Document:

Exhibit 10.2

 

EXECUTION VERSION

 

 

 

LOAN AGREEMENT

 

between

 

MINERA SAN CRISTÓBAL S.A.,

as Borrower

 

and

 

CORPORACIÓN ANDINA DE FOMENTO

 

Dated as of December 1, 2005

 

U.S. $50,000,000

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1
  DEFINITIONS

  	
  1

  
	
  1.01

  	
  Certain Defined
  Terms

  	
  1

  
	
  1.02

  	
  Other
  Definitions; Headings

  	
  3

  
	
  1.03

  	
  Interpretation

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2
  THE LOAN

  	
  3

  
	
  2.01

  	
  Loans

  	
  3

  
	
  2.02

  	
  Disbursements

  	
  4

  
	
  2.03

  	
  Use of
  Proceeds

  	
  4

  
	
  2.04

  	
  Financing
  Fee

  	
  4

  
	
  2.05

  	
  Commitment
  Fee

  	
  4

  
	
  2.06

  	
  CAF Notes

  	
  4

  
	
  2.07

  	
  Voluntary
  Prepayments of Loans

  	
  4

  
	
  2.08

  	
  Mandatory
  Prepayments

  	
  5

  
	
  2.09

  	
  All
  Prepayments

  	
  5

  
	
  2.10

  	
  Change in
  Commitment

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3
  PAYMENTS OF PRINCIPAL AND INTEREST

  	
  5

  
	
  3.01

  	
  Repayment of
  Loan

  	
  5

  
	
  3.02

  	
  Interest

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4
  PAYMENTS, ETC.

  	
  6

  
	
  4.01

  	
  Payments

  	
  6

  
	
  4.02

  	
  Notices of
  Disbursement

  	
  6

  
	
  4.03

  	
  Set-Off

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5
  YIELD PROTECTION, ETC.

  	
  7

  
	
  5.01

  	
  Additional
  Costs

  	
  7

  
	
  5.02

  	
  Alternate
  Interest Rate

  	
  8

  
	
  5.03

  	
  Illegality

  	
  9

  
	
  5.04

  	
  Compensation

  	
  9

  
	
  5.05

  	
  Covered
  Taxes

  	
  10

  
	
  5.06

  	
  Mitigation

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6
  CONDITIONS PRECEDENT

  	
  11

  
	
  6.01

  	
  Initial
  Loans

  	
  11

  
	
  6.02

  	
  Each Loan

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7
  REPRESENTATIONS AND WARRANTIES

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8
  COVENANTS OF THE BORROWER

  	
  12

  
	
  8.01

  	
  Common
  Security Agreement Covenants

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9
  EVENTS OF DEFAULT

  	
  12

  

 

i

 

	
  9.01

  	
  Events of
  Default

  	
  12

  
	
  9.02

  	
  Remedies.

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10
  MISCELLANEOUS

  	
  13

  
	
  10.01

  	
  Waiver

  	
  13

  
	
  10.02

  	
  Notices

  	
  13

  
	
  10.03

  	
  Amendments,
  Etc.

  	
  14

  
	
  10.04

  	
  Successors
  and Assigns

  	
  14

  
	
  10.05

  	
  Assignments
  and Participations

  	
  14

  
	
  10.06

  	
  Survival/Reinstatement

  	
  14

  
	
  10.07

  	
  Captions

  	
  14

  
	
  10.08

  	
  Counterparts

  	
  14

  
	
  10.09

  	
  GOVERNING LAW

  	
  15

  
	
  10.10

  	
  Jurisdiction,
  Service of Process and Venue

  	
  15

  
	
  10.11

  	
  WAIVER OF
  JURY TRIAL

  	
  15

  
	
  10.12

  	
  No Immunity

  	
  15

  
	
  10.13

  	
  Judgment
  Currency

  	
  15

  
	
  10.14

  	
  Expenses;
  Indemnity

  	
  16

  
	
  10.15

  	
  Use of
  English Language

  	
  16

  
	
  10.16

  	
  No Fiduciary
  Relationship

  	
  16

  
	
  10.17

  	
  Severability

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  EXHIBIT A

  	
  Form of
  Note

  	
   

  
	
  EXHIBIT B

  	
  Amortization
  Schedule

  	
   

  
	
  EXHIBIT C

  	
  Prepayment
  Premium

  	
   

  
				

 

ii

 

LOAN AGREEMENT

 

LOAN AGREEMENT,
dated as of December 1, 2005, among MINERA SAN CRISTÓBAL S.A., a sociedad anónima organized under the laws
of Bolivia (the “Borrower”) and CORPORACIÓN ANDINA DE FOMENTO (“CAF”).

 

WHEREAS, for
purposes of financing in part the development of the Project, the Borrower desires
that CAF make certain loans to it, and CAF wishes to make certain loans to the
Borrower, all on the terms and conditions set forth herein and in the Common
Security Agreement;

 

NOW THEREFORE, in
consideration of the foregoing, the agreements contained herein and in the
Common Security Agreement and for other good and valid consideration, the
receipt and adequacy of which are hereby expressly acknowledged, the parties
hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.01           Certain
Defined Terms.  Except as otherwise
defined herein, capitalized terms used herein (including the preamble and
recital of this Agreement) shall have the meanings assigned to such terms in
the Common Security Agreement (including Appendix A thereto).  For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:

 

“Agreement” means this Loan Agreement. 

 

“Availability Period” means the period from the date hereof
until the Commitment Termination Date.

 

“Borrower” has the meaning assigned thereto in the first
paragraph of this Agreement.

 

“Borrower Process Agent” has the meaning set forth in Section 10.10(b) hereof.

 

“Borrowing” shall mean (a) all Loans made on the same
Disbursement Date and (b) all Loans as to which a single Interest Period is
in effect.

 

“CAF Loan Commitment” means $50,000,000.

 

“CAF Note” shall have the meaning set forth in Section 2.06
hereof.

 

“CAF Process Agent” has the meaning set forth in Section 10.10(b) hereof.

 

“Change in Law” means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or

 

 

(c) compliance
by CAF with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the date of
this Agreement.

 

“Common Security Agreement” means the Common Security Agreement
dated as of December 1, 2005 among the Borrower, Apex Luxembourg, Apex
Sweden, Apex Metals, the Administrative Agent, the Lead Arrangers, CAF, the
Collateral Agent and the Securities Intermediary, the Hedge Banks party thereto
and the Senior Lenders party thereto.

 

“Covered Taxes” has the meaning assigned thereto in Section 5.05(a) hereof.

 

“Default Interest Period” means each successive period (not in
excess of one month) as CAF shall choose, during which any amount payable by
the Borrower hereunder is in default. 
The first such period shall commence as of the date on which such amount
in default becomes due, and each such succeeding period shall commence
immediately upon the expiry of the immediately preceding period; provided,
however, that in the absence of or pending a determination by CAF, each
Default Interest Period shall have a duration of one week.

 

“Default Margin” means a rate per annum equal to 2%.

 

“Dollars” and “US$” mean lawful money of the United
States of America.

 

“Event of Default” has the meaning set forth in Section 9
hereof.

 

“Excluded Taxes” means (a) Taxes imposed on CAF’s overall
net income (including branch profits or similar taxes), and franchise taxes
imposed in lieu of net income taxes, by the jurisdiction under the laws of
which CAF is organized or any political subdivision thereof, (b) Taxes
imposed because of a connection between Bolivia and CAF other than lending
money or extending credit pursuant to, receiving payments under, or enforcing
this Agreement, the Common Security Agreement, the Loans, the CAF Notes, the
Security Documents, the other Financing Documents or any related document, and (c) Taxes
imposed on CAF’s overall net income by the jurisdiction of CAF or any political
subdivision thereof.

 

“Interest Payment Date” means, with respect to any Loan or
Borrowing, each Quarterly Date. 

 

“Interest Period” means, for any Borrowing: (a) the period
commencing on the Disbursement Date for Loans comprising such Borrowing and
ending on but excluding the next following Semiannual Date occurring at least
thirty (30) days thereafter and (b) thereafter, each period commencing on
the last day of the next preceding Interest Period for such Borrowing and
ending on but excluding the next following Semiannual Date.

 

“LIBO Rate” means, with respect to any Borrowing for any
Interest Period or any amount not paid when due hereunder for any Default
Interest Period, the rate appearing on Page 3750 of the Dow Jones Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
notified to CAF by the Administrative Agent from time to time for purposes of
providing quotations of interest rates

 

2

 

applicable to
Dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for the offering of Dollar deposits with a maturity
comparable to such Interest Period.  In
the event that such rate is not available at such time for any reason, then the
LIBO Rate for such Interest Period shall be the average rate (calculated to
four decimal places and notified to CAF by the Administrative Agent) at which
Dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of each Reference Bank in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period.

 

“Loan” means each of the loans provided to the Borrower pursuant
to Section 2.01 hereof.

 

“Margin” means 3.50% per annum.

 

“Negotiation Period” has the meaning set forth in Section 5.02.

 

“Notice of Disbursement” has the meaning set forth in Section 2.02
hereof.

 

“Reference Banks” means BNP Paribas, Barclays Bank PLC and a
third Lender selected by the Administrative Agent and approved by the Borrower,
such approval not to be unreasonably withheld or delayed.  

 

“Semiannual Date” shall mean each of the Quarterly Dates
occurring in June and December in each year.

 

“Substitute Basis” has the meaning set forth in Section 5.02
hereof.

 

1.02           Other
Definitions; Headings.  The table of
contents to this Agreement and section headings contained herein are for
convenience of reference only and shall not affect the construction hereof.

 

1.03           Interpretation.  Section 1.02 of the Common Security
Agreement is hereby incorporated herein by reference as if fully set forth
herein mutatis mutandis.

 

ARTICLE 2

THE LOAN

 

2.01           Loans.  CAF agrees, subject to the terms and
conditions of this Agreement and the Common Security Agreement, and for the
purposes described herein, to make Loans to the Borrower in U.S. Dollars from
time to time during the Availability Period in an aggregate principal amount up
to but not exceeding the CAF Loan Commitment. 
If the full principal amount of the CAF Loan Commitment is not disbursed
during the Availability Period, the amount of any undrawn portion thereof shall
be automatically reduced to zero as provided in Section 2.08(a) of
the Common Security Agreement.

 

3

 

2.02           Disbursements.  The Borrower shall give CAF through the
Administrative Agent a notice of disbursement (a “Notice of Disbursement”)
for each disbursement of Loans hereunder, such notice to be substantially in
the form of Appendix D-1 to the Common Security Agreement, as provided in Section 11.04
of the Common Security Agreement.  Except
as to a disbursement of Loans which utilizes the unborrowed CAF Loan Commitment
in full, each Disbursement of Loans hereunder shall be in an amount which,
taken together with the amount of simultaneous disbursements under other Senior
Loan Agreements, is not less than US$5,000,000 and, if greater, is an integral
multiple of US$2,000,000.

 

Not later than 11:00 a.m. New York time on the date specified in
each Notice of Disbursement hereunder, CAF shall make available the aggregate
amount of the Loans to be made by it on such date to the Borrower by depositing
the same in the Loan Proceeds Account in immediately available funds.  

 

The Borrower hereby irrevocably agrees that evidence of wire
instructions demonstrating that a wire transfer of a Loans was initiated by or
on behalf of CAF and credited to the Loan Proceeds Account pursuant to a Notice
of Disbursement shall constitute sufficient evidence that the Borrower has
received the proceeds of such Disbursement of Loans, and the Borrower is
thereby obligated to repay such Loans in accordance with the terms of this
Agreement and the Common Security Agreement.

 

2.03           Use
of Proceeds.  The Borrower agrees
that the proceeds of the Loans shall be used by it exclusively in accordance
with Section 8.26 of the Common Security Agreement.

 

2.04           Financing
Fee.  The Borrower shall pay to CAF
on the date of the initial Loan hereunder a financing fee in an amount equal to
1.25% flat of the amount of the CAF Loan Commitment.

 

2.05           Commitment
Fee.  The Borrower shall pay to CAF a
commitment fee on the daily average unused amount of the CAF Loan Commitment,
for the period from and including the date hereof to but excluding the
Commitment Termination Date, at a rate equal to 1.00% per annum.  Accrued commitment fee shall be payable in
arrears on each Quarterly Date and on the Commitment Termination Date.  

 

2.06           CAF
Notes.  Each Disbursement of a Loan
shall be evidenced by one or more separate promissory notes of the Borrower
(each, a “CAF Note”), dated the relevant Disbursement Date, payable to
CAF in a principal amount equal to the principal amount of such Disbursement
and otherwise duly completed.

 

2.07           Voluntary
Prepayments of Loans.  The Borrower
shall have the right to prepay the Loans, either in whole or in part, in
accordance with Section 2.04(b) of the Common Security Agreement, at
any time or from time to time, provided that upon each such prepayment
under this Section 2.07 the Borrower shall pay CAF a prepayment premium in
an amount calculated in the manner set forth in Exhibit C hereto.  

 

4

 

2.08           Mandatory
Prepayments.  The Borrower shall be
obligated to prepay the Loans pursuant to Sections 5.05(c)(ii), 5.08(c)(ii) and
(iii) and 9.02 of the Common Security Agreement and Section 5.03
hereof.  

 

2.09           All
Prepayments.  Amounts prepaid may not
be reborrowed by the Borrower.  Any
prepayment made by the Borrower pursuant to Sections 2.07 or 2.08 hereof
or any provision of the Common Security Agreement shall be made together with
all accrued but unpaid interest on amounts prepaid and all other amounts
(including any amounts due pursuant to Section 5) then due from the
Borrower hereunder.

 

2.10           Change
in Commitment.  Subject to Section 2.07
of the Common Security Agreement, the Borrower shall have the right at any time
or from time to time to terminate or reduce the aggregate unused amount of the
CAF Loan Commitment.  Any portion of the
CAF Loan Commitment once terminated or reduced may not be reinstated.

 

ARTICLE 3

PAYMENTS OF PRINCIPAL AND INTEREST

 

3.01           Repayment
of Loan.  The Borrower hereby
unconditionally promises to pay to CAF the principal amount of the Loans in
nine consecutive semi-annual installments payable commencing on the first
Principal Repayment Date and on each subsequent Principal Repayment Date
thereafter, each such installment to be in an aggregate principal amount
computed in accordance with the Amortization Schedule set forth in Exhibit B
hereto. 
To the extent not previously paid, all Loans shall be due and
payable on the Final Maturity Date.

 

3.02           Interest.  

 

(a)                                  The
Borrower hereby promises to pay to CAF interest on the unpaid principal amount
of each Loan for the period from and including the date of such Loan to but
excluding the date such Loan shall be paid in full, at a rate per annum equal
to, for each Interest Period, the LIBO Rate for such Loan for such Interest
Period plus the applicable Margin plus, subject to Section 10.02(b) of
the Common Security Agreement, upon the occurrence and during the continuance
of any Event of Default under the Common Security Agreement (other than any
Event of Default under clause (a) of Section 10.01 thereof
relating to this Agreement for which a default rate is being applied in
accordance with Section 3.02(c) below), the Default Margin.

 

(b)                                 Accrued
interest on each Loan shall be payable (i) on each Interest Payment Date
for such Loan and (ii) upon the payment or prepayment thereof (on the
principal amount paid or prepaid). 
Promptly after the determination of any interest rate provided for
herein or any change therein, CAF shall give notice thereof to the Borrower and
to the Administrative Agent.   

 

(c)                                  If
any installment of principal of any Loan or any other amount (including
interest on a Loan or any fee hereunder) payable hereunder is not paid in full
when due (whether at the stated due date, by acceleration, by mandatory
prepayment or otherwise), the Borrower hereby agrees to pay from time to time
upon demand interest on the amount past due and unpaid for such period of time
within each related Default Interest Period during which such amount

 

5

 

shall remain
due and unpaid, at a rate per annum equal to (i) in respect of principal,
the Default Margin plus the greater of (A) the rate of interest
payable in respect of such principal pursuant to Section 3.02(a) (or,
if applicable, Section 5.02) in effect immediately prior to such default
in payment and (B) the sum of the LIBO Rate for such Default Interest Period
plus the Margin and (ii) in respect of such other amounts, the
Default Margin plus the LIBO Rate for such Default Interest Period plus
the Margin.

 

(d)                                 The
determination by CAF of the interest rate hereunder from time to time in
accordance with the terms hereof shall be presumed correct in the absence of
manifest error.

 

ARTICLE 4

PAYMENTS, ETC

 

4.01           Payments.  

 

(a)                                  All
payments of principal, interest and other amounts to be made by the Borrower
under this Agreement and the CAF Notes shall be made in Dollars, in immediately
available funds (with the exclusion of other currencies), without deduction,
set-off or counterclaim of any kind, to CAF by wire transfer to its account at
Standard Chartered Bank, Acct. No. 3544-053717-002, Swift Code:  SCBLUS33, not later than 11:00 a.m. New
York City time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day).

 

(b)                                 If
CAF shall at any time receive less than the full amount then due and payable to
it under this Agreement in connection with the Loans, CAF shall allocate and
apply such payment first to fees and expenses payable under this
Agreement, second to overdue interest (if any) on the Loans, third
to other interest due and payable on the Loans, fourth to principal of
the Loans due and payable, and fifth to other amounts payable hereunder.

 

(c)                                  If
the due date of any payment under this Agreement and the Notes would otherwise
fall on a day that is not a Business Day, such date shall be extended to the
next succeeding Business Day, and interest shall be payable for any principal
so extended for the period of such extension.

 

(d)                                 Interest
on the Loans shall be computed on the basis of a year of 360 days and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest and commitment fee are payable.

 

4.02           Notices
of Disbursement.  Notices of
Disbursement delivered by the Borrower to CAF shall be irrevocable and shall be
effective only if received by CAF not later than 11:00 a.m. New York time
at least five Business Days prior to the date of such disbursement as provided
in Section 11.04 of the Common Security Agreement.

 

If received later than 11:00 a.m. New York time on such date, such
notice shall be effective on the next succeeding Business Day unless the
Borrower is notified by CAF that such notice shall be effective on the original
Business Day.

 

6

 

4.03           Set-Off.  The provisions of Section 15.16 of the
Common Security Agreement shall be deemed incorporated herein mutatis  mutandis.

 

ARTICLE 5

YIELD PROTECTION, ETC.

 

5.01           Additional
Costs.  

 

(a)                                  Generally.  If any Change in Law shall:

 

(i)                                     impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, CAF; or

 

(ii)                                  impose on CAF or the
London interbank market any other condition affecting this Agreement or any
Loans made by CAF;

 

and the result
of any of the foregoing shall be to increase the cost to CAF of making or
maintaining any Loans (or of maintaining its obligation to make any Loan) or to
reduce the amount of any sum received or receivable by CAF hereunder (whether
of principal, interest or otherwise), then the Borrower will pay to CAF such
additional amount or amounts as will compensate CAF for such additional costs
incurred or reduction suffered to the extent not otherwise compensated under
any other provision of the Financing Documents.

 

(b)                                 Capital
Requirements.  If CAF determines that
any Change in Law regarding capital requirements has or would have the effect
of reducing the rate of return on CAF’s capital as a consequence of this
Agreement or the Loans made by CAF to a level below that which CAF could have
achieved but for such Change in Law (taking into consideration CAF’s policies
with respect to capital adequacy), then from time to time the Borrower will pay
to CAF such additional amount or amounts as will compensate CAF for any such
reduction suffered.

 

(c)                                  Certificates
from CAF.  A certificate of CAF
setting forth in reasonable detail the computation of the amount or amounts
necessary to compensate CAF as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive
absent manifest error.  The Borrower
shall pay CAF the amount shown as due on any such certificate within
10 days after receipt thereof.

 

(d)                                 Delay
in Requests.  Failure or delay on the
part of CAF to demand compensation pursuant to this Section shall not
constitute a waiver of CAF’s right to demand such compensation; provided
that the Borrower shall not be required to compensate CAF pursuant to this Section for
any increased costs or reductions incurred more than 270 days prior to the
date that CAF notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of CAF’s intention to claim compensation
therefor; provided  further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

 

7

 

5.02           Alternate
Interest Rate.  Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any LIBO
Rate for any Interest Period or Default Interest Period: 

 

(a)                                  CAF determines (which
determination shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the LIBO Rate for such Interest
Period or Default Interest Period; or

 

(b)                                 CAF reasonably
determines that (i) the LIBO Rate for such Interest Period or Default
Interest Period will not adequately reflect the cost to CAF of making or
maintaining Loans, or maintaining any other amount hereunder not paid when due,
for such Interest Period or Default Interest Period or (ii) deposits in
U.S. Dollars in the London interbank market are not available to CAF in the
ordinary course of business in sufficient amounts to make and/or maintain their
Loans,

 

then CAF shall
notify the Borrower thereof and the following provisions shall apply:

 

(A)                              During the thirty-day
period following the date of any such notice (the “Negotiation Period”),
CAF and the Borrower will negotiate in good faith for the purpose of agreeing
upon an alternative, mutually acceptable basis (the “Substitute Basis”)
for determining the rate of interest to be applicable to Loans, and any other
amounts hereunder not paid when due, from time to time and if, at the expiry of
the Negotiation Period, CAF and the Borrower have agreed upon a Substitute
Basis and any required governmental approvals therefor have been obtained, the
Substitute Basis shall take effect from such date (including such retroactive
date) as CAF and the Borrower may in such circumstance agree.

 

(B)                                If at the expiry of the
Negotiation Period, a Substitute Basis shall not have been agreed upon or any
required Government Approvals therefor shall not have been obtained, CAF shall
notify the Borrower of the cost to CAF (as reasonably determined by it) of
funding and maintaining the outstanding affected Loans, and any other amounts
hereunder not paid when due for such Interest Period or Default Interest Period
and the interest payable to CAF on Loans and such other amounts not paid when
due to which such Interest Period or Default Interest Period applies shall be
interest at a rate per annum equal to the cost of funding and maintaining such
Loans or such other amounts as so notified by CAF plus the applicable
Margin plus, subject to Section 10.02(b) of the Common
Security Agreement, upon the occurrence and during the continuance of any Event
of Default under the Common Security Agreement (other than any Event of Default
under clause (a) of Section 10.01 thereof relating to this Agreement
for which a default rate is being applied in accordance with Section 3.02
hereof), the Default Margin.

 

The procedures
specified in (A) and (B) above shall apply to each relevant period
succeeding the first such period to which they were applied unless and until
CAF notifies the Borrower that the condition referred to in clause (a) of
this Section 5.02 no longer exists or CAF notifies the Borrower that the
condition referred to in clause (b) of this Section 5.02 no
longer exists (which notice CAF agrees to give or cause to be given promptly
following the cessation of such condition), whereupon interest on Loans shall
again be determined in accordance with the

 

8

 

provisions of Section 3.02,
effective commencing on the third Business Day after the date of such notice.

 

5.03           Illegality.  Notwithstanding any other provision of this
Agreement:  (i) in the event that it
becomes unlawful for CAF to honor its obligation to make Loans hereunder, then
CAF shall promptly notify the Borrower thereof (with a copy to the
Administrative Agent) and CAF’s obligation to make Loans to the Borrower shall
be suspended until such time as CAF may again make Loans; and (ii)  in the
event that (A) it becomes unlawful for CAF to maintain Loans or (B) Bolivia
ceases to be a member of, or ceases to be entitled to use the general resources
of CAF, then, at the election of CAF (by notice to the Borrower), the Borrower
will prepay, without any penalty or premium whatsoever, CAF’s outstanding Loans
in full (or in the amount of the affected portion thereof) together with
accrued interest thereon and all other amounts payable to CAF hereunder
(including amounts payable under Section 5.04), on the last day of the
then current Interest Period or Default Interest Period for the Loans (or on
such earlier date as shall be certified by CAF as being the last permissible
date for such prepayment under the relevant law, rule, regulation, treaty or
directive), provided, however, that the Borrower shall not be
obligated to make any such prepayment less than 10 days following its
receipt of such notice from CAF.   

 

5.04           Compensation.  Upon request of CAF, the Borrower shall pay
to CAF such amount or amounts as shall be sufficient to compensate it for any
loss, cost or reasonable expense (other than in-house management costs or lost
profit or margin) that CAF has certified to the Borrower as being attributable
to:

 

(a)                                  any payment or
voluntary prepayment by the Borrower of a Loan for any reason (including,
without limitation, the acceleration of the Loans pursuant to Section 10.02
of the Common Security Agreement and voluntary prepayments made pursuant to Section 2.07
of this Agreement) on a date other than the last day of an Interest Period for
such Loan; or

 

(b)                                 any failure by the
Borrower for any reason (including, without limitation, the failure of any of
the conditions precedent specified in Section 6 of this Agreement or in Article XI
of the Common Security Agreement to be satisfied) to borrow a Loan from CAF on
the date for such disbursement for such Loan specified in the relevant Notice
of Disbursement given pursuant to Section 2.02, other than any failure
which results from CAF wrongfully suspending its obligation or wrongfully
failing to make Loans to the Borrower or wrongfully terminating the CAF Loan
Commitment under this Agreement; 

 

provided,
however, that the Borrower shall not be required to compensate CAF for
losses, costs or expenses attributable to a mandatory prepayment made pursuant
to Section 5.03 hereof.  Such
compensation shall include an amount equal to the excess, if any, of (i) the
amount of interest that otherwise would have accrued on the principal amount so
paid or prepaid or not borrowed for the period from the date of such payment,
prepayment or failure to borrow to the last day of the then current Interest
Period for such Loan (or, in the case of a failure to borrow, the Interest
Period for such Loan that would have commenced on the date specified for the
disbursement of such Loan) at the applicable rate of interest for such Loan
provided for herein (excluding, however, the applicable Margin or Default
Margin included therein, if any) over (ii) the amount

 

9

 

of interest
(as reasonably determined by CAF) that otherwise would have accrued on such
principal amount by placing such amount on deposit for a comparable period with
leading banks in the London interbank market. 
A certificate of CAF setting forth in reasonable detail any amount or
amounts which CAF is entitled to receive pursuant to this Section 5.04 and
setting forth in reasonable detail the manner in which such amounts shall have
been determined shall be delivered to the Borrower and shall be conclusive
absent manifest error.  The Borrower
shall pay CAF the amount shown as due on any such certificate within
10 days after receipt thereof.

 

5.05           Covered Taxes.  The Borrower agrees that, whether or not any
Loan is made hereunder:

 

(a)                                  All payments of
principal of and interest on the Loans and all other amounts payable on, under
or in respect of this Agreement, the Loans or the Common Security Agreement by
the Borrower to CAF, including, without limitation, amounts payable by the
Borrower under clause (b) of this Section 5.05, 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
(including interest thereon and penalties assessed with respect thereto, if
any, collectively, “Taxes”), other than Excluded Taxes, imposed,
assessed, levied or collected by any competent authority in Bolivia or any
political subdivision or taxing authority thereof or therein or by any other
jurisdiction from or through which payments of the Loans or other amounts
payable by the Borrower hereunder and thereunder are made that are so imposed,
assessed, levied or collected on or in respect of this Agreement, the Loans,
the CAF Notes, the Common Security Agreement, the Security Documents, the
execution, registration, enforcement, notarization or other formalization of any
thereof, and any payments of principal, interest, charges, fees, commissions or
other amounts made on, under or in respect thereof (hereinafter called “Covered
Taxes”) all of which will be timely paid by the Borrower, for its own
account.  CAF (as to amounts payable to
it for its own account) agrees to notify the Borrower of all Covered Taxes
promptly upon becoming aware of the same.

 

(b)                                 The Borrower will
indemnify CAF against, and reimburse CAF on demand for, any Covered Taxes paid
by CAF and any loss, liability, claim or expense, including interest,
penalties, judgments, costs or disbursements and reasonable and documented
legal fees, which CAF may incur at any time arising out of or in connection
with any failure of the Borrower to make any payment of Covered Taxes when due.

 

(c)                                  In the event that the
Borrower is required by applicable law, decree or regulation to deduct or
withhold Covered Taxes from any amounts payable on, under or in respect of this
Agreement, the Loans, the CAF Notes or the other Financing Documents (including
amounts payable under clause (b) of this Section 5.05), the
Borrower shall pay such additional amount as may be required, after the
deduction or withholding of Covered Taxes (and any deduction or withholding
applicable to additional amounts paid pursuant to this Section 5.05(c)),
to enable CAF to receive from the Borrower an amount equal to the full amount
stated to be payable to CAF under this Agreement, the Loans or the other
Financing Documents.

 

10

 

(d)                                 The Borrower shall
furnish to CAF original or certified copies of tax receipts in respect of any
withholding by it of Covered Taxes required under this Section 5.05 as
promptly as reasonably practicable after the date of each payment hereunder as
to which such withholding is required, and the Borrower shall promptly furnish
to CAF any other information, documents and receipts that CAF may from time to
time reasonably require to establish to its satisfaction that full and timely
payment has been made by the Borrower of all Covered Taxes required to be paid
under this Section 5.05.   

 

5.06           Mitigation.  If, as a result of a Change in Law, an event
or circumstance occurs that would entitle CAF to exercise any of the rights or
benefits afforded by this Section 5, CAF, if it determines to exercise
such rights or benefits, promptly upon becoming aware of the same, shall take
such steps as may be reasonably available to eliminate or mitigate the effects
of such event or circumstance; provided, however, that CAF shall
not be under any obligation to take any step that would (a) result in its
incurring additional costs or taxes or (b) otherwise be disadvantageous to
CAF.

 

ARTICLE 6

CONDITIONS PRECEDENT

 

6.01           Initial
Loans.  CAF’s obligation to make the
initial Loan hereunder shall be subject to the satisfaction (or waiver by CAF)
of each of the common conditions precedent set forth in Sections 11.01,
11.02 and 11.03 of the Common Security Agreement, and CAF shall have received
copies of the notices to such effect required to be given by each Senior Lender
Group pursuant to Section 11.04(e) of the Common Security Agreement.

 

6.02           Each
Loan.  CAF’s obligation to make any
Loan hereunder, including its initial Loan, is subject to the satisfaction (or
waiver by CAF) of each of the following conditions:

 

(a)                                  the common conditions
precedent set forth in Section 11.03 of the Common Security Agreement
shall have been satisfied (or waived as provided therein); and

 

(b)                                 a promissory note
evidencing the obligation of the Borrower to pay the principal of the Loans
subject to the Disbursement shall have been duly completed, executed and
delivered to CAF as contemplated by Section 2.06 at least one Business Day
prior to the date of such Disbursement.

 

Each Notice of
Disbursement shall constitute a certification by the Borrower to the effect
that the conditions set forth in subclauses (a) and (b) of this Section 6.02
have been fulfilled (both as of the date of such notice and, unless the
Borrower otherwise notifies CAF prior to each Disbursement Date, as of such
Disbursement Date).   

 

11

 

ARTICLE 7

REPRESENTATIONS AND WARRANTIES

 

In addition to the representations and warranties contained in Article VII
of the Common Security Agreement, the Borrower represents and warrants to CAF
that the Borrower has duly authorized, executed and delivered this Agreement,
and this Agreement constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms.

 

ARTICLE 8

COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees with CAF that, so long as any portion
of the CAF Loan Commitment or any Loan is outstanding, and until payment in
full of all amounts payable by the Borrower hereunder:

 

8.01           Common Security Agreement Covenants.  

 

(a)                                  Common Security
Agreements Covenants.  The Borrower
shall observe and perform each of the covenants set forth in Article VIII
of the Common Security Agreement, which covenants and agreements are incorporated
by reference in this Agreement as if fully set forth herein, in accordance with
their terms unless waived in accordance with the Common Security Agreement.

 

(b)                                 Central Bank Filing.  As soon as practicable but in any event no
later than 10 Business Days after the execution and delivery of this Agreement,
the Borrower shall file the requisite information regarding the Loans with the
Bolivian Central Bank and shall provide CAF with evidence of such registration
promptly upon such filing.

 

ARTICLE 9

EVENTS OF DEFAULT

 

9.01           Events of Default.  Each of the following events shall be an “Event
of Default” under the Agreement:

 

(a)                                  The occurrence and
continuance of any Event of Default (as defined in the Common Security
Agreement) set forth in Section 10.01 of the Common Security Agreement.

 

(b)                                 The Borrower fails to
perform or observe any covenant, agreement or obligation to be performed or
observed by it under this Agreement (other than a covenant or agreement also
set forth in the Common Security Agreement), and such failure continues uncured
for a period of 30 days after notice to the Borrower specifying the failure and
requesting its cure.

 

12

 

9.02           Remedies. 

 

(a)  Common Security Agreement
Remedies.  Upon the occurrence and
continuance of an Event of Default described in Section 9.01(a) hereof,
CAF shall have, subject to the terms of the Common Security Agreement, each of
the rights and remedies provided in Article X of the Common Security
Agreement (in addition to any and all other available remedies at law and in
equity, except as expressly set forth herein and in the Common Security
Agreement).

 

(b)  CAF Event of Default Remedies.  Immediately upon the occurrence and during
the continuance of an Event of Default described in Section 9.01(b) hereof,
CAF may, by notice to the Borrower terminate the CAF Loan Commitment and/or
declare the principal amounts then outstanding of, and accrued interest on, the
Loans and all other amounts payable by the Borrower hereunder to be forthwith
due and payable, 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.

 

ARTICLE 10

 

MISCELLANEOUS

 

10.01     Waiver.   Except as expressly provided herein, no
failure on the part of CAF to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.

 

10.02     Notices.

 

(a)  Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be (i) in writing (including telex or telecopier) and (ii) telexed,
telecopied or sent by overnight courier (if for inland delivery) or
international courier (if for overseas delivery) to a party hereto at its
address and contact number specified in the signature pages hereto, or at
such other address and contact number as is designated by such party in a
written notice to the other party hereto.

 

(b)  All such notices and communications
shall be effective (i) if sent by telex, when sent (with the correct
answerback), (ii) if sent by telecopier, when sent (on receipt of written
or oral confirmation of receipt) and (iii) if sent by courier, (A) one
day after deposit with an overnight courier if for inland delivery and (B) three
days after deposit with an international courier if for overseas delivery.  Notice of any address or facsimile number
change shall be effective only upon receipt.

 

13

 

10.03     Amendments,
Etc.  Except as otherwise expressly
provided in this Agreement and subject to Section 15.18 of the Common Security
Agreement, any provision of this Agreement may be amended, modified or
supplemented only by an instrument in writing signed by the Borrower and CAF,
and any provision of this Agreement may be waived only by an instrument in
writing signed by CAF, and no such consent by the Borrower shall be required in
the case of such a waiver.  Any
amendment, modification, supplement or waiver hereunder shall be for such
period and shall be subject to such conditions as shall be specified in the
instrument effecting the same and shall be effective only in the specific
instance and for the purpose for which given. 
This Agreement and the Notes and the other documents referred to herein
shall constitute the entire agreement with respect to the subject matter hereof
and thereof.

 

10.04     Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

 

10.05     Assignments and Participations.

 

(a)                                  The
Borrower may not assign any of its rights or obligations under this Agreement
without the prior written consent of CAF (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void).

 

(b)                                 CAF
may assign the Loan or any portion thereof to any bank, fund or financial
institution that makes or invests in commercial loans in the ordinary course of
its business and that has (or is an affiliate of an entity that has) a combined
capital surplus of at least US$500 million.

 

(c)                                  CAF
may furnish any information concerning the Borrower in the possession of CAF
from time to time to assignees and participants (including prospective
assignees and participants) subject to the confidentiality provisions set forth
in Section 15.07 of the Common Security Agreement.

 

10.06     Survival/Reinstatement.   The obligations of the Borrower under Article 5
shall survive the repayment of the Loans and the termination of the CAF Loan
Commitment.  This Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Borrower’s obligations hereunder, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by CAF. 
In the event that any payment or any part thereof is so rescinded,
reduced, restored or returned, such obligations shall be reinstated and deemed
reduced only by such amount paid and not so rescinded, restored or returned.

 

10.07     Captions.  The table of contents and captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.

 

10.08     Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

 

14

 

10.09     GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

 

10.10     Jurisdiction, Service of Process and Venue.

 

(a)                                  The
provisions of Sections 15.12 (a), (b), (d) and (e) of the Common
Security Agreement are incorporated herein mutatis  mutandis.

 

(b)                                 The
Borrower hereby confirms its appointment of CT Corporation System (the “Borrower
Process Agent”) as agent for service of process, pursuant to Section 15.12(c) of
the Common Security Agreement.  CAF
hereby irrevocably appoints CT Corporation System, in New York, New York (the “CAF
Process Agent”), with an office on the date hereof at 111 8th Avenue, New
York, New York 10011, as its agent and true and lawful attorney-in-fact in its
name, place and stead to receive, on behalf of CAF and its Property, service of
copies of the summons and complaint and any other process which may be served
in any such suit, action or proceeding brought in the State of New York.  Each of the Borrower and CAF covenants and
agrees that it shall take any and all reasonable action, including the
execution and filing of any and all documents, that may be necessary to
continue the designation of the Borrower Process Agent or CAF Process Agent, as
the case may be, pursuant to this Section in full force and effect and to
cause such process agent to act as such. 
To the extent that the Borrower may, in any suit, action or proceeding
brought in a court of Bolivia or elsewhere arising out of or in connection with
this Agreement or any other Loan Document, be entitled to the benefit of any
provision of law requiring CAF in such suit, action or proceeding to post
security or a bond for the costs of the Borrower, the Borrower hereby
irrevocably waives such benefit, in each case to the fullest extent now or
hereafter permitted under the laws of Bolivia or, as the case may be, such
other jurisdiction.

 

10.11     WAIVER
OF JURY TRIAL.  EACH OF THE BORROWER
AND CAF HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHT TO 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 OTHER THEORY.

 

10.12     No
Immunity.  To the extent that the
Borrower has or hereafter may acquire any immunity from jurisdiction of any
court or from any 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 irrevocably waives such
immunity, to the fullest extent permitted by law, in respect of its obligations
under this Agreement.

 

10.13     Judgment
Currency.  This is an international
loan transaction in which the specification of U.S. Dollars and payment in New
York, New York, United States of America is of the essence, and U.S. Dollars
shall be the currency of account in all events. 
The

 

15

 

provisions of Section 15.13
of the Common Security Agreement are incorporated herein mutatis  mutandis.

 

10.14     Expenses;
Indemnity.  The provisions of Section 15.14
of the Common Security Agreement are incorporated herein mutatis  mutandis.

 

10.15     Use
of English Language.  This Agreement
has been negotiated and executed in the English language.  All certificates, reports, notices and other
documents and communications given or delivered pursuant to this Agreement
(including, without limitation, any modifications or supplements hereto) shall
be in the English language, or, if requested by CAF, accompanied by a certified
English translation thereof.

 

10.16     No
Fiduciary Relationship.  The Borrower
acknowledges that CAF has no fiduciary relationship with, or fiduciary duty to,
the Borrower arising out of or in connection with this Agreement or the other
Financing Documents, and the relationship between CAF, on the one hand, and the
Borrower, on the other, in connection herewith or therewith is solely that of
creditor and debtor.  None of this
Agreement, the Notes or any other Financing Document creates a joint venture among
the parties.

 

10.17     Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

16

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.

 

	
   

  	
  MINERA SAN CRISTÓBAL S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Jeffrey
  G. Clevenger

  
	
   

  	
   

  	
  Name Jeffrey
  G. Clevenger

  
	
   

  	
   

  	
  Title:
  Director

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  Minera San
  Cristóbal

  
	
   

  	
  Calle Campos No. 265

  
	
   

  	
  P.O. Box
  13790

  
	
   

  	
  La Paz, Bolivia

  
	
   

  	
  Tel: 
   +591 2 433800

  
	
   

  	
  Fax:  +591 2 433737

  
	
   

  	
  Attn:  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 Minera San Cristóbal S.A., 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:

 

1

 

	
   

  	
  CORPORACIÓN ANDINA DE FOMENTO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Jose A. Carrera

  	
   

  
	
   

  	
   

  	
  Name Jose A.
  Carrera

  
	
   

  	
   

  	
  Title:
  Representante

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  Corporación Andina de Fomento

  
	
   

  	
  Av. Luis Roche

  
	
   

  	
  Torre CAF

  
	
   

  	
  Altamira, Caracas

  
	
   

  	
  Venezuela, ZP 1060

  
	
   

  	
  Tel:

  	
  +58 212 209 2297

  
	
   

  	
  Tel:

  	
  +58 212 209 2059

  
	
   

  	
  Fax:

  	
  +58 212 209 2325

  
	
   

  	
  Attn:

  	
  Carmen Elena Carbonell/Cristina Alvarado

  
					

 

 

	
  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 Corporación Andina de Fomento, 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:

 

2

 

EXHIBIT A

 

[FORM OF NOTE]

 

NOTE

 

	
  $[                                ]

  	
   

  	
  [                                ],
  2005

  

 

New York, New York

 

FOR VALUE RECEIVED, MINERA SAN CRISTÓBAL, S.A., a sociedad anónima organized under the laws
of Bolivia (the “Borrower”), hereby unconditionally promises to pay to
the order of Corporación Andina de Fomento (“CAF”) the principal sum of
$50,000,000 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by CAF to the Borrower under the CAF Loan
Agreement referred to below), in lawful money of the United States of America
and in immediately available funds, on the dates and in the principal amounts
provided in the CAF Loan Agreement, and to pay interest on the unpaid principal
amount of each such Loan, at such office, in like money and funds, for the
period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the CAF Loan
Agreement.

 

The date, amount, interest rate and duration of Interest Period (if
applicable) of each Loan made by CAF to the Borrower, and each payment made on
account of the principal of such Loan, shall be recorded by CAF on its books
and, prior to any transfer of this Note, endorsed by CAF on the schedule attached
to this Note or any continuation of such schedule; provided that the
failure of CAF to make any such recordation or endorsement shall not affect the
obligations of the Borrower to make a payment when due of any amount owing
under the CAF Loan Agreement or under this Note in respect of the Loans made by
CAF.

 

This Note evidences Loans made by CAF under the CAF Loan Agreement
dated as of December 1, 2005 (as modified and supplemented and in effect
from time to time, the “CAF Loan Agreement”) between the Borrower and
CAF.  Terms used but not defined in this
Note have the respective meanings assigned to them in the CAF Loan Agreement.

 

The CAF Loan Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Loans
upon the terms and conditions supplied therein.

 

Except as permitted by Section 10.05 of the CAF Loan Agreement,
this Note may not be assigned by CAF to any other Person.

 

All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest, and all other notices of any kind.

 

1

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

 

 

	
   

  	
  MINERA SAN CRISTÓBAL, S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  

 

2

 

SCHEDULE TO NOTE

 

This Note
evidences Loans made under the CAF Loan Agreement to the Borrower, on the
dates, in the principal amounts, bearing interest at the rates and having
Interest Periods (if applicable) of the durations set forth below, subject to
the payments, and prepayments of principal set forth below:

 

	
  Date

  Made

  	
   

  	
  Amount of

  Loan

  	
   

  	
  Interest

  Period

  	
   

  	
  Paid or

  Prepaid

  	
   

  	
  Balance

  Outstanding

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

3

 

EXHIBIT B

 

AMORTIZATION SCHEDULE

 

	
  Principal

  Repayment

  Date

  (Quarterly Date falling

  in the specified

  months)

  	
   

  	
  % of Original Principal 

  Amount

  to be Repaid

  	
   

  
	
  December 2008

  	
   

  	
  11.00

  	
  %

  
	
  June 2009

  	
   

  	
  11.90

  	
  %

  
	
  December 2009

  	
   

  	
  13.00

  	
  %

  
	
  June 2010

  	
   

  	
  13.60

  	
  %

  
	
  December 2010

  	
   

  	
  13.50

  	
  %

  
	
  June 2011

  	
   

  	
  12.90

  	
  %

  
	
  December 2011

  	
   

  	
  12.90

  	
  %

  
	
  June 2012

  	
   

  	
  7.60

  	
  %

  
	
  December 2012

  	
   

  	
  3.60

  	
  %

  

 

1

 

EXHIBIT C

 

PREPAYMENT PREMIUM

 

	
  Year in which

  Prepayment

  is made

  	
   

  	
  Premium

  (% of principal

  amount prepaid)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2007-2008

  	
   

  	
  2.5

  	
  %

  
	
  2009

  	
   

  	
  2.0

  	
  %

  
	
  2010

  	
   

  	
  1.5

  	
  %

  
	
  2011

  	
   

  	
  1.0

  	
  %

  
	
  2012

  	
   

  	
  0.5

  	
  %

  

 

1Exhibit
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

 

 

 

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

  

 

 

i

 

	
  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

  

 

ii

 

	
  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

  

 

iii

 

	
  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

  

 

iv

 

	
  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

  

 

v

 

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

  

 

vi

 

	
  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

 

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.

 

 

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;

 

2

 

(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 .  

 

3

 

(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

 

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

 

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

 

6

 

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

 

7

 

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 

 

8

 

(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

 

9

 

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

 

10

 

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:

 

11

 

(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

 

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

 

13

 

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

 

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

 

15

 

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-

 

16

 

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

 

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

 

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

 

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

 

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,

 

21

 

(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

 

22

 

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

 

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

 

24

 

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

 

25

 

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

 

26

 

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

 

27

 

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

 

28

 

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;

 

29

 

(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

 

30

 

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

 

31

 

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

 

32

 

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).

 

33

 

(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

 

34

 

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

 

35

 

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;

 

36

 

(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

 

37

 

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;

 

38

 

(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

 

39

 

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

 

40

 

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

 

41

 

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.

 

42

 

(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

 

43

 

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

 

44

 

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

 

45

 

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

 

46

 

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.

 

47

 

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

 

48

 

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.

 

49

 

(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.

 

50

 

(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

 

51

 

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

 

52

 

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

 

53

 

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

 

54

 

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

 

55

 

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.

 

56

 

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

 

57

 

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

 

58

 

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.

 

59

 

(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

 

60

 

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,

 

61

 

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.

 

62

 

(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

 

63

 

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,

 

64

 

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.

 

65

 

(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.

 

66

 

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.

 

67

 

(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,

 

68

 

(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

 

69

 

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,

 

70

 

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.

 

71

 

(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

 

72

 

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:

 

73

 

(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

 

74

 

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;

 

75

 

(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.

 

76

 

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).

 

77

 

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.

 

78

 

(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

 

79

 

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;

 

80

 

(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

 

81

 

(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

 

82

 

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;

 

83

 

(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

 

84

 

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

 

85

 

(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

 

86

 

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

 

87

 

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

 

88

 

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

 

89

 

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;

 

90

 

(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.

 

91

 

(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

 

92

 

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.

 

93

 

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

 

94

 

(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

 

95

 

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,

 

96

 

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.

 

97

 

(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.

 

98

 

(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.

 

99

 

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 

 

100

 

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 

 

101

 

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;

 

102

 

(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.

 

103

 

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);

 

104

 

(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.

 

105

 

(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

 

106

 

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.

 

107

 

(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 

 

108

 

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 

 

109

 

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.

 

110

 

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 

 

111

 

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 

 

112

 

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 

 

113

 

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.

 

115

 

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 

 

116

 

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 

 

117

 

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 

 

118

 

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 

 

119

 

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.

 

120

 

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

 

121

 

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.

 

122

 

(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 

 

123

 

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.

 

124

 

(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 

 

125

 

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); 

 

126

 

(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 

 

127

 

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 

 

128

 

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.

 

129

 

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 

 

130

 

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

  

 

131

 

	
   

  	
  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;

  
						

 

132

 

	
  (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

  

 

133

 

	
   

  	
  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.

 

134

 

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 

 

135

 

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.

 

136

 

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 

 

137

 

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 

 

138

 

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, 

 

139

 

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 

 

140

 

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 

 

141

 

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.

 

142

 

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.

 

A-5

 

“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.

 

A-6

 

“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.

 

A-7

 

“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).

 

A-8

 

“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

 

“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

 

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.

 

A-11

 

“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).

 

A-12

 

“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

 

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.

 

A-14

 

“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 

 

A-15

 

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 

 

A-16

 

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).

 

A-17

 

“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.

 

A-18

 

“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

 

(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 

 

A-20

 

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.

 

A-21

 

“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 

 

A-22

 

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 

 

A-23

 

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 

 

A-24

 

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.

 

A-25

 

“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)).

 

A-26

 

“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.

 

A-27

 

“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.

 

A-28

 

“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.

 

A-29

 

“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 

 

A-30

 

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.

 

A-31

 

“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.

 

A-32

 

“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.

 

A-33

 

“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.

 

A-34

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