FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from --------- to ----------.
Commission File Number 2-2274
ALTA GOLD CO.
------------
(Exact Name of Registrant as specified in its charter)
Nevada 87-0259249
------ ------------
(State or other jurisdiction (I.R.S. Employer
Identification Number) of incorporation or organization)
601 WHITNEY RANCH DRIVE, SUITE 10
HENDERSON, NEVADA 89014
---------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (702) 433-8525
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
------ -----
The number of shares outstanding of the Registrant's Common Stock as
of September 30, 1995 was 28,452,780.
ALTA GOLD CO.
<TABLE>
<CAPTION>
INDEX
<S> <C>
Page
Number
------
PART I Financial Information
Item 1 Financial Statements
Condensed Balance Sheets as of
September 30, 1995 and December 31, 1994 . . . . . . . 3
Condensed Statements of Operations for the
Three Months Ended September 30, 1995 and 1994 . . . . 5
Nine Months Ended September 30, 1995 and 1994 . . . . 6
Condensed Statements of Cash Flows for the
Nine Months Ended September 30, 1995 and 1994 . . . . 8
Notes to Condensed Financial Statements. . . . . . . . 10
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . 13
PART II Other Information
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . 16
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
ALTA GOLD CO.
-------------
CONDENSED BALANCE SHEETS
-----------------------
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
September 30, December 31,
1995 1994
------------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 170,000 $ 471,000
Short-term investments - 262,000
Receivables 103,000 428,000
Inventories 5,229,000 3,806,000
Prepaid expenses and other 426,000 437,000
---------- -----------
Total current assets 5,928,000 5,404,000
PROPERTY, BUILDINGS AND EQUIPMENT, net
Mining properties and claims 18,550,000 18,399,000
Buildings and equipment 14,963,000 11,611,000
Construction in progress - 2,044,000
---------- -----------
33,513,000 32,054,000
Less - accumulated
depreciation ( 6,895,000) ( 5,740,000)
----------- -----------
Total property, buildings
and equipment, net 26,618,000 26,314,000
DEFERRED MINE DEVELOPMENT
COSTS, net 8,244,000 6,308,000
OTHER ASSETS 642,000 429,000
----------- ----------
Total assets $41,432,000 $38,455,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed balance
sheets.
ALTA GOLD CO.
------------
CONDENSED BALANCE SHEETS (continued)
-----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
September 30, December 31,
1995 1994
------------- ------------
CURRENT LIABILITIES:
Accounts payable $ 1,172,000 $ 2,205,000
Accrued liabilities 463,000 840,000
Current portion of
long-term debt 5,048,000 4,750,000
----------- -----------
Total current liabilities 6,683,000 7,795,000
LONG-TERM DEBT, net of
current portion 3,332,000 4,256,000
DEFERRED INCOME TAXES 755,000 755,000
OTHER LONG-TERM LIABILITIES 1,774,000 1,711,000
----------- -----------
Total liabilities 12,544,000 14,517,000
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; authorized
40,000,000 shares, issued 28,452,780 and
27,950,851 shares, respectively 29,000 28,000
Additional capital 42,360,000 41,799,000
Accumulated deficit ( 13,501,000) ( 17,889,000)
----------- -----------
Total stockholders' equity 28,888,000 23,938,000
----------- -----------
Total liabilities and
stockholders' equity $41,432,000 $38,455,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed balance
sheets.
ALTA GOLD CO.
---------------
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<S> <C> <C>
Three Months Ended September 30,
1995 1994
----------- ----------
REVENUE:
Sales of gold and
other metals $ 6,607,000 $3,220,000
----------- ----------
OPERATING COSTS AND EXPENSES:
Direct mining, production and
holding costs 3,730,000 2,012,000
General and administrative 277,000 335,000
Exploration 11,000 72,000
Depreciation, depletion
and amortization 1,010,000 239,000
----------- ---------
5,028,000 2,658,000
----------- -----------
Income from operations 1,579,000 562,000
----------- ----------
OTHER INCOME (EXPENSE), net:
Interest income and other 12,000 25,000
Interest expense and other ( 209,000) ( 1,000)
----------- ----------
( 197,000) 24,000
------------ ----------
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,382,000 586,000
PROVISION FOR INCOME TAXES - -
------------ ---------
NET INCOME $ 1,382,000 $ 586,000
============ ==========
NET INCOME PER SHARE:
Primary $ 0.05 $ 0.02
============ ==========
Fully diluted $ 0.05 $ 0.02
============ ==========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Primary 28,452,780 27,593,555
=========== ==========
Fully Diluted 28,452,780 28,466,868
=========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
ALTA GOLD CO.
--------------
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
(Unaudited)
<S> <C> <C>
Nine Months Ended September 30,
1995 1994
----------- ---------
REVENUE:
Sales of gold and other metals $12,899,000 $8,534,000
----------- ----------
OPERATING COSTS AND EXPENSES:
Direct mining, production and
holding costs 7,603,000 6,075,000
General and administrative 975,000 1,059,000
Exploration 28,000 234,000
Depreciation, depletion
and amortization 1,957,000 751,000
----------- ----------
10,563,000 8,119,000
----------- ----------
Income from operations 2,336,000 415,000
---------- ----------
OTHER INCOME (EXPENSE), net:
Gain on sale of assets 2,425,000 -
Interest income and other 109,000 302,000
Interest expense and other ( 482,000) ( 201,000)
---------- ---------
2,052,000 101,000
---------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES
AND EXTRAORDINARY ITEM 4,388,000 516,000
PROVISION FOR INCOME TAXES - -
---------- ---------
INCOME BEFORE
EXTRAORDINARY ITEM 4,388,000 516,000
EXTRAORDINARY ITEM:
Gain on extinguishment
- 2,182,000
---------- ----------
NET INCOME $4,388,000 $2,698,000
========== ==========
NET INCOME PER SHARE:
Primary-
Income before
extraordinary item $ 0.16 $ 0.02
Extraordinary item - 0.08
---------- ----------
$ 0.16 $ 0.10
========== ==========
Fully diluted-
Income before
extraordinary item $ 0.16 $ 0.02
Extraordinary - 0.08
---------- ----------
$ 0.16 $ 0.10
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements
ALTA GOLD CO.
--------------
CONDENSED STATEMENTS OF OPERATIONS (continued)
----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
<S> <C> <C>
1995 1994
---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING:
Primary 28,299,097 27,494,926
========== ==========
Fully diluted 28,299,097 28,203,984
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
ALTA GOLD CO.
--------------
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------
(Unaudited)
<S> <C> <C>
Nine Months Ended September 30,
1995 1994
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $4,388,000 $2,698,000
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Gain on extinguishment of debt - ( 2,182,000)
Depreciation, depletion
and amortization 1,957,000 751,000
Net gain on sale of assets ( 2,425,000) -
Stock compensation 47,000 50,000
Interest expense on term loan payable
to Mase Westpac, Ltd. - 194,000
Decrease (increase) in -
Short-term investment 262,000 963,000
Receivables 325,000 43,000
Inventories ( 1,423,000) 996,000
Prepaid expenses and other 11,000 223,000
Other ( 138,000) ( 99,000)
Increase (decrease) in -
Accounts payable ( 1,033,000) ( 148,000)
Accrued liabilities ( 377,000) 325,000
---------- ----------
Net cash provided by (used in)
operating activities 1,594,000 3,814,000
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings
and equipment ( 2,108,000) ( 7,616,000)
Additions to deferred mine
development costs ( 2,018,000) ( 2,027,000)
Proceeds from sale of property,
buildings and equipment 2,425,000 -
---------- ----------
Net cash used in investing
activities ( 1,701,000) ( 9,643,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt settlement - 4,214,000
Proceeds from issuance of debt 5,317,000 -
Payments on debt (5,526,000) ( 118,000)
Increase in restricted
short-term investments - ( 184,000)
Other 15,000 -
---------- ----------
Net cash provided by
financing activities ( 194,000) 3,912,000
---------- ----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS ( 301,000) (1,917,000)
CASH AND CASH EQUIVALENTS,
beginning of period 471,000 3,432,000
--------- ----------
CASH AND CASH EQUIVALENTS,
end of period $ 170,000 $1,515,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements
ALTA GOLD CO.
------------
CONDENSED STATEMENTS OF CASH FLOWS (continued)
----------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
<S> <C> <C>
Nine Months Ended September 30,
1995 1994
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest,
net of amount capitalized $269,000 $ 7,000
Cash paid during the period for income taxes $ 65,000 $18,000
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
During the nine months ended September 30, 1995, the Company retired
$500,000 in outstanding debt through the issuance of common stock valued at
$500,000.
During the nine months ended September 30, 1994, the Company acquired
mining interests totaling $9,615,000 through the issuance of debt in the
amount of $7,947,000 and common stock valued at $1,668,000.
During the nine months ended September 30, 1994, the Company transferred
gold in process totaling $1,230,000 from deferred mine development costs to
gold inventories.
The accompanying notes are an integral part of these condensed financial
statements.
ALTA GOLD CO.
-------------
NOTES TO CONDENSED FINANCIAL STATEMENTS
--------------------------------------
(Unaudited)
NOTE 1. INTERIM FINANCIAL STATEMENT POLICIES AND DISCLOSURES
- -------------------------------------------------------------
The unaudited, condensed financial statements of Alta Gold Co.
(the "Company") included herein have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally required in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading.
These interim, unaudited, condensed financial statements should
be read in conjunction with the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, as filed with the Securities
and Exchange Commission. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three month and nine month periods ended September
30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995.
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
- ----------------------------------------------------
For purposes of the balance sheets and statements of cash flows,
the Company considers all investments with an original maturity of
three months or less to be cash equivalents.
RECLAMATION COSTS
- -----------------
Minimum standards for mine reclamation have been established by
various governmental agencies which affect certain operations of the
Company. The Company's general policy is to accrue estimated
reclamation costs during each property's productive life based on
estimated reserves using the units of production method. As of
September 30, 1995 and December 31, 1994, the Company had reserved
approximately $1,871,000 and $2,088,000, respectively, for
reclamation activities of which approximately $100,000 is expected
to be expended during the last three months of 1995.
NET INCOME PER SHARE
- --------------------
Net income per share is computed based on the weighted-average
number of shares and common stock equivalents, if dilutive, actually
outstanding during the period. For primary weighted-average
purposes, common stock equivalents are the shares that would be
outstanding assuming exercise of dilutive stock warrants and stock
options having exercise prices less than the average market price of
the common stock using the treasury stock method.
On a fully diluted basis, the common stock equivalents are
adjusted to reflect exercise prices less than the period end market
price (when greater than the average market price).
NOTE 2. INVENTORIES
- ---------------------
<TABLE>
<CAPTION>
Inventories consist of the following:
<S> <C> <C>
September 30, December 31,
1995 1994
----------- -----------
Precious metals:
Refined product $ 31,000 $ 7,000
In process 5,002,000 3,657,000
Consumable supplies 196,000 142,000
---------- ----------
$5,229,000 $3,806,000
========== ==========
</TABLE>
Inventories of in-process metals and consumable supplies are
valued at the lower of cost (using the first-in, first-out method)
or market. Inventories of refined product are valued at market.
NOTE 3. EXTINGUISHMENT OF DEBT
- --------------------------------
On May 23, 1994 the Company entered into a Settlement Agreement
and Mutual Release ("Settlement Agreement") with Mase Westpac, Ltd.,
one of the Company's former lenders, and related parties ("Mase") in
regard to certain litigation which had been ongoing since the first
quarter of 1991.
Under the terms of the Settlement Agreement, in addition to the
release of all litigation, the Company released the entire balance
held in an investment escrow fund having an estimated value of
approximately $16,200,000 in exchange for a cash payment of
$4,500,000 plus Mase's release of claims of approximately
$14,200,000 in amounts owed under a revolving credit agreement.
In the second quarter of 1994, the Company recorded $2,182,000
as Extraordinary Gain - Extinguishment of Debt, which amount
recognizes the aforementioned settlement net of $286,000 in
associated litigation expense incurred by the Company in 1994.
NOTE 4 - LONG-TERM DEBT
- -------------------------
<TABLE>
<CAPTION>
Long-term debt is summarized as follows:
<S> <C> <C>
September 30, December 31,
1995 1994
-------------------------
Note payable due February 1995; interest at 10.5%;
secured by equipment $ - $ 500,000
Note payable due February 1995; interest at 10%;
unsecured - 500,000
Note payable due April 1995; non-interest bearing;
secured by Kinsley - 1,500,000
Note payable due July 1995; interest at prime plus
2%; secured by Olinghouse - 2,250,000
Notes payable, due in three equal installments in
October, November and December 1995; interest
at prime plus 1.5%; secured by Kinsley,
Easy Jr. and Olinghouse 1,688,000 -
Note payable due October 1995; interest at prime
plus 2%; secured by equipment 1,000,000 -
Note payable, due February 1996; interest at 12%;
secured by buildings and equipment 625,000 -
Notes payable due in installments of $28,000 per
month through June 1998; interest imputed at
16.1%; secured by equipment 728,000 -
Subordinated debenture due June 1996; interest
at 6%; convertible at the option of the debt
holder through maturity into common stock
at a conversion price of $4.00 per share 1,500,000 1,500,000
Subordinated debenture due June 1998; interest
at 6%; convertible at the option of the debt
holder through maturity into common stock
at a conversion price of $4.00 per share 1,500,000 1,500,000
Subordinated zero coupon debenture with a redemption
price of $4,000,000 due June 2008; discounted
at 9% compounded per annum 1,339,000 1,256,000
---------- ----------
8,380,000 9,006,000
Less - current portion (5,048,000) (4,750,000)
--------- ---------
Total long-term debt $3,332,000 $4,256,000
========== ==========
</TABLE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
COMPARISON OF THREE-MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND
SEPTEMBER 30, 1994.
In the third quarter of 1995, the Company had $6,607,000 in
revenue from the sale of 16,780 ounces of gold at an average price
of $394/oz, as compared to $3,220,000 in revenue in the third
quarter of 1994 from the sale of 8,100 ounces of gold at an average
price of $398/oz. In the third quarter of 1995, the Company
produced 15,201 ounces of gold, 12,411 ounces from Kinsley at an
average cash cost of $168/oz and 2,790 ounces from Easy Jr. at an
average cash cost of $285/oz. In the third quarter of 1994, the
Company produced 7,989 ounces of gold, all of it from Easy Jr. at an
average cash cost of $222/oz.
Mining began at Kinsley in the fourth quarter of 1994 and gold
production began in late January 1995. Mining at Easy Jr. was
completed in the third quarter of 1994; however, gold production is
expected to continue through early 1996 as the mined ore is
processed. The increase in revenue between comparable quarters is
due to having two mines in production in 1995 as compared to only
one in 1994 plus the sale of gold bullion held in inventory at the
end of the second quarter of 1995. The increase in direct mining,
production and holding costs from $2,012,000 to $3,730,000 between
comparable periods is directly related to the increase in
production.
The decrease in general and administrative expenses from $335,000
in 1994 to $277,000 in 1995 is due to several factors, including a
reduction in administrative personnel.
The decrease in exploration expenses from $72,000 in 1994 to
$11,000 in 1995 is due to the natural progression from exploration
to development of Olinghouse, Copper Flat and Griffon.
The increase in depreciation, depletion and amortization from
$239,000 in 1994 to $1,010,000 in 1995 is due to the depreciation,
depletion and amortization of various costs associated with Kinsley,
which began producing gold in 1995.
Interest expense and other increased from $1,000 in 1994 to
$209,000 in 1995 as the result of financing costs incurred in 1995
associated with new borrowings.
No provision for income taxes was required in either 1994 or 1995
because of the utilization of net operating loss carryforwards. As
of September 30, 1995, the Company estimates that it has
approximately $16,500,000 in remaining net operating loss
carryforwards. These net operating loss carryforwards are scheduled
to expire during the period 2000 to 2009.
COMPARISON OF NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND
SEPTEMBER 30, 1994.
During the first nine months of 1995, the Company had $12,899,000
in revenue from the sale of 32,780 ounces of gold at an average
price of $393/oz, as compared to $8,534,000 in revenue during the
first nine months of 1994 from the sale of 21,800 ounces of gold at
an average price of $391/oz. During the first nine months of 1995,
the Company produced 32,844 ounces of gold, 22,818 ounces from
Kinsley at an average cash cost of $186/oz and 10,026 ounces from
Easy Jr. at an average cash cost of $277/oz. During the first nine
months of 1994, the Company produced 18,067 ounces of gold, all of
it from Easy Jr. at an average cash cost of $220/oz.
Mining began at Kinsley in the fourth quarter of 1994 and gold
production began in late January 1995. Mining at Easy Jr. was
completed in the third quarter of 1994; however, gold production is
expected to continue through early 1996 as the mined ore is
processed. The increase in revenue between comparable periods is
due to having two mines in production in 1995 as compared to only
one in 1994, as partially offset by the sale of 3,459 ounces of gold
in 1994 which had been held in inventory as of year-end 1993. The
increase in direct mining, production and holding costs from
$6,075,000 to $7,603,000 between comparable periods is directly
related to the increase in production.
The decrease in general and administrative expenses from
$1,059,000 in 1994 to $975,000 in 1995 is due to several factors,
including a reduction in administrative personnel.
The decrease in exploration expenses from $234,000 in 1994 to
$28,000 in 1995 is due to the natural progression from exploration
to development of Olinghouse, Copper Flat and Griffon.
The increase in depreciation, depletion and amortization from
$751,000 in 1994 to $1,957,000 in 1995 is due to depreciation,
depletion and amortization of various costs associated with Kinsley,
which began producing gold in 1995.
In the first quarter of 1995, the Company sold its remaining
interest in the Robinson Copper Property for a net gain of
$2,425,000; there were no similar transactions in 1994. Interest
income and other decreased from $302,000 in 1994 to $109,000 in 1995
as the result of the settlement of litigation with a former creditor
in 1994 (please refer to "Note 3. Extinguishment of Debt" for
further information). The increase in interest expense and other
from $201,000 in 1994 to $482,000 in 1995 is due to additional
financing costs incurred in 1995 associated with new borrowings, as
partially offset by the effect of the settlement of litigation with
a former creditor in 1994.
No provision for income taxes was required in either 1994 or 1995
because of the utilization of net operating loss carryforwards. As
of September 30, 1995, the Company estimates that it has
approximately $16,500,000 in remaining net operating loss
carryforwards. These net operating loss carryforwards are scheduled
to expire during the period 2000 to 2009.
In the second quarter of 1994, the Company settled all
outstanding litigation with a former creditor. Under the terms of
the settlement, the Company realized $2,182,000 as an extraordinary
item - gain on extinguishment of debt (please refer to "Note 3.
Extinguishment of Debt" for further information).
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of September 30, 1995, the Company had a working capital
deficit of $755,000, a $1,636,000 improvement from the December 31,
1994 working capital deficit of $2,391,000. This improvement was
expected and is principally due to internal funds generated since
the initiation of gold production at Kinsley in January 1995.
As gold production from Kinsley and Easy Jr. continues in the
last quarter of 1995, the Company anticipates that it will have
positive working capital by year-end 1995. In order to provide
flexibility during the next twelve months, the Company obtained a
$1,500,000 line of credit in September 1995.
The $1,500,000 line of credit bears an interest rate of prime
plus 2% on any outstanding balance. Under the terms of the line of
credit, the Company may draw down up to $1,500,000 through December
31, 1995, but may only have an outstanding balance totalling
$1,125,000 as of December 31, 1995. The available line for each
quarter thereafter and the allowable end-of-quarter outstanding
balance is progressively reduced by $375,000 per quarter, until the
line of credit expires on September 30, 1996. As of September 30,
1995, there were no drawdowns on the line of credit.
With funds expected to be generated from gold production at
Kinsley and Easy Jr., funds to be generated from gold-in-process
inventories and funds available under the $1,500,000 line of credit,
the Company believes that it has adequate liquidity for its
operating and capital needs during the next twelve months.
INVESTING AND FINANCING ACTIVITIES
- ----------------------------------
During the first nine months of 1995, the Company expended
$2,108,000 for claims, facilities and equipment at Kinsley and
Olinghouse, $2,018,000 on the development of Olinghouse, Copper Flat
and Griffon and $5,526,000 for the retirement of debt. During the
same period, the Company received $2,425,000 from the sale of its
remaining interest in the Robinson Copper Property, $4,500,000 in
short-term financing and $817,000 in three-year equipment loans.
OUTLOOK
- -------
During the remainder of 1995, the Company has budgeted $1,200,000
for mine development, $100,000 for reclamation and $2,743,000 for
retirement of debt. These expenditures are expected to be funded
from revenues generated from gold-in-process inventories and gold
produced at Kinsley and Easy Jr. and from the $1,500,000 line of
credit. The budgeted cash expenditures are based upon future events
which cannot be absolutely predicted and which may be beyond the
control of the Company, nevertheless, the Company expects to meet
its obligations.
As of Sepember 30, 1995, the Company had sold forward 6,000
ounces of gold at an average price of $403 per ounce.
PART II OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.61 Employment Agreement between Alta Gold Co. and Robert N. Pratt
dated June 9, 1995.
10.62 Employment Agreement between Alta Gold Co. and John A. Bielun
dated June 9, 1995.
10.63 Promissory Note with U.S. Bank of Nevada dated September 18,
1995.
(b) No reports were filed on Form 8-K during the three-month period ended
September 30, 1995.
SIGNATURE
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ALTA GOLD CO.
-------------
(Registrant)
November 3, 1995 BY: /s/ John A. Bielun
- ---------------- -------------------------
(Date) John A. Bielun
Chief Financial Officer and
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 170
<SECURITIES> 0
<RECEIVABLES> 103
<ALLOWANCES> 0
<INVENTORY> 5,229
<CURRENT-ASSETS> 5,928
<PP&E> 33,513
<DEPRECIATION> 6,895
<TOTAL-ASSETS> 41,432
<CURRENT-LIABILITIES> 6,683
<BONDS> 3,332
<COMMON> 29
0
0
<OTHER-SE> 28,859
<TOTAL-LIABILITY-AND-EQUITY> 41,432
<SALES> 12,899
<TOTAL-REVENUES> 12,899
<CGS> 9,560
<TOTAL-COSTS> 9,560
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is
entered into as of the 9th day of June, 1995, by and
between Alta Gold Co. a Nevada corporation
("Employer"), and Robert N. Pratt ("Executive").
For and in consideration of the mutual covenants
contained herein and of the mutual benefits to be
derived hereunder, the parties agree as follows:
1. EMPLOYMENT. Employer hereby employs
Executive to perform those duties generally
described in this Agreement, and Executive hereby
accepts and agrees to such employment on the terms
and conditions hereinafter set forth.
2. TERM. The term of this Agreement shall
commence on October 16, 1995, and end on October 15,
1998.
3. DUTIES. During the term of this Agreement,
Executive shall be employed by Employer and shall
occupy the office of President, Chairman and Chief
Executive Officer. Executive agrees to serve in
such offices or positions with Employer or any
subsidiary of Employer. Executive agrees to
continue to serve as a member of the Board of
Directors of Employer, and to serve as a director of
any subsidiary of Employer, for no additional
compensation subject to removal by the shareholders
of Employer.
Executive shall devote substantially all of his
working time and efforts to the business of Employer
and its subsidiaries and shall not during the term
of this Agreement be engaged in any other
substantial business activities which will
significantly interfere or conflict with the
reasonable performance of his duties hereunder.
However, this shall not be construed as preventing
Executive from developing mining properties located
in eastern Nevada in which he presently has an
interest. Should such development occur, it would
be accomplished in such a manner as not to interfere
with the duties detailed herein.
4. COMPENSATION. For all services rendered by
Executive, Employer shall pay to Executive a salary
of $220,500 per year while serving as President,
Chairman and Chief Executive Officer. All salary
payments shall be subject to withholding and other
applicable taxes. To compensate for cost of living
increases, the rate of salary shall be increased
annually effective January 1, 1996, and on each
anniversary thereafter, as the Board of Directors,
on the recommendation of its compensation committee
may determine or, in the absense of such
determination, in the amount of 7% over the
applicable salary rate during the preceding 12-month
period. In the event Executive resigns from his
position with Employer and not otherwise under the
circumstances set forth at paragraphs 15 or 16
herein, compensation payments to Executive shall be
limited to compensation for services rendered by
Executive.
5. EMPLOYMENT SIGNING BONUS. Upon the
implementation of this Employment Agreement the
Employer shall provide the option to Executive at
the end of each year of Employment to purchase
125,000 shares of common stock of Employer at a
market price of $.75 (seventy-five cents) for a
period of three years from date of option. A total
option of 375,000 shares. All options, including
the 500,000 share option granted on October 15,
1991, are exercisable for a period of ten years from
the date of grant.
Executive shall have the rights of a stockholder
with respect to the options which have not been
issued and/or exercised, including any cash
dividends declared thereon; any stock dividend,
stock split or other change in the common stock of
Employer; or any merger or sale of all or
substantially all of the assets or other acquisition
of Employer, and any and all new, substituted, or
additional securities to which Executive is
entitled.
Should Executive die during the term of this
contract, the remainder of the 375,000 shares from
this contract, together with any unexercised portion
of the 500,000 share option granted on October 15,
1991, shall be awarded to his estate and exercisable
for a period of ten years from the date of grant.
6. INCENTIVE COMPENSATION. Employer shall
provide Executive with incentive compensation in the
form of cash and stock bonuses not less often than
once each year during the term of this Agreement.
The amount of such bonuses shall be determined by
the Board of Directors of Employer or a compensation
committee thereof taking into consideration the
relative contribution by Executive to the business
of Employer, the economy in general, and such other
factors as the Board of Directors or compensation
committee deems relevant.
7. EMPLOYMENT BENEFITS. Employer shall
provide health and medical insurance for Executive
in a form and program to be chosen by Employer for
its full-time employees. Executive shall be
entitled to participate in any retirement, pension,
profit sharing, or other plan approved by the Board
of Directors.
8. WORKING FACILITIES. Employer shall provide
to Executive at Employer's principal executive
offices suitable executive offices and facilities
appropriate for his position and suitable for the
performance of his responsibilities.
9. VACATIONS. Executive shall be entitled
each year to paid vacation of at least 5 weeks.
Vacations shall be taken by Executive at a time and
with starting and ending dates mutually convenient
to Employer and Executive. Vacations or portions of
vacations not used in one employment year shall
carry over to the succeeding employment year, but
shall thereafter expire if not used within such
succeeding year.
10. EXPENSES. Employer will reimburse
Executive for expenses incurred in connection with
Employer's business, including expenses for travel,
lodging, meals, beverages, entertainment, and other
items upon Executive's periodic presentation of an
account of such expenses as required by Employer's
policies and procedures.
11. COVENANT NOT TO DISCLOSE PROPRIETARY
INFORMATION. For a period of three years after
termination of Executive's employment, Executive
agrees that he will not directly or indirectly use,
employ, publish, or otherwise disclose any
procedures, policies, practices, trade secrets,
computer software, formulas, client opportunities,
or other information of a proprietary nature in the
establishment, opening, or operation of a business,
or in connection with engaging in business with,
serving as an officer, director, employee or agent
of, or owning any equity interest (other than
ownership of ten percent or less of the outstanding
stock of any corporation listed on the New York or
American Stock Exchange or included in the National
Association of Security Dealers Automated Quotation
System) in any person, firm, corporation, or
business entity, that engages in mining activities
in the United States that are competitive with
Employer's mining activities. The parties intend
that this covenant not to disclose proprietary
information shall be construed as a series of
separate covenants. If in any judicial proceeding a
court shall refuse to enforce any of the separate
covenants deemed included in this paragraph, then
the unenforceable covenants shall be deemed
eliminated from these provisions for the purpose of
those proceedings to the extent necessary to permit
the remaining separate covenants to be enforced.
This covenant not to disclose proprietary
information shall not be construed as restricting
the Executive's right to own shares in any company
or limited partnership or business entity, provided
they do not perform services, or participate in any
way in the management of, a business entity which
competes in any manner outlined above.
This covenant shall survive the termination of
this Agreement.
12. NONDISCLOSURE OF INFORMATION. In further
consideration of employment and the continuation of
employment by Employer, Executive will not, directly
or indirectly, during or after the term of
employment disclose to any person not authorized by
Employer to receive or use such information, except
for the sole benefit of Employer, any of Employer's
confidential or proprietary data, information, or
techniques, or give to any person not authorized by
Employer to receive it any information that is not
generally known to anyone other than Employer or
that is designated by Employer as "Limited",
"Private", or "Confidential", or similarly
designated.
13. DISABILITY. If Executive is unable to
perform his services by reason of illness or
incapacity for a period of more than 9 consecutive
months, the compensation thereafter payable to him
during the second consecutive 9-month period shall
be one-half of the compensation provided for in
paragraph 4 hereof, and during the third consecutive
9-month period, one-fourth of the salary provided
for in paragraph 4; PROVIDED, however, that no such
compensation shall be payable after the termination
of this Agreement. During such 27-consecutive-month
period, Executive shall be entitled to receive
incentive compensation in the same proportion as
Executive's incentive compensation to his annual
salary set forth in paragraph 4 paid to Executive,
if any, for the fiscal year last preceding the date
such illness of incapacity commenced.
Notwithstanding the foregoing, if such illness or
incapacity does not cease to exist within such 27-
consecutive-month period, Executive shall not be
entitled to receive any further compensation nor any
payments set forth in paragraph 15 herein from
Employer and Employer may thereupon terminate this
Agreement.
14. TERMINATION FOR CAUSE. Except as set forth
in the foregoing paragraph, Employer may not
terminate this Agreement during its term without
cause ("Cause"). Employer, however, may terminate
this Agreement for Cause by showing that Executive
has materially breached its terms; that Executive,
in the determination of the Board of Directors has
been grossly negligent in the performance of his
duties; that he has substantially failed to meet
written standards established by Employer for the
performance of his duties; or that he has engaged in
material willful or gross misconduct in the
performance of his duties hereunder. If Employer
terminates this Agreement for Cause, all of
Employer's obligations hereunder shall terminate.
15. PAYMENTS FOR TERMINATION WITHOUT CAUSE. In
the event that Employer terminates this Agreement
without Cause and not as the direct result of a
change in control, as that phrase is defined in
paragraph 18 hereof, Executive shall be compensated
by Employer in a single lump sum payment, payable
within 30 days after termination of employment, of
the following amounts:
(a) The amount of his salary as provided
in paragraph 4; and
(b)Incentive compensation in the same
proportion as Executive's incentive compensation
to his annual salary set forth in paragraph 4,
paid to Executive, if any, for the fiscal year
last preceding the year during which his
employment terminates, but prorated to reflect
the number of full months of his employment
during the year of termination.
(c) The remaining amount of his Signing
Bonus. In addition, Executive's coverage under
the Employer's insured employee benefit plan, as
provided in paragraph 7, shall continue through
the term of this Agreement.
16. TERMINATION PAYMENT FOR CHANGE IN CONTROL.
If Executive resigns or is discharged by Employer
(or is deemed to be discharged pursuant to paragraph
18 below) as the direct and sole result of a change
in control, or in reasonable anticipation of a
change in control, then, in lieu of any payment
otherwise paid or payable to Executive under
paragraph 15 hereof, Employer shall pay to Executive
an amount equal to 2.9 times the average of the sum
of amounts payable to Executive for salary, bonus,
and profit sharing for the five fiscal years
immediately preceding the date of the change in
control or for such fewer fiscal years if Executive
has been employed by Employer for less than five
fiscal years, plus the remaining amount of the
Signing Bonus. Any amounts paid to Executive
pursuant to this paragraph 16, shall be subject to
any applicable federal, state, and local tax
withholdings and shall be payable in a lump sum to
Executive as soon as practicable after Executive's
resignation or discharge, but subject to the terms
of paragraph 17 herein.
17. TAX LIMITATION. If Employer reasonably
determines that the payment provided for in
paragraph 16 hereof (the "Termination Payment") will
likely result in a loss of a deduction to Employer
as provided under Section 280G of the Internal
Revenue Code of 1986, or any successor provision
thereto, and the imposition of the excise tax
payable to Executive as provided under Section 4999
to the Internal Revenue Code of 1986, or any
successor provision thereto, such Termination
Payment shall be reduced by the least amount
required to avoid such loss of deduction and
imposition of excise tax (collectively referred to
hereinafter as the "Tax Penalties"). Employer shall
make no Termination Payment to Executive prior to
determining whether the Tax Penalties will apply to
the Termination Payment. Employer shall make such
determination within a reasonable time after
Executive's resignation or discharge, but not to
exceed 30 days thereafter.
18. DEEMED TERMINATION OF EMPLOYMENT. For
purposes of paragraph 16 hereof, Executive shall be
deemed to have been discharged by Employer if
Executive voluntarily resigns before the end of the
term of this Agreement, but after a change in
control has occurred, provided the Executive could
not be discharged by Employer for Cause, has given
Employer at least 30 days prior written notice of
such resignation, and such resignation occurs after
any of the following:
(a) Executive is removed or released from
any of his titles, positions, or offices in
effect immediately prior to the occurrence of a
change in control, or Executive's duties and
responsibilities in such titles, positions, or
offices are materially changed;
(b) Executive's base salary in effect
immediately before the change in control is
reduced;
(c) Executive is removed from
participation in any of Employer's bonus or
profit sharing programs, or any such bonus or
profit sharing programs in which Executive was
or was entitled to participate in immediately
prior to the change in control are discontinued;
(d) Executive's office is based more than
50 miles from the location of the principal
office at which Executive was based immediately
prior to the occurrence of the change in
control; or
(e) Employer deprives Executive of or
otherwise reduces any material fringe benefit,
including perquisites, provided to Executive by
Employer immediately prior to the occurrence of
a change in control.
(f) Executive makes a determination in
good faith that as a result of the change in
control and a change in circumstances thereafter
and since the date of this Agreement
significantly affecting his position, he is
unable to carry out the authorities, powers,
functions or duties attached to his position and
the situation is not remedied within 30 days
after receipt by Employer of written notice from
the Executive of such determination.
19. DEFINITION OF CHANGE IN CONTROL. For
purposes of this Agreement, a "change in control"
will be deemed to have occurred on the first to
occur of the following events:
(a) As a result of a cash tender offer,
stock exchange offer or other takeover device,
any person, as that term is used in Section
13(d) and 14(b)(2) of the Securities Exchange
Act of 1934, is or becomes a beneficial owner,
directly or indirectly, of stock of Employer
representing thirty percent (30%) or more of the
total voting power of Employer's then
outstanding securities;
(b) Any material realignment of the Board
of Directors of Employer or change in officers
of Employer resulting from a concerted
shareholder action, including without limitation
a proxy flight, voting trusts or pooling
arrangements;
(c) Any sale by Employer of thirty percent
(30%) or more of its assets to a single
purchaser or to a group of associated
purchasers; or
(d) Any merger, consolidation, or other
reorganization of Employer with an entity, other
than its affiliates, whereby Employer is not the
surviving entity or the shareholders of Employer
otherwise fail to retain substantially the same
direct or indirect ownership in Employer or its
affiliates immediately after any such merger,
consolidation, or reorganization.
20. DEATH DURING EMPLOYMENT. If Executive dies
during the term of this Agreement, Employer shall
pay to the estate, trustee, or other legally
constituted third party designated by Executive in
six equal monthly installments commencing on the
first day of the month immediately following the
month in which Executive dies, an amount equal to
one year's salary provided for in paragraph 4 of
this Agreement, and payment of incentive
compensation in the same proportion as Executive's
incentive compensation to his annual salary set
forth in paragraph 4 paid to Executive for the
fiscal year last preceding the year in which
Executive dies, but prorated for the number of full
months of his employment during the year of his
death.
21. STOCK REGISTRATION PROVISIONS. During the
term of this Agreement, Executive shall have the
following rights and obligations with respect to
registration under the Securities Act of 1933 and
applicable blue sky laws of shares of common stock
("Shares") of Employer owned of record by Executive:
(a) COMPANY REGISTRATION. Employer shall
notify Executive, at least thirty (30) days
prior to the filing of any Registration
Statement on forms S-1, S-2, S-3, S-8 or any
successor forms under the Securities Act of 1933
covering any class of stock of the Employer and
will upon the written request of Executive
delivered at least fifteen (15) days prior to
such filing, include in any such Registration
Statement such information as may be required to
register such number of Executive's Shares as
Executive may request. Executive and Employer
shall each include customary representations,
warranties, indemnifications, and contribution
provisions in any underwriting agreement entered
into in connection with such registration.
If the managing underwriters for such
registration advise Employer in writing that in
their opinion the total amount of securities to
be included in such registration statement
exceeds the amount which should reasonably be
included in that offering to achieve the
Employer's financing goals, Employer may limit
the amount of stock to be included as follows:
(i) first, all securities Employer proposes to
sell may be included, (ii) second, the Shares of
common stock requested to be included in such
registration by all executives and employees
pursuant to registration rights may be reduced
and adjusted among participating executives and
employees on the basis of the amount of shares
owned of record by each employee, and (iii)
third, if applicable, other stocks requested to
be included in such registration may be
similarly and ratably adjusted with all
executives' and employees' stock pro rata
according to the amount of stock owned of record
by any proposed seller. All incremental
expenses of such registration will be allocated
pro rata according to the total number of shares
included therein. There shall be no limit on
the number of registrations so requested, but
each such request shall cover an amount of
Shares having a proposed offering price of not
less than one hundred thousand dollars
($100,000.00).
(b) REGISTRATION OF REQUEST. In addition,
Executive's Shares may be registered on not more
than two (2) separate occasions, in such amounts
as may be requested, in the following
circumstances: (i) within one year following
the death or the commencement of disability of
Executive or (ii) at any time in a reasonable
amount and for a bona fide business purpose with
the approval of a majority of the independent,
outside members of the Board of Directors of
Employer. Within thirty (30) days after the
receipt of a request for such registration by
Executive's estate or personal representative
pursuant to phrase (i) of the preceding sentence
or the approval by the independent outside
directors pursuant to phrase (ii) of the
preceding sentence, Employer will commence the
process of preparing for filing a Registration
Statement covering the Shares and use its best
efforts to cause such Registration Statement to
become effective. Employer and Executive shall
use commercially reasonable efforts to obtain an
underwriter to firmly underwrite any such
offering; in the event that no underwriter
reasonably acceptable to Employer is willing to
make a firm commitment, Employer shall have no
obligation to file the Registration Statement.
Employer may delay for up to ninety (90) days
the filing of such a Registration Statement if
the Board of Directors of Employer in good faith
and for a bona fide corporate purpose determines
that a filing at a requested time would be
adverse to Employer's interests. Employer shall
not be obligated to file any such Registration
Statement at any time during which it is
impossible or impracticable to include the
required financial statements. Employer and
Executive shall provide all information required
for inclusion in such Registration Statement and
any underwriting agreement entered into in
connection therewith shall contain the customary
representations, warranties, indemnifications,
and contribution provisions. All expenses of
such registration shall be allocated pro rata
according to the total number of shares included
therein.
(c) GENERAL. In connection with each of
the foregoing registrations and subject to the
provisions concerning expenses, Employer shall
also (i) use its best efforts to qualify the
Shares for public sale under the blue sky laws
of such jurisdictions as Executive may
reasonably request, (ii) provide such number of
preliminary and final prospectuses as Executive
may reasonably request, and (iii) keep the final
prospectus in any such registration current for
a reasonable period of time. In connection with
the indemnification and contribution to be
provided by Executive to any underwriter or
Employer pursuant to this paragraph 21, the
aggregate liability of Executive shall not
exceed the aggregate net proceeds received by
Executive from the sale of the registered
Shares, and, in connection with contribution,
shall also take into consideration the relative
fault of each contributing person.
22. NONTRANSFERABILITY. Neither Executive, his
spouse, his designated contingent beneficiary, nor
their estates shall have any right to anticipate,
encumber, or dispose of any payment due under this
Agreement. Such payments and other rights are
expressly declared nonassignable and nontransferable
except as specifically provided herein.
23. INDEMNIFICATION. Employer shall indemnify
executive and hold him harmless from liability for
acts or decisions made by him while performing
services for Employer to the greatest extent
permitted by applicable law. Employer shall use its
best efforts to obtain coverage for Executive under
any insurance policy now in force or hereafter
obtained during the term of this Agreement insuring
officers and directors of Employer against such
liability.
24. ASSIGNMENT. This Agreement may not be
assigned by either party without the prior written
consent of the other party.
25. ENTIRE AGREEMENT. This Agreement is and
shall be considered to be the only agreement or
understanding between the parties hereto and
supersedes and is controlling over any and all other
prior existing agreements between the parties with
respect to the employment of Executive by Employer.
All negotiations, commitments, and understandings
acceptable to both parties have been incorporated
herein. No letter, telegram, or communication
passing between the parties hereto covering any
matter during this contract period, or any plans or
periods thereafter, shall be deemed a part of this
Agreement; nor shall it have the effect of modifying
or adding to this Agreement unless it is distinctly
stated in such letter, telegram, or communication
that it is to constitute a part of this Agreement
and is to be attached as a rider to this Agreement
and is signed by the parties to this Agreement.
26. ENFORCEMENT. Executive acknowledges that
any remedy at law for breach of paragraphs 11 and 12
would be inadequate, acknowledges that Employer
would be irreparably damaged by an actual or
threatened breach thereof, and agrees that Employer
shall be entitled to an injunction restraining
Executive from any actual or threatened breach of
paragraphs 11 and 12 as well as any further
appropriate equitable relief without any bond or
other security being required. In addition to the
foregoing, each of the parties hereto shall be
entitled to any remedies available in equity or by
statute with respect to the breach of the terms of
this Agreement by the other party.
27. GOVERNING LAW. This Agreement shall be
governed by and interpreted in accordance with the
laws of the state of Nevada.
28. SEVERABILITY. If and to the extent that
any court of competent jurisdiction holds any
provision or any part thereof of this Agreement to
be invalid or unenforceable, such holding shall in
no way affect the validity of the remainder of this
Agreement.
29. WAIVER. No failure by any party to insist
upon the strict performance of any covenant, duty,
agreement, or condition of this Agreement or to
exercise any right or remedy consequent upon a
breach hereof shall constitute a waiver of any such
breach or of any other covenant, agreement, term, or
condition.
30. LITIGATION EXPENSES. In the event that it
shall be necessary or desirable for the Executive to
retain legal counsel and/or incur other costs and
expenses in connection with the enforcement of any
and all of his rights under this Agreement, he shall
be entitled to recover from the Employer reasonable
attorney's fees, costs, and expenses incurred by him
in connection with the enforcement of said rights.
Payment shall be made to the Executive by the
Employer at the time these attorney's fees, costs,
and expenses are incurred by the Executive. If,
however, the Executive does not prevail in such
enforcement actions, he shall repay any such
payments to the Employer.
AGREED AND ENTERED INTO as of the date first
above written.
EMPLOYER: ALTA GOLD CO.
By:
_______________________________
Compensation Committee Chairman
EXECUTIVE:
_______________________________
Robert N. Pratt
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered
into as of the 9th day of June, 1995, by and between
Alta Gold Co. a Nevada corporation ("Employer"), and
John A. Bielun ("Executive").
For and in consideration of the mutual covenants
contained herein and of the mutual benefits to be
derived hereunder, the parties agree as follows:
1. Employment. Employer hereby employs
Executive to perform those duties generally described
in this Agreement, and Executive hereby accepts and
agrees to such employment on the terms and conditions
hereinafter set forth.
2. Term. The term of this Agreement shall
commence on October 19, 1995, and end on October 18,
1998.
3. Duties. During the term of this Agreement,
Executive shall be employed by Employer and shall
occupy the office of Senior Vice President and Chief
Financial Officer. Executive agrees to serve in such
offices or positions with Employer or any subsidiary of
Employer.
Executive shall devote substantially all of his
working time and efforts to the business of Employer
and its subsidiaries and shall not during the term of
this Agreement be engaged in any other substantial
business activities which will significantly interfere
or conflict with the reasonable performance of his
duties hereunder.
4. Compensation. For all services rendered by
Executive, Employer shall pay to Executive a salary of
$132,000 per year plus a $350 per month car allowance
while serving as Senior Vice President and Chief
Financial Officer. All salary payments shall be
subject to withholding and other applicable taxes. To
compensate for cost of living increases, the rate of
salary shall be increased annually effective January 1,
1996, and on each anniversary thereafter, as the Board
of Directors, on the recommendation of its compensation
committee may determine or, in the absense of such
determination, in the amount of 7% over the applicable
salary rate during the preceding 12-month period. In
the event Executive resigns from his position with
Employer and not otherwise under the circumstances set
forth at paragraphs 15 or 16 herein, compensation
payments to Executive shall be limited to compensation
for services rendered by Executive.
5. Employment Signing Bonus. Upon the
implementation of this Employment Agreement the
Employer shall provide the option to Executive at the
end of each year of Employment to purchase 40,000
shares of common stock of Employer at a market price of
$.75 (seventy-five cents) for a period of three years
from date of option. A total option of 120,000 shares.
All options, including the 80,000 share option granted
on October 19, 1992, are exercisable for a period of
ten years from the date of grant.
Executive shall have the rights of a stockholder
with respect to the options which have not been issued
and/or exercised, including any cash dividends declared
thereon; any stock dividend, stock split or other
change in the common stock of Employer; or any merger
or sale of all or substantially all of the assets or
other acquisition of Employer, and any and all new,
substituted, or additional securities to which
Executive is entitled.
Should Executive die during the term of this
contract, the remainder of the 120,000 shares from this
contract, together with any unexercised portion of the
80,000 share option granted on October 19, 1992, shall
be awarded to his estate and exercisable for a period
of ten years from the date of grant.
6. Incentive Compensation. Employer shall
provide Executive with incentive compensation in the
form of cash and stock bonuses not less often than once
each year during the term of this Agreement. The
amount of such bonuses shall be determined by the Board
of Directors of Employer or a compensation committee
thereof taking into consideration the relative
contribution by Executive to the business of Employer,
the economy in general, and such other factors as the
Board of Directors or compensation committee deems
relevant.
7. Employment Benefits. Employer shall provide
health and medical insurance for Executive in a form
and program to be chosen by Employer for its full-time
employees. Executive shall be entitled to participate
in any retirement, pension, profit sharing, or other
plan approved by the Board of Directors.
8. Working Facilities. Employer shall provide
to Executive at Employer's principal executive offices
suitable executive offices and facilities appropriate
for his position and suitable for the performance of
his responsibilities.
9. Vacations. Executive shall be entitled each
year to paid vacation of at least 5 weeks. Vacations
shall be taken by Executive at a time and with starting
and ending dates mutually convenient to Employer and
Executive. Vacations or portions of vacations not used
in one employment year shall carry over to the
succeeding employment year, but shall thereafter expire
if not used within such succeeding year.
10. Expenses. Employer will reimburse Executive
for expenses incurred in connection with Employer's
business, including expenses for travel, lodging,
meals, beverages, entertainment, and other items upon
Executive's periodic presentation of an account of such
expenses as required by Employer's policies and
procedures.
11. Covenant Not to Disclose Proprietary
Information. For a period of three years after
termination of Executive's employment, Executive agrees
that he will not directly or indirectly use, employ,
publish, or otherwise disclose any procedures,
policies, practices, trade secrets, computer software,
formulas, client opportunities, or other information of
a proprietary nature in the establishment, opening, or
operation of a business, or in connection with engaging
in business with, serving as an officer, director,
employee or agent of, or owning any equity interest
(other than ownership of ten percent or less of the
outstanding stock of any corporation listed on the New
York or American Stock Exchange or included in the
National Association of Security Dealers Automated
Quotation System) in any person, firm, corporation, or
business entity, that engages in mining activities in
the United States that are competitive with Employer's
mining activities. The parties intend that this
covenant not to disclose proprietary information shall
be construed as a series of separate covenants. If in
any judicial proceeding a court shall refuse to enforce
any of the separate covenants deemed included in this
paragraph, then the unenforceable covenants shall be
deemed eliminated from these provisions for the purpose
of those proceedings to the extent necessary to permit
the remaining separate covenants to be enforced.
This covenant not to disclose proprietary
information shall not be construed as restricting the
Executive's right to own shares in any company or
limited partnership or business entity, provided they
do not perform services, or participate in any way in
the management of, a business entity which competes in
any manner outlined above.
This covenant shall survive the termination of
this Agreement.
12. Nondisclosure of Information. In further
consideration of employment and the continuation of
employment by Employer, Executive will not, directly or
indirectly, during or after the term of employment
disclose to any person not authorized by Employer to
receive or use such information, except for the sole
benefit of Employer, any of Employer's confidential or
proprietary data, information, or techniques, or give
to any person not authorized by Employer to receive it
any information that is not generally known to anyone
other than Employer or that is designated by Employer
as "Limited", "Private", or "Confidential", or
similarly designated.
13. Disability. If Executive is unable to
perform his services by reason of illness or incapacity
for a period of more than 9 consecutive months, the
compensation thereafter payable to him during the
second consecutive 9-month period shall be one-half of
the compensation provided for in paragraph 4 hereof,
and during the third consecutive 9-month period, one-
fourth of the salary provided for in paragraph 4;
provided, however, that no such compensation shall be
payable after the termination of this Agreement.
During such 27-consecutive-month period, Executive
shall be entitled to receive incentive compensation in
the same proportion as Executive's incentive
compensation to his annual salary set forth in
paragraph 4 paid to Executive, if any, for the fiscal
year last preceding the date such illness of incapacity
commenced. Notwithstanding the foregoing, if such
illness or incapacity does not cease to exist within
such 27-consecutive-month period, Executive shall not
be entitled to receive any further compensation nor any
payments set forth in paragraph 15 herein from Employer
and Employer may thereupon terminate this Agreement.
14. Termination for Cause. Except as set forth
in the foregoing paragraph, Employer may not terminate
this Agreement during its term without cause ("Cause").
Employer, however, may terminate this Agreement for
Cause by showing that Executive has materially breached
its terms; that Executive, in the determination of the
Board of Directors has been grossly negligent in the
performance of his duties; that he has substantially
failed to meet written standards established by
Employer for the performance of his duties; or that he
has engaged in material willful or gross misconduct in
the performance of his duties hereunder. If Employer
terminates this Agreement for Cause, all of Employer's
obligations hereunder shall terminate.
15. Payments for Termination Without Cause. In
the event that Employer terminates this Agreement
without Cause and not as the direct result of a change
in control, as that phrase is defined in paragraph 18
hereof, Executive shall be compensated by Employer in a
single lump sum payment, payable within 30 days after
termination of employment, of the following amounts:
(a) The amount of his salary as provided in
paragraph 4; and
(b) Incentive compensation in the same
proportion as Executive's incentive
compensation to his annual salary set
forth in paragraph 4, paid to Executive,
if any, for the fiscal year last
preceding the year during which his
employment terminates, but prorated to
reflect the number of full months of his
employment during the year of
termination.
(c) The remaining amount of his Signing
Bonus. In addition, Executive's
coverage under the Employer's insured
employee benefit plan, as provided in
paragraph 7, shall continue through the
term of this Agreement.
16. Termination Payment for Change in Control.
If Executive resigns or is discharged by Employer (or
is deemed to be discharged pursuant to paragraph 18
below) as the direct and sole result of a change in
control, or in reasonable anticipation of a change in
control, then, in lieu of any payment otherwise paid or
payable to Executive under paragraph 15 hereof,
Employer shall pay to Executive an amount equal to 2.9
times the average of the sum of amounts payable to
Executive for salary, bonus, and profit sharing for the
five fiscal years immediately preceding the date of the
change in control or for such fewer fiscal years if
Executive has been employed by Employer for less than
five fiscal years, plus the remaining amount of the
Signing Bonus. Any amounts paid to Executive pursuant
to this paragraph 16, shall be subject to any
applicable federal, state, and local tax withholdings
and shall be payable in a lump sum to Executive as soon
as practicable after Executive's resignation or
discharge, but subject to the terms of paragraph 17
herein.
17. Tax Limitation. If Employer reasonably
determines that the payment provided for in paragraph
16 hereof (the "Termination Payment") will likely
result in a loss of a deduction to Employer as provided
under Section 280G of the Internal Revenue Code of
1986, or any successor provision thereto, and the
imposition of the excise tax payable to Executive as
provided under Section 4999 to the Internal Revenue
Code of 1986, or any successor provision thereto, such
Termination Payment shall be reduced by the least
amount required to avoid such loss of deduction and
imposition of excise tax (collectively referred to
hereinafter as the "Tax Penalties"). Employer shall
make no Termination Payment to Executive prior to
determining whether the Tax Penalties will apply to the
Termination Payment. Employer shall make such
determination within a reasonable time after
Executive's resignation or discharge, but not to exceed
30 days thereafter.
18. Deemed Termination of Employment. For
purposes of paragraph 16 hereof, Executive shall be
deemed to have been discharged by Employer if Executive
voluntarily resigns before the end of the term of this
Agreement, but after a change in control has occurred,
provided the Executive could not be discharged by
Employer for Cause, has given Employer at least 30 days
prior written notice of such resignation, and such
resignation occurs after any of the following:
(a) Executive is removed or released from
any of his titles, positions, or offices in effect
immediately prior to the occurrence of a change in
control, or Executive's duties and
responsibilities in such titles, positions, or
offices are materially changed;
(b) Executive's base salary in effect
immediately before the change in control is
reduced;
(c) Executive is removed from participation
in any of Employer's bonus or profit sharing
programs, or any such bonus or profit sharing
programs in which Executive was or was entitled to
participate in immediately prior to the change in
control are discontinued;
(d) Executive's office is based more than 50
miles from the location of the principal office at
which Executive was based immediately prior to the
occurrence of the change in control; or
(e) Employer deprives Executive of or
otherwise reduces any material fringe benefit,
including perquisites, provided to Executive by
Employer immediately prior to the occurrence of a
change in control.
(f) Executive makes a determination in good
faith that as a result of the change in control
and a change in circumstances thereafter and since
the date of this Agreement significantly affecting
his position, he is unable to carry out the
authorities, powers, functions or duties attached
to his position and the situation is not remedied
within 30 days after receipt by Employer of
written notice from the Executive of such
determination.
19. Definition of Change in Control. For
purposes of this Agreement, a "change in control" will
be deemed to have occurred on the first to occur of the
following events:
(a) As a result of a cash tender offer,
stock exchange offer or other takeover device, any
person, as that term is used in Section 13(d) and
14(b)(2) of the Securities Exchange Act of 1934,
is or becomes a beneficial owner, directly or
indirectly, of stock of Employer representing
thirty percent (30%) or more of the total voting
power of Employer's then outstanding securities;
(b) Any material realignment of the Board of
Directors of Employer or change in officers of
Employer resulting from a concerted shareholder
action, including without limitation a proxy
flight, voting trusts or pooling arrangements;
(c) Any sale by Employer of thirty percent
(30%) or more of its assets to a single purchaser
or to a group of associated purchasers; or
(d) Any merger, consolidation, or other
reorganization of Employer with an entity, other
than its affiliates, whereby Employer is not the
surviving entity or the shareholders of Employer
otherwise fail to retain substantially the same
direct or indirect ownership in Employer or its
affiliates immediately after any such merger,
consolidation, or reorganization.
20. Death During Employment. If Executive dies
during the term of this Agreement, Employer shall pay
to the estate, trustee, or other legally constituted
third party designated by Executive in six equal
monthly installments commencing on the first day of the
month immediately following the month in which
Executive dies, an amount equal to one year's salary
provided for in paragraph 4 of this Agreement, and
payment of incentive compensation in the same
proportion as Executive's incentive compensation to his
annual salary set forth in paragraph 4 paid to
Executive for the fiscal year last preceding the year
in which Executive dies, but prorated for the number of
full months of his employment during the year of his
death.
21. Stock Registration Provisions. During the
term of this Agreement, Executive shall have the
following rights and obligations with respect to
registration under the Securities Act of 1933 and
applicable blue sky laws of shares of common stock
("Shares") of Employer owned of record by Executive:
(a) Company Registration. Employer shall
notify Executive, at least thirty (30) days prior
to the filing of any Registration Statement on
forms S-1, S-2, S-3, S-8 or any successor forms
under the Securities Act of 1933 covering any
class of stock of the Employer and will upon the
written request of Executive delivered at least
fifteen (15) days prior to such filing, include in
any such Registration Statement such information
as may be required to register such number of
Executive's Shares as Executive may request.
Executive and Employer shall each include
customary representations, warranties,
indemnifications, and contribution provisions in
any underwriting agreement entered into in
connection with such registration.
If the managing underwriters for such registration
advise Employer in writing that in their opinion
the total amount of securities to be included in
such registration statement exceeds the amount
which should reasonably be included in that
offering to achieve the Employer's financing
goals, Employer may limit the amount of stock to
be included as follows: (i) first, all securities
Employer proposes to sell may be included, (ii)
second, the Shares of common stock requested to be
included in such registration by all executives
and employees pursuant to registration rights may
be reduced and adjusted among participating
executives and employees on the basis of the
amount of shares owned of record by each employee,
and (iii) third, if applicable, other stocks
requested to be included in such registration may
be similarly and ratably adjusted with all
executives' and employees' stock pro rata
according to the amount of stock owned of record
by any proposed seller. All incremental expenses
of such registration will be allocated pro rata
according to the total number of shares included
therein. There shall be no limit on the number of
registrations so requested, but each such request
shall cover an amount of Shares having a proposed
offering price of not less than one hundred
thousand dollars ($100,000.00).
(b) Registration of Request. In addition,
Executive's Shares may be registered on not more
than two (2) separate occasions, in such amounts
as may be requested, in the following
circumstances: (i) within one year following the
death or the commencement of disability of
Executive or (ii) at any time in a reasonable
amount and for a bona fide business purpose with
the approval of a majority of the independent,
outside members of the Board of Directors of
Employer. Within thirty (30) days after the
receipt of a request for such registration by
Executive's estate or personal representative
pursuant to phrase (i) of the preceding sentence
or the approval by the independent outside
directors pursuant to phrase (ii) of the preceding
sentence, Employer will commence the process of
preparing for filing a Registration Statement
covering the Shares and use its best efforts to
cause such Registration Statement to become
effective. Employer and Executive shall use
commercially reasonable efforts to obtain an
underwriter to firmly underwrite any such
offering; in the event that no underwriter
reasonably acceptable to Employer is willing to
make a firm commitment, Employer shall have no
obligation to file the Registration Statement.
Employer may delay for up to ninety (90) days the
filing of such a Registration Statement if the
Board of Directors of Employer in good faith and
for a bona fide corporate purpose determines that
a filing at a requested time would be adverse to
Employer's interests. Employer shall not be
obligated to file any such Registration Statement
at any time during which it is impossible or
impracticable to include the required financial
statements. Employer and Executive shall provide
all information required for inclusion in such
Registration Statement and any underwriting
agreement entered into in connection therewith
shall contain the customary representations,
warranties, indemnifications, and contribution
provisions. All expenses of such registration
shall be allocated pro rata according to the total
number of shares included therein.
(c) General. In connection with each of the
foregoing registrations and subject to the
provisions concerning expenses, Employer shall
also (i) use its best efforts to qualify the
Shares for public sale under the blue sky laws of
such jurisdictions as Executive may reasonably
request, (ii) provide such number of preliminary
and final prospectuses as Executive may reasonably
request, and (iii) keep the final prospectus in
any such registration current for a reasonable
period of time. In connection with the
indemnification and contribution to be provided by
Executive to any underwriter or Employer pursuant
to this paragraph 21, the aggregate liability of
Executive shall not exceed the aggregate net
proceeds received by Executive from the sale of
the registered Shares, and, in connection with
contribution, shall also take into consideration
the relative fault of each contributing person.
22. Nontransferability. Neither Executive, his
spouse, his designated contingent beneficiary, nor
their estates shall have any right to anticipate,
encumber, or dispose of any payment due under this
Agreement. Such payments and other rights are
expressly declared nonassignable and nontransferable
except as specifically provided herein.
23. Indemnification. Employer shall indemnify
executive and hold him harmless from liability for acts
or decisions made by him while performing services for
Employer to the greatest extent permitted by applicable
law. Employer shall use its best efforts to obtain
coverage for Executive under any insurance policy now
in force or hereafter obtained during the term of this
Agreement insuring officers and directors of Employer
against such liability.
24. Assignment. This Agreement may not be
assigned by either party without the prior written
consent of the other party.
25. Entire Agreement. This Agreement is and
shall be considered to be the only agreement or
understanding between the parties hereto and supersedes
and is controlling over any and all other prior
existing agreements between the parties with respect to
the employment of Executive by Employer. All
negotiations, commitments, and understandings
acceptable to both parties have been incorporated
herein. No letter, telegram, or communication passing
between the parties hereto covering any matter during
this contract period, or any plans or periods
thereafter, shall be deemed a part of this Agreement;
nor shall it have the effect of modifying or adding to
this Agreement unless it is distinctly stated in such
letter, telegram, or communication that it is to
constitute a part of this Agreement and is to be
attached as a rider to this Agreement and is signed by
the parties to this Agreement.
26. Enforcement. Executive acknowledges that any
remedy at law for breach of paragraphs 11 and 12 would
be inadequate, acknowledges that Employer would be
irreparably damaged by an actual or threatened breach
thereof, and agrees that Employer shall be entitled to
an injunction restraining Executive from any actual or
threatened breach of paragraphs 11 and 12 as well as
any further appropriate equitable relief without any
bond or other security being required. In addition to
the foregoing, each of the parties hereto shall be
entitled to any remedies available in equity or by
statute with respect to the breach of the terms of this
Agreement by the other party.
27. Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws
of the state of Nevada.
28. Severability. If and to the extent that any
court of competent jurisdiction holds any provision or
any part thereof of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the
validity of the remainder of this Agreement.
29. Waiver. No failure by any party to insist
upon the strict performance of any covenant, duty,
agreement, or condition of this Agreement or to
exercise any right or remedy consequent upon a breach
hereof shall constitute a waiver of any such breach or
of any other covenant, agreement, term, or condition.
30. Litigation Expenses. In the event that it
shall be necessary or desirable for the Executive to
retain legal counsel and/or incur other costs and
expenses in connection with the enforcement of any and
all of his rights under this Agreement, he shall be
entitled to recover from the Employer reasonable
attorney's fees, costs, and expenses incurred by him in
connection with the enforcement of said rights.
Payment shall be made to the Executive by the Employer
at the time these attorney's fees, costs, and expenses
are incurred by the Executive. If, however, the
Executive does not prevail in such enforcement actions,
he shall repay any such payments to the Employer.
AGREED AND ENTERED INTO as of the date first above
written.
EMPLOYER: ALTA GOLD CO.
By:
_______________________________
Robert N. Pratt
President, Chairman and
Chief Executive Officer
EXECUTIVE:
_______________________________
John A. Bielun
PROMISSORY NOTE
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL
- ------------- --------- -------- -------- ----
$1,500,000.00 09-18-1995 09-30-1996 849-26 55929
COLLATERAL ACCOUNT OFFICER INITIALS
- ---------- ------- ------- --------
564 0276506752 58625
References in the shaded area (the above) are for Lender's use only and
do not limit the applicability of this document to any particular loan or
item.
BORROWER: ALTA GOLD CO.
601 Whitney Ranch Drive, Suite 10
Henderson, NV 89014
LENDER: U.S. BANK OF NEVADA
Commercial Services Group
2300 W. Sahara, Suite 200
Las Vegas, NV 89102
PRINCIPAL AMOUNT: $1,500,000.00 INITIAL RATE: 10.75%
DATE OF NOTE: SEPTEMBER 18, 1995
PROMISE TO PAY. ALTA GOLD CO. ("Borrower") promises to pay to
U.S. BANK OF NEVADA ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Million Five
Hundred Thousand & no/100 Dollars ($1,500,000.00) or so much as may
be outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of
each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in accordance with the following
payment schedule:
Borrower will pay outstanding principal plus all accrued unpaid
interest on September 30, 1996. In addition, Borrower will pay
regular monthly payments of accrued unpaid interest beginning
October 30, 1995, and all subsequent interest payments are due on
the same day of each month after that.
Interest on this Note is computed on a 365/360 simple interest basis; that
is, by applying the ratio of the annual interest rate over a year of 360
days, multiplyied by the outstanding principal balance, multiplied by the
actual number of days the principal is outstanding. Borrower will pay
Lender at Lender's address shown above or at such other place as
Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to accrued unpaid interest,
then to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to
change from time to time based on changes in an index which is the
LENDER'S PRIME RATE. THIS IS THE RATE OF INTEREST WHICH
LENDER FROM TIME TO TIME ESTABLISHES AS ITS PRIME RATE
AND IS NOT, FOR EXAMPLE, THE LOWEST RATE OF INTEREST
WHICH LENDER COLLECTS FROM ANY BORROWER OR CLASS OF
BORROWERS (the "Index"). THE INTEREST RATE SHALL BE
ADJUSTED WITHOUT NOTICE EFFECTIVE ON THE DAY BANK'S
PRIME RATE CHANGES. Lender will tell Borrower the current Index
rate upon Borrower's request. Borrower understands that Lender may
make loans based on other rates as well. The interest rate change will
not occur more often than each day. The index currently is 8.75% per
annum. The Interest rate to be applied to the unpaid principal balance of
this Note will be at a rate of 2.000 percentage points over the Index,
resulting in an Initial rate of 10.750% per annum. NOTICE: Under no
circumstances will the interest rate of this Note be more than the
maximum rate allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that
all loan fees and other prepaid finance charges are earned fully as of the
date of the loan and will not be subject to refund upon early payment
(whether voluntary of as a result of default), except as otherwise required
by law. Other than Borrower's obligation to pay any minimum interest
change, Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lendor in writing, relieve Borrower of Borrower's obligation to continue to
make payments of accrued unpaid interest. Rather, they will reduce the
principal balance due.
DEFAULT. Borrower will be in default if any of the following happens:
(a) Borrower fails to make any payment when due. (b) Borrower
breaks any promise Borrower has made to Lender, or Borrower fails to
perform promptly at the time and strictly in the manner provided in this
Note or any agreement related to this Note, or in any other agreement or
loan Borrower has with Lender. (c) Borrower defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's ability to repay
this Note or perform Borrower's obligations under this Note or any of the
Related Documents. (d) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect. (e) Borrower becomes insolvent, a
receiver is appointed for any part of Borrower's property, Borrower
makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Borrower or against Borrower under any
bankruptcy or insolvency laws. (f) Any creditor tries to take any of
Borrower's property on or in which Lender has a lien or security interest.
This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any of the events described in this default section occurs with
respect to any guarantor of this Note. (h) Lender in good faith deems
itself insecure.
In any default, other than a default in payment, is curable and if Borrower
has not been given a notice of a breach of the same provision of this
Note within the preceding twelve (12) months, it may be cured (and no
event of default will have occurred) if Borrower, after receiving written
notice from Lender demanding cure of such default: (a) cures the default
within fifteen days; or (b) if the cure requires more than fifteen (15) days,
immediately initiates steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire
unpaid principal balance on this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount. Upon default,
including failure to pay upon final maturity, Lender, at its option, may
also, if permitted under applicable law, increase the variable interest rate
on this Note to 4.000 percentage points over the Index. The interest rate
will not exceed the maximum rate permitted by applicable law. Lender
may hire or pay someone else to help collect this Note if Borrower does
not pay. Borrower also will pay Lender that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. If not prohibited
by applicable laws, Borrower also will pay any court costs, in addition to
all other sums provided by law. This Note has been delivered to Lender
and accepted by Lender in the State of Nevada. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of
the courts of Clark County, the State of Nevada. Subject to the
provisions on arbitration, this Note shall be governed by and construed in
accordance with the laws of the State of Nevada.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $10.00
if Borrower makes a payment on Borrower's loan and the check or
preauthorized charge with which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual
possessory security interest in, and hereby assigns, conveys, delivers,
pledges, and transfers to Lender all Borrower's right, title and interest in
and to, Borrower's accounts with Lender (whether checking, savings, or
some other account), including without limitation all accounts held jointly
with someone else and all accounts Borrower may open in the future,
excluding however all IRA, Keogh, and trust accounts. Borrower
authorizes Lender, to the extent permitted by applicable law, to charge or
setoff all sums owing on this Note against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit.
Advances under this Note may be requested either orally or in writing by
Borrower or by an authorized person. Lender may, but need not, require
that all oral requests be confirmed in writing. All communications,
instructions, or directions by telephone or otherwise to Lender are to be
directed to Lender's office shown above. The following party or parties
are authorized to request advances under the line of credit until Lender
receives from Borrower at Lender's address shown above written notice
of revocation of their authority: ROBERT N. PRATT, President/CEO;
and JOHN A. BIELUN, Treasurer/Chief Financial Officer. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with
the instructions of an authorized person or (b) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on
this Note at any time may be evidenced by endorsement on this Note or
by Lender's internal records, including daily computer print-outs. Lender
will have no obligation to advance funds under this Note if: (a) Borrower
or any guarantor is in default under the terms of this Note or any
agreement that Borrower or any guarantor has with Lender, including any
agreement made in connection with the signing of this Note; (b) Borrower
or any guarantor ceases doing business or is insolvent; (c) any guarantor
seeks, claims or otherwise attempts to limit, modify or revoke such
guarantor's guarantee of this Note or any other loan with Lender; or (d)
Borrower has applied funds provided pursuant to this Note for purposes
other than those authorized by Lender; or (e) Lender in good faith deems
itself insecure under this Note or any other agreement between Lender
and Borrower.
ARBITRATION. Lender and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Note or otherwise, including without limitation contract
and tort disputes, shall be arbitrated pursuant to the Rules of the
American Arbitration Association, upon request of either party. No act to
take or dispose of any collateral securing this Note shall constitute a
waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining injunctive relief or
a waiver of this arbitation agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining injunctive relief or
a temporary restraining order; invoking a power of sale under any deed
of trust or mortgage; obtaining a writ of attachment or imposition of a
receiver; or exercising any right relating to personal property, including
taking or disposing of such property with or without judicial process
pursuant to Article 9 of the Uniform Commercial Code. Any disputes,
claims, or controversies concerning the lawfulness or reasonableness of
any act, or exercise of any right, concerning any collateral securing this
Note, including any claim to rescind, reform, or otherwise modify any
agreement relating to the collateral securing this Note, shall also be
arbitrated, provided however that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an
interpretation, and enforcement of this arbitration provision.
LATE CHARGE. If a payment is 15 days late or more past due,
borrower will be charged a late charge of 5% of the delinquent payment.
MAXIMUM PRINCIPAL BALANCE.
Notwithstanding any other provision of this Note and without prejudice to
Lender's rights, if any, to require payment on demand, the maximum
Principal balance outstanding on this Note at one time shall be
(a) $1,500,000.00 from September 18, 1995, through December 31,
1995;
(b) $1,125,000.00 from January 1, 1996, through March 31, 1996;
(c) $750,000.00 from April 1, 1996, through June 30, 1996;
(d) $385,000.00 from July 1, 1996, through September 29, 1996; and
(e) $0.00 on and after September 30, 1996.
In addition to any required payments, Borrower shall pay to Lender on
demand an amount equal to the amount by which the unpaid Principal
balance of this Note at any time exceeds the maximum Principal balance
specified above for such time.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of
its rights or remedies under this Note without losing them. Borrower to
the extent allowed by law, waive presentment, demand for payment,
protest and notice of guarantor, accomodation maker or endorser, shall
be released from liability. All such parties agree that Lender may renew
or extend (repeatedly and for any length of time) this loan, or release any
party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone.
All such parties also agree that Lender may modify this loan without the
consent of or notice to anyone other than the party with whom the
modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND
UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING
THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THIS NOTE.
BORROWER:
ALTA GOLD CO.
- --------------------------
Authorized Officer
LENDER:
U.S. BANK OF NEVADA
By:---------------------------
Authorized Officer
