Document:

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                                                                    EXHIBIT 10.3

                          EQUIPMENT PURCHASE AGREEMENT

THIS AGREEMENT, made and entered into this 22nd day of August, 1997, by and
between FAUSETT INTERNATIONAL, INC., an Idaho corporation, ("FII") and ATLAS
MINING COMPANY, an Idaho corporation ("Buyer");

     WHEREAS, FII owns equipment used in providing underground mining and
related civil construction contract services in the state of Idaho and
throughout the western United States; and

     WHEREAS, Seller desires to sell and Buyer desires to purchase from Seller
all of the mining equipment, drills, loaders, trucks, tools, vehicles and
supplies upon the terms and conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for the other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties do hereby mutually
agree as follows:

       Agreement to Sell and to Buy. Seller, for itself and its respective
          successors, legal representatives and assigns, hereby agrees to sell
          to Buyer and Buyer, for itself and its successors, legal
          representatives and assigns, hereby agrees to purchase from Seller,
          for the consideration set forth in Section 2 hereof, all of Seller's
          rights, title and interests in and to the property listed in Exhibit
          B, attached hereto. Seller warrants that the specified assets are free
          from all liabilities and encumbrances, except for the secured
          interests of Washington Trust Bank and Orix Credit Alliance as
          described in Exhibit A, attached hereto. Buyer is not assuming any
          underlying debts in a timely and orderly manner.

       Purchase Price and Method of Payment. Subject to the adjustments
          Hereinafter specified, the total purchase price is One Million Four
          Hundred Sixteen Thousand Ninety-Four Dollars ($1,416,094.00) and is
          payable by the Buyer as follows:

          Twenty-five Thousand Dollars ($25,000) upon signing of this agreement,
               the receipt of which is hereby acknowledged as earnest money in
               partial payment of the purchase price for said assets; and

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          The additional sum of Twenty-five Thousand Dollars ($25,000), plus
               Three Hundred Fifty Thousand Dollars ($350,000) of Atlas Mining
               Company Stock issued at the bid price as of the date of this
               agreement to FII, on or before the closing date of this
               agreement; and

          The balance of the purchase price shall be evidenced by a promissory
          Note payable to Seller which provides for payment principal in the
          amount of One Million Sixteen Thousand Ninety-Four Dollars
          ($1,016,094) payable according to the following schedule.

       During the first 12 months of the term of the note, payments will be
          $15,000, payable monthly beginning thirty days after Closing Date.
          Interest will accrue at the rate of eight and three quarters percent
          (8.75%) per annum.

       Should Buyer sell or refinance equipment on Exhibit A (now financed by
          Washington Trust or Orix Credit), then Buyer will pay the additional
          principal payment of the sale or refinance proceeds directly to the
          Creditor herein and Seller will reduce balance of the promissory note
          in the amount equal to that paid by the Buyer directly to the
          creditor.

         At the end of One Year after Closing Date the Buyer shall: Pay
the outstanding principal and accrued interest in one lump payment; or Refinance
the outstanding balance of principal and accrued interest with another lender;
or If after pursuing both SBA and commercial financing for the purpose of
refinancing the outstanding balance of principal and accrued interest the Buyer
is unable to obtain financing the Buyer shall have the option of refinancing
with the Seller the outstanding balance for additional periods of 30 month or 42
month periods, and for periods of one year thereafter. The terms of the notes
shall be of a maximum 7 year amortization and annual percentage rate no more
than the Washington Trust Bank prime rate + .75%.
          The Buyer has the right to prepay the note without penalty.
          The Buyer agrees that all of the equipment listed on Exhibit B shall
              be subject to uniform commercial code security interests and/or
              motor vehicle title liens in favor of the Seller to secure payment
              of the amount due under the promissory note. All security
              interests shall be released by the Seller when the note is
              satisfied.
          Buyer agrees the duty of Seller to consummate this sale is expressly
              contingent upon the approval of the terms hereof by Washington
              Trust Bank and Orix Credit Alliance on or prior to the Closing
              Date.

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       Liabilities Not Assumed. This agreement is intended by the parties to be
          for the sale of equipment only. It is expressly understood and agreed
          that Buyer shall not assume any liability or obligations of any
          nature, financial or otherwise, pertaining to the conduct of the
          business by Seller prior to the date of closing or the ownership by
          Seller of the assets sold to Buyer hereunder.

       Closing. It is hereby agreed that this matter shall be closed at the
          office of HULL, BRANSTETTER & SIMPSON, Wallace, Idaho. All funds and
          instruments necessary to complete the sale and create the contemplated
          security interests will be deposited with them. The Closing Date shall
          be ______________, 1997, unless an earlier date is mutually agreed
          upon.

       Documents to be Delivered by Seller at Closing. At Closing, Seller Shall
          deliver to Buyer, in form and substance satisfactory to Buyer in each
          case:
          Certified copies of resolutions duly adopted by the Board of Directors
               and ratification of shareholders of FII approving the
               transactions referred to herein and authorizing and directing the
               execution of this Agreement and the performance of all
               obligations hereunder;
          Fully executed Bills of Sale and Assignment with full warranties of
               title (except as otherwise shown on Exhibit A hereto)
               transferring to Buyer all of Seller's interests of every kind and
               nature in and to all equipment and supplies as listed in Exhibit
               B;
          All other documents or instruments which Buyer may reasonably require
               to assure full and effective transfer to Buyer of all of Seller's
               property transferred to Buyer pursuant to the terms of this
               agreement.
          Seller agrees to give the Board of Directors of Atlas Mining Company
               voting rights to the stock issued by Atlas as partial payment
               herein, said proxy to be nonrevocable for the term of this
               agreement or extensions thereof.

       Documents to be Delivered by Buyer at Closing.  At Closing, Buyer shall
          deliver to Seller, in form and substance satisfactory to Seller in
          each case;
          Payment in full of that portion of the consideration payable on the
               Date of Closing as specified in Section 2;
          Duly executed promissory note purchase money security agreement and
               uniform commercial code filing instrument covering assets
               purchased in the amount and payable in the manner specified in
               Section 2;

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          Certified copies of resolutions duly adopted by Buyer's Board of
               Directors approving the transactions referred to herein and
               authorizing and directing the execution of this Agreement and the
               performance of all obligations hereunder;
          Such other documents as may be reasonably requested by Seller in order
               to complete the transaction contemplated hereby.

       Possession. Seller shall deliver to Buyer, and Buyer shall take delivery
          of, property to Seller being purchased and sold hereunder on the Date
          of Closing.

       Seller's Covenant, Representations, and Warranties. As an inducement to
          Buyer to enter into this Agreement, Seller for itself and its
          respective representatives, successors and assigns, jointly and
          severally covenant, represent and warrant to Buyer as follows:
The Seller is now, and on the Date of Closing will be, a corporation duly
   organized and in good standing under the laws of the State of Idaho, with the
   power to own, sell and transfer its assets, inventory and properties pursuant
   to this Agreement;
The execution, delivery and performance by the Seller of this Agreement, and
   each other instrument or agreement contemplated by this agreement, are within
   the corporate powers of the Seller, have been duly authorized by all
   necessary corporate action on the part of the Seller (including shareholder
   approval of transactions or documents contemplated by this Agreement with
   respect to which shareholder approval is required by law or each of the
   Seller's governing instruments), and will not violate or constitute a default
   under any provision of law or of the Articles of Incorporation, By-Laws, or
   other contractual obligation of the Seller. This Agreement, together with all
   other instruments or agreements contemplated hereunder, when duly executed
   and delivered, will be the legal, valid and binding obligation of the Seller
   and its heirs or assigns, and is enforceable against the Seller in accordance
   with their respective terms;
Except as specified in Exhibit A, Seller has good and marketable title to their
   respective assets sold hereunder. On the Date of Closing all tangible
   personal property purchased hereunder shall be in as good order and condition
   as on the date of this Agreement, ordinary wear and tear excepted;
TheSeller is not a party to or by any agreement or instrument or subject to any
   charter or corporate resolution or any order, injunction or decree of any
   court or governmental agency affecting the properties being purchased by
   Buyer hereunder;

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Except to the extent otherwise specifically agreed upon under the terms of this
   Agreement, the risk of loss of the properties purchased by the Buyer
   Hereunder shall remain with Seller until the Closing, at which time such risk
   shall become that of the Buyer.

      Buyer's Covenants, Representations and Warranties. As an inducement to
            Seller to enter into this Agreement, Buyer covenants, represents and
            warrants to Seller that:
Buyer is now, and on the Date of Closing will be, a corporation duly organized,
   Validly existing and in good standing under the laws of the State of Idaho,
   with power to own, purchase and acquire Seller's assets pursuant to this
   Agreement; The execution, delivery and performance by Buyer of this
   Agreement, and each other instrument or agreement contemplated by the
   Agreement, are within the corporate powers of Buyer, have been duly
   authorized by all necessary corporate action on the part of Buyer and will
   not violate or constitute default under any provision of the Articles of
   Incorporation, Bylaws or any other contractual obligation of Buyer. This
   Agreement, together with all other instruments or agreements contemplated
   hereunder, when duly executed and delivered, will be the legal, valid and
   binding obligation of Buyer, and will be enforceable against Buyer in
   accordance with their respective terms.
>From and after the time of closing Buyer agrees to continually insure the
   equipment subject to this agreement in the amount equal to the amount owed
   FII from time to time. Buyer further agrees to name FII as an additional
   Insured on such theft and casualty policy and with indemnification paying all
   proceeds of claims directly to FII or its assigns.

     10.    Conditions to Obligation of Buyer.  The obligations of Buyer under
            this Agreement are expressly conditioned upon  satisfaction of the
            following conditions as of the Date of Closing:
All the terms, covenants and conditions of this Agreement to be compiled with
and performed by the Seller on or before the Date of Closing shall have been
fully complied with and performed in all material respects;

Seller shall have afforded to the officers and authorized representatives of
Buyer free and full access to the equipment and supplies of Seller prior to the
Date of Closing in order that Buyer shall have full opportunity to make such
inspections of the assets being purchased hereunder and such other
investigations as it shall desire, including the right of Buyer to have an
independent outside appraisal of the assets in Exhibit B, and Seller shall have
furnished Buyer with such additional financial and operating data and other
information as to the maintenance operation of Seller's assets which Buyer shall
from time to time have reasonably requested prior to the Date of Closing.

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     11.    Brokerage.  Seller  and  Buyer  warrant  and represent to each other
            that there is  no  brokerage or finder's fee payable to any party in
            connection with the sale o the  assets,  inventory,  and  properties
            provided for in this Agreement.

     12.    Assignment. Prior to the Date of Closing, Buyer may at its option
            assign its interests under this Agreement to a third party without
            the prior consent of Seller. Seller may at its option assign its
            interests under this agreement to a third party without the prior
            written consent of Buyer.

     13.    Miscellaneous.
     All covenants, agreements, representations and warranties contained
            herein Shall survive the execution of this Agreement and the Date of
            Closing hereunder;
     The parties shall execute and deliver such other and further documents
            as may be necessary to implement and consummate this Agreement;
            This Agreement shall be binding upon and inure to the benefit and be
                         enforceable against the parties hereto and their
                         respective successors and assigns, and shall in all
                         respects be governed, enforced and interpreted in
                         accordance with the laws of the State of Idaho;
     Attorney for the Seller is Ben Simpson, Hull Branstetter & Simpson, 416
            River Street, Wallace, Idaho 83873. Each party acknowledges the
            right of the other to have any and all documents reviewed by their
            respective representative.

     All notices, demands and requests required or permitted to be given
            hereunder shall be deemed duly given if and when mailed by certified
            or registered mail, postage prepaid, and, pending the designation in
            writing of another address, addressed to Seller as follows:

                  Fausett International, Inc.
                  1221 W. Yellowstone Avenue
                  Osburn, Idaho 83849

     and addressed as follows:

                  Atlas Mining Company
                  P.O. Box 631
                  Mullan, ID 83846

        (f)    This Agreement and the Exhibits attached hereto contain the
               entire agreement between the parties, superseding in all respects

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               any and all prior oral or written agreements or understandings,
               between the parties hereto pertaining to the sale of Seller's
               equipment purchased and sold hereunder, and shall be amended or
               modified only by written instrument signed by both parties
               hereto. This Agreement may be executed in one or more
               counterparts, each of which shall be deemed an original and all
               of which, taken together, shall constitute one agreement.

     IN WITNESS WHEREOF, each of the parties hereto executed this Agreement on
the day and year first above written.

     SELLER:     Fausett International, Inc.
                 By:  _________________________
                 Its:  ________________________
                 Date:  _______________________

     BUYER:     Atlas Mining Company
                By:  _________________________
                Its:  ________________________
                Date:  _______________________

                                   EXHIBIT "A"

EQUIPMENT: All equipment of Debtor now owned or hereafter acquired including,
but not limited to mining equipment and machinery, together with all parts,
fittings, and accessions at anytime acquired, wherever located.

INVENTORY: All inventory of debtor now owned or hereafter acquired, including,
but not limited to, raw materials, work in process, finished goods and materials
and supplies used or consumed in debtor's business including, but not limited to
drill bits, drill shafts and other consumable mining inventory whether in the
possession of the debtor, warehouseman, bailee, or any other person or wherever
located, and all proceeds and products of debtor's inventory in any form.

CASH AND DEPOSIT ACCOUNTS: All cash and deposit accounts in any form excluding
payroll and tax reserve accounts.

DATED this 11th day of October, 1989.

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Fausett  International,  Inc.

By:________________________________
                    President

By:________________________________
                    Treasurer

Washington  Trust  Bank

By:_________________________________
                    Vice  President

                           FAUSETT INTERNATIONAL, INC.
                           FAUSETT MINE SERVICES, INC.

                                    Exhibit A

ACCOUNTS: All accounts, chattel paper, contracts and contract receivables,
instruments, documents or other writing evidencing a monetary obligation, all
other rights to payments, including, but not limited to, all general intangibles
evidencing or comprising a right to receive payment, including all city, county,
state and federal tax refunds or other receivables due from such sources now or
at anytime hereafter existing whether or not earned by performance arising out
of the conduct of the Debtor's business together with all rights, titles,
security and guaranties of each account including any right to stop in transit
and all security interest, claims and pledges whether voluntary or involuntary
which are pertinent to or affect such accounts and all returned or repossessed
goods sold in inventory. All accounts, chattel paper, instruments general
intangibles, and rights to payment of every kind, now or hereafter owing to
Debtor including but not limited to that certain contract between Debtor and
Pegasus Gold Corporation dated 24th day of June, 1994.

CASH AND DEPOSIT ACCOUNTS: All cash deposit accounts in any form excluding
payroll and tax reserve accounts.

GENERAL INTANGIBLES: All general intangibles (as defined in Article 9 of the
Uniform Commercial Code) now owned or hereafter acquired, together with all
renewals, replacements and/or substitutions therefore or additions thereto, all
rights accruing therefrom and all proceeds thereof.

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FAUSETT  INTERNATIONAL,  INC.

By:_______________________________

By:_______________________________

FAUSETT  MINE  SERVICES,  INC.

By:_______________________________

By:_______________________________

                                   EXHIBIT "A"

EQUIPMENT: All equipment of Debtor now owned or hereafter acquired including,
but not limited to mining equipment and machinery, together with all parts,
fittings, and accessions at anytime acquired, wherever located.

INVENTORY: All inventory of debtor now owned or hereafter acquired, including,
but not limited to, raw materials, work in process, finished goods and materials
and supplies used or consumed in debtor's business including, but not limited to
drill bits, drill shafts and other consumable mining inventory whether in the
possession of the debtor, warehouseman, bailee, or any other person or wherever
located, and all proceeds and products of debtor's inventory in any form.

CASH  AND  DEPOSIT ACCOUNTS: All cash and deposit accounts in any form excluding
payroll  and  tax  reserve  accounts.

DATED this 11th day of October, 1989.

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Fausett  International,  Inc.

By:________________________________
            President

By:________________________________
            Treasurer

Washington  Trust  Bank

By:_________________________________
         Vice  President

                           FAUSETT INTERNATIONAL, INC.
                           FAUSETT MINE SERVICES, INC.

                                    Exhibit A

ACCOUNTS: All accounts, chattel paper, contracts and contract receivables,
instruments, documents or other writing evidencing a monetary obligation, all
other rights to payments, including, but not limited to, all general intangibles
evidencing or comprising a right to receive payment, including all city, county,
state and federal tax refunds or other receivables due from such sources now or
at anytime hereafter existing whether or not earned by performance arising out
of the conduct of the Debtor's business together with all rights, titles,
security and guaranties of each account including any right to stop in transit
and all security interest, claims and pledges whether voluntary or involuntary
which are pertinent to or affect such accounts and all returned or repossessed
goods sold in inventory. All accounts, chattel paper, instruments general
intangibles, and rights to payment of every kind, now or hereafter owing to
Debtor including but not limited to that certain contract between Debtor and
Pegasus Gold Corporation dated 24th day of June, 1994.

CASH  AND  DEPOSIT  ACCOUNTS:  All  cash  deposit accounts in any form excluding
payroll  and  tax  reserve  accounts.

GENERAL INTANGIBLES: All general intangibles (as defined in Article 9 of the
Uniform Commercial Code) now owned or hereafter acquired, together with all
renewals, replacements and/or substitutions therefore or additions thereto, all
rights accruing therefrom and all proceeds thereof.

FAUSETT  INTERNATIONAL,  INC.

By:_______________________________

By:_______________________________

FAUSETT  MINE  SERVICES,  INC.

By:_______________________________

By:_______________________________

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                         ADDENDUM TO PURCHASE AGREEMENT
                              DATED AUGUST 22, 1997

This is to modify the maturity date of the Equipment Purchase Agreement of
August 22, 1998, between Fausett International, Inc. and Atlas Mining Company.

It is mutually agreed that the date of maturity of this agreement be extended to
August 22, 2002. It is mutually agreed that the maturity of the Promissory Note
dated September 30, 1997, negotiated in conjunction with the Equipment Purchase
Agreement also be extended to August 22, 2002.

Signed this ___ day of December, 1998.

---------------------------------
For Fausett International, Inc.

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                                                                    EXHIBIT 10.4

                                STOCK OPTION PLAN
                                       OF
                              ATLAS MINING COMPANY

                                       I.
                                 PURPOSE OF PLAN

The Atlas Mining Company. Stock Option Plan (the "Plan") is intended to advance
the interests of Atlas Mining Company. (the "Company"), its shareholders, and
its subsidiaries by encouraging and enabling selected officers, directors, and
other key employees upon whose judgment, initiative and effort the Company is
largely dependent for the successful conduct of its business, to acquire and
retain a proprietary interest in the Company by ownership of its stock. Options
granted under the Plan are intended to be options which do not meet the
requirements of Section 422 of the Internal Revenue Code of 1986 (the "Code").

                                       II.
                                   DEFINITIONS

2.1      "Administrative Committee" means the Board of Directors or a committee
         appointed by the Board of Directors, pursuant to Article III below,
         administering the Plan.

2.2      "Affiliate" means a "parent corporation" of the Company, as described
         in Section 424(e) of the Code, or a "subsidiary corporation" of the
         Company, as described in Section 424(f) of the Code.

2.3      "Board" means the Board of Directors of the Company.

2.4      "Code" means the Internal Revenue Code of 1986.

2.5      "Common Stock" means the Company's no par value Common Stock.

2.6      "Company" means Atlas Mining Company.

2.7      "Date of Grant" means the date on which an Option is granted under the
         Plan.

2.8      "Disinterested Person" has the meaning defined in Article 3.1(c) of
         this Plan.

2.9      "Option" means an option granted under the Plan.

2.10     "Optionee" means a person to whom an Option, which has not expired, has
         been granted under the Plan.

2.11     "Plan" means this Stock Option Plan.

2.12     "Qualified Successor" means a person or persons entitled under
         Optionee's will or applicable laws of descent and distribution to
         receive Incentive Stock Options held by Optionee at the time of
         Optionee's death. 2.13 "Reorganization" and "Reorganization Agreement"
         have the meanings defined in Article VII of this Plan.

2.13     "Subsidiary" or "Subsidiaries" means a subsidiary corporation or
         corporations of the Company as defined in Section 424 of the Code.

2.14     "Successor" means the legal representative of the estate of a deceased
         Optionee or the person or persons who acquire the right to exercise an
         Option by bequest or inheritance or by reason of the death of any
         Optionee.

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                                      III.
                             ADMINISTRATION OF PLAN

3.1      This Plan shall be administered by the Board of Directors of the
         Company (the "Board") unless a committee of the Board is appointed in
         accordance with Article 3.2 or 3.4(b) below. The Board, or such
         committee if appointed, will be referred to in this Plan as the
         "Administrative Committee."

3.2      The Board may at any time appoint a committee, consisting of not less
         than two of its members, to administer this Plan on behalf of the Board
         in accordance with such terms and conditions not inconsistent with this
         Plan as the Board may prescribe. After it is appointed, the committee
         shall continue to serve until otherwise directed by the Board. The
         Board may appoint additional members to the committee; remove members
         (with or without cause); fill vacancies however caused; and/or remove
         all members of the committee and thereafter directly administer this
         Plan.

3.3      A majority of the members of the Administrative Committee shall
         constitute a quorum; and subject to the limitations of this Article
         III, all actions of the Administrative Committee shall require the
         affirmative vote of members who constitute a majority of a quorum.
         Members of the Administrative Committee who are not Disinterested
         Persons (as defined in Article 3.4(c)) may vote on any matters
         affecting the administration or the grant of Stock Options under the
         Plan; provided, however, that no member shall vote on the granting of a
         Stock Option to himself or herself (but a member may be counted in
         determining the existence of a quorum at a meeting of the
         Administrative Committee during which action is taken with respect to
         the granting of such Stock Option).

3.4      Notwithstanding the foregoing provisions of this Article III, to the
         extent necessary to be exempt from the operation of Section 16(b) of
         the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
         this Plan shall from the effective date of registration until six
         months after the termination thereof, be administered as follows:

         a.       The Board shall administer the Plan directly (regardless of
                  whether a committee of the Board has been appointed under
                  Article 3.2) as long as each member of the Board is a
                  Disinterested Person, and all actions of the Board as the
                  Administrative Committee shall require the affirmative vote of
                  directors who constitute a majority of a quorum.

         b.       If at any time a member of the Board is not a Disinterested
                  Person, the Board shall appoint a committee consisting of two
                  or more of its members, each of whom is a Disinterested
                  Person, to administer this Plan on behalf of the Board. Such
                  committee shall act in accordance with terms and conditions
                  prescribed by the Board to the extent such terms and
                  conditions are not inconsistent with this Plan. Once
                  appointed, the committee shall continue to serve until
                  otherwise directed by the Board. From time to time, the Board
                  may appoint additional members to the committee; remove
                  members (with or without cause); fill vacancies however
                  caused; and/or at any time when all members of the Board are
                  Disinterested Persons, remove all members of the committee and
                  thereafter directly administer this Plan. At no time shall a
                  person who is not a Disinterested Person serve on the
                  committee appointed under this Article 3.4(b), nor shall such
                  committee at any time have fewer than two members.

         c.       The term "Disinterested Person" shall mean a director who,
                  during the one year prior to service as a member of the
                  Administrative Committee or during such service, is not
                  granted or awarded equity securities pursuant to this Plan or
                  any other plan of the Company or any of its Affiliates (as
                  defined in Article 2.2) other than grants or awards that
                  pursuant to Rule 166-3(c)(2)(i) under the Exchange Act will
                  not cause the director to cease to be a "Disinterested
                  Person," as defined in such rule.

3.5      The following provisions shall apply to the Administrative Committee:

         a.       The Administrative Committee shall have the authority to (i)
                  administer this Plan in accordance with its express terms;
                  (ii) determine all questions arising in connection with the
                  administration, interpretation, and application of this Plan,

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                  including all questions relating to the value of the Common
                  Stock; (iii) correct any defect, supply any information and
                  reconcile any inconsistency in such manner and to such extent
                  as shall be deemed necessary or advisable to carry out the
                  purpose of this Plan; (iv) prescribe, amend, and rescind rules
                  and regulations relating to the administration of this Plan;
                  (v) determine the duration and purposes of leaves of absence
                  which my be granted to participants without constituting a
                  termination of employment for purposes of this Plan; and (vi)
                  make all other determinations necessary or advisable for
                  administration of this Plan.

         b.       The authority of the Administrative Committee to administer
                  the Plan shall be exercised consistently with the intent that
                  (i) the Stock Options issued under this Plan qualify under
                  Section 422 of the Code (including any amendments thereof or
                  successor provision similar thereto); and (ii) the Plan be
                  administered in a manner that satisfies the conditions of Rule
                  16b-3(c)(2)(i) under the Exchange Act (including any
                  amendments thereof and any successor provision similar
                  thereto) so that the grant of Stock Options under this Plan,
                  and all other actions taken with respect to the Plan, to the
                  options granted thereunder and to the Common Stock acquired
                  upon exercise of Stock Options, shall to the extent possible
                  be exempt from the operation of Section 16(b) of the Exchange
                  Act.

         c.       All determinations made by the Administrative Committee in
                  good faith on matters referred to in this Article 3.5 shall be
                  final, conclusive, and binding upon all persons. The
                  Administrative Committee shall have all powers necessary or
                  appropriate to accomplish its duties under this Plan.

                                   ARTICLE IV.
                         COMMON STOCK SUBJECT TO OPTIONS

The aggregate number of shares of the Company's Common Stock which may be issued
upon the exercise of Options granted under this Plan and any other stock option
plan adopted by the Company shall not exceed ten percent (10%) of the then
currently issued and outstanding shares of the Company's Common Stock, subject
to adjustment under the provisions of Article VII. The aggregate number of
shares of the Company's Common Stock which may be issued to any one person shall
not exceed five percent (5%) of the then currently issued and outstanding shares
of the Company's Common Stock. The shares of Common Stock to be issued upon the
exercise of Options may be authorized but unissued shares, shares issued and
reacquired by the Company or shares bought on the market for the purposes of the
Plan. In the event any Option shall, for any reason, terminate or expire or be
surrendered without having been exercised in full, the shares subject to such
Option but not purchased thereunder shall again be available for Options to be
granted under the Plan.

                                   ARTICLE V.
                                  PARTICIPANTS

Options may be granted under the Plan to any person who is or who agrees to
become an officer, director, or employee (including officers and employees who
are also directors) of the Company or any of its subsidiaries.

                                   ARTICLE VI.
                         TERMS AND CONDITIONS OF OPTIONS

Any Option granted under the Plan shall be evidenced by an agreement executed by
the Company and the applicable officer or employee and shall contain such terms
and be in such form as the Administrative Committee may from time to time
approve, subject to the following limitations and conditions:

6.1      OPTION PRICE. The Option price per share with respect to each Option
         may be the lowest price allowable under applicable laws and
         regulations.

6.2      PERIOD OF OPTION. The expiration date of each Option shall be fixed by
         the Administrative Committee; but notwithstanding any provision of the
         Plan to the contrary, such expiration date shall not be more than five
         (5) years from the Date of Grant.

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6.3      VESTING OF SHAREHOLDER RIGHTS. Neither an Optionee nor his successor
         shall have any of the rights of a shareholder of the Company until the
         Option has been exercised and the certificates evidencing the shares
         purchased are properly delivered to such Optionee or his successor.

6.4      EXERCISE OF OPTION. Each Option shall be exercisable from time to time
         over a period commencing on the Date of Grant and ending upon the
         expiration or termination of the Option; provided, however, the
         Administrative Committee may by the provisions of any Option agreement
         limit the number of shares purchasable thereunder in any period or
         periods of time during which the Option is exercisable. An Option shall
         not be exercisable in whole or in part prior to the date of shareholder
         approval of the Plan.

6.5      NON-TRANSFERABILITY OF OPTION. No Option shall be transferable or
         assignable by an Optionee, otherwise than by will or the laws of
         descent and distribution and each Option shall be exercisable, during
         the Optionee's lifetime, only by him. No Option shall be pledged or
         hypothecated in any way and no Option shall be subject to execution,
         attachment, or similar process except with the express consent of the
         Administrative Committee.

6.6      TERMINATION OF EMPLOYMENT. Upon termination of an Optionee's employment
         with the Company or with any of its subsidiaries, his Option privileges
         shall be limited to the shares which were immediately purchasable by
         him at the date of such termination and such Option privileges shall
         expire unless exercised by him within 30 days after the date of such
         termination. In the event of termination of an Optionee's employment
         "for cause," his Option privileges shall immediately terminate. The
         granting of an Option to an eligible person does not alter in any way
         the Company's or the relevant subsidiary's existing rights to terminate
         such person's employment at any time for any reason or for no reason,
         nor does it confer upon such person any rights or privileges except as
         specifically provided for in the Plan.

6.7      DEATH OF OPTIONEE. If an Optionee dies while a member of the Board or
         in the employ of the Company or any subsidiary, the Option privileges
         of the estate shall be limited to the shares which were immediately
         purchasable by the Optionee at the date of death and such Option
         privileges shall expire unless exercised by the Optionee's successor
         within one year after the date of death.

                                  ARTICLE VII.
                                   ADJUSTMENTS

7.1      In the event that the outstanding shares of Common Stock of the Company
         are hereafter increased or decreased or changed into or exchanged for a
         different number or kind of shares or other securities of the Company
         or of another corporation, by reason of a recapitalization,
         reclassification, stock split-up, combination of shares, or dividend or
         other distribution payable in capital stock, appropriate adjustment
         shall be made by the Administrative Committee in the number and kind of
         shares for the purchase of which Options may be granted under the Plan.
         In addition, the Administrative Committee shall make appropriate
         adjustment in the number and kind of shares as to which outstanding
         Options, or portions thereof then unexercised, shall be exercisable, to
         the end that the proportionate interest of the holder of the Option
         shall, to the extend practicable, be maintained as before the
         occurrence of such event. Such adjustment in outstanding Options shall
         be made without change in the total price applicable to the unexercised
         portion of the Option but with a corresponding adjustment in the Option
         price per share.

7.2      In the event of the dissolution or liquidation of the Company, any
         Option granted under the Plan shall terminate as of a date to be fixed
         by the Administrative Committee, provided that not less than 30 days
         written notice of the date so fixed shall be given to each Optionee and
         each such Optionee shall have the right during such period to exercise
         his Option as to all or any part of the shares covered thereby
         including shares as to which such Option would not otherwise be
         exercisable by reason of an insufficient lapse of time.

7.3      In the event of a Reorganization (as hereinafter defined) in which the
         Company is not the surviving or acquiring company, or in which the
         Company is or becomes a wholly-owned subsidiary of another company
         after the effective date of the Reorganization, then

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         a.       If there is no plan or agreement respecting the Reorganization
                  ("Reorganization Agreement") or if the Reorganization
                  Agreement does not specifically provide for the change,
                  conversion, or exchange of the shares under outstanding and
                  unexercised stock Options for securities of another
                  corporation, then the Administrative Committee shall take such
                  action, and the Options shall terminate, as provided in
                  Article 7.2; or

         b.       If there is a Reorganization Agreement and if the
                  Reorganization Agreement specifically provides for the change,
                  conversion, or exchange of the shares under outstanding and
                  unexercised stock Options for securities of another
                  corporation, then the Administrative Committee shall adjust
                  the shares under such outstanding and unexercised stock
                  Options (and shall adjust the shares remaining under the Plan
                  which are then available to the Optionee under the Plan, if
                  the Reorganization Agreement makes specific provision
                  therefor) in a manner not inconsistent with the provisions of
                  the Reorganization Agreement for the adjustment, change,
                  conversion, or exchange of such stock and such Options.

         The term "Reorganization" as used in this Article VII shall mean any
         statutory merger; statutory consolidation; sale of all or substantially
         all of the assets of the Company; or pursuant to an agreement with the
         Company, the sale of securities of the Company pursuant to which the
         Company is or becomes a wholly-owned subsidiary of another company
         after the effective date of the Reorganization.

7.4      Adjustments and determinations under this Article VII shall be made by
         the Administrative Committee, whose decisions as to what adjustments or
         determinations shall be made, and the extent thereof, shall be final,
         binding, and conclusive.

                                  ARTICLE VIII.
                         RESTRICTIONS ON ISSUING SHARES

The exercise of each Option shall be subject to the condition that if at any
time the Company shall determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or that the listing,
registration, or qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any state or federal law, or that
the consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, such exercise or the delivery or purchase
of shares pursuant thereto, then in any such event, such exercise shall not be
effective unless such withholding, listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Company.

                                   ARTICLE IX.
                                 USE OF PROCEEDS

The proceeds received by the Company from the sale of Common Stock pursuant to
the exercise of Options granted under the Plan shall be added to the Company's
general funds and used for general corporate purposes.

                                   ARTICLE X.
                  AMENDMENT, SUSPENSION, OR TERMINATION OF PLAN

The Board may at any time suspend or terminate the Plan or may amend it from
time to time in such respects as the Board may deem advisable in order that the
Options granted thereunder may conform to any changes in the law or in any other
respect which the Board may deem to be in the best interest of the Company;
provided, however, that without approval by the shareholders of the Company
representing a majority of the voting power, no such amendment shall (i) except
as specified in Article VII, increase the maximum number of shares for which
Options may be granted under the Plan; (ii) change the provisions of Article
6.01 relating to the establishment of the Option price; (iii) change the
provisions of Article 6.2 relating to the expiration date of each Option; or
(iv) change the provisions of the second sentence of this Article X relating to
the term of this Plan. Unless the Plan shall theretofore have been terminated by
the Board or as provided in Article XI, the Plan shall terminate ten years after
the effective date of the Plan. No Option may be granted during any suspension
or after the termination of the Plan. Except as provided in Article XI, no
amendment, suspension, or termination of the Plan shall, without an Optionee's
consent, alter or impair any of the rights or obligations under any Option
theretofore granted to such Optionee under the Plan.

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<PAGE>

                                   ARTICLE XI
                     Option Agreement and Legend Requirement

Each Stock Option granted hereunder shall be evidenced by a written agreement
executed by the Company and the Optionee. Such agreement shall contain the terms
of the Stock Option specified by Article VI, together with other terms,
conditions, and provisions that the Administrative Committee deems advisable and
that are not inconsistent with the terms and conditions of this Plan. Such
agreement shall also provide that, by accepting a Stock Option granted under
this Plan, the Optionee, for himself or herself, for his or her Qualified
Successor, and for his or her heirs, successors and assigns:

         (i)      Recognizes, agrees and acknowledges that no registration
                  statement under the Securities Act of 1933, as amended (the
                  "1933 Act"), or under any state securities laws, will have
                  been filed as to either the Stock Option or any shares of
                  Common Stock that may be acquired upon exercise of such Stock
                  Option;

         (ii)     Warrants and represents that the Stock Option and any shares
                  of Common Stock of the Company acquired upon exercise of the
                  Stock Option will be acquired and held by the Optionee for the
                  Optionee's own account, for investment purposes only, and not
                  with a view towards the distribution or public offering
                  thereof nor with any present intention of reselling or
                  distributing the same at any particular future time;

         (iii)    Acknowledges and consents to the appearance of a printed
                  legend on the back of each stock certificate representing
                  shares of Common Stock issued upon exercise of the Stock
                  Option, which legend shall read as follows:

                         NOTICE: RESTRICTION ON TRANSFER

                  The securities represented hereby have not been registered
                  under the Securities Act of 1933 or any state securities laws,
                  and may not be offered, sold, transferred, encumbered or
                  otherwise disposed of except upon satisfaction of certain
                  conditions set forth in the Atlas Mining Company Stock Option
                  Plan. Information concerning these restrictions may be
                  obtained from the corporation or its legal counsel. Any offer
                  or disposition of these securities without satisfaction of
                  such conditions will be wrongful and will not entitle the
                  transferee to register ownership of the securities with the
                  corporation. These securities may also be subject to
                  repurchase by the corporation upon certain terms and
                  conditions set forth in said documents.

         (iv)     Agrees not to sell, transfer or otherwise dispose of any
                  shares of Common Stock that may be acquired upon exercise of
                  the Stock Option unless (i) there is an effective registration
                  statement under the 1933 Act covering the proposed disposition
                  and compliance with governing state securities laws, (ii) the
                  Optionee delivers to the Company, at the Optionee's expense, a
                  "no-action" letter or similar interpretative opinion,
                  satisfactory in form and substance to the Company, from the
                  staff of each appropriate securities agency, to the effect
                  that such shares may be disposed of by the Optionee in the
                  manner proposed, or (iii) the Optionee delivers to the
                  Company, at the Optionee's expense, a legal opinion,
                  satisfactory in form and substance to the Company, of legal
                  counsel designated by the Optionee and satisfactory to the
                  Company, to the effect that the proposed disposition is exempt
                  from registration under the 1933 Act and governing state
                  securities laws; and

         (v)      Agrees to indemnify the Company and hold it harmless from and
                  against any loss, claim or liability, including attorney's
                  fees or other legal expenses incurred in the defense thereof,
                  incurred by the Company as a result of any breach by the
                  Optionee of, or any inaccuracy in, any representation,
                  warranty, covenant or other provision contained in such
                  agreement.

                                       98
<PAGE>

If a registration statement under the 1933 Act is hereafter filed with respect
to Stock Options granted or to be granted hereunder and the shares of Common
Stock that may be acquired upon exercise of such Stock Options, then, following
the effectiveness of such registration statement, the provisions in agreements
representing Stock Options that would otherwise be required by this Article XI
may, in the discretion of the Administrative Committee, be modified or
eliminated.

                                  ARTICLE XII.
                 EFFECTIVE DATE OF PLAN AND SHAREHOLDER APPROVAL

The effective date of the Plan is January 13, 1997, the date of its approval by
the Board; provided, however, if the Plan is not approved by the shareholders of
the Company representing a majority of the voting power at the next
shareholders' meeting or if the Plan is not approved by such shareholders before
January 12, 1998, the Plan shall terminate and any Options granted thereunder
shall be void and have no force or effect.

This Plan is adopted this 19th day of November, 1998.

ATLAS MINING COMPANY

BY:                                      BY:
   -------------------------------          ------------------------------------
    William T. Jacobson, President          Marqueta Martinez, Secretary

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