EXHIBIT 10.1
FORBEARANCE AGREEMENT
This Forbearance Agreement (this "Agreement") is dated as of January 15,
2011 and is made by and among Brigus Gold Corp., a Yukon Territory
corporation ("BGC"), Brigus Gold, Inc., a Delaware corporation ("BGI" and,
together with BGC, "Brigus"), Calais Resources Inc., a British Columbia
corporation ("CRI"), and Calais Resources Colorado, Inc .a Nevada corporation
("CRCI" and, together with CRI, "Borrowers").
W I T N E S S E T H:
WHEREAS, Brigus is the holder of the indebtedness evidenced by the
promissory notes set forth on Exhibit A hereto and issued by Borrowers (the
"Promissory Notes");
WHEREAS, in connection with the issuance of the Promissory Notes and
Brigus' acquisition thereof, each of Brigus and Borrowers entered into
certain endorsements, assignments, security documents and other instruments,
documents and agreements, including, without limitation, the Purchase
Agreement, dated February 1, 2010, among Elkhorn Goldfields, LLC, CRI, CRCI
and BGI (the "Montana Tunnels Purchase Agreement") and the Purchase
Agreement, dated March 12, 2010, among BGC, CRCI, CRI, Xxxxx Xxxxx, Xxxxx
Xxxxx, Xxxx Xxxxxx and Xxxxx Xxxx (the "Xxxxx Purchase Agreement" and
together with the Montana Tunnels Purchase Agreement, the "Purchase
Agreement") (collectively, the Promissory Notes, the Purchase Agreements and
such other endorsements, assignments, security documents and other
instruments, documents and agreements entered into in connection therewith,
the "Financing Agreements");
WHEREAS, Borrowers are and have been in default under the Promissory
Notes for, among other things, failure to pay principal and interest when due
(the "Existing Defaults");
WHEREAS, pursuant to the (i) Montana Tunnels Purchase Agreement, Brigus
agreed to forbear from enforcing its rights with respect to the Additional
Unsecured Note (as defined in the Montana Tunnels Purchase Agreement) until
February 1, 2011 and (ii) the Xxxxx Purchase Agreement, Brigus agreed to
forbear from enforcing its rights with respect to the promissory note dated
August 11, 2005 in the original principal amount of $807,650 (the "Xxxxx
Note") until March 12, 2011;
WHEREAS, Borrowers have requested that Brigus agree to forbear from
exercising its rights and remedies as a result of the Existing Defaults,
which are continuing, notwithstanding such Existing Defaults; and
WHEREAS, Brigus is willing to agree to forbear from exercising certain
of its rights and remedies for the period and on the terms and conditions
specified herein;
NOW, THEREFORE, in consideration of the foregoing, and the respective
agreements, warranties and covenants contained herein, the parties hereto
agree, covenant and warrant as follows:
SECTION 1. ACKNOWLEDGMENT
1.1. Acknowledgment of Obligations. Each Borrower hereby acknowledges,
confirms, affirms and agrees that Borrowers are indebted to Brigus in respect
of the Promissory Notes. The indebtedness evidenced by the Promissory Notes,
together with interest accrued and accruing thereon, and all fees, costs,
expenses and other charges now or hereafter payable by Borrowers to Brigus,
are unconditionally owing by Borrowers to Brigus, without offset, defense or
counterclaim of any kind, nature or description whatsoever. Borrowers
further hereby acknowledge, confirm, agree and reaffirm that the Promissory
Notes and the other Financing Agreements are valid and enforceable against
Borrowers and their respective affiliates.
1.2. Acknowledgment of Liens. Each Borrower hereby acknowledges,
confirms and agrees that Brigus has and shall continue to have valid,
enforceable and perfected liens upon and security interests in the collateral
heretofore granted to Brigus pursuant to the Financing Agreements or
otherwise granted to or held by Brigus.
1.3. Binding Effect of Documents. Each Borrower hereby acknowledges,
confirms and agrees that: (a) each of the Financing Agreements to which it is
a party has been duly executed and delivered to Brigus by such Borrower, and
each is in full force and effect as of the date hereof, (b) the agreements
and obligations of each Borrower contained in such documents and in this
Agreement constitute the legal, valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their
respective terms, and such Borrower has no valid defense to the enforcement
of such obligations, and (c) Brigus is and shall be entitled to the rights,
remedies and benefits provided for in the Financing Agreements and applicable
law.
SECTION 2. FORBEARANCE IN RESPECT OF CERTAIN EVENTS OF DEFAULT
2.1. Acknowledgment of Default. Each Borrower hereby acknowledges and
agrees that the Existing Defaults have occurred and are continuing, each of
which entitles Brigus to exercise its rights and remedies under the Financing
Agreements, applicable law or otherwise. Brigus has not waived, presently
does not intend to waive, and may never waive such Existing Defaults and
nothing contained herein or the transactions contemplated hereby shall be
deemed to constitute any such waiver. Each Borrower hereby acknowledges and
agrees that Brigus has the presently exercisable right to declare the
obligations to be immediately due and payable under the terms of the
Financing Agreements.
2.2. Forbearance.
(a) In reliance upon the representations, warranties and
covenants of each Borrower contained in this Agreement, and subject to the
terms and conditions of this Agreement and any documents or instruments
executed in connection herewith, Brigus agrees (1) to forbear from exercising
its rights and remedies under the Promissory Notes, applicable law or
otherwise in respect of or arising out of the Existing Defaults for the
period (the "Forbearance Period") commencing on the date hereof and ending on
the date which is the earliest to occur of: (i) June 30, 2011, (ii) execution
of a definitive agreement between Borrower and Brigus that retires or
transfers the Promissory Notes from Brigus to Borrower, (iii) a breach by any
Borrower of this Agreement, (iv) insolvency of, appointment of a receiver for
any part of the property of, or assignment for the benefit of creditors by,
any Borrower; (v) the commencement of any proceedings under any bankruptcy or
insolvency laws by any Borrower; or (vi) the commencement of any involuntary
proceedings under any bankruptcy or insolvency laws against Borrower if the
same have not been fully discharged within thirty days after the commencement
thereof and(2) that the interest rate payable under the Original Caribou Note
(as defined in the Montana Tunnels Purchase Agreement), the Congo Note (as
defined in the Montana Tunnels Purchase Agreement) and the Xxxxx Note shall
be eight percent (8%) for the Forbearance Period, with such interest rates
reverting to such rate as is set forth in such notes automatically upon the
expiration of the Forbearance Period.
(b) Upon the termination of the Forbearance Period, the agreement
of Brigus to forbear and reduce the applicable interest rates shall
automatically and without further action terminate and be of no force and
effect, it being expressly agreed that the effect of such termination will be
to permit Brigus, to exercise immediately all rights and remedies under the
Financing Agreements and applicable law, including, but not limited to, the
acceleration of all of the obligations; in either case without any further
notice, passage of time or forbearance of any kind and enforcing its rights
with respect to the collateral.
2.3. No Other Waivers; Reservation of Rights.
(a) Brigus has not waived, is not by this Agreement waiving, and
has no intention of waiving, any events of default under the Financing
Agreements ("Events of Default") which may be continuing on the date hereof
or any Events of Default which may occur after the date hereof (whether the
same or similar to the Existing Defaults or otherwise), and Brigus has not
agreed to forbear with respect to any of its rights or remedies concerning
any Events of Default (other than, during the Forbearance Period, the
Existing Defaults to the extent expressly set forth herein), which may have
occurred or are continuing as of the date hereof or which may occur after the
date hereof. Nothing contained in this Agreement, nor any action by Brigus,
nor any failure to act by Brigus, shall be deemed to constitute or shall be
construed as (i) a course of dealing obligating Brigus to take, or not to
take, any action, including without limitation to provide any accommodations,
financial or otherwise, to any Borrower at any time, (ii) a commitment or an
agreement to make a commitment with respect to any possible restructure of
the indebtedness evidenced by the Promissory Notes or (iii) an agreement to
forbear from exercising any rights or remedies following the termination of
the Forbearance Period.
(b) Subject to Section 2.2(a) above, Brigus reserves its right,
in its discretion, to exercise any or all of its rights and remedies under
the Promissory Notes and the other Financing Agreements as a result of any
Events of Default which may be continuing on the date hereof or any Event of
Default which may occur after the date hereof; and Brigus has not waived any
of such rights or remedies, and nothing in this Agreement, and no delay on
its part in exercising any such rights or remedies, should be construed as a
waiver of any such rights or remedies.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Borrower hereby represents, warrants and covenants with and to
Brigus as follows:
3.1. Binding Effect of Documents. This Agreement and the other
Financing Agreements have been duly authorized, executed and delivered to
Brigus by Borrowers, are enforceable in accordance with their terms and are
in full force and effect, as modified hereby.
3.2. No Conflict, Etc. The execution, delivery and performance of this
Agreement by Borrowers will not violate any laws, rules, regulations or
orders of any governmental authority or any contractual obligation of any
Borrower and will not result in, or require, the creation or imposition of
any lien on any of a Borrower's properties or revenues.
3.3 Brigus Consent Rights. In addition, from the date hereof until the
expiration of the foregoing Forbearance Period, each Borrower shall operate
and carry on its business and shall cause each of its affiliates to operate
and carry on its business only in the ordinary course and substantially as
presently operated. Consistent with the foregoing, each Borrower shall keep
and maintain its assets and shall cause each of its affiliates to keep and
maintain its assets in good operating condition and repair and shall use its
best efforts consistent with good business practice to maintain the business
organization of such Borrower intact and to preserve the goodwill of the
suppliers, contractors, licensors, employees, customers, distributors and
others having business relations with such Borrower. In connection
therewith, except with the express written approval of Brigus, no Borrower
shall, nor shall it permit any of its affiliates to: (i) amend its
organizational documents; (ii) issue, grant, sell or encumber any shares of
its capital stock or other securities (except in connection with a financing
transaction that is on terms acceptable to Brigus in its sole discretion);
issue, grant, sell or encumber any security, option, convertible security,
put, call, subscription or other right of any kind, fixed or contingent, that
directory or indirectly calls for the acquisition, issuance, sale, pledge or
other disposition of any shares of capital stock or other securities or make
any other changes in capital structure; (iii) make any material change to its
business or operations; (iv) sell, lease (as lessor), transfer or otherwise
dispose of (including any transfers from Borrower to its affiliates), or
mortgage or pledge, or impose or suffer to be imposed any Encumbrance on, any
of the capital stock or the assets or properties of any Borrower; (v) make
any payment of cash or distribution of assets to any of its affiliates; (vi)
create, incur or assume any indebtedness for borrowed money, enter into, as
lessee, any capitalized lease obligations or declare, set aside or pay any
cash dividends on or make any other cash distributions in respect of any
capital stock; (vii) declare, set aside or pay any dividends on or make any
other distributions (whether in cash, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any securities in respect of, in
lieu of or in substitution for any capital stock; or (viii) authorize, agree
or enter into any agreement to do any of the foregoing actions.
SECTION 4. PROVISIONS OF GENERAL APPLICATION
4.1. No Further Amendments: Ratification of Liability. Each Borrower
hereby agrees that except as amended hereby, the Promissory Notes and each of
the other Financing Agreements shall remain in full force and effect in
accordance with their respective terms. Each Borrower hereby ratifies and
confirms its liabilities, obligations and agreements under the Promissory
Notes and the other Financing Agreements to which such Borrower is a party,
subject to the terms of this Agreement, and acknowledges that (i) as of the
date of this Agreement, no Borrower has any defenses, claims or set-offs to
the enforcement by Brigus of such liabilities, obligations and agreements,
(ii) other than as specifically set forth herein, Brigus does not waive,
diminish or limit any term or condition contained in the Promissory Notes or
any of the other Financing Agreements and (iii) the passage of time created
by any forbearance by Brigus shall not be used as a defense by any Borrower
against the payment of indebtedness, interest and fees owing to Brigus and
represented by the Promissory Notes. Brigus' agreement to the terms of this
Agreement shall not be deemed to establish or create a custom or course of
dealing between Brigus and Borrowers. To the extent of conflict between the
terms of this Agreement and the other Financing Agreements, the terms of this
Agreement shall control.
4.2. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
4.3. Survival of Representations and Warranties. All representations
and warranties made in this Agreement or any other document furnished in
connection with this Agreement shall survive the execution and delivery of
this Agreement and the other documents, and no investigation by Brigus or any
closing shall affect the representations and warranties or the right of
Brigus to rely upon them.
4.4. Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement.
4.5. Reviewed by Attorneys. Each Borrower represents and warrants to
Brigus that it (a) understands fully the terms of this Agreement and the
consequences of the execution and delivery of this Agreement, (b) has been
afforded an opportunity to have this Agreement reviewed by, and to discuss
this Agreement and document executed in connection herewith with, such
attorneys and other persons as such Borrower may wish, and (c) has entered
into this Agreement and executed and delivered all documents in connection
herewith of its own free will and accord and without threat, duress or other
coercion of any kind by any Person. The parties hereto acknowledge and agree
that neither this Agreement nor the other documents executed pursuant hereto
shall be construed more favorably in favor of one than the other based upon
which party drafted the same, it being acknowledged that all parties hereto
contributed substantially to the negotiation and preparation of this
Agreement and the other documents executed pursuant hereto or in connection
herewith.
4.6. Governing Law and Jurisdiction.
THE DOMESTIC LAW, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, OF THE
STATE OF COLORADO WILL GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE PERFORMANCE OF THE
OBLIGATIONS IMPOSED BY THIS AGREEMENT. EACH OF THE PARTIES SUBMITS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN DENVER,
COLORADO, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH PARTY ALSO AGREES NOT TO
BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
IN ANY OTHER COURT. EACH OF THE PARTIES WAIVES ANY DEFENSE OF INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES
ANY BOND, SURETY OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY
WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE PARTIES AGREE THAT EITHER
OR BOTH OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED AGREEMENT BETWEEN THE
PARTIES IRREVOCABLY TO WAIVE ANY OBJECTIONS TO VENUE OR TO CONVENIENCE OF
FORUM.
4.7. Counterparts. This Agreement may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one
and the same agreement.
4.8 Currency All references in this Agreement to "$" are references to
United States dollars.
4.9 Time of Essence.With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.4.10 No Third-
Party Beneficiaries.Nothing expressed or referred to in this Agreement
confers any rights or remedies upon any person that is not a party or
permitted assign of a party to this Agreement.[Signature Pages Follow]
IN WITNESS WHEREOF, this Agreement is executed and delivered as of the
day and year first above written.
CALAIS RESOURCES, INC.
By:/s/ Xxxxx X. Xxxxx
Title: President
CALAIS RESOURCES COLORADO, INC.
By:/s/ Xxxxxx X. Xxxxxxxxx
Title: President
BRIGUS GOLD CORP.
By:/s/ Xxx Xxxxxxxx
Title: CFO
BRIGUS GOLD, INC.
By:/s/ Xxx Xxxxxxxx
Title: Officer
