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) April 14, 1997
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, including area code (702) 433-8525
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On April 4, 1997, the Company completed a private placement
of $10 million in aggregate principal amount of convertible
debentures (the "Debentures") to a small group of accredited
investors. The Debentures were sold pursuant to an exemption
from the registration requirements of the Securities Act of
1933. In connection with the sale of the Debentures, the Company
agreed to file a registration statement with the Securities and
Exchange Commission within 30 days to register the common stock
which will be issued upon a conversion, if any, of the Debentures.
The Debentures accrue interest at an annual rate of four
percent and mature on April 14, 1999. The Debentures may be
converted into the Company's common stock at a conversion price
of the lesser of (i) an amount equal to 90% of the average of the
closing bid prices of the Company's common stock for the five
consecutive trading days preceding a notice of conversion, or
(ii) $4.00. The Debentures may be converted on the earlier of
(i) the effective date of the registration statement, (ii) six
months from the date of the Debentures, and (iii) five business
days prior to the record date of a special meeting of
stockholders to approve, or if there is no such record date, five
business days prior to the consummation of, a merger,
consolidation, exchange of shares, recapitalization,
reorganization or other similar event.
The Company intends to use the net proceeds from the sale of
the Debentures to finance a portion of the Company's anticipated
1997 expenditures. The Company's anticipated expenditures for
1997 include amounts for (i) permitting and property holding
costs, mine planning, site development, equipment and project
working capital at its Olinghouse and Griffon mining properties;
(ii) completing a feasibility study for its Olinghouse mining
property; (iii) permitting and property holding costs at its
Copper Flat mining property; and (iv) additional drilling at its
Olinghouse, Griffon, Kinsley, Excalibur and Osceola mining
properties. Additional funds, which the Company anticipates to
be provided from debt financing, will be required for these
projects. Actual expenditures at any of the Company's properties
will be based upon the timing of the issuance of government
permits, the availability of alternative methods of financing,
the Company's progress in developing its properties and other
factors. The use of net proceeds from the sale of the Debentures
also is subject to change based upon market conditions and
unanticipated costs of exploration and development of the
Company's properties.
The Company is engaged in the exploration, development,
mining and production of gold on properties in Nevada. The
Company also has three base metals properties in the western
United Sates which are in various stages of development.
THIS FORM 8-K CONTAINS STATEMENTS THAT MAY BE CONSIDERED
FORWARD-LOOKING STATEMENTS SUCH AS THE COMPANY'S ANTICIPATED 1997
EXPENDITURES AND THE ANTICIPATED USE OF THE NET PROCEEDS FROM THE
SALE OF THE DEBENTURES. SUCH FORWARD-LOOKING STATEMENTS ARE
INHERENTLY UNCERTAIN, AND THE ACTUAL RESULTS MAY DIFFER FROM
MANAGEMENT'S EXPECTATIONS. FURTHER INFORMATION ON POTENTIAL
FACTORS WHICH COULD AFFECT THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY ARE INCLUDED IN THE FILINGS OF THE
COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING,
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BUT NOT LIMITED TO, THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired. Not
applicable.
(b) Pro forma financial information. Not applicable.
(c) Exhibits.
EXHIBIT NO. DESCRIPTION
10.01 Securities Purchase Agreement dated April
14, 1997, by and among Alta Gold Co. and
RGC International Investors, LDC, The
Tailwind Fund, Ltd., European American
Securities Account Client, Keway
Investments Ltd., Olympus Securities,
Ltd., Nelson Partners and Halifax, L.P.
10.02 Form of Convertible Debentures dated
April 14, 1997, issued by Alta Gold Co.,
contained in Exhibit 10.01.
10.03 Registration Rights Agreement dated April
14, 1997, by and among Alta Gold Co. and
RGC International Investors, LDC, The
Tailwind Fund, Ltd., European American
Securities Account Client, Keway
Investments Ltd., Olympus Securities,
Ltd., Nelson Partners and Halifax, L.P.,
contained in Exhibit 10.01.
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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: April 16, 1997 By: /s/ John A. Bielun
John A. Bielun
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
10.01 Securities Purchase Agreement dated April 14, 6
1997, by and among Alta Gold Co. and RGC
International Investors, LDC, The Tailwind
Fund, Ltd., European American Securities
Account Client, Keway Investments Ltd.,
Olympus Securities, Ltd., Nelson Partners and
Halifax, L.P.
10.02 Form of Convertible Debentures dated April 14,
1997, issued by Alta Gold Co., contained in
Exhibit 10.01.
10.03 Registration Rights Agreement dated April 14,
1997, by and among Alta Gold Co. and RGC
International Investors, LDC, The Tailwind
Fund, Ltd., European American Securities
Account Client, Keway Investments Ltd.,
Olympus Securities, Ltd., Nelson Partners and
Halifax, L.P., contained in Exhibit 10.01.
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EXHIBIT 10.01
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EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as
of April 14, 1997 by and among Alta Gold Co., a Nevada
corporation, with corporate offices located at 601 Whitney Ranch
Road, Suite 10, Henderson, Nevada 89014 (the "COMPANY"), and each
of the purchasers set forth on the signature pages hereto (the
"BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D ("REGULATION
D") as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as
amended (the "1933 ACT");
B. The Buyers desire to purchase and the Company desires to
issue and sell, upon the terms and conditions set forth in this
Agreement, convertible debentures of the Company, in the form
attached hereto as EXHIBIT "A", in the aggregate principal amount
of Ten Million Dollars ($10,000,000), convertible into shares of
common stock, par value $.001 per share, of the Company (the
"COMMON STOCK"), upon the terms and subject to the limitations
and conditions set forth in such debentures;
C. Each Buyer wishes to purchase, upon the terms and conditions
stated in this Agreement, such convertible debentures of the
Company in the principal amount set forth immediately below its
name on the signature pages hereto; and
D. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement, in the form attached hereto as
EXHIBIT "B" (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to
which the Company has agreed to provide certain registration
rights under the 1933 Act and the rules and regulations
promulgated thereunder and applicable state securities laws;
NOW THEREFORE, the Company and each of the Buyers (severally
and not jointly) hereby agree as follows:
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1. PURCHASE AND SALE OF DEBENTURES.
a. PURCHASE OF DEBENTURES. The Company shall issue
and sell to each Buyer and each Buyer severally agrees to
purchase from the Company such principal amount of convertible
debentures as is set forth immediately below such Buyer's name on
the signature pages hereto (collectively, together with any
debenture(s) issued in replacement thereof in accordance with the
terms thereof, the "DEBENTURES") for an aggregate principal
amount of Ten Million Dollars ($10,000,000).
b. FORM OF PAYMENT. On the Closing Date (as defined
below), (i) each Buyer shall pay the purchase price for the
Debentures to be issued and sold to it (the "PURCHASE PRICE") by
wire transfer of immediately available funds to the Company, in
accordance with the Company's written wiring instructions,
against delivery of the Debentures in the principal amount
equivalent to the Purchase Price, and (ii) the Company shall
deliver such Debentures duly executed on behalf of the Company,
to the Buyer, against delivery of such Purchase Price.
c. CLOSING DATE. Subject to the satisfaction (or
waiver) of the conditions thereto set forth in Section 6 and
Section 7 below, the date and time of the issuance and sale of
the Debentures pursuant to this Agreement (the "CLOSING DATE")
shall be 12:00 noon Eastern Standard Time on April 14, 1997 or,
such other mutually agreed upon time. The closing shall occur on
the Closing Date at the offices of Ballard Spahr Andrews &
Ingersoll, 1735 Market Street, 51st Floor, Philadelphia,
Pennsylvania.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer severally represents and warrants to the Company
that:
a. INVESTMENT PURPOSE. As of the date hereof, the
Buyer is purchasing the Debentures and the shares of Common Stock
issuable upon conversion thereof (the "CONVERSION SHARES" and,
collectively with the Debentures, the "SECURITIES") for its own
account for investment only and not with a present view towards
the public sale or distribution thereof, except pursuant to sales
that are exempt from the registration requirements of the 1933
Act and any applicable state securities laws and/or that are
registered under the 1933 Act and any applicable state securities
laws.
b. ACCREDITED INVESTOR STATUS. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of
Regulation D and has such knowledge and experience in financial
and business matters that Buyer is capable of evaluating the
merits and risks of the prospective investment, which risks are
substantial.
c. RELIANCE ON EXEMPTIONS. The Buyer understands
that the Securities are being offered and sold to it in reliance
upon specific exemptions from the registration requirements of
United States federal and state securities laws and that the
Company is relying
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upon the truth and accuracy of, and the Buyer's compliance with,
the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility
of the Buyer to acquire the Securities.
d. INFORMATION. The Buyer and its advisors, if any,
have been furnished with all materials relating to the business,
finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by
the Buyer or its advisors. The Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the
Company and have received what the Buyer believes to be
satisfactory answers to any such inquiries. Neither such
inquiries nor any other due diligence investigation conducted by
Buyer or any of its advisors or representatives shall modify,
amend or affect Buyer's right to rely on the Company's
representations and warranties contained in Section 3 below. The
Buyer understands that its investment in the Securities involves
a significant degree of risk.
e. GOVERNMENTAL REVIEW. The Buyer understands that
no United States federal or state agency or any other government
or governmental agency has passed upon or made any recommendation
or endorsement of the Securities.
f. TRANSFER OR RESALE. The Buyer understands that
(i) except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under the
1933 Act or any applicable state securities laws, and may not be
transferred unless (a) subsequently registered thereunder, or (b)
the Buyer shall have delivered to the Company or its transfer
agent an opinion or other similar letter of counsel (which
opinion or letter shall be reasonably acceptable to the Company)
to the effect that the Securities to be sold or transferred may
be sold or transferred pursuant to an exemption from such
registration under the 1933 Act and any state securities laws,
sold pursuant to Rule 144 promulgated under the 1933 Act (or a
successor rule) or sold or transferred to an affiliate of Buyer
pursuant to a valid exemption from the registration requirements
of the 1933 Act; (ii) any sale of such Securities made in
reliance on Rule 144 may be made only in accordance with the
terms of said rule and further, if said rule is not applicable,
any resale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be
deemed to be an underwriter (as that term is defined in the 1933
Act) may require compliance with some other exemption under the
1933 Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions
of any exemption thereunder (in each case, other than pursuant to
the Registration Rights Agreement).
g. LEGENDS. The Buyer understands that the
Debentures and, until such time as the Conversion Shares have
been registered under the 1933 Act as contemplated by the
Registration Rights Agreement or may be sold without restriction
pursuant to Rule 144(k) (or any successor rule thereto) under the
1933 Act, the Conversion Shares, may bear a restrictive
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legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such
Securities):
"The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended (the "Act"). The securities have been
acquired for investment and may not be sold,
transferred or assigned in the absence of an effective
registration statement for the securities under said
Act, or an opinion of counsel, in form, substance and
scope reasonably acceptable to the Company, that
registration is not required under said Act and any
applicable state securities laws or unless sold
pursuant to Rule 144 under said Act."
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of
any Security upon which it is stamped, if, unless otherwise
required by applicable state securities laws, (a) the sale of
such Security is covered by an effective registration statement
under the 1933 Act, or (b) such holder provides the Company or
its transfer agent with an opinion or other similar letter of
counsel, in form, substance and scope reasonably acceptable to
the Company, to the effect that a public sale or transfer of such
Security may be made without registration under the 1933 Act and
any applicable state securities laws or that such Security can be
sold pursuant to Rule 144 under the 1933 Act (or a successor rule
thereto) without any restriction as to the number of Securities
acquired as of a particular date that can then be immediately
sold. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been
removed, in compliance with applicable securities law.
h. AUTHORIZATION; ENFORCEMENT. This Agreement and the
Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of the Buyer and are
valid and binding agreements of the Buyer enforceable in
accordance with their terms.
i. RESIDENCY. The Buyer is a resident of the
jurisdiction set forth immediately below such Buyer's name on the
signature pages hereto.
j. APPROVAL OF FOREIGN AGENCIES. The execution,
delivery and performance of this Agreement and the Registration
Rights Agreement by the Buyer do not currently require any
approval or consent on the part of, or to make any filing or to
apply for any registration or qualification with, any court or
governmental agency or any regulatory or self-regulatory agency
in any jurisdiction outside of the United States applicable to
the Buyer the failure of which to obtain would have a Material
Adverse Effect (as defined in Section 3(a)).
k. NO GENERAL SOLICITATION. To the knowledge of the
Buyer, the Securities were not offered to Buyer through any form
of general solicitation or general advertising, including,
without limitations, (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or
similar media or broadcast over television or radio,
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and (ii) any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Buyer that:
a. ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has
the requisite corporate power to own its properties and to carry
on its business as now being conducted. The Company does not own
or control any Subsidiaries (as defined below). The Company is
duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the
business conducted by it makes such qualification necessary and
where the failure so to qualify would have a Material Adverse
Effect. "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the operations, assets, financial condition or
prospects of the Company or on the transactions contemplated
hereby or by the agreements or instruments to be entered into in
connection herewith. "SUBSIDIARIES" means any corporation or
other organization, whether incorporated or unincorporated, (i)
of which (a) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar
functions with respect to such corporation or other organization
is directly or indirectly owned or controlled by the Company or
(b) the Company is a general partner or (ii) which is controlled,
directly or indirectly, by the Company (through ownership of
securities, by contract or otherwise).
b. AUTHORIZATION; ENFORCEMENT. (i) The Company has
the requisite corporate power and authority to enter into and
perform this Agreement, the Registration Rights Agreement and the
Debentures, and to issue the Securities, in accordance with the
terms hereof and thereof, (ii) the execution and delivery of this
Agreement, the Registration Rights Agreement and the Debentures
by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation the
issuance of the Debentures and the issuance and reservation for
issuance of the Conversion Shares issuable upon conversion or
exercise thereof) have been duly authorized by the Company's
Board of Directors and no further consent or authorization of the
Company, its Board or Directors, or its stockholders is required,
(iii) this Agreement has been duly executed and delivered by the
Company, and (iv) this Agreement constitutes, and upon execution
and delivery by the Company of the Registration Rights Agreement
and the Debentures, each of such instruments will constitute, a
valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
c. CAPITALIZATION. As of the date hereof, the
authorized capital stock of the Company consists of (i)
60,000,000 shares of Common Stock of which 29,043,692 shares are
issued and outstanding, 2,176,509 shares are reserved for
issuance pursuant to the Company's
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stock option plans, 1,975,700 shares are reserved for issuance
pursuant to securities (other than the Debentures) exercisable
for, or convertible into or exchangeable for shares of Common
Stock and 5,808,738 shares are reserved for issuance upon
conversion of the Debentures (subject to adjustment pursuant to
the Company's covenant set forth in Section 4(h) below); and (ii)
no shares of preferred stock have been authorized, issued or are
outstanding. All of such outstanding shares of capital stock are,
or upon issuance will be, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company are
subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. Except as
disclosed in SCHEDULE 3(C) and as provided by this Agreement, as
of the effective date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for,
calls, rights of first refusal or commitments of any character
whatsoever relating to, or securities or rights convertible into
or exchangeable for any shares of capital stock of the Company,
or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company, (ii)
there are no agreements or arrangements under which the Company
is obligated to register the sale of any of its securities under
the 1933 Act (except the Registration Rights Agreement) and (iii)
there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any
agreement providing rights to securityholders) that will be
triggered by the issuance of the Debentures or Conversion Shares.
The Company has furnished to the Buyer true and correct copies of
the Company's Restated Articles of Incorporation as in effect on
the date hereof ("ARTICLES OF INCORPORATION"), the Company's By-
laws, as in effect on the date hereof (the "BY-LAWS"), and the
terms of all securities convertible into or exercisable for
Common Stock of the Company and the material rights of the
holders thereof in respect thereto. The Company shall provide
the Buyer with a written update of this representation signed by
the Company's Chief Executive or Chief Financial Officer on
behalf of the Company as of the Closing Date.
d. ISSUANCE OF SHARES. The Debentures and the
Conversion Shares are duly authorized and, upon issuance in
accordance with the terms of this Agreement (including the
issuance of the Conversion Shares upon conversion of the
Debentures) will be validly issued, fully paid and non-
assessable, and free from all taxes, liens and charges with
respect to the issue thereof and will not be subject to
preemptive rights or other similar rights of stockholders of the
Company. The term Conversion Shares includes the shares of
Common Stock issuable upon conversion of the Debentures,
including without limitation, shares issuable in respect of the
conversion of principal and interest thereunder and such
additional shares, if any, as are issuable as a result of the
events described in Section 2(b) of the Registration Rights
Agreement. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock of the issuance
of the Conversion Shares upon conversion of the Debentures.
e. NO CONFLICTS. The execution, delivery and
performance of this Agreement, the Registration Rights Agreement
and the Debentures by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for
issuance of the Conversion Shares) will not (i) result
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in a violation of the Articles of Incorporation or By-laws or
(ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both could become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of
the Company is bound or affected (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). The Company is not in violation
of its Articles of Incorporation, By-laws or other organizational
documents and the Company is not in default (and no event has
occurred which with notice or lapse of time or both could put the
Company in default) under, and the Company has not taken any
action or failed to take any action that would give to others any
rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company
is a party or by which any property or assets of the Company is
bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
The business of the Company is not being conducted, and shall not
be conducted so long as a Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental
entity, except for involuntary violations which either singly or
in the aggregate do not have a Material Adverse Effect. Except
as specifically contemplated by this Agreement and as required
under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency
in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Registration Rights
Agreement or the Debentures in accordance with the terms hereof
or thereof. The Company is not in violation of the listing
requirements of the Nasdaq National Market ("NASDAQ-NMS") and
does not reasonably anticipate that the Common Stock will be
delisted by the Nasdaq-NMS in the foreseeable future.
f. SEC DOCUMENTS, FINANCIAL STATEMENTS. Since
December 31, 1995, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it
with the SEC pursuant to the reporting requirements of the
Exchange Act of 1934, as amended (the "1934 ACT") (all of the
foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto
and documents (other than exhibits) incorporated by reference
therein, being hereinafter referred to herein as the "SEC
DOCUMENTS"). The Company has delivered to each Buyer true and
complete copies of the SEC Documents, except for such exhibits
and incorporated documents. As of their respective dates, the
SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and
none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As
of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all
material respects with
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applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of
the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the financial statements of
the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to
December 31, 1996 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or in
the aggregate, are not material to the financial condition or
operating results of the Company.
g. ABSENCE OF CERTAIN CHANGES. Since December 31,
1996, there has been no material adverse change and no material
adverse development in the business, properties, operations,
financial condition, results of operations or prospects of the
Company, except as disclosed in the SEC Documents.
h. ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the Company, threatened
against or affecting the Company that could have a Material
Adverse Effect. SCHEDULE 3(H) contains a complete list and
summary description of any pending or threatened proceeding
against or affecting the Company, without regard to whether it
would have a Material Adverse Effect.
i. PERMITS, PATENTS, COPYRIGHTS, ETC. Except as set
forth on SCHEDULE 3(I), the Company has all required federal,
state and other permits and licenses necessary to conduct its
current mining operations described in the SEC Documents except
those, the failure of which to obtain, that would not have a
Material Adverse Effect. The Company owns or possesses the
requisite licenses or rights to use all patents, patent rights,
inventions, know-how, trade secrets, trademarks, service marks,
service names, trade names and copyrights necessary to enable it
to conduct its business as now operated (and, except as set forth
in SCHEDULE 3(I) hereof, to the best of the Company's knowledge,
as presently contemplated to be operated in the future); there is
no claim or action by any person pertaining to, or proceeding
pending, or to the Company's knowledge threatened which
challenges the right of the Company with respect to any patents,
patent rights, licenses, inventions, know-how, trademarks,
service marks, service names, trade names and copyrights
necessary to enable it to conduct its business as now operated
(and, except as set forth in SCHEDULE 3(I) hereof, to the best of
the Company's knowledge, as presently contemplated to be operated
in the future); to the best of the Company's knowledge, the
Company's current and intended products, services and processes
do not infringe on any patents,
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patent rights, licenses, inventions, know-how, trademarks,
service marks, service names, tradenames, copyrights or other
rights held by any person; and the Company is unaware of any
facts or circumstances which might give rise to any of the
foregoing. Set forth on EXHIBIT "C" are additional
representations and warranties of the Company regarding its
mining operations. Such representations and warranties are
incorporated in and made a part of this Section 3(i). The
reference to patents and patent rights in this Section 3(i)
(other than those described in EXHIBIT "C") refers to
intellectual property rights and not to patented mining rights.
j. NO MATERIALLY ADVERSE CONTRACTS, ETC. The Company
is not subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation
which, in the judgment of the Company's officers, has or is
expected in the future to have a Material Adverse Effect. The
Company is not a party to any contract or agreement which, in the
judgment of the Company's officers, has or is expected to have a
Material Adverse Effect.
k. TAX STATUS. Except as set forth on SCHEDULE 3(K),
the Company has made or filed all federal and state income and
all other tax returns, reports and declarations required to be
made or filed at or prior to the date of this Agreement by any
jurisdiction to which it is subject (unless and only to the
extent that the Company has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to
be due on such returns, reports and declarations to the extent
that such taxes, assessments or charges have become due at or
prior to the date of this Agreement, except those being contested
in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis
for any such claim.
l. CERTAIN TRANSACTIONS. Except (i) as disclosed in
the SEC Documents, (ii) for transactions which would not be
required to be disclosed in the SEC Documents pursuant to SEC
rules and regulations, (iii) for arm's length transactions
pursuant to which the Company makes payments in the ordinary
course of business upon terms no less favorable than the Company
could obtain from third parties and (iv) for the grant of stock
options disclosed in the SEC Documents, none of the officers,
directors, or employees of the Company is presently a party to
any transaction with the Company (other than for services as
employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from
any officer, director or such employee or, to the knowledge of
the Company, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or
partner.
m. DISCLOSURE. All information relating to or
concerning the Company set forth in this Agreement and provided
to the Buyers pursuant to Section 2(d) hereof and otherwise
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in connection with the transactions contemplated hereby is true
and correct in all material respects and the Company has not
omitted to state any material fact necessary in order to make the
statements made herein or therein, in light of the circumstances
under which they were made, not misleading. No event or
circumstance has occurred or exists with respect to the Company
or its business, properties, prospects, operations or financial
conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming
for this purpose that the Company's reports filed under the 1934
Act are being incorporated into an effective registration
statement filed by the Company under the 1933 Act).
n. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF
DEBENTURES. The Company acknowledges and agrees that the Buyers
are acting solely in the capacity of arm's length purchasers with
respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that no Buyer is acting
as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the
transactions contemplated hereby, and any advice given by any
Buyer or any of their respective representatives or agents in
connection with this Agreement and the transactions contemplated
hereby is merely incidental to the Buyers' purchase of the
Debentures. The Company further represents to each Buyer that
the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.
o. NO INTEGRATED OFFERING. Neither the Company, nor
any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales in
any security or solicited any offers to buy any security under
circumstances that would require registration under the 1933 Act
of the issuance of the Securities to the Buyers. To the
knowledge of the Company, the issuance of the Securities to the
Buyers will not be integrated with any other issuance of the
Company's securities which requires stockholder approval under
the rules of the Nasdaq Stock Market.
p. NO BROKERS. The Company has taken no action which
would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this
Agreement or the transactions contemplated hereby, except for
dealings with Monetary Advancement Int'l, Inc., whose commissions
and fees will be paid for by the Company.
q. NO GENERAL SOLICITATION. To the knowledge of the
Company, the Securities were not offered to Buyer through any
form of general solicitation or general advertising, including,
without limitations, (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, and (ii) any
seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
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4. COVENANTS.
a. BEST EFFORTS. The parties shall use their best
efforts to satisfy timely each of the conditions described in
Section 6 and 7 of this Agreement.
b. FORM D; BLUE SKY LAWS. The Company agrees to file
a Form D with respect to the Securities as required under
Regulation D. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Buyers at the
applicable closing pursuant to this Agreement under applicable
securities or "blue sky" laws of the states of the United States
(or to obtain an exemption from such qualification).
c. REPORTING STATUS; ELIGIBILITY TO USE FORM S-3.
The Company's Common Stock is registered under Section 12(g) of
the 1934 Act. So long as any Buyer beneficially owns any of the
Securities, the Company shall timely file all reports required to
be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination. The
Company currently meets, and will take all necessary action to
continue to meet, the "registrant eligibility" requirements set
forth in the general instructions to Form S-3. The Company
currently meets the "registrant eligibility" requirements for
primary issuances set forth in the general instructions to Form S-
3.
d. USE OF PROCEEDS. The Company shall use the
proceeds from the sale of the Debentures (less fees and expenses)
in the manner set forth in SCHEDULE 4(D) attached hereto and made
a part hereof.
e. ADDITIONAL EQUITY CAPITAL; RIGHT OF FIRST REFUSAL.
Subject to the exceptions described below, the Company agrees
that during the period beginning on the date hereof and ending
one hundred eighty (180) calendar days following the Closing Date
(the "LOCK-UP PERIOD"), the Company will not, without the prior
written consent of the holders of the majority of the Outstanding
Principal Amount (as defined in the Registration Rights
Agreement) of the Debentures negotiate or contract with any party
to obtain additional equity financing (including debt financing
with an equity component). In addition, subject to the
exceptions described below, the Company will not conduct any
equity financing (including debt with an equity component)
("FUTURE OFFERINGS") during the period beginning on the first day
immediately following the Lock-Up Period and ending on the 12-
month anniversary of the Closing Date unless it shall have first
delivered to each Buyer, at least ten (10) calendar days prior to
the closing of such Future Offering, written notice describing
the proposed Future Offering, including the terms and conditions
thereof, and providing each Buyer an option during the ten (10)
calendar day period following delivery of such notice to purchase
its pro rata share (based on the ratio that the principal amount
of Debentures purchased by it hereunder bears to the aggregate
principal amount of Debentures purchased hereunder) of the
securities being offered in the Future Offering on the same terms
as contemplated by such Future Offering (the
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<PAGE>
limitations referred to in this and the immediately preceding
sentence are collectively referred to as the "CAPITAL RAISING
LIMITATIONS"). If one or more Buyers chooses not to exercise
such option, the other Buyers will be provided the option to
purchase such nonparticipation Buyer's or Buyers', as the case
may be, pro rata share or shares. The Capital Raising
Limitations shall not apply to any transaction involving (i)
issuances of common stock in a "best efforts" underwritten public
offering which remains open for a period not exceeding three (3)
months from the date of its commencement or in a firm commitment
underwritten public offering (which best efforts or firm
commitment underwritten public offering shall not constitute a
continuous offering of securities pursuant to Rule 415 under the
1933 Act) or (ii) issuances of securities in connection with a
merger, consolidation or sale of assets, or in connection with
any strategic partnership or joint venture (the primary purpose
of which is not to raise equity capital), or in connection with
the disposition or acquisition of a business, product or license
by the Company. The Capital Raising Limitations also shall not
apply to the issuance of securities upon exercise or conversion
of the Company's options, warrants or other convertible
securities outstanding as of the date hereof or to the grant of
additional options or warrants, or the issuance of additional
securities, under any Company stock option or restricted stock
plan approved by a majority of the Company's disinterested
directors or a majority of the Company's disinterested
stockholders, under any bona fide employment agreements of the
Company which relate to full-time employment and have been
approved by a majority of disinterested directors of the Company
or pursuant to project or debt financing arrangements, provided
that any issuances of securities pursuant to such project or debt
financing arrangements shall not permit registration of such
securities for a period of six (6) months from the end of the
Lock-Up Period.
f. EXPENSES. The Company shall reimburse Rose Glen
Capital Management, L.P. ("RGC") for all expenses incurred by it
in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the other
agreements to be executed in connection herewith, including,
without limitation, attorneys' and consultants' fees and
expenses. The Company's obligation to reimburse RGC's expenses
under this Section 4(f) shall be limited to Thirty Thousand
Dollars ($30,000); PROVIDED, HOWEVER, that the Company shall not
be required to reimburse RGC for such expenses if RGC terminates
this Agreement or the Registration Rights Agreement other than by
reason of any intentional misstatement or misconduct of the
Company or any breach of any of the Company's representations or
warranties hereunder or in the Registration Rights Agreement or
the failure of the Company to perform any of its covenants or
agreements hereunder or in the Registration Rights Agreement.
g. FINANCIAL INFORMATION. The Company agrees to send
the following reports to each Buyer until such Buyer transfers,
assigns, or sells all of the Securities: (i) within ten (10)
calendar days after the filing with the SEC, a copy of its Annual
Report on Form 10-K, its Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K and any registration statement (to
the extent that such registration statement is publicly
available); and (ii) within one (1) calendar day after release,
copies of all press releases issued by the Company.
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<PAGE>
h. RESERVATION OF SHARES. The Company shall at all
times have authorized, and reserved for the purpose of issuance,
a sufficient number of shares of Common Stock to provide for the
full conversion of the outstanding Debentures and issuance of the
Conversion Shares in connection therewith (based on the
Conversion Price of the Debentures in effect from time to time).
The Company shall not reduce the number of shares of Common Stock
reserved for issuance upon conversion of the Debentures without
the consent of each Buyer, which consent will not be unreasonably
withheld; PROVIDED, HOWEVER, that the number of shares of Common
Stock reserved for issuance upon conversion of the Debentures may
be increased or reduced without the consent of any of the Buyers
to reflect stock dividends or splits, recapitalizations, mergers,
consolidations, spin-offs, reorganizations, combinations or
exchanges of shares or other similar changes in the capital
structure of the Company. The Company shall use its best efforts
at all times to maintain the number of shares of Common Stock so
reserved for issuance at no less than two (2) times the number
that is then actually issuable upon full conversion of the
Debentures (based on the Conversion Price of the Debentures in
effect from time to time).
i. LISTING. The Company shall promptly secure the
listing of the Conversion Shares upon each national securities
exchange or automated quotation system, if any, upon which shares
of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Conversion
Shares from time to time issuable upon conversion of the
Debentures. The Company will take all action necessary to obtain
and maintain the listing and trading of its Common Stock on the
Nasdaq-NMS, the Nasdaq SmallCap Market ("NASDAQ SMALLCAP"), the
New York Stock Exchange ("NYSE"), or the American Stock Exchange
("AMEX") and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules
of the National Association of Securities Dealers ("NASD") and
such exchanges, as applicable.
j. CORPORATE EXISTENCE. So long as a Buyer
beneficially owns any Debentures, the Company shall maintain its
corporate existence, except in the event of a merger,
consolidation or sale of all or substantially all of the
Company's assets, as long as the surviving or successor entity in
such transaction (i) assumes the Company's obligations hereunder
and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation
whose Common Stock is listed for trading on the Nasdaq-NMS,
Nasdaq SmallCap, NYSE or AMEX.
k. SOLVENCY. The Borrower (both before and after
giving effect to the transactions contemplated by this Agreement)
is solvent (I.E., its assets have a fair market value in excess
of the amount required to pay its probable liabilities on its
existing debts as they become absolute and matured) and currently
the Borrower has no information that would lead it to reasonably
conclude that the Borrower would not have, nor does it intend to
take any action that would impair, its ability to pay its debts
from time to time incurred in connection therewith as such debts
mature; PROVIDED, HOWEVER that the Holder hereby acknowledges (i)
that the
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<PAGE>
Borrower does not currently have funds reserved specifically for
repayment of the Debentures and (ii) that the Borrower expects
all amounts payable under the Debentures to be converted into
Common Stock in accordance with Article I thereof.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent to issue certificates, registered in the name of
each Buyer or its nominee, for the Conversion Shares in such
amounts as specified from time to time by each Buyer to the
Company (which amounts are subject to verification by the
Company) upon proper conversion of the Debentures (the
"IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior to
registration of the Conversion Shares under the 1933 Act, all
such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof (in the case
of the Conversion Shares, prior to registration of the Conversion
Shares under the 1933 Act), will be given by the Company to its
transfer agent and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to
the extent provided in this Agreement and the Registration Rights
Agreement. Nothing in this Section shall affect in any way the
Buyer's obligations and agreement set forth in Section 2(g)
hereof to comply with all applicable securities laws upon resale
of the Securities. If a Buyer provides the Company with an
opinion of counsel, reasonably satisfactory to the Company in
form, substance and scope, that registration of a resale by such
Buyer of any of the Securities is not required under the 1933
Act, the Company shall permit the transfer, and, in the case of
the Conversion Shares, promptly instruct its transfer agent to
issue one or more certificates in such name and in such
denominations as specified by such Buyer. The Company
acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Buyers, by obliterating the
intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section, that the
Buyers shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring
immediate transfer, without the necessity of showing economic
loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell
the Debentures to the Buyers or any of them at the Closing is
subject to the satisfaction, at or before the Closing Date, of
each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion (the obligation
of the Company to issue and sell the Debentures to any Buyer
hereunder is distinct and separate from its obligation to issue
and sell Debentures to any other Buyer hereunder and any failure
by one or more Buyers to fulfill the conditions set forth herein
or to consummate the purchase of
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<PAGE>
Debentures hereunder will not relieve the Company of its
obligations with respect to any other Buyer except as provided in
Section 6(c)):
a. The applicable Buyer shall have executed this
Agreement and the Registration Rights Agreement, and delivered
the same to the Company.
b. The applicable Buyer shall have delivered the
Purchase Price in accordance with Section 1(b) above.
c. The aggregate amount of the Purchase Price or
subscriptions received by the Company from all Buyers shall be
Ten Million Dollars ($10,000,000) and, in the event that
subscriptions for less than $10,000,000 is received by the
Company for the purchase of the Debentures, the Company will
return to the Initial Investors who have wired funds to the
Company all of the funds received.
d. The representations and warranties of the
applicable Buyer shall be true and correct in all material
respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and
warranties that speak as of a specific date), and the applicable
Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the applicable Buyer at or prior to the Closing Date.
The Company shall have received a certificate, executed by each
Buyer, dated as of the Closing Date, to the foregoing effect.
e. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits
the consummation of any of the transactions contemplated by this
Agreement.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the
Debentures at the Closing, is subject to the satisfaction, at or
before the Closing Date of each of the following conditions,
provided that these conditions are for such Buyer's sole benefit
and may be waived by such Buyer at any time in its sole
discretion:
a. The Company shall have executed this Agreement and
the Registration Rights Agreement, and delivered the same to the
Buyer.
b. The Company shall have delivered to such Buyer
duly executed Debentures being so purchased in accordance with
Section 1(b) above.
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<PAGE>
c. The Irrevocable Transfer Agent Instructions, in
form and substance satisfactory to a majority-in-interest of the
Buyers, shall have been delivered to the Company's transfer
agent.
d. The representations and warranties of the Company
shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at such time
(except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied
and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior
to the Closing Date. The Buyer shall have received a
certificate, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect.
e. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits
the consummation or materially and adversely alters the economic
benefits to the Buyer of any of the transactions contemplated by
this Agreement.
f. The Buyer shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in form, scope
and substance reasonably satisfactory to the Buyer and in
substantially the same form as EXHIBIT "D" attached hereto.
g. The Buyer shall have received an officer's
certificate described in Section 3(c) above, dated as of the
Closing Date.
h. The Common Stock shall have been authorized for
quotation on Nasdaq-NMS and trading thereon shall not have been
suspended by the SEC or Nasdaq.
i. Each other Buyer shall have purchased the
Debentures in the aggregate principal amount set forth
immediately below its name on the signature pages hereto and
shall have executed a satisfactory letter relating to trading
restrictions.
8. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of
Nevada without regard to the principles of conflict of laws. The
parties hereto hereby submit to the exclusive jurisdiction of the
United States Federal Courts located in Las Vegas, Nevada with
respect to any dispute arising under this Agreement, the
agreements entered into in connection herewith or the
transactions contemplated hereby or thereby.
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<PAGE>
b. COUNTERPARTS; SIGNATURE BY FACSIMILE. This
Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to the other party. This Agreement, once executed
by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
c. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.
d. SEVERABILITY. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Agreement or the validity
or enforceability of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and
the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the
party to be charged with enforcement.
f. NOTICES. Any notices required or permitted to be
given under the terms of this Agreement shall be sent by
certified or registered mail (return receipt requested) or
personally delivered (by hand, by courier, by telephone line
facsimile transmission or other means) and shall be effective
five days after being placed in the mail, if mailed, or upon
receipt, if personally delivered (by hand, by courier, by
telephone line facsimile transmission or other means), in each
case addressed to a party. The addresses for such communications
shall be:
If to the Company:
Alta Gold Co.
601 Whitney Ranch Drive
Henderson, Nevada 89014
Attention: Chief Executive Officer
Telecopy: 702-433-1547
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<PAGE>
With copy to:
Michael J. Bonner, Esquire
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway, 7th Floor
Las Vegas, Nevada 89109-0907
Telecopy: 702-796-7181
If to a Buyer: To the address set forth immediately below
such Buyer's name on the signature pages hereto.
Each party shall provide notice to the other party of any
change in address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties and their
successors and assigns. Neither the Company nor any Buyer shall
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding
the foregoing, any Buyer may assign its rights hereunder to any
of its "affiliates," as that term is defined under the 1934 Act,
without the consent of the Company, so long as such Buyer
complies with the provisions of Section 2(f) hereunder.
h. THIRD PARTY BENEFICIARIES. This Agreement is
intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any
other person.
i. SURVIVAL. The representations and warranties of
the Company and the agreements and covenants set forth in
Sections 2, 3, 4, 5 and 8 shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or
on behalf of the Buyers. The Company agrees to indemnify and
hold harmless each of the Buyers for loss or damage arising as a
result of or related to any breach or alleged breach by the
Company of any of its representations, warranties and covenants
set forth in Sections 3 and 4 hereof, including advancement of
reasonable expenses as they are incurred.
j. PUBLICITY. The Company and each of the Buyers
shall have the right to review before issuance any press
releases, SEC, Nasdaq or NASD filings, or any other public
statements with respect to the transactions contemplated hereby;
PROVIDED, HOWEVER, that the Company shall be entitled to make any
press release or SEC, Nasdaq or NASD filings with respect to such
transactions as is required by applicable law and regulations
(although each of the Buyers shall be consulted by the Company in
connection with any such press release prior to its release and
shall be provided with a copy thereof).
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<PAGE>
k. FURTHER ASSURANCES. Each party shall do and
perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
l. TERMINATION. In the event that issuance and sale
of the Debentures pursuant to this Agreement shall not have
occurred on or before April 11, 1997, unless the parties agree
otherwise, this Agreement and the Registration Rights Agreement
shall terminate at the close of business on such date and, except
as specifically provided in Section 4(f), the Company and Buyer
shall have no further obligation or liability whatsoever under
this Agreement or the Registration Rights Agreement.
m. NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict
construction will be applied against either party.
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<PAGE>
IN WITNESS WHEREOF, the undersigned Buyers and the Company
have caused this Agreement to be duly executed as of the date
first above written.
Alta Gold Co.
By:____________________________
Name: Robert N. Pratt
Its: Chairman of the Board, Chief
Executive Officer and President
RGC International Investors, LDC
By: Rose Glen Capital Management, L.P., Investment Manager
By: RGC General Partners Corp.
SIGNATURE:
By:_________________________________
Name: Wayne Bloch
Its: Managing Director
STATE OF RESIDENCE: Cayman Islands
ADDRESS:
440 E. Swedesford Road
Suite 2025
Wayne, PA 19087
Facsimile: (610) 971-2212
Telephone: (610) 902-0200
AGGREGATE PURCHASE PRICE: $4,000,000
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<PAGE>
NAME OF BUYER: The Tail Wind Fund Ltd.
SIGNATURE: Brighton Holdings Limited, as sole director
By:__________________________________
Name: Steven E. Carey, John L. Thompson
Its: Directors
STATE OF RESIDENCE: N/A
ADDRESS:
The Tail Wind Fund Ltd.
c/o MeesPierson (Bahamas) Limited
Windermere House
404 East Bay Street
P.O. Box SS-5539
Nassau, Bahamas
Facsimile: (809) 393-9021
Telephone: (809) 393-8777
AGGREGATE PURCHASE PRICE: $ 1.5 million
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<PAGE>
NAME OF BUYER: European American Securities, Inc.
SIGNATURE:
By:_________________________________
Name: R. James Morton
Its: Director
STATE OF RESIDENCE: B.V.I.
ADDRESS:
1 Regent Street
Floor 4
London, SWIY 4NS
Facsimile: 44-171-468-7695
Telephone: 44-171-468-7690
AGGREGATE PURCHASE PRICE: $ 400,000
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<PAGE>
NAME OF BUYER: Nelson Partners
SIGNATURE:
By:_________________________________
Name: Anne Dupry
Its: Officer
STATE OF RESIDENCE: Bermuda
ADDRESS:
c/o Leed Management
129 Front Street
Hamilton HM12 Bermuda
Facsimile: 441-292-2239
Telephone: 441-295-8617
AGGREGATE PURCHASE PRICE: $ 1,000,000
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<PAGE>
NAME OF BUYER: Olympus Securities, Ltd.
SIGNATURE:
By:_________________________________
Name: Anne Dupry
Its: Alternate Director
STATE OF RESIDENCE: Bermuda
ADDRESS:
c/o Leed Management
129 Front Street
Hamilton HM12 Bermuda
Facsimile: 441-292-2239
Telephone: 441-295-8617
AGGREGATE PURCHASE PRICE: $ 1,000,000
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24
<PAGE>
NAME OF BUYER: Keyway Investments Ltd.
SIGNATURE:
By:_________________________________
Name: Gregory W. Murphy
Its: SVP Midland Walwyn Capital, Inc.
as agent for Keyway Investments Ltd.
STATE OF RESIDENCE: Isle of Man
ADDRESS:
c/o Midland Walwyn Capital, Inc.
BCE Place
181 Bay Street, Suite 500
Toronto, Ontario M5J2V8
Facsimile: 416-369-8738
Telephone: 416-369-8726
AGGREGATE PURCHASE PRICE: $ 1,100,000
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25
<PAGE>
NAME OF BUYER: Halifax Fund L.P.
SIGNATURE:
By: Palladin Group L.P., as attorney in fact
By: Palladin Capital Management LLC, its General Partner
By: Andrew Kaplan, Senior Vice President
STATE OF RESIDENCE: Cayman Islands
ADDRESS:
c/o Palladin Group, L.P.
40 West 57th Street
New York, New York 10019
Facsimile: 212-698-0599
Telephone: 212-698-0515
AGGREGATE PURCHASE PRICE: $ 1,000,000
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26
<PAGE>
EXHIBIT A to
Securities Purchase
Agreement
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID
ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE BORROWER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
CONVERTIBLE DEBENTURE
Henderson, Nevada
April 14, 1997 $_________
FOR VALUE RECEIVED, ALTA GOLD CO., a Nevada corporation
(hereinafter called the "Borrower") hereby promises to pay to the
order of ______________________________ or registered assigns
(the "Holder") the sum of ____________________ Dollars
($____________), on April 14, 1999, and to pay interest on the
unpaid principal balance hereof at the rate of four percent (4%)
per annum from April 14, 1997 (the "Issue Date") until the same
becomes due and payable, whether at maturity or upon acceleration
or by prepayment or otherwise. Any amount of principal of or
interest on this Debenture which is not paid when due shall bear
interest at the rate of six percent (6%) per annum from the due
date thereof until the same is paid ("Default Interest").
Interest shall commence accruing on April 14, 1997 and shall be
payable quarterly commencing on July 14, 1997 and shall be
computed on the basis of a 365-day year. All payments of
principal and interest (to the extent not converted in accordance
with the terms hereof) shall be made in lawful money of the
United States of America. All payments shall be made at such
address as the Holder shall hereafter give to the Borrower by
written notice made in accordance with the provisions of this
Debenture. Whenever any amount expressed to be due by the terms
of this Debenture is due on any day which is not a business day,
the same shall instead be due on the next succeeding day which is
a business day and, in the case of any interest payment date
which is not the date on which this Debenture is paid in full,
the extension of the due date thereof shall not be taken into
account for purposes of determining
<PAGE>
the amount of interest due on such date. As used in this
Debenture, the term "business day" shall mean any day other than
a Saturday, Sunday or a day on which commercial banks in the city
of Las Vegas, Nevada are authorized or required by law or
executive order to remain closed. Each capitalized term used
herein, and not otherwise defined, shall have the meaning
ascribed thereto in the Securities Purchase Agreement, dated
April 14, 1997, pursuant to which this debenture was originally
issued (the "Purchase Agreement").
The following terms shall apply to this Debenture:
ARTICLE I. CONVERSION RIGHTS
1.1 Conversion Right. The Holder shall have the right
from and after the earliest of (i) the effective date of the
Registration Statement (as defined in the Registration Rights
Agreement dated April 14, 1997 and executed in connection with
the initial issuance of this Debenture (the "Registration Rights
Agreement")), (ii) six (6) months from the date hereof and (iii)
any event described in Section 1.6 below, and then at any time on
or prior to the day that all of the principal, accrued interest
and other amounts payable hereunder is paid in full, to convert
at any time all or from time to time any part of the outstanding
and unpaid principal amount of this Debenture of at least
$50,000, or such lesser amount as shall remain unpaid at the time
of the conversion (together with accrued and unpaid interest
thereon), into fully paid and non-assessable shares of Common
Stock, par value $.001 per share, of the Borrower as such stock
exists on the date of issuance of this Debenture, or any shares
of capital stock of Borrower into which such stock shall
hereafter be changed or reclassified (the "Common Stock") at the
conversion price determined as provided herein (the "Conversion
Price"); provided, however, that unless the Holder delivers a
waiver in accordance with the immediately following sentence in
no event shall the Holder be entitled to convert any portion of
this Debenture in excess of that portion of this Debenture upon
conversion of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other
than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of this
Debenture) and (2) the number of shares of Common Stock issuable
upon the conversion of the portion of this Debenture with respect
to which the determination of this proviso is being made, would
result in beneficial ownership by the Holder and its affiliates
of more than 4.9% of the outstanding shares of Common Stock. For
purposes of the proviso to the immediately preceding sentence,
(i) beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended,
and Regulation 13 D-G thereunder, except as otherwise provided in
clause (1) of such proviso and (ii) the Holder may waive the
limitations set forth therein by written notice to the Company
upon not less than sixty-one (61) days prior notice (with such
waiver taking effect only upon the expiration of such 61 day
notice period). The number of shares of Common Stock to be
issued upon each conversion of this Debenture shall be determined
by dividing the
2
<PAGE>
Conversion Amount (as defined below) by the Conversion Price in
effect on the date a notice of conversion, in the form attached
hereto as Exhibit A (the "Notice of Conversion"), is delivered to
the Borrower by the Holder in accordance with Section 1.4 below
(the "Conversion Date"). The term "Conversion Amount" means,
with respect to any conversion of this Debenture, the sum of (1)
the principal amount of this Debenture to be converted in such
conversion plus (2) accrued and unpaid interest, if any, on such
principal amount at the interest rates provided in this Debenture
to the Conversion Date plus (3) Default Interest, if any, on the
interest referred to in the immediately preceding clause (2) plus
(4) at the Holder's option, any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof or pursuant to Section
2(b) of the Registration Rights Agreement.
1.2 Conversion Price. The Conversion Price shall be
the lesser of (i) 90% of the Market Price, when Market Price
means the average of the closing bid prices for the Common Stock
on the Nasdaq National Market, or on the principal securities
exchange or other securities market on which the Common Stock is
then being traded (as reported by Bloomberg Financial Markets),
for the five (5) consecutive Trading Days (as defined below)
ending one Trading Day prior to the date the Conversion Notice is
sent by the Holder to the Borrower via facsimile (the "Conversion
Date"), and (ii) $4.00 per share (subject to equitable
adjustments for stock splits, stock dividends, rights offerings,
combinations, recapitalization, reclassifications and similar
events). "Trading Day" shall mean any day on which the Common
Stock is traded for any period on the Nasdaq National Market, or
on the principal securities exchange or other securities market
on which the Common Stock is then being traded.
1.3 Authorized Shares. The Borrower covenants that
during the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of Common
Stock upon the full conversion of this Debenture. As of the date
of issuance of this Debenture, 5,808,738 authorized and unissued
shares of Common Stock have been duly reserved for issuance upon
conversion of this Debenture (the "Reserved Amount"). The
Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower
(i) acknowledges that it has irrevocably instructed its transfer
agent to issue certificates for the Common Stock issuable upon
conversion of this Debenture and (ii) agrees that its issuance of
this Debenture shall constitute full authority to its officers
and agents who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for
shares of Common Stock in accordance with the terms and
conditions of this Debenture.
If, at any time a Holder of this Debenture submits a
Notice of Conversion, the Borrower does not have sufficient
authorized but unissued shares of Common Stock available to
effect such conversion in accordance with the provisions of this
Article I (a "Conversion Default"), subject to Section 4.8, the
Borrower shall issue to the Holder all of the shares of
3
<PAGE>
Common Stock which are then available to effect such conversion.
The portion of this Debenture which the Holder included in its
Conversion Notice and which exceeds the amount which is then
convertible into available shares of Common Stock (the "Excess
Amount") shall, notwithstanding anything to the contrary
contained herein, not be convertible into Common Stock in
accordance with the terms hereof until (and at the Holder's
option at any time after) the date additional shares of Common
Stock are authorized by the Borrower, at which time the
Conversion Price in respect thereof shall be the lower of (i) the
Conversion Price on the Conversion Default Date (as defined
below) and (ii) the Conversion Price on the Conversion Date
thereafter elected by the Holder in respect thereof. The
Borrower shall pay to the Holder payments ("Conversion Default
Payments") for a Conversion Default in the amount of (N/365) x
the "Default Rate" (as defined below) x the Excess Amount on the
Conversion Date in respect of the Conversion Default (the
"Conversion Default Date"), where (i) N = the number of days from
the Conversion Default Date to the date (the "Authorization
Date") that the Borrower authorizes a sufficient number of shares
of Common Stock to effect conversion of the full outstanding
principal balance of this Debenture. The Default Rate means .15
for the first forty-five (45) calendar days following the
Conversion Default Date and .24 for the period thereafter until
the Authorization Date. The Borrower shall use its best efforts
to authorize a sufficient number of shares of Common Stock as
soon as practicable following the earlier of (i) such time that
the Holder notifies the Borrower or that the Borrower otherwise
becomes aware and notifies the Holder that there are insufficient
authorized and unissued shares to allow full conversion thereof
and (ii) a Conversion Default. The Borrower shall send notice to
the Holder of the authorization of additional shares of Common
Stock, the Authorization Date and the amount of Holder's accrued
Conversion Default Payments. The accrued Conversion Default
Payments for each calendar month shall be paid in cash or shall
be convertible into Common Stock at the Market Price, at the
Holder's option, as follows:
(a) In the event Holder elects to take such
payment in cash, cash payment shall be made to Holder by the
fifth day of the month following the month in which it has
accrued; and
(b) In the event Holder elects to take such
payment in Common Stock, the Holder may convert such payment
amount into Common Stock at the Conversion Price (as in effect at
the time of conversion) at any time after the fifth day of the
month following the month in which it has accrued in accordance
with the terms of this Article I.
The Holder's election shall be made in writing to the
Borrower at any time prior to 5:00 p.m. Philadelphia,
Pennsylvania Time on the third day of the month following the
month in which Conversion Default payments have accrued. If no
election is made, the Holder shall be deemed to have elected to
receive cash. Nothing herein shall limit the Holder's right to
pursue actual damages (to the extent in excess of the Conversion
Default
4
<PAGE>
Payments) due to the Borrower's failure to maintain a sufficient
number of authorized shares of Common Stock.
1.4 Method of Conversion.
(a) This Debenture may be converted by the Holder
in whole or in part (provided such partial conversion is at least
$50,000, or such lesser amount as shall remain unpaid at the time
of the conversion (together with accrued and unpaid interest
thereon)) at any time from time to time after the earliest of (i)
effective date of the Registration Statement, (ii) six (6) months
from the date hereof and (iii) any event described in Section 1.6
below, by (A) submitting to the Borrower a Notice of Conversion
(by facsimile dispatched on the Conversion Date prior to 8:00
p.m. Philadelphia, Pennsylvania Time) and (B) subject to Section
1.4(b), surrendering this Debenture at the principal office of
the Borrower.
(b) Notwithstanding anything to the contrary set
forth herein, upon conversion of this Debenture in accordance
with the terms hereof, the Holder shall not be required to
physically surrender this Debenture to the Borrower unless the
entire unpaid principal amount of this Debenture is so converted.
The Holder and the Borrower shall maintain records showing the
principal amount so converted and the dates of such conversions
or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender
of this Debenture upon each such conversion. In the event of any
dispute or discrepancy, such records of the Borrower shall be
controlling and determinative in the absence of manifest error.
Notwithstanding the foregoing, if any portion of this Debenture
is converted as aforesaid, the Holder may not transfer this
Debenture unless the Holder first physically surrenders this
Debenture to the Borrower, whereupon the Borrower will forthwith
issue and deliver upon the order of the Holder a new note of like
tenor, registered as the Holder (upon payment by the Holder of
any applicable transfer taxes) may request, representing in the
aggregate the remaining unpaid principal amount of this
Debenture. The Holder and any assignee, by acceptance of this
Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion
of this Debenture, the unpaid and unconverted principal amount of
this Debenture represented by this Debenture may be less than the
amount stated on the face hereof.
(c) The Borrower shall not be required to pay any
tax which may be payable in respect of any transfer involved in
the issue and delivery of shares of Common Stock or other
securities or property on conversion of this Debenture in a name
other than that of the Holder (or in street name), and the
Borrower shall not be required to issue or deliver any such
shares or other securities or property unless and until the
person or persons (other than the Holder or the custodian in
whose street name such shares are to be held for the Holder's
account) requesting the issuance thereof shall have paid to the
Borrower the
5
<PAGE>
amount of any such tax or shall have established to the
satisfaction of the Borrower that such tax has been paid.
(d) Upon receipt by the Borrower from the Holder
of a facsimile transmission of a Notice of Conversion meeting the
requirements for conversion as provided in this Section 1.4, the
Borrower shall issue and deliver or cause to be issued and
delivered to the Holder certificates for the Common Stock
issuable upon such conversion within three (3) business days
after such receipt (and, solely in the case of conversion of the
entire unpaid principal amount hereof, surrender of this
Debenture) (such third business day being hereinafter referred to
as the "Deadline") in accordance with the terms hereof and the
Purchase Agreement (including, without limitation, in accordance
with the requirement that certificates for shares of Common Stock
issued on or after the effective date of the Registration
Statement upon conversion of this Debenture shall not bear any
restrictive legend).
(e) Upon receipt by the Borrower of a Notice of
Conversion, the Holder shall be deemed to be the holder of record
of the Common Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and unpaid
interest on this Debenture shall be reduced to reflect such
conversion, and, unless the Borrower defaults on its obligations
under this Article I, all rights with respect to the portion of
this Debenture being so converted shall forthwith terminate
except the right to receive the Common Stock or other securities,
cash or other assets, as herein provided, on such conversion. If
the Holder shall have given a Notice of Conversion as provided
herein, the Borrower's obligation to issue and deliver the
certificates for Common Stock shall be absolute and
unconditional, irrespective of the absence of any action by the
Holder to enforce the same, any waiver or consent with respect to
any provision thereof, the recovery of any judgment against any
person or any action to enforce the same, any failure or delay in
the enforcement of any other obligation of the Borrower to the
holder of record, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Borrower, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Borrower to the Holder in connection with such conversion.
The date of receipt of such Notice of Conversion shall be the
Conversion Date so long as it is received before 8:00 p.m. on
such date (Philadelphia, Pennsylvania Time) and, if received
after 8:00 p.m., the Conversion Date shall be the next business
day.
(f) In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided
the Borrower's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of the Holder and its compliance with the
provisions contained in Section 1.1 and in this Section 1.4, the
Borrower shall use its best efforts to cause its transfer agent
to electronically transmit the Common Stock issuable upon
conversion
6
<PAGE>
to the Holder by crediting the account of Holder's Prime Broker
with DTC through its Deposit Withdrawal Agent Commission ("DWAC")
system.
(g) Without in any way limiting the Holder's
right to pursue other remedies, including actual damages and/or
equitable relief, the parties agree that if delivery of the
Common Stock issuable upon conversion of this Debenture is more
than one (1) business day after the Deadline (other than a
failure due to the circumstances described in Section 1.3 above,
which failure shall be governed by such Section) the Borrower
shall pay to the Holder $500 per day in cash, for the first day
beyond the Deadline and $2,500 per day in cash for each day
thereafter that the Borrower fails to deliver such Common Stock.
Such cash amount shall be paid to Holder by the fifth day of the
month following the month in which it has accrued or, at the
option of the Holder (by written notice to the Borrower by the
first day of the month following the month in which it has
accrued), shall be added to the principal amount of this
Debenture, in which event interest shall accrue thereon in
accordance with the terms of this Debenture and such additional
principal amount shall be convertible into Common Stock in
accordance with the terms of this Debenture.
1.5 Concerning the Shares. The shares of Common Stock
issuable upon conversion of this Debenture may not be sold or
transferred unless either (i) they first shall have been included
in any effective registration statement or (ii) the Borrower or
its transfer agent shall have been furnished with an opinion or
other similar letter of legal counsel to the effect that such
sale or transfer is exempt from the registration requirements of
the Act and any applicable state securities laws, such sale or
transfer is pursuant to Rule 144 under the Act or such transfer
is to an affiliate of the Holder pursuant to a valid exemption
from the registration requirements of the Act. Except as
otherwise provided in the Securities Purchase Agreement, each
certificate for shares of Common Stock issuable upon conversion
of this Debenture that has not been so registered and that has
not been sold pursuant to an exemption that permits removal of
the legend, shall bear a legend substantially in the following
form, as appropriate:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID
ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the
Borrower shall issue to the Holder a new certificate therefor
free of any transfer legend, unless otherwise required
7
<PAGE>
by applicable state securities laws, if (i) the Borrower or its
transfer agent shall have received an opinion or other similar
letter of counsel, reasonably acceptable to the Borrower in form,
substance and scope, to the effect that a public sale or transfer
of such Common Stock may be made without registration under the
Act and any applicable state securities laws, or that the Common
Stock issuable upon conversion of this Debenture (to the extent
such securities are deemed to have been acquired on the same
date) can be sold pursuant to Rule 144 (or a successor rule
thereto) without any restriction as to the number of shares of
Common Stock acquired as of a particular date that can then be
immediately sold or (ii) in the case of the Common Stock issuable
upon conversion of this Debenture, a registration statement under
the Act covering such securities is in effect. Nothing in this
Debenture shall (i) limit the Borrower's obligation under the
Registration Rights Agreement or (ii) affect in any way the
Holder's obligations to comply with applicable prospectus
delivery requirements upon the resale of the securities referred
to herein.
1.6 Effect of Merger, Consolidation, etc. If at any
time when this Debenture is issued and outstanding, there shall
be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a
result of which shares of Common Stock of the Borrower shall be
changed into the same or a different number of shares of another
class or classes of stock or securities of the Borrower or
another entity, or in case of any sale or conveyance of all or
substantially all of the assets of the Borrower other than in
connection with a plan of complete liquidation of the Borrower,
then the Holder of this Debenture shall thereafter have the right
to receive upon conversion of this Debenture, upon the bases and
upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon
conversion, such stock, securities or assets which the Holder
would have been entitled to receive in such transaction had this
Debenture been converted immediately prior to such transaction,
and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holder of this
Debenture to the end that the provisions hereof (including,
without limitation, provisions for adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the
Debenture) shall thereafter be applicable, as nearly as may be
practicable in relation to any securities or assets thereafter
deliverable upon the exercise hereof. The Borrower shall not
effect any transaction described in this Section 1.6 unless (a)
it first gives prior written notice five (5) business days prior
to the record date of the special meeting of stockholders to
approve, or if there is no such record date, five (5) business
days prior to the consummation of, such merger, consolidation,
exchange of shares, recapitalization, reorganization or other
similar event or sale of assets (during which time the Holder
shall be entitled to convert this Debenture) and (b) the
resulting successor or acquiring entity (if not the Borrower)
assumes by written instrument the obligations of this Section
1.6. The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share exchanges.
8
<PAGE>
1.7 Certain Payments in Lieu of Conversion. In no
event shall the Borrower issue more than the Maximum Share Amount
(as defined below and subject to adjustment as provided herein)
upon conversion of this Debenture, unless the Borrower shall have
obtained Stockholder Approval (as defined below) or a waiver of
such requirement by the Nasdaq Stock Market. As used herein,
Stockholder Approval means approval by the stockholders of the
Borrower in accordance with Rule 4460(i) of the rules of the
Nasdaq Stock Market. Once the Maximum Share Amount has been
issued (the date of which is hereinafter referred to as the
"Maximum Conversion Date"), in lieu of any further right to
convert this Debenture, and in full satisfaction of the
Borrower's obligations under this Debenture, the Borrower shall
pay to the Holder, within fifteen (15) business days of the
Maximum Conversion Date, an amount equal to the greater of (i)
the sum of (a) the then outstanding principal amount of this
Debenture immediately following the Maximum Conversion Date plus
(b) accrued and unpaid interest on such principal amount plus (c)
accrued and unpaid Default Interest, if any, on the amount
referred to in the immediately preceding clause (b) at the rate
provided in this Debenture plus (d) any optional amounts that may
be added thereto at the Maximum Conversion Date by the Holder in
accordance with the terms hereof (collectively, the "The
Remaining Convertible Amount") times 111%, or (ii) The Remaining
Convertible Amount divided by the Conversion Price (based on the
five (5) consecutive trading days ending on the date which is two
(2) trading days prior to the date of payment) times the closing
sale price of the Common Stock on Nasdaq or the principal trading
market for the Common Stock on the trading day immediately
preceding the date of payment. The Maximum Share Amount shall
mean an aggregate of 5,779,695 shares of Common Stock (19.9% of
the Company's outstanding shares of Common Stock as of April 14,
1997), subject to equitable adjustment from time to time for
stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to the Common Stock
occurring after the date hereof. With respect to each Holder of
Debentures, the Maximum Share Amount shall refer to such Holder's
pro rata share thereof determined in accordance with Section 4.8
below. In the event that Borrower obtains Stockholder Approval,
the approval of The Nasdaq Stock Market or otherwise concludes
that it is able to increase the number of shares to be issued
above the Maximum Share Amount (such increased number being the
"New Maximum Share Amount"), the references to Maximum Share
Amount, above, shall be deemed to be, instead, references to the
greater New Maximum Share Amount. In the event that Stockholder
Approval is not obtained or a registration statement covering the
additional shares of Common Stock which constitute the New
Maximum Share Amount is not effective prior to the Maximum Share
Amount being issued (if such registration statement is necessary
to allow for the public resale of such securities), the Maximum
Share Amount shall remain unchanged; provided, however, that the
Holder may grant an extension of the effective date of such
registration statement. So long as the Borrower otherwise
satisfies the payment obligations under this Section 1.7, the
Borrower shall be under no obligation to obtain Stockholder
Approval.
9
<PAGE>
ARTICLE II. CERTAIN COVENANTS
2.1 Tender Offers. The Borrower will not itself, and
will not permit any subsidiary of the Borrower to (1) make any
tender offer or exchange offer (a "Tender Offer") for outstanding
shares of Common Stock unless the Borrower contemporaneously
therewith makes an offer, or (2) enter into an agreement
regarding a Tender Offer for outstanding shares of Common Stock
by any person other than the Borrower or any subsidiary of the
Borrower unless such person agrees with the Borrower to make an
offer, in either such case, to the Holder to purchase the same
percentage of the outstanding principal amount of this Debenture
held by the Holder as the percentage of outstanding shares of
Common Stock offered to be purchased in such Tender Offer, at a
price equal to the greater of (i) the product obtained by
multiplying (1) the sum of (a) the principal amount of this
Debenture to be purchased plus (b) accrued and unpaid interest on
such principal amount to date of purchase plus (c) accrued and
unpaid Default Interest, if any, on the amount referred to in the
immediately preceding clause (b) at the rate provided in this
Debenture to the date of purchase plus (d) any optional amounts
that may be added thereto by the Holder in accordance with the
terms hereof (collectively, the "Then Convertible Amount") times
(2) 111% or (ii) the Then Convertible Amount divided by the
applicable Conversion Price (based on the five trading days
immediately preceding the date of public notice of such Tender
Offer) times the price offered to holders of Common Stock in such
Tender Offer.
2.2 Distributions on Capital Stock. So long as the
Borrower shall have any obligation under this Debenture, the
Borrower shall not (a) pay, declare or set apart for such
payment, any dividend (whether in cash, property or other
securities) on shares of capital stock other than dividends on
shares of Common Stock solely in the form of additional shares of
Common Stock or (b) directly or indirectly or through any
subsidiary make any other payment or distribution in respect of
its capital stock.
2.3 Restriction on Stock Repurchases. So long as this
Debenture is outstanding, neither the Borrower nor any subsidiary
of the Borrower shall redeem, repurchase (other than pursuant to
a Tender Offer, as defined in Section 2.1, which shall be
governed by Section 2.1) or otherwise acquire (whether for cash
or in exchange for property or other securities or otherwise) in
any one transaction or series of related transactions any shares
of capital stock of the Borrower or any subsidiary of the
Borrower or any warrants, rights or options to purchase or
acquire any such shares.
10
<PAGE>
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an
"Event of Default") shall occur:
3.1 Failure to Pay Principal or Interest. The
Borrower fails (a) to pay the principal hereof when due, whether
at maturity, upon mandatory prepayment pursuant to Section 1.7,
upon acceleration or otherwise or (b) to pay any installment of
interest hereon when due and, in the case of this clause (b)
only, such failure continues for a period of ten (10) calendar
days after the due date thereof;
3.2 Conversion and the Shares. The Borrower fails to
issue shares of Common Stock to the Holder (or announces that it
will not honor its obligation to do so) upon exercise by the
Holder of the conversion rights of the Holder in accordance with
the terms of this Debenture (for a period of at least 90 calendar
days, if such failure is solely as a result of the circumstances
governed by Section 1.3 and the Borrower is using its best
efforts to authorize a sufficient number of shares of Common
Stock as soon as practicable), fails to transfer any certificate
for shares of Common Stock issued to the Holder upon conversion
of this Debenture and when required by this Debenture or the
Registration Rights Agreement, or fails to remove any restrictive
legend on any certificate for any shares of Common Stock issued
to the Holder upon conversion of this Debenture as and when
required by this Debenture, the Purchase Agreement or the
Registration Rights Agreement and any such failure shall continue
uncured (or any announcement not to honor conversions shall not
be rescinded) for ten (10) business days after the Borrower shall
have been notified thereof in writing by the Holder.
3.3 Breach of Covenant. The Borrower breaches any
material covenant or other material term or condition of this
Debenture (other than as specifically provided in Sections 3.1
and 3.2 hereof), the Purchase Agreement or the Registration
Rights Agreement and such breach continues for a period of ten
(10) business days after written notice thereof to the Borrower
from the Holder, it being understood that the failure of the
Borrower to obtain effectiveness with the Securities and Exchange
Commission of the Registration Statement within the 90-day period
specified in Section 2(b) of the Registration Rights Agreement
for any reason other than the failure of the Borrower to amend
such Registration Statement as specified in Section 2(a) of the
Registration Rights Agreement or to use its best efforts to cause
such Registration Statement to become effective within such
period and to remain effective during the Registration Period (as
defined therein), without more, shall not constitute an Event of
Default until such failure extends for 180 calendar days at which
time it shall be an Event of Default;
3.4 Breach of Representations and Warranties. Any
representation or warranty of the Borrower made herein or in any
agreement, statement or certificate given in
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writing pursuant hereto or in connection herewith (including,
without limitation, the Purchase Agreement and the Registration
Rights Agreement), shall be false or misleading in any material
respect when made and the breach of which would have a material
adverse effect on the Borrower or the prospects of the Borrower
or a material adverse effect on the Holder or the rights of the
Holder with respect to this Debenture or the shares of Common
Stock issuable upon conversion of this Debenture;
3.5 Receiver or Trustee. The Borrower or any
subsidiary of the Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment
of a receiver or trustee for it or for a substantial part of its
property or business, or such a receiver or trustee shall
otherwise be appointed;
3.6 Judgments. Any money judgment, writ or similar
process shall be entered or filed against the Borrower or any
subsidiary of the Borrower or any of its property or other assets
which would have a material adverse effect on the operations,
assets, financial condition or prospects of the Borrower or on
the transactions contemplated by this Debenture, and shall remain
unvacated, unbonded or unstayed for a period of forty-five (45)
calendar days unless otherwise consented to by the Holder, which
consent will not be unreasonably withheld; or
3.7 Bankruptcy. Bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings
for relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.
3.8 Delisting of Common Stock. The Common Stock is
not listed on at least one of the Nasdaq National Market, the
Nasdaq SmallCap Market, the New York Stock Exchange or the
American Stock Exchange.
Then upon the occurrence and during the continuation of
any Event of Default specified in Section 3.1, 3.2, 3.3, 3.4, 3.6
or 3.8, at the option of the Holders of a majority of the
aggregate principal amount of Debentures issued pursuant to the
Securities Purchase Agreement, the Borrower shall, and upon the
occurrence of any event of default specified in Section 3.5 or
3.7, the Borrower shall pay to the Holder an amount equal to the
greater of (i) the product of (1) the sum of (x) the then
outstanding principal amount of this Debenture plus (y) accrued
and unpaid interest on the unpaid principal amount of this
Debenture to the date of payment plus (z) Default Interest, if
any, on the interest referred to in the immediately preceding
clause (collectively, the "Default Sum") times (2) 115% or (ii)
the Default Sum divided by the then applicable Conversion Price
times the closing sale price of the Common Stock on Nasdaq or the
principal trading market for the Common Stock on the date the
Holders exercise their option pursuant to this paragraph or the
date of the occurrence of an event referred to in 3.5 or 3.7 (the
"Default Amount") and all other amounts payable
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<PAGE>
hereunder shall immediately become due and payable, all without
demand, presentment or notice, all of which hereby are expressly
waived, together with all costs, including, without limitation,
legal fees and expenses, of collection, and the Holder shall be
entitled to exercise all other rights and remedies available at
law or in equity.
If the Borrower fails to pay the Default Amount within
five (5) business days of written notice that such amount is due
and payable, then the Holder shall have the right at any time, so
long as the Borrower remains in default, to require the Borrower,
upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower
equal to the Default Amount divided by the Conversion Price then
in effect.
ARTICLE IV. MISCELLANEOUS
4.1 Failure or Indulgence Not Waiver. No failure or
delay on the part of the Holder in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right
or privilege preclude other or further exercise thereof or of any
other right, power or privileges. All rights and remedies
existing hereunder are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
4.2 Notices. Any notice herein required or permitted
to be given shall be in writing and may be personally served or
delivered by courier or sent by United States mail and shall be
deemed to have been given upon receipt if personally served
(which shall include telephone line facsimile transmission) or
sent by courier or three (3) calendar days after being deposited
in the United States mail, certified, with postage pre-paid and
properly addressed, if sent by mail. For the purposes hereof,
the address of the Holder shall be as shown on the records of the
Borrower; and the address of the Borrower shall be Alta Gold Co.,
601 Whitney Ranch Drive, Henderson, Nevada 89014, Attention:
Chief Executive Officer (facsimile number 702-433-1547). Both
the Holder and the Borrower may change the address for service by
service of written notice to the other as herein provided.
4.3 Amendments. This Debenture and any provision
hereof may only be amended by an instrument in writing signed by
the Borrower and the Holder. The term "Debenture" and all
reference thereto, as used throughout this instrument, shall mean
this instrument (and the other Debentures issued pursuant to the
Purchase Agreement) as originally executed, or if later amended
or supplemented, then as so amended or supplemented.
4.4 Assignability. This Debenture shall be binding
upon the Borrower and its successors and assigns, and shall inure
to be the benefit of the Holder and its successors
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<PAGE>
and assigns; provided, however, that so long as no Event of
Default has occurred, this Debenture shall only be transferable
in whole or in increments of $500,000 to "Accredited Investors"
(as defined in Rule 501(a) under the Securities Act) who agree in
advance to be bound by the terms of that certain letter agreement
dated April 14, 1997 executed by the Holder. Notwithstanding the
foregoing, this Debenture may be pledged as collateral in
connection with a bona fide margin account or other lending
arrangement.
4.5 Cost of Collection. If default is made in the
payment of this Debenture, the Borrower shall pay the Holder
hereof costs of collection, including reasonable attorneys' fees.
4.6 Governing Law. This Debenture shall be governed
by the internal laws of the State of Nevada, without regard to
the principles of conflict of laws.
4.7 Certain Amounts. Whenever pursuant to this
Debenture the Borrower is required to pay an amount in excess of
the outstanding principal amount (or the portion thereof required
to be paid at that time) plus accrued and unpaid interest plus
Default Interest on such interest, the Borrower and the Holder
agree that the actual damages to the Holder from the receipt of
cash payment on this Debenture may be difficult to determine and
the amount to be so paid by the Borrower represents stipulated
damages and not a penalty and is intended to compensate the
Holder in part for loss of the opportunity to convert this
Debenture and to earn a return from the sale of shares of Common
Stock acquired upon conversion of this Debenture at a price in
excess of the price paid for such shares pursuant to this
Debenture. The Borrower and the Holder hereby agree that such
amount of stipulated damages is not plainly disproportionate to
the possible loss to the Holder from the receipt of a cash
payment without the opportunity to convert this Debenture into
shares of Common Stock.
4.8 Allocations of Maximum Share Amount. The Maximum
Share Amount and the Reserved Amount (including any increases
thereto) shall be allocated pro rata among the Holders of
Debentures based on the principal amount of Debentures then held
by each Holder relative to the aggregate principal amount of the
Debentures then outstanding.
4.9 Damages Shares. The shares of Common Stock that
may be issuable to the Holder pursuant to Sections 1.3 and 1.4(g)
hereof and pursuant to Section 2(b) of the Registration Rights
Agreement ("Damages Shares") shall be treated as Common Stock
issuable upon conversion of this Debenture for all purposes
hereof and shall be subject to all of the limitations and
afforded all of the rights of the other shares of Common Stock
issuable hereunder, including without limitation, the right to be
included in the Registration Statement filed pursuant to the
Registration Rights Agreement. For purposes of calculating
interest payable on the outstanding principal amount hereof,
except as otherwise provided herein,
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<PAGE>
amounts convertible into Damages Shares ("Damages Amounts") shall
not bear interest but must be converted prior to the conversion
of any outstanding principal amount hereof, until the outstanding
Damages Amounts is zero.
4.10 Denominations. At the request of the Holder, upon
surrender of this Debenture, the Borrower shall promptly issue
new Debentures in the aggregate outstanding principal amount
hereof, in the form hereof, in such denominations of at least
$100,000 as the Holder shall request.
4.11 Purchase Agreement. By its acceptance of this
Debenture, each Holder agrees to be bound by the applicable terms
of the Purchase Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
15
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Debenture
to be signed in its name by its duly authorized officer this 14th
day of April, 1997.
ALTA GOLD CO
By:_________________________________
Name:
Title:
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<PAGE>
Exhibit A
NOTICE OF CONVERSION
OF CONVERTIBLE DEBENTURE
TO: Alta Gold Co.
(1) Pursuant to the terms of the attached Convertible
Debenture (the "Debenture"), the undersigned hereby elects to
convert $ principal amount of the Debenture into
shares of Common Stock of Alta Gold Co., a Nevada corporation
(the "Borrower"). Capitalized terms used herein and not
otherwise defined herein have the respective meanings provided in
the Debenture.
(2) Please issue a certificate or certificates for the
number of shares of Common Stock into which such principal amount
of the Debenture is convertible (_____ shares, based on the
Holder's calculation attached hereto) in the name(s) specified
immediately below or, if additional space is necessary, on an
attachment hereto:
_____________________________ ______________________________
Name Name
_____________________________ ______________________________
Address Address
_____________________________ ______________________________
SS or Tax ID Number SS or Tax ID Number
(3) Capitalized terms used in this Notice of Conversion
and not otherwise defined herein shall have the respective
meanings provided in the Debenture.
Date_________________ __________________________________________
Signature of Registered Holder (must be
signed exactly as name appears in the
Debenture).
17
<PAGE>
EXHIBIT B TO
SECURITIES PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as
of April 14, 1997 by and among Alta Gold Co., a Nevada
corporation, with corporate offices located at 601 Whitney Ranch
Drive, Suite 10, Henderson, Nevada 89014 (the "COMPANY"), and
each of the undersigned (together with their respective
affiliates the "INITIAL INVESTORS").
WHEREAS:
A. In connection with the Securities Purchase Agreement by
and among the parties hereto of even date herewith (the
"SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon
the terms and subject to the conditions contained therein, to
issue and sell to the Initial Investors convertible debentures
(the "DEBENTURES") that are convertible into shares (the
"CONVERSION SHARES") of the Company's common stock (the "COMMON
STOCK"), upon the terms and subject to the limitations and
conditions set forth in such Debentures; and
B. To induce the Initial Investors to execute and deliver
the Securities Purchase Agreement, the Company has agreed to
provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each of the Initial Investors
hereby agree as follows:
<PAGE>
1. DEFINITIONS.
a. As used in this Agreement, the following terms
shall have the following meanings:
(i) "BUSINESS DAY" means any day other than a
Saturday, Sunday or a day on which commercial banks in the city
of Las Vegas, Nevada are authorized or required by law or
executive order to remain closed.
(ii) "INVESTORS" means the Initial Investors and
any transferee or assignee (other than affiliates of the Initial
Investors, which are included in the definition of Initial
Investors) who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(iii) "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by preparing and
filing a Registration Statement or Statements in compliance with
the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous
basis ("RULE 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
(iv) "REGISTRABLE SECURITIES" means the Conversion
Shares issued or issuable and any shares of capital stock issued
or issuable as a dividend on or in exchange for or otherwise with
respect to any of the foregoing.
(v) "REGISTRATION STATEMENT" means a registration
statement of the Company under the 1933 Act related to the
Registrable Securities.
b. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in
the Securities Purchase Agreement.
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall
prepare, and, on or prior to the date which is thirty (30)
calendar days after the Closing Date, as defined in the
Securities Purchase Agreement (the "CLOSING DATE"), file with the
SEC a Registration Statement on Form S-3 (or, if Form S-3 is not
then available, on such form of Registration Statement as is then
available to effect a registration of the Registrable Securities,
subject to the consent of the Initial Investors, which consent
will not be unreasonably withheld) covering the resale of the
Registrable Securities underlying the Debentures issued pursuant
to the Securities Purchase Agreement which Registration
Statement, to the extent allowable under the 1933 Act and the
Rules promulgated thereunder (including Rule 416), shall state
that such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become
2
<PAGE>
issuable upon conversion of the Debentures (i) to prevent
dilution resulting from stock splits, stock dividends or similar
transactions or (ii) by reason of changes in the Conversion Price
of the Debentures in accordance with the terms thereof. The
number of shares of Common Stock initially included in such
Registration Statement shall be no less than two (2) times the
number of Conversion Shares that are then issuable upon
conversion of the Debentures without regard to any limitation on
an Investor's ability to convert the Debentures.
b. PAYMENTS BY THE COMPANY. The Company shall use
its best efforts to obtain effectiveness of the Registration
Statement as soon as practicable. If (i) the Registration
Statement(s) covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not
declared effective by the SEC within ninety (90) calendar days
after the Closing Date or if, after the Registration Statement
has been declared effective by the SEC, sales cannot be made
pursuant to the Registration Statement by reason of stop order,
or the Company's failure to update the Registration Statement, or
(ii) the Common Stock is not listed or included for quotation on
the Nasdaq National Market (the "NASDAQ-NMS"), the Nasdaq
SmallCap Market ("NASDAQ SMALLCAP"), the New York Stock Exchange
(the "NYSE") or the American Stock Exchange (the "AMEX") after
being so listed or included for quotation, then the Company will
make payments to the Investors in such amounts and at such times
as shall be determined pursuant to this Section 2(b) as partial
relief for the damages to the Investors by reason of any such
delay in or reduction of their ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity). The Company shall pay
to each holder of the Debentures or Registerable Securities an
amount equal to the then outstanding principal amount of the
Debentures (and, in the case of holders of Registrable
Securities, the principal amount of Debentures from which such
Registrable Securities were converted) ("OUTSTANDING PRINCIPAL
AMOUNT") multiplied by one and one-half hundredths (.015) times
the sum of: (i) the number of months (prorated for partial
months) after the end of such 90-day period and prior to the date
the Registration Statement is declared effective by the SEC,
provided, however, that there shall be excluded from such period
any delays which are solely attributable to changes required by
the Investors in the Registration Statement with respect to
information relating to the Investors, including, without
limitation, changes to the plan of distribution, or to the
failure of the Investors to conduct their review of the
Registration Statement pursuant to Section 3(g) below in a
reasonably prompt manner; (ii) the number of months (prorated for
partial months) that sales cannot be made pursuant to the
Registration Statement after the Registration Statement has been
declared effective; and (iii) the number of months (prorated for
partial months) that the Common Stock is not listed or included
for quotation on the Nasdaq-NMS, Nasdaq SmallCap, NYSE or AMEX
after the Registration Statement has been declared effective.
(For example, if the Registration Statement becomes effective one
(1) month after the end of such 90-day period, the Company would
pay $15,000 for each $1,000,000 of Outstanding Principal Amount;
if thereafter, sales could not be made pursuant to the
Registration Statement for an additional period of one (1) month,
the Company would pay an additional $15,000 for each $1,000,000
of Outstanding Principal Amount.) Such amounts shall be paid in
cash or, at each Investor's option, may be convertible into
Common Stock at the "CONVERSION PRICE" (as defined in the
Debentures). Any shares of Common Stock
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<PAGE>
issued upon conversion of such amounts shall be Registrable
Securities. If the Investor desires to convert the amounts due
hereunder into Registrable Securities, it shall so notify the
Company in writing within two (2) business days of the date on
which such amounts are first payable in cash and such amounts
shall be so convertible (pursuant to the mechanics set forth
under Article I of the Debentures), beginning on the last day
upon which the cash amount would otherwise be due in accordance
with the following sentence. Payments of cash pursuant hereto
shall be made within ten (10) calendar days after the end of each
period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) calendar days,
interim payments shall be made for each such thirty (30) day
period.
c. PIGGY-BACK REGISTRATIONS. If at any time prior to
the expiration of the Registration Period (as hereinafter
defined) the Company shall file with the SEC a Registration
Statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity
securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or
other employee benefit plans), the Company shall send to each
Investor who is entitled to registration rights under this
Section 2(c) written notice of such determination and, if within
fifteen (15) calendar days after the effective date of such
notice, such Investor shall so request in writing, the Company
shall include in such Registration Statement all or any part of
the Registrable Securities such Investor requests to be
registered, except that if, in connection with any underwritten
public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or
other factors dictate such limitation is necessary to facilitate
public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion
of the Registrable Securities with respect to which such Investor
has requested inclusion hereunder as the underwriter shall
permit. Any exclusion of Registrable Securities shall be made pro
rata among the Investors seeking to include Registrable
Securities in proportion to the number of Registrable Securities
sought to be included by such Investors; PROVIDED, HOWEVER, that
the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the
holders of which are not entitled to inclusion of such securities
in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities; and PROVIDED, FURTHER,
HOWEVER, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made
pro rata with holders of other securities having the right to
include such securities in the Registration Statement other than
holders of securities entitled to inclusion of their securities
in such Registration Statement by reason of demand registration
rights. No right to registration of Registrable Securities under
this Section 2(c) shall be construed to limit any registration
required under Section 2(a) hereof. If an offering in connection
with which an Investor is entitled to registration under this
Section 2(c) is an underwritten offering, then each Investor
whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer
and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters
4
<PAGE>
and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in
such underwritten offering.
d. ELIGIBILITY FOR FORM S-3. The Company represents
and warrants that it meets the registrant eligibility and
transaction requirements for the use of Form S-3 for registration
of the sale by the Initial Investors and any other Investors of
the Registrable Securities and the Company shall file all reports
required to be filed by the Company with the SEC in a timely
manner so as to maintain such eligibility for the use of Form S-
3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable
Securities, the Company shall have the following obligations:
a. The Company shall prepare promptly, and file with
the SEC not later than thirty (30) calendar days after the
Closing Date, a Registration Statement with respect to the number
of Registrable Securities provided in Section 2(a), and
thereafter use its best efforts to cause such Registration
Statement relating to Registrable Securities to become effective
as soon as possible after such filing, and keep the Registration
Statement effective pursuant to Rule 415 at all times until such
date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold and (ii) the date on which
the Registrable Securities (in the opinion of counsel to the
Initial Investors) may be immediately sold without registration,
(the "REGISTRATION PERIOD"), which Registration Statement
(including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein not
misleading.
b. The Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and
supplements to the Registration Statement and the prospectus used
in connection with the Registration Statement as may be necessary
to keep the Registration Statement effective at all times during
the Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration
Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statement. In the event the number of shares
available under a Registration Statement filed pursuant to this
Agreement is insufficient to cover all of the Registrable
Securities issued or issuable upon conversion of the Debentures,
the Company shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefore, if
applicable), or both, so as to cover all of the Registrable
Securities, in each case, as soon as practicable, but in any
event within twenty (20) business days after the necessity
therefor arises (based on the market price of the Common Stock
and other relevant factors on which the Company reasonably elects
to rely). The Company shall use its best efforts to cause such
amendment and/or new Registration
5
<PAGE>
Statement to become effective as soon as practicable following
the filing thereof. The provisions of Section 2(b) above shall
be applicable with respect to such obligation, with the ninety
(90) calendar days running from the day after the date on which
the Company reasonably first determines (or reasonably should
have determined) the need therefor.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement
and its legal counsel (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the
Company, one copy of the Registration Statement and any amendment
thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, and, in the case of the
Registration Statement referred to in Section 2(a), each letter
written by or on behalf of the Company to the SEC or the staff of
the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration
Statement (other than any portion of any thereof which contains
information for which the Company has sought confidential
treatment), and (ii) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and
supplements thereto as such Investor may reasonably request in
order to facilitate the disposition of the Registrable Securities
owned by such Investor. The Company will immediately notify each
Investor by facsimile of the effectiveness of the Registration
Statement or any post-effective amendment thereto.
d. The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or "blue sky"
laws of such jurisdictions in the United States as the Investors
who hold a majority in interest of the Registrable Securities
being offered reasonably request, (ii) prepare and file in those
jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness
thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such
jurisdictions; PROVIDED, HOWEVER, that the Company shall not be
required in connection therewith or as a condition thereto to (a)
qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b)
subject itself to general taxation in any such jurisdiction, (c)
file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause the Company
undue expense or burden, or (e) make any change in its charter or
bylaws, which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the Company
and its stockholders. Notwithstanding anything to the contrary
contained herein, the Investors shall, if applicable, be
responsible, at their sole cost and expense, to register and
qualify the Registerable Securities under any securities laws
outside of the United States.
e. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor of the
happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in the Registration
Statement, as then
6
<PAGE>
in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and
use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of such
supplement or amendment to each Investor as such Investor may
reasonably request.
f. The Company shall use its best efforts to prevent
the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, and, if such an order
is issued, to obtain the withdrawal of such order at the earliest
possible moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such
order and the resolution thereof.
g. The Company shall permit a single firm of counsel
designated by the Initial Investors to review the Registration
Statement and all amendments and supplements thereto (as well as
all requests for acceleration or effectiveness thereof) a
reasonable period of time prior to their filing with the SEC, and
not file any document in a form to which such counsel reasonably
objects. The fees and expenses of such counsel shall be borne
solely by the Initial Investors.
h. The Company shall make generally available to its
security holders as soon as practical, but not later than ninety
(90) calendar days after the close of the period covered thereby,
an earnings statement (in form complying with the provisions of
Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal
quarter next following the effective date of the Registration
Statement.
i. The Company shall make available for inspection by
(i) any Investor, (ii) one firm of attorneys and one firm of
accountants or other agents retained by the Initial Investors,
and (iii) one firm of attorneys and one firm of accountants or
other agents retained by all other Investors (collectively, the
"INSPECTORS") all pertinent financial and other records, and
pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise
its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which
any Inspector may reasonably request for purposes of such due
diligence; PROVIDED, HOWEVER, that each Inspector shall hold in
confidence and shall not make any disclosure (except to an
Investor) of any Record or other information which the Company
determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (b) the
release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been
made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall
not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall
have entered into confidentiality agreements (in form and
substance satisfactory
7
<PAGE>
to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(i). Each Investor
agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice
to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed confidential.
Nothing herein shall be deemed to limit the Investor's ability to
sell Registrable Securities in a manner which is otherwise
consistent with applicable laws and regulations.
j. The Company shall hold in confidence and not make
any disclosure of information concerning an Investor provided to
the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of
competent jurisdiction, or (iv) such information has been made
generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give
prompt notice to such Investor prior to making such disclosure,
and allow the Investor, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order
for, such information.
k. The Company shall use its best efforts either to
(i) cause all the Registrable Securities covered by the
Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such
exchange, or (ii) secure the designation and quotation, of all
the Registrable Securities covered by the Registration Statement
on the Nasdaq-NMS or, if not eligible for the Nasdaq-NMS on the
Nasdaq SmallCap and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register
with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities.
l. The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable
Securities not later than the effective date of the Registration
Statement.
m. The Company shall cooperate with the Investors who
hold Registrable Securities being offered to facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case
may be, as the Investors may reasonably request and registered in
such names as the Investors may request, and, within three (3)
business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel selected by
the Company to deliver, to the transfer agent for the
8
<PAGE>
Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration
Statement) an instruction in the form attached hereto as
EXHIBIT 1 and an opinion of such counsel in the form attached
hereto as EXHIBIT 2.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable
Securities, the Investors shall have the following obligations:
a. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant
to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of
the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable
Securities and shall execute such documents in connection with
such registration as the Company may reasonably request. At
least three (3) business days prior to the first anticipated
filing date of the Registration Statement, the Company shall
notify each Investor of the information the Company requires from
each such Investor.
b. Each Investor, by such Investor's acceptance of
the Registrable Securities, agrees to cooperate with the Company
as reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder,
unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 3(e) or 3(f), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until
such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or 3(f) and, if
so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in such
Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts
and commissions, incurred by the Company in connection with
registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing
and qualification fees, printers and accounting fees, and the
fees and disbursements of counsel for the Company, shall be borne
by the Company.
9
<PAGE>
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will
indemnify, hold harmless and defend (i) each Investor who holds
such Registrable Securities, (ii) the directors, officers,
partners, employees, agents and each person who controls any
Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 ACT"), if any,
(iii) any underwriter (as defined in the 1933 Act) for the
Investors, and (iv) the directors, officers, partners, employees
and each person who controls any such underwriter within the
meaning of the 1933 Act or the 1934 Act, if any (each, an
"INDEMNIFIED PERSON"), against any joint or several losses,
claims, damages, liabilities or expenses (collectively, together
with actions, proceedings or inquiries by any regulatory or self-
regulatory organization, whether commenced or threatened, in
respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or the omission or
alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement,
or contained in the final prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements
therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the 1933 Act, the 1934 Act,
any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to
the offer or sale of the Registrable Securities (the matters in
the foregoing clauses (i) through (iii) being, collectively,
"VIOLATIONS"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company
shall reimburse the Indemnified Person, promptly as such expenses
are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in connection
with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to
a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in
writing to the Company by any Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was
timely made available by the Company pursuant to Section 3(c)
hereof; (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably
withheld; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the
untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, such corrected
prospectus
10
<PAGE>
was timely made available by the Company pursuant to Section 3(c)
hereof, and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use
giving rise to a Violation and such Indemnified Person,
notwithstanding such advise, used it. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees
severally and not jointly to indemnify, hold harmless and defend,
to the same extent and in the same manner set forth in Section
6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement, each person, if any, who
controls the Company within the meaning of the 1933 Act or the
1934 Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder
or underwriter within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim to which any of them may
become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity
with written information furnished to the Company by such
Investor expressly for use in connection with such Registration
Statement; and subject to Section 6(c) such Investor will
reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them
in connection with investigating or defending any such Claim;
PROVIDED, HOWEVER, that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written
consent of the Investors holding two-thirds of the Outstanding
Principal Amount of the Debentures, which consent shall not be
unreasonably withheld; PROVIDED, FURTHER, HOWEVER, that the
Investor shall be liable under this Agreement (including this
Section 6(b) and Section 7) for only that amount as does not
exceed the net proceeds to such Investor as a result of the sale
of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then
amended or supplemented.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the
commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
11
<PAGE>
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; PROVIDED, HOWEVER, that an Indemnified
Person or Indemnified Party shall have the right to retain its
own counsel with the reasonable fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall
be selected by Investors holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to
which the Claim relates (with the approval of a majority-in-
interest of the Initial Investors), if the Investors are entitled
to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action
shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is actually
prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to
make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section 6 to the fullest
extent permitted by law; PROVIDED, HOWEVER, that (i) no
contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault
standards set forth in Section 6, (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was
not guilty of such fraudulent misrepresentation, and (iii)
contribution (together with any indemnification or other
obligations under this Agreement) by any seller of Registrable
Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the
benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit
the investors to sell securities of the Company to the public
without registration ("RULE 144"), the Company agrees to:
12
<PAGE>
a. make and keep public information available, as
those terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports
and other documents required of the Company under the 1933 Act
and the 1934 Act so long as the Company remains subject to such
requirements (it being understood that nothing herein shall limit
the Company's obligations under Section 4(c) of the Securities
Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144;
and
c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon written request, (i) a
written statement by the Company that it has complied with the
reporting requirements of Rule 144, the 1933 Act and the 1934
Act, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities
pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable
Securities pursuant to this Agreement shall be automatically
assignable by the Investors to any transferee of all or any
portion of Registrable Securities only to the extent that the
Debentures may be assigned under the terms thereof and provided
further that: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time
after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii)
following such transfer or assignment, the further disposition of
such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws, (iv) at or
before the time the Company receives the written notice
contemplated by clause (ii) of this sentence, the transferee or
assignee agrees in writing to be bound by all of the provisions
contained herein, (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities
Purchase Agreement, and (vi) such transferee shall be an
"ACCREDITED INVESTOR" as that term defined in Rule 501 of
Regulation D promulgated under the 1933 Act.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the
observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively),
only with written consent of the Company and the Investors who
hold two-thirds of the Outstanding Principal Amount of the
Debentures; PROVIDED, HOWEVER, that the Company's obligations
with respect to the filing of the Registration Statement, the
seeking of effectiveness of the Registration Statement and the
maintenance of effectiveness of the Registration Statement shall
not be altered,
13
<PAGE>
amended or waived without the written consent of each of the
Initial Investors. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of
record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more
persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such
Registrable Securities.
b. Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be
sufficiently given when personally delivered (by hand, by
courier, by telephone line facsimile transmission or other means)
or which receipt is refused if delivered by hand or by courier or
sent by certified mail, return receipt requested, properly
addressed and with proper postage pre-paid,
if to the Company:
Alta Gold Co.
601 Whitney Ranch Drive
Henderson, Nevada 89014
Attention: Chief Executive Officer
Telecopy: 702-433-1547
With copy to:
Michael J. Bonner, Esquire
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway, 7th Floor
Las Vegas, Nevada 89109
Telecopy: 702-796-7181
and if to any Investor, at such address as such Investor shall
have provided in writing to the Company, or at such other address
as each such party furnishes by notice given in accordance with
this Section 11(b), and shall be effective, when personally
delivered, upon receipt and, when so sent by certified or
registered mail (return receipt requested), five days after
deposit with the United States Postal Service.
14
<PAGE>
c. Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver
thereof.
d. This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of Nevada
applicable to agreements made and to be performed entirely within
such State. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any
other provision hereof. The parties hereto hereby submit to the
exclusive jurisdiction of the United States Federal Courts
located in Las Vegas, Nevada with respect to any dispute arising
under this Agreement or the transactions contemplated hereby.
e. This Agreement and the Securities Purchase
Agreement (including all schedules and exhibits thereto)
constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This
Agreement and the Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof,
this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the
meaning hereof.
h. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. Unless otherwise provided, all consents and other
determinations to be made by the Investors pursuant to this
Agreement shall be made by Investors holding a majority
15
<PAGE>
of the Registrable Securities, determined as if the Debentures
then outstanding have been converted into or exercised for
Registrable Securities.
16
<PAGE>
IN WITNESS WHEREOF, the Company and the undersigned Initial
Investors have caused this Agreement to be duly executed as of
the date first above written.
ALTA GOLD CO.
By:_________________________________
Name: Robert N. Pratt
Its: Chairman of the Board, Chief Executive
Officer and President
RGC International Investors, LDC
By: Rose Glen Capital Management, L.P. Investment Manager
By: RGC General Partner Corp.
By:________________________________
Name: Wayne Bloch
Its: Managing Director
INVESTOR: The Tail Wind Fund Ltd.
Brighton Holdings Limited, as sole director
By:________________________________
Name: Steven E. Carey, John L. Thompson
Its: Directors
INVESTOR: European American Securities, Inc.
___________________________________
By:________________________________
Name: R. James Morton
Its: Director
17
<PAGE>
INVESTOR: Nelson Partners
___________________________________
By:________________________________
Name: Anne Dupry
Its: Officer
INVESTOR: Olympus Securities, Ltd.
___________________________________
By:________________________________
Name: Anne Dupry
Its: Alternate Director
INVESTOR: Keyway Investments Ltd.
___________________________________
By:________________________________
Name: Gregory W. Murphy
Its: SVP Midland Walwyn Capital Inc.
as agent for Keyway Investments Ltd.
INVESTOR: Halifax Fund L.P.
___________________________________
By: The Palladin Group L.P., as attorney in fact
By: Palladin Capital Management LLC, its General Partner
By: Andrew Kaplan, Senior Vice President
18
<PAGE>
EXHIBIT 1
TO
REGISTRATION
RIGHTS
AGREEMENT
[Company Letterhead]
[Date]
[Name and address of Transfer Agent]
Ladies and Gentlemen:
This letter shall serve as our irrevocable
authorization and direction to you (1) to transfer or re-register
(or at the holders request to reissue to the holder thereof
without any restrictive legend) the certificates for the shares
of Common Stock, $.001 par value (the "COMMON STOCK"), of Alta
Gold Co., a Nevada corporation (the "COMPANY"), represented by
certificate numbers _____ for an aggregate of _____ shares (the
"OUTSTANDING SHARES") of Common Stock presently registered in the
name of [Name of Investor] (which shares were previously issued
upon conversion of the Debentures (as hereinafter defined)) upon
surrender of such certificates to you, notwithstanding the legend
appearing on such certificates, and (2) to issue the shares (the
"Conversion Shares") of Common Stock to or upon the order of the
registered holder of the Debentures upon surrender to you of a
properly completed and duly executed Notice of Conversion and
written confirmation from the Company that the number of shares
of Common Stock to be issued upon such conversion was calculated
in accordance with the terms of the Debentures. The transfer or
re-registration of the certificates for the Outstanding Shares by
you should be made at such time as you are requested to do so by
the record holder of the Outstanding Shares. The certificate
issued upon such transfer or re-registration should be registered
in such name as requested by the holder of record of the
certificate surrendered to you and should not bear any legend
which would restrict the transfer of the shares represented
thereby. In addition, you are hereby directed to remove any stop-
transfer instruction relating to the Outstanding Shares.
Certificates for the Conversion Shares should not bear any
restrictive legend and should not be subject to any stop-transfer
restriction.
<PAGE>
Contemporaneous with the delivery of this letter, the
Company is delivering to you an opinion of the Company's legal
counsel as to registration of the Outstanding Shares and the
Conversion Shares under the Securities Act of 1933, as amended.
Should you have any questions concerning this matter,
please contact me.
Very truly yours,
ALTA GOLD CO.
By: _________________________
Name:
Title:
Enclosures:
cc: [Name of Investor]
<PAGE>
EXHIBIT 2
TO
REGISTRATION
RIGHTS
AGREEMENT
[Date]
[Name and address
of transfer agent]
RE: ALTA GOLD CO.
Ladies and Gentlemen:
We are counsel to Alta Gold Co. a Nevada corporation (the
"COMPANY") , and we understand that [Name of Investor] (the
"HOLDER") has purchased from the Company convertible debentures
in the principle amount of $_____ (the "DEBENTURES") that are
convertible into the Company's Common Stock, par value $.001 per
share (the "COMMON STOCK"). The Debentures were purchased by the
Holder pursuant to a Securities Purchase Agreement, dated as of
April 11, 1997, between the Holder and the Company (the
"AGREEMENT"). Pursuant to a Registration Rights Agreement, dated
as of April 11, 1997, between the Company and the Holder (the
"REGISTRATION RIGHTS AGREEMENT"), the Company agreed with the
Holder, among other things, to register the shares of Common
Stock underlying the Debentures (the "REGISTRABLE SECURITIES")
under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), upon the terms provided in the Registration Rights
Agreement. In connection with the Company's obligations under
the Registration Rights Agreement, on _______ __, 1997, the
Company filed a Registration Statement on Form S-3 (File No. 333-
_____________) (the "REGISTRATION STATEMENT") with the Securities
and Exchange Commission (the "SEC") relating to the Registrable
Securities, which names the Holder as a selling stockholder
thereunder.
[Other introductory and scope of examination language to be
inserted]
Based on the foregoing, we are of the opinion that the
Registrable Securities have been registered under the Securities
Act.
<PAGE>
[Other appropriate language to be included.]
Very truly yours,
cc: [Name of investor]
<PAGE>
EXHIBIT C TO
SECURITIES PURCHASE
AGREEMENT
MINING REPRESENTATIONS AND WARRANTIES
(a) Except as identified in SCHEDULE 3(I), there are no material
actions, claims, investigations or proceedings, judicial or
otherwise, pending, or to the knowledge of the Company,
threatened, against or relating to the Company which relate
to or could adversely affect its interest in the properties
utilized or to be utilized in connection with the Company's
current and future mining operations (the "Properties").
(b) The Properties are free and clear of all claims, liens,
security interests, burdens, and encumbrances of any kind or
nature except those expressly identified in SCHEDULE 3(I).
(c) The Company is in exclusive possession of the Properties and
has not received any notice of default under any agreement
relating to the Properties.
(d) With respect to unpatented mining claims in the Properties,
except as provided in SCHEDULE 3(I) and subject to the
paramount title of the United States, to the best of the
Company's knowledge: (i) the unpatented mining claims were
properly laid out and monumented; (ii) all required location
and validation work was properly performed; (iii) location
notices and certificates were properly recorded and filed
with appropriate governmental agencies; (iv) all assessment
work and annual rental or maintenance fees required to hold
the unpatented mining claims has been performed or paid; (v)
all affidavits of assessment work and other filings required
to maintain the claims in good standing have been properly
and timely recorded or filed with appropriate governmental
agencies; and (vi) the Company has no knowledge of
conflicting claims except where such non-compliance would
not have a Material Adverse Effect.
(e) All activities by or on behalf of the Company on the
Properties have been performed in compliance with all
applicable laws, rules and regulations of federal, state and
local governments, including all such laws, rules and
regulations relating to operations and reclamation of
disturbed lands and those relating to protection of the
environment except where such non-compliance would not have
a Material Adverse Effect. The Company has not received
notice of any alleged violation of any law, rule or
regulation with respect to the Properties and has no
knowledge of any threatened or pending investigation with
respect to the Properties by any governmental agency except
where such violation would not have a Material Adverse
Effect.
<PAGE>
ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
(a) The following definitions shall apply for purposes of this
paragraph (a) and paragraph (b) below:
(i) "Environmental Laws" shall mean and include each
and every federal, state or local statute, regulation
or ordinance or any judicial or administrative decree
or decision, whether now existing or hereafter enacted,
promulgated or issued, with respect to any Hazardous
Materials (as hereinafter defined), drinking water,
groundwater, wetlands, landfills, open dumps, storage
tanks, underground storage tanks, solid waste, waste
water, storm water run-off, waste emissions or wells,
but taking into account exceptions and exclusions
applicable to the mining industry in general. Without
limiting the generality of the foregoing, the term
shall encompass each of the following statutes and
regulations promulgated thereunder as well as any
amendments and successors to such statutes and
regulations, as may be enacted and promulgated from
time to time: (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980
(codified in scattered sections of 26 U.S.C., 33
U.S.C., 42 U.S.C. and 42 U.S.C. Sec. 9601 ET SEQ.); (ii)
the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Sec. 6901 ET SEQ.); (iii) Hazardous Materials
Transportation Act (49 U.S.C. Sec. 1801 ET SEQ.); (iv) the
Toxic Substances Control Act (15 U.S.C. Sec. 2061 ET SEQ.);
(v) the Clean Water Act (33 U.S.C. Sec. 1251 ET SEQ.); (vi)
the Clean Air Act (42 U.S.C. Sec. 7401 ET SEQ.); (vii) the
Safe Drinking Water Act (21 U.S.C. Sec. 349; 42 U.S.C. Sec.
Policy Act of 1969 (42 U.S.C. Sec. 4321); (ix) the
Superfund Amendment and Reauthorization Act of 1986
(codified in scattered sections of 10 U.S.C., 29
U.S.C., 33 U.S.C. and 42 U.S.C.); and (x) Title III of
the Superfund Amendment and Reauthorization Act (40
U.S.C. Sec. 1101 ET SEQ.).
(ii) "Hazardous Materials" shall mean each and every
element, compound, chemical mixture, contaminant,
pollutant, material, waste or other substance which is
defined, determined or identified as hazardous or toxic
under any Environmental Law but taking into account
exceptions and exclusions applicable to the mining
industry in general. Without limiting the generality
of the foregoing, the term shall mean and include:
(A) "chemical substance or mixture" as
defined in the Toxic Substances Control Act, as
amended, and regulations promulgated thereunder;
2
<PAGE>
(B) "hazardous materials" as defined in the
Hazardous Materials Transportation Act, as
amended, and regulations promulgated thereunder;
(C) "hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Superfund Amendment
and Reauthorization Act of 1986, or Title III of
the Superfund Amendment and Reauthorization Act,
each as amended, and regulations promulgated
thereunder;
(D) "hazardous waste" as defined in the
Resource Conservation and Recovery Act of 1976, as
amended, and regulations promulgated thereunder;
(iii) "Release" shall mean any reportable spilling,
leaking, pumping, pouring, emitting, emptying,
discharging, injecting, storing, escaping, leaching,
dumping, or discarding, burying, abandoning, or
disposing into the environment.
(iv) "Threat of Release" shall mean a substantial
likelihood of a Release which requires action to
prevent or mitigate damage to the environment which may
result from such Release.
(v) The Company represents and warrants to the Buyers
as follows:
(i) To the Company's knowledge, no condition,
activity or conduct currently exists on or in
connection with the Properties which constitutes
a material violation of any Environmental Law.
(ii) During the Company's and any predecessor
to the Company's ownership and, to the Company's
knowledge prior to its or any of its predecessor's
ownership, there has been no Release or Threat of
Release of any Hazardous Materials on, upon or
into the Properties which have not been corrected,
nor, to the Company's knowledge, has there been
any such Release or Threat of Release of any
Hazardous Materials on, upon or into any real
property in the vicinity of the Properties which,
through soil or groundwater migration, could
reasonably be expected to come to be located on
the Properties.
(iii) To the Company's knowledge, there
are no existing or closed underground storage
tanks on the Properties.
3
<PAGE>
(iv) To the Company's knowledge, none of the
following are or will be located in, on, under or
constitute a part of the Properties: asbestos or
asbestos-containing material in any form or
condition; urea formaldehyde insulation;
transformers or other equipment which contain
dicletric fluid containing polychlorinated
biphenyls; or leaded paint.
(v) To the Company's knowledge, there are no
existing or closed sanitary landfills (other than
any existing, licensed and active sanitary
landfill on the Properties), solid hazardous waste
disposal sites, or hazardous waste treatment,
storage or disposal facilities on or affecting the
Properties.
(vi) No notice has been issued to the Company
or any predecessor to the Company by any agency,
authority, or unit of government that the Company
or any predecessor to the Company has been
identified as a potentially responsible party
under any Environmental Laws with respect to the
Properties.
(vii) There exists no investigation,
action, proceeding, or claim by any agency,
authority, or unit of government or by any third
party which could result in any material
liability, penalty, sanction, or judgment under
any Environmental Law with respect to any
condition, use or operation of the Properties.
(viii) There has been no claim by any
party that any use, operation, or condition of the
Properties has caused any nuisance.
4
<PAGE>
SCHEDULE 3(C)
TO SECURITIES PURCHASE AGREEMENT
ALTA GOLD CO.
1. OUTSTANDING OPTIONS.
<TABLE>
<CAPTION>
EXERCISE SHARES OF COMMON STOCK SUBJECT TO OPTIONS
DESCRIPTION PRICE EXERCISEABLE UNEXERCISEABLE PENDING TOTAL
<S> <C> <C> <C> <C> <C>
Officers $0.7500 775,000 390,000 0 1,165,000 <F1>
$1.3438 263,000 106,000 0 369,000
$1.7188 62,500 127,500 0 190,000
Directors $0.7500 0 0 35,000 35,000 <F2>
Employees $1.3438 52,000 126,000 0 178,000
$1.7188 32,259 107,250 0 139,509
Gerald Metals, Inc. $1.0313 150,000 0 0 150,000
Gerald Metals, Inc. $3.7500 75,000 0 0 75,000
Registered Consulting Group $2.6083 0 0 35,700 35,700 <F3>
Total 1,409,759 856,750 70,700 2,337,209
<FN>
<F1> Includes options to purchase 585,000 shares of
common stock of Alta Gold Co. are subject to
stockholder approval at the next annual meeting.
<F2> Issuance of such options are subject to
stockholder approval at the next annual meeting.
<F3> Issuance of such options are subject to contract
performance.
</FN>
</TABLE>
2. OUTSTANDING WARRANTS.
<TABLE>
<CAPTION>
EXERCISE SHARES OF COMMON STOCK SUBJECT TO WARRANTS
DESCRIPTION PRICE EXERCISEABLE UNEXERCISEABLE PENDING TOTAL
<S> <C> <C> <C> <C> <C>
N.A. Dagerstrom $4.0000 400,000 0 0 400,000
Ballard Investment $2.0000 50,000 0 0 50,000
Total 450,000 0 0 450,000
</TABLE>
3. REGISTRATION RIGHTS.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK SUBJECT
DESCRIPTION TYPE TO OPTIONS AND WARRANTS
<S> <C> <C>
N.A. Dagerstrom Demand 400,000
Registered Consulting Group Piggyback 35,700
Total 435,700
</TABLE>
<PAGE>
SCHEDULE 3(H)
TO SECURITIES PURCHASE AGREEMENT
ALTA GOLD CO.
1. PENDING LITIGATION.
(A) UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF NEVADA
AND FOURTH JUDICIAL DISTRICT COURT, ELKO, NEVADA.
Case No.: CV-N-96-00759-HDM and 27934, respectively
Case Name: Christopher Deere v. Jerry Lee Ainsworth and
Alta Gold Co.
Filed: December 16, 1996 and June 17, 1996,
respectively
Case Type: Diversity; negligence; personal injury (motor
vehicle)
Status: Active
Relationship: Defendant
(b) SECOND JUDICIAL DISTRICT COURT, WASHOE COUNTY, NEVADA
Case No.: CV-91-1267
Case Name: Alta Gold Co. v. Mase West Pac Limited New
York and N.M.B. Postbank Group
Filed: February 22, 1991
Status: Settled
Relationship: Plaintiff
2. THREATENED LITIGATION.
The owner of the Ladder Ranch in New Mexico has threatened
litigation or other action to challenge the permitting and
opening of the Company's Copper Flat mining property.
<PAGE>
SCHEDULE 3(I)
TO SECURITIES PURCHASE AGREEMENT
ALTA GOLD CO.
1. THREATENED LITIGATION.
The owner of the Ladder Ranch in New Mexico has threatened
litigation or other action to challenge the permitting and
opening of the Company's Copper Flat mining property.
2. LIENS.
(a) Property described in the following financing
statements on file on the date hereof is subject to security
interests:
<TABLE>
<CAPTION>
FILING OFFICE SECURED PARTY TYPE FILE NO.
<S> <C> <C> <C>
Nevada Secretary of State NERCO Exploration Company Original 91-10688
Cargill Leasing Corporation Original 95-08576
Cargill Leasing Corporation Assignment 95-08576
(assignee: Cargill Lease
Receivables L.L.C.)
Cargill Leasing Corporation Original 95-12612
Cargill Leasing Corporation Assignment 95-12612
(assignee: Cargill Lease
Receivables L.L.C.)
First National Bank of Ely Original 96-
Lyon Credit Corp. Original 96-06852
Gerald Metals, Inc. Original 96-09229
Gerald Metals, Inc. (assignee: Assignment 96-09229
BHF-Bank Aktiengesellschaft
New York Bank)
Concord Commercial and HSBC Original 96-09309
Business Loans, Inc.
Cargill Lease Receivables Original 97-02722
L.L.C.
Clark County Recorder Gerald Metals, Inc. Original Bk 950508
Inst 00863
Gerald Metals, Inc. (original Amendment Bk 950727
Bk 950508/Inst 00863) Inst 01195
Gerald Metals, Inc. Original Bk 960716
Inst 00621
Gerald Metals, Inc. (assignee: Assignment Bk 960716
BHF-Bank Aktiengesellschaft Inst 00622
New York Bank) (original Bk
960716/Inst 00621)
</TABLE>
<TABLE>
<CAPTION>
(Continuation of above table)
FILE COLLATERAL
FILING OFFICE SECURED PARTY DATE DESCRIPTION
<S> <C> <C> <C>
Nevada Secretary of State NERCO Exploration Company 11/19/91 Escrow Funds
Cargill Leasing Corporation 06/19/95 Equipment
Cargill Leasing Corporation 06/19/95 N/A
(assignee: Cargill Lease
Receivables L.L.C.)
Cargill Leasing Corporation 09/06/95 Equipment
Cargill Leasing Corporation 09/06/95 N/A
(assignee: Cargill Lease
Receivables L.L.C.)
First National Bank of Ely 03/ /96 Mill and Equipment
Lyon Credit Corp. 05/03/96 Equipment
Gerald Metals, Inc. 06/12/96 All assets
Gerald Metals, Inc. (assignee: 06/12/96 N/A
BHF-Bank Aktiengesellschaft
New York Bank)
Concord Commercial and HSBC 06/13/96 Equipment
Business Loans, Inc.
Cargill Lease Receivables 02/18/97 Equipment
L.L.C.
Clark County Recorder Gerald Metals, Inc. 05/08/95 All assets
Gerald Metals, Inc. (original 07/27/95 N/A
Bk 950508/Inst 00863)
Gerald Metals, Inc. 07/16/96 All assets
Gerald Metals, Inc. (assignee: 07/16/96 N/A
BHF-Bank Aktiengesellschaft
New York Bank) (original Bk
960716/Inst 00621)
</TABLE>
<TABLE>
<CAPTION>
FILE COLLATERAL
FILING OFFICE SECURED PARTY TYPE FILE NO. DATE DESCRIPTION
<S> <C> <C> <C> <C>
Elko County Recorder Gerald Metals, Inc. Original 366877 04/20/95 All assets
Bk 889
Pg 651
Gerald Metals, Inc. Original 386760 06/12/96 All assets
Bk 942
Pg 164
Gerald Metals, Inc. Assignment 387556 06/27/96 N/A
(assignee: BHF-Bank Bk 944
Aktiengesellschaft New Pg 674
York Bank)
Washoe County Recorder Gerald Metals, Inc. Original Bk 4288 04/24/95 All assets
Pg 0649
White Pine County Gerald Metals, Inc. Original Bk 235 04/21/95 All assets
Recorder Pg 583
</TABLE>
(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.
(d) Deed of Trust, Assignment of Rents and Royalties,
Security Agreement and Financing Statement in mining claims and
water rights at the Company's Easy Junior mining property,
together with all precious and non-precious metals and other
mineral deposits, ore in place and otherwise, water and water
rights, assignable governmental permits, easements, royalties and
profits thereof.
(e) Deed of Trust, Assignment of Rents and Royalties,
Security Agreement and Financing Statement in the mining claims
and water rights at the Company's Kinsley, Olinghouse and Griffon
mining properties, together with all precious and non-precious
metals and other mineral deposits, ore in place or otherwise,
water and water rights, assignable governmental permits,
easements, royalties, revenues, rents, issues, proceeds and
profits thereof, in connection with that certain $8.5 million
loan from Gerald Metals, Inc. and BHF-Bank Aktiengesellschaft New
York Bank ("BHF").
(f) Security Agreement (including financing statements) in
all fixtures and tangible and intangible personal property of the
Company of every kind and description, whether now owned or
hereafter acquired by the Company, in connection with that $8.5
million loan from Gerald Metals, Inc. and BHF.
3. LEASE AND ROYALTY AGREEMENTS.
<TABLE>
<CAPTION>
LESSEE/ ROYALTY
PROPERTY HOLDER TYPE OF AGREEMENT DATE
<S> <C> <C> <C>
Copper Flat Cobb/Hydro Royalty 06/28/94
Gold Express Provisional Royalty 06/14/94
<PAGE>
G.S. Greer Lease 03/31/95
G.S. Greer Lease 03/31/95
G.S. Greer Lease 03/31/95
Hydro Lease 06/07/94
Excalibur D.W. Slagle Lease/Royalty 10/27/96
Golden Eagle Golden Eagle Mining Lease/Royalty/Option 11/22/96
to Purchase
Griffon Griffon Resources Royalty 02/27/95
Olinghouse Haggerty et al Lease/Option to 10/07/92
Purchase
Olinghouse Lease/Royalty 08/05/92
Development Co.
Tarantino et al Lease/Royalty 03/15/93
Murphy et al Lease/Royalty/Option 10/12/92
to Purchase
Jones et al Lease/Royalty 07/14/92
Cowles et al Lease/Royalty/Option 01/21/93
to Purchase
Janess et al Lease/Royalty/Option 04/06/93
to Purchase
Sutich et al Lease/Royalty 08/13/96
Osceola Burgess and Hansen Lease/Royalty/Option 12/03/96
to Purchase
Osceola Marriott's Lease/Royalty 11/25/96
Pilot Knob Mining Lease/Royalty/Option 12/02/96
to Purchase
S. Headley Lease/Royalty 12/06/96
Hansen et al Lease/Royalty/Option 12/03/91
to Purchase
Havingdon Peak/ SFP Minerals Lease/Royalty 04/07/88
Slaven Canyon S. Comeaux Lease/Royalty 06/19/92
Barredo et al Lease/Royalty 02/02/89
Western States Lease/Royalty 05/03/90
Minerals
</TABLE>
<PAGE>
SCHEDULE 3(K)
TO SECURITIES PURCHASE AGREEMENT
ALTA GOLD CO.
None.
<PAGE>
SCHEDULE 4(D)
TO SECURITIES PURCHASE AGREEMENT
ALTA GOLD CO.
The Company intends to use the net proceeds from the sale of
the Debentures to finance a portion of the Company's anticipated
1997 expenditures. The Company's anticipated expenditures for
1997 include amounts for (i) permitting and property holding
costs, mine planning, site development, equipment and project
working capital at its Olinghouse and Griffon mining properties;
(ii) completing a feasibility study for its Olinghouse mining
property; (iii) permitting and property holding costs at its
Copper Flat mining property; and (iv) additional drilling at its
Olinghouse, Griffon, Kinsley, Excalibur and Osceola mining
properties. Additional funds, which the Company anticipates to
be provided from debt financing, will be required for these
projects. Actual expenditures at any of the Company's properties
will be based upon the timing of the issuance of government
permits, the availability of alternative methods of financing,
the Company's progress in developing its properties and other
factors. The use of net proceeds from the sale of the Debentures
also is subject to change based upon market conditions and
unanticipated costs of exploration and development of the
Company's properties.
<PAGE>
