EXHIBIT 10.2

 

CREDIT AGREEMENT

 

DATED AS OF MARCH 4, 2005

 

BETWEEN

 

MK GOLD EXPLORATION B.V.

 

AND

 

LEUCADIA NATIONAL CORPORATION

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page

--------------------------------------------------------------------------------

SECTION 1.

  DEFINITIONS    1

1.1

  Defined Terms    1

1.2

  Intentionally Omitted    4

1.3

  Other Definitional Provisions    4

SECTION 2.

  AMOUNTS AND TERMS OF COMMITMENT AND LOANS    5

2.1

  Commitment; Loans; Notes    5

2.2

  Interest on the Loans    6

2.3

  Intentionally Omitted    6

2.4

  Repayments and Prepayments; General Provisions Regarding Payments    6

2.5

  Use of Proceeds    8

SECTION 3.

  CONDITIONS TO LOANS    9

3.1

  Closing Conditions    9

3.2

  Further Conditions To Each Loan    9

SECTION 4.

  REPRESENTATIONS AND WARRANTIES    10

4.1

  Intentionally Omitted    10

4.2

  Organization, Powers, Qualification, and Good Standing    10

4.3

  Authorization, Etc    10

4.4

  No Legal Bar    10

4.5

  No Material Adverse Effect    11

4.6

  Title to Properties; Liens    11

4.7

  Taxes    11

4.8

  No Material Litigation    11

4.9

  Use of Proceeds    11

SECTION 5.

  AFFIRMATIVE COVENANTS    11

5.1

  Compliance Certificates and Other Reports    11

5.2

  Maintenance of Existence and Conduct of Business    12

5.3

  Payment of Obligations    12

5.4

  Books and Records    12

 

i

--------------------------------------------------------------------------------

TABLE OF CONTENTS

(continued)

 

         Page

--------------------------------------------------------------------------------

5.5

  Insurance    12

5.6

  Compliance with Laws    13

5.7

  Use of Proceeds    13

5.8

  Special Dividend    13

5.9

  Further Assurances    13

SECTION 6.

  NEGATIVE COVENANTS    13

6.1

  Mergers, Subsidiaries, Etc    13

6.2

  Investments; Loans and Advances    13

6.3

  Indebtedness    13

6.4

  Liens    14

6.5

  Intentionally Omitted    14

6.6

  Capital Structure and Business    14

6.7

  Change of Fiscal Year    14

6.8

  No Speculative Transactions    14

SECTION 7.

  EVENTS OF DEFAULT; RIGHTS AND REMEDIES; TERMINATION    14

7.1

  Events of Default    14

7.2

  Remedies    16

7.3

  Termination    16

SECTION 8.

  MISCELLANEOUS    17

8.1

  Fees and Expenses    17

8.2

  Severability    17

8.3

  Headings    17

8.4

  Applicable Law    17

8.5

  Waiver of Jury Trial    17

8.6

  Submission to Jurisdiction; Service of Process    17

8.7

  Successors and Assigns    18

8.8

  Notices    18

8.9

  Survival    19

8.10

  Entire Agreement    19

 

ii

--------------------------------------------------------------------------------

TABLE OF CONTENTS

(continued)

 

         Page

--------------------------------------------------------------------------------

8.11

  Counterparts; Effectiveness    19

 

INDEX OF EXHIBITS

 

Exhibit I - Form of Notice of Borrowing

 

Exhibit II - Form of Note

 

Exhibit III – Form of Guaranty

 

iii

--------------------------------------------------------------------------------

CREDIT AGREEMENT

 

This CREDIT AGREEMENT (the “Agreement”) is entered into as of March 4, 2005,
between MK GOLD EXPLORATION B.V., a Dutch private company with limited liability
(“Borrower”), and LEUCADIA NATIONAL CORPORATION, a New York corporation
(“Lender”). Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in subsection 1.1 of this Agreement.

 

RECITALS

 

WHEREAS, Borrower desires that Lender extend a revolving credit facility to
Borrower for certain corporate purposes of Borrower as specified in subsection
2.5 hereof.

 

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 DEFINED TERMS.

 

The following terms used in this Agreement shall have the following meanings:

 

“Agreement” means this Credit Agreement between MK Gold Exploration B.V. and
Leucadia National Corporation as it may be amended, restated, supplemented or
otherwise modified from time to time.

 

“Borrower” has the meaning specified in the Preamble hereto.

 

“Business Day” means any day other than Saturday, Sunday and any other day on
which banking institutions located in New York are authorized or required to
close.

 

“Charges” shall mean all national and local, foreign or other governmental taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Obligations, (ii) Borrower’s employees,
payroll, income or gross receipts, (iii) Borrower’s ownership or use of any of
its assets or (iv) any other aspect of Borrower’s business.

 

“CLC” means Cobre Las Cruces S.A., Borrower’s wholly-owned Spanish subsidiary.

 

“Closing Date” means March 4, 2005.

--------------------------------------------------------------------------------

“Commitment” means the aggregate commitment of Lender to make Loans, which
aggregate commitment shall be $35,000,000 on the Closing Date and thereafter
until the Termination Date, as such amount may be reduced from time to time in
accordance with the Agreement.

 

“Contractual Obligation” means any provision of any security issued by Borrower
or of any agreement, instrument or undertaking to which Borrower is a party or
by which it or any of its property is bound.

 

“Default” means an Event of Default or an event that with notice or lapse of
time or both would become an Event of Default.

 

“Dutch Agreement and Deed of Pledge” means the Agreement and Deed of Pledge
pursuant to which MK Resources shall pledged 65% of the outstanding share
capital of Borrower as Security for its obligations under the MK Resources
Credit Agreement and the Guaranty.

 

“Eurodollar Rate” means the rate determined by Lender to be the offered rate for
deposits in U.S. Dollars appearing on the Dow Jones Markets Telerate Page 3750
as of 11:00 a.m., London time, on the date of determination. In the event that
such rate does not appear on the Dow Jones Markets Telerate Page 3750 (or
otherwise on the Dow Jones Markets screen), the Eurodollar Rate for the purposes
of this definition shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be selected by
Lender

 

“Event of Default” means each of the events set forth in Section 7.

 

“Fiscal Year” means the fiscal year of Borrower ending on December 31 of each
calendar year.

 

“Funding Date” means the date of funding of any Loan.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Guaranty” means the guaranty, in substantially the form of Exhibit III (Form of
Guaranty), executed by MK Resources.

 

“Indebtedness” of any Person means without duplication (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person evidenced by
notes, bonds, debentures or similar instruments or that bear interest, (c) all
reimbursement and all obligations with respect to letters of credit, bankers’
acceptances, surety bonds and performance bonds, whether or not matured, (d) all
indebtedness for the deferred purchase price of property or services, (e) all
indebtedness of such Person

 

2

--------------------------------------------------------------------------------

created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (f) all capital lease
obligations of such Person and the present value of future rental payments under
all synthetic leases, (g) all guaranty obligations of such Person, (h) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any stock or stock equivalents of such Person, valued, in the
case of redeemable preferred stock, at the greater of its voluntary liquidation
preference and its involuntary liquidation preference plus accrued and unpaid
dividends, (i) all payments that such Person would have to make in the event of
an early termination on the date Indebtedness of such Person is being determined
in respect of hedging contracts of such Person and (j) all Indebtedness of the
type referred to above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon
or in property (including accounts and general intangibles) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness.

 

“Interest Rate” means a rate equal to 2.5% per annum plus the Eurodollar Rate.

 

“IRC” means the Internal Revenue Code of 1986 (or any successor legislation
thereto), as amended from time to time.

 

“Las Cruces Project” means the high grade copper deposit owned by CLC and
covered by a mining concession granted by the Ministry of Employment and
Technical Development of the government of Andalusia, Spain.

 

“Lender” has the meaning specified in the Preamble hereto.

 

“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
lease or title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Uniform
Commercial Code or comparable law of any jurisdiction).

 

“Loan Documents” means this Agreement, the Note, the Guaranty, the Dutch
Agreement and Deed of Pledge and any applications, reimbursement agreements and
other documents or certificates executed in favor of Lender relating to this
Agreement.

 

“Loans” means the loans made from time to time by Lender to Borrower pursuant to
subsection 2.1.

 

3

--------------------------------------------------------------------------------

“Material Adverse Effect” means (i) a material adverse effect upon the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of Borrower or (ii) a material adverse effect on the ability of Borrower to
perform, or of Lender to enforce, the Obligations.

 

“MK Resources” means MK Resources Company, a Delaware corporation.

 

“MK Resources Credit Agreement” means that certain Credit Agreement, dated as of
March 1, 1998, as amended from time to time, between MK Resources (f/k/a MK Gold
Company) and Leucadia National Corporation.

 

“Note” has the meaning specified in subsection 2.1(d).

 

“Notice of Borrowing” has the meaning specified in subsection 2.1(b).

 

“Obligations” means all obligations of every nature of Borrower from time to
time owed to Lender under the Loan Documents, whether for principal, interest,
fees, expenses, indemnification or otherwise.

 

“Permitted Encumbrances” means the following encumbrances: (i) Liens for taxes
or assessments or other governmental charges or levies, either not yet due and
payable or to the extent that nonpayment thereof is permitted by the terms of
this Agreement; (ii) any attachment or judgment lien, unless the judgment it
secures shall not, within thirty (30) days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have been
discharged within thirty (30) days after the expiration of any such stay and
(iii) mechanics and similar liens arising in ordinary course of business that do
not secure indebtedness and do not impair the use by Borrower of assets subject
thereto in the course of its business.

 

“Person” means and includes natural persons, corporations, limited partnerships,
limited liability companies, 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.

 

“Responsible Officer” means, with respect to Borrower, any one of the managing
directors of Borrower.

 

“Termination Date” shall mean January 3, 2007, or such earlier date as may be
determined in accordance with subsection 2.1(e).

 

1.2 INTENTIONALLY OMITTED.

 

1.3 OTHER DEFINITIONAL PROVISIONS. References to “Sections” and “subsections”
shall be to Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided. Any of the terms defined in subsection 1.1 may,
unless the context otherwise requires, be used in the singular or the plural,
depending on the reference.

 

4

--------------------------------------------------------------------------------

SECTION 2. AMOUNTS AND TERMS OF COMMITMENT AND LOANS

 

2.1 COMMITMENT; LOANS; NOTES.

 

(a) Commitment. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower herein set forth,
Lender hereby agrees to lend to Borrower from time to time from and including
the Closing Date through but excluding the Termination Date an aggregate amount
not exceeding the Commitment to be used for the purposes identified to and
approved by Lender in accordance with subsection 2.5. The amount of the
Commitment may be permanently reduced from time to time pursuant to subsection
2.4(a)(ii) or (iii). Within the limits of the Commitment, amounts borrowed under
this subsection 2.1(a) may be repaid and reborrowed up to but excluding the
Termination Date.

 

(b) Borrowing Mechanics. Each Loan shall be made on notice, given by Borrower to
Lender not later than 10:00 a.m. (New York time) on the Business Day prior to
the date of the proposed borrowing. Each such notice (a “Notice of Borrowing”)
shall be made in writing substantially in the form of Exhibit I annexed hereto,
specifying (i) the amount of the proposed Loan and (ii) the proposed Funding
Date with respect to such Loan. Each Loan shall be in a minimum amount of
$500,000 and integral multiples of $100,000 in excess of that amount.

 

(c) Disbursement of Funds. Lender shall make the proceeds of any Loan available
to Borrower on the Funding Date specified in the applicable Notice of Borrowing
by causing an amount of immediately available funds equal to the proceeds of
such Loan to be wired in accordance with the wire instructions of Borrower,
which may specify an account of Borrower or an agent of Borrower.

 

(d) Note. Loans made by Lender shall be evidenced by a promissory note to be
executed and delivered by Borrower on the Closing Date, in the form of Exhibit
II annexed hereto (the “Note”). The Note shall be payable to the order of Lender
and shall represent the obligation of Borrower to pay the amount of the
Commitment or, if less, the aggregate unpaid principal amount of all Loans made
by Lender to Borrower with interest thereon as provided in subsection 2.2. The
date and amount of each Loan and each payment of principal with respect thereto
shall be recorded on the books and records of Lender, which books and records
shall constitute prima facie evidence of the accuracy of the information therein
recorded. The entire unpaid balance of the Loans shall be due and payable on the
Termination Date.

 

(e) Change by Lender of the Termination Date. Lender shall have the right, to be
exercised in its sole discretion, at any time on or before September 15 of each
year, commencing on September 15, 2006, by notice to Borrower, to change

 

5

--------------------------------------------------------------------------------

the Termination Date hereunder to the December 15 immediately following the date
of such notification to Borrower. All Obligations hereunder and under the other
Loan Documents shall be due and payable on such Termination Date. Lender shall
have no obligation to change the Termination Date.

 

2.2 INTEREST ON THE LOANS.

 

(a) Rate of Interest. Borrower shall pay interest to Lender on the outstanding
principal amount of each Loan from the date made until repaid which shall accrue
at the Interest Rate.

 

(b) Interest Payments. Accrued interest on each Loan shall be capitalized with
and added to the principal amount of the Loans on each of March 31, June 30,
September 30 and December 31, commencing on the first such date to occur after
the initial Funding Date through the Termination Date (whether by acceleration
or otherwise). All interest (whether or not capitalized) shall be payable by
Borrower to Lender in full (i) at any time payment is made pursuant to Section
2.4(a) of this Agreement and (ii) on the Termination Date (whether by
acceleration or otherwise).

 

(c) Default Interest. Upon the occurrence and during the continuance of an Event
of Default, the outstanding principal amount of all Loans and, to the extent
permitted by applicable law, any interest payments on the Loans not paid when
due, shall thereafter bear interest payable on demand at the Interest Rate plus
2.0%.

 

(d) Computation of Interest. Interest on the Loans shall be computed on the
basis of a 360-day year, in each case for the actual number of days elapsed in
the period during which it accrues.

 

2.3 INTENTIONALLY OMITTED.

 

2.4 REPAYMENTS AND PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS.

 

(a) Prepayment and Reductions in Commitments.

 

(i) Voluntary Prepayments. Borrower may, on not less than one (1) Business Day
prior written or telephonic notice, confirmed in writing to Lender, on any
Business Day prepay any Loans in whole or in part, in a minimum amount of
$100,000 and integral multiples of $100,000 in excess of that amount.

 

(ii) Voluntary Reductions of Commitment. Borrower may, on not less than three
(3) Business Days’ prior written or telephonic notice confirmed in writing to
Lender, at any time and from time to time terminate in whole or permanently
reduce in part, without premium or penalty, the Commitment in an amount up to
the amount by which the Commitment exceeds the outstanding amount of the Loans
at the time of such termination or reduction; provided that any such partial
reduction of

 

6

--------------------------------------------------------------------------------

the Commitment shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount. Borrower’s notice to
Lender shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and such
termination or reduction of the Commitment shall be effective on the date
specified in Borrower’s notice.

 

(iii) Mandatory Prepayments and Reductions of Commitment. If CLC becomes
ineligible to receive a substantial portion of the Regional Incentives Subsidy
of €36.9 million from the Ministry of Economy for Spain and the Special Action
Zone subsidy of €10.6 million from the Regional Ministry for Employment and
Technological Development for Andalusia (the “Subsidies”) and CLC’s applications
to modify the conditions of the Subsidies or otherwise regain eligibility to
receive the Subsidies have been denied, Borrower shall cause CLC to declare and
pay a dividend in the maximum amount permitted by law and use the proceeds to
prepay the Loans and permanently reduce the Commitment in an amount equal to
such prepayment.

 

(b) General Provisions Regarding Payments.

 

(i) Manner and Time of Payment. All payments by Borrower of principal, interest,
fees and other Obligations hereunder and under the Note shall be made in
immediately available funds and without defense, setoff or counterclaim, free of
any restriction or condition, and delivered to Lender not later than 2:00 p.m.
(New York time) on the date due at the office specified on the signature pages
hereof (or such other office as may be designated by Lender) for the account of
Lender; funds received by Lender after that time on such due date shall be
deemed to have been paid by Borrower on the next succeeding Business Day.

 

(ii) Payments on Business Days. Whenever any payment to be made hereunder shall
be stated to be due on a day that is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest hereunder or of the
commitment fee hereunder, as the case may be.

 

(iii) Taxes.

 

(a) Any and all payments by Borrower under each Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding (i) in the case of Lender (A) taxes measured by its
net income, and franchise taxes imposed on it, by the jurisdiction (or any
political subdivision thereof) under the laws of which Lender is organized and
(B) any United States withholding taxes payable with respect to payments under
the Loan Documents under laws (including any statute, treaty or regulation) in
effect on the Closing Date applicable to Lender, but not excluding any United
States withholding taxes payable as a result of any change in such laws
occurring after the Closing Date and (ii) in the case of Lender, taxes measured
by its net income, and franchise taxes imposed on it as a result of

 

7

--------------------------------------------------------------------------------

a present or former connection between Lender and the jurisdiction of the
Governmental Authority imposing such tax or any taxing authority thereof or
therein (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as “Taxes”). If any
Taxes shall be required by law to be deducted from or in respect of any sum
payable under any Loan Document to Lender (w) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.3(b)(iii))
Lender receives an amount equal to the sum it would have received had no such
deductions been made, (x) Borrower shall make such deductions, (y) Borrower
shall pay the full amount deducted to the relevant taxing authority or other
authority in accordance with applicable law and (z) Borrower shall deliver to
Lender evidence of such payment.

 

(b) In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction, and all liabilities with respect thereto, in
each case arising from any payment made under any Loan Document or from the
execution, delivery or registration of, or otherwise with respect to, any Loan
Document (collectively, “Other Taxes”).

 

(c) Borrower shall indemnify Lender for the full amount of Taxes and Other Taxes
(including any Taxes and Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.3(b)(iii)) paid by Lender and any liability
(including for penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date Lender makes written demand therefor.

 

(d) Within 30 days after the date of any payment of Taxes or Other Taxes by
Borrower, Borrower shall furnish to Lender, at its address referred to on the
signature page hereto, the original or a certified copy of a receipt evidencing
payment thereof.

 

(e) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
2.3(b)(iii) shall survive the payment in full of the Obligations.

 

2.5 USE OF PROCEEDS. The proceeds of the Loans shall be contributed by Borrower
to CLC to facilitate CLC’s receipt of the Subsidies for the development of the
Las Cruces Project; provided, however, that if the proceeds of the Loans exceeds
the amount required to be contributed to CLC under the conditions of the
Subsidies, an amount not to exceed $100,000 may be used for general corporate
purposes.

 

8

--------------------------------------------------------------------------------

SECTION 3. CONDITIONS TO LOANS

 

3.1 CLOSING CONDITIONS. The obligation of Lender to make the Loan on the initial
Funding Date, or to take, fulfill or perform any other action hereunder, is
subject to the following conditions having been satisfied or provided for in a
manner satisfactory to Lender, or waived in writing by Lender:

 

(a) This Agreement or counterparts hereof shall have been duly executed by, and
delivered to, Borrower and Lender; the Note shall have been executed by Borrower
and delivered to Lender; and Lender shall have received such documents,
instruments, agreements and legal opinions as Lender shall request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, each in form and substance reasonably satisfactory to Lender.

 

(b) The Guaranty shall have been duly executed by MK Resources and delivered to
Lender.

 

(c) The Dutch Agreement and Deed of Pledge shall have been duly executed by MK
Resources, Borrower and Lender.

 

(d) Lender shall have received (i) resolutions of the managing board of
Borrower, to be duly adopted and in full force and effect on such date,
authorizing (A) the consummation of each of the transactions contemplated by the
Loan Documents and (B) specific officers to execute and deliver this Agreement
and the other Loan Documents and (ii) a copy of the deed of incorporation of
Borrower, containing the articles of association of Borrower certified as of a
recent date by a civil law notary in the Netherlands.

 

(e) Lender shall have received such additional information and materials in
respect of Borrower as Lender may reasonably request, including, without
limitation copies of any debt agreements, security agreements and other material
contracts.

 

3.2 FURTHER CONDITIONS TO EACH LOAN. The obligation of Lender to fund any Loan
on the Funding Date thereof is subject to the following:

 

(a) Lender shall have received before the Funding Date, in accordance with the
provisions of subsection 2.1(b), an originally executed Notice of Borrowing, in
each case signed by a Responsible Officer.

 

(b) No representation or warranty by Borrower contained herein or in any of the
other Loan Documents shall be untrue or incorrect as of such date, except to the
extent that such representation or warranty expressly relates to an earlier
date.

 

9

--------------------------------------------------------------------------------

(c) No event or circumstance having a Material Adverse Effect shall have
occurred since the date hereof.

 

(d) No Default or Event of Default shall have occurred and be continuing or
would result after giving effect to any Loans.

 

(e) Borrower shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before that Funding Date.

 

The request and acceptance by Borrower of the proceeds of any Loan shall be
deemed to constitute, as of the date of such request or acceptance, a
representation and warranty by Borrower that the conditions in this subsection
3.2 have been satisfied.

 

SECTION 4. REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Lender that:

 

4.1 INTENTIONALLY OMITTED.

 

4.2 ORGANIZATION, POWERS, QUALIFICATION, AND GOOD STANDING.

 

(a) Organization and Powers. Borrower is a private company with limited
liability, duly organized and validly existing under the laws of the
Netherlands, and its only subsidiary is CLC. Borrower has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into each of
the Loan Documents to which it is a party, to carry out the transactions
contemplated thereby and to issue and pay the Note.

 

(b) Qualification and Good Standing. Borrower is qualified to do business and is
in good standing, if applicable, in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, except
in jurisdictions where the failure to be so qualified or in good standing has
not had and will not have a Material Adverse Effect.

 

4.3 AUTHORIZATION, ETC. The execution, delivery and performance of the Loan
Documents have been duly authorized by all necessary corporate action on the
part of Borrower.

 

4.4 NO LEGAL BAR. The execution, delivery and performance of this Agreement and
the Note, the borrowings hereunder and the use of the proceeds thereof, (a) do
not contravene any provision of Borrower’s articles of association, (b) do not
violate any law or regulation, or any order or decree of any court or
Governmental Authority, (c) do not violate any Contractual Obligation and (d)
except for the Dutch Agreement and Deed of Pledge, will not result in, or
require, the creation or imposition of any Lien on any of its properties or
revenues pursuant to any applicable provisions of law or Contractual Obligation.

 

 

10

--------------------------------------------------------------------------------

4.5 NO MATERIAL ADVERSE EFFECT. Since December 31, 2004, no event or change has
occurred that has caused or evidences, either individually or in the aggregate,
a Material Adverse Effect.

 

4.6 TITLE TO PROPERTIES; LIENS. Borrower has good, sufficient and legal title to
all of its respective properties and assets, except for assets and properties
not constituting a material portion of the assets and properties of Borrower.
Except as permitted by this Agreement, all such properties and assets are free
and clear of Liens.

 

4.7 TAXES. All tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by Borrower have
been filed with the appropriate Governmental Authority and all Charges have been
paid prior to the date on which any fine, penalty, interest or late charge may
be added thereto for nonpayment thereof (or any such fine, penalty, interest,
late charge or loss has been paid).

 

4.8 NO MATERIAL LITIGATION. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of Borrower, threatened by or against Borrower or against any of its respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect.

 

4.9 USE OF PROCEEDS. The proceeds of any Loan are being used only for purposes
approved by Lender pursuant to subsection 2.5.

 

SECTION 5. AFFIRMATIVE COVENANTS

 

Borrower covenants and agrees that, so long as the Commitment shall remain in
effect and until payment in full of all of the Loans and other Obligations, it
shall perform all covenants in this Section 5.

 

5.1 COMPLIANCE CERTIFICATES AND OTHER REPORTS. Borrower shall deliver to Lender:

 

(a) Compliance Certificate. Within fifty-five (55) days after the end of each of
the first three fiscal quarters of each Fiscal Year and within 100 days after
the end of each Fiscal Year, a certificate of a Responsible Officer stating
that, to the best of such Responsible Officer’s knowledge, Borrower during such
quarterly or annual period, as applicable, has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to which it is a party to be observed,
performed or satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate.

 

11

--------------------------------------------------------------------------------

(b) Reports to Shareholders. Within ten (10) days after the same are sent or
made available, copies of all financial statements, reports and notices, if any,
sent or made available generally by Borrower to its shareholders.

 

(c) Events of Default, etc. Promptly upon any Responsible Officer of Borrower
obtaining knowledge: (i) of any condition or event that constitutes a Default or
Event of Default or (ii) of the occurrence of any event or change that has
caused or evidences or could reasonably be expected to cause a Material Adverse
Effect, an officer’s certificate of Borrower specifying the nature and period of
existence of such condition, event or change.

 

(d) Other Information. With reasonable promptness, such other information and
data with respect to Borrower (including, without limitation, financial
statements in form and substance reasonably satisfactory to Lender) as from time
to time may be reasonably requested by Lender.

 

5.2 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower shall: (i) do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its rights and franchises; (ii) continue to
conduct its business substantially as now conducted or as otherwise permitted
hereunder; and (iii) at all times maintain, preserve and protect all of its
assets and properties used or useful in the conduct of its business, and keep
the same in good repair, working order and condition in all material respects
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices.

 

5.3 PAYMENT OF OBLIGATIONS. Borrower shall pay and discharge or cause to be paid
and discharged promptly all Charges payable by it, including (a) Charges imposed
upon it, its income and profits, or any of its property (real, personal or
mixed) and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees, and (b) lawful claims for labor,
materials, supplies and services or otherwise, before any thereof shall become
past due.

 

5.4 BOOKS AND RECORDS. Borrower shall keep adequate books and records with
respect to its business activities in which proper entries, reflecting all
financial transactions.

 

5.5 INSURANCE. Borrower shall, at its sole cost and expense, maintain policies
of insurance with financially sound and reputable insurers against risks and in
amounts comparable to those maintained by corporations in the same or similar
businesses similarly situated.

 

12

--------------------------------------------------------------------------------

5.6 COMPLIANCE WITH LAWS. Borrower shall comply with all federal, state, local
and foreign laws and regulations applicable to it, including, without
limitation, all environmental laws, except to the extent that the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

5.7 USE OF PROCEEDS. The proceeds of any Loan shall be used only for purposes
approved by Lender pursuant to subsection 2.5.

 

5.8 SPECIAL DIVIDEND. If CLC becomes ineligible to receive a substantial portion
of the Subsidies and CLC’s applications to modify the conditions of the
Subsidies or otherwise regain eligibility to receive the Subsidies have been
denied, Borrower shall immediately cause CLC to declare and pay a dividend to it
in amount equal to all (or the maximum amount permitted by law) of the funds
contributed to CLC by it pursuant to subsection 2.5 and Borrower shall
immediately repay the Loans in accordance with the terms of Section 2.4(a)(iii)
of this Agreement.

 

5.9 FURTHER ASSURANCES. At any time or from time to time, upon the request of
Lender, Borrower shall execute and deliver such further documents and do such
other acts and things as Lender may reasonably request in order to effect fully
the purposes of this Agreement and the other Loan Documents and to provide for
payment of the Obligations in accordance with the terms of this Agreement and
the other Loan Documents.

 

SECTION 6. NEGATIVE COVENANTS

 

Borrower agrees that without the prior written consent of Lender, from and after
the date hereof until the later of the Termination Date and payment in full of
all of the Loans and other Obligations:

 

6.1 MERGERS, SUBSIDIARIES, ETC. Borrower shall not directly or indirectly, by
operation of law or otherwise, (a) form or acquire any subsidiary; (b) merge
with, consolidate with, acquire all or substantially all of the assets or
capital stock of, or otherwise combine with or acquire, any Person or any
operating division of any Person; (c) liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution); or (d) dispose of all or any substantial
part of its property or business.

 

6.2 INVESTMENTS; LOANS AND ADVANCES. Borrower shall not make or permit to exist
any investment in, or make, accrue or permit to exist loans or advances of money
to, any Person, through the direct or indirect lending of money, holding of
securities or otherwise; provided that Borrower can make investments in CLC in
accordance with subsection 2.5.

 

6.3 INDEBTEDNESS. Borrower shall not create, incur, assume or permit to exist
any Indebtedness, except (without duplication) (i) the Loans and the other
Obligations, (ii) deferred taxes, (iii) unfunded pension fund and other employee
benefit

 

13

--------------------------------------------------------------------------------

plan obligations and liabilities to the extent they are permitted to remain
unfunded under applicable law, (iv) Indebtedness owed to MK Resources, (iv)
existing Indebtedness described in Schedule 6.3 and refinancings thereof or
amendments or modifications thereto which do not have the effect of increasing
the principal amount thereof or changing the amortization thereof (other than to
extend the same) and which are otherwise on terms and conditions no less
favorable to Borrower or Lender, as determined by Lender, than the terms of the
Indebtedness being refinanced, amended or modified.

 

6.4 LIENS. Borrower shall not create, incur, assume or permit to exist any Lien
on or with respect to any of its properties or assets (whether now owned or
hereafter acquired) except for (a) Permitted Encumbrances and (b) the Liens
evidenced by the Dutch Agreement and Deed of Pledge. In addition, Borrower shall
not become a party to any agreement, note, indenture or instrument, or take any
other action, which would prohibit the creation of a Lien on any of its
properties or other assets in favor of Lender, as collateral for the
Obligations, except leases or licenses which prohibit Liens upon the assets that
are subject thereto.

 

6.5 INTENTIONALLY OMITTED.

 

6.6 CAPITAL STRUCTURE AND BUSINESS. Borrower shall not make any changes in any
of its business objectives, purposes or operations which could adversely affect
the repayment of the Loans or any of the other Obligations or could have or
result in a Material Adverse Effect. Borrower shall not engage in any business
other than the businesses currently engaged in by it.

 

6.7 CHANGE OF FISCAL YEAR. Borrower shall not change its Fiscal Year.

 

6.8 NO SPECULATIVE TRANSACTIONS. Borrower shall not engage in any transaction
involving commodity options, futures contracts or similar transactions, except
solely to hedge against fluctuations in the prices of commodities owned or
purchased by it and the values of foreign currencies receivable or payable by it
and interest swaps, caps or collars.

 

SECTION 7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES; TERMINATION

 

7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an “Event of Default”
hereunder:

 

(a) Borrower shall fail (i) to make any payment of principal of, or interest on
any Loan, or any of the other Obligations when due and payable or (ii) to pay or
reimburse Lender for any expense reimbursable hereunder or under any other Loan
Document, in each case within ten (10) Business Days following Lender’s demand
for such reimbursement or payment of expenses; or

 

14

--------------------------------------------------------------------------------

(b) Borrower shall fail to comply with subsection 2.5, 5.1(c) or Section 6 of
this Agreement; or

 

(c) Borrower shall fail or neglect to perform, keep or observe any other
provision of this Agreement or of any of the other Loan Documents (other than
any provision embodied in or covered by any other clause of this Section 7) and
the same shall remain unremedied for twenty (20) days or more; or

 

(d) a default or breach under any other agreement, document or instrument to
which Borrower is a party which is not cured within any applicable grace period,
and such default or breach (i) involves the failure to make any payment when due
in respect of any Indebtedness (other than the Obligations) of Borrower in
excess of $500,000 in the aggregate, or (ii) causes, or permits any holder of
such Indebtedness or a trustee to cause, Indebtedness or a portion thereof in
excess of $500,000 in the aggregate to become due prior to its stated maturity
or prior to its regularly scheduled dates of payment, regardless of whether such
right is exercised, by such holder or trustee; or

 

(e) a case or proceeding shall have been commenced against Borrower in a court
having competent jurisdiction seeking a decree or order in respect of Borrower
(i) under any applicable bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower or of any substantial part of its properties or (iii)
ordering the winding-up or liquidation of the affairs of Borrower and such case
or proceeding shall remain undismissed or unstayed for thirty (30) consecutive
days or such court shall enter a decree or order granting the relief sought in
such case or proceeding; or

 

(f) Borrower shall (i) file a petition seeking relief under any applicable
bankruptcy or other similar law, (ii) consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Borrower or of any substantial part of its
properties, (iii) fail generally to pay its debts as such debts become due or
(iv) take any corporate action in furtherance of any such action; or

 

(g) there shall occur an event which would have a Material Adverse Effect; or

 

(h) any representation or warranty herein or in any other Loan Document or in
any written statement, report, financial statement or certificate made or
delivered to Lender by Borrower is untrue or incorrect in any material respect
as of the date when made or deemed made; or

 

15

--------------------------------------------------------------------------------

(i) assets of Borrower with a fair market value of $500,000 or more shall be
attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors of Borrower and such condition continues for thirty
(30) days or more; or

 

(j) a final judgment or judgments for the payment of money in excess of $500,000
in the aggregate at any time outstanding shall be rendered against Borrower and
the same shall not, within thirty (30) days after the entry thereof, have been
discharged or execution thereof stayed or bonded pending appeal, or shall not
have been discharged prior to the expiration of any such stay; or

 

(k) any material provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms (or Borrower shall
challenge the enforceability of any Loan Document or shall assert in writing, or
engage in any action or inaction based on any such assertion, that any provision
of any of the Loan Documents has ceased to be or otherwise is not valid, binding
and enforceable in accordance with its terms); or

 

(l) any Default or Event of Default (each as defined in the MK Resources Credit
Agreement) shall occur and be continuing under the MK Resources Credit
Agreement; or

 

(m) any provision of the Guaranty or the Dutch Agreement and Deed of Pledge
after delivery thereof pursuant to this Agreement or any other Loan Document
shall for any reason cease to be valid and binding on, or enforceable against,
any party thereto, or any party thereto shall so state in writing; or

 

(n) the Dutch Agreement and Deed of Pledge shall for any reason fail or cease to
create a valid Lien on any collateral purported to be covered thereby or, except
as permitted by the Loan Documents, such Lien shall fail or cease to be a
perfected and first or second ranking Lien or any party thereto shall so state
in writing.

 

7.2 REMEDIES. If any Event of Default shall have occurred and be continuing,
Lender may, without notice, terminate the Commitment to make Loans hereunder
and/or declare all Obligations to be forthwith due and payable, whereupon the
Commitment to make Loans hereunder shall terminate and all Obligations shall
become and be due and payable, without presentment, demand, protest or further
notice of any kind, all of which are expressly waived by Borrower; provided,
however, that upon the occurrence of an Event of Default specified in subsection
7.1(e), (f) or (i) hereof, the Commitment to make Loans hereunder shall
automatically terminate and the Obligations shall automatically become due and
payable without declaration, notice or demand by Lender.

 

7.3 TERMINATION. If MK Resources shall cease, for any reason, to own one hundred
percent (100%) of the issued share capital of Borrower, then Lender

 

16

--------------------------------------------------------------------------------

shall have the right, on not less than ninety (90) days’ notice to Borrower, to
terminate the Commitment to make Loans hereunder and declare all Obligations to
be forthwith due and payable, whereupon the Commitment to make loans hereunder
shall terminate and all Obligations shall become due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower.

 

SECTION 8. MISCELLANEOUS

 

8.1 FEES AND EXPENSES. Borrower shall reimburse Lender for all out-of-pocket
expenses incurred in connection with the preparation and administration of the
Loan Documents and any amendments thereto or waivers thereunder, including the
reasonable fees and expenses of its counsel.

 

8.2 SEVERABILITY. In case any provision in or obligation under this Agreement or
the other Loan Documents shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality, and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

8.3 HEADINGS. Section and subsection 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.

 

8.4 APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE LEGAL
RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

8.5 WAIVER OF JURY TRIAL. EACH OF BORROWER AND LENDER HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

8.6 SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.

 

(a) Any legal action or proceeding with respect to this Agreement or any other
Loan Document may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, Borrower hereby accepts for itself and
in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. The parties hereto hereby irrevocably waive any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, that any of them may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions.

 

17

--------------------------------------------------------------------------------

(b) Borrower hereby irrevocably designates, appoints and empowers MK Resources
(telephone no: (801) 297-6900) (telecopy no: (801) 297-6950) (electronic mail
address: jfarmer@mkresources.com) (the “Process Agent”), in the case of any
suit, action or proceeding brought in the United States of America as its
designee, appointee and agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and all legal process,
summons, notices and documents that may be served in any action or proceeding
arising out of or in connection with this Agreement or any Loan Document. Such
service may be made by mailing (by registered or certified mail, postage
prepaid) or delivering a copy of such process to Borrower in care of the Process
Agent at the Process Agent’s above address, and Borrower hereby irrevocably
authorizes and directs the Process Agent to accept such service on its behalf.
As an alternative method of service, Borrower irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
(by registered or certified mail, postage prepaid) of copies of such process to
the Process Agent or Borrower at its address specified on the signature page
hereto. The Borrower 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 judgment or in any other manner provided by law.

 

(c) Nothing contained in this Section 8.6 shall affect the right of Lender to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against Borrower in any other jurisdiction.

 

(d) If for the purposes of obtaining judgment in any court it is necessary to
convert a sum due hereunder in U.S. Dollars into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures Lender could purchase U.S. Dollars with such other currency at the
spot rate of exchange quoted by Citibank, N.A. at 11:00 a.m. (New York time) on
the Business Day preceding that on which final judgment is given, for the
purchase of U.S. Dollars, for delivery two Business Days thereafter.

 

8.7 SUCCESSORS AND ASSIGNS. This agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of Lender. Borrower
may not assign any of its rights or obligations hereunder without the consent of
Lender. The terms and provisions of this Agreement shall inure to the benefit of
any assignee or transferee of Lender, and in the event of any such transfer or
assignment the rights and privileges herein conferred upon Lender shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.

 

8.8 NOTICES. Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by
another, or whenever any of the parties desires to give or serve upon another
any communication with respect to this Agreement, each such notice, demand,
request, consent, approval,

 

18

--------------------------------------------------------------------------------

declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or telecopied and confirmed by
telecopy answerback and addressed as set forth on the signature pages hereto.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Every notice, demand, request, consent,
approval, declaration or other communication hereunder shall be deemed to have
been duly given or served on the date on which personally delivered, with
receipt acknowledged, or three (3) Business Days after the same shall have been
deposited in the United States mail. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.

 

8.9 SURVIVAL. The representations and warranties of Borrower in this Agreement
shall survive the execution, delivery and acceptance hereof by the parties
hereto and the closing of the transactions described herein or related hereto.

 

8.10 ENTIRE AGREEMENT. This Agreement, taken together with all of the other Loan
Documents and all certificates and other documents delivered by Borrower to
Lender pursuant to the Loan Documents, embodies the parties’ entire agreement
and supersedes all prior agreements, written and oral, relating to the subject
matter hereof.

 

8.11 COUNTERPARTS; EFFECTIVENESS. This Agreement and any amendments, waivers,
consents or supplements hereto or in connection herewith may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

 

[SIGNATURE PAGE FOLLOWS]

 

19

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.

 

BORROWER:

MK GOLD EXPLORATION B.V.

By:

 

/s/ John Farmer

--------------------------------------------------------------------------------

Name:

  John Farmer

Title:

  Director

NOTICE ADDRESS:

MK Gold Exploration B.V.

c/o MK Resources Company

60 East South Temple, Suite 1225

Salt Lake City, Utah 84014

Attn:

  John Farmer

Fax:

  (801) 297-6950

Tel:

  (801) 297-6900

LENDER:

LEUCADIA NATIONAL CORPORATION

By:

 

/s/ Joseph A. Orlando

--------------------------------------------------------------------------------

Name:

  Joseph A. Orlando

Title:

  Vice President

NOTICE ADDRESS:

Leucadia National Corporation

315 Park Avenue South

New York, NY 10010-3679

Attn:

  Joseph A. Orlando     Vice President and     Chief Financial Officer

Fax:

  (212) 598-3241

Tel:

  (212) 460-1932

--------------------------------------------------------------------------------

EXHIBIT I

 

(FORM OF NOTICE OF BORROWING)

 

NOTICE OF BORROWING

 

Pursuant to that certain Credit Agreement, dated as of March 4, 2005 (the
“Credit Agreement”), by MK GOLD EXPLORATION B.V., a Dutch private company with
limited liability (“Borrower”), and LEUCADIA NATIONAL CORPORATION, a New York
corporation (“Lender”), this represents Borrower’s request to borrow on
                , 2005, from Lender a Loan of $                    . Capitalized
terms used herein and not defined shall have the meanings assigned to them in
the Credit Agreement. The proceeds of such Loan are to be deposited at:

 

______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________

 

The undersigned officer and Borrower certify that:

 

(i) No event has occurred and is continuing or would result from the
consummation of the borrowing contemplated hereby that would constitute a
Default or Event of Default;

 

(ii) Borrower has satisfied all conditions which the Credit Agreement and the
other Loan Documents provide shall be satisfied on or before the date of the
Loan requested hereby; and

 

(iii) Each of the representations and warranties contained in the Credit
Agreement are true and correct on the date hereof, except to the extent that
such representation or warranty expressly relates to an earlier date.

 

DATED:                     

  MK GOLD EXPLORATION B.V.         By:  

 

--------------------------------------------------------------------------------

        Name:             Title:    

--------------------------------------------------------------------------------

EXHIBIT II

 

(FORM OF NOTE)

 

MK GOLD EXPLORATION B.V.

 

PROMISSORY NOTE

 

U.S. $35,000,000

 

New York, New York

   

March 4, 2005

 

FOR VALUE RECEIVED, MK GOLD EXPLORATION B.V., a Dutch private company with
limited liability (“Borrower”), promises to pay to the order of LEUCADIA
NATIONAL CORPORATION, a New York corporation (“Payee”), on or before the
Termination Date (as defined in the Credit Agreement referred to below) the
lesser of (x) THIRTY FIVE MILLION DOLLARS ($35,000,000) and (y) the unpaid
principal amount of all Loans made by Payee to Borrower under the Credit
Agreement referred to below.

 

Borrower also promises to pay interest on the unpaid principal amount hereof,
from the date hereof until paid in full, at the rates and at the times provided
by that certain Credit Agreement, dated as of March 4, 2005, between Borrower
and Payee (as it may be amended, the “Credit Agreement”). Capitalized terms used
herein and not defined have the meanings assigned to them in the Credit
Agreement.

 

This Note is Borrower’s “Note” and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loans evidenced
hereby were made and are to be repaid.

 

All payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in immediately available funds at
the location designated by Payee.

 

Whenever any payment on this Note shall be stated to be due on a day which is
not a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall be included in the computation of the
payment of interest on this Note.

 

This Note is subject to prepayment at the option of Borrower as provided in
subsection 2.4(a)(i) of the Credit Agreement.

 

Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note, together with all accrued and unpaid interest thereon, may
become, or may be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit Agreement.

 

[SIGNATURE PAGE FOLLOWS]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.

 

MK GOLD EXPLORATION B.V.

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title: