U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (No Fee Required) for the fiscal year ended December 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
For the transition period from _________ to _________
Commission file number: 02-69494
GLOBAL GOLD CORPORATION
(Name of small business issuer in its charter)
Delaware 13-03025550
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
734 Franklin Avenue, #333, Garden City, New York 11530-4525
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (516) 627-2388
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes: ____X_____ No: _________.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB
Yes: ________ No: ____X_____.
The issuer's revenues for its most recent fiscal year ending December 31, 2002
were $-0-.
The aggregate market value of the voting stock held by non-affiliates of the
Company computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of March 31, 2003, was $685,811.
As of March 31, 2003 there were 6,858,114 Shares of the registrant's Common
Stock outstanding (2).
(1) The Company's Common Stock is not publicly traded. However, the Board of
Directors of the Company determined that the fair market value of the Common
Stock as of March 31, 2003 was $0.10 per share.
(2) This number is computed after taking into account the 1 for 10 reverse split
of the shares of Common Stock of the Company, effective as of December 31, 1996
(the "Reverse Split").
ITEM 1 DESCRIPTION OF BUSINESS
(1) GENERAL OVERVIEW
Global Gold Corporation (the "Company") is currently in the development stage.
The Company, on January 15, 2003, entered into an option/purchase/lease
agreement with Alfredo Soto Torino and Adrian Soto Torino for the purchase of
copper gold properties in Chile (the Candelaria 1 to 3, the Santa Candelaria 1
to 8 and the Torino I mining claims 1 through 7 and Torino II mining claims 1
through 11, properties in Chanaral District III (the "Chilean agreement"). In
addition to the Chilean agreement, the Company has entered into two agreements
in Armenia, a member of the Commonwealth of Independent States. These agreements
are for the acquisition of the Hankavan mine, and an agreement on cooperation on
confidentiality and to negotiate with Sipan I Limited, an Armenian company, for
the purchase of the Lichvaz-Tei and Terterasar gold properties in southern
Armenia. The Company was previously engaged in the development of a gold mining
project in Armenia, and had pursued various mining and other business
opportunities thereafter, but without consummating any such transactions. Prior
thereto, the Company did not engage in any substantial business activities
except as described in the section 1(d) entitled "Prior History of the Company"
in the annual reports previously filed by the Company with the Securities and
Exchange Commission ("SEC").
(2) ARMENIAN MINING PROJECT
In 1996, the Company acquired rights under a Joint Venture Agreement with the
Ministry of Industry of Armenia and Armgold, S.F., the Armenian state
enterprises, to provide capital and multistage financing of the Armenian gold
industry, which rights were finalized under the Second Armenian Gold Recovery
Company Joint Venture Agreement dated as of September 30, 1997.
As of January 31, 1997, the Company and Global Gold Armenia Limited, the
Company's wholly-owned Cayman Islands subsidiary ("GGA"), reached an agreement
with First Dynasty Mines, Ltd., whose name changed to Sterlite Gold Ltd. on July
5, 2002 ("Sterlite"), a Canadian public company whose shares are traded on the
Toronto Stock Exchange and on NASDAQ. Under such agreement, Sterlite acquired
the right to acquire all of the stock of GGA, subject to certain conditions, by
advancing funds in stages necessary for the implementation of the tailing
project and the preparation of engineering and business plan materials for the
remaining Armenian mining projects.
The Company, GGA and Sterlite entered into a definitive agreement dated May 13,
1997 reflecting the final agreement of the parties with respect to the above
project (the "FDM Agreement"). The parties thereafter amended the FDM Agreement
on July 24, 1998.
In connection with Sterlite's purchase of the Company's remaining 20% interest
in GGA, the Company received a certificate representing special warrants to
purchase 4,000,000 shares of First Dynasty common stock. In September 1999, the
warrants were exchanged for 4,000,000 shares of First Dynasty common stock. As
of December 31, 2002 the Company owned 2,300,000 shares of Sterlite common
stock.
Pursuant to the FDM Agreement, the Company retain the right until December 31,
2009 to elect to participate at a level of up to 20% with Sterlite, or any of
its affiliates, in any exploration project undertaken by them in Armenia.
For a further description of the background concerning the Armenian mining
project, an interested person can review the quarterly and annual reports
previously filed by the Company with the SEC.
(3) GEORGIAN MINING PROJECT
As of December 31, 1997, the Company abandoned its pursuit of any mining project
in the country of Georgia.
For a further description of the background concerning the Georgian mining
project, an interested person can review the quarterly and annual reports
previously filed by the Company with the SEC.
2
(4) RECENT ACTIVITIES
The Company's principal activity at present consists of developing the
exploration and exploitation of its gold/silver property in the Chanaral
District in Chile. On January 15, 2003, the Company entered into an
option/purchase/lease agreement with Alfred Soto Torino and Adrian Soto Torino
for the purchase of copper and gold properties in Chile for a total purchase
price of U.S. $400,000 which is non-interest bearing and payable over four years
at U.S. $25,000 per quarter, commencing on March 31, 2003, which first payment
was made. In addition to the purchase price, a royalty of U.S. $1 per ounce is
to be paid quarterly, on all ounces of gold produced in excess of 500,000
ounces, provided that the average price of gold per quarter exceeds U.S. $310
per ounce as measured by the London Metal Exchange. Under such agreement, the
Company has the right to develop the property under the lease thereof. Upon the
expiration of such agreement, or sooner at the Company's option, the Company can
exercise its option to acquire the title to the property, subject to the above
royalty obligation.
The Chilean property consists of approximately 1100 acres in total, including
the Candelaria 1 to 3, Santa Candelaria 1 to 8 and the Torino I mining claims 1
to 7 and the Torino II mining claims 1 to 11. The Company has not yet developed
a feasibility report for the development of these properties, and has not yet
ascertained the amount of the proven or probable reserves of gold, copper and
other minerals on the property, if any.
On October 28, 2002 the Company entered into an agreement on cooperation and
confidentiality and to negotiate with Sipan Limited, an Armenian company, for
the purchase of the Lichvaz - TEI and Terterasar gold/silver properties in
southern Armenia. No purchase price has been agreed upon.
On March 17, 2003, the Company entered into an agreement with SHA, LLC, an
Armenian limited liability company for the acquisition of the Hankavan mine, a
gold and copper mine, in Armenia, for a total purchase price of US $150,000 (or
$175,000 if an additional mining property is also transferred) payable in
installments. Under such agreement, the Company has the option, exercisable
within 45 days from March 17, 2003, to acquire either (i) the exclusive license,
permits, and all rights related to such mine, or (ii) all of the ownership
shares of SHA and any other entity which may hold rights to such mine.
The Hankavan mine deposit is located in central Armenia between Vanadzor and
Meghradzor north of the Marmarik River. The Company has not yet developed a
feasibility report for the development of these properties, and has not yet
determined the amount of proven or probable reserves of gold, copper and other
minerals on the property, if any.
The Company currently holds 2,300,000 shares of common stock of Sterlite which
is traded on the Toronto Stock Exchange. The closing price per common share on
December 31, 2002 was Canadian $0.19, with a U.S. dollar exchange rate of .6331,
for a value of U.S. $ 0.12029 per share. As of December 31, 2002, Sterlite had
260,590,988 shares issued and outstanding.
3
(5) SPECIAL CONSIDERATIONS
The following risk factors should be considered in connection with an evaluation
of the business of the Company:
Development Stage Company
Since the Company did not engage in the active conduct of a trade or business,
it has not generated any revenues to date, with the exception of interest income
and the 4,000,000 shares of Sterlite common stock and cash received from such
source under the FDM Agreement, as amended. The Company may encounter problems,
delays, expenses and difficulties typically encountered in the development
stage, many of which may be outside of the Company's control.
Need for Additional Cash
The Company needs additional funds in order to pay the purchase price for the
acquisition of the Chilean property under its option/purchase agreement and to
pay the acquisition cost of any acquisition of any mining property in Armenia.
Moreover, the Company needs additional funds in order to conduct any active
mining development and production operations in the foreseeable future. There
can be no assurance that any financing for acquisitions or future projects will
be available for such purposes or that such financing, if available, would be on
terms favorable or acceptable to the Company.
Competition
There is intense competition in the mining industry. If the Company does engage
in any future mining activities, it will be competing with larger mining
companies, many of which have substantially greater financial strengths,
capital, marketing and personnel resources than those possessed by the Company.
4
Need for Key Personnel
The Company presently only has one officer intimately familiar with the
operation of mining projects or the development of such projects. While the
Company does not believe the loss of its president or any other director or
officer of the Company will materially and adversely affect its long-term
business prospects, the loss of any of the Company's senior personnel might
potentially adversely affect the Company until a suitable replacement could be
found. The Company continues to employ independent consultants and engineers.
Failure to Satisfy NASDAQ Listing Rules
Without increases in assets and capital surplus, the Company may not be eligible
to have its securities traded on NASDAQ. Moreover, regulations issued by NASDAQ
have increased the thresholds that have to be met in order for a security to be
traded initially on the NASDAQ Small Cap and National Markets, which may
adversely affect the Company's ability to have its Common Stock traded on the
NASDAQ Small Cap or National Markets. Furthermore, the Company could experience
difficulties in commencing the trading of its securities on NASDAQ. If the
Company is unable to have its securities traded on NASDAQ, its securities will
continue to be eligible for trading on the OTC Bulletin Board, although the
market for shares of the Company's Common Stock may be reduced, and, hence, the
liquidity of the shares of Common Stock may be reduced. Moreover, recent
regulations adopted for the trading of securities may adversely affect the
eligibility of the Company's Common Stock for trading on the OTC Bulletin Board.
Compliance with Federal Securities Laws
The Company was incorporated on February 21, 1980, and closed a public offering
of its Common Stock in January 1981. Several months after the closing of such
offering, the Company withdrew the listing of the Common Stock for trading on
NASDAQ. After the consummation of the public offering, the Company failed to
file any further annual or periodic reports required under the Exchange Act.
While the Company has filed Form 10-QSB commencing with the quarter ended March
31, 1995 and for each quarter thereafter, through and including September 30,
2002, and has filed audited financial statements with Form 10-KSB for calendar
year 1994, covering calendar years 1987, 1988, 1989, 1990, 1991, 1992, 1993 and
1994, and for calendar years 1995, 1996, 1997, 1998, 1999, 2000 and 2001, there
can be no assurance that the SEC might not assert claims against the Company or
question its classification.
Lack of Insurance Protection
The Company may not be able to obtain adequate insurance protection for its
potential investments in the Chilean mining project and any Armenian mining
project.
5
Fluctuation in Mineral Prices
The prices of gold and other minerals historically fluctuate and are affected by
numerous factors beyond the Company's control and no assurance can be given that
any reserves proved or estimated will actually be produced.
Mining Risks
The Company's proposed mining operations will be subject to a variety of
potential engineering, seismic and other risks, some of which cannot be
predicted and which may not be covered by insurance.
Foreign Risks
The value of the Company's assets may be adversely affected by political,
economic and other factors in Chile and Armenia.
No Dividends
The Company currently anticipates that it will retain all of its future
earnings, if any, for use in its operations and does not anticipate paying any
cash dividends in the near term future. There can be no assurance that the
Company will pay cash dividends at any time, or that the failure to pay
dividends for periods of time will not adversely affect the market price for the
Company's Common Stock.
Control of the Company
Drury J. Gallagher, the Chairman and Chief Executive Officer, and Robert A.
Garrison, the President and Chief Operating Officer, own 2,178,453 and 2,000,000
shares respectively, or a total of 4,178,453 shares, out of the 6,858,114 shares
of the Company's Common Stock issued and outstanding as of March 31, 2003. If
Messrs. Gallagher and Garrison act in concert, they control 60.9% of the issued
and outstanding shares of Common Stock of the Company are able to effectively
determine the vote on any matter being voted on by the Company's stockholders,
including the election of directors and any merger, sale of assets or other
change in control of the Company.
As of December 31, 2002, Messrs. Gallagher and Garrison owned 1,828,453 and
1,100,000 shares, respectively, for a combined interest of 64.1%.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's officers use a portion of their facilities for the conduct of the
Company's business without any rental charge to the Company.
6
ITEM 3. LEGAL PROCEEDINGS
Except as noted below, there is no material pending legal proceeding to which
the Company is a party or to which any of its properties is subject.
In January 1998, the Company brought an action against Eyre, the Parry-Beaumont
Trust and Kevin Parry, individually, in the United States District Court for the
Southern District of New York, seeking damages in excess of $81,000,000 arising
out of the alleged fraud committed by the defendants.
The defendants denied such claims and asserted counterclaims against the Company
seeking damages in an undetermined amount against the Company and seeking a
declaratory judgment voiding the Second Restructuring Agreement. In addition,
Eyre and the Parry-Beaumont Trust brought a third-party complaint against Drury
J. Gallagher and Robert A. Garrison, individually, seeking, among other things,
damages in excess of $75,000 and directing Messrs. Gallagher and Garrison to
return the 2,000,000 shares of the Company's Common Stock issued to them by the
Company in January 1997.
A settlement was agreed to on October 13, 1999. In the settlement, 600,000
shares of common stock of Sterlite owned by the Company were exchanged for
600,000 shares of Common Stock of the Company held by Eyre and 400,000 common
shares of Sterlite owned by the Company were exchanged for 400,000 shares of the
Company's Common Stock held by the Parry-Beaumont Trust. Outstanding warrants
held by Eyre and the Parry-Beaumont Trust were also canceled as part of such
settlement.
On October 4, 1999, Penn Med Consultants, Inc. ("PennMed"), Drury J. Gallagher
("Gallagher") and other officers of PennMed entered into a Settlement Agreement
of a Civil False Claims Act lawsuit with the United States of America, the
Office of Inspector General of the United States Department of Health and Human
Services, the Pennsylvania Department of Public Welfare and qui tam relators.
The Settlement Agreement ended an investigation into allegedly fraudulent
administrative expenses which adversely affected reimbursement from the Medicare
and Pennsylvania Medicaid programs by PennMed. Under the Settlement Agreement,
PennMed, Gallagher and the other PennMed officers agreed to pay the Federal
Government and the Pennsylvania Department of Public Welfare a restitution
amount and PennMed agreed to adhere to a comprehensive compliance program
without any admission of wrongdoing on behalf of the defendants. In addition,
Gallagher agreed to exclusion, for a period of five years, from participation in
the Medicare, Medicaid and all other federal and Pennsylvania state health care
programs, including managed care programs. Such exclusion has national affect
and also applies to other federal procurement and non-procurement programs.
Gallagher waived his right under any statute or regulation to payment from
Medicare, Medicaid, TRICARE, the Veterans Administration or the Federal Employee
Health Benefit Program administered by the Office of Personnel Management during
the subject exclusion. PennMed continues to operate the nursing home business
previously conducted by it.
The Company was never a defendant in such action and was not a party to the
Settlement Agreement which concluded the investigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
7
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The Company's shares of Common Stock are not publicly traded on
any market.
(b) As of December 31, 2002, the Company had 4,568,114 issued and
outstanding shares of its Common Stock.
(c) As of December 31, 2002, there were approximately 1,100 holders
of record of shares of the Company's Common Stock.
(d) The Company did not pay or declare any cash dividends on its
shares of Common Stock during its last two fiscal years ended
December 31, 2001 and December 31, 2002.
(e) The Company's transfer agent is American Registrar and Transfer
Company, with offices at 342 E. 900 South, Salt Lake City, Utah
84111, having a telephone number of (801) 363-9065.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
As of December 31, 2002, the Company's total assets were $337,960, of which
$7,784 consisted of cash or cash equivalents.
The Company's plan of operation for calendar year 2003 is:
(a) Commence activities with regard to the Chilean mining
properties, acquired in January 2003, and developing the
properties and /or prospects as previously described;
(b) Pursue and consummate the acquisition of the Armenian mining
properties previously described above, and to possibly acquire
additional mineral-bearing properties in Armenia; and
(c) To sell the 2,300,000 shares of Sterlite common stock, and use
the sales proceeds for working capital purposes.
8
The Company needs financing to meet its anticipated monthly administrative
expenses of $3,000 (exclusive of officers' compensation), plus additional
amounts for legal and accounting costs. The Company could obtain additional
financing in 2003 from the holders of its Warrants to purchase 330,000 shares of
Common Stock of the Company at an exercise price of $0.25 per share, which
expire on October 31, 2005 pursuant to the two-year extension granted by the
Company as of December 31, 2002. If the Warrants were exercised in full, the
Company would receive $82,500 in gross proceeds. However, the Company does not
believe that the Warrants will be exercised at present, although there can be no
assurance of such result.
The Company is negotiating with several financing sources for additional
capital. The Company needs such financing in order to pay the acquisition cost
under the purchase agreement for the Chilean properties, and to pay the
acquisition costs of the Armenian mining properties sought to be purchased by
the Company.
In the event that the contemplated financing is not obtained, the Company does
not have sufficient financial resources to meet its obligations. Additionally,
the Company's auditors have issued a going concern opinion in their audit report
on the Company's financial statements as of and for the year ended December 31,
2002. See footnote 2a of the financial statements for further details.
The Company does not intend to engage in any research and development during
2003, and does not expect to purchase or sell any plant or significant
equipment.
The Company does not expect to hire any additional full-time employees in 2003,
except with respect to developing mining properties acquired.
As of December 31, 2002, the Company had two employees. One employee, who was in
charge of the overall business of the Company on a part-time basis, and one
employee who is principally involved in overseeing the Company's proposed mining
activities on a part-time basis.
Pursuant to a Confidential Private Placement Memorandum dated November 15, 2002
(the "2002 Offering"), the Company offered to sell up to 1,000,000 shares of its
common stock at $0.25 per share. In January and February 2003, the Company sold
350,000 shares of its Common Stock at a price of $0.25 per share and raised
total proceeds of $87,500. In addition, the Company granted another 100,000
shares, valued at $0.25 per share under the 2002 Offering, for services
previously performed for the Company. All such shares under the 2002 Offering
have not been issued as of March 31, 2003.
In January 2003, the Company sold to an individual 500,000 shares of common
stock for $0.05 per share, for total proceeds of $25,000. These shares have a
reduced price as an inducement for future funding services that the Company
desires to be performed from such individual.
ITEM 7. FINANCIAL STATEMENTS
The audited financial statements of the Company, notes thereto and reports of
Independent Certified Public Accountants thereon for the years ended December
31, 2002 by Grassi and Co., CPAs, P.C, and December 31, 2001 by Feldman Sherb &
Co., P.C., are attached hereto as a part of, and at the end of, this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
9
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
The directors and executive officers of the Company are as follows:
Name Age Officer
Drury J. Gallagher 64 Chairman, Chief Executive Officer,
Treasurer and Director
Robert A. Garrison 61 President, Chief Operating Officer,
Chief Financial Officer, Secretary
and Director
Each director is elected for a period of one year at the Company's annual
meeting of stockholders and serves until his successor is duly elected and
qualified. Each director who is not a full-time employee of the Company receives
no remuneration for his services as a director. Officers are appointed by the
Board of Directors.
10
The Board of Directors has not appointed any audit, compensation or any other
committee. Instead, the Board acts as a whole in all matters.
Mr. Gallagher has served as a director since 1981 and as Chairman, President and
Treasurer of the Company from 1982 until February 1, 1997 and as Chairman, Chief
Executive Officer and Treasurer since that date.
Mr. Garrison has served as a director and Vice President of the Company from
June 26, 1995 until February 1, 1997. He became the President, Chief Operating
Officer and Secretary on February 1, 1997 and became the Chief Financial Officer
in September, 2002.
ITEM 10. EXECUTIVE COMPENSATION
(a) The summary compensation table shown below indicates the cash or
accrued compensation paid by the Company as well as other compensation
paid or accrued to the Chairman and Chief Executive Officer (the
Company's chief executive officer) and the next highest compensated
executive officer at December 31, 2002 for services rendered in all
capacities during calendar years 2002, 2001 and 2000.
SUMMARY COMPENSATION TABLE
Name and Other Annual Restricted Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Stock Awards Options/SARs(#) Payout Compensation
- ---------------------- ------- --------- ------ ------------ ------------- --------------- ------------ ----- --------------
Drury J. Gallagher 2002 $ 5,000 -0- -0- -0- -0- -0- -0- -0-
Chairman, Chief 2001 $ -0- -0- -0- -0- -0- -0- -0- -0-
Executive Officer 2000 $162,500 -0- -0- -0- -0- -0- -0- -0-
and Treasurer
(the Company's Chief
Executive Officer)
Robert A. Garrison 2002 $ 5,000 -0- -0- -0- -0- -0- -0- -0-
President, Chief 2001 $ -0- -0- -0- -0- -0- -0- -0- -0-
Operating Officer, 2000 $ -0- -0- -0- -0- -0- -0- -0- -0-
Chief Financial Officer
and Secretary,
(the Company's
Chief Financial Officer)
(b) Stock Options and Awards
The Company adopted the 1995 Stock Option Plan under which a maximum
of 500,000 shares of Common Stock may be issued (subject to adjustment
for stock splits, dividends and the like). In July 2002, the Company
granted options to buy 150,000 shares of common stock, at $0.11 per
share, to each of the Chairman and President of the Company. Of these
options issued, 75,000 vest on the first anniversary of the date of
issuance, and the remaining 75,000 vest on the second anniversary of
the date of issuance. A total of 200,000 shares remain to be issued
under the 1995 Stock Option Plan as of March 31, 2003.
Aggregated Option Exercises in Last Fiscal Year and Options Values
Value Number of Options and Value of In-The-Money
Shares Realized($) Underlying Secuirities Options\SARs At Fiscal Year-End
Acquired from at year end
on Excercise of
Name Excercise(#) Options Unexercisable Exercisable Unexercisable Exercisable
-------------------------- ---------- ---------- ----------------------------- ----------------------------
Drury J. Gallagher, - - 150,000 - - -
Chairman, Chief Executive
Officer
Robert A. Garrison,
President, Chief
Operating Officer - - 150,000 - - -
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Set forth below is information as of December 31, 2002 pertaining to
ownership of the Company's Common Stock, determined in accordance with Rule
13(d)(3) under the Securities and Exchange Act of 1934, by persons known to the
Company who own more than 5% of the Company's Common Stock:
Name and Address of Number of
Title of Class Beneficial Owner Shares(1) Percent of Class
- --------------- ------------------- ------------ --------------------
Common Drury J. Gallagher 1,928,453(2) 40.4(2)
107 Eakins Road
Manhasset, NY 11030
Common Robert A. Garrison 1,200,000(3) 25.2(3)
44 Lords Highway East
Weston, CT 06883 ------------ -------
Total: 3,128,453 65.6
(1) For purposes of this table, a person or group is
deemed to have beneficial ownership of any shares
which such person has the right to acquire within 60
days after December 31, 2002. For purposes of
calculating the percentage of outstanding shares held
by each person named herein, any shares which such
person has the right to acquire within 60 days after
December 31, 2002 are deemed to be outstanding, but
not for the purpose of calculating the percentage
ownership of any other person.
(2) This amount includes 100,000 shares of common
stock issuable upon the exercise of the Warrants
acquired by Mr. Gallagher and 100,000 shares of
common stock issued as compensation for 2002 under
his Employment Agreement with the Company dated as of
July 1, 2002.
12
(3) This amount includes 100,000 shares of Common Stock issuable upon the
exercise of the Warrants acquired by Mr. Garrison and 100,000 shares of common
stock as compensation for 2002 under the Employment Agreement with the Company
dated as of July 1, 2002.
(b) Set forth below is information as of December 31, 2002 pertaining to
ownership of the Company's Common Stock by all directors and executive officers
of the Company:
Name and Address of Number of
Title of Class Beneficial Owner Shares(1) Percent of Class
-------------- ------------------- ------------ -----------------
Common Drury J. Gallagher 1,928,453(2) 40.4(2)
107 Eakins Road
Manhasset, NY 11030
Common Robert A. Garrison 1,200,000(3) 25.2(3)
44 Lords Highway East
Weston, CT 06883
---------------- ----------
Total 3,128,453 65.6
(1) For purposes of this table, a person or group is
deemed to have beneficial ownership of any shares
which such person has the right to acquire within 60
days after December 31, 2002. For purposes of
calculating the percentage of outstanding shares held
by each person named herein, any shares which such
person has the right to acquire within 60 days after
December 31, 2002 are deemed to be outstanding, but
not for the purpose of calculating the percentage
ownership of any other person.
(2) This amount includes 100,000 shares of common
stock issuable upon the exercise of the Warrants
acquired by Mr. Gallagher and 100,000 shares of
common stock as compensation for 2002 under his
Employment Agreement with the Company dated as of
July 1, 2002.
13
(3)This amount includes 100,000 shares of Common
Stock issuable upon the exercise of the Warrants
acquired by Mr. Garrison and 100,000 shares of Common
Stock as compensation for 2002 under the Employment
Agreement with the Company dated as of July 1, 2002.
(c) As of December 31, 2002, there were no arrangements in effect which may
result in a change of control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Officers
On March 15, 2000, the Company issued 1,000,000 restricted shares of its Common
Stock out of its treasury to the Company's Chairman and Chief Executive Officer,
Drury J. Gallagher, for accrued salary of $162,500 at a price of $0.1625 per
share.
On October 31, 2000 the Company granted warrants to purchase 100,000 shares of
its Common Stock to each of Messrs. Gallagher and Garrison at an exercise price
of $0.25 for each share of common stock of the Company subject to each warrant,
which initially were to expire on October 31, 2003, but which were extended as
of December 31, 2002 for an additional two years until October 31, 2005.
The Company entered into four-year Employment Agreements with each of Messrs.
Gallagher (its Chairman and Chief Executive Officer) and Garrison (its President
and Chief Financial Officer) as of July 1, 2002. Pursuant to these agreements,
the Company agreed to deliver to each of these officers 100,000 shares of its
Common Stock as base compensation for each year during the four-year term,
subject to an adjustment each year, as determined by the Board of Directors (i)
in an amount equal to the increase in the consumer price index or (ii) up to 10%
of the then base compensation. In addition, each officer was entitled to annual
bonus compensation under any bonus plan as determined by the Board of Directors.
On October 31, 2002, the Company issued 100,000 shares of its Common Stock as
compensation to each officer for the year ended December 31, 2002. The Company
entered into Amended and Restated Employment Agreements with Messrs. Gallagher
and Garrison dated as of February 1, 2003 that modified the existing four-year
Employment Agreements and terminating on June 30, 2006. Each Amended and
Restated Employment Agreement provides for base compensation of $100,000 per
year (subject to payment as cash flow permits), and the granting of 900,000
shares as a stock award subject to a substantial risk of forfeiture if either
terminates his employment with the Company (other than by death or disability)
over the 41-month term of the agreement, and which is to be earned, and vest
ratably, during such period, plus any bonus determined in accordance with any
bonus plan approved by the Board of Directors. On February 21, 2003, the Company
issued the 900,000 shares to such officers.
In July 2002, the Company granted options to buy 150,000 shares of common stock,
at an exercise price of $0.11 per share, to each of the Chairman and President
of the Company. Of these options issued, 75,000 vest on the first anniversary of
the date of issuance, and the remaining 75,000 vest on the second anniversary of
the date of issuance. These options expire five years from the date of issuance.
14
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
1. The following documents are filed as part of this report: Financial
Statements of the Company, including reports of Independent Certified
Public Accountants, Balance Sheet, Statements of Operations, Statements
of Stockholders' Equity (Deficit) and Comprehensive Income (Loss),
Statements of Cash Flow and Notes to Financial Statements: as of and
for the years ended December 31, 2002 and December 31, 2001.
2. Exhibits which are listed on the Exhibit Index attached hereto:
3.3 Certificate of Renewal and Revival of Certification of
Incorporation dated as of January 23, 2003.
10.57 Form of Amendment to Warrant Nos, U-1, U-2, U-3, U-4 and U-5
dated as of December 31, 2002.
10.58 Amended and Restated Employment Agreement between the Registrant
and Drury J. Gallagher dated as of February 1, 2003.
10.59 Amended and Restated Employment Agreement between the Registrant
and Robert A. Garrison dated as of February 1, 2003.
10.60 Purchase, Option, Lease, Mandate and Prohibition to Lien and
Alienate Contract by and among the Registrant and Alfredo Soto
Torino and Adrian Soto Torino dated January 15, 2003.
10.61 Purchase, Option, Lease, Mandate and Prohibition to Lien and
Alienate Contract by and among the Registrant and Alfredo Soto
Torino and Adrian Soto Torino, as amended, dated March 3, 2003.
10.62 Agreement between the Registrant and SHA Armenia LLC dated as of
March 17, 2003.
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
3. No reports on Form 8-K were filed by the registrant during the last quarter
of the period covered by this report.
ITEM 14. CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of the Company's
Chief Executive Officer and Chief Financial Officer of the effectiveness of our
disclosure controls and procedures (as defined in the Securities and Exchange
Act of 1934 Rules 13a-14 and 15d - 14). Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the time periods specified in Securities and
Exchange Commission rules and forms. Subsequent to the date of their evaluation,
there were no significant changes in the Company's internal controls or in other
factors that could significantly affect the disclosure controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GLOBAL GOLD CORPORATION
(Registrant)
Dated: April 8, 2003 By: /s/ Drury J. Gallagher
-----------------------
Drury J. Gallagher,
Chairman, Chief Executive
Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Name Title Date
/s/ Drury J. Gallagher Chairman, Chief Executive Officer, April 8, 2003
Drury J. Gallagher Treasurer and Director (Principal
Executive and Financial Officer)
/s/ Robert A. Garrison President, Chief Operating April 8, 2003
- -------------------------
Robert A. Garrison Officer, Chief Financial Officer,
Secretary and Director
16
CERTIFICATION
I, Robert A. Garrison, the President, Chief Financial Officer and Chief
Operating Officer of Global Gold Corporation (the "Company"), certify that:
1. I have reviewed this annual report on Form 10-KSB of the Company;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
(c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: April 8, 2003 /s/ Robert A. Garrison
----------------------
Robert A. Garrison, President,
Chief Financial Officer and
Chief Operating Officer
17
CERTIFICATION
I, Drury J. Gallagher, the Chairman, Chief Executive Officer and Treasurer
of Global Gold Corporation (the "Company"), certify that:
1. I have reviewed this annual report on Form 10-KSB of the Company;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
(c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: April 8, 2003 /s/ Drury J. Gallagher
----------------------
Drury J. Gallagher, Chairman,
Chief Executive Officer and Treasurer
18
GLOBAL GOLD CORPORATION
(A Development Stage Enterprise)
Financial Statements
Page
Independent Auditors' Reports - for the Year Ended December 31, 2002 F-1
Independent Auditors' Reports - for the Year Ended December 31, 2001 F-2
Balance Sheet - as of December 31, 2002 F-3
Statements of Operations - for the years ended
December 31, 2002 and 2001 and the development
stage period January 1, 1995 through December 31, 2002 F-4
Statements of Changes in Stockholders' Equity (Deficit) and Comprehensive Income
(Loss)- for the years ended December 31, 2002 and 2001 and the development stage
period January 1, 1995 through December 31, 2002 F-5
Statements of Cash Flows - for the years ended December 31, 2002 and 2001 and
the development stage
period January 1, 1995 through December 31, 2002 F-6
Notes to Financial Statements F-7 to F-19
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Global Gold Corporation
We have audited the accompanying balance sheet of Global Gold Corporation (a
development stage enterprise) as of December 31, 2002 and the related statements
of operations, changes in stockholders' equity (deficit) and comprehensive
income (loss), and cash flows for the year then ended and for the period from
January 1, 1995 through December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The cumulative
statements of operations, changes in stockholders' equity (deficit) and
comprehensive income (loss), and cash flows for the period January 1, 1995 to
December 31, 2002 include amounts for the period January 1, 1995 to December 31,
2001 and for each of the years in the seven-year period ended December 31, 2001,
which were audited by other auditors whose reports included explanatory
paragraphs describing conditions that raised substantial doubt about the
Company's ability to continue as a going concern. Our opinion, insofar as it
relates to the amounts included for the period January 1, 1995 through December
31, 2001, is based solely on the reports of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global Gold Corporation as of
December 31, 2002 and the results of its operations and its cash flows for the
year then ended and for the period from January 1, 1995 through December 31,
2002 in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2a to the
financial statements, the Company has incurred significant losses since
inception. This raises substantial doubt about the Company's ability to continue
as a going concern. Management's plans with respect to these matters are also
described in Note 2a to the financial statements. The financial statements do
not include any adjustments that might result should the Company be unable to
continue as a going concern.
/s/ Grassi & Co., CPAs, P.C.
Grassi & Co., CPAs, P.C.
Certified Public Accountants
March 31, 2003
New York, New York
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Global Gold Corporation
We have audited the accompanying statements of operations, changes in
stockholders' equity (deficit) and comprehensive income (loss), and cash flows
of Global Gold Corporation (a development stage enterprise), for the year ended
December 31, 2001 and for the period from January 1, 1995 through December 31,
2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The cumulative statements of operations, changes
in stockholders' equity (deficit) and comprehensive income (loss), and cash
flows for the period January 1, 1995 to December 31, 2001 include amounts for
the period January 1, 1995 to December 31, 1998 and for each of the years in the
four-year period ended December 31, 1998, which were audited by other auditors
whose report included an explanatory paragraph describing conditions that raised
substantial doubt about the Company's ability to continue as a going concern.
Our opinion, insofar as it relates to the amounts included for the period
January 1, 1995 through December 31, 1998, is based solely on the report of the
other auditors.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Global Gold
Corporation for the year ended December 31, 2001 and for the period from January
1, 1995 through December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2a to the
financial statements, the Company has incurred significant losses since
inception. This raises substantial doubt about the Company's ability to continue
as a going concern. Management's plans with respect to these matters are also
described in Note 2a to the financial statements. The financial statements do
not include any adjustments that might result should the Company be unable to
continue as a going concern.
/s/ Feldman Sherb & Co., P.C.
Feldman Sherb & Co., P.C.
Certified Public Accountants
March 26, 2002
New York, New York
F-2
GLOBAL GOLD CORPORATION
(A Development Stage Enterprise)
BALANCE SHEET
December 31, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,784
-----------------
TOTAL CURRENT ASSETS 7,784
Deferred costs 53,502
Investment in securities available for sale 276,674
-----------------
$ 337,960
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 105,784
Due to related parties 63,932
-----------------
TOTAL CURRENT LIABILITIES 169,716
-----------------
STOCKHOLDERS' EQUITY:
Common stock $0.001 par, 100,000,000 shares authorized,
4,568,114 shares issued and outstanding 4,568
Additional paid-in capital 4,844,755
Deficit accumulated during the development stage (4,807,485)
Accumulated other comprehensive income 126,406
-----------------
TOTAL STOCKHOLDERS' EQUITY 168,244
-----------------
$ 337,960
=================
The accompanying notes are an integral part of these financial statements.
F-3
GLOBAL GOLD CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
January 1, 1995
Years Ended through
December 31, December 31,
--------------------------------
2002 2001 2002
--------------- ------------- ----------------
REVENUES $ - $ - $ -
--------------- ------------- ----------------
EXPENSES:
Selling, general and administrative 39,774 19,300 1,362,797
Legal fees 24,958 7,602 656,253
Write-off investment in Georgia
mining interests - - 135,723
Gain on sale of interest in
Global Gold Armenia - - (268,874)
Gain on sale of interest in
Sterlite Gold Ltd. (4,619) - (4,619)
Miscellaneous other - (70) 18,557
--------------- ------------- ----------------
TOTAL EXPENSES 60,113 26,832 1,899,837
--------------- ------------- ----------------
NET LOSS $ (60,113) $ (26,832) $ (1,899,837)
=============== ============= ================
NET LOSS PER SHARE-BASIC AND DILUTED $ (0.01) $ (0.01)
=============== =============
WEIGHTED AVERAGE SHARES OUTSTANDING 4,404,641 4,368,114
=============== =============
The accompanying notes are an integral part of these financial statements.
F - 4
GLOBAL GOLD CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)
Deficit
Accumulated Accumulated Total
Additional During the Other Stockholders'
Common Stock Paid-in Development Treasury Comprehensive Equity Comprehensive
Shares Amount Capital Stage Stock Income (Loss) (Deficit) Income (Loss)
-------- -------- -------- ----------- ------ ------------- ----------- ------------
Balance from February 21, 1980
to December 31, 1994
(Note 1) 898,074 $ 89,807 3,147,693 (2,907,648) $ - $ - $ 329,852
Adjustment for the restatement
of par value - (88,909) 88,909 - - -
Issuance of stock for acquisition
of Eyre Resources, N.L. 1,000,000 1,000 849,000 - 850,000
Proceeds received from private
placement 200,000 200 421,373 421,573
Net loss - - - (361,345) - - (361,345)
-------- -------- ---------- ----------- ------ ----------- -----------
Balance at December 31, 1995 2,098,074 2,098 4,506,975 (3,268,993) - - 1,240,080
Warrants exercised 40 100 100
Net loss (668,577) (668,577)
-------- -------- ---------- ----------- ------ ----------- -----------
Balance at December 31, 1996 2,098,114 2,098 4,507,075 (3,937,570) - - 571,603
Issuance of common stock 2,250,000 2,250 222,750 225,000
Net loss - - - (690,747) - - (690,747)
-------- -------- ---------- ----------- ------ ----------- ----------
Balance at December 31, 1997 4,348,114 4,348 4,729,825 (4,628,317) - - 105,856
Net income 34,944 34,944
-------- -------- ---------- ----------- ------ ----------- ----------
Balance at December 31, 1998 4,348,114 4,348 4,729,825 (4,593,373) - - 140,800
Purchase of treasury stock - - - - (60,000) - (60,000)
Unrealized loss on investment - - - - - (16,000) (16,000) $ (16,000)
Net loss - - - (93,826) - - (93,826) (93,826)
-------- -------- ---------- ----------- ------ ----------- ---------- ------------
Balance at December 31, 1999 4,348,114 4,348 4,729,825 (4,687,199) (60,000) (16,000) (29,026) $ (109,826)
============
Issuance of common stock in
connection with settlement 20,000 20 1,980 2,000
Cancellation of treasury stock (1,000,000) (1,000) (59,000) 60,000 -
Settlement of accrued salary 1,000,000 1,000 161,500 162,500
Sale of warrants 650 650
Unrealized loss on investment (90,000) (90,000) $ (90,000)
Net loss - - - (33,341) - - (33,341) (33,341)
-------- -------- ---------- ----------- ------ ----------- ---------- ------------
Balance at December 31, 2000 4,368,114 4,368 4,834,955 (4,720,540) - (106,000) 12,783 $ (123,341)
============
Net loss - - - (26,832) - - (26,832) $ (26,832)
Unrealized loss on investment (15,000) (15,000) (15,000)
-------- -------- ---------- ----------- ------ ----------- ---------- ------------
Balance at December 31, 2001 4,368,114 4,368 4,834,955 (4,747,372) - (121,000) (29,049) $ (41,832)
============
Issuance of common stock for
compensation 200,000 200 9,800 10,000
Net loss - - - (60,113) - - (60,113) $ (60,113)
Unrealized gain on investment 247,406 247,406 247,406
-------- -------- ---------- ----------- ------ ----------- ---------- ------------
Balance at December 31, 2002 4,568,114 $ 4,568 $4,844,755 $(4,807,485) $ - $ 126,406 $ 168,244 $ 187,293
========= ======== ========== =========== ====== =========== =========== ============
F-5
GLOBAL GOLD CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
January 1, 1995
Years Ended through
December 31, December 31,
----------------------------
2002 2001 2002
------------ ------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (60,113) $ (26,832) $ (1,899,837)
Adjustments to reconcile net loss
to net cash used in operating activities:
Provision for bad debt - - 325,000
Gain on sale of Armenia mining interests - - (268,874)
Write-off of mining investment in Georgia - - 135,723
Gain on sale of marketable securities (4,619) - (4,619)
Non cash expenses related to issuance of common stock 10,000 - 174,500
Changes in assets and liabilities:
Organization costs - - (9,601)
Accounts receivable and deposits - - (154)
Accounts payable and accrued expenses 23,573 22,852 224,605
------------ ------------ ----------------
NET CASH USED IN OPERATING ACTIVITIES (31,159) (3,980) (1,323,257)
------------ ------------ ----------------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of Armenia mining interests - - 1,891,155
Proceeds from sale of First Dynasty Mines, Ltd. interests 50,351 50,351
Investment in certain mining
interests - net of financing - - (153,494)
Deferred costs - mining interests (53,502) - (932,360)
------------ ------------ ----------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (3,151) - 855,652
------------ ------------ ----------------
CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds from private
placement offering - - 421,573
Due to related party 28,214 13,500 41,714
Sale of warrants - - 650
Warrants exercised - - 100
------------ ------------ ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 28,214 13,500 464,037
------------ ------------ ----------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,096) 9,520 (3,568)
CASH AND CASH EQUIVALENTS - beginning of period 13,880 4,360 11,352
------------ ------------ ----------------
CASH AND CASH EQUIVALENTS - end of period $ 7,784 $ 13,880 $ 7,784
============ ============ ================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes paid $ - $ - $ 2,683
============ ============ ================
Interest paid $ - $ - $ 15,422
============ ============ ================
The accompanying notes are an integral part of these financial statements.
F - 6
GLOBAL GOLD CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
1. ORGANIZATION AND BUSINESS
Global Gold Corporation (the "Company") was incorporated as Triad Energy
Corporation in the State of Delaware on February 21, 1980 and, as further
described hereafter, had no operating or development stage history from its
inception until January 1, 1995. During 1995, the Company changed its name
from Triad Energy Corporation to Global Gold Corporation to pursue certain
gold and copper mining rights in the former Soviet Republics of Armenia and
Georgia. As part of the plan to acquire the mining interests and raise
venture capital, the Company increased the number of shares authorized to
be issued from ten million to one hundred million, and commenced a private
placement offering to raise $500,000.
The accompanying financial statements present the available development
stage activities information of the Company from January 1, 1995, the
period commencing the Company's operations as Global Gold Corporation,
through December 31, 2002.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation - These financial statements have been prepared
assuming that the Company will continue as a going concern. Since its
inception, the Company, a development stage enterprise, has yet to
generate revenues (other than interest income and the proceeds from
the sale of an interest in an Armenian mining venture, and the sale of
common stock of marketable securities received as consideration,
therewith) while incurring costs in excess of $1,800,000. Management
is currently pursuing additional investors and lending institutions
interested in financing the Company's projects. However, there is no
assurance that the Company will obtain the financing that it requires
or achieve profitable operations. The Company expects to incur
additional losses for the near term until such time as it derives
substantial revenues from the Chilean mining interest acquired by it
or other future projects or from its investment in marketable
securities. The accompanying financial statements do not include any
adjustments that might be necessary should the Company be unable to
continue as a going concern.
b. Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
F-7
c. Fair Value of Financial Instruments - The Company's financial
instruments include cash, marketable securities and accounts payable.
The Company believes that the carrying amounts of these accounts are
reasonable estimates of their fair value because of the short-term
nature of such instruments.
d. Net Loss Per Share - Basic net loss per share is based on the weighted
average number of common and common equivalent shares outstanding.
Potential common shares includable in the computation of fully diluted
per share results are not presented in the financial statements as
their effect would be anti-dilutive.
e. Stock Based Compensation - The Company accounts for employee stock
transactions in accordance with APB Opinion No. 25, "Accounting For
Stock Issued to Employees". The Company has adopted the pro forma
disclosure requirements of Statement of Financial Accounting Standards
No. 123, "Accounting For Stock Based Compensation". The Company
accounts for all stock transactions other than with employees in
accordance with SFAS No. 123, based on the fair value of the
consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable.
f. Comprehensive Income - The Company has adopted Statement of Financial
Accounting Standards No. 130 ("SFAS 130") "Reporting Comprehensive
Income". Comprehensive income is comprised of net income (loss) and
all changes to stockholders' equity (deficit), except those due to
investments by stockholders, changes in paid-in capital and
distribution to owners.
g. Income Taxes - The Company accounts for income taxes under Statement
of Financial Accounting Standards No.109, "Accounting for Income
Taxes" ("SFAS No.109"). Pursuant to SFAS No.109, the Company accounts
for income taxes under the liability method. Under the liability
method, a deferred tax asset or liability is determined based upon the
tax effect of the differences between the financial statement and tax
basis of assets and liabilities as measured by the enacted rates that
will be in effect when these differences reverse.
h. Investment in Marketable Securities - The Company's investment in
available for sale securities consists of certain equity securities
not classified as trading securities nor as securities to be
held-to-maturity. Securities available for sale are carried at fair
value with unrealized gains and losses reported in other comprehensive
income. Realized gains and losses on securities available for sale are
included in other income (expense) and, when applicable, are reported
as a reclassification adjustment, net of tax, in other comprehensive
income. Gains and losses on the sale of available for sale securities
are determined using the specific-identification method. Declines in
fair value on individual available for sale securities below their
cost that are other than temporary would result in the write-downs of
the individual securities to their fair value. The related write-downs
would be included in earnings as realized losses.
i. Deferred costs - The Company has incurred fees in connection with
their acquisition of mining properties. These fees are recorded on the
balance sheet as deferred costs. Upon completion of these
acquisitions, the Company will capitalize such fees as fixed assets.
j. Reclassifications - Certain amounts in the prior period financial
statements have been reclassified to conform to the current year's
presentation.
F-8
k. New Accounting Standards:
- Effective January 1, 2002, the Company adopted
Statement of Financial Accounting Standard ("SFAS")
No. 142, which eliminates the amortization for
goodwill and other intangible assets with indefinite
lives. Intangible assets with lives restricted by
contractual, legal, or other means will continue to
be amortized over their useful lives. Goodwill and
other intangible assets not subject to amortization
are tested for impairment annually or more frequently
if events or changes in circumstances indicate that
the asset might be impaired. SFAS No. 142 requires a
two-step process for testing impairment. First, the
fair value of each reporting unit is compared to its
carrying value to determine whether an indication of
impairment exists. If impairment is indicated, then
the implied fair value of the reporting unit's
goodwill is determined by allocating the unit's fair
value to its assets and liabilities (including any
unrecognized intangible assets) as if the reporting
unit had been acquired in a business combination. The
amount of impairment for goodwill and other
intangible assets is measured as the excess of its
carrying value over its implied fair value. The
adoption did not have an effect on the Company's
financial statements.
- Effective January 1, 2002, the Company adopted
Statement of Financial Accounting Standards No. 144
("SFAS 144"), "Accounting for the Impairment or
Disposal of Long-lived Assets." SFAS 144 superceded
Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-lived Assets
and Assets to be Disposed of" and the accounting and
reporting provisions of Accounting Principles Board
Opinion No. 30, "Reporting the Results of Operations
- Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions". SFAS 144 also
amends Accounting Research Bulletin No. 51,
"Consolidated Financial Statements," to eliminate the
exception to consolidation for a subsidiary for which
control is likely to be temporary. The adoption did
not have an effect on the Company's financial
statements.
- In April 2002, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 145, "Rescission of
FASB Statement No. 4, 44 and 64, Amendment of FASB
Statement No.13, and Technical Corrections." The
rescission of SFAS No.4, "Reporting Gains and Losses
from Extinguishments," and SFAS No.64,
"Extinguishments of Debt made to Satisfy Sinking Fund
Requirements," which amended SFAS No.4, will affect
income statement classification of gains and losses
from extinguishment of debt. SFAS No.4 requires that
gains and losses from extinguishment of debt be
classified as an extraordinary item, if material.
Under SFAS No. 145, if the extinguishment of debt is
a routine and recurring transaction by the entity, as
in a risk management strategy, then it should not be
considered extraordinary under the criteria in APB
Opinion No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions," as
it does not meet the unusual in nature and
infrequency of occurrence criteria in APB Opinion No.
30. SFAS No. 145 will be effective for fiscal years
beginning after May 15, 2002. Upon adoption,
extinguishments of debt shall be classified under the
criteria in APB Opinion No. 30. The Company does not
expect the provisions of SFAS No.146 to materially
affect its financial position and results of
operations.
F-9
- In June 2002, the FASB issued SFAS No.146,
"Accounting for Costs Associated with Exit or
Disposal Activities." SFAS No. 146 addresses
financial accounting and reporting for costs
associated with exit or disposal activities and
nullified Emerging Issues Task Force Issue No. 94-3,
"Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 requires that a
liability for a cost associated with an exit or
disposal activity be recognized when the liability is
incurred versus the date an entity commits to an exit
plan under EITF 94-3. SFAS No. 146 also establishes
that fair value is the objective for initial
measurement of the liability. The provisions of this
statement are effective for exit or disposal
activities that are initiated after December 31,
2002, with early application encouraged. The Company
does not expect the provisions of SFAS No.146 to
materially affect its financial position and results
of operations.
- In December 2002, the FASB issued SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition
and Disclosure - an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting
for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the
fair value based method of accounting for stock-based
employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and
interim financial statements about the method of
accounting for stock-based employee compensation and
the effect of the method used on reported results.
The disclosure requirements apply to all companies
for fiscal years ending after December 15, 2002. The
interim disclosure provisions are effective for
financial reports containing financial statements for
interim periods beginning after December 15, 2002.
The adoption of SFAS No. 148 is not expected to have
a material impact on the Company's financial
statements.
- In November 2002, the FASB issued FASB Interpretation
No. 45 ("FIN 45"), "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN
45 requires that upon issuance of a guarantee, the
guarantor must recognize a liability for the fair
value of the obligation it assumes under that
guarantee. FIN 45 also requires additional
disclosures by a guarantor in its interim and annual
financial statements about the obligations associated
with guarantees issued. The disclosure requirements
are effective for financial statements of interim or
annual periods ending after December 15, 2002. The
recognition and measurement provisions are effective
on a prospective basis to guarantees issued or
modified after December 31, 2002. The adoption of
this interpretation is not expected to have an impact
on the Company's financial statements.
- In January 2003, the FASB issued FASB Interpretation
No. 46 ("FIN 46"), "Consolidation of Variable
Interest Entities." FIN 46 provides guidance on the
identification of entities for which control is
achieved through means other than through voting
rights, variable interest entities, and how to
determine when and which business enterprises should
consolidate variable interest entities. This
interpretation applies immediately to variable
interest entities created after January 31, 2003. It
applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest
entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003.
The adoption of this interpretation is not expected
to have an impact on the Company's financial
statements.
F-10
- In December 2001, Accounting Standards Committee
(AcSEC) of the American Institute of Certified Public
Accountants issued Statement of Position 01-6,
"Accounting by Certain Entities (including Entities
with Trade Receivables) That Lend to or Finance the
Activities of Others" ("SOP 01-6"). SOP 01-6 provides
guidance on accounting and reporting matters for
entities that have trade receivables and entities
that finance their customers' purchases of goods and
services using trade receivables. SOP 01-6 is
effective for fiscal years beginning after December
15, 2001, and the Company has adopted the provisions
of SOP 01-6 effective January 1, 2002. The adoption
of SOP 01-6 has not had a material effect on the
Company's financial position, results of operations
or cash flows.
3. ACQUISITION OF ARMENIAN MINING INTEREST FROM EYRE
Pursuant to an Asset Purchase Agreement dated June 1995, the Company
acquired from Eyre Resources N.L., ("Eyre") an Australian corporation, all
of its potential interest in its Armenian gold mining project (Note 4) and
all of Eyre's potential interest in its Georgia gold and copper mining
project (Note 5).
In January 1998, the Company brought an action against Eyre, the
Parry-Beaumont Trust, a Singapore trust, and Kevin Parry, individually, in
the United States District Court for the Southern District of New York,
seeking damages in excess of $81,000,000 arising out of the alleged fraud
committed by the defendants.
The defendants denied such claims and asserted counterclaims against the
Company, the Company's Chairman, and the Company's President.
A settlement was agreed to on October 13, 1999. In the settlement,
1,000,000 common shares of First Dynasty Mines Ltd., which on July 5, 2002
changed its name to Sterlite Gold Ltd., ("Sterlite"), owned by the Company
that were received in exchange for the investment in Global Gold Armenia
Limited were exchanged for 1,000,000 shares of Common Stock of Global Gold
Corporation, 600,000 of which were held by Eyre and 400,000 of which were
held by the Parry-Beaumont Trust. All outstanding Warrants held by Eyre and
the Parry-Beaumont Trust were canceled as part of the settlement.
In March 2000, an additional 20,000 shares of the Company's common stock
were issued as a final settlement of obligations resulting from the
lawsuit.
4. ARMENIAN JOINT VENTURE AGREEMENT
On February 2, 1996, the Company and Armgold, a division of the Ministry of
Industry of the Government of the Republic of Armenia, initialed a Joint
Venture Agreement (the "Venture") entitled the Armenian Gold Recovery
Company ("AGRC").
The first stage of the project for extraction of gold from tailings began
operations at an official dedication ceremony on February 25, 1998.
An agreement to contribute the Zod and Meghradzor mines to the Venture was
signed on September 30, 1997 and approved by the Armenian government on
June 25, 1998 based on a feasibility study prepared by a joint venture
between Kilborn-SNC Lavalin and CMPS&F, and submitted on June 8, 1998.
An agreement was entered into with Sterlite on July 24, 1998, transferring
the Company's interest in AGRC in exchange for 4,000,000 Special Warrants
exchangeable at no cost into common shares of Sterlite. In 1998 the Company
recognized a gain of $268,874 in the exchange.
F-11
5. GEORGIAN AGREEMENT
The Company also acquired from Eyre rights under a Foundation Agreement
dated April 22, 1995 (including a Charter for a joint venture company) with
R.C.P.A. Madneuli, a Georgian state enterprise, in connection with carrying
out certain mining activities on the Madneuli deposit. The Company was
subsequently advised that the application for the license required to be
filed with the Georgian government had not been filed, and it had no
definitive agreement granting it fixed rights to mining production or
processing in Georgia.
The Company thereafter learned that the Georgian government was planning to
privatize the development of the Madneuli mine through a public bidding
process which was slated to end on April 15, 1997. Since the structure of
the Madneuli mining project under the public tender differed markedly from
that contemplated under the Asset Purchase Agreement between the Company
and Eyre dated as of June 30, 1995, the Company decided not to submit a bid
for the development of the Madneuli mining project. As of December 31,
1997, the Company wrote off its investment in the Georgian mining property
resulting in a loss of $135,723.
6. INVESTMENT IN SECURITIES AVAILABLE FOR SALE
The Company, Global Gold Armenia ("GGA"), a Cayman Island Company, and
Sterlite on July 5, 2002, entered into a preliminary agreement dated
January 27, 1997, whereby Sterlite agreed to advance funds in stages
necessary for the development of the Armenian mining projects.
The Company and Sterlite entered into a definitive agreement dated May 13,
1997, reflecting the final agreement of the parties with respect to the
Armenian mining projects (the "FDM Agreement").
The Company and GGA, in conjunction with Sterlite, negotiated for AGRC to
develop the Zod and Meghradzor mines and concluded the amended Armenian
Joint Venture Agreement on September 30, 1997. Sterlite agreed to advance a
maximum of $24,510,000 under the FDM Agreement. All funds advanced by
Sterlite were to be advanced to GGA as debt, which is convertible into
stock of GGA at Sterlite's option, or is automatically converted into such
stock under certain circumstances, with $24,510,000 equal to 80% of the
capital stock of GGA. Upon obtaining 80% of the capital stock of GGA, or
upon making aggregate advances of $24,510,000, Sterlite would be entitled
to acquire the remaining 20% of the outstanding capital stock of GGA within
18 months after making such total advances, by issuance of 4,000,000
special warrants.
On July 24, 1998, Sterlite and the Company entered into an agreement to
accelerate the issuance of the 4,000,000 special warrants. The 4,000,000
special warrants are exchangeable into 4,000,000 common shares of Sterlite
at no cost within one year or with the public offering of common shares,
whichever comes first. The common shares were valued at approximately CND
$0.20 on the Toronto Stock Exchange or approximately US $0.13 on August 31,
1998. For reporting purposes, the shares were discounted 50% for absence of
a market for the warrants, lack of trading volume and future dilution.
In September 1999, the warrants were exchanged for 4,000,000 shares of
Sterlite common stock.
F-12
In October 1999, as noted in Note 3, the Company reacquired 1,000,000
shares of its outstanding common stock in exchange for 1,000,000 shares of
Sterlite owned by the Company. As a result, total stock of Sterlite owned
by the Company amounted to 3,000,000 shares.
The Company has determined that these Sterlite shares are marketable
securities to be held for an indefinite period, and has thus classified
them available for sale. Unrealized gains or losses on these securities are
added to stockholders' equity as accumulated other comprehensive gain or
loss.
During the years ended December 31, 2002, the Company sold 700,000 shares
of Sterlite for $50,351 and recorded a profit of $4,619. There were no
sales of Sterlite shares in the year ended December 31, 2001. As of
December 31, 2002 the Company owned 2,300,000 shares of Sterlite valued at
$276,674. In addition, the Company has recorded a comprehensive gain of
$126,406 on these marketable securities, included in the Company's
statements of changes in stockholders' equity (deficit).
The Company will retain the right until December 31, 2009 to elect to
participate at a level of up to twenty percent with Sterlite or any of its
affiliates in any exploration project undertaken by them in Armenia.
In connection with the Sterlite financing, the Company paid a finder's fee
of 125,000 shares of its common stock to each of Walker Investments Ltd.
and Alpine Holdings Ltd. at $.10 per share which approximated fair market
value as determined by management at the time.
7. DUE TO RELATED PARTIES
Due to related parties of $63,932 represents non-interest bearing advances
from officers/stockholders of the Company, which are due on demand.
8. PRIVATE PLACEMENT MEMORANDUM
Pursuant to a Confidential Private Placement Memorandum dated May 17, 1995,
as amended (the "1995 Offering"), the Company issued $500,000 of 10%
Convertible Notes due December 31, 1996. Expenses in connection with the
Offering were $78,427.
Each $1,000 Convertible Note, entitled the holder to 400 shares of common
stock and warrants to purchase 800 shares of common stock at an adjusted
exercise price of $.50 per share at any time before December 31, 1998. The
exercise price was subsequently reduced to $.125 per share to reflect the
current market valuation as determined by management and the exercise date
was extended to December 31, 1999. The exercise date was further extended
to December 31, 2000 at which time the warrants expired.
In accordance with the Offering, interest was not payable on the
Convertible Notes so long as they were converted to equity within a
specified time frame. After the December 1, 1995 Eyre closing, the entire
$500,000 of Convertible Notes were exchanged for 200,000 shares of Common
Stock, as computed after the Reverse Split (see Note 11).
F-13
9. OFFICERS' COMPENSATION, INCENTIVE STOCK OPTIONS AND STOCK APPRECIATION
RIGHTS
Management currently consists of two individuals: the Chairman, Chief
Executive Officer and Treasurer of the Company (the "Chairman") who has
been a stockholder since 1981 and was previously the Company's President,
and the current President of the Company (the "President") who was hired in
April 1995 to oversee mining and related financing activities.
In March 2000, the Company paid the Chairman accrued salary from prior
years of $162,500 by issuing 1,000,000 shares of its common stock out of
its Treasury shares.
The Company entered into four-year Employment Agreements with both the
Company's Chairman and its President commencing as of July 1, 2002, and
terminating on June 30, 2006. Pursuant to these agreements, the Company
agreed to deliver to each of these officers 100,000 shares of its Common
Stock as base compensation for each year during the four-year term, subject
to an adjustment each year, as determined by the Board of Directors (i) in
an amount equal to the increase in the consumer price index or (ii) up to
10% of the then base compensation. On October 31, 2002, the Company issued
100,000 shares of common stock, valued at $0.05 per share, to both the
Chairman and President as compensation for the year 2002. Such expense was
reflected in the Statement of Operations for the year ended December 31,
2002. In addition, each officer is entitled to annual bonus compensation
under any bonus plan as determined by the Board of Directors.
The Company, on February 1, 2003, entered into Amended and Restated
Employment Agreements with both the Chairman and President that modified
the existing four-year Employment Agreements that commenced on July 1,
2002. Each Amended and Restated Employment Agreement provides for base
compensation of $100,000 per year (subject to payment as cash flow permits)
and the grant of 900,000 shares as a stock award subject to a substantial
risk of forfeiture if either terminates their employment with the Company
(other than by death or disability) over the 41-month term of the
agreement. On February 21, 2003, the Company issued the 900,000 shares to
both officers of the Company. These shares are to be earned, and vest
ratably, during such period, plus any bonus determined in accordance with
any bonus plan approved by the Board of Directors.
F-14
10. INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes ("SFAS No. 109").
SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statements and tax basis of assets and liabilities, and for the
expected future tax benefit to be derived from tax loss and tax credit
carry forwards. SFAS No. 109 additionally requires the establishment of a
valuation allowance to reflect the likelihood of realization of deferred
tax assets. At December 31, 2002, the Company had net deferred tax assets
of $666,000. The Company has recorded a valuation allowance for the full
amount of the net deferred tax assets.
The following table illustrates the source and status of the Company's
major deferred tax assets as of December 31, 2002:
Net operating loss carryforwards $ 666,000
Valuation allowance (666,000)
---------------
Net deferred tax asset recorded $ -
===============
The provisions for income taxes for the years ended December 31, 2002 and 2001
differ from the amounts computed by applying the statutory Federal income tax
rate to the loss before income taxes as follows:
Years ended December 31,
----------------------------
2002 2001
------------ ------------
Income tax benefit computed at the Federal statutory rate $ (15,000) $ (9,000)
Deductions for which no benefit is recognized 15,000 9,000
------------ ------------
Provision for income taxes $ - $ -
============ ============
The Company has net operating loss carryforwards for tax purposes of
approximately $1,960,000 at December 31, 2002 expiring at various dates from
2003 to 2022. A significant portion of these carryforwards are subject to
limitations on annual utilization due to "equity structure shifts" or "owner
shifts" involving "5 percent stockholders" (as defined in the Internal Revenue
Code of 1986, as amended), which resulted in more than a 50 percent change in
ownership.
F-15
11. STOCKHOLDERS' EQUITY (DEFICIT)
a. Reverse stock split - The Company filed a Certificate of
Amendment to the Certificate of Incorporation with respect to
a 1 for 10 reverse split with the Delaware Secretary of State
on December 31, 1996. Such step was taken by the written
consent of the holders of a majority of the Company's issued
and outstanding shares of common stock.
b. Treasury stock - As part of the settlement with Eyre and the
Parry-Beaumont Trust (Note 3), 1,000,000 shares of Sterlite
common stock, owned by the Company with a market value of
$60,000 as October 13, 1999, were exchanged for 1,000,000
shares of the Company's common shares, of which 600,000 shares
were held by Eyre and 400,000 shares were held by the
Parry-Beaumont Trust. Upon exchange the Company classified
their shares as treasury stock.
On March 15, 2000, the Company issued 1,000,000 restricted
shares of its common stock out of its treasury to the
Company's Chairman and Chief Executive Officer, Drury
Gallagher, for accrued salary of $162,500 or $0.1625 per
share.
c. On October 31, 2002, the Company issued 100,000 shares of its
common stock to each of the Chairman and President of the
Company, as payment of salaries payable under terms of their
Employment Agreements dated as of July 1, 2002 (Note 9).
d. Stock Warrants and Options
- On October 31, 2000, the Company sold, for $0.005 per
share, warrants to purchase 130,000 shares of Common
Stock of the Company at an exercise price of $0.25
per share, expiring on October 31, 2005, as amended.
- On October 31, 2000, the Company granted warrants to
purchase 100,000 shares of the Common Stock of the
Company at an exercise price of $0.25 per share,
expiring on October 31, 2005, as amended, to each of
Drury J. Gallagher, the Company's Chairman and Robert
A. Garrison, the Company's President, in
consideration of their prior services to the Company.
- The Company adopted the 1995 Stock Option Plan under
which a maximum of 500,000 shares of Common Stock may
be issued (subject to adjustment for stock splits,
dividends and the like). In July 2002, the Company
granted options to buy 150,000 shares of common
stock, at an exercise price of $0.11 per share, to
each of the Chairman and President of the Company. Of
these options issued, 75,000 vest on the first
anniversary of the date of issuance, and the
remaining 75,000 vest on the second anniversary of
the date of issuance. These options expire five years
from the date of issuance. As of December 31, 2002,
there were 200,000 stock awards available under the
Plan for future issuance.
F-16
- The following tables illustrates the Company's stock
warrant and option issuances and balances outstanding
as of, and during the years ended December 31, 2002
and December 31, 2001, respectively.
WARRANTS OPTIONS
------------------------------ ------------------------------
Shares Weighted Shares Weighted
Average Average
Underlying Exercise Underlying Exercise
Warrants Price Options Price
------------- ------------- ------------- -------------
Outstanding at December 31, 2000 330,000 $ 0.25 - $ -
Granted - - - -
Canceled - - - -
Exercised - - - -
------------- ------------- ------------- -------------
Outstanding at December 31, 2001 330,000 $ 0.25 - $ -
Granted - - 300,000 0.11
Canceled - - - -
Exercised - - - -
------------- ------------- ------------- -------------
Outstanding at December 31, 2002 330,000 $ 0.25 300,000 $ 0.11
============= ============= ============= =============
The following is additional information with respect to the Company's
options and warrants as of December 31, 2002:
WARRANTS OUTSTANDING WARRANTS
EXERCISABLE
--------------------------------------------------------------------- ----------------------------------
Exercise Number of Weighted Weighted Number of Weighted
Outstanding Average Exercisable
Shares Remaining Average Shares
Underlying Contractual Exercise Underlying Average
Price Warrants Life Price Warrants Exercise Price
-------------- --------------- --------------- ------------ -------------- ---------------
$ 0.25 330,000 2.83 years $ 0.25 330,000 $ 0.25
OPTIONS
OPTIONS OUTSTANDING EXERCISABLE
--------------------------------------------------------------------- ----------------------------------
Exercise Number of Weighted Weighted Number of Weighted
Outstanding Average Exercisable
Shares Remaining Average Shares
Underlying Contractual Exercise Underlying Average
Price Options Life Price Options Exercise Price
-------------- --------------- --------------- ------------ -------------- ---------------
$ 0.11 300,000 4.50 years $ 0.11 - $ -
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees." Pro-forma
information regarding net loss and net loss per share is presented
below as if the Company had accounted for its employee stock options
under the fair value method using SFAS No. 123; such pro-forma
information is not necessarily representative of the effects on
reported net loss for future years due primarily to option vesting
periods and to the fair value of additional options in future years.
F-17
Had compensation cost for the options been determined
using the methodology prescribed under the
Black-Scholes option pricing model, the Company's net
loss and loss per share would have been $53,166 and
$.01, respectively, for the year ended December 31,
2002. There were no options issued in the year ended
December 31, 2001.
Assumptions used for the pro-forma above information
are: expected dividend yield of 0%, risk free
interest of 5.7%, expected option lives of 2 years
and expected volatility of 100%. Based on these
assumptions the weighted average fair value of stock
options granted during the year ended December 31,
2002 was $0.07 per share.
12. AGREEMENTS
On October 28, 2002 the Company entered into an agreement on
cooperation and confidentiality and to negotiate with Sipan Limited,
an Armenian company, for the purchase of the Lichvaz - TEI and
Terterasar gold/silver properties in southern Armenia. No purchase
price has been agreed upon.
13. SUBSEQUENT EVENTS
a.) On January 15, 2003, the Company entered into an
option/purchase/lease agreement with Alfred Soto Torino and
Adrian Soto Torino for the purchase of copper and gold properties
in Chile for a total purchase price of $400,000 US$ payable over
four years at $25,000 US$ per quarter for four years, commencing
on March 31, 2003, of which payment was made. In addition to the
purchase price, a royalty of $1 US$ per ounce is to be paid
quarterly on all ounces of gold produced in excess of 500,000
ounces, provided that the average price of gold per quarter
exceeds U.S. $310 per ounce as measured by the London Metal
Exchange. Under such agreement, the Company has the right to
develop the property under the lease thereof. Upon expiration of
four years from the date of such agreement, or sooner at the
Company's option, the Company can exercise its option to acquire
the title to the property, subject to the above royalty
obligation.
The Chilean properties consists of approximately 1100 acres in
total, including the Candelaria 1 to 3, Santa Candelaria 1 to 8
and the Torino I mining claims 1 to 7 and the Torino II mining
claims 1 to 11. The Company has not yet developed a feasibility
report for the development of these properties, and has not yet
ascertained the amount of the proven or probable reserves of
gold, copper and other minerals on the property, if any.
b.) On March 17, 2003, the Company entered into an agreement with
SHA, LLC, an Armenian limited liability company, for the
acquisition of the Hankavan mine, a gold and copper mine located
in Armenia, for a total purchase price of $150,000 US$ (or
$175,000 if an additional mining property is also transferred)
payable in installments. Under such agreement, the Company has
the option, exercisable within 45 days from March 17, 2003, to
acquire either (i) the exclusive license, permits, and all rights
related to such mine, or (ii) all of the ownership shares of SHA
and any other entity which may hold rights to such mine.
The Hankavan mine deposit is located in central Armenia between
Vanadzor and Meghradzor north of the Marmarik River. The Company
has not yet developed a feasibility report for the development of
the properties, and has not yet determined the amount of proven
or probable reserves of gold, copper and other minerals on the
property, if any.
F-18
c.) Pursuant to a Confidential Private Placement Memorandum dated
November 15, 2002 (the "2002 Offering"), the Company offered to
sell up to 1,000,000 shares of its common stock at $0.25 per
share. In January and February 2003, the Company sold 350,000
shares of its Common Stock at a price of $0.25 per share and
raised total proceeds of $87,500. In addition, the Company
granted another 100,000 shares, valued at $0.25 per share under
the 2002 Offering, for services previously performed for the
Company. All such shares under the 2002 Offering have not been
issued as of March 31, 2003.
d.) In January 2003, the Company sold to an individual 500,000 shares
of common stock for $0.05 per share, for total proceeds of
$25,000. These shares have a reduced price as an inducement for
future funding services that the Company desires to be performed
from such individual.
F-19
EXHIBIT INDEX
FORMER
EXHIBIT NO. EXHIBIT NO. DESCRIPTION OF EXHIBIT
3.1 1 Certificate of Incorporation, as amended.* (1)
3.2 2 By Laws*(1)
3.3 Certificate of Renewal and Revival of Certification
of Incorporation dated as of January 23, 2003**
4.1 21 Promissory Note of the Registrant dated December 1,
1995 in the principal amount of $100,000 *(2)
4.2 22 Promissory Note of the Registrant dated as of
December 1, 1995 in the principal amount of
$100,000 *(2)
4.3 29 Promissory Note of Global Gold Armenia Limited
dated as December 1, 1995 in the principal amount
of $802,740 *(2)
4.4 30 Promissory Note of Global Gold Georgia Limited
dated as of December 1, 1995 in the principal
amount of $47,260 *(2)
4.5 43 Debenture of Global Gold Armenia Limited issued to
First Dynasty Mines Ltd. dated February 3, 1997,
including Guarantee thereof by the Registrant *(3)
10.1 3 Certificate of Merger between the Registrant and
Everest Petroleum Inc. *(1)
10.2 4 Agreement of Merger between the Registrant and
Everest Petroleum Inc.*(1)
10.3 5 Asset Purchase Agreement between the Registrant and
Eyre Resources N.L. dated as of June 30, 1995 *(1)
10.4 6 Form of 1995 Stock Option Plan + *(1)
10.5 7 Letter Agreement between Registrant, Eyre Resources
N.L. and Robert A. Garrison + *(1)
10.6 8 Employment Agreement between the Registrant and
Drury J. Gallagher dated as of July 1, 1995 + *(2)
10.7 9 Employment Agreement between the Registrant and
Robert A. Garrison dated as of July 1, 1995 + *(2)
10.8 10 Employment Agreement between Autosport (Asia) Pte.
Ltd. and Robert A. Garrison dated as of July 1,
1996 +*(2)
19
10.9 11 Stock Option Agreement between the Registrant and
Drury J. Gallagher dated as of July 1, 1995 with
respect to the grant of 1,000,000 shares of the
Company's Common Stock +*(2)
10.10 12 Stock Option Agreement between the Registrant and
Drury J. Gallagher dated as of July 1, 1995 with
respect to the grant of 487,500 shares of the
Company's Common Stock + *(2)
10.11 13 Stock Option Agreement between the Registrant and
Drury J. Gallagher dated as of July 1, 1995 with
respect to the grant of 12,500 shares of the
Company's Common Stock +*(2)
10.12 14 Stock Option Agreement between the Registrant and
Robert A. Garrison dated as of July 1, 1995 with
respect to the grant of 487,500 shares of the
Company's Common Stock +*(2)
10.13 15 Stock Option Agreement between the Registrant and
Robert A. Garrison dated as of July 1, 1995 with
respect to the grant of 12,500 shares of the
Company's Common Stock +*(2)
10.14 16 Stock Appreciation Rights Agreement between the
Registrant and Drury J. Gallagher dated July 21,
1995 +*(2)
10.15 17 Stock Appreciation Rights Agreement between the
Registrant and Robert A. Garrison dated July 21,
1995 + *(2)
10.16 18 Assignment and Assumption Agreement between Eyre
Resources N.L. and Global Gold Armenia Limited
dated December 1, 1995 *(2)
10.17 19 Assignment and Assumption Agreement between Eyre
Resources N.L. and Global Gold Georgia Limited
dated December 1, 1995 *(2)
10.18 20 Assignment and Assumption Agreement between Eyre
Resources N.L. and Global Gold Australia Limited
dated December 1, 1995 *(2)
10.19 23 Stockholders Agreement by and among the Registrant,
Eyre Resources N.L., the Parry Beaumont Trust,
Drury J. Gallagher, Francis A. Hayman, John Hayman,
Howard G. Seitz and George L. Ryan dated December
1, 1995 *(2)
10.20 24 Guarantee and Indemnification Agreement of the
Registrant dated December 1, 1995 *(2)
20
10.21 25 Warrant Agreement to purchase 20,000 shares of the
Registrant's Common Stock dated December 1, 1995
issued to David Steadly *(2)
10.22 26 Warrant Agreement to purchase 20,000 shares of the
Registrant's Common Stock dated December 1, 1995
issued to Karekin Arzoomanian *(2)
10.23 27 Form of Warrant Agreement issued to 20 purchasers
of the Registrant's 10% Convertible Notes pursuant
to the Confidential Private Placement Memorandum
dated May 17, 1995, as amended *(2)
10.24 28 Restructuring Agreement dated as of December 1,
1995 by and among the Registrant, Global Gold
Armenia Ltd., Global Gold Georgia Ltd., Global Gold
Australia Ltd., Eyre Resources N.L., and the Parry-
Beaumont Trust *(2)
10.25 31 Amended Employment Agreement between the Registrant
and Robert A. Garrison dated as of April 11, 1996
*(2)
10.26 32 Agreement No. 1 by and between the Registrant,
London & International Mercantile Limited and HCL
Communications Ltd. *(3)
10.27 33 Agreement No. 2 by and between the Registrant,.
London & International Mercantile Limited and HCL
Communications Ltd. *(3)
10.28 34 Warrant Agreements to purchase 2,000,000 shares of
the Registrant's Common Stock issued to London &
International Mercantile Limited and HCL
Communications Ltd. under Agreement No. 1 with such
party. *(3)
10.29 35 Warrant Agreements to purchase 2,000,000 shares of
the Registrant's Common Stock issued to London &
International Mercantile Limited and HCL
Communications Ltd. under Agreement No. 2 with
such party. *(3)
10.30 36 Assignment and Assumption Agreement between the
Registrant and Global Gold Armenia Limited dated
as of July 30, 1996. *(3)
10.31 37 Stock Option Agreement between the Registrant and
Drury J. Gallagher dated as of July 19, 1996, as
amended on November 4, 1996 + *(3)
10.32 38 Stock Option Agreement between the Registrant and
Robert A. Garrison dated as of July 19, 1996, as
amended on November 4, 1996 + *(3)
21
10.33 39 Restructuring Agreement dated December 4, 1996 by
and among the Registrant, Eyre Resources N.L. and
the Parry-Beaumont Trust *(3)
10.34 40 Certificate of Amendment to the Certificate of
Incorporation of the Registrant filed with the
Delaware Secretary of State on December 31, 1996
*(3)
10.35 41 Unanimous Written Consent of the Board of Directors
of the Registrant dated as of January 3, 1997,
approving the transfer of 1,000,000 shares of the
Registrant's Common Stock to each of Drury J.
Gallagher and Robert A. Garrison+ *(3)
10.36 42 Letter Agreement by and among the Registrant,
Global Gold Armenia Limited and First Dynasty Mines
Ltd.*(3)
10.37 44 Global Gold Armenia Limited Charge Over Shares
issued to First Dynasty Mines Ltd. dated February
3, 1997 *(3)
10.38 45 Form of Amendments No. 2, 3 and 4 to Warrant
Agreement issued to the purchasers of the
Registrant's 10% Convertible Notes pursuant to the
Confidential Private Placement Memorandum dated
May 17, 1995, as amended *(3)
10.39 46 Definitive Agreement by and among the Registrant,
Global Gold Armenia Limited and First Dynasty Mines
Ltd. dated as of May 13, 1997 *(3)
10.40 47 First Amendment to the Definitive Agreement by and
among the Registrant, Global Gold Armenia Limited
and First Dynasty Mines Ltd. dated as of October
10, 1997 *(4)
10.41 48 Restated Employment Agreement between the
Registrant and Drury J. Gallagher dated as of July
1, 1997 + *(4)
10.42 49 Restated Debenture of Global Gold Armenia Limited
issued to First Dynasty Mines Ltd. dated October 3,
1997, including Guarantee thereof issued by the
Registrant *(4)
10.43 50 Form of Amendment No. 5 to Warrant Agreement
issued to the purchasers of the Registrant's 10%
Convertible Notes pursuant to the Confidential
Private Placement Memorandum dated May 17, 1995, as
amended *(4)
22
10.44 51 Letter Agreement dated July 24, 1998 between Global
Gold Corporation, First Dynasty Mines Ltd. and
Global Gold Armenia Ltd. and Robert A. Garrison
+*(5)
10.45 52 Release dated as of August 31, 1998 given to Global
Gold Corporation with respect to its guaranty of
Debenture of Global Gold Armenia Limited and the
Change Over Shares issued to First Dynasty Mines
Ltd.* (5)
10.46 53 Share Transfer Certificate with respect to the
transfer of shares of shares of First Dynasty Mines
Armenia Limited (formerly known as Global Gold
Armenia Limited) to First Dynasty Mines (USA) LLC
dated August 31, 1998* (5)
10.47 54 Joint Acknowledgement by First Dynasty Mines
Armenia Limited and Robert A. Garrison dated August
31, 1998+* (5)
10.48 55 Joint Acknowledgement between First Dynasty Mines
Ltd., First Dynasty Mines Armenia Limited and First
Dynasty Mines (USA) LLC and the Registrant dated
August 31, 1998 terminating all rights under the
Shareholders Agreement between the parties* (5)
10.49 56 Special Warrants to purchase 4,000,000 shares of
common stock of First Dynasty Mines Ltd. issued to
the Registrant* (5)
10.50 57 Special Warrants to purchase 500,000 shares of
common stock of First Dynasty Mines Ltd. issued to
the Registrant* (5)
10.51 58 Special Trust Indenture dated as of August 31, 1998
between first Dynasty Mines Ltd. and CIBC Mellon
Trust Company providing for the issue of special
warrants to purchase common stock of First Dynasty
Mines Ltd. issued to the Registrant and Robert A.
Garrison* (5)
10.52 59 Form Amendment No. 6 to Warrant Agreement issued
to the purchasers of the Registrant's 10%
Convertible Notes pursuant to the Confidential
Private Placement Memorandum dated May 17, 1995, as
amended*(6)
10.53 Employment Agreement between the Registrant and
Drury J. Gallagher dated as of July 1, 2002.*+
10.54 Employment Agreement between the Registrant and
Robert A. Garrison dated as of July 1, 2002.*+
23
10.55 Stock Option Agreement between the Registrant and
Drury J. Gallagher dated as of July 1, 2002 with
respect to the grant of 150,000 shares of the
Registrant's Common Stock.*+
10.56 Stock Option Agreement between the Registrant and
Robert A. Garrison dated as of July 1, 2002 with
respect to the grant of 150,000 shares of the
Registrant's Common Stock.*+
10.57 Form of Amendment to Warrant Nos, U-1, U-2, U-3,
U-4 and U-5 dated as of December 31, 2002.**
10.58 Amended and Restated Employment Agreement
between the Registrant and Drury J. Gallagher dated
as of February 1, 2003.**+
10.59 Amended and Restated Employment Agreement between
the Registrant and Robert A. Garrison dated as
of February 1, 2003.**+
10.60 Purchase, Option, Lease, Mandate and Prohibition
to Lien and Alienate Contract by and among the
Registrant and Alfredo Soto Torino and Adrian Soto
Torino dated January 15, 2003.**
10.61 Purchase, Option, Lease, Mandate and Prohibition
to Lien and Alienate Contract by and among the
Registrant and Alfredo Soto Torino and Adrian Soto
Torino, as amended, dated March 3, 2003.**
10.62 Agreement between the Registrant and SHA Armenia
LLC dated as of March 17, 2003.**
27.1 Financial data schedule*
99.1 Certification of Chief Executive Officer**
99.2 Certification of Chief Financial Officer**
-----------------------
*(1) Filed previously and incorporated by reference to an Exhibit
to the Registrant's Form 10-KSB filed for the fiscal year
ended December 31, 1994.
*(2) Filed previously and incorporated by reference to an Exhibit
to the Registrant's Form 10-KSB filed for the fiscal year
ended December 31, 1995.
*(3) Filed previously and incorporated by reference to an Exhibit
to the Registrant's Form 10-KSB filed for the fiscal year
ended December 31, 1996.
*(4) Filed previously and incorporated by reference to an Exhibit
to the Registrant's Form 10-KSB filed for the fiscal year
ended December 31, 1997.
*(5) Filed previously and incorporated by reference to an Exhibit
to the Registrant's Form 10-KSB filed for the fiscal year
ended December 31, 1998.
** Filed herewith
+ Management contract or compensation plan or arrangement
24
Exhibit 3.3
CERTIFICATE OF RENEWAL AND REVIVAL OF
CERTIFICATE OF INCORPORATION
OF
GLOBAL GOLD CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter the "corporation") is:
Global Gold Corporation
2. The corporation was organized under the provisions of the
General Corporation Law of the State of Delaware. The date of filing
of its original certificate of incorporation with the Secretary of
State of the State of Delaware (under its then name of Triad Energy
Corp.) is February 21, 1980.
3. The address of the registered office of the corporation in the
State of Delaware and the name of the registered agent at such address
are as follows: Corporation Service Company, Wilmington, Delaware
19808.
4. The corporation hereby procures a renewal and revival of its
certificate of incorporation, which became inoperative by law on March
1, 1997 for failure to file annual reports and non-payment of taxes
payable to the State of Delaware.
5. The certificate of the corporation, which provides for and will
continue to provide for, perpetual duration, shall, upon the filing of
this Certificate of Renewal and Revival of the Certificate of
Incorporation in the Department of State of the State of Delaware, be
renewed and revived and shall become fully operative on February 28,
1997.
6. This Certificate of Renewal and Revival of the Certificate of
Incorporation is filed by authority of the duly elected directors as
prescribed by Section 312 of the General Corporation Law of the State
of Delaware.
Signed and attested to on January 23, 2003
GLOBAL GOLD CORPORATION
By:
-----------------------
Drury J. Gallagher, Chairman and
Chief Executive Officer
EXHIBIT 10.57
AMENDMENT TO WARRANT NO. U-____
ISSUED BY
GLOBAL GOLD CORPORATION
Warrant No. U-___ issued by Global Gold Corporation (the "Warrant") on
October 31, 2000, is hereby amended as follows:
1. The first paragraph of the Warrant is hereby amended to
substitute the following paragraph in lieu of the paragraph appearing therein:
"Global Gold Corporation, a Delaware corporation (the
"Company"), hereby certifies that, for value received, ____________________
_________________________________, or registered permitted assigns, is entitled,
subject to the terms set forth below, to purchase from the Company at any time
or from time to time before 5:30 P.M., Eastern Standard Time, on October 31,
2005, _______ fully paid and nonassessable shares of Common Stock, $.001 par
value, of the Company, at a purchase price per share of $0.25 (such purchase
price per share as adjusted from time to time as herein provided is referred to
herein as the "Purchase Price"). The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided
herein."
2. Section 20 of the Warrant is hereby amended to read as
follows:
"The right to exercise this Warrant shall expire at 5:30 p.m.,
Eastern Standard Time, on October 31, 2005."
3. Except as otherwise set forth herein, all of the other
terms and conditions of the Warrant shall remain in full force and effect.
Dated: As of December 31, 2002 GLOBAL GOLD CORPORATION
By:_________________________
Drury J. Gallagher, Chairman
and Chief Executive Officer
Exhibit 10.58
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 1st day of February, 2003 between Global Gold
Corporation, a Delaware corporation (the "Corporation"), and Drury J. Gallagher,
an individual residing at 107 Eakins Road, Manhasset, New York 11030 (the
"Employee") (the "Agreement").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Corporation and the Employee entered into a three-year
employment agreement effective as of July 1, 1997 and which terminated on June
30, 2000;
WHEREAS, the Corporation needs the active service of the Employee in light
of the Corporation's renewed efforts to obtain and exploit gold mining projects;
WHEREAS, the Corporation and the Employer entered into a four-year
employment agreement dated as of July 1, 2002 (the "Employment Agreement");
WHEREAS, the Corporation and the Employee desire to enter into an amended
and restated employment agreement, which supersedes the Employment Agreement, on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES.
(a) The Corporation hereby employs the Employee, and the Employee hereby
accepts and agrees to such employment, as Chairman and Chief Executive Officer
and, in such capacity, to be responsible for overseeing, supervising and
participating in the day-to-day activities of the Corporation. The Employee
shall, subject to the supervision and control of the Board of Directors of the
Corporation, perform such executive duties and exercise such supervisory powers
over and with regard to the business of the Corporation and its present and
future subsidiaries, consistent with such position, and such additional duties
as specified in the Corporation's By-Laws or as may be assigned to him from time
to time by the Board of Directors of the Corporation.
(b) The Employee agrees to devote 60% of his available business time to the
performance of his duties hereunder, or 1,200 hours per each 12-month period.
The Employee may provide services to other organizations, on a compensation or
pro bono basis, provided that such services do not constitute more than 40% of
his available business time.
2. TERM. The term of this Agreement shall be for a period of four years
commencing on July 1, 2002 and ending on June 30, 2006, and shall be
automatically renewed for consecutive one-year periods thereafter unless (a)
terminated by the Employee on 120 days written notice prior to the expiration of
the initial term hereof, (b) terminated by either party on 120 days written
notice prior to the expiration of the fourth year hereof or any year thereafter
or (c) sooner terminated as otherwise provided herein.
3. COMPENSATION.
(a) Base Compensation. In consideration for the services rendered by the
Employee under this Agreement, the Corporation shall transfer and deliver to the
Employee as base compensation for the three-year and five-month remaining term
of this Agreement commencing on February 1, 2003 and ending on June 30, 2006 a
total of 900,000 shares of its common stock pursuant to the terms of the
Restricted Stock Award attached hereto as Exhibit A, which have a fair market
value of $0.05 per share as determined by the Corporation (the "Restricted Stock
Award"). The Employee acknowledges receipt of the delivery of 100,000 shares of
the Corporation's common stock pursuant to the Employment Agreement as base
compensation for the seven-month period ending January 31, 2003. In addition to
the foregoing, the Corporation shall pay to the Employee, as base compensation,
the sum of $100,000 for each 12-month period commencing on and after July 1,
2003 during the term of this Agreement, payable in equal monthly installments of
$8,333.33 on the 15th day of each month, provided that the Corporation shall not
be required to make such payment if the Corporation lacks the financial
resources or adequate cash flow to do so, as determined by the Board of
Directors of the Corporation pursuant to a unanimous written consent. If such
sum of $100,000 or portion thereof is not paid when due, such sum in question
shall accrue without interest, but any sum accrued during the 12-month period
ended June 30, 2004 shall become due and payable on June 30, 2005, and any sum
due accrued during the period ended June 30, 2005 or June 30, 2006 shall become
due and payable on June 30, 2006.
2
(b) Bonus Compensation. In addition to the foregoing compensation, the
Employee shall be entitled to receive annual bonus compensation ("Annual Bonus")
in an amount determined in accordance with any bonus plan approved by the Board
of Directors, or any committee thereof duly authorized by the Board to make such
determination, based upon qualitative and quantitative goals determined by the
Board of Directors, or such committee thereof, in its sole discretion, as the
case may be. Any Annual Bonus shall be subject to all applicable tax
withholdings.
(c) In the event that the Employee voluntarily elects not to work 60% for
the Corporation as contemplated hereunder, both his base compensation, and bonus
compensation, if any, to which he would otherwise have been entitled, set forth
in Section 3(a) and (b) shall be reduced to the amount computed by multiplying
such base compensation and bonus entitlement by the ratio of the number of hours
worked during such 12-month period to 1,200 hours.
(d) Change of Control.
(i) If during the term of this Agreement, there shall occur a Change
of Control of the Corporation (as defined herein), the Employee may terminate
his employment hereunder at any time during the term of this Agreement, in which
case he shall be entitled to receive a payment equal to 2.95 times the
Employee's average annual compensation paid by the Company within the meaning of
Section 280(G)(d)(1) of the Internal Revenue Code of 1986, as amended, during
the four-year period (or, if he has worked less than four years hereunder, such
shorter period) immediately preceding the date of his termination of employment
(the "Severance Payment"), provided, however, that such Severance Payment shall
be reduced if and only to the extent necessary to avoid the imposition of an
excise tax on such Severance Payment under Section 4999 of the Internal Revenue
Code of 1986, as amended. The Severance Payment shall be payable to Employee
within 30 days after the occurrence of a Change of Control.
(ii) (A) For purposes hereof, the term "Change of Control" shall mean
an event or series of events that would be required to be described as a change
in control of the Corporation in a proxy or information statement distributed by
the Corporation pursuant to Section 14 of the Securities Exchange Act of 1934 in
response to Item 6(e) of Schedule 14A promulgated thereunder, or any substitute
provision which may hereafter be promulgated thereunder or otherwise adopted.
3
(B) (1) Notwithstanding anything contained in this Section 3(d)
to the contrary, a "Change of Control" shall be deemed to occur upon
(a) (i) the sale of all or substantially all of the
Corporation's assets or (y) a merger (including a merger in which the
Corporation is the surviving corporation) or consolidation of the Corporation
with one or more corporations or entities, as a result of which in each such
case the Corporation's voting securities outstanding immediately before such
sale, merger or consolidation represent less than 50% of the combined voting
power of voting securities of the Corporation or the surviving entity
outstanding immediately after such sale, merger or consolidation; or
(ii) any "person", as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or persons acting in concert (other than Drury J. Gallagher, Robert A.
Garrison, Van Z. Krikorian or any of their affiliates) become the "beneficial
owner" or "beneficial owners" (as defined in Rule 13d-3 under the Exchange Act,
or any successor rule or regulation thereto as in effect from time to time),
directly or indirectly, of the Corporation's securities representing more than
50% of the combined voting power of the Corporation's then outstanding
securities, pursuant to a plan of such person or persons to acquire such a
controlling interest in the Company, whether pursuant to a merger (including a
merger in which the Corporation is the surviving corporation), an acquisition of
securities or otherwise, except that this Section 3(d)(ii)(B)(1)(a)(ii) shall
not apply to any person who provides financing to the Corporation or any of
their affiliates, pursuant to a private placement transaction or otherwise; and
4
(b) a transaction shall not constitute a Change of Control
if its sole purpose is to change the state of the Corporation's incorporation or
to create a holding company that will be owned in substantially the same
proportions by the persons who held the Corporation's securities immediately
before such transaction.
4. WORKING FACILITIES. The Corporation shall not be required to provide an
office for the Employee for the performance of his services hereunder, but will
provide such other facilities and services commensurate with his position as
Chairman and Chief Executive Officer of the Corporation, as are reasonably
necessary for the performance of his duties hereunder, as determined by the
Board of Directors of the Corporation.
5. REIMBURSEMENT OF BUSINESS EXPENSES. The Employee is authorized to incur
reasonable expenses in connection with the conduct of the Corporation's
business, including, without limitation, expenses for the Employee's travel,
lodging and business entertainment in accordance with the Corporation's
customary practice and subject to the general limitations thereof set forth in
the annual or more frequent budgets adopted by the Corporation from time to
time. The Corporation will promptly reimburse the Employee for such expenses
upon the presentation by the Employee, from time to time, of an itemized account
of such expenditures together with vouchers or receipts in substantiation
thereof.
6. BENEFITS. During the term of this Agreement, any benefits made available
to officers or employees of the Corporation under any pension plan, profit
sharing plan, employee stock purchase plan, stock bonus plan, incentive stock
option plan, stock appreciation plan, deferred compensation plan, insurance
plan, health plan, welfare plan, long-term disability plan or otherwise shall be
made available to the Employee, taking into account the Employee's level of
compensation, past services, scope of responsibility and such other factors as
are customarily used to evaluate executive performance and compensation under
such plans.
7. VACATIONS. The Employee shall be entitled each year during the term of
this Agreement to a vacation period of four weeks during which period all
compensation, benefits, and other rights to which the Employee is entitled
hereunder shall be provided in full. Such vacation may be taken, in the
Employee's discretion, at such time or times as are not inconsistent with the
reasonable business needs of the Corporation. During the term of this Agreement,
the vacation time provided for herein shall not be cumulative to the extent not
taken by the Employee during a given year. In the event that the vacation time
provided hereunder has not been taken during the 12-month period prior to the
termination or expiration of this Agreement for any reason other than those set
forth in Section 8(a) hereof, the Corporation shall pay the Employee, in
addition to any other benefits due to the Employee hereunder, an amount equal to
the number of weeks (or fraction thereof) of vacation time not so taken during
such period multiplied by an amount equal to the result obtained by dividing (x)
the then base salary in effect on the Termination Date (as defined in Section
8(e) hereof) by (y) 52.
5
8. TERMINATION.
(a) Early Termination by Corporation for Cause. During the term of this
Agreement, the Employee's employment may be terminated by the Corporation for
Cause (as defined herein) only by the affirmative vote of 100% of all of the
members of the Board of Directors of the Corporation then holding office
(without counting any vote of the Employee whose services are sought to be
terminated, if the Employee is then a member of the Board of Directors) on 30
days prior written notice by means of a Notice of Termination, and an
opportunity for the Employee, accompanied by counsel of his choice, to address
the full Board of Directors, that one of the following conditions exists or one
of the following events has occurred (each of which is defined as "Cause"):
(i) Wrongful act or acts on the part of the Employee which caused
material damage to the Corporation;
(ii) The conviction of the Employee for a felony involving the
Corporation or moral turpitude;
(iii) The refusal by the Employee, continued for at least 90
days, to perform such employment duties as may reasonably be delegated or
assigned to him under this Agreement, consistent with his executive position,
by the Board of Directors of the Corporation;
(iv) Willful and unexcused neglect by the Employee of his employ-
ment duties under this Agreement, continued for at least 90 days; or
(v) Any other material breach by the Employee of the provisions
of this Agreement.
Subject only to a final determination by an arbitrator made pursuant to the
provisions of Section 11 of this Agreement, the Board of Directors'
determination, in good faith, in writing that cause exists for termination of
the Employee's employment shall be binding and conclusive for all purposes under
this Agreement. Upon such determination by the Board of Directors, the
Employee's compensation pursuant to Section 3 hereof and all other benefits
provided hereunder shall terminate on the Termination Date, except that the
Employee shall be entitled to be paid severance pay equal to his then base
compensation for a period of three months thereafter. In the event that the
Employee desires to take any matter with respect to such determination to
arbitration, he must commence an arbitration proceeding within 30 days after
receipt of written notice of the Board of Directors' determination. If the
Employee fails to take such action within such period, he will be deemed
conclusively to have waived his right to arbitration of the termination of his
employment hereunder.
6
(b) Termination by Employee. In the event that the Corporation shall
default in the performance of any of its obligations under this Agreement in any
material respect (other than by reason of its financial inability to make
payments as determined by the Board of Directors of the Corporation in writing),
and shall not cure such default within 10 days of receipt by the Corporation of
written notice of such default from the Employee, the Employee may terminate
this Agreement by delivery of a Notice of Termination. Upon any termination
pursuant to the provisions of this Section 8(b), the Employee shall be entitled
to receive, as liquidated damages and not as a penalty, one year's payments
which would have been made to the Employee on account of his base salary in
effect at the date of the delivery of a Notice of Termination. Upon fulfillment
of the conditions set forth in Section 8(b) hereof and subject to Section 8(f)
hereof, all rights and obligations of the parties under this Agreement shall
thereupon be terminated. The Employee shall have no obligation to mitigate
damages, and amounts payable pursuant to the provisions of this Section 8(b)
shall not be reduced on account of any income earned by the Employee from other
employment or other sources.
(c) Termination by Reason of Disability. In the event that Employee shall
be prevented from rendering all of the services or performing all of his duties
hereunder by reason of illness, injury or incapacity (whether physical or
mental) for a period of six consecutive months, determined by an independent
physician selected by the Board of Directors of the Corporation, the Corporation
shall have the right to terminate this Agreement, by giving 10 days prior
written notice to the Employee, provided that the Corporation shall continue to
pay his then base compensation for a period of 12 months thereafter (exclusive
of any benefit under the Restricted Stock Award). Until terminated in the manner
set forth in this Section 8(c), the Employee shall be entitled to receive his
full compensation and benefits provided hereunder through the Termination Date.
Any payments to the Employee under any disability insurance or plan maintained
by the Corporation shall be applied against and shall reduce the amount of the
base compensation payable by the Corporation under this Section 8(c).
(d) Termination by Reason of Death. In the event that the Employee shall
die during the term of this Agreement, this Agreement shall terminate upon such
death. The death benefit payable to the Employee under this Agreement (exclusive
of any benefit under the Restricted Stock Award) shall be the life insurance
benefits provided to the Employee, if any.
(e) Certain Definitions.
(i) Any termination of the Employee's employment by the
Corporation or by the Employee shall be communicated by a Notice of Termination
to the other party hereto. For purposes hereof, a "Notice of Termination" shall
mean a notice which shall state the specific reasons, and shall set forth in
reasonable detail the facts and circumstances, for such termination.
(ii) "Termination Date" shall mean the date specified in the
Notice of Termination as the last day of Employee's employment by the
Corporation.
(f) Continued Maintenance of Benefit Plans in Certain Cases.
Notwithstanding anything contained in this Agreement to the contrary, if the
Employee's employment is terminated pursuant to Sections 8(b) or 8(c) hereof,
the Corporation shall maintain in full force and effect, for the continued
benefit of the Employee for the number of years (including partial years)
remaining in the term of employment hereunder, all employee benefit plans and
programs in which the Employee was entitled to participate immediately prior to
the Termination Date, provided that the Employee's continued participation is
possible under the general terms and provisions of such plans and programs. In
the event that the Employee's participation in any such plan or program is
barred, the Corporation shall have no obligation to provide any substitute
benefits for the Employee.
7
9. CONFIDENTIALITY.
(a) During the term of this Agreement, and for a period of two years
thereafter, the Employee shall not, without the prior written consent of the
Board of Directors of the Corporation, disclose to any person, other than an
employee of the Corporation or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Employee of
his duties hereunder, any of the Corporation's confidential information obtained
by the Employee during the term of this Agreement, including, without
limitation, trade secrets, products, designs, customers or methods of
distribution.
(b) The obligations of confidentiality contained in this Section shall not
extend to any matter which is in or becomes part of the public domain otherwise
than by reason of a breach by the Employee of his obligations of confidentiality
hereunder or which is disclosed by the Employee pursuant to an order of a
governmental body or court of competent jurisdiction or as required pursuant to
a legal proceeding in which the Employee or the Corporation is a party.
10. CERTAIN REMEDIES IN EVENT OF BREACH. In the event that the Employee
commits a breach, or threatens to commit a breach, of any of the restrictions on
confidentiality contained in Section 9 of this Agreement, the Corporation shall
have the following rights and remedies:
(a) to obtain an injunction restraining any violation or threatened
violation of the provisions of Section 9 or any other appropriate decree of
specific performance by any court having equity jurisdiction, it being
acknowledged and agreed by the Employee that the services rendered, and to be
rendered to the Corporation by him as an Employee, are of a special, unique and
extraordinary character and that any such breach or threatened breach will cause
irreparable injury to the Corporation and that money damages will not provide an
adequate remedy to the Corporation; and
(b) to require the Employee to account for and pay over to the Corporation
all compensation, profits, monies, accruals, increments or other benefits
(collectively the "Benefits") derived or received by the Employee as the result
of any transactions constituting a breach of any of the provisions of Section 9,
and the Employee hereby agrees to account for and pay over the Benefits to the
Corporation.
Each of the rights and remedies enumerated in this Section 10 shall be
independent of the other, and shall be severally enforceable, and such rights
and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Corporation at law or in equity.
11. ARBITRATION.
(a) Selection of Arbitrators. In the event of any disagreement or
controversy arising out of or relating to this Agreement, such controversy or
disagreement shall be settled by three arbitrators in the City of New York in
accordance with the rules of the American Arbitration Association (the "AAA") in
arbitrations administered by it (other than the AAA rules relating to the
appointment of arbitrators), and any award granted in such arbitration shall
finally determine such controversy or disagreement. The arbitrators for any of
the arbitral proceedings referred to in the preceding sentence shall be chosen
as follows: (x) one shall be chosen by the Employee, (y) one shall be chosen by
the Board of Directors of the Corporation, and (z) one shall be chosen by the
two arbitrators selected under Section 11(a)(x) and (y) hereof. The arbitrators
to be chosen by the parties shall be chosen within 30 days after the service of
a demand for arbitration on any party hereto. If the two arbitrators appointed
above shall not agree to the appointment of the third arbitrator to be appointed
as provided in Section 11(a)(z) within 15 days after their appointment, such
arbitrator shall be chosen by the then President of the Association of the Bar
of the City of New York, subject to challenge by any party only by reason of a
conflict of interest.
8
(b) Jurisdiction. Any judicial proceeding brought against any of the
parties to this Agreement in connection with compelling or staying arbitration
or enforcing any arbitral decision shall be brought in the courts of the State
of New York in the City of New York or in the United States District Court for
the Southern District of New York, and by the execution and delivery of this
Agreement, each of the parties to this Agreement accepts for himself or itself
the exclusive jurisdiction of such courts, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement. Such consent
shall not constitute a general appearance or be available to any other person
who is not a party to this Agreement. The parties agree that service of process
will be deemed sufficient if made upon each party hereto at the address set
forth herein.
12. MISCELLANEOUS.
(a) Notices. All notices or other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall be considered
as duly given on (a) the date of delivery, if delivered in person, by nationally
recognized overnight delivery service or by facsimile or (b) three days after
mailing if mailed from within the continental United States by registered or
certified mail, return receipt requested to the party entitled to receive the
same, if to the Corporation, Global Gold Corporation, c/o Robert A. Garrison, 44
Lords Highway East, Weston, Connecticut 06883, facsimile number (203) 222-9037,
with a copy to Law Offices of Stephen R. Field, 240 Madison Avenue, New York,
New York 10016, Attn: Stephen R. Field, Esq., facsimile number (212) 681-0845;
and if to the Employee, Mr. Drury J. Gallagher, 107 Eakins Road, Manhasset, New
York 11030, facsimile number (516) 627-5067. Any party may change his or its
address by giving notice to the other party stating his or its new address.
Commencing on the 10th day after the giving of such notice, such newly
designated address shall be such party's address for the purpose of all notices
or other communications required or permitted to be given pursuant to this
Agreement.
(b) Governing Law. This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
New York determined without regard to conflicts of law principles.
(c) Entire Agreement; Waiver of Breach. This Agreement constitutes the
entire agreement among the parties and supersedes any prior agreement or
understanding among them with respect to the subject matter hereof, and it may
not be modified or amended in any manner other than as provided herein; and no
waiver of any breach or condition of this Agreement shall be deemed to have
occurred unless such waiver is in writing, signed by the party against whom
enforcement is sought, and no waiver shall be claimed to be a waiver of any
subsequent breach or condition of a like or different nature.
(d) Binding Effect; Assignability. This Agreement and all the terms and
provision hereof shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, successors and permitted assigns. This
Agreement and the rights of the parties hereunder shall not be assigned except
with the written consent of all parties hereto.
(e) Captions. Captions contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit or extend the scope or intent
of this Agreement or any provision hereof.
(f) Number and Gender. Wherever from the context it appears appropriate,
each term stated in either the singular or the plural shall include the singular
and the plural, and pronouns stated in either the masculine, the feminine or the
neuter gender shall include the masculine, feminine and neuter.
9
(g) Severability. If any provision of this Agreement shall be held invalid
or unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
(h) Amendments. This Agreement may not be amended except in a writing
signed by all of the parties hereto.
(i) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument. In addition, this Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of such signature pages executed by the parties to one copy of the
Agreement; all of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had
signed a single signature page.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
Global Gold Corporation
By:
Robert A. Garrison, President
and Chief Financial Officer
Drury J. Gallagher
10
EXHIBIT A
Global Gold Corporation
734 Franklin Avenue, No. 333
Garden City, New York 11530-4525
February 1, 2003
Mr. Drury J. Gallagher 107 Eakins Road Manhasset, New York 11030
Re: Restricted Stock Award
Dear Mr. Gallagher:
As an inducement for your rendering of services to the Company, we hereby
grant you 900,000 shares of the Common Stock of the Company, evidenced by a
certificate of shares of our common stock, $.001 par value per share (the
"Shares"), subject to applicable securities law restrictions and the terms and
conditions set forth herein:
1. You shall be required to spend at least 60% of your business time (1,200
hours for each 12-month period) in connection with the responsibility assigned
to you (or to be assigned to you) by the Board of Directors of the Company in
promoting the business of the Company pursuant to your employment agreement with
the Company.
11
2. For the first five month period commencing with the date hereof within
which you render the services provided herein, you shall become fully vested in
12.195% of the total Shares granted hereunder. For each six-month period
thereafter commencing on July 1, 2003 through June 30, 2006, you shall become
fully vested in 14.634% of the total Shares granted hereunder. Thus, if you
complete five, 17, 29 and 41 months of service as provided hereunder, you shall
be 12.195%, 41.463%, 70.731% and 100% vested, respectively, in the Shares
granted hereunder.
3. In the event of your termination of your employment on or before the
expiration of the initial five-month period commencing with the date hereof or
any subsequent six-month period thereafter during the 36-month period commencing
with July 1, 2003 for any reason, you shall forfeit all right, title and
interest in and to any of the Shares granted hereunder which have not become
vested in you, without any payment by the Company therefor.
4. (a) Any Shares granted hereunder are not transferable and cannot be
assigned, pledged, hypothecated or disposed of in any way until they become
vested, and may be transferred thereafter in accordance with applicable
securities law restrictions. Any attempted transfer in violation of the Section
shall be null and void.
(b) Notwithstanding anything contained in this Agreement to the
contrary, after you become vested in any of the Shares granted hereunder, no
sale, transfer or pledge thereof may be effected without an effective
registration statement or an opinion of counsel for the Company that such
registration is not required under the Securities Act of 1933, as amended, and
any applicable state securities laws.
5. During the period commencing with the date hereof and prior to your
forfeiture of any of the Shares granted hereunder, you shall have all right,
title and interest in and to the Shares granted hereunder, including the right
to vote the Shares and receive dividends or other distributions with respect
thereto.
6. You shall be solely responsible for any and all Federal, state and local
income taxes arising out of your receipt of the Shares and your future sale of
other disposition of them.
7. This Agreement and the rights of the parties hereunder shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to its conflicts of law principles. All parties hereto (i) agree that any
legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted only in a Federal or state court in the City of New York in
the State of New York, (ii) waive any objection which they may now or hereafter
have to the laying of the venue of any such suit, action or proceeding, and
(iii) irrevocably submit to the exclusive jurisdiction of any Federal or state
court in the City of New York in the State of New York, in any such suit, action
or proceeding, but such consent shall not constitute a general appearance or be
available to any other person who is not a party to this Agreement. All parties
hereto agree that the mailing of any process in any suit, action or proceeding
at the addresses of the parties shown herein shall constitute personal service
thereof.
12
8. If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
9. This Agreement and all the terms and provisions hereof shall be binding
upon and shall inure to the benefit of the parties and their respective heirs
and successors and, in the case of the Company, its assigns.
10. This Agreement may not be amended except in a writing signed by all of
the parties hereto.
11. Nothing contained herein shall be construed to create an employment
agreement between the Company and you or require the Company to employ or retain
you under such a contract or otherwise.
12. Notwithstanding anything contained this in Agreement to the contrary:
(a) the Shares shall become fully vested upon the occurrence of a
Change of Control (as defined in this Section 12), which shall occur upon
(i) (x) the sale of all or substantially all of the Company's assets
or (y) a merger (including a merger in which the Company is the surviving
corporation) or consolidation of the Company with one or more corporations or
entities, as a result of which in each such case the Company's voting securities
outstanding immediately before such sale, merger or consolidation represent less
than 50% of the combined voting power of voting securities of the Company or the
surviving entity outstanding immediately after such sale, merger or
consolidation; or
(ii) any "person", as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
persons acting in concert (other than Drury J. Gallagher, Robert A. Garrison,
Van Z. Krikorian or any of their affiliates) become the "beneficial owner" or
"beneficial owners" (as defined in Rule 13d-3 under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time), directly
or indirectly, of the Company's securities representing more than 50% of the
combined voting power of the Company's then outstanding securities, pursuant to
a plan of such person or persons to acquire such a controlling interest in the
Company, whether pursuant to a merger (including a merger in which the Company
is the surviving corporation), an acquisition of securities or otherwise, except
that this Section 12(a)(ii) shall not apply to any person who provides financing
to the Company or any of their affiliates, pursuant to a private placement
transaction or otherwise; and
(b) a transaction shall not constitute a Change of Control if its
sole purpose is to change the state of the Company's incorporation or to
create a holding company that will be owned in substantially the same
proportions by the persons who held the Company's securities immediately before
such transaction.
13
(3) the Shares shall become fully vested upon your death or upon
your becoming disabled, which shall mean you shall have been unable to render
all of your duties by reason of illness, injury or incapacity (whether
physical or mental) for a period of six consecutive months, determined by an
independent physician selected by the Board of Directors of the Company.
13. In the event of any conflict between the terms of this Agreement and of
the Amended and Restated Employment Agreement, the provisions contained in this
Agreement shall control.
If this letter accurately reflects our understanding, please sign the
enclosed copy of this letter at the bottom and return it to us.
Very truly yours,
Global Gold Corporation
By:_____________________________
Robert A. Garrison, President
and Chief Financial Officer
Agreed:
- -------------------------------
Drury J. Gallagher
14
Exhibit 10.59
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 1st day of February, 2003 between Global Gold
Corporation, a Delaware corporation (the "Corporation"), and Robert A. Garrison,
an individual residing at 44 Lords Highway East, Weston, Connecticut 06883 (the
"Employee") (the "Agreement").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Corporation and the Employee entered into a three-year
employment agreement effective as of July 1, 1997 and which terminated on June
30, 2000;
WHEREAS, the Corporation needs the active service of the Employee in light
of the Corporation's renewed efforts to obtain and exploit gold mining projects;
WHEREAS, the Corporation and the Employer entered into a four-year
employment agreement dated as of July 1, 2002 (the "Employment Agreement");
WHEREAS, the Corporation and the Employee desire to enter into an amended
and restated employment agreement, which supersedes the Employment Agreement, on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES.
(a) The Corporation hereby employs the Employee, and the Employee hereby
accepts and agrees to such employment, as President and Chief Financial Officer
and, in such capacity, to be responsible for overseeing, supervising and
participating in the day-to-day activities of the Corporation. The Employee
shall, subject to the supervision and control of the Board of Directors of the
Corporation, perform such executive duties and exercise such supervisory powers
over and with regard to the business of the Corporation and its present and
future subsidiaries, consistent with such position, and such additional duties
as specified in the Corporation's By-Laws or as may be assigned to him from time
to time by the Board of Directors of the Corporation.
(b) The Employee agrees to devote 60% of his available business time to the
performance of his duties hereunder, or 1,200 hours per each 12-month period.
The Employee may provide services to other organizations, on a compensation or
pro bono basis, provided that such services do not constitute more than 40% of
his available business time.
2. TERM. The term of this Agreement shall be for a period of four years
commencing on July 1, 2002 and ending on June 30, 2006, and shall be
automatically renewed for consecutive one-year periods thereafter unless (a)
terminated by the Employee on 120 days written notice prior to the expiration of
the initial term hereof, (b) terminated by either party on 120 days written
notice prior to the expiration of the fourth year hereof or any year thereafter
or (c) sooner terminated as otherwise provided herein.
3. COMPENSATION.
(a) Base Compensation. In consideration for the services rendered by the
Employee under this Agreement, the Corporation shall transfer and deliver to the
Employee as base compensation for the three-year and five-month remaining term
of this Agreement commencing on February 1, 2003 and ending on June 30, 2006 a
total of 900,000 shares of its common stock pursuant to the terms of the
Restricted Stock Award attached hereto as Exhibit A, which have a fair market
value of $0.05 per share as determined by the Corporation (the "Restricted Stock
Award"). The Employee acknowledges receipt of the delivery of 100,000 shares of
the Corporation's common stock pursuant to the Employment Agreement as base
compensation for the seven-month period ending January 31, 2003. In addition to
the foregoing, the Corporation shall pay to the Employee, as base compensation,
the sum of $100,000 for each 12-month period commencing on and after July 1,
2003 during the term of this Agreement, payable in equal monthly installments of
$8,333.33 on the 15th day of each month, provided that the Corporation shall not
be required to make such payment if the Corporation lacks the financial
resources or adequate cash flow to do so, as determined by the Board of
Directors of the Corporation pursuant to a unanimous written consent. If such
sum of $100,000 or portion thereof is not paid when due, such sum in question
shall accrue without interest, but any sum accrued during the 12-month period
ended June 30, 2004 shall become due and payable on June 30, 2005, and any sum
due accrued during the period ended June 30, 2005 or June 30, 2006 shall become
due and payable on June 30, 2006.
(b) Bonus Compensation. In addition to the foregoing compensation, the
Employee shall be entitled to receive annual bonus compensation ("Annual Bonus")
in an amount determined in accordance with any bonus plan approved by the Board
of Directors, or any committee thereof duly authorized by the Board to make such
determination, based upon qualitative and quantitative goals determined by the
Board of Directors, or such committee thereof, in its sole discretion, as the
case may be. Any Annual Bonus shall be subject to all applicable tax
withholdings.
(c) In the event that the Employee voluntarily elects not to work 60% for
the Corporation as contemplated hereunder, both his base compensation, and bonus
compensation, if any, to which he would otherwise have been entitled, set forth
in Section 3(a) and (b) shall be reduced to the amount computed by multiplying
such base compensation and bonus entitlement by the ratio of the number of hours
worked during such 12-month period to 1,200 hours.
2
(d) Change of Control.
(i) If during the term of this Agreement, there shall occur a Change of
Control of the Corporation (as defined herein), the Employee may terminate his
employment hereunder at any time during the term of this Agreement, in which
case he shall be entitled to receive a payment equal to 2.95 times the
Employee's average annual compensation paid by the Company within the meaning of
Section 280(G)(d)(1) of the Internal Revenue Code of 1986, as amended, during
the four-year period (or, if he has worked less than four years hereunder, such
shorter period) immediately preceding the date of his termination of employment
(the "Severance Payment"), provided, however, that such Severance Payment shall
be reduced if and only to the extent necessary to avoid the imposition of an
excise tax on such Severance Payment under Section 4999 of the Internal Revenue
Code of 1986, as amended. The Severance Payment shall be payable to Employee
within 30 days after the occurrence of a Change of Control.
(ii) (A) For purposes hereof, the term "Change of Control" shall mean an
event or series of events that would be required to be described as a change in
control of the Corporation in a proxy or information statement distributed by
the Corporation pursuant to Section 14 of the Securities Exchange Act of 1934 in
response to Item 6(e) of Schedule 14A promulgated thereunder, or any substitute
provision which may hereafter be promulgated thereunder or otherwise adopted.
(B) (1) Notwithstanding anything contained in this Section 3(d)
to the contrary, a "Change of Control" shall be deemed to occur upon
(a) (i) the sale of all or substantially all of the
Corporation's assets or (y) a merger (including a merger in which the
Corporation is the surviving corporation) or consolidation of the Corporation
with one or more corporations or entities, as a result of which in each such
case the Corporation's voting securities outstanding immediately before such
sale, merger or consolidation represent less than 50% of the combined voting
power of voting securities of the Corporation or the surviving entity
outstanding immediately after such sale, merger or consolidation; or
(ii) any "person", as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
persons acting in concert (other than Drury J. Gallagher, Robert A. Garrison,
Van Z. Krikorian or any of their affiliates) become the "beneficial owner" or
"beneficial owners" (as defined in Rule 13d-3 under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time), directly
or indirectly, of the Corporation's securities representing more than 50% of the
combined voting power of the Corporation's then outstanding securities, pursuant
to a plan of such person or persons to acquire such a controlling interest in
the Company, whether pursuant to a merger (including a merger in which the
Corporation is the surviving corporation), an acquisition of securities or
otherwise, except that this Section 3(d)(ii)(B)(1)(a)(ii) shall not apply to any
person who provides financing to the Corporation or any of their affiliates,
pursuant to a private placement transaction or otherwise; and
3
(b) a transaction shall not constitute a Change of Control if its sole
purpose is to change the state of the Corporation's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Corporation's securities immediately before such
transaction.
4. WORKING FACILITIES. The Corporation shall not be required to provide an
office for the Employee for the performance of his services hereunder, but will
provide such other facilities and services commensurate with his position as
President and Chief Financial Officer of the Corporation, as are reasonably
necessary for the performance of his duties hereunder, as determined by the
Board of Directors of the Corporation.
5. REIMBURSEMENT OF BUSINESS EXPENSES. The Employee is authorized to incur
reasonable expenses in connection with the conduct of the Corporation's
business, including, without limitation, expenses for the Employee's travel,
lodging and business entertainment in accordance with the Corporation's
customary practice and subject to the general limitations thereof set forth in
the annual or more frequent budgets adopted by the Corporation from time to
time. The Corporation will promptly reimburse the Employee for such expenses
upon the presentation by the Employee, from time to time, of an itemized account
of such expenditures together with vouchers or receipts in substantiation
thereof.
6. BENEFITS. During the term of this Agreement, any benefits made available
to officers or employees of the Corporation under any pension plan, profit
sharing plan, employee stock purchase plan, stock bonus plan, incentive stock
option plan, stock appreciation plan, deferred compensation plan, insurance
plan, health plan, welfare plan, long-term disability plan or otherwise shall be
made available to the Employee, taking into account the Employee's level of
compensation, past services, scope of responsibility and such other factors as
are customarily used to evaluate executive performance and compensation under
such plans.
7. VACATIONS. The Employee shall be entitled each year during the term of
this Agreement to a vacation period of four weeks during which period all
compensation, benefits, and other rights to which the Employee is entitled
hereunder shall be provided in full. Such vacation may be taken, in the
Employee's discretion, at such time or times as are not inconsistent with the
reasonable business needs of the Corporation. During the term of this Agreement,
the vacation time provided for herein shall not be cumulative to the extent not
taken by the Employee during a given year. In the event that the vacation time
provided hereunder has not been taken during the 12-month period prior to the
termination or expiration of this Agreement for any reason other than those set
forth in Section 8(a) hereof, the Corporation shall pay the Employee, in
addition to any other benefits due to the Employee hereunder, an amount equal to
the number of weeks (or fraction thereof) of vacation time not so taken during
such period multiplied by an amount equal to the result obtained by dividing (x)
the then base salary in effect on the Termination Date (as defined in Section
8(e) hereof) by (y) 52.
4
8. TERMINATION.
(a) Early Termination by Corporation for Cause. During the term of this
Agreement, the Employee's employment may be terminated by the Corporation for
Cause (as defined herein) only by the affirmative vote of 100% of all of the
members of the Board of Directors of the Corporation then holding office
(without counting any vote of the Employee whose services are sought to be
terminated, if the Employee is then a member of the Board of Directors) on 30
days prior written notice by means of a Notice of Termination, and an
opportunity for the Employee, accompanied by counsel of his choice, to address
the full Board of Directors, that one of the following conditions exists or one
of the following events has occurred (each of which is defined as "Cause"):
(i) Wrongful act or acts on the part of the Employee which caused
material damage to the Corporation;
(ii) The conviction of the Employee for a felony involving the
Corporation or moral turpitude;
(iii) The refusal by the Employee, continued for at least 90
days, to perform such employment duties as may reasonably be delegated or
assigned to him under this Agreement, consistent with his executive position,
by the Board of Directors of the Corporation;
(iv) Willful and unexcused neglect by the Employee of his employment
duties under this Agreement, continued for at least 90 days; or
(v) Any other material breach by the Employee of the provisions of
this Agreement.
Subject only to a final determination by an arbitrator made pursuant to the
provisions of Section 11 of this Agreement, the Board of Directors'
determination, in good faith, in writing that cause exists for termination of
the Employee's employment shall be binding and conclusive for all purposes under
this Agreement. Upon such determination by the Board of Directors, the
Employee's compensation pursuant to Section 3 hereof and all other benefits
provided hereunder shall terminate on the Termination Date, except that the
Employee shall be entitled to be paid severance pay equal to his then base
compensation for a period of three months thereafter. In the event that the
Employee desires to take any matter with respect to such determination to
arbitration, he must commence an arbitration proceeding within 30 days after
receipt of written notice of the Board of Directors' determination. If the
Employee fails to take such action within such period, he will be deemed
conclusively to have waived his right to arbitration of the termination of his
employment hereunder.
5
(b) Termination by Employee. In the event that the Corporation shall
default in the performance of any of its obligations under this Agreement in any
material respect (other than by reason of its financial inability to make
payments as determined by the Board of Directors of the Corporation in writing),
and shall not cure such default within 10 days of receipt by the Corporation of
written notice of such default from the Employee, the Employee may terminate
this Agreement by delivery of a Notice of Termination. Upon any termination
pursuant to the provisions of this Section 8(b), the Employee shall be entitled
to receive, as liquidated damages and not as a penalty, one year's payments
which would have been made to the Employee on account of his base salary in
effect at the date of the delivery of a Notice of Termination. Upon fulfillment
of the conditions set forth in Section 8(b) hereof and subject to Section 8(f)
hereof, all rights and obligations of the parties under this Agreement shall
thereupon be terminated. The Employee shall have no obligation to mitigate
damages, and amounts payable pursuant to the provisions of this Section 8(b)
shall not be reduced on account of any income earned by the Employee from other
employment or other sources.
(c) Termination by Reason of Disability. In the event that Employee shall
be prevented from rendering all of the services or performing all of his duties
hereunder by reason of illness, injury or incapacity (whether physical or
mental) for a period of six consecutive months, determined by an independent
physician selected by the Board of Directors of the Corporation, the Corporation
shall have the right to terminate this Agreement, by giving 10 days prior
written notice to the Employee, provided that the Corporation shall continue to
pay his then base compensation for a period of 12 months thereafter (exclusive
of any benefit under the Restricted Stock Award). Until terminated in the manner
set forth in this Section 8(c), the Employee shall be entitled to receive his
full compensation and benefits provided hereunder through the Termination Date.
Any payments to the Employee under any disability insurance or plan maintained
by the Corporation shall be applied against and shall reduce the amount of the
base compensation payable by the Corporation under this Section 8(c).
(d) Termination by Reason of Death. In the event that the Employee shall
die during the term of this Agreement, this Agreement shall terminate upon such
death. The death benefit payable to the Employee under this Agreement (exclusive
of any benefit under the Restricted Stock Award) shall be the life insurance
benefits provided to the Employee, if any.
(e) Certain Definitions.
(i) Any termination of the Employee's employment by the Corporation
or by the Employee shall be communicated by a Notice of Termination to the other
party hereto. For purposes hereof, a "Notice of Termination" shall mean a notice
which shall state the specific reasons, and shall set forth in reasonable detail
the facts and circumstances, for such termination.
(ii) "Termination Date" shall mean the date specified in the Notice
of Termination as the last day of Employee's employment by the Corporation.
(f) Continued Maintenance of Benefit Plans in Certain Cases.
Notwithstanding anything contained in this Agreement to the contrary, if the
Employee's employment is terminated pursuant to Sections 8(b) or 8(c) hereof,
the Corporation shall maintain in full force and effect, for the continued
benefit of the Employee for the number of years (including partial years)
remaining in the term of employment hereunder, all employee benefit plans and
programs in which the Employee was entitled to participate immediately prior to
the Termination Date, provided that the Employee's continued participation is
possible under the general terms and provisions of such plans and programs. In
the event that the Employee's participation in any such plan or program is
barred, the Corporation shall have no obligation to provide any substitute
benefits for the Employee.
6
9. CONFIDENTIALITY.
(a) During the term of this Agreement, and for a period of two years
thereafter, the Employee shall not, without the prior written consent of the
Board of Directors of the Corporation, disclose to any person, other than an
employee of the Corporation or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Employee of
his duties hereunder, any of the Corporation's confidential information obtained
by the Employee during the term of this Agreement, including, without
limitation, trade secrets, products, designs, customers or methods of
distribution.
(b) The obligations of confidentiality contained in this Section shall not
extend to any matter which is in or becomes part of the public domain otherwise
than by reason of a breach by the Employee of his obligations of confidentiality
hereunder or which is disclosed by the Employee pursuant to an order of a
governmental body or court of competent jurisdiction or as required pursuant to
a legal proceeding in which the Employee or the Corporation is a party.
10. CERTAIN REMEDIES IN EVENT OF BREACH. In the event that the Employee
commits a breach, or threatens to commit a breach, of any of the restrictions on
confidentiality contained in Section 9 of this Agreement, the Corporation shall
have the following rights and remedies:
(a) to obtain an injunction restraining any violation or threatened
violation of the provisions of Section 9 or any other appropriate decree of
specific performance by any court having equity jurisdiction, it being
acknowledged and agreed by the Employee that the services rendered, and to be
rendered to the Corporation by him as an Employee, are of a special, unique and
extraordinary character and that any such breach or threatened breach will cause
irreparable injury to the Corporation and that money damages will not provide an
adequate remedy to the Corporation; and
(b) to require the Employee to account for and pay over to the Corporation
all compensation, profits, monies, accruals, increments or other benefits
(collectively the "Benefits") derived or received by the Employee as the result
of any transactions constituting a breach of any of the provisions of Section 9,
and the Employee hereby agrees to account for and pay over the Benefits to the
Corporation.
Each of the rights and remedies enumerated in this Section 10 shall be
independent of the other, and shall be severally enforceable, and such rights
and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Corporation at law or in equity.
11. ARBITRATION.
(a) Selection of Arbitrators. In the event of any disagreement or
controversy arising out of or relating to this Agreement, such controversy or
disagreement shall be settled by three arbitrators in the City of New York in
accordance with the rules of the American Arbitration Association (the "AAA") in
arbitrations administered by it (other than the AAA rules relating to the
appointment of arbitrators), and any award granted in such arbitration shall
finally determine such controversy or disagreement. The arbitrators for any of
the arbitral proceedings referred to in the preceding sentence shall be chosen
as follows: (x) one shall be chosen by the Employee, (y) one shall be chosen by
the Board of Directors of the Corporation, and (z) one shall be chosen by the
two arbitrators selected under Section 11(a)(x) and (y) hereof. The arbitrators
to be chosen by the parties shall be chosen within 30 days after the service of
a demand for arbitration on any party hereto. If the two arbitrators appointed
above shall not agree to the appointment of the third arbitrator to be appointed
as provided in Section 11(a)(z) within 15 days after their appointment, such
arbitrator shall be chosen by the then President of the Association of the Bar
of the City of New York, subject to challenge by any party only by reason of a
conflict of interest.
7
(b) Jurisdiction. Any judicial proceeding brought against any of the
parties to this Agreement in connection with compelling or staying arbitration
or enforcing any arbitral decision shall be brought in the courts of the State
of New York in the City of New York or in the United States District Court for
the Southern District of New York, and by the execution and delivery of this
Agreement, each of the parties to this Agreement accepts for himself or itself
the exclusive jurisdiction of such courts, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement. Such consent
shall not constitute a general appearance or be available to any other person
who is not a party to this Agreement. The parties agree that service of process
will be deemed sufficient if made upon each party hereto at the address set
forth herein.
12. MISCELLANEOUS.
(a) Notices. All notices or other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall be considered
as duly given on (a) the date of delivery, if delivered in person, by nationally
recognized overnight delivery service or by facsimile or (b) three days after
mailing if mailed from within the continental United States by registered or
certified mail, return receipt requested to the party entitled to receive the
same, if to the Corporation, Global Gold Corporation, c/o Drury J. Gallagher,
107 Eakins Road, Manhasset, New York 11030, facsimile number (516) 627-5067,
with a copy to Law Offices of Stephen R. Field, 240 Madison Avenue, New York,
New York 10016, Attn: Stephen R. Field, Esq., facsimile number (212) 681-0845;
and if to the Employee, Robert A. Garrison, 44 Lords Highway East, Weston,
Connecticut 06883, facsimile number (203) 222-9037. Any party may change his or
its address by giving notice to the other party stating his or its new address.
Commencing on the 10th day after the giving of such notice, such newly
designated address shall be such party's address for the purpose of all notices
or other communications required or permitted to be given pursuant to this
Agreement.
(b) Governing Law. This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
New York determined without regard to conflicts of law principles.
(c) Entire Agreement; Waiver of Breach. This Agreement constitutes the
entire agreement among the parties and supersedes any prior agreement or
understanding among them with respect to the subject matter hereof, and it may
not be modified or amended in any manner other than as provided herein; and no
waiver of any breach or condition of this Agreement shall be deemed to have
occurred unless such waiver is in writing, signed by the party against whom
enforcement is sought, and no waiver shall be claimed to be a waiver of any
subsequent breach or condition of a like or different nature.
(d) Binding Effect; Assignability. This Agreement and all the terms and
provision hereof shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, successors and permitted assigns. This
Agreement and the rights of the parties hereunder shall not be assigned except
with the written consent of all parties hereto.
(e) Captions. Captions contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision hereof.
(f) Number and Gender. Wherever from the context it appears appropriate,
each term stated in either the singular or the plural shall include the singular
and the plural, and pronouns stated in either the masculine, the feminine or the
neuter gender shall include the masculine, feminine and neuter.
8
(g) Severability. If any provision of this Agreement shall be held invalid
or unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
(h) Amendments. This Agreement may not be amended except in a writing
signed by all of the parties hereto.
(i) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument. In addition, this Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of such signature pages executed by the parties to one copy of the
Agreement; all of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had
signed a single signature page.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
Global Gold Corporation
By:
Drury J. Gallagher, Chairman
and Chief Executive Officer
Robert A. Garrison
9
EXHIBIT A
Global Gold Corporation
734 Franklin Avenue, No. 333
Garden City, New York 11530-4525
February 1, 2003
Mr. Robert A. Garrison 44 Lords Highway East Weston, Connecticut 06883
Re: Restricted Stock Award
Dear Mr. Garrison:
As an inducement for your rendering of services to the Company, we hereby
grant you 900,000 shares of the Common Stock of the Company, evidenced by a
certificate of shares of our common stock, $.001 par value per share (the
"Shares"), subject to applicable securities law restrictions and the terms and
conditions set forth herein:
1. You shall be required to spend at least 60% of your business time (1,200
hours for each 12-month period) in connection with the responsibility assigned
to you (or to be assigned to you) by the Board of Directors of the Company in
promoting the business of the Company pursuant to your employment agreement with
the Company.
10
2. For the first five month period commencing with the date hereof within
which you render the services provided herein, you shall become fully vested in
12.195% of the total Shares granted hereunder. For each six-month period
thereafter commencing on July 1, 2003 through June 30, 2006, you shall become
fully vested in 14.634% of the total Shares granted hereunder. Thus, if you
complete five, 17, 29 and 41 months of service as provided hereunder, you shall
be 12.195%, 41.463%, 70.731% and 100% vested, respectively, in the Shares
granted hereunder.
3. In the event of your termination of your employment on or before the
expiration of the initial five-month period commencing with the date hereof or
any subsequent six-month period thereafter during the 36-month period commencing
with July 1, 2003 for any reason, you shall forfeit all right, title and
interest in and to any of the Shares granted hereunder which have not become
vested in you, without any payment by the Company therefor.
4. (a) Any Shares granted hereunder are not transferable and cannot be
assigned, pledged, hypothecated or disposed of in any way until they become
vested, and may be transferred thereafter in accordance with applicable
securities law restrictions. Any attempted transfer in violation of the Section
shall be null and void.
(b) Notwithstanding anything contained in this Agreement to the
contrary, after you become vested in any of the Shares granted hereunder,
no sale, transfer or pledge thereof may be effected without an effective
registration statement or an opinion of counsel for the Company that such
registration is not required under the Securities Act of 1933, as amended, and
any applicable state securities laws.
5. During the period commencing with the date hereof and prior to your
forfeiture of any of the Shares granted hereunder, you shall have all right,
title and interest in and to the Shares granted hereunder, including the right
to vote the Shares and receive dividends or other distributions with respect
thereto.
6. You shall be solely responsible for any and all Federal, state and local
income taxes arising out of your receipt of the Shares and your future sale of
other disposition of them.
7. This Agreement and the rights of the parties hereunder shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to its conflicts of law principles. All parties hereto (i) agree that any
legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted only in a Federal or state court in the City of New York in
the State of New York, (ii) waive any objection which they may now or hereafter
have to the laying of the venue of any such suit, action or proceeding, and
(iii) irrevocably submit to the exclusive jurisdiction of any Federal or state
court in the City of New York in the State of New York, in any such suit, action
or proceeding, but such consent shall not constitute a general appearance or be
available to any other person who is not a party to this Agreement. All parties
hereto agree that the mailing of any process in any suit, action or proceeding
at the addresses of the parties shown herein shall constitute personal service
thereof.
8. If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
9. This Agreement and all the terms and provisions hereof shall be binding
upon and shall inure to the benefit of the parties and their respective heirs
and successors and, in the case of the Company, its assigns.
11
10. This Agreement may not be amended except in a writing signed by all of
the parties hereto.
11. Nothing contained herein shall be construed to create an employment
agreement between the Company and you or require the Company to employ or retain
you under such a contract or otherwise.
12. Notwithstanding anything contained this in Agreement to the contrary:
(a) the Shares shall become fully vested upon the occurrence of a Change of
Control (as defined in this Section 12), which shall occur upon
(i) (x) the sale of all or substantially all of the Company's assets or
(y) a merger (including a merger in which the Company is the surviving
corporation) or consolidation of the Company with one or more corporations or
entities, as a result of which in each such case the Company's voting securities
outstanding immediately before such sale, merger or consolidation represent less
than 50% of the combined voting power of voting securities of the Company or the
surviving entity outstanding immediately after such sale, merger or
consolidation; or
(ii) any "person", as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or persons
acting in concert (other than Drury J. Gallagher, Robert A. Garrison, Van Z.
Krikorian or any of their affiliates) become the "beneficial owner" or
"beneficial owners" (as defined in Rule 13d-3 under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time), directly
or indirectly, of the Company's securities representing more than 50% of the
combined voting power of the Company's then outstanding securities, pursuant to
a plan of such person or persons to acquire such a controlling interest in the
Company, whether pursuant to a merger (including a merger in which the Company
is the surviving corporation), an acquisition of securities or otherwise, except
that this Section 12(a)(ii) shall not apply to any person who provides financing
to the Company or any of their affiliates, pursuant to a private placement
transaction or otherwise; and
(b) a transaction shall not constitute a Change of Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
(3) the Shares shall become fully vested upon your death or upon your
becoming disabled, which shall mean you shall have been unable to render all of
your duties by reason of illness, injury or incapacity (whether physical or
mental) for a period of six consecutive months, determined by an independent
physician selected by the Board of Directors of the Company.
13. In the event of any conflict between the terms of this Agreement and of
the Amended and Restated Employment Agreement, the provisions contained in this
Agreement shall control.
If this letter accurately reflects our understanding, please sign the
enclosed copy of this letter at the bottom and return it to us.
Very truly yours,
Global Gold Corporation
By:____________________________
Drury J. Gallagher, Chairman
and Chief Executive Officer
Agreed:
- -------------------------------
Robert A. Garrison
12
EXHIBIT 10.60
IVAN TORREALBA ACEVEDO
NOTARIO PUBLICO
HUERFANOS 979 OF. 501 - SANTIAGO
Digest N(degree) 632-03
PURCHASE OPTION, LEASE, MANDATE,
AND PROHIBITION TO LIEN
AND ALIENATE
CONTRACT
ALFREDO VICTOR RICARDO SOTO TORINO
AND
ADRIAN FRANCISCO SOTO TORINO
TO
GLOBAL GOLD CORPORATION
IN SANTIAGO, CHILE, on January 15th 2003, before me, IVAN TORREALBA
ACEVEDO, Chilean, married, attorney-at-law and Incumbent Notary Public
of the 33rd Notary Office of Santiago, National ID Card 3.417.990-5,
bearing legal domicile at Huerfanos No. 979, Suite 501, Santiago,
there appear: Mr. ALFREDO VICTOR RICARDO SOTO TORINO, a Chilean
national, married, mining entrepreneur, National ID Card No.
5.387.074-0, bearing legal domicile in the city of Copiapo, at Maraton
No. 477, Villa El Cobre Dos, and visiting this city; Mr. ADRIAN
FRANCISCO SOTO TORINO, Chilean, married under the property separation
regime, mining entrepreneur, ID Card n(0) 5.535.932-7, (hereinafter,
both indistinctly and jointly, " The Offerer" or "The Offerers"), on
one hand, and on the other Mr. Robert A. Garrison, a US national,
married, agent of commerce, US Passport No. 141168159, bearing legal
domicile at 731 Franklin Avenue Suite 333, Garden City, New York
11530, and visiting this city, on behalf, as accredited hereinbelow,
of GLOBAL GOLD CORPORATION, a company incorporated as per the laws of
the State of Delaware, USA, bearing the same legal domicile as its
representative (hereinafter, indistinctly, the "Beneficiary"); all of
statutory age, who accredit their identities with the aforementioned
documents, and
1
represent: FIRST.- MINING CLAIMS AND RIGHTS PURCHASE OPTION CONTRACT.-
One.- Mr. Alfredo Victor Ricardo Soto Torino, is the sole owner of the
following mining claims and rights: a/ Candelaria 1 to 3 mining
claims, which boundaries certificate was recorded on folio 26, under
number 9 of the 1983 Chanaral Mining Registry, and re-recorded on
folio 85 number 19 of the 1992 Diego de Almagro Mining Registry.- b/
Santa Candelaria 1 to 8 mining claims, which boundaries certificate
and constitution decree are recorded on the reverse of folio 70 number
22 of the 1993 Diego de Almagro Mining Registry. Whereas, Mr. Adrian
Francisco Soto Torino, is the sole owner of the following mining
claims and rights arising from the following manifestations duly
recorded in the Corresponding Registrars: c/ "Torina Una" 1 to 7
mining manifestation, introduced on December 23rd, 2002, to the El
Salvador Civil Court and registered on the Mining Discoveries Record
of the 2003 Diego de Almagro Mining Registry as of January 7th 2003,
on the reverse of folio 2, number 2. d/ "Torina Dos" 1 to 11 mining
manifestation, introduced on December 23rd, 2002, to the El Salvador
Civil Court and registered on the Mining Discoveries Record of the
2003 Diego de Almagro Mining Registry on January 7th 2003, on the
reverse of folio 3, number 3. e/ "Torina Tres" 1 to 5 mining
manifestation, introduced on December 23rd, 2002, to the El Salvador
Civil Court and registered on the Mining Discoveries Record of the
2003 Diego de Almagro Mining Registry on January 7th 2003, on the
reverse of folio 4, number 4. f/ "Torina Cuatro" 1 to 7 mining
manifestation, introduced on December 23rd, 2002, to the El Salvador
Civil Court and registered on the Mining Discoveries Record of the
2003 Diego de Almagro Mining Registry on January 7th, 2003, on the
reverse of folio 5, number 5. g/ "Torina Cinco" 1 to 8 mining
manifestation, introduced on December 23rd, 2002, to the El Salvador
Civil Court and registered on the Mining Discoveries Record of the
2003 Diego de Almagro Mining Registry on January 7, 2003, on the
reverse of folio 6, number 6. h/ "Torina Seis" 1 to 8 mining
manifestation, introduced on December 23rd, 2002, to the El Salvador
Civil Court and registered on the Mining Discoveries Record of the
2003 Diego de Almagro Mining Registry on January 7, 2003, on the
reverse of
2
folio 7, number 7. The Offerers state the maps which are being
registered, dully signed by both parties, on this same date, jointly
with the public deed hereby, under the number 204, effectively
correspond, one, to the mining claims individualised on letters a/ and
b/ above, and the other, to the mining claims and manifestations
individualised on letters a/ to h/. Two: Under the contract hereby,
the Offerers, grant Global Gold Corporation, on behalf of which Mr.
Robert A. Garrison accepts, a purchase option right, under the
provisions set forth in Article 169 of the Mining Code currently in
force, over the respective mining claims and rights specified on
number One above of this First Clause. Such option, therefore,
encompasses both the mining claims already constituted and
individualised on letters a/ and b/ of number One above, and the
rights on the constitution processes of those specified on letter c/
to h/ of Section One above. Three.- Global Gold Corporation, as
Beneficiary, shall have, at any time, the right to assign to a third
party its rights of this purchase option, and the Assignee shall, at
the same time, have the right to assign its rights to any person or
entity, acquiring the Assignee(s), at its sole discretion, the right
to exercise the purchase option granted under this instrument as well
as be obliged to make, subject to the conditions applicable to each
case, the payments defined in Sections Eight and/or Ten hereinbelow of
this First Clause. Four.- The purchase option subject matter hereof is
irrevocable and exclusive, and is granted for a term of four years as
of this date. At any time, within such term, whoever bears the legal
representation of Global Gold Corporation or its Assignees as
stipulated in section Three above shall have the right to accept or
not, at its sole discretion, the purchase option granted herein.
Five.- For materialisation of the purchases offered hereby, Global
Gold Corporation or its Assignees, each duly represented on each case,
shall formalise the acceptance thereof by means of a public deed
within the time limit set forth in Section Four above. Six: Both the
Offerers, their heirs in any degree and their Assignees are, and shall
be, held liable for this obligation. Seven: As the period to exercise
the option is not due yet, Mr. Adrian Francisco Soto Torino shall have
the obligation to perform all the acts, processes, and procedures, be
these judicial or not, including the payment of mining patents and
tariffs, as well as any other expense related to and destined to the
duly constitution of the mining claims
3
whose manifestation and registration are individualised on the letters
c/ to h/ of the Section One above. Particularly, but not limiting to,
the Offerer shall perform the judicial acts or carry on with the
corresponding jurisdictional acts for the defence of the
manifestations individualised. Global Gold Corporation shall reimburse
Mr. Adrian Francisco Soto Torino for the necessary and verifiable
expenses made by him in the performance of the aforementioned acts,
procedures and processes. Eight.- Purchase Price: Should the
Beneficiary or its Assignees exercise the purchase option, the price
of the latter for each mining claim and right given in option herein
shall have one fixed and one variable component. A/ The fixed
component shall be the equivalent in pesos, at the moment the
respective payment of fifty thousand American dollars, hereinafter
Dollars, may have been or be made, as the case may be, at the exchange
rate prevailing on the date of such payment is made for the assets
individualised on letters a/ to h/ of number One above. To the effects
of the deed herein shall be understood that the "dollar observed" or
the "exchange rate prevailing on the date", shall be the Dollar value,
at the date in question, published by the Central Bank of Chile in
conformance to second subparagraph of article 44 of the Law n(0)
18,840. Thus, the fixed component for the price of all the assets
subject matter hereof shall be four hundred thousand dollars
(US$400,000), as per the exchange rate of the United States Dollar
prevailing the payment date and it shall be paid as follows: (i)
Firstly, by assigning to such price the amounts the Beneficiary or its
Assignee may have paid, before exercising the option, for the lease
contract payment set forth on the SECOND clause herein. In order to
assign such payment, the US dollar exchange rate shall be that of the
date in which each lease payment had been made and the amounts paid
for this concept , as set forth on the SECOND clause hereinbelow,
shall be allocated on an equal part basis to the assets subject matter
hereof; (ii) then, by assigning in the same fashion as letter (i)
above, the amount paid as compensation for the option granted hereby
as set forth in article Ten hereinbelow of this First clause; (iii)
the difference between the purchase price (four hundred thousand
dollars for all the assets subject matter of this purchase) plus the
amounts paid for letters (i) and (ii) above, shall be paid in
4
instalments equivalent in pesos to twenty five thousand dollars each,
in a quarterly fashion until completing the difference, being payable
any of these instalments the first working day of March, June,
September or December, right after the date in which the option may
have been exercised, in conformance to the exchange rate prevailing on
such date. B/ The variable component of the purchase price shall be,
for each asset individualised in letters a/ to h/ of the number One
above, the equivalent in pesos to US$1.25 per each oz gold over the
first 500,000 oz the Beneficiary or its Assignees extract, from the
mining claims purchased, and sell in the market, and up to a million
oz extracted and sold in the market until May 1st 2015. Should the
option be exercised, therefore, the obligation of the Beneficiary or
its Assignees to pay the variable part set forth in letter B/ shall be
extinguished when reaching the million oz extracted and sold in the
market or when reaching the date of May 1st 2015. The payment of the
aforementioned variable part of the price shall only be claimable to
the Beneficiary or its Assignees if the average price of gold at the
London Metal Exchange, at the payment date, is higher than US$310 per
oz. The total amount allocated to the aforementioned price variable
component shall not exceed, in any case, the equivalent to US$500,000,
as per the exchange rate prevailing on the date of each payment
composing it. Such variable component shall be liquidated
provisionally every three months, having to perform a final adjustment
no further than March in the following calendar year. Notwithstanding
the aforesaid, for the Beneficiary or its Assignees' the obligation to
pay the variable part of the prices described on letter B/ shall also
be extinguished if the Beneficiary or its Assignees alienate the
mining claims and/or rights described on the number One of the First
Clause of this instrument to a person they are no related to. The
determination of the variable part of the price does not entitle the
Offerers to supervise the exploitation the Beneficiary or its
Assignees make of the mining claims subject matter of this contract.
Nine.- Payment Form. All payments set forth in the option herein and
the lease set forth in the Second clause hereinbelow, shall be made
through promissory note(s) payable at sight to the name of one or the
other Offerer, indistinctively, or to the name of the Mandatories
5
individualized on the Clause Third hereinbelow, which shall be left to
the disposal of one or the others at the Notary Office granting the
acceptance public deed, being left on record by means of a
certification issued by the Notary, which shall be annotated in the
margin of the original of this instrument. Ten.- As the sole
compensation for granting the hereby option Global Gold Corporation or
its Assignees shall pay no further than March 5th 2003, the equivalent
in pesos, at the payment date, to US$25,000 as per the exchange rate
prevailing on that date. Eleven.- In the event of exercising this
purchase option, the assets subject matter hereof shall be
transferred, in each case, ad corpus, free from any lien,
interdiction, encumbrance, injunction, ownership limitation,
litigation, action or suit for enforcement of a contractual
obligation, with all its uses, customs, rights as well as active and
passive easements, and the Offerers, in each case, shall be held
liable for any legal reparation or eviction in compliance with law.
SECOND.- MINING CLAIMS LEASE CONTRACT.- One.- By the instrument herein
the Offerers shall lease Global Gold Corporation the assets subject
matter of the option contract set forth on number One of the First
Clause, as of this date and till the end of the time period for the
option, being understood this lease shall end by the mere fact of
granting the acceptance of the irrevocable purchase offer contained in
the previously mentioned option contract. Under the aforesaid, Global
Gold Corporation shall be entitled to execute exploration and
exploitation works at its sole risk, as set forth in article 171 of
the Mining Code. By virtue of this lease contract, Global Gold
Corporation shall pay a quarterly rent or royalty to the Offerers
equivalent to US$25,000 as per the prevailing exchange rate of that
date. Likewise, it is agreed that during the duration of the hereby
lease contract Global Gold Corporation or its Assignee shall pay the
mining patents corresponding to the aforementioned mining claims. In
this act, however, the Offerers grant Global Corporation Gold a
special and irrevocable proxy to pay, acting through its agents, and
on behalf of the Offerers, the mining patents corresponding to the
aforementioned mining claims. The fulfilment of this lease contract,
shall not affect in any form the validity, duration, and effectiveness
6
of the option contract contained herein. Two. Suspensive Conditions.-
The obligations Global Gold Corporation acquires under the hereby
lease contract, including the payment of the respective rent, are
subject to the following copulative suspensive conditions: a/ that the
titles of the mining claims and rights subject matter hereof be, at
the sole discretion of Prieto and Cia Law Firm. lawfully constituted;
specially fully perfected and free from any lien, mortgage,
interdiction, encumbrance, injunction, ownership limitation,
litigation, action or suit for enforcement of a contractual
obligation; b/ that Intercontinental Investments Chile S.A., and the
Offerer have subscribed a public instrument, in a valid and sufficient
fashion, at the sole discretion of Prieto and Cia. Law Firm, before a
Notary Public rescinding the Rights Assignment Agreement entered into
by public deed dated October 9th, 1998, granted at the Santiago Notary
Office of Mr. Aliro Veloso Munoz (Digest 9165-98); c/ (i) that
Intercontinental Investments Chile S.A., (ii) each of its shareholders
or partners and, if these were others than Messrs. Jorge Lopehandia
and Jaime Chavez Teuber, also each one of them, (iii) the partnerships
or people related to Messrs. Jorge Lopehandia and/or Chavez, and/or
Intercontinental Investments S.A., as well as Ms. Ana Maria Quevedo
Valdivia, have granted, whether jointly or individually, in a valid
and sufficient manner, at the sole discretion of Prieto and Cia Law
Firm, a termination and release document in respect of each and every
act and contract that might be related to any of the mining claims
and/or rights subject matter hereof, and in which any of them partook
or partakes, may have or may have had an interest in; said termination
and release document should be as broad as legally permissible,
stating that each of them waives to each and every claim, right or
action to which they may be entitled in the future, whether directly
or indirectly through other related persons, in connection with said
mining claims or rights, and waives to file any type of action against
the Offerer, Global Gold Corporation, its Assignees or their
respective representatives, partners, managers or former owners of
such mining claims; of whatever nature such actions are or may be; d/
be verified, to the sole satisfaction of Prieto and Cia. Law Firm,
that over the estate comprised of any of the mining claims or rights
7
subject matter of the hereby contract no other concessions or mining
claim applications governed by the Mining Code exist on the land on
which the mining claims are located, and in respect of which there may
exist an overlapping with the mining claims or rights subject matter
hereof; e/ be verified, to the sole satisfaction of Prieto and Cia.
Law Firm, that all the authorisations, or that it has not been
necessary to obtain, in each case, have been given by the owners of
the superficial land where the mining claims are constituted or the
rights expressed on each mining claim have been requested, all
individualized on the number One of the First Clause above. The
suspensive conditions described above shall be deemed as fulfilled
once Prieto and Cia. Law Firm through a public deed entered into in
this same Notary Office state such action has taken place. The payment
of the first rent shall be made, by Global Gold Corporation or its
Assignees, the first working day of March, June, September or
December, right after the granting of the aforementioned public deed.
Three. Resolutory Condition. The lease contract contained herein shall
be subject to the following resolutory conditions: A/ that the
engineering company which has performed the feasibility study of the
mining project to be developed in the mining claims deems, at its sole
judgement, "as economically non feasible" for Global Gold Corporation
or its Assignees the exploitation mining project of the mining claims
subject thereof; B/ that any of the exploitation mining claims whose
respective manifestations and registries are individualised on letters
c/ to h/ on the number One of the First Clause above shall not come to
be fully or dully constituted or, to the sole judgment of Prieto and
Cia., Law Firm, its constitution becomes excessively difficult or
expensive and; C/ that any legal action be entered into, of any nature
this may be and before any court, whether national or foreign,
ordinary or arbitral, which is related to the assets subject matter of
the option and lease contracts hereto, or that intends to discuss the
property, possession or mere tenancy of the mining claims and/or
rights subject matter of the option and lease contract, or which
pursuits any liability, whether civil or criminal or of any other
nature, against any of the Offerers, Global Gold Corporation or its
Assignees, of its respective representatives, partners or managers, or
former owner of the claims. The resolutory conditions established
above are set forth to the sole and exclusive benefit of the
Beneficiary and its Assignees and shall operate once they have been
8
solicited by the Beneficiary or its Assignees, and once solicited,
they shall be fully in force, without need of any further proceeding
or additional statement. Four. Assignment. The lease contract herein
may be assigned to a third party by Global Gold Corporation, and this
third party may also assign it to someone else and so on, without any
limitation. THIRD: ENVIRONMENTAL OBLIGATIONS FULFILMENT. Each of the
Messrs Alfredo Victor Ricardo Soto Torino and Adrian Francisco Soto
Torino, hereinafter "the Soto Torino Messrs.", state and guarantee
Global Gold Corporation and its successors that, as of the date of
this instrument: One/ each one of them is in total compliance with all
the environmental laws and regulations applicable to the mining claims
constituted or in the process of being constituted, and such
compliance includes, but no limiting to, for both of them, having all
the permits and other governmental, administrative or city council
authorisations required by the environmental laws and regulations and
the compliance of their terms and provisions. They also state and
guarantee that none of the Soto Torino Messrs has ever received any
notice, whether from a governmental, administrative or city council
authority, group of inhabitants, employees or in any other way, in
which is stated that any of the claims described in this number One or
the Offerers, as legal bearers of the right, do not comply fully with
the aforementioned laws and regulations, and to the true knowledge of
each of the Soto Torino Messrs, there are no circumstances which may
impede or interfere in the future with such full compliance. Two/
There are neither environmental claim being processed against any of
the Soto Torino Messrs nor against any of the mining claims
individualised in the letters a/ to h/ of the number One of the First
Clause above.- Three/ There are no actions, activities, circumstances,
conditions, events or incidents, past or present, including, but not
limiting to, the liberation, emission, discharge, presence or disposal
of any contaminant material against the owner, current or future, of
the mining claims or, to the true knowledge of the Soto Torino Messrs,
any person or entity whose responsibility has, or may have, been
undertaken by any of the Soto Torino Messrs, whether contractually or
due to legal cause. FOURTH- IRREVOCABLE MANDATE.- By this act, Messrs
Alfredo Victor Ricardo Soto Torino and Adrian Francisco Soto Torino,
hereinafter the "Mandators" sign one another an irrevocable mandate
and each one of them also signs an irrevocable mandate to Ms. Ana
Maria Quevedo Valdivia, Ms. Herlinda Edith Herrera Palma and to the
arbitrators appointed in the Eighth Clause of this instrument,
hereinafter the "Mandators", to receive any of the appointed Mandators
all or a share of the prices Global Gold Corporation or its Assignees
shall pay due to the option and lease contracts and or for having
9
exercised the option set forth herein, or due to any other obligation
amongst the parties. The mandate to receive stated in this clause is
of irrevocable nature in the terms of the article two hundred and
forty one of the Commerce Code, for being granted in benefit of Global
Gold Corporation and its Assignees. Furthermore, and in accordance
with the article two thousand one hundred and sixty nine of the Civil
Code, the mandate hereby shall not either terminate due to Mr. Alfredo
Victor Ricardo Soto Torino and/or Mr. Adrian Francisco Soto Torino
demise, being each of such Mandators able to continue receiving all or
a share of the aforementioned prices paid by Global Gold Corporation
and its Assignees even after one or both Mandators demise.- FIFTH.-
Prohibitions.- Mr. Alfredo Victor Ricardo Soto Torino agrees to
constitute in favour of the Beneficiary, for whom accepts Mr. Robert
A. Garrison, prohibition to lien, alienate or provide by all means all
and each of the mining claims individualised in the letters a/ to h/,
or signing acts and contracts that limit or affect its tenancy,
possession or property, without the authorisation of the Beneficiary
or its Assignees; authorisation that, in any case, should be given by
public deed. On the other hand, Mr. Adrian Francisco Soto Torino
hereby constitutes in favour of the Beneficiary, for whom accepts Mr.
Robert A. Garrison, a prohibition to lien, alienate or provide by all
means all and each of the mining rights arising from the claims
individualised in the letters c/ to g/ of the number One of the First
Clause above or signing acts and contracts that limit or affect its
tenancy, possession or property, without the authorisation of the
Beneficiary or its Assignees; authorisation that, in any case, should
be given by public deed. Upon acceptance of the irrevocable offer
subject matter hereof, all prohibitions referred to in this clause
shall be rendered null and void when they refer particularly to the
asset in which respect such acceptance has been granted, and release
thereof by the respective Mining Registrar may be requested by merely
submitting the acceptance public deed. SIXTH.- This purchase option
contract shall be recorded in the Liens and Encumbrances Registry of
the respective Mining Registrars where each of the mining claims and
rights subject matter hereof are recorded, in order to produce the
effects set forth in the second subparagraph of Article 169 of the
Mining Code. SEVENTH.- AUTHORIZATION.- Present to this act, Ms.
Herlinda Edith Herrera Palma, Chilean, head of household, ID card
number 5.093.929-4 married in community property regime to Mr. Alfredo
Victor Soto Torino, of the same domicile, who accredits his identity
10
with the aforementioned document and states she expressly authorizes
her spouse to enter into the contracts subject matter hereto. EIGHTH.-
ARBRITATION.- Any doubt, difficulty, difference or controversy arising
between the Offerers, on one hand and on the other, the Beneficiary in
connection with the existence, validity, effectiveness, application,
interpretation, duration, enforcement or fulfilment of this purchase
option contract shall be submitted on each occasion to the
consideration of an arbitrator, who shall have arbitration powers as
regards the procedure and de jure powers as regards the sentence, who
shall resolve the matter in a single instance, and the granting
parties hereby expressly waive to any legal recourses to which they
may resort to appeal against the arbitrator's resolutions, except for
the appeal for reversal, clarification, amendment or rectification
before the same arbitrator, and remedy of complaint. To this end, the
parties hereby designate as arbitrator Mr. Jorge Montes Bezanilla;
should the arbitrator so designated be unable or refused to accept to
act in this capacity, the parties agree to designate Mr. Eduardo
Gonzalez Errazuriz in his replacement, and finally, if the latter is
unable or fails to accept to act as such, the parties agree to
designate Mr. Juan Luis Ossa Bulnes. If none of the aforementioned
people is able to act as arbitrator or fails to accept to act in such
capacity, the parties shall meet to agree on the designation of
another arbitrator, and if they fail to reach such agreement any of
them shall have the right to request that such designation be made by
the Ordinary Justice, being the one in charge of appointing him, in
which case the person designated to act as such shall necessarily be
an attorney-at-law who is or has been Dean or Director of the
Juridical and Social Sciences Department of Universidad Catolica de
Chile or Universidad de Chile or who has or has had the position of an
ordinary or extraordinary Professor of Civil, Commercial or Criminal
Law at the Santiago Law Schools of any of the aforementioned
universities for a period of not less than 5 years. None of the
arbitrators designated shall be rejected based on the fact that they
have heard any of the matter subject matter hereof or issued a
sentence in respect thereof. The arbitration proceedings shall take
place in the city of Santiago. The arbitrator acting as such shall be
vested with all necessary powers to solve any matter related to his
competency or jurisdiction, and to issue any injunction orders, no
matter if they are prior or after the arbitration proceedings.
11
Expenses originating from the arbitration, from the experts' reports
required and others arising therefrom shall be borne by the parties as
determined in the respective sentence.- NINTH.- Global Gold
Corporation, Mr. Alfredo Victor Ricardo Soto Torino and Mr. Adrian
Francisco Soto Torino state they have had independent legal
counselling to enter into this instrument. TENTH.- DOMICILE.- For all
legal purposes hereof the parties establish their special domicile in
the city of Santiago. ELEVENTH.- AGREEMENTS: the instrument hereby
constitutes a complete and definitive agreement amongst the parties in
relation to the negotiation they have performed and it shall prevail
over any other agreement, oral or written, which may have previously
existed amongst the parties; in respect of which they fully and
broadly terminate. TWELFTH.- The parties state the contracts subject
matter hereof shall not originate any payment or commission for
brokerage or discovery of any of the mining claims subject matter
thereof, and, therefore, Global Gold Corporation shall not be held
liable for any payment in relation to such concept. THIRTEENTH: The
parties commit to fulfil the contract hereby, as well as construe its
clauses abiding by the good faith principle. FOURTEENTH. No hindrance
or delay in exercising, by Global Gold Corporation or its Assignees,
any right given in virtue of the contracts subject matter hereof,
shall be construed as a waiver thereof. Global Gold Corporation or its
Assignees shall be able to waive some conditions, be these suspensive
or resolutory, all of which have been set forth for its own benefit,
or any other right, condition, time limit or requirement which may
have been set forth for its own benefit in the contracts subject
matter hereof. Nevertheless, its particular waiver to one of these
rights, conditions, time limits or requirements neither shall mean nor
be construed, under any circumstance, as a waiver to the others.
FIFTEENTH.- The Offerers, indistinctively, shall cover, pay or
reimburse Global Gold Corporation or its Assignees all expenses and
detriments inflicted on them, in relation to the property or operation
of the mining claims and/or rights individualised in letters a/ to h/
of the Number One of the First Clause above and which may arise due to
facts or circumstances prior to this date. SIXTEENTH EXPENSES.- All
expenses and taxes related to the granting of this instrument and the
acts subject matter hereof shall be borne by Global Gold Corporation.-
SEVENTEENTH.- The appearing parties grant power of attorney to the
attorneys-at-law Mr. Luis Victor Delpiano Del Rio, Rodrigo de Alencar
Barahona, Francisco Javier Mujica Escobar and Leonidas Prieto Larrain
to act, whether individually or jointly, and on behalf of the
appearing parties, give or subscribe documents and deeds, whether
public or private that be necessary to rectify, amend, clarify or
complement the purchase option, lease, and mandate deed herein, in
order to correct mistakes or omissions and to enable the
materialisation of the will manifested by the parties herein and to
perform the corresponding registrations.- EIGHTEENTH REGISTRATIONS.-
12
The bearer of an authorized copy hereof shall be empowered to request
to the competent Mining Registrars all necessary and applicable
registrations and annotations in virtue of the hereby instrument.-
LEGAL CAPACITIES.- The legal capacity of Mr. Robert A. Garrison to
represent Global Gold Corporation is stated in the Board session of
Global Gold Corporation of this same date.- In witness whereof and
after reading the instruments herein, the parties set their hand and
seal hereto. Copy granted, and annotated in the Digest under the
number mentioned hereinabove. I attest.
-----------------------
Robert Garrison
p.p. Global Gold Corporation
American Passport N(degree) 141168159
-----------------------
Alfredo Victor Ricardo Soto Torino
ID Card Number.: 5.387.074-0
-----------------------
Adrian Francisco Soto Torino
I.D Card Number: 5.535.932-6
-----------------------
Herlinda Edith Herrera Palma
I.D Card Number: 5.093.929-4
13
EXHIBIT 10.61
IVAN TORREALBA ACEVEDO
NOTARIO PUBLICO
HUERFANOS 979 OF. 501 - SANTIAGO
Digest N(degree) 2698-03
AMENDMENT TO PURCHASE OPTION AND LEASE AGREEMENTS
ALFREDO VICTOR RICARDO SOTO TORINO
AND
ADRIAN FRANCISCO SOTO TORINO
TO
GLOBAL GOLD CORPORATION
IN SANTIAGO, CHILE, on March 3, 2003, before me, IVAN TORREALBA
ACEVEDO, Chilean, married, attorney-at-law and Incumbent Notary Public
of the 33rd Notary Office of Santiago, National ID Card 3.417.990-5,
domiciled at Huerfanos No. 979, Suite 501, Santiago, there appear: Mr.
ALFREDO VICTOR RICARDO SOTO TORINO, a Chilean national, married,
mining entrepreneur, National ID Card No. 5.387.074-0, domiciled in
the city of Copiapo, at Maraton No. 477, Villa El Cobre Dos, and
visiting this city; Mr. ADRIAN FRANCISCO SOTO TORINO, Chilean, married
under the property separation regime, mining entrepreneur, ID Card
n(0) 5.535.932-7, (hereinafter, both indistinctly and jointly, " The
Offerer" or "The Offerers"), on one hand, and on the other Mr. Robert
A. Garrison, a US national, married, agent of commerce, US Passport
No. 141168159, bearing legal domicile at 734 Franklin Avenue Suite
333, Garden City, New York 11530, and visiting this city, on behalf,
as accredited hereinbelow, of GLOBAL GOLD CORPORATION, a company
incorporated as per the laws of the State of Delaware, USA, domiciled
as its representative (hereinafter, indistinctly, the "Beneficiary");
all of statutory age, who evidence their identities with the
aforementioned documents, and represent: FIRST.- By public deed dated
January 15, 2003, at this Notary Public's Office (Digest N(degree)
632-03) the parties hereto granted a Purchase Option, Lease and
1
Mandate Agreement, establishing as well prohibitions to place liens
and to alienate on the mining properties and rights described in the
aforementioned public deed. SECOND.- The parties hereby replace in its
integrity letter B/ of Point Eight of Clause First of the public deed
described in the preceding paragraph, by the following: "B/ The
variable component of the purchase price shall be, for each asset
individualised in letters a/ to h/ of the number One above, the
equivalent in pesos to US$0.125 per each oz of gold over the first
500,000 oz of gold the Beneficiary or its Assignees extract from the
mining claims purchased and sell in the market, and up to a million oz
of gold extracted and sold in the market until March 1st 2015.
Therefore, should the option be exercised, the obligation of the
Beneficiary or its Assignees to pay the variable part of the purchase
price set forth in this letter B/ shall arise if more than 500,000 oz
of gold are extracted from the previously individualised mining claims
and are sold in the market, and shall be extinguished when reaching
the million oz of gold extracted from such claims and sold in the
market, or when reaching the date of May 1st 2015, whatever occurs
first. The payment of the aforementioned variable part of the price
shall only be claimable to the Beneficiary or its Assignees if the
average price of gold at the London Metal Exchange, at the payment
date, is higher than US$310 per oz. The total amount allocated to the
aforementioned price variable component shall not exceed, in any case,
the equivalent to US$500,000, as per the exchange rate prevailing on
the date of each payment composing it. Such variable component shall
be liquidated provisionally every three months, having to perform a
final adjustment no further than March in the following calendar year,
month in which the payment shall be done. Notwithstanding the
aforesaid, the Beneficiary's or its Assignees' obligation to pay the
variable part of the price described in this letter B/ shall also be
extinguished by operation of law if the Beneficiary or its Assignees
alienate the mining claims and/or rights described on the number One
of the First Clause of this agreement to a person they are not related
to. The calculation of the variable part of the price does not entitle
the Offerers to supervise the exploitation the Beneficiary or its
2
Assignees make of the mining claims subject matter of this contract."
THIRD.- The parties hereby replace in its integrity Point Nine of
Clause First of the public deed described in Clause First of this
Agreement by the following: "Nine.- Payment Form. All payments set
forth in the option herein and the lease set forth in the Second
clause hereinbelow, shall be made through promissory note(s) payable
at sight to the name of one or the other Offerer, indistinctively, or
to the name of the Mandatories individualised on the Clause Third
hereinbelow, which shall be left to the disposal of one or the others
at the Notary Office granting the acceptance public deed, being left
on record by means of a certification issued by the Notary. The
aforementioned payments can also be made by wire transfer to bank
accounts held by any of the Offerers, or by any one of the Mandatories
individualised in Clause Fourth below." FOURTH: These amendments shall
be recorded at a margin of the registration(s) that correspond with
the Liens and Encumbrances Registry(s) of the respective(s) Mining
Registrar(s). FIFTH.- AUTHORIZATION.- Present to this act, Mrs.
Herlinda Edith Herrera Palma, Chilean, head of household, ID card
number 5.093.929-4 married in community property regime to Mr. Alfredo
Victor Soto Torino, of the same domicile, who accredits his identity
with the aforementioned document and states she expressly authorizes
her spouse to amend the agreements contained in the public deed
individualised in Clause First herein in the terms described in this
Agreement. Furthermore, she expressly authorizes her spouse in the
future, to amend, every time its necessary, the Option, Lease and
Mandate Agreements already individualised, being able her spouse to
agree on new terms and conditions thereof, precise the interpretation
of those already in force and, in general, create, amend or extinguish
rights. SIXTH.- In all which has not been amended, the public deed
individualised will stay in force and effect. SEVENTH: All costs and
taxes arising out of the granting of this document shall be borne
exclusively by Global Gold Corporation. EIGHTH: REGISTRATIONS.- The
bearer of an authorized copy hereof shall be empowered to request to
3
the competent Mining Registrars all necessary and applicable
registrations and annotations in virtue of the hereby instrument.-
LEGAL CAPACITIES.- The legal capacity of Mr. Robert A. Garrison to
represent Global Gold Corporation is stated in the Board session of
Global Gold Corporation registered at this Notary Public's Office on
January 15, 2003.- In witness whereof and after reading the
instruments herein, the parties set their hand and seal hereto. Copy
granted, and annotated in the Digest under the number mentioned
hereinabove. I attest.
-----------------------
Robert Garrison
p.p. Global Gold Corporation
American Passport N(degree) 141168159
-----------------------
Alfredo Victor Ricardo Soto Torino
ID Card Number.: 5.387.074-0
-----------------------
Adrian Francisco Soto Torino
I.D Card Number: 5.535.932-6
-----------------------
Herlinda Edith Herrera Palma
I.D Card Number: 5.093.929-4
4
EXHIBIT 10.62
Agreement
This Agreement is made as of 17th March 2003 by and between SHA, LLC, an
Armenian limited liability company ("SHA") and Global Gold Corporation, a
Delaware, United States corporation ("Global") to set the terms for the
acquisition of the Hankavan mine in Armenia with proven mineral reserves as
further described in Exhibit A attached (the "Mine"),
Premises
Whereas, SHA owns the exclusive exploration license, registration, permits,
other assets and rights with respect to the Mine, as further described in
Exhibit B attached; and
Whereas, SHA has represented that the attached Mine exploration license and
registration can be converted to an exploitation license and all necessary
permits according to Armenian legislation to begin mining and processing of the
ore at the mine can be acquired within twelve months; and
Whereas, SHA desires to sell the Mine and related assets to Global and Global
desires to acquire and develop the Mine, all on the terms and conditions of this
Agreement, the parties hereby agree as follows.
1. At Global's option to be exercised within 45 days, SHA shall: (a)
transfer the exclusive license, registration, permits, and all other
rights related to the Mine to Global; or (b) with its limited liability
company participants transfer of 100% of all ownership shares of SHA
and any other entity which may hold rights in the Mine to Global or
Global's designee.
2. The total purchase price shall be One Hundred Fifty Thousand U.S.
Dollars ($150,000 USD), payable as follows:
a. Fifteen Thousand U.S. Dollars ($15,000 USD) payable within
five days of execution of the final documentation and transfer
of assets, licenses, registration, and/or shares to Global
(the "Closing");
b. Sixty Seven Thousand Five Hundred U.S. Dollars ($67,500 USD)
payable within six month of the Closing; and
c. Sixty Seven Thousand Five Hundred U.S. Dollars ($67,500 USD)
payable within thirty days of issuance of the exploitation
license and all other licenses and permits necessary to begin
commercial mining and processing operations at the Mine.
3. SHA or its designee shall work with Global or its designee to acquire
all the necessary licenses and permits to commence commercial mining
and processing operations. Global shall pay the governmental fees and
additional compensation for these services, as mutually agreed.
4. This Agreement is subject to Global's satisfactory completion of the
due diligence review and .final documentation, to include detailed
representations, warranties, and other agreed terms and conditions, to
be completed within sixty days of this Agreement.
5. This is an international agreement which the parties shall implement in
good faith. Any disputes shall not be settled in Armenian courts, but
by a mutually agreed arbitration forum; if the parties do not agree to
an arbitration forum within sixty days of a dispute, all disputes shall
be referred for arbitration to the International Chamber of Commerce in
London, England.
6. This Agreement contains the complete understanding and agreement of the
parties, and no amendment or modification to this Agreement shall be
valid unless expressed in writing and duly executed.
7. The individuals executing this Agreement are authorized to execute and
ensure performance on behalf of their respective parties.
In witness whereof, the parties execute this Agreement as of the date first
written above.
SHA, LLC and for its Participants Global Gold Corporation
- ------------------------ --------------------------
Yurik Lalazarian, Director Robert Garrison, President
- ------------------------- ----------------------
Witness Witness
Exhibit 99.1
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-KSB of Global Gold
Corporation (the "Company") on Form 10-KSB for the year ended December 31, 2002
as filed with the Securities and Exchange commission on the date hereof (the
"Report"), I, Drury J. Gallagher, Chairman, Chief Executive Officer and
Treasurer of the Company, certify, pursuant to 18 U.S.C. ss 1350, as adopted
pursuant to ss 906 of the Sarbanes-Oxley Act of 2002, that:
1. The report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934: and
2. The information contained in the report fairly presents, in all
material respects, the financial condition and results of operations
of the Company as of and for the period covered by the Report.
April 8, 2003 /s/ Drury J. Gallagher
-----------------------
Drury J. Gallagher,
Chairman, Chief Executive
Officer and Treasurer
EXHIBIT 99.2
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-KSB of Global Gold
Corporation (the "Company") on Form 10-KSB for the year ended December 31, 2002
as filed with the Securities and Exchange commission on the date hereof (the
"Report"), I, Robert A. Garrison, President, Chief Financial Officer and Chief
Operating Officer of the Company, certify, pursuant to 18 U.S.C. ss 1350, as
adopted pursuant to ss 906 of the Sarbanes-Oxley Act of 2002, that:
3. The report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934: and
4. The information contained in the report fairly presents, in all
material respects, the financial condition and results of operations
of the Company as of and for the period covered by the Report.
April 8, 2003 /s/ Robert A. Garrison
-----------------------
Robert A. Garrison,
President, Chief Financial Officer
and Chief Operating Officer