Exhibit 10.3

 

EXECUTION VERSION

 

 

COMMON SECURITY AGREEMENT

 

among

 

MINERA SAN CRISTÓBAL, S.A.
as Borrower,

 

APEX SILVER MINES SWEDEN AB,

 

APEX LUXEMBOURG S.A. R.L.,

 

APEX METALS GmbH,

 

BNP PARIBAS
as Administrative Agent and a Mandated Lead Arranger,

 

BARCLAYS CAPITAL

as Technical Agent and a Mandated Lead Arranger,

 

CORPORACIÓN ANDINA DE FOMENTO

as a Senior Lender,

 

JPMORGAN CHASE BANK, N.A.,
as Collateral Agent and as Securities Intermediary,

 

THE SENIOR LENDERS PARTY HERETO

 

and

 

THE HEDGE BANKS PARTY HERETO

 

 

Dated as of December 1, 2005

 

 

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TABLE OF CONTENTS

 

 

Page

ARTICLE I DEFINITIONS AND INTERPRETATION

1

1.01 Definitions

1

1.02 Interpretation

2

 

 

ARTICLE II SECURED DEBT

3

2.01 Debt Secured Hereby

3

2.02 Secured Debt Pari Passu

3

2.03 Secured Debt and Disbursements

3

2.04 Prepayment of Senior Loans.

3

2.05 Payments Generally; Pro Rata Treatment.

4

2.06 Replacement Secured Debt.

5

2.07 Senior Lender Suspension or Termination.

7

2.08 Termination and Reduction of Senior Loan Commitments.

8

 

 

ARTICLE III SECURITY INTERESTS

10

3.01 Currently Owned Project Property

10

3.02 After-acquired Property

11

3.03 De Minimis Exception

13

3.04 Project Documents

14

3.05 Bolivian Insurance Policies

16

3.06 Borrower Shares

16

3.07 Expropriation Compensation

17

3.08 New York Accounts

18

3.09 Other Security Documents

19

3.10 Non-Bolivian Policies

19

3.11 Apex Sweden Shares

19

3.12 Intercompany Debt

20

3.13 Apex Metals Quotas

22

3.14 Perfection and Maintenance of Security Interests

23

3.15 Rights in Collateral Prior to Enforcement Direction

25

3.16 Liability of Borrower

26

3.17 Deficiency

26

3.18 Private Sale and Waivers

26

3.19 Obligations Absolute

27

3.20 Subrogation

28

3.21 Designation of Local Banks

28

3.22 First Priority

29

 

 

ARTICLE IV ACCOUNTS

29

4.01 Accounts

29

4.02 Deposits

33

4.03 Investment of Funds in Accounts

35

4.04 Withdrawals from Liquidity Accounts Pre-Event of Default

36

 

 

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4.05 Withdrawals from Liquidity Accounts During the Continuance of an Event of
Default

37

4.06 Debt Service Reserve Account

40

4.07 Operating Reserve Account

42

4.08 Equity Account

43

4.09 Contingent Support Account

45

4.10 Insurance Proceeds Account

47

4.11 Expropriation Proceeds Account

47

4.12 Reports and Certifications

47

4.13 Books and Accounts

47

4.14 Inadequately Identified Amounts

48

 

 

ARTICLE V INSURANCE AND EXPROPRIATION

48

5.01 Maintenance of Insurance

48

5.02 Lender Provisions in Policies of Insurance

49

5.03 Payment, Etc. of Reinsurance

49

5.04 Payment of Premiums

49

5.05 Application of Insurance Proceeds

49

5.06 Information

51

5.07 Insurance Advisor

52

5.08 Expropriation Compensation

52

 

 

ARTICLE VI REPORTING

55

6.01 Regular Operational Reporting

55

6.02 Other Regular Reporting

57

6.03 Notice of Extraordinary Events

58

6.04 Environmental and Social Reports

59

 

 

ARTICLE VII REPRESENTATIONS AND WARRANTIES

59

7.01 Representations and Warranties of the Borrower

59

 

 

ARTICLE VIII COVENANTS

67

8.01 Maintenance of Existence; Prohibition of Fundamental Changes

67

8.02 No Modification of Organizational Documents

67

8.03 Business

67

8.04 Principal Place of Business

67

8.05 Books and Records; Accounting and Cost Control Systems

67

8.06 Access

68

8.07 Preservation of Assets

68

8.08 Taxes

69

8.09 Compliance with Law and Environmental Guidelines

69

8.10 Maintain and Comply with Mining Concessions and Government Approvals

70

8.11 Project Documents

70

8.12 Construction and Completion

71

8.13 Operation

71

8.14 Operating Plan, Construction Budget and Financial Model

72

8.15 Capital Expenditures

73

 

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8.16 Sales of Project Production

74

8.17 [Reserved]

74

8.18 Arm’s Length Transactions

74

8.19 Limitation on Indebtedness

74

8.20 Limitation on Liens and Encumbrances

75

8.21 Limitation on Loans, Advances, Guarantees and Investments

76

8.22 Limitation on Share Issuance

76

8.23 Hedge Instruments

76

8.24 Maintain Good Title

76

8.25 Further Assurances

77

8.26 Use of Proceeds

77

8.27 Limitations on Accounts

77

8.28 Independent Engineer

77

8.29 Registration of Financing Information

77

8.30 Perfection of Security Interests

77

 

 

ARTICLE IX RESTRICTED PAYMENTS; CASH SWEEP PREPAYMENTS

78

9.01 Restricted Payments

78

9.02 Cash Sweep Prepayments

80

 

 

ARTICLE X EVENTS OF DEFAULT

80

10.01 Events of Default

80

10.02 Remedies

91

10.03 Enforcement Action; Limitation on Suits; Subrogation

92

10.04 Application of Enforcement Proceeds

94

10.05 Conduct of Certain Enforcement Action

94

10.06 Incidents of Sale

95

10.07 Collateral Agent May File Proofs of Claim

95

10.08 Collateral Agent May Enforce Claims

96

10.09 References to Collateral Agent

96

 

 

ARTICLE XI CONDITIONS PRECEDENT

96

11.01 Conditions Precedent to Closing Date

96

11.02 Conditions Precedent to Initial Disbursement of Senior Loans

100

11.03 Common Conditions Precedent to Initial and Subsequent Disbursements of
Senior Loans

104

11.04 Disbursements

104

11.05 Post Commitment Termination Date Funding of Project Costs

107

 

 

ARTICLE XII ADMINISTRATIVE AGENT AND TECHNICAL AGENT

108

12.01 Appointment

108

12.02 Limitation of Liability

108

12.03 Resignation and Replacement

110

12.04 No Reliance

111

12.05 Communication

111

12.06 Indemnity

111

12.07 Duties

112

 

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12.08 Special Provisions Relating to the Loan PRI Policy

112

12.09 Special Provisions Relating to the Hedge PRI Policy

113

12.10 Compensation

116

12.11 Authority to Act for Secured Parties

116

 

 

ARTICLE XIII THE COLLATERAL AGENT AND SECURITIES INTERMEDIARY

116

13.01 Appointment of Collateral Agent

116

13.02 Delivery of Documentation

116

13.03 Attorney-in-Fact

116

13.04 Authority to Act for the Secured Parties

118

13.05 Reliance

118

13.06 Written Direction; Liability

118

13.07 Consultation With Counsel, Etc.

119

13.08 Duties

119

13.09 Resignation, Replacement and Successor Collateral Agent

119

13.10 Indemnity

120

13.11 Compensation

121

13.12 Certificates

121

13.13 Information

121

13.14 Limitation on Collateral Agent’s Duties in Respect of Collateral

121

13.15 Right to Initiate Judicial Proceedings, Etc.

121

13.16 Exculpatory Provisions

122

13.17 Treatment of Senior Lenders by Collateral Agent

122

13.18 Collateral Agent Protections

122

13.19 Miscellaneous

122

 

 

ARTICLE XIV INTERCREDITOR ARRANGEMENTS

123

14.01 Sharing of Information

123

14.02 Notice of Payments Subject to Sharing Among Secured Parties

124

14.03 Meetings of Secured Parties

124

14.04 No Reliance

124

14.05 Use of Agent for the Collateral

124

14.06 Sharing Generally

125

14.07 Sharing of Non-Pro Rata Payments

125

14.08 Amounts Not Subject to Sharing

126

14.09 No Separate Security

128

14.10 Consent and Agreement of Borrower

128

14.11 Termination of Senior Loan Commitments

128

14.12 Hedge Bank Voting

129

14.13 Hedge Bank Accession

129

14.14 Secured Party Action

129

 

 

ARTICLE XV MISCELLANEOUS

130

15.01 Termination

130

15.02 Currency Equivalents

130

15.03 Governing Law

130

15.04 WAIVER OF JURY TRIAL

130

 

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15.05 Severability

130

15.06 Entire Agreement

131

15.07 Confidentiality

131

15.08 Notices

131

15.09 Benefits of Agreement

134

15.10 Remedies

135

15.11 Execution in Counterparts

135

15.12 Consent to Jurisdiction

135

15.13 Judgment Currency

137

15.14 Expenses; Indemnity

137

15.15 Survival

138

15.16 Right to Setoff

138

15.17 Successors and Assigns

139

15.18 Waivers; Amendments

139

15.19 Conflicts

141

15.20 Effectiveness

141

15.21 Headings

141

15.22 Compliance with Applicable Law

141

15.23 Language

141

15.24 Reinstatement

142

15.25 No Consequential Damages

142

 

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APPENDICES

 

Appendix A

Definitions

Appendix B-1

Lenders, Senior Loan Commitments, Initial Senior Loan Agreements and Hedge Banks

Appendix B-2

Notice Instructions and Addresses for Secured Parties

Appendix C-1

Schedule of Minimum Insurance Requirements

Appendix C-2

Lender Provisions in Policies of Insurance

Appendix C-3

Form of Broker’s Letter of Undertaking

Appendix C-4

Assignment of Reinsurance Policies

Appendix D-1

Form of Notice of Disbursement

Appendix D-2

Form of Notice of Project Costs

Appendix E-1

Financing Document Authorizations, Government Approvals, Etc.

Appendix E-2

Project Authorizations, Government Approvals, Etc.

Appendix F

Mandatory Metals Hedge Transactions

Appendix G

Form of Cost to Complete Certificate

Appendix H

Physical Facilities

Appendix I

[Reserved]

Appendix J

Notice and Acknowledgment of Assignment of Project Document and Counterparty’s
Consent

Appendix K

Notice and Counterparty’s Consent and Acknowledgment of Assignment of
Non-Bolivian Policies

Appendix L

Form of CSA Accession Agreement

Appendix M

[Reserved]

Appendix N

Form of Quarterly Hedge Report

Appendix O

Form of Withdrawal Certificate

Appendix P

[Reserved]

Appendix Q

Debt Service Coverage Ratio Data

Appendix R-1

Forms of Opinion of Bolivian counsel to the Borrower

Appendix R-2

Form of Opinion of Cayman counsel to the Sponsor

Appendix R-3

Form of Opinion of  New York counsel to the Affiliated Obligors

Appendix R-4

Form of Opinion of  Colorado counsel to the Affiliated Obligors

Appendix R-5

Form of Opinion of  Swedish counsel to Apex Sweden

Appendix R-6

Form of Opinion of  Swiss counsel to Apex Metals

Appendix R-7

Form of Opinion of  Luxembourg counsel to Apex Luxembourg

Appendix R-8

Form of Opinion of  Bolivian counsel to the Senior Lenders

Appendix R-9

Form of Opinion of  New York counsel to the Senior Lenders

Appendix R-10

Form of Opinion of Chilean counsel to Apex Metals and the Borrower

Appendix R-11

Form of Opinion of Counsel to Material Project Counterparty

Appendix R-12

Form of Opinion of English Counsel to the Affiliated Obligors

 

SCHEDULES

 

Schedule 3.01(a)

Mining Concessions and Other Property Rights

Schedule 3.02(a)(i)

Equipment

Schedule 7.01(a)(ii)

Indebtedness for Borrowed Money

 

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Schedule 7.01(o)(i)

Project Documents and Third Party Concentrate Sales Agreements

Schedule 7.01(o)(vii)

Performance Security

 

ANNEXES

 

Annex 1

Acceptable Buyers

Annex 2

Planned Project Costs

 

vii

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COMMON SECURITY AGREEMENT

 

This Agreement, dated as of December 1, 2005, is made among:

 

MINERA SAN CRISTÓBAL, S.A., a sociedad anónima organized under the laws of
Bolivia, as Borrower,

 

APEX SILVER MINES SWEDEN AB, a privat aktiebolag organized under the laws of
Sweden,

 

APEX LUXEMBOURG S.A. R.L., a société à responsabilité limitée organized under
the laws of Luxembourg,

 

APEX METALS GmbH, a company with limited liability organized under the laws of
Switzerland; with its seat in Zug, canton of Zug, Switzerland; and registered
address: c/o Juris Treuhand AG, Industriestrasse 47, 6304 Zug, Switzerland,

 

BNP PARIBAS, a banking institution organized under the laws of France, as
Administrative Agent and a Mandated Lead Arranger,

 

BARCLAYS CAPITAL, a public limited company organized under the laws of England
and Wales, as Technical Agent and a Mandated Lead Arranger,

 

CORPORACIÓN ANDINA DE FOMENTO, a multilateral institution organized and existing
pursuant to its Constitutive Agreement signed in Bogotá, Colombia on February 7,
1968, as a Senior Lender,

 

JPMORGAN CHASE BANK, N.A., a national banking corporation, as Collateral Agent
and as Securities Intermediary,

 

the SENIOR LENDERS party hereto, and

 

the HEDGE BANKS party hereto.

 

WHEREAS, the Borrower (a) proposes (i) to incur and secure Senior Loans, in an
aggregate principal amount of up to $225,000,000, for the construction,
development and operation of the Project and (ii) to secure its obligations to
the Hedge Banks under the Hedge Guaranty and (b) has authorized the execution
and delivery of this Agreement.

 

NOW, THEREFORE, the parties agree as follows:

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

1.01  Definitions.  Defined terms in this Agreement and the Appendices to this
Agreement, which may be identified by the capitalization of the first letter of
each principal word thereof, have the meanings assigned to them in Appendix A.

 

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1.02  Interpretation.  In this Agreement and in the Appendices, except to the
extent that the context otherwise requires:

 

(a)           the Table of Contents and headings are for convenience only and
shall not affect the interpretation of this Agreement;

 

(b)           unless otherwise specified in this Agreement, references to
Articles, Sections, clauses and Appendices are references to Articles, Sections
and clauses of, and Appendices to, this Agreement;

 

(c)           unless otherwise specified in this Agreement, any definition of or
reference to any agreement, instrument or other document, including this
Agreement, shall be deemed to refer to such agreement, instrument or other
document as amended, restated, supplemented, replaced or otherwise modified from
time to time in accordance with its terms and (where applicable) subject to any
restrictions or requirements set forth therein or in the Financing Documents;

 

(d)           references in this Agreement to any Person shall be construed to
include such Person’s successors or permitted assigns (to the extent permitted
under the Financing Documents) and, in the case of any Governmental Authority,
any Person succeeding to its functions and capacities;

 

(e)           the definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined;

 

(f)            any pronoun shall include the corresponding masculine, feminine
and neuter forms;

 

(g)           the words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”; 

 

(h)           the word “will” shall be construed to have the same meaning and
effect as the word “shall”;

 

(i)            references to number of days shall refer to calendar days unless
Business Days are otherwise specified;

 

(j)            references to months and years shall refer to calendar months and
years unless otherwise specified;

 

(k)           the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof;

 

(l)            the words “asset” and “property” shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights;

 

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(m)          any reference to assignment of a Person’s rights and/or obligations
shall be construed to refer to assignment, transfer or novation of those rights
and/or obligations; and

 

(n)           unless otherwise specified, references in this Agreement to any
Government Rule shall be construed as a reference to such Government Rule as
re-enacted, redesignated, amended or extended from time to time, except as
otherwise provided in this Agreement.

 

ARTICLE II

SECURED DEBT

 

2.01  Debt Secured Hereby.  All Secured Debt Obligations shall be secured by and
entitled to the benefits of this Agreement and the security interests granted
pursuant to this Agreement and each other Security Document.  Each Initial
Senior Lender, the Initial Senior Lender Group to which such Initial Senior
Lender belongs, such Initial Senior Lender’s Senior Loan Commitment, the Initial
Senior Loan Agreements relating to each Initial Senior Lender Group and each
Initial Hedge Bank are each identified in Appendix B.

 

2.02  Secured Debt Pari Passu.  All Secured Debt shall rank pari passu without
any preference among Secured Debt by reason of date of incurrence, currency of
payment or otherwise; provided that the foregoing shall not be construed to
permit any Hedge Bank to vote more than its Eligible Guaranteed Apex Metals
Amount with respect to any vote to be conducted pursuant to this Agreement or
any other Financing Document.

 

2.03  Secured Debt and Disbursements.  The failure of any Senior Lender to make
any Senior Loans required to be made by it under its respective Senior Loan
Agreement shall not relieve any other Senior Lender of its obligations under
such Senior Loan Agreement; provided that the Senior Loan Commitments of the
Senior Lenders are several and neither any Senior Lender nor any Agent shall be
responsible for any other Senior Lender’s failure to make Senior Loans as
required under its respective Senior Loan Agreement.

 

2.04  Prepayment of Senior Loans. 

 

(a)           Mandatory Prepayments.  The Borrower shall make mandatory
prepayments (each, a “Mandatory Prepayment”) of the Senior Loans in the amounts
and at the times specified in Section 5.05(c)(ii), Section 5.08(c)(ii) and (iii)
and Section 9.02. 

 

(b)           Voluntary Prepayments. 

 

(i)            The Borrower shall have the right at any time and from time to
time, subject to prior notice and otherwise as set forth below in this
Section 2.04(b), to prepay all or part of the principal amount then outstanding
of Senior Loans (each such prepayment, a “Voluntary Prepayment”); provided that
the Borrower shall not have the right to prepay any Senior Loans held by CAF
prior to January 1, 2007 . 

 

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(ii)           Voluntary Prepayments shall not be subject to the payment of any
premia (except as otherwise specified in the Senior Loan Agreements) or
penalties; provided that the Borrower shall be required to pay any breakage
costs with respect to the early termination of Interest Periods to the extent
required under and in accordance with the applicable Senior Loan Agreement. 

 

(iii)          The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any Voluntary Prepayment hereunder not later than
11:00 a.m., New York City time, not less than ten Business Days before the date
of prepayment.  Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of Senior Loans to be prepaid (and,
upon the date specified in any such notice of prepayment, the amount to be
prepaid together with accrued interest and other amounts payable in connection
therewith shall become due and payable hereunder).  Promptly following receipt
of any such notice (and in any event by the Business Day after receipt thereof)
the Administrative Agent shall advise the Senior Lenders of the contents
thereof. 

 

(iv)          Each Voluntary Prepayment of Senior Loans shall be in a total
amount of not less than the lesser of (A) $5,000,000 and integral multiples of
$2,000,000 in excess thereof and (B) the remaining principal amount then
outstanding.

 

(v)           Notwithstanding anything herein to the contrary, in the event that
the Borrower notifies the Administrative Agent that it shall make a Voluntary
Prepayment prior to January 1, 2007 and makes such a prepayment, such a
prepayment may only be applied to Senior Loans other than Senior Loans held by
CAF.  Any such prepayment may be made on a non-Pro Rata Payment basis as between
CAF (on the one hand) and the other Senior Lender Groups (on the other), and the
Senior Lenders entitled to such prepayment shall not have any obligation to
share the proceeds thereof with CAF.

 

(c)           All Prepayments.   Each prepayment under this Section 2.04 shall
be applied in inverse order of maturity to the remaining installments of the
Senior Loans and shall be accompanied by accrued interest to the date of
prepayment on the amounts prepaid and any other amounts as required by the
applicable Senior Loan Agreements.

 

2.05  Payments Generally; Pro Rata Treatment. 

 

(a)           Each payment or prepayment by the Borrower to a Senior Lender in
respect of Senior Loan Obligations shall be a Pro Rata Payment, other than
(i) prepayments as set forth in clause (b) of this Section 2.05, (ii) payments
or prepayments in accordance with Section 2.07 and (iii) prepayments referred to
in Section 2.04(b)(v) (but only to the extent set out therein).

 

(b)           The Borrower may prepay in whole, but not in part, Senior Loan
Obligations owed to any Senior Lender without making a Pro Rata Payment to the
other Senior Lenders if (i) such prepayment is made with the proceeds of Sponsor
Funding contributed no more than ten Business Days prior to such prepayment,
(ii) such prepayment is made with the proceeds of Replacement Secured Debt
incurred in compliance with the requirements of

 

4

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Section 2.06 or (iii) such prepayment is made from funds available for
Restricted Payments pursuant to Section 9.01 and, in each case of clauses (i),
(ii) and (iii), either (A) in the case of any Senior Lender, (1) such Senior
Lender would be entitled to or has received compensation from the Borrower for
increased costs incurred by such Senior Lender in connection with making or
maintaining its Senior Loans under its Senior Loan Agreement materially in
excess of costs incurred generally by the other Senior Lenders, (2) it becomes
unlawful for such Senior Lender to honor its obligation to make or maintain its
Senior Loans under its Senior Loan Agreement and it has not become unlawful
generally for the other Senior Lenders to honor their obligations to make or
maintain their Senior Loans under their Senior Loan Agreements or (3) any change
in law after the date hereof results in the Borrower becoming liable to pay
taxes in respect of such Senior Lender’s (but not others’) Senior Loans at a
rate or in an amount materially greater than that which would apply had no such
change in law occurred or (B) in the case of a Commercial Bank Senior Lender,
such prepayment is made in accordance with Section 5.01, 5.03, 5.04 or 5.05 of
the Commercial Bank Senior Loan Agreement.

 

(c)           If at any time at which any Senior Loan Obligations are payable to
a Senior Lender, such Senior Lender receives insufficient funds to pay in full
all Senior Loan Obligations payable to such Senior Lender at such time pursuant
to its Senior Loan Agreement, this Agreement or the Completion Agreement, the
funds so received by such Senior Lender at such time shall be deemed to be
applied in order of priority, for purposes of computations hereunder and under
the Senior Loan Agreements or the Completion Agreement, as follows:  first, to
fees, commissions, indemnities, expenses and all amounts (other than principal
of and interest on the Senior Loans) payable to such Senior Lender; second, to
interest (including post-default interest) on the Senior Loans of such Senior
Lender; and third, to principal of Senior Loans of such Senior Lender; provided
that, if the Senior Loans of a Senior Lender have been accelerated, funds may be
applied in any order of priority as such Senior Lender may determine; and
provided, further, that any Senior Lender may apply such funds in a different
order, but any such application shall not affect in any way the obligations of
the Borrower hereunder or under any Senior Loan Agreement.

 

(d)           Each payment by the Borrower to the Hedge Banks in respect of
Guaranteed Apex Metals Net Payment Amounts shall be made on a pro rata basis to
each Hedge Bank based on the proportion of Guaranteed Apex Metals Net Payment
Amounts owed to such Hedge Bank to the total amount of Guaranteed Apex Metals
Net Payment Amounts due to all Hedge Banks on such date.  Each payment by the
Borrower to the Hedge Banks in respect of Guaranteed Apex Metals Early
Termination Amounts shall be made on a pro rata basis to each Hedge Bank based
on the proportion of Guaranteed Apex Metals Early Termination Amounts owed to
such Hedge Bank to the total amount of Guaranteed Apex Metals Early Termination
Amounts due to all Hedge Banks on such date.

 

2.06  Replacement Secured Debt. 

 

(a)           At any time and from time to time the Borrower may enter into
commitments to incur, and may incur, without the consent of Senior Lenders, the
Administrative Agent or the Collateral Agent, Indebtedness for Borrowed Money
secured by and entitled to the benefits hereof for the purpose of (w) paying, in
the case of an acceleration by a Senior Lender or Senior Lender Group of its
Secured Debt Obligations under Section 2.07, such Secured Debt

 

5

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Obligations, (x) replacing any part of a Senior Loan Commitment cancelled by a
Senior Lender or Senior Lender Group under Section 2.07, (y) prepaying Secured
Debt in accordance with Section 2.05(b) or (z) replacing all or any part of an
unutilized Senior Loan Commitment in accordance with Section 2.08(d)
(“Replacement Secured Debt”), subject to each of the following conditions:

 

(i)            the maximum principal amount of the replacement Senior Loan
Commitment is no greater than the principal amount of Senior Loans being paid
(in the case of an acceleration by a Senior Lender or Senior Lender Group, as
the case may be, of its Secured Debt Obligations under Section 2.07) or prepaid
and/or the unutilized or cancelled part of the Senior Loan Commitment being
replaced;

 

(ii)           the Replacement Secured Debt has an amortization schedule
substantially similar to (or longer than) that of the Senior Loan(s) being
replaced such that, after giving effect to the incurrence of the Replacement
Secured Debt, the aggregate principal amount of Senior Loans scheduled to be due
on or before any particular date is not more than the aggregate principal amount
of Senior Loans that would have been scheduled to be due on or before such date
had such Replacement Secured Debt not been incurred;

 

(iii)          the Replacement Secured Debt is or will be incurred for the
purpose of (A) paying, in the case of an acceleration by a Senior Lender or
Senior Lender Group of its Secured Debt Obligations under Section 2.07, such
Secured Debt Obligations, (B) replacing all or any part of a Senior Loan
Commitment cancelled by a Senior Lender or Senior Lender Group under
Section 2.07, (C) prepaying Secured Debt in accordance with Section 2.05(b) or
(D) replacing all or any part of an unutilized Senior Loan Commitment in
accordance with Section 2.08(d);

 

(iv)          the Replacement Secured Debt (A) bears interest at a rate or, in
the case of a floating rate facility, margin which is not higher than that of
the Senior Loans being replaced and (B) has commitment fees at a rate which is
not higher than that of the Senior Loans being replaced;

 

(v)           the lender of Replacement Secured Debt (A) shall be a bank or
other financial institution reasonably acceptable to the Majority Lenders and
(B) shall not be an Affiliate of the Borrower;

 

(vi)          the lender of Replacement Secured Debt shall not be identified by
the Office of Foreign Assets Control of the U.S. Department of the Treasury as
subject to sanctions imposed by the U.S. government on the basis that such
lender, its affiliates or the government of its or its affiliates’ home
jurisdiction has engaged in or supports terrorism or other international
criminal activity;

 

(vii)         the lender of the Replacement Secured Debt shall have executed and
delivered to the Collateral Agent and the Administrative Agent a written

 

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agreement in which such lender agrees to be bound as a Senior Lender by all of
the terms and conditions of the Financing Documents as a Senior Lender as if it
were a party hereto and thereto; and

 

(viii)        the Borrower shall have delivered an Officer’s Certificate to the
Collateral Agent and the Administrative Agent (A) identifying the lender of
Replacement Secured Debt, (B) certifying compliance with each of the conditions
set forth in this Section 2.06, and (C) attaching thereto a copy of the proposed
Senior Loan Agreement relating to the Replacement Secured Debt (which shall
disclose the rate, or the rate basis and margin in the case of a floating rate,
at which the Replacement Secured Debt shall bear interest).

 

(b)           Commitments for Replacement Secured Debt permitted under this
Section 2.06 shall be considered Senior Loan Commitments for all purposes of
this Agreement.  Agreements pursuant to which such Replacement Secured Debt may
be incurred shall be considered Senior Loan Agreements for all purposes of this
Agreement.  Appendix B shall be deemed to be amended from time to time to make
reference to any such Senior Loan Agreements. 

 

2.07  Senior Lender Suspension or Termination. 

 

(a)           If any one Senior Lender (an “Accelerating Lender”) or any Senior
Lender Group (an “Accelerating Lender Group”) shall have suspended, cancelled or
terminated its Senior Loan Commitment, in whole or in part, accelerated the
maturity of the Secured Debt Obligations held by it or declared that all or part
of the Secured Debt Obligations held by it must be then prepaid in accordance
with the terms of its Senior Loan Agreement and the event or circumstance giving
rise to such suspension, cancellation, termination, acceleration or declaration
of prepayment shall have been an event or circumstance the occurrence of which
does not of itself (i) constitute a Default or an Event of Default under
Section 10.01 (except under Section 10.01(dd)) or (ii) give each other Senior
Lender or other Senior Lender Group, under the terms of this Agreement or its
respective Senior Loan Agreement (other than terms providing for disbursements
or payments or prepayments pro rata to those made to other Senior Lenders), the
right to suspend, cancel or terminate its Senior Loan Commitment, accelerate the
maturity of the Secured Debt Obligations held by it, or declare all or part
thereof to be prepayable, then, notwithstanding any other provision of this
Agreement (other than clause (b) of this Section 2.07) or any Senior Loan
Agreement, the Borrower may pay or prepay the Secured Debt Obligations owed to
such Accelerating Lender or Accelerating Lender Group, as applicable, without
making a Pro Rata Payment to the other Senior Lenders or other Senior Lender
Groups, and if any Senior Loan Commitments then remain available and undrawn,
the obligation of such other Senior Lenders to make additional Senior Loans (to
the extent no other event has then suspended their obligations to make
additional Senior Loans) shall not be affected by reason of such event or
circumstance.  Any prepayment made pursuant to this paragraph 2.07(a) shall (A)
be made with (1) the proceeds of Sponsor Funding (which shall exclude the
proceeds of Sponsor Funding from amounts on deposit in the Equity Account or
Contingent Support Account) contributed no more than 10 Business Days prior to
such prepayment, or (2) be made with the proceeds of Replacement Secured Debt
incurred in compliance with the requirements of Section 2.06, or (3) be made
from funds available for

 

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Restricted Payments pursuant to Section 9.01 and (B) if there is an Accelerating
Lender Group, be made in a manner such that all other Secured Debt Obligations
of Senior Lenders in such Accelerating Lender Group are prepaid.

 

(b)           If, by the end of the 180th day following the date on which an
Accelerating Lender or an Accelerating Lender Group, as the case may be, shall
have first given notice to the Borrower of a suspension, cancellation,
termination, acceleration or declaration of required prepayment referred to in
paragraph (a) of this Section 2.07, (i) such Accelerating Lender or Accelerating
Lender Group, as the case may be, shall not have rescinded the action described
in such notice or (ii) such Accelerating Lender or Accelerating Lender Group, as
the case may be, shall not have been paid or prepaid in accordance with
paragraph (a) above, then, at such time, (A) Majority Lenders (not including
such Accelerating Lender or Accelerating Lender Group, as the case may be, and
disregarding the outstanding Senior Loan Obligations owed to such Accelerating
Lender or Accelerating Lender Group and unutilized Senior Loan Commitment of
such Accelerating Lender or Accelerating Lender Group for purposes of
calculating the requisite number and interest that constitute Majority Lenders)
may suspend their obligations to make Senior Loans and (B) the Default then
continuing under Section 10.01(dd), if any, shall become an Event of Default. 
Notwithstanding any other provision of this Agreement or the terms and
conditions of any Senior Loan Agreement, Senior Lenders (other than such
Accelerating Lender or Accelerating Lender Group, as the case may be) agree not
to take any action by reason of such suspension, cancellation, termination,
acceleration or declaration of required prepayment (x) until the termination of
such 180-day period or (y) unless, prior to the termination of such 180-day
period, it becomes unlawful for such Senior Lender to honor its obligation to
make or maintain its Senior Loans under its Senior Loan Agreement (provided that
the foregoing shall not restrict other Senior Lenders from refusing to make
disbursements of Senior Loans in the event that the conditions to disbursement
cannot be satisfied due to such suspension, cancellation, termination or
declaration of required prepayment).

 

2.08  Termination and Reduction of Senior Loan Commitments. 

 

(a)           The Senior Loan Commitments shall be automatically reduced to zero
at 5:00 p.m. New York time on the Commitment Termination Date.  Senior Loan
Commitments, once drawn and repaid, cannot be reborrowed.

 

(b)           The Borrower shall have the right at any time or from time to time
to terminate or reduce the aggregate unused amount of the Senior Loan
Commitments; provided that no Senior Loan Commitment shall be reduced pursuant
to this Section 2.08(b) unless:

 

(i)            the Borrower shall give the Administrative Agent notice of each
such termination or reduction as provided in clause (c) of this Section 2.08;

 

(ii)           each partial reduction shall be in an aggregate amount not less
than $5,000,000 and integral multiples of $2,000,000 in excess thereof;

 

(iii)          either:

 

(A) the Borrower cancels all Senior Loan Commitments in whole and prepays all
outstanding Secured Debt Obligations; or

 

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(B) the Administrative Agent shall have received (1) a Cost to Complete
Certificate dated as of the date of the notice delivered pursuant to Section
2.08(c),  (2) an Officer’s Certificate of the Borrower certifying that (I) all
information provided pursuant to such Cost to Complete Certificate is true and
correct as of the date of the notice delivered pursuant to Section 2.08(c), (II)
the proceeds of such terminated Senior Loan Commitments are not necessary to
achieve Completion on or prior to the Limit Completion Date, (III) no Default or
Event of Default has occurred and is continuing or could reasonably be expected
to result from the contemplated reduction of the Senior Loan Commitments and
(IV) no Material Adverse Effect has occurred or could reasonably be expected to
result from the contemplated reduction of the Senior Loan Commitments and (3) an
Officer’s Certificate of the Sponsor certifying the Completion Agreement is in
full force and effect;

 

(iv)          no Default or Event of Default has occurred and is continuing or
could reasonably be expected to result from the contemplated reduction of the
Senior Loan Commitments; and

 

(v)           no Material Adverse Effect has occurred or could reasonably be
expected to result from the contemplated reduction of the Senior Loan
Commitments.

 

(c)           The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Senior Loan Commitments under clause (b) of this
Section 2.08 at least ten Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof.  Promptly following receipt of any such notice, the Administrative
Agent shall advise the Senior Lenders of its contents.  Each notice delivered by
the Borrower pursuant to this Section 2.08 shall be irrevocable.  Any
termination or reduction of the Senior Loan Commitments shall be permanent. 
Commitment fees payable in respect of terminated or reduced Senior Loan
Commitments shall cease to accrue, or shall be reduced as appropriate, upon such
termination or reduction.  Accrued commitment fees on the Senior Loan
Commitments terminated or reduced hereunder shall be payable on the date of such
termination or reduction.

 

(d)           Terminations and reductions of Senior Loan Commitments shall be
pro rata among Senior Lenders based on the aggregate amount of unutilized Senior
Loan Commitments then outstanding, provided that the Borrower may, without
making a pro rata termination or reduction of the other Senior Loan Commitments,
terminate or reduce all outstanding Senior Loan Commitments of any Senior
Lender, if (i) such Senior Loan Commitments are replaced with Replacement
Secured Debt in accordance with Section 2.06 or Sponsor Funding (excluding
Sponsor Funding from the proceeds of amounts on deposit in the Equity Account or
Contingent Support Account) and (ii) either (A) in the case of any Senior Lender
(I) such Senior Lender would be entitled to or has received compensation from
the Borrower for increased costs incurred by such Senior Lender in connection
with making or maintaining its Senior Loan Commitment under its Senior Loan
Agreement materially in excess of costs incurred generally by the other Senior
Lenders, (II) it becomes unlawful for such Senior

 

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Lender to honor its obligation to make or maintain its Senior Loan Commitment
under its Senior Loan Agreement and it has not become unlawful generally for the
other Senior Lenders to honor their obligations to make or maintain their Senior
Loan Commitments under their Senior Loan Agreements or (III) any change in law
after the date hereof results in the Borrower becoming liable to pay taxes in
respect of such Senior Lender’s (but not others’) Senior Loans at a rate or in
an amount materially greater than that which would apply had no such change in
law occurred or (B) in the case of a Commercial Bank Senior Lender, such
termination or reduction is made in accordance with Section 5.01, 5.03, 5.04 or
5.05 of the Commercial Bank Senior Loan Agreement.

 

ARTICLE III

SECURITY INTERESTS

 

3.01  Currently Owned Project Property.  The Borrower shall, except to the
extent otherwise provided in this Article III, on or prior to the Initial
Disbursement Date, (i) execute and deliver to the Collateral Agent for the
benefit of the Secured Parties, as security for the Secured Debt Obligations,
notarized Bolivian public deeds, notices or other documents as may be required
by applicable law constituting, except to the extent specified in the form of
legal opinion set forth in Appendix R-1, a first priority security interest or a
conditional assignment under Bolivian law in all Project Property (other than
Excepted Property, and other than property exempted under Section 3.03), and
(ii) except to the extent relating to Excepted Property or as otherwise
specified below, on or prior to the Initial Disbursement Date, register or file,
or cause to be registered or filed, such deeds, notices or documents in each
public registry in Bolivia in which such registration or filing is necessary and
give or cause to be given such notices and obtain or cause to be obtained such
consents and take or cause to be taken any other actions as are necessary to
perfect the security interests purported to be granted by such deeds, notices or
documents.  Such deeds, notices or documents shall include the following:

 

(a)           (i) a first priority mining mortgage (hipoteca) on each of the
Mining Concessions owned by the Borrower on the date of execution of this
Agreement, and (ii) registration of such mortgage, on or prior to the Initial
Disbursement Date, in the mining registry (Registro Minero) and the real
property registry (Oficina Pública de Derechos Reales) in the location where
such Mining Concessions are located.  The Mining Concessions referred to in this
clause (a) are listed in Schedule 3.01(a);

 

(b)           (i) a first priority civil mortgage (hipoteca) of all real
property owned by the Borrower on the date of execution of this Agreement, and
(ii) registration of such mortgage, on or prior to the Initial Disbursement
Date, in the real property registry (Oficina Pública de Derechos Reales) in the
location where such real property is located;

 

(c)           (i) a first priority mortgage (hipoteca de los vehiculos) over all
motor vehicles owned by the Borrower on the date of execution of this Agreement,
(ii) registration of such mortgage in the transit police registry (Organismo
Operativo de Tránsito) on or prior to the Initial Disbursement Date in the
corresponding jurisdiction

 

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where the vehicles are registered, and (iii) the certificate of title with
respect to such motor vehicles to be properly annotated with a notice of such
mortgage;

 

(d)           first priority fixed registered pledges (prendas sin
desplazamiento) of all equipment, machinery and other tangible personal property
located in Bolivia and owned by the Borrower on the date of execution of this
Agreement, and registration of such pledge in the commerce registry and in the
real property registry (Registro de Comercio and Oficina de Derechos Reales) on
or prior to the Initial Disbursement Date; provided that the Borrower shall not
be required under this clause (d) to create, register or perfect a pledge or
other security interest in respect of (i) tangible personal property described
in the definition of Excepted Property, (ii) property affixed (or scheduled to
be affixed within 90 days) to property mortgaged pursuant to paragraph (a) or
(b) of this Section 3.01, (iii) property physically located, or deemed under
Bolivian law to be located, outside Bolivian territory or in transit to the
Project site, and (iv) property the ownership of which is required to be
registered but the registration of which in the relevant registry is pending
completion;

 

(e)           first priority fixed registered pledges (prendas sin
desplazamiento) of all trademarks registered with a Bolivian registry that are
held by the Borrower on the date of execution of this Agreement, and
registration of such pledge in the intellectual property registry (Servicio
Nacional de Propiedad Intelectual);

 

(f)            within the mining mortgage described in paragraph (a) of this
Section 3.01, a promise to grant first priority floating pledges (prendas
flotantes) of the categories of inventory described in Section 3.02(c);

 

(g)           a conditional assignment (cesión condicional) of contract rights
and other general intangibles; and

 

(h)           a pledge (prenda) of all letters of credit and performance bonds
issued in favor of the Borrower under the Material Project Documents to be
created and perfected by endorsing such letters of credit and performance bonds
in favor of the Collateral Agent by inscribing the following: 

 

“ENDOSO EN PRENDA A FAVOR DE [COLLATERAL AGENT] EN BENEFICIO SECURED PARTIES
[DATED THE LATER OF THE INITIAL DISBURSEMENT DATE AND THE DATE OF ISSUANCE].” 

 

3.02  After-acquired Property. 

 

(a)           Equipment, Etc.  Except to the extent otherwise provided in this
Article III, as security for the Secured Debt Obligations, the Borrower hereby
agrees to (i) execute and deliver to the Collateral Agent (or otherwise as
requested by it) for the benefit of the Secured Parties, and (ii) register as
required for perfection, such instruments as may be required to constitute a
first priority perfected fixed registered pledge (prenda sin desplazamiento)
under Bolivian law of:

 

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(i)            the equipment identified in Schedule 3.02(a)(i), no later than
the time such equipment arrives at the Project site, is assembled and is
registered (if so required) (but prior to being used); and

 

(ii)           all equipment, machinery and other tangible personal property
(including any thereof previously excluded under clauses (d)(ii), (d)(iii) or
(d)(iv) of Section 3.01 but the reason for exclusion of which no longer
applies), promptly after such property is acquired by the Borrower; provided
that the Borrower shall not be required under this clause (a)(ii) to create,
register or perfect a pledge or other security interest in respect of
(A) Excepted Property, (B) property to be affixed to property mortgaged pursuant
to Section 3.01(a), 3.01(b), 3.02(d) or 3.02(e), (C) property otherwise subject
to a security interest pursuant to Section 3.01 or Section 3.02, (D) property
physically located, or deemed under Bolivian law to be located, outside Bolivian
territory or in transit to the Project site, and (E) property the ownership of
which is required to be registered but the registration of which in the relevant
registry is pending completion.

 

The Borrower shall promptly register in the relevant registry its ownership in
any such property that is required to be registered.

 

(b)           Trademarks.  Except to the extent otherwise provided in this
Article III, as security for the Secured Debt Obligations, the Borrower hereby
agrees to execute and deliver to the Collateral Agent (or otherwise as requested
by it) for the benefit of the Secured Parties, promptly following the
acquisition of any trademarks that are registered with a Bolivian registry, and
cause to be duly registered with the applicable Bolivian registry, such
instruments as may be required to constitute a first priority perfected fixed
registered pledge (prenda sin desplazamiento) under Bolivian law in such
trademarks; provided that the Borrower shall have no obligations under this
clause (b) in respect of (i) Excepted Property and (ii) property otherwise
subject to a security interest pursuant to Section 3.01.

 

(c)           Ore in Stockpile, Ore in Process, Solution in Process, Concentrate
in Inventory and Supplies Inventories.  As security for the Secured Debt
Obligations, the Borrower hereby agrees to execute and deliver to the Collateral
Agent (or otherwise as requested by it) for the benefit of the Secured Parties,
promptly upon Mechanical Completion, and cause to be filed in all applicable
offices such instruments as may be required to constitute first priority
perfected floating pledges (prendas flotantes) under Bolivian law, over all
existing and future amounts of coarse ore in stockpile, crushed ore in
stockpile, ore in process, lead, zinc and silver solution in process (i.e.,
pre-concentrates), Lead Concentrate and Zinc Concentrate in inventory, and
supplies in inventory.

 

(d)           Real Property.  Except to the extent otherwise provided in this
Article III, as security for the Secured Debt Obligations, the Borrower hereby
agrees to execute and deliver to the Collateral Agent (or otherwise as requested
by it) for the benefit of the Secured Parties promptly following the acquisition
of any real property, and cause to be duly registered in the real property
registry (Oficina Pública de Derechos Reales) in the location where the property
is located, such notarized Bolivian deeds and registrations as are necessary to
grant and perfect a first priority civil mortgage (hipoteca) under Bolivian law
of all such real property acquired by

 

12

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the Borrower in Bolivia; provided that the Borrower shall have no obligations
under this clause (d) in respect of property otherwise subject to a security
interest pursuant to Section 3.01.

 

(e)           Mining Concessions.  As security for the Secured Debt Obligations,
the Borrower hereby agrees to execute and deliver to the Collateral Agent (or
otherwise as requested by it) for the benefit of the Secured Parties, promptly
following the acquisition by the Borrower of any Mining Concessions, such
notarized Bolivian deeds and registrations as are necessary to grant and perfect
a first priority  mining mortgage (hipoteca) under Bolivian law of each such
mining concession acquired by the Borrower.  The Borrower agrees to register
each mortgage granted pursuant to this Section 3.02(e) in each public registry
where such Mining Concessions are registered and Other Property Rights
appurtenant to such Mining Concessions are registered.

 

(f)            Motor Vehicles.  Except to the extent otherwise provided in this
Article III, as security for the Secured Debt Obligations, the Borrower hereby
agrees to execute and deliver to the Collateral Agent (or otherwise as requested
by it) for the benefit of the Secured Parties promptly following the acquisition
of any motor vehicles (i) a first priority  mortgage (hipoteca de los vehiculos)
over all motor vehicles acquired by the Borrower after the date of execution of
this Agreement, (ii) a registration of such mortgage in the transit police
registry (Organismo Operativo de Tránsito) in the corresponding jurisdiction
where the vehicles are registered, (iii) the certificate of title with respect
to such motor vehicles to be properly annotated with a notice of such mortgage.

 

(g)           Reserved

 

(h)           Performance Security.  As security for the Secured Debt
Obligations, the Borrower hereby agrees to execute and deliver to the Collateral
Agent (or as otherwise requested by it) for the benefit of the Secured Parties
promptly following the issuance of any deposit, performance bond or letters of
credit in support of a Material Project Counterparty’s obligations under a
Material Project Document such endorsements as may be required to constitute a
first priority perfected pledge in such property in favor of the Secured
Parties.

 

(i)            Other.  Except to the extent otherwise provided in this Article
III, as security for the Secured Debt Obligations, the Borrower hereby agrees,
promptly following the acquisition of any Project Property, to execute and
deliver to the Collateral Agent for the benefit of the Secured Parties such
notarized Bolivian public deeds or instruments as are necessary to grant,
without duplication, a conditional assignment (cesión condicional) in all such
Project Property; provided that the Borrower shall have no obligation under this
clause (i) in respect of (i) Excepted Property, (ii) Project Property that is
capable of being mortgaged pursuant to a hipoteca or pledged pursuant to a
prenda, so long as the Borrower executes and delivers a first priority perfected
prenda or hipoteca of such property in favor of the Secured Parties at the time
and on the terms and conditions otherwise applicable to the granting of security
in such type of Project Property as provided in this Section 3.02 or
(iii) property that is otherwise subject to a security interest pursuant to this
Article III.

 

3.03  De Minimis Exception.  The Borrower shall not be required to grant a
security interest in any item of Project Property described in Section 3.01(b)
(currently owned real property), 3.01(c) (motor vehicles), 3.01(d) (currently
owned equipment, machinery and

 

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other tangible personal property), 3.01(e) (currently owned trademarks),
3.02(a)(ii) (after acquired equipment, machinery and other tangible personal
property), 3.02(b) (after acquired trademarks), 3.02(d) (after acquired real
property), 3.02(f) (after acquired motor vehicles) or 3.02(i) (other after
acquired Project Property), unless (a) the original cost of such item of Project
Property exceeds $250,000 or (b) the granting of such security interest in such
item is reasonably requested by the Collateral Agent (acting upon the directions
of any Secured Party (other than the Technical Agent)) or (c) such item of
Project Property has an original cost in excess of $100,000, and when taken
together with all such other items of Project Property having an original cost
in excess of $100,000 that are not otherwise mortgaged, pledged or assigned
(conditionally or unconditionally, by way of fiduciary assignment) in accordance
with this Section 3.03, the aggregate original cost of such items exceeds
$5 million at any time prior to Completion and $1 million at any time
thereafter. 

 

3.04  Project Documents. 

 

(a)           Bolivian Conditional Assignments.

 

(i)            Current Project Documents.  On or prior to the Initial
Disbursement Date, as security for the Secured Debt Obligations, the Borrower
shall execute and deliver to the Collateral Agent (or otherwise as requested by
it) for the benefit of the Secured Parties a conditional assignment (cesión
condicional) under Bolivian law (executed before a Bolivian notary public as may
be required by applicable Government Rules) of all of the Borrower’s rights,
title and interests (and any proceeds thereof) under each Project Document in
effect on the date of execution of this Agreement.  On or prior to the Initial
Disbursement Date, the Borrower shall deliver to the Collateral Agent for the
benefit of the Secured Parties a copy of each such agreement so secured pursuant
to this paragraph.

 

(ii)           Future Project Documents.  As security for the Secured Debt
Obligations, the Borrower agrees to execute and deliver, promptly after
execution by the Borrower of any Project Document that is entered into or
becomes effective after the date of execution of this Agreement, to the
Collateral Agent (or otherwise as requested by it) for the benefit of the
Secured Parties a conditional assignment (cesión condicional) under Bolivian law
(executed before a Bolivian notary public as may be required by applicable
Government Rules) of all of the Borrower’s rights, title and interests (and any
proceeds therefrom) under each Project Document.   The Borrower shall deliver to
the Collateral Agent for the benefit of the Secured Parties a copy of each such
agreement so secured promptly following the execution thereof.

 

(b)           New York Security Interest.

 

(i)            Grant.  The Borrower hereby grants, transfers and assigns to the
Collateral Agent for the benefit and on behalf of the Secured Parties, as
security for the Secured Debt Obligations, and grants a security interest in,
all right, title and interest which the Borrower now has or which shall
hereafter arise in and to

 

14

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any of the Project Documents and all other agreements, contracts or arrangements
relating to the Project (other than the Financing Documents) to which the
Borrower is a party, including:  (A) all rights of the Borrower to receive
monies due and to become due under or pursuant to the Project Documents
(including all proceeds thereof and accounts with respect thereto) and such
other agreements; (B) all rights of the Borrower to receive proceeds of any
insurance, bond, indemnity, warranty or guaranty with respect to the Project
Documents and such other agreements; (C) all claims of the Borrower for damages
arising out of or for breach of or default under the Project Documents and such
other agreements (including all claims resulting from any failure of performance
or compliance with any of the provisions of any of the Project Documents or such
other agreements); (D) all rights of the Borrower to terminate, amend,
supplement, modify or waive performance under the Project Documents and such
other agreements, to perform thereunder and to compel performance and otherwise
to exercise all remedies thereunder; and (E) all proceeds, products, offspring,
rents, revenues, letter-of-credit rights, issues, profits, royalties, income,
benefits, accessions, additions, substitutions and replacements of and to any of
the property of the Borrower described in clauses (A) through (D) (including,
without limitation, any proceeds of insurance thereon and all causes of action
with respect thereto) and any indemnity, warranty or guaranty in respect of the
Project or of any of the foregoing, and, to the extent related to any property
described in said clauses or such proceeds, products and accessions, all books,
correspondence, credit files, records, invoices and other papers, including,
without limitation, all tapes, cards, computer runs and other papers and
documents in the possession or under the control of the Borrower or any computer
bureau or service from time to time acting for the Borrower, and, in each case
together with full power and authority, in its own name or in the name of the
Borrower, or otherwise, subject to Article X hereof, to enforce the Project
Documents and other agreements against the counterparties thereto and to
collect, receive and give receipts and releases for proceeds, accounts and other
amounts due in respect thereof. 

 

(ii)           Further Assurances.  The Borrower shall make or cause to be made
any filings or recordations, give or cause to be given any notices in addition
to those required by clause (c) of this Section 3.04 and take or cause to be
taken any other actions as may be advisable or necessary in Bolivia, the
District of Columbia, the State of New York, the State of Colorado, the State of
Delaware and any other applicable jurisdiction, to validly assign as security
and otherwise perfect the grant of a first priority security interest in each
Project Document pursuant hereto.

 

(c)           Chilean Conditional Assignment.  On or prior to the Initial
Disbursement Date, as security for the Secured Debt Obligations, the Borrower
shall execute and deliver to the Collateral Agent (or otherwise as requested by
it) for the benefit of the Secured Parties a conditional assignment (cession
condicional)  under Chilean law (executed before a Chilean notary public as may
be required by applicable Government Rules) of all of the Borrower’s rights,
title and interest (and any proceeds thereof) under the Ports Agreement.  On or
prior to the Initial Disbursement Date, the Borrower shall

 

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deliver to the Collateral Agent for the benefit of the Secured Parties a copy of
the Ports Agreement.

 

(d)           Common Provisions.   On or prior to the Initial Disbursement Date,
the Borrower shall give or cause to be given written notice of the conditional
assignment of and the security interest in all then existing Project Documents
created hereunder to the other parties thereto, and shall obtain from each
Material Project Counterparty such Counterparty’s Consent, in accordance with
the last two sentences in this clause (d).  Concurrently with or promptly after
entering into any Project Document executed after the date hereof, the Borrower
shall give or cause to be given written notice to the counterparty thereto of
the conditional assignment thereof provided in clause (a) and the security
interest therein granted by clause (b).  Such notice shall be substantially in
the form set out in Part 1 of Appendix J.  The Borrower shall obtain from the
counterparty under each Material Project Document including all Additional
Material Project Documents and deliver or cause to be delivered to the
Collateral Agent an acknowledgment, addressed to the Collateral Agent and in
substantially the form set forth in Part 2 of Appendix J (such acknowledgment
being herein referred to as the “Counterparty’s Consent”).  

 

3.05  Bolivian Insurance Policies.  As security for the Secured Debt
Obligations, on or prior to the Initial Disbursement Date, and if entered into
after the Initial Disbursement Date, promptly after its receipt of each such
Bolivian Insurance Policy, the Borrower shall assign and endorse each Bolivian
Insurance Policy in favor of the Secured Parties by causing each such policy to
be endorsed as follows:

 

“ENDOSO A FAVOR DE [[COLLATERAL AGENT] EN BENEFICIO DE [SECURED PARTIES]].  NO
OBSTANTE, MIENTRAS EL ASEGURADOR NO HAYA RECIBIDO NOTIFICACIÓN DE CUALQUIERA DE
LOS ACREEDORES DE EJERCER SUS DERECHOS BAJO ESTE ENDOSO, MINERA SAN CRISTÓBAL
S.A. CONSERVA TODOS LOS DERECHOS RELACIONADOS CON ESTA PÓLIZA DE SEGUROS,
INCLUYENDO EL DERECHO DE RENOVAR, MODIFICAR O CANCELAR ESTA PÓLIZA O INICIAR Y
RESOLVER RECLAMOS.

 

 

 

 

 

[signatory]

 

pp. Minera San Cristóbal S.A.”

 

Concurrently with or promptly after such assignment and endorsement the Borrower
shall notify each insurer under the relevant Bolivian Insurance Policy of such
assignment and endorsement and shall obtain from such insurer an acknowledgement
thereof and shall furnish the Collateral Agent with a copy of such
acknowledgement.

 

3.06  Borrower Shares. 

 

(a)           As security for the Secured Debt Obligations and the CGSA Secured
Obligations, each of Apex Sweden, Apex Luxembourg and Apex Metals agree (i) to
execute and deliver to the Secured Parties, on or prior to the Initial
Disbursement Date, a first priority non-

 

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possessory pledge of the Borrower Shares as security in favor of the Secured
Parties (prenda sin desplazamiento) and a secretary’s certificate confirming the
constitution of such pledge, and, on or prior to the Initial Disbursement Date,
to cause such pledge to be registered in the share registry book of the
Borrower, (ii) to grant a first priority non-possessory pledge (prenda sin
desplazamiento) under Bolivian law on any Borrower Shares promptly upon the
receipt thereof, in the same manner as provided in clause (i) of this
Section 3.06(a), and (iii) make or cause to be made such filings, registrations
or recordations, give or cause to be given any notices and take or cause to be
taken any other actions as may be necessary to perfect such security interest in
Bolivia.  The Secured Parties agree and acknowledge that they shall have no
right in the proceeds of any dividend, distribution or return of capital paid in
cash in compliance with Article IX following receipt thereof by Apex Luxembourg,
Apex Sweden or Apex Metals.

 

(b)           Each of Apex Sweden, Apex Luxembourg and Apex Metals agrees that
(i) except as contemplated by the Transfer Restrictions Agreement it shall not
consent to any amendment or modification to the charter or other constituent
documents of the Borrower that would in any manner deprive the holders of the
Borrower Shares of control of the Borrower and (ii) all equity investments by it
in and contribution by it to the capital of the Borrower shall constitute
Borrower Shares covered by paragraph (a) of this Section 3.06.

 

3.07  Expropriation Compensation. 

 

(a)           Each of the Borrower, Apex Sweden, Apex Metals and Apex Luxembourg
hereby grants, transfers and assigns to the Collateral Agent for the benefit and
on behalf of the Secured Parties, as security for the Secured Debt Obligations,
all of its right, title and interest in and to any Expropriation Compensation
and Project Equity Expropriation Compensation, respectively, together with full
power and authority (subject to Section 5.08), in its name or otherwise, to
institute proceedings (whether before a court or judge or by way of arbitration
or otherwise) to enforce such claims, execute judgments or awards made pursuant
thereto and collect and receive Expropriation Compensation and Project Equity
Expropriation Compensation, respectively.

 

(b)           On or prior to the Initial Disbursement Date, the grantors in
clause (a) above shall make or cause to be made any filings or other recordings,
give or cause to be given any notices and take and cause to be taken any other
actions as may be necessary in the State of New York, Bolivia and in any other
jurisdiction to validly assign as security and otherwise perfect the grant of a
first priority perfected security interest created by this Section 3.07.

 

(c)           Any Project Equity Expropriation Compensation received by Apex
Sweden, Apex Metals, Apex Luxembourg or any Affiliate of any thereof shall be
deposited in the name of the Collateral Agent in a segregated bank account in
New York, New York (the “New York Equity Expropriation Account”) established in
the name of the Collateral Agent (such account being a “securities account” as
such term is defined in Section 9-501(a) of the UCC) or, if such Project Equity
Expropriation Compensation is paid, originated or received in Bolivia and not
permitted under applicable law to be paid directly to the New York Equity
Expropriation Account, it shall be deposited in a segregated custody account
established and maintained by the Collateral Agent in a Local Bank (the
“Bolivian Equity Expropriation Account”; the Bolivian Equity Expropriation
Account, together with the New York Equity Expropriation Account, are

 

17

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hereinafter collectively referred to as the “Equity Expropriation Account”). 
The New York Equity Expropriation Account and all moneys, financial assets and
investments held in the New York Equity Expropriation Account shall constitute
additional Collateral hereunder.  The moneys held in the New York Equity
Expropriation Account shall be held in the name of the Collateral Agent for the
purpose of making payments from the New York Equity Expropriation Account in
accordance with this Agreement, and only the Collateral Agent shall have the
right to make withdrawals and payments from the New York Equity Expropriation
Account, as provided in this Agreement and the other Financing Documents.  All
moneys held in the Bolivian Equity Expropriation Account shall be funds held for
the purpose of making payments therefrom in accordance with this Agreement and
the other Financing Documents, and only the Collateral Agent shall have the
right to make withdrawals and payments therefrom upon receiving instructions or
directions as provided in this Agreement and the other Financing Documents. 

 

(d)           If (i) an Enforcement Action has been taken in accordance with
Section 10.03, (ii) any Project Equity Expropriation Compensation (together with
any interest and other income earned thereon) remains in the Equity
Expropriation Account, and (iii) the Collateral Agent has notified the Borrower
that it has been instructed to commence and diligently pursue Enforcement Action
designed to realize on substantially all of the value of the Collateral, then
all funds in the Equity Expropriation Account shall be applied to the payment of
any unpaid Secured Debt Obligations and the balance, if any, shall be paid to
Apex Luxembourg, Apex Metals, Apex Sweden, Affiliates thereof or any other
Person entitled thereto, pro rata to the amount of Project Equity Expropriation
Compensation deposited by it in the Equity Expropriation Account.  

 

3.08  New York Accounts. 

 

(a)           The Borrower hereby grants, transfers and assigns to the
Collateral Agent for the benefit and on behalf of the Secured Parties, as
security for the Secured Debt Obligations, and grants a security interest in,
all of its right, title and interest, if any, in and to the New York Accounts,
and, in each case, to the money, financial assets and investments therein. 

 

(b)           Apex Metals hereby grants, transfers and assigns to the Collateral
Agent for the benefit and on behalf of the Secured Parties, as security for the
Secured Debt Obligations and the CGSA Secured Obligations, and grants a security
interest in, all of its right, title and interest, if any, in and to the New
York Accounts, and, in each case, to the money, financial assets and investments
therein.

 

(c)           Apex Sweden, Apex Metals and Apex Luxembourg each hereby grants,
transfers and assigns to the Collateral Agent for the benefit and on behalf of
the Secured Parties, as security for the Secured Debt Obligations and the CGSA
Secured Obligations, and grants a security interest in, all of its respective
right, title and interest, if any, in and to the New York Equity Expropriation
Account, and, in each case, to the money, financial assets and investments
therein. 

 

18

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3.09  Other Security Documents.  The Borrower shall cause the execution and
delivery of the Sponsor Pledge Agreement and the ASC Bolivia Pledge Agreement
for the benefit of the Collateral Agent for the benefit of the Secured Parties. 
The property pledged and in which a security interest is granted pursuant to
such agreements shall be Collateral hereunder. 

 

3.10  Non-Bolivian Policies. 

 

(a)           The Borrower hereby grants, transfers and assigns to the
Collateral Agent for the benefit and on behalf of the Secured Parties, as
security for the Secured Debt Obligations, and grants a security interest in,
all right, title and interest which the Borrower now has or which shall
hereafter arise in and to any Non-Bolivian Policies, and all proceeds and claims
against the insurer or insurers thereunder.

 

(b)           On or prior to the Initial Disbursement Date, the Borrower shall
give or cause to be given written notice of the security interest in all then
existing Non-Bolivian Policies created under clause (a) to the respective
insurer or insurers thereunder, as described in the third sentence of this
clause (b), and shall obtain from such parties an acknowledgment in accordance
with the penultimate sentence in this clause (b).  Concurrently with or promptly
after the coming into effect of any additional Non-Bolivian Policies after the
Initial Disbursement Date, the Borrower shall give or cause to be given written
notice to the insurer or insurers thereunder of the security interest therein
granted by clause (a).  Such notice shall be substantially in the form set out
in Appendix K and shall instruct such insurer to make or cause to be made all
payments due under the relevant Non-Bolivian Policy in accordance with
Article V.  The Borrower shall obtain from the insurer under each Non-Bolivian
Policy and deliver or cause to be delivered to the Collateral Agent an
acknowledgment addressed to the Collateral Agent as set out in Appendix K. 
Notwithstanding the foregoing, the Borrower shall instead comply with the
requirements of Section 5.03 for Non-Bolivian Policies that are reinsurance
policies.

 

(c)           The Borrower shall make or cause to be made any filings or
recordations, give or cause to be given any notices in addition to those
required by clause (b) of this Section 3.10 and take or cause to be taken any
other actions as may be necessary in Bolivia, London, England, the State of New
York and in any jurisdiction in which an insurer is organized or has its
principal place of business, to validly assign as security and otherwise perfect
the grant of a first priority security interest in each Non-Bolivian Policy
pursuant hereto.

 

3.11  Apex Sweden Shares. 

 

(a)           Apex Luxembourg hereby grants, transfers and assigns to the
Collateral Agent, for the benefit and on behalf of the Secured Parties, as
security for the Secured Debt Obligations and the CGSA Secured Obligations, and
grants a security interest in, all right, title and interest which it has or may
at any time hereafter acquire in and to (i) the shares of Apex Sweden (the “Apex
Sweden Shares”) held by it, (ii) all other shares, securities or other property
constituting or representing a right to receive a dividend on such Apex Sweden
Shares or constituting or representing a right to receive a distribution or
return of capital upon or in respect of such Apex Sweden Shares or constituting
or representing warrants or any subscription or other purchase rights with
respect to such Apex Sweden Shares, and (iii) any other interest in Apex Sweden
which, by reason of notice or lapse of time or the occurrence of other events,
may be

 

19

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converted into a direct equity interest in Apex Sweden.  Apex Luxembourg shall
deliver to the Collateral Agent the certificates representing Apex Sweden Shares
on or prior to the Initial Disbursement Date and, promptly following receipt,
shall deliver to the Collateral Agent certificates or other relevant
documentation representing any of such other shares, securities, property,
warrants, subscriptions, interests or rights, together in each case with stock
powers duly executed by it in blank (it being understood that such stock powers
must be renewed annually), to be held by the Collateral Agent for the benefit
and on behalf of the Secured Parties pursuant to the pledge made hereby.  Apex
Luxembourg agrees that except as contemplated by the Transfer Restrictions
Agreement it shall not permit the charter or other constituent documents of Apex
Sweden to be amended or modified in any manner that would deprive the holders of
the Apex Sweden Shares of control of Apex Sweden.  Apex Luxembourg represents
and warrants that as of the date of this Agreement, it is the owner of 100% of
the capital stock of Apex Sweden.

 

(b)           On or prior to the Initial Disbursement Date, Apex Luxembourg
shall, as security for the Secured Debt Obligations and the CGSA Secured
Obligations, make or cause to be made any filings or recordations, give or cause
to be given any notices and take or cause to be taken any other actions as may
be reasonably necessary in the State of New York, Bolivia, Luxembourg or Sweden
and in any jurisdiction in which it is organized or has its principal place of
business to perfect the pledge of Apex Sweden Shares and all such other shares,
securities, property, warrants, subscriptions, interests and rights in Apex
Sweden.  Apex Luxembourg hereby promises to pledge any Apex Sweden Shares and
all such other shares, securities, property, warrants, subscriptions, interests
and rights in Apex Sweden which it may acquire after the Initial Disbursement
Date, as security for the Secured Debt Obligations and the CGSA Secured
Obligations, promptly upon the receipt thereof, and to make or cause to be made
any filings, registrations or recordations, give or cause to be given any
notices and take or cause to be taken any other actions as may be necessary in
the State of New York, Bolivia, Luxembourg or Sweden and in any jurisdiction in
which it is organized and has its principal place of business, to perfect the
pledge of such Apex Sweden Shares and all such other shares, securities,
property, warrants, subscriptions, interests and rights in Apex Sweden.  Apex
Luxembourg shall defend, all at its own cost and expense, its title to, and the
existence, perfection and priority of the Collateral Agent’s security interest
in, the Apex Sweden Shares and the other Collateral referenced in Section
3.11(a) against all adverse claims.

 

3.12  Intercompany Debt. 

 

(a)           Each Intercompany Lender party hereto hereby grants, transfers and
assigns to the Collateral Agent for the benefit and on behalf of the Secured
Parties, without recourse to such Intercompany Lender, as security for the
Secured Debt Obligations and the CGSA Secured Obligations, and grants a security
interest in, all right, title and interest which it has or may at any time
hereafter acquire in and to the Intercompany Debt and each Intercompany Note at
any time payable to or owned or held by it, and all claims resulting from any
failure of performance or compliance with such Intercompany Notes by the obligor
thereon, together with full power and authority, in its own name or otherwise,
to enforce such Intercompany Notes against such obligor, provided, however, that
(i) such security interest shall not affect an Intercompany Lender’s rights to
obtain and retain, free of any security interest created by this Section
3.12(a), reimbursement or repayment in accordance with Article IX and Section
5.17 of the Cross Guarantee and Security Agreement (if applicable) of amounts
owed to it in respect of

 

20

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any such Intercompany Debt and (ii) such security interest shall terminate, with
respect to such Intercompany Debt, as provided in Section 15.01.

 

(b)           On or prior to the Initial Disbursement Date, each Intercompany
Lender shall deliver to the Collateral Agent any Intercompany Notes owned or
held by it as at such date, and agrees that it promptly shall deliver to the
Collateral Agent the Intercompany Notes owned or held by it from time to time,
in each case, together with duly executed instruments of endorsement without
recourse, to be held by the Collateral Agent for the benefit and on behalf of
each Secured Party.

 

(c)           If any Intercompany Lender receives any payment by an obligor of
principal or interest on Intercompany Debt during the continuance of a Default
or Event of Default (or at any time when such payment would not be permitted
under Article IX and Section 5.17 of the Cross Guarantee and Security Agreement
(if applicable), or the subordination provisions applicable thereto, if any),
such party shall receive the same (without, if possible, intermingling such
payment with other funds) in trust for the benefit of the Secured Parties and
promptly following receipt thereof remit the same to the Collateral Agent for
deposit in the Apex Metals Account.

 

(d)           In the event any Intercompany Notes are delivered to the
Collateral Agent pursuant to paragraph (b) above, the Collateral Agent on behalf
of the Secured Parties agrees that as long as Intercompany Debt is outstanding,
unless a Default or Event of Default shall have occurred and be continuing, it
shall take such action as an Intercompany Lender may direct to allow such party
to exercise with respect to any Intercompany Note evidencing such Intercompany
Debt the rights retained by it in respect thereof, provided that the Collateral
Agent shall not in any case be obligated to surrender possession of such
Intercompany Notes unless, simultaneously with such surrender, such Intercompany
Lender, delivers to the Collateral Agent one or more Intercompany Notes with an
aggregate principal amount equal to or greater than the aggregate principal
amount then outstanding of the Intercompany Notes being surrendered by the
Collateral Agent, together with appropriate endorsement or duly executed
instruments of transfer or assignment in blank.  Upon receipt of such
replacement notes the Collateral Agent shall be entitled to (and shall, if so
directed by the Administrative Agent at the request of such Intercompany Lender)
cancel the original notes and surrender such notes to such Intercompany Lender. 
If an Event of Default shall have occurred and be continuing, the Collateral
Agent shall, if directed by an Enforcement Direction, (i) to the extent
permitted by law, transfer title of the Intercompany Notes to the Collateral
Agent, the Secured Parties or any other Person, (ii) receive, subject to the
subordination provisions applicable thereto (if any) and to Article IX and
Section 5.17 of the Cross Guarantee and Security Agreement (if applicable), all
principal, interest or other payments in respect of the Intercompany Notes (and
if an Intercompany Lender receives any such payment after Enforcement Action
shall have been taken, or at any time when such payment would not be permitted
under Article IX and Section 5.17 of the Cross Guarantee and Security Agreement
(if applicable) or the subordination provisions, if any, applicable thereto, it
shall receive and hold the same (without intermingling any such payment with
other funds) in trust for the benefit of the Secured Parties and, promptly
following receipt, remit such payment to the Collateral Agent for deposit to the
Apex Metals Account), (iii) amend, supplement or replace the Intercompany Notes,
(iv) make endorsements to the schedules attached thereto,

 

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(v) freely sell and dispose of such Intercompany Notes, and (vi) do any and all
things that could be done by an Intercompany Lender theretofore.

 

(e)           Each obligor on an Intercompany Note that is a party hereto
acknowledges receipt of notice of and consents to the grant of security
interests under this Section 3.12, agrees (where such Intercompany Note is a
Subordinated Note) to observe the subordination terms applicable to Subordinated
Debt set forth in Appendix A-1 to the Transfer Restrictions Agreement, agrees
(where such Intercompany Note is an Apex Metals Subordinated Note) to observe
the subordination terms applicable to Subordinated Debt set forth in
Appendix A-2 to the Transfer Restrictions Agreement, and each obligor on an
Intercompany Note agrees upon request of the Collateral Agent (at the direction
of any Secured Party) from time to time to deliver further acknowledgements and
consents specifically identifying the Intercompany Debt (and the instruments and
agreements relating thereto) covered by this Section 3.12.  Each Intercompany
Lender shall defend, all at its own cost and expense, its title to, and the
existence, perfection and priority of the Collateral Agent’s security interest
in, the Intercompany Debt held by it and the other Collateral referenced in
Section 3.12(a) against all adverse claims.

 

3.13  Apex Metals Quotas.

 

(a)           Each of Apex Luxembourg and Apex Sweden hereby grants, transfers
and assigns to the Collateral Agent, for the benefit and on behalf of the
Secured Parties, as security for the Secured Debt Obligations and the CGSA
Secured Obligations, and grants a security interest in, all right, title and
interest which it has or may at any time hereafter acquire in and to (i) the
quotas of Apex Metals (the “Apex Metals Quotas”), (ii) all other quotas,
securities or other property constituting or representing a right to receive a
dividend on such Apex Metals Quotas or constituting or representing a right to
receive a distribution or return of capital upon or in respect of such Apex
Metals Quotas or constituting or representing warrants or any subscription or
other purchase rights with respect to such Apex Metals Quotas, and (iii) any
other interest in Apex Metals which, by reason of notice or lapse of time or the
occurrence of other events, may be converted into a direct equity interest in
Apex Metals.  Apex Metals hereby acknowledges notice of the assignment of the
Apex Metals Quotas accomplished hereby and shall register the assignment of the
Apex Metals Quotas on its register of members on or prior to the Initial
Disbursement Date. Each of Apex Luxembourg and Apex Sweden shall deliver to the
Collateral Agent the certificates (if any) representing Apex Metals Quotas on or
prior to the Initial Disbursement Date and, promptly following receipt, shall
deliver to the Collateral Agent certificates or other relevant documentation (if
any) representing any of such other quotas, securities, property, warrants,
subscriptions, interests or rights, together in each case with quota powers duly
executed by it in blank to be held by the Collateral Agent for the benefit and
on behalf of the Secured Parties pursuant to the pledge made hereby.  Each of
Apex Luxembourg and Apex Sweden agrees that except as contemplated by the
Transfer Restrictions Agreement it shall not permit the Organizational Documents
of Apex Metals to be amended or modified in any manner that would deprive the
holders of the Apex Metals Quotas of control of Apex Metals. 

 

(b)           On or prior to the Initial Disbursement Date, each of Apex
Luxembourg and Apex Sweden shall, as security for the Secured Debt Obligations
and the CGSA Secured Obligations, make or cause to be made any filings or
recordations, give or cause to be given any notices and take or cause to be
taken any other actions as may be reasonably necessary in the

 

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State of New York, Bolivia, Luxembourg, Switzerland or Sweden and in any
jurisdiction in which it is organized or has its principal place of business to
perfect the pledge of the Apex Metals Quotas and all such other quotas,
securities, property, warrants, subscriptions, interests and rights in Apex
Metals.  Each of Apex Luxembourg and Apex Sweden hereby promises to pledge any
Apex Metals Quotas and all such other shares, securities, property, warrants,
subscriptions, interests and rights in Apex Metals which it may acquire after
the Initial Disbursement Date, as security for the Secured Debt Obligations and
the CGSA Secured Obligations promptly upon the receipt thereof, and to make or
cause to be made any filings, registrations or recordations, give or cause to be
given any notices and take or cause to be taken any other actions as may be
necessary in the State of New York, Luxembourg, Switzerland or Sweden and in any
jurisdiction in which it is organized and has its principal place of business,
to perfect the pledge of such Apex Metals Quotas and all such other shares,
securities, property, warrants, subscriptions, interests and rights in Apex
Metals.  Each of Apex Luxembourg and Apex Sweden shall defend, all at its own
cost and expense, its title to, and the existence, perfection and priority of
the Collateral Agent’s security interest in, the Apex Metals Quotas and the
other Collateral referenced in Section 3.13(a) against all adverse claims.

 

3.14  Perfection and Maintenance of Security Interests. 

 

(a)           Except to the extent otherwise provided in this Agreement, at any
time and from time to time, upon demand of the Collateral Agent (at the
direction of any Senior Lender Group or Hedge Bank) for the benefit and on
behalf of any Secured Party:

 

(i)            each of the Borrower, Apex Luxembourg, Apex Sweden and Apex
Metals shall give, execute, file or record any notice, financing statement,
continuation statement, public deed, instrument, document or agreement and use
its reasonable efforts to obtain such Government Approvals, consents, licenses
or authorizations that any Senior Lender Group or Hedge Bank may consider
reasonably necessary or desirable, and shall take all other reasonable action as
required or advisable to create, preserve, continue, perfect or validate any
security interest granted by it under the Security Documents or hereunder or
pursuant hereto in the Collateral or to enable the Collateral Agent to exercise
or enforce its rights hereunder or under the Security Documents with respect to
such security interest; and

 

(ii)           the Borrower will give, execute, file or record any notice,
financing statement, continuation statement, public deed, instrument, document
or agreement and use all reasonable efforts to obtain such Government Approvals,
consents, licenses or authorizations, that any Senior Lender Group or Hedge Bank
may consider reasonably necessary or desirable, and shall take all other
reasonable action as required or advisable, to create, preserve, continue,
perfect or validate any security interest in any written agreement to which the
Borrower is a party.

 

(b)           Without limiting the generality of the foregoing, except to the
extent otherwise provided in this Agreement, the Collateral Agent, on behalf of
each Secured Party, is authorized to file or cause to be filed under the Uniform
Commercial Code of any state of the

 

23

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United States of America or under other applicable law financing statements,
continuation statements or other documents relating to the Collateral, and the
Collateral Agent on behalf of each Secured Party, is authorized to execute and
file or cause to be executed and filed public deeds or other documents under the
laws of Bolivia, Luxembourg, Sweden, Switzerland, Chile and the Cayman Islands
necessary to preserve a security interest in the Collateral, in each case
without the signature of the Borrower, Apex Luxembourg or Apex Sweden (to the
extent permitted by applicable law).  None of the Collateral Agent or the
Secured Parties have any responsibility for the creation, perfection, validity
or enforceability of any security interest created or intended to be created
hereby or pursuant hereto or for the maintenance or perfection of any such
security interest, provided, however, that the Collateral Agent shall execute
all public deeds or other documents as required by applicable law and regulation
and as requested by the Secured Parties to duly create and register security
interests in accordance with this Article III.  The Collateral Agent shall
notify the Borrower following the taking by it of such respective action.  The
Collateral Agent may delegate the performance of some or all of its rights and
obligations under this Section 3.14, subject to Section 13.18.

 

(c)           Neither the Borrower, Apex Luxembourg, Apex Sweden or Apex Metals
shall take any action inconsistent with this Agreement which would impair or
render ineffective or adversely affect the perfection or the priority of any of
the security interests granted by it in, or pursuant to, this Agreement or the
other Security Documents.

 

(d)           On or prior to the Initial Disbursement Date, each of the
Borrower, Apex Luxembourg, Apex Sweden and Apex Metals agrees to execute and
deliver to the Local Bank or the Collateral Agent, for the benefit and on behalf
of each Secured Party, and, in the case of the Borrower, to register in the
Registro de Comercio and in any other public registry in Bolivia in which such
registration is necessary, a notarized Bolivian public deed constituting
irrevocable powers of attorney granting the Collateral Agent, as the Borrower’s
attorney-in-fact, the power and right, in its name or on its behalf, without
notice or assent, to the extent permitted by applicable law, to take any action
and execute any instruments, in each case consistent with this Agreement and in
compliance with Section 13.03, which the Collateral Agent (as may be determined
pursuant to Section 13.06) or any other Secured Party may deem reasonably
necessary or advisable to create, preserve, continue, perfect or validate any
security interest granted or purported to be granted by it under or pursuant to
this Agreement or any other Security Document.

 

(e)           Any Security Document governed by the laws of Bolivia or Chile
referred to in this Article III required to be delivered to the Collateral Agent
or to the Secured Parties may be delivered to the Person from time to time
designated by the Collateral Agent or the Secured Parties (as applicable) as its
attorney-in-fact for such purpose.

 

(f)            The Collateral Agent (on behalf of itself and the Secured
Parties), the Borrower, Apex Luxembourg and Apex Sweden, as the case may be,
prior to or concurrently with the time or times that any Persons (including
successors, transferees and assigns of Secured Parties) become holders of
Secured Debt secured by and entitled to the benefits of this Agreement, shall,
to the extent necessary or advisable and as directed by the Administrative
Agent, amend each of the Security Documents to which it is a party solely to
identify specifically such additional Secured Parties and the Secured Debt held
or to be held thereby and to state that

 

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the Secured Debt held by such additional Secured Parties shall have the benefit
of the security interests referred to therein.

 

(g)           The Security Documents to be granted under the laws of Bolivia and
Chile, the consents and acknowledgments to be obtained from third parties
referred to in this Article III and the power of attorney referred to in Section
3.14(d) shall be in form and substance consistent with this Agreement and
reasonably satisfactory to the Collateral Agent (as may be determined pursuant
to Section 13.06).

 

3.15  Rights in Collateral Prior to Enforcement Direction. 

 

(a)           Notwithstanding the security interests created and to be created
pursuant to the Security Documents, unless otherwise specifically provided in
this Agreement, the Cross-Guarantee and Security Agreement or the Transfer
Restrictions Agreement or unless the Collateral Agent shall have received an
Enforcement Direction with respect to Collateral in accordance with
Section 10.03, the Borrower, Apex Luxembourg, Apex Sweden and Apex Metals shall
retain and be entitled to exercise all their respective rights relating to such
Collateral, subject to the terms and conditions of the Financing Documents and
of the security interests created or to be created pursuant to the Security
Documents, including the following:  (i) possessing and using, in the case of
the Borrower, the Project Property, receiving the revenues and profits to be
derived therefrom, and subject to Section 8.07, altering or disposing of any
part thereof, (ii) exercising all rights relating to Project Documents,
including, subject to Section 8.11, terminating or amending Project Documents
and instituting and settling proceedings to enforce its rights thereunder,
(iii) subject to Article V, renewing, amending and canceling insurance policies,
making claims and instituting and settling proceedings against insurers
thereunder, (iv) possessing title to any Borrower Shares, Apex Sweden Shares,
Apex Metals Quotas or Service Company Shares (other than possession of the
certificates themselves) that constitute Collateral, (v) transferring (in
accordance with the Transfer Restrictions Agreement) any Borrower Shares, Apex
Sweden Shares, Apex Metals Quotas or Service Company Shares, receiving the
proceeds of Restricted Payments permitted to be made pursuant to Article IX and
Section 5.17 of the Cross Guarantee and Security Agreement (if applicable) with
respect to any Borrower Shares, Apex Sweden Shares, Apex Metals Quotas or
Service Company Shares and exercising rights as shareholders (including voting
and the giving of consents) of the Borrower, the Service Company, Apex Metals
or, as applicable, Apex Sweden, under the relevant constitutional documents,
(vi) receiving payments of principal and interest permitted to be made as
Restricted Payments pursuant to Article IX and Section 5.17 of the Cross
Guarantee and Security Agreement (if applicable) on any Intercompany Debt when
payable thereunder subject to (A) in the case of any Subordinated Debt, the
subordination terms set forth in Appendix A-1 to the Transfer Restrictions
Agreement, (B) in the case of any Apex Metals Subordinated Debt, the
subordination terms set forth in Appendix A-2 to the Transfer Restrictions
Agreement and (C) in the case of other Intercompany Debt where amounts to be
utilized to repay such debt represent the proceeds of Restricted Payments by the
Borrower or Apex Metals, the provisions of Article IX hereof and Section 5.17 of
the Cross-Guarantee and Security Agreement, (vii) amending the terms of any
Intercompany Debt (other than the subordination terms set out in Appendices A-1
and A-2 to the Transfer Restrictions Agreement) and assigning Intercompany Debt
(in accordance with and subject to the Transfer Restrictions Agreement) and
(viii) subject to Sections 3.07 and 5.08, receiving payment of Expropriation

 

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Compensation and Project Equity Expropriation Compensation and making claims and
instituting and settling proceedings for the recovery thereof.

 

(b)           Unless the Collateral Agent shall have received an Enforcement
Direction with respect to such Collateral in accordance with Section 10.03, the
Collateral Agent shall, at the request and cost of the Borrower, Apex
Luxembourg, Apex Sweden or Apex Metals, as the case may be, execute such
documents and take such action and do such things as the Borrower, Apex
Luxembourg, Apex Sweden or Apex Metals, as the case may be, deems necessary or
desirable to enable such grantor of the security interest in the Collateral to
exercise the rights retained by it in such Collateral, provided that such
execution or action does not materially adversely affect the Collateral or the
security interests created or purported to be created therein pursuant to this
Agreement or the other Security Documents and no Secured Party shall take any
action prior to the receipt of such Enforcement Direction (other than any
actions expressly permitted by this Agreement to be taken prior to the receipt
of such Enforcement Direction) that would interfere with actions permitted
hereunder in respect of such Collateral by the grantor of the security interest
in such Collateral.

 

3.16  Liability of Borrower.  Notwithstanding any other provision of the
Security Documents, it is the intention of the parties that:

 

(a)           the Borrower shall remain liable under all agreements and
contracts included in the Collateral to the extent provided therein;

 

(b)           the exercise by the Collateral Agent or any other Secured Party of
any of their respective rights under this Agreement or any other Security
Document shall not release the Borrower from any of its duties or obligations
under any contracts or agreements included in the Collateral; and

 

(c)           none of the Collateral Agent or any other Secured Party shall have
any obligation or liability under any such contracts or agreements included in
the Collateral by reason of this Agreement or the other Security Documents, nor
shall the Collateral Agent or any other Secured Party be obligated to perform
any of the obligations or duties of the Borrower thereunder or to take any
action or collect or enforce any claim for payment assigned hereunder.

 

3.17  Deficiency.  If the proceeds of sale, collection or other realization of
or upon the Collateral pursuant to this Agreement and the other Security
Documents are insufficient to cover the costs and expenses of such realization
and the payment in full of the Secured Debt Obligations, each of the Borrower
and Apex Metals shall remain liable for any deficiency.

 

3.18  Private Sale and Waivers.  This Section 3.18 applies with respect to all
Collateral over which a Lien is granted hereby or by other Security Documents
pursuant to the laws of the State of New York.  The Collateral Agent and the
Secured Parties shall incur no liability as a result of the sale of the
Collateral, or any part thereof, at any private sale where permitted pursuant to
applicable law conducted in a commercially reasonable manner, provided that the
Borrower, Apex Metals, Apex Luxembourg or Apex Sweden, as the case may be, is
notified of the time and place of such sale at least ten days in advance
thereof.  Subject to the

 

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immediately preceding sentence, each of the Borrower, Apex Metals, Apex
Luxembourg and Apex Sweden hereby waives any claims against the Collateral Agent
or any other Secured Party arising by reason of the fact that the price at which
the Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale or was less than the aggregate
amount of the Secured Debt Obligations, even if the Collateral Agent accepts the
first offer received and does not offer the Collateral to more than one
offeree.  Each of the Borrower, Apex Metals, Apex Luxembourg and Apex Sweden
waives, to the maximum extent permitted by applicable law (a) any claim that, as
to any part of the Collateral, a public sale, should the Collateral Agent elect
so to proceed (pursuant to written direction of the Administrative Agent and the
Secured Parties pursuant to Section 10.05), is, in and of itself, not a
commercially reasonable method of sale for the Collateral; (b) except for any
damages which are the result of the Collateral Agent’s gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction
and except as otherwise provided in this Agreement, NOTICE OR JUDICIAL HEARING
IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR DISPOSITION OF
ANY OF THE COLLATERAL INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT THE BORROWER, APEX
LUXEMBOURG,  APEX SWEDEN OR APEX METALS WOULD OTHERWISE HAVE UNDER THE
CONSTITUTION OF THE UNITED STATES OR ANY STATUTE OF THE UNITED STATES OR OF ANY
STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF SALE OR
OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF THE COLLATERAL AGENT’S
RIGHTS HEREUNDER; (c) all rights of redemption, appraisement, valuation, stay
and extension or moratorium; and (d) all other rights the exercise of which
would, directly or indirectly, prevent, delay or inhibit the enforcement of any
of the rights or remedies of the Collateral Agent and the other Secured Parties
under this Agreement and the other Security Documents or the absolute sale of
the Collateral, now or hereafter in force under any applicable law, and each of
the Borrower, Apex Metals, Apex Luxembourg and Apex Sweden, in each case for
itself and all who may claim under it, insofar as it or they now or hereafter
lawfully may, hereby waive the benefit of all such laws and rights.

 

3.19  Obligations Absolute.  To the maximum extent permitted by applicable law,
the obligations of Apex Luxembourg, Apex Metals and Apex Sweden under this
Agreement and the other Security Documents to which they are a party are
absolute, irrevocable and unconditional and will remain in full force and effect
without regard to, and will not be released, suspended, discharged, terminated
or otherwise affected by, any circumstance or occurrence whatsoever (other than
termination pursuant to Section 15.01), including:

 

(a)           any renewal, extension, amendment, or modification of, or addition
or supplement to or deletion from, any of the Transaction Documents or any other
instrument or agreement referred to therein, or any assignment or transfer of
any thereof;

 

(b)           any waiver of, consent to or departure from, extension, indulgence
or other action or inaction under or in respect of any of the Secured Debt
Obligations, this Agreement, any other Transaction Document or other instrument
or agreement relating thereto, or any exercise or non-exercise of any right,
remedy, power or privilege under or

 

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in respect of the Secured Debt Obligations, this Agreement, any other
Transaction Document or any such other instrument or agreement relating thereto;

 

(c)           any furnishing of any additional security for the Secured Debt
Obligations or any part thereof to the Collateral Agent or any other person or
any acceptance thereof by the Collateral Agent or any other person or any
substitution, sale, exchange, release, surrender or realization of or upon any
such security by the Collateral Agent or any other person or the failure to
create, preserve, validate, perfect or protect any other Lien granted to, or
purported to be granted to, or in favor of, the Collateral Agent or any other
Secured Party;

 

(d)           any invalidity, irregularity or unenforceability of all or any
part of the Secured Debt Obligations, any other Transaction Document or any
other agreement or instrument relating thereto or any security therefor;

 

(e)           the acceleration of the maturity of any of the Secured Debt
Obligations or any other modification of the time of payment thereof; or

 

(f)            any other event or circumstance whatsoever which might otherwise
constitute a legal or equitable discharge of a surety or a guarantor, it being
the intent of this Section 3.19 that the obligations of Apex Luxembourg and Apex
Sweden hereunder and under the other Security Documents shall be absolute,
irrevocable and unconditional under any and all circumstances.

 

3.20  Subrogation.  Apex Luxembourg, Apex Sweden and, with respect to the
Borrower Shares pledged by it, Apex Metals shall not exercise, and each of Apex
Luxembourg and Apex Sweden hereby irrevocably defers the exercise of, any claim,
right or remedy that it may now have or may hereafter acquire against the
Borrower or Apex Metals arising under or in connection with this Agreement or
any other Security Document, including, without limitation, any claim, right or
remedy of subrogation, contribution, reimbursement, exoneration, indemnification
or participation arising under contract, by applicable law or otherwise in any
claim, right or remedy of the Collateral Agent or the other Secured Parties
against the Borrower, Apex Metals or any other Person or any Collateral which
the Collateral Agent or any other Secured Party may now have or may hereafter
acquire, until the indefeasible payment and satisfaction in full of all Secured
Debt Obligations.  If, notwithstanding the preceding sentence, any amount shall
be paid to Apex Luxembourg, Apex Sweden or Apex Metals on account of such
subrogation rights at any time when any of the Secured Debt Obligations shall
not have been paid in full, such amount shall be held by such Person in trust
for the Collateral Agent and the other Secured Parties, segregated from other
funds of such Person and be turned over to the Collateral Agent in the exact
form received by such Person (duly endorsed by such Person to the Collateral
Agent, if required), to be applied against the Secured Debt Obligations, whether
matured or unmatured, in accordance with the Financing Documents.

 

3.21  Designation of Local Banks.  As a condition to being a Local Bank, any
financial institution designated by the Borrower as a Local Bank shall enter
into a local bank agreement in a form mutually satisfactory to the Majority
Secured Parties and the Borrower.  Each Local Bank shall deliver a signed copy
of such agreement to the Administrative Agent.  No

 

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Local Bank shall continue to serve as a Local Bank if such bank ceases to
satisfy the definition of “Local Bank”.

 

3.22  First Priority.  As used in this Article III, a reference to a “first
priority” pledge or security interest shall be deemed to be subject to Permitted
Liens to the extent that such Permitted Liens are granted priority on a
mandatory basis under applicable Government Rules.

 

ARTICLE IV

ACCOUNTS

 

4.01  Accounts. 

 

(a)           Establishment of Accounts.  The Borrower (and in the case of the
Apex Metals Account, Apex Metals) shall direct the Collateral Agent to, and the
Collateral Agent shall, on or prior to the Closing Date, direct JPMorgan Chase
Bank, N.A. (in its individual capacity, the “Securities Intermediary”) to
establish and maintain each of the New York Accounts as provided in clause (b)
below.  The Bolivian Accounts shall be established as provided in clause (j)
below. 

 

(b)           New York Accounts.  The New York Accounts shall consist of the
segregated, non-interest bearing trust accounts set forth in subclauses (i)
through (viii) below (together, the “New York Accounts”), each opened in the
name of the Collateral Agent in its capacity as Collateral Agent hereunder as
“securities accounts” (as such term is defined in Section 8-501(a) of the UCC),
denominated in Dollars and separately established and maintained by the
Securities Intermediary (which shall act as “securities intermediary” (as such
term is defined in Section 8-102(a)(14) of the UCC) with respect to the New York
Accounts) at its offices located in New York City:

 

(i)            a “Loan Proceeds Account”, into which deposits shall be made in
accordance with Sections 4.02(a), 4.08(a) and 4.08(b);

 

(ii)           an “Apex Metals Account”, into which deposits shall be made in
accordance with Sections 4.02(c), 4.02(d), 4.02(f) and 4.02(h);

 

(iii)          a “Contingent Support Account”, into which deposits shall be made
in accordance with Section 4.02(e);

 

(iv)          a “Debt Service Reserve Account”, into which Reserve Payments
shall be deposited in accordance with Section 4.06;

 

(v)           an “Operating Reserve Account”, into which Reserve Payments shall
be deposited in accordance with Section 4.07;

 

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(vi)          an “Insurance Proceeds Account”, into which deposits shall be made
in accordance with Section 4.02(f);

 

(vii)         an “Expropriation Proceeds Account”, into which deposits shall be
made in accordance with Section 4.02(f); and

 

(viii)        an “Equity Account”, into which deposits shall be made in
accordance with Section 4.02(b).

 

All moneys held in the New York Accounts shall be trust funds held by the
Collateral Agent solely for the purpose of making payments therefrom in
accordance with this Agreement; and only the Collateral Agent shall have the
right to make withdrawals and payments therefrom as and to the extent provided
in this Agreement.  Regardless of any provision in any other agreement, for
purposes of the UCC, the “securities intermediary’s jurisdiction” with respect
to the New York Accounts for the purposes of Section 8-110(e) of the UCC is the
State of New York.

 

(c)           Acknowledgements of Securities Intermediary.  The Collateral
Agent, the Borrower, Apex Metals and the Securities Intermediary hereby agree
and confirm that (i) the Collateral Agent for the benefit of the Secured Parties
will be the “entitlement holder” (within the meaning of section 8-102(a)(7) of
the UCC) of the “security entitlements” (within the meaning of section
8-102(a)(17) of the UCC) in respect of the “financial assets” (within the
meaning of section 8-102(a)(9) of the UCC) credited to the New York Accounts and
any instruction or direction from the Collateral Agent as described in this
Article IV or elsewhere in this Agreement relating to the transfer or redemption
of a financial asset (as so defined) shall constitute an “entitlement order” (as
defined in Section 8-102(a)(8) of the UCC), (ii) all property delivered to the
Collateral Agent (in such capacity) pursuant to this Agreement or any other
Financing Document for deposit in the New York Accounts will be held by the
Securities Intermediary and promptly credited to a New York Account by an
appropriate entry in its records in accordance with this Agreement, (iii) all
financial assets (as so defined) in registered form or payable to or to the
order of and credited to any such New York Account shall be registered in the
name of, payable to or to the order of, or indorsed to, the Collateral Agent or
in blank, or credited to another securities account maintained in the name of
the Collateral Agent, and in no case will any financial asset credited to any
such New York Account be registered in the name of, payable to or to the order
of, or indorsed to, the Borrower or Apex Metals, as the case may be, except to
the extent the foregoing have been subsequently indorsed by the Borrower or Apex
Metals, as the case may be, to the Collateral Agent or in blank, and (iv) each
item of property (including any security, instrument or obligation, share,
participation, interest, cash or other property whatsoever) credited to any New
York Account shall be treated as a financial asset (as so defined).  In the
event that the Securities Intermediary receives conflicting entitlement orders
or written instructions from the Collateral Agent, any Affiliated Obligor or any
other Person, the Securities Intermediary shall comply with the entitlement
orders or written instructions, as applicable, originated by the Collateral
Agent.  The Securities Intermediary is not party to and shall not execute and
deliver, or otherwise become bound by, any agreement under which the Securities
Intermediary agrees with any Person other than the Collateral Agent and the
Borrower or Apex Metals to comply with entitlement orders or written
instructions originated by such Person relating to any of the New York Accounts
or the security entitlements that are the

 

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subject of this Agreement.  The Securities Intermediary shall not grant, permit
or suffer to exist any Lien in any financial asset that is the subject of any
security entitlement that is the subject of this Agreement.

 

(d)           Account Names and Numbers.  The Securities Intermediary shall not
change the name or account number of any New York Account without the prior
written consent of the Collateral Agent (acting in accordance with Section
13.06); provided, however, that in the case of any change in account number that
is a result of any reconfiguring of the systems of the Securities Intermediary,
the prior written consent of the Collateral Agent shall not be required so long
as the Collateral Agent shall have received prior written notice of such
change.  The Securities Intermediary shall give the Borrower and Apex Metals
prior written notice of any change in the account number or name of any New York
Account.

 

(e)           Waiver of Lien; Subordination.  In the event that the Securities
Intermediary has or subsequently obtains by agreement, operation of law or
otherwise a Lien on any New York Account, any financial asset carried therein or
credited thereto or any security entitlement related thereto, the Securities
Intermediary agrees that such Lien shall (except to the extent provided in the
last sentence of this Section 4.01(e)) be subordinate to the Liens of the
Collateral Agent.  The financial assets standing to the credit of the New York
Accounts will not be subject to deduction, set-off, banker’s lien, or any other
right in favor of any Person other than the Collateral Agent (except to the
extent of returned items and chargebacks either for uncollected checks or other
items of payment and transfers previously credited to one or more of the New
York Accounts, and the Borrower, Apex Metals and the Collateral Agent hereby
authorize the Securities Intermediary to debit the relevant New York Account(s)
for such amounts).

 

(f)            No Other Agreements.  None of the Securities Intermediary, the
Collateral Agent, the Borrower or Apex Metals have entered or will enter into
any agreement with respect to any New York Account or any security entitlements,
financial assets or amounts carried in or credited to any New York Account,
other than this Agreement, the other Security Documents and account agreements
and similar documentation relating to any New York Account (provided that in the
event of any conflict between the terms of this Agreement and any such account
agreement or similar documentation, the terms of this Agreement shall control). 
The Securities Intermediary has not entered into any agreement with the
Borrower, Apex Metals or any other Person purporting to limit or condition the
obligation of the Securities Intermediary to comply with entitlement orders or
written instructions originated by the Collateral Agent in accordance with
Section 4.01(c).

 

(g)           No Adverse Claims.  Except for the claims and interest of the
Collateral Agent and the Securities Intermediary and, to the limited extent
provided herein, the Borrower and Apex Metals in each of the New York Accounts,
the Securities Intermediary does not know, as of the date hereof and as of each
date on which any New York Account is established in connection with this
Agreement, of any claim to, or interest in, any New York Account or in any
security entitlement, financial asset or amounts carried therein or credited
thereto.  If the Securities Intermediary obtains knowledge that any Person has
asserted any Lien (including any writ, garnishment, judgment, warrant of
attachment, execution or similar process) against any New York Account or in any
security entitlement, financial asset or amounts carried therein or

 

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credited thereto, the Securities Intermediary will promptly notify the
Collateral Agent, the Borrower and Apex Metals.

 

(h)           Perfection of Lien.  The rights and powers granted to the
Collateral Agent by the Secured Parties have been granted in order to perfect
its Lien in the New York Accounts and the security entitlements, financial
assets and amounts carried therein or credited thereto, are powers coupled with
an interest and will not be affected by the bankruptcy of the Borrower, the
bankruptcy of Apex Metals or the lapse of time.  Without limiting the intent of
the parties that the New York Accounts be treated and maintained as securities
accounts and the funds on deposit therein be treated as financial assets, in the
event that any of the New York Accounts is deemed to be a deposit account then
the following provisions shall apply with respect to such New York Accounts: 
(i) each such New York Account will be treated as a “deposit account” (within
the meaning of Section 9-102(a)(29) of the UCC); (ii) the Securities
Intermediary agrees to act as a “bank” (within the meaning of 9-102(a) of the
UCC) with respect to such New York Accounts that are “deposit accounts” and
credit balances therein not constituting financial assets credited thereto;
(iii) the Collateral Agent will be treated as the “customer” (within the meaning
of Section 4-104(e) of the UCC) with respect to such Accounts that are “deposit
accounts”; (iv) the Collateral Agent shall have “control” (within the meaning of
Section 9-104(a) of the UCC) of the New York Accounts that are “deposit
accounts”; and (v) the Securities Intermediary will not have any rights of
set-off or other Lien in respect of such New York Accounts or the credit balance
therein and the Collateral Agent, for the benefit of the Secured Parties, shall
have a Lien on such New York Accounts and the credit balances therein.  The
Securities Intermediary hereby agrees that it will comply with instructions with
respect to the New York Accounts originated by the Collateral Agent without
further consent by the Borrower, Apex Metals or any other Person.

(i)            No Borrower or Apex Metals Rights.  Neither the Borrower nor Apex
Metals shall have any right to withdraw funds held in the New York Accounts,
except to:  (i) receive or make requisitions of monies held in the New York
Accounts as expressly permitted by this Agreement; (ii) cause transfers of
monies held in the New York Accounts, as expressly permitted by this Agreement;
and (iii) direct the investment of monies held in the New York Accounts as
expressly permitted by Section 4.03.  No other Affiliated Obligor shall have any
right, title or interest in, to or under any of the New York Accounts.

 

(j)            Bolivian Accounts. 

 

(i)            Expense Account.  The “Expense Accounts” shall be two separate
bank accounts established in the name of the Borrower and maintained by the
Borrower at the Local Bank.  One Expense Account shall be in US Dollars, into
which US Dollar-denominated deposits shall be made and from which US
Dollar-denominated withdrawals shall be made. A second Expense Account shall be
in Bolivianos into which Boliviano-deposits shall be made and from which
Boliviano-denominated withdrawals shall be made (and references herein to the
“Expense Accounts” shall be deemed to include a reference to the accounts
maintained therein).  The Borrower may make transfers into the Expense Accounts
in accordance with Section 4.04(a) for the payment of Operating Costs in
Bolivia, provided that, (1) no such transfer may be made if, after giving effect

 

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thereto, the balance in the Expense Accounts would exceed the Maximum Expense
Account Balance and (2) each such transfer shall be in a minimum amount of
$500,000.  In the event that the balance of funds in the Expense Accounts
exceeds the Maximum Expense Account Balance, the Borrower shall, to the extent
permitted by applicable law, promptly direct the Local Bank to transfer funds
(converting amounts in Bolivianos to Dollars) from the Expense Accounts to the
applicable New York Account to cure such excess; and if required for purpose of
effecting such transfer, the Borrower shall cooperate with the Collateral Agent
in constituting and issuing such accounts, authorizations and powers as may be
advisable or requested by the Collateral Agent to comply with any formal
requirements incident to such transfer.  If any Boliviano amount otherwise
required to be deposited in the Expense Accounts cannot be deposited therein
without the balance in the Expense Account exceeding the Maximum Expense Account
Balance, such Boliviano amount shall (to the extent permitted by applicable law)
promptly be deposited in the applicable New York Account (converting amounts in
Bolivianos to Dollars at the rate established by the Bolivian Central Bank).

 

(ii)           Bolivian Proceeds Account.  If at any time the Borrower shall
have received any proceeds, other than proceeds from Expropriation Compensation
or Insurance subject to Article V, denominated in Bolivianos and such proceeds
cannot be deposited in the applicable New York Account (after converting amounts
in Bolivianos to Dollars) in accordance with Section 4.01(j)(i), then at such
time the Borrower shall direct the Local Bank to promptly establish a segregated
Bolivian Account (a “Bolivian Proceeds Account”) at the Local Bank and shall
deposit such funds therein.  After establishing the Bolivian Proceeds Account
the Borrower shall promptly execute and deliver to the Local Bank an irrevocable
instruction in favor of the Collateral Agent duly authorizing the Collateral
Agent, as its attorney-in-fact to direct the funds in the account.  The Borrower
shall not withdraw or otherwise make use of such funds without the prior written
consent of the Collateral Agent (acting in accordance with Section 13.06).

 

4.02  Deposits. 

 

(a)           Senior Loan Disbursements.  Disbursements of Senior Loans shall be
paid directly to the Loan Proceeds Account.  The proceeds of withdrawals from
the Equity Account in accordance with Section 4.08(a) shall be paid into the
Loan Proceeds Account.  Promptly upon its receipt of proceeds of Senior Loans
into the Loan Proceeds Account, the Securities Intermediary shall notify each
funding Senior Lender and the Borrower that it has received such proceeds.

 

(b)           Equity Amount.  Prior to the Initial Disbursement Date, Sponsor
Funding in an amount equal to the Equity Amount shall be deposited directly into
the Equity Account; provided that an Equity Support Letter of Credit may be
provided in lieu of all or a portion of the Equity Amount as provided in Section
11.02(a)(i).

 

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(c)           Proceeds.  Apex Metals agrees to instruct all buyers of Project
Production or the Persons making payment on behalf of such buyers (including
banks making payments under letters of credit) to make all payments in respect
thereof in Dollars directly to the Apex Metals Account.  Without prejudice to
such buyers’ obligations to make payments in Dollars under Third Party
Concentrate Sales Agreements directly to the Apex Metals Account, if,
notwithstanding the instructions required to be given to buyers of Project
Production pursuant to this Agreement, any such payments are remitted to Apex
Metals other than by deposit to the Apex Metals Account, then Apex Metals shall
hold such amounts (without, if possible, intermingling them with other funds) in
trust for the benefit of the Collateral Agent, and promptly following receipt,
remit such amounts to the Apex Metals Account.  

 

(d)           Hedge Agreement Proceeds and Early Termination Amounts.  All Hedge
Banks shall make all payments of amounts due to Apex Metals under any Mandatory
Metals Hedge Agreements in Dollars directly to the Apex Metals Account.   

 

(e)           Contingent Support Amount.  Prior to the Initial Disbursement
Date, Sponsor Funding in an amount equal to $70,000,000 shall be deposited
directly into the Contingent Support Account; provided that a Contingent Support
Letter of Credit may be provided in lieu of all or a portion of such amount as
provided in Section 11.02(a)(ii). Subsequent to the Initial Disbursement Date,
Sponsor Funding shall be deposited directly into the Contingent Support Account
as and when required pursuant to Section 5.03 of the Completion Agreement.

 

(f)            Proceeds from Sale of Collateral, Expropriation Compensation and
Insurance.  Any proceeds from the sale of Project Property shall be paid
directly to the Apex Metals Account.  Any proceeds from Expropriation
Compensation shall be paid directly to the Expropriation Proceeds Account;
provided that (i) any proceeds denominated in Bolivianos when received, and
(ii) any proceeds originating, paid or received in Bolivia and not permitted
under applicable Government Rules to be paid directly to the Expropriation
Proceeds Account, shall be deposited (following conversion, if necessary, of the
relevant amount into a corresponding Dollar or Boliviano amount) in the Expense
Account, subject to Section 4.01(j), which amount shall be promptly deposited to
the applicable New York Account (after converting amounts in Bolivianos to
Dollars).  Any proceeds from insurance shall be paid directly to the Insurance
Proceeds Account, the Expense Account or, in the case of third party liability
or worker’s compensation, to the Person to whom the liability has been incurred,
as applicable, in accordance with the provisions of Article V.

 

(g)           IVA Reimbursements.  All payments in respect of IVA Reimbursement
Rights or sales of IVA Reimbursement Rights shall be made directly to, or
deposited in the Expense Account, subject to Section 4.01(j).

 

(h)           Other Project Funds and Sponsor Funding.  Other than as specified
in clauses (a) through (g) of this Section 4.02 and as contemplated by
Section 5.05 or 5.08, all Project Funds and Sponsor Funding shall be deposited
directly (following conversion, if necessary, of the relevant amount into a
corresponding Dollar amount) in the Apex Metals Account.  All other amounts
received by or paid to the Borrower or Apex Metals and not expressly required to
be deposited into another New York Account in accordance with the terms

 

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of this Agreement shall be deposited directly into the Apex Metals Account (and
each of the Borrower and Apex Metals hereby agree to notify all payors that all
payments to be made to either of them shall be made to the Apex Metals
Account). 

 

4.03  Investment of Funds in Accounts. 

 

(a)           Unless an Event of Default has occurred and is continuing, the
Collateral Agent shall direct the Securities Intermediary to invest funds (and
vary and redeem such investments) in the New York Accounts in the name of the
Collateral Agent as directed by the Borrower or Apex Metals (solely with respect
to the Apex Metals Account); provided that such investments shall only be in
Authorized Investments in Dollars and shall be at the sole risk and expense of
the Borrower or Apex Metals (solely with respect to the Apex Metals Account). 
All taxes accruing with respect to Authorized Investments and the acquisition,
liquidation and redemption thereof shall be for the sole account of the Borrower
or Apex Metals (solely with respect to the Apex Metals Account).

 

(b)           If an Event of Default has occurred and is continuing, the
Collateral Agent shall, to the extent so notified as contemplated by
Section 4.05(a), direct the Securities Intermediary to invest funds (and vary
and redeem such investments) in the New York Accounts as directed by the Person
designated by the applicable Secured Parties in an Account Enforcement Notice,
provided that such funds may be invested only in certain Authorized Investments
as directed by the Administrative Agent, at the instruction of the Majority
Secured Parties.

 

(c)           Whenever directed to make a withdrawal or transfer of funds, the
Collateral Agent (unless, so long as no Event of Default is continuing,
otherwise directed by the Borrower or Apex Metals (solely with respect to the
Apex Metals Account)) is authorized to direct the Securities Intermediary to
liquidate any investment to the extent that, after application of all other
available funds, liquidation of such investment is necessary to make such
transfer, provided that the Collateral Agent shall not be obliged to issue such
a direction to so liquidate any investment unless directed to do so by the
Borrower or Apex Metals (solely with respect to the Apex Metals Account) (or, in
the event that an Account Enforcement Notice has been delivered and not revoked,
the Administrative Agent or the Person identified in such notice).  If so
directed by the Borrower or Apex Metals (solely with respect to the Apex Metals
Account) (or, in the event that an Account Enforcement Notice has been delivered
and not revoked, the Administrative Agent or the Person identified in such
notice), the Collateral Agent shall cause to be liquidated investments as so
directed.  The Collateral Agent shall have, however, no liability with respect
to any interest cost or penalty on the liquidation of any investment pursuant to
this clause (c), nor shall the Collateral Agent have any liability with respect
to investments (including purchases or conversions of foreign exchange) of
moneys held in the New York Accounts (or any losses resulting therefrom) made in
accordance with this Section 4.03, except in the case of gross negligence or
willful misconduct of the Collateral Agent as finally determined by a court of
competent jurisdiction.  All investment of funds in the New York Accounts shall
be made in the name of and on behalf of the Collateral Agent and should be
reflected as such on the books and records of the Securities Intermediary, and
shall be at the sole cost and expense of the Borrower and Apex Metals (solely
with respect to the Apex Metals Account).  To the extent that a transfer of
funds from one New York Account to another New York Account is required in

 

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accordance with the terms of this Agreement and the Securities Intermediary can
effect such transfer without liquidating Authorized Investments in the New York
Account from which funds are to be transferred (e.g., where such New York
Account has an Authorized Investment having a face amount that is less than or
equal to the amount of the funds to be transferred), then the Collateral Agent,
the Borrower or Apex Metals (solely with respect to the Apex Metals Account) may
request that the Securities Intermediary transfer such Authorized Investments to
the recipient New York Account without liquidating such Authorized Investment.

 

(d)           All references in this Agreement to New York Accounts and to cash,
moneys or funds therein or balances thereof, shall include the investments in
which such moneys are then invested and the proceeds thereof.

 

(e)           Proceeds of Authorized Investments shall be posted to the New York
Accounts to which such Authorized Investments are credited.

 

4.04  Withdrawals from Liquidity Accounts Pre-Event of Default.  Unless an Event
of Default shall have occurred and is continuing, the Borrower shall have the
sole right to direct the Collateral Agent by delivery of a Withdrawal
Certificate (and the Collateral Agent shall direct the Securities Intermediary
in accordance with such Withdrawal Certificate) to withdraw moneys as directed
from the Liquidity Accounts (subject to Section 4.07(d) with respect to the
Operating Reserve Account) and to apply such moneys in the following order of
priority:

 

(a)           first, (i) to pay Operating Costs (other than Operating Costs to
be paid from amounts on deposit in the Insurance Proceeds Account or the
Expropriation Proceeds Account) then due and payable and (ii) for transfer to
the Expense Account the amount requested by the Borrower for the payment of
Operating Costs in Bolivia, subject to Section 4.01(j);

 

(b)           second, to pay Senior Loan Obligations consisting of interest and
commitment fees then due and payable with respect to the Senior Loans and Senior
Loan Commitments;

 

(c)           third, to pay (i) premia on the PRI Policies then due and payable
and (ii) any other amount (other than principal payments, Cash Sweep
Prepayments, Guaranteed Apex Metals Early Termination Amounts and any amounts
payable under steps first and second above) then due and payable under the
Financing Documents in respect of the Secured Debt Obligations;

 

(d)           fourth, to pay (i) Secured Debt Obligations consisting of the
amount of principal of the Senior Loans (excluding Cash Sweep Prepayments) then
due and payable and (ii) Guaranteed Apex Metals Early Termination Amounts;

 

(e)           fifth, from and after the Completion Date, (i) first to fund in
accordance with Section 4.06(a)(i) the amount of any Debt Service Reserve
Deficiency and (ii) second to fund in accordance with Section 4.07(a)(i) the
amount of any Operating Reserve Deficiency;

 

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(f)            sixth, to Cash Sweep Prepayments of the Senior Loans in
accordance with Section 9.02; and

 

(g)           seventh, to pay any Service Fee then due and payable.

 

Apex Metals hereby irrevocably authorizes the Borrower to make such withdrawals
and transfers from the Apex Metals Account as may be necessary to fund the
foregoing costs, expenses and payments.

 

4.05  Withdrawals from Liquidity Accounts During the Continuance of an Event of
Default. 

 

(a)           If an Event of Default shall have occurred and be continuing, the
Administrative Agent may, and if directed by the Majority Secured Parties the
Administrative Agent shall, notify (such notification, an “Account Enforcement
Notice”) the Collateral Agent (which in turn shall notify the Securities
Intermediary) in accordance with Section 10.04 that, as contemplated by this
Agreement, the Collateral Agent shall no longer accept Withdrawal Certificates
and instructions from the Borrower or Apex Metals (solely with respect to the
Apex Metals Account) for the investment, withdrawal or transfer of funds or
investments in the New York Accounts.  The Collateral Agent and the Securities
Intermediary shall thereafter, for so long as such Event of Default shall be
continuing, accept instructions for the investment or disposition of funds in
such New York Accounts solely from the Administrative Agent or other Person(s)
designated by the Administrative Agent in such notice.  In the event that the
Administrative Agent does not issue an Account Enforcement Notice, the
provisions of Section 4.04 shall continue to apply notwithstanding the
occurrence of an Event of Default; provided that no payments shall be made in
respect of Section 4.04(d)(ii) except payments of Guaranteed Apex Metals Early
Termination Amounts where the Collateral Agent has delivered to each other
Secured Party a notice previously delivered to it by a Hedge Bank specifying
that such Hedge Bank has terminated some or all of the Mandatory Metals Hedge
Transactions then outstanding.

 

(b)           The Borrower, Apex Metals, the Collateral Agent and the Secured
Parties agree that following the delivery to the Collateral Agent of an Account
Enforcement Notice, and until such time as either (x) an Enforcement Direction
has been given in accordance with Section 10.02(e) or (y) the Event of Default
has been cured or waived as specified in clause (d) below, the Collateral Agent
shall (I) direct the Securities Intermediary to invest moneys available in the
New York Accounts solely in certain Authorized Investments as instructed by the
Administrative Agent acting at the direction of the Majority Secured Parties,
and (II) cause available funds from the Liquidity Accounts to be applied on the
first Business Day of each month following receipt of an Account Enforcement
Notice in the following order of priority:

 

(i)            first, (A) for the period from the date of the applicable Event
of Default to the beginning of the first month for which the Borrower may timely
deliver a Restricted Operating Cost Certificate in accordance with clause (c)
below, to pay to the Persons indicated on such certificate at the times
specified in such certificate or transfer to the Expense Account, Operating
Costs (other than Operating Costs to be paid from amounts on deposit in the
Insurance Proceeds Account or the Expropriation Proceeds Account) incurred prior
to the date of such

 

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Event of Default that are then due and payable or that constitute Restricted
Operating Costs, in each case when due and payable during such period, as
certified by the Borrower in a Restricted Operating Cost Certificate delivered
to the Technical Agent and the Collateral Agent pursuant to and in accordance
with Section 4.05(c), and (B) thereafter, to pay to the Persons indicated on
such certificate at the times specified in such certificate or transfer to the
Expense Account, Restricted Operating Costs (other than Restricted Operating
Costs to be paid from amounts on deposit in the Insurance Proceeds Account or
the Expropriation Proceeds Account) for such month as set forth in the
applicable Restricted Operating Cost Certificate for such month delivered to the
Collateral Agent pursuant to clause (c) of this Section 4.05 (excluding, in any
case, any amount set forth in such certificate that the Administrative Agent has
notified the Collateral Agent has been determined by the Technical Agent in
consultation with the Independent Engineer pursuant to clause (c) of this
Section 4.05 not to be a Restricted Operating Cost);

 

(ii)           second, to pay all outstanding fees and expenses of the Agents
then due and payable ratably to such Agents based on the amounts owed to such
Agents or to reserve for such amounts reasonably expected to become due and
payable prior to the next scheduled date of application of funds;

 

(iii)          third, to pay interest and commitment fees constituting Senior
Loan Obligations and to pay Guaranteed Apex Metals Net Payment Amounts then due
and payable ratably to the Persons entitled thereto based on the ratio of such
amounts owed to such Persons to the aggregate of all such amounts owed to all
such Persons, or to reserve for all such amounts reasonably expected to become
due and payable prior to the next scheduled date of application of funds;

 

(iv)          fourth, to pay premia on PRI Policies then due and payable ratably
to the Persons entitled thereto based on the ratio of such amounts owed to such
Persons to the aggregate of all such amounts owed to all such Persons, or to
reserve for such amounts reasonably expected to become due and payable prior to
the next scheduled date of application of funds;

 

(v)           fifth, to pay Senior Loan Obligations (other than those described
in the foregoing clauses (ii) through (iv) and clauses (vi), (vii) and (viii)
below) then due and payable ratably to the Persons entitled thereto based on the
ratio of such amounts owed to such Persons to the aggregate of all such amounts
owed to all such Persons, or to reserve for such amounts reasonably expected to
become due and payable prior to the next scheduled date of application of funds;

 

(vi)          sixth, to pay regular scheduled installments of principal of
Senior Loan Obligations then due and payable ratably to the Persons entitled
thereto based on the ratio of such amounts owed to such Persons to the aggregate
of all such amounts owed to all such Persons, or to reserve for such amounts
reasonably expected to become due and payable prior to the next scheduled date
of application of funds;

 

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(vii)         seventh, to reserve for Secured Debt Obligations described in
clauses (ii) through (vi) above reasonably expected to become due and payable on
or prior to the next Principal Repayment Date;

 

(viii)        eighth, to pay Senior Loan Obligations that have become due and
payable prior to their scheduled Principal Repayment Date and Guaranteed Apex
Metals Early Termination Amounts; ratably to the Persons entitled thereto based
on the ratio of such amounts owed to such Persons to the aggregate of all such
amounts owed to all such Persons;

 

(ix)           ninth, from and after the Completion Date, (i) first to fund in
accordance with Section 4.06(a)(i) the amount of any Debt Service Reserve
Deficiency and (ii) second to fund in accordance with Section 4.07(a)(i) the
amount of any Operating Reserve Deficiency; and

 

(x)            tenth, to Cash Sweep Prepayments of the Senior Loans in
accordance with Section 9.02;

 

provided, however, that if an Enforcement Direction has been given in accordance
with Section 10.02(e), then the Collateral Agent shall, upon receipt of
directions from the Administrative Agent, on behalf of the Majority Secured
Parties, instruct the Securities Intermediary to cause such funds to be applied
as so directed by the Administrative Agent, on behalf of the Majority Secured
Parties as specified in the Enforcement Direction. 

 

(c)           In the event that the Administrative Agent delivers an Account
Enforcement Notice to the Collateral Agent and for so long as the Event of
Default referred to therein has not been cured or waived, the Borrower shall
deliver to the Collateral Agent, the Technical Agent and the Independent
Engineer at least 15 Business Days prior to the first day of each month or, in
the case of Operating Costs occurring during the period described in
clause (b)(i)(A) above, as soon as possible, a certificate signed by a senior
financial officer of the Borrower (a “Restricted Operating Cost Certificate”)
setting forth in reasonable detail (i) the amount of Operating Costs incurred
prior to the Event of Default then due and payable and (ii) the amount of
Restricted Operating Costs that are expected to become due and payable during
the period required to be covered by such certificate pursuant to clause (b)(i)
above.  Each such Restricted Operating Cost Certificate shall contain a warranty
that the funds disbursed at the direction of the Collateral Agent pursuant to
item (i) in the order of priority specified in clause (b) shall be used solely
to pay Operating Costs incurred prior to the Event of Default then due and
payable and Restricted Operating Costs that will become due and payable on or
prior to the last day of the period covered by such certificate.  Each such
Restricted Operating Cost Certificate shall state that the amount of Restricted
Operating Costs contained therein has been based on the Construction Budget or
Operating Plan, as the case may be, for the period to which it relates.  The
funds in the Liquidity Accounts shall be applied as provided in such certificate
unless within 10 Business Days of the delivery to the Independent Engineer and
the Technical Agent of the Restricted Operating Cost Certificate, the Technical
Agent, in consultation with the Independent Engineer, identifies any items of
expenditure specified therein which it determines are not Restricted Operating
Costs and provides written notice thereof to the Borrower and the Senior Lenders
indicating the reason for its conclusion.  In such event, such items of
expenditure

 

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shall not be treated as Restricted Operating Costs for purposes of
Section 4.05(b) until such time as the Majority Secured Parties determine that
they may be treated as Restricted Operating Costs.  The Technical Agent and
Independent Engineer shall review each Restricted Operating Cost Certificate. 
The reasonable and documented fees and expenses of the Independent Engineer and
the reasonable and documented out-of-pocket expenses of the Technical Agent, in
each case to the extent incurred in the review of the Restricted Operating Cost
Certificates, shall be for the account of the Borrower. 

 

(d)           Upon cessation, cure or waiver of an Event of Default, the
Majority Secured Parties shall cause the Administrative Agent to deliver a
notice to the Borrower and the Collateral Agent, stating the date of such
cessation, cure or waiver.  Any notice given pursuant to this Section 4.05(d)
shall be a “Cessation Notice”.   Upon receipt by the Collateral Agent of
Cessation Notices with respect to all continuing Events of Default, the
Collateral Agent shall promptly notify the Securities Intermediary, with a copy
to the Borrower and Apex Metals, directing them once again to accept the
directions of the Borrower, and the Securities Intermediary shall again accept
the directions of the Borrower pursuant to written instructions in respect of
investment of funds in the Accounts and pursuant to Withdrawal Certificates in
respect of disposition of funds in the Accounts, all on the terms and conditions
of this Agreement.

 

4.06  Debt Service Reserve Account. 

 

(a)           Debt Service Reserve Payments.

 

(i)            If, after Completion, there is a Debt Service Reserve Deficiency
on any Reserve Payment Date, then on such Reserve Payment Date the Borrower
shall deliver a Withdrawal Certificate to the Collateral Agent instructing it to
transfer to the Debt Service Reserve Account, from funds (if any) available in
any Liquidity Account, funds in an amount equal to such Debt Service Reserve
Deficiency (a “Debt Service Reserve Payment”).

 

(ii)           The Borrower shall give immediate notice to the Collateral Agent
and the Administrative Agent if less than 100% of any Debt Service Reserve
Payment due has been deposited in the Debt Service Reserve Account on or prior
to the applicable Reserve Payment Date.

 

(b)           Timing of Debt Service Reserve Payments.  The Borrower may make
Debt Service Reserve Payments or cause to be provided Debt Service Reserve
Letters of Credit at any time including to meet the conditions of
Section 9.01(a).

 

(c)           Transfer at Completion.  In order to meet the conditions to
Completion set forth in the Financial Certificate attached as Appendix B-6 to
the Completion Agreement, so long as no Event of Default shall have occurred and
is continuing, the Borrower may either (i) direct the Collateral Agent pursuant
to a duly delivered Withdrawal Certificate to cause the Securities Intermediary
to transfer amounts on deposit in the Equity Account or the Contingent Support
Account to the Debt Service Reserve Account in an aggregate amount equal to the
lesser of (A) the aggregate amount available for withdrawal therefrom and (B)
the Debt Service Reserve Requirement or (ii) cause to be delivered to the
Collateral Agent Debt Service Reserve

 

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Letters of Credit in an amount available to be drawn thereunder equal to the
Debt Service Reserve Requirement.

 

(d)           Transfers from the Debt Service Reserve Account.

 

(i)            In the event that, at any time, the sum of (A) the balance in the
Debt Service Reserve Account plus (B) amounts available to be drawn on Debt
Service Reserve Letters of Credit is in excess of the Debt Service Reserve
Requirement, the Borrower may either (1) direct the Collateral Agent to transfer
funds from the Debt Service Reserve Account to the Apex Metals Account or (2)
request that the Collateral Agent consent to (and the Collateral Agent shall
consent to) a reduction in the undrawn face amount of such Debt Service Reserve
Letters of Credit, but, in each case, only to the extent of such excess.

 

(ii)           The Borrower shall direct the Collateral Agent to apply funds in
the Debt Service Reserve Account to pay Secured Debt Obligations that are then
due and payable if and to the extent at any time there are no other funds
available in the Liquidity Accounts or the Bolivian Accounts (other than moneys
in the Bolivian Insurance Account or Bolivian Expropriation Account, which shall
be utilized as specified in Sections 5.05 and 5.08, respectively) to pay such
Secured Debt Obligations.

 

(e)           Debt Service Reserve Letters of Credit

 

(i)            At any time, the Borrower may deliver (or cause to be delivered)
to the Collateral Agent Debt Service Reserve Letters of Credit in an aggregate
maximum amount available to be paid or drawn thereunder equal to all or any
portion of the then-current Debt Service Reserve Requirement.  Promptly
following delivery of such Debt Service Reserve Letters of Credit to the
Collateral Agent in accordance with the immediately preceding sentence, the
Collateral Agent shall remit to such Person as directed by the Borrower as set
forth in a Withdrawal Certificate of the Borrower delivered contemporaneously
with such Debt Service Reserve Letters of Credit, an amount from the Debt
Service Reserve Account equal to the lesser of (A) the maximum amount to be paid
or drawn under such Debt Service Reserve Letters of Credit and (B) the monies
then held in the Debt Service Reserve Account (provided that such remission does
not result in the sum of the (1) amounts available to be drawn under Debt
Service Reserve Letters of Credit plus (2) the balance in the Debt Service
Reserve Account being less than the Debt Service Reserve Requirement), and such
payment shall not constitute a Restricted Payment for purposes of the Financing
Documents.  In the event that with respect to any date on which a withdrawal is
to be made from the Debt Service Reserve Account as provided in Section
4.06(d)(ii), there would be insufficient funds on deposit in the Debt Service
Reserve Account to make such withdrawal (the amount of such insufficiency, an
“Unfunded DSRA Deficiency”), the Collateral Agent shall, on the date three
Business Days prior to such date, deliver to the issuers of the Debt Service
Reserve Letters of Credit (ratably based on the aggregate amount

 

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available for drawing thereunder) (A) drafts in an aggregate amount equal to the
lesser of (1) the amount of the Unfunded DSRA Deficiency and (2) the aggregate
maximum amount available to be drawn under such Debt Service Reserve Letters of
Credit and (B) appropriate certificates with respect thereto in the form
required by such Debt Service Reserve Letters of Credit, and deposit the monies
received from the issuers of such Debt Service Reserve Letters of Credit in
payment of such drafts in the Debt Service Reserve Account for application in
accordance with this Section 4.06.

 

(ii)           In the event that (A) a Debt Service Reserve Letter of Credit
delivered to the Collateral Agent in respect of the Debt Service Reserve Account
has not been renewed, extended or replaced on or prior to the date fifteen days
prior to the expiration of such Debt Service Reserve Letter of Credit or (B) the
Collateral Agent and the Borrower shall receive from the Administrative Agent or
any other Secured Party an Officer’s Certificate of an Authorized Officer of the
Administrative Agent or such other Secured Party stating that a Debt Service
Reserve Letter of Credit does not meet the Support Standards for a Debt Service
Reserve Letter of Credit (and the reasons therefor), and such Debt Service
Reserve Letter of Credit has not been replaced by a replacement Debt Service
Reserve Letter of Credit within ten days after receipt by the Collateral Agent
and the Borrower of such Officer’s Certificate, then the Collateral Agent shall
deliver to the issuer of such Debt Service Reserve Letter of Credit on such date
(1) a draft in an amount equal to the aggregate maximum amount available to be
paid or drawn under such Debt Service Reserve Letter of Credit and (2) an
appropriate certificate with respect thereto in the form required by such Debt
Service Reserve Letter of Credit.  The Collateral Agent shall deposit the monies
received from the issuer of such Debt Service Reserve Letter of Credit in
payment of such draft in the Debt Service Reserve Account to be applied in
accordance with this Section 4.06.

 

4.07  Operating Reserve Account. 

 

(a)           Operating Reserve Payments.

 

(i)            If, after Completion, there is an Operating Reserve Deficiency on
any Reserve Payment Date, then on such Reserve Payment Date the Borrower shall
deliver a Withdrawal Certificate to the Collateral Agent instructing it to
transfer to the Operating Reserve Account, from funds (if any) available in the
Apex Metals Account funds in an amount equal to such Operating Reserve
Deficiency (a “Operating Reserve Payment”).

 

(ii)           The Borrower shall give prompt notice to the Collateral Agent and
the Administrative Agent if less than 100% of any Operating Reserve Payment due
has been deposited in the Operating Reserve Account on or prior to the
applicable Reserve Payment Date.

 

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(b)                                 Timing of Operating Reserve Payments.  The
Borrower may make Operating Reserve Payments at any time including to meet the
conditions of Section 9.01(a).

 

(c)                                  Transfer at Completion.  In order to meet
the conditions to Completion set forth in the Financial Certificate attached as
Appendix B-6 to the Completion Agreement, so long as no Event of Default shall
have occurred and is continuing, the Borrower may direct the Collateral Agent
pursuant to a duly delivered Withdrawal Certificate to cause the Securities
Intermediary to transfer amounts on deposit in the Equity Account or the
Contingent Support Account to the Operating Reserve Account in an aggregate
amount equal to the lesser of (A) the aggregate amount available for withdrawal
therefrom and (B) the Operating Reserve Requirement.

 

(d)                                 Restrictions on Withdrawals.  No money shall
be withdrawn from the Operating Reserve Account under Section 4.04 or
Section 4.05 unless at such time there remain no funds on deposit in any other
Liquidity Account.

 

4.08  Equity Account.

 

(a)                                  Transfers to Loan Proceeds Account.

 

(i)                                     On or Prior to the Commitment
Termination Date.  On the Business Day immediately prior to a Requested
Disbursement Date, the Borrower shall direct the Collateral Agent pursuant to a
duly delivered Withdrawal Certificate to direct the Securities Intermediary to
withdraw from the Equity Account the amount specified as being the Base Equity
Contribution due to be made in connection with such Requested Disbursement Date
as set out in the related Notice of Disbursement and transfer such Base Equity
Contribution to the Loan Proceeds Account.

 

(ii)                                  Following the Commitment Termination
Date.  On the Business Day immediately prior to a Project Cost Funding Date, the
Borrower shall direct the Collateral Agent pursuant to a duly delivered
Withdrawal Certificate to direct the Securities Intermediary to withdraw from
the Equity Account the amount specified as being the Base Equity Contribution
due to be made in connection with such Project Cost Funding Date as set out in
the related Notice of Project Costs and transfer such amount to the Loan
Proceeds Account.

 

(b)                                 Completion.  In order to meet the conditions
to Completion set forth in the Financial Certificate attached as Appendix B-6 to
the Completion Agreement, so long as no Event of Default shall have occurred and
is continuing, the Borrower may direct the Collateral Agent pursuant to a duly
delivered Withdrawal Certificate to transfer from the Equity Account (i) first,
to the Loan Proceeds Account the lesser of (A) the amount necessary to pay all
remaining costs incurred to achieve Completion which are not yet due and payable
as set out in such Financial Certificate delivered under the Completion
Agreement and (B) the amount then on deposit in the Equity Account, (ii) second,
to the Debt Service Reserve Account the lesser of (A) the amount of the Debt
Service Reserve Requirement and (B) the amount then on deposit in the Equity
Account and (iii) third, to the Operating Reserve Account the lesser of (A) the
amount

 

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of the Operating Reserve Requirement and (B) the amount then on deposit in the
Equity Account.  Any funds on deposit after the transfers pursuant to
clauses (i), (ii) and (iii) in the preceding sentence shall be remitted as
directed by the Borrower (and such transfer shall not constitute a Restricted
Payment hereunder).

 

(c)                                  Equity Support Letters of Credit.

 

(i)                                     At any time, the Borrower may deliver
(or cause to be delivered) to the Collateral Agent Equity Support Letters of
Credit in an aggregate maximum amount available to be drawn thereunder equal to
all or any portion of the Remaining Equity Amount.  Promptly following delivery
of Equity Support Letters of Credit to the Collateral Agent in accordance with
the immediately preceding sentence, the Collateral Agent shall remit to such
Person as directed by the Borrower as set forth in a Withdrawal Certificate of
an Authorized Officer of the Borrower delivered contemporaneously with such
Equity Support Letters of Credit, an amount from the Equity Account equal to the
lesser of (A) the maximum amount to be paid or drawn under such Equity Support
Letters of Credit and (B) the monies then held in the Equity Account (provided
that such remission does not result in the sum of (x) the amounts available to
be drawn under Equity Support Letters of Credit plus (y) the balance in the
Equity Account being less than the Remaining Equity Amount), and such payment
shall not constitute a Restricted Payment for purposes of the Financing
Documents.  In the event that with respect to any date on which a withdrawal is
to be made from the Equity Account as provided in Section 4.08(a) or 4.08(b),
there would be insufficient funds on deposit in the Equity Account to make such
withdrawal (the amount of such insufficiency, an “Equity Deficiency”), the
Collateral Agent shall, on the date three Business Days prior to such date,
deliver to the issuers of the Equity Support Letters of Credit (ratably based on
the aggregate amount available for drawing thereunder) (A) drafts in an
aggregate amount equal to the lesser of (1) the amount of the Equity Deficiency
and (2) the aggregate maximum amount available to be drawn under such Equity
Support Letters of Credit and (B) appropriate certificates with respect thereto
in the form required by such Equity Support Letters of Credit, and deposit the
monies received from the issuers of such Equity Support Letters of Credit in
payment of such demands for payment or drafts in the Equity Account for
application in accordance with this Section 4.08.  Notwithstanding anything
herein to the contrary, within three Business Days prior to Completion, the
Collateral Agent shall draw on the Equity Support Letters of Credit and deposit
such funds in the Equity Account.

 

(ii)                                  In the event that (A) an Equity Support
Letter of Credit delivered to the Collateral Agent in respect of the Equity
Account has not been renewed, extended or replaced on or prior to the date
fifteen days prior to the expiration of such Equity Support Letter of Credit or
(B) the Collateral Agent and the Borrower shall receive from the Administrative
Agent or any other Secured Party an Officer’s Certificate of an Authorized
Officer of the Administrative Agent or such other Secured Party stating that an
Equity Support Letter of Credit does not meet the Support Standards for an
Equity Support Letter of Credit (and the reasons

 

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therefor), and such Equity Support Letter of Credit has not been replaced by a
replacement Equity Support Letter of Credit within fifteen days after receipt by
the Collateral Agent and the Borrower of such Officer’s Certificate, then the
Collateral Agent shall deliver to the issuer of such Equity Support Letter of
Credit on such date (1) a draft in an amount equal to the aggregate maximum
amount available to be paid or drawn under such Equity Support Letter of Credit
and (2) an appropriate certificate with respect thereto in the form required by
such Equity Support Letter of Credit.  The Collateral Agent shall deposit the
monies received from the issuer of such Equity Support Letter of Credit in
payment of such draft in the Equity Account to be applied in accordance with
this Section 4.08.

 

4.09  Contingent Support Account.

 

(a)                                  Transfers to Loan Proceeds Account.

 

(i)                                     Prior to the Commitment Termination
Date.  On the Business Day immediately prior to a Requested Disbursement Date,
the Borrower shall direct the Collateral Agent pursuant to a duly delivered
Withdrawal Certificate to direct the Securities Intermediary to withdraw from
the Contingent Support Account the amount specified as being the Contingent
Support Contribution due to be made in connection with such Notice of
Disbursement and transfer such Contingent Support Contribution to the Loan
Proceeds Account.

 

(ii)                                  Following the Commitment Termination
Date.  On the Business Day immediately prior to a Project Cost Funding Date, the
Borrower shall direct the Collateral Agent pursuant to a duly delivered
Withdrawal Certificate to direct the Securities Intermediary to withdraw from
the Contingent Support Account the amount specified as being the Contingent
Support Contribution due to be made in connection with such Project Cost Funding
Date as set out in the related Notice of Project Costs and transfer such
Contingent Support Contribution to the Loan Proceeds Account.

 

(b)                                 Completion.  In order to meet the conditions
to Completion set forth in the Financial Certificate attached as Appendix B-6 to
the Completion Agreement, so long as no Event of Default shall have occurred and
is continuing, the Borrower may direct the Collateral Agent pursuant to a duly
delivered Withdrawal Certificate to transfer from the Contingent Support Account
(after making all transfers from the Liquidity Accounts and the Equity Account)
(i) first, to the Apex Metals Account the lesser of (A) the amount necessary to
pay all remaining costs incurred to achieve Completion which are not yet due and
payable as set out in such Financial Certificate delivered under the Completion
Agreement and (B) the amount then on deposit in the Contingent Support Account,
(ii) second, to the Debt Service Reserve Account the lesser of (A) the amount of
the Debt Service Reserve Requirement and (B) the amount then on deposit in the
Contingent Support Account and (iii) third, to the Operating Reserve Account the
lesser of (A) the amount of the Operating Reserve Requirement and (B) the amount
then on deposit in the Contingent Support Account.  Any funds on deposit after
the transfers pursuant to clauses (i), (ii) and (iii) in the preceding sentence
shall be remitted to as directed by the

 

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Borrower pursuant to a duly delivered Withdrawal Certificate (and such transfer
shall not constitute a Restricted Payment hereunder).

 

(c)                                  Contingent Support Letters of Credit.

 

(i)                                     At any time, the Borrower may deliver
(or cause to be delivered) to the Collateral Agent Contingent Support Letters of
Credit in an aggregate maximum amount available to be drawn thereunder equal to
all or any portion of the Contingent Support Requirement.  Promptly following
delivery of Contingent Support Letters of Credit to the Collateral Agent in
accordance with the immediately preceding sentence, the Collateral Agent shall
remit to such Person as directed by the Borrower as set forth in a Withdrawal
Certificate of the Borrower delivered contemporaneously with such Contingent
Support Letters of Credit, an amount from the Contingent Support Account equal
to the lesser of (i) the maximum amount to be paid or drawn under such
Contingent Support Letters of Credit and (ii) the monies then held in the
Contingent Support Account (provided that such remission does not result in the
sum of the (x) amounts available to be drawn under Contingent Support Letters of
Credit plus (y) the balance in the Contingent Support Account being less than
the greater of (1) the Contingent Support Amount and (2) the sum of (x) the
maximum amount to be paid or drawn under Contingent Support Letters of Credit
outstanding immediately prior to the posting of such new Contingent Support
Letter of Credit and (ii) the monies held in the Contingent Support Account
immediately prior to the posting of such new Contingent Support Letter of
Credit), and such payment shall not constitute a Restricted Payment for purposes
of the Financing Documents.  In the event that with respect to any date on which
a withdrawal is to be made from the Contingent Support Account as provided in
Section 4.09(a) or 4.09(b), there would be insufficient funds on deposit in the
Contingent Support Account to make such withdrawal (the amount of such
insufficiency, a “Contingent Support Shortfall”), the Collateral Agent shall, on
the date three Business Days prior to such date, deliver to the issuers of the
Contingent Support Letters of Credit (ratably based on the aggregate amount
available for drawing thereunder) (A) drafts in an aggregate amount equal to the
lesser of (1) the amount of the Contingent Support Shortfall and (2) the
aggregate maximum amount available to be drawn under such Contingent Support
Letters of Credit and (B) appropriate certificates with respect thereto in the
form required by such Contingent Support Letters of Credit, and deposit the
monies received from the issuers of such Contingent Support Letters of Credit in
payment of such demands for payment or drafts in the Contingent Support Account
for application in accordance with this Section 4.09.

 

(ii)                                  In the event that (A) a Contingent Support
Letter of Credit delivered to the Collateral Agent in respect of the Contingent
Support Account has not been renewed, extended or replaced on or prior to the
date fifteen days prior to the expiration of such Contingent Support Letter of
Credit or (B) the Collateral Agent and the Borrower shall receive from the
Administrative Agent or any other Secured Party an Officer’s Certificate of an
Authorized Officer of the

 

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Administrative Agent or such other Secured Party stating that a Contingent
Support Letter of Credit does not meet the Support Standards for a Contingent
Support Letter of Credit (and the reasons therefor), and such Contingent Support
Letter of Credit has not been replaced by a replacement Contingent Support
Letter of Credit within fifteen days after receipt by the Collateral Agent and
the Borrower of such Officer’s Certificate, then the Collateral Agent shall
deliver to the issuer of such Contingent Support Letter of Credit on such date
(1) a draft in an amount equal to the aggregate maximum amount available to be
paid or drawn under such Contingent Support Letter of Credit and (2) an
appropriate certificate with respect thereto in the form required by such
Contingent Support Letter of Credit.  The Collateral Agent shall deposit the
monies received from the issuer of such Contingent Support Letter of Credit in
payment of such draft in the Contingent Support Account to be applied in
accordance with this Section 4.09.

 

(d)                                 All Withdrawals.  The Borrower shall not
direct the Collateral Agent to direct the Securities Intermediary to make any
transfers from the Contingent Support Account other than pursuant to clauses
(a) and (b) of this Section 4.09, notwithstanding there being any amounts on
deposit in the Contingent Support Account (or amounts available under Contingent
Support Letters of Credit) in excess of the Contingent Support Requirement.

 

4.10  Insurance Proceeds Account.  Amounts shall be deposited into and
transferred from the Insurance Proceeds Account as provided in Section 5.05.

 

4.11  Expropriation Proceeds Account.  Amounts shall be deposited into and
transferred from the Expropriation Proceeds Account as provided in Section 5.08.

 

4.12  Reports and Certifications.

 

(a)                                  The Securities Intermediary shall deliver
to Apex Metals, the Borrower, the Collateral Agent and the Administrative Agent
(for delivery to each other Secured Party), no later than 20 days after the end
of each month following the initial drawdown of Senior Loans, copies of the
account statements for all Accounts for such month prepared or compiled by the
Securities Intermediary.  Such account statements shall indicate, with respect
to each such Account deposits and withdrawals, investments made and closing
balances.

 

(b)                                 Each time the Borrower directs that a
transfer or withdrawal be made from a New York Account or a Bolivian Account,
the Borrower will be deemed to represent and warrant for the benefit of the
Collateral Agent and the Secured Parties that such transfer or withdrawal is
being made in an amount, and will be applied solely for the purposes, permitted
by this Article IV or Section 3.15.

 

4.13  Books and Accounts.  The Collateral Agent and the Securities Intermediary
shall maintain all such accounts, books and records as may be necessary to
record all transactions carried out by it under this Agreement.  The Collateral
Agent and the Securities Intermediary shall permit the Secured Parties, the
Borrower and their authorized representatives to examine such accounts, books
and records, provided that any such examination shall occur upon reasonable
notice and during normal business hours.

 

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4.14  Inadequately Identified Amounts.  In the event that the Securities
Intermediary receives any amount which is inadequately or incorrectly identified
as to the New York Account into which such amount is to be credited, the
Securities Intermediary shall notify the Collateral Agent, Apex Metals and the
Borrower (or, if an Event of Default shall have occurred and be continuing, the
Administrative Agent) of such event and shall request instructions from the
Borrower (or, if an Event of Default shall have occurred and be continuing, the
Administrative Agent) as to the New York Account into which such amount should
be credited.  Until such time as the Securities Intermediary receives such
instructions, it shall credit such amount to the Apex Metals Account.  Upon
receiving such instructions, the Securities Intermediary shall credit such
amount to the New York Account designated by the Borrower (or if an Event of
Default shall have occurred and be continuing, the Administrative Agent).

 

ARTICLE V

INSURANCE AND EXPROPRIATION

 

5.01  Maintenance of Insurance.

 

(a)                                  On or prior to the Closing Date and until
this Agreement is terminated in accordance with Section 15.01, the Borrower
shall at all times keep all of its property of an insurable nature and of a
character usually insured, insured with insurers of good repute selected by it,
against such risks, with such coverage (including deductibles and exclusions)
and in such form and amounts as are customary and reasonable for mines and
mining facilities of similar type and scale, taking into account the current
availability and cost of such coverage.  Without limiting the generality of the
immediately preceding sentence, the Borrower shall, to the extent permitted by
Bolivian law, obtain and maintain in effect the coverage set forth in the
schedule of minimum insurance requirements set forth in Appendix C-1 (the
“Schedule of Minimum Insurance Requirements”).  The Borrower agrees that the
insurance set forth in the Schedule of Minimum Insurance Requirements shall be
(a) denominated in Dollars, (b) except for the Other Local Policies, reinsurance
shall be obtained for all such insurance placed with insurers in Bolivia with
non-Bolivian reinsurers of international standing with a minimum rating of at
least “A-” from S&P or an equivalent rating from Moody’s or A.M. Best or, if not
so rated, acceptable to the Majority Secured Parties and (c) except for the
Other Local Policies, placed with Bolivian insurers reasonably acceptable to the
Majority Secured Parties or, if permitted by Bolivian law, placed directly with
non-Bolivian insurers of international standing with a minimum rating of at
least “A-” from S&P or an equivalent rating from Moody’s or A.M. Best (the
requirement set forth in clause (c) is hereinafter referred to as the “Minimum
Insurer Credit Requirements”).  The Schedule of Minimum Insurance Requirements
may be amended by the Borrower with the consent of the Majority Secured Parties,
which consent shall not be unreasonably withheld, provided that the Majority
Secured Parties’ consent shall not be required to the extent such amendment
updates the Schedule of Minimum Insurance Requirements to (i) delete any Other
Local Policy to the extent it is no longer required by applicable law or (ii) as
appropriate in light of any changes to the Construction Budget or the Operating
Plan that have been accepted pursuant to Section 8.14.  The Borrower shall
notify the Administrative Agent, the Collateral Agent and each other Secured
Party of any proposed modification of the Schedule of Minimum

 

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Insurance Requirements regardless of whether or not such modification requires
the consent of the Majority Secured Parties.

 

(b)                                 As of the Initial Disbursement Date, the
Borrower has no Non-Bolivian Policies.

 

5.02  Lender Provisions in Policies of Insurance.  The Borrower shall cause each
insurer to include in each insurance policy issued to the Borrower (other than
the Other Local Policies), provisions addressing the matters set forth in
Appendix C-2 attached hereto.

 

5.03  Payment, Etc. of Reinsurance.  The Borrower shall cause (a) on or before
the Initial Disbursement Date all of its insurers in Bolivia (other than
insurers under the Other Local Policies) and their reinsurers and (b) after the
Initial Disbursement Date any reinsurers that become bound by a treaty of
reinsurance in respect to any of the insurance policies issued to the Borrower,
to agree to assign the reinsurance policies to the Collateral Agent and cause
such reinsurers to execute a consent to such assignment substantially in the
form attached to the “Deed of Assignment” which is attached as Appendix C-4.

 

5.04  Payment of Premiums.  The Borrower shall pay all premiums and other sums
payable in respect of its insurance when due.

 

5.05  Application of Insurance Proceeds.  To the extent permitted by applicable
law and except as otherwise provided in an Enforcement Direction, proceeds of
insurance or reinsurance shall be applied as set forth in this Section 5.05.

 

(a)                                  Any sum paid in settlement of any third
party liability or worker’s compensation shall be paid to the Person to whom the
liability shall have been incurred or, if such liability shall have been
previously paid by the insured party, to or to the order of the insured party
and if such insured party is the Borrower, such sum shall be paid to the Apex
Metals Account or, to the extent required by applicable law or paid pursuant to
an Other Local Policy, the Expense Account.

 

(b)                                 Proceeds from any delay in startup or
business interruption insurance (or reinsurance) shall be deposited in the Apex
Metals Account or, to the extent required by applicable law, the Expense Account
and will be applied as provided for other withdrawals from such Accounts.

 

(c)                                  Except as provided in subclauses (i) and
(ii) below and except as provided in clause (d) of this Section 5.05 with
respect to proceeds from any Other Local Policy, all proceeds from property
insurance and reinsurance shall be deposited in the Apex Metals Account;
provided that (i) any proceeds denominated in Bolivianos when received and
(ii) any proceeds originating, paid or received in Bolivia and not permitted
under applicable law to be paid directly to a New York Account, shall be
deposited (following conversion, if necessary, of the relevant amount into a
corresponding Dollar or Boliviano amount) in the Expense Account, subject to
Section 4.01(j), and will be applied as provided for other withdrawals from such
Accounts.

 

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(i)                                     If the Borrower shall have suffered a
single loss or related series of losses to Project Property that it reasonably
expects to cost in excess of $5 million but not more than $25 million to repair
or replace, then such proceeds of insurance relating to such loss or losses
shall be deposited in the Insurance Proceeds Account (or, if deposited in the
Apex Metals Account, promptly transferred to the Insurance Proceeds Account in
accordance with a Withdrawal Certificate issued by the Borrower), or to the
extent required by applicable law or if such proceeds are denominated in
Bolivianos, in a segregated Bolivian Account (a “Bolivian Insurance Account”,
and together with the Insurance Proceeds Account, the “Insurance Account”)
established at such time with a Local Bank in respect of which the Borrower
shall use its reasonable best efforts to promptly convert such proceeds into
Dollars and pay the Dollar proceeds thereof to the Apex Metals Account.  Such
insurance proceeds shall be applied to repair or replace the damaged or lost
Project Property unless, if the Borrower desires to apply less than 100% of such
proceeds to repair or replace the affected Project Property, the Borrower
delivers, within 30 days of receipt of proceeds into the Insurance Account which
it desires to apply to another purpose, a restoration plan to the Technical
Agent, the Administrative Agent and the Independent Engineer detailing the
sources and uses of funds for repairing or replacing the affected Project
Property and certifying to the Secured Parties that (A) such proceeds are not
then required to repair or replace the affected property because (x) sufficient
funds remain in the Insurance Account to pay for such repair or replacement,
(y) such repair or replacement has already been made and paid for or (z) the
affected property was or has become obsolete or superfluous and such repair or
replacement is not necessary for the construction of the Project in accordance
with the Project Description and the Construction Budget and the operation of
the Project in accordance with the Operating Plan and (B) if such application of
insurance proceeds is to occur after Mechanical Completion, after the proposed
application of such proceeds and after giving effect to such restoration plan,
the Project would have unit operating costs and production levels substantially
similar in all material respects to those unit operating costs and production
levels that would be applicable but for the casualty.  The Technical Agent and
the Administrative Agent shall notify the Borrower of their receipt of such
plan.  If after receipt of such plan and following review by the Independent
Engineer, the Technical Agent and the Administrative Agent and following
consultation with the Borrower, the Majority Secured Parties, in the exercise of
their reasonable judgment, determine that the implementation of such plan could
not reasonably be expected to satisfy the foregoing conditions, such proceeds
will be applied in their entirety (or such lesser extent actually required) to
repair or replace the affected Project Property.  Otherwise, such proceeds may
be applied from the Insurance Account in accordance with, and at the times
specified by, such restoration plan and the Borrower may transfer (in the case
of a transfer from the Bolivian Insurance Account, to the extent permitted by
applicable law) any excess proceeds to the Apex Metals Account.  Any certificate
delivered by the Borrower under this clause (i) shall state in reasonable detail
the basis for such determination.

 

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(ii)                                  If the Borrower shall have suffered a
single loss or related series of losses to Project Property that it reasonably
expects to cost in excess of $25 million to repair or replace, then such
proceeds of insurance relating to such loss or losses will be deposited in the
Insurance Proceeds Account (or, if deposited in the Apex Metals Account,
promptly transferred to the Insurance Proceeds Account in accordance with a
Withdrawal Certificate issued by the Borrower), or to the extent required by
applicable law or if such proceeds are denominated in Bolivianos, in a Bolivian
Insurance Account from which the Borrower shall use its reasonable best efforts
to promptly convert such insurance proceeds into Dollars and pay the Dollar
proceeds thereof to the Insurance Proceeds Account.  Within 30 days of the
receipt of the first proceeds to be received in respect of such loss or series
of losses, the Borrower shall deliver to the Technical Agent, the Administrative
Agent and the Independent Engineer a plan for the repair, replacement or
restoration of the affected Project Property.  The Independent Engineer, the
Technical Agent and the Administrative Agent shall notify the Borrower upon the
receipt of such plan and shall review such plan in consultation with the
Borrower and, following such review, shall submit such plan to the Secured
Parties for their approval, such approval not to be unreasonably withheld or
delayed. In making a determination as to whether to approve a restoration plan,
the Secured Parties shall consider among other things, whether, after
implementation of the Borrower’s plan, the Borrower would be able to pay Secured
Debt Obligations as and when they fall due.  In the event that the Majority
Secured Parties approve such plan and no Event of Default has then occurred and
remains outstanding, the Borrower shall be entitled to apply such proceeds as
set out in such plan subject to the terms and conditions of this Agreement.  In
the event that such plan is not approved by the Majority Secured Parties, then
the Majority Secured Parties shall have the right to require that such insurance
proceeds be applied (in the case of insurance proceeds held in the Bolivian
Insurance Account, to the extent permitted by applicable law) to prepay Senior
Loans in accordance with Section 2.04, provided that if an Event of Default has
occurred and is continuing and an Enforcement Direction has been issued
directing the application of such proceeds in accordance with Section 10.04,
then such proceeds shall be applied in accordance with Section 10.04.

 

(d)                                 Proceeds from an Other Local Policy (except
sums paid in settlement of any third party or worker’s compensation liability,
which shall be deposited as provided in clause (a) of this Section 5.05) shall
be deposited in the Expense Account, and, if such proceeds are proceeds from
property insurance and reinsurance, such proceeds shall be applied to repair or
replace the damaged or lost Project Property, as applicable, or, if the Borrower
desires to apply less than 100% of such proceeds for these purposes, the excess
shall be applied as provided for other withdrawals from such accounts.

 

5.06  Information.

 

(a)                                  At least 90 days prior to the renewal or
replacement of any insurance policy required by Section 5.01, the Borrower shall
undertake a review of the insurance market, and, to the extent it believes it
will not be able to comply with any item on the existing Schedule

 

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of Minimum Insurance Requirements, it shall promptly inform the Collateral Agent
and the Administrative Agent (who shall promptly inform the Secured Parties),
together with an explanation therefor.

 

(b)                                 Promptly following receipt of any
certificate of insurance, insurance binder or broker’s undertaking letter, as
the case may be, in respect of renewal or replacement of any insurance policy or
reinsurance policy, or any new insurance or reinsurance policy, required to be
maintained by the Borrower pursuant to Section 5.01, the Borrower shall deliver
a copy thereof to the Collateral Agent and the Administrative Agent.

 

(c)                                  The Borrower shall promptly notify the
Collateral Agent and the Administrative Agent (who shall promptly notify the
Secured Parties) of (i) any material dispute with an insurer or reinsurer,
(ii) the non-payment of any premium when due, (iii) failure, for any reason, to
maintain in full force and effect the minimum insurance coverage required to be
maintained in accordance with Section 5.01, (iv) any reduction in any insurance
coverage or any other material amendment or proposed amendment to any policy
required to be maintained by the Borrower in accordance with Section 5.01,
(v) the cancellation or termination prior to its stated term of any policy in
respect of the coverage required to be maintained by the Borrower pursuant to
Section 5.01, (vi) any claim under any of its insurance policies which is equal
to or in excess of $1,000,000 and (vii) any other information relating to the
Borrower’s insurance or reinsurance that may be reasonably requested by the
Collateral Agent, the Administrative Agent or the Insurance Advisor.

 

5.07  Insurance Advisor.  The Majority Secured Parties shall have the right to
appoint an Insurance Advisor, subject, so long as no Default has occurred and is
continuing, to the prior approval by the Borrower (which approval may not be
unreasonably withheld), of the identity of such consultant and the terms of its
appointment, including fee arrangements and the scope of its work, provided that
in the event that the Borrower has not objected to such appointment within
10 days of notification, such appointment shall become final and effective at
the expiration of such 10-day period.  The Borrower shall pay or reimburse the
Secured Parties for the reasonable and documented fees and expenses of the
Insurance Advisor in connection with (i) any request by the Borrower for a
waiver of, or amendment to, the requirements of the Schedule of Minimum
Insurance Requirements, (ii) review of information provided by the Borrower to
the Collateral Agent under Sections 5.05 and 5.06, (iii) initial review of
information, insurance plan and schedules in connection with the negotiation of
the documentation and the closing of the Senior Loan Facilities, and (iv) the
review of such renewal and replacement policies of insurance and reinsurance and
other insurance documents relating to the Project as may be reasonably requested
at any time by the Majority Secured Parties.

 

5.08  Expropriation Compensation.

 

(a)                                  None of the Borrower, Apex Metals, Apex
Sweden or Apex Luxembourg shall (i) voluntarily enter into or accept any
settlement for Expropriation Compensation or Project Equity Expropriation
Compensation if the aggregate amount of the proposed Expropriation Compensation
or Project Equity Expropriation Compensation, as the case may be, to be received
is less than the Secured Debt Obligations then outstanding or (ii) reject any
settlement offered without, in each case, having first received the consent of
each of the Secured

 

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Parties and the PRI Insurers.  Each of the Borrower, Apex Metals, Apex Sweden
and Apex Luxembourg shall notify the Secured Parties and PRI Insurers not more
than 30 days after receiving the terms of such settlement offer, and the Secured
Parties and the PRI Insurers shall agree to accept or reject such settlement
within 45 days following receipt of such notice (or, if disclosed to the Secured
Parties, such shorter period as may be required by the terms of such settlement
offer, but in no event less than 30 days).

 

(b)                                 In the event of the expropriation (including
the deprivation of rights) of Project Property or Borrower Shares or
Subordinated Debt, each of the Borrower, Apex Sweden, Apex Metals and Apex
Luxembourg, as applicable, shall use its reasonable efforts to obtain promptly
the full amount of Expropriation Compensation and Project Equity Expropriation
Compensation to which it may be entitled under applicable law.  Each of the
Borrower, Apex Sweden, Apex Metals and Apex Luxembourg agrees to inform and
consult with the Administrative Agent, the Collateral Agent and the Secured
Parties regarding the status of discussions with or proceedings against Bolivia
or any expropriating authority thereof.

 

(c)                                  Subject to applicable law, Expropriation
Compensation in respect of Project Property shall be paid to the Expropriation
Account and applied as provided for other withdrawals from the Accounts, in each
case except as provided below.

 

(i)                                     If the aggregate amount of Expropriation
Compensation (except Expropriation Compensation arising from expropriation of
all or substantially all of the Mining Concessions or the Borrower’s rights
thereunder, which is addressed in clause (iii) of this Section 5.08(c)) for a
single loss or related series of losses exceeds $5 million but does not exceed
$25 million, such proceeds shall be deposited in the Expropriation Proceeds
Account or, if in Bolivianos, in a segregated Bolivian Account (such account,
the “Bolivian Expropriation Account” and, together with the Expropriation
Proceeds Account, the “Expropriation Account”) established at such time with a
Local Bank in respect of which the Borrower shall use its reasonable best
efforts to promptly convert such Expropriation Compensation to Dollars and pay
the Dollar proceeds thereof to the Expropriation Proceeds Account.  Such
Expropriation Compensation (including the proceeds of any conversion and
transfer of such Expropriation Compensation to the Expropriation Proceeds
Account) shall be applied to replace the expropriated Project Property unless,
if the Borrower desires to apply less than 100% of such proceeds to repair or
replace the affected Project Property, the Borrower delivers, within 30 days of
receipt of Expropriation Compensation into the Expropriation Account which it
desires to apply to another purpose, a restoration plan to the Technical Agent,
the Administrative Agent and the Independent Engineer detailing the sources and
uses of funds for repairing or replacing the affected Project Property and
certifying to the Secured Parties that (A) such Expropriation Compensation is
not then required to repair or replace the affected property because
(x) sufficient funds remain in the Expropriation Account to pay for such repair
or replacement, (y) such repair or replacement has already been made and paid
for or (z) the affected property was or has become obsolete or superfluous and
such repair or replacement is not necessary for the construction of the Project
in accordance with the Project Description and the

 

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Construction Budget and the operation of the Project in accordance with the
Operating Plan and (B) if such application of Expropriation Compensation is to
occur after Mechanical Completion, after the proposed application of such
Expropriation Compensation and after giving effect to such restoration plan, the
Project would have unit operating costs and production levels substantially
similar in all material respects to those unit operating costs and production
levels that would be applicable but for the expropriation.  The Technical Agent
and the Administrative Agent shall notify the Borrower of their receipt of such
plan.  If after receipt of such plan and following review by the Independent
Engineer, the Technical Agent and the Administrative Agent and following
consultation with the Borrower, the Majority Secured Parties, in the exercise of
their reasonable judgment, determine that the implementation of such plan could
not reasonably be expected to satisfy the foregoing conditions, such
Expropriation Compensation will be applied in their entirety (or such lesser
extent actually required) to repair or replace the affected Project Property. 
Otherwise, such Expropriation Compensation may be applied from the Expropriation
Account in accordance with, and at the times specified by, such restoration plan
and the Borrower may transfer (in the case of a transfer from the Bolivian
Expropriation Account, to the extent permitted by applicable law) any excess
proceeds to the Apex Metals Account.  Any certificate delivered by the Borrower
under this clause (i) shall state in reasonable detail the basis for such
determination.

 

(ii)                                  If the aggregate amount of Expropriation
Compensation (except Expropriation Compensation arising from expropriation of
all or substantially all of the Borrower’s rights under the Mining Concessions,
which is addressed in clause (iii) of this Section 5.08(c)) for a single loss or
related series of losses exceeds $25 million, then such Expropriation
Compensation shall be deposited in the Expropriation Proceeds Account or, to the
extent required by applicable law or if such proceeds are denominated in
Bolivianos, in a Bolivian Expropriation Account from which the Borrower shall
use its reasonable best efforts to promptly convert such Expropriation
Compensation into Dollars and pay the Dollar proceeds there of to the
Expropriation Proceeds Account.  Within 30 days of the receipt of the first
Expropriation Compensation to be received in respect of such loss or series of
losses, the Borrower shall deliver to the Technical Agent, the Administrative
Agent and the Independent Engineer a plan for the repair, replacement or
restoration of the affected Project Property.  The Independent Engineer, the
Technical Agent and the Administrative Agent shall notify the Borrower upon
receipt of such plan and shall review such plan in consultation with the
Borrower and, following such review, shall submit such plan to the Secured
Parties for their approval, such approval not to be unreasonably withheld or
delayed. In making a determination as to whether to approve a restoration plan,
the Secured Parties shall consider among other things, whether, after
implementation of the Borrower’s plan, the Borrower would be able to pay Secured
Debt Obligations as and when they fall due.  In the event that the Majority
Secured Parties approve such plan and no Event of Default has then occurred and
remains outstanding, the Borrower shall be entitled to apply such Expropriation
Compensation as set out in such plan subject to the terms and

 

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conditions of this Agreement.  In the event that the Borrower does not deliver a
plan or such plan is not approved by the Majority Secured Parties, then the
Majority Secured Parties shall have the right to require that such Expropriation
Compensation be applied (in the case of Expropriation Compensation held in the
Bolivian Expropriation Account, to the extent permitted by applicable law) to
prepay Senior Loans in accordance with Section 2.04, provided that if an Event
of Default has occurred and is continuing and an Enforcement Direction has been
issued, then such proceeds shall be applied in accordance with Section 10.04.

 

(iii)                               If the Expropriation Compensation arises
from expropriation of all or substantially all of the Borrower’s rights under
the Mining Concessions, such Expropriation Compensation proceeds shall be
applied to prepay the Secured Debt Obligations in accordance with
Section 10.04.  The Administrative Agent shall direct the Collateral Agent to
apply such prepayments in the manner in which each Secured Party indicates by
written notice to the Administrative Agent, the Collateral Agent and the
Borrower at least 5 Business Days prior to such prepayment.

 

(d)                                 Project Equity Expropriation Compensation
received by Apex Luxembourg, Apex Sweden or any Affiliate of any thereof shall
be paid as provided in Section 3.07.

 

ARTICLE VI

REPORTING

 

6.01  Regular Operational Reporting.

 

(a)                                  Construction Reports.  The Borrower shall
deliver to the Technical Agent for delivery to the Administrative Agent, the
Independent Engineer and each Senior Lender in respect of each month occurring
prior to Completion:

 

(i)                                     no later than twenty (20) days after the
end of such month, copies of the EPCM Monthly Status Report with respect to such
month in the form produced by the EPCM Contractor for delivery to the Borrower;
and

 

(ii)                                  no later than thirty (30) days after the
end of such month, a report which shall describe, among other things
(A) construction during such month, including physical progress and expenditure,
(B) cumulative expenditure through the end of such month, (C) material
variations of such physical progress and cumulative expenditures from those set
forth in the Construction Budget, together with a brief description of the
causes of such variations and (D) the Borrower’s then current estimates of the
material variations of such costs and the timing of occurrence of Mechanical
Completion from those set forth in the applicable Construction Budget, together
with a brief description of the causes of such variations (to the extent not
described under clause (C) above), and which shall

 

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have attached thereto all monthly reports received from the Mining Contractor,
the Transmission Line Contractors, the Rail Transporter, the Ports Owner and
each other Material Project Counterparty with respect to such month to the
extent received under the applicable Material Project Document.

 

(b)                                 Cost to Complete Certificate.  The Borrower
shall deliver to the Independent Engineer (with a copy to the Technical Agent),
no later than ten Business Days prior to (i) the proposed Initial Disbursement
Date, (ii) the beginning of January, March, May, July, September and November of
each calendar year commencing in 2006, (iii) any date on which the Borrower
desires to reduce the aggregate amount of Senior Loan Commitments and (iv) the
date on which the Borrower desires to deliver a Financial Certificate attached
as Appendix B-6 to the Completion Agreement, a draft certificate substantially
in the form of Appendix G for review and approval by the Independent Engineer
acting in its professional discretion.  If the Independent Engineer approves
such draft certificate, the Technical Agent shall accept such certificate and
notify the Borrower and the Administrative Agent of such approval within five
Business Days of its receipt of such certificate countersigned by the
Independent Engineer.  Such certificate, as so countersigned, shall constitute a
Cost to Complete Certificate.  If the Independent Engineer rejects the draft
certificate, it shall notify the Technical Agent and the Borrower of the reasons
therefor, and the Technical Agent shall submit such draft certificate for
approval by the Majority Secured Parties.  In the event that the Majority
Secured Parties accept such certificate, such certificate shall constitute a
Cost to Complete Certificate notwithstanding the lack of a countersignature by
the Independent Engineer.  In the event that the Majority Secured Parties reject
such draft certificate, it shall be deemed withdrawn and the Borrower shall be
required to promptly resubmit a revised draft certificate substantially in the
form of Appendix G for approval after modifying its previous certificate to take
into account the objections of the Independent Engineer.

 

(c)                                  Commercial Operation.  The Borrower shall
deliver to the Technical Agent for delivery to the Administrative Agent, the
Independent Engineer and each Senior Lender (i) prior to Completion, no later
than 10 days after the end of each calendar month ending after Mechanical
Completion and (ii) from and after Completion, no later than 20 days after the
end of each Production Quarter, copies of the Borrower’s Operating and Financial
Report, which shall describe, among other things, (A) cumulative capital
expenditure through the end of such calendar month or Production Quarter, as
applicable, (B) revenue and Operating Costs during such calendar month or
Production Quarter, as applicable, as compared to the then-current Operating
Plan and the Financial Model, (C) capital expenditures during such calendar
month or Production Quarter, as applicable, as compared to the capital
expenditures reflected in the then-current Operating Plan and the Financial
Model, (D) Project Production, shipment of Project Production and inventory
(including inventory from time to time in storage in Chile) during such
Production Quarter and (E) any material developments during such Production
Quarter in Project operations, including material technical problems,
interruptions of Project operations, disputes with Bolivian or Chilean
authorities and labor problems and which report shall have attached thereto all
monthly reports received from the Mining Contractor, the Transmission Line
Contractors, the Rail Transporter, the Ports Owner and each other Material
Project Counterparty with respect to any month during such Production Quarter to
the extent received under the applicable Material Project Document.

 

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6.02  Other Regular Reporting.  The Borrower shall furnish to the Administrative
Agent (for delivery to each Senior Lender and each Hedge Bank) and to each PRI
Insurer:

 

(a)                                  Quarterly Financial Statements.  As soon as
available and in any event within 60 days after the end of each of the first
three quarterly fiscal periods of each fiscal year of the Borrower, unaudited
statements of income and cash flows of the Borrower, for the period from the
beginning of the respective fiscal year to the end of such period, and the
related unaudited balance sheet, as at the end of such period, setting out in
each case in comparative form the corresponding figures for the preceding fiscal
year end, accompanied by any material accounting variation report and a
certificate of a senior financial officer of the Borrower, which certificate
shall state that said financial statements fairly present in all material
respects the financial condition and results of operations of the Borrower, in
accordance with Applicable Accounting Principles as at the end of, and for, such
period (subject only to normal year-end audit adjustments);

 

(b)                                 Annual Financial Statements.  As soon as
available and in any event within ninety (90) days after the end of its fiscal
year, audited consolidated statements of income, owners’ equity and cash flows
of the Borrower for such year and the related audited balance sheets as at the
end of such year, setting out in each case in comparative form the corresponding
figures for the preceding fiscal year, and an opinion of an independent public
or chartered accountants of recognized international standing as are reasonably
acceptable to the Administrative Agent, which opinion shall (i) state that said
financial statements fairly present in all material respects the financial
condition and results of operations of the Borrower as at the end of, and for,
such fiscal year in accordance with Applicable Accounting Principles
consistently applied, (ii) contain no “going concern” or like qualification and
(iii) certify that no Default has occurred and is continuing.

 

(c)                                  Calculation of Financial Ratios. The
Borrower shall provide to the Administrative Agent within five (5) Business Days
following the occurrence of each Principal Repayment Date an Officer’s
Certificate (such certificate, the “Financial Ratio Certificate”) setting out
(i) the HDSCR for the six-month period ending with such Principal Repayment Date
(including payments to be made on such Principal Repayment Date), (ii) the
FLDSCR for the six-month period commencing on such Principal Repayment Date,
(iii) the LLCR calculated from such Principal Repayment Date (and including
payments to be made on such Principal Repayment Date) through the Final Maturity
Date and (iv) the Reserve Tail calculated through the date which falls six
months after the Ratio Maturity Date, and, in each case, calculations in
reasonable detail supporting the derivation of such ratios.  All Financial Ratio
Certificates shall (i) certify that the version of the Financial Model used to
determine the LLCR, HDSCR, Reserve Tail and the FLDSCR, as applicable, is the
latest version that was provided to the Senior Lenders and approved pursuant to
Section 8.14, identifying when such Financial Model was issued, (ii) certify
that all relevant operational and production assumptions in the Financial Model
used for determining the LLCR, HDSCR, Reserve Tail and the FLDSCR, as
applicable, are based upon the Operating Plan and Financial Model then in
effect, (iii) include the supporting data used for such calculation, as set
forth in a schedule attached thereto (which data shall be provided substantially
in the form of Appendix Q

 

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attached hereto with respect to the FLDSCR), (iv) include a representation to
the effect that (A) the calculation of such ratios has been prepared in good
faith and (B) there have been no changes in the calculation methodology used in
the Financial Model since the date of execution of this Agreement other than
those changes disclosed and approved by the Majority Secured Parties, and
(v) the Technical Agent’s confirmation that calculations made therein are
correctly made and based on accurate and complete information.  In furtherance
of the foregoing, the Borrower shall provide a draft of each Financial Ratio
Certificate to the Technical Agent for review on each Principal Repayment Date.

 

(d)                                 Other Information.  As promptly as
reasonably possible following a request, such additional information relating to
the Borrower or the Project, as any Agent or Senior Lender from time to time may
reasonably request.

 

6.03  Notice of Extraordinary Events.  The Borrower shall promptly, but in no
event later than five (5) days after the Borrower obtains knowledge thereof,
deliver written notice to the Administrative Agent (for delivery to each Senior
Lender and each Hedge Bank), the Collateral Agent and the PRI Insurers of the
occurrence of:

 

(a)                                  any Default or Event of Default;

 

(b)                                 any material default by any party under, or
termination of, any Material Project Document or Apex Metals Document (other
than a Financing Document) or any material dispute with respect to any thereof;

 

(c)                                  any pending or threatened, litigation,
arbitration, claim or proceeding that is instituted by the Borrower or against
the Borrower or any of its assets or affecting the Project which could
reasonably be expected to have a Material Adverse Effect;

 

(d)                                 any notification or other material
communication, written or otherwise, received by the Borrower in respect of any
written claim, application, proceeding, other process or other action directly
or indirectly challenging, amending, modifying or otherwise potentially
adversely affecting the validity, duration, quantity, exercise, use or any other
term or condition of the Mining Concessions or other rights granted for the
Project’s use and necessary for the construction or operation of the Project in
accordance with the Construction Budget and the Operating Plan then in effect;

 

(e)                                  any occurrence of an event or circumstance
which would materially and adversely affect the ability of the Borrower to
achieve the performance contemplated by the Construction Budget and the
Operating Plan then in effect,

 

(f)                                    (i) any material environmental accident
or spill; (ii) any other condition, event or circumstance that results in
material non-compliance with any Environmental Law or Environmental Guidelines;
and (iii) any other condition, event or circumstance which is listed as a
reportable event under the EAP or SDCR Report then in effect;

 

(g)                                 (i) any development, event or circumstance
which could reasonably be expected to result in a Material Adverse Effect; or
(ii) any other event that could

 

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reasonably be expected to materially increase the total capital cost of the
Project or have a material adverse effect on the performance or operations of
the Project following Completion,

 

(h)                                 any material downward revision to Proven and
Probable Reserves, and any decision to change the level of production of
Concentrates to a level materially different than those outlined in the
Operating Plan then in effect;

 

(i)                                     any proposed material change in mining
or processing methods; or

 

(j)                                     any Event of Force Majeure affecting the
Borrower, the Project or any Material Project Counterparty;

 

in each case describing the nature thereof and the action the Borrower proposes
to take with respect thereto.

 

6.04  Environmental and Social Reports.  The Borrower shall deliver to the
Technical Agent (for delivery to the Social Consultant and the Independent
Engineer), the Administrative Agent (for delivery to each Senior Lender) and the
PRI Insurers: (a) any material update of the EAP or the SDCR Report within
10 days after it is available and (b) a monthly report on compliance with
(i) the EAP (including compliance with the environmental and social budget set
out as a part thereof) showing that the recommendations and requirements set out
therein have been achieved (approved by the Independent Engineer acting in its
professional discretion) and (ii) the SDCR Report showing that the
recommendations and requirements set out therein have been achieved (approved by
the Social Consultant acting in its professional discretion), in each case
within 10 days of the commencement of any calendar month after the Closing Date.

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

 

7.01  Representations and Warranties of the Borrower.  The Borrower represents
and warrants to the Agents, each Senior Lender and each Hedge Bank that:

 

(a)                                  Organization and Ownership.

 

(i)                                     The Borrower (A) is a sociedad anónima
duly organized and validly existing and in good standing under the laws of
Bolivia; (B) has all requisite corporate power and authority under the laws of
Bolivia to own its property and to carry on the business of the Project; and
(C) is duly qualified to do business in and is in good standing in all other
jurisdictions where necessary in light of the business it conducts and the
property it owns and intends to conduct and own and in light of the transactions
contemplated by this Agreement and the other Transaction Documents, except where
the failure to qualify could not reasonably be expected to have a Material
Adverse Effect.

 

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(ii)                                  The capital of the Borrower is owned
beneficially and of record solely by Apex Sweden, Apex Metals and Apex
Luxembourg, and no other Person has a legal or beneficial interest (other than a
Permitted Lien) in the Borrower or (except as contemplated in this Agreement)
any of the other Collateral that constitutes property of the Borrower.  The
Borrower has no outstanding Indebtedness for Borrowed Money except as set forth
on Schedule 7.01(a)(ii) as of the date hereof and thereafter as permitted under
Section 8.19.  The Borrower does not own any material properties or assets other
than for purposes of developing and operating the Project.  The Borrower does
not have outstanding any securities convertible into capital stock or rights to
subscribe for capital stock, and there are no arrangements for the issuance of
capital stock of the Borrower other than to Apex Sweden.  The Borrower has no
subsidiaries and owns no equity interest in, or otherwise controls any voting
stock of or has any ownership interest in, any other Person.

 

(b)                                 Authority.  The Borrower has all requisite
corporate power and authority to enter into each Transaction Document to which
it is a party and to incur and perform its obligations provided for herein and
therein, to carry on the business of the Project as described in the Project
Documents, to construct, develop and operate the Project as contemplated in the
Construction Budget and the Operating Plan then in effect, to grant to the
Secured Parties the security interests and Liens described in the Security
Documents to which it is a party, to make the borrowings contemplated under the
Financing Documents and to execute and deliver the Notes.

 

(c)                                  Binding Agreement; Proper Legal Form.

 

(i)                                     Each Transaction Document to which the
Borrower is a party which has been executed and delivered by the Borrower on or
prior to the date hereof, has been duly authorized, executed and delivered by it
and constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

 

(ii)                                  Each Financing Document to which the
Borrower is a party is in proper legal form for the enforcement thereof against
the Borrower under the laws of Bolivia and if each of such Financing Documents
were stated to be governed by such law, they would constitute legal, valid and
binding obligations of the Borrower under such law, enforceable in accordance
with their respective terms subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles; and
to ensure the legality, validity, enforceability or admissibility in evidence of
this Agreement or any other Financing Document in Bolivia, it is not necessary
that this Agreement or any other document be filed or recorded with any court or
other authority in Bolivia or that any stamp or similar tax be paid on or in
respect of this Agreement or any other Financing

 

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Document except as specifically provided in the legal opinions delivered in
satisfaction of the conditions precedent referred to in clause (h) of
Section 11.02.

 

(d)                                 Consents and Approvals for Financing
Documents.  All Authorizations and Government Approvals which are necessary for
(i) the execution and delivery by the Borrower of this Agreement and the other
Financing Documents and (ii) the performance of its obligations hereunder and
thereunder are listed in Appendix E-1 and have been obtained and are in full
force and effect (except for those specified in the legal opinions delivered in
satisfaction of the conditions precedent referred to in Section 11.02(h) which
are to be obtained following the Closing Date but prior to the Initial
Disbursement Date), and no other action by, and no notice to or filing with, any
Governmental Authority or other Person is required for such execution, delivery
or performance, and all fees and taxes required for the legality or
enforceability of such documents have been paid (except for those specified in
the legal opinions delivered in satisfaction of the conditions precedent
referred to in Section 11.02(h) which are to be paid following the Closing Date
but prior to the Initial Disbursement Date and those which are immaterial and of
a ministerial nature).

 

(e)                                  Consents and Approvals for Project.

 

(i)                                     All material (A) Government Approvals,
(B) Authorizations, (C) Mining Concessions, (D) Other Property Rights and
(E) Intellectual Property Rights, necessary in each case for the development,
construction and operation of the Project and the execution and delivery by the
Borrower of, and the performance by the Borrower of its obligations under, the
Project Documents, are listed in Appendix E-2 hereto.

 

(ii)                                  Each (A) Government Approval,
(B) Authorization, (C) Mining Concession, (D) Other Property Right and
(E) Intellectual Property Right listed on Part A of Appendix E-2 has been
obtained and is in full force and effect.  Collectively, (A), (B), (C), (D) and
(E) above are sufficient to permit (I) the development, construction and
operation of the Project in all material respects as contemplated by the
Construction Budget and Operating Plan then in effect and (II) the performance
by the Borrower of its obligations under the Project Documents, in each case,
with respect to (A), (B), (D) and (E) above, other than those which (x) are not
now necessary and which are expected to be obtained in the ordinary course of
business by the time they are necessary (and which are listed in Part B of
Appendix E-2) or (y) the failure to have or obtain could not now or during the
remaining term of the Senior Loans reasonably be expected to have a Material
Adverse Effect.

 

(iii)                               At every time after the date of this
Agreement on which this representation is deemed to be made, all (A) Government
Approvals, (B) Authorizations, (C) Mining Concessions, (D) Other Property Rights
and (E) Intellectual Property Rights that are necessary to permit (1) the
development, construction and operation of the Project in all material respects
as contemplated by the Construction Budget and Operating Plan then in effect and
(2) the performance by the Borrower of its obligations under the Project
Documents,

 

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shall have been obtained and shall be in full force and effect, in each case
other than those, with respect to (A), (B), (D) and (E) above, which (x) are not
then necessary and which are expected to be obtained in the ordinary course of
business by the time they are necessary or (y) the failure to have or obtain
could not now or during the remaining term of the Senior Loans reasonably be
expected to have a Material Adverse Effect.

 

(iv)                              The Borrower is in compliance (A) with all
terms and conditions of all of the Mining Concessions and (B) in all material
respects, with all terms and conditions of all of the (1) Government Approvals,
(2) Authorizations, (3) Other Property Rights and (4) Intellectual Property
Rights, in each of cases (A) and (B), listed in Appendix E-2 hereto, which have
been obtained on the date on which this representation is deemed made or
repeated.

 

(f)                                    No Conflicts.  The execution, delivery
and performance by the Borrower of each of the Transaction Documents to which it
is or is intended to be a party and the consummation of the transactions
contemplated thereby do not and will not (i) violate any provision of its
Organizational Documents, any Authorization, any Government Rule or any
Government Approval applicable to the Project or the Borrower; (ii) conflict
with, result in a breach of or constitute a default under any Transaction
Document or any indenture or loan or credit agreement to which the Borrower is a
party or by which it or its property may be bound or affected in any material
respect; or (iii) result in, or create any Lien (other than a Permitted Lien)
upon or with respect to any of the properties now owned or hereafter acquired by
the Borrower.

 

(g)                                 No Litigation.  There are no actions, suits
or proceedings pending against or, to the knowledge of the Borrower, threatened
against, or affecting the Borrower or any of its properties before or by any
Governmental Authority or before any arbitrator other than those which have been
disclosed in writing to the Senior Lenders on or prior to the date hereof or
which could not reasonably be expected to result in a Material Adverse Effect. 
There is no existing default by the Borrower under any applicable order, writ,
injunction or decree or other decision of any Governmental Authority or any
arbitrator.

 

(h)                                 Project Information.  As of the date hereof
and the Initial Disbursement Date, the Project Information (including known
mineable reserves information) and other information provided by or on behalf of
the Borrower in writing to the Senior Lenders or the PRI Insurers (as may have
been superseded, modified or corrected by later information provided in writing
by or on behalf of the Borrower in accordance with the Transaction Documents)
does not contain any material misrepresentation or misstatement (or omit any
material fact or circumstance necessary in order to make the information
contained therein not misleading); provided that, the Borrower’s sole
representation with respect to projections, estimates or other expressions of
view as to future circumstances set out in the Project Information shall be that
such projections, estimates or other expressions of view as to future
circumstances (i) were prepared in good faith and with due care and (ii) were
based on reasonable assumptions as to all factual and legal matters material to
the estimates therein as of their respective date(s) of delivery.

 

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(i)                                     No Immunity.  The Borrower is subject to
civil and commercial law with respect to its obligations under each of the
Financing Documents to which it is a party.  The execution, delivery and
performance by the Borrower of each of the Financing Documents to which it is a
party constitute private and commercial acts rather than public or governmental
acts.  Neither the Borrower, nor any of the Project Properties, is entitled to
any right of immunity in any jurisdiction from suit, court jurisdiction,
judgment, attachment (whether before or after judgment), set-off or execution of
a judgment or from any other legal process or remedy relating to the obligations
of the Borrower under any of the Financing Documents to which it is a party.

 

(j)                                     Title to Properties; Security
Interests.  Except as noted in the legal opinions delivered in satisfaction of
the conditions precedent referred to in clause (h) of Section 11.02, the
Borrower has good, legal and valid title to (or, in the case of any leased
premises, easement properties or licensed property, valid leasehold, easement or
license interests in) all real and personal property and all rights, tangible or
intangible (including Intellectual Property Rights and Other Property Rights),
required for the construction and operation of the Project substantially as
contemplated by the Construction Budget and Operating Plan then in effect; and
there are no Liens of any nature against such Properties or rights (other than
Permitted Liens).  To the extent provided in Article III, except as noted in the
legal opinions delivered in satisfaction of the conditions precedent referred to
in clause (h) of Section 11.02, each Security Document, when executed and
delivered as contemplated hereby, will create each Lien purported to be created
thereby.  To the extent provided in Article III, except as noted in the legal
opinions delivered in satisfaction of the conditions precedent referred to in
clause (h) of Section 11.02, each such Lien will be valid and legally binding,
and will constitute, under applicable law, fully perfected first and prior
security interests or assignments of rights, superior in right to any other
Liens and interests (other than Permitted Liens referenced in Sections 8.20(b),
(c), (d), and, if applicable (e) and (f)  to the extent such Liens are granted
priority on a mandatory basis under applicable Government Rules) and enforceable
against the grantor of such security interests, any trustee in bankruptcy or
equivalent and any attaching creditor or third party.

 

(k)                                  Taxes.  The Borrower has filed or caused to
be filed all tax returns required to be filed by it, and has paid all taxes
shown to be due and payable on such returns, or on any assessments made against
it or any of its properties, and all other taxes, assessments, fees, liabilities
or other charges imposed on it or on its properties by any Governmental
Authority, in each case after giving effect to any applicable extensions, except
for any such taxes, assessments, fees, liabilities or other charges (i) the
payment of which is being contested in good faith and by appropriate proceedings
and for which adequate reserves are being maintained in accordance with U.S.
GAAP and Applicable Accounting Principles or (ii) the failure of which to file
or pay could not reasonably be expected to result in a Material Adverse Effect. 
As of the date hereof, there are no material disputes pending or, to its
knowledge, threatened, between the Borrower and any Governmental Authority
relating to taxes.

 

(l)                                     Withholding and Other Taxes.  No income
or other taxes or levies, imposts, deductions, charges, compulsory loans or
withholdings whatsoever are or will

 

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be, under applicable Bolivian law as at the date of this Agreement, imposed,
assessed, levied or collected by Bolivia or any political subdivision or taxing
authority thereof or therein on or in respect of (i) principal, interest or
commissions payable to the Senior Lenders as of the date hereof under this
Agreement, except for withholding taxes on payments of interest on the Senior
Loans at a rate of 12.5% and (ii) premia payable under the PRI Policies.

 

(m)                               Ranking.  The obligations of the Borrower
under this Agreement and in respect of the Senior Loans and under the Hedge
Guaranty, will at all times rank (i) in right of payment and of collateral
security, senior to the obligations of the Borrower in respect of the
Subordinated Debt and (ii) pari passu in right of payment with or senior in
right of payment to, and senior in right of collateral security to, all other
obligations of the Borrower other than those obligations which are granted
priority on a mandatory basis under Bolivian law.

 

(n)                                 No Event of Default or Material Adverse
Effect.  No Default or Event of Default has occurred and is continuing.  No
event, circumstance or condition has occurred that could reasonably be expected
to result in a Material Adverse Effect.

 

(o)                                 Transaction Documents.

 

(i)                                     The Transaction Documents constitute and
include all contracts and agreements to which the Borrower is a party other than
those providing for immaterial services, materials or rights.  All Project
Documents to which the Borrower is a party on the Closing Date are listed on
Schedule 7.01(o)(i).  All Third Party Concentrate Sales Agreements to which Apex
Metals is a party on the Closing Date are listed on Schedule 7.01(o)(i).

 

(ii)                                  There are no material services, materials
or rights (other than Government Approvals and Authorizations) required for the
current stage of the development, financing, construction, operation and
ownership of the Project other than those granted by, or to be provided to the
Borrower pursuant to, the Transaction Documents.

 

(iii)                               Except as permitted pursuant to Section 8.11
hereof, none of the Material Project Documents have been amended, modified or
supplemented, and all of the Financing Documents and Material Project Documents
are in full force and effect and have not been terminated, suspended or
rescinded by any party thereto.

 

(iv)                              All conditions precedent to the obligations of
the respective parties under the Material Project Documents have been satisfied
or waived except for such conditions precedent which need not or cannot be
satisfied until a later stage of development, financing, construction, operation
and ownership of the Project, and the Borrower has no reason to believe that any
such condition precedent cannot be satisfied on or prior to the commencement of
the appropriate stage of development, financing, construction, operation and
ownership of the Project,

 

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except as otherwise disclosed to the Secured Parties in writing prior to the
date hereof.

 

(v)                                 The Borrower is not in default in the
performance of any covenant or obligation set forth in or otherwise in default
under any Project Document, which default could reasonably be expected to result
in a Material Adverse Effect.  To the Borrower’s knowledge, there has been no
default by any Material Project Counterparty under, and no Event of Force
Majeure has occurred under, any Material Project Document, which in either case
could reasonably be expected to have a Material Adverse Effect.

 

(vi)                              The copies of the Material Project Documents
and the Financing Documents and of any amendments to any of the foregoing
provided or to be provided by the Borrower to the Collateral Agent prior to or
on the date of execution of this Agreement are, or when delivered will be, true
and complete copies of such agreements and documents and each of such agreements
heretofore provided is, and all such agreements and documents will, at the date
of execution of this Agreement, be in full force and effect.

 

(vii)                           All letters of credit, performance bonds and
other types of performance security issued in favor of the Borrower or Apex
Metals under any Project Document or any Third Party Concentrate Sales Agreement
on or prior to the Closing Date are listed on Schedule 7.01(o)(vii).

 

(p)                                 Compliance with Government Rules and
Government Approvals.  The Borrower has complied with (i) all Government
Rules (other than Environmental Laws and anti-corruption Government Rules, which
are addressed in the immediately succeeding paragraph) and Government Approvals
(other than environmental Government Approvals, which are addressed in the
immediately succeeding paragraph), except where failure to so comply,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect and (ii) U.S. Executive Order 13224 of September 24,
2001 Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit or Support Terrorism (66 Fed. Reg. 49, 079 (2001) (the
“Anti-Terrorism Order”) and the provisions of Public Law 107-56 (the “USA
Patriot Act”).

 

(q)                                 Environmental Matters.

 

(i)                                     The development, construction and
operation of the Project and the activities and properties of the Borrower are
in compliance (A) in all material respects with (1) the Environmental
Guidelines, (2) all applicable Environmental Laws and (3) all environmental
Government Approvals and (B) with all anti-corruption Government Rules in force
in Bolivia, the United States and Switzerland.  The Borrower has designed the
Project in compliance in all material respects with the Environmental
Guidelines.

 

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(ii)                                  No notice, notification, demand, citation,
summons or order has been issued, no written complaints have been filed, no
penalty has been assessed and, to the Borrower’s knowledge, no investigation or
review is pending or threatened by any Governmental Authority or other Person
with respect to any alleged failure by the Borrower to have any material
environmental Government Approval, to comply with any applicable Environmental
Law or to comply with any anti-corruption Government Rule.

 

(r)                                    Financial Condition.  The financial
statements of the Borrower delivered in accordance with the requirements of this
Agreement are true, complete and correct and fairly present in all material
respects the financial condition and results of operations of the Borrower as at
the end of, and for, such fiscal year or each fiscal quarter, as the case may
be, in accordance with Applicable Accounting Principles consistently applied
(subject, in the case of quarterly financial statements, to normal year-end
adjustments and the absence of notes).  The Borrower does not have as of the
date of such financial statements any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments required to be included or
noted in financial statements prepared in accordance with Applicable Accounting
Principles except (i) as referred to or reflected or provided for in such
financial statement or, in the case of the financial statements delivered
pursuant to Section 11.01(h), as arising solely from the execution and delivery
of the Financing Documents or (ii) as notified in writing to the Administrative
Agent concurrently with the delivery of such financial statements.  There has
been no material adverse change in the business, assets, operations or
condition, financial or otherwise, of the Borrower from that set forth in such
financial statements (as supplemented by any information delivered therewith
pursuant to the preceding sentence, if any) as of the date thereof.

 

(s)                                  Use of Proceeds.  The proceeds of each
Senior Loan will be used solely in accordance with, and solely for the purposes
contemplated by, this Agreement and the other Financing Documents.  No part of
the proceeds of any Senior Loan will be used for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any Margin Stock or to extend
credit to others for such purpose.

 

(t)                                    No Liquidation.  The Borrower is
Solvent.  The Borrower has not commenced any voluntary proceeding or filed any
petition, and the Borrower is not aware of the commencement of any involuntary
proceeding or the filing of any involuntary petition, seeking (i) liquidation,
reorganization or other relief in respect of the Borrower for its debts, or any
substantial part of its assets under any applicable Government Rule or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or for a substantial part of its assets.

 

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ARTICLE VIII

COVENANTS

 

8.01  Maintenance of Existence; Prohibition of Fundamental Changes.  The
Borrower shall do all things necessary to maintain its corporate existence as a
sociedad anónima under the laws of Bolivia and good standing in Bolivia.  The
Borrower shall not liquidate, voluntarily commence proceedings under bankruptcy
or other similar laws, enter into any merger or consolidation or sell or
otherwise transfer all or substantially all of its assets, or, without the prior
consent of Majority Secured Parties, buy or acquire any material asset, other
than in connection with permitted capital expenditures under Section 8.15 below
or other purchases necessary for the construction or operation of the Project as
contemplated by the Construction Budget or Operating Plan then in effect, as
applicable.

 

8.02  No Modification of Organizational Documents.  Except as permitted by the
Transfer Restrictions Agreement, the Borrower shall not take any action to amend
or modify any of its Organizational Documents in any material respect; except
where such amendment or modification is necessary under applicable Government
Rules in connection with the increase of the share capital of the Borrower.

 

8.03  Business.  The Borrower shall not conduct any business other than the
development, construction, financing, completion and operation of the Project
and activities related thereto.

 

8.04  Principal Place of Business.  The Borrower shall not change its
jurisdiction of incorporation, shall maintain its principal place of business in
Bolivia and shall not maintain any place of business (other than as required in
the ordinary course of business) outside Bolivia unless it has given at least 30
days’ prior notice thereof to the Administrative Agent and the Collateral Agent
and has taken all steps then required pursuant to Article III to ensure the
maintenance and perfection of the Liens created or purported to be created
pursuant to the Security Documents; provided that the Borrower shall not be
permitted to maintain any place of business in any location that the Borrower
has advised the Senior Lenders of, and has been given written notification
within 15 days of providing such advice, that would result, at the time such
place of business is established, in a Senior Lender’s failure to comply with
all applicable Government Rules and all policies governing such Senior Lender. 
The Borrower shall maintain at its principal place of business originals or
copies of its books and records.

 

8.05  Books and Records; Accounting and Cost Control Systems.

 

(a)                                  The Borrower shall (i) keep proper books of
record and account in Dollars in which entries will be made of transactions of
or in relation to its business and (ii) keep accounts and financial and cost
records in Dollars in accordance with Applicable Accounting Principles. 
Notwithstanding the foregoing, if Bolivian law requires that the Borrower
maintain accounts and records in Bolivianos, the Borrower also may keep, for
purposes other than compliance with this Section, accounts and records in
Bolivianos.

 

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(b)                                 The Borrower shall maintain adequate
accounting, management information and cost accounting systems for the Project
reasonably acceptable to the Majority Secured Parties and shall employ
independent auditors of recognized international standing to audit annually its
financial statements.  The accounting and cost control systems of the Borrower
shall include records of capitalized assets, including (i) asset description,
(ii) asset cost, (iii) asset book lives, (iv) cumulative depreciation and
(v) net book value, all in sufficient detail to enable a Secured Party to
exercise its right to direct the Collateral Agent to take action pursuant to
Section 13.03(b); provided that, the recorded capitalized cost of any asset
listed in the records may differ from the asset’s capitalized purchase cost as a
result of the allocation of indirect costs.

 

8.06  Access.  The Borrower shall permit each Agent, each Senior Lender and each
PRI Insurer (or its respective designee) access to the books and records of the
Borrower, to the Project sites and to the officers and managerial personnel of
the Borrower and to the Borrower’s independent accountants to discuss the
business affairs of the Project as often as the Agents may reasonably request,
in each case, upon reasonable prior notice to the Borrower and (a) during normal
business hours, (b) in a manner that does not unreasonably disrupt the operation
of the Project, (c) subject to the confidentiality provisions set forth in
Section 15.07, and (d) subject to applicable health and safety laws and
regulations and policies adopted by the Borrower.  If no Default or Event of
Default has occurred and is continuing, (i) the Independent Engineer shall visit
the Project site once every three (3) months prior to Completion and shall make
annual visits to the Project site after Completion, and the associated
reasonable and documented fees and out-of-pocket expenses of such site visits
shall be for the account of the Borrower, (ii) the Social Consultant shall visit
the Project site quarterly prior to Completion and shall make annual visits to
the Project site after Completion to monitor the Borrower’s compliance with the
SDCR Report, and the associated reasonable and documented fees and out-of-pocket
expenses of such site visits shall be for the account of the Borrower and
(iii) any Agent, Senior Lender or PRI Insurer (or its respective designee) may
accompany the Independent Engineer or the Social Consultant on such site visits
at the expense of such Agent, Senior Lender or PRI Insurer.  Prior to
Completion, the Independent Engineer shall be entitled to make an unlimited
number of site visits pursuant to the protocol set forth in Appendix B to the
Completion Agreement, and the Social Consultant shall be entitled to make
additional site visits as the Social Consultant shall deem necessary in its
professional opinion and in consultation with the Independent Engineer.  The
Independent Engineer and representatives of Senior Lenders shall be entitled to
make an unlimited number of site visits at any time when a Default or Event of
Default has occurred and is continuing, and in each case the associated
reasonable and documented fees and out-of-pocket expenses in connection with
such visits shall be for the account of the Borrower.

 

8.07  Preservation of Assets.

 

(a)                                  The Borrower shall maintain the Project
Property in good repair and from time to time shall make all repairs and
replacements thereto as required in accordance with prudent international mining
industry practice.

 

(b)                                 The Borrower shall not sell, assign, lease,
transfer or otherwise dispose of any Project Property without the prior written
consent of Majority Secured Parties, except for the following dispositions which
are specifically permitted: (i) dispositions of Project Production,

 

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(ii) assets, the disposition of which is not otherwise permitted hereunder,
having an aggregate value (together with the value of all such assets previously
sold or disposed of pursuant to this clause (ii)) not exceeding $1,000,000 in
any calendar year, (iii) dispositions of damaged, obsolete, superfluous or
replaced assets or disposition of assets in connection with an insurance claim
relating to such assets, or (iv) dispositions of assets in compliance with any
applicable court or governmental order.

 

(c)                                  Upon certification by the Borrower to the
Collateral Agent and the Administrative Agent to the effect that it intends to
dispose or has disposed of an item of Project Property in accordance with
clause (b) above, the Collateral Agent shall, at the request and expense of the
Borrower, execute and deliver, file and/or record, or cause to be filed and/or
recorded, any notice, waiver, termination statement, instruments of
satisfaction, discharge and release of security as may be necessary to release
any security interest in such item of Project Property created by or pursuant to
this Agreement or any Security Document and to release or waive any restriction
on the transferability of such item of Project Property contained in any
Security Document within five (5) Business Days of receipt of such
certification.

 

8.08  Taxes.  The Borrower shall pay and discharge before the same become
delinquent all taxes, assessments and governmental charges or levies lawfully
imposed on it or its property (including interest and penalties) unless such
taxes, assessments, charges or levies shall be contested in good faith, by
appropriate proceedings and adequate reserves are established and maintained by
the Borrower with respect thereto in accordance with U.S. GAAP and Applicable
Accounting Principles.  The Borrower shall notify the Collateral Agent promptly
upon the occurrence of any material disputes pending between it and any
Governmental Authority relating to taxes.

 

8.09  Compliance with Law and Environmental Guidelines.

 

(a)                                  The Borrower shall (i) comply with all
applicable anti-corruption Government Rules, (ii) comply in all material
respects with all applicable Environmental Laws and (iii) comply with all other
applicable Government Rules unless, with respect to this clause (iii) only, such
non-compliance could not reasonably be expected to have a Material Adverse
Effect.

 

(b)                                 The Borrower shall (i) ensure that, at the
time thereof, the making of the Senior Loans and the use of the proceeds thereof
shall not, by virtue of the activities, status or jurisdiction of organization
of any member of the Apex Group, violate the Trading With the Enemy Act, as
amended, or any of the foreign assets control regulations of the U.S. Treasury
Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto and (ii) comply with the U.S.
Executive Order 13224 of September 24, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism
(66 Fed. Reg. 49, 079 (2001) (the “Anti-Terrorism Order”) and the provisions of
Public Law 107-56 (the “USA Patriot Act”).

 

(c)                                  The Borrower shall, in all material
respects, construct and operate the Project in compliance with the EAP, the SDCR
Report, the DIA and the Environmental Guidelines, comply with and implement the
mitigating measures specified in the EAP, the SDCR

 

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Report, the DIA and the Environmental Guidelines, and implement such changes
adopted by the authorities issuing such Environmental Guidelines or otherwise as
may be required by Governmental Authorities having jurisdiction.

 

8.10  Maintain and Comply with Mining Concessions and Government Approvals.

 

(a)                                  The Borrower shall obtain and maintain in
full force and effect and comply with the terms and conditions of the Mining
Concessions and, subject to Sections 8.09(a) and (c), comply in all material
respects with all Government Approvals necessary for the construction,
development and operation of the Project or necessary (i) to comply with its
obligations under the Transaction Documents, (ii) to derive all material
benefits from the Material Project Documents, (iii) to export and sell Project
Production offshore, (iv) to maintain the New York Accounts and (v) to receive
and maintain export proceeds.

 

(b)                                 The Borrower shall, with due diligence and
in a reasonable and prudent manner, enforce the rights granted to it under and
in connection with all Mining Concessions, Authorizations and Government
Approvals.

 

(c)                                  The Borrower shall not propose or agree to
any amendment, modification, assignment, termination, cancellation, waiver or
suspension of any Mining Concession or Government Approval, unless such
amendment, modification, assignment, termination, cancellation, waiver or
suspension could not reasonably be expected to have a Material Adverse Effect.

 

8.11  Project Documents.

 

(a)                                  The Borrower shall (i) perform and observe
in all material respects all of its covenants and obligations contained in each
of the Project Documents to which it is a party, (ii) take all action to prevent
the early termination or cancellation by the Material Project Counterparty of
any Material Project Document in accordance with the terms thereof or otherwise
except where such termination or cancellation could not reasonably be expected
to have a Material Adverse Effect, and (iii) enforce against the other party to
each Material Project Document each material covenant or obligation of such
Material Project Document in accordance with its terms consistent with prudent
business practices.

 

(b)                                 The Borrower shall not:  (i) cancel or
terminate early any Material Project Document to which it is a party or consent
to or accept any cancellation or early termination thereof, (ii) sell, assign
(other than pursuant to the Security Documents) or otherwise dispose of (by
operation of law or otherwise) any part of its interest in any Material Project
Document, (iii) waive any default under, or breach of, any Material Project
Document or waive, fail to enforce, forgive, compromise, settle, adjust or
release any right, interest or entitlement, howsoever arising, under, or in
respect of, any Material Project Document or in any way vary, or agree to the
variation of, any provision of such Material Project Document or of the
performance of any covenant or obligation by any Material Project Counterparty
under any Material Project Document, (iv) petition, request or take any other
legal or administrative action that seeks, or could reasonably be expected, to
materially impair any Material Project Document (or otherwise give effect to any
action otherwise restricted by this Section 8.11) or (v) amend, supplement,

 

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modify or replace any Material Project Document (in each case as in effect on
the date hereof and as thereafter amended, supplemented or modified in
accordance with this Section 8.11); except in each case where the Borrower is
acting with the prior consent of the Majority Secured Parties (after
consultation with the Independent Engineer), or where such actions could not
reasonably be expected to have a Material Adverse Effect (but only after
reasonable prior written notice thereof and certification to that effect to the
Administrative Agent).

 

(c)                                  If the Borrower desires to enter into any
Additional Material Project Document, it shall provide a copy of the proposed
Additional Material Project Document to the Agents prior to the execution
thereof, and the execution and delivery of such proposed agreement shall be
subject to the consent of the Majority Secured Parties, not to be unreasonably
withheld or delayed.

 

(d)                                 Promptly after the execution and delivery
thereof, the Borrower shall furnish the Administrative Agent with certified
copies of (i) all amendments, supplements or modifications of any Material
Project Document and (ii) all Additional Material Project Documents.  The
Borrower shall furnish a copy of each Project Document executed after the
Closing Date to the Administrative Agent for distribution to the Senior Lenders.

 

(e)                                  The Borrower shall not declare, or accept
the declaration of, Mechanical Completion under the EPCM Contract without the
prior written consent of the Independent Engineer, acting in its professional
discretion.

 

8.12  Construction and Completion.

 

(a)                                  The Borrower shall diligently pursue
Completion and cause Completion to occur as promptly as reasonably possible and
in accordance with the Construction Budget and the Operating Plan then in
effect.

 

(b)                                 The Borrower shall construct and complete
the physical facilities of the Project substantially as contemplated by the
Project Description and in all material respects in accordance with the
Operating Plan, the Construction Budget, the Project Documents and prudent
international mining industry practice.

 

(c)                                  The Borrower shall notify the Technical
Agent, the Senior Lenders, the PRI Insurers and the Independent Engineer of any
revision to the Construction Budget including the Project Description it
proposes to make from time to time.  Any material revision of the Construction
Budget other than those revisions as provided in Section 8.14 shall require the
prior written consent of Majority Secured Parties (acting after consultation
with the Independent Engineer).  The Borrower shall provide to the
Administrative Agent, the Technical Agent and the Independent Engineer, promptly
after it is available, a copy of any revision to the Construction Budget.

 

8.13  Operation.

 

(a)                                  The Borrower shall operate the Project in
all material respects in accordance with the Operating Plan, the Material
Project Documents and prudent international mining industry practice.

 

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(b)                                 The Borrower shall notify the Technical
Agent, the Senior Lenders, the PRI Insurers and the Independent Engineer of any
revision to the Operating Plan it proposes to make from time to time.  Any
material revision of the Operating Plan other than those revisions as provided
in Section 8.14 shall require the prior written consent of Majority Secured
Parties (acting after consultation with the Independent Engineer).  The Borrower
shall provide to the Administrative Agent, the Technical Agent and the
Independent Engineer, promptly after it is available, a copy of any revision to
the Operating Plan.

 

8.14  Operating Plan, Construction Budget and Financial Model.

 

(a)                                  Updates to Financial Model, Construction
Budget and Operating Plan.  The Borrower shall deliver, no later than November 1
of each calendar year commencing 2006, to the Technical Agent, in sufficient
copies for the Administrative Agent, the Senior Lenders and the Independent
Engineer, an updated Financial Model together with an updated Operating Plan and
updated Construction Budget, as applicable, for the Project.  Each updated
Financial Model, Construction Budget and Operating Plan shall:

 

(i)                                     except as may be otherwise agreed by the
Technical Agent and the Supermajority Secured Parties (A) be in substantially
the form of, and contain the same type of data, projections, forecasts,
calculations, assumptions and other information as, the Initial Financial Model,
Initial Construction Budget and the Initial Operating Plan and (B) contain the
same assumptions with respect to the prices of Metals as are set out in the
Initial Financial Model;

 

(ii)                                  incorporate, in the case of the Financial
Model, all relevant quantitative data derived from the Operating Plan and
Construction Budget;

 

(iii)                               incorporate, in the case of the Construction
Budget, any proposed changes to the physical facilities as set forth on Appendix
H;

 

(iv)                              include, in the case of the Financial Model,
an explanation of any deviation in the amount attributed to any line item
specified in such Financial Model where such deviation is 5% or more of the
amount attributed to the same line item in the Initial Financial Model unless
such deviation has been explained and incorporated into a prior Financial Model;
and

 

(v)                                 include such other information as the
Technical Agent may reasonably request with respect to any Financial Model,
Construction Budget or Operating Plan.

 

(b)                                 Acceptance of Financial Model, Construction
Budget and Operating Plan.

 

(i)                                     The Technical Agent shall direct the
Independent Engineer to review the updated Operating Plan, updated Construction
Budget and updated Financial Model for material compliance with the Initial
Operating Plan, Initial Construction Budget and the Initial Financial Model,
respectively.  Within thirty (30) days of its receipt thereof, the Independent
Engineer shall notify the Technical Agent whether or not, in its professional
opinion, each of the updated

 

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Operating Plan, updated Construction Budget and updated Financial Model is in
material compliance with the Initial Operating Plan, Initial Construction Budget
and the Initial Financial Model, respectively.  In the event that the
Independent Engineer determines that the updated Operating Plan, updated
Construction Budget and the updated Financial Model are in material compliance,
the Technical Agent shall accept such updated Operating Plan, updated
Construction Budget and updated Financial Model and shall promptly notify the
Administrative Agent and the Borrower of such acceptance.  Once approved, such
updated Operating Plan, updated Construction Budget and updated Financial Model
shall become the current Operating Plan, Construction Budget and Financial
Model.

 

(ii)                                  In the event that the Independent Engineer
determines that any of the updated Operating Plan, updated Construction Budget
or updated Financial Model are not in material compliance with the Initial
Operating Plan, Initial Construction Budget or Initial Financial Model,
respectively, it shall promptly notify the Technical Agent and the Borrower of
the reasons for such determination, and the Technical Agent shall submit such
updated Operating Plan, updated Construction Budget or updated Financial Model,
as the case may be, for approval by the Majority Secured Parties.  If the
Majority Secured Parties approve such updated Operating Plan, updated
Construction Budget or updated Financial Model, as the case may be, the
Technical Agent shall promptly notify the Borrower and the Administrative Agent
of such approval.  If the Borrower is notified by the Technical Agent that its
updated Financial Model, updated Construction Budget or updated Operating Plan,
as the case may be, has not been approved by the Majority Secured Parties, the
Borrower shall, within ten (10) Business Days and after consultation with the
Technical Agent as to the reasons for such rejection, submit an appropriately
revised Financial Model, Construction Budget and/or Operating Plan, as the case
may be. Following such resubmission, the process described in the foregoing
clause (i) shall be repeated until a Financial Model, Construction Budget and
Operating Plan have been accepted as provided therein.  To the extent that a
calendar year commences without a Financial Model, Construction Budget and/or
Operating Plan having been approved in accordance with this Section 8.14(b), the
previously approved Financial Model, Construction Budget and/or Operating Plan,
as applicable, shall remain in effect until a revised Financial Model,
Construction Budget and/or Operating Plan, as applicable, shall have been
approved.

 

(iii)                               Following Completion, the Borrower need not
submit an updated Construction Budget.

 

8.15  Capital Expenditures.  Prior to Completion, the Borrower may incur from
time to time capital expenditures necessary for developing, constructing and
operating the Project in accordance with the Construction Budget and the
Operating Plan then in effect and to achieve Completion.  Following Completion,
the Borrower may not incur capital expenditures other than the following:

 

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(a)                                  the Borrower may incur from time to time
without restriction capital expenditures contemplated by the Operating Plan then
in effect; and

 

(b)                                 the Borrower may incur from time to time
capital expenditures not otherwise contemplated herein with the consent of the
Majority Secured Parties acting reasonably.

 

8.16  Sales of Project Production.  The Borrower shall sell all Project
Production to Apex Metals pursuant to the Concentrate Sales Agreement.

 

8.17  [Reserved].

 

8.18  Arm’s-Length Transactions.  Other than the Intercompany Agreements
executed and delivered in connection with the Closing Date, each transaction or
agreement between the Borrower and the Sponsor or any Affiliate of the Borrower
shall be undertaken on fair and commercially reasonable terms and conditions no
less favorable to the Borrower than would be obtained in a comparable
arm’s-length transaction at the time with a Person that is not the Sponsor or an
Affiliate of the Borrower.

 

8.19  Limitation on Indebtedness.

 

(a)                                  The Borrower shall not incur, create,
assume, suffer or permit to exist Indebtedness for Borrowed Money other than:

 

(i)                                     Indebtedness for Borrowed Money incurred
under the Financing Documents;

 

(ii)                                  Subordinated Debt, provided that the
provider of such Subordinated Debt is a party to the Transfer Restrictions
Agreement;

 

(iii)                               Indebtedness for Borrowed Money not
otherwise permitted under this Section 8.19(a), which does not in the aggregate
exceed $5 million at any one time; and

 

(iv)                              other Indebtedness for Borrowed Money incurred
with the consent of Majority Secured Parties.

 

(b)                                 The subordination provisions set forth in
Appendix A-1 to the Transfer Restrictions Agreement, constitute the
“Subordination Agreement” and shall apply to all Indebtedness for Borrowed
Money, if any, owed by the Borrower to any Affiliate.  Each of the Borrower,
Apex Luxembourg and Apex Sweden agrees to observe the subordination provisions
set forth in Appendix A-1 which shall be applicable to all Subordinated Debt and
all debt which is required to be subordinated pursuant to the terms hereof.  The
Borrower shall cause all of its Affiliates to whom it owes Indebtedness for
Borrowed Money to agree to be bound by the Subordination Agreement.  The
Borrower agrees that all such provisions shall be enforceable, including under
Bolivian law and regulations (to the extent permitted thereby), as if such
provisions were an agreement between Apex Luxembourg or Apex Sweden, as
applicable and the Secured Parties.  Each of the Borrower, Apex Luxembourg and
Apex Sweden agrees that no

 

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amendment or modification of the Subordination Agreement shall be effective
without the consent of each Secured Party.  A copy of any such amendment or
modification shall be delivered to the Collateral Agent.

 

(c)                                  If (x) an Event of Default under
Section 10.01(a) (Payment Default) is continuing or (y) the balance in the Debt
Service Reserve Account is less than the Debt Service Reserve Requirement, the
Borrower shall not make voluntary prepayments to reduce the outstanding
principal amount of Indebtedness for Borrowed Money incurred pursuant to clause
(ii), (iii) or (iv) of paragraph (a) of this Section 8.19 where, as a result
thereof, the principal amount of indebtedness outstanding would be below the
amount of such Indebtedness for Borrowed Money outstanding immediately prior to
the occurrence of the event or occurrence specified in clause (x) or (y) of this
paragraph (c).

 

8.20  Limitation on Liens and Encumbrances.  The Borrower shall not create,
assume, incur, suffer or permit to exist any Lien of any kind (including
unsatisfied judgments that shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 30 days after the entry
thereof) upon any Project Property whether now owned or hereafter acquired,
except for the following (collectively “Permitted Liens”):

 

(a)                                  Liens created pursuant to the Security
Documents to secure the Secured Debt Obligations;

 

(b)                                 Liens imposed by any Governmental Authority
for taxes, levies, assessments, pension obligations or charges not yet due or
which are being contested in good faith and by appropriate proceedings (and
against which adequate reserves are being maintained in accordance with U.S.
GAAP and Applicable Accounting Principles by the Borrower);

 

(c)                                  deposits or pledges to secure obligations
under workmen’s compensation, social security or similar laws, or under
employment insurance;

 

(d)                                 mechanics’, workmen’s, materialmen’s,
landlord’s, carriers’, warehousemen’s or other like liens arising in the
ordinary course of business with respect to obligations which are not yet due or
which are being contested in good faith and by appropriate proceedings and for
which adequate reserves have been established in accordance with U.S. GAAP and
Applicable Accounting Principles;

 

(e)                                  Liens of the Mining Contractor in equipment
leased to the Borrower under the Mining Contract;

 

(f)                                    with respect to Collateral consisting of
real property (other than the Mining Concessions), zoning restrictions,
easements, licenses, encumbrances or other restrictions on the use of such real
property or other minor irregularities in the title thereto, so long as the same
do not impair in any material respect the use or value of such property for its
intended purpose;

 

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(g)                                 pledges or deposits of money to secure
surety or appeal bonds or letters of credit in the ordinary course of business,
not exceeding $5,000,000 in the aggregate at any one time outstanding;

 

(h)                                 deposit or cash collateral posted to secure
surety bonds or letters of credit required to be posted under Material Project
Documents (other than the letter of credit posted under the Rail Transportation
Agreement, the cash posted in respect of obligations to fund an escrow account
under the Ports Agreement and the letter of credit posted under the EPCM
Contract); and

 

(i)                                     other Liens incurred with the consent of
the Majority Secured Parties.

 

8.21  Limitation on Loans, Advances, Guarantees and Investments.

 

(a)                                  The Borrower shall not make any loans or
advances to any Person other than (i) Authorized Investments, (ii) down payments
or prepayments to suppliers, contractors, and others on ordinary commercial
terms in the ordinary course of business, (iii) loans and advances contemplated
by the Borrower Concentrate Sales Agreement and (iv) ordinary course of business
advances to employees for travel and other business expenses not to exceed
$250,000 outstanding at any one time.

 

(b)                                 The Borrower shall not assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable for
Indebtedness or obligations of any other Person other than pursuant to the Hedge
Guaranty.

 

(c)                                  Without the consent of the Majority Secured
Parties, the Borrower shall not purchase or otherwise invest in the capital
stock of or other ownership interest in any Person or purchase any securities
except for Authorized Investments.  The Borrower shall not form any
subsidiaries.

 

8.22  Limitation on Share Issuance.  The Borrower shall not, without the consent
of the Majority Secured Parties, issue any common shares or any other security
convertible into common shares or any other interests in the Borrower’s capital
to, or accept irrevocable capital contributions (aportes irrevocables de
capital) from, any Person other than Apex Sweden, provided that in any event no
such shares, securities or other interests may be issued to any Person unless
such shares, securities or other interests shall have been pledged to the
Secured Parties.

 

8.23  Hedge Instruments.  The Borrower shall not enter into any Hedge
Instruments.

 

8.24  Maintain Good Title.  The Borrower shall maintain good, legal and valid
title to (or, in the case of any leased premises, easement properties or
licensed property, valid leasehold, easement or license interests in) all real
and personal property (including Project Property) and all rights, tangible or
intangible (including Intellectual Property Rights and Other Property Rights)
necessary for the construction, development and operation of the Project,
subject to Permitted Liens.

 

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8.25  Further Assurances.  Subject to the terms and conditions herein provided,
the Borrower agrees to use its reasonable efforts to do all things necessary
under applicable laws and regulations to consummate and make effective, as soon
as practicable, the transactions contemplated by, and to carry out the purposes
of, the Financing Documents and the Material Project Documents, including the
obtaining of Authorizations and Government Approvals required in connection
therewith.

 

8.26  Use of Proceeds.  The Borrower shall use the proceeds of the Senior Loans
solely to pay or finance Project Costs (so long as immediately following each
Disbursement, the TPCFR is no greater than 33:67) and for no other purpose.

 

8.27  Limitations on Accounts.  The Borrower shall not maintain any bank
accounts other than the New York Accounts, the Bolivian Accounts and the Health
Care Account (provided that the maximum balance on deposit in the Health Care
Account shall at no time exceed $50,000 or the Boliviano equivalent thereof)

 

8.28  Independent Engineer.  The Majority Secured Parties shall have the right
to appoint an Independent Engineer (and to remove and replace a Person
theretofore acting in such capacity) subject, so long as no Event of Default has
occurred and is continuing, to prior approval of the Borrower of the identity of
such consultant and the terms of its appointment, including fee arrangements and
the scope of its work, which approval, where required, shall not be unreasonably
withheld.  The Borrower shall pay, or reimburse the Senior Lenders, the
Administrative Agent and the Collateral Agent for, the reasonable and documented
fees and expenses of the Independent Engineer.

 

8.29  Registration of Financing Information.  The Borrower shall, promptly after
the execution and delivery of each of the Financing Documents, register such
information regarding each Financing Document with the Bolivian Central Bank as
shall be required by circulars issued by the Bolivian Central Bank and provide
notice thereof to the Administrative Agent.

 

8.30  Perfection of Security Interests.  Each of the Borrower, Apex Metals, Apex
Luxembourg and Apex Sweden, as applicable, shall make all filings necessary in
each applicable jurisdiction to perfect any security interest created or
intended to be created under this Agreement or any other Security Documents, to
the extent any such security interest may be perfected by the making of such
filings.  Promptly after the completion of any such filing, the Borrower shall
deliver to the Collateral Agent an Officer’s Certificate certifying that
(i) such filings have been made, (ii) a first priority security interest
(subject to Permitted Liens which are entitled to mandatory priority under
applicable Government Rules), in the underlying Collateral in favor of the
Collateral Agent, on behalf of the Secured Parties, exists under applicable law
(subject to Permitted Liens that are granted priority on a mandatory basis under
applicable Government Rules), and (iii) there are no other Liens or security
interest on the underlying Collateral ranking senior to or pari passu with such
security interest (other than Permitted Liens which are entitled to mandatory
priority under applicable Government Rules).

 

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ARTICLE IX

RESTRICTED PAYMENTS; CASH SWEEP PREPAYMENTS

 

9.01  Restricted Payments.

 

(a)                                  Conditions to Restricted Payments.  The
Borrower shall not make any Restricted Payment unless:

 

(i)                                     no Default or Event of Default shall
have occurred and be continuing at the time of and immediately following the
making of such proposed Restricted Payment;

 

(ii)                                  Completion has been achieved;

 

                                               
(iii)                               the Borrower has paid the first scheduled
repayment of principal of the Senior Loans;

 

(iv)                              such Restricted Payment is made at least ten
(10) Business Days but no more than twenty (20) Business Days after a Principal
Repayment Date (the date of such Restricted Payment being the “Restricted
Payment Date”, and such Principal Repayment Date being the “Corresponding
Payment Date”);

 

(v)                                 there is, and immediately following such
Restricted Payment will be, no Debt Service Reserve Deficiency or Operating
Reserve Deficiency;

 

(vi)                              all Secured Debt Obligations due and payable
on or prior to such Corresponding Payment Date have been paid;

 

(vii)                           the LLCR calculated from such Corresponding
Payment Date (and including payments to be made on such Corresponding Payment
Date) through the Final Maturity Date shall be not less than 1.4:1.0, and the
foregoing shall be certified by the Borrower in the Financial Ratio Certificate
to be delivered by the Borrower with respect to the Corresponding Payment Date
as provided in Section 6.02(c);

 

(viii)                        the FLDSCR for the six-month period commencing on
such Corresponding Payment Date (including payments to be made on such
Corresponding Payment Date) shall be not less than 1.25:1.0, and the foregoing
shall be certified by the Borrower in the Financial Ratio Certificate to be
delivered by the Borrower with respect to the Corresponding Payment Date as
provided in Section 6.02(c); and

 

(ix)                                subject to Section 9.01(c), a Financial
Model and Operating Plan prepared specifically for the calendar year during
which the Restricted Payment Date falls shall have been approved pursuant to
Section 8.14(b) and be in full force and effect on the relevant Corresponding
Payment Date.

 

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(b)                                 Notice.  If the Borrower would like to make
a Restricted Payment, it shall, not more than ten (10) Business Days but not
less than five (5) Business Days prior to the proposed Restricted Payment Date,
submit such request to the Administrative Agent, who shall notify the Senior
Lenders of such request.  The request shall (i) attach the Financial Ratio
Certificate for the Corresponding Payment Date accepted by the Technical Agent
in accordance with Section 6.02(c), (ii) certify as to the Borrower’s
expectation as to compliance with the conditions set forth in Section 9.01 as of
the proposed Restricted Payment Date, (iii) set forth the information and
computations demonstrating compliance with such conditions and (iv) specify the
amount requested for such Restricted Payment, which shall equal or be less than
the amount available in the Apex Metals Account for a Restricted Payment on the
Corresponding Payment Date after giving effect to Section 9.02(a).  If the
Administrative Agent determines that the requisite information has been provided
as required by this Section 9.01, it shall accept such request and promptly
notify the Borrower, the Collateral Agent and the Senior Lenders of such
acceptance and direct the Collateral Agent to make such Restricted Payment. 
Restricted Payments shall only be permitted if all of the foregoing conditions
are actually satisfied on the Restricted Payment Date.  The amount of any
Restricted Payment shall be the lesser of (y) the aggregate amount on deposit in
the Apex Metals Account on the Restricted Payment Date and (z) the amount
requested by the Borrower pursuant to its Restricted Payment request.

 

(c)                                  Operating Plan and Financial Model. In the
event that the Borrower has submitted timely information as provided in
Section 9.01(b) above with respect to the satisfaction of all conditions to the
making of a Restricted Payment except that the condition set forth in
Section 9.01(a)(ix) is not satisfied on the relevant Corresponding Payment Date,
then the Borrower shall be entitled, notwithstanding the provisions of
Section 9.01(a)(iv), to select a Restricted Payment Date that is at least ten
(10) Business Days but no more than twenty (20) Business Days after the date
(the “Clause (ix) Date”) on which the condition set forth in
Section 9.01(a)(ix) is first satisfied for the calendar year in which the
relevant Corresponding Payment Date falls subject to the following conditions:

 

(i)                                     all of the conditions to making a
Restricted Payment must be satisfied in the same manner, and all documentation
must be submitted or re-submitted in the same manner as provided in
Section 9.01(b), with respect to the new proposed Restricted Payment Date in
accordance with the provisions of Section 9.01(b);

 

(ii)                                  the related Clause (ix) Date cannot be
within fifteen (15) days of a Principal Repayment Date (other than the
Corresponding Payment Date on which the condition set forth in
Section 9.01(a)(ix) was not satisfied); and

 

(iii)                               the amount requested for such Restricted
Payment shall be the least of (A) the amount on deposit in the Apex Metals
Account on the Restricted Payment Date, (B) the amount that would have been
available for a Restricted Payment from the Apex Metals Account had the
condition set forth in Section 9.01(a)(ix) been satisfied on the relevant
Corresponding Payment Date and (C) the amount requested by the Borrower pursuant
to its Restricted Payment request.

 

(d)                                 Sales Fees.  Amounts in respect of the Sales
Fee may be credited to Apex Metals when earned from time to time but shall
remain on deposit in the Apex Metals Account

 

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unless otherwise withdrawn or transferred therefrom in accordance with the terms
and conditions of this Agreement or Section 5.17 of the Cross-Guarantee and
Security Agreement.

 

9.02  Cash Sweep Prepayments.

 

(a)                                  Cash Sweep Prepayments.  The Borrower
shall, on each Principal Repayment Date, prepay the principal of and interest on
the Senior Loans (each such payment being a “Cash Sweep Prepayment”) in an
amount equal to the lesser of (i) 35% of the amount then on deposit in the
Liquidity Accounts (other than the Operating Reserve Account) and (ii) the total
aggregate amount of Senior Loans then outstanding.

 

(b)                                 Application of Cash Sweep Prepayments.  The
aggregate amount of all Cash Sweep Prepayments shall be applied to prepay the
principal installments of Senior Loans in inverse order of maturity.  No
penalty, premium, breakage cost or similar cost will be payable by the Borrower
in respect of a Cash Sweep Prepayment.

 

(c)                                  Notice.  The Borrower shall state in a
Withdrawal Certificate delivered to the Administrative Agent and the Collateral
Agent not more than ten (10) Business Days but not less than five (5) Business
Days prior to a Principal Repayment Date the aggregate amount of Cash Sweep
Prepayments and the payment in respect thereof to be made to each Senior Lender
to be made on such Principal Repayment Date, together, in either case, with
calculations in reasonable detail demonstrating the Borrower’s compliance with
this Section 9.02.  Failure of the Borrower to provide such Withdrawal
Certificate shall not relieve the Borrower of its obligation to make a Cash
Sweep Prepayment.  In the event that the Borrower has failed to deliver a
Withdrawal Certificate as required by this Section 9.02(c), the Administrative
Agent shall calculate the amount of the Cash Sweep Prepayment and instruct the
Collateral Agent to disburse such Cash Sweep Prepayment.  The Administrative
Agent’s calculation shall be final and binding.

 

ARTICLE X

EVENTS OF DEFAULT

 

10.01  Events of Default.  Each of the following events shall be an “Event of
Default”:

 

(a)                                  Payment Default.

 

(i)                                     The Borrower defaults in the payment of
(A) any Senior Loan Obligation consisting of principal when and as such Senior
Loan Obligation is due and payable or (B) any Secured Debt Obligation consisting
of a Guaranteed Apex Metals Obligation in respect of a Guaranteed Apex Metals
Early Termination Amount when and as such Secured Debt Obligation is due and
payable, and such default is continuing for a period of two (2) Business Days;

 

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(ii)                                  The Borrower defaults in the payment of
any Secured Debt Obligation (other than as described in clause (i) above), when
and as such Secured Debt Obligation is due and payable, and such default is
continuing for a period of (i) in the case of payments of Guaranteed Apex Metals
Obligations in respect of Guaranteed Apex Metals Net Payment Amounts, interest
(including premiums and fees in respect of the PRI Policies) and commitment
fees, three Business Days after the date such payment was due and (ii) in the
case of all other payments to any Secured Party, five (5) days after such
payment was due;

 

(b)                                 Breach of Representation and Warranty.  Any
representation, warranty or statement confirmed or made by the Borrower under
any Financing Document or contained in any certificate, statement, notice or
other document provided to any Secured Party under or pursuant to any Financing
Document shall have been incorrect in any material respect when made or deemed
to be made or (except if stated to have been made solely as of an earlier date)
repeated;

 

(c)                                  Breach of Covenant.

 

(i)                                     The Borrower defaults on its obligation
to provide notice concerning any of the events and circumstances described in
Section 6.03 (Notice of Extraordinary Events);

 

(ii)                                  The Borrower fails to perform or observe,
violates or otherwise defaults on:

 

(A)                              any obligation under Article IV (Accounts)
(I) to transfer or pay (or cause to be transferred or paid) funds (other than
insurance proceeds and expropriation compensation) (x) to a New York Account
from outside of Bolivia or (y) from a New York Account, (II) to apply, hold or
invest (or cause to be applied, held or invested) funds deposited in a New York
Account (other than the Insurance Proceeds Account and the Expropriation
Proceeds Account) in a specified manner, or (III) to transfer or pay (or cause
to be transferred or paid) funds (other than insurance proceeds and
expropriation compensation) to a New York Account from Bolivia, and in each case
of items (I), (II) and (III), such default continues uncured for three
(3) Business Days from the occurrence thereof;

 

(B)                                any obligation under Article V (Insurance and
Expropriation Compensation) or the related provisions of Article IV, to transfer
or pay (or cause to be transferred or paid) to or from, or apply, hold or invest
(or cause to be applied, held or invested) funds deposited in, the Insurance
Accounts or the Expropriation Accounts in a specified manner, and such default
continues uncured for five (5) Business Days after the occurrence thereof;

 

(C)                                any obligation under Section 9.01 (Restricted
Payments) or Section 9.02 (Cash Flow Prepayments); or

 

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(D)                               any covenants or agreements contained in
Section 8.01 (Maintenance of Existence; Prohibition of Fundamental Changes),
8.02 (No Modification of Organizational Documents), 8.03 (Business), 8.04
(Principal Place of Business), 8.07(b) (Preservation of Assets),
8.09(b) (Compliance with Law and Environmental Guidelines), 8.10(a) or
(c) (Maintain and Comply with Mining Concessions and Government Approvals),
8.11(b) or (e) (Project Documents), 8.12(c) (Construction and Completion), 8.15
(Capital Expenditures), 8.19 (Limitation on Indebtedness), 8.20 (Limitation on
Liens and Encumbrances), 8.21 (Limitation on Loans, Advances, Guarantees and
Investments), 8.22 (Limitation on Share Issuance) or 8.23 (Hedge Instruments)
hereof;

 

(iii)                               The Borrower fails to perform or observe,
violates or otherwise defaults on any obligation under Article III (Security
Interests), Article IV (Accounts), Article V (Insurance), Article VI
(Reporting), or Article VIII (Covenants), or on any obligation under any other
Section of this Agreement (other than those specified in clauses (a) and
(c)(i) and (c)(ii) above) or any other Financing Document and, in each case,
such default continues uncured for thirty (30) days after the occurrence
thereof;

 

provided that if any breach of an obligation in the Financing Documents arises
out of or results from events or circumstances that constitute a Default or a
separate Event of Default specified in another clause of this Section 10.01,
then such other clause will control for the purposes of determining if and when
an Event of Default has occurred under this Agreement;

 

(d)                                 Bankruptcy of the Borrower.

 

(i)                                     The Borrower shall:  (A) admit in
writing its inability to, or be generally unable to, pay its debts as such debts
become due; (B) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property; (C) make a general assignment for the
benefit of its creditors; (D) commence a Proceeding; (E) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts; (F) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
Proceeding filed against it; or (G) take any corporate action for the purpose of
effecting any of the foregoing; or

 

(ii)                                  A Proceeding or case shall be commenced
against the Borrower without its application or consent, in any court of
competent jurisdiction, seeking:  (A) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts;
(B) the appointment of a trustee, receiver, custodian, liquidator or the like
for itself or for all or any substantial part of its property; or (C) similar
relief in respect of it under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and, in each
case, such proceeding or case shall continue undismissed, or an order, judgment

 

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or decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 or more days;

 

(e)                                  Dissolution, Termination or Winding-Up. 
Other than in respect of a proceeding relating to the insolvency of the Borrower
as specified in Section 10.01(d), the Borrower shall be terminated or dissolved
(as a matter of Government Rule or otherwise), or proceedings shall be commenced
by any Person seeking the termination or dissolution of the Borrower and such
proceedings shall continue undismissed or unstayed for a period of 60 or more
days (or such shorter period of time which such Person has pursuant to
Government Rule to cause the dismissal of such proceeding or stay the
effectiveness of any such order, judgment or decree);

 

(f)                                    Default Under or Termination of the
Completion Agreement.  (i) A Completion Default shall have occurred and be
continuing; (ii) the Completion Agreement shall have been terminated prior to
Completion; (iii) the Completion Agreement shall have been declared in a final
order of a court to be unenforceable against the Sponsor, or (iv) the Sponsor
shall have repudiated its obligations under the Completion Agreement prior to
Completion;

 

(g)                                 Default Under or Termination of the Transfer
Restrictions Agreement.  (i) A TRA Default shall have occurred and be
continuing; (ii) the Transfer Restrictions Agreement shall be terminated other
than in accordance with its terms; (iii) the Transfer Restrictions Agreement
shall have been declared in a final order of a court to be unenforceable against
Apex Sweden, Apex Luxembourg, the Sponsor or any Permitted Assignee of any
thereof; or (iv) any of Apex Sweden, Apex Luxembourg, the Sponsor or any
Permitted Assignee of any thereof shall have repudiated its obligations under
the Transfer Restrictions Agreement;

 

(h)                                 Default under or Termination of the
Cross-Guarantee and Security Agreement.  (i) A CGSA Default shall have occurred
and be continuing; (ii) the Cross-Guarantee and Security Agreement shall be
terminated; (iii) the Cross-Guarantee and Security Agreement shall have been
declared in a final order of a court to be unenforceable against Apex Metals; or
(iv) Apex Metals shall have repudiated its obligations under the Cross-Guarantee
and Security Agreement;

 

(i)                                     Sponsor Default. (i) A Sponsor Default
shall have occurred and be continuing; (ii) the Sponsor Pledge Agreement shall
be terminated; (iii) the Sponsor Pledge Agreement shall have been declared in a
final order of a court to be unenforceable against the Sponsor; or (iv) the
Sponsor shall have repudiated its obligations under the Sponsor Pledge
Agreement;

 

(j)                                     ASC Bolivia Default.  (i) An ASC Bolivia
Default shall have occurred and be continuing; (ii) the ASC Bolivia Pledge
Agreement shall be terminated; (iii) the ASC Bolivia Pledge Agreement shall have
been declared in an order of a court to be unenforceable against ASC Bolivia; or
(iv) ASC Bolivia shall have repudiated its obligations under the ASC Bolivia
Pledge Agreement;

 

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(k)                                  Cross-Defaults.  Any Indebtedness for
Borrowed Money for which the Borrower is liable in a principal amount in excess
of $10 million either individually or in the aggregate is not paid when due
(after giving effect to any applicable grace period) or is capable of being
declared or has been declared to be due and payable prior to the stated maturity
thereof;

 

(l)                                     Unsatisfied Judgments.  Any final
judgment or judgments for the payment of money in excess of $10 million either
individually or in the aggregate shall be rendered against the Borrower and
shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of 30 days after the date of entry thereof;

 

(m)                               Abandonment.  Abandonment of the Project shall
have occurred;

 

(n)                                 Failure to Achieve Completion.  The Borrower
shall have failed to achieve Completion by the Limit Completion Date;

 

(o)                                 Security Interests Invalid.  Liens purported
to be created by or under the Security Documents in any (i) Mining Concession,
(ii) New York Account, (iii) Material Asset, (iv) Material Project Document or
(v) material portion of any other Collateral shall fail or cease to be validly
perfected first priority Liens having first priority over all other Liens (other
than Permitted Liens which are entitled to mandatory priority under applicable
Government Rules) and valid assignments of rights, as applicable, in favor of
the Secured Parties; any material provision of any Security Document shall at
any time for any reason cease to be valid and binding and in full force and
effect; or the validity or enforceability of any material provision of any
Security Document shall be contested by any party thereto (other than a Secured
Party) or any Governmental Authority;

 

(p)                                 Attachment of Collateral.  Any Person (other
than the Collateral Agent or any other Secured Party) shall have attached, or
levied or enforced distress, execution or a similar remedy in respect of any of
the Collateral or other Project Property having a replacement cost greater than
$10 million, and, in each case, any such attachment or other process shall
remain unstayed, unlifted or undischarged for 30 days after the Borrower has
been served notice thereof;

 

(q)                                 Unenforceability of Transaction Documents. 
(i) The Hedge Guaranty, any Senior Loan Agreement, any Note or any Fee Letter
shall at any time for any reason cease to be valid and binding or in full force
and effect, in each case without the prior written consent of the Collateral
Agent (acting at the direction of the Administrative Agent); (ii) except as
provided in Section 8.11, any Material Project Document shall at any time for
any reason cease to be valid and binding or in full force and effect without the
prior written consent of the Majority Secured Parties; (iii) the validity or
enforceability of any Financing Document (other than the Completion Agreement, a
Security Document or the Transfer Restrictions Agreement) or Material Project
Document shall be contested by any party thereto (other than a Secured Party) or
any Governmental Authority (and, in the case of a Material Project Document,
such contest shall not be withdrawn by the contesting party within 30 days of
the Administrative

 

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Agent notifying the Borrower that it requires such contest to be withdrawn); or
(iv) any Person (other than a Secured Party) shall deny that it has any
liability or obligation under any Financing Document (other than the Completion
Agreement, a Security Document or the Transfer Restrictions Agreement) or
Material Project Document to which it is a party (and, in the case of a Material
Project Document, such contest shall not be withdrawn by the contesting party
within 30 days of the Administrative Agent notifying to the Borrower that it
requires such contest to be withdrawn);

 

(r)                                    Breach of Material Project Documents. 
Except as provided in Section 8.11, (i) any Material Project Document is
terminated or (ii) any Material Project Counterparty shall have failed to
perform any material obligations thereunder, and such failure is not remedied,
or the breached agreement is not replaced on terms and with counterparties
reasonably acceptable to Majority Secured Parties, within 30 days after written
notice to the Borrower by the Administrative Agent;

 

(s)                                  Material Project Counterparties.

 

(i)                                     Bankruptcy of the Material Project
Counterparties.

 

(A)                              Prior to the completion of its duties under all
Material Project Documents to which it is a party, any Material Project
Counterparty shall:  (1) admit in writing its inability to, or be generally
unable to, pay its debts as such debts become due; (2) apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property;
(3) make a general assignment for the benefit of its creditors; (4) commence a
Proceeding; (5) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or readjustment of debts; (6) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary Proceeding; or (7) take any corporate or partnership action for the
purpose of effecting any of the foregoing; provided, that the occurrence of the
foregoing in relation to such Person shall not be an Event of Default if, within
90 days after the Borrower knows of such occurrence or the Administrative Agent
notifies the Borrower of such occurrence, the Borrower shall have replaced such
Person in each of the Material Project Documents to which it is a party with a
counterparty acceptable to the Majority Secured Parties; or

 

(B)                                Prior to the completion of its duties under
all Material Project Documents to which it is a party, a proceeding or case
shall be commenced against any Material Project Counterparty, without the
application or consent of such Material Project Counterparty, in any court of
competent jurisdiction, seeking:  (1) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts;
(2) the appointment of a trustee, receiver, custodian, liquidator or the like of
such Person or of all or any substantial part of its property; or

 

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(3) similar relief in respect of such Person under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and, in each case, such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of 60 or more days;
provided, that the occurrence of the foregoing in relation to such Person shall
not be an Event of Default if, within 90 days after the Borrower knows of such
occurrence or the Administrative Agent notifies the Borrower of such occurrence,
the Borrower shall have replaced such Person in each of the Material Project
Documents to which it is a party with a counterparty acceptable to the Majority
Secured Parties;

 

(ii)                                  Dissolution, Termination or Winding-Up. 
Other than in respect of a proceeding relating to the insolvency of a Material
Project Counterparty specified in Section 10.01(s)(i), any Material Project
Counterparty shall be terminated or dissolved (as a matter of Government Rule or
otherwise), or proceedings shall be commenced by any Person seeking the
termination or dissolution of any Person referred to in clause (i) above and
such proceedings shall continue undismissed or unstayed for a period of 60 or
more days (or such shorter period of time which such Person has pursuant to
Government Rule to cause the dismissal of such proceeding or stay the
effectiveness of any such order, judgment or decree); provided, that the
occurrence of the foregoing in relation to such Person shall not be an Event of
Default if, within 90 days after the Borrower knows of such occurrence or the
Administrative Agent notifies the Borrower of such occurrence, the Borrower
shall have replaced such Person in each of the Material Project Documents to
which it is a party with a counterparty acceptable to the Majority Secured
Parties;

 

(iii)                               Cross-Defaults.  Any Indebtedness for
Borrowed Money for which any Material Project Counterparty is liable in a
principal amount in excess of $10 million, either individually or in the
aggregate, is not paid when due (after giving effect to any applicable grace
period) or is capable of being declared or has been declared to be due and
payable prior to the stated maturity thereof; provided, that the occurrence of
the foregoing in relation to such Person shall not be an Event of Default
(A) for so long as there is no cessation or impairment of the performance of the
Material Project Counterparty under each of the Material Project Documents to
which it is a party or (B) if, within 90 days after the Borrower knows of such
occurrence or the Administrative Agent notifies the Borrower of such occurrence,
the Borrower shall have replaced such Person in each of the Material Project
Documents to which it is a party with a counterparty acceptable to the Majority
Secured Parties;

 

(iv)                              Unsatisfied Judgments.  Any final judgment or
judgments for the payment of money in excess of $10 million either individually
or in the aggregate shall be rendered against any Material Project Counterparty
and shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period

 

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of 30 days after the date of entry thereof; provided, that the occurrence of the
foregoing in relation to such Person shall not be an Event of Default (A) for so
long as there is no cessation or impairment of the performance of the Material
Project Counterparty under each of the Material Project Documents to which it is
a party or (B) if, within 90 days after the Borrower knows of such occurrence or
the Administrative Agent notifies the Borrower of such occurrence, the Borrower
shall have replaced such Person in each of the Material Project Documents to
which it is a party with a counterparty acceptable to the Majority Secured
Parties;

 

(t)                                    Expropriatory Event.

 

(i)                                     There shall have occurred any act or
series of acts taken, approved or authorized by, or attributable to, a Bolivian
Governmental Authority that has the effect of expropriation, confiscation,
nationalization, requisition or sequestration of the Senior Lenders’ fundamental
rights as creditors in respect of the Financing Documents (including rights in
connection with the security interests granted (or purported to be granted) by
or pursuant to this Agreement and the other Security Documents); or

 

(ii)                                  any act or series of acts is taken,
authorized or ratified by Bolivia or any Governmental Authority of Bolivia that
has the effect of expropriation, confiscation, nationalization, requisition or
sequestration which (A) prevents or restricts the operation of the Borrower or
the Project, or (B) deprives the Borrower of its ownership or control of all or
any substantial part of the Project Property, the taking of which either under
clause (A) or (B) above prevents, or is reasonably likely to prevent, the
Borrower from constructing or operating the Project (or material parts thereof)
in all material respects in accordance with the Project Description, the
Construction Budget and the Operating Plan then in effect or paying Secured Debt
Obligations when due;

 

and, in either case (i) or (ii), such acts or series of acts continues uncured
for 180 days;

 

(u)                                 Selective Discrimination.  A law, order or
decree shall have been imposed upon the Borrower, any Senior Lender or on the
Project by a Bolivian Governmental Authority that is selective and
discriminatory in nature or effect and which (i) prevents the operation of all
or a substantial part of the Borrower or the Project or (ii) prevents any Senior
Lender from participating in the benefits of the Collateral provided by the
Borrower, Apex Metals or the Sponsor (including rights in connection with the
security interests granted (or purported to be granted) by or pursuant to this
Agreement and the other Security Documents), and in either case (i) or (ii),
such law, order or decree remains in effect for 180 days;

 

(v)                                 Foreign Exchange Restrictions.  (i) The
Borrower is deprived by applicable Bolivian law, directive or decision by any
Bolivian Governmental Authority of any of its rights (whether by breach,
cancellation or revocation of such benefits for any reason) to (A) produce and
export Project Production, (B) receive and maintain all

 

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proceeds of the export of Project Production outside Bolivia, (C) use such
proceeds to pay Secured Debt Obligations, or (D) make other payments required to
be made in foreign currencies outside Bolivia, import products and services
necessary for the construction and operation of the Project substantially as
contemplated by the Construction Budget and Operating Plan then in effect and
pay for such products and services with funds outside Bolivia, (ii) in the case
of any of clause (A), (B), (C) or (D), at any time following such deprivation of
rights, the operation of any law, directive or decision of any Bolivian
Governmental Authority prevents any Senior Lender or the Borrower from (X)
converting Dollars to Bolivianos or Bolivianos to Dollars, (Y) converting an
amount in Bolivianos realized by any Senior Lender following the exercise by
such Senior Lender of its rights and/or remedies under the Financing Documents
to Dollars or (Z) transferring outside Bolivia any amount constituting a payment
of any Secured Debt Obligation, (iii) in the case of any of clause (A), (B),
(C), or (D), at any time following such deprivation of rights any Bolivian
Governmental Authority or any entity authorized by Bolivian law to operate in
the foreign exchange markets fails to effect any conversion or transfer by the
Borrower or any Senior Lender, with respect to a payment of any Secured Debt
Obligations, of Dollars to Bolivianos or Bolivianos to Dollars and (iv) in the
case of (i), (ii) or (iii), such deprivation or such law, directive or decision
or failure to effect a transfer continues uncured or in effect for a period of
180 days;

 

(w)                               Political Violence Events.  Any violent act
motivated by political reasons or any act or acts of war (declared or
undeclared), civil commotion, rebellion, riot, sabotage, strikes or terrorism in
Bolivia shall have occurred (i) which has a material adverse effect on (A) the
security interests created or purported to be created under the Security
Documents, taken as a whole, (B) the Borrower’s ability to construct or operate
the Project in all material respects in accordance with the Project Description,
the Construction Budget and the Operating Plan or (C) the Borrower’s ability to
pay the Secured Debt Obligations when due, and (ii) such act or acts results in
the material cessation of operations of the Project for a period of 180 days;

 

(x)                                   Mining Concessions and Government
Approvals.  Any Mining Concession or Government Approval is abrogated in any
material respect, cancelled, terminated, abandoned, repudiated or declared void,
invalid or unenforceable (except to the extent such Mining Concession or
Government Approval is no longer necessary due to permitted revisions made to
the Construction Budget or the Operating Plan in accordance with Section 8.14)
and such action is (i) not remedied within 30 days after the Borrower has
written notice thereof or (ii) held to be final and non-appealable or continues
unstayed for a period of 60 days;

 

(y)                                 Embargo.  A law, order, decree or regulation
has been imposed by any Governmental Authority within the country of the
principal place of business of any Senior Lender, any Governmental Authority
within the country of the principal place of business of any of Apex Metals,
Apex Luxembourg or Apex Sweden, any supranational body (including but not
limited to the United Nations and the European Union) or any Chilean
Governmental Authority that (i) prohibits any Senior Lender from receiving any
payment on any Secured Obligation, (ii) prevents the Borrower from exporting
Project

 

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Production, or (iii) prevents the import of Project Production into the country
of any purchaser and in any such event, the law, order, decree or regulation
continues in effect for 180 days.

 

(z)                                   Restriction of Export Rights.  The
Borrower’s right to export Project Production is abrogated in any material
respect, cancelled, terminated, repudiated or declared void, invalid or
unenforceable by any Bolivian Governmental Authority and such action is (i) not
remedied within 30 days after the Borrower has written notice thereof, or
(ii) held to be final and non-appealable or continues unstayed for a period of
60 days.

 

(aa)                            Forced Divestiture.  A law, order, decree,
regulation, directive or restriction by any Governmental Authority of the
principal place of business of the Sponsor, any Senior Lender or any of Apex
Metals, Apex Luxembourg or Apex Sweden that (i) requires any of Apex Metals,
Apex Luxembourg or Apex Sweden to divest itself of all or part of its equity
interest in the Borrower or (ii) prevents the Sponsor or any of Apex Metals,
Apex Luxembourg or Apex Sweden from participating in all or any part of the
benefit of its equity interests in the Project, and in each such case such law,
order, decree, regulation, directive or restriction remains in effect for a
period of 180 days.

 

(bb)                          Chilean Political Events.

 

(i)                                     The Borrower or Apex Metals is deprived
by applicable Chilean Government Rules or final and non-appealable actions by
Chilean Governmental Authorities of any of its rights (whether by breach,
cancellation or revocation of such benefits for any reason) to (A) export
Project Production and (B) import products and services necessary for the
construction and operation of the Project substantially as contemplated by the
Construction Budget and the Operating Plan then in effect, and in the case of
any of clause (A) or (B) such deprivation of rights continues uncured for a
period of 180 days;

 

(ii)                                  Any act or acts of war (declared or
undeclared), civil war, revolution, insurrection, civil strife or terrorism in
Chile shall have occurred (i) which has a material adverse effect on (A) the
Borrower’s ability to construct or operate the Project in all material respects
in accordance with the Project Description, the Construction Budget and the
Operating Plan then in effect, (B) the Borrower’s or Apex Metals’ ability to
export Project Production from Bolivia or Chile or (C) the Borrower’s or Apex
Metals’ ability to import products and services necessary for the construction
and operation of the Project substantially as contemplated by the Construction
Budget and Operating Plan then in effect, and such act or acts results in the
material cessation of operations of the Project for a period of 180 days; or

 

(iii)                               Any act or series of acts is taken,
authorized or ratified by Chile or any Governmental Authority of Chile that has
the effect of confiscation, expropriation or nationalization of the Railway or
the Port which has a material adverse effect on (A) the Borrower’s ability to
construct or operate the Project in

 

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all material respects in accordance with the Project Description, the
Construction Budget and the Operating Plan then in effect, (B) the Borrower’s or
Apex Metals’ ability to export Project Production from Bolivia or Chile or
(C) the Borrower’s or Apex Metals’ ability to import products and services
necessary for the construction and operation of the Project substantially as
contemplated by the Project Description, the Construction Budget and the
Operating Plan then in effect, and such act or acts results in the material
cessation of operations of the Project for a period of 180 days;

 

(cc)                            Default Under or Termination of Hedge
Agreements.  (i) Any “Event of Default” or “Early Termination Event” howsoever
described in any Mandatory Metals Hedge Agreement with respect to any Mandatory
Metals Hedge Transaction shall have occurred and be continuing or (ii) any
Mandatory Metals Hedge Transaction shall be terminated (except as permitted
pursuant to Section 5.05 of the Cross-Guarantee and Security Agreement) or
(iii) any Mandatory Metals Hedge Transaction shall be declared in a final
non-appealable judgment to be unenforceable against any Hedge Bank;

 

(dd)                          Event of Default Under Individual Senior Loan
Agreement.  An event of default under, and as defined in, an individual Senior
Loan Agreement which is not also an Event of Default under this Agreement (a
“Senior Lender Group Event of Default”), has occurred and is continuing and
(i) all applicable grace periods thereunder shall have expired, (ii) the Senior
Lender Group shall have delivered a notice to the Borrower declaring a Senior
Lender Group Event of Default under the applicable Senior Loan Agreement and
(iii) the requirements of Section 2.07(b) elevating this event to an Event of
Default have been satisfied;

 

(ee)                            Change in Control.  Subject to the provisions of
the Transfer Restrictions Agreement:

 

(i)                                     (A) Prior to Completion, the Sponsor
shall cease to own directly 100% of the issued and outstanding Apex Luxembourg
Shares, (B) at any time after Completion, the Sponsor shall cease to own
directly at least 51% of the issued and outstanding Apex Luxembourg Shares or
(C) at any time, the Sponsor shall cease to Control the Borrower or Apex Metals
directly or indirectly;

 

(ii)                                  (A) Apex Luxembourg shall cease to own
directly 100% of the issued and outstanding Apex Sweden Shares and at least one
Apex Metals Quota in the amount of 1,000 Swiss Francs or (B) Apex Luxembourg
shall cease to Control Apex Sweden or Apex Metals directly or indirectly at any
time;

 

(iii)                               (A) Apex Sweden shall cease to own directly
100% of the issued and outstanding Borrower Shares and at least 99.79% of the
issued and outstanding Apex Metals Quotas or (B) Apex Sweden shall cease to
Control the Borrower directly or indirectly at any time;

 

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(ff)                                Force Majeure.  An Event of Force Majeure
(that is not an event of the type described in (t) through (bb) above) occurs
which results in the material cessation of operations of the Project for a
period of 60 consecutive days or 120 days in the aggregate;

 

(gg)                          Material Adverse Effect.  Any event, condition or
occurrence occurs which has a Material Adverse Effect;

 

(hh)                          Minimum Financial Ratios.

 

(i)                                     At any time after Completion, the HDSCR
as determined for the six-month period ending on any Principal Repayment Date is
less than 1.1:1.0, or

 

(ii)                                  At any time after Completion, the LLCR
calculated from any Principal Repayment Date to the Final Maturity Date is less
than 1.3:1.0, or

 

(iii)                               At any time after Completion, the FLDSCR as
determined for the six-month period commencing on a Principal Repayment Date is
less than 1.15:1.0; or

 

(iv)                              At any time after Completion, the Reserve Tail
calculated from any Principal Repayment Date is less than 40%; and

 

(ii)                                  Reserve Accounts.  At any time after
Completion, (i) a Debt Service Reserve Deficiency shall remain unsatisfied for
more than 90 consecutive days or (ii) an Operating Reserve Deficiency shall
remain unsatisfied for more than 60 consecutive days.

 

10.02  Remedies.  Upon the occurrence and during the continuation of an Event of
Default:

 

(a)                                  Immediately upon the occurrence and during
the continuance of an Event of Default, the Administrative Agent (acting at the
direction of the Majority Secured Parties) shall have the right to (i) give to
the Collateral Agent an Account Enforcement Notice and the Collateral Agent
shall take full control of the New York Accounts as provided in Section 4.05 and
(ii) direct the Collateral Agent to draw on any Debt Service Reserve Letter of
Credit, Contingent Support Letter of Credit and/or Equity Support Letter of
Credit and deposit the proceeds thereof in the applicable New York Account for
application in accordance with an Enforcement Direction.

 

(b)                                 Immediately upon the occurrence and during
the continuance of an Event of Default and the delivery by the Administrative
Agent (acting at the direction of the Majority Lenders) of a notice to the
Borrower electing to apply the Default Margin (provided that no such notice
shall be required where the Administrative Agent is prohibited or otherwise
restricted from giving such notice to the Borrower under applicable Government
Rules), the Default Margin shall apply in calculation of interest in respect of
the Senior Loan Obligations.

 

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(c)                                  Immediately upon the occurrence and during
the continuance of an Event of Default, the Administrative Agent shall, if
instructed by the Majority Lenders, by notice to the Borrower terminate the
Senior Loan Commitments and/or declare the principal amounts then outstanding
of, and accrued interest on, the Senior Loans and all other amounts payable by
the Borrower hereunder constituting Senior Loan Obligations to be forthwith due
and payable (provided that in the case of the Event of Default referred to in
Section 10.01(d) (other than clause (i)(A) thereof), (i) the Senior Loan
Commitments shall automatically be terminated and such amounts shall
automatically become immediately due and payable without any such declaration
and (ii) an Account Enforcement Notice shall be deemed to have been delivered),
whereupon such amounts shall be immediately due and payable and such notice
deemed given, without presentment, demand, notice, protest or other formalities
of any kind, all of which are expressly waived by the Borrower.

 

(d)                                 Immediately upon the occurrence and during
the continuance of an Event of Default, the Majority Secured Parties shall have
the right to require the Borrower to seek to appoint the Sponsor to act as
operator of the Project pursuant to an agreement with the Borrower in compliance
with Section 8.18 for the purpose of providing assistance to the Borrower
necessary to cure any continuing Event of Default.  The Sponsor shall have no
obligation to enter into such agreement, provided that upon the Sponsor’s
failure to enter into such agreement or failure to perform its obligations
thereunder, the Majority Secured Parties shall have the right to require the
Borrower to seek to appoint a qualified third party acceptable to the Majority
Secured Parties as operator pursuant to an agreement on terms and conditions
acceptable to such Majority Secured Parties.

 

(e)                                  Immediately upon the occurrence and during
the continuance of an Event of Default, the Majority Secured Parties shall have
the right to take Enforcement Action and to direct the Administrative Agent to
give the Collateral Agent a notice, identified as an enforcement direction,
together with a certification that such notice is given in accordance with this
Agreement (an “Enforcement Direction”), directing the Collateral Agent to take
the Enforcement Action specified in such notice.

 

10.03  Enforcement Action; Limitation on Suits; Subrogation.

 

(a)                                  Following receipt of an Enforcement
Direction, subject to the receipt by the Collateral Agent of indemnity or other
assurances reasonably satisfactory to it, the Secured Parties giving such
Enforcement Direction shall have the right (i) to require the Collateral Agent
to enforce this Agreement and the Security Documents, either by judicial
proceedings for the enforcement of the payment of Secured Debt Obligations and
the enforcement of the security interests created under the Financing Documents,
the sale of the Collateral or any part thereof or otherwise or by the exercise
of the power of entry and/or sale conferred pursuant to the Financing Documents
and (ii) to direct the time, method and place of conducting any proceeding for
any remedy available to the Collateral Agent, or exercising any trust or power
conferred upon the Collateral Agent hereunder or under any Security Document,
provided that (A) such direction shall not be

 

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in conflict with applicable Government Rules and (B) the Collateral Agent may
take any other action reasonably incidental to carrying out any direction of
such Secured Parties.

 

(b)                                 No Secured Party (other than pursuant to an
Enforcement Action properly taken in accordance with this Agreement) shall have
the right in respect of the Secured Debt Obligations owed to it or otherwise
under any Financing Document to commence any proceeding, judicial or otherwise,
against the Borrower or any Affiliated Obligor under any bankruptcy law or other
reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency, liquidation or similar law or for the appointment of a
receiver, trustee or other officer or representative of a court or of creditors.

 

(c)                                  No Secured Party (other than pursuant to an
Enforcement Action properly taken in accordance with this Agreement) shall have
the right to commence any proceeding, judicial or otherwise, to enforce any
judgment obtained by it in respect of the Secured Debt Obligations or otherwise
under any Financing Document, against the Borrower or any Affiliated Obligor
thereof or their assets or properties or to enforce any provision of this
Agreement, any other Financing Document or the security interests created under
or pursuant to any such Financing Document, it being understood and intended
that no Secured Party shall have any rights in any manner whatsoever to affect,
disturb or prejudice the security interests created hereunder or pursuant hereto
or under the Security Documents or pursuant thereto or the rights of any of the
other Secured Parties, or to obtain or seek to obtain priority or preference
over any other Secured Party or to enforce any rights under this Agreement or
any other Financing Document except in the manner herein provided.

 

(d)                                 Without limitation of the foregoing
provisions of this Section 10.03, the Secured Parties confirm to each other
their intention to remain in frequent consultation with each other at all times
during which Enforcement Actions are being or can be taken hereunder, and to
endeavor to achieve a broad consensus on the manner, timing, method and place of
exercising Secured Parties’ remedies with a view to obtaining repayment of the
Secured Debt Obligations.

 

(e)                                  Nothing in this Article X shall prevent the
Administrative Agent or any other Secured Party from directing the Collateral
Agent to take action with respect to the Collateral reasonably designed to
preserve and protect their rights in, or to prevent any diminution in the value,
utility or condition of, such Collateral.

 

(f)                                    The Borrower, the Collateral Agent and
the Secured Parties acknowledge and agree that, in the event that a PRI Insurer
shall have paid a Secured Debt Obligation to a Secured Party (other than an
Agent) pursuant to a PRI Policy, such PRI Insurer shall be subrogated to the
rights of such Secured Party in respect thereof under this Agreement and each
other Financing Document and shall be a Secured Party for all purposes hereunder
and thereunder to the extent of such payment, and the obligations of the
Borrower to such PRI Insurer as a subrogee shall constitute unpaid Secured Debt
Obligations and an Event of Default under clause (a) of Section 10.01 hereof
shall be continuing until such Secured Debt Obligations shall be paid in full.

 

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10.04  Application of Enforcement Proceeds.  Proceeds from Enforcement Actions
specified to be applied in accordance with this Section 10.04 shall be applied
promptly by the Collateral Agent, at the direction of the Majority Secured
Parties (provided that the Majority Secured Parties, in issuing such a
direction, cannot amend the priority of payments set out in this Section 10.04),
in the following order of priority:

 

(a)                                  FIRST, to the pro rata payment of all fees
and moneys owed to the Collateral Agent and the other Agents, each in its
individual or trust capacity (but not as Senior Lenders or Hedge Banks),
relating to services rendered in their respective capacities as agents (but not
as Senior Lenders or Hedge Banks) in each case including monies owed to them
pursuant to indemnities provided in connection with such services;

 

(b)                                 SECOND, to the payment of the whole amount
outstanding of Secured Debt Obligations (whether accelerated or otherwise); and
in the event such moneys shall not be sufficient to pay in full the whole amount
so due and unpaid, then to make payments on a pro rata basis to each Person
entitled to receive such payments based on the amounts of Secured Debt
Obligations owed to such Person, without preference or priority, provided that
in such case any Person may apply funds received by it to Senior Loan
Obligations held by it in any order it chooses;

 

(c)                                  THIRD, after payment in full of the
foregoing amounts, to the payment of all PRI Insurer Obligations; and

 

(d)                                 FOURTH, after payment in full of the
foregoing amounts, to the payment of the remainder, if any, to the holder of the
equity of redemption, if any, of the Collateral subject to enforcement, or its
respective successor, or as a court of competent jurisdiction may otherwise
direct.

 

10.05  Conduct of Certain Enforcement Action.  Upon taking Enforcement Action,
the Collateral Agent shall have the right to, and shall, but only if and to the
extent so instructed by the Administrative Agent, at the direction of the
Secured Parties directing such Enforcement Action (upon receipt of indemnity
satisfactory to it), subject to applicable Government Rules:

 

(a)                                  sell or cause to be sold, at public or
private sale, subject to any mandatory requirement of applicable Government
Rules and the requirements of Section 3.18 to the extent applicable thereto, the
Collateral either as an entirety, or, if permitted by applicable Government
Rules and so directed by such Secured Parties, in parcels at such place and at
such time and upon such terms as the Secured Parties taking the Enforcement
Action may specify or may be required by applicable Government Rules;

 

(b)                                 proceed to protect and enforce its right and
the rights of Secured Parties under this Agreement and the Security Documents by
sale pursuant to judicial proceedings or by a proceeding in equity or at law or
otherwise, whether for the enforcement of the security interests created under
or pursuant to this Agreement or the Security Documents or for the enforcement
of any other legal, equitable or other remedy; and/or

 

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(c)                                  take any other action as the holder of a
security interest may be entitled to take under the laws in effect in any
jurisdiction where any rights or remedies hereunder may be asserted.

 

10.06  Incidents of Sale.  Upon any sale of any of the Collateral by the
Collateral Agent on behalf of the Secured Parties, whether made under the power
of sale hereby given or pursuant to judicial proceedings, to the extent
permitted by applicable Government Rules:

 

(a)                                  Secured Parties may bid for and purchase
the property offered for sale, and upon compliance with the terms of sale may
hold and dispose of such property;

 

(b)                                 The Collateral Agent may make and deliver,
or cause to be made and delivered, to the purchaser or purchasers a good and
sufficient deed, bill of sale and instrument of assignment and transfer of the
property sold; and

 

(c)                                  The Collateral Agent in its own name or
pursuant to the power of attorney granted in or pursuant to Section 13.03 by the
Borrower may make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold, and for that purpose the
Collateral Agent may execute all necessary deeds, bills of sale and instruments
of assignment and transfer, and may substitute one or more Persons with like
power (and the Borrower hereby ratifies and confirms all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof; but if so
required by the Collateral Agent or by any purchaser, the Borrower shall ratify
and confirm any such sale or transfer by executing and delivering to the
Collateral Agent or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be designated
in any such request).

 

Upon a sale of substantially all of the Collateral owned by the Borrower,
whether made under the power of sale hereby given or pursuant to judicial
proceedings, the Borrower shall permit, to the extent permitted by applicable
law, the purchaser thereof and its successors and its and their assigns to take
and use the name of the Borrower and to carry on business under such name or any
variant or variants thereof and to use and employ any and all other trade names
and trademarks of the Borrower.

 

10.07  Collateral Agent May File Proofs of Claim.  During the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other similar judicial proceeding relative to any
Affiliated Obligor or the Collateral, the Collateral Agent (irrespective of
whether the principal of the Secured Debt Obligations shall then be due and
payable), shall be entitled and empowered, by intervention in such proceeding or
otherwise, (a) to file and prove a claim for the whole amount of the Secured
Debt Obligations owing to the Secured Parties and unpaid and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Collateral Agent (including any claim for the reasonable compensation,
disbursements and advances of the Collateral Agent, in their respective
individual or trust capacities, their agents and counsel) and of Secured Parties
allowed in such judicial proceeding and (b) to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such

 

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judicial proceeding is hereby authorized by each Secured Party to make such
payments to the Collateral Agent. Nothing contained herein shall be deemed to
authorize the Collateral Agent to authorize or consent to or accept or adopt on
behalf of any Secured Party any plan of reorganization, arrangement, adjustment
or composition affecting the Secured Debt Obligations or the rights of any
Secured Party or to authorize the Collateral Agent to vote in respect of the
claim of any Secured Party in any such proceeding.

 

10.08  Collateral Agent May Enforce Claims.  All rights of action and claims
under this Agreement may be prosecuted and enforced by the Collateral Agent in
its own name for the benefit of the Secured Parties; provided, however, that the
Collateral Agent is also hereby appointed as agent for the Secured Parties for
this and the other purposes of this Agreement, and the Collateral Agent may, if
necessary under applicable law, take such action solely as agent for the Secured
Parties and/or delegate the performance of such action to a third Person.  Any
recovery of judgment by the Collateral Agent shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Collateral Agent, its agents and counsel, be for the benefit of the Secured
Parties and applied as provided in Section 10.04.

 

10.09  References to Collateral Agent.  All references in Article IV and this
Article X to the Collateral Agent shall, for the avoidance of doubt, be deemed
to be references to any Person granted a power of attorney (including any
attorney-in-fact appointed in connection with judicial or other proceedings in
Bolivia) by the Collateral Agent for the purpose of enforcing the rights and
remedies granted to the Secured Parties under the Security Documents.

 

ARTICLE XI

CONDITIONS PRECEDENT

 

11.01  Conditions Precedent to Closing Date.  The “Closing Date” shall mean the
date upon which all of the following conditions precedent have been satisfied in
form and substance acceptable to, or shall have been waived by, and all of the
following documents have been received by each Senior Lender and each Agent:

 

(a)                                  Authorizations, Etc.  The Administrative
Agent and the Collateral Agent shall have received certified copies of (i) the
Organizational Documents of the Affiliated Obligors and (ii) Authorizations with
respect to each Affiliated Obligor given to authorize the execution, delivery
and performance by it of each Financing Document, Material Project Document and
Apex Metals Document to which it is a party, and the performance by it of its
obligations hereunder and thereunder, as applicable.

 

(b)                                 Incumbency and Signatures.  The
Administrative Agent and the Collateral Agent shall have received certificates
of each Affiliated Obligor, in respect of the authority and incumbency, and
containing a specimen signature, of each Person who has signed or will sign each
of this Agreement, the other Financing Documents, the Material Project Documents
and the Apex Metals Documents to which it is a party, on its behalf,

 

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or who will, until replaced by another Person or Persons duly authorized for
that purpose, otherwise act as representative for the purposes of signing
documents in connection with such documents and the transactions contemplated
hereby and thereby.

 

(c)                                  Execution and Delivery.  Each of this
Agreement, each other Financing Document (other than the Bolivian Security
Documents, the Chilean Security Documents and the Swiss Pledge Agreement), each
other Apex Metals Document and each of the Project Documents (each of which, in
the case of the Financing Documents, the other Apex Metals Documents and the
Material Project Documents, shall be in form and substance satisfactory to the
Senior Lenders) shall have been executed and delivered by each of the parties
named as proposed signatories hereto and thereto, to the Senior Lenders.

 

(d)                                 Senior Loan Agreements.  Other items that
are being delivered concurrently with the execution of, and as set forth in, the
individual Senior Loan Agreements shall have been delivered under each
applicable Senior Loan Agreement in accordance with the terms thereof.

 

(e)                                  Project Consents and Approvals.  All
Government Approvals, Mining Concessions, Other Property Rights, Intellectual
Property Rights and Authorizations (other than those specified in clause
(a)(ii) above) required for the construction, operation or financing of the
Project, as identified in Part A of Appendix E-2, shall have been obtained (or
are expected to be obtained prior to Initial Disbursement) and be in full force
and effect and been registered with each authority of, or in each public
registry in, Bolivia with or in which such registration is necessary, other than
those expected to be obtained in the ordinary course by the time they are
necessary which are identified in Part B of Appendix E-2. The Borrower shall
deliver to the Collateral Agent, the Administrative Agent and each Senior Lender
copies of the documents creating and evidencing all such Mining Concessions,
Other Property Rights, Intellectual Property Rights and Authorizations certified
by an Authorized Officer of the Borrower.

 

(f)                                    Independent Engineer Report.  The
Administrative Agent shall have received a report on the Project, the
Development Plan, the Initial Construction Budget and the Initial Operating Plan
by the Independent Engineer, satisfactory to the Senior Lenders in all material
respects as to the (i) environmental conditions at and near the Project site and
the environmental and social impact of the contemplated operations of the
Project (including, without limitation, compliance with the Environmental
Guidelines, the EAP and the DIA, as described in such report), (ii) reliability
of the mineable reserve estimate, mining plans and metallurgy as well as the
integrity and feasibility of all engineering, design, capacity, construction and
operating specifications and arrangements, capital and operating cost estimates
and drawdown schedule, (iii) the progress of the construction and all Operating
Costs incurred prior to the end of the second calendar month immediately
preceding the Closing Date, (iv) feasibility and compliance by the Project with
the Development Plan, the Initial Construction Budget and the Initial Operating
Plan, (vi) the requirements of the Completion Test and (vii) such other matters
with respect to the Project as any Senior Lender shall reasonably request.

 

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(g)                                 Financial Model.  The Administrative Agent
and the Technical Agent and each Senior Lender shall have received the
Development Plan, the Initial Financial Model, the Initial Operating Plan and
the Initial Construction Budget, accepted in all respects by the Senior Lenders,
accompanied by a review of the Initial Financial Model dated September 30, 2005
by the Financial Model Auditor, containing, without limitation, (i) evidence
that the minimum FLDSCR for any semi-annual period through the Final Maturity
Date is not less than 1.5:1.0, (ii) evidence that the LLCR is not less than
1.7:1.0, (iii) evidence that the Reserve Tail is never less than 40% prior to
the Final Maturity Date, and (iv) estimates of future production and costs
prepared by the Borrower as of the Closing Date with only such qualifications
and limitations as are acceptable to the Senior Lenders in their sole
discretion.

 

(h)                                 Financial Statements.  The Borrower shall
have delivered to the Administrative Agent copies of the most recent unaudited
quarterly financial statements of the Borrower, the Sponsor, Apex Metals, Apex
Luxembourg and Apex Sweden and the most recent annual audited financial
statements of the Sponsor and the Borrower (prepared in accordance with, in the
case of the Borrower, the requirements set forth in Section 6.02 of this
Agreement, in the case of the Sponsor, the requirements set forth in
Section 4.02 of the Sponsor Pledge Agreement, in the case of Apex Metals, the
requirements set forth in Section 5.10 of the Cross-Guarantee and Security
Agreement, in the case of Apex Luxembourg, the requirements set forth in
Section 3.05(i) of the Transfer Restrictions Agreement and in the case of Apex
Sweden, the requirements set forth in Section 3.06(i) of the Transfer
Restrictions Agreement), accompanied by an officer’s certificate of each such
party, dated as of the Closing Date, certifying that such financial statements
are true and complete and fairly present the financial conditions of such Person
for the period covered thereby, and that no material adverse change in the
financial conditions, operations or business of such Person has occurred since
the date of such financial statements.

 

(i)                                     Environmental Reports.  The Borrower
shall have delivered to the Administrative Agent (for delivery to each Senior
Lender) and the PRI Insurers, the EAP and the On Common Ground Report (including
the SDCR Report), each prepared to the reasonable satisfaction of the Senior
Lenders.

 

(j)                                     Acceptance of Appointment of Agent for
Service.  The Collateral Agent and the Administrative Agent shall have received
acceptances from agents for service of process appointed in New York for each
Affiliated Obligor under each of Sections 15.12(c) hereto, 10.09 of the
Commercial Bank Senior Loan Agreement, 10.10(b) of the CAF Loan Agreement,
7.10(d) of the Completion Agreement, 5.08(c) of the Transfer Restrictions
Agreement, 8.07(c) of the Cross-Guarantee and Security Agreement, 7.07(c) of the
Sponsor Pledge Agreement, 4.08(c) of the Hedge Guaranty, 5.07(c) of the
Concentrate Sales Guarantee and 5.07(c) of the Project Document Guarantee.

 

(k)                                  Intercompany Agreements; Consents to
Assignment.  The Borrower shall have delivered to the Collateral Agent, the
Administrative Agent and each Senior Lender (i) copies of all Intercompany
Agreements; and (ii) a Counterparty Consent from each Person (other than the
Borrower) party to each Intercompany Agreement.

 

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(l)                                     Apex Metals Conditions.  All Government
Approvals and Authorizations (other than those specified in clause
(a)(ii) above) required for the execution, delivery and performance by Apex
Metals of its obligations under the Apex Metals Documents shall have been
obtained (or are expected to be obtained prior to Initial Disbursement) and be
in full force and effect. 

 

(m)                               Metals Report.  The Administrative Agent shall
have received a report of the Metals Consultant showing a long term outlook for
both zinc and lead including a supply and demand analysis (both historical and
forecast), a review of the relevant concentrate markets and zinc and lead price
forecasts, such report to be in form and substance satisfactory to the Senior
Lenders.

 

                                               
(n)                                 Power Reports.   The Administrative Agent
shall have received reports of the Power Consultant satisfactory to the Senior
Lenders demonstrating that (i) the transmission system from Punutuma to San
Cristóbal, as finally developed, will provide a suitable means of supplying
power to the San Cristóbal complex; (ii) the national grid has historically
displayed reliable power supply and there are no significant factors anticipated
in future years to suggest that this will change; and (iii) the power prices
assumptions used in the Initial Financial Model are prudent and conservative.

 

(o)                                 Initial Cost to Complete.  The Borrower
shall have delivered to the Administrative Agent an initial Cost to Complete
Certificate approved by the Independent Engineer.

 

(p)           PRI Premia.  The Borrower shall have paid all premia and other
fees of the Loan PRI Insurers and the Hedge PRI Insurers payable under the Loan
PRI Policy or the Hedge PRI Policy, as applicable, on or before the Closing
Date.

 

(q)                                 Payment of Fees.  The Borrower shall have
paid all reasonable and documented fees and expenses (including out-of-pocket
expenses) in respect of the transactions contemplated by this Agreement then due
and payable to the Collateral Agent, the Administrative Agent, the Technical
Agent, the Mandated Lead Arrangers and any Senior Lender.  

 

(r)                                    Fees of Independent Engineer, Social
Consultant, Insurance Advisor and Legal Counsel.  The Borrower shall have paid
the reasonable and documented fees and expenses of each of the Independent
Engineer, the Social Consultant and the Insurance Advisor acting on behalf of
the Senior Lenders and New York and Bolivian counsel to the Mandated Lead
Arrangers, to the extent statements for any therefor shall have been delivered
to the Borrower not later than one (1) Business Day prior to the Closing Date.

 

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11.02  Conditions Precedent to Initial Disbursement of Senior Loans.  The
obligation of each Senior Lender to make its initial disbursement of Senior
Loans shall be subject to the occurrence of the Closing Date and the
satisfaction, or waiver by it, of the following conditions precedent:

 

(a)                                  Sponsor Support.

 

(i)                                     The sum of (A) the amount of Sponsor
Funding deposited in the Equity Account plus (B) the aggregate undrawn face
amount of all Equity Support Letters of Credit shall equal the Equity Amount.

 

(ii)                                  The sum of (A) the amount of Sponsor
Funding deposited in the Contingent Support Account plus (B) the aggregate
undrawn face amount of all Contingent Support Letters of Credit shall equal
$70,000,000.  

 

(iii)                               The Senior Lenders shall have approved the
Sponsor Budget.

 

(iv)                              The Administrative Agent shall have received
evidence satisfactory to the Senior Lenders of the funding of (A) the Escrow
Account in an amount not less than $10,893,780 and (B) the Additional Escrow
Account in an amount not less than $9,855,180.

 

(v)                                 The Administrative Agent shall have received
evidence satisfactory to the Senior Lenders that the Sponsor has Dedicated Cash
of at least $51,069,000.

 

(b)                                 Hedging.  Apex Metals and the Hedge Banks
shall have executed all Mandatory Metals Hedging Transactions having the terms
specified in Appendix F in form and substance acceptable to the Senior Lenders.

 

(c)                                  Security Documents.  Each of the Bolivian
Security Documents, the Swiss Pledge Agreement and the Chilean Security
Documents shall have been executed and delivered by each of the parties
thereto.  To the extent provided in Article III, all Security Documents shall
have been recorded and any other actions necessary to create and perfect the
Liens required to be created and perfected under such Security Documents shall
have been taken.  Each of the Bolivian Security Documents and the Chilean
Security Documents shall have been duly executed and delivered and, to the
extent specified in Article III, notarized and registered in each public
registry in Bolivia or Chile, as applicable, in which such registration is
necessary, and notified to any Person, where such notification is necessary to
perfect the security interest granted by such documents, and notarized and
consularized copies thereof, together with evidence of filing, registration,
giving of notices or receipt of consents, as required for such perfection, shall
have been delivered to the Collateral Agent, the Administrative Agent and each
Senior Lender.  The Borrower and each Secured Party shall have executed and
delivered to the Collateral Agent, and registered in every public registry in
Bolivia in which such registration is necessary, a notarized deed constituting
the powers of attorney specified in Section 3.14(d).  The Administrative Agent
shall have received a consent from the escrow agent under the Transmission Line
Escrow Agreement to the assignment

 

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by way of security of ASC Bolivia’s rights thereunder in form and substance
satisfactory to the Administrative Agent.

 

(d)                                 Certificates.

 

(i)                                     The Borrower shall have delivered to the
Administrative Agent and the Collateral Agent an Officer’s Certificate dated the
Initial Disbursement Date to the effect that the conditions set forth in
Section 11.01 and this Section 11.02 have been satisfied.

 

(ii)                                  Each Affiliated Obligor shall have
delivered to the Administrative Agent and the Collateral Agent an Officer’s
Certificate dated the Initial Disbursement Date to the effect that the
representations and warranties made by it in each Transaction Document to which
it is a party are true and correct in all material respects as if made on and as
of the date of such certificate (except for such representations which are
expressly stated to be made as of an earlier date in which case such
representations shall be true and correct in all material respects as of such
earlier date).

 

(iii)                               The Administrative Agent and the Collateral
Agent shall have received an Officer’s Certificate of the Borrower approved by
the Independent Engineer setting out the Contributed Equity Amount which shall
be at least $150,000,000.

 

(e)                                  Project Documents; Consents to Assignment. 
The Borrower shall have delivered to the Collateral Agent, the Administrative
Agent and each Senior Lender:

 

(i)            copies of all Material Project Documents then in effect (other
than those previously delivered pursuant to Section 11.01(k));

 

(ii)                                  Counterparty Consents from each Material
Project Counterparty with respect to each Material Project Document that is in
existence on or prior to the Initial Disbursement Date (other than those
provided pursuant to Section 11.01(k));

 

(iii)                               AM Counterparty Consents from each party
(other than Apex Metals and a Secured Party) to an Apex Metals Document; and

 

(iv)                              with respect to the Rail Transporter and each
Transmission Line Contractor, an opinion of counsel to such Material Project
Counterparty substantially in the form of Appendix R-11 hereto.

 

(f)                                    Accounts.

 

(i)                                     The New York Accounts and the Bolivian
Accounts shall have been established, and agreements setting forth the
arrangements for the operation and maintenance of the New York Accounts and the
Bolivian Accounts shall have

 

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been executed and delivered (and registered, if necessary), in form and
substance reasonably satisfactory to the Senior Lenders.

 

(ii)                                  The Collateral Agent shall have notified
the Borrower and each Senior Lender of the establishment of each New York
Account and each Bolivian Account. 

 

(g)                                 Insurance.

 

(i)                                     The insurance required to be in effect
pursuant to Article V shall be in full force and effect, and the Borrower shall
have delivered true and complete copies of binders and brokers’ letters of
undertaking substantially in the form of Appendix C-3 with respect to the
insurance required pursuant to Article V to the Collateral Agent, which letters
shall be dated not earlier than 30 days prior to the Closing Date and shall
certify that (A) the insurance is in full force and effect, (B) all of the
premiums have been paid and (C) all necessary endorsements have been made.  The
Borrower shall certify in writing that such policies comply with the provisions
of this Agreement.

 

(ii)                                  The Senior Lenders shall have received the
Insurance Advisor Report confirming that the insurance obtained by the Borrower
complies with the requirements set forth in Article V of this Agreement.

 

(iii)                               The Borrower shall have delivered true and
complete copies of each “Deed of Assignment” of reinsurance (substantially in
the form of Appendix C-4 hereto) executed by each of its insurers in Bolivia
(other than insurers under the Other Local Policies) and their reinsurers in
accordance with Section 5.03.

 

(h)                                 Legal Opinions.  The Administrative Agent
and the Collateral Agent shall have received the following legal opinions dated
the Initial Disbursement Date and addressed to the Administrative Agent, the
Collateral Agent, each Senior Lender and each Hedge Bank:

 

(i)                                     the opinion of Quintanilla & Soria
Abogados, special Bolivian counsel to the Borrower, in the form attached hereto
as Appendix R-1;

 

(ii)                                  the opinion of Walkers & Co., special
Cayman Islands counsel to the Sponsor, in the form attached hereto as
Appendix R-2;

 

(iii)                               the opinion of Akin, Gump, Strauss, Hauer &
Feld LLP, special New York counsel to the Affiliated Obligors, in the form
attached hereto as Appendix R-3;

 

(iv)                              the opinion of Davis, Graham & Stubbs LLP,
special Colorado counsel to the Affiliated Obligors, in the form attached hereto
as Appendix R-4;

 

(v)                                 the opinion of Wistrand Advokatbyra, special
Swedish counsel to Apex Sweden, in the form attached hereto as Appendix R-5;

 

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(vi)                              the opinion of SuterHowald, special Swiss
counsel to Apex Metals, in the form attached hereto as Appendix R-6;

 

(vii)                           the opinion of Bonn Schmitt Steichen, special
Luxembourg counsel to Apex Luxembourg, in the form attached hereto as
Appendix R-7;

 

(viii)                        the opinion of C. R. & F. Rojas, Bolivian counsel
to the Senior Lenders, in the form attached hereto as Appendix R-8;

 

(ix)                                the opinion of Milbank, Tweed, Hadley &
McCloy LLP, New York counsel to the Senior Lenders, in the form attached hereto
as Appendix R-9;

 

(x)                                   the opinion of Philippi, Yrarrazaval,
Pulido & Brunner Ltda., Chilean counsel to the Borrower and Apex Metals, in the
form attached hereto as Appendix R-10; and

 

(xi)                                the opinion of Akin, Gump, Strauss, Hauer &
Feld LLP, special English counsel to the Affiliated Obligors, in the form
attached hereto as Appendix R-12.

 

(i)                                     Taxes.  The Borrower shall have
delivered evidence that all filings, recordation, subscription and inscription
fees and all recording and other similar fees, and all recording, stamp and
other taxes and other expenses related to such filings, registrations and
recordings necessary for the consummation of the transactions contemplated by
this Agreement, the other Financing Documents and the Project Documents have
been paid in full (to the extent the obligations to make such payment then
exists) by or on behalf of the Borrower.                                

 

(j)                                     Financing Statements.  The Collateral
Agent shall have received acknowledgement copies of all financing statements
under the Uniform Commercial Code with respect to each Affiliated Obligor, in
each jurisdiction in which such financing statements are necessary or desirable
to perfect the Liens created by the Security Documents.

 

(k)                                  Payment of Fees.  The Borrower shall have
paid all reasonable and documented fees and expenses (including out-of-pocket
expenses) in respect of the transactions contemplated by this Agreement then due
and payable to the Collateral Agent, the Administrative Agent and the Technical
Agent.  

 

(r)                                    Fees of Independent Engineer, Social
Consultant, nsurance Advisor and Legal Counsel.  The Borrower shall have paid
the reasonable and documented fees and expenses of each of the Independent
Engineer, the Social Consultant and the Insurance Advisor acting on behalf of
Senior Lenders and New York and Bolivian counsel to the Mandated Lead Arrangers,
to the extent statements for any therefor shall have been delivered to the
Borrower not later than three (3) Business Days prior to the Initial
Disbursement Date.

 

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11.03  Common Conditions Precedent to Initial and Subsequent Disbursements of
Senior Loans.  The obligation of each Senior Lender to make the initial and any
subsequent disbursement of Senior Loans hereunder shall be subject to
satisfaction, or waiver by it, of the following conditions precedent:

 

(a)                                  Representations and Warranties.  Each
representation and warranty made by an Affiliated Obligor in this Agreement,
each other Financing Document and each Intercompany Agreement shall be true and
correct in all material respects as of each Disbursement Date as if made on and
as of that date (except for such representations which are expressly stated to
be made as of an earlier date in which case such representations shall be true
and correct in all material respects as of such earlier date).

 

(b)           Cost to Complete.  The Borrower shall have delivered to the
Administrative Agent a copy of the most recent Cost to Complete Certificate
approved pursuant to Section 6.01(b), provided that such Cost to Complete
Certificate shall have been so approved within sixty (60) days immediately
preceding the Requested Disbursement Date.

 

(c)                                  No Default.  No Default or Event of Default
shall have occurred and be continuing.

 

(d)                                 No Material Adverse Effect.  No event,
occurrence or condition has occurred that could reasonably be expected to result
in a Material Adverse Effect.

 

(e)                                  Independent Condition Precedent.  Each
Independent Condition Precedent shall have been satisfied or waived as provided
in the Senior Loan Agreement pursuant to which such Independent Condition
Precedent was established.                                           

 

11.04  Disbursements. 

 

(a)                                  Notice of Disbursement.  The Borrower shall
request Disbursements under the Senior Loan Agreements in compliance with this
Section 11.04 and the terms of such Senior Loan Agreements by delivering a
Notice of Disbursement with respect to such Disbursements, appropriately
completed and signed by an Authorized Officer of the Borrower, to the
Administrative Agent (with a copy to the Technical Agent), no later than five
(5) Business Days prior to the Requested Disbursement Date.  The Borrower shall
request Disbursements no more frequently than once per calendar month.

 

(b)                                 Required Information.  Each Notice of
Disbursement shall be in the form of Appendix D-1 appropriately completed and
shall contain the following:  

 

(i)                                     the amount of the requested Disbursement
under each Senior Loan Facility, which shall be not less than the minimum amount
and in the incremental amount (if any) required by the applicable Senior Loan
Agreement, except for Disbursements made on the final Disbursement Date under
each Senior Loan Facility (which shall have no minimum amount and incremental
amount requirements);

 

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(ii)                                  the total amount of Project Costs required
to be funded in connection with such Disbursement, which shall be Project Costs
expected to be due and payable in the next month (except in connection with the
initial disbursement of Senior Loans to the Borrower), broken down into Planned
Project Costs and Excess Project Costs;

 

(iii)                               the total amount of Base Equity
Contributions and Contingent Support Contributions required to be funded from
Equity Account and the Contingent Support Account to fund, in the case of Base
Equity Contributions, a portion of the Planned Project Costs and, in the case of
Contingent Support Contributions, all Excess Project Costs (all in compliance
with the provisions of Section 11.04(g));

 

(iv)                              the Requested Disbursement Date for such
Disbursements, which shall be a Business Day and shall be the same date for each
Disbursement requested under such Notice of Disbursement (the “Requested
Disbursement Date”);

 

(v)                                 a statement of the aggregate balance of all
Disbursements under each Senior Loan Facility to be outstanding on the relevant
Disbursement Date after giving effect to each such requested Disbursement;

 

(vi)                              if the requested Disbursement is the final
Disbursement under a Senior Loan Facility, a certification to such effect;

 

(vii)                           a certification that as of the Requested
Disbursement Date and immediately prior to giving effect to the Disbursement to
be made on such date, the total amount of Planned Project Costs as set forth on
the most recently accepted Cost to Complete Certificate does not exceed the sum
of available amounts on deposit in the Equity Account plus the then-available
and unutilized amount of Senior Loan Commitments; and

 

(viii)                        such additional information as may be required
under the Senior Loan Agreements.

 

(c)                                  Attachments.  The Notice of Disbursement
shall include as attachments all certificates and documentation required to be
attached thereto pursuant to Section 11.03 and each other applicable Financing
Document, including the most recent approved Cost to Complete Certificate.

 

(d)                                 Funding.  With respect to any Disbursements
requested in a Notice of Disbursement, if all conditions precedent to making
Disbursements under the Senior Loan Agreements have been satisfied or waived in
accordance the terms hereof and thereof on the Requested Disbursement Date, each
of the Senior Lenders from whom such Disbursements shall have been requested
shall make such Disbursements in accordance with the terms of their respective
Senior Loan Agreements.

 

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(e)                                  Satisfaction and Waiver of Conditions
Precedent. 

 

(i)                                     The conditions precedent to the Senior
Lenders’ obligations set forth in Sections 11.01, 11.02 and 11.03 and, in
respect of the Initial Disbursement, the other conditions precedent set forth in
Section 6.01 of the Commercial Bank Senior Loan Agreement and Section 6.01 of
the CAF Senior Loan Agreement (each with respect to the Initial Disbursement)
shall have been satisfied at such time as the Borrower, the Administrative
Agent, the Collateral Agent and each Senior Lender shall have received from each
Senior Lender Group a notice to the effect that each such condition precedent
has been met or has been waived by such Senior Lender Group.  Each Senior Lender
Group agrees to give such notice promptly following the satisfaction of all of
the conditions precedent set forth in Sections 11.01, 11.02 and 11.03 and in its
Senior Loan Agreement (with respect to the initial disbursement) or the waiver
thereof.

 

(ii)                                  With respect to the Initial Disbursement,
the conditions precedent to Disbursements set forth in Sections 11.01, 11.02 and
11.03 may only be waived by the agreement of all of the Senior Lenders, and with
respect to all subsequent Disbursements, the conditions precedent set forth in
Section 11.03 may only be waived upon the request of the Borrower and by the
agreement of the Majority Lenders; provided, however, that Independent
Conditions Precedent under each Senior Loan Agreement referred to in
Section 11.03(e), if any, may only be waived by the relevant Senior Lender
Group. 

 

(f)                                    Pro Rata Disbursements.  The Borrower
shall draw down Senior Loans on a pro rata basis in accordance with the Senior
Loan Commitments under all of the Senior Loan Agreements except in the case
where the amount of the borrowing must be greater than what would otherwise be
required under this Section due to the minimum disbursement requirements set
forth in the various Senior Loan Agreements.

 

(g)                                 Funding of Project Costs Identified in a
Notice of Disbursement.  Project Costs to be paid on and after the Initial
Disbursement Date that are set forth in a Notice of Disbursement submitted
pursuant to and satisfying the requirements of Section 11.04(b) shall be funded
as set forth below.

 

(i)                                     Planned Project Costs shall be funded:
(A) by Base Equity Contributions in an amount equal to 55% of the aggregate
amount of Planned Project Costs identified in such Notice of Disbursement and
(B) by Senior Loans in an amount equal to 45% of the aggregate amount of Planned
Project Costs identified in such Notice of Disbursement; provided that at no
time shall the TPCFR exceed 33:67; and

 

(ii)                                  Excess Project Costs shall be funded:
(A) from amounts otherwise available in the Apex Metals Account (and not
previously marked for any other purpose) and (B) by Contingent Support
Contributions.

 

(h)                                 Timing of Contributions.  To the extent that
Base Equity Contributions and/or Contingent Support Contributions, are
identified in any Notice of Disbursement, such amounts shall be funded through
transferring the applicable amount from the Equity Account or

 

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the Contingent Support Account, as applicable, to the Loan Proceeds Account on
the Business Day immediately prior to the Requested Disbursement Date. 

 

11.05  Post Commitment Termination Date Funding of Project Costs. 

 

(a)                                  Notice of Project Costs.  After the
Commitment Termination Date, no later than five (5) Business Days prior to a
date on which it desires to make transfers from the Equity Account or the
Contingent Support Account for the purpose of paying Project Costs (each such
date, a “Project Cost Funding Date”), the Borrower shall deliver a Notice of
Project Costs appropriately completed and signed by an Authorized Officer of the
Borrower, to the Administrative Agent (with a copy to the Technical Agent and
CAF).  The Borrower shall deliver a Notice of Project Costs only following the
Commitment Termination Date and no more frequently than once per calendar month.

 

(b)                                 Required Information.  Each Notice of
Project Costs shall be in the form of Appendix D-2 appropriately completed and
shall contain the following:  

 

(i)                                     the total amount of Project Costs
required to be funded in connection with such Notice of Project Costs, which
shall be Project Costs expected to be due and payable in the next month, broken
down into Planned Project Costs and Excess Project Costs;

 

(ii)                                  the total amount of Base Equity
Contributions and Contingent Support Contributions required to be funded from
the Equity Account and the Contingent Support Account to fund, in the case of
Base Equity Contributions, a portion of the Planned Project Costs and, in the
case of Contingent Support Contributions, all Excess Project Costs (all in
compliance with the provisions of Section 11.05(e)); and

 

(iii)                               the Project Cost Funding Date, which shall
be a Business Day.

 

(c)                                  Attachments.  The Notice of Project Costs
shall include as an attachment the most recent Cost to Complete Certificate
approved pursuant to Section 6.01(b); provided that the Borrower shall not be
permitted to designate a Project Cost Funding Date unless such Cost to Complete
Certificate has been approved within sixty (60) days immediately preceding the
requested Project Cost Funding Date.

 

(d)                                 Funding.  So long as a Project Cost Funding
Date has been validly designated hereunder, on the Project Cost Funding Date,
the Borrower may instruct the Collateral Agent to instruct the Securities
Intermediary to make withdrawals from the Equity Account and the Contingent
Support Account as set out in the Notice of Project Costs.

 

(e)                                  Funding of Project Costs Identified in a
Notice of Project Costs.  Project Costs to be paid on and after the Commitment
Termination Date that are set forth in a Notice of Project Costs submitted
pursuant to and satisfying the requirements of Section 11.05(b) shall be funded
as set forth below.

 

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(i)                                     Planned Project Costs identified in such
Notice of Project Costs shall be funded by Base Equity Contributions (provided
that to the extent that any proceeds of Senior Loans remain on deposit in the
Loan Proceeds Account at any such time, the Borrower may use such proceeds to
fund any such Planned Project Costs); and

 

(ii)                                  Excess Project Costs shall be funded:
(A) from amounts otherwise available in the Apex Metals Account (and not
previously marked for any other purpose) and (B) by Contingent Support
Contributions.

 

(f)                                    Timing of Contributions.  Base Equity
Contributions and/or Contingent Support Contributions identified in any Notice
of Disbursement shall be funded through transferring the applicable amount from
the Equity Account or the Contingent Support Account, as applicable, to the Loan
Proceeds Account on the Project Cost Funding Date.

 

ARTICLE XII

ADMINISTRATIVE AGENT AND
TECHNICAL AGENT

 

12.01  Appointment. 

 

(a)                                  Each Senior Lender and Hedge Bank hereby
irrevocably appoints and authorizes (i) BNP Paribas as the Administrative Agent
to act as its agent hereunder, under the other Financing Documents to which the
Administrative Agent is named as a party, under the Loan PRI Policies (with
respect to the Tranche A Senior Lenders) and under the Hedge PRI Policy (with
respect to the Hedge Banks) and (ii) Barclays Capital as the Technical Agent to
act as its agent hereunder and under the Completion Agreement, in each case,
with such powers as are specifically delegated to such Agent by the terms of
this Agreement, the other Financing Documents and the PRI Policies, as
applicable, together with such other powers as are reasonably incidental
thereto.

 

(b)                                 Any bank serving as either the
Administrative Agent or the Technical Agent as appointed hereunder shall have
the same rights and powers in its capacity as a Senior Lender or Hedge Bank as
any other Senior Lender or Hedge Bank and may exercise the same as though it
were not the Administrative Agent or the Technical Agent, as applicable, and
such bank and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Affiliate
thereof as if it were not the Administrative Agent or the Technical Agent, as
applicable, hereunder.

 

12.02  Limitation of Liability. 

 

(a)                                  The Administrative Agent and the Technical
Agent shall not have any duties or obligations except those expressly set forth
herein, in the other Financing Documents to which it is a party and, with
respect to the Administrative Agent, the PRI Policies.  Without limiting the
generality of the foregoing (i) neither the Administrative Agent nor the
Technical

 

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Agent shall be subject to any fiduciary or other implied duties, regardless of
whether a Default or an Event of Default has occurred and is continuing,
(ii) neither the Administrative Agent nor the Technical Agent shall have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby or by
another Financing Document to which it is a party, or, in the case of the
Administrative Agent, a PRI Policy, that the Administrative Agent or the
Technical Agent, as applicable, is required to exercise in writing by the
requisite Secured Parties, and (iii) except as expressly set forth herein, in
any other Financing Document to which it is a party and, in the case of the
Administrative Agent, any PRI Policy, neither the Administrative Agent nor the
Technical Agent shall have any duty to disclose, and neither the Administrative
Agent nor the Technical Agent shall be liable for the failure to disclose, any
information relating to the Borrower or any of its Affiliates that is
communicated to or obtained by a bank serving as either Administrative Agent or
Technical Agent or any of its affiliates in any capacity.  Neither the
Administrative Agent nor the Technical Agent shall be liable for any action
taken or not taken by it with the consent or at the request of the requisite
Secured Parties as specified in the applicable agreement, or in the absence of
its own gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.  Each of the Administrative Agent and the Technical
Agent shall be deemed not to have knowledge of any Default or Event of Default
unless and until written notice thereof is given to it by an Affiliated Obligor
or a Secured Party, and neither the Administrative Agent nor the Technical Agent
shall be responsible for or have any duty to ascertain or inquire into (A) any
statement, warranty or representation made in or in connection with this
Agreement, any other Financing Document, any PRI Policy or the Project, (B) the
contents of any certificate, report or other document delivered hereunder, under
any other Financing Document, under a PRI Policy or in connection herewith or
therewith, except as expressly set forth herein or therein, (C) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth herein, in any other Financing Document or any PRI Policy, (D) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Financing Document, any PRI Policy or any other agreement, instrument or
document, (E) the satisfaction of any condition precedent to a Disbursement set
forth in Article XI or elsewhere herein or in any other Financing Document to
which it is a party, other than to confirm receipt of items expressly required
to be delivered to it and except as expressly set forth herein or therein, or
(F) the adequacy of any insurance or insurance support agreement, the
effectiveness or maintenance of any insurance policy or insurance support
agreement, the creditworthiness of any underwriter or any other matter relating
to the insurance provided by the Borrower hereunder.

 

(b)                                 Each of the Administrative Agent and the
Technical Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person.  Each of the
Administrative Agent and the Technical Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon.  Each of the
Administrative Agent and the Technical Agent may consult with, and obtain advice
from, legal counsel, accountants and other experts of its choice, in connection
with the performance of their respective duties hereunder and under the other
Financing Documents and the PRI Policies as applicable and shall incur no
liability and shall be fully protected in acting in good faith in reliance on
the written opinion and written advice of such counsel, accountants and other
experts.  The Administrative Agent and the Technical Agent shall not be
responsible for the negligence or

 

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misconduct of any counsel, accountants and other experts selected by it without
gross negligence or willful misconduct on its part.

 

(c)                                  Each of the Administrative Agent and the
Technical Agent may perform any and all its duties and exercise its rights and
powers by or through any one or more sub-agents or attorneys-in-fact appointed
by it, including sub-agents specifically appointed to represent a single
Creditor Group (and, in the event that a sub-agent is appointed to represent a
single Creditor Group, such sub-agent may seek the advice of counsel for such
single Creditor Group).  Each of the Administrative Agent and the Technical
Agent and any such sub-agent or attorney-in-fact may perform any and all its
duties and exercise its rights and powers through their respective affiliates. 
The exculpatory provisions of this Section 12.02 and the indemnification
provisions of Section 15.14 shall apply to the affiliates of each of the
Administrative Agent and the Technical Agent and any such sub-agent or
attorney-in-fact, and shall apply to their respective activities provided for
herein as well as the activities of the Administrative Agent and the Technical
Agent.

 

12.03  Resignation and Replacement.  Subject to the appointment and acceptance
of a successor Administrative Agent or Technical Agent as provided in this
Section, each of the Administrative Agent and the Technical Agent may resign at
any time by notifying each other Secured Party and the Borrower.  The
Administrative Agent and the Technical Agent may be removed as agent hereunder,
under the other Financing Documents to which it is a party and under the PRI
Policies upon thirty (30) days’ notice by an instrument in writing signed by the
Majority Lenders and the Majority Hedge Banks.  Upon any such resignation or
removal, the Majority Lenders and the Majority Hedge Banks shall have the right
to appoint a successor.  No removal or resignation of the Administrative Agent
or the Technical Agent or appointment of a successor Administrative Agent or
Technical Agent shall be effective until (a) the appointment of a successor is
accepted by such successor and (b) all indemnity and compensation required under
the Financing Documents, and, in the case of the Administrative Agent, the PRI
Policies have been paid or provided for.  If no successor shall have been so
appointed by the Majority Lenders and the Majority Hedge Banks or shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent or Technical Agent, as the case may be, gives notice of its
resignation, then such retiring Administrative Agent or Technical Agent may, on
behalf of the Secured Parties, appoint a successor Administrative Agent or
Technical Agent, as the case may be, which shall be a bank with an office in New
York, New York or London, England having capital and surplus in excess of
$500,000,000, or an affiliate of any such bank.  Upon the acceptance of its
appointment as the Administrative Agent or Technical Agent hereunder, as
applicable, by a successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of such retiring
Administrative Agent or Technical Agent and such retiring Administrative Agent
or Technical Agent shall be discharged from its duties and obligations
hereunder, under each other Financing Document to which it is a party and, in
the case of the Administrative Agent, under the PRI Policies.  The fees payable
by the Borrower to a successor Administrative Agent or Technical Agent shall be
the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor.  After the resignation of either the Administrative
Agent or the Technical Agent hereunder, the provisions of this Article XII and
Section 15.14 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent
or Technical Agent, as the case may be.

 

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12.04  No Reliance.  Each Secured Party acknowledges that it has, independently
and without reliance upon either the Administrative Agent or the Technical Agent
or any other Secured Party and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Financing Document.  Each Secured Party also
acknowledges that it will, independently and without reliance upon either the
Administrative Agent or the Technical Agent or any other Secured Party and based
on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement and each other Financing Document, any
related agreement or any document furnished hereunder or thereunder.  Each
Secured Party further acknowledges that consent by the Secured Parties to
certain proposed actions hereunder shall be deemed to have been given in certain
circumstances with the passage of time, as expressly provided herein.

 

12.05  Communication. 

 

(a)                                  The Administrative Agent agrees to furnish
promptly to each other Secured Party a copy of each written communication
(including notices, notices of borrowing, certificates, reports, opinions,
agreements, other documents, financial information and project reports) received
by it from any Affiliated Obligor under or expressly relating to this Agreement,
any other Financing Document or the transactions contemplated hereby and
thereby; provided that information received under the Commercial Bank Senior
Loan Agreement need only be provided to Commercial Bank Senior Lenders.  The
obligation of the Administrative Agent with respect to information received
under the Loan PRI Policy and the Hedge PRI Policy shall be governed solely by
Sections 12.08(b) and 12.09(b) respectively. 

 

(b)                                 The Administrative Agent agrees to furnish
promptly to each other Secured Party a copy of each written communication
received by it from, or sent by it to, any member of the Apex Group expressly
relating to any insurance to be provided for, or in respect of or relating to,
the Borrower or the Project.

 

(c)                                  The Technical Agent agrees to promptly upon
receipt of a request thereof from the Administrative Agent or Collateral Agent,
provide technical and environmental advice in relation to the contents of any
notice, document, request or other information received by it.

 

12.06  Indemnity.  Each Senior Lender (other than the Agents) and each Hedge
Bank agrees to indemnify each of the Administrative Agent and the Technical
Agent, its officers, agents and employees for, and to hold it harmless ratably
in accordance with, its proportionate share of the aggregate amount of Secured
Debt Obligations held by or payable to each Secured Party (other than the
Agents) against, any loss, liability, claim, judgment, settlement, compromise,
obligation, damage, penalty, cost, expense or disbursement of any kind or nature
whatsoever with respect to the performance of its agency role in accordance with
this Agreement, the other Financing Documents and the PRI Policies (to the
extent not reimbursed under Section 15.14), unless arising from the gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction, of the Administrative Agent or Technical Agent, its officers,
agents and employees that are seeking indemnification.  Notwithstanding anything
herein or in the other Financing Documents to the contrary, neither the
Administrative Agent nor the Technical Agent shall be obliged to take any such
action or to expend or risk its

 

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own funds or otherwise incur any liability in the performance of any of its
duties or the exercise of any of its rights or powers hereunder or thereunder if
it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it or if such action would be contrary to applicable law.

 

12.07  Duties. 

 

(a)                                  Each of the Administrative Agent and the
Technical Agent shall:

 

(i)                                     except as otherwise expressly provided
in any Financing Document, perform its duties in accordance with any
instructions given to it by the requisite Secured Parties as provided in this
Agreement, which instructions shall be binding on all Secured Parties (including
the Collateral Agent) party hereto; and

 

(ii)                                  if so instructed by the requisite Secured
Parties, refrain from exercising any right, power, authority or discretion
vested in it hereunder or under the other Financing Documents (other than rights
arising under this Article XII).

 

(b)                                 The Technical Agent shall:

 

(i)                                     coordinate and monitor the activities of
the Independent Engineer as required;

 

(ii)                                  monitor the results of any reports
prepared by the Independent Engineer and provide comments as appropriate to the
Administrative Agent on such reports; and

 

(iii)                               review and provide comments to the
Administrative Agent on the report of the Independent Engineer on the Completion
Certificates and supporting documentation.

 

(c)                                  The Administrative Agent shall coordinate
and monitor the activities of the Insurance Advisor as required, and shall
review the results of any reports and other correspondence prepared by the
Insurance Advisor and provide comments as appropriate to the Administrative
Agent in respect thereof.

 

12.08  Special Provisions Relating to the Loan PRI Policy. 

 

(a)                                  Each Tranche A Senior Lender represents and
warrants to the Administrative Agent that:  (i) it has reviewed the Loan PRI
Policy and is aware of the provisions thereof and (ii) no information provided
by such Tranche A Senior Lender in writing to the Loan PRI Insurers prior to the
date hereof was incomplete, untrue or incorrect in any respect except to the
extent that such Tranche A Senior Lender, in the exercise of reasonable care and
due diligence prior to the giving of the information, could not have discovered
the error or omission.  Each Tranche A Senior Lender represents and warrants for
the benefit of the Administrative Agent and each other Tranche A Senior Lender
that it has not taken (or failed to take), and agrees that it shall not take (or
fail to take), any action that would result in the

 

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Administrative Agent being in breach of any of its obligations as “Agent” under
the Loan PRI Policy, or result in the “Insureds” (as defined in the Loan PRI
Policy) being in breach of any of their respective obligations as “Insureds”
under the Loan PRI Policy, or which would otherwise prejudice the Administrative
Agent’s ability to make a claim on behalf of the Tranche A Senior Lenders under
the Loan PRI Policy.

 

(b)                                 The Administrative Agent agrees to furnish
promptly to each Tranche A Senior Lender a copy of each written communication
received by it from, or sent by it to, the Loan PRI Insurers, the Borrower, the
Collateral Agent, any member of the Apex Group or any Affiliate of any thereof
expressly relating to, and any amendment or waiver of any of the provisions of,
the Loan PRI Policy, or from any Tranche A Senior Lender pursuant to or in
relation to the Loan PRI Policy.  The Administrative Agent agrees not to take
any action under the Loan PRI Policy without the consent of the Tranche A Senior
Lenders holding more than 50% of the aggregate amount of uncancelled and undrawn
Tranche A Loan Commitments and outstanding Tranche A Loans.  The Administrative
Agent agrees to furnish promptly to each Tranche A Senior Lender a request for
any information it reasonably requires for the purposes of fulfilling its duties
under the Loan PRI Policy. 

 

(c)                                  Each Tranche A Senior Lender acknowledges
and agrees that it shall have no entitlement to make any claim or to take any
action whatsoever under or in connection with the Loan PRI Policy except through
the Administrative Agent (acting upon the instructions of the Tranche A Senior
Lenders holding more than 50% of the aggregate amount of uncancelled and undrawn
Tranche A Loan Commitments and outstanding Tranche A Loans) and that all of the
rights of the Tranche A Senior Lenders under the Loan PRI Policy shall only be
exercised by the Administrative Agent (acting upon the instructions of the
Tranche A Senior Lenders holding more than 50% of the aggregate amount of
uncancelled and undrawn Tranche A Loan Commitments and outstanding Tranche A
Loans).

 

(d)                                 Each payment received by the Administrative
Agent from the Loan PRI Insurers under the Loan PRI Policy for the account of
any Tranche A Senior Lender shall be distributed by the Administrative Agent to
each such Tranche A Senior Lender in accordance with Section 4.01(b) of the
Commercial Bank Senior Loan Agreement.

 

12.09  Special Provisions Relating to the Hedge PRI Policy. 

 

(a)                                  Each Hedge Bank represents and warrants to
the Administrative Agent that:  (i) it has reviewed the Hedge PRI Policy and is
aware of the provisions thereof and (ii) no information provided by such Hedge
Bank in writing to the Hedge PRI Insurers prior to the date hereof was
incomplete, untrue or incorrect in any respect except to the extent that such
Hedge Bank, in the exercise of reasonable care and due diligence prior to the
giving of the information, could not have discovered the error or omission. 
Each Hedge Bank represents and warrants for the benefit of the Administrative
Agent and each other Hedge Bank that it has not taken (or failed to take), and
agrees that it shall not take (or fail to take), any action that would result in
the Administrative Agent being in breach of any of its obligations as “Agent”
under the Hedge PRI Policy, or result in the “Insureds” (as defined in the Hedge
PRI Policy) being in breach of any of their respective obligations as “Insureds”
under the Hedge PRI Policy, or which would otherwise

 

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prejudice the Administrative Agent’s ability to make a claim on behalf of the
Hedge Bank under the Hedge PRI Policy.

 

(b)                                 The Administrative Agent agrees to furnish
promptly to the Administrative Agent (for delivery to each Hedge Bank) a copy of
each written communication received by it from, or sent by it to, the Hedge PRI
Insurers, the Borrower, the Administrative Agent, the Collateral Agent, any
member of the Apex Group or any Affiliate of any thereof expressly relating to,
and any amendment or waiver of any of the provisions of, the Hedge PRI Policy,
or from any Hedge Bank pursuant to or in relation to the Hedge PRI Policy.  The
Administrative Agent agrees not to take any action under the Hedge PRI Policy
without the consent of the Majority Hedge Banks.  The Administrative Agent
agrees to furnish promptly to each Hedge Bank a request for any information it
reasonably requires for the purposes of fulfilling its duties under the Hedge
PRI Policy. 

 

(c)                                  Each Hedge Bank acknowledges and agrees
that it shall have no entitlement to make any claim or to take any action
whatsoever under or in connection with the Hedge PRI Policy except through the
Administrative Agent (acting upon the instructions of the Majority Hedge Banks)
and that all of the rights of the Hedge Banks under the Hedge PRI Policy shall
only be exercised by the Administrative Agent (acting upon the instructions of
the Majority Hedge Banks).

 

(d)                                 Each payment received by the Administrative
Agent from the Hedge PRI Insurers under the Hedge PRI Policy for the account of
any Hedge Bank shall be distributed by the Administrative Agent promptly to each
such Hedge Bank, in immediately available funds, for the account of and as
designated by such Hedge Bank.

 

(e)                                  Unless otherwise agreed in writing by the
Administrative Agent (at the direction of each Hedge Bank) and the Borrower, the
Borrower shall pay (or cause to be paid) to the Hedge PRI Insurers, all fees,
premia and other amounts payable from time to time in respect of the Hedge PRI
Policy (excluding any premia payment deducted or offset by the Hedge PRI
Insurers during the process of calculating a claim payment payable to one or
more Hedge Banks), by no later than 11:00 a.m. New York time on the date due
therefor.  All such payments shall be made by the Borrower free and clear of,
and without deduction or withholding for, any and all present and future income,
stamp and other taxes and levies, imposts, deductions, charges, fees, compulsory
loans and assessments whatsoever imposed, assessed, levied or collected by any
competent authority in Bolivia or any political subdivision or taxing authority
thereof or therein.  If the Borrower is required by any applicable Government
Rule to withhold any amounts when making any payment referred to in this
Section 12.09(e), the Borrower shall pay the Hedge PRI Insurers such additional
amounts as are necessary to pay to the Hedge PRI Insurers the full amount due
notwithstanding the withholding requirement.

 

(f)                                    Each Hedge Bank hereby agrees that in the
event that a potential “Event of Default” described in Section 5(a)(ix) of its
Mandatory Metals Hedge Agreement has occurred, and (i) the Majority Hedge Banks
have accepted the terms and conditions or a proposed replacement insurance
policy and (ii) the Majority Hedge Banks have accepted the proposed replacement
Hedge PRI Insurer, then such Hedge Bank will agree to accept the proposed policy
and shall not terminate the Mandatory Metals Hedge Transactions.

 

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(g)                                 If any Event of Default Section 10.01(u)
(Selective Discrimination), (v) (Foreign Exchange Restrictions), (w) (Political
Violence Events), (x) (Mining Concessions and Government Approvals), (y)
(Embargo), (z) (Restriction of Export Rights) or (aa) (Forced Divestiture) has
occurred (each such Event of Default, a “PRI Eligible Event”), the Borrower will
notify the Administrative Agent who shall promptly notify the Hedge Banks in
writing (such notice, a “PRI Notice”) of such PRI Eligible Event giving
reasonable details in respect thereof. Each Hedge Bank shall promptly notify the
Administrative Agent of its Guaranteed Apex Metals Early Termination Amount in
respect of all Mandatory Metals Hedging Transactions promptly upon receipt of
such PRI Notice from the Administrative Agent. Each Hedge Bank agrees that it
shall not declare an “Event of Default” (as defined in a Mandatory Metals Hedge
Agreement) or otherwise declare an “Early Termination Date” (as defined in a
Mandatory Metals Hedge Agreement) in respect of any Mandatory Metals Hedge
Transaction unless and until either (a) the Administrative Agent shall have
informed the Hedge Banks in writing that no PRI Eligible Event has occurred (or
that the same has been waived in accordance with the terms of this Agreement or
that the same is not an event that would be covered by the Hedge PRI Policy) and
that the PRI Notice has been withdrawn (in which case the Hedge Banks shall be
entitled to take such action as desired under the Mandatory Metals Hedge
Agreements in respect of any continuing “Event of Default” thereunder) or
(b) the Hedge PRI Insurers have informed the Administrative Agent that such
Hedge PRI Insurers desire to direct the Hedge Banks to declare an Early
Termination Date under the Mandatory Metals Hedge Agreements in respect of the
Mandatory Metals Hedge Transactions, in which case the Hedge Banks shall declare
that an Early Termination Date has occurred under the Mandatory Metals Hedge
Agreements in respect of all Mandatory Metals Hedge Transactions; provided that
if at any time following the delivery of a PRI Notice the Hedge Banks inform the
Administrative Agent that the collective Guaranteed Apex Metals Early
Termination Amount for all Hedge Banks exceeds the amount of cover provided by
the Hedge PRI Insurers under the Hedge PRI Policy, then, notwithstanding the
foregoing provisions, each Hedge Bank shall be entitled to declare an Early
Termination Date under its Mandatory Metals Hedge Agreement with respect to all
Mandatory Metals Hedge Transactions notwithstanding the provisions of this
Section 12.09(g).  Except as provided in this Section 12.09(g), nothing in the
Financing Documents shall prohibit a Hedge Bank from establishing an “Early
Termination Date” as defined under its Mandatory Metals Hedge Agreement where it
is otherwise entitled to do so following the occurrence of an “Event of Default”
as defined thereunder.

 

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12.10  Compensation.  Each of the Administrative Agent and the Technical Agent
shall be entitled to compensation as separately agreed upon with the Borrower. 
The Senior Lenders shall have no liability for any fees, expenses or
disbursements of the Administrative Agent or the Technical Agent.  Any
reasonable and documented fees, compensation or expenses of the Administrative
Agent or the Technical Agent or its counsel not paid as provided for herein may
be taken from any property held by the Collateral Agent hereunder
notwithstanding any provisions herein to the contrary.  As security for such
payment, the Administrative Agent and the Technical Agent shall have a lien upon
all Collateral and other property and funds held or collected by the Collateral
Agent hereunder and shall have priority in the distribution of proceeds from
Enforcement Actions in accordance with Section 10.04.  The obligations of the
Borrower under this Section 12.10 and Section 15.14 to compensate and indemnify
the Administrative Agent, the Technical Agent and each predecessor
Administrative Agent or Technical Agent and to pay or reimburse the
Administrative Agent, the Technical Agent and each predecessor Administrative
Agent or Technical Agent as set forth herein shall survive the resignation of
the Administrative Agent or the Technical Agent and the termination of this
Agreement.

 

12.11  Authority to Act for Secured Parties.  The Administrative Agent and the
Technical Agent shall have the right and authority with full power of
substitution to act for and on behalf of the Secured Parties with respect to
each Financing Document to which such Agent is a party, including the right to
create, accept, perfect and execute such Financing Document and any and all
amendments (subject to Section 15.18) and renewals of such documents and, on
behalf of the Secured Parties, to exercise in accordance with the provisions
hereof the Secured Parties’ rights under such Financing Documents and shall
incur no liability to the Secured Parties in connection with any failure to act
thereunder as the same may be amended or renewed from time to time.

 

ARTICLE XIII

THE COLLATERAL AGENT AND SECURITIES INTERMEDIARY

 

13.01  Appointment of Collateral Agent.  JPMorgan Chase Bank, N.A., acting
through its office in New York, is hereby appointed by the Secured Parties as
collateral agent and attorney in fact for the purposes of this Agreement and the
other Financing Documents (such Person in such capacity and its successors in
such capacity being the “Collateral Agent”) and the Collateral Agent hereby
accepts such appointment upon the terms and conditions hereof.

 

13.02  Delivery of Documentation.  Executed counterparts of the Financing
Documents and the PRI Policies will be delivered to the Collateral Agent on or
prior to the date of execution of this Agreement and the Collateral Agent shall
acknowledge receipt thereof.  The Borrower agrees to deliver to the Collateral
Agent: (a) any instrument amending or modifying any agreement previously
delivered to the Collateral Agent, (b) any instrument or document relating to
the Secured Debt Obligations and (c) any instrument or document relating to the
transactions contemplated by the Project Documents.

 

13.03  Attorney-in-Fact.  The Collateral Agent or any officer or agent thereof,
with full power of substitution, is hereby appointed the attorney-in-fact with
special power of attorney of each Affiliated Obligor for the purpose of carrying
out the provisions of this

 

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Agreement and the other Financing Documents and taking any action and executing
any instruments which the Collateral Agent may deem necessary or advisable to
accomplish the purposes hereof and thereof, which appointment as
attorney-in-fact with special power of attorney is coupled with an interest and
irrevocable and, without limiting the generality of the foregoing, which
appointment hereby gives the Collateral Agent or any officer or agent thereof
the power and right on behalf of each Affiliated Obligor, without notice to or
assent by the foregoing, to the extent permitted by applicable Government Rules,
to do the following when and to the extent it is authorized or directed to do so
pursuant to the terms of this Agreement or any of the other Financing Documents,
provided that, unless otherwise permitted hereunder to do so to perform its
functions as Collateral Agent, the Collateral Agent cannot exercise its powers
under this Section 13.03 unless an Event of Default has occurred and is
continuing:

 

(a)                                  to ask for, demand, sue for, collect,
receive and give acquittance for any and all moneys due or to become due with
respect to, and to the extent of, the rights assigned to it by any Affiliated
Obligor to the extent of the interest therein of any Secured Party in the
Collateral;

 

(b)                                 to receive, take, endorse, assign and
deliver any and all checks, notes, drafts, acceptances, documents and other
negotiable and non-negotiable instruments, documents and chattel paper taken or
received by the Collateral Agent in connection with this Agreement or any of the
other Financing Documents;

 

(c)                                  to commence, file, prosecute, defend,
settle, compromise, adjust, revoke, cancel, annul, move to dismiss or otherwise
undo any claim, suit, action or proceeding with respect to the security
interests granted for the benefit and on behalf of the Secured Parties in the
Collateral;

 

(d)                                 to sell, transfer, assign or otherwise deal
in or with (or to so cause) the Collateral or any part thereof pursuant to the
terms and conditions of this Agreement and any of the other Financing Documents;
and

 

(e)                                  to do, at its option and at the expense and
for the account of the Borrower at any time or from time to time, all acts and
things which the Collateral Agent deems necessary to protect or preserve the
Collateral and to realize upon such Collateral.

 

Each Affiliated Obligor agrees to execute and deliver to the Collateral Agent,
and register in any applicable public registry in the jurisdiction of its
organization in which such registration is necessary, a notarized deed
constituting such power of attorney.  The Collateral Agent shall not be
responsible for the negligence or misconduct of any attorney-in-fact selected by
it without gross negligence or willful misconduct.

 

Each Affiliated Obligor hereby confirms and ratifies any and all actions and
things performed or done by the Collateral Agent as its attorney-in-fact or any
of its representatives hereunder in each case pursuant to and in accordance with
the powers granted hereunder.

 

Each Senior Lender and Hedge Bank agrees, if required by applicable law or
reasonably requested by the Collateral Agent, to execute and deliver to the
Collateral Agent, and

 

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register in every public registry in Bolivia in which such registration is
necessary, a notarized public deed appointing the Collateral Agent and any
officer or agent thereof, with full power of substitution, its attorney-in-fact
(with special power of attorney) for purposes of exercising any rights and
remedies of such Senior Lender or Hedge Bank under the Financing Documents to
which the Collateral Agent is a party and taking all action in Bolivia on behalf
of the Secured Parties that the Collateral Agent is authorized to take pursuant
to this Agreement.

 

13.04  Authority to Act for the Secured Parties.  The Collateral Agent shall
have the right and authority with full power of substitution to act for and on
behalf of the Secured Parties with respect to each Financing Document to which
it is a party, including the right to create, accept, perfect and execute such
Financing Document and any and all amendments (subject to Section 15.18) and
renewals of such documents and, on behalf of the Secured Parties, to exercise in
accordance with the provisions hereof the Secured Parties’ rights under such
Financing Documents and shall incur no liability to the Secured Parties in
connection with any failure to act thereunder as the same may be amended or
renewed from time to time.

 

13.05  Reliance.  The Collateral Agent shall be entitled to act upon any notice,
certificate, instrument, demand, request, direction, instruction, waiver,
receipt, consent or other document or communication furnished, in each case in
writing, hereunder or under any other Financing Document which it in good faith
believes and on its face appears to be genuine, and it shall be entitled to rely
upon the due execution, validity and effectiveness, and the truth and
acceptability, of any provisions contained therein.  The Collateral Agent shall
not have any responsibility to make any investigation into the facts or matters
stated in any notice, certificate, instrument, demand, request, direction,
instruction, waiver, receipt, consent or other document or communication
furnished to it hereunder or under any other Financing Document.  Concurrently
with the execution and delivery of this Agreement, the Borrower and Apex Metals
shall deliver to the Collateral Agent a list of authorized signatories of any
notice, certificate, instruments, demand, request, direction, instruction,
waiver, receipt, consent or other document or communication furnished to the
Collateral Agent hereunder or under any other Financing Document and the
Collateral Agent shall be entitled to rely on such list until a new list is
furnished by the Borrower or Apex Metals, as applicable, to the Collateral
Agent.

 

13.06  Written Direction; Liability.  Except as otherwise provided in this
Agreement and the other Financing Documents, the Collateral Agent (a) shall only
take such action under this Agreement and the other Financing Documents
(including, without limitation, any action in respect of or pursuant to an
Enforcement Action) as it shall be directed in writing in accordance with this
Agreement or any of the other Financing Documents and (b) shall not give any
direction or consent under this Agreement or any other Financing Document or
enter into any agreement amending, modifying, supplementing or waiving any
provisions of this Agreement or any other Financing Document unless it shall
have been directed to do so in writing by the Administrative Agent, on behalf of
the requisite Senior Lenders and Hedge Banks, as applicable.  The Collateral
Agent shall not be required to exercise any discretionary power granted to it
herein or in any Financing Document, but may act or refrain from acting upon the
written direction of the Administrative Agent acting on behalf of the requisite
Senior Lenders and Hedge Banks, as applicable.  The Collateral Agent shall not
be liable for any error of judgment or for any act done or omitted to be done by
it in good faith or for any mistake of fact or law, or for anything which it may
do or refrain from doing, except for its own gross

 

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negligence or willful misconduct.  The Senior Lenders and Hedge Banks shall in
no event be liable for any act done or omitted to be done by the Collateral
Agent or by any of their officers or employees.

 

13.07  Consultation With Counsel, Etc.  The Collateral Agent may consult with,
and obtain advice from, legal counsel, accountants and other experts of its
choice, in connection with the performance of its respective duties hereunder
and under the other Financing Documents and shall incur no liability and shall
be fully protected in acting in good faith in reliance on the written opinion
and written advice of such counsel, accountants and other experts.  The
Collateral Agent shall not be responsible for the negligence or misconduct of
any counsel, accountants and other experts selected by it without gross
negligence or willful misconduct on its part.

 

The Collateral Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents or attorneys-in-fact
appointed by it.  The Collateral Agent and any such sub-agent or
attorney-in-fact may perform any and all its duties and exercise its rights and
powers through their respective Affiliates.  The exculpatory provisions of this
Article XIII and the indemnification provisions of Section 15.14 shall apply to
the Affiliates of the Collateral Agent and any such sub-agent or
attorney-in-fact, and shall apply to their respective activities provided for
herein as well as the activities of the Collateral Agent.

 

13.08  Duties.  The Collateral Agent shall have no duties other than those
specifically and expressly set forth or provided for in this Agreement and the
other Financing Documents to which it is a party and no implied covenants or
obligations or fiduciary duties of the Collateral Agent shall be read into, or
implied by use of the term “collateral agent” in, this Agreement, the other
Financing Documents or any related agreement to which the Collateral Agent is a
party.  The Collateral Agent shall not have any obligation to familiarize itself
with and shall have no responsibility with respect to any other agreement or
document relating to the transactions contemplated by this Agreement or the
other Financing Documents nor any obligation to inquire whether any notice,
certificate, instrument, demand, request, direction, instruction, waiver,
receipt, consent, document, communication, statement or calculation is in
conformity with the terms of any such other agreement, except those
irregularities or errors manifestly apparent on the face of such document or to
the actual knowledge of a Authorized Officer of the Collateral Agent.  Except to
the extent the Collateral Agent is acting on express instructions, the
Collateral Agent shall at all times take such care in dealing with the
Collateral as would a prudent person in dealing with his or her own property. 
The Collateral Agent shall, upon receipt of an Enforcement Direction, exercise
the rights and powers vested in it by this Agreement, the other Financing
Documents or by any Security Document which it is directed by the Administrative
Agent on behalf of the requisite Senior Lenders and Hedge Banks to exercise and
the Collateral Agent shall not be liable with respect to any action taken or
omitted to be taken by it in accordance with the direction of the Administrative
Agent on behalf of such requisite Senior Lenders and Hedge Banks.

 

13.09  Resignation, Replacement and Successor Collateral Agent.  The Collateral
Agent at any time may resign as Collateral Agent hereunder and under the other
Financing Documents, upon giving not less than thirty (30) days notice in
writing to the Borrower and each other Secured Party.  The Collateral Agent may
be removed as Collateral Agent hereunder and

 

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under the other Financing Documents, by an instrument in writing signed by the
Majority Lenders and Majority Hedge Banks.  Upon resignation of the Collateral
Agent, a successor collateral agent shall be appointed by the Majority Lenders
and the Majority Hedge Banks and, so long as no Default or Event of Default has
occurred and is continuing, with the consent of the Borrower, such consent not
to be unreasonably withheld or delayed.  No resignation or removal of the
Collateral Agent and no appointment of a successor collateral agent shall be
effective until the successor collateral agent has accepted its appointment
hereunder.  If no successor collateral agent shall have been so appointed and
shall have accepted such appointment within thirty (30) days after the date
fixed for such resignation or such removal, the Collateral Agent may, at the
expense of the Borrower, petition any court of competent jurisdiction for the
appointment of a successor collateral agent.  Such court may thereupon, after
such notice, if any, as it may prescribe, appoint a successor collateral agent. 
Any successor collateral agent appointed pursuant to this Section shall be a
bank or trust company of international repute and suitable experience acting
through a branch or office in London, England or New York, New York, in any such
case having a combined capital and surplus of at least $500,000,000.  Any
successor collateral agent shall evidence its acceptance of the trust hereunder
by executing and delivering to the Borrower, each Senior Lender, each PRI
Insurer and the Collateral Agent an instrument accepting its appointment as
Collateral Agent hereunder, and thereupon such successor collateral agent,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, duties and obligations of its predecessor hereunder with like
effect as if originally named as Collateral Agent herein, and such predecessor
shall have no further obligation or liability thereunder except for liability
with respect to its acts or omissions prior to such succession pursuant to
Section 13.06; nevertheless, on the request of any party hereto or such
successor collateral agent, the Collateral Agent ceasing to act shall, upon
payment of its then unpaid charges, execute and deliver instruments transferring
to such successor collateral agent all rights and powers of the Collateral Agent
so ceasing to act, including any such instruments necessary to assign and/or
novate the relevant Financing Documents, and shall deliver to such successor
collateral agent all property held by it under the Security Documents, provided
that all indemnities in favor of the substituting or resigning collateral agent
shall be retained by it.

 

13.10  Indemnity.  Each Senior Lender (other than the Agents) and each Hedge
Bank agrees to indemnify each of the Collateral Agent and the Securities
Intermediary, its officers, agents and employees for, and to hold it harmless
ratably in accordance with its proportionate share of the aggregate amount of
Secured Debt Obligations held by or payable to each Secured Party (other than an
Agent) against, any loss, liability, claim, judgment, settlement, compromise,
obligation, damage, penalty, cost, expense or disbursement of any kind or nature
whatsoever with respect to the performance of its agency role in accordance with
this Agreement and the other Financing Documents (to the extent not reimbursed
under Section 15.14), unless arising from the gross negligence or willful
misconduct, as finally determined by a court of competent jurisdiction, of any
of the Collateral Agent or the Securities Intermediary, its officers, agents and
employees that are seeking indemnification.  Notwithstanding anything herein or
in the other Financing Documents to the contrary, neither the Collateral Agent
nor the Securities Intermediary shall be obliged to take any such action or to
expend or risk its own funds or otherwise incur any liability in the performance
of any of its duties or the exercise of any of its rights or powers hereunder or
thereunder if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it or if such action would be contrary to applicable law.

 

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13.11  Compensation.  The Collateral Agent shall be entitled to compensation as
separately agreed upon with the Borrower.  The Senior Lenders shall have no
liability for any fees, expenses or disbursements of the Collateral Agent.  Any
reasonable and documented fees, compensation or expenses of the Collateral Agent
or its counsel not paid as provided for herein may be taken from any property
held by the Collateral Agent hereunder notwithstanding any provisions herein to
the contrary.  As security for such payment, the Collateral Agent shall have a
lien upon all Collateral and other property and funds held or collected by the
Collateral Agent hereunder and shall have priority in the distribution of
proceeds from Enforcement Actions in accordance with Section 10.04.  The
obligations of the Borrower under this Section 13.11 and Section 15.14 to
compensate and indemnify the Collateral Agent and each predecessor Collateral
Agent and to pay or reimburse the Collateral Agent and each predecessor
Collateral Agent as set forth herein shall survive the resignation or removal of
the Collateral Agent and the termination of this Agreement.

 

13.12  Certificates.  Whenever the Collateral Agent shall deem it necessary or
desirable that a matter be proved or established in connection with taking or
omitting any action by the Collateral Agent hereunder or under the other
relevant Financing Documents such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of gross
negligence or willful misconduct on the part of the Collateral Agent, be deemed
to be conclusively proved or established by an Officer’s Certificate of the
Borrower or instruction by the requisite Secured Parties, as applicable,
delivered to the Collateral Agent.

 

13.13  Information.  Concurrently with the execution and delivery of this
Agreement, the Administrative Agent, the Technical Agent, each Senior Lender and
each Hedge Bank shall deliver to the Collateral Agent an authority and
incumbency certificate setting forth the positions of the Persons authorized to
provide instructions or directions to the Collateral Agent as of the date hereof
and shall promptly provide any changes thereto from time to time thereafter. 
The Collateral Agent shall be entitled to rely conclusively on such certificate
(or notice, as applicable) until it receives a certificate (or notice)
specifically stating that it is a superseding certificate (or notice).

 

13.14  Limitation on Collateral Agent’s Duties in Respect of Collateral.  Beyond
its express duties set forth in this Agreement as to the custody thereof and the
accounting to the Borrower, Apex Metals, the Senior Lenders and Hedge Banks for
moneys received hereunder, the Collateral Agent shall not have any duty to the
Borrower, Apex Metals, the Senior Lenders or the Hedge Banks with respect to any
Collateral in its possession or control or in the possession or control of its
agent or nominee, any income thereon, or the preservation of rights against
prior parties or any other rights pertaining thereto.  To the extent, however,
that the Collateral Agent or an agent or nominee of the Collateral Agent, as the
case may be, maintains possession or control of any of the Collateral or the
Security Documents at any office of the Collateral Agent, the Collateral Agent
shall, or shall instruct such agent or nominee to, grant the Borrower, Apex
Metals and the Secured Parties the access to such Collateral or Security
Documents, which they require for the conduct of their businesses, except in the
case of the Borrower, if and to the extent that the Collateral Agent shall have
received notice of an Event of Default.

 

13.15  Right to Initiate Judicial Proceedings, Etc.  If and only if the
Collateral Agent shall have received an Enforcement Direction and during such
time as such Enforcement

 

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Direction shall not have been withdrawn (a) the Collateral Agent shall have the
right and power to institute and maintain such suits and proceedings as (subject
to the instructions of the requisite Senior Lenders and Hedge Banks) it may deem
appropriate to protect and enforce the rights vested in it by this Agreement and
the other Financing Documents and (b) the Collateral Agent may, either after
entry or without entry, proceed (subject to the instructions of the requisite
Senior Lenders and Hedge Banks) by suit or suits at law or in equity to enforce
such rights and to foreclose upon the Collateral assigned for the benefit and to
the extent of the interest therein of such Senior Lender or Hedge Bank and to
realize upon all or, from time to time, any of the property of the trust
established hereunder for the benefit of such Senior Lender or Hedge Bank under
the judgment or decree of a court of competent jurisdiction.

 

13.16  Exculpatory Provisions.  The Collateral Agent makes no representation as
to the value or condition of the Collateral or any part thereof, or as to the
title of any Affiliated Obligor thereto or as to the rights and interests
granted or the security afforded by this Agreement or any other Financing
Document or as to the validity, execution (except by itself), enforceability,
legality or sufficiency of this Agreement, any other Financing Document or the
Secured Debt Obligations secured hereby, and the Collateral Agent shall not
incur any liability or responsibility in respect of any such matters.

 

13.17  Treatment of Senior Lenders by Collateral Agent.  Any Person which shall
be designated as the duly authorized representative of one or more of the Senior
Lenders to act as such in connection with any matters pertaining to this
Agreement, any other Financing Document or the Collateral shall present to the
Collateral Agent, if applicable, such documents, including opinions of counsel,
as the Collateral Agent may reasonably request, in order to demonstrate to the
Collateral Agent the authority of such Person to act as the representative of
such Senior Lenders.  The Collateral Agent may rely upon such documents until it
receives documents, including opinions of counsel, as the Collateral Agent may
reasonably request, specifically stating that they are superseding documents.

 

13.18  Collateral Agent Protections.  The rights, privileges, protections,
immunities and benefits given to the Collateral Agent hereunder and under the
other Financing Documents, including its right to be indemnified are extended
to, and shall be enforceable by, JPMorgan Chase Bank, N.A., as Collateral Agent
(or any successor Collateral Agent appointed in accordance herewith) and to each
agent, custodian and other Person employed by it to act hereunder or thereunder.

 

13.19  Miscellaneous. 

 

(a)                                  In the event of any disagreement between
the other parties to this Agreement resulting in adverse claims being made in
connection with property held by the Collateral Agent, in the event that the
terms of this Agreement do not unambiguously mandate the action the Collateral
Agent is to take or not to take in connection therewith under the circumstance
then existing, or the Collateral Agent is in doubt as to what action it is
required to take or not to take, the Collateral Agent shall be entitled to
refrain from taking any action until directed otherwise in writing by a request
signed jointly by the parties hereto entitled to give such direction or by order
of a court of competent jurisdiction.

 

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(b)                                 The Collateral Agent makes no
representations as to, and shall have no responsibility for, the correctness of
any statement contained in, or the validity or sufficiency of this Agreement or
any documents or instruments referred to herein, or the sufficiency or
effectiveness of any security afforded hereby or thereby or as to or for the
validity or collectibility of any obligation contemplated hereby or thereby. 
The Collateral Agent shall not be accountable for the use or application by any
Person of disbursements properly made by the Collateral Agent in conformity with
the provisions of this Agreement or of the proceeds of Senior Loans or other
moneys borrowed by the Borrower.  The Collateral Agent shall not be obligated to
monitor the investment rating of any Authorized Investment after such investment
has been made.

 

(c)                                  Any bank serving as the Collateral Agent
hereunder shall have the same rights and powers in its capacity as a Senior
Lender or Hedge Bank as any other Senior Lender or Hedge Bank and may exercise
the same as though it were not the Collateral Agent, and such bank and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Affiliate thereof as if it were not
the Collateral Agent hereunder.

 

(d)                                 Notwithstanding anything to the contrary in
this Agreement, in no event shall the Collateral Agent be liable under or in
connection with this Agreement for indirect, special, incidental, punitive or
consequential losses or damages of any kind whatsoever, including but not
limited to lost profits, whether or not foreseeable, even if the Collateral
Agent has been advised of the possibility thereof and regardless of the form of
action in which such damages are sought.

 

(e)                                  The Collateral Agent shall not be deemed to
have actual, constructive, direct or indirect notice or knowledge of the
occurrence of any Default or Event of Default unless and until the Collateral
Agent shall have received written notice indicating that any Default or Event of
Default has occurred.  The Collateral Agent shall not have any obligation
whatsoever either prior to or after receiving such notice to enquire whether a
Default or Event of Default has, in fact, occurred and shall be entitled to rely
conclusively, and shall be protected in so relying, on any notice so furnished
to it.

 

ARTICLE XIV

INTERCREDITOR ARRANGEMENTS

 

14.01  Sharing of Information.  Each Secured Party shall use reasonable efforts
promptly to make available to other Secured Parties, the Administrative Agent,
the PRI Insurers and the Collateral Agent any material information it receives
regarding: (a) the construction or operation of the Project, the prospects for
the achievement of Completion or the financial condition or business of the
Borrower, (b) the Borrower’s ability to pay Secured Debt Obligations when due,
(c) the security interests granted by or pursuant to this Agreement and the
Security Documents, (d) each Affiliated Obligor’s ability to comply with its
obligations under each of the Transaction Documents to which it is a party,
(e) the occurrence of a Default or an

 

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Event of Default or (f) any other matter regarding an Affiliated Obligor, the
Guaranteed Apex Metals Obligations or the Senior Loans that such Secured Party
considers to be of common interest to Secured Parties; provided that (i) this
Section shall not require any Secured Party to make available to any other
Secured Party information that, in such Secured Party’s reasonable judgment, is
not of common interest to the other Secured Parties or is subject to
confidentiality restrictions that prohibit such disclosure and (ii) no Secured
Party shall have any liability for any failure to make available to other
Secured Parties such information or for any inaccuracy or incompleteness of any
such information made available by it in good faith.

 

14.02  Notice of Payments Subject to Sharing Among Secured Parties.  Each
Secured Party shall notify each other Secured Party of any payment received in
respect of Secured Debt Obligations in excess of the amount payable to such
Secured Party as provided in Article IV.  Any such excess payment shall be
applied, subject to Section 14.07(c), 14.08 and 14.13, as provided in
Section 14.07(a) as if such payment was not received from the Collateral Agent
hereunder.

 

14.03  Meetings of Secured Parties.  Any Secured Party may at any time request
that a meeting (telephonic or otherwise) of Secured Parties be convened, without
cost to the Borrower.  The Secured Party or Secured Parties requesting such
meeting shall give at least five (5) Business Days’ notice thereof to each
Secured Party (unless such period of advance notice is not practicable in the
reasonable judgment of such Senior Lender(s) in view of the circumstances, in
which case such Secured Parties shall give such advance notice as is reasonably
practicable) specifying the date, time and place of the meeting and the general
nature of the business proposed to be considered; provided, however, that this
provision shall not affect in any manner the rights of the Secured Parties
hereunder or improve in any way the rights or defenses of the Borrower.

 

14.04  No Reliance.  Notwithstanding any other provisions of this Agreement, no
Secured Party has relied or shall rely on any other Secured Party or any Agent
(a) to inquire into or verify the accuracy or completeness of any information
provided by the Borrower or any Affiliated Obligor, or made available by a
Secured Party to other Secured Parties on or prior to the date of this
Agreement, or hereafter pursuant to Section 14.01, or (b) to review or evaluate
the condition of the Borrower, any Affiliated Obligor, the Project or Bolivia. 
Each Secured Party has made its credit decision, and shall take, or refrain from
taking, any future decision or action, on the basis of its own independent
judgment, without reliance on information provided by or expected from, or on
views expressed by, any other Secured Party, any Agent or the Collateral Agent.

 

14.05  Use of Agent for the Collateral. 

 

(a)                                  Accounts.  Without improving in any way the
rights or defenses of the Borrower, if any one or more Secured Parties shall
direct the Administrative Agent to give an Account Enforcement Notice to the
Collateral Agent contemplated by Section 4.05(a) of this Agreement, then all
Secured Parties shall endeavor to agree on (i) the appointment of a Person or
Persons to act as their agent in the giving of instructions with respect to the
investment and disposition of funds in the Accounts and (ii) the development of
objectives or instructions to be followed by such Person or Persons.

 

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(b)                                 Enforcement Action.  If necessary or
desirable, in connection with the taking of Enforcement Action, the Secured
Parties shall endeavor to agree on the appointment of a Person resident in
Bolivia, if necessary, to act as their agent in the administration of the
Collateral located in Bolivia and the taking of Enforcement Action with respect
thereto.

 

14.06  Sharing Generally.  Subject to the provisions of Section 14.08 and the
provisions set forth in the Senior Loan Agreements affecting the allocation of
funds within the applicable Senior Loan Facility, all amounts paid to or
received by the Collateral Agent for redistribution to the Secured Parties
(other than to the Agents in their capacity as agents) and representing the
proceeds of the Collateral and the proceeds of any action taken pursuant to an
Enforcement Direction shall be paid promptly to the Secured Parties ratably in
the order specified in Section 10.04 based on the amounts owing to each Secured
Party on each level of priority specified therein.

 

14.07  Sharing of Non-Pro Rata Payments. 

 

(a)                                  Payments Subject to Sharing Among Secured
Parties.  Subject to Sections 14.07(c), 14.08 and 14.13, if any Secured Party
(other than an Agent) obtains any amount (other than amounts disbursed by the
Collateral Agent in accordance with this Agreement) in respect of the Financing
Documents or the Mandatory Metals Hedge Agreements (whether (i) by way of
voluntary or involuntary payment, (ii) by virtue of an exercise of any right of
setoff (including without limitation by virtue of an exercise of any such right
under a Mandatory Metals Hedge Agreement (but subject to
Section 14.08(a)(vii) below) or any guarantee related to any of the foregoing),
banker’s lien, or counterclaim, (iii) as proceeds of any insurance policy
covering any Project Property, (iv) from proceeds of liquidation or dissolution
of the Borrower or distribution of its assets among its creditors, however such
liquidation, dissolution or distribution may occur, (v) as payment of any
Secured Debt Obligations following the acceleration thereof, whether in whole or
in part, (vi) from any realization on the Collateral, (vii) by virtue of the
application of any provision of any of the Financing Documents, or (viii) in any
other manner), such Secured Party shall forthwith notify the Administrative
Agent and the Collateral Agent thereof in writing and shall promptly, and in any
event within ten (10) Business Days of its so obtaining the same, pay such
amount (less any reasonable costs and expenses incurred by such Secured Party in
obtaining such amount) to the Collateral Agent.  The Administrative Agent shall
direct the Collateral Agent promptly following receipt of any such sums to
distribute the appropriate amount to each Secured Party entitled to such funds
under the provisions of Article IV or Section 10.04, as applicable, of this
Agreement.  Notwithstanding the foregoing, if at such time the payment of such
amount to the Collateral Agent in such manner is inadvisable in the judgment of
any Secured Party, then at the request of such Secured Party, the Secured
Parties shall promptly consult with each other to determine whether there is a
preferable manner to make equitable adjustments (including the purchase by such
Secured Party of Secured Debt Obligations held by other Secured Parties) to
permit all Secured Parties to share such payment (net of expenses incurred by
the recipient Senior Lenders in obtaining or preserving such payment) as if such
payment had been made to the Collateral Agent and redistributed pursuant to
Article IV or Section 10.04 as applicable.  If any such redistributed or shared
payment is rescinded or must otherwise be restored by the Secured Party that
first obtained it, each other Secured Party that shares the benefit of such
payment shall return to such Secured Party its portion of the payment so
rescinded or required to be restored.  Nothing contained in this
Section 14.07(a) shall require

 

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any Secured Party to exercise any such right or shall affect the right of any
Secured Party to exercise, and retain the benefits of exercising, any such right
with respect to any other indebtedness or obligation of the Borrower.  If, under
any applicable bankruptcy, insolvency or other similar law, any Secured Party
receives a secured claim in lieu of a set-off to which this
Section 14.07(a) applies, such Secured Party shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Secured Parties entitled under this Section 14.07(a) to share
in the benefits of any recovery on such secured claim. 

 

(b)                                 The Borrower consents to the foregoing
arrangements, and agrees that, any provision to the contrary notwithstanding:

 

(i)                                     any Secured Party (other than an Agent)
that has received a payment that is more than its pro rata share of such payment
and has remitted the amount of such payment to other Secured Parties pursuant to
this Section for redistribution shall be deemed to have received payment only of
the amount received by such Secured Party after redistribution by such Secured
Party to other Secured Parties, and any Secured Party that has received a
payment pursuant to this Section from another Secured Party shall be deemed to
have been paid such amount by the Borrower; and

 

(ii)                                  if any sharing of payments pursuant to
this Section 14.07 shall (with the consent of all Secured Parties (other than
the Agents)) have been accomplished by the purchase by any Secured Party (other
than an Agent) of participations in Secured Debt Obligations owed to another
Secured Party (other than an Agent), such purchasing Secured Party shall have
and may exercise all legal and equitable rights and remedies (including rights
of set-off) with respect to such participation as fully as if such Secured Party
were the holder of a direct Secured Debt Obligation in the amount of such
participation.

 

(c)                                  For purposes hereof, any payment received
by a Secured Party (other than an Agent) pursuant to this Agreement may be
presumed by such Secured Party to have been properly received by such Secured
Party in accordance with this Agreement unless and until such Secured Party
receives notice from any other Secured Party that such payment was not made in
accordance herewith. 

 

14.08  Amounts Not Subject to Sharing.  Notwithstanding any other provision of
this Agreement or any other Financing Document to the contrary:

 

(a)                                  no Secured Party (other than the Collateral
Agent) shall have any obligation to share:

 

(i)                                     any payment made by any Person to such
Secured Party (other than an Agent) pursuant to a contract of participation or
assignment or any other arrangement by which a direct or indirect interest of
such Secured Party under the Financing Documents or any Mandatory Metals Hedge
Agreement is transferred (unless such participation or assignment is purchased
by the Borrower or an Affiliate of the Borrower);

 

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(ii)                                  any payment made to a Secured Party (other
than an Agent) by a PRI Insurer under a PRI Policy, provided that to the extent
that a PRI Insurer has refused to pay on, or excluded a claim by, a specific
Secured Party, the other Secured Parties that are entitled to payment in respect
of such claim shall not be required to share recoveries with the excluded
Secured Party;

 

(iii)                               any prepayment of a Senior Lender’s Senior
Loan Obligations pursuant to Sections 2.04(b)(v), 2.05(b) and 2.07 that is not
required to be a Pro Rata Payment;

 

(iv)                              any indemnification, tax gross-up or similar
payment received by such Secured Party under the Financing Documents for costs
or losses suffered by such Secured Party;

 

(v)                                 any payment made to such Secured Party
pursuant to a credit swap or similar arrangement between such Secured Party and
a third party (other than the Borrower or an Affiliate of the Borrower);

 

(vi)                              any agency, upfront fees or other fees paid to
any Secured Party pursuant to the Financing Documents;

 

(vii)                           any payment made to a Hedge Bank in respect of
Mandatory Metals Hedge Transactions where such payment is effected by such Hedge
Bank netting amounts payable by such Hedge Bank under Mandatory Metals Hedge
Transactions against amounts payable to such Hedge Bank in respect of Mandatory
Metals Hedge Transactions (whether in the ordinary course or upon the occurrence
of an “Early Termination Date” with respect thereto); and

 

(viii)                        amounts received by CAF pursuant to clause (c) of
this Section 14.08;

 

(b)                                 the sharing of payments made with respect to
a particular Senior Loan Agreement shall be subject to the sharing provisions of
such Senior Loan Agreement as such provisions affect the sharing of payments
among the parties thereto; and

 

(c)                                  CAF, in its capacity as a Senior Lender,
shall have the right to receive and retain, without obligation to share with any
other Secured Party or other Person, any Preferred Payment (as hereinafter
defined); provided that nothing in this paragraph is intended to modify any
provision in any Security Document (including this Agreement) governing the
exercise of any remedies in respect of all or any part of the Collateral or
otherwise in connection with the enforcement of such Security Document.

 

A “Preferred Payment” shall mean each of the following:

 

(i) any payment received by or for the account of CAF as a Senior Lender in
freely convertible and transferable currencies (“Convertible Currencies”)  under
circumstances in which (A) any Governmental Authority (including any central
bank or entity acting as a central bank) having the power to regulate foreign
exchange in Bolivia or any other jurisdiction through which payment is due under
the CAF Senior Loan Agreement is made (Bolivia and any such jurisdiction, as the
case may be, a “Restricted

 

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Country”) is not generally permitting the conversion of the currency of such
Restricted Country or the remittance of Convertible Currencies from such
Restricted Country or has imposed a general moratorium on the payment of
international debt using                Convertible Currencies and (B) CAF is
either being exempted from such foreign exchange restrictions or moratorium or
is otherwise being afforded preferential treatment by such Government Authority
or another competent Government Authority by foreign exchange being made
available for obligations owed to it in Convertible Currencies; and

 

(ii) any payment received by or for the account of CAF as a Senior Lender (in
Convertible Currencies, or converted as provided in clause (i) above)
constituting the proceeds of enforcement by CAF (exercised subject to the
proviso above) of its pro rata share of the Secured Parties’ Lien on particular
Collateral in Bolivia under circumstances in which (A) any Governmental
Authority of Bolivia shall have attached assets constituting such Collateral and
is not generally permitting the enforcement of Liens by the Secured Parties or
by the Collateral Agent for the benefit of the Secured Parties against such
Collateral and (B) CAF is either being exempted from such Lien enforcement
restrictions or is otherwise being afforded preferential treatment by
Governmental Authorities in Bolivia by being allowed to enforce its pro rata
share of the Secured Parties’ Lien on such Collateral.

 

14.09  No Separate Security.  Each Secured Party that is a party to this
Agreement (for itself and any Person claiming through it):  (a) agrees that,
except as otherwise provided herein, all Collateral is for the joint benefit of
all the Secured Parties (subject to the priority among the Secured Parties set
out herein); and (b) represents and warrants to each other Secured Party that,
in respect of any Secured Debt Obligations now or hereafter owing to such
Secured Party (other than an Agent), it has received no security or guarantees
from the Borrower or any Affiliate thereof, other than (i) its interest in the
Collateral as provided in the Security Documents, if any, or (ii) as otherwise
provided pursuant to the Financing Documents.  In furtherance of the foregoing,
if any Secured Party (other than an Agent) shall receive or be entitled to
demand or otherwise call upon any guaranty, security or other assurance of
payment which is not described in clause (i) or (ii) of the preceding sentence
in respect of the Secured Debt Obligations owed to such Secured Party, such
Secured Party shall receive any proceeds thereof in trust for all the Secured
Parties (to be shared promptly and ratably (subject to the priority provisions
among the Secured Parties established herein) with the other Secured Parties)
and shall exercise its rights to demand or call upon such guaranty, security or
other assurance of payment as directed by the Majority Secured Parties.

 

14.10  Consent and Agreement of Borrower.  The Borrower consents to the exchange
of information and views among the Secured Parties as contemplated in this
Article XIV.  Each of the Borrower, Apex Metals, Apex Luxembourg and Apex Sweden
agrees and acknowledges that the provisions of Article XIV are intended for the
benefit of the Secured Parties only and shall not give rise to any rights on the
part of the Borrower, Apex Luxembourg, Apex Sweden, Apex Metals or any other
member of the Apex Group.

 

14.11  Termination of Senior Loan Commitments.  In the event the Senior Loan
Commitment of a Senior Lender is terminated prior to disbursement of any Senior
Loans by such

 

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Senior Lender, such Senior Lender shall cease to be a party to this Agreement
and the other Financing Documents.

 

14.12  Hedge Bank Voting.  At any time when a Hedge Bank is entitled to vote as
set out in the definition of “Majority Secured Parties” or “Majority Hedge
Banks”,  or at any time when the Administrative Agent may otherwise require for
purposes of making calculations under the Hedge PRI Policy, the Administrative
Agent may request, and each Hedge Bank shall provide, its statement of the
Guaranteed Apex Metals Early Termination Amount with respect to such Hedge Bank
(whether or not such Hedge Bank has then terminated any of its Mandatory Metals
Hedge Transactions).  The Administrative Agent shall calculate the Eligible
Guaranteed Apex Metals Amount for each Hedge Bank and inform such Hedge Bank of
its calculation when any such request is made in connection with a vote to be
taken.  The Administrative Agent will seek such information and perform such
calculations each time a vote is to be taken hereunder where the vote of the
Hedge Banks is required. 

 

14.13  Hedge Bank Accession.  Any Person proposing to execute Mandatory Metals
Hedge Transactions may become a Secured Party hereunder as a Hedge Bank subject
to (a) such Person otherwise being a Senior Lender hereunder and (b) the
Administrative Agent’s receipt of an executed and delivered counterpart of (i) a
CSA Accession Agreement (by virtue of which such Person shall become entitled to
the benefits of the Security Documents) and (ii) the Hedge Guaranty.  Upon
acceptance of such CSA Accession Agreement and the executed counterpart with
respect to the Hedge Guaranty by the Administrative Agent, such Person shall be
a party to this Agreement and the Hedge Guaranty and shall have the rights and
obligations of a Secured Party hereunder and thereunder.  No Hedge Bank may
assign or transfer any of its rights or obligations under any Mandatory Metals
Hedge Transaction to any Person that is not a Senior Lender having a credit
rating in respect of its long term unsecured and un-credit enhanced
Dollar-denominated indebtedness of at least A from Standard & Poor’s and A2 from
Moody’s Investor Service. No Hedge Bank may assign or transfer any of its rights
or obligations under any Mandatory Metals Hedge Transaction without causing the
assignee or transferee thereof to execute a counterpart of a CSA Accession
Agreement and the Hedge Guaranty.

 

14.14  Secured Party Action. 

 

(a)                                  The Borrower shall notify the
Administrative Agent, the Collateral Agent and each other Secured Party of the
identity of any new Senior Lender Group (and of the Senior Lender part thereof
whose action shall constitute action of the Senior Lender Group) formed in
connection with Replacement Secured Debt.

 

(b)                                 Any Secured Party that is party to any
arrangement with the Borrower or any member of the Apex Group whereby such
Secured Party has agreed to take direction from the Borrower or such member of
the Apex Group in connection with any matter under any Financing Document, shall
not have any voting rights, in its capacity as a Secured Party, on any matter
concerning the Secured Parties and contemplated under this Agreement or the
other Financing Documents, shall not be entitled to any information provided to
Secured Parties by any Secured Party and shall not be entitled to attend any
meetings of any Secured Parties.

 

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ARTICLE XV

MISCELLANEOUS

 

15.01  Termination.  Upon repayment in full in cash of all Secured Debt
Obligations in Dollars and termination or expiry of all Senior Loan Commitments
and termination of all outstanding Mandatory Metals Hedge Transactions, (a) this
Agreement (other than the provisions hereof that expressly survive termination
pursuant to Section 15.15) and the security interests and rights created by or
pursuant to this Agreement or any Security Document shall terminate, (b) the
Collateral Agent, the Senior Lenders and their respective attorneys-in-fact
shall, at the expense of the Borrower, execute and deliver termination
statements and such instruments of satisfaction, discharge and release of
security in respect of all Collateral as may be requested by the Borrower,
(c) the Administrative Agent shall direct the Collateral Agent to pay, assign,
transfer and deliver to or to the order of the Borrower all moneys and
investments in the Expense Account, (d) the Administrative Agent shall direct
the Collateral Agent to deliver all Borrower Shares, Apex Metals Shares and Apex
Metals Quotas pledged pursuant to Article III to the applicable pledgor and all
other Collateral held by the Collateral Agent at the direction of the Borrower
and (e) the Administrative Agent shall direct the Collateral Agent to pay,
assign, transfer and deliver or cause to be paid, assigned, transferred and
delivered to or to the order of the Borrower all moneys and investments in the
New York Accounts.  The obligations of Senior Lenders to make further
disbursements of Senior Loans under their respective Senior Loan Agreements
shall terminate in accordance with each such Senior Loan Agreement and, in any
case, upon the termination of this Agreement.

 

15.02  Currency Equivalents.  For purposes of this Agreement and the Senior Loan
Agreements, amounts set forth in U.S. currency shall include the Dollar
equivalent of amounts in other currencies calculated on any day based on the
foreign exchange spot rate for settlement on such date, as reported in The Wall
Street Journal, Eastern Edition, as the New York foreign exchange selling rate
applying to trading among banks in amounts of $1 million and more, or, if not so
reported, the arithmetic average of the day’s spread as reported in the
Financial Times, or, if not so reported, the selling rate for trading among
banks in amounts of $1 million and more as quoted by the Administrative Agent,
at its principal office in New York, New York at or around 3:00 p.m. on the day
for which spot transactions apply to such date.

 

15.03  Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

 

15.04  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY).

 

15.05  Severability.  Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability

 

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of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

15.06  Entire Agreement.  This Agreement, the other Financing Documents and each
Mandatory Metals Hedge Agreement constitute the entire agreement and
understanding, and supersede all prior agreements and understandings (both
written and oral), between the Borrower and the Affiliated Obligors, on the one
hand, and the Secured Parties, on the other hand. 

 

15.07  Confidentiality.  Each of the Administrative Agent, the Technical Agent,
the Collateral Agent and the Secured Parties agrees to maintain the
confidentiality of the Information, except that the Information may be disclosed
(a) to its Related Parties including accountants, legal counsel and other
advisers, (b) to a guarantor of the Borrower’s obligations under the Financing
Documents, (c) to any insurer or guarantor of Senior Loan Obligations held by a
Senior Lender in connection with this Agreement, (d) to the extent requested by
any regulatory or Governmental Authority, (e) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process,
(f) in the case of any Senior Lender that is a governmental agency or entity, to
other parts of its government in accordance with its usual policies, (g) to any
other party to this Agreement, (h) in connection with the exercise of any duties
or remedies hereunder or any suit, action or proceeding relating to this
Agreement or under the Loan PRI Policy (or in satisfaction of the insureds’
obligations thereunder) or the enforcement of rights hereunder, (i) subject to
an agreement containing provisions substantially the same as those of this
Section 15.07 (which shall name the Borrower as a third party beneficiary
thereof), to any permitted assignee of or Participant in, or any prospective
permitted assignee or Participant in, any of its rights or obligations under
this Agreement, (j) with the consent of the Borrower or (k) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
the obligations contained in this Section 15.07 or (ii) becomes available to the
Administrative Agent, the Technical Agent, the Collateral Agent or any Senior
Lender on a nonconfidential basis from a source other than the Borrower or the
Sponsor (it being understood in the case of sections (a), (b), (c) and
(g) hereof that any such Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential to the extent that such Person has not previously
agreed to keep such Information confidential).

 

15.08  Notices. 

 

(a)                                  Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices,
directions and other communications provided for herein or under any Senior Loan
Agreement shall be in writing in the English language and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

 

(i)

if to the Borrower, to it at:

 

 

 

Minera San Cristóbal

 

Calle Campos No. 265

 

P.O. Box 13790

 

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La Paz, Bolivia

 

Tel:

+591 2 433800

 

Fax:

+691 2 433737

 

Attn:

President;

 

 

(ii)

if to Apex Sweden, to it at:

 

 

 

Apex Silver Mines Sweden AB

 

c/o Accurate Accounting

 

AB, Drakegaten 7, SE-412 50, Göteborg

 

Sweden

 

Tel:

(303) 839-5060

 

 

(888) 696-2739

 

Fax:

(303) 839-5907

 

Attn:

Director

 

 

 

with a copy to:

 

 

 

Apex Silver Mines Corporation

 

1700 Lincoln Street, Suite 3050

 

Denver, CO 80203

 

Tel:

(303) 839-5060

 

 

(888) 696-2739

 

Fax:

(303) 839-5907

 

Attn:

Chief Financial Officer;

 

 

(iii)

if to Apex Luxembourg, to it at:

 

Apex Luxembourg S.A. R.L.

 

73, Cote d’Eich L-1450 Luxembourg

 

Luxembourg

 

Tel:

(303) 839-5060

 

 

(888) 696-2739

 

Fax:

(303) 839-5907

 

Attn:

Manager

 

 

 

with a copy to:

 

 

 

Apex Silver Mines Corporation

 

1700 Lincoln Street, Suite 3050

 

Denver, CO 80203

 

Tel:

(303) 839-5060

 

 

(888) 696-2739

 

Fax:

(303) 839-5907

 

Attn:

Chief Financial Officer;

 

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(iv)

if to Apex Metals, to it at:

 

 

 

Apex Metals GmbH

 

c/o Juris Treuhand AG

 

Industriestrasse 47, 6300 Zug

 

Switzerland

 

Tel:

(303) 839-5060

 

 

(888) 696-2739

 

Fax:

(303) 839-5907

 

Attn:

Managing Officer

 

 

 

with a copy to:

 

 

 

Apex Silver Mines Corporation

 

1700 Lincoln Street, Suite 3050

 

Denver, CO 80203

 

Tel:

(303) 839-5060

 

 

(888) 696-2739

 

Fax:

(303) 839-5907

 

Attn:

Chief Financial Officer;

 

 

(v)

if to the Administrative Agent, to it at:

 

 

 

BNP Paribas

 

787 7th Avenue

 

New York, NY 10019

 

Tel:

(212) 471-6651

 

Fax:

(212) 471-6697

 

Attn:

Chris Weik;

 

 

(vi)

if to the Securities Intermediary, to it at:

 

 

 

JPMorgan Chase Bank, N.A.

 

4 New York Plaza – 15th Floor

 

New York, NY 10004

 

Tel:

(212) 623-5783

 

Fax:

(212) 623-6207

 

Attn:

Worldwide Securities Services;

 

 

(vii)

if to the Collateral Agent, to it at:

 

 

 

JPMorgan Chase Bank, N.A.

 

4 New York Plaza – 15th Floor

 

New York, NY 10004

 

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Tel:

(212) 623-5783

 

Fax:

(212) 623-6207

 

Attn:

Worldwide Securities Services;

 

 

(viii)

if to the Technical Agent, to it at:

 

 

 

Barclays Capital

 

Mining and Metals IBD

 

5 The North Colonnade

 

Canary Wharf

 

London E14 4BB

 

Tel:

+44 207 77 30339

 

Tel:

+44 207 77 31429

 

Fax:

+44 207 773 0402

 

Attn:

Grant Willis/David Ellis;

 

 

(ix)

if to CAF, to it at:

 

 

 

Corporación Andina de Fomento

 

Av. Luis Roche

 

Torre CAF

 

Altamira, Caracas

 

Venezuela ZP 1060

 

Tel:

+58 212 209 2135

 

Fax:

+58 212 209 2368

 

Attn:

Fernando Dongilio;

 

(x)                                   if to any Senior Lender or Hedge Bank, to
it at its address (or telecopy number) set forth in Appendix B-2 hereto or, as
applicable, in the case of any assignee, as notified to the Borrower, the
Administrative Agent and the Collateral Agent in accordance with the assignment
provisions in each Senior Loan Agreement or Mandatory Metals Hedging Agreement,
as the case may be.

 

(b)                                 The Administrative Agent shall promptly
forward to each Secured Party copies of any notice, certificate, instrument,
demand, request, direction, instruction, waiver, receipt, consent or other
document that it receives from any other party hereto.

 

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

 

15.09  Benefits of Agreement.  Nothing in this Agreement or any other Financing
Document, express or implied, shall give to any Person, other than the parties
hereto and their successors and permitted assigns hereunder or under the other
Financing Documents, any benefit or any legal or equitable right or remedy under
this Agreement.

 

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15.10  Remedies. 

 

(a)                                  Other than as stated expressly herein, no
remedy herein conferred upon the Collateral Agent, the Administrative Agent, the
Technical Agent or the other Secured Parties is intended to be exclusive of any
other remedy and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or under the other Financing
Documents or now or hereafter existing at law or in equity or by statute or
otherwise.

 

(b)                                 The amounts payable by the Borrower at any
time under this Agreement shall be a separate and independent debt and each
Senior Lender, except as otherwise specifically provided in this Agreement or
any of the other Financing Documents, shall be entitled to protect and enforce
its rights arising out of this Agreement or any of the other Financing
Documents, and its right to cancel or suspend its Senior Loan Commitment and to
accelerate the maturity of amounts due under its Senior Loan Agreement, and,
except as aforesaid, it shall not be necessary for any other Senior Lender to
consent to, or be joined as an additional party in, any proceedings for such
purposes.

 

(c)                                  No failure on the part of any Secured Party
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power, or privilege under this Agreement, or any other Financing
Document, shall operate as a waiver thereof nor shall any single or partial
exercise of any right, power or privilege under any such document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  None of the Collateral Agent, any other Agent or any other Secured
Party shall be responsible for the failure of any other Secured Party to perform
its obligations hereunder, under any Senior Loan Agreement or any Mandatory
Metals Hedge Agreement.

 

(d)                                 In case any Secured Party, or the Collateral
Agent on behalf of any Secured Party, shall have proceeded to enforce any right,
remedy or power under this Agreement or any other Financing Document, and the
proceeding for the enforcement thereof shall have been discontinued or abandoned
for any reason or shall have been determined adversely to such Secured Party,
then and in every such case the Borrower and the Secured Parties shall, subject
to any effect of or determination in such proceeding, severally and respectively
be restored to their former positions and rights hereunder and under such
Financing Document, and thereafter all rights, remedies and powers of the
Secured Parties shall continue as though no such proceeding had been taken.

 

15.11  Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.

 

15.12  Consent to Jurisdiction. 

 

(a)                                  Each party hereto hereby irrevocably
consents and agrees, for the benefit of each other party hereto, that any legal
action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Agreement, any Senior Loan Agreement or the Secured Debt Obligations may be
brought in any

 

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Federal or State court located in the Borough of Manhattan, The City of New York
(including the Supreme Court of the State of New York sitting in New York County
and the United States District Court of the Southern District of New York), and
any appellate court from any thereof, and hereby irrevocably accepts and submits
to the non-exclusive jurisdiction of each such court with respect to any such
action, suit or proceeding.  Each party hereto hereby waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions, suits or proceedings brought in any such court and hereby further
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought therein has been brought in an inconvenient forum.

 

(b)                                 The Borrower hereby agrees that a final
judgment against it in any action, suit or proceeding taken in any Federal or
State Court in the Borough of Manhattan, The City of New York in accordance with
clause (a) above shall be conclusive and may be enforced in any jurisdiction by
suit on the judgment, a certified copy of which judgment shall be conclusive
evidence thereof, or by any other means provided by law.

 

(c)                                  The Borrower hereby irrevocably appoints CT
Corporation System, with offices at the date of this Agreement at 111 8th
Avenue, New York, NY 10011, as its authorized agent on which any and all legal
process may be served in any such action, suit or proceeding brought in any
Federal or State court located in the Borough of Manhattan, The City of New
York.  The Borrower agrees that service of process in respect of it upon such
agent, together with written notice of such service given to it as provided in
Section 15.08, shall be deemed to be effective service of process upon it in any
such action, suit or proceeding.  The Borrower agrees that the failure of such
agent to give notice to it of any such service shall not impair or affect the
validity of such service or any judgment rendered in any action, suit or
proceeding based thereon.  If for any reason such agent shall cease to be
available to act as such, the Borrower agrees to designate a new agent in the
Borough of Manhattan, the City of New York, on the terms and for the purposes of
this Section.  Nothing herein shall be deemed to limit the ability of any other
party hereto to serve any such legal process in any other manner permitted by
applicable law or to obtain jurisdiction over any such party or bring actions,
suits or proceedings against it in such other jurisdictions, and in such manner,
as may be permitted or required by applicable law.

 

(d)                                 The Borrower hereby irrevocably consents and
agrees, for the benefit of the Collateral Agent and each Secured Party, that any
legal action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Agreement or the Senior Debt Obligations may be brought in Bolivia and
hereby irrevocably accepts and submits to the non-exclusive jurisdiction of such
courts with respect to any such action, suit or proceeding.

 

(e)                                  To the extent that the Borrower has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution, sovereign immunity or otherwise) with
respect to itself or its property, it hereby irrevocably waives such immunity,
to the fullest extent permitted by law, in respect of its obligations under this
Agreement and the other Financing Documents.

 

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15.13  Judgment Currency.  The obligations of the Borrower to make payments
under the Financing Documents shall not be discharged by an amount paid in any
currency other than Dollars, whether pursuant to a court or arbitral judgment or
otherwise, to the extent that the amount so paid upon conversion to Dollars and
transferred to New York, New York under normal banking procedures does not yield
the amount of Dollars due, and the Borrower hereby, as a separate obligation and
notwithstanding any such judgment, agrees to indemnify the Collateral Agent, the
Agents and each other Secured Party against, and to pay to the Collateral Agent,
the Agents and each Senior Lender on demand, in Dollars, any difference between
the sum originally due in Dollars and the amount of Dollars received upon any
such conversion and transfer.

 

15.14  Expenses; Indemnity. 

 

(a)                                  Without duplication with respect to any
similar obligations contained in the Senior Loan Agreements or the Mandatory
Metals Hedge Agreements, the Borrower shall pay promptly (i) all reasonable and
documented fees of and out-of-pocket costs and expenses incurred after the
Closing Date by the respective Agents and the other Secured Parties (including
the reasonable and documented fees and expenses of counsel, consultants and
advisors to them) in connection with the negotiation, preparation, execution,
delivery, administration, translation, authentication, notarization,
legalization, recordation or registration, if required, of this Agreement, any
other Financing Document, the Mandatory Metals Hedge Agreements, any PRI Policy
and any other agreement contemplated hereby or thereby (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable and documented fees of and out-of-pocket costs and expenses incurred
after the Closing Date by the Agents and the other Secured Parties (including
fees and expenses of counsel, consultants and advisors to them) in connection
with any amendments, modifications or waivers of the provisions of any Financing
Document or Mandatory Metals Hedge Agreement (whether or not the transactions
contemplated hereby or thereby shall be consummated), (iii) all reasonable and
documented out-of-pocket expenses incurred after the Closing Date by the Agents
or any other Secured Party (including (A) the reasonable fees, charges and
disbursements of common counsel, consultants and advisors for the Agents or any
of the other Secured Parties and (B) costs and expenses of pursuing any claim
under any PRI Policy or making any assignment to a PRI Insurer in connection
therewith) in connection with the exercise, enforcement, protection or
preservation of its rights in connection with the Financing Documents or
Mandatory Metals Hedge Agreements, including its rights under this
Section 15.14, or in connection with the Senior Loans made under each Senior
Loan Agreement or Guaranteed Apex Metals Obligations, including in connection
with any workout whether or not consummated, restructuring, negotiations in
respect thereof and (iv) the exercise by a PRI Insurer of any of its rights of
access to the business records of the Borrower or to the Project (whether under
this Agreement or its PRI Policy).  To the extent that any Agent has entered
into a Fee Letter with the Borrower, such Fee Letter shall prevail in the event
of any inconsistency between this Agreement and such Fee Letter.

 

(b)                                 The Borrower shall indemnify each Agent,
each Senior Lender (other than any Tranche B Senior Lender or CAF in the case of
clause (iv) below), each Hedge Bank and each Related Party of any of the
foregoing Persons (each, an “Indemnitee”) from, and hold each Indemnitee
harmless against, any and all losses, claims, damages, liabilities and related
expenses, including the reasonable and documented fees, charges and
disbursements of any

 

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counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of the Financing Documents, the performance by the parties hereto or
thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) any Senior
Loans or the use of the proceeds therefrom, (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnitee is a party thereto or (iv) any termination of any PRI
Policy, including any premia or fees payable to, or deducted from a claim
payment made by, the PRI Insurer; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are incurred by reason of the gross negligence
or willful misconduct of such Indemnitee as finally determined by a court of
competent jurisdiction.  Without limiting the generality of the foregoing, the
Borrower will indemnify each Indemnitee from, and hold each of them harmless
against, any losses, liabilities, claims, damages or expenses described in the
preceding sentence (excluding any loss, liability, claim, damage or expense
incurred by reason of the gross negligence or willful misconduct of the Person
to be indemnified as finally determined by a court of competent jurisdiction)
arising under any Environmental Law as a result of the past, present or future
operations of the Borrower (or any predecessor in interest to the Borrower) or
the environmental contamination of any site or facility owned, operated, mined
or leased at any time by (or, in the case of “operated or mined” at the
direction of) the Borrower (or any such predecessor in interest) in connection
with the Project, or any Release or threatened Release of any Hazardous
Materials by the Borrower (or any such predecessor in interest) at or from any
such site or facility.

 

(c)  The Borrower agrees to indemnify and hold harmless the Collateral Agent
each other Agent, and each Secured Party from, and shall reimburse the
Collateral Agent, each other Agent and each Secured Party for, any present or
future claim for liability for any stamp or other similar documentary tax and
any penalties or interest with respect thereto, which may be assessed, levied or
collected by any jurisdiction in connection with this Agreement, the other
relevant Financing Documents or the PRI Policies or the attachment or perfection
of the security interest granted to the Secured Parties in any Collateral. 

 

(d)                                 All amounts due under this Section 15.14
shall be promptly paid after written demand therefor in accordance with this
Section 15.14.  The obligations of the Borrower under this Section shall survive
the resignation or removal of the Collateral Agent or any Agent and the
termination of the other provisions of this Agreement.

 

15.15  Survival.  The provisions of Sections 12.06, 13.10, 13.11, 15.14 and this
Section 15.15 shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Senior Loans, the expiration or termination of the Senior Loan Commitments or
the termination of this Agreement or any provision thereof.

 

15.16  Right to Setoff.  If an Enforcement Direction has been delivered, each
Senior Lender and each Hedge Bank is hereby authorized at any time and from time
to time, to the fullest extent permitted by law but subject to the provisions of
this Agreement and the Security Documents, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such

 

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Senior Lender or Hedge Bank to or for the credit or the account of the Borrower
against the Senior Loan Obligations or Guaranteed Apex Metals Obligations, as
applicable, due and payable to such Senior Lender or Hedge Bank at the time of
such offset.  The rights of each Senior Lender and Hedge Banks under this
Section 15.16 are in addition to other rights and remedies (including other
rights of setoff) that such Senior Lender or Hedge Banks may have.

 

15.17  Successors and Assigns.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby and by the Financing Documents or
Mandatory Metals Hedge Agreements, except that the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Senior Lender and Hedge Bank, as applicable (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void).  Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person, other than the parties hereto and their
respective successors and assigns permitted hereby, any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

15.18  Waivers; Amendments. 

 

(a)                                  Except as otherwise expressly provided in
this Agreement, any applicable Financing Document or any Mandatory Metals Hedge
Agreement, no failure or delay by any Agent or any other Secured Party in
exercising any right or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies of the Agents and the other Secured
Parties hereunder are cumulative and are not exclusive of any rights or remedies
that they would otherwise have.  No waiver of any provision of this Agreement or
consent to any departure by the Borrower, Apex Metals, Apex Luxembourg or Apex
Sweden therefrom shall in any event be effective unless such waiver or consent
shall be permitted by clause (b) of this Section 15.18, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.  Without limiting the generality of the foregoing, the making of a
Senior Loan shall not be construed as a waiver of any Default or Event of
Default, regardless of whether any Agent or any Senior Lender may have had
notice or knowledge of such Default or Event of Default at the time.

 

(b)                                 Except as otherwise expressly provided
herein, this Agreement may be waived, amended, modified or supplemented only by
an agreement in writing entered into by the Borrower, Apex Metals, Apex Sweden,
Apex Luxembourg and the Majority Secured Parties or by the Borrower, Apex
Metals, Apex Sweden, Apex Luxembourg and the Administrative Agent acting with
the consent of the Majority Secured Parties (except that no Hedge Bank shall
have any right in any circumstance to vote in connection with the waiver or
amendment of any condition precedent to disbursement specified in Sections 11.02
and 11.03 hereof); provided that, subject to clause (c) below, no such agreement
shall (i) reduce any amounts payable to a Secured Party hereunder, without the
written consent of each Secured Party affected thereby, (ii) postpone the
scheduled date of payment of any amounts payable to a Secured Party hereunder,
or reduce the amount of, waive or excuse any such payment without the written
consent of each Secured Party affected thereby, (iii) postpone the scheduled
date of expiration of,

 

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or increase, any Senior Loan Commitment, without the written consent of each
Senior Lender affected thereby, (iv) change Section 2.01, 2.02, 2.03, 2.04 or
2.05 or any other provision in any other Financing Document in a manner that
would alter (A) the pari passu status of the Secured Debt Obligations, (B) the
prepayments or (C) the pro rata sharing of payments or terminations, in each
case as required thereby, without the written consent of each Secured Party
(other than the Agents), (v) change the definition of “Majority Lenders” or
“Supermajority Lenders”, without the written consent of each Senior Lender,
(vi) change any of the provisions of this Section or the definition of “Majority
Secured Parties” or “Supermajority Secured Parties”, or any other provision
hereof specifying the number or percentage of Secured Parties required to waive,
amend or modify any rights hereunder or make any determination or grant any
consent hereunder, without the written consent of each Secured Party (other than
the Agents), (vii) amend, modify or otherwise affect the rights or duties of the
Collateral Agent or any Agent hereunder without the prior written consent of the
Collateral Agent or, as applicable, the relevant Agent, (viii) release a
material part of the Collateral or terminate any security interest created by
the Security Documents without the written consent of each Secured Party (other
than the Agents), (ix) release any Affiliated Obligor from (A) all or
substantially all of its obligations under or (B) any guarantee or payment
obligation under, any Financing Document to which it is a party, (x) materially
change the requirement for achieving Completion (other than in accordance with
the Completion Agreement) without the written consent of each Secured Party
(other than the Agents), (xi) waive or amend any condition precedent to
disbursement set forth in Section 11.02 or 11.03 in connection with the Initial
Disbursement without the consent of each Senior Lender, (xii) waive any
condition to termination set forth in Section 15.01, without the written consent
of each Secured Party, (xiii) change any provision requiring ratable funding of
Senior Loans, without the written consent of each Senior Lender, (xiv) change
any provision of any payment waterfall set out in this Agreement that would have
the effect of preferring one Secured Party over another without the consent of
the Secured Party disadvantaged thereby, (xv) waive any Event of Default under
Section 10.01(ee)(i) without the written consent of each Secured Party or (xvi)
change the definition of “Majority Hedge Banks” without the written consent of
each Hedge Bank.

 

(c)                                  The provisions of Article XIV may be
waived, amended, modified or supplemented only by an agreement in writing
entered into by the Administrative Agent and each Secured Party and no consent
of the Borrower, Apex Metals, Apex Sweden or Apex Luxembourg shall be required.

 

(d)                                 Sections 12.08 and 12.09 may be waived,
amended, modified or supplemented only by an agreement in writing entered into
by the Administrative Agent and the Majority Bank Lenders, in the case of
Section 12.08 and the Majority Hedge Banks, in the case of Section 12.09, and no
consent of the Borrower, Apex Metals, Apex Sweden or Apex Luxembourg shall be
required.

 

(e)                                  Unless otherwise specifically provided
herein or in another Financing Document, the Administrative Agent shall take and
shall only direct the Collateral Agent to take, and the Collateral Agent shall
only take, such actions and execute such amendments, modifications, waivers and
supplements to such Financing Documents (other than this Agreement) to which
they are a party as directed by the Majority Secured Parties; provided that no
such action or agreement in respect of such Financing Document shall (i) reduce
any amounts

 

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payable to a Secured Party thereunder, without the written consent of each
Secured Party affected thereby, (ii) postpone the scheduled date of payment of
any amounts payable to a Secured Party thereunder, or reduce the amount of,
waive or excuse any such payment without the written consent of each Secured
Party affected thereby, (iii) alter the pari passu status of the Secured Debt
Obligations, without the written consent of each Secured Party (other than the
Agents),  (iv) change any provision thereof specifying the number or percentage
of Secured Parties required to waive, amend or modify any rights thereunder or
make any determination or grant any consent thereunder, without the written
consent of each Secured Party (other than the Agents), (v) amend, modify or
otherwise affect the rights or duties of the Collateral Agent or any Agent
thereunder without the prior written consent of the Collateral Agent or, as
applicable, the relevant Agent, (vi) release a material part of the Collateral
or terminate any security interest created thereunder without the written
consent of each Secured Party other than the Agents, (vii) change any provision
of any payment waterfall set out in this Agreement that would have the effect of
preferring one Secured Party over another without the consent of the Secured
Party disadvantaged thereby, or (viii) release any Affiliated Obligor from
(A) all or substantially all of its obligations under or (B) any guarantee or
payment obligation under, any Financing Document to which it is a party without
the written consent of each Secured Party (other than the Agents).

 

(f)                                    The Borrower shall provide to each PRI
Insurer and the Administrative Agent (for delivery to the other Secured Parties)
written notice of any proposed amendment, modification or waiver of any
Financing Document (together with a copy of such proposed amendment,
modification or waiver).

 

15.19  Conflicts.  In case of any conflict or inconsistency between this
Agreement and any Security Document (with respect to the rights and obligations
of the parties prior to enforcement and the conditions and terms on which
security interests may be enforced) this Agreement shall control.

 

15.20  Effectiveness.  This Agreement shall come into full force and effect upon
its execution and delivery by each of the parties named on the signature
pages hereof.

 

15.21  Headings.  Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and
shall not affect the construction of, or be taken into consideration in
interpreting, this Agreement.

 

15.22  Compliance with Applicable Law.  Notwithstanding any provision of this
Agreement, but without in any way limiting any rights of the Collateral Agent or
the Secured Parties under Article X in connection with any Event of Default
resulting from the taking or refraining from taking of any action pursuant to
any law, statute, regulation, rule, order, injunction, decree, writ or judgment
binding on it or affecting its properties, the Borrower shall not be obligated
to take or refrain from taking any action otherwise required under this
Agreement if at the time the Borrower is to take or refrain from taking such
action, such action is contrary to any law, statute, regulation, rule, order,
injunction, decree, writ or judgment binding on it or affecting its properties.

 

15.23  Language.  If any Financing Document, financial statements, Material
Project Document, notice, certificate, communication or other such document
required to be

 

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delivered to the Agents or any other Secured Party pursuant to this Agreement or
any other Financing Document is not originally executed, delivered or given in
the English language, the Borrower shall, at the request of any Secured Party,
additionally and at its own expense, promptly provide a certified English
translation thereof.

 

15.24  Reinstatement.  This Agreement shall automatically be reinstated if and
to the extent that for any reason any payment by or on behalf of the Borrower in
respect of the Secured Debt Obligations is rescinded or must otherwise be
restored to Borrower or the Person that made such payment on the Borrower’s
behalf by any holder of the Secured Debt Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Borrower shall
indemnify the Collateral Agent and each other Secured Party on demand for all
reasonable and documented costs and expenses (including fees of counsel)
incurred by the Collateral Agent or such Secured Party in connection with such
rescission or restoration.

 

15.25  No Consequential Damages.  No Affiliated Obligor nor any Secured Party
shall assert any claim against any Affiliated Obligor or Secured Party, as the
case may be, on any theory of liability, for any lost profits or special,
indirect or consequential damages or (to the fullest extent lawful) any punitive
damages arising out of, in connection with, or as a result of, this Agreement or
any other Financing Document (except as the same may be asserted by a third
party in respect of any claim for which a Secured Party is indemnified under
Section 15.14), and each of the parties hereto hereby forever waives, releases
and agrees not to sue upon any claim for any such lost profits or special,
indirect, consequential or (to the fullest extent lawful) punitive damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.

 

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IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed as
of the date first above written.

 

 

MINERA SAN CRISTÓBAL, S.A.

 

 

 

 

 

 

 

By:

/s/ Jeffrey G. Clevenger

 

 

Name: Jeffrey G. Clevenger

 

 

Title: Director

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

 

 

)

 

 

On the 1st day of December in the year 2005, before me personally came
                             , to me known, who, being by me duly sworn, did
depose and say that she/he resides at
                                                               , that she/he is
a                                      of
                                         , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-1

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

 

 

APEX SILVER MINES SWEDEN AB,

 

 

 

 

 

 

 

By:

/s/Mark A. Lettes

 

 

Name: Mark A. Lettes

 

 

Title: Deputy Director

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

 

 

)

 

 

On the 1st day of December in the year 2005, before me personally
came                                    , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                          ,
that she/he is a
                                   of                                               ,
the corporation described in and which executed the above instrument; and that
she/he signed her/his name thereto by order of the board of directors of said
institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-2

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

 

 

APEX LUXEMBOURG S.A. R.L.

 

 

 

 

 

 

 

By:

/s/ Mark A. Lettes

 

 

Name: Mark A. Lettes

 

 

Title: Manager

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

 

 

)

 

 

On the 1st day of December in the year 2005, before me personally
came                                      , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                              ,
that she/he is a                                      of
                                                    , the corporation described
in and which executed the above instrument; and that she/he signed her/his name
thereto by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-3

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

 

 

APEX METALS GMBH

 

 

 

 

 

 

 

By:

/s/ Mark A. Lettes

 

 

Name: Mark A. Lettes

 

 

Title: Managing Officer

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

 

 

)

 

 

On the 1st day of December in the year 2005, before me personally
came                             , to me known, who, being by me duly sworn, did
depose and say that she/he resides at
                                                                                   ,
that she/he is a
                                     of                                                 ,
the corporation described in and which executed the above instrument; and that
she/he signed her/his name thereto by order of the board of directors of said
institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-4

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

 

 

BNP PARIBAS,

 

as Administrative Agent

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

Name: Jeffrey Stufsky

 

 

Title: Managing Director

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

Name: Matthew Lewis

 

 

Title: Vice President

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

 

 

)

 

 

On the 1st day of December in the year 2005, before me personally
came                                     , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                    ,
that she/he is a                                        of
                                           , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-5

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

 

 

BARCLAYS CAPITAL,

 

as Technical Agent

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

Name: Jeffrey Stufsky

 

 

Title: Attorney in Fact

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

 

 

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                , to me known, who, being by me duly sworn, did
depose and say that she/he resides at
                                                                                ,
that she/he is a
                                     of                                                   ,
the corporation described in and which executed the above instrument; and that
she/he signed her/his name thereto by order of the board of directors of said
institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-6

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

 

 

JPMORGAN CHASE BANK, N.A.,

 

as Collateral Agent

 

 

 

 

 

 

 

By:

/s/ Lucia Jaklitsch

 

 

Name: Lucia Jaklitsch

 

 

Title: Vice President

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

 

 

)

 

 

On the 1st day of December in the year 2005, before me personally
came                                    , to me known, who, being by me duly
sworn, did depose and say that she/he resides
at                                                                                  ,
that she/he is a                                     of JP Morgan Chase Bank,
N.A., the banking association described in and which executed the above
instrument; and that she/he signed her/his name thereto by order of the board of
directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-7

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

 

 

JPMORGAN CHASE BANK, N.A.,

 

as Securities Intermediary

 

 

 

 

 

 

 

By:

/s/ Lucia Jaklitsch

 

 

Name: Lucia Jaklitsch

 

 

Title: Vice President

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

 

 

)

 

 

On the 1st day of December in the year 2005, before me personally
came                                    , to me known, who, being by me duly
sworn, did depose and say that she/he resides
at                                                                                            ,
that she/he is a                                of JPMorgan Chase Bank, N.A.,
the banking association described in and which executed the above instrument;
and that she/he signed her/his name thereto by order of the board of directors
of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-8

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

 

 

CORPORACIÓN ANDINA DE FOMENTO,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Jose A. Carrera

 

 

 

Name: Jose A. Carrera

 

 

Title: Representante

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-9

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

 

 

BARCLAYS BANK PLC,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Attorney in Fact

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-10

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

 

 

BNP PARIBAS,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Managing Director

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Vice President

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-11

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

 

 

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ John W. Wade

 

 

 

Name: John W. Wade

 

 

Title: Director

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-12

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

 

 

KFW,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Attorney in Fact

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Attorney in Fact

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-13

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

 

 

NATEXIS BANQUES POPULAIRES,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Amit Roy

 

 

 

Name: Amit Roy

 

 

Title: Vice President

 

 

 

 

 

 

 

By:

/s/ Anthony Perna

 

 

 

Name: Anthony Perna

 

 

Title: Vice President

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came Anthony
H. Perna and Amit Roy, to me known, who, being by me duly sworn, did depose and
say that she/he resides at 1251 Avenue of the Americas, 34th floor, that she/he
is each a Vice President, Project Finance of Natexis Banques Populaires, the
corporation described in and which executed the above instrument; and that
she/he signed her/his name thereto by order of the board of directors of said
institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-14

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

 

 

CATERPILLAR FINANCIAL SERVICES (UK)
LTD., as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Attorney in Fact

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-15

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

 

 

N M ROTHSCHILD & SONS LIMITED,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Attorney in Fact

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Attorney in Fact

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-16

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

 

 

EXPORT DEVELOPMENT CANADA,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Anton Pfisztner

 

 

 

Name: Anton Pfisztner

 

 

Title: Project Finance – Financial Services
Manager

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-17

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

 

 

FORTIS CAPITAL CORP.,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Attorney in Fact

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Attorney in Fact

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-18

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

 

 

NORDKAP BANK AG,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Attorney in Fact

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Attorney in Fact

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-19

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

 

 

RMB INTERNATIONAL (DUBLIN) LIMITED,

 

as a Senior Lender

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Attorney in Fact

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Attorney in Fact

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

S-20

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

 

 

BARCLAYS BANK PLC,

 

as a Hedge Bank

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Attorney in Fact

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-21

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

 

 

BNP PARIBAS,

 

as a Hedge Bank

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Managing Director

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Vice President

 

 

 

 

 

 

STATE OF NEW YORK

)

 

) ss.:

COUNTY OF

)

 

 

On the 1st day of December in the year 2005, before me personally came
                                        , to me known, who, being by me duly
sworn, did depose and say that she/he resides at
                                                                                      ,
that she/he is a                                    of
                                          , the corporation described in and
which executed the above instrument; and that she/he signed her/his name thereto
by order of the board of directors of said institution.

 

 

 

 

Notary Public

 

 

My commission expires:

 

S-22

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

 

Appendix A
to the Common Security Agreement

 

DEFINITIONS

 

In this Appendix, the Common Security Agreement and the other Appendices hereto
and in any other document that references this Appendix, the following terms
shall have the meanings assigned below (and the rules of interpretation set
forth in Section 1.02 of the Common Security Agreement shall apply, mutatis
mutandis, as if set forth in full in this Appendix) (and unless otherwise
specified, Section references in this Appendix are to sections of the Common
Security Agreement):

 

“Abandonment” shall occur if the Borrower voluntarily ceases construction or
production activities of the Project or otherwise places the Project on a “care
and maintenance” basis and the Borrower expressly declares its intention that
mining activities not be resumed.  If the Borrower ceases construction or
production activities and such cessation continues without interruption for
30 days (other than by reason of the occurrence and continuance of an Event of
Force Majeure), Majority Secured Parties shall have the right to deliver to the
Borrower a notice requesting a certificate to the effect that the Borrower
intends to cause construction or production activities to resume as soon as is
commercially practicable.  If within 15 days following delivery of such notice
the certificate is not delivered, or if within 30 days following delivery of
such certificate the Borrower does not resume and continue substantial
construction or production activities of the Project, then Majority Secured
Parties shall have the right to declare that Abandonment has occurred.

 

“Accelerating Lender” has the meaning set forth in Section 2.07(a).

 

“Accelerating Lender Group” has the meaning set forth in Section 2.07(a).

 

“Acceptable Bank” shall mean any bank or other financial institution which (a)
is organized under the laws of any country that is a member of the Organization
for Economic Cooperation and Development and that has a long-term senior
unsecured debt rating of “A-” or better by S&P and “A3” or better by Moody’s for
Dollar-denominated indebtedness; or (b) is otherwise acceptable to the Majority
Lenders.

 

“Acceptable Buyer” means a Person listed on Annex 1 and any other Person
approved by the Majority Secured Parties acting reasonably.

 

“Acceptable Funding Plan” has the meaning set forth in the Completion Agreement.

 

“Account Enforcement Notice” has the meaning set forth in Section 4.05(a).

 

“Additional Escrow Account” has the meaning given to that term in Appendix A to
the Completion Agreement.

 

“Additional Material Project Document” means any contract, agreement or other
arrangement entered into by the Borrower after the Closing Date other than a
contract executed by the EPCM Contractor as the agent of the Borrower that
(a) replaces or supersedes a Material Project Document that is in effect on the
Closing Date, (b) has a term of more than one year and has

 

A-1

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

 

payments due to or from the Borrower thereunder in excess of $10 million or
(c) the failure of the Borrower to have and maintain could reasonably be
expected to have a material adverse effect on the Borrower’s ability to
(i) construct the Project in all material respects in accordance with the
Project Description, (ii) operate the Project in all material respects in
accordance with the Operating Plan, (iii) achieve Completion by the Limit
Completion Date or (iv) pay the Secured Debt Obligations when due.

 

“Administrative Agent” means BNP Paribas, in its capacity as Administrative
Agent.

 

“Affiliate” of a Person means any other Person (a) which has a 25% or more
beneficial equity interest in such Person, (b) in which such Person has a 25% or
more beneficial equity interest or (c) in which another Person which has a 25%
or more beneficial equity interest in such Person has a 25% or more beneficial
equity interest.

 

“Affiliated Obligors” means, collectively, the Borrower, the Sponsor, Apex
Luxembourg, Apex Sweden and Apex Metals.

 

“Agents” means, collectively, the Collateral Agent, the Administrative Agent and
the Technical Agent, and “Agent” means any of them.

 

“Agreement” means this Common Security Agreement.

 

“AM Counterparty’s Consent” has the meaning given to such term in the
Cross-Guarantee and Security Agreement.

 

“Anti-Terrorism Order” has the meaning set forth in Section 7.01(p).

 

“Apex Group” means ASM, Apex Luxembourg, Apex Sweden and their respective
Affiliates (other than the Borrower).

 

“Apex Luxembourg” means Apex Luxembourg S.A. R.L., a Luxembourg société à
responsabilité limitée.

 

“Apex Luxembourg Shares” has the meaning given to that term in Section 3.01(a)
of the Sponsor Pledge Agreement.

 

“Apex Metals” means Apex Metals GmbH, a company with limited liability organized
under the laws of Switzerland; with its seat in Zug, canton of Zug, Switzerland;
and registered address: c/o Juris Treuhand AG, Industriestrasse 47, 6304 Zug,
Switzerland.

 

“Apex Metals Account” has the meaning specified in Section 4.01(b)(ii).

 

“Apex Metals Documents” means this Agreement, the Transfer Restrictions
Agreement, Apex Metals Management and Services Agreement, each Third Party
Concentrate Sales Agreement, the Borrower Concentrate Sales Agreement, the
Cross-Guarantee and Security Agreement, the Project Document Guarantee described
in clause (b) of the definition thereof and each Mandatory Metals Hedge
Agreement.

 

A-2

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

 

“Apex Metals Management and Services Agreement” means the Apex Metals Management
and Services Agreement dated December 1, 2005 between Apex Metals and the
Service Company.

 

“Apex Metals Net Payment Amount” means, with respect to any Hedge Bank on any
date on which a payment is due in respect of a Mandatory Metals Hedge
Transaction (a “Hedge Payment Date”), the net obligations (expressly excluding
obligations in respect of early terminations) of (a) Apex Metals to such Hedge
Bank or (b) such Hedge Bank to Apex Metals, as the case may be, with respect, in
each case, to Mandatory Metals Hedge Transactions under the Mandatory Metals
Hedge Agreement to which the Hedge Bank and Apex Metals are party.

 

“Apex Metals Obligations” means the obligations of Apex Metals under the
Mandatory Metals Hedge Agreements (including all Mandatory Metals Hedge
Transactions thereunder).

 

“Apex Metals Quotas” has the meaning set forth in Section 3.13.

 

“Apex Metals Subordinated Debt” means unsecured Indebtedness (including
capitalized interest) of Apex Metals, whether currently outstanding or hereafter
created, ranking in payment and upon liquidation junior to the Secured Debt in
accordance with the subordination terms attached as Appendix A-2 to the Transfer
Restrictions Agreement which is assigned and pledged as security for the Secured
Debt Obligations pursuant to a Security Document.  No such indebtedness of Apex
Metals will constitute Apex Metals Subordinated Debt until such time as the Apex
Metals Subordinated Lender assumes in writing, either pursuant to the terms of a
Financing Document or otherwise, all of the obligations applicable to a Apex
Metals Subordinated Lender under and in accordance with this Agreement and the
Apex Metals Subordination Agreement.

 

“Apex Metals Subordinated Lender” means each of ASM, Apex Sweden, Apex
Luxembourg and any other holder of Apex Metals Subordinated Debt so long as it
continues to hold such Apex Metals Subordinated Debt.

 

“Apex Metals Subordinated Notes” has the meaning set forth in the
Cross-Guarantee and Security Agreement.

 

“Apex Metals Subordination Agreement” has the meaning set forth in Section
5.06(b) of the Cross-Guarantee and Security Agreement.

 

“Apex Sweden” means Apex Silver Mines Sweden AB, a Swedish privat aktíebolag.

 

“Apex Sweden Shares” has the meaning set forth in Section 3.11.

 

“Applicable Accounting Principles” means generally accepted accounting
principles, consistently applied, as in effect from time to time in the
jurisdiction in which a Person is incorporated; provided, that with respect to
any Person not incorporated in the United States and that is not otherwise
required by Government Rules to prepare such a reconciliation, Applicable
Accounting Principles shall require preparation of a reconciliation of such
Person’s financial statements to U.S. GAAP.

 

A-3

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

 

“ASC Bolivia” means ASC Bolivia LDC, sucursal Bolivia, the Bolivian branch of a
Cayman Island company limited by shares.

 

“ASC Bolivia Default” has the meaning set forth in Section 6.01 of the ASC
Bolivia Pledge Agreement.

 

“ASC Bolivia Pledge Agreement” means that certain ASC Bolivia Pledge and
Agreement dated December 1, 2005 between ASC Bolivia and the Collateral Agent.

 

“ASM” means Apex Silver Mines Limited, a Cayman Islands exempted company limited
by shares.

 

“Authorizations” means all third part(ies)’, corporate, creditors’,
shareholders’, partners’ and members’ resolutions, approvals or consents (but
excluding, to the extent included, Government Approvals).

 

“Authorized Depositary” means any Bolivian branch of a foreign bank (or a
subsidiary of a foreign bank that benefits from an unconditional guarantee from
such foreign bank) which has a rating of at least “A-” from S&P or at least the
equivalent rating from Moody’s.

 

“Authorized Investments” means any of the following investments in Dollars:

 

(a)           direct obligations of the United States of America (including
obligations issued or held in book-entry form on the books of the Department of
the Treasury of the United States of America) or obligations, the timely payment
of principal and interest of which is fully guaranteed by the United States
government or any agency or instrumentality thereof;

 

(b)           evidences of ownership of a proportionate interest in specified
obligations described in clause (a) above;

 

(c)           trust funds, trust accounts, interest-bearing demand or time
deposits (including certificates of deposit) which are held in banks having
general obligations rated at least “A” category by S&P or Moody’s;

 

(d)           commercial paper rated (on the date of acquisition thereof) at
least A-1 or P-1 or equivalent by S&P or Moody’s, respectively (or an equivalent
rating by another nationally recognized credit rating agency of similar standing
if neither of such corporations is then in the business of rating commercial
paper), maturing not more than 270 days from the date of creation thereof;

 

(e)           money market mutual funds, including, without limitation the
JPMorgan Funds or any other mutual fund for which the trustee or any affiliate
of the trustee serves as investment manager, administrator, shareholder
servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the
trustee or an affiliate of the trustee receives fees from such funds for
services rendered, (ii) the trustee charges and collects fees for services
rendered pursuant to this Agreement, which fees are separate from the fees
received from such funds, and (iii) services performed for such funds and
pursuant to this

 

A-4

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

 

Agreement may at times duplicate those provided to such funds by the trustee or
its affiliates; or

 

(f)            auction rate preferred stock with liquidation rights at par of 28
days rated at least “A” or better by S&P and A2 or better by Moody’s.

 

“Authorized Officer” means any officer (in the case of the Collateral Agent
within the Corporate Trust Office), including any Vice President, Assistant Vice
President (or in the case of the Collateral Agent, Senior Trust Officer or Trust
Officer) or any other Person who customarily performs functions similar to those
performed by such Persons, who on the date of this Agreement shall be such
officers, or to whom any matter is referred because of such Person’s knowledge
of, and familiarity with, the particular subject and who shall have direct
responsibility for the administration of this Agreement and the other Financing
Documents to which it is a party.

 

“Available Cash” has the meaning set forth in the Completion Agreement.

 

“Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C.
§§ 101-1330.

 

“Base Equity Contribution” means a transfer from the Equity Account to the Loan
Proceeds Account for the purpose of paying Planned Project Costs.

 

“Bolivian Accounts” means the Expense Account, any Bolivian Proceeds Account,
any Bolivian Insurance Account and any Bolivian Expropriation Account.

 

“Bolivian Equity Expropriation Account” has the meaning set forth in
Section 3.07.

 

“Bolivian Expropriation Account” has the meaning set forth in Section
5.08(c)(i).

 

“Bolivian Insurance Account” has the meaning set forth in Section 5.05(c)(i).

 

“Bolivian Insurance Policies” means insurance policies issued to the Borrower by
insurers incorporated or otherwise organized, and authorized to operate, in
Bolivia.

 

“Bolivian Proceeds Account” has the meaning set forth in Section 4.01(j)(ii).

 

“Bolivian Security Documents” means any document that is governed by the laws of
the Republic of Bolivia which is intended to create a valid security interest in
or conditional assignment of property of any Person as well as any power of
attorney related thereto.

 

“Bolivianos” means the lawful currency of Bolivia.

 

“Borrower” means Minera San Cristóbal S.A., a sociedad anónima organized under
the laws of Bolivia.

 

“Borrower Concentrate Sales Agreement” means the Concentrate Sales Agreement
dated December 1, 2005 between the Borrower and Apex Metals.

 

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“Borrower Management and Services Agreement” means the Borrower Management and
Services Agreement dated December 1, 2005 between the Service Company and the
Borrower.

 

“Borrower Shares” means the shares in the Borrower representing all the issued
share capital of the Borrower, including any capital consisting of irrevocable
capital contributions (aportes irrevocables a cuenta de futuros aumentos de
capital).

 

“Borrower’s Operating and Financial Report” means the quarterly operating and
financial report referred to in Section 6.01(c)(ii).

 

 “Bulk Concentrate” means bulk concentrates produced by the Project as further
described in section 12.2.5 of the Independent Engineer Report.

 

“Business Day” means a day on which banks are generally open for business in New
York, New York, United States of America, Caracas, Venezuela and London,
England.

 

“BVICO” means Ingelec Electricity Transportation Investments Corp., a company
organized under the laws of the British Virgin Islands and the parent company of
the Transporter.

 

“CAF Senior Loan Agreement” means that certain Senior Loan Agreement dated
December 1, 2005 between the Borrower and Corporación Andina de Fomento.

 

“Cash Sweep Prepayments” has the meaning set forth in Section 9.02.

 

“Cessation Notice” has the meaning set forth in Section 4.05(d).

 

“CGSA Default” has the meaning set forth in Section 7.01 of the Cross-Guarantee
and Security Agreement.

 

“CGSA Secured Obligations” has the meaning given to that term in the
Cross-Guarantee and Security Agreement.

 

“Chilean Security Documents” means any document that is governed by the laws of
the Republic of Chile which is intended to create a valid security interest in
or conditional assignment of property of any Person as well as any power of
attorney related thereto.

 

“Closing Date” has the meaning set forth in Section 11.01.

 

“Collateral” means all property (including contractual rights) in which a
security interest is created under Article III of this Agreement or under any
other Security Document.

 

“Collateral Agent” has the meaning set forth in Section 13.01.

 

“Commercial Bank Senior Lenders” means the banks providing Secured Debt to the
Borrower pursuant to the terms of the Commercial Bank Senior Loan Agreement.

 

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“Commercial Bank Senior Loan Agreement” means that certain Loan Agreement dated
December 1, 2005 among the Borrower, BNP Paribas, Barclays Bank PLC, Australia
and New Zealand Banking Group Limited, KfW, Natexis Banques Populaires,
Caterpillar Financial Services (UK) Ltd., N M Rothschild & Sons Limited, Export
Development Canada, Fortis Capital Corp., Nordkap Bank AG and RMB International
(Dublin) Limited.

 

“Commitment Termination Date” means the earliest of (a) the date of the full
drawdown of the Senior Loan Commitments, (b) the Completion Date, (c) May 31,
2007 and (d) the date on which the Senior Loan Commitments are terminated in
accordance with the provisions of the Financing Documents.

 

“Completion” has the meaning given to that term in the Completion Agreement.

 

“Completion Agreement” means the Completion Agreement dated as of December 1,
2005, among the Sponsor, the Technical Agent, the Administrative Agent and the
Collateral Agent, as the same may be amended or supplemented from time to time
in accordance with the terms thereof.

 

“Completion Certificates” has the meaning given to that term in the Completion
Agreement.

 

“Completion Date” means the date on which Completion occurs.

 

“Completion Default” has the meaning set forth in Section 6.01 of the Completion
Agreement.

 

“Completion Test” has the meaning set forth in Section 2.01 of the Completion
Agreement.

 

“Completion Test Period” has the meaning set forth in Appendix B to the
Completion Agreement.

 

“Concentrate” means Bulk Concentrate, Lead Concentrate or Zinc Concentrate, as
the context may require.

 

“Concentrate Sales Guarantee” means the Guarantee by the Sponsor in favor of the
Borrower and the Collateral Agent of Apex Metals’ obligations to the Borrower
under the Borrower Concentrate Sales Agreement.

 

 “Construction Budget” means the Initial Construction Budget and each updated
construction budget provided from time to time by the Borrower in accordance
with Section 8.14.

 

“Contingent Support Account” has the meaning set forth in Section 4.01(b)(iii).

 

“Contingent Support Amount” has the meaning set forth in Section 4.02(e).

 

“Contingent Support Contribution” means a transfer from the Contingent Support
Account to the Apex Metals Account for the purpose of paying Excess Project
Costs.

 

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“Contingent Support Deficiency” means, on any date of determination, the
positive difference, if any, of (a) the Contingent Support Requirement less (b)
the sum of (i) the balance of the Contingent Support Account plus (ii) the total
aggregate amount available to be drawn under Contingent Support Letters of
Credit.

 

“Contingent Support Letter of Credit” shall mean one or more irrevocable direct
pay letters of credit in an amount up to the Contingent Support Amount and any
extensions thereof or any substitute letter of credit therefor in the stated
amount contained in such extension or substitute, subject to the limitations set
forth in, and permitting draws thereon as contemplated by, Section 4.09,
(a) issued to the Collateral Agent for the benefit of the Secured Parties by an
Acceptable Bank, (b) in form and substance reasonably acceptable to the
Administrative Agent, (c) with a minimum term of at least one year automatically
extending for not less than six months unless the issuing bank provides at least
30 days’ prior written notice of termination or non-renewal to the Collateral
Agent, (d) providing for the amount thereof to be available to the Collateral
Agent in multiple drawings conditioned only upon presentation of a sight draft
accompanied by the applicable certificate in the form attached to such letter of
credit and (e) which is pursuant to an Officer’s Certificate of the Borrower
certified not (i) to constitute Indebtedness of the Borrower and (ii) to be
secured by a Lien on any Project Property.

 

“Contingent Support Requirement” means, at any date of determination, the
greater of (a) (i) prior to Mechanical Completion or, to the extent that
Mechanical Completion occurs during a period when the Sponsor is constructing or
implementing an Acceptable Funding Plan pursuant to Section 5.03 of the
Completion Agreement, $50,000,000 or (ii) at any other time through Completion,
$40,000,000 and (b) (i) the Total Cost to Complete as indicated on the most
recently approved Cost to Complete Certificate less (ii) the sum of (A) the
total amount of Senior Loan Commitments then available to be drawn plus (B) the
sum of (1) amounts available to be drawn under Equity Support Letters of Credit
plus (2) the balance in the Equity Account.

 

“Contributed Equity Amount” means the total aggregate Dollar amount of Project
Costs incurred after December 31, 2003 and paid in connection with the
development, financing and construction of the Project prior to the Initial
Disbursement Date as certified by the Borrower and confirmed by the Independent
Engineer in the certificate delivered in connection with the Initial
Disbursement Date as referred to in Section 11.02(d)(iii).

 

“Control” shall mean possession, directly or indirectly, of power (whether or
not exercised) to direct or cause the direction of or exercise a controlling
influence on management, operation or policies (whether through legal or
beneficial ownership of securities or partnership or other ownership interests,
by contract, representation on the board of directors or similar governing body
or otherwise).  “Controlling,” “Controlled by” and “under common Control with”
shall have the meanings correlative thereto.

 

“Corresponding Payment Date” has the meaning set forth in Section 9.01(a)(iv).

 

“Cost to Complete Certificate” means an Officer’s Certificate substantially in
the form of Appendix G hereto delivered by the Borrower and approved pursuant to
Section 6.01(b).

 

“Counterparty’s Consent” has the meaning set forth in Section 3.04(d).

 

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“Creditor Group” means (a) each Senior Lender Group and (b) collectively, the
Hedge Banks.

 

“Cross-Guarantee and Security Agreement” means the Guaranty and Security
Agreement executed by Apex Metals in favor of the Collateral Agent for the
benefit of the Secured Parties.

 

“CSA Accession Agreement” means a CSA Accession Agreement among the
Administrative Agent, a Hedge Bank and the Borrower, substantially in the form
of Appendix L hereto.

 

“Debt Service Reserve Account” has the meaning set forth in Section 4.01(b)(iv).

 

“Debt Service Reserve Deficiency” means at any time from and after Completion,
the amount, if any, by which the Debt Service Reserve Requirement exceeds the
sum of (a) the balance in the Debt Service Reserve Account plus (b) amounts
available to be drawn under Debt Service Reserve Letters of Credit.

 

“Debt Service Reserve Letter of Credit” shall mean one or more irrevocable
direct pay letters of credit in an amount up to the Debt Service Reserve
Requirement and any extensions thereof or any substitute letter of credit
therefor in the stated amount contained in such extension or substitute, subject
to the limitations set forth in, and permitting draws thereon as contemplated
by, Section 4.06, (a) issued to the Collateral Agent (for the benefit of the
Secured Parties entitled to the benefits of the Debt Service Reserve Account) by
an Acceptable Bank, (b) in form and substance reasonably acceptable to the
Administrative Agent, (c) with a minimum term of at least one year automatically
extending for not less than six months unless the issuing bank provides at least
30 days’ prior written notice of termination or non-renewal to the Collateral
Agent, (d) providing for the amount thereof to be available to the Collateral
Agent in multiple drawings conditioned only upon presentation of a sight draft
accompanied by the applicable certificate in the form attached to such letter of
credit and (e) which is pursuant to an Officer’s Certificate of the Borrower
certified not (i) to constitute Indebtedness of the Borrower and (ii) to be
secured by a Lien on any Project Property.

 

“Debt Service Reserve Payment” has the meaning set forth in Section 4.06(a)(i).

 

“Debt Service Reserve Requirement” means, as at Completion and any Principal
Repayment Date after Completion and for the six-month period commencing on
Completion or on such Principal Repayment Date, as the case may be, an amount
equal to the aggregate amount of principal and interest on Senior Loans and all
premia on the PRI Policies projected to become due during such six-month period.

 

“Dedicated Cash” has the meaning given to such term in Appendix A to the
Completion Agreement.

 

“Default” means any event or condition that, with the giving of notice or lapse
of time or determination of materiality, or any combination of the foregoing,
would constitute an Event of Default.

 

A-9

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“Default Margin” has the meaning set forth in each individual Senior Loan
Agreement.

 

“Development Plan” means the Life of Mine plan for the construction and
operation of the Project dated November 2004, as amended by the Kvaerner
Escalation Report and the Borrower-generated change orders, prepared by the
Borrower and reviewed and approved by the Independent Engineer, accepted by the
Technical Agent acting on behalf of Secured Parties.

 

“DIA” means the Updated Declaration of Environmental Impact dated August 27,
2004 and issued by the MSDP and the Vice Ministry of Mining and Metallurgy.

 

“Disbursement” means the making of Senior Loans pursuant to a Senior Loan
Agreement.

 

“Disbursement Date” means the date on which a Disbursement of Senior Loans is
made under a Senior Loan Agreement.

 

“Dollars” or “$” or “US$” refers to lawful money of the United States of
America.

 

 “Eligible Guaranteed Apex Metals Amount” means, with respect to each Hedge Bank
on any date of determination, an amount equal to the lesser of: (a) such Hedge
Bank’s Guaranteed Apex Metals Early Termination Amount and (b) the product
(rounded to two decimal places) of (i) the quotient (rounded to two decimal
places) of (A) such Hedge Bank’s Guaranteed Apex Metals Early Termination Amount
divided by (B) the aggregate total Guaranteed Apex Metals Early Termination
Amounts of all Hedge Banks times (ii) the lesser of (A) $150,000,000 and (B) the
aggregate principal amount of Senior Loans outstanding on such date.

 

“Enforcement Action” means any action to enforce the rights and remedies of the
Secured Parties under this Agreement and the other Financing Documents whether
available at law (including under the New York UCC) or in equity, subject only
to the requirements of applicable Government Rules.

 

“Enforcement Direction” has the meaning set forth in Section 10.02(e).

 

“Environmental Action Plan” or “EAP” means the Environmental Action Plan
delivered to the Senior Lenders in accordance with Section 11.01(i) and prepared
on the basis of the Environmental Impact Assessment and any update provided in
accordance with Section 6.04.

 

“Environmental Card” means the documentation submitted for the Project on April
13, 1998 to the MSDP to permit the MSDP to classify the Project for the purpose
of determining what form of impact assessment should be performed.

 

“Environmental Guidelines” means the following guidelines as in effect on the
date hereof applicable to the Project (referred to in the Equator Principles
framework): (a) World Bank Environmental, Health and Safety Guidelines (i)
Mining and Milling – Open Pit dated August 11, 1995, (ii) Pollution Abatement
and Prevention Handbook 1998: General

 

A-10

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Environmental Guidelines, (iii) Operational Policy 4.01 (Environmental
Assessment), (iv) Operation Policy 4.04 (Natural Habitats), (v) Operational
Policy 4.11 (Cultural Property), (vi) Pollution Abatement and Prevention
Handbook 1998: Part III Project Guidelines, Monitoring and Base Metal and Iron
Ore Mining and (viii) the Reclamation and Closure Plan Section in the
Knight-Piesold Environmental Assessment of the Project (Closure Plan) and (b)
IFC Safeguard Policies dated September 1998..

 

“Environmental Impact Assessment” means the Environmental Impact Assessment
provided to the MSDP and Vice Ministry of Mining and Metallurgy of Bolivia dated
September 20, 2000 based upon the classification established by the MSDP under
the Environmental Card as thereafter amended and updated which resulted in the
issuance of the DIA.

 

“Environmental Laws” shall mean any and all laws, rules and regulations, and any
lawful orders or decrees, in each case as now or hereafter in effect and
applicable in Bolivia to the Borrower or the Project, relating to the protection
of human health and safety from the effects of Hazardous Materials, or to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or toxic or hazardous substances or wastes
into the environment, including ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or toxic or hazardous substances
or wastes.

 

“EPCM Contract” means the EPCM Services Supply Agreement dated November 8, 2004
between the Borrower and the EPCM Contractor.

 

“EPCM Contractor” means Aker Kvaerner Metals, Inc., and any successor contractor
providing substantially the same services as are provided under the EPCM
Contract.

 

“EPCM Guaranty” means the guaranty provided by Aker Kvaerner ASA in favor of the
Borrower in support of the EPCM Contractor’s obligations under the EPCM
Contract.

 

“EPCM Monthly Status Report” means the “Monthly Status Report” referred to in
Schedule 2 of the EPCM Contract.

 

“Equator Principles” means the set of environmental guidelines developed by
commercial banks and the International Finance Corporation for the purpose of
assessing and managing environmental and social issues related to private-sector
project financings, as adopted on June 4, 2003.

 

“Equity Account” has the meaning set forth in Section 4.01(b)(viii).

 

“Equity Amount” means an amount equal to (a) $680,857,000 minus (b) the
Contributed Equity Amount minus (c) the aggregate amount of the Senior Loan
Commitments available on the Initial Disbursement Date minus (d) the Share
Funding Amount.

 

“Equity Deficiency” has the meaning set forth in Section 4.08(c)(i).

 

“Equity Expropriation Account” has the meaning set forth in Section 3.07.

 

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“Equity Support Letter of Credit” shall mean one or more irrevocable direct pay
letters of credit in an amount up to the Remaining Equity Amount and any
extensions thereof or any substitute letter of credit therefor in the stated
amount contained in such extension or substitute, subject to the limitations set
forth in, and permitting draws thereon as contemplated by, Section 4.08,
(a) issued to the Collateral Agent for the benefit of the Secured Parties by an
Acceptable Bank, (b) in form and substance reasonably acceptable to the
Administrative Agent, (c) with a minimum term of at least one year automatically
extending for not less than six months unless the issuing bank provides at least
30 days’ prior written notice of termination or non-renewal to the Collateral
Agent, (d) providing for the amount thereof to be available to the Collateral
Agent in multiple drawings conditioned only upon presentation of a sight draft
accompanied by the applicable certificate in the form attached to such letter of
credit and (e) which is pursuant to an Officer’s Certificate of the Borrower
certified not (i) to constitute Indebtedness of the Borrower and (ii) to be
secured by a Lien on any Project Property.

 

“Escrow Account” has the meaning set forth in the Completion Agreement.

 

“Event of Default” has the meaning set forth in Section 10.01.

 

“Event of Force Majeure” means (a) any event, whether similar to the following
or not, which is not within the reasonable control of the Borrower and which
makes continued construction or production impracticable or has a material
adverse effect on the ability of the Borrower to develop or operate the Project
in all material respects in accordance with the Project Description and the
Operating Plan and shall include, subject to the foregoing, an act of God, labor
dispute and industrial action of any kind (including a strike, interruption,
slowdown and other similar action on the part of organized labor), a lockout,
act of the public enemy, war (declared or undeclared), civil war, sabotage,
blockade, revolution, riot, insurrection, civil disturbance, terrorism,
epidemic, cyclone, tidal wave, landslide, lightning, earthquake, flood, storm,
fire, adverse weather conditions, expropriation, nationalization, act of eminent
domain, laws, rules, regulations or order of any government authority,
explosion, breakage or accident to machinery or equipment or power transmission
lines or railroad tracks or ports or other facility, embargo, inability to
obtain or delay in obtaining equipment, materials or transport and (b) in the
case of any Project Document or any Material Project Counterparty, an event of
force majeure or uncontrollable force or other similar term as such term is
defined or used in such Project Document.

 

“Excepted Property” means all permits, licenses, franchises and rights which
pursuant to their terms or under applicable Government Rules would become void
or voidable if pledged or assigned.

 

“Excess Project Cost” means (a) any Project Cost of a type or category
identified in any Cost to Complete Certificate that exceeds the total or
cumulative amount set forth for such line item in the Initial Construction
Budget, to the extent of such excess or (b) any Project Cost of a type or
category not identified in any line item of the Initial Construction Budget
delivered at the Initial Disbursement Date.

 

“Expense Account” has the meaning set forth in Section 4.01(j)(ii).

 

“Expropriation Account” has the meaning set forth in Section 5.08(c)(i).

 

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“Expropriation Compensation” means all value (whether in the form of money,
securities, property or otherwise), excluding Project Equity Expropriation
Compensation, paid or payable by Bolivian Governmental Authorities or a
governing authority that is in de facto control of part of Bolivia, to the
Borrower, in whole or partial settlement of claims, whether or not resulting
from judicial proceedings and whether paid or payable in or outside Bolivia, as
compensation for or in respect of the appropriation, confiscation, cancellation,
expropriation or nationalization (by intervention, condemnation or other form of
taking) whether under color of law or otherwise (including through confiscatory
taxation or imposition of confiscatory charges) of ownership or control of the
Borrower or the Project or any substantial portion thereof or substantial
portion of rights thereof.

 

“Expropriation Proceeds Account” has the meaning set forth in Section
4.01(b)(vii).

 

“Fee Letters” means each letter agreement dated on or before the date hereof
between the Borrower and an Agent regarding the fees for such Agent’s services.

 

“Final Maturity Date” means the Principal Repayment Date occurring in December
of 2012.

 

“Financial Model” means the Initial Financial Model and each of the Borrower’s
updated financial models, as provided from time to time in accordance with
Section 8.14.

 

“Financial Model Auditor” means PricewaterhouseCoopers or such other auditor as
the Majority Secured Parties may engage from time to time with the consent of
the Borrower, such consent not to be unreasonably withheld or delayed.

 

“Financial Ratio Certificate” has the meaning set forth in Section 6.02(c).

 

“Financing Documents” means the Security Documents, the Completion Agreement,
the Transfer Restrictions Agreement, the Hedge Guaranty, each Senior Loan
Agreement, each Note, each PRI Policy and the Fee Letters.

 

“Forward Looking Debt Service Coverage Ratio” or “FLDSCR” means, with respect to
any period, the ratio of (a) Projected Cash Proceeds (excluding projected
proceeds from sales of IVA Receivables, all projected equity contributions and
proceeds from Subordinated Debt and other Sponsor Funding, all projected
insurance proceeds payable to the Borrower in respect of assets of the Project,
all projected Expropriation Compensation and projected proceeds of Indebtedness
for Borrowed Money permitted under Section 8.19)) minus Projected Operating
Costs for such period to (b) the aggregate amount of Senior Loan Obligations
projected to be due and payable during such period.  The Forward Looking Debt
Service Coverage Ratio will be calculated using the Financial Model in effect as
of the date of determination.

 

“Government Approval” means any authorization, consent, approval, license,
lease, ruling, permit, tariff, rate, certification, exemption, filing, variance,
claim, order, judgment, decree, sanction or publication of, by or with, any
notice to, any declaration of or with, or any

 

A-13

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registration by or with, or any other action or deemed action by or on behalf
of, any Governmental Authority.

 

“Government Rule” means any statute, law, regulation, ordinance, rule, judgment,
order, decree, directive or rule, requirement of, or other governmental
restriction or any similar form of official decision of or determination by, or
any official interpretation of any of the foregoing by, any Governmental
Authority, whether now or hereafter in effect.

 

“Governmental Authority” means the government of Bolivia, the United States of
America, Switzerland or any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

 

“Guaranteed Apex Metals Early Termination Amount” means, with respect to any
Hedge Bank on any date of determination, the obligations of the Borrower to such
Hedge Bank under the Hedge Guaranty calculated as being equal to the amount of
any “Early Termination Amount” payable to the Hedge Bank by Apex Metals under
(and as defined in) the Mandatory Metals Hedge Agreements to which the Hedge
Bank and Apex Metals are party in respect of Mandatory Metals Hedge
Transactions.  The “Close-out Amount” underlying the Early Termination Amount
described in this definition shall be calculated by the Hedge Bank assuming: (a)
all outstanding Mandatory Metals Hedge Transactions are terminated, (b) the
“Early Termination Date” for each Mandatory Metals Hedge Transaction for the
purpose of this definition shall be deemed to be the earlier to occur of (i) the
date on which the “Early Termination Date” has actually been declared under the
relevant Mandatory Metals Hedge Agreement with respect to such Mandatory Metals
Hedge Transaction and (ii) the first possible date on which an Early Termination
Date could be designated with respect to such Mandatory Metals Hedge Transaction
under the Mandatory Metals Hedge Agreement to which the Hedge Bank and Apex
Metals are parties; and (c) each of the Hedge Bank and Apex Metals’ exposures in
respect of Mandatory Metals Hedge Transactions are netted against each other
under the applicable Mandatory Metals Hedge Agreement (but without (A) any
netting against any other Mandatory Metals Hedge Transactions that may have been
executed under the same Mandatory Metals Hedge Agreement or (B) any set-off by
the Hedge Bank of net amounts owed to it against any obligations of the Borrower
or any of its Affiliates under any other document).  The “Unpaid Amounts”
underlying the Early Termination Amount as used in this definition shall include
only “Unpaid Amounts” relating to Mandatory Metals Hedge Transactions; provided
that, notwithstanding the foregoing, to the extent that one or more Mandatory
Metals Hedge Transactions is terminated for a reason other than an “Event of
Default” or “Termination Event” under, and as defined in, the Mandatory Metals
Hedge Agreements, the amount of the Guaranteed Apex Metals Early Termination
Amount shall be calculated with respect to such terminated Mandatory Metals
Hedge Transactions as being the actual amount due and payable under such
Mandatory Metals Hedge Agreements in connection with such terminated Mandatory
Metals Hedge Transactions.

 

“Guaranteed Apex Metals Net Payment Amount” means, with respect to any Hedge
Bank, any Apex Metals Net Payment Amount owing to the Hedge Bank by the Borrower
under the Hedge Guaranty.

 

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“Guaranteed Apex Metals Obligations” means all Guaranteed Obligations as defined
in Section 2.01 of the Hedge Guaranty owed by the Borrower to the Hedge Banks
and Agents thereunder and all obligations of the Borrower to pay premia on the
Hedge PRI Policy.

 

“Hazardous Material” means any pollutant, contaminant, chemical or toxic or
hazardous material or substance or waste or any other material or substance, to
the extent exposure to such material or substance is now or hereafter
prohibited, limited or regulated under any Environmental Law.

 

“Health Care Account” means a single bank account established in Bolivia for the
purpose of funding certain payments required to be made by the Borrower in lieu
of making contributions to the Bolivian national health care program.

 

“Hedge Bank” shall mean any Initial Hedge Bank and any bank or financial
institution that executes and delivers a CSA Accession Agreement as a “Hedge
Bank”.

 

“Hedge Guaranty” means that certain Guaranty and Agreement (Apex Metals) issued
by the Borrower in favor of the Hedge Banks guaranteeing all of the obligations
of Apex Metals to the Hedge Banks under the Mandatory Metals Hedge Transactions.

 

“Hedge Instrument” means (a) currency swap agreements, option contracts, futures
contracts, options on futures contracts, spot or forward contracts or other
agreements to purchase or sell currency or any other arrangement entered into by
a Person to hedge such Person’s exposure or to speculate on movements in the
rates of exchange of currencies, (b) interest rate swaps, option contracts,
futures contracts, options on futures contracts, cap, floors, collars or any
other similar hedging arrangements entered into by a Person to hedge such
Person’s exposure to or to speculate on movements in interest rates, (c) forward
purchases and sales, put options, synthetic put options, call options, collars
or any other arrangement relating to commodities entered into by a Person to
hedge such Person’s exposure to or to speculate on commodity prices, and (d) any
other derivative transaction or hedging arrangements of any type or nature
whatsoever that is the subject at any time of trading in the over-the-counter
derivatives market.  “Hedge Instruments” shall exclude, to the extent included,
the Borrower Concentrate Sales Agreement.

 

“Hedge PRI Insurers” means Chaucer Marine, Kiln Marine & Special Risks, COF,
Beazley, Quanta Europe Limited, SVB, Sovereign Risk Insurance Ltd., Zurich
Global Corporate UK Ltd., Chubb Insurance Company of Europe, Axis Specialty
Limited, Ace Global Markets Political Risks & Credit and SJC as the insurers
under the Hedge PRI Policy, any entity that replaces any of the foregoing as
insurer under the Hedge PRI Policy or each insurer under any Replacement Hedge
PRI Policy.

 

 “Hedge PRI Policy” means the political risk insurance policy issued by the
Hedge PRI Insurers insuring amounts owing by the Borrower to the Hedge Banks
under the Hedge Guaranty or any Replacement Hedge PRI Policy.

 

“Historical Debt Service Coverage Ratio” or “HDSCR” means, in respect of any
six-month period ending on a Principal Repayment Date, the ratio of (a) (i) all
Project Funds received by the Borrower and, without duplication, Apex Metals
during such period (other than

 

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disbursements of Senior Loans, all equity contributions and proceeds from
Subordinated Debt and other Sponsor Funding, all insurance proceeds paid to the
Borrower in respect of assets of the Project, all Expropriation Compensation
and proceeds of Indebtedness for Borrowed Money permitted under Section 8.19)
minus (ii) all Operating Costs incurred during such period other than costs paid
(or reasonably expected to be reimbursed) from the proceeds of related property
insurance or Expropriation Compensation, to (b) Senior Loan Obligations (other
than prepayments) paid on the Principal Repayment Date and during the six-month
period preceding such Principal Repayment Date.

 

“IDD Mandatory Metals Hedge Transactions” means Metals Hedge Transactions placed
by Apex Metals with the Hedge Banks on or prior to the Initial Disbursement Date
in satisfaction of the condition specified in Section 11.02(b) of this
Agreement.

 

“Indebtedness for Borrowed Money” means, for any Person at any date, without
duplication (a) all obligations of such Person to repay money borrowed, (b) all
obligations of such Person to pay money evidenced by term loans, bonds,
debentures, notes or other similar instruments, including such obligations
incurred in connection with the acquisition of property, assets or a business,
(c) all obligations of such Person to pay the deferred purchase price of
property or services, (d) all obligations of such Person as lessee under capital
leases, (e) all payment obligations under any Hedge Instruments entered into by
such Person, (f) the face amount of all letters of credit issued for the account
of such Person and all outstanding reimbursement obligations with respect to any
letters of credit, and (g) obligations of another Person of the type listed in
(a) through (f), payment of which is guaranteed by or secured by liens on the
property of such Person (with respect to liens, to the extent of the value of
property pledged pursuant to such liens if less than the amount of such
obligations), provided that “Indebtedness for Borrowed Money” shall not include
trade accounts payable or purchase money obligations (other than purchase money
obligations incurred post-Completion which are due in more than 90 days and are
not subject to a bona fide dispute) incurred in the ordinary course of business.

 

“Indemnitee” has the meaning set forth in Section 15.14(b).

 

“Independent Condition Precedent” means any condition precedent to the making of
any Senior Loan under (a) Section 6.01 or 6.02 of the Commercial Bank Senior
Loan Agreement and (b) Section 6.01 or 6.02 of the CAF Senior Loan Agreement
which, in any such case, (i) is not separately set forth in Section 11.03 (other
than by virtue of Section 11.03(e)) and (ii) does not restate or incorporate by
reference any condition precedent set forth in Section 11.03.

 

“Independent Engineer” means Chlumsky, Armbrust and Meyer or such replacement
engineering consulting firm appointed in accordance with Section 8.28.

 

“Independent Engineer Report” means the Development Plan Review (San Cristóbal
Project — Bolivia) dated July 8, 2005 by Chlumsky, Armbrust and Meyer.

 

“Information” means all information received from the Borrower or any member of
the Apex Group relating to the Borrower, any member of the Apex Group or any of
their businesses, other than any such information that is available to any of
the Agents, any Senior

 

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Lender or any Hedge Bank on a nonconfidential basis prior to disclosure by the
Borrower or any such member of the Apex Group.

 

“Initial Construction Budget” means the Borrower’s construction plan, dated
November 2005,  as based upon the Development Plan and outlining the Borrower’s
quantitative monthly projections (costs and timing associated with specific
activities or equipment) and supporting qualitative information, for the
construction of the Project through Completion.

 

“Initial Disbursement Date” means the date of the initial disbursement of Senior
Loans to the Borrower.

 

“Initial Financial Model” means the financial model dated September 30, 2005,
incorporating the quantitative inputs from the Initial Operating Plan and
Initial Construction Budget and containing as relevant additional quantitative
assumptions such as for metal price forecasts, currency and inflation
projections and estimates, all as have been approved and signed-off by the
Independent Engineer and agreed and accepted by the Borrower and the Senior
Lenders.

 

“Initial Hedge Banks” means the Hedge Banks set forth in Appendix B-1 on the
date hereof.

 

“Initial Operating Plan” means the operating plan dated November 2005, based
upon the Development Plan and beginning with Mechanical Completion, and
containing the quantitative operating input projections and supporting
qualitative information for the Life of Mine. Such projections will be prepared
on a monthly basis for the first production year, on a semi-annual basis for the
succeeding two years and annually for subsequent years.

 

An “Initial Senior Lender Group” shall be comprised of the Initial Senior
Lenders which are party to the same Initial Senior Loan Agreement.

 

“Initial Senior Lenders” means the Senior Lenders under the Initial Senior Loan
Agreements as set forth in Appendix B-1 on the date hereof.

 

“Initial Senior Loan Agreements” means the Senior Loan Agreements dated as of
the date of this Agreement and set forth in Appendix B-1 on the date hereof.

 

“Insurance Account” has the meaning set forth in Section 5.05(c)(i).

 

“Insurance Advisor” means Aon Risk Services Canada or such other insurance
advisor as the Majority Secured Parties may engage from time to time as provided
in Section 5.07.

 

“Insurance Advisor Report” means the Insurance Report issued to the Senior
Lenders dated October 2005 by Aon Risk Services Canada.

 

“Insurance Proceeds Account” has the meaning set forth in Section 4.01(b)(vi).

 

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“Intellectual Property Rights” means all permits, licenses, trademarks, patents
or agreements with respect to the usage of technology or other intellectual
property (other than those constituting Government Approvals and off-the-shelf
commercially available software).

 

“Intercompany Agreements” means the Borrower Management and Services Agreement,
the Borrower Concentrate Sales Agreement, the Apex Metals Management and
Services Agreement and the Project Document Guarantee.

 

“Intercompany Debt” means Subordinated Debt, Shareholder Debt, Shareholder
Parent Debt, Service Company Debt and Apex Metals Subordinated Debt.

 

“Intercompany Lender” means any Subordinated Lender, Shareholder Lender,
Shareholder Parent Lender, Apex Metals Subordinated Lender and Service Company
Lender.

 

“Intercompany Note” means any Subordinated Note, Shareholder Note, Shareholder
Parent Note, Apex Metals Subordinated Note and Service Company Note.

 

“Interest Period” has the meaning set forth in the Commercial Bank Senior Loan
Agreement.

 

“ISDA Master Agreement” means the ISDA Master Agreement 1992 Cross-Border
Multicurrency Form.

 

“IVA Reimbursement Rights” means the right of the Borrower to receive
reimbursements of Bolivian value-added tax (Impuesto al Valor Agregado) in
accordance with Bolivian law.

 

“IVA Receivables” means tax credits for IVA reimbursements.

 

“Lead Concentrate” means lead concentrate produced by the Project as further
described in section 12.2.3 of the Independent Engineer Report.

 

 “Lien” shall mean, with respect to any property of any Person, any mortgage,
lien, pledge, charge, lease, easement, servitude, right of others or security
interest or encumbrance of any kind in respect of such property.  For purposes
of the Financing Documents, any Person shall be deemed to own, subject to a
Lien, any property that it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement (other than an operating lease) relating to such
property.

 

“Life of Mine” means the period during which all Proven and Probable Reserves at
the Project are planned to be extracted according to the Initial Operating Plan
or Operating Plan, all as referenced in the Initial Financial Model or Financial
Model, as the case may be.

 

“Limit Completion Date” means December 31, 2008.

 

“Liquidity Accounts” means the Loan Proceeds Account, the Apex Metals Account
and the Operating Reserve Account.

 

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“Loan Life Coverage Ratio” or “LLCR” means, as of any date, the ratio of
(a) (i) the sum of the net present value as of such date (discounted at a rate
equal to the weighted average interest rate on Senior Loans as of such date,
such interest rate to include the premia and fees in respect of the Loan PRI
Policy) of Projected Cash Proceeds (excluding projected proceeds from sales of
IVA Receivables, all projected equity contributions and proceeds from
Subordinated Debt and other Sponsor Funding, all projected insurance proceeds
payable to the Borrower in respect of assets of the Project, all projected
Expropriation Compensation and projected proceeds of Indebtedness for Borrowed
Money permitted under Section 8.19)) minus Projected Operating Costs for each
successive six-month period commencing on such date and ending on the Final
Maturity Date plus (ii) all cash in the Debt Service Reserve Account and the
Operating Reserve Account on the day immediately following such date, to (b) the
aggregate principal amount of Senior Loans outstanding on the day immediately
following such date.  The Loan Life Coverage Ratio will be calculated using the
assumptions set forth in the Financial Model in effect as of the date of
determination.

 

“Loan PRI Insurers” means Chaucer Marine, Kiln Marine & Special Risks, COF,
Beazley, Quanta Europe Limited, SVB, Sovereign Risk Insurance Ltd., Zurich
Global Corporate UK Ltd., Chubb Insurance Company of Europe, Axis Specialty
Limited, Ace Global Markets Political Risks & Credit and SJC as the insurers
under the Loan PRI Policy, any entity that replaces any of the foregoing as
insurer under the Loan PRI Policy or each insurer under any Replacement Loan PRI
Policy.

 

“Loan PRI Policy” means the political risk insurance policy issued by the Loan
PRI Insurers insuring debt investments in the Borrower by the Tranche A Senior
Lenders under the Commercial Bank Senior Loan Agreement or any Replacement Loan
PRI Policy.

 

“Loan Proceeds Account” has the meaning set forth in Section 4.01(b)(i).

 

“Local Bank” means (a) an Authorized Depositary or (b) Banco Nacional de Bolivia
S.A. or Banco BISA S.A.  or (c) any Bolivian bank approved from time to time by
the Majority Lenders.

 

“Majority Hedge Banks” means Hedge Banks holding more than 50% of Eligible
Guaranteed Apex Metals Amounts.

 

“Majority Lenders” means Senior Lenders holding more than 50% of the sum of
(a) the aggregate amount of uncancelled and undrawn Senior Loan Commitments and
(b) the aggregate principal amount of outstanding Senior Loans; provided that
any Senior Loan Commitments or Senior Loans held by any Affiliate of the
Borrower shall be disregarded in such calculations.

 

“Majority Secured Parties” means:

 

(a)           if no Event of Default has occurred and is continuing, Majority
Lenders; and

 

A-19

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(b)           if an Event of Default has occurred and is continuing, Secured
Parties holding more than 50% of the sum of (a) the aggregate principal amount
of outstanding Senior Loans plus (b) Eligible Guaranteed Apex Metals Amounts.

 

“Mandated Lead Arrangers” means BNP Paribas and Barclays Capital.

 

“Mandatory Metals Hedge Agreements” means the ISDA Master Agreement, schedule
and confirmations executed by a Hedge Bank and Apex Metals pursuant to which
such Persons execute Mandatory Metals Hedge Transactions.  The schedule forming
part of an ISDA Master Agreement for a Mandatory Metals Hedge Agreement shall be
substantially in the form of Appendix B to the Cross-Guarantee and Security
Agreement.

 

“Mandatory Metals Hedge Transactions” means, as of any date of determination,
any IDD Mandatory Metals Hedge Transactions and any Replacement Mandatory Metals
Hedge Transactions then in effect.

 

“Mandatory Prepayments” has the meaning set forth in Section 2.04(a).

 

“Margin Stock” shall mean margin stock within the meaning of Regulations U and
X.

 

“Material Adverse Effect” means a material adverse effect on (a) the condition
(financial or otherwise), business, performance, operations, or properties of
(i) the Borrower, (ii) Apex Metals, (iii) the Project, or (iv) all Affiliated
Obligors taken as a whole, (b) the legality, validity or enforceability of any
Financing Document, (c) the perfection or priority of any of the security
interests or Collateral having a value in excess of $100,000, either
individually or in the aggregate, granted pursuant to any Security Document, (d)
the ability of an Affiliated Obligor to perform its obligations under any
Financing Document, or (e) the rights and remedies of any Secured Party under
any Financing Document.

 

 “Material Project Counterparty” means each Person party to a Material Project
Document other than the Borrower.

 

“Material Project Documents” means the Transmission Line Agreement, the
Transmission Line Security Documents, the EPCM Contract, the EPCM Guaranty, the
Rail Transportation Agreement, the Mining Contract, the WGI Guaranty, the Ports
Agreement, the Ports LOC, the Borrower Management and Services Agreement, the
Borrower Concentrate Sales Agreement, each Project Document Guarantee and each
Additional Material Project Document.

 

“Maximum Expense Account Balance” means $5,000,000 or its equivalent in
Bolivianos.

 

“Mechanical Completion” has the meaning ascribed to such term in the EPCM
Contract.

 

“Metals” means (a) lead meeting the standards of “Standard Lead” as such term is
used in the 1993 ISDA Commodity Definitions (as updated by the 2000 Supplement
to the 1993 ISDA Commodity Definitions), (b) silver meeting the standards of
“Silver” as such term is used in the 1997 ISDA Bullion Definitions and (c) zinc
meeting the standards of “Special High Grade

 

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Zinc” as such term is used in the 1993 ISDA Commodity Definitions (as updated by
the 2000 Supplement to the 1993 ISDA Commodity Definitions).

 

“Metals Consultant” means Brook Hunt.

 

“Metals Hedge Transactions” means any swap agreements, option contracts, futures
contracts, options on futures contracts, spot or forward contracts, forward
purchases and sales, put options, synthetic put options, call options, collars,
spread locks or any other derivative transaction or hedging arrangements of any
nature whatsoever that hedges or purports to hedge the Borrower’s exposure
(through Apex Metals) to movements in prices of Metals.

 

 “Mining Concessions” means, collectively, the mining concessions identified in
Appendix E-2.

 

“Mining Contract” means that certain Open Pit Mining Services Agreement between
the Borrower and the Mining Contractor dated January 7, 2005.

 

“Mining Contractor” means Washington Group Bolivia s.r.l. as the contractor
under the Mining Contract and any successor contractor providing substantially
the same services as are provided under the Mining Contract.

 

“Moody’s” mean Moody’s Investors Service, Inc.

 

“MSDP” means the Bolivian Ministry for Sustainable Development and the
Environment.

 

“New York Accounts” has the meaning set forth in Section 4.01(b).

 

“New York Equity Expropriation Account” has the meaning set forth in
Section 3.07.

 

“Non-Bolivian Policies” means insurance and reinsurance policies, if any,
placed, in accordance with Article V, with insurers outside Bolivia in respect
of which the Borrower is an insured party or an additional loss payee.

 

“Notes” means any promissory notes evidencing Senior Loans.

 

“Notice of Disbursement” means a “notice of disbursement” substantially in the
form of Appendix D-1.

 

“Notice of Project Costs” means a “notice of project costs” substantially in the
form of Appendix D-2.

 

“Officer’s Certificate” shall mean, with respect to any Person, a certificate
signed by an Authorized Officer of such Person.

 

“On Common Ground Report” means the report dated September 2005 prepared for the
Senior Lenders by the Social Consultant relating to the social impact of the
Project.

 

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“Operating Costs” means all cash expenditures for the purposes of the Project,
whether incurred in connection with the construction (i.e., Project Costs) or
the operation of the Project, of the Borrower or Apex Metals or of the
Borrower’s offices, including, without limiting the generality of the foregoing,
salaries, wages, taxes, duties, royalties, owners’ costs, expenditures for
spares and other capital goods, inventory, capital expenditures permitted by
Section 8.13, insurance premia (other than premia and fees due to insurers under
any political risk insurance policy), payments under Project Documents and,
without duplication, Guaranteed Apex Metals Net Payment Amounts, but excluding
(a) Senior Loan Obligations, (b) Restricted Payments, (c) Guaranteed Apex Metals
Early Termination Amounts, (d) Service Fees and (e) Sales Fees.

 

“Operating Plan” means the Initial Operating Plan and each updated Operating
Plan provided from time to time by the Borrower in accordance with Section 8.14.

 

“Operating Reserve Account” has the meaning set forth in Section 4.01(b)(v).

 

“Operating Reserve Deficiency” means at any time from and after Completion, the
amount, if any, by which the collected credit balance of the Operating Reserve
Account is less than the Operating Reserve Requirement.

 

“Operating Reserve Payment” has the meaning set forth in Section 4.07(a)(i).

 

“Operating Reserve Requirement” means, as at Completion and any Reserve Payment
Date, an amount equal to the aggregate amount of projected Operating Costs
estimated to accrue through the calendar month commencing on or immediately
prior to the Completion Date or such Reserve Payment Date based on the Operating
Plan then in effect.

 

“Organizational Documents” means, with respect to any Person, the articles of
incorporation, by-laws, limited liability company agreements, partnership
agreements or such other documents or instruments that are required to be
registered or lodged in the place of incorporation or organization of such
Person and which establish the legal existence of such Person.

 

“Other Local Policies” means, collectively, the insurances listed under “Other
Insurances for the Borrower” on the Schedule of Minimum Insurance Requirements.

 

“Other Property Rights” means, collectively, easements, leases, mining and civil
usufructs, rights of way and other property rights.

 

“Participant” means any one or more banks or other entities to which any Senior
Lender may sell participations pursuant to the terms of its Senior Loan
Agreement.

 

“Permitted Assignee” has the meaning set forth in Section 1.01 of the Transfer
Restrictions Agreement.

 

“Permitted Lien” has the meaning set forth in Section 8.20.

 

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust, business
trust, unincorporated

 

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organization, co-ownership, Governmental Authority or other entity of whatever
nature, and the heirs, executors, administrators or other legal representatives
of an individual.

 

“Planned Project Costs” means $680,857,000, the total amount of Project Costs as
identified in the Initial Construction Budget as detailed in the line items set
forth in Annex 2 hereto.

 

“Port” means the Port of Mejilones, Chile or the Port of Antofagasta, Chile.

 

“Ports Agreement” means that certain Construction and Ports Services Agreement
dated as of September 1, 2003 between the Borrower and the Ports Owner.

 

“Ports LOC” means the letter of credit issued to the benefit of the Borrower for
the account of the Ports Owner and delivered under the Ports Agreement.

 

“Ports Owner” means Puerto de Mejillones, S.A. and any successor contractor
providing substantially the same services as are provided under the Ports
Agreement.

 

“Power Consultant” means PB Power.

 

“PRI Insurer” means each of the Loan PRI Insurers and each of the Hedge PRI
Insurers.

 

“PRI Insurer Obligation” means the obligations of the Borrower to pay all
indemnities and other amounts payable to a PRI Insurer under this Agreement, the
Commercial Bank Senior Loan Agreement or any other Finance Document which do not
constitute Secured Debt Obligations payable to such PRI Insurer.

 

“PRI Policies” means, collectively, the Hedge PRI Policy and the Loan PRI
Policy.

 

 “Principal Repayment Date” means each of the Quarterly Dates occurring in June
and December in each year commencing with the Quarterly Date occurring in
December of 2008, provided that if any such date shall fall on a day that is not
a Business Day, the relevant Principal Repayment Date shall be the immediately
preceding Business Day.

 

“Pro Rata Payment” means a payment to a Senior Lender on any date on which a
payment of Senior Loan Obligations is made in which (a) interest paid to such
Senior Lender on such date bears the same proportion to the total interest
payments made to all Senior Lenders on such date as (i) the total obligations
for interest due to such Senior Lender on such date bears to (ii) the total
obligations for interest due to all Senior Lenders on such date, (b) principal
paid or prepaid to such Senior Lender on such date bears the same proportion to
the total principal payments or prepayments made to all Senior Lenders on such
date as (i) the total obligations for principal due to such Senior Lender on
such date bears to (ii) the total obligations for principal due to all Senior
Lenders on such date (or, in the case of voluntary prepayments, as the total
principal outstanding to such Senior Lender bears to the total principal
outstanding to all Senior Lenders) and (c) fees, commissions, indemnities and
all amounts other than interest and principal paid to such Senior Lender on such
date bears the same proportion to the total fees, commissions, indemnities and
such other amounts paid to all Senior Lenders on such date as (i) the total

 

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obligations for fees, commissions, indemnities and such other amounts due to
such Senior Lender on such date bears to (ii) the total obligations for fees,
commissions, indemnities and such other amounts due to all Senior Lenders on
such date.  If payments cannot be made exactly in such proportion due to minimum
required payment amounts and required integral multiples of payments under
Senior Loan Agreements, payments made in amounts as near as such exactly
proportionate amounts as possible shall be deemed to be Pro Rata Payments so
long as such payments are not more than 10% more or less than such exact
proportionate amount.

 

“Proceeding” means, as to any Person, (a) any proceeding under applicable
insolvency or bankruptcy law of Bolivia, the United States or any other
jurisdiction or any receivership, liquidation, reorganization or similar case or
proceeding in connection therewith, relative to such Person and to its
creditors, as such, or to such Person’s assets, whether conducted in or under
the laws of Bolivia or otherwise, or (b) any liquidation, dissolution or other
winding up of such Person, whether partial or complete and whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (c) any
proceedings for the readjustment or extension of indebtedness of such Person,
any composition, arrangement or assignment for the benefit of creditors or any
other marshaling of assets and liabilities of such Person.

 

“Production Quarter” means a period of three consecutive months commencing (a)
in the case of the first Production Quarter, with the first day of the first
calendar month falling after Completion and (b) in the case of each subsequent
Production Quarter, a consecutive three-month period commencing on each
three-month anniversary of such first day.

 

“Project” means the development, establishment, construction and operation by
the Borrower of the San Cristóbal open pit silver/zinc/lead mine located in the
Potosi Department, Bolivia, the processing of silver, zinc and lead ores to
recover silver, zinc and lead concentrates and related infrastructure (including
rail transportation, power transmission and port facilities), and the marketing
and sale of the products thereof and other activities reasonably ancillary
thereto.

 

“Project Costs” means the costs (including capital costs, PRI premia and Senior
Loan Obligations consisting of interest and fees) incurred in connection with
the engineering, design, construction, start-up and initial operations and
working capital requirements of the Project through Completion.

 

“Project Cost Funding Date” means a Business Day falling after the Commitment
Termination Date which is designated as a “Project Cost Funding Date” in a
Notice of Project Costs.

 

“Project Description” means the description of the Project facilities attached
as Appendix H (Physical Facilities) to this Agreement as it may be amended from
time to time in accordance with Section 8.12(c).

 

“Project Document Guarantees” means, collectively, (a) a guaranty issued by the
Sponsor in favor of the Borrower and the Collateral Agent of Apex Metals’
obligations under the Borrower Concentrate Sales Agreement and the Service
Company’s obligations under the Borrower Management and Services Agreement and
(b) a guaranty issued by the Sponsor in

 

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favor of Apex Metals and the Collateral Agent of the Service Company’s
obligations under the Apex Metals Management and Services Agreement.

 

“Project Documents” means each Material Project Document and any other contract
or agreement necessary in any material way for the development, construction,
operation and ownership of the Project entered into by the Borrower at any time
(including agreements relating to Other Property Rights and Intellectual
Property Rights to the extent that the same are not Government Approvals).

 

“Project Equity Expropriation Compensation” means all value (whether in the form
of money, securities, property or otherwise), excluding Expropriation
Compensation, paid or payable by the government of Bolivia or a governing
authority that is in de facto control of part of Bolivia, to Persons other than
the Borrower, in whole or partial settlement of claims, whether or not resulting
from judicial proceedings and whether paid or payable in or outside Bolivia, as
compensation for or in respect of the appropriation, confiscation, cancellation,
expropriation or nationalization (by intervention, condemnation or other form of
taking) whether under color of law or otherwise (including through confiscatory
taxation or imposition of confiscatory charges) for or in respect of Borrower
Shares or interests in the Borrower or Subordinated Debt, or any direct or
indirect deprivation of rights or interests of or in the Borrower or the Project
that gives rise to compensable claims under Bolivian or other applicable law or
treaties by direct or indirect holders of debt or equity interests in the
Borrower.

 

“Project Funds” means (a) all proceeds of sale of or other disposition of
Project Production and other Project Property (without duplication of amounts
paid to the Borrower and Apex Metals), (b) all disbursements of Senior Loans,
(c) all equity contributions and proceeds from Subordinated Debt, (d) all
insurance proceeds paid to the Borrower in respect of assets of the Project and
all proceeds from insurance in respect of business interruption, loss of profits
or similar matters, (e) all Expropriation Compensation, (f) all damages and
awards paid to the Borrower, (g) all investment earnings from funds in the New
York Accounts, (h) proceeds of Indebtedness for Borrowed Money permitted under
Section 8.19(a)(iii), (i) without duplication of other amounts specified above,
all net settlement amounts payable to Apex Metals under the Mandatory Metals
Hedge Agreements and (j) all other miscellaneous receipts of the Borrower and,
without duplication, Apex Metals.

 

“Project Information” means all information contained in the information
memorandum relating to the financing of the Project, dated October 12, 2005,
taken as whole, and as such memorandum may have been superseded, modified or
corrected by information subsequently provided to the Senior Lenders on or prior
to the date of this Agreement.

 

“Project Production” means Concentrates produced by the Project.

 

“Project Property” means all property, assets, interests (including security
interests) and contractual or other rights (including rights to use or possess
property or assets), real and personal, tangible and intangible, whether now
owned or hereafter acquired, wherever located, of the Borrower used in or
related to the Project and any proceeds from such property, assets, interests
and rights.

 

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“Projected Cash Proceeds” means, for any period, all Project Funds expected to
be received during such period other than the proceeds of property insurance,
Expropriation Compensation, Senior Loan disbursements, and Sponsor Funding.

 

“Projected Operating Costs” means, for any period, all Operating Costs expected
to become due and payable during such period other than costs expected to be
paid or reimbursed from the proceeds of property insurance or Expropriation
Compensation.

 

“Proven and Probable Reserves” shall mean the aggregate of the Proven Mineral
Reserve and Probable Mineral Reserve for silver, lead and zinc for the Project,
as such terms are defined in and measured in accordance with U.S. Securities and
Exchange Commission Guide 7.

 

“Quarterly Date” means each of March 15, June 15, September 15 and December 15
in each year (provided that if any such date shall fall on a day that is not a
Business Day, the relevant Quarterly Date shall be the immediately preceding
Business Day).

 

 “Rail Transportation Agreement” means that certain Transportation Agreement
dated as of March 15, 2005 between the Borrower and the Rail Transporter.

 

“Rail Transporter” means Antofagasta Railway Company PLC and any successor
contractor providing substantially the same services as are provided under the
Rail Transportation Agreement.

 

“Railway” means the railway on which Concentrates are to be transported under
the Rail Transportation Agreement.

 

“Ratio Maturity Date” means, as of any date of determination, the last scheduled
Principal Repayment Date taking into account any prepayment of the principal of
the Senior Loans pursuant to Section 2.04.

 

“Regulations U and X” shall mean Regulation U and Regulation X of the Board of
Governors of the Federal Reserve System.

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisers of such Person and such Person’s Affiliates.

 

“Release” shall mean any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment, including the movement of Hazardous Materials through ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata.

 

“Remaining Equity Amount” means, on any date of determination on or prior to
Completion, the excess of (a) the Equity Amount over (b) the aggregate amount of
Base Equity Contributions made on or prior to such date (which amount shall
exclude any amount transferred to a New York Account at the direction of the
Borrower under the second sentence of Section 4.08(c)(i)).

 

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“Replacement Hedge PRI Policy” has the meaning set forth in Part 1 of the
Schedules to each of the Mandatory Metals Hedge Agreements.

 

“Replacement Loan PRI Policy” has the meaning set forth in Section 9.01(c) of
the Commercial Bank Senior Loan Agreement.

 

“Replacement Mandatory Metals Hedge Transaction” means Metals Hedge Transactions
placed by Apex Metals with the Hedge Banks following the Initial Disbursement
Date in replacement of IDD Mandatory Metals Hedge Transactions as permitted
under the Cross-Guarantee and Security Agreement.

 

“Replacement Secured Debt” has the meaning set forth in Section 2.06(a).

 

“Replacement Senior Loan Agreement” means any replacement senior loan agreement
providing for the terms and conditions of the Replacement Secured Debt.

 

“Requested Disbursement Date” has the meaning set forth in Section 11.04(b)(iv).

 

“Reserve Payment” means each Debt Service Reserve Payment and Operating Reserve
Payment.

 

“Reserve Payment Date” means the first Business Day of each calendar month and
each Principal Repayment Date.

 

“Reserve Tail” shall mean a ratio (expressed as a percentage), as of any date of
determination until the Ratio Maturity Date, of (a) the then current forecasted
production of zinc, lead and silver from the Ratio Maturity Date through the
remainder of the Life of Mine as set forth in the Financial Model to (b) the
originally forecasted production of zinc, lead and silver estimated to be
produced for the Life of Mine as set forth in the Initial Financial Model.  For
the purposes of this ratio, production of zinc, lead and silver shall be (a)
calculated in the manner set forth in the Initial Financial Model, utilizing the
Proven and Probable Reserves as verified and accepted by the Independent
Engineer, and (b) stated in zinc equivalent terms using the zinc, lead and
silver price assumptions contained in the Initial Financial Model.

 

“Restricted Operating Cost Certificate” has the meaning given to it in
Section 4.05(c).

 

“Restricted Operating Costs” means (a) Operating Costs excluding (i)
expenditures which are (A) not essential to the compliance by the Borrower with
its obligations under the Financing Documents or (B) not required to maintain
the Project’s actual operating capacity at, or to prevent a material increase in
operating expenses from, the levels contemplated in the Operating Plan then in
effect or (C) not required to satisfy legal or contractual obligations of the
Borrower and (ii) Guaranteed Apex Metals Obligations (to the extent otherwise
included in Operating Costs), (b) prior to Completion, permitted expenditures
contemplated by the Construction Budget as necessary to achieve Completion,
(c) other permitted expenditures required to achieve the Project’s actual
operating capacity at the levels contemplated in the Operating Plan then in
effect, and (d) items of expenditure which the Majority Lenders have agreed may
be treated as Restricted Operating Costs pursuant to clause (c) of Section 4.05.

 

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“Restricted Payment” means:

 

(a)           all dividends of the Borrower (in cash, property of the Borrower
or obligations) on, or other payments, dividends or distributions on account of,
or the setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition by the Borrower of, any
portion of any share or equity interest in the Borrower or any other return on
or of any equity or other capital in or of the Borrower; and

 

(b)           all payments (in cash, property of the Borrower or obligations) of
principal of, interest on, and other amounts with respect to, or other payments
on account of, or the setting apart of money for a sinking or other analogous
fund for, or the purchase, redemption, retirement or other acquisition by the
Borrower of, any Subordinated Debt.

 

“Restricted Payment Date” has the meaning set forth in Section 9.01(a)(iv).

 

“S&P” or “Standard & Poor’s” means Standard and Poor’s Rating Service.

 

“Sales Fee” has the meaning ascribed thereto in the Borrower Concentrate Sales
Agreement.

 

“Schedule of Minimum Insurance Requirements” has the meaning set forth in
Section 5.01.

 

“SDCR Report” means the Social Development Community Relations Report developed
for the Project,  delivered to the Senior Lenders in accordance with
Section 11.01(i) and prepared on the basis of the On Common Ground Report and
the Environmental Impact Assessment.

 

“Secured Debt” means the Indebtedness incurred by the Borrower to the Secured
Parties pursuant to the Senior Loan Agreements and the Hedge Guaranty.

 

“Secured Debt Obligations” means the Senior Loan Obligations and the Guaranteed
Apex Metals Obligations.

 

“Secured Parties” means holders of Secured Debt Obligations and each Agent.

 

“Securities Intermediary” has the meaning set forth in Section 4.01(a).

 

“Security Documents” means this Agreement, the Cross-Guarantee and Security
Agreement, Counterparty’s Consent, AM Counterparty’s Consent, the Sponsor Pledge
Agreement, the ASC Bolivia Pledge Agreement, the Swiss Pledge Agreement, the
Chilean Conditional Assignment and each other security agreement, document,
assignment, mortgage, charge, pledge, fiduciary assignment, power of attorney,
sub-powers of attorney, and other documents signed or filed (or to be signed and
filed) by the Borrower, Apex Sweden, Apex Metals, ASC Bolivia, the Sponsor or
Apex Luxembourg or any other Person in order or purporting to create, preserve,
continue, perfect or validate any security interest in any property of any such
Person required or contemplated by this Agreement.

 

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“Semi-Annual Date” means (a) with respect to the calendar year in which
Mechanical Completion occurs (i) the first day of the first calendar month
falling after Mechanical Completion and (ii) the six-month anniversary of such
date (unless such date falls in a subsequent calendar year, in which case clause
(b) shall apply) and (b) with respect to each subsequent calendar year, each
Principal Repayment Date that falls in such calendar year.

 

“Senior Lender Group” means each Senior Lender or group of Senior Lenders party
to a separate Senior Loan Agreement.

 

“Senior Lender Group Event of Default” has the meaning set forth in
Section 10.01(dd).

 

“Senior Lenders” means (a) the institutions or banks party to this Agreement
referred to in Appendix B-1, and (b) their respective successors, transferees
and permitted assigns who make Senior Loan Commitments or become holders of
Secured Debt in transactions permitted under this Agreement (including any
lender of Replacement Secured Debt or any subrogee of any Senior Lender
following any payment by such subrogee to or for the benefit of such Senior
Lender).  Persons that are not parties to this Agreement, such as those that may
purchase participations in Secured Debt or Senior Debt Commitments, shall not be
Senior Lenders.

 

“Senior Loan Agreements” means, collectively, the Commercial Bank Senior Loan
Agreement, the CAF Senior Loan Agreement and any Replacement Senior Loan
Agreement.

 

“Senior Loan Commitment” means, for each Senior Lender, the aggregate principal
amount of Senior Loans which such Senior Lender is committed to disburse to the
Borrower under the relevant Senior Loan Agreement to which it is a party, as
such commitment may be reduced from time to time pursuant to Section 2.05.  The
Senior Loan Commitments of the Senior Lenders as of the date hereof are set
forth in Appendix B-1.

 

“Senior Loan Facilities” means the loan facility made available to the Borrower
by the Senior Lenders under the Senior Loan Agreements.

 

“Senior Loan Obligations” means the obligations to pay or prepay principal and
interest on the Senior Loans (including any interest accruing after the
occurrence of any event referred to in Section 9.01(d), whether or not a claim
for post-petition interest is allowed in such Proceeding), as well as any and
all commissions, fees, indemnities, prepayment premiums, breakage costs,
obligations to pay premia on the Loan PRI Policy and other amounts payable to
the Senior Lenders under the Financing Documents.

 

“Senior Loans” means the loans made to the Borrower outstanding under the Senior
Loan Agreements.

 

“Service Company” means Apex Silver Mines Corporation, a Delaware corporation.

 

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“Service Company Debt” means Indebtedness (including capitalized interests) of
the Service Company, whether currently existing or hereafter created, which was
originally owed to any Affiliate of the Service Company

 

“Service Company Lender” means Apex Metals and any other holder of Service
Company Debt so long as it continues to hold such Service Company Debt.

 

“Service Company Note” means any promissory notes or other instruments of the
Service Company evidencing Service Company Debt.

 

“Service Company Shares” has the meaning set forth in Section 4.03(b) of the
Cross-Guarantee and Security Agreement.

 

“Service Fee” means (a) the “Service Fee” payable to the Service Company by the
Borrower pursuant to Section 3(a) of the Borrower Management and Services
Agreement and (b) the “Service Fee” payable to the Service Company by Apex
Metals pursuant to Section 3(a) of the Apex Metals Management and Services
Agreement.

 

“Share Funding Amount” shall mean $9,570,000 which is the aggregate amount to be
funded through the delivery of shares in the Sponsor on behalf of the Borrower
under the EPCM Contract and on behalf of ASC Bolivia under the Transmission Line
Loan Agreement.

 

“Shareholder Debt” means unsecured Indebtedness (including capitalized interest)
of Apex Sweden, whether currently outstanding or hereafter created, which is
assigned and pledged as security for the Secured Debt Obligations pursuant to a
Security Document.

 

“Shareholder Lender” means each of ASM, Apex Luxembourg and any other holder of
Shareholder Debt so long as it continues to hold such Shareholder Debt.

 

“Shareholder Note” means any promissory notes or other instruments of Apex
Sweden evidencing Shareholder Debt.

 

“Shareholder Parent Debt” means unsecured Indebtedness (including capitalized
interest) of Apex Luxembourg, whether currently outstanding or hereafter
created, and which is assigned and pledged as security for the Secured Debt
Obligations pursuant to a Security Document.

 

“Shareholder Parent Lender” means ASM and any other holder of Shareholder Parent
Debt so long as it continues to hold such Shareholder Parent Debt.

 

“Shareholder Parent Note” means any promissory notes or other instruments of
Apex Luxembourg evidencing Shareholder Parent Debt.

 

 “Social Consultant” means On Common Ground.

 

“Solvent”  means, with respect to any Person on a particular date, the condition
that on such date (a) the fair value of the assets of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay

 

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the probable liability of such Person on its existing debts as they become
absolute and matured, and (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person’s ability to
pay as such debts and liabilities mature.

 

“Sponsor” means ASM.

 

“Sponsor Budget” has the meaning set forth in the Completion Agreement.

 

“Sponsor Default” has the meaning set forth in the Sponsor Pledge Agreement.

 

“Sponsor Funding” means funding provided to the Borrower by or on behalf of the
Sponsor, Apex Luxembourg or Apex Sweden in the form of equity or Subordinated
Debt.

 

“Sponsor Pledge Agreement” means that certain Sponsor Pledge and Agreement dated
December 1, 2005 between the Sponsor and the Collateral Agent.

 

“Spot Sales Agreement” means a written contract or agreement for the sale or
other disposition of Project Production with a term of three years or less or
any oral contract or arrangement evidenced by a confirmation receipt entered
into by the Borrower or Apex Metals for the sale or other disposition of Project
Production for delivery of a specified quantity of Project Production in a
single shipment or any other contract for the sale or other disposition of
Project Production that is not a Third Party Concentrate Sales Agreement.

 

“Subordinated Debt” means unsecured Indebtedness (including capitalized
interest) of the Borrower, whether currently outstanding or hereafter created,
ranking in payment and upon liquidation junior to the Secured Debt in accordance
with the subordination terms attached as Appendix A-1 to the Transfer
Restrictions Agreement which is assigned and pledged as security for the Secured
Debt Obligations pursuant to a Security Document.  No such Indebtedness of the
Borrower will constitute Subordinated Debt until such time as the Subordinated
Lender assumes in writing, either pursuant to the terms of a Financing Document
or otherwise, all of the obligations applicable to a Subordinated Lender under
and in accordance with the this Agreement and any other relevant Financing
Document and the Subordination Agreement.

 

“Subordinated Lender” means each of ASM, Apex Metals, Apex Sweden, Apex
Luxembourg and any other holder of Subordinated Debt so long as it continues to
hold such Subordinated Debt.

 

 “Subordinated Notes” means any promissory notes or other instruments of the
Borrower evidencing Subordinated Debt.

 

“Subordination Agreement” has the meaning set forth in Section 8.19(b).

 

“Supermajority Lenders” means Senior Lenders holding more than 75% of the sum of
(a) the aggregate amount of uncancelled and undrawn Senior Loan Commitments and
(b) the aggregate principal amount of outstanding Senior Loans; provided that
any Senior Loan Commitments or Senior Loans held by any Affiliate of the
Borrower shall be disregarded in such calculations.

 

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“Supermajority Secured Parties” means:

 

(a)           if no Event of Default has occurred and is continuing,
Supermajority Lenders; and

 

(b)           if an Event of Default has occurred and is continuing, Secured
Parties holding more than 75% of the sum of (i) the aggregate principal amount
of outstanding Senior Loans plus (iii) Eligible Guaranteed Apex Metals Amounts.

 

“Support Standards” means as of any date of determination the satisfaction of
each of the criteria for an Acceptable Bank set forth in the definition of
“Acceptable Bank”.

 

“Swiss Pledge Agreement” means that certain Pledge Agreement to be entered into
between Apex Sweden, Apex Luxembourg and the Collateral Agent.

 

“Technical Agent” means Barclays Capital, in its capacity as Technical Agent.

 

“Third Party Concentrate Sales Agreement” means an agreement for the sale of
Concentrate between Apex Metals and an Acceptable Buyer having the following
terms:

 

(a)           the Acceptable Buyer shall pay a price thereunder calculated by
reference to a London Metals Exchange price for lead, zinc or silver;

 

(b)           it shall provide for accelerated dispute resolution and fallback
pricing in the event that there is or may be a renegotiation of price;

 

(c)           the term shall equal or exceed three (3) years; and

 

(d)           no penalty, payment or fee shall be payable by Apex Metals in the
event of any termination or cancellation of such arrangement for convenience (it
being understood that termination or cancellation resulting from a failure by
Apex Metals to deliver Concentrates at the purity or at the volume agreed upon
shall not constitute convenience).

 

“Total Project Cost Funding Ratio” or “TPCFR” means, on any date of
determination, the ratio of (b) the total aggregate principal amount of Senior
Loans outstanding on such date to (b) the total aggregate amount of Base Equity
Contributions plus Contingent Support Contributions plus the Contributed Equity
Amount made on or prior to such date.

 

“Total Cost to Complete” means, as of any date of determination, the aggregate
amount of Project Costs remaining to be paid to achieve Completion as indicated
in the most recent Cost to Complete Certificate.

 

“TRA Default” has the meaning specified in Section 4.01 of the Transfer
Restrictions Agreement.

 

“Tranche A Loans” has the meaning ascribed thereto in Section 2.01(a) of the
Commercial Bank Senior Loan Agreement.

 

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“Tranche A Loan Commitments” has the meaning ascribed thereto in the Commercial
Bank Senior Loan Agreement.

 

“Tranche A Senior Lender” means Senior Lenders that hold Tranche A Loan
Commitments or Tranche A Loans from time to time.

 

“Tranche B Loans” has the meaning ascribed thereto in Section 2.01(b) of the
Commercial Bank Senior Loan Agreement.

 

“Tranche B Loan Commitments” has the meaning ascribed thereto in the Commercial
Bank Senior Loan Agreement.

 

“Tranche B Senior Lenders” means Senior Lenders that hold Tranche B Loan
Commitments or Tranche B Loans from time to time.

 

“Transaction Documents” means the Project Documents and the Financing Documents.

 

“Transfer Restrictions Agreement” means the Transfer Restrictions Agreement
dated as of December 1, 2005 between the Sponsor, Apex Metals, Apex Luxembourg,
Apex Sweden and the Collateral Agent for and on behalf of the Secured Parties.

 

“Transmission Line Agreement” means the Power Line Construction and Transmission
Agreement dated as of January 14, 2005 among the Borrower, Ingelec SA, Ingelec
Transportadora de Electricidad S.A., BVICO and the Transporter.

 

“Transmission Line BVICO Pledge Agreement” means the Pledge Agreement dated as
of April 15, 2005 made by Ingelec Electricity Transportation Investments, Corp.,
Raúl Quiroga and Rene Fernández in favor of ASC Bolivia LDC.

 

“Transmission Line Contractors” means the Transporter, BVICO and Ingelec SA.

 

“Transmission Line Escrow Agreement” means the Escrow Agreement and Account
Pledge and Security Agreement dated as of April 15, 2005 among San Cristóbal
Transportadora de Electricidad S.A., ASC Bolivia LDC and Atlantic Security Bank,
Grand Cayman.

 

“Transmission Line Guaranty” means the Guaranty dated as of April 15, 2005 made
by Ingelec S.A., Ingelec Transportadora de Electricidad S.A. and Ingelec
Electricity Transportation Investments, Corp. in favor of ASC Bolivia LDC.

 

“Transmission Line Loan Agreement” means the Loan Agreement dated as of April
15, 2005 between ASC Bolivia LDC and San Cristóbal Transportadora de
Electricidad S.A.

 

“Transmission Line Moveables Pledge” means that certain “Borrower Security
Agreement” (as defined in the Transmission Line Loan Agreement) creating a fixed
registered pledge (prendas sin desplazamiento) to be created over certain
property of the Transporter.

 

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“Transmission Line Promissory Note” means the Promissory Note dated as of April
15, 2005 between San Cristóbal Transportadora de Electricidad S.A. and ASC
Bolivia LDC.

 

 “Transmission Line Security Documents” means the Transmission Line Loan
Agreement, the Transmission Line Promissory Note, the Transmission Line Escrow
Agreement, the Transmission Line BVICO Pledge Agreement, the Transmission Line
Transporter Pledge Agreement, the Transmission Line Guaranty, and, when
executed, the Transmission Line Moveables Pledge.

 

“Transmission Line Transporter Pledge Agreement” means the Pledge Agreement
dated as of April 15, 2005 made by Ingelec Transportadora de Electricidad S.A.
in favor of ASC Bolivia LDC.

 

“Transporter” means San Cristóbal Transportadora de Electricidad S.A., and any
successor transmission provider providing similar services to those provided by
the Transporter under the Transmission Line Agreement.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

 

“Unfunded DSRA Deficiency” has the meaning set forth in Section 4.06(c)(i).

 

“U.S. GAAP” means generally accepted accounting principles in the United States.

 

“USA Patriot Act” has the meaning set forth in Section 7.01(p).

 

“Voluntary Prepayment” means a prepayment of Senior Loans made in accordance
with Section 2.04(b).

 

 “WGI Guaranty” means the guaranty issued by Washington Group International Inc.
in favor of the Borrower supporting the Mining Contractor’s obligations under
the Mining Contract.

 

“Withdrawal Certificate” means a certificate substantially in the form of
Appendix O hereto signed by an Authorized Officer of the Borrower.

 

“Zinc Concentrate” means high grade zinc concentrate produced by the Project as
further described in section 12.2.1 of the Independent Engineer Report.

 

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