SECOND AMENDED AND RESTATED CREDIT AGREEMENTLoan Agreement |
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “ Agreement ”) dated as of March 31, 2009, among NORD RESOURCES CORPORATION, a Delaware corporation (the “ Borrower ”), and COCHISE AGGREGATES AND MATERIALS, INC., a Nevada corporation (“ Cochise ”, a “ Guarantor ”), the lenders from time to time party hereto (each a “ Lender ” and collectively, the “ Lenders ”), and NEDBANK LIMITED, as administrative agent (in such capacity, the “ Administrative Agent ”) and as sole lead arranger (in such capacity, the “ Sole Lead Arranger ”). WHEREAS the Borrower, the Guarantor, the Lenders and the Administrative Agent entered into certain Credit Agreement dated June 17, 2007 to provide to the Borrower a term loan facility to assist in financing the construction, start-up, and operation of mining and metal operations at the Johnson Camp Mine, a copper mine and production facility located 65 miles east of Tuscon, Arizona in Cochise County (the “ Original Agreement ”); WHEREAS, the Original Agreement was Amended and Restated (the “ First Amended and Restated Credit Agreement ” on June 30, 2008; WHEREAS, the Borrower has requested that the First Amended and Restated Agreement be further amended and restated by this Agreement; and WHEREAS, subject to the conditions set forth herein (including, without limitation, those conditions set forth in Article 11 hereof) the parties have agreed to cause the First Amended and Restated Credit Agreement to be amended and restated as set forth herein. NOW THEREFORE, in consideration of the foregoing recitals, the mutual agreements contained herein and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows: ARTICLE I. SECTION 1.1. Defined Terms . As used in this Agreement, the following terms have the meanings specified below: “ A Term Loan ” has the meaning set forth in Section 2.1. For the avoidance of doubt, only A Term Loans shall exist immediately following the Second Amendment and Restatement Date, provided that the A Term Loans may be re-tranched into A Term Loans and B Term Loans if a Term Loan Conversion Event shall occur. “ Account Charge ” means an English law governed charge instrument substantially in the form of Exhibit F. “ Administrative Agent ” means Nedbank Limited, in its capacity as administrative agent for the Lenders hereunder. “ Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “ Agreement ” has the meaning set forth in the recitals hereto. “ Applicable Law ” means all public laws, statutes, ordinances, decrees, judgments, codes, standards, acts, orders, by-laws, rules, regulations, Approvals, permits and requirements of any Governmental Authority, in each case having the force of law and which now or hereafter may be lawfully applicable to and enforceable against any Loan Party or its property or any part thereof. “ Applicable Margin ” means: (a) for the A Term Loans, 6.06% per annum, provided that such amount (x) shall be reduced by 1.75% after the Deferred Payment Trigger Event, and (y) shall be reduced by an additional 0.50% after Completion; and (b) for the B Term Loans (if any), 5.00% per annum. “ Applicable Percentage ” means, with respect to any Lender, the percentage of the total Term Loan Commitments represented by such Lender’s Term Loan Commitment. If the Term Loan Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Term Loan Commitments most recently in effect, giving effect to any assignments. “ Approvals ” means each and every approval, order in council, authorization, license, permit, consent, filing and registration by or with any Governmental Authority or other Person which are required by Applicable Law and necessary to authorize or permit the development and operation of the Project and the execution, delivery, performance, validity and enforceability of the Loan Documents or the Material Contracts. “ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.4), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent. “ Availability Period ” means the period from and including the Closing Date to but excluding the earlier of (a) the date of termination of the Term Loan Commitments, and (b) the first Principal Payment Date. “ B Term Loan ” has the meaning set forth in Section 10.16. For the avoidance of doubt, only A Term Loans shall exist immediately following the Second Amendment and Restatement Date, provided that the A Term Loans may be re-tranched into A Term Loans and B Term Loans if a Term Loan Conversion Event shall occur. “ Board ” means the Board of Governors of the Federal Reserve System of the United States of America. - 2 - “ Borrower ” has the meaning set forth in the recitals hereto. “ Borrower Public Documents ” means all registration statements, prospectuses, forms, reports, schedules, statements and other documents (including any amendments or supplements thereto) filed by the Borrower with: (a) the SEC under the United States Securities Act of 1933, as amended, or the United States Securities Exchange Act of 1934, as amended, and any rules, regulations or other instruments promulgated thereunder; or (b) the Canadian Securities Regulators under the Securities Act (Ontario) or the Securities Act (British Columbia), and any rules, regulations or other instruments promulgated thereunder. “ Borrowing ” means a borrowing of Term Loans. “ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. “ CADS ” means, for a particular period, (a) gross revenues for such period (for any future period, calculated (i) using the actual hedged price for future hedged production and (ii) the unhedged price for unhedged production, with the unhedged price being the Historic Six Month Average Spot Price at such time) less (b) the sum of (i) the aggregate of Project Development Costs for such period, (ii) cash Tax Expenses for such period, and (iii) cash Operating Costs for such period, and (c) adjusted for changes in Working Capital over such period (plus any increases and minus any decreases). “ Canadian Securities Regulators ” means either or both of the Ontario Securities Commission and the British Columbia Securities Commission, as the context requires. “ Capital Expenditures ” means, for a particular period, the aggregate of all expenditures by the Borrower during such period that, in accordance with GAAP, are classified as capital expenditures. “ Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. “ Casualty Event ” means, with respect to any Property of any Person, any loss of or damage to, or any condemnation or other taking of, such Property for which such Person receives insurance proceeds, or proceeds of a condemnation award or other compensation. “ Change of Control ” means (a) Cochise shall cease to be a direct wholly-owned subsidiary of the Borrower; or (b) the Administrative Agent, for the benefit of the Lenders, shall cease to have a perfected security interest in Equity Interests of Cochise representing 100% of the aggregate equity value represented by the issued and outstanding Equity Interests in Cochise. - 3 - “ Change in Law ” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.13(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. “ Closing Date ” means the second Business Day after which the conditions specified in Section 4.1 are satisfied (or waived in accordance with Section 10.2) . “ Cochise ” has the meaning in the recitals hereto. “ Code ” means the Internal Revenue Code of 1986, as amended from time to time. “ Collateral ” means a collective reference to all real and personal property with respect to which Liens have been granted in favor of the Administrative Agent pursuant to and in accordance with the Security Documents. “ Collateral Account Agreement ” means the Collateral Account Agreement in the form attached as Exhibit C hereto. “ Collateral Accounts ” shall have the meaning set forth in the Collateral Account Agreement. “ Completion ” means the earlier to occur of the date upon which the Borrower has delivered the Completion Certificates to the Administrative Agent, duly executed by the Borrower, and verified by the Independent Technical Consultant, and such certificates shall have been accepted by the Administrative Agent. “ Completion Certificates ” shall mean, collectively, the forms of certificates relating to Completion which shall be in a form satisfactory to the Borrower, the Administrative Agent, and the Independent Technical Consultant. “ Completion Date ” means the date upon which Completion occurs. “ Consent Agreements ” means, collectively, the agreements so named, entered into or to be entered into between the Lenders, the Administrative Agent, the Borrower and each of the counterparties to each Material Contract with a value in excess of $1,000,000 (as determined by the Administrative Agent in consultation with the Borrower) pursuant to which, inter alia, such counterparties consent to the Security and grant to the Lenders or their nominee certain “step-in” rights. “ Construction Schedule and Capital Spending Plan ” means the Borrower’s construction schedule and capital spending plan, dated June 20, 2007, as the same may be modified by the Borrower and approved by the Required Lenders. - 4 - “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto. “ Debt Issuance ” means the issuance of any Indebtedness by any Loan Party other than the issuance of any Indebtedness permitted under Section 6.1. “ Debt Service Charges ” means, for a particular period, the sum of all scheduled principal payments made or required to have been made by the Borrower hereunder with respect to Term Loans during such period and interest on such Term Loans paid or required to have been paid by the Borrower during such period. “ Debt Service Coverage Ratio ” means, (a) with respect to a particular Historical Test Period, the ratio of (i) CADS for such Test Period to (ii) Debt Service Charges for such Test Period (as determined with respect to the financial statements most recently delivered pursuant to Section 5.1(a) and (b) hereof); and (b) with respect to a particular Future Test Period, the ratio of (i) CADS for such Test Period to (ii) Debt Service Charges for such Test Period (as determined with respect to the Financial Model then in effect). “ Debt Service Reserve Account ” has the meaning set forth in the Collateral Account Agreement. “ Deed of Trust ’ means the Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing in the form of Exhibit D, hereto. “ Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. “ Deferred Payments ” means payments on the A Term Loan made pursuant to Section 2.8(b) or Section 2.9(e) in an aggregate amount equal to the sum of (a) $3,607,085 plus (b) the Deferred Payment Notional Amount. For purposes of this definition, “ Deferred Payment Notional Amount ” shall mean an amount equal to a notional amount of interest on the amount in clause (a) of the preceding sentence calculated at a rate of 5.98% per annum from and including March 31, 2009 to but excluding the earlier of Completion and the Deferred Payment Trigger Date, and (assuming Completion occurs first) 5.48% per annum from and including Completion to but excluding the Deferred Payment Trigger Date and (ii) such notional amount of interest otherwise calculated in a manner consistent with this Agreement, including with respect to the capitalization of interest in Section 2.11(c) . For the avoidance of doubt, the calculation provided for in the previous sentence is not additional interest required to be paid by the Borrower, but is a calculation of the amount of prepayments required to be made by the Borrower in order for the Deferred Payment Trigger Event to occur. “ Deferred Payment Trigger Event ” means the Deferred Payments shall have been made with respect to the A Term Loan. “ Disclosure Schedule ” means the disclosure schedule that has been prepared by the Borrower, delivered by the Borrower to the Lender, and dated the date of this Agreement, which - 5 - shall be deemed to include each Borrower Public Document available on EDGAR or SEDAR and filed prior to the date of this Agreement if the relevance of such disclosure is reasonably apparent on its face. “ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, other than the Permitted Royalty Sale. “ dollars ” or “ $ ” refers to lawful money of the United States of America. “ EBIT ” means, for a particular period, Net Income for such period plus, to the extent deducted in determining such Net Income and without duplication, the aggregate of the (a) Interest Expenses for such period, and (b) Tax Expenses for such period, determined in each case in accordance with GAAP. “ EDGAR ” means the Electronic Data-Gathering, Analysis, and Retrieval system of the SEC, accessible on the Internet at www.sec.gov. “ Environmental Laws ” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters. “ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. “ Environmental Plan ” means the Compliance Order dated September 7, 2002 issued by the Arizona Department of Environmental Quality, as the same may be modified, replaced, or superceded (including, without limitation, by the appropriate Aquifer Protection Permit). “ Equity Interests ” means shares of equity interest, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest. “ Equity Issuance ” means any issuance by the Borrower to any Person (other than a Loan Party) of shares of its Equity Interests. “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time. - 6 - “ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. “ ERISA Event ” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. “ Event of Default ” has the meaning assigned to such term in Article VII. “ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.17(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.15(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.15(a) . “ Excess Cash Flow ” means, at any particular time and from time to time, the amount identified in the Excess Cash Flow Certificate. “ Excess Cash Flow Certificate ” means a certificate of a Financial Officer of the Borrower substantially in the form of Exhibit E hereto. - 7 - “ Existing Bridge Loan Facility ” means the loan evidenced by the $4,900,000 Amended and Restated Secured Promissory Note dated May 31, 2006 between the Borrower and Nedbank Limited, as the same may be amended and modified from time to time. “ Existing Copper Hedge Counterparty ” means the copper hedge provider under any Existing Copper Hedging Agreement. “ Existing Copper Hedging Agreements ” means the Hedge Agreements currently in place that hedge the price of copper. “ Feasibility Study ” means the Feasibility Study, dated October, 2005, prepared by Winters, Dorsey and Company LLC, as supplemented by the Johnson Camp Mine Project Feasibility and Technical Report, dated September, 2007, prepared by Bikerman Engineering & Technology Associated, Inc. “ Fee Letter ” means the fee letter dated June 27, 2007 between the Borrower and Nedbank Limited, as the same may be amended, modified, supplemented or replaced from time to time. “ Financial Model ” means the financial model delivered pursuant to Section 11.2(b), as the same may be modified from time to time in accordance with Section 5.10. “ Financial Officer ” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower. “ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. “ Forward Sale Price Protection Program ” means a hedging program with respect to a specified percentage of copper output from the Project which shall be entered into prior to the Closing Date (with such adjustments consistent with Section 5.12) and which shall be in form and substance satisfactory to the Borrower and the Administrative Agent. “ Future Test Periods ” means with respect to any Test Date, the period of four consecutive fiscal quarters ending on each of the next four succeeding Test Dates. “ GAAP ” means generally accepted accounting principles in the United States of America. “ Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. “ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any - 8 - Indebtedness or other obligation of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation; provided , that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. “ Guarantor ” means Cochise. “ Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. “ Hedging Agreement ” means any present or future swap, hedging, foreign exchange or cash management agreement or other derivative transaction entered into by any Loan Party which constitutes any copper or commodity hedging transaction, spot or forward foreign exchange transaction, interest rate swap transaction, currency swap transaction, forward rate transaction, rate cap transaction, rate floor transaction, rate collar transaction, and any other exchange or rate protection transaction, any combination of such transactions or any option with respect to any such transaction entered into by any Loan Party. “ Historic Six Month Average Spot Price ” means, for any day, the average of the closing spot price for copper on New York Comex for each Business Day over the six-month period ending on such day. “ Historical Test Period ” means the period of four consecutive fiscal quarters of the Borrower ending on a Test Date; provided , that for purposes of calculating the Debt Service Coverage Ratio and Interest Coverage Ratio for each of the first three applicable Test Dates after Completion, the amount of each of CADS, Debt Service Charges, EBIT and Interest Expense for purposes of such calculations shall be determined as follows: (a) for the first Test Date, such amounts shall equal the amounts for the most recently ended fiscal quarter multiplied by 4, (b) for the second Test Date, such amounts shall equal the amount for the two most recently ended fiscal quarters multiplied by 2; and (c) for the third Test Date, such amounts shall equal the amount for the three most recently ended fiscal quarters multiplied by 3/4. “ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase - 9 - price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. “ Indemnified Taxes ” means Taxes other than Excluded Taxes. “ Independent Technical Consultant ” means the technical engineering consultant as the Administrative Agent, in consultation with the Borrower, may engage from time to time to monitor the Borrower’s construction under and compliance with the Construction Schedule and Capital Spending Plan, certify the passage of the Completion tests and otherwise carry out the responsibilities of the Independent Technical Consultant under the Loan Documents. “ Intellectual Property ” shall mean all issued patents and patent applications, industrial design registrations, trade-marks, registrations and applications therefor, trade-names and styles, logos, copyright registrations and applications therefor, all of the foregoing owned by or licensed to the Loan Parties or any of them and used in or necessary to the operation of the Project. “ Interest Coverage Ratio ” means (a) with respect to a particular Historical Test Period, the ratio of (i) EBIT for such Test Period to (ii) Interest Expense for such Test Period (as determined with respect to the financial statements most recently delivered pursuant to Section 5.1(a) and (b) hereof); and (b) with respect to a particular Future Test Period, the ratio of (i) EBIT for such Test Period to (ii) Interest Expense for such Test Period (as determined with respect to the Financial Model then in effect); provided that any such calculation shall be effected without regard to the effect of any non-cash expense associated with the $23 million equity financing. “ Interest Expense ” means, for any particular period, the aggregate amount which would be classified on the income statement of the Borrower for such period as interest expenses (whether expensed or capitalized or in respect of synthetic lease obligations), all as determined in accordance with GAAP. “ Interest Payment Date ” means the last Business Day of each of March, June, September and December in each year. “ Interest Period ” means, with respect to any Borrowing, (a) the period from and including the date of such Borrowing to but excluding the first Interest Payment Date occurring after such Borrowing, and (b) thereafter, the period from and including the first Interest Payment Date for such Borrowing, to but excluding the next Interest Payment Date. - 10 - “ Lenders ” has the meaning set forth in the recitals hereto. “ LIBOR Rate ” means the rate of interest per annum, calculated on the basis of a year of 360 days, determined by the Administrative Agent for a particular Interest Period (a) at 11:00 a.m. (London time) on the second Business Day prior to the commencement of such Interest Period that appears as such on the Reuters Page LIBOR01, or (b) if, for any reason, such rate does not appear on such Reuters Page, the rate of interest per annum (rounded upwards if necessary to the nearest whole multiple of 1/16%) determined by the Administrative Agent as being the rate of interest at which the Administrative Agent, in accordance with its normal practices, would be prepared to offer to leading banks in the London interbank market for delivery on the first day of each relevant Interest Period for a period equal to the relevant Interest Period based on the number of days comprised therein, deposits in U.S. dollars of comparable amounts to the amount of the Term Loan, to be outstanding during the Interest Period, at or about 11:00 am (London time) on the second Business Day prior to the commencement of such Interest Period. “ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. “ Loan Documents ” means this Agreement, the Security Documents, and the Fee Letter. “ Loan Party ” means each of the Borrower and the Guarantor. “ Material Adverse Effect ” means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Project or any Loan Party, (b) the ability of any Loan Party to perform any of its obligations under this Agreement or (c) the rights of or benefits available to the Lenders under the Loan Documents. “ Material Contracts ” means the material contracts set forth on Schedule 1.1, and any other contract which, in the event of a breach, could reasonably be expected to result in a Material Adverse Effect, as determined by the Administrative Agent in consultation with the Borrower. “ Material Indebtedness ” means Indebtedness (other than the Term Loans), or obligations in respect of one or more Hedging Agreements, of any one or more of any Loan Party in an aggregate principal amount exceeding $200,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of any Loan Party in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party would be required to pay if such Hedging Agreement were terminated at such time. “ Mining Properties ” means the real property pledged to the Administrative Agent for the benefit of the Lenders pursuant to the Security Documents. - 11 - “ Moody’s ” means Moody’s Investors Service, Inc. “ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. “ Net Cash Proceeds ” means: (a) with respect to any Disposition, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such Disposition less (ii) the sum of (x) the out-of-pocket expenses incurred by the Borrower in connection with such Disposition and (y) taxes reasonably estimated to be actually payable in connection therewith; (b) with respect to any Casualty Event, the excess, if any, of (i) the sum of insurance proceeds or other condemnation award received (other than any amounts received in connection with business interruption insurance) in connection with such Casualty Event less (ii) the sum of any reasonable expenses incurred in connection therewith; and (c) with respect to any Debt Issuance, the excess, if any, of (i) all cash received in connection with such Debt Issuance less (ii) the sum of all reasonable expenses by the Borrower incurred in connection therewith. “ Net Income ” means, for a particular period, the aggregate amount which would be classified on the income statement of the Borrower for such period as net income, determined in accordance with GAAP; provided that Net Income shall be inclusive of extraordinary, unusual and non-recurring items to the extent received or paid in cash and exclusive of extraordinary, unusual and non-recurring items to the extent not received or paid in cash. “ Obligations ” means all indebtedness, obligations and liabilities, present or future, absolute or contingent, matured or not, at any time owing by a Loan Party to a Lender or the Administrative Agent under or in connection with the Loan Documents or any Hedging Agreement. “ Operating Costs ” means, for any period, the sum, computed without duplication, of all consolidated costs and expenses (including, without limitation, costs relating to corporate overhead, salaries, insurance, board expenses, legal expenses, deferred salaries, expenses in connection with letters of credit, and royalty payments) paid directly or indirectly by the Borrower during such period (or, in the case of any future period, projected to be paid or payable during such period) in connection with the operation, maintenance and administration of the Project. “ Other Taxes ” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement. “ Participant ” has the meaning set forth in Section 10.4. - 12 - “ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. “ Permitted Investments ” means: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s; (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; (e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000; and (f) any deposits of the type described in clause (d) of “Permitted Liens”. “ Permitted Liens ” means Liens: (a) imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.4; (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.4; (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds, letters of credit and other obligations of a like nature, in each case in the ordinary course of business; - 13 - (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII; and (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower; provided that the term “Permitted Liens” shall not include any Lien securing Indebtedness. “ Permitted Royalty Sale ” has the meaning set forth in Section 11.1(f) . “ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. “ Plan ” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA. “ Principal Payment Dates ” means the last Business Day of March, June, September, and December in each year, starting with the last Business Day of September 2009 and ending on the last Business Day of March 2013. “ Proceeds Account ” has the meaning set forth in the Collateral Account Agreement. “ Project ” means the construction, startup and operation by the Borrower of the Johnson Camp Mine, a copper mine and production facility located 65 miles east of Tucson, Arizona, as described in the Feasibility Study and as augmented by the Construction Schedule and Capital Spending Plan and Financial Model. “ Project Development Costs ” means amounts (other than Operating Expenses) spent pursuant to Material Contracts and the Construction Schedule and Capital Spending Plan. “ Register ” has the meaning set forth in Section 10.4. “ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates. “ Required Lenders ” means, at any time, Lenders having Term Loans and unused Term Loan Commitments representing more than 50% of the sum of the total Term Loans and unused Term Loan Commitments at such time. “ Restricted Payment ” means (a) any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on - 14 - account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower, and (b) any other expenditures not constituting Project Development Costs or Operating Costs, including, without limitation, any amounts expended with respect to (x) exploration at the Coyote Springs site in an amount in excess of $1,500,000 during the Availability Period, and (y) exploration at the Mimbres site in an amount in excess of $100,000 during the Availability Period. “ S&P ” means Standard & Poor’s. “ SEC ” means the United States Securities and Exchange Commission. “ Second Amendment and Restatement Date ” has the meaning set forth in Section 11.1. “ Secured Parties ” means the Administrative Agent and the Lenders. “ Security ” means the collateral security constituted by the Security Documents. “ Security Documents ” means the Deed of Trust, the Collateral Account Agreement, the Account Charge, the Consent Agreements and such other security documents and instruments, including without limitation Uniform Commercial Code financing statements, as may be executed and/or delivered by the Loan Parties pursuant to the terms hereunder or any collateral document which, in each case, shall be deemed executed and delivered for the benefit of the Administrative Agent and the Lenders. “ SEDAR ” means the System for Electronic Document Analysis and Retrieval of the Canadian Securities Administrators (including the Canadian Securities Regulators), accessible on the Internet at www.sedar.com. “ Solvent ” and “ Solvency ” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can be reasonably be expected to become an actual or matured liability. “ Start-up of Commercial Production ” means the earliest date on which the Borrower has produced at least three million pounds of saleable copper cathodes from newly mined ore. “ subsidiary ” means, with respect to any Person (the “ parent ”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of - 15 - which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. “ Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. “ Term Loans ” has the meaning set forth in Section 2.1, and (a) after the Second Amendment and Restatement Date shall consist of the A Term Loans, and (b) after a Term Loan Conversion Event, shall consist of the A Term Loans and the B Term Loans. For the avoidance of doubt, only A Term Loans shall exist immediately following the Second Amendment and Restatement Date, provided that the A Term Loans may be re-tranched into A Term Loans and B Term Loans if a Term Loan Conversion Event shall occur. “ Term Loan Borrowing Request ” means a borrowing request substantially in the form of Exhibit B. “ Term Loan Commitment ” means the commitment of such Lender to make Term Loans hereunder, as such amount may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.4. The initial amount of each Lender’s Term Loan Commitment is set forth on Schedule 2.1, or in the assignment and assumption pursuant to which such Lender shall have assumed its Term Loan Commitment, as applicable. The initial aggregate amount of the Term Loan Commitment is $25,000,000, which amount may be reduced by the Borrower in accordance with Section 2.5(b) . “ Term Loan Conversion Event ” has the meaning set forth in Section 10.16. “ Test Date ” means the last day of December, March, June, and September of each year, commencing from the date on which Completion occurs or the first such date at least 12 months after the first drawdown, whichever is earlier, until the final Principal Payment Date. “ Transactions ” means (a) the execution, delivery and performance by the Loan Parties of (i) the Loan Documents, the Borrowing and the use of the proceeds thereof, and (ii) the Material Contracts, and (b) the development of the Project by the Borrower. “ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. “ Working Capital ” means, at any particular time, (a) the amount which would be classified on the balance sheet of the Borrower at such time as current assets, minus (b) the amount which would be classified on the balance sheet of the Borrower at such time as current - 16 - liabilities (other than the current portion of long-term debt), in each case determined in accordance with GAAP. SECTION 1.2. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.3. Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. ARTICLE II. SECTION 2.1. Term Loans . (a) Subject to the terms and conditions set forth herein, each Lender agrees to make available to the Borrower during the Availability Period, loans (“ Term Loans ”) in an aggregate principal amount that will not result in a Lender exceeding such Lender’s Term Loan Commitment. The Term Loan is not revolving in nature, and any portion thereof that is repaid or prepaid cannot be reborrowed. Borrowings may occur from time to time but not more frequently than once per calendar month. (b) On the Second Amendment and Restatement Date the Term Loans under the Second Amended and Restated Credit Agreement shall be deemed to be Term Loans - 17 - hereunder, and such Term Loans shall be deemed to satisfy such Lender’s obligation under the preceding paragraph. Such Term Loans shall be referred to as the “A Term Loans” under this Agreement. The A Term Loans may, upon the occurrence of a Term Loan Conversion Event, be separated into two separate tranches (the “A Term Loan” and the “B Term Loan”), as provided for in Section 10.16. SECTION 2.2. Borrowings . (a) Each Term Loan shall be made as part of a Borrowing consisting of Term Loans made by the Lenders ratably in accordance with their respective Term Loan Commitments. The failure of any Lender to make any Term Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Term Loan Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Term Loans as required. (b) Each Lender at its option may make any Term Loan by causing any branch or Affiliate of such Lender to make such Term Loan; provided that any exercise of such option shall not affect the obligation of such Lender hereunder to make such Term Loan or the obligation of the Borrower to repay such Term Loan in accordance with the terms of this Agreement; and provided further that any such Lender shall in any event be subject to Section 2.17. (c) Each Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $2,500,000. SECTION 2.3. Requests for Borrowings . To request a Borrowing, the Borrower shall provide a Term Loan Borrowing Request to the Administrative Agent not later than 11:00 a.m., New York City time, two Business Days prior to the date of the proposed Borrowing. Promptly following receipt of a Term Loan Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Term Loan to be made as part of the requested Borrowing. SECTION 2.4. Funding of Borrowings . (a) Each Lender shall make each Term Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Term Loans available to the Borrower by promptly crediting the amounts so received to the Proceeds Account. (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and - 18 - the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to such Borrowing . If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Term Loan included in such Borrowing. SECTION 2.5. Termination and Reduction of Term Loan Commitments . (a) Unless previously terminated, the Term Loan Commitments shall terminate on the last day of the Availability Period. (b) The Borrower may at any time terminate, or from time to time reduce, the Term Loan Commitments; provided that each reduction of the Term Loan Commitments shall be in an amount that is an integral multiple of $100,000 and not less than $1,000,000. SECTION 2.6. Repayment of Term Loans . The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender: (a) the then unpaid principal amount of the A Term Loan in 15 (fifteen) equal installments on each Principal Payment Date; and (b) the then unpaid principal amount of the B Term Loan (if any) on the final Principal Payment Date, provided that if the Deferred Payment Trigger Event has occurred, then the B Term Loan shall be payable in equal installments on each of the Principal Payment Dates remaining for the A Term Loan (after giving effect to the payment of the Deferred Amounts). For the avoidance of doubt and by way of illustration (x) if the B Term Loan was outstanding and the Deferred Payment Trigger Event occurred prior to the first Principal Payment Date, then the B Term Loan would be amortized over the first 13 (thirteen) Principal Payment Dates, since the last two installments of the A Term Loan (defined as the “Deferred Payments”) shall have already been paid, and (y) if the Deferred Payment Trigger Event occurs after the first Principal Payment Date but prior to the second Principal Payment Date, then the B Term Loan would be amortized over the next 12 (twelve) Principal Payment Dates. SECTION 2.7. Evidence of Debt . (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Term Loan made by such Lender, including the amounts of principal and interest payable to such Lender hereunder. (b) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Term Loan made hereunder and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from - 19 - the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof. (c) The entries made in the accounts maintained pursuant to paragraph (a) or (b) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Term Loans in accordance with the terms of this Agreement. (d) Any Lender may request that Term Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Term Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.8. Optional Prepayments of Term Loans . The Borrower shall have the right at any time and from time to time to prepay any Term Loan in whole or in part, provided that: (a) the Borrower shall notify the Administrative Agent in writing of any prepayment hereunder not later than 11:00 a.m., New York City time, at least five Business Days before the date of prepayment; each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Term Loan or portion thereof to be prepaid; promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof; (b) each prepayment shall be applied (i) first , to the Deferred Payments until such payments have been paid in full, (ii) second to installments of the B Term Loan (if any) in inverse order of maturity until paid in full, and (iii) third , to installments of the A Term Loan in inverse order of maturity until paid in full; prepayments shall be accompanied by accrued interest to the extent required by Section 2.11 and any break funding payments required by Section 2.14; (c) the Debt Service Reserve Account is fully funded; (d) the Borrower shall be in compliance with the financial covenants set forth in Section 6.10 after giving effect to any such prepayment (calculated on a proforma basis with respect to the Historical Test Period and Future Test Period for the Test Date most recently ended); and (e) so long as such prepayment is made with the proceeds of internally generated funds (and not a refinancing) then no prepayment penalty shall apply; provided that a prepayment penalty in an amount set forth on the following schedule shall apply with respect to any prepayment made with proceeds of other than internally generated funds: - 20 -
SECTION 2.9. Mandatory Prepayments . (a) Excess Cash Flow . After the termination of the Availability Period, on each date of delivery of financial statements as required by Sections 5.01(a) and (b), the Borrower shall deliver to the Administrative Agent an Excess Cash Flow Certificate for the fiscal quarter most recently ended and shall simultaneously prepay outstanding Term Loans in the aggregate principal amount equal to the amount of 80% of Excess Cash Flow indicated on such certificate, provided that, after the Deferred Payment Trigger Event, the Borrower shall be thereafter obliged to prepay outstanding Term Loans in the aggregate principal amount equal to 40% of Excess Cash Flow as indicated on such certificate. The Administrative Agent shall notify the Borrower, within 10 Business Days after receipt of such certificate, whether it validates and approves such certificate, and, if it does not validate and approve the certificate, advise the Borrower of the amount of the Excess Cash Flow as calculated by the Administrative Agent. In the absence of manifest error on the part of the Administrative Agent, the Borrower shall adjust the amount to be paid by it on the following Principal Payment Date by the amount necessary to take account of the discrepancy in such the certificate, as certified by the Administrative Agent. Any such prepayment shall be applied in accordance with clause (e) hereof. (b) Dispositions . The Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds of any Disposition or series of Dispositions by any Loan Party or any Subsidiary of a Loan Party pursuant to Section 6.3(a)(iii) generating Net Cash Proceeds in excess of $250,000 in the aggregate after the Closing Date. Each such prepayment - 21 - shall be due promptly upon receipt by the such Person of such Net Cash Proceeds and shall be applied as set forth in clause (e) below. Notwithstanding the foregoing, the Borrower shall not be required to apply any such proceeds in accordance with clause (e) to the extent that the Borrower advises the Administrative Agent at the time of the relevant Disposition that the Borrower intends to use the Net Cash Proceeds thereof to finance one or more Operating Costs or Project Development Costs permitted by this Agreement, and such Net Cash Proceeds are in fact so applied (or contractually committed to be applied) to such expenditures within 180 days of such Disposition (it being understood that Net Cash Proceeds shall be deemed to be utilized in the same order in which they are received. Any such Net Cash Proceeds which are not applied (or contractually committed to be applied) within such 180 day period as required by the immediately preceding sentence shall forthwith be applied in accordance with clause (e). Notwithstanding the foregoing, the Borrower shall not be required to prepay any proceeds realized form the sale of any Dispositions generated from the sale of assets exclusively related to the Coyote Springs or Mimbres sites. In addition, the Borrower agrees that the sale of any drilling equipment no longer used in the business of the Borrower shall be considered to be Disposition under Section 6.3(a)(iii) . (c) Casualty Events . The Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds received by any Loan Party or any Subsidiary of a Loan Party in connection with any Casualty Event or series of Casualty Events generating Net Cash Proceeds in excess of $1,000,000 in the aggregate for any fiscal year. Each such prepayment shall be due promptly upon receipt by such Person of such Net Cash Proceeds and shall be applied as set forth in clause (e) below. Notwithstanding the foregoing, the Borrower shall not be required to apply any such proceeds in accordance with clause (e) to the extent that the Company advises the Administrative Agent at the time of the relevant Casualty Event that it intends to use Net Cash Proceeds thereof to finance the replacement or repair of such affected property, and such Net Cash Proceeds are in fact so applied (or contractually committed to be applied) to such affected Property within 360 days of receipt thereof (it being understood that Net Cash Proceeds shall be deemed to be utilized in the same order in which they are received). Any such Net Cash Proceeds which are not applied (or contractually committed to be applied) within such 360 day period as required by the immediately preceding sentence shall forthwith be applied as set forth in clause (e) below. (d) Debt Issuances . The Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds received by the Borrower or any Subsidiary in connection with any Debt Issuance. Each such prepayment shall be due promptly upon receipt by such Person of such Net Cash Proceeds and shall be applied as set forth in clause (e) below. (e) Application . Any such prepayment shall be applied (i) first , to the Deferred Payments until such payments have been paid in full, (ii) second to installments of the B Term Loan (if any) in inverse order of maturity until paid in full, and (iii) third , to installments of the A Term Loan in inverse order of maturity until paid in full. SECTION 2.10. Fees . (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at 0.250% per annum on the daily amount of the - 22 - unused Term Loan Commitment of such Lender during the Availability Period, subject to the last sentence hereof. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Term Loan Commitments terminate, commencing on the first such date to occur after the date hereof. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). Such fees shall be payable on an amount of unused commitments for each day equal to the amount of unused Commitments set forth in the table below minus the amount of Term Loans outstanding on such day:
For purposes of illustration, (a) if Term Loans in an amount in excess of $9,000,000 were outstanding on September 15, 2007, no such fee would be payable on such day, and (b) if Term Loans in an amount of $2,000,000 were outstanding on September 15, 2007, such fee would be payable in respect of $1,000,000 in unused Term Loan Commitments on such day. (b) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances. - 23 - (a) The aggregate principal amount of all outstanding A Term Loans and B Term Loans (if any) shall bear interest from the date such Term Loan is made until the date the principal of such Term Loan is repaid at an annual rate equal the LIBOR Rate for the Interest Period in effect for such Term Loan plus the Applicable Margin for such A Term Loan or B Term Loan, respectively. (b) Notwithstanding the foregoing, upon any Event of Default, all principal amounts hereunder shall bear interest, after as well as before judgment, at a rate per annum equal to 3% plus the rate otherwise applicable to such Term Loan as provided in the preceding paragraph of this Section. (c) Accrued interest on each Term Loan shall be payable in arrears on each Interest Payment Date; provided that (i) interest accrued pursuant to paragraph (b) of this Section shall be payable on demand, and (ii) in the event of any prepayment of any Term Loan, accrued interest on the principal amount prepaid shall be payable on the date of such prepayment. Notwithstanding the foregoing, (x) for each Interest Payment Date prior to the first Principal Payment Date, any interest payable with respect to the A Term Loans on such Interest Payment Date shall be capitalized and shall increase the unpaid principal amount of the A Term Loans, and (y) for each Interest Payment Date prior to the Deferred Payment Trigger Event, any interest payable with respect to the B Term Loans on such Interest Payment Date shall be capitalized and shall increase the unpaid principal amount of the B Term Loans. (d) The applicable LIBOR Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. SECTION 2.12. Alternate Rate of Interest . If prior to the commencement of any Interest Period for any Term Loan: (a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBOR Rate for such Interest Period; or (b) the Administrative Agent is advised by the Required Lenders that the LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Term Loans (or its Term Loan) included in such Borrowing for such Interest Period; then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) no borrowing request shall be effective, and (ii) the Borrower and the Lenders shall enter into negotiations in good faith with a view to establish a satisfactory alternative basis for computing interest on the Term Loans. SECTION 2.13. Increased Costs. - 24 - (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender; or (ii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Term Loans made by such Lender; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Term Loan (or of maintaining its obligation to make Term Loans) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender, such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. (b) If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Term Loans made by, such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s or holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered. (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof. SECTION 2.14. Break Funding Payments . In the event of (a) the payment of any principal of any Term Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the failure to borrow any Term Loan on the date specified in any notice delivered pursuant hereto, then, in each such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such - 25 - Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Term Loan had such event not occurred, at the LIBOR Rate that would have been applicable to such Term Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, for the period that would have been the Interest Period for such Term Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate on demand. SECTION 2.15. Taxes . (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of any present and future tax liability and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. - 26 - (e) Any Foreign Lender that is entitled to an exemption from or reduction of withho | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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