Attached files
| file | filename |
|---|---|
| EX-10.4 - EX-10.4 - MINES MANAGEMENT INC | a2228805zex-10_4.htm |
| EX-10.3 - EX-10.3 - MINES MANAGEMENT INC | a2228805zex-10_3.htm |
| EX-10.2 - EX-10.2 - MINES MANAGEMENT INC | a2228805zex-10_2.htm |
| EX-3.1 - EX-3.1 - MINES MANAGEMENT INC | a2228805zex-3_1.htm |
| EX-2.1 - EX-2.1 - MINES MANAGEMENT INC | a2228805zex-2_1.htm |
| 8-K - 8-K - MINES MANAGEMENT INC | a2228805z8-k.htm |
QuickLinks -- Click here to rapidly navigate through this document
Execution Copy
TERM LOAN AND SECURITY AGREEMENT
This Term Loan and Security Agreement ("Agreement") is made as of May 23, 2016 by and among MINES MANAGEMENT, INC., an Idaho corporation (the "Borrower"), NEWHI, INC., a Washington corporation ("Newhi"), MONTANORE MINERALS CORP., a Delaware corporation ("MMC"), MONTMIN RESOURCES CORP., a Delaware corporation ("MRC"), MONTANORE MINERALS WISCONSIN CORP., a Delaware corporation ("MMWC" and together with MMC, MRC and Newhi, the "Guarantors" and the Guarantors together with the Borrower, the "Loan Parties") and HECLA MINING COMPANY, a Delaware corporation (the "Lender"). In consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
LOAN; SECURITY DOCUMENTS
1.1 TERM LOAN
On the terms and subject to the conditions of this Agreement, the Lender agrees to make to the Borrower, on or after the date that all conditions precedent set forth in Article III have been satisfied (the "Closing Date"), one or more term loans (each a "Loan" and collectively, "Loans") in an aggregate principal amount not to exceed Two Million Three Hundred Thousand and No/100 dollars ($2,300,000) (the "Maximum Amount"). No amounts paid or prepaid with respect to the Loans may be reborrowed.
1.2 NOTE
The Borrower's unconditional and absolute obligation to repay to the Lender the principal of the Loans and interest thereon shall be evidenced by a promissory note (as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, and together with any renewals thereof or substitutions therefor, the "Note"), in the form of Exhibit A hereto dated the Closing Date. The date and amount of each advance made, and each repayment and prepayment of principal thereon received, by the Lender shall be recorded by the Lender in its records or, at its option, on the schedule attached to the Note. The aggregate unpaid principal amount so recorded shall be prima facie evidence of the principal amount owing and unpaid on the Note to the Lender absent manifest error. The failure to so record any such amount or any error in so recording any such amount, however, shall not limit or otherwise affect the Borrower's obligations hereunder or under the Note to repay the principal amount of the Loans together with all interest accruing thereon.
1.3 USE OF PROCEEDS
The Borrower shall apply the proceeds of each Loan solely for the Borrower's general corporate purposes so long as such application (i) is consistent in all material respects with the most recent Budget (as hereinafter defined) delivered by the Borrower or for expenses identified in such Budget and (ii) does not result in a breach of the Merger Agreement. The Borrower hereby directs the Lender to transfer the proceeds of the Loan on the Closing Date to a deposit account to be identified by the Borrower.
1.4 GUARANTY
All of the obligations of the Borrower under the Note and this Agreement shall be guaranteed pursuant to the Guaranty by the Guarantors. All of the obligations of the Guarantors under the Guaranty shall be secured by the Collateral, which shall be a lien ranking senior and superior to all other liens.
1.5 GRANT OF SECURITY INTEREST
As collateral security for the payment and performance in full of all the Obligations, each Loan Party hereby pledges and grants to the Lender, a lien on and security interest in and to all of the right, title and interest of such Loan Party in, to and under the following property, wherever located, and whether now existing or hereafter arising or acquired from time to time (collectively, the "Collateral"):
(a) all interests in real property, mineral property, leaseholds, royalties and other interests listed on Schedule 1.5(a) attached hereto (the "MMI Property");
(b) all leases and rents related to the MMI Property;
(c) all fixtures located at the MMI Property;
(d) all awards, payments or judgments, including interest thereon, and the right to receive the same, as a result of the exercise or threatened exercise of any right of eminent domain, other injury to, taking up, or decrease in the value of all or any portion of the MMI Property, any other portion of the mine including, without limitation, the adit located at the MMI Property or any other property described herein;
(e) all other property or rights of any kind or character related to the MMI Property, any other portion of the mine including, without limitation, the adit located at the MMI Property or other property described herein including, without limitation, Accounts, As-Extracted Collateral, Chattel Paper, Consumer Goods, Contract Rights, Documents, Equipment, Farm Products, Fixtures, General Intangibles, Goods, Instruments, Inventory, Proceeds of collateral or any other personal property of a kind or character defined in or subject to the applicable provisions of the UCC (as in effect in the appropriate jurisdiction with respect to each of said properties, rights and interests);
(f) all proceeds and products of the foregoing; and
(g) all equity interests of Newhi, MMC and MRC.
Each Loan Party shall take all action that may be reasonably necessary or desirable, or that Lender may reasonably request, so as at all times to maintain the validity, perfection, enforceability and priority of Lender's security interest in and lien on the Collateral or to enable Lender to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) promptly discharging all liens other than Permitted Liens, (ii) subject to any express exclusion or limitations in this Agreement, executing and delivering financing statements, control agreements, instruments of pledge, notices and assignments, in each case in form and substance satisfactory to Lender, relating to the creation, validity, perfection, maintenance or continuation of Lender's security interest and lien under the UCC or other applicable law, (iii) providing, within fourteen (14) days after the Closing Date (or, at Lender's sole discretion, such longer period), with respect to Loan Parties' interests in the MMI Property, mortgages or deeds of trust (including, without limitation, leasehold mortgages and leasehold deeds of trust) and related landlord estoppels, accompanied by title insurance, environmental indemnities, lien searches, environmental reports, opinions of counsel, and other items requested by Lender in its sole discretion, with respect to the MMI Property (whether such interest is a fee interest, leasehold interest, patented claim, unpatented claim or otherwise), and (iv) otherwise providing such other documents and instruments as Lender may reasonably request, in order that the full intent of this Agreement may be effected; provided, however, perfection of Lender's liens on assets of the Loan Parties shall not be required where the Lender determines in its sole discretion that the benefits of obtaining such perfection is outweighed by the costs or burdens of providing the same. By its signature hereto, each Loan Party hereby authorizes Lender to file against such Loan Party, one or more financing, continuation or amendment statements pursuant to the applicable UCC in form and substance satisfactory to Lender (which statements may have a description of collateral which is the
2
same, broader or more narrow than that set forth herein). All charges, expenses and fees Lender may incur in doing any of the foregoing, and any local taxes relating thereto, shall be paid by Borrower to Lender immediately upon demand.
1.6 FILINGS
Each Loan Party hereby irrevocably authorizes the Lender at any time and from time to time to file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including (i) whether the Loan Party is an organization, the type of organization and any organizational identification number issued to such Loan Party, (ii) any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Loan Party hereunder, without the signature of such Loan Party where permitted by law, including the filing of a financing statement describing the Collateral or with respect to a Guarantor, describing the Collateral as "all assets now owned or hereafter acquired by Debtor or in which the Debtor otherwise has rights" and (iii) in the case of a financing statement filed as a fixture filing or covering Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient description of the real property to which such Collateral relates. Each Loan Party agrees to provide all information described in the immediately preceding sentence to the Lender promptly upon request by the Lender.
ARTICLE II
REPAYMENT; PREPAYMENTS; INTEREST
2.1 REPAYMENT OF THE LOANS
The Borrower shall repay the aggregate outstanding principal amount of the Loans, together with all accrued but unpaid interest thereon, in full on the earlier of (i) August 15, 2016, (ii) the date the merger contemplated by the Merger Agreement is completed or (iii) the date upon which the Loans become or are declared due and payable pursuant to Article VII or Section 2.2(b) or (c) of this Agreement (the "Due Date").
2.2 PREPAYMENTS
(a) The Borrower shall not have the right to prepay the principal amount of the Loans, in whole or in part, at any time.
(b) Upon a Change of Control of Borrower, any outstanding balance of the principal amount plus accrued and unpaid interest of the Loans shall become immediately payable in full, and the Borrower shall provide immediate notice to the Lender as soon as the Borrower becomes aware that a Change of Control (other than pursuant to the Merger Agreement) may occur.
(c) If the Merger Agreement is no longer effective for any reason other than a termination caused by a breach of the Merger Agreement by Lender and Borrower is not otherwise in breach under the Merger Agreement, any outstanding balance of the principal owed and unpaid interest of the Loans shall become immediately payable in full.
2.3 INTEREST AND FEES
(a) The Loans shall bear interest on the outstanding principal amount thereof at a per annum rate equal to LIBOR plus five percent (5%). All accrued interest on the Loans shall be payable in arrears at maturity (or if such day is not a Business Day, on the next succeeding Business Day); provided that in the event of any repayment or prepayment of the Loans, accrued interest on the
3
principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment. All computations of interest shall be made on the basis of a year of 360 days, and actual days elapsed, which, the Borrower acknowledges will result in a higher actual rate of interest than the rates stated above.
(b) Notwithstanding the rate of interest specified above, after an Event of Default and during the continuance thereof (regardless of whether the Loans have been accelerated), the Borrower agrees to pay interest (after as well as before judgment to the extent permitted by applicable law) on all unpaid principal, interest or other amounts owing under the Transaction Documents, at a rate equal to the rate otherwise payable hereunder plus two percent (2%) per annum.
2.4 USURY
Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to the Loans, together with all fees, charges and other amounts which are treated as interest on the Loans under applicable law shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Lender in accordance with applicable law, the rate of interest payable in respect of such Loans hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum Rate.
2.5 TAXES; WITHHOLDING, ETC.
(a) All sums payable by or on account of any obligation of the Borrower hereunder or under the other Transaction Documents, shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax.
(b) If any Loan Party is required by law to make any deduction or withholding on account of any tax from any sum paid or payable to the Lender under any of the Transaction Documents: (i) the Borrower shall notify the Lender of any such requirement or any change in any such requirement as soon as the Borrower becomes aware of it; (ii) the Borrower shall pay any such tax before the date on which penalties attach thereto; (iii) the sum payable by the Borrower in respect of which the relevant deduction or withholding is required shall be increased to the extent necessary to ensure that, after the making of that deduction or withholding (including any deduction or withholding of taxes applicable to additional sums payable under this Section 2.5), the Lender receives on the Due Date a net sum equal to what it would have received had no such deduction or withholding been required or made; and (iv) within 30 days after the due date of payment of any tax which it is required to deduct or withhold, the Borrower shall deliver to the Lender evidence reasonably satisfactory of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority.
2.6 PAYMENTS DUE
(a) All payments by the Loan Parties of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to the Lender not later than 12:00 noon (Pacific time) on the Due Date; for purposes of computing interest and fees, funds received by the Lender after that time on such Due Date shall be deemed to have been paid by the Loan Parties on the next succeeding Business Day. All payments in respect of the principal amount of any Loan shall include payment of accrued interest on the principal amount being repaid or prepaid, and all such payments (and, in any event, any payments in respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be applied to the payment of interest then due and payable before application to principal.
4
ARTICLE III
CONDITIONS TO CLOSING AND SUBSEQUENT DRAWS
3.1 CONDITIONS FOR INITIAL LOAN
The obligation of the Lender to make the initial Loan is subject to the fulfillment to the Lender's satisfaction on or prior to the Closing Date of each of the following conditions, unless waived by the Lender:
(a) All covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Borrower and the Guarantors on or prior to the Closing Date shall have been performed or complied with by the Borrower and the Guarantors.
(b) The Loan Parties shall have executed and delivered to the Lender this Agreement, Borrower shall have issued to the Lender its Note, and the Borrower and each of the Guarantors, as applicable, shall have executed and delivered the following agreements and documents:
(i) the Guaranty;
(ii) the Pledge Agreement;
(iii) a secretary's certificate of the Borrower, (i) attaching a certified copy of the Articles of Incorporation and current Bylaws of the Borrower and certifying the same as not having been amended and as being in full force and effect, (ii) attaching and certifying resolutions by the board of directors of the Borrower approving the execution, delivery and performance of the Transaction Documents and the transactions contemplated thereby, and (iii) certifying as to the incumbency, and attaching specimen signatures of the officers or representatives of the Borrower signing the Transaction Documents to which the Borrower is a party;
(iv) a secretary's certificate of each of the Guarantors (i) attaching a certified copy of the Articles or Certificate of Incorporation and current Bylaws of such Guarantor and certifying the same as not having been amended and as being in full force and effect, (ii) attaching and certifying resolutions by the board of directors of such Guarantor approving the execution, delivery and performance of the Transaction Documents and the transactions contemplated thereby, and (iii) certifying as to the incumbency, and attaching specimen signatures of the officers or representatives of such Guarantor signing the Transaction Documents to which such Guarantor is a party;
(v) a Certificate of Good Standing from the state of formation of the Borrower and each of the Guarantors;
(vi) UCC Financing Statement naming the Borrower as Debtor, the Lender as Secured Party and describing the Collateral;
(vii) UCC Financing Statement naming the Guarantors as Debtors, the Lender as Secured Party and describing the Guarantor Collateral; and
(viii) a Mortgage encumbering the MMI Property, duly executed by the Loan Parties, in form and substance acceptable to the Lender.
(c) The Borrower and the Guarantors shall have obtained all necessary consents or waivers, if any, from all parties governmental and private immediately prior to the Closing Date in order that the transactions contemplated by the Transaction Documents may be consummated.
(d) All corporate and other proceedings taken or required to be taken by the Borrower and the Guarantors in connection with the transactions contemplated by this Agreement and the other Transaction Documents shall have been taken, and the Lender shall have received such other
5
documents, in form and substance reasonably satisfactory to the Lender and its counsel, as to such other matters incident to the transactions contemplated hereby as the Lender may reasonably request.
(e) All Indebtedness existing on the Closing Date and any mortgage, pledge, lien, security interest or encumbrance on any part of a Loan Party's properties or assets shall be subordinated to the extent required by the Lender pursuant to subordination agreements in form and substance satisfactory to the Lender and its counsel.
(f) The Borrower shall have prepared and submitted to the Lender an operating budget for the thirty (30) day period following the date hereof, which shall include all projected funding requirements incurred or to be incurred by the Borrower for the thirty (30) day period following the date of the submitted budget specifying, by amount, type and kind, all current or past due expenses, liabilities and accounts payable, and all revenues and expenses anticipated by the Borrower for such period consistent with past practices except to the extent such relate to the Merger Agreement, the requirements thereof and the transactions contemplated thereby (the "Budget"), in such detail and in form and substance as are acceptable to the Lender in its sole and absolute discretion.
(g) Borrower shall deliver to Lender a favorable written opinion (addressed to the Lender) of Crowley Fleck PLLP, counsel for the Loan Parties, that upon proper recording and filing of the Mortgage or any other documents with the county recorder located in each of Lincoln County and Sanders County, Montana as may be necessary or, in the opinion of the Lender, desirable, such Mortgage will create a valid, perfected first priority lien against the MMI Property have been made, and covering such other matters relating to the Loan Parties, covering the Loan Documents or the Transactions as the Lender shall reasonably request.
3.2 CONDITIONS FOR ALL LOANS
The obligation of the Lender to make any Loan, including the initial Loan, on or after the Closing Date is subject to the fulfillment to Lender's satisfaction of each of the following conditions, unless waived by Lender:
(a) The Lender shall have received a notice from the Borrower requesting that a Loan be made, which notice shall specify (i) the amount of the Loan; (ii) the date the Borrower would like Lender to make such Loan (which date shall be a Business Day) (the "Credit Date") and (iii) a description of the proposed use of the proceeds of such Loan, which must be for working capital consistent with the uses shown in the updated Budget submitted pursuant to Section 3.2(b) herein or for expenses identified in such Budget;
(b) The Borrower shall deliver to the Lender an updated Budget for its operations for the thirty (30) day period following the date of the previously submitted Budget including a comparison of the actual cash receipts and expenditures for the thirty (30) day period preceding the date of the submitted Budget in comparison to the previously submitted Budget, all of which shall be in such detail and in form and substance acceptable to the Lender in its sole and absolute discretion;
(c) After making the Loans requested, the aggregated principal amount of Loans made by Lender to Borrower on and after the Closing Date shall not exceed the Maximum Amount;
(d) As of such Credit Date, the representations and warranties of the Loan Parties contained herein and in the other Transaction Documents shall be true and correct, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on and as of such earlier date;
6
(e) As of such Credit Date, no event shall have occurred and be continuing or would result from the making of the requested Loan that would constitute a Default or an Event of Default or a breach of the Merger Agreement;
(f) None of the Borrower, the Guarantors or the Lender shall be subject to any order, decree or injunction of a court or administrative or governmental body or agency of competent jurisdiction directing that the transactions provided for in the Transaction Documents or the Merger Agreement or any material aspect thereof not be consummated as contemplated by the Transaction Documents or Merger Agreement;
(g) There shall not be any action, suit, proceeding, complaint, charge, hearing, inquiry or investigation before or by any court or administrative or governmental body or agency pending or, to the Borrower's best knowledge, threatened, wherein an unfavorable order, decree or injunction would prevent the performance of any of the Transaction Documents or Merger Agreement or the consummation of any material aspect of the transactions or events contemplated thereby, declare unlawful any aspect of the transactions or events contemplated by the Transaction Documents or Merger Agreement, cause any material aspect of the transactions contemplated by the Transaction Documents or Merger Agreement to be rescinded or have a Material Adverse Effect, other than proceedings currently pending with respect to permits for the Montanore project as described on Schedule 3.2(g); and
(h) Except as set forth in Schedule 3.2(h), no event or development, individually, or in the aggregate, shall have occurred since December 31, 2015 which could have a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE BORROWER AND GUARANTORS
As a material inducement to the Lender to enter into and perform its obligations under this Agreement, except as disclosed in Article 4 of the Merger Agreement and in the Company Disclosure Schedule (as such term is defined in the Merger Agreement) the Borrower and each of the Guarantors hereby represent and warrant to the Lender as follows:
4.1 ORGANIZATION AND EXISTENCE
(a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of Idaho and is qualified to do business in such other jurisdictions as the nature or conduct of its operations or the ownership of its properties require such qualification. The Borrower has furnished the Lender with true, correct and complete copies of its Articles of Incorporation, bylaws and all amendments thereto, as of the date hereof.
(b) Each of the Guarantors is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and is qualified to do business in such other jurisdictions as the nature or conduct of its operations or the ownership of its properties require such qualification. Each Guarantor has furnished the Lender with true, correct and complete copies of its Articles or Certificate of Incorporation, bylaws and all amendments thereto, as of the date hereof.
4.2 AUTHORIZATION
(a) The Borrower has all requisite corporate power and authority (i) to execute and deliver, and to perform and observe its obligations under, the Transaction Documents to which it is a party, and (ii) to consummate the transactions contemplated hereby and thereby.
7
(b) All corporate action on the part of the Borrower necessary for the authorization, execution, delivery and performance by the Borrower of the Transaction Documents and the transactions contemplated therein, and for the authorization, issuance and delivery of the Note, has been taken.
(c) Each of the Guarantors has all requisite corporate power and authority (i) to execute and deliver, and to perform and observe its obligations under, the Transaction Documents to which such Guarantor is a party, and (ii) to consummate the transactions contemplated hereby and thereby.
(d) All corporate action on the part of each of the Guarantors necessary for the authorization, execution, delivery and performance by each such Guarantor of the Transaction Documents to which it is a party and the transactions contemplated therein has been taken.
4.3 BINDING OBLIGATIONS; NO MATERIAL ADVERSE CONTRACTS
The Transaction Documents constitute valid and binding obligations of the Borrower and each of the Guarantors enforceable in accordance with their respective terms. The execution, delivery and performance by the Borrower and each of the Guarantors of the Transaction Documents to which it is a party and compliance therewith will not result in any violation of and will not conflict with, or result in a breach of any of the terms of or constitute a default, or accelerate or permit the acceleration of any rights or obligations, under, any provision of the rules of any securities exchange (including the NYSE MKT and the TSX) or any state, local, federal or foreign law to which the Borrower or any of the Guarantors is subject, the Articles or Certificate of Incorporation, as amended, or the bylaws, as amended, of the Borrower, or the Articles or Certificate of Incorporation, as amended, or the bylaws, as amended, of any of the Guarantors, or any mortgage, indenture, agreement, instrument, judgment, decree, order, rule or regulation or other restriction to which the Borrower or any of the Guarantors is a party or by which any of them is bound, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Borrower or any of the Guarantors except as set forth in this Agreement and the Transaction Documents.
4.4 COMPLIANCE WITH INSTRUMENTS
Neither the Borrower nor any of the Guarantors is in violation of its organizational documents. Neither the Borrower nor any of the Guarantors (a) is in default, and no event has occurred which, with the giving of notice, or the lapse of time, or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material agreement to which it is a party, including, without limitation, the Merger Agreement, or any license, indenture or other instrument to which it is a party or by which it is bound or to which any of its property or assets is subject, and (b) is in material violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property may be subject.
4.5 LITIGATION
Except as described on Schedule 3.2(g), there are no actions, suits or proceedings (including governmental or administrative proceedings), investigations, third-party subpoenas or inquiries by any regulatory agency, body or other governmental authority, to which the Borrower or any of the Guarantors is a party or is subject, or to which any of their authorizations, consents and approvals or other properties or assets, is subject, which is pending, or, to the best knowledge of the Borrower or any of the Guarantors, threatened or contemplated against the Borrower or any of the Guarantors or any of such property or assets, that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any of the Guarantors is subject to any actions, suits or proceedings (including governmental or administrative proceedings), investigation, third-party subpoenas or inquiries by any regulatory agency, body or other governmental authority or any third Person regarding its accounting practices or policies.
8
4.6 OFFERING EXEMPTION
Neither the Borrower nor any of the Guarantors is subject to registration as an "investment company" under the 1940 Act.
4.7 PERMITS; GOVERNMENTAL AND OTHER APPROVALS
(a) The Borrower and each of the Guarantors possess all necessary consents, approvals, authorizations, orders, registrations, stamps, filings, qualifications, licenses, permits or other analogous acts by, of, from or with all public, regulatory or governmental agencies, bodies and authorities and all other third parties, to own, lease and operate its respective properties and to carry on its business as now conducted and proposed to be conducted prior to the Due Date except to the extent that the failure to obtain any such consents, approvals, authorizations, orders, registrations, stamps, filings, qualifications, licenses or permits would not have a Material Adverse Effect. No approval, consent, authorization or other order of, and no designation, filing, registration, qualification or recording with, any governmental authority or any other Person is required in connection with the Borrower's or any of the Guarantor's valid execution, delivery and performance of this Agreement or the consummation of any other transaction contemplated on the part of the Borrower or either Guarantor hereby except such as are required in connection with the creation and perfection of security interests and otherwise pursuant to this Agreement and the Transaction Documents .
4.8 TAXES
The Borrower and each of the Guarantors has (a) filed all necessary income, franchise and other material tax returns, domestic and foreign, (b) paid all taxes shown as due thereunder and (c) withheld and paid to the appropriate tax authorities all amounts required to be withheld from wages, salaries and other remuneration to employees. Neither the Borrower nor any of the Guarantors has any knowledge, nor has it received notice, of any tax deficiency which might be assessed against the Borrower or any of the Guarantors which, if so assessed, would reasonably be expected to have a Material Adverse Effect.
4.9 INDEBTEDNESS
The Loan Parties have no Indebtedness outstanding as of the Closing Date other than the Indebtedness listed on Schedule 4.9.
4.10 LIENS AND SECURITY INTERESTS
As of the Closing Date, the Loan Parties have no mortgage, pledge, lien, security interest or other encumbrance on any part of their properties or assets, including the MMI Property and other Collateral, or on any interest they may have therein, nor has any Loan Party acquired or agreed to acquire property or assets under any conditional sale agreement or title retention contract other than the mortgages, liens and security interests granted pursuant to the Transaction Documents in favor of the Lender and the mortgages, pledges, liens, security interests, encumbrances, conditional sale agreements and title retention contracts listed on Schedule 4.10.
4.11 DISCLOSURE
The information heretofore provided and to be provided by the Loan Parties in connection with this Agreement, the Transaction Documents and each of the agreements, documents, certificates and writings previously furnished to the Lender or its representatives, do not and will not contain any untrue statement of a material fact and do not and will not omit to state a material fact necessary in order to make the statements and writings contained herein and therein not false or misleading in the light of the circumstances under which they were made.
9
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower and each of the Guarantors hereby covenant and agree, so long as the Note remains outstanding, as follows:
5.1 MAINTENANCE OF CORPORATE EXISTENCE; TAXES
(a) The Borrower and each Guarantor shall maintain in full force and effect its corporate existence, rights and franchises owned or possessed by it and necessary to the conduct of its business, except where failure to maintain such rights and franchises would not reasonably be expected to have a Material Adverse Effect.
(b) The Borrower shall, and shall cause each of the Guarantors to, (i) promptly pay and discharge, or cause to be paid and discharged when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, assets, property or business of the Borrower and each of the Guarantors, (ii) withhold and promptly pay to the appropriate tax authorities all amounts required to be withheld from wages, salaries and other remuneration to employees, and (iii) promptly pay all claims or indebtedness (including, without limitation, claims or demands of workmen, materialmen, vendors, suppliers, mechanics, carriers, warehousemen and landlords) which, if unpaid might become a lien upon the assets or property of the Borrower or any of the Guarantors; provided, however, that any such tax, lien, assessment, charge or levy need not be paid if (1) the validity thereof shall be contested timely and in good faith by appropriate proceedings, (2) the Borrower or any of the Guarantors shall have set aside on its books adequate reserves with respect thereto, (3) the failure to pay shall not be prejudicial in any material respect to the Lender and (4) the failure to pay shall not cause a breach of the Merger Agreement, and provided further that the Borrower or any of the Guarantors will pay or cause to be paid any such tax, lien, assessment, charge or levy forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefor.
5.2 REPORTING
The Borrower and the Guarantors shall furnish with reasonable promptness copies of such information and financial data concerning the Borrower and each of the Guarantors as the Lender may reasonably request.
5.3 NOTICE OF ADVERSE CHANGE
The Borrower and each of the Guarantors shall promptly give notice to the Lender (but in any event within two Business Days) after becoming aware of the existence of any condition or event which constitutes, or the occurrence of, any of the following:
(a) any Event of Default or Default;
(b) the institution or threatened institution of any action, suit or proceeding against the Borrower or any of the Guarantors before any court, administrative agency or arbitrator, including, without limitation, any action of a foreign government or instrumentality, which, if adversely decided, would reasonably be expected to have a Material Adverse Effect;
(c) any information relating to the Borrower or any of the Guarantors which would reasonably be expected to have a Material Adverse Effect; or
(d) any failure by the Borrower or any of the Guarantors to comply with the provisions of Section 5.4 below.
10
Any notice given under this Section 5.3 shall specify the nature and period of existence of the condition, event, information, development or circumstance, the anticipated effect thereof and what actions the Borrower has taken and proposes to take with respect thereto.
5.4 COMPLIANCE WITH AGREEMENTS; COMPLIANCE WITH LAWS
The Borrower and each of the Guarantors shall comply in all material respects with the terms and conditions of all material agreements, commitments or instruments to which they are a party or by which they may be bound, including, without limitation, the Merger Agreement. The Borrower and each of the Guarantors shall also enforce all of its material rights under any material agreements, commitments or instruments to which they are a party or by which they may be bound. The Borrower and each of the Guarantors shall duly comply with any Legal Requirements relating to the conduct of its businesses, properties or assets, in each case except for any such noncompliance that would not reasonably be expected to have a Material Adverse Effect.
5.5 ACCOUNTS AND RECORDS; INSPECTIONS
(a) The Borrower and each of the Guarantors shall keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to the business and affairs of the Borrower and each of the Guarantors.
(b) The Borrower shall permit the Lender or any of the Lender's officers, employees or representatives during regular business hours of the Borrower and Guarantors, upon reasonable notice and as often as the Lender may reasonably request, to visit and inspect the offices and properties of the Borrower and Guarantors and to make extracts or copies of the books, accounts and records of the Borrower and Guarantors, and to discuss the affairs, finances and accounts of the Borrower and Guarantors with the Borrower's and Guarantors' directors and officers, its independent public accountants, consultants and attorneys.
5.6 MAINTENANCE OF OFFICE
The Borrower will maintain its principal office at the address of the Borrower set forth in Section 10.4 of this Agreement where notices, presentments and demands in respect of this Agreement and the Note may be made upon the Borrower, until such time as the Borrower shall notify the Lender in writing, at least 30 days prior thereto, of any change of location of such office.
5.7 LIENS ON COLLATERAL; FURTHER ASSURANCES
Except as specifically permitted in this Agreement and the other Transaction Documents, all liens and security interests granted by the Loan Parties in favor of Lender shall be perfected first priority liens and security interests. From time to time the Borrower and each of the Guarantors shall execute and deliver to the Lender such other instruments, certificates, agreements and documents and take such other action and do all other things as may be reasonably requested by the Lender in order to implement or effectuate the terms and provisions of this Agreement and the transactions contemplated hereby.
5.8 COLLATERAL
With respect to all Collateral, the Borrower and each of the Guarantors shall take all actions necessary to preserve and protect the Lender's first priority security interest therein pursuant to the applicable Transaction Documents or otherwise.
11
The Borrower hereby covenants and agrees, so long as the Note remains outstanding, other than as permitted under the Merger Agreement, it will not, directly or indirectly, without the prior written consent of the Lender, which consent shall not be unreasonably withheld:
6.1 STAY, EXTENSION AND USURY LAWS
At any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereinafter in force, which may affect the covenants or the performance of the Note or this Agreement, the Borrower hereby expressly waiving all benefit or advantage of any such law, or by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Lender but will suffer and permit the execution of every such power as though no such law had been enacted.
6.2 LIENS
Except for the liens and security interests granted to the Lender pursuant to this Agreement or any other Transaction Document and any other lien or security interest permitted under the Merger Agreement or otherwise approved by the Lender in writing prior to the incurrence thereof (such exceptions being "Permitted Liens"), create, incur, assume or permit to exist any mortgage, pledge, lien, security interest or encumbrance on any part of its properties or assets, including the MMI Property and other Collateral, or on any interest it may have therein, now owned or hereafter acquired, nor acquire or agree to acquire property or assets under any conditional sale agreement or title retention contract.
6.3 INDEBTEDNESS
Create, incur, assume, suffer, permit to exist, or guarantee, directly or indirectly, any Indebtedness, excluding:
(a) the endorsement of instruments for the purpose of deposit or collection in the ordinary course of business;
(b) the Note; or
(c) indebtedness permitted under the Merger Agreement.
6.4 ARM'S LENGTH TRANSACTIONS
Enter into any transaction, contract or commitment or take any action other than at arm's length.
6.5 LOANS AND ADVANCES
Make any advance or loan to, or guarantee any obligation of, any Person other than the Guarantors as necessary pursuant to an approved Budget.
6.6 INTERCOMPANY TRANSFERS; DISTRIBUTIONS; TRANSACTIONS WITH AFFILIATES; CHANGE OF CONTROL
(a) Make any intercompany transfers of monies or other assets in any single transaction or series of transactions other than as necessary pursuant to an approved Budget, or any distributions to its owners, except as otherwise permitted by the Merger Agreement.
12
(b) Engage in any transaction with any of the officers, directors, employees or Affiliates of the Borrower except on terms no less favorable to the Borrower as could be obtained at arm's length.
(c) Make any material payments to its shareholders, affiliates or executives other than (i) normal salaries, (ii) payments made by a Guarantor to Borrower, and (iii) payments required to be made with respect to Borrower's Series B Preferred Stock.
(d) Enter into any transaction resulting, or that could result, in a Change of Control.
(e) Waive or terminate prior to the stated expiration any standstill agreements provided by third parties in favor of the Borrower.
6.7 INVESTMENTS
Make any investments in, or purchase any stock, option, warrant, or other security or evidence of Indebtedness of, any Person other than investments permitted under the Merger Agreement.
6.8 OTHER BUSINESS
Enter into or engage, directly or indirectly, in any business other than the business currently conducted or proposed to be conducted as disclosed to the Lender prior to the date hereof by the Borrower.
6.9 EMPLOYEE BENEFIT PLANS AND COMPENSATION
Enter into any agreement to provide for or otherwise establish any written or unwritten employee benefit plan, program or other arrangement of any kind, covering current or former employees of the Borrower.
6.10 FORMATION OF SUBSIDIARIES
Organize or invest in any new corporation, partnership, joint venture, limited liability company, trust or estate.
6.11 ASSET SALES
Sell, lease, transfer or otherwise dispose of its assets and property, including the Capital Stock of any Guarantor, other than sales, leases, transfers and dispositions permitted under the Merger Agreement.
6.12 ROYALTY RIGHTS
Grant any royalty or other rights on the production from any of the Loan Parties' properties, including the MMI Property and the other Collateral, except as permitted under the Merger Agreement.
13
6.13 AMENDMENTS AND WAIVERS OF OTHER AGREEMENTS AND ORGANIZATION DOCUMENTS
(i) Amend, modify or otherwise change (or permit the amendment, modification or other change in any manner of) any of the provisions of any of its or any Loan Party's Indebtedness or of any instrument or agreement relating to any such Indebtedness if such amendment, modification or change would result in a violation of the subordination agreement pertaining thereto, (ii) amend, modify or otherwise change its name, jurisdiction of organization, organizational identification number or FEIN, (iii) amend, modify or otherwise change any of its Organization Documents, or any agreement or arrangement entered into by it, with respect to any of its Capital Stock (including any equityholders' agreement), or enter into any new agreement with respect to any of its Capital Stock, except as permitted under the Merger Agreement or (iv) amend, modify or otherwise change in any material respect (or permit the amendment, modification or other change in any material respect of), or waive any material rights under or material provisions of, any material contract or agreement to which such Loan Party is a party or its assets are subject or bound, other than any waiver obtained by Borrower relating to its obligations under Borrower's Series B Preferred Stock.
6.14 LIQUIDATION, DISSOLUTION, WINDING UP
Voluntarily liquidate, dissolve, or wind-up the affairs of any Loan Party, or enter into arrangements or accommodations with the creditors of any Loan Parties.
6.15 ISSUANCE OF SECURITIES
Except as permitted under the Merger Agreement, issue any securities, including convertible securities, of any of the Loan Parties, except for the issuance of options, and shares upon the exercise of options, granted pursuant to the Borrower's stock option plan in the ordinary course and consistent with past practice, and the issuance of common stock of the Borrower upon the exercise of warrants or conversion of Series B Preferred Stock outstanding as of the date of this Agreement.
7.1 EVENTS OF DEFAULT
If any of the following events shall occur and be continuing, an "Event of Default" shall be deemed to have occurred:
(a) If the Borrower shall default in the payment of any part of the principal or interest of the Note, when the same shall become due and payable, whether at maturity or at a date fixed for payment or prepayment or by acceleration or otherwise;
(b) if the Borrower or any of the Guarantors shall default in the performance of any of the covenants contained in Articles V or VI or Section 1.5;
(c) except as provided in Section 7.1(a) or (b), if the Borrower or any of the Guarantors shall default in the performance of any other agreement contained in any Transaction Document or in any other agreement executed in connection with this Agreement and such default shall not have been remedied to the reasonable satisfaction of the Lender within 10 days;
(d) if any representation or warranty made by the Borrower, the Guarantors or any of their officers in any Transaction Document or in or any certificate delivered pursuant thereto shall prove to have been incorrect in any material respect when made or deemed made;
14
(e) if (i) any default shall occur under any indenture, mortgage, agreement, instrument or commitment evidencing, or under which there is at the time outstanding, any Indebtedness of the Borrower or any of the Guarantors, or which results in such Indebtedness becoming (or being declared by its holders or, on its behalf, by an agent or trustee therefore to be) due and payable prior to its Due Date; or (ii) except as provided under the Merger Agreement, a Change of Control in Borrower shall have occurred;
(f) if the Borrower or any of the Guarantors shall default in the observance or performance of any term or provision of an agreement to which it is a party or by which it is bound which default would reasonably be expected to have a Material Adverse Effect and such default is not waived or cured within the applicable grace period;
(g) if a final judgment which, either alone or together with other outstanding final judgments against the Borrower or any of the Guarantors, exceeds an aggregate of $50,000 shall be rendered against the Borrower or any of the Guarantors and such judgment shall have continued undischarged or unstayed for 10 days after entry thereof;
(h) if the Borrower or any of the Guarantors shall generally not pay its debts as such debts become due or shall make an assignment for the benefit of creditors generally, or shall admit in writing its inability to pay its debts generally; or if any proceeding shall be instituted by or against the Borrower or any of the Guarantors seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or the reorganization or relief of debtors, or seeking entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or unstayed for a period of 15 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or if any writ of attachment or execution or any similar process shall be issued or levied against it or any substantial part of its property which is either not released, stayed, bonded or vacated within 15 days after its issue or levy or any of the actions sought or relief sought in any proceeding pursuant to which such writ or similar process shall be issued or initiated shall occur or be granted; or if the Borrower or any of the Guarantors takes corporate action in furtherance of any of the aforesaid purposes or conditions;
(i) if any provision of any Transaction Document or the Merger Agreement shall for any reason cease to be valid and binding on, or enforceable against, the Borrower or any of the Guarantors, or the Borrower or any of the Guarantors shall so assert in writing;
(j) any Transaction Document (or any financing statement) which purports:
(i) to create, perfect or evidence a lien on or security interest in any Collateral in favor of the Lender (or their agents and representatives), or to provide for the priority of any such lien or security interest over the interest of any other party in the same collateral, shall cease to create, or to preserve the enforceability, perfection or priority of, such lien and security interest; or
(ii) to provide for the priority in right of payment of the Borrower's obligations under the Transaction Documents to or in favor of the Lender (or their agents or representatives) shall cease to preserve such priority;
(k) if any change in the business, assets or financial condition of the Borrower shall occur that would reasonably be expected to have a Material Adverse Effect;
15
(l) if the Borrower is party to, or the subject of, any regulatory proceedings brought by or instituted in connection with any regulatory agency (other than regulatory notices from a United States national securities exchange) that are likely to cause a Material Adverse Effect; or
(m) if the Borrower shall be in breach of any provision of the Merger Agreement.
7.2 REMEDIES
Upon the occurrence and during the continuance of an Event of Default, the Lender may at any time at its option, by written notice or notices to the Borrower (a) declare the Note to be due and payable, whereupon the same shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived by the Borrower; and (b) declare any other amounts payable to the Lender under this Agreement or as contemplated hereby due and payable; provided, however, that upon the occurrence of an Event of Default under Section 7.1(h), the Note, together with interest accrued thereon, shall automatically become and be due and payable, without presentment, demand, protest or notice of any kind, or any other action of the Lender of any kind, all of which are hereby waived by the Borrower.
7.3 ENFORCEMENT
(a) In case any one or more Events of Default shall occur and be continuing, the Lender or its agent may proceed to protect and enforce the rights of the Lender by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement in favor of the Lender or its agent which is contained in any of the Transaction Documents or in the Note or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law (including, without limitation, the right to enforce the Guaranty and the Pledge Agreement, each in accordance with its respective terms). In case of a default in the payment of any principal of or interest on the Note, the Borrower will pay to the Lender such further amount as shall be sufficient to cover the cost and the expenses of collection, including, without limitation, attorney's fees, expenses and disbursements. No course of dealing and no delay on the part of the Lender or its agent in exercising any rights shall operate as a waiver thereof or otherwise prejudice the Lender's or its agent's rights. No right conferred hereby or by the Note upon any holder thereof shall be exclusive of any other right referred to herein or therein or now available at law or in equity, by statute or otherwise.
(b) If any Event of Default shall have occurred and be continuing, the Lender may exercise, without any other notice to or demand upon any Loan Party, in addition to the other rights and remedies provided for herein or in any other Transaction Document or otherwise available to it, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected Collateral) and also may:
(i) without notice except as specified below, sell, resell, assign and deliver or grant a license to use or otherwise dispose of the Collateral or any part thereof, in one or more parcels at public or private sale, at any of the Lender's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Lender may deem commercially reasonable; and
(ii) exercise any and all rights and remedies of the Borrower under or in connection with the Collateral, or otherwise in respect of the Collateral, including without limitation, (A) any and all rights of the Borrower to demand or otherwise require payment of any amount under, or performance of any provision of, the Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with respect to the Deposit Accounts, (C) exercise all other rights and remedies with respect to the Collateral, including without limitation, those set forth in Section 9-607 of the UCC and (D) exercise any and all voting, consensual and other rights with respect to any Collateral.
16
(c) Each Loan Party agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to the Borrower of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. At any sale of the Collateral, if permitted by applicable law, the Lender may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, each Loan Party waives all claims, damages and demands it may acquire against the Lender arising out of the exercise by it of any rights hereunder. Each Loan Party hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Obligations or otherwise. The Lender shall not be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall it be under any obligation to take any action with regard thereto. The Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefore, and such sale may, without further notice, be made at the time and place to which it was so adjourned.
(d) The Lender may, without notice to the Borrower or any of the Guarantors except as required by law and at any time or from time to time, charge, set off and otherwise apply all or part of the Obligations against any funds deposited with it or held by it or against any obligations it owes to any Loan Party.
(a) Each Loan Party shall jointly and severally indemnify the Lender and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower, any other Loan Party or any of their respective subsidiaries) other than such Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of hazardous materials on or from any property owned or operated by Borrower, any other Loan Party or any of their respective subsidiaries, or any environmental claim related in any way to Borrower, any other Loan Party or any of their respective subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, any other Loan Party or any of their respective subsidiaries, and regardless of whether any Indemnitee is a party thereto; provided, such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, or (y) result from a claim brought by Borrower, any other Loan Party or any of their respective subsidiaries against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other
17
Transaction Document, if Borrower, any other Loan Party or any of their respective subsidiaries has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.
(b) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, no party hereto shall assert, and each party hereto hereby waives, any claim against any Indemnitee or any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby.
(c) Payments. All amounts due under this Article VIII shall be payable promptly after demand therefor.
(d) Survival. Each party's obligations under this Article VIII shall survive the termination of the Transaction Documents and payment of the obligations hereunder.
ARTICLE IX
AMENDMENT AND WAIVER
No amendment of any provision of this Agreement, including any amendment of this Article IX, shall be valid unless the same shall be in writing and signed by the Borrower, the Guarantors and the Lender. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder or under any other Transaction Document, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or thereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
10.1 GOVERNING LAW
This Agreement and the rights of the parties hereunder shall be governed in all respects by the laws of the State of Delaware wherein the terms of this Agreement were negotiated, excluding to the greatest extent permitted by law any rule of law that would cause the application of the laws of any jurisdiction other than the State of Delaware.
10.2 SUCCESSORS AND ASSIGNS
Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon and enforceable by and against, the parties hereto and their respective successors, assigns, heirs, executors and administrators. No party may assign any of its rights hereunder without the prior written consent of the other parties; provided, however, that the Lender may assign any of its rights under any of the Transaction Documents to (a) any Affiliate of such Lender or (b) any Person to whom such Lender shall transfer the Note, provided, that in each case the transferee will be subject to the applicable terms of the Transaction Documents to the same extent as if such transferee were the original Lender hereunder.
18
10.3 ENTIRE AGREEMENT
This Agreement (including the Exhibits and Schedules hereto), the other Transaction Documents and any other documents delivered pursuant hereto and simultaneously herewith constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof.
10.4 NOTICES
All notices, demands or other communications given hereunder shall be in writing and shall be sufficiently given if transmitted by facsimile or delivered either personally or by a nationally recognized courier service marked for next business day delivery or sent in a sealed envelope by first class mail, postage prepaid and either registered or certified, return receipt requested, addressed as follows:
- (a)
- if to any Loan Party:
- (b)
- if to the Lender:
Mines
Management, Inc.
905 W. Riverside Avenue, Suite 311
Spokane, Washington
Attention: Douglas Dobbs
Facsimile: (509) 838-0486
Email: ddobbs@minesmanagement.com
with a copy to:
Davis
Graham & Stubbs LLP
1550 17th St., Suite 500
Denver, Colorado 80121
Attention: Deborah J. Friedman
Facsimile: (303) 893-1379
Email: deborah.friedman@dgslaw.com
Hecla
Mining Company
6500 N. Mineral Drive, Suite 200
Coeur d'Alene, Idaho 83815-9408
Attention: David C. Sienko
Facsimile: (208) 209-1278
Email: dsienko@hecla-mining.com
with a copy to:
Sheppard
Mullin Richter & Hampton LLP
70 West Madison, 48th Floor
Chicago, Illinois 60602
Attention: Kenneth A. Peterson
Facsimile: (312) 499-6301
Email: kpeterson@sheppardmullin.com
or to such other address with respect to any party hereto as such party may from time to time notify (as provided above) the other parties hereto. Any such notice, demand or communication shall be deemed to have been given (i) on the date of delivery, if delivered personally, (ii) on the date of facsimile transmission, receipt confirmed, (iii) one Business Day after delivery to a nationally recognized overnight courier service, if marked for next day delivery, or (iv) five Business Days after the date of mailing, if mailed.
19
10.5 DELAYS, OMISSIONS OR WAIVERS
No delay or omission to exercise any right, power or remedy accruing to the Lender upon any breach or default of the Borrower under this Agreement shall impair any such right, power or remedy of the Lender nor shall it be construed to be a waiver of any such breach or default, or an acquiescence, therein, or of or in any similar breach or default thereafter occurring. Any permit, consent or approval of any kind or character on the part of the Lender of any breach or default under this Agreement must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to the Lender, shall be cumulative and not alternative.
10.6 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES
All covenants hereunder shall be given independent effect so that if a certain action or condition constitutes a default under a certain covenant, the fact that such action or condition is permitted by another covenant shall not affect the occurrence of such default. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of or a breach of a representation and warranty hereunder.
10.7 SEVERABILITY
In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
10.8 EXPENSES
(a) The Borrower and each of the Guarantors shall bear its own expenses and legal fees incurred on its behalf with respect to the negotiation, execution and consummation of the transactions contemplated by this Agreement.
(b) [Intentionally Omitted]
(c) The Borrower and each of the Guarantors further agrees to pay or reimburse the Lender and its agents for all out-of-pocket costs and expenses, including, without limitation, attorneys' fees and disbursements, and costs of settlement incurred by the Lender or its agents after the occurrence of an Event of Default (i) in enforcing any obligation or in foreclosing against the Collateral or exercising or enforcing any other right or remedy available by reason of such Event of Default; (ii) in connection with any negotiation, refinancing or restructuring of, or attempted refinancing or restructuring of, the credit arrangements provided under this Agreement and the other Transaction Documents in the nature of a "work-out" or in any insolvency or bankruptcy proceeding; (iii) in commencing, defending or intervening in any litigation or in filing a petition, complaint, answer, motion or other pleadings in any legal proceeding relating to either Borrower or any of its Affiliates and related to or arising out of the transactions contemplated hereby or by any of the other Transaction Documents; (iv) in taking any other action in or with respect to any suit or proceeding (whether in bankruptcy or otherwise) arising out of or in connection with this Agreement or any of the other Transaction Documents; (v) in protecting, preserving, collecting, leasing, selling, taking possession of, or liquidating any of the Collateral; or (vi) attempting to enforce or enforcing any security interest in any of the Collateral or any other rights under any Transaction Document.
20
10.9 JURISDICTION
(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the district court of the State of Idaho and the Federal Courts of the United States located in the State of Idaho, in any action or proceeding arising out of or relating to this Agreement or any of the other Transaction Documents to which it is a party or to whose benefit it is entitled, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in the district court of the State of Idaho or, to the fullest extent permitted by law, in such United States Federal court located in the State of Idaho. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Transaction Documents in the courts of any other jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or in relation to this Agreement or any other Transaction Document to which it is a party in any such district court or United States Federal court sitting in the State of Idaho. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
10.10 WAIVER OF JURY TRIAL
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
10.11 TITLES AND SUBTITLES
The titles of the articles, sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
10.12 COUNTERPARTS
This Agreement may be executed in any number of counterparts, including by facsimile copy, each of which shall be deemed an original, but all of which together shall constitute one instrument.
ARTICLE XI
CERTAIN DEFINED TERMS
Unless otherwise defined in the Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC. However, if a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in Article 9. The following terms have the meanings indicated (unless otherwise expressly provided herein):
"1940 Act" means the Investment Company Act of 1940, as amended, and any applicable rules and regulations thereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule or regulation of the 1940 Act shall be deemed to include any corresponding provisions of future law.
21
"Affiliate" has the meaning specified in Rule 501(b) under the Securities Act.
"Agreement" has the meaning set forth in the Preamble hereto.
"Borrower" has the meaning set forth in the Preamble hereto.
"Budget" has the meaning set forth in Section 3.1(e).
"Business Day" means any day other than a Saturday or Sunday on which commercial banks are authorized to close, or are in fact closed, in Coeur d'Alene, Idaho.
"Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person including, in each instance in clauses (i) and (ii) above, options, warrants, convertible securities and other equity securities.
"Change of Control" means (a) the acquisition of control of the board of directors of the Borrower by way of the acquisition of the right to nominate or appoint a majority of the members of the board of directors of the Borrower, (b) acquisition of over 25% of the outstanding shares of common stock of the Borrower, in either case by one entity or two or more entities acting in concert, or (c) the Borrower sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its properties and assets (either in one transaction or a series of related transactions) to any Person.
"Closing Date" has the meaning set forth in Section 1.1.
"Collateral" has the meaning set forth in Section 1.5.
"Credit Date" has the meaning set forth in Section 3.2(a).
"Default" means the occurrence of any event that with the passage of time or the giving of notice or both would constitute an Event of Default.
"Dollars" and the sign "$" mean the lawful money of the United States of America.
"Due Date" has the meaning set forth in Section 2.1.
"Event of Default" has the meaning set forth in Section 7.1.
"GAAP" means generally accepted accounting principles in the United States.
"Guarantor Collateral" means all collateral pledged by the Guarantor to the Lender pursuant to the Pledge Agreement.
"Guaranty" means the Guaranty of even date herewith made by the Guarantors in favor or the Lender.
"Guarantors" has the meaning set forth in the Preamble hereto.
"Indebtedness", as applied to any Person, means, without duplication, (i) indebtedness for borrowed money; (ii) that portion of obligations with respect to capital leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit, regardless of whether representing obligations for borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA and excluding accounts payable incurred in the ordinary course of business that are not overdue by more than ninety days); (v) indebtedness secured by a 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; (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) the direct or indirect guaranty,
22
endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another; (viii) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (ix) any liability of such Person for the obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (a) or (b) of this clause (ix), the primary purpose or intent thereof is as described in clause (viii) above; and (x) obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including any hedge agreement, whether entered into for hedging or speculative purposes.
"Indemnitee" has the meaning set forth in Article VIII(a).
"Interest Period" means an interest period of one month, (i) initially, commencing on the Closing Date; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided, (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of a calendar month; and (c) no Interest Period shall extend beyond such Loan's Maturity Date.
"Interest Rate Determination Date" means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.
"Legal Requirements" means any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, order, edict, judgment, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any governmental entity.
"Lender" has the meaning set forth in the Preamble hereto.
"LIBOR" means the rate per annum equal to the rate determined by the Lender and equal to the rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) quoted as (i) the "LIBOR Rate" set forth in the money rates section of the Wall Street Journal for the date that is the applicable Interest Rate Determination Date or (ii) in the event the rate referenced in the preceding clause (i) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum determined as of approximately 9:00 a.m. (Los Angeles time) on such Interest Rate Determination Date by reference to the British Bankers' Association Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Lender that has been nominated by the British Bankers' Association (or any successor or substitute agency determined by the Lender) as an authorized information vendor for the purpose of displaying such rates) with a term equivalent to the applicable Interest Period. The Lender currently uses the rate quoted in the Wall Street Journal as indicated above to provide information with respect to the interbank Eurodollar market, but the Lender, in its sole discretion, may change the service providing such information at any time. Each determination of the LIBOR Base Rate by the Lender shall be conclusive and binding upon the parties hereto, absent manifest error.
"Loan" or "Loans" has the meaning set forth in Section 1.1.
23
"Loan Parties" has the meaning set forth in the Preamble hereto.
"Material Adverse Effect" means any event, occurrence, fact, condition or change that is, or would reasonably be expected to become, individually or in the aggregate, materially adverse to (i) the business, results of operations, prospects, condition (financial or otherwise), or assets of the Borrower and the Guarantors, taken as a whole, or (ii) the ability of the Borrower to consummate the transactions contemplated under the Merger Agreement on a timely basis; provided, however, that, for the purposes of clause (i), a Material Adverse Effect shall not be deemed to include events, occurrences, facts, conditions or changes arising out of, relating to or resulting from: (a) changes generally affecting the economy or financial or securities markets; (b) the announcement of the transactions contemplated by the Merger Agreement; (c) any outbreak or escalation of war or any act of terrorism; or (d) general conditions in the industries in which the Borrower and the Guarantors operate; provided further, however, that any event, change and effect referred to in clauses (a), (c) or (d) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such event, change or effect has a disproportionate effect (other than an effect that is disproportionate solely due to the financial condition of the Borrower and its subsidiaries) on the Borrower and the Guarantors, taken as a whole, compared to other participants in the industries in which the Borrowers and the Guarantors conduct their businesses.
"Maximum Amount" has the meaning set forth in Section 1.1.
"Maximum Rate" has the meaning set forth in Section 2.4.
"Merger Agreement" means that Agreement and Plan of Merger, dated as of May 23, 2016, by and among the Borrower, the Lender and [Merger Sub], as such agreement exists on the date hereof with such amendments or supplements as approved by the Lender pursuant to the Merger Agreement.
"MMC" has the meaning set forth in the Preamble hereto.
"MMI Property" has the meaning set forth in Section 1.5.
"MMWC" has the meaning set forth in the Preamble hereto.
"MRC" has the meaning set forth in the Preamble hereto.
"Mortgage" means a mortgage or deed of trust made by any Grantor in favor of, or for the benefit of, the Lender, substantially in the form of Exhibit B (with such changes thereto acceptable to the Lender as shall be advisable under the law of the jurisdiction in which such mortgage or deed of trust is to be recorded), pursuant to which a lien is granted on the MMI Property and other real property and fixtures described therein.
"Newhi" has the meaning set forth in the Preamble hereto.
"Note" has the meaning set forth in Section 1.2.
"NYSE MKT" means the NYSE MKT LLC.
"Obligations" means (i) obligations of the Borrower from time to time arising under this Agreement, any other Transaction Document or otherwise with respect to the due and punctual payment of (A) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loan, when and as due, whether at maturity, by acceleration, or otherwise, (B) each payment required to be made by the Borrower under this Agreement or any other Transaction Document, when and as due, and (C) all other monetary obligations, including fees, costs, attorneys' fees and disbursements, reimbursement obligations, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including
24
monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower under this Agreement and any other Transaction Document, and (ii) all other agreements, duties, indebtedness, obligations and liabilities of any kind of the Borrower under, out of, or in connection with this Agreement and the other Transaction Documents or any other document made, delivered or given in connection with any of the foregoing, in each case whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed in any bankruptcy, insolvency, receivership or other similar proceeding, whether arising from an extension of credit, loan, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.
"Organization Documents" means (i) for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of designations or preferences or other instrument relating to the rights of preferred shareholders of such corporation, any shareholders or similar agreement, and all applicable resolutions of the board of directors (or any committee thereof) of such corporation, (ii) for any partnership, the partnership agreement and, if applicable, certificate of limited partnership, (iii) for any limited liability company, the operating or limited liability company agreement and articles or certificate of formation or (iv) for any other entity, any similar agreement or instrument.
"Permitted Liens" has the meaning set forth in Section 6.2.
"Person" means any individual, corporation, limited liability company, partnership, association, trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
"Pledge Agreement" means the Pledge Agreement of even date herewith by and among the Grantor and the Lender, as such agreement may be supplemented, amended or otherwise modified from time to time in accordance with its terms.
"Related Parties" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person's Affiliates.
"Securities Act" means the Securities Act of 1933, as amended, and any applicable rules and regulations thereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule or regulation of the Securities Act shall be deemed to include any corresponding provisions of future law.
"Series B Preferred Stock" means the Borrower's Series B 6% Convertible Preferred Stock, no par value and stated value equal to $1,000 per share.
"Transaction Documents" means, collectively, this Agreement, the Note, the Guaranty and each other document or agreement executed and/or delivered in connection therewith.
"TSX" means the Toronto Stock Exchange.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of Idaho; provided, however, that if by reason of mandatory provisions of law, any or all of the perfection or priority of the Lender's security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Idaho, the term "UCC" means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
[SIGNATURE PAGES FOLLOW]
25
IN WITNESS WHEREOF, the parties hereto have executed this Term Loan and Security Agreement as of the date first written above.
| BORROWER: | ||||||
MINES MANAGEMENT, INC. |
||||||
By: |
/s/ Glenn M. Dobbs |
|||||
| Name: | Glenn M. Dobbs | |||||
| Title: | Chief Executive Officer | |||||
GUARANTORS: |
||||||
MONTANORE MINERALS CORP. |
||||||
By: |
/s/ Glenn M. Dobbs |
|||||
| Name: | Glenn M. Dobbs | |||||
| Title: | Chief Executive Officer | |||||
NEWHI, INC. |
||||||
By: |
/s/ Glenn M. Dobbs |
|||||
| Name: | Glenn M. Dobbs | |||||
| Title: | Chief Executive Officer | |||||
MONTMIN RESOURCES CORP. |
||||||
By: |
/s/ Glenn M. Dobbs |
|||||
| Name: | Glenn M. Dobbs | |||||
| Title: | Chief Executive Officer | |||||
MONTANORE MINERALS WISCONSIN CORP. |
||||||
By: |
/s/ Glenn M. Dobbs |
|||||
| Name: | Glenn M. Dobbs | |||||
| Title: | Chief Executive Officer | |||||
Signature Page to Term Loan and Security Agreement
| LENDER: | ||||||
HECLA MINING COMPANY |
||||||
By: |
/s/ David C. Sienko |
|||||
| Name: | David C. Sienko | |||||
| Title: | Vice President & General Counsel | |||||
Signature Page to Term Loan and Security Agreement
TERM LOAN AND SECURITY AGREEMENT
ARTICLE I LOAN; SECURITY DOCUMENTS
ARTICLE II REPAYMENT; PREPAYMENTS; INTEREST
ARTICLE III CONDITIONS TO CLOSING AND SUBSEQUENT DRAWS
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BORROWER AND GUARANTORS
ARTICLE V AFFIRMATIVE COVENANTS
ARTICLE VI NEGATIVE COVENANTS
ARTICLE VII EVENTS OF DEFAULT
ARTICLE VIII INDEMNIFICATION
ARTICLE IX AMENDMENT AND WAIVER
ARTICLE X MISCELLANEOUS
ARTICLE XI CERTAIN DEFINED TERMS