FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "AK
Amendment") is made and entered into as of November __, 1996, by and
between N M ROTHSCHILD & SONS LIMITED, a company organized and
existing under the laws of England with an address at New Court, St.
Swithin's Lane, London EC4P 4DU ("Lender"), and USMX OF ALASKA, INC.,
a company organized and existing under the laws of Alaska with an
address at 141 Union Blvd., Suite 100, Lakewood, Colorado 80228
("Borrower") pursuant to Section 11.1 of that certain Credit Agreement
dated as of July 11, 1996, between Lender and Borrower (the "AK Credit
Agreement").
R E C I T A L S
I. Pursuant to the AK Credit Agreement, Lender agreed,
under certain terms and conditions, to loan to Borrower up to
$19,500,000 to be used to finance the construction and initial
operation of the Illinois Creek, Alaska gold mining facility.
II. USMX, INC., a Delaware corporation and sole shareholder
of Borrower ("USMX"), has (i) executed a Guaranty, dated as of July
11, 1996 (the "Guaranty"), in favor of Lender pursuant to which USMX
guarantees the obligations of Borrower to Lender under the AK Credit
Agreement and the other Loan Documents; and (ii) entered into a
separate Credit Agreement, dated as of July 11, 1996, between Lender
and USMX (the "USMX Credit Agreement") pursuant to which Lender has
agreed, under certain terms and conditions, to loan to USMX
$2,500,000.
III. The following Events of Default are known to Lender to
be currently outstanding under the AK Credit Agreement, the Guaranty
and the USMX Credit Agreement and under the other Loan Documents:
(1) USMX has failed to make an additional equity
contribution of $1,500,000 to Borrower as required by
Section 10 of the Guaranty; and
(2) USMX is not in compliance with the financial covenants
set forth in Section 11 of the Guaranty.
IV. Lender, Borrower and USMX have entered into that
certain Letter Agreement, dated October 29, 1996 (the "Letter
Agreement"), pursuant to which Lender has agreed to waive until
December 31, 1996 the Defaults listed in (1) and (2) of Recital III
(the "Waived Defaults") in exchange for certain actions, agreements
and undertakings by Borrower and USMX, including the execution and
delivery to Lender of this AK Amendment and the First Amendment to
USMX Credit Agreement, dated the date hereof, by and between USMX and
Lender, and the documents and agreements contemplated by those two
amendments (together, the "Waiver Documents").
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual provisions
set forth below, the parties agree as follows:
A. Definitions. Capitalized terms used herein but not
otherwise defined shall have the meanings given thereto in the AK
Credit Agreement.
B. Status of Loan Documents. Borrower reaffirms its
liability for all of the obligations evidenced or secured by the Loan
Documents, and acknowledges that Borrower has no defenses to
enforcement of the Loan Documents in accordance with their respective
terms and no basis for asserting any offset or other claim against
Lender.
C. Amendment of Credit Agreement. The AK Credit Agreement
is hereby amended as follows:
1. A new Section 2.3(d) is hereby added to read in
its entirety as follows:
(d) First Amendment Fee. In consideration
of Lender agreeing to enter into the First Amendment to
this Agreement and the other documents and agreements
executed and delivered by Lender related to such First
Amendment, Borrower, jointly and severally with USMX,
agrees to pay Lender a fee in the amount of $100,000
(the "First Amendment Fee"), which fee shall be payable
on the first to occur of (i) the offer and sale of
equity interests of USMX required by Section 7.12(a) of
the USMX Credit Agreement; (ii) April 15, 1997; or
(iii) such other time as the First Amendment Fee can be
paid by either Borrower or USMX without reducing
working capital available to Borrower to an amount less
than required by Borrower for its continued operations,
in the reasonable judgement of Lender. The First
Amendment Fee is in addition to all other fees,
expenses and reimbursements paid or required to be paid
by Borrower or USMX to Lender.
2. Section 3.5(b) is hereby amended and restated in
its entirety as follows:
(b) Interest Periods. Borrower may
select an interest period with respect to each
Advance ("Interest Period") of 30, 90 or 180 days,
or of such other period of days as may be agreed
to by Lender in its sole discretion, on a 360-day
year basis; provided that in no event may more
than three (3) different Interest Periods be in
effect hereunder at any one time. Borrower will
select Interest Periods by giving notice to Lender
in the Request for Advance and thereafter at least
three (3) Business Days prior to the expiration of
the Interest Period then in effect by a
Conversion/Interest Period Notice. If at any time
Borrower fails to give timely notice of its
Interest Period selection, then Borrower shall be
deemed to have selected an Interest Period of
thirty (30) days. No Interest Period shall end
after the Scheduled Maturity Date. Interest will
be payable in full at the end of each Interest
Period, provided that accrued interest will be
payable every ninety (90) days for Interest
Periods greater than 90 days.
3. A new Section 3.14(d) is hereby added to read in
its entirety as follows:
(d) In the event that, with the prior
consent of Lender (which may be given or withheld in
Lender's sole discretion), Borrower sells any royalty
or other interest in or to the Mining Properties or
assets related thereto or production of valuable
minerals therefrom (other than sales of assets or
minerals in the ordinary course of Borrower's
business), Borrower shall deposit in the Proceeds
Account the proceeds from such sale or sales
immediately upon their receipt.
4. Section 8.11 is hereby amended by appending the
following two sentences to the end of that
section:
No later than December 2, 1996, Borrower shall
have submitted to Lender a draft of an amended
Development Plan reflecting the results of operations
through that date and, no later than December 11, 1996,
Borrower shall make such changes therein as are
necessary in order to obtain the approval of Lender
required by this Agreement of such amended Development
Plan. Provided that such amended Development Plan
meets with Lender's approval as provided by this
Agreement, Lender shall grant its approval hereunder no
later than December 16, 1996.
5. A new Section 8.14 is hereby added to read in its
entirety as follows:
8.14 Project Monitoring. In addition to any
reporting and other obligations of Borrower pursuant to
this Article VIII, Borrower shall consult with Lender
and its agents regarding management of the Project
through Completion, with such consultations to include:
(a) Instituting arrangements for
monitoring by Lender and its agents of
construction of the Project and initial mining
through Completion, including the management
thereof, and the payment of costs and expenses
associated therewith;
(b) Review of and, to the extent
deemed necessary or desirable by Lender and its
agents in Lenders sole judgement, modification of
the mining, construction and other working plans
related to the Project, and any budgets associated
therewith, including review and modification of
approved vendors, suppliers and creditors to the
Project through Completion; and
(c) Final decision regarding the
date on which construction of the Project and
mining will be suspended for the 1996-97 winter
season.
6. Section 11.4 is hereby amended by changing each
use of the word "Agreement" to read "Agreement (and any
amendment to this Agreement)".
D. Reaffirmation. Borrower hereby reaffirms each
representation, warranty, and covenant contained in the AK Credit
Agreement with the same force and effect as if each were separately
stated herein and made as of the date hereof, except (i) for such made
as of a certain date, which are hereby reaffirmed as of such date, and
(ii) to the extent of any variance therefrom disclosed on Exhibit A to
the Omnibus Certificate supplied to Lender pursuant to Paragraph H.3
hereof.
E. Title Matters. Borrower represents and warrants to
Lender that, except as previously disclosed to Lender, it is the sole
owner of the Mining Properties, and that the Mining Properties are
free and clear of all material defects of title or Liens except as
have previously been permitted by Lender.
F. Default Under Loan Documents. Borrower acknowledges
and agrees that any Default by Borrower under this AK Amendment shall
constitute a Default under each of the Loan Documents, entitling
Lender to exercise any or all rights and remedies provided for in the
Loan Documents. Lender's execution and delivery of this AK Amendment
shall not be construed as a waiver of any presently-existing Default
under any of the Loan Documents, whether or not such Default is known
to Lender, except that compliance by Borrower with the Waived Defaults
is hereby waived by Lender until December 31, 1996.
G. Ratification of Credit Agreement. As modified by this
AK Amendment, the AK Credit Agreement is in all respects ratified,
approved and confirmed, and as so amended, shall remain in full force
and effect. From and after the date hereof, all references to the
Credit Agreement in any Loan Document or in any Waiver Document shall
be references to the AK Credit Agreement as amended by this AK
Amendment.
H. Conditions Precedent. The obligations of the Lender
under this AK Amendment or the other Wavier Documents, including
specifically the waiver until December 31, 1996 of the Waived
Defaults, are, in addition to the conditions precedent specified in
Section 6.2 of the AK Credit Agreement, subject to the following
conditions precedent, wherein each document to be delivered to the
Lender will be in form and substance satisfactory to the Lender:
1. Closing. The execution and delivery of each of
the Waiver Documents shall have occurred on or before
November 15, 1996, or such later date as agreed to by Lender
in its sole discretion.
2. Proceeds Account. $4,500,000 shall have been
transferred from the Proceeds Account to Lender, provided
that (i) Lender shall have given such consent as is required
for such a disbursement by the Proceeds Account Agreement;
(ii) notwithstanding the second sentence of Section 3.6(a),
such $4,500,000 shall be available for Advance to Borrower
after the date hereof under the terms and conditions of the
AK Credit Agreement, (iii) such $4,500,000 shall be subject
after the date of such transfer to Lender to the Commitment
Fee in the same manner as other funds subject to the
Commitment that have not been Advanced to Borrower; and (iv)
nothing contained herein will relieve Borrower from its
obligation to pay interest as required by the terms of the
AK Credit Agreement accrued on such $4,500,000 prior to its
payment to Lender.
3. Omnibus Certificate. Lender shall have received a
certificate, signed by the chief executive officer of the
Borrower, in the form attached hereto as Attachment 1.
4. Opinion of Borrower's Counsel. Lender shall have
received the opinion of counsel to Borrower and USMX in the
form attached hereto as Attachment 2.
5. Acknowledgement from Guarantor. Lender shall have
received the Guarantor's Acknowledgement, executed and
delivered by USMX, in the form attached hereto as Attachment
3.
6. Waivers and Consents. Borrower shall have
obtained all waivers and consents necessary or desirable to
enable it to enter into this AK Amendment and the other
Waiver Documents.
7. Other Conditions. All conditions precedent under
each of the other Waiver Documents shall be satisfied as
determined by Lender in its sole discretion.
I. Successors and Assigns. Nothing in this AK Amendment
shall be construed as waiving or modifying any provision of the AK
Credit Agreement prohibiting transfer of the Mining Properties without
the prior written consent of Lender, or making any such transfer a
Default under the AK Credit Agreement. Subject to the preceding
sentence, this AK Amendment shall bind and benefit the parties and
their respective heirs, personal representatives, successors and
assigns.
J. Governing Law; Severability; Merger. This AK Amendment
shall be governed by and construed in accordance with the laws of the
State of Colorado. Wherever possible, each provision of the Loan
Documents is to be interpreted so as to be effective and valid under
applicable law. If any provision of any Loan Document is for any
reason and to any extent, invalid or unenforceable, then neither the
remainder of the Loan Document in which such provision appears, nor
any other Loan Document, nor the application of the provisions to
other persons or entities or in other circumstances, shall be affected
by such invalidity or unenforceability. The AK Credit Agreement,
together with the other Loan Documents, all as amended and modified by
the Waiver Documents, represent the final agreement between the
parties pertaining to the subject matter thereof.
K. Execution in Counterparts. This AK Amendment may be
executed in two or more counterparts, all of which shall, upon
execution of identical counterparts by all parties, constitute a
single agreement. Lender and its attorneys are authorized to remove
and reattach signature and acknowledgement pages of various
counterparts in order to avoid unnecessary recording and copying
expense and to provide fully-executed counterparts to each party.
Signed and delivered as of the date first mentioned above.
BORROWER
USMX OF ALASKA, INC.
By:
Name:
Title:
LENDER
PER PRO
N M ROTHSCHILD & SONS LIMITED