SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 7, 1997
HANOVER GOLD COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-23022 11-2740461
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1000 Northwest Boulevard, Suite 100
Coeur d'Alene, Idaho 83814
(Address of principal executive offices)
Registrant's telephone number, including area code: (208) 664-4653
<PAGE>
Item 5. Other Events.
Hanover Gold Company, Inc. ("Hanover") announced on March 10, 1997 that it
had entered into an agreement, dated March 7, 1997, with Easton-Pacific and
Riverside Mining Company ("Easton-Pacific") for the acquisition of all of
the issued and outstanding shares of capital stock of Easton-Pacific in
exchange for 7,000,000 shares of Hanover's common stock, following which
Easton-Pacific will become a wholly-owned subsidiary of Hanover. Easton-
Pacific has advised the Company that it owns or controls 36 patented and
137 unpatented mining claims in the Brown Gulch area, in a claims block
that is contiguous to the Company's claims block, and an interest in an
additional 35 patented and 58 unpatented claims near Norris and Pony,
Montana, some 35 miles northwest of Browns Gulch.
The Hanover common stock to be issued to the holders of Easton-Pacific's
capital stock in the transaction will be included in an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") and will generally be freely transferable following such
issuance. Certain affiliates of Easton-Pacific will be required to enter
into lock-up agreements as part of the transaction, however, prohibiting
the resale of any shares of Hanover common stock received in the
transaction for a period of six months and limiting the number of shares
that may be sold for during the ensuing twelve-month period. In addition,
Richard J. Fisher, Easton-Pacific's current chairman and president, will be
appointed to Hanover's board of directors at closing.
It is expected that the transaction will close no later than June 30, 1997.
As a condition to moving forward with the preparation and filing of the
registration statement under the Securities Act and the preparation of
proxy materials to be used in conjunction with the special meetings of
stockholders of Hanover and Easton-Pacific, each holder of more than five
percent (5%) of Easton-Pacific's capital stock has agreed to execute and
deliver irrevocable proxies instructing the proxies named therein to vote
the shares of Easton-Pacific held by such persons for approval of the
transaction.
Closing is specifically conditioned on: the approval of definitive
transaction documents; the filing by Hanover of an effective registration
statement under the Securities Act (which registration statement may take
the form of a post-effective amendment to its current registration
statement) with respect to the shares of common stock to be issued by
Hanover in the transaction; the approval of the transaction by Hanover's
stockholders in accordance with proposed requirements of the Nasdaq Stock
Market; the approval of the transaction by the shareholders of Easton-
Pacific; and the delivery of an opinion of counsel to Easton-Pacific to the
effect that the transaction will be tax free to Easton-Pacific and its
shareholders.
As part of the transaction, N. A. Degerstrom ("Degerstrom"), an affiliate
of Hanover, has guaranteed payment of Hanover's obligations to the
landowner-lessees of its mining claims for a period of eighteen months, or
until August 7, 1998, up to an amount of $2,891,210; such guaranty will
take effect in the event Hanover is unable for any reason to meet such
obligations. As consideration for such guarantee, Hanover's board of
directors is expected to approve the grant to Degerstrom of options to
purchase up to 2,312,968 shares of Hanover's common stock, which options
will be exercisable at the price of $1.25 per share for a period of three
years from the date of grant. Payments made by Degerstrom pursuant to the
guaranty, if any, will be credited toward the exercise of such options.
It is anticipated that the transactions will be accounted for by Hanover as
a purchase of assets as opposed to a pooling of interests.
Hanover had previously announced, in February of 1996, that it had entered
into a letter of intent with Easton-Pacific contemplating the possible
merger of Easton-Pacific into the Company in exchange for 14,368,713 shares
of Hanover's common stock. Although that letter of intent expired in July
of 1996, representatives of Hanover and Easton-Pacific continued to discuss
the possibility of combining their respective mining properties. These
discussions lead to the agreement that was signed on March 7th.
Item 7. Financial Statements and Exhibits.
No financial statements are required to be included as part of this report.
The exhibits hereto consist of:
(a) A copy of the letter agreement, dated March 7, 1997, and the
exhibits thereto, by and between Hanover and Easton-Pacific; and
(b) A copy of the Hanover's press release dated March 10, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HANOVER GOLD COMPANY, INC.
By /s/ James A. Fish
--------------------------------
its President and
Chief Executive Officer
Exhibit (a) to Current Report
on Form 8-K dated March 10, 1997
HANOVER GOLD COMPANY
1000 Northwest Boulevard, Suite 100
Coeur d'Alene, Idaho 83814
March 7, 1997
Board of Directors
Easton-Pacific and Riverside Mining Company
21 Courthouse Square
P.O. Box 1011
St. Cloud Minnesota 56302
Gentlemen:
The board of directors of Hanover Gold Company, Inc. ("Hanover), a Delaware
corporation, has authorized me to extend you the following offer for the
acquisition by Hanover of Easton-Pacific and Riverside Mining Company
("Easton-Pacific"), a Montana corporation. As used herein, the proposed
acquisition is sometimes referred to as the "Transaction."
1. The Transaction will be structured as an acquisition by Hanover of all
of the issued and outstanding shares of capital stock of Easton-Pacific
(the "Easton-Pacific Stock") in exchange for shares of common stock, par
value $.0001 per share, of Hanover (the "Hanover Stock").
2. Hanover will issue 7,000,000 shares of Hanover Stock to the holders of
Easton-Pacific Stock in the Transaction, and upon the closing of the
Transaction Easton-Pacific will become a wholly-owned subsidiary of
Hanover. Hanover will be responsible for paying Easton-Pacific's
indebtedness upon the closing of the Transaction, which indebtedness
consists primarily of amounts owed by Easton-Pacific to James Nierengarten.
If acceptable to Mr. Nierengarten, Hanover is willing to issue shares of
Hanover Stock to him in settlement of such indebtedness, which shares will
be valued at the prevailing market price as of the date of issuance.
3. The Hanover Stock will be issued to the holders of the Easton-Pacific
Stock in the Transaction pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"). The
Hanover Stock will be freely transferable following such issuance;
provided, however, that certain affiliates of Easton-Pacific will be
required to enter into lock-up agreements as part of the Transaction, as
discussed in paragraph 5 of this letter, which agreements will restrict
their ability to transfer their shares of Hanover Stock for a specified
period following the closing of the Transaction.
4. Counsel to Hanover will render an opinion in connection with the
registration statement to be filed under the Securities Act, which opinion
shall be redelivered at the closing of the Transaction, to the effect that
the Transaction will qualify as a tax-free reorganization under the
Internal Revenue Code of 1986, as amended.
5. At the closing of the Transaction, the following holders of Easton-
Pacific Stock, being those holders who own or control, or may be deemed to
control, 20,000 or more shares of such stock, shall enter into lock-up
agreements with Hanover substantially in the form of lock-up agreement
annexed to this letter as Exhibit A: Richard J. Fisher, Kathleen Fisher,
Ann Marie Fisher, Christopher Michael Fisher, Katherine Mary Fisher,
Elizabeth E. Fisher, Lewis Fisher, Maura Jeanne Fisher, David M. Daniel,
Karifico, James J. Nierengarten, Brenda M. Nierengarten, David J.
Nierengarten, Lawrence A. Nierengarten, Richard D. Nierengarten, Robinson
Bosworth III, Wendy R. Bosworth, Robinson Bosworth Jr. Family Trust, Keith
F. Hughes, Edward L. and Helen M. Maier, and Nicholas C. Wilson; PROVIDED,
HOWEVER, that if any of the children of Richard J. Fisher reasonably
believe that they must sell any of their shares of Hanover Stock in
contravention of their lock-up agreement for the purpose of paying college
tuition expenses, Hanover will, upon receipt of evidence supporting such
belief, waive the provisions of their lock-up agreement with respect to
such sales.
6. At the closing of the Transaction, Richard J. Fisher shall be
appointed to the board of directors of Hanover and shall be entitled to
receive such benefits, if any, as are accorded directors of Hanover
generally.
7. The closing of the Transaction shall occur no later than June 30,
1997. The closing shall be specifically conditioned on the following:
(a) Approval by the board of directors of Hanover of a definitive
agreement governing the proposed Transaction (the "Transaction
Documents").
(b) The filing by Hanover of an effective registration statement
under the Securities Act (which registration statement may take
the form of a post-effective amendment to its registration
statement on Form S-1 declared effective by the Securities and
Exchange Commission on September 3, 1996) with respect to the
shares of Hanover Stock to be issued in the Transaction.
(c) Approval by the board of directors and shareholders of Easton-
Pacific of the Transaction and of the Transaction Documents,
which approval, in the case of Easton-Pacific's shareholders,
shall be obtained at a special meeting of shareholders called for
such purpose and which shall be predicated on a written
prospectus/proxy statement to be prepared by counsel to Hanover
and substantially meeting the requirements of Form S-4 under the
Securities Act and Schedule 14A adopted under the Securities
Exchange Act of 1934.
(d) The delivery of the opinions of counsel referred to in paragraph
4 of this letter.
(e) The delivery by Hanover of the written guaranty of N. A.
Degerstrom ("Degerstrom") substantially in the form of annexed to
this letter as Exhibit B, evidencing Degerstrom's unconditional
agreement to pay Hanover's obligations to the landowner-lessees
of its mining claims for the period commencing January 1, 1997
and ending June 30, 1998 in the event Hanover is unable, for any
reason, to pay such obligations.
(f) The delivery by the holders of five percent (5%) or more of
Easton-Pacific Stock of irrevocable proxies appointing James A.
Fish and Neal A. Degerstrom, and each of them as such person's
proxy, with full power of substitution, to vote the shares of
Hanover Stock held by such person for approval of the nominees to
the board of directors of Hanover recommended by Degerstrom at
any annual or special meeting of Hanover called or held during
the two-year period following the closing of the Transaction.
(g) The absence of any material change in the condition, financial or
otherwise, or outstanding capital stock of Easton-Pacific during
the period commencing with the date of this letter and ending on
the closing of the Transaction.
(h) The receipt by the board of directors of Easton-Pacific of an
opinion of a financial consultant or advisor selected by Easton-
Pacific (which selection shall be concurred in by Hanover) to the
effect that the Transaction is fair from a financial point of
view to Easton-Pacific and its shareholders.
8. As a condition to moving forward with the preparation and filing of
the registration statement under the Securities Act and the preparation of
proxy materials to be used in conjunction with the special meeting of
stockholders of Easton-Pacific, each holder of five percent (5%) or more of
Easton-Pacific Stock shall, within ten days of the acceptance of this offer
by Easton-Pacific's board of directors, execute and deliver to Easton-
Pacific (with copies to Hanover) irrevocable proxies substantially in the
form annexed to this letter as Exhibit C appointing James Nierengarten and
David Daniels, and each of them as such person's proxy, with full power of
substitution, to vote the shares of Easton-Pacific Stock held by such
person for approval of the Transaction at the special meeting called for
such purpose, including any adjournment or postponement thereof.
9. The costs and expenses of the Transaction, including the costs and
expenses of counsel to Hanover and Easton-Pacific, and accounting costs,
shall be borne by Hanover.
10. This letter and the terms and conditions of the offer contained herein
are confidential. Neither this letter nor such terms and conditions shall
not be disclosed by Easton-Pacific to any person, other than its executive
officers, directors and counsel, without the prior written consent of
Hanover.
11. Unless accepted prior thereto, this offer will expire at 6:00 p.m.,
Spokane time, on Friday, March 7, 1997.
* * *
This letter supersedes and replaces all prior agreements or understanding
of every kind or nature between Hanover and Easton-Pacific.
If the foregoing terms and conditions are accepted by Easton-Pacific,
please so signify by signing in the space provided below and returning one
copy of this letter to Hanover by facsimile at (208) 769-7969.
Very truly yours,
HANOVER GOLD COMPANY, INC.
/s/ Neal A. Degerstrom
- ----------------------------------
its duly authorized signatory
ACCEPTED AND AGREED to by Easton-Pacific and Riverside Mining Company by
order of its board of directors this 10th day of March, 1997.
/s/ David M. Daniel
- ----------------------------------
its duly authorized signatory
<PAGE>
EXHIBIT A TO HANOVER LETTER
TO EASTON-PACIFIC
LOCK-UP AGREEMENT
__________ __, 1997
Hanover Gold Company, Inc.
1000 Northwest Boulevard, Suite 100
Coeur d'Alene, Idaho 83814
Attention: James A. Fish
President and Chief Executive Officer
Gentlemen:
I am an Easton-Pacific Selling Stockholder as such term is defined in that
certain joint proxy statement/prospectus which comprises a portion of a
registration statement on Form S-_, Commission File No. 33-____ (the
"Registration Statement") filed by Hanover Gold Company, Inc. (the
"Company"), a Delaware corporation, under the Securities Act of 1933, as
amended (the "Securities Act"), relating to, inter alia, the issuance of
shares of the common stock of the Company, par value $.0001 (the "Common
Stock"), to me and other Easton-Pacific Selling Stockholders in exchange
for our shares of capital stock of Easton-Pacific.
In consideration of the issuance by the Company of such shares of Common
Stock to me, I hereby agree that I will not, directly or indirectly, offer,
sell, grant any options to purchase or otherwise dispose of my such shares,
except as follows:
1. I may transfer any number of my shares to my children or relatives, by
gift or otherwise, and may also transfer any number of my shares in a
private sale, provided, in each case, that any such shares shall continue
to be subject to the restrictions set forth in this agreement. As used in
this agreement, the term "private sale" shall be defined to mean any non-
public sale effected by me and the purchaser of my shares, without the
assistance or intervention of a securities broker or dealer, which occurs
outside the medium of the Nasdaq SmallCap Market or any other securities
exchange or secondary market on which shares of the Company's Common Stock
are traded or prices therefor are quoted.
2. For a period of six months from and after the date the Registration
Statement is declared effective by the Securities and Exchange Commission
(the "Effective Date"), I will not sell or otherwise dispose of any shares,
other than as permitted by paragraph 1 above.
3. For a period of six months commencing six months following the
Effective Date, I will not sell or otherwise dispose of more than fifty
percent (50%) of my shares, other than as permitted by paragraph 1, above
(provided I am not then deemed to be an affiliate of the Company and may do
so under the Securities Act).
4. For a period of six months commencing twelve months following the
Effective Date, I will not sell or otherwise dispose of more than an
additional fifty percent (50%) of my shares, other than as permitted by
paragraph 1, above (provided I am not then deemed to be an affiliate of the
Company and may do so under the Securities Act), it being understood and
agreed that any unsold shares that were permitted to be sold pursuant to
paragraph 3 above may be aggregated with the shares permitted to be sold
pursuant to this paragraph 4 and sold, resulting in maximum aggregate sales
of all of the shares that I own (provided I am not then deemed to be an
affiliate of the Company and may do so under the Securities Act).
5. I understand that this agreement is binding upon me and my heirs,
personal representatives, successors, transferees and assigns.
6. I understand that this agreement shall take effect upon the date it is
executed and shall continue for a term of one years and six months.
7. The Company has represented to me that agreements similar to this
agreement were signed by certain other selling stockholders of the Company
(consisting of the Company's directors, all of the members of the Schmid
family and substantially all of the members of the Degerstrom group of
stockholders) in September of 1996, and that, pursuant to such agreements,
all of such persons have agreed to limit the number of shares of Common
Stock they may resell during an eighteen-month period commencing September
3, 1996 pursuant to an effective registration statement on Form S-1 filed
under the Securities Act (Commission File No. 33-3882) with respect to such
shares. My performance under this agreement is expressly conditioned on
the truthfulness and accuracy of this representation. If such lock-up
agreements are terminated for any reason, the Company shall give notice of
such termination to me and the other Easton-Pacific Selling Stockholders,
and this lock-up agreement and the lock-up agreements to which the other
Easton-Pacific Selling Stockholders are a party shall likewise be deemed
terminated and of no further force or effect.
8. The Company hereby agrees to indemnify me and the other Easton-Pacific
Selling Stockholders for certain liabilities, including liabilities arising
under the Securities Act, in conjunction with the offer and sale of the
shares by the Easton-Pacific Selling Stockholders pursuant to the
Registration Statement. I understand that, insofar as indemnification for
liabilities arising under the Securities Act may be permitted pursuant to
the foregoing, or to directors, officers and controlling persons of the
Company pursuant to applicable provisions of the Delaware General
Corporation Law and the Company's bylaws, the Company has been advised that
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer, Easton-Pacific
Selling Stockholder or controlling person of the Company in a successful
defense of any action, suit or proceeding) is asserted by such director,
officer, Easton-Pacific Selling Stockholder or controlling person in
connection with the shares being registered pursuant to the Registration
Statement, the Company will, unless in the opinion of its counsel such
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification is
against public policy as expressed in the Securities Act, and I agree to be
governed by the final adjudication of such issue.
Very truly yours,
________________________________
Signature of Easton-Pacific
Selling Stockholder
________________________________
________________________________
________________________________
________________________________
Please print name and address
Accepted and Agreed:
Hanover Gold Company, Inc.
________________________________
its duly authorized officer
<PAGE>
EXHIBIT B TO HANOVER LETTER
EASTON-PACIFIC
GUARANTY
The undersigned, Neal A. Degerstrom ("Degerstrom"), hereby guarantees,
on the terms and subject to the conditions set forth herein, the payment
when due of any and all indebtedness or liability of Hanover Gold Company,
Inc. ("Hanover"), a Delaware corporation, arising under the terms of those
various leases, lease option agreements and purchase contracts pertaining
to various mining claims and interests located in the Alder Gulch area of
the Virginia City Mining District in southwestern Montana entered into by
and between Hanover (or its predecessors in interest, Hanover Resources,
Inc. and Group S Limited), as lessee or purchaser, and the landowner-
lessors or sellers of such claims.
This guaranty shall continue until September 7, 1998, being eighteen
(18) months from the date of that certain letter agreement by and between
Hanover and Easton-Pacific and Riverside Mining Company ("Easton-Pacific")
providing for the acquisition by Hanover of all of the issued and
outstanding shares of capital stock of Easton-Pacific in exchange for
shares of common stock of Hanover. Following such date, this guaranty
shall be deemed to be of no further force of effect whatsoever.
The aggregate indebtedness or liability of Hanover hereby guaranteed
by Degerstrom shall not exceed $2,891,210.
As consideration for this guaranty, Hanover has agreed to issue
Degerstrom four-year options to purchase 2,628,373 shares of Hanover's
common stock, which options are exercisable at $1.10 per share. It is
specifically understood and agreed that if Degerstrom makes any payments
pursuant to this guaranty, the amount of such payments shall be credited
toward the exercise price of such options.
Hanover represents and warrants to Easton-Pacific that Hanover will
not offer or sell, nor offer to sell any of its securities to Degerstrom or
to anyone affiliated, directly or indirectly, with Degerstrom at a price
less than 85% of the then prevailing market price of such securities.
This guaranty is delivered in conjunction with, and as partial
consideration for, the closing of the transaction evidenced by that certain
agreement, dated as of March 7, 1997, by and between Hanover and Easton-
Pacific and Riverside Mining Company.
DATED this ________ __, 1997.
/s/ Neal A. Degerstrom
---------------------------------------
<PAGE>
EXHIBIT C TO HANOVER LETTER
EASTON-PACIFIC
IRREVOCABLE PROXY
The undersigned hereby (i) constitutes and appoints James Nierengarten
and David Daniels, and each of them, the undersigned's attorney-in-fact and
proxy to vote all of the shares of capital stock of Easton-Pacific and
Riverside Mining Company (the "Company"), a Montana corporation, owned of
record by the undersigned at the special meeting of shareholders of the
Company to be held for the purpose of approving the acquisition of the
Company by Hanover Gold Company, Inc. (the "Transaction"), and any
adjournment(s) or postponement(s) thereof, and (ii) instructs such
attorneys-in-fact and proxies to vote all of said shares of capital stock
of the undersigned for approval of the Transaction.
The undersigned acknowledges that this proxy is given in consideration
of the Transaction, and that it is coupled with an interest. This proxy
may not be revoked by the undersigned.
DATED: _____________, 1997
______________________________________
Signature of Shareholder
______________________________________
Additional Signature, if Jointly Owned
Exhibit (b) to Current Report
on Form 8-K dated March 10, 1997
[HANOVER GOLD COMPANY, INC. LETTERHEAD]
Hanover Gold Announces Agreement to Acquire
Easton-Pacific
Coeur d' Alene, Idaho, March 10, 1997--Hanover Gold Company, Inc. (Nasdaq
SmallCap Market Symbol "HVGO") announced today that it has signed an
agreement with Easton-Pacific and Riverside Mining Company ("Easton-
Pacific") to purchase all of the issued and outstanding shares of capital
stock of Easton-Pacific in exchange for 7,000,000 shares of Hanover's
common stock. Following the purchase, Easton-Pacific will become a wholly-
owned subsidiary of Hanover. It is anticipated that the transaction will
be approved by the shareholders of Hanover and Easton-Pacific at meetings
to be held prior to June 30th; the boards of directors of each company will
recommend such approval.
The Hanover common stock to be issued to the holders of Easton-Pacific's
capital stock in the transaction will be included in an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") and will generally be freely transferable following such
issuance. Certain affiliates of Easton-Pacific will be required to enter
into lock-up agreements as part of the transaction, prohibiting the resale
of any shares of Hanover common stock received in the transaction for a
period of six months and limiting the number of shares that may be sold for
during the ensuing twelve-month period. The agreement with Easton-Pacific
also provides that Richard J. Fisher, Easton-Pacific's current chairman and
president, will be appointed to Hanover's board of directors at closing.
As part of the transaction, N. A. Degerstrom ("Degerstrom"), an affiliate
of Hanover, has guaranteed payment of Hanover's obligations to the
landowner-lessees of its mining claims for a period of eighteen months, or
until August 7, 1998, up to an amount of $2,891,210; such guaranty will
take effect in the event Hanover is unable for any reason to meet such
obligations. As consideration for such guarantee, Hanover's board of
directors is expected to approve the grant to Degerstrom of options to
purchase up to 2,312,968 shares of Hanover's common stock, which options
will be exercisable at the price of $1.25 per share for a period of three
years from the date of grant. Payments made by Degerstrom pursuant to the
guaranty, if any, will be credited toward the exercise of such options.
In making the announcement, Jim Fish, Hanover's president and chief
executive officer, stated "With this agreement Hanover has substantially
completed its efforts to consolidate the mining claims and interests in the
Virginia City Mining District. With the addition of 36 patented and 137
unpatented mining claims in the Browns Gulch area held by Easton-Pacific,
Hanover's contiguous holdings in the district will increase to 655 patented
and unpatented claims, along with 35 patented and 58 unpatented claims of
Easton-Pacific near Norris and Pony, Montana. With this acquisition, we
believe we are now in position to seriously negotiate the terms under which
another mining company can participate with us in the project. This should
give us the wherewithal to conduct additional exploratory and eventually
develop a mine plan. We welcome Easton-Pacific's decision to combine their
properties with ours in this endeavor."
For more information concerning this announcement or any other aspect of
Hanover's business, contact Hanover Gold Company, 1000 Northwest Boulevard,
Suite 100, Coeur d'Alene, Idaho 83814; telephone: (208) 664-4653/telefax:
(208) 769-7969.
