred to as the "U.S. Sponsors"); and
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT ("EBRD") and OVERSEAS
PRIVATE INVESTMENT CORPORATION ("OPIC" and, together with EBRD, hereinafter
referred to as the "Project Lenders").
WHEREAS:
(A) Cyprus Amax indirectly owns 100% of the outstanding shares of capital stock
of Cyprus Magadan and Cyprus Magadan owns 50% of the outstanding shares of
capital stock of the Company;
(B) EBRD has entered into a loan agreement dated as of 30 June 1995 (the "EBRD
Loan Agreement") with the Company, pursuant to which EBRD has agreed, subject to
the terms and conditions of the EBRD Loan Agreement, to make a loan to the
Company in an amount not to exceed US$47,500,000;
(C) OPIC has entered into a finance agreement dated as of 30 June 1995 (the
OPIC "Finance Agreement") with the Company, pursuant to which OPIC has agreed,
subject to the terms and conditions of the OPIC Finance Agreement, to make a
loan to the Company in an amount not to exceed US$52,500,000; and
(D) it is a condition precedent to the obligation of EBRD to make disbursements
to the Company under the EBRD Loan Agreement and of OPIC to make disbursements
to the Company under the OPIC Finance Agreement that the U.S. Sponsors enter
into this Agreement.
NOW, THEREFORE, in consideration of EBRD entering into the EBRD Loan Agreement
and OPIC entering into the OPIC Finance Agreement, and in order to
1
<PAGE>
induce EBRD to make disbursements under the EBRD Loan Agreement and OPIC to make
disbursements under the OPIC Finance Agreement, the U.S. Sponsors hereby agree
with the Company, EBRD and OPIC as follows:
ARTICLE I - DEFINITIONS
Section 1.01. Definitions
Wherever used in this Agreement or the Schedules hereto, unless the context
otherwise requires, terms defined in the Recitals shall have the meanings
assigned to them in such Recitals, terms defined in the EBRD Loan Agreement
shall have the same meanings in this Agreement and the following terms shall
have the following meanings:
"Company Payment
Amount" means an amount which is equal to (a) the aggregate
of all payments and withdrawals which contravene
the Company Payment Restrictions, and (b) all such
other damages, losses, costs and expenses suffered
or incurred by the Project Lenders as a result of,
or in connection with, any breach of the Company
Payment Restrictions.
"Company Payment
Restrictions" means:
(a) the restrictions, under any provision of the
Financing Agreements, on the use by the Company or
either U.S. Sponsor of the proceeds of the Loan or
the OPIC Loan or any other funds of the Company;
(b) the restrictions on payments and all other
obligations of the Company under Sections 6.01 and
6.08(c) of the EBRD Loan Agreement and Sections 6.01
and 6.08(c) of the OPIC Finance Agreement; and
(c) the restrictions, under the EBRD Loan Agreement,
the OPIC Finance Agreement, the Offshore Account
Pledge and the Russian Account Pledge, on
withdrawals by the Company of funds from the
Offshore Bank Account and the subaccounts thereof
and from the Russian Bank Accounts and all other
obligations of the Company under Sections 5.10,
5.11, 5.12, 5.13 and 5.14 of the EBRD Loan Agreement
and Sections 5.10, 5.11, 5.12, 5.13 and 5.14 of the
OPIC Finance Agreement.
2
<PAGE>
"Company Security
Restrictions" means the obligations of the Company under Sections
6.03, 6.04 and 6.05 of the EBRD Loan Agreement and
under Sections 6.03, 6.04 and 6.05 of the OPIC
Finance Agreement.
"Junior Indebtedness" means any and all of the Company's obligations,
whether existing on the date hereof or arising
after the date hereof, to make payments of whatever
nature to either U.S. Sponsor, including without
limitation any and all of the Company's obligations
to make payments of principal, interest, management
fee and other amounts to either U.S. Sponsor under
the Management Agreement or in respect of any loan
or other advance of funds by such U.S. Sponsor to
the Company, but excluding reimbursements to either
U.S. Sponsor for amounts which constitute Operating
Costs.
"Senior Indebtedness" means any and all of the Company's obligations to
make payments of principal, interest, fees,
charges, commissions, indemnities and other amounts
to the Project Lenders under the EBRD Loan
Agreement, the OPIC Finance Agreement and the other
Financing Agreements.
Section 1.02. Singular/Plural - Persons - References - Headings
(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, reference 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.
ARTICLE II- SUPPORT OBLIGATIONS
Section 2.01. U.S. Sponsors' Support Obligations
(a) Each U.S. Sponsor shall use its best efforts to provide to the Company such
assistance of a personnel, management and technical nature as may be reasonably
required to enable the Company to carry out the Project, provided that the U.S.
3
<PAGE>
Sponsors shall be relieved from such obligations to the extent that the Project
Lenders take any action which prevents the U.S. Sponsors from performing such
obligations.
(b) Each U.S. Sponsor shall use its best efforts in its capacity as a direct or
indirect shareholder in the Company to cause the Company at all times to:
(1) carry out the Project in accordance with the requirements of the EBRD
Loan Agreement, the OPIC Finance Agreement and the other Financing
Agreements and in accordance with the Development Plan; and
(2) maintain in full force and effect all Project Agreements to which the
Company is a party except as set forth in Section 5.09 of the EBRD Loan
Agreement and Section 5.09 of the OPIC Finance Agreement.
(c) To the extent that the Company has insufficient funds for such purpose, the
U.S. Sponsors shall jointly and severally provide the Company with sufficient
funds to enable the Company:
(1) to fulfil its obligations with respect to the Evenskoye Field under
the terms of the License Agreement; and
(2) to take such preventive, remedial or other actions as may be
necessary in connection with any release or threatened release of any
pollutants or hazardous materials at any site or facility owned, operated
or leased by the Company (or any predecessor or successor in interest to
the Company) which was caused by or related to the negligence or wilful
misconduct of, or any breach of its obligations under any Project
Agreement by, either U.S. Sponsor.
(d) Each U.S. Sponsor shall perform all of its obligations under the Project
Agreements to which such U.S. Sponsor is a party.
(e) Each U.S. Sponsor agrees that it will not take any action, in its capacity
as a shareholder of the Company or otherwise, which reasonably and foreseeably
would have a Material Adverse Effect.
Section 2.02. Special Obligations of Cyprus Magadan
Without limiting its obligations under Section 2.01, Cyprus Magadan shall
provide to the Company the personnel, equipment, facilities and other assistance
as provided for in the Management Agreement. Cyprus Magadan shall ensure that
such personnel are qualified and experienced and shall use its best efforts to
cause such personnel to carry out their duties in accordance with the
requirements of the EBRD Loan Agreement, the OPIC Finance Agreement and the
other Financing Agreements, the Management Agreement, all applicable laws and
the Development Plan.
4
<PAGE>
Section 2.03. Special Obligations of Cyprus Amax
Cyprus Amax shall cause Cyprus Magadan to perform all of its obligations
under this Agreement.
Section 2.04. Not a Guaranty
(a) For the avoidance of doubt, the parties hereto acknowledge and confirm that
the obligations of the U.S. Sponsors under Sections 2.01 through 2.03 are not
intended to constitute a guaranty of the payment obligations of the Company
under the EBRD Loan Agreement, the OPIC Finance Agreement and the other
Financing Agreements.
(b) Notwithstanding the foregoing, (1) the U.S. Sponsors shall be liable to the
Project Lenders for any losses, damages, liabilities, costs, expenses and other
amounts suffered or sustained by the Project Lenders arising out of any breach
by either U.S. Sponsor of its obligations under Sections 2.01 through 2.03, and
(2) nothing in this Agreement shall affect the obligations of Cyprus Magadan
under the Cyprus Magadan Guaranty or the obligations of Cyprus Amax under the
Cyprus Amax Guaranty.
ARTICLE III- INDEMNITY OBLIGATIONS
Section 3.01. Environmental Liability
(a) The U.S. Sponsors jointly and severally agree, on first written demand from
either Project Lender, to indemnify and hold harmless each Project Lender and
its officers, directors, employees, agents and servants 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 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 (subject to (2) below) by strict
liability or otherwise, which are imposed on, incurred by or asserted against
such Project Lender or any of its officers, directors, employees, agents or
servants (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 release or use or threatened release of any pollutants or
hazardous materials at any site or facility owned, operated or leased by
the Company (or any predecessor or successor in interest to the Company)
prior to the Project Completion Date or any other environmental liability
traceable to an event or condition relating to the Project or the Company
that occurred or existed prior to the Project Completion Date;
(2) any release or use or threatened release of any pollutants or
hazardous materials at any site or facility owned, operated or leased by
the Company (or
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any predecessor or successor in interest to the Company) or any other
environmental liability traceable to an event or condition relating to
the Project or the Company, which in either case was caused by or related
to the negligence or wilful misconduct of, or any breach of its
obligations under any Project Agreement by, either U.S. Sponsor; or
(3) any preventive, remedial or other action, including without
limitation suspension or termination of operations at the Kubaka Field,
which may be required by the Russian Federation or any political
subdivision thereof, or any ministry, agency or instrumentality of the
Russian Federation or any political subdivision thereof, under the
Environmental Standards and under applicable statutes, laws, regulations,
rules, orders and decrees as in effect and as interpreted by the relevant
authorities on the date hereof, in connection with the existing tailings
pond at the Kubaka Field.
(b) Any claim made by either Project Lender under Section 3.01(a) shall set
forth in reasonable detail the origin and cause of such claim.
(c) The indemnity obligations of the U.S. Sponsors under Section 3.01(a) shall
survive the expiry or termination of this Agreement.
Section 3.02. Breach of Company Payment and Security Restrictions
(a) If the Company at any time breaches one of the Company Payment Restrictions,
the following provisions shall apply:
(1) If the act or omission of the Company which constituted a breach of
the Company Payment Restrictions was proposed or submitted to the Board
of Directors or the shareholders of the Company and the Board of
Directors or the shareholders of the Company then approved such act or
omission or failed to take action to prevent such act or omission from
occurring, then the U.S. Sponsors shall be jointly and severally
obligated to indemnify the Project Lenders by paying to them on first
written demand an amount equal to 100% of the Company Payment Amount;
provided that this Section 3.02(a)(1) shall not apply to any payment of
dividends which breaches the Company Payment Restrictions if:
(A) on the date of such payment, the U.S. Sponsors and the Company
had jointly delivered to the Project Lenders a certificate
confirming, to the best of their knowledge after due inquiry,
that, as of the date of such payment, no Event of Default or
Potential Event of Default had occurred and was continuing; and
(B) the breach of the Company Payment Restrictions was due solely
to the existence of a Potential Event of Default which had not
been notified by either Project Lender to the Company on or prior
to the date of such payment.
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(2) In the case of any breach of the Company Payment Restrictions other
than one to which Section 3.02(a)(1) applies, the U.S. Sponsors shall be
jointly and severally obligated to indemnify the Project Lenders by
paying to them on first written demand an amount equal to the greater of:
(A) 50% of the Company Payment Amount; and
(B) the portion of the Company Payment Amount which was received
by the U.S. Sponsors;
provided that this Section 3.02(a)(2) shall not apply to any payment of
dividends which breaches the Company Payment Restrictions if:
(i) on the date of such payment, the U.S. Sponsors and the
Company had jointly delivered to the Project Lenders a
certificate confirming, to the best of their knowledge
after due inquiry, that, as of the date of such payment, no
Event of Default or Potential Event of Default had occurred
and was continuing; and
(ii) the breach of the Company Payment Restrictions was due
solely to the existence of a Potential Event of Default
which had not been notified by either Project Lender to the
Company on or prior to the date nine months after the date
of such payment.
(b) If the Company at any time breaches one or more of the Company
Security Restrictions, and if such breach has not been remedied within 45
days after receipt of notice of such breach, the following provisions
shall apply:
(1) If the act or omission of the Company which constituted a
breach of the Company Security Restrictions was proposed or
submitted to the Board of Directors or shareholders of the Company
and the Board of Directors or shareholders of the Company then
approved such act or omission or failed to take action to prevent
such act or omission from occurring, then the U.S. Sponsors shall
be jointly and severally obligated to indemnify each Project
Lender by paying to it on first written demand an amount equal to
100% of all amounts from time to time due and payable by the
Company to such Project Lender under the Financing Agreements
which the Company fails to irrevocably discharge within five days
of the same falling due.
(2) In the case of any breach of the Company Security Restrictions
other than that referred to in Section 3.02(b)(1), the U.S.
Sponsors shall be jointly and severally obligated to indemnify
each Project Lender by paying to it on first written demand an
amount equal to 50% of all amounts from time to time due and
payable by the Company to such Project Lender under the Financing
Agreements which the Company fails to irrevocably discharge within
five days of the same falling due.
(c) For purposes of this Section 3.02, the burden of proof with respect
to whether an act or omission which is referenced in this Section 3.02
was proposed or submitted
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to the Board of Directors or shareholders of the Company shall fall upon the
U.S. Sponsors.
Section 3.03. Transfer to Amax Gold; Expropriatory Action
If:
(1) in accordance with Section 5.03(b), Cyprus Amax transfers its shares
in Cyprus Magadan to Amax Gold and, as a result thereof, the License is
terminated; or
(2) any Expropriatory Action (as defined in the Cyprus Magadan Guaranty)
occurs after the Project Completion Date which:
(A) was provoked, instigated or caused by or in retaliation for,
or continued because of any unreasonable or illegal action
(including, without limitation, any corrupt practice) of either
U.S. Sponsor;
(B) was preventable or curable by the exercise of reasonable
diligence by either U.S. Sponsor; or
(c) was caused as a result of or attributable to, or continued as
a consequence of, any agreement, consent or instruction (whether
express or implied, written or oral) made by either U.S. Sponsor,
then the U.S. Sponsors shall be jointly and severally obligated to indemnify the
Project Lenders by paying to them on first written demand from either Project
Lender an amount equal to the aggregate of the outstanding principal, interest
and other amounts owing under the EBRD Loan Agreement, the OPIC Finance
Agreement and the other Financing Agreements as of the date of such demand
(whether or not such amounts are then due and payable by the Company).
ARTICLE IV - SUBORDINATION
Section 4.01. Subordination in Right of Payment
(a) Except as provided in Section 4.01(b), the payment of all or any part of the
Junior Indebtedness shall be postponed and subordinated to the payment in full
of all amounts due and payable in respect of the Senior Indebtedness and no
payments or other distributions whatsoever in respect of any part of the Junior
Indebtedness shall be made nor shall any property or assets of the Company be
applied to the purchase or other acquisition or retirement of any part of the
Junior Indebtedness.
(b) The Company may make payments to the U.S. Sponsors on account of the Junior
Indebtedness so long as no Event of Default or Potential Event of Default has
occurred and is continuing and such payment is otherwise permitted under the
terms
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of the EBRD Loan Agreement, the OPIC Finance Agreement and the other Financing
Agreements.
Section 4.02. Subordination in Liquidation
In the event of any dissolution, winding up, liquidation, readjustment,
reorganization or other similar proceedings relating to the Company or to its
creditors, as such, or to its property, of whatever nature:
(a) the Senior Indebtedness shall first be paid in full before either U.S.
Sponsor shall be entitled to receive and to retain any payment or distribution
in respect of the Junior Indebtedness;
b) all payments and distributions of any kind or character in respect of the
Junior Indebtedness to which either U.S. Sponsor would be entitled if the Junior
Indebtedness were not subordinated pursuant to this Agreement shall be made
directly to the Project Lenders;
(c) each U.S. Sponsor shall promptly file a claim or claims, in the form
required in such proceedings, for the full outstanding amount of the Junior
Indebtedness owing to such U.S. Sponsor and shall cause such claim or claims to
be approved and all payments and other distributions in respect thereof to be
made directly to the Project Lenders; and
(d) each U.S. Sponsor hereby irrevocably agrees that each Project Lender may, at
its sole discretion, in the name of such U.S. Sponsor or otherwise, demand, sue
for, collect, receive and give receipt for any and all such payments or
distributions, and file, prove and vote or consent in any such proceedings with
respect to any and all claims of such U.S. Sponsor relating to the Junior
Indebtedness.
Section 4.03. Pledge of Junior Indebtedness
(a) As security for all of the Senior Indebtedness, each U.S. Sponsor hereby
creates a pledge of rights in favor of the Project Lenders over (1) all of such
U.S. Sponsor's rights, title, benefit and interest (present and future) in and
to the Junior Indebtedness, (2) all monies whatsoever payable to or to the
account of such U.S. Sponsor in respect of the Junior Indebtedness, and (3) all
other rights and benefits whatsoever accruing to such U.S. Sponsor in connection
with the Junior Indebtedness.
(b) The pledge created pursuant to Section 4.03(a) shall be without prejudice
and in addition to any other rights which may be held by the Project Lenders or
granted to the Project Lenders by the Company or any other person for or in
respect of the Senior Indebtedness and such pledge shall remain in full force
and effect as continuing security to the Project Lenders until the Senior
Indebtedness has been paid in full. When the Senior Indebtedness has been paid
in full and the Project Lenders are satisfied that no payment received by the
Project Lenders in respect thereof may be avoided or adjusted in bankruptcy or
otherwise, the Project Lenders shall, upon the
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request of each U.S. Sponsor, issue an absolute and unconditional release of
such pledge.
(c) The Company acknowledges the existence of the pledge of rights in respect of
the Junior Indebtedness created by Section 4.03(a), the value of which on the
date of this Agreement is nil.
Section 4.04. Trust
In the event that either U.S. Sponsor receives any payment or other
distribution of any kind or character from the Company or from any other source
whatsoever in respect of any part of the Junior Indebtedness, other than as
expressly permitted by the terms of this Agreement, such payment or other
distribution shall be received in trust for the Project Lenders and promptly
turned over by such U.S. Sponsor to the Project Lenders.
Section 4.05. Application of Payments
All payments and distributions received by the Project Lenders in respect
of the Junior Indebtedness, to the extent received in or converted into cash,
may be applied by the Project Lenders first to the payment of any and all
expenses (including lawyers' fees and legal expenses) paid or incurred by the
Project Lenders in enforcing this Agreement or in endeavoring to collect or
realize upon any part of the Junior in Indebtedness or any security therefor,
and any balance thereof shall, solely as between the U.S. Sponsors and the
Project Lenders, be applied by the Project Lenders, in such order and manner of
application as may be prescribed in the Security Sharing Agreement, toward the
payment of the Senior Indebtedness remaining unpaid; but, as between the Company
and its creditors, no such payments or distributions of any kind or character
shall be deemed to be payments or distributions in respect of the Senior
Indebtedness and, notwithstanding any such payments or distributions received by
the Project Lenders in respect of the Junior Indebtedness and so applied by
the Project Lenders toward the payment of the Senior Indebtedness, the U.S.
Sponsors shall be subrogated to the then existing rights of the Project Lenders,
if any, in respect of the Senior Indebtedness only at such time as this
Agreement shall have been discontinued as provided for in Section 6.04.
Section 4.06. U.S. Sponsors' Affirmative Covenants
Each U.S. Sponsor shall, from time to time:
(a) promptly notify the Project Lenders of the issuance of any promissory note
or other instrument to evidence the Junior Indebtedness or any part thereof,
upon request by either Project Lender cause any part of the Junior Indebtedness
which is not evidenced by a promissory note or other instrument of the Company
to be so evidenced and cause to be clearly inserted in any promissory note or
other instrument which at any time evidences any part of the Junior Indebtedness
a statement to the
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effect that the payment thereof is subordinated in accordance with the terms of
this Agreement;
(b) mark its books and records, and cause the Company to mark its books and
records, so as to clearly indicate that the Junior Indebtedness is subordinated
in accordance with the terms of this Agreement;
(c) upon request by either Project Lender, and as collateral security for all
Senior Indebtedness, endorse without recourse, deliver and pledge jointly to the
Project Lenders any promissory notes or other instruments evidencing the Junior
Indebtedness and otherwise assign jointly to the Project Lenders the Junior
Indebtedness and any security therefor and guaranties thereof, all in a manner
satisfactory to the Project Lenders; and
(d) execute such further documents or instruments and take such further action
as either Project Lender may reasonably from time to time request to carry out
the terms of this Agreement.
Section 4.07. U.S. Sponsors' Negative Covenants
Neither U.S. Sponsor shall, without the prior written consent of both
Project Lenders:
(a) require or accept, by set-off or otherwise, any prepayment or accelerated
payment or repayment in respect of any part of the Junior Indebtedness, except
as may be required under Section 4.02;
(b) cancel, waive, forgive, transfer or assign, or attempt to enforce or
collect, any part of the Junior Indebtedness or any rights in respect thereof;
(c) take any collateral security for any part of the Junior Indebtedness; or
(d) commence, or join with any other creditor in commencing, any bankruptcy,
reorganization or insolvency proceedings with respect to the Company.
Section 4.08. Waivers by U.S. Sponsors
Each U.S. Sponsor hereby waives notice of the non-payment of all or any
part of the Senior Indebtedness and all diligence in collection or protection of
or realization upon the Senior Indebtedness or any part thereof or any security
therefor.
Section 4.09. Actions by the Project Lenders
Each Project Lender may, from time to time, whether before or after any
discontinuance of this Agreement, at its sole discretion and without notice to
either U.S. Sponsor, take any or all of the following actions:
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(a) retain or obtain a security interest in any property to secure any part of
the Senior Indebtedness;
(b) retain or obtain the primary or secondary obligation of any obligor or
obligors with respect to any part of the Senior Indebtedness;
(c) extend or renew for one or more periods (whether or not longer than the
original period), alter or exchange any part of the Senior Indebtedness, or
release or compromise any obligation of any nature of any obligor with respect
to any part of the Senior Indebtedness; and
(d) release its security interest in, or surrender, release or permit any
substitution or exchange for, all or any part of any property securing any part
of the Senior Indebtedness, or extend or renew for one or more periods (whether
or not longer than the original period) or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to any such
property.
Section 4.10. Company's Obligations
The Company agrees to be bound by the terms and provisions of this
Agreement, to make no payments or distributions contrary to the terms and
provisions hereof and to do every other act and thing necessary or appropriate
to carry out such terms and provisions.
ARTICLE V - REPRESENTATIONS AND WARRANTIES AND COVENANTS
OF THE U.S. SPONSORS
Section 5.01. Representations and Warranties
Each U.S. Sponsor represents and warrants to the Project Lenders that:
(a) it is duly organized and validly existing under the laws of the State of
Delaware in the United States of America and has all requisite power and
authority, corporate or otherwise, to execute, deliver and perform all of its
obligations under this Agreement;
(b) it has taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement;
(c) this Agreement has been duly executed and delivered by it and constitutes
its valid and legally binding obligation, enforceable against it in accordance
with its terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, moratorium and similar laws of general applicability affecting
creditors' rights;
(d) no governmental authorization or action of any kind is or will be necessary
for its valid execution, delivery or performance of this Agreement;
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(e) the execution, delivery and performance by it of this Agreement do not
require the consent or approval of any of its creditors 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, judgment,
injunction, decree, determination or award applicable to it;
(f) there are no actions, proceedings or claims pending or, to the best of its
knowledge, threatened, the adverse determination of which might have a
materially adverse effect on its ability to perform its obligations hereunder or
affect the validity or enforceability hereof;
(g) unless disclosed in writing to the Project Lenders at the time such
statement was made or such information was furnished, no statement made or other
information furnished by it in this Agreement or any other Financing Agreement
to which it is a party in any other document furnished by it or on its behalf
in connection therewith contains any untrue statement of a material fact or
omits to state (as of the date made or furnished) any material fact necessary to
make such statement or information not misleading in light of the circumstances
under which it was made or furnished, provided that, to the extent that any such
statement or information was based upon estimates, forecasts or professional
opinions, such estimates, forecasts or opinions (except as otherwise warranted
herein or therein) were made in good faith and based upon the best available
information, but otherwise it does not warrant that such estimates, forecasts or
opinions will ultimately prove to be correct;
(h) there is no fact known to it that has had, or that could have, a Material
Adverse Effect (other than matters having general applicability and matters of a
general economic, political or legal nature or matters otherwise relating to
general market conditions) that has not been disclosed in writing to the Project
Lenders;
(i) neither it nor any of its officers, directors or authorized employees,
agents or representatives has (1) paid, promised or offered to pay or authorized
the payment of any commission, bribe, pay-off or kickback related to the Project
that violates the U.S. Foreign Corrupt Practices Act of 1977, as amended, (2)
entered into any agreement pursuant to which any such commission, bribe, pay-off
or kickback may or will at any time be paid, or (3) ever been convicted under
the U.S. Foreign Corrupt Practices Act of 1977, as amended, for an offense
related to a project insured or otherwise supported by OPIC;
(j) in the case of Cyprus Amax, it is a corporation created under the laws of
the State of Delaware in the United States of America and is at least 50%
beneficially owned by United States citizens; and
(k) in the case of Cyprus Magadan, it does not own any capital stock or other
form of equity ownership interest in any person other than the Company, it has
no Indebtedness other than Indebtedness under the Cyprus Magadan Guaranty and no
Lien exists with respect to any of its property, revenues or other assets other
than Permitted Liens.
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Section 5.02. Covenants
Each U.S. Sponsor covenants and agrees that, unless both Project Lenders
shall otherwise agree in writing:
(a) it shall promptly notify the Project Lenders of any event that constitutes,
or which with the lapse of time or the giving of notice or both would
constitute, an Event of Default and of any other event that has or might have a
materially adverse effect on its ability to perform its obligations hereunder or
on the Project, the Company or the Company's business prospects;
b) it shall permit representatives of the Project Lenders to inspect its
records pertaining to the Project at any reasonable time;
(c) in the case of Cyprus Magadan, it shall furnish to each of the Project
Lenders, as soon as available but, in any event, within 60 days after the end of
each quarter of each of its fiscal years, two copies of its financial statements
for such quarter prepared in accordance with Generally Accepted Accounting
Principles in the United States and certified by an authorized officer of Cyprus
Magadan;
(d) in the case of Cyprus Amax, it shall furnish to each of the Project
Lenders:
(1) as soon as available but, in any event, within 60 days after the end
of each quarter of each of its fiscal years, two copies of its
consolidated financial statements for such quarter pare in accordance
with Generally Accepted Accounting Principles in the United States and
certified by an authorized officer of Cyprus Amax;
(2) as soon as available but, in any event, within 120 days after the end
of each of its fiscal years, two copies of its consolidated financial
statements for such fiscal year prepared in accordance with Generally
Accepted Accounting Principles in the United States, together with an
audit report thereon of its independent auditors;
(3) as soon as available but, in any event, within 60 days after the end
of each quarter of each of the fiscal years of Amax Gold, two copies of
the consolidated financial statements for Amax Gold for such quarter
prepared in accordance with Generally Accepted Accounting Principles in
the United States and certified by an authorized officer of Amax Gold;
and
(4) as soon as available but, in any event, within 120 days after the end
of each of the fiscal years of Amax Gold, two copies of the consolidated
financial statements of Amax Gold for such fiscal year prepared in
accordance with Generally Accepted Accounting Principles in the United
States, together with an audit report thereon of its independent
auditors;
(e) it shall furnish to the Project Lenders from time to time such other
information pertaining to the Project or such U.S. Sponsor's financial status as
either Project Lender may reasonably request;
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(f) in the case of Cyprus Magadan, it shall not (1) engage in any business other
than the holding of shares in the Company, (2) incur any Indebtedness other than
Indebtedness under the Cyprus Magadan Guaranty, or (3) create or permit to exist
any Lien on any of its property, revenues or other assets, present or future,
other than Permitted Liens; and
(g) it shall not, through any of its officers, directors or authorized
shareholders, employees, agents or representatives, pay, promise or offer to pay
or authorize the payment of any commission, bribe, pay-off or kickback related
to the Project that violates the U.S. Foreign Corrupt Practices Act of 1977, as
amended, or enter into any agreement pursuant to which any such commission,
bribe, pay-off or kickback may or will at any time be paid.
Section 5.03. Share Retention
(a) Cyprus Magadan agrees that, until all amounts due or to become due under the
EBRD Loan Agreement, the OPIC Finance Agreement and the other Financing
Agreements have been paid in full, Cyprus Magadan shall not, without the prior
written consent of both Project Lenders, effect any change in its equity
interest in the Company or transfer any of its shares of the capital stock of
the Company.
(b) Cyprus Amax agrees that, until all amounts due or to become due under the
EBRD Loan Agreement, the OPIC Finance Agreement and the other Financing
Agreements have been paid in full, Cyprus Amax shall not, without the prior
written consent of both Project Lenders, effect any change in its 100% indirect
shareholding in Cyprus Magadan or permit Cyprus Gold to transfer any of its
shares of the capital stock of Cyprus Magadan other than to another wholly-owned
subsidiary of Cyprus Amax, provided that Cyprus Gold shall, upon 90 days' prior
written notice to the Project Lenders, be entitled to transfer all (but not part
only) of its shares in Cyprus Magadan to Amax Gold if Amax Gold is then an
Affiliate of Cyprus Amax and Amax Gold has agreed in writing to be bound by this
Agreement and to assume all of the obligations of Cyprus Amax under this
Agreement (other than the obligations of Cyprus Amax under this Section 5.03(b))
as if it were originally a party hereto (whereupon Cyprus Amax shall, without
affecting any of its obligations under the Cyprus Amax Guaranty, be released
from its obligations under this Agreement) and not to transfer such shares to
any third party.
(c) Without limiting the foregoing, unless both Project Lenders otherwise agree
in writing, Cyprus Amax shall, until all amounts due or to become due under the
EBRD Loan Agreement, the OPIC Finance Agreement and the other Financing
Agreements have been paid in full:
(1) indirectly through Cyprus Magadan own at least 50% of the shares in
the Company at any time outstanding; and
(2) retain, either directly or indirectly, such control over the
management of the Company as is provided for in the Company's Charter as
it exists on the date
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hereof and not reduce such management control from that provided for in
the Company's Charter as it exists on the date hereof.
(d) The U.S. Sponsors acknowledge the difficulty of quantifying losses that may
be suffered by the Project Lenders in the event of a breach by either U.S.
Sponsor of the provisions of Section 5.03(a), 5.03(b) or 5.03(c). Each U.S.
Sponsor therefore agrees that, in the event of any such breach by either U.S.
Sponsor, it shall pay to the Project Lenders, upon first written demand by
either Project Lender, liquidated damages equal to the aggregate of the
outstanding principal, interest and other amounts owing under the EBRD Loan
Agreement, the OPIC Finance Agreement and the other Financing Agreements as of
the date of such demand (whether or not such amounts are then due and payable by
the Company). The U.S. Sponsors agree that such liquidated damages are
reasonable under all circumstances.
ARTICLE VI - MISCELLANEOUS
Section 6.01. Notices
Any notice, request or other communication to be given or made under this
Agreement shall be in writing. Such notice, request 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 required or
permitted to be given or made at such party's address specified below its
signature to this Agreement or at such other address as such party shall have
designated by notice to the party giving or making such notice, request or other
communication.
Section 6.02. Rights, Remedies and Waivers
(a) No course of dealing and no delay in exercising, or omission to exercise,
any right, power or remedy accruing to either Project Lender 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 either Project Lender in respect of any such default, or any
acquiescence by it therein, affect or impair any right, power or remedy of the
other Project Lender in respect of such default or of either Project Lender in
respect of any other default.
(b) No single or partial exercise of any right, power or remedy accruing to the
Project Lenders upon any default under this Agreement or any other agreement
shall preclude any other or further exercise thereof or the exercise of any
other legal right.
(c) No waiver of any right, power or remedy accruing to the Project Lenders upon
any default under this Agreement or any other agreement shall be effective
unless given in writing by both Project Lenders.
(d) The rights or remedies provided for herein axe cumulative and are not
exclusive of any other rights, powers or remedies provided by law.
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Section 6.03. Successors and Assigns
This Agreement shall bind the successors and assigns of each U.S. Sponsor
and shall inure to the benefit of each Project Lender and its successors and
assigns; provided that no U.S. Sponsor may assign any of its obligations
hereunder without the prior written consent of both Project Lenders.
Section 6.04. Term of Agreement
This Agreement shall continue in force until all monies payable under the
EBRD Loan Agreement, the OPIC Finance Agreement and the other Financing
Agreements shall have been fully and irrevocably paid in accordance with the
provisions thereof. Notwithstanding the foregoing, the provisions of Sections
2.01(c) and 3.01 and this Article VI shall survive any expiry or termination of
this Agreement.
Section 6.05. 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 6.06. Jurisdiction
(a) Each U.S. Sponsor 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 may, at the option
of either Project Lender, 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 such
Project Lender may elect, and, by execution and delivery of this Agreement, each
U.S. Sponsor 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. Each U.S. Sponsor
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
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. A copy of any such process served on such agent shall be
promptly forwarded by airmail by such Project Lender to such U.S. Sponsor at its
address referred to in Section 6.01, but the failure of such U.S. Sponsor to
receive such copy shall not affect in any way the service of such process as
aforesaid. Each U.S. Sponsor 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
17
<PAGE>
prepaid, to such U.S. Sponsor at its address referred to in Section 6.01. The
foregoing, however, shall not limit the fights of the Project Lenders 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. Each
U.S. Sponsor 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.
(b) Each U.S. Sponsor hereby irrevocably waives (1) any fight 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, (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.
(c) Each U.S. Sponsor hereby (1) irrevocably waives its right to, and agrees not
to request, plead or claim that either Project Lender 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 claim
of either Project Lender that such Project Lender should be exempt or immune
from posting, paying, making or offering any such bond, fee, payment or security
measure.
(d) Notwithstanding anything herein to the contrary, no provision of this
Agreement shall be construed as a waiver by EBRD of any of the immunities,
privileges and exemptions granted to EBRD under the Agreement Establishing the
European Bank for Reconstruction and Development and applicable law.
Section 6.07. 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.
18
<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/ Ilya S. Rosenblum
-------------------------------
[SEAL APPEARS HERE] 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)
Address: Proletariat Street, 14
685000 Magadan
Russian Federation
Attention: General Manager
Telex: 145122
Answerback: NEGA SU
Fax: (1) (907) 887-3000
CYPRUS AMAX MINERALS COMPANY
By: /s/ Farokh S. Hakimi
-------------------------------
Name: Farokh S. Hakimi
-------------------------------
Title: Assistant Treasurer
-------------------------------
Address: 9100 East Mineral Circle
Englewood, Colorado 80112
U.S.A.
Attention: General Counsel
Fax: (1) (303) 643-5269
19
<PAGE>
CYPRUS MAGADAN GOLD CORPORATION
By: /s/ Farokh S. Hakimi
-------------------------------
Name: Farokh S. Hakimi
-------------------------------
Title: Assistant Treasurer
-------------------------------
Address: 9100 East Mineral Circle
Englewood, Colorado 80112
U.S.A.
Attention: General Counsel
fax: (1) (303) 643-5269
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
By: /s/ Stephane Baverez
-------------------------------
Name: Stephane Baverez
-------------------------------
Title: Principal Banker
-------------------------------
Address: One Exchange Square
London EC2A 2EH
United Kingdom
Attention: Operation Administration Unit
Telex: 8812161
Answerback: EBRD L G
Fax: (44) (171) 338-6100
OVERSEAS AS PRIVATE INVESTMENT CORPORATION
By: /s/ Ronald N. Jonkers
-------------------------------
Name: Ronald N. Jonkers
-------------------------------
Title: Assistant General Counsel
-------------------------------
Address: 1100 New York Avenue, N.W.
Washington, D.C. 20527
U.S.A.
Attention: Vice President, Finance
(with a separately transmitted copy
to Treasurer)
Telex: 4938219
Fax: (1) (202) 408-9859
20
<PAGE>
[EXECUTION COPY]
AMENDMENT AGREEMENT TO SUPPORT AGREEMENT
THIS AMENDMENT AGREEMENT is made as of the 28th day of January, 1997 among:
THE CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY" (the
"Company");
CYPRUS AMAX MINERALS COMPANY ("Cyprus Amax") and CYPRUS MAGADAN GOLD
CORPORATION ("Cyprus Magadan" and, together with Cyprus Amax,
hereinafter referred to as the "U.S. Sponsors"); and
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT ("EBRD") and OVERSEAS
PRIVATE INVESTMENT CORPORATION ("OPIC" and, together with EBRD,
hereinafter referred to as the "Project Lenders").
WHEREAS:
(A) the Company is party to 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 "EBRD Loan Agreement"), with EBRD,
pursuant to which EBRD has made a loan to the Company in the amount of
US$47,500,000, subject to the terms and conditions of the EBRD Loan Agreement;
(B) the Company is party to a finance agreement dated as of 30 June 1995, as
amended by an amendment agreement to finance agreement dated as of 22 April 1996
(such finance agreement as so amended, the "OPIC Finance Agreement"), with OPIC,
pursuant to which OPIC has made a loan to the Company in the amount of
US$52,500,000, subject to the terms and conditions of the OPIC Finance
Agreement;
(C) in consideration of EBRD entering into the EBRD Loan Agreement and OPIC
entering into the OPIC Finance Agreement and in order to induce EBRD and OPIC to
make disbursements thereunder, the U.S. Sponsors entered into a support
agreement dated as of 30 August 1995 (the "Support Agreement") with the Company
and the Project Lenders;
(D) the Company and EBRD have entered into a third amendment agreement dated as
of 20 November 1996 (the "EBRD Third Amendment Agreement") to the EBRD Loan
Agreement and the Company and OPIC have entered into a second amendment
agreement dated as of 28 January 1997 (the "OPIC Second Amendment Agreement") to
the OPIC Finance Agreement, pursuant to which the maximum principal amounts of
the loans under the EBRD Loan Agreement and the OPIC Finance Agreement are to be
<PAGE>
increased US$62,500,000 and US$67,500,000, respectively, subject to the terms
and conditions of the EBRD Third Amendment Agreement and the OPIC Second
Amendment Agreement; and
(E) it is a condition precedent to the effectiveness of the amendments contained
in the EBRD Third Amendment Agreement and the OPIC Second Amendment Agreement
that the U.S Sponsors enter into 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 Support Agreement and not separately
defined herein shall have the same meanings when used in this Amendment
Agreement.
Section 2. Amendments to Support Agreement
(a) Paragraph (B) in the Whereas clause of the Support Agreement is hereby
amended by deleting "a loan agreement dated as of 30 June 1995 (the "EBRD Loan
Agreement")" in the first and second lines and inserting "a loan agreement dated
as of 30 June 1995, as amended by an amendment agreement dated as of 7 November
1995, a second amendment agreement dated as of 22 April 1996 and a third
amendment agreement dated as of 20 November 1996 (such loan agreement as so
amended, the "EBRD Loan Agreement")" in place thereof.
(b) Paragraph (C) in the Whereas clause of the Support Agreement is hereby
amended by deleting "a finance agreement dated as of 30 June 1995 (the "OPIC
Finance Agreement")" in the first and second lines and inserting "a finance
agreement dated as of 30 June 1995, as amended by an amendment agreement dated
as of 22 April 1996 and a second amendment agreement dated as of 28 January 1997
(such finance agreement as so amended, the "OPIC Finance Agreement")" in place
thereof.
(c) Section 2.01 of the Support Agreement is hereby amended by inserting new
subsections (f) and (g) at the end of such Section to read as follows:
"(f) In the event that either Project Lender determines 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) of the EBRD Loan Agreement or Section 2.01(a) of the
OPIC Finance Agreement, then the U.S. Sponsors shall, within 60 days of
such determination, be jointly and severally obligated to make cash
contributions of paid-in capital or Subordinated Shareholder Loans to the
Company in the full amount of such excess.
(g) In the event that, prior to registration of the first amendment to
the Amended and Restated Charter of the Company with the State
Registration
2
<PAGE>
Chamber and registration of the Company's shares with the Ministry of
Finance, the Company refunds to any Shareholder or the Ministry of
Finance confiscates from the Company all or any portion of the paid-in
capital contributed to the Company by such Shareholder in connection with
the increase in share capital of the Company pursuant to the first
amendment to the Amended and Restated Charter of the Company, the U.S.
Sponsors shall be jointly and severally obligated to make cash
contributions of Subordinated Shareholder Loans to the Company in the
full amount of such refund. Until both such registrations take effect,
Cyprus Magadan shall maintain in its bank account at Pittsburgh National
Bank in the United States a balance of not less than $6,000,000."
(d) Section 2.02 of the Support Agreement is hereby amended by numbering the
existing text as sub-section (a) and inserting a new sub-section (b) at the end
of such Section to read as follows:
"(b) Cyprus Magadan shall, not 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 April
1997, whichever occurs first, contribute, in a manner satisfactory to
both Project Lenders, an additional $3,000,000 (or the equivalent thereof
in other currencies at then current rates of exchange) as paid-in capital
to the Company either in cash or in kind."
Section 3. Representations and Warranties
The Company and each U.S. Sponsor 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 Support 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 Support 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 Support 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 its
valid execution, delivery and performance of this Amendment Agreement and the
Support 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 Support Agreement as amended by this Amendment Agreement do not require
the
3
<PAGE>
consent or approval of any of its creditors 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) the representations and warranties made by it in the Support Agreement are
true on and as of the date of this Amendment Agreement with the same effect as
if such representations and warranties had been made on and as of the date of
this Amendment Agreement.
Section 4. Miscellaneous
(a) All references to the Support Agreement in the Support Agreement and all
instruments and agreements executed thereunder shall for all purposes refer to
the Support Agreement as amended by this Amendment Agreement. All references to
the EBRD Loan Agreement in the Support Agreement and all instruments and
agreements executed thereunder shall for all purposes refer to the EBRD Loan
Agreement as amended by the EBRD Third Amendment Agreement. All references to
the OPIC Finance Agreement in the Support Agreement and all instruments and
agreements executed thereunder shall for all purposes refer to the OPIC Finance
Agreement as amended by the OPIC Second Amendment Agreement.
(b) Except to the extent each is expressly amended by the terms of this
Amendment Agreement, all terms and conditions of the Support Agreement 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, the U.S. Sponsors and the Project Lenders.
(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 5. 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.
4
<PAGE>
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/ ILLEGIBLE
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
[SEAL APPEARS HERE]
By: /s/ ILLEGIBLE
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
By: /s/ L.D. Clark
------------------------------------
Name: L.D. Clark
------------------------------------
Title:
------------------------------------
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
------------------------------------
OVERSEAS PRIVATE INVESTMENT CORPORATION
By: /s/ James C. Polan
------------------------------------
Name: James C. Polan
------------------------------------
Title: Manager, Project Finance
------------------------------------
5
<PAGE>
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
By: /s/ Stephane Baverez
------------------------------------
Name: Stephane Baverez
------------------------------------
Title: Principal Banker
------------------------------------
[SEAL APPEARS HERE]
6
<PAGE>
[EXECUTION COPY]
GUARANTY AGREEMENT
among
CYPRUS AMAX MINERALS COMPANY
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
and
OVERSEAS PRIVATE INVESTMENT CORPORATION
Dated as of 30 August 1995
<PAGE>
GUARANTY AGREEMENT
This Guaranty Agreement is entered into as of 30 August 1995, among:
CYPRUS AMAX MINERALS COMPANY, a Delaware corporation ("Cyprus Amax");
OVERSEAS PRIVATE INVESTMENT CORPORATION, an agency of the United States
of America ("OPIC"); and
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT ("EBRD").
Recitals
A. Omolon Gold Mining Company (the "Company") is a closed joint stock
company organized and existing under the laws of the Russian Federation.
B. Cyprus Magadan Gold Corporation ("Cyprus Magadan") is a corporation
organized and existing under the laws of the State of Delaware. Cyprus Magadan
has entered into a Guaranty Agreement dated as of 30 August 1995 with OPIC and
EBRD (the "Cyprus Magadan Guaranty") and a Support Agreement, dated as of 30
August 1995, with OPIC, EBRD and Cyprus Amax (the "Support Agreement").
C. Cyprus Magadan owns 50% of the issued and outstanding shares of
capital stock of the Company. Cyprus Magadan does not own any other significant
assets.
D. Cyprus Amax indirectly owns 100% of the issued and outstanding shares
of Cyprus Magadan.
E. This Guaranty Agreement is entered into and delivered by Cyprus Amax
as an inducement for:
(1) OPIC to enter into the Finance Agreement dated as of 30 June 1995
between OPIC and Omolon Gold Mining Company, a closed joint stock
company organized and existing under the laws of the Russian
Federation (the "Company"); and
(2) EBRD to enter into the Loan Agreement dated as of 30 June 1995
between EBRD and the Company (collectively, the "Loan
Agreements").
1
<PAGE>
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contorted and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree:
ARTICLE 1
DEFINITIONS, CONSTRUCTION, GOVERNING LAW
SECTION 1.01. DEFINITIONS.
A. General. Except as provided in Subsection 1.01.B, the terms used
herein (including the Recitals) shall have the definitions set forth in the Loan
Agreements and the Cyprus Magadan Guaranty.
B. Specific. Wherever used in this Agreement (including the Exhibits and
Schedule 1 attached hereto), the following terms have the following meanings:
"Agreement" means this Guaranty Agreement.
"Authorized Officer" means any officer of Cyprus Amax designated in
writing by Cyprus Amax, pursuant to an Incumbency Certificate, as
having been authorized in accordance with articles of
incorporation and bylaws to execute and deliver this Agreement and
any other notice or instrument contemplated by this Agreement.
"Cyprus Magadan Guaranty" means the Guaranty Agreement among the Project
Lenders and Cyprus Magadan dated as of 30 August 1995.
"Disbursement" means:
(1) with respect to OPIC, a "Disbursement" as defined in the
OPIC Finance Agreement; and
(2) with respect to EBRD, a "Disbursement" as defined in the
EBRD Loan Agreement.
"Disbursement Request" means:
(1) with respect to OPIC, a "Disbursement Request" as defined
in and submitted in accordance with the OPIC Finance
Agreement; and
(2) with respect to EBRD, an "application" for a Disbursement
in accordance with section 3.03(a) of the EBRD Loan
Agreement.
"Guaranteed Obligations" has the meaning set forth in Section 3.01.
2
<PAGE>
"Guaranty" means Cyprus Amax's obligations pursuant to Article 3 of this
Agreement.
"Incumbency Certificate" means with respect to Cyprus Amax, a
certificate, in form and substance satisfactory to the Project
Lenders, certifying the authority of the person or persons who
will, on behalf of Cyprus Amax, sign this Agreement, provide the
certificates and notices provided for in this Agreement, or take
any other action or execute any other document required or
permitted to be taken or executed by Cyprus Amax under this
Agreement, and the authenticated specimen signature of each such
person.
"Payment Demand" means a notice from the Project Lenders (or either of
them) stating that a Guaranteed Obligation has not been paid when
due, setting forth the amount that is then due and payable, and
demanding payment thereof from Cyprus Amax.
"Process Agents" and "Process Agent" have the meanings set forth in
Section 5.03.B.
SECTION 1.02. CONSTRUCTION.
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, or Exhibit shall be construed as a
reference to that specified Article, Section, Subsection, or
Exhibit of this Agreement;
(d) The headings and the Table of Contents are inserted for
convenience of reference only and shaft 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;
3
<PAGE>
(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 time an action requires either or both Project Lenders'
consent or other action, such consent shall be at each Project
Lender's sole discretion without any express or implied agreement
or understanding that either Project Lender will provide such
consent or undertake such action; and
(j) Unless otherwise expressly provided, any right granted, consent
required, or action to be undertaken to or by the Project Lenders
(or either Project Lender) in this Agreement, such right, consent,
or action may be exercised by either Project Lender independently
of the other Project Lender as if the other Project Lender was not
a party hereto, subject, as between the Project Lenders only, to
the Security Sharing Agreement.
SECTION 1.03. GOVERNING LAW.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO ITS CHOICE OF LAW PRINCIPLES.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. REPRESENTATIONS AND WARRANTIES.
In addition to the representations and warranties made by Cyprus Amax in
each other Financing Agreement to which Cyprus Amax is a party, Cyprus Amax
represents and warrants to the Project Lenders that:
(a) Cyprus Amax is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware.
(b) Cyprus Amax has all requisite power and authority, corporate or
otherwise, to execute and deliver and perform all of its
obligations under this Agreement.
4
<PAGE>
(c) Cyprus Amax has taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement.
(d) This Agreement has been duly executed and delivered by Cyprus Amax
and constitutes a legal, valid, and binding obligation of Cyprus
Amax enforceable against Cyprus Amax in accordance with the terms
hereof: subject, as to enforceability, to applicable bankruptcy,
insolvency, moratorium and similar laws of general applicability
affecting creditors' rights.
(e) No governmental authorization or action of any kind is or will be
necessary for the valid execution, delivery, or performance by
Cyprus Amax of this Agreement.
(f) The execution, delivery, and performance by Cyprus Amax of this
Agreement does not require the consent or approval of any creditor
of Cyprus Amax, will not conflict with or constitute a breach or
default under or violate any provision of the articles of
incorporation or by-laws of Cyprus Amax, and will not violate or
breach any agreement to which Cyprus Amax is a party or Law
applicable to Cyprus Amax.
(g) There are no actions, proceedings, or claims pending or, to the
best knowledge of Cyprus Amax, threatened, the adverse
determination of which might have a material adverse effect on
Cyprus Amax's ability to perform its obligations hereunder.
(h) The obligations of Cyprus Amax hereunder will rank at least pari
passu with each other unsecured obligation of Cyprus Amax.
SECTION 2.02. REITERATION IN CONNECTION WITH DISBURSEMENTS.
The representations and warranties set forth in this Article 2 shall be
deemed restated by Cyprus Amax in full as of the date of each Disbursement
Request and the date of each Disbursement.
SECTION 2.03. RELIANCE AND INVESTIGATION.
The Project Lenders shall be entitled to rely on all representations and
warranties made by Cyprus Amax notwithstanding any independent inquiry that
either or both may have done or may undertake or any other information that
either or both Project Lenders may receive or have received.
5
<PAGE>
ARTICLE 3
GUARANTY
SECTION 3.01. GUARANTY.
Cyprus Amax unconditionally and irrevocably guarantees, as primary
obligor and not as surety, the full and prompt payment on first written demand
(whether at stated maturity, by acceleration, or otherwise) to each Project
Lender in Dollars of all amounts payable by (i) Cyprus Magadan to the Project
Lenders (or either of them) pursuant to the Cyprus Magadan Guaranty and each
other Financing Agreement, Project Agreement, or any other agreement to which
Cyprus Magadan and either Project Lender or both Project Lenders are parties,
and by (ii) Cyprus Gold pursuant to any Financing Agreement to which Cyprus Gold
and the Project Lenders are parties; provided however, that Cyprus Amax shall
not be liable for Cyprus Magadan's obligations under section 2.01(c)(1)
(Evenskoye) of the Support Agreement or Cyprus Magadan's obligations under the
Reclamation Agreement, except as otherwise provided therein (the "Guaranteed
Obligations").
SECTION 3.02. NATURE OF GUARANTY.
A. Absolute. Cyprus Amax's obligations pursuant to Section 3.01 shall be
continuing and remain in full force and effect until the Guaranteed Obligations
have been discharged in full, subject to reinstatement as provided in Section
3.06. Cyprus Amax's obligations pursuant to Section 3.01 shall be direct,
absolute, unconditional, and irrevocable. Cyprus Amax's obligations pursuant to
Section 3.01 shall not to any extent or in any way be reduced, limited,
terminated, discharged, impaired, or otherwise affected by any of the following:
(1) Cyprus Magadan's or the Company's failure to pay a fee or provide
other consideration to Cyprus Amax in consideration of its
entering into this Agreement;
(2) The occurrence or continuance of any Event of Default or Potential
Event of Default under either (or both) of the Loan Agreements or
any acceleration or required prepayment of either or both of the
Loans as a result thereof or otherwise;
(3) Any default, potential event of default, or non-compliance by
Cyprus Magadan, the Company, any Russian Shareholder, or any other
Person with the terms of any other Financing Agreement, Project
Agreement, or any Government Approval;
(4) Any lack of validity or enforceability of, or any
misrepresentation, irregularity, or other defect in the Cyprus
Magadan Guaranty, any Loan Agreement, any Note, any other
Financing Agreement, any Project Agreement, any Government
Approval, or any other agreement
6
<PAGE>
entered into or permit, license, or approval or any Person received in
connection therewith;
(5) Any failure by either Project Lender to take any steps to preserve its
rights in respect of, or to perfect or keep perfected, any of the
security interests created or purported to be created by any Security
Document;
(6) Any Claim or defense which Cyprus Amax may have under or in respect of
this Agreement or otherwise;
(7) Any waiver, surrender, or compromise that may exist in respect of this
Agreement or otherwise;
(8) Any failure of the Company to pay Taxes which may have been payable in
respect of either or both of the Loans, to comply with any Government
Approval, or to obtain or comply with any necessary permits, licenses, or
approvals required under Law in connection therewith;
(9) Any modification or amendment (whether material or otherwise) of, or
waiver or consent or other action taken with respect to, the Cyprus
Magadan Guaranty, the Loan Agreements, any Notes, any other Financing
Agreement, any Project Agreements, any Government Approval, or any other
agreement or document delivered pursuant to the terms of the Cyprus
Magadan Guaranty or the Loan Agreements, including, without limitation,
any forbearance, indulgence in or extension of time for the payment by
Cyprus Magadan or the Company of any amount payable under or in
connection with the Cyprus Magadan Guaranty, the Loan Agreements, or any
Note, or for the performance of any of the other obligations of Cyprus
Magadan or the Company thereunder;
(10) Any Law now or hereafter in effect which may in any manner affect any of
Cyprus Magadan's or the Company's obligations under the Cyprus Magadan
Guaranty or under either Loan Agreement or any Note, any other Financing
Agreement, any Project Agreement, or any Government Approval, or either
Project Lender's rights thereunder, whether or not the Company or Cyprus
Magadan has a defense valid against either Project Lender and whether or
not other guarantors of such obligations, if any, contribute to such
payments;
(11) Any Bankruptcy Proceeding affecting Cyprus Magadan, the Company, any
Russian Shareholder, or any of their respective Properties;
(12) The release or discharge of the Company from any of its obligations under
either of the Loan Agreements or any other Financing Agreement or Project
Agreement;
7
<PAGE>
(13) The release or discharge of any other Person under any Financing
Agreement or Project Agreement;
(14) The consolidation, merger, or reorganization of Cyprus Magadan,
the Company or any Russian Shareholder, or any change of ownership
or of any Russian Shareholder, the Company, or Cyprus Magadan;
(15) The recovery of any judgment against any Person or any action to
enforce any judgment,
(16) Any discharge, stay, injunction, or modification of Cyprus
Magadan's obligation to pay any amount pursuant to the Cyprus
Magadan Guaranty;
(17) Any Force Majeure Event or Political Event;
(18) Any change of circumstances (including any Change of Law), whether
or not foreseeable, and whether or not any such change does or
might vary the risk of Cyprus Amax hereunder; or
(19) Any other act, omission, neglect, event, or circumstance
whatsoever, whether similar or dissimilar to the foregoing, that
might otherwise constitute a defense available to, or a legal or
equitable discharge of, Cyprus Amax in respect of any of its
obligations under this Agreement.
B. Modifications and Discharges. Notwithstanding anything to the contrary
in this Agreement, Cyprus Amax irrevocably agrees that the Project Lenders (or
either of them) may, at any time and from time to time, either before or after
the maturity of the Loan, without notice to or consent (whether prior to or
subsequent) of Cyprus Amax:
(1) extend the time of payment of or renew any Guaranteed Obligation;
(2) exchange or surrender any Security;
(3) modify, compromise, waive, discharge, settle, or release any
Guaranteed Obligation or any Security, in whole or in part; or
(4) modify, amend, or waive any term or provision of, or consent to
any action with respect to (whether material or otherwise) any
Financing Agreement or Project Agreement;
in each case without in any way impairing or affecting the obligations and
liabilities of Cyprus Amax under this Agreement.
C. Payment. Cyprus Amax's obligations hereunder constitute a guaranty of
payment and not of collection. The Project Lenders (or either Project Lender)
may
8
<PAGE>
require payment by Cyprus Amax and enforce this Agreement without first being
required to:
(1) enforce the Project Lenders' (or either of their) Claims against
the Company, Cyprus Magadan, any Russian Shareholder, the Russian
Government, or any other Person;
(2) resort to the Security or any other security or guaranty for the
Loans (or either of them); or
(3) take any other action prior to receiving payment of the Guaranteed
Obligations.
D. Unmatured Guaranteed Obligations. No payment of a Guaranteed
Obligation by Cyprus Amax pursuant to this Agreement shall constitute a waiver
of or in any manner prejudice the right of either Project Lender to receive
payment of other Guaranteed Obligations, if any, which become due and payable
before or after such payment, and Cyprus Amax shall continue to be liable to
each Project Lender for such other Guaranteed Obligations.
SECTION 3.03. WAIVER.
A. General. Cyprus Amax unconditionally waives presentment, demand,
diligence, protest, notice of acceptance, notice of default, and notice of any
other kind to which Cyprus Amax might otherwise be entitled under applicable law
with respect to obligations hereunder.
B. Insurance Contracts. Cyprus Amax waives any right or claim of set-off,
whether by way of defense or otherwise, to its obligations hereunder in respect
of any Claim that it may have against OPIC arising out of or in any way related
to the Insurance Contracts.
SECTION 3.04. APPLICATION OF PAYMENTS.
Any payment of the Guaranteed Obligations received by a Project Lender
from Cyprus Amax hereunder shall be applied by such Project Lender in accordance
with its respective Loan Agreement (subject, as between the Project Lenders, to
the provisions of the Security Sharing Agreement), regardless of any designation
made or purported to be made on behalf of Cyprus Amax or any other Person.
Cyprus Amax hereby authorizes each Project Lender to apply amounts that are on
deposit or account with such Project Lender, whether or not matured, in the name
or for the benefit of Cyprus Amax in whatever currency in reduction of amounts
due and payable in respect of its obligations hereunder.
SECTION 3.05. PAYMENT.
A. Payment Demand. If a payment is due to either or both of the Project
Lenders hereunder, the Project Lenders (or either of them) agrees to submit a
9
<PAGE>
Payment Demand to Cyprus Amax (such agreement without prejudice to the waiver
set forth in Section 3.03.A).
B. Payment. Within 5 Business Days of Cyprus Amax's receipt of a Payment
Demand, Cyprus Amax shall pay to the Project Lenders (or the Project Lender
submitting the Payment Demand) the amount specified in such Payment Demand
(together with interest thereon accruing from the date of the Payment Demand to
the date of payment calculated in accordance with the terms of the EBRD Loan
Agreement with respect to amounts demanded by or owed to EBRD, and calculated in
accordance with the OPIC Finance Agreement with respect to amounts demanded by
or owed to OPIC).
C. Method of Payment. Unless either Project Lender shall otherwise direct
by notice to Cyprus Amax, Cyprus Amax shall make any payments due to a Project
Lender as required by this Agreement by wire transfer (via a United States bank
in the case of OPIC) of immediately available funds in Dollars as follows:
(1) If to OPIC:
US Treasury Department
ABA No. 0210-3000-4
TREAS NYC/CTR/BNF=A/C-71000001
OBI=OPIC Loan # - 118-94-130-IG
and
(2) If to EBRD: to such account as EBRD designates in its Payment
Demand.
D. Gross-up. All sums owing under this Agreement shall be paid without
setoff or counterclaim and free and clear of and without deduction for any and
all present and future Taxes, deductions, or withholdings and all liabilities
with respect thereto. If Cyprus Amax is prohibited by Law from making any such
payments free and clear of such deductions or withholdings, then the amount
payable by Cyprus Amax shall be increased as may be necessary so that the actual
amount received by each Project Lender after all deductions and withholdings
equals the amount that such Project Lender would have received if no such
deductions or withholdings. Cyprus Amax shall forthwith forward to such Project
Lender official receipts or other evidence acceptable to such Project Lender
establishing payment of such amounts.
SECTION 3.06. PREFERENCES
If any Guaranteed Obligation is recovered from, or repaid by, either
Project Lender in whole or in part in any Bankruptcy Proceedings instituted by
or against Cyprus Magadan, the Guaranty shall be reinstated and continue to be
fully applicable to such Guaranteed Obligation to the same extent as though the
payment so recovered or repaid had never been originally made on such
obligation.
10
<PAGE>
ARTICLE 4
SUBROGATION
SECTION 4.01. WAIVER OF SUBROGATION RIGHTS.
Cyprus Amax shall not assert any Rights it may now or hereafter have that
arise in connection with the performance of its obligations under this Agreement
to be subrogated to the Rights of the Project Lenders (or either of them)
against Cyprus Magadan, until the Guaranteed Obligations have been fully,
irrevocably, and unconditionally paid in accordance with the provisions thereof.
SECTION 4.02. WAIVER OF OTHER RELATED RIGHTS.
Cyprus Amax hereby irrevocably waives all contractual, common law,
statutory, or other Rights of reimbursement, contribution, exoneration, or
indemnity or any similar Right from or against Cyprus Magadan or any other
Person which may have arisen in connection with this Agreement.
SECTION 4.03. PAYMENTS HELD IN TRUST.
If Cyprus Amax receives any payment on account of any Right suspended
pursuant to Section 4.01 or waived pursuant to Section 4.02 while any Guaranteed
Obligations remain outstanding or to which it is otherwise not entitled, Cyprus
Amax shall hold such payment in trust for the Project Lenders and promptly pay
such amount to the Project Lenders.
ARTICLE 5
REMEDIES AND DISPUTE RESOLUTION
SECTION 5.01. CUMULATIVE REMEDIES.
The rights and remedies provided for herein axe cumulative and are not
exclusive of any other Rights, powers or remedies provided by Law. The assertion
or employment of any Right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion of any other or proximate remedy.
11
<PAGE>
SECTION 5.02 ATTORNEYS' FEES.
Cyprus Amax shall pay each Project Lender on demand such amount in
Dollars as shall be sufficient to cover all of such Project Lender's costs and
expenses of any action to enforce this Agreement or to collect any amounts due
hereunder (including any action or proceeding to protect such Project Lender's
rights in any Bankruptcy Proceeding with respect to Cyprus Amax or Cyprus
Magadan), and including, reasonable attorneys' fees, expenses, and
disbursements.
SECTION 5.03. JURISDICTION AND CONSENT TO SUIT.
A. Jurisdiction. Without prejudice to the rights of either Project Lender
to bring suit in any appropriate domestic or foreign jurisdiction, any
proceeding to enforce this Agreement may be brought by either or both Project
Lenders in:
(1) any state or federal court of competent jurisdiction in
Washington, D.C.;
(2) any state or federal court of competent jurisdiction in New York
City;
(3) the High Court of Justice in London, England; or
(4) any court of competent jurisdiction in any other jurisdiction
where Cyprus Amax or any of its Property may be found.
Cyprus Amax hereby irrevocably consents and submits unconditionally to the
nonexclusive jurisdiction for itself and in respect of any of its Property of
any such court. Cyprus Amax hereby irrevocably waives:
(a) any present or future objection to any such venue, and
irrevocably; and
(b) any claim in any such court that any such action, suit, or
proceeding brought therein has been brought in an inconvenient
forum.
Cyprus Amax 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 Cyprus Amax's
obligation.
B. Service of Process. Cyprus Amax 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) New York City, if made upon CT Corporation System, a corporation
organized and existing under the laws of the State of Delaware
("CT
12
<PAGE>
Corporation"), located on the date hereof at 1633 Broadway, New
York, NY 10019;
(2) Washington, D.C., if made upon CT Corporation located on the day
hereof at 1025 Vermont Avenue, NW, 4th Floor, Washington DC 20005;
and
(3) London, if made 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").
Cyprus Amax shall maintain each of such appointments of Process Agents (or that
of successors satisfactory to the Project Lenders) continuously in effect at all
times while the any Guaranteed Obligation is outstanding. Nothing in this
Agreement shall affect the Project Lenders' (or either of their) rights to serve
process in any other manner permitted by applicable law.
SECTION 5.04. WAIVER OF JURY TRIAL.
CYPRUS AMAX AND EACH PROJECT LENDER WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVNG ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN CYPRUS AMAX AND EITHER OR BOTH PROJECT LENDERS ARISING OUT
OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE
TRANSACTIONS RELATED THERETO.
SECTION 5.05. CYPRUS AMAX WAIVER.
Cyprus Amax waives any right to initiate any legal or arbitral action,
whether in the form of declaratory relief or otherwise, in regard to its
obligations hereunder.
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. NOTICES.
Each notice, demand, report, or other communication relating to this
Agreement shall be in writing, shall be hand-delivered or sent by facsimile
transmission (with a copy by hand delivery to follow, receipt of which copy
shall not be required to effect notice), and shall be deemed duly given when
sent to the following addresses, or to such other address or number as each
party shall have last specified by notice to the other parties:
13
<PAGE>
If to OPIC:
Overseas Private Investment Corporation
1100 New York Avenue, N.W.
Washington, D.C. 20527
United States of America
Attn: Treasurer
Fax: (202) 408-9859
with a separately transmitted copy to Vice President, Finance:
Fax: (202) 408-9866
If to EBRD:
European Bank for Reconstruction and Development
One Exchange Square
London EC2A 2EH
United Kingdom
Attn: Operation Administration Unit
Fax: (44) (171) 338-6100
if to Cyprus Amax:
Cyprus Amax Minerals Company
9100 E. Mineral Circle
Englewood
Colorado
USA 80111
Attn: General Counsel / Director Finance
Fax: (303) 643-5269
SECTION 6.02. AMENDMENTS, ETC.
Except as otherwise expressly provided in this Agreement, the provisions
of this. agreement may be amended or modified only by an instrument in writing
signed by each Project Lender and by an Authorized Officer of Cyprus Amax. The
provisions of this Agreement may be waived by a Project Lender only by an
instrument in writing signed by such Project Lender.
14
<PAGE>
SECTION 6.03. RIGHTS, REMEDIES AND WAIVERS.
A. General. The right of each Project Lender to require compliance with
any condition under this Agreement that may be waived by the other Project
Lender is expressly preserved for the non-waiving Project Lender.
B. No Impairment or Waiver. No course of dealing and no delay in
exercising, or omission to exercise, any right, power or remedy accruing to
either Project Lender 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 either
Project Lender in respect of any such default, or any acquiescence by it
therein, affect or impair any right, power or remedy of either Project Lender
in respect of any other default.
C. Defaults. Nothing in this Agreement shall be deemed a waiver or
estoppel in respect of either Project Lender's right to declare an Event of
Default or Potential Event of Default at any time under either Loan Agreement,
to accelerate either or both of the Loans, or to pursue any of its respective
remedies under any of the Financing Agreements, including the Security
Documents, to which it is a party.
SECTION 6.05. NO LENDER LIABILITY.
Neither Project Lender shall incur any liability for (and Cyprus Amax
hereby irrevocably waives any Claim it may ever have arising out of or in any
way related to) any act, failure to act, delay in acting, or error (whether
negligent, reckless, or willful) of the Independent Engineer, the Insurance
Consultant, or any agent of the Project Lenders (or either of them) in
performing its duties as contemplated by any Financing Agreement.
SECTION 6.06. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto, except that Cyprus Amax may not
assign, delegate, or otherwise transfer all or any part of its rights or
obligations under this Agreement without the prior written consent of the
Project Lenders.
SECTION 6.07. FURTHER ASSURANCES.
From time to time, Cyprus Amax shall execute and deliver to each Project
Lender such additional documents as either Project Lender may require to carry
out the purposes of this Agreement or to preserve and protect each Project
Lender's rights as contemplated herein.
SECTION 6.08. SEVERABILITY.
If any provision of this Agreement is prohibited or held to be invalid,
illegal, or unenforceable in any jurisdiction, the Project Lenders and Cyprus
Amax agree to the fullest extent permitted by Law that:
15
<PAGE>
(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 6.09. 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.
SECTION 6.10. INTEGRATION.
This Agreement embodies the entire understanding of the parties hereto,
and supersedes all prior negotiations, understandings and agreements between
them with respect to the subject matter hereof.
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.
CYPRUS AMAX MINERALS COMPANY
By: /s/ Farokh S. Hakimi
--------------------------------
Name: Farokh S. Hakimi
------------------------------
Its: Assistant Treasurer
-------------------------------
OVERSEAS PRIVATE INVESTMENT
CORPORATION
By: /s/ Ronald N. Jonkers
--------------------------------
Name: Ronald N. Jonkers
------------------------------
Its: Assistant General Counsel
-------------------------------
EUROPEAN BANK FOR
RECONSTRUCTION AND DEVELOPMENT
By: /s/ Stephane Baverez
--------------------------------
Name: Stephane Baverez
------------------------------
Its: Principal Banker
-------------------------------
16
<PAGE>
30 January, 1997
CYPRUS AMAX MINERALS COMPANY
EUROPEAN BANK FOR
RECONSTRUCTION AND DEVELOPMENT
OVERSEAS PRIVATE INVESTMENT CORPORATION
=================================
AMENDMENT AGREEMENT
to
CYPRUS AMAX GUARANTY
=================================
FRESHFIELDS
<PAGE>
AMENDMENT AGREEMENT TO
CYPRUS AMAX GUARANTY
THIS AMENDMENT AGREEMENT is made the 30th day of January 1997
---- -------
BETWEEN
CYPRUS AMAX MINERALS COMPANY, a company organized under the laws of the State of
Delaware in the United States of America (the Guarantor),
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD), and
OVERSEAS PRIVATE INVESTMENT CORPORATION (OPIC and together with EBRD the
Lenders).
WHEREAS
(A) the Guarantor and the Lenders have entered into a guaranty agreement dated
30 August 1995 (the Cyprus Amax Guaranty) pursuant to which the Guarantor has
guaranteed the obligations of:
(i) Cyprus Magadan Gold Corporation (Cyprus Magadan), and
(ii) Cyprus Gold Company (Cyprus Gold),
to the Lenders subject to the terms of the Cyprus Amax Guaranty;
(B) Omolon Gold Mining Company (the Company) and the Lenders have agreed to
increase the maximum principal amounts of the Loans under the Loan Agreements
pursuant to the latest amendments to the Loan Agreements;
(c) Cyprus Magadan, a corporation organized and existing under the laws of the
State of Delaware, owns 50% of the issued and outstanding shares of the capital
stock of the Company. Cyprus Gold owns 100% of the issued and the outstanding
shares of the capital stock of Cyprus Magadan. The Guarantor indirectly owns
100% of the issued and outstanding shares of Cyprus Magadan;
(D) the Guarantor and the Lenders have agreed to amend the Cyprus Amax Guaranty
on the terms and conditions of this Amendment Agreement; and
(E) this Amendment Agreement is supplemental to the Cyprus Amax Guaranty and is
entered into and delivered by Cyprus Amax as an inducement for the Lenders to
enter into the third amendments to the Loan Agreements.
Now, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained and for other good and valuable consideration, the
<PAGE>
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
DEFINITIONS
1.1 Wherever used in this Amendment Agreement, unless the context shall
otherwise require, the terms defined in the Cyprus Amax Guaranty and in the Loan
Agreements and not separately defined herein shall have the same meanings when
used in this Amendment Agreement.
AMENDMENTS TO THE CYPRUS AMAX GUARANTY
2.1 Section 1.0lB is hereby amended by inserting the following additional
definitions:
(a) ""EBRD Loan Agreement" means the loan agreement dated as of 30 June 1995
as amended by an amendment agreement to the loan agreement dated as of
7November 1995, a second amendment agreement dated as of 22 April 1996
and a third amendment agreement dated as of 20 November 1996." and
(b) ""OPIC Finance Agreement" means the finance agreement dated as of 30June
1995, as amended by an amendment agreement dated as of 22 April 1996 and
a second amendment agreement dated as of 28 January 1997."
2.2 Section 1.0lB is hereby further amended by deleting the "Cyprus Magadan
Guaranty" definition in its entirety and inserting in place thereof the
following:
""Cyprus Magadan Guaranty" means the Guaranty Agreement among the Lenders
and Cyprus Magadan dated as of 30 August 1995, as amended by an amendment
agreement dated as of the date hereof."
REPRESENTATIONS AND WARRANTIES
3.1 The Guarantor 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 Cyprus Amax Guaranty as amended by this Amendment
Agreement;
(b) it has taken all necessary action to authorized the execution, delivery
and performance by it of this Amendment Agreement and the Cyprus Amax
Guaranty as amended by this Amendment Agreement;
<PAGE>
(c) this Amendment Agreement has been duly executed and delivered by it and
this Amendment Agreement and the Cyprus Amax Guaranty 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 Cyprus Amax Guaranty 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 Cyprus Amax Guaranty as amended by this Amendment Agreement do
not require the consent or approval of any of its creditors 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;
(f) the Cyprus Amax Guaranty as amended by this Amendment Agreement will,
when executed and delivered, constitute an unconditional and irrevocable
guaranty by the Guarantor, as primary obligor, of the full and prompt
payment on first written demand of the Guaranteed Obligations to the
Lenders on the terms of the Cyprus Amax Guaranty; and
(g) the representations and warranties made by it in the Cyprus Amax Guaranty
are true on and as of the date of this Amendment Agreement with the same
effect as if such representations and warranties had been made on and as
of the date of this Amendment Agreement.
EFFECTIVENESS
4.1 This Amendment Agreement shall become effective as of the date hereof.
MISCELLANEOUS
5.1 All references to this, Guaranty Agreement and this Agreement in the Cyprus
Amax Guaranty and all references to the Cyprus Amax Guaranty in the Security
Documents, the Loan Agreements and the other Financing Agreements, and all
instruments and agreements executed thereunder, shall for all purposes refer to
the Cyprus Amax Guaranty as amended by this Amendment Agreement.
5.2 Except to the extent each is expressly amended by the terms of this
Amendment Agreement, all terms and conditions of the Cyprus Amax Guaranty and
all other instruments and agreements executed thereunder remain in full
<PAGE>
force and effect. This Amendment Agreement may he amended only by an instrument
in writing signed by the Guarantor and the Lenders.
5.3 This Amendment Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shah constitute one
and the same agreement.
GOVERNING LAW
6.1 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 ant, year
first above written,
CYPRUS AMAX )
MINERALS COMPANY )
By: /s/ Farokh S. Hakimi
Name: Farokh S. Hakimi
Title: Assistant Treasurer
EUROPEAN BANK FOR )
RECONSTRUCTION AND )
DEVELOPMENT )
By: /s/ Stephane Baverez
Name: Stephane Baverez
Title: Principle Banker
OVERSEAS PRIVATE )
INVESTMENT CORPORATION )
By: /s/ James C. Polan
Name: James C. Polan
Title: Manager, Project Finance
<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 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 3l2 Expenses......................................................7
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
Borrower's Obligations under Section 3.3 hereof notwithstanding, Borrower
hereby represents and warrants that, in accordance with the Law "On Amend-
ments 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................................................9
SECTION 5. COVENANTS......................................................9
SECTION 5.1 Senior Credit Agreements......................................9
SECTION 5.2 Promissory Notes.............................................10
SECTION 5.3 Conduct of Operations........................................10
SECTION 5.4 Performance and Notice.......................................10
SECTION 5.5 Government Approvals.........................................10
SECTION 5.6 Insurance....................................................10
SECTION 5.8 Negative Pledge..............................................11
SECTION 5.9 Subordination of the Loan....................................11
SECTION 5.10 Dividend Payments...........................................11
SECTION 5. CONDITIONS PRECEDENT..........................................11
SECTION 6.2 Conditions to Any Disbursement...............................11
SECTION 7. SUBORDINATED DEBT EVENTS OF DEFAULT...........................12
SECTION 7.2 Consequences of Default......................................12
SECTION 8. LOAN ADMINISTRATION...........................................13
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 8.1 Entire Agreement: Amendments................................13
SECTION 8.2 Cumulative Rights: Waivers..................................13
SECTION 8.3 Assignment...................................................13
SECTION 8.4 Indemnification..............................................14
SECTION 8.5 Governing Law................................................14
SECTION 8.6 Arbitration..................................................14
SECTION 8.7 Waiver of Sovereign Immunity.................................15
SECTION 9. MISCELLANEOUS.................................................15
SECTION 9.1 Notices......................................................15
SECTION 9.2 Severability.................................................16
SECTION 9.3 Specified Currency...........................................16
SECTION 9.1 Language.....................................................16
SECTION 9.5 Counterparts.................................................16
</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.
"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.
<PAGE>
"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 ate 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.
"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,
<PAGE>
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.
"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.
<PAGE>
"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.
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.
<PAGE>
(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.
(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.
<PAGE>
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.
SECTION 2.7 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.
<PAGE>
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.
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 3l2 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.
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
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 5.8 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.
(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.
<PAGE>
(b) Note. Lender shall have received an undated Note evidencing such
----
Disbursement duly executed by Borrower.
SECTION 7. 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 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
<PAGE>
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 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
<PAGE>
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 affect 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.
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.
<PAGE>
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.
SECTION 9. MISCELLANEOUS
SECTION 9.1 Notices
-------
(a) Except as provide 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
<PAGE>
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
(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 9.1 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
------------------------------
Name:
Title:
------------------------------
Name:
Title:
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:
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<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
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<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
8
<PAGE>
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.
9
<PAGE>
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;
10
<PAGE>
(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
11
<PAGE>
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,
12
<PAGE>
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
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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
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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.
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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>
10.7(b)
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
-2-
<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.
-3-
<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
-4-
<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.
-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.
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.
-9-
<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>
THIRD AMENDMENT AGREEMENT
THIS THIRD AMENDMENT AGREEMENT, dated as of March 24, 1997 (this
"Agreement"), is made among (1) AMAX GOLD INC., a Delaware corporation (the
---------
"Borrower"), (2) FAIRBANKS GOLD MINING, INC., a Delaware corporation ("Fairbanks
- --------- ---------
Gold"), GUANACO MINING COMPANY, INC., a Delaware corporation ("Guanaco Mining"),
- ---- --------------
LASSEN GOLD MINING, INC., a Delaware corporation ("Lassen Gold"), MELBA CREEK
-----------
MINING, INC., an Alaska corporation ("Melba Creek"), and NEVADA GOLD MINING,
-----------
INC., a Delaware corporation ("Nevada Gold"; all of the foregoing entities,
-----------
collectively, the "Principal Subsidiaries", and together with the Borrower, the
----------------------
"Obligors"), (3) MERRILL LYNCH CAPITAL CORPORATION, a Delaware corporation
--------
("Merrill Lynch"), ABN AMRO BANK N.V., a bank organized under the laws of The
- ---------------
Netherlands ("ABN AMRO"), N M ROTHSCHILD & SONS LIMITED, a bank organized under
--------
the laws of England ("Rothschild"), and THE TORONTO-DOMINION BANK, a bank
----------
organized under the federal laws of Canada ("Toronto-Dominion"; all of the
----------------
foregoing entities, collectively, the "Arrangers"), (4) THE BANKS AND OTHER
---------
FINANCIAL INSTITUTIONS whose names appear on the signature pages hereto under
the heading "The Lenders" (collectively, the "Lenders"), (5) MERRILL LYNCH, in
-------
its capacity as syndication agent for the Lenders (in such capacity, the
"Syndication Agent"), (6) TORONTO-DOMINION, in its capacity as documentation and
- ------------------
technical agent for the Lender Parties (in such capacity, the "Documentation and
-----------------
Technical Agent"), (7) LASALLE NATIONAL TRUST, N.A., a U.S., national banking
- ---------------
association, in its capacity as collateral agent for the Lender Parties (in such
capacity, the "Collateral Agent"), and (8) ROTHSCHILD, in its capacity as
----------------
administrative agent for the Lender Parties (in such capacity, the
"Administrative Agent").
- ---------------------
W I T N E S S E T H:
WHEREAS, the Borrower, the Principal Subsidiaries, the Arrangers, the
Lenders party thereto, the Syndication Agent, the Documentation and Technical
Agent, the Collateral Agent and the Administrative Agent have entered into that
certain Loan Agreement, dated as of October 31, 1995, and amended as of December
7, 1995 and as of March 19, 1996 (as so amended, the "Existing Loan Agreement");
-----------------------
WHEREAS, Fairbanks Gold intends to incur up to an aggregate of $71,000,000
principal amount of Indebtedness in connection with the issuance by AIDEA (as
defined in the Amended Loan Agreement) of the Fort Knox Industrial Revenue Bonds
and each of the Borrower and Fairbanks Gold has requested that the terms of the
Existing Loan Agreement be amended such that, following the Fort Knox Economic
Completion Date, the incurrence of such Indebtedness will be in accordance with
the various undertakings of the Obligors contained in Article 7 of the Existing
---------
Loan Agreement; and
<PAGE>
WHEREAS, subject to the terms and conditions of this Agreement, the Lender
Parties are willing to consent to such requested amendment;
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS; INTERPRETATION
--------------------------------------
SECTION 1.1 ORIGINAL LOAN AGREEMENT TERMS. Terms for which meanings are
provided in the Existing Loan Agreement are, unless otherwise defined herein or
the context otherwise requires, used in this Agreement with such meanings. This
Agreement is a Loan Document and shall be interpreted in accordance with
applicable provisions contained in the Existing Loan Agreement (including
Sections 1.4 and 1.11 thereof).
- ------------ ----
SECTION 1.2. ADDITIONAL TERMS. In this Agreement (including its preamble
and recitals), the following capitalized terms shall have the following
meanings:
"Amended Loan Agreement" means the Existing Loan Agreement, as amended by
----------------------
this Agreement.
"Amendment Effective Date" is defined in Article 4.
------------------------ ---------
"Authorized Representative" means, relative to Cyprus Amax, those of its
-------------------------
officers whose signatures and incumbency shall have been certified to the
Administrative Agent pursuant to clause (b) of Section 5.2 of the Second
---------- -----------
Amendment Agreement.
"Term Sheets" means, collectively, (a) the term sheet, dated November 15,
-----------
1996, prepared by Merrill Lynch & Co. and relating to the issue of the Fort Knox
Industrial Revenue Bonds, and (b) the term sheet, dated November 13, 1996,
prepared by Union Bank of Switzerland and relating to the issue of the Fort Knox
IRB Letter of Credit (as defined in the Amended Loan Agreement), in each case in
the form submitted to the Administrative Agent (and copied by the Administrative
Agent to each Lender) in connection with the implementation of this Agreement.
ARTICLE 2. AMENDMENTS TO THE EXISTING LOAN AGREEMENT
----------------------------------------------------
SECTION 2.1 AMENDMENTS TO SECTION 1.1 OF THE EXISTING LOAN AGREEMENT.
Section 1.1 of the Existing Loan Agreement shall be amended by:
- -----------
(a) adding thereto the following definitions in the appropriate
alphabetical order:
-2-
<PAGE>
"AIDEA" means Alaska Industrial Development and Export Authority, a
-----
governmental agency and a body politic and corporate constituting a
political subdivision of the State of Alaska.
"Cyprus Amax/AGI Reimbursement Agreement" means the letter agreement,
---------------------------------------
dated on or prior to the Third Amendment Effective Date, between Cyprus Amax
and the Borrower.
"Fort Knox IRB AGI Guarantee" means the guarantee to be issued by the
---------------------------
Borrower of the performance of certain obligations contained in the Fort
Knox Industrial Revenue Bonds and of the obligations to pay the Purchase
Price (as defined in the Fort Knox IRB Indenture) in respect of the Fort
Knox Industrial Revenue Bonds contained in the Fort Knox IRB Indenture.
"Fort Knox IRB Financing" means, collectively, the issuance of the Fort
-----------------------
Knox Industrial Revenue Bonds, the lending of the proceeds thereof by AIDEA
to Fairbanks Gold pursuant to the Fort Knox IRB Loan Agreement, the issue of
the Fort Knox IRB Letter of Credit and all other transactions relating or
incidental thereto (including the issuance of the Fort Knox IRB AGI
Guarantee and the entering into of the Fort Knox IRB Reimbursement
Agreement).
"Fort Knox IRB Financing Documentation" means the definitive documentation
-------------------------------------
relating to the Fort Knox IRB Financing to be entered into on or about the
Third Amendment Effective Date and referred to in (and in the form agreed
pursuant to) Section 4.2 of the Third Amendment Agreement and as the same
-----------
may be amended or otherwise modified after the Third Amendment Effective
Date in accordance with Section 7.2.16.
--------------
"Fort Knox IRB Indenture" means the trust indenture to be entered into
-----------------------
between AIDEA and The First National Bank of Chicago, as trustee, in
connection with the issue of the Fort Knox Industrial Revenue Bonds.
"Fort Knox IRB Letter of Credit" means the letter of credit to be
------------------------------
issued by Union Bank of Switzerland, New York Branch (or any successor
thereto), in an aggregate face amount not in excess of the Fort Knox IRB
Letter of Credit Amount in support of certain payment obligations in
connection with the Fort Knox Industrial Revenue Bonds.
"Fort Knox IRB Letter of Credit Amount" means the sum of (a) the aggregate
-------------------------------------
principal amount of the Fort Knox Industrial Revenue Bonds (being not in
excess of $71,000,000), plus (b) an amount equivalent to the amount of
interest on the unpaid principal amount of the Fort Knox Industrial Revenue
Bonds which, in connection with the rating thereof, the relevant rating
agencies shall require to be covered by the Fort Knox IRB Letter of Credit
(but, in no event, in an amount which would be in excess of the interest
-3-
<PAGE>
which would have accrued on the Fort Knox Industrial Revenue Bonds for a
period of seven months).
"Fort Knox IRB Loan Agreement" means the agreement to be entered into
----------------------------
between AIDEA and Fairbanks Gold in connection with the advance of the
proceeds of the Fort Knox Industrial Revenue Bonds by AIDEA to Fairbanks
Gold.
"Fort Knox IRB Reimbursement Agreement" means the agreement to be entered
-------------------------------------
into between Fairbanks Gold and Union Bank of Switzerland, New York Branch,
in connection with the reimbursement by Fairbanks Gold to Union Bank of
Switzerland, New York Branch, of amounts paid pursuant to a drawing under
the Fort Knox IRB Letter of Credit.
"Relevant IRB Default" means:
--------------------
(a) the occurrence and continuation of any Event of Default (excluding,
however (and subject to clause (c)), any Event of Default arising
----------
pursuant to (i) Section 8.1.3 or (ii) with respect to Lassen Gold,
-------------
Nevada Gold or Guanaco Mining, Section 8.1.18;
--------------
(b) the occurrence and continuation of any condition or event which,
after notice, lapse of time, the making of any required
determination or any combination of the foregoing would constitute
an Event of Default under Section 8.1.1, 8.1.6 or 8.1.14; or
------------- ----- ------
(c) the occurrence and continuation of any condition or event (including
any Default) which, after notice, lapse of time, the making of any
required determination or any combination of the foregoing might, in
the reasonable opinion of the Lender Parties, constitute a
Materially Adverse Effect;
provided, however, that (a) the exclusion contained in clause (a)(i) shall
-------- ------- -------------
not apply to any Event of Default arising as a result of a breach of Section
7.2.2, 7.2.3 or 7.2.4 and (b) for the avoidance of doubt no Relevant IRB
----- ----- -----
Default shall be deemed to be in existence at any time in connection with
the occurrence of any event of the nature referred to in clauses (a) through
-----------
(c) if such event shall not be continuing at such time.
---
"Third Amendment Agreement" means that certain Third Amendment Agreement
-------------------------
hereto, dated as of March 24, 1997, among the Borrower, the Principal
Subsidiaries, the Arrangers and Lenders party thereto, and the Agents.
"Third Amendment Effective Date" means the Amendment Effective Date
------------------------------
under (and as defined in) the Third Amendment Agreement.
-4-
<PAGE>
(b) amending the definition of "Fort Knox Industrial Revenue Bonds"
----------------------------------
contained therein in its entirety to read as set forth below:
"Fort Knox Industrial Revenue Bonds" means the Alaska Industrial Development
----------------------------------
and Export Authority Exempt Facility Revenue Bonds (Fairbanks Gold Mining,
Inc.
Project) Series 1997 not in excess of an aggregate principal amount of
$71,000,000 to be issued on or about the Third Amendment Effective Date by
AIDEA pursuant to the Fort Knox IRB Indenture and the other Fort Knox IRB
Financing Documentation.
(c) amending clause (b)(ii) of the definition of "Cash Flow Ratio"
-------------- ---------------
contained therein in its entirety to read as set forth below:
(ii) rental payments made by the Borrower or Fairbanks Gold in
respect of the Permitted Fort Knox Sale-Leaseback for such period and,
without duplication and without prejudice to the provisions of clause
------
(j)(iv) of Section 7.2.2, payments made by the Borrower or Fairbanks Gold
------- -------------
pursuant to the relevant Fort Knox IRB Financing Documentation in
connection with the Fort Knox Industrial Revenue Bonds for such period.
(d) amending clause (b)(vi) of the definition of "Consolidated Fixed
-------------- ------------------
Charge Coverage Ratio" contained therein in its entirety to read
---------------------
as set forth below:
(vi) rental payments made by the Borrower or Fairbanks Gold in respect
of the Permitted Fort Knox Sale-Leaseback during such Measurement Period
and, without duplication and without prejudice to the provisions of clause
------
(j)(iv) of Section 7.2.2, principal payments made by the Borrower or
------- -------------
Fairbanks Gold pursuant to the relevant Fort Knox IRB Financing
Documentation in connection with the Fort Knox Industrial Revenue Bonds
during such Measurement Period.
SECTION 2.2. AMENDMENT TO SECTION 7.1.1 OF THE EXISTING LOAN AGREEMENT.
Section 7.1.1 of the Existing Loan Agreement is amended:
- -------------
(a) by adding a new clause (p) immediately following clause (o)
---------- ----------
thereof reading as set forth below and by redesignating clause
------
(p) of Section 7.1.1 of the Existing Loan Agreement as clause
--- ------------- ------
(q) thereof:
---
(p) without prejudice to the provisions of Section 7.2.16, each of
--------------
the Borrower and Fairbanks Gold shall, promptly upon receipt,
dispatch or effectiveness thereof, deliver to the
Administrative Agent copies of all material correspondence and
notices relating to the Fort Knox IRB Financing (including any
such correspondence or notices relating to any proposed
amendment or other modification to the Fort Knox IRB Financing
Documentation) and of all documentation relating to all
amendments or other modifications to the Fort Knox IRB
Financing Documentation; and
-5-
<PAGE>
(b) by adding at the end thereof a proviso reading as set forth
-------
below:
provided, however, that at any time on or prior to the Fort Knox
-------- -------
Economic Completion Date the Obligor's obligations pursuant to this
Section shall be limited to the delivery of financial statements,
reports and information (x) of the nature referred to in clauses (c) and
---
(n), and (y) relating to, or required to be
delivered in connection with, the occurrence of Fort Knox Economic
Completion.
SECTION 2.3. AMENDMENT TO SECTION 7.2 OF THE EXISTING LOAN AGREEMENT.
Section 7.2 of the Existing Loan Agreement shall be amended in its entirety to
- -----------
read as set forth below:
SECTION 7.2 CERTAIN NEGATIVE COVENANTS. Each Obligor agrees with
each Lender Party that, at all times on and after the Fort Knox Economic
Completion Date (and, in the case of any agreement contained in Section
-------
7.2.16, at all times prior to the Fort Knox Economic Completion Date) until
------
all Obligations have been paid and performed in full, such Obligor will
perform its respective obligations set forth in this Section. Except where
the context specifically requires otherwise, the Borrower shall use its best
efforts to ensure that each relevant Subsidiary complies with its respective
obligations set forth in this Section.
SECTION 2.4. AMENDMENT TO SECTION 7.2.2 OF THE EXISTING LOAN AGREEMENT.
Clause (j) of Section 7.2.2 of the Existing Loan Agreement shall
- ---------- -------------
be amended in its entirety to read as set forth below:
(j) Indebtedness (i) of Fairbanks Gold in a principal amount not in excess
of $71,000,000 at any one time outstanding in respect of the loan advanced
to Fairbanks Gold by AIDEA pursuant to the Fort Knox IRB Loan Agreement,
(ii) of Fairbanks Gold in an amount not in excess of the Fort Knox IRB
Letter of Credit Amount in connection with its reimbursement obligations set
forth in the Fort Knox IRB Reimbursement Agreement, (iii) of the Borrower in
connection with its guarantee of the Fort Knox Industrial Revenue Bonds
pursuant to the Fort Knox IRB AGI Guarantee, and (iv) of the Borrower to
Cyprus Amax in connection with its obligations pursuant to the Cyprus
Amax/AGI Reimbursement Agreement to reimburse Cyprus Amax in respect of any
amount paid by Cyprus Amax pursuant to its guarantee of the obligations of
Fairbanks Gold under the Fort Knox IRB Reimbursement Agreement; provided,
--------
however, (x) that no payment in respect of any Indebtedness of the nature
-------
referred to in clause (j)(iv) may be made by the Borrower at any time when
--------------
any Relevant IRB Default shall have occurred and be continuing at such time
or might, in the reasonable opinion of the Lender Parties, occur on or prior
to the Final Maturity Date as a result of such payment, and (y) Fairbanks
Gold may not, at any time on or prior to the Final Maturity Date, make any
voluntary prepayment of any of its obligations incurred pursuant to the Fort
Knox IRB Loan Agreement prior to the scheduled maturity of such obligations,
whether pursuant to Section 6.1 of the Fort Knox IRB Loan Agreement or
-----------
otherwise;
-6-
<PAGE>
SECTION 2.5. AMENDMENT TO SECTION 7.2.3 OF THE EXISTING LOAN AGREEMENT.
Clause (l) of Section 7.2.3 of the Existing Loan Agreement shall be
- ----------
amended in its entirety to read as set forth below:
(l) Liens granted by Fairbanks Gold to the issuer of the Fort Knox IRB
Letter of Credit pursuant to Section 1.04 of the Fort Knox IRB Reimbursement
Agreement and the Pledge Agreement (as defined in the Fort Knox IRB
Reimbursement Agreement) as security for the performance by Fairbanks Gold
of its obligations thereunder and encumbering solely those of the Fort Knox
Industrial Revenue Bonds delivered for the account of the issuer of the Fort
Knox IRB Letter of Credit from time to time as referred to in Section 1.04
of the Fort Knox IRB Reimbursement Agreement (together with interest thereon
and all proceeds thereof);
SECTION 2.6. AMENDMENT TO SECTION 7.2.6 OF THE EXISTING LOAN AGREEMENT.
Section 7.2.6 of the Existing Loan Agreement shall be amended by adding a new
- -------------
clause (g) immediately following clause (f) thereof reading as set forth below
- --------- ----------
and by redesignating clauses (g) and (h) of Section 7.2.6 of the Existing Loan
----------- --- -------------
Agreement as clauses (h) and (i) thereof, respectively:
----------- ---
(g) Investments by the Borrower in Fairbanks Gold pursuant to the
Fort Knox IRB AGI Guarantee;
SECTION 2.7. AMENDMENT TO ARTICLE 7 OF THE EXISTING LOAN AGREEMENT.
Article 7 of the Existing Loan Agreement is amended by adding at the end thereof
- ---------
a new Section 7.2.16 reading as set forth below:
--------------
SECTION 7.2.16. FORT KNOX IRB FINANCING.
(a) Fairbanks Gold shall apply the proceeds of the loan advanced
pursuant to the Fort Knox IRB Loan Agreement for the purposes
referred to in Sections 3.3 and 3.4 thereof.
------------ ---
(b) Neither the Borrower nor Fairbanks Gold shall agree to, or
suffer to exist, any amendment or other modification to the
terms and conditions of the Fort Knox IRB Financing
Documentation if such amendment or other modification:
(i) modifies any provision of the Fort Knox IRB Financing
Documentation which has the result of increasing the amount
of, or accelerating the date of, any payment to be made in
connection with the Fort Knox Industrial Revenue Bonds
(including any such payment to be made by Fairbanks Gold or
the Borrower pursuant to or in connection with the Fort
Knox IRB Reimbursement Agreement or the Fort Knox IRB Loan
Agreement); or
(ii) would have, or would be reasonably likely to have, a
Materially Adverse Effect.
-7-
<PAGE>
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
-----------------------------------------
In order to induce the Lender Parties to enter into this Agreement and, in
the case of the Lenders, to make, maintain, continue and/or convert Loans under
the Amended Loan Agreement, the Borrower, individually for itself and with
respect to matters hereinafter relating to it and each other Obligor, and each
other Obligor individually for itself and with respect to matters hereinafter
relating to it, represents and warrants unto each Lender Party as set forth in
this Article.
SECTION 3.1. AUTHORITY. Each Obligor has full power and authority to enter
into this Agreement and perform its obligations under the Amended Loan
Agreement.
SECTION 3.2. DUE AUTHORIZATION; NON-CONTRAVENTION. The execution and
delivery by each Obligor of this Agreement and the performance by such Obligor
of its obligations under the Amended Loan Agreement have been authorized by all
necessary corporate action on its part, do not and will not require any
Approval, do not and will not conflict with, result in any violation of, or
constitute any default under, any provision of any Requirement of Law or
Approval binding on it, and will not result in or require the creation or
imposition of any Lien on any of its properties pursuant to the provisions of
any Contractual Obligations except as permitted to be incurred pursuant to the
Priority Agreement and Section 7.2.3 of the Amended Loan Agreement.
-------------
SECTION 3.3 VALIDITY. This Agreement constitutes the legal, valid and
binding obligation of each Obligor enforceable against such Obligor in
accordance with its terms, subject as to enforceability only, to Applicable Laws
relating to bankruptcy and the enforceability of creditors' rights generally and
by the fact that the availability of equitable remedies is discretionary.
ARTICLE 4. CONDITIONS TO EFFECTIVENESS
--------------------------------------
This Agreement shall become effective upon receipt by the Administrative
Agent of the documents, certificates and other Instruments described in this
Article. The date on which the Administrative Agent shall have received all
such documents, certificates and other Instruments is referred to as the
"Amendment Effective Date". In the event that the Amendment Effective Date
- -------------------------
shall not occur on or prior to June 30, 1997, the agreements of the parties
contained in this Agreement shall be of no further force and effect.
SECTION 4.1. COUNTERPARTS OF AGREEMENT. The Administrative Agent shall have
received counterparts of this Agreement, duly executed by the Obligors, the
Arrangers, the Lenders and the other Agents.
SECTION 4.2. FORT KNOX IRB FINANCING DOCUMENTATION. The Administrative Agent
shall have received:
-8-
<PAGE>
(a) copies of execution counterparts of the Fort Knox Industrial
Revenue Bonds, the Fort Knox IRB Letter of Credit, the Fort Knox
IRB Loan Agreement, the Fort Knox IRB Reimbursement Agreement,
the Fort Knox IRB AGI Guarantee and the Cyprus Amax/AGI
Reimbursement Agreement (together with copies of such other
items of documentation relating thereto as the Administrative
Agent shall reasonably have requested) and shall have received
notification that, in the reasonable opinion of counsel to the
Lenders, such documentation is consistent with the Term Sheets
and the Loan Documents (including, in the case of the Cyprus
Amax/AGI Reimbursement Agreement, clause (x) of the proviso to
---------- -------
clause (j) of Section 7.2.2 of the Amended Loan Agreement) (and,
---------- -------------
in connection with any provisions of such documentation which
are not specifically referred to in the Term Sheets (including
any such provisions referred to in either Term Sheet as being
customary for transactions similar to those contemplated by such
Term Sheet), such provisions shall be acceptable to the
Administrative Agent (following, in the case of any material and
substantive such provision, consultation with the Lenders)); and
(b) evidence satisfactory to it that the Fort Knox Industrial
Revenue Bonds have been, or on or prior to June 30, 1997 will
be, issued in a manner which is consistent with the Term Sheets,
the Fort Knox IRB Financing Documentation and the Loan
Documents.
SECTION 4.3. COMPETITIVE ADVANCE FACILITY AGREEMENT. The Administrative
Agent shall have received a copy of Sections 7.01 and 7.05 of the Competitive
------------- ----
Advance Facility Agreement, as in effect on a date as close as practicable to
the intended Amendment Effective Date, certified by an Authorized Representative
of Cyprus Amax.
SECTION 4.4. LETTER AGREEMENT WITH CYPRUS AMAX. The Administrative Agent
shall have received a counterpart of the letter agreement in the form attached
hereto as Exhibit A, dated a date as close as practicable to the intended
---------
Amendment Effective Date, duly executed by Cyprus Amax.
SECTION 4.5. COMPLIANCE WITH WARRANTIES, NO DEFAULTS. The Administrative
Agent shall have received a certificate, dated a date as close as practicable to
the intended Amendment Effective Date, of an Authorized Representative of each
Obligor to the effect that, both immediately before and immediately after giving
effect to the transactions contemplated by this Agreement, the representations
and warranties of each Obligor set forth in Article 3 (only to the extent that
---------
any such representation or warranty shall be required to be made on the
Amendment Effective Date) shall be true and correct with the same effect as if
then made (unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date).
-9-
<PAGE>
ARTICLE 5. MISCELLANEOUS
------------------------
SECTION 5.1. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SECTION 5.2. EFFECT OF AMENDMENT. Effective as of the Amendment Effective
Date, references in the Existing Loan Agreement and in each other Loan Document
to "the Agreement", "this Agreement", the "Loan Agreement" and words of similar
import shall be to the Existing Loan Agreement, as amended hereby. Except as
amended or otherwise modified hereby, the Existing Loan Agreement shall continue
in full force and effect.
SECTION 5.3. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK. Upon the Amendment Effective Date, except with respect to the
Borrower's obligations to indemnify and pay the costs and expenses of the
Underwriters as set forth in the Commitment Letter, the Existing Loan Agreement,
as amended hereby, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto
(including the Commitment Letter (except as aforesaid), the Indicative Summary
Terms for $250,000,000 Senior Term Facility, dated August 15, 1995, and the
Information Memorandum).
SECTION 5.4. PROVISIONS INCORPORATED BY REFERENCE. The parties hereto agree
that the provisions of Sections 10.14 (Forum Selection and Consent to
--------------
Jurisdiction; Waiver of Immunity) and 10.15 (Waiver of Jury Trial) of the
-----
Existing Loan Agreement shall be incorporated by reference into this Agreement
as if set forth in full herein.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
The Obligors
------------
AMAX GOLD INC.,
as the Borrower
By: LELAND O ERDAHL
Name Printed: Leland O Erdahl
Title: Vice President and Chief
Financial Officer
FAIRBANKS GOLD MINING, INC.,
as a Principal Subsidiary
By: LELAND O ERDAHL
Name Printed: Leland O Erdahl
Title: Vice President and Treasurer
GUANACO MINING COMPANY,
INC., as a Principal Subsidiary
By: LELAND O ERDAHL
Name Printed: Leland O Erdahl
Title: Vice President and Treasurer
LASSEN GOLD MINING, INC.,
as a Principal Subsidiary
By: LELAND O ERDAHL
Name Printed: Leland O Erdahl
Title: Vice President and Treasurer
-11-
<PAGE>
MELBA CREEK MINING, INC.,
as a Principal Subsidiary
By: LELAND O ERDAHL
Name Printed: Leland O Erdahl
Title: Vice President and Treasurer
NEVADA GOLD MINING, INC.,
as a Principal Subsidiary
By: LELAND O ERDAHL
Name Printed: Leland O Erdahl
Title: Vice President and Treasurer
The Lenders
-----------
ABN AMRO NORTH AMERICA,
INC., acting as agent for
ABN AMRO BANK N.V.
By: WILLIAM HEISSENBUTTEL
Name Printed: William Heissenbuttel
Title: Vice President
By: JAMES R MORGAN
Name Printed: James R Morgan
Title: Group Vice President and
Team Leader
-12-
<PAGE>
ARAB BANKING CORPORATION
(B.S.C.)
By: STEPHEN A PLAUCHE
Name Printed: Stephen A Plauche
Title: Vice President
BAYERISCHE VEREINSBANK AG
By: WOLFRAM SCHIEDER
Name Printed: Wolfram Schieder
Title: Managing Director
By: ULRICH MENNACHER
Name Printed: Ulrich Mennacher
Title: Assistant Vice President
CANADIAN IMPERIAL BANK OF
COMMERCE
By: JOHN W KUNKLE
Name Printed: John W Kunkle
Title: Authorised Signatory
THE CHASE MANHATTAN BANK
(previously known as Chemical Bank)
By: JAMES H RAMAGE
Name Printed: James H Ramage
Title: Vice President
-13-
<PAGE>
CREDIT LYONNAIS, New York
Branch
By: MICHAEL PEPE
Name Printed: Michael Pepe
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By: JANE BEK
Name Printed: Jane Bek
Title: Vice President
THE FUJI BANK LIMITED, Los
Angeles Agency
By: NOBUHIRO UMEMURA
Name Printed: Nobuhiro Umemura
Title: Joint General Manager
MERRILL LYNCH CAPITAL
CORPORATION
By: CHRISTOPHER BIROSAK
Name Printed: Christopher Birosak
Title: Vice President
NATIONAL BANK OF ALASKA
-14-
<PAGE>
By: PATRICIA JELLEY BENZ
Name Printed: Patricia Jelley Benz
Title: Vice President
PNC BANK, N.A.
By: ROBERT D ERWIN
Name Printed: Robert D Erwin
Title: Vice President
per pro N M ROTHSCHILD & SONS
LIMITED
By: MICHAEL ALLAN PRICE
Name Printed: Michael Allan Price
Title: Director
By: D STREET
Name Printed: D Street
Title: Manager
SOCIETE GENERALE
By: RICHARD A ERBERT
Name Printed: Richard A Erbert
Title: Vice President
-15-
<PAGE>
SWISS BANK CORPORATION,
Cayman Island Branch
By: GARY RIDDELL
Name Printed: Gary Riddell
Title: Director Credit
Risk Management
By: DOROTHY L. MCKINLEY
Name Printed: Dorothy L. McKinley
Title: Associate Director, Banking
Finance Support, N.A.
THE TORONTO-DOMINION BANK
By: DAVID G. PARKER
Name Printed: David G. Parker
Title: Manager Credit Administration
The Agents and the Arrangers
----------------------------
ABN AMRO NORTH AMERICA,
INC., acting as agent for ABN AMRO
BANK N.V., as an Arranger
By: WILLIAM HEISSENBUTTEL
Name Printed: William Heissenbuttel
Title: Vice President
By: JAMES R. MORGAN
-16-
<PAGE>
Name Printed: James R. Morgan
Title: Group Vice President and Team
Leader
LASALLE NATIONAL TRUST,
N.A., as the Collateral Agent
By: SARAH H WEBB
Name Printed: Sarah H Webb
Title: First Vice President
By: DIANE S SWANSON
Name Printed: Diane S Swanson
Title: Assistant Secretary
MERRILL LYNCH CAPITAL
CORPORATION, as the Syndication
Agent and as an Arranger
By: CHRISTOPHER BIROSAK
Name Printed: Christopher Birosak
Title: Vice President
per pro N M ROTHSCHILD & SONS
LIMITED, as the Administrative
Agent and as an Arranger
By: MICHAEL ALLAN PRICE
Name Printed: Michael Allan Price
Title: Director
-17-
<PAGE>
By: DAVID STREET
Name Printed: David Street
Title: Manager
THE TORONTO-DOMINION
BANK, as the Documentation and
Technical Agent and as an Arranger
By: DAVID G. PARKER
Name Printed: David G. Parker
Title: Manager Credit Administration
EXHIBIT A
to
Third Amendment Agreement
To: N M Rothschild & Sons Limited,
in its capacity under the Loan
Agreement referred to (and
defined) below
New Court
St. Swithin's Lane
London EC4P 4DU
England
_____________, 1997
and to each of the other Lender
Parties party to such Loan Agreement
RE: LOAN AGREEMENT, DATED AS OF OCTOBER 31, 1995 (AS AMENDED FROM TIME TO
TIME PRIOR TO THE DATE HEREOF, THE "LOAN AGREEMENT"), AMONG AMAX GOLD
--------------
INC., AS THE BORROWER, FAIRBANKS GOLD MINING, INC., GUANACO MINING
COMPANY, INC., LASSEN GOLD MINING, INC., MELBA CREEK MINING, INC. AND
NEVADA GOLD MINING,
-18-
<PAGE>
INC., AS THE PRINCIPAL SUBSIDIARIES, AND THE VARIOUS BANKS AND OTHER
FINANCIAL INSTITUTIONS REFERRED TO THEREIN AS THE ARRANGERS, THE
LENDERS AND THE AGENTS
----------------------------------------------------------------------
Dear Sirs:
This letter agreement is being entered into pursuant to Section 4.4 of the
-----------
Third Amendment Agreement to the Loan Agreement (the Loan Agreement as amended
by such Third Amendment Agreement, the "Amended Loan Agreement"). In connection
----------------------
therewith;
1. We have requested, and by your signature hereto on behalf of each of
the Lender Parties each of the Lender Parties thereby agree, that, effective as
of the Third Amendment Effective Date, Article 5 of the Cyprus Amax Guaranty is
---------
amended by replacing the phrase "the Amendment Effective Date" appearing in the
fourth line thereof with the phrase "_________, 1997".
2. We hereby acknowledge and accept the terms and conditions of the Third
Amendment Agreement and, pursuant to the terms and conditions of Section 3.4 of
-----------
the Cyprus Amax Guaranty, hereby consent thereto such that our obligations
contained in the Cyprus Amax Guaranty shall continue in full force and effect
following the implementation and effectiveness of the Third Amendment Agreement.
3. In order to induce the Lender Parties to consent to the effectiveness
of the Third Amendment Agreement we hereby represent and warrant unto each
Lender Party as set forth below:
(a) Cyprus Amax has full power and authority to enter into this letter
agreement and perform its obligations under the Cyprus Amax Guaranty as
amended hereby;
(b) the execution and delivery by Cyprus Amax of this letter agreement and
the performance by Cyprus Amax of its obligations under the Cyprus Amax
Guaranty as amended hereby have been authorized by all necessary corporate
action on its part, do not and will not require any Approval, do not and
will not conflict with, result in any violation of, or constitute any
default under, any provision of any Requirement of Law or Approval binding
on it, and will not result in or require the creation or imposition of any
Lien on any of its properties pursuant to the provisions of any Contractual
Obligations; and
(c) this letter agreement constitutes the legal, valid and binding
obligation of Cyprus Amax enforceable against Cyprus Amax in accordance with
its terms, subject as to enforceability only, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws of general
applicability relating to or affecting creditors' rights from time to time
in effect and to general principles of equity, regardless of whether such
enforcement is considered in a proceeding at law or in equity.
-19-
<PAGE>
4. In accordance with the provisions of clause (j) of Section 7.2.2 of
-------------
the Loan Agreement and of Section of the Cyprus Amax/AGI Reimbursement
-----------
Agreement, we hereby agree and undertake with the Lender Parties that, in the
event that any payment is made by the Borrower to us that is not permitted by
such provisions so to be made, in whole or in part, to hold the proceeds of such
payment in trust for, and to turn over the proceeds of such payment to, the
Lender Parties for application to the payment Obligations of the Borrower in
accordance with the Loan Documents to the extent such Obligations remain unpaid.
Terms for which meanings are provided in the Amended Loan Agreement are,
unless otherwise defined herein, used herein with such meanings.
Very truly yours,
CYPRUS AMAX MINERALS
COMPANY
By:________________________________
Name Printed:______________________
Title:_____________________________
ACCEPTED AND AGREED the
___ day of _________, 1997
N M ROTHSCHILD & SONS LIMITED, in
its capacity as Administrative
Agent for the Lender Parties
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
-20-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<PERIOD-START> JAN-01-1997
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 22,200
<SECURITIES> 0
<RECEIVABLES> 30,500
<ALLOWANCES> 0
<INVENTORY> 60,400
<CURRENT-ASSETS> 132,800
<PP&E> 1,117,000
<DEPRECIATION> 359,100
<TOTAL-ASSETS> 920,100
<CURRENT-LIABILITIES> 221,000
<BONDS> 383,400
0
1,800
<COMMON> 1,100
<OTHER-SE> 296,000
<TOTAL-LIABILITY-AND-EQUITY> 920,100
<SALES> 111,700
<TOTAL-REVENUES> 111,700
<CGS> 68,400
<TOTAL-COSTS> 111,100
<OTHER-EXPENSES> 1,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,600<F1>
<INCOME-PRETAX> (15,200)
<INCOME-TAX> 100
<INCOME-CONTINUING> (15,300)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 4,500
<NET-INCOME> (10,800)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
<FN>
<F1>Net of interest income of $0.9 million and capitalized interest of $4.2
million.
</FN>
</TABLE>
