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EXHIBIT 1.01
AMENDMENT NO. 1 TO CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 1997
BETWEEN
HYCROFT RESOURCES & DEVELOPMENT, INC.
AS THE BORROWER,
AND
THE BANK OF NOVA SCOTIA,
AS THE LENDER.
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AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment No. 1"),
dated as of September 30, 1997, between HYCROFT RESOURCES & DEVELOPMENT, INC.,
a Nevada corporation (the "Borrower"), and THE BANK OF NOVA SCOTIA (the
"Lender").
WITNESSETH:
WHEREAS, the Borrower and the Lender are parties to that certain
Credit Agreement, dated as of February 20, 1997 (as the same has been from
time-to-time amended, hereinafter referred to as the "Existing Credit
Agreement"); and
WHEREAS, the Borrower has requested that certain amendments be made to
the Existing Credit Agreement; and
WHEREAS, the Lender is willing to make certain amendments to the
Existing Credit Agreement on the terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 CERTAIN DEFINITIONS. The following terms (whether or not
underscored) when used in this Amendment No. 1 shall have the following
meanings:
"Amended Credit Agreement" means the Existing Credit Agreement as
amended by this Amendment No. 1.
"Amendment No. 1 Effective Date" has the meaning provided in Section
5.1.
SECTION 1.2 OTHER DEFINITIONS. Unless otherwise defined or the context
otherwise requires, terms used herein (including in the preamble and recitals
hereto) have the meanings provided for in the Existing Credit Agreement.
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ARTICLE II.
AMENDMENTS TO
EXISTING CREDIT AGREEMENT
Effective on the Amendment No. 1 Effective Date, the Existing Credit
Agreement is amended in accordance with the terms of this Article II except as
so amended, the Existing Credit Agreement shall continue to remain in all
respects in full force and effect.
SECTION 2.1 AMENDMENTS TO SECTION 1.1.
(a) The definition of "Capital Stock" in the Existing Credit
Agreement is deleted and the following definition is inserted in its
place:
"Capital Stock" means, relative to any Person, any and ah
shares, interests, participations, rights or other equivalents
(however designated) of corporate stock, including partnership
interests, limited liability company membership interests,
participations quotas and other indicia of ownership of such
Person and all warrants, options, purchase rights, conversion
or exchange rights, voting rights, calls or any claims of any
character with respect thereto.
(b) The definition of "Change in Control" in the Existing Credit
Agreement is amended by deleting the word "or" at the end of subsection
(c), deleting the period at the end of subsection (d) and replacing it
with a semicolon and adding the following subsections (e), (f) and (g):
"(e) the failure of Parent to own (legally or
beneficially, or directly or indirectly), free and clear of
all Liens or other encumbrances, at least 100% of the
outstanding shares of Voting Stock of Yamin on a fully diluted
basis; or
(f) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30%
or more of the outstanding shares of Voting Stock of Parent;
or
(g) any amalgamation, merger, consolidation or similar
transaction affecting or involving Parent such that Parent is
not the surviving and controlling entity."
(c) The definition of "Guaranty" in the Existing Credit Agreement
is deleted and the following definition is inserted in its place:
"Guaranty" means, as the context may require, the Parent
Guaranty, the Holdings Guaranty, the Preferred Shareholder
Guaranty, the Yamin Guaranty and/or any
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Subsidiary Guaranty, in each case as amended, supplemented,
amended and restated or otherwise modified.
(d) The definition of "Hedging Obligation" nu the Existing Credit
Agreement is deleted and the following definition is inserted in its
place:
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under Hedging Agreements, including
but not limited to obligations and liabilities arising in
connection with or as a result of early or premature
termination of a Hedging Agreement, whether or not occurring
as a result of a default thereunder.
(e) The definition of "Loan Document" in the Existing Credit
Agreement is deleted and the following definition is inserted in its
place:
"Loan Document" means this Agreement, the Note, each Borrowing
Request, each Continuation Conversion Notice, each Borrowing
Base Certificate, each Compliance Certificate, the Master
Subordination Agreement, each Pledge Agreement, each Hedging
Agreement between Parent, the Borrower or any of its
Subsidiaries and the Lender or any Affiliate of the Lender,
each Security Agreement, each Guaranty, each Mortgage, and
each other agreement, certificate, report, document or
instrument delivered in connection with this Agreement and
such other agreements, whether or not specifically mentioned
herein or therein.
(f) The definition of "Material Adverse Effect" in the Existing
Credit Agreement is amended by inserting "Yamin," after ",Holdings" in
subsection (a)
(g) The definition of "Mortgage" in the Existing Credit Agreement
is deleted and the following definition is inserted in its place:
"Mortgage" means each mortgage, deed of trust or agreement
executed and delivered by the Borrower or any other Obligor in
favor of the Lender pursuant to the requirements of this
Agreement in substantially the form of Exhibit I hereto, as
applicable, under which a Lien is granted on the Real Property
of the Borrower, such Obligor and each Subsidiary Guarantor
and fixtures and other property described therein, in each
case as amended, supplemented, amended and restated or
otherwise modified.
(h) The definition of "Obligations" in the Existing Credit
Agreement is deleted and the following definition is inserted in its
place:
"Obligations" means all obligations (monetary or otherwise) of
the Borrower and each other Obligor arising under or in
connection with this Agreement, the Notes and each other Loan
Document, including, without limitation, all Hedging
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Obligations arising under Hedging Agreements between Parent,
the Borrower or any of its Subsidiaries and the Lender or an
Affiliate of the Lender.
(i) The definition of "Obligor" in the Existing Credit Agreement
is deleted and the following definition is inserted in its place:
"Obligor" means the Borrower or any other Person (other than
the Lender) obligated under any Loan Document (including the
Parent, Holdings, Vista Gold U.S. Inc., Yamin and each
Subsidiary Guarantor).
(j) The definition of "Security Agreement" in the Existing Credit
Agreement is deleted and the following definition is inserted in its
place:
"Security Agreement" means, as the context may require, the
Borrower Security Agreement, the Yamin Security Agreement
and/or each Subsidiary Security Agreement, in each case as
amended, supplemented, amended and restated or otherwise
modified.
(k) The definition of "Stated Maturity Date" in the Existing
Credit Agreement is deleted and the following definition is inserted in
its place:
"Stated Maturity Date" means December 31, 1999 (as such date
may be extended pursuant to Section 2.8 and as such date may
be accelerated by virtue of any prepayment pursuant to Section
3.1).
(1) The definition of "Rate Protection Agreement" in the Existing
Credit Agreement is deleted and the following definition is inserted in
its place:
"Rate Protection Agreement" means, any currency exchange
agreement, interest or currency rate swap, cap, collar or
floor, forward rate agreement, basis swap agreement, and all
other similar agreements designed to protect a Person against
fluctuations in interest rates or currency exchange
(m) Section 1.1 of the Existing Credit Agreement is amended to add
the following defined terms in the proper alphabetical order:
"Amayapampa Project" means the (a) the properties
which comprise the Amayapampa property, located approximately
300 kilometers southeast of La Paz in ▇▇▇▇▇▇▇▇ Province,
Department of Potosi, in the south-central portion of the
Nation of Bolivia, and as described in the description of the
Mining Rights for the Amayapampa Mine on Schedule I hereto and
(b) those certain associated facilities, together with all
plant sites, waste dumps, ore dumps, crushing circuits, heap
▇▇▇▇▇ pads, abandoned heaps, power supply systems and
ancillary and
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infrastructure facilities thereat which are used in connection
with the operation thereof.
"Borrowing Base Reinstatement" means the reinstatement
of the Borrowing Base mechanism as set forth in Section 3.5.
"Excess Cash Flow" means, for the twelve-month period
ending December 31, 1998, the sum of: (a) net income of the
Borrower and its Subsidiaries, plus (b) non-cash expenses of
the Borrower and its Subsidiaries, minus (c) capital
expenditures paid by the Borrower or its Subsidiaries in
connection with the development and operation of the Hycroft
Mine, to the extent included in the approved Life of Mine Plan
and operating plan in effect from time-to-time for the Hycroft
Mine, plus (d) all fees or charges paid by the Borrower or any
of its Subsidiaries to Parent or any other Subsidiary of
Parent in respect of overhead, management or general
administrative services to the extent that the sum of such
payments exceeds $15,000 per month.
"Hedging Agreement" means
(a) any Rate Protection Agreement, and
(b) any forward contract, option, futures
contract, futures option, commodity swap, commodity
option, commodity collar, commodity cap, commodity
floor or any other agreement or arrangement designed
to protect a Person against fluctuations in the price
of commodities.
"Pledge Agreement - Yamin" means the Pledge Agreement
executed and delivered by Parent and ▇▇▇▇▇ ▇'▇▇▇▇▇▇, as
amended, supplemented, amended and restated or otherwise
modified.
"Vista Line of Credit" means that certain letter
agreement captioned "Establishment of Operating Credit
Facility in Favour of Vista Gold Corp." dated November 22,
1996, between Parent and the Lender, as amended by the Vista
Line of Credit Amendment, as the same may be, from time to
time, further amended, supplemented, amended and restated or
otherwise modified.
"Vista Line of Credit Amendment" means that amendment
dated as of September 30, 1997 to the Vista Line of Credit.
"Yamin" means Sociedad Industrial Yamin Limitada, a
limitada organized under the laws of the Nation of Bolivia,
and a wholly-owned Subsidiary of Parent.
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"Yamin Guaranty" means the Guaranty executed and
delivered by the Yamin pursuant to Section 4.1(b), as
amended, supplemented, amended and restated or otherwise
modified.
"Yamin Security Agreement" means the Security
Agreement executed and delivered by Yamin in favor of the
Lender pursuant to the terms of this Agreement, as amended,
supplemented, amended and restated or otherwise modified.
"Yamin Security Release" means the release or
termination of the Yamin Guaranty, the Yamin Security
Agreement, the Pledge Agreement - Yamin and the Mortgage from
Yamin pursuant to Section 3.5 hereof.
SECTION 2.2 AMENDMENTS TO SECTION 2.1.
(a) Section 2.1.1 of the Existing Credit Agreement is amended by
deleting the last sentence of such Section and inserting the following
sentence in its place:
"On the terms and subject to the conditions hereof, the
Borrower may from time to time borrow and prepay U.S. Loans,
but may not reborrow any amounts paid or prepaid."
(b) Section 2.1.2 of the Existing Credit Agreement is amended by
deleting the last sentence of such Section and inserting the following
sentence in its place:
"On the terms and subject to the conditions hereof, the
Borrower may from time to time borrow and prepay Canadian
Loans, but may not reborrow any amounts paid or prepaid."
SECTION 2.3 AMENDMENTS TO SECTION 2.2.
Section 2.2 of the Existing Credit Agreement is deleted and
the following is inserted in its place:
"Lender Not Permitted or Required To Make Credit Extensions.
After the earlier to occur of (i) the Yamin Security Release
or (ii) the Borrowing Base Reinstatement, the Lender shall not
be permitted or required to make any Credit Extension if,
after giving effect thereto, the Outstanding Amount would
exceed the lesser of (a) the Commitment Amount and (b) the
Borrowing Base Amount."
SECTION 2.4 AMENDMENTS TO SECTION 3.1.
(a) Section 3.1 (b) of the Existing Credit Agreement is amended by
deleting the existing Section 3.1 (b) and inserting the following in
its place:
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"(b) shall, on each date when any reduction in the Commitment
Amount shall become effective pursuant to Section 2.3, make a mandatory
prepayment of all Loans equal to the excess, if any, of the aggregate,
outstanding principal amount of all Loans over the Commitment Amount,
as so reduced; provided that if the Yamin Security Release or the
Borrowing Base Reinstatement has occurred on or before such date, the
mandatory prepayment of all Loans shall be equal to the excess, if any,
of the aggregate outstanding principal amount of Loans over the lesser
of (i) the Commitment Amount as so reduced and (u) the then existing
Borrowing Base Amount;"
(b) Section 3.1(c) of the Existing Credit Agreement is amended by
inserting the following before the beginning of the text thereof:
"after the earlier to occur of (i) the Yamin Security Release
or (ii) the Borrowing Base Reinstatement,"
(c) Section 3.1 of the Existing Credit Agreement is amended by
relettering Section 3.1(d) as Section 3.1(g) and inserting the
following new Sections 3.1(d), (e) and (f) immediately prior thereto:
"(d) shall, prior to the Yamin Security Release or the
Borrowing Base Reinstatement, commencing on the Monthly
Payment Date for January 1999 and ending on the Monthly
Payment Date for December 1999 (or such earlier date on which
all Loans have been paid in full), make a mandatory repayment
on each Monthly Payment Date equal to $1,083,333.33;
(e) shall, if the Yamin Security Release or the Borrowing Base
Reinstatement shall not have then occurred, on January 31,
1999, make a mandatory prepayment equal to 100% of all Excess
Cash Flow;
(f) shall, prior to the Yamin Security Release or the
Borrowing Base Reinstatement, immediately upon receipt
thereof, make a mandatory prepayment equal to 100% of the
gross proceeds from the sale or other disposition of any asset
owned by the Borrower, including without limitation, the
equipment listed on Schedule II hereto; provided that, solely
with respect to equipment (other than equipment listed on
Schedule II hereto), such proceeds shall be net of actual,
reasonable expenses which Borrower is required to pay and pays
to non-Affiliated brokers, agents, security-holders, lessors
or others with whom the Borrower has binding, arms-length
contractual obligations, and provided further, that the
Borrower shall not be obligated to pay over any proceeds from
the sale of equipment (i) which is replaced within 30 days,
(ii) is replaced by equipment having a value equal to or
greater than the value of the equipment sold or otherwise
disposed of and (iii) is necessary for the efficient operation
of the Hycroft Mine;"
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(d) Section 3.1 of the Existing Credit Agreement is amended by
deleting the last sentence thereof and inserting the following sentence
in its place:
"Each prepayment of Loans pursuant to this Section 3.1 shall
be applied, to the extent of such prepayment, in the inverse
order of maturity."
SECTION 2.5 AMENDMENTS TO SECTION 3.2.
Section 3.2.1 of the Existing Credit Agreement is amended by
deleting "1 %" in subsection (a) and replacing it with "one and
one-half percent (1.5%)", and deleting "1.5%" in subsection (b) and
replacing it with "two percent (2%)".
SECTION 2.6 NEW SECTION 3.5.
Article III of the Existing Credit Agreement is amended by
adding the following new Section 3.5 following the existing Section
3.4:
"SECTION 3.5. Yamin Security Release and Borrowing Base
Reinstatement.
(a) Upon the request and at the sole cost and expense of the
Borrower and if no Default shall have occurred and be
continuing, the Lender shall release or terminate the Yamin
Guaranty, the Yamin Security Agreement, the Pledge Agreement -
Yamin and the Mortgage from Yamin if, for the three (3)
consecutive months prior to such request, the Lender has
received Borrowing Base Certificates showing that the
Borrowing Base Amount in each of such months was greater than
or equal to the aggregate principal amount of all Credit
Extensions outstanding such that, if Section 3.1(c) were then
in effect, that no mandatory prepayment would have been
required for such month.
(b) Prior to the release of the security described in the
preceding Section 3.5(a), the reporting obligations of Section
7.1.1(c) shall be suspended, provided that the reports
required by Section 7.1.1(e) shall contain all information
about the operation of the Hycroft Mine reasonably requested
by the Lender, including operating costs, quantities of ore
placed on the pads, contained ounces of gold on the pad,
ounces of gold sold and the price received in respect of the
sale of such gold.
(c) If the Lender has not made Loans in the aggregate
principal amount of the Commitment Amount on or before January
2, 1998, then the borrowing base provisions of Sections 2.2.
3. 1(b)(ii). 3.1(c). and 7.1.1(c) of the Existing Credit
Agreement shall be immediately reinstated and any mandatory
repayment of Loans required thereby shall be made on such
day."
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SECTION 2.7 AMENDMENTS TO SECTION 7.2.
Section 7.2.2 of the Existing Credit Agreement shall be
amended by deleting the word "and" at the end of subsection (f)(ii)
thereof, inserting the word "and" at the end of subsection (g) thereof
and inserting a new subsection (h) thereafter as follows:
"(g) Indebtedness of the Borrower and its Subsidiaries to the
Lender represented by Guaranties given by the Borrower and its
Subsidiaries of the Vista Line of Credit;"
SECTION 2.8 AMENDMENTS TO SECTION 7.2.4.
Section 7.2.4 of the Existing Credit Agreement shall be
amended by deleting the existing Section 7.2.4 and inserting the
following in its place:
"SECTION 7.2.4 Financial Condition. The Borrower will not
permit at any time its Tangible Net Worth to be less than U.S.
$30,000,000; provided, that such amount shall be reduced
(dollar for dollar), subject to the following proviso, to the
extent (and only to the extent) such repayment is made with
proceeds from Borrowings made hereunder, by the amount of each
repayment of the intercompany Indebtedness of the Borrower
outstanding on the Effective Date and owing to the Parent and
permitted pursuant to clauses (b) and (c) of Section 7.2.2;
provided, further that, in any event, the aggregate amount of
ali such reductions pursuant to the foregoing proviso shall
not exceed U.S. $14,700,000."
SECTION 2.9 AMENDMENTS TO SECTION 8.1.
Section 8.1 of the Existing Credit Agreement is amended by
inserting a new Section 8.1.11 and a new Section 8.1.12 immediately
following existing Section 8.1.10 as follows:
"SECTION 8.1.11 Default on Vista Line of Credit. A default
shall occur in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any
Indebtedness of Parent under the Vista Line of Credit, or the
holder of such Indebtedness shall have given notice of a
default in the performance or observance of any obligation or
condition with respect to the Vista Line of Credit if the
effect of such default described in such notice is to
accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of
time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to
cause such Indebtedness to become due and payable.
SECTION 8.1.12 Default under Yamin Guaranty. Yamin Security
Agreement or Pledge Agreement - Yamin. A Default or Event of
Default shall occur under
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any of the Yamin Guaranty, the Yamin Security Agreement or the
Pledge Agreement - Yamin."
SECTION 2.10 AMENDMENTS TO SECTION 9.3.
Section 9.3 of the Existing Credit Agreement shall be amended
by deleting the word "and" at the end of subsection (b) thereof,
inserting the word "and" at the end of subsection (c) thereof and
inserting a new subsection (d) thereafter as follows:
"(d) evaluations, investigations, assessments, or reports
undertaken by engineers or other technical experts reasonably
requested by the Lender at any time and from time to time
relating to any collateral security for the Obligations."
SECTION 2.11 AMENDMENTS TO SCHEDULES AND EXHIBITS.
(a) Schedule III to the Existing Credit Agreement is deleted and a
new Schedule III in the form attached hereto as Schedule III is
inserted in its place.
(b) Schedule 1V to the Existing Credit Agreement is deleted and a
new Schedule IV in the form attached hereto as Schedule IV is inserted
in its place.
(c) Attachment 1 to Exhibit E to the Existing Credit Agreement is
deleted and a new Attachment 1 in the form attached hereto as
Attachment 1 is inserted in its place.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to make the amendments provided for in
Article II, the Borrower hereby
(a) acknowledges and agrees that, immediately prior to the
Amendment No. 1 Effective Date, the aggregate outstanding principal
amount of all U.S. Loans is $9,300,000.00, and the aggregate
outstanding principal amount of all Canadian Loans is $0.00;
(b) represents and warrants that the Borrower has full power
and authority to execute, deliver and perform its obligations under
this Amendment No. 1 and all other Loan Documents delivered to Lender
in connection herewith, and this Amendment No. 1 and all such Loan
Documents are the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms;
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(c) represents and warrants, that each of the representations
and warranties contained in the Existing Credit Agreement and in the
other Loan Documents is true and correct as of the date hereof as if
made on the date hereof (except, if any such representation and
warranty relates to an earlier date, such representation and warranty
shall be true and correct in all material respects as of such earlier
date) and Borrower has performed each of the covenants and agreements
in the Existing Credit Agreement and the other Loan Documents required
to be performed by Borrower as of the date hereof; and
(d) There is no Default or Event of Default by Borrower or
any other Obligor under the Existing Credit Agreement or any other Loan
Document and no event exists which, with the giving of notice or the
passage of time or both, would give rise to a Default or Event of
Default by Borrower or any other Obligor under the Existing Credit
Agreement or any Loan Document, except that, but for the execution,
delivery and effectiveness of this Amendment, the Borrower would be
obligated to make a mandatory prepayment of Loans because the
outstanding amount of all Loans exceeds the Borrowing Base Amount.
ARTICLE IV.
COVENANTS
SECTION 4.1 Affirmative Covenants. In order to induce the Lender to
enter into this Amendment and to amend the Credit Agreement as provided herein,
the Borrower hereby agrees to perform the obligations set forth in this Section
4.1 by NOVEMBER 12, 1997:
(a) Pledge of Yamin Ownership Interest. The Lender shall receive
counterparts of Pledge Agreement - Yamin, substantially in the form of Exhibit
B to this Amendment No. 1, duly executed and delivered on behalf of Parent and
▇▇▇▇▇ ▇'▇▇▇▇▇▇ (who holds legal title to a 20% interest in Yamin in trust for
the benefit of Parent), and the Lender, together with (i) the certificates, if
any, evidencing all of the issued and outstanding Capital Stock of Yamin
pledged pursuant to the Pledge Agreement - Yamin, which certificates shall in
each case be accompanied by undated stock powers, or equivalent instruments,
duly executed in blank, and (ii) all Pledged Notes (as defined in such Pledge
Agreement), if any, evidencing Indebtedness payable to Parent, duly endorsed to
the order of the Lender.
(b) Guaranty from Yamin. The Lender shall receive counterparts of
the Yamin Guaranty, duly executed and delivered on behalf of Yamin,
substantially in the form of Exhibit A-1 to this Amendment No. 1.
(c) Yamin Security Agreement. The Lender shall receive counterparts of
the Yamin Security Agreement, substantially in the form of Exhibit C to this
Amendment No. 1, duly executed and delivered on behalf of Yamin and the Lender,
together with
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(i) acknowledgment copies of properly filed Uniform
Commercial Code financing statements (Form UCC-1), dated a date
reasonably near to the Amendment No. 1 Effective Date, or such other
evidence of filing as may be acceptable to the Lender, naming the
Yamin, as the debtor and the Lender as the secured party, or other
similar instruments or documents, filed under the Uniform Commercial
Code of ali jurisdictions as may be necessary or, in the opinion of the
Lender, desirable to perfect the security interest of the Lender
pursuant to the Yamin Security Agreement;
(ii) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens
(other than Liens of the type described in clause (f) of the definition
of "Permitted Lien", if any) and other rights of any Person
(A) in any collateral described in the Yamin
Security Agreement previously granted by any Person, or
(B) securing any of the Indebtedness identified in
item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure
Schedule,
together with such other Uniform Commercial Code Form UCC-3 termination
statements as the Lender may reasonably request from Yamin; and
(iii) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11 or Form UCC-2), or a similar search
report certified by a party acceptable to the Lender, dated a date
reasonably near to the Amendment No. 1 Effective Date, listing ali
effective financing statements which name Yamin (in each case, under
its present name and any previous names) as the debtor and which are
filed in the jurisdictions in which filings were made pursuant to
clause (a) above, together with copies of such financing statements
(none of which (other than (x) those described in clause (a), if such
Form UCC-11 or search report, as the case may be, is current enough to
list such financing statements described in clause (a) and (y) those in
respect of Liens of the type described in clause (f) of the definition
of "Permitted Lien") shall cover any collateral described in the Yamin
Security Agreement).
(d) Mortgage from Yamin. The Lender shall receive counterparts of
a Mortgage, substantially in the form of Exhibit D to this Amendment No. 1,
with respect to the Real Property comprising the Amayapampa Project, dated as
of the Amendment No. 1 Effective Date, duly executed and delivered by Yamin,
together with
(i) evidence of the completion (or satisfactory
arrangements for the completion) of all recordings
and filings of such Mortgage as may be necessary or,
in the reasonable opinion of the Lender, desirable
effectively to create a valid, perfected first
priority Lien against the properties purported to be
covered thereby;
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(ii) evidence of the title of Yamin to such Real Property
in the form of a title opinion from reputable counsel in Bolivia
acceptable to the Lender, in form and substance satisfactory to the
Lender and its legal counsel, which opinion will show title of Yamin
in such Real Property satisfactory to the Lender and its legal counsel
and that Yamin has placed of record in the Offices of the Registry of
Real Property and the Registry of Commerce such instruments, in form
satisfactory to the Lender and its legal counsel, necessary to perfect
the Lien and security interest granted by the Yamin in such Real
Property and in the other Collateral described in (and as such term is
defined in) such Mortgage; and
(iii) such other approvals, opinions (including an opinion of
reputable counsel in Bolivia as to the enforceability of the Yamin
Guaranty, the Yamin Security Agreement and the Yamin Mortgage under
Bolivian laws), or documents as the Lender may reasonably request.
SECTION 4.2 REMOVAL OF LIENS. The Borrower hereby agrees that, by
November 5, 1997, it will cause to be removed all Liens (in favor of parties
other than the Lender) against the Hycroft Mine or any portion thereof that
purport to secure Indebtedness in excess of the amount stated in Section
7.2.3(d) of the Existing Credit Agreement.
SECTION 4.3 EVENT OF DEFAULT. Borrower's failure to satisfy all of the
covenants set forth in (i) Section 4.1 hereof on or prior to November 19, 1997
and (ii) Section 4.2 on or prior to November 5, 1997 shall constitute an Event
of Default.
ARTICLE V.
CONDITIONS TO EFFECTIVENESS
SECTION 5.1 EFFECTIVE DATE. This Amendment No. 1 shall become
effective on SEPTEMBER 30, 1997, or, if later, the date (herein called the
"Amendment No. 1 Effective Date") when the conditions set forth in this Section
5.1 have been satisfied.
(a) Execution of Counterparts. The Lender shall have received
counterparts of this Amendment No. 1 duly executed and delivered on behalf of
the Borrower and the Lender.
(b) Amendments to Existing Security Documents. The Lender shall
have received counterparts of amendments to the Master Subordination Agreement
and each of the Pledge Agreements, each duly executed and delivered on behalf
of the applicable Obligor and the Lender, substantially in the forms of
Exhibits E and F to this Amendment No. 1.
(c) Guaranty from the Borrower. The Lender shall have received
counterparts of the Borrower Guaranty, each duly executed and delivered on
behalf of the Borrower, substantially in the form of Exhibit A-2 to this
Amendment ▇▇. ▇.
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(▇) Amendments to Guaranties. The Lender shall have received
counterparts of amendments to each of the Parent Guaranty, the Holdings
Guaranty, the Preferred Shareholder Guaranty and each Subsidiary Guaranty, each
duly executed and delivered on behalf of the applicable Obligor and the Lender,
substantially in the form of Exhibit G to this Amendment No. 1.
(e) Assignment of Hedging Agreements. The Lender shall have received
counterparts of Hedging Agreements, duly executed and delivered on behalf of
the Borrower and counter parties acceptable to the Lender, that will ensure
that a price of not less than (i) US$340/ounce of gold will be realized from
the sale by the Borrower of at least 100,000 ounces of gold produced from the
Hycroft Mine in each of the years 1998 and 1999, and (u) US$325/ounce of gold
will be realized from the sale by the Borrower of at least 30,000 ounces of
gold produced from the Hycroft Mine in the year 2000. Each of such Hedging
Agreements shall have been collaterally assigned to the Lender pursuant to
documents in form and substance satisfactory to the Lender and its counsel.
(f) Vista Line of Credit Amendment. The Lender shall have received
counterparts of Vista Line of Credit Amendment duly executed and delivered on
behalf of Parent and the Lender, substantially in the form of Exhibit H to this
Amendment No. 1.
(g) Opinions. Certificates. etc. The Lender shall have received
such certificates and opinions of counsel as the Lender shall have reasonably
requested.
(h) Compliance with Warranties. No Default. etc. The following
statements shall be true and correct
(i) the representations and warranties set forth in
Article VI of the Existing Credit Agreement (excluding, however, those
contained in Section 6.7), Article III of each Guaranty, Article III
of each Pledge Agreement, Article III of each Security Agreement,
Article I of each Mortgage and Section 10 of the Master Subordination
Agreement shall be true and correct with the same effect as if then
made (unless stated to relate solely to an early date, in which case
such representations and warranties shall be true and correct as of
such earlier date);
(ii) except as disclosed by the Borrower to the Lender
pursuant to Section 6.7 of the Existing Credit Agreement
(A) no labor controversy, litigation, arbitration
or governmental investigation or proceeding
shall be pending or, to the knowledge of the
Borrower, threatened against the Parent,
Holdings, Yamin, the Borrower or any of its
Subsidiaries which might reasonably be
expected to have a Material Adverse Effect,
and
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(B) no material adverse development shall have
occurred in any labor controversy, litigation, arbitration or
governmental investigation or proceeding disclosed pursuant to
Section 6.7 which might reasonably be expected to have a
Material Adverse Effect; and
(iii) no Default or Event of Default shall have then occurred
and be continuing, and neither the Parent, Holdings, Yamin, the
Borrower, any other Obligor, nor any Subsidiary is in material
violation of any law or governmental regulation or court order or
decree.
(i) Borrowing Request. The Lender shall have received a Borrowing
Request for any Credit Extension requested on the Amendment No. 1 Effective
Date.
(j) Closing Fees. Expenses. etc. The Lender shall have received
all reasonable costs and expenses due and payable pursuant to Sections 3.4 and
9.3 of the Existing Credit Agreement, if then invoiced.
(k) Legal Details. etc. All documents executed or submitted
pursuant hereto, and ali legal matters incident thereto, shall be satisfactory
in form and substance to the Lender and its counsel.
SECTION 5.2 EXPIRATION. If all of the conditions set forth in Section
5.1 hereof shall not have been satisfied on or prior to October 29, 1997, the
agreements of the parties contained in this Amendment No. 1 shall, unless
otherwise agreed by the Lender, terminate effective immediately on such date
and without further action.
ARTICLE VI.
APPROVAL OF MINE PLAN
The revised Hycroft Mine Plan dated as of July, 1997, and attached
hereto as Schedule V is hereby approved by the Borrower and the Lender.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1 LOAN DOCUMENT PURSUANT TO EXISTING CREDIT AGREEMENT. This
Amendment No. 1 is a Loan Document executed pursuant to the Existing Credit
Agreement. Except as expressly amended or waived hereby, all of the
representations, warranties, terms, covenants and conditions contained in the
Existing Credit Agreement and each other Loan Document shall remain unamended
and in full force and effect. The amendments set forth herein shall be limited
precisely as provided for herein and shall not be deemed to be a waiver of,
amendment of, consent to or modification of any other term or provision of the
Existing
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Credit Agreement or of any term or provision of any other Loan Document or of
any transaction or further or future action on the part of the Borrower or
which would require the consent of the Lender under the Existing Credit
Agreement or any other Loan Document.
SECTION 7.2 COUNTERPARTS, ETC. This Amendment No. 1 may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement with the same effect as if all parties hereto had signed the same
signature page. Any signature page of this Amendment No. 1 may be detached from
any identical counterpart of this Amendment No. 1 having attached to it one or
more additional signature pages.
SECTION 7.3 GOVERNING LAW: ENTIRE AGREEMENT.
THIS AMENDMENT NO. 1 SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 7.4 TITLES AND HEADINGS. The titles and headings of the
Sections of this Amendment No. 1 are intended for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Amendment No. 1.
SECTION 7.5 CHANGES AND MODIFICATIONS IN WRITING. No provision of this
Amendment No. 1 may be changed or modified except by an instrument in writing
signed by the party against whom enforcement of the change or modification is
sought.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be executed by their respective officers hereunto duly authorized as of the
day and year first above written.
BORROWER
HYCROFT RESOURCES & DEVELOPMENT INC., A
Nevada corporation
By: /s/ ▇▇▇▇▇▇▇ B RI CHINGES
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Title: Director
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By: /s/ ▇▇ ▇▇▇
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Title: VP Finance & CFO
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LENDER
THE BANK OF NOVA SCOTIA
By: /s/ ▇▇▇ ▇▇▇▇▇▇
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Title: Manager
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