LOAN AGREEMENT
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THIS LOAN AGREEMENT, dated as of January 16, 1997 (this "Agreement"), is by
and among GLOBEX MINING ENTERPRISES INC., a Quebec corporation, whose address is
146 - 14th Street, Rouyn-Noranda, Quebec, Canada, J9X 2J3 (the "Lender"), GOLD
CAPITAL CORPORATION, a Colorado corporation, whose address is 5525 Erindale
Drive, Suite 201, Colorado Springs, Colorado, USA 80918 (the "Borrower"), TONKIN
SPRINGS VENTURE LIMITED PARTNERSHIP, a Nevada limited partnership, whose address
is 55 Madison, Suite 700, Denver, Colorado 80206 ("TSVLP"), TONKIN SPRINGS GOLD
MINING COMPANY a Colorado corporation, general partner of TSVLP, whose address
is 55 Madison, Suite 700, Denver, Colorado 80206 ("TSGMC") and U.S. GOLD
CORPORATION, a Colorado corporation ("U.S. Gold") of which TSGMC is a
wholly-owned subsidiary, whose address is 55 Madison, Suite 700, Denver,
Colorado 80206.
RECITALS
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A. Borrower is the owner of an undivided sixty percent (60%) interest in
the Tonkin Springs Project, consisting of unpatented mining claims, unpatented
millsites leases, improvements, permits, water rights, mines, fixtures and
equipment, all located in Eureka County, Nevada (collectively, the "Project").
B. Borrower and TSVLP are parties to a Purchase and Sale Agreement dated
December 31, 1993 (the "Purchase and Sale Agreement"), pursuant to which the
Borrower acquired its sixty percent (60%) interest in the Project. Borrower and
TSVLP are also parties to a Mining Venture Agreement dated effective as of
December 31, 1993 (the "Mining Venture Agreement"), pursuant to which operations
are conducted at the Project and under which the Borrower is the Manager (as
defined in the Mining Venture Agreement) of the Project. In addition, TSVLP is
the owner and holder of an Amended and Restated Secured Promissory Note, as
amended (the "TSVLP Note"), executed by Borrower on or about June 21, 1995, in
the original principal amount of $3,800,000, which is secured by a Security
Agreement by and between Borrower and TSVLP dated December 31, 1993 (the "TSVLP
Security Agreement"). The remaining amount of principal and interest outstanding
under the TSVLP Note, and the schedule for repayment of those amounts, is set
forth in the TSVLP Note.
C. In accordance with the terms of a Letter of Intent dated December 20,
1996, among the Lender, the Borrower, TSGMC and U.S. Gold (the "Letter of
Intent"), the Borrower and the Lender are contemplating a series of transactions
(the "Acquisition Transactions") pursuant to which the Lender acquires all of
the issued and outstanding shares of common stock of the Borrower, and in
connection therewith, the Lender has agreed to make certain advances of funds on
Borrower's behalf, for the payment of operating and other indebtedness of
Borrower incurred in connection with the Project.
D. TSVLP has agreed to execute the Intercreditor Agreement (as defined
below) to provide the Lender a security interest in the Project pari passu with
the security interest in the Project held by TSVLP pursuant to the TSVLP
Security Agreement, for the amount of funding provided by the Lender under this
Agreement.
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E. Borrower, TSVLP and Lender desire to memorialize the terms and
conditions upon which such financing will be completed.
NOW, THEREFORE, in consideration of the foregoing recitals, the covenants
and conditions hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
SECTION I
Definitions
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As used in this Agreement:
"Accounts Payable" shall mean outstanding amounts currently owed by the
Borrower to third party vendors, a complete list of which (to the actual
knowledge of the Borrower) is set forth on Schedule 1 attached hereto.
"Collateral" shall mean all of the right, title and interest of Borrower in
and to the property defined as "Collateral" or "Debtor's Collateral" in the
TSVLP Security Agreement, as more particularly described in Section 2(a)(i)-(ix)
thereof, and all of the right, title and interest of Borrower in and to any
additional real or personal property, ores, minerals or mineral resources,
machinery, fixtures or equipment of any kind at the Project, and general
intangibles and income, products and proceeds associated with the foregoing and
any additional unpatented mining claims or millsites, as more particularly
described on Exhibit A attached hereto and incorporated herein by reference.
"Deed of Trust" shall mean that Deed of Trust, Security Agreement,
Financing Statement and Assignment of Production and Proceeds, pursuant to which
the Lender is granted a first priority security interest in and to that portion
of the Collateral constituting real property, in the form of Exhibit B attached
hereto and incorporated herein by reference, subject only to Permitted Liens and
the Lien created by the TSVLP Note and the TSVLP Security Agreement.
"Distribution" means any dividend payable in cash or property with respect
to any shares of capital stock of Borrower (including, without limitation,
dividends payable in shares of common, preferred, or other capital stock) or any
purchase, redemption or retirement of, or other payment with respect to any
shares of capital stock of Borrower.
"Environmental Laws" means any and all federal, state and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the protection of human health, safety or the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without limitation, ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling or pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes, which statutes and regulations shall
include, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et seq., the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et
seq., the Federal Water and Pollution Control Act, as amended, 33 U.S.C. Section
1251 et seq., the Federal Clean Air Act, as amended, 42 U.S.C.Section 7401 et
seq., the Emergency Planning and Community Right to Know Act, as amended, 42
U.S.C.
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Section 110101 et seq., the Toxic Substances Control Act, as amended, 154 U.S.C.
Section 2601-2629, the Safe Drinking Water Act, as amended, 42 U.S.C. Section
300f-300j, and any and all Nevada state law counterparts, and the regulations
issued under each of such federal or state statutes.
"Equity Proceeds" means the net proceeds of sale by Borrower of any and all
common stock, preferred stock, notes, debentures or other securities (including
without limitation any stock sold pursuant to the exercise of stock options)
issued by Borrower and sold subsequent to the date of this Agreement.
"Event of Default" shall mean the occurrence of any one or more of the
events which constitute an Event of Default under Section VII of this Agreement.
"Intercreditor Agreement" means that certain Intercreditor Agreement among
the Lender, TSVLP, TSGMC and U.S. Gold of even date herewith, in the form of
Exhibit C attached hereto.
"Lands" means all of the unpatented mining claims and millsites or other
mineral rights owned or leased by the Borrower or TSVLP and subject to the
Mining Venture Agreement.
"Lien" means any lien, mortgage, deed of trust, security interest, pledge,
deposit, production payment, right of a vendor under any title retention or
conditional sale agreement or lease substantially equivalent thereto or any
other charge or encumbrance for security purposes, whether arising or by law or
agreement or otherwise, but excluding any right of offset which arises without
agreement in the ordinary course of business.
"Loan" shall mean the aggregate amount of the advances provided for in
Section II hereof, as evidenced by the Note to be delivered by the Borrower to
the Lender on the Loan Date.
"Loan Date" shall mean the date on which the Lender makes the initial
installment of the Loan available to the Borrower pursuant to Section II of this
Agreement.
"Material Project Agreements" means those agreements to which the Borrower
is a party which are material to the conduct of operations at the Project or the
maintenance of any portion of the Collateral.
"Maturity Date" means the earlier of the date of full execution and
delivery of definitive documents by which the Lender acquires all of the issued
and outstanding shares of common stock of the Borrower, or August 30, 1997.
"Mining Leases" shall mean those Mining Leases described in Schedule 2
attached hereto.
"Note" shall mean the promissory note of the Borrower, evidencing the Loan,
which shall be automatically amended from time to time as Lender makes
additional advances to Borrower pursuant to Section 2.1, in the form attached to
this Agreement as Exhibit D and incorporated herein by reference.
"Permitted Liens" shall mean existing indebtedness of the Borrower
(including Accounts Payable) as listed in Schedule 3 attached hereto.
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"Person" shall mean any natural person, company, trust, corporation, joint
venture or business organization.
"Security Documents" shall mean the filings, recordations, approvals,
certificates, title insurance and other documentation, including without
limitation the Deed of Trust, necessary, in the Lender's sole discretion, to
perfect and evidence the Lender's lien and security interest in the Collateral.
SECTION II
The Loan
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Subject to the terms and conditions of this Agreement, the Lender agrees to
make the Loan to the Borrower as follows:
2.1.Amount; Maturity. Subject to the terms and conditions hereof, Lender
agrees to make advances to Borrower under this Loan Agreement, from time to
time, in the initial amount of $415,000 (the "Initial Advance", which shall be
disbursed in accordance with the procedures described below) and in such
additional amounts as requested in writing (in the form of request set forth on
the attached on Schedule 2.1) by the Borrower and agreed to by the Lender (in
each case not later than three business days following the receipt of such
request, unless the Lender has asked the Borrower for additional information as
to the nature of the advance or the specific uses to which the funds advanced
will be put, which such requests by Lender Borrower agrees to respond to
promptly, in which case, assuming it receives the additional information, Lender
will respond not later than seven business following the receipt of such
request) in its sole discretion (so long as the Lender, subject to its rights to
approve or disapprove specific requests for advances and to elect not to make
any further advances hereunder, agrees to make such advances as are necessary to
enable Borrower to achieve the objectives set forth in clauses (a), (b) and (c)
below), all such amounts to be disbursed and utilized strictly in accordance
with this Section 2.1 and the schedule attached hereto as Exhibit E and
incorporated herein by reference, to enable Borrower to (a) take such actions as
are reasonably necessary to maintain, preserve and protect the assets and
properties of the Tonkin Springs Project, (b) service the TSVLP Note (which the
parties agree shall not be subject to the Lender's discretion), and (c) pay
other necessary and proper obligations and commitments of Borrower, including
such obligations and commitments of Borrower as are required under the Letter of
Intent and all agreements contemplated thereby. The Borrower and the Lender
hereby agree and the Borrower hereby covenants and agrees that the proceeds of
the Initial Advance shall be disbursed and used as follows:
(i) $20,000, previously advanced by Lender to Borrower;
(ii) $166,780 to be paid by wire transfers to the Lessors under the
Campbell/Simpson Lease (as defined in Schedule 2), pursuant to written
instructions from the Borrower;
(iii) $141,000 to be paid immediately to TSVLP, $91,000 of which will
be applied to payments, including interest, past due under the TSVLP Note, and
$50,000 of which will cover the January 1997 payment due under the TSVLP Note;
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(iv) $30,306.37 to be paid immediately to the Eureka County, Nevada,
Assessor to cover past due personal property taxes for the Collateral;
(v) $25,000 to cover the Borrower's working capital needs (as directed
by Lender in accordance with the provisions of this Section 2.1) for January
1997, as set forth on Exhibit E; and
(vi) the balance ($31,913.63) to be used for the payment of Accounts
Payable (as directed by Lender in accordance with the provisions of this Section
2.1) during January 1997, as set forth on Exhibit E.
Except for the Initial Advance, as to which no election is permitted, the
parties hereby acknowledge and agree that in addition to responding
affirmatively or negatively to specific written requests for advances of funds
as set forth above, Lender, by written notice to the Borrower at any time, may
elect to terminate its obligation to make any further advances to the Borrower
pursuant to this Agreement. In that event, the Lender shall have no obligation
or liability to the Borrower, any other party hereto, or any third party for the
foreseeable or unforeseeable consequences of an election by the Lender not to
make any further advances.
2.2.Note. The Obligation of Borrower to repay the Loan, with interest
thereon, shall be evidenced by the Note, which shall be deemed automatically
amended to reflect all amounts advanced by Lender to Borrower pursuant to
Section 2.1, at the time each such advance is made. The Note shall be payable on
the Maturity Date or upon acceleration as hereinafter set forth. The Note shall
bear interest at a rate equal to two percent (2%) over the existing prime rate,
as published in the Wall Street Journal, Western Edition, on the day the initial
portion of the Loan is funded. Interest shall accrue at the annual rate of
fifteen percent (15%) (the "Default Rate") on any past-due payment of principal
and, to the fullest extent permitted by law, of any interest or other amount
payable under this Agreement. Interest shall be calculated on the basis of a
three hundred sixty (360) day year of twelve (12) thirty (30) day months.
2.3.Acceleration. The Maturity Date of the Note shall be accelerated (the
"Acceleration Date") (a) as provided under Section 8.1, (b) in the event the
Borrower shall receive Equity Proceeds in an aggregate amount of not less than
$2,000,000 at any date subsequent to the Loan Date, (c) in the event the TSVLP
Note shall be declared in default and action to foreclose the underlying
security (pursuant to the TSVLP Security Agreement) is taken in connection with
such an Event of Default, or (d) in the event any third party takes any
foreclosure action or otherwise attempts to collect against the Collateral.
2.4.Prepayments.
(a) Within five (5) business days after receipt by Borrower of any
Equity Proceeds in excess of $2,000,000, Borrower shall make mandatory
prepayment of the entire amount of the Loan.
(b) Borrower shall have the right to prepay the Note at any time,
either in whole or in part, with or without notice, without penalty or premium.
2.5.Payment to Lender. Borrower will pay to the Lender on the Maturity
Date, or the Acceleration Date, whichever shall first occur, the principal
amount, together with accrued interest not later than 12 noon, Denver, Colorado
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time in lawful money of the United States of America in immediately available
funds. Any payment received after that time will be deemed to have been made on
the next following business day. Should the payment become due and payable on a
day other than a business day, the maturity of that payment shall be extended to
the next succeeding business day, and in the case of a payment of principal,
interest shall accrue and be payable for the period of such extension. At the
Lender's election, which may be exercised by its giving written notice to the
Borrower not less than ten (10) business days prior to the Maturity Date or the
Acceleration Date, whichever is applicable, the Lender may request the Borrower
to issue to the Lender common stock of the Borrower in lieu of payment of the
amounts outstanding under the Note, the number of common shares to be issued to
be determined by dividing $.80 into the amount outstanding under the Note. The
Borrower agrees, at its sole expense, that it will upon the Lender's written
request use its reasonable best efforts to register the sale of such shares with
the United States Securities and Exchange Commission, in accordance with the
provisions of Exhibit F attached hereto. In connection therewith, the Borrower
shall have obtained all authorizations and approvals of, and all other actions
required to be taken by, any applicable governmental authority or regulatory
body or stock exchange and shall have given all notices to, and made all filings
with, any such governmental authority or regulatory body or stock exchange, that
may be required in connection with such issuance and registration of the
Borrower's common stock. The Borrower may elect not to issue the stock if it
timely pays to Lender in immediately available funds the full amount of
principal and interest owed under the Note. Upon the issuance of the stock, the
amount due under the Loan shall be deemed no longer due and payable, and this
Agreement shall be deemed terminated and the Note deemed canceled.
2.6.Continuation of Indebtedness. If at any time prior to August 30, 1997,
Lender and Borrower and any necessary third parties have executed and delivered
definitive agreements pursuant to which Lender has acquired all of the issued
and outstanding shares of Borrower's common stock (as contemplated under the
Letter of Intent), the amount due under the Loan shall remain due and payable
and the Note shall remain outstanding, but the security interest of Lender under
this Agreement shall be deemed terminated. In connection therewith, U.S. Gold
hereby agrees that it will vote (and cause its officers and directors and TSVLP
and TSGMC to vote) all of the shares of common stock of the Borrower that it (or
they) own(s) in favor of the planned acquisition of all such stock by the Lender
(in exchange for common stock of Lender at the ratio and as otherwise set forth
in the Letter of Intent), and that it (and they) will not sell any of its
(their) shares of common stock of the Borrower to any third party, all pursuant
to the terms and provisions of a Stock Purchase Option Agreement between U.S.
Gold and the Lender to be executed simultaneously herewith.
SECTION III
Security
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3.1.The Security. The obligations of the Borrower hereunder will be secured
by the Security Documents and any additional Security Documents hereinafter
delivered by Borrower and accepted by Lender.
3.2.Priority of Security. The Lien of Lender created by the Security
Documents shall rank pari passu with the Lien of TSVLP evidenced by the TSVLP
Security Agreement and accompanying financing statements, such ranking in an
amount equal to the principal amount of the Loan (plus applicable interest).
Proceeds from exercise of any rights granted by the Security Documents and the
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TSVLP Security Agreement shall be split pari passu between Lender and TSVLP,
share and share alike until the Lender has recovered the principal amount of the
Loan (plus applicable interest). TSVLP agrees to execute and file, as deemed
necessary by counsel for Lender, any documents necessary to evidence the equal
priority granted Lender hereunder.
3.3.Forbearance by Lender. Notwithstanding written notice by the Lender of
an election not to make any additional advances hereunder, the Lender hereby
agrees to forebear exercising any rights under the Security Documents through
and including the Maturity Date, so long as no Events of Default have occurred
hereunder or thereunder, to allow the Borrower to perform its duties as Manager
at the Project and to seek additional financing during that time.
Notwithstanding such forbearance, however, Lender shall be entitled to declare
the Loan immediately due and payable in accordance with the provisions of
Section 8.1 and to exercise all rights it has to the full extent of the Security
Documents in the event that (a) TSVLP shall undertake any action to enforce its
rights under the TSVLP Security Agreement or other documents securing its
existing Lien, or (b) any third party shall exercise any rights of foreclosure
or other collection action against the Collateral.
SECTION IV
Conditions Precedent
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The Lender's obligation to make the Initial Advance under the Loan (or
decision to make any further advance of additional amounts thereunder following
the Loan Date) shall be subject to the satisfaction of each of the following
conditions precedent:
4.1.Note. The Note shall have been executed by the Borrower and delivered
to the Lender.
4.2.Security Documents and Security. The Security Documents, duly executed
and delivered in form, substance and date satisfactory to the Lender, shall have
been delivered to the Lender, and the Lender shall have a valid and perfected
lien and security interest in the Collateral in accordance with the terms of the
Security Documents, subject only to Permitted Liens and the Lien created by the
TSVLP Security Agreement.
4.3.Intercreditor Agreement. The Lender shall have received the
Intercreditor agreement, duly executed and delivered by TSVLP in form, substance
and date satisfactory to the Lender.
4.4.Approvals; Certificates. The Lender shall have received, dated the date
hereof, certificates of the Secretary or Assistant Secretary of the Borrower
certifying (a) the resolutions of the Board of Directors of the Borrower
approving this Agreement, the Note and the Security Documents and (b) the names
and true signatures of the officers authorized to sign said agreement and
documents.
4.5.Representations and Warranties. Each and every representation and
warranty made by or on behalf of the Borrower relating to this Agreement, the
Note, the Security Documents or any instruments or transactions contemplated
hereby or thereby shall be true and complete on and as of the Loan Date, and on
the date of each subsequent advance of funds hereunder by the Lender.
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4.6.No Defaults. There shall exist no Event of Default (other than the
technical defaults under the Purchase and Sale Agreement and the Mining Venture
Agreement referred to in Section 5.6 below) and no event which, with the giving
of any notice or the passage of any period of time, would constitute an Event of
Default.
4.7.Counsel Opinion. The Borrower shall have delivered to the Lender an
opinion of the Borrower's counsel dated the date hereof in form and substance
satisfactory to the Lender and its counsel, as to the matters referred to in
Sections 5.1 and 5.2 of this Agreement and with respect to such other matters as
the Lender may reasonably require.
4.8. Lockup Agreement. The Lender shall have received the Stock Purchase
Option Agreement referred to in Section 2.6, duly executed and delivered by U.S.
Gold in form, substance and date satisfactory to the Lender.
SECTION V
Representations and Warranties
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In order to induce the Lender to enter into this agreement, the Borrower
hereby represents and warrants to the Lender as follows:
5.1.Existence. The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado, and is
qualified to do business and in good standing in the State of Nevada. The
Borrower is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business transacted
by it or the nature of the property owned or leased by it makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on the ability of the Borrower to perform its obligations under
this Agreement, the Security Documents or the Note.
5.2.Authority. The Borrower has all necessary corporate power and authority
to execute, deliver, observe and perform the terms of this Agreement, the
Security Documents, and the Note. Neither the Borrower's execution and delivery
of this Agreement, the Security Documents, or the Note, nor the performance or
observance by the Borrower of the provisions hereof or thereof, violates, or
will violate, any provisions in the Borrower's articles of incorporation, bylaws
or other constitutive documents, or will constitute a default or a violation
under, or result in the imposition of any lien under, or conflict with, or
result in any breach of any of the provisions of, any existing contract or other
obligation binding upon the Borrower or its property or the Collateral. This
Agreement, the Security Documents, and the Note have been duly executed and
delivered by the Borrower, and this Agreement, the Security Documents, and the
Note are legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms (subject to
applicable bankruptcy, reorganization, insolvency or similar laws affecting the
enforcement of creditors' rights generally). The Borrower's obligations
hereunder under the Security Documents and under the Note will rank not less
than pari passu with all of the Borrower's secured indebtedness to TSVLP, as
evidenced by the TSVLP Security Agreement.
5.3.Litigation; Taxes. Except for Permitted Liens, and as set forth in
Schedule 5.3, there are no legal or arbitral proceedings or any proceedings by
or before any judicial, governmental or regulatory body, now pending, or (to the
knowledge of the Borrower) threatened, against the Borrower or pertaining to or
which could affect any of its property which, if adversely determined, could
have a material adverse effect on the ability of the Borrower to perform its
obligations under this Agreement, the Security Documents, or the Note, or which
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could have a material adverse impact on the Project. The Borrower has filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by it and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Borrower or any of its
subsidiaries. The charges, accruals and reserves on the books of the Borrower
and its subsidiaries in respect of taxes and other governmental charges are, in
the opinion of the Borrower, adequate therefor.
5.4.Financial Condition; No Material Adverse Effect. The Borrower has
delivered to the Lender audited consolidated financial statements as of and for
the year ended December 31, 1995 and unaudited consolidated financial statements
for the three quarters ended September 30, 1996 (as set forth in Borrowers'
Annual Report on form 10-K for the fiscal year ending December 31, 1995 and
Borrower's Quarterly Reports on form 10-Q for the periods ended March 31, 1996,
June 30, 1996 and September 30, 1996, copies of each of which the Lender
acknowledges receiving from the Borrower prior to the Loan Date), which have
been certified by the principal financial officer of the Borrower. Such
financial statements are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly and accurately present the financial position of
the Borrower as of said dates and the results of its operations for the periods
then ended (subject, in the case of unaudited quarterly financial statements, to
normal and customary year-end adjustments). Since September 30, 1996, except as
set forth on the Schedules attached to this Agreement, to the best of the
Borrower's knowledge, no event or condition has occurred that reasonably could
be expected to have a material adverse effect on the ability of the Borrower to
perform its obligations under this Agreement, the Security Documents or the
Note.
5.5.No Approvals or Consents. No authorization or approval or other action
by, and no notice to or filing with, any court, governmental authority or
regulatory body, or any consent or approval of any other third party, is
required for the due execution, delivery and performance by the Borrower of this
Agreement, the Security Documents, the Note, or any other agreements or
instruments required of the Borrower by this Agreement.
5.6.Title to Properties.
(a)The Borrower owns an undivided sixty percent (60%) interest in and
to the Project pursuant to the provisions of the Purchase and Sale Agreement and
the Mining Venture Agreement. The Purchase and Sale Agreement and the Mining
Venture Agreement are in full force and effect; provided, however, that the
parties acknowledge that the Borrower is in technical default under the Purchase
and Sale Agreement and the Mining Venture Agreement as to the performance of
certain of Borrower's obligations as the Manager under the Mining Venture
Agreement.
(b)(i) The Borrower owns an undivided sixty percent (60%) interest,
and, to the best of Borrower's knowledge, TSVLP owns an undivided forty percent
(40%) interest in and to all of the unpatented lode mining claims comprising a
portion of the Project and which are described in Schedule 5.6(b)(i) attached
hereto and Schedule A-1 to the Deed of Trust, which title is, subject to Liens
held by TSVLP, and the Royalties described in Section 5.7, superior and
paramount to any adverse claim or right of title which may be asserted subject
only to the paramount title of the United States as to any unpatented mining
claims and the rights of third parties to such unpatented mining claims pursuant
to the Multiple Mineral Development Act of 1954 and the Surface Resources and
Multiple Use Act of 1955.
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(ii) The Borrower and TSVLP are tenants in common and hold an
undivided one hundred percent (100%) leasehold interest in and to each of the
Mining Leases. Each of the Mining Leases is in full force and effect, and the
lessee has performed all of its obligations thereunder (other than payment of
the Advance Minimum Royalty payment due thereunder between January 1 and 15,
1997), and neither party is in default thereunder. To the best of Borrower's
knowledge, the title of the lessor under each of the Mining Leases to the
unpatented mining claims covered thereby is, subject to Liens held by TSVLP, and
the Royalties described in Section 5.7, superior and paramount to any adverse
claim or right of title which may be asserted subject only to the paramount
title of the United States as to any unpatented mining claims and the rights of
third parties to such unpatented mining claims pursuant to the Multiple Mineral
Development Act of 1954 and the Surface Resources and Multiple Use Act of 1955.
(c)With respect to the unpatented lode mining claims listed on
Schedule 5.6(b)(i) attached hereto and Schedule A-1 to the Deed of Trust; (1)
the Borrower is in exclusive possession thereof, free and clear of all liens,
claims, encumbrances or other burdens on production (other than Permitted Liens,
the Lien held by TSVLP pursuant to the TSVLP Security Agreement, and the
Royalties set forth in Schedule 5.7); (2) the claims were located, staked, filed
and recorded on available public domain land in compliance with all applicable
state and federal laws and regulations; (3) assessment work, intended in good
faith to satisfy the requirements of state and federal laws and regulations and
generally regarded in the mining industry as sufficient, for all assessment
years up to and including the assessment year ending September 1, 1992, was
timely performed on or for the benefit of the claims and affidavits evidencing
such work were timely recorded; (4) claim rental and maintenance fees required
to be paid under federal law in lieu of the performance of assessment work, in
order to maintain the claims commencing with the assessment year ending on
September 1, 1993 and through the assessment year ending on September 1, 1997,
have been timely and properly paid, and affidavits or other notices evidencing
such payments and required under federal or state laws or regulations have been
timely and properly filed or recorded; (5) all filings with the BLM with respect
to the claims which are required under the Federal Land Policy and Management
Act of 1976 ("FLPMA") have been timely and properly made, and (6) there are no
actions or administrative or other proceedings pending or to the best of the
Borrower's knowledge threatened against or affecting the claims. With respect to
the unpatented lode mining claims listed on Schedule 5.6(b)(ii) attached hereto
and Schedule A-2 to the Deed of Trust: (1) the Borrower is in exclusive
possession thereof, free and clear of all liens, claims, encumbrances or other
burdens of production (except as set forth in the Mining Leases); (2) to the
best of Borrower's knowledge, the claims were located, staked, filed and
recorded on available public domain land in compliance with all applicable state
and federal laws and regulations; (3) to the best of Borrower's knowledge,
assessment work, intended in good faith to satisfy the requirement of state and
federal laws and regulations and generally regarded in the mining industry is
sufficient, for all assessment years up to and including the assessment year
ending September 1, 1992, was timely performed on or for the benefit of the
claims and affidavits evidencing such work were timely recorded; (4) claim
rental and maintenance fees required to be paid under federal law in lieu of the
performance of assessment work, in order to maintain the claims commencing with
the assessment year ending on September 1, 1993 and through the assessment year
ending on September 1, 1997, have been timely and properly paid, and affidavits
or other notices evidencing such payment and required under federal or state
laws or regulations have been timely and properly filed and recorded; (5) all
filings with the BLM with respect to the claims which are required under FLPMA
have been timely and properly made; and (6) there are no actions or
administrative or other proceedings pending or to the best of the Borrower's
knowledge threatened against or affecting the claims. Nothing herein shall be
deemed a representation that any unpatented claim listed on Schedule 5.6(b)
contains a discovery of valuable minerals. In addition, with respect to each of
-10-
the unpatented mining claims listed on Schedule 5.6(b) attached hereto and
Schedule A to the Deed of Trust, the Borrower represents that they have been
remonumented as necessary, and that evidence of such remonumentation has been
timely and properly recorded, all in compliance with the provisions of N.R.S.
Section 517.030.
(d)The Borrower has good and marketable title to the equipment,
machinery, property and fixtures comprising a portion of the Project, as
described in Exhibit A and in Schedule B to the Deed of Trust. The Lands that
are described in Schedule 5.6(b) attached hereto and Schedule A to the Deed of
Trust and the equipment, machinery, property and fixtures described in Exhibit A
and in Schedule B to the Deed of Trust constitute all of the properties and
assets, tangible or intangible, real or personal, which are used in the conduct
of the business of the Borrower, as such business is presently being conducted
and as pertains to the Project. All such properties and assets are owned free
and clear of all clouds to title and of all Liens, except Permitted Liens and
Liens created under the TSVLP Security Agreement. All equipment, machinery,
property and fixtures owned by the Borrower and described in Exhibit A attached
hereto and Schedule B of the Deed of Trust is in a state of repair adequate for
normal operations and is in all material respects in good working order
5.7.Leases and Royalties. The Lands described in Schedule 5.6(b) attached
hereto and Schedule A to the Deed of Trust are not subject to any leases or
other agreements other than the Mining Leases. The Lands described in Schedule
5.6(b) attached hereto as Schedule A of the Deed of Trust are not subject to any
Royalties burdening such Lands except as set forth in the Mining Leases and
other agreements listed on Schedule 5.7. For purposes hereof, "Royalties" shall
mean all amounts payable as a share of the product or profit or profit from the
Lands or any mineral products produced therefrom and includes without
limitation, production payments, net profits interests, net smelter return
royalties, landowner's royalties, minimum royalties, overriding royalties and
royalty bonuses.
5.8.Agreements. Other than the Material Project Agreements (all of which
are listed on the attached Schedule 5.8), the Borrower is not a party to any
agreement or instrument or subject to any charter or other corporate restriction
adversely affecting its business or the Project. Except for failure to make
payments required under certain of the Material Project Agreements, as set forth
on Schedule 3 or in Section 5.6(b)(ii), all such Material Project Agreements are
in full force and effect and the Borrower is not (nor, to the Borrower's best
knowledge, is any other party to such agreements) in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Material Project Agreement or any other agreement or instrument
to which it is a party, the effect of which would have a material adverse effect
on the financial condition, properties or operations of the Borrower or on the
Collateral. Copies of all such Material Project Agreements have been delivered
to the Lender and its counsel and are full, complete and current copies of such
agreements.
5.9.Compliance with Laws. With respect to the Project and operations
undertaken at the Project or in connection therewith, the Borrower, except as
set forth in Schedule 5.9 attached hereto, has complied in all material respects
with all applicable local, state and federal laws, including Environmental Laws,
and regulations relating to the operation of the Project, and the Borrower is
not aware of any investigation (other than a routine inspection) of the Borrower
or the Project underway by any local, state or federal agency with respect to
enforcement of such laws and regulations. The existing and planned use of the
Project complies with all legal requirements, including, but not limited to,
applicable zoning in ordinances, regulations and restrictive covenants affecting
the Lands as well as all environmental, ecological, landmark and other
-11-
applicable laws and regulations; and all requirements for such use have been
satisfied. No release, emission or discharge into the environment of hazardous
substances, as defined under any Environmental Law, has occurred or is presently
occurring or will occur in operating the Project in its intended form in excess
of federal or state permitted release levels or reportable quantities, or other
concentrations, standards or limitations under the foregoing laws or under any
other federal, state or local laws, regulations or governmental approvals in
connection with the construction, ore treatment fuel supply, power generation
and transmission or waste disposal, or any other operations or processes
relating to the Project. The Lands and the Borrower's use and proposed use
thereof are not and will not be in violation of any environmental, occupational
safety and health or other applicable law now in effect, the effect of which
violation, in any case or in the aggregate, would materially adversely affect
the Lands or the Borrower's use thereof, or which, in any case or in the
aggregate, would impose a material liability on the Lender or jeopardize the
interest of the Lender in the Lands. Except as set forth on Schedule 5.9, the
Borrower has no knowledge of any past or existing violations of any such laws,
ordinances or regulations issued by any governmental authority.
5.10.Permits Affecting Properties. The Borrower has obtained, as set forth
on Schedule 5.10 attached hereto, all licenses, operating bonds (other than the
reclamation bond required by the BLM), permits and approvals from all
governments, governmental commissions, boards and other agencies required in
respect to its present operations at the Project, but the Borrower does not
warrant that those constitute all of the Material Project Permits that will be
required for the Project. The Borrower has listed on Schedule 5.10 all Material
Project Permits. Copies of all such Material Project Permits have been made
available to the Lender and are full, complete and current copies of same.
5.11.Prior Security Interest. Except for the due and timely filing or
recording of any Security Document (and except for the delivery to the Lender of
any Collateral as to which possession is the only method of perfecting a
security interest in or Lien on such Collateral), no further action is necessary
to establish and perfect the Lender's prior security interest in or shared first
Lien on all Collateral other than Collateral subject to Permitted Liens and the
Lien created by the TSVLP Security Agreement.
SECTION VI
Covenants
---------
The Borrower agrees that, until the principal amount of the Loan and all
accrued interest thereon shall have been paid in full, the Borrower shall
perform, observe and comply with each of the following:
6.1.Notice to the Lender. The Borrower will promptly give notice to the
Lender as soon as it becomes aware of:
(a)Any Event of Default or potential Event of Default;
(b)Any loss or damage to the Collateral in excess of $25,000;
-12-
(c)Every notice, and the contents thereof, received by the Borrower in
relation to any renewal of any rights with respect to, or having a material
adverse effect upon , the Lands, and any circumstances which might result in a
loss of or a failure to obtain or a failure to be able to renew the Borrower's
interest in a material part of the Lands;
(d)Each new issuance or approval of a Material Project Permit and each
new change in operations that necessitates any amendment or modification of any
Material Project Agreement or Material Project Permit; and
(e)The cessation of any Event of Default.
6.2.Dispositions of Assets or Dissolution. Except as otherwise specifically
permitted hereunder, the Borrower shall not:
(a)sell, assign, convey, lease or otherwise dispose of any part of its
assets or properties, or grant the option or any other right to purchase, or
otherwise acquire such assets, whether now owned or hereafter acquired, except
in the ordinary course of business or for the replacement of a capital asset
with an asset of equal or greater value (in accordance with the provisions of
Section 6.12);
(b)dissolve, liquidate or otherwise cease to do business;
(c)so long as Lender has not given written notice of its intention not
to make any further advances pursuant to Section 2.1, without the prior written
consent of the Lender, directly or indirectly, (i) grant any proxies or enter
into any voting trust or other agreement or arrangement with respect to the
voting of any of its shares of common stock (the "Shares"), (ii) acquire or
sell, assign, transfer or otherwise dispose of any Shares, (iii) enter into any
contract, option or other arrangement or understanding with respect to the
direct or indirect acquisition or sale, assignment, transfer or other
disposition of any Shares, or (iv) directly or indirectly, encourage, solicit,
initiate or participate in any way in discussions or negotiations with, or
knowingly provide any information to, any corporation, partnership, person or
other entity or group (other than the Borrower or any affiliate or subsidiary of
the Borrower) concerning any proposal or offer (a "Takeover Proposal") for a
merger or other business combination involving the Borrower or the acquisition
in any manner, directly or indirectly, of a material equity interest in any
voting securities of or a substantial portion of the assets of the Borrower;
provided, however, that to the extent required in the exercise of the fiduciary
duties of the Borrower's directors and officers to the Borrower or its
shareholders under applicable law (after duly considering the written advice of
outside counsel to the Borrower), the Borrower may, in response to an
unsolicited request therefor, furnish information with respect to the Borrower
to any such corporation, partnership, person or other entity or group who has
made a bona fide offer for a Takeover Proposal that the board of directors of
the Borrower determines in its good faith judgment to be more favorable to the
Borrower's stockholders than the Acquisition Transactions. The Borrower shall
promptly notify the Lender of, and communicate to the Lender the terms and
status of any inquiry or proposal with respect to any Takeover Proposal and
shall promptly provide the Lender with any such information regarding such
proposal as the Lender may request (including delivering copies thereof).
6.3.No Liens. Neither the Borrower nor any subsidiary shall create, assume
or suffer to exist any Lien or other security interest on any real or personal
property or interest therein now owned or hereafter acquired by it, except for
Permitted Liens or any such Liens or security interests created under the TSVLP
-13-
Security Agreement or the Security Documents. In addition, the Borrower will use
its best efforts to obtain and record in the official records of Eureka County
release documents for the liens listed on the attached Schedule 6.3.
6.4.Taxes and Other Obligations. The Borrower shall pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or upon any portion of the Project prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a lien or charge upon any such portion of the Project, except for any
such tax, assessment, charge, levy or claim, which constitutes a Permitted Lien
or the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained, or if the
non-payment thereof would not have a material adverse effect on the ability of
the Borrower to perform its obligations under this Agreement, the Security
Documents or the Note.
6.5.Use of Loan Proceeds. The Borrower agrees that all Loan Proceeds shall
be used only as set forth on Exhibit E.
6.6.Properties.
(a)Maintenance of Properties. The Borrower shall maintain and preserve
all of the properties comprising the Project in good standing without default of
any obligations with respect thereto, including without limitation payment of
claim maintenance fees, and making federal filings and state recordings
regarding the unpatented claims comprising the Collateral.
(b)Compliance with Agreements. The Borrower shall comply with all of
the provisions of the Mining Leases, the Purchase and Sale Agreement, the Mining
Venture Agreement, the TSVLP Security Agreement and all other agreements to
which it is a party, except where noncompliance therewith would not have a
material adverse effect on the ability of the Borrower to perform its
obligations under this Agreement, the Security Documents, or the Note.
(c)Insurance. The Borrower shall maintain such insurance policies as
are currently in place for activities at or undertaken in correction with the
Project.
6.7.Corporate Existence and Good Standing. The Borrower shall preserve and
maintain its corporate existence, and shall be and remain qualified to do
business as a foreign corporation and be in good standing in each jurisdiction
in which such qualification is necessary or desirable in view of its business or
operations or the ownership of its properties; provided that nothing contained
in this Section 6.6 or otherwise in this Agreement shall prevent the termination
of the existence of any subsidiary of the Borrower or of any rights, franchises
or privileges of the Borrower or such a subsidiary if the Borrower deems such
termination thereof to be advisable in its own discretion so long as such
termination does not have a material adverse effect on the financial condition
of the Borrower or its ability to comply with its obligations hereunder.
6.8.Compliance with Law. The Borrower shall comply at all times and in all
material respects with all valid and applicable statutes, rules and regulations
of the United States of America, of the states thereof and their counties,
municipalities and other subdivisions and of any other jurisdictions applicable
to it (including, without limitation, Environmental Laws), and the provisions of
permits, licenses and any other authorizations issued to it or pertaining to the
Project, except where noncompliance would not have a material adverse effect on
the ability of the Borrower to perform its obligations under this Agreement, the
-14-
Security Documents or the Note, or where compliance shall be currently contested
in good faith by appropriate proceedings, timely instituted, which shall operate
to stay any order with respect to noncompliance.
6.9.Additional Debt and Distributions. The Borrower shall not (unless the
Lender has given written notice of its intention not to make any further
advances pursuant to the provisions of Section 2.1), create, incur, assume or
permit to exist any debt except the Loan, the TSVLP Note, Permitted Liens, trade
debt to suppliers and contractors and debt of the types permitted by the
Security Documents. Further, the Borrower shall not (unless the Lender has given
written notice of its intention not to make any further advances pursuant to the
provisions of Section 2.1) make Distributions of any kind or otherwise issue any
additional shares of its common stock or sell or otherwise transfer or grant
options for any shares of its common stock or enter into any agreements with any
third parties contemplating any of the foregoing.
6.10.Security Documents; Further Assurances. The Borrower at its cost shall
take all actions necessary or reasonably requested by the Lender to maintain the
Security Documents in full force and effect and enforceable in accordance with
their respective terms, including (i) making filings and recordations, (ii)
making payments of fees and other charges, (iii) issuing supplemental
documentation, including continuation statements, and (iv) taking all actions
necessary or reasonably requested by the Lender to ensure that the Collateral is
and remains subject to a valid and enforceable lien and security interest in
favor of the Lender (subject only to Permitted Liens and the TSVLP Security
Agreement).
6.11.Books and Records. The Borrower shall keep proper books of record in
accordance with generally accepted accounting principles and permit
representatives of the Lender to visit and inspect the properties, to examine
the books of record and accounts and to discuss the affairs, finances and
accounts of the Borrower with the Borrower's principal officers, engineers and
independent accountants, all at such reasonable times during business hours and
at such intervals as the Lender may desire; provided, however, that the Lender
shall provide the Borrower with at least three Business Days' notice of any
visit and shall use their best efforts not to unreasonably disrupt the
Borrower's business during such visits.
6.12.Alterations, Disposal of Assets, Etc. The Borrower will not cause any
building, structure or fixture or other improvement which is part of the
Collateral to be erected, removed, demolished, or materially changed or altered,
except in the ordinary course of business. Except in the ordinary and normal
course of business, the Borrower shall not remove or permit the removal of any
of the personal property constituting part of the Collateral or any part thereof
(including renewal, replacement and other after-acquired property) from the
Lands or the Project; provided, however, that obsolete or worn out property may
be removed concurrently with the replacement or renewal thereof with property of
at least equal quality, usefulness, value and class to the original property, if
such replacement is in accordance with prudent industry practices; provided,
further, however, that the Borrower shall have the right, but not the
obligation, to amend or relocate any or all of the unpatented lode mining claims
included in the Lands (under any applicable federal or state statute) and to
locate any fractions resulting from the amendment or relocation of such claims.
Any mining claims amended or relocated by the Borrower shall be included in the
Lands, and the Borrower agrees that the amendment or relocation of such claims
shall not result in any diminution of the total acreage presently included
within the lands. The Borrower shall not commit or permit any waste in, on or
about the Lands or the Project that would have a material adverse effect on the
Collateral.
-15-
6.13.Leases and Other Agreements. The Borrower shall not enter into, assume
or otherwise become liable with respect to any non-cancelable operating leases
or other agreements having terms in excess of or renewable for more than one (1)
month if the aggregate minimum required payments under any such leases or other
agreements exceeds Ten Thousand Dollars ($10,000).
6.14.Change in Business. The Borrower shall not engage in any business
activities or operations substantially different form the business of
exploration, mining and production of Gold and other precious metals or base
metals associated with any Gold mine.
6.15.Capital Expenditures. The Borrower shall not make capital expenditures
in excess of the aggregate amount of Ten Thousand Dollars ($10,000) without the
Lender's prior written approval.
6.16.Loans; Intercompany Accounts. Other than as contemplated in this
Agreement, the Borrower shall not lend or advance money, gold, or other assets
to any entity or person.
6.17.Additional Covenants of TSVLP. TSVLP hereby confirms that the Borrower
is not in default under the provisions of the TSVLP Note or the TSVLP Security
Agreement, and that while technical defaults by Borrower (as referred to in
Section 5.6) exist under the Purchase and Sale Agreement and the Mining Venture
Agreement, such events of default shall be deemed suspended, and TSVLP will take
no actions in connection therewith, for so long as (i) Lender has not elected to
terminate the advancement of funds to the Borrower and has made advances of
funds as required under Section 2.1 hereof, (ii) Lender continues good faith
negotiations with the Borrower and other necessary third parties for definitive
agreements by which Lender acquires all of the issued and outstanding shares of
Borrower's common stock and (iii) no third party attempts to foreclose or
otherwise take any collection action against the Collateral.
SECTION VII
Events of Default
-----------------
Each of the following shall constitute an Event of Default under this
Agreement:
7.1.Payments.
(a)The Borrower shall fail to make payment of any principal amount of
the Loan or accrued interest thereon under this Agreement or the Note when the
same shall become due and payable (whether prior to its stated maturity or
otherwise).
(b)TSVLP has declared an event of default based on the Borrower's
failure to make any payment of any amount due under the TSVLP Note or the TSVLP
Security Agreement or any other event of default thereunder.
7.2.Representations and Covenants. Any representation or warranty made by
the Borrower under this Agreement or the Security Documents proves to have been
incorrect in any material respect when made (unless such representation or
warranty was incorrect as a result of actions taken by the officers of the
Borrower between October 1 and December 15, 1996), or the Borrower shall
violate, fail or omit to perform or observe any other covenant, agreement,
-16-
condition or provision contained in this Agreement, the Note or the Security
Documents and any such violation, failure or provision shall continue without
being corrected for five (5) days after the Lender has given written notice
thereof to the Borrower.
7.3.Insolvency. The Borrower shall not pay its debts as they become due
(unless such failure is caused by an election by the Lender not to make any
further advances of funds pursuant to Section 2.1), shall file or consent by
answer or otherwise to the filing against it of a petition for relief,
reorganization, arrangement or any petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, shall
make an assignment for the benefit of its creditors, shall be adjudicated
insolvent or be liquidated, or shall take corporate action for the purpose of
any of the foregoing.
7.4.Change in Control. There shall occur any change in the effective
control of the Borrower (other than by way of acquisition by the Lender of all
of the shares of common stock of the Borrower).
SECTION VIII
Remedies Upon an Event of Default
---------------------------------
Notwithstanding any contrary provisions or inference herein or elsewhere:
8.1. Acceleration of Loan. If an Event of Default shall occur and be
continuing hereunder, and such Event of Default does not result directly from a
decision by the Lender not to make any further advances pursuant to Section 2.1,
then the Lender shall have the right, but not the obligation, upon written
notice to the Borrower, to declare the entire unpaid principal balance of, and
any accrued interest on, the Loan to be immediately due and payable, whereupon
the Note, all such interest and any other amounts payable hereunder shall become
and be forthwith due and payable, without presentment, demand or notice of any
kind, all of which are hereby expressly waived by the Borrower.
8.2. Exercise of Remedies. The aforementioned right to accelerate is in
addition to and not a substitute for any other remedies available to Lender
hereunder, under the Security Documents, under the Note and under applicable
laws.
SECTION IX
Miscellaneous
-------------
9.1. Amendments, Etc. No amendment or waiver of any provision of this
Agreement, the Security Documents or the Note, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless by an agreement
in writing signed by authorized representatives of both parties.
9.2. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be delivered by hand, by reputable overnight
courier or telecopied; if to the Borrower, at its address as set forth above,
Attention: Bill Conrad; if to the Lender, at its address as set forth above,
Attention: Jack Stoch; if to TSVLP, at its address set forth above, Attention:
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William W. Reid; or, as to any party, at such other address as shall be
designated by such party in a written notice to the other party.
9.3. No Waivers; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
9.4. Costs and Expenses. The Borrower shall reimburse the Lender in the
event the Lender incurs any legal or other fees and expenses in connection with
the modification or amendment of this Agreement, the Note or the Security
Documents or in protecting or enforcing its rights hereunder or thereunder
whether or not any legal action or suit is brought.
9.5. Entire Agreement. This Agreement, the Note, and the Security Documents
contain the entire agreement of the parties pertaining to the subject matter
hereof and supersede all prior written and oral agreements pertaining hereto.
9.6. Successors and Assigns. This Agreement, the Note and the Security
Documents shall be binding on and inure to the benefit of the Borrower and the
Lender and their respective successors and assigns; provided, however, that the
Borrower may not assign any of its rights or delegate any of its obligations
hereunder without the prior written consent of the Lender.
9.7. Survival. The obligations of the Borrower under Section 9.4 shall
survive the repayment of the Loan and the termination of this Agreement and the
Note.
9.8. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together constitute one and the same instrument.
9.9. Governing Law. This Agreement, the Security Documents and the Note
shall be governed by and construed in accordance with the laws of the State of
Colorado, without regard to its principles concerning conflicts of laws.
9.10. Further Assurances. At the request of any party hereto, the parties
shall execute and deliver any further instruments, agreements, documents or
other papers and take such other actions as may be reasonably requested by any
other party to effect the purposes of this Agreement and the transactions
contemplated hereby.
9.11. Public Announcements. Each party shall obtain the prior written
consent of each of the other parties to this Agreement before making any public
announcement with respect to this Agreement, any related agreement or the
transactions contemplated hereunder or thereunder, unless counsel for the
disclosing party advises it that such public announcement is required under
applicable laws or securities exchange regulations (in which case such public
announcement shall be made only after the text of such announcement has been
disclosed to the other parties with reasonable advance notice).
9.12. Confidentiality. Except as otherwise set forth in Section 9.11, the
parties hereto and their collective representatives shall forever treat
confidentially all information concerning the terms and conditions of this
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Agreement, all related agreements, and of the transactions contemplated
hereunder or thereunder (collectively "Confidential Information"); provided,
however, that Confidential Information shall not include information which
concerns the Tonkin Springs Project which is or becomes generally known to the
public other than as the result of a breach of the provisions of this Section
9.12 by any party hereto or its representatives. The obligation to treat the
Confidential Information confidentially shall not apply to the extent that any
party or its representatives shall be required to disclose such information in
connection with an investigation or legal proceeding where the failure to
disclose such information could result in liability for contempt or other
censure or penalty; provided, however, that such party and/or its
representatives shall notify the other parties as soon as possible and in any
event prior to such disclosure and shall cooperate with the other party in the
event that the other party elects to legally contest such disclosure.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GOLD CAPITAL CORPORATION, a Colorado
corporation
By:
-----------------------------------------
------------------------------------(name)
-----------------------------------(title)
GLOBEX MINING ENTERPRISES INC., a Quebec
corporation
-19-
By:
---------------------------------------
---------------------------------(name)
--------------------------------(title)
TONKIN SPRINGS VENTURE LIMITED
PARTNERSHIP, a Nevada limited partnership
By: TONKIN SPRINGS GOLD MINING COMPANY,
a Colorado corporation
By:
--------------------------------------
--------------------------------(name)
-------------------------------(title)
-20-
TONKIN SPRINGS GOLD MINING COMPANY,
a Colorado corporation
By:
---------------------------------------
---------------------------------(name)
--------------------------------(title)
U.S. GOLD CORPORATION, a Colorado
corporation
By:
---------------------------------------
---------------------------------(name)
--------------------------------(title)
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