Document:

Exhibit 10.1

 

English Summary of the Line of Credit Agreement (“Line of Credit”), dated April 17, 2015, and finalized May 29, 2015, between Banco Nacional de Comercio Exterior (“Bancomext”) and Compañia Minera Pangea (“CMP”).

 

Parties to the Agreement: Banco Nacional de Comercio Exterior, S.N.C.; Compañia Minera Pangea, S.A. de C.V.; and McEwen Mining Inc.

 

Subject Matter of Agreement: Provision of a Line of Credit granted to CMP by Bancomext in an amount up to $90 million Mexican pesos, subject to the execution of a “Guaranty and Subordination Agreement,” under which McEwen Mining Inc. (“McEwen”) jointly assumes CMP’s obligation to Bancomext.

 

Use of Proceeds:  CMP is obligated to use the Line of Credit funds (i) to finance the value added tax (“VAT”) refunds related to the cost of the El Gallo 1 project, (ii) as working capital and (iii) for other expenses related to CMP’s mining activity.

 

Advances:  The Line of Credit will be available for withdrawal for six (6) months beginning from the date of execution. CMP must provide to Bancomext all required documentation five (5) days in advance prior to any withdrawal.

 

Term: Any amounts borrowed under the Line of Credit will be payable in one lump sum payment twenty-four (24) months after the date of the first withdrawal, including principal and any accrued interest.  CMP is permitted to prepay any amounts owed without penalty or commission.

 

Interest:  The interest rate is (i) two and one-half percent (2.5%) per annum plus (ii) the 91 day TIIE (Interbank Equilibrium Interest Rate) rate, as published by the Bank of Mexico.  The interest rate will be reviewed and adjusted on a quarterly basis.  Any accrued interest is payable quarterly.  In case of late payment of interest due, the rate shall be twice the ordinary interest rate as agreed between CMP and Bancomext.

 

Other fees:  A fee of 1% of the total Line of Credit amount was charged upon execution of the agreement.

 

Affirmative and Negative Covenants:

 

·                  CMP is required to provide to Bancomext all financial statements (interim and audited annual) on a quarterly basis during the term of the Line of Credit.  McEwen is required to provide to Bancomext all financial statements McEwen files with the US Securities and Exchange Commission within 10 days of submission;

·                  CMP must not change its shareholder structure without the consent of Bancomext;

·                  CMP must notify Bancomext of any circumstance affecting the recovery of the VAT balance within two (2) days from being notified by the Tax Administration Service (“SAT”);

·                  CMP shall maintain a bank account (“VAT Account”) with Banco Nacional de Mexico (“Banamex”) to deposit and transfer the VAT amounts; and deliver to Bancomext a copy of the statement of VAT Account within five (5) days following the end of each month;

 

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·                  CMP is required to deposit any portion of the VAT refund it collects into the VAT Account; deposit the VAT applied as reduction by final compensation of each fiscal year into the VAT Account; and report existence of embargoes or trade offsets that affect the VAT refund;

·                  CMP shall not instruct SAT to deposit the VAT refunds into any account, other than the designated VAT Account, without acknowledgment and approval of Bancomext. Further, CMP shall not file supplementary tax returns without acknowledgment and approval of Bancomext, unless to correct an error. CMP shall not request compensation for other tax credits or liabilities that may affect the VAT returns claimed and shall not withdraw from the tax authority any VAT claim filed under the terms of the Line of Credit without prior written consent by Bancomext unless such withdrawal is filed by the same tax authority and followed by a submission of a VAT claim to replace the original within sixty (60) days of such withdrawal.

 

Joint Obligor and Subordination:  McEwen agreed to guarantee all of CMP’s obligations under the Line of Credit.  Further, McEwen agreed to subordinate to Bancomext all of McEwen’s right to payment and claim of all debt obligations owing by CMP to McEwen (“Subordinated Debt”) for the duration of the Line of Credit.  If McEwen receives a Subordinated Debt payment from CMP, McEwen is required to remit the same to Bancomext within twenty-four (24) hours of receipt.

 

Pledge:  CMP is obliged to simultaneously enter into a non-dispossessory pledge agreement with Bancomext, pledging the amounts deposited in the VAT Account.

 

Insurance:  Upon the first withdrawal from the Line of Credit, CMP must provide Bancomext with a copy of an insurance policy that covers risks associated with the mining industry for at least 100% of the amount granted under the Line of Credit.

 

Events of Acceleration:  The Line of Credit will be deemed due immediately, without notification required, if CMP does not make timely payments of the principal, interest or commissions; or if CMP is no longer in good standing regarding tax obligations and labor remittances; or if CMP has been involved in paying bribes to a government or government official in regards to obtaining the approval of this Line of Credit.

 

Payment of expenses:  CMP will pay all the expenses generated from the Line of Credit, along with any related duties, fees, taxes and others. In case of failure to pay, all expenses due will be subject to a 25% annual ordinary interest on the amount remaining unpaid.  Proof of payment must be provided to Bancomext.

 

Enforcement:  Bancomext has the right to obtain payment through commercial enforcement, as per Article 1395 of the Commercial Code (Codigo de Comercio de Mexico) of any amounts owed by CMP.

 

Governing Law and Jurisdiction: The Line of Credit will be exclusively governed by and construed according to the laws of the Federal District and jurisdiction of Mexico City, D.F.. The parties waive any other jurisdiction.

 

2Exhibit 10.2

 

MCEWEN MINING, INC. / BANCO NACIONAL DE COMERCIO EXTERIOR, S.N.C.

 

GUARANTY AND SUBORDINATION AGREEMENT

 

This GUARANTY AND SUBORDINATION AGREEMENT (the “Guaranty) is made effective as of April 17, 2015, by McEwen Mining, Inc., (the “Guarantor”), for the benefit of El Banco Nacional de Comercio Exterior, S.N.C. (the “Creditor”), located at Periférico Sur 4333, Col. Jardines en la Montaña, C.P. 14210 México, D.F. This Guaranty is being given for the benefit of the Guarantor and for Compañía Minera Pangea, S.A. (the “Debtor”) located at, Blvd. Antonio Rosales 855, Ote. Altos 12 Col. Morelos C.P.81460, Guamúchil Sinaloa, Mexico., in consideration for the Creditor entering into that certain Contrato de Apertura de Crédito Simple dated as of April 17, 2015 among the parties hereto (the “Credit Agreement”).

 

I. OBLIGATIONS

 

The guaranty set forth herein (this “Guaranty”) is given by the Guarantor to induce the Creditor to extend credit to the Debtor, or to forbear in the exercise of the Creditor’s right against the Debtor, and in consideration of the Creditor doing so, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and further acknowledging that the Creditor intends to rely on this Guaranty, the Guarantor absolutely, irrevocably and unconditionally guarantees prompt payment when due of all payments and liabilities of the Debtor to the Creditor in relation to the Credit Agreement, whether now existing or hereafter incurred (it being understood and agreed that this Guaranty is a continuing one, except as such duration is specifically limited elsewhere in this Guaranty or the Credit Agreement), whether voluntary or involuntary and however arising, whether secured or unsecured, absolute or contingent, liquidated or unliquidated, and regardless of whether the Debtor may be liable individually or jointly with others, regardless of whether recovery upon any such obligation may be or hereafter become barred or otherwise unenforceable, including interest and charges, and to the extend not prohibited by law, all costs and attorney’s fees incurred in attempting to realize upon this Guaranty. Creditor may proceed directly against Guarantor without first proceeding against Debtor.

 

II. DURATION

 

This Guaranty is continuing and shall not be revoked by the Guarantor. This Guaranty will remain effective until all obligations guaranteed by this Guaranty and pursuant to the Credit Agreement are completely discharged.

 

III. NOTICE OF DEFAULT

 

The Creditor shall not be required to notify the Guarantor of a default by the Debtor in the Debtor’s commitments to the Creditor before proceeding against the Guarantor under this Guaranty.

 

IV. CREDITOR PROVISIONS

 

The Guarantor expressly waives diligence on the part of the Creditor in collection of any part of the debt or other obligation owed to the Debtor. Further, the Creditor has no duty to bring suit

 

 

against the Debtor (for collection of the debt or other performance which is due) before proceeding against the Guarantor. The Guarantor waives notice of the acceptance of this Guaranty and of any and all such indebtedness and liability. The Guarantor waives presentment, protest, notice, demand, or action on delinquency in respect of any such indebtedness or liability, including any right to require the Creditor to sue or otherwise enforce payment. Until all obligations of the Debtor to the Creditor have been satisfied in full, the Guarantor waives all rights of subrogation to any collateral and remedies of the Creditor against the Debtor, and other persons or entities. Any indebtedness of the Debtor now or hereafter owed to the Guarantor is hereby subrogated to the indebtedness of the Debtor to the Creditor, and such indebtedness of the Debtor to the Guarantor, if the Creditor so requests, shall be collected, enforced, and received by the Guarantor as trustee for the Creditor and be paid over the Creditor on account of the indebtedness of the Debtor to the Creditor, but without reducing or affecting in any manner the liability of the Guarantor under the provisions of this Guaranty.

 

V. AUTHORITY TO ALTER OBLIGATIONS

 

The Guarantor agrees that, without notice to the Guarantor, the Creditor may change the terms of payment or performance by the Debtor to the Creditor. The Guarantor shall not be released from any responsibility on the obligations of the Debtor. The Guarantor’s liability under this Guaranty is several and is independent of any other guarantees. Other guarantees may be released or modified, with or without consideration, without affecting the liability of the Guarantor.

 

VI. SUBORDINATION

 

(1) To the extent and in the manner hereinafter set forth, Guarantor hereby subordinates, in right of payment and claim, all debt obligations now and hereafter owing by Debtor to Guarantor (the “Subordinated Debt”) to the obligations of the Debtor to the Creditor under the Credit Agreement (the “Obligations”):

 

(a)           until the Obligations shall have been paid and satisfied in full in cash, the Guarantor shall not receive or collect, directly or indirectly, any amount upon the Subordinated Debt; and

 

(b)           until the Obligations shall have been paid and satisfied in full in cash, the undersigned shall not (i) commence any enforcement action of any kind whatsoever against the Debtor or any of its assets to recover all or any part of the Subordinated Debt, or (ii) join with any creditor in bringing any proceedings against the Debtor under any liquidation, conservatorship, bankruptcy, reorganization, rearrangement, debtor’s relief, or other insolvency law now or hereafter existing.

 

(2) Guarantor agrees that it will not assign any interest in the Subordinated Debt to any party, and represents and warrants that no party owns an interest in the Subordinated Debt other than Guarantor and that the entire Subordinated Debt is owing to Guarantor, subject only to the rights of Creditor hereunder.

 

(3) Notwithstanding anything herein to the contrary, in the event of any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of the Debtor to the creditors of the Debtor or readjustment of the

 

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obligations and indebtedness of the Debtor, whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceedings involving the readjustment of all or any of the Subordinated Debt, or the application of the assets of the Debtor to the payment or liquidation thereof, or the dissolution or other winding up of the Debtor’s business, or upon the sale of all or substantially all of the Debtor’s assets, then, and in any such event, Creditor shall be entitled to receive payment in full of any and all of the Obligations then owing prior to the payment of all or any part of the Subordinated Debt, and any payment or distribution of any kind or character, either in cash, securities or other property, which shall be payable or deliverable upon or with respect to any or all of the Subordinated Debt shall be paid or delivered directly to Creditor for application on any of the Obligations, due or not due, until such Obligations shall have first been fully paid and satisfied.

 

(4) Should any payment or distribution be received by Guarantor upon or with respect to the Subordinated Debt in violation of or contrary to the terms hereof, Guarantor shall receive and hold the same in trust, as trustee, for the benefit of Creditor and shall forthwith deliver the same to Creditor in precisely the form received (except for endorsement or assignment by Guarantor where necessary), for application on any of the Obligations, due or not due, and, until so delivered, the same shall be held in trust by Guarantor as the property of Creditor. In the event of the failure of Guarantor to make any such endorsement or assignment to Creditor, Creditor or any of its officers or employees, is hereby irrevocably authorized to make same as attorney-in-fact for Guarantor.

 

VII. ASSIGNMENT

 

This Guaranty shall (a) bind the successor and assigns of the Guarantor and is not assignable by the Guarantor without the express written consent of the Creditor, and (b) may be enforced by any party to whom all or any part of the liabilities may be transferred or assigned by the Creditor.

 

VIII. CORPORATE AUTHORITY

 

The Guarantor hereby certifies that it is not prohibited under its articles of incorporation, bylaws, any of its other constitutive or corporate documents or any agreement to which it is a party to act as the Guarantor and perform its obligations hereunder.

 

IX. AMENDMENT

 

This Guaranty may be modified or amended, if the amendment is made in writing and is signed by both parties.

 

X. SEVERABILITY

 

If any provision of this Guaranty shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds any provision of this Guaranty is invalid or unenforceable, but that limiting such provision it would become valid or enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

 

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XI. WAIVER OF CONTRACTUAL RIGHT

 

The failure of either party to enforce any provision of this Guaranty shall not be construed as a waiver or limitation of that party’s right to subsequently enforce and compel strict compliance with every provision of this Guaranty.

 

XII. APPLICABLE LAW AND JURISDICTION

 

This Guaranty and Subordination Agreement is governed by the laws of the State of New York. For any legal action or proceeding with respect to this Guaranty, the Guarantor hereby expressly submits itself to the general jurisdiction of the courts of the State of New York in the Borough of Manhattan, City of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof.

 

The parties agree that service of process to the Guarantor in any action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to CT Corporation System (the “Process Agent”), as the Guarantor’s agent in New York for service of process, and hereby irrevocably appoints the Process Agent as its agent for service of process in connection with any such action or proceeding, commencing on the date hereof.

 

If the Process Agent at any time ceases to be present in New York, the Guarantor will forthwith appoint a new Process Agent, and if the Process Agent, at any time changes its address within New York, the Guarantor will immediately notify in writing to the Creditor, such notice to include the new address of the Process Agent.

 

THE GUARANTOR, AND THE CREDITOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING UNDER OR RELATING TO THIS AGREEMENT OR ANY NOTE AND FOR ANY COUNTERCLAIM THEREIN.

 

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This Guaranty and Subordination Agreement has been duly executed by authorized representatives of each of the parties hereto as follows:

 

	
GUARANTOR:
    	
 
    
	
 
    	
 
    
	
McEwen Mining, Inc.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Perry Y. Ing
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Vice President, Chief Financial Officer
    	
 
    
	
 
    	
 
    
	
CREDITOR :
    	
 
    
	
 
    	
 
    
	
El Banco Nacional de Comercio Exterior, S.N.C.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Naly Estela Acosta Viana
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Power of Attorney
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Hector Arciniega Ruiz
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Power of Attorney
    	
 
    

 

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