1
Exhibit 10.1
AS OF JUNE 29, 2000
--------------------
HECLA MINING COMPANY
as Borrower
STANDARD BANK LONDON LIMITED
as Lender
----------------------------
SUBORDINATED LOAN AGREEMENT
----------------------------
ASHURST ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Tel: ▇▇▇ ▇▇▇▇ ▇▇▇▇
Fax: ▇▇▇ ▇▇▇▇ ▇▇▇▇
TCW/627S00008/1769431
2
INDEX
1. DEFINITIONS; INTERPRETATION 1
1.1 Defined Terms 1
1.2 Use of Defined Terms 11
1.3 Accounting and Financial Determinations 11
1.4 Change in Accounting Principles 11
1.5 General Provisions as to Certificates and Opinions, etc. 11
1.6 Interpretation 12
2.COMMITMENTS AND PROCEDURES FOR MAKING THE LOAN; CONTINUATION PROCEDURES 13
2.1 Commitments; Making The Loan 13
2.2 Continuation Elections 14
2.3 Records 14
2.4 Funding 14
3.PRINCIPAL PAYMENTS; INTEREST; CAPITALISATION OF INTEREST; FEES 15
3.1 Principal Payments 15
3.1.1 Scheduled Repayments 15
3.1.2 Prepayments - Voluntary 15
3.1.3 Principal Payments Generally 15
3.2 Interest Payments 15
3.2.1 Rate 16
3.2.2 Post-Maturity Rate 16
3.2.3 Payment Dates; Calculation of Interest 16
3.2.4 Rate Determinations 16
3.2.5 Capitalization of Interest 17
3.2.6 Payments Subject to Subordination 17
4.INCREASED COSTS; TAXES; MARKET DISRUPTIONS; GENERAL PAYMENT PROVISIONS 18
4.1 Dollars Unavailable 18
4.2 Increased Costs, etc. 18
4.3 Funding Losses 19
4.4 Increased Capital Costs 19
4.5 Illegality 20
4.6 Taxes 21
4.7 Mitigation 21
4.8 Payments, Computations, etc. 22
4.9 Set-off 22
4.10 Application of Proceeds 23
5. CONDITIONS PRECEDENT TO MAKING LOANS 23
5.1 In General 23
5.1.1 Resolutions, etc. 23
5.1.2 Subordination Agreement; MHV Guaranty 24
5.1.3 Borrowing Notice 24
5.1.4 Process Agent Acceptance 24
5.1.5 Opinions 24
5.1.6 Closing Expenses, etc. 25
5.1.7 Compliance with Warranties, No Defaults, etc. 25
3
6. REPRESENTATIONS AND WARRANTIES 25
6.1 Organization, Power, Authority, etc. 25
6.2 Due Authorization; Non-Contravention 26
6.3 Validity, etc. 26
6.4 Legal Status 26
6.5 Financial Information 26
6.6 Absence of Default 27
6.7 Litigation, etc. 27
6.8 Materially Adverse Effect 27
6.9 Taxes and Other Payments 27
6.10 Subsidiaries 28
6.11 Environmental Warranties 28
6.12 ERISA Liabilities 28
6.13 Regulations T, U and X 29
6.14 Government Regulation 29
7. COVENANTS 29
7.1 Informational and Financial Covenants 29
7.1.1 Financial Information, etc. 29
7.1.2 Defaults 30
7.1.3 Miscellaneous Information 30
7.1.4 Books and Records; Access 30
7.1.5 Accuracy of Information 31
7.2 Affirmative Covenants 31
7.2.1 Compliance with Laws, etc. 31
7.2.2 Maintenance of Corporate Existence 31
7.2.3 Payment of Taxes, etc. 31
7.2.4 Use of Proceeds 31
7.3 Negative Covenants 32
7.3.1 Business Activities; Place of Business; Organic Documents; Fiscal Year 32
7.3.2 ERISA Plans 32
7.3.3 Consolidation, Merger, etc 32
8. EVENTS OF DEFAULT 32
8.1 Events of Default 33
8.1.2 Non-Performance of Certain Covenants 33
8.1.3 Non-Performance of Other Obligations 33
8.1.4 Breach of Representation or Warranty 33
8.1.5 Default on other Indebtedness 33
8.1.6 Bankruptcy, Insolvency, etc. 33
8.1.7 Impairment of Loan Documents 34
8.1.8 Judgments 34
8.1.9 Change in Control 35
8.1.10 Materially Adverse Effect 35
8.2 Action if Bankruptcy 35
8.3 Action if Other Event of Default 35
9. MISCELLANEOUS 35
9.1 Waivers, Amendments, etc 35
9.2 Notices 36
9.3 Costs and Expenses 36
4
9.4 Indemnification 36
9.5 Survival 37
9.6 Severability 37
9.7 Headings 37
9.8 Counterparts; Effectiveness 37
9.9 Governing Law; Entire Agreement 38
9.10 Successors and Assigns 38
9.11 Sale and Transfer of the Loan; Participations in the Loan 38
9.12 Other Transactions 38
9.13 Forum Selection and Consent to Jurisdiction; Waiver of Immunity 39
9.14 Waiver of Jury Trial 40
5
SCHEDULES AND EXHIBITS
SCHEDULE I Disclosure Schedule
SCHEDULE II Additional Costs Rate
EXHIBIT A Borrowing Notice
EXHIBIT B Continuation Notice
EXHIBIT C MHV Guaranty
EXHIBIT D Subordination Agreement
EXHIBIT E-1 Opinion of Debevoise & ▇▇▇▇▇▇▇▇, New York counsel to the Lender
EXHIBIT E-2 Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President, General Counsel and
Secretary of Hecla Mining
EXHIBIT E-3 Opinion of ▇▇▇▇▇ Von ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Diquez, Venezuelan counsel
to MHV
EXHIBIT F Process Agent Acceptance
6
THIS SUBORDINATED LOAN AGREEMENT is dated as of June 29, 2000 (this "Agreement")
AMONG:-
(1) HECLA MINING COMPANY, a Delaware corporation ("Hecla Mining" or the
"Borrower"); and
(2) STANDARD BANK LONDON LIMITED, a bank organized under the laws of England
("Standard Bank"), as the lender (in such capacity, the "Lender").
WITNESSETH:-
WHEREAS, Hecla Mining and its Subsidiaries (such and other capitalized terms
used as defined in Section 1.1) are active in the exploration and development of
precious metals and industrial minerals in the United States and other
jurisdictions;
WHEREAS, Hecla Mining is party to the Facility Agreement dated March 24, 2000
(the "Senior Facility Agreement") among Hecla Mining, as borrower, Standard
Bank, as initial lender, Standard Bank, as collateral agent, and Standard Bank,
as administrative agent;
WHEREAS, in addition to the Indebtedness made available under the Senior
Facility Agreement, the Borrower has requested that the Lender make funds
available to it for general corporate purposes and the Lender is willing to make
such funds available to the Borrower on the terms and subject to the conditions
of this Agreement and the other Loan Documents;
WHEREAS, Minera Hecla Venezolana, C.A., a company organized under the laws of
Venezuela and a wholly owned indirect Subsidiary of the Borrower ("MHV") is
willing to guarantee the obligations of the Borrower to the Lender and it is a
condition precedent to the making of the Loans hereunder that MHV execute and
deliver the MHV Guaranty; and
WHEREAS, the Standard Bank, as administrative agent under the Senior Facility
Agreement (in such capacity, the "Senior Agent") is willing to permit the credit
accommodations contemplated by this Agreement, subject to the terms and
conditions of the Subordination Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy
whereof is hereby acknowledged by each party hereto, the parties hereto hereby
agree as follows:-
7
1. DEFINITIONS; INTERPRETATION
1.1 Defined Terms
The following terms, when used in this Agreement, including its preamble
and recitals, shall have the following meanings:
"Additional Costs Rate" means, for any Interest Period, the applicable
rate determined by the Lender in accordance with Schedule II.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls or is controlled by or under common control with such
Person (excluding any trustee under, or any committee with responsibility
for administering, any compensation, welfare or similar plan). A Person
shall be deemed to be "controlled by" any other Person if such other
Person possesses, directly or indirectly, power:
(a) to vote twenty percent (20%) or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors or managing general partners of such Person; or
(b) to direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"Agreement" is defined in the preamble.
"Applicable Law" means, with respect to any Person or matter, any
supranational, national, provincial, federal, state, regional or local
statute, law, rule, treaty, convention, regulation, order, decree or other
requirement relating to such Person or matter and, where applicable, any
interpretation thereof by any Governmental Agency having jurisdiction with
respect thereto or charged with the administration or interpretation
thereof (in each case, whether or not having the force of law, but if not
having the force of law, such statute, law, etc. being of the type with
which such Person would comply in the ordinary course of business).
"Applicable Margin" means four percent (4%) per annum.
"Approval" means each and every approval, authorization, license, permit,
consent, filing and registration by or with any Governmental Agency or
other Person necessary for the execution, delivery or performance of this
Agreement or any other Loan Document or for the validity or enforceability
hereof or thereof, whether or not referred to in Item 1 ("Approvals") of
the Disclosure Schedule.
"Authorized Representative" means those officers of the Obligors whose
signatures and incumbency shall have been certified pursuant to Section
5.1.1.
8
"Borrower" is defined in the preamble.
"Borrowing Date" means the Business Day on which the Loan is made pursuant
to Section 2.1.
"Borrowing Notice" means a loan request and certificate duly executed by
an Authorized Representative of the Borrower, substantially in the form of
Exhibit A hereto.
"Business Day" means:-
(a) any day which is not Saturday, Sunday, a legal holiday or any other
day on which banks are closed in London, England or New York, New
York; and
(b) relative to the making, continuing or the calculation of the LIBO
Rate, any day on which dealings in Dollars are carried on in the
London interbank market.
"Capitalized Lease Liabilities" means all monetary obligations of any
Person under any leasing or similar arrangement which, in accordance with
U.S. GAAP, would be classified as capitalized leases, and, for the
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with U.S. 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.
"Change in Control" means the occurrence of any of the following events:-
(a) any Person or two or more Persons acting as a group shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Act of 1934,
and including holding proxies to vote for the election of directors
other than proxies held by the Borrower's management or their
designees to be voted in favor of Persons nominated by the Borrower's
Board of Directors) of 25% or more of the outstanding voting
securities of Borrower, measured by voting power (including both
common stock and any preferred stock or other equity securities
entitling the holders thereof to vote with the holders of common
stock in elections for directors of Borrower);
(b) a majority of the directors of Borrower shall consist of Persons not
nominated by the Borrower's Board of Directors (not including as
Board nominees any directors which the Board is obligated to
nominate pursuant to shareholders agreements, voting trust
arrangements or similar arrangements); or
9
(c) the failure by the Borrower to own indirectly all of the share
capital (howsoever denominated) of MHV, free and clear of all Liens,
other than arising under the LaCamorra Credit Agreement.
"Commitment" means the Lender's obligation to make, maintain and continue
its Loan in an amount equal to the Commitment Amount in each case pursuant
to the terms and subject to the conditions of this Agreement.
"Commitment Amount" means U.S.$3,000,000, as may be reduced pursuant to
Section 2.1(d).
"Commitment Termination Date" means the earliest to occur of the
following:-
(a) July 14, 2000;
(b) the occurrence of any Enforcement Event;
(c) the Borrowing Date on which the Loan shall have been made pursuant to
Section 2.1; and
(d) the termination of the Commitments pursuant to Section 2.1(d).
"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise
to invest in, a debtor, or otherwise to assure a creditor against loss)
the indebtedness, obligation or any other liability of any other Person
(other than by endorsements of instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the
shares of any other Person. The amount of any Person's obligation under
any Contingent Liability shall (subject to any limitation set forth
therein) be deemed to be the outstanding principal amount (or maximum
principal amount, if larger) of the debt, obligation or other liability
guaranteed thereby.
"Continuation Notice" means a notice of continuation and certificate duly
executed by an Authorized Representative of the Borrower, substantially in
the form of Exhibit B attached hereto.
"Contractual Obligation" means, relative to any Person, any provision of
any security issued by such Person or of any Instrument or undertaking to
which such Person is a party or by which it or any of its property is
bound.
"Default" means any Event of Default or any condition or event which,
after notice, lapse of time, the making of any required determination or
any combination of the foregoing, would constitute an Event of Default.
10
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I.
"Dollar" and the sign "U.S.$" mean lawful money of the United States.
"Effective Date" is defined in Section 9.8.
"Enforcement Event" means either:-
(a) an Insolvency Event; or
(b) the occurrence of any other Event of Default and the acceleration of
the Obligations pursuant to Section 8.3.
"Environmental Law" means, with respect to any Person, any Applicable Law
relating to or imposing liability or standards of conduct concerning
public health and safety and the protection of the environment that is
applicable to such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means the Borrower and all members of a controlled group
of corporations and all trades or business (whether or not incorporated)
under common control that, together with the Borrower, are treated as a
single employer under Section 414 of the Internal Revenue Code.
"ERISA Plan" means any employee pension benefit plan subject to Title IV
or ERISA maintained by any ERISA Affiliate with respect to which any
Related Person has a fixed or contingent liability.
"Event of Default" is defined in Section 8.1.
"Facility" means the Loan and the financial accommodations made to the
Borrower in connection therewith.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System.
"Governmental Agency" means any supranational, national, federal, state,
regional or local government or governmental department or other entity
charged with the administration, interpretation or enforcement of any
Applicable Law.
"Hecla Mining" is defined in the preamble.
11
"Hedging Obligations" means, with respect to any Person, all liabilities
of such Person under commodity swap agreements, interest rate swap
agreements, interest rate cap agreements and interest rate collar
agreements, and all other agreements, options and arrangements designed to
protect such Person against fluctuations in interest rates, currency
exchange rates or metal prices.
"Impermissible Qualification" means, relative to the opinion or report of
any independent certified public accountant or any independent chartered
accountant as to any financial statement of either Obligor, any
qualification or exception to such opinion or report:
(a)which is of a "going concern" or similar nature;
(b) which relates to any limited scope of examination of matters relevant
to such financial statement which has resulted from any action of such
Obligor, the result of which is, directly or indirectly, to prevent
such accountant from making such examination as such accountant deems
appropriate.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money or metals (including
Gold) and all obligations evidenced by bonds, debentures, notes, or
other similar Instruments on which interest charges are customarily
paid;
(b) all obligations, contingent or otherwise, relative to the face amount
of all letters of credit, whether or not drawn, and bankers'
acceptances and similar instruments, in each such case 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 U.S. GAAP, recorded as Capitalized
Lease Liabilities;
(d)net payment liabilities of such Person under all Hedging Obligations;
(e) whether or not so included as liabilities in accordance with U.S.
GAAP, all obligations of such Person 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
(f) all Contingent Liabilities of such Person in respect of any of the
foregoing items which are the obligations of any other Person.
12
"Indemnified Liabilities" is defined in Section 9.4.
"Indemnified Parties" is defined in Section 9.4.
"Insolvency Event" means the occurrence of any Default described in
Section 8.1.6.
"Instrument" means any contract, agreement, indenture, mortgage, document
or writing (whether by formal agreement, letter or otherwise) under which
any obligation is evidenced, assumed, or undertaken, or any Lien (or right
or interest therein) is granted or perfected or purported to be granted or
perfected.
"Interest Payment Date" is defined in Section 3.2.5(b).
"Interest Period" means, relative to the Loan:
(a) initially, the period from the date such Loan was made on the
Borrowing Date to the day which numerically corresponds to such date
one, two, three or six months thereafter (or such other date as agreed
between the Lender and the Borrower but, subject at all times to the
provisions of Section 4.1);
(b) thereafter, each period from the last day of the immediately preceding
Interest Period applicable to the Loan to the day which numerically
corresponds to such date one, two, three or six months thereafter (or
such other date as agreed between the Lender and the Borrower and,
subject as provided in clause (a)) as the Borrower may irrevocably
select in the relevant Continuation Notice delivered pursuant to
Section 2.2;
provided, however, that:
(c) absent the timely selection of an Interest Period for the then
outstanding Loan, the Borrower shall be deemed to have selected an
Interest Period identical to that then in effect with respect to the
Loan;
(d) if such Interest Period for the Loan would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the
next following Business Day, unless such Business Day occurs in the
next following calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day;
(e) the Borrower shall not be permitted to select, and there shall not be
applicable, any Interest Period that would end later than the Maturity
Date;
(f) at any one time, there shall only be permitted to be in effect a
maximum of two Interest Periods with respect to the Loan; and
13
(g) the Lender shall be able to select Interest Periods satisfactory to it
pursuant to the terms and conditions of Section 3.2.2 or after any
Enforcement Event.
"La Camorra Credit Agreement" means the credit agreement, dated as of June
25, 1999, between (1) Hecla Resources Investments Limited, as borrower,
(2) MHV, as additional obligor, (3) the lenders party thereto and (4)
Standard Bank, as administrative agent and collateral agent.
"Lender" is defined in the preamble.
"Lending Office" means the office of the Lender designated as such below
its signature hereto or such other office of the Lender as may be
designated from time to time by notice from the Lender to the Borrower.
"LIBO Rate" means:-
(a) the rate (rounded upwards, if necessary, to the nearest four decimal
places) which is the offered rate at or about 11.00 a.m. two Business
Days prior to the relevant Interest Period for Dollar deposits for a
period equal to the relevant Interest Period which appears on the
display designated as the British Bankers' Association Interest
Settlement Rate as quoted on the Reuters' Screen page no. LIBOR = (or
such other page or service as may replace page no. LIBOR = of such
service (as the case may be) for the purpose of so displaying the
British Bankers' Association Interest Settlement Rate for London
interbank offered rates and, in the absence of any such replacement
page or service, such other page of such other service as the Lender
and the Borrower may agree, or
(b) if no relevant rate appears on Reuters' Screen page no. LIBOR = or if
such Reuters' Screen page is unavailable at the relevant time the
arithmetic mean (rounded upwards, if necessary, to the nearest four
decimal places) of the respective rates, as supplied to the Lender at
its request, quoted by the Reference Banks to prime banks in the
London Interbank Market at or about 11.00 a.m. two Business Days prior
to the relevant Interest Period in an amount comparable to the amount
of the Loans and for a period equal to the Interest Period for
delivery on the first day of that Interest Period.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, encumbrance, lien (statutory or otherwise), charge against or
interest in property to secure payment of a debt or performance of an
obligation or other priority or preferential arrangement of any kind or
nature whatsoever.
"Loan" means the Lender's loan under this Agreement, whatever outstanding
or to be made.
14
"Loan Documents" means, collectively, this Agreement, the MHV Guaranty,
the Subordination Agreement and each other Instrument executed by the
Obligors or any Affiliate of any thereof, evidencing any obligation
(monetary or otherwise) in connection with and pursuant to this Agreement
and the transactions contemplated hereby and representing obligations
incurred to any of the Finance Parties.
"Material Subsidiary" means any direct or indirect Subsidiary of the
Borrower designated as such in Item 3 ("Subsidiaries") of the Disclosure
Schedule and any other Subsidiary of the Borrower with assets in excess of
U.S.$1,000,000 (or its equivalent in any other currency).
"Materially Adverse Effect" means an effect, resulting from any occurrence
of whatever nature (including any adverse determination in any labor
controversy, litigation, arbitration or governmental investigation or
proceeding), which is materially adverse to the ability of either Obligor
to make any payment or perform any other material obligation required
under any Loan Document to which it is a party.
"Maturity" means, relative to the Loan, any date on which the Loan is
stated to be due and payable, in whole or in part, whether by required
repayment, prepayment, declaration or otherwise.
"Maturity Date" means June 30, 2004.
"MHV" is defined in the fourth recital.
"MHV Guaranty" means the Guaranty executed by MHV in favor of the Lender,
substantially in the form of Exhibit C attached hereto.
"Obligations" means all obligations of either Obligor with respect to the
repayment or performance of all obligations (monetary or otherwise)
arising under or in connection with the Facility.
"Obligors" means, collectively, the Borrower and MHV.
"Ordinary Rate" means the rate described in Section 3.2.1.
"Organic Document" means (a) in the case of the Borrower, its certificate
of incorporation and by-laws, (b) in the case of MHV, its estatutos and
(c) in the case of either Obligor, all shareholder agreements, voting
trusts and similar arrangements applicable to any of its authorized shares
of capital stock or other equity interests.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
15
"Post Maturity Rate" means the rate described in Section 3.2.2.
"Principal Amount" means the principal amount of the Loan, which shall
include for the avoidance of doubt any interest and other amounts accruing
thereon and capitalized pursuant to Section 3.2.5.
"Process Agent" is defined in Section 9.13.
"Process Agent Acceptance" means a letter from the Process Agent to the
Lender, substantially in the form of Exhibit F attached hereto.
"Regulatory Change" means the occurrence after the Effective Date of any
change in or
abrogation of, or introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of any:-
(a) statute, law, rule, or regulation applicable to the Lender, or
(b) guideline, interpretation, directive, consent decree, administrative
order, request or determination (whether or not having the force of
law but, if not having the force of law, such guideline, etc. being of
the type with which the Lender would comply in the ordinary course of
business) applicable to the Lender of any court, central bank or
governmental or regulatory authority charged with the interpretation
or administration of any statute, law, rule or regulation referred to
in clause (a) or of any fiscal, monetary, or other authority having
jurisdiction over the Lender.
"Related Person" means the Borrower and each Material Subsidiary.
"Requirement of Law" means, as to any Person, its Organic Documents and
any Applicable Law or Contractual Obligation binding on or applying to
such Person.
"Senior Agent" is defined in the fifth recital.
"Senior Facility Agreement" is defined in the second recital.
"Standard Bank" is defined in the preamble.
"Subordination Agreement" means the Agreement executed by the Senior
Agent, Standard Bank, as subordinated lender, and the Borrower,
substantially in the form of Exhibit D attached hereto.
"Subsidiary" means with respect to any Person, any corporation at least a
majority or more of the outstanding shares of capital stock of which
having ordinary voting power to elect a majority of the board of directors
or other governing body of such corporation (irrespective of
16
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time owned by such Person, by such Person and one
or more other Subsidiaries of such Person, or by one or more other
Subsidiaries of such Person.
"Tax Credit" is defined in Section 4.7(b).
"Tax Payment" is defined in Section 4.7(b).
"Taxes" means any present or future income, franchise, excise, stamp or
other taxes, fees, duties, withholdings or other charges of any nature
imposed by any taxing authority of any jurisdiction.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of
ERISA or (ii) any other reportable event described in Section 4043(b) of
ERISA other than a reportable event not subject to the provision for 30-
day notice to the Pension Benefit Guaranty Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA, or (b) the
withdrawal of any ERISA Affiliate from an ERISA Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan
or the treatment of any ERISA Plan amendment as a termination under
Section 4041 of ERISA, or (d) the institution of proceedings to terminate
any ERISA Plan by the Pension Benefit Guaranty Corporation under Section
4042 of ERISA, or (3) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any ERISA Plan.
"U.S. GAAP" is defined in Section 1.3.
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 this Agreement and each notice and other communication
delivered from time to time in connection therewith.
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 shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be
prepared in accordance with, generally accepted accounting principles in
the U.S. ("U.S. GAAP").
17
1.4 Change in Accounting Principles
If, after the Effective Date, there shall be any material change to either
Obligor's Fiscal Year, or in the application of the accounting principles
used in the preparation of the financial statements referred to in Section
6.5 as a result of the promulgation of rules, regulations, pronouncements
or opinions by agencies having jurisdiction over financial reporting and
accounting standards which changes result in a change in the method of
calculation of, or have an adverse impact on, financial covenants,
standards, or terms applicable to either Obligor found in this Agreement
or any other Loan Document, the Borrower and the Lender agree promptly to
enter into negotiations in order to amend such financial covenants,
standards or terms so as to reflect equitably such changes with the
desired result that the evaluations of such Obligor's financial condition
shall be the same after such changes as if such changes had not been made;
provided, however, that pending such agreements, such Obligor's financial
condition shall continue to be evaluated on the same principles as those
used in the preparation of the financial statements of such Obligor
referred to in Section 6.5.
1.5 General Provisions as to Certificates and Opinions, etc.
Whenever the delivery of a certificate is a condition precedent to the
taking of any action by the Lender hereunder, the truth and accuracy of
the facts and the diligent and good faith determination of the opinions
stated in such certificate shall in each case be conditions precedent to
the right of the relevant Obligor to have such action taken, and any
certificate executed by the relevant Obligor shall be deemed to represent
and warrant that the facts stated in such certificate are true and
accurate as of the date stated.
1.6 Interpretation
Unless a clear contrary intention appears, this Agreement and each other
Loan Document shall be construed and interpreted in accordance with the
provisions set forth below:-
(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person's successors, executors,
administrators, substitutes and assigns but, if applicable, only if
such successors, executors, administrators, substitutes and assigns
are permitted by this Agreement or such other Loan Document, and
reference to a Person in a particular capacity excludes such Person
in any other capacity or individually;
(c) reference to any gender includes any other gender;
18
(d) reference to any agreement, document or Instrument means such
agreement, document or Instrument as amended, supplemented, novated,
refinanced, replaced, waived, restated or modified, and in effect
from time to time in accordance with the terms thereof and, if
applicable, the terms hereof;
(e) reference to any promissory note includes any promissory note which
is an extension or renewal thereof or a substitute or replacement
therefor;
(f) reference to any Applicable Law means such Applicable Law as amended,
modified, codified or re-enacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated
thereunder;
(g) "hereunder", "hereof", "hereto", "herein" and words of similar import
shall be deemed references to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular
Article, Section, clause or other provision hereof or thereof;
(h) any reference to any particular Article, Section or clause shall be
to such Article, Section or clause of this Agreement or such other
Loan Document;
(i) "including" means including without limiting the generality of any
description preceding such term;
(j) relative to the determination of any period of time, "from" means
"from (and including)" and "to" means "to (but excluding)";
(k) any reference to a time of day is a reference to London time;
(l) reference to a "company" or "corporation" shall be construed as a
reference to the analogous form of business entity used in any
relevant jurisdiction;
(m) when an expression is defined, another part of speech or grammatical
form of that expression has a corresponding meaning; and
(n) any reference to the "knowledge" of either Obligor or its Authorized
Representative with respect to a certain matter means either such
Person's actual knowledge with respect to such matter or that of which
a Person, in the position of such Obligor or Authorized Representative
and acting reasonably, would be expected to have knowledge.
19
2. COMMITMENTS AND PROCEDURES FOR MAKING THE LOAN; CONTINUATION PROCEDURES
2.1 Commitments; Making The Loan
(a) Subject to the terms and on the conditions of this Agreement, the
Lender agrees that its Commitment consists of obligations to make,
maintain and continue the Loan, in an amount not to exceed the
Commitment Amount. The Loan may only be made on a single Borrowing
Date during the period from the Effective Date to the Commitment
Termination Date.
(b) By delivering a Borrowing Notice to the Lender on or before 10:00 a.m.
and at least 24 hours prior thereto, the Borrower may request on any
Business Day during the period described in clause (a), that a single
Loan be made by the Lender on the Borrowing Date set forth in such
Borrowing Notice in a principal amount equal to the then Commitment
Amount. The Borrowing Notice, once delivered, shall not thereafter
be revocable by the Borrower.
(c) Subject to the terms and conditions of this Agreement, the Loan
requested to be made in the Borrowing Notice shall be made on the
specified Borrowing Date. On the Borrowing Date and subject to such
terms and conditions, the Lender shall, on or before 10:00 a.m., make
such funds available to the Borrower by crediting the Principal Amount
of the Loan to such account of the Borrower as it may direct.
(d) The Borrower may, from time to time on any Business Day prior to the
Commitment Termination Date upon which there then remains any portion
of the Commitment Amount, voluntarily reduce the Commitment Amount, as
then in effect, in whole or, if in part, in multiples of
U.S.$1,000,000; provided, however, that the Borrower shall give the
Lender not less than three or nor more than five Business Days prior
written notice (counting the date on which such notice is given) of
any such reduction which notice shall be irrevocable once given. On
the Commitment Termination Date, the Commitment Amount (if still
remaining) shall, automatically, and without any action by any Person
be reduced to zero.
2.2 Continuation Elections
(a) To continue all or part of the Loan for the same (or for a different)
Interest Period, the Borrower must deliver a Continuation Notice to
the Lender no later than 10.00 a.m. five Business Days prior to the
expiration of the relevant Interest Period then in effect. To the
extent the Borrower wishes to issue a Continuation Notice with respect
to part (but not all) of the Loan, such Continuation Notice must
relate to an aggregate Principal Amount of multiples of U.S.$500,000,
and a maximum of two Interest Periods with respect to the Loan may
be outstanding at any one time after giving effect thereto.
20
(b) (i) Each new Interest Period will commence on the
expiration of the preceding Interest Period relating to all or
that portion of the Loan made pursuant to the Borrowing Notice or
continued pursuant to a Continuation Notice.
(ii) If the Borrower fails to deliver a Continuation Notice as and
when required, it, subject as provided in clauses (d) and (e) of
the definition of "Interest Period", will be deemed to have
requested that the then current Loan be continued for an Interest
Period that is the same as the duration of the Interest Period
then currently in effect with respect to the Loan.
(c) A Continuation Notice once given shall be irrevocable.
2.3 Records
The Lender's Loan shall be evidenced by a loan account maintained by the
Lender. The Borrower hereby irrevocably authorizes the Lender to make (or
cause to be made) appropriate account entries, which account entries, if
made, shall evidence inter alia the date of, the type of, the principal
amount of, any repayments of, the interest rate on, and the Interest
Period applicable to, the Loan then outstanding. Any such account entries
indicating the outstanding Principal Amount of the Loan outstanding to the
Lender shall be prima facie evidence of the Principal Amount thereof owing
and unpaid, but the failure to make any such entry shall not limit or
otherwise affect the obligations of the Borrower hereunder to make
payments of the amount of, or interest on, the Loan when due.
2.4 Funding
The Lender may, if it so elects, but subject to Applicable Law, fulfil its
obligation to make, maintain or continue any portion of its Loan by
causing an offshore branch, Affiliate or banking facility of the Lender to
make, maintain or continue the Loan; provided, however, that in such event
the Loan shall be deemed to have been made by the Lender, and the
obligation of the Borrower to repay the Loan, and pay interest thereon,
shall nevertheless be to the Lender and shall be deemed to be held by it,
to the extent of the Loan, for the account of such foreign branch,
Affiliate or international banking facility; and provided, further,
however, that the Borrower shall be under no obligation to pay any amount
to the Lender pursuant to Section 4.1, 4.2, 4.3, 4.4, 4.5 or 4.6 which
arises solely as a consequence of an election made by the Lender pursuant
to this Section.
21
3. PRINCIPAL PAYMENTS; INTEREST; CAPITALISATION OF INTEREST; FEES
3.1 Principal Payments
3.1.1 Scheduled Repayments
(a) The Borrower shall repay the Loan in Principal Amounts of
U.S.$1,000,000 on each of June 30, 2003 and December 31, 2003.
(b) The Borrower shall repay the Principal Amount of the Loan remaining
outstanding in full on the Maturity Date.
3.1.2 Prepayments - Voluntary
In addition to its obligations under Section 3.1.1, the Borrower may, from
time to time on any Business Day (subject to Sections 3.2.6 and 4.3) make
a voluntary prepayment, in whole or in part, of the then outstanding
Principal Amount of the Loan; provided, however, that:
(a) the Borrower shall give the Lender not less than five Business Days'
prior written notice (counting the date on which such notice is
given) of any such voluntary prepayment, which notice, once given,
shall be irrevocable; and
(b) all such partial voluntary prepayments shall be in an aggregate
Principal Amount of multiples of U.S.$500,000.
3.1.3 Principal Payments Generally
(a) Each repayment or prepayment of the Loan made pursuant to this
Section shall be without premium or payment of any other additional
amount, except as may be required pursuant to Section 4.3. Amounts
repaid or prepaid may not be re-borrowed. Except as set forth in
Section 3.2.5, any repayment or prepayment of the Principal Amount of
the Loan shall include accrued interest on the date of repayment or
prepayment on the Principal Amount being repaid or prepaid.
(b) The Loan, as required to be repaid or prepaid pursuant to this
Section, shall be paid in Dollars. Any amount paid pursuant to
Section 3.1.2(a) shall be applied in reducing the repayment
installments under Section 3.1.1 in the inverse order of their
maturities.
3.2 Interest Payments
The Borrower shall make payments of (or capitalize) interest in accordance
with this Section.
22
3.2.1 Rate
The Borrower shall pay interest on the Principal Amount of the Loan
outstanding from time to time (or interest shall accrete thereon) at a rate
per annum equal to the sum of (i) the LIBO Rate, (ii) the Applicable Margin
plus (iii) the Additional Costs Rate, if relevant.
3.2.2 Post-Maturity Rate
After the Maturity of all or any portion of the Principal Amount of
the Loan or after any other Obligations shall have become due and not been
paid, the Borrower shall pay interest (after as well as before judgment) on
the Principal Amount of the Loan so matured or on any such other
Obligations, at a rate per annum equal to the sum of (i) the LIBO Rate for
such Interest Periods (of a minimum of three months) as the Lender may from
time to time select, (ii) the Applicable Margin, (iii) the Additional Costs
Rate (if relevant) plus (iv) two percent (2%).
3.2.3 Payment Dates; Calculation of Interest
Interest accrued on the Loan shall, subject to Section 3.2.5, be payable
without duplication on:
(a) the last day of each Interest Period with respect to the Loan (and, in
addition to such day, if such Interest Period shall exceed three
months, on each date which is the last day of each successive three-
monthly period occurring during such Interest Period);
(b) the Maturity of the Loan; and
(c) with respect to any portion of the Loan repaid or prepaid pursuant to
Section 3.1 or 4.5 the date of such repayment or prepayment, as the
case may be.
In addition, interest accrued on the Loan after the Maturity thereof and
interest on other overdue amounts shall be payable upon demand. The
amount of accruing and accreting interest on the Loan shall be calculated
by the Lender on the daily outstanding Principal Amount of the Loan. All
interest shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) during the period for
which such interest is payable over a year comprised of 360 days. Subject
to clauses (d) and (e) of the definition of "Interest Period", whenever
any payment to be made shall otherwise be due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall be included in computing interest, if
any, in connection with such payment.
23
3.2.4 Rate Determinations
All determinations by the Lender of the rate of interest applicable to the
Loan shall be conclusive absent demonstrated error.
3.2.5 Capitalization of Interest
(a) Notwithstanding the interest payment provisions contained in this
Section, until the date on which the principal of, and interest on,
the Loan shall become payable in full, whether at the Maturity Date or
by reason of acceleration or if the Maturity of all or any portion of
the Principal Amount of the Loan or after any Obligations shall have
become due and not been paid, the Borrower may capitalize interest as
provided in this Section.
(b) To the extent the Borrower shall not make any payment of interest
(including for the avoidance of doubt, the Additional Costs Rate, if
relevant) on the Loan in cash on each date described in Section 3.2.3
(other than the proviso set forth in clause (a) thereof) or when
otherwise due (each such date, an "Interest Payment Date"), an amount
equal to the interest payable on such Interest Payment Date but not
paid in cash shall be added to the Principal Amount payable hereunder
and shall continue to bear interest as provided herein.
(c) For the avoidance of doubt, the payment of each Principal Amount
described in Sections 3.1.1(a) and Section 3.1.2 may be made without
payment of any interest capitalized until such date. All interest so
capitalized shall, subject to this Agreement, be added to the
Principal Amount immediately outstanding after each such payment,
shall continue to bear interest as provided herein and shall be paid
in cash at the Maturity Date or on any other date where interest is
actually payable.
(d) To the extent the Borrower shall not make any payment of interest on
the Loan in cash on any Interest Payment Date occurring after the
Maturity of all or any portion of the Principal Amount of the Loan or
after any other Obligations shall have become due and not been paid,
an amount which bears the same proportion to the total amount of
interest which would be payable on the remaining Principal Amount of
the Loan if the Loan bore interest at the Post-Maturity Rate for the
period from the immediately preceding Interest Payment Date until the
then current Interest Payment Date as (i) the amount of interest due
on the current Interest Payment Date at the Ordinary Rate but not paid
in cash bears to (ii) the total amount of interest at the Ordinary
Rate payable on such Interest Payment Date, shall be added to the
Principal Amount payable hereunder and shall bear interest as provided
herein.
24
3.2.6 Payments Subject to Subordination
All payments of principal and interest shall be subject to the terms of
the Subordination Agreement.
4. INCREASED COSTS; TAXES; MARKET DISRUPTIONS; GENERAL PAYMENT PROVISIONS
4.1 Dollars Unavailable
(a) If, at any time that the Lender shall be required to make any
determination of the LIBO Rate for any Interest Period and it shall
have determined or in the case of the Loan outstanding or to be
outstanding during such Interest Period, either (x) Dollar
certificates of deposit or Dollar deposits, as the case may be, in the
relevant amount and for the relevant Interest Period are not available
to the Lender in the London interbank market, or (y) by reason of
circumstances affecting the Lender in the London interbank market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to the Loan, then the Lender shall promptly give
telephonic notice of such determination confirmed in writing to the
Borrower (which determination shall, in the absence of demonstrated
error, be conclusive and binding on the Borrower).
(b) As soon as practicable following the giving of the notice described in
clause (a), the Lender acting reasonably and the Borrower shall
negotiate for a period not exceeding 30 days with a view to agreeing
to an alternative basis for making or maintaining the Loan affected by
the circumstances described in clause (a). During such period
interest shall accrue on the principal amount of the affected Lender's
affected Loan at the rate applicable to the Loan immediately prior to
the giving of such notice. If no such alternative basis is agreed
within such time period, the affected Lender's affected Loan shall
bear interest at a rate per annum equal to the sum of (i) the cost to
the Lender of funding the Loan (as determined by the Lender which
determination shall, in the absence of demonstrated error, be
conclusive and binding on the Borrower), (ii) the Applicable Margin
plus (iii) the Additional Costs Rate as in effect from time to time.
4.2 Increased Costs, etc.
(a) The Borrower agrees to reimburse the Lender for any increase (other
than as specifically covered in any other Section of this Article) in
the cost to the Lender of making, continuing or maintaining (or of its
obligation to make, continue or maintain) the Loan, and for any
reduction (other than as specifically covered in any other Section of
this Article) in the amount of any sum receivable by the Lender
hereunder in respect of making,
25
continuing or maintaining any portion of the Loan in either case, from
time to time by reason of any Regulatory Change (including with
respect to Regulation D of the F.R.S. Board but excluding the
Additional Costs Rate (if relevant)), then, in any such event, the
Lender shall promptly notify the Borrower thereof stating in
reasonable detail the reasons therefor and the additional amount
required fully to compensate the Lender for such increased cost or
reduced amount. Such notice shall, in the absence of demonstrated
error, be conclusive and binding on the Borrower.
(b) As soon as practicable following the giving of any notice described in
clause (a), the Lender and the Borrower shall negotiate for a period
not exceeding 30 days with a view to avoiding or minimizing the
circumstances described in clause (a). If no steps mutually agreeable
to the Lender and the Borrower are decided within such 30 day period,
the Borrower may elect either to prepay the principal amount of and
interest on the Lender's then outstanding Loan (subject, however, to
Section 4.3) or pay, within five days after the expiry of such 30 day
period, any additional amount required fully to compensate the Lender
for the increased cost or reduced amount described in clause (a).
4.3 Funding Losses
In the event that the Lender shall incur any loss or expense (including
any loss or expense incurred by reason of the liquidation or reemployment
of Dollar deposits or other funds acquired by the Lender to make, continue
or maintain any portion of the Principal Amount of the Loan) as a result
of:-
(a) any payment or prepayment of the Principal Amount of the Loan on a
date other than as and when required, whether pursuant to Section
3.1 or otherwise; or
(b) any action of the Borrower resulting in the Loan not being made or
continued, in accordance with the Borrowing Notice or Continuation
Notice, as the case may be, as given therefor,
then, upon the request of the Lender to the Borrower the Borrower shall
pay to the Lender such amount as will (in the reasonable determination of
the Lender) reimburse the Lender for such loss or expense. A statement as
to any such loss or expense (including calculations thereof in reasonable
detail) shall be submitted by the Lender and the Borrower and shall, in
the absence of demonstrated error, be conclusive and binding on the
Borrower.
26
4.4 Increased Capital Costs
(a) If any Regulatory Change affects or would affect the amount of capital
required to be maintained by the Lender or any Person controlling the
Lender, and the Lender determines (in its reasonable discretion) that
the rate of return on its or such controlling Person's capital is
reduced to a level below that which the Lender or such controlling
Person could have achieved but for the occurrence of any such
Regulatory Change, then, in any such case upon notice from time to
time by the Lender to the Borrower, the Borrower may, at its option
(i) within five days of receipt of such notice, pay directly to the
Lender additional amounts sufficient to compensate the Lender or such
controlling Person for the portion of such reduction in rate of return
which is reasonably allocable to the Facility or (ii) prepay the
principal amount of and interest on the affected Lender's then
outstanding Loan (subject, however, to Section 4.3). A statement of
the Lender as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence of
demonstrated error, be conclusive and binding on the Borrower. In
determining such amount, the Lender may use any method of averaging
and attribution that it (in its reasonable discretion) shall deem
applicable.
(b) Notwithstanding clause (a), the Borrower shall not be obligated to pay
any amount to the Lender in respect of any such reduction in the rate
of return or increased cost which arises as a consequence of (i) any
law or directive implementing the proposals for international
convergence of capital measurement and capital standards published by
the Basle Committee on Banking Regulations and Supervisory Practices
in July 1988 and/or (ii) the Council of the European Communities
Directive of April 17, 1989, on the own funds of credit institutions
(89/299/EC) and the Council of the European Communities Directive of
December 18, 1989, on a solvency ratio for credit institutions
(89/647/EC) to the extent that the impact of any such law or directive
can reasonably be calculated at the Effective Date. In addition, the
Lender may not make any claim for compensation in respect of any such
reduction in return or increased cost to the extent that a
notification of the event leading to such reduction in the rate or
return or increased cost is not given to the Borrower within six
months of the Lender's obtaining knowledge thereof.
4.5 Illegality
(a) If, as the result of any Regulatory Change, the Lender shall determine
(which determination, in the absence of demonstrated error, shall be
conclusive and binding on the Borrower) that it is unlawful for the
Lender to make the Loan then the obligations
27
of the Lender to make the Loan shall, upon such determination (and
telephonic notice thereof confirmed in writing to the Borrower),
forthwith be suspended until the Lender shall become aware that the
circumstances causing such suspension no longer exist and shall
forthwith notify the Borrower to such effect, at which time the
obligation of the Lender to make the Loan shall be reinstated.
(b) If, as the result of any Regulatory Change, the Lender shall determine
(which determination, in the absence of demonstrated error, shall be
conclusive and binding on the Borrower) that it is unlawful for the
Lender to continue its Loan, then, upon notice by the Lender to the
Borrower, the Lender shall consult with the Borrower for a period of
up to 30 days from the date of such notice, with a view to agreeing
upon a mutually acceptable alternative arrangement which will avoid
or minimize such illegality. If, no steps mutually agreeable to the
Lender and the Borrower are decided within such 30 day period, the
Borrower may, at its option, to the extent not prohibited from doing
so by the relevant illegality or unlawfulness, continue the Lender's
then outstanding Loan or prepay, within five days after the expiry of
such 30 day period (unless required to do so prior thereto) the
principal amount of and interest on the Lender's then outstanding
Loan (subject, however, to Section 4.3).
(c) If the relevant illegality or unlawfulness makes it unlawful for the
Lender to maintain its Loan, then upon notice by the Lender to the
Borrower, the Borrower shall, as soon as practicable after receiving
such notice, prepay the Principal Amount of any interest on the
Lender's outstanding Loan (subject, however, to Section 4.3)
4.6 Taxes
All payments by the Borrower of principal of, and interest on, the Loan
and all other amounts payable pursuant to the relevant Loan Documents
shall be made free and clear of, and without deduction for any Taxes
(other than franchise taxes and taxes imposed on or measured by the
recipient's net income or receipts). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder or under
any other Loan Document is required in respect of any such Taxes pursuant
to any Applicable Law, then the Borrower will:-
(a) pay directly to the relevant authority the full amount to be so
withheld or deducted;
(b) promptly forward to the Lender an official receipt or other
documentation satisfactory to the Lender evidencing such payment to
such authority; and
28
(c) pay to the Lender entitled thereto such additional amount or amounts
as is necessary to ensure that the net amount actually received by
such Person will be equal to the full amount such Person would have
received had no such withholding or deduction been required.
Moreover, if any such Taxes are directly asserted against the Lender with
respect to any payment received by the Lender, the Lender may pay such
Taxes and the Borrower will promptly pay such additional amounts
(including any penalties, interest or expenses) as is or are necessary in
order that the net amount received by such Person after the payment of
such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had such Taxes not been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Lender, the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for
any incremental Taxes, interest or penalties that may become payable by
any such Person as a result of any such failure.
The Lender agrees to co-operate with the Borrower in completing and
delivering or filing tax-related forms which would reduce or eliminate any
amount of the nature referred to in this Section; provided, however, that
the Lender shall not be under any obligation to execute and deliver any
such form if, in the reasonable opinion of the Lender, completion of any
such form could result in an adverse consequence with respect to the
business or tax position of the Lender.
4.7 Mitigation
(a) In the event that the Borrower makes payment of any amount pursuant to
Section 4.4 or 4.6 or that the Lender seeks payment of an amount
pursuant to Section 4.4 or 4.6 or because of circumstances resulting
in the 30 day negotiation period described in Section 4.1(b), 4.2(b)
or 4.5(b), the Lender agrees that it will take such reasonable steps
as may reasonably be open to it to mitigate the effects of the
circumstances described in the foregoing Sections (such steps to
include the transfer of the Lender's Lending Office to another
jurisdiction and the application for a Tax Credit); provided, however,
that the Lender shall not be obligated to (i) take any such steps if,
in its opinion, such steps would require it to achieve less than its
expected return with respect to the Facility or would have an adverse
effect upon its assets or financial condition or (ii) achieve any
particular result or incur any liability to the Borrower by virtue of
any such steps resulting in less than complete mitigation of the
relevant circumstances.
29
(b) If, pursuant to clause (a), the Lender effectively obtains a refund of
tax or credit (a "Tax Credit") against a payment made by the Borrower
pursuant to Section 4.6 (a "Tax Payment"), and the Lender is able to
identify such Tax Credit as being attributable to such Tax Payment,
then the Lender, after actual receipt of such Tax Credit, shall
reimburse the Borrower for such amount as the Lender shall reasonably
determine to be the proportion of such Tax Credit as shall be
reasonably attributable to such Tax Payment; provided, however, that
the Lender shall not be required to make any such reimbursement which
would cause it to lose the benefit of such Tax Credit or would
otherwise adversely affect any matter relating to the Lender in
connection with the assessment or payment of any Taxes. If the Lender
shall claim any Tax Credit pursuant to this Section, it shall have
absolute discretion in the extent, order and manner in which it does
so. The Lender shall not be obligated to disclose information
regarding its tax affairs or computations to the Borrower.
4.8 Payments, Computations, etc.
(a) All payments by the Borrower pursuant to this Agreement or any other
Loan Document shall be paid in Dollars.
(b) All payments under the Facility shall be made by the Borrower by
delivery of Dollars in immediately available funds to an account of
the Lender in New York City at the Lender's Lending Office, which
account shall be designated from time to time by notice to the
Borrower from the Lender. All such payments shall be made, without
setoff, deduction, or counterclaim, not later than 11:00 a.m.,
New York City time, on the date when due. Any payments received
hereunder after the time and date specified in this Section shall be
deemed to have been received by the Lender on the next following
Business Day.
4.9 Set-off
In addition to and not in limitation of any rights of any of the Lender
under Applicable Law, the Lender (or any branch thereof) shall, upon the
occurrence of any Enforcement Event, have the right to appropriate and
apply to the payment of the Obligations owing to it (whether or not then
due), any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with the Lender in whatever
currency (and, as security for the Obligations owing to the Lender, but
not to the exclusion of any other rights the Lender may have, the Borrower
hereby grants to the Lender a continuing security interest in any and all
balances, etc., as aforesaid).
30
4.10 Application of Proceeds
(a) If at any time any amount (including any proceeds received in respect
of any sale of, collection from, or other realization upon, the MHV
Guaranty) received by the Lender is less than the amount then due and
payable pursuant to this Agreement or any other Loan Document such
amount may, or at any time thereafter be applied (after payment of any
amounts payable to the Lender pursuant to Sections 9.3 and 9.4 and
similar provisions contained in any other Loan Document) in whole or
in part by the Lender against, all or any part of the Obligations in
the following order:-
(i) first, to amounts outstanding to the Lender under any Loan
Document in respect of any amount other than interest on, or the
Principal Amount of, the Loan;
(ii) second, to amounts outstanding to the Lender under any Loan
Document in respect of interest on the Loan; and
(iii)third, to amounts outstanding to the Lender under any Loan
Document in respect of the Principal Amount of the Loan.
(b) Any surplus of such cash or cash proceeds held by the Lender and
remaining after payment in full of all the Obligations, and the
termination of all Commitments (if not then already terminated),
shall be paid over to or to whomsoever may be lawfully entitled
to receive such surplus.
5. CONDITIONS PRECEDENT TO MAKING LOANS
5.1 In General
The obligations of the Lender to make the Loan shall be subject to the
prior or concurrent satisfaction of each of the conditions precedent set
forth in this Article. Unless specifically stated to the contrary, each
document, certificate and other Instrument delivered pursuant to this
Section shall be dated on, or prior to, and shall be in full force and
effect on, the Borrowing Date.
The Lender shall have received:
5.1.1 Resolutions, etc.
(a) a certificate of an Authorized Representative of each Obligor to the
effect that (i) the representations of such Person set forth in each
Loan Document to which it is a party shall be true and correct as at
the Effective Date and after giving effect to the Loan and (ii) no
Default shall have then occurred and be continuing; and
31
(b) a certificate of the Secretary or similar officer of each Obligor as
to:
(i) resolutions of its Board of Directors or similar body then in
force and effect authorizing the execution, delivery and
performance of each Loan Document to which it is a party and any
other document to be executed by it in connection with the
transactions contemplated thereby;
(ii) the incumbency and signatures of those of its officers authorized
to act with respect to each Loan Document to which it is a party
and any other document executed or to be executed by it; and
(iii) its Organic Documents as then in effect,
upon which certificate the Lender may conclusively rely until it shall
have received a further certificate of the Secretary or similar officer of
the relevant Person cancelling or amending such prior certificate.
5.1.2 Subordination Agreement; MHV Guaranty
(a) counterparts of the MHV Guaranty, duly executed by an Authorized
Representative of MHV; and
(b) counterparts of the Subordination Agreement, duly executed by the
Senior Agent, Standard Bank, as subordinated creditor, and an
Authorized Representative of Hecla Mining.
5.1.3 Borrowing Notice
A Borrowing Notice relating to the Loan, executed by an Authorized
Representative of the Borrower.
5.1.4 Process Agent Acceptance
The Process Agent Acceptance, duly executed by the Process Agent, together
with the evidence of the appointment of the Process Agent by each Obligor.
5.1.5 Opinions
Opinions of:
(a) Debevoise & ▇▇▇▇▇▇▇▇, New York counsel to the Lender, substantially in
the form of Exhibit E-1 attached hereto;
(b) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President, General Counsel and Secretary to
Hecla Mining, substantially in the form of Exhibit E-2 attached
hereto; and
32
(c) ▇▇▇▇▇ Von ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Diquez, Venezuelan counsel to MHV,
substantially in the form of Exhibit E-3 attached hereto.
5.1.6 Closing Expenses, etc.
The Lender shall have received (including, to the extent necessary, from
the proceeds of the Loan to be made on the Borrowing Date) all expenses
due to the Lender (including those of the Lender's advisors then invoiced)
and payable on or prior to such Borrowing Date.
5.1.7 Compliance with Warranties, No Defaults, etc.
The representations and warranties of the Borrower set forth in Article 6
and of MHV in the MHV Guaranty shall be true and correct as of the date
initially made, and both immediately before and after the making of the
requested Loan:
(a) such representations and warranties shall be true and correct with the
same effect as if then made (unless stated to relate solely to an
earlier date, in which case such representations and warranties shall
be true and correct as of such earlier date); and
(b) no Default shall have then occurred and be continuing.
6. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make,
maintain and continue the Loan hereunder, the Borrower, individually for
itself and with respect to matters hereinafter relating to it, represents
and warrants unto the Lender, in each case as set forth in this Article.
The representations and warranties set forth in this Article shall be made
on the Effective Date and upon the delivery of the Borrowing Notice and
shall be deemed to be made as at the Borrowing Date.
6.1 Organization, Power, Authority, etc.
(a) The Borrower is a corporation duly incorporated, validly existing and
in good standing under the laws of Delaware.
(b) The Borrower is qualified to do business and is in good standing
(where such concept is applicable) as a foreign company in each
jurisdiction where the nature of its business makes such
qualification necessary and has full power and authority, and holds
all requisite Approvals, to own and hold under lease its property and
to conduct its business substantially as currently conducted by it.
The Borrower has full power and authority to enter into and perform
its obligations under this Agreement and the other Loan Documents
executed or to be executed by it.
33
6.2 Due Authorization; Non-Contravention
The execution and delivery by the Borrower of this Agreement and each
other Loan Document executed or to be executed by it and the performance
by the Borrower of its obligations hereunder and thereunder, have been
duly authorized by all necessary corporate action on its part, do not and
will not require any Approval do not and will not conflict with, result in
any violation of, or constitute any default under, any provision of any
Requirement of Law or Approval binding on it, and will not result in or
require the creation or imposition of any Lien on any of its properties
pursuant to the provisions of any Contractual Obligation (other than
pursuant to this Agreement).
6.3 Validity, etc.
This Agreement constitutes, and each other Loan Document executed or to be
executed by the Borrower constitutes, or on the due execution by each
party thereto and delivery thereof will constitute, the legal, valid and
binding obligation of the Borrower enforceable in accordance with its
terms, subject as to enforceability, to Applicable Laws relating to
bankruptcy and the enforceability of creditors' rights generally and by
the fact that the availability of equitable remedies is discretionary.
6.4 Legal Status
Neither the Borrower nor any of its properties or revenues enjoys any
right of immunity from suit, set off, attachment prior to judgment or in
aid of execution, or execution on a judgment in respect of its obligations
under any of the Loan Documents to which it is a party.
6.5 Financial Information
All balance sheets and all other financial information of the Borrower and
MHV which have been furnished by it to the Lender for the purposes of or
in connection with this Agreement or any transaction contemplated hereby,
including:-
(a) the consolidated balance sheet at December 31, 1999 and the related
consolidated statements of operations and cashflows, loss and deficit
and change in financial position for the Fiscal Year then ended, of
the Borrower and its Subsidiaries in respect of which an opinion was
given by PricewaterhouseCoopers LLC;
(b) the consolidated balance sheet at March 31, 2000 and the related
consolidated statement of profit and loss and cashflows for the Fiscal
Quarter then ended, of the Borrower and its Subsidiaries, certified by
the principal financial or accounting Authorized Representative of the
Borrower;
34
(c) the balance sheet at December 31, 1999 and the related statements of
operations and cashflows, loss and deficit and change in financial
position for the Fiscal Year then ended, of MHV; and
(d) the balance sheet at March 31, 2000 and the related statement of
profit and loss and cashflows for the Fiscal Quarter then ended, of
MHV, certified by the principal financial or accounting Authorized
Representative of MHV,
have been prepared in accordance with U.S. GAAP (or generally accepted
accounting principles in Venezuela, and subsequently conformed to U.S.
GAAP) consistently applied throughout the periods involved (except as
disclosed therein) and do present fairly (subject in the case of interim
financial statements to year-end audit adjustments) the financial position
of the relevant Obligor as at the dates thereof and the results of its
operations for the periods then ended. Neither Obligor on the date hereof
has any material Contingent Liability or liability for taxes, long-term
leases or unusual forward or unusual long-term commitments which are not
reflected in its financial statements described in this Section or in the
notes thereto.
6.6 Absence of Default
The Borrower is not in default in the payment of or in the performance of
any material obligation applicable to any Indebtedness (subject to any
applicable grace period), or in default under any Requirement of Law or
the terms or conditions upon which any Approval has been granted.
6.7 Litigation, etc.
Except as disclosed in Item 1 ("Litigation") of the Disclosure Schedule,
there is no pending or, to the knowledge of the Borrower, threatened labor
controversy, litigation, arbitration or governmental investigation or
proceeding against the Borrower (or any of its Subsidiaries) or to which
any of its business, operations, properties, assets or revenues is subject
as to which there is a reasonable likelihood of an adverse outcome to the
Borrower and which, if adversely determined, would result in a Materially
Adverse Effect. In the case of any litigation described in Item 1
("Litigation") of the Disclosure Schedule, there has been no development
in such litigation which would result in a Materially Adverse Effect.
6.8 Materially Adverse Effect
Since the date of the most recent audited financial statements referred to
in Section 6.5, there have been no occurrences which, individually or in
the aggregate, would result in a Materially Adverse Effect.
35
6.9 Taxes and Other Payments
Except as disclosed in Item 2 ("Taxes") of the Disclosure Schedule, the
Borrower has filed all tax returns and reports required by any Applicable
Law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing and all claims for sums due for labor,
material, supplies, personal property and services of every kind and
character provided with respect to, or used in connection with its
business and no claim for the same exists except as permitted hereunder,
except (i) any such taxes and governmental charges which are being
diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with U.S. GAAP shall have been set
aside on the books of the Borrower, (ii) any such tax and governmental
charge which has not been timely invoiced as a result of the negligence of
the relevant taxing authority or (iii) in the case of any other claims,
where failure to make payment therefor would not result in a Materially
Adverse Effect with respect to the Borrower.
6.10 Subsidiaries
All of the Subsidiaries (including the Material Subsidiaries) of the
Borrower as of the Effective Date are listed in Item 3 ("Subsidiaries")
of the Disclosure Schedule.
6.11 Environmental Warranties
Except as disclosed in Item 4 ("Environmental Matters") of the Disclosure
Schedule or except where failure of any of the following statements to be
made would not reasonably be expected to have a Materially Adverse
Effect:-
(a) The Borrower is, and has at all times been, in compliance with, or has
fully remedied any non-compliance so as to be in compliance with, all
Environmental Laws in all material respects and all material Approvals
relating to Environmental Laws necessary in connection with the
ownership and operation of its business and that of its subsidiaries
are in full force and effect. There are no acts, omissions, events,
states of facts or circumstances which may reasonably be expected to
prevent or interfere with the Borrower being in substantial compliance
with any Environmental Laws, including obtaining or being in
substantial compliance with any material Approvals relating to
Environmental Laws in the future, and no material investment is
necessary to obtain or renew any material Approval relating to
Environmental Laws.
36
(b) There are no present or, to the Borrower's knowledge, past acts,
omissions, events, states of facts or circumstances which have
resulted in (or could result in) any third party (including any
regulatory authority) taking any action or making any material claim
against the Borrower under any Environmental Laws including remedial
action (in particular in relation to contaminated land) or the
revocation, suspension, variation or non-renewal of any Approval under
any Environmental Laws and the Borrower has no notice of any
complaints, demands, civil claims, enforcement proceedings or of any
action required by any regulatory authority and there are no
investigations pending or, to the Borrower's knowledge, threatened in
relation to the failure of the Borrower to obtain any material
Approval under, or comply with, any Environmental Laws.
6.12 ERISA Liabilities
All currently existing ERISA Plans are listed in Item 5 ("ERISA Plans") of
the Disclosure Schedule. Except as disclosed in the Disclosure Schedule,
no Termination Event has occurred with respect to any ERISA Plan and the
Related Persons are in compliance with ERISA in all material respects. No
Related Person is required to contribute to, or has any other absolute or
contingent liability in respect of, any "multiemployer plan" as defined in
Section 4001 of ERISA. Except as set forth in the Disclosure Schedule:
(a) no "accumulated funding deficiency" (as defined in Section 4.12(a) of
the Internal Revenue Code) exists in excess of U.S. $1,000,000 with
respect to any ERISA Plan, whether or not waived by the Secretary of
the Treasury or his delegate; and
(b) the current value of each ERISA Plan's benefits does not exceed the
current value of such ERISA Plan's assets available for the payment of
such benefits by more than U.S.$1,000,000.
6.13 Regulations T, U and X
The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock, and none of the proceeds of the Loan
will be used for a purpose which violates or would be inconsistent with,
F.R.S. Board Regulations T, U and X. Terms for which meanings are
provided in F.R.S. Board Regulations T, U or X or any regulations
substituted therefor, as from time to time in effect, are used in this
Section with such meanings.
37
6.14 Government Regulation
Neither the Borrower nor any Subsidiary thereof is an "investment company"
within the meaning of the Investment Company Act of 1940, or a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", in each case within the meaning of the Public Utility
Holding Company Act of 1935.
7. COVENANTS
7.1 Informational and Financial Covenants
The Borrower agrees with the Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in full the
Borrower will perform its relevant obligations set forth in this Section.
7.1.1. Financial Information, etc.
The Borrower will deliver to the Lender copies of the following reports
and information:-
(a) promptly when available, and in any event within 90 days after the
close of each of its Fiscal Years, its consolidated balance sheet at
the close of such Fiscal Year and related consolidated statements of
operations and cashflows, loss and deficit, and changes in financial
position, as may be relevant (with comparable information at the close
of and for the prior Fiscal Year) and reported on without
Impermissible Qualification by an independent certified public or
chartered accountant of recognized international standing; and
(b) promptly when available, and in any event within 45 days after the
close of the first three Fiscal Quarters of each of its Fiscal Years,
its consolidated balance sheet at the close of such Fiscal Quarter and
related consolidated statements of operations and cashflows, loss and
deficit, and changes in financial position, as may be relevant, for
such Fiscal Quarter and for the period in such Fiscal Year ending on
the last day of such Fiscal Quarter (with comparable information at
the close of and for the corresponding Fiscal Quarter of the prior
Fiscal Year and for the corresponding portion of such prior Fiscal
Year) and certified by its accounting or financial Authorized
Representative.
38
7.1.2 Defaults
As soon as practicable and in any event within three Business Days after
obtaining knowledge of the occurrence of any Default relating to it, the
Borrower will furnish to the Lender a statement of its chief financial
Authorized Representative setting forth details of such Default and the
action which it has taken and proposes to take with respect thereto.
7.1.3 Miscellaneous Information
The Borrower will deliver to the Lender copies of the following reports
and information:-
(a) without duplication of any other clause of this Section, notice of the
occurrence as soon as possible and in any event within three Business
Days after the Borrower knows or has reason to know of any
circumstance which has a reasonable likelihood of having a Materially
Adverse Effect;
(b) as soon as practicable details of any litigation, arbitration or
administrative proceedings, which if resolved against the Borrower
could result in the Borrower suffering a loss in excess of
U.S.$1,000,000 (or the equivalent thereof in any other currency); and
(c) all other information relating to its financial condition, operations
or assets the Lender may from time to time reasonably request.
7.1.4 Books and Records; Access
The Borrower will keep financial records and statements reflecting all of
its business affairs and transactions in accordance with U.S. GAAP.
7.1.5 Accuracy of Information
All factual information hereafter furnished by or on behalf of the
Borrower in writing to the Lender for the purposes of or in connection
with this Agreement or any transaction contemplated hereby will be true
and accurate in every material respect on the date as of which such
information is dated or certified and such information shall not be
incomplete by omitting to state any material fact necessary to make such
information not misleading.
7.2 Affirmative Covenants
The Borrower agrees with the Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower will perform its relevant obligations set forth in this Section.
39
7.2.1 Compliance with Laws, etc.
The Borrower will comply (a) in all material respects with all Applicable
Laws and (b) with the terms of any Loan Document to which it is a party.
7.2.2 Maintenance of Corporate Existence
The Borrower will do and will cause to be done at all times all things
necessary to maintain and preserve its corporate existence and to be duly
qualified to do business and be in good standing (where such concept is
relevant) as a foreign corporation in each jurisdiction where the nature
of its business requires it to be so qualified and where there is a
reasonable likelihood of a Material Adverse Effect if not so qualified.
7.2.3 Payment of Taxes, etc.
The Borrower will pay and discharge, as the same may become due and
payable, all taxes, assessments, fees and other governmental charges or
levies against it or on any of its property, as well as claims of any kind
or character (including claims for sums due for labor, material, supplies,
personal property and services); provided, however, that the foregoing
shall not require the Borrower to pay or discharge any such tax,
assessment, fee, charge or levy (i) if such tax, etc. has not been timely
invoiced as a result of the negligence of the relevant taxing authority,
or so long as it shall be diligently contesting the validity or amount
thereof in good faith by appropriate proceedings and shall have set aside
on its books adequate reserves in accordance with U.S. GAAP with respect
thereto or (ii) in the case of any such claims due, where failure to make
payment therefor would not result in a Materially Adverse Effect.
7.2.4 Use of Proceeds
The Borrower shall apply the proceeds of the Loan strictly in accordance
with the terms of this Agreement, including the third recital.
7.3 Negative Covenants
The Borrower agrees with the Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower will perform its relevant obligations set forth in this Section.
40
7.3.1 Business Activities; Place of Business; Organic Documents; Fiscal Year
The Borrower shall not:-
(i) change its chief executive office or principal place of business;
(ii) amend its Organic Documents in any material respect or change its
corporate name; or
(iii) change its Fiscal Year.
7.3.2 ERISA Plans
The Borrower will not, and will not permit any other Related Person to,
incur any obligation to contribute to any "multiemployer plan" as defined
in Section 4001 of ERISA.
7.3.3 Consolidation, Merger, etc
The Borrower will not (a) liquidate or dissolve; or (b) if the following
would result in a Change in Control consolidate with, or merge into or
with, any other corporation.
8. EVENTS OF DEFAULT
8.1 Events of Default
The term "Event of Default" shall mean any of the events set forth in this
Section.
8.1.1 Non-Payment of Obligations
The Borrower:-
(a) shall default in the payment or prepayment when due of any Principal
Amount; or
(b) shall default in the payment when due of any other Obligation (and
such default shall continue unremedied for a period of three Business
Days).
8.1.2 Non-Performance of Certain Covenants
The Borrower shall default in the due performance and observance of any of
its obligations under Section 7.2.2, 7.2.4 or 7.3 or MHV shall default in
the due performance and observance of any of its obligations under Section
4.2.2, 4.2.4 or 4.3.1 of the MHV Guaranty (other than if any such default
is capable of cure or remedy, such default shall
41
continue unremedied for a period of 21 Business Days (or such longer
period as the Lender may agree, if the Lender determines that such default
is reasonably capable of being cured in such longer period) after notice
thereof shall have been given to the Borrower by the Lender).
8.1.3 Non-Performance of Other Obligations
Either Obligor shall default in the due performance or observance of any
term, condition, covenant or agreement, whether contained herein or in any
other Loan Document executed by it (other than a default arising pursuant
to Section 8.1.1 or 8.1.2) and, if capable of cure or remedy, such default
shall continue unremedied for a period of 21 Business Days (or such longer
period as the Lender may agree, if the Lender determines that such default
is reasonably capable of being cured within such longer period) after
notice thereof shall have been given to the relevant Obligor by the
Lender.
8.1.4 Breach of Representation or Warranty
Any representation or warranty of either Obligor hereunder or in any other
Loan Document executed by it or in any other writing furnished by or on
behalf of such Obligor to the Lender for the purposes of or in connection
with this Agreement or any such Loan Document is or shall be incorrect
when made in any material respect.
8.1.5 Default on other Indebtedness
A default shall occur in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, by either Obligor
under any Indebtedness (excluding Indebtedness described in Section 8.1.1)
of such Obligor having a principal amount, individually or in the
aggregate, in excess of U.S.$1,000,000 (or the equivalent of any of the
foregoing in any other currency), or the maturity of any such Indebtedness
shall be accelerated.
8.1.6 Bankruptcy, Insolvency, etc.
The Borrower or any of its Material Subsidiaries shall:-
(a) become insolvent or generally fail to pay, or admit in writing its
inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a trustee,
receiver, sequestrator or other custodian for such Person, or any
property of any thereof, or make a general assignment for the benefit
of creditors;
42
(c) in the absence of such application, consent or acquiescence, permit or
suffer to exist the appointment of a trustee, receiver, sequestrator
or other custodian for such Person or for a substantial part of the
property of any thereof, and such trustee, receiver, sequestrator or
other custodian shall not be discharged within 60 days, provided that
the Borrower hereby expressly authorizes the Lender to appear in any
court conducting any relevant proceeding during such 60-day period to
preserve, protect and defend the rights of the Lender under the Loan
Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of any Person and, if such case or
proceeding is not commenced by such Person, such case or proceeding
shall be consented to or acquiesced in by such Person or shall result
in the entry of an order for relief or shall remain for 60 days
undismissed, provided that the Borrower hereby expressly authorizes
the Lender to appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend the rights
of the Lender under the Loan Documents;
(e) suffer any comparable event to any of the foregoing in any
jurisdiction; or
(f) take any corporate action authorizing, or in furtherance of, any of
the foregoing.
8.1.7 Impairment of Loan Documents
This Agreement or any other Loan Document shall terminate or cease in
whole or part to be the legal, valid, binding and enforceable obligation
of the relevant Obligor party thereto, or either Obligor shall, directly
or indirectly, contest in any manner such effectiveness, validity, binding
nature or enforceability.
8.1.8 Judgments
Any judgment or order for the payment of money in excess of U.S.$1,000,000
(or the equivalent thereof in any other currency) shall be rendered
against either Obligor and either:-
(a) enforcement proceedings shall have been commenced by any creditor upon
such judgment or order; or
43
(b) there shall be any period of 21 consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect, unless the payment of
such judgment is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies.
8.1.9 Change in Control
Any Change in Control shall occur.
8.1.10 Materially Adverse Effect
Any event (other than as enumerated in any other provision of this
Article) shall occur or condition shall exist which constitutes a
Materially Adverse Effect.
8.2 Action if Bankruptcy
If an Insolvency Event shall occur, the Commitment (if not theretofore
terminated) shall automatically terminate, without notice, and the
outstanding principal amount of all outstanding Loan 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 an Insolvency Event) shall occur for
any reason, whether voluntary or involuntary, and be continuing the Lender
shall, upon notice or demand to the Borrower, declare all or any portion
of the outstanding principal amount of the Loan to be due and payable and
any or all other Obligations to be due and payable and/or the Commitment
(if not theretofore terminated) to be terminated, whereupon the full
unpaid amount of the Loan and any and all other such 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, such Commitment shall terminate.
9. MISCELLANEOUS
9.1 Waivers, Amendments, etc
The provisions of this Agreement and of each other Loan Document (except
to the extent expressly otherwise set forth in such 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 (or
the relevant Obligor party to such Loan Document) and the Lender.
44
No failure or delay on the part of the Lender in exercising any power or
right under this Agreement or any other Loan Document to which it is a
party 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 the Borrower in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval by the
Lender under this Agreement or any other Loan Document to which it is a
party 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.
9.2 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 telex
or by facsimile and addressed or delivered to it at the relevant address
for such party set forth below its signature hereto and designated as its
"Address for Notices" or at such other address as may be designated by
such party in the relevant Loan Document or a notice to the other parties.
Any notice, if sent by hand delivery or courier delivery, shall be deemed
received on the Business Day when delivered and, if transmitted by telex
or facsimile, shall be deemed given on the Business Day when transmitted
(answerback confirmed in the case of telexes and transmission confirmed by
the sending facsimile machine in the case of facsimiles).
9.3 Costs and Expenses
(a) Without prejudice to similar obligations of the Borrower under any
other Loan Document, the Borrower agrees to pay on demand all
reasonable out-of-pocket expenses (inclusive of United Kingdom Value
Added Tax or any other similar tax to the extent not recoverable by
the Lender) of the Lender for the negotiation, preparation, execution
and delivery of this Agreement and 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 (including the
reasonable fees and expenses of counsel and designated local counsel
to the Lender from time to time incurred in connection therewith),
whether or not the transactions contemplated hereby are consummated,
and all expenses (inclusive as aforesaid) of the Lender (including
reasonable fees and expenses of counsel and designated local counsel
to the Lender and any stamp or other taxes) incurred in connection
with the preparation and review of the form of any Instrument relevant
to this Agreement or any other Loan Document, the consideration of
legal questions relevant hereto and thereto
45
and the filing, recording, refiling or re-recording of any Loan
Document and all amendments or supplements to any thereof and any and
all other documents or Instruments of further assurance required to be
filed or recorded or refiled or re-recorded by the terms hereof or of
any other Loan Document.
(b) The Borrower agrees to reimburse the Lender upon demand for all
reasonable out-of-pocket expenses (including attorneys' fees and
expenses and inclusive of United Kingdom Value Added Tax or any other
similar tax) incurred by the Lender in connection with (i) the
negotiation of any restructuring or "work-out", whether or not
consummated, of any Obligations and (ii) the enforcement of any such
Obligations.
9.4 Indemnification
In consideration of the execution and delivery of this Agreement by the
Lender and the extension of the Commitments, the Borrower (without
prejudice to any similar obligations of either Obligor pursuant to any
applicable Loan Document) hereby indemnifies, exonerates and holds the
Lender and each of the Lender's Affiliates, officers, directors,
shareholders, employees and 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 in
connection therewith, in each case arising from the claims of third
parties including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of
them as a result of, or arising out of, or relating to:-
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the Loan;
(b) the entering into and performance of this Agreement and any other Loan
Document by any of the Indemnified Parties,
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, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities for which each is
liable hereunder and which is permissible under Applicable Law.
9.5 Survival
The obligations of the Borrower under Sections 4.2, 4.3, 4.4, 4.6, 9.3 and
9.4, shall, in each case, survive any termination of this Agreement. The
representations and warranties made by each Obligor in this Agreement and
in each other Loan Document to which it is a party shall survive the
execution and delivery of this Agreement and each such other Loan
Document.
46
9.6 Severability
Any provision of this Agreement or any other Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or such other Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
9.7 Headings
The various headings of this Agreement and of each other Loan Document are
inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
9.8 Counterparts; Effectiveness
This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement. This
Agreement shall become effective on the date (the "Effective Date") when
counterparts hereof executed on behalf of the Borrower shall have been
received by the Lender.
9.9 Governing Law; Entire Agreement
(a) THIS AGREEMENT AND, UNLESS OTHERWISE SPECIFIED THEREIN, EACH OTHER
LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(b) This Agreement and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject
matter hereof and thereof and supersede any prior agreements, written
or oral, or document with respect thereto.
9.10 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:
(a) the Borrower may not assign or transfer its rights or obligations
without the prior written consent of the Lender; and
(b) the rights of sale, assignment, and transfer of the Lender are subject
to Section 9.11.
47
9.11 Sale and Transfer of the Loan; Participations in the Loan
The Lender may assign, or sell participations in, its Loan and Commitment
in accordance with this Section. The Lender, with notice to the Borrower,
may assign and delegate (or grant participations) to any of its Affiliates
or to one or more commercial banks a constant and not varying percentage
of the Lender's Loan and/or Commitment, in a minimum aggregate amount of
U.S.$1,000,000. To the extent the Lender wishes to make any assignment
and delegation of (or sell participations in) the Loan and/or its
Commitment, the parties hereto agree to execute such documents and make
such amendments to the Loan Documents as are necessary to reflect the
participation of more than one financial institution in the Facility. In
no event shall the Borrower be required to pay any amount under any of
Sections 4.2, 4.3, 4.4, 4.5 and 4.6 existing at the time of any proposed
assignment or participation which would otherwise be payable if such
assignment took place.
9.12 Other Transactions
Nothing contained herein shall preclude the 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.
9.13 Forum Selection and Consent to Jurisdiction; Waiver of Immunity
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
THE LENDER OR THE BORROWER MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF
THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND IN ADDITION IN THE COURTS OF ANY
JURISDICTION WHERE ANY COLLATERAL OR OTHER PROPERTY OF THE BORROWER MAY BE
FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE BORROWER HEREBY IRREVOCABLY APPOINTS THE CT CORPORATION
WITH OFFICES ON THE DATE HEREOF AT ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(THE "PROCESS AGENT") AS ITS AGENT FOR SERVICE OF PROCESS IN NEW YORK.
SERVICE OF PROCESS MAY BE MADE UPON THE BORROWER BY MAILING OR DELIVERING
A COPY OF SUCH PROCESS TO IT IN CARE OF THE PROCESS AGENT AT THE PROCESS
AGENT'S ADDRESS AND THE BORROWER HEREBY FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN NEW YORK
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY THE MAILING OF
COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS FOR NOTICES SET FORTH
48
BELOW ITS SIGNATURE HERETO. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
9.14 Waiver of Jury Trial
THE LENDER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF
THE LENDER OR THE BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE LENDER ENTERING INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT.
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
HECLA MINING COMPANY
as the Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President - General Counsel
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇'▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
U.S.
Facsimile No.: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Operating Officer
Commitment Amount : U.S.$3,000,000 STANDARD BANK LONDON LIMITED
as Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant General Manager
By: /s/ Don M. Newport
Title: Head of Mining Finance
Lending Office:
Standard Bank London Limited
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Address for Notices:
Standard Bank London Limited
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile No.: ▇▇-▇▇▇ ▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
50
SCHEDULE I
DISCLOSURE SCHEDULE
Item 1 - Litigation
Pertinent litigation matters are described in Hecla Mining Company's annual
report on Form 10-K for the 1999 Fiscal Year, as follows:
Item 3 - Legal Proceedings
Note 5 - Notes to Consolidated Financial Statements
Note 8 - Notes to Consolidated Financial Statements
Item 2 - Taxes
N/A
Item 3 - Subsidiaries
Name Ownership Jurisdiction
CoCa Mines Inc. 100% Colorado
Creede Resources, Inc. 100% Colorado
Southern San ▇▇▇▇ Valley Railroad Company 100% Colorado
Eastmaque Gold Mines (U.S.) Corp. 100% Nevada
Hecla International Mining, Inc. 100% Delaware
Kentucky-Tennessee Clay Company* 100% Delaware
K-T Feldspar Corporation* 100% North Carolina
MWCA, Inc. 100% Idaho
Nevada Mine Properties, Inc. 100% Nevada
Southeastern Land Resources Corporation 100% Delaware
Compania Minera Hecla Chile Limitada 100% Chile
Constructora Hecla, S.A. de C.V. 100% Mexico
Equinox Resources (Canada) Inc. 100% Canada
Hecla do Brasil Empreendimentos e Participacoes Ltda. 100% Brazil
▇▇▇▇▇ de Caxias Mineracao Ltda. 100% Brazil
Hecla Mining Company of Canada Ltd. 100% Canada
Hecla Resources Investments Ltd. 100% Bermuda
Industrias Hecla, S.A. de C.V. 100% Mexico
▇-▇ ▇▇▇▇ de Mexico, S.A. de C.V.* 100% Mexico
Minera Hecla S.A. de C.V.* 100% Mexico
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ S.A. 100% Peru
Mineracao Hecla do Brasil Ltda. 100% Brazil
Minera Hecla Venezolana, C.A.* 100% Venezuela
Recursos Minerales del Norte, S.A. de C.V. 100% Mexico
ConSil Corp. 78.45% Idaho
The Rosebud Mining Company, L.L.C. 50% Delaware
* Designates Material Subsidiaries
Item 4 - Environmental Matters
Pertinent environmental matters are described in Hecla Mining Company's annual
report on Form 10-K for the 1999 Fiscal Year, as follows:
Item 1 - Business
Item 3 - Legal Proceedings
Note 5 - Notes to Consolidated Financial Statements
Note 8 - Notes to Consolidated Financial Statements
Item 5 - ERISA Plans
The benefit plans put in place by Hecla Mining for its employees and those of
certain of its subsidiaries are as follows. Such plans are more particularly
described in Note 9 to the Consolidate Financial Statements in the Form 10-K for
the fiscal year ended December 31, 1999.
Company Benefit Plan
Hecla Mining Company Lucky Friday Pension Plan
Hecla Mining Company Lucky Friday Hourly Savings Plan
Hecla Mining Company PBGC Premium Payments
Hecla Mining Company Travel Accident Plan (515)
Hecla Mining Company Long Term Disability Plan (514)
Hecla Mining Company Lucky Friday Layoff Plan (510)
52
Hecla Mining Company Lucky Friday Non-Occupational Disability
Plan (509)
Hecla Mining Company Lucky Friday Group Dental Plan (508)
Hecla Mining Company Lucky Friday Medical Insurance Plan (507)
Hecla Mining Company Supplemental Ret. and Death
Benefit Plan (505)
Hecla Mining Company Non-Occupational Disability Plan (504)
Hecla Mining Company Group Dental Plan (503)
Hecla Mining Company Group Medical Insurance Plan (502)
Hecla Mining Company Lucky Friday Group Life Insurance Plan
(506)
Hecla Mining Company Group Life Insurance Plan (501)
Hecla Mining Company Retirement Plan (001)
Hecla Mining Company Capital Accumulation Plan (004)
K-T Feldspar Corporation PBGC Premium Payments
Kentucky-▇▇▇▇▇▇▇▇ ▇▇▇▇ Hourly Employees Pension Fund (001)
K-T Feldspar Corporation Hourly Pension Plan (002)
53
SCHEDULE II
ADDITIONAL COSTS RATE
1. The Additional Costs Rate applicable to an Interest Period shall be the
rate determined by the Lender to be equal to the following formula:
A x 0.01%
---------
300
where, in each case, on the day of application of that formula by the
Lender:
A is the rate of charge payable by the Lender to the Financial
Services Authority under paragraph 2.02 or 2.03 (as the case may be)
of the Fees Regulations (but where, for this purpose, the figures at
paragraph 2.02(b) and 2.03(b) of the Fees Regulations shall be
deemed to be zero) and expressed in pounds per 1 million of the Fee
Base of the Lender.
2. For the purposes of this Schedule:-
"Eligible Liabilities" and "Special Deposits" have the meanings given to
those terms under the Bank of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ or by the Bank of England
(as may be appropriate), on the day of the application of the formula;
"Fee Base" has the meaning given to that term for the purposes of, and
shall be calculated in accordance with, the Fees Regulations;
"Fees Regulations" means, as appropriate, either:
(a) the Banking Supervision (Fees) Regulations 1998; or
(b) such regulations as from time to time may be in force relating to the
payment of fees for banking supervision in respect of periods
subsequent to 28 February 1999.
(i) The Additional Costs Rate applicable to a Loan for an Interest
Period shall be calculated at or about 11.00 am on the first day
of that Interest Period and shall be payable on the date on which
interest is payable in respect of that Loan under this Agreement.
(ii) The Lender shall determine the Additional Costs Rate by
application of the formula set out in paragraph 1 above on the
first day of each Interest Period.
54
If there is any change in applicable law or regulation, or the interpretation
thereof, by any governmental authority charged with the administration thereof,
or in the nature of any request or requirement by the Financial Services
Authority, the Bank of England, or other applicable banking authority, the
effect of which is to impose, modify or deem applicable any fees or any reserve,
special deposit, liquidity or similar requirements against assets held by, or
deposits in, or for the account of, or advances by the Lender, or in any other
respect whatsoever, the Lender shall be entitled to vary the formula set out in
paragraph 1 above so as (but only so as) to restore the Lender's position - in
terms of overall return to the Lender - to that which prevailed before that
change became necessary. The Lender shall notify the Borrower of any such
necessary variation to the formula and the formula, as so varied, shall be the
formula for the purposes of this Agreement with effect from the date of
notification.