SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 31, 1996
ALTA GOLD CO.
(Exact name of Registrant as specified in charter)
Nevada
(State or other jurisdiction of incorporation)
2-2274 87-0259249
(Commission File Number) (IRS Employee
Identification No.)
601 Whitney Ranch Drive, Henderson, Nevada 89014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, (702) 433-8525
including area code
Not Applicable
(Former name or former address, if changed since last report)
THIS DOCUMENT CONSISTS OF 31 PAGES. THE EXHIBIT INDEX IS ON PAGE 5.
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ITEM 5 - OTHER EVENTS
On May 31, 1996 the Alta Gold Co. (the "Company")
entered a certain loan agreement (the "Loan Agreement") with
Gerald Metals, Inc., a Delaware corporation ("GMI"), pursuant to
which the Company is entitled to borrow from GMI up to five
million dollars ($5,000,000) in aggregate principal amount (the
"Loan"). Under the Loan Agreement, advances shall be made to the
Company in amounts of at least five hundred thousand dollars
($500,000) each, provided, however, that no advances shall be
made on or after December 31, 1996. The proceeds from the Loan
shall be used for working capital.
Interest on the Loan ("Interest") is computed in
arrears and is based on a 360 day year counting the actual number
of days elapsed. To the extent there is no Event of Default (as
hereinafter defined) under the Loan Agreement, the outstanding
principal balance of the Loan bears Interest (the "Interest
Rate") at the rate of the overnight London Interbank Offered Rate
quoted by Telerate, as of 11:00 a.m. British standard time, plus
two percent (2%). Upon an Event of Default, the Interest Rate
shall be increased to a rate per annum equal to the rate which
the Chase Manhattan Bank, N.A. announces from time to time at its
principal office in New York, New York as its prime lending rate,
plus three percent (3%). Interest is payable not later than five
(5) business days after the end of each month.
Installments of principal shall be made by the Company
to GMI on December 31, 1996, January 31, 1997, and February 28,
1997 each in an amount equal to one hundred thousand dollars
($100,000). Commencing March 31, 1997 and continuing on the last
business day of each month thereafter, the Company shall make
nine (9) installments of principal to GMI, each in an amount
equal to one-ninth of the principal amount outstanding under the
Loan on February 28, 1997. A final payment of all remaining
principal and accred interest under the Loan is due GMI on
November 28, 1997.
In addition to the monthly installments of principal
described above, the Company is obligated to repay its
indebtedness under the Loan in the amount, and immediately upon
receipt, of all proceeds from (i) any public or private equity or
debt offering of the Company (except proceeds from any exercise
of rights under the Company's employee stock option plan), (ii)
any debt financing on the Company's Kinsley or Olinghouse mining
properties or (iii) any sale of all or a portion of such mining
properties.
The Loan Agreement is subject to a certain security
agreement (the "Security Agreement"), of even date with the Loan
Agreement, by and between the Company and GMI. Under the
Security Agreement, the Loan is collateralized by a first
priority security interest in certain personal property of the
Company and a first priority mortgage on the real estate and all
improvements thereon at Kinsley.
With the exception of certain permitted exceptions
(the "Permitted Exceptions"), the Loan Agreement prohibits the
Company from creating, incurring or assuming any mortgage,
2
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pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets, whether now owned or hereafter
acquired. The Permitted Exceptions include, without limitation,
(i) certain liens to secure the payment of taxes, (ii) liens to
secure certain statutory obligations such as deposits under
worker's compensation and unemployment insurance, (iii)
mechanics' liens incurred in good faith and in the ordinary
course of business, (iv) liens in favor of GMI, (v) liens in
favor of other entities providing financing to the Company
related to the Company's mining properties not exceeding one
million dollars ($1,000,000) in the aggregate at any time and
(vi) certain additional liens as set forth in the Loan Agreement.
The Loan Agreement contains certain negative covenants
which prohibit the Company from, among other things, dissolving,
liquidating, merging, consolidating or otherwise modifying the
Company's corporate name, mailing address, principal place of
business, structure, status or existence. The Loan Agreement
also prohibits the Company from paying any dividend or making any
distribution to stockholders and from redeeming, purchasing or
otherwise acquiring for consideration any shares of the Company's
capital stock.
An event of default ("Event of Default") under the
Loan Agreement includes, without limitation, (i) failure of the
Company to pay any principal or interest pursuant to the terms
and provisions of the Loan Agreement when the same shall become
due and payable, (ii) failure of the Company to observe certain
terms, covenants or agreements applicable to the Company as set
forth in the Loan Agreement, (iii) untruthfulness of any of the
Company's representations or warranties set forth in the Loan
Agreement, (iv) insolvency or cessation of the Company's
business, and (v) occurrence of any "Event of Default" as defined
in a certain Trading Agreement between the Company and GMI dated
January 24, 1995. Upon the occurrence of an Event of Default,
GMI may declare all obligations under the Loan Agreement and the
promissory note evidencing the Loan to be immediately due and
payable and any obligation of GMI to make the Loan to the Company
shall immediately terminate.
The Company has agreed to indemnify, defend and hold
harmless GMI and its officers, directors, agents, employees and
counsel from and against any losses, claims or damages incurred
by them (other than by their gross negligence or willful
misconduct) arising out of, or by reason of, the Loan Agreement.
The Loan Agreement is governed under the laws of the State of New
York and the Company has consented to the jurisdiction of such
state in the event of any litigation in connection with the Loan
Agreement.
The Company also granted a stock option to Gerald
Metals, Inc. for 75,000 shares, exercisable at $3.75 per share.
The stock option expires five years from May 31, 1996.
3
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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 hereunto duly authorized.
ALTA GOLD CO.
(Registrant)
Date: June 11, 1996 By: /s/ John A. Bielun
John A. Bielun
Principal Financial Officer and
Principal Accounting Office
4
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EXHIBIT INDEX
Exhibit Page
NUMBER DESCRIPTION NUMBER
4.01 Loan Agreement dated May 31, 1996 between Alta 6
Gold Co. and Gerald Metals, Inc.
4.02 Stock Option Agreement dated as of May 31, 1996
between Gerald Metals, Inc. and Alta Gold Co.
incorporated by reference from the Company's
Form S-8 Registration Statement filed June 11,
1996, Part II, Item 8, Exhibit 4.03.
5
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EXHIBIT 4.01
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LOAN AGREEMENT
between
ALTA GOLD CO.
as Borrower,
and
GERALD METALS, INC.,
as Lender
Dated as of May 31, 1996
<PAGE>
TABLE OF CONTENTS
Page
I. DEFINITIONS 1
II. GENERAL TERMS 4
2.01. Loan 4
2.02. Payments of Principal and Interest on the Loan 4
2.03. Withholding 5
2.04. Use of Proceeds 5
2.05. Security 5
III. REPRESENTATIONS AND WARRANTIES 6
3.01. Financial Statements 6
3.02. Organization, Etc. 6
3.03. Authorization, Compliance, Etc. 6
3.04. Litigation 6
3.05. Title to Properties 6
3.06. Filing and Payment of Taxes 7
3.07. Full Disclosure 7
3.08. Enforceability 7
3.09. Solvency 7
IV. CONDITIONS PRECEDENT 7
V. AFFIRMATIVE COVENANTS 9
5.01. Preservation of Assets; Compliance with Law 9
5.02. Taxes, Etc. 9
5.03. Notice of Proceedings or Adverse Change 9
5.04. Notice of Default or Event of Default 9
5.05. Reimbursement of Expenses 9
5.06. Insurance 9
VI. NEGATIVE COVENANTS 10
6.01. Fundamental Changes 10
6.02. Illegal Activities 10
6.03. Dividends 10
6.04. Liens 10
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VII. DEFAULTS/RIGHTS AND REMEDIES OF LENDER UPON DEFAULT 11
7.01. Events of Default 11
7.02. Default Rate 13
VIII. MISCELLANEOUS 13
8.01. Survival 13
8.02. Indemnification 13
8.03. Nonliability of Lender 14
8.04. Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial; Waiver of Damages 14
8.05. Amendments, Etc. 16
8.06. Waiver 16
8.07. Notices 16
8.08. Successors and Assigns 17
8.09. Severability 17
8.10. Section Headings 18
8.11. Integration 18
8.12. Counterparts 18
SCHEDULE OF EXHIBITS
Exhibit A - Request for Advance
Exhibit B - Permitted Liens
Exhibit C - Opinion of Counsel
Exhibit D - Loss Payable Endorsement
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LOAN AGREEMENT
THIS LOAN AGREEMENT (as the same may be amended from time to
time, "this Agreement") is made as of the 31st day of May, 1996,
between GERALD METALS, INC., a Delaware corporation with its
principal office at High Ridge Park, Stamford, Connecticut 06904
("Lender"), and ALTA GOLD CO., a Nevada corporation with its
principal office at 601 Whitney Ranch Drive. Suite 10, Henderson,
Nevada 89014 ("Borrower").
W I T N E S S E T H T H A T:
Borrower has requested that Lender provide Borrower with a
secured loan in a principal amount of up to Five Million Dollars
($5,000,000) (the "Loan") and Lender has agreed to extend such
Loan upon the terms and subject to the conditions hereinafter set
forth. Capitalized terms used herein are defined in Article I of
this Agreement.
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the indicated
meanings:
"ADVANCE" or "ADVANCES" shall mean the individual or
aggregate principal amount advanced by Lender to Borrower
pursuant to Section 2.01 of this Agreement.
"BORROWER" shall have the meaning given to such term in the
preamble.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or other day when commercial banks are authorized or
required to be closed in the State of New York.
"COLLATERAL" shall mean any and all assets, rights and
interests in or to property of Borrower pledged or mortgaged to
Lender, or in which a security interest is granted to Lender,
from time to time, as security pursuant to the Security
Documents, whether now owned or hereafter acquired.
"COMMITMENT" shall have the meaning given to such term in
Section 2.01(a) of this Agreement.
"DEFAULT" shall mean an event, condition or default which
with the giving of notice, the passage of time, or both, would be
an Event of Default.
"DEFAULT RATE" shall have the meaning given to such term in
Section 7.02 of this Agreement.
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"EVENT OF DEFAULT" shall have the meaning given to such term
in Section 7.01 of this Agreement.
"EXPENSES" shall mean all present and future expenses
incurred by or on behalf of Lender in connection with this
Agreement or any of the other Loan Documents, whether incurred
heretofore or hereafter, which expenses shall include, without
being limited to, the cost of record searches, attorneys' fees,
disbursements and expenses, all costs and expenses incurred by
Lender in opening bank accounts, depositing checks, receiving and
transferring funds, and any charges due to "insufficient funds"
of deposited checks and Lender's standard fee relating thereto,
fees and expenses of accountants, appraisers or other experts or
advisors retained by Lender, fees and taxes relative to the
filing of financing statements, costs of preparing and recording
the Security Documents and all expenses, costs and fees set forth
in Articles V, VII or VIII of this Agreement.
"FINANCIAL STATEMENTS" shall mean the balance sheet, income
statement, statement of cash flows and retained earnings
statement of Borrower for the year or other period then ended.
"GOVERNMENTAL AUTHORITY" shall mean the United States
government, any state or other political subdivision thereof, any
agency, court or body of the United States government, any state
or other political subdivision thereof, or any quasi-governmental
agency or authority exercising executive, legislative, judicial,
regulatory or administrative functions.
"LENDER" shall have the meaning given to such term in the
preamble of this Agreement.
"LIEN(S)" shall mean any lien, claim, charge, pledge,
security interest, mortgage, deed of trust or other encumbrance.
"LIBOR" shall mean the overnight London Interbank Offered
Rate quoted by Telerate, as of 11:00 A.M. British Standard Time,
or as otherwise mutually agreed.
"LOAN" shall have the meaning given to such term in the
preamble to this Agreement.
"LOAN DOCUMENTS" shall mean this Agreement, the Note, the
Security Documents and all other documents or instruments
executed and delivered by or on behalf of Borrower in connection
with the Loan and the transactions contemplated hereby, as the
same may hereafter be amended, supplemented, restated or
otherwise modified from time to time.
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"MATERIAL ADVERSE CHANGE" shall mean a material adverse
change in (i) the business, prospects, operations, results of
operations, assets, liabilities or condition (financial or
otherwise) of Borrower or (ii) the Collateral, in each case as
determined by Lender.
"MATERIAL ADVERSE EFFECT" shall mean (i) a Material Adverse
Change, (ii) a material adverse effect on Borrower's ability to
perform its obligations under this Agreement or any of the other
Loan Documents to which it is a party or (iii) a material adverse
effect on the rights and remedies of Lender under any of the Loan
Documents, in each case as determined by Lender.
"MATURITY DATE" shall mean November 28, 1997.
"NOTE" shall mean the Secured Promissory Note of even date
herewith in the original principal amount of $5,000,000 made by
Borrower in favor of Lender to evidence the Loan, as the same may
be amended, supplemented, restated or otherwise modified from
time to time.
"OBLIGATIONS" shall mean the Loan, together with interest
thereon (including interest which would be payable as post-
petition interest in connection with any bankruptcy or similar
proceeding). Obligations shall also include any other
indebtedness owing to Lender by Borrower under this Agreement,
the Note, the Security Documents or under any other agreement or
arrangement now or hereafter entered into between Borrower and
Lender with respect to the Loan.
"PERMITTED LIENS" shall mean certain existing liens
identified on Exhibit B hereto.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution,
entity, party or government (including any division, agency or
department thereof), and, as applicable, the successors, heirs
and assigns of each.
"PRIME RATE" shall mean the rate which The Chase Manhattan
Bank, N.A. announces from time to time at its principal office in
New York, New York as its prime lending rate, as in effect from
time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to
any customer.
"SECURITY AGREEMENT" shall mean that certain Security
Agreement of even date herewith made by Borrower in favor of
Lender, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
<PAGE>
"SECURITY DOCUMENTS" shall have the meaning given to such
term in Section 2.05 of this Agreement.
ARTICLE II
GENERAL TERMS
SECTION 2.01. LOAN.(a) Subject to all of the terms and
conditions contained in this Agreement and provided no Default or
Event of Default has occurred, Lender agrees to make Advances to
Borrower from time to time until December 31, 1996 (the "Loan")
in the aggregate principal amount of up to Five Million Dollars
($5,000,000) (the "Commitment"). Borrower may request Advances
from Lender in accordance with Section 2.01(b) hereof. Each
Advance shall be in an amount of at least Five Hundred Thousand
Dollars ($500,000). If at any time the outstanding principal
balance of the Loan exceeds the Commitment, Borrower shall
immediately pay to Lender the amount of such excess. The
Advances shall be evidenced by the Note, which Note is hereby
incorporated herein by reference and made a part hereof. No
Advances will be made on or after December 31, 1996.
(b) Advances under the Loan will be made by Lender to
Borrower upon telephonic request to credit such Advance to
Borrower's account made by an officer of Borrower who has been
duly authorized by its board of directors and whose name, along
with a certified copy of such resolutions, has been transmitted
to Lender. Such request shall be confirmed in writing by
Lender's receipt, within two (2) Business Days thereafter, of a
request for Advance in the form of EXHIBIT A hereto, signed by a
duly authorized officer of Borrower indicating the date and
amount of the Advance requested and acknowledging the principal
balance outstanding on the Loan, as of the said date after taking
into consideration the amount of the Advance as so requested.
SECTION 2.02. PAYMENTS OF PRINCIPAL AND INTEREST ON THE
LOAN. (a) Unless the Default Rate shall apply, the outstanding
principal balance of the Loan shall bear interest at LIBOR plus
two percent (2%). Interest will be computed in arrears and based
on a three hundred sixty (360) day year counting the actual
number of days elapsed and will be payable not later than five
(5) Business Days after the end of each month (commencing
_________, 1996).
(b) Borrower will remit to Lender (i) on December 31,
1996, January 31, 1997 and February 28, 1997 installments of
principal each in an amount equal to One Hundred Thousand Dollars
($100,000) and (ii) commencing March 31, 1997 and continuing on
the last Business Day of each month thereafter, Borrower will
remit to Lender nine (9) installments of principal each in an
amount equal to one-ninth of the principal amount outstanding
under the Note on February 28, 1997. If any monthly principal
installment is paid in a different amount and/or on a date other
than the last Business Day of each such month, then Lender, at
its sole discretion, may charge breakage costs to Borrower. A
final payment of all remaining principal and accrued interest
will be made by Borrower to Lender on the Maturity Date.
<PAGE>
(c) In addition to payment of monthly installments of
principal as provided in Subsection 2.02(b) above, Borrower shall
prepay the Note in the amount, and immediately upon receipt, of
all proceeds from (i) any public or private equity or debt
offering of Borrower (except proceeds from any exercise of rights
under the employee stock option plan of Borrower), (ii) any debt
financing on the Kinsley and/or Olinghouse mining properties of
Borrower or (iii) any sale of all or any portion of such mining
properties.
(d) All payments to be made by Borrower of principal
of, and interest on, the Note and all Expenses payable by
Borrower hereunder, shall be made in such manner as may be
designated by Lender in writing to Borrower, and in any event all
such payments shall be made to Lender in U.S. dollars in
immediately available funds prior to 12:00 o'clock Noon (New York
City time) on or before the day that such payment is due.
SECTION 2.03. WITHHOLDING. Borrower hereby agrees to
indemnify and save Lender harmless from and against any liability
(either directly or by way of deduction, withholding, or
otherwise) for any present or future tax, duty, levy, impost, fee
or charge in respect of, or arising out of, the execution and
delivery of or performance under this Agreement or the making of
the Loan hereby or the consummation of any of the transactions
contemplated by this Agreement, other than taxes which are
assessed on a net income basis and remitted by Lender to the
United States of America and any political subdivision or taxing
authority thereof or therein in respect of, or arising out of,
the making of the Loan hereunder and the entering into of the
transactions described above. The obligations of Borrower to pay
any sums which may become payable under this Section 2.03 will
survive the expiration or other termination of this Agreement.
SECTION 2.04. USE OF PROCEEDS. The proceeds of the Loan
shall be used exclusively by Borrower for working capital and the
payment of Expenses.
SECTION 2.05. SECURITY. Payment and performance of the
Obligations and any other indebtedness and liabilities of
Borrower to Lender, whether under the Note or otherwise, shall be
secured by:
(a) a first priority security interest in Collateral
pursuant to the terms of the Security Agreement;
(b) a mortgage executed by Borrower granting thereby a
first priority mortgage loan on the real estate and all
improvements thereon located at the Kinsley Mine; and
(c) such other agreements may be required by Lender
and necessary to attach or perfect a Lien in the items
covered by Subsections (a) and (b) above.
All agreements and instruments described in this Section
2.05, together with any and all other agreements and instruments
now or hereafter securing the Note, are sometimes hereinafter
referred to collectively as the "Security Documents" and
individually as a "Security Document."
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement and to make
the Loan, Borrower hereby represents and warrants to Lender
(which representations and warranties shall survive the delivery
of the Note and the making of the Loan and shall continue until
payment in full of the Obligations) that:
SECTION 3.01. FINANCIAL STATEMENTS. Borrower has
heretofore furnished to Lender Borrower's Financial Statements
dated March 31, 1996 which fairly present the financial condition
of Borrower as of their date, and the results of its operations
for the year or other period then ended. To the best of
Borrower's knowledge and belief, Borrower does not have any
contingent obligations, liabilities for taxes or unusual forward
or long-term commitments except as specifically mentioned in the
Financial Statements. Since the date of the Financial
Statements, there has been no Material Adverse Change and no
dividends or other distributions have been declared or paid or
made to the shareholders of Borrower.
SECTION 3.02. ORGANIZATION, ETC. Borrower (a) is duly
organized, validly existing and in good standing under the laws
of the state of its incorporation, (b) is duly qualified to
transact business in every jurisdiction where, because of the
nature of its business or property, such qualification is
required, (c) has full power and authority to own its property
and assets and to carry on its business as now conducted, and (d)
has full power to execute, deliver and perform its obligations
under the Loan Documents to which it is a party.
SECTION 3.03. AUTHORIZATION, COMPLIANCE, ETC. The
execution and delivery of, and the performance by Borrower of its
Obligations under, the Loan Documents (a) are within its
corporate powers, (b) have been duly authorized by all requisite
corporate action, (c) do not violate any provision of law, any
order of any court or other agency of government, the corporate
charter or by-laws of Borrower, and (d) do not violate any
indenture, agreement or other instrument to which Borrower is a
party, or by which it is bound, or be in conflict with, result in
a breach of, or constitute (with due notice or lapse of time or
both) a default under, or except as may be provided by this
Agreement, result in the creation or imposition of any Lien upon
any of the property or assets of Borrower pursuant to, any such
indenture, agreement or instrument. Borrower is not required to
obtain any consent, approval or authorization from, or to file
any declaration or statement with, any Governmental Authority in
connection with or as a condition to the execution, delivery or
performance of the Loan Documents.
SECTION 3.04. LITIGATION. There is no action, suit or
proceeding at law or in equity or by or before any Governmental
Authority now pending or, to the knowledge of Borrower,
threatened against or affecting Borrower which, if adversely
determined, would have a Material Adverse Effect.
SECTION 3.05. TITLE TO PROPERTIES. Borrower has good title
to all Collateral, free and clear of all Liens of any kind,
except Permitted Liens and restrictions, easements and minor
<PAGE>
irregularities in title which do not and will not interfere with
the occupation, use and enjoyment of Borrower of such properties
and assets in the normal course of its business as presently
conducted or materially impaired the value of such properties and
assets for the purpose of such business.
SECTION 3.06. FILING AND PAYMENT OF TAXES. Borrower has
filed all tax returns required to be filed by Borrower, and has
paid, or made adequate provision for the payment of, all taxes,
charges and assessments due and payable by Borrower.
SECTION 3.07. FULL DISCLOSURE. Neither the Financial
Statements referred to in Section 3.01, nor any statement of fact
made by or on behalf of Borrower in this Agreement or any of the
other Loan Documents or any certificate, written statement or
schedule furnished to Lender pursuant hereto, contains any untrue
statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not
misleading. There is no fact known to Borrower which has not
been disclosed to Lender in writing, which could have a Material
Adverse Effect.
SECTION 3.08. ENFORCEABILITY. This Agreement and all of
the other Loan Documents executed and delivered in connection
herewith are legal, valid and binding obligations of Borrower and
are enforceable against Borrower, in accordance with their terms
except as such enforceability may be limited by (i) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and (ii)
general principles of equity.
SECTION 3.09. SOLVENCY. The fair saleable value of
Borrower's assets exceeds all probable liabilities of Borrower;
Borrower, to the best of its knowledge, does not have
unreasonably small capital in relation to the business in which
it is or proposes to be engaged; and Borrower has not incurred,
nor believes that it will incur after giving effect to the
transactions contemplated by this Agreement, debts beyond its
ability to pay such debts as they become due.
ARTICLE IV
CONDITIONS PRECEDENT
The obligation of Lender to make the Loan is subject to the
satisfaction of the following conditions precedent:
(a) The representations and warranties set forth in
Article III hereof and in all other Loan Documents shall be
true and correct.
(b) Borrower shall have executed and delivered to
Lender, or caused to be executed and delivered to Lender, on
or prior to the date of execution of this Agreement, the
following:
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(i) The Note;
(ii) A certificate of the Secretary or Assistant
Secretary of Borrower certifying to the votes of
Borrower's Board of Directors authorizing the execution
and delivery of this Agreement, the Note and the Loan
Documents;
(iii) A certificate of the Secretary or Assistant
Secretary of Borrower which shall certify the names of
the officers of Borrower authorized to sign this
Agreement, the Note, and any other documents or
certificates to be delivered pursuant to this Agreement
by Borrower or any of its officers, together with the
true signatures of such officers. Lender may
conclusively rely on such certificate until it shall
receive a further certificate of the Secretary or an
Assistant Secretary of Borrower canceling or amending
the prior certificate and submitting the signatures of
the officers named in such further certificate;
(iv) Good Standing Certificates, dated reasonably
near the date of the Loan, of the Nevada Secretary of
State stating that Borrower is duly incorporated (or
qualified) and in good standing in such jurisdiction
and has filed all annual reports and has paid all
franchise and other taxes required to be filed or paid
to the date of such certificate;
(v) A favorable written opinion of Borrower's
counsel in favor of Lender, dated the date of this
Agreement, in the form attached hereto as EXHIBIT C;
(vi) The Security Documents, together with any
other documents required by the terms thereof; and
(vii) Such other supporting documents, legal
opinions, agreements and certificates as Lender or its
counsel may request.
(c) All legal matters incident to the transactions
hereby contemplated shall be satisfactory to counsel for
Lender.
(d) Lender shall have received payment in full of all
Expenses referred to in Article V hereof which are payable
to Lender on or before the date of execution of this
Agreement (such Expenses not to exceed $2,000).
(e) No Default or Event of Default shall have occurred
and be continuing or would result from the making of the
Loan.
(f) No Material Adverse Change, or development
reasonably likely to have a Material Adverse Effect, shall
have occurred and be continuing.
<PAGE>
ARTICLE V
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment and
satisfaction in full of all Obligations, whether now existing or
arising hereafter, Borrower will:
SECTION 5.01. PRESERVATION OF ASSETS; COMPLIANCE WITH LAW.
(a) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its corporate existence,
rights, licenses, permits and franchises; and
(b) Comply with all applicable laws, rules,
regulations and orders, whether now in effect or hereafter
enacted or promulgated by any applicable Governmental Authority.
SECTION 5.02. TAXES, ETC. Pay and discharge or cause to be
paid and discharged, when due, all taxes, assessments and
governmental charges or levies imposed upon it or upon its
respective income and profits or upon any of the Collateral.
SECTION 5.03. NOTICE OF PROCEEDINGS OR ADVERSE CHANGE.
Give written notice to Lender, as soon as possible and in any
event within fifteen (15) days after Borrower has knowledge, of
(i) any proceedings or investigations being instituted by or
against Borrower in any federal or state court or before any
commission or other regulatory body, whether federal, state or
local which, if adversely determined, would have a Material
Adverse Effect and (ii) any Material Adverse Change.
SECTION 5.04. NOTICE OF DEFAULT OR EVENT OF DEFAULT.
Immediately advise Lender of the occurrence of any Default or
Event of Default.
SECTION 5.05. REIMBURSEMENT OF EXPENSES. On the date of
execution of this Agreement, reimburse Lender for all Expenses
incurred by Lender on or prior to such date. From and after such
date, Borrower shall promptly reimburse Lender for all Expenses
as the same are incurred by Lender and upon receipt of invoices
therefor.
SECTION 5.06. INSURANCE. Maintain at all times insurance
coverage in respect of the properties and assets of Borrower in
amounts, on terms and with such financially sound and reputable
insurers reasonably acceptable to Lender, as in consistent with
Borrower's ordinary course of business. Such coverage shall
include, without limitation, fire and extended coverage insurance
for the full insurable value of all buildings and other
improvements located on property constituting Collateral and
public liability and worker's compensation insurance, all in
amounts not less than the amount of the coverage maintained
immediately prior to the execution of this Agreement and under
policies in form and content reasonably acceptable to Lender.
All policies of insurance shall name Lender as loss payee and
additional insured pursuant to an endorsement as set out in
EXHIBIT D hereto.
<PAGE>
Any surplus remaining from any such insurance in excess of
all indebtedness, liabilities and obligations of Borrower to
Lender shall be delivered to Borrower, or its successors or
assigns.
Borrower shall furnish Lender with an original copy of all
policies of insurance. If Lender permits Borrower to provide any
of the required insurance through blanket policies, the Borrower
shall furnish Lender with a certificate of insurance for each
such policy setting forth coverage, the limits of liability, the
name of the carrier, the policy number, and the expiration date.
ARTICLE VI
NEGATIVE COVENANTS
Borrower covenants and agrees that, until payment and
satisfaction in full of all Obligations, whether now existing or
arising hereafter, Borrower will not, directly or indirectly:
SECTION 6.01. FUNDAMENTAL CHANGES. Dissolve, liquidate,
merge, consolidate or otherwise alter or modify Borrower's
corporate name, mailing address, principal place of business,
structure, status or existence or enter into or engage in any
operation or activity materially different from that presently
conducted by Borrower; make any substantial change in its
executive management; or amend its corporate charter or by-laws
in any manner that could have a Material Adverse Effect.
SECTION 6.02. ILLEGAL ACTIVITIES. Engage in any conduct or
activity, including, without limitation, a pattern of
racketeering activity, that could subject any of Borrower's
assets to forfeiture or seizure.
SECTION 6.03. DIVIDENDS. Pay any dividends, or make any
distribution of cash or property, or both, to holders of shares
of its capital stock, or directly or indirectly, redeem, purchase
or otherwise acquire for a consideration, any shares of its
capital stock, of any class.
SECTION 6.04. LIENS. Create, incur, assume or suffer to
exist any mortgage, pledge, lien, charge or other encumbrance of
any nature whatsoever on any of its assets or Kinsley properties,
now or hereafter owned, other than:
(i) liens securing the payment of taxes, either not
yet due or the validity of which is being contested in good
faith by appropriate proceedings, and as to which it shall
have set aside on its books adequate reserves;
(ii) deposits under worker's compensation, unemployment
insurance and social security laws, or to secure the
performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to secure
statutory obligations or surety or appeal bonds or
reclamation bonds, or to secure indemnity, performance or
other similar bonds in the ordinary course of business;
<PAGE>
(iii) liens imposed by law, such as carriers',
warehousemen's or mechanics' liens, incurred by it in good
faith in the ordinary course of business, and liens arising
out of a judgment or award against it with respect to which
it shall currently be prosecuting an appeal, a stay of
execution pending such appeal having been secured;
(iv) liens in favor of Lender;
(v) liens in favor of other entities providing
financing to Borrower related to mining properties and not
to exceed One Million Dollars ($1,000,000) in the aggregate
at any time; and
(vi) Permitted Liens.
ARTICLE VII
DEFAULTS/RIGHTS AND REMEDIES OF LENDER UPON DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. In each case of happening
of any of the following events (each of which is herein and in
the Note and the Security Documents sometimes called an "Event of
Default"):
(a) failure of Borrower to pay (i) any installment of
principal of, or interest on, the Note (provided, however,
in the case of interest on the Note, that such failure
continues for a period of three (3) Business Days following
its occurrence), (ii) Expenses or (iii) any other
Obligations, when the same shall become due and payable,
whether at the due date thereof or by acceleration or
otherwise;
(b) failure of Borrower to perform, comply with or
observe any term, covenant or agreement applicable to
Borrower (other than as set forth in other paragraphs of
this Section 7.01) contained in Articles II, V or VI hereof,
Section 8.02 hereof or in the Note, which failure continues
for a period of ten (10) days following its occurrence;
(c) failure of Borrower to perform, comply with or
observe any other term, covenant or agreement applicable to
Borrower pursuant to this Agreement other than as set forth
in other paragraphs of this Section 7.01, and such default
shall continue unremedied for a period of twenty (20) days
after the delivery of written notice thereof by Lender to
Borrower;
(d) any representation or warranty made by or on
behalf of Borrower pursuant to this Agreement, any other
Loan Document or any other agreement, document, instrument
or certificate executed by Borrower in favor of Lender shall
be untrue or misleading in any material adverse respect as
<PAGE>
of the date such representation or warranty was made or is
deemed to have been made;
(e) the occurrence of any "Event of Default" as
defined in any Security Document;
(f) Borrower shall (i) discontinue or abandon
operation of its business, (ii) apply for or consent to or
suffer the appointment of a receiver, trustee, custodian or
liquidator of it or any of its property, (iii) admit in
writing its inability to pay its debts as they mature, (iv)
make a general assignment for the benefit of creditors, (v)
file, or have filed against it, a petition for relief under
Title 11 of the United States Code, (vi) file, or have filed
against it, a petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with
creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or an answer
admitting the material allegations of a petition filed
against it in any proceeding under any such law, or if
corporate or action shall be taken for the purpose of
effecting any of the foregoing, (vii) become insolvent,
(viii) fail to generally pay its debts as they mature or
(ix) have liabilities which exceed the fair value of its
assets;
(g) for any reason, any Security Document at any time
shall not be in full force and effect in all material
respects or shall not be enforceable in all material
respects in accordance with its terms, or any Lien granted
pursuant thereto shall fail to be perfected within a
reasonable time subsequent to the execution and delivery of
this Agreement;
(h) Borrower suffers or sustains a Material Adverse
Change or the prospect of repayment of Lender is materially
impaired; or
(i) the occurrence of any "Event of Default" as defined
in that certain Trading Agreement between Borrower and
Lender dated January 24, 1995, as amended or modified from
time to time;
then, upon the occurrence of any such Event of Default which has
not been cured by Borrower or waived in writing by Lender, Lender
may, by notice to Borrower, declare all Obligations to be
immediately due and payable. Upon Lender's declaration, the
Obligations shall become immediately due and payable, both as to
principal and interest, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Note or other evidence of
such Obligations to the contrary notwithstanding (except with
respect to any Event of Default set forth in Section 7.01(f), in
which case all Obligations shall automatically become immediately
due and payable without the necessity of any notice or other
demand) and any obligation of Lender to make the Loan to Borrower
shall immediately terminate. Lender may enforce payment of the
same and exercise any or all of the rights, powers and remedies
possessed by Lender, whether under this Agreement, the Security
Documents or under any agreement securing the Obligations of
Borrower hereunder, or afforded by applicable
<PAGE>
law. The remedies provided for herein are cumulative and are not
exclusive of any other remedies provided by law. Borrower agrees
to pay Lender's attorneys' reasonable fees and legal expenses
incurred in enforcing Lender's rights, powers and remedies under
this Agreement, the Note, the Security Documents and any other
agreement securing the Obligations.
SECTION 7.02. DEFAULT RATE. Without regard to whether
Lender has exercised any other rights or remedies hereunder, if
an Event of Default shall have occurred and be continuing, the
applicable interest rate under the Note shall be increased, to
the extent permitted by law, to a rate per annum equal to the
Prime Rate plus three percent (3%).
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. SURVIVAL. This Agreement and all covenants,
agreements, representations and warranties herein and in the
certificates delivered pursuant hereto, shall survive the making
by Lender of the Loan and the execution and delivery to Lender of
the Note and shall continue in full force and effect so long as
the Note and any other indebtedness of Borrower to Lender is
outstanding and unpaid.
SECTION 8.02. INDEMNIFICATION. Borrower shall and hereby
agrees to indemnify, defend and hold harmless Lender and its
directors, officers, agents, employees and counsel from and
against any and all losses, claims, damages, liabilities,
deficiencies, judgments or expenses incurred by any of them
(except to the extent that it is finally judicially determined to
have resulted from their own gross negligence or willful
misconduct) arising out of or by reason of any litigation,
investigations, claims or proceedings which arise out of or are
in any way related to (i) this Agreement or the transactions
contemplated hereby, (ii) any actual or proposed use by Borrower
of the proceeds of the Loan, (iii) any breach by Borrower of any
of the provisions of this Agreement or (iv) Lender's entering
into this Agreement, the other Loan Documents or any other
agreements and documents relating hereto, including, without
limitation, amounts paid in settlement, court costs and fees and
disbursements of counsel incurred in connection with any such
litigation, investigation, claim or proceeding or any advice
rendered in connection with any of the foregoing. If and to the
extent that any Obligations are unenforceable for any reason,
Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of such Obligations which is permissible
under applicable law. Borrower's obligations set forth in this
Section 8.02 shall survive any termination of this Agreement and
the other Loan Documents and the payment in full of the
Obligations, and are in addition to, and not in substitution of,
any other of its obligations set forth in this Agreement or
otherwise. In addition, Borrower shall, upon demand, pay to
Lender all costs and expenses (including the reasonable fees and
disbursements of counsel) paid or incurred by Lender in (i)
enforcing or defending its rights under or in respect of this
Agreement, the other Loan Documents or any other document or
instrument now or hereafter executed and delivered in connection
herewith, (ii) collecting the Loan, (iii) foreclosing or
otherwise collecting upon the Collateral or any part thereof and
(iv) obtaining any legal, accounting or other advice in
connection with any of the foregoing.
<PAGE>
SECTION 8.03. NONLIABILITY OF LENDER. THE RELATIONSHIP
BETWEEN BORROWER AND LENDER SHALL BE SOLELY THAT OF BORROWER AND
LENDER. LENDER SHALL NOT HAVE ANY FIDUCIARY RESPONSIBILITIES TO
BORROWER. BORROWER (i) AGREES THAT LENDER SHALL NOT HAVE ANY
LIABILITY TO BORROWER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) FOR LOSSES SUFFERED BY BORROWER IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS
CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS OR ANY OTHER AGREEMENT ENTERED INTO IN
CONNECTION HEREWITH OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A JUDGMENT OF A
COURT THAT IT IS BINDING ON LENDER (WHICH JUDGMENT SHALL BE FINAL
AND NOT SUBJECT TO REVIEW ON APPEAL), THAT SUCH LOSSES WERE THE
RESULT OF ACTS OR OMISSIONS ON THE PART OF LENDER, CONSTITUTING
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AND (ii) WAIVES, RELEASES
AND AGREES NOT TO SUE UPON ANY CLAIM AGAINST LENDER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE), EXCEPT A CLAIM BASED
UPON GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WHETHER OR NOT SUCH
DAMAGES ARE RELATED TO A CLAIM THAT IS SUBJECT TO THE WAIVER
EFFECTED ABOVE AND WHETHER OR NOT SUCH WAIVER IS EFFECTIVE,
LENDER SHALL NOT HAVE ANY LIABILITY WITH RESPECT TO, AND BORROWER
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR,
ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES SUFFERED
BY BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATED TO THE TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP
ESTABLISHED BY THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY
OTHER AGREEMENT ENTERED INTO IN CONNECTION HEREWITH OR THEREWITH
OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR
THEREWITH, UNLESS IT IS DETERMINED BY A JUDGMENT OF A COURT THAT
IS BINDING ON LENDER (WHICH JUDGMENT SHALL BE FINAL AND NOT
SUBJECT TO REVIEW ON APPEAL), THAT SUCH DAMAGES WERE THE RESULT
OF ACTS OR OMISSIONS ON THE PART OF LENDER CONSTITUTING WILLFUL
MISCONDUCT.
SECTION 8.04. GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; WAIVER OF DAMAGES. (a) THIS AGREEMENT
SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE
OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
BORROWER AND LENDER IN CONNECTION WITH THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW
YORK.
(b) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN
PARAGRAPH (f) BELOW, BORROWER AND LENDER AGREE THAT ALL DISPUTES
<PAGE>
BETWEEN THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR
FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, BUT BORROWER AND
LENDER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK.
BORROWER WAIVES IN ALL DISPUTES ANY OBLIGATION THAT IT MAY HAVE
TO THE LOCATION OF SUCH COURT CONSIDERING THE DISPUTE INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS.
(c) BORROWER AGREES THAT LENDER SHALL HAVE THE RIGHT
TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY
SELECTED IN GOOD FAITH TO ENABLE LENDER TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED
IN FAVOR OF LENDER. BORROWER AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY LENDER TO
REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF LENDER. BORROWER WAIVES ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT IN WHICH LENDER HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS.
(d) BORROWER AND LENDER EACH WAIVE ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A
JURY.
(e) BORROWER HEREBY IRREVOCABLY DESIGNATES PARSONS
BEHLE & LATIMER, ONE UTAH CENTER, 201 SOUTH MAIN STREET, SUITE
1800, P.O. BOX 45898, SALT LAKE CITY, UT 84145-0898, FAX NO.
(801) 536-6111, ATTENTION: R. CRAIG JOHNSON, ESQ., AS THE
DESIGNEE, APPOINTEE AND AGENT OF BORROWER TO RECEIVE, FOR AND ON
BEHALF OF BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE
JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS
ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH
<PAGE>
SERVICE TO BECOME EFFECTIVE THREE (3) BUSINESS DAYS AFTER SUCH
MAILING.
(f) NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY
OTHER JURISDICTION.
(g) BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF LENDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED
IN FAVOR OF LENDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE,
TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT
BETWEEN BORROWER AND LENDER.
SECTION 8.05. AMENDMENTS, ETC. No amendment or waiver of
any provision of this Agreement, or of the Note, or of any of the
Security Documents, nor consent to any departure by Borrower from
a provision, shall be effective unless the same shall be in
writing and signed by Lender. A written amendment, consent or
waiver shall be effective only in the specific instance, and for
the purpose, for which given. No notice to, or demand, on
Borrower, in any one case, shall entitle Borrower to any other or
future notice or demand in the same, similar or other
circumstances.
SECTION 8.06. WAIVER. Neither any failure nor any delay on
the part of Lender in exercising any right, power or privilege
hereunder, or under the Note, or any Security Document shall
operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or future exercise, or the
exercise of any other right, power or privilege.
SECTION 8.07. NOTICES. All notices and correspondence
hereunder shall be in writing and sent by certified or registered
mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, to the applicable party at the
addresses set forth below, or by facsimile transmission
(including, without limitation, computer generated facsimile),
promptly confirmed in writing sent by first class mail, to the
FAX numbers and addresses set forth below.
If to Lender:
Gerald Metals, Inc.
High Ridge Park
Stamford, Connecticut 06904
Attention: Robert Kaeser
cc: Treasurer
FAX No.: (203) 609-8439
<PAGE>
With a copy to:
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Attention: James P. Kelly, Esq.
FAX No.: (401) 276-6611
If to Borrower:
Alta Gold Co.
601 Whitney Ranch Drive
Suite 10
Henderson, Nevada 89014
Attention: President
FAX No.: (702) 433-1547
With a copy to:
Parsons Behle & Latimer
One Utah Center
201 South Main Street, Suite 1800
P.O. Box 45898
Salt Lake City, UT 84145-0898
Attention: R. Craig Johnson, Esq.
FAX No. (801) 536-6111
or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All
such notices and correspondence shall be deemed given upon the
earliest to occur of (i) actual receipt, (ii) if sent by
certified or registered mail, three (3) Business Days after being
postmarked, (iii) if sent by overnight delivery service, when
received at the above stated addresses or when delivery is
refused or (iv) if sent by facsimile transmission, when receipt
of such transmission is acknowledged.
SECTION 8.08. SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns, except that Borrower
shall not have the right to assign this Agreement or any interest
herein without the prior written consent of Lender. Lender may,
without the consent of Borrower, assign to one or more banks,
financial institutions or investment companies all or a portion
of Lender's rights and obligations under this Agreement, the Note
and the Security Documents.
SECTION 8.09. SEVERABILITY. In case any provision in or
obligation under this Agreement or the Note or the other Loan
Documents shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or
<PAGE>
of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 8.10. SECTION HEADINGS. The Article and Section
headings in this Agreement are inserted for convenience of
reference only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
SECTION 8.11. INTEGRATION. This Agreement supersedes
Borrower's application for credit, commitment letters and
proposal letters in respect hereof, and all other prior dealings
between the parties hereto and their respective agents, employees
or officers with respect to the credit facilities extended
hereby, and this Agreement, together with the other Loan
Documents and the Note, constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof.
SECTION 8.12. COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by the different parties hereto
in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, Lender and Borrower have caused this
Agreement to be duly executed by their duly authorized officers,
all as of the day and year first above written.
Lender:
GERALD METALS, INC.
By /s/
Title Vice President
By /s/
Title Senior Vice President
Borrower:
ALTA GOLD CO.
By /s/
Title President
By /s/
Title Sr Vice President & CFO
<PAGE>
EXHIBIT A
REQUEST FOR ADVANCE
____________, 199__
Gerald Metals, Inc.
High Ridge Park
Stamford, Connecticut 06904
Attention: Robert Kaeser
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.01 of the Loan
Agreement dated as of May ___, 1996, between the undersigned and
Gerald Metals, Inc., as amended or modified from time to time
(the "Loan Agreement"), and the undersigned, as borrower, hereby
requests an Advance of $____________ to be made on _____________,
199__, which Advance shall be evidenced by the undersigned's
Secured Promissory Note dated May ___, 1996. The principal
balance outstanding under said Secured Promissory Note, after
taking into consideration the amount of the Advance requested
hereunder, is $____________.
The undersigned hereby represents and warrants that (i) no
event has occurred and is continuing, or would result from the
proposed Advance, which constitutes an "Event of Default" or a
"Default" as each term is defined in the Loan Agreement and (ii)
the representations and warranties in Article III of the Loan
Agreement remain true and correct as of the date hereof. The
undersigned further represents and warrants that the financial
condition of the undersigned has not materially adversely changed
since the submission of the undersigned's most recent financial
information to Lender.
The officer signing below hereby individually represents
that he/she is an authorized officer of the undersigned borrower
and is authorized to request the Advance on behalf of such
borrower.
Very truly yours,
ALTA GOLD CO.
By_________________________________
Title______________________________
<PAGE>
EXHIBIT B
PERMITTED LIENS
(A) Property described in the following financing statements on
file on date hereof:
Collateral
FILING OFFICE SECURED PARTY FILE NO. FILE DATE DESCRIPTION
Nevada NERCO 91-10688 11/19/91 Escrow funds
Secretary of Exploration
State Company
Cargill Leasing 95-08576 06/19/95 Equipment
Corporation
Cargill Leasing 95-12612 09/06/95 Equipment
Corporation
First National 96- 3/ /96 Mill and
Bank of Ely equipment
Lyon Credit Co. 96- 4/ /96 Equipment
(B) Purchase money security interests in property acquired after
the date hereof.
(C) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due.
<PAGE>
EXHIBIT C
FORM OF OPINION OF COUNSEL
<PAGE>
EXHIBIT D
LOSS PAYABLE ENDORSEMENT
Policy No.:
Named Insured: Alta Gold Co.
Name of Loss Payee and Additional Insured: Gerald Metals, Inc.
Address: High Ridge Park
P.O. Box 10134
Stamford, Connecticut 06904
Interest/Description of Property:
Loss under this policy will be payable to the above named
Loss Payee and Additional Insured as Lender or mortgagee as its
interests may appear.
The Loss Payee and Additional Insured now has or will
acquire from time to time an insurable interest in certain
property insured under this policy. Such interests will be
established by documentary or other written evidence (including,
without limitation, a security agreement).
The interest of the Loss Payee and Additional Insured will
not be impaired by:
1. any act or neglect of the borrower, mortgagor or owner
of the above described property except as provided in the last
paragraph of this endorsement;
2. any change in the title or ownership of the property; or
3. a more hazardous occupancy of the premises where the
property is located than is permitted by this policy.
We reserve the right to cancel this policy at any time as
provided by its terms. If we do so, this policy will continue in
force for the benefit only of the Loss Payee and Additional
Insured for sixty (60) days after notice to the Loss Payee and
Additional Insured of such cancellation and will then cease.
Whenever we will pay the Loss Payee and Additional Insured
any sum for loss or damage under this policy and claim that, as
to the borrower, mortgagor or owner, no liability existed then
<PAGE>
we will, to the extent of such payment, be legally subrogated to
all the rights of the party to whom the payment will be made,
under all securities held as collateral to the debt. At our
option, we may pay the Loss Payee and Additional Insured the
whole principal due or to grow due on the debt with interest, and
thereupon receive a full assignment and transfer of the debt and
of the mortgage and all of such other securities as evidence of
the interest of the Loss Payee and Additional Insured in the
described property. However, no subrogation will impair the Loss
Payee and Additional Insured's right to recover the full amount
of its claim against the borrower, mortgagor or owner.
All other provisions of the policy apply.
<PAGE>
