EXHIBIT 99.1
______________________________________________________
CREDIT AND GUARANTEE AGREEMENT
Dated as of May 18, 2000
Between
LAC DES ILES MINES LTD.
as the Borrower
and
NORTH AMERICAN PALLADIUM LTD.
as the Parent Guarantor
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS
as the Lenders
and
BANK OF MONTREAL
as the Administrative Agent for the Lenders
and
ROYAL BANK OF CANADA
as the Syndication Agent for the Lenders
and
THE BANK OF NOVA SCOTIA
as the Documentation Agent for the Lenders
______________________________________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
___________
BARRISTERS & SOLICITORS
TABLE OF CONTENTS
RECITALS.............................................................................................. 1
SECTION 1 - DEFINITIONS AND ACCOUNTING TERMS.......................................................... 1
1.1 Defined Terms............................................................................... 1
(1) Acceptable Bank................................................................... 2
(2) Accounts.......................................................................... 2
(3) Additional Compensation........................................................... 2
(4) Additional Project Document....................................................... 2
(5) Administrative Agent.............................................................. 2
(6) Administrative Agent's Account for Payments....................................... 2
(7) Administrative Agent's Branch of Account.......................................... 2
(8) Affected Borrowing................................................................ 2
(9) Affiliate......................................................................... 2
(10) Aggregate Commitment.............................................................. 3
(11) Agreement......................................................................... 3
(12) Applicable Margin................................................................. 3
(13) Applicable Period................................................................. 3
(14) Approvals to be Obtained.......................................................... 3
(15) Approved Budget................................................................... 4
(16) Assignee Lender................................................................... 4
(17) Authorized Officer................................................................ 4
(18) BMO............................................................................... 4
(19) Borrower.......................................................................... 4
(20) Borrower Completion Certificate................................................... 4
(21) Borrower Construction Certificate................................................. 4
(22) Borrowing......................................................................... 4
(23) Borrowing Request................................................................. 4
(24) Budgeted Capital Expenditures..................................................... 4
(25) Budgeted Project Costs............................................................ 4
(26) Business Day...................................................................... 4
(27) Canadian Benefit Plans............................................................ 4
(28) Canadian Dollar, Dollar, and the sign "$" and "C$"................................ 5
(29) Canadian Pension Plans............................................................ 5
(30) Capital Expenditures.............................................................. 5
(31) Capitalized Lease Liabilities..................................................... 5
(32) Cash Flow......................................................................... 5
(33) Cash Operating Cost Per Ounce of Accountable Palladium............................ 5
(34) Cash Operating Cost Per Tonne Ore Milled.......................................... 5
(35) Cash Production Costs............................................................. 5
(36) CFADS............................................................................. 6
(37) Change of Control................................................................. 6
(38) Change Order...................................................................... 6
(40) Collateral........................................................................ 6
(41) Commitment........................................................................ 6
(i)
(42) Commitment Amount................................................................. 6
(43) Commitment Termination Date....................................................... 6
(44) Commitment Termination Event...................................................... 6
(45) Commodity Swap.................................................................... 6
(46) Completion........................................................................ 7
(47) Completion Date................................................................... 7
(48) Completion Guarantee.............................................................. 7
(49) Completion Guarantors............................................................. 7
(50) Consent to Assignment............................................................. 7
(51) Construction Budget............................................................... 8
(52) Construction Contracts............................................................ 8
(53) Contest........................................................................... 8
(54) Continuation/Conversion Notice.................................................... 8
(55) Cost Overrun...................................................................... 8
(56) Credit Party...................................................................... 8
(57) Date Certain...................................................................... 8
(58) Debt.............................................................................. 8
(59) Debt Service...................................................................... 9
(60) Debt Service Coverage Ratio....................................................... 9
(61) Debt Service Reserve Account...................................................... 9
(62) Default........................................................................... 9
(63) Development....................................................................... 9
(64) Development Plan.................................................................. 9
(65) Disputed Item..................................................................... 9
(66) Effective Date.................................................................... 9
(67) Environmental Claim............................................................... 9
(68) Environmental Laws................................................................ 9
(69) Environmental Liabilities......................................................... 10
(70) Environmental Permits............................................................. 10
(71) Equity Contribution............................................................... 10
(72) Equivalent Amount................................................................. 10
(73) Event of Abandonment.............................................................. 10
(74) Event of Default.................................................................. 10
(75) Excess Cash Flow.................................................................. 10
(76) Excluded Taxes.................................................................... 10
(77) Existing Mine..................................................................... 10
(78) Feasibility Study................................................................. 10
(79) Federal Funds Rate................................................................ 10
(80) Fee Letter........................................................................ 11
(81) Final Maturity Date............................................................... 11
(82) Fiscal Quarter.................................................................... 11
(83) Fiscal Year....................................................................... 11
(84) Force Majeure..................................................................... 11
(85) GAAP.............................................................................. 11
(86) General Contractor................................................................ 11
(87) Government Approval............................................................... 11
(88) Government Authority.............................................................. 11
(ii)
(89) Government Rule................................................................... 11
(90) Guarantee or "Guaranty"........................................................... 12
(91) Guarantors........................................................................ 12
(92) Guaranteed Liability.............................................................. 12
(93) Hazardous Material................................................................ 12
(94) Hedge Agreements.................................................................. 12
(95) Hedging Obligations............................................................... 12
(96) herein, hereof, hereto, hereunder and similar terms............................... 12
(97) Impermissible Qualification....................................................... 13
(98) including......................................................................... 13
(99) Indebtedness...................................................................... 13
(100) Indemnified Liabilities........................................................... 13
(101) Indemnified Parties............................................................... 13
(102) Independent Engineer.............................................................. 13
(103) Independent Engineer Completion Certificate....................................... 13
(104) Independent Engineer Construction Certificate..................................... 13
(105) Initial Repayment Date............................................................ 13
(106) Insolvency Laws................................................................... 14
(107) Insurance Advisor................................................................. 14
(108) Insurance Policies................................................................ 14
(109) Interest Expense.................................................................. 14
(110) Interest Payment Date............................................................. 14
(111) Interest Period................................................................... 14
(112) Interest Rate/Currency Protection Agreement....................................... 14
(113) Investment........................................................................ 14
(114) ITA............................................................................... 15
(115) ▇▇▇▇▇▇ Bridge Loan................................................................ 15
(116) ▇▇▇▇▇▇-▇▇▇▇▇ Credit Agreement..................................................... 15
(117) Kaiser Group...................................................................... 15
(118) ▇▇▇▇▇▇ Sub Debt................................................................... 15
(119) Leases............................................................................ 15
(120) Lenders........................................................................... 15
(121) Lender Assignment Agreement....................................................... 15
(122) LIBO Rate......................................................................... 15
(123) LIBO Rate Loan.................................................................... 16
(124) LIBOR Interest Date............................................................... 16
(125) Lien.............................................................................. 16
(126) Life-of-Mine Plan................................................................. 16
(127) Loan.............................................................................. 16
(128) Loan Documents.................................................................... 16
(129) London Price for Gold............................................................. 16
(130) London Price for Platinum......................................................... 17
(131) Loss.............................................................................. 17
(132) Loss Proceeds..................................................................... 17
(133) Loss Proceeds Account............................................................. 17
(134) Majority Lenders.................................................................. 17
(135) Major Loss........................................................................ 17
(iii)
(136) Material Adverse Effect........................................................ 17
(137) Material Project Contracts..................................................... 17
(138) Mechanics' Liens............................................................... 17
(139) ▇▇▇▇▇'▇........................................................................ 17
(140) Mortgages...................................................................... 17
(141) Mortgaged Properties........................................................... 18
(142) Net Available Amount........................................................... 18
(143) Non-Government Approval........................................................ 18
(144) Non-Material Project Contracts................................................. 18
(145) Obligation..................................................................... 18
(146) Obligor........................................................................ 18
(147) Operating Account.............................................................. 18
(148) Operating Budget............................................................... 18
(149) Operation and Maintenance Expenses............................................. 18
(150) Organizational Document........................................................ 19
(151) ounces......................................................................... 19
(152) Palladium Sales Contract....................................................... 19
(153) Participant.................................................................... 19
(154) Percentage..................................................................... 19
(155) Permitted Hedge Agreement...................................................... 19
(156) Permitted Indebtedness......................................................... 19
(157) Permitted Investments.......................................................... 19
(158) Permitted Liens................................................................ 19
(159) Person......................................................................... 19
(160) Physical Completion............................................................ 19
(161) Pledge Agreement............................................................... 20
(162) Power Supply Agreement......................................................... 20
(163) Principal Payment Date......................................................... 20
(164) Pro Forma Debt Service Coverage Ratio.......................................... 20
(165) Prohibited Change Order........................................................ 20
(166) Project........................................................................ 21
(167) Project Costs.................................................................. 21
(168) Project Costs Accounts......................................................... 21
(169) Project Party.................................................................. 21
(170) Project Revenues............................................................... 21
(171) Property....................................................................... 21
(172) Qualifying Term................................................................ 21
(173) Real Estate.................................................................... 21
(174) Release........................................................................ 21
(175) Required Insurance............................................................. 21
(176) Restricted Payment............................................................. 22
(177) Reuters Screen LIBO Page....................................................... 22
(178) Royalty Agreement.............................................................. 22
(179) S&P............................................................................ 22
(180) Secured Obligations............................................................ 22
(181) Secured Parties................................................................ 22
(182) Security Agreements............................................................ 22
(iv)
(183) Security Document.................................................... 23
(184) Site................................................................. 23
(185) Smelting Agreements.................................................. 23
(186) Stock................................................................ 23
(187) Subject Claim........................................................ 23
(188) Subordination Agreement.............................................. 23
(189) Subsidiary........................................................... 23
(190) Super Majority Lenders............................................... 23
(191) Target Amount........................................................ 23
(192) Tax and Taxes........................................................ 24
(193) Termination Date..................................................... 24
(194) Test Period.......................................................... 24
(195) tonnes............................................................... 24
(196) Transaction Documents................................................ 24
(197) Type................................................................. 24
(198) United States or "US" means.......................................... 24
(199) United States Dollar, "US Dollar" and the sign "US"$................. 24
(200) US Base Rate......................................................... 24
(201) USBR Loan............................................................ 24
(202) Use.................................................................. 24
(203) Wholly Owned Subsidiary.............................................. 25
1.2 Use of Defined Terms........................................................ 25
1.3 Accounting and Financial Determinations..................................... 25
1.4 Conflict.................................................................... 25
1.5 Currency.................................................................... 25
1.6 Time........................................................................ 25
1.7 Headings and Table of Contents.............................................. 25
1.8 Number and Gender........................................................... 25
1.9 References.................................................................. 25
1.10 Statutory References........................................................ 25
1.11 Time of Day................................................................. 25
1.12 Governing Law............................................................... 25
1.13 Entire Agreement............................................................ 26
1.14 Severability................................................................ 26
SECTION 2 - COMMITMENTS, BORROWING PROCEDURES AND NOTES............................... 26
2.1 Commitments................................................................. 26
2.2 Lenders Not Permitted or Required to Make Loans............................. 26
2.3 Borrowing Procedure......................................................... 26
2.4 Continuation and Conversion Elections....................................... 28
2.5 Reliance on Oral Instructions............................................... 28
2.6 Deposit of Proceeds of Loans................................................ 28
2.7 Evidence of Obligations..................................................... 28
SECTION 3 - REPAYMENTS, PREPAYMENTS, INTEREST AND FEES................................ 29
3.1 Repayments and Prepayments.................................................. 29
(1) Repayment............................................................... 29
(2) Voluntary Prepayment.................................................... 29
(3) Mandatory Prepayment.................................................... 30
(v)
(a) Excess Cash Flow..................................................... 30
(b) Loss Proceeds........................................................ 30
(4) Pro Rata Application of Payments..................................... 30
(5) Repayment, Prepayment and Cancellation............................... 31
3.2 Interest Provisions...................................................... 31
(1) Interest on USBR Loans............................................... 31
(2) Interest on LIBO Rate Loans.......................................... 32
(a) Rate................................................................. 32
(b) Calculation.......................................................... 32
(c) Determination by Administrative Agent................................ 32
(3) Post-Default Rates................................................... 32
(4) Payment Dates - General.............................................. 32
3.3 Other Fees............................................................... 32
(1) Commitment Fee....................................................... 32
(2) Other Fees........................................................... 33
3.4 Interest Act............................................................. 33
3.5 Limit on Rate of Interest................................................ 33
(1) Adjustment........................................................... 33
(2) Reimbursement........................................................ 33
(3) Actuarial Principles................................................. 33
SECTION 4 - OTHER EXPENSE PROVISIONS............................................... 34
4.1 Change in Circumstances.................................................. 34
(1) Reduction in Rate of Return.......................................... 34
(2) Taxes, Reserves, Capital Adequacy, etc............................... 34
(3) Payment of Additional Compensation................................... 35
(4) Commercially Reasonable.............................................. 35
4.2 Payment of Portion....................................................... 35
4.3 Illegality............................................................... 35
4.4 Substitute Basis of Advance - LIBO Rate Loans............................ 36
4.5 Indemnity - Eurodollar................................................... 36
(1) LIBO Rate Loans...................................................... 36
(2) Certificate.......................................................... 37
4.6 Taxes.................................................................... 37
(1) Payments............................................................. 37
(2) Indemnity............................................................ 37
(3) Evidence of Payment.................................................. 37
(4) Excluded Taxes....................................................... 38
(5) Survival............................................................. 38
4.7 Payments, Computations, etc.............................................. 38
4.8 Currency Matters......................................................... 38
4.9 Sharing of Payments...................................................... 38
4.10 Setoff................................................................... 39
SECTION 5 - CONDITIONS TO BORROWING................................................ 39
5.1 Initial Borrowing........................................................ 39
(1) Borrower Documents................................................... 39
(2) Material Project Contracts; Consents to Assignment................... 39
(3) Organizational Documents............................................. 40
(vi)
(4) Officer's Certificates............................................. 41
(5) Consents and Approvals............................................. 41
(6) Insurance Certificates and Insurance Advisor....................... 41
(7) Opinions of Counsel................................................ 42
(8) Security Agreements................................................ 42
(9) Pledge Agreement................................................... 42
(10) Mortgage; Title Reports; Survey; Appraisal......................... 42
(11) Engineer's Report.................................................. 43
(12) Special Accounts................................................... 43
(13) Completion Guarantee............................................... 43
(14) The Guarantors..................................................... 44
(15) Subordination Agreement............................................ 44
(16) Subordination...................................................... 44
(17) Financial Statements............................................... 44
(18) Tax Losses......................................................... 44
(19) Satisfactory Documents............................................. 44
5.2 All Borrowings........................................................... 44
(1) Compliance with Warranties, No Default, etc........................ 44
(2) Borrowing Request.................................................. 45
(3) Government Approvals; Compliance With Government Rules, etc........ 45
(4) Borrower Construction Certificates................................. 45
(5) Insurance Matters.................................................. 45
(6) No Material Adverse Effect......................................... 46
(7) Equity Contribution................................................ 46
(8) Phase I Environmental Site Assessment report....................... 46
(9) Capital Restructuring.............................................. 46
(10) Satisfactory Legal Form............................................ 46
SECTION 6 - REPRESENTATIONS AND WARRANTIES......................................... 46
6.1 Organization, etc........................................................ 46
6.2 Due Authorization, Non-Contravention, etc................................ 47
6.3 Validity, etc............................................................ 47
6.4 Financial Condition...................................................... 47
6.5 Government Approvals; Non-Government Approvals; Consents; Government
Rules 47...................................................................... 47
6.6 Proceedings.............................................................. 48
6.7 Nature of Business....................................................... 49
6.8 Title: Security Documents............................................... 49
6.9 Property................................................................. 50
6.10 Labour Matters........................................................... 50
6.11 Transaction Documents; Non-Material Project Contracts; Licenses.......... 51
6.12 Utility Services......................................................... 51
6.13 No Default............................................................... 52
6.14 Absence of Default or Condition Excusing Performance..................... 52
6.15 Condemnation............................................................. 52
6.16 Construction Budget...................................................... 52
6.17 Insurance................................................................ 52
6.18 Taxes.................................................................... 52
(vii)
6.19 Canadian Pension and Benefit Plans................................... 53
6.20 Environmental Matters................................................ 53
6.21 Operation of the Project............................................. 54
6.22 Financial Advisors................................................... 54
6.23 Accuracy of Information.............................................. 54
6.24 No Material Adverse Effect........................................... 55
6.25 Feasibility Plan..................................................... 55
6.26 Acknowledgment....................................................... 55
SECTION 7 - COVENANTS.......................................................... 55
7.1 Affirmative Covenants................................................ 55
(1) Financial Information, Reports, Notices, etc.................... 55
(2) Compliance with Laws, Maintenance of Existence, etc............. 58
(3) Canadian Pension and Benefit Plans.............................. 58
(4) Maintenance and Operation of Properties......................... 59
(5) Insurance....................................................... 59
(6) Books and Records............................................... 62
(7) Environmental Covenant.......................................... 62
(8) Obligations..................................................... 63
(9) Hedging Arrangements............................................ 63
(10) Approved Budgets................................................ 63
(11) Construction; Overruns.......................................... 64
(12) Physical Completion; Completion................................. 65
(13) Debt Service Reserve Account.................................... 65
(14) Completion Guarantee............................................ 65
(15) Survey, etc..................................................... 65
(16) Use of Proceeds................................................. 66
(17) Mining Leases................................................... 66
(18) After-Acquired Property......................................... 66
(19) Pledge of Equity Shares......................................... 66
(20) Permits......................................................... 66
(21) Phase I Environmental Site Assessment Report.................... 66
(22) Environmental Management Plan for Construction Period........... 66
(23) Environmental Management Plan................................... 67
(24) Factory Mutual Policy........................................... 67
7.2 Negative Covenants................................................... 67
(1) Business Activities............................................. 67
(2) Indebtedness.................................................... 67
(3) Liens........................................................... 68
(4) Consolidation, Merger, Sale of Assets, etc...................... 70
(5) Transactions with Affiliates.................................... 70
(6) Material Project Contracts; Change Orders; Development Plan..... 70
(7) Negative Pledges, Restrictive Agreements, etc................... 71
(8) Capital Expenditures; Operating Budget.......................... 71
(9) Restricted Payments............................................. 71
(10) Financial Covenants............................................. 72
(11) Hedge Agreements................................................ 72
(12) Investments..................................................... 72
(viii)
(13) No Capital Leases........................................... 73
SECTION 8 - EVENTS OF DEFAULT.............................................. 73
8.1 Listing of Events of Default..................................... 73
(1) Non-Payment of Obligations.................................. 73
(2) Breach of Warranty.......................................... 73
(3) Non-Performance of Other Covenants and Obligations.......... 73
(4) Default on Other Indebtedness; Agreements................... 73
(5) Judgments................................................... 74
(6) Change of Control........................................... 74
(7) Executions.................................................. 74
(8) Bankruptcy, Insolvency, etc................................. 74
(9) Voluntary Proceedings....................................... 75
(10) Lack of Enforceability of Loan Documents.................... 75
(11) Government Approval......................................... 75
(12) Material Project Contracts.................................. 75
(13) Failure of Completion....................................... 75
(14) Material Adverse Effect..................................... 75
(15) Abandonment................................................. 76
(16) ▇▇▇▇▇▇-▇▇▇▇▇ Credit Agreement............................... 76
(17) Senior Debt Restructuring................................... 76
(18) Completion Guarantee........................................ 76
(19) Leases...................................................... 76
(20) Equity Contribution......................................... 76
(21) Governmental Approvals and Consents......................... 76
(22) Death of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇................................... 76
8.2 Action if Bankruptcy............................................. 76
8.3 Action if Other Event of Default................................. 76
SECTION 9 - THE ADMINISTRATIVE AGENT....................................... 77
9.1 Actions.......................................................... 77
9.2 Funding Reliance, etc............................................ 77
9.3 Exculpation...................................................... 77
9.4 Successor........................................................ 78
9.5 Loans by the Administrative Agent................................ 78
9.6 Credit Decisions................................................. 78
9.7 Copies, etc...................................................... 79
SECTION 10 - ACCOUNTS...................................................... 79
10.1 Establishment of Accounts........................................ 79
10.2 Permitted Investments............................................ 79
10.3 Deposits Into the Accounts....................................... 79
(1) Project Costs Account....................................... 79
(2) Operating Account........................................... 80
(3) Loss Proceeds Account....................................... 80
(4) Debt Service Reserve Account................................ 80
10.4 Withdrawals and Transfers........................................ 80
(1) Project Costs Account....................................... 80
(2) Loss Proceeds Account....................................... 81
(ix)
(3) Operating Account........................................... 81
10.5 Event of Default, etc........................................... 81
10.6 When Amounts Are Insufficient to Pay Debt Service............... 81
10.7 Excess Amounts.................................................. 82
10.8 Termination of Accounts......................................... 82
SECTION 11 - MISCELLANEOUS PROVISIONS...................................... 82
11.1 Waivers, Amendments, etc........................................ 82
11.2 Notices......................................................... 82
11.3 Payment of Costs and Expenses................................... 83
11.4 Indemnification................................................. 83
11.5 Survival........................................................ 84
11.6 Execution in Counterparts, Effectiveness, etc................... 84
11.7 Successors and Assigns.......................................... 84
11.8 Sale and Transfer of Loans; Participations in Loans............. 84
(1) Assignments................................................. 84
(2) Participations.............................................. 85
11.9 Other Transactions.............................................. 85
11.10 Submission to Jurisdiction...................................... 85
11.11 Judgment Currency............................................... 85
SECTION 12 --- GUARANTEE - PARENT GUARANTOR................................ 86
12.1 Guarantee....................................................... 86
12.2 Waivers......................................................... 86
12.3 Benefit of Guarantee............................................ 87
12.4 Subordination of Subrogation, etc............................... 87
12.5 Liability Cumulative............................................ 87
12.6 Indemnification and Payment..................................... 87
12.7 Obligations Not Affected........................................ 88
12.8 Dealing with Others............................................. 89
Exhibit 1.1(20) - Form of Borrower Completion Certificate
Exhibit 1.1(21) - Form of Borrower Construction Certificate
Exhibit 1.1(23) - Form of Borrowing Request
Exhibit 1.1(54) - Form of Continuation/Conversion Notice
Exhibit 1.1(103) - Form of Independent Engineer Completion Certificate
Exhibit 1.1(104) - Form of Independent Engineer Construction Certificate
Exhibit 1.1(121) - Form of Lender Assignment Agreement
Schedule 7.1(5) - Required (Minimum) Insurance
(x)
CREDIT AND GUARANTEE AGREEMENT
THIS CREDIT AND GUARANTEE AGREEMENT, dated as of May 18, 2000, is made and
entered among LAC DES ILES MINES LTD., a corporation formed under the laws of
Canada (the "Borrower"), its parent NORTH AMERICAN PALLADIUM LTD., a corporation
formed under the laws of Canada (the "Parent Guarantor"), the various financial
institutions as are or may become parties hereto (collectively, the "Lenders"),
BANK OF MONTREAL ("BMO"), as administrative agent (together with any
successor(s) thereto in such capacity the "Administrative Agent") for the
Lenders, ROYAL BANK OF CANADA ("RBC"), as syndication agent (together with any
successor(s) thereto in such capacity the "Syndication Agent") for the Lenders
and THE BANK OF NOVA SCOTIA ("BNS"), as documentation agent (together with any
successor(s) thereto in such capacity the "Documentation Agent") for the
Lenders.
RECITALS
A. WHEREAS, the Borrower presently owns and operates an open pit mine at Lac
des Iles, near Thunder Bay, Ontario (the "Existing Mine").
B. WHEREAS, the Borrower intends to develop, construct, own and operate an
expansion of the Existing Mine including a new milling operation (the
"Project").
C. WHEREAS, the Project's operation will consist of an expansion of the
Existing Mine and construction of a new processing plant for, among other
things, the production of palladium concentrate.
D. WHEREAS, the Borrower desires to obtain Commitments from the Lenders
pursuant to which Loans will be made to the Borrower from time to time prior to
the Commitment Termination Date for such Commitments.
E. WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Section 5), to extend such
Commitments and make such Loans to the Borrower.
F. WHEREAS, the Parent Guarantor is willing to guarantee the obligations of
the Borrower hereunder in accordance with the terms and conditions set out
herein.
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 - DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms. The following terms (whether or not capitalized) when used
in this Agreement, including its preamble and recitals, shall, except where the
context otherwise
-2-
requires, have the following meanings (such meanings to be equally applicable to
the singular and plural forms thereof):
(1) Acceptable Bank means (a) any Lender or (b) any other bank or trust company
which has capital, surplus and undivided profits of at least $500,000,000 and
has outstanding unsecured long-term indebtedness which is rated A or better by
S&P or A2 or better by ▇▇▇▇▇'▇ (or an equivalent rating by another nationally
recognized statistical rating organization of similar standing if neither such
corporation is then in the business of rating unsecured bank indebtedness).
(2) Accounts means the Operating Account, the Project Costs Account, the Debt
Service Reserve Account, and the Loss Proceeds Account.
(3) Additional Compensation has the meaning given to it in Section 4.1.
(4) Additional Project Document means any contract or agreement and each
Consent to Assignment related thereto relating to the Development of the Project
entered into by the Borrower subsequent to the Effective Date (other than Non-
Material Project Contracts).
(5) Administrative Agent is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor Administrative
Agent pursuant to Section 9.4.
(6) Administrative Agent's Account for Payments means for all payments for and
by the Borrower in US Dollars, the following account maintained by the
Administrative Agent at the Administrative Agent's Branch of Account, to which
payments and transfers are to be effected as follows:
▇▇▇▇▇▇ Bank International Corp. of N.Y.
Swift Code HATRUS 33
for beneficiary bank
Bank of Montreal, Swift Code BOFMCAM 2
Account Number ▇▇▇▇-▇▇▇▇-▇▇▇, beneficiary
account 0002 464731, Loan Account for Lac des Iles Mines Ltd.
or any other account of the Administrative Agent as the Administrative
Agent may from time to time advise the Borrower and the Lenders in writing.
(7) Administrative Agent's Branch of Account means the office of the
Administrative Agent located at ▇▇/▇▇/ ▇▇▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (Fax No.: ▇▇▇-▇▇▇-▇▇▇▇) or other office or branch of the
Administrative Agent in Canada as the Administrative Agent may from time to time
advise the Borrower and the Lenders in writing.
(8) Affected Borrowing has the meaning given to it in Section 4.2.
(9) Affiliate means any Person that directly or indirectly controls, or is
under common control with, or is controlled by, another Person and, if such
Person is an individual, any member of the immediate family (including parents,
spouse, children and siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such
-3-
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") means possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise). Notwithstanding the foregoing, the
definition of "Affiliate" shall not encompass (a) any individual solely by
reason of his or her being a director, officer or employee of any Person and (b)
the Administrative Agent or any Lender. A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power (a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
members or general partners; or (b) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
(10) Aggregate Commitment means the aggregate of the Commitments of all the
Lenders as reduced from time to time pursuant to the terms hereof.
(11) Agreement means, on any date, this Credit and Guarantee Agreement as
originally in effect on the Effective Date and as thereafter from time to time
amended, supplemented, amended and restated, or otherwise modified and in effect
on such date.
(12) Applicable Margin means:
(a) with respect to a USBR Loan, (i) 1.00 % per annum during the period
commencing on the Effective Date to and including the Completion Date;
(ii) 1.375 % per annum during the period commencing the day after the
Completion Date to and including the third anniversary of the
Completion Date; (iii) 1.625 % per annum during the period commencing
the day after the third anniversary of the Completion Date; and
(b) with respect to a LIBO Rate Loan, (i) 1.75% per annum during the
period commencing on the Effective Date to and including the
Completion Date; (ii) 2.125% per annum during the period commencing
the day after the Completion Date to and including the third
anniversary of the Completion Date; (iii) 2.375% per annum during the
period commencing the day after the third anniversary of the
Completion Date.
The Applicable Margin shall be reduced by 0.75 % per annum with respect to
interest on any portion of a Loan that is fully secured by cash collateral or
Permitted Investments in a minimum amount of US$5,000,000 or whole multiples of
US$1,000,000 in excess thereof (excluding amounts in the Accounts) pledged by
the Borrower to the Administrative Agent as security for the Obligations,
subject to Security Documents in form and substance acceptable to the
Administrative Agent. Notwithstanding the foregoing, the Borrower acknowledges
that it cannot use the proceeds, or any portion thereof, of the Equity
Contribution to lower the Applicable Margin in accordance with the terms hereof.
(13) Applicable Period is defined in Section 7.2(10).
(14) Approvals to be Obtained is defined in Section 6.5(1).
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(15) Approved Budget means (a) prior to Completion, the Construction Budget then
most recently approved by the Majority Lenders and (b) after Completion, the
Operating Budget then most recently approved by the Majority Lenders, in each
case pursuant to Section 7.1(10).
(16) Assignee Lender is defined in Section 11.8(1).
(17) Authorized Officer means: (a) with respect to any Person that is a
corporation or a limited liability company, the President, Vice President or
Chief Financial Officer of such Person; and (b) with respect to any Person that
is a partnership, the President, Vice President or Chief Financial Officer of a
general partner of such Person. Without limiting the foregoing, "Authorized
Officer" means, relative to the Borrower and each Obligor, those of its officers
whose signatures and incumbency shall have been certified to the Administrative
Agent and the Lenders pursuant to Section 5.1(3)(d).
(18) BMO is defined in the preamble, and includes its successors.
(19) Borrower is defined in the preamble, and includes its successors.
(20) Borrower Completion Certificate means the certificate in the form of
Exhibit 1.1(20) hereto and duly completed and executed by the Borrower.
(21) Borrower Construction Certificate means the certificate in the form of
Exhibit 1.1(21) hereto and duly completed and executed by the Borrower.
(22) Borrowing means the Loans of the same Type and, in the case of LIBO Rate
Loans, having the same Interest Period, made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.3.
(23) Borrowing Request means a loan request and certificate duly executed by an
Authorized Officer of the Borrower, substantially in the form of Exhibit 1.1(23)
hereto.
(24) Budgeted Capital Expenditures means Capital Expenditures that are funded
solely from funds specified for such purpose in the applicable Construction
Budget or Operating Budget, as the case may be.
(25) Budgeted Project Costs means the amount budgeted by, and to be used by, the
Borrower to develop and construct the Project and operate the Project through to
Completion (including funds for financing fees, interest, closing costs and
insurance premiums), all as is more fully described in the Construction Budget.
As of the date hereof, the Budgeted Project Costs exclusive of Operation and
Maintenance Expenses (other than expenses referred to in (j) of such definition)
and working capital associated with the Existing Mine equal US$153,000,000.
(26) Business Day means (a) any day which is neither a Saturday or Sunday nor a
legal holiday on which Lenders are authorized or required to be closed in
Toronto; and (b) relative to the making, continuing, prepaying or repaying of
any LIBO Rate Loans, any day on which dealings in US Dollars are carried on in
the interbank eurodollar market.
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(27) Canadian Benefit Plans means all material employee benefit plans or
arrangements maintained or contributed to by the Borrower that are not Canadian
Pension Plans, including all profit sharing, savings, supplemental retirement,
retiring allowance, severance, pension, deferred compensation, welfare, bonus,
incentive compensation, phantom stock, legal services, supplementary
unemployment benefit plans or arrangements and all life, health, dental and
disability plans and arrangements in which the employees or former employees of
the Borrower participate or are eligible to participate but excluding all stock
option or stock purchase plans.
(28) Canadian Dollar, Dollar, and the sign "$" and "C$" mean lawful money of
Canada.
(29) Canadian Pension Plans means all plans or arrangements which are considered
to be pension plans for the purposes of any applicable pension benefits
standards statute or regulation in Canada established, maintained or contributed
to by the Borrower for its employees or former employees.
(30) Capital Expenditures means, for any period, the aggregate amount of all
expenditures of the Borrower for fixed or capital assets made during such period
which, in accordance with GAAP, would be classified as capital expenditures.
(31) Capitalized Lease Liabilities means all monetary obligations of the
Borrower under any leasing or similar arrangement which, in accordance with
GAAP, would be classified as capitalized leases, and, for purposes of this
Agreement and each other Loan Document, the amount of such obligations shall be
the capitalized amount thereof, determined in accordance with GAAP, and the
stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
(32) Cash Flow means, with respect to any period, net income of the Borrower
(excluding extraordinary gains or losses, but after deducting interest accrued
after the Completion Date) for such period, plus, to the extent deducted in
determining such net income, provision for deferred income taxes, depreciation,
depletion and amortization expenses deducted for such period as well as other
non-cash charges.
(33) Cash Operating Cost Per Ounce of Accountable Palladium means, for any
period, without duplication, the on-site operating costs in respect of all
operational and maintenance costs during such period for mining, milling,
administration, power and reclamation calculated on a per ounce of accountable
palladium basis, excluding by-product credits and royalties and also excluding
any such costs and mill production associated with the accountable palladium
milled through the mill in the Existing Mine.
(34) Cash Operating Cost Per Tonne Ore Milled means, for any period, without
duplication, the on-site operating costs in respect of all operational and
maintenance costs during such period for mining, milling, administration, power
and reclamation calculated on a per tonne of ore milled basis but excluding such
costs and mill production associated with any ore milled through the mill in the
Existing Mine.
(35) Cash Production Costs means, for any period, without duplication, the
amount payable in respect of all Project Costs and Operation and Maintenance
Expenses during such period.
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(36) CFADS means for any period, Cash Flow, plus Interest Expense, less Capital
Expenditures and plus or minus changes in working capital.
(37) Change of Control means any event, transaction or occurrence as a result of
which (a) any Person (together with any Affiliates of such Person,
collectively), other than any Person that is a member of the Kaiser Group, shall
own and control, directly or indirectly, all of the economic and voting rights
associated with ownership of at least forty percent (40%) of the outstanding
capital Stock of all classes of the Parent Guarantor on a fully diluted basis,
or (b) the Parent Guarantor shall cease to own and control all of the economic
and voting rights associated with all of the outstanding Stock of the Borrower.
(38) Change Order means any change to the scope of work, or any detail thereof,
of the Project as originally set forth in the respective Construction
Contracts, and includes, without limitation, any "change order" as defined
in the respective Construction Contracts.
(39) Charges shall mean all lawful claims for labor, materials, supplies and
services or otherwise and Taxes assessed, levied or imposed against a Credit
Party or upon (a) the Collateral, (b) the Obligations, (c) the employees,
payroll, income or gross receipts of any Credit Party, (d) any Credit Party's
ownership or use of any properties or other assets, or (e) any other aspect of
any Credit Party's business or existence of any Liens in respect of such Taxes.
(40) Collateral means the undertaking, property and assets covered by the
Security Documents and any other property, real or personal, tangible or
intangible, now existing or hereafter acquired by a Credit Party, that may at
any time be or become subject to a Lien in favour of the Administrative Agent on
behalf of the Lenders to secure any or all of the Obligations.
(41) Commitment means, relative to any Lender, such Lender's obligation to make
Loans pursuant to Section 2.1.
(42) Commitment Amount means, on any date, US $90,000,000, as such amount may be
reduced from time to time pursuant to Section 3.1(5).
(43) Commitment Termination Date means the earliest of (a) the Completion Date,
(b) the Initial Repayment Date, (c) the date on which the Aggregate Commitment
is terminated in full and reduced to zero pursuant to Section 3.1(5), and (d)
the date on which any Commitment Termination Event occurs.
(44) Commitment Termination Event means (a) the occurrence of any Event of
Default described in Section 8.1(8), or 8.1(9), and (b) the occurrence and
continuance of any other Event of Default and either (i) the declaration of the
Loans to be due and payable pursuant to Section 8.3, or (ii) in the absence of
such declaration, the giving of notice by the Administrative Agent, acting at
the direction of the Majority Lenders, to the Borrower that the Commitments have
been terminated.
(45) Commodity Swap means any hedge, swap or similar agreement or similar
arrangement between such Person and one or more financial institutions or other
Persons providing for the
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transfer or mitigation of commodity pricing risks either generally or under
specific contingencies.
(46) Completion shall occur when all of the following conditions have been
satisfied to the satisfaction of the Administrative Agent and the Lenders:
(a) Physical Completion has occurred;
(b) as of the Completion Date, the Debt Service Reserve Account is
funded in the amount of 100% of the Target Amount;
(c) the Debt Service Coverage Ratio as of the Completion Date exceeds
1.25:1.00, as calculated for the Test Period (based on the
assumption that the first Principal Payment Date occurs during the
Test Period);
(d) the Qualifying Term remaining as of the Completion Date shall be at
least three years and six months;
(e) no Default or Event of Default shall have occurred and be
continuing; and
(f) the Administrative Agent (with a copy for each Lender) shall have
received the Independent Engineer Completion Certificate and a
Borrower Completion Certificate, in each case, including all
exhibits and attachments thereto and dated not more than 10 days
prior to the Completion Date, together with evidence satisfactory
to them from the Borrower confirming the matters set forth therein
and a subsearch of title together with a legal opinion of
Borrower's counsel ensuring the priority of the Liens created under
the Mortgage for the full aggregated principal amount of the Loans
outstanding subject only to such qualifications as are satisfactory
to the Majority Lenders, acting reasonably.
(47) Completion Date means the date on which Completion occurs.
(48) Completion Guarantee means the Guarantee to be entered into by the
Completion Guarantors in favour of the Administrative Agent for the benefit of
the Secured Parties on the Effective Date, as amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms of this
Agreement and the other Loan Documents.
(49) Completion Guarantors means each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ Energy Ltd., GBK Corporation and ▇▇▇▇▇▇ - ▇▇▇▇▇▇▇ Oil Company.
(50) Consent to Assignment means each consent to assignment in favour of the
Administrative Agent for the benefit of the Secured Parties in form and
substance satisfactory to the Administrative Agent, with respect to certain
Material Project Contracts including, without limitation, the Palladium Sales
Contract, the Construction Contracts, the Power Supply Contract and the Smelting
Agreements.
-8-
(51) Construction Budget means a budget, prepared and certified by the Borrower,
of the Project Costs expected to be incurred by the Borrower in the form
attached hereto as Schedule 6.16, as the same may be amended from time to time
as provided herein.
(52) Construction Contracts means, collectively, the (a) Technical Services
Contract for Detailed Engineering, Procurement and Construction Management
Services between AGRA ▇▇▇▇▇▇ Limited and the Parent Guarantor, as later assigned
to the Borrower by the Parent Guarantor, effective as of November 22, 1999 and
(b) all other contracts to be entered into by the Borrower pursuant to which the
Project will be built.
(53) Contest means, with respect to any Person, with respect to any Charges or
any Lien imposed on Property of such Person (or the related underlying claim for
labour, material, supplies or services) by any Government Authority for Charges
or with respect to obligations under any Mechanics' Lien (each, a "Subject
Claim"), a contest of the amount, validity or application, in whole or in part,
of such Subject Claim pursued in good faith and by appropriate legal,
administrative or other proceedings diligently conducted so long as: (a)
adequate reserves have been established with respect to such Subject Claim in
accordance with GAAP, (b) during the period of such contest the enforcement of
such Subject Claim is effectively stayed and any Lien arising by virtue of such
Subject Claim shall be effectively secured by posting of cash collateral or a
surety bond (or similar instrument) by a reputable surety company or, with the
consent of the Administrative Agent, the posting of another security reasonably
satisfactory to the Administrative Agent, in any case in an amount sufficient to
assure the discharge of the Subject Claim and any actual or proposed deficiency,
additional charge, penalty or expense arising from or incurred as a result of
such contest, (c) neither the Administrative Agent nor any Lender would
reasonably be expected to be exposed to any risk of criminal liability or civil
liability as a result of such contest, (d) the failure to pay such Subject Claim
under the circumstances described above would not otherwise reasonably be
expected to have a Material Adverse Effect, and (e) at the time of commencement
and during the term of such Contest, no Default or Event of Default shall have
occurred and be continuing. The term "Contest" used as a verb shall have a
correlative meaning.
(54) Continuation/Conversion Notice means a notice of continuation or conversion
and certificate duly executed by an Authorized Officer of the Borrower,
substantially in the form of Exhibit 1.1(54) hereto.
(55) Cost Overrun means the total amount by which the Borrower or the
Independent Engineer, and in the case of a disagreement between the Borrower and
the Independent Engineer, means the greater of the two numbers, estimates that
Project Costs, including funds expended to date, but less the Operation and
Maintenance Expenses, working capital and funds for working capital will exceed
the original amount budgeted in the Construction Budget.
(56) Credit Party means each of the Borrower and the Parent Guarantor.
(57) Date Certain means December 31, 2001 unless there are at least four and one
half years remaining on the Palladium Sales Contract at such time in which case
it is June 30, 2002.
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(58) Debt means all items under clauses (a), (b), (c), (f) and (g) of the
definition of Indebtedness but excluding deferred Taxes and other deferred
credits.
(59) Debt Service means, for any period, the sum, computed without
duplication, of the following: (a) all scheduled principal amounts payable by
the Borrower in respect of Debt during such period plus (b) all amounts payable
----
by the Borrower in respect of Interest Expense for such period.
(60) Debt Service Coverage Ratio means, for any period, the ratio of (a) CFADS
for such period to (b) Debt Service for such period.
(61) Debt Service Reserve Account means the Debt Service Reserve Account
contemplated by Section 10.1.
(62) Default means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
(63) Development means the design, construction, development, ownership,
leasing, occupation, equipping, testing, repair, operation, maintenance and use
of the Project and the financing of the Project.
(64) Development Plan means the plan for the Development and expansion of the
Project, as developed by the Borrower, reviewed by the Independent Engineer and
approved by the Lenders as part of the Feasibility Study, as amended or
supplemented from time to time in accordance with the annual approved Operating
Budget delivered to the Administrative Agent and Lenders under Section
7.1(1)(e).
(65) Disputed Item is defined in Section 2.3(3).
(66) Effective Date means the date this Agreement becomes effective pursuant
to Section 11.6.
(67) Environmental Claim means, with respect to any Person, any written
notice, claim, administrative, regulatory or judicial action, suit, judgment or
demand by any other Person alleging or asserting such first Person's liability
for investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property of such Person, personal injuries, fines or
penalties arising out of, based on or resulting from (a) the presence, Use, or
Release into the environment of any Hazardous Material from or at any personal
or real property of the Borrower or Parent Guarantor or (b) any act,
circumstance, condition or occurrence forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include any claim by any Government Authority for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
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(68) Environmental Laws means any and all applicable Government Rules relating
to the protection of the environment, human health or safety, or the Release or
threatened Release of Hazardous Materials into the indoor or outdoor
environment, including ambient air, soil, surface water, groundwater, wetlands,
land or subsurface strata, or otherwise relating to the Use of Hazardous
Materials, whether now or hereafter in effect.
(69) Environmental Liabilities means with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any Environmental Claim.
(70) Environmental Permits means Government Approvals under Environmental
Laws.
(71) Equity Contribution means a contribution of cash to the Borrower made by
way of an equity investment in the Stock of the Borrower by the Parent Guarantor
in the amount of US$55,000,000, or the Equivalent Amount in Canadian Dollars,
for the purposes of financing the Project pursuant to Section 5.2(7).
(72) Equivalent Amount in one currency on any day means the amount of that
currency into which a specified amount of another currency can be converted at
the Bank of Canada's noon spot rate (or any other rate to which the parties
agree) and if that day is not a Business Day, on the immediately preceding
Business Day.
(73) Event of Abandonment means (a) prior to Completion, the suspension or
cessation of development or construction of the Project for more than 90
consecutive days or for more than 10 consecutive days that are not covered by
Force Majeure, business interruption or similar insurance for the benefit of the
Lenders and (b) after Completion, the suspension or cessation of the operation
of the Project for more than 120 consecutive days or for more than 30
consecutive days that are not covered by force majeure, business interruption or
similar insurance for the benefit of the Lenders.
(74) Event of Default is defined in Section 8.1.
(75) Excess Cash Flow means, with respect to any period, CFADS less (a)
Interest Expense and principal payments required to be made under Section 3.1(1)
of this Agreement and (b) payments to the Debt Service Reserve Account under
Section 10.3 of this Agreement.
(76) Excluded Taxes is defined in Section 4.6(4).
(77) Existing Mine is defined in the first recital.
(78) Feasibility Study means the Lac des Iles - Detailed Feasibility Study
prepared by AGRA ▇▇▇▇▇▇ Limited dated May, 2000.
(79) Federal Funds Rate means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight
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Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such day; provided that: (a) if
--------
the day for which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day
and (b) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to the Administrative Agent on such
day on such transactions as determined by the Administrative Agent.
(80) Fee Letter is defined in Section 3.3(2).
(81) Final Maturity Date means (a) September 30, 2006 or (b) if applicable,
the earlier Principal Payment Date upon which the Loans are to be repaid in full
in accordance with Section 3.1(1).
(82) Fiscal Quarter means any quarter of a Fiscal Year.
(83) Fiscal Year means any period of twelve consecutive calendar months ending
on December 31; references to a Fiscal Year with a number corresponding to any
calendar year (e.g., the "2000 Fiscal Year") refer to the Fiscal Year ending on
the December 31 occurring during such calendar year.
(84) Force Majeure means any of the following: acts of God, earthquakes or
other earth movements, tidal waves, hurricanes, landslides, cave-ins,
subsidences, storms, windstorms, lightening, floods, explosions, fires,
vandalism, wars (whether declared or not), armed conflicts (whether internal or
international), riots, insurrections, rebellions, civil commotions, sabotage,
blockades, embargoes, epidemics, acts or omissions of governmental bodies,
strikes, lockouts, other labour disturbances, or any other event or cause,
whether similar or dissimilar to the foregoing, beyond the control of the party
asserting Force Majeure and , in any case, against which the party asserting
Force Majeure could not reasonably have protected itself and which prevents such
party from performing the relevant obligation, but for greater certainty does
not include lack of funds.
(85) GAAP is defined in Section 1.3.
(86) General Contractor means AGRA ▇▇▇▇▇▇ Limited.
(87) Government Approval means (a) any authorization, consent, approval,
license, lease, ruling, permit, tariff, rate, certification, waiver, exemption,
filing, variance, claim, order, judgment or decree of, by or with, (b) any
required notice to, (c) any declaration of or with, or (d) any registration by
or with, any Government Authority.
(88) Government Authority means any domestic or foreign government including,
without limitation, any federal, provincial, state, territorial or municipal
government and any executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, government.
(89) Government Rule means any statute, law, regulation, ordinance, rule,
judgment, order, decree, permit, concession, grant, franchise, license,
agreement, directive, requirement of, or
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other governmental restriction or any similar binding form of decision of or
determination by, or any binding interpretation or administration of any of the
foregoing by, any Government Authority, whether now or hereafter in effect.
(90) Guarantee or "Guaranty" means a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property of any Person, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make
payment of his, her or its obligations or an agreement to assure a creditor
against loss, and including causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "Guarantee", "Guaranty" and "Guaranteed" used as
verbs shall have correlative meanings.
(91) Guarantors means each of the Parent Guarantor and the Completion
Guarantors.
(92) Guaranteed Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Guaranteed Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.
(93) Hazardous Material means, any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste." "hazardous material," "hazardous substance,"
"dangerous good," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
(94) Hedge Agreements means Commodity Swaps and Interest Rate/Currency
Protection Agreements.
(95) Hedging Obligations means, with respect to any Person, all liabilities of
such Person under Hedge Agreements.
(96) herein, hereof, hereto, hereunder and similar terms contained in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be,
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as a whole and not to any particular Section, paragraph or provision of this
Agreement or such other Loan Document.
(97) Impermissible Qualification means, relative to the opinion or certification
of any independent public accountant as to any financial statement of the
Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature; (b) which relates to
the limited scope of examination of matters relevant to such financial
statement; or (c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its removal,
would require an adjustment to such item the effect of which would be to
cause the Borrower to be in default of any of its obligations under
Sections 7.1 or 7.2.
(98) including means including without limiting the generality of any
description preceding such term.
(99) Indebtedness of any Person means, without duplication: (a) all obligations
of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (b) all
obligations, contingent or otherwise, relative to the face amount of all
letters of credit, whether or not drawn, and Lender's acceptances issued
for the account of such Person; (c) all obligations of such Person as
lessee under leases which have been or should be, in accordance with GAAP,
recorded as Capitalized Lease Liabilities; (d) all other items which, in
accordance with GAAP, would be included as liabilities on the liability
side of the balance sheet of such Person as of the date at which
Indebtedness is to be determined; (e) net liabilities of such Person under
all Hedging Agreements; (f) whether or not so included as liabilities in
accordance with GAAP, all deferred payment obligations of such Person,
including obligations to pay the deferred purchase price of property or
services, and indebtedness (excluding prepaid interest thereon) secured by
a Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by
such Person or is limited in recourse; and (g) all Guaranteed Liabilities
of such Person in respect of any of the foregoing. For all purposes of
this Agreement, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.
(100) Indemnified Liabilities is defined in Section 11.4.
(101) Indemnified Parties is defined in Section 11.4.
(102) Independent Engineer means ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇, or such other Person
acceptable to the Borrower, acting reasonably, as the Administrative Agent may
engage on behalf of the Lenders to act as Independent Engineer for the purposes
of this Agreement.
(103) Independent Engineer Completion Certificate means a Completion
Certificate, in substantially the form of Exhibit 1.1(103) hereto and duly
completed and executed by the Independent Engineer.
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(104) Independent Engineer Construction Certificate means a Construction
Certificate, in substantially the form of Exhibit 1.1(104) hereto and duly
completed and executed by the Independent Engineer.
(105) Initial Repayment Date means December 31, 2001.
(106) Insolvency Laws shall mean any of the Bankruptcy and Insolvency Act
(Canada), the Companies' Creditors Arrangement Act (Canada) and Title 11 of the
United States Code entitled "Bankruptcy", each as now and hereafter in effect,
any successors to such statutes and any other applicable insolvency or other
similar law of any jurisdiction including, without limitation, any law of any
jurisdiction permitting a debtor to obtain a stay or a compromise of the claims
of its creditors against it.
(107) Insurance Advisor means ▇▇▇▇▇ an MMC Company or such other Person as the
Administrative Agent may engage (with the consent of the Borrower) on behalf of
the Lenders to act as Insurance Advisor for the purposes of this Agreement.
(108) Insurance Policies means those policies of insurance delivered pursuant
to Section 5.1(6) or otherwise required to be obtained and maintained by the
Borrower pursuant to Section 7.1(5).
(109) Interest Expense means, for any period, the sum of the following: (a) all
interest in respect of Debt accrued or capitalized during such period (whether
or not actually paid during such period) plus (b) the net amounts payable (or
minus the net amounts receivable) under Interest Rate/Currency Protection
Agreements accrued during such period (whether or not actually paid or received
during such period).
(110) Interest Payment Date means the third Business Day of each month.
(111) Interest Period means, relative to LIBO Rate Loans, the period beginning
on (and including) the date on which such LIBO Rate Loan is made or continued
as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4 and shall
end on (but exclude) the day which is one, two, three or six months thereafter,
in either case as the Borrower may select in its relevant notice pursuant to
Section 2.3 or 2.4; provided, however, that (a) the Borrower shall not be
permitted to select Interest Periods to be in effect at any one time which have
expiration dates occurring on more than five different dates; (b) Interest
Periods commencing on the same date for Loans comprising part of the same
Borrowing shall be of the same duration; and (c) if such Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next following Business Day (unless, if such Interest Period applies
to LIBO Rate Loans, such next following Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day).
(112) Interest Rate/Currency Protection Agreement means, for any Person, any
interest rate or currency swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest or currency risks either generally or under
specific contingencies.
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(113) Investment means, for any Person: (a) the acquisition (whether for cash,
Property of such Person, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale), (b) the
making of any deposit with, or advance, loan or other extension of credit to,
any other Person (including the purchase of Property from another Person subject
to an understanding or agreement, contingent or otherwise, to resell such
Property to such Person, but excluding any such advance, loan or extension of
credit having a term not exceeding ninety (90) days representing the purchase
price of inventory or supplies sold in the ordinary course of business), (c) the
entering into of any Guarantee of, or other contingent obligation with respect
to, Indebtedness or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person and (d) the entering into of any Hedge Agreement. The amount of any
Investment shall be the original principal or capital amount thereof less all
returns of principal or equity thereon (and without adjustment by reason of the
financial condition of such other Person) and shall, if made by the transfer or
exchange of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property.
(114) ITA shall mean the Income Tax Act (Canada) as the same may, from time to
time be in effect.
(115) ▇▇▇▇▇▇ Bridge Loan means indebtedness of the Parent Guarantor or the
Borrower owing to ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Oil Company incurred in connection with the
$15,000,000 facility under the Letter Agreement dated May 24, 2000 between the
Parent Guarantor, the Borrower and ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Oil Company and which matures
on July 14, 2000.
(116) ▇▇▇▇▇▇-▇▇▇▇▇ Credit Agreement means the Amended and Restated Revolving
Credit Agreement dated as of January 31, 2000 among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇▇, as Borrowers, the lenders who became party thereto and Chase Bank of
Texas, National Association, as Administrative Agent, as the same may be
amended, varied, restated or changed from time to time.
(117) Kaiser Group means each of the Completion Guarantors and Fountains
Continuum of Care, Inc. and each of their Affiliates and Subsidiaries.
(118) ▇▇▇▇▇▇ Sub Debt means indebtedness of the Parent Guarantor owing to
▇▇▇▇▇▇-▇▇▇▇▇▇▇ Oil Company the amount of which as of March 31, 2000 was
C$123,241,000 as evidenced by a term promissory note in the principal amount of
US$82,956,184 dated January 1, 2000.
(119) Leases means the mining leases with Her Majesty the Queen in Right of the
Province of Ontario as represented by the Minister of Northern Development and
Mining being Mining Leases No. 104108, 104109, 104110 and 104111.
(120) Lenders is defined in the preamble.
(121) Lender Assignment Agreement means a Lender Assignment Agreement
substantially in the form of Exhibit 1.1(121) hereto.
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(122) LIBO Rate means, with respect to any Interest Period applicable to a LIBO
Rate Loan, the average annual rate of interest (based on a 360 day year, rounded
upwards, if necessary, to the nearest whole multiple of 1/16 of 1%) at which
major banks in the London interbank market are offering deposits in the relevant
currency and amount for a period equal to the relevant Interest Period,
appearing on the Reuters Screen LIBO Page (at or about 11:00 a.m. London time)
two Business Days before the beginning of such Interest Period. If that rate
does not so appear, then the LIBO Rate shall be determined by reference to
another publicly available financial information service as may be agreed by the
Administrative Agent and the Borrower or, if that service is not available or
agreed, then the LIBO Rate shall be the annual rate of interest determined by
the Administrative Agent as being the rate of interest at which it would be
prepared to offer to leading banks in the London interbank market for delivery
on the first day of the relevant Interest Period for a period equal to the
Interest Period, deposits in the relevant currency and amount comparable to the
relevant LIBO Rate Loan requested by the Borrower.
(123) LIBO Rate Loan means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a rate of interest determined by
reference to the LIBO Rate (Reserve Adjusted).
(124) LIBOR Interest Date means, with respect to any Loan, the date falling on
the last day of each Interest Period applicable to a LIBO Rate Loan and, if the
applicable Interest Period is longer than 3 months, the date falling every 3
months after the beginning of the Interest Period and the last day of the
Interest Period.
(125) Lien means, with respect to any Property of any Person, any mortgage,
deed of trust, encumbrance, lien (statutory or otherwise), interest, royalty,
pledge, charge, lease, easement, servitude, security interest or encumbrance of
any kind in respect of such Property of such Person. For purposes of this
Agreement and the other Loan Documents, a Person shall be deemed to own subject
to a Lien any Property which it has acquired or holds subject to the interest of
a vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement (other than an operating lease) relating to such
Property.
(126) Life-of-Mine Plan means an annual life-of-mine plan for the projected
life of the Project and the Existing Mine that is consistent with the
Development Plan and includes, without limitation, monthly forecasts for the
first year and annual forecasts thereafter of tonnes of material and ore mined,
tonnes of ore processed (milled), ore grades mined and processed, concentrate
grades, metal recoveries, production of concentrates, cash operating costs, and
capital expenditures.
(127) Loan means a Loan of any Type by a Lender by way of the advance of a USBR
Loan or LIBO Rate Loan.
(128) Loan Documents means this Agreement, the Security Documents, the
Completion Guarantee, the Consents to Assignment, Hedge Agreement(s) entered
into with any of the Lenders and each other agreement, document or instrument
delivered pursuant to any of the foregoing.
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(129) London Price for Gold means that the price of gold for any day will be
that day's afternoon fixing per ▇▇▇▇ ounce of unallocated gold for delivery in
London through a member of the LBMA authorized to effect such delivery, stated
in U.S. Dollars, as calculated by the London Buillion Market Association and
displayed on page "NMRB" of the Reuters Monitor Commodities 2000 on that date.
(130) London Price for Platinum means that the price of platinum for any day
will be that day's afternoon fixing per ▇▇▇▇ ounce of unallocated platinum for
delivery in Zurich through a member of the London Platinum and Palladium Market
("LPPM") authorized to effect such delivery, stated in U.S. Dollars, as
calculated by the LPPM and displayed on page NMRB of the Reuters Monitor
Commodities 2000 on that date.
(131) Loss means any loss, theft, destruction, damage, casualty, title defect
or failure, adverse zoning change, taking, condemnation, seizure, confiscation,
or requisition of or with respect to the Project or any part thereof.
(132) Loss Proceeds means insurance proceeds, condemnation awards or other
compensation, awards, damages and other payments or relief (exclusive, in each
case, of the proceeds of liability insurance, Force Majeure, delay in start-up
and business interruption insurance and other payments for interruption of
operations and any construction cost overrun insurance) with respect to any
Loss.
(133) Loss Proceeds Account means the Loss Proceeds Account contemplated by
Section 10.1.
(134) Majority Lenders means, at any time, Lenders holding more than 50% of the
aggregate unpaid principal amount of the outstanding Loans, except that if no
Loans are outstanding, Lenders holding more than 50% of the then Aggregate
Commitment.
(135) Major Loss means any loss, theft, destruction, damage, casualty, title
defect or failure, adverse zoning change, taking, condemnation, seizure,
confiscation, or requisition of or with respect to the Project or any part
thereof that, in the judgment of the Majority Lenders, acting reasonably, makes
construction or operation of the Project uneconomical or unfeasible.
(136) Material Adverse Effect means, with respect to any Person, a material
adverse change in (i) the business, assets, operations, property, condition
(financial or otherwise), or prospects of such Person, the Project or the
Existing Mine, (ii) such Person's ability to perform its obligations under any
Transaction Document to which it is a party or (iii) the validity,
enforceability or perfection of the Liens created under the Security Documents.
(137) Material Project Contracts means the Palladium Sales Contract, the
Insurance Policies, the Construction Contracts, the Smelting Agreements, the
Royalty Agreement, the Power Supply Agreement, Hedge Agreements and the
Completion Guarantee, and, after the execution and delivery thereof following
the Effective Date, each Additional Project Document, each of such agreements to
be in form and substance satisfactory to the Administrative Agent and the
Majority Lenders, acting reasonably.
(138) Mechanics' Liens means carriers', warehousemen's, mechanics', workmen's,
materialmen's, construction or other like statutory Liens.
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(139) Moody's means ▇▇▇▇▇'▇ Investors Service, Inc.
(140) Mortgages means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by either or both of the Credit Parties
to the Administrative Agent with respect to the Mortgaged Properties, all in
form and substance satisfactory to Administrative Agent, including, without
limitation, acknowledgement of charges, standard charge terms, assignment of
rents, hypothecs charging real property and debentures.
(141) Mortgaged Properties has the meaning given to it in Section 5.1(10).
(142) Net Available Amount means in the case of any Loss, the aggregate amount
of Loss Proceeds received by the Borrower or the Parent Guarantor in respect of
such Loss net of fees and expenses incurred by the Borrower in connection with
the collection of such Loss Proceeds.
(143) Non-Government Approval means (a) any authorization, consent, approval,
license, lease, waiver or variance by or with, (b) any required notice to, or
(c) any declaration of or with, any Person (other than any Government
Authority).
(144) Non-Material Project Contracts means (a) contracts or agreements entered
into by the Borrower in the ordinary course of business in connection with the
Development of the Project under which the Borrower shall have obligations not
in excess of (i) US$5,000,000 in the aggregate as to all such agreements in any
Fiscal Year of the Borrower or (ii) US$1,000,000 under any one such agreement,
(b) contracts or agreements that provide for purchase of spare parts and related
services (if any), have a term of less than one (1) year and payments under
which are provided for in the applicable Operating Budget, and (c) any contract
or agreement entered into by the Borrower in the ordinary course of business for
legal or accounting services in connection with the ownership and operation of
the Project.
(145) Obligation means all obligations (monetary or otherwise) of the Borrower,
the Parent Guarantor and each other Obligor arising under or in connection with
this Agreement and each other Loan Document.
(146) Obligor means the Credit Parties, each Completion Guarantor and any other
Person (other than the Administrative Agent or any Lender) obligated under any
Loan Document.
(147) Operating Account means the "Operating Account" contemplated by Section
10.1.
(148) Operating Budget is defined in Section 7.1(1)(e).
(149) Operation and Maintenance Expenses means, for any period, the sum,
computed without duplication, of the following: (a) expenses of administering
and operating the Project and the Existing Mine and of maintaining them in good
repair and operating condition payable during such period plus (b) direct
operating and maintenance costs of the Project payable during such period plus
(c) insurance costs payable during such period plus (d) applicable sales and
excise taxes (if any) payable by the Borrower during such period plus (e)
franchise taxes payable by the Borrower during such period plus (f) federal,
provincial, state and local income taxes imposed by law on, and payable by, the
Borrower during such period, if any, plus (g) property
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taxes payable by the Borrower during such period plus (h) costs and fees
attendant to the obtaining and maintaining in effect the Government Approvals
payable during such period plus (i) legal, accounting and other professional
fees attendant to any of the foregoing items payable during such period plus (j)
all fees payable to the Administrative Agent and the Lenders in accordance with
Section 3.3 or the Fee Letters during such period. Operation and Maintenance
Expenses shall exclude, to the extent included: (i) payments into the Debt
Service Reserve Account and the Operating Account during such period, (ii)
payments of any kind with respect to Restricted Payments during such period,
(iii) depreciation and depletion for such period, and (iv) any payments of any
kind with respect to restoration work during such period undertaken in
accordance with Section 7.1(5).
(150) Organizational Document means, relative to any Person, its articles of
organization, formation or incorporation (or comparable document), its by-laws
or operating agreement and all shareholder agreements, partnership agreements,
member agreements, voting trusts and similar arrangements applicable to
ownership.
(151) ounces means ▇▇▇▇ ounces equalling 31.1035 grams per ounce.
(152) Palladium Sales Contract means the contract, a copy of which was
delivered to the Administrative Agent on or before the Effective Date, dated
February 4, 2000, between the Parent Guarantor and later assigned to the
Borrower by the Parent Guarantor, and a major automobile manufacturer, for sales
of all palladium production of the Project up to a maximum of 35,000 ounces per
month, for a term of approximately five years commencing on the date when
financing for the Project has been completed and terminating on June 30, 2005,
having an initial floor price of US$325/oz., as may be extended in accordance
with its terms.
(153) Participant is defined in Section 11.8(2).
(154) Percentage means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the Lender Assignment Agreement,
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to Section 11.8.
(155) Permitted Hedge Agreement means any Hedge Agreement between the Borrower
and any Lender or any Affiliate of any Lender entered into in accordance with
the terms of Section 7.1(9).
(156) Permitted Indebtedness means the Indebtedness permitted under Section
7.2(2)
(157) Permitted Investments means the Investments permitted under Section
7.2(12).
(158) Permitted Liens means the Liens permitted under Section 7.2(3).
(159) Person means any natural person, corporation, limited liability company,
partnership, firm, association, trust, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
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(160) Physical Completion will be deemed to have occurred when the following
conditions have been met and confirmed in the Independent Engineer Completion
Certificate and Borrower Completion Certificate:
(a) construction of the physical facilities, buildings and equipment,
has been completed at the Project Site in accordance in all
material respects with the original design and specifications and
the Construction Contracts; such facilities have become
operational including sufficient capital spares and inventory and
all manufacturers' and contractors' guaranteed test runs have
been satisfactorily completed;
(b) the Borrower has accepted delivery, installation and/or provision
of all material equipment and services to be provided under the
Construction Contracts in accordance in all material respects
with the Development Plan;
(c) Government Approvals required for sustained operation of the
Project at design capacity shall have been obtained and are in
full force and effect; and
(d) the Borrower has accepted all work under the Construction
Contracts.
(161) Pledge Agreement means the Pledge Agreement to be entered into between
the Administrative Agent and the Parent Guarantor on the Effective Date, as such
Pledge Agreement may be amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms of this Agreement and the other
Loan Documents.
(162) Power Supply Agreement means the Agreement for Power dated January 30,
1998 between Ontario Hydro (now Ontario Power Generation) and the Borrower.
(163) Principal Payment Date means the first repayment date as set forth in
Section 3.1(1) and the last Business Day of each calendar quarter thereafter.
(164) Pro Forma Debt Service Coverage Ratio means, as of a given date (the
"calculation date"), the Debt Service Coverage Ratio determined on a pro forma
basis for the each of the next four successive periods of 12 calendar months,
the first such period beginning in the month in which such calculation date
falls on the basis that (a) Debt Service for each such period shall be
calculated using the current applicable LIBO Rate plus the Applicable Margin
based on a 3 month Interest Period, and (b) CFADS for each such period shall be
calculated based on the most recent Life-of-Mine Plan assuming (i) the floor
price under the Palladium Sales Contract for each such period, (ii) base metal
prices based on the forecasts contained in the most recent ▇▇▇▇▇ ▇▇▇▇ metal
service report, (iii) platinum prices at the lower of the London Price for
Platinum and US$350/oz.; and (iv) gold prices at the lower of the London Price
for Gold and US$300/oz. (all prices as adjusted based on the Borrower's
applicable Commodity Swaps permitted in accordance with Section 7.1(9)). For the
purposes of this calculation, the exchange rate between Cdn$ and US$ will be the
most recent four year forecast of the Administrative Agent.
(165) Prohibited Change Order means any Change Order which (a) results in an
increase in Project Costs (individually or, together with all prior Change
Orders) exceeding 10% of Budgeted Project Costs, or (b) either individually or
in conjunction with some or all prior
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Change Orders (i) changes or modifies the plans and specifications of any of the
Construction Contracts in any material way, materially changes the construction
schedule or expected Completion Date or materially adversely affects the
performance levels or performance guarantees set forth in any of the
Construction Contracts or (ii) results in any change to the Project which is
adverse to the interests of the Lenders.
(166) Project is defined in the second recital.
(167) Project Costs means all costs and expenses to be incurred by the Borrower
to develop, construct and achieve Completion in the manner contemplated by the
Transaction Documents and Development Plans including, without limitation, (i)
fees and expenses of the Independent Engineer, the Insurance Advisor, and legal
counsel to the Administrative Agent, (ii) the design, construction, equipment
procurement, installation and start up operation of the Project including,
without limitation, all Debt Service, Operation & Maintenance Expenses and other
expenses during or (to the extent provided in the Construction Budget) prior to
construction of the Project and the initial funding of the Debt Service Reserve
Account.
(168) Project Costs Accounts means the "Project Costs Account" contemplated by
section 10.1.
(169) Project Party means each Person (other than the Borrower, the
Administrative Agent or any Lender) from time to time party to a Material
Project Contract or Additional Project Document.
(170) Project Revenues means, for any period, all revenues (without
duplication) receivable by the Borrower in respect of such period from: (a) the
sale of products and performance of services by the Project, including pursuant
to the Palladium Sales Contract, (b) all interest earned with respect to such
period on Permitted Investments held in the Accounts, (c) amounts received by
the Borrower from Project Parties constituting the refund of deposits during
such period, (d) amounts received by the Borrower under any Material Project
Contract, Non-Material Project Contract or Additional Project Document during
such period, (e) the proceeds of any force majeure, delay in start-up (whether
due to construction, efficacy or otherwise), business interruption insurance and
other payments received for interruption of operations during such period and
(f) all other revenue, however derived, by the Borrower during such period.
(171) Property means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
(172) Qualifying Term means with respect to the Palladium Sales Contract, any
continuous period during the term of such agreement (including any extensions
thereof) during which the floor price for palladium shall be at least US$325/oz.
(if on or before June 30, 2005) and at least US$300/oz. (at any time after June
30, 2005) at all times thereunder.
(173) Real Estate is defined in Section 6.9
(174) Release means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the
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movement of Hazardous Material through or in the ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata.
(175) Required Insurance means the insurance to be obtained and maintained by
the Borrower and the Parent Guarantor pursuant to Section 7.1(5) and Schedule
7.1(5) to this Agreement.
(176) Restricted Payment means: (a) all declarations, or distributions of a
Credit Party (in cash, Property of such Credit Party or obligations) on, or
other payments or distributions on account of, or the setting apart of money for
a sinking or other analogous fund for, or the purchase, redemption, retirement
or other acquisition by such Credit Party of, any portion of any Stock in such
Credit Party; (b) all payments (in cash, Property of such Credit Party or
obligations) of principal or, premium, if any, or interest on and other amounts
with respect to, or other payments on account of, or the setting apart of money
for a sinking or other analogous fund for, or the purchase, redemption,
retirement or other acquisition by such Credit Party of, the ▇▇▇▇▇▇ Sub Debt
except for (i) a payment to the Completion Guarantors of any guarantee fees in
connection with the Completion Guarantee while the Completion Guarantee is in
effect up to a maximum of 0.5% per annum of the outstanding amount hereunder;
and (ii) repayment of the ▇▇▇▇▇▇ Sub Debt out of the proceeds of the equity to
be raised for the Equity Contribution provided that the Equity Contribution to
be used for Project Costs has been invested in the Borrower; (c) any payment of
a claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of such Person's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (d) any payment, loan,
contribution, or other transfer of funds or other property to any stockholder of
such Person other than payment of compensation in the ordinary course to
stockholders who are employees of such Person; and (e) any payment of management
fees (or other fees of a similar nature) by such Person to any stockholder of
such Person or their Affiliates other than such remuneration as is payable in
the ordinary course of business up to a maximum of C$100,000 per annum.
(177) Reuters Screen LIBO Page means the display designated as page LIBO on the
Reuters Monitor Money Rates Service or other page as may, from time to time,
replace that page on that service for the purpose of displaying interbank
offered rates for deposits in the London interbank market.
(178) Royalty Agreement means the royalty agreement dated August 31, 1994
between the Borrower, The Sheridan Platinum Group Ltd. and ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
(179) S&P means Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc.
(180) Secured Obligations means, as at any date, the sum, computed without
duplication, of the following: (a) the aggregate outstanding principal amount of
the Loans plus all accrued interest on such amounts plus (b) all other amounts
----
from time to time payable under the Loan Documents plus accrued interest on such
amounts plus (c) any and all obligations of the Borrower or any Obligor to the
----
Administrative Agent, or any Lender for the performance of its agreements,
covenants or undertakings under or in respect of any Loan Document, plus (d) any
Hedging Obligations owing to any Lender under Hedging Agreements which are
permitted in accordance with Section 7.1(9).
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(181) Secured Parties means the Administrative Agent and each of the Lenders.
(182) Security Agreements means the Security Agreements dated as of the
Effective Date, between the Borrower and the Administrative Agent and between
the Parent Guarantor and the Administrative Agent, in each case as amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms of this Agreement and the other Loan Documents.
(183) Security Document means each of the Security Agreements, the Mortgages,
the Pledge Agreement and any additional security agreement or instrument
necessary to grant to the Administrative Agent a Lien on the Collateral to
secure the Secured Obligations.
(184) Site means the land on which the Project is located.
(185) Smelting Agreements means the smelting contract between the Borrower and
Falconbridge Limited dated as of April 1, 2000 and the smelting contract between
the Borrower and Inco Ltd. dated as of April 1, 2000.
(186) Stock shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership, limited partnership or equivalent entity whether
voting or nonvoting or participating or non-participating.
(187) Subject Claim is defined in the definition of "Contest".
(188) Subordination Agreement means the subordination agreement dated as of the
date hereof given by the ▇▇▇▇▇▇ Group and the Parent Guarantor in favour of the
Administrative Agent and the Lenders.
(189) Subsidiary means, for any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by their terms ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"Wholly Owned Subsidiary" means any such corporation, partnership or other
entity of which all of the equity securities or other ownership interests (other
than, in the case of a corporation, directors' qualifying shares) are so owned
or controlled.
(190) Super Majority Lenders means, at any time, Lenders holding more than 67%
of the aggregate unpaid principal amount of the outstanding Loans, except that
if no Loans are outstanding, Lenders holding more than 67% of the then Aggregate
Commitment.
(191) Target Amount means, as of any given date, an amount equal to the total
principal and interest payments estimated in good faith by the Borrower and
approved by the Administrative Agent to be payable by the Borrower under this
Agreement during the three calendar months
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immediately following the date as to which the Target Amount is being
calculated; except that, so long as the Debt Service Coverage Ratio is less than
1.50:1, such amount shall be determined with reference to such amounts payable
during the six calendar months immediately following the date as to which the
Target Amount is being calculated.
(192) Tax and Taxes includes all present and future taxes, surtaxes, duties,
levies, imposts, rates, fees, assessments, withholdings, dues and other charges
of any nature imposed by any Government Authority (including income, capital
(including large corporations), withholding, consumption, sales, use, transfer,
goods and services or other value-added, excise, customs, anti-dumping,
countervail, net worth, stamp, registration, franchise, payroll, employment,
health, education, business, school, property, local improvement, development,
education development and occupation taxes, surtaxes, duties, levies, imposts,
rates, fees, assessments, withholdings, dues and charges) together with all
fines, interest, penalties on or in respect of, or in lieu of or for non-
collection of, those taxes, surtaxes, duties, levies, imposts, rates, fees,
assessments, withholdings, dues and other charges.
(193) Termination Date means the date on which (a) the Administrative Agent and
the Lenders shall have received payment in full in cash of all of the Secured
Obligations and all other amounts owing to the Administrative Agent and the
Lenders under the Loan Documents on such date, (b) the Commitments shall have
terminated, expired or been reduced to zero and (c) each Hedge Agreement that
would constitute a Secured Obligation shall have terminated or expired.
(194) Test Period means the period of 90 consecutive days preceding the
Completion Date.
(195) tonnes means metric tonnes equalling 2,204.6 pounds.
(196) Transaction Documents means the Loan Documents, the Material Project
Contracts and the Additional Project Documents.
(197) Type means, relative to any Loan, the portion thereof, if any, being
maintained as a USBR Loan or a LIBO Rate Loan.
(198) United States or "US" means the United States of America, its fifty
States and the District of Columbia.
(199) United States Dollar, "US Dollar" and the sign "US$" means lawful money
of the United States.
(200) US Base Rate means, on any date and with respect to all USBR Loans, a
fluctuating rate of interest per annum equal to the higher of (a) the Federal
Funds Rate for such date plus 1/2 of 1% per annum and (b) the Base Rate for such
date. The "Base Rate" is the rate of interest most recently announced by BMO as
its base rate for US Dollar denominated commercial loans made by it in Canada
and is not necessarily intended to be the lowest rate of interest determined by
BMO in connection with extensions of credit. Changes in the rate of interest on
that portion of any Loans maintained as USBR Loans will take effect
simultaneously with each change in the US Base Rate. The Administrative Agent
will give notice promptly to the Borrower and the Lenders of changes in the US
Base Rate.
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(201) USBR Loan means a Loan which is denominated in US Dollars bearing
interest at a fluctuating rate determined by reference to the US Base Rate in
accordance with Section 3.2.
(202) Use means, with respect to any Hazardous Material and with respect to any
Person, the generation, manufacture, processing, distribution, handling, use,
treatment, recycling or storage of such Hazardous Material or transportation to
or from the real property of such Person of such Hazardous Material.
(203) Wholly Owned Subsidiary is defined in the definition of "Subsidiary."
1.2 Use of Defined Terms. Unless otherwise defined or the context otherwise
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in each Borrowing Request, Continuation/Conversion
Notice, Loan Document, notice and other communication delivered from time to
time in connection with this Agreement or any other Loan Document.
1.3 Accounting and Financial Determinations. Unless otherwise specified, all
accounting terms used herein or in any other Loan Document shall be interpreted,
all accounting determinations and computations hereunder or thereunder
(including under Section 7.1 and 7.2) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, Canadian generally accepted accounting principles ("GAAP").
1.4 Conflict. If there is a conflict between any provision of this Agreement
and any provision of another document contemplated by or delivered under or in
connection with this Agreement, the relevant provision of this Agreement is to
prevail.
1.5 Currency. Unless otherwise specified, all amounts are stated and all
payments are to be made in US Dollars.
1.6 Time. Time shall be of the essence in all provisions of this Agreement.
1.7 Headings and Table of Contents. The division of this Agreement into
sections, the insertion of headings and the provision of a table of contents are
for convenience of reference only and are not to affect the construction or
interpretation of this Agreement.
1.8 Number and Gender. Unless otherwise specified, words importing the
singular include the plural and vice versa and words importing gender include
all genders.
1.9 References. Unless otherwise specified, references in this Agreement to
Sections, Exhibits and Schedules are to sections of, and exhibits and schedules
to, this Agreement.
1.10 Statutory References. Unless otherwise specified, each reference to an
enactment is deemed to be a reference to that enactment, and to the regulations
made under that enactment, as amended or re-enacted from time to time.
1.11 Time of Day. Unless otherwise specified, references to time of day or
date mean the local time or date in the City of Toronto, Province of Ontario.
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1.12 Governing Law. This Agreement and each of the Loan Documents are governed
by, and are to be construed and interpreted in accordance with, the laws of the
Province of Ontario and the laws of Canada applicable in the Province of
Ontario.
1.13 Entire Agreement. This Agreement and all Loan Documents constitute the
entire agreement between the parties with respect to the subject matter and
supersede all prior agreements, negotiations, discussions, undertakings,
representations, warranties and understandings, whether written or oral.
1.14 Severability. If any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any jurisdiction, the illegality, invalidity or
unenforceability of that provision will not affect:
(1) the legality, validity or enforceability of the remaining provisions of
this Agreement; or
(2) the legality, validity or enforceability of that provision in any other
jurisdiction.
SECTION 2 - COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1 Commitments. On the terms and subject to the conditions of this Agreement
(including Section 5), each Lender severally agrees to make Loans pursuant to
the Commitments described in this Section 2.1. From time to time on any Business
Day occurring prior to the Commitment Termination Date, each Lender will make
Loans to the Borrower equal to such Lender's Percentage of the aggregate amount
of the Borrowing of Loans requested by the Borrower to be made on such day. The
Commitment of each Lender described in this Section 2.1 is herein referred to as
its "Commitment." No amounts repaid or prepaid with respect to Loans may be
reborrowed.
2.2 Lenders Not Permitted or Required to Make Loans. No Lender shall be
permitted or required to make any Loan if, after giving effect thereto, the
aggregate principal amount of all Loans (a) of all Lenders made since the
Effective Date would exceed the Commitment Amount, or (b) of such Lender made
since the Effective Date would exceed such Lender's Percentage of the Commitment
Amount.
2.3 Borrowing Procedure.
(1) By delivering a Borrowing Request to the Administrative Agent on or
before 10:00 a.m. on a Business Day during a calendar month, the Borrower may
from time to time irrevocably request, on not less than three Business Days'
notice, that a Borrowing be made in an amount equal to the Project Costs due and
payable on or before the thirtieth (30th) day after the date of such Borrowing,
including all Project Costs previously paid and all holdbacks permitted to be
released under the Construction Lien Act (Ontario) less the sum of: (a) Project
Costs funded by all previous Borrowings and Project Revenues; (b) holdbacks as
required by the Construction Lien Act (Ontario); and (c) after October 31, 2000
the Equity Contribution. Such Borrowing shall be made in a minimum amount of
US$1,000,000 and in an integral multiple of US$1,000,000 or in the unused amount
of the applicable Commitments and no Borrowing shall be made on or after the
Commitment Termination Date. The Borrower may, in any Borrowing
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Request, request that US$2,000,000 in excess of the amount set out above be
included in such Borrowing provided any amounts previously advanced by the
Lenders pursuant to this provision have been expended in full on Project Costs.
The Borrower may, in any Borrowing Request, request that the amount requested in
such Borrowing Request be advanced by the Lenders in two payments, to be made no
more than twenty (20) days apart. If the Borrower delivered a Borrowing Request
which requests that an advance be paid in part on the Borrowing Date and part at
a later date, on such later date the Borrower will confirm that the provisions
of Sections 5.2(1), (3), (5), (6) and (10) shall be true and correct on such
date. The Borrower may not request more than two (2) Borrowings in any calendar
month. On the terms and subject to the conditions of this Agreement, each
Borrowing shall be comprised of the Type of Loans, and shall be made on the
Business Day or Business Days, specified in such Borrowing Request. On the terms
and subject to the conditions of this Agreement, on or before 11:00 a.m. on such
Business Day(s) each Lender shall deposit with the Administrative Agent same day
funds in an amount equal to such Lender's Percentage of the requested Borrowing.
Such deposit(s) will be made to the Administrative Agent's Account for Payments.
No Lender's obligation to make any Loan shall be affected by any other Lender's
failure to make any Loan.
(2) In addition to the requirements set forth in clause (1) above, the Borrower
shall have delivered to the Independent Engineer and the Administrative Agent at
least ten (10) Business Days prior to the date of such Loan a Borrower
Construction Certificate designating, among other things, the application of the
proceeds of such Borrowing. Not less than five (5) Business Days prior to the
date of such Loan, the Independent Engineer shall have delivered to the
Administrative Agent each of the Borrower Construction Certificate and the
Independent Engineer Construction Certificate. Not more than three (3) Business
Days prior to the date of such Loan, following review of the Borrower
Construction Certificate and the Independent Engineer Construction Certificate,
the Administrative Agent shall accept or reject such Borrower Construction
Certificate.
(3) In the event that the Administrative Agent has a dispute with any item in
the Borrower Construction Certificate or Independent Engineer Construction
Certificate delivered pursuant to clause (2) above, and if such disputed item
shall cause the Administrative Agent to reject such Borrower Construction
Certificate (each a "Disputed Item"), then the Lenders shall make available to
the Borrower an amount of Loans equal to the requested Borrowing minus the
aggregate amount of the Disputed Items. Not more than two (2) Business Days
after the Administrative Agent shall have received such Borrower Construction
Certificate or Independent Engineer Construction Certificate, the Administrative
Agent shall consult with the Borrower and the Independent Engineer to resolve
such Disputed Item. In the event that the Administrative Agent, the Borrower and
the Independent Engineer cannot resolve such Disputed Item within three (3)
Business Days, then (i) the Borrower may resubmit such Disputed Item with the
next requested Borrowing or (ii) submit such disputed item for resolution to a
nationally recognized engineering firm acceptable to the Borrower and the
Administrative Agent (the "Second Independent Engineer") and, following a
determination by the Second Independent Engineer, such disputed item shall be
paid or resubmitted with the next requested Borrowing.
(4) If the Borrower Construction Certificate or Independent Engineer
Construction Certificate states, or if the Administrative Agent otherwise
reasonably believes, that a Cost Overrun is expected to occur then
notwithstanding any other provision of this Agreement no
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Lender shall be obligated to make any Loans hereunder unless and until the
Borrower provides to the Administrative Agent and Lenders evidence satisfactory
to the Super Majority Lenders, acting reasonably, that the Borrower possesses
sufficient funds to pay for such excess from amounts advanced to it in
accordance with the Completion Guarantee or from Project Revenues.
2.4 Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 10:00
a.m. on a Business Day, the Borrower may from time to time irrevocably elect, on
not less than three Business Days' notice, that all or any portion in an
aggregate minimum amount of US$1,000,000 and an integral multiple of
US$1,000,000 of any Loans denominated in US Dollars be, in the case of USBR
Loans, converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, on the
last day of the current Interest Period, be converted into a USBR Loan or
continued as a LIBO Rate Loan (in the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three
Business Days before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a USBR Loan); provided, however, that (a) each such conversion or
-------- -------
continuation shall be pro rated among the applicable outstanding Loans of all
Lenders, and (b) no portion of the outstanding principal amount of any Loans may
be continued as, or be converted into, LIBO Rate Loans when any Default has
occurred and is continuing.
2.5 Reliance on Oral Instructions. The Administrative Agent and any Lender
shall be entitled to act upon the oral instructions of any Person who the
Administrative Agent or the Lender, acting reasonably, believes is a Person
authorized by the Borrower to act on the Borrower's behalf. Neither the
Administrative Agent nor the Lender shall be responsible for any error or
omission in those instructions or in the performance thereof except in the case
of gross negligence or wilful misconduct by the Administrative Agent, the Lender
or their respective employees. Any instructions so given shall be confirmed in
writing by the Borrower to the Administrative Agent or the Lender, as
applicable, on the same day. The Borrower shall indemnify the Administrative
Agent and each Lender for any loss or expense suffered or incurred by the
Administrative Agent or the Lender as a consequence of the Administrative Agent
or the Lender acting upon instructions given or agreements made over the
telephone or by electronic transmission of any type with Persons reasonably
believed by the Administrative Agent or the Lender to have been acting on the
Borrower's behalf.
2.6 Deposit of Proceeds of Loans . The Administrative Agent shall credit to the
accounts specified by the Borrower in the Borrowing Request and, otherwise, to
the Project Costs Account on the applicable date of Borrowing the proceeds of
each Borrowing by way of USBR Loans or LIBO Rate Loans made on that date.
2.7 Evidence of Obligations. The Administrative Agent shall open and maintain
at its Branch of Account, accounts and records evidencing the Obligations of the
Borrower to each Lender with respect to Loans made available by that Lender. The
Administrative Agent shall record in those accounts by appropriate entries all
amounts on account of those Obligations and all payments on account thereof.
Those accounts and records will constitute, in the absence of manifest error,
prima facie evidence of those Obligations from time to time, the date each Loan
was made and the amounts that the Borrower has paid from time to time on account
of those Obligations.
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SECTION 3 - REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1 Repayments and Prepayments.
(1) Repayment. Commencing on the earlier of (a) the last Business Day of the
first calendar quarter following the Completion Date, and (b) the Initial
Repayment Date, and on the last Business Day of each calendar quarter thereafter
(each such date, a "Principal Repayment Date"), the Borrower shall repay the
Loans in quarterly instalments on each such Principal Payment Date to and
including the Final Maturity Date; provided that such quarterly payments of
--------
principal shall be in amounts equal to the aggregate amount of all Loans
outstanding as at the first Principal Repayment Date multiplied by the
percentages set forth below for the relevant Principal Payment Dates:
Principal Payment Dates Percentage of All Outstanding Loans:
----------------------- ------------------------------------
1 - 4 3.75%
5 - 8 7.50%
9 - 12 6.25%
13 - 16 5.00%
17 - 20 2.50%
If, at any time, the remaining Qualifying Term under Palladium Sales Contracts
is less than four years and the Qualifying Term expires before the then current
Final Maturity Date, then the percentages set forth above and the principal
payments due on each Principal Payment Date shall be increased proportionately
such that the final scheduled principal repayment under the Loans shall be made,
and the Loans fully repaid, on the last Principal Payment Date occurring before
the expiry of such Qualifying Term. Such final Principal Payment Date shall be
deemed to be the new Final Maturity Date. All Loans and other Obligations
outstanding shall be repaid and paid in full on such Final Maturity Date and the
number of Principal Payment Dates shall be likewise reduced. If the Qualifying
Term under the Palladium Contract is subsequently extended the accelerated
repayment of principal hereunder shall not be subsequently reverted to the
repayment schedule set out above. By way of example only, if on the Initial
Repayment Date the Qualifying Term under the Palladium Sale Contract is 3? years
the payment referred to above would be as follows:
Principal Payment Dates Percentage of All Outstanding Loans:
----------------------- ------------------------------------
1 - 4 4.6875%
5 - 8 9.375%
9 - 12 7.8125%
13 - 14 6.25%
(2) Voluntary Prepayment. Upon at least three (3) Business Days' notice to the
Administrative Agent (which notice the Administrative Agent shall promptly
transmit to each of the applicable Lenders), the Borrower may, from time to
time, without premium or penalty,
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voluntarily prepay the outstanding principal amounts of the Loans, in whole or
in parts, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, that (a) each prepayment must be in an
--------
aggregate minimum amount of US$1,000,000 or whole multiples thereof or, if less,
the full remaining principal balance of the outstanding Loans, (b) if the
Borrower prepays any LIBO Rate Loan on any date other than the last day of the
Interest Period therefor, the Borrower shall compensate the Lenders pursuant to
Section 4.5 and (c) any such prepayment shall be made pro rata among Loans of
the same Type and, if applicable, having the same Interest Period. Any notice to
the Administrative Agent pursuant to this Section 3.1(2) shall set forth the
Borrowing to be prepaid, the Type of Loans which currently make up such
Borrowing, the amount thereof and the proposed date of such prepayment. All
prepayments of principal under this Section 3.1(2) shall be applied to reduce
the principal due in respect of the Loans in the inverse order of their
scheduled maturities.
(3) Mandatory Prepayment.
(a) Excess Cash Flow. Commencing on the date occurring sixty (60) days
after the first Principal Payment Date and sixty (60) days after each
Principal Payment Date thereafter, the Borrower shall prepay the Loans
in an aggregate amount equal to 50% of the Excess Cash Flow calculated
for the quarterly period ending on such Principal Payment Date except
in the case of the first Excess Cash Flow calculation which will be
calculated for the period commencing on Physical Completion and ending
on the first Principal Payment Date. The Borrower shall notify the
Administrative Agent of the amount of the Excess Cash Flow at least
three (3) Business Days prior to each date upon which such excess Cash
Flow is to be paid.
(b) Loss Proceeds. The Borrower shall prepay the Loans in an aggregate
amount equal to 100% of all insurance proceeds received in connection
with a Major Loss and all other insurance proceeds that are not
applied to pay the cost of restoration in accordance with Section
7.1(5)(e).
All prepayments of principal under this Section 3.1(3) shall be applied to
reduce the principal payments due in respect of the Loans in the inverse order
of their scheduled maturities.
(4) Pro Rata Application of Payments. Except to the extent otherwise provided
in this Agreement:
(a) each borrowing of Loans under Section 2.1 shall be made from the
Lenders and each termination of the amount of the Commitments under
Section 3.1(5) shall be applied to the respective Commitments of the
Lenders, pro rata according to the amounts of their respective
Commitments;
(b) the conversion and continuation of Loans of a particular Type shall be
made pro rata among the Lenders according to the amounts of their
respective Commitments and the then current Interest Period for each
Loan of such Type shall be coterminous;
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(c) each payment or prepayment of principal of Loans by the Borrower shall
be made for the account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of the Loans held by them,
provided, that if, immediately prior to giving effect to any such
--------
payment in respect of any Loan, the outstanding principal amount of
the Loans shall not for any reason be held by the Lenders pro rata in
accordance with their respective Commitments in effect at the time
such Loans were made, then such payment shall be applied to the Loans
in such manner as shall result, as nearly as is practicable, in the
outstanding principal amount of the Loans being held by the Lenders
pro rata in accordance with their respective Commitments; and
(d) each payment of interest on Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of
interest on such Loans then due and payable to the respective Lenders.
(5) Repayment, Prepayment and Cancellation. The Borrower may at any time cancel
undrawn amounts of the Aggregate Commitment without premium or penalty, in
minimum amounts of US$1,000,000 or whole multiples thereof, subject to giving
the Administrative Agent ten (10) Business Days prior irrevocable written
notice; provided that the Administrative Agent and Lenders have received a
certificate of Authorized Officer of the Borrower certifying that the Borrower
has sufficient funds to complete the Project and specifying the sources of such
funds, as permitted in accordance with this Agreement. All amounts repaid or
prepaid in accordance with this Agreement shall constitute a permanent reduction
and cancellation of the Aggregate Commitment and such amounts shall not be
reborrowed. Amounts cancelled will not be reinstated and the Commitments of each
Lender shall be reduced rateably and Commitment Amount correspondingly reduced.
3.2 Interest Provisions. Interest on the outstanding principal amount of Loans
shall accrue and be payable in accordance with this Section 3.2.
(1) Interest on USBR Loans.
(a) Rate. The Borrower shall pay to the Administrative Agent on behalf of
the Lenders interest on USBR Loans at the Administrative Agent's
Account for Payments at a rate per annum equal to the US Base Rate
plus the Applicable Margin.
(b) Change in Rate. Each change in the fluctuating interest rate
applicable to each USBR Loan will take place simultaneously with the
corresponding change in the US Base Rate without the necessity for any
notice.
(c) Calculation. Interest on USBR Loans shall be payable monthly in
arrears on every Interest Payment Date and on the Final Maturity Date
for the period from and including, as the case may be, the date of
Borrowing or conversion or the immediately preceding Interest Payment
Date to but excluding the first-mentioned Interest Payment Date or the
Final Maturity Date, as applicable, and shall be calculated on a daily
basis on the principal amount of the USBR Loans remaining
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unpaid on the basis of the actual number of days elapsed in a year of
365 or 366 days as the case may be.
(2) Interest on LIBO Rate Loans.
(a) Rate. The Borrower shall pay to the Administrative Agent on behalf of
the Lenders interest on LIBO Rate Loans at the Administrative Agent's
Account for Payments at a rate per annum equal to the LIBO Rate for
the applicable Interest Period plus the Applicable Margin.
(b) Calculation. Interest on a LIBO Rate Loan shall be payable on the
LIBOR Interest Date applicable to the LIBO Rate Loan, for the period
commencing from and including the first day of the Interest Period or
the immediately preceding LIBOR Interest Date, as the case may be,
applicable to the LIBO Rate Loan, to but excluding the LIBOR Interest
Date, and shall be calculated on a daily basis on the principal amount
of LIBO Rate Loans remaining unpaid on the basis of the actual number
of days elapsed in a year of 360 days.
(c) Determination by Administrative Agent. Each determination by the
Administrative Agent of the rate of interest applicable to a LIBO Rate
Loan shall, in the absence of manifest error, be final, conclusive and
binding upon the Borrower and the Lenders. Upon determination of the
rate of interest applicable, the Administrative Agent shall notify the
Borrower and each Lender of that rate.
(3) Post-Default Rates. After the date any principal amount of any Loan is due
and payable (whether on the Final Maturity Date, upon acceleration or
otherwise), or after any other monetary Obligation of the Borrower shall have
become due and payable, at the discretion of the Administrative Agent and the
Lenders, the Borrower shall pay interest (after as well as before judgment) on
such amounts at a rate per annum equal to the US Base Rate plus the Applicable
Margin for the US Base Rate plus a margin of 2% per annum. Subject to the
foregoing, interest on any amount of overdue principal shall be payable at the
same rate both before and after demand, default or judgement.
(4) Payment Dates - General. Without limitation of this Agreement, interest
accrued on each Loan shall be payable, without duplication: (a) on the Final
Maturity Date therefor; (b) on the date of any payment or prepayment of
principal outstanding on such Loan; (c) with respect to any USBR Loans converted
into another Type of Borrowing on a day when interest would not otherwise have
been payable, on the date of such conversion; and (d) on that portion of any
Loans which is accelerated pursuant to Section 8.1(8) or Section 8.1(9),
immediately upon such acceleration. Interest accrued on Loans or other monetary
Obligations arising under this Agreement or any other Loan Document after the
date such amount is due and payable (whether on the Final Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.
3.3 Other Fees. The Borrower agrees to pay the fees set forth in this Section
3.3. All such fees shall be non-refundable.
(1) Commitment Fee. The Borrower agrees to pay to the Administrative Agent for
the account of each Lender, for the period (including any portion thereof when
any of its
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Commitments are suspended by reason of the Borrower's inability to satisfy any
condition of Section 5) commencing on the Effective Date and continuing until
the Commitment Termination Date, a commitment fee calculated at the rate of
0.50% per annum on such Lender's Percentage of the sum of the average daily
unused, available and uncancelled portion of the Commitment Amount in effect
from time to time on the basis of the actual number of days elapsed and a year
of 365 days. Such commitment fees shall be payable by the Borrower in arrears on
the last Business Day of each month, commencing with the first such day
following the Effective Date, and on the Commitment Termination Date.
(2) Other Fees. The Borrower agrees to pay to the Administrative Agent, for the
Administrative Agent's own account, such fees, including a participation fee
payable to each Lender, an annual agency fee and a technical agency fee in the
amounts and as provided in one or more separate fee letter agreements (such
agreements, as amended from time to time, being the "Fee Letters") between the
Administrative Agent and the Borrower.
3.4 Interest Act. For purposes of the Interest Act (Canada), where in this
Agreement a rate of interest is to be calculated on the basis of a year of 360
or 365 days, the yearly rate of interest to which the rate is equivalent is the
rate multiplied by the number of days in the year for which the calculation is
made and divided by 360 or 365, as applicable.
3.5 Limit on Rate of Interest.
(1) Adjustment. If any provision of this Agreement or any of the other
Documents would obligate the Borrower to make any payment of interest or other
amount payable to any Lender in an amount or calculated at a rate which would be
prohibited by law or would result in a receipt by that Lender of interest at a
criminal rate (as construed under the Criminal Code (Canada)), then
notwithstanding that provision, that amount or rate shall be deemed to have been
adjusted with retroactive effect to the maximum amount or rate of interest, as
the case may be, as would not be so prohibited by law or result in a receipt by
that Lender of interest at a criminal rate, the adjustment to be effected, to
the extent necessary, as follows:
(a) firstly, by reducing the amount or rate of interest required to be
paid to the affected Lender under this Section 3; and
(b) thereafter, by reducing any fees, commissions, premiums and other
amounts required to be paid to the affected Lender which would
constitute interest for purposes of Section 347 of the Criminal Code
(Canada).
(2) Reimbursement. Notwithstanding Section 3.5(1), and after giving effect to
all adjustments contemplated thereby, if any Lender shall have received an
amount in excess of the maximum permitted by the Criminal Code (Canada), then
the Borrower shall be entitled, by notice in writing to the affected Lender, to
obtain reimbursement from that Lender in an amount equal to the excess, and
pending reimbursement, the amount of the excess shall be deemed to be an amount
payable by that Lender to the Borrower.
(3) Actuarial Principles. Any amount or rate of interest referred to in this
Section 3.5 shall be determined in accordance with generally accepted actuarial
practices and principles as an effective annual rate of interest over the term
that any Loan remains outstanding on the
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assumption that any charges, fees or expenses that fall within the meaning of
interest (as defined in the Criminal Code (Canada)) shall, if they relate to a
specific period of time, be pro-rated over that period of time and otherwise be
pro-rated over the period from the Closing Date to the Final Maturity Date and,
in the event of a dispute, a certificate of a Fellow of the Canadian Institute
of Actuaries appointed by the Administrative Agent shall be conclusive for the
purposes of that determination.
SECTION 4 - OTHER EXPENSE PROVISIONS
4.1 Change in Circumstances.
(1) Reduction in Rate of Return. If at any time any Lender determines, acting
reasonably, that any change in any Government Rule or any interpretation thereof
after the date of this Agreement, or compliance by the Lender with any
direction, requirement, guidelines or policies or request from any regulatory
authority given after the date of this Agreement, whether or not having the
force of law, has or would have, as a consequence of a Lender's obligation under
this Agreement, and taking into consideration the Lender's policies with respect
to capital adequacy, the effect of reducing the rate of return on the Lender's
capital to a level below that which the Lender would have achieved but for the
change or compliance, then from time to time, upon demand of the Lender, the
Borrower shall pay the Lender such additional amounts as will compensate the
Lender for the reduction in accordance with Section 4.1(3).
(2) Taxes, Reserves, Capital Adequacy, etc. If, after the date of this
Agreement, the introduction of any Government Rule or any change or introduction
of a change in any Government Rule (whether or not having the force of law) or
in the interpretation or application thereof by any court or by any Government
Authority, central bank or other authority or entity charged with the
administration thereof, or any change in the compliance of any Lender therewith
now or hereafter:
(a) subjects any Lender to, or causes the withdrawal or termination of a
previously granted exemption with respect to, any Tax or changes the
basis of taxation, or increases any existing Tax on payments of
principal, interest, fees or other amounts payable by the Borrower to
the Lender under or by virtue of this Agreement (except for Excluded
Taxes);
(b) imposes, modifies or deems applicable any reserve, special deposit,
deposit insurance or similar requirement against assets held by, or
deposits in or for the account of, or loans by or any other
acquisition of funds by, an office of any Lender in respect of any
Loan or any other condition with respect to this Agreement; or
(c) imposes any Tax on reserves or deemed reserves with respect to the
undrawn portion of the Commitment of any Lender;
and the result of any of the foregoing, in the sole determination of the Lender
acting reasonably, shall be to increase the cost to, or reduce the amount
received or receivable by the Lender or its effective rate of return in respect
of making, maintaining or funding a Loan hereunder, the
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Lender shall, acting reasonably, determine that amount of money which shall
compensate the Lender for the increase in cost or reduction in income.
(3) Payment of Additional Compensation. Upon a Lender having determined that it
is entitled to compensation in accordance with the provisions of this Section
4.1 ("Additional Compensation"), the Lender shall promptly so notify the
Borrower and the Administrative Agent and shall provide to the Borrower and the
Administrative Agent a photocopy of the relevant Government Rule or request, as
applicable, and a certificate of an officer of the Lender setting forth the
Additional Compensation and the basis of calculation thereof, which shall be
conclusive evidence of the Additional Compensation in the absence of manifest
error. The Borrower shall pay to the Lender within 30 Business Days of the
giving of notice the Additional Compensation for the account of the Lender
accruing from the date of the notification. The Lender shall be entitled to be
paid Additional Compensation from time to time to the extent that the provisions
of this Section 4.1 are then applicable notwithstanding that the Lender has
previously been paid Additional Compensation.
(4) Commercially Reasonable. If it is commercially reasonable in the opinion of
a Lender receiving Additional Compensation under this Section 4.1, the Lender
shall make reasonable efforts to limit the incidence of that Additional
Compensation, including seeking recovery for the account of the Borrower
following the Borrower's request and at the Borrower's expense, if the Lender,
in its sole determination, would suffer no appreciable economic, legal,
regulatory or other disadvantage as a result.
4.2 Payment of Portion.
(1) Notwithstanding any other term or condition of this Agreement, if a Lender
gives the notice provided for in Section 4.1 with respect to any Loan (an
"Affected Borrowing"), the Borrower may, at its option, upon ten (10) Business
Days notice to that Lender (which notice shall be irrevocable), repay, without
penalty, to the Lender in full the Lender's Percentage of the Affected Borrowing
outstanding together with accrued and unpaid interest on the principal amount so
repaid up to the date of repayment, together with such Additional Compensation
as may be applicable to the date of payment.
(2) The Borrower shall be entitled to replace the Lender whose Loan the
Borrower is entitled to repay pursuant to Section 4.2(1) (the "Replaced Lender")
with a substitute Lender (the "Substituted Lender") provided that (i) the
Substituted Lender assumes all of the Replaced Lender's obligations pursuant to
the Loan Documents, including the Replaced Lender's Commitment, in its entirety
hereunder, (ii) the Borrower pays all Additional Compensation as may be
applicable to the date of payment, (iii) the Borrower obtains the consent of the
Majority Lenders, not to be unreasonably withheld, to such substitution, and
(iv) the Borrower pays to the Agent, with respect to each Substituted Lender, an
administration fee of $3,000. For greater certainty, no such replacement of a
Replaced Lender shall constitute a repayment and readvance of a Loan.
4.3 Illegality. If any Government Rule, or any change therein or in the
interpretation or application thereof by any court or by any Government
Authority or central bank or comparable agency or any other entity charged with
the interpretation or administration thereof, or
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compliance by any Lender with any request or direction (whether or not having
the force of law) of any Government Authority, central bank or comparable agency
or other entity, now or hereafter makes it unlawful or impossible for the Lender
to make, fund or maintain a Loan or to perform its obligations under or by
virtue of this Agreement, the Lender may, by written notice thereof to the
Borrower and the Administrative Agent, terminate its obligations to make further
Loans under this Agreement, and the Borrower, if required by the Lender, shall
repay forthwith (or at the end of such longer period as the Lender in its
discretion has agreed) the principal amount of the Loan from such Lender
together with accrued interest without penalty or bonus and such Additional
Compensation as may be applicable to the date of payment and all other
outstanding Obligations to the Lender. If any change shall only affect a portion
of any Lender's obligations under this Agreement which is, in the opinion of the
Lender, severable from the remainder of this Agreement so that the remainder of
this Agreement may be continued in full force and effect without otherwise
affecting any of the obligations of the Lender or the Borrower under this
Agreement, the Lender shall only declare its obligations under that portion so
terminated.
4.4 Substitute Basis of Advance - LIBO Rate Loans. If, at any time during the
term of this Agreement, a Lender acting in good faith determines (which
determination absent manifest error shall be final, conclusive and binding upon
the Borrower) that:
(1) adequate and fair means do not exist for ascertaining the rate of interest
on a LIBO Rate Loan, or
(2) the LIBO Rate does not accurately reflect the effective cost to the Lender
of making, funding or maintaining a LIBO Rate Loan and the costs to the Lender
are increased or the income receivable by the Lender is reduced in respect of a
LIBO Rate Loan, or
(3) the making, funding or maintaining of a LIBO Rate Loan or a portion thereof
by the Lender has become impracticable by reason of circumstances which
materially and adversely affect the London interbank market, or
(4) deposits in US Dollars are not available to the Lender in the London
interbank market in sufficient amounts in the ordinary course of business for
the applicable Interest Period to make, fund or maintain a LIBO Rate Loan during
the Interest Period,
the Lender shall promptly notify the Borrower setting forth the basis of that
determination and the Borrower hereby instructs the Lender to repay the affected
LIBO Rate Loan with the proceeds of a USBR Loan in the amount of the LIBO Rate
Loan, to be drawn down on the last day of the then current Interest Period. The
Lender shall not be required to make or continue any LIBO Rate Loans available
under this Agreement so long as any of the circumstances referred to in this
Section 4.4 continue to exist.
4.5 Indemnity - Eurodollar.
(1) LIBO Rate Loans. If the Borrower repays, prepays or cancels a LIBO Rate
Loan on a day other than the last day of an Interest Period, the Borrower shall
indemnify the applicable Lender for any loss or expense suffered or incurred by
the Lender as a consequence thereof including, without limitation, any loss of
profit or expenses which the Lender incurs by reason of
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the liquidation or re-deployment of deposits or other funds acquired by the
Lender to effect or maintain the LIBO Rate Loan or any interest or other charges
payable to lenders of funds borrowed by the Lender in order to effect or
maintain the LIBO Rate Loan together with any other charges, costs or expenses
incurred by the Lender relative thereto.
(2) Certificate. A certificate of the Administrative Agent or the affected
Lender, as the case may be, setting out the basis for the determination of the
amount necessary to indemnify the Lender pursuant to this Section 4.5(2) shall
be conclusive evidence, absent manifest error, of the correctness of that
determination.
4.6 Taxes.
(1) Payments All payments to be made by or on behalf of the Credit Parties
under or with respect to this Agreement are to be made free and clear of and
without deduction or withholding for, or on account of, any present or future
Taxes, unless such deduction or withholding is required by Government Rules. If
a Credit Party is required to deduct or withhold any Taxes from any amount
payable to the Administrative Agent or any Lender (a) the amount payable shall
be increased as may be necessary so that, after making all required deductions
or withholdings (including deductions and withholdings applicable to, and taking
into account all Taxes on, or arising by reason of the payment of, additional
amounts under this Section 4.6), the Administrative Agent or the Lender, as the
case may be, receives and retains an amount equal to the amount that it would
have received had no such deductions or withholdings been required, (b) the
Credit Party shall make such deductions or withholdings, and (c) the Credit
Party shall remit the full amount deducted or withheld to the relevant taxing
authority in accordance with Government Rules. Notwithstanding the foregoing,
the Credit Parties shall not be required to pay additional amounts in respect of
Excluded Taxes or as a result of any of the Administrative Agent or the Lenders
changing their residency for tax purposes.
(2) Indemnity. Each Credit Party shall indemnify the Administrative Agent and
the Lenders for the full amount of any Taxes (other than Excluded Taxes) imposed
by any jurisdiction on amounts payable by such Credit Party under this Agreement
or any of the Loan Documents and paid by the Administrative Agent or any Lender
and any liability (including penalties, interest and reasonable expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted, and any Taxes levied or imposed with respect to
any indemnity payment made under this Section 4.6. Each Credit Party shall also
indemnify the Administrative Agent and the Lenders for any Taxes (other than
Excluded Taxes) that may arise as a consequence of the execution, sale,
transfer, delivery or registration of, or otherwise with respect to this
Agreement or any other Loan Document. The indemnifications contained in this
Section 4.6(2) shall be made within 30 days after the date the Administrative
Agent makes written demand therefor.
(3) Evidence of Payment. The Borrower shall furnish to the Administrative Agent
the original or a certified copy of a receipt evidencing payment by the
applicable Credit Party of any Taxes with respect to any amount payable to the
Administrative Agent and the Lenders hereunder as soon as such receipts become
available.
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(4) Excluded Taxes. For the purpose of Section 4.1(2)(a) and this Section 4.6,
"Excluded Taxes" means, in relation to the Administrative Agent or any Lender,
any Taxes imposed on the net income or capital of the Administrative Agent or
the Lender by any Governmental Authority as a result of the Administrative Agent
or the Lender (a) carrying on a business or having a permanent establishment in
any jurisdiction or political subdivision thereof, (b) being organized under the
laws of such jurisdiction or any political subdivision thereof, or (c) being or
being deemed to be resident in such jurisdiction or political subdivision
thereof.
(5) Survival. The Borrower's obligations under this Section 4.6 shall survive
the termination of this Agreement and the payment of all amounts payable under
or with respect to this Agreement and the other Loan Documents.
4.7 Payments, Computations, etc. Unless otherwise expressly provided, all
payments by the Borrower pursuant to this Agreement, or any other Loan Document
shall be made by the Borrower to the Administrative Agent for the pro rata
account of the Lenders entitled to receive such payment. All such payments
required to be made to the Administrative Agent shall be made, without setoff,
deduction or counterclaim, not later than 11:00 a.m. on the date due, in same
day or immediately available funds, to the Administrative Agent's Account for
Payments. Funds received after that time shall be deemed to have been received
by the Administrative Agent on the next succeeding Business Day. The
Administrative Agent shall promptly remit in same day funds to each Lender its
share, if any, of such payments received by the Administrative Agent for the
account of such Lender. Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except as otherwise
required by clause (c) of the definition of the term "Interest Period" with
respect to LIBO Rate Loans) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.
4.8 Currency Matters. Principal, interest, reimbursement obligations, fees, and
all other amounts payable under this Agreement and the other Loan Documents to
the Administrative Agent and the Lenders shall be payable in the currency in
which such Obligations are denominated. Unless stated otherwise, all
calculations, comparisons, measurements or determinations under this Agreement
shall be made in US Dollars. For the purpose of such calculations, comparisons,
measurements or determinations, amounts denominated in other currencies shall be
converted in the Equivalent Amount of US Dollars on the date of calculation,
comparison, measurement or determination.
4.9 Sharing of Payments. If any Lender shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of setoff or
otherwise), after exercise of any rights pursuant to Sections 8.2 or 8.3 on
account of any Loan or Hedging Agreement in excess of its pro rata share of
payments then or therewith obtained by all Lenders, such Lender shall purchase
from the other Lenders such participations in Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
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portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and each Lender which
has sold a participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent of such recovery together with
an amount equal to such selling Lender's ratable share (according to the
proportion of the amount of such selling
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Lender's required repayment to the purchasing Lender to the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to Section 4.10) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders entitled under this
Section to share in the benefits of any recovery on such secured claim.
4.10 Setoff. Each Lender shall, upon the occurrence of any Default described in
Sections 8.1(8) and 8.1(9) or, with the consent of the Majority Lenders, upon
the occurrence of any other Event of Default, have the right to appropriate and
apply to the payment of the Obligations owing to it (whether or not then due),
and (as security for such Obligations) the Borrower hereby grants to each Lender
a continuing security interest in, any and all balances, credits, deposits,
accounts, moneys or cash value of any Hedging Agreements of the Borrower then or
thereafter maintained with such Lender; provided, however, that any such
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appropriation and application shall be subject to the provisions of Section 4.9.
Each Lender agrees promptly to notify in writing the Borrower and the
Administrative Agent after any such setoff and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
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validity of such setoff and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff under Government Rule or otherwise) which such Lender may have.
SECTION 5 - CONDITIONS TO BORROWING
5.1 Initial Borrowing. The obligations of the Lenders to fund the initial
Borrowing shall be subject to the prior or concurrent satisfaction of each of
the conditions precedent set forth in this Section 5.1, each of which must be
satisfactory to the Administrative Agent and the Lenders in form and substance
and, if applicable, in full force and effect.
(1) Borrower Documents. The Administrative Agent shall have received from the
Borrower the following:
(a) This Agreement, duly executed and delivered by the Borrower, the
Lenders and the Administrative Agent; and
(b) The Fee Letters, duly executed and delivered by the Borrower and the
Administrative Agent.
(2) Material Project Contracts; Consents to Assignment. The Administrative
Agent shall have received:
(a) Copies of the Material Project Contracts including, without
limitation, the Palladium Sales Contract, accompanied by a certificate
of an Authorized Officer
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of the Borrower to the effect that (1) such copy is a true, correct
and complete copy of each such agreement (including all exhibits and
schedules, if any, and all amendments thereto), (2) each of the
Material Project Contracts has been, either as of the Effective Date
or prior thereto, duly executed and delivered by the Borrower and is
in full force and effect, and (3) the Borrower is not in breach of or
default under, and to the Borrower's knowledge none of the other
parties to any Material Project Contract is in breach of or default
under, any such Material Project Contract;
(b) An original Consent to Assignment, in form and substance satisfactory
to the Administrative Agent and the Lenders, duly executed and
delivered by each of the following:
(i) the major automobile company who is party to the Palladium
Sales Contract in respect of the Palladium Sales Contract;
(ii) Ontario Power Generation in respect of the Power Supply
Contract;
(iii) Inco Ltd. in respect of the Smelting Agreement with Inco Ltd.;
(iv) Falconbridge Limited in respect of the Smelting Agreement with
Falconbridge Limited; and
(v) AGRA ▇▇▇▇▇▇ Limited in respect of the Construction Contract.
(3) Organizational Documents. The Administrative Agent shall have received a
certificate of the Secretary, Assistant Secretary or Vice President of each of
the Borrower, the Parent Guarantor, ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Oil Company, ▇▇▇▇▇▇ Energy
Ltd. and GBK Corporation, dated as of the Effective Date, certifying:
(a) that attached to such certificate is a true and complete copy of the
articles, by-laws, or other Organizational Documents, as the case may
be, of such Person as in effect on the date of such certificate;
(b) that attached to such certificate is a true and complete copy of
resolutions duly adopted by the board of directors or members of such
Person, as applicable, authorizing the execution, delivery and
performance of such of the Transaction Documents to which such Person
is or is intended to be a party;
(c) that attached thereto is a copy of the certificate of status,
compliance or good standing, as the case may be, of such Person, in
each case certified as of a recent date by the applicable Government
Authority;
(d) as to the incumbency and specimen signature of each officer of such
Person executing such of the Transaction Documents to which such
Person is or is intended to be a party;
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(4) Officer's Certificates. The Administrative Agent shall have received the
following:
(a) A certificate of an Authorized Officer of the Borrower and of the
Parent Guarantor, dated as of the Effective Date, certifying that: (1)
the representations and warranties of the Credit Parties contained in
each of the Loan Documents are true and correct on and as of such date
(both immediately prior to the funding of the Loans and after giving
effect to such funding and to the intended use thereof) in all
material respects as if made on and as of such date (or, if stated to
have been made solely as of an earlier date, were true and correct in
all material respects as of such date); (2) no Default or Event of
Default has occurred and is continuing on such date; (3) no act, event
or circumstance affecting the Borrower has arisen since the date of
the financial statements of the Borrower described in Section 6.4 that
would reasonably be expected to result in a Material Adverse Effect;
and (4) there is no action, suit or proceeding at law or in equity or
by or before any Government Authority or arbitral tribunal now pending
or, to the best knowledge of the Borrower threatened against any
Credit Party or the Project or with respect to any Transaction
Document or Government Approval related to the Project, which would
reasonably be expected to result in a Material Adverse Effect.
(b) A certificate of an Authorized Officer of ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Oil Company,
▇▇▇▇▇▇ Energy Ltd. and GBK Corporation, dated as of the Effective
Date, certifying that the representations and warranties of such
▇▇▇▇▇▇-▇▇▇▇▇▇▇ Oil Company as the case may be, contained in each of
the Loan Documents to which such Person is a party are true and
correct on and as of such date (both immediately prior to the funding
of the Loans and after giving effect to such funding and to the
intended use thereof) in all material respects as if made on and as of
such date (or, if stated to have been made solely as of an earlier
date, were true and correct in all material respects as of such date).
(5) Consents and Approvals. The Administrative Agent shall have received
originals or copies of all Government Approvals and third party approvals and
consents required to complete the Project other than the Consents and Approvals
regarding sewage works, air, water works and industrial sewage and the permit to
take water and the permit for the fuel storage facility, all from the Ministry
of the Environment of the Province of Ontario, accompanied by a certificate of
an Authorized Officer of the Borrower to the effect that all copies are true,
correct and complete copies of such consents and approvals.
(6) Insurance Certificates and Insurance Advisor. The Administrative Agent
shall have received copies of insurance certificates, together with a letter
from the Insurance Advisor, dated as of a recent date, in form and substance
satisfactory to the Administrative Agent, addressed to the Administrative Agent
and each Lender and certifying that the insurance required by Section 7.1(5) is
comparable in all material respects with insurance maintained in respect of
similar projects and that insurance complying with Section 7.1(5) has been
obtained and is in full force and effect and not subject to cancellation.
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(7) Opinions of Counsel. The Administrative Agent shall have received the
following:
(a) Opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ontario counsel to the
Obligors, dated the Effective Date and addressed to the Administrative
Agent and the Lenders in form and substance satisfactory to them;
(b) Opinions of Cheadle ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ attached to the Opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated the effective date and addressed to
the Administrative Agent and the Lenders in form and scope
satisfactory to them; and
(c) An opinion of special Oklahoma counsel to the Completion Guarantors,
dated the Effective Date and addressed to the Administrative Agent,
the Collateral Account Administrative Agent and the Lenders in form
and substance satisfactory to them.
(8) Security Agreements. The Administrative Agent shall have received executed
counterparts of the Security Agreements, duly executed and delivered by the
Borrower together with:
(a) Evidence satisfactory to the Administrative Agent that it (for the
benefit of itself and Lenders) has a valid and perfected first
priority security interest (or the applicable equivalent thereto) in
the Collateral subject to Permitted Liens, including (A) such
documents duly executed by each Credit Party (including financing
statements under the PPSA, as required, and other applicable documents
under the laws of any jurisdiction with respect to the perfection of
Liens) as the Administrative Agent may request in order to perfect its
security interests (or the applicable equivalent thereto) in the
Collateral and (B) copies of PPSA search reports listing all effective
financing statements (or the applicable equivalent thereto) that name
any Credit Party as debtor, together with copies of such financing
statements (or the applicable equivalent thereto), none of which shall
cover the Collateral, except for those relating to Liens of which
shall be released, discharged or terminated on the Closing Date; and
(b) executed copies of proper PPSA discharges and all other releases,
termination or disclosure statements, if any, necessary to release all
Liens and other rights of any Person in any Collateral, as the
Administrative Agent may reasonably request.
(9) Pledge Agreement. The Administrative Agent shall have received executed
counterparts of the Pledge Agreement, duly executed by each of the Credit
Parties, together with certificates, notes and instruments, if any, evidencing
all of the stock pledged pursuant to the Pledge Agreement, which certificates,
if any, shall be duly registered in the name of the Administrative Agent or its
nominee together with other executed documents, as may be necessary or, in the
reasonable opinion of the Administrative Agent, desirable to effect the security
or other evidence interest of the Administrative Agent pursuant to the Pledge
Agreement.
(10) Mortgage; Title Reports; Survey; Appraisal. The Administrative Agent shall
have received executed counterparts of the Mortgages covering all of the Real
Estate ("Mortgaged Properties"), duly executed and delivered by the applicable
Credit Parties, together with:
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(a) title opinions from counsel for Credit Parties in respect of the
Mortgaged Properties, showing that the Mortgages are a first charge on
the Mortgaged Properties, current as-built surveys, evidence of zoning
compliance and compliance with all other legal requirements, including
that all certificates of occupancy, building permits and other
licences, certificates, approvals and consents have been obtained, in
each case satisfactory in form and substance to Administrative Agent,
in its sole discretion;
(b) evidence that counterparts of the Mortgages have been registered in
all places to the extent necessary or desirable, in the judgment of
Administrative Agent, to create a valid and enforceable first priority
Lien (subject to Permitted Liens) on each Mortgaged Property in favour
of Administrative Agent for the benefit of itself and Lenders (or in
favour of Administrative Agent and Lenders or such other trustee as
may be required or desired under local law); and
(c) an opinion of counsel in each province in which any Mortgaged Property
is located in form and substance and from counsel satisfactory to the
Administrative Agent;
(d) copies of all leases and other conveyances to the Borrower of the Real
Property described in the Mortgages; and
(e) such other approvals, opinions, or documents as the Administrative
Agent may reasonably request.
(11) Engineer's Report. The Administrative Agent shall have received a final
report of the Independent Engineer dated as of a recent date, addressed to the
Administrative Agent and each of the Lenders, in form and substance satisfactory
to the Administrative Agent, acting reasonably, (a) addressing the Material
Project Contracts, (b) addressing permits and licenses and including an
assessment of the Project's capability to meet the technical requirements
specified in such permits and licenses, (c) addressing the engineering, economic
and technical viability of the Project, including, without limitation, an audit
of Project reserves, a review of the Project, the Development Plan and the
Feasibility Study, (d) stating that the operation, capacity and expected
operating costs of the Project are such that the Project can be reasonably
expected to meet operating and financial projections previously provided to the
Administrative Agent and each Lender, and (e) regarding such other matters as
the Lenders may request, which report shall be in form, scope and substance
satisfactory to the Lenders and such report shall not disclose any opinion, fact
or state of affairs which shall be unacceptable to any Lender.
(12) Special Accounts. The Administrative Agent shall have received evidence
that all Accounts required to be established on or before the Effective Date
pursuant to Section 10.1 shall have been established in a manner satisfactory to
the Administrative Agent.
(13) Completion Guarantee. The Administrative Agent shall have received the
Completion Guarantee, fully executed and delivered by the Completion Guarantors.
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(14) The Guarantors. The Administrative Agent and Lenders shall have completed a
review in form and substance satisfactory to each of them of the financial
condition and capacity of the Parent Guarantor and the Completion Guarantors.
(15) Subordination Agreement. The Administrative Agent shall have received the
Subordination Agreement, fully executed and delivered by the Kaiser Group and
the Parent Guarantor.
(16) Subordination. The Administrative Agent shall have received evidence
satisfactory to it that all security granted in respect of the ▇▇▇▇▇▇ Sub Debt
has been fully subordinated to the security granted to the Administrative Agent
and the Lenders.
(17) Financial Statements. The Administrative Agent shall have received a copy
of (a) the annual audit report for the fiscal year ended December 31, 1999,
together with(b) unaudited consolidated financial statements for the most
recently ended Fiscal Quarter, for the Parent Guarantor in each case including
therein consolidated balance sheets of such Person as of the end of each such
period and consolidated statements of earnings and cash flow of such Person for
each such period, in the case of clause (a) certified in a manner acceptable to
the Administrative Agent and the Lenders by nationally recognized independent
public accountants, and in the case of clause (b), accompanied by a certificate
of the chief financial officer of each Credit Party certifying that the
financial statements fairly present such Credit Party's financial condition and
results of operations showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to the Administrative
Agent) compliance with this Agreement and stating that no Default or Event of
Default exists.
(18) Tax Losses. The Administrative Agent shall have received evidence
satisfactory to it from the Borrower's auditor that the Borrower has tax loss
pools from previous operating losses which are consistent with those referred to
in the Feasibility Study.
(19) Satisfactory Documents. All documents executed or submitted pursuant hereto
by or on behalf of the Borrower or any other Obligors, or otherwise submitted to
or received by the Administrative Agent, in each case pursuant to this Section
5.1 shall be satisfactory in form and substance to the Administrative Agent, the
Lenders and their counsel, and the Administrative Agent, the Lenders and their
counsel shall have received all information, approvals, opinions, documents or
instruments as the Administrative Agent, the Lenders or their counsel may
reasonably request.
5.2 All Borrowings. The obligation of each Lender to fund any Loan on the
occasion of any Borrowing (including the initial Borrowing) shall be subject to
the satisfaction of each of the conditions precedent set forth in this Section
5.2.
(1) Compliance with Warranties, No Default, etc. Both before and after giving
effect to any Borrowing (but, if any Default of the nature referred to in
Section 8.1(4) shall have occurred with respect to any other Indebtedness,
without giving effect to the application, directly or indirectly, of the
proceeds thereof) the following statements shall be true and correct: (a) the
representations and warranties set forth in Section 6 shall be true and correct
with the same effect as if then made (unless stated to relate solely to an
earlier date, in which case such representations and warranties
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shall be true and correct as of such earlier date); (b) except as disclosed by
the Borrower to the Administrative Agent and the Lenders pursuant to Section
6.6, no Proceedings shall be pending or threatened against a Credit Party which
could reasonably be expected to materially adversely affect its consolidated
business, operations, assets, revenues, properties or prospects or which
purports to affect the legality, validity or enforceability of this Agreement or
any other Loan Document; and no development shall have occurred in any
Proceeding disclosed pursuant to Section 6.6 which might materially adversely
affect the consolidated businesses, operations, assets, revenues, properties or
prospects of a Credit Party; (c) no Default or Event of Default shall have then
occurred and be continuing; and (d) neither the Borrower nor any other Obligor
are in material violation of any law or governmental regulation or court order
or decree.
(2) Borrowing Request. The Administrative Agent shall have received a Borrowing
Request for such Borrowing. Each of the delivery of a Borrowing Request and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
(both immediately before and after giving effect to such Borrowing and the
application of the proceeds thereof) the statements made in Section 5.2(1) are
true and correct.
(3) Government Approvals; Compliance With Government Rules, etc. All Government
Approvals required for the construction, operation and maintenance of the
Project which are required to be obtained prior to the date of such Borrowing
shall have been duly obtained or made and shall be in full force and effect and
there shall not have been any appeal of any such Government Approval and the
Project shall have been and be in material compliance with all Government
Approvals and Government Rules relating to the construction, operation and
maintenance of the Project which are applicable prior to and on the date of such
Borrowing, and the Project as described in the Material Project Contracts,
without additions or modifications, shall reasonably be expected to satisfy and
be in material compliance with all established and, to the best knowledge of the
Borrower anticipated requirements (including those requirements in proposed
rules) of existing and presently known future Government Approvals and
Government Rules relating to the future construction, operation and maintenance
of the Project which are or are anticipated to be applicable after the date of
such Borrowing and there shall have been no change in any applicable Government
Approval or Government Rule, and no issuance of any order, writ, injunction or
decree of any Regulatory Authority which could reasonably be expected to have a
Material Adverse Effect, and, to the best knowledge of the Borrower, there shall
have been no proposed or threatened change in or modification of any applicable
Government Rule which could reasonably be expected to have a Material Adverse
Effect.
(4) Borrower Construction Certificates. The Administrative Agent shall have
received (a) an Independent Engineer Construction Certificate and a Borrower
Construction Certificate, in each case at such times as required by Section
2.3(2) and (b) an opinion of legal counsel to the Borrower containing a sub-
search of title to the Site and confirming the priority of the Liens created
under the Mortgages for the full aggregate principal amount of the Loans
outstanding, all in form and substance satisfactory to the Administrative Agent.
(5) Insurance Matters. The Administrative Agent shall have received a report of
the Insurance Advisor, or other evidence satisfactory to the Administrative
Agent, that all insurance
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required by Section 7.1(5) is in full force and effect with no default by the
Borrower or the General Contractor, as the case may be, thereunder.
(6) No Material Adverse Effect. There shall have occurred no event or condition
constituting, or which could reasonably be expected to constitute, a Material
Adverse Effect.
(7) Equity Contribution. Until such time as the Parent Guarantor shall have
made, and the Borrower shall have applied, the Equity Contribution to fund
Project Costs, as evidenced by a certificate of an Authorized Officer of the
Borrower and confirmed by a certificate of the Independent Engineer describing
the application of the proceeds thereof to fund Project Costs, the maximum
aggregate Advance which the Borrower may request is $45,000,000.
(8) Phase I Environmental Site Assessment report. Until such time as the
Borrower shall have delivered to the Administrative Agent and each Lender a
Phase I environmental site assessment report with respect to the Site prepared
by an environmental consultant acceptable to the Administrative Agent and
Lenders in form and substance acceptable to the Administrative Agent, the
maximum aggregate amount of Advances which the Borrower may request is
US$10,000,000.
(9) Capital Restructuring. Prior to October 31, 2000 the debt and capital
structure of the Parent Guarantor shall be restructured in a manner in form and
substance satisfactory to the Administrative Agent and the Lenders, including,
without limitation, as to the terms and conditions of the ▇▇▇▇▇▇ Sub Debt and
the investment of the Equity Contribution by the Parent Guarantor.
(10) Satisfactory Legal Form. All documents executed or submitted pursuant
hereto by or on behalf of the Borrower or any other Obligors, or otherwise
submitted to or received by the Administrative Agent, in each case pursuant to
this Section 5.2, shall be satisfactory in form and substance to the
Administrative Agent and its counsel, and the Administrative Agent and its
counsel shall have received all information, approvals, opinions, documents or
instruments as the Administrative Agent or its counsel may reasonably request.
SECTION 6 - REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Administrative Agent to enter into
this Agreement and to make Loans hereunder, each of the Credit Parties
represents and warrants to the Administrative Agent and each Lender as set forth
in this Section 6.
6.1 Organization, etc. Each Credit Party is a corporation duly organized and
existing and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing in each
jurisdiction where the nature of its business requires such qualification, and
has full power and authority to construct, own and operate the Project (in the
case of the Borrower) and to enter into and perform the Secured Obligations and
its obligations under each of the Transaction Documents to which it is a party
and to own and hold under lease its Property and to conduct its business
substantially as currently conducted by it and as contemplated by the
Transaction Documents. As of the date hereof and as of the date of the initial
Borrowing hereunder, the only shareholder of the Borrower is the Parent
Guarantor.
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6.2 Due Authorization, Non-Contravention, etc. The execution, delivery and
performance by each Credit Party of each of the Transaction Documents executed
or to be executed by such Credit Party are within such Credit Party's
organizational powers, have been duly authorized by all necessary corporate
action, and do not contravene such Credit Party's Organizational Documents,
contravene any contractual restriction, Government Rule or Government Approval
applicable to any Credit Party or the Project, violate, result in a breach of or
constitute a default under any of the Transaction Documents to which such Credit
Party is a party or any other material agreement or instrument to which any
Credit Party is a party or by which any Credit Party or its Property may be
bound or affected, or result in, or require the creation or imposition of, any
Lien (other than Permitted Liens) on any Property, now owned or hereafter
acquired, of any Credit Party.
6.3 Validity, etc. Each Transaction Document to which each Credit Party is a
party constitutes, or will, on the due execution and delivery thereof,
constitute, the legal, valid and binding obligations of such Credit Party
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency and other laws of general application limiting the
enforceability of creditors' rights and to the fact that specific performance is
an equitable remedy only available in the discretion of the court.
6.4 Financial Condition.
(1) The audited consolidated balance sheet of the Parent Guarantor as at
December 31, 1999, and the related statements of income, copies of which have
been furnished to the Administrative Agent and the Lenders, have been prepared
from the books and records of the Credit Parties and fairly present in all
material respects the financial condition of the Credit Parties as at such date
and the results of operation for the period then ended, all in accordance with
GAAP and practices applied on a consistent basis (subject to normal year-end
adjustments). No Credit Party had on such date any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments required to be
disclosed in accordance with GAAP, except as referred to or reflected or
provided for in financial statements of such Credit Party (including the notes
thereto) as at such date or as arising solely from the execution and delivery of
the Material Project Contracts or Non-Material Project Contracts. Each of the
Credit Parties is solvent.
(2) Each of the Credit Parties' most recent financial statements, copies of
which have been furnished to the Administrative Agent and Lenders, were prepared
in accordance with GAAP applied on a basis consistent with preceding periods,
except as stated therein or in the notes, and those financial statements fairly
represent such Credit Party's financial conditions as at their date.
(3) Since the date of the most recent financial statements delivered to the
Administrative Agent and Lenders, there has been no material adverse change in
the conditions (financial or otherwise), operations, assets, business,
properties or prospects of any Credit Party and no Credit Party has contingent
obligations not disclosed by or reserved against in such financial statements.
6.5 Government Approvals; Non-Government Approvals; Consents; Government Rules.
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(1) All Government Approvals and Non-Government Approvals related to the
construction, ownership, operation and maintenance of the Project and the
execution, delivery and performance of the Transaction Documents are set forth
in Schedule 6.5. Except for those Government Approvals and Non-Government
Approvals designated in Schedule 6.5 as having not yet being obtained (the
"Approvals to be Obtained"), as of the date hereof and as of the Effective Date,
all Government Approvals and Non-Government Approvals set forth in Schedule 6.5
have been duly obtained by the Borrower or for the benefit of the Project or the
Borrower by the Borrower or Parent Guarantor as of the Effective Date, were
validly issued, are in full force and effect, are not subject to appeal or
renewal, are held in the name of the Borrower or the Parent Guarantor and are
free from conditions or requirements compliance with which would reasonably be
expected to have a Material Adverse Effect or which the Borrower does not expect
to be able to satisfy on or prior to the Effective Date. There is no proceeding
pending or, to the Borrower's knowledge, threatened against any third party
which seeks, or may reasonably be expected, to rescind, terminate, modify or
suspend any Government Approval or Non-Government Approval so obtained.
(2) The Approvals to be Obtained specified in Schedule 6.5 are required solely
in connection with later stages of construction and operation of the Project and
are not customarily obtained or complied with until a later stage of
construction or after commercial operation has commenced.
(3) The Borrower has no reason to believe that any applicable Government Rule
applicable to the development, construction and operation of the Project will
not be complied with or that any Approval to be Obtained will not be obtained on
or prior to the date specified in Schedule 6.5.
(4) The Project, if constructed in accordance with the plans and specifications
therefor and the Construction Contracts, and upon Completion including full
scale commercial operation, will satisfy, conform to and comply in all material
respects with all requirements for and all covenants, conditions, restrictions
and reservations in the then applicable Government Approvals and the
Construction Contracts applicable thereto and all federal, provincial and local
zoning, environmental, land use and other Government Rules applicable thereto.
(5) The Administrative Agent, acting for the benefit of the Secured Parties,
will be entitled, without undue expense or delay, to the benefit of each
Government Approval and Non-Government Approval set forth in Schedule 6.5 upon
the exercise of remedies under the Security Documents to the extent permitted by
Government Rules or by such Non-Governmental Approval, as the case may be.
6.6 Proceedings. Except as set forth in Schedule 6.6, there is no litigation,
action, investigation, proceeding or labour controversy ("Proceedings") at law
or in equity or by or before any Government Authority or arbitral tribunal now
pending or, to the best of the Borrower's knowledge, threatened against any
Credit Party, the Project or with respect to any Transaction Document or
Government Approval related to the Project, in each case which seeks damages in
excess of C$500,000 or the Equivalent Amount thereof or which alleges criminal
misconducts of any Credit Party.
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6.7 Nature of Business. The Borrower has no Subsidiaries and owns no equity or
other ownership interest in any other Person. The Borrower has not engaged in
any business other than the Existing Mine and to enter into the Transaction
Documents and Non-Material Project Contracts and otherwise to conduct such
business as is necessary or appropriate to the development, ownership,
maintenance and operation of the Existing Mine, the Project and mineral
exploration programmes.
6.8 Title: Security Documents.
(1) The provisions of the respective Security Documents are effective to
create, in favour of the Administrative Agent for the benefit of the Secured
Parties, a legal, valid and enforceable Lien on and security interest in all of
the Collateral purported to be covered thereby, and all necessary recordings and
filings have been made (or will be made as soon as practicable following the
Effective Date) in all necessary public offices, and all other necessary and
appropriate action has been taken, so that the respective Security Documents
create a perfected Lien on and security interest in all right, title and
interest of each Credit Party in the Collateral covered thereby, prior and
superior to all other Liens (other than Permitted Liens) and all necessary and
appropriate consents to the creation, perfection and enforcement of such Liens
have been obtained.
(2) Each Credit Party (i) owns and has good and marketable title to, or a valid
leasehold interest in, all of its properties and assets, real and personal,
tangible and intangible, of any nature whatsoever, including, without
limitation, the Collateral (other than after-acquired property contemplated by
the Security Agreement) purported to be covered by the respective Security
Documents, free and clear of all Liens (other than Permitted Liens) and (ii)
owns and has good and marketable fee simple title to Collateral consisting of
real property and fixtures purported to be covered by the Mortgage free and
clear of all Liens (other than Permitted Liens). The Borrower owns directly and
has good and marketable title to or is entitled to use by license or otherwise,
all material patents, trademarks, trade names, service marks and copyrights (if
any) necessary for the conduct of its business after the Completion Date, and
without any obligation to pay royalties or license fees therefor and without
claim of infringement by any Person known to the Borrower. The Borrower has
obtained all necessary licenses, easements and access rights required for the
Development of the Project and enjoys peaceful and undisturbed possession of all
Properties (subject only to Permitted Liens) that are necessary for the
Development of the Project. Such ownership interests and other rights as
described in this Section 6.8, and the ownership interests which may be obtained
by the Borrower through the exercise of rights of condemnation which may be
vested in it and as described in Section 6.9, are sufficient to enable the
construction of the Project to be completed on a commercial basis in the manner
contemplated by the Transaction Documents and to enable the Borrower to perform
its obligations under the Transaction Documents.
(3) The Borrower is not a lessee under any lease of properties or assets, real
or personal, tangible or intangible, of any nature whatsoever necessary for the
construction of the Project to be completed on a reasonable basis in the manner
contemplated by the Transaction Documents and for the Borrower to perform its
obligations under the Transaction Documents except as listed in Schedule 6.9,
which leases are valid subsisting leases in full force and effect, and the
Borrower has not defaulted in the performance of its obligations pursuant to any
such lease.
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6.9 Property. The Borrower owns or leases, or will own or lease, all of the
real and tangible personal property necessary for the Development of the
Project. Schedule 6.9 contains an accurate and complete list of all real
property ("Real Estate") owned, leased, subleased or used by, and all easements
in favour of each Credit Party and all unpatented mine claims in favour of each
Credit Party as of the date hereof and as of the Effective Date. Except as set
forth in Schedule 6.9, there are no real property leases or licenses affecting
the Site, or the Project. Except as set forth on Schedule 6.9, all improvements
on real estate owned and all easements conform to applicable Government Rules,
and the properties are zoned for the construction and, after the Completion
Date, operation and maintenance of the Project. None of the buildings and
structures located or to be built on real property owned by, or any land covered
by easements in favour of, the Borrower, nor any appurtenances thereto or
equipment therein nor the operation or maintenance thereof, violates or will
violate in any material manner any restrictive covenants or encroaches on any
property owned by any Person or violates or will violate the terms, conditions
or restrictions of any such easement, nor does any building or structure of any
Person encroach upon the property owned by, or granted by easement to, the
Borrower. All such property, (a) is sufficient to enable the construction of the
Project to be completed on a commercial basis in the manner contemplated by the
Transaction Documents and to enable the Borrower to perform its obligations
under the Project Documents to which it is a party, (b) is suitable and usable
in all material respects for the operation of the Project as contemplated by the
Transaction Documents, and (c) conforms in all material respects with applicable
Government Rules. All easements necessary for the Development of the Project
have been obtained and are not subordinate to any mortgages on the servient
estate. The Site has access to a public road. There are no tenants at the Site.
There are no special tax assessments for the Site or the Project; there are no
proceedings pending for the reduction of the assessed valuation of the Site, or
the Project and, except to the extent that construction of the Project increases
the value of such property, the Borrower has no knowledge of any contemplated
increase in the assessed valuation of the Site or the Project or any other
special assessments. Other than work on the Project no work has been performed
or is in progress at the Site or with respect to the Project that may give rise
to any mechanics' or materialmen's or other Liens on any property of any Credit
Party. The Project, the Existing Mine and all reserves referred to in the
Feasibility Study and the Development Plan are located on lands leased from the
Province of Ontario as referred to in Schedule 6.9 and none of such property is
located on an unpatented mine claim.
6.10 Labour Matters. There are no strikes or other labour disputes against any
Credit Party that are pending or, to the Credit Party's best knowledge,
threatened. All payment due from each Credit Party on account of employee
insurance of every kind and vacation pay have been paid or accrued as a
liability on the books of the relevant Credit Party. Except as set forth on
Schedule 6.10, none of the Credit Parties has any obligation under any
collective agreements. None of the Credit Parties has any obligations under any
consulting or management agreement requiring payments which cannot be cancelled
without material liability. Each of the Credit Parties is in material compliance
with the terms and conditions of all consulting agreements, management
agreements and employment agreements, if any. As of the date of this Agreement,
there is no organizing activity involving any of the Credit Parties or to the
Borrower's knowledge, threatened by any labour union or group of employees. As
of the date of this Agreement, no labour union or group of employees has made a
pending demand for recognition. There are no complaints or charges against any
of the Credit Parties pending or threatened to be filed with any
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Government Authority or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment of any
individual by any Credit Party.
6.11 Transaction Documents; Non-Material Project Contracts; Licenses.
(1) The Transaction Documents in effect on the Effective Date, the Non-
Material Project Contracts and the Additional Project Documents entered into in
accordance with this Agreement, constitute and include all contracts and
agreements relating to the Project which could reasonably be expected to affect
the financial condition, assets, construction, ownership or operations of the
Borrower or the legal, technical or economic viability of the Project; and the
Borrower is not a party to any material contract or agreement that is not a
Transaction Document, a Non-Material Project Contract or an Additional Project
Document. The services to be performed, the materials to be supplied and the
property interests and other rights granted pursuant to the Transaction
Documents comprise all of the property interests necessary to secure any such
right material to the construction, operation and maintenance of the Project in
accordance with all Government Rules (including, without limitation,
Environmental Laws). There are no services, materials or rights (other than
Government Approvals) required for the construction, maintenance, ownership or
operation of the Project other than those granted by, or to be provided to the
Borrower pursuant to, the Transaction Documents and the Non-Material Project
Contracts. Except as permitted pursuant to Section 7.2(6), none of the Material
Project Contracts has been amended, modified, supplemented or suspended, and all
of the Material Project Contracts (other than those that are not required to be
entered into pursuant to this Agreement as of the date of the making of this
representation or that have been cancelled or terminated as permitted under this
Agreement) are in full force and effect. All conditions precedent to the
obligations of the Borrower under the Material Project Contracts have been
satisfied or waived. The Borrower is not in default under any Transaction
Document. The Borrower is not in default under any Non-Material Project Contract
which default could reasonably be expected to have a Material Adverse Effect. No
party (other than the Borrower) to any Transaction Document or Non-Material
Project Contract is in default under any material covenant or obligation set
forth therein. No abandonment or material damage to the Project has occurred. No
Credit Party has received any written notice from, and no Credit Party has
knowledge of, any intent by any Person to terminate or declare a default under
any Transaction Document or Non-Material Project Contract. No Credit Party has
assigned all or any part of its rights under any Transaction Document or Non-
Material Project Contract.
(2) All permits, licenses, trademarks, patents or agreements with respect to
the usage of technology that are necessary for the current stage of the
Development of the Project have been obtained, are final and are in full force
and effect. The Borrower reasonably believes that all such permits, licenses,
trademarks, patents or agreements necessary for all future stages of the
Development of the Project will be timely obtained in the ordinary course and
will not be subject to terms or conditions which would reasonably be expected to
result in a Material Adverse Effect.
6.12 Utility Services. All utility services, means of transportation,
facilities and other materials necessary for the construction, operation and
maintenance of the Project and the achievement of Completion (including, without
limitation, as necessary, electrical, water supply, storm, telephone and sewage
services and facilities) are available to the Project and, to the extent
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necessary or desirable, arrangements have been made on commercially reasonable
terms for such services, means of transportation, facilities and other means.
6.13 No Default. No Default or Event of Default has occurred and is continuing.
6.14 Absence of Default or Condition Excusing Performance. No breach, default
or event of default which would permit a party to terminate, suspend performance
or seek damages under any Transaction Document to which any Credit Party is a
party has occurred and is continuing. No force majeure event or any other event
or condition exists that permits or requires any party to any Material Project
Contract to suspend or terminate its performance, in whole or in part, under any
such agreement or that impairs the binding effect of any such agreement.
6.15 Condemnation. There are no condemnations or other similar proceedings
pending or, threatened, which are applicable to the Project or any Credit
Party's business operations or Properties.
6.16 Construction Budget. A true, complete and correct copy of the Construction
Budget as in effect on the date hereof and on the Effective Date is attached
hereto as Schedule 6.16.
6.17 Insurance. The Credit Parties have the benefit of the insurance coverage
described in the certificates of insurance delivered pursuant to Section 5.1(6)
and required to be maintained pursuant to Section 7.1(5).
6.18 Taxes. All tax returns, reports and statements, including information
returns, required by any Government Authority to be filed by any Credit Party
have been filed with the appropriate Government Authority and all Charges have
been paid prior to the date on which any fine, penalty, interest or late charge
may be added thereto for non-payment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding Charges or other amounts
being Contested in accordance with Section 7.1(2). Proper and accurate amounts
have been withheld by each Credit Party from payments to its respective
employees, customers and other applicable payees for all periods in full as
required by all applicable Canadian and United States federal law and all
applicable provincial, state, local and foreign law and such withholdings have
been timely paid to the respective Government Authorities. Schedule 6.18 sets
forth as of the Closing Date in respect of each Credit Party (i) those taxation
years that have not yet been assessed by Revenue Canada, the IRS or the
applicable provincial or state Government Authorities, (ii) the taxation years
that are currently being audited by Revenue Canada, the IRS or the applicable
provincial or state Government Authorities, (iii) any assessments or, to such
Credit Party's knowledge, threatened assessments in connection with such audit,
or otherwise currently outstanding, and (iv) the most recent taxation year that
an audit by Revenue Canada, the IRS or the applicable provincial or state
Government Authorities has been completed. Except as described on Schedule 6.18,
no Credit Party has executed or filed with Revenue Canada, the IRS or any other
Government Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges. As
of the Closing Date, except as set forth on Schedule 6.18, none of the Credit
Parties and their respective predecessors is liable for any Charges: (a) under
any agreement (including any tax sharing agreements) or (b) to each Credit
Party's knowledge, as a transferee.
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6.19 Canadian Pension and Benefit Plans.
(1) Schedule 6.19 sets forth all Canadian Benefit Plans (other than, for
greater certainty, universal plans created by and to which the Borrower is
obligated to contribute by statute) and Canadian Pension Plans adopted by each
Credit Party. The Canadian Pension Plans are duly registered under the ITA and
all other applicable laws which require registration and no event has occurred
which is reasonably likely to cause the loss of such registered status. All
material obligations of each Credit Party (including fiduciary, funding,
investment and administration obligations) required to be performed in
connection with the Canadian Pension Plans and the funding agreements therefor
have been performed in a timely fashion. There have been no improper withdrawals
or applications of the assets of the Canadian Pension Plans or the Canadian
Benefit Plans. There are no outstanding disputes concerning the assets of the
Canadian Pension Plans or the Canadian Benefit Plans. Each of the Canadian
Pension Plans is fully funded on a solvency basis (using actuarial methods and
assumptions which are consistent with the valuations last filed with the
applicable Government Authorities and which are consistent with generally
accepted actuarial principles).
(2) No Credit Party is a member of, or has any liability in respect of, any
pension plan as defined in Section 3(2) of the Employee Retirement Security Act
of 1974 (United States of America).
6.20 Environmental Matters. Except as otherwise specified in Schedule 6.20:
(1) all facilities and real property owned, leased or operated by any Credit
Party comprising a part of the Project have been, and continue to be, owned,
leased or operated by such Credit Party in compliance with all applicable
Environmental Laws;
(2) there are no past or present facts, actions, circumstances, conditions,
events or incidents, including without limitation, the Release of any Hazardous
Material at, on or under any property now or previously owned, leased or
operated in connection with the Project that, singular or in the aggregate,
could reasonably be expected to form the basis of any Environmental Claims
against any Credit Party or the Project or result in any Environmental
Liabilities of a Credit Party which could reasonably be expected to exceed
C$500,000 or the Equivalent Amount thereof. Without in any way limiting the
generality of the foregoing, (i) there are no on-site or off-site locations in
which any Credit Party or the Project have stored, disposed or arranged for the
disposal of Hazardous Materials that could reasonably be expected to form the
basis of any material Environmental Claim (ii) there are no underground storage
tanks located on the site or property owned or leased by any Credit Party, and
(iii) no Hazardous Materials are or have been Used or stored at or Released from
any property owned or leased by any Credit Party except in substantial
compliance with all applicable Environmental Laws. There are no environmental
conditions at the Site, which could reasonably be expected to materially
interfere with the operation of the Project. No Credit Party has received any
written notice of violation that has not been cured or any other written
communication, whether from a Government Authority, citizens group, employee or
otherwise, that alleges that any Credit Party or the Project is not in
compliance with all Environmental Laws and Environmental Approvals, and to the
knowledge of the Credit Parties, there are no circumstances that reasonably
could be expected to prevent or interfere with such compliance by the Project as
presently operated in the future;
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(3) there is no Environmental Claim pending or threatened against any Credit
Party or the Project which could reasonably be expected to result in
Environmental Liabilities of such Credit Party exceeding C$500,000 or the
Equivalent Amount thereof;
(4) the Credit Parties and the Project are in compliance with all applicable
Environmental Laws, including, without limitation, Government Rules relating to
emissions reduction credits, except for any non-compliance which could not
reasonably be expected to result in Environmental Liabilities of such Credit
Party exceeding C$500,000 or the Equivalent Amount thereof; and
(5) subject to Section 6.5, the Credit Parties have obtained all material
Government Approvals required for the operation of the Project according to all
applicable Environmental Laws, and all such Government Approvals are in full
force and effect.
6.21 Operation of the Project. Upon Completion the Project shall be able to be
operated on a safe and commercially sound basis in compliance with all
Government Rules, Government Approvals relating or applicable to the Project,
and the requirements of all Transaction Documents and in accordance with sound
practices of the mining and milling industry consistent with the Development
Plan for a period ending no earlier than December 31, 2010.
6.22 Financial Advisors. No Credit Party or any of their respective Affiliates
has retained any broker, finder or financial advisor in connection with the
transactions contemplated by this Agreement or by the other Material Project
Contracts, which will result in the obligation of any Person to pay any finder's
fee, brokerage commission or similar payment in connection with the transactions
contemplated herein or therein (other than fees payable under the Fee Letters or
any fees payable to BMO-▇▇▇▇▇▇▇ ▇▇▇▇▇, RBC Dominion Securities or Scotia Capital
in connection with the issuance of equity by a Credit Party), and the Borrower
will indemnify and hold harmless each Lender and the Administrative Agent from
and against all losses, claims, damages or liabilities (including legal fees and
costs of investigation and defense thereof) to which such Person may become
subject arising out of or based upon any act or omission arising out of a breach
of the representation and warranty given in this Section 6.22.
6.23 Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Credit Parties in writing to
the Independent Engineer, the Insurance Advisor, the Administrative Agent or any
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all other such factual information hereafter
furnished by or on behalf of the Credit Parties, to the Independent Engineer,
the Insurance Advisor, the Administrative Agent or any Lender pursuant to this
Agreement will be, true and accurate in every material respect on the date as of
which such information is dated or certified and as of the date of execution and
delivery of this Agreement by the Administrative Agent and such Lender, and such
information is not, or shall not be, as the case may be, incomplete by omitting
to state any material fact necessary to make such information not misleading.
All projections delivered by or on behalf of the Credit Parties in writing to
any of such Persons are based upon estimates and assumptions stated therein, all
of which the Credit Parties believe to be reasonable and fair in light of
current conditions and facts known to the Credit Parties and reflect such Credit
Parties' good faith and reasonable estimate of the future
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financial performance of the Credit Parties and of the other information
projected therein for the periods set forth therein.
6.24 No Material Adverse Effect. Between December 31, 1999 and the Effective
Date, no event has occurred, which alone or together with other events, could
reasonably be expected to have a Material Adverse Effect.
6.25 Feasibility Plan. Each of the Credit Parties acknowledges that the
Feasibility Study is the initial Development Plan for the purposes hereof.
6.26 Acknowledgment. Each of the Credit Parties acknowledges that the
Administrative Agent and the Lenders are relying upon the representations and
warranties in this Section 6 in entering into this Agreement and the
transactions contemplated thereby and making the Loans.
SECTION 7 - COVENANTS
7.1 Affirmative Covenants. Each Credit Party agrees with the Administrative
Agent and each Lender that, until all Commitments have terminated and all
Secured Obligations have been paid and performed in full, each Credit Party will
perform, and cause each other Credit Party to perform, the obligations set forth
in this Section 7.1.
(1) Financial Information, Reports, Notices, etc. The Credit Parties will
furnish, or will cause to be furnished, to each Lender and the Administrative
Agent copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 60 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year, for
each Credit Party, consolidated unaudited balance sheets of such
Person as of the end of such Fiscal Quarter and consolidated
statements of earnings and cash flow of such Person for such Fiscal
Quarter and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter,
certified by the chief financial Authorized Officer of the
respective Person;
(b) as soon as available and in any event within 120 days after the end
of each Fiscal Year, a copy of the annual audit report for such
Fiscal Year for each Credit Party, including therein consolidated
balance sheets of such Person as of the end of such Fiscal Year and
consolidated statements of earnings and cash flow of such Person for
such Fiscal Year, in each case certified (without any Impermissible
Qualification) in a manner acceptable to the Administrative Agent
and the Majority Lenders by nationally recognized independent public
accountants;
(c) as soon as available and in any event within 60 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year and
within 120 days after the end of each Fiscal Year, a certificate,
executed by the Chief Financial Officer of the Parent Guarantor
certifying that the financial statements fairly present the Credit
Parties' financial condition and results of operations showing (in
reasonable detail and with appropriate calculations and computations
in all respects satisfactory to
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the Administrative Agent) compliance with this Agreement and stating
that no Default or Event of Default exists, or if any Default or
Event of Default exists, stating the nature and status thereof;
(d) as soon as available and in any event within 60 days after the end
of each Fiscal Quarter, a certificate, executed by the Chief
Financial Officer of the Parent Guarantor (i) certifying that the
Borrower was in compliance with, and including the calculation of,
the Debt Service Coverage Ratio test required by Section 7.2(9) with
respect to the Applicable Period ending on such calendar month then
most recently ended, and (ii) calculating the Excess Cash Flow
during the Fiscal Quarter then most recently ended and stating
whether or not the Borrower is required to make a prepayment of the
Loans pursuant to Section 3.1(3) (and, if so, including a
calculation of the required prepayment);
(e) on or before the 60/th/ day before the expected Completion Date and,
thereafter, as soon as available and in any event within 60 days
after the end of each Fiscal Year, an annual business plan for the
Credit Parties, approved by the board of directors of each Credit
Party, for the year following the most recently completed Fiscal
Year, which shall include monthly forecasts of operating results, an
operating plan of the Borrower (including a maintenance schedule),
cash flow, and projected balance sheets and capital expenditure
plans, and a budget and pro forma statement of income and retained
earnings and a pro forma cash flow statement of the Borrower,
together with a statement of material assumptions, all in form and
substance satisfactory to the Administrative Agent and the Lenders,
(collectively the "Operating Budget"), in each case in form
acceptable to the Majority Lenders and the Administrative Agent,
acting reasonably. The Operating Budget will be with respect to the
then Fiscal Year; provided that the initial Operating Budget adopted
--------
prior to the Completion Date will be for the period commencing on
the Completion Date and ending on the Fiscal Year within which
Completion occurs. The Borrower will deliver to the Administrative
Agent and the Independent Engineer a copy of the proposed Operating
Budget at least 45 days prior to the date by which such Operating
Budget is to be adopted. No Operating Budget shall be adopted or
implemented without the prior written consent of the Administrative
Agent (after consultation with the Independent Engineer) and the
Majority Lenders which consent shall not be unreasonably withheld.
If any line item on the summary page of a proposed Operating Budget
differs from the corresponding amount set forth for the applicable
base case amount or on the summary page of the current Fiscal Year's
Operating Budget by 10% or more, then the Borrower shall
simultaneously with the delivery of the proposed Operating Budget,
deliver to the Lenders a certificate of an Authorized Officer of the
Borrower setting forth in reasonable detail the explanation for such
line item variance;
(f) as soon as available and in any event within 90 days after the end
of each Fiscal Year, an annual Life of Mine Plan, as well as a
reserve report, in form and substance satisfactory to the
Administrative Agent and Lenders;
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(g) before the Completion Date, within 30 days after the end of each
calendar month, monthly Project Construction progress reports
detailing expenditures to date, physical progress on construction to
date, material variations from the Construction Budget delivered at
the Closing Date, estimated costs to complete the Project in
accordance with the Development Plan and estimated date of Physical
Completion and Completion, all in form and substance satisfactory to
the Administrative Agent and Lenders, acting reasonably;
(h) after the Completion Date, within 30 days after the end of each Fiscal
Quarter, a quarterly operating report with respect to the Project
detailing operating costs, capital expenditures and production levels
(together with any variations from the annual Operating Budget
delivered in respect of the relevant Fiscal Year), and a detailed
description of any material operating or other business issues
encountered with respect to the Project during the Fiscal Quarter; all
in form and substance satisfactory to the Administrative Agent and
Lenders, acting reasonably;
(i) as soon as possible and in any event within three Business Days after
the occurrence of each Default of which one or more of the Credit
Parties is aware, or Event of Default, a statement of the chief
financial Authorized Officer of the Borrower or the Parent Guarantor
setting forth details of such Default or Event of Default and the
action which the Credit Parties have taken or propose to take with
respect thereto;
(j) as soon as possible and in any event within three Business Days after
(i) the occurrence of any adverse development with respect to any
litigation, action, proceeding, or labour controversy described in
Section 6.6 of which one or more of the Credit Parties is aware or
(ii) the commencement of any litigation, action, proceeding or labour
controversy of the type described in Section 6.6, notice thereof and
copies of all documentation relating thereto which are in the
possession of the Credit Parties;
(k) promptly after the sending or filing thereof, copies of (i) all press
releases and other statements made available by any Credit Party to
the public concerning material changes or developments in the business
of such Person (ii) all notices proxy statements and reports which any
Credit Party sends to any security holders, and (iii) all regular and
periodic reports, registration statements and prospectuses which any
Credit Party files with any securities exchange, commission or
governmental or public or private regulatory authority;
(l) reasonably promptly upon its becoming available, copies of all notices
or documents received by a Credit Party pursuant to any Transaction
Document alleging default or non-performance by any Credit Party
thereunder or terminating or suspending any such Transaction Document
or claiming that any Transaction Document is subject to potential
suspension or termination;
(m) promptly after any Credit Party knows or has reason to believe that
any Government Approval related to the Project may be modified or
supplemented in
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a manner which would reasonably be expected to have a Material Adverse
Effect, or may be revoked or suspended, a description of such
threatened modification, supplement, revocation or suspension and the
action the Credit Parties propose to take with respect thereto;
(n) as soon as possible but in any event within three (3) Business Days of
becoming aware thereof, notice of the occurrence of any other event or
occurrence that could reasonably be expected to have a Material
Adverse Effect and the occurrence of any Loss; and
(o) such other information respecting the condition or operations,
financial or otherwise, of the Credit Parties or any Completion
Guarantor as any Lender through the Administrative Agent may from time
to time reasonably request.
(2) Compliance with Laws, Maintenance of Existence, etc. Each Credit Party will
comply in all material respects with all applicable Government Rules, including
all Government Approvals, such compliance to include, without limitation, the
maintenance and preservation of its legal existence as a corporation and
qualification to carry on business in each jurisdiction where the nature of such
Credit Party's business requires such qualification. Each Credit Party shall
promptly upon receipt or publication furnish a copy (certified by an Authorized
Officer of such Credit Party as true and complete) of each such Government
Approval to the Administrative Agent. Each Credit Party shall pay, before the
same become delinquent, all Charges imposed upon it or upon its property except
to the extent such Charges are being diligently Contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
(3) Canadian Pension and Benefit Plans.
(a) For each existing Canadian Pension Plan, each Credit Party shall
ensure that such plan retains its registered status under and is
administered in a timely manner in all respects in accordance with the
applicable pension plan text, funding agreement, the ITA and all other
applicable laws.
(b) For each Canadian Pension Plan hereafter adopted by any Credit Party
which is required to be registered under the ITA or any other
applicable laws, that Credit Party shall use its best efforts to seek
and receive confirmation in writing from the applicable Government
Authorities to the effect that such plan is unconditionally registered
under the ITA and such other applicable laws.
(c) For each existing Canadian Pension Plan and Canadian Benefit Plan
hereafter adopted, each Credit Party shall in a timely fashion perform
in all material respects all obligations (including fiduciary,
funding, investment and administration obligations) required to be
performed in connection with such plan and the funding media therefor.
(d) Each Credit Party shall deliver to the Administrative Agent if
requested by the Administrative Agent, promptly after the filing
thereof by any Credit Party with any applicable Government Authority,
copies of each annual and other return,
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report or valuation with respect to each Canadian Pension Plan;
promptly after receipt thereof, a copy of any direction, order,
notice, ruling or opinion that any Credit Party may receive from any
applicable Government Authority with respect to any Canadian Pension
Plan; and notification within 30 days of any increases having a cost
to such Credit Party in excess of C$500,000 per annum, in the benefits
of any existing Canadian Pension Plan or Canadian Benefit Plan, or the
establishment of any new Canadian Pension Plan or Canadian Benefit
Plan, or the commencement of contributions to any such plan to which
any Credit Party was not previously contributing.
(4) Maintenance and Operation of Properties.
(a) Each Credit Party will maintain, preserve, protect and keep its
properties in good repair, ordinary wear and tear excepted, working
order and condition, and make necessary and proper repairs, renewals
and replacements so that its business carried on in connection
therewith may be properly conducted at all times unless such Credit
Party determines in good faith that the continued maintenance of any
of its properties is no longer economically desirable.
(b) The Borrower shall operate the Project in accordance with sound and
prudent practices consistent with industry standards.
(c) On and after the Completion Date, the Credit Parties shall maintain
adequate spare parts in accordance with good engineering and operating
practices.
(d) At least five (5) Business Days prior to the engagement by a Credit
Party of a contractor to provide for scheduled major maintenance
involving a shut-down of any part of the Project for a period of at
least 30 days which shut-down shall result in the Project producing
50% or less then the production set out in the Development Plan for
such time period, such Credit Party shall obtain the written consent
of the Majority Lenders to such engagement and any material agreement
with respect thereto shall be in form and substance satisfactory to
the Lenders (after consultation with the Independent Engineer), acting
reasonably.
(e) After Completion, the Credit Parties shall not make any modification,
alteration or addition to the Project if such modification, alteration
or addition could reasonably be expected to: (i) result in the loss
or adverse modification of any manufacturer's or contractor's
warranty, (ii) materially interfere with the ability of any Credit
Party to perform its obligations under any Project Document, (iii)
impair the value of the Collateral or (iv) adversely affect the
capacity, performance, productivity, availability, anticipated
revenues or cash flows of the Project or of any Credit Party.
(5) Insurance.
(a) The Borrower shall maintain, all insurance described on Schedule
7.1(5) hereto ("Required Insurance"). All Required Insurance shall be
provided by financially sound and reputable insurance companies or
associations rated "A+"
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or better by A.M. Best, unless previously approved by the
Administrative Agent in writing (such approval not to be unreasonably
withheld).
(b) All insurance maintained by the Borrower shall provide for waivers of
subrogation in favour of the Administrative Agent and the Lenders,
shall not be cancellable without at least 90 days (30 days in the case
of non-payment of premiums) prior written notice to the Administrative
Agent, shall name the Administrative Agent and the Lenders as
additional insureds and (except in the case of third-party liability,
worker's compensation and automobile liability insurance or as
otherwise agreed by the Administrative Agent in writing) shall name
the Administrative Agent as the first loss payee. All liability
insurance maintained by the Borrower shall provide a severability of
interest and a cross liability clause and shall be primary and not
excess to or contributing with any insurance maintained by the
Administrative Agent or the Lenders.
(c) The Borrower shall deliver to the Administrative Agent prior to the
Effective Date of this Agreement and annually thereafter, certificates
of insurance or cover notes and a letter from a recognized insurance
representative/broker which evidences (i) that coverage certified
complies with the insurance requirements set forth in this Section
7.1(5) and Schedule 7.1(5) and (ii) that premiums with respect to each
policy of Required Insurance have been paid prior to the due date
thereof. Upon request, the Borrower shall provide the Administrative
Agent with copies of all insurance policies and certificates and other
information that may be reasonably requested with respect to the
Required Insurance or the providers thereof.
(d) The Borrower hereby collaterally assigns to the Administrative Agent
(on behalf of all Secured Parties) and grants the Administrative Agent
(on behalf of all Secured Parties) a Lien upon all insurance obtained
by the Borrower or in which the Borrower has any rights or interest
(whether or not complying with or described by this Section 7.1(5)),
and in the event the Borrower shall fail to make, settle, compromise
and liquidate any and all claims in a timely manner, the
Administrative Agent shall have the right to make, settle, compromise
and liquidate any and all claims thereunder, without prejudice to its
other rights and remedies under the Loan Documents, the Required
Insurance or Government Rules and regulations. All insurance proceeds
shall be deposited into the Loss Proceeds Account.
(e) In the event of a Loss of $1,000,000 or less, the Borrower will have
the right to apply the insurance proceeds from the Required Insurance
arising from such Loss to the restoration of the Project. In the event
of a Loss of greater than $1,000,000 but less than $10,000,000 that is
not a Major Loss, the Borrower will have the right, with the prior
written consent of the Majority Lenders acting reasonably, to apply
the insurance proceeds from the Required Insurance arising from such
Loss to the restoration of the Project if (i) the Material Project
Contracts (other than, if after the date Completion of the Project is
deemed to have occurred pursuant to the terms of this Agreement, the
Construction Contracts) remain in effect, and (ii) such proceeds
(together with such other funds as Borrower may make available
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for such purpose) are sufficient, in the reasonable opinion of the
Independent Engineer, to pay the cost of restoration and cover Debt
Service during any period during which the revenues of the Project are
reduced due to the restoration. In the event of a Loss of $10,000,000
or more, or in the event of a Major Loss, the insurance proceeds from
the Required Insurance arising from such Loss may be used by the
Borrower for the restoration of the Project only with the prior
written approval of the Majority Lenders, acting reasonably. All
insurance proceeds received in connection with a Major Loss and all
other insurance proceeds that are not applied to pay the cost of
restoration in accordance with this Section 7.1(5)(e) will be applied
to the repayment of the Loans in accordance with Section 3.
(f) In the event the Borrower is unable to maintain the Required Insurance
set forth herein, Borrower shall immediately notify the Administrative
Agent, along with a letter from a recognized insurance
representative/broker indicating that such insurance is not available
and commercially feasible. Administrative Agent and Lenders shall
enter into discussions with the Insurance Advisor and the Borrower,
and shall have the option of (i) waiving such requirement for such
period of time as insurance is not commercially available and feasible
or (ii) exploring the market and procuring such insurance on behalf of
the Project, with costs of insurance to be charged back to the
Project. Any waiver of a material requirement or condition must be
approved annually by the Administrative Agent and the Lenders.
(g) Before the Borrower commences any restoration work (other than
temporary restoration work to protect Property, to prevent
interference with business or to comply with applicable Government
Rules), the Borrower shall deliver to the Administrative Agent a
certificate of an Authorized Officer of the Borrower to the effect
that the plans and specifications and the schedule for the restoration
work provide for restoration work that is technically feasible and
such that, upon its completion the Project shall be financially viable
and attaching thereto evidence that the Borrower has committed to
commence such restoration work.
(h) Each request for payment for restoration work authorized by this
Section 7.1(5) shall be made on three (3) Business Days' prior notice
to the Administrative Agent and shall be accompanied by (i) a
certificate of an Authorized Officer of the Borrower and the
Independent Engineer to the effect that (1) all of the restoration
work completed has been done substantially in compliance with the
approved plans and specifications, (2) the sum requested is required
to pay, or to reimburse the Borrower for, costs incurred in connection
with such restoration work (giving a brief description of the services
and materials provided in connection with such restoration work), (3)
the sum requested, when added to all Loss Proceeds with respect to the
relevant Loss previously paid with respect to such Loss, does not
exceed the aggregate amount then due and payable or that will become
due and payable during the next ten days with respect to the
restoration work done as of the date of such certificate and to be
done in the next ten days and (4) the amount of Loss Proceeds with
respect to the relevant Loss remaining in the Loss Proceeds Account,
together with the Net Available Amount
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will be sufficient to complete the restoration work (giving in such
reasonable detail as the Administrative Agent may reasonably require
an estimate of the cost of such completion), and (ii) a certificate of
an Authorized Officer of the Borrower certifying that no Event of
Default has occurred and is continuing on such date. Notwithstanding
the provisions of Section 7.1(5) or any other provisions of the
Agreement requiring adherence to the Construction Budget or the
Operating Budget, where circumstances warrant expenditures which are
necessary for the lawful, safe, efficient and effective operation of
the Project or Existing Mine, the Borrower may make expenditures of up
to C$500,000 notwithstanding that such expenditure is not provided for
in the Construction Budget or the Operating Budget without the prior
consent of the Administrative Agent and the Lenders.
(i) No provision of this Section 7.1(5) or any provision of any other Loan
Document or any Material Project Contract shall impose on the
Administrative Agent or the Lenders any duty or obligation to verify
the existence or adequacy of the insurance coverage maintained by the
Borrower, nor shall the Secured Parties be responsible for any
representations or warranties made by or on behalf of the Borrower to
any insurance company or underwriter.
(6) Books and Records. Each of the Credit Parties will keep books and records
which accurately reflect its business affairs and transactions and permit the
Administrative Agent and each Lender or any of their respective representatives,
at reasonable times and intervals and at the Borrower's expense, to visit all of
its offices, to discuss its financial matters with its officers and independent
public accountant (and each Credit Party hereby authorizes such independent
public accountant to discuss its financial matters with each Lender or its
representatives whether or not any representative of the Credit Party is
present) and to examine and photocopy extracts, at the Borrower's expense from
any of its books or other corporate records. The Borrower shall pay any fees of
such independent public accountant incurred in connection with the
Administrative Agent's or any Lender's exercise of its rights pursuant to this
Section. The Independent Engineer shall have the right to visit and inspect the
Project and the books, records and documents of the Credit Parties from time to
time (and at least once during any quarterly period) and at the Borrower's
expense, and to discuss the Credit Parties' affairs with their principal
officers and engineers, all at such times during normal business hours as the
Independent Engineer may reasonably request.
(7) Environmental Covenant. Each Credit Party will use and operate all of its
facilities and properties in material compliance with all Environmental Laws,
keep all necessary Environmental Permits, in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material compliance
with all applicable Environmental Laws; immediately notify the Administrative
Agent and provide copies upon receipt of all written claims, complaints, notices
or inquiries relating to the condition of its facilities and properties or
compliance with Environmental Laws; and provide such information and
certifications which the Administrative Agent may reasonably request from time
to time to evidence compliance with this Section 7.1(7).
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(8) Obligations. Each Credit Party will at all times fulfill all its covenants
and obligations on its part to be fulfilled under, maintain in full force and
effect, and promptly enforce (or cause the relevant party to enforce) the
obligations of each other Person under the Transaction Documents and enforce
each covenant and all of its rights and privileges under the Transaction
Documents.
(9) Hedging Arrangements. The Credit Parties may from time to time enter into
one or more Hedge Agreements to hedge against such Credit Party's actual
interest rate, foreign exchange and commodity price risk and not for speculative
purposes. In particular, the Credit Parties (a) may not enter into palladium
price hedging arrangements requiring deliveries in any period with respect to
more than 75% of its production in such period not subject to a price cap under
the Palladium Sales Contract other than Hedging Agreements with the other party
to the Palladium Sales Contract, (b) may enter into palladium price hedging
arrangements with respect to ounces that have been produced in concentrate and
shipped to Inco Ltd. or Falconbridge Limited pursuant to the Smelting Agreements
and (c) may not enter into price hedging arrangements requiring deliveries in
any period for other metals produced at the Project and the Existing Mine with
respect to more than 75% of such production in such period. The covenants,
representations and warranties and events of default and conditions precedent in
such Hedge Agreements shall not be more onerous to the Borrower than those set
forth herein. The Borrower, or the Parent Guarantor, as the case may be, shall
provide a copy of each Hedge Agreement to the Administrative Agent.
(10) Approved Budgets.
(a) The Construction Budget attached to this Agreement shall be the
Approved Budget for the Project for the period ending on the
Completion Date unless amended pursuant to Section 7.1(10)(b).
(b) Prior to Completion the Borrower shall have the right from time to
time to propose to adopt an amended Construction Budget. After
Completion the Borrower shall have the right from time to time to
propose an amended Operating Budget for the remainder of the then
current Fiscal Year. The Borrower shall furnish to the Administrative
Agent (with a copy to the Independent Engineer) and each Lender a
copy of the proposed amended Construction Budget or Operating Budget,
as the case may be, at least ten (10) Business Days before the
proposed date of its adoption, together with a certificate of an
Authorized Officer of the Borrower describing the changes to the then
current budget and the reasons therefor. No such proposed amended
Construction Budget or Operating Budget shall be adopted unless it is
approved by the Administrative Agent and Majority Lenders in their
sole discretion.
(c) The Construction Budget (prior to Completion) or Operating Budget
(after Completion) as then most recently approved by the
Administrative Agent and Majority Lenders is referred to herein as the
"Approved Budget."
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(11) Construction; Overruns.
(a) The Borrower will use its best efforts to achieve Completion. The
Borrower will cause the Project to be duly completed in all material
respects in accordance with all applicable Material Project Contracts,
all Loan Documents, all Government Rules and all Government Approvals
and in accordance with prudent construction and engineering practices
and consistent with good engineering practices for the industry in
which the Project is intended to operate. The Borrower will cause all
performance tests under the Construction Contracts to be achieved
without giving effect to any variances or waivers.
(b) The Borrower will pay all Project Costs, including by making
Borrowings hereunder and by use of the proceeds of the Equity
Contribution and payments made to it under the Completion Guarantee.
(c) If, at any time, the Borrower or Independent Engineer believes that a
Cost Overrun will occur, then the Borrower shall immediately notify
the Administrative Agent and Lenders in writing. The Borrower agrees
to provide for the funding of all Cost Overruns in a manner acceptable
to the Lenders. The Borrower acknowledges that if a Cost Overrun is
forecast by the Borrower or the Independent Engineer the Lenders may
suspend all Advances until such time as this covenant has been
complied with.
(d) The Administrative Agent and Lenders shall have the right, but not the
obligation, to review all relevant documents and materials regarding
Project Costs.
(e) The Borrower shall at all times during construction of the Project
comply with all provisions of the Construction Lien Act (Ontario) or
similar legislation in any jurisdiction where the Mortgaged Property
is located ("Construction Lien Legislation"). The Borrower shall not
knowingly permit the registration of any Lien pursuant to any
Construction Lien Legislation against the Mortgaged Property. If such
a Lien is registered against the Mortgaged Property with the
Borrower's knowledge or if the Borrower receives notice of such a Lien
which is capable of being registered against the Mortgaged Property
the Borrower will take whatever steps are necessary to ensure that
such Lien is fully discharged and satisfied within 30 days of such
registration or notification. If the Borrower disputes the validity
or correctness of a registered Lien, it may contest such Lien in any
manner properly contemplated by applicable law, provided it promptly
discharges or vacates, or causes to be discharged or vacated, the Lien
by posting of a payment bond in such amount, or by payment into court
of such amount, as is necessary to obtain such removal or otherwise
posting such security as may be acceptable to the Administrative
Agent. The Borrower will not make a Borrowing Request during any
period when a Lien has been registered (or notification of such Lien
having been given) and not discharged or otherwise satisfied.
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(12) Physical Completion; Completion. The Borrower shall notify the
Administrative Agent in writing at least ten (10) Business Days prior to the
date (i) on which the Physical Completion is expected to occur, and (ii) the
Test Period is expected to commence, and shall indicate the anticipated date of
Completion. The Borrower, shall, at its own expense, make allowances and provide
such access to its facilities, premises and books and records as may be
reasonably required by the Administrative Agent to permit the Independent
Engineer to make such observations and tests, and to provide the Independent
Engineer with such information, as it may reasonably request in order to certify
whether Physical Completion and Completion has occurred. Promptly (but in any
event within one (1) Business Day) after the Borrower and Independent Engineer
conclude that Physical Completion has occurred, the Borrower shall deliver to
the Administrative Agent a certificate, executed by an Authorized Officer of the
Borrower certifying that Physical Completion has occurred on a date to be
specified by the Borrower in such certificate and attaching thereto a
certificate from the Independent Engineer concurring with the statements in the
Borrower's certificate. At such time as the Borrower and Independent Engineer
believe that Completion may occur, the Borrower shall prepare and deliver the
Borrower Completion Certificate to the Administrative Agent and shall direct the
Independent Engineer to prepare and deliver to the Administrative Agent the
Independent Engineer Completion Certificate. The Borrower shall provide to the
Administrative Agent and Lenders such other information regarding satisfaction
of the conditions to Completion as the Administrative Agent or any Lender may
reasonably request.
(13) Debt Service Reserve Account. From and after Completion, the Credit Parties
at all times will cause to be on deposit in the Debt Service Reserve Accounts an
amount not less than the then current Target Amount.
(14) Completion Guarantee. The Credit Parties will at all times ensure that the
Completion Guarantee shall be in full force and effect.
(15) Survey, etc.
(a) Upon substantial completion of the Project, the Borrower shall deliver
to the Administrative Agent (with a copy for each Lender) a survey of
the Site, prepared and certified by a licensed surveyor or civil
engineer, which shall (i) show that the Project is located within the
Site, and (ii) show that the Project does not encroach upon any
easements or other property rights of any other Person or violate any
Government Rule relating to setback or land use.
(b) Not later than 90 days after Completion, the Borrower shall deliver to
the Administrative Agent (with a copy for each Lender):
(i) a final and complete survey of the Project Site prepared and
certified by a licensed surveyor or civil engineer, which shall
(1) show all aspects of such Site, including the boundaries of
the Site and the location within or adjacent to the Site of all
buildings and improvements, all utilities services, transmission
lines, pipelines, rights of way and easements, bodies of water,
points of ingress and egress and other pertinent information, (2)
show that the improvements thereon do not encroach upon any
easements
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or other property rights of any Person or violate any Government
Rule relating to setback or land use, and (3) be satisfactory in
all respects to the Lenders and their counsel, acting reasonably;
and
(ii) such other instruments and documents as the Administrative Agent
or any Lender may reasonably request in order to protect or to
perfect the Liens, or the priority of the Liens, created or
intended to be created by the Security Documents.
(16) Use of Proceeds. Borrower shall utilize the proceeds of the Loans for the
financing of Project Costs as specified in Section 2.3 including the initial
repayment of the ▇▇▇▇▇▇ Bridge Loan to fund Project Costs.
(17) Mining Leases. The Borrower shall keep the Leases in good standing and
comply with all terms thereunder such that the Leases will not be terminated. In
addition, the Borrower shall use its best efforts to ensure that the Leases are
renewed for a further term on their expiry date.
(18) After-Acquired Property. Each Credit Party shall ensure that all Property
of one or more of them acquired after the entering into of this Agreement, the
Mortgage and/or the Security is subject to a valid Lien in favour of the Agent
and the Lenders, such Lien to be subject only to Permitted Liens.
(19) Pledge of Equity Shares. Each of Credit Parties undertakes to do all things
necessary to ensure that all shares of the Borrower issued in connection with
the investment of the Equity Contribution are subject to a valid pledge and Lien
in favour of the Agent and Lenders, such Pledge or Lien to be subject only to
Permitted Liens.
(20) Permits. The Borrower will, prior to October 31, 2000, deliver to the
Administrative Agent original or copies of all Governmental Approvals and third
party approvals and consents, excluding the abandonment plan, required to
complete the Project, not previously delivered, accompanied by a Certificate of
an Authorized Officer of the Borrower to the effect that all copies are true,
correct and complete copies of such consents and approvals.
(21) Phase I Environmental Site Assessment Report. The Borrower shall deliver to
the Administrative Agent and each Lender on or before July 31, 2000 a Phase I
environmental site assessment report prepared by an environmental consultant
acceptable to the Administrative Agent and Lenders with respect to the Site in
form and substance acceptable to the Administrative Agent, in addition the
Borrower shall provide verbal confirmation of the conclusions of such report to
the Lenders on or before July 14, 2000.
(22) Environmental Management Plan for Construction Period. The Borrower shall
deliver to the Administrative Agent on or before July 15, 2000 an outline for a
plan, acceptable to the Administrative Agent acting reasonably, for the
oversight by the Borrower of environmental compliance at the Project for the
period from such date until Physical Completion including, without limitation,
spill prevention and countermeasure, waste management and waste disposal plans.
The plan shall be implemented no later than August 31, 2000 in a manner
acceptable to the Lenders, acting reasonably.
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(23) Environmental Management Plan. The Borrower shall deliver to the
Administrative Agent on or before August 31, 2000 an outline for an
environmental management plan for compliance by the Borrower with all
environmental requirements including spill prevention and countermeasures,
operational management plans for the tailings facility, monitoring plans and
waste management and waste disposal plans along with a Schedule for
implementation of such environmental management plan. The environmental
management plan shall be implemented no later than Physical Completion in a
manner acceptable to the Lenders, acting reasonably.
(24) Factory Mutual Policy. The Borrower will deliver to the Administrative
Agent an amendment to Section E, Part 11. Suspension of the Factory Mutual
-----------------------------------------
Policy (Binder No. ST521) in form satisfactory to the Administrative Agent and
------
the Insurance Advisor within sixty (60) days of the initial Borrowing.
7.2 Negative Covenants. Each of the Credit Parties agrees with the
Administrative Agent and each Lender that, until all Commitments have terminated
and all Secured Obligations have been paid and performed in full, it will
perform, and will cause each of the other Credit Parties to perform, the
obligations set forth in this Section 7.2.
(1) Business Activities. The Borrower will not engage in any business
activity, except those described in the first recital, the second recital and
----- ------
the third recital and such activities as may be incidental or related thereto.
-----
(2) Indebtedness. No Credit Party will create, incur, assume or suffer to exist
or otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Loans and other Secured Obligations;
(b) Indebtedness in an aggregate principal amount not to exceed
C$2,500,000 or the Equivalent Amount thereof at any time outstanding
which is incurred by the Borrower in the ordinary course of business
to a vendor of equipment not comprising an integral part of the
Project excluding existing indebtedness in respect of the present
operating equipment of the Borrower the details of which are set out
in Schedule 7.2(2);
(c) unsecured Indebtedness incurred in the ordinary course of business for
expenses set forth in the then most recent Operating Budget (including
open accounts extended by suppliers on normal trade terms in
connection with purchases of goods and services, but excluding
Indebtedness incurred through the borrowing of money or Guaranteed
Liabilities) so long as such trade accounts payable are payable within
ninety (90) days of the date the respective goods are delivered or the
respective services are rendered and (unless such trade accounts
payable are being Contested in good faith and by appropriate legal,
administrative or other proceedings diligently conducted and so long
as adequate reserves have been established with respect thereto in
accordance with GAAP, and only if the failure to pay such accounts
payable would not reasonably be expected to have a
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Material Adverse Effect on the Borrower) are not more than ninety (90)
days past due;
(d) the ▇▇▇▇▇▇ Sub Debt of the Parent Guarantor;
(e) the obligations of the Parent Guarantor under its guarantee of the
obligations of the Borrower under the Palladium Sales Contract in
favour of the other party to the Palladium Sales Contract: or
(f) Hedging Obligations under Hedge Agreements permitted to be entered
into pursuant to Section 7.1(9);
provided, however, that no Indebtedness otherwise permitted by clause (b), (c),
-------- -------
(d), (e) or (f) of this Section 7.2(2) shall be permitted if, after giving
effect to the incurrence thereof, any Default or Event of Default shall have
occurred and be continuing.
(3) Liens. No Credit Party will create, incur, assume or suffer to exist any
Lien upon any of its property, revenues or assets, whether now owned or
hereafter acquired, except:
(a) Liens securing payment of the Secured Obligations including any
Hedging Obligations owing to any Lender under any Hedging Agreement
permitted under Section 7.1(9), granted pursuant to any Loan Document;
(b) Liens granted to secure payment of Indebtedness of the type permitted
and described in clause (b) of Section 7.2(2) and covering only those
assets acquired with the proceeds of such Indebtedness;
(c) unregistered Liens that arise by operation of law for Charges of
Government Authorities not at the time delinquent or thereafter
payable without penalty or being Contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(d) unregistered Liens that arise by operation of law for claims of
carriers, warehousemen, mechanics, materialmen and landlords and other
Charges incurred in the ordinary course of business for sums not
overdue or being Contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(e) Liens incurred in the ordinary course of business in connection with
workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of
tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(f) judgment Liens in existence less than 15 days after the entry thereof
or with respect to which execution has been stayed or the payment of
which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies;
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(g) Liens resulting from any judgement rendered or claim filed against the
Credit Party which the Credit Party shall be contesting in good faith
by proper legal proceedings if adequate reserves with respect thereto
are maintained on the books of such Credit Party, in accordance with
GAAP, so long as such Liens do not involve any immediate danger of the
sale, forfeiture or loss of the property, revenues or assets that are
subject to the Lien;
(h) Liens affecting real property which are:
(i) title defects, encroachments or irregularities of a minor
nature acceptable to the Majority Lenders;
(ii) restrictions, easements, rights-of-way, servitudes or other
similar rights in land (including rights-of-way and servitudes
for railways, sewers, drains, gas and oil pipelines, gas and
water mains, electric light and power and telephone or
telegraph for cable television conduits, poles, wires and
cables) granted to or reserved by other Persons, in each case
where such Liens in the aggregate do not materially impair the
usefulness or marketability of such real property or its
usefulness for the purposes for which it is held;
(iii) a reservation of royalty rights in favour of ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and/or The Sheridan Platinum Group, such royalties not
to exceed 5% of production from the Project, in the aggregate;
(i) the right reserved to or vested in any Government Authority by any
statutory provision, or by the terms of any lease, license, franchise,
grant or permit of the Credit Party, to terminate any such lease,
license, franchise, grant or permit or to require annual or other
payments as a condition to the continuance thereof;
(j) any Lien resulting from security given to a public utility or
Government Authority when required by such utility or Government
Authority in connection with the operation of the business of such
Credit Party;
(k) the reservations, limitations, provisos and conditions, if any,
expressed in any original grants of real property from the Crown or in
comparable grants, if any, in jurisdictions other than Canada;
(l) any lien, satisfaction of which has been provided for by the
depositing with the Lenders of an amount in cash, or the obtaining of
a surety bond satisfactory to the Lenders in their absolute
discretion, sufficient in either case to pay or discharge the same and
which deposit or bond the Lenders are authorized to use or draw upon
for that purpose;
(m) zoning and building by-laws and ordinances, municipal by-laws,
provincial laws and regulations, which do not materially impair the
usefulness or marketability of real property or its usefulness for the
purposes for which it is held;
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(n) any Lien on real or personal property granted to secure the ▇▇▇▇▇▇
Sub-Debt provided it is fully and completely subordinated to the
Security Obligations pursuant to the Subordination Agreement; and
(o) any Lien on real or personal property existing at the date of this
Agreement and disclosed on Schedule 7.2(3) but only to the extent such
Lien conforms to its description on Schedule 7.2(3) and any extension,
renewal or refinancing of such Lien; provided that the amount of the
obligations secured by any such Lien is not increased as a result of
such extension, renewal or refinancing or otherwise.
(4) Consolidation, Merger, Sale of Assets, etc. No Credit Party will
amalgamate, liquidate or dissolve, consolidate with, or merge into or with, any
other Person, or purchase or otherwise acquire all or substantially all of the
assets of or any class of Stock (or other equity interest in) any Person (or of
any division thereof) or make any investments other than Permitted Investments.
The Borrower shall not form, nor operate any of its business through, any
Subsidiary. Except for the sale of products in the ordinary course of each
Credit Party's business and the sale of surplus assets of the Credit Parties
replaced in the ordinary course of business, no Credit Party shall convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, any assets in an amount exceeding C$500,000 or the Equivalent
Amount thereof in the aggregate during any calendar year. No Credit Party shall
purchase or acquire any assets other than: (a) the purchase of assets reasonably
required in connection with a restoration of the Project in accordance with
Section 7.1(5), (b) the purchase of assets in the ordinary course of business
reasonably required in connection with the development of the Project in
accordance with the Material Project Contracts and contemplated by the then-
effective Construction Budget or Operating Budget, as the case may be, (c) the
purchase of assets reasonably required in connection with Capital Expenditures
permitted to be made pursuant to Section 7.2(8), and (d) Permitted Investments.
(5) Transactions with Affiliates. No Credit Party will enter into, or cause,
suffer or permit to exist any other arrangement or contract with any Affiliate
of such Credit Party unless such arrangement or contract has commercially
reasonable terms, is fair and equitable to such Credit Party and is an
arrangement or contract of the kind which would be entered into by a prudent
Person in the position of such Credit Party with a Person which is not one of
its Affiliates.
(6) Material Project Contracts; Change Orders; Development Plan.
(a) No Credit Party shall, without the prior written consent of the
Administrative Agent and the Majority Lenders, each acting in its sole
discretion, (i) amend, supplement, waive, terminate, cancel, release
or otherwise modify or consent to a departure in writing from, any
provision of the Material Project Contracts, (other than an extension
of the term of the Palladium Sales Contract) (ii) give any approval or
consent or permission required for or with respect to any of the
actions described in the immediately preceding clause or consent to
any assignment by any Person of its respective obligations under a
Material Project Contract or compromise, settle or forgive any
obligation under any Material Project Contract, (iii) assign or
otherwise dispose of any of its rights under any Material Project
Contract, or (iv) enter into any Additional Project Document.
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(b) No Credit Party will issue or agree or consent to any Prohibited
Change Order unless (i) at least ten (10) Business Days prior to the
date on which the Borrower proposes to issue or agree or consent to
such Change Order the Borrower shall have delivered a copy of the
proposed Change Order to the Administrative Agent, together with a
certificate from an Authorized Officer of the Borrower and an
Independent Engineer (1) stating the reasons for and costs associated
with such Change Order, including an updated estimate of what total
Project Costs will be to achieve Completion and comparing such totals
against the Budgeted Project Costs, (2) confirming and certifying that
the Change Order will not adversely affect the scope or coverage
afforded by the Required Insurance and that the Required Insurance
will, after giving effect to the change proposed by the Change Order,
insure the Project (as proposed to be changed by the Change Order),
and (3) stating that the Independent Engineer recommends that the
Lenders approve such Change Order and (ii) the Majority Lenders
approve such Prohibited Change Order, which approval is within such
Majority Lenders' sole and absolute discretion.
(c) No Credit Party shall permit or approve any change in the Development
Plan that would either (i) increase Capital Expenditures required in
connection with the Project by more than 10% of the amount
contemplated in the Development Plan; or (ii) cause a decrease or
increase in the tonnes of ore produced in any annual period of more
than 10% of the amount contemplated in the Development Plan.
(7) Negative Pledges, Restrictive Agreements, etc. No Credit Party will enter
into any agreement (excluding this Agreement and any other Loan Documents)
prohibiting the creation or assumption of any Lien upon its properties, revenues
or assets, whether now owned or hereafter acquired, or the ability of any Credit
Party to amend or otherwise modify this Agreement, any other Loan Document or
any other Material Project Contract.
(8) Capital Expenditures; Operating Budget. On and after the Effective Date,
the Borrower shall not make any Capital Expenditures other than Budgeted Capital
Expenditures and the Borrower shall not make any changes to an Approved Budget
for any Fiscal Year unless consented to in writing by the Administrative Agent
and the Majority Lenders pursuant to Section 7.1(10).
(9) Restricted Payments. No Credit Party shall make any Restricted Payments
prior to Completion. However, notwithstanding the foregoing, the Borrower or the
Parent Guarantor may (i) pay annual fees, payable at the end of each calendar
quarter after the date hereof, together not to exceed the aggregate amount of
five-tenths of one percent (0.5%) of the average balance of the Indebtedness
outstanding under this Agreement during such calendar quarter to the Completion
Guarantors; (ii) repay in whole or in part the loans owing to ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Oil
Company from proceeds of an equity issue by the Parent Guarantor simultaneous
with the funding of the Equity Contribution; and (iii) make the initial
repayment of the ▇▇▇▇▇▇ Bridge Loan. Notwithstanding (iii) above, the Borrower
shall not use the proceeds of any Loan to repay the ▇▇▇▇▇▇ Bridge Loan until the
Borrower has complied with section 7.1(21). On and after Completion, no Credit
Party shall make any Restricted Payment except quarterly on Principal
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Payment Dates out of funds available for such purpose pursuant to Section 10.4
and unless each of the following conditions is satisfied on the date of payment:
(a) no Default or Event of Default shall have occurred and shall be
continuing or would result from the making of such Restricted Payment;
(b) each Credit Party reasonably expects to have sufficient cash during
the then immediately succeeding fiscal quarter to cover any increase
in working capital requirements and any Capital Expenditures to be
made during such quarter;
(c) the Pro Forma Debt Service Coverage Ratio for each of the next four
consecutive twelve month periods or until the Final Maturity Date,
whichever period is less, as determined on the date of payment, shall
be at least 1.50 to 1.00;
(d) where such Restricted Payment is made on the date of any mandatory
prepayment of the Loans in accordance with Section 3.1(3), such
Restricted Payment is made after such mandatory prepayment has been
made to the Lenders; and
(e) the Qualifying Term remaining as of the Completion Date was at least
four (4) years.
(10) Financial Covenants. After Completion, the Borrower shall not permit its
Debt Service Coverage Ratio for any Applicable Period to be less than 1.25 to
1.00. For purposes of this Section 7.2(10), the "Applicable Period" shall mean,
as of any date of calculation, the four (4) calendar quarters then most recently
ended; provided that until the end of the first four (4) calendar quarters after
--------
the Completion Date, with respect to any date of calculation hereunder the
"Applicable Period" shall mean and include the full calendar months then elapsed
since the Completion Date.
(11) Hedge Agreements. No Credit Party shall enter into any Hedge Agreements
other than Hedge Agreements permitted under Section 7.1(9).
(12) Investments. No Credit Party shall make any Investments except:
(a) direct obligations of Canada or the United States, or of any agency
thereof, or obligations guaranteed as to principal and interest by
Canada or the United States or any agency thereof, maturing in not
more than ninety (90) days from the date of acquisition by such Credit
Party;
(b) certificates of deposit issued by any Acceptable Bank maturing in not
more than ninety (90) days from the date of acquisition by such Credit
Party;
(c) commercial paper rated (on the date of acquisition by such Credit
Party) A-1 or P-1 by S&P or ▇▇▇▇▇'▇, respectively (or an equivalent
rating by another nationally recognized statistical rating
organization of similar standing if neither of such corporations is
then in the business of rating commercial paper), maturing in not more
than ninety (90) days from the date of acquisition by such Credit
Party;
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(d) repurchase agreements fully secured by obligations described in clause
(a) above with any Acceptable Bank with maturities not in excess of
thirty (30) days;
(e) shares in money-market mutual funds having assets of $1,000,000,000 or
more that invest solely in securities described in clauses (a) through
(d) above that have a maximum maturity of one year or less and an
average maturity of six months or less at the time of purchase;
(f) Stock of the Borrower held by the Parent Guarantor; and
(g) any transactions contemplated in the Hedge Agreements permitted under
Section 7.1(9).
(13) No Capital Leases. No Credit Party shall enter into any capital leases
having Capitalized Lease Liabilities exceeding C$2,500,000 or the Equivalent
Amount thereof, at any time, on an aggregate basis for all Credit Parties.
SECTION 8 - EVENTS OF DEFAULT
8.1 Listing of Events of Default. Each of the following events or occurrences
described in this Section 8.1 shall constitute an "Event of Default."
(1) Non-Payment of Obligations. The Borrower shall default in the payment when
due of any principal on any Loan, or the Borrower shall default (and such
default shall continue unremedied for a period of three (3) days) in the payment
when due of any interest or fee or of any other Obligation.
(2) Breach of Warranty. Any representation or warranty of any Credit Party or
any other Obligor made or deemed to be made hereunder or in any other Loan
Document executed by it or any other writing or certificate furnished by or on
behalf of any Credit Party or any other Obligor to the Administrative Agent, or
any Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Section
5), is or shall be incorrect when made or on the Effective Date in any material
respect.
(3) Non-Performance of Other Covenants and Obligations.
(a) Any Credit Party shall default in the performance and observance of
any of its obligations under Sections 7.2(4), (9) or (12); or
(b) Any Credit Party shall default in the performance and observance of
any of its obligations under Sections 7.1(16), 7.1(17), 7.1(18),
7.1(19), 7.1(20), 7.1(21), 7.1(22), 7.2 (not referred to in Section
(a)) or Section 10 and such default shall continue unremedied for a
period of ten (10) days or more; or
(c) Any Obligor shall default in the due performance and observance of
this Agreement or any other Loan Document and such default shall
continue unremedied for a period of 30 days or more.
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(4) Default on Other Indebtedness; Agreements.
(a) Any Credit Party (or any Completion Guarantor, only with respect to
the period before the Completion Date) shall default in the payment
when due of any principal of or interest on any of its Indebtedness
(other than any amount due under this Agreement) aggregating C$500,000
(and in the case of the Completion Guarantors, C$5,000,000) or the
Equivalent Amount thereof or more or any event specified in any note,
agreement, indenture or other document evidencing or relating to any
such Indebtedness shall occur if the effect of such event is to cause,
or (with the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, such Indebtedness
to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated
maturity; or
(b) Any Credit Party (or any Completion Guarantor, only during the period
before the Completion Date) shall default in payment or performance
under any Material Project Contract.
(5) Judgments. Any judgment or order for the payment of money in excess of
C$500,000 or the Equivalent Amount thereof shall be rendered against a Credit
Party and remains unstayed or unbonded for at least thirty (30) days.
(6) Change of Control. Any Change of Control shall occur.
(7) Executions. Assets of any Credit Party with a fair market value of
C$500,000 or the Equivalent Amount thereof or more shall be attached, seized,
levied upon or subjected to execution, garnishment, distress or any other
similar process, or come within the possession of any receiver, trustee,
custodian, liquidator, administrator, sequestrator, sheriff, bailiff or assignee
for the benefit of creditors of any Credit Party and such condition continues
for thirty (30) days or more.
(8) Bankruptcy, Insolvency, etc. Any involuntary case or proceeding (including
the filing of any notice in respect thereof) is commenced against any Credit
Party (or any Completion Guarantor, only during the period before the Completion
Date) under any Insolvency Law, any incorporation law or other applicable law in
any jurisdiction in respect of the:
(a) bankruptcy, liquidation, winding-up, dissolution or suspension of
general operations,
(b) composition, rescheduling, reorganization, arrangement or readjustment
of, or other relief from, or stay of proceedings to enforce, some or
all of the debts or obligations,
(c) appointment of a trustee, interim receiver, receiver, receiver and
manager, liquidator, administrator, custodian, sequestrator,
administrative agent or other similar official for, or for all or a
substantial part of the assets, or
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(d) possession, foreclosure, seizure or retention, sale or other
disposition of, or other proceedings to enforce security over, all or
a substantial part of the assets,
of any such Person and such case or proceeding shall remain undismissed or
unstayed for thirty (30) days or more or such court shall enter a decree or
order granting the relief sought in such case or proceeding;
(9) Voluntary Proceedings. Any Credit Party (or any Completion Guarantor, only
during the period before the Completion Date) (i) shall commence or fail to
contest in a timely and appropriate manner or shall consent to the institution
of proceedings referred to in Section 8.1(8) above or to the filing of any such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of any such
Person or of any substantial part of any such Person's assets or (ii) shall take
any corporate action in furtherance of any of the foregoing or of any of the
proceedings referred to in Section 8.1(8) above or (iii) shall admit in writing
its inability to pay its debts as such debts become due or (iv) shall become
insolvent.
(10) Lack of Enforceability of Loan Documents. Unless otherwise expressly
provided herein or in any Loan Document and after the date of the execution and
delivery by the parties thereto of any Loan Document, any Loan Document shall
cease to be in full force and effect or, in the case of Security Documents, to
be effective to grant a perfected Lien to the Administrative Agent, for the
benefit of the Secured Parties, on the Collateral described in such Security
Document with the priority purported to be created by such Security Document.
(11) Government Approval. Any Government Approval shall be rescinded, cancelled,
amended, modified or supplemented, or shall cease to be in full force and effect
and is not replaced within thirty (30) days, and such rescission, cancellation,
amendment, modification, supplement or cessation would reasonably be expected to
have a Material Adverse Effect.
(12) Material Project Contracts. (a) Unless otherwise permitted or contemplated
Material Project Contract shall at any time for any reason cease to be valid and
binding or in full force and effect or shall be cancelled or terminated (in each
case, except in connection with its expiration in accordance with its terms in
the ordinary course (and not related to any default thereunder)), or the
validity or enforceability of any Material Project Contract shall be contested
by any party to such Material Project Contract (other than the Administrative
Agent or the Lenders) or any Government Authority, or any Project Party shall
deny that it has any or further liability or obligation under any Material
Project Contract (except in connection with any such Project Document that
expired in accordance with its terms in the ordinary course (and not related to
any default thereunder)), in each case for more than thirty (30) days, or (b)
any Project Party shall be in default under any Material Project Contract.
(13) Failure of Completion. The Completion Date shall not have occurred on or
prior to the Date Certain.
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(14) Material Adverse Effect. At any time there occurs an event or circumstance
which could have a Material Adverse Effect with respect to the Credit Parties or
(only before the Completion Date) the Completion Guarantors.
(15) Abandonment. The Borrower shall cease, or threatens to cease, to carry on
its business at the Site or an Event of Abandonment otherwise occurs.
(16) ▇▇▇▇▇▇-▇▇▇▇▇ Credit Agreement. An event of default shall occur and be
continuing under the ▇▇▇▇▇▇-▇▇▇▇▇ Credit Agreement at any time prior to the
Completion Date.
(17) Senior Debt Restructuring. The Lenders, acting reasonably, do not approve
of any proposed changes to the Completion Guarantee as a result of an amendment
or restructuring of the ▇▇▇▇▇▇-▇▇▇▇▇ Credit Agreement, including, without
limitation, pursuant to Section 4 of the Completion Guarantee.
(18) Completion Guarantee. Any Completion Guarantor shall breach any of the
covenants contained in the Completion Guarantee or any representation or
warranty contained in the Completion Guarantee shall be false or any other
breach of the terms and conditions of the Completion Guarantee shall occur or if
the Lenders give notice of acceleration in accordance with Section 2.1 of the
Completion Guarantee.
(19) Leases. One or more of the Leases is terminated or termination of one or
more of the Leases is threatened in writing.
(20) Equity Contribution. The Borrower shall fail to obtain the Equity
Contribution on or before October 31, 2000.
(21) Governmental Approvals and Consents. The Borrower shall fail to obtain all
the Government Approvals and third party approvals and consents required to
complete the Project prior to October 31, 2000 excluding the abandonment plan.
(22) Death of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Only during the period before the Completion
Date, the death of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
8.2 Action if Bankruptcy. If any Event of Default described in Sections 8.1(8)
or 8.1(9) shall occur, the Commitments (if not theretofore terminated) shall
automatically terminate and the outstanding principal amount of all outstanding
Loans and all other Obligations shall automatically be and become immediately
due and payable, without notice or demand.
8.3 Action if Other Event of Default. If any Event of Default (other than as
specified in Section 8.2) shall occur for any reason, whether voluntary or
involuntary, and be continuing, the Administrative Agent, upon the direction of
the Majority Lenders, shall by notice to the Borrower declare all or any portion
of the outstanding principal amount of the Loans and other Secured Obligations
to be due and payable and/or the Commitments (if not theretofore terminated) to
be terminated, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitments shall terminate.
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SECTION 9 - THE ADMINISTRATIVE AGENT
9.1 Actions. Each Lender hereby appoints BMO as its Administrative Agent under
and for purposes of this Agreement and each other Loan Document. Each Lender
authorizes the Administrative Agent to act on behalf of such Lender under this
Agreement and each other Loan Document and, in the absence of other written
instructions from the Majority Lenders received from time to time by the
Administrative Agent (with respect to which the Administrative Agent agrees that
it will comply, except as otherwise provided in this Section or as otherwise
advised by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Administrative Agent by the terms
hereof and thereof, together with such powers as may be reasonably incidental
thereto. Each Lender hereby indemnifies (which indemnity shall survive any
termination of this Agreement) the Administrative Agent, pro rata according to
such Lender's Percentage, from and against any and all liabilities, obligations,
losses, damages, claims, costs or expenses of any kind or nature whatsoever
which may at any time be imposed on, incurred by, or asserted against, the
Administrative Agent in any way relating to or arising out of this Agreement and
any other Loan Document, including reasonable fees of legal counsel, and as to
which the Administrative Agent is not reimbursed by the Borrower; provided,
--------
however, that no Lender shall be liable for the payment of any portion of such
-------
liabilities, obligations, losses, damages, claims, costs or expenses which are
determined by a court of competent jurisdiction in a final proceeding to have
resulted solely from the Administrative Agent's gross negligence or wilful
misconduct. The Administrative Agent shall not be required to take any action
hereunder or under any other Loan Document, or to prosecute or defend any suit
in respect of this Agreement or any other Loan Document, unless it is
indemnified hereunder to its satisfaction. If any indemnity in favour of the
Administrative Agent shall be or become, in the Administrative Agent's
determination, inadequate, the Administrative Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
9.2 Funding Reliance, etc. Unless the Administrative Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m. on the
day prior to a Borrowing that such Lender will not make available the amount
which would constitute its Percentage of such Borrowing on the date specified
therefor, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If and to
the extent that such Lender shall not have made such amount available to the
Administrative Agent, such Lender and the Borrower severally agree to repay the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date the Administrative Agent made such
amount available to the Borrower to the date such amount is repaid to the
Administrative Agent, at the interest rate applicable at the time to Loans
comprising such Borrowing.
9.3 Exculpation. Neither the Administrative Agent nor any of its directors,
officers, employees or administrative agents shall be liable to any Lender for
any action taken or omitted to be taken by it under this Agreement or any other
Loan Document, or in connection herewith or therewith, except for its own wilful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, nor to make any inquiry
respecting
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the performance by the Borrower or other Obligor of its obligations hereunder or
under any other Loan Document. Any such inquiry which may be made by the
Administrative Agent shall not obligate it to make any further inquiry or to
take any action. The Administrative Agent shall be entitled to rely upon advice
of counsel concerning legal matters and upon any notice, consent, certificate,
statement or writing which the Administrative Agent believes to be genuine and
to have been presented by a proper Person.
9.4 Successor. The Administrative Agent may resign as such at any time upon at
least 30 days' prior written notice to the Borrower and all Lenders. If the
Administrative Agent at any time shall resign, the Borrower with the approval of
the Majority Lenders may appoint another Lender as a successor Administrative
Agent which shall thereupon become the Administrative Agent hereunder. If no
successor Administrative Agent shall have been so appointed by the Majority
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be one of the Lenders or a commercial lending
institution organized under the laws of Canada, and having a combined capital
and surplus of at least C$500,000,000. Upon the acceptance of any appointment
as Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall be entitled to receive from the retiring
Administrative Agent such documents of transfer and assignment as such successor
Administrative Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Administrative Agent under this
Agreement; and Section 9.3 and Section 9.4 shall continue to inure to its
benefit.
9.5 Loans by the Administrative Agent. The Administrative Agent shall have the
same rights and powers with respect to the Loans made by it or any of its
Affiliates as any other Lender and may exercise the same as if it were not the
Administrative Agent. The Administrative Agent and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Borrower or Affiliate of the Borrower as if the Administrative Agent were
not the Administrative Agent hereunder.
9.6 Credit Decisions. Each Lender acknowledges that it has, independently of
the Administrative Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Administrative
Agent and each other Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.
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9.7 Copies, etc. The Administrative Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the
Administrative Agent by the Borrower pursuant to the terms of this Agreement
(unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.
SECTION 10 - ACCOUNTS
10.1 Establishment of Accounts. The Borrower shall cause to be established on
or before the date of the initial Borrowing each of the Project Costs Account,
the Operating Account, the Debt Service Reserve Account and the Loss Proceeds
Account, in each case in the name of the Borrower. Unless and until an Event of
Default shall have occurred and be continuing, and subject to the terms and
conditions of this Agreement and the other Loan Documents, the Borrower shall
have check-writing privileges over the Project Costs Account, the Operating
Account and the Loss Proceeds Account. Each Account shall be a segregated trust
or custody account dedicated solely to the purposes contemplated by this
Agreement. In accordance with the terms of the Borrower's Security Agreement,
the Borrower shall, on the Effective Date, pledge, assign and transfer to the
Administrative Agent for the equal and ratable benefit of the Secured Parties a
Lien on and security interest in, all of the Borrower's right, title and
interest in, to and under the Accounts, any Permitted Investments (or any other
property) held in or credited to the Accounts and the proceeds of any such
Permitted Investments (or such other property). Except as otherwise expressly
provided in this Agreement, all Accounts shall be under the dominion and control
of the Administrative Agent. The Borrower hereby irrevocably confirms the
authority of the Administrative Agent to (and directs and authorizes the
Administrative Agent to) deposit into and remit funds from such Accounts in
accordance with the terms and conditions of this Agreement and, following their
execution and delivery, the Security Documents.
10.2 Permitted Investments. Upon the request of the Borrower, the
Administrative Agent shall invest and reinvest any balances in any Account from
time to time in Permitted Investments; provided that if the Borrower fails to so
--------
request the Administrative Agent or upon the occurrence and continuance of an
Event of Default, the Administrative Agent may invest and reinvest such balances
as the Administrative Agent shall determine in its sole discretion. Earnings on
Permitted Investments (or other property credited to the Accounts as set forth
above) shall be deposited on the date received by the Administrative Agent (or
as soon as practicable thereafter) in the Operating Account for application as
provided for in this Agreement. All such Investments and reinvestments shall be
held in the name, and shall be under the dominion and control, of the
Administrative Agent. The Administrative Agent shall have no liability for any
loss in investment of funds in any Account.
10.3 Deposits Into the Accounts.
(1) Project Costs Account. The proceeds of all Loans and all funds paid to the
Borrower pursuant to the Equity Contribution shall be deposited in the Project
Costs Account. All Project Revenues (other than Loss Proceeds received on or
after the Effective Date) shall be deposited in
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the Project Costs Account. The Borrower agrees to instruct each Project Party to
remit all such payments due or to become due to the Borrower under each
Transaction Document and Non-Material Project Contract in respect of Project
Revenues to the Project Costs Account. In the event that, notwithstanding the
foregoing, any such payments or other amounts are received by the Borrower, the
Borrower shall promptly pay, endorse, transfer and deliver such payments or
other amounts to the Administrative Agent for deposit in the Project Costs
Account, and, until such delivery, the Borrower shall hold such payments and
other amounts in the same form as received in trust for the Administrative
Agent.
(2) Operating Account The proceeds of all operations of the Borrower from the
Existing Mine, if any, including without limitation, all revenue receivable by
the Borrower from the sale of product and performance of service shall be
deposited to the Operating Account. The Borrower may use the proceeds of the
Operating Account to pay all expenses and costs associated with the Existing
Mine and/or Project Costs. Upon Physical Completion, the Operating Account shall
be closed and the balance of such Operating Account shall be transferred to the
Project Costs Account.
(3) Loss Proceeds Account. The Borrower shall remit (or cause to be remitted)
the Net Available Amount of any Loss Proceeds for deposit in the Loss Proceeds
Account.
(4) Debt Service Reserve Account. The Borrower shall, from and after the
Completion Date, ensure that the Debt Service Reserve Account has a balance at
least equal to the then current Target Amount.
10.4 Withdrawals and Transfers. Subject in all cases to Section 10.5, funds
shall be withdrawn and transferred from the Accounts as provided in this Section
10.4.
(1) Project Costs Account. Subject to Section 10.5, the Administrative Agent
shall make funds available from the Project Costs Account, to be applied in the
order of priority set forth below:
(a) firstly, Cash Production Costs;
(b) secondly, Budgeted Capital Expenditures;
(c) thirdly, cash Taxes payable;
(d) fourthly, rateably to the Lenders, interest and fees payable on the
Loans when due,
(e) fifthly, rateably to the Lenders, scheduled principal payments payable
on the Loans when due;
(f) sixthly, funding of the Debt Service Reserve Account;
(g) seventhly, rateably to the Lenders, mandatory prepayments payable on
the Loans when due in accordance with Section 3.1(3); and
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(h) eighthly, Restricted Payments to the extent permitted in accordance
with Section 7.2(9).
With respect to any payments to be made in accordance with clauses (a), (b), (c)
and (h), the amount that the Borrower in good faith determines that it
reasonably requires to pay such items shall be specified, in each case to the
extent budgeted in the then current Approved Budget for the Project, in a
certificate of an Authorized Officer of the Borrower delivered to the
Administrative Agent at least two (2) Business Days before the calendar month in
which such payment shall be required. After the Final Maturity Date, provided
that all Obligations hereunder have been satisfied the balance in the Project
Costs Account shall be transferred to the Operating Account. Notwithstanding
the foregoing, the Borrower shall not use the proceeds of any Loan to repay the
▇▇▇▇▇▇ Bridge Loan until the Borrower has complied with Section 7.1(21)
(2) Loss Proceeds Account. Funds on deposit in the Loss Proceeds Account shall
be transferred by the Administrative Agent from time to time for application in
accordance with Section 3.1(3)(b), 7.1(5) and 10.6.
(3) Operating Account Funds on deposit in the Operating Account may be used by
the Borrower to pay all costs and expenses connected to the Existing Mine. The
Borrower may use amounts in the Operating Account to pay Project Costs.
Notwithstanding all of the foregoing provisions of this Section 10.4, the
Administrative Agent shall have the right to withdraw from the Operating Account
or the Loss Proceeds Account and transfer to the Administrative Agent or any
Lender on any Business Day any amount of Obligations then due and owing to the
Administrative Agent or such Lender under this Agreement or any other Loan
Document if the Borrower fails to pay the same provided insufficient funds are
available in the Project Costs Account, and as a result thereof an Event of
Default has occurred and is continuing.
10.5 Event of Default, etc. Notwithstanding any provision of this Agreement to
the contrary, upon the occurrence and during the continuation of a Default or an
Event of Default, the Administrative Agent shall have the right (a) not to
release, withdraw, distribute, transfer or otherwise make available any funds in
or from any of the Accounts and (b) following the occurrence of an Event of
Default which is continuing to apply such funds in such order as it may
determine in its sole discretion and to exercise such remedies as are then
available to it, including the application of all or any part of the funds in
the Accounts to repay any of the Obligations.
10.6 When Amounts Are Insufficient to Pay Debt Service. If the funds on deposit
in the Project Costs Account and the Operating Account are insufficient to make
all payments of Debt Service in respect of Obligations then due and payable, the
Administrative Agent may, in its sole and absolute discretion, transfer such
amounts into the Project Costs Account as shall be necessary to satisfy such
deficiency, firstly from the Debt Service Reserve Account and secondly from the
Loss Proceeds Account (in each case to the extent funds are available in each
such Account). If any such transfer of funds from the Debt Service Reserve
Account causes the amount on deposit in the Debt Service Reserve Account to fall
below the then most recently calculated Target Amount, then the Borrower shall
immediately pay into the Debt Service
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Reserve Account funds sufficient to increase the amount on deposit in the Debt
Service Reserve Account to such Target Amount.
10.7 Excess Amounts. If, on any Principal Payment Date, the balance on deposit
in the Debt Service Reserve Account exceeds the then Target Amount, then the
Administrative Agent shall transfer all or a portion of such excess amount to
the Project Costs Account for further application in accordance with the terms
of this Section 10 on such Principal Payment Date.
10.8 Termination of Accounts. On the Termination Date all Permitted Investments
in each Account shall be liquidated or, at the election of the Borrower,
conveyed to the Borrower and all remaining funds in each Account shall be
remitted to (or at the direction of) the Borrower. In the event that after the
Termination Date any funds are received by the Administrative Agent for deposit
in any Account the Administrative Agent shall promptly remit such funds to (or
at the direction of) the Borrower, in the form received, with any necessary
endorsements.
SECTION 11 - MISCELLANEOUS PROVISIONS
11.1 Waivers, Amendments, etc. The provisions of this Agreement and of each
other Loan Document may from time to time be amended, modified or waived, if
such amendment, modification or waiver is in writing and consented to by the
Borrower and by the Majority Lenders (or the Administrative Agent with the
consent in writing of the Majority Lenders) provided, however, that no such
supplemental agreement shall, without the consent of all of the Lenders: (a)
extend the maturity of any Loan or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon; (b) reduce
the percentage specified in the definition of Majority Lenders, or Super
Majority Lenders or required to direct the Administrative Agent; (c) extend the
Final Maturity Date or the Commitment Termination Date, or reduce the amount or
extend the payment date for, any payments required hereunder, or increase the
amount of the Commitment of any Lender hereunder, or change any term or
provision of this Agreement relating to the Completion Date or permit the
Borrower to assign its rights under this Agreement except as provided in Section
11.8; (d) amend or release the Completion Guarantees; (e) release any Collateral
or terminate the Credit Parties' obligations under any Security Document; or (f)
amend this Section 11.1. No failure or delay on the part of the Administrative
Agent or any Lender in exercising any power or right under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on a Credit Party in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Administrative
Agent or any Lender under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
11.2 Notices. All notices and other communications provided to any party hereto
under this Agreement or any other Loan Document shall be in writing or by
facsimile and addressed, delivered or transmitted to such party at its address
or facsimile number set forth below its signature hereto or set forth in the
Lender Assignment Agreement or at such other address or facsimile number as may
be designated by such party in a notice to the other parties. Any notice,
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if mailed and properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted.
11.3 Payment of Costs and Expenses. The Borrower agrees to pay on demand all
reasonable expenses of the Administrative Agent (including the reasonable fees
and out-of-pocket expenses of counsel to the Administrative Agent and of local
counsel, if any, who may be retained by counsel to the Administrative Agent) in
connection with the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and exhibits, and
any amendments, waivers, consents, supplements or other modifications to this
Agreement or any other Loan Document as may from time to time hereafter be
required, whether or not the transactions contemplated hereby are consummated,
and the filing of financing statements relating thereto and all amendments,
supplements and modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or registered by the terms
hereof or of the Security Documents, and the preparation and review of the form
of any document or instrument relevant to this Agreement or any other Loan
Document. The Borrower further agrees to pay, and to save the Administrative
Agent and the Lenders harmless from all liability for, any stamp or other taxes
which may be payable in connection with the execution or delivery of this
Agreement, the borrowings hereunder or any other Loan Documents. The Borrower
also agrees to reimburse the Administrative Agent and each Lender upon demand
for all reasonable, out-of-pocket expenses (including reasonable fees and out-
of-pocket expenses of legal counsel and legal expenses) incurred by the
Administrative Agent or such Lender in connection with the enforcement of any
Obligations.
11.4 Indemnification. In consideration of the execution and delivery of this
Agreement by each Lender and the extension of the Commitments, each Credit Party
hereby indemnifies, exonerates and holds the administrative agent and each
Lender and each of their respective officers, directors, employees and
Administrative Agents (collectively, the "Indemnified Parties") free and
harmless from and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable fees of legal
counsel and disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnified Parties or any of them as a result of, or arising
out of, or relating to any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan; the entering into
and performance of this Agreement and any other Loan Document by any of the
Indemnified Parties; any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by a Credit Party of any Hazardous
Material; or the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real property
owned or operated by a Credit Party of any Hazardous Material (including any
losses, liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law), regardless of whether caused by, or within
the control of a Credit Party, except for any such Indemnified Liabilities
arising for the account of a particular Indemnified Party by reason of the
relevant Indemnified Party's gross negligence or wilful misconduct. If and to
the extent that the foregoing undertaking may be unenforceable for any reason,
each Credit Party hereby agrees to make the maximum
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contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under Government Rule.
11.5 Survival. The obligations of the Credit Parties under Sections 2.5, 4.1,
4.2, 4.3, 4.5, 4.6, 11.3 and 11.4, and the obligations of the Lenders under
Section 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by the Credit Parties in this Agreement and
in each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
11.6 Execution in Counterparts, Effectiveness, etc. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
executed by the Credit Parties and the Administrative Agent and the Lenders and
be deemed to be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Credit Parties and each Lender (or notice
thereof satisfactory to the Administrative Agent) shall have been received by
the Administrative Agent and notice thereof shall have been given by the
Administrative Agent to the Credit Parties and each Lender.
11.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that: the Borrower may not assign or transfer its
rights or obligations hereunder without the prior written consent of the
Administrative Agent and all Lenders, such consent not to be unreasonably
withheld; and the rights of sale, assignment and transfer of the Lenders are
subject to Section 11.8.
11.8 Sale and Transfer of Loans; Participations in Loans. Each Lender may
assign, or sell participations in, its Loans and Commitments to one or more
other Persons in accordance with this Section 11.8.
(1) Assignments. Any Lender, with the written consents of the Borrower and
the Administrative Agent (which consents shall not be unreasonably delayed or
withheld) which consent, in the case of the Borrower, shall not be required or
necessary after the occurrence of an Event of Default which is continuing may at
any time assign and delegate to one or more commercial Lenders or other
financial institutions, and with notice to the Borrower and the Administrative
Agent, but without the consent of the Borrower or the Administrative Agent, may
assign and delegate to any of its Affiliates or to any other Lender (each Person
described in either of the foregoing clauses as being the Person to whom such
assignment and delegation is to be made, being hereinafter referred to as an
"Assignee Lender"), all or any fraction of such Lender's total Loans and
Commitments (which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Loans and Commitments) in a
minimum aggregate amount of US$5,000,000; provided, however, that, the Borrower
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and the Administrative Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until written notice of such assignment and
delegation, together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall have been given to the
Borrower and the Administrative Agent by such Lender and such Assignee Lender,
such Assignee Lender
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shall have executed and delivered to the Borrower and the Administrative Agent a
Lender Assignment Agreement, accepted by the Administrative Agent, and the
processing fees described below shall have been paid. From and after the date
that the Administrative Agent accepts such Lender Assignment Agreement, (x) the
Assignee Lender thereunder shall be deemed automatically to have become a party
hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Administrative Agent upon delivery of any Lender Assignment Agreement in the
amount of C$3,000. Any attempted assignment and delegation not made in
accordance with this Section 11.8(1) shall be null and void.
(2) Participations. Any Lender may at any time sell to one or more commercial
Lenders or other financial institution (each such commercial Lender being herein
called a "Participant") participating interests in any of the Loans,
Commitments, or other interests of such Lender hereunder; provided, however,
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that no participation contemplated in this Section 11.8 shall relieve such
Lender from its Commitments or its other obligations hereunder or under any
other Loan Document, such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations, the Borrower and each
other Obligor and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents. No
Participant, unless such Participant is an Affiliate of such Lender, or is
itself a Lender, shall be entitled to require such Lender to take or refrain
from taking any action hereunder or under any other Loan Document, except that
such Lender may agree with any Participant that such Lender will not, without
such Participant's consent, take any actions of the type described in clause (b)
or (c) of Section 11.8(1), and the Borrower shall not be required to pay any
amount under Section 4.6 that is greater than the amount which it would have
been required to pay had no participating interest been sold. The Borrower
acknowledges and agrees that each Participant, for purposes of Sections 4.1,
4.2, 4.3, 4.5, 4.6, 4.9, 4.10, 11.3 and 11.4, shall be considered a Lender.
11.9 Other Transactions. Nothing contained herein shall preclude the
Administrative Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
11.10 Submission to Jurisdiction. Each of the parties irrevocably submits to
the non-exclusive jurisdiction of the courts of the Province of Ontario.
11.11 Judgment Currency. If for the purpose of obtaining judgment in any court
it is necessary to convert any amount owing or payable to the Administrative
Agent or the Lenders under this Agreement from the currency in which it is due
(the "Agreed Currency") into a particular currency (the "Judgment Currency"),
the rate of exchange applied in that conversion shall be that at which the
Administrative Agent, in accordance with its normal procedures, could
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purchase the Agreed Currency with the Judgment Currency at or about noon on the
Business Day immediately preceding the date on which judgment is given. The
obligation of each Credit Party in respect of any amount owing or payable under
this Agreement to the Administrative Agent or Lenders in the Agreed Currency
shall, notwithstanding any judgment and payment in the Judgment Currency, be
satisfied only to the extent that the Administrative Agent, in accordance with
its normal procedures, could purchase the Agreed Currency with the amount of the
Judgment Currency so paid at or about noon on the next Business Day following
that payment; and if the amount of the Agreed Currency which the Administrative
Agent could so purchase is less than the amount originally due in the Agreed
Currency, such Credit Party shall, as a separate obligation and notwithstanding
the judgment or payment, indemnify the Administrative Agent and the Lenders
against any loss.
SECTION 12 -- GUARANTEE - PARENT GUARANTOR
12.1 Guarantee. The Parent Guarantor hereby agrees that it is liable for, and
hereby irrevocably and unconditionally guarantees to the Administrative Agent
and the Lenders and their respective successors and assigns, the full and prompt
payment when due (whether at stated maturity, by acceleration or otherwise) and
at all times thereafter, and performance, of all Obligations owed or hereafter
owing to the Administrative Agent and the Lenders by the Borrower. The Parent
Guarantor agrees that its guarantee obligation hereunder is a continuing
guarantee of payment and performance and not of collection, that its obligations
under this Section 12 shall not be discharged until payment and performance, in
full, of the Obligations has occurred and this Agreement has been terminated,
and that its obligations under this Section 12 shall be primary, absolute and
unconditional.
The obligations of the Parent Guarantor under Section 12 shall not be
satisfied, reduced, affected or discharged by any intermediate payment,
settlement or satisfaction of the whole or any part of the principal, interest,
fees and other money or amounts which may at any time be or become owing or
payable under or by virtue of or otherwise in connection with the Obligations
or the Loan Documents.
The Parent Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations and any amounts
expressed to be payable from the Parent Guarantor on the footing of this
guarantee shall be recoverable from the Parent Guarantor as a primary obligor
and principal debtor in respect thereof. The Parent Guarantor agrees that any
notice or directive given at any time to the Administrative Agent that is
inconsistent with the immediately preceding sentence shall be null and void and
may be ignored by the Administrative Agent, and, in addition, may not be pleaded
or introduced as evidence in any litigation relating to this guarantee for the
reason that such pleading or introduction would be at variance with the written
terms of this guarantee, unless the Administrative Agent has specifically agreed
otherwise in writing.
12.2 Waivers. The Parent Guarantor expressly waives all rights it may have now
or in the future under any statute, or at common law, or at law or in equity, or
otherwise, to compel the Administrative Agent or the Lenders to marshal assets
or to proceed in respect of the Obligations guaranteed hereunder against any
other Obligor, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
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proceeding against, the Parent Guarantor. It is agreed among the Parent
Guarantor, the Administrative Agent and the Lenders that the foregoing waivers
in this Section 12.2 and Section 12.1 are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, the Administrative Agent and
the Lenders would decline to enter into this Agreement.
12.3 Benefit of Guarantee. The Parent Guarantor agrees that the provisions of
this Section 12 are for the benefit of the Administrative Agent and the Lenders
and their respective successors, transferees, endorsees and assigns, and nothing
herein contained shall impair, as between the Borrower and the Administrative
Agent or the Lenders, the obligations of the Borrower under the Loan Documents.
12.4 Subordination of Subrogation, etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, the Parent Guarantor
hereby expressly and irrevocably subordinates to payment of the Obligations any
and all rights at law or in equity to subrogation, reimbursement, exoneration,
contribution, indemnification or set off and any and all defenses available to a
surety, guarantor or accommodation co-obligor until the Obligations are
indefeasibly paid in full in cash and this Agreement has been terminated. The
Parent Guarantor acknowledges and agrees that this subordination is intended to
benefit the Administrative Agent and the Lenders and shall not limit or
otherwise affect the Parent Guarantor's liability hereunder or the
enforceability of this Section 12, and that the Administrative Agent, the
Lenders and their respective successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 12.4.
12.5 Liability Cumulative. The liability of the Parent Guarantor under this
Section 12 is in addition to and shall be cumulative with all liabilities of the
Parent Guarantor to the Administrative Agent and the Lenders under this
Agreement and the other Loan Documents to which the Parent Guarantor is a party
or in respect of any Obligations or obligation of the Borrower, without any
limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.
12.6 Indemnification and Payment. As an original and independent obligation
under this Agreement, the Parent Guarantor shall:
(1) indemnify each of the Administrative Agent and the Lenders and keep
indemnified against any cost, loss, expense or liability of whatever kind
resulting from the failure by the Borrower to make due and punctual payment of
any of the Obligations or resulting from any of the Obligations being or
becoming void, voidable, unenforceable or ineffective against the Borrower other
than as a result of the wilful misconduct of the Administrative Agent and the
Lenders (including, but without limitation, all legal and other costs, charges
and expenses incurred by the Administrative Agent and the Lenders in connection
with preserving or enforcing, or attempting to preserve or enforce, their rights
under this Agreement); and
(2) pay on demand the amount of such cost, loss, expense or liability,
incurred in good faith, whether or not any of the Administrative Agent and the
Lenders have attempted to enforce any rights against the Borrower or any other
Person.
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12.7 Obligations Not Affected. The obligations of the Parent Guarantor under
this Section 12 shall not be affected or impaired by any act, omission, matter
or thing whatsoever, occurring before, upon or after any demand for payment
hereunder (and whether or not known to the Parent Guarantor or any of the
Administrative Agent and the Lenders) which, but for this provision, might
constitute a whole or partial defence to a claim against the Parent Guarantor
hereunder or might operate to release or otherwise exonerate the Parent
Guarantor from any of its obligations hereunder or otherwise affect such
obligations, whether occasioned by default of the Administrative Agent or any of
the Lenders or otherwise, and the Parent Guarantor hereby irrevocably waives any
defence it may now or hereafter have in any way relating to any of the
foregoing, including, without limitation:
(1) any limitation of status or power, disability, incapacity or other
circumstance relating to any Obligor, including any insolvency, bankruptcy,
liquidation, reorganization, readjustment, composition, dissolution, winding-up
or other proceeding involving or affecting any Obligor;
(2) any irregularity, defect, unenforceability or invalidity in respect of
any indebtedness or other obligation of any Obligor under the Loan Documents or
any other document or instrument;
(3) any failure of any Obligor, whether or not without fault on their part,
to perform or comply with any of the provisions of this Agreement or the Loan
Documents or to give notice thereof to the Parent Guarantor;
(4) the taking or enforcing or exercising or the refusal or neglect to take
or enforce or exercise any right or remedy from or against any Obligor or their
respective assets or the release or discharge of any such right or remedies by
the Administrative Agent or the Lenders;
(5) the granting of time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to any Obligor;
(6) any amendment, restatement, variation, modification, supplement or
replacement of the Agreement, the Loan Documents or any other document or
instrument;
(7) any change in the ownership, control, name, objects, businesses, assets,
capital structure or constitution of any Obligor or, any merger or amalgamation
of any Obligor with any Person or Persons;
(8) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction or by any present or future action of any
Government Authority or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect, any of the
Obligations of the Parent Guarantor under this Agreement;
(9) the existence of any claim, set-off or other rights that the Parent
Guarantor may have at any time against the Borrower, the Administrative Agent
and the Lenders or any other Person, whether in connection with this Agreement,
the Loan Documents or otherwise; and
(10) any other circumstance (including, without limitation, any existence of
or reliance on any representation by the Administrative Agent, but excluding
complete, irrevocable payment) that
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might otherwise constitute a legal or equitable discharge or defence of the
Parent Guarantor under this Agreement or Loan Documents, including in respect of
its guarantee hereunder.
12.8 Dealing with Others. The Administrative Agent and the Lenders, without
releasing, discharging, limiting or otherwise affecting in whole or in part the
Parent Guarantor's obligations and liabilities hereunder and without the consent
of or notice to the Parent Guarantor may:
(1) grant time, renewals, extensions, compromises, concessions, waivers,
releases, discharges and other indulgences to any Obligor;
(2) amend, vary, modify, supplement or replace any Loan Document or any other
related document or instrument to which the Parent Guarantor is not a party;
(3) take or abstain from taking security or collateral from any Obligor or from
perfecting security or collateral of any Obligor;
(4) release, discharge, compromise, realize, enforce or otherwise deal with or
do any act or thing in respect of (with or without consideration) any and all
Collateral, mortgages or other security given by any Obligor or any third party
with respect to any of the Obligations or matters contemplated by this Agreement
or the other Loan Documents;
(5) accept compromises or arrangements from any Obligor;
(6) apply all money at any time received from any Obligor or from any
collateral upon such part of the Obligations as they may see fit or change any
such application in whole or in part from time to time as they may see fit; and
(7) otherwise deal with, or waive or modify their right to deal with any other
Obligor and all other Persons and securities as they may see fit.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized on June
__________, 2000.
LAC DES ILES MINES LTD.
By:_____________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
By:_____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President, Finance
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Address for Notice:
Lac des Iles Mines Ltd.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇, President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President Finance
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
NORTH AMERICAN PALLADIUM LTD.
By:_______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
By:________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President, Finance
Address for Notice:
North American Palladium Ltd.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇, President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President Finance
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, as Administrative
Agent
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Address for Notice:
Regarding Financial Covenants
Bank of Montreal
Global Distribution Service (Canada)
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Attention: ▇▇▇▇▇ ▇▇▇▇
Deal Specialist
for all other notices:
Bank of Montreal
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Services
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
ROYAL BANK OF CANADA, as Syndication
Agent
By:__________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
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Address for Notice:
Royal Bank of Canada
Project and Structured Finance
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE BANK OF NOVA SCOTIA, as
Documentation Agent
By:__________________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Director
Address for Notices:
The Bank of Nova Scotia
Bank Finance - Mining
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Attention: ▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
PERCENTAGE OF THE LENDERS
BANK OF MONTREAL
33% ($30,000,000)
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
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Address for Notice:
Regarding Financial Covenants
Bank of Montreal
Global Distribution Service (Canada)
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Attention: ▇▇▇▇▇ ▇▇▇▇
Deal Specialist
for all other notices:
Bank of Montreal
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Services
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE BANK OF NOVA SCOTIA
By:_________________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Director
Address for Notice:
The Bank of Nova Scotia
Bank Finance - Mining
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Attention: ▇▇▇ ▇▇▇▇▇▇
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33% (30,000,000)
By:______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Address for Notice:
Royal Bank of Canada
Project and Structured Finance
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Exhibit 1.1(20) - Form of Borrower Completion Certificate
[DATE]
Bank of Montreal, as Administrative Agent
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Distribution
Re: Borrower Completion Date Certificate
Lac des Iles Mines Ltd.
Ladies and Gentlemen:
This certificate is delivered pursuant to Section 7.1(12) of the Credit and
Guarantee Agreement, dated as of May 18, 2000 (as amended, supplemented, amended
and restated, restructured or otherwise modified from time to time, including
any refinancing in whole or in part thereof, the "Credit Agreement"), among Lac
des Iles Mines Ltd., a corporation formed under the laws of Canada (the
"Borrower"), the Parent Guarantor, certain commercial lending institutions (the
"Lenders"), Bank of Montreal, as administrative agent (the "Administrative
Agent"), Royal Bank of Canada as syndication agent and The Bank of Nova Scotia
as documentation agent. All terms used in this certificate which are defined in
the Credit Agreement shall have their respective meanings set forth in the
Credit Agreement, unless otherwise defined herein.
The Borrower hereby certifies to the Administrative Agent and Lenders as
follows:
1. The Project achieved Physical Completion on ____________.
2. As of the date hereof, the Debt Service Reserve Account is funded in
the amount of US$_________, being 100% of the Target Amount.
3. Attached hereto is a calculation of the Debt Service Coverage Ratio as
of the date hereof for the Test Period, as required in accordance with the
definition of "Completion" under the Credit Agreement. Such Debt Service
Coverage Ratio exceeds 1.25:1.00.
4. As of the date hereof, no Default or Event of Default has occurred and
is continuing.
5. To the best of our knowledge all Transaction Documents are in full
force and effect.
6. The Project has been in operation for not less than 90 consecutive
days (the "Test Period") and during such Test Period:
1.1(20) - 1
(a) Tonnage of ore produced by the mine was not less than 1,300,000
tonnes and the tonnage of waste and low grade ore stockpiled was
at least 90% of the tonnage as set-out in the Development Plan;
(b) Tonnage accepted as feed to the new 15,000 tonnes per day mill
(the "New Mill") was not less than 1,300,000 tonnes of which not
less than 80% was breccia ore;
(c) Weighted average mill head grade for palladium was not less than
90% of the grades set out in the Development Plan for the Test
Period;
(d) Weighted average palladium recovery was not less than 95% of the
Development Plan levels for the Test Period;
(e) Cash Operating Cost Per Tonne of Ore Milled for the ore milled
through the New Mill was not more than 110% of the Development
Plan levels for the Test Period;
(f) Cash Operating Cost Per Ounce of Accountable Palladium produced
by the New Mill was not more than 110% of the Development Plan
levels for the Test Period;
(g) Total value of the contained weights of palladium, platinum,
gold, copper, and nickel in concentrates, was not less than 90%
of the total value of the contained weights of the same metals in
the Development Plan for the Test Period and assuming in both
calculations, the metal prices as set out in the Feasibility
Study for the Test Period;
(h) Concentrates produced are of acceptable quality and the payable
metal assays for palladium, platinum, gold, copper, nickel and
cobalt conform to the approximate analyses or ranges thereof
under the smelter agreements assumed in the Development Plan;
additionally, the concentrates do not contain any deleterious
elements or compounds which would make the concentrate
unmarketable or subject to penalties beyond those assumed under
the smelter agreements in the Development Plan;
(i) There has been no more than 10% reduction in the diluted,
mineable ore reserves estimated in terms of (1) ore tonnes, (2)
palladium ore grade, and (3) contained palladium contained in the
Development Plan.
(j) [If both the original Mill and New Mill are operated during the
Test Period then following statement must be included in the
certificate:] At least 30 days prior to the beginning of the
Test Period, the Independent Engineer and Lenders agreed to the
operating and accounting procedures used to separate and identify
cost and metal production data from each mill as part of a
revised Development Plan. The operating and accounting
procedures specifically address the issues identified in Appendix
XX. The
1.1 (20) - 2
agreed upon operating and accounting procedures were adhered to
during the Test Period.
7. The foregoing conditions taking into account milling only at the New
Mill are representative of the expected performance of the New Mill and could
reasonably be sustainable over the life of the Project and the Development Plan
is achievable.
8. All equipment for measuring quantities and assays in the milling
operation for ores, concentrates, and tailings was operated, maintained and
calibrated in accordance with manufacturer's specifications prior to and during
the Test Period with proper documentation made available to the Independent
Engineer.
9. Each General Contractor has completed, to the satisfaction of the
Borrower in accordance with the provisions of the respective Construction
Contracts, all performance tests required by the respective Construction
Contract and has [select either (i) achieved the performance guarantees or (ii)
paid all liquidated damages due or which may become due pursuant to the
respective Construction Contracts].
10. The Project can be used for its intended purposes and operated in
accordance with the Transaction Documents, all applicable Government Rules and
Government Approvals.
11. The Borrower has received all Government Approvals and Non-Government
Approvals required to be obtained in connection with the operation of the
Project as contemplated by the Transaction Documents.
12. The Borrower has received from each General Contractor all as-built
drawings, system descriptions, engineering data, operations manuals, maintenance
manuals, operating procedures and spare parts, instrument and valve lists, and
instruction books, pursuant to the Construction Contract to which such General
Contractor is a party.
13. Each General Contractor has certified to the Borrower that all amounts
due to such General Contractor and due by such General Contractor to
subcontractors or others on account of the Project have been fully paid and
there is no dispute or proceeding in respect thereof.
14. The Palladium Sales Contract has a Qualifying Term of [_____] years
remaining as of the date hereof. [The Qualifying Term shall be at least 3 years
as of the Completion Date.]
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
________________, _____.
LAC DES ILES MINES LTD.
By:_____________________________________
Name: .
Title: .
By:_____________________________________
Name: .
Title: .
cc: Bank of Montreal
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Attention: Structured Finance--▇▇▇▇▇▇▇ ▇▇▇▇▇
Appendix XX
1. Identification of accountable metallurgical balances for palladium
recovery, concentrate production and grade is absolutely critical in the
Test Period. Given that the PGM final concentrate will be combined before
filtering and shipment to the smelters methodologies and procedures to
accomplish this must be agreed to.
2. Proper allocation and documentation of operating costs (on a per tonne of
ore and per ounce of palladium) between the two milling operation for
labour, consumables, maintenance materials, operating supplies, G&A
labour/expenses, and possibly certain fixed costs such as off-site
overheads.
3. If ore is placed in and reclaimed from stockpiles going to the two milling
operations, a procedure to account for ore tonnes and grades going to each
mill must be agreed to.
Exhibit 1.1(21) - Form of Borrower Construction Certificate
[DATE]
Bank of Montreal, as Administrative Agent
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Distribution
Re: Borrower Construction Certificate
Lac des Iles Mines Ltd.
Ladies and Gentlemen:
This Certificate is delivered pursuant to Section 5.2(4) of the Credit
and Guarantee Agreement, dated as of May 18, 2000 (as amended, supplemented,
amended and restated, restructured or otherwise modified from time to time,
including any refinancing in whole or in part thereof, the "Credit Agreement"),
among Lac des Iles Mines Ltd., a corporation formed under the laws of Canada
(the "Borrower"), the Parent Guarantor, certain commercial lending institutions,
Bank of Montreal as administrative agent (the "Administrative Agent"), Royal
Bank of Canada as syndication agent and The Bank of Nova Scotia as documentation
agent. Unless otherwise defined herein or the context otherwise requires, terms
used herein have the meanings provided in the Credit Agreement.
This Certificate is being delivered in connection with a Borrowing
Request of even date herewith (the "Current Borrowing Request").
The undersigned, ______________________________, in his capacity as the
_______________________ of Borrower, hereby certifies (on behalf of the
Borrower) to the Administrative Agent and the Lenders as follows:
1. The construction of the Project to date has been performed in
accordance with the Construction Contracts and the related construction
contracts. The Borrower believes in good faith that it is reasonable to believe
that Completion is achievable by the Date Certain. The Borrower currently
expects Physical Completion and Completion to occur on or about _____________
and ______________, respectively.
2. The Project has not been materially injured or damaged by fire or
other casualty which injury or damage, as of the date hereof, has not been
restored, and no other Loss has occurred.
3. Schedule I attached hereto sets forth the names of the Persons to
whom the proceeds of the Loans being requested by the Current Borrowing Request
(the "Current Loans") will be paid. Schedule I also sets forth the amounts paid
to each such Person, a brief description of the work performed, services
rendered, materials supplied or other purpose for
which such payment was made. Copies of the invoices for which such payments
described in Schedule I are being provided to the Administrative Agent
concurrently herewith.
4. The Borrower has reviewed the work performed, services rendered and
materials delivered pursuant to the Construction Contracts for which the Current
Loans are being requested (either directly or in reliance on sources of
information deemed reliable by the Borrower) and the Borrower believes that the
amounts which have been paid or to be paid are appropriately payable (and, in
the case of payments being made to the General Contractors, are being made in
accordance with the provisions of the Construction Contracts). The proceeds of
the Current Loans will not be used to make a payment on account of (a) any
holdbacks as required under the Construction Lien Act (Ontario) or (b) any
retained percentages or amount in dispute which the Borrower as of the date
hereof is entitled to retain or withhold.
5. The aggregate amount of the unborrowed portion of the Commitment
Amount [prior to September 30, 2000 add - and the Equity Amount] is not less
than the amount which the Borrower reasonably expects to be necessary to pay all
remaining unpaid Project Costs to achieve Completion.
6. There has not been and the Borrower has not projected a Cost Overrun.
7. Attached hereto or previously supplied to the Administrative Agent are
the following:
(a) all subsearches, legal opinions and such other documents as may be
required by any Lender to confirm the priority of the Mortgage as a Lien
prior to all other Liens except for Liens permitted under Section 7.2(3) of
the Credit Agreement;
(b) all invoices, statements, supporting schedules, contracts, change
orders, subcontracts, and other information pertinent to the foregoing.
8. A list of all Change Orders made or submitted since the date of the
last Borrowing is attached hereto. All Change Orders required to be submitted
to the Administrative Agent have been so submitted.
The Borrower hereby acknowledges and agrees that the delivery of this
Borrower Construction Certificate constitutes a representation and warranty by
the Borrower that, on the date this Borrower Construction Certificate is
delivered, all statements set forth in Section 5.2(1) of the Credit Agreement
are true and correct in all material respects.
Very truly yours,
LAC DES ILES MINES LTD.
By: _____________________________________
Name: .
Title: .
By:______________________________________
Name: .
Title: .
cc: Bank of Montreal
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Attn: Structured Finance--▇▇▇▇▇▇▇ ▇▇▇▇▇
Exhibit 1.1(23) - Form of Borrowing Request
Bank of Montreal
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Distribution
Re: Lac des Iles Mines Ltd.
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 2.3 of
the Credit and Guarantee Agreement, dated as of May 18, 2000 (together with all
amendments, if any, from time to time made thereto, the "Credit Agreement"),
among Lac des Iles Mines Ltd., a corporation formed under the laws of Canada
(the "Borrower"), the Parent Guarantor, certain financial institutions, Bank of
Montreal as administrative agent (the "Administrative Agent"), Royal Bank of
Canada as syndication agent and The Bank of Nova Scotia as documentation agent.
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that a Loan be made in the aggregate
principal amount of US$__________ on __________, 20___ as to US$__________ and
on __________, 20___ as to US$__________ as a [LIBO Rate Loan having an Interest
Period of _______ months] [USBR].
The Borrower hereby acknowledges that, pursuant to Section 5.2(2) of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, (i) all statements set forth in Section 5.2(1) are true
and correct in all material respects, and (ii) between the date hereof and the
date of the previous Borrowing Request [or, if the initial Borrowing Request,
the Effective Date] no event has occurred, which alone or together with other
events, could reasonably be expected to have a Material Adverse Effect.
The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify the Administrative Agent.
Except to the extent, if any, that prior to the time of the Borrowing requested
hereby the Administrative Agent shall receive written notice to the contrary
from the Borrower, each matter certified to herein shall be deemed once again to
be certified as true and correct at the date of such Borrowing as if then made.
Please transfer the proceeds of the Borrowing to the Project Costs
Account of the Borrower.
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this ___ day of ___________, _____.
LAC DES ILES MINES LTD.
By:________________________________________
Name: .
Title: .
By:________________________________________
Name: .
Title: .
Exhibit 1.1(54) - Form of Continuation/Conversion Notice
Bank of Montreal
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Distribution
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to Section
2.4 of the Credit and Guarantee Agreement, dated as of May 18, 2000 (together
with all amendments, if any, from time to time made thereto, the "Credit
Agreement"), among Lac des Iles Mines Ltd., a corporation formed under the laws
of Canada (the "Borrower"), the Parent Guarantor, certain financial
institutions, Bank of Montreal as administrative agent (the "Administrative
Agent"), Royal Bank of Canada as syndication agent and The Bank of Nova Scotia
as documentation agent. Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided in the Credit
Agreement.
The Borrower hereby requests that on ____________, _______,
(1) $___________ of the presently outstanding principal amount of the Loans
originally made on __________, 20___ [and $__________ of the presently
outstanding principal amount of the Loans originally made on __________, 19___],
(2) and all presently being maintained as/1/ [USBR Loans] [LIBO Rate
Loans],
(3) be [converted into] [continued as],
(4) LIBO Rate Loans having an Interest Period of ______ months [USBR
Loans].
The Borrower hereby:
(a) certifies and warrants that no Default has occurred and is continuing;
and
(b) agrees that if prior to the time of such continuation or conversion any
matter certified to herein by it will not be true and correct at such time as if
then made, it will immediately so notify the Administrative Agent.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Administrative Agent shall receive written
notice to the contrary from the Borrower, each matter certified to herein shall
be deemed to be certified at the date of such continuation or conversion as if
then made.
____________________
/1/ Select appropriate interest rate option.
1.1(54)-1
The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Authorized Officer this ___ day of _________, ______.
LAC DES ILES MINES LTD.
By:
--------------------------------
Name: .
Title: .
By:
--------------------------------
Name: .
Title: .
1.1(54)-2
Exhibit 1.1(103) - Form of Independent Engineer Completion Certificate
[DATE]
Bank of Montreal, as Administrative Agent
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Distribution
Re: Independent Engineer's Completion Certificate
Lac des Iles Mines Ltd.
Ladies and Gentlemen:
This certificate is delivered pursuant to Section 7.1(12) of the Credit and
Guarantee Agreement, dated as of May 18, 2000 (as amended, supplemented, amended
and restated, restructured or otherwise modified from time to time, including
any refinancing in whole or in part thereof, the "Credit Agreement"), among Lac
des Iles Mines Ltd., a corporation formed under the laws of Canada (the
"Borrower"), the Parent Guarantor, certain commercial lending institutions (the
"Lenders"), Bank of Montreal as administrative agent (the "Administrative
Agent"), Royal Bank of Canada as syndication agent and The Bank of Nova Scotia
as documentation agent. All terms used in this certificate which are defined in
the Credit Agreement shall have their respective meanings set forth in the
Credit Agreement, unless otherwise defined herein.
The undersigned is the Independent Engineer identified in the Credit
Agreement and, in such capacity, does hereby certify to the Administrative Agent
and Lenders as follows:
1. The Project achieved Physical Completion on ___________.
2. To the knowledge of the Independent Engineer, as of the date hereof no
Default or Event of Default has occurred and is continuing.
3. The Project has been in operation for not less than 90 consecutive
days (the "Test Period") and during such Test Period:
(a) Tonnage of ore produced by the mine was not less than
1,300,000 tonnes and the tonnage of waste and low grade ore
stockpiled was at least 90% of the tonnage as set-out in the
Development Plan;
(b) Tonnage accepted as feed to the new 15,000 tonnes per day mill
(the "New Mill") was not less than 1,300,000 tonnes of which not
less than 80% was breccia ore;
1.1(103)-1
(c) Weighted average mill head grade for palladium was not less than
90% of the grades set out in the Development Plan for the Test
Period;
(d) Weighted average palladium recovery was not less than 95% of the
Development Plan levels for the Test Period;
(e) Cash Operating Cost Per Tonne of Ore Milled for the ore milled
through the New Mill was not more than 110% of the Development
Plan levels for the Test Period;
(f) Cash Operating Cost Per Ounce of Accountable Palladium produced
by the New Mill was not more than 110% of the Development Plan
levels for the Test Period;
(g) Total value of the contained weights of palladium, platinum,
gold, copper, and nickel in concentrates, was not less than 90%
of the total value of the contained weights of the same metals in
the Development Plan for the Test Period and assuming in both
calculations, the metal prices as set out in the Feasibility
Study for the Test Period;
(h) Concentrates produced are of acceptable quality and the payable
metal assays for palladium, platinum, gold, copper, nickel and
cobalt conform to the approximate analyses or ranges thereof
under the smelter agreements assumed in the Development Plan;
additionally, the concentrates do not contain any deleterious
elements or compounds which would make the concentrate
unmarketable or subject to penalties beyond those assumed under
the smelter agreements in the Development Plan;
(i) There has been no more than 10% reduction in the diluted,
mineable ore reserves estimated in terms of (1) ore tonnes, (2)
palladium ore grade, and (3) contained palladium contained in the
Development Plan.
(j) [If both the original Mill and New Mill are operated during the
Test Period then following statement must be included in the
certificate:] At least 30 days prior to the beginning of the
Test Period, the Independent Engineer and Lenders agreed to the
operating and accounting procedures used to separate and identify
cost and metal production data from each mill as part of a
revised Development Plan. The operating and accounting
procedures specifically address the issues identified in Appendix
XX. The agreed upon operating and accounting procedures were
adhered to during the Test Period.
4. The foregoing conditions taking into account milling only at the New
Mill, in the reasonable opinion of the Independent Engineer, are representative
of the expected performance of the New Mill and could reasonably be sustainable
over the life of the Project and the Development Plan is achievable.
1.1(103)-2
5. All equipment for measuring quantities and assays in the milling
operations for ores, concentrates, and tailings was operated, maintained and
calibrated in accordance with manufacturer's specifications prior to and during
the Test Period with proper documentation made available to the Independent
Engineer.
6. Each General Contractor has completed, to the satisfaction of the
Independent Engineer in accordance with the provisions of the respective
Construction Contracts, all performance tests required by the respective
Construction Contract and has [select either (i) achieved the performance
guarantees or (ii) paid all liquidated damages due or which may become due
pursuant to the respective Construction Contracts].
7. The Borrower has received all Government Approvals and Non-Government
Approvals required to be obtained in connection with the operation of the
Project as contemplated by the Transaction Documents.
8. The Borrower has received from each General Contractor all as-built
drawings, system descriptions, engineering data, operations manuals, maintenance
manuals, operating procedures and spare parts, instrument and valve lists, and
instruction books, pursuant to the Construction Contract to which such General
Contractor is a party.
9. Each General Contractor has certified to the Borrower that all amounts
due to such General Contractor and due by such General Contractor to
subcontractors or others on account of the Project have been fully paid and
there is no dispute or proceeding in respect thereof.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
________________, _____.
[INDEPENDENT ENGINEER]
By:________________________________
Name: .
Title: .
I. The Independent Engineer has reviewed the report containing the
results of the Performance Tests, provided pursuant to [Section .] of
the Construction Contract and finds such report satisfactory.
II. The date of Final Completion of the Facility is _______________, 2000.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the
____ day of _____________, 20___.
1.1(103)-4
[INDEPENDENT ENGINEER]
By:________________________________
Name: .
Title: .
1.1(103)-4
Appendix XX
1. Identification of accountable metallurgical balances for palladium
recovery, concentrate production and grade is absolutely critical in the
Test Period. Given that the PGM final concentrate will be combined before
filtering and shipment to the smelters methodologies and procedures to
accomplish this must be agreed to.
2. Proper allocation and documentation of operating costs (on a per tonne of
ore and per ounce of palladium) between the two milling operation for
labour, consumables, maintenance materials, operating supplies, G&A
labour/expenses, and possibly certain fixed costs such as off-site
overheads.
3. If ore is placed in and reclaimed from stockpiles going to the two milling
operation, a procedure to account for ore tonnes and grades going to each
mill must be agreed to.
1.1(103)-5
Exhibit 1.1(104) - Form of Independent Engineer Construction Certificate
[DATE]
Bank of Montreal, as Administrative Agent
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Distribution
Re: Independent Engineer Construction Certificate
Lac des Iles Mines Ltd.
Ladies and Gentlemen:
This certificate is based upon our review conducted in accordance with the
scope of our services as Independent Engineer and the understanding and
assumption that the Independent Engineer has been provided true, correct and
complete information from the Borrower, the General Contractors and such other
parties as to matters covered by this certificate. This certificate is
delivered pursuant to Section 5.2(4) of the Credit and Guarantee Agreement,
dated as of May 18, 2000 (as amended, supplemented, amended and restated,
restructured or otherwise modified from time to time, including any refinancing
in whole or in part thereof, the "Credit Agreement"), among Lac des Iles Mines
Ltd., a corporation formed under the laws of Canada (the "Borrower"), the Parent
Guarantor, certain commercial lending institutions (the "Lenders"), Bank of
Montreal as administrative agent (the "Administrative Agent"), Royal Bank of
Canada as syndication agent and The Bank of Nova Scotia as documentation agent.
Terms used in this certificate which are defined in the Credit Agreement shall
have their respective meanings set forth in the Credit Agreement, unless
otherwise defined herein.
The Independent Engineer hereby certifies to the Administrative Agent and
the Lenders as of the date hereof that:
1. We have reviewed the material and data made available to us by the
Borrower. We have completed a review of the technical specifications to the
Construction Contracts and each related construction contract. Our review and
observations were performed in accordance with generally accepted engineering
practice and included such investigation, observation and review as we in our
professional capacity deemed necessary in the circumstances. We have also
reviewed the Borrower Construction Certificate dated _______________, _____ (the
"Current Certificate"), including any appendices, schedules and requisitions
and/or invoices attached thereto or delivered therewith.
2. To the extent practicable, we have verified that the information set
forth in this request for payment for materials procured is and has been true
and correct and work performed under this drawdown has been performed in
accordance with the respective Construction Contracts and each related
construction contract.
1.1(104)-1
3. Based upon our review of the aforementioned information and data
provided to us by others, we are of the opinion that, as of the date hereof:
(a) Completion is achievable by the Date Certain. The Independent
Engineer currently expects Physical Completion and Completion to occur on
or about ___________ and ____________, respectively.
(b) The aggregate amount of the unborrowed portion of the Commitment
Amount [prior to September 30, 2000 add - and the Equity Amount] is not
less than the amount reasonably expected to be necessary to pay all
remaining unpaid Project Costs to achieve Completion (as defined in the
Credit Agreement).
(c) The aggregate amount of Project Costs incurred to date are not in
excess of the corresponding amounts set forth in the Construction Budget,
except as set forth on Schedule I hereto.
(d) Construction of the Project to date has been performed in
compliance with the technical specifications set forth in the Construction
Contracts and the related construction contracts and in accordance with
Government Approvals.
(e) We believe that the work performed under the Construction
Contracts as of the date hereof has been performed in a good and
workmanlike manner and in accordance with generally accepted engineering
and construction and project management practices; and the construction
work is proceeding within the [Contract Price (as defined in the respective
Construction Contracts)] and, to the best of our knowledge, each General
Contractor has no claim pending for any change in the [Substantial
Completion Date (as defined in the respective Construction Contracts)] or
the respective Contract Price. The work is being performed in accordance
with the Construction Contracts subject to the approved change orders.
(f) The major construction and mechanical activities during the period
covered by this Certificate and the progress of the construction of the
Project are proceeding in accordance with the Construction Contracts and
each related construction contract.
(g) We are not aware that any Force Majeure Event (as defined in each
of the Construction Contracts) has occurred.
(h) Except as set forth on the Current Borrower Certificate, to the
best of our knowledge, all Approvals to be Obtained listed in Schedule 6.5
of the Credit Agreement which need to have been obtained by the date hereof
have been so obtained, and are in full force and effect as of the date
hereof. To the best of our knowledge, there is no proceeding pending or
threatened that could rescind, terminate, modify or suspend any Government
Approval held by the Borrower, the result of which could have a Material
Adverse Effect. Such Government Approvals are not subject to any material
difference inconsistent in any material respect with the transactions, the
plans and specifications set forth in the Construction Contracts and the
related construction contracts and operations contemplated by the Material
Project Contracts. We have no reason to believe that any
1.1(104) - 2
Approval to be Obtained which has not as yet been obtained will not be
granted to the Borrower in a timely manner, as contemplated by the Credit
Agreement.
(i) The Project has not been materially injured or damaged by fire or
other casualty which, as of the date hereof, has not been restored, and no
Loss has occurred.
(j) We are not aware that any Default has occurred and is continuing
or exists on the date hereof, nor has anything come to our attention which
would cause us to believe that a Default will occur as a result of the
Loans requested pursuant to the Current Borrower Certificate.
(k) We are not aware that any event, act or condition regarding or
affecting the Borrower or the Project has occurred and is continuing or
exists which could reasonably be expected to have a Material Adverse
Effect.
(l) The list of all Change Orders made or submitted since the date of
the last Borrowing attached to the Current Certificate is true, correct and
complete. All Change Orders required by the Credit Agreement to be
submitted to the Administrative Agent have been so submitted.
4. A list of all Change Orders made or submitted since the date of the
last Borrowing is attached hereto.
5. The person signing this Certificate is a duly qualified representative
of the Independent Engineer and as such is authorized to execute this
Certificate on behalf of the Independent Engineer.
Sincerely,
[INDEPENDENT ENGINEER]
By:________________________________
Name: .
Title: .
cc: Bank of Montreal
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Attn: Structured Finance--▇▇▇▇▇▇▇ ▇▇▇▇▇
1.1(104) - 3
Exhibit 1.1(121) - Form of Lender Assignment Agreement
[DATE]
[Name of Lender]
Attention:
Bank of Montreal, as Administrative Agent
Global Distribution Services (Canada)
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Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Manager, Global Distribution
Re: Lender Assignment Agreement
Lac des Iles Mines Ltd.
Gentlemen and Ladies:
We refer to Section 11.8(1) of the Credit and Guarantee Agreement, dated as
of May 18, 2000 (together with all amendments and other modifications, if any,
from time to time thereafter made thereto, the "Credit Agreement"), among Lac
des Iles Mines Ltd., a corporation formed under the laws of Canada (the
"Borrower"), the Parent Guarantor, certain financial institutions, Bank of
Montreal as administrative agent (the "Administrative Agent"), Royal Bank of
Canada as syndication agent and The Bank of Nova Scotia as documentation agent.
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
This agreement is delivered to you pursuant to Section 11.8(1) of the
Credit Agreement and also constitutes notice to each of you, pursuant to the
Credit Agreement, of the assignment and delegation to _______________ (the
"Assignee") of ___% of the Loans and Commitments of _____________ (the
"Assignor") outstanding under the Credit Agreement on the date hereof. After
giving effect to the foregoing assignment and delegation, the Assignor's and the
Assignee's Percentages for the purposes of the Credit Agreement are set forth
opposite such Person's name on the signature pages hereof.
The Assignee hereby acknowledges and confirms that it has received a copy
of the Credit Agreement and the exhibits related thereto, together with copies
of the documents which were required to be delivered under the Credit Agreement
as a condition to the making of the Loans thereunder. The Assignee further
confirms and agrees that in becoming a Lender and in making its Commitments and
Loans under the Credit Agreement, such actions have and will be made without
recourse to, or representation or warranty by the Administrative Agent.
1.1(121) - 1
Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Administrative Agent
(1) the Assignee
(a) shall be deemed automatically to have become a party to the Credit
Agreement, have all the rights and obligations of a "Lender" under the
Credit Agreement and the other Loan Documents as if it were an original
signatory thereto to the extent specified in the second paragraph hereof;
and
(b) agrees to be bound by the terms and conditions set forth in the Credit
Agreement and the other Loan Documents as if it were an original signatory
thereto; and
(2) the Assignor shall be released from its obligations under the Credit
Agreement and the other Loan Documents to the extent specified in the
second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Administrative Agent the processing fee referred to in Section
11.8(1) of the Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitments and requests the
Administrative Agent to acknowledge receipt of this document:
(A) Address for Notices:
Institution Name:
Attention:
Telephone:
Facsimile:
(B) Payment Instructions:
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
Adjusted Percentage
-------------------
[ASSIGNOR]
Commitment By:____________________________
and Name: .
Loans: ___% Title: .
1.1(121) - 2
Adjusted Percentage
------------------- [ASSIGNEE]
Commitment By:_____________________________
and Name: .
Loans: ___% Title: .
Accepted and Acknowledged
this __ day of _______, 19__
Bank of Montreal, as Administrative Agent
By:______________________________________
Name: .
Title: .
1.1(121) - 3
Schedule 7.1(5) - Required (Minimum) Insurance
An owner-controlled insurance program will be maintained including as Insureds
the Borrower, the Administrative Agent and Lenders.
Solely during the construction period including the Test Period the contractor,
all subcontractors and consultants to the preceding (on-site activities only)
shall also be included as Insureds.
(All figures shown below are in Cdn$)
1. Construction Period: From the commencement of construction until the
--------------------
conclusion of the Test Period (including start-up and commissioning)
the Borrower shall maintain:
A. Construction Property Damage Coverage
-------------------------------------
(i) The policy will provide indemnification for 'All Risks' of
physical loss or damage including mechanical and electrical
breakdown during testing and commissioning, and earthquake
and flood, to the Project including all equipment and
materials forming part of the Project.
(ii) Limits of Liability and Deductibles:
Limit $145,000,000
Annual Aggregate $100,000,000 (Applicable to Flood)
Annual Aggregate $100,000,000 (Applicable to Earthquake)
Sublimits:
Inland Transit $ 10,000,000
Demolition/Incr. Cost $ 2,000,000
Off-Site Storage $ 2,000,000
Extra and Expediting Exp. $ 2,000,000
Debris Removal $ 2,000,000
Professional Fees $ 500,000
Deductibles: $ 20,000 (All Other
Perils)
$ 150,000 (Testing and
Commissioning)
$ 100,000 (Earthquake
and Flood)
7.1(5) - 1
(iii) Principal Exclusions
. defect in design, workmanship, or material
but limited to that particular part of the
property insured which is defective - it
being understood that resultant damage is
covered
. wear and tear, excepting resultant damage
. liquidated damages for delay or detention or
in connection with guarantees of performance
. licensed vehicles, watercraft, aircraft,
. currency, money, precious metals in bullion
form, notes or securities
. war, civil war, invasion, act of foreign
enemy - but terrorism, sabotage, malicious
damage are not excluded
. pollution except destruction of or damage to
the property insure caused by: a) pollution
which results from an insured peril; (b) an
insured peril which results from pollution
(iv) Additional Coverage Features
. no exclusion for dams or ▇▇▇▇▇
. inland transit coverage and off-site (unnamed
locations) storage
. replacement cost coverage
. no coinsurance penalties
. policy continues in force until Operational
cover placed
. currency clause
. marine 50/50 clause (if there is separate
property damage and marine cargo insurance)
. inland transit coverage including loading and
unloading and debris removal
. errors and omissions extension
B. Delayed Opening Coverage (including consequential loss and
----------------------------------------------------------
increased costs to avoid delay)
-------------------------------
(i) The policy will provide indemnification for the loss of
anticipated Gross Profits if caused by physical loss or
damage indemnified under 1 A. (above) causing a delay,
interference or interruption of the (construction) Project.
7.1(5) - 2
(ii) Limit of Liability$ $25,000,000 (12 Month Indemnity
Period)
(iii) Deductible(s): Waiting Period 20 days 48 hours
Waiting Period for Service
Interruption
(iv) Principal Exclusions
. Interference by strikers except for vandalism
and malicious damage
. fines or penalties for breach of or for late
or non-completion of orders
. penalties of any nature
(v) Additional Coverage Features
. on - and off-premises service interruption
extension
. ingress / egress extension
. contingent / suppliers extension (limited to
the territories of Canada and the United
States)
C. Construction Wrap-up Liability Coverage
---------------------------------------
(i) The policy will cover on an 'occurrence' basis the Insureds
legal obligations for bodily injury, death, personal
injury, or property including loss of use, sudden and
accidental pollution, non-owned automobile, employers' and
contingent employers' liability.
(ii) Limit of Liability $ 25,000,000 Each Occurrence
(iii) Deductible(s): $ 2,500 Property Damage
Only
(iv) Principal Exclusions
. liability of the insured under workers
compensation statutes
. aircraft, watercraft of specified weight
classes, licensed automobiles
. gradual pollution
. nuclear liability
7.1(5) - 3
(iv) Additional Coverage Features
. cross liability and severability of interest
. products and 24 months competed operations
. employees as Additional Insureds
. broad form property damage
. contractual liability
. legal costs in addition to the policy limits
D. Automobile Insurance
---------------------
(i) The automobile insurance policy will include coverage for bodily
injury, death and property damage liability with a $2,000,000 combined
single limit of liability per occurrence covering all automobiles
owned, rented, leased, or licensed by the Borrower or for the use of
any employee of the Borrower.
E. Mobile (Mining) Equipment Insurance
-----------------------------------
(i) The policy will provide indemnification for 'All Risks' of
physical loss or damage to mining equipment owned, rented or leased by
the Borrower or for which the Borrower may be otherwise responsible.
F. Transit/Marine Cargo Insurance
------------------------------
(i) the policy will cover all cargoes and freight, which are the
property of the Borrower or at the risk of the Borrower. Coverage
extends to conveyance of any type including vessel, air, rail, road
and post. The valuation shall be the invoice amount plus all charges
not included therein, plus 10%.
(ii) Additional Coverage Feature
Delayed Opening as a result of loss in transit.
G. Professional Liability / Errors an Omissions Insurance
------------------------------------------------------
(i) The General Contractor will maintain professional
liability/error and omission insurance with a limit of $1,000,000.
2. Operating Period: From the commencement of operations following
----------------
Completion (conclusion of start-up and commissioning) the Borrower
shall maintain:
A. Property and Business Interruption Insurance
--------------------------------------------
7.1(5) - 4
(v) The policy will provide indemnification for 'All Risks'
(including earthquake and flood) of property damage,
machinery breakdown and business interruption.
(ii) Limits of Liability and Deductibles:
Limits:
Property Damage $145,000,000
Annual Aggregate $100,000,000 (Applicable to
Flood)
Annual Aggregate $100,000,000 (Applicable to
Earthquake)
Business Interruption $25,000,000 (12 month indemnity
period)
Sublimits:
Inland Transit $2,000,000
Demolition/Incr. Cost $2,000,000
Off-Site Storage $2,000,000
Extra and Expediting $2,000,000
Debris Removal $2,000,000
Professional Fees $ 500,000
Account Receivable $2,000,000
Valuable Papers and $2,000,000
Records
Deductibles: $ 20,000 (All Other Perils)
$ 150,000 (Boilers and
Machinery)
$ 100,000 (Earthquake and
Flood)
Time Element Deductibles:
Waiting Period 20 days; 48 hours
Waiting Period for Service
Interruption
(iii) Principal Exclusions
. defect in design, workmanship, or material
but limited to that particular part of the
property insured which is defective - it
being understood that resultant damage is
covered
. wear and tear, excepting resultant damage
. licensed vehicles, watercraft, aircraft
7.1(5) - 5
. currency, money, precious metals in bullion
form, notes or securities
. war, civil war, invasion, act of foreign
enemy - but terrorism, sabotage, malicious
damage are not excluded
. pollution except destruction of or damage to
the property insure caused by: a) pollution
which results from an insured peril; (b) an
insured peril which results from pollution
(iv) Additional Coverage Features
. no exclusion for dams or ▇▇▇▇▇
. no mining limitation provisions
. inland transit coverage and off-site (unnamed
locations) storage
. replacement cost coverage
. no coinsurance penalties
. 90 days notice of cancellation except for
non-payment of premiums (15 days)
. currency clause
. marine 50/50 clause (between property damage
and marine cargo insurance)
. inland transit coverage including loading
. and unloading and debris removal
. errors and omissions extension
B. Commercial General Liability
----------------------------
(i) The policy will cover on an occurrence basis the Insureds
legal obligations for bodily injury, death, personal injury,
or property including loss of use, sudden and accidental
pollution, non-owned automobile, employers' and contingent
employers' liability.
(ii) Limit of Liability $ 25,000,000 Each Occurrence
(vi) Deductible(s): $ 2,500 Property Damage
Only
(iv) Principal Exclusions
. liability of the insured under workers
compensation statutes
. aircraft, watercraft of specified weight
classes, licensed automobiles
. gradual pollution
7.1(5) - 6
. nuclear liability
(v) Additional Coverage Features
. cross liability and severability of interests
. products and competed operations
. employees as Additional Insureds
. broad form property damage
. contractual liability
. legal costs in addition to the policy limits
C. Automobile Insurance
--------------------
(i) The automobile insurance policy will include coverage for bodily
injury, death and property damage liability with a $2,000,000 combined
single limit of liability per occurrence covering all automobiles
owned, rented, leased, or licensed by the Borrower or for the use of
any employee of the Borrower.
D. Mobile (Mining) Equipment Insurance
-----------------------------------
(i) The policy will provide indemnification for 'All Risks' of
physical loss or damage to mining equipment owned, rented or leased by
the Borrower or for which the Borrower may be otherwise responsible.
7.1(5) - 7