-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Veg9MgTsQzZt9vLiwSwy2VoNvdyx+VFq6ltBFcZdjyyuPVFb4jtF/OYdo+OXJVaM 9/prGChXaYMl65K8Hsy5ng== 0000950134-95-002346.txt : 19950928 0000950134-95-002346.hdr.sgml : 19950927 ACCESSION NUMBER: 0000950134-95-002346 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950924 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Change in fiscal year FILED AS OF DATE: 19950925 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTMISS GOLD INC CENTRAL INDEX KEY: 0000824590 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 640748908 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16484 FILM NUMBER: 95575846 BUSINESS ADDRESS: STREET 1: 6025 SOUTH QUEBEC STREET STE 310 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037719000 0000950134-95-002346.txt : 19950927 0000950134-95-002346.hdr.sgml : 19950927 ACCESSION NUMBER: 0000950134-95-002346 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950924 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Change in fiscal year FILED AS OF DATE: 19950925 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTMISS GOLD INC CENTRAL INDEX KEY: 0000824590 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 640748908 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16484 FILM NUMBER: 95575846 BUSINESS ADDRESS: STREET 1: 6025 SOUTH QUEBEC STREET STE 310 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037719000 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report SEPTEMBER 24, 1995 ------------------------- FIRSTMISS GOLD INC. ------------------- (Exact Name of Registrant as Specified in Charter) NEVADA 0-16484 64-0748908 - -------------------------------------------------------------------------------- (State or Other (Commission (I.R.S. Employer Jurisdiction of File Number) Identification No.) Incorporation) 6025 S. QUEBEC STREET, SUITE 310 ENGLEWOOD, COLORADO 80111 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (303) 771-9000 ----------------------------- N/A - -------------------------------------------------------------------------------- (Former Name, if Changed Since Last Report) An Exhibit Index is on page 14 of this report Page 1 2 Item 1(b). Changes in Control of Registrant See discussion under Item 5 below. Item 5. Other Events Introduction. In January 1995, the Company announced a geologic resource along the Turquoise Ridge Fault ("Turquoise Ridge") on the Company's Getchell Property in north central Nevada. The Company hired Mineral Resources Development, Inc. ("MRDI") to prepare a pre-feasibility study (the "MRDI Study") with respect to Turquoise Ridge. A pre-feasibility study is an economic-based analysis of an ore body that serves as the basis for a mine plan for the extraction of gold from that ore body on an economically viable basis. In September 1995, MRDI issued an executive summary (the "MRDI Study Summary") of its pre-feasibility study. The MRDI Study concludes that the Turquoise Ridge area contains probable reserves of 1.254 million contained ounces of gold. Certain conclusions of the MRDI Study Summary are summarized below. In February 1990, First Mississippi Corporation, a Mississippi corporation ("First Mississippi") announced plans to distribute its stock in FirstMiss Gold Inc. (the "Company") to First Mississippi's shareholders. According to First Mississippi, this spin-off was subject to a favorable tax ruling from the Internal Revenue Service and a favorable operational and financial outlook for the Company. Although the required ruling was received in December 1990, gold prices had fallen in the interim, and the spin-off was put on hold. First Mississippi has informed the Company that it received a subsequent ruling from the Internal Revenue Service in April 1995 that a spin-off would be treated as a tax-free distribution for federal income tax purposes, subject to certain conditions. First Mississippi currently owns approximately 81% of the outstanding common stock of the Company. On September 24, 1995, First Mississippi's board of directors approved the spin-off of First Mississippi's stock in the Company to First Mississippi's shareholders of record on October 10, 1995. The distribution (the "Distribution") of such stock is expected to occur on October 20, 1995. MRDI Pre-feasibility Study. Based on the MRDI Study Summary, the Company has announced a new probable reserve consisting of 3.712 million tons of ore with an average grade of .338 ounces per ton or 1.254 million ounces of gold. This reserve addition at Turquoise Ridge increases the Company's proven and probable reserves to 2.689 million ounces, an 87% increase from the end of fiscal 1995 reserve figure. Reserves are defined as that part of a mineral deposit which could be economically and legally extracted or produced at the time of Page 2 3 reserve determination. Probable reserves are reserves for which quantity and grade are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. The MRDI Study focused on one area of encouraging drill intersections from a portion of the Turquoise Ridge structural trend of the Getchell property. The MRDI Study is based upon the piercements of 51 drill holes, which were targeted to be positioned at a nominal spacing of 100 feet. Eight of the drill hole piercements provide close- spaced, 50-feet offsets. There are overall a total of 81 drill holes within the vicinity of the Turquoise Ridge resource area. However, a number of mineralized intercepts exist in the periphery of the study area which were not incorporated into the MRDI Study. In order to ensure the integrity of the database used to support resource estimation and mine planning, more than 10,000 drill samples were passed through a MRDI designated quality control-quality assurance protocol, designed to monitor the precision of gold assays on a batch-by-batch basis. VULCAN software was used to prepare a three dimensional computer model of the formations, structure and mineralized envelopes. Within the mineralized envelopes, gold grades were estimated for 10 x 10 x 12 feet blocks using a linear interpolation process. Models were also prepared for sulfide sulfur, carbonate content and rock mass rating ("RMR"). The MRDI Study involved hydrologic characterization. A prototype dewatering well, three observation wells and four piezometers were installed in the Turquoise Ridge area to acquire three-dimensional aquifer parameter data. Based on the hydraulic conductivity values, simulations were made of mine dewatering rates for pumping of surface wells from the mineralized zone and from one or two (or both) shaft sites over the projected 18-month development period. The MRDI Study also involved geotechnical rock mass characterization. Oriented core was obtained from three of the holes drilled. This was used to establish the orientation of five major fault sets. A RMR assessment was conducted on cores. These were reconciled with cores and underground observations obtained from the Getchell underground mine. The MRDI Study found that the ore at Turquoise Ridge occurs in three types of ore bodies comprising shallow dipping bedded ores located in the hanging wall and footwall of the Turquoise Ridge shear zone and steeply dipping faulted ores. Given the configuration of the ore bodies and the weak nature of the ground, the underhand cut- and-fill mining method has been selected. Drifts and crosscuts will be 12 feet by 10 feet in size. Depending on the horizontal width, both longitudinal and transverse stoping will be employed. Page 3 4 It is currently expected that two shafts will access the ore bodies. One shaft would serve as a production/service shaft and the other would serve as a ventilation shaft and an emergency exit. A development drilling and trial stoping program would be conducted from the ventilation shaft until the sinking of the production shaft is complete. Ore body access is expected to be via two main crosscuts on the 3500 and 4000 L's, a main access decline which connects the levels and sublevel development off this access spaced at a vertical interval of 72 feet. The MRDI Study Summary estimates that the capital required to bring the initial phase of the Turquoise Ridge underground mine into commercial production of 2,000 tons of ore per day will be approximately $85 million, to be spent from approximately October 1995 to the first calendar quarter of 1999. Major capital expenditures are the production shaft, estimated to cost $33 million and the mine development costs of approximately $26 million. Under the timetable presently contemplated by the Company, initial production would not commence prior to mid-calendar 1999. The MRDI Study Summary notes that projected cash flow of $25.7 million is small compared to the size of the capital investment contemplated by the Company of $85.5 million and that such projections would ordinarily not be enough to justify a project and to declare a reserve. However, MRDI noted that certain unusual characteristics warranted the declaration of a reserve. Such characteristics include: (i) that the Company is an operating company with in-place underground mining and processing capability within the Getchell district, now being operated by an experienced management group and workforce and (ii) that a fairly stringent cutoff grade of 0.25 ounces of gold per ton was applied for purposes of the MRDI Study. However, there can be no assurance that any of these assumptions will prove to be accurate. Turquoise Ridge involves numerous risks, certain of which are summarized below under "Certain Turquoise Ridge Project Risks." Page 4 5 Summary of Spin-off Agreements. On September 24, 1995, the Company and First Mississippi entered into certain agreements related to the Distribution. These agreements are attached as exhibits hereto and are summarized, along with certain related documents including a $20 million credit facility with Toronto-Dominion Bank, below. Such summaries are qualified in their entirety by reference to the agreements and documents for the full terms thereof. Post Spin-Off Agreement. The Company and First Mississippi have entered into the Post Spin-Off Agreement, which provides generally for the transition of the Company from a subsidiary of First Mississippi to a stand- alone corporation. In particular, the Post Spin-Off Agreement provides for, among other things: (i) the grant by First Mississippi to the Company for a period of at least five years from the date of the Distribution to use the name "FirstMiss" as part of its corporate name and (ii) the cooperation of the Company and First Mississippi to effectuate the purposes of the Distribution and the documents related to such Distribution. The Post Spin-Off Agreement is attached hereto as Exhibit 10(a) and is incorporated by reference herein. Tax Ruling Agreement. The Tax Ruling Agreement sets forth covenants and agreements of the Company relevant to maintaining the tax-free nature of the Distribution after consummation of the Distribution. Under the Tax Ruling Agreement, the Company represents that it has not taken and will not take any action which is inconsistent with the facts and representations stated in the private letter ruling (the "Ruling") and related submissions related to the Distribution from the Internal Revenue Service (the "I.R.S."). The Tax Ruling Agreement provides that the Company will consummate an underwritten public equity offering of common stock generating aggregate proceeds of at least $50,000,000 as soon as practicable in the reasonable business judgment of the Company's board of directors and that such offering will be consummated prior to April 28, 1996 unless the Company has obtained a supplemental ruling from the I.R.S. that failure to consummate such offering will not affect the Ruling. Consistent with their obligation, the Company has filed a registration statement on Form S-3 which contemplates a delayed offering pursuant to Rule 415 under the Securities Act of 1933, as amended. The Tax Ruling Agreement provides that the Company will use at least $15,000,000 of the proceeds from the equity offering to repay a portion of its outstanding debt to First Mississippi and will use the balance of the proceeds for the development and exploration of its Turquoise Ridge and Getchell properties for the mining and exploration of gold. The Tax Ruling Agreement provides that the Company will not prior to one year from the date of the Distribution enter into any agreement to merge or consolidate with or into any other corporation, to liquidate or partially liquidate, to sell or transfer all or substantially all of its assets, to redeem or repurchase any of its capital stock (except for the redemption of the stock of one or more Company employees upon his or her termination) or to issue additional shares of its capital stock (except in connection with the Offering or Page 5 6 issuances pursuant to the Company's employee benefit or compensation plans), unless it first obtains an opinion of counsel or a supplemental ruling from the I.R.S. that such action does not interfere with the Tax Ruling. In the event the Company takes such actions or solicits or assists any person or group to commence a tender offer is such person or group would acquire beneficial ownership of 20 percent or more of the Company's outstanding common stock without an opinion or a supplemental I.R.S. ruling, the Company agreed under the Tax Ruling Agreement to indemnify and hold First Mississippi and certain affiliated corporations harmless against any and all federal, state and local taxes, interest, penalties and additions thereto imposed upon or incurred by such corporations as a result of such action's effect on the tax-free nature of the Distribution. The Tax Ruling Agreement is attached hereto as Exhibit 10(b) and is incorporated by reference herein. Loan Agreement. The Loan Agreement and related promissory note establish a specific repayment plan for the intercompany debt owed by the Company to First Mississippi. As of the date of the Distribution, this debt is expected to be approximately $49 million presently owed plus any additional borrowings prior to the Distribution date. Under the Loan Agreement, the Company agreed to repay the entire remaining principal balance on April 27, 2000, or earlier if the loan is accelerated under the circumstances provided for in the Loan Agreement. Interest accrues at a LIBOR-based rate and is payable based on the LIBOR period selected by the Company (one month, three month, six month or one year) or the prime rate. The Loan Agreement permits prepayments at any time at the Company's option and requires $15 million in principal of the loan to be repaid following the consummation of any public offering of the Company's securities after the date of the Loan Agreement as well as full prepayment upon a change in control of the Company. In the Loan Agreement, the Company makes certain representations and warranties about its corporate status and financial and business condition and affirmative and negative covenants customary in lending transactions as to the conduct of its business going forward. Certain circumstances, including failure to pay principal or interest when due and the Company's insolvency, will constitute an event of default under the Loan Agreement entitling First Mississippi to accelerate the remaining principal balance of the loan, plus accrued interest. First Mississippi has agreed to subordinate certain of its rights to those of The Toronto-Dominion Bank (see "Toronto-Dominion Bank Loan Facility" below). The Loan Agreement is attached hereto as Exhibit 10(c) and is incorporated by reference herein. Amended Tax Sharing Agreement. First Mississippi and the Company have entered into an Amended Tax Sharing Agreement. The Amended Tax Sharing Agreement provides for the termination of the Tax Sharing Agreement dated as of October 1, 1987 to which First Mississippi and the Company are parties, and sets forth the parties' obligations with respect to taxes relating to pre-Distribution taxable periods ("Pre-Spin-Off Periods"). Page 6 7 The Amended Tax Sharing Agreement obligates First Mississippi to pay the Company (by either an actual payment or a reduction in the Company's outstanding indebtedness to First Mississippi) an agreed upon amount (approximately $13.3 million if the Distribution had occurred on June 30, 1995) representing the tax benefit received by the affiliated group of which First Mississippi is the common parent corporation (the "First Mississippi Affiliated Group") from its use of the Company's losses, deductions, credits and allowances in Pre-Spin-Off Periods. The Company has agreed in the Tax Sharing Agreement to indemnify First Mississippi for any taxes attributable to the Company and assessed with respect to consolidated or combined tax returns which include the Company and relate to Pre-Spin-Off Periods, to the extent any liability for such taxes exceeds $250,000. Conversely, First Mississippi has agreed to indemnify the Company against any liability for taxes attributable to members of the First Mississippi Affiliated Group other than the Company, but imposed on the Company as a result of its inclusion in First Mississippi's consolidated or combined tax returns for Pre-Spin-Off Periods. The Amended Tax Sharing Agreement is attached hereto as Exhibit 10(d) and is incorporated by reference herein. Toronto-Dominion Bank Loan Facility. The Loan Facility will be provided by The Toronto-Dominion Bank acting through its Toronto-Dominion Merchant Bank Division ("Agent") and one or more financial institutions which may become parties to the Loan Facility. The Loan Facility will provide for $20,000,000 of term loans to the Company. Amounts drawn under the Loan Facility will be available for financing the development of the Company's mining properties and for the general working capital purposes of the Company. Borrowings under the Loan Facility will bear interest at 3% over the LIBOR rate for each one month period during which advances are outstanding. In addition, the Company will pay the Agent a drawdown fee of 1% of the amount of each advance of funds to the Company under the Loan Facility and has granted to the Agent a participation right as described in the following paragraph. The Company has paid to the Agent a commitment fee in the amount of $100,000. Upon execution of the Loan Agreement, the Company is required to pay to the Agent an additional $400,000. All advances of funds under the Loan Facility must be repaid by the Company on October 31, 1996. The Company is obligated to prepay amounts advanced under the Loan Facility from the net proceeds of any financing or issuance of securities by the Company. Amounts repaid under the Loan Facility cannot be reborrowed. Page 7 8 The Company has granted to the Agent an equity participation right which may be exercised by written notice (i) after the earlier of termination of the Loan Facility and the Due Date (as defined therein) and (ii) on or before 30 months following repayment of all funds advanced under the Loan Facility. Upon exercise of such participation right, the Company shall pay to the Agent, either in cash or by way of issuance to the Agent of shares of the common stock of the Company (valued at the weighted average closing price of such shares during the ten-day period prior to the date of exercise of the participation right), an amount not exceeding (x) $1,000,000 if all advances under the Loan Facility are paid in full within six months of the date of the Loan Facility, and (y) $1,500,000 if such funds advanced are paid in full after such six month period, but prior to the Due Date. At any time prior to November 30, 1995, the Borrower may satisfy the participation right in full by paying $500,000 (in cash or through the issuance of securities of equivalent value) to the Agent. In the event any obligations of the Company described in this paragraph are satisfied by issuance of common stock of the Company, the Agent will have piggy-back registration rights in connection with any registration of the common stock of the Company. The loans under the Loan Facility will be guaranteed by the Company's wholly-owned subsidiary FMG Inc. The obligations of FMG Inc. and the Company under the Loan Facility will be secured by a pledge by the Company of all the capital stock of FMG Inc. In connection with the Loan Facility, the Company will also be required to deliver to the Agent a satisfactory agreement from First Mississippi as to subordination of certain of the Company's obligations to First Mississippi to the obligations of the Company to the Agent. The Loan Facility will contain covenants and provisions that will restrict, among other things, the Company's ability to: (i) change its business; (ii) consolidate, merge or sell all of its assets; (iii) incur certain indebtedness; (iv) incur liens on its property; and (v) declare dividends. The Loan Agreement dated as of September 24, 1995, by and between Toronto-Dominion Bank and the Company is attached hereto as Exhibit 10(e) and is incorporated by reference herein. Page 8 9 Certain Turquoise Ridge Project Risks. The Turquoise Ridge Project involves numerous risks. These include the following: There can be no assurances the probable reserves set forth in the MRDI Study Summary will actually be able to be mined and milled on an economical basis, if at all. The MRDI Study is based upon many assumptions, any, some or all of which may not prove to be accurate. The failure of any such assumptions to prove accurate may alter the conclusions of the MRDI Study and may have a material adverse effect on the Company. The Turquoise Ridge project is at the pre-feasibility study level of project development and while the data in-hand reflect a considerable expenditure of time and money on the part of the Company, the expenditure required to advance the project to the point of a production test is large, particularly since the Company has decided to proceed with shaft systems capable of being used in full-scale production to save time and money, should trial mining be confirmed as viable. Thus to a large extent expenditures which would usually be supported by a feasibility study will depend on the data in-hand and assumptions made in this pre-feasibility study with attendant higher level of uncertainty. Reserves. The resource and reserve estimates were prepared using geological and engineering judgment based on available data. In the absence of underground development, such estimates must be regarded as imprecise and some of the assumptions made may later prove to be incorrect or unreliable. The grade distribution at Turquoise Ridge is fairly narrow, with most stoping blocks having grades between 0.2 to 0.4 oz/st. This means that small changes in cutoff grade can cause large shifts in the reserves. If dilution and/or mining costs related to bad ground are higher than expected, the reserves could be substantially reduced, resulting in a shortening of mine life and a reduced or negative cash flow. Mining. Dilution. The tonnage and grade of the mill feed material was estimated by applying dilution factors to certain resource data. The dilution agents are backfill, waste from the back of overcut crosscuts and drifts, and from the walls. In the case of the latter two, MRDI assumed that there would be an average of one foot of back and wall dilution. If this dilution increases, there will be corresponding negative effects on the tonnage and grade to mill. This risk is related to the irregular configuration of the ore body which, even with the tight cut-and-fill stoping method used, could make achievement of a dilution thickness of one foot impossible to achieve in practice. Page 9 10 No. 1 Shaft Completion. MRDI believes a two-year assumed construction period for No. 1 Shaft, which will become the main production shaft, is an aggressive schedule. Delay in construction would necessitate removing ore through the No. 2 Shaft, which is basically designed for waste and the limited ore from early production. Additionally, the availability of the final ventilation circuit required for mining depends upon the completion of No. 1 Shaft. Mining Cost. As part of the project risk assessment, sensitivities were run on various mining costs. Due to uncertainties about actual ground conditions and productivities, these costs are only predictable within a broad range and the predictions may not be valid. Therefore, actual mining costs may have a material adverse effect on the viability of the Turquoise Ridge project and on the Company. Hydrology. Drainage of the ore body and country rocks will be critical to the achievement of the mining efficiencies and costs estimated for the study. If the deposit is not drained and water remains in this clay-rich environment, mining conditions could worsen, and support costs will increase. If, due to the presence of fine clays, the deposit drains slowly, the start of production may be delayed, and the build-up to full production may be of longer duration. Additionally, depending upon the quantity and quality of water encountered, the water treatment/disposal options presently available to the Company may be insufficient to meet estimated amounts needed to treat water pumped from Turquoise Ridge during de-watering. Geotechnical Considerations. The Turquoise Ridge ore zones contain areas of poor ground conditions due to a high percentage of the ground being comprised of low RMR rock and clay. As a result, additional ground support may be required. Page 10 11 Item 7. Financial Statements and Exhibits (c) The following exhibits are filed as part of this Report: 10(a) Post Spin-Off Agreement dated as of September 24, 1995, by and between First Mississippi and the Company. 10(b) Tax Ruling Agreement dated as of September 24, 1995, by and between First Mississippi and the Company. 10(c) Loan Agreement dated as of September 24, 1995, by and between First Mississippi and the Company. 10(d) Amended Tax Sharing Agreement dated as of September 24, 1995, by and between First Mississippi and the Company. 10(e) Loan Agreement dated as of September 24, 1995, by and between The Toronto-Dominion Bank and the Company. Page 11 12 Item 8. Change in Fiscal Year On September 24, 1995, the Company's board of directors approved a change in the Company's fiscal year from a previous fiscal year end of June 30 to a fiscal year end of December 31. The report covering the transition period will be filed with the Securities and Exchange Commission on Form 10-K. Page 12 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FIRSTMISS GOLD INC. Registrant Date: September 24, 1995 By: /s/ Donald S. Robson ----------------------------------------- Donald S. Robson, Chief Financial Officer Page 13 14 EXHIBIT INDEX
Exhibit ------- 10(a) Post Spin-Off Agreement dated as of September 24, 1995, by and between First Mississippi and the Company. 10(b) Tax Ruling Agreement dated as of September 24, 1995, by and between First Mississippi and the Company. 10(c) Loan Agreement dated as of September 24, 1995, by and between First Mississippi and the Company. 10(d) Amended Tax Sharing Agreement dated as of September 24, 1995, by and between First Mississippi and the Company. 10(e) Loan Agreement dated as of September 24, 1995, by and between Toronto-Dominion Bank and the Company.
Page 14 EX-10.A 2 POST SPIN-OFF AGREEMENT 1 POST SPIN-OFF AGREEMENT THIS POST SPIN-OFF AGREEMENT (this "Agreement") is made this 24th day of September, 1995 between First Mississippi Corporation, a Mississippi corporation ("FMC"), and FirstMiss Gold Inc., a Nevada corporation ("Gold"); WHEREAS, Gold has been a subsidiary of FMC; WHEREAS, FMC wishes to spin off to the shareholders of FMC the stock of Gold owned by FMC (the "Spin-Off"); and WHEREAS, FMC and Gold wish to enter into certain agreements with respect to the period following the Spin-Off; NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency which is hereby acknowledged, the parties hereto hereby agree as follows: 1. TAX AGREEMENTS. FMC and Gold hereby amend the Tax Sharing Agreement dated as of October 1, 1987 between FMC and Gold so that, as amended, it is in the form of Exhibit A attached hereto (the "Amended Tax Sharing Agreement"). Contemporaneously with the execution and delivery of this Agreement, FMC and Gold shall execute and deliver to each other copies of the Amended Tax Sharing Agreement, which shall also be executed and delivered by FMG Inc., a subsidiary of Gold, and a Tax Ruling Agreement in the form of Exhibit B attached hereto (the "Tax Ruling Agreement"). 2 2. EMPLOYEE BENEFITS. Contemporaneously with the execution and delivery of this Agreement, FMC and Gold shall execute and deliver to each other copies of an agreement relating to employee benefits and compensation in the form of Exhibit C attached hereto (the "Employee Benefits Agreement"). 3. LOAN AGREEMENT AND NOTE. Contemporaneously with the execution and delivery of this Agreement, FMC and Gold shall execute and deliver to each other copies of a Loan Agreement in the form of Exhibit D attached hereto (the "Loan Agreement"), and on the date of the Spin-Off Gold shall execute and deliver to FMC a promissory note in the form of Exhibit A to the Loan Agreement, dated the date of the Spin-Off (the "Note"), with a principal balance equal to the indebtedness of Gold to FMC for advances as of the date of the Spin-Off, whereupon all prior promissory notes evidencing such indebtedness shall be cancelled and FMC shall deliver the prior promissory notes to Gold, marked "cancelled". 4. NAME. Effective as of the date of the Spin-Off, FMC hereby grants to Gold a world-wide, fully-paid, non- transferable, non-exclusive right and license for five years from the date of the Spin-Off to use the name "FirstMiss" as part of its corporate name, and this license will remain in effect from year to year thereafter unless terminated by either party on twelve months' notice to the other. Prior to the termination of this license, Gold shall change its corporate name to a name not including the word "FirstMiss" or any similar word or words, at which time this license shall terminate. As a condition to maintaining this license in effect, Gold agrees to maintain a quality of products under the name "FirstMiss" commensurate with the business position of the parties involved, with FMC setting reasonable standards for the quality of the -2- 3 products sold under the name, reserving the right to inspect the quality of the products sold under the name, and reserving the right to inspect the facilities and processes used to produce said products in order to insure that FMC standards of quality are observed. As promptly as practicable after the date hereof, Gold will cease use of FMC's fanciful "f" trademark. 5. AUTHORITY AND ENFORCEABILITY. This Agreement, the Amended Tax Sharing Agreement, the Tax Ruling Agreement, the Employee Benefits Agreement, the Loan Agreement and the Note (collectively the "Spin-Off Documents"), have been duly authorized by all requisite corporate action of the parties thereto and constitute the valid and binding obligations of the parties thereto, enforceable in accordance with their terms. 6. ADMINISTRATIVE SUPPORT. From time to time following the Spin-Off, FMC will provide to Gold at no charge a reasonable amount of assistance from FMC's administrative, tax and legal staffs to answer questions concerning Gold, including without limitation, historical matters and the location of documents and information. The existing Administrative Services Agreement dated as of October 28, 1987 between FMC and Gold, as amended by the parties by letter dated August 29, 1995, effective July 1, 1995, shall remain in effect for 180 days following the Spin-Off, unless extended by mutual agreement of the parties. 7. DEGUSSA GUARANTY. Gold agrees that within two years from the date of the Spin-Off, it will cause FMC to be removed from its guaranty to Degussa Corporation ("Degussa") under the FirstMiss Gold Inc. Agreement dated November 3, 1993, among Gold, FMC and Degussa, and Gold acknowledges and agrees that in the event FMC makes any payment to Degussa pursuant to such guaranty, Gold will make immediate -3- 4 repayment thereof to FMC on demand of FMC, and FMC shall have all rights available to a guarantor under applicable law, including, without limitation, rights of reimbursement and subrogation. 8. RECLAMATION BOND. Gold agrees that within two years from the date of the Spin-Off, it will cause the Irrevocable Letter of Credit dated October 11, 1993 issued by The Chase Manhattan Bank, N.A. ("Chase"), in favor of the United States Department of the Interior, Bureau of Land Management, for the benefit of Gold (the "Letter of Credit"), to be terminated, and Gold will pay on demand all fees and costs payable by FMC after the Spin-Off to maintain the Letter of Credit in effect. Gold acknowledges and agrees that in the event that FMC is required to make any payment to Chase with respect to any draw upon the Letter of Credit, Gold will make immediate repayment thereof to FMC on demand of FMC, and FMC shall have all rights available to it under applicable law, including, without limitation, rights of reimbursement and subrogation. 9. RECORD RETENTION AND ASSISTANCE. From time to time after the date of the Spin-Off, FMC and Gold each shall provide to the other party information reasonably requested by such party which is necessary to prepare any financial, accounting or other reports or tax returns with respect to periods up to and including the date of the Spin-Off. Each party shall preserve all of its records and information necessary to meet the foregoing obligation until the latest of (a) December 31, 2002, (b) any period as may be required by any governmental agency or pending litigation, or (c) in the case of records or information relating to taxes, until the expiration of the applicable statute of limitations, including extensions. If either party wishes to destroy any such records or information after such period, it shall first give 30 days' prior notice to the other party, -4- 5 which shall have the right at its option to object to such destruction, in which case the party seeking to destroy such records or information shall at its option either continue to retain possession of such records or information or will deliver such records or information to the other party. 10. CONFIDENTIALITY. FMC and Gold each will not disclose any trade secrets or confidential information of the other party for so long as they remain trade secrets in the case of trade secrets and for five years following the date of the Spin-Off in the case of confidential information. For purposes of this Agreement, a trade secret is anything which is a trade secret under applicable law and confidential information is any information which is competitively sensitive and not generally available to the public. 11. COOPERATION AND FURTHER ASSURANCES. From time to time following the date of this Agreement, each of FMC and Gold will cooperate with the other to effectuate the purposes of the Spin-Off and the Spin-Off Documents and each will execute and deliver such additional documents and take such further actions as shall be reasonably requested by the other. 12. EXPENSES. Except as otherwise specifically provided in the Spin-Off Documents or other written agreements between FMC and Gold, all costs and expenses relating to the Spin-Off shall be paid by the party incurring them. 13. MEDIATION AND ARBITRATION. If a dispute arises between FMC and Gold with respect to this Agreement or the breach thereof, and if such dispute cannot be settled through negotiations, the parties shall first attempt in good faith to settle the dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association. If such dispute cannot be settled by mediation, it shall be settled -5- 6 by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Regardless of any other choice of law provisions in this Agreement, any arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, as amended from time to time. 14. GOVERNING LAW. This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of Delaware. 15. SEVERABILITY. In the event that any court of competent jurisdiction shall determine that any provision of this Agreement is invalid, such determination shall not affect the validity of any other provision of this Agreement, which shall remain in full force and effect and which shall be construed as to be valid under applicable law. 16. NOTICES. Any and all notices and other communications permitted or required to be given under this Agreement shall be in writing, signed by or on behalf of the party giving the same, and shall be deemed to have been properly given and shall be effective upon the earliest of (a) in the case of personal delivery, upon receipt, (b) in the case of mailed notice, three days after deposit in the United States mail, postage prepaid, certified with return receipt requested, (c) in the case of facsimile or other telecommunications transmission, upon receipt, or (d) in the case of notice by Federal Express or other reputable overnight courier service, one business day after delivery to such courier service, in each case sent to the other party at its address set forth below or at such other address within the continental United States as it may designate by notice specifically designated as a notice of change of address and given in accordance herewith: -6- 7 If to FMC: First Mississippi Corporation 700 North Street Jackson, MS 39202-3095 Attn: General Counsel If to Gold: FirstMiss Gold Inc. 5460 S. Quebec Street Suite 240 Englewood, CO 80111 Attn: President 17. ASSIGNMENT; SUCCESSORS AND INTEREST. No assignment or transfer by either party of any or all of its rights and obligations under this Agreement shall be made except with the prior written consent of the other party, which consent shall not be unreasonably withheld. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors and assigns, and any reference to a party hereto shall also be a reference to a permitted successor or assign. 18. INTEGRATION; AMENDMENT; WAIVER. This Agreement and the other agreements contemplated hereby supersede all prior negotiations, agreements and understandings between the parties with respect to the subject matter hereof, constitute the entire agreement between the parties with respect to the subject matter hereof and may not be altered or amended except in writing signed by the parties. The failure of either party hereto at any time or times to require performance of any provisions of this Agreement shall in no manner affect the right to enforce the same. No waiver by either -7- 8 party hereto of any condition, or of the breach of any provision of this Agreement or the other agreements contemplated hereby, whether by conduct or otherwise, in any one or more instances, shall be deemed or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other provision herein or therein contained. Signed, sealed and delivered on the date first above written. (CORPORATE SEAL) FMC: FIRST MISSISSIPPI CORPORATION ATTEST: By: ---------------------------------- President - ------------------------ Secretary (CORPORATE SEAL) GOLD: FIRSTMISS GOLD INC. ATTEST: By: ---------------------------------- President - ------------------------ Secretary -8- EX-10.B 3 TAX RULING AGREEMENT 1 TAX RULING AGREEMENT THIS TAX RULING AGREEMENT (this "Agreement") is made this 24th day of September, 1995 between First Mississippi Corporation, a Mississippi corporation ("FMC"), and FirstMiss Gold Inc. a Nevada corporation ("Gold"). WHEREAS, FMC is the common parent of an affiliated group of corporations (the "FMC Group") under Section 1504 of the Internal Revenue Code of 1986, as amended (the "Code"), and owns shares of common stock ("Common Stock") of Gold constituting "control" within the meaning of Section 368(c) of the Code; WHEREAS, FMC is considering a distribution to the shareholders of FMC of the stock of Gold owned by FMC (the "Spin-Off"); WHEREAS, FMC has received a tax ruling related to the Spin-Off from the Internal Revenue Service, a copy of which has been furnished to Gold (the "Ruling"); and WHEREAS, FMC and Gold wish to enter into certain agreements with respect to the Ruling; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. COMPLIANCE WITH THE RULING. Gold represents and warrants that it has not taken and will not take any action which is inconsistent with the facts and representations stated in the Ruling or in any submissions to the Internal Revenue Service (the "IRS") in connection therewith (such submission being letters from FMC to the IRS dated July 8, 1994, October 19, 1994, January 19, 1995, February 16, 1995, March 11, 1995, March 15, 2 1995, March 27, 1995 and April 19, 1995), which have been furnished to Gold. Gold represents and warrants that it is not aware of any facts which are inconsistent with the facts and representations set forth in the Ruling and such letters. 2. EQUITY OFFERING. Gold agrees that it will consummate an underwritten public equity offering of common stock generating aggregate proceeds of at least $50,000,000 (the "Offering") as soon as practicable in the reasonable business judgment of the Board of Directors of Gold, but notwithstanding the foregoing, in any event Gold will consummate the Offering prior to April 27, 1996 unless Gold has obtained a supplemental ruling from the Internal Revenue Service that the failure to so consummate the Offering will not affect the qualification of the Spin-Off under Section 355 of the Code. Gold represents and warrants that it has filed a registration statement on Form S-3 which contemplates a delayed offering pursuant to Rule 415 under the Securities Act of 1933, as amended, and upon declaration of effectiveness would be available for the Offering. 3. USE OF PROCEEDS. Immediately after consummation of the Offering, Gold will use at least $15,000,000 of the proceeds of the Offering to repay a portion of its outstanding debt to FMC, will use at least $35,000,000 of the proceeds for the development and exploration of its Turquoise Ridge and Getchell properties for the mining and exploration of gold, and will use any balance of the proceeds for purposes related to the business of Gold, including for working capital. 4. CONTINUED CONDUCT OF BUSINESS. Gold represents that it has no plan or intention to cease the active conduct of its trade or business within the meaning of Section 355(b) of the Code and agrees to take no steps to do so without the consent of FMC for a -2- 3 period of at least one year commencing with the date of the Spin-Off (the "Restricted Period"). 5. OPINION REQUIREMENT FOR MAJOR TRANSACTIONS UNDERTAKEN BY GOLD DURING THE RESTRICTED PERIOD. Gold represents that is has no plan or intention to do any of the following and it agrees that during the Restricted Period, it will not, and will not enter into any agreement to: (i) merge or consolidate with or into any other corporation or effect any transaction having a similar effect, (ii) liquidate or partially liquidate (within the meaning of such terms as defined in Section 346 and Section 302, respectively, of the Code), (iii) sell or transfer all or substantially all its assets (within the meaning of Rev. Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of related transactions, (iv) redeem or otherwise repurchase any of its capital stock (except for the redemption of the stock of one or more employees upon his or their termination, and Gold represents that it has no plan or intention to do so), or (v) except in connection with the Offering or except for capital stock issued to officers, directors or employees of Gold and its subsidiaries pursuant to employee benefit or compensation plans of Gold, issue additional shares of its capital stock, in each case, unless it first obtains (i) an opinion of Sutherland, Asbill & Brennan, counsel to FMC, or other law firm reasonably satisfactory to FMC, or (ii) a supplemental ruling from the Internal Revenue Service, that such transaction, and any transaction related thereto, will not affect the qualification of the Spin-Off under Section 355 of the Code. -3- 4 6. INDEMNIFICATION. 6.1 INDEMNITY. If during the Restricted Period: (a) Gold takes any action or enters into any agreement to take any action, including, without limitation, (i) any merger or consolidation of Gold with or into another corporation or any transaction having a similar effect, (ii) any complete or partial liquidation of Gold (within the meaning of such terms as defined in Section 346 and 302, respectively, of the Code), (iii) a sale or transfer of all or substantially all Gold's assets (within the meaning of Rev. Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of related transactions, (iv) ceasing to actively conduct its trade or business within the meaning of Section 355 of the Code, (v) redeeming or otherwise repurchasing any of Gold's outstanding capital stock, (vi) issuing any additional shares of Gold stock, or Gold fails to take any action, including, without limitation, failing to consummate the Offering prior to April 27, 1996, and the Spin-Off shall fail to qualify under Section 355 of the Code primarily as a result of such action or actions or failure or failures to act; or (b) Gold solicits or assists any person or group of affiliated or associated persons to commence a tender offer for the stock of Gold upon consummation of which such person or group of affiliated or associated persons would acquire beneficial ownership of 20% or more of Gold's outstanding common stock, and the Spin-Off shall fail to qualify under Section 355 of the Code primarily as a result of the tender offer; then Gold shall indemnify and hold harmless FMC and each member of the FMC Group against any and all federal, state and local taxes, interest, penalties and additions to tax imposed upon or incurred by the FMC Group or any member thereof as a result of the -4- 5 failure of the Spin-Off to so qualify to the extent provided herein, unless, with respect to matters described in Section 6.1(a)(i), (ii), (iii), (v) or (vi), Gold previously shall have obtained a favorable legal opinion or supplemental ruling as set forth in Section 5. 6.2 INDEMNIFIED LIABILITY. For purposes of this Agreement, the term "Indemnified Liability" means any liability imposed upon or incurred by the FMC Group or any member of the FMC Group for which FMC or any other member of the FMC Group is indemnified and held harmless under Section 6.1, but shall not refer to the amount of such liability. 6.3 AMOUNT OF INDEMNIFIED LIABILITY FOR INCOME TAXES. The amount of an Indemnified Liability for a federal or state tax based on or determined with reference to income shall be deemed to be the amount of tax computed by multiplying (i) the taxing jurisdiction's highest marginal tax rate applicable to taxable income of corporations such as FMC of the character subject to tax as a result of the failure of the Spin-off to qualify under Section 355 of the Code for the taxable period in which the Spin-Off occurs, times (ii) the gain or income of the FMC Group or member thereof which is subject to tax in the taxing jurisdiction as a result of the failure of the Spin-Off to qualify under Section 355 of the Code, and, in the case of a state, times (iii) the percentage representing the extent to which such gain or income is apportioned or allocated to such state; provided, however, that in the case of a state tax determined as a percentage of federal income tax liability, the amount of the Indemnified Liability shall be deemed to be the amount of tax computed by multiplying (i) that state's highest percentage rate applicable to the taxable income of corporations such as FMC of the character subject to tax as a result of the failure of the Spin-Off to qualify -5- 6 under Section 355 of the Code for the taxable period in which the Spin-Off occurs, times (ii) the amount of deemed federal income tax (whether or not incurred) imposed upon the FMC Group or any member thereof from the failure of the Spin-Off to qualify under Section 355 of the Code computed in accordance with this Section 6.3, times (iii) the percentage representing the extent to which the gain or income required to be recognized on the Spin-Off is apportioned or allocated to such state. 6.4 INDEMNITY REDUCED BY INCOME TAX BENEFITS FROM INDEMNIFIED LIABILITY. (a) If an Indemnified Liability is of a type that constitutes a deduction from income in any taxable period in determining the FMC Group's or any of its member's liability for a federal or state tax based upon or determined with reference to income, the amount that Gold would otherwise be required to pay as indemnification for such Indemnified Liability shall be reduced by the aggregate reduction, on account of such deduction of the Indemnified Liability, in the tax liability of the FMC Group or any member of the FMC Group to all taxing jurisdictions over all taxable periods in which the Indemnified Liability is deductible. (b) The deemed reduction in tax liability to a taxing jurisdiction for any taxable period in which all or a portion of the Indemnified Liability is deductible shall be deemed to be the amount computed by multiplying (i) such taxing jurisdiction's highest marginal tax rate applicable to the taxable income of corporations such as FMC of the character against which the Indemnified Liability is deductible, times (ii) the portion of the Indemnified Liability that constitutes a deduction in such taxing jurisdiction in such taxable -6- 7 period, and, in the case of a state, times (iii) the percentage representing the extent to which the deduction for the Indemnified Liability is apportioned or allocated to such state; provided, however, that in the case of a state tax determined as a percentage of federal income tax liability, the amount of deemed reduction in tax liability to such state for any taxable period in which all or a portion of the Indemnified Liability is deductible shall be deemed to be the amount computed by multiplying (i) such state's highest percentage rate applicable to the taxable income of corporations such as FMC in such taxable period of such character against which the Indemnified Liability is deductible, times (ii) the deemed reduction in federal income tax in such taxable period resulting from the deductibility of the Indemnified Liability computed in accordance with this Section 6.4, times (iii) the percentage representing the extent to which the deduction for the Indemnified Liability is apportioned or allocated to such state. The amount of such reduction in Gold's liability shall be unaffected by any interest paid to the FMC Group, or any member thereof, by a taxing authority by reason of any such deduction. 6.5 INDEMNITY AMOUNT. With respect to any Indemnified Liability, the amount which Gold shall pay to or on behalf of FMC as indemnification (the "Indemnity Amount") shall be the amount of the Indemnified Liability, as determined and adjusted under Sections 6.3 and 6.4. 7. PROCEDURAL MATTERS. 7.1 NOTICE. If either FMC or Gold receives any written notice of deficiency, claim or adjustment or any other written communication from a taxing authority that may result in an Indemnified Liability, the party receiving such notice or communication shall -7- 8 promptly give written notice thereof to the other party; provided that any delay by FMC in so notifying Gold shall not relieve Gold of any liability to FMC hereunder, except to the extent Gold is materially and adversely prejudiced by such delay. FMC undertakes and agrees that from and after such time as FMC obtains knowledge that any representative of a taxing authority has begun to investigate or inquire into the Spin-Off (whether or not such investigation or inquiry is a formal or informal investigation or inquiry), FMC shall (i) notify Gold thereof, provided that any delay by FMC is so notifying Gold shall not relieve Gold of any liability to FMC hereunder, (ii) consult with Gold from time to time as to the conduct of such investigation or inquiry, (iii) provide Gold with copies of all correspondence between FMC or its representatives and such taxing authority or any representative thereof pertaining to such investigation or inquiry and (iv) arrange for a representative of Gold to be present at (and, if Gold is controlling the proceeding pursuant to Section 7.3, participate in) all meetings with such taxing authority or any representative thereof pertaining to such investigation or inquiry. 7.2 WRITTEN ACKNOWLEDGEMENT. Promptly upon receipt of notice as provided in Section 7.1, Gold shall confirm in writing to FMC that the liability asserted in the notice of deficiency, claim or adjustment or other written communication would, if imposed upon or incurred by the FMC Group or any member thereof, be an Indemnified Liability, unless Gold believes in good faith that such liability would not be an Indemnified Liability, in which case Gold shall set forth in writing to FMC the grounds for such belief. -8- 9 7.3 TAX PROCEEDINGS CONTROLLED BY GOLD. (a) Any tax proceeding that may result in an Indemnified Liability, which is acknowledged as such by Gold, shall be conducted in accordance with this Section 7.3. (b) Promptly upon Gold's written acknowledgement that the asserted liability is an Indemnified Liability, Gold shall assume and direct the defense or settlement of the proceeding and shall diligently defend against the claim of any taxing authority that the Spin-Off resulted in taxable income to FMC or any other member of the FMC Group or any other party. If the Indemnified Liability is grouped with other unrelated asserted liabilities or issues in the proceeding, FMC and Gold shall use their respective best efforts to cause the Indemnified Liability to be the subject of a separate proceeding. If such severance is not possible, Gold shall assume and direct and be responsible only for the matters relating to the Indemnified Liability. (c) Upon request, during the course of the tax proceeding, Gold shall from time to time furnish FMC with evidence reasonably satisfactory to FMC of its ability to pay the full amount of the Indemnified Liability. If at any time during such tax proceeding FMC reasonably determines, after due investigation, that Gold could not pay the full amount of the Indemnified Liability, if required, then FMC may assume control of the tax proceeding in accordance with Section 7.4. (d) Gold shall pay all reasonable expenses related to the Indemnified Liability, including but not limited to reasonable fees for attorneys, accountants, expert witnesses or other consultants retained by it. To the extent that any such expenses have -9- 10 been or are paid by FMC or any member of the FMC Group, Gold shall promptly reimburse FMC or such member therefor. (e) FMC shall not pay (unless otherwise required by a proper notice of levy and after prompt notification to Gold of FMC's receipt of notice and demand for payment), settle, compromise or concede any portion of the Indemnified Liability without the written consent of Gold. FMC shall, at Gold's sole cost (including but not limited to any reasonable out-of-pocket costs incurred by FMC), take such action as Gold may reasonably request (including but not limited to the execution of powers of attorney for one or more persons designated by Gold, and the filing of a petition, complaint, amended return or claim for refund) in contesting the Indemnified Liability. Gold shall, on a timely basis, keep FMC informed of all developments in the proceeding and provide FMC with copies of all pleadings, briefs, orders, and other written papers pertaining thereto. (f) Subject to satisfaction of the conditions herein set forth, Gold may direct FMC to settle the Indemnified Liability on such terms and for such amount as Gold may direct. FMC may condition such settlement on receipt, prior to the settlement, from Gold of the Indemnity Amount less any amounts to be paid directly by Gold to the taxing authority. Gold may direct FMC, at Gold's expense, to pay an asserted deficiency for the Indemnified Liability out of funds provided by Gold, and to file a claim for refund. If Gold pays FMC the Indemnified Amount pursuant to Section 7.5 and FMC or any other member of the FMC Group receives a refund of any portion of amounts paid to a taxing jurisdiction in respect of the Indemnified Liability (other than a refund resulting from adjustments unrelated to the Indemnified Liability), FMC shall pay any and all such refund -10- 11 proceeds, together with interest thereon for each day and the actual number of days commencing on the date such refund is received by FMC at the rate of one percentage point above the monthly average of the daily Effective Funds Rate, as stated by the Federal Reserve Bank of New York; provided, however, that the provision for interest herein shall not be construed to give FMC the right to defer payment to Gold of any refund proceeds hereunder. 7.4 TAX PROCEEDINGS CONTROLLED BY FMC. Should Gold not provide FMC with the confirmation contemplated by Section 7.2 within thirty (30) days following receipt of notice provided in Section 7.1 or, following such confirmation, should Gold fail within thirty (30) days following request therefor to furnish to FMC evidence of its ability to pay the full amount of the Indemnified Liability or should FMC reasonably believe after due investigation that Gold could not pay the full amount of the Indemnified Liability if required, then FMC may assume control of the tax proceeding upon the following terms: (1) FMC will diligently defend against the claim of any taxing authority that the Spin-Off resulted in taxable income to it or any other member of the FMC Group or any other party, without regard to the indemnification provided herein, including the pursuit of the appeal of any adverse determinations to the appropriate tribunal (unless advised by independent counsel in its reasonable judgment that FMC or such other member of the FMC Group would not prevail upon any such appeal) and shall employ such resources, including independent counsel, in conducting such defense as are reasonably commensurate with the nature and magnitude of the claim; (ii) FMC will consult with Gold as to the conduct of all proceedings, will provide Gold with copies of all protests, pleadings, briefs, filings, correspondence and -11- 12 similar materials relative to the proceedings and will arrange for a representative of Gold to be present at (but not to participate in) all meetings with the relevant taxing authorities and all hearings before any court; and (iii) neither FMC nor any other member of the FMC Group will settle, compromise or concede any claim that would result in an Indemnified Liability unless FMC has made the determination, and has been so advised by independent counsel, that such settlement is not unreasonable in the circumstances. Subject to the above, any such tax proceedings shall be controlled and directed exclusively by FMC and may be contested, defended, paid, settled, compromised or conceded by FMC and any related expenses incurred by FMC or any member of the FMC Group, including but not limited to reasonable fees for attorneys, accountants, expert witnesses or other consultants shall be reimbursed by Gold, if Gold admits or is found to have incorrectly failed to acknowledge the asserted liability as an Indemnified Liability as provided in Section 7.2; provided, however, that if after FMC's assumption of control of the proceedings, Gold acknowledges in writing that the asserted liability is an Indemnified Liability or Gold demonstrates its ability to pay the full amount of the Indemnified Liability if required, Gold shall (if practical and upon its request) promptly assume and direct the proceeding which shall thenceforth be conducted in accordance with Section 7.3; and provided further, however, that FMC will not be required to pursue the claim in the federal district court, Court of Claims or any state court if as a prerequisite to such court's jurisdiction, it is required to pay the asserted liability unless the funds necessary to invoke such jurisdiction are provided by Gold. 7.5 TIME AND MANNER OF PAYMENT. Unless otherwise agreed in writing, Gold shall pay to FMC the Indemnity Amount (less any amounts paid directly by Gold to -12- 13 the taxing authority) no less than three (3) business days prior to the date payment of the Indemnified Liability is to be made, whether by FMC or Gold, to the taxing authority. Such payment shall be paid by Gold to FMC by wire transfer of immediately available funds to an account designated by FMC by written notice to Gold prior to the due date of such payment. If Gold delays making payment beyond the due date hereunder, Gold shall pay interest to FMC on the amount unpaid at the rate of one (1) percentage point above the Prime Rate published in the Wall Street Journal on the due date of the payment for each day and the actual number of days for which any amount due hereunder is unpaid; provided, however, that this provision for interest shall not be construed to give Gold the right to defer payment beyond the due date hereunder. 7.6 REFUND OF AMOUNTS PAID BY GOLD. In connection with this Agreement, should FMC or any other member of the FMC Group receive a refund in respect of amounts paid by Gold to any taxing authority on FMC's behalf, or should any such amounts that would otherwise be refundable to Gold be applied by the taxing authority to obligations of FMC or any other member of the FMC Group unrelated to the Spin-Off, then FMC shall, promptly following receipt (or notification of credit), remit such refund, together with interest thereon, which interest shall be paid at the rate of one (1) percentage point above the Prime Rate published in the Wall Street Journal on the due date of the payment for each day and the actual number of days commencing on the date such refund is received (or credit applied); provided, however, that this provision for interest shall not be construed to give FMC the right to defer payment to Gold of any refund proceeds hereunder. -13- 14 7.7 COOPERATION. FMC and Gold shall cooperate with one another in a timely manner in any administrative or judicial proceeding involving any matter that may result in an Indemnified Liability. FMC and Gold agree that such cooperation shall include, without limitation, making available to the other party, during normal business hours, all books, records and information, officers and employees (without substantial interruption of employment) and office space necessary or useful in connection with any such judicial or administrative proceeding. The party requesting or otherwise entitled to any books, records, information, officers, employees or office space pursuant to this Section 7.7 shall bear all reasonable out-of-pocket costs and expenses (except reimbursement of salaries, employee benefits and general overhead) incurred in connection with providing such books, records, information, officers, employees or office space. 8. MEDIATION AND ARBITRATION. If a dispute arises between FMC and Gold with respect to this Agreement or the breach thereof, and if such dispute cannot be settled through negotiations, the parties shall first attempt in good faith to settle the dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association. If such dispute cannot be settled by mediation, it shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Regardless of any other choice of law provisions in this Agreement, any arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, as amended from time to time. -14- 15 9. GOVERNING LAW. This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of Delaware. 10. SEVERABILITY. In the event that any court of competent jurisdiction shall determine that any provision of this Agreement is invalid, such determination shall not affect the validity of any other provision of this Agreement, which shall remain in full force and effect and which shall be construed as to be valid under applicable law. 11. NOTICES. Any and all notices and other communications permitted or required to be given under this Agreement shall be in writing, signed by or on behalf of the party giving the same, and shall be deemed to have been properly given and shall be effective upon the earliest of (a) in the case of personal delivery, upon receipt, (b) in the case of mailed notice, three days after deposit in the United States mail, postage prepaid, certified with return receipt requested, (c) in the case of facsimile or other telecommunications transmission, upon receipt, or (d) in the case of notice by Federal Express or other reputable overnight courier service, one business day after delivery to such courier service, in each case sent to the other party at its address set forth below or at such other address within the continental United States as it may designate by notice specifically designated as a notice of change of address and given in accordance herewith: If to FMC: First Mississippi Corporation 700 North Street Jackson, MS 39202-3095 Attn: General Counsel -15- 16 If to Gold: FirstMiss Gold Inc. 5460 S. Quebec Street Suite 240 Englewood, Colorado 80111 Attn: President 12. ASSIGNMENT; SUCCESSORS AND INTEREST. No assignment or transfer by either party of any or all of its rights and obligations under this Agreement shall be made except with the prior written consent of the other party, which consent shall not be unreasonably withheld. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors and assigns, and any reference to a party hereto shall also be a reference to a permitted successor or assign. 13. INTEGRATION; AMENDMENT; WAIVER. This Agreement and the other agreements contemplated hereby supersede all prior negotiations, agreements and understandings between the parties with respect to the subject matter hereof, constitute the entire agreement between the parties with respect to the subject matter hereof and may not be altered or amended except in writing signed by the parties. The failure of either party hereto at any time or times to require performance of any provisions of this Agreement shall in no manner affect the right to enforce the same. No waiver by either party hereto of any condition, or of the breach of any provision of this Agreement or the other agreements contemplated hereby, whether by conduct or otherwise, in any one or more instances, shall be deemed or construed as a further or continuing waiver of any such condition or breach -16- 17 or a waiver of any other condition or of the breach of any other provision herein or therein contained. Signed, sealed and delivered on the date first above written. (CORPORATE SEAL) FMC: FIRST MISSISSIPPI CORPORATION ATTEST: By: ----------------------------------- President - ------------------------ Secretary (CORPORATE SEAL) GOLD: FIRSTMISS GOLD INC. ATTEST: By: ----------------------------------- President - ------------------------ Secretary -17- EX-10.C 4 LOAN AGREEMENT W/FIRST MISS CORP. 1 LOAN AGREEMENT THIS LOAN AGREEMENT is dated as of September 24, 1995 and entered into by and between FirstMiss Gold Inc., a Nevada corporation ("Borrower") and First Mississippi Corporation, a Mississippi corporation ("Lender"). All capitalized terms used herein and not elsewhere defined herein are defined in Section 1 of this Agreement. WHEREAS, Lender has previously extended credit to Borrower in the form of cash advances in the aggregate amount of $__________________; and WHEREAS, Borrower and Lender wish to formalize the repayment terms of such previous advances by Lender to Borrower and Lender has agreed to permit Borrower to repay such advances over time, subject to the terms and conditions of this Agreement; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Borrower and Lender agree as follows: SECTION 1 DEFINITIONS 1.1 Certain Defined Terms. The following terms used in this Agreement shall have the following meanings: "Affiliate" means any Person (other than Lender): (a) directly or indirectly controlling, controlled by, or under common control with, Borrower; (b) directly or indirectly owning or holding five percent (5%) or more of any equity interest in Borrower; or (c) five percent (5%) or more of whose voting stock or other equity interest is directly or indirectly owned or held by Borrower. For purposes of this definition, "control" (including with correlative meanings, the terms "controlling", "controlled by" and "under common control with") means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or by contract or otherwise. "Amended Tax Sharing Agreement" means the Amended Tax Sharing Agreement between Lender and Borrower of even date herewith, as it may be amended from time to time. "Applicable Margin" shall mean for any fiscal quarter of Borrower the percentage determined for such quarter as set forth below based upon Borrower's Leverage Ratio for such quarter. For each fiscal quarter of Borrower, the Applicable Margin shall be added to the LIBOR Rate to determine the interest rate on the Note for such quarter. 2
Leverage Ratio Applicable Margin -------------- ----------------- greater than or equal to 0.75 1.0% greater than or equal to 0.50 and less than 0.75 0.75% less than 0.50 0.625%
"Agreement" means this Loan Agreement as it may be amended, supplemented or otherwise modified from time to time. "Borrower" has the meaning assigned to that term in the preamble to this Agreement. "Business Day" means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of Mississippi or is a day on which banking institutions located in such state are closed. "Change of Control" shall be deemed to have occurred if any Person or related group of Persons shall acquire, directly or indirectly, ownership or control of more than twenty percent (20%) of the voting securities of Borrower. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Default" means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default if that condition or event were not cured or removed within any applicable grace or cure period. "Employee Benefit Plan" means any employee benefit plan within the meaning of Section 3(3) of ERISA which (a) is maintained for employees of any Loan Party or any ERISA Affiliate or (b) has at any time within the preceding six years been maintained for the employees of any Loan Party or any current or former ERISA Affiliate. "Environmental Laws" means any federal, state or local law, rule, regulation or order relating to pollution, waste, disposal, industrial hygiene, land use or the protection of human health, safety or welfare, plant life or animal life, natural resources, the environment or property. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder. "ERISA Affiliate", as applied to any Loan Party, means any Person who is a member of a group which is under common control with any Loan Party, who together with any Loan -2- 3 Party is treated as a single employer within the meaning of Section 414(b) and (c) of the IRC. "Event of Default" means each of the events set forth in Section 7.1. "Fiscal Year" means for any fiscal year of Borrower ending on or before June 30, 1995, each twelve-month period ending on the last day of June, and for any fiscal year of Borrower ending after June 30, 1995, each period constituting such fiscal year as determined by Borrower. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the circumstances as of the date of determination. "Hazardous Material" means all or any of the following: (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as "hazardous substances", "hazardous materials", "hazardous wastes", "toxic substances" or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or "EP toxicity"; (b) oil, petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (c) any flammable substances or explosives or any radioactive materials; and (d) asbestos in any form or electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million. "Indebtedness", as applied to any Person, means: (a) all indebtedness for borrowed money; (b) obligations under leases which in accordance with GAAP constitute capital leases; (c) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (d) any obligation owed for all or any part of the deferred purchase price of property or services if the purchase price is due more than six months from the date the obligation is incurred or is evidenced by a note or similar written instrument; and (e) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person. "Intangible Assets" means the amount of Borrower's intangible assets (determined in conformity with GAAP) including, without limitation, goodwill, trademarks, tradenames, licenses, organizational costs, deferred amounts, covenants not to compete, unearned income and restricted funds. "Interest Period" shall have the meaning set forth in Section 2.2(B). -3- 4 "IRC" means the Internal Revenue Code of 1986. "Lender" has the meaning assigned to that term in the preamble to this Agreement. "Lender Account" shall have the meaning set forth in Section 2.3(A). "Leverage Ratio" means, for any fiscal quarter of Borrower, the result obtained by dividing (i) Indebtedness of Borrower as of the end of Borrower's prior fiscal quarter by (ii) Net Worth as of the end of such prior fiscal quarter, all as determined based upon Borrower's financial statements for such prior fiscal quarter. "Liabilities" shall have the meaning given that term in accordance with GAAP and shall include Indebtedness. "LIBOR" as of any date of determination means for any period the offered rate for deposits in United States dollars in the London Interbank Market at approximately 11:00 a.m. (London time), which appears on the Telerate Service on such date or, if such rate is not available on such date, the next preceding day on which banking institutions are open for business in London, or if such service is not available, "LIBOR" as of any date of determination means for any period the London Interbank Offered Rates for deposits in United States dollars for such period as published on such date in the "MONEY RATES" column of The Wall Street Journal, regardless of the stated effective date thereof, or if such rates are not so published on such date, on the next preceding date on which they are so published. In the event The Wall Street Journal ceases to publish London Interbank Offered Rates for deposits in United States dollars, Lender and Borrower may obtain such rates from another reliable publication or source. "LIBOR Rate" means LIBOR for the Interest Period selected from time to time by Borrower pursuant to Section 2.2(B). "LIBOR Rate Notice" shall have the meaning set forth in Section 2.2(C). "Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind, whether voluntary or involuntary (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest). "Loan" means the amount advanced under the Term Loan. "Loan Documents" means this Agreement, the Note and all other instruments, documents and agreements executed by or on behalf of any Loan Party and delivered concurrently herewith or at any time hereafter to or for Lender in connection with the Loan and other transactions contemplated by this Agreement, all as amended, supplemented or modified from time to time. -4- 5 "Loan Party" means Borrower, Borrower's Subsidiaries or any other Person (other than Lender) which is or becomes a party to any Loan Document. "Loan Parties" means Borrower, Borrower's Subsidiaries and any other Loan Parties, taken as a whole. "Material Adverse Effect" means (a) a material adverse effect upon the business, operations, properties, assets or condition (financial or otherwise) of the Loan Parties or (b) the impairment of the ability of the Loan Parties to perform its obligations under any Loan Document to which it is a party or of Lender to enforce or collect any of the Obligations. "Net Worth" means, as of any date, the sum of the capital stock and additional paid-in capital plus retained earnings (or minus accumulated deficit) of Borrower on a consolidated basis calculated in conformity with GAAP. "Note" means the Term Note. "Obligations" means all obligations, liabilities and indebtedness of every nature of each Loan Party from time to time owed to Lender under the Loan Documents including the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from time to time hereafter owing, due or payable. "Permitted Encumbrances" means the following types of Liens: (a) Liens for taxes, assessments or other governmental charges not yet due and payable or being contested in good faith; (b) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and other similar liens imposed by law, which are incurred in the ordinary course of business, including capital improvements and mine developments, for sums not more than thirty (30) days delinquent; (c) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (d) easements, rights-of-way, restrictions, and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of the Loan Parties; (e) Liens in favor of Lender; (f) existing Liens of Borrower set forth on Schedule 1.1(B); (g) Liens created to secure Indebtedness in an aggregate amount not in excess of $5,000,000; and (h) Liens created to secure Indebtedness incurred to finance the cost of acquisition, construction or improvement of property owned or acquired by, or working capital for, Borrower or its Subsidiaries. "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. -5- 6 "Prime Rate" as of any date means the Prime Rate as published on such date in the "MONEY RATES" column of The Wall Street Journal, regardless of the stated effective date thereof. If a range of rates is so published, the "Prime Rate" shall be the arithmetic mean of the highest and lowest of such rates. The Prime Rate initially shall be established on the date hereof and shall be adjusted on the first business day of each month hereafter, except that if The Wall Street Journal is not published on such business day, then the Prime Rate shall be adjusted on the next business day on which The Wall Street Journal is published. In the event The Wall Street Journal ceases to publish the Prime Rate, Lender may designate the "prime rate", "reference rate", "base rate", or other similar rate of a commercial banking institution selected by Lender and reasonably acceptable to Borrower as the "Prime Rate" under this Agreement. "Public Offering" means a public offering of Common Stock of Borrower pursuant to a registration statement that has been declared effective by the U.S. Securities and Exchange Commission pursuant to the Securities Act, other than an offering utilizing Form S-4 or S-8 or any successor form. "Securities Act" means the Securities Act of 1933. "Securities Exchange Act" means the Securities Exchange Act of 1934. "Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of shares of stock (or equivalent ownership or controlling interest) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof. "Tangible Net Worth" means an amount equal to: (a) Borrower's Net Worth; plus (b) the amount of any Indebtedness owing to any Person by Borrower which is subordinated to Lender; less (c) Borrower's Intangible Assets; less (d) Borrower's prepaid expenses; less (e) all obligations owed to Borrower or any of its Subsidiaries by any Affiliate of Borrower or any of its Subsidiaries; and less (f) all loans by Borrower to officers, stockholders or employees of Borrower. "Tax Ruling Agreement" means that certain Tax Ruling Agreement, of even date herewith, by and between Lender and Borrower. "Term Loan" means the advances previously made by Lender to Borrower in the aggregate amount of $________________. "Term Note" means the promissory note of Borrower, in substantially the form of Exhibit A, issued pursuant to Section 2.1(B). -6- 7 "Termination Date" means the date this Agreement is terminated as set forth in Section 2.4. 1.2 Accounting Terms. For purposes of this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to such terms in conformity with GAAP. 1.3 Other Definitional Provisions. References to "Sections", "Exhibits" and "Schedules" shall be to Sections, Exhibits and Schedules, respectively, of this Agreement unless otherwise specifically provided. Any of the terms defined in Section 1.1 may, unless the context otherwise requires, be used in the singular or the plural depending on the reference. In this Agreement, words importing any gender include the other genders; the words "including," "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to agreements and other contractual instruments shall be deemed to include subsequent amendments, assignments, and other modifications thereto, but only to the extent such amendments, assignments and other modifications are not prohibited by the terms of this Agreement or any other Loan Document; references to Persons include their respective permitted successors and assigns or, in the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. SECTION 2 THE TERM LOAN 2.1 Loan. (A) Amount; Payment. Subject to the terms and conditions of this Agreement, Lender has previously advanced to Borrower the Term Loan in the amount of $__________. Borrower shall make a single payment of the full amount of the principal balance of the Term Loan, together with accrued interest, on the Termination Date. Borrower shall make such other principal payments as are required and may make such other principal payments as are permitted by this Agreement. (B) Note. Borrower shall execute and deliver to Lender a Term Note in the form of Exhibit A to evidence the Term Loan, such Term Note to be in the principal amount of the Term Loan and with other appropriate insertions. 2.2 Interest. (A) Amount; Payment. Borrower shall pay interest in respect of all unpaid principal of the Term Loan from the date hereof to maturity (whether by acceleration, notice of prepayment or otherwise) at a rate per annum equal to the LIBOR Rate selected by Borrower plus the Applicable Margin, each as in effect from time to time. Overdue principal and accrued interest and, to the extent not prohibited by applicable law, all other -7- 8 overdue amounts owing hereunder, shall bear interest from each date that such amounts are overdue at the rate or rates otherwise applicable for the then-current Interest Period plus an additional two percent (2.0%) per annum; thereafter at the Prime Rate plus an additional two percent (2.0%) per annum. Interest on the Term Loan shall accrue from and including the date hereof to but excluding the date of any repayment thereof. All accrued interest shall be payable on the Termination Date, except that interest accrued on any amounts prepaid under this Agreement shall be payable on the date of prepayment. In the case of Interest Periods for which the LIBOR Rate applies, interest shall be added to the principal balance of the Term Loan at the end of each Interest Period as set forth in Section 2.2(B). For periods during which the Prime Rate applies, interest shall be compounded quarterly beginning December 31, 1995 and continuing on each March 31, June 30, September 30 and December 31 thereafter until paid. (B) Interest Periods. Borrower shall select the interest periods (each an "Interest Period") to be applicable to the Term Loan, each of which Interest Periods shall be either a one month, three month, six month or one year period; provided that: (1) The initial Interest Period shall commence on the date hereof and each Interest Period occurring thereafter shall commence on the day on which the immediately preceding Interest Period expires; (2) If any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day, provided that if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; and (3) Any Interest Period which begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall expire on the last Business Day of such calendar month. (C) LIBOR Rate Notices. Borrower shall notify Lender of the applicable LIBOR Rate for each Interest Rate Period by delivering to Lender a notice thereof (a "LIBOR Rate Notice") not later than 10:00 a.m. Jackson, Mississippi time, at least one (1) Business Day prior to the effective date of the change to such rate. In the case of the initial Interest Period, Borrower shall provide such notice on or prior to the date hereof. Each LIBOR Rate Notice shall either be oral, with prompt written confirmation, or in writing, shall be irrevocable, shall be effective upon receipt by Lender, and shall specify the effective date of the Interest Period with respect to such LIBOR Rate (which shall be a Business Day). (D) Expiration of Interest Period. Upon the expiration of each Interest Period, unless Lender has received from Borrower a new LIBOR Rate Notice with respect to the following Interest Period, interest on the Term Loan shall accrue at the Prime Rate. -8- 9 (E) Inability to Determine LIBOR Rate. In the event that Lender reasonably determines (which determination shall be conclusive) that, by reason of circumstances affecting the London interbank market, quotation of interest rates for the relevant deposits used to determine LIBOR are not being provided in the relevant amounts or for the relevant maturities for the purpose of determining a rate of interest for any LIBOR Rate, then Lender shall promptly notify Borrower whereupon the right of Borrower to submit a LIBOR Rate Notice shall thereupon be suspended and interest on the Term Loan shall accrue at the Prime Rate until such time as Lender again can determine a LIBOR Rate. (F) Interest Savings Clause. Nothing contained in this Agreement or in the Note shall be construed to permit Lender to receive at any time interest, fees or other charges in excess of the amounts which Lender is legally entitled to charge and receive under any law to which such interest, fees or charges are subject. In no contingency or event whatsoever shall the compensation payable to Lender by Borrower, howsoever characterized or computed, hereunder or under the Note or under any other agreement or instrument evidencing or relating to the Obligations, exceed the highest rate permissible under any law to which such compensation is subject. There is no intention that Lender shall contract for, charge or receive compensation in excess of the highest lawful rate, and, in the event it should be determined that any excess has been charged or received, then, ipso facto, such rate shall be reduced to the highest lawful rate so that no amounts shall be charged which are in excess thereof; and Lender shall apply such excess against the Obligations then outstanding. 2.3 Payments and Prepayments. (A) Manner and Time of Payment. All payments by Borrower of the Obligations shall be made without deduction, defense, set-off or counterclaim and in same day funds and delivered to Lender by wire transfer to Lender's account, ABA No. 065305436, Account No. 500-22-215-80 at Deposit Guaranty National Bank, Jackson, MS., A/C First Mississippi Corporation or at such other place as Lender may direct from time to time by notice to Borrower (the "Lender Account"). Borrower shall receive credit for funds remitted to the Lender Account directly by Borrower by wire transfer on the date such funds are received in the Lender Account if Borrower has given Lender telephonic notice by 10:00 a.m. (central time) of the transfer of such funds and such funds are received in the Lender Account by 12:00 noon (central time) on such day. (B) Mandatory Prepayments. (1) Proceeds of Public Offering. Pursuant to the Tax Ruling Agreement, Borrower has committed to undertake a Public Offering generating aggregate proceeds of at least $50,000,000. Borrower shall apply the aggregate net proceeds to Borrower of any Public Offering effected after the date of this Agreement, up to a maximum of $15 million in the aggregate, to the prepayment of the principal amount of the Term Loan together with accrued interest to the date of such prepayment on the principal amount prepaid, which -9- 10 prepayment shall be made within five (5) Business Days after closing of any such Public Offering. (2) Change of Control. Upon the consummation of a Change of Control, Borrower shall prepay in full the principal amount of the Term Loan together with accrued interest to the date of such prepayment on the principal amount prepaid. (C) Optional Prepayments. Borrower may, upon at least five Business Days' notice to Lender, prepay the principal amount of the Term Loan in whole or in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that each partial prepayment shall be in a aggregate principal amount of $100,000 or an integral multiple of $100,000 in excess thereof. (D) Set-Off Under Amended Tax Sharing Agreement. Lender shall reduce the outstanding balance of the Loan under the circumstances set forth in Section 2(c)(ii) of the Amended Tax Sharing Agreement. 2.4 Term of this Agreement. Upon acceleration of the Obligations in accordance with Section 7 or on September 22, 2000 (in either event, the "Termination Date"), all Obligations shall become immediately due and payable without notice or demand. Until all Obligations have been fully paid and satisfied, and even after payment of all Obligations hereunder, Borrower's obligation to indemnify Lender in accordance with the terms hereof shall continue. SECTION 3 BORROWER'S REPRESENTATIONS AND WARRANTIES In order to induce Lender to enter into this Agreement, Borrower represents and warrants to Lender that the following statements are true, correct and complete: 3.1 Organization, Power. Borrower is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and qualified to do business in all states where such qualification is required. Borrower has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and proposed to be conducted and to enter into each Loan Document. 3.2 Authorization of Borrowing. Borrower has the corporate power and authority to incur the Obligations. The execution, delivery and performance of the Loan Documents by each Loan Party and signatory thereto have been duly authorized by all necessary corporate and shareholder action. The execution, delivery and performance by each Loan Party of each Loan Document and the consummation of the transactions contemplated by this Agreement do not and will not be in contravention of any applicable law, the corporate charter or bylaws of any Loan Party or any agreement or order by which any Loan Party is bound. This Agreement is, and the other Loan Documents, including the Note, when -10- 11 executed and delivered will be, the legally valid and binding obligations of the applicable Loan Parties respectively, each enforceable against the Loan Parties, as applicable, in accordance with their respective terms. 3.3 Financial Condition. All financial statements concerning Borrower and its Subsidiaries which have been or will hereafter be furnished by Borrower and its Subsidiaries to Lender pursuant to this Agreement have been or will be prepared in accordance with GAAP consistently applied throughout the periods involved (except as disclosed therein) and do or will present fairly the financial condition of the corporations covered thereby as at the dates thereof and the results of their operations for the periods then ended. 3.4 Indebtedness and Liabilities. As of July 30, 1995, neither Borrower nor any of its Subsidiaries has any Indebtedness or Liabilities other than the Indebtedness or as disclosed on Schedule 3.4. 3.5 [LEFT BLANK INTENTIONALLY] 3.6 Title to Properties; Liens. Borrower and each of its Subsidiaries has good, sufficient and legal title, subject to Permitted Encumbrances, to all its respective material properties and assets. Except for Permitted Encumbrances, all such properties and assets are free and clear of Liens. To the best knowledge of Borrower after due inquiry, there are no actual, threatened or alleged defaults with respect to any leases of real property under which Borrower or any of its Subsidiaries is lessee or lessor which would have a Material Adverse Effect. 3.7 Litigation; Adverse Facts. There are no judgments outstanding against Borrower or any of its Subsidiaries or affecting any property of any of them nor is there any action, charge, claim, demand, suit, proceeding, petition, governmental investigation or arbitration now pending or, to the best knowledge of Borrower after due inquiry, threatened against or affecting Borrower or any of its Subsidiaries or any property of Borrower or any of its Subsidiaries which could reasonably be expected to result in any Material Adverse Effect. Neither Borrower nor any of its Subsidiaries has received any opinion or memorandum or legal advice from legal counsel to the effect that it is exposed to any liability or disadvantage which could reasonably be expected to result in any Material Adverse Effect. 3.8 Payment of Taxes. All material tax returns and reports of Borrower and each of its Subsidiaries required to be filed by any of them have been timely filed, and all taxes, assessments, fees and other governmental charges upon such Persons and upon their respective properties, assets, income and franchises which are shown on such returns as due and payable have been paid when due and payable. No tax liens have been filed and no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of Borrower and each of its Subsidiaries in respect of any taxes or other governmental charges are in accordance with GAAP. -11- 12 3.9 Performance of Agreements. Neither Borrower nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any contractual obligation of any such Person, and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default. 3.10 Employee Benefit Plans. Borrower, each Subsidiary of Borrower and each ERISA Affiliate is in compliance in all material respects with all applicable provisions of ERISA, the IRC and all other applicable laws and the regulations and interpretations thereof with respect to all Employee Benefit Plans. No material liability has been incurred by Borrower, any Subsidiary of Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan. 3.11 Intellectual Property. Borrower and each of its Subsidiaries owns, is licensed to use or otherwise has the right to use, all patents, trademarks, trade names, copyrights, technology, know-how and processes used in or necessary for the conduct of its business as currently conducted that are material to the financial condition, business or operations of Borrower or its Subsidiaries. 3.12 Broker's Fees. No broker's or finder's fee or commission will be payable with respect to the issuance of the Note or any of the other transactions contemplated hereby. 3.13 Environmental Compliance. Each of Borrower and its Subsidiaries has been and is currently in material compliance with all applicable Environmental Laws, including obtaining and maintaining in effect all permits, licenses or other authorizations required by applicable Environmental Laws. There are no claims, liabilities, investigations, litigation, administrative proceedings, whether pending or, to the best knowledge of Borrower, after due inquiry, threatened, or judgments or orders relating to any Hazardous Materials asserted or threatened against any of Borrower and its Subsidiaries or relating to any real property currently or formerly owned, leased or operated by any of Borrower and its Subsidiaries. 3.14 Solvency. As of and from and after the date of this Agreement, Borrower: (a) owns and will own assets the fair saleable value of which are (i) greater than the total amount of liabilities (including contingent liabilities) of Borrower and (ii) greater than the amount that will be required to pay the liabilities of Borrower as they mature; (b) has capital that is not unreasonably small in relation to its business as presently conducted or as contemplated; and (c) does not intend to incur and does not believe that it will incur debts beyond its ability to pay such debts as they become due. 3.15 Disclosure. No representation or warranty of Borrower or any of its Subsidiaries contained in this Agreement, the financial statements, the other Loan Documents, or any other document, certificate or written statement furnished to Lender by or on behalf of any such Person for use in connection with the Loan Documents contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the -12- 13 circumstances in which the same were made. There is no fact known to Borrower that has had or will have a Material Adverse Effect and that has not been disclosed herein or in such other documents, certificates and statements furnished to Lender for use in connection with the transactions contemplated hereby. 3.16 Insurance. Borrower and its Subsidiaries maintain adequate insurance policies for public liability and property damage for their business and properties, no notice of cancellation has been received with respect to such policies and Borrower and its Subsidiaries are in compliance with all conditions contained in such policies. 3.17 Compliance with Laws. Borrower and each of its Subsidiaries are not in violation of any law, ordinance, rule, regulation, order, policy, guideline or other requirement of any domestic or foreign government or any instrumentality or agency thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties, including, without limitation, any violation relating to any use, release, storage, transport or disposal of any Hazardous Material, which violation would subject Borrower or any such Subsidiary, or any of their respective officers to criminal liability or have a Material Adverse Effect and no such violation has been alleged. SECTION 4 AFFIRMATIVE COVENANTS Borrower covenants and agrees that, until payment in full of all Obligations, unless Lender shall otherwise give its prior written consent, Borrower shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 4 applicable to such Person. 4.1 Financial Statements and Other Reports. Borrower will maintain, and cause each of its Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. Borrower will deliver to Lender the financial statements and other reports described below. Borrower will deliver with each of the financials set forth in Sections 4.1(A), (B) and (C) a computation reflecting its compliance or non-compliance with Sections 5.1 and 5.2, and with each delivery of the financials set forth in Section 4.1(C) and upon the reasonable request of Lender, a confirmation of such computation by Borrower's independent certified public accountants. (A) Monthly Financials. As soon as available and in any event within thirty-five (35) days after the end of each month, Borrower will deliver the consolidated balance sheet of Borrower as at the end of such month and the related consolidated statements of income, stockholders' equity and cash flow for such month and for the period from the beginning of the then current Fiscal Year to the end of such month. (B) Quarterly Financials. As soon as available and in any event within forty-five (45) days after the end of each quarter of a Fiscal Year, Borrower will deliver the consolidated balance sheet of Borrower as at the end of such period and the related -13- 14 consolidated statements of income, stockholders' equity and cash flow for such quarter of a Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such quarter of a Fiscal Year. (C) Year-End Financials. As soon as available and in any event within ninety (90) days after the end of each Fiscal Year, Borrower will deliver the consolidated balance sheet of Borrower as at the end of such Fiscal Year and the related consolidated statements of income, stockholders' equity and cash flow for such Fiscal Year, together with a report with respect to such financial statements from a firm of independent certified public accountants selected by Borrower, which report shall be unqualified as to going concern and scope of audit of Borrower and its Subsidiaries and shall state that (1) such consolidated financial statements present fairly the consolidated financial position of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years and (2) that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards. (D) Securities Reports. Promptly upon their becoming available, copies of all registration statements (in the form in which declared effective) and reports and other documents which Borrower shall have filed pursuant to the Securities Act or the Securities Exchange Act. (E) Company Information. Promptly upon the mailing thereof to the shareholders of Borrower, copies of all financial statements, reports, proxy statements and other documents which Borrower shall have mailed to shareholders, and promptly upon the issuance thereof by Borrower, copies of all press releases which Borrower shall have issued. (F) Accountants' Reports. Promptly upon receipt thereof, Borrower will deliver copies of all significant reports submitted to Borrower by independent public accountants in connection with each annual, interim or special audit of the financial statements of Borrower made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit. (G) Lawsuits and Government Notices. Borrower will deliver to Lender promptly after receipt copies of all lawsuits filed by or against Borrower or any of its Subsidiaries and all notices, requests, subpoenas, inquiries or other writings received from any governmental agency concerning any Employee Benefit Plan, the violation or alleged violation of any Environmental Laws, the storage, use or disposal of any Hazardous Material or Borrower's payment or non-payment of any taxes including any tax audit. (H) Events of Default, etc. Promptly upon any officer of Borrower obtaining knowledge of any of the following events or conditions, Borrower shall deliver a certificate of Borrower's chief executive officer specifying the nature and period of existence of such condition or event and what action Borrower has taken, is taking and proposes to take with respect thereto: (1) any condition or event that constitutes an Event of Default or Default; -14- 15 (2) any notice of default that any Person has given to Borrower or any of its Subsidiaries or any other action taken with respect to a claimed default; or (3) any Material Adverse Effect. (I) [LEFT BLANK INTENTIONALLY] (J) Locations. Borrower will give Lender at least thirty (30) days' advance written notice of any change in Borrower's or any of its Subsidiaries' principal place of business or any change in the location of its books and records or of any new location for its books and records. (K) Other Information. With reasonable promptness, Borrower will deliver such other information and data with respect to any Loan Party as Lender may reasonably request from time to time. 4.2 Access to Accountants. Borrower authorizes Lender to discuss the financial condition and financial statements of Borrower and its Subsidiaries with Borrower's independent public accountants upon reasonable notice to Borrower of its intention to do so. 4.3 Inspection. Borrower shall permit Lender and any authorized representatives designated by Lender to visit and inspect any of the properties of Borrower or any of its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances and business with its and their officers and independent public accountants, at such reasonable times during normal business hours and as often as may be reasonably requested. 4.4 Corporate Existence. Borrower will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its corporate existence and all rights and franchises material to its business. Borrower will promptly notify Lender of any change in its corporate structure. 4.5 Payment of Taxes. Borrower will, and will cause each of its Subsidiaries to, pay all taxes, assessments and other governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon; provided that no such tax need be paid if Borrower or one of its Subsidiaries is contesting same in good faith by appropriate proceedings promptly instituted and diligently conducted and if Borrower or such Subsidiary has established appropriate reserves as shall be required in conformity with GAAP. 4.6 Maintenance of Properties; Insurance. Borrower will maintain or cause to be maintained in good repair, working order and condition all material properties used in the business of Borrower and its Subsidiaries and will make or cause to be made all appropriate repairs, renewals and replacements thereof. Borrower will maintain or cause to be maintained, with financially sound and reputable insurers, public liability and property damage insurance with respect to its business and properties and the business and properties of its Subsidiaries against loss or damage of the kinds customarily carried or maintained by -15- 16 corporations of established reputation engaged in similar businesses and in amounts acceptable to Lender. 4.7 Compliance with Laws. Borrower will comply with and will cause each of its Subsidiaries to comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority as now in effect and which may be imposed in the future in all jurisdictions in which Borrower or its Subsidiaries are now doing business or may hereafter be doing business, other than those laws the noncompliance with which would not have a Material Adverse Effect. 4.8 Further Assurances. Borrower shall and shall cause each of its Subsidiaries to, from time to time, execute such reports and other documents or deliver to Lender such instruments, certificates of title or other documents as Lender at any time may reasonably request to evidence, perfect or otherwise implement the Obligations provided for in the Loan Documents. SECTION 5 FINANCIAL COVENANTS Borrower covenants and agrees that, until payment in full of all Obligations, Borrower shall comply with, and shall cause each of its Subsidiaries to comply with, all covenants in this Section 5 applicable to such Person. 5.1 Tangible Net Worth. Borrower shall at all times maintain Tangible Net Worth of at least $27,000,000.00. 5.2 Ratio of Indebtedness to Tangible Net Worth. The ratio of (a) Borrower's Indebtedness, on a consolidated basis, to (b) Borrower's Tangible Net Worth, shall at no time be greater than 2.0:1.0. SECTION 6 NEGATIVE COVENANTS Borrower covenants and agrees that, until payment in full of all Obligations, Borrower shall comply with, and shall cause each of its Subsidiaries to comply with, all covenants in this Section 6 applicable to such Person. 6.1 Indebtedness and Liabilities. Borrower will not and will not permit any of its Subsidiaries directly or indirectly to create, incur, assume, guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness except: (a) the Obligations; (b) intercompany Indebtedness among Borrower and its Subsidiaries; provided that such Indebtedness is subordinated in right of payment to the Obligations; (c) Indebtedness incurred to finance the cost of acquisition, construction or improvement of property owned or acquired by, or working capital for, Borrower or its Subsidiaries; (d) Indebtedness secured by Liens identified on Schedule 1.1(B) or replacement indebtedness -16- 17 in like amount and (e) other Indebtedness in an aggregate amount not in excess of $5,000,000. Except for Indebtedness described in the preceding sentence, Borrower will not incur and will not permit any of its Subsidiaries to incur any Liabilities except for trade payables and normal accruals in the ordinary course of business not yet due and payable or with respect to which Borrower or any of its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings and then only to the extent that Borrower or any of its Subsidiaries has established adequate reserves therefor, if appropriate under GAAP. 6.2 Guaranties. Except for guaranties of Indebtedness secured by Permitted Encumbrances, guaranties by Borrower and its Subsidiaries of indebtedness of each other permitted by this Agreement, endorsements of instruments or items of payment for collection in the ordinary course of business, Borrower shall not and shall not permit any of its Subsidiaries to guaranty, endorse, or otherwise in any way become or be responsible for any obligations of any other Person, whether directly or indirectly by agreement to purchase the indebtedness of any other Person or through the purchase of goods, supplies or services, or maintenance of working capital or other balance sheet covenants or conditions, or by way of stock purchase, capital contribution, advance or loan for the purpose of paying or discharging any indebtedness or obligation of such other Person or otherwise. 6.3 Liens. Except for Permitted Encumbrances, Borrower will not, and will not permit any of its Subsidiaries directly or indirectly, to create, incur, assume or permit to exist any Lien on or with respect to any of its assets or properties or any income or profits therefrom. 6.4 Investments and Loans. Borrower shall not and shall not permit any of its Subsidiaries to make or permit to exist investments in or loans to any other Person, except: (a) investments in short-term direct obligations of the United States or Canadian governments; (b) time deposits maturing within one year from the date of creation thereof with, including certificates of deposit issued by, any bank or trust company which is organized under the laws of the United States or any state thereof or Canada and has capital, surplus and undivided profits aggregating at least $250,000,000; (c) investments in commercial paper rated at least A-2 by Standard & Poor's Corporation or at least P-2 by Moody's Investors Service, Inc.; and (d) loans and advances to employees for moving, entertainment, travel, purchases of stock in Borrower and other similar expenses in the ordinary course of business. 6.5 Restricted Junior Payments. Except for repayments of Indebtedness permitted under Section 6.1, Borrower will not and will not permit any of its Subsidiaries to directly or indirectly declare, order, pay, make or set apart any sum for (a) any dividend or other distribution on account of any capital stock of Borrower or any of its Subsidiaries now or hereafter outstanding, except stock dividends; (b) any redemption, conversion, exchange, retirement, sinking fund or other purchase of any capital stock of Borrower or any of its Subsidiaries now or hereafter outstanding (other than repurchases of capital stock owned by employees following termination of employment); and (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire -17- 18 capital stock of Borrower or any of its Subsidiaries now or hereafter outstanding (other than repurchases of outstanding warrants, options or other rights to acquire capital stock of Borrower. 6.6 Restriction on Fundamental Changes. Neither Borrower nor any of its Subsidiaries will: (a) enter into any transaction of merger, consolidation or other reorganization having a similar result or effect; (b) liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its business or assets, or the capital stock of any of its Subsidiaries, whether now owned or hereafter acquired; or (d) acquire by purchase or otherwise all or any substantial part of the business or assets of, or stock or other evidence of beneficial ownership of, any Person; provided that the foregoing restrictions shall not apply to any merger of a Subsidiary with and into Borrower or to a merger in which Borrower is the surviving corporation or the purchase of all or any substantial part of the business or assets of, or stock or other evidence of beneficial ownership of any Person, provided that upon consummation of such merger or purchase no Default or Event of Default shall have occurred and be continuing or would occur after giving effect to such merger or purchase. 6.7 Transactions with Affiliates. Borrower will not, and will not permit any Loan Party to, enter into any transaction with an Affiliate including the purchase, sale or exchange of property or the rendering of any service to any Affiliate except in the ordinary course of and pursuant to the reasonable requirements of Borrower's business and upon fair and reasonable terms no less favorable to Borrower than it would obtain in a comparable arm's length transaction with an unaffiliated Person. 6.8 Environmental Liabilities. Borrower will not and will not permit any Loan Party to: (a) violate any applicable Environmental Law; (b) dispose of any Hazardous Materials (except in accordance with applicable law) into or onto or from, any real property owned, leased or operated by any Loan Party; or (c) permit any Lien imposed pursuant to any Environmental Law to be imposed or to remain on any real property owned, leased or operated by any Loan Party. 6.9 Compliance with ERISA. Borrower will not and will not permit any of its Subsidiaries to establish any new Employee Benefit Plan or amend any existing Employee Benefit Plan if the liability or increased liability resulting from such establishment or amendment would have a Material Adverse Effect. Neither Borrower nor any Subsidiary shall fail to establish, maintain and operate each Employee Benefit Plan in compliance in all material respects with the provisions of ERISA, the IRC and all other applicable laws and the regulations and interpretations thereof. -18- 19 SECTION 7 DEFAULT, RIGHTS AND REMEDIES 7.1 Event of Default. "Event of Default" shall mean the occurrence or existence of any one or more of the following: (A) Payment. (1) Failure of Borrower to make payment of any of the Obligations when due, or (2) failure of Borrower or any of its Subsidiaries to pay when due any principal or interest on any Indebtedness other than the Obligations, or (3) any other breach or default of Borrower or any of its Subsidiaries with respect to any Indebtedness if in the case of (2) or (3) such failure to pay, breach or default has resulted in the holder causing such Indebtedness having an individual principal amount in excess of $200,000 or having an aggregate principal amount in excess of $700,000 to become or be declared due prior to its stated maturity; or (B) Breach of Warranty. Any material representation, warranty, certification or other statement made by Borrower or any other Loan Party in any Loan Document or in any statement or certificate at any time given by such Person in writing pursuant or in connection with any Loan Document is false in any material respect on the date made; or (C) Breach of Certain Provisions. Failure of Borrower to perform or comply with any term or condition contained in Section 5 or Section 6 other than Sections 6.3, 6.8 or 6.9; or (D) Other Defaults Under Loan Documents. Borrower or any other Loan Party defaults in the performance of or compliance with any term contained in this Agreement or the other Loan Documents and such default is not remedied or waived within ten (10) days after receipt by Borrower of notice from Lender of such default (other than occurrences described in other provisions of this Section 7.1 for which a different grace or cure period is specified or which constitute immediate Events of Default); or (E) Default in Other Agreements. Breach of Borrower or any Subsidiary of any of the representations, warranties, covenants or agreements contained in any other agreement or instrument between Borrower or any Subsidiary on the one hand and Lender on the other hand, including without limitation the Tax Ruling Agreement. (F) Bankruptcy, etc. (1) Commencement by or against Borrower or any of its Subsidiaries of any bankruptcy proceeding, insolvency arrangement, or similar proceeding and in the case of any such proceeding instituted against Borrower or any of its Subsidiaries (but not instituted by it) such proceeding shall remain undismissed or unstayed for a period of thirty (30) days, or (2) Borrower or any of its Subsidiaries suspends or discontinues its business, or (3) the appointment of a receiver or trustee of any kind for Borrower or any of its Subsidiaries or for any property of Borrower or any of its Subsidiaries, or (4) if Borrower or any of its Subsidiaries calls, or has called by a third party, a general meeting of creditors; or -19- 20 (G) [LEFT BLANK INTENTIONALLY] (H) Judgment and Attachments. Any money judgment, writ or warrant of attachment, or similar process involving (1) an amount in any individual case in excess of $200,000 or (2) an amount in the aggregate at any time in excess of $700,000 (in either case not adequately covered by insurance as to which the insurance company has acknowledged coverage) is entered or filed against Borrower or any of its Subsidiaries or any of their respective assets and remains undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (I) Dissolution. Any order, judgment or decree is entered against Borrower or any of its Subsidiaries decreeing the dissolution or split up of Borrower or such Subsidiary and such order remains undischarged or unstayed for a period in excess of twenty (20) days; or (J) Solvency. Borrower or any of its Subsidiaries ceases to be solvent or admits in writing its present or prospective inability to pay its debts as they become due; or (K) Injunction. Borrower or any of its Subsidiaries is enjoined, restrained or in any way prevented by the order of any court or any administrative or regulatory agency from conducting all or any material part of its business and such order continues for more than thirty (30) days; or (L) Invalidity of Loan Documents. Any of the Loan Documents for any reason, other than a partial or full release in accordance with the terms thereof, ceases to be in full force and effect or is declared to be null and void, or any Loan Party denies that it has any further liability under any Loan Documents to which it is party, or gives notice to such effect. 7.2 Acceleration. Upon the occurrence of any Event of Default described in the foregoing Section 7.1(F)(1), all Obligations shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by Borrower. Upon the occurrence and during the continuance of any other Event of Default, Lender may, by written notice to Borrower, declare all or any portion of the Obligations to be, and the same shall forthwith become, immediately due and payable. 7.3 Remedies. All rights and remedies under the Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. SECTION 8 MISCELLANEOUS 8.1 Assignments. Lender may assign its rights and delegate its obligations under this Agreement and may assign all or any part of the Loan, the Note and this Agreement (a) to an Affiliate, (b) to a purchaser of all or substantially all of the business of Lender, regardless -20- 21 of the form of the transaction, (c) to a commercial bank or other financial institution, or (d) to any other Person with the consent of Borrower (such consent not to be unreasonably withheld). In the case of an assignment authorized under this Section 8.1, the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as it would if it were a Lender hereunder. Borrower hereby acknowledges and agrees that any assignment will give rise to a direct obligation of Borrower to the assignee and that the assignee shall be considered to be a "Lender". Lender may furnish any information concerning Borrower and its Subsidiaries in its possession from time to time to assignees and participants (including prospective assignees and participants) meeting the criteria specified in (a) through (d); provided that each recipient of such information agrees prior to receipt of such information, in a writing addressed to Borrower and Lender, not to disclose such information to any other Person. 8.2 Set Off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default, Lender and each holder of the Note is hereby authorized by Borrower at any time or from time to time, without notice to Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all balances held by it at any of its offices for the account of Borrower or any of its Subsidiaries (regardless of whether such balances are then due to Borrower or its Subsidiaries) and any other property at any time held or owing by Lender or that holder to or for the credit or for the account of Borrower against and on account of any of the Obligations which are not paid when due. 8.3 Expenses and Attorneys' Fees. Borrower agrees to promptly pay all fees, costs and expenses incurred by Lender in connection with any matters contemplated by or arising out of this Agreement or the other Loan Documents including the following, and all such fees, costs and expenses shall be part of the Obligations, payable on demand: (a) fees, costs and expenses (including attorneys' fees, allocated costs of internal counsel and fees of environmental consultants, accountants and other professionals retained by Lender) incurred in connection with the review, negotiation, preparation, documentation, execution and administration of any amendments, waivers, consents, forbearances and other modifications relating to the Loan Documents and the Loan or any subordination or intercreditor agreements; and (b) fees, costs, expenses (including attorneys' fees and allocated costs of internal counsel) and costs of settlement incurred in any action to enforce this Agreement or the other Loan Documents or to collect any payments due from Borrower or any other Loan Party under this Agreement or any other Loan Document or incurred in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement, whether in the nature of a "workout" or in connection with any insolvency or bankruptcy proceedings or otherwise. 8.4 Indemnity. In addition to the payment of expenses pursuant to Section 8.3, whether or not the transactions contemplated hereby shall be consummated, Borrower agrees to indemnify, pay and hold Lender and any holder of the Note, and the officers, directors, employees, agents, affiliates and attorneys of Lender and such holders (collectively called the -21- 22 "Indemnitees") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the fees and disbursements of counsel for such Indemnities in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not such Indemnitee shall be designated a party thereto) that may be imposed on, incurred by, or asserted against that Indemnitee by any person not a party to this Agreement, in any manner relating to or arising out of this Agreement or the other Loan Documents, the consummation of the transactions contemplated by this Agreement, the exercise of any right or remedy hereunder or under the other Loan Documents (the "Indemnified Liabilities"); provided that Borrower shall have no obligation to an Indemnitee hereunder with respect to Indemnified Liabilities resulting from the gross negligence or willful misconduct of or material breach of this Agreement by that Indemnitee as determined by a court of competent jurisdiction. 8.5 Amendments and Waivers. This Agreement together with the other Loan Documents constitutes the entire agreement between Lender and Borrower with respect to the subject matter thereof, and no amendment, modification, termination or waiver of any provision of this Agreement or of the other Loan Documents, or consent to any departure by Borrower therefrom, shall be effective unless the same shall be in writing and signed by Lender and Borrower. Each amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose for which it was given. 8.6 Notices. Unless otherwise specifically provided herein, all notices shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied or sent by overnight courier service or United States mail and shall be deemed to have been given: (a) if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if transmitted on a Business Day before 4:00 p.m. (central time) or, if not, on the next succeeding Business Day; (c) if delivered by overnight courier, two days after delivery to such courier properly addressed; or (d) if by U.S. Mail, four Business Days after depositing in the United States mail, with postage prepaid and properly addressed. If to Borrower: FirstMiss Gold Inc. 5460 S. Quebec Street Suite 240 Englewood, Colorado 80111 Attn: President Telephone No.: (303) 771-9000 Telecopy No.: (303) 771-1075 With a copy to: Latham & Watkins 505 Montgomery Street, 19th Floor San Francisco, California 94111-2586 Attn: Christopher L. Kaufman -22- 23 Telephone No.: (415) 395-8030 Telecopy No.: (415) 395-8095 If to Lender: First Mississippi Corporation 700 North Street Jackson, Mississippi 39202-3095 Attn: President Telephone No.: (601) 948-7550 Telecopy No.: (601) 949-0292 With a copy to: First Mississippi Corporation 700 North Street Jackson, Mississippi 39202-3095 Attn: General Counsel Telephone No.: (601) 948-7550 Telecopy No.: (601) 949-0292 or to such other address as the party addressed shall have previously designated by written notice to the serving party, given in accordance with this Section 8.6. 8.7 Survival of Warranties and Certain Agreements. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of Borrower set forth in Sections 8.3 and 8.4 shall survive the payment of the Loan and the termination of this Agreement. 8.8 Indulgence Not Waiver. No failure or delay on the part of Lender or any holder of the Note in the exercise of any power, right or privilege hereunder or under the Note shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 8.9 Marshaling; Payments Set Aside. Lender shall not be under any obligation to marshal any assets in favor of any Loan Party or any other party or against or in payment of any or all of the Obligations. To the extent that any Loan Party makes a payment or payments to Lender or Lender exercises its rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the Obligations or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred. -23- 24 8.10 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. 8.11 Severability. The invalidity, illegality or unenforceability in any jurisdiction of any provision in or obligation under this Agreement or the other Loan Documents shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Agreement, or the other Loan Documents or of such provision or obligation in any other jurisdiction. 8.12 Headings. Headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 8.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 8.14 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns except that Borrower may not assign its rights or obligations hereunder without the written consent of Lender. 8.15 No Fiduciary Relationship. No provision in this Agreement or in any of the other Loan Documents and no course of dealing between the parties shall be deemed to create any fiduciary duty by Lender to Borrower. 8.16 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW CASTLE, DELAWARE AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTE, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS. 8.17 WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTE OR THE OTHER -24- 25 LOAN DOCUMENTS. BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. Witness the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above. FIRST MISSISSIPPI CORPORATION FIRSTMISS GOLD INC. By: By: ------------------------------- ---------------------------------- Title: Title: ---------------------------- ------------------------------- -25- 26 SCHEDULES 1.1(B) Permitted Encumbrances 3.4 Indebtedness and Liabilities EXHIBIT Exhibit A Form of Term Note -26- 27 EXHIBIT A TERM NOTE $__________________ ________________, 1995 FOR VALUE RECEIVED, the undersigned, FIRSTMISS GOLD, INC., a Nevada corporation (the "Borrower"), hereby promises to pay to the order of FIRST MISSISSIPPI CORPORATION, a Mississippi corporation (the "Lender"), at the Lender's office located at 700 North Street, Jackson, Mississippi 39202-3095, or at such other place as the holder of this Note may from time to time designate in writing, in lawful money of the United States of America and in immediately available funds, the principal sum of _______________ DOLLARS ($______________), payable as set forth in that certain Loan Agreement of even date herewith, between the Borrower and the Lender (the "Loan Agreement"; capitalized terms used herein and not otherwise specifically defined herein shall have the meanings assigned to them in the Loan Agreement). This Note is the Term Note referred to in Section 2.1(B) of the Loan Agreement and is issued to evidence a term loan made to the Borrower by the Lender pursuant to the Loan Agreement, to which reference is hereby made for a statement of the terms, conditions and covenants under which the loan evidenced hereby was made and is to be repaid, including, but not limited to, those related to acceleration of the indebtedness represented hereby upon the occurrence of an Event of Default pursuant to the Loan Agreement. The Borrower promises to pay interest on the outstanding unpaid principal amount hereof at the rates and on the dates set forth in the Loan Agreement. Interest shall be computed on the daily principal balance on the basis of a 360- day year for the actual number of days elapsed in the period during which it accrues, or if interest hereunder is accruing at the Prime Rate, a 365-day year for the actual number of days elapsed in the period during which it accrues. In no contingency or event whatsoever shall the compensation payable to the Lender by the Borrower hereunder or under the Loan Agreement, however characterized or computed, exceed the highest rate permissible under any law to which such compensation is subject. In the event that a court of competent jurisdiction shall in a final judgment determine that the Lender has received compensation hereunder or thereunder in excess of the highest rate applicable hereto or thereto, the provisions of the Loan Agreement relating thereto shall control. A-1 28 The Borrower hereby waives demand, presentment, protest, notice of demand, dishonor, presentment, protest, nonpayment and all other notices in connection with this Note. If this Note is collected by or through an attorney-at-law, all costs of collection, including attorneys' fees, shall be payable by the undersigned, as more particularly described in the Loan Agreement. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. Whenever in this Note reference is made to the Lender or the Borrower, such reference shall be deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Note shall be binding upon and shall inure to the benefit of such successors and assigns. The Borrower's successors and assigns shall include, without limitation, a receiver, trustee or debtor in possession of or for the Borrower. WITNESS the hand and seal of the undersigned, as of the date first above written. FIRSTMISS GOLD INC. By: ---------------------------------- Title: ------------------------------- Attest: ------------------------------ Title: ------------------------------- [CORPORATE SEAL] A-2 EX-10.D 5 AMENDED TAX SHARING AGREEMENT 1 AMENDED TAX SHARING AGREEMENT THIS AMENDED TAX SHARING AGREEMENT (the "Amended Agreement") is made this 24th day of September, 1995 between First Mississippi Corporation, a Mississippi corporation ("FMC"), FirstMiss Gold Inc., a Nevada corporation ("FirstMiss Gold"), and FMG Inc., a Nevada corporation ("FMG"); WHEREAS, FirstMiss Gold is a subsidiary of FMC and FMG is a subsidiary of Gold (FirstMiss Gold and FMG are hereinafter referred to collectively as "Gold"); WHEREAS, FMC is the common parent of an affiliated group of corporations (the "Affiliated Group") which files consolidated tax returns; WHEREAS, FMC and Gold are parties to a Tax Sharing Agreement (the "Tax Sharing Agreement") dated as of October 1, 1987; WHEREAS, FMC wishes to spin off to the shareholders of FMC the stock of Gold owned by FMC (the "Spin-Off); and WHEREAS, in connection with the Spin-Off, FMC and Gold wish to amend the Tax Sharing Agreement so as fix the respective rights and obligations of the parties under said agreement following the Spin-Off; NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. TERMINATION OF TAX SHARING AGREEMENT. The Tax Sharing Agreement shall terminate on the date of the Spin-Off and the parties shall thereafter have no 2 obligations to each other thereunder, except as specifically provided in this Amended Agreement. 2. SETTLEMENT OF OBLIGATIONS. (a) In complete satisfaction of any existing obligation of FMC under the Tax Sharing Agreement to make payment to Gold for the use of any deduction, credit or allowance of Gold by the Affiliated Group, FMC shall pay Gold the Settlement Amount, as hereinafter defined, pursuant to the provisions of subsection 2(c) below. (b) For purposes of this Amended Agreement, the "Settlement Amount" shall mean that amount which is equal to (i) the present value, as of the date of the Spin-Off, of the right to receive payment of the amount of "Gold Tax Benefits," as hereinafter defined, in twenty (20) equal quarterly installments beginning on September 30, 1998, computed using a discount rate of 6.5 percent, less (ii) the aggregate amount of any advances in excess of $5,000,000 made by FMC to Gold between August 22, 1995 and the date of the Spin-Off. The amount of "Gold Tax Benefits" shall be that amount which is equal to the difference between (x) the sum of the alternative minimum tax credit carryovers and the tax benefit of the net operating loss carryovers which Gold would have been entitled to as of the date of the Spin-Off if Gold had filed a separate consolidated return during the entire time that Gold was a member of the Affiliated Group and (y) the amount of the alternative minimum tax credit carryovers which will be allocated to Gold as of the date of the Spin-Off pursuant to the consolidated return regulations. The tax benefit of the net operating loss carryovers, referred to in Section 2(b)(x) above, shall be computed using a 34% tax rate for periods ending before July 1, 1993, and a 35% tax rate for periods ending after June 30, 1993, based on the taxable year in which Gold would have incurred the loss. -2- 3 (c) The Settlement Amount shall be paid by FMC to Gold as follows: (i) if between the date of the Spin- Off and the earlier of the date of the public equity offering of common stock (the "Offering") Gold plans to effect, or April 28, 1997, Gold requires funds, in addition to those available to it under its credit facility with Toronto Dominion Bank, Gold may request, as funds are necessary for mine development, operations and working capital, payment from FMC of amounts which do not exceed, in the aggregate, the Settlement Amount, and FMC shall pay Gold such amounts; and (ii) if on the earlier of the date of the Offering or April 28, 1997, FMC has paid Gold, pursuant to section (2)(c)(i) above, an aggregate amount of less than the Settlement Amount, the excess of the Settlement Amount over the amounts previously paid by FMC pursuant to section 2(c)(i) above shall be paid by FMC on such date in the form of a reduction in the balance of the loan from FMC to Gold outstanding on such date. (d) Any reduction in the balance of the loan from FMC to Gold which is made pursuant to section 2(c)(ii) above shall not satisfy or otherwise affect the obligation of Gold, set forth in Section 2.3(B)(1) of the Loan Agreement between FMC and Gold of even date herewith, to make a mandatory $15,000,000 prepayment of said loan out of the net proceeds of the Offering. 3. CONTROL OF AUDITS, ETC. (a) In the event that any audit or administrative or judicial proceeding relating to taxes involves an asserted claim which relates solely to Gold (a "Claim"), FMC shall, at Gold's request, attempt to have such Claim severed and considered separately from any other issues involved in such audit or proceeding. If severance of the Claim is accomplished, Gold shall have the right to control the contest of such Claim with its own -3- 4 counsel and at Gold's own expense. FMC shall have the right to participate, at its own expense, in proceedings relating to such Claim, provided that the conduct of such proceedings shall remain within the sole control of Gold. In the event of such severance, Gold shall not settle any Claim in a manner which would have an adverse impact on FMC unless Gold has indemnified FMC against such adverse impact and shall also not settle any Claim without the written consent of FMC, which consent shall not be unreasonably withheld; provided, however, that the consent of FMC to such settlement shall not be required if FMC has failed to provide Gold with information which has been reasonably requested by Gold in connection with the contest of such Claim. (b) In the event that severance of a Claim is not accomplished, then FMC shall permit Gold to attend any proceedings relating to such Claim, and FMC shall take such actions in connection with contesting such Claim as Gold shall reasonably request; provided, however, that the conduct of all such proceedings shall remain within the sole control of FMC and FMC shall have no obligation to take any action in contesting such Claim if such action is inconsistent with some position being taken by FMC or would have a detrimental effect on FMC. Notwithstanding the foregoing, FMC shall not settle any Claim without the written consent of Gold, which consent shall not be unreasonably withheld; provided, however, that the consent of Gold to such settlement shall not be required if Gold has failed to provide FMC with information which has been reasonably requested by FMC in connection with the contest of such Claim. Gold shall execute any power of attorney or other document requested by FMC to enable FMC to exercise control over any such proceedings. -4- 5 (c) FMC and Gold shall promptly notify the other in writing of any issue raised by a taxing authority following the Spin-Off which can reasonably be expected to affect the tax returns of the other party, or which could give rise to an obligation to make a payment to the other party under the terms of section 4(a) or 4(b) of this Amended Tax Sharing Agreement. 4. AUDIT ADJUSTMENTS. (a) If following the Spin-Off any audit adjustment or redetermination attributable to Gold is made with respect to any consolidated or combined tax return which includes Gold and relates to a taxable period prior to the Spin-Off, Gold shall reimburse FMC for any resulting assessments of tax (including interest, penalties and additions to tax) when, and to the extent that, the cumulative amount of such assessments, determined on a consolidated or combined return basis, exceeds $250,000. In the event that any such audit adjustment or redetermination results in a refund or credit which is attributable to Gold, FMC shall pay Gold when, and to the extent that, the cumulative amount of such refunds or credits, determined on a consolidated or combined return basis, received by FMC exceeds $250,000. (b) FMC and Gold shall notify the other party of any audit adjustments which affect the allocation of alternative minimum tax credit carryovers between the parties as of the date of the Spin-Off. In the event the cumulative amount of any such reallocated alternative minimum tax credit carryovers, determined on a consolidated return basis, exceeds $250,000, FMC or Gold shall make payment to the other party to the extent of such excess. -5- 6 (c) FMC shall indemnify Gold against any joint and several liability for taxes (including interest, penalties and additions to tax) which are attributable solely to corporations other than Gold, but are imposed on Gold solely as the result of its inclusion in a consolidated or combined tax return filed by FMC. 5. CARRYBACKS. (a) In the event that Gold incurs a regular or alternative minimum tax net operating loss in a taxable period following the Spin-Off which may be carried back to a taxable year in which Gold was included in the Affiliated Group, then Gold shall make an election under section 172(b)(3) of the Internal Revenue Code of 1986, as amended, (or comparable state law provision) to forego the carryback period for such loss. If Gold shall fail to make such an election, FMC shall have no liability to Gold for any refund received by FMC as a result of the carryback of such loss. (b) In the event that Gold incurs a capital loss or is entitled to a credit in a taxable period following the Spin-Off which may be carried back to a taxable year in which Gold was included in the Affiliated Group, FMC will pay Gold the lesser of (i) the tax benefit which would result to Gold from such carryback if Gold's tax liability were computed on a separate return basis, or (ii) the amount of tax actually refunded to FMC for the taxable year to which such loss or credit is carried. 6. RECORD RETENTION AND ASSISTANCE. FMC and Gold shall, in accordance with their existing record retention policies, retain all records, documents, accounting data and other information (including computer data) which relate to all tax returns filed for periods prior to the Spin-Off. Each party shall provide the other with reasonable access to such records and information. If either party wishes to destroy any such records or -6- 7 information, it shall first give 30 days' prior notice to the other party, which shall have the right at its option to object to such destruction, in which case the party seeking to destroy such records or information shall at its option either continue to retain possession of such records or information or will deliver such records or information the other party. FMC and Gold shall provide each other with such other cooperation and information as either of them may reasonably request of the other in connection with the preparation of tax returns, amended returns, claims for refunds or in connection with any audit or other examination by any authority or any judicial or administrative proceeding relating to taxes. 7. MEDIATION AND ARBITRATION. If a dispute arises between FMC and Gold with respect to this Agreement or the breach thereof, and if such dispute cannot be settled through negotiations, the parties shall first attempt in good faith to settle the dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association. If such dispute cannot be settled by mediation, it shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Regardless of any other choice of law provisions in this Agreement, any arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, as amended from time to time. 8. INTEGRATION; AMENDMENT; WAIVER. This Amended Agreement supersedes the Tax Sharing Agreement and all prior negotiations, agreements and understandings between the parties with respect to the subject matter hereof, constitutes the entire agreement between the parties with respect to the subject matter hereof and may not be altered or amended except in writing signed by the parties. The failure of either party -7- 8 hereto at any time or times to require performance of any provisions of this Amended Agreement shall in no manner affect the right to enforce the same. No waiver by either party hereto of any condition, or of the breach of any provision of this Amended Agreement or the other agreements contemplated hereby, whether by conduct or otherwise, in any one or more instances, shall be deemed or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other provision herein or therein contained. Signed, sealed and delivered on the date first above written. (CORPORATE SEAL) FMC: FIRST MISSISSIPPI CORPORATION ATTEST: By: ---------------------------------- President - ------------------------- Secretary (CORPORATE SEAL) FIRSTMISS GOLD: FIRSTMISS GOLD INC. ATTEST: By: ---------------------------------- President - ------------------------- Secretary -8- 9 (CORPORATE SEAL) FMG: FMG INC. ATTEST: By: ---------------------------------- President - ------------------------- Secretary -9- EX-10.E 6 LOAN AGREEMENT 1 FIRSTMISS GOLD INC. as Borrower - and - THE TORONTO-DOMINION BANK (through its Toronto Dominion Merchant Bank Division) as Lender ________________________________________________________________ LOAN AGREEMENT DATED SEPTEMBER 24, 1995 ________________________________________________________________ TORY TORY DESLAURIERS & BINNINGTON 2 TABLE OF CONTENTS ARTICLE 1. INTERPRETATION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.3. Interest Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.4. Invalidity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.5. Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.6. Governing Law; Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.7. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.8. Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.9. This Agreement to Govern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.10. Generally Accepted Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.11. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.12. Actions on Days Other Than Banking Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.13. Verbal Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE 2. THE LOAN FACILITY 2.1. Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.2. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.3. Evidence of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.4. Term and Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.5. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.6. Payments Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE 3. FEES AND EXPENSES 3.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.2. Drawdown Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.3. Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.4. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ARTICLE 4. CONDITIONS TO ADVANCES 4.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 4.2. Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE 5. ADVANCES 5.1. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 5.2. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3 ii 5.3. Drawdown Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE 6. SECURITY 6.1. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 6.2. Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 6.3. Security Effective Notwithstanding Date of Advance . . . . . . . . . . . . . . . . . . . . . . . . . . 15 6.4. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 6.5. Discharge of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE 7. REPRESENTATIONS AND WARRANTIES 7.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 7.2. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE 8. COVENANTS 8.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 8.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES 9.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 9.2. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 9.3. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE 10. ASSIGNMENT AND PARTICIPATIONS 10.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 10.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 10.3. Exchange of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ARTICLE 11. GENERAL 11.1. Reliance and Non-Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 11.2. Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 11.3. Set-Off or Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 11.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 11.5. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 11.6. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 11.7. Currency Conversion and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 11.8. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4 iii 11.9. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 11.10. Date of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Schedule A - Request for Advance Schedule B - FMG Guarantee Schedule C - FRMG Pledge Agreement Schedule D - Grid Promissory Note Schedule E - Permitted Liens 5 1 THIS AGREEMENT is made as of September 24, 1995 BETWEEN: FIRSTMISS GOLD INC. (the "Borrower") - and - THE TORONTO-DOMINION BANK (through its Toronto Dominion Merchant Bank Division) (the "Lender") RECITALS: A. The Borrower has requested the Lender to provide to it certain financing for the development of the Turquoise Ridge Deposit (as hereinafter defined); and B. The Lender agreed to do so upon the terms and conditions set out herein. NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE 1. INTERPRETATION 1.1.DEFINITIONS For the purposes of this Agreement: "ADVANCE" means a borrowing by the Borrower by way of Loans, and any reference relating to the amount of Advances shall mean the sum of all outstanding Advances; "AGREEMENT" means this agreement and all schedules attached to this agreement, in each case as they may be amended or supplemented from time to time; the expressions "HEREOF", "HEREIN", "HERETO", "HEREUNDER", "HEREBY" and similar expressions refer to this Agreement as a whole and not to any particular article, section, schedule or other portion hereof, and the expression "ARTICLE" and "SECTION" followed by a number or by a number and letter, and "SCHEDULE" followed by a letter, mean and refer to the specified article or section of or schedule to this Agreement, except as otherwise specifically provided herein; "APPLICABLE LAW" means, in respect of any Person, property, transaction or event, all applicable laws, statutes, rules, by-laws and regulations, and all applicable official directives, orders, judgments and decrees of Governmental Bodies; 6 - 2 - "BANKING DAY" means a day on which Canadian charter banks are generally open for business in Toronto, Ontario. "BORROWER" means FirstMiss Gold Inc., its successors and assigns; "BORROWER S COUNSEL" means McCarthy Tetrault or such other counsel as the Borrower may designate; "BRANCH OF ACCOUNT" means the TD main branch located at the Toronto Dominion Centre, 55 King Street West, Toronto, Ontario, or such other branch of TD as the Lender, acting reasonably, may designate in writing to the Borrower; "CASH OPERATING COST" has the meaning attributed to such term in the prefeasibility report prepared by Mineral Resource Development Inc.; "COMMITMENT" means the Lender s covenant to make Advances to the Borrower in a total maximum amount of $20,000,000; "CURRENCY" means U.S. dollars; "DEFAULT" means any event which, with the lapse of time, giving of notice or both, would constitute an Event of Default; "DESIGNATED ACCOUNT" means, in respect of any Advance, the account or accounts maintained by the Borrower at Branch of Account, or such other account or accounts, that the Borrower designates in its Drawdown Notice, acting reasonably; "DRAWDOWN DATE" means any Banking Day on which an Advance is made; "DUE DATE" means October 31, 1996 or such earlier date as the entire balance of the Loan may become due whether by acceleration or otherwise; "ELIGIBLE PARTICIPANT" means an assignee which has been approved by the Borrower, such approval not to be unreasonably withheld; "ENVIRONMENTAL LAWS" means all federal, state, municipal or local laws, regulations or rules relating to generation, operation, manufacture, refining, treatment, transportation, storage, handling, disposal, transfer, production or processing of any material or process including, without limiting the generality of the foregoing, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq.; the Clean Air Act, 42 U.S.C. Section 7401, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 3808, et seq.; Nev. Rev. Stat. ch. 459; Nev. Rev. Stat. ch. 444; Nev. Rev. Stat. ch. 445; Nev. Rev. 7 - 3 - Stat. ch. 590; Nev. Rev. Stat. Section Section 618.750-618.850, inclusive; and Nev. Rev. Stat. Section 477.045; as all of the same may be amended from time to time; "ENVIRONMENTAL PERMITS" means all permits, certificates, approvals, consents, authorizations, registrations and licences issued by any Governmental Body pursuant to Environmental Laws; "EVENT OF DEFAULT" has the meaning attributed to such term in section 9.1; "FMC" means First Mississippi Corporation, the controlling shareholder of the Borrower as at the date of this Agreement; "FMC SUBORDINATION AGREEMENT" means a subordination agreement among FMC, FMG, the Borrower and the Lender, in form satisfactory to the Lender, acting reasonably, whereunder FMC agrees to subordinate and postpone in favour of the Lender any claim or obligation owed by the Borrower to FMC; "FMG" means FMG Inc., a wholly-owned subsidiary of the Borrower; "FMG GUARANTEE" means a guarantee, in form of Schedule B to this Agreement to the Lender by FMG in favour of the Lender of the Obligations hereunder; "FRMG PLEDGE AGREEMENT" means a pledge agreement, in form of Schedule C to this Agreement to the Lender between the Borrower and the Lender whereunder the Pledged Shares are pledged to secure the Borrower s Obligations hereunder; "GOVERNMENTAL BODY" means any government, parliament, legislature, or any regulatory authority, agency, commission or board of any government, parliament or legislature, or any court or (without limitation to the foregoing) any other law, regulation or rule-making entity (including, without limitation, any central bank, fiscal or monetary authority or authority regulating banks), having or purporting to have jurisdiction in the relevant circumstances, or any Person acting or purporting to act under the authority of any of the foregoing; "GRID PROMISSORY NOTE" means a grid promissory note in the form of Schedule D to this Agreement; "INDEBTEDNESS" means with respect to any Person, all indebtedness, obligations, and liabilities of such Person, including without limitation: (i) all "liabilities" which would be reflected on the balance sheet of such Person, prepared in accordance with generally accepted accounting principles, (ii) all obligations of such Person in respect of any guarantee, (iii) all obligations of such Person in respect of any capital lease, (iv) all obligations, indebtedness and liabilities secured by any lien or any security interest on any property or assets of such Person, and (v) all redeemable preferred stock of such Person valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; "LENDER" means The Toronto-Dominion Bank through its Merchant Bank Division; 8 - 4 - "LENDER S COUNSEL" means Tory Tory DesLauriers & Binnington or such other counsel as the Lender may designate; "LIBOR RATE" means either: (a) the rate that appears on the Telerate Page 3750 (or any successor source from time to time) as of 11:00 a.m. (London time) each Business Day expressed as a percentage per annum on the basis of a 360 day year for deposits in U.S. dollars in the London interbank market for a 30 day period, or, (b) if no such rate appears as contemplated in item (a) above, the interest rate expressed as a percentage per annum on the basis of a 360 day year at which deposits in U.S. dollars are offered to the principal office of TD in London, England in the London interbank market at 11:00 a.m. London time for a 30 day period and in an amount approximately equal to the amount of the Advance; "LIEN" means any mortgage, lien, pledge, assignment, charge, security interest, lease intended as security, title retention agreement, rights reserved in any Governmental Body, lease of real property, hypothec, levy, execution, seizure, attachment, garnishment or other similar encumbrance; "LOAN" means, at any time, the principal amount of all Obligations then outstanding under the Loan Facility; "LOAN DOCUMENTS" means this Agreement, the FRMG Pledge Agreement, the FMC Subordination Agreement, the FMG Guarantee and any other agreement as the Lender and the Borrower may agree is a Loan Document; "LOAN FACILITY" means the loan facility of $20,000,000 in favour of the Borrower which is established by this Agreement; "MATERIAL AUTHORIZATION" means, with respect to any Person, at any point in time any approval, permit, licence or similar authorization (including any trademark, trade name or patent) from, and any filing or registration with, any Governmental Body or any other Person required by such Person to own its property and assets or to carry on its business as carried on by it at such time or as contemplated hereunder to be carried on by it at such time in each jurisdiction in which it does so or is contemplated to do so or where the failure to have such approval, permit, licence, authorization, filing or registration would have a material adverse effect upon its business, financial condition or prospects or upon its ability to perform its obligations under any Loan Document to which it is a party; "NET PROCEEDS" means in connection with any financing or the issuance of any securities by the Borrower, the amount or proceeds received by the Borrower less any out-of-pocket fees and expenses paid to third parties incurred in connection with such financing or issuance of securities; 9 - 5 - "OBLIGATIONS" means all indebtedness, liabilities and other obligations of the Borrower to the Lender under or in connection with this Agreement or any other document delivered pursuant hereto, including all Advances, whether actual or contingent, direct or indirect, matured or not, now existing or arising hereafter; "OFFICERS CERTIFICATE" means a certificate signed by the Chief Executive Officer and the Chief Financial Officer of the Borrower; "PARTICIPATION RIGHT" has the meaning attributed to such term in section 3.3; "PERMITTED LIENS" has the meaning set out in Schedule E; "PERSON" means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative or Governmental Body; "PLEDGED SHARES" means all of the issued and outstanding shares of FMG; "PROBABLE RESERVES" has the meaning attributed to such term in the prefeasibility report prepared by Mineral Resource Development Inc.; "REQUEST FOR ADVANCE" means a notice in the form of Schedule A to this Agreement; "SECURITY" means the security held from time to time by the Lender securing or intended to secure repayment of the Obligations, including without limitation the security described in section 6.1; "SUBSIDIARY" means FMG and any other subsidiary of the Borrower that may exist from time to time; "TAXES" means all taxes of any kind or nature whatsoever including, without limitation, income taxes, sales or value - added taxes, levies, stamp taxes, royalties, duties, and all fees, deductions, compulsory loans and withholdings imposed, levied, collected, withheld or assessed as of the date hereof or at any time in the future, by any Governmental Body of or within Canada or any other jurisdiction whatsoever having power to tax, together with penalties, fines, additions to tax and interest thereon; "TURQUOISE RIDGE DEPOSIT" means the gold deposit owned indirectly by the Borrower and located in the state of Nevada to be described in more detail in the prefeasibility study prepared by Mineral Resource Development Inc.; "U.S. DOLLARS" means lawful money of the United States of America; 10 - 6 - 1.2. GENDER AND NUMBER Words importing the singular include the plural and vice versa and words importing gender include all genders. 1.3. INTEREST ACT For purposes of the Interest Act (Canada), where in any Loan Document a rate of interest is to be calculated on the basis of a year of 360 days, the yearly rate of interest to which the 360 day rate is equivalent is such rate multiplied by the number of days in the year for which such calculation is made and divided by 360. 1.4. INVALIDITY, ETC. Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity, illegality or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision of this Agreement or of any other Loan Document. Without limiting the generality of the foregoing, if any amounts on account of interest or fees or otherwise payable by the Borrower to the Lender hereunder exceed the maximum amount recoverable under Applicable Law, the amounts so payable hereunder shall be reduced to the maximum amount recoverable under Applicable Law. 1.5. HEADINGS, ETC. The division of this Agreement into articles, sections and clauses, the inclusion of a table of contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.6. GOVERNING LAW; ATTORNMENT This Agreement shall be governed by and constituted in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. The Borrower irrevocably submits to the courts of the Province of Ontario in any action or proceeding arising out of or relating to this Loan Agreement or any other Loan Document, and irrevocably agrees that all such actions and proceedings may be heard and determined in such courts, and irrevocably waives, to the fullest extent possible, the defence of an inconvenient forum. The Borrower agrees that a judgment or order in any such action or proceeding may be enforced in other jurisdictions in any manner provided by law; provided, however, that the Lender may serve legal process in any manner permitted by law or may bring an action or proceeding against the Borrower or the property or assets of the Borrower in the courts of any other jurisdiction. 1.7. REFERENCES Except as otherwise specifically provided, reference in this Agreement to any contract, agreement or any other instrument shall be deemed to include references to the same as 11 - 7 - varied, amended, supplemented or replaced from time to time and reference in this Agreement to any enactment, including without limitation, any statute, law, by-law, regulation, ordinance or order, shall be deemed to include references to such enactment as re-enacted, amended or extended from time to time. 1.8. CURRENCY Except as otherwise specifically provided herein, all monetary amounts in this Agreement are stated in U.S. dollars. 1.9. THIS AGREEMENT TO GOVERN If there is any inconsistency between the terms of this Agreement and the terms of any other Loan Document, the provisions hereof shall prevail to the extent of the inconsistency, but the foregoing shall not apply to limit or restrict in any way the rights and remedies of the Lender under the terms of the FRMG Pledge Agreement after the Lien thereby constituted shall have become enforceable. For greater certainty, notwithstanding that any Loan Document may provide for payment on demand, the Obligations shall only be payable as stipulated herein. 1.10. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Except as otherwise specifically provided herein, all accounting terms shall be applied and construed in accordance with U.S. generally accepted accounting principles consistently applied. 1.11. COMPUTATION OF TIME PERIODS Except as otherwise specifically provided herein, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". 1.12. ACTIONS ON DAYS OTHER THAN BANKING DAYS Except as otherwise specifically provided herein, where any payment is required to be made or any other action is required to be taken on a particular day and such day is not a Banking Day and, as a result, such payment cannot be made or action cannot be taken on such day, then this Agreement shall be deemed to provide that such payment shall be made or such action shall be taken on the first Banking Day after such day; provided that if such deferral would cause such payment to be made or such action to be taken after the first day of the following calendar month, such payment shall be made or such action shall be taken on the next preceding Banking Day and interest and fees shall be calculated accordingly. If the payment of any amount is deferred for any period under this section, then such period shall, unless otherwise provided herein, be included for purposes of the computation of any interest or fees payable hereunder. 12 - 8 - 1.13. VERBAL INSTRUCTIONS Notwithstanding any other provision herein regarding the delivery of notices by the Borrower, the Lender shall in its sole discretion be entitled to act upon the verbal instructions of the Borrower, or any Person reasonably believed by the Lender to be a Person authorized by the Borrower to give instructions regarding any request. All such verbal instructions shall be at the risk of the Borrower and must be confirmed in writing by the Borrower on the same Banking Day as the verbal instruction is given. The Lender shall not be responsible for any error or omission in such instructions or in the performance thereof except in the case of negligence or wilful misconduct by the Lender. ARTICLE 2. THE LOAN FACILITY 2.1. AMOUNT Upon and subject to the terms and conditions of this Agreement, the Lender hereby establishes the Loan Facility in favour of the Borrower in the amount of $20,000,000. 2.2. ADVANCES The Borrower shall be entitled to obtain Advances under the Loan Facility, in an amount of $2,000,000 (or an integral multiple of $250,000 in excess of that amount) for each Advance, upon satisfaction of the conditions set out in Article 4. The Loan Facility is non-revolving and the principal amount of any Loan that is repaid may not be reborrowed. 2.3. EVIDENCE OF INDEBTEDNESS The indebtedness of the Borrower resulting from Loans made by the Lender shall be evidenced by the Grid Promissory Note. The Lender shall record on the Grid Promissory Note each Advance and the date thereof and the interest, fees and other charges accrued thereon and applicable thereto from time to time and each payment of principal (including prepayments). The Grid Promissory Note shall constitute, in the absence of manifest error, prima facie evidence of the indebtedness of the Borrower to the Lender. The failure of the Lender to correctly record any amount or date on the Grid Promissory Note shall not adversely affect the obligation of the Borrower to pay amounts due hereunder to the Lender in accordance with this Agreement. At all times and for all purposes, the Grid Promissory Note may be tendered as prima facie evidence, in the absence of manifest error, of the matters recorded therein. 2.4. TERM AND REPAYMENT 2.4.1. Term: Notwithstanding any other provision of this Agreement, Obligations outstanding on the Due Date shall be due and payable, together with all interest accrued and unpaid thereon, on the Due Date. 13 - 9 - 2.4.2. Prepayment: Subject to section 2.6, the Borrower may repay Obligations at any time without penalty. 2.4.3. Mandatory Prepayment: Immediately upon the completion of any financing or issuance of any securities by the Borrower, the Borrower shall repay the principal amount of the Borrower s Obligations to the extent of the Net Proceeds received by the Borrower. Notwithstanding the foregoing, the Borrower shall have no obligation to repay Obligations from financings or the issuance of securities with or to FMC provided such financing or issuance of securities is fully subordinated in all circumstances to repayment of the Obligations, on terms satisfactory to the Lender acting reasonably. 2.5. APPLICATION OF PROCEEDS All amounts prepaid and repaid shall be applied firstly in reduction of fees due to the Lender and then in reduction of the accrued and unpaid interest then outstanding and then in reduction of the principal amount of the Loans then interest outstanding and thereafter in reduction of all other Obligations outstanding. 2.6. PAYMENTS GENERALLY All payments in respect of the Loans (in respect of principal, interest, fees or otherwise) shall be made by the Borrower to the Lender no later than 11:00 a.m. (Toronto time) on the due date thereof to the accounts specified therefor by the Lender at its Branch of Account. Any payments received after such time shall be considered for all purposes as having been made on the next following Banking Day unless the Lender otherwise agrees in writing. All payments shall be made by way of immediate transfers from accounts of the Borrower with the Lender or other immediately available funds. ARTICLE 3. FEES AND EXPENSES 3.1. COMMITMENT FEE The Borrower has paid to the Lender a commitment fee in the amount of $100,000, which payment was made by the Borrower upon the execution by the Lender of the commitment to provide the Loan Facility. Subject to the last proviso of Section 4.2, the Borrower shall pay to the Lender an additional commitment fee of $400,000, payable upon the execution of this Agreement by the parties hereto. The Borrower shall also pay to the Lender a commitment fee in the amount of $100,000 per month commencing on April 1, 1996 payable on the first day of each month during the remaining term of the Loan Facility. 3.2. DRAWDOWN FEE The Borrower shall pay to the Lender on each Drawdown Date a drawdown fee of 1% of the amount of the Advance made on such Drawdown Date. 14 - 10 - 3.3. PARTICIPATION As additional consideration for providing the Loan Facility, the Borrower hereby grants to the Lender, subject to the last proviso of Section 4.2, a participation right (the "Participation Right") in accordance with the following terms and conditions: 3.3.1. the right may be exercised by way of written notice given by the Lender to the Borrower any time after the earlier of the repayment of the Loan, the termination of the Commitment and the Due Date (the "triggering event") and on or before the date that is 30 months after the triggering event; 3.3.2. subject to section 3.3.3, upon the exercise of the Participation Right by the Lender, the Borrower shall pay to the Lender, in cash or by way of the issuance of common shares to the Lender (valued for these purposes at the weighted average closing price of the common shares of the Borrower during the 10 day period prior to the date the Lender exercises the Participation Right), the amount equal to 250,000 x (the amount by which the weighted average closing price of the common shares of the Borrower during the 10 day period prior to the date of exercise of the Participation Right exceeds $20) (the "Participation Right Value"); 3.3.3. notwithstanding anything in section 3.3.2, the Participation Right Value shall not exceed the following amounts: 3.3.3.1. $1,000,000 if the Loan Facility is repaid in full within 6 months of the date of this Agreement; and 3.3.3.2. $1,500,000 if the Loan Facility is repaid in full after the 6 month period specified in clause 3.3.3.1 above and prior to the Due Date. 3.3.4. notwithstanding anything in this section 3.3 to the contrary, at any time on or before November 30, 1995, the Borrower shall have the right, by way of written notice given to the Lender in this regard, to satisfy the Participation Right in full by paying $500,000, at the option of the Borrower, in cash or through the issuance to the Lender of that number of common shares of the Borrower equal to $500,000 divided by the weighted average closing price of the common shares of the Borrower during the 10 day period prior to the date the Borrower exercises its right to satisfy the Participation Right as set out herein and upon such payment the Lender shall have no further rights under this section 3.3 other than pursuant to section 3.3.5; 3.3.5. if the Borrower elects to issue common shares to satisfy any obligations herein, the Lender shall have piggy-back registration rights in connection with any registration of any common shares of the Borrower. 15 - 11 - 3.4. PAYMENT OF COSTS AND EXPENSES Whether or not the Borrower obtains any Loans hereunder, the Borrower shall pay to the Lender upon request all reasonable out-of-pocket costs and expenses of the Lender, its agents, officers and employees, its qualified independent engineer, any receiver or receiver-manager appointed by it or by a court in connection with this Agreement or the other Loan Documents, including, without limitation: 3.4.1. the preparation, execution, filing and registration of any of the Loan Documents, any actual or proposed amendment or modification hereof or thereof or any waiver hereunder or thereunder and all instruments supplemental or ancillary thereto; 3.4.2. the review of the prefeasibility report referred to in section 4.2.4 of this Agreement; 3.4.3. obtaining advice as to the Lender's rights and responsibilities under the Loan Documents; and 3.4.4. the defence, establishment, protection or enforcement of any of the rights or remedies of the Lender under any of the Loan Documents including, without limitation, all costs and expenses of establishing the validity and enforceability of, or of collection of amounts owing under, any of the Loan Documents or of any enforcement of the Loan Documents, and further including, without limitation, all of the fees, expenses and disbursements of the Lender's Counsel (and, following the occurrence of an Event of Default, such legal counsel as may be retained by the Lender), on a solicitor and his own client basis, incurred in connection therewith, and including all sales or value-added taxes payable by the Lender (whether refundable or not) on all such costs and expenses. ARTICLE 4. CONDITIONS TO ADVANCES 4.1. GENERAL The Borrower shall not be entitled to obtain an Advance until satisfaction of and compliance with the following terms and conditions: 4.1.1. the representations and warranties set forth in Article 7 are true and accurate in all material respects on the date of execution of this Agreement and shall continue to be true and accurate in all material respects on the date of the Advance in question and the Lender shall have received an Officers Certificate from the Borrower to such effect; 16 - 12 - 4.1.2. no Default or Events of Default shall have occurred and be continuing and the Lender shall have received an Officers Certificate from the Borrower to such effect; 4.1.3. the Lender shall have received a Drawdown Notice in accordance with section 5.3 4.2. INITIAL ADVANCE In addition to the terms and conditions contained in Section 4.1, the Borrower shall be entitled to obtain the initial Advance under the Loan Facility upon and only in compliance with the following terms and conditions: 4.2.1. the Lender shall have received a duly executed copy of this Agreement, the FRMG Pledge Agreement, the FMC Subordination Agreement and the FMG Guarantee; 4.2.2. the Borrower shall have delivered to the Lender an opinion of Borrower s Counsel addressed to the Lender, dealing with the Borrower and FMG and the actions to be taken and documents to be delivered by them hereunder or pursuant hereto, in form satisfactory to the Lender, acting reasonably; and 4.2.3. the Lender shall have received, in form and substance satisfactory to the Lender acting reasonably, an Officers Certificate from the Borrower dated the date of the initial Advance certifying that attached thereto are true and correct copies of the following documents, and that such documents are in full force and effect, unamended: 4.2.3.1. the certificate/articles of incorporation of the Borrower and FMG; 4.2.3.2. the by-laws of the Borrower and FMG; 4.2.3.3. a certificate of incumbency, including sample signatures of officers and directors, of the Borrower; and 4.2.3.4. the resolutions or other documentation evidencing that all necessary action, corporate or otherwise, has been taken by the Borrower and FMG to authorize the execution, delivery and performance of the Loan Documents; and 4.2.4. the Lender shall have received a copy of a prefeasibility report prepared by Mineral Resource Development Inc. in respect of the Turquoise Ridge Deposit showing (to the satisfaction of the Lender on the advice of a qualified independent engineer acting on its behalf): 4.2.4.1. Probable Reserves of not less than 1.25 million ounces; 17 - 13 - 4.2.4.2. an estimate average Cash Operating Cost of not greater than $270 per ounce of gold; and 4.2.4.3. the absence of any matters with respect to environmental, regulatory or land title issues which could have a material adverse effect on the commercial exploitation of the deposit by the Borrower; 4.2.5. since the date of the audited consolidated financial statements of the Borrower dated as of and for the period ending June 30, 1995, there has been no development which has had or will have a material adverse effect upon the business, operation, assets, capitalization, financial condition or prospects of the Borrower or upon the ability of the Borrower to perform its obligations under any of the Loan Documents and the Lender shall have received an Officer s Certificate from the Borrower to such effect; and 4.2.6. FMC shall have completed the distribution of its entire ownership interest in the Borrower pursuant to Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"), and otherwise in a form satisfactory to the Lender and in compliance with the terms and provisions of that certain Private Letter Ruling issued by the Internal Revenue Service to FMC dated April 28, 1995 ("PLR"). FMC shall also deliver to the Lender a certificate certifying to the Lender that: (i) it has complied in all material respects with the terms and provisions of the PLR; (ii) all of the transactions proposed to be undertaken by FMC, the Borrower and their affiliated entities as set forth in the PLR have been completed in the same manner as described in the PLR; (iii) all of the representations made by or applicable to FMC, the Borrower and their affiliated entities to the Internal Revenue Service in the PLR are true and accurate in all material respects; and (iv) neither the Borrower nor FMC is aware of any fact or circumstance that would render the PLR inapplicable to the distribution by FMC of its entire ownership interest in the Borrower or otherwise cause such transaction not to be governed by Section 355 of the Code; provided that if the conditions set out in sections 4.2.4, 4.2.5 or 4.2.6 are not satisfied on or before October 31, 1995, the Lender may declare the Commitment to be terminated, whereupon the Lender shall not be required to make any Advances, the Lender s rights and entitlements under the Participation Right shall be terminated and the Lender shall repay to the Borrower the additional commitment fee of $400,000 paid to the Lender on the execution of this Agreement pursuant to Section 3.1. 18 - 14 - ARTICLE 5. ADVANCES 5.1. LOANS Upon the timely fulfilment of all applicable conditions as set forth in this Agreement, the Lender shall make the requested amount of each Advance available to the Borrower on the Drawdown Date by crediting the Designated Account with such amount and making the appropriate notation on the Grid Promissory Note. Interest on the Loans shall be payable on the first Banking Day of each month during the term of the Loans and on the Due Date. All interest shall accrue from day to day and shall be payable in arrears for the actual number of days elapsed from and including the date of Advance or the previous date on which interest was payable, as the case may be, to but excluding the date on which interest is payable both before and after maturity, default and judgment, with interest on overdue interest at the same rate payable on demand. 5.2. PAYMENT OF INTEREST The Borrower shall pay to the Lender interest on Loans in the manner and at the rates per annum determined in accordance with section 5.1 and this section 5.2. Interest payable hereunder shall be payable both before and after maturity, default and/or judgment, if any, until payment in full thereof, and interest shall accrue on overdue interest, if any, at the same rate. Interest shall be payable on all Loans at a rate per annum equal to the LIBOR Rate plus 3%. 5.3. DRAWDOWN NOTICES Drawdown Notices or repayment notices, as the case may be, shall be given on the third Banking Day prior to the date of any Advance or payment. Drawdown Notices shall be given not later than 11:00 a.m. (Toronto time) on the date for notice. If a notice is not given by such time, it shall be deemed to have been given on the next Banking Day, unless the Lender agrees to accept the late notice as being effective on the date it is given. ARTICLE 6. SECURITY 6.1. SECURITY As security for the due and punctual payment of all Obligations of the Borrower, the Borrower shall deliver or cause to be delivered to and in favour of the Lender, the FRMG Pledge Agreement, the FMC Subordination Agreement and the FMG Guarantee on or before the date of the initial Advance. Pursuant to the FRMG Pledge Agreement, the Borrower shall deliver to the Lender certificates representing all the Pledged Shares. 19 - 15 - 6.2. PERFECTION The Borrower shall ensure that each of the FRMG Pledge Agreement, the FMC Subordination Agreement and the FMG Guarantee is executed and delivered and that the Liens created by the FRMG Pledge Agreement and the FMG Guarantee are perfected on or prior to the date of the initial Advance in all jurisdictions reasonably required by the Lender. 6.3. SECURITY EFFECTIVE NOTWITHSTANDING DATE OF ADVANCE The Liens constituted or required to be created under the FRMG Pledge Agreement, the FMC Subordination Agreement and the FMG Guarantee shall be effective and the undertakings therein in respect thereto shall be continuing, whether the monies hereby or thereby secured or any part thereof shall be advanced before or after or at the same time as the creation of any such Liens or before or after or upon the date of execution of this Agreement. The FRMG Pledge Agreement, the FMC Subordination Agreement and the FMG Guarantee shall not be affected by any payments on the Loans, but shall constitute continuing security to the Lender for the Obligations from time to time. 6.4. NO MERGER The security constituted by the Security shall not merge in any other security. No judgment obtained by the Lender shall in any way affect any of the provisions of this Agreement or the Security. For greater certainty, no judgment obtained by the Lender shall in any way affect the obligation of the Borrower to pay interest at the rates, times and in the manner provided in this Agreement. 6.5. DISCHARGE OF SECURITY The Lender shall release the Security and the Liens shall terminate and shall be of no further force and effect upon repayment of the Obligations and termination in full of the Commitment. ARTICLE 7. REPRESENTATIONS AND WARRANTIES 7.1. REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Lender that: 7.1.1. Incorporation and Status: each of the Borrower and FMG is duly incorporated and validly existing under the laws of Nevada and Mississippi respectively and has the corporate power and capacity to own its properties and assets and to carry on its business as presently carried on by it or as contemplated hereunder to be carried on by it and holds all Material Authorizations; 20 - 16 - 7.1.2. Power and Capacity: each of the Borrower and FMG has the corporate power and capacity to enter into each of the Loan Documents to which it is a party and to do all acts and things as are required or contemplated hereunder or thereunder to be done, observed and performed by it; 7.1.3. Business: neither the Borrower nor FMG is engaged in any business other than as set out in the Borrower s most recent annual report; 7.1.4. Due Authorization: each of the Borrower and FMG has taken all necessary corporate action to authorize the execution, delivery and performance by it of each of the Loan Documents to which it is a party; 7.1.5. No Contravention: the execution and delivery by each of the Borrower and FMG of the Loan Documents to which it is a party and the performance by each of the Borrower and FMG of its respective obligations thereunder (i) does not and will not contravene, breach or result in any default under the organizational documents of the Borrower or FMG or under any material mortgage, lease, agreement or other legally binding instrument, license, permit, Material Authorization or Applicable Law to which the Borrower or FMG are a party or by which the Borrower or FMG or any of their respective properties or assets may be bound, (ii) will not oblige the Borrower or FMG to grant any Lien to any Person other than the Lender, (iii) will not result in or permit the acceleration of the maturity of any indebtedness, liability or obligation under any material mortgage, lease, agreement or other legally binding instrument of or affecting the Borrower or FMG and (iv) will not violate any judgment, injunction, determination or award which is binding on the Borrower or FMG; 7.1.6. No Consents Required: no Material Authorization or other authorization, consent or approval of, or filing with or notice to, any Person (including any Governmental Body) is required which has not been obtained in connection with the execution, delivery or performance by the Borrower or FMG of this Agreement or any of the other Loan Documents to which it is a party; 7.1.7. Enforceability: each of the Loan Documents constitutes, or upon execution and delivery will constitute, a valid and binding obligation of the Borrower and FMG enforceable against each of them which is a party thereto (as applicable) in accordance with its terms, subject only to the qualifications set out in the opinion of Borrower s Counsel; 7.1.8. Title: the Borrower has good and valid title to the Pledged Shares assigned by it to the Lender, free and clear of any Liens and no Person has any claim or rights with respect to such shares which could reasonably be expected to adversely affect the value of such shares in the event that the Lender should sell or otherwise realize upon such shares and that the Lender, upon any such sale or realization thereof permitted by law, will have an unfettered right to exercise all incidents of ownership with respect to the shares pledged to it; 21 - 17 - 7.1.9. No Litigation: there is no court, administrative, regulatory or similar proceeding (whether civil, quasi- criminal, or criminal); arbitration or other dispute settlement procedure; investigation or enquiry by any Governmental Body; or any similar matter or proceeding (collectively "proceedings") against or involving the Borrower or FMG whether in progress or, to the best of its knowledge, threatened, which could reasonably be expected to materially adversely affect its ability to perform any of the provisions of any Loan Document to which it is a party or which purports to affect the legality, validity and enforceability of any such Loan Document; no event has occurred which might reasonably be expected to give rise to any proceedings and there is no judgment, decree, injunction, rule, award or order of any Governmental Body outstanding against the Borrower or FMG which has or could reasonably be expected to have a material adverse effect on its ability to perform any of the provisions of any Loan Document to which it is a party; 7.1.10. No Default: neither the Borrower nor FMG is in default or breach under the terms and conditions relating to any Material Authorizations and there exists no state of facts which, after notice or the passage of time or both, would constitute such a default or breach; and there are no proceedings in progress, pending or threatened which may result in the revocation, cancellation, suspension or any adverse modification of any Material Authorization; 7.1.11. Financial Statements: the audited consolidated financial statements of the Borrower dated as of and for the period ending June 30, 1995 contained in the annual report of the Borrower have been prepared in accordance with generally accepted accounting principles and fairly, completely and accurately present the financial position of the Borrower and the financial information presented therein for the period and as at the date thereof. Since the date of such audited consolidated financial statements, there has been no development which has had or will have a material adverse effect upon the business, property, financial condition or prospects of the Borrower or upon the ability of the Borrower to perform its obligations under any of the Loan Documents; 7.1.12. FMG: FMG is a wholly-owned subsidiary of the Borrower; and 7.1.13. Environmental Compliance: The Borrower and FMG and the business and assets of each of them has been and is being operated in compliance with all applicable Environmental Laws and Environmental Permits. 7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES The Borrower covenants that the representations and warranties made by it in this Article 7 shall be true and correct in all material respects on each day that this Agreement remains in force and effect, and all such representations and warranties shall be deemed to be made on each such day with the same effect as if such representations and warranties had been made and given on and as of such day, notwithstanding any investigation made at any time by the Lender; except that if any such representation and warranty is specifically given in respect of 22 - 18 - information as of a particular date or particular period of time and relates only to such information, then such representation and warranty shall continue to be given as at such date or for such period of time until the information to which it relates is updated at which point it shall continue to be given as of such updated date or period of time, and so forth from time to time. ARTICLE 8. COVENANTS 8.1. AFFIRMATIVE COVENANTS So long as any Obligations remain outstanding and unless the Lender otherwise consents in writing, the Borrower covenants and agrees that: 8.1.1. Punctual Payment: it shall pay or cause to be paid all Obligations falling due hereunder on the dates and in the manner specified herein; 8.1.2. Conduct of Business: it shall do or cause to be done, and shall cause FMG to do or cause to be done, all things necessary or desirable to maintain its corporate existence in its present jurisdiction of incorporation and to maintain its corporate power and capacity to own its properties and assets; 8.1.3. Preservation of Material Authorizations: it shall preserve and maintain all Material Authorizations of the Borrower; 8.1.4. Compliance with Applicable Law and Contracts: it shall comply, and shall cause FMG to comply, with the requirements of all Applicable Law and all contracts to which it is a party or by which it or its properties are bound, non-compliance with which would, singly or in the aggregate, have a material adverse effect upon its ability to perform its obligations under any Loan Document to which it is a party; 8.1.5. Notice of Litigation and Other Matters: as soon as practical after it shall become aware of the same, the Borrower shall give, and shall cause FMG to give, notice to the Lender of the following events: 8.1.5.1. the commencement of any action, proceeding, arbitration or investigation against or in any other way relating adversely to the Borrower or FMG or its properties, assets or businesses which, if adversely determined, could reasonably be expected to singly or when aggregated with all other such actions, proceedings, arbitrations and investigations, have a material adverse effect on the ability of the Borrower or FMG to perform its obligations under any Loan Document to which it is a party; 8.1.5.2. any amendment of the organizational documents of the Borrower or FMG; 23 - 19 - 8.1.5.3. any development which has had or will have a material adverse effect upon the ability of the Borrower or FMG to perform its obligations under any Loan Documents to which it is a party; and 8.1.5.4. any Default or Event of Default giving in each case the details thereof and specifying the action proposed to be taken with respect thereto. 8.1.6. Maintenance of Security: it shall, and shall cause FMG to, keep the Security in full force and effect during the term of the Loan Facility; 8.1.7. Use of Proceeds: it shall use the Advance solely for the purpose of enabling the Borrower to finance the development of its current mining properties and for the general working capital purposes of the Borrower; 8.1.8. Refinancing: it shall use its commercially reasonable efforts to effect the repayment of the Obligations through a financing or the issuance of securities; 8.1.9. Hedging Strategy: it shall deliver to the Lender from time to time (or otherwise at the request of the Lender) information with respect to the hedging strategy being carried out by the Borrower in connection with the forward selling of its gold production; 8.1.10. Subsidiaries: it shall pledge to the Lender (as security for the Borrower s obligations hereunder) all of the issued and outstanding shares of its Subsidiaries by way of a pledge agreement (in a form consistent with Schedule C hereto or otherwise in a form satisfactory to the Lender, acting reasonably); and 8.1.11. Compliance Certificate: within two business days following a request therefor from the Lender, the Borrower shall deliver to the Lender an Officers Certificate certifying that no Default or Event of Default has occurred hereunder or, if any Default or Event of Default has occurred, specifying the relevant particulars and the period of existence thereof and the action taken or proposed to be taken by the Borrower with respect thereto. 8.2. NEGATIVE COVENANTS So long as any Obligations remain outstanding and unless the Lender otherwise consents in writing, the Borrower covenants and agrees that: 8.2.1. Encumber Assets: without the prior written approval of the Lender, it shall not and shall not permit FMG to create, grant, assume or suffer to exist any Liens upon its assets, other than Permitted Liens; 24 - 20 - 8.2.2. Unrelated Business: it shall not engage directly or indirectly in any business activity, or purchase or otherwise acquire any properties or assets, in each case unrelated to or unnecessary for the conduct of its present business; 8.2.3. Sell Assets: it shall not sell, transfer or otherwise dispose of any of its assets having a value in excess of $1,000,000 in each instance, except that the Borrower may enter into sales transactions in the ordinary course of business and may dispose of worn out, obsolete or replaced assets; 8.2.4. Amalgamations: it shall not enter into any transaction (including by way of reorganization, consolidation, amalgamation, liquidation, transfer, sale or otherwise) whereby all or any material portion of the property and assets of the Borrower would become the property of any other Person or, in the case of any such amalgamation, of the continuing Corporation resulting therefrom other than as contemplated herein; 8.2.5. Limitation on Indebtedness: it shall not, and shall not permit FMG to, incur, create, contract, waive, assume, guarantee or otherwise be or become, directly or indirectly, liable in respect of any Indebtedness, except (i) Indebtedness arising out of this Agreement; (ii) Indebtedness secured by the Permitted Liens, (iii) current liabilities for taxes and assessments incurred in the ordinary course of business, (iv) Indebtedness in respect of current accounts payable or accrued and incurred in the ordinary course of business, (v) Indebtedness of the Borrower and FMG as reflected in the audited consolidated financial statements of the Borrower as at June 30, 1995 and (vi) Indebtedness, the Net Proceeds of which are used to repay Loans. 8.2.6. Distributions and Dividends: Neither the Borrower nor FMG shall make any repayment of any Indebtedness, issue security, dividends or other forms of cash distribution other than in the ordinary course of business or in accordance with its terms and shall not issue any securities or pay any dividends other than as expressly contemplated in this Agreement. ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES 9.1. EVENTS OF DEFAULT The occurrence of any one or more of the following events shall constitute an Event of Default: 9.1.1. the Borrower shall fail to pay any portion of the principal amount of any Loan or interest when due, or if the Borrower shall fail to pay, any fees or other Obligations within five days of when due and payable; 25 - 21 - 9.1.2. default by the Borrower or FMG in the performance or observance of any covenant, condition or obligation contained in any Loan Document that does not require the payment of money to the Lender and which is not remedied within 30 days of receipt by the Borrower of notice of such default from the Lender provided that, if such default requires more than 30 days to be cured and the Borrower is diligently and actively pursuing the curing of such default, the Borrower shall be afforded such additional time to cure such default as shall be reasonable in the circumstances provided that in any event such default is cured within 60 days of receipt by the Borrower of notice of such default from the Lender; 9.1.3. any representation or warranty made or deemed to have been made by the Borrower or FMG herein or in any Loan Document, Officers Certificate or other document delivered to the Lender pursuant hereto or in connection with any Loan Document is found to be false or incorrect in any way so as to make it materially misleading when made or deemed to have been made and as a result thereof, there is a material adverse effect on the Borrower s ability to perform its obligations hereunder and, if capable of being corrected, is not corrected within 10 Days of the Lender giving notice thereof; 9.1.4. either the Borrower or FMG permits any default under one or more agreements or instruments under or pursuant to which Indebtedness was incurred or created or permits any other event to occur and to continue after any applicable grace period specified in such agreement or instruments, in either case which is not waived or cured, if the effect of one or more of such defaults or events results in the Indebtedness of the Borrower or FMG in excess of $1,000,000 becoming due prior to its stated maturity; 9.1.5. either the Borrower or FMG admits its inability to pay its debts generally as they become due or otherwise acknowledges its insolvency; 9.1.6. either the Borrower or FMG institutes any proceeding or takes any corporate action or executes any agreement to authorize its participation in or commencement of any proceeding: 9.1.6.1. seeking to adjudicate it a bankrupt or insolvent, or 9.1.6.2. seeking liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal with respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, the filing of any petition under the United States Bankruptcy Code or any similar federal or state statute); 9.1.7. any proceeding is commenced against or affecting either the Borrower or FMG: 26 - 22 - 9.1.7.1. seeking to adjudicate it a bankrupt or insolvent; 9.1.7.2. seeking liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal with respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, the filing of any petition under the United States Bankruptcy Code or any similar federal or state statute);or 9.1.7.3. seeking appointment of a receiver, trustee, agent, custodian or other similar official for it or for any substantial part of its properties and assets, or any part thereof, and such proceeding is not being contested in good faith by appropriate proceedings and is not in any event stayed or terminated within 45 days of its commencement, or, if such proceeding is being contested in good faith, the Borrower should default under section 9.1.1; 9.1.8. any execution, distress or other enforcement process, whether by court order or otherwise, relating to any entry of final judgement in excess of $1,000,000 becomes enforceable against any property of the Borrower or of FMG and the same is not fully covered by insurance; and 9.1.9. FMG ceases to be a wholly-owned subsidiary of the Borrower. 9.2. REMEDIES UPON DEFAULT Upon the occurrence of any Event of Default, the Lender may do any one or more of the following: 9.2.1. declare the unutilized portion (if any) of the Loan Facility to be terminated (whereupon the Lender shall not be required to make any further Advances) and declare all Obligations to be immediately due and payable; 9.2.2. realize upon all or part of the Security; 9.2.3. take such actions and commence such proceedings as may be permitted at law or in equity (whether or not provided for herein or in the Loan Documents) at such times and in such manner as the Lender in its sole discretion may consider expedient, all without, except as may be required by Applicable Law, any additional notice, presentment, demand, protest, notice of protest, dishonour or any other action. The rights and remedies of the Lender hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by Applicable Law or by the Loan Documents. 27 - 23 - 9.3. DISTRIBUTIONS All distributions under or in respect of the Loan Documents shall be held by the Lender on account of the Obligations and the Borrower shall remain liable for any deficiency. All such distributions may be applied to such part of the Obligations as the Lender may see fit in its sole discretion, and the Lender may at any time change any appropriation of any such distributions or other moneys received by it and reapply the same against any other part of the Obligations as the Lender may see fit, notwithstanding any previous application, with any remaining amounts following payment of all Obligations, payable to the Borrower. ARTICLE 10. ASSIGNMENT AND PARTICIPATIONS 10.1. ASSIGNMENTS Except as provided in this section, no party may assign its rights or benefits under this Agreement. 10.1.1. The Borrower shall not assign or transfer all or any part of its rights or benefits hereunder without the prior written consent of the Lender. 10.1.2. The Lender may assign all or part of its rights in respect of the Obligations and the Security and have its corresponding obligations hereunder assumed by: 10.1.2.1. any affiliate of the Lender without the consent of the Borrower, 10.1.2.2. any other Person with the prior written consent of the Borrower (which consent shall not be unreasonably withheld). Any assignment under section 10.1.2.1 shall become effective when the Borrower has been notified thereof by the Lender and has received from the assignee an undertaking to be bound by this Agreement and the other Loan Documents and to perform the obligations assumed by it; any assignment under section 10.1.2.2 shall become effective when the Borrower has provided its written consent to the Lender and has received from the assignee an undertaking to be bound by this Agreement and the other Loan Documents and to perform the obligations assumed by it. Any such assignee shall be treated as a party to this Agreement for all purposes of this Agreement and the other Loan Documents and shall be entitled to the full benefit hereof and thereof and shall be subject to the obligations of the Lender to the same extent as if it were an original party in respect of the rights assigned to it and obligations assumed by it and, except in the case of an assignee referred to in section 10.1.2.1 the Lender shall be released and discharged accordingly. Notwithstanding the foregoing, the Borrower shall not have any liability under Article 1 or Article 2 of this Agreement to any assignee in excess of the liability which would have been incurred by the Borrower thereunder had the assignment or participation not taken place. 28 - 24 - 10.2. PARTICIPATIONS The Lender may sell to one or more Eligible Participants participations in a portion of its rights and obligations under this Agreement up to an aggregate amount of $10,000,000 (including, without limitation, a portion of its Commitment), but the participant shall not become a Lender and: 10.2.1. the Lender s obligations under this Agreement (including, without limitation, its Commitment) shall remain unchanged; 10.2.2. the Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; 10.2.3. the Borrower and the Lender shall continue to deal solely and directly with the Lender in connection with the Lender s rights and obligations under this Agreement; and 10.2.4. no participant shall have any right to approve any amendment or waiver of any provision of this Agreement, or any consent to any departure by any person therefrom. 10.3. EXCHANGE OF INFORMATION The Lender may provide to any proposed assignee or participant such information concerning the financial position and the operations of the Borrower as, in the opinion of the Lender, may be relevant or useful in connection with the Loan Facility or any portion thereof proposed to be acquired by such assignee or participant, provided that each recipient of such information agrees not to disclose such information to any other Person. ARTICLE 11. GENERAL 11.1. RELIANCE AND NON-MERGER All covenants, agreements, representations and warranties of the Borrower made herein or in any other Loan Document or in any certificate or other document signed by any of its directors or officers and delivered by or on behalf of it pursuant hereto or thereto are material, shall be deemed to have been relied upon by the Lenders notwithstanding any investigation heretofore or hereafter made by the Lender or the Lender s Counsel or any employee or other representative of the Lender and shall survive the execution and delivery of this Agreement and the other Loan Documents until the Borrower shall have satisfied and performed all of the Obligations. 29 - 25 - 11.2. AMENDMENT AND WAIVER No amendment or waiver of any provision of any Loan Document or consent to any departure by the Borrower from any provision thereof is effective unless it is in writing and signed by the Lender. Such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. 11.3. SET-OFF OR COMPENSATION In addition to and not in limitation of any rights now or hereafter granted under applicable law, if repayment is accelerated pursuant to section 9.2, the Lender may at any time and from time to time without notice to the Borrower or any other Person, any notice being expressly waived by the Borrower, set-off and compensate and apply any and all deposits, general or special, time or demand, provisional or final, matured or unmatured, and any other indebtedness at any time owing by the Lender to or for the credit of or the account of the Borrower, against and on account of the Obligations notwithstanding that any of them are contingent or unmatured and notwithstanding that any such deposit or indebtedness may or may not be expressed in the same Currency. 11.4. NOTICES Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by prepaid first-class mail, by telecopier or other means of electronic communication or by hand-delivery as hereinafter provided. Any such notice, if mailed by prepaid first-class mail at any time other than during or within three Banking Days prior to a general discontinuance of postal service due to strike, lockout or otherwise, shall be deemed to have been received on the fourth Banking Day after the post-marked date thereof, or if sent by telecopier or other means of electronic communication, shall be deemed to have been received on the Banking Day following the sending, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address of the addressee to a senior officer of the addressee at such address with responsibility for matters to which the information relates. Notice of change of address shall also be governed by this section. In the event of a general discontinuance of postal service due to strike, lock-out or otherwise, notices or other communications shall be delivered by hand or sent by facsimile or other means of electronic communication and shall be deemed to have been received in accordance with this section. Notices and other communications shall be addressed to the addresses of the relevant party hereto as follows: To the Borrower: FirstMiss Gold Inc. 5460 South Quebec Street Suite 240 Englewood, Colorado 80111 U.S.A. 30 - 26 - Attention: Chief Financial Officer Telecopier No.: (303) 771-1075 with a copy to: Latham & Watkins 505 Montgomery Street Suite 1900 San Francisco, California 94111-2562 U.S.A. Attention: Christopher L. Kaufman Telecopier No.: (415) 395-8095 To FMG: FMG Inc. c/o FirstMiss Gold Inc. 5460 South Quebec Street Suite 240 Englewood, Colorado 80111 U.S.A. Attention: Chief Financial Officer Telecopier No.: (303) 771-1075 To the Lender: Toronto Dominion Securities Inc. Merchant Banking 222 Bay Street Ernst & Young Tower 20th Floor Toronto, Ontario M5K 1A2 Attention: John B. MacIntyre Telecopier No.: (416) 944-5579 with a copy to: Tory Tory DesLauriers & Binnington Aetna Tower, Suite 3000 Toronto-Dominion Centre Toronto, Ontario M5K 1N2 31 - 27 - Attention: W. Geoffrey Beattie Telecopier No.: (416) 865-7380 11.5. TIME Time is of the essence of the Loan Documents. 11.6. FURTHER ASSURANCES Whether before or after the happening of an Event of Default, the Borrower shall at its own expense do, make, execute or deliver all such further acts, documents and things in connection with the Loan and the Loan Documents as the Lender may reasonably require from time to time for the purpose of giving effect to the Loan Documents including, without limitation, for the purpose of facilitating the enforcement of the Loan Documents, all promptly upon the request of the Lender. 11.7. CURRENCY CONVERSION AND INDEMNITY All payments made hereunder shall be made in the Currency in respect of which the obligations requiring such payment arose. If, in connection with any action or proceeding brought in connection with this Agreement or any of the Loan Documents or any judgment or order obtained as a result thereof, it becomes necessary to convert any amount due hereunder in one Currency (the "First Currency") into another Currency (the "Second Currency"), then the conversion shall be made at the Exchange Rate on the first Banking Day prior to the day on which payment is received. If the conversion is not able to be made in the manner contemplated by the preceding paragraph in the jurisdiction in which the action or proceeding is brought, then the conversion shall be made at the Exchange Rate on the day on which the judgment is given. 11.8. COUNTERPARTS This Agreement may be signed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute one and the same instrument. 11.9. ENTIRE AGREEMENT The Loan Documents constitute the entire agreement between the parties hereto pertaining to the matters therein set forth and supersede and replace any prior understandings or arrangements pertaining to the subject matter hereof. There are no warranties, representations or agreements between the parties in connection with such matters except as specifically set forth or referred to in the Loan Documents 32 - 28 - 11.10. DATE OF AGREEMENT This Agreement may be referred to as being dated September 24, 1995 or as of September 24, 1995, notwithstanding the actual date of execution. IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the date first written above. FIRSTMISS GOLD INC. By: ------------------------------ By: ------------------------------ THE TORONTO-DOMINION BANK By: ------------------------------ By: ------------------------------ 33 SCHEDULE A REQUEST FOR ADVANCE TO: The Toronto-Dominion Bank ("TD") FROM: FirstMiss Gold Inc.(the "Borrower") - -------------------------------------------------------------------------------- Reference is made to a Loan Agreement (the "Loan Agreement") dated as of September 24, 1995 between the Borrower and TD, pursuant to which TD, through its merchant banking division, agreed to lend U.S. $20,000,000 to the Borrower. All terms used in this Request for Advance which are defined in the Loan Agreement have the meanings attributed thereto in the Loan Agreement. The Borrower hereby requests an Advance pursuant to the Loan Agreement as follows: 1. Amount of Advance: --------------------------------------------------- 2. Advance Date: -------------------------------------------------------- 3. Payment instructions (if any): --------------------------------------- ---------------------------------------------------------------------- DATED this day of September, 1995. FIRSTMISS GOLD INC. By: ------------------------------- Title: By: ------------------------------- Title: 34 SCHEDULE B GUARANTEE WHEREAS FirstMiss Gold Inc., a Nevada corporation (the "Borrower") entered into an agreement dated September 24, 1995 with The Toronto-Dominion Bank (the "Lender") (through its Toronto Dominion Merchant Bank Division) a Canadian chartered bank (the "Loan Agreement"); AND WHEREAS FMG Inc., a Nevada corporation, and a wholly-owned subsidiary of the Borrower (the "Guarantor") has agreed to guarantee the obligations of the Borrower to the Lender; NOW THEREFORE for valuable consideration (the receipt and sufficiency whereof are hereby acknowledged), the Guarantor hereby agrees to and with the Lender as follows: 1. All capitalized terms used, but not defined, in this guarantee (the "Guarantee") shall have the meaning ascribed to such terms in the Loan Agreement. 2. The Guarantor hereby unconditionally, absolutely and irrevocably guarantees payment to the Lender of all principal and interest and other monies, debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time, owing by the Borrower to the Lender under the Loan Agreement and the other Loan Documents (all of which principal, interest, debts and liabilities to be referred to hereinafter as, collectively, the "Obligations"). This Guarantee shall be a continuing guarantee of all of the Obligations now or hereafter owing or to be performed pursuant to the Loan Agreement by the Borrower and any security given in respect thereof by the Borrower. This Guarantee shall not be considered as wholly or partially satisfied by the payment or liquidation at any time of any amount of money for the time being due or remaining unpaid by the Borrower to the Lender. The Guarantor also agrees to pay all reasonable costs and expenses incurred in connection with enforcing this Guarantee (including legal costs on a solicitor and client basis). 3. The liability of the Guarantor under this Guarantee shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of any agreement between the Borrower, the Guarantor and the Lender, or between the Lender and any other person or the failure on the part of the Borrower or the Lender to carry out any of its obligations under such agreements; (b) any change in the time, manner or place of payment of, amount of credit available to the Borrower under or in any other term of, or any other amendment or waiver of, or any consent to departure from, any agreement between the Borrower, the 35 -2- Guarantor and the Lender, or between the Lender and any other person, relating to the Loan Agreements or this Guarantee; (c) any change in the name or business of the Borrower or the Lender; (d) any impossibility, impracticability, frustration of purpose, illegality, force majeure or act of government; (e) the bankruptcy, winding-up, liquidation, dissolution or insolvency of the Borrower, the Lender or any party to any agreement to which the Lender is party; (f) any lack or limitation of power, incapacity or disability on the part of the Borrower or of the directors, partners or agents thereof or any other irregularity, defect or informality on the part of the Borrower in its obligations to the Lender; or (g) any other law, regulation or other circumstance which might otherwise constitute a defence available to, or a discharge of, the Borrower in respect of any or all of the Obligations. 4. The Lender shall not be concerned to see or enquire into the powers of the Borrower or any of its directors, officers, managers, agents or other entity or entities acting or purporting to act on its behalf, and the credit in fact borrowed or obtained from the Lender under the Loan Agreement by the Borrower in professed exercise of such powers shall be deemed to form part of the amounts hereby guaranteed, notwithstanding that such borrowing or obtaining of such credit shall be in any way irregular, defective or informal. The guarantee contained in this Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of the indebtedness or obligation of the Borrower under the Loan Agreement is rescinded or must otherwise be returned by the Lender upon the insolvency, bankruptcy, dissolution or reorganization of the Borrower, all as though such payment had not been made. 5. All indebtedness and liabilities, present and future, of the Borrower to the Guarantor are hereby assigned to the Lender and postponed to the Obligations, and all moneys received by the Guarantor in respect thereof shall be received in trust for the Lender and forthwith upon receipt shall be paid over to the Lender except as otherwise provided in the Loan Agreement, the whole without in any way limiting or lessening the liability of the Guarantor under the foregoing guarantee; and this assignment and postponement is independent of the said guarantee and shall remain in full effect notwithstanding that the liability of the Guarantor under the said guarantee may be extinct. The term "Obligations", as previously defined, for purposes of the postponement feature provided by this agreement, and this section in particular, includes any funds advanced or held at the disposal of the Borrower under any line(s) of credit. 6. The Lender shall not be bound to exhaust its recourse against the Borrower, or others of any security or other guarantees the Lender may at any time hold before being entitled to payment from the Guarantor. Without limiting the foregoing, the Guarantor waives its benefits, if any, under any applicable anti-deficiency or single-action legislation. 36 -3- 7. The liability of the Guarantor to make payment under this Guarantee shall arise forthwith after demand for payment has been made in writing on the Guarantor by the Lender. 8. The Lender may treat all Obligations of the Borrower as due and payable on demand in accordance with the Loan Agreement and the Lender may forthwith, following demand in accordance with this Guarantee, collect from the Guarantor the total amount hereby guaranteed and may apply the amount so collected against the Obligations of the Borrower owing under the Loan Agreement. A written statement of the Lender as to the amount remaining unpaid by the Borrower to the Lender at any time shall be, in the absence of manifest error, evidence against the Guarantor as to the amount remaining unpaid to the Lender under the Loan Agreement at such time by the Borrower. 9. This Guarantee shall be in addition to and not in substitution for any other guarantee or other security which the Lender may now or hereafter hold in respect of the Obligations, and the Lender shall be under no obligation to marshal in favour of the Borrower any other guarantee or other security or any monies or other assets which the Lender may be entitled to receive or may have a claim upon. No loss of, or in respect of, or under any other guarantee or other security under the Loan Agreement or this Guarantee shall in any way limit or lessen the liability of the Guarantor hereunder. This Guarantee shall be a continuing guarantee and shall cover all the Obligations at any time or from time to time and it shall apply to and secure any ultimate balance due or remaining unpaid to the Lender under the Loan Agreement. 10. The obligations and liabilities of the Guarantor under this Guarantee shall not be released, discharged, limited or in any way affected by anything done, suffered or permitted by the Lender in connection with any monies advanced by the Lender to the Borrower or any security therefor including any loss of or in respect of any security received by the Lender from the Borrower or others. Without prejudice to and without releasing, discharging, limiting or otherwise affecting in whole or in part the obligations and liabilities of the Guarantor hereunder and without in any way obtaining the consent of or giving notice to the Guarantor, the Lender may grant time, renewals, extensions, indulgences, releases and discharges to and accept compositions from or otherwise deal with the Borrower and any other guarantor as the Lender may see fit, and the Lender may take, abstain from taking or perfecting, vary, exchange, renew, discharge, give up, realize on or otherwise deal with any security and guarantees in such manner as the Lender may see fit and the Lender may apply all monies received from the Borrower or from securities or guarantees upon such part of the Obligations of the Borrower under this Guarantee as may be permitted or required under the Loan Agreement and change any such application in full or in part from time to time. 11. Until both repayment in full of all Obligations of the Borrower and the termination of all commitments of the Lender under the Loan Agreement, all dividends, compositions, proceeds of security, security valued or payments received by the Lender from the Borrower in respect of the Obligations shall be regarded for all purposes as payments in gross without any right on the part of the Guarantor to claim the benefit thereof in reduction of the liability under this Guarantee, and the Guarantor shall not be entitled to claim any set-off or counterclaim against the Borrower in respect of any liability of the Borrower to the Guarantor, 37 -4- claim or prove in the bankruptcy or insolvency of the Borrower in competition with the Lender or have any right to be subrogated to the Lender. In the case of the liquidation, dissolution, winding-up or bankruptcy of the Borrower, whether voluntary or involuntary, or in the event that the Borrower shall make an arrangement or composition with its creditors, the Lender shall have the right to rank for its full claim and to receive all dividends or other payments in respect thereof until its claim has been paid in full, and the Guarantor shall continue to be liable to the Lender, less any payments made by the Guarantor under this Guarantee, for any balance which may be owing to the Lender by the Borrower. If any amount shall be paid to the Guarantor on account of any subrogation rights (actual or postponed) at any time when all Obligations of the Borrower shall not have been fully paid and satisfied, such amount shall be held in trust for the benefit of the Lender and shall forthwith be paid to the Lender to be credited and applied against the amount owing to the Lender under the Loan Agreement and this Guarantee, whether matured or unmatured. 12. The Guarantor shall do, execute and deliver or shall cause to be done, executed and delivered all such further acts, documents and things as the Lender may reasonably request for the purpose of giving effect to this Guarantee (including the assignment and postponement contained in Section 5). The guarantee contained in this Guarantee shall remain in full force and effect until payment in full of all Obligations at any time or from time to time of the Borrower under the Loan Agreement and the termination of all commitments of the Lender under the Loan Agreement, and shall be binding upon the Guarantor, its successors and assigns and enure to the benefit of and be enforceable by the Lender and its successors and assigns. 13. Notwithstanding any other provision of the Loan Agreement or this Guarantee (save and except for Section 3), upon both repayment in full of all Obligations of the Borrower and the termination of all commitments of the Lender under the Loan Agreement, the Guarantor shall be immediately released from this Guarantee and all other obligations hereunder, including the postponement set out in Section 5. 14. The Guarantor hereby irrevocably renounces all benefits of division and discussion and binds itself jointly and severally with the Borrower to fulfil the Obligations in the manner and upon the terms and conditions set forth herein. 15. Any moneys or amounts expressed to be owing or payable by the Guarantor hereunder which may not be recoverable from the Guarantor on the footing of a guarantee shall be recoverable from the Guarantor as a primary obligor and principal debtor in respect thereof. 16. This Guarantee shall be governed by and construed in accordance with the laws of the Province of Ontario. The Guarantor irrevocably submits to the courts of the Province of Ontario in any action or proceeding arising out of or relating to this Guarantee, and irrevocably agrees that all such actions and proceedings may be heard and determined in such courts, and irrevocably waives, to the fullest extent possible, the defence of an inconvenient forum. The Guarantor agrees that a judgment or order in any such action or proceeding may be enforced in other jurisdictions in any manner provided by law; provided, however, that the Lender may serve 38 -5- legal process in any manner permitted by law or may bring an action or proceeding against the Guarantor or the property or assets of the Guarantor in the courts of any other jurisdiction. IN WITNESS WHEREOF this Guarantee has been executed and delivered as of the 24th day of September, 1995. FMG INC. By: ------------------------ Name: Title: c/s By: ------------------------ Name: Title: 39 SCHEDULE C STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT (this "Agreement") is entered into as of the 24th day of September, 1995, by and between THE TORONTO-DOMINION BANK, acting through its Toronto Dominion Merchant Bank Division ("Lender"), and FIRSTMISS GOLD INC., a Nevada corporation ("Pledgor"). RECITALS A. Pledgor is the owner of 100% of the issued and outstanding shares of common stock of FMG Inc., a Nevada corporation (the "Company"), which are represented by stock certificate no. 1 for 100 shares of common stock of the Company (the "Pledged Shares"). B. Lender has agreed to make a loan (the "Loan") to Pledgor in the maximum principal amount of $20,000,000 (U.S. Dollars), subject to and upon the terms and conditions set forth in that certain Loan Agreement dated as of September 24, 1995; between Pledgor and Lender (the "Loan Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement. C. As a condition to making the Loan, Lender requires a pledge of the Pledge Collateral (as hereinafter defined) to secure the payment by Pledgor of all amounts due and payable under the Loan Agreement and the performance by Pledgor of all of its obligations under the Loan Agreement and all of the other Loan Documents, and Pledgor has agreed to pledge the Pledged Collateral to Lender to provide such security. AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce Lender to make the Loan, Pledgor and Lender hereby agree as follows: 1. Pledge. Pledgor hereby pledges to Lender, and grants to Lender a security interest in, the Pledged Shares and the certificates representing the Pledged Shares, and all dividends, cash, instruments and other payments or property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares, and in all rights of any kind attributable to or arising out of ownership of the Pledged Shares (all of the foregoing being referred to herein as the "Pledged Collateral"). 40 2. Security for Obligations. The Pledged Collateral shall secure payment of all indebtedness, liabilities and other obligations of Pledgor under or in connection with the Loan Agreement or any of the other Loan Documents (or any extension, modification or replacement thereof), including all Advances, whether actual or contingent, direct or indirect, matured or unmatured (collectively, the "Obligations"). 3. Delivery of Pledged Collateral. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered by Pledgor to Lender, shall be held by Lender, and shall be in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Lender. Possession of all such certificates or instruments representing or evidencing the Pledged Collateral by Lender shall be for itself and for its benefit. 4. Representations and Warranties. Pledgor represents and warrants to Lender as follows: (a) Pledgor's principal place of business is 5460 South Quebec Street, Suite 240, Englewood, Colorado 80111. (b) The Pledged Shares have been duly authorized and validly issued, are fully paid and non-assessable, and represent 100% of the issued and outstanding stock of Company. (c) Pledgor is the legal and beneficial owner of the Pledged Collateral, free and clear of any lien, security interest, option or other charge or encumbrance whatsoever. (d) No authorization, consent, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor; or (ii) for the exercise by Lender of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally). 5. Voting Rights. So long as no Event of Default (hereinafter defined) or event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default (a "Default") shall have occurred and be continuing, Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Loan Agreement; provided, however, that Pledgor shall not exercise or refrain from exercising any such right if, in Lender's judgment, such action would have a material adverse effect on the value of the Pledged Collateral or any part thereof, and provided further, -2- 41 that Pledgor shall give Lender not less than five (5) days' written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right. Upon the occurrence and during the continuance of an Event of Default or a Default, all rights of Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to this Section 5 shall cease. All such rights shall thereupon become vested in Lender, which shall thereupon have the sole right to exercise such voting and other consensual rights. 6. Dividends and Distributions. (a) So long as no Default or Event of Default shall have occurred and be continuing, Pledgor shall be entitled to receive and retain dividends and distributions paid by the Company with respect to the Pledged Collateral; provided, however, that any and all (i) dividends and distributions paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral; (ii) dividends and other distributions paid or payable in respect of any Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus; and (iii) cash paid, payable or otherwise distributed in any respect of principal of, or in redemption of, or in exchange for, any Pledged Collateral, shall be, and shall be forthwith delivered to Lender to hold as, Pledged Collateral and shall, if received by Pledgor, be received in trust for the benefit of Lender, be segregated from the other property or funds of Pledgor, and be forthwith delivered to Lender as Pledged Collateral in the same form as so received (together with any necessary stock powers, endorsements or such other instruments of transfer or assignment as Lender may request). (b) Upon the occurrence and during the continuance of an Event of Default or a Default, all of Pledgor's rights to receive dividends and distributions under Section 6(a) shall cease, and all such rights shall thereupon become vested in Lender, which shall have the sole right to receive and hold as Pledged Collateral such dividends and distributions. All dividends and distributions which are received by Pledgor contrary to the provisions of this Section shall be received in trust for the benefit of Lender, shall be segregated from other funds of Pledgor and shall be forthwith paid over to Lender as Pledged Collateral in the same form as so received (together with any necessary stock powers, endorsements or -3- 42 such other instruments of transfer or assignment as Lender may request). 7. Performance by Lender. If Pledgor fails to perform any covenant set forth in this Agreement, Lender may itself perform, or cause performance of, such covenant, and all expenses incurred by Lender in connection therewith shall be payable by Pledgor. 8. Lender Appointed Attorney-in-Fact. Pledgor hereby appoints Lender as Pledgor's attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor or otherwise, from time to time in Lender's discretion, upon the occurrence of an Event of Default or a Default, to take any action and to execute any instrument which Lender may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to Pledgor representing any dividend or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same. This appointment is coupled with an interest and shall be irrevocable until payment in full of the Obligations. 9. Assignment of Lender's Rights. The rights of Lender under this Agreement may be assigned by it in connection with any assignment or negotiation of the Loan in accordance with the terms of the Loan Agreement, and any such holder or assignee shall be entitled to rely upon Pledgor's representations, warranties and covenants as set forth herein. 10. Further Assurances. Pledgor agrees that at any time and from time to time, Pledgor will promptly execute and deliver all further instruments and documents, and take all further action that may be necessary or desirable, or that Lender may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral. 11. Transfers and Other Liens. Pledgor agrees that it will not voluntarily, involuntarily or by operation of law sell, transfer, encumber, pledge, hypothecate or grant any options or similar rights with respect to, or otherwise convey or diminish in any manner any of the Pledged Collateral, except in connection with Permitted Liens, without the prior written consent of Lender, which may be withheld for any reason. Any attempt to convey, encumber or otherwise diminish the Pledged Collateral in violation of the foregoing sentence without the prior written consent of Lender shall be void, unenforceable and of no legal effect. 12. Reasonable Care. Lender shall be deemed to have exercised reasonable care in the custody of any of the Pledged Collateral that may be in its possession if such Pledged Collateral is accorded treatment substantially equal to that which Lender -4- 43 accords its own property, it being understood that, so long as Lender exercises reasonable care in the custody of any Pledged Shares as may be in its possession, Lender shall not have any responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not Lender has or is deemed to have knowledge or such matters; (b) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral; or (c) failing to perform any act pursuant to a discretionary power with respect to the Pledged Collateral conferred upon Lender under this Agreement. 13. Events of Default. Each of the following shall constitute an event of default (an "Event of Default") hereunder: (a) The occurrence of any "Event of Default" as defined in the Loan Agreement; (b) The failure by Pledgor properly to perform any obligation contained herein and the continuance of such failure for a period of thirty (30) days following notice thereof from Lender to Pledgor; provided, however, that if such failure is not curable within such thirty (30) day period, then, so long as Pledgor commences to cure such failure within such thirty (30) day period and is actively and diligently attempting to cure such failure, Pledgor shall be afforded such additional time to cure such failure as shall be reasonable in the circumstances, provided that in any event such failure is cured within forty-five (45) days after notice thereof from Lender to Pledgor; (c) Any representation or warranty made by Pledgor in this Agreement is found to be false or incorrect in any way so as to make it materially misleading when made so that it would reasonably be expected to have a material adverse effect on Pledgor's ability to repay the Obligations when due or to perform its obligations under any of the Loan Documents and, if capable of being corrected, is not corrected within ten (10) days after notice thereof from Lender to Pledgor; (d) The issuance by Company of any additional shares of stock whatsoever; (e) The Company's payment of a dividend or distribution in respect of the Pledged Collateral, or purchase, redemption or other acquisition of any of the Pledged Collateral, except, in each case, as permitted by the Loan Agreement, without Lender's prior written consent; (f) A breach of the covenant set forth in Section 11 of this Agreement; -5- 44 (g) The dissolution, termination or liquidation of Pledgor or Company; or (h) The assertion of any claim of priority over the Pledged Collateral, by title, lien or otherwise, other than the Permitted Liens. 14. Lender's Rights and Remedies Upon an Event of Default. If any Event of Default shall have occurred and be continuing: (a) Lender may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under applicable law, and Lender may also, without notice except as specified below, sell the Pledged Collateral or any part thereof, in one or more parcels at public or private sale, at any exchange, broker's board or at any of Lender's offices or elsewhere, for cash, on credit, or for future delivery, and upon such other terms as Lender may deem commerically reasonable. Any requirements for reasonable notice of the time and place of any public sale, or of the time after which any private sale or other disposition is to be made, will be satisfied by Lender's giving of such notice to Pledgor at least five (5) business days prior to the time of any public sale or the time after which any private sale or other intended disposition is to be made. Lender shall not be obligated to make or cause any sale of Pledged Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time by announcement, at the time and place fixed therefor, of the time and place of the adjourned sale, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (b) Any cash held by Lender as Pledged Collateral and all cash proceeds received by Lender in respect of any sale of, collection from or other realization upon all or any part of the Pledged Collateral may, in the discretion of Lender, be held by Lender as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to Lender pursuant to Section 16 of this Agreement) in whole or in part by Lender against, all or any part of the Obligations in accordance with the terms of the Loan Agreement. Any surplus of such cash or cash proceeds held by Lender and remaining after payment in full of all the Obligations shall be paid over to PLedgor or to whomever may be lawfully entitled to receive such surplus. The rights and remedies of Lender hereunder are cumulative and are not in lieu of, but are in addition to, any other rights or -6- 45 remedies which Lender may have under the Loan Agreement or any of the other Loan Documents or at law or in equity. No act of Lender shall be construed as an election to proceed under any particular provision of the Loan Agreement or any other Loan Document to the exclusion of any other provision in the same or any other such document, or as an election of remedies to the exclusion of any other remedy which may then or thereafter be available to Lender. 15. No Third Party Rights. No person shall be a third party beneficiary of any provision of any of the Loan Documents. All provisions of the Loan Documents favoring Lender are intended solely for the benefit of Lender. 16. Expenses. Pledgor will pay to Lender upon demand the amount of any and all expenses, including the fees and expenses of its counsel and of any experts and agents, which Lender may incur in connection with (a) the administration of this Agreement; (b) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged Collateral; and (c) the exercise or enforcement of any of the rights of Lender hereunder. 17. Cooperation on Sale. If Lender shall reasonably determine to exercise its right to sell all or any of the Pledged Collateral pursuant to Section 14 of this Agreement, Pledgor agrees that, upon request of Lender, Pledgor will, at its own expense, do or cause to be done all such other acts and things as may be reasonably necessary to make such sale of the Pledged Collateral or any part thereof valid and binding and in compliance with applicable law. 18. Security Interest Absolute. All rights of Lender and security interests hereunder, and all obligations of Pledgor hereunder, shall be absolute and unconditional irrespective of: (a) Any lack of validity or enforceability of the Loan Agreement or any other Loan Document; (b) Any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the terms of the Loan Agreement; or (c) Any other circumstances which might otherwise constitute a defense available to, or a discharge of, Pledgor in respect of the Obligations or this Agreement. 19. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by Pledgor therefrom shall in any event be effective unless the same shall be in writing and signed by Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. -7- 46 20. Notices. Any notice required or permitted to be given by Pledgor or Lender under this Agreement shall be in writing and shall be given in accordance with the Loan Agreement. 21. Continuing Security Interest; Transfer of Loan. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (a) remain in full force and effect until payment in full of the Obligations; (b) be binding upon Pledgor, its successors and permitted assigns; and (c) inure to the benefit of Lender and its successors and permitted transferees and assigns. Without limiting the generality of the foregoing clause (c), and subject only to Section 10.1.2 of the Loan Agreement, Lender may assign or otherwise transfer the Loan to any other person or entity, and such other person or entity shall thereupon become vested with all the benefits in respect thereof granted to Lender herein or otherwise. Upon the payment in full of the Obligations, Pledgor, subject to the terms and conditions of this Agreement and the Loan Agreement, shall be entitled to the return of such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof. 22. Illegality. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby, and in lieu of each such illegal, invalid or unenforceable provision there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. If the rights and liens created by this Agreement shall be invalid or unenforceable as to any part of the Obligations, then the unsecured portion of the Obligations shall be completely paid prior to the payment of the remaining and secured portion of the Obligations, and all payments made on the Obligations shall be considered to have been paid on and applied first to the complete payment of the unsecured portion of the Obligations. 23. Binding Effect. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 24. Amendment. This Agreement may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except only by an instrument in writing and signed by the party against whom enforcement of any waiver, amendment, change, modification or discharge is sought. 25. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be a duplicate original. 26. Captions. The captions used in this Agreement are for convenience of reference only and are in no way intended to be -8- 47 used to limit, define or interpret the scope or intent of this Agreement or any provisions hereof. 27. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada. IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed and delivered as of the date first above written. PLEDGOR: FIRSTMISS GOLD INC., a ATTEST: Nevada corporation By: By: ------------------------------- -------------------------------- Secretary Title: ----------------------------- [SEAL] LENDER: THE TORONTO-DOMINION BANK By: -------------------------------- Title: ----------------------------- -9- 48 IRREVOCABLE STOCK POWER KNOW ALL MEN BY THESE PRESENTS: That FIRSTMISS GOLD INC., a Nevada corporation ("FIRSTMISS"), for value received, hereby assigns and transfers unto ___________________________ __________________ ("Transferee") One Hundred (100) shares of the common stock of FMG INC., a Nevada corporation (the "Corporation"), standing in the name of FIRSTMISS on the books of the Corporation and represented by Certificate No. 1, and FIRSTMISS hereby constitutes and appoints ________________________ as attorney-in-fact, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge and make over all or any part of the common stock described above, and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, FIRSTMISS hereby ratifying and confirming all that said attorney-in-fact or a substitute or substitutes shall lawfully do by virtue thereof. Entered into this ____ day of _____________ , 1995. FIRSTMISS GOLD INC., a Nevada corporation ATTEST: By: - ----------------------------- ---------------------------- Secretary Title: --------------------- (Corporate Seal) 49 SCHEDULE D GRID PROMISSORY NOTE Date: [ ] FOR VALUE RECEIVED the undersigned hereby unconditionally promises to pay on demand to the order of The Toronto-Dominion Bank (the "Bank"), in lawful money of the United States of America, the Loans under the Agreement as recorded on the grid schedule attached hereto, in accordance with the provisions regarding the payment of such Loans set forth in the loan agreement (the "Loan Agreement") dated as of September 24, 1995 between the undersigned and the Bank. This grid promissory note is issued pursuant to and is subject to the provisions of the Loan Agreement. All terms used in this Grid Promissory Note which are defined in the Loan Agreement have the meanings attributed thereto in the Loan Agreement. The undersigned acknowledges that the actual recording of amounts advanced and amounts paid on the attached grid schedule shall, in the absence of manifest error, be prima facie evidence of the same; provided that the failure of the Bank to record the same on the grid schedule shall not affect the obligation of the undersigned to pay or repay the Obligations. Payments of principal and interest hereunder must be made at the location specified in the Loan Agreement or at such other location as may be notified by the Bank to the undersigned. The undersigned waives presentment for payment, notice of non-payment, protest and notice of protest of this grid promissory note and diligence in collection or bringing suit. This Grid Promissory Note shall be governed by and construed in accordance with the laws of the Province of Ontario. FIRSTMISS GOLD INC. By: --------------------------- Title: c/s By: --------------------------- Title 50 Currency: U.S. Dollars
ADVANCE UNPAID NOTATION DATE REQUESTED BY ADVANCES INTEREST PAYMENTS BALANCE MADE BY ---- ------------ -------- -------- -------- ------- ------- _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________ _____________ ____________ _____________ ___________ ___________ ___________ ____________
51 SCHEDULE E PERMITTED LIENS "Permitted Liens" means (a) the rights and interests of the Lender as provided in the Loan Documents, (b) Liens for any tax, assessment or other governmental charge, either secured by a bond reasonably acceptable to the Lender or not yet due or being contested diligently and in good faith by appropriate proceedings in respect of which no final judgment or order has been issued (whether or not rights of appeal exist), (c) materialmen's, mechanics', workers', repairmen's, employees' or other like Liens arising in the ordinary course of business or in connection with development of the Turquoise Ridge Deposit, so long as the same are either (i) being contested in good faith by appropriate proceedings in respect of which no final judgment or order has been issued (whether or not rights of appeal exist) or (ii) are bonded with a statutory form of lien release bond (or otherwise in form and substance reasonably satisfactory to the Lender) in an amount equal to 100% of the amount of the Lien claim, (d) Liens arising out of judgments or awards so long as an appeal or proceeding for review is being prosecuted in good faith and the enforcement of such judgment or award has been stayed and such judgments or awards do not singly or in the aggregate exceed $250,000, (e) mineral rights, other than rights in the Turquoise Ridge Deposit, the use and enjoyment of which do not materially interfere with the use and enjoyment of the property of the Borrower, (f) Liens, deposits or pledges to secure statutory obligations or performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or for purposes of like general nature in the ordinary course of its business which are not overdue, (g) Liens on assets (real or personal) of the Borrower which assets have a fair market value of less than $250,000 in the aggregate, (h) other Liens incident to the ordinary course of business that are not incurred in connection with the obtaining of any loan, advance or credit and that do not in the aggregate materially impair the use of the property or assets of the Borrower or the value of such property or assets for the purposes of such business, (i) Liens, rights of way, and other defects or encumbrances on title to real property owned, held or leased by the Borrower that do not in the aggregate materially impair the use of such real property of the Borrower or the value of such real property for the purposes of the business for which such real property is held and (j) involuntary Liens securing a charge or obligation, on any of the Borrower's property, either real or personal, whether now or hereafter owned in the aggregate sum of less than $250,000 which are being contested in good faith. -----END PRIVACY-ENHANCED MESSAGE-----