UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
(UNDER SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934)
QUILCHENA RESOURCES, INC.
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(Name of Small Business Issuer in its charter)
Incorporated in the State of Nevada 91-2006414
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(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
101 West 5th Avenue, Vancouver, B.C. V5Y 1H9
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (604) 688 - 3929
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Securities to be registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Capital Shares - $0.001 par value
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(Title of Class)
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QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 2 OF 12
QUILCHENA RESOURCES, INC.
TABLE OF CONTENTS
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PART I
Item 1. Description of Business...........................................................................3
(a) Business Development.........................................................................3
(b) Business of the Company......................................................................3
Item 2. Plan of Operation.................................................................................4
Item 3. Description of Property...........................................................................4
Item 4. Security Ownership of Certain Beneficial Owners and Management....................................5
(a) Security Ownership of Certain Beneficial Owners..............................................5
(b) Security Ownership of Management.............................................................6
(c) Changes in Control...........................................................................6
Item 5. Directors, Executive Officers, Promoters and Control Persons......................................6
(a) Identify Directors and Executive Officers....................................................6
(b) Identify Significant Employees...............................................................7
(c) Family Relationships.........................................................................7
(d) Involvement in Certain Legal Proceedings.....................................................7
Item 6. Executive Compensation............................................................................7
Item 7. Certain Relationships and Related Transactions....................................................8
(a) Relationships with Insiders..................................................................8
(b) Transactions with Promoters..................................................................8
Item 8. Description of Securities.........................................................................8
(a) Common or Preferred Stock....................................................................8
(b) Debt Securities..............................................................................9
(c) Other Securities to be Registered............................................................9
PART II
Item 1. Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters ......9
(a) Market Information...........................................................................9
(b) Holders......................................................................................9
(c) Dividends...................................................................................10
Item 2. Legal Proceedings................................................................................10
Item 3. Changes in and Disagreements with Accountants....................................................10
Item 4. Recent Sale of Unregistered Securities...........................................................10
Item 5. Indemnification of Directors and Officers........................................................10
PART F/S........................................................................................................11
PART III
Items 1 and 2. Index to and Description of Exhibits.......................................................12
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QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 3 OF 12
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(A) BUSINESS DEVELOPMENT
Quilchena Resources, Inc. (the "COMPANY") was incorporated under the laws of the
State of Nevada on March 3, 1999. The Company has not been involved in any
bankruptcy, receivership or similar proceedings. There has been no material
reclassification, merger, consolidation or purchase or sale of a significant
amount of assets not in the ordinary course of the Company's business.
(B) BUSINESS OF THE COMPANY
The Company is a mineral exploration and development company. The Company owns
an option to acquire a 100% undivided interest in the Hi-Ho 1-10 mineral claims,
New Westminster Mining Division, British Columbia, Canada (the "HI-HO CLAIMS").
The Company owns no other assets. An exploration report on the Hi-Ho Claims
prepared by Douglas H. Hopper, Consulting Geologist, dated March 11, 1999,
recommends a geologist and prospector spending seven days examining, mapping,
hand trenching, sampling and possibly staking more ground at the Hi-Ho Claims. A
report following the first phase of exploration on the Hi-Ho Claims would
fulfill the work commitment to hold the Hi-Ho Claims in good standing for three
to four years. The direction a second phase of exploration would take depends on
the economics of developing either an industrial mineral property or a precious
metal property. The estimated cost of the Phase 1 work program is CDN$8,495.00.
At this time, the Company has no products or services. Accordingly, there is no
requirement for any government approval of the Company's principal products or
services.
The Company's current business will not be materially affected by any existing
or probable governmental regulations, including any applicable environmental
laws. The Company's exploration program will be governed by the Mineral
Exploration Code of British Columbia. The purpose of this code is to establish
standards for mineral exploration and development and to manage exploration and
development activities to ensure maximum extraction with a minimum of
environmental disturbance. However, the Mineral Exploration Code will not apply
to the Company provided that the work to be done as part of its exploration
program does not involve any mechanical disturbance of the surface of the CP
Claims. Such exempt work includes prospecting using hand tools, geological and
geochemical surveying, airborne geophysical surveying, ground geophysical
surveying without the use of exposed, energized electrodes, hand trenching
without the use of explosives, and establishment of grid lines that do not
require the felling of trees. If the Company does any work on the CP Claims that
is not exempt it will need to comply with the Mineral Exploration Code and
obtain the applicable permits. At this time, all of the proposed work of the
Company's exploration program is exempt work.
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QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 4 OF 12
The mineral industry is intensely competitive in all its phases. The Company
competes with many companies possessing greater financial resources and
technical facilities than itself for the acquisition of mineral concessions,
claims, leases and other mineral interests as well as for the recruitment and
retention of qualified employees.
No funds have been spent on research and development activities since the date
of the Company's incorporation.
The Company is not a party to any material contracts other than the Option
Agreement and the Assignment Agreement under which the Company acquired its
interest in the Hi-Ho Claims. See Exhibits 6.1 and 6.2
The Company has a total of one employee who is a part time employee.
ITEM 2. PLAN OF OPERATION.
The Company has not had any revenues generated from its business operations
since its incorporation.
The Company's twelve-month plan of operation is to complete the recommended
exploration program on the Hi-Ho Claims. An exploration report on the property
prepared by Douglas H. Hopper, Consulting Geologist, dated March 11, 1999,
recommends a geologist and prospector spending seven days examining, mapping,
hand trenching, sampling and possibly staking more ground at the Hi-Ho Claims. A
report following the first phase of exploration on the Hi-Ho Claims would
fulfill the work commitment to hold the Hi-Ho Claims in good standing for three
to four years. The direction a second phase of exploration would take depends on
the economics of developing either an industrial mineral property or a precious
metal property. The estimated cost of the Phase 1 work program is CDN$8,495.00.
The Company can satisfy its cash requirements for the next 12 months without
having to raise additional funds.
The Company (i) will not be undertaking any product research or development;
(ii) will not be purchasing any plant or significant equipment; and (iii) does
not expect significant changes in the number of its employees.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's sole asset is an exclusive and irrevocable option to acquire a
100% undivided interest in the Hi-Ho Claims. The Hi-Ho Claims are 10 contiguous
mineral claims comprising of 225 hectares (555 acres) located on Garnet Creek on
the north side of the Fraser River some 13 kilometres west of Hope, British
Columbia (121(degrees) 36' West Longitude and 49(degrees) 23' 30' North
Latitude).
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QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 5 OF 12
The Hi-Ho Claims are mineral properties in the early stage of development. The
mineral claims are located in a warm, wet climate resulting in a thick foliage
undergrowth. Soil geochemistry indicates a gold anomaly and the historical data
of the mineral claims indicate a high grade gold mineralization. Drilled talc
deposits occur on all the Hi-Ho Claims. The Hi-Ho Claims are free and clear of
any claims and are in good standing with the applicable regulatory authorities.
All payments to be made on the Hi-Ho Claims have been made, including all
payments to be made to date pursuant to the terms and conditions of the Option
Agreement.
On July 20, 1999, the owner of the Hi-Ho Claims, Gerry Diakow, and Wet Coast
Capital Corporation entered into an Option Agreement for the Hi-Ho Claims. The
purchase price for the 100% undivided interest in the Hi-Ho Claims includes a
payment of CDN$7,500 to the owner, which has been made by Wet Coast Capital
Corporation and the financing of Phase 1 of the recommended work program in the
amount of CDN$8,495.00.
Wet Coast Capital Corporation then assigned all of its interest in the Option
Agreement to the Company in consideration of the payment of $10,000. To exercise
the option and acquire its 100% undivided interest in the Hi-Ho Claims, the
Company must finance the recommended work program by July 20, 2000. The Option
Agreement is silent with respect to default and termination by the owner. The
Option Agreement may only be terminated by the Company.
The Company operates from its offices at 101 West 5th Avenue, Vancouver, British
Columbia, Canada. Sonora Capital Corp. provides space to the Company on a
rent-free basis and it is anticipated this arrangement will remain for at least
another year until December 2000. In the opinion of the management of the
Company, this office space will meet the needs of the Company for the
foreseeable future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (MORE THAN 5%)
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(1) (2) (3) (4)
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER [1] OF CLASS
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Common Dream Weaver Investments Ltd. Glendenning 497,500 9.95%
Capital Shares House, 618 Wicklow Street, Dublin 2
Eireland
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Common Cronwall Investments Ltd. 497,500 9.95%
Capital Shares Suite 95 East Bay Shopping Center,
P.O. Box N-1836, Nassau, Bahamas
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Common Spirit Investments Ltd. 497,500 9.95%
Capital Shares 16 Promenade Saint-Antoine,
1204 Geneva, Switzerland
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Common Lamplighter Investments Ltd. 497,500 9.95%
Capital Shares 88 Ellis Road, Crowthorne Berks,
England RG45 6PN
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Common Strathburn Investments Ltd. 497,500 9.95%
Capital Shares Suite 95 East Bay Shopping Center,
P.O. Box N-1836, Nassau, Bahamas
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Common Dynamic Investments Ltd. 497,500 9.95%
Capital Shares Penthouse Suite, Buckingham Square,
West Bay Road, SMB, Grand Cayman,
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QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 6 OF 12
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Cayman Islands, BWI
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Common Anchor Cove Investments Ltd. 497,500 9.95%
Capital Shares 2 Elyston Court, Howard's Lane, Putney,
London, England SW15 6QH
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Common Aero Atlantic Ltd. 497,500 9.95%
Capital Shares Palm Chambers, P.O. Box 119,
Roadtown, Tortola, BVI
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Common Sonora Capital Corp. 497,500 9.95%
Capital Shares 1000 - 355 Burrard Street,
Vancouver, B.C., V6C 2G8
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Common Castaways Holdings 497,500 9.95%
Capital Shares Palm Chambers, P.O. Box 119,
Roadtown, Tortola, BVI
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[1] The listed beneficial owner has no right to acquire any shares within 60
days of the date of this Form 10-SB from options, warrants, rights,
conversion privileges or similar obligations.
(B) SECURITY OWNERSHIP OF MANAGEMENT
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(1) (2) (3) (4)
TITLE OF CLASS NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNER [1] OF CLASS
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Common Derek Herman 1,000 0.02%
Capital Shares 302, 1825 West 8th Avenue,
Vancouver, B.C., V5E 1E3
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Common Directors and Executive 1,000 0.02%
Capital Shares Officers (as a group)
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[1] The listed beneficial owner has no right to acquire any shares within 60
days of the date of this Form 10-SB from options, warrants, rights,
conversion privileges or similar obligations.
(C) CHANGES IN CONTROL
The Company is not aware of any arrangement that may result in a change in
control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
(A) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS
Mr. Derek Herman is the sole director of the Company and is 46 years old. Mr.
Herman is also the president, secretary and treasurer of the Company. Mr. Herman
has held the positions of sole director, president, secretary and treasurer
since March 4, 1999.
A director of the Company holds office until (i) the next annual meeting of the
stockholders, (ii) his successor is elected and qualified, or (iii) he resigns.
Mr. Herman holds no other directorships in any other reporting company.
The following is Mr. Herman's business experience for the past five years.
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QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 7 OF 12
1987 - 1995 President of DH & Associates (Johannesburg, SA)
1995 - 1998 President of TCD Technologies (Vancouver, B.C.)
1998 - Present Vice President of ACT Technologies Limited (Abbotsford, B.C.)
(B) IDENTIFY SIGNIFICANT EMPLOYEES
Mr. Herman is the Company's only significant employee.
(C) FAMILY RELATIONSHIPS
There are no family relationships among the directors, executive officers or
persons nominated or chosen by the Company to become directors or executive
officers.
(D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
(1) No bankruptcy petition has been filed by or against any business of
which Derek Herman was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time.
(2) Derek Herman has never been convicted in a criminal proceeding and is
not subject to a pending criminal proceeding (excluding traffic
violations and other minor offences).
(3) Derek Herman has never been subject to any order, judgement, or
decree, not subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities.
(4) Derek Herman has never been found by a court of competent jurisdiction
(in a civil action), the Securities Exchange Commission or the
Commodity Futures Trading Commission to have violated a federal or
state securities or commodities law, that has not been reversed,
suspended, or vacated.
ITEM 6. EXECUTIVE COMPENSATION.
The Company has paid no compensation to any of its named executive officers
since the date of incorporation.
<PAGE>
SUMMARY COMPENSATION TABLE
QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 8 OF 12
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Long-term compensation
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Annual compensation Awards Payouts
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Other Securities
annual Restricted underlying All other
compen- stock options/ LTIP compen-
Name and principal Salary Bonus sation awards SARs Payouts sation
position Year ($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
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Derek Herman, CEO 1999 none none none none none none none
Mar 1999-Oct 1999
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Since the Company's incorporation, no stock options, stock appreciation rights,
or long-term incentive plans have been granted, exercised or repriced.
Currently, there are no arrangements between the Company and any of its
directors whereby such directors are compensated for any services provided as
directors. Also, there are no employment agreements between the Company and any
named executive officer.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(A) RELATIONSHIPS WITH INSIDERS
The only material transaction undertaken by the Company since its incorporation
is its acquisition of an interest in the Hi-Ho Claims. No member of management,
executive officer or security holder had any direct or indirect interest in this
transaction.
(B) TRANSACTIONS WITH PROMOTERS
Mr. Derek Herman is the only promoter of the Company. Derek Herman subscribed
for and was issued 1,000 Common Capital Shares of the Company at $0.01 per
share. See Item 4. - Recent Sale of Unregistered Securities. Mr. Herman has not
received any other assets from the Company and does not own any shares
indirectly.
ITEM 8. DESCRIPTION OF SECURITIES.
(A) COMMON OR PREFERRED STOCK
The authorized common stock of the Company is 200,000,000 Common Capital Shares
with a par value of $0.001 per share, of which 5,000,000 shares are issued and
outstanding as of the date of this filing. All of the issued and outstanding
Common Capital Shares are fully paid and non-assessable. There is no preferred
stock authorized.
All shares have equal voting rights and, when validly issued, are entitled to
one vote per share in all matters to be vote upon by the stockholders. The
shares have no pre-emptive, subscription, conversion or redemption rights and
may be issued only as fully paid and non-assessable shares.
<PAGE>
QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 9 OF 12
Cumulative voting in the election of directors is not permitted, which means
that the holders of a majority of the issued and outstanding Common Capital
Shares represented at any stockholder meeting at which a quorum is present, will
be able to elect the entire Board of Directors if they so choose and, in such
event, the holders of the remaining Common Capital Shares will not be able to
elect any directors. In the event of liquidation of the Company, each
stockholder is entitled to receive a proportionate share of the Company's assets
after distribution in full of preferential amounts, if any. Holders of Common
Capital Shares are entitled to share rateable in dividends, as may be declared
from time to time by the Board of Directors in its discretion, from funds
legally available for dividend payments.
There is no provision in the Company's constating documents that would delay,
defer or prevent a change in control of the Company.
(B) DEBT SECURITIES
The Company is not offering any debt securities.
(C) OTHER SECURITIES TO BE REGISTERED
The Company is not registering any other securities of its capital at this time
other than its Common Capital Shares.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
(A) MARKET INFORMATION
The Company's Common Capital Shares do not trade on a public trading market and
is not quoted at the present time.
Currently, there are no Common Capital Shares that (i) are subject to
outstanding options or warrants to purchase, or securities convertible into,
Common Capital Shares; (ii) the Company has agreed to register under the
Securities Exchange Act of 1934, as amended; or (iii) are or have been proposed
to be publicly offered by the Company.
As of the date of this filing, none of the issued and outstanding shares of the
Company's Common Capital Shares are subject to any trading restriction or
limitation under Rule 144 promulgated under the Securities Exchange Act of 1933,
as amended.
(B) HOLDERS
The Company has 32 holders of record of Common Capital Shares as of the date of
this filing.
<PAGE>
QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 10 OF 12
(C) DIVIDENDS
No dividends have been declared on the Company's Common Capital Shares.
Except for the lack of funds, there are no restrictions that limit the ability
of the Company to pay dividends on the Company's Common Capital Shares.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings, and to the best of
the Company's knowledge, the Hi-Ho Claims are not the subject of any pending
legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
The Company's principal independent accountant, Davidson & Company, has not
changed since the date of incorporation and there have been no disagreements
with the Company's principal independent accountant.
ITEM 4. RECENT SALE OF UNREGISTERED SECURITIES.
On March 15, 1999, the Board of Directors authorized the issuance of 5,000,000
Common Capital Shares at $0.01 to private investors for a total offering price
of $50,000. The Company relied upon Section 4(2) of the Securities and Exchange
Act of 1933, as amended, and Rule 504 of Regulation D. This offering was not
accompanied by any general advertisement or any general solicitation. The
Company received from each subscriber a completed and signed subscription
agreement containing certain representations and warranties, including, among
others, that the subscribers had bought the shares for their own investment
account. The 5,000,000 Common Capital Shares were issued for investment purposes
in a "private transaction".
The following is a list of the subscribers that subscribed for shares in the
March 15, 1999 private placement.
NAME OF SUBSCRIBERS
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Dream Weaver Investments Ltd. Sonora Capital Corp. Phil Dubois Russ Isaac
Cronwall Investments Ltd. Castaways Holdings Michael O'Brien Phillip Levinson
Spirit Investments Ltd. Farrel Barwin Don Graham Gary Treisman
Lamplighter Investments Ltd. Bill Turner Serena Sive Kevin Ossip
Strathburn Investments Ltd. Gisele Decker Norman Mammon Sidney Broer
Dynamic Investments Ltd. Zvi Mammon Lorie Stringer Kathy Robinson
Anchor Cove Investments Ltd. Darryl Fain Matt Emory Jonty McNair
Aero Atlantic Ltd. Brandon Barwin Dan Isserow Derek Herman
</TABLE>
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 11 OF 12
Articles Twelve of the Articles of Incorporation and Article 11 of the By-Laws
of the Company set forth certain indemnification rights. The By-Laws of the
Company provide that the Company will indemnify its directors and officers from
any action, suit or proceeding, whether civil, criminal, administrative, or
investigative to the extent that indemnification is legally permissible under
the laws of Nevada. The By-laws further provide that any expenses of the
directors and officers incurred in defending an action, suit, or proceeding must
be paid by the Company as these expenses are incurred and in advance of the
final disposition of the action, suit, or proceeding provided the director or
officer provide an undertaking to repay any amount if a court finds that the
director or officer is not entitled to be indemnified.
The Company may also purchase and maintain insurance for the benefit of any
director or officer who is or was a director or officer of the Company and such
insurance may cover claims for which the Company could not indemnify such
director or officer. Currently, the Company has not purchased any such
insurance.
The By-Laws also provide that the directors may adopt other by-laws regarding
indemnification and may amend the by-laws to provide at all times the fullest
indemnification permitted by the General Corporation Law of the State of Nevada.
The Articles of the Company provide that no director or officer is personally
liable to the Company or its stockholders for damages for breach of fiduciary
duty as a director or officer, with the exception that the directors and
officers may be held liable to the Company or its stockholders for acts or
omissions that involve intentional misconduct, fraud, a knowing violation of
law, or the payment of dividends in violation of the Nevada Revised Statutes.
The Nevada Private Corporations Act provides that the Company may indemnify its
directors and officers if the directors and officers acted in good faith and in
a manner the directors and officers believed to be in the best interest of the
Company and had no reasonable cause to believe the conduct was unlawful.
Except as referred to above, no controlling person, director or officer of the
Company is insured or indemnified by any statute, charter provisions, by-laws,
contract or other arrangement.
PART F/S
The audited financial statements of the Company and related notes which are
included in this registration statement have been examined by Davidson &
Company, Chartered Accountants, and have been included in reliance upon the
opinion of such accountants given upon their authority as an expert in auditing
and accounting.
<PAGE>
AGE>
QUILCHENA RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
(EXPRESSED IN UNITED STATES DOLLARS)
JUNE 30, 1999
<PAGE>
[DAVIDSON & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of
Quilchena Resources, Inc.
(An Exploration Stage Company)
We have audited the accompanying balance sheet of Quilchena Resources, Inc. as
at June 30, 1999 and the related statements of operations, stockholders' equity
and cash flows for the period from incorporation on March 3, 1999 to June 30,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at June 30, 1999 and the
results of its operations and its cash flows for the period from incorporation
on March 3, 1999 to June 30, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that Quilchena
Resources, Inc. will continue as a going concern. As discussed in Note 2 to the
financial statements, unless the Company attains further profitable operations
and/or obtains additional financing, there is substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regards
to these matters are discussed in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
"DAVIDSON & COMPANY"
Vancouver, Canada Chartered Accountants
September 10, 1999
<PAGE>
QUILCHENA RESOURCES, INC.
(An Exploration Stage Company)
BALANCE SHEET
(Expressed in United States Dollars)
AS AT JUNE 30, 1999
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ASSETS
CURRENT
Cash and cash equivalents $ 11,860
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 1,523
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STOCKHOLDERS' EQUITY
Capital stock (Note 4)
Authorized
200,000,000 common shares, par value of $0.001
Issued and outstanding
5,000,000 common shares 5,000
Additional paid in capital 45,000
Subscriptions receivable (37,500)
Deficit accumulated during the exploration stage (2,163)
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Total stockholders' equity 10,337
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Total liabilities and stockholders' equity $ 11,860
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HISTORY AND ORGANIZATION OF THE COMPANY (Note 1)
GOING CONCERN (Note 2)
SUBSEQUENT EVENT (Note 7)
ON BEHALF OF THE BOARD:
"DEREK HERMAN" Director Director
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The accompanying notes are an integral part of these financial statements.
<PAGE>
QUILCHENA RESOURCES, INC.
(An Exploration Stage Company)
STATEMENT OF OPERATIONS
(Expressed in United States Dollars)
CUMULATIVE FROM INCORPORATION ON MARCH 3, 1999 TO JUNE 30, 1999
- --------------------------------------------------------------------------------
EXPENSES
Incorporation costs $ 640
Professional fees 1,523
---------------
LOSS FOR THE PERIOD $ (2,163)
================================================================================
BASIC AND FULLY DILUTED LOSS PER SHARE $ (0.01)
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WEIGHTED AVERAGE SHARES OUTSTANDING 4,500,000
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
QUILCHENA RESOURCES, INC.
(An Exploration Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Expressed in United States Dollars)
PERIOD FROM INCORPORATION ON MARCH 3, 1999 TO JUNE 30, 1999
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Deficit
Accumulated
Common Stock Additional Stock During the
---------------------------- Paid-in Subscriptions Exploration
Shares Amount Capital Receivable Stage Total
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<S> <C> <C> <C> <C> <C> <C>
INCEPTION, MARCH 3, 1999 - $ - $ - $ - $ - $ -
Shares issued for cash 1,250,000 1,250 11,250 - - 12,500
Shares subscribed for 3,750,000 3,750 33,750 (37,500) - -
Loss for the period - - - - (2,163) (2,163)
------------- ------------- ------------- ------------- ------------- -------------
BALANCE AT JUNE 30, 1999 5,000,000 $ 5,000 $ 45,000 $ (37,500) $ (2,163) $ 10,337
=============================================================================================================================
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The accompanying notes are an integral part of these financial statements.
<PAGE>
QUILCHENA RESOURCES, INC.
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
(Expressed in United States Dollars)
CUMULATIVE FROM INCORPORATION ON MARCH 3, 1999 TO JUNE 30, 1999
- --------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN):
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (2,163)
Changes in other operating assets and liabilities
Increase in accounts payable 1,523
---------------
Net cash used in operating activities (640)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock for cash 12,500
---------------
Net cash provided by financing activities 12,500
---------------
CHANGE IN CASH AND CASH EQUIVALENTS DURING THE PERIOD 11,860
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -
--------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,860
================================================================================
CASH PAID DURING THE PERIOD FOR:
Interest expense $ -
Income taxes -
================================================================================
SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, FINANCING AND INVESTING
ACTIVITIES (Note 5)
The accompanying notes are an integral part of these financial statements.
<PAGE>
QUILCHENA RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1999
- --------------------------------------------------------------------------------
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was formed on March 3, 1999 under the Laws of the State of
Nevada and is in the business of exploration and development of mineral
properties. The Company has not yet determined whether its properties
contain mineral resources that may be economically recoverable.
2. GOING CONCERN
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The general business
strategy of the Company is to acquire mineral properties either directly or
through the acquisition of operating entities. The continued operations of
the Company and the recoverability of mineral property costs is dependent
upon the existence of economically recoverable reserves, confirmation of
the Company's interest in the underlying mineral claims, the ability of the
Company to obtain necessary financing to complete the development and upon
future profitable production. The Company has incurred operating losses and
requires additional funds to meet its obligations and maintain its
operations. Management's plan in this regard is to raise equity financing
as required. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from this uncertainty.
================================================================================
1999
- --------------------------------------------------------------------------------
Deficit accumulated during the exploration stage $ (2,163)
Working capital 10,337
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less. These are recorded at cost which
approximates market.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
accounts payable and accrued liabilities. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial
instruments. The fair value of these financial instruments approximate
their carrying values, unless otherwise noted.
FOREIGN CURRENCY TRANSLATION
Translation amounts denominated in foreign currencies are translated into
United States currency at exchanges rates prevailing at transactions dates.
Carrying values of monetary assets and liabilities are adjusted at each
balance sheet date to reflect the exchange rate at that date. Gains and
losses from restatement of foreign currency monetary assets and liabilities
are included in income.
<PAGE>
QUILCHENA RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1999
- --------------------------------------------------------------------------------
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which establishes
accounting and reporting standards for derivative instruments and for
hedging activities. SFAS 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. The Company does not anticipate that
the adoption of the statement will have a significant impact on its
financial statements.
RESOURCE PROPERTIES
Costs of acquisition, exploration, carrying, and retaining unproven
properties are expenses as incurred. Costs incurred in proving and
developing a property ready for production are capitalized and amortized
over the life of the mineral deposit or over a shorter period if the
property is shown to have an impairment in value.
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". A
deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carryforwards.
Deferred tax expenses (benefit) result from the net change during the year
of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
LOSS PER SHARE
Loss per share is computed based on the weighted average number of common
shares and common stock equivalents outstanding during each period, unless
the common stock equivalents are anti-dilutive. For the period ended June
30, 1999, the weighted average number of common shares outstanding were
4,500,000.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee is required to
pay for the stock.
COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income". This statement establishes
rules for the reporting of comprehensive income and its components. The
adoption of SFAS 130 had no impact on total shareholders' equity as of June
30, 1999.
4. CAPITAL STOCK
During the period, the Company issued 5,000,000 common shares under Rule
504 of Regulation D of the Securities Act of 1933, at a price per share of
$0.01, for total proceeds of $50,000. Of this amount, $37,500 was received
subsequent to period end and is included in subscriptions receivable.
<PAGE>
QUILCHENA RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1999
- --------------------------------------------------------------------------------
5. SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, FINANCING AND INVESTING
ACTIVITIES
There were no significant non-cash transactions during the period ended
June 30, 1999.
6. INCOME TAXES
The Company's total deferred tax asset at June 30 is as follows:
================================================================================
1999
- --------------------------------------------------------------------------------
Tax benefit of net operating loss carryforward $ 325
Valuation allowance (325)
-------------
$ -
================================================================================
The Company has a net operating loss carryforward of approximately $2,163.
The Company has provided a full valuation allowance on the deferred tax
asset because of the uncertainty regarding realizability.
7. SUBSEQUENT EVENT
Pursuant to an assignment agreement with Wet Coast Capital Corporation,
dated July 20, 1999, the Company has acquired an option to earn a 100%
interest in the Hi-Ho 1-10 Mining claims located in the New Westminster
Mining Division of British Columbia for the price of US$10,000 (paid).
8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four digits to identify a year. Date-sensitive systems may
incorrectly recognize the Year 2000 as some other date, resulting in
errors. The effects of the Year 2000 Issue may be experienced before, on or
after January 1, 2000 and, if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems
failure which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the Year
2000 Issue affecting the Company, including those related to the efforts of
customers, suppliers or other third parties, will be fully resolved.
<PAGE>
PART III
QUILCHENA RESOURCES, INC. FORM 10-SB PAGE 12 OF 12
ITEMS 1 AND 2. INDEX TO AND DESCRIPTION OF EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C> <C>
Exhibit A 1. Audited Financial Statements for Included
the period ended June 30, 1999
Exhibit 2.1 Corporate Charter Included
Exhibit 2.2 Articles of Incorporation Included
Exhibit 2.3 By-Laws Included
Exhibit 3 Instruments defining the rights of security holders None
Exhibit 5 Voting Trust Agreement None
Exhibit 6.1 Material Contracts - Option Agreement Included
Exhibit 6.2 Material Contracts - Assignment Agreement Included
Exhibit 7 Material Foreign Patents None
Exhibit 12 Additional Exhibits None
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934,as amended, the Company has duly caused this registration statement to be
signed on its behalf by the undersigned, who is duly authorized.
QUILCHENA RESOURCES, INC.
Dated November 16, 1999 By: /S/ "DEREK HERMAN"
----------------------------------
DEREK HERMAN - PRESIDENT
SECRETARY OF STATE
[LOGO]
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that QUILCHENA RESOURCES, INC. did on MARCH 3, 1999 file in this
office the original Articles of Incorporation; that said Articles are now on
file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required by
the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set
my hand and affixed the Great Seal of
State, at my office, in Carson City,
Nevada, On MARCH 4, 1999.
/s/ Dean Heller
----------------------------------------
Dean Heller
Secretary of State
By /s/ Kelly R. Davenport
----------------------------------------
Kelly R. Davenport
Certification Clerk
Filed # C5005-99
MAR 03 1999
In the Office of
Dean Heller
DEAN HELLER
Secretary of State
EXHIBIT 2.1
ARTICLES OF INCORPORATION
OF
QUILCHENA RESOURCES, INC.
**********
The undersigned, acting as incorporator, pursuant to the provisions of the
laws of the State of Nevada relating to private corporations, hereby adopts the
following Articles of Incorporation:
ARTICLE ONE [NAME]. The name of the corporation is:
QUILCHENA RESOURCES, INC.
ARTICLE TWO. [RESIDENT AGENT]. The initial agent for service of process is
Nevada Agency and Trust Company, 50 West Liberty Street, Suite 880, City of
Reno, Country of Washoe, State of Nevada 89501.
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
I. [OMNIBUS]. To have to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations organized
pursuant to the laws under which the corporation is organized and any and
all acts amendatory thereof and supplemental thereto.
II. [CARRYING ON BUSINESS OUTSIDE STATE]. To conduct and carry on its
business or any branch thereof in any state or territory of the United
States or in any foreign country in conformity with the laws of such state,
territory, or foreign country, and to have and maintain in any state,
territory, or foreign country a business office, plant, store or other
facility.
III. [PURPOSES TO BE CONSTRUED AS POWERS]. The purposes specified herein
shall be construed both as purposes and powers and shall be in no wise
limited or restricted by reference to, or inference from, the terms
<PAGE>
of any other clause in this or any other article, but the purposes and powers
specified in each of the clauses herein shall be regarded as independent
purposes and powers, and the enumeration of specific purposes and powers
shall not be construed to limit or restrict in any manner the meaning of
general terms or of the general powers of the corporation; nor shall the
expression of one thing be deemed to exclude another, although it be of like
nature not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority to
issue an aggregate of TWO HUNDRED MILLION (2,000,000,000) COMMON CAPITAL
SHARES, PAR VALUE ONE MILL ($0.001) per share for a total capitalization of TWO
HUNDRED THOUSAND DOLLARS ($200,000.000).
The holders of shares of capital stock of the corporation shall not be
entitled to pre-emptive or preferential rights to subscribe to any unissued
stock or any other securities which the corporation may now or hereafter be
authorized to issue.
The corporation's capital stock may be issued and sold from time to time
for such consideration as may be fixed by the Board of Directors, provided that
the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all
shareholders meetings called for the purpose of electing a Board of Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be
governed by a Board of Directors of no more than eight (8) nor less than one
(1) person. The name and address of the first Board of Director is:
NAME ADDRESS
---- -------
Trent Jordan 355 Burrard Street, Suite 1000
Vancouver, British Columbia
Canda V6C 2G8
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the corporation,
after the amount of the subscription price or par value had been paid in, shall
not be subject to pay debts of the corporation, and no paid up stock and no
stock issued as fully paid up shall ever be assessable or assessed.
2
<PAGE>
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the incorporator of
the corporation is as follows:
NAME ADDRESS
---- -------
Amanda Cardinalli 50 West Liberty Street, Suite 880
Reno, Nevada 89501
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS]. The initial By-laws of the corporation shall be
adopted by its Board of Directors. The power to alter, amend, or repeal the
By-laws, or to adopt new By-laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-laws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meetings of stockholders shall be
held at such place within or without the State of Nevada as may be provided by
the By-laws of the corporation. Special meetings of the stockholders may be
called by the President or any other executive officer of the corporation, the
Board of Directors, or any member thereof, or by the record holder or holders
of at least ten percent (10%) of all shares entitled to vote at the meeting.
Any action otherwise required to be taken at a meeting of the stockholders,
except election of directors, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by stockholders
having at least a majority of the voting power.
ARTICLE ELEVEN. [CONTRACTS OF CORPORATION]. No contract or other
transaction between the corporation any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be
affected or invalidated by the fact that any of the directors of this
corporation are pecuniarily or otherwise interested in, or are directors or
officers of such other corporation. Any director of this corporation,
individually, or any firm of which such director may be a member, may be a
party to, or may be pecuniarily or otherwise interested in any contract or
transaction of the corporation; provided, however, that the fact that he or
such firm is so interested shall be disclosed or shall have been known to the
Board of Directors of this corporation, or a majority thereof; and any director
of this corporation who is also a director or officer of such other
corporation, or who is so interested, may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of this
corporation that shall authorize such
3
<PAGE>
contract or transaction, and may vote thereat to authorize such contract or
transaction, with like force and effect as if he were not such director or
officer of such other corporation or not so interested.
ARTICLE TWELVE. [LIABILITY OF DIRECTORS AND OFFICERS]. No director or
officer shall have any personal liability to the corporation or its
stockholders for damages for breach of fiduciary duty as a director or officer,
except that this Article Twelve shall not eliminate or limit the liability of a
director or officer for (I) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of the Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed here
signature at Reno, Nevada this 2nd ay of March, 1999.
/s/ Amanda Cardinali
----------------------------------------
AMANDA CARDINALI
STATE OF NEVADA }
: SS.
COUNTY OF WASHOE }
On the 2nd day of March, 1999, before me, the undersigned, a NOTARY PUBLIC
in and for the State of Nevada, personally appeared AMANDA CARDINALLI, known to
me to be the person described in and who executed the foregoing instrument, and
who acknowledged to me that she executed the same freely and voluntarily for
the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Margaret A. Oliver
----------------------------------------
NOTARY PUBLIC
Residing in Reno, Nevada
My Commission Expires: [SEAL] MARGARET A. OLIVER
October 10, 2002 Notary Public-State of Nevada
Appointment Recorded in Washoe County
No. 94-5323-2-EXPIRES OCT. 10, 2002
4
<PAGE>
FILED # C5005-99
MAR 03 1999
IN THE OFFICE OF
DEAN HELLER
DEAN HELLER SECRETARY OF STATE
CONSENT TO SERVE AS RESIDENT AGENT
Nevada Agency and Trust Company, located at 50 West Liberty Street, Suite
880, Reno, Nevada 89501, hereby consents to serve as Resident Agent in the
State of Nevada for the following Corporation:
QUILCHENA RESOURCES, INC.
We understand that as agent for the Corporation, it will be our
responsibility to receive service of process in the name of the Corporation; to
forward all mail to the Corporation; and to immediately notify the office of
the Secretary of State in the event of our resignation, or of any changes in
the registered office of the Corporation for which we are an agent.
IN WITNESS WHEREOF, the undersigned authorized representative of The
Nevada Agency and Trust Company has hereunto affixed her signature at Reno,
Nevada this 2nd day of March, 1999.
/s/ Amanda Cardinali
----------------------------------------
AMANDA CARDINALI
STATE OF NEVADA }
: SS.
COUNTY OF WASHOE }
On the 2nd day of March, 1999, before me, the undersigned a NOTARY PUBLIC
in and for the state of Nevada, personally appeared AMANDA CARDINALLI, known to
me to be the person described in and who executed the foregoing instrument, and
who acknowledged to me that she executed the same freely and voluntarily for
the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Margaret A. Oliver
----------------------------------------
NOTARY PUBLIC
Residing in Reno, Nevada
My Commission Expires: [SEAL] MARGARET A. OLIVER
October 10, 2002 Notary Public-State of Nevada
Appointment Recorded in Washoe County
No. 94-5323-2-EXPIRES OCT. 10, 2002
EXHIBIT 2.2
BY LAWS
OF
QUILCHENA RESOURCES INC.
A NEVADA CORPORATION
ARTICLE 1
OFFICES
SECTION 1. The registered office of this corporation is in the city of Reno,
Nevada.
SECTION 2. The corporation may also have offices at other places both within and
without the State of Nevada as the directors may determine or the business of
the corporation may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 1. Annual meetings of the stockholders must be held at the registered
office of the corporation or at any other place within or without the State of
Nevada as the directors may decide. Special meetings of the stockholders may be
held at the time and place within or without the State of Nevada as is stated in
the notice of the meeting, or in a duly executed waiver of notice.
SECTION 2. Annual meetings of the stockholders must be held on the anniversary
date of incorporation each year if it is not a legal holiday and, and if it is a
legal holiday, then on the next secular day following, or at another time as the
directors may decide, at which the stockholders will elect the directors and
transact any other business that is properly before the meeting.
SECTION 3. The president or the secretary may by resolution of the directors or
on the written request of the stockholders owning a majority of the issued and
outstanding shares and entitled to vote, call special meetings of the
stockholders for any purpose unless otherwise prescribed by statute or by the
articles of incorporation. A request must state the purpose of the proposed
meeting.
SECTION 4. Notices of meetings must be written and signed by the president or
vice-president or the secretary or an assistant secretary or by any other person
designated by the directors. The notice must state the purpose for which the
meeting is called and the time and the place, which may be within or without the
State, where it is to be held. A copy of the notice must be either delivered
personally or mailed, postage prepaid, to each stockholder of record entitled to
vote at the meeting not less than ten nor more than sixty days before the
meeting. If it is mailed, it must be directed to a stockholder at the address
that appears upon the records of the corporation and is deemed to be delivered
to the stockholder when it is deposited into the mail. If a stockholder is a
corporation, association or partnership, the notice is deemed to have been
delivered to the stockholder it is delivered personally to an officer of the
corporation or association, or to any member of a partnership. A transferee is
not entitled to notice of a meeting if the stock is transferred after the notice
is delivered and before the meeting is held.
SECTION 5. Business transactions at any special meeting of stockholders are
limited to the purpose stated in the notice.
SECTION 6. The holders of a majority of the stock issued and outstanding and
entitled to vote and present in person or represented by proxy, constitutes a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the articles of incorporation. If
a quorum is not present or represented at any meeting of the stockholders, the
stockholders who are entitled to vote and present in person or represented by
proxy may adjourn the meeting from time to time, without notice other than
announcements at the meeting, until a
<PAGE>
BYLAWS 2 OF 8
quorum is present or represented. Any business may be conducted at the adjourned
meetings that could have been transacted at the meeting as originally notified
if a quorum is present or represented at the adjourned meeting.
SECTION 7. When a quorum is present or represented at any meeting, the vote of
the holders of 10% of the stock having voting power present in person or
represented by proxy is sufficient to elect directors or to decide any question
brought before the meeting unless the statute or the articles of incorporation
specify that the question requires that a different percentage is required to
decide the question.
SECTION 8. Each stockholder of record of the corporation is entitled at each
meeting of the stockholders to one vote for each share standing in his name on
the books of the corporation. Any stockholder may demand that the vote for
directors and any question before the meeting be by ballot.
SECTION 9. At any meeting of the stockholders any stockholder may be represented
and vote by a proxy or proxies appointed by in writing. If the written proxy
designates two or more persons to act as proxies, a majority of the designated
persons present at the meeting, or one if only one is present, has the powers
conferred by the written instruction. No proxy or power of attorney to vote may
be voted at a meeting of the stockholders unless it has been filed with the
secretary of the meeting when required by the inspectors of election. All
questions regarding the qualifications of voters, the validity of proxies, and
the acceptance or rejection of votes must be decided by the inspectors of
election who are appointed by the directors, or if not appointed, then by the
officer presiding at the meeting.
SECTION 10. Any action that may be taken by the vote of the stockholders at a
meeting may be taken without meeting if it is authorized by the written consent
of stockholders holding at least a majority of the voting power, unless the
provisions of the statute or the articles of incorporation require a greater
proporation of voting power to authorize the action, in which case the greater
proportion of written consents is required.
ARTICLE 3
DIRECTORS
SECTION 1. The directors must manage business of the corporation and they may
exercise all the powers of the corporation and do any lawful thing unless the
statute or the articles of incorporation or these bylaws specify that the
stockholders have the power to do the thing.
SECTION 2. The number of directors that constitute the whole board may not be
less than one or more than eight. The directors at any time may increase or
decrease the number of directors to not less than one nor more than eight. The
stockholders will elect the directors at the annual meeting of the stockholders
and except as provided in section 2 of this article, each director elected holds
office until his successor is elected and qualified. Directors need not be
stockholders.
SECTION 3. A majority of the remaining directors, even if they are less than a
quorum, or a sole remaining director may fill any vacancies in the board of
directors, including those caused by an increase in the number of directors, and
each director so elected holds office until his successor is elected at the
annual or a special meeting of the stockholders. The holders of two-thirds of
the outstanding shares of stock entitled to vote may at any time peremptorily
terminate the term of office of all or any of the directors by voting at a
meeting called the the purpose or by a written statement filed with the
secretary or, if the secretary is absent, with any other officer. The removal is
effective immediately even if successors are not elected simultaneously, and the
resulting vacancies on the board of directors may be filled only from the
stockholders.
A vacancy on the board of directors is deemed to exist if a director dies,
resigns or is removed, or if the authorized number of directors is increased, or
if the stockholders fail to elect the number of directors to be elected at any
annual or special meeting of stockholders at which any director is to be
elected.
<PAGE>
BYLAWS 3 OF 8
The stockholders may elect a director at any time to fill any vacancy
not filled by the directors. If the directors accept the resignation of a
director tendered to take effect at a future time, the board or the stockholders
may elect a successor to take office when the resignation becomes effective.
Neither the directors nor the stockholders can reduce the authorized
number of directors to cause the removal of any director before the expiration
of his term.
ARTICLE 4
MEETING OF THE BOARD OF DIRECTORS
SECTION 1. Regular meetings of the board of directors must be held at any place
within or without the State that is designated by a resolution of the board or
the written consent of all members of the board. In the absence of a
designation, regular meetings must be held at the registered office.
SECTION 2. The first meeting of each newly elected directors should be held
immediately following the adjournment of the meeting of stockholder and at the
place of the meeting. A notice of the meeting is not necessary in order legally
to constitute the meeting if a quorum is present. If the meeting is not held
then, it may be held at the time and place that is specified in a notice given
as these bylaws provide for special meetings of the directors.
SECTION 3. Regular meetings of the board of directors may be held without call
or notice at the time and at the place that is fixed by the directors.
SECTION 4. Special meetings of the directors may be called by the chairman or
the present or by the vice-president or by any two directors.
Written notice of the time and place of special meetings must be delivered
personally to each director, or sent to each director by mail or by other form
of written communication, charges prepaid, addressed to the director at the
address as it is shown upon the records or, if not readily ascertainable, at the
place in which meetings of the directors are regularly held. If the notice is
mailed or telegraphed, it will be deposited in the postal service or delivered
to the telegraph company at least forty-eight hours before the meeting is
scheduled to start. If the notice is delivered or faxed, it must be delivered or
faxed at least twenty-four hours before the meeting is scheduled to start.
Delivery as described in this article is legal and sufficient notice to the
director.
SECTION 5. Notice of the time and place for convening an adjourned meeting need
not be given to the absent directors if the time and place have been fixed at
the meeting adjourned.
SECTION 6. The transaction of business at any meeting of the directors, however
called and noticed or wherever held, is as valid as though transacted at a
meeting duly held after regular call and notice if a quorum is present and if,
either before or after the meeting, each of the director not present signs a
written waiver of notice or a consent to meeting's being held, or written
approvals are filed with the corporate records or made part of the minutes of
the meeting.
SECTION 7. A majority of the authorized number of directors constitutes a quorum
for the transaction of business, except to adjourn as described in these bylaws.
Every decision made by a majority of the directors present at a meeting duly
held at which a quorum is present is deemed to be the decision of the board of
directors unless a greater number is required by law or by the articles of
incorporation. Any action of a majority, although not at a regularly called
meeting, and the record of it if the other directors have consented in writing,
is as valid and effective in all respects as if it were passed by the board in
regular meeting.
SECTION 8. A quorum of the directors may adjourn any directors' meeting to meet
again at a stated day and hour, but, in the absence of a quorum a majority of
the directors present at any directors' meeting, either regular or special, may
adjourn the meeting to the next regular meeting of the board.
<PAGE>
BYLAWS 4 OF 8
ARTICLES 5
COMMITTEES OF DIRECTORS
SECTION 1. The directors may, by resolution adopted by a majority of them,
designate one or more committees of the directors, each to consist of two or
more of the directors. A committee may exercise the power of the whole board in
the management of the business of the corporation and may authorize the fixing
of the seal of the corporation to any document that requires it. The directors
may name the committee. The members of the committee present at any meeting and
not disqualifed from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the board to act at the meeting in the
place of any absent or disqualifed member. The consent of a majority of the
members or alternate members at any meeting of a committee that has a quorum is
required to approve any act of the committee.
SECTION 2. The committee must keep regular minutes of their proceedings and
report them to the whole board.
SECTION 3. Any action that must or may be taken at meetings of the directors or
any committee of them may be taken without a meeting if the directors on the
board or committee consent unanimously in writing and the written consent is
filed with the minutes of the proceedings of the board or committee.
ARTICLE 6
COMPENSATION OF DIRECTORS
SECTION 1. The directors may be paid their expenses for attending each meeting
of the directors and may be paid a fixed sum for attendance at each meeting of
the directors or a stated salary as director. No payment precludes any director
from serving the corporation in any other capacity and being compensated for the
service. Members of special or standing committees may be allowed like
reimbursement and compensation for attending committee meetings.
ARTICLE 7
NOTICES
SECTION 1. Notices to directors and stockholders must be written and delivered
personally to the directors or stockholders at their addresses as they appear on
the books of the corporation. Notices to directors may also be given by fax and
by telegram. Notice by mail, fax or telegram is deemed to be given when the
notice is mailed, faxed or telegraphed.
SECTION 2. Whenever all parties entitled to vote at any meeting, whether of
directors or stockholders, consent, either by writing on the records of the
meeting or filed with the secretary, or by their presence at the meeting or oral
consent entered on the minutes, or by taking part in the deliberations at the
meeting without objection, the doings of the meeting are as a valid as if the
were done at a meeting regularly called and noticed, and at the meeting any
business may be transacted that is not excepted from the written consent if no
objection for want of notice is made at the time and, if any meeting is
irregular for want of notice or consent and a quorum was present at the meeting,
the proceedings of the meeting may be ratified and approve and rendered valid,
and the irregularity or defect is waived if all parties having the right to vote
at the meeting consent in writing. The consent or approval of stockholders may
be by proxy or attorney, but all the proxies and powers of attorney must be in
writing.
SECTION 3. Whenever any notice is required to be given under the provisions of
the statute, the articles of incorporation or these bylaws, a written waiver
signed by the persons entitled to the notice, whether before or after the time
stated, is deemed to equivalent.
<PAGE>
BYLAWS 5 of 8
ARTICLE 8
OFFICERS
SECTION 1. The directors will choose the officers of the corporation. The
offices to be filled are president, secretary and treasurer. A person may hold
two or more offices.
SECTION 2. The directors at their first meeting after each annual meeting of
stockholders will choose a chairman of the board of directors from among
themselves, and will choose a president, a secretary and a treasurer, none of
whom must be directors.
SECTION 3. The directors may appoint a vice-chairman of the board,
vice-presidents and one or more assistant secretaries and assistant treasurers
and the other officers and agents as it deems necessary to hold their offices
for the term as and exercise the powers and perform the duties determined by the
directors.
SECTION 4. The directors will fix the salaries and compensation of all officers
of the corporation.
SECTION 5. The officers of the corporation hold their offices at the pleasure of
the directors. Any officer elected or appointed by the directors may be removed
any time by the directors. The directors will fill any vacancy occurring in any
office of the corporation by death, resignation, removal or otherwise.
SECTION 6. The CHAIRMAN OF THE BOARD will preside at meetings of the
stockholders and the directors and will see that the orders and resolutions of
the directors are carried into effect.
SECTION 7. The VICE-CHAIRMAN will, if the chairman is absent or disabled,
perform the duties and exercise the powers of the chairman of the board and will
perform other duties as the directors may prescribe.
SECTION 8. The PRESIDENT is the chief executive officer of the corporation and
will manage the business of the corporation. He will execute on behalf of the
corporation all instruments requiring execution unless the signing and execution
of them is expressly designated by directors to some other officer or agent of
the corporation.
SECTION 9. The VICE-PRESIDENTS will act under the direction of the president
and, if the president is absent or disabled, will perform the duties and
exercise the powers of the president. They will perform the other duties and
have the other powers prescribed by the president or directors. The directors
may designate one or more executive vice-presidents and may specify the order of
seniority of the vice-presidents. The duties and powers of the president descend
to the vice-presidents in the specified order of seniority.
SECTION 10. The SECRETARY will act under the direction of the president, will
attend and record the proceedings at all meetings of the directors and the
stockholders and at the standing committees when required, will give or cause to
be given notice of all meetings of the stockholders and special meetings of the
directors, and will perform other the duties that are prescribed by the
president or the directors.
SECTION 11. The ASSISTANT SECRETARIES will act under the direction of the
president in the order of their seniority unless the president or the directors
decide otherwise, and they will perform the duties and exercise the powers of
the secretary if the secretary is absent or disabled. They will perform other
duties and have the other powers that are prescribed by the president and the
directors.
SECTION 12. The TREASURER will act under the direction of the president with
custody of the corporate funds and securities, will keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation,
and will deposit all money and other valuable effects in the name and to the
credit of the corporation in the depositories that are designated by the
directors, will disburse the funds of the corporation as ordered by the
president or the directors, taking proper vouchers for the disbursements, and
will render to the president and the directors, at their regular meetings or
when the directors require an account of all the transactions undertaken by the
treasurer and of the financial condition of the corporation.
<PAGE>
BYLAWS 6 of 8
If the directors require, the treasurer will give the corporation a
bond in the sum and with the surety that is satisfactory to the directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, if he dies, resigns, retires or is removed from office, of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the corporation.
SECTION 13. The ASSISTANT TREASURERS in order of their seniority, or as
determined by the president or the directors, will perform the duties and
exercise the powers of the treasurer if the treasurer is absent or disabled.
They will perform the other duties and have the other powers that are prescribed
by the president or the directors.
ARTICLE 9
CERTIFICATES OF STOCK
SECTION 1. Every stockholder is entitled to have a certificate signed by the
president or a vice-president and the treasurer or an assistant treasurer, or
the secretary or an assistant secretary of the corporation, that certifies the
number of shares owned by him in the corporation. If the corporation is
authorized to issue more than one class of stock or more than one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of the various classes of stock or series and the
qualifications, limitation or restrictions of the rights, must be described in
full or summarized on the face or back of the certificate that the corporation
issues to represent the stock.
SECTION 2. If a certificate is signed (a) by a transfer agent other than the
corporation or its employees or (b) by a registrar other than the corporation or
its employees, the signatures of the officers of the corporation may be
facsimiles. If any officer who has signed or whose facsimile signatures has been
placed upon a certificate ceases to be the officer before the certificate is
issued, the certificate may be issued with the same effect as though the person
had not ceased to be the officer. The seal of the corporation oar a facsimile of
it may, but need not be, affixed to certificates of stock.
SECTION 3. The directors may direct that a new certificate be issued in place of
any certificate issued by the corporation that is alleged to have been lost or
destroyed if the person claiming the loss or destruction of the certificate
makes an affidavit of that fact. When they authorize the issuance of a new
certificate, the directors may, in their discretion and as a condition precedent
to the issuance of the new certificate, require that the owner of the lost or
destroyed certificate or his legal representative advertise the loss as it
requires or give the corporation a bond in the sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost or destroyed.
SECTION 4. When a certificate for shares, duly endorsed accompanied by proper
evidence of succession, assignment or authority to transfer, is surrendered to
the corporation or the transfer agent of the corporation shares, the corporation
must, if it is satisfied that it complies with the laws and regulations
applicable to the corporation regarding the transfer and ownership of shares,
issue a new certificate to the person entitled to it and will cancel the old
certificate and record the transaction upon its books.
SECTION 5. The directors may fix in advance a date not more than sixty days nor
less than ten days before the date of any meeting of stockholders, for the date
of the payment of any dividend, or the date of the allotment of rights, or the
date when any change or conversion or exchange of capital stock is effective, or
a date in connection with obtaining the consent of stockholders for any purpose,
as a record date for the determination of the stockholders entitled to notice of
and to vote at any meeting or adjournment, or entitled to be paid any dividend,
or to consent to any matter for which stockholders' consent is required, an in
either case, only the stockholders who are stockholders of record on the date so
fixed are entitled to notice of and to vote as the meeting or any adjournment,
or to be paid a dividend, or to be allocated rights, or to exercise the rights,
or to consent, as the case may be, notwithstanding any transfer of any stock on
the books of the corporation after the record date is fixed.
SECTION 6. The corporation is entitled to recognize the person registered on its
books as the owner of the share as the exclusive owner for all purposes
including voting and dividends, and the corporation is not bound to recognize
<PAGE>
BYLAWS 7 of 8
any other person's equitable or other claims to or interest in the shares,
whether it has express or other notice of a claim, except as otherwise provided
by the laws of Nevada.
ARTICLE 10
GENERAL PROVISIONS
SECTION 1. The directors may declare dividends upon the capital stock of the
corporation, subject to the provisions of the articles of incorporation, if any,
at any regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property or in shares of the capital stock, subject to the provisions
of the articles of incorporation.
SECTION 2. Before it pays any dividend, the corporation may set aside out of any
funds of the corporation available for dividends the sum that the directors, in
their absolute discretion, think proper a reserve to meet contingencies, or for
equalizing dividends, or for repairing and maintaining any property of the
corporation, or for another purpose that the directors determine are in the
interests of the corporation, and the directors may modify or abolish any the
reserve in the manner that it was created.
SECTION 3. All checks or demands for money and notes of the corporation must be
signed by the officers or other persons that are designated by the directors.
SECTION 4. The directors will fix the fiscal year of the corporation.
SECTION 5. The directors may resolve to adopt a corporate seal for the
corporation. The name of the corporation must be inscribed on the seal with
words "Corporate Seal" and "Nevada". The seal may be used by causing it or a
facsimile of it to be impressed or affixed or in any member reproduced.
ARTICLE II
INDEMNIFICATION
SECTION 1. Every person who was or is a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, because he or a person whom he
legally represents is or was a director or officer of the corporation or is or
was serving at the request of the corporation or for its benefit as a director
or officer of another corporation, or as its representative in a partnership,
joint venture, trust or other enterprise, is indemnified and held harmless to
the fullest extent legally permissible under the General Corporation Law of the
State of Nevada from time to time against all expanses, liability and loss
(including attorney's fees, judgments, fines and amounts paid or to be paid in
settlements) reasonably incurred or suffered by him in connection with his
acting. The expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation as they are
incurred and in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The right of indemnification is a contract right that may be
enforced in any matter desired by the person. The right of indemnification
does not any other right that the directors, officers or representatives may
have or later acquire and, without limiting the generality of the statement,
they are entitled to their respective rights of indemnification under any bylaw,
agreement, vote of stockholders, provision of law or otherwise, as well as their
rights under this article.
SECTION 2. The directors may cause the corporation to purchase and maintain on
behalf of any person who is or was a director or officer of the corporation, or
is or was serving at the request of the corporation as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust or other enterprise against any liability asserted against the person and
incurred in any capacity or arising out of the status, whether or not the
corporation would have the power to indemnify the person.
SECTION 3. The directors may adopt other bylaws regarding indemnification and
may amend the bylaws to provide at all times the fullest indemnification
permitted by the General Corporation Law of the State of Nevada.
<PAGE>
BYLAWS 8 of 8
ARTICLE 12
AMENDMENTS
SECTION 1. The bylaws may be amended by the majority vote of all the record
holders of the stock issued and outstanding and entitled to vote at any annual
or special meeting of the stockholders, if the notice of the meeting contains a
notice of the intention to amend.
SECTION 2. The directors by a majority vote of the whole board at any meeting
may amend these bylaws, including bylaws adopted by the stockholders, but the
stockholders may specify particulars of the bylaws that cannot be amended by the
board of directors.
APPROVED AND ADOPTED ON MARCH 4, 1999
CERTIFICATE OF THE DIRECTOR
I, Trent Jordan, certify that I am director of Quilchena Resources, Inc. and the
foregoing bylaws consisting of eight pages constitute the code of bylaws of this
corporation as duly adopted at a regular meeting of the directors of the
corporation held on March 4, 1999.
March 4, 1999
/s/ Trent Jordan
- -------------------------
Trent Jordan - Director
OPTION AGREEMENT
This agreement is dated for reference July 20, 1999.
BETWEEN: WET COAST CAPITAL CORPORATION, a British Columbia company, of Suite
420, 1090 West Pender Street, Vancouver, British Columbia, V6E 2N7,
and fax (604) 682-6509
("Wet Coast")
AND: GERRY DIAKOW, a mining engineer, of 1537 - 54th Street, Delta, British
Columbia, V4M 3H6, and fax (604)682-6509
(the "Optionor")
RECITALS
A. The Optionor has an undivided 100% interest in Hi-Ho 1-10 Mining Claims, New
Westminster Mining Division, 121(degrees), 36' West Longitude and 49(degrees),
23', 30" North Latitude,, British Columbia, Canada (the "Property").
B. Wet Coast wants the exclusive and irrevocable right to acquire 100% of the
Optionor's interest in the Property.
IN CONSIDERATION of the recitals and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree that:
1. The definitions in the recitals are part of this agreement.
2. The Optionor grants Wet Coast an option to acquire a 100% undivided
interest in the Property (the "Option").
3. To exercise the Option, Wet Coast must:
(a) finance the work program recommended for the Property in the initial
report of Douglas H. Hopper, Consulting Geologist, dated March 11,
1999 (the "Work Program") within 12 months of the date of this
agreement (the "Work Period"); and
(b) pay the Optionor CDN$7,500 within 18 months of the date of this
agreement (the "Option Period").
4. The Optionor will perform the Work Program and provide an engineering
report that satisfies Wet Coast within two months of his completing the
Work Program or the end of the Work Period, whichever is earlier.
5. Wet Coast may transfer, assign, grant an option to purchase or otherwise
alienate its rights and obligations under this agreement.
<PAGE>
2
6. Wet Coast and its employees, agents, independent contractors, and assignees
may have full access to the Property during the Option Period.
7. Wet Coast may terminate this agreement at any time during the Option Period
by giving written notice of its intention to terminate by fax to the
Optionor's fax number as soon as Wet Coast arrives at its decision to
terminate. No monies already paid by Wet Coast under this agreement are
refundable and Wet Coast is entitled to no interest in the Property if this
agreement is terminated by Wet Coast during the Option Period.
8. During the Option Period, the Optionor will:
(a) do nothing that might adversely affect Wet Coast's rights under this
agreement, and
(b) keep the Property free and clear of any claims and in good standing
with applicable government authorities.
9. During the Option Period, Wet Coast will:
(a) conduct all work on the Property in a careful and miner-like manner
and in compliance with all applicable laws, and
(b) obtain and maintain and cause any contractor or sub-contractor engaged
under this agreement to obtain and maintain adequate insurance during
any period in which active work is carried out on the Property.
10. Each party represents and warrants to the other that:
(a) it has the power and authority to carry on its business and to make
this agreement and any agreement that is contemplated by this
agreement, and
(b) the making of this agreement and any agreements contemplated by it
does not violate or breach its constating documents or the laws of any
applicable jurisdiction and has been authorized by its board of
directors.
11. The Optionor represents and warrants that:
(a) title to the Property is free and clear of any claims or charges,
either actual, pending or threatened,
(b) the Property is not subject to any order or direction relating to
environmental matters that requires any action,
(c) he has the exclusive right to make this agreement, and to dispose of
the Interest in the Property in accordance with the terms of this
agreement.
12. The representations and warranties of the parties are conditions on which
the parties have relied in making this agreement and survive the exercising
of the Option.
<PAGE>
3
13. The Optionor acknowledges that this agreement was prepared by Jeffs &
Company, Law Corporation, on behalf of and solely for Wet Coast, and that
it may contain terms and conditions onerous to the Optionor. The Optionor
expressly acknowledges that Wet Coast has given the Optionor adequate time
to review this agreement and to seek and obtain independent legal advice,
and he represents to Wet Coast that he has in fact sought and obtained
independent legal advice and is satisfied with all of the terms and
conditions of this agreement.
14. This agreement contains the entire agreement among the parties and
supersedes all earlier representations, understandings and agreements,
whether written or oral, express or implied, that might have lead to the
parties' making this agreement.
15. The parties will sign any document and do anything within their power that
is necessary to implement the terms of this agreement.
16. Time is of the essence of this agreement and is of the essence of any
amendments to this agreement unless its essence is waived in the amendment.
17. This agreement is governed by the laws of British Columbia and must be
litigated in the courts of British Columbia.
18. This agreement enures to the benefit of and is binding on the parties and
their respective successors and permitted assigns.
19. This agreement may be executed in any number of separate counterparts and
delivered to the parties by fax. The counterparts together are deemed to be
one original document.
THE PARTIES' SIGNATURES below are evidence of their agreement.
WET COAST CAPITAL CORPORATION
Per: /S/ "RICK JEFFS"
----------------------------------
Authorized Signatory
Signed by GERRY DIAKOW in the presence of:
/S/ "ALITA M. CERRA" /S/ "GERRY DIAKOW"
- ---------------------------------- ----------------------------------
Signature of Witness Gerry Diakow
ALITA M. CERRA
- ----------------------------------
Name of Witness
- ----------------------------------
Address of Witness
ASSIGNMENT AGREEMENT
THIS AGREEMENT dated for reference July 20, 1999, is BETWEEN WET COAST CAPITAL
CORPORATION, a British Columbia company, of Suite 420, 1090 West Pender Street,
Vancouver, British Columbia, V6E 2N7, and fax (604)682-6509 ("Wet Coast"); AND
QUILCHENA RESOURCES, INC., a Nevada company, of Suite 1000, 355 Burrard Street,
Vancouver, B.C., V6C 2G8, and fax (604)687-0554 ("Quilchena").
WET COAST has an option (the "Option") to purchase an undivided 100% interest in
the Hi-Ho 1-10 Mining Claims, New Westminster Mining Division, 121(degrees), 36'
West Longitude and 49(degrees), 23', 30" North Latitude, British Columbia,
Canada (the "Property") by an agreement dated July 20, 1999, attached as
Schedule A to this agreement (the "Option Agreement") and has agreed to assign
its entire interest in the Option Agreement to Quilchena; so IN CONSIDERATION of
the recitals and valuable consideration, the receipt and sufficiency of which
are acknowledged, the parties agree that:
1. The definitions in the recitals are part of this agreement.
2. This agreement is effective on July 20, 1999 (the "Effective Date").
3. Wet Coast irrevocably assigns its entire interest in the Option Agreement
to Quilchena as of the Effective Date for US$10,000 (the "Price").
4. Wet Coast represents and warrants that it may assign the Option Agreement
and that it has granted no other party any right to acquire any of its
interest in the Option Agreement.
5. Wet Coast represents and warrants that it has made the CDN$7,500 option
payment referred to in paragraph 3(b) of the Option Agreement.
6. Quilchena acknowledges that in order to exercise the Option, it is required
to finance the work program on the Property referred to in paragraph 3(a)
of the Option Agreement.
7. Quilchena acknowledges that this agreement was prepared by Jeffs & Company,
Law Corporation, on behalf of and solely for Wet Coast, and that it may
contain terms and conditions onerous to Quilchena. Quilchena expressly
acknowledges that Wet Coast has given Quilchena adequate time to review
this agreement and to seek and obtain independent legal advice, and
represents to Wet Coast that it has in fact sought and obtained independent
legal advice and is satisfied with all of the terms and conditions of this
agreement.
8. This agreement contains the entire agreement between the parties and
supersedes all earlier representations, understandings and agreements,
whether written or oral, express or implied, that might have lead to the
parties making this agreement.
9. The parties will sign any document and do anything within their power that
is necessary to implement the terms of this agreement.
10. Time is of the essence of this agreement and of any amendments to this
agreement unless it is expressly waived in the amendment.
<PAGE>
2
11. This agreement is governed by the laws of British Columbia and must be
litigated in the courts of British Columbia.
12. This agreement enures to the benefit of and is binding on the parties and
their respective successors and permitted assigns.
13. This agreement may be executed in any number of separate counterparts and
may be delivered to the parties by fax, and the counterparts together are
deemed to be one original document.
THE PARTIES' SIGNATURES below are evidence of their agreement.
WET COAST CAPITAL CORPORATION
Per:
/S/ "RICK JEFFS"
- ----------------------------------
Authorized Signatory
QUILCHENA RESOURCES, INC.
Per:
/S/ "DEREK HERMAN"
- ----------------------------------
Authorized Signatory
