EXHIBIT 10.12
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement, dated as of March 10, 1995 ("Agreement"),
by and between Amax Gold Inc., a Delaware corporation (the "Borrower"), and
Cyprus Amax Minerals Company, a Delaware corporation (the "Lender");
WITNESSETH:
WHEREAS, the parties previously have entered into that certain letter
agreement dated February 16, 1995 (the "Commitment Letter") providing for, among
other things, agreed upon share purchase prices and the preparation of
definitive documents to implement the terms thereof;
WHEREAS, this Revolving Credit Agreement is one of the definitive documents
contemplated in the Commitment Letter;
WHEREAS, on the date of this Agreement the Lender indirectly owns
approximately 34,313,709 shares of the Borrower's common stock, par value $0.01
per share ("Common Stock");
WHEREAS, the Borrower needs financial support from the Lender to support
the planned development of the Fort Knox mine construction and development
project in Alaska and other growth opportunities and for general corporate
purposes, and the Lender is willing to provide to the Borrower up to $80,000,000
of financing for such needs, on the terms of this Agreement;
WHEREAS, the Borrower owns interests in several promising gold prospects,
including 100% of the Fort Knox Project near Fairbanks, Alaska, as well as
certain other advanced stage projects (collectively the "Projects"), each of
which is expected to require substantial additional development capital;
WHEREAS, the Borrower is developing one or more of its Projects and is
otherwise taking steps to increase its cash flow from operations to enable the
Borrower to fund its ongoing working capital requirements and required
development capital from operating cash flow or establish third party sources of
financing without reliance on guarantees or other financial support from the
Lender;
WHEREAS, each party has determined, after consulting with an independent
investment banking firm, that it is in the best interest of such party's
stockholders (in the case of the Borrower, without regard to the Lender) that
such financing from the Lender be provided on the terms and conditions set forth
in this Agreement;
WHEREAS, the Borrower and the Lender each have had the transactions
contemplated by this Agreement approved by its Board of Directors (and the
Borrower having had such transactions approved separately by the Audit Committee
of the Borrower's Board of Directors, which consists solely of those Directors
who are unaffiliated with the Lender), and having received a fairness opinion
from an independent investment bank, establishing that the transactions
contemplated herein are, on the whole, fair from a financial point of view to
the shareholders of the Borrower and the Lender respectively;
NOW THEREFORE, the parties hereby agree to the following terms and
conditions:
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ARTICLE I
AMOUNTS AND TERMS OF THE LOAN
SECTION 1.01 Revolving Credit Commitment. Subject to the terms and
conditions hereof, the Lender agrees to make one or more loans (individually a
"Loan" and collectively the "Loans") to the Borrower from time to time during
the period that commences on the date hereof and ends on the earlier of (i)
December 31, 2001 or (ii) the date on which the Commitment is terminated
pursuant to this Agreement (the expiration date determined by (i) or (ii) is
herein called the "Revolver Expiration Date"), in an aggregate principal amount
up to but not exceeding at any one time outstanding the sum of $80,000,000 (the
"Commitment"). During such period the Borrower may use the Commitment by
borrowing, paying and prepaying in whole or in any part and reborrowing, on a
revolving basis, all in accordance with the terms and conditions hereof. To the
extent that the Borrower repays (including any prepayment) any principal amount
of Loans in the Borrower's $2.25 Series C Convertible Preferred Stock, par value
$1.00 per share (the "Preferred Stock") pursuant to and as defined in Section
1.08 hereof prior to the Revolver Expiration Date, the amount of the Commitment
shall automatically be reduced by the amount of any Preferred Stock so issued,
based upon the value of such Preferred Stock at the time of issuance as
determined in accordance with Section 1.08. Each borrowing and cash prepayment
of principal, if any, shall be in an amount equal to an integral multiple of
$1,000,000.00. Notwithstanding the foregoing, the Commitment shall terminate if
the conditions for making the initial Loan under Section 2.01 shall not have
been satisfied on or prior to June 16, 1995, unless extended by the parties.
SECTION 1.02 Making the Loans. The Borrower shall give the Lender notice of
each borrowing hereunder not later than 11:00 a.m. Denver, Colorado, time at
least two (2) Business Days prior to the date a Loan is requested to be made,
specifying the inception date, the amount thereof and the initial Interest
Period for such Loan. The Lender will arrange the loan and confirm the details
in writing to the Borrower. On the inception date of the borrowing, the Lender
will make the proceeds of the Loan available to the Borrower in immediately
available funds at the Borrower's account with Chemical Bank, New York, or as
the Borrower may otherwise direct in such notice.
The Loans to the Borrower shall be evidenced by a grid Note of the Borrower
substantially in the form of Exhibit A hereto (the "Note"). The Note will
evidence the obligation of the Borrower to pay the aggregate unpaid principal
amount of all Loans made by the Lender pursuant to Section 1.01 of this
Agreement, together with all accrued interest on such Loans. Entries made on the
grid schedules of the Note by the Lender reflecting borrowings, payments and
interest rate calculations under this Agreement shall constitute, absent proven
error, prima facie evidence of the transactions represented by such entries. The
Note shall (i) be dated the date of the initial Loan hereunder, (ii) be payable
in accordance with its terms and the terms of this Agreement and (iii) evidence
the obligation of the Borrower to pay interest on each Loan made hereunder from
the date of such Loan on the unpaid principal amount thereof outstanding from
time to time, calculated in accordance with the provisions of Section 1.03 and
the outstanding principal amount of such Loan in accordance with Section 1.06 or
Section 1.08 of this Agreement pursuant to the repayment notice given by the
Borrower under the applicable section of this Agreement. Except for the payment
referenced in Section 1.08 hereof, the Borrower shall make each payment
(including any cash prepayment) hereunder and under the Note, not later than the
close of business of the day when due by wire transfer, in lawful money of the
United States of America to the Lender, at its address referred to in Section
7.02 or as otherwise directed by the Lender, in immediately available funds.
SECTION 1.03 Payment of Interest. Each Loan made by the Lender pursuant to
this Agreement shall bear interest on the principal balance thereof from time to
time unpaid at an annual rate equal to the LIBOR Rate (as defined herein) for
the interest period selected by the Borrower at its option for a period of one,
three or six months, or such other periods as are agreed between the Borrower
and the Lender (each, an "Interest Period"), and as set forth in the notice of
borrowing referred to in Section 1.02 hereof or the notice of Interest Period
selection referred to in Section 1.05 hereof, as the case may be, plus 0.30%
except as otherwise provided in this Section. Interest on each Loan shall be due
and payable in full on the last day of the Interest Period applicable
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to such Loan and, in the case of any Interest Period in excess of three months,
at the end of each calendar quarter occurring during the term thereof. The term
"LIBOR Rate" shall mean the rate of interest per annum at which U.S. dollar
deposits, in an amount equal to the aggregate principal balance of the Loan are
offered (as reasonably determined by the Lender) at or about 11:00 a.m. Denver
time on the date that is two Business Days immediately prior to the beginning of
such Interest Period in the London Interbank Eurodollar Market for delivery on
the first day of such Interest Period for approximately the number of days
contained therein (as appearing on page "LIBOR" on the Reuters Monitor Money
Rates Service or such other page as may replace the LIBOR page on that service
for the purpose of displaying London Interbank Offered Rates for dollar deposits
of major banks); provided, however, that if at least two such offered rates
appear on the LIBOR page in respect of such Interest Period, the arithmetic mean
of all such rates (as determined by the Lender and rounded upwards to the
nearest 1/16th of 1%) will be the rate used; and provided further that if
Reuters Monitor Money Rates Service ceases to provide LIBOR quotations, such
rate shall be the average rate of interest (as determined by the Lender) and
rounded upwards to the nearest 1/16th of 1%) at which U.S. dollar deposits are
offered for the relevant Interest Period by three of the leading banks selected
by the Lender in the London interbank market as of 11:00 a.m. Denver time on the
date which is two (2) Business Days prior to the first day of such Interest
Period, or as reasonably determined by the Lender by reference to the LIBOR rate
for an equivalent interest period in the most recent edition of the Wall Street
Journal under the section headed "Money Rates", or otherwise as the Lender and
the Borrower may mutually agree. If the Borrower fails to make any payment to
the Lender of the principal of or interest on any Loan when such payment becomes
due, such Loan shall accrue interest at a rate that is 1.0% per annum higher
than the rate otherwise payable with respect to such Loan and such higher rate
shall continue until such default in payment by the Borrower is cured. All
computations of interest under the Note shall be made by the Lender on the basis
of a year of 360 days, consisting of twelve 30-day months, for the actual number
of days (including the first day but excluding the last day) elapsed.
SECTION 1.04 Prepayments in Cash. On any interest payment date, or as
otherwise agreed by the Lender, the Borrower may make cash prepayments of
principal (which, unless the Commitment is earlier terminated pursuant to
Section 6.02, may be reborrowed on or prior to the Revolver Expiration Date but
not thereafter) of one or more Loans (which Loans shall be designated by the
Borrower) in an amount equal to an integral multiple of $1,000,000, and shall be
made without premium or penalty, but together with interest accrued, if any, on
the amount of each prepaid Loan (at the interest rate applicable to such Loan)
to the date of prepayment and shall be applied to the Loans in the inverse order
of maturity. The Borrower shall give Lender at least two Business Days notice of
any such prepayment. All such cash payments shall be made by wire transfer in
immediately available funds to an account designated by the Lender.
SECTION 1.05 Interest Period Selection. The Borrower shall have the option
to select a new Interest Period for each Loan, which period shall take effect at
the end of the then current Interest Period with respect to such Loan. The
Borrower shall give the Lender notice of such Interest Period selection pursuant
to this Section 1.05 not later than 11:00 a.m. Denver, Colorado, time at least
two (2) Business Days prior to the last day of the applicable Interest Period,
specifying the new Interest Period for such Loan. If the Borrower does not
deliver such notice of Interest Period selection to the Lender as set forth
herein, the Interest Period for such Loan shall be the same number of months as
the immediately preceding Interest Period for such Loan. The selection of a
subsequent Interest Period shall not be deemed to constitute a reborrowing or a
new Loan for purposes of this Agreement.
SECTION 1.06 Amortization of Principal. On the Revolver Expiration Date all
accrued interest shall be paid and the aggregate principal balance of all Loans
outstanding shall become due and payable in twenty equal quarterly installments
on March 31, June 30, September 30, and December 31 of each of the following
five years with the first installment due on March 31, 2002; provided, however,
that the last such installment shall be in the amount necessary to repay in full
the unpaid principal amount thereof. The outstanding principal balance of the
Note shall bear interest in accordance with Section 1.03 until the Note is paid
in full. Accrued interest on the Note shall be added to and paid with each such
quarterly amortization payment.
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SECTION 1.07 Payment on Non-Business Days. Whenever any payment to be made
hereunder or under the Note shall be stated to be due on a date which is a
Saturday, Sunday or a public holiday or the equivalent for Lender or for banks
generally under the laws of the State of Colorado (any other day being a
"Business Day"), such payment may be made on the next succeeding Business Day
and such extension of time shall in such case be included in the computation of
interest due.
SECTION 1.08 Payment in Preferred Stock. At the Borrower's election, which
may be exercised by its giving written notice to the Lender at least 20 Business
Days prior to the date such repayment or prepayment of the Note or a required
amortization payment due under the Note is to be made, the Borrower may (i)
repay the entire principal balance of the Note, (ii) pay the required
amortization payment due under the Note, (iii) upon the Lender's prior consent
given not later than two Business Days prior to the payment date, pay the
required interest payment due under the Note, and/or (iv) prepay increments of
at least $5,000,000 of principal of Loans outstanding under the Note (which
Loans shall be designated by the Borrower), in each case by issuing to the
Lender the Preferred Stock, which shall have the powers, preferences and
relative participating, optional or other special rights and qualifications,
limitations or restrictions thereof as are set forth in Exhibit B to this
Agreement and otherwise as the Board of Directors of the Borrower may determine
(consistent with the provisions of such Exhibit B) by resolution or resolutions
adopted by the Board of Directors of the Borrower providing for the issue of
such Preferred Stock. The amount of such Preferred Stock issued to the Lender
shall (w) in the event the payment is to be made pursuant to clause (i) above,
be equal in value to the outstanding principal amount of all Loans outstanding
at the time of such payment, plus accrued interest thereon to the date of such
payment; (x) in the event the payment is to be made pursuant to clause (ii)
above, be equal in value to the amount of such required amortization payment to
be made plus accrued interest thereon to the date of such payment; (y) in the
event the payment is to be made pursuant to clause (iii) above, be equal in
value to the amount of such required interest payment to be made on the date of
such payment; or (z) in the event the payment is to be made pursuant to clause
(iv) above, be equal in value to the incremental amount of such Loans that the
Borrower elects to prepay, plus accrued interest thereon to the date of such
payment, in each case as specified in the notice given to the Lender pursuant to
this Section 1.08, except that no fractional shares of Preferred Stock shall be
issued. In lieu of a fraction of a share of Preferred Stock, the Borrower shall
pay the Lender in cash an amount equivalent to such fraction of a share. The
value of the Preferred Stock shall be determined by multiplying the number of
shares of Preferred Stock to be issued to the Lender by $50.00 per share. The
number of shares of Preferred Stock to be issued to the Lender pursuant to this
Section 1.08 (which shall not exceed the number authorized in the Borrower's
Restated Certificate of Incorporation, as amended) will be determined by the
Borrower based on the amount of the Loans to be repaid or prepaid with such
Preferred Stock, subject to adjustment for arithmetic errors.
SECTION 1.09 Regulatory Approvals. As a condition precedent to issuing any
Preferred Stock to the Lender pursuant to Section 1.08 hereof, the Borrower
shall have obtained all authorizations and approvals of, and all other actions
required to be taken by, any applicable governmental authority or regulatory
body or stock exchange and shall have given all notices to, and made all filings
with, any such governmental authority or regulatory body or stock exchange, that
may be required in connection with such issuance of such Preferred Stock.
SECTION 1.10 Failure to Obtain Regulatory Approvals. In the event the
Borrower is unable to obtain all authorizations and approvals required for the
issuance of any Preferred Stock pursuant to Section 1.09 hereof, such failure
shall not constitute a default but the written notice given by the Borrower to
the Lender with respect to making such repayment or prepayment by issuing
Preferred Stock shall be null and void, without prejudice to the rights of the
Borrower to exercise its option under Section 1.08 on any other occasion. If the
Preferred Stock was to be issued to pay an interest payment or required
amortization due under the Note, such payment shall be made by the Borrower in
immediately available funds on the date such payment is due in accordance with
Section 1.03 or 1.06 of this Agreement, as the case may be, and the Note.
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SECTION 1.11 Restrictions on Transfer of Preferred Stock.
(i) Notice of Intended Dispositions. Except for dispositions
pursuant to this Section 1.11, if at any time the Lender desires to sell,
assign, transfer, pledge, encumber or otherwise dispose of any shares of
Preferred Stock held by it, then the Lender shall deliver written notice (a
"Disposition Notice") to the Borrower under Section 7.02, of its intention
to sell, setting forth the Lender's desire to make such sale, the identity
of the prospective purchaser, the number of shares of Preferred Stock
proposed to be sold (the "Offered Shares") the price ("Offer Price") at
which the Lender proposes to dispose of the Offered Shares and the other
material terms of such disposition. Such proposed sale, transfer, etc.,
shall be for cash only.
(ii) Borrower's First Refusal Option. Upon the receipt of the
Disposition Notice, the Borrower shall then have the right to purchase at
the Offer Price all, but not less than all, of the Offered Shares. In order
to exercise its first refusal option, the Borrower must give written notice
(a "First Refusal Exercise Notice") under Section 7.02, of such exercise to
the Lender, not more than 45 calendar days from the date of its receipt of
the Disposition Notice. In the event that the Borrower exercises its first
refusal option with respect to the Offered Shares, then the Lender shall
sell to the Borrower and the Borrower shall purchase the Offered Shares
within 30 calendar days after the date of receipt by the Lender of the
First Refusal Exercise Notice. Upon the consummation of any purchase by the
Borrower of Offered Shares, the Lender shall deliver certificates
evidencing the Offered Shares sold duly endorsed, or accompanied by written
instruments of transfer, free and clear of any liens and encumbrances,
against delivery of the Offer Price. From and after the time at which cash
necessary to pay the Offer Price for shares of Preferred Stock pursuant to
the exercise of the first refusal option irrevocably shall have been
deposited or set aside, then, notwithstanding that the certificates
representing the Offered Shares shall not have been surrendered, all rights
(other than the right to receive payment of the Offer Price with respect to
such shares of Preferred Stock) of the Lender with respect to the shares of
Preferred Stock for which tender has been made, including without
limitation all conversion, voting and dividend rights, permanently shall
cease and terminate, except only the right to receive payment for such
shares of Preferred Stock, and the Lender shall no longer be considered the
owner of such shares of Preferred Stock.
(iii) Permitted Dispositions. If the Disposition Notice has been duly
given and the Borrower shall not have timely given the First Refusal Notice
to exercise its first refusal option, then the Lender shall have the right,
for a period of 30 calendar days after expiration of the 45 day period
referred to in the second sentence of subsection (ii) of this Section 1.11,
to sell to the prospective purchaser referred to in such notice the Offered
Shares at no less than the Offer Price and on the other terms and
provisions set forth in the Disposition Notice.
ARTICLE II
CONDITIONS OF LENDING
SECTION 2.01 Conditions Precedent to Making the Initial Loan. The
obligation of the Lender to make the initial Loan is subject to the following
conditions precedent:
(a) The Lender shall have received on or before the day the initial
Loan is made all of the following, in form and substance reasonably
satisfactory to the Lender:
(i) The Note duly executed by the Borrower;
(ii) Copies of the borrowing resolutions of the Board of
Directors of the Borrower authorizing the execution and delivery of
this Agreement and the Note as well as the
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Borrower's performance of all of the covenants, obligations and other
undertakings of the Borrower contemplated by this Agreement and the
Note, (including the specific authorization of the Preferred Stock to
be issued pursuant to Section 1.08 of this Agreement on the terms of
Exhibit B to this Agreement) and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with
respect to this Agreement and the Note, certified by the Secretary or
an Assistant Secretary of the Borrower;
(iii) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the names and true signatures of the
officers of the Borrower authorized to sign this Agreement and the
Note and any other documents to be delivered hereunder;
(iv) A favorable opinion of counsel of the Borrower, as to
matters referred to in Section 3.01 (except subsection (e) thereof) of
this Agreement;
(v) A Notice of Borrowing under Section 1.02; and
(vi) Evidence reasonably satisfactory to the Lender that the
New York Stock Exchange shall have accepted a listing application for
the Common Stock to be issued pursuant to this Agreement or upon
conversion of the Preferred Stock and if so required as a condition to
listing, that the majority of the shareholders of the Borrower have
approved the issuance of such Common Stock.
(b) On the date of such Loan the following statements shall be true:
(i) The representations and warranties of the Borrower
contained in Section 3.01 are true and correct in all material
respects and the covenants of the Borrower made in Article IV hereof
shall be deemed to have been made on and as of the date of such Loan
(or of a subsequent Loan for the purposes of Section 2.02);
(ii) No event has occurred and is continuing, or would result
from such Loan (or from a subsequent Loan for the purposes of Section
2.02), which constitutes an Event of Default (as defined in Article V)
or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both; and
(c) The Borrower shall deliver to the Lender a certificate of the
Borrower's Chief Financial Officer stating the purpose of the borrowing,
which shall be consistent with Section 7.05 and the other terms and
conditions of this Agreement and, if required by Section 7.05, resolutions
of the Borrower's Board of Directors, which resolutions shall be certified
to Lender by the Secretary or an Assistant Secretary of the Borrower.
SECTION 2.02 Conditions Precedent to Subsequent Loans. The obligation of
the Lender to make each subsequent Loan is subject to the conditions precedent
that (i) on the date of any such subsequent Loan the statements made in Section
2.01(b)(i) and (ii) shall be true; and (ii) the condition set forth in Section
2.01(c), shall be satisfied with respect to such subsequent Loan.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(a) The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power to execute, deliver and perform its obligations
under this Agreement and the Note.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the Note have been, or in the case of the issuance of Common
Stock will be on or prior to the date of issuance, duly authorized by all
necessary corporate action (including authorization of the Board of
Directors of the Borrower to issue the Preferred Stock in the event the
Borrower elects to pay or prepay in Preferred Stock pursuant to Section
1.08 of this Agreement and to issue the Common Stock required to be issued
upon conversion of the Preferred Stock or pursuant to Articles of this
Agreement) and do not (and the issuance of such Preferred Stock on the
terms of Exhibit B or, in the case of the Common Stock, such Common Stock
will not at the time the same is to be issued):
(i) violate any provision of the Restated Certificate of
Incorporation, as amended, or By-Laws of the Borrower or any law,
order, writ, judgment, decree, determination or award, in each case as
presently in effect and having applicability to the Borrower; or
(ii) result in a breach of or constitute a default under any
material indenture, bank loan agreement, credit agreement, bullion
loan or other material agreement to which the Borrower is a party or
by which any of its properties or the properties of any of its
Subsidiaries, are presently bound. As used in this Agreement, the term
"Subsidiary" shall mean, as to the Borrower, any corporation of which
at least a majority of the outstanding shares of stock, having by the
terms thereof ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether or not at
the time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency), is at the time directly or indirectly owned or
controlled by the Borrower or one of more of its Subsidiaries.
(c) No authorization or approval of, or other action by, and no notice
to or filing with, any governmental authority or regulatory body, other
than the Securities and Exchange Commission ("SEC"), is required for the
due execution, delivery and performance by the Borrower of this Agreement
(except for such notices, any necessary shareholder approvals,
registrations, stock exchange listings or filings as may be required in
connection with issuing the Preferred Stock and the Common Stock) or the
Note.
(d) This Agreement is, and the Note when executed and delivered will
be, legal, valid and binding obligations of the Borrower enforceable
against it in accordance with their respective terms (subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles).
(e) The consolidated statements of financial position of the Borrower
and its consolidated Subsidiaries as at December 31, 1993, and the related
consolidated statements of operations, cash flows and changes in Common
Stock, paid-in capital and retained earnings of the Borrower and such
Subsidiaries for the period then ended (copies of which have been furnished
to the Lender) fairly present the financial condition of the Borrower and
such Subsidiaries as at such date and the results of
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the operations of the Borrower and its Subsidiaries for the period ended on
such date, all in accordance with generally accepted accounting principles.
(f) Except as disclosed in the Borrower's most recent Annual Report on
Form 10-K filed with the SEC for the fiscal year then ended, the most
recent Quarterly Reports on Form 10-Q, or as otherwise disclosed in writing
to the Lender, there is not to the actual knowledge of the executive
officers of the Borrower any pending or threatened action or proceeding
against or affecting the Borrower before any court, governmental agency or
arbitrator that reasonably could be expected to materially and adversely
affect the ability of the Borrower to perform its obligations under the
Agreement or the Note.
(g) The Preferred Stock and the Common Stock, when issued in
accordance with the terms of this Agreement (and any Common Stock when
issued on conversion of or pursuant to the terms of the Preferred Stock),
will be validly issued, fully paid and nonassessable.
ARTICLE IV
COVENANTS OF THE BORROWER
SECTION 4.01 Payment of Principal, Premium and Interest. The Borrower duly
and punctually will pay or cause to be paid the principal of and interest on the
Loans evidenced by the Note according to the terms thereof.
SECTION 4.02 Reports, etc. The Borrower will furnish to the Lender the
following reports, information and documents:
(i) within 15 days after the Borrower is required to file the same
with the SEC, copies of the annual reports on Form 10-K, proxy statements,
quarterly reports on Form 10-Q, and of such reports, notices, documents and
other information (or copies of such portions of any of the foregoing as
the SEC may from time to time by rules and regulations prescribe) that the
Borrower may be required to file with the SEC pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, or with
the principal securities exchange (or successor thereto) in the United
States on which securities of the Borrower are listed and, upon
distribution thereof, a copy of each report, proxy statement, notice,
document or other information sent by the Borrower to all of its
stockholders; and
(ii) promptly upon demand, such other information respecting the
financial condition, operations and properties of the Borrower and its
consolidated Subsidiaries as the Lender reasonably may request; provided
that the Lender shall maintain the confidentiality thereof in the same
manner as the Lender maintains the confidentiality of its own information
of like nature.
SECTION 4.03 Inspection. So long as the Lender is obligated to make Loans
under this Agreement or so long as the Note is outstanding, the Borrower will
permit the Lender or any of its authorized representatives, at the Lender's
expense, to inspect at all reasonable times all properties, books and records of
the Borrower or any of its consolidated Subsidiaries reasonably related to the
overall financial and business condition of the Borrower and its consolidated
Subsidiaries or to the observance and performance by the Borrower of its
obligations hereunder and under the Note, and to discuss the business and
affairs of the Borrower and its consolidated Subsidiaries with its officers and
independent accountants (and by this provision the Borrower authorizes said
accountants to discuss with the Lender or such authorized representatives, the
finances and affairs of the Borrower and its consolidated Subsidiaries), all as
often as reasonably may be requested, subject to appropriate obligations of
confidentiality.
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SECTION 4.04 Payment of Taxes. The Borrower will pay and discharge, or
cause to be paid and discharged, all taxes, assessments and governmental charges
levied on it or against any of its properties or assets prior to the date on
which penalties are attached thereto, unless and to the extent only that the
same shall be contested in good faith and by appropriate proceedings by the
Borrower, or except to the extent that the failure to so pay or to so discharge
would not have a material adverse effect on the ability of the Borrower to
perform its obligations under this Agreement or the Note.
SECTION 4.05 Officers' Certificate. The Borrower will deliver a certificate
to the Lender on or before April 30 in each year (beginning with 1995), signed
by the Chairman of the Board or the President, the Chief Financial Officer, any
Senior Vice President or any Vice President (the foregoing being hereafter
referred to as "Senior Officers") and by the Secretary or any Assistant
Secretary of the Borrower, stating that in the course of the performance by the
signers of their duties as officers of the Borrower they normally would have
knowledge of any condition or event that constitutes or which, after the giving
of notice or lapse of time or both, would constitute, an Event of Default under
this Agreement or under the Note, stating whether or not they have knowledge of
any such condition or event and, if so, specifying each such condition or event
of which the signers have knowledge and the nature thereof, and the steps taken
by the Borrower to correct the same.
SECTION 4.06 Compliance With Laws. The Borrower shall comply, in all
material respects, with all applicable laws, rules, regulations and orders,
except where the failure would not have a material adverse effect on the
Borrower's ability to perform under this Agreement and the Note.
SECTION 4.07 Mergers and Consolidations. Without the Lender's prior consent
which will not be unreasonably withheld, the Borrower will not enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution). The Borrower will
not convey, sell, lease, transfer or otherwise dispose of, in one transaction or
a series of transactions, all or substantially all of its business or assets.
Notwithstanding the foregoing provisions of this Section 4.07:
(a) Any Subsidiary of the Borrower may be merged or consolidated with
or into (x) the Borrower if the Borrower shall be the continuing or
surviving corporation, or (y) any such other Subsidiary;
(b) Any Subsidiary of the Borrower may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to the Borrower or to a Subsidiary of the Borrower; and
(c) The Borrower or any of its Subsidiaries may merge or consolidate
with any other Person if (x) in the case of a merger or consolidation of
the Borrower, the Borrower is the surviving corporation and, in any other
case, the surviving corporation is a Subsidiary of the Borrower, and (y)
after giving effect thereto, no Event of Default would exist hereunder, and
there will be no material adverse impact on the ability of the Borrower to
perform any of its obligations hereunder or under the Note in accordance
with the respective terms thereof.
SECTION 4.08 Listing Approval. The Borrower promptly shall use all
reasonable efforts to obtain the acceptance of the New York Stock Exchange of a
listing application for the Common Stock to be issued pursuant to the terms of
this Agreement and, if so required as a condition to such listing, to obtain the
approval of a majority of its shareholders for the issuance for such Common
Stock.
9
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.01 Events of Default. If any of the following events (each, an
"Event of Default") shall occur and be continuing:
(a) The Borrower shall (i) fail to pay the principal of or any
interest on the Note when due, or (ii) fail to perform or observe any other
term, covenant or condition contained in this Agreement or in the Note on
its part to be performed or observed and any such failure shall remain
unremedied for five (5) Business Days in the case of clause (i) and thirty
(30) days in the case of clause (ii) after the same is discovered by any
Senior Officer of the Borrower; or
(b) Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in any certificate or other document
delivered pursuant to this Agreement shall prove to have been incorrect in
any material respect when made and such incorrect representation or
warranty shall not have been corrected within ten (10) days after the same
is discovered by any Senior Officer of the Borrower; or
(c) The Borrower shall admit in writing its inability to pay its
debts, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower or seeking to
adjudicate it a bankrupt or insolvent or seeking reorganization,
arrangement, adjustment, or composition of it or its debts under the law of
any jurisdiction relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and,
with respect to any involuntary proceeding instituted against the Borrower,
such proceeding shall not be dismissed within sixty (60) days;
then, and in any such event, the Lender, by notice to the Borrower, may take
either or both of the following actions: (i) terminate the Commitment, whereupon
the same shall terminate forthwith; or (ii) declare the principal balance
outstanding under the Note and all interest accrued and unpaid thereon, and all
other sums due hereunder, to be due and payable without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that upon the occurrence of an Event of
Default specified in subparagraph (c) above, (x) the Commitment automatically
shall be terminated and (y) the Note, all such principal and interest and all
such other sums due hereunder automatically shall become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
ARTICLE VI
LENDER'S STOCK PURCHASE OPTION
SECTION 6.01 Description of Lender's Option. At any time after the
acceptance by the New York Stock Exchange of a listing application for the
issuance of the shares of Common Stock described herein, and prior to the later
of (i) the Revolver Expiration Date or (ii) payment in full of the Note and all
other amounts, if any, due to the Lender under this Agreement, the Lender shall
have the option from time to time (the "Lender's Purchase Option") to purchase
an amount not to exceed 14,919,806 shares of the Borrower's Common Stock at a
purchase price per share (the "Purchase Price") of $5.362, subject to adjustment
in accordance with Section 6.03 hereof, and, in connection with the consummation
of such purchase (the "Closing"), to terminate such portion of the Commitment as
is equal to the product of (i) the number of shares so purchased multiplied by
(ii) the Purchase Price (as adjusted under Section 6.03); provided if less than
14,919,806 shares are purchased (taking into account all shares previously
purchased under this provision), the number of shares shall be an
10
integral multiple of one million shares. The Lender may exercise any Lender's
Purchase Option under this Article VI by giving written notice to the Borrower,
if at all, at least 20 Business Days prior to the date stated in such notice for
the Closing of such stock purchase. If there are no amounts outstanding under
the Note at the time such notice is given, the Lender shall give such notice to
the Borrower at least 20 Business Days prior to the Revolver Expiration Date.
Such notice shall state the Lender's decision to exercise its option hereunder
and the date for Closing of such stock purchase. Upon receipt of such notice,
the Borrower and the Lender shall select a time and place for the Closing and if
the Borrower and the Lender are unable to agree, the Closing shall take place at
the Borrower's offices at 9:00 a.m., local time, on the date specified for
Closing in the Lender's notice.
SECTION 6.02 Transactions at Closing. At the Closing, the Purchase Price
for the shares of the Borrower's Common Stock to be purchased by the Lender
shall be paid and applied by the Lender in the following order:
(i) First, to all accrued interest to the date of Closing and then
to such portion of and such portion of the principal amount of the
outstanding balance under the Note in stated order of maturity, as is
determined by (y) the product of (i) the number of shares so purchased
multiplied by (ii) the Purchase Price (as adjusted under Section 6.03);
less (z) the amount of accrued interest to the date of Closing; (which
amount shall be deemed repaid by the Borrower, irrespective of whether such
amounts are then due and payable, by the issuance of a credit against the
Purchase Price payable by the Lender for such Common Stock and the Lender
shall deliver a receipt to the Borrower for the amount of such payment).
Amounts of principal paid pursuant hereto may not be reborrowed.
(ii) Secondly, in the event the aggregate amount of the Purchase
Price shall exceed the amount in Section 6.02(i), the Lender shall deliver
to the Borrower the number of shares of Preferred Stock previously issued
to the Lender pursuant to Section 1.08, to the extent that such shares have
not been converted into or redeemed for shares of the Borrower's Common
Stock pursuant to the terms of such Preferred Stock as are equal in value
to the aggregate Purchase Price in excess of the amount applied in clause
6.02 (i) above. To the extent that shares of Preferred Stock have been
converted into or redeemed for shares of the Borrower's Common Stock and to
the extent that any shares of Common Stock have been issued in lieu of cash
dividend payments on the Preferred Stock, the amount of Common Stock to be
purchased by the Lender pursuant to this Article VI first shall be reduced
by an amount equal to the number of such shares of Common Stock which have
been issued by the Borrower (x) on conversion or redemption of such shares
of Preferred Stock, or (y) in lieu of cash dividend payments on Preferred
Stock.
(iii) Thirdly, the amount of the excess of the aggregate Purchase
Price over the amounts applied in Section 6.02 (i) and (ii) above, if any,
shall next be applied by the Lender paying to the Borrower by wire
transfer, certified or official bank check payable in United States
currency in immediately available funds, to the account of the Borrower, or
as the Borrower shall direct by written notice given at least two Business
Days prior to Closing, an amount up to the remainder of the Commitment less
the amount of the outstanding principal balance of the Note.
Upon payment of the Purchase Price in the manner described above, the
Borrower shall deliver to the Lender a Certificate for the number of shares of
the Borrower's Common Stock purchased at Closing, together with a legal opinion
from the Borrower's General Counsel, or such other counsel as the Borrower may
choose, which other counsel shall be reasonably acceptable to the Lender, to the
effect that such shares of Common Stock purchased by the Lender have been duly
authorized, validly issued, and are fully paid and non-assessable. Upon delivery
of the certificate for the Common Stock and the legal opinion described herein,
such portion of the Commitment as is equal to the product described in Section
6.01 above, shall terminate.
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SECTION 6.03 Adjustment of Purchase Price and Number of Shares Purchasable.
The Purchase Price and the number of shares of Common Stock purchasable upon the
exercise of any Lender's Purchase Option shall be subject to adjustment from
time to time by the Borrower as follows:
(i) In case the Borrower shall (A) pay a dividend or make a
distribution on its Common Stock in shares of Common Stock (other than
pursuant to a dividend reinvestment or similar plan), (B) subdivide its
outstanding shares of Common Stock into a greater number of shares, (C)
combine its outstanding shares of Common Stock into a smaller number of
shares, or (D) issue by reclassification of its Common Stock any shares of
capital stock of the Borrower, then in each such case the number of shares
of Common Stock purchasable upon the exercise of the Lender's Purchase
Option immediately prior thereto shall be adjusted so that the Lender shall
be entitled to receive the kind and number of shares of Common Stock or
other securities of the Borrower which the Lender would have owned or have
been entitled to receive immediately following such action had such shares
of Common Stock been purchased immediately prior to the occurrence of such
event. An adjustment made pursuant to this subsection (i) shall become
effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this subsection (i), the Lender shall become
entitled to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the Borrower, the Audit
Committee of the Board of Directors of the Borrower (whose reasonable
determination shall be conclusive except for arithmetic errors and shall be
described in a statement filed by the Borrower with the Lender) shall
determine the equitable allocation of the adjusted Purchase Price between
or among shares of such classes of capital stock or shares of Common Stock
and other capital stock.
(ii) In case the Borrower shall issue rights, options or warrants to
all holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less
than the current market price per share (as determined pursuant to
subsection (iv) of this Section 6.03) of the Common Stock (other than
pursuant to any stock option, restricted stock or other incentive or
benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers or any dividend reinvestment plan of the
Borrower in effect at the time hereof or any other similar plan adopted or
implemented hereafter), to the extent that the same have not expired by
their terms prior to the exercise of the Lender's Purchase Option, then the
number of shares of Common Stock thereafter purchasable upon the exercise
of the Lender's Purchase Option shall be determined by multiplying the
number of shares of Common Stock theretofore purchasable upon exercise of
the Lender's Purchase Option immediately prior to the date of issuance of
such rights, options or warrants by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding on the date of issuance
of such rights, options or warrants (immediately prior to such issuance)
plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the number
of shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants (immediately prior to such issuance) plus the
number of shares which the aggregate offering price of the total number of
shares of Common Stock so offered would purchase at such current market
price. Such adjustment successively shall be made whenever any such rights,
options or warrants are issued, and immediately shall become effective on
the date of issuance retroactive to the record date for the determination
of stockholders entitled to receive such rights, options or warrants;
provided, however, in the event that all the shares of Common Stock offered
for subscription or purchase are not delivered upon the exercise of such
rights, options or warrants, upon the expiration of such rights, options or
warrants the Purchase Price shall be readjusted to the Purchase Price that
would have been in effect had the numerator and the denominator of the
foregoing fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the exercise of
such rights, options or warrants rather than upon the number of shares of
Common Stock offered for subscription or purchase. In no event, however,
shall there be any adjustment made with respect any shares previously
issued pursuant to the exercise of the Lender's Purchase Option. In
determining whether any rights, options or warrants entitle the
12
holders to subscribe for or purchase shares of Common Stock at less than
such current market price and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Borrower for such rights, options or
warrants. The value of such consideration, if other than cash, shall be
determined by the Audit Committee of the Borrower's Board of Directors
(whose reasonable determination shall be conclusive, except for arithmetic
errors, and shall be described in a statement filed by the Borrower with
the Lender).
(iii) In case the Borrower shall, by dividend or otherwise,
distribute to all holders of its outstanding Common Stock, evidences of its
indebtedness or assets (including securities and cash, but excluding any
cash dividend of the Borrower paid out of retained earnings and dividends
or distributions payable in stock pursuant to a dividend reinvestment or
similar plan or for which adjustment is made pursuant to subsection (i) of
this Section 6.03) or rights, options or warrants to subscribe for or
purchase securities of the Borrower (excluding those referred to in
subsection (ii) of this Section 6.03), then in each such case the number of
shares of Common Stock thereafter purchasable upon the exercise of the
Lender's Purchase Option shall be determined by multiplying the number of
shares of Common Stock theretofore purchasable upon the exercise of the
Lender's Purchase Option by a fraction of which the numerator shall be the
current market price per share of the Common Stock as determined pursuant
to subsection (iv) of this Section 6.03, and of which the denominator shall
be such current market price per share of Common Stock less the fair market
value on such record date (as determined by the Audit Committee of its
Board of Directors of the Borrower, whose reasonable determination shall be
conclusive except for arithmetic errors and shall be described in a
statement filed by the Borrower with the Lender) of the portion of the
capital stock or assets or the evidences of indebtedness or assets so
distributed to the holder of one share of Common Stock or of such
subscription rights, options or warrants applicable to one share of Common
Stock. Such adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
(iv) For the purpose of any computation under subsections (ii) and
(iii) of this Section 6.03, the current market price per share of Common
Stock on any date shall be deemed to be the average of the "Closing Price",
as defined below, for the shorter of (A) 30 consecutive trading days ending
on the last full trading day prior to the Time of Determination or (B) the
period commencing on the date next succeeding the first public announcement
of the issuance of such rights, options or warrants or such distribution
through such last full trading day prior to the Time of Determination. The
term "Closing Price" for any day in question shall be the last reported
sale price regular way or, in case no such reported sales take place on
such day, the average of the closing bid and asked prices regular way for
such day, in each case on the New York Stock Exchange Composite Tape or, if
not listed on the New York Stock Exchange, on the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if not listed or admitted to trading on a national
securities exchange, the last sale price regular way for the Common Stock
as published by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or if such last sale price is not so published
by NASDAQ or if no such sale takes place on such day, the average between
the closing bid and asked prices for the Common Stock as published by
NASDAQ. The term "trading day" shall mean a day on which the market used
for calculating the Closing Price is open for the transaction of business
or, if the shares of such securities are not so listed or admitted to
trading, a business day. The term "Time of Determination" shall mean the
time and date of the earlier of (I) the record date for determining
stockholders entitled to receive the rights, options, warrants or
distributions referred to in Section 6.03 (ii) and (iii) or (II) the
commencement of "ex-dividend" trading on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading or, if not listed or admitted to trading on a national securities
exchange, the NASDAQ.
(v) In any case in which this Section 6.03 shall require that an
adjustment be made immediately following a record date or an effective
date, the Borrower may elect to defer (but only until the delivery by the
Borrower of the notice required by subsection (viii) of this Section 6.03)
issuing to the Lender the shares of Common Stock issuable upon exercise of
the Lender's Purchase
13
Option over and above the shares of Common Stock issuable upon exercise of
the Lender's Purchase Option on the basis of the number of shares of Common
Stock purchasable upon exercise of the Lender's Purchase Option prior to
adjustment, and paying to the Lender any amount of cash in lieu of a
fractional share.
(vi) Whenever the number of shares of Common Stock purchasable upon
the exercise of the Lender's Purchase Option is adjusted as herein
provided, the Purchase Price payable upon exercise of the Lender's Purchase
Option shall be adjusted by multiplying such Purchase Price immediately
prior to such adjustment by a fraction, of which the numerator shall be the
number of shares of Common Stock purchasable upon the exercise of the
Lender's Purchase Option immediately prior to such adjustment, and of which
the denominator shall be the number of shares of Common Stock so
purchasable immediately thereafter.
(vii) No adjustment in the number of shares of Common Stock
purchasable upon exercise of the Lender's Purchase Option shall be required
to be made unless such adjustment would require an increase or decrease of
at least 1.0% of the number of shares of Common Stock purchasable upon
exercise of the Lender's Purchase Option; provided, however, that any
adjustments which by reason of this subsection (vii) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 6.03 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
Anything in this Section 6.03 to the contrary notwithstanding, the Borrower
shall be entitled to make such reduction in the Purchase Price, in addition
to the adjustments required by this Section 6.03, as it in its discretion
shall determine to be advisable in order that any stock dividend,
subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable
for stock hereafter made by the Borrower to its stockholders shall not be
taxable to the recipients. Except as set forth in subsections (i), (ii) and
(iii) above, the Purchase Price shall not be adjusted for any such event
including, without limitation, the issuance of Common Stock, or any
securities convertible into or exchangeable for Common Stock or carrying
the right to purchase any of the foregoing, in exchange for cash, property
or services.
(viii) Whenever the Purchase Price is adjusted as herein provided, the
Borrower shall promptly deliver or mail, or cause to be delivered or mailed
by first class mail, postage prepaid, as soon as practicable to the Lender
a notice under Section 7.02 setting forth the Purchase Price and number of
shares of Common Stock purchasable upon the exercise of the Lender's
Purchase Option after such adjustment and a brief statement of the facts
requiring such adjustment and the manner of computing the same, which
certificate shall be conclusive evidence of the correctness of such
adjustment.
(ix) In the event that at any time, as a result of an adjustment
made pursuant to subsection (i) of this Section 6.03, the Lender shall
become entitled to receive any shares of the Borrower other than shares of
Common Stock, thereafter the Purchase Price of such other shares that the
Lender shall be entitled to purchase shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to Common Stock contained in this Section.
(x) The Borrower from time to time may decrease the Purchase Price
by any amount for any period of time if the period is at least 20 days and
if the decrease is irrevocable during the period. Whenever the Purchase
Price is so decreased, the Borrower shall deliver or mail to the Lender a
notice of the decrease at least 15 days before the date the decreased
Purchase Price takes effect, and such notice shall state the decreased
Purchase Price and the period it will be in effect.
14
Notwithstanding the foregoing provisions of this Section 6.03, no such
adjustments shall be made if the adjustment effectively duplicates the effect of
an adjustment made in connection with Section (5)(d) of the Certificate of
Designation relating to the Convertible Preferred Stock.
SECTION 6.04 Reservation of Shares of Common Stock. The Borrower covenants
that it will, at all times prior to the expiration of the Lender's Purchase
Option, reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock for the purpose
of enabling it to satisfy any obligation to issue shares of Common Stock upon
the exercise of the Lender's Purchase Option, the full number of shares of
Common Stock deliverable upon the exercise of the Lender's Purchase Option not
theretofore purchased and on or before (and as a condition of) taking any action
that would cause an adjustment of the Purchase Price resulting in an increase in
the number of shares of Common Stock deliverable upon the exercise of the
Lender's Purchase Option above the number thereof previously reserved and
available therefor, the Borrower shall take all such action so required.
Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value (if any) of the shares of Common Stock
deliverable upon exercise of the Lender's Purchase Option, the Borrower shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Borrower may validly and legally issue fully paid and non-
assessable shares of Common Stock at such adjusted Purchase Price.
SECTION 6.05 Transfer Taxes, Etc. The Borrower shall pay any and all
documentary stamp, issue or transfer taxes, and any other similar taxes payable
in respect of the issue or delivery of shares of Common Stock upon exercise of
the Lender's Purchase Option; provided, however, that the Borrower shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock in a name other than that of
the Lender and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Borrower the amount of
any such tax or has established, to the satisfaction of the Borrower, that such
tax has been paid.
SECTION 6.06 Consolidation or Merger or Sale of Assets. Notwithstanding any
other provision herein to the contrary, in case of any consolidation or merger,
sale or transfer to which the Borrower is a party and which is permitted under
Section 4.07 above or otherwise upon the Lender's prior written consent (which
shall not be unreasonably withheld) and pursuant to which there is a change in
the Common Stock of the Borrower, then lawful provision, in a manner and on
terms reasonably satisfactory to counsel for the Lender, shall be made by the
corporation formed by such consolidation or the corporation whose securities,
cash or other property will immediately after the merger or consolidation be
owned, by virtue of the merger or consolidation, by the holders of Common Stock
immediately prior to the merger or consolidation, or the corporation which shall
have acquired such assets or securities of the Borrower (collectively the
"Formed, Surviving or Acquiring Corporation"), as the case may be, providing
that the Lender shall have the right thereafter upon payment of the Purchase
Price in effect immediately prior to such action to purchase upon exercise of
the Lender's Purchase Option the kind and amount of securities, cash or other
property that the Lender would have owned or have been entitled to receive after
the happening of such consolidation, merger, sale, lease or transfer had the
Lender's Purchase Option been exercised immediately prior to such action
(provided that, if the kind or amount of securities, cash or other property that
the Lender would have owned or have been entitled to receive after the happening
of such consolidation, merger, sale, lease or transfer is not the same for each
share of Common Stock in respect of which such rights of election shall not have
been exercised ("non-electing share"), then for the purposes of this Section
6.06 the kind and amount of securities, cash or other property which the Lender
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale, lease or transfer for each nonelecting share shall
be deemed to be the kind and amount so receivable per share by a plurality of
the non-electing shares). The Formed, Surviving or Acquiring Corporation, as the
case may be, shall make provision in a manner and on terms reasonably
satisfactory to counsel for the Lender, in its certificate or articles of
incorporation or other constituent documents to the end that the provisions set
forth in this Section 6.06 shall thereafter correspondingly be made applicable,
as nearly as may reasonably be, in
15
relation to any shares of stock or other securities or property thereafter
deliverable upon exercise of the Lender's Purchase Option.
The above provisions of this Section 6.06 shall similarly apply to
successive consolidations, mergers, sales, leases or transfers.
SECTION 6.07 Transfer Restrictions.
(a) Legends on Common Stock.
(i) Until the third anniversary of the date of original
issuance of the shares of Common Stock, certificates representing the
shares of Common Stock purchased by the Lender upon exercise of the
Lender's Purchase Option and not otherwise registered pursuant to an
effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act") shall bear a legend substantially to
the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
SIMILAR STATE SECURITIES LAWS AND THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT AND
LAWS."
The shares of Common Stock purchased by the Lender upon exercise of the
Lender's Purchase Option and not otherwise registered pursuant to an effective
registration statement under the Securities Act shall be subject to the
restrictions on transfer set forth in the legends referred to above until the
third anniversary of the date of original issuance of such shares of Common
Stock; provided, however, and notwithstanding the foregoing, such shares of
Common Stock may be resold under and pursuant to the terms and conditions of
Regulation S of the Securities Act, prior to the end of the third anniversary
date of the issuance of such shares.
(ii) The certificates evidencing shares of Common Stock purchased
by the Lender upon exercise of the Lender's Purchase Option and not
otherwise registered pursuant to an effective registration statement under
the Securities Act shall bear, until such time as the Borrower and the
transfer agent for the Common Stock shall have received evidence
satisfactory to each of them that the transfer of such shares of Common
Stock has been effected in accordance with the limitations on transfer set
forth in paragraph (a)(i) above, the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES, OPINIONS OF
COUNSEL AND OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
(b) Transfer Agent Requirements. The transfer agent and registrar for
the Common Stock shall not be required to accept for registration of
transfer any Common Stock bearing the legend contained in paragraph (a)(ii)
above, except upon presentation of satisfactory evidence that the
restrictions on transfer of the Common Stock referred to in the legend in
paragraph (a)(i) have been complied with, all in accordance with such
reasonable regulations and procedures as the Borrower may from time to time
agree with the transfer agent and registrar for the Common Stock.
16
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Note, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender and the Borrower, in the case of an amendment, or by
the party to be charged, in the case of a waiver or a consent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 7.02 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and delivered to an officer of the other party
or mailed or transmitted by facsimile; if to the Lender to its address at 9100
East Mineral Circle, Englewood, Colorado 80112-3299, Attention: Chief Financial
Officer (Fax No. 303-643-5269); if to the Borrower, to its address at 9100 East
Mineral Circle, Englewood, Colorado 80112-3299, Attention: Chief Financial
Officer (Fax No. 303-643-5505) or, as to each party, to such other address as
shall be designated by such party in a written notice to the other party. All
such notices and communications shall, when delivered to an officer of the other
party, be effective upon such delivery and, when mailed or transmitted by
facsimile, be effective when deposited in the mails or when transmitted
respectively, addressed as aforesaid; except that notices by the Borrower to the
Lender or by the Lender to the Borrower pursuant to the provisions of Section
1.05 shall not be effective until received by the Lender or the Borrower, as the
case may be, but such notices may be given by telephone and confirmed in writing
or by facsimile on the same day and shall be effective upon such telephonic
notice.
SECTION 7.03 No Waiver; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under the Note,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder or under the Note preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 7.04 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Lender and their respective successors
and assigns, except that (i) the Borrower shall not have the right, to assign
its rights hereunder or any interest herein except to a successor by merger,
consolidation or sale of all or substantially all of the Borrower's assets, in
each case if permitted under Section 4.07 above, without the prior written
consent of the Lender, and (ii) the Lender shall not assign any of its rights or
obligations hereunder or under the Note, except to a successor by merger,
consolidation or sale of substantially all of the Lender's assets without the
prior written consent of the Borrower.
SECTION 7.05 Use of Proceeds. The proceeds of the Loans shall be used by
the Borrower for the planned construction and development of Fort Knox, other
growth opportunities and general corprate purposes.
SECTION 7.06 Demand Registration Rights. (i) At any time after the earlier
to occur of (i) the conversion of the Preferred Stock into shares of Common
Stock or (ii) the exercise of the Lender's Purchase Option, the Lender may make
one or more written requests to the Borrower (a "Demand") for registration under
and in accordance with the provisions of the Securities Act of all or part (but
not less than 1,000,000 shares per Demand) of the shares of Common Stock issued
to the Lender pursuant to Section 1.08 or Section 6.01 of this Agreement
("Registrable Shares"). Each such request shall specify the aggregate number of
Registrable Shares proposed to be registered and the intended method of
disposition thereof.
(i) Upon receipt of a Demand, the Borrower shall use its best
efforts to effect such registration to permit the sale of Registrable
Shares in accordance with the intended method of disposition thereof and
pursuant thereto, the Borrower shall as expeditiously as possible:
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(a) execute and deliver all such instruments and documents and do
or cause to be done all such other acts and things as may be necessary
or, in the opinion of the Lender, advisable to register such
Registrable Shares under the provisions of the Securities Act, and to
cause the registration statement relating thereto to become effective
and to remain effective for such period as prospectuses are required
by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of the
Lender, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of
the SEC applicable thereto;
(b) use its best efforts to qualify the Registrable Shares under
the applicable state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Registrable
Shares, as requested by the Lender;
(c) make available to the Lender, as soon as practicable, an
earnings statement that will satisfy the provisions of Section 11(a)
of the Securities Act; and (d) do or cause to be done all such other
acts and things as may be necessary to make such sale of the
Registrable Shares or any part thereof valid and binding and in
compliance with applicable law.
(ii) If any such Demand is made at a time when the Lender directly
or indirectly owns less than five percent 5% of the number of shares of
Common Stock outstanding, the Borrower may, if its Audit Committee of its
Board of Directors determines in the good faith exercise of its reasonable
judgment that it would be inadvisable to effect a demand registration,
defer such demand registration until the earliest practicable time at which
such demand registration can be reasonably effected, which period shall not
exceed three (3) months.
(iii) All Registration Expenses incurred in connection with the first
registration statement to be filed hereunder or under that certain Stock
Purchase Agreement between the Lender and the Borrower of even date
herewith (the "Stock Agreement") shall be paid by the Borrower. All
Registration Expenses incurred in connection with each additional
registration statement to be filed hereunder or under the Stock Agreement
shall be paid by the Lender. For purposes of this Agreement, "Registration
Expenses" shall mean any and all expenses incident to performance of or
compliance with this Section 7.06, including, without limitation, (i) all
SEC and stock exchange registration and filing fees, (ii) all fees and
expenses of complying with state securities or "Blue Sky" laws (including
fees and disbursements of counsel in connection with Blue Sky
qualifications of the Registrable Shares and determination of the
eligibility of the Registrable Shares for investment under the laws of such
jurisdiction as the Lender may indicate), (iii) all printing, messenger and
delivery expenses, (iv) all fees and expenses incurred in connection with
the listing of Registrable Shares on any exchange, and (v) the fees and
disbursements of counsel for the Borrower and of its independent public
accountants, but excluding underwriting discounts and commissions,
brokerage fees, transfer taxes, if any, fees and disbursements of counsel,
accountants or other experts or advisors to the Lender, and National
Association of Securities Dealers Inc. registration and filing fees.
SECTION 7.07 Expenses. The Borrower shall pay (i) all out-of-pocket
expenses of the Lender, including fees and disbursements of special counsel for
the Lender, in connection with the preparation of this Agreement, any waiver or
consent hereunder or any amendment hereof or any default or alleged default
hereunder and (ii) if an Event of Default occurs, or upon the occurrence of an
event that with notice or the lapse of time or both would constitute an Event of
Default, all out-of-pocket expenses incurred by the Lender, including fees and
disbursements of counsel, in connection with such actual or potential Event of
Default and collection, bankruptcy, insolvency and other enforcement
proceedings, actions or negotiations resulting therefrom. The Borrower shall
indemnify the Lender against any transfer taxes, documentary taxes, assessments
or charges made by any governmental authority by reason of the execution and
delivery to the Lender of this Agreement, or any Note.
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SECTION 7.08 Prior Agreement. This Agreement and the Note issued hereunder
shall supersede in their entirety any prior negotiations, discussions,
understandings or arrangements between the Lender and the Borrower pertaining to
the subject matter of this Agreement.
SECTION 7.09 Governing Law. This Agreement and the Note shall be governed
by, and construed in accordance with, the laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AMAX GOLD INC.
By /s/ MARK A. LETTES Title: Vice President and Chief
----------------------- Financial Officer
ATTEST:
/s/ DEBORAH J. FRIEDMAN
-----------------------
CYPRUS AMAX MINERALS COMPANY
BY /s/ FRANCIS J. KANE
------------------------ Title: Vice President Investor
Relations and Treasurer
ATTEST:
/s/ KATHLEEN J. GORMLEY
-----------------------
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EXHIBIT A
REVOLVING CREDIT NOTE
$80,000,000.00 Date: March 10, 1995
FOR VALUE RECEIVED, Amax Gold Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of Cyprus Amax Minerals Company, a
Delaware corporation (the "Lender") at the office of the Lender located at 9100
East Mineral Circle, Englewood, Colorado 80112, or at such other place as the
Lender may direct in writing, in lawful money of the United States of America
and in immediately available funds, the principal amount of Eighty Million
Dollars or, if less than such principal amount, the aggregate unpaid principal
amount of all Loans made by the Lender to the Borrower pursuant to Article I of
the Agreement referred to below in accordance with the respective Schedules
applicable to such Loans attached to and made part of this Note. All principal
amounts outstanding under this Note on December 31, 2002 shall be paid in twenty
equal quarterly installments in accordance with Section 1.06 of such Agreement;
provided, however, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount hereof; and, provided,
further, that the Lender, upon exercise of its Stock Purchase Option under
Article VI of such Agreement, may terminate or reduce the "Commitment", as
defined therein, whereupon such installments shall be due as of the date set for
closing such stock purchase pursuant to Section 6.01 of such Agreement.
The Borrower further promises to pay interest at said office in like money,
from the date hereof on the unpaid principal amount hereof outstanding from time
to time, at the rates and at the times set forth in Article I of such Agreement.
Notwithstanding anything contained herein to the contrary, at the election of
the Borrower the principal of this Note may be paid by the Borrower in Preferred
Stock of the Borrower in accordance with the provisions of Section 1.08 of the
Agreement, subject to satisfaction of the conditions set forth in Section 1.09
of such Agreement.
This Note is the Note referred to in Section 1.02 of the Revolving Credit
Agreement between the Borrower and the Lender dated as of March 10, 1995, as the
same may hereafter from time to time be amended or supplemented in accordance
with the terms thereof ("Agreement"), is entitled to the benefits thereof and
subject to the terms and conditions set forth therein (including, without
limitation, the Lender's rights to accelerate the due date hereof) and may be
paid and prepaid as provided therein.
Upon the occurrence of any of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note may be declared to be
or shall automatically become immediately due and payable as provided therein.
Amax Gold Inc.
By_______________________________
ATTEST:
_________________________________
Secretary
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SCHEDULE OF LOANS AND PAYMENTS
MADE UNDER NOTE DATED MARCH 10, 1995
FROM AMAX GOLD INC.*
TO CYPRUS AMAX MINERALS COMPANY
Principal Amount of the Initial Loan: $__________
Date of the Initial Loan: __________
Interest Rate for the Initial Loan: __________
PRINCIPAL BORROWINGS
AND PAYMENTS OF THIS NOTE
Amount Interest Principal Unpaid
Date Borrowed Rate Paid Paid Balance
---- -------- ---- -------- --------- -------
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
____________________
* All terms used in this Schedule shall have the meanings given them in
Agreement.
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