N M Rothschild & Sons Limited
New Court, St. Swithin's Lane
London, EC4P 4DU
Registered Number 925279
July 11, 1996
USMX OF ALASKA, INC.
141 Union Blvd., Suite 100
Lakewood, Colorado 80228
USA
Dear Sirs:
Further to our recent discussions, we write to advise USMX OF
ALASKA, INC., the wholly-owned subsidiary of USMX, INC. (with
USMX of Alaska, Inc. referred to herein as "USMX" or "you") that
in principle, as contemplated by the Credit Agreement dated as of
July 11, 1996 (the "Credit Agreement") by and between USMX OF
ALASKA, INC. and NM Rothschild & Sons Limited ("NMR"), we are
prepared to deal with you on an uncommitted basis in spot and
forward gold and silver transactions and in gold and silver
options subject to the terms and conditions of this letter.
1. Effective Date
The arrangements in this letter will be effective on:
(a) your acceptance of such arrangements in
accordance with the terms of this letter; and
(b) receipt by us of all the documents listed in
the Schedule to this letter in form and substance
satisfactory to us.
Our entry into any transaction under this letter is also
conditional upon you being in compliance at the relevant
time with the terms and conditions of, and there being no
breach of or default under (including any conditions which
with the passing of time or the giving of notice or the
occurrence of any other event, might constitute such a
breach or default) this letter.
2. Single Agreement
Each party acknowledges that this letter, any confirmation
in writing (a "Confirmation"), including any telex or
facsimile communication from either party to the other,
evidencing and setting out the principal terms of a Spot,
Option or Forward (as each such transaction is defined
below) agreed between the parties and all Spots, Options and
Forwards entered into at any time pursuant to this letter,
shall constitute a single agreement between the parties, it
being understood that the parties would not otherwise enter
into any such Spot, Option or Forward.
3. Maturity
Notwithstanding any other provision of this letter, no
Option shall expire and no Forward shall mature after
December 31, 1999.
4. Options
A. Granting of Options
(i) Subject always to our mutual agreement as to
terms, either party (the "Writer") may from time to
time grant the other (the "Buyer") an option (an
"Option") entitling, but not obliging, the Buyer to
purchase from (a "Call Option") or sell to (a "Put
Option") the Writer a specified quantity of Metal
(the "Metal Quantity") at a stated or defined price
per unit of Metal according to market practice (the
"Strike Price"), no later than a specified time (the
"Expiration Time") on a specified day (the "Expiry
Date").
(ii) In this letter "Option" means a Put Option or
a Call Option and "Options" means Put Options and/or
Call Options.
B. Option Premium
In consideration of the Writer granting an Option to the
Buyer, the Buyer will pay to the Writer an option premium
agreed at the time the Option is granted no later than two
Business Days after the date on which the Option is granted.
C. Exercise of Options
(i) Exercise Date
Unless otherwise agreed, an Option under this
letter may be exercised only on its Expiry Date.
However, the parties may from time to time agree to
enter into other types of Options on terms to be
agreed between us.
(ii) Automatic Exercise
If the Writer has not received notice of
exercise (where such exercise is possible under the
terms of the Option) prior to the Expiration Time of
an Option having positive Option Value for the
Buyer, the Writer will immediately (and
automatically) exercise such Option on the Buyer's
behalf in accordance with paragraph 4.C.(iii)
without further reference to the Buyer ("Automatic
Exercise").
(iii) Settlement
Subject to paragraph 4.C.(iv), immediately
upon Automatic Exercise an Option will be
automatically converted into a sale by the Writer to
the Buyer (in the case of a Call Option) or a
purchase by the Writer from the Buyer (in the case
of a Put Option) at the Transaction Value for
Settlement (as defined below) two Business Days (the
"Settlement Date") after such exercise.
(iv) Cash Settlement
Where the Option so requires or where the
parties so agree at the time the Option is entered
into, settlement by the parties shall be by delivery
or receipt of the positive Option Value of such
Option on the Settlement Date.
(v) Alternative Settlement
As an alternative to Settlement of an
exercised Option you may settle by requesting us to
convert the relevant maturing spot transaction into
a Forward.
(vi) Default Settlement
If you do not specify which method of
settlement available to you under this paragraph 4
you wish to adopt before 10:00 a.m. London time on
the day falling two Business Days prior to the
Settlement Date, we shall settle such transaction in
accordance with Clause 4.C.(iv).
(vii) In this letter,-
(a) "Option Value" at any time means,
in the case of a Call Option, Market Value
minus Transaction Value and, in the case of a
Put Option, Transaction Value minus Market
Value; and
(b) "Market Value" in relation to
Options means the product of (x) the Metal
Quantity and (y) the then prevailing market
bid (in the case of a Call Option) or offered
(in the case of a Put Option) price for the
Metal for settlement on the Settlement Date.
(c) "Transaction Value" means the
amount equal to the product of the Metal
Quantity and the Strike Price.
D. Expiry/Cancellation
Subject to Automatic Exercise an Option shall expire on its
stated Expiry Date without value if not exercised by such
date.
5. Forward and Spot Transactions
A. Purchase and Sale
(i) Spot Transactions
We may purchase from you and/or sell to you
Metal for Settlement two Business Days thereafter at
a price (the "Spot Price") which you may choose to
be:
i) our loco London spot price
prevailing at the time you wish to deal; or
ii) in the case of gold, the morning or
afternoon US Dollar London Gold Market Fixing
Price; or
iii) in the case of silver, the spot US
Dollar London Silver Market Fixing Price,
in each case on the day of entering into the
transaction (each such transaction a "Spot").
(ii) Forward Transactions
We may purchase from you and/or sell to you
Metal for settlement on a specified future date (the
"Maturity Date") on the basis of a price (the
"Forward Price") determined in accordance with the
provisions of this letter (each such transaction a
"Forward").
(iii) Fixed or Floating Forwards
Each Forward shall have a Forward Price
comprising the Spot Price on the day of entering
into the Forward and a forward premium determined in
accordance with the terms of this letter on a fixed
rate basis (a "Fixed Rate Forward") or on a Floating
rate basis ("Floating Rate Forward").
B. Fixed Rate Forwards
(i) Premium
Unless the parties agree otherwise and
subject to paragraph 5.D., the forward premium for a
Fixed Rate Forward will be determined by reference
to the then prevailing market interest rates for the
period of the Forward applied to the Spot Price.
The forward premium will be calculated on an annual
basis based on a 360-day year.
(ii) Settlement
You may settle any Fixed Rate Forward on its
Maturity Date on giving us not less than two
Business Days' prior written notice or by closing
out such Forward by either:
(a) entering into a matching Forward at
any time in the same quantity and for the
same Maturity Date as the original Forward,
with the matching Forward Price being
determined in accordance with the terms of
this letter. The difference between the
original Forward Price and the matching
Forward Price multiplied by the Metal
Quantity will be paid on the Maturity Date;
or
(b) entering into a matching Spot on
the Maturity Date of the original Forward at
a price based, at your election, on:
(1) our prevailing spot price
by reference to the market prices quoted
two Business Days before the Maturity
Date; or
(2) the morning London Gold
Market US Dollar Fixing Price two
Business Days before the Maturity Date;
or
(3) in the case of silver,
the London Silver Market spot US Dollar
Fixing price two Business Days before
the Maturity Date; and
cash payment of the amount equal to
the product of the Metal Quantity and the
difference between the original Forward Price
and the matching spot price will be made on
the Maturity Date.
(i) New Forward
At the time you close out a Fixed Rate
Forward under this letter you may elect to enter
into a new Forward in the same Metal Quantity with a
Maturity Date and Forward Price determined in
accordance with the terms of this letter.
(ii) Conversion
As an alternative to closing out a Fixed Rate
Forward you may elect on not less than two Business
Days' prior notice to settle such Forward by
requesting us to convert it into a Floating Rate
Forward.
C. Floating Rate Forwards
(i) Premium
(a) Unless the parties agree otherwise,
and subject to the remainder of paragraph
5.C., the forward premium for a Floating Rate
Forward will be determined by us by reference
to market interest rates for gold and Dollars
for successive floating rate periods (each a
"Floating Rate Period") over the term of the
Forward.
(b) In calculating the gold or silver
floating rate of interest, the purchaser may
elect for one or more tranches of the gold or
silver (as the case may be) purchased
pursuant to a Forward to be subject to our
quoted rate for an interest period agreed by
the parties which does not exceed thirty-six
months, PROVIDED that each such tranche
comprises at least 5,000 fine ounces of gold
or (as the case may be) 50,000 ounces of
silver.
(c) If a Forward is not settled on the
last day of a Floating Rate Period, the
accrued forward premium will be aggregated
with the Spot Price for such Forward, such
aggregate being the new Spot Price for the
succeeding floating rate period. The forward
premium for the succeeding floating rate
period will be calculated by reference to and
will apply to such new Spot Price. Forward
premiums shall be aggregated in such manner
to each successive floating rate period until
settlement.
(d) If you elect to settle a Floating
Rate Forward prior to the Rollover Date (as
defined below), the accrued forward premium
will be calculated by discounting to present
value the forward premium for said floating
rate period from the date of settlement to
the last day of such period at the rate
determined by us by reference to the market
for the unexpired portion of such period.
(e) The forward premium will be
calculated on an annual basis based on a 360-
day year.
(ii) Floating Rate Periods
You may select the duration of each Floating
Rate Period provided that:
(a) you notify us no later than two
Business Days before the beginning of the
relevant Floating Rate Period of such
duration; and
(b) the first Floating Rate Period will
commence two Business Days after the date on
which we enter into the relevant Floating
Rate Period; and
(c) no Floating Rate Period shall
extend beyond the Maturity Date.
(iii) Rollover
On the last day of each Floating Rate Period
(the "Rollover Date" and the last Rollover Date
shall fall on the Maturity Date) you may on
notifying us no later than two Business Days before
such Rollover Date:
(a) Settle; or
(b) close out the Forward in accordance
with paragraph 5.C.(iv)(b)(2), except that
(1) if the Floating Rate Period ends on the
Maturity Date, the appropriate Spot Price
will be the relevant quotes two Business Days
before the Maturity Date and (2) the Forward
Price will not be discounted to present
value; or
(c) except where the Rollover Date is
the Maturity Date, elect that the relevant
Forward continues as a Floating Rate Forward
with a new Floating Rate Period and in the
same Metal Quantity, with the new Forward
Price determined in accordance with the terms
of this letter,
provided that if by 10:00 a.m. on the
Rollover Date we have not received such notification
we shall settle the Forward in such manner as we may
in our discretion consider appropriate.
(iv) Settlement
On any date prior to the Maturity Date of a
Floating Rate Forward you may:
(a) on notifying us no later than two
Business Days before the proposed settlement
date Settle; or
(b) except on Rollover Dates or the
Maturity Date close out such Forward by:
1) entering (except on
Rollover Dates or the Maturity Date)
into a matching Forward in the same
Metal Quantity and for the Rollover Date
for the relevant Floating Rate Period,
with the matching Forward Price being
determined in accordance with the terms
of this letter. The difference between
the original Forward Price and the
matching Forward Price multiplied by the
Metal Quantity will be paid on the
Rollover Date. In this subparagraph,
the Maturity Date shall be deemed to be
the Rollover Date if the Floating Rate
Period ends on the Maturity Date; or
2) entering (subject to
paragraph 5.C.(iii)(b)) into a Spot in
the same Metal Quantity at a Spot Price
determined in accordance with the terms
of this letter. The difference between
the Forward Price (discounted to present
value) and the Spot Price multiplied by
the Metal Quantity will be paid two
Business Days after the date of the Spot
is entered into.
D. Fixing Commission
(i) In respect of your sales of Metal to us based
on a London Fixing Price we will until further
notice allow you a return commission of $0.05 per
fine ounce (in the case of gold) and one-sixteenth
of one percent of the price per ounce (in the case
of silver). In respect of your purchases of Metal
from us based on a London Fixing Price we shall
until further notice charge you Fixing commission at
the rate of $0.15 per fine ounce (in the case of
gold) and three-sixteenths of one percent of the
price per ounce (in the case of silver).
(ii) If you use the London Fixing Price as a base
price for a Forward, the forward premium will be
calculated on such Fixing Price (excluding Fixing
commission) and the relevant Fixing commission
specified above will then be added to the Forward
Price.
6. Open Position Limit
A. Open Position Limit
The maximum Open Position Limit that we are currently
prepared to have outstanding with you at any time will
(subject to paragraph 6.C.) be 150,000 ounces of gold.
B. Utilization of Limit
Utilization of the Open Position Limit will be deemed to be
the difference between:
(a) your outstanding Forward Sales of
Metal to us;
(b) outstanding Call Options sold by us
to you; and
(c) outstanding Put Options sold by us
to you and the Open Position Limit.
C. Variation
We hereby reserve the right to vary the Open Position Limit
at any time by notice to you in writing.
7. Exposure Limit and Margin
A. Exposure Limit
(i) Without prejudice to paragraphs 6.A. and
7.C., your Exposure Limit under the terms of this
letter is US$7,500,000.00 (Seven Million Five
Hundred Thousand United States Dollars).
(ii) Your Exposure Limit will comprise the aggregate of:
(a) the notional cost to us of
replacing in the market any Options sold by
you to us; and
(b) the amount by which the Market
Value of your outstanding Forward sales to us
under the terms of this letter is in excess
of their Contractual Values; and
(c) the amount by which the Contractual
Value of your outstanding Forward purchases
from us under the terms of this letter is in
excess of their Market Value,
less the aggregate of
(d) the notional cost to you of
replacing in the market any Options sold by
us to you; and
(e) the amount by which the Market
Value of your outstanding Forward sales to us
under the terms of this letter is less than
their Contractual Value; and
(f) the amount by which the Contractual
Value of your outstanding Forward purchases
from us under the terms of this letter is
less than their Market Value; and
(iii) In this letter, Market Value means in relation
to a Forward, the product of(x) the Metal Quantity and
(y) the Market Price Portion of the Forward Price determined
by reference to the latest available London Market Price for
the Metal adjusted by a forward premium determined by us
by reference to market prices.
B. Margin
(i) In the event that the Exposure Limit is
exceeded, you will, within two Business Days after
demand by us in writing at any time, provide us with
an acceptable margin ("Margin") at least equal to
such excess but in any event equal in value to not
less than US$250,000.00 (Two Hundred Fifty Thousand
United States Dollars).
(ii) Subject to the following provisions of
paragraph 7.B., to the extent that at any time you
have provided us with any Margin in excess of the
amount required by clause (i) above or otherwise
required by this Agreement, we shall release to you
such excess Margin within our possession five
Business Days after your request therefor, provided
always that we shall not be obligated to release any
Margin within seven Business Days of your having
lodged the same with us.
(iii) Margin may be provided by you in the form of
any combination of the following:
(a) deposits placed with us on which we
will pay to you the relevant London Interbank
Bid Rate for the period concerned as mutually
agreed at the time of deposit.
(b) Metal (conforming to the good
delivery specifications of the London Bullion
Market Association and being for loco London
delivery unless agreed otherwise by us in
writing) which may be deposited with us
either by way of physical delivery or by way
of book transfer in a manner acceptable to
us.
(iv) When releasing physical Metal placed with us
by way of Margin we shall not be obliged to release
the identical Metal placed with us but rather Metal
of an equivalent quantity, type and assay.
(v) You shall not pledge, mortgage, charge or
create any other form of encumbrance over Margin, or
your rights in respect thereof, delivered (or to be
delivered) to us (except liens in favor of
N M Rothschild & Sons Limited), and such rights
shall not be capable of being transferred, assigned,
mortgaged, charged or otherwise dealt with in any
way without our prior written consent. At all times
(whether before or after the occurrence of an Event
of Default) your rights in respect of Margin
provided hereunder shall constitute contractual
rights for the delivery, subject to the provisions
hereof, of identical amounts of gold (to the intent
that you shall not retain any proprietary right to
or entitlement in gold delivered as Margin to us and
we shall be entitled in our absolute discretion to
lend, lease, dispose of or otherwise deal with the
same as the beneficial owner thereof).
C. Variation
We hereby reserve the right to vary your Exposure Limit at
any time by notice to you in writing.
8. Termination
A. Termination Date
Subject to paragraph 8.B., the facilities in this letter are
available to you until December 31, 1999 (the "Termination
Date").
B. Termination by Notice
(i) We may at any time, by notice to you in
writing, immediately terminate the arrangements set
out herein by giving you written notice of
termination, provided that such termination shall be
without prejudice to transactions entered into
between us hereunder then outstanding, subject
always to paragraph 11.
(ii) After giving you notice of termination, we
will be prepared to enter into matching transactions
with you to close out existing transactions between
us.
9. Representations
You represent to us, on the date of your acceptance of this
letter and on each date that any transaction under this
letter is outstanding (with reference to the facts and
circumstances then existing) as follows:
A. USMX is a corporation duly organized under the laws of
Delaware with the necessary power and authority to enter
into the transactions and arrangements referred to in this
letter; and your obligations under this letter are legal and
valid obligations binding on you in accordance with its
terms;
B. your entry into and/or performance of or observance of your
obligations under this letter does not and will not violate
or breach any law, regulation, agreement, deed, license,
order, obligation or document which is applicable to you;
C. you will not be required to make any deduction or withhold
ing from any payment you may make pursuant to this letter;
D. our claims made in respect of, or pursuant to, this letter
will rank at least pari passu with the claims of all your
other secured creditors (save those preferred solely by any
bankruptcy, insolvency, liquidation or other similar laws of
general application);
E. in any proceedings taken in your jurisdiction of incorpora
tion in relation to this letter, you will not be entitled to
claim for yourself or any of your assets immunity from suit,
execution, attachment or other legal process;
F. all acts, conditions and things required to be done,
fulfilled and performed in order (a) to enable you lawfully
to enter into, exercise your rights under and perform and
comply with the obligations under this letter, (b) to ensure
that your obligations under this letter are and shall be
legal, valid and binding, and (c) to make this letter
admissible in evidence in your jurisdiction of
incorporation, have been done, fulfilled and performed;
G. under the laws of your jurisdiction of incorporation, it is
not necessary that this letter or any document issued
pursuant hereto be filed, recorded or enrolled with any
court or other authority in such jurisdiction or that any
stamp, registration or similar tax be paid on or in relation
to this letter or any such document;
H. no Event of Default (as defined below) has occurred;
I. no action or administrative proceeding of or before any
court or agency which might have a material adverse effect
on your business or financial condition has been started or
threatened;
J. you are a producer, processor or commercial user of, or a
merchant handling, Metal or Metal products or by-products;
and in entering into the transactions and arrangements
referred to in this letter are doing so solely for the
purpose related to your business as such;
K. you are acting as principal in connection with each Spot,
Forward and Option under this letter and not as agent;
L. you have carefully reviewed this letter and the transactions
contemplated under it and have determined that you can bear
the risks involved in such transactions; and
M. you are an eligible swap participant as defined in
applicable commodity futures trading laws.
10. Covenants
You shall:
A. not enter into contracts or options hereunder or otherwise
hedge pursuant to other hedging arrangements more than
eighty percent (80%) of its annual Metals production;
B. from time to time on our request, furnish us with such
information about your business and financial condition as
we may reasonably require;
C. obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all
authorizations, approvals, licenses and consents required in
or by the laws and regulations of your jurisdiction of
incorporation to enable you lawfully to enter into and
perform your obligations arising under or pursuant to this
letter or to ensure the legality, validity, enforceability
or admissibility in evidence in your jurisdiction of
incorporation of this letter and/or any agreements or
documents made or issued pursuant to it;
D. promptly inform us of the occurrence of any event which is
or may become (with the passage of time, the giving of
notice, the making of any determination hereunder, or any
combination thereof) an Event of Default and, upon receipt
of a written request to that effect from us confirm to us
that, save as previously notified to us or as notified in
such confirmation, no such event has occurred.
11. Events of Default and Close-Out
A. Events of Default
Any of the following shall constitute an Event of Default:
(i) you fail to make any payment or delivery
(including the supply of Margin) when due under this
letter or any Option and/or Forward and/or Spot or
breach any other term of this letter;
(ii) any steps are taken, petition presented,
application made, resolution proposed, meeting
summoned to consider a resolution, or request made for
your liquidation, bankruptcy, administration,
voluntary arrangement, dissolution or any other
insolvency proceedings whatsoever are taken in respect
of you or for the appointment of a receiver,
administrative receiver, liquidator, administrator or
other insolvency representative whatsoever in respect
of you;
(iii) you convene a meeting for the purpose of
making, or propose entering into, any agreement or
composition for the benefit of your creditors or any
class of them;
(iv) you cease or threaten to cease to carry on your
business, or dispose or threaten to dispose of your
undertaking or assets or become unable to pay or stop
or suspend payment of your debts as they fall due;
(v) any of your indebtedness or obligations for the
repayment of any borrowed moneys becomes due and
payable, or capable of being declared due and payable,
prior to the specified maturity date thereof due to
any default thereunder or is not paid when due;
(vi) an encumbrancer takes possession or a receiver,
administrative receiver, liquidator, administrator or
other similar officer is appointed in respect of you
or any part of your undertaking or assets or a
distress, execution or other process is levied or
enforced upon or against any of your property and is
not removed, discharged or paid out within seven days;
(vii) any security created by any mortgage or charge
or other security interest created by you becomes
enforceable;
(viii) any event occurs or proceeding is taken with
respect to you in any jurisdiction to which you are
subject which has an effect equivalent or similar to
any of the events mentioned in paragraphs (ii), (iii),
(iv) and (vi) above;
(ix) any representation made pursuant to paragraph
9. proves to have been materially incorrect or
misleading when made;
(x) at any time it becomes unlawful for you to
perform or comply with any or all of your obligations
arising under this letter or under any Option or
Forward or such obligations cease to be legal, valid
and binding;
(xi) if any circumstances arise which in our opinion
have or may have a material adverse effect on your
ability to perform your obligations under this letter;
(xii) an Event of Default (as therein defined) occurs
under the Credit Agreement.
B. Rights on Default
(i) If an Event of Default occurs and is not
corrected within one Business Day in respect of a late
payment under paragraph 11.A.(i), or within five
Business Days in respect of any other Event of
Default, we shall have the absolute discretion at any
time (without prior notice to you) to immediately
(a) determine the replacement cost to
either party of outstanding Options and
exercise any Option having positive Option
Value for either party and to close out the
resultant open position by entering into a
matching transaction with you; and/or
(b) to close out all outstanding Forwards
by entering into matching transactions for the
relevant Metal Quantity in the market; and/or
(c) terminate our obligations under
this letter by written notice to you; and/or
(d) restrict the maximum duration of
future Forwards; and/or
(e) change the Termination Date; and/or
(f) amend any other provision of this
letter,
provided always that upon the occurrence of
any Event of Default arising under any one or more
of paragraphs 11.A(ii), (iii), (iv), (vi), (vii) and
(viii), then we shall be deemed automatically and
immediately to have exercised our rights set out in
11.B(i)(a) and (b) above so as to reduce outstanding
obligations between us to the payment of a single
cash sum payable by either party to the other.
(ii) If an Event of Default occurs and is corrected within the
time periods stated in paragraph 11.B., we shall have the absolute
right in our sole discretion to exercise any one or more of our
rights under paragraph 11.B.(i)(d),e) and (f) without prejudice
to existing options or contracts established pursuant to
paragraphs 4 and 5 hereof.
C. Default Netting
Having exercised our rights in accordance with
paragraph 11.B.(i)(a) and (b) we shall:
(i) net the transaction amounts and quantities in
the manner described in paragraph 12.A. and adjust
any resulting amount to present value from the value
date of the forward transaction and matching
transaction to the close-out date by discounting
such amount at the appropriate Eurodollar rate for
the period concerned (as determined by us at our
absolute discretion) assuming a 360-day year.
(ii) liquidate any of your property in our
possession by sale or other commercially reasonable
means; and
(iii) convert any such amounts resulting from
paragraph 11.C.(i) and (ii) above into US Dollars in
such manner and at such rates as we may in our
reasonable discretion determine.
The net resulting amount shall be paid by us to you or by you to
us (as the case may be) forthwith in Dollars upon notice to you
of the amount so determined and shall be in full and final
settlement and discharge of all payment and delivery obligations
between you and us under this letter.
D. Performance on Default
Without prejudice to the foregoing provisions of paragraph
11, upon the occurrence of an Event of Default, we shall not
be required to deliver US Dollars or Metal hereunder or
under any transaction entered into pursuant to this letter
unless and until you first satisfy all your obligations to
us.
12. Netting and Payments
A. Netting
If on any date in respect of Spots or maturing Forwards or
Options any amounts are payable by both parties in the same
currency or any amounts of Metal having the same assay and
delivery location are transferable by both parties, then:
(i) the amounts so payable or transferable by
each party respectively in that currency or metal
type shall be aggregated; and
(ii) if the aggregate amount payable by one party
hereto ("the first party") exceeds the aggregate
amount payable or transferable by the other party
hereto, the respective obligations of the parties to
pay or transfer such aggregate amounts shall be
deemed to be satisfied and discharged and replaced
by an obligation on the part of the first party to
pay to the other party an amount equal to such
excess; and
(iii) if the aggregate amounts payable by each
party hereto are equal, such amounts shall be deemed
to be satisfied and discharged and no payment or
transfer shall be made by either party in respect
thereof.
B. Payment Instructions
(i) All payments due to us hereunder shall be
remitted by telegraphic transfer in same day funds
to our Account Number 001-1-948262, with The Chase
Manhattan Bank N.A., 1 Chase Manhattan Plaza, New
York, NY 10081.
(ii) All payments due to you hereunder will be
remitted by telegraphic transfer in same day funds
in accordance with your written instructions.
C. Non-Business Day
Any amount due for payment hereunder which falls due on a
day which is not a Business Day shall be payable on the next
succeeding Business Day and the amount due will be adjusted
accordingly by an appropriate rate of interest to be agreed
between us.
D. Settlement Limit
Notwithstanding the foregoing provisions of paragraph 12,
the maximum sum or value of Metal that we shall be obliged
to pay or deliver to you or to your order, as the case may
be, without our first having received confirmation that the
Metal or funds (as the case may be) due to be delivered or
paid to us by you, respectively, have actually been received
by us at our nominated correspondent, shall not exceed
US$25,000,000.00 (Twenty-Five Million United States
Dollars).
E. Gross-Up
If you are required at any time to make any deduction or
withholding for or on account of tax in respect of any
payment due from you hereunder or under any transaction,
then you shall increase the amount of such payment to the
extent necessary to ensure that the amount we receive is not
less than the amount we would have received had no such
deduction or withholding been required.
13. Confirmations, Statements and Notices
A. Confirmations
Upon entering into any Option, Spot or Forward transaction
with you under the terms of this letter we will promptly
send you by telex or facsimile a confirmation setting out
the principal terms of the transaction.
B. Statements
We will also send you monthly statements of your accounts
maintained with us.
C. Notices
Unless the contrary is stated, any notice or communication
to be given by either party hereunder shall be sent to the
facsimile or telex numbers set out below and shall be deemed
received upon despatch by the relevant party, provided that
such party shall have received the appropriate answer back.
To: N M Rothschild & Sons Limited
Fax: 071-280-5139
Telex: 888031
To: USMX OF ALASKA, INC.
Fax: 303-980-1363
14. Fixing Business
To the extent that you wish to execute business based on a
London Market Fixing Price you will place your purchase or
sale order with us no later than 10:15 a.m. London time on
the day in question (in the case of the morning London Gold
Market Fixing Price), no later than 2:45 p.m. London time on
the day in question (in the case of the afternoon US Dollar
London Gold Market Fixing Price) and no later than 11:30
a.m. (in the case of the US Dollar London Silver Market
Fixing Price).
15. Expenses
You agrees to indemnify us in full and on demand for all
reasonable fees (including legal fees), costs and expenses
incurred in connection with the protection and enforcement
of our rights hereunder.
16. Law and Jurisdiction
The terms of this letter will be governed by, and construed
in accordance with, the laws of England. For our exclusive
benefit you hereby agree to submit to the jurisdiction of
the English courts to settle any disputes which may arise
out of or in connection with this letter. Nothing in this
paragraph limits our right to bring proceedings against you
in connection with this letter in any other court of
competent jurisdiction, nor shall the taking of proceedings
in one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction whether concurrently
or not, to the extent permitted by the law of such other
jurisdiction.
17. General Provisions
A. Assignment
Your rights arising under any transaction entered into
pursuant hereto shall not be capable of assignment by you.
B. Severability
Each of the provisions of this letter and any transaction
made pursuant to it shall be severable and distinct from one
another and if at any time any one or more of such
provisions is or becomes invalid, illegal or unenforceable,
the validity, legality and enforceability of each of the
remaining provisions of this letter or any such transaction
shall not in any way be affected, prejudiced or impaired
thereby.
C. Cumulative Rights
The rights, powers and remedies provided by this letter are
cumulative and are not, nor are they to be construed as,
exclusive of any right of set-off or other rights, powers
and remedies provided by law or by any other agreement
between the parties. No failure on our part to exercise, or
delay in exercising, any of the rights, powers and remedies
provided by this letter, law or any other such agreement
shall operate as a waiver thereof, nor shall any single or
partial waiver of any such right, power or remedy preclude
any further or other exercise thereof.
D. Reliance
Each Spot, Forward or Option shall be deemed to have been
entered into by you in reliance only upon your own judgment
and deliberations and we do not hold ourselves out, or any
of our employees or agents having our authority, to advise
you on the terms thereof or on any other matters connected
with Metal transactions under this letter, and neither we
nor any of our employees or agents shall have any
responsibility or liability whatsoever in respect of any
such advice given to you, whether or not such advice was
requested by you.
E. Set-Off
Without prejudice to our rights under paragraph 11.C. we may
without notice to you set off any matured obligation owed by
you to us under this letter against any obligation (whether
or not matured) owed by us to you, regardless of payment,
booking branch, currency or Metal of such obligations. This
paragraph is intended to give rise to rights in contract
only and is not intended to constitute, create or give rise
to a security interest of any kind over any of your assets.
18. Acceptance
Please arrange for an authorized signatory of your Company
to sign and return to us the attached copy of this letter,
thereby signifying your agreement to the terms set out
herein. In the event that you have not so signed and
returned the attached copy of this letter by close of
business on July 13, 1996 (or such later date as we may
agree), the uncommitted facility offered by this letter
shall lapse.
19. Definitions
"Business Day" means a day on which Banks in London, New
York, Denver and Johannesburg are open for a full day's
business.
"Dollars" and "$" means the lawful currency of the United
States of America.
"gold" means 995+ gold which would constitute good delivery
on the London Bullion Market.
"Metal" means gold and/or silver.
"Settlement" means:
(a) in respect of a sale of Metal to you,
settlement by your remitting to us on the Settlement
Date or Maturity Date (as appropriate) the
Transaction Value or Spot Price or Forward Price (as
appropriate) against which we will credit your
relevant London Gold Holding Account or, as the case
may be, London Silver Holding Account in our books;
or
(b) in respect of a purchase of Metal from you,
settlement by your arranging physical delivery of
loco London good delivery gold to us or by your
arranging for another acceptable London Bullion
Market Association member to credit our relevant
London Gold Exchange Account or, as the case may be,
London Silver Exchange Account with such member on
the Settlement Date or Maturity Date (as
appropriate) against which we will remit the
Transaction Value or Spot Price or Forward Price (as
appropriate) to you in accordance with your
instructions; and
"Settle" and "Settled" shall be construed accordingly.
"silver" means 999 silver which would constitute good
delivery on the London Bullion Market.
Unless otherwise stated, any reference herein to a numbered
"paragraph" shall be a reference to such paragraph contained
in this letter. Headings used in this letter shall not
affect the meaning hereof.
Yours very truly,
PER PRO
N M ROTHSCHILD & SONS LIMITED
______________________________
______________________________
Countersigned by way of acceptance the
terms and conditions set out above.
For and on behalf of
USMX OF ALASKA, INC.
__________________________________
Authorized Signatory
Name:_____________________________
Title:____________________________
SCHEDULE
Condition Precedent Documents
1. A copy, certified a true copy by a duly authorized officer of
USMX OF ALASKA, INC. ("USMX") Board Resolutions of USMX approving
the execution, delivery and performance of this letter and the
terms and conditions hereof and authorizing a named person or
persons to sign this letter and any documents to be delivered by
USMX pursuant hereto.
2. A certificate of a duly authorized officer of USMX setting out
the names and signatures of the persons authorized to sign, on
behalf of USMX, this letter and any documents to be delivered by
USMX pursuant hereto.