Exhibit 10.23
U.S. Gold Corporation
Form 10 KSB, December 31, 1996
LOAN AGREEMENT
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 000 00xx Xxxxxx, Xxxxx Xxxxxxx,
Xxxxxx, Xxxxxx, X0X 0X0 (the Lender), GOLD CAPITAL CORPORATION, a
Colorado corporation, whose address is 0000 Xxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxxx Xxxxxxx, Xxxxxxxx, XXX 80918 (the Borrower), TONKIN
SPRINGS VENTURE LIMITED PARTNERSHIP, a Nevada limited partnership,
whose address is 00 Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000
(TSVLP), TONKIN SPRINGS GOLD MINING COMPANY a Colorado
corporation, general partner of TSVLP, whose address is 00 Xxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 (TSGMC) and U.S. GOLD
CORPORATION, a Colorado corporation (U.S. Gold) of which TSGMC is
a wholly owned subsidiary, whose address is 00 Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000.
RECITALS
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 Borrowers 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.
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
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. 9601 et seq., the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. 6901 et seq., the Federal Water and Pollution
Control Act, as amended, 33 U.S.C. 1251 et seq., the Federal Clean
Air Act, as amended, 42 U.S.C. 7401 et seq., the Emergency
Planning and Community Right to Know Act, as amended, 42 U.S.C.
110101 et seq., the Toxic Substances Control Act, as amended, 154
U.S.C. 2601 2629, the Safe Drinking Water Act, as amended, 42
U.S.C. 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.
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
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 Lenders
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 Xxxxxxxx/Xxxxxxx 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;
(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 Borrowers 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 of $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 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 Lenders
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 Lenders 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
Borrowers 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
Borrowers 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
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 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
The Lenders 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.
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
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,.0 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 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
Borrowers 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 Borrowers 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 Borrowers 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 Borrowers 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.
(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 Borrowers
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 Borrowers 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 Borrowers 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 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.
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, landowners 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 Borrowers 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 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
Borrowers 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 Borrowers 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 Lenders 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;
(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 Borrowers 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 Borrowers 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
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
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
Borrowers 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 Borrowers 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.
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 Lenders 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 Borrowers 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 Borrowers
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, 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: Xxxx Xxxxxx; if to the
Lender, at its address as set forth above, Attention: Xxxx Xxxxx;
if to TSVLP, at its address set forth above, Attention: Xxxxxxx X.
Xxxx; 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 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: Xxxx X. Xxxxxx
Xxxx X. Xxxxxx(name)
President (title)
GLOBEX MINING ENTERPRISES INC., a Quebec corporation
By: Xxxx Xxxxx
Xxxx Xxxxx (name)
President (title)
TONKIN SPRINGS VENTURE LIMITED
PARTNERSHIP, a Nevada limited partnership
By: TONKIN SPRINGS GOLD MINING COMPANY,
a Colorado corporation
By: Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx (name)
President (title)
TONKIN SPRINGS GOLD MINING COMPANY,
a Colorado corporation
By: Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx (name)
President (title)
U.S. GOLD CORPORATION, a Colorado corporation
By: Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx (name)
President (title)
Exhibit 10.24
U.S. Gold Corporation
Form 10 KSB, December 31, 1996
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT, dated this 16th day of January, 1997,
is by and among TONKIN SPRINGS VENTURE LIMITED PARTNERSHIP, a
Nevada limited partnership (TSVLP), whose address is 55 Madison,
Suite 700, Denver, Colorado 80206, TONKIN SPRINGS GOLD MINING
COMPANY, a Colorado corporation and the general partner of TSVLP
(TSGMC), whose address is 55 Madison, Suite 700, Denver, Colorado
80206, U.S. GOLD CORPORATION, a Colorado corporation of which TSGMC
is a wholly owned subsidiary (U.S. Gold), whose address is 00
Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, and GLOBEX MINING
ENTERPRISES INC., a Quebec corporation (Globex), whose address is
000 00xx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxx, Xxxxxx, X0X 253 and GOLD
CAPITAL CORPORATION, a Colorado corporation (GCC), whose address is
0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000,
who is a party hereto for certain purposes as indicated on the
signatory pages hereof.
RECITALS
A. Pursuant to a Secured Promissory Note dated December 31, 1993,
by GCC in favor of TSVLP (such Secured Promissory Note having been
amended and restated July 13, 1994, October 18, 1994, March 27,
1995, June 21, 1995 and, as amended, referred to hereinafter as the
TSVLP Note), GCC issued to TSVLP a Secured Promissory Note and
currently owes principal and interest to TSVLP in the aggregate
amount of $1,630,644.46, after taking into account the adding of
1996 accrued interest on the TSVLP Note to the unpaid principal
balance thereof.
B. The indebtedness and obligations of GCC under the TSVLP Note
are secured by certain real and personal property of GCC,
constituting (i) a sixty percent (60%) interest in certain owned or
leased unpatented mining claims comprising the Tonkin Springs
Project in Eureka County, Nevada, and related surface facilities
and machinery and equipment (collectively the Tonkin Springs
Project), and (ii) GCCs interest in that Mining Venture Agreement
between GCC and TSVLP dated December 31, 1993, which governs
operations at the Tonkin Springs Project (the Mining Venture
Agreement), all as more particularly described in that Security
Agreement dated December 31, 1993 (the TSVLP Security Agreement)
and a related UCC 1 Financing Statement between GCC and TSVLP
(collectively referred to hereinafter as the TSVLP Collateral
Agreements).
C. Pursuant to a Loan Agreement and Promissory Note (the Globex
Agreements) dated of even date herewith among GCC, TSVLP, TSGMC,
U.S. Gold and Globex, Globex has agreed to provide a loan to GCC,
consisting of an initial advance of $395,000 and such additional
advances as may be made pursuant to the provisions of the Globex
Agreements (the Globex Loan). The indebtedness and obligations of
GCC under the Globex Agreements with respect to the Globex Loan and
the Promissory Note issued by GCC to Globex in connection therewith
are also secured by the collateral that is covered by the TSVLP
Collateral Agreements, pursuant to a Deed of Trust, Security
Agreement, Financing Statement and Assignment of Production and
Proceeds of even date herewith, together with related UCC 1
Financing Statements (the Globex Collateral Agreements).
D. TSVLP and Globex are sometimes referred to collectively herein
as the Lenders or individually as a Lender. The TSVLP Collateral
Agreements and the Globex Collateral Agreements are collectively
referred to hereafter as the Collateral Documents. All of the
collateral pertaining to the Tonkin Springs Project and the Mining
Venture Agreement covered and encumbered by any of the Collateral
Documents is collectively referred to hereinafter as the
Collateral. The TSVLP Note and the Globex Agreements are
collectively referred to hereinafter as the Loan Agreements.
E. The Lenders desire by this Agreement to establish their
relative rights and priorities with respect to their liens relating
to the Collateral, and to agree to enforcement procedures of rights
under the Collateral Agreements.
AGREEMENT
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Ratable Sharing of Collateral. Each Lender acknowledges (and
each has irrevocably advised and instructed GCC to recognize) that
the Collateral in which it has or acquires a security interest is
identical and is intended to be coextensive with the Collateral
covered by the security interest of the other Lender and, with
respect to gold and other precious metals contained in and
recoverable from the ore concentrates, that such security interests
remain through the stockpiling, shipping and smelting processes.
It is the intent of the Lenders, and it is hereby agreed between
the Lenders, that as between the Lenders each Lender shall
participate in fifty percent (50%) of the total amount of
Collateral and proceeds of the Collateral (including commingled
contained gold in a given stockpile, shipment or batch) up to the
aggregate amount of principal and interest owed to each of them
pursuant to the TSVLP Note and the Globex Loan, respectively.
Subject to the terms of this Agreement, the Lenders hereby agree
jointly to pursue any rights and remedies that each may have and
either may elect to initiate under their respective Collateral
Documents in a manner that recognizes and respects the other
Lenders prorata share of the Collateral in accordance with the
terms of this Agreement and any proceeds from the disposition of
the Collateral in the event either Lender exercises or enforces its
rights to foreclosure or takes other remedial action as a secured
party shall, subject to the terms hereof, be shared between them
pari passu in equal proportions.
2. Priority. Notwithstanding the date, manner or order of
recording of the Collateral Documents or the taking of any other
steps necessary to perfect or any steps to enforce the respective
security interests in the Collateral and notwithstanding any
provision of the Uniform Commercial Code as adopted in Nevada or
any other applicable law, or any provision in the Loan Agreements
or the Collateral Documents, the liens and encumbrances created by
the Collateral Documents shall be equal and on a parity, and TSVLP
and Globex, subject to the terms of Section 1, shall have equal
priority with respect to their security interests in the Collateral
as to the amounts owing to them under the Loan Agreements. Each
Lender assigns to the other Lender, for the term of this Agreement,
an undivided interest in the Collateral Documents of the assigning
Lender, and in any proceeds collected by virtue of enforcement
thereof or otherwise, to the extent of the assignees undivided
interest and right to participate in the Collateral pursuant to
Section 1 hereof. Each Lender agrees to take all action necessary
or appropriate to evidence and give effect to the foregoing
assignment.
3. Foreclosure. If a Default or Event of Default, as such terms
are defined in the Loan Agreements (collectively, a Default), shall
have occurred and is continuing, the Lender who is alleging such
Default (the Foreclosing Lender) may notify the other Lender (the
Participating Lender) in accordance with Section 10 hereof. If
after thirty (30) days from the date of the notice the Default
continues, the Participating Lender shall be entitled to pursue the
remedies and exercise any further rights and remedies granted under
the relevant Loan Agreement or Collateral Document. TSVLP and
Globex recognize that a trustee foreclosure under a deed of trust
may be less expensive and more expedited than a judicial
foreclosure. Therefore, the Lenders covenant and agree that if
there is a Default under either or both of the TSVLP Collateral
Agreements (and/or the TSVLP Security Agreement) and the Globex
Collateral Agreements (and/or the Globex Agreements), foreclosure
proceedings shall be commenced upon the expiration of the thirty
(30) day notice period, and the Foreclosing Lender shall proceed to
foreclose under the applicable Collateral Documents. The
foreclosure shall be conducted as a unified sale of real and
personal property conducted in accordance with the Nevada Uniform
Commercial Code and Nevada real property law governing a trustees
sale of real property encumbered by a deed of trust, unless
otherwise agreed by the Foreclosing and Participating Lender. At
the trustees sale, the Foreclosing Lender and the Participating
Lender shall jointly bid not less than the lesser of the fair
market value of the Collateral or the combined balances then owing
under the applicable Loan Agreement, unless otherwise agreed by the
Lenders. If the Collateral is not purchased by a third party at
the trustees sale, the Foreclosing Lender shall cause title to vest
in the names of both Lenders, as tenants in common, with equal
undivided interests therein. The Foreclosing Lender shall obtain
a Trustees Sale Guaranty from a title company reasonably
acceptable to the Participating Lender insuring title in the real
property portion of the Collateral vested as required herein. The
Foreclosing Lender or Participating Lender may also exercise any
further rights or remedies under the applicable Collateral
Documents or Loan Agreements; provided, that any interest in or
amounts recorded with respect to the Collateral shall be vested in
the names of both Lenders in accordance herewith. Any proceeds
received from any such foreclosure, remedial action, redemption or
receivership proceeding related to the Collateral shall be shared
between the Lenders pari passu in equal proportions; provided, that
such proceeds shall be allocated between the Lenders in the manner
provided in Section 4 below. Upon issuance of the Trustees Deeds
to TSVLP and Globex, as tenants in common in accordance herewith,
each Lender agrees to promptly release the lien of its respective
Collateral Documents as an encumbrance against the Collateral. For
a period of ninety (90) days thereafter, TSVLP shall have the
option to pay to Globex in immediately available funds an amount
equal to the amount of principal and interest owed to Globex under
the Globex Agreements at the time of foreclosure, and thereby
acquire all of the right, title and interest of Globex in and to
the Collateral, by documents of conveyance reasonably acceptable in
form and substance to TSVLP and Globex and their respective
counsel. If TSVLP fails to timely exercise that option, the
parties shall remain tenants in common as to the Collateral. Any
foreclosure or sale of the Collateral constituting personal
property not conducted simultaneously with the trustees sale shall
be made by the Foreclosing Lender in accordance with the provisions
of the Nevada Uniform Commercial Code, and any proceeds received
therefrom shall be shared between the Lenders pari passu in equal
proportions; provided, that such proceeds shall be allocated
between the Lenders in the manner provided in Section 4 below.
4. Application of Payments with Respect to the Collateral. In
the event of any foreclosure, sale or other disposition of or
realization in any manner upon any of the Collateral, all monies or
other property collected or received by either Lender with respect
to the Collateral, in excess of the amount paid to discharge liens
upon the Collateral prior to the Collateral Documents (if any),
shall be distributed by the collecting Lender as follows:
(a) First: to the Foreclosing Lender and Participating Lender in
the amount of, and to apply to, the payment of reasonable costs and
expenses incurred by the Foreclosing Lender and Participating
Lender in connection with the administration and enforcement of the
foreclosed upon deed of trust or other Collateral Document, as the
case may be, and any of the other Loan Agreements relating to such
foreclosure, including the reasonable fees and outofpocket expenses
of counsel employed by the foreclosing Lender to the extent that
such fees, advances, costs and expenses, shall not previously have
been paid or reimbursed to the Foreclosing Lender and Participating
Lender;
(b) Second: to the pari passu payment and prepayment of so much of
the outstanding amounts of the Loan Agreements as constitute unpaid
principal amounts, and of so much of such unpaid indebtedness as
constitute accrued and unpaid interest to and including the date of
such application, in equal proportions, all in accordance with
Section 1; and
(c) Third: to the Lenders pari passu in equal proportions, until
all indebtedness and other obligations owed by GCC under the Loan
Agreements have been satisfied in full, then any excess amount to
GCC.
5. Notice of an Event of Default. If either Lender intends to
declare a Default under any of the Loan Agreements to which such
Lender is a party, such Lender shall give prompt notice of such
intention to the other Lender, which notice shall set forth in
reasonable detail the circumstances known to the sender with
respect to such Event of Default. TSVLP hereby agrees that it will
not send notice to GCC of an Event of Default under the TSVLP
Security Agreement so long as GCC timely makes the monthly debt
service payments required under the TSVLP Note, Globex has not
provided written notice to GCC of an election not to make further
advances of funds to GCC set forth in the Globex Agreements, and no
third party creditor(s) attempts to foreclose or otherwise collect
on the Collateral or to force GCC into any involuntary bankruptcy,
insolvency or similar proceedings. Globex hereby agrees to
forebear exercising any foreclosure rights under the Globex
Collateral Agreements through and including the Maturity Date (as
defined in the Globex Agreements), so long as no Events of Default
have occurred hereunder or thereunder; provided, however, that
Globex shall be entitled to participate and to exercise all rights
it has to the full extent of the Globex Collateral Agreements in
the event that (a) TSVLP shall undertake any action to enforce its
rights under the TSVLP Collateral Agreements, or (b) any third
party shall exercise any rights of foreclosure or other collection
action against the Collateral.
6. Security Interests. Notwithstanding anything to the contrary
herein, each Lender is responsible for the creation, perfection and
validity of any security or other interest in and to the Collateral
pursuant to its own financing facility (i.e., the TSVLP Note or the
Globex Loan, as appropriate) and pursuant to the Nevada Uniform
Commercial Code (the UCC), Nevada real property laws and other
applicable law. In prescribing their relative rights and
privileges, this Agreement assumes that each Lender has complied
with the UCC and other applicable law and holds a valid security
interest or ownership interest in and to its share of Collateral.
Each Lender is responsible for perfecting its respective security
interest in and to the Collateral, whether by filing of record the
Deed of Trust or otherwise reflecting its interest as further
security for the obligations and indebtedness under their
respective Loan Agreements.
7. Compromise of Claims; Effect of Bankruptcy, Fraud, etc.
Neither Lender shall compromise or settle any claim with respect to
the Collateral without the prior written consent of the other.
Should GCC become subject to a bankruptcy or similar proceeding
prior to the repayment to a Lender of all amounts owed to such
Lender by GCC either Lender who files a proof of claim and is shown
to have a valid, perfected secured claim in or title to its
respective prorata share of the Collateral shall have a secured
claim up to its own prorata share therein, and shall share ratably
in any deficiency or other claim against GCC, and any proceeds
received therefrom shall be shared between the Lenders pari passu
in equal proportions; provided, that such proceeds shall be
allocated between the Lenders in the manner provided in Section 4.
8. Termination. The provisions contained in the foregoing
Sections 1 through 7 of this Agreement shall terminate when the
indebtedness and obligations under either of the respective Loan
Agreements have been paid and performed in full.
9. Representations, Warranties and Covenants. The parties make
the following representations, warranties and covenants:
(a)(i) TSVLP is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of
Nevada, and is qualified to do business and in good standing 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 TSVLP to perform its
obligations under this Agreement.
(ii) Globex is a corporation duly organized, validly existing and
in good standing under the laws of the Province of Quebec, and is
qualified to do business and in good standing 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 Globex to perform its obligations
under this Agreement.
(b)(i) TSVLP has all necessary limited partnership power and
authority to own and operate its properties and to carry on its
business as now conducted and to execute, deliver, observe and
perform the terms of this Agreement. TSVLP has taken all necessary
limited partnership action to duly authorize the execution and
delivery of this Agreement. Neither TSVLP's execution and delivery
of this Agreement, nor the performance or observance by TSVLP of
the provisions hereof, violates, or will violate, any provisions in
TSVLP'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 TSVLP or its property or
the Collateral. This Agreement has been duly executed and
delivered by TSVLP and is the legal, valid and binding obligation
of TSVLP, enforceable against TSVLP in accordance with its terms
(subject to applicable bankruptcy, reorganization, insolvency or
similar laws affecting the enforcement of creditors rights
generally).
(ii) Globex has all necessary corporate power and authority to
execute, deliver, observe and perform the terms of this Agreement.
Neither Globex's execution and delivery of this Agreement, nor the
performance or observance by Globex of the provisions hereof,
violates, or will violate, any provisions in Globex'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 Globex or its property or the Collateral.
This Agreement has been duly executed and delivered by Globex and
is the legal, valid and binding obligation of Globex, enforceable
against Globex in accordance with its terms (subject to applicable
bankruptcy, reorganization, insolvency or similar laws affecting
the enforcement of creditors rights generally).
(c) No suit, arbitration, action or other proceeding is pending
or, to the best of TSVLPs knowledge, threatened before any court,
governmental authority or regulatory body against TSVLP.
(d) Each of TSVLP and Globex agree that prior to the termination
of this Agreement they will in no way amend the terms and
provisions of any Collateral Documents to which they are a party.
10. No Representation or Guaranty; No Intention to Create Cross
Interests; No Fiduciary Duty. Neither TSVLP nor Globex makes to
the other Lender any representation or assumes any responsibility
in respect of the execution, construction or enforcement of this
Agreement or any Loan Agreement or Collateral Document, note or
other instrument or agreement executed by either Lender. Neither
Lender shall be deemed as a result of this Agreement to have
indirectly or directly guaranteed any debts, obligations or
liabilities of the other Lender or of GCC. The purpose of the
foregoing provisions of this Agreement is to establish certain
rights and obligations as among the Lenders which are necessary
because of their shared interest in the Collateral. Each Lender is
the sole lender under and in respect of its own Loan Agreement with
GCC, and nothing herein shall be construed as an assignment,
participation or other disposition by one Lender with respect to
the other Lenders Loan Agreement or in any indebtedness or
liability thereunder. Further, except as to funds received or
controlled by either Lender as to which the other Lender is
entitled to participate hereunder, nothing in this Agreement shall
be deemed or construed to expressly create a fiduciary relationship
among or duty between the Lenders, who disavow the existence of any
other such fiduciary relationship or duty to each other or to GCC.
11. Notices. All notices, requests and consent, demands and other
communications which are required or permitted to be given or made
hereunder, shall be given in writing and will be served by personal
delivery, by reputable overnight courier or by postage prepaid or
by U.S. certified mail, return receipt requested, addressed to the
respective parties at the addresses set forth in the preamble of
this Agreement. All notices, requests, consents, demands and other
communications hereunder shall be deemed given and effective three
days following the date on which such notice is deposited in the
U.S. mail or one business day after deposit with a reputable
overnight courier, addressed as provided above, or on the date
personally delivered to and received by the specified parties.
12. Governing Law. This Agreement shall be governed by the laws
of the State of Nevada, without regard to its rules concerning
conflicts of law.
13. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and
shall become effective when copies hereof, taken together, bear the
signatures of each of the parties.
14. Agreement by GCC. GCC agrees that it will cooperate with the
Lenders to the full extent necessary to effect the purposes of this
Agreement, and that it will not take any action in contravention of
the provisions of this Agreement.
15. Conflicts. In the event any provision of any agreement,
including either the TSVLP Security Agreement, the TSVLP Note, or
the Globex Agreements or Globex Collateral Agreements, to which a
Lender and GCC are parties is inconsistent with the terms hereof,
the provisions of this Agreement shall prevail as to the subject
matter hereof.
16. Survival of Representations. All representations, warranties,
covenants, and agreements of the parties contained in this
Agreement, or in any instrument, certificate, opinion, or other
writing provided for in it, shall survive the recording of any
Collateral Documents.
17. Waiver. Any of the terms or conditions of this Agreement may
be waived at any time by the party entitled to the benefit thereof,
but no such waiver shall affect or impair the right of the waiving
party to require observance, performance or satisfaction either of
that term or condition as it applies on a subsequent occasion or of
any other term or condition thereof.
18. Succession. Subject to the provisions otherwise contained in
this Agreement, this Agreement shall inure to the benefit of and be
binding on the successors and assigns of the respective parties
hereto. This Agreement may not be assigned by either Lender
without the prior written consent of the other Lender, and may not
be assigned by any other party.
19. Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than the
parties to it and their respective successors and assigns, nor is
anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right
of subrogation or action over against any party to this Agreement.
20. Specific Performance. Each partys obligations under this
Agreement are unique. The parties each acknowledge that, if any
party should default in performance of the duties and obligations
imposed by this Agreement, it would be extremely impracticable to
measure the resulting damages. Accordingly, the nondefaulting
party, in addition to any other available rights or remedies, may
xxx in equity for specific performance and the parties each
expressly waive the defense that a remedy in damages will be
adequate.
21. Attorneys Fees. If the services of any attorney are required
by any party to secure the performance hereof or otherwise upon the
breach or default of another party to this agreement, or if any
judicial remedy or arbitration is necessary to enforce or interpret
any provision of this Agreement or the rights and duties of any
person in relation thereto, the prevailing party shall be entitled
to recover its reasonable attorneys fees, costs and other
expenses, in addition to any other relief to which such party may
be entitled.
22. Further Assurances. At the request of any party hereto, the
other 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 party to effect the purposes
of this Agreement and the transactions contemplated hereby.
23. Public Announcements. Each party shall obtain the prior
written consent 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.
24. Confidentiality. Except as otherwise set forth in Section 23,
the parties hereto and their collective representatives shall
forever treat confidentially all information concerning the terms
and conditions of this 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 24 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.
IN WITNESS WHEREOF, the parties have executed this Intercreditor
Agreement as of the date first written above.
TONKIN SPRINGS VENTURE LIMITED PARTNERSHIP, a Nevada limited
partnership
By: Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx (name)
President, Tonkin Springs Gold Mining Company, General Partner
(title)
TONKIN SPRINGS GOLD MINING COMPANY, a Colorado corporation
By: Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx (name)
President (title)
U.S. GOLD CORPORATION, a Colorado
corporation
By: Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx (name)
President (title)
GLOBEX MINING ENTERPRISES INC., a Quebec corporation
By: Xxxx Xxxxx
Xxxx Xxxxx (name)
President (title)
GCC is executing this Agreement for purposes of the agreements
contained in Sections 1, 3, 4(c), 13 and 14.
GOLD CAPITAL CORPORATION, a Colorado corporation
By: Xxxx X. Xxxxxx
Xxxx X. Xxxxxx (name)
President (title)
Exhibit 10.25
U.S. Gold Corporation
Form 10 KSB, December 31, 1996
STOCK PURCHASE OPTION AGREEMENT, AGREEMENT NOT TO SELL SHARES, AND
AGREEMENT TO VOTE SHARES FOR MERGER
THIS STOCK PURCHASE OPTION AGREEMENT, AGREEMENT NOT TO SELL SHARES,
AND AGREEMENT TO VOTE SHARES FOR MERGER (this Agreement) dated as
of January 16, 1997, is by and between U.S. Gold Corporation, a
Colorado corporation (Stockholder), and Globex Mining Enterprises
Inc., a Quebec corporation (Globex).
Recitals
A. Globex and Gold Capital Corporation, a Colorado corporation
(Company), are parties to a Letter of Intent dated December 20,
1996, which contemplates a series of transactions by which Globex
will acquire all of the issued and outstanding shares of common
stock of the Company (the Common Stock) pursuant to a series of
transactions (sometimes referred to hereinafter as the Acquisition
Transactions) which will include (i) a Loan Agreement (the Loan
Agreement) between Globex and the Company by which Globex will loan
certain amounts to the Company; (ii) a Stock Purchase Agreement
(the Stock Purchase Agreement) between Globex and Royalstar
Resources Ltd. (Royalstar), regarding the sale to Globex of
approximately 47% of the Common Stock, which is owned by Royalstar;
and (iii) an Agreement and Plan of Merger (the Merger Agreement),
pursuant to which, and subject to the terms and conditions
contained therein, Globex would purchase the remaining outstanding
shares of the Company's Common Stock, for and in consideration of
1,285,607 shares of Globex Common Stock (the Globex Stock) for
every share of common stock, pursuant to a merger (the Merger) of
the Company with a wholly owned U.S. subsidiary of Globex (the
Sub).
B. As of the date hereof, Stockholder owns 2,287,547 shares, or
approximately 25% of the outstanding Common Stock of the Company
(the Shares), and Stockholder desires to (i) grant to Globex (or
Sub) an irrevocable option to purchase the Shares; (ii) agree to
vote in favor of the Merger (subject to the proxy described in
clause (iii)) all the Shares held by Stockholder; (iii) grant to
Globex (or Sub) an irrevocable proxy covering the shares held by
Stockholder to vote in favor of the Merger; and (iv) enter into an
agreement whereby the Stockholder agrees not to sell any of its
Shares during the Option Period (as defined below).
Agreement
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and other good and valuable
consideration, and intending to be legally bound hereby, the
parties hereby agree as follows:
1. Grant of Option. Stockholder hereby grants to Globex (or Sub)
an irrevocable option (the Option) to purchase the Shares in return
for 632,094 shares of Globex Stock (the Purchase Price).
2. Exercise of Option. (a) Globex (or Sub) may exercise the
Option, in whole but not in part, at any time on or prior to the
Termination Date (as defined herein), which period of time shall be
referred to hereinafter as the Option Period. In the event Globex
wishes to exercise the Option, Globex will send a written notice to
Stockholder (the Closing Notice) specifying a place and date no
later than five business days following the date of Closing Notice,
for the closing of such purchase (the Closing).
(b) Notwithstanding the provisions of clause (a) above, if any
waiting period under the Xxxx Xxxxx Xxxxxx Antitrust Improvements
Act of 1976, as amended, or the rules and regulations promulgated
thereunder (collectively, the HSR Act), applicable to the exercise
of the Option shall not have expired or been terminated, or if any
preliminary or permanent injunction or other order by any court of
competent jurisdiction prohibiting or otherwise restraining
exercise of the Option shall be in effect, in any case, as of the
date specified for the Closing in the Closing Notice, the period of
time during which the Option may be exercised shall be extended
until five business days following the later to occur of the
expiration or termination of such waiting period or the removal of
any such Order.
3. Sale and Purchase. (a) If Globex exercises the Option, at any
Closing hereunder, subject to the terms and conditions hereof,
Stockholders will sell, transfer and deliver to Globex (or Sub) a
certificate or certificates representing the Shares duly endorsed
(or accompanied by duly executed stock powers) to Globex (or Sub)
and otherwise in proper form for transfer, and Globex (or Sub) will
purchase the Shares and will sell, transfer and deliver to
Stockholder a certificate or certificates representing the number
of shares of Globex stock constituting the Purchase Price, duly
endorsed (or accompanied by duly executed stock powers) to
Stockholder and otherwise in proper form for transfer. All such
Shares shall be subject only to those restrictions on transfer, if
any, as are placed on the shares of Globex shares exchanged for
shares of stock of the Company pursuant to the Merger Agreement.
(b) In the event of any change in the number of issued and
outstanding Shares by reason of any stock dividend, split up,
merger, recapitalization, combination, conversion, exchange of
shares, outstanding options, obligations of the Company to issue
additional Shares or the like, or any other change in the corporate
or capital structure of the Company that would have the effect of
diluting Globex's rights and privileges hereunder, the number and
kind of Shares subject to the Option and the consideration payable
in respect of such Shares shall be appropriately adjusted to
restore to Globex its rights and privileges hereunder.
(c) In the event of any change in the number of issued and
outstanding shares of Globex common stock by reason of any stock
dividend, split up, merger, recapitalization, combination,
conversion, exchange of shares or the like (except in relation to
the Acquisition Transactions hereunder or financing undertaken by
Globex in connection therewith), or any other change in the
corporate or capital structure of Globex that would have the effect
of diluting the consideration which Stockholder is to receive for
the Shares if Globex exercises the Option, the Purchase Price
payable in respect of such Shares shall be appropriately adjusted
to provide to Stockholder substantially the same consideration for
its Shares.
4. Dividends and Distributions. Until the sale of Stockholder's
Shares at any Closing hereunder, Stockholder will remain the record
and beneficial owner of such Shares and will be entitled to receive
and retain all cash dividends with respect to such Shares declared
prior to the date of Closing and payable to shareholders of record
as of a date prior to the date of the Closing.
5. Agreement to Support Merger. Stockholder agrees, subject to
the terms of Section 7, to vote the Shares held by it in favor of
the Merger pursuant to the terms of the Merger Agreement.
6. Proxy With Respect to the Shares. Stockholder hereby
irrevocably appoints Globex (or Sub) as its attorney and proxy,
with full power of substitution, to vote or to express written
consent or dissent in such manner as such attorney and proxy or its
substitute shall, in its sole discretion, deem proper, and
otherwise act (including pursuant to any corporate action in
writing without a meeting) with respect to all of the Shares which
it is entitled to vote at any meeting of stockholders (whether
annual or special and whether or not an adjourned meeting) of the
Company, or pursuant to written action taken in lieu of any such
meeting or otherwise; provided, however, that Stockholder grants a
proxy hereunder only with respect to the following matters (the
Designated Matters): (i) votes or consents with respect to the
Merger; (ii) votes or consents with respect to any action or
agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement; (iii) votes or consents
with respect to any action or agreement that would impede,
interfere with, delay, postpone or attempt to discourage the
Merger, including, but not limited to, (a) any extraordinary
corporate transaction (other than the Merger), such as a merger,
other business combination, reorganization or liquidation involving
Company, (b) any option, sale, mortgage, transfer or other material
transaction regarding the Tonkin Springs Project in Eureka County,
Nevada or any other material asset of the Company or any of its
subsidiaries, (c) any change in the management or board of
directors of the Company, except as otherwise agreed to in writing
by Globex, or (d) any material change in the present capitalization
of the Company; and (iv) votes or consents relating to any other
material change in the corporate structure or business of the
Company. This proxy is irrevocable, is coupled with an interest
sufficient in law to support an irrevocable proxy and is granted in
consideration of and as an inducement to cause Globex to enter into
the transactions contemplated by this Agreement and the Merger
Agreement. This proxy shall revoke any other proxy granted by
Stockholder at any time with respect to the Shares and no
subsequent proxies will be given with respect thereto by
Stockholder. In addition, if subsequent to the date hereof
Stockholder is entitled to vote the Shares for any purpose
unrelated to the Designated Matters, it shall provide notice
thereof to Globex.
7. Condition to Stockholder's Obligations. The obligations of the
parties to close the transactions contemplated by this Agreement
upon its execution and thereafter shall be subject to the
additional condition that all representations and warranties of
Stockholder (in the case of the obligations of Globex) and Globex
(in the case of the obligations of Stockholder) shall be true and
correct in all material respects as of the date hereof and at and
as of the date of the exercise of the Option and the closing of (i)
the Stock Purchase Agreement and (ii) the Merger Agreement, all
with the same force and effect as though made on and as of the date
of this Agreement.
8. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Globex as follows:
8.1 Ownership of Shares. On the date hereof, the Shares are all
of the shares of the Company's Common Stock currently beneficially
owned by the Stockholder. Stockholder has no rights to acquire
additional shares of the Company's Common Stock, and has converted
all shares of preferred stock of the Company owned by it into
Common Stock. Stockholder currently has, and at the Closing
described in Section 3 will have, good, valid and marketable title
to the Shares, free and clear of all liens, encumbrances,
restrictions, options, warrants, rights to purchase and claims of
every kind (other than the encumbrances created by this Agreement
and other than restrictions on transfer under applicable U.S.
Federal and State securities laws). As set forth on the form 8 K
filed by the Company with the Securities and Exchange Commission on
December 19, 1996, and notwithstanding assertions to the contrary
made by Royalstar in a letter to Company dated January 10, 1997,
Stockholder is of the opinion, based on the advice of its outside
counsel, that the Shareholders Agreement among Xxxx Xxxxx,
Royalstar, the Company, Stockholder, Tonkin Springs Venture Limited
Partnership and Tonkin Springs Gold Mining Company terminated
effective as of the date Xxxx Xxxxx resigned as an officer and
director of the Company.
8.2 Power: Binding Agreement. Stockholder has the full legal
right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and
delivery of this Agreement by Stockholder has been authorized by
all necessary corporate action on the part of Stockholder and will
not violate any other agreement to which Stockholder is a party
including, without limitation, any voting agreement, stockholders
agreement, voting trust or proxy. This Agreement has been duly
executed and delivered by Stockholder and constitutes a legal,
valid and binding agreement of Stockholder, enforceable in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws, now or hereafter in effect affecting creditors'
rights and remedies generally or general principles of equity.
Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the transactions contemplated hereby
will (i) require any consent or approval of or filing with any
governmental or other regulatory body except for (x) the filings
required under the H-S-R Act and (y) filings on Schedule 13D under
the Securities Exchange Act of 1934, as amended, or (ii) constitute
a violation of, conflict with or constitute a default under, any
contract, commitment, agreement, understanding, arrangement or
other restriction of any kind to which Stockholder is a party or by
which Stockholder is bound.
8.3 Continuity of Interest. There is no current plan or intention
by Stockholder to sell, exchange or otherwise dispose of the shares
of Globex's common stock received by the Stockholder.
8.4 Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with
this Agreement or the transactions contemplated hereby.
9. Representations and Warranties of Globex. Globex represents
and warrants to Stockholder as follows:
9.1 Ownership of Shares. At the Closing described in Section 3,
Globex will have good, valid and marketable title to the shares of
Globex common stock constituting the Purchase Price, free and clear
of all liens, encumbrances, restrictions, options, warranties,
rights to purchase and claims of every kind (other than
restrictions on transfer under applicable Canadian provincial and
U.S. Federal and State securities laws).
9.2 Powers: Binding Agreement. Globex has full legal right,
power and authority to enter into and perform all of its
obligations under this Agreement. The execution and delivery of
this Agreement by Globex has been authorized by all necessary
corporate action on the part of Globex and will not violate any
other agreement to which Globex is a party. This Agreement has
been duly executed and delivered by Globex and constitutes a legal,
valid and binding agreement of Globex, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar
laws, now or hereafter in effect, affecting creditors'
reorganization, moratorium and similar laws, now or hereafter in
effect, affecting creditors' rights and remedies generally or
general principles of equity. Neither the execution of this
Agreement nor the consummation by Globex of the transactions
contemplated hereby will (i) require any consent or approval of or
filing with any governmental or regulatory body except for (x) for
the filings required under the H-S-R Act and (y) filings on
Schedule 13D under the Securities Exchange Act of 1934, as amended,
or (ii) constitute a violation of, conflict with or constitute a
default under, any contract, commitment, agreement, understanding,
arrangement or other restriction of any kind to which Globex is a
party or by which it is bound.
9.3 Finders Fees. No person is, or will be, entitled to any
commission or finders fees from Globex in connection with this
Agreement or the transactions contemplated hereby.
9.4 No Intention to Sell Shares. If it exercises the Option,
Globex (or Sub) will be acquiring the Shares for investment
purposes and has no intention of selling such Shares in a public
distribution in violation of applicable securities laws.
10. Covenants of Stockholder. (a) So long as the Option remains
exercisable, Stockholder hereby covenants and agrees with Globex
that, except pursuant to the terms of this Agreement, Stockholder
will not, without the prior written consent of Globex, 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
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 Globex or
any affiliate or associate of Globex) concerning any proposal or
offer (a Takeover Proposal) for a merger or other business
combination involving the Company 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
Company. Stockholder shall promptly notify Globex of, and
communicate to Globex the terms and status of any inquiry or
proposal with respect to any Takeover Proposal and shall promptly
provide Globex with any such information regarding such proposal as
Globex may request (including delivering copies thereof).
(b) In the event that Globex exercises the Option, Stockholder
hereby agrees, for a period of two (2) years from the date of
Globexs exercise of the Option to vote all shares of Globex Stock
which constitute the Purchase Price under Section 1 of this
Agreement (the Globex Shares) in the exact manner specified by
Globex, or, at the sole election of Globex, to grant to Globex a
duly executed irrevocable proxy with respect to the Globex Shares
in accordance with C.R.S. 7-107-203(5).
(c) In the event that Globex exercises the Option, Stockholder
hereby grants to Globex a first right of refusal as related to
sales of the Globex Shares by Stockholder to third party non
affiliates, for a period of two (2) years from the date of Globexs
exercise of the Option, as provided herein (First Right of
Refusal).
(i) Stockholder will give Globex written notice of Stockholders
intention to sell (or deliver in satisfaction of debt) any of the
Globex Shares beneficially owned directly or indirectly by
Stockholder to any person, except for an Affiliate, as hereinafter
defined, such written notice to provide in reasonable detail, the
terms, conditions and timing of such intended sale (or delivery)
provided that a written notice from Stockholder to the effect that
a prescribed number of shares will be sold at the prevailing market
price shall constitute a valid Sales Notice (Sales Notice). An
Affiliate of Stockholder is defined as any entity in which
Stockholder directly or indirectly owns a greater than 50%
interest.
(ii) Globex will have 5 business days from receipt of the Sales
Notice to give Stockholder written notice of Globexs irrevocable
election to exercise its rights to purchase the shares covered by
the Sales Notice under terms and conditions no less favorable to
Stockholder than those included in the Sales Notice.
(iii) If Globex has not given notice to Stockholder of its
irrevocable intent to exercise its rights as provided in (ii) and
within the required time frame specified above, Globex shall
relinquish any First Right of Refusal related specifically to those
shares included in the Sales Notice, unless such sale(s) are not
consummated by Stockholder within 30 days of the date of the Sales
Notice.
(iv) Any election by Globex not to exercise its First Right of
Refusal as related to any Sales Notice shall not change or diminish
Globexs rights under this Agreement as related to subsequent Sales
Notices.
(vi) Stockholder may sell or transfer any of the Globex Shares
which it beneficially owns directly or indirectly to an Affiliate
provided that such Affiliate agrees in writing to be bound by the
terms of this Agreement.
11. Remedies. The parties hereto agree that if for any reason
Globex or Stockholder shall have failed to perform its obligations
under this Agreement, then any party hereto seeking to enforce this
Agreement against such non performing party shall be entitled to
seek specific performance and injunctive and other equitable
relief, and the parties hereto further agree to waive any
requirement for the securing or posting of any bond in connection
with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights
that either party hereto may have against the other party hereto
for any failure to perform its obligation under this Agreement.
12. Termination. This Agreement (other than the provisions
relating to expenses (Section 13), and confidentiality (Section
14)) shall terminate (the Termination Date) on the earliest of:
(a) the date on which Globex and Stockholder mutually consent to
terminate this Agreement in writing;
(b) the date of successful consummation of the Stock Purchase
Agreement and successful consummation of the Merger;
(c) the date on which Globex provides written notice to Stockholder
of Globexs intention not to exercise the Option;
(d) the date upon which Globex gives written notice to the Company
under the Loan Agreement of its intention not to make any further
advances of funds thereunder; or
(e) August 30, 1997.
13. Expenses. Each party hereto will pay all of its expenses in
connection with the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of its counsel
and other advisers.
14. Confidentiality. Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may
be dependent upon confidentiality with respect to these matters. In
this connection, Stockholder agrees that it will not disclose or
discuss these matters with anyone (other than its legal counsel and
advisors) not a party to this Agreement, without prior written
consent of Globex, except to the extent necessary for filings
required pursuant to the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder or disclosures
Stockholder's legal counsel advises in writing are necessary in
order to fulfill Stockholder's obligations imposed by law, in which
events Stockholder shall give prompt prior notice of such
disclosure to Globex.
15. Certain Covenants of Globex
15.1 Stock Purchase and Merger. Globex agrees to use its
reasonable best efforts to negotiate the terms of the Stock
Purchase Agreement and the Merger Agreement in good faith, and to
consummate the closing of the Acquisition Transactions contemplated
thereby.
15.2 H-S-R Act Filings. Globex agrees to make in a timely manner
any filings required to be made by it under the H-S-R Act in
connection with the transactions contemplated by this Agreement,
the Stock Purchase Agreement and the Merger Agreement.
16. Notices. All notices or other communications required or
permitted hereunder shall be in writing (except as otherwise
provided here) and shall be deemed duly given when received by
delivery in person, by telecopy, telex or telegram or by certified
mail, postage prepaid, or by an overnight courier service,
addressed as follows:
If to Globex:
000 00xx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxx, Xxxxxx
Attn: Xxxx Xxxxx
Chief Executive Officer
with copies to:
Xxxxx, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
If to Stockholder:
U.S. Gold Corporation
00 Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
17. Entire Agreement: Amendment. This Agreement, together with
the documents expressly referred to herein, constitute the entire
agreement among the parties hereto with respect to the subject
matter contained herein and supersede all prior agreements and
understandings among the parties with respect to such subject
matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the
party against whom such modification, amendment, alteration or
supplement is sought to be enforced.
18. Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other
parties, except that Globex may assign any or all of its rights and
obligations hereunder to Sub without the consent of Stockholder or
the Company, but no such transfer shall relieve Globex of its
obligations under this Agreement.
19. Governing Law. This Agreement, and all matters relating
hereto, shall be governed by, and construed in accordance with the
laws of the State of Colorado without giving effect to the
principles of conflicts of laws thereof.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and
all of which together shall constitute one and the same document.
21. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable such provision shall
be interpreted to be only so broad as is enforceable.
22. Further Assurances. Each party hereto shall execute and
deliver such additional documents as may be necessary or desirable
to consummate the transactions contemplated by this Agreement.
23. Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, shall be construed to give any person other
than the parties hereto any legal or equitable right, remedy or
claim under or by reason of this Agreement or any provision
contained herein.
THIS SPACE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, Globex and Stockholder have each caused this
Agreement to be executed by their duly authorized officers as of
the date and year first above written.
GLOBEX MINING ENTERPRISES, INC.,
a Quebec corporation
By: Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: President
U.S. GOLD CORPORATION,
a Colorado corporation
By: Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: President
Exhibit 11. U.S. GOLD CORPORATION EXHIBIT TO FORM 10-KSB
Computation of Weighted Average Shares Outstanding
Used in Earnings Per Share Calculations
for the two years ended December 31, 1996
1996 1995
Shares issued, beginning of period 13,806,505 13,768,800
Weighted average shares issued:
Exercise of stock options 17,442 25,454
Weighted average of common
stock equivalents:
Unexercised stock options 1,145,495 1,193,495
Less: Buy back of common shares
under treasury stock method
using average price (291,346) (395,779)
Total weighted average shares and
share equivalent outstanding 14,678,096 14,591,970
(1) Fully diluted computations are not made as total shares and
share equivalent outstanding would be effected by less than 3%.
Exhibit 23.1 Consent of BDO Xxxxxxx, LLP, to the incorporation by
reference of their report dated March 26, 1997, in the Companys
Form S-8.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement of U.S. Gold Corporation on Form S-8, File No. 33-47460
of our report dated March 19, 1997, on our audit of the
consolidated financial statements of U.S. Gold Corporation as of
December 31, 1996 and for the two years ended December 31, 1996, which report
is included in the Annual Report on Form 10-KSB for the year ended December 31,
1996
BDO Xxxxxxx, LLP
Denver, Colorado
March 26, 1997
Exhibit 23.2 Consent of Xxxxx Xxxxxxx and Company, Inc., dated
March 24, 1997.
CONSENT OF INDEPENDENT ENGINEERS
As independent engineers, Xxxxx Xxxxxxx and Company, Inc. (Xxxxx
Xxxxxxx) has rendered its report entitled TECHNICAL AUDIT OF THE
TONKIN SPRINGS GOLD PROPERTY, EUREKA COUNTY, NEVADA, dated April,
1996. Xxxxx Xxxxxxx hereby consents to all references to Xxxxx
Xxxxxxx in the Form 10 KSB for the period ended December 31, 1996,
of U.S. Gold Corporation.
XXXXX XXXXXXX AND COMPANY, INC.
by: Xxxxxxx X. Xxxxxxxx
President, Chief Executive Officer,
and Chief Operating Officer
Denver, Colorado
March 24, 1997
Exhibit 23.3 Consent of Ore Reserve Engineering, date March 20,
1997.
CONSENT OF INDEPENDENT ENGINEERS
As independent engineers, Ore Reserve Engineering (ORE) has
rendered its estimate of open pit ore reserves for the Tonkin
Springs Project, dated October, 1996. ORE hereby consents to all
references to ORE in the Form 10 KSB for the period ended December
31, 1996, of U.S. Gold Corporation.
ORE RESERVE ENGINEERING
By: Xxxx X. Xxxxx, P.E.
Lakewood, Colorado
March 20, 1997
