Gryphon Gold Corp GYPHQ

Negative Covenants...

[red911]

You tell me how it is ever possible for GGN to conduct business with all of the negative covenants associated with this Waterton debt.  

 

8.2  Negative Covenants.

 

Except with the prior written consent of the Lender (acting in its sole and absolute discretion), until the irrevocable, full and final payment and performance of the Obligations and the termination of this Agreement, none of the Borrower or any of the other Credit Parties shall:

 

(a)	Debt.  Create, incur, assume or suffer to exist any Debt, other than Permitted Debt.

 

(b)

Liens.  Create, incur, assume or suffer to exist, any Lien on any of their respective properties or assets, now owned or hereafter acquired, or assign or otherwise convey any right to receive the production, proceeds or income therefrom, other than Permitted Liens.  Notwithstanding the foregoing, if a Credit Party shall grant a Lien on any of its properties or assets in violation of this Section 8.2(b), then it shall be deemed to have simultaneously granted an equal and rateable Lien on any such properties or assets to and in favour of the Lender, to the extent that such a Lien has not already been granted to the Lender.

 

(c)

Mergers, Etc.  Enter into any reorganization, consolidation, amalgamation, arrangement, winding-up, merger or other similar transaction or convey, lease or Dispose of all or substantially all of its assets or convey, lease or Dispose of all or any part of any Mining Property without the prior written consent of the Lender.

 

(d)

Disposal of Assets Generally.  Directly or indirectly, sell, transfer, assign or otherwise dispose of any of their respective assets or properties, including, without limitation, those assets and properties related to any Mining Properties without the prior written consent of the Lender, other than (i) bona fide sales of inventory, in the ordinary course of business for the purpose of carrying on the Business and at fair market value, and (ii) the sale of any asset (other than securities) which has no material economic value in the Business and is obsolete provided the fair market value of such asset does not exceed, when aggregated with the fair market value of all other assets sold in reliance on this Section 8.2(d, $100,000.

 

 

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(e)	Joint Venture Agreements, Etc. Enter into any option, joint venture, royalty or other similar agreement with respect to any of the Mining Properties without the prior written consent of the Lender.

 

(f)	Transactions with Related Parties. Directly or indirectly enter into any agreement with, make any financial accommodation for, or otherwise enter into any transaction with, a Related Party.

 

(g)	Change in Business.  Make any change in the nature of the Business.

 

(h)

Distributions.  Declare, make or pay any Distribution.  For purposes of this Section 8.2(h), “Distribution” includes with respect to any Person (i) any dividend or other distribution on issued shares or any other Equity Interest of the Person or any of its Subsidiaries, (ii) any purchase, redemption or retirement of any issued share, warrant or other Equity Interest or any other option or right to acquire any share or other Equity Interest of the Person or any of its Subsidiaries or (iii) any payment whether as consulting fees, management fees or otherwise, to any Related Party of the Person or any of its Subsidiaries.

 

(i)

Financial Assistance.  Provide any Financial Assistance to any Person.  For the purposes of this Section 8.2(i), “Financial Assistance” includes any advances, loans or other extensions of credit, guarantees, indemnities, financial accommodations or other contingent liabilities in the nature of a guarantee or indemnity or capital contributions.

 

(j)

Acquisitions.  Purchase any shares, stocks, bonds, notes, debentures, securities or other Equity Interests of any Person other than such Equity Interests which such Credit Party owns as of the date hereof and disclosed on Schedule 8.2(i) hereto, or acquire the undertaking of, or all or substantially all the assets of, any other Person.

 

(k)	Hedging.  Enter into any Hedging Agreement on a margined or collateralized basis or of a speculative nature.

 

(l)	Business.  Carry on the Business otherwise than through the Borrower.

 

(m)	Charter Documents.  Amend or modify its Constating Documents (or equivalent charter documents) except for the purpose of increasing its authorized capital.

 

(n)	Change to Material Contracts.  Terminate, waive, amend, assign or transfer any interest in, any Material Contract, except with the prior written consent of the Lender.

 

(o)

Burdens on Production.  Grant, sell, transfer, assign or convey, directly or indirectly, to any Person any royalty (of any kind or nature whatsoever, howsoever designated), production payment or other interest in any Mining Property, other than to the Lender except for the royalties described in Schedule 8.2(o) and the Gold and Silver Supply Agreement.

 

(p)

Limitation on the Issuance of Shares.  Sell, transfer or issue, and the Credit Parties shall cause each Subsidiary to not sell, transfer or issue, any Equity Interest provided that, subject to the other provisions in this Agreement, the Borrower shall be entitled to issue shares from treasury (i) for cash and on arm’s length terms or (ii) upon the

 

 

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exercise of warrants and options outstanding on the date hereof and issued from time to time in accordance with the requirements of the TSX or such other market or exchange on which the Borrower’s Equity Interests are quoted or listed.

 

(q)	Payment of Debt. Directly or indirectly, voluntarily or involuntarily, purchase, redeem, defease or pay, repay or prepay any principal, interest or any other amount in relation to any Debt, other than to the Borrower.