INTERCREDITOR AGREEMENT
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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 146-14th Street, Rouyn- Noranda,
Quebec, Canada, J9X 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
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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) GCC's 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
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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
co-extensive 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 Lender's pro-rata 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 assignee's undivided interest and right to
participate in the Collateral pursuant to Section 1 hereof. Each Lender
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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 trustee's sale of real property encumbered by a deed of
trust, unless otherwise agreed by the Foreclosing and Participating Lender. At
the trustee's 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 Trustee's 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 Trustee's 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 trustee's 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.
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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 out-of-pocket 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.
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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 pro-rata share of
the Collateral shall have a secured claim up to its own pro-rata 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
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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 TSVLP's 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 Lender's 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
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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.
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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 party's 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.
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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: Tonkin Springs Gold Mining Company
General Partner
/s/ XXXXXXX XXXX (name)
----------------------------------------
(title)
-----------------------------------------
TONKIN SPRINGS GOLD MINING
COMPANY, a Colorado corporation
By: /s/ XXXXXXX XXXX
---------------------------------------
Xxxxxxx X. Xxxx (name)
---------------------------------------
President (title)
---------------------------------------
U.S. GOLD CORPORATION, a Colorado
corporation
By: ---------------------------------------
---------------------------------(name)
--------------------------------(title)
GLOBEX MINING ENTERPRISES INC., a
Quebec corporation
By: /s/ XXXX XXXXX
---------------------------------------
Xxxx Xxxxx (name)
---------------------------------------
President (title)
---------------------------------------
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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: /S/ XXXX X. XXXXXX
-----------------------------------
Xxxx X. Xxxxxx
------------------------------(name)
Pres
-----------------------------(title)
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