Second Quarter Report 10QSB
June 30, 2005
WARNING
This filing is best viewed using a larger screen resolution (greater than 580px). Viewing this page at a lower resolution will be difficult.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission file number 02-69494
GLOBAL GOLD CORPORATION
(Exact name of small business issuer in its charter)
DELAWARE 13-3025550
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
104 Field Point Road, Greenwich, CT 06830
(Address of principal executive offices)
(203) 422-2300
(Issuer's telephone number)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
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 whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]. Not applicable.
As of August 12, 2005 there were 17,551,301 shares of the issuer's Common Stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X].
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet - as of June 30, 2005 ..........3
Condensed Consolidated Statements of Operations for the three
months and six months ended June 30, 2005 and June 30, 2004
and for the development stage period from January 1, 1995
through June 30, 2005 ...............................................4
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 2005 and June 30, 2004 and for the
development stage period from January 1, 1995 through
June 30, 2005 .......................................................5
Notes to Condensed Consolidated Financial Statements (Unaudited) ...6-8
Item 2. Management's Discussion and Analysis or Plan of Operation ..........8-9
Item 3. Controls and Procedures ..............................................9
PART II OTHER INFORMATION
Item 1. Legal Proceedings ....................................................9
Item 2. Changes in Securities ................................................9
Item 3. Defaults Upon Senior Securities ......................................9
Item 4 Submission of Matters to a Vote of Security Holders .................10
Item 5 Other Information ...................................................10
Item 6. Exhibits and Reports on Form 8-K ....................................10
SIGNATURES
CERTIFICATIONS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Unaudited Condensed Consolidated Balance Sheet
June 30, 2005
ASSETS
CURRENT ASSETS: Cash ................................................$ 572,666
MINE ACQUISITION COSTS .................................................449,804
----------
$1,022,470
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES: Accounts payable and accrued expenses...........$ 46,579
STOCKHOLDERS' EQUITY
Common stock $0.001 par, 100,000,000 shares authorized,
13,461,301 shares issued and outstanding...............13,461
Additional paid-in-capital ..................................8,190,154
Unearned compensation.........................................(501,320)
Accumulated deficit.........................................(2,907,648)
Deficit accumulated during the development stage ...........(3,818,756)
-----------
TOTAL STOCKHOLDERS' EQUITY ...........................975,891
-----------
$1,022,470
==========
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Unaudited Condensed Consolidated Statements of Operations
Cumulative
amount from
April 1, 2005 April 1, 2004 January 1, 2005 January 1, 2004 January 1, 1995
through through through through through
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004 June 30, 2005
------------- ------------- ------------- ------------- --------------
REVENUES $ -0- $ -0- $ -0- $ -0- $ -0-
EXPENSES:
Selling general and administrative 200,822 194,320 406,808 405,363 2,958,185
Mine exploration costs 117,918 4,500 163,120 30,905 394,412
Legal fees 48,473 17,460 49,710 19,541 766,637
Write-off investment in Georgia
mining interests --- --- 135,723
Gain on sale of interest in Global
Gold Armenia --- --- (268,874)
(Gain) loss on sale of interest in
Sterlite Gold Ltd. --- (6,607) --- (8,748) (50,767)
Gain on extinguisment of debt --- --- --- --- (110,423)
Interest Income (2,407) --- (5,578) --- (6,137)
------------- ------------- ------------- ------------- --------------
TOTAL EXPENSES 364,806 209,673 614,060 447,061 3,818,756
NET LOSS (364,806) (209,673) (614,060) (447,061) (3,818,756)
============= ============= ============= ============= ==============
NET LOSS PER SHARE-BASIC AND
DILUTED $(0.03) $(0.02) $(0.05) $(0.05)
============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING
13,461,301 9,802,345 13,409,927 9,805,239
============= ============= ============= =============
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Unaudited Condensed Consolidated Statements of Cash Flows
Cumulative Amount
from
January 1, 2005 January 1, 2004 January 1, 1995
through through through
June 30, 2005 June 30, 2004 June 30, 2005
----------------- ------------------ ------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss................................................. $ (614,060) $ (447,061) $ (3,818,756)
Adjustments to reconcile net loss
to net cash used in operating activities:
Provision for bad debts............................. --- --- 325,000
Amortization of unearned compensation............... 131,914 164,842 614,472
Gain on extinguishment of debt................ --- --- (110,423)
Gain on sale of Armenia mining
interests......................................... --- --- (268,874)
Write-off of mining investment in
Georgia........................................... --- --- 135,723
(Gain) loss on sale of investment
in common stock of Sterlite Gold Ltd --- (8,748) (50,767)
Non-cash expenses related to issuance of
common stock...................................... --- --- 174,500
Changes in assets and liabilities:
Organization costs.................................. --- --- (9,601)
Accounts receivable and deposits.................... --- --- (154)
Accounts payable and accrued expenses............... 40,137 37,397 387,196
----------------- ------------------ ------------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (442,009) (253,570) (2,621,684)
----------------- ------------------ ------------------
NET CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of Armenia mining
interests......................................... --- --- 1,891,155
Proceeds from sale of investment in
common stock of Sterlite Gold Ltd................. --- 34,879 246,767
Investment in certain mining interests
- net of financing................................ --- --- (153,494)
Mine acquisition costs.............................. 407 (32,678) (1,239,035)
----------------- ------------------ ------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 407 2,201 745,393
----------------- ------------------ ------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from private placement
offering.......................................... --- --- 2,484,073
Repurchase of common stock.......................... --- --- (25,000)
Due to related parties.............................. --- 111,000 (22,218)
Sale of warrants.................................... --- --- 650
Warrants exercised.................................. --- --- 100
----------------- ------------------ ------------------
NET CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES --- 111,000 2,437,605
----------------- ------------------ ------------------
NET INCREASE (DECREASE) IN CASH.......................... (441,602) (140,369) 561,314
CASH AND CASH EQUIVALENTS - beginning of
period.............................................. 1,014,268 147,247 11,352
----------------- ------------------ ------------------
CASH AND CASH EQUIVALENTS - end of period................ $ 572,666 $ 6,878 $ 572,666
----------------- ------------------ ------------------
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid........................................ $ 0 $ 0 $ 2,683
================= ================== ==================
Interest paid............................................ $ 0 $ 0 $ 16,502
================= ================== ==================
Noncash Transactions:
Stock issued for unearned compensation................... $ 425,000 $ 125,000 $ 1,247,500
================= ================== ==================
Stock issued for closing fees............................ $ --- $ --- $ 45,000
================= ================== ==================
Stock forfeiture......................................... $ --- $ --- $ 131,708
================= ================== ==================
Stock issued for mine acquisition costs.................. $ --- $ --- $ 113,197
================= ================== ==================
Stock issued in exchange for accounts payable............ $ --- $ 76,608 $ 138,500
================= ================== ==================
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 2005
1. BASIS FOR PRESENTATION
The accompanying financial statements present the development stage activities of the Company and its wholly owned subsidiaries from January 1, 1995, the period commencing the Company's operations as Global Gold Corporation, through June 30, 2005.
The accompanying financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information and instructions to Form 10-QSB. In the opinion of management, all necessary adjustments (which include only normal recurring adjustments) have been made to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included in the December 31, 2004 annual report on Form 10-KSB. The results of operations for the six-month period ended June 30, 2005 are not necessarily indicative of the operating results to be expected for the full year ended December 31, 2005.
2. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Officers and Directors On January 11, 2005, the Company amended and extended for two years ending June 30, 2008, the Employment Agreement with Van Krikorian, who became President and General Counsel as of October 1, 2004. The amended compensation terms included an increase in base compensation to $180,000 per year and the granting of an additional 600,000 shares as a stock award subject to a substantial risks of forfeiture on the same terms as provided in the original Employment Agreement.
The Company issued 50,000 shares to each of the five Directors as of January 11, 2005 at the fair market value of $0.50 per share, as determined by the Board of Directors. Such amounts have been reflected as unearned compensation and are being amortized into compensation expense on a straight-line basis over the term of the agreements. Compensation expense for the six months ended June 30, 2005 and 2004 were $272,264 and $314,842, respectively.
The amount of total unearned compensation amortized for the six months ended June 30, 2005 and 2004 was $131,914 and $164,842, respectively.
3. EQUITY TRANSACTIONS
On January 11, 2005, the Company amended and extended for two years ending June 30, 2008, the Employment Agreement with Van Krikorian, who became President and General Counsel as of October 1, 2004. The amended compensation terms included an increase in base compensation to $180,000 per year and the granting of an additional 600,000 shares as a stock award subject to a substantial risks of forfeiture on the same terms as provided in the original Employment Agreement.
6
The Company issued 50,000 shares to each of the five Directors as of January 11, 2005 at the fair market value of $0.50 per share, as determined by the Board of Directors. Such amounts have been reflected as unearned compensation and are being amortized into compensation expense on a straight-line basis over the term of the agreements.
4. AGREEMENTS
On March 28, 2005, the Company's subsidiary Minero Global Chile Limitada entered an agreement with Adrian Soto Torino to provide mine preparation work and mining on the previously mined vein structure at the Santa Candalaria mine in Region III of Chile.
5. SUBSEQUENT EVENTS -
(a)On July 13, 2005, the Company held its annual shareholders meeting at its offices pursuant to the June 10, 2005 notice and proxy statement. By a vote of 11,735,202 shares for, 180 shares against, and 150 shares abstaining, (i)Messrs. Nicholas Aynilian, Drury J. Gallagher, Ian Hague, Van Krikorian, and Michael Mason were reelected as directors; and (ii) Allen G. Roth, PA was appointed as the Company's auditor for the fiscal year 2005.
(b) On July 13, 2005, the Company's subsidiary, Minero Global Chile Limitada, began small scale production at the Santa Candalaria mine pursuant to the March 28, 2005 contract.
(c) On July 13, 2005, the Company named Lester Caesar, formerly Chief Accounting Officer, as its Chief Financial Officer.
(d) On July 29, 2005, the Company closed a private placement raising three million dollars to fund acquisition of the Tukhmanuk mining property in Armenia as well as to further its current mining and exploration projects and for working capital. The transaction involved the issuance of four million shares of common stock at $0.75 per share. Each new share issued carries a warrant to purchase one half of one additional share at $1.50 per share. The warrants are exercisable on or before July 31, 2007. Subscribers to shares and their corresponding amounts purchased were: Firebird Global Master Fund, Ltd. to 1,000,000 shares; Firebird Republics Fund, Ltd. to 500,000 shares; Firebird Avrora Fund, Ltd. to 500,000 shares; East Capital to 666,667 shares; Falcon QP LP to 533,333 shares; Dover Industries Corp. to 333,333 shares; Bank Sal Oppenheim jr & Cie (Switz) Ltd to 200,000 shares; Richard Potapchuk to 75,000 shares; Holmes Revocable Trust to 50,000 shares; Ralph M. Richart to 50,000 shares; David Parry to 50,000 shares; and Dan Pedersen to 41,667 shares.
(e) On August 1, 2005, the Company's subsidiary Global Gold Mining, LLC ("GGM") entered an agreement to acquire the Tukhmanuk gold mining property and surrounding exploration sites. The Tukhmanuk property is adjacent to Global Gold's Hankavan property in central Armenia, between the Aragatsotn and Kotayk provinces. In addition to the central property, the acquisition includes a 200,000 tonne per year capacity plant and the Damlik, Mirak, Grebnevaya, Ozyornaya, Emin Yourt, Voskedzor, and Dalma exploration sites. The property is held by the Armenian company Mego-Gold, LLC, ("MG") for which GGM, agreed to pay $3,500,000. GGM is initially paying $1,500,000 for 51% of MG and paying the balance of the purchase price for the remaining 49% within two years. The transaction closed on August 8, 2005 when GGM transferred the first $1,500,000 payment to the sellers in exchange for 51% of MG and issuance of the necessary mining licenses by the Armenian Government to MG.
7
(f) On August 1, 2005, the Company's subsidiary GGM entered three-year employment agreements in Armenia with Messrs. Simon Cleghorn and Frank Pastorino, as Director of Mining and Exploration and Director of Business Operations, respectively. The terms of both contracts are identical, with compensation at $100,000 per year and restricted stock awards of the Company's shares of 45,000 each vesting at a rate of 15,000 shares per year. Each contract is for three years and provides that each employee shall devote 80% of his available time to his duties. Mr. Cleghorn received his Bachelor of Engineering in Mineral Exploration and Mining Geology with honors from the Western Australia School of Mines in 1989 and has worked in Armenia since 1997. Mr. Pastorino received his Bachelor of Science degree in 1999 and Masters of Business Administration degree in 1999 both from the University of Louisville and has worked in Armenia since 2002, starting as a US Peace Corps volunteer.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
When used in this discussion, the words "expect(s)", "feel(s)", "believe(s)", "will", "may", "anticipate(s)" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, and are urged to carefully review and consider the various disclosures elsewhere in this Form 10-QSB.
RESULTS OF OPERATIONS
SIX-MONTHS ENDED JUNE 30, 2005 AND SIX-MONTHS ENDED JUNE 30, 2004
During the six-month period ended June 30, 2005, the Company's administrative and other expenses were $619,638, which represented an increase of $163,829 from $455,809 in the same period last year. The expense increase was primarily attributable to higher legal expense of $30,169, insurance expense of $23,841, and mine exploration costs of $132,215 due to increased activity resulting from project development in Armenia and Chile.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2005, the Company's total assets were $1,022,470, of which $572,666 consisted of cash or cash equivalents.
The Company's plan of operation for the calendar year 2005 is:
(a) To continue exploration activities and mining with regard to the Santa Candalaria Chilean mining properties purchased in February 2004;
(b) To develop the Hankavan and Marjan mining properties in Armenia acquired in December 2003, to develop the Tukhmanuk mining property and the surrounding exploration sites, to engage in further exploration in Armenia, and to pursue and consummate the acquisition of the Armenia mining properties from Sipan 1, LLC, and develop those properties through a joint venture;
(c) To review and possibly acquire additional mineral bearing properties; and
(d) Pursue additional financing through private placements or joint ventures.
The Company retains the right until December 31, 2009 to elect to participate at a level of up to twenty percent with Sterlite Gold Ltd. or any of its affiliates in any exploration project undertaken in Armenia.
8
The Company also anticipates spending additional funds in Armenia for further exploration and development as well as acquisition of properties. The Company anticipates that it may have to issue additional equity or debt to finance its planned activities. The Company anticipates that it might obtain additional financing 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. If the Warrants were exercised in full, the Company would receive $82,500 in gross proceeds. In addition, the Company anticipates that it might obtain additional financing from the holders of its Warrants to purchase 3,000,000 million shares of Common Stock of the Company at an exercise price of $0.75 per share, which expire on December 1, 2006. If these Warrants were exercised in full, the Company would receive $2,250,000 in gross proceeds. The Company anticipates that it might obtain additional financing from the holders of its Warrants to purchase 2,000,000 shares of Common Stock of the Company at an exercise price of $1.50 per share, which expire on July 31, 2007. If these Warrants were exercised in full, the Company would receive $3,000,000 in gross proceeds.
The Company does not intend to engage in any research and development during 2005 and does not expect to sell any plant or significant equipment; it does anticipate purchasing processing plant and equipment assets.
The Company has been able to continue its development stage activities based upon its receipt of funds from the issuance of equity securities and shareholder loans, and by acquiring assets or paying expenses by issuing stock. The Company's continued existence is dependent upon its continued ability to raise funds through the issuance of our securities or borrowings. Management's plans in this regard are to obtain other debt and equity financing until profitable operation and positive cash flow are achieved and maintained. Although management believes that it will be able to secure suitable additional financing for the Company's operations, there can be no guarantee that such financing will continue to be available on reasonable terms, or at all.
Item 3. Controls and Procedures.
As of the end of the period covered by 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 Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934). 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 Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within 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 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
9
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
a. The following documents are filed as part of this report:
o Unaudited Condensed Financial Statements of the Company, including Balance Sheet as of June 30, 2005; Statements of Operations and Statements of Cash Flows for the three-months and six months ended June 30, 2005 and June 30, 2004, and for the development stage period from January 1, 1995 through June 30, 2005 and the Exhibits which are listed on the Exhibit Index.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
Exhibit 31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1 Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2 Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 10.1 August 1, 2005 Employment Agreement of Simon Cleghorn
Exhibit 10.2 August 1, 2005 Employment Agreement of Frank Pastorino
(b) Reports on Form 8-K filed during the quarter ended June 30, 2005
Current Reports on Form 8-K, filed with the Securities and Exchange Commission on July 15, 2005, under Item 8.01 of Form 8K and on August 3, 2005 under Items 1.01, 3.02, and 9.01 of Form 8K.
10
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GLOBAL GOLD CORPORATION
By: /s/ Drury J. Gallagher
August 12, 2005 -------------------------
Drury J. Gallagher,
Chairman, Chief Executive
Officer and Treasurer
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 1st day of August, 2005 between Global Gold Mining, LLC , a Delaware limited liability company (the "Company"), and Simon Cleghorn , an individual citizen of Australia resident in Armenia ( Passport number E7057507) residing in Yerevan, Armenia (the "Employee") (the "Agreement").
W I T N E S S E T H:
WHEREAS, the Company needs the active service of the Employee in light of the Company's efforts to acquire, develop, and operate mining projects;
WHEREAS, the Company and the Employee desire to enter into an employment agreement on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES.
(a) The Company hereby employs the Employee, and the Employee hereby accepts and agrees to such employment, as Director of Exploration and Mining and, in such capacity, to be responsible for exploration, mining, development, and related operations, work necessary for the Company in Armenia and such other places as may be assigned from time to time. The Employee shall, subject to the supervision and control of the Company's Regional Director, Mr. Ashot Boghossian, perform such executive duties and exercise such supervisory powers over and with regard to the business of the Company and any present and future subsidiaries, consistent with such position, and such additional duties as specified or as may be assigned to him from time to time by the Regional Director or the Managers of the Company.
(b) The Employee agrees to devote 80% of his available business time to the performance of his duties hereunder. The Employee may provide services to other organizations, on a compensation or pro bono basis, provided that such services do not constitute more than 20% of his available business time.
2. TERM. The term of this Agreement shall be for a period of three years commencing on August 1, 2005 (or such other date as mutually agreed by the parties) and ending on July 31, 2008, 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 Company shall deliver to the Employee as base compensation for the term of this Agreement a total of Forty Five Thousand (45,000) shares of the common stock of Global Gold Corporation pursuant to the terms of the Restricted Stock Award attached hereto as Exhibit A, (the "Restricted Stock Award"). In addition to the foregoing, the Company shall pay to the Employee, as base compensation, the sum of $100,000 (or AMD equivalent for payments in Armenia) for each 12-month period commencing on and after August 1, 2005 during the term of this Agreement, payable in equal monthly installments of $8,333 in arrears on the last day of each month. The Company shall pay income, social security and other employment related taxes imposed by Armenian law. Employee shall be responsible for any other applicable taxes. The Company shall act as tax agent. Employee shall provide all necessary information for the Company to fulfill its role as tax agent.
(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 Managers, or any committee thereof duly authorized by the Board to make such determination, based upon qualitative and quantitative goals determined by the Board of Managers, 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 80% for the Company 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.
4. WORKING FACILITIES. The Company shall provide an office for the Employee for the performance of his services hereunder, and will provide such other facilities and services commensurate with the Company's needs as are reasonably necessary for the performance of his duties hereunder, as determined by the Regional Director and Managers of the Company.
5. BENEFITS. During the term of this Agreement, the Company shall provide to the Employee insurance covering life, health, disability, and indemnity for activities taken in good faith on the Company's behalf.
6. 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 Company upon the consent of the Company Managers. 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. The Company, at its discretion, may also grant short term unpaid leave.
7. TERMINATION.
(a) Early Termination by Company for Cause. During the term of this Agreement, the Employee's employment may be terminated by the Company for Cause (as defined herein) only by the affirmative vote of 100% of all of the members of the Board of Managers of the Company 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 Managers) 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 Managers, 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 Company;
(ii) The arrest, filing of charges or conviction of the Employee for a crime involving the Company or moral turpitude;
(iii) The refusal or inability by the Employee, continued for at least 14 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 Regional Director or the Board of Managers of the Company;
(iv) Willful and unexcused neglect by the Employee of his employment duties under this Agreement continued for at least 14 days after written warning;
(v) Any other material breach by the Employee of the provisions of this Agreement;
(vi) Curtailment in project scope, implementation, or funding; or
(vii) Other cases as provided in Armenian law.
Pending termination, the Company may suspend Employee at will. Subject only to a final determination by dispute resolution procedure pursuant to the provisions of Section 11 of this Agreement, the Board of Managers' 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 Armenian court of respective jurisdiction, he must commence a court proceeding within 30 days after receipt of written notice of the Board of Managers' determination. If the Employee fails to take such action within such period, he will be deemed conclusively to have waived his right to adjudication of the termination of his employment hereunder.
(b) Termination by Employee. In the event that the Company shall default in the performance of any of its obligations under this Agreement in any material respect, and shall not cure such default within 10 days of receipt by the Company 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 7(b), the Employee shall be entitled to receive, as liquidated damages and not as a penalty, one month'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 7(b) hereof and subject to
Section 7(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 7(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 Managers of the Company, the Company shall have the right to terminate this Agreement, by giving 10 days prior written notice to the Employee, provided that the Company 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 7(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 Company shall be applied against and shall reduce the amount of the base compensation payable by the Company under this Section 7(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 three months salary plus the life insurance benefits provided to the Employee, if any.
(e) Certain Definitions.
(i) Any termination of the Employee's employment by the Company 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 Company.
(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 7(b) or 7(c) hereof, the Company shall maintain in full force and effect, at the Employee's expense, 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 Company shall have no obligation to provide any substitute benefits for the Employee.
8. 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 Managers of the Company, disclose to any person, other than an employee of the Company 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 Company'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 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 Company is a party. These obligations of confidentiality are in addition to, not in place of any other applicable confidentiality obligations.
9. 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, the Company shall have the following rights and remedies:
(a) to obtain an injunction restraining any violation or threatened violation of the confidentiality provisions or any other appropriate decree of specific performance by any court having jurisdiction, it being acknowledged and agreed by the Employee that the services rendered, and to be rendered to the Company by him as an Employee and as legal counsel, are of a special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company; and
(b) to require the Employee to account for and pay over to the Company 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 confidentiality provisions, and the Employee hereby agrees to account for and pay over the Benefits to the Company.
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 Company at law or in equity.
10. DISPUTE RESOLUTION.
(a) Venue and Choice of Law. . In the event of any disagreement or controversy arising out of or relating to this Agreement, such controversy or disagreement shall be resolved by the Republic of Armenia courts of respective jurisdiction. This Agreement and the rights of the parties hereunder shall be governed by the Republic of Armenia law without regard to conflicts of law principles.
11. 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 contin-ental United States by registered or certified mail, return receipt requested to the party entitled to receive the same, if to the Company, Global Gold Mining, LLC, 104 Field Point Road, Greenwich, Connecticut 06830, facsimile number (203)422-2330; and if to the Employee, Mr. Simon Cleghorn, Yerevan, Armenia, facsimile number +37410 54 56 98. 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) Entire Agreement; Waiver of Breach. This Agree-ment 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.
(c) 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.
(d) 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.
(e) 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 pro-nouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter.
(f) Severability. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unen-forceability 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.
(g) Amendments. This Agreement may not be amended except in a writing signed by all of the parties hereto.
(h) 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 Mining, LLC
By: __________________ ______________________ Van Z. Krikorian, Manager Simon Cleghorn
CONFIDENTIAL DRAFT EXHIBIT A
Global Gold Corporation
104 Field Point Road
Greenwich, CT 06830
August 1, 2005
Mr. Simon Cleghorn
Yerevan, Armenia
Re: Restricted Stock Award
Dear Mr. Cleghorn:
As consideration for your employment agreement with Global Gold Mining, LLC (the "Company") and as an inducement for your rendering of services to the Company, we hereby grant you Forty five Thousand (45,000) shares of the Common Stock of Global Gold Corporation (the "Corporation"), 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. For the first twelve month period commencing with the date hereof within which you render the services provided herein, you shall become fully vested in one third of the total Shares granted hereunder. For each twelve month period thereafter commencing on August 1, 2006 through August 1, 2008, you shall become fully vested in one third of the total Shares granted hereunder. Thus, if you complete twelve, twenty four, and thirty six months of service as provided hereunder, you shall be vested in 15,000, 30,000 and 45,000 of the Shares granted hereunder, respectively.
2. In the event of your termination of your employment on or before the expiration of the initial twelve month period commencing with the date hereof or any subsequent twelve month period thereafter during the 36-month period commencing with August 1, 2005 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 therefore unless mutually agreed otherwise.
3. (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.
11
(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 Corporation that such registration is not required under the Securities Act of 1933, as amended, and any applicable state securities laws.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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 Corporation, its assigns.
9. This Agreement may not be amended except in a writing signed by all of the parties hereto.
10. Nothing contained herein shall be construed to create an employment agreement between the Corporation or the Company and you or require the Corporation or the Company to employ or retain you under such a contract or otherwise.
11. 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 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 a shareholder related to Firebird Management, LLC, Drury J. Gallagher, Nicholas Aynilian, and 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 Corporation'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.
(c) 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 Corporation.
12. In the event of any conflict between the terms of this Agreement and of the 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
Agreed:
Simon Cleghorn
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 1st day of August, 2005 between Global Gold Mining, LLC , a Delaware limited liability company Armenian Branch (the "Company"), and Frank Pastorino, an individual citizen of United States resident in Armenia ( Passport number 087487025) residing at 25/14 Nalbandyan #83, Yerevan, Armenia (the "Employee") (the "Agreement").
W I T N E S S E T H:
WHEREAS, the Company needs the active service of the Employee in light of the Company's efforts to acquire, develop, and operate mining projects;
WHEREAS, the Company and the Employee desire to enter into an employment agreement on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES.
(a) The Company hereby employs the Employee, and the Employee hereby accepts and agrees to such employment, as Director of Business Operations and, in such capacity, to be responsible for business operations and systems related to exploration, mining, development, and related operations, work necessary for the Company (including procurement, budget preparation, implementation, and oversight) in Armenia and such other places as may be assigned from time to time. The Employee shall, subject to the supervision and control of the Company's Regional Director, Mr. Ashot Boghossian, perform such executive duties and exercise such supervisory powers over and with regard to the business of the Company and any present and future subsidiaries, consistent with such position, and such additional duties as specified or as may be assigned to him from time to time by the Regional Director or the Managers of the Company.
(b) The Employee agrees to devote 80% of his available business time to the performance of his duties hereunder. The Employee may provide services to other organizations, on a compensation or pro bono basis, provided that such services do not constitute more than 20% of his available business time.
2. TERM. The term of this Agreement shall be for a period of three years commencing on August 1, 2005 (or such other date as mutually agreed by the parties) and ending on July 31, 2008, 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 Company shall deliver to the Employee as base compensation for the term of this Agreement a total of Forty Five Thousand (45,000) shares of the common stock of Global Gold Corporation pursuant to the terms of the Restricted Stock Award attached hereto as Exhibit A, (the "Restricted Stock Award"). In addition to the foregoing, the Company shall pay to the Employee, as base compensation, the sum of $100,000 (or AMD equivalent for payments in Armenia) for each 12-month period commencing on and after August 1, 2005 during the term of this Agreement, payable in equal monthly installments of $8,333 in arrears on the last day of each month. The Company shall pay income, social security and other employment related taxes imposed by Armenian law. Employee shall be responsible for any other applicable taxes. The Company shall act as tax agent. Employee shall provide all necessary information for the Company to fulfill its role as tax agent.
(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 Managers, or any committee thereof duly authorized by the Board to make such determination, based upon qualitative and quantitative goals determined by the Board of Managers, 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 80% for the Company 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.
4. WORKING FACILITIES. The Company shall provide an office for the Employee for the performance of his services hereunder, and will provide such other facilities and services commensurate with the Company's needs as are reasonably necessary for the performance of his duties hereunder, as determined by the Regional Director and Managers of the Company.
5. BENEFITS. During the term of this Agreement, the Company shall provide to the Employee insurance covering life, health, disability, and indemnity for activities taken in good faith on the Company's behalf.
6. 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 Company upon the consent of the Company Managers. 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. The Company, at its discretion, may also grant short term unpaid leave.
7. TERMINATION.
(a) Early Termination by Company for Cause. During the term of this Agreement, the Employee's employment may be terminated by the Company for Cause (as defined herein) only by the affirmative vote of 100% of all of the members of the Board of Managers of the Company 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 Managers) 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 Managers, 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 Company;
(ii) The arrest, filing of charges or conviction of the Employee for a crime involving the Company or moral turpitude;
(iii) The refusal or inability by the Employee, continued for at least 14 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 Regional Director or the Board of Managers of the Company;
(iv) Willful and unexcused neglect by the Employee of his employment duties under this Agreement continued for at least 14 days after written warning;
(v) Any other material breach by the Employee of the provisions of this Agreement;
(vi) Curtailment in project scope, implementation, or funding; or
(vii) Other cases as provided in Armenian law.
Pending termination, the Company may suspend Employee at will. Subject only to a final determination by dispute resolution procedure pursuant to the provisions of Section 11 of this Agreement, the Board of Managers' 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 Armenian court of respective jurisdiction, he must commence a court proceeding within 30 days after receipt of written notice of the Board of Managers' determination. If the Employee fails to take such action within such period, he will be deemed conclusively to have waived his right to adjudication of the termination of his employment hereunder.
(b) Termination by Employee. In the event that the Company shall default in the performance of any of its obligations under this Agreement in any material respect, and shall not cure such default within 10 days of receipt by the Company 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 7(b), the Employee shall be entitled to receive, as liquidated damages and not as a penalty, one month'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 7(b) hereof and subject to
Section 7(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 7(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 Managers of the Company, the Company shall have the right to terminate this Agreement, by giving 10 days prior written notice to the Employee, provided that the Company 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 7(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 Company shall be applied against and shall reduce the amount of the base compensation payable by the Company under this Section 7(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 three months salary plus the life insurance benefits provided to the Employee, if any.
(e) Certain Definitions.
(i) Any termination of the Employee's employment by the Company 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 Company.
(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 7(b) or 7(c) hereof, the Company shall maintain in full force and effect, at the Employee's expense, 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 Company shall have no obligation to provide any substitute benefits for the Employee.
8. 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 Managers of the Company, disclose to any person, other than an employee of the Company 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 Company'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 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 Company is a party. These obligations of confidentiality are in addition to, not in place of any other applicable confidentiality obligations.
9. 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, the Company shall have the following rights and remedies:
(a) to obtain an injunction restraining any violation or threatened violation of the confidentiality provisions or any other appropriate decree of specific performance by any court having jurisdiction, it being acknowledged and agreed by the Employee that the services rendered, and to be rendered to the Company by him as an Employee and as legal counsel, are of a special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company; and
(b) to require the Employee to account for and pay over to the Company 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 confidentiality provisions, and the Employee hereby agrees to account for and pay over the Benefits to the Company.
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 Company at law or in equity.
10. DISPUTE RESOLUTION.
(a) Venue and Choice of Law. . In the event of any disagreement or controversy arising out of or relating to this Agreement, such controversy or disagreement shall be resolved by the Republic of Armenia courts of respective jurisdiction. This Agreement and the rights of the parties hereunder shall be governed by the Republic of Armenia law without regard to conflicts of law principles.
11. 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 contin-ental United States by registered or certified mail, return receipt requested to the party entitled to receive the same, if to the Company, Global Gold Mining, LLC, 104 Field Point Road, Greenwich, Connecticut 06830, facsimile number (203)422-2330; and if to the Employee, Mr. Frank Pastorino, 25/14 Nalbandyan #83, Yerevan, Armenia, facsimile number +37410 58 98 56. 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) 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.
(c) 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.
(d) 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.
(e) 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 pro-nouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter.
(f) Severability. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unen-forceability 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.
(g) Amendments. This Agreement may not be amended except in a writing signed by all of the parties hereto.
(h) 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 Mining, LLC
By: __________________ ______________________ Van Z. Krikorian, Manager Frank Pastorino
CONFIDENTIAL DRAFT EXHIBIT A
Global Gold Corporation
104 Field Point Road
Greenwich, CT 06830
August 1, 2005
Mr.Frank Pastorino
Yerevan, Armenia
Re: Restricted Stock Award
Dear Mr. Cleghorn:
As consideration for your employment agreement with Global Gold Mining, LLC (the "Company") and as an inducement for your rendering of services to the Company, we hereby grant you Forty five Thousand (45,000) shares of the Common Stock of Global Gold Corporation (the "Corporation"), 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. For the first twelve month period commencing with the date hereof within which you render the services provided herein, you shall become fully vested in one third of the total Shares granted hereunder. For each twelve month period thereafter commencing on August 1, 2006 through August 1, 2008, you shall become fully vested in one third of the total Shares granted hereunder. Thus, if you complete twelve, twenty four, and thirty six months of service as provided hereunder, you shall be vested in 15,000, 30,000 and 45,000 of the Shares granted hereunder, respectively.
2. In the event of your termination of your employment on or before the expiration of the initial twelve month period commencing with the date hereof or any subsequent twelve month period thereafter during the 36-month period commencing with August 1, 2005 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 therefore unless mutually agreed otherwise.
3. (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 Corporation that such registration is not required under the Securities Act of 1933, as amended, and any applicable state securities laws.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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 Corporation, its assigns.
9. This Agreement may not be amended except in a writing signed by all of the parties hereto.
10. Nothing contained herein shall be construed to create an employment agreement between the Corporation or the Company and you or require the Corporation or the Company to employ or retain you under such a contract or otherwise.
11. 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 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 a shareholder related to Firebird Management, LLC, Drury J. Gallagher, Nicholas Aynilian, and 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 Corporation'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.
(c) 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 Corporation.
12. In the event of any conflict between the terms of this Agreement and of the 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
Agreed:
Frank Pastorino
Exhibit 31.1
CERTIFICATIONS
I, Drury J. Gallagher, certify that:
1) I have reviewed this Quarterly Report on Form 10-QSB of Global Gold Corporation for the period ended June 30, 2005;
2) Based on my knowledge, this Quarterly 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 Quarterly Report;
3) Based on my knowledge, the financial statements, and other financial information included in this Quarterly 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 Quarterly 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-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 Quarterly Report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and
c) Disclosed in this Quarterly Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 12, 2005 By: /s/ Drury J. Gallagher
-------------------------
Drury J. Gallagher
Chairman, Chief Executive
Officer and Treasurer
Exhibit 31.2
CERTIFICATIONS
I, Lester Caesar, certify that:
1) I have reviewed this Quarterly Report on Form 10-QSB of Global Gold Corporation for the quarter ended June 30, 2005;
2) Based on my knowledge, this Quarterly 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 Quarterly Report;
3) Based on my knowledge, the financial statements, and other financial information included in this Quarterly 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 Quarterly 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-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 Quarterly Report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and
c) Disclosed in this Quarterly Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 12, 2005 By: /s/ Lester Caesar
-----------------------
Lester Caesar
Chief Financial Officer
Exhibit 32.1
CERTIFICATION 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 Quarterly Report of Global Gold Corporation (the "Company") on Form 10-QSB for the period ending June 30, 2005 as filed with the Securities and Exchange Commission (the "Report"), I, Drury J. Gallagher, the Chairman, Chief Executive Officer and Treasurer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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.
Dated: August 12, 2005
By: /s/ Drury J. Gallagher
-------------------------
Drury J. Gallagher
Chairman, Chief Executive
Officer and Treasurer
Exhibit 32.2
CERTIFICATION 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 Quarterly Report of Global Gold Corporation (the "Company") on Form 10-QSB for the period ending June 30, 2005 as filed with the Securities and Exchange Commission (the "Report"), I, Lester Caesar, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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.
Dated: August 12, 2005
By: /s/ Lester Caesar
-----------------------
Lester Caesar
Chief Financial Officer