<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT SEPTEMBER 24, 1995
---------------------
FIRSTMISS GOLD INC.
(Exact Name of Registrant as Specified in Charter)
NEVADA 0-16484 64-0748908
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
6025 S. QUEBEC STREET, SUITE 310 80111
ENGLEWOOD, COLORADO (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (303) 771-9000
N/A
(Former Name, if Changed Since Last Report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
An Exhibit Index is on page 9 of this report
Page 1
<PAGE> 2
ITEM 1(B). CHANGES IN CONTROL OF REGISTRANT
See discussion under Item 5 below.
ITEM 5. OTHER EVENTS
Introduction.
In January 1995, the Company announced a geologic resource along the
Turquoise Ridge Fault ("Turquoise Ridge") on the Company's Getchell Property in
north central Nevada. The Company hired Mineral Resources Development, Inc.
("MRDI") to prepare a pre-feasibility study (the "MRDI Study") with respect to
Turquoise Ridge. A pre-feasibility study is an economic-based analysis of an ore
body that serves as the basis for a mine plan for the extraction of gold from
that ore body on an economically viable basis. In September 1995, MRDI issued an
executive summary (the "MRDI Study Summary") of its pre-feasibility study. The
MRDI Study concludes that the Turquoise Ridge area contains probable reserves of
1.254 million contained ounces of gold. Certain conclusions of the MRDI Study
Summary are summarized below.
In February 1990, First Mississippi Corporation, a Mississippi corporation
("First Mississippi") announced plans to distribute its stock in FirstMiss Gold
Inc. (the "Company") to First Mississippi's shareholders. According to First
Mississippi, this spin-off was subject to a favorable tax ruling from the
Internal Revenue Service and a favorable operational and financial outlook for
the Company. Although the required ruling was received in December 1990, gold
prices had fallen in the interim, and the spin-off was put on hold. First
Mississippi has informed the Company that it received a subsequent ruling from
the Internal Revenue Service in April 1995 that a spin-off would be treated as a
tax-free distribution for federal income tax purposes, subject to certain
conditions. First Mississippi currently owns approximately 81% of the
outstanding common stock of the Company.
On September 24, 1995, First Mississippi's board of directors approved the
spin-off of First Mississippi's stock in the Company to First Mississippi's
shareholders of record on October 10, 1995. The distribution (the
"Distribution") of such stock is expected to occur on October 20, 1995.
MRDI Pre-feasibility Study.
Based on the MRDI Study Summary, the Company has announced a new probable
reserve consisting of 3.712 million tons of ore with an average grade of .338
ounces per ton or 1.254 million ounces of gold. This reserve addition at
Turquoise Ridge increases the Company's proven and probable reserves to 2.689
million ounces, an 87% increase from the end of fiscal 1995 reserve figure.
Reserves are defined as that part of a mineral deposit which could be
economically and legally extracted or produced at the time of reserve
determination. Probable reserves are reserves for which quantity and grade are
computed from information similar to that used for proven reserves, but the
sites for inspection, sampling and measurement are farther apart or are
otherwise less adequately spaced. The degree of assurance, although lower than
that for proven reserves, is high enough to assume continuity between points of
observation.
The MRDI Study focused on one area of encouraging drill intersections from
a portion of the Turquoise Ridge structural trend of the Getchell property. The
MRDI Study is based upon the piercements of 51 drill holes, which were targeted
to be positioned at a nominal spacing of 100 feet. Eight of the drill hole
piercements provide close-spaced, 50-feet offsets. There are overall a total of
81 drill holes within the vicinity of the Turquoise Ridge resource area.
However, a number of mineralized intercepts exist in the periphery of the study
area which were not incorporated into the MRDI Study. In order to ensure the
integrity of the database used to support resource estimation and mine planning,
more than 10,000 drill samples were passed through a MRDI designated quality
control-quality assurance protocol, designed to monitor the precision of gold
assays on a batch-by-batch basis.
VULCAN software was used to prepare a three dimensional computer model of
the formations, structure and mineralized envelopes. Within the mineralized
envelopes, gold grades were estimated for
2
<PAGE> 3
10 X 10 X 12 feet blocks using a linear interpolation process. Models were also
prepared for sulfide sulfur, carbonate content and rock mass rating ("RMR").
The MRDI Study involved hydrologic characterization. A prototype dewatering
well, three observation wells and four piezometers were installed in the
Turquoise Ridge area to acquire three-dimensional aquifer parameter data. Based
on the hydraulic conductivity values, simulations were made of mine dewatering
rates for pumping of surface wells from the mineralized zone and from one or two
(or both) shaft sites over the projected 18-month development period.
The MRDI Study also involved geotechnical rock mass characterization.
Oriented core was obtained from three of the holes drilled. This was used to
establish the orientation of five major fault sets. A RMR assessment was
conducted on cores. These were reconciled with cores and underground
observations obtained from the Getchell underground mine.
The MRDI Study found that the ore at Turquoise Ridge occurs in three types
of ore bodies comprising shallow dipping bedded ores located in the hanging wall
and footwall of the Turquoise Ridge shear zone and steeply dipping faulted ores.
Given the configuration of the ore bodies and the weak nature of the ground, the
underhand cut-and-fill mining method has been selected. Drifts and crosscuts
will be 12 feet by 10 feet in size. Depending on the horizontal width, both
longitudinal and transverse stoping will be employed.
It is currently expected that two shafts will access the ore bodies. One
shaft would serve as a production/service shaft and the other would serve as a
ventilation shaft and an emergency exit. A development drilling and trial
stoping program would be conducted from the ventilation shaft until the sinking
of the production shaft is complete.
Ore body access is expected to be via two main crosscuts on the 3500 and
4000 L's, a main access decline which connects the levels and sublevel
development off this access spaced at a vertical interval of 72 feet.
The MRDI Study Summary estimates that the capital required to bring the
initial phase of the Turquoise Ridge underground mine into commercial production
of 2,000 tons of ore per day will be approximately $85 million, to be spent from
approximately October 1995 to the first calendar quarter of 1998. Major capital
expenditures are the production shaft, estimated to cost $33 million and the
mine development costs of approximately $26 million. Under the timetable
presently contemplated by the Company, initial production would not commence
prior to mid-calendar 1998.
The MRDI Study Summary notes that projected cash flow of $25.7 million is
small compared to the size of the capital investment contemplated by the Company
of $85.5 million and that such projections would ordinarily not be enough to
justify a project and to declare a reserve. However, MRDI noted that certain
unusual characteristics warranted the declaration of a reserve. Such
characteristics include: (i) that the Company is an operating company with
in-place underground mining and processing capability within the Getchell
district, now being operated by an experienced management group and workforce
and (ii) that a fairly stringent cutoff grade of 0.25 ounces of gold per ton was
applied for purposes of the MRDI Study. However, there can be no assurance that
any of these assumptions will prove to be accurate. Turquoise Ridge involves
numerous risks, certain of which are summarized below under "Certain Turquoise
Ridge Project Risks."
Summary of Spin-off Agreements.
On September 24, 1995, the Company and First Mississippi entered into
certain agreements related to the Distribution. These agreements are attached as
exhibits hereto and are summarized, along with certain related documents
including a $20 million credit facility with Toronto-Dominion Bank, below. Such
summaries are qualified in their entirety by reference to the agreements and
documents for the full terms thereof.
Post Spin-Off Agreement. The Company and First Mississippi have entered
into the Post Spin-Off Agreement, which provides generally for the transition of
the Company from a subsidiary of First Mississippi to a stand-alone corporation.
In particular, the Post Spin-Off Agreement provides for, among other things:
3
<PAGE> 4
(i) the grant by First Mississippi to the Company for a period of at least five
years from the date of the Distribution to use the name "FirstMiss" as part of
its corporate name and (ii) the cooperation of the Company and First Mississippi
to effectuate the purposes of the Distribution and the documents related to such
Distribution. The Post Spin-Off Agreement is attached hereto as Exhibit 10(a)
and is incorporated by reference herein.
Tax Ruling Agreement. The Tax Ruling Agreement sets forth covenants and
agreements of the Company relevant to maintaining the tax-free nature of the
Distribution after consummation of the Distribution. Under the Tax Ruling
Agreement, the Company represents that it has not taken and will not take any
action which is inconsistent with the facts and representations stated in the
private letter ruling (the "Ruling") and related submissions related to the
Distribution from the Internal Revenue Service (the "I.R.S.").
The Tax Ruling Agreement provides that the Company will consummate an
underwritten public equity offering of common stock generating aggregate
proceeds of at least $50,000,000 as soon as practicable in the reasonable
business judgment of the Company's board of directors and that such offering
will be consummated prior to April 28, 1996 unless the Company has obtained a
supplemental ruling from the I.R.S. that failure to consummate such offering
will not affect the Ruling. Consistent with their obligation, the Company has
filed a registration statement on Form S-3 which contemplates a delayed offering
pursuant to Rule 415 under the Securities Act of 1933, as amended. The Tax
Ruling Agreement provides that the Company will use at least $15,000,000 of the
proceeds from the equity offering to repay a portion of its outstanding debt to
First Mississippi and will use the balance of the proceeds for the development
and exploration of its Turquoise Ridge and Getchell properties for the mining
and exploration of gold.
The Tax Ruling Agreement provides that the Company will not prior to one
year from the date of the Distribution enter into any agreement to merge or
consolidate with or into any other corporation, to liquidate or partially
liquidate, to sell or transfer all or substantially all of its assets, to redeem
or repurchase any of its capital stock (except for the redemption of the stock
of one or more Company employees upon his or her termination) or to issue
additional shares of its capital stock (except in connection with the Offering
or issuances pursuant to the Company's employee benefit or compensation plans),
unless it first obtains an opinion of counsel or a supplemental ruling from the
I.R.S. that such action does not interfere with the Tax Ruling.
In the event the Company takes such actions or solicits or assists any
person or group to commence a tender offer if such person or group would acquire
beneficial ownership of 20 percent or more of the Company's outstanding common
stock without an opinion or a supplemental I.R.S. ruling, the Company agreed
under the Tax Ruling Agreement to indemnify and hold First Mississippi and
certain affiliated corporations harmless against any and all federal, state and
local taxes, interest, penalties and additions thereto imposed upon or incurred
by such corporations as a result of such action's effect on the tax-free nature
of the Distribution. The Tax Ruling Agreement is attached hereto as Exhibit
10(b) and is incorporated by reference herein.
Loan Agreement. The Loan Agreement and related promissory note establish a
specific repayment plan for the intercompany debt owed by the Company to First
Mississippi. As of the date of the Distribution, this debt is expected to be
approximately $49 million presently owed plus any additional borrowings prior to
the Distribution date. Under the Loan Agreement, the Company agreed to repay the
entire remaining principal balance on April 27, 2000, or earlier if the loan is
accelerated under the circumstances provided for in the Loan Agreement. Interest
accrues at a LIBOR-based rate and is payable based on the LIBOR period selected
by the Company (one month, three month, six month or one year) or the prime
rate. The Loan Agreement permits prepayments at any time at the Company's option
and requires $15 million in principal of the loan to be repaid following the
consummation of any public offering of the Company's securities after the date
of the Loan Agreement as well as full prepayment upon a change in control of the
Company. In the Loan Agreement, the Company makes certain representations and
warranties about its corporate status and financial and business condition and
affirmative and negative covenants customary in lending transactions as to the
conduct of its business going forward. Certain circumstances, including failure
to pay principal or interest when due and the Company's insolvency, will
constitute an event of default under the Loan Agreement
4
<PAGE> 5
entitling First Mississippi to accelerate the remaining principal balance of the
loan, plus accrued interest. First Mississippi has agreed to subordinate certain
of its rights to those of The Toronto-Dominion Bank (see "Toronto-Dominion Bank
Loan Facility" below). The Loan Agreement is attached hereto as Exhibit 10(c)
and is incorporated by reference herein.
Amended Tax Sharing Agreement. First Mississippi and the Company have
entered into an Amended Tax Sharing Agreement. The Amended Tax Sharing Agreement
provides for the termination of the Tax Sharing Agreement dated as of October 1,
1987 to which First Mississippi and the Company are parties, and sets forth the
parties' obligations with respect to taxes relating to pre-Distribution taxable
periods ("Pre-Spin-Off Periods").
The Amended Tax Sharing Agreement obligates First Mississippi to pay the
Company (by either an actual payment or a reduction in the Company's outstanding
indebtedness to First Mississippi) an agreed upon amount (approximately $13.3
million if the Distribution had occurred on June 30, 1995) representing the tax
benefit received by the affiliated group of which First Mississippi is the
common parent corporation (the "First Mississippi Affiliated Group") from its
use of the Company's losses, deductions, credits and allowances in Pre-Spin-Off
Periods.
The Company has agreed in the Tax Sharing Agreement to indemnify First
Mississippi for any taxes attributable to the Company and assessed with respect
to consolidated or combined tax returns which include the Company and relate to
Pre-Spin-Off Periods, to the extent any liability for such taxes exceeds
$250,000. Conversely, First Mississippi has agreed to indemnify the Company
against any liability for taxes attributable to members of the First Mississippi
Affiliated Group other than the Company, but imposed on the Company as a result
of its inclusion in First Mississippi's consolidated or combined tax returns for
Pre-Spin-Off Periods. The Amended Tax Sharing Agreement is attached hereto as
Exhibit 10(d) and is incorporated by reference herein.
Toronto-Dominion Bank Loan Facility. The Loan Facility will be provided by
The Toronto-Dominion Bank acting through its Toronto-Dominion Merchant Bank
Division ("Agent") and one or more financial institutions which may become
parties to the Loan Facility. The Loan Facility will provide for $20,000,000 of
term loans to the Company. Amounts drawn under the Loan Facility will be
available for financing the development of the Company's mining properties and
for the general working capital purposes of the Company.
Borrowings under the Loan Facility will bear interest at 3% over the LIBOR
rate for each one month period during which advances are outstanding. In
addition, the Company will pay the Agent a drawdown fee of 1% of the amount of
each advance of funds to the Company under the Loan Facility and has granted to
the Agent a participation right as described in the following paragraph. The
Company has paid to the Agent a commitment fee in the amount of $100,000. Upon
execution of the Loan Agreement, the Company is required to pay to the Agent an
additional $400,000. All advances of funds under the Loan Facility must be
repaid by the Company on October 31, 1996. The Company is obligated to prepay
amounts advanced under the Loan Facility from the net proceeds of any financing
or issuance of securities by the Company. Amounts repaid under the Loan Facility
cannot be reborrowed.
The Company has granted to the Agent an equity participation right which
may be exercised by written notice (i) after the earlier of termination of the
Loan Facility and the Due Date (as defined therein) and (ii) on or before 30
months following repayment of all funds advanced under the Loan Facility. Upon
exercise of such participation right, the Company shall pay to the Agent, either
in cash or by way of issuance to the Agent of shares of the common stock of the
Company (valued at the weighted average closing price of such shares during the
ten-day period prior to the date of exercise of the participation right), an
amount not exceeding (x) $1,000,000 if all advances under the Loan Facility are
paid in full within six months of the date of the Loan Facility, and (y)
$1,500,000 if such funds advanced are paid in full after such six month period,
but prior to the Due Date. At any time prior to November 30, 1995, the Borrower
may satisfy the participation right in full by paying $500,000 (in cash or
through the issuance of securities of equivalent value) to the Agent. In the
event any obligations of the Company described in this paragraph are satisfied
by issuance of
5
<PAGE> 6
common stock of the Company, the Agent will have piggy-back registration rights
in connection with any registration of the common stock of the Company.
The loans under the Loan Facility will be guaranteed by the Company's
wholly-owned subsidiary FMG Inc. The obligations of FMG Inc. and the Company
under the Loan Facility will be secured by a pledge by the Company of all the
capital stock of FMG Inc. In connection with the Loan Facility, the Company will
also be required to deliver to the Agent a satisfactory agreement from First
Mississippi as to subordination of certain of the Company's obligations to First
Mississippi to the obligations of the Company to the Agent.
The Loan Facility will contain covenants and provisions that will restrict,
among other things, the Company's ability to: (i) change its business; (ii)
consolidate, merge or sell all of its assets; (iii) incur certain indebtedness;
(iv) incur liens on its property; and (v) declare dividends.
The Loan Agreement dated as of September 24, 1995, by and between
Toronto-Dominion Bank and the Company is attached hereto as Exhibit 10(e) and is
incorporated by reference herein.
Certain Turquoise Ridge Project Risks.
The Turquoise Ridge Project involves numerous risks. These include the
following:
There can be no assurances the probable reserves set forth in the MRDI
Study Summary will actually be able to be mined and milled on an economical
basis, if at all. The MRDI Study is based upon many assumptions, any, some or
all of which may not prove to be accurate. The failure of any such assumptions
to prove accurate may alter the conclusions of the MRDI Study and may have a
material adverse effect on the Company.
The Turquoise Ridge project is at the pre-feasibility study level of
project development and while the data in-hand reflect a considerable
expenditure of time and money on the part of the Company, the expenditure
required to advance the project to the point of a production test is large,
particularly since the Company has decided to proceed with shaft systems capable
of being used in full-scale production to save time and money, should trial
mining be confirmed as viable. Thus to a large extent expenditures which would
usually be supported by a feasibility study will depend on the data in-hand and
assumptions made in this pre-feasibility study with attendant higher level of
uncertainty.
Reserves.
The resource and reserve estimates were prepared using geological and
engineering judgment based on available data. In the absence of underground
development, such estimates must be regarded as imprecise and some of the
assumptions made may later prove to be incorrect or unreliable.
The grade distribution at Turquoise Ridge is fairly narrow, with most
stoping blocks having grades between 0.2 to 0.4 oz/st. This means that small
changes in cutoff grade can cause large shifts in the reserves. If dilution
and/or mining costs related to bad ground are higher than expected, the reserves
could be substantially reduced, resulting in a shortening of mine life and a
reduced or negative cash flow.
Mining.
Dilution. The tonnage and grade of the mill feed material was estimated by
applying dilution factors to certain resource data. The dilution agents are
backfill, waste from the back of overcut crosscuts and drifts, and from the
walls. In the case of the latter two, MRDI assumed that there would be an
average of one foot of back and wall dilution. If this dilution increases, there
will be corresponding negative effects on the tonnage and grade to mill. This
risk is related to the irregular configuration of the ore body which, even with
the tight cut-and-fill stoping method used, could make achievement of a dilution
thickness of one foot impossible to achieve in practice.
No. 1 Shaft Completion. MRDI believes a two-year assumed construction
period for No. 1 Shaft, which will become the main production shaft, is an
aggressive schedule. Delay in construction would necessitate removing ore
through the No. 2 Shaft, which is basically designed for waste and the limited
ore from early
6
<PAGE> 7
production. Additionally, the availability of the final ventilation circuit
required for mining depends upon the completion of No. 1 Shaft.
Mining Cost. As part of the project risk assessment, sensitivities were run
on various mining costs. Due to uncertainties about actual ground conditions and
productivities, these costs are only predictable within a broad range and the
predictions may not be valid. Therefore, actual mining costs may have a material
adverse effect on the viability of the Turquoise Ridge project and on the
Company.
Hydrology.
Drainage of the ore body and country rocks will be critical to the
achievement of the mining efficiencies and costs estimated for the study. If the
deposit is not drained and water remains in this clay-rich environment, mining
conditions could worsen, and support costs will increase. If, due to the
presence of fine clays, the deposit drains slowly, the start of production may
be delayed, and the build-up to full production may be of longer duration.
Additionally, depending upon the quantity and quality of water encountered, the
water treatment/disposal options presently available to the Company may be
insufficient to meet estimated amounts needed to treat water pumped from
Turquoise Ridge during de-watering.
Geotechnical Considerations.
The Turquoise Ridge ore zones contain areas of poor ground conditions due
to a high percentage of the ground being comprised of low RMR rock and clay. As
a result, additional ground support may be required.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) The following exhibits are filed as part of this Report:
<TABLE>
<S> <C> <C>
10(a) -- Post Spin-Off Agreement dated as of September 24, 1995, by and between
First Mississippi and the Company.
10(b) -- Tax Ruling Agreement dated as of September 24, 1995, by and between First
Mississippi and the Company.
10(c) -- Loan Agreement dated as of September 24, 1995, by and between First
Mississippi and the Company.
10(d) -- Amended Tax Sharing Agreement dated as of September 24, 1995, by and
between First Mississippi and the Company.
10(e) -- Loan Agreement dated as of September 24, 1995, by and between The
Toronto-Dominion Bank and the Company.
</TABLE>
ITEM 8. CHANGE IN FISCAL YEAR
On September 24, 1995, the Company's board of directors approved a change
in the Company's fiscal year from a previous fiscal year end of June 30 to a
fiscal year end of December 31. The report covering the transition period will
be filed with the Securities and Exchange Commission on Form 10-K.
7
<PAGE> 8
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 hereunto duly authorized.
FIRSTMISS GOLD INC.
Registrant
By: /s/ DONALD S. ROBSON
Donald S. Robson,
Chief Financial Officer
Date: September 24, 1995
8
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
10(a) Post Spin-Off Agreement dated as of September 24, 1995, by and between First Mississippi and the
Company.
10(b) Tax Ruling Agreement dated as of September 24, 1995, by and between First Mississippi and the Company.
10(c) Loan Agreement dated as of September 24, 1995, by and between First Mississippi and the Company.
10(d) Amended Tax Sharing Agreement dated as of September 24, 1995, by and between First Mississippi and the
Company.
10(e) Loan Agreement dated as of September 24, 1995, by and between The Toronto-Dominion Bank and the Company.
</TABLE>
Page 9
<PAGE> 1
POST SPIN-OFF AGREEMENT
THIS POST SPIN-OFF AGREEMENT (this "Agreement") is made this 24th day of
September, 1995 between First Mississippi Corporation, a Mississippi
corporation ("FMC"), and FirstMiss Gold Inc., a Nevada corporation ("Gold");
WHEREAS, Gold has been a subsidiary of FMC;
WHEREAS, FMC wishes to spin off to the shareholders of FMC the stock of
Gold owned by FMC (the "Spin-Off"); and
WHEREAS, FMC and Gold wish to enter into certain agreements with respect
to the period following the Spin-Off;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. TAX AGREEMENTS. FMC and Gold hereby amend the Tax Sharing
Agreement dated as of October 1, 1987 between FMC and Gold so that, as amended,
it is in the form of Exhibit A attached hereto (the "Amended Tax Sharing
Agreement"). Contemporaneously with the execution and delivery of this
Agreement, FMC and Gold shall execute and deliver to each other copies of the
Amended Tax Sharing Agreement, which shall also be executed and delivered by
FMG Inc., a subsidiary of Gold, and a Tax Ruling Agreement in the form of
Exhibit B attached hereto (the "Tax Ruling Agreement").
<PAGE> 2
2. EMPLOYEE BENEFITS. Contemporaneously with the execution and
delivery of this Agreement, FMC and Gold shall execute and deliver to each
other copies of an agreement relating to employee benefits and compensation in
the form of Exhibit C attached hereto (the "Employee Benefits Agreement").
3. LOAN AGREEMENT AND NOTE. Contemporaneously with the execution and
delivery of this Agreement, FMC and Gold shall execute and deliver to each
other copies of a Loan Agreement in the form of Exhibit D attached hereto (the
"Loan Agreement"), and on the date of the Spin-Off Gold shall execute and
deliver to FMC a promissory note in the form of Exhibit A to the Loan
Agreement, dated the date of the Spin-Off (the "Note"), with a principal
balance equal to the indebtedness of Gold to FMC for advances as of the date of
the Spin-Off, whereupon all prior promissory notes evidencing such indebtedness
shall be cancelled and FMC shall deliver the prior promissory notes to Gold,
marked "cancelled".
4. NAME. Effective as of the date of the Spin-Off, FMC hereby grants
to Gold a world-wide, fully-paid, non- transferable, non-exclusive right and
license for five years from the date of the Spin-Off to use the name
"FirstMiss" as part of its corporate name, and this license will remain in
effect from year to year thereafter unless terminated by either party on twelve
months' notice to the other. Prior to the termination of this license, Gold
shall change its corporate name to a name not including the word "FirstMiss" or
any similar word or words, at which time this license shall terminate. As a
condition to maintaining this license in effect, Gold agrees to maintain a
quality of products under the name "FirstMiss" commensurate with the business
position of the parties involved, with FMC setting reasonable standards for the
quality of the
-2-
<PAGE> 3
products sold under the name, reserving the right to inspect the quality of the
products sold under the name, and reserving the right to inspect the facilities
and processes used to produce said products in order to insure that FMC
standards of quality are observed. As promptly as practicable after the date
hereof, Gold will cease use of FMC's fanciful "f" trademark.
5. AUTHORITY AND ENFORCEABILITY. This Agreement, the Amended Tax
Sharing Agreement, the Tax Ruling Agreement, the Employee Benefits Agreement,
the Loan Agreement and the Note (collectively the "Spin-Off Documents"), have
been duly authorized by all requisite corporate action of the parties thereto
and constitute the valid and binding obligations of the parties thereto,
enforceable in accordance with their terms.
6. ADMINISTRATIVE SUPPORT. From time to time following the Spin-Off,
FMC will provide to Gold at no charge a reasonable amount of assistance from
FMC's administrative, tax and legal staffs to answer questions concerning Gold,
including without limitation, historical matters and the location of documents
and information. The existing Administrative Services Agreement dated as of
October 28, 1987 between FMC and Gold, as amended by the parties by letter
dated August 29, 1995, effective July 1, 1995, shall remain in effect for 180
days following the Spin-Off, unless extended by mutual agreement of the
parties.
7. DEGUSSA GUARANTY. Gold agrees that within two years from the date
of the Spin-Off, it will cause FMC to be removed from its guaranty to Degussa
Corporation ("Degussa") under the FirstMiss Gold Inc. Agreement dated November
3, 1993, among Gold, FMC and Degussa, and Gold acknowledges and agrees that in
the event FMC makes any payment to Degussa pursuant to such guaranty, Gold will
make immediate
-3-
<PAGE> 4
repayment thereof to FMC on demand of FMC, and FMC shall have all rights
available to a guarantor under applicable law, including, without limitation,
rights of reimbursement and subrogation.
8. RECLAMATION BOND. Gold agrees that within two years from the date
of the Spin-Off, it will cause the Irrevocable Letter of Credit dated October
11, 1993 issued by The Chase Manhattan Bank, N.A. ("Chase"), in favor of the
United States Department of the Interior, Bureau of Land Management, for the
benefit of Gold (the "Letter of Credit"), to be terminated, and Gold will pay
on demand all fees and costs payable by FMC after the Spin-Off to maintain the
Letter of Credit in effect. Gold acknowledges and agrees that in the event
that FMC is required to make any payment to Chase with respect to any draw upon
the Letter of Credit, Gold will make immediate repayment thereof to FMC on
demand of FMC, and FMC shall have all rights available to it under applicable
law, including, without limitation, rights of reimbursement and subrogation.
9. RECORD RETENTION AND ASSISTANCE. From time to time after the date
of the Spin-Off, FMC and Gold each shall provide to the other party information
reasonably requested by such party which is necessary to prepare any financial,
accounting or other reports or tax returns with respect to periods up to and
including the date of the Spin-Off. Each party shall preserve all of its
records and information necessary to meet the foregoing obligation until the
latest of (a) December 31, 2002, (b) any period as may be required by any
governmental agency or pending litigation, or (c) in the case of records or
information relating to taxes, until the expiration of the applicable statute
of limitations, including extensions. If either party wishes to destroy any
such records or information after such period, it shall first give 30 days'
prior notice to the other party,
-4-
<PAGE> 5
which shall have the right at its option to object to such destruction, in
which case the party seeking to destroy such records or information shall at
its option either continue to retain possession of such records or information
or will deliver such records or information to the other party.
10. CONFIDENTIALITY. FMC and Gold each will not disclose any trade
secrets or confidential information of the other party for so long as they
remain trade secrets in the case of trade secrets and for five years following
the date of the Spin-Off in the case of confidential information. For purposes
of this Agreement, a trade secret is anything which is a trade secret under
applicable law and confidential information is any information which is
competitively sensitive and not generally available to the public.
11. COOPERATION AND FURTHER ASSURANCES. From time to time following
the date of this Agreement, each of FMC and Gold will cooperate with the other
to effectuate the purposes of the Spin-Off and the Spin-Off Documents and each
will execute and deliver such additional documents and take such further
actions as shall be reasonably requested by the other.
12. EXPENSES. Except as otherwise specifically provided in the
Spin-Off Documents or other written agreements between FMC and Gold, all costs
and expenses relating to the Spin-Off shall be paid by the party incurring
them.
13. MEDIATION AND ARBITRATION. If a dispute arises between FMC and
Gold with respect to this Agreement or the breach thereof, and if such dispute
cannot be settled through negotiations, the parties shall first attempt in good
faith to settle the dispute by mediation under the Commercial Mediation Rules
of the American Arbitration Association. If such dispute cannot be settled by
mediation, it shall be settled
-5-
<PAGE> 6
by arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. Regardless of any other choice of law provisions in this Agreement,
any arbitration shall be governed by the United States Arbitration Act, 9
U.S.C. Sections 1-16, as amended from time to time.
14. GOVERNING LAW. This Agreement shall in all respects be construed
in accordance with and governed by the substantive laws of the State of
Delaware.
15. SEVERABILITY. In the event that any court of competent
jurisdiction shall determine that any provision of this Agreement is invalid,
such determination shall not affect the validity of any other provision of this
Agreement, which shall remain in full force and effect and which shall be
construed as to be valid under applicable law.
16. NOTICES. Any and all notices and other communications permitted or
required to be given under this Agreement shall be in writing, signed by or on
behalf of the party giving the same, and shall be deemed to have been properly
given and shall be effective upon the earliest of (a) in the case of personal
delivery, upon receipt, (b) in the case of mailed notice, three days after
deposit in the United States mail, postage prepaid, certified with return
receipt requested, (c) in the case of facsimile or other telecommunications
transmission, upon receipt, or (d) in the case of notice by Federal Express or
other reputable overnight courier service, one business day after delivery to
such courier service, in each case sent to the other party at its address set
forth below or at such other address within the continental United States as it
may designate by notice specifically designated as a notice of change of
address and given in accordance herewith:
-6-
<PAGE> 7
If to FMC: First Mississippi Corporation
700 North Street
Jackson, MS 39202-3095
Attn: General Counsel
If to Gold: FirstMiss Gold Inc.
5460 S. Quebec Street
Suite 240
Englewood, CO 80111
Attn: President
17. ASSIGNMENT; SUCCESSORS AND INTEREST. No assignment or transfer by
either party of any or all of its rights and obligations under this Agreement
shall be made except with the prior written consent of the other party, which
consent shall not be unreasonably withheld. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
permitted successors and assigns, and any reference to a party hereto shall
also be a reference to a permitted successor or assign.
18. INTEGRATION; AMENDMENT; WAIVER. This Agreement and the other
agreements contemplated hereby supersede all prior negotiations, agreements and
understandings between the parties with respect to the subject matter hereof,
constitute the entire agreement between the parties with respect to the subject
matter hereof and may not be altered or amended except in writing signed by the
parties. The failure of either party hereto at any time or times to require
performance of any provisions of this Agreement shall in no manner affect the
right to enforce the same. No waiver by either
-7-
<PAGE> 8
party hereto of any condition, or of the breach of any provision of this
Agreement or the other agreements contemplated hereby, whether by conduct or
otherwise, in any one or more instances, shall be deemed or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of the breach of any other provision herein or therein
contained.
Signed, sealed and delivered on the date first above written.
(CORPORATE SEAL) FMC:
FIRST MISSISSIPPI CORPORATION
ATTEST: By:
----------------------------------
President
- ------------------------
Secretary
(CORPORATE SEAL) GOLD:
FIRSTMISS GOLD INC.
ATTEST: By:
----------------------------------
President
- ------------------------
Secretary
-8-
<PAGE> 1
TAX RULING AGREEMENT
THIS TAX RULING AGREEMENT (this "Agreement") is made this 24th day of
September, 1995 between First Mississippi Corporation, a Mississippi
corporation ("FMC"), and FirstMiss Gold Inc. a Nevada corporation ("Gold").
WHEREAS, FMC is the common parent of an affiliated group of corporations
(the "FMC Group") under Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code"), and owns shares of common stock ("Common Stock") of Gold
constituting "control" within the meaning of Section 368(c) of the Code;
WHEREAS, FMC is considering a distribution to the shareholders of FMC of
the stock of Gold owned by FMC (the "Spin-Off");
WHEREAS, FMC has received a tax ruling related to the Spin-Off from the
Internal Revenue Service, a copy of which has been furnished to Gold (the
"Ruling"); and
WHEREAS, FMC and Gold wish to enter into certain agreements with respect
to the Ruling;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. COMPLIANCE WITH THE RULING. Gold represents and warrants that it
has not taken and will not take any action which is inconsistent with the facts
and representations stated in the Ruling or in any submissions to the Internal
Revenue Service (the "IRS") in connection therewith (such submission being
letters from FMC to the IRS dated July 8, 1994, October 19, 1994, January 19,
1995, February 16, 1995, March 11, 1995, March 15,
<PAGE> 2
1995, March 27, 1995 and April 19, 1995), which have been furnished to Gold.
Gold represents and warrants that it is not aware of any facts which are
inconsistent with the facts and representations set forth in the Ruling and
such letters.
2. EQUITY OFFERING. Gold agrees that it will consummate an
underwritten public equity offering of common stock generating aggregate
proceeds of at least $50,000,000 (the "Offering") as soon as practicable in the
reasonable business judgment of the Board of Directors of Gold, but
notwithstanding the foregoing, in any event Gold will consummate the Offering
prior to April 27, 1996 unless Gold has obtained a supplemental ruling from the
Internal Revenue Service that the failure to so consummate the Offering will
not affect the qualification of the Spin-Off under Section 355 of the Code.
Gold represents and warrants that it has filed a registration statement on Form
S-3 which contemplates a delayed offering pursuant to Rule 415 under the
Securities Act of 1933, as amended, and upon declaration of effectiveness would
be available for the Offering.
3. USE OF PROCEEDS. Immediately after consummation of the Offering,
Gold will use at least $15,000,000 of the proceeds of the Offering to repay a
portion of its outstanding debt to FMC, will use at least $35,000,000 of the
proceeds for the development and exploration of its Turquoise Ridge and
Getchell properties for the mining and exploration of gold, and will use any
balance of the proceeds for purposes related to the business of Gold, including
for working capital.
4. CONTINUED CONDUCT OF BUSINESS. Gold represents that it has no plan
or intention to cease the active conduct of its trade or business within the
meaning of Section 355(b) of the Code and agrees to take no steps to do so
without the consent of FMC for a
-2-
<PAGE> 3
period of at least one year commencing with the date of the Spin-Off (the
"Restricted Period").
5. OPINION REQUIREMENT FOR MAJOR TRANSACTIONS UNDERTAKEN BY GOLD
DURING THE RESTRICTED PERIOD. Gold represents that is has no plan or intention
to do any of the following and it agrees that during the Restricted Period, it
will not, and will not enter into any agreement to: (i) merge or consolidate
with or into any other corporation or effect any transaction having a similar
effect, (ii) liquidate or partially liquidate (within the meaning of such terms
as defined in Section 346 and Section 302, respectively, of the Code), (iii)
sell or transfer all or substantially all its assets (within the meaning of
Rev. Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of related
transactions, (iv) redeem or otherwise repurchase any of its capital stock
(except for the redemption of the stock of one or more employees upon his or
their termination, and Gold represents that it has no plan or intention to do
so), or (v) except in connection with the Offering or except for capital stock
issued to officers, directors or employees of Gold and its subsidiaries
pursuant to employee benefit or compensation plans of Gold, issue additional
shares of its capital stock, in each case, unless it first obtains (i) an
opinion of Sutherland, Asbill & Brennan, counsel to FMC, or other law firm
reasonably satisfactory to FMC, or (ii) a supplemental ruling from the Internal
Revenue Service, that such transaction, and any transaction related thereto,
will not affect the qualification of the Spin-Off under Section 355 of the
Code.
-3-
<PAGE> 4
6. INDEMNIFICATION.
6.1 INDEMNITY. If during the Restricted Period:
(a) Gold takes any action or enters into any agreement to
take any action, including, without limitation, (i) any merger or consolidation
of Gold with or into another corporation or any transaction having a similar
effect, (ii) any complete or partial liquidation of Gold (within the meaning of
such terms as defined in Section 346 and 302, respectively, of the Code), (iii)
a sale or transfer of all or substantially all Gold's assets (within the
meaning of Rev. Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series
of related transactions, (iv) ceasing to actively conduct its trade or business
within the meaning of Section 355 of the Code, (v) redeeming or otherwise
repurchasing any of Gold's outstanding capital stock, (vi) issuing any
additional shares of Gold stock, or Gold fails to take any action, including,
without limitation, failing to consummate the Offering prior to April 27, 1996,
and the Spin-Off shall fail to qualify under Section 355 of the Code primarily
as a result of such action or actions or failure or failures to act; or
(b) Gold solicits or assists any person or group of
affiliated or associated persons to commence a tender offer for the stock of
Gold upon consummation of which such person or group of affiliated or
associated persons would acquire beneficial ownership of 20% or more of Gold's
outstanding common stock, and the Spin-Off shall fail to qualify under Section
355 of the Code primarily as a result of the tender offer; then Gold shall
indemnify and hold harmless FMC and each member of the FMC Group against any
and all federal, state and local taxes, interest, penalties and additions to
tax imposed upon or incurred by the FMC Group or any member thereof as a result
of the
-4-
<PAGE> 5
failure of the Spin-Off to so qualify to the extent provided herein, unless,
with respect to matters described in Section 6.1(a)(i), (ii), (iii), (v) or
(vi), Gold previously shall have obtained a favorable legal opinion or
supplemental ruling as set forth in Section 5.
6.2 INDEMNIFIED LIABILITY. For purposes of this Agreement, the
term "Indemnified Liability" means any liability imposed upon or incurred by
the FMC Group or any member of the FMC Group for which FMC or any other member
of the FMC Group is indemnified and held harmless under Section 6.1, but shall
not refer to the amount of such liability.
6.3 AMOUNT OF INDEMNIFIED LIABILITY FOR INCOME TAXES. The amount
of an Indemnified Liability for a federal or state tax based on or determined
with reference to income shall be deemed to be the amount of tax computed by
multiplying (i) the taxing jurisdiction's highest marginal tax rate applicable
to taxable income of corporations such as FMC of the character subject to tax
as a result of the failure of the Spin-off to qualify under Section 355 of the
Code for the taxable period in which the Spin-Off occurs, times (ii) the gain
or income of the FMC Group or member thereof which is subject to tax in the
taxing jurisdiction as a result of the failure of the Spin-Off to qualify under
Section 355 of the Code, and, in the case of a state, times (iii) the
percentage representing the extent to which such gain or income is apportioned
or allocated to such state; provided, however, that in the case of a state tax
determined as a percentage of federal income tax liability, the amount of the
Indemnified Liability shall be deemed to be the amount of tax computed by
multiplying (i) that state's highest percentage rate applicable to the taxable
income of corporations such as FMC of the character subject to tax as a result
of the failure of the Spin-Off to qualify
-5-
<PAGE> 6
under Section 355 of the Code for the taxable period in which the Spin-Off
occurs, times (ii) the amount of deemed federal income tax (whether or not
incurred) imposed upon the FMC Group or any member thereof from the failure of
the Spin-Off to qualify under Section 355 of the Code computed in accordance
with this Section 6.3, times (iii) the percentage representing the extent to
which the gain or income required to be recognized on the Spin-Off is
apportioned or allocated to such state.
6.4 INDEMNITY REDUCED BY INCOME TAX BENEFITS FROM INDEMNIFIED
LIABILITY.
(a) If an Indemnified Liability is of a type that
constitutes a deduction from income in any taxable period in determining the
FMC Group's or any of its member's liability for a federal or state tax based
upon or determined with reference to income, the amount that Gold would
otherwise be required to pay as indemnification for such Indemnified Liability
shall be reduced by the aggregate reduction, on account of such deduction of
the Indemnified Liability, in the tax liability of the FMC Group or any member
of the FMC Group to all taxing jurisdictions over all taxable periods in which
the Indemnified Liability is deductible.
(b) The deemed reduction in tax liability to a taxing
jurisdiction for any taxable period in which all or a portion of the
Indemnified Liability is deductible shall be deemed to be the amount computed
by multiplying (i) such taxing jurisdiction's highest marginal tax rate
applicable to the taxable income of corporations such as FMC of the character
against which the Indemnified Liability is deductible, times (ii) the portion
of the Indemnified Liability that constitutes a deduction in such taxing
jurisdiction in such taxable
-6-
<PAGE> 7
period, and, in the case of a state, times (iii) the percentage representing
the extent to which the deduction for the Indemnified Liability is apportioned
or allocated to such state; provided, however, that in the case of a state tax
determined as a percentage of federal income tax liability, the amount of
deemed reduction in tax liability to such state for any taxable period in which
all or a portion of the Indemnified Liability is deductible shall be deemed to
be the amount computed by multiplying (i) such state's highest percentage rate
applicable to the taxable income of corporations such as FMC in such taxable
period of such character against which the Indemnified Liability is deductible,
times (ii) the deemed reduction in federal income tax in such taxable period
resulting from the deductibility of the Indemnified Liability computed in
accordance with this Section 6.4, times (iii) the percentage representing the
extent to which the deduction for the Indemnified Liability is apportioned or
allocated to such state. The amount of such reduction in Gold's liability
shall be unaffected by any interest paid to the FMC Group, or any member
thereof, by a taxing authority by reason of any such deduction.
6.5 INDEMNITY AMOUNT. With respect to any Indemnified Liability,
the amount which Gold shall pay to or on behalf of FMC as indemnification (the
"Indemnity Amount") shall be the amount of the Indemnified Liability, as
determined and adjusted under Sections 6.3 and 6.4.
7. PROCEDURAL MATTERS.
7.1 NOTICE. If either FMC or Gold receives any written notice of
deficiency, claim or adjustment or any other written communication from a
taxing authority that may result in an Indemnified Liability, the party
receiving such notice or communication shall
-7-
<PAGE> 8
promptly give written notice thereof to the other party; provided that any
delay by FMC in so notifying Gold shall not relieve Gold of any liability to
FMC hereunder, except to the extent Gold is materially and adversely prejudiced
by such delay. FMC undertakes and agrees that from and after such time as FMC
obtains knowledge that any representative of a taxing authority has begun to
investigate or inquire into the Spin-Off (whether or not such investigation or
inquiry is a formal or informal investigation or inquiry), FMC shall (i) notify
Gold thereof, provided that any delay by FMC is so notifying Gold shall not
relieve Gold of any liability to FMC hereunder, (ii) consult with Gold from
time to time as to the conduct of such investigation or inquiry, (iii) provide
Gold with copies of all correspondence between FMC or its representatives and
such taxing authority or any representative thereof pertaining to such
investigation or inquiry and (iv) arrange for a representative of Gold to be
present at (and, if Gold is controlling the proceeding pursuant to Section 7.3,
participate in) all meetings with such taxing authority or any representative
thereof pertaining to such investigation or inquiry.
7.2 WRITTEN ACKNOWLEDGEMENT. Promptly upon receipt of notice as
provided in Section 7.1, Gold shall confirm in writing to FMC that the
liability asserted in the notice of deficiency, claim or adjustment or other
written communication would, if imposed upon or incurred by the FMC Group or
any member thereof, be an Indemnified Liability, unless Gold believes in good
faith that such liability would not be an Indemnified Liability, in which case
Gold shall set forth in writing to FMC the grounds for such belief.
-8-
<PAGE> 9
7.3 TAX PROCEEDINGS CONTROLLED BY GOLD.
(a) Any tax proceeding that may result in an Indemnified
Liability, which is acknowledged as such by Gold, shall be conducted in
accordance with this Section 7.3.
(b) Promptly upon Gold's written acknowledgement that the
asserted liability is an Indemnified Liability, Gold shall assume and direct
the defense or settlement of the proceeding and shall diligently defend against
the claim of any taxing authority that the Spin-Off resulted in taxable income
to FMC or any other member of the FMC Group or any other party. If the
Indemnified Liability is grouped with other unrelated asserted liabilities or
issues in the proceeding, FMC and Gold shall use their respective best efforts
to cause the Indemnified Liability to be the subject of a separate proceeding.
If such severance is not possible, Gold shall assume and direct and be
responsible only for the matters relating to the Indemnified Liability.
(c) Upon request, during the course of the tax proceeding,
Gold shall from time to time furnish FMC with evidence reasonably satisfactory
to FMC of its ability to pay the full amount of the Indemnified Liability. If
at any time during such tax proceeding FMC reasonably determines, after due
investigation, that Gold could not pay the full amount of the Indemnified
Liability, if required, then FMC may assume control of the tax proceeding in
accordance with Section 7.4.
(d) Gold shall pay all reasonable expenses related to the
Indemnified Liability, including but not limited to reasonable fees for
attorneys, accountants, expert witnesses or other consultants retained by it.
To the extent that any such expenses have
-9-
<PAGE> 10
been or are paid by FMC or any member of the FMC Group, Gold shall promptly
reimburse FMC or such member therefor.
(e) FMC shall not pay (unless otherwise required by a
proper notice of levy and after prompt notification to Gold of FMC's receipt of
notice and demand for payment), settle, compromise or concede any portion of
the Indemnified Liability without the written consent of Gold. FMC shall, at
Gold's sole cost (including but not limited to any reasonable out-of-pocket
costs incurred by FMC), take such action as Gold may reasonably request
(including but not limited to the execution of powers of attorney for one or
more persons designated by Gold, and the filing of a petition, complaint,
amended return or claim for refund) in contesting the Indemnified Liability.
Gold shall, on a timely basis, keep FMC informed of all developments in the
proceeding and provide FMC with copies of all pleadings, briefs, orders, and
other written papers pertaining thereto.
(f) Subject to satisfaction of the conditions herein set
forth, Gold may direct FMC to settle the Indemnified Liability on such terms
and for such amount as Gold may direct. FMC may condition such settlement on
receipt, prior to the settlement, from Gold of the Indemnity Amount less any
amounts to be paid directly by Gold to the taxing authority. Gold may direct
FMC, at Gold's expense, to pay an asserted deficiency for the Indemnified
Liability out of funds provided by Gold, and to file a claim for refund. If
Gold pays FMC the Indemnified Amount pursuant to Section 7.5 and FMC or any
other member of the FMC Group receives a refund of any portion of amounts paid
to a taxing jurisdiction in respect of the Indemnified Liability (other than a
refund resulting from adjustments unrelated to the Indemnified Liability), FMC
shall pay any and all such refund
-10-
<PAGE> 11
proceeds, together with interest thereon for each day and the actual number of
days commencing on the date such refund is received by FMC at the rate of one
percentage point above the monthly average of the daily Effective Funds Rate,
as stated by the Federal Reserve Bank of New York; provided, however, that the
provision for interest herein shall not be construed to give FMC the right to
defer payment to Gold of any refund proceeds hereunder.
7.4 TAX PROCEEDINGS CONTROLLED BY FMC. Should Gold not provide
FMC with the confirmation contemplated by Section 7.2 within thirty (30) days
following receipt of notice provided in Section 7.1 or, following such
confirmation, should Gold fail within thirty (30) days following request
therefor to furnish to FMC evidence of its ability to pay the full amount of
the Indemnified Liability or should FMC reasonably believe after due
investigation that Gold could not pay the full amount of the Indemnified
Liability if required, then FMC may assume control of the tax proceeding upon
the following terms: (1) FMC will diligently defend against the claim of any
taxing authority that the Spin-Off resulted in taxable income to it or any
other member of the FMC Group or any other party, without regard to the
indemnification provided herein, including the pursuit of the appeal of any
adverse determinations to the appropriate tribunal (unless advised by
independent counsel in its reasonable judgment that FMC or such other member of
the FMC Group would not prevail upon any such appeal) and shall employ such
resources, including independent counsel, in conducting such defense as are
reasonably commensurate with the nature and magnitude of the claim; (ii) FMC
will consult with Gold as to the conduct of all proceedings, will provide Gold
with copies of all protests, pleadings, briefs, filings, correspondence and
-11-
<PAGE> 12
similar materials relative to the proceedings and will arrange for a
representative of Gold to be present at (but not to participate in) all
meetings with the relevant taxing authorities and all hearings before any
court; and (iii) neither FMC nor any other member of the FMC Group will settle,
compromise or concede any claim that would result in an Indemnified Liability
unless FMC has made the determination, and has been so advised by independent
counsel, that such settlement is not unreasonable in the circumstances.
Subject to the above, any such tax proceedings shall be controlled and directed
exclusively by FMC and may be contested, defended, paid, settled, compromised
or conceded by FMC and any related expenses incurred by FMC or any member of
the FMC Group, including but not limited to reasonable fees for attorneys,
accountants, expert witnesses or other consultants shall be reimbursed by Gold,
if Gold admits or is found to have incorrectly failed to acknowledge the
asserted liability as an Indemnified Liability as provided in Section 7.2;
provided, however, that if after FMC's assumption of control of the
proceedings, Gold acknowledges in writing that the asserted liability is an
Indemnified Liability or Gold demonstrates its ability to pay the full amount
of the Indemnified Liability if required, Gold shall (if practical and upon its
request) promptly assume and direct the proceeding which shall thenceforth be
conducted in accordance with Section 7.3; and provided further, however, that
FMC will not be required to pursue the claim in the federal district court,
Court of Claims or any state court if as a prerequisite to such court's
jurisdiction, it is required to pay the asserted liability unless the funds
necessary to invoke such jurisdiction are provided by Gold.
7.5 TIME AND MANNER OF PAYMENT. Unless otherwise agreed in
writing, Gold shall pay to FMC the Indemnity Amount (less any amounts paid
directly by Gold to
-12-
<PAGE> 13
the taxing authority) no less than three (3) business days prior to the date
payment of the Indemnified Liability is to be made, whether by FMC or Gold, to
the taxing authority. Such payment shall be paid by Gold to FMC by wire
transfer of immediately available funds to an account designated by FMC by
written notice to Gold prior to the due date of such payment. If Gold delays
making payment beyond the due date hereunder, Gold shall pay interest to FMC on
the amount unpaid at the rate of one (1) percentage point above the Prime Rate
published in the Wall Street Journal on the due date of the payment for each
day and the actual number of days for which any amount due hereunder is unpaid;
provided, however, that this provision for interest shall not be construed to
give Gold the right to defer payment beyond the due date hereunder.
7.6 REFUND OF AMOUNTS PAID BY GOLD. In connection with this
Agreement, should FMC or any other member of the FMC Group receive a refund in
respect of amounts paid by Gold to any taxing authority on FMC's behalf, or
should any such amounts that would otherwise be refundable to Gold be applied
by the taxing authority to obligations of FMC or any other member of the FMC
Group unrelated to the Spin-Off, then FMC shall, promptly following receipt (or
notification of credit), remit such refund, together with interest thereon,
which interest shall be paid at the rate of one (1) percentage point above the
Prime Rate published in the Wall Street Journal on the due date of the payment
for each day and the actual number of days commencing on the date such refund
is received (or credit applied); provided, however, that this provision for
interest shall not be construed to give FMC the right to defer payment to Gold
of any refund proceeds hereunder.
-13-
<PAGE> 14
7.7 COOPERATION. FMC and Gold shall cooperate with one another
in a timely manner in any administrative or judicial proceeding involving any
matter that may result in an Indemnified Liability. FMC and Gold agree that
such cooperation shall include, without limitation, making available to the
other party, during normal business hours, all books, records and information,
officers and employees (without substantial interruption of employment) and
office space necessary or useful in connection with any such judicial or
administrative proceeding. The party requesting or otherwise entitled to any
books, records, information, officers, employees or office space pursuant to
this Section 7.7 shall bear all reasonable out-of-pocket costs and expenses
(except reimbursement of salaries, employee benefits and general overhead)
incurred in connection with providing such books, records, information,
officers, employees or office space.
8. MEDIATION AND ARBITRATION. If a dispute arises between FMC and
Gold with respect to this Agreement or the breach thereof, and if such dispute
cannot be settled through negotiations, the parties shall first attempt in good
faith to settle the dispute by mediation under the Commercial Mediation Rules
of the American Arbitration Association. If such dispute cannot be settled by
mediation, it shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. Regardless of any other choice of law provisions
in this Agreement, any arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Sections 1-16, as amended from time to time.
-14-
<PAGE> 15
9. GOVERNING LAW. This Agreement shall in all respects be construed
in accordance with and governed by the substantive laws of the State of
Delaware.
10. SEVERABILITY. In the event that any court of competent
jurisdiction shall determine that any provision of this Agreement is invalid,
such determination shall not affect the validity of any other provision of this
Agreement, which shall remain in full force and effect and which shall be
construed as to be valid under applicable law.
11. NOTICES. Any and all notices and other communications permitted or
required to be given under this Agreement shall be in writing, signed by or on
behalf of the party giving the same, and shall be deemed to have been properly
given and shall be effective upon the earliest of (a) in the case of personal
delivery, upon receipt, (b) in the case of mailed notice, three days after
deposit in the United States mail, postage prepaid, certified with return
receipt requested, (c) in the case of facsimile or other telecommunications
transmission, upon receipt, or (d) in the case of notice by Federal Express or
other reputable overnight courier service, one business day after delivery to
such courier service, in each case sent to the other party at its address set
forth below or at such other address within the continental United States as it
may designate by notice specifically designated as a notice of change of
address and given in accordance herewith:
If to FMC: First Mississippi Corporation
700 North Street
Jackson, MS 39202-3095
Attn: General Counsel
-15-
<PAGE> 16
If to Gold: FirstMiss Gold Inc.
5460 S. Quebec Street
Suite 240
Englewood, Colorado 80111
Attn: President
12. ASSIGNMENT; SUCCESSORS AND INTEREST. No assignment or transfer by
either party of any or all of its rights and obligations under this Agreement
shall be made except with the prior written consent of the other party, which
consent shall not be unreasonably withheld. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
permitted successors and assigns, and any reference to a party hereto shall
also be a reference to a permitted successor or assign.
13. INTEGRATION; AMENDMENT; WAIVER. This Agreement and the other
agreements contemplated hereby supersede all prior negotiations, agreements and
understandings between the parties with respect to the subject matter hereof,
constitute the entire agreement between the parties with respect to the subject
matter hereof and may not be altered or amended except in writing signed by the
parties. The failure of either party hereto at any time or times to require
performance of any provisions of this Agreement shall in no manner affect the
right to enforce the same. No waiver by either party hereto of any condition,
or of the breach of any provision of this Agreement or the other agreements
contemplated hereby, whether by conduct or otherwise, in any one or more
instances, shall be deemed or construed as a further or continuing waiver of
any such condition or breach
-16-
<PAGE> 17
or a waiver of any other condition or of the breach of any other provision
herein or therein contained.
Signed, sealed and delivered on the date first above written.
(CORPORATE SEAL) FMC:
FIRST MISSISSIPPI CORPORATION
ATTEST: By:
-----------------------------------
President
- ------------------------
Secretary
(CORPORATE SEAL) GOLD:
FIRSTMISS GOLD INC.
ATTEST: By:
-----------------------------------
President
- ------------------------
Secretary
-17-
<PAGE> 1
LOAN AGREEMENT
THIS LOAN AGREEMENT is dated as of September 24, 1995 and entered into by
and between FirstMiss Gold Inc., a Nevada corporation ("Borrower") and First
Mississippi Corporation, a Mississippi corporation ("Lender"). All capitalized
terms used herein and not elsewhere defined herein are defined in Section 1 of
this Agreement.
WHEREAS, Lender has previously extended credit to Borrower in the form of
cash advances in the aggregate amount of $__________________; and
WHEREAS, Borrower and Lender wish to formalize the repayment terms of
such previous advances by Lender to Borrower and Lender has agreed to permit
Borrower to repay such advances over time, subject to the terms and conditions
of this Agreement;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower and Lender agree as
follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement shall
have the following meanings:
"Affiliate" means any Person (other than Lender): (a) directly or
indirectly controlling, controlled by, or under common control with, Borrower;
(b) directly or indirectly owning or holding five percent (5%) or more of any
equity interest in Borrower; or (c) five percent (5%) or more of whose voting
stock or other equity interest is directly or indirectly owned or held by
Borrower. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or by contract or otherwise.
"Amended Tax Sharing Agreement" means the Amended Tax Sharing Agreement
between Lender and Borrower of even date herewith, as it may be amended from
time to time.
"Applicable Margin" shall mean for any fiscal quarter of Borrower the
percentage determined for such quarter as set forth below based upon Borrower's
Leverage Ratio for such quarter. For each fiscal quarter of Borrower, the
Applicable Margin shall be added to the LIBOR Rate to determine the interest
rate on the Note for such quarter.
<PAGE> 2
<TABLE>
<CAPTION>
Leverage Ratio Applicable Margin
-------------- -----------------
<S> <C>
greater than or equal to 0.75 1.0%
greater than or equal to
0.50 and less than 0.75 0.75%
less than 0.50 0.625%
</TABLE>
"Agreement" means this Loan Agreement as it may be amended, supplemented
or otherwise modified from time to time.
"Borrower" has the meaning assigned to that term in the preamble to this
Agreement.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of Mississippi or is a day on
which banking institutions located in such state are closed.
"Change of Control" shall be deemed to have occurred if any Person or
related group of Persons shall acquire, directly or indirectly, ownership or
control of more than twenty percent (20%) of the voting securities of Borrower.
"Consolidated" refers to the consolidation of accounts in accordance with
GAAP.
"Default" means a condition or event that, after notice or lapse of time
or both, would constitute an Event of Default if that condition or event were
not cured or removed within any applicable grace or cure period.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Loan Party or any ERISA Affiliate or (b) has at any time within the preceding
six years been maintained for the employees of any Loan Party or any current or
former ERISA Affiliate.
"Environmental Laws" means any federal, state or local law, rule,
regulation or order relating to pollution, waste, disposal, industrial hygiene,
land use or the protection of human health, safety or welfare, plant life or
animal life, natural resources, the environment or property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any Person who is
a member of a group which is under common control with any Loan Party, who
together with any Loan
-2-
<PAGE> 3
Party is treated as a single employer within the meaning of Section 414(b) and
(c) of the IRC.
"Event of Default" means each of the events set forth in Section 7.1.
"Fiscal Year" means for any fiscal year of Borrower ending on or before
June 30, 1995, each twelve-month period ending on the last day of June, and for
any fiscal year of Borrower ending after June 30, 1995, each period
constituting such fiscal year as determined by Borrower.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
"Hazardous Material" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable laws or regulations as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity or "EP toxicity"; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(c) any flammable substances or explosives or any radioactive materials; and
(d) asbestos in any form or electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million.
"Indebtedness", as applied to any Person, means: (a) all indebtedness for
borrowed money; (b) obligations under leases which in accordance with GAAP
constitute capital leases; (c) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money; (d) any obligation owed for all or any part of the deferred purchase
price of property or services if the purchase price is due more than six months
from the date the obligation is incurred or is evidenced by a note or similar
written instrument; and (e) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person.
"Intangible Assets" means the amount of Borrower's intangible assets
(determined in conformity with GAAP) including, without limitation, goodwill,
trademarks, tradenames, licenses, organizational costs, deferred amounts,
covenants not to compete, unearned income and restricted funds.
"Interest Period" shall have the meaning set forth in Section 2.2(B).
-3-
<PAGE> 4
"IRC" means the Internal Revenue Code of 1986.
"Lender" has the meaning assigned to that term in the preamble to this
Agreement.
"Lender Account" shall have the meaning set forth in Section 2.3(A).
"Leverage Ratio" means, for any fiscal quarter of Borrower, the result
obtained by dividing (i) Indebtedness of Borrower as of the end of Borrower's
prior fiscal quarter by (ii) Net Worth as of the end of such prior fiscal
quarter, all as determined based upon Borrower's financial statements for such
prior fiscal quarter.
"Liabilities" shall have the meaning given that term in accordance with
GAAP and shall include Indebtedness.
"LIBOR" as of any date of determination means for any period the offered
rate for deposits in United States dollars in the London Interbank Market at
approximately 11:00 a.m. (London time), which appears on the Telerate Service
on such date or, if such rate is not available on such date, the next preceding
day on which banking institutions are open for business in London, or if such
service is not available, "LIBOR" as of any date of determination means for any
period the London Interbank Offered Rates for deposits in United States dollars
for such period as published on such date in the "MONEY RATES" column of The
Wall Street Journal, regardless of the stated effective date thereof, or if
such rates are not so published on such date, on the next preceding date on
which they are so published. In the event The Wall Street Journal ceases to
publish London Interbank Offered Rates for deposits in United States dollars,
Lender and Borrower may obtain such rates from another reliable publication or
source.
"LIBOR Rate" means LIBOR for the Interest Period selected from time to
time by Borrower pursuant to Section 2.2(B).
"LIBOR Rate Notice" shall have the meaning set forth in Section 2.2(C).
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" means the amount advanced under the Term Loan.
"Loan Documents" means this Agreement, the Note and all other
instruments, documents and agreements executed by or on behalf of any Loan
Party and delivered concurrently herewith or at any time hereafter to or for
Lender in connection with the Loan and other transactions contemplated by this
Agreement, all as amended, supplemented or modified from time to time.
-4-
<PAGE> 5
"Loan Party" means Borrower, Borrower's Subsidiaries or any other Person
(other than Lender) which is or becomes a party to any Loan Document.
"Loan Parties" means Borrower, Borrower's Subsidiaries and any other Loan
Parties, taken as a whole.
"Material Adverse Effect" means (a) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of the Loan Parties or (b) the impairment of the ability of the Loan Parties to
perform its obligations under any Loan Document to which it is a party or of
Lender to enforce or collect any of the Obligations.
"Net Worth" means, as of any date, the sum of the capital stock and
additional paid-in capital plus retained earnings (or minus accumulated
deficit) of Borrower on a consolidated basis calculated in conformity with
GAAP.
"Note" means the Term Note.
"Obligations" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Lender under the Loan
Documents including the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable.
"Permitted Encumbrances" means the following types of Liens: (a) Liens
for taxes, assessments or other governmental charges not yet due and payable or
being contested in good faith; (b) statutory Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other similar liens imposed by law,
which are incurred in the ordinary course of business, including capital
improvements and mine developments, for sums not more than thirty (30) days
delinquent; (c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money); (d) easements, rights-of-way, restrictions,
and other similar charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of the Loan Parties; (e)
Liens in favor of Lender; (f) existing Liens of Borrower set forth on Schedule
1.1(B); (g) Liens created to secure Indebtedness in an aggregate amount not in
excess of $5,000,000; and (h) Liens created to secure Indebtedness incurred to
finance the cost of acquisition, construction or improvement of property owned
or acquired by, or working capital for, Borrower or its Subsidiaries.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
-5-
<PAGE> 6
"Prime Rate" as of any date means the Prime Rate as published on such
date in the "MONEY RATES" column of The Wall Street Journal, regardless of the
stated effective date thereof. If a range of rates is so published, the "Prime
Rate" shall be the arithmetic mean of the highest and lowest of such rates.
The Prime Rate initially shall be established on the date hereof and shall be
adjusted on the first business day of each month hereafter, except that if The
Wall Street Journal is not published on such business day, then the Prime Rate
shall be adjusted on the next business day on which The Wall Street Journal is
published. In the event The Wall Street Journal ceases to publish the Prime
Rate, Lender may designate the "prime rate", "reference rate", "base rate", or
other similar rate of a commercial banking institution selected by Lender and
reasonably acceptable to Borrower as the "Prime Rate" under this Agreement.
"Public Offering" means a public offering of Common Stock of Borrower
pursuant to a registration statement that has been declared effective by the
U.S. Securities and Exchange Commission pursuant to the Securities Act, other
than an offering utilizing Form S-4 or S-8 or any successor form.
"Securities Act" means the Securities Act of 1933.
"Securities Exchange Act" means the Securities Exchange Act of 1934.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock (or equivalent ownership or controlling interest)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means an amount equal to: (a) Borrower's Net Worth;
plus (b) the amount of any Indebtedness owing to any Person by Borrower which
is subordinated to Lender; less (c) Borrower's Intangible Assets; less (d)
Borrower's prepaid expenses; less (e) all obligations owed to Borrower or any
of its Subsidiaries by any Affiliate of Borrower or any of its Subsidiaries;
and less (f) all loans by Borrower to officers, stockholders or employees of
Borrower.
"Tax Ruling Agreement" means that certain Tax Ruling Agreement, of even
date herewith, by and between Lender and Borrower.
"Term Loan" means the advances previously made by Lender to Borrower in
the aggregate amount of $________________.
"Term Note" means the promissory note of Borrower, in substantially the
form of Exhibit A, issued pursuant to Section 2.1(B).
-6-
<PAGE> 7
"Termination Date" means the date this Agreement is terminated as set
forth in Section 2.4.
1.2 Accounting Terms. For purposes of this Agreement, all accounting terms
not otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP.
1.3 Other Definitional Provisions. References to "Sections", "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the singular
or the plural depending on the reference. In this Agreement, words importing
any gender include the other genders; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to agreements and other contractual instruments shall be deemed to
include subsequent amendments, assignments, and other modifications thereto,
but only to the extent such amendments, assignments and other modifications are
not prohibited by the terms of this Agreement or any other Loan Document;
references to Persons include their respective permitted successors and assigns
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations.
SECTION 2 THE TERM LOAN
2.1 Loan.
(A) Amount; Payment. Subject to the terms and conditions of this
Agreement, Lender has previously advanced to Borrower the Term Loan in the
amount of $__________. Borrower shall make a single payment of the full amount
of the principal balance of the Term Loan, together with accrued interest, on
the Termination Date. Borrower shall make such other principal payments as are
required and may make such other principal payments as are permitted by this
Agreement.
(B) Note. Borrower shall execute and deliver to Lender a Term Note in
the form of Exhibit A to evidence the Term Loan, such Term Note to be in the
principal amount of the Term Loan and with other appropriate insertions.
2.2 Interest.
(A) Amount; Payment. Borrower shall pay interest in respect of all
unpaid principal of the Term Loan from the date hereof to maturity (whether by
acceleration, notice of prepayment or otherwise) at a rate per annum equal to
the LIBOR Rate selected by Borrower plus the Applicable Margin, each as in
effect from time to time. Overdue principal and accrued interest and, to the
extent not prohibited by applicable law, all other
-7-
<PAGE> 8
overdue amounts owing hereunder, shall bear interest from each date that such
amounts are overdue at the rate or rates otherwise applicable for the
then-current Interest Period plus an additional two percent (2.0%) per annum;
thereafter at the Prime Rate plus an additional two percent (2.0%) per annum.
Interest on the Term Loan shall accrue from and including the date hereof to
but excluding the date of any repayment thereof. All accrued interest shall be
payable on the Termination Date, except that interest accrued on any amounts
prepaid under this Agreement shall be payable on the date of prepayment. In
the case of Interest Periods for which the LIBOR Rate applies, interest shall
be added to the principal balance of the Term Loan at the end of each Interest
Period as set forth in Section 2.2(B). For periods during which the Prime Rate
applies, interest shall be compounded quarterly beginning December 31, 1995 and
continuing on each March 31, June 30, September 30 and December 31 thereafter
until paid.
(B) Interest Periods. Borrower shall select the interest periods (each
an "Interest Period") to be applicable to the Term Loan, each of which Interest
Periods shall be either a one month, three month, six month or one year period;
provided that:
(1) The initial Interest Period shall commence on the date hereof
and each Interest Period occurring thereafter shall commence on the day on
which the immediately preceding Interest Period expires;
(2) If any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next succeeding
Business Day, provided that if any Interest Period would otherwise expire on a
day that is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the
next preceding Business Day; and
(3) Any Interest Period which begins on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period shall expire on the last Business Day of such calendar month.
(C) LIBOR Rate Notices. Borrower shall notify Lender of the applicable
LIBOR Rate for each Interest Rate Period by delivering to Lender a notice
thereof (a "LIBOR Rate Notice") not later than 10:00 a.m. Jackson, Mississippi
time, at least one (1) Business Day prior to the effective date of the change
to such rate. In the case of the initial Interest Period, Borrower shall
provide such notice on or prior to the date hereof. Each LIBOR Rate Notice
shall either be oral, with prompt written confirmation, or in writing, shall be
irrevocable, shall be effective upon receipt by Lender, and shall specify the
effective date of the Interest Period with respect to such LIBOR Rate (which
shall be a Business Day).
(D) Expiration of Interest Period. Upon the expiration of each
Interest Period, unless Lender has received from Borrower a new LIBOR Rate
Notice with respect to the following Interest Period, interest on the Term Loan
shall accrue at the Prime Rate.
-8-
<PAGE> 9
(E) Inability to Determine LIBOR Rate. In the event that Lender
reasonably determines (which determination shall be conclusive) that, by reason
of circumstances affecting the London interbank market, quotation of interest
rates for the relevant deposits used to determine LIBOR are not being provided
in the relevant amounts or for the relevant maturities for the purpose of
determining a rate of interest for any LIBOR Rate, then Lender shall promptly
notify Borrower whereupon the right of Borrower to submit a LIBOR Rate Notice
shall thereupon be suspended and interest on the Term Loan shall accrue at the
Prime Rate until such time as Lender again can determine a LIBOR Rate.
(F) Interest Savings Clause. Nothing contained in this Agreement
or in the Note shall be construed to permit Lender to receive at any time
interest, fees or other charges in excess of the amounts which Lender is
legally entitled to charge and receive under any law to which such interest,
fees or charges are subject. In no contingency or event whatsoever shall the
compensation payable to Lender by Borrower, howsoever characterized or
computed, hereunder or under the Note or under any other agreement or
instrument evidencing or relating to the Obligations, exceed the highest rate
permissible under any law to which such compensation is subject. There is no
intention that Lender shall contract for, charge or receive compensation in
excess of the highest lawful rate, and, in the event it should be determined
that any excess has been charged or received, then, ipso facto, such rate shall
be reduced to the highest lawful rate so that no amounts shall be charged which
are in excess thereof; and Lender shall apply such excess against the
Obligations then outstanding.
2.3 Payments and Prepayments.
(A) Manner and Time of Payment. All payments by Borrower of the
Obligations shall be made without deduction, defense, set-off or counterclaim
and in same day funds and delivered to Lender by wire transfer to Lender's
account, ABA No. 065305436, Account No. 500-22-215-80 at Deposit Guaranty
National Bank, Jackson, MS., A/C First Mississippi Corporation or at such other
place as Lender may direct from time to time by notice to Borrower (the "Lender
Account"). Borrower shall receive credit for funds remitted to the Lender
Account directly by Borrower by wire transfer on the date such funds are
received in the Lender Account if Borrower has given Lender telephonic notice
by 10:00 a.m. (central time) of the transfer of such funds and such funds are
received in the Lender Account by 12:00 noon (central time) on such day.
(B) Mandatory Prepayments.
(1) Proceeds of Public Offering. Pursuant to the Tax Ruling
Agreement, Borrower has committed to undertake a Public Offering generating
aggregate proceeds of at least $50,000,000. Borrower shall apply the aggregate
net proceeds to Borrower of any Public Offering effected after the date of this
Agreement, up to a maximum of $15 million in the aggregate, to the prepayment
of the principal amount of the Term Loan together with accrued interest to the
date of such prepayment on the principal amount prepaid, which
-9-
<PAGE> 10
prepayment shall be made within five (5) Business Days after closing of any
such Public Offering.
(2) Change of Control. Upon the consummation of a Change of
Control, Borrower shall prepay in full the principal amount of the Term Loan
together with accrued interest to the date of such prepayment on the principal
amount prepaid.
(C) Optional Prepayments. Borrower may, upon at least five Business
Days' notice to Lender, prepay the principal amount of the Term Loan in whole
or in part, together with accrued interest to the date of such prepayment on
the principal amount prepaid; provided, however, that each partial prepayment
shall be in a aggregate principal amount of $100,000 or an integral multiple of
$100,000 in excess thereof.
(D) Set-Off Under Amended Tax Sharing Agreement. Lender shall reduce
the outstanding balance of the Loan under the circumstances set forth in
Section 2(c)(ii) of the Amended Tax Sharing Agreement.
2.4 Term of this Agreement. Upon acceleration of the Obligations in
accordance with Section 7 or on September 22, 2000 (in either event, the
"Termination Date"), all Obligations shall become immediately due and payable
without notice or demand. Until all Obligations have been fully paid and
satisfied, and even after payment of all Obligations hereunder, Borrower's
obligation to indemnify Lender in accordance with the terms hereof shall
continue.
SECTION 3 BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement, Borrower represents and
warrants to Lender that the following statements are true, correct and
complete:
3.1 Organization, Power. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and qualified to do business in all states where such
qualification is required. Borrower has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted and to enter into each Loan Document.
3.2 Authorization of Borrowing. Borrower has the corporate power and
authority to incur the Obligations. The execution, delivery and performance of
the Loan Documents by each Loan Party and signatory thereto have been duly
authorized by all necessary corporate and shareholder action. The execution,
delivery and performance by each Loan Party of each Loan Document and the
consummation of the transactions contemplated by this Agreement do not and will
not be in contravention of any applicable law, the corporate charter or bylaws
of any Loan Party or any agreement or order by which any Loan Party is bound.
This Agreement is, and the other Loan Documents, including the Note, when
-10-
<PAGE> 11
executed and delivered will be, the legally valid and binding obligations of
the applicable Loan Parties respectively, each enforceable against the Loan
Parties, as applicable, in accordance with their respective terms.
3.3 Financial Condition. All financial statements concerning Borrower and
its Subsidiaries which have been or will hereafter be furnished by Borrower and
its Subsidiaries to Lender pursuant to this Agreement have been or will be
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as disclosed therein) and do or will present fairly the
financial condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended.
3.4 Indebtedness and Liabilities. As of July 30, 1995, neither Borrower nor
any of its Subsidiaries has any Indebtedness or Liabilities other than the
Indebtedness or as disclosed on Schedule 3.4.
3.5 [LEFT BLANK INTENTIONALLY]
3.6 Title to Properties; Liens. Borrower and each of its Subsidiaries has
good, sufficient and legal title, subject to Permitted Encumbrances, to all its
respective material properties and assets. Except for Permitted Encumbrances,
all such properties and assets are free and clear of Liens. To the best
knowledge of Borrower after due inquiry, there are no actual, threatened or
alleged defaults with respect to any leases of real property under which
Borrower or any of its Subsidiaries is lessee or lessor which would have a
Material Adverse Effect.
3.7 Litigation; Adverse Facts. There are no judgments outstanding against
Borrower or any of its Subsidiaries or affecting any property of any of them
nor is there any action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration now pending or, to the best knowledge
of Borrower after due inquiry, threatened against or affecting Borrower or any
of its Subsidiaries or any property of Borrower or any of its Subsidiaries
which could reasonably be expected to result in any Material Adverse Effect.
Neither Borrower nor any of its Subsidiaries has received any opinion or
memorandum or legal advice from legal counsel to the effect that it is exposed
to any liability or disadvantage which could reasonably be expected to result
in any Material Adverse Effect.
3.8 Payment of Taxes. All material tax returns and reports of Borrower and
each of its Subsidiaries required to be filed by any of them have been timely
filed, and all taxes, assessments, fees and other governmental charges upon
such Persons and upon their respective properties, assets, income and
franchises which are shown on such returns as due and payable have been paid
when due and payable. No tax liens have been filed and no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves on
the books of Borrower and each of its Subsidiaries in respect of any taxes or
other governmental charges are in accordance with GAAP.
-11-
<PAGE> 12
3.9 Performance of Agreements. Neither Borrower nor any of its Subsidiaries
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any contractual obligation of
any such Person, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default.
3.10 Employee Benefit Plans. Borrower, each Subsidiary of Borrower and each
ERISA Affiliate is in compliance in all material respects with all applicable
provisions of ERISA, the IRC and all other applicable laws and the regulations
and interpretations thereof with respect to all Employee Benefit Plans. No
material liability has been incurred by Borrower, any Subsidiary of Borrower or
any ERISA Affiliate which remains unsatisfied for any taxes or penalties with
respect to any Employee Benefit Plan.
3.11 Intellectual Property. Borrower and each of its Subsidiaries owns, is
licensed to use or otherwise has the right to use, all patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or
necessary for the conduct of its business as currently conducted that are
material to the financial condition, business or operations of Borrower or its
Subsidiaries.
3.12 Broker's Fees. No broker's or finder's fee or commission will be payable
with respect to the issuance of the Note or any of the other transactions
contemplated hereby.
3.13 Environmental Compliance. Each of Borrower and its Subsidiaries has been
and is currently in material compliance with all applicable Environmental Laws,
including obtaining and maintaining in effect all permits, licenses or other
authorizations required by applicable Environmental Laws. There are no claims,
liabilities, investigations, litigation, administrative proceedings, whether
pending or, to the best knowledge of Borrower, after due inquiry, threatened,
or judgments or orders relating to any Hazardous Materials asserted or
threatened against any of Borrower and its Subsidiaries or relating to any real
property currently or formerly owned, leased or operated by any of Borrower and
its Subsidiaries.
3.14 Solvency. As of and from and after the date of this Agreement, Borrower:
(a) owns and will own assets the fair saleable value of which are (i) greater
than the total amount of liabilities (including contingent liabilities) of
Borrower and (ii) greater than the amount that will be required to pay the
liabilities of Borrower as they mature; (b) has capital that is not
unreasonably small in relation to its business as presently conducted or as
contemplated; and (c) does not intend to incur and does not believe that it
will incur debts beyond its ability to pay such debts as they become due.
3.15 Disclosure. No representation or warranty of Borrower or any of its
Subsidiaries contained in this Agreement, the financial statements, the other
Loan Documents, or any other document, certificate or written statement
furnished to Lender by or on behalf of any such Person for use in connection
with the Loan Documents contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading in light of
the
-12-
<PAGE> 13
circumstances in which the same were made. There is no fact known to Borrower
that has had or will have a Material Adverse Effect and that has not been
disclosed herein or in such other documents, certificates and statements
furnished to Lender for use in connection with the transactions contemplated
hereby.
3.16 Insurance. Borrower and its Subsidiaries maintain adequate insurance
policies for public liability and property damage for their business and
properties, no notice of cancellation has been received with respect to such
policies and Borrower and its Subsidiaries are in compliance with all
conditions contained in such policies.
3.17 Compliance with Laws. Borrower and each of its Subsidiaries are not in
violation of any law, ordinance, rule, regulation, order, policy, guideline or
other requirement of any domestic or foreign government or any instrumentality
or agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties, including, without
limitation, any violation relating to any use, release, storage, transport or
disposal of any Hazardous Material, which violation would subject Borrower or
any such Subsidiary, or any of their respective officers to criminal liability
or have a Material Adverse Effect and no such violation has been alleged.
SECTION 4 AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of all
Obligations, unless Lender shall otherwise give its prior written consent,
Borrower shall perform, and shall cause each of its Subsidiaries to perform,
all covenants in this Section 4 applicable to such Person.
4.1 Financial Statements and Other Reports. Borrower will maintain, and
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to permit
preparation of financial statements in conformity with GAAP. Borrower will
deliver to Lender the financial statements and other reports described below.
Borrower will deliver with each of the financials set forth in Sections 4.1(A),
(B) and (C) a computation reflecting its compliance or non-compliance with
Sections 5.1 and 5.2, and with each delivery of the financials set forth in
Section 4.1(C) and upon the reasonable request of Lender, a confirmation of
such computation by Borrower's independent certified public accountants.
(A) Monthly Financials. As soon as available and in any event within
thirty-five (35) days after the end of each month, Borrower will deliver the
consolidated balance sheet of Borrower as at the end of such month and the
related consolidated statements of income, stockholders' equity and cash flow
for such month and for the period from the beginning of the then current Fiscal
Year to the end of such month.
(B) Quarterly Financials. As soon as available and in any event within
forty-five (45) days after the end of each quarter of a Fiscal Year, Borrower
will deliver the consolidated balance sheet of Borrower as at the end of such
period and the related
-13-
<PAGE> 14
consolidated statements of income, stockholders' equity and cash flow for such
quarter of a Fiscal Year and for the period from the beginning of the then
current Fiscal Year to the end of such quarter of a Fiscal Year.
(C) Year-End Financials. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year, Borrower will deliver the
consolidated balance sheet of Borrower as at the end of such Fiscal Year and
the related consolidated statements of income, stockholders' equity and cash
flow for such Fiscal Year, together with a report with respect to such
financial statements from a firm of independent certified public accountants
selected by Borrower, which report shall be unqualified as to going concern and
scope of audit of Borrower and its Subsidiaries and shall state that (1) such
consolidated financial statements present fairly the consolidated financial
position of Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years and (2)
that the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards.
(D) Securities Reports. Promptly upon their becoming available, copies
of all registration statements (in the form in which declared effective) and
reports and other documents which Borrower shall have filed pursuant to the
Securities Act or the Securities Exchange Act.
(E) Company Information. Promptly upon the mailing thereof to the
shareholders of Borrower, copies of all financial statements, reports, proxy
statements and other documents which Borrower shall have mailed to
shareholders, and promptly upon the issuance thereof by Borrower, copies of all
press releases which Borrower shall have issued.
(F) Accountants' Reports. Promptly upon receipt thereof, Borrower will
deliver copies of all significant reports submitted to Borrower by independent
public accountants in connection with each annual, interim or special audit of
the financial statements of Borrower made by such accountants, including the
comment letter submitted by such accountants to management in connection with
their annual audit.
(G) Lawsuits and Government Notices. Borrower will deliver to Lender
promptly after receipt copies of all lawsuits filed by or against Borrower or
any of its Subsidiaries and all notices, requests, subpoenas, inquiries or
other writings received from any governmental agency concerning any Employee
Benefit Plan, the violation or alleged violation of any Environmental Laws, the
storage, use or disposal of any Hazardous Material or Borrower's payment or
non-payment of any taxes including any tax audit.
(H) Events of Default, etc. Promptly upon any officer of Borrower
obtaining knowledge of any of the following events or conditions, Borrower
shall deliver a certificate of Borrower's chief executive officer specifying
the nature and period of existence of such condition or event and what action
Borrower has taken, is taking and proposes to take with respect thereto: (1)
any condition or event that constitutes an Event of Default or Default;
-14-
<PAGE> 15
(2) any notice of default that any Person has given to Borrower or any of its
Subsidiaries or any other action taken with respect to a claimed default; or
(3) any Material Adverse Effect.
(I) [LEFT BLANK INTENTIONALLY]
(J) Locations. Borrower will give Lender at least thirty (30) days'
advance written notice of any change in Borrower's or any of its Subsidiaries'
principal place of business or any change in the location of its books and
records or of any new location for its books and records.
(K) Other Information. With reasonable promptness, Borrower will
deliver such other information and data with respect to any Loan Party as
Lender may reasonably request from time to time.
4.2 Access to Accountants. Borrower authorizes Lender to discuss the
financial condition and financial statements of Borrower and its Subsidiaries
with Borrower's independent public accountants upon reasonable notice to
Borrower of its intention to do so.
4.3 Inspection. Borrower shall permit Lender and any authorized
representatives designated by Lender to visit and inspect any of the properties
of Borrower or any of its Subsidiaries, including its and their financial and
accounting records, and to make copies and take extracts therefrom, and to
discuss its and their affairs, finances and business with its and their
officers and independent public accountants, at such reasonable times during
normal business hours and as often as may be reasonably requested.
4.4 Corporate Existence. Borrower will, and will cause each of its
Subsidiaries to, at all times preserve and keep in full force and effect its
corporate existence and all rights and franchises material to its business.
Borrower will promptly notify Lender of any change in its corporate structure.
4.5 Payment of Taxes. Borrower will, and will cause each of its Subsidiaries
to, pay all taxes, assessments and other governmental charges imposed upon it
or any of its properties or assets or with respect to any of its franchises,
business, income or property before any penalty accrues thereon; provided that
no such tax need be paid if Borrower or one of its Subsidiaries is contesting
same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if Borrower or such Subsidiary has established
appropriate reserves as shall be required in conformity with GAAP.
4.6 Maintenance of Properties; Insurance. Borrower will maintain or cause to
be maintained in good repair, working order and condition all material
properties used in the business of Borrower and its Subsidiaries and will make
or cause to be made all appropriate repairs, renewals and replacements thereof.
Borrower will maintain or cause to be maintained, with financially sound and
reputable insurers, public liability and property damage insurance with respect
to its business and properties and the business and properties of its
Subsidiaries against loss or damage of the kinds customarily carried or
maintained by
-15-
<PAGE> 16
corporations of established reputation engaged in similar businesses and in
amounts acceptable to Lender.
4.7 Compliance with Laws. Borrower will comply with and will cause each of
its Subsidiaries to comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority as now in effect and which
may be imposed in the future in all jurisdictions in which Borrower or its
Subsidiaries are now doing business or may hereafter be doing business, other
than those laws the noncompliance with which would not have a Material Adverse
Effect.
4.8 Further Assurances. Borrower shall and shall cause each of its
Subsidiaries to, from time to time, execute such reports and other documents or
deliver to Lender such instruments, certificates of title or other documents as
Lender at any time may reasonably request to evidence, perfect or otherwise
implement the Obligations provided for in the Loan Documents.
SECTION 5 FINANCIAL COVENANTS
Borrower covenants and agrees that, until payment in full of all
Obligations, Borrower shall comply with, and shall cause each of its
Subsidiaries to comply with, all covenants in this Section 5 applicable to such
Person.
5.1 Tangible Net Worth. Borrower shall at all times maintain Tangible Net
Worth of at least $27,000,000.00.
5.2 Ratio of Indebtedness to Tangible Net Worth. The ratio of (a) Borrower's
Indebtedness, on a consolidated basis, to (b) Borrower's Tangible Net Worth,
shall at no time be greater than 2.0:1.0.
SECTION 6 NEGATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of all
Obligations, Borrower shall comply with, and shall cause each of its
Subsidiaries to comply with, all covenants in this Section 6 applicable to such
Person.
6.1 Indebtedness and Liabilities. Borrower will not and will not permit any
of its Subsidiaries directly or indirectly to create, incur, assume, guaranty,
or otherwise become or remain directly or indirectly liable with respect to any
Indebtedness except: (a) the Obligations; (b) intercompany Indebtedness among
Borrower and its Subsidiaries; provided that such Indebtedness is subordinated
in right of payment to the Obligations; (c) Indebtedness incurred to finance
the cost of acquisition, construction or improvement of property owned or
acquired by, or working capital for, Borrower or its Subsidiaries; (d)
Indebtedness secured by Liens identified on Schedule 1.1(B) or replacement
indebtedness
-16-
<PAGE> 17
in like amount and (e) other Indebtedness in an aggregate amount not in excess
of $5,000,000. Except for Indebtedness described in the preceding sentence,
Borrower will not incur and will not permit any of its Subsidiaries to incur
any Liabilities except for trade payables and normal accruals in the ordinary
course of business not yet due and payable or with respect to which Borrower or
any of its Subsidiaries is contesting in good faith the amount or validity
thereof by appropriate proceedings and then only to the extent that Borrower or
any of its Subsidiaries has established adequate reserves therefor, if
appropriate under GAAP.
6.2 Guaranties. Except for guaranties of Indebtedness secured by Permitted
Encumbrances, guaranties by Borrower and its Subsidiaries of indebtedness of
each other permitted by this Agreement, endorsements of instruments or items of
payment for collection in the ordinary course of business, Borrower shall not
and shall not permit any of its Subsidiaries to guaranty, endorse, or otherwise
in any way become or be responsible for any obligations of any other Person,
whether directly or indirectly by agreement to purchase the indebtedness of any
other Person or through the purchase of goods, supplies or services, or
maintenance of working capital or other balance sheet covenants or conditions,
or by way of stock purchase, capital contribution, advance or loan for the
purpose of paying or discharging any indebtedness or obligation of such other
Person or otherwise.
6.3 Liens. Except for Permitted Encumbrances, Borrower will not, and will
not permit any of its Subsidiaries directly or indirectly, to create, incur,
assume or permit to exist any Lien on or with respect to any of its assets or
properties or any income or profits therefrom.
6.4 Investments and Loans. Borrower shall not and shall not permit any of
its Subsidiaries to make or permit to exist investments in or loans to any
other Person, except: (a) investments in short-term direct obligations of the
United States or Canadian governments; (b) time deposits maturing within one
year from the date of creation thereof with, including certificates of deposit
issued by, any bank or trust company which is organized under the laws of the
United States or any state thereof or Canada and has capital, surplus and
undivided profits aggregating at least $250,000,000; (c) investments in
commercial paper rated at least A-2 by Standard & Poor's Corporation or at
least P-2 by Moody's Investors Service, Inc.; and (d) loans and advances to
employees for moving, entertainment, travel, purchases of stock in Borrower and
other similar expenses in the ordinary course of business.
6.5 Restricted Junior Payments. Except for repayments of Indebtedness
permitted under Section 6.1, Borrower will not and will not permit any of its
Subsidiaries to directly or indirectly declare, order, pay, make or set apart
any sum for (a) any dividend or other distribution on account of any capital
stock of Borrower or any of its Subsidiaries now or hereafter outstanding,
except stock dividends; (b) any redemption, conversion, exchange, retirement,
sinking fund or other purchase of any capital stock of Borrower or any of its
Subsidiaries now or hereafter outstanding (other than repurchases of capital
stock owned by employees following termination of employment); and (c) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire
-17-
<PAGE> 18
capital stock of Borrower or any of its Subsidiaries now or hereafter
outstanding (other than repurchases of outstanding warrants, options or other
rights to acquire capital stock of Borrower.
6.6 Restriction on Fundamental Changes. Neither Borrower nor any of its
Subsidiaries will: (a) enter into any transaction of merger, consolidation or
other reorganization having a similar result or effect; (b) liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution); (c) convey,
sell, lease, sublease, transfer or otherwise dispose of, in one transaction or
a series of transactions, all or any substantial part of its business or
assets, or the capital stock of any of its Subsidiaries, whether now owned or
hereafter acquired; or (d) acquire by purchase or otherwise all or any
substantial part of the business or assets of, or stock or other evidence of
beneficial ownership of, any Person; provided that the foregoing restrictions
shall not apply to any merger of a Subsidiary with and into Borrower or to a
merger in which Borrower is the surviving corporation or the purchase of all or
any substantial part of the business or assets of, or stock or other evidence
of beneficial ownership of any Person, provided that upon consummation of such
merger or purchase no Default or Event of Default shall have occurred and be
continuing or would occur after giving effect to such merger or purchase.
6.7 Transactions with Affiliates. Borrower will not, and will not permit any
Loan Party to, enter into any transaction with an Affiliate including the
purchase, sale or exchange of property or the rendering of any service to any
Affiliate except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms no less
favorable to Borrower than it would obtain in a comparable arm's length
transaction with an unaffiliated Person.
6.8 Environmental Liabilities. Borrower will not and will not permit any
Loan Party to: (a) violate any applicable Environmental Law; (b) dispose of
any Hazardous Materials (except in accordance with applicable law) into or onto
or from, any real property owned, leased or operated by any Loan Party; or (c)
permit any Lien imposed pursuant to any Environmental Law to be imposed or to
remain on any real property owned, leased or operated by any Loan Party.
6.9 Compliance with ERISA. Borrower will not and will not permit any of its
Subsidiaries to establish any new Employee Benefit Plan or amend any existing
Employee Benefit Plan if the liability or increased liability resulting from
such establishment or amendment would have a Material Adverse Effect. Neither
Borrower nor any Subsidiary shall fail to establish, maintain and operate each
Employee Benefit Plan in compliance in all material respects with the
provisions of ERISA, the IRC and all other applicable laws and the regulations
and interpretations thereof.
-18-
<PAGE> 19
SECTION 7 DEFAULT, RIGHTS AND REMEDIES
7.1 Event of Default. "Event of Default" shall mean the occurrence or
existence of any one or more of the following:
(A) Payment. (1) Failure of Borrower to make payment of any of the
Obligations when due, or (2) failure of Borrower or any of its Subsidiaries to
pay when due any principal or interest on any Indebtedness other than the
Obligations, or (3) any other breach or default of Borrower or any of its
Subsidiaries with respect to any Indebtedness if in the case of (2) or (3) such
failure to pay, breach or default has resulted in the holder causing such
Indebtedness having an individual principal amount in excess of $200,000 or
having an aggregate principal amount in excess of $700,000 to become or be
declared due prior to its stated maturity; or
(B) Breach of Warranty. Any material representation, warranty,
certification or other statement made by Borrower or any other Loan Party in
any Loan Document or in any statement or certificate at any time given by such
Person in writing pursuant or in connection with any Loan Document is false in
any material respect on the date made; or
(C) Breach of Certain Provisions. Failure of Borrower to perform or
comply with any term or condition contained in Section 5 or Section 6 other
than Sections 6.3, 6.8 or 6.9; or
(D) Other Defaults Under Loan Documents. Borrower or any other Loan
Party defaults in the performance of or compliance with any term contained in
this Agreement or the other Loan Documents and such default is not remedied or
waived within ten (10) days after receipt by Borrower of notice from Lender of
such default (other than occurrences described in other provisions of this
Section 7.1 for which a different grace or cure period is specified or which
constitute immediate Events of Default); or
(E) Default in Other Agreements. Breach of Borrower or any Subsidiary
of any of the representations, warranties, covenants or agreements contained in
any other agreement or instrument between Borrower or any Subsidiary on the one
hand and Lender on the other hand, including without limitation the Tax Ruling
Agreement.
(F) Bankruptcy, etc. (1) Commencement by or against Borrower or any of
its Subsidiaries of any bankruptcy proceeding, insolvency arrangement, or
similar proceeding and in the case of any such proceeding instituted against
Borrower or any of its Subsidiaries (but not instituted by it) such proceeding
shall remain undismissed or unstayed for a period of thirty (30) days, or (2)
Borrower or any of its Subsidiaries suspends or discontinues its business, or
(3) the appointment of a receiver or trustee of any kind for Borrower or any of
its Subsidiaries or for any property of Borrower or any of its Subsidiaries, or
(4) if Borrower or any of its Subsidiaries calls, or has called by a third
party, a general meeting of creditors; or
-19-
<PAGE> 20
(G) [LEFT BLANK INTENTIONALLY]
(H) Judgment and Attachments. Any money judgment, writ or warrant of
attachment, or similar process involving (1) an amount in any individual case
in excess of $200,000 or (2) an amount in the aggregate at any time in excess
of $700,000 (in either case not adequately covered by insurance as to which the
insurance company has acknowledged coverage) is entered or filed against
Borrower or any of its Subsidiaries or any of their respective assets and
remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
(I) Dissolution. Any order, judgment or decree is entered against
Borrower or any of its Subsidiaries decreeing the dissolution or split up of
Borrower or such Subsidiary and such order remains undischarged or unstayed for
a period in excess of twenty (20) days; or
(J) Solvency. Borrower or any of its Subsidiaries ceases to be solvent
or admits in writing its present or prospective inability to pay its debts as
they become due; or
(K) Injunction. Borrower or any of its Subsidiaries is enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues for more than thirty (30) days; or
(L) Invalidity of Loan Documents. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to such effect.
7.2 Acceleration. Upon the occurrence of any Event of Default described in
the foregoing Section 7.1(F)(1), all Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by Borrower.
Upon the occurrence and during the continuance of any other Event of Default,
Lender may, by written notice to Borrower, declare all or any portion of the
Obligations to be, and the same shall forthwith become, immediately due and
payable.
7.3 Remedies. All rights and remedies under the Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 8 MISCELLANEOUS
8.1 Assignments. Lender may assign its rights and delegate its obligations
under this Agreement and may assign all or any part of the Loan, the Note and
this Agreement (a) to an Affiliate, (b) to a purchaser of all or substantially
all of the business of Lender, regardless
-20-
<PAGE> 21
of the form of the transaction, (c) to a commercial bank or other financial
institution, or (d) to any other Person with the consent of Borrower (such
consent not to be unreasonably withheld). In the case of an assignment
authorized under this Section 8.1, the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as it would if it
were a Lender hereunder. Borrower hereby acknowledges and agrees that any
assignment will give rise to a direct obligation of Borrower to the assignee
and that the assignee shall be considered to be a "Lender". Lender may furnish
any information concerning Borrower and its Subsidiaries in its possession from
time to time to assignees and participants (including prospective assignees and
participants) meeting the criteria specified in (a) through (d); provided that
each recipient of such information agrees prior to receipt of such information,
in a writing addressed to Borrower and Lender, not to disclose such information
to any other Person.
8.2 Set Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, Lender and each holder of the Note is
hereby authorized by Borrower at any time or from time to time, without notice
to Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all balances held by
it at any of its offices for the account of Borrower or any of its Subsidiaries
(regardless of whether such balances are then due to Borrower or its
Subsidiaries) and any other property at any time held or owing by Lender or
that holder to or for the credit or for the account of Borrower against and on
account of any of the Obligations which are not paid when due.
8.3 Expenses and Attorneys' Fees. Borrower agrees to promptly pay all fees,
costs and expenses incurred by Lender in connection with any matters
contemplated by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall be part of
the Obligations, payable on demand: (a) fees, costs and expenses (including
attorneys' fees, allocated costs of internal counsel and fees of environmental
consultants, accountants and other professionals retained by Lender) incurred
in connection with the review, negotiation, preparation, documentation,
execution and administration of any amendments, waivers, consents, forbearances
and other modifications relating to the Loan Documents and the Loan or any
subordination or intercreditor agreements; and (b) fees, costs, expenses
(including attorneys' fees and allocated costs of internal counsel) and costs
of settlement incurred in any action to enforce this Agreement or the other
Loan Documents or to collect any payments due from Borrower or any other Loan
Party under this Agreement or any other Loan Document or incurred in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise.
8.4 Indemnity. In addition to the payment of expenses pursuant to Section
8.3, whether or not the transactions contemplated hereby shall be consummated,
Borrower agrees to indemnify, pay and hold Lender and any holder of the Note,
and the officers, directors, employees, agents, affiliates and attorneys of
Lender and such holders (collectively called the
-21-
<PAGE> 22
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnities in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee by any person not
a party to this Agreement, in any manner relating to or arising out of this
Agreement or the other Loan Documents, the consummation of the transactions
contemplated by this Agreement, the exercise of any right or remedy hereunder
or under the other Loan Documents (the "Indemnified Liabilities"); provided
that Borrower shall have no obligation to an Indemnitee hereunder with respect
to Indemnified Liabilities resulting from the gross negligence or willful
misconduct of or material breach of this Agreement by that Indemnitee as
determined by a court of competent jurisdiction.
8.5 Amendments and Waivers. This Agreement together with the other Loan
Documents constitutes the entire agreement between Lender and Borrower with
respect to the subject matter thereof, and no amendment, modification,
termination or waiver of any provision of this Agreement or of the other Loan
Documents, or consent to any departure by Borrower therefrom, shall be
effective unless the same shall be in writing and signed by Lender and
Borrower. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given.
8.6 Notices. Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and
may be personally served, telecopied or sent by overnight courier service or
United States mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. (central time)
or, if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two days after delivery to such courier properly addressed; or (d) if
by U.S. Mail, four Business Days after depositing in the United States mail,
with postage prepaid and properly addressed.
If to Borrower: FirstMiss Gold Inc.
5460 S. Quebec Street
Suite 240
Englewood, Colorado 80111
Attn: President
Telephone No.: (303) 771-9000
Telecopy No.: (303) 771-1075
With a copy to: Latham & Watkins
505 Montgomery Street, 19th Floor
San Francisco, California 94111-2586
Attn: Christopher L. Kaufman
-22-
<PAGE> 23
Telephone No.: (415) 395-8030
Telecopy No.: (415) 395-8095
If to Lender: First Mississippi Corporation
700 North Street
Jackson, Mississippi 39202-3095
Attn: President
Telephone No.: (601) 948-7550
Telecopy No.: (601) 949-0292
With a copy to: First Mississippi Corporation
700 North Street
Jackson, Mississippi 39202-3095
Attn: General Counsel
Telephone No.: (601) 948-7550
Telecopy No.: (601) 949-0292
or to such other address as the party addressed shall have previously
designated by written notice to the serving party, given in accordance with
this Section 8.6.
8.7 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of Borrower set forth in
Sections 8.3 and 8.4 shall survive the payment of the Loan and the termination
of this Agreement.
8.8 Indulgence Not Waiver. No failure or delay on the part of Lender or any
holder of the Note in the exercise of any power, right or privilege hereunder
or under the Note shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege.
8.9 Marshaling; Payments Set Aside. Lender shall not be under any obligation
to marshal any assets in favor of any Loan Party or any other party or against
or in payment of any or all of the Obligations. To the extent that any Loan
Party makes a payment or payments to Lender or Lender exercises its rights of
set-off, and such payment or payments or the proceeds of such enforcement or
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or set-off had
not occurred.
-23-
<PAGE> 24
8.10 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
8.11 Severability. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement or the
other Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents or of such provision or obligation in any other
jurisdiction.
8.12 Headings. Headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose or be given any substantive effect.
8.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
8.14 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns except that Borrower may not assign its rights or obligations hereunder
without the written consent of Lender.
8.15 No Fiduciary Relationship. No provision in this Agreement or in any of
the other Loan Documents and no course of dealing between the parties shall be
deemed to create any fiduciary duty by Lender to Borrower.
8.16 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW CASTLE, DELAWARE
AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER
LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTE, THE OTHER LOAN
DOCUMENTS OR THE OBLIGATIONS.
8.17 WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT, THE NOTE OR THE OTHER
-24-
<PAGE> 25
LOAN DOCUMENTS. BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. BORROWER AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
FIRST MISSISSIPPI CORPORATION FIRSTMISS GOLD INC.
By: By:
------------------------------- ----------------------------------
Title: Title:
---------------------------- -------------------------------
-25-
<PAGE> 26
SCHEDULES
1.1(B) Permitted Encumbrances
3.4 Indebtedness and Liabilities
EXHIBIT
Exhibit A Form of Term Note
-26-
<PAGE> 27
EXHIBIT A
TERM NOTE
$__________________ ________________, 1995
FOR VALUE RECEIVED, the undersigned, FIRSTMISS GOLD, INC., a Nevada
corporation (the "Borrower"), hereby promises to pay to the order of FIRST
MISSISSIPPI CORPORATION, a Mississippi corporation (the "Lender"), at the
Lender's office located at 700 North Street, Jackson, Mississippi 39202-3095,
or at such other place as the holder of this Note may from time to time
designate in writing, in lawful money of the United States of America and in
immediately available funds, the principal sum of _______________ DOLLARS
($______________), payable as set forth in that certain Loan Agreement of even
date herewith, between the Borrower and the Lender (the "Loan Agreement";
capitalized terms used herein and not otherwise specifically defined herein
shall have the meanings assigned to them in the Loan Agreement).
This Note is the Term Note referred to in Section 2.1(B) of the Loan
Agreement and is issued to evidence a term loan made to the Borrower by the
Lender pursuant to the Loan Agreement, to which reference is hereby made for a
statement of the terms, conditions and covenants under which the loan evidenced
hereby was made and is to be repaid, including, but not limited to, those
related to acceleration of the indebtedness represented hereby upon the
occurrence of an Event of Default pursuant to the Loan Agreement.
The Borrower promises to pay interest on the outstanding unpaid principal
amount hereof at the rates and on the dates set forth in the Loan Agreement.
Interest shall be computed on the daily principal balance on the basis of a
360- day year for the actual number of days elapsed in the period during which
it accrues, or if interest hereunder is accruing at the Prime Rate, a 365-day
year for the actual number of days elapsed in the period during which it
accrues.
In no contingency or event whatsoever shall the compensation payable to
the Lender by the Borrower hereunder or under the Loan Agreement, however
characterized or computed, exceed the highest rate permissible under any law to
which such compensation is subject. In the event that a court of competent
jurisdiction shall in a final judgment determine that the Lender has received
compensation hereunder or thereunder in excess of the highest rate applicable
hereto or thereto, the provisions of the Loan Agreement relating thereto shall
control.
A-1
<PAGE> 28
The Borrower hereby waives demand, presentment, protest, notice of
demand, dishonor, presentment, protest, nonpayment and all other notices in
connection with this Note.
If this Note is collected by or through an attorney-at-law, all costs of
collection, including attorneys' fees, shall be payable by the undersigned, as
more particularly described in the Loan Agreement.
Whenever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note. Whenever in this Note reference is made to
the Lender or the Borrower, such reference shall be deemed to include, as
applicable, a reference to their respective successors and assigns. The
provisions of this Note shall be binding upon and shall inure to the benefit of
such successors and assigns. The Borrower's successors and assigns shall
include, without limitation, a receiver, trustee or debtor in possession of or
for the Borrower.
WITNESS the hand and seal of the undersigned, as of the date first above
written.
FIRSTMISS GOLD INC.
By:
----------------------------------
Title:
-------------------------------
Attest:
------------------------------
Title:
-------------------------------
[CORPORATE SEAL]
A-2
<PAGE> 1
AMENDED TAX SHARING AGREEMENT
THIS AMENDED TAX SHARING AGREEMENT (the "Amended Agreement") is made this
24th day of September, 1995 between First Mississippi Corporation, a
Mississippi corporation ("FMC"), FirstMiss Gold Inc., a Nevada corporation
("FirstMiss Gold"), and FMG Inc., a Nevada corporation ("FMG");
WHEREAS, FirstMiss Gold is a subsidiary of FMC and FMG is a subsidiary of
Gold (FirstMiss Gold and FMG are hereinafter referred to collectively as
"Gold");
WHEREAS, FMC is the common parent of an affiliated group of corporations
(the "Affiliated Group") which files consolidated tax returns;
WHEREAS, FMC and Gold are parties to a Tax Sharing Agreement (the "Tax
Sharing Agreement") dated as of October 1, 1987;
WHEREAS, FMC wishes to spin off to the shareholders of FMC the stock of
Gold owned by FMC (the "Spin-Off); and
WHEREAS, in connection with the Spin-Off, FMC and Gold wish to amend the
Tax Sharing Agreement so as fix the respective rights and obligations of the
parties under said agreement following the Spin-Off;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. TERMINATION OF TAX SHARING AGREEMENT. The Tax Sharing Agreement
shall terminate on the date of the Spin-Off and the parties shall thereafter
have no
<PAGE> 2
obligations to each other thereunder, except as specifically provided in this
Amended Agreement.
2. SETTLEMENT OF OBLIGATIONS.
(a) In complete satisfaction of any existing obligation of FMC
under the Tax Sharing Agreement to make payment to Gold for the use of any
deduction, credit or allowance of Gold by the Affiliated Group, FMC shall pay
Gold the Settlement Amount, as hereinafter defined, pursuant to the provisions
of subsection 2(c) below.
(b) For purposes of this Amended Agreement, the "Settlement
Amount" shall mean that amount which is equal to (i) the present value, as of
the date of the Spin-Off, of the right to receive payment of the amount of
"Gold Tax Benefits," as hereinafter defined, in twenty (20) equal quarterly
installments beginning on September 30, 1998, computed using a discount rate of
6.5 percent, less (ii) the aggregate amount of any advances in excess of
$5,000,000 made by FMC to Gold between August 22, 1995 and the date of the
Spin-Off. The amount of "Gold Tax Benefits" shall be that amount which is
equal to the difference between (x) the sum of the alternative minimum tax
credit carryovers and the tax benefit of the net operating loss carryovers
which Gold would have been entitled to as of the date of the Spin-Off if Gold
had filed a separate consolidated return during the entire time that Gold was a
member of the Affiliated Group and (y) the amount of the alternative minimum
tax credit carryovers which will be allocated to Gold as of the date of the
Spin-Off pursuant to the consolidated return regulations. The tax benefit of
the net operating loss carryovers, referred to in Section 2(b)(x) above, shall
be computed using a 34% tax rate for periods ending before July 1, 1993, and a
35% tax rate for periods ending after June 30, 1993, based on the taxable year
in which Gold would have incurred the loss.
-2-
<PAGE> 3
(c) The Settlement Amount shall be paid by FMC to Gold as
follows: (i) if between the date of the Spin- Off and the earlier of the date
of the public equity offering of common stock (the "Offering") Gold plans to
effect, or April 28, 1997, Gold requires funds, in addition to those available
to it under its credit facility with Toronto Dominion Bank, Gold may request,
as funds are necessary for mine development, operations and working capital,
payment from FMC of amounts which do not exceed, in the aggregate, the
Settlement Amount, and FMC shall pay Gold such amounts; and (ii) if on the
earlier of the date of the Offering or April 28, 1997, FMC has paid Gold,
pursuant to section (2)(c)(i) above, an aggregate amount of less than the
Settlement Amount, the excess of the Settlement Amount over the amounts
previously paid by FMC pursuant to section 2(c)(i) above shall be paid by FMC
on such date in the form of a reduction in the balance of the loan from FMC to
Gold outstanding on such date.
(d) Any reduction in the balance of the loan from FMC to Gold
which is made pursuant to section 2(c)(ii) above shall not satisfy or otherwise
affect the obligation of Gold, set forth in Section 2.3(B)(1) of the Loan
Agreement between FMC and Gold of even date herewith, to make a mandatory
$15,000,000 prepayment of said loan out of the net proceeds of the Offering.
3. CONTROL OF AUDITS, ETC.
(a) In the event that any audit or administrative or judicial
proceeding relating to taxes involves an asserted claim which relates solely to
Gold (a "Claim"), FMC shall, at Gold's request, attempt to have such Claim
severed and considered separately from any other issues involved in such audit
or proceeding. If severance of the Claim is accomplished, Gold shall have the
right to control the contest of such Claim with its own
-3-
<PAGE> 4
counsel and at Gold's own expense. FMC shall have the right to participate, at
its own expense, in proceedings relating to such Claim, provided that the
conduct of such proceedings shall remain within the sole control of Gold. In
the event of such severance, Gold shall not settle any Claim in a manner which
would have an adverse impact on FMC unless Gold has indemnified FMC against
such adverse impact and shall also not settle any Claim without the written
consent of FMC, which consent shall not be unreasonably withheld; provided,
however, that the consent of FMC to such settlement shall not be required if
FMC has failed to provide Gold with information which has been reasonably
requested by Gold in connection with the contest of such Claim.
(b) In the event that severance of a Claim is not accomplished,
then FMC shall permit Gold to attend any proceedings relating to such Claim,
and FMC shall take such actions in connection with contesting such Claim as
Gold shall reasonably request; provided, however, that the conduct of all such
proceedings shall remain within the sole control of FMC and FMC shall have no
obligation to take any action in contesting such Claim if such action is
inconsistent with some position being taken by FMC or would have a detrimental
effect on FMC. Notwithstanding the foregoing, FMC shall not settle any Claim
without the written consent of Gold, which consent shall not be unreasonably
withheld; provided, however, that the consent of Gold to such settlement shall
not be required if Gold has failed to provide FMC with information which has
been reasonably requested by FMC in connection with the contest of such Claim.
Gold shall execute any power of attorney or other document requested by FMC to
enable FMC to exercise control over any such proceedings.
-4-
<PAGE> 5
(c) FMC and Gold shall promptly notify the other in writing of
any issue raised by a taxing authority following the Spin-Off which can
reasonably be expected to affect the tax returns of the other party, or which
could give rise to an obligation to make a payment to the other party under the
terms of section 4(a) or 4(b) of this Amended Tax Sharing Agreement.
4. AUDIT ADJUSTMENTS.
(a) If following the Spin-Off any audit adjustment or
redetermination attributable to Gold is made with respect to any consolidated
or combined tax return which includes Gold and relates to a taxable period
prior to the Spin-Off, Gold shall reimburse FMC for any resulting assessments
of tax (including interest, penalties and additions to tax) when, and to the
extent that, the cumulative amount of such assessments, determined on a
consolidated or combined return basis, exceeds $250,000. In the event that any
such audit adjustment or redetermination results in a refund or credit which is
attributable to Gold, FMC shall pay Gold when, and to the extent that, the
cumulative amount of such refunds or credits, determined on a consolidated or
combined return basis, received by FMC exceeds $250,000.
(b) FMC and Gold shall notify the other party of any audit
adjustments which affect the allocation of alternative minimum tax credit
carryovers between the parties as of the date of the Spin-Off. In the event
the cumulative amount of any such reallocated alternative minimum tax credit
carryovers, determined on a consolidated return basis, exceeds $250,000, FMC or
Gold shall make payment to the other party to the extent of such excess.
-5-
<PAGE> 6
(c) FMC shall indemnify Gold against any joint and several
liability for taxes (including interest, penalties and additions to tax) which
are attributable solely to corporations other than Gold, but are imposed on
Gold solely as the result of its inclusion in a consolidated or combined tax
return filed by FMC.
5. CARRYBACKS.
(a) In the event that Gold incurs a regular or alternative minimum
tax net operating loss in a taxable period following the Spin-Off which may be
carried back to a taxable year in which Gold was included in the Affiliated
Group, then Gold shall make an election under section 172(b)(3) of the Internal
Revenue Code of 1986, as amended, (or comparable state law provision) to forego
the carryback period for such loss. If Gold shall fail to make such an
election, FMC shall have no liability to Gold for any refund received by FMC as
a result of the carryback of such loss.
(b) In the event that Gold incurs a capital loss or is entitled to
a credit in a taxable period following the Spin-Off which may be carried back
to a taxable year in which Gold was included in the Affiliated Group, FMC will
pay Gold the lesser of (i) the tax benefit which would result to Gold from such
carryback if Gold's tax liability were computed on a separate return basis, or
(ii) the amount of tax actually refunded to FMC for the taxable year to which
such loss or credit is carried.
6. RECORD RETENTION AND ASSISTANCE. FMC and Gold shall, in accordance
with their existing record retention policies, retain all records, documents,
accounting data and other information (including computer data) which relate to
all tax returns filed for periods prior to the Spin-Off. Each party shall
provide the other with reasonable access to such records and information. If
either party wishes to destroy any such records or
-6-
<PAGE> 7
information, it shall first give 30 days' prior notice to the other party,
which shall have the right at its option to object to such destruction, in
which case the party seeking to destroy such records or information shall at
its option either continue to retain possession of such records or information
or will deliver such records or information the other party. FMC and Gold
shall provide each other with such other cooperation and information as either
of them may reasonably request of the other in connection with the preparation
of tax returns, amended returns, claims for refunds or in connection with any
audit or other examination by any authority or any judicial or administrative
proceeding relating to taxes.
7. MEDIATION AND ARBITRATION. If a dispute arises between FMC and
Gold with respect to this Agreement or the breach thereof, and if such dispute
cannot be settled through negotiations, the parties shall first attempt in good
faith to settle the dispute by mediation under the Commercial Mediation Rules
of the American Arbitration Association. If such dispute cannot be settled by
mediation, it shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. Regardless of any other choice of law provisions
in this Agreement, any arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Sections 1-16, as amended from time to time.
8. INTEGRATION; AMENDMENT; WAIVER. This Amended Agreement supersedes
the Tax Sharing Agreement and all prior negotiations, agreements and
understandings between the parties with respect to the subject matter hereof,
constitutes the entire agreement between the parties with respect to the
subject matter hereof and may not be altered or amended except in writing
signed by the parties. The failure of either party
-7-
<PAGE> 8
hereto at any time or times to require performance of any provisions of this
Amended Agreement shall in no manner affect the right to enforce the same. No
waiver by either party hereto of any condition, or of the breach of any
provision of this Amended Agreement or the other agreements contemplated
hereby, whether by conduct or otherwise, in any one or more instances, shall be
deemed or construed as a further or continuing waiver of any such condition or
breach or a waiver of any other condition or of the breach of any other
provision herein or therein contained.
Signed, sealed and delivered on the date first above written.
(CORPORATE SEAL) FMC:
FIRST MISSISSIPPI CORPORATION
ATTEST: By:
----------------------------------
President
- -------------------------
Secretary
(CORPORATE SEAL) FIRSTMISS GOLD:
FIRSTMISS GOLD INC.
ATTEST: By:
----------------------------------
President
- -------------------------
Secretary
-8-
<PAGE> 9
(CORPORATE SEAL) FMG:
FMG INC.
ATTEST: By:
----------------------------------
President
- -------------------------
Secretary
-9-
<PAGE> 1
FIRSTMISS GOLD INC.
as Borrower
- and -
THE TORONTO-DOMINION BANK
(through its Toronto Dominion Merchant Bank Division)
as Lender
________________________________________________________________
LOAN AGREEMENT
DATED SEPTEMBER 24, 1995
________________________________________________________________
TORY TORY DESLAURIERS & BINNINGTON
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1.
INTERPRETATION
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3. Interest Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4. Invalidity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5. Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6. Governing Law; Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.7. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.8. Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.9. This Agreement to Govern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10. Generally Accepted Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.11. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.12. Actions on Days Other Than Banking Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.13. Verbal Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2.
THE LOAN FACILITY
2.1. Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3. Evidence of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4. Term and Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6. Payments Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 3.
FEES AND EXPENSES
3.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2. Drawdown Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3. Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 4.
CONDITIONS TO ADVANCES
4.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2. Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 5.
ADVANCES
5.1. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
ii
<TABLE>
<S> <C> <C>
5.3. Drawdown Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 6.
SECURITY
6.1. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2. Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3. Security Effective Notwithstanding Date of Advance . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5. Discharge of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES
7.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 8.
COVENANTS
8.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 9.
EVENTS OF DEFAULT AND REMEDIES
9.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.2. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.3. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 10.
ASSIGNMENT AND PARTICIPATIONS
10.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.3. Exchange of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 11.
GENERAL
11.1. Reliance and Non-Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.2. Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.3. Set-Off or Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.5. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.6. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.7. Currency Conversion and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.8. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
<PAGE> 4
iii
<TABLE>
<S> <C> <C>
11.9. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.10. Date of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
Schedule A - Request for Advance
Schedule B - FMG Guarantee
Schedule C - FRMG Pledge Agreement
Schedule D - Grid Promissory Note
Schedule E - Permitted Liens
<PAGE> 5
1
THIS AGREEMENT is made as of September 24, 1995
BETWEEN:
FIRSTMISS GOLD INC.
(the "Borrower")
- and -
THE TORONTO-DOMINION BANK
(through its Toronto Dominion Merchant
Bank Division)
(the "Lender")
RECITALS:
A. The Borrower has requested the Lender to provide to it certain
financing for the development of the Turquoise Ridge Deposit (as
hereinafter defined); and
B. The Lender agreed to do so upon the terms and conditions set out herein.
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of
the covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE 1.
INTERPRETATION
1.1.DEFINITIONS
For the purposes of this Agreement:
"ADVANCE" means a borrowing by the Borrower by way of Loans, and any reference
relating to the amount of Advances shall mean the sum of all outstanding
Advances;
"AGREEMENT" means this agreement and all schedules attached to this agreement,
in each case as they may be amended or supplemented from time to time; the
expressions "HEREOF", "HEREIN", "HERETO", "HEREUNDER", "HEREBY" and similar
expressions refer to this Agreement as a whole and not to any particular
article, section, schedule or other portion hereof, and the expression
"ARTICLE" and "SECTION" followed by a number or by a number and letter, and
"SCHEDULE" followed by a letter, mean and refer to the specified article or
section of or schedule to this Agreement, except as otherwise specifically
provided herein;
"APPLICABLE LAW" means, in respect of any Person, property, transaction or
event, all applicable laws, statutes, rules, by-laws and regulations, and all
applicable official directives, orders, judgments and decrees of Governmental
Bodies;
<PAGE> 6
- 2 -
"BANKING DAY" means a day on which Canadian charter banks are generally open
for business in Toronto, Ontario.
"BORROWER" means FirstMiss Gold Inc., its successors and assigns;
"BORROWER S COUNSEL" means McCarthy Tetrault or such other counsel as the
Borrower may designate;
"BRANCH OF ACCOUNT" means the TD main branch located at the Toronto Dominion
Centre, 55 King Street West, Toronto, Ontario, or such other branch of TD as
the Lender, acting reasonably, may designate in writing to the Borrower;
"CASH OPERATING COST" has the meaning attributed to such term in the
prefeasibility report prepared by Mineral Resource Development Inc.;
"COMMITMENT" means the Lender s covenant to make Advances to the Borrower in a
total maximum amount of $20,000,000;
"CURRENCY" means U.S. dollars;
"DEFAULT" means any event which, with the lapse of time, giving of notice or
both, would constitute an Event of Default;
"DESIGNATED ACCOUNT" means, in respect of any Advance, the account or accounts
maintained by the Borrower at Branch of Account, or such other account or
accounts, that the Borrower designates in its Drawdown Notice, acting
reasonably;
"DRAWDOWN DATE" means any Banking Day on which an Advance is made;
"DUE DATE" means October 31, 1996 or such earlier date as the entire balance of
the Loan may become due whether by acceleration or otherwise;
"ELIGIBLE PARTICIPANT" means an assignee which has been approved by the
Borrower, such approval not to be unreasonably withheld;
"ENVIRONMENTAL LAWS" means all federal, state, municipal or local laws,
regulations or rules relating to generation, operation, manufacture, refining,
treatment, transportation, storage, handling, disposal, transfer, production or
processing of any material or process including, without limiting the
generality of the foregoing, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section
1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251, et seq.; the Toxic Substances Control Act,
15 U.S.C. Section 2601, et seq.; the Clean Air Act, 42 U.S.C. Section 7401,
et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 3808, et seq.; Nev.
Rev. Stat. ch. 459; Nev. Rev. Stat. ch. 444; Nev. Rev. Stat. ch. 445; Nev.
Rev.
<PAGE> 7
- 3 -
Stat. ch. 590; Nev. Rev. Stat. Section Section 618.750-618.850, inclusive; and
Nev. Rev. Stat. Section 477.045; as all of the same may be amended from time
to time;
"ENVIRONMENTAL PERMITS" means all permits, certificates, approvals, consents,
authorizations, registrations and licences issued by any Governmental Body
pursuant to Environmental Laws;
"EVENT OF DEFAULT" has the meaning attributed to such term in section 9.1;
"FMC" means First Mississippi Corporation, the controlling shareholder of the
Borrower as at the date of this Agreement;
"FMC SUBORDINATION AGREEMENT" means a subordination agreement among FMC, FMG,
the Borrower and the Lender, in form satisfactory to the Lender, acting
reasonably, whereunder FMC agrees to subordinate and postpone in favour of the
Lender any claim or obligation owed by the Borrower to FMC;
"FMG" means FMG Inc., a wholly-owned subsidiary of the Borrower;
"FMG GUARANTEE" means a guarantee, in form of Schedule B to this Agreement to
the Lender by FMG in favour of the Lender of the Obligations hereunder;
"FRMG PLEDGE AGREEMENT" means a pledge agreement, in form of Schedule C to this
Agreement to the Lender between the Borrower and the Lender whereunder the
Pledged Shares are pledged to secure the Borrower s Obligations hereunder;
"GOVERNMENTAL BODY" means any government, parliament, legislature, or any
regulatory authority, agency, commission or board of any government, parliament
or legislature, or any court or (without limitation to the foregoing) any other
law, regulation or rule-making entity (including, without limitation, any
central bank, fiscal or monetary authority or authority regulating banks),
having or purporting to have jurisdiction in the relevant circumstances, or any
Person acting or purporting to act under the authority of any of the foregoing;
"GRID PROMISSORY NOTE" means a grid promissory note in the form of Schedule D
to this Agreement;
"INDEBTEDNESS" means with respect to any Person, all indebtedness, obligations,
and liabilities of such Person, including without limitation: (i) all
"liabilities" which would be reflected on the balance sheet of such Person,
prepared in accordance with generally accepted accounting principles, (ii) all
obligations of such Person in respect of any guarantee, (iii) all obligations
of such Person in respect of any capital lease, (iv) all obligations,
indebtedness and liabilities secured by any lien or any security interest on
any property or assets of such Person, and (v) all redeemable preferred stock
of such Person valued at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends;
"LENDER" means The Toronto-Dominion Bank through its Merchant Bank Division;
<PAGE> 8
- 4 -
"LENDER S COUNSEL" means Tory Tory DesLauriers & Binnington or such other
counsel as the Lender may designate;
"LIBOR RATE" means either:
(a) the rate that appears on the Telerate Page 3750 (or any
successor source from time to time) as of 11:00 a.m. (London
time) each Business Day expressed as a percentage per annum on
the basis of a 360 day year for deposits in U.S. dollars in
the London interbank market for a 30 day period, or,
(b) if no such rate appears as contemplated in item (a) above, the
interest rate expressed as a percentage per annum on the basis
of a 360 day year at which deposits in U.S. dollars are
offered to the principal office of TD in London, England in
the London interbank market at 11:00 a.m. London time for a 30
day period and in an amount approximately equal to the amount
of the Advance;
"LIEN" means any mortgage, lien, pledge, assignment, charge, security interest,
lease intended as security, title retention agreement, rights reserved in any
Governmental Body, lease of real property, hypothec, levy, execution, seizure,
attachment, garnishment or other similar encumbrance;
"LOAN" means, at any time, the principal amount of all Obligations then
outstanding under the Loan Facility;
"LOAN DOCUMENTS" means this Agreement, the FRMG Pledge Agreement, the FMC
Subordination Agreement, the FMG Guarantee and any other agreement as the
Lender and the Borrower may agree is a Loan Document;
"LOAN FACILITY" means the loan facility of $20,000,000 in favour of the
Borrower which is established by this Agreement;
"MATERIAL AUTHORIZATION" means, with respect to any Person, at any point in
time any approval, permit, licence or similar authorization (including any
trademark, trade name or patent) from, and any filing or registration with, any
Governmental Body or any other Person required by such Person to own its
property and assets or to carry on its business as carried on by it at such
time or as contemplated hereunder to be carried on by it at such time in each
jurisdiction in which it does so or is contemplated to do so or where the
failure to have such approval, permit, licence, authorization, filing or
registration would have a material adverse effect upon its business, financial
condition or prospects or upon its ability to perform its obligations under any
Loan Document to which it is a party;
"NET PROCEEDS" means in connection with any financing or the issuance of any
securities by the Borrower, the amount or proceeds received by the Borrower
less any out-of-pocket fees and expenses paid to third parties incurred in
connection with such financing or issuance of securities;
<PAGE> 9
- 5 -
"OBLIGATIONS" means all indebtedness, liabilities and other obligations of the
Borrower to the Lender under or in connection with this Agreement or any other
document delivered pursuant hereto, including all Advances, whether actual or
contingent, direct or indirect, matured or not, now existing or arising
hereafter;
"OFFICERS CERTIFICATE" means a certificate signed by the Chief Executive
Officer and the Chief Financial Officer of the Borrower;
"PARTICIPATION RIGHT" has the meaning attributed to such term in section 3.3;
"PERMITTED LIENS" has the meaning set out in Schedule E;
"PERSON" means any individual, partnership, limited partnership, joint venture,
syndicate, sole proprietorship, company or corporation with or without share
capital, unincorporated association, trust, trustee, executor, administrator or
other legal personal representative or Governmental Body;
"PLEDGED SHARES" means all of the issued and outstanding shares of FMG;
"PROBABLE RESERVES" has the meaning attributed to such term in the
prefeasibility report prepared by Mineral Resource Development Inc.;
"REQUEST FOR ADVANCE" means a notice in the form of Schedule A to this
Agreement;
"SECURITY" means the security held from time to time by the Lender securing or
intended to secure repayment of the Obligations, including without limitation
the security described in section 6.1;
"SUBSIDIARY" means FMG and any other subsidiary of the Borrower that may exist
from time to time;
"TAXES" means all taxes of any kind or nature whatsoever including, without
limitation, income taxes, sales or value - added taxes, levies, stamp taxes,
royalties, duties, and all fees, deductions, compulsory loans and withholdings
imposed, levied, collected, withheld or assessed as of the date hereof or at
any time in the future, by any Governmental Body of or within Canada or any
other jurisdiction whatsoever having power to tax, together with penalties,
fines, additions to tax and interest thereon;
"TURQUOISE RIDGE DEPOSIT" means the gold deposit owned indirectly by the
Borrower and located in the state of Nevada to be described in more detail in
the prefeasibility study prepared by Mineral Resource Development Inc.;
"U.S. DOLLARS" means lawful money of the United States of America;
<PAGE> 10
- 6 -
1.2. GENDER AND NUMBER
Words importing the singular include the plural and vice versa
and words importing gender include all genders.
1.3. INTEREST ACT
For purposes of the Interest Act (Canada), where in any Loan
Document a rate of interest is to be calculated on the basis of a year of 360
days, the yearly rate of interest to which the 360 day rate is equivalent is
such rate multiplied by the number of days in the year for which such
calculation is made and divided by 360.
1.4. INVALIDITY, ETC.
Each of the provisions contained in this Agreement is distinct
and severable and a declaration of invalidity, illegality or unenforceability
of any such provision or part thereof by a court of competent jurisdiction
shall not affect the validity or enforceability of any other provision of this
Agreement or of any other Loan Document. Without limiting the generality of
the foregoing, if any amounts on account of interest or fees or otherwise
payable by the Borrower to the Lender hereunder exceed the maximum amount
recoverable under Applicable Law, the amounts so payable hereunder shall be
reduced to the maximum amount recoverable under Applicable Law.
1.5. HEADINGS, ETC.
The division of this Agreement into articles, sections and
clauses, the inclusion of a table of contents and the insertion of headings are
for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.6. GOVERNING LAW; ATTORNMENT
This Agreement shall be governed by and constituted in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein. The Borrower irrevocably submits to the courts of the
Province of Ontario in any action or proceeding arising out of or relating to
this Loan Agreement or any other Loan Document, and irrevocably agrees that all
such actions and proceedings may be heard and determined in such courts, and
irrevocably waives, to the fullest extent possible, the defence of an
inconvenient forum. The Borrower agrees that a judgment or order in any such
action or proceeding may be enforced in other jurisdictions in any manner
provided by law; provided, however, that the Lender may serve legal process in
any manner permitted by law or may bring an action or proceeding against the
Borrower or the property or assets of the Borrower in the courts of any other
jurisdiction.
1.7. REFERENCES
Except as otherwise specifically provided, reference in this
Agreement to any contract, agreement or any other instrument shall be deemed to
include references to the same as
<PAGE> 11
- 7 -
varied, amended, supplemented or replaced from time to time and reference in
this Agreement to any enactment, including without limitation, any statute,
law, by-law, regulation, ordinance or order, shall be deemed to include
references to such enactment as re-enacted, amended or extended from time to
time.
1.8. CURRENCY
Except as otherwise specifically provided herein, all monetary
amounts in this Agreement are stated in U.S. dollars.
1.9. THIS AGREEMENT TO GOVERN
If there is any inconsistency between the terms of this
Agreement and the terms of any other Loan Document, the provisions hereof shall
prevail to the extent of the inconsistency, but the foregoing shall not apply
to limit or restrict in any way the rights and remedies of the Lender under the
terms of the FRMG Pledge Agreement after the Lien thereby constituted shall
have become enforceable. For greater certainty, notwithstanding that any Loan
Document may provide for payment on demand, the Obligations shall only be
payable as stipulated herein.
1.10. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Except as otherwise specifically provided herein, all
accounting terms shall be applied and construed in accordance with U.S.
generally accepted accounting principles consistently applied.
1.11. COMPUTATION OF TIME PERIODS
Except as otherwise specifically provided herein, in the
computation of a period of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".
1.12. ACTIONS ON DAYS OTHER THAN BANKING DAYS
Except as otherwise specifically provided herein, where any
payment is required to be made or any other action is required to be taken on a
particular day and such day is not a Banking Day and, as a result, such payment
cannot be made or action cannot be taken on such day, then this Agreement shall
be deemed to provide that such payment shall be made or such action shall be
taken on the first Banking Day after such day; provided that if such deferral
would cause such payment to be made or such action to be taken after the first
day of the following calendar month, such payment shall be made or such action
shall be taken on the next preceding Banking Day and interest and fees shall be
calculated accordingly. If the payment of any amount is deferred for any
period under this section, then such period shall, unless otherwise provided
herein, be included for purposes of the computation of any interest or fees
payable hereunder.
<PAGE> 12
- 8 -
1.13. VERBAL INSTRUCTIONS
Notwithstanding any other provision herein regarding the
delivery of notices by the Borrower, the Lender shall in its sole discretion be
entitled to act upon the verbal instructions of the Borrower, or any Person
reasonably believed by the Lender to be a Person authorized by the Borrower to
give instructions regarding any request. All such verbal instructions shall be
at the risk of the Borrower and must be confirmed in writing by the Borrower on
the same Banking Day as the verbal instruction is given. The Lender shall not
be responsible for any error or omission in such instructions or in the
performance thereof except in the case of negligence or wilful misconduct by
the Lender.
ARTICLE 2.
THE LOAN FACILITY
2.1. AMOUNT
Upon and subject to the terms and conditions of this
Agreement, the Lender hereby establishes the Loan Facility in favour of the
Borrower in the amount of $20,000,000.
2.2. ADVANCES
The Borrower shall be entitled to obtain Advances under the
Loan Facility, in an amount of $2,000,000 (or an integral multiple of $250,000
in excess of that amount) for each Advance, upon satisfaction of the conditions
set out in Article 4. The Loan Facility is non-revolving and the principal
amount of any Loan that is repaid may not be reborrowed.
2.3. EVIDENCE OF INDEBTEDNESS
The indebtedness of the Borrower resulting from Loans made by
the Lender shall be evidenced by the Grid Promissory Note. The Lender shall
record on the Grid Promissory Note each Advance and the date thereof and the
interest, fees and other charges accrued thereon and applicable thereto from
time to time and each payment of principal (including prepayments). The Grid
Promissory Note shall constitute, in the absence of manifest error, prima facie
evidence of the indebtedness of the Borrower to the Lender. The failure of the
Lender to correctly record any amount or date on the Grid Promissory Note shall
not adversely affect the obligation of the Borrower to pay amounts due
hereunder to the Lender in accordance with this Agreement. At all times and
for all purposes, the Grid Promissory Note may be tendered as prima facie
evidence, in the absence of manifest error, of the matters recorded therein.
2.4. TERM AND REPAYMENT
2.4.1. Term: Notwithstanding any other provision of this Agreement,
Obligations outstanding on the Due Date shall be due and
payable, together with all interest accrued and unpaid
thereon, on the Due Date.
<PAGE> 13
- 9 -
2.4.2. Prepayment: Subject to section 2.6, the Borrower may repay
Obligations at any time without penalty.
2.4.3. Mandatory Prepayment: Immediately upon the completion of any
financing or issuance of any securities by the Borrower, the
Borrower shall repay the principal amount of the Borrower s
Obligations to the extent of the Net Proceeds received by the
Borrower. Notwithstanding the foregoing, the Borrower shall
have no obligation to repay Obligations from financings or the
issuance of securities with or to FMC provided such financing
or issuance of securities is fully subordinated in all
circumstances to repayment of the Obligations, on terms
satisfactory to the Lender acting reasonably.
2.5. APPLICATION OF PROCEEDS
All amounts prepaid and repaid shall be applied firstly in
reduction of fees due to the Lender and then in reduction of the accrued and
unpaid interest then outstanding and then in reduction of the principal amount
of the Loans then interest outstanding and thereafter in reduction of all other
Obligations outstanding.
2.6. PAYMENTS GENERALLY
All payments in respect of the Loans (in respect of principal,
interest, fees or otherwise) shall be made by the Borrower to the Lender no
later than 11:00 a.m. (Toronto time) on the due date thereof to the accounts
specified therefor by the Lender at its Branch of Account. Any payments
received after such time shall be considered for all purposes as having been
made on the next following Banking Day unless the Lender otherwise agrees in
writing. All payments shall be made by way of immediate transfers from
accounts of the Borrower with the Lender or other immediately available funds.
ARTICLE 3.
FEES AND EXPENSES
3.1. COMMITMENT FEE
The Borrower has paid to the Lender a commitment fee in the
amount of $100,000, which payment was made by the Borrower upon the execution
by the Lender of the commitment to provide the Loan Facility. Subject to the
last proviso of Section 4.2, the Borrower shall pay to the Lender an additional
commitment fee of $400,000, payable upon the execution of this Agreement by the
parties hereto. The Borrower shall also pay to the Lender a commitment fee in
the amount of $100,000 per month commencing on April 1, 1996 payable on the
first day of each month during the remaining term of the Loan Facility.
3.2. DRAWDOWN FEE
The Borrower shall pay to the Lender on each Drawdown Date a
drawdown fee of 1% of the amount of the Advance made on such Drawdown Date.
<PAGE> 14
- 10 -
3.3. PARTICIPATION
As additional consideration for providing the Loan Facility,
the Borrower hereby grants to the Lender, subject to the last proviso of
Section 4.2, a participation right (the "Participation Right") in accordance
with the following terms and conditions:
3.3.1. the right may be exercised by way of written notice given by
the Lender to the Borrower any time after the earlier of the
repayment of the Loan, the termination of the Commitment and
the Due Date (the "triggering event") and on or before the
date that is 30 months after the triggering event;
3.3.2. subject to section 3.3.3, upon the exercise of the
Participation Right by the Lender, the Borrower shall pay to
the Lender, in cash or by way of the issuance of common shares
to the Lender (valued for these purposes at the weighted
average closing price of the common shares of the Borrower
during the 10 day period prior to the date the Lender
exercises the Participation Right), the amount equal to
250,000 x (the amount by which the weighted average closing
price of the common shares of the Borrower during the 10 day
period prior to the date of exercise of the Participation
Right exceeds $20) (the "Participation Right Value");
3.3.3. notwithstanding anything in section 3.3.2, the Participation
Right Value shall not exceed the following amounts:
3.3.3.1. $1,000,000 if the Loan Facility is repaid in
full within 6 months of the date of this
Agreement; and
3.3.3.2. $1,500,000 if the Loan Facility is repaid in
full after the 6 month period specified in
clause 3.3.3.1 above and prior to the Due
Date.
3.3.4. notwithstanding anything in this section 3.3 to the contrary,
at any time on or before November 30, 1995, the Borrower shall
have the right, by way of written notice given to the Lender
in this regard, to satisfy the Participation Right in full by
paying $500,000, at the option of the Borrower, in cash or
through the issuance to the Lender of that number of common
shares of the Borrower equal to $500,000 divided by the
weighted average closing price of the common shares of the
Borrower during the 10 day period prior to the date the
Borrower exercises its right to satisfy the Participation
Right as set out herein and upon such payment the Lender shall
have no further rights under this section 3.3 other than
pursuant to section 3.3.5;
3.3.5. if the Borrower elects to issue common shares to satisfy any
obligations herein, the Lender shall have piggy-back
registration rights in connection with any registration of any
common shares of the Borrower.
<PAGE> 15
- 11 -
3.4. PAYMENT OF COSTS AND EXPENSES
Whether or not the Borrower obtains any Loans hereunder, the
Borrower shall pay to the Lender upon request all reasonable out-of-pocket
costs and expenses of the Lender, its agents, officers and employees, its
qualified independent engineer, any receiver or receiver-manager appointed by
it or by a court in connection with this Agreement or the other Loan Documents,
including, without limitation:
3.4.1. the preparation, execution, filing and registration of any of
the Loan Documents, any actual or proposed amendment or
modification hereof or thereof or any waiver hereunder or
thereunder and all instruments supplemental or ancillary
thereto;
3.4.2. the review of the prefeasibility report referred to in section
4.2.4 of this Agreement;
3.4.3. obtaining advice as to the Lender's rights and
responsibilities under the Loan Documents; and
3.4.4. the defence, establishment, protection or enforcement of any
of the rights or remedies of the Lender under any of the Loan
Documents including, without limitation, all costs and
expenses of establishing the validity and enforceability of,
or of collection of amounts owing under, any of the Loan
Documents or of any enforcement of the Loan Documents,
and further including, without limitation, all of the fees, expenses and
disbursements of the Lender's Counsel (and, following the occurrence of an
Event of Default, such legal counsel as may be retained by the Lender), on a
solicitor and his own client basis, incurred in connection therewith, and
including all sales or value-added taxes payable by the Lender (whether
refundable or not) on all such costs and expenses.
ARTICLE 4.
CONDITIONS TO ADVANCES
4.1. GENERAL
The Borrower shall not be entitled to obtain an Advance until
satisfaction of and compliance with the following terms and conditions:
4.1.1. the representations and warranties set forth in Article 7 are
true and accurate in all material respects on the date of
execution of this Agreement and shall continue to be true and
accurate in all material respects on the date of the Advance
in question and the Lender shall have received an Officers
Certificate from the Borrower to such effect;
<PAGE> 16
- 12 -
4.1.2. no Default or Events of Default shall have occurred and be
continuing and the Lender shall have received an Officers
Certificate from the Borrower to such effect;
4.1.3. the Lender shall have received a Drawdown Notice in accordance
with section 5.3
4.2. INITIAL ADVANCE
In addition to the terms and conditions contained in Section
4.1, the Borrower shall be entitled to obtain the initial Advance under the
Loan Facility upon and only in compliance with the following terms and
conditions:
4.2.1. the Lender shall have received a duly executed copy of this
Agreement, the FRMG Pledge Agreement, the FMC Subordination
Agreement and the FMG Guarantee;
4.2.2. the Borrower shall have delivered to the Lender an opinion of
Borrower s Counsel addressed to the Lender, dealing with the
Borrower and FMG and the actions to be taken and documents to
be delivered by them hereunder or pursuant hereto, in form
satisfactory to the Lender, acting reasonably; and
4.2.3. the Lender shall have received, in form and substance
satisfactory to the Lender acting reasonably, an Officers
Certificate from the Borrower dated the date of the initial
Advance certifying that attached thereto are true and correct
copies of the following documents, and that such documents are
in full force and effect, unamended:
4.2.3.1. the certificate/articles of incorporation of
the Borrower and FMG;
4.2.3.2. the by-laws of the Borrower and FMG;
4.2.3.3. a certificate of incumbency, including sample
signatures of officers and directors, of the
Borrower; and
4.2.3.4. the resolutions or other documentation
evidencing that all necessary action,
corporate or otherwise, has been taken by the
Borrower and FMG to authorize the execution,
delivery and performance of the Loan
Documents; and
4.2.4. the Lender shall have received a copy of a prefeasibility
report prepared by Mineral Resource Development Inc. in
respect of the Turquoise Ridge Deposit showing (to the
satisfaction of the Lender on the advice of a qualified
independent engineer acting on its behalf):
4.2.4.1. Probable Reserves of not less than 1.25
million ounces;
<PAGE> 17
- 13 -
4.2.4.2. an estimate average Cash Operating Cost of
not greater than $270 per ounce of gold; and
4.2.4.3. the absence of any matters with respect to
environmental, regulatory or land title
issues which could have a material adverse
effect on the commercial exploitation of the
deposit by the Borrower;
4.2.5. since the date of the audited consolidated financial
statements of the Borrower dated as of and for the period
ending June 30, 1995, there has been no development which has
had or will have a material adverse effect upon the business,
operation, assets, capitalization, financial condition or
prospects of the Borrower or upon the ability of the Borrower
to perform its obligations under any of the Loan Documents and
the Lender shall have received an Officer s Certificate from
the Borrower to such effect; and
4.2.6. FMC shall have completed the distribution of its entire
ownership interest in the Borrower pursuant to Section 355 of
the Internal Revenue Code of 1986, as amended (the "Code"),
and otherwise in a form satisfactory to the Lender and in
compliance with the terms and provisions of that certain
Private Letter Ruling issued by the Internal Revenue Service
to FMC dated April 28, 1995 ("PLR"). FMC shall also deliver
to the Lender a certificate certifying to the Lender that: (i)
it has complied in all material respects with the terms and
provisions of the PLR; (ii) all of the transactions proposed
to be undertaken by FMC, the Borrower and their affiliated
entities as set forth in the PLR have been completed in the
same manner as described in the PLR; (iii) all of the
representations made by or applicable to FMC, the Borrower and
their affiliated entities to the Internal Revenue Service in
the PLR are true and accurate in all material respects; and
(iv) neither the Borrower nor FMC is aware of any fact or
circumstance that would render the PLR inapplicable to the
distribution by FMC of its entire ownership interest in the
Borrower or otherwise cause such transaction not to be
governed by Section 355 of the Code;
provided that if the conditions set out in sections 4.2.4, 4.2.5 or 4.2.6 are
not satisfied on or before October 31, 1995, the Lender may declare the
Commitment to be terminated, whereupon the Lender shall not be required to make
any Advances, the Lender s rights and entitlements under the Participation
Right shall be terminated and the Lender shall repay to the Borrower the
additional commitment fee of $400,000 paid to the Lender on the execution of
this Agreement pursuant to Section 3.1.
<PAGE> 18
- 14 -
ARTICLE 5.
ADVANCES
5.1. LOANS
Upon the timely fulfilment of all applicable conditions as set
forth in this Agreement, the Lender shall make the requested amount of each
Advance available to the Borrower on the Drawdown Date by crediting the
Designated Account with such amount and making the appropriate notation on the
Grid Promissory Note.
Interest on the Loans shall be payable on the first Banking
Day of each month during the term of the Loans and on the Due Date. All
interest shall accrue from day to day and shall be payable in arrears for the
actual number of days elapsed from and including the date of Advance or the
previous date on which interest was payable, as the case may be, to but
excluding the date on which interest is payable both before and after maturity,
default and judgment, with interest on overdue interest at the same rate
payable on demand.
5.2. PAYMENT OF INTEREST
The Borrower shall pay to the Lender interest on Loans in the
manner and at the rates per annum determined in accordance with section 5.1 and
this section 5.2. Interest payable hereunder shall be payable both before and
after maturity, default and/or judgment, if any, until payment in full thereof,
and interest shall accrue on overdue interest, if any, at the same rate.
Interest shall be payable on all Loans at a rate per annum equal to the LIBOR
Rate plus 3%.
5.3. DRAWDOWN NOTICES
Drawdown Notices or repayment notices, as the case may be,
shall be given on the third Banking Day prior to the date of any Advance or
payment. Drawdown Notices shall be given not later than 11:00 a.m. (Toronto
time) on the date for notice. If a notice is not given by such time, it shall
be deemed to have been given on the next Banking Day, unless the Lender agrees
to accept the late notice as being effective on the date it is given.
ARTICLE 6.
SECURITY
6.1. SECURITY
As security for the due and punctual payment of all
Obligations of the Borrower, the Borrower shall deliver or cause to be
delivered to and in favour of the Lender, the FRMG Pledge Agreement, the FMC
Subordination Agreement and the FMG Guarantee on or before the date of the
initial Advance. Pursuant to the FRMG Pledge Agreement, the Borrower shall
deliver to the Lender certificates representing all the Pledged Shares.
<PAGE> 19
- 15 -
6.2. PERFECTION
The Borrower shall ensure that each of the FRMG Pledge
Agreement, the FMC Subordination Agreement and the FMG Guarantee is executed
and delivered and that the Liens created by the FRMG Pledge Agreement and the
FMG Guarantee are perfected on or prior to the date of the initial Advance in
all jurisdictions reasonably required by the Lender.
6.3. SECURITY EFFECTIVE NOTWITHSTANDING DATE OF ADVANCE
The Liens constituted or required to be created under the FRMG
Pledge Agreement, the FMC Subordination Agreement and the FMG Guarantee shall
be effective and the undertakings therein in respect thereto shall be
continuing, whether the monies hereby or thereby secured or any part thereof
shall be advanced before or after or at the same time as the creation of any
such Liens or before or after or upon the date of execution of this Agreement.
The FRMG Pledge Agreement, the FMC Subordination Agreement and the FMG
Guarantee shall not be affected by any payments on the Loans, but shall
constitute continuing security to the Lender for the Obligations from time to
time.
6.4. NO MERGER
The security constituted by the Security shall not merge in
any other security. No judgment obtained by the Lender shall in any way affect
any of the provisions of this Agreement or the Security. For greater
certainty, no judgment obtained by the Lender shall in any way affect the
obligation of the Borrower to pay interest at the rates, times and in the
manner provided in this Agreement.
6.5. DISCHARGE OF SECURITY
The Lender shall release the Security and the Liens shall
terminate and shall be of no further force and effect upon repayment of the
Obligations and termination in full of the Commitment.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES
7.1. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender that:
7.1.1. Incorporation and Status: each of the Borrower and FMG is duly
incorporated and validly existing under the laws of Nevada and
Mississippi respectively and has the corporate power and
capacity to own its properties and assets and to carry on its
business as presently carried on by it or as contemplated
hereunder to be carried on by it and holds all Material
Authorizations;
<PAGE> 20
- 16 -
7.1.2. Power and Capacity: each of the Borrower and FMG has the
corporate power and capacity to enter into each of the Loan
Documents to which it is a party and to do all acts and things
as are required or contemplated hereunder or thereunder to be
done, observed and performed by it;
7.1.3. Business: neither the Borrower nor FMG is engaged in any
business other than as set out in the Borrower s most recent
annual report;
7.1.4. Due Authorization: each of the Borrower and FMG has taken all
necessary corporate action to authorize the execution,
delivery and performance by it of each of the Loan Documents
to which it is a party;
7.1.5. No Contravention: the execution and delivery by each of the
Borrower and FMG of the Loan Documents to which it is a party
and the performance by each of the Borrower and FMG of its
respective obligations thereunder (i) does not and will not
contravene, breach or result in any default under the
organizational documents of the Borrower or FMG or under any
material mortgage, lease, agreement or other legally binding
instrument, license, permit, Material Authorization or
Applicable Law to which the Borrower or FMG are a party or by
which the Borrower or FMG or any of their respective
properties or assets may be bound, (ii) will not oblige the
Borrower or FMG to grant any Lien to any Person other than the
Lender, (iii) will not result in or permit the acceleration of
the maturity of any indebtedness, liability or obligation
under any material mortgage, lease, agreement or other legally
binding instrument of or affecting the Borrower or FMG and
(iv) will not violate any judgment, injunction, determination
or award which is binding on the Borrower or FMG;
7.1.6. No Consents Required: no Material Authorization or other
authorization, consent or approval of, or filing with or
notice to, any Person (including any Governmental Body) is
required which has not been obtained in connection with the
execution, delivery or performance by the Borrower or FMG of
this Agreement or any of the other Loan Documents to which it
is a party;
7.1.7. Enforceability: each of the Loan Documents constitutes, or
upon execution and delivery will constitute, a valid and
binding obligation of the Borrower and FMG enforceable against
each of them which is a party thereto (as applicable) in
accordance with its terms, subject only to the qualifications
set out in the opinion of Borrower s Counsel;
7.1.8. Title: the Borrower has good and valid title to the Pledged
Shares assigned by it to the Lender, free and clear of any
Liens and no Person has any claim or rights with respect to
such shares which could reasonably be expected to adversely
affect the value of such shares in the event that the Lender
should sell or otherwise realize upon such shares and that the
Lender, upon any such sale or realization thereof permitted by
law, will have an unfettered right to exercise all incidents
of ownership with respect to the shares pledged to it;
<PAGE> 21
- 17 -
7.1.9. No Litigation: there is no court, administrative, regulatory
or similar proceeding (whether civil, quasi- criminal, or
criminal); arbitration or other dispute settlement procedure;
investigation or enquiry by any Governmental Body; or any
similar matter or proceeding (collectively "proceedings")
against or involving the Borrower or FMG whether in progress
or, to the best of its knowledge, threatened, which could
reasonably be expected to materially adversely affect its
ability to perform any of the provisions of any Loan Document
to which it is a party or which purports to affect the
legality, validity and enforceability of any such Loan
Document; no event has occurred which might reasonably be
expected to give rise to any proceedings and there is no
judgment, decree, injunction, rule, award or order of any
Governmental Body outstanding against the Borrower or FMG
which has or could reasonably be expected to have a material
adverse effect on its ability to perform any of the provisions
of any Loan Document to which it is a party;
7.1.10. No Default: neither the Borrower nor FMG is in default or
breach under the terms and conditions relating to any Material
Authorizations and there exists no state of facts which, after
notice or the passage of time or both, would constitute such a
default or breach; and there are no proceedings in progress,
pending or threatened which may result in the revocation,
cancellation, suspension or any adverse modification of any
Material Authorization;
7.1.11. Financial Statements: the audited consolidated financial
statements of the Borrower dated as of and for the period
ending June 30, 1995 contained in the annual report of the
Borrower have been prepared in accordance with generally
accepted accounting principles and fairly, completely and
accurately present the financial position of the Borrower and
the financial information presented therein for the period and
as at the date thereof. Since the date of such audited
consolidated financial statements, there has been no
development which has had or will have a material adverse
effect upon the business, property, financial condition or
prospects of the Borrower or upon the ability of the Borrower
to perform its obligations under any of the Loan Documents;
7.1.12. FMG: FMG is a wholly-owned subsidiary of the Borrower; and
7.1.13. Environmental Compliance: The Borrower and FMG and the
business and assets of each of them has been and is being
operated in compliance with all applicable Environmental Laws
and Environmental Permits.
7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The Borrower covenants that the representations and warranties
made by it in this Article 7 shall be true and correct in all material respects
on each day that this Agreement remains in force and effect, and all such
representations and warranties shall be deemed to be made on each such day with
the same effect as if such representations and warranties had been made and
given on and as of such day, notwithstanding any investigation made at any time
by the Lender; except that if any such representation and warranty is
specifically given in respect of
<PAGE> 22
- 18 -
information as of a particular date or particular period of time and relates
only to such information, then such representation and warranty shall continue
to be given as at such date or for such period of time until the information to
which it relates is updated at which point it shall continue to be given as of
such updated date or period of time, and so forth from time to time.
ARTICLE 8.
COVENANTS
8.1. AFFIRMATIVE COVENANTS
So long as any Obligations remain outstanding and unless the
Lender otherwise consents in writing, the Borrower covenants and agrees that:
8.1.1. Punctual Payment: it shall pay or cause to be paid all
Obligations falling due hereunder on the dates and in the
manner specified herein;
8.1.2. Conduct of Business: it shall do or cause to be done, and
shall cause FMG to do or cause to be done, all things
necessary or desirable to maintain its corporate existence in
its present jurisdiction of incorporation and to maintain its
corporate power and capacity to own its properties and assets;
8.1.3. Preservation of Material Authorizations: it shall preserve and
maintain all Material Authorizations of the Borrower;
8.1.4. Compliance with Applicable Law and Contracts: it shall comply,
and shall cause FMG to comply, with the requirements of all
Applicable Law and all contracts to which it is a party or by
which it or its properties are bound, non-compliance with
which would, singly or in the aggregate, have a material
adverse effect upon its ability to perform its obligations
under any Loan Document to which it is a party;
8.1.5. Notice of Litigation and Other Matters: as soon as practical
after it shall become aware of the same, the Borrower shall
give, and shall cause FMG to give, notice to the Lender of the
following events:
8.1.5.1. the commencement of any action, proceeding,
arbitration or investigation against or in
any other way relating adversely to the
Borrower or FMG or its properties, assets or
businesses which, if adversely determined,
could reasonably be expected to singly or
when aggregated with all other such actions,
proceedings, arbitrations and investigations,
have a material adverse effect on the ability
of the Borrower or FMG to perform its
obligations under any Loan Document to which
it is a party;
8.1.5.2. any amendment of the organizational documents
of the Borrower or FMG;
<PAGE> 23
- 19 -
8.1.5.3. any development which has had or will have a
material adverse effect upon the ability of
the Borrower or FMG to perform its
obligations under any Loan Documents to which
it is a party; and
8.1.5.4. any Default or Event of Default giving in
each case the details thereof and specifying
the action proposed to be taken with respect
thereto.
8.1.6. Maintenance of Security: it shall, and shall cause FMG to,
keep the Security in full force and effect during the term of
the Loan Facility;
8.1.7. Use of Proceeds: it shall use the Advance solely for the
purpose of enabling the Borrower to finance the development of
its current mining properties and for the general working
capital purposes of the Borrower;
8.1.8. Refinancing: it shall use its commercially reasonable efforts
to effect the repayment of the Obligations through a financing
or the issuance of securities;
8.1.9. Hedging Strategy: it shall deliver to the Lender from time to
time (or otherwise at the request of the Lender) information
with respect to the hedging strategy being carried out by the
Borrower in connection with the forward selling of its gold
production;
8.1.10. Subsidiaries: it shall pledge to the Lender (as security for
the Borrower s obligations hereunder) all of the issued and
outstanding shares of its Subsidiaries by way of a pledge
agreement (in a form consistent with Schedule C hereto or
otherwise in a form satisfactory to the Lender, acting
reasonably); and
8.1.11. Compliance Certificate: within two business days following a
request therefor from the Lender, the Borrower shall deliver
to the Lender an Officers Certificate certifying that no
Default or Event of Default has occurred hereunder or, if any
Default or Event of Default has occurred, specifying the
relevant particulars and the period of existence thereof and
the action taken or proposed to be taken by the Borrower with
respect thereto.
8.2. NEGATIVE COVENANTS
So long as any Obligations remain outstanding and unless the
Lender otherwise consents in writing, the Borrower covenants and agrees that:
8.2.1. Encumber Assets: without the prior written approval of the
Lender, it shall not and shall not permit FMG to create,
grant, assume or suffer to exist any Liens upon its assets,
other than Permitted Liens;
<PAGE> 24
- 20 -
8.2.2. Unrelated Business: it shall not engage directly or indirectly
in any business activity, or purchase or otherwise acquire any
properties or assets, in each case unrelated to or unnecessary
for the conduct of its present business;
8.2.3. Sell Assets: it shall not sell, transfer or otherwise dispose
of any of its assets having a value in excess of $1,000,000 in
each instance, except that the Borrower may enter into sales
transactions in the ordinary course of business and may
dispose of worn out, obsolete or replaced assets;
8.2.4. Amalgamations: it shall not enter into any transaction
(including by way of reorganization, consolidation,
amalgamation, liquidation, transfer, sale or otherwise)
whereby all or any material portion of the property and assets
of the Borrower would become the property of any other Person
or, in the case of any such amalgamation, of the continuing
Corporation resulting therefrom other than as contemplated
herein;
8.2.5. Limitation on Indebtedness: it shall not, and shall not
permit FMG to, incur, create, contract, waive, assume,
guarantee or otherwise be or become, directly or indirectly,
liable in respect of any Indebtedness, except (i) Indebtedness
arising out of this Agreement; (ii) Indebtedness secured by
the Permitted Liens, (iii) current liabilities for taxes and
assessments incurred in the ordinary course of business, (iv)
Indebtedness in respect of current accounts payable or accrued
and incurred in the ordinary course of business, (v)
Indebtedness of the Borrower and FMG as reflected in the
audited consolidated financial statements of the Borrower as
at June 30, 1995 and (vi) Indebtedness, the Net Proceeds of
which are used to repay Loans.
8.2.6. Distributions and Dividends: Neither the Borrower nor FMG
shall make any repayment of any Indebtedness, issue security,
dividends or other forms of cash distribution other than in
the ordinary course of business or in accordance with its
terms and shall not issue any securities or pay any dividends
other than as expressly contemplated in this Agreement.
ARTICLE 9.
EVENTS OF DEFAULT AND REMEDIES
9.1. EVENTS OF DEFAULT
The occurrence of any one or more of the following events
shall constitute an Event of Default:
9.1.1. the Borrower shall fail to pay any portion of the principal
amount of any Loan or interest when due, or if the Borrower
shall fail to pay, any fees or other Obligations within five
days of when due and payable;
<PAGE> 25
- 21 -
9.1.2. default by the Borrower or FMG in the performance or
observance of any covenant, condition or obligation contained
in any Loan Document that does not require the payment of
money to the Lender and which is not remedied within 30 days
of receipt by the Borrower of notice of such default from the
Lender provided that, if such default requires more than 30
days to be cured and the Borrower is diligently and actively
pursuing the curing of such default, the Borrower shall be
afforded such additional time to cure such default as shall be
reasonable in the circumstances provided that in any event
such default is cured within 60 days of receipt by the
Borrower of notice of such default from the Lender;
9.1.3. any representation or warranty made or deemed to have been
made by the Borrower or FMG herein or in any Loan Document,
Officers Certificate or other document delivered to the
Lender pursuant hereto or in connection with any Loan Document
is found to be false or incorrect in any way so as to make it
materially misleading when made or deemed to have been made
and as a result thereof, there is a material adverse effect on
the Borrower s ability to perform its obligations hereunder
and, if capable of being corrected, is not corrected within 10
Days of the Lender giving notice thereof;
9.1.4. either the Borrower or FMG permits any default under one or
more agreements or instruments under or pursuant to which
Indebtedness was incurred or created or permits any other
event to occur and to continue after any applicable grace
period specified in such agreement or instruments, in either
case which is not waived or cured, if the effect of one or
more of such defaults or events results in the Indebtedness of
the Borrower or FMG in excess of $1,000,000 becoming due prior
to its stated maturity;
9.1.5. either the Borrower or FMG admits its inability to pay its
debts generally as they become due or otherwise acknowledges
its insolvency;
9.1.6. either the Borrower or FMG institutes any proceeding or takes
any corporate action or executes any agreement to authorize
its participation in or commencement of any proceeding:
9.1.6.1. seeking to adjudicate it a bankrupt or
insolvent, or
9.1.6.2. seeking liquidation, dissolution, winding up,
reorganization, arrangement, protection,
relief or composition of it or any of its
property or debt or making a proposal with
respect to it under any law relating to
bankruptcy, insolvency, reorganization or
compromise of debts or other similar laws
(including, without limitation, the filing of
any petition under the United States
Bankruptcy Code or any similar federal or
state statute);
9.1.7. any proceeding is commenced against or affecting either the
Borrower or FMG:
<PAGE> 26
- 22 -
9.1.7.1. seeking to adjudicate it a bankrupt or
insolvent;
9.1.7.2. seeking liquidation, dissolution, winding up,
reorganization, arrangement, protection,
relief or composition of it or any of its
property or debt or making a proposal with
respect to it under any law relating to
bankruptcy, insolvency, reorganization or
compromise of debts or other similar laws
(including, without limitation, the filing of
any petition under the United States
Bankruptcy Code or any similar federal or
state statute);or
9.1.7.3. seeking appointment of a receiver, trustee,
agent, custodian or other similar official
for it or for any substantial part of its
properties and assets, or any part thereof,
and such proceeding is not being contested in good faith by
appropriate proceedings and is not in any event stayed or
terminated within 45 days of its commencement, or, if such
proceeding is being contested in good faith, the Borrower
should default under section 9.1.1;
9.1.8. any execution, distress or other enforcement process, whether
by court order or otherwise, relating to any entry of final
judgement in excess of $1,000,000 becomes enforceable against
any property of the Borrower or of FMG and the same is not
fully covered by insurance; and
9.1.9. FMG ceases to be a wholly-owned subsidiary of the Borrower.
9.2. REMEDIES UPON DEFAULT
Upon the occurrence of any Event of Default, the Lender may do
any one or more of the following:
9.2.1. declare the unutilized portion (if any) of the Loan Facility
to be terminated (whereupon the Lender shall not be required
to make any further Advances) and declare all Obligations to
be immediately due and payable;
9.2.2. realize upon all or part of the Security;
9.2.3. take such actions and commence such proceedings as may be
permitted at law or in equity (whether or not provided for
herein or in the Loan Documents) at such times and in such
manner as the Lender in its sole discretion may consider
expedient,
all without, except as may be required by Applicable Law, any
additional notice, presentment, demand, protest, notice of protest, dishonour
or any other action. The rights and remedies of the Lender hereunder are
cumulative and are in addition to and not in substitution for any other rights
or remedies provided by Applicable Law or by the Loan Documents.
<PAGE> 27
- 23 -
9.3. DISTRIBUTIONS
All distributions under or in respect of the Loan Documents
shall be held by the Lender on account of the Obligations and the Borrower
shall remain liable for any deficiency. All such distributions may be applied
to such part of the Obligations as the Lender may see fit in its sole
discretion, and the Lender may at any time change any appropriation of any such
distributions or other moneys received by it and reapply the same against any
other part of the Obligations as the Lender may see fit, notwithstanding any
previous application, with any remaining amounts following payment of all
Obligations, payable to the Borrower.
ARTICLE 10.
ASSIGNMENT AND PARTICIPATIONS
10.1. ASSIGNMENTS
Except as provided in this section, no party may assign its
rights or benefits under this Agreement.
10.1.1. The Borrower shall not assign or transfer all or any part of
its rights or benefits hereunder without the prior written
consent of the Lender.
10.1.2. The Lender may assign all or part of its rights in respect of
the Obligations and the Security and have its corresponding
obligations hereunder assumed by:
10.1.2.1. any affiliate of the Lender without the
consent of the Borrower,
10.1.2.2. any other Person with the prior written
consent of the Borrower (which consent shall
not be unreasonably withheld).
Any assignment under section 10.1.2.1 shall become effective when the Borrower
has been notified thereof by the Lender and has received from the assignee an
undertaking to be bound by this Agreement and the other Loan Documents and to
perform the obligations assumed by it; any assignment under section 10.1.2.2
shall become effective when the Borrower has provided its written consent to
the Lender and has received from the assignee an undertaking to be bound by
this Agreement and the other Loan Documents and to perform the obligations
assumed by it. Any such assignee shall be treated as a party to this Agreement
for all purposes of this Agreement and the other Loan Documents and shall be
entitled to the full benefit hereof and thereof and shall be subject to the
obligations of the Lender to the same extent as if it were an original party in
respect of the rights assigned to it and obligations assumed by it and, except
in the case of an assignee referred to in section 10.1.2.1 the Lender shall be
released and discharged accordingly. Notwithstanding the foregoing, the
Borrower shall not have any liability under Article 1 or Article 2 of this
Agreement to any assignee in excess of the liability which would have been
incurred by the Borrower thereunder had the assignment or participation not
taken place.
<PAGE> 28
- 24 -
10.2. PARTICIPATIONS
The Lender may sell to one or more Eligible Participants
participations in a portion of its rights and obligations under this Agreement
up to an aggregate amount of $10,000,000 (including, without limitation, a
portion of its Commitment), but the participant shall not become a Lender and:
10.2.1. the Lender s obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
10.2.2. the Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
10.2.3. the Borrower and the Lender shall continue to deal solely and
directly with the Lender in connection with the Lender s
rights and obligations under this Agreement; and
10.2.4. no participant shall have any right to approve any amendment
or waiver of any provision of this Agreement, or any consent
to any departure by any person therefrom.
10.3. EXCHANGE OF INFORMATION
The Lender may provide to any proposed assignee or participant
such information concerning the financial position and the operations of the
Borrower as, in the opinion of the Lender, may be relevant or useful in
connection with the Loan Facility or any portion thereof proposed to be
acquired by such assignee or participant, provided that each recipient of such
information agrees not to disclose such information to any other Person.
ARTICLE 11.
GENERAL
11.1. RELIANCE AND NON-MERGER
All covenants, agreements, representations and warranties of
the Borrower made herein or in any other Loan Document or in any certificate or
other document signed by any of its directors or officers and delivered by or
on behalf of it pursuant hereto or thereto are material, shall be deemed to
have been relied upon by the Lenders notwithstanding any investigation
heretofore or hereafter made by the Lender or the Lender s Counsel or any
employee or other representative of the Lender and shall survive the execution
and delivery of this Agreement and the other Loan Documents until the Borrower
shall have satisfied and performed all of the Obligations.
<PAGE> 29
- 25 -
11.2. AMENDMENT AND WAIVER
No amendment or waiver of any provision of any Loan Document
or consent to any departure by the Borrower from any provision thereof is
effective unless it is in writing and signed by the Lender. Such amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it is given.
11.3. SET-OFF OR COMPENSATION
In addition to and not in limitation of any rights now or
hereafter granted under applicable law, if repayment is accelerated pursuant to
section 9.2, the Lender may at any time and from time to time without notice to
the Borrower or any other Person, any notice being expressly waived by the
Borrower, set-off and compensate and apply any and all deposits, general or
special, time or demand, provisional or final, matured or unmatured, and any
other indebtedness at any time owing by the Lender to or for the credit of or
the account of the Borrower, against and on account of the Obligations
notwithstanding that any of them are contingent or unmatured and
notwithstanding that any such deposit or indebtedness may or may not be
expressed in the same Currency.
11.4. NOTICES
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be given by prepaid first-class
mail, by telecopier or other means of electronic communication or by
hand-delivery as hereinafter provided. Any such notice, if mailed by prepaid
first-class mail at any time other than during or within three Banking Days
prior to a general discontinuance of postal service due to strike, lockout or
otherwise, shall be deemed to have been received on the fourth Banking Day
after the post-marked date thereof, or if sent by telecopier or other means of
electronic communication, shall be deemed to have been received on the Banking
Day following the sending, or if delivered by hand shall be deemed to have been
received at the time it is delivered to the applicable address of the addressee
to a senior officer of the addressee at such address with responsibility for
matters to which the information relates. Notice of change of address shall
also be governed by this section. In the event of a general discontinuance of
postal service due to strike, lock-out or otherwise, notices or other
communications shall be delivered by hand or sent by facsimile or other means
of electronic communication and shall be deemed to have been received in
accordance with this section. Notices and other communications shall be
addressed to the addresses of the relevant party hereto as follows:
To the Borrower:
FirstMiss Gold Inc.
5460 South Quebec Street
Suite 240
Englewood, Colorado
80111 U.S.A.
<PAGE> 30
- 26 -
Attention: Chief Financial Officer
Telecopier No.: (303) 771-1075
with a copy to:
Latham & Watkins
505 Montgomery Street
Suite 1900
San Francisco, California
94111-2562 U.S.A.
Attention: Christopher L. Kaufman
Telecopier No.: (415) 395-8095
To FMG:
FMG Inc.
c/o FirstMiss Gold Inc.
5460 South Quebec Street
Suite 240
Englewood, Colorado
80111 U.S.A.
Attention: Chief Financial Officer
Telecopier No.: (303) 771-1075
To the Lender:
Toronto Dominion Securities Inc.
Merchant Banking
222 Bay Street
Ernst & Young Tower
20th Floor
Toronto, Ontario
M5K 1A2
Attention: John B. MacIntyre
Telecopier No.: (416) 944-5579
with a copy to:
Tory Tory DesLauriers & Binnington
Aetna Tower, Suite 3000
Toronto-Dominion Centre
Toronto, Ontario
M5K 1N2
<PAGE> 31
- 27 -
Attention: W. Geoffrey Beattie
Telecopier No.: (416) 865-7380
11.5. TIME
Time is of the essence of the Loan Documents.
11.6. FURTHER ASSURANCES
Whether before or after the happening of an Event of Default,
the Borrower shall at its own expense do, make, execute or deliver all such
further acts, documents and things in connection with the Loan and the Loan
Documents as the Lender may reasonably require from time to time for the
purpose of giving effect to the Loan Documents including, without limitation,
for the purpose of facilitating the enforcement of the Loan Documents, all
promptly upon the request of the Lender.
11.7. CURRENCY CONVERSION AND INDEMNITY
All payments made hereunder shall be made in the Currency in
respect of which the obligations requiring such payment arose. If, in
connection with any action or proceeding brought in connection with this
Agreement or any of the Loan Documents or any judgment or order obtained as a
result thereof, it becomes necessary to convert any amount due hereunder in one
Currency (the "First Currency") into another Currency (the "Second Currency"),
then the conversion shall be made at the Exchange Rate on the first Banking Day
prior to the day on which payment is received.
If the conversion is not able to be made in the manner
contemplated by the preceding paragraph in the jurisdiction in which the action
or proceeding is brought, then the conversion shall be made at the Exchange
Rate on the day on which the judgment is given.
11.8. COUNTERPARTS
This Agreement may be signed in any number of counterparts,
each of which shall be deemed to be an original, but all such separate
counterparts shall together constitute one and the same instrument.
11.9. ENTIRE AGREEMENT
The Loan Documents constitute the entire agreement between the
parties hereto pertaining to the matters therein set forth and supersede and
replace any prior understandings or arrangements pertaining to the subject
matter hereof. There are no warranties, representations or agreements between
the parties in connection with such matters except as specifically set forth or
referred to in the Loan Documents
<PAGE> 32
- 28 -
11.10. DATE OF AGREEMENT
This Agreement may be referred to as being dated September 24,
1995 or as of September 24, 1995, notwithstanding the actual date of execution.
IN WITNESS WHEREOF this Agreement has been executed by the
parties hereto as of the date first written above.
FIRSTMISS GOLD INC.
By:
------------------------------
By:
------------------------------
THE TORONTO-DOMINION BANK
By:
------------------------------
By:
------------------------------
<PAGE> 33
SCHEDULE A
REQUEST FOR ADVANCE
TO: The Toronto-Dominion Bank ("TD")
FROM: FirstMiss Gold Inc.(the "Borrower")
- --------------------------------------------------------------------------------
Reference is made to a Loan Agreement (the "Loan Agreement") dated as
of September 24, 1995 between the Borrower and TD, pursuant to which TD,
through its merchant banking division, agreed to lend U.S. $20,000,000 to the
Borrower. All terms used in this Request for Advance which are defined in the
Loan Agreement have the meanings attributed thereto in the Loan Agreement.
The Borrower hereby requests an Advance pursuant to the Loan Agreement
as follows:
1. Amount of Advance:
---------------------------------------------------
2. Advance Date:
--------------------------------------------------------
3. Payment instructions (if any):
---------------------------------------
----------------------------------------------------------------------
DATED this day of September, 1995.
FIRSTMISS GOLD INC.
By:
-------------------------------
Title:
By:
-------------------------------
Title:
<PAGE> 34
SCHEDULE B
GUARANTEE
WHEREAS FirstMiss Gold Inc., a Nevada corporation (the "Borrower")
entered into an agreement dated September 24, 1995 with The Toronto-Dominion
Bank (the "Lender") (through its Toronto Dominion Merchant Bank Division) a
Canadian chartered bank (the "Loan Agreement");
AND WHEREAS FMG Inc., a Nevada corporation, and a wholly-owned
subsidiary of the Borrower (the "Guarantor") has agreed to guarantee the
obligations of the Borrower to the Lender;
NOW THEREFORE for valuable consideration (the receipt and
sufficiency whereof are hereby acknowledged), the Guarantor hereby agrees to
and with the Lender as follows:
1. All capitalized terms used, but not defined, in this guarantee (the
"Guarantee") shall have the meaning ascribed to such terms in the Loan
Agreement.
2. The Guarantor hereby unconditionally, absolutely and irrevocably
guarantees payment to the Lender of all principal and interest and other
monies, debts and liabilities, present or future, direct or indirect, absolute
or contingent, matured or not, at any time, owing by the Borrower to the Lender
under the Loan Agreement and the other Loan Documents (all of which principal,
interest, debts and liabilities to be referred to hereinafter as, collectively,
the "Obligations"). This Guarantee shall be a continuing guarantee of all of
the Obligations now or hereafter owing or to be performed pursuant to the Loan
Agreement by the Borrower and any security given in respect thereof by the
Borrower. This Guarantee shall not be considered as wholly or partially
satisfied by the payment or liquidation at any time of any amount of money for
the time being due or remaining unpaid by the Borrower to the Lender. The
Guarantor also agrees to pay all reasonable costs and expenses incurred in
connection with enforcing this Guarantee (including legal costs on a solicitor
and client basis).
3. The liability of the Guarantor under this Guarantee shall be
absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any agreement between the
Borrower, the Guarantor and the Lender, or between the Lender and
any other person or the failure on the part of the Borrower or the
Lender to carry out any of its obligations under such agreements;
(b) any change in the time, manner or place of payment of, amount of
credit available to the Borrower under or in any other term of, or
any other amendment or waiver of, or any consent to departure from,
any agreement between the Borrower, the
<PAGE> 35
-2-
Guarantor and the Lender, or between the Lender and any other
person, relating to the Loan Agreements or this Guarantee;
(c) any change in the name or business of the Borrower or the Lender;
(d) any impossibility, impracticability, frustration of purpose,
illegality, force majeure or act of government;
(e) the bankruptcy, winding-up, liquidation, dissolution or insolvency
of the Borrower, the Lender or any party to any agreement to which
the Lender is party;
(f) any lack or limitation of power, incapacity or disability on the
part of the Borrower or of the directors, partners or agents
thereof or any other irregularity, defect or informality on the
part of the Borrower in its obligations to the Lender; or
(g) any other law, regulation or other circumstance which might
otherwise constitute a defence available to, or a discharge of, the
Borrower in respect of any or all of the Obligations.
4. The Lender shall not be concerned to see or enquire into the powers
of the Borrower or any of its directors, officers, managers, agents or other
entity or entities acting or purporting to act on its behalf, and the credit in
fact borrowed or obtained from the Lender under the Loan Agreement by the
Borrower in professed exercise of such powers shall be deemed to form part of
the amounts hereby guaranteed, notwithstanding that such borrowing or obtaining
of such credit shall be in any way irregular, defective or informal. The
guarantee contained in this Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of the indebtedness
or obligation of the Borrower under the Loan Agreement is rescinded or must
otherwise be returned by the Lender upon the insolvency, bankruptcy,
dissolution or reorganization of the Borrower, all as though such payment had
not been made.
5. All indebtedness and liabilities, present and future, of the
Borrower to the Guarantor are hereby assigned to the Lender and postponed to
the Obligations, and all moneys received by the Guarantor in respect thereof
shall be received in trust for the Lender and forthwith upon receipt shall be
paid over to the Lender except as otherwise provided in the Loan Agreement, the
whole without in any way limiting or lessening the liability of the Guarantor
under the foregoing guarantee; and this assignment and postponement is
independent of the said guarantee and shall remain in full effect
notwithstanding that the liability of the Guarantor under the said guarantee
may be extinct. The term "Obligations", as previously defined, for purposes of
the postponement feature provided by this agreement, and this section in
particular, includes any funds advanced or held at the disposal of the Borrower
under any line(s) of credit.
6. The Lender shall not be bound to exhaust its recourse against the
Borrower, or others of any security or other guarantees the Lender may at any
time hold before being entitled to payment from the Guarantor. Without
limiting the foregoing, the Guarantor waives its benefits, if any, under any
applicable anti-deficiency or single-action legislation.
<PAGE> 36
-3-
7. The liability of the Guarantor to make payment under this Guarantee
shall arise forthwith after demand for payment has been made in writing on the
Guarantor by the Lender.
8. The Lender may treat all Obligations of the Borrower as due and
payable on demand in accordance with the Loan Agreement and the Lender may
forthwith, following demand in accordance with this Guarantee, collect from the
Guarantor the total amount hereby guaranteed and may apply the amount so
collected against the Obligations of the Borrower owing under the Loan
Agreement. A written statement of the Lender as to the amount remaining unpaid
by the Borrower to the Lender at any time shall be, in the absence of manifest
error, evidence against the Guarantor as to the amount remaining unpaid to the
Lender under the Loan Agreement at such time by the Borrower.
9. This Guarantee shall be in addition to and not in substitution for
any other guarantee or other security which the Lender may now or hereafter
hold in respect of the Obligations, and the Lender shall be under no obligation
to marshal in favour of the Borrower any other guarantee or other security or
any monies or other assets which the Lender may be entitled to receive or may
have a claim upon. No loss of, or in respect of, or under any other guarantee
or other security under the Loan Agreement or this Guarantee shall in any way
limit or lessen the liability of the Guarantor hereunder. This Guarantee shall
be a continuing guarantee and shall cover all the Obligations at any time or
from time to time and it shall apply to and secure any ultimate balance due or
remaining unpaid to the Lender under the Loan Agreement.
10. The obligations and liabilities of the Guarantor under this
Guarantee shall not be released, discharged, limited or in any way affected by
anything done, suffered or permitted by the Lender in connection with any
monies advanced by the Lender to the Borrower or any security therefor
including any loss of or in respect of any security received by the Lender from
the Borrower or others. Without prejudice to and without releasing,
discharging, limiting or otherwise affecting in whole or in part the
obligations and liabilities of the Guarantor hereunder and without in any way
obtaining the consent of or giving notice to the Guarantor, the Lender may
grant time, renewals, extensions, indulgences, releases and discharges to and
accept compositions from or otherwise deal with the Borrower and any other
guarantor as the Lender may see fit, and the Lender may take, abstain from
taking or perfecting, vary, exchange, renew, discharge, give up, realize on or
otherwise deal with any security and guarantees in such manner as the Lender
may see fit and the Lender may apply all monies received from the Borrower or
from securities or guarantees upon such part of the Obligations of the Borrower
under this Guarantee as may be permitted or required under the Loan Agreement
and change any such application in full or in part from time to time.
11. Until both repayment in full of all Obligations of the Borrower and
the termination of all commitments of the Lender under the Loan Agreement, all
dividends, compositions, proceeds of security, security valued or payments
received by the Lender from the Borrower in respect of the Obligations shall be
regarded for all purposes as payments in gross without any right on the part of
the Guarantor to claim the benefit thereof in reduction of the liability under
this Guarantee, and the Guarantor shall not be entitled to claim any set-off or
counterclaim against the Borrower in respect of any liability of the Borrower
to the Guarantor,
<PAGE> 37
-4-
claim or prove in the bankruptcy or insolvency of the Borrower in competition
with the Lender or have any right to be subrogated to the Lender. In the case
of the liquidation, dissolution, winding-up or bankruptcy of the Borrower,
whether voluntary or involuntary, or in the event that the Borrower shall make
an arrangement or composition with its creditors, the Lender shall have the
right to rank for its full claim and to receive all dividends or other payments
in respect thereof until its claim has been paid in full, and the Guarantor
shall continue to be liable to the Lender, less any payments made by the
Guarantor under this Guarantee, for any balance which may be owing to the
Lender by the Borrower. If any amount shall be paid to the Guarantor on
account of any subrogation rights (actual or postponed) at any time when all
Obligations of the Borrower shall not have been fully paid and satisfied, such
amount shall be held in trust for the benefit of the Lender and shall forthwith
be paid to the Lender to be credited and applied against the amount owing to
the Lender under the Loan Agreement and this Guarantee, whether matured or
unmatured.
12. The Guarantor shall do, execute and deliver or shall cause to be
done, executed and delivered all such further acts, documents and things as the
Lender may reasonably request for the purpose of giving effect to this
Guarantee (including the assignment and postponement contained in Section 5).
The guarantee contained in this Guarantee shall remain in full force and effect
until payment in full of all Obligations at any time or from time to time of
the Borrower under the Loan Agreement and the termination of all commitments of
the Lender under the Loan Agreement, and shall be binding upon the Guarantor,
its successors and assigns and enure to the benefit of and be enforceable by
the Lender and its successors and assigns.
13. Notwithstanding any other provision of the Loan Agreement or this
Guarantee (save and except for Section 3), upon both repayment in full of all
Obligations of the Borrower and the termination of all commitments of the
Lender under the Loan Agreement, the Guarantor shall be immediately released
from this Guarantee and all other obligations hereunder, including the
postponement set out in Section 5.
14. The Guarantor hereby irrevocably renounces all benefits of division
and discussion and binds itself jointly and severally with the Borrower to
fulfil the Obligations in the manner and upon the terms and conditions set
forth herein.
15. Any moneys or amounts expressed to be owing or payable by the
Guarantor hereunder which may not be recoverable from the Guarantor on the
footing of a guarantee shall be recoverable from the Guarantor as a primary
obligor and principal debtor in respect thereof.
16. This Guarantee shall be governed by and construed in accordance
with the laws of the Province of Ontario. The Guarantor irrevocably submits to
the courts of the Province of Ontario in any action or proceeding arising out
of or relating to this Guarantee, and irrevocably agrees that all such actions
and proceedings may be heard and determined in such courts, and irrevocably
waives, to the fullest extent possible, the defence of an inconvenient forum.
The Guarantor agrees that a judgment or order in any such action or proceeding
may be enforced in other jurisdictions in any manner provided by law; provided,
however, that the Lender may serve
<PAGE> 38
-5-
legal process in any manner permitted by law or may bring an action or
proceeding against the Guarantor or the property or assets of the Guarantor in
the courts of any other jurisdiction.
IN WITNESS WHEREOF this Guarantee has been executed and delivered
as of the 24th day of September, 1995.
FMG INC.
By:
------------------------
Name:
Title:
c/s
By:
------------------------
Name:
Title:
<PAGE> 39
SCHEDULE C
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is entered into as of the
24th day of September, 1995, by and between THE TORONTO-DOMINION BANK, acting
through its Toronto Dominion Merchant Bank Division ("Lender"), and FIRSTMISS
GOLD INC., a Nevada corporation ("Pledgor").
RECITALS
A. Pledgor is the owner of 100% of the issued and outstanding shares of
common stock of FMG Inc., a Nevada corporation (the "Company"), which are
represented by stock certificate no. 1 for 100 shares of common stock of the
Company (the "Pledged Shares").
B. Lender has agreed to make a loan (the "Loan") to Pledgor in the
maximum principal amount of $20,000,000 (U.S. Dollars), subject to and upon the
terms and conditions set forth in that certain Loan Agreement dated as of
September 24, 1995; between Pledgor and Lender (the "Loan Agreement").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Loan Agreement.
C. As a condition to making the Loan, Lender requires a pledge of the
Pledge Collateral (as hereinafter defined) to secure the payment by Pledgor of
all amounts due and payable under the Loan Agreement and the performance by
Pledgor of all of its obligations under the Loan Agreement and all of the other
Loan Documents, and Pledgor has agreed to pledge the Pledged Collateral to
Lender to provide such security.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce Lender to
make the Loan, Pledgor and Lender hereby agree as follows:
1. Pledge. Pledgor hereby pledges to Lender, and grants to Lender a
security interest in, the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other payments or
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares, and in all
rights of any kind attributable to or arising out of ownership of the Pledged
Shares (all of the foregoing being referred to herein as the "Pledged
Collateral").
<PAGE> 40
2. Security for Obligations. The Pledged Collateral shall secure
payment of all indebtedness, liabilities and other obligations of Pledgor under
or in connection with the Loan Agreement or any of the other Loan Documents (or
any extension, modification or replacement thereof), including all Advances,
whether actual or contingent, direct or indirect, matured or unmatured
(collectively, the "Obligations").
3. Delivery of Pledged Collateral. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered by Pledgor
to Lender, shall be held by Lender, and shall be in suitable form for transfer
by delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Lender.
Possession of all such certificates or instruments representing or evidencing
the Pledged Collateral by Lender shall be for itself and for its benefit.
4. Representations and Warranties. Pledgor represents and warrants to
Lender as follows:
(a) Pledgor's principal place of business is 5460 South Quebec
Street, Suite 240, Englewood, Colorado 80111.
(b) The Pledged Shares have been duly authorized and validly issued,
are fully paid and non-assessable, and represent 100% of the issued and
outstanding stock of Company.
(c) Pledgor is the legal and beneficial owner of the Pledged
Collateral, free and clear of any lien, security interest, option or other
charge or encumbrance whatsoever.
(d) No authorization, consent, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (i) for the pledge by Pledgor of the Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of
this Agreement by Pledgor; or (ii) for the exercise by Lender of the voting or
other rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally).
5. Voting Rights. So long as no Event of Default (hereinafter defined)
or event which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default (a "Default") shall have occurred and be
continuing, Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Loan
Agreement; provided, however, that Pledgor shall not exercise or refrain from
exercising any such right if, in Lender's judgment, such action would have a
material adverse effect on the value of the Pledged Collateral or any part
thereof, and provided further,
-2-
<PAGE> 41
that Pledgor shall give Lender not less than five (5) days' written notice of
the manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right. Upon the occurrence and during the continuance of
an Event of Default or a Default, all rights of Pledgor to exercise the voting
and other consensual rights which it would otherwise be entitled to exercise
pursuant to this Section 5 shall cease. All such rights shall thereupon become
vested in Lender, which shall thereupon have the sole right to exercise such
voting and other consensual rights.
6. Dividends and Distributions.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, Pledgor shall be entitled to receive and retain dividends and
distributions paid by the Company with respect to the Pledged Collateral;
provided, however, that any and all
(i) dividends and distributions paid or payable other than in cash
in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Pledged
Collateral;
(ii) dividends and other distributions paid or payable in respect of
any Pledged Collateral in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus; and
(iii) cash paid, payable or otherwise distributed in any respect of
principal of, or in redemption of, or in exchange for, any Pledged
Collateral,
shall be, and shall be forthwith delivered to Lender to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Lender, be segregated from the other property or funds of Pledgor,
and be forthwith delivered to Lender as Pledged Collateral in the same form as
so received (together with any necessary stock powers, endorsements or such
other instruments of transfer or assignment as Lender may request).
(b) Upon the occurrence and during the continuance of an Event of
Default or a Default, all of Pledgor's rights to receive dividends and
distributions under Section 6(a) shall cease, and all such rights shall
thereupon become vested in Lender, which shall have the sole right to receive
and hold as Pledged Collateral such dividends and distributions. All dividends
and distributions which are received by Pledgor contrary to the provisions of
this Section shall be received in trust for the benefit of Lender, shall be
segregated from other funds of Pledgor and shall be forthwith paid over to
Lender as Pledged Collateral in the same form as so received (together with any
necessary stock powers, endorsements or
-3-
<PAGE> 42
such other instruments of transfer or assignment as Lender may request).
7. Performance by Lender. If Pledgor fails to perform any covenant set
forth in this Agreement, Lender may itself perform, or cause performance of,
such covenant, and all expenses incurred by Lender in connection therewith
shall be payable by Pledgor.
8. Lender Appointed Attorney-in-Fact. Pledgor hereby appoints Lender as
Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in Lender's
discretion, upon the occurrence of an Event of Default or a Default, to take
any action and to execute any instrument which Lender may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend or other distribution in respect of the
Pledged Collateral or any part thereof and to give full discharge for the same.
This appointment is coupled with an interest and shall be irrevocable until
payment in full of the Obligations.
9. Assignment of Lender's Rights. The rights of Lender under this
Agreement may be assigned by it in connection with any assignment or
negotiation of the Loan in accordance with the terms of the Loan Agreement, and
any such holder or assignee shall be entitled to rely upon Pledgor's
representations, warranties and covenants as set forth herein.
10. Further Assurances. Pledgor agrees that at any time and from time to
time, Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action that may be necessary or desirable, or
that Lender may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Lender
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.
11. Transfers and Other Liens. Pledgor agrees that it will not
voluntarily, involuntarily or by operation of law sell, transfer, encumber,
pledge, hypothecate or grant any options or similar rights with respect to, or
otherwise convey or diminish in any manner any of the Pledged Collateral, except
in connection with Permitted Liens, without the prior written consent of
Lender, which may be withheld for any reason. Any attempt to convey, encumber
or otherwise diminish the Pledged Collateral in violation of the foregoing
sentence without the prior written consent of Lender shall be void,
unenforceable and of no legal effect.
12. Reasonable Care. Lender shall be deemed to have exercised reasonable
care in the custody of any of the Pledged Collateral that may be in its
possession if such Pledged Collateral is accorded treatment substantially equal
to that which Lender
-4-
<PAGE> 43
accords its own property, it being understood that, so long as Lender exercises
reasonable care in the custody of any Pledged Shares as may be in its
possession, Lender shall not have any responsibility for (a) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Collateral, whether or not
Lender has or is deemed to have knowledge or such matters; (b) taking any
necessary steps to preserve rights against any parties with respect to any
Pledged Collateral; or (c) failing to perform any act pursuant to a
discretionary power with respect to the Pledged Collateral conferred upon
Lender under this Agreement.
13. Events of Default. Each of the following shall constitute an event of
default (an "Event of Default") hereunder:
(a) The occurrence of any "Event of Default" as defined in the
Loan Agreement;
(b) The failure by Pledgor properly to perform any obligation
contained herein and the continuance of such failure for a period of
thirty (30) days following notice thereof from Lender to Pledgor; provided,
however, that if such failure is not curable within such thirty (30) day
period, then, so long as Pledgor commences to cure such failure within
such thirty (30) day period and is actively and diligently attempting to
cure such failure, Pledgor shall be afforded such additional time to cure
such failure as shall be reasonable in the circumstances, provided that in
any event such failure is cured within forty-five (45) days after notice
thereof from Lender to Pledgor;
(c) Any representation or warranty made by Pledgor in this Agreement
is found to be false or incorrect in any way so as to make it materially
misleading when made so that it would reasonably be expected to have a
material adverse effect on Pledgor's ability to repay the Obligations when
due or to perform its obligations under any of the Loan Documents and, if
capable of being corrected, is not corrected within ten (10) days after
notice thereof from Lender to Pledgor;
(d) The issuance by Company of any additional shares of stock
whatsoever;
(e) The Company's payment of a dividend or distribution in respect
of the Pledged Collateral, or purchase, redemption or other acquisition of
any of the Pledged Collateral, except, in each case, as permitted by the
Loan Agreement, without Lender's prior written consent;
(f) A breach of the covenant set forth in Section 11 of this
Agreement;
-5-
<PAGE> 44
(g) The dissolution, termination or liquidation of Pledgor or
Company; or
(h) The assertion of any claim of priority over the Pledged
Collateral, by title, lien or otherwise, other than the Permitted Liens.
14. Lender's Rights and Remedies Upon an Event of Default. If any Event
of Default shall have occurred and be continuing:
(a) Lender may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
on default under applicable law, and Lender may also, without notice
except as specified below, sell the Pledged Collateral or any part
thereof, in one or more parcels at public or private sale, at any
exchange, broker's board or at any of Lender's offices or elsewhere, for
cash, on credit, or for future delivery, and upon such other terms as
Lender may deem commerically reasonable. Any requirements for reasonable
notice of the time and place of any public sale, or of the time after
which any private sale or other disposition is to be made, will be
satisfied by Lender's giving of such notice to Pledgor at least five (5)
business days prior to the time of any public sale or the time after which
any private sale or other intended disposition is to be made. Lender shall
not be obligated to make or cause any sale of Pledged Collateral
regardless of notice of sale having been given. Lender may adjourn any
public or private sale from time to time by announcement, at the time and
place fixed therefor, of the time and place of the adjourned sale, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) Any cash held by Lender as Pledged Collateral and all cash
proceeds received by Lender in respect of any sale of, collection from
or other realization upon all or any part of the Pledged Collateral may,
in the discretion of Lender, be held by Lender as collateral for, and/or
then or at any time thereafter applied (after payment of any amounts
payable to Lender pursuant to Section 16 of this Agreement) in whole or in
part by Lender against, all or any part of the Obligations in accordance
with the terms of the Loan Agreement. Any surplus of such cash or cash
proceeds held by Lender and remaining after payment in full of all the
Obligations shall be paid over to PLedgor or to whomever may be lawfully
entitled to receive such surplus.
The rights and remedies of Lender hereunder are cumulative and are not
in lieu of, but are in addition to, any other rights or
-6-
<PAGE> 45
remedies which Lender may have under the Loan Agreement or any of the other
Loan Documents or at law or in equity. No act of Lender shall be construed as
an election to proceed under any particular provision of the Loan Agreement or
any other Loan Document to the exclusion of any other provision in the same or
any other such document, or as an election of remedies to the exclusion of any
other remedy which may then or thereafter be available to Lender.
15. No Third Party Rights. No person shall be a third party beneficiary
of any provision of any of the Loan Documents. All provisions of the Loan
Documents favoring Lender are intended solely for the benefit of Lender.
16. Expenses. Pledgor will pay to Lender upon demand the amount of any
and all expenses, including the fees and expenses of its counsel and of any
experts and agents, which Lender may incur in connection with (a) the
administration of this Agreement; (b) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral; and (c) the exercise or enforcement of any of the rights of Lender
hereunder.
17. Cooperation on Sale. If Lender shall reasonably determine to exercise
its right to sell all or any of the Pledged Collateral pursuant to Section 14
of this Agreement, Pledgor agrees that, upon request of Lender, Pledgor will,
at its own expense, do or cause to be done all such other acts and things as
may be reasonably necessary to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable law.
18. Security Interest Absolute. All rights of Lender and security
interests hereunder, and all obligations of Pledgor hereunder, shall be
absolute and unconditional irrespective of:
(a) Any lack of validity or enforceability of the Loan Agreement or
any other Loan Document;
(b) Any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the terms of the Loan
Agreement; or
(c) Any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Pledgor in respect of the
Obligations or this Agreement.
19. Amendments, Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Pledgor therefrom shall in any event
be effective unless the same shall be in writing and signed by Lender, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
-7-
<PAGE> 46
20. Notices. Any notice required or permitted to be given by Pledgor or
Lender under this Agreement shall be in writing and shall be given in
accordance with the Loan Agreement.
21. Continuing Security Interest; Transfer of Loan. This Agreement shall
create a continuing security interest in the Pledged Collateral and shall (a)
remain in full force and effect until payment in full of the Obligations; (b)
be binding upon Pledgor, its successors and permitted assigns; and (c) inure to
the benefit of Lender and its successors and permitted transferees and assigns.
Without limiting the generality of the foregoing clause (c), and subject only
to Section 10.1.2 of the Loan Agreement, Lender may assign or otherwise
transfer the Loan to any other person or entity, and such other person or
entity shall thereupon become vested with all the benefits in respect thereof
granted to Lender herein or otherwise. Upon the payment in full of the
Obligations, Pledgor, subject to the terms and conditions of this Agreement and
the Loan Agreement, shall be entitled to the return of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
22. Illegality. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, the legality, validity and enforceability of the
remaining provisions of this Agreement shall not be affected thereby, and in
lieu of each such illegal, invalid or unenforceable provision there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable. If the rights and liens created by this Agreement
shall be invalid or unenforceable as to any part of the Obligations, then the
unsecured portion of the Obligations shall be completely paid prior to the
payment of the remaining and secured portion of the Obligations, and all
payments made on the Obligations shall be considered to have been paid on and
applied first to the complete payment of the unsecured portion of the
Obligations.
23. Binding Effect. The provisions of this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
24. Amendment. This Agreement may not be amended, modified or changed,
nor shall any waiver of any provision hereof be effective, except only by an
instrument in writing and signed by the party against whom enforcement of any
waiver, amendment, change, modification or discharge is sought.
25. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be a duplicate original.
26. Captions. The captions used in this Agreement are for convenience of
reference only and are in no way intended to be
-8-
<PAGE> 47
used to limit, define or interpret the scope or intent of this Agreement or any
provisions hereof.
27. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed
and delivered as of the date first above written.
PLEDGOR:
FIRSTMISS GOLD INC., a
ATTEST: Nevada corporation
By: By:
------------------------------- --------------------------------
Secretary
Title:
-----------------------------
[SEAL]
LENDER:
THE TORONTO-DOMINION BANK
By:
--------------------------------
Title:
-----------------------------
-9-
<PAGE> 48
IRREVOCABLE STOCK POWER
KNOW ALL MEN BY THESE PRESENTS:
That FIRSTMISS GOLD INC., a Nevada corporation ("FIRSTMISS"), for value
received, hereby assigns and transfers unto ___________________________
__________________ ("Transferee") One Hundred (100) shares of the common stock
of FMG INC., a Nevada corporation (the "Corporation"), standing in the name of
FIRSTMISS on the books of the Corporation and represented by Certificate No. 1,
and FIRSTMISS hereby constitutes and appoints ________________________ as
attorney-in-fact, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge
and make over all or any part of the common stock described above, and for that
purpose to make and execute all necessary acts of assignment and transfer
thereof, and to substitute one or more persons with like full power, FIRSTMISS
hereby ratifying and confirming all that said attorney-in-fact or a substitute
or substitutes shall lawfully do by virtue thereof.
Entered into this ____ day of _____________ , 1995.
FIRSTMISS GOLD INC.,
a Nevada corporation
ATTEST:
By:
- ----------------------------- ----------------------------
Secretary
Title:
---------------------
(Corporate Seal)
<PAGE> 49
SCHEDULE D
GRID PROMISSORY NOTE
Date: [ ]
FOR VALUE RECEIVED the undersigned hereby unconditionally promises
to pay on demand to the order of The Toronto-Dominion Bank (the "Bank"), in
lawful money of the United States of America, the Loans under the Agreement as
recorded on the grid schedule attached hereto, in accordance with the
provisions regarding the payment of such Loans set forth in the loan agreement
(the "Loan Agreement") dated as of September 24, 1995 between the undersigned
and the Bank.
This grid promissory note is issued pursuant to and is subject to
the provisions of the Loan Agreement. All terms used in this Grid Promissory
Note which are defined in the Loan Agreement have the meanings attributed
thereto in the Loan Agreement.
The undersigned acknowledges that the actual recording of amounts
advanced and amounts paid on the attached grid schedule shall, in the absence
of manifest error, be prima facie evidence of the same; provided that the
failure of the Bank to record the same on the grid schedule shall not affect
the obligation of the undersigned to pay or repay the Obligations.
Payments of principal and interest hereunder must be made at the
location specified in the Loan Agreement or at such other location as may be
notified by the Bank to the undersigned.
The undersigned waives presentment for payment, notice of
non-payment, protest and notice of protest of this grid promissory note and
diligence in collection or bringing suit.
This Grid Promissory Note shall be governed by and construed in
accordance with the laws of the Province of Ontario.
FIRSTMISS GOLD INC.
By:
---------------------------
Title:
c/s
By:
---------------------------
Title
<PAGE> 50
Currency: U.S. Dollars
<TABLE>
<CAPTION>
ADVANCE UNPAID NOTATION
DATE REQUESTED BY ADVANCES INTEREST PAYMENTS BALANCE MADE BY
---- ------------ -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
_____________ ____________ _____________ ___________ ___________ ___________ ____________
</TABLE>
<PAGE> 51
SCHEDULE E
PERMITTED LIENS
"Permitted Liens" means (a) the rights and interests of the Lender
as provided in the Loan Documents, (b) Liens for any tax, assessment or other
governmental charge, either secured by a bond reasonably acceptable to the
Lender or not yet due or being contested diligently and in good faith by
appropriate proceedings in respect of which no final judgment or order has been
issued (whether or not rights of appeal exist), (c) materialmen's, mechanics',
workers', repairmen's, employees' or other like Liens arising in the ordinary
course of business or in connection with development of the Turquoise Ridge
Deposit, so long as the same are either (i) being contested in good faith by
appropriate proceedings in respect of which no final judgment or order has been
issued (whether or not rights of appeal exist) or (ii) are bonded with a
statutory form of lien release bond (or otherwise in form and substance
reasonably satisfactory to the Lender) in an amount equal to 100% of the amount
of the Lien claim, (d) Liens arising out of judgments or awards so long as an
appeal or proceeding for review is being prosecuted in good faith and the
enforcement of such judgment or award has been stayed and such judgments or
awards do not singly or in the aggregate exceed $250,000, (e) mineral rights,
other than rights in the Turquoise Ridge Deposit, the use and enjoyment of
which do not materially interfere with the use and enjoyment of the property of
the Borrower, (f) Liens, deposits or pledges to secure statutory obligations or
performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, or for purposes of like general nature in the
ordinary course of its business which are not overdue, (g) Liens on assets
(real or personal) of the Borrower which assets have a fair market value of
less than $250,000 in the aggregate, (h) other Liens incident to the ordinary
course of business that are not incurred in connection with the obtaining of
any loan, advance or credit and that do not in the aggregate materially impair
the use of the property or assets of the Borrower or the value of such property
or assets for the purposes of such business, (i) Liens, rights of way, and
other defects or encumbrances on title to real property owned, held or leased
by the Borrower that do not in the aggregate materially impair the use of such
real property of the Borrower or the value of such real property for the
purposes of the business for which such real property is held and (j)
involuntary Liens securing a charge or obligation, on any of the Borrower's
property, either real or personal, whether now or hereafter owned in the
aggregate sum of less than $250,000 which are being contested in good faith.
