|
Exhibit
10.1
CREDIT
AGREEMENT
THIS AGREEMENT dated for reference
March 17, 2008 is between:
IONIC CAPITAL CORP. ,
an Alberta corporation, having an office at Suite 1028, 550 Burrard
Street, Vancouver, British Columbia V6C 2B5
(the “ Lender
”)
AND:
HYCROFT RESOURCES &
DEVELOPMENT, INC., a Nevada corporation, having its chief
executive office at 9604 Prototype Court, Reno, Nevada
89521
(the “ Borrower
”)
AND:
ALLIED NEVADA GOLD
CORP., a Delaware corporation, having its chief executive
office at 9604 Prototype Court, Reno, Nevada 89521
(“ Allied Nevada
”)
AND:
HYCROFT LEWIS MINE,
INC., a Nevada corporation, having its chief executive office
at 9604 Prototype Court, Reno, Nevada 89521
(“ Hycroft Lewis
”)
AND:
VICTORY EXPLORATION
INC., a Nevada corporation, having its chief executive office
at 9604 Prototype Court, Reno, Nevada 89521
(“ Victory
Exploration ”)
AND:
VICTORY GOLD INC., a
Nevada corporation, having its chief executive office at 9604
Prototype Court, Reno, Nevada 89521
(“ Victory Gold
”)
AND:
ALLIED VGH INC., a
Nevada corporation, having its chief executive office at 9604
Prototype Court, Reno, Nevada 89521
(“ Allied VGH
”)
AND:
ALLIED NEVADA GOLD
HOLDINGS LLC, a Nevada limited liability corporation, having
its chief executive office at 9604 Prototype Court, Reno, Nevada
89521
(“ Allied
Holdings ”)
AND:
ALLIED VNC INC., a
Nevada corporation, having its chief executive office at 9604
Prototype Court, Reno, Nevada 89521
(“ Allied VNC
”)
(Allied Nevada, Hycroft Lewis, Victory
Exploration, Victory Gold, Allied VGH, Allied Holdings and Allied
VNC are collectively referred to herein as the “
Guarantors ”)
BACKGROUND
A. The Lender has agreed to lend to the
Borrower and the Borrower has agreed to borrow from the Lender the
aggregate principal amount of up to CAD$27,000,000, on the terms
and subject to the conditions of this Agreement.
B. The Guarantors are affiliated with
the Borrower and have requested that the Lender advance the
Facility to the Borrower pursuant to this Agreement, and to induce
the Lender to make such advance have agreed to execute and deliver
this Agreement and the security contemplated herein, including but
not limited to guarantees of all obligations of the Borrower to the
Lender in respect of the Facility.
C. The Guarantors acknowledge that by
virtue of their relationship with the Borrower they will benefit
from the advance of the Facility by the Lender to the Borrower
pursuant to this Agreement.
AGREEMENTS
For good and valuable consideration, the
receipt and sufficiency of which each party acknowledges, the
parties agree as follows:
| 1. |
Definitions. In this Agreement: |
| |
(a) |
“ Advance ” means any of the Initial Advance
and any Subsequent Advance; |
| |
(b) |
“ Allied Nevada ” means Allied Nevada Gold
Corp., a Delaware corporation; |
| |
(c) |
“ Allied Holdings ” means Allied Nevada Gold
Holdings LLC, a Nevada limited liability corporation; |
| |
(d) |
“ Allied VGH ” means Allied VGH Inc., a
Nevada corporation; |
| |
(e) |
“ Allied VNC ” means Allied VNC Inc., a
Nevada corporation; |
| |
(f) |
“ Bonus ” has the meaning set forth in
paragraph 8 below; |
| |
(g) |
“ Borrower ” means Hycroft
Resources & Development, Inc., a Nevada
corporation; |
| |
(h) |
“ Business Day ” means a day which is not a
Saturday, Sunday or a statutory holiday in the State of
Nevada; |
| |
(i) |
“ Collateral Properties ” means
collectively, the Maverick Springs, Mountainview, Hasbrouck, Three
Hills and Wildcat properties now owned by the Credit Parties, as
those properties are described in the Preliminary
Prospectus; |
| |
(j) |
“ control ” has the meaning set forth in
subparagraph 15(m) below; |
| |
(k) |
“ Credit Parties ” means collectively the
Borrower and the Guarantors, and “ Credit Party
” means any one of them; |
| |
(l) |
“ Drawing Notice ” means the drawing notice
and certification in form attached as Schedule “C”
hereto; |
| |
(m) |
“ Event of Default ” has the meaning set
forth in paragraph 15 below; |
| |
(n) |
“ Exchange ” means The Toronto Stock
Exchange; |
| |
(o) |
“ Facility ” means the $27,000,000 credit
facility granted by the Lender to the Borrower pursuant to this
Agreement; |
| |
(p) |
“ Final Approval ” has the meaning set forth
in subparagraph 12(k) below; |
| |
(q) |
“ Guarantors ” means collectively, Allied
Nevada, Hycroft Lewis, Victory Exploration, Victory Gold, Allied
VGH, Allied Holdings and Allied VNC and “ Guarantors
” means any one of them; |
| |
(r) |
“ Hycroft Lewis ” means Hycroft Lewis Mine,
Inc., a Nevada corporation; |
| |
(s) |
“ Hycroft Mine ” means the Hycroft open pit
mine located near Winnemucca, Nevada comprised of the Hycroft
Mining Properties and all present and after-acquired personal
property derived from or used or acquired for use in connection
therewith; |
| |
(t) |
“ Hycroft Mine Plan of Operations ” means
the plan of operations filed by the Borrower with the US Bureau of
Land Management and the Nevada Division of Environmental
Protection; |
| |
(u) |
“ Hycroft Mining Properties ” means the
mining properties described in the attached Schedule
“A”; |
| |
(v) |
“ Initial Advance ” shall mean the first
advance under the Facility, which in any event shall be drawn down
in an amount of CAD$10,000,000, subject to the conditions precedent
set forth in paragraph 10 below; |
| |
(w) |
“ Lender ” means Ionic Capital Corp., an
Alberta corporation; |
| |
(x) |
“ Liens ” means any mortgage, charge, lien,
hypothec or encumbrance, whether fixed or floating on, or any
security interest in, any property, whether real, personal or
mixed, tangible or intangible, any pledge or hypothecation of any
property, any deposit arrangement, priority, conditional sale
agreement, other title retention agreement or equipment trust,
capital lease or other security arrangement of any
kind.; |
| |
(y) |
“ Permitted Encumbrances ” means
(i) all Liens registered against the title to the Hycroft
Mining Properties on the date hereof described in the title opinion
of the Credit Parties’ US counsel dated March 18, 2008
delivered to the Lender in connection with the transactions
described herein, and (ii) the Liens described in the attached
Schedule “E”; |
| |
(z) |
“ Preliminary Prospectus ” means the amended
and restated preliminary prospectus of Allied Nevada dated
March 7, 2008, as filed on SEDAR; |
| |
(aa) |
“ Outstanding Balance ” has the meaning set
forth in paragraph 4(a) below; |
| |
(bb) |
“ Standby Fee ” has the meaning set forth in
paragraph 7 below; |
| |
(cc) |
“ Structuring Fee ” has the meaning set
forth in paragraph 6 below; |
| |
(dd) |
“ Subsequent Advance ” means any advance
under the Facility subsequent to the Initial Advance which, in any
event shall be drawn down in multiples of $500,000 each and which
in aggregate together with the Initial Advance and all Subsequent
Advances shall not exceed the aggregate amount of the Facility, and
subject to the conditions precedent set forth in paragraph 10
below; |
| |
(ee) |
“ Subsidiaries ” means, with respect to the
Credit Parties, any corporation of which at least a majority of the
outstanding shares to which there is attached voting power under
ordinary circumstances to elect a majority of the board of
directors of such corporation, shall at the relevant time be owned
directly or indirectly by the Credit Parties, one or more
Subsidiaries of the Credit Parties, or any combination thereof, but
shall not include Mineral Ridge Resources Inc., a Nevada
corporation, which is in the process of dissolution, and for
greater certainty, shall include those corporations listed on
Schedule “D” hereto, and “ Subsidiary
” shall mean any one of them; |
| |
(ff) |
“ Term Sheet ” means the Term Sheet for
Credit Facility dated February 11, 2008, between Allied Nevada
and the Lender; |
| |
(gg) |
“ Victory Exploration ” means Victory
Exploration Inc., a Nevada corporation; and |
| |
(hh) |
“ Victory Gold ” means Victory Gold Inc. a
Nevada corporation. |
| 2. |
Facility Advance. Subject to and upon the fulfilment of
the conditions precedent contained in paragraphs 10 and 11 of this
Agreement, as the case may be, the Lender will advance the
principal amount of the Facility to the Borrower or as the Borrower
may otherwise direct. |
| 3. |
Use of Proceeds. The Borrower covenants and agrees with
the Lender that the Facility proceeds will be used by the Borrower
for working capital and other operating expenses relating to the
re-opening and operation of the Hycroft Mine, all as more
particularly described in the Preliminary Prospectus, and for no
other purpose whatsoever without the express written consent of the
Lender. |
| |
(a) |
Subject to the rights of the Lender under Section 16 to
accelerate payment of all monies owing hereunder, the principal
amount of each Advance, together with all accrued but unpaid
interest, bonus and other costs or charges payable hereunder from
time to time (collectively the “ Outstanding Balance
”), will be immediately due and payable by the Borrower to
the Lender on March 30, 2009. |
| |
(b) |
If after the Advance of the Facility, the Credit Parties or any
of their respective Subsidiaries sell or otherwise dispose of any
assets outside of the ordinary course of business (except for the
sale of the Treasure Hill, White Pine Count, Nevada property to
Golden Predator Mines US Inc. and the Wonder, Churchill County,
property to Century Gold LLC on terms substantially similar to
those disclosed to the Lender in writing prior to the date of this
Agreement), or close one or more equity or debt financings (except
for a proposed prospectus offering of equity securities by Allied
Nevada pursuant to the Preliminary Prospectus and further provided
that such offering closes within three months of the date of this
Agreement), the Credit Parties will pay or cause to be paid to the
Lender all proceeds from such sale, disposition or financing, net
of reasonable selling or financing costs, up to the full amount of
the Outstanding Balance, to be applied on account of the
Facility. |
| |
(c) |
The Credit Parties may prepay the Facility in whole at any time
before maturity, without notice or penalty, provided that such
prepayment occurs on the last Business Day of any calendar month
during the term of the Facility and further provided that the
Borrowers have delivered to the Lender written notice of its
intention to prepay the Facility not less than ten
(10) Business Days’ prior to such
prepayment. |
| 5. |
Interest. Interest will accrue on the Outstanding
Balance from the date of Advance at the rate of twelve percent
(12%) per annum, calculated daily and compounded monthly
(effective annual rate of 12.68%), and be payable by the Borrower
to the Lender monthly on the last Business Day of every month, as
well as after maturity, default and judgment. In the case of the
Initial Advance, the parties hereto acknowledge and agree that
interest shall accrue from and after March 18, 2008 regardless
of whether the proceeds of the Initial Advance are delivered or
otherwise made available to the Borrowers. |
| 6. |
Structuring Fee . In consideration for the Lender
entering into this Agreement, the Borrower shall pay to the Lender
a non-refundable $135,000 structuring fee concurrently with the
Initial Advance (the “ Structuring Fee
”). |
| 7. |
Standby Fee. In consideration for the Lender entering
into this Agreement, the Borrower shall pay to the Lender a
non-refundable $1,080,000 standby fee concurrently with the Initial
Advance (the “ Standby Fee ”). |
| 8. |
Bonus. As additional consideration for each Advance
under the Facility and concurrently therewith, the Borrower shall
make a non-refundable bonus payment to the Lender in the amount of
five percent (5%) of the principal amount of each Advance (the
“ Bonus ”). |
| 9. |
Security. As security for the Facility the Credit
Parties will execute and deliver, or cause to be executed and
delivered, to the Lender: |
| |
(a) |
unlimited guarantees from each of the Guarantors, under which
the Guarantors will guarantee all obligations of the Borrower to
the Lender; |
| |
(b) |
security agreements from each of the Credit Parties, under
which the Credit Parties will grant to the Lender first priority
security interests in all present and after acquired personal
property of the Credit Parties, subject only to Permitted
Encumbrances; |
| |
(c) |
deeds of trust, security agreement, assignment of leases and
rents and fixture filing to secure promissory note and guaranty,
and other documents incidental thereto or required by the Lender or
its counsel thereunder from each of the Credit Parties with an
interest in the Hycroft Mine, under which such Credit Parties will
grant to the Lender first priority mortgage, charge, assignment and
security interest in all of their respective right, title and
interest in and to the Hycroft Mine now or hereafter owned by such
Credit Parties, subject only to Permitted Encumbrances; |
| |
(d) |
deeds of trust, security agreement, assignment of leases and
rents and fixture filing to secure promissory note and guaranty,
and other documents incidental thereto or required by the Lender or
its counsel thereunder from each of the Credit Parties with an
interest in the Collateral Properties, under which such Credit
Parties will grant to the Lender first priority mortgage, charge,
assignment and security interest in all of their respective right,
title and interest in and to the Collateral Properties now or
hereafter owned by such Credit Parties, subject only to Permitted
Encumbrances; |
| |
(e) |
share pledge agreements from each of the Credit Parties with
Subsidiaries, under which each such Credit Party will pledge and
grant to the Lender a first priority security interest in all of
the issued and outstanding shares of each such Subisidiary,
together with all share certificates representing the pledge shares
thereunder, and all transfer forms and directors resolutions as may
be required to effect the transfer of such pledge
shares; |
| |
(f) |
an environmental indemnity agreement in favour of the Lender;
and |
| |
(g) |
such other security as the Lender may reasonably
require; |
all in form and terms
satisfactory to the Lender and its counsel (collectively, the
“ Security ”).
| 10. |
Conditions Precedent to Initial Advance. As conditions
precedent to the Initial Advance under the Facility by the
Lender: |
| |
(a) |
the Borrower will have: |
| |
(i) |
executed and delivered to the Lender a Drawing Notice prior to
the date of the Initial Advance; and |
| |
(ii) |
executed and delivered to the Lender a promissory note in the
form attached hereto as Schedule “B” (the “
Note ”) in the principal amount of the Initial
Advance; |
| |
(b) |
the Credit Parties will have: |
| |
(i) |
executed and delivered or caused to be executed and delivered
all of the security documents referred to in paragraph 9 above and
the documents, securities and instruments referred therein, except
that security referred to in subparagraph 9(d) above, and the
Lender will have completed all registrations and other filings that
may be prudent or necessary to perfect the Lender’s security
therein; |
| |
(ii) |
delivered certified copies of their directors’
resolutions authorizing the borrowing or guaranteeing of the
Facility, as the case may be, the grant of the Security and the
execution and delivery of this Agreement and all agreements,
documents and instruments referred to herein, together with
officer’s certificates, certifying certain factual matters;
and |
| |
(iii) |
caused to be executed and delivered legal opinions of the
Credit Parties’ Canadian and United States counsel, in form
and terms satisfactory to the Lender and its counsel, acting
reasonably; |
| |
(c) |
the representations and warranties of the Credit Parties
contained in paragraph 12 will be true and correct in all material
respects and the Credit Parties will have complied with all
covenants required to be complied with by them prior to the Initial
Advance under the Facility by the Lender (including but not limited
to the payment of the Structuring Fee, the Standby Fee and that
portion of the Bonus payable in connection with the Initial
Advance); |
| |
(d) |
there shall have been no adverse material change in the
business, operations, assets or ownership of the Credit Parties or
any of their respective Subsidiaries, taken as a whole, since the
date of the Term Sheet; |
| |
(e) |
the Lender will have completed and, in its sole and absolute
discretion, be satisfied with its due diligence review of the
Credit Parties and their respective Subsidiaries, properties and
assets, including but not limited to the Hycroft Mine and all
valuations, mine plans, budgets, permits and pro forma financial
statements in respect thereof, and shall have satisfactorily
completed a site visit of the Hycroft Mine; |
| |
(f) |
the Lender will, in its sole and absolute discretion, be
satisfied as to the creditworthiness of the Credit Parties and
their respective Subsidiaries and the adequacy of the collateral
security contemplated herein; |
| |
(g) |
the Lender shall have completed the syndication of the
Facility; and |
| |
(h) |
the Lender shall have received the approval of its board of
directors; |
all in form and terms satisfactory to
the Lender and its counsel. If any of the foregoing conditions
precedent are not satisfied or waived by the Lender in writing on
or before March 18, 2008, this Agreement will terminate, and
the Lender will be under no further obligation to the Credit
Parties in connection with the transaction contemplated
herein.
| 11. |
Conditions Precedent to Subsequent Advances. As
conditions precedent to all Subsequent Advances under the Facility
by the Lender: |
| |
(a) |
the Borrower will have executed and delivered to the
Lender: |
| |
(i) |
a Drawing Notice not less than five (5) Business Days
prior to the date of such Subsequent Advance; |
| |
(ii) |
a Note in the principal amount of the Subsequent Advance;
and |
| |
(iii) |
executed and delivered, or caused to be executed and delivered,
title opinions of the Credit Parties’ US counsel in respect
of the Collateral Properties in form and terms satisfactory to the
Lender and its counsel, together with all of the security documents
referred to in subparagraph 9(d) above and the documents,
securities and instruments referred therein, and the Lender will
have completed all registrations and other filings that may be
prudent or necessary to perfect the Lender’s security
therein; |
| |
(b) |
the Credit Parties will have executed and delivered to the
Lender officer’s certificates of the Credit Parties,
certifying certain factual matters, substantially in the form
provided on the Initial Advance; |
| |
(c) |
the representations and warranties of the Credit Parties
contained in paragraph 12 will be true and correct in all material
respects and the Credit Parties will have complied with all
covenants required to be complied with by them prior to each
Subsequent Advance under the Facility by the Lender (including but
not limited to the payment of that portion of the Bonus payable in
connection with such Subsequent Advance); |
| |
(d) |
there shall have been no adverse material change in the
business, operations, assets or ownership of the Credit Parties or
any of their respective Subsidiaries, taken as a whole, since the
date of the Term Sheet; |
| |
(e) |
the Lender will have completed and, in its sole and absolute
discretion, be satisfied with its due diligence review of the
Credit Parties, their Subsidiaries and their respective properties
and assets, including but not limited to the Hycroft Mine;
and |
| |
(f) |
the Lender will, in its sole and absolute discretion, be
satisfied as to the creditworthiness of the Credit Parties and
their Subsidiaries and the adequacy of the collateral security
contemplated herein. |
If any of the foregoing conditions
precedent are not satisfied or waived by the Lender in writing on
or before July 31, 2008, the Lender will be under no
obligation to the Borrowers to make any Subsequent Advances
contemplated herein.
| 12. |
Representations and Warranties. The Credit Parties
represent and warrant to the Lender as follows: |
| |
(a) |
each of the Credit Parties exist as a company under the law of
its jurisdiction of incorporation, and has not discontinued or been
dissolved under that Law and is in good standing with respect to
the filing of annual reports thereunder; |
| |
(b) |
each of the
Credit Parties has the power and authority to (i) carry on its
business as now being conducted and is licensed or registered or
otherwise qualified in all jurisdictions
|
| |
where in the nature of its
assets or the business transacted makes such licensing,
registration or qualification necessary, (ii) acquire, own,
hold, lease and mortgage or grant security in its assets including
real property and personal property and (iii) enter into and
perform its obligations under this Agreement and all other
documents or instruments delivered hereunder;
|
| |
(c) |
this Agreement and all ancillary instruments or documents
issued, executed and delivered hereunder by each of the Credit
Parties, has been duly authorized by all necessary action of each
of the Credit Parties and each constitutes or will constitute a
legal, valid and binding obligation of each, enforceable against
each of the Credit Parties in accordance with their terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the rights and remedies of
creditors and to the general principles of equity; |
| |
(d) |
none of the Credit Parties nor any Subsidiary is in breach of
or in default under any agreement which if terminated or cancelled
could reasonably be expected to have a material adverse effect on
the business, properties or assets of the Credit Parties, or any
obligation in respect of borrowed money and the execution and
delivery of this Agreement and all ancillary instruments or
documents issued and delivered hereunder or thereunder, and the
performance of the terms hereof and thereof will not be, or result
in, a violation or breach of, or default under the Credit
Parties’ or any Subsidiary’s constating documents, any
law, any judgment, agreement or instrument to which they are a
party or may be bound; |
| |
(e) |
the Security creates a valid first registered charge, lien and
security interest on the Hycroft Mine, subject only to Permitted
Encumbrances; |
| |
(f) |
no litigation or administrative proceedings before any court or
governmental authority are presently ongoing, or have been
threatened in writing, or to the best of the Credit Parties’
knowledge are pending, against any of the Credit Parties or any
Subsidiary or any of their respective properties or assets or
affecting any of their properties or assets which could reasonably
be expected to have a material adverse effect on their business,
properties or assets; |
| |
(g) |
the audited annual consolidated financial statements for Allied
Nevada for the fiscal period ended December 31, 2007,
including all management’s discussion and analysis publicly
disclosed in connection therewith (collectively, the “
Financial Statements ”), fairly present the financial
affairs of Allied Nevada and its Subsidiaries as of the date to
which they are made, and have been prepared in accordance with
United States of America generally accepted accounting principles,
consistently applied (“ US GAAP ”); |
| |
(h) |
Allied Nevada is in compliance, in all material respects, with
its continuous disclosure obligations under applicable securities
laws and, without limiting the generality of the foregoing, there
has been no adverse material change (actual, contemplated or
threatened) in the property, assets, business or operations of any
of the Credit Parties or any of their respective Subsidiaries,
taken as a whole, since the date of release of the Financial
Statements, other than as publicly disclosed in writing by Allied
Nevada prior to the date of this Agreement; |
| |
(i) |
the Borrower, Hycroft Lewis and Victory Exploration are the
legal and beneficial owners of Hycroft Mine, subject only to
Permitted Encumbrances and any and all agreements pursuant to which
any of the Borrower, Hycroft Lewis or Victory Exploration holds or
will hold any interest in the Hycroft Mine are in good standing in
all material respects under the applicable statutes and regulations
of the jurisdictions in which they are situated; |
| |
(j) |
the information circulars, prospectuses (including the
Preliminary Prospectus), annual information forms, offering
memoranda, financial statements, material change reports and news
releases filed with the Exchange and the Securities Commissions in
those jurisdictions in which Allied Nevada is a reporting issuer on
or during the twelve (12) months preceding the date hereof
(collectively, the “ Public Record ”), is
complete and accurate in all material respects and omits no facts,
the omission of which makes the Public Record, or any particulars
therein, misleading, misrepresentative or incorrect in any material
respect; |
| |
(k) |
the Credit Parties and their respective Subsidiaries have
conducted and are conducting their respective businesses in
compliance with all applicable laws, bylaws, rules and regulations
of each jurisdiction in which their businesses are now carried on
and hold all licenses, registrations, permits, consents or
qualifications (whether governmental, regulatory or otherwise)
required in order to enable their businesses to be carried on as
now conducted and, upon receipt of the final approval of the US
Bureau of Land Management and the Nevada Division of Environmental
Protection ( the “ Final Approval ”) of
the Hycroft Mine Plan of Operations, as proposed to be conducted by
the Borrower, and except for the Final Approval, all such licenses,
registrations, permits, consents and qualifications are valid and
subsisting and in good standing and none of the Credit Parties nor
any Subsidiary have received any notice of proceedings relating to
the revocation or modification of any such licenses, registrations,
permits, consents or qualifications which could reasonably be
expected to have any materially adverse affect on, the condition of
such businesses, operations, condition (financial or otherwise) or
income of the Borrowers or any Subsidiary; |
| |
(l) |
no order ceasing or suspending trading in securities of any of
the Credit Parties or prohibiting the sale of securities by any of
the Credit Parties has been issued and no proceedings for this
purpose have been instituted, are pending, contemplated or
threatened; |
| |
(m) |
neither Canada Revenue Agency, the Internal Revenue Service,
nor any other taxation authority has asserted or, to the best of
the Credit Parties’ knowledge, has threatened to assert any
assessment, claim or liability for taxes due or to become due in
connection with any review or examination of the tax returns of any
of the Credit Parties or any Subsidiary filed for any year which
would have material adverse effect on the assets, properties,
business, results of operations, prospects or condition (financial
or otherwise) of the Credit Parties or any Subsidiary; |
| |
(n) |
none of the Credit Parties nor any Subsidiary is a party to any
material contract other than as disclosed in the Public
Record; |
| |
(o) |
Allied Nevada
is a reporting issuer under the Securities Acts of all
Canadian Provinces and the Yukon Territory and is in compliance
with its material obligations under those
|
| |
Acts and under the rules,
regulations and policies of the Exchange, and will use its best
efforts to maintain such status, without default, from the date
hereof until repayment in full of the Facility to the
Lender;
|
| |
(p) |
as at the date of this Agreement, except as disclosed in the
Financial Statements, in any filings within any governmental body
or securities regulatory authority or to the Lender in writing and
as contemplated by this Agreement, no holder of outstanding shares
in the capital of the Credit Parties will be entitled to any
pre-emptive or any similar rights to subscribe for any of the
shares in the capital of the Credit Parties or other securities of
the Credit Parties, and no rights, warrants or options to acquire,
or instruments convertible into or exchangeable for any shares in
the capital of the Credit Parties are outstanding; |
| |
(q) |
except as disclosed on Schedule “D” hereto, the
Credit Parties have no direct or indirect subsidiary
corporations; |
| |
(r) |
the Credit Parties and all Subsidiaries own their respective
business, operations and assets, as more particularly described in
the Public Record (including but not limited to the Hycroft Mine),
and hold good title thereto, free and clear of all liens, claims or
encumbrances whatsoever, other than Permitted
Encumbrances; |
| |
(s) |
all factual information previously or contemporaneously
furnished to the Lender by or on behalf of the Credit Parties for
purposes of or in connection with this Agreement or any transaction
contemplated hereby, is true and accurate in every material respect
and such information is not incomplete by the omission of any
material fact necessary to make such information not
misleading; |
| |
(t) |
the Credit Parties and their respective Subsidiaries are
solvent and are generally able to pay their debts as they come due
and will be able to do so after giving effect to the transactions
contemplated in this Agreement; and |
| |
(u) |
the chief executive, principal place of business and place
where each of the Credit Parties and each Subsidiary keep their
books and records is located at 9604 Prototype Court, Reno, Nevada
89521. |
| 13. |
Positive Covenants of the Credit Parties. The Credit
Parties covenant and agree that so long as any monies will be
outstanding under this Agreement, they will: |
| |
(a) |
at all times maintain their corporate existence and the
corporate existence of all of their Subsidiaries; |
| |
(b) |
duly perform their obligations under this Agreement and all
other agreements and instruments executed and delivered hereunder
or thereunder; |
| |
(c) |
execute and deliver, or caused to be executed and delivered,
title opinions of the Credit Parties’ US counsel in respect
of the Collateral Properties together with all of the security
documents referred to in subparagraph 9(d) above and the documents,
securities and instruments referred therein, duly executed by the
Credit Parties, in form and terms satisfactory to the Lender and
its counsel, all on or before April 30, 2008; |
| |
(d) |
promptly pay when due all agency or finders’ fees payable
in connection with the Facility or this Agreement and indemnify and
save harmless the Lender from all claims in respect of any such
fees; |
| |
(e) |
carry on and conduct their business in a proper business-like
manner in accordance with good business practice and will keep or
cause to be kept proper books of account in accordance with US
GAAP; |
| |
(f) |
at all times comply with all applicable laws, except where such
voluntary non-compliance could not reasonably be expected to have a
material adverse effect on the business, properties or assets of
any of the Credit Parties or any Subsidiary; |
| |
(g) |
pay and discharge promptly when due, all taxes, assessments and
other governmental charges or levies imposed upon it or upon its
properties or assets or upon any part thereof, as well as all
claims of any kind (including claims for labour, materials and
supplies) which, if unpaid, would by law become a lien, charge,
trust or other claims upon any such properties or assets, provided
however that the Credit Parties shall not be required to pay any
such tax, assessment, charge or levy or claim so long as it remains
secured by a Permitted Lien; |
| |
(h) |
give to the Lender within three (3) Business Days of
filing on SEDAR copies of all documents or instruments publicly
filed by Allied Nevada on SEDAR, together with such other financial
or other management reports, certificates, updated financial
statements, including monthly internal financial and operational
reports and documents and such other information with respect to
the Credit Parties or the Subsidiaries as the Lender may reasonably
request from time to time during the term of this
Agreement; |
| |
(i) |
provide the Lender with written notice of any proposed
financing made by or to the Credit Parties concurrently with, but
not prior to, public disclosure of such financing; |
| |
(j) |
furnish and give to the Lender (if such is the case) notice
that an Event of Default has occurred and, if applicable, is
continuing or notice in respect of any event which would constitute
an Event of Default hereunder and specifying the nature of same;
and |
| |
(k) |
perform and do all such acts and things as are necessary to
perfect and maintain the security provided to the Lender pursuant
to this Agreement. |
| 14. |
Negative Covenants of the Credit Parties. The Credit
Parties covenant and agree with the Lender that the Credit Parties
will not without first obtaining the written consent of the
Lender: |
| |
(a) |
except for the Security and Permitted Encumbrances, make, give,
create or permit or attempt to make, give or create any mortgage,
charge, lien or encumbrance over any assets of the Credit Parties
or any Subsidiary; |
| |
(b) |
change the name of any Credit Parties or any
Subsidiary; |
| |
(c) |
allot and
issue any new shares of any Subsidiary, unless in the case of a
Subsidiary whose shares have been pledged or otherwise subject to a
security interest in favour of the Lender as part of the Security,
the share certificates representing all such new shares allotted
and issued are delivered to the Lender, together with powers of
attorney and
|
| |
such other transfer
documents as the Lender or its counsel may require, to be held by
the Lender pursuant to the Security as additional security for the
obligations of the Borrower to the Lender in respect of the
Facility;
|
| |
(d) |
in the case of Allied Nevada, declare or provide for any
dividends or other payments based on share capital; |
| |
(e) |
in the case of Allied Nevada, redeem or purchase any of its
shares; |
| |
(f) |
except for the sale of the Treasure Hill property to Golden
Predator Mine US Inc. on terms disclosed to the Lender in writing
before the date of this Agreement, make any sale of or dispose of
any substantial or material part of its business, assets or
undertaking, or that of any Subsidiary, including its interest in
the shares or assets of any Subsidiary outside of the ordinary
course of business; |
| |
(g) |
save and except for purchase money security interests, chattel
mortgages, equipment leases entered into in the ordinary course of
business, borrow or cause any Subsidiary to borrow money from any
person other than the Lender without first obtaining and delivering
to the Lender a duly signed assignment and postponement of claim by
such person in favour of the Lender, in form and terms satisfactory
to the Lender; |
| |
(h) |
in respect of itself or any Subsidiary, pay out any
shareholders loans or other indebtedness to non-arm’s length
parties or enter into any transactions with any non-arm’s
length parties other than on commercially reasonable terms, unless
such payment or transaction is with one of the other Credit Parties
hereto and the proceeds of such payment and all benefits of such
transaction continue to be subject to the Security after giving
effect to such payment or transaction; or |
| |
(i) |
in respect of itself or any Subsidiary, guarantee the
obligations of any other person, directly or indirectly, other than
obligations permitted by this Agreement. |
| 15. |
Events of Default. Each and every of the events set
forth in this paragraph will be an event of default (“
Event of Default ”): |
| |
(a) |
if the Borrower fails to make any payment of principal or
interest when due hereunder, and such failure continues for two
(2) Business Days; |
| |
(b) |
if any of the Credit Parties default in observing or performing
any material term, covenant or condition of this Agreement or any
Security or other document delivered hereunder or in connection
with the Facility, other than the payment of monies as provided for
in subparagraph (a) hereof, on their part to be observed or
performed and such failure continues for five (5) Business
Days; |
| |
(c) |
if Allied Nevada is in default of any material prescribed
filings with applicable securities regulatory authorities, the
stock exchange or market on which its shares trade (collectively,
the “ Authorities ”), or are subject to any
suspension in excess of two (2) trading days or cease trade
order issued by any such Authority; |
| |
(d) |
if any of the Credit Parties’ representations, warranties
or other statements in this Agreement or any other collateral
document delivered hereunder or in connection with the Facility
were at the time given false or misleading in any material
respect; |
| |
(e) |
if any of the Credit Parties are in default under any agreement
which if terminated could reasonably be expected to result in a
material adverse effect on the operations, business or assets of
any of the Credit Parties and written notice of such default has
been given to the Credit Parties by the other party
thereto; |
| |
(f) |
if any of the Credit Parties default in any material respect in
observing or performing any term, covenant or condition of any debt
instrument or obligation in respect of borrowed money by which they
are bound in an aggregate amount of not less than
$100,000; |
| |
(g) |
if any of the Credit Parties permit any sum which has been
admitted as due, or is not disputed to be due, and which forms or
is capable of being made a charge upon any of the assets or
undertaking of any of the Credit Parties to remain unpaid or not
challenged for 30 days after proceedings have been taken to enforce
the same; |
| |
(h) |
if any of the Credit Parties, directly or indirectly through
any Subsidiary, cease or threaten to cease to carry on
business; |
| |
(i) |
if any order is made or issued by a competent regulatory
authority prohibiting the trading in shares of Allied Nevada or if
Allied Nevada’s common shares are suspended or de-listed from
trading on any stock exchange; |
| |
(j) |
if, in the reasonable opinion of the Lender, an adverse
material change occurs in the financial condition of any of the
Credit Parties; |
| |
(k) |
if the Lender in good faith and on commercially reasonable
grounds believes that the ability of the Credit Parties or any
Subsidiary, taken as a whole, to pay any of the Outstanding Balance
to the Lender or to perform any of the covenants contained in this
Agreement or any Security or other agreement or document delivered
hereunder is impaired or any security granted by the Borrowers or
any Subsidiary to the Lender is or is about to be impaired or in
jeopardy in any material respect; |
| |
(l) |
if any of the Credit Parties or any Subsidiary petitions or
applies to any tribunal for the appointment of a trustee, receiver
or liquidator or commences any proceedings under any bankruptcy,
insolvency, readjustment of debt or liquidation law of any
jurisdiction, whether now or hereafter in effect; |
| |
(m) |
any change of control of any of the Credit Parties (“
control ” being defined as ownership of or control or
direction over, directly or indirectly, 20% or more of the
outstanding voting securities of any such Credit Parties);
or |
| |
(n) |
if any petition or application |
|
