<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JULY 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-17386
FISCHER-WATT GOLD COMPANY, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0227654
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1410 Cherrywood Drive, Coeur d'Alene, ID 83814
(Address of principal executive offices)
(208) 664-6757
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
The number of shares of Common Stock, $0.001 par value,
outstanding as of September 1, 1995 was 12,344,000
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
Part 1 - Financial Information
Item 1. Financial Statements
FISCHER-WATT GOLD COMPANY, INC.
BALANCE SHEETS
July 31, January 31,
ASSETS 1995 1995
(Unaudited)
CURRENT ASSETS:
Cash $124,000 $ 6,000
Trading securities 346,000 358,000
Accounts receivable 2,000 2,000
Other current assets 5,000 6,000
------- -------
Total current assets 477,000 372,000
MINERAL INTERESTS 192,000 387,000
MINING AND OTHER EQUIPMENT 51,000 50,000
LESS DEPRECIATION, DEPLETION
AND AMORTIZATION ( 36,000) ( 36,000)
------- -------
207,000 401,000
INVESTMENT IN HONDURAN CORPORATION 100,000 91,000
INVESTMENT IN MEXICAN CORPORATION 16,000 -
OTHER ASSETS 27,000 27,000
------- -------
Total assets $ 827,000 $ 891,000
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 85,000 $ 89,000
Notes payable - 500,000
Accrued payroll and benefits 32,000 59,000
Accrued interest expense 3,000 51,000
Other accrued liabilities 42,000 31,000
------- -------
Total current liabilities 162,000 730,000
LONG TERM LIABILITIES:
Nonrecourse debt (Note 5) 100,000 87,000
Total liabilities 262,000 817,000
COMMITMENTS AND CONTINGENCIES,
Notes 1,3, 6
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, $0.001 par value,
50,000,000 shares authorized;
12,344,000 shares outstanding
at July and January 1995 12,000 12,000
Additional paid-in capital 5,773,000 5,773,000
Deficit (5,220,000) (5,711,000)
--------- ---------
Total shareholders' equity 565,000 74,000
--------- --------
Total liabilities and
shareholders' equity $ 827,000 $ 891,000
-------- --------
The accompanying notes are an integral part of these balance
sheets.
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
[CAPTION]
<TABLE>
Three Months Ended Six Months Ended
July 31, July 31,
1995 1994 1995 1994
_______ _______ _______ _______
<S> <C> <C> <C> <C>
REVENUES:
Gain on sale of mineral interest $641,000 $ - $641,000 $109,000
COSTS AND EXPENSES:
Abandoned properties and
prospects 157,000 197,000 179,000 197,000
Generative exploration expense - - 3,000 -
Operating and administrative 71,000 54,000 119,000 127,000
Public company costs 23,000 2,000 44,000 23,000
_______ _______ _______ _______
251,000 253,000 345,000 347,000
OTHER INCOME (EXPENSE):
Interest expense ( 2,000) (20,000) (24,000) (39,000)
Unrealized gain on
trading securities 156,000 - 206,000 -
Other income 35,000 - 24,000 21,000
_______ _______ _______ _______
189,000 (20,000) 206,000 (18,000)
Net income (loss) before
tax provision 579,000 (273,000) 502,000 (256,000)
TAX PROVISION (10,000) - (11,000) (1,000)
_______ _______ _______ _______
NET INCOME (LOSS) $569,000 $(273,000) $491,000 $(257,000)
INCOME (LOSS) PER SHARE AND
COMMON EQUIVALENT $ .05 $ (.02) $ .04 $ (.02)
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 12,588,000 12,344,000 12,588,000 12,344,000
The accompanying notes are an integral part of these statements.
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
July 31,
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 491,000 $(257,000)
Adjustments to reconcile net income
(loss) to net cash used in
operating activities-
Unrealized gain on trading securities (206,000) -
Gain on sale of mineral interest (641,000) (109,000)
Abandoned properties and prospects 180,000 197,000
Generative exploration expensed 3,000 -
Depreciation and amortization 1,000 2,000
Accrued interest added to
principal balance - 40,000
(Increase) decrease in receivables and
other current assets - (3,000)
Gain on sale of equipment - ( 20,000)
Proceeds from sale of trading securities 238,000 -
Gain on sale of trading securities (20,000) -
Increase (decrease) in accounts payable
and accrued liabilities 2,000 ( 89,000)
-------- --------
Net cash provided by (used in)
operating activities 48,000 (239,000)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of
mineral interest 150,000 105,000
Property acquisition and development costs(63,000) 4,000
Bonuses applied to reduce cost basis - 33,000
Investment in Honduran Corporation ( 9,000) -
Investment in Mexican Corporation (15,000) ( 4,000)
Equipment acquired ( 2,000) ( 3,000)
-------- --------
Net cash provided by
investing activities 61,000 135,000
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 9,000 -
-------- --------
Net cash provided by
financing activities 9,000 -
-------- --------
NET INCREASE (DECREASE) IN CASH 118,000 (104,000)
CASH, at beginning of period 6,000 106,000
CASH, at end of period $124,000 $ 2,000
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $2,000 $ 2,000
SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT
NONCASH ACTIVITIES:
Application of bonus on unproven
property to offset accrued
interest expense $ 25,000 $ 25,000
Cost basis of trading securities
sold in connection with loss on
trading securities $218,000 -
Application of reclamation bond to
offset cost basis of mineral property $ - $ 40,000
Short-term debt eliminated in
connection with sale of
mineral interest $500,000 $ 90,000
Accrued interest eliminated in
connection with sale of
mineral interest $ 42,000 $ -
Cost basis in mineral interest
sold in connection with short-
term debt eliminated $ 51,000 $ 86,000
Purchase of stock in Honduran
corporation paid for in August 1994 $ - $ 81,000
Fair market value of vehicles and
office equipment offset against
wages and expenses due to
former employees $ - $ 33,000
The accompanying notes are an integral part of these statements.
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) FINANCIAL STATEMENT ADJUSTMENTS AND FOOTNOTES DISCLOSURES
The accompanying financial statements are unaudited; however, in
the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation have
been made. These financial statements and notes thereto should
be read in conjunction with the financial statements and related
notes included in Fischer-Watt Gold Company, Inc.'s
("Fischer-Watt" or the "Company") Annual Report on Form 10-K for
the year ended January 31, 1995 ("Form 10-K").
Future Financing and Realization
While Fischer-Watt was profitable in the latest fiscal year, it
had
negative cash flow from operations in the latest fiscal year and
suffered losses from operations and negative cash flow from
operations in each of its prior years. The entire profit was
attributable to a sale of a mineral interest. Since the Company
has no sustaining income or cash flow from operations, it is
currently funding its operations from proceeds of property sales
and the sale of stock received as part of the sale price of a
mineral interest. The ability of the Company to continue as a
going concern is dependent upon establishing successful future
operations or additional financing, or disposition of some of the
Company's assets. While the Company has been successful in
raising cash from these sources in the past, there can be no
assurance that its cash raising efforts will succeed. (See Item
2 Management's Discussion and Analysis or Plan of Operation -
"Subsequent Events".)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Gain on Sale of Mineral Interest--Gain on sale of mineral
interests
represents the excess of the proceeds realized from the sale of a
mineral interest over the Company's cost basis in that property.
On February 28, 1995, Tombstone Explorations Co. Ltd.
("Tombstone"),a Vancouver-based mining and exploration company
entered into a letter agreement with Fischer-Watt to purchase
Fischer-Watt's interest in the Minas de Oro property in Honduras.
Minas de Oro was joint ventured with Kennecott Exploration
Company ("Kennecott") who had an 80 percent working interest.
Tombstone agreed to buy the Kennecott interest and to acquire
Fischer-Watt's $500,000 promissory note to Kennecott, as well as
Fischer-Watt's interest in the property. Tombstone paid
Fischer-Watt $150,000 in cash and delivered for cancellation,
Fischer-Watt's $500,000 promissory note to Kennecott plus all
accrued interest. The transaction closed on May 16, 1995 with the
sale of the Minas de Oro interests to Cerenex Financial A. V. V.,
a subsidiary of Tombstone. The sale resulted in
a gain of $641,000. (See Note 4.)
In March 1994, Fischer-Watt optioned its interest in the San
Andres mineral property in Honduras to Greenstone Resources Ltd.
("Greenstone"). Fischer-Watt's gross proceeds from the sale of
this option were $195,000 ($105,000 in cash plus elimination of
$90,000 of its $94,000 debt to Greenstone. Fischer-Watt's cost
basis in the property optioned was $86,000 resulting in a
realized gain of $109,000 from the sale of the option. The
balance of the purchase price was recognized as income when the
option was exercised on October 31, 1994. (See Note 5.)
Bonuses--As an incentive to enter into a joint exploration and
development agreement, Fischer-Watt may receive bonus payments.
The bonus payments are recognized as revenue if the agreement
entered into relates to a proven property. For unproven
properties, bonus payments are first applied as a reduction of
the cost basis of the property with any excess being recognized
as revenue.
Trading Securities
Shares of Greenstone Resources Ltd.--The Company received 427,300
restricted shares of Greenstone Resources Ltd. ("Greenstone"),
common stock upon exercise of the San Andres option (Note 5).
These shares were valued at $700,000 which was the average of the
daily closing price on the Toronto Stock Exchange for the five
trading days preceding the exercise date of the option, adjusted
to United States dollars.
The Company has adopted Statement of Financial Accounting
Standards ("SFAS ") No. 115 which applies to certain investments
in equity securities. At July 31, 1995, the Company held 142,300
shares of Greenstone stock. Since the shares are listed on both
NASDAQ and the Toronto Stock Exchange, the average closing price
(converted to United States dollars) of the two exchanges was
used to determine the fair value. The fair value was determined
to be $346,000 which resulted in an unrealized gain on trading
securities of $206,000. The gain is included in the statements of
operations.
In the quarter ended July 31, 1995, the Company sold 66,000
shares and received net proceeds of $121,000 which resulted in a
gain on the sale of trading securities of $20,000 which is shown
on the statement of operations.
In the quarter ended April 30, 1995, the Company sold 119,000
shares and received net proceeds of $117,000 which resulted in a
loss on the sale of trading securities of $13,000 which is shown
on the statement of operations.
Abandonment of Mineral Interests
Mineral Interests in unproven properties are evaluated on a
quarterly basis for possible impairment. Management evaluation
considers all the facts and circumstances known about each
property including: the results of drilling and other
exploration activities to date; the desirability and likelihood
that additional future exploration activities will be undertaken
by the Company or by others; the land holding costs including
work commitments, rental and royalty payments and other lease and
claim maintenance commitments; the expiration date of the lease
including any earlier dates by which notice of intent to
terminate the lease must be given in order to avoid work
commitments; the accessibility of the property; the ability and
likelihood to joint venture the property with others; and, if
producing, the cost and revenue of operation.
Unproven properties are considered fully or partially impaired,
and are fully or partially abandoned, at the earliest of the time
that: geologic mapping, surface sample assays or drilling results
fail to confirm the geologic concepts involved at the time the
property was acquired; a decision is made not to perform the work
commitments or to make the lease payments required to retain the
property; the Company discontinues its efforts to find a joint
venture partner to fund future exploration activities and has
decided not to fund those costs itself; or, the time the property
interest terminates by contract or by operation of law.
Reclamation Liabilities
Reclamation liabilities are recorded as liabilities (and as a
cost of the related property) in the period in which the drilling
or mining activity which generates the reclamation requirement
occurs.
Generative Exploration Expense
The costs of generative exploration activities that do not result
in the acquisition of mineral interests are expensed.
Income Taxes
Because of the Company's exploration activities and net operating
loss carryovers, the Federal tax rate for the year ended January
31, 1995 was zero. Accordingly, no provision for Federal Income
taxes was made in the statement of operations for the quarter
ended July 31, 1995. Because of the Company's gain on the sale
of mineral interest, the provision for State income taxes,
primarily for the State of Idaho, was increased from $1,000 to
$11,000.
Earnings Per Share
Net income (loss) per common share has been computed on the basis
of the weighted average number of common shares outstanding
during each period using the modified treasury stock method.
Since the number of shares of common stock obtainable upon
exercise of outstanding options exceeds 20% of the number of
common shares outstanding, the treasury stock method has been
modified to assume exercise of all outstanding options. In these
circumstances, the assumed proceeds are first applied to share
repurchase, next to reduction of debt and the remaining balance
of the proceeds are invested in U.S. Government securities with
appropriate recognition of any income tax effect. The net result
of this calculation is that the effect of the options in
non-dilutive.
(3) PROPERTY AND EQUIPMENT
A summary of the cost basis of mineral properties and prospects
as of July 31 and January 31, 1995, is:
July 31 January 31
Oatman (United Western), Arizona $ 10,000 $ 136,000
Modoc, California 72,000 72,000
Minas de Oro, Honduras - 59,000
Tuscarora, Nevada 45,000 77,000
America Mine, California 18,000 16,000
La Victoria, Honduras 5,000 -
Other mineral interests
(each less than $40,000) 42,000 27,000
------- -------
$ 192,000 $ 387,000
The Company's property interests require minimum payments to be
made, or work commitments to be satisfied, to maintain ownership
of the property. However, all of these payments may be avoided
by timely forfeiture of the related property interest. If the
joint venture partner, or the Company, fails to meet these
commitments,the Company could lose its rights to explore, develop
or mine the property. The table below lists the various
properties and the required financial commitments.
PROPERTY COMMITMENTS
For the year ending July 31, 1996
Lease Work J.V. Net FWG
Property Payments Commit. Total Share Cost
-------- -------- -------- -------- -------- --------
America $48,000 $102,000 $152,000 $152,000 $ -
La Victoria 10,000 25,000 35,000 - 35,000
Tuscarora - 2,000 2,000 2,000 -
Modoc 26,000 - 26,000 26,000 -
Oatman - - - - -
Other 48,000 193,000 241,000 191,000 50,000
------ -------- -------- -------- -------
Totals $132,000 $324,000 $456,000 $371,000 $85,000
(4) NOTES PAYABLE
Kennecott Loan
In March 1992, Kennecott loaned Fischer-Watt $500,000. Principal
and interest on this loan were repayable in monthly installments
of $100,000 beginning August 1, 1992. The loan bore interest at
the higher of 10% or prime plus 5% and was secured by the
Company's interest in the America Mine property. The Company was
in default as to payment of principal and interest on this loan
from August 1,1992 until May 16, 1995 when the note and
associated interest were canceled in conjunction with the sale of
the Company's mineral interest in the Minas de Oro, Honduras
property. (See Item 2 Management's Discussion and Analysis or
Plan of Operation -"Liquidity and Financial Position".)
(5) GREENSTONE RESOURCES TRANSACTIONS
On November 2, 1993, the Company signed a letter of intent to be
acquired by Greenstone Resources Ltd. During the due diligence
period, Greenstone advanced funds to the Company for current
operations. The proposed merger was terminated by Greenstone in
February 1994. Greenstone advanced $94,000 during that period.
In March 1994, Fischer-Watt accepted an offer from Greenstone to
acquire an option to purchase all of Fischer-Watt's interests in
the San Andres project in Honduras. As consideration for the
option, Greenstone paid Fischer-Watt $105,000 and forgave $90,000
of a $94,000 loan provided to Fischer-Watt pursuant to the
terminated merger transaction. At April 30, 1994, the Company
recognized a gain of $109,000 on this transaction.
Greenstone exercised its option on October 31, 1994 by forgiving
the remaining loan balance of $4,000, paying Fischer-Watt a
further $56,000 and issuing it $700,000 worth of Greenstone
common stock, valued at the time of exercise. Upon exercise of
the option, Greenstone was assigned Fischer-Watt's option to
acquire 51% of Compania Minerales de Copan, S.A. de C.V. from
Milner Consolidated Silver Mines (25.5%) and North American
Palladium Resources (25.5%) as well as all of Fischer-Watt's
other rights and interest in the San Andres project subject to
the shares described below. Minerales de Copan owns the San
Andres project and is currently producing gold from a small open
pit, heap leach operation within the project boundaries.
On August 4, 1994, the Company received the first instalment of a
loan from Greenstone Resources Canada Ltd. The loan was
negotiated as part of the San Andres option agreement. The loan
is to provide all of the funds to purchase up to nine percent of
the shares of Compania Minerales de Copan S.A. de C.V. ("Copan").
The Company believes that the total loan amount may eventually
exceed $250,000. The loan is nonrecourse as to both principal and
interest to the Company and is to be repaid out of dividends, if
any, from the Copan shares. The shares are pledged to Greenstone
as collateral for the loan which is due on or before December 31,
1999. At July 31, 1995 this loan plus associated accrued
interest totaled $100,000. At July 31, 1995, the Company owned,
or had options to purchase, seven percent of the outstanding
shares of Copan.
On August 28, 1995, the Company agreed to convey all of these
shares and options to acquire additional shares as part of the
purchase price for the for the shares of Greenstone of Colombia.
Under the terms of the agreement, the nonrecourse debt and
accrued interest associated with this debt will be forgiven.
(See Item 2 Management's Discussion and Analysis or Plan of
Operation -"Subsequent Events".)
(6) COMMITMENTS
Property Leases
The Company's property interests require minimum payments to be
made, or work commitments to be satisfied, to maintain ownership
of the property. However, all of these payments may be avoided
by timely forfeiture of the related property interest. (See Note
3 and Item 2 "Subsequent Events".)
Item 2. Management's Discussion and Analysis or Plan of
Operation
The following is a discussion of Fischer-Watt Gold Company,
Inc.'s ("Fischer-Watt" or the "Company") current financial
condition as well as its operations for the three months and six
months ended July 31, 1995 (fiscal 1996) and July 31, 1994
(fiscal 1995). This discussion should be read in conjunction
with the Financial Statements in Item 1 of this report as well as
the Financial Statements in Form 10-K for the fiscal year ended
January 31, 1995 on file with the Securities and Exchange
Commission, as the discussion set forth below is qualified in its
entirety by reference thereto.
LIQUIDITY AND FINANCIAL POSITION
As of September 1, 1995, the Company had $29,000 in cash and
accounts payable of $88,000. The Company also has 122,300 shares
of Greenstone common stock that had an approximate market value
of $321,000 that could be sold to provide funds for operations.
In March 1992, Kennecott loaned Fischer-Watt $500,000. Principal
and interest on this loan were repayable in monthly installments
of $100,000 beginning August 1, 1992. The loan bore interest at
the higher of 10% or prime plus 5% and was secured by the
Company's interest in the America Mine property. The Company was
in default as to payment of principal and interest on this loan
from August 1, 1992 until May 16, 1995 when the note and
associated interest were canceled in conjunction with the sale of
the Company's mineral interest in the Minas de Oro, Honduras
property. (See Note 4 to Financial Statements.)
Subsequent Events
On August 28, 1995, the Company signed an agreement to purchase
100% of Greenstone Resources Ltd.'s wholly-owned Colombian
branch, Greenstone of Colombia ("GOC"). Greenstone of Colombia
owns 94.9% of Compania Minera Oronorte S. A. ("Oronorte"). Under
the terms of the agreement, Fischer-Watt will convey all rights
and interests it holds in Compania Minerales de Copan S.A. de
C.V. ("Copan") to Greenstone Resources Ltd.. In return,
Fischer-Watt will acquire all ownership rights of GOC which
include GOC's interest in Oronorte which owns an operating gold
mine and related cash and receivables and saleable gold in
inventory of not less than $450,000, subject to certain
liabilities not exceeding $1,000,000 and equipment lease
obligations not exceeding $375,000. Fischer-Watt has taken
operating control of GOC and its subsidiaries and their
respective operations.
The Oronorte is an underground mine in northern Colombia. It
produces gold concentrates that are shipped to Japan for
smelting. It has produced an average of 8,800 ounces of gold for
the past four years. The mine has recently been losing
approximately $75,000 per month. The Company recently assumed
operation of the mine and is conducting engineering studies to
explore the feasibility of expanding production, improving
operating efficiency and reducing costs. The Company is
searching for funds to subsidize operations until planned changes
in operations can take effect. At September 1, 1995, the Company
had only enough cash and trading securities that could be sold
to fund the next three months of operations.
On August 28, 1995, the Company signed a letter of intent to
enter into a business combination with Great Basin Management
Company, Inc. ("GBM") GBM is a privately held minerals
exploration company based in Reno, Nevada. GBM owns Great Basin
Exploration and Mining Company, Inc. ("GBEM") which has several
mineral properties in Nevada's Battle Mountain - Eureka Trend, a
major gold producing district in central Nevada in addition to
mineral interests in Arizona and Canada. Under the terms of the
letter of intent, GBM and Fischer-Watt shall combine through the
merger of GBM with and into a newly formed, wholly-owned
subsidiary of Fischer-Watt Gold Company, Inc. GBM is actively
negotiating with prospective joint venture partners on several of
its properties and evaluating other mineral prospects. At the
closing, as to be defined in a definitive agreement, Fischer-Watt
will issue shares of its common stock representing, immediately
after such issuance, 25% of the outstanding shares of common
stock of Fischer-Watt. The letter of intent is subject to each
party's due diligence and obtaining any necessary approvals.
Either party may terminate the letter of intent if the definitive
agreement has not been executed by October 31. 1995.
On August 28, 1995, the Company agreed to loan GBM up to $108,000
for specified purposes in connection with maintaining certain
mineral property positions. There are no plans to loan GBM any
additional funds. As of September 1, 1995, $97,000 of the loan
had been funded. The loan is secured by all of GBM's interest to
all of the outstanding shares of GBEM. There is no requirement
to repay the loan or any interest thereon unless the proposed
merger between the Company and GBM has not occurred by November
1, 1995, in which event the entire amount of the loan and accrued
interest shall be due and payable on December 1, 1995.
Short-Term Liquidity
While Fischer-Watt was profitable in the latest fiscal year, it
had negative cash flow from operations in the latest fiscal year
and suffered losses from operations and negative cash flow from
operations in each of its prior years. The entire profit was
attributable to a sale of a mineral interest. Since the Company
has no sustaining income or cash flow from operations, it is
currently funding its operations from proceeds of the sale of a
mineral interest and the sale of stock received as part of the
sale price of a mineral interest. The ability of the Company to
continue as a going concern is dependent upon establishing
successful future operations or additional financing, or
disposition of some of the Company's assets. There can be no
assurance that its cash raising efforts will succeed.
The principal assets of the Company consists of investments in
mineral properties and in the common stock of Greenstone
Resources Ltd. The ability of the Company to ultimately realize
the value of these investments is dependent upon successful
future operations and additional financing, or disposition of
assets, since the Company's properties are not projected to
generate cash from mining operations during fiscal 1996.
The Company's net cash provided by operating activities during
the first six months of fiscal 1996 was $48,000 compared to
$239,000 used during the first six months of the prior year.
This increase in cash provided of $287,000 is due primarily to
the Company's net income of $491,000 compared to a loss of
$257,000 in the first six months of the prior year as adjusted to
eliminate noncash items. In the first six months of fiscal 1996,
the Company had gain on sale of mineral interest of $641,000
compared to a $109,000 gain in the first six months of fiscal
1995. The Company had an unrealized gain on trading securities
of $206,000 in the six months ended July 31, 1995. The Company
had proceeds from sales of trading securities of $238,000 during
the first six months of fiscal 1996. There was no comparable gain
or proceeds in the six months ended July 31, 1994 as the Company
had no trading securities. Accrued interest decreased from
$40,000 in the prior year to none in the current fiscal period
due to the cancellation of the Kennecott loan on May 16, 1995.
There was no gain on the sale of equipment in the current period
compared to a $20,000 gain in the six months ended July 31, 1994
which was attributable to sales of vehicles and equipment
pursuant to settlement agreements with former employees.
The change in accounts payable of $91,000 was attributable to the
Company's acquiring $81,000 of stock in a Honduran corporation
during the six months ended July 31, 1994 but not paying for it
until August 1994. (See Note 5 to Financial Statements.)
Net cash provided by investing activities was $61,000 in the
first six months of fiscal 1996 compared to $135,000 in the first
six months of fiscal 1995. This decrease of $74,000 results
primarily from the larger proceeds of the sale of mineral
property offset by an increase in the Company's expenditures for
property acquisition costs. In the six months ended July 31,
1994, the property acquisition and development costs were
unusual in that cash was provided by the return of a reclamation
bond to offset property costs coupled with a very low level of
property acquisition and development activity due to a shortage
of available funds.
Net cash provided by financing activities was $9,000 in the six
months ended July 31, 1995. This was the receipt of a portion of
the nonrecourse loan from Greenstone Resources in conjunction
with the Copan share purchase. (See Note 5 to Financial
Statements.) There was no net cash provided by, or used for,
financing activities in the first quarter of fiscal 1995.
On July 31, 1995, Fischer-Watt's current ratio was 2.9:1 based on
current assets of $477,000 and current liabilities of $162,000.
On January 31, 1995, its current ratio was .5:1 based upon
current assets of $372,000 and current liabilities of $730,000.
The main reason for this improvement was the elimination of the
$500,000 Kennecott loan and accrued interest.
A current ratio of less than 1:1 indicates that the Company does
not have sufficient cash and other current assets to pay its
bills and other liabilities incurred at the end of its fiscal
period which are due and payable within the next 12 months.
Long-Term Liquidity
The Company plans to continue its search for long-term debt or
equity capital to fund its operating and exploration activities
until these activities can be funded from production of mineral
resources.
At July 31, 1995, the Company's long-term debt consisted
entirely of a nonrecourse loan from Greenstone Resources Canada
Ltd. The loan was negotiated as part of the San Andres option
agreement. The loan was to provide all of the funds to purchase
up to nine percent of the shares of Compania Minerales de Copan
S.A. de C.V.("Copan"). The loan was nonrecourse as to both
principal and interest to the Company and was to be repaid out of
dividends, if any, from the Copan shares. At July 31, 1995, this
loan plus associated accrued interest totaled $100,000. On August
28, 1995, the Company signed an agreement to convey all of the
stock and options to acquire stock to Greenstone. Under the
terms of the agreement, the nonrecourse debt and accrued interest
associated with this debt will be forgiven. (See "Subsequent
Events" and Note 5 to Financial Statements.)
RESULTS OF OPERATIONS
Three Months Ended July 31, 1995 Compared with Three Months Ended
July 31, 1994
Fischer-Watt had net income of $569,000, or $.05 per share in the
quarter ended July 31, 1995 compared with a net loss of $273,000,
or $.02 per share, in the quarter ended July 31, 1994. This net
income is attributable to a $641,000 gain on the sale of a
mineral interest and an unrecognized gain of $156,000 on trading
securities. In the quarter ended July 31, 1994, there were no
sales of mineral interests nor any gain on trading securities.
This net income was reduced by higher levels of operating and
administrative and public company costs in the quarter from the
prior year's abnormally low levels. Abandoned properties and
prospects decreased from $197,000 in the three months ended July
31, 1994 to $157,000 in the three months ended July 31, 1995.
Copan Share Purchase
On August 4, 1994, the Company received the first instalment of a
loan from Greenstone Resources Canada Ltd. The loan was
negotiated for in the San Andres option agreement. The loan is
to provide all of the funds to purchase up to nine percent of the
shares of Compania Minerales de Copan S.A. de C.V.(Copan). The
loan is non-recourse as to both principal and interest to the
Company and is to be repaid out of dividends, if any, from the
Copan shares. The shares are pledged to Greenstone as collateral
for the loan which is due on or before December 31, 1999.
On August 28, 1995, the Company signed an agreement to convey all
of the stock and options to acquire stock to Greenstone. Under
the terms of the agreement, the nonrecourse debt and accrued
interest associated with this debt will be forgiven.(See
"Subsequent Events" and Note 5 to Financial Statements.)
Other items
Abandonments in the quarter ended July 31, 1995 were $157,000
compared with $197,000 in the second quarter of fiscal 1995. The
Oatman property in Arizona was partially abandoned after an
independent evaluation indicated that it was unlikely that its
cost would be fully recovered based on the current mineral lease
on the property. The $125,000 writedown reduced its basis to
$10,000. Tuscarora was partially abandoned in the amount of
$32,000 based on the results of the same independent evaluation
leaving the remaining basis at $45,000. In the prior year
quarter ended July 31, 1994, Sukut, Costa Rica, having a cost
basis of $197,000 was the only property abandoned.
Operating and administrative costs increased from $54,000 in the
second quarter of fiscal 1995 to $71,000 in the first quarter of
fiscal 1996. This increase reflects the Company's ability to
resume a more normal level of operations due to its improved cash
position compared to the prior year. The prior year costs did
not reflect normal operations due to the severe cash position of
the Company.
Public company costs increased from $2,000 in the second quarter
of fiscal 1995 to $23,000 in the second quarter of fiscal 1996.
This $18,000 increase is due to the resumption of more normal
levels of corporate relations with the investment community and
due to reimbursing members of the Board of Directors for their
expenses in connection with their services.
Interest expense decreased to $2,000 in the second quarter of
fiscal 1996 from $20,000 in the second quarter of fiscal 1995.
This decrease is due primarily to elimination of accrued interest
expense on the $500,000 Kennecott loan which was canceled in
conjunction with the sale of the Minas de Oro sale. (See above
and Note 4 to Financial Statements.)
Other income increased from none in the second quarter of fiscal
1995 to $35,000 in the second quarter of fiscal 1996. This
$35,000 increase is due primarily to a $32,000 gain on the sale
of trading securities in the current quarter. There were no
comparable sales in the prior year quarter.
Six Months Ended July 31, 1995 Compared with Six Months ended
July 31, 1994
Fischer-Watt had a net income of $491,000, $.04 per share, in the
six months ended July 31, 1995 compared to net loss of $257,000,
$.02 per share, in the six months ended July 31, 1994. This
difference of $748,000 is due primarily to a $641,000 gain from
the sale of Fischer-Watt's interest in the Minas de Oro property
in Honduras coupled with an unrealized gain of $206,000 on
trading securities.
Sale of Minas de Oro mineral interest
On February 28, 1995, Tombstone Explorations Co. Ltd.
("Tombstone"), a Vancouver-based mining and exploration company
entered into a letter agreement with Fischer-Watt to purchase
Fischer-Watt's interest in the Minas de Oro property in Honduras.
Minas de Oro was joint ventured with Kennecott Exploration
Company ("Kennecott") who had an 80 percent working interest.
Tombstone agreed to buy the Kennecott interest and to acquire
Fischer-Watt's $500,000 promissory note to Kennecott, as well as
Fischer-Watt's interest in the property. Tombstone paid
Fischer-Watt $150,000 in cash and delivered for cancellation,
Fischer-Watt's $500,000 promissory note to Kennecott plus all
accrued interest. The transaction closed on May 16, 1995 with the
sale of the Minas de Oro interests to Cerenex Financial A. V. V.,
a subsidiary of Tombstone. The sale resulted in a gain of
$641,000. (See Note 4 to Financial Statements)
Sale of Option on San Andres
In the six months ended July 31, 1994, a gain of $109,000 was
realized from the sale of an option to purchase Fischer-Watt's
interest in the San Andres property.
Other items
Abandonments decreased from $197,000 in the first six months of
fiscal 1995 to $179,000 in the first six months of fiscal 1996.
The Oatman property in Arizona was partially abandoned after an
independent evaluation indicated that it was unlikely that its
cost would be fully recovered based on the current mineral lease
on the property. The $125,000 writedown reduced its net cost
basis to $10,000. The Tuscarora mineral interest in Nevada was
partially abandoned in the amount of $32,000 based on the results
of the same independent evaluation leaving the remaining basis at
$45,000. The Rio Tinto property in Honduras was abandoned when an
exploration program conducted at the end of fiscal 1995 and the
beginning of fiscal 1996 could not confirm mineral values
discovered under earlier exploration programs. Rio Tinto had a
cost basis of $22,000. An additional $3,000 of generative
exploration expense was incurred when a prospect in Nevada was
abandoned when the Company decided not to fund the work needed to
perfect its mining claims. In the six months ended July 31,
1994, Sukut, Costa Rica, having a cost basis of $197,000 was the
only property abandoned.
Operating and administrative costs decreased from $127,000 in the
first six months of fiscal 1995 to $119,000 in the first six
months of fiscal 1996. This $8,000 decrease is primarily due to
lower office occupancy costs in fiscal 1996 resulting from the
closure of the Company's office in Nevada.
Public company costs increased from $23,000 in the first six
months of fiscal 1995 to $44,000 in the first six months of
fiscal 1996. This increase resulted primarily from the Company's
resumption of more normal levels of corporate relations with the
investment community and due to reimbursing members of the Board
of Directors for their expenses in connection with their
services.
Interest on recourse debt decreased to $24,000 in the first six
months of fiscal 1996 from $39,000 in the first six months of
fiscal 1995. This decrease is due primarily to elimination of
interest accrued on the $500,000 Kennecott loan which was
canceled in conjunction with the May 1995 sale of the Minas de
Oro mineral interests. (See above and Note 4 to Financial
Statements.)
Interest and other income increased from$21,000 in the first six
months of fiscal 1995 to $24,000 in the first six months of
fiscal 1996. The income in the current six month period is
attributable to a gain on the sale of trading securities whereas
the gain in the first six months of fiscal 1995 was due to the
Company's $20,000 gain on the sale of vehicles and equipment to
former employees pursuant to employee settlement agreements.
Part II - Other Information
Item 3. Defaults Upon Senior Securities
In March 1992, Kennecott Exploration Company loaned Fischer-Watt
$500,000. Principle and interest on this loan was repayable in
monthly installments of $100,000 beginning August 1, 1992. The
loan bore interest at the higher of 10% or prime plus 5% and was
secured by the Company's interest in the America Mine property.
On May 16, 1995 the note and associated interest were canceled in
conjunction with the sale of the Company's mineral interest in
the Minas de Oro, Honduras property thus curing the default.
(See above and Note 4 to Financial Statements.)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit Item 601
No. Category Exhibit
1 2 Letter of Intent dated August 28, 1995 whereby Fischer-
Watt Gold Company, Inc., and Great Basin Management
Company, Inc., agree to form a business combination.
2 2 August 28, 1995 agreement between Fischer-Watt Gold
Company, Inc., and Greenstone Resources Ltd., whereby
Fischer-Watt agrees to purchase 100% of Greenstone
Resources Ltd.'s wholly-owned Colombian branch,
Greenstone of Colombia ("GOC").
3 3 Articles of Incorporation dated October 20, 1986 filed
as Exhibit 3.1 to Form 10 filed December 22, 1988, and
incorporated herein by reference.
4 3 By-Laws of the Corporation, filed as Exhibit 3.2 to
Form 10 filed December 22, 1988, and incorporated
herein by reference.
5 3 Certificate of Amendment of Articles of Incorporation
of Fischer-Watt Gold Company, Inc., dated February 8,
1987,filed as Exhibit 3.3 to Form 10 filed December 22,
1988, and incorporated herein by reference.
6 10 Letter Agreement between BMR Gold Corporation and
Fischer-Watt Gold Company, Inc., regarding the America
Mine Property effective September 20, 1989, and filed
as Exhibit 19.1 to Form 10-Q filed November 20, 1989
and incorporated herein by reference.
7 10 Fischer-Watt Gold Company, Inc., non-qualified stock
option plan of May 1987 and filed as Exhibit 36.10 to
Form 10-K filed April 23, 1991 and incorporated herein
by reference.
8 10 Greenstone Letter Agreement dated November 2, 1993
whereby Greenstone Resources Ltd., and Fischer-Watt
Gold Company, Inc. agree to a merger of Fischer-Watt
Gold Company, Inc., with a wholly-owned subsidiary of
Greenstone and filed as Exhibit 49.10 to Form 10-Q
filed December 10, 1993 and incorporated herein by
reference.
9 10 Employment Agreement effective September 1, 1993
between Fischer-Watt Gold Company, Inc., and George
Beattie whereby Fischer-Watt agrees to employ Mr.
Beattie for a two-year period as Chief Executive
Officer and filed as Exhibit 20.10 to Form 10-K filed
May 11, 1994 and incorporated herein by reference.
10 10 Loan Agreement dated November 12, 1993 between Fischer-
Watt Gold Company, Inc., and Greenstone Resources Ltd.,
whereby Greenstone agreed to lend Fischer-Watt working
capital during the prospective merger's due diligence
period and filed as Exhibit 21.10 to Form 10-K filed
May 11, 1994 and incorporated herein by reference.
11 10 Letter from Greenstone Resources Ltd., dated
February 1,1994 to Fischer-Watt Gold Company, Inc.,
whereby Greenstone advised that the merger agreement
dated November 2, 1993 between Greenstone and
Fischer-Watt Gold is terminated as of that date and
filed as Exhibit 22.10 to Form 10-K filed May 11, 1994
and incorporated herein by reference.
12 10 Option Agreement between Greenstone Resources Ltd., and
Fischer-Watt Gold Company, Inc., dated March 24, 1994,
whereby Greenstone has the right to purchase all of
Fischer-Watt's interest in the San Andres property in
Honduras and filed as Exhibit 23.10 to Form 10-K filed
May 11, 1994 and incorporated herein by reference.
13 10 Exploration Agreement between Fischer-Watt Gold
Company, Inc.'s 50% owned Mexican company, Minera
Montoro S.A. de C.V., and Gatro South America Holdings
Limited (GSA) dated March 25, 1994, whereby GSA funds
a Generative Exploration program in Baja California,
Mexico and filed as Exhibit 24.10 to Form 10-K filed
May 11, 1994 and incorporated herein by reference.
14 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and W. Perry Durning, a former employee, whereby terms
for payment of unpaid wages and expenses were accepted
by the parties and filed as Exhibit 25.10 to Form 10-K
filed May 11, 1994 and incorporated herein by
reference.
15 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and Joel Heath, a former employee, whereby terms for
payment of unpaid wages and expenses were accepted by
the parties and filed as Exhibit 26.10 to Form 10-K
filed May 11, 1994 and incorporated herein by
reference.
16 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and Robert Gordon, a former employee, whereby terms for
payment of unpaid wages and expenses were accepted by
the parties and filed as Exhibit 27.10 to Form 10-K
filed May 11, 1994 and incorporated herein by
reference.
17 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and Frank L. Hillemeyer, a former employee, whereby
terms for payment of unpaid wages and expenses were
accepted by the parties and filed as Exhibit 28.10 to
Form 10-K filed May 11, 1994 and incorporated herein by
reference.
18 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and Michael D. Johnson, a former employee, whereby
terms for payment of unpaid wages and expenses were
accepted by the parties and filed as Exhibit 29.10 to
Form 10-Q filed June 14, 1994 and incorporated herein
by reference.
19 10 Agreement to Assign Leases dated July 7, 1994 between
Fischer-Watt Gold Company, Inc., and Kennecott
Exploration Company whereby Fischer-Watt agrees to
assign its interests in the Modoc property located in
Imperial County, California to Kennecott, reserving a
Net Smelter Return royalty. This agreement was filed
as Exhibit 22.10 to Form 10-Q filed September 13, 1994
and incorporated herein by reference.
20 10 Letter agreement between Fischer-Watt Gold Company,
Inc., and La Cuesta International (LCI) dated August
11, 1994 whereby LCI agrees to lease the Oatman
property located in Mohave County, Arizona. This
agreement was filed as Exhibit 23.10 to Form 10-Q filed
September 13, 1994 and incorporated herein by
reference.
21 10 Stock Pledge Agreement between Fischer-Watt Gold
Company, Inc., and Greenstone Resources Canada Ltd.,
dated July 31, 1994 whereby Fischer-Watt grants a
security interest in shares of Compania Minerales de
Copan S.A. de C.V., acquired under Stock Loans, to
Greenstone. This agreement was filed as Exhibit 24.10
to Form 10-Q filed September 13, 1994 and incorporated
herein by reference.
22 10 Option Agreement - Lock-up Agreement between Fischer-
Watt Gold Company, Inc., and Greenstone Resources Ltd.,
dated October 17, 1994 whereby the San Andres option
agreement was amended to provide for an early advance
of $50,000 as partial payment of the option in exchange
for restrictions on the disposition of Greenstone
shares. This agreement was filed as Exhibit 22.10 to
Form 10-Q filed December 14, 1994 and incorporated
herein by reference.
23 10 English translation of an Exploration Agreement between
Fischer-Watt's Mexican subsidiary, Minera Montoro, S.A.
de C.V. and Minera Cuicuilco, S.A. de C.V. dated
October 18, 1994 whereby Minera Cuicuilco is granted
the rights to explore the Cerrito property in Baja
California, Mexico and was filed as Exhibit 23.10 to
Form 10-Q filed December 14, 1994 and incorporated
herein by reference.
24 10 Acquisition agreement dated November 10, 1994 among
Greenstone Resources Canada Ltd., Greenstone Resources
Ltd., and Fischer-Watt Gold Company, Inc., whereby the
parties finalize the Option Agreement of March 24, 1994
to purchase the San Andres property in Honduras and
modify the Lock-Up Agreement dated October 17, 1994.
This agreement was filed as Exhibit 29.10 to Form 10-K
filed May 15, 1995 and incorporated herein by
reference.
25 10 Letter agreement dated February 28, 1995 between
Tombstone Explorations Co. Ltd., and Fischer-Watt Gold
Company, Inc., whereby Tombstone agrees to purchase all
of Fischer-Watt's rights to the Minas de Oro property
in Honduras. This agreement was filed as Exhibit
30.10 to Form 10-K filed May 15, 1995 and incorporated
herein by reference.
26 10 Letter agreement dated April 13, 1995 between Begeyge
Minera Limitada and Fischer-Watt Gold Company, Inc.,
whereby Fischer-Watt will acquire rights to the
La Victoria, Honduras property. This agreement was
filed as Exhibit 31.10 to Form 10-K filed May 15, 1995
and incorporated herein by reference.
27 10 Option whereby Fischer-Watt Gold Company, Inc., grants
Gerald D. Helgeson an option to purchase 100,000 shares
of Fischer-Watt restricted common stock. This option
was filed as Exhibit 32.10 to Form 10-K filed May 15,
1995 and incorporated herein by reference.
28 10 Option whereby Fischer-Watt Gold Company, Inc., grants
Larry J. Buchanan an option to purchase 100,000 shares
of Fischer-Watt restricted common stock. This option
was filed as Exhibit 33.10 to Form 10-K filed May 15,
1995 and incorporated herein by reference.
29 10 Amendment dated April 20, 1995 to Agreement to Assign
Leases dated July 7, 1994 between Fischer-Watt Gold
Company, Inc., and Kennecott Exploration Company
whereby Fischer-Watt agrees to assign its interests
in the Modoc property located in Imperial County,
California to Kennecott and filed as Exhibit 28.10 to
Form 10-QSB filed June 14, 1995 and incorporated herein
by reference.
30 10 Asset Purchase Agreement dated May 16, 1995 between
Fischer-Watt Gold Company, Inc., and Cerenex Financial
A. V. V., whereby the February 28, 1995 sale of Minas
de Oro is closed and filed as Exhibit 29.10 to Form
10-QSB filed June 14, 1995 and incorporated herein by
reference.
31 10 Option effective June 1, 1995, replacing an option
filed as Exhibit 26.10 to Form 10-QSB filed June 14,
1995, whereby Fischer-Watt Gold Company, Inc., grants
Gerald D.Helgeson an option to purchase 200,000 shares
of Fischer-Watt restricted common stock.
32 10 Option effective June 1, 1995, replacing an option
filed as Exhibit 27.10 to Form 10-QSB filed June 14,
1995, whereby Fischer-Watt Gold Company, Inc., grants
Larry J. Buchanan an option to purchase 100,000 shares
of Fischer-Watt restricted common stock.
33 10 Option effective June 1, 1995 whereby Fischer-Watt
Gold Company, Inc., grants Anthony P. Taylor an option
to purchase 100,000 shares of Fischer-Watt restricted
common stock.
34 10 Option effective June 1, 1995 whereby Fischer-Watt
Gold Company, Inc., grants Kelly Boatright an option
to purchase 25,000 shares of Fischer-Watt restricted
common stock.
35 10 Option effective June 1, 1995 whereby Fischer-Watt Gold
Company, Inc., grants Donald N. Lawrence III an option
to purchase 100,000 shares of Fischer-Watt restricted
common stock.
36 10 Loan agreement dated August 28, 1995, between Fischer-
Watt Gold Company, Inc., and Great Basin Management
Company, Inc., whereby Fischer-Watt agrees to loan
Great Basin Management Company, Inc., up to $108,000.
37 11 Statement regarding per share earnings for the
quarterly period ended July 31, 1995.
38 27 Financial Data Schedule for the quarterly period ended
April 30, 1995 and filed as Exhibit 30.10 to Form
10-QSB filed June 14, 1995 and incorporated herein by
reference.
39 27 Financial Data Schedule for the six month period ended
July 31,1995.
40 99 Promissory Note from Fischer-Watt Gold Company, Inc.
to Kennecott Exploration Company in the amount of
$500,000 dated March 25, 1992 and filed as Exhibit
44.28 to Form 10-K filed April 22, 1993 and
incorporated herein by reference.
41 99 Minutes of Special Meeting of Board of Directors of
Fischer-Watt Gold Company, Inc., dated October 19,
1994, whereby George Beattie's employment contract
dated September 1, 1993 is extended to September 1,
1997. These minutes were filed as Exhibit 28.99 to
Form 10-K filed May 15, 1995 and incorporated herein
by reference.
(b) Reports on Form 8-K - NONE
SIGNATURES
In accordance with the requirements of the Exchange Act the
Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FISCHER-WATT GOLD COMPANY, INC.
September 13, 1995 By /s/ George Beattie
George Beattie, President,
Chief Executive Officer
(Principal Executive Officer),
Chief Financial Officer
(Principal Financial Officer),
Chairman of the Board
and Director
</TABLE>
FISCHER-WATT GOLD COMPANY, INC.
1410 CHERRYWOOD DRIVE
COEUR D'ALENE, IDAHO 83814
August 28, 1995
Great Basin Management Co., Inc.
3400 Kauai Court, Suite 208
Reno, Nevada 89509
Re: Business Combination of Great Basin Management Co.,
Inc. ("GBM") and Fischer-Watt Gold Company, Inc.
("FWG")
Gentlemen:
This letter of intent, when countersigned by you, will
confirm our tentative agreement to combine, in the transaction
described below (the "Transaction"), GBM and FWG. Our agreement
is on the terms, and subject to the conditions, described below.
Except for Items 3A, 4 and 5 below, this letter of intent
represents only our current good-faith intention to negotiate and
enter into a definitive agreement, subject to a more complete
review of your business and to negotiation of such a definitive
agreement in form acceptable to us. It is not, and is not
intended to be, a binding agreement between us (except as to
those specified items), and neither of us shall have any
liability to the other if we fail to execute a definitive
agreement for any reason. Statements below as to what we, or
you, will do, or agree to do, or the like, are so expressed for
convenience only, and are understood in all instances (except for
the items enumerated above) to be subject to our mutual continued
willingness to proceed with any transaction as our negotiations
take place.
1. Fundamental Terms. GBM and FWG shall combine through
the merger of GBM with and into a newly formed wholly-owned
subsidiary of FWG ("Newco"). FWG will form Newco under the laws of
Nevada to consummate the Transaction. At the Closing, as to be
defined in the definitive agreement (the "Agreement"), as
consideration for such Transaction, FWG shall issue shares of its
Common Stock representing, immediately after such issuance, 25% of
the outstanding shares of Common Stock of FWG (the "Consid-
eration").
2. Definitive Agreement. We mutually agree to proceed in good
faith toward negotiation and execution of the Agreement, which
shall provide for the Transaction, and shall contain representa-
tions, conditions, covenants and the like typical in such Transac-
tions. We also agree that if the Agreement has not been executed by
5:00 P.M. pacific time (standard or daylight savings, as then in
effect) on October 31, 1995, this letter of intent shall
automatically be terminated and of no further force or effect,
except for the items enumerated in the first paragraph, which shall
survive any such termination.
3.Conditions. This letter of intent is and, to the extent
applicable, the Agreement will (except as specified below) be
subject to the following conditions:
A. A complete review by each of us of the books,
records, business and affairs of the other. Each of us agrees to
provide to the other and its agents complete access to all of our
respective books, records and personnel for purposes of conducting
our investigation. We agree that all information so provided by
either of us to the other and identified as "confidential" will be
treated by the recipient as such, that the recipient will not make
any use of such information unless the same shall become available
to it through non-confidential means or shall otherwise come into
the public domain, and that if this letter of intent shall be
terminated without an Agreement having been executed, each of us
will return to the other all such confidential documents (and all
copies thereof) in our possession, or will certify to the other
that all of such confidential documents not returned have been
destroyed.
B. Negotiation and execution of the Agreement with
terms, provisions and conditions mutually acceptable to each of
us.
C. Approval of the Transaction by the Boards of
Directors of GBM and FWG.
D. Approval of the Transaction by shareholders of GBM.
E. Approval of the Transaction by banks, lessors or
similar creditors of GBM or FWG whose consent is required.
F. Approval of the Transaction by regulatory
authorities, if any, having jurisdiction over the Transaction.
G. Appropriate confirmations as to compliance with
representations, warranties and covenants, and opinions of
counsel, at the Closing of the Transaction as is customary in
similar agreements.
4. Expenses. Each party to this letter of intent shall bear
its own expenses, except as specifically provided to the contrary
above.
5. Press Releases and Disclosure. Each party agrees that it
will not issue any press release or other disclosure of this
letter of intent or of the Transaction without the prior approval
of the other, which shall not be unreasonably withheld, unless,
in the good faith opinion of counsel, such disclosure is required
by law and time does not permit the obtaining of such consent, or
such consent is withheld.
6.Termination. This letter of intent may be terminated (i)
by either party if the Agreement has not been executed by October
31, 1995 or (ii) by mutual consent of GBM and FWG. In the event
of such termination, all provisions hereof shall terminate except
Items 3A, 4 and 5, which shall survive termination of this letter
of intent, and except that if a party is in breach of its obliga-
tions hereunder, such termination shall not relieve such party of
liability for such breach.
Very truly yours,
FISCHER-WATT GOLD COMPANY, INC.
By /s/ George Beattie
President
Confirmed and Agreed:
GREAT BASIN MANAGEMENT CO., INC.
By /s/ Dr. Anthony Taylor Date: August 28, 1995
President
Greenstone
Resources Ltd.
August 28, 1995
Mr. George Beattie
Chairman and Chief Executive Officer
Fischer-Watt Gold Company, Inc.
1410 Cherrywood Drive
Coeur d'Alene, Idaho 83814
Dear George:
This Agreement sets forth all of the terms and conditions whereby
Fischer-Watt Gold Company, Inc. ("FWG") irrevocably agrees to
purchase 100% of Greenstone Resources Ltd.'s ("GRE") wholly-owned
Colombian branch, Greenstone of Colombia ("GOC").
Commercial Terms
(1) FWG or its subsidiaries shall at closing convey to Greenstone
all rights and interests FWG holds in Minerales de Copan ("Copan
Interests"), including shares and options to acquire shares and
GRE shall at closing convey to FWG 100% of GOC and any other
shares of GOC or Compania Minera Oronorte S.A. ("Oronorte") owned
by GRE on any GRE subsidiary.
(2) FWG as of closing shall acquire all ownership rights of GOC.
The liabilities of GOC include the bank debt with certain
Colombian banks, the equipment lease obligations with Union
Leasing and Finevesa ("Lease Obligations"), the existing accounts
payable and accrued royalty obligations of GOC's majority owned
subsidiary, Oronorte. GRE shall at closing forgive any amounts
owed by GOC or Oronorte to GRE or any of it's subsidiaries.
(3) GRE shall as of closing forgive FWG of any amounts owed by
FWG to GRE or any of its subsidiaries.
(4) GRE shall as of closing indemnify FWG and its subsidiaries
from any and all financial obligations resulting from any legal
actions taken by Norman Bracht, John Miller or their related
companies. GRE also agrees to pursue legal action against Bracht
and Miller at its expense and any Colombian land or mineral
rights obtained from such action shall be offered to Oronorte at
GRE's cost, if any.
Representations and Warranties of FWG
FWG hereby represents and warrants that:
(5) Except for the liens in favour of GRE, there are no other
existing liens or encumbrances against the Copan shares. Any
additional Copan Interests which FWG may acquire after the date
of this Agreement shall be offered forthwith to GRE for purchase
by GRE at FWG's cost.
(6) Upon execution of this Agreement, FWG agrees to take
operating control of GOC and its subsidiaries and their
respective operations.
(7) FWG has obtained all the necessary corporate approvals to
enter into this transaction.
Representations and Warranties of GRE
GRE hereby represents and warrants that:
(8) GOC and its subsidiaries are validly existing corporate
entities under Colombian law.
(9) At the date of closing GOC shall not own not less than 94.9%
of the outstanding shares of Oronorte. At the date of closing
there will be no existing liens or encumbrances against such
shares, and there will be no outstanding rights to acquire equity
interests in Oronorte. At the date of closing GRE shall own 100%
of the outstanding shares of GOC, there will be no existing liens
or encumbrances against such shares, and there will be no
outstanding rights to acquire equity interests in GOC. Any
additional shares of Oronorte which GRE may acquire after the
date of closing shall be offered forthwith to FWG for purchase by
FWG at GRE's costs.
(10) The total liabilities of GOC and its subsidiaries as of
August 24, 1995, excluding the Lease Obligations, including any
contingent liabilities, shall not exceed US $1,000,000. The
amount of the Lease Obligations at the time of closing shall not
exceed US $375,000.
(11) The total of cash, accounts receivable and saleable gold in
inventory of GOC and it's subsidiaries, as of August 24, 1995
shall not be less than US $450,000. Expenditures after August
24, 1995 will follow the ordinary course of business.
(12) GRE has the corporate power and authority and has or will
obtain by the date of closing all necessary approvals to enter
into this transaction.
(13) Prior to Closing, GRE shall cause the officers and directors
of GOC and Oronorte to take direction from FWG and to do all
things necessary to ensure that FWG is able to exercise control
over GOC and Oronorte.
(14) GOC and Oronorte have and will have at closing, good and
marketable title, or valid leasehold rights in the case of
leasehold property, to all assets owned or leased by them or used
by them in the conduct of their business, free and clear of liens
or encumbrances.
(15) To the best of GRE's knowledge, this transaction does not
conflict with or result in a breach of any contractual legal or
regulatory obligation to which GOC, Oronorte, or any of their
assets are subject to and will not result in the acceleration of
any debt or other obligation to which GOC or Oronorte are
subject.
(16) The material terms of the relationship and contractual
obligations of GOC or Oronorte with Dual Resources is accurately
stated or summarized as follows: Dual resources owns 2.8 million
shares of Oronorte, Oronorte owes certain taxes to Dual
Resources, GRE will indemnify FWG for the US $300,000 payment to
Dual Resources.
Closing
(17) The parties hereto agree to effect a Closing of this
transaction as soon as possible and to execute any and all
documents required to give effect to this transaction.
Sincerely,
Greenstone Resources Ltd.
/s/ J. Randy Martin
Senior Vice-President
Chief Operating Officer
/s/ George Beattie
Reviewed, Agreed and Accepted on August 28, 1995
Fischer-Watt Gold Company, Inc.
OPTION
THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURI-
TIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS
(THE "STATE ACTS") AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED,
DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDER-
ATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF
FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH
EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN
EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE ACT AND THE STATE ACTS.
OPTION TO PURCHASE 200,000 SHARES OF COMMON STOCK
FISCHER-WATT GOLD COMPANY, INC.
(A Nevada Corporation)
Not Transferable or Exercisable Except
upon Conditions Herein Specified
Void after 5:00 O'Clock P.M.,
Mountain Time, on June 1, 2001
Fischer-Watt Gold Company, Inc., a Nevada corporation (the
"Company") hereby certifies that Gerald D. Helgeson or his regis-
tered successors and permitted assigns thereof, registered on the
books of the Company maintained for such purposes as the
registered holder hereof (the "Holder"), for value received, is
entitled to purchase from the Company the number of fully paid
and non-assessable shares of Common Stock of the Company, of the
par value of $.001 per share (the "Shares"), stated above at the
purchase price of $.0625 per Share (the "Exercise Price") (the
number of Shares and Exercise Price being subject to adjustment
as hereinafter provided) upon the terms and conditions herein
provided.
1. Exercise of Option.
(a) Subject to subsection (b) of this Section 1, upon
presentation and surrender of this Option Certificate, with the
attached Purchase Form duly executed, at the principal office of
the Company at 1410 Cherrywood Drive, Couer d'Alene, Idaho
83814, or at such other place as the Company may designate by
notice to the Holder hereof, together with a certified or bank
cashier's check payable to the order of the Company in the amount
of the Exercise Price times the number of Shares being purchased,
the Company shall deliver to the Holder hereof, as promptly as
practicable, certificates representing the Shares being
purchased. This Option may be exercised in whole or in part;
and, in case of exercise hereof in part only, the Company, upon
surrender hereof, will deliver to the Holder a new Option
Certificate or Option Certificates of like tenor entitling the
Holder to purchase the number of Shares as to which this Option
has not been exercised.
(b) This Option may be exercised in whole or in part at any time
after June 1, 1996 and prior to 5:00 o'clock P.M. Mountain Time,
on June 1, 2001. In the event that, prior to June 1, 1996, the
Holder shall cease for any reason whatsoever to be a director of
the Company, except due to removal by the shareholders of the
Company, failure to be nominated for election at a meeting of the
Company's shareholders at which directors are to be elected, or
failure to be elected by the shareholders of the Company if
nominated for election at such a meeting, this Option shall
immediately and automatically be and become null and void and of
no further force or effect.
2. Exchange and Transfer of Option. This Option at any time
prior to the exercise hereof, upon presentation and surrender to
the Company, may be exchanged, alone or with other Options of
like tenor registered in the name of the Holder, for another
Option or other Options of like tenor in the name of such Holder
exercisable for the same aggregate number of Shares as the Option
or Options surrendered.
3. Rights and Obligations of Option Holder.
(a) The Holder of this Option Certificate shall not, by virtue
hereof, be entitled to any rights of a stockholder in the
Company, either at law or in equity; provided, however, in the
event that any certificate representing the Shares is issued to
the Holder hereof upon exercise of this Option, such Holder
shall, for all purposes, be deemed to have become the holder of
record of such Shares on the date on which this Option
Certificate, together with a duly executed Purchase Form, was
surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such Share certificate.
The rights of the Holder of this Option are limited to those
expressed herein and the Holder of this Option, by its acceptance
hereof, consents to and agrees to be bound by and to comply with
all the provisions of this Option Certificate, including, without
limitation, all the obligations imposed upon the Holder hereof by
Section 5 hereof. In addition, the Holder of this Option
Certificate, by accepting the same, agrees that the Company may
deem and treat the person in whose name this Option Certificate
is registered on the books of the Company maintained for such
purpose as the absolute, true and lawful owner for all purposes
whatsoever, notwithstanding any notation of ownership or other
writing thereon, and the Company shall not be affected by any
notice to the contrary.
(b) No Holder of this Option Certificate, as such, shall be
entitled to vote or receive dividends or to be deemed the holder
of Shares for any purpose, nor shall anything contained in this
Option Certificate be construed to confer upon any Holder of this
Option Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to
any action by the Company, whether upon any recapitalization,
issue of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise, receive notice of meetings or other
action affecting stockholders (except for notices provided for
herein), receive dividends, subscription rights, or otherwise,
until this Option shall have been exercised and the Shares
purchasable upon the exercise thereof shall have become
deliverable as provided herein; provided, however, that any such
exercise on any date when the stock transfer books of the Company
shall be closed shall constitute the person or persons in whose
name or names the certificate or certificates for those Shares
are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on
which such stock transfer books are open, and the Option
surrendered shall not be deemed to have been exercised, in whole
or in part as the case may be, until the next succeeding day on
which stock transfer books are open for the purpose of
determining entitlement to dividends on the Company's common
stock.
4. Shares Underlying Option. The Company covenants and agrees
that all Shares delivered upon exercise of this Option shall,
upon delivery and payment therefor, be duly and validly
authorized and issued, fully paid and non-assessable, and free
from all stamp-taxes, liens, and charges with respect to the
purchase thereof. In addition, the Company agrees at all time to
reserve and keep available an authorized number of Shares
sufficient to permit the exercise in full of this Option.
5. Disposition of Option or Shares.
(a) The holder of this Option Certificate and any transferee
hereof or of the Shares issuable upon the exercise of the Option
Certificate, by their acceptance hereof, hereby understand and
agree that the Option, and the Shares issuable upon the exercise
hereof, have not been registered under either the Securities Act
of 1933 (the "Act") or applicable state securities laws (the
"State Acts") and shall not be sold, pledged, hypothecated,
donated, or otherwise transferred (whether or not for consider-
ation) except upon the issuance to the Company of a favorable
opinion of counsel or submission to the Company of such evidence
as may be satisfactory to counsel to the Company, in each such
case, to the effect that any such transfer shall not be in
violation of the Act and the State Acts. It shall be a condition
to the transfer of this Option that any transferee hereof deliver
to the Company its written agreement to accept and be bound by
all of the terms and conditions of this Option Certificate.
(b) The stock certificates of the Company that will evidence the
shares of Common Stock with respect to which this Option may be
exercisable will be imprinted with a conspicuous legend in
substantially the following form:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts") and shall not
be sold, pledged, hypothecated, donated or otherwise transferred
(whether or not for consideration) by the holder except upon the
issuance to the Company of a favorable opinion of its counsel or
submission to the Company of such other evidence as may be
satisfactory to counsel to the Company, in each such case, to the
effect that any such transfer shall not be in violation of the
Act and the State Acts.
The Company has not agreed to register any of the holder's shares
of Common Stock of the Company with respect to which this Option
may be exercisable for distribution in accordance with the
provisions of the Act or the State Acts and, the Company has not
agreed to comply with any exemption from registration under the
Act or the State Acts for the resale of the holder's shares of
Common Stock of the Company with respect to which this Option may
be exercised. Hence, it is the understanding of the holders of
this Option that by virtue of the provisions of certain rules
respecting "restricted securities" promulgated by the SEC, the
shares of Common Stock of the Company with respect to which this
Option may be exercisable may be required to be held
indefinitely, unless and until registered under the Act and the
State Acts, unless an exemption from such registration is avail-
able, in which case the holder may still be limited as to the
number of shares of Common Stock of the Company with respect to
which this Option may be exercised that may be sold.
6. Adjustments. The number of Shares purchasable upon the
exercise of this Option is subject to adjustment from time to
time upon the occurrence of any of the events enumerated below.
(a) In case the Company shall: (i) pay a dividend in Shares, (ii)
subdivide its outstanding Shares into a greater number of Shares,
(iii) combine its outstanding Shares into a smaller number of
Shares, or (iv) issue, by reclassification of its Shares, any
shares of its capital stock, the amount of Shares purchasable
upon the exercise of this Option immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive upon
exercise of the Option that number of Shares which such Holder
would have owned or would have been entitled to receive after the
happening of such event had such Holder exercised the Option
immediately prior to the record date, in the case of such
dividend, or the effective date, in the case of any such
subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (a) shall be made whenever any of
such events shall occur, but shall become effective retroactively
after such record date or such effective date, as the case may
be, as to any exercise between such record date or effective date
and the date of happening of any such event.
(b) Notice to Option Holders of Adjustment. Whenever the number
of Shares purchasable hereunder is adjusted as herein provided,
the Company shall cause to be mailed to the Holder in accordance
with the provisions of this Section 6 a notice (i) stating that
the number of Shares purchasable upon exercise of this Option
have been adjusted, (ii) setting forth the adjusted number of
Shares purchasable upon the exercise of this Option, and (iii)
showing in reasonable detail the computations and the facts,
including the amount of consideration received or deemed to have
been received by the Company, upon which such adjustments are
based.
7. Fractional Shares. The Company shall not be required to issue
any fraction of a Share upon the exercise of this Option. If
more than one Option shall be surrendered for exercise at one
time by the same Holder, the number of full Shares which shall be
issuable upon exercise thereof shall be computed on the basis of
the aggregate number of Shares with respect to which this Option
is exercised. If any fractional interest in a Share shall be
deliverable upon the exercise of this Option, the Company shall
make an adjustment therefor in cash equal to such fraction
multiplied by the Exercise Price.
8. Loss or Destruction. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Option Certificate and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement or bond
satisfactory in form, substance and amount to the Company or, in
the case of any such mutilation, upon surrender and cancellation
of this Option Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Option Certificate of
like tenor.
9. Survival. The various rights and obligations of the Holder
hereof as set forth herein shall survive the exercise of the
Option represented hereby and the surrender of this Option
Certificate.
10. Notices. Whenever any notice, payment of any purchase price,
or other communication is required to be given or delivered under
the terms of this Option, it shall be in writing and delivered by
hand delivery or United States registered or certified mail,
return receipt requested, postage prepaid, and will be deemed to
have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the
case may be; and, if to the Company, it will be addressed to the
address specified in Section 1 hereof, and if to the Holder, it
will be addressed to the registered Holder at its, his or her
address as it appears on the books of the Company.
FISCHER-WATT GOLD COMPANY, INC.
By /s/ George Beattie
Chief Executive Officer
Date: June 1, 1995
ATTEST:
By /s/ Gerald D. Helgeson
Secretary
OPTION
THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURI-
TIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS
(THE "STATE ACTS") AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED,
DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDER-
ATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF
FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH
EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN
EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE ACT AND THE STATE ACTS.
OPTION TO PURCHASE 100,000 SHARES OF COMMON STOCK
FISCHER-WATT GOLD COMPANY, INC.
(A Nevada Corporation)
Not Transferable or Exercisable Except
upon Conditions Herein Specified
Void after 5:00 O'Clock P.M.,
Mountain Time, on June 1, 2001
Fischer-Watt Gold Company, Inc., a Nevada corporation (the
"Company") hereby certifies that Lawrence J. Buchanan or his
registered successors and permitted assigns thereof, registered
on the books of the Company maintained for such purposes as the
registered holder hereof (the "Holder"), for value received, is
entitled to purchase from the Company the number of fully paid
and non-assessable shares of Common Stock of the Company, of the
par value of $.001 per share (the "Shares"), stated above at the
purchase price of $.0625 per Share (the "Exercise Price") (the
number of Shares and Exercise Price being subject to adjustment
as hereinafter provided) upon the terms and conditions herein
provided.
1. Exercise of Option.
(a) Subject to subsection (b) of this Section 1, upon
presentation and surrender of this Option Certificate, with the
attached Purchase Form duly executed, at the principal office of
the Company at 1410 Cherrywood Drive, Couer d'Alene, Idaho
83814, or at such other place as the Company may designate by
notice to the Holder hereof, together with a certified or bank
cashier's check payable to the order of the Company in the amount
of the Exercise Price times the number of Shares being purchased,
the Company shall deliver to the Holder hereof, as promptly as
practicable, certificates representing the Shares being
purchased. This Option may be exercised in whole or in part;
and, in case of exercise hereof in part only, the Company, upon
surrender hereof, will deliver to the Holder a new Option
Certificate or Option Certificates of like tenor entitling the
Holder to purchase the number of Shares as to which this Option
has not been exercised.
(b) This Option may be exercised in whole or in part at any time
after June 1, 1996 and prior to 5:00 o'clock P.M. Mountain Time,
on June 1, 2001. In the event that, prior to June 1, 1996, the
Holder shall cease for any reason whatsoever to be a director of
the Company, except due to removal by the shareholders of the
Company, failure to be nominated for election at a meeting of the
Company's shareholders at which directors are to be elected, or
failure to be elected by the shareholders of the Company if
nominated for election at such a meeting, this Option shall
immediately and automatically be and become null and void and of
no further force or effect.
2. Exchange and Transfer of Option. This Option at any time
prior to the exercise hereof, upon presentation and surrender to
the Company, may be exchanged, alone or with other Options of
like tenor registered in the name of the Holder, for another
Option or other Options of like tenor in the name of such Holder
exercisable for the same aggregate number of Shares as the Option
or Options surrendered.
3. Rights and Obligations of Option Holder.
(a) The Holder of this Option Certificate shall not, by virtue
hereof, be entitled to any rights of a stockholder in the
Company, either at law or in equity; provided, however, in the
event that any certificate representing the Shares is issued to
the Holder hereof upon exercise of this Option, such Holder
shall, for all purposes, be deemed to have become the holder of
record of such Shares on the date on which this Option
Certificate, together with a duly executed Purchase Form, was
surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such Share certificate.
The rights of the Holder of this Option are limited to those
expressed herein and the Holder of this Option, by its acceptance
hereof, consents to and agrees to be bound by and to comply with
all the provisions of this Option Certificate, including, without
limitation, all the obligations imposed upon the Holder hereof by
Section 5 hereof. In addition, the Holder of this Option
Certificate, by accepting the same, agrees that the Company may
deem and treat the person in whose name this Option Certificate
is registered on the books of the Company maintained for such
purpose as the absolute, true and lawful owner for all purposes
whatsoever, notwithstanding any notation of ownership or other
writing thereon, and the Company shall not be affected by any
notice to the contrary.
(b) No Holder of this Option Certificate, as such, shall be
entitled to vote or receive dividends or to be deemed the holder
of Shares for any purpose, nor shall anything contained in this
Option Certificate be construed to confer upon any Holder of this
Option Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to
any action by the Company, whether upon any recapitalization,
issue of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise, receive notice of meetings or other
action affecting stockholders (except for notices provided for
herein), receive dividends, subscription rights, or otherwise,
until this Option shall have been exercised and the Shares
purchasable upon the exercise thereof shall have become
deliverable as provided herein; provided, however, that any such
exercise on any date when the stock transfer books of the Company
shall be closed shall constitute the person or persons in whose
name or names the certificate or certificates for those Shares
are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on
which such stock transfer books are open, and the Option
surrendered shall not be deemed to have been exercised, in whole
or in part as the case may be, until the next succeeding day on
which stock transfer books are open for the purpose of
determining entitlement to dividends on the Company's common
stock.
4. Shares Underlying Option. The Company covenants and agrees
that all Shares delivered upon exercise of this Option shall,
upon delivery and payment therefor, be duly and validly
authorized and issued, fully paid and non-assessable, and free
from all stamp-taxes, liens, and charges with respect to the
purchase thereof. In addition, the Company agrees at all time to
reserve and keep available an authorized number of Shares
sufficient to permit the exercise in full of this Option.
5. Disposition of Option or Shares.
(a) The holder of this Option Certificate and any transferee
hereof or of the Shares issuable upon the exercise of the Option
Certificate, by their acceptance hereof, hereby understand and
agree that the Option, and the Shares issuable upon the exercise
hereof, have not been registered under either the Securities Act
of 1933 (the "Act") or applicable state securities laws (the
"State Acts") and shall not be sold, pledged, hypothecated,
donated, or otherwise transferred (whether or not for consider-
ation) except upon the issuance to the Company of a favorable
opinion of counsel or submission to the Company of such evidence
as may be satisfactory to counsel to the Company, in each such
case, to the effect that any such transfer shall not be in
violation of the Act and the State Acts. It shall be a condition
to the transfer of this Option that any transferee hereof deliver
to the Company its written agreement to accept and be bound by
all of the terms and conditions of this Option Certificate.
(b) The stock certificates of the Company that will evidence the
shares of Common Stock with respect to which this Option may be
exercisable will be imprinted with a conspicuous legend in
substantially the following form:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts") and shall not
be sold, pledged, hypothecated, donated or otherwise transferred
(whether or not for consideration) by the holder except upon the
issuance to the Company of a favorable opinion of its counsel or
submission to the Company of such other evidence as may be
satisfactory to counsel to the Company, in each such case, to the
effect that any such transfer shall not be in violation of the
Act and the State Acts.
The Company has not agreed to register any of the holder's shares
of Common Stock of the Company with respect to which this Option
may be exercisable for distribution in accordance with the
provisions of the Act or the State Acts and, the Company has not
agreed to comply with any exemption from registration under the
Act or the State Acts for the resale of the holder's shares of
Common Stock of the Company with respect to which this Option may
be exercised. Hence, it is the understanding of the holders of
this Option that by virtue of the provisions of certain rules
respecting "restricted securities" promulgated by the SEC, the
shares of Common Stock of the Company with respect to which this
Option may be exercisable may be required to be held
indefinitely, unless and until registered under the Act and the
State Acts, unless an exemption from such registration is avail-
able, in which case the holder may still be limited as to the
number of shares of Common Stock of the Company with respect to
which this Option may be exercised that may be sold.
6. Adjustments. The number of Shares purchasable upon the
exercise of this Option is subject to adjustment from time to
time upon the occurrence of any of the events enumerated below.
(a) In case the Company shall: (i) pay a dividend in Shares, (ii)
subdivide its outstanding Shares into a greater number of Shares,
(iii) combine its outstanding Shares into a smaller number of
Shares, or (iv) issue, by reclassification of its Shares, any
shares of its capital stock, the amount of Shares purchasable
upon the exercise of this Option immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive upon
exercise of the Option that number of Shares which such Holder
would have owned or would have been entitled to receive after the
happening of such event had such Holder exercised the Option
immediately prior to the record date, in the case of such
dividend, or the effective date, in the case of any such
subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (a) shall be made whenever any of
such events shall occur, but shall become effective retroactively
after such record date or such effective date, as the case may
be, as to any exercise between such record date or effective date
and the date of happening of any such event.
(b) Notice to Option Holders of Adjustment. Whenever the number
of Shares purchasable hereunder is adjusted as herein provided,
the Company shall cause to be mailed to the Holder in accordance
with the provisions of this Section 6 a notice (i) stating that
the number of Shares purchasable upon exercise of this Option
have been adjusted, (ii) setting forth the adjusted number of
Shares purchasable upon the exercise of this Option, and (iii)
showing in reasonable detail the computations and the facts,
including the amount of consideration received or deemed to have
been received by the Company, upon which such adjustments are
based.
7. Fractional Shares. The Company shall not be required to issue
any fraction of a Share upon the exercise of this Option. If
more than one Option shall be surrendered for exercise at one
time by the same Holder, the number of full Shares which shall be
issuable upon exercise thereof shall be computed on the basis of
the aggregate number of Shares with respect to which this Option
is exercised. If any fractional interest in a Share shall be
deliverable upon the exercise of this Option, the Company shall
make an adjustment therefor in cash equal to such fraction
multiplied by the Exercise Price.
8. Loss or Destruction. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Option Certificate and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement or bond
satisfactory in form, substance and amount to the Company or, in
the case of any such mutilation, upon surrender and cancellation
of this Option Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Option Certificate of
like tenor.
9. Survival. The various rights and obligations of the Holder
hereof as set forth herein shall survive the exercise of the
Option represented hereby and the surrender of this Option
Certificate.
10. Notices. Whenever any notice, payment of any purchase price,
or other communication is required to be given or delivered under
the terms of this Option, it shall be in writing and delivered by
hand delivery or United States registered or certified mail,
return receipt requested, postage prepaid, and will be deemed to
have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the
case may be; and, if to the Company, it will be addressed to the
address specified in Section 1 hereof, and if to the Holder, it
will be addressed to the registered Holder at its, his or her
address as it appears on the books of the Company.
FISCHER-WATT GOLD COMPANY, INC.
By /s/ George Beattie
Chief Executive Officer
Date: June 1, 1995
ATTEST:
By /s/ Gerald D. Helgeson
Secretary
OPTION
THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURI-
TIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS
(THE "STATE ACTS") AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED,
DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDER-
ATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF
FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH
EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN
EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE ACT AND THE STATE ACTS.
OPTION TO PURCHASE 100,000 SHARES OF COMMON STOCK
FISCHER-WATT GOLD COMPANY, INC.
(A Nevada Corporation)
Not Transferable or Exercisable Except
upon Conditions Herein Specified
Void after 5:00 O'Clock P.M.,
Mountain Time, on June 1, 2001
Fischer-Watt Gold Company, Inc., a Nevada corporation (the
"Company") hereby certifies that Anthony P. Taylor or his regis-
tered successors and permitted assigns thereof, registered on the
books of the Company maintained for such purposes as the
registered holder hereof (the "Holder"), for value received, is
entitled to purchase from the Company the number of fully paid
and non-assessable shares of Common Stock of the Company, of the
par value of $.001 per share (the "Shares"), stated above at the
purchase price of $.0625 per Share (the "Exercise Price") (the
number of Shares and Exercise Price being subject to adjustment
as hereinafter provided) upon the terms and conditions herein
provided.
1. Exercise of Option.
(a) Subject to subsection (b) of this Section 1, upon
presentation and surrender of this Option Certificate, with the
attached Purchase Form duly executed, at the principal office of
the Company at 1410 Cherrywood Drive, Couer d'Alene, Idaho
83814, or at such other place as the Company may designate by
notice to the Holder hereof, together with a certified or bank
cashier's check payable to the order of the Company in the amount
of the Exercise Price times the number of Shares being purchased,
the Company shall deliver to the Holder hereof, as promptly as
practicable, certificates representing the Shares being
purchased. This Option may be exercised in whole or in part;
and, in case of exercise hereof in part only, the Company, upon
surrender hereof, will deliver to the Holder a new Option
Certificate or Option Certificates of like tenor entitling the
Holder to purchase the number of Shares as to which this Option
has not been exercised.
(b) This Option may be exercised in whole or in part at any time
after June 1, 1996 and prior to 5:00 o'clock P.M. Mountain Time,
on June 1, 2001. In the event that, prior to June 1, 1996, the
Holder shall cease for any reason whatsoever to be a director of
the Company, except due to removal by the shareholders of the
Company, failure to be nominated for election at a meeting of the
Company's shareholders at which directors are to be elected, or
failure to be elected by the shareholders of the Company if
nominated for election at such a meeting, this Option shall
immediately and automatically be and become null and void and of
no further force or effect.
2. Exchange and Transfer of Option. This Option at any time
prior to the exercise hereof, upon presentation and surrender to
the Company, may be exchanged, alone or with other Options of
like tenor registered in the name of the Holder, for another
Option or other Options of like tenor in the name of such Holder
exercisable for the same aggregate number of Shares as the Option
or Options surrendered.
3. Rights and Obligations of Option Holder.
(a) The Holder of this Option Certificate shall not, by virtue
hereof, be entitled to any rights of a stockholder in the
Company, either at law or in equity; provided, however, in the
event that any certificate representing the Shares is issued to
the Holder hereof upon exercise of this Option, such Holder
shall, for all purposes, be deemed to have become the holder of
record of such Shares on the date on which this Option
Certificate, together with a duly executed Purchase Form, was
surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such Share certificate.
The rights of the Holder of this Option are limited to those
expressed herein and the Holder of this Option, by its acceptance
hereof, consents to and agrees to be bound by and to comply with
all the provisions of this Option Certificate, including, without
limitation, all the obligations imposed upon the Holder hereof by
Section 5 hereof. In addition, the Holder of this Option
Certificate, by accepting the same, agrees that the Company may
deem and treat the person in whose name this Option Certificate
is registered on the books of the Company maintained for such
purpose as the absolute, true and lawful owner for all purposes
whatsoever, notwithstanding any notation of ownership or other
writing thereon, and the Company shall not be affected by any
notice to the contrary.
(b) No Holder of this Option Certificate, as such, shall be
entitled to vote or receive dividends or to be deemed the holder
of Shares for any purpose, nor shall anything contained in this
Option Certificate be construed to confer upon any Holder of this
Option Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to
any action by the Company, whether upon any recapitalization,
issue of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise, receive notice of meetings or other
action affecting stockholders (except for notices provided for
herein), receive dividends, subscription rights, or otherwise,
until this Option shall have been exercised and the Shares
purchasable upon the exercise thereof shall have become
deliverable as provided herein; provided, however, that any such
exercise on any date when the stock transfer books of the Company
shall be closed shall constitute the person or persons in whose
name or names the certificate or certificates for those Shares
are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on
which such stock transfer books are open, and the Option
surrendered shall not be deemed to have been exercised, in whole
or in part as the case may be, until the next succeeding day on
which stock transfer books are open for the purpose of
determining entitlement to dividends on the Company's common
stock.
4. Shares Underlying Option. The Company covenants and agrees
that all Shares delivered upon exercise of this Option shall,
upon delivery and payment therefor, be duly and validly
authorized and issued, fully paid and non-assessable, and free
from all stamp-taxes, liens, and charges with respect to the
purchase thereof. In addition, the Company agrees at all time to
reserve and keep available an authorized number of Shares
sufficient to permit the exercise in full of this Option.
5. Disposition of Option or Shares.
(a) The holder of this Option Certificate and any transferee
hereof or of the Shares issuable upon the exercise of the Option
Certificate, by their acceptance hereof, hereby understand and
agree that the Option, and the Shares issuable upon the exercise
hereof, have not been registered under either the Securities Act
of 1933 (the "Act") or applicable state securities laws (the
"State Acts") and shall not be sold, pledged, hypothecated,
donated, or otherwise transferred (whether or not for consider-
ation) except upon the issuance to the Company of a favorable
opinion of counsel or submission to the Company of such evidence
as may be satisfactory to counsel to the Company, in each such
case, to the effect that any such transfer shall not be in
violation of the Act and the State Acts. It shall be a condition
to the transfer of this Option that any transferee hereof deliver
to the Company its written agreement to accept and be bound by
all of the terms and conditions of this Option Certificate.
(b) The stock certificates of the Company that will evidence the
shares of Common Stock with respect to which this Option may be
exercisable will be imprinted with a conspicuous legend in
substantially the following form:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts") and shall not
be sold, pledged, hypothecated, donated or otherwise transferred
(whether or not for consideration) by the holder except upon the
issuance to the Company of a favorable opinion of its counsel or
submission to the Company of such other evidence as may be
satisfactory to counsel to the Company, in each such case, to the
effect that any such transfer shall not be in violation of the
Act and the State Acts.
The Company has not agreed to register any of the holder's shares
of Common Stock of the Company with respect to which this Option
may be exercisable for distribution in accordance with the
provisions of the Act or the State Acts and, the Company has not
agreed to comply with any exemption from registration under the
Act or the State Acts for the resale of the holder's shares of
Common Stock of the Company with respect to which this Option may
be exercised. Hence, it is the understanding of the holders of
this Option that by virtue of the provisions of certain rules
respecting "restricted securities" promulgated by the SEC, the
shares of Common Stock of the Company with respect to which this
Option may be exercisable may be required to be held
indefinitely, unless and until registered under the Act and the
State Acts, unless an exemption from such registration is avail-
able, in which case the holder may still be limited as to the
number of shares of Common Stock of the Company with respect to
which this Option may be exercised that may be sold.
6. Adjustments. The number of Shares purchasable upon the
exercise of this Option is subject to adjustment from time to
time upon the occurrence of any of the events enumerated below.
(a) In case the Company shall: (i) pay a dividend in Shares, (ii)
subdivide its outstanding Shares into a greater number of Shares,
(iii) combine its outstanding Shares into a smaller number of
Shares, or (iv) issue, by reclassification of its Shares, any
shares of its capital stock, the amount of Shares purchasable
upon the exercise of this Option immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive upon
exercise of the Option that number of Shares which such Holder
would have owned or would have been entitled to receive after the
happening of such event had such Holder exercised the Option
immediately prior to the record date, in the case of such
dividend, or the effective date, in the case of any such
subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (a) shall be made whenever any of
such events shall occur, but shall become effective retroactively
after such record date or such effective date, as the case may
be, as to any exercise between such record date or effective date
and the date of happening of any such event.
(b) Notice to Option Holders of Adjustment. Whenever the number
of Shares purchasable hereunder is adjusted as herein provided,
the Company shall cause to be mailed to the Holder in accordance
with the provisions of this Section 6 a notice (i) stating that
the number of Shares purchasable upon exercise of this Option
have been adjusted, (ii) setting forth the adjusted number of
Shares purchasable upon the exercise of this Option, and (iii)
showing in reasonable detail the computations and the facts,
including the amount of consideration received or deemed to have
been received by the Company, upon which such adjustments are
based.
7. Fractional Shares. The Company shall not be required to issue
any fraction of a Share upon the exercise of this Option. If
more than one Option shall be surrendered for exercise at one
time by the same Holder, the number of full Shares which shall be
issuable upon exercise thereof shall be computed on the basis of
the aggregate number of Shares with respect to which this Option
is exercised. If any fractional interest in a Share shall be
deliverable upon the exercise of this Option, the Company shall
make an adjustment therefor in cash equal to such fraction
multiplied by the Exercise Price.
8. Loss or Destruction. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Option Certificate and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement or bond
satisfactory in form, substance and amount to the Company or, in
the case of any such mutilation, upon surrender and cancellation
of this Option Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Option Certificate of
like tenor.
9. Survival. The various rights and obligations of the Holder
hereof as set forth herein shall survive the exercise of the
Option represented hereby and the surrender of this Option
Certificate.
10. Notices. Whenever any notice, payment of any purchase price,
or other communication is required to be given or delivered under
the terms of this Option, it shall be in writing and delivered by
hand delivery or United States registered or certified mail,
return receipt requested, postage prepaid, and will be deemed to
have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the
case may be; and, if to the Company, it will be addressed to the
address specified in Section 1 hereof, and if to the Holder, it
will be addressed to the registered Holder at its, his or her
address as it appears on the books of the Company.
FISCHER-WATT GOLD COMPANY, INC.
By /s/ George Beattie
Chief Executive Officer
Date: June 1, 1995
ATTEST:
By /s/ Gerald D. Helgeson
Secretary
OPTION
THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURI-
TIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS
(THE "STATE ACTS") AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED,
DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDER-
ATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF
FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH
EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN
EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE ACT AND THE STATE ACTS.
OPTION TO PURCHASE 25,000 SHARES OF COMMON STOCK
FISCHER-WATT GOLD COMPANY, INC.
(A Nevada Corporation)
Not Transferable or Exercisable Except
upon Conditions Herein Specified
Void after 5:00 O'Clock P.M.,
Mountain Time, on June 1, 2001
Fischer-Watt Gold Company, Inc., a Nevada corporation (the
"Company") hereby certifies that Kelly A. Boatright or his regis-
tered successors and permitted assigns thereof, registered on the
books of the Company maintained for such purposes as the
registered holder hereof (the "Holder"), for value received, is
entitled to purchase from the Company the number of fully paid
and non-assessable shares of Common Stock of the Company, of the
par value of $.001 per share (the "Shares"), stated above at the
purchase price of $.0625 per Share (the "Exercise Price") (the
number of Shares and Exercise Price being subject to adjustment
as hereinafter provided) upon the terms and conditions herein
provided.
1. Exercise of Option.
(a) Subject to subsection (b) of this Section 1, upon
presentation and surrender of this Option Certificate, with the
attached Purchase Form duly executed, at the principal office of
the Company at 1410 Cherrywood Drive, Couer d'Alene, Idaho
83814, or at such other place as the Company may designate by
notice to the Holder hereof, together with a certified or bank
cashier's check payable to the order of the Company in the amount
of the Exercise Price times the number of Shares being purchased,
the Company shall deliver to the Holder hereof, as promptly as
practicable, certificates representing the Shares being
purchased. This Option may be exercised in whole or in part;
and, in case of exercise hereof in part only, the Company, upon
surrender hereof, will deliver to the Holder a new Option
Certificate or Option Certificates of like tenor entitling the
Holder to purchase the number of Shares as to which this Option
has not been exercised.
(b) This Option may be exercised in whole or in part at any time
after June 1, 1996 and prior to 5:00 o'clock P.M. Mountain Time,
on June 1, 2001.
2. Exchange and Transfer of Option. This Option at any time
prior to the exercise hereof, upon presentation and surrender to
the Company, may be exchanged, alone or with other Options of
like tenor registered in the name of the Holder, for another
Option or other Options of like tenor in the name of such Holder
exercisable for the same aggregate number of Shares as the Option
or Options surrendered.
3. Rights and Obligations of Option Holder.
(a) The Holder of this Option Certificate shall not, by virtue
hereof, be entitled to any rights of a stockholder in the
Company, either at law or in equity; provided, however, in the
event that any certificate representing the Shares is issued to
the Holder hereof upon exercise of this Option, such Holder
shall, for all purposes, be deemed to have become the holder of
record of such Shares on the date on which this Option
Certificate, together with a duly executed Purchase Form, was
surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such Share certificate.
The rights of the Holder of this Option are limited to those
expressed herein and the Holder of this Option, by its acceptance
hereof, consents to and agrees to be bound by and to comply with
all the provisions of this Option Certificate, including, without
limitation, all the obligations imposed upon the Holder hereof by
Section 5 hereof. In addition, the Holder of this Option
Certificate, by accepting the same, agrees that the Company may
deem and treat the person in whose name this Option Certificate
is registered on the books of the Company maintained for such
purpose as the absolute, true and lawful owner for all purposes
whatsoever, notwithstanding any notation of ownership or other
writing thereon, and the Company shall not be affected by any
notice to the contrary.
(b) No Holder of this Option Certificate, as such, shall be
entitled to vote or receive dividends or to be deemed the holder
of Shares for any purpose, nor shall anything contained in this
Option Certificate be construed to confer upon any Holder of this
Option Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to
any action by the Company, whether upon any recapitalization,
issue of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise, receive notice of meetings or other
action affecting stockholders (except for notices provided for
herein), receive dividends, subscription rights, or otherwise,
until this Option shall have been exercised and the Shares
purchasable upon the exercise thereof shall have become
deliverable as provided herein; provided, however, that any such
exercise on any date when the stock transfer books of the Company
shall be closed shall constitute the person or persons in whose
name or names the certificate or certificates for those Shares
are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on
which such stock transfer books are open, and the Option
surrendered shall not be deemed to have been exercised, in whole
or in part as the case may be, until the next succeeding day on
which stock transfer books are open for the purpose of
determining entitlement to dividends on the Company's common
stock.
4. Shares Underlying Option. The Company covenants and agrees
that all Shares delivered upon exercise of this Option shall,
upon delivery and payment therefor, be duly and validly
authorized and issued, fully paid and non-assessable, and free
from all stamp-taxes, liens, and charges with respect to the
purchase thereof. In addition, the Company agrees at all time to
reserve and keep available an authorized number of Shares
sufficient to permit the exercise in full of this Option.
5. Disposition of Option or Shares.
(a) The holder of this Option Certificate and any transferee
hereof or of the Shares issuable upon the exercise of the Option
Certificate, by their acceptance hereof, hereby understand and
agree that the Option, and the Shares issuable upon the exercise
hereof, have not been registered under either the Securities Act
of 1933 (the "Act") or applicable state securities laws (the
"State Acts") and shall not be sold, pledged, hypothecated,
donated, or otherwise transferred (whether or not for consider-
ation) except upon the issuance to the Company of a favorable
opinion of counsel or submission to the Company of such evidence
as may be satisfactory to counsel to the Company, in each such
case, to the effect that any such transfer shall not be in
violation of the Act and the State Acts. It shall be a condition
to the transfer of this Option that any transferee hereof deliver
to the Company its written agreement to accept and be bound by
all of the terms and conditions of this Option Certificate.
(b) The stock certificates of the Company that will evidence the
shares of Common Stock with respect to which this Option may be
exercisable will be imprinted with a conspicuous legend in
substantially the following form:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts") and shall not
be sold, pledged, hypothecated, donated or otherwise transferred
(whether or not for consideration) by the holder except upon the
issuance to the Company of a favorable opinion of its counsel or
submission to the Company of such other evidence as may be
satisfactory to counsel to the Company, in each such case, to the
effect that any such transfer shall not be in violation of the
Act and the State Acts.
The Company has not agreed to register any of the holder's shares
of Common Stock of the Company with respect to which this Option
may be exercisable for distribution in accordance with the
provisions of the Act or the State Acts and, the Company has not
agreed to comply with any exemption from registration under the
Act or the State Acts for the resale of the holder's shares of
Common Stock of the Company with respect to which this Option may
be exercised. Hence, it is the understanding of the holders of
this Option that by virtue of the provisions of certain rules
respecting "restricted securities" promulgated by the SEC, the
shares of Common Stock of the Company with respect to which this
Option may be exercisable may be required to be held
indefinitely, unless and until registered under the Act and the
State Acts, unless an exemption from such registration is avail-
able, in which case the holder may still be limited as to the
number of shares of Common Stock of the Company with respect to
which this Option may be exercised that may be sold.
6. Adjustments. The number of Shares purchasable upon the
exercise of this Option is subject to adjustment from time to
time upon the occurrence of any of the events enumerated below.
(a) In case the Company shall: (i) pay a dividend in Shares, (ii)
subdivide its outstanding Shares into a greater number of Shares,
(iii) combine its outstanding Shares into a smaller number of
Shares, or (iv) issue, by reclassification of its Shares, any
shares of its capital stock, the amount of Shares purchasable
upon the exercise of this Option immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive upon
exercise of the Option that number of Shares which such Holder
would have owned or would have been entitled to receive after the
happening of such event had such Holder exercised the Option
immediately prior to the record date, in the case of such
dividend, or the effective date, in the case of any such
subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (a) shall be made whenever any of
such events shall occur, but shall become effective retroactively
after such record date or such effective date, as the case may
be, as to any exercise between such record date or effective date
and the date of happening of any such event.
(b) Notice to Option Holders of Adjustment. Whenever the number
of Shares purchasable hereunder is adjusted as herein provided,
the Company shall cause to be mailed to the Holder in accordance
with the provisions of this Section 6 a notice (i) stating that
the number of Shares purchasable upon exercise of this Option
have been adjusted, (ii) setting forth the adjusted number of
Shares purchasable upon the exercise of this Option, and (iii)
showing in reasonable detail the computations and the facts,
including the amount of consideration received or deemed to have
been received by the Company, upon which such adjustments are
based.
7. Fractional Shares. The Company shall not be required to issue
any fraction of a Share upon the exercise of this Option. If
more than one Option shall be surrendered for exercise at one
time by the same Holder, the number of full Shares which shall be
issuable upon exercise thereof shall be computed on the basis of
the aggregate number of Shares with respect to which this Option
is exercised. If any fractional interest in a Share shall be
deliverable upon the exercise of this Option, the Company shall
make an adjustment therefor in cash equal to such fraction
multiplied by the Exercise Price.
8. Loss or Destruction. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Option Certificate and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement or bond
satisfactory in form, substance and amount to the Company or, in
the case of any such mutilation, upon surrender and cancellation
of this Option Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Option Certificate of
like tenor.
9. Survival. The various rights and obligations of the Holder
hereof as set forth herein shall survive the exercise of the
Option represented hereby and the surrender of this Option
Certificate.
10. Notices. Whenever any notice, payment of any purchase price,
or other communication is required to be given or delivered under
the terms of this Option, it shall be in writing and delivered by
hand delivery or United States registered or certified mail,
return receipt requested, postage prepaid, and will be deemed to
have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the
case may be; and, if to the Company, it will be addressed to the
address specified in Section 1 hereof, and if to the Holder, it
will be addressed to the registered Holder at its, his or her
address as it appears on the books of the Company.
FISCHER-WATT GOLD COMPANY, INC.
By /s/ George Beattie
Chief Executive Officer
Date: June 1, 1995
ATTEST:
By /s/ Gerald D. Helgeson
Secretary
OPTION
THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURI-
TIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS
(THE "STATE ACTS") AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED,
DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDER-
ATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF
FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH
EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN
EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE ACT AND THE STATE ACTS.
OPTION TO PURCHASE 100,000 SHARES OF COMMON STOCK
FISCHER-WATT GOLD COMPANY, INC.
(A Nevada Corporation)
Not Transferable or Exercisable Except
upon Conditions Herein Specified
Void after 5:00 O'Clock P.M.,
Mountain Time, on June 1, 2001
Fischer-Watt Gold Company, Inc., a Nevada corporation (the
"Company") hereby certifies that Donald N. Lawrence III or his
registered successors and permitted assigns thereof, registered
on the books of the Company maintained for such purposes as the
registered holder hereof (the "Holder"), for value received, is
entitled to purchase from the Company the number of fully paid
and non-assessable shares of Common Stock of the Company, of the
par value of $.001 per share (the "Shares"), stated above at the
purchase price of $.0625 per Share (the "Exercise Price") (the
number of Shares and Exercise Price being subject to adjustment
as hereinafter provided) upon the terms and conditions herein
provided.
1. Exercise of Option.
(a) Subject to subsection (b) of this Section 1, upon
presentation and surrender of this Option Certificate, with the
attached Purchase Form duly executed, at the principal office of
the Company at 1410 Cherrywood Drive, Couer d'Alene, Idaho
83814, or at such other place as the Company may designate by
notice to the Holder hereof, together with a certified or bank
cashier's check payable to the order of the Company in the amount
of the Exercise Price times the number of Shares being purchased,
the Company shall deliver to the Holder hereof, as promptly as
practicable, certificates representing the Shares being
purchased. This Option may be exercised in whole or in part;
and, in case of exercise hereof in part only, the Company, upon
surrender hereof, will deliver to the Holder a new Option
Certificate or Option Certificates of like tenor entitling the
Holder to purchase the number of Shares as to which this Option
has not been exercised.
(b) This Option may be exercised in whole or in part at any time
after June 1, 1996 and prior to 5:00 o'clock P.M. Mountain Time,
on June 1, 2001.
2. Exchange and Transfer of Option. This Option at any time
prior to the exercise hereof, upon presentation and surrender to
the Company, may be exchanged, alone or with other Options of
like tenor registered in the name of the Holder, for another
Option or other Options of like tenor in the name of such Holder
exercisable for the same aggregate number of Shares as the Option
or Options surrendered.
3. Rights and Obligations of Option Holder.
(a) The Holder of this Option Certificate shall not, by virtue
hereof, be entitled to any rights of a stockholder in the
Company, either at law or in equity; provided, however, in the
event that any certificate representing the Shares is issued to
the Holder hereof upon exercise of this Option, such Holder
shall, for all purposes, be deemed to have become the holder of
record of such Shares on the date on which this Option
Certificate, together with a duly executed Purchase Form, was
surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such Share certificate.
The rights of the Holder of this Option are limited to those
expressed herein and the Holder of this Option, by its acceptance
hereof, consents to and agrees to be bound by and to comply with
all the provisions of this Option Certificate, including, without
limitation, all the obligations imposed upon the Holder hereof by
Section 5 hereof. In addition, the Holder of this Option
Certificate, by accepting the same, agrees that the Company may
deem and treat the person in whose name this Option Certificate
is registered on the books of the Company maintained for such
purpose as the absolute, true and lawful owner for all purposes
whatsoever, notwithstanding any notation of ownership or other
writing thereon, and the Company shall not be affected by any
notice to the contrary.
(b) No Holder of this Option Certificate, as such, shall be
entitled to vote or receive dividends or to be deemed the holder
of Shares for any purpose, nor shall anything contained in this
Option Certificate be construed to confer upon any Holder of this
Option Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to
any action by the Company, whether upon any recapitalization,
issue of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise, receive notice of meetings or other
action affecting stockholders (except for notices provided for
herein), receive dividends, subscription rights, or otherwise,
until this Option shall have been exercised and the Shares
purchasable upon the exercise thereof shall have become
deliverable as provided herein; provided, however, that any such
exercise on any date when the stock transfer books of the Company
shall be closed shall constitute the person or persons in whose
name or names the certificate or certificates for those Shares
are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on
which such stock transfer books are open, and the Option
surrendered shall not be deemed to have been exercised, in whole
or in part as the case may be, until the next succeeding day on
which stock transfer books are open for the purpose of
determining entitlement to dividends on the Company's common
stock.
4. Shares Underlying Option. The Company covenants and agrees
that all Shares delivered upon exercise of this Option shall,
upon delivery and payment therefor, be duly and validly
authorized and issued, fully paid and non-assessable, and free
from all stamp-taxes, liens, and charges with respect to the
purchase thereof. In addition, the Company agrees at all time to
reserve and keep available an authorized number of Shares
sufficient to permit the exercise in full of this Option.
5. Disposition of Option or Shares.
(a) The holder of this Option Certificate and any transferee
hereof or of the Shares issuable upon the exercise of the Option
Certificate, by their acceptance hereof, hereby understand and
agree that the Option, and the Shares issuable upon the exercise
hereof, have not been registered under either the Securities Act
of 1933 (the "Act") or applicable state securities laws (the
"State Acts") and shall not be sold, pledged, hypothecated,
donated, or otherwise transferred (whether or not for consider-
ation) except upon the issuance to the Company of a favorable
opinion of counsel or submission to the Company of such evidence
as may be satisfactory to counsel to the Company, in each such
case, to the effect that any such transfer shall not be in
violation of the Act and the State Acts. It shall be a condition
to the transfer of this Option that any transferee hereof deliver
to the Company its written agreement to accept and be bound by
all of the terms and conditions of this Option Certificate.
(b) The stock certificates of the Company that will evidence the
shares of Common Stock with respect to which this Option may be
exercisable will be imprinted with a conspicuous legend in
substantially the following form:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts") and shall not
be sold, pledged, hypothecated, donated or otherwise transferred
(whether or not for consideration) by the holder except upon the
issuance to the Company of a favorable opinion of its counsel or
submission to the Company of such other evidence as may be
satisfactory to counsel to the Company, in each such case, to the
effect that any such transfer shall not be in violation of the
Act and the State Acts.
The Company has not agreed to register any of the holder's shares
of Common Stock of the Company with respect to which this Option
may be exercisable for distribution in accordance with the
provisions of the Act or the State Acts and, the Company has not
agreed to comply with any exemption from registration under the
Act or the State Acts for the resale of the holder's shares of
Common Stock of the Company with respect to which this Option may
be exercised. Hence, it is the understanding of the holders of
this Option that by virtue of the provisions of certain rules
respecting "restricted securities" promulgated by the SEC, the
shares of Common Stock of the Company with respect to which this
Option may be exercisable may be required to be held
indefinitely, unless and until registered under the Act and the
State Acts, unless an exemption from such registration is avail-
able, in which case the holder may still be limited as to the
number of shares of Common Stock of the Company with respect to
which this Option may be exercised that may be sold.
6. Adjustments. The number of Shares purchasable upon the
exercise of this Option is subject to adjustment from time to
time upon the occurrence of any of the events enumerated below.
(a) In case the Company shall: (i) pay a dividend in Shares, (ii)
subdivide its outstanding Shares into a greater number of Shares,
(iii) combine its outstanding Shares into a smaller number of
Shares, or (iv) issue, by reclassification of its Shares, any
shares of its capital stock, the amount of Shares purchasable
upon the exercise of this Option immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive upon
exercise of the Option that number of Shares which such Holder
would have owned or would have been entitled to receive after the
happening of such event had such Holder exercised the Option
immediately prior to the record date, in the case of such
dividend, or the effective date, in the case of any such
subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (a) shall be made whenever any of
such events shall occur, but shall become effective retroactively
after such record date or such effective date, as the case may
be, as to any exercise between such record date or effective date
and the date of happening of any such event.
(b) Notice to Option Holders of Adjustment. Whenever the number
of Shares purchasable hereunder is adjusted as herein provided,
the Company shall cause to be mailed to the Holder in accordance
with the provisions of this Section 6 a notice (i) stating that
the number of Shares purchasable upon exercise of this Option
have been adjusted, (ii) setting forth the adjusted number of
Shares purchasable upon the exercise of this Option, and (iii)
showing in reasonable detail the computations and the facts,
including the amount of consideration received or deemed to have
been received by the Company, upon which such adjustments are
based.
7. Fractional Shares. The Company shall not be required to issue
any fraction of a Share upon the exercise of this Option. If
more than one Option shall be surrendered for exercise at one
time by the same Holder, the number of full Shares which shall be
issuable upon exercise thereof shall be computed on the basis of
the aggregate number of Shares with respect to which this Option
is exercised. If any fractional interest in a Share shall be
deliverable upon the exercise of this Option, the Company shall
make an adjustment therefor in cash equal to such fraction
multiplied by the Exercise Price.
8. Loss or Destruction. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Option Certificate and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement or bond
satisfactory in form, substance and amount to the Company or, in
the case of any such mutilation, upon surrender and cancellation
of this Option Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Option Certificate of
like tenor.
9. Survival. The various rights and obligations of the Holder
hereof as set forth herein shall survive the exercise of the
Option represented hereby and the surrender of this Option
Certificate.
10. Notices. Whenever any notice, payment of any purchase price,
or other communication is required to be given or delivered under
the terms of this Option, it shall be in writing and delivered by
hand delivery or United States registered or certified mail,
return receipt requested, postage prepaid, and will be deemed to
have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the
case may be; and, if to the Company, it will be addressed to the
address specified in Section 1 hereof, and if to the Holder, it
will be addressed to the registered Holder at its, his or her
address as it appears on the books of the Company.
FISCHER-WATT GOLD COMPANY, INC.
By /s/ George Beattie
Chief Executive Officer
Date: June 1, 1995
ATTEST:
By /s/ Gerald D. Helgeson
Secretary
LOAN AGREEMENT
This Loan Agreement is entered into this 28th day of August,
1995, by and between Fischer-Watt Gold Company, Inc., a Nevada
corporation (the "Lender"), and Great Basin Management Co., Inc.,
a Nevada corporation (the "Borrower").
WHEREAS the Borrower and the Lender have expressed to each
other their tentative agreement to merge the Borrower with and
into a subsidiary of the Lender (the "Proposed Merger"), and;
WHEREAS the Lender has determined that the Borrower has an
immediate need for funds to retain property positions held by its
subsidiary, Great Basin Exploration and Mining Co., Inc.
("GBEM"), during the period required to perform due diligence,
prepare definitive documentation and obtain the necessary
approvals in connection with the Proposed Merger, and;
WHEREAS the Borrower has determined that it is most feasible
and in the best interests of its shareholders to borrow funds
from the Lender on the terms of this loan agreement pending
completion of the Proposed Merger;
WHEREAS the Borrower wishes to borrow from the Lender and
the Lender has agreed to lend to the Borrower up to the sum of
One Hundred Eight Thousand Four Hundred Forty Seven Dollars
($108,447) for the purposes and in accordance with the timetable
set forth in Exhibit A (the "Purposes");
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants, terms and conditions set forth herein, and
other good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the
parties hereto agree as follows:
1. The Loan
1.1 The Lender shall, on the terms and conditions of this
agreement, lend to the Borrower up to the amount of One Hundred
Eight Thousand Four Hundred Forty Seven Dollars ($108,447) (the
"Loan") in installments as set forth in Exhibit A.
1.2 The Loan is made available by the Lender to the Borrower to
enable the Borrower to carry out the Purposes and the Borrower
shall use all proceeds advanced under the Loan for the Purposes
and for no other purpose.<PAGE>
2. Repayment of the Loan
The Borrower shall repay the Loan together with interest as
provided in this agreement to the Lender as follows:
2.1 There is no requirement to repay the Loan or any interest
thereon unless the Proposed Merger has not occurred by November
1, 1995, in which event the entire amount of the Loan and accrued
interest shall be due and payable on December 1, 1995 (the "Due
Date").
2.2 The Borrower shall pay interest on the aggregate amount of
outstanding principal advanced from time to time under the Loan
at the rate of 11.75% per annum.
2.3 The Borrower shall have the privilege without premium or
penalty, of prepaying all or any part of the moneys advanced
pursuant to the Loan. Any prepayment of a part only of the
advances then outstanding and unpaid shall be applied first to
outstanding interest and second to outstanding principal.
3. Conditions Precedent
The Borrower acknowledges that the Lender shall not be
called on to make any advance under the Loan until the following
conditions precedent have been fulfilled:
3.1 No Event of Default (hereinafter defined) shall have
occurred and be continuing.
3.2 The Borrower shall have furnished to the Lender copies of
resolutions of the Board of Directors of the Borrower in a form
satisfactory to the Lender authorizing the borrowing contemplated
by this agreement, the execution and delivery of this agreement
and the security interest granted in Section 4 of this agreement,
all certified by the Secretary of the Borrower or another
authorized officer of the Borrower.
4. Security
4.1 As continuing collateral security for the payment of all
advances made under the Loan and interest and all other moneys
payable pursuant to this agreement, the Borrower shall execute
and deliver to the Lender the promissory note attached hereto as
Exhibit B (the "Note") and hereby delivers, sets over, transfers,
pledges, grants a security interest in and assigns to the Lender
all of its right, title and interest in and to all of the issued
and outstanding shares of stock of any class of GBEM (the
"Stock") owned by the Borrower on the date hereof (certificates
therefor, accompanied by stock powers duly executed in blank by
the Borrower, having been delivered to the Lender), and any
proceeds thereof, to be held by the Lender upon the terms and
conditions set forth in this agreement. If the Borrower shall
acquire (by purchase, stock dividend or otherwise) any other or
additional Stock at any time or from time to time after the date
hereof, the Borrower will forthwith pledge and deposit the same
with the Lender hereunder and deliver to the Lender certificates
therefor, accompanied by stock powers duly executed in blank by
the Borrower. All Stock at any time pledged or required to be
pledged hereunder is hereinafter called the "Pledged Stock", and
the Pledged Stock, together with all other securities and moneys
received and at the time held by the Lender hereunder, is
hereinafter called the "Collateral".
4.2 Unless an Event of Default shall have occurred and be
continuing, the Borrower shall be entitled to vote its shares of
the Pledged Stock and to give consents, waivers, and
ratifications in respect thereof, provided that no vote shall be
cast or consent, waiver or ratification given or action taken
which would violate or not comply with any of the terms and
provisions of this agreement. All such rights of the Borrower to
vote and to give consents, waivers and ratifications shall cease
in case an Event of Default shall occur and be continuing. If
there shall have occurred an Event of Default, the Borrower
hereby grants to the Lender an irrevocable proxy coupled with an
interest for the Pledged Stock pursuant to which proxy the Lender
shall be entitled to vote or consent in its discretion and in
such event the Borrower agrees to deliver to the Lender such
further evidence of such proxy as the Lender may request.
4.3 All cash dividends payable in respect of the Pledged Stock
shall be paid to the Lender and retained by it as part of the
Collateral. The Lender shall also be entitled to receive
directly, and to retain as part of the Collateral:
(a) other or additional stock or securities or property
paid or distributed by way of dividend in respect of the Pledged
Stock;
(b) all other or additional stock or any other securities
or property (including cash) paid or distributed in respect of
the Pledged Stock by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar corporate
rearrangement; and
(c) all other or additional stock or other securities or
property (including cash) which may be paid or distributed in
respect of the Collateral by reason of any consolidation, merger,
exchange of stock, conveyance of assets, liquidation or similar
corporate reorganization.
The Borrower will not permit or approve of the issuance of
any additional shares of stock of any class of GBEM, or the
declaration, order or setting apart of any sum or any property or
assets by GBEM for any dividend on account of any shares of stock
of any class of GBEM, now or hereafter outstanding.
4.4 In case an Event of Default shall have occurred and be
continuing, the Lender shall be entitled to exercise all of the
rights, powers and remedies (whether vested in it by this
agreement or by law or otherwise including, without limitation,
those of a secured party under the Uniform Commercial Code) for
the protection and enforcement of its rights in respect of the
Collateral, and the Lender shall be entitled, without limitation:
(a) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 4.3 to the Borrower;
(b) to transfer and register all or any part of the Pledged
Stock into the Lender's name or the name of its nominee or
nominees;
(c) to vote all or any part the Pledged Stock (whether or
not transferred or registered into the name of the Lender) and
give all consents, waivers and ratifications in respect thereof
and otherwise act with respect to the Collateral as through it
were the outright owner thereof pursuant to the proxy granted
heretofore in Section 4.2 hereof; and
(d) to sell, upon no less than ten (10) days' prior notice
to the Borrower of the time and place of any public sale, or up
to ten (10) days prior notice to the Borrower of the date after
which a private sale may be consummated (which notice the
Borrower agrees is reasonable) and without liability for any
diminution in price which may have occurred, all of the Pledged
Stock in such manner, whether at any broker's board, public or
private sale, and whether in one lot as an entirety, or in
separate portions, and for such price and other terms and
conditions as the Lender may determine in its absolute
discretion.
At any sale, the Lender shall be free to purchase all or any
part of the Pledged Stock unless prohibited by applicable law.
Upon any sale or other disposition, the Lender shall have
the right to deliver, assign and transfer to the purchaser
thereof the Pledged Stock so sold or disposed of. Each purchaser
at any such sale or other disposition (including the Lender)
shall hold the Pledged Stock free from any claim or right of
whatever kind, including any equity or right of redemption of the
Borrower. The Borrower specifically waives all rights of
redemption, stay or appraisal which it had or may have under any
rule of law or statute now existing or hereafter adopted.
The Lender shall not be obligated to make any sale or other
disposition, unless the terms thereof shall be satisfactory to
it. The Lender may, without notice or publication, adjourn any
private or public sale, and upon ten (10) days' prior notice to
the Borrower, may hold such sale at any time or place to which
the same may be so adjourned. In case of any sale of all the
Pledged Stock, on credit for future delivery, the pledged stock
so sold may be retained by the Lender until the selling price is
paid by the purchaser thereof, but the Lender shall incur no
liability in case of the failure of such purchaser to take up and
pay for the Pledged Stock so sold and, in case of any such
failure, such Pledged Stock may again be sold as hereinabove
provided.
The Borrower recognizes that the Lender may be unable to
effect a public sale of all or a part of the Pledged Stock by
reason of certain prohibitions contained in the Securities Act of
1933, as amended, and applicable state securities law, but may be
compelled to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other
things, to acquire the Pledged Stock for their own account, for
investment and not with a view to the distribution or resale
thereof. The Borrower agrees that private sales so made may be
at prices and on other terms less favorable to the seller than if
the Pledged Stock were sold at public sale, and that the Lender
has no obligation to delay the sale of any Pledged Stock for the
period of time necessary to permit the registration of the
Pledged Stock for public sale under any securities law. The
Borrower agrees that a private sale or sales made under the
foregoing circumstances shall be deemed to have been made in a
commercially reasonable manner.
If any consent, approval or authorization of any state,
municipal or other governmental department, agency or authority
should be necessary to effectuate any sale or other disposition
of the Pledged Stock, or any partial sale or other disposition of
the Pledged Stock, the Borrower will execute all such
applications and other instruments as may be required in
connection with securing any such consent, approval or
authorization, and will otherwise use its best efforts to secure
the same.
4.5 Each right, power and remedy of the Lender provided for in
this agreement or in the Note now or hereafter existing at law or
in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by
the Lender of any one or more of the rights, powers or remedies
provided for in this agreement or in the Note or now or hereafter
existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Lender of all
such other rights, powers or remedies, and no failure or delay on
the part of the Lender to exercise any such right, power or
remedy shall operate as a waiver thereof.
4.6 All moneys collected upon any sale or sales of the
Collateral hereunder, together with all other moneys received by
the Lender hereunder, shall be applied to the payment of all
costs and expenses incurred or paid by the Lender in connection
with any sale, transfer or delivery of the Collateral or the
collection of any such moneys (including without limitation,
reasonable attorney's fees and expenses), and the balance of such
moneys shall be held by the Lender and applied by it at any time
or from time to time to the payment of the Loan and interest and
all other moneys payable pursuant to the agreement in such order
and manner as the Lender in its sole discretion may determine.
4.7 The obligations of the Borrower under this agreement shall
be absolute and unconditional and shall remain in full force and
effect without regard to, and shall not be released, suspended,
discharged, terminated, lessened or otherwise affected by any
circumstance or occurrence whatsoever, including, without
limitation: (a) any renewal, extension, substitution, amendment
or modification of or addition or supplement to or deletion from
the Note or this agreement or any assignment or transfer of any
thereof; (b) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of the Note or this
agreement, or any exercise or nonexercise of any right, remedy,
power or privilege under or in respect of the Note or this
agreement; (c) any furnishing of any additional collateral or
security to the Lender or its assignee or any acceptance thereof
or any release of any collateral or security in whole or in part
by the Lender or its assignee under this agreement or otherwise;
(d) any limitation on any party's liability or obligations under
the Note or under this agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or
any term thereof; (e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Borrower, or any action taken with
respect to this agreement or the Note by any trustee or receiver,
or by any court, in any such proceeding; or (f) any other
circumstances; whether or nor the Borrower shall have notice or
knowledge or any of the foregoing.
4.8 The Lender shall have no duty or any obligation to take any
steps to protect, preserve or enforce any rights under the
Collateral. The Lender shall exercise reasonable care in the
custody and preservation of the Collateral in its possession to
the extent required by applicable statute, and shall be deemed to
have exercised reasonable care if it takes such action for that
purpose as the Borrower shall reasonably request in writing; but
no omission to do any act so requested by the Borrower shall be
deemed a failure to exercise reasonable care.
4.9 Upon the payment in full of the Loan and interest and all
other moneys payable pursuant to this agreement in accordance
with the terms of the Note and of this agreement, and the payment
of all other sums payable thereunder and hereunder, this
agreement shall terminate and the Lender, at the request and
expense of the Borrower, will execute and deliver to the Borrower
a proper instrument or instruments acknowledging the satisfaction
and termination of this agreement, and will duly assign, transfer
and deliver to the Borrower such of the Collateral as has not
theretofore been sold or otherwise applied or released pursuant
to this agreement, together with any moneys at the time held by
the Lender hereunder.
5. Representations and Warranties of the Borrower
The Borrower represents and warrants to the Lender that:
5.1 The Borrower is a corporation legally incorporated, duly
organized and validly existing, in good standing under the laws
of the jurisdiction of its incorporation and is qualified to
carry on its business in all jurisdictions where the nature of
its business or the character of its properties make such
qualification necessary.
5.2 The borrowing of money by the Borrower and the execution,
delivery and performance of this agreement and the grant of the
security interest set forth in Section 4 of this agreement are
within the corporate powers and capacities of the Borrower and
have been duly authorized by proper corporate proceedings.
5.3 There are no actions, suits or proceedings pending or to the
knowledge of the Borrower threatened against or adversely
affecting the Borrower or GBEM in any court or before or by any
federal, state, municipal or other governmental department,
commission, board, bureau or agency, United States or foreign,
which might materially affect the financial condition of the
Borrower or GBEM or the title to their property or assets.
5.4 The execution and delivery of this agreement, the
consummation of the transactions contemplated by this agreement,
the grant to the Lender of the security interest set forth in
Section 4 of this agreement, and the compliance with the
covenants, terms, provisions and conditions of this agreement
will not conflict with or result in a breach of any of the terms
or provisions of the Articles of Incorporation or by-laws of the
Borrower or GBEM, any resolution of the directors or shareholders
of the Borrower or GBEM, any laws of the United States or the
State of Nevada governing the Borrower, or any agreement or
instrument to which the Borrower or GBEM is now a party or which
purports to be binding on the borrower or GBEM or their property
or assets.
5.5 This agreement and all other documents or instruments to be
delivered pursuant to this agreement will, when executed and
delivered, constitute valid and binding obligations of the
Borrower enforceable against it in accordance with their
respective terms, except as may be limited by other deeds,
documents or instruments delivered pursuant to this agreement, or
by applicable bankruptcy, reorganization, insolvency, moratorium
and other laws affecting the enforcement of creditor's rights.
5.6 The borrowing of money under this agreement and the
execution and delivery of this agreement do not require the
consent or approval of any other party, including shareholders of
the Borrower.
5.7 All balance sheets, earnings statements and other financial
data, which have been or shall be furnished to the Lender to
induce the Lender to enter into this agreement or otherwise in
connection with this agreement have been or will be prepared in
accordance with generally accepted accounting principles (which
means, with respect to the Borrower and GBEM, generally accepted
accounting principles consistently followed through prior fiscal
periods as given effect to in previous financial statements of
the Borrower and GBEM) and do or will fairly present the
financial condition and the results of the operations of the
Borrower and GBEM, and all other information, certificates,
schedules, reports and other papers and data furnished by the
Borrower are or will be at the time they are so furnished,
accurate and complete in all material respects.
5.8 As to each share of the Stock at any time pledged or
required to be pledged hereunder:
(a) the Borrower is the sole legal, record and beneficial
owner thereof, and the Borrower has good and marketable title
thereto;
(b) the Stock is validly issued, fully paid and
non-assessable and the holder or holders thereof are not and will
not
be subject to any personal liability as such holder;
(c) on the date hereof the Stock consists of 100% of the
shares of common stock of GBEM;
(d) the Stock is and will remain free and clear of all
security interests, pledges, liens or other encumbrances, and
restrictions on the transfer and assignment thereof, except
pursuant to this agreement and those permitted in writing by
Lender;
(e) any consent, approval or authorization of or
designation or filing with any governmental authority on the part
of the Borrower which is required in connection with the pledge
and security interest granted under this agreement has been
obtained or effected; and
(f) there are no outstanding options, warrants or other
requirements with respect to the Stock.
6. Affirmative Covenants
The Borrower covenants with the Lender that so long as any
amounts advanced under the Loan remain outstanding:
6.1 It will deliver to the Lender:
(a) Copies of all financial statements, reports and returns
that the Borrower shall send to its shareholders; and
(b) With reasonable promptness, other financial data as the
Lender may reasonably request.
6.2 It will permit any person designated by the Lender in
writing to visit and inspect any of the properties, corporate
books and financial records of the Borrower and GBEM and to
discuss the affairs, finances and accounts of the Borrower and
GBEM with the principal officers of the Borrower at all
reasonable times and as often as the Lender may reasonably
request.
6.3 All current insurance policies and those which may have
lapsed in the prior six months covering the assets and property
of the Borrower and GBEM, if any, shall be kept/reinstituted into
good standing. The Borrower shall pay or cause to be paid all
premiums in connection with the insurance and will deposit
certified copies of insurance policies with the Lender or
otherwise deal with them as the Lender may require.
6.4 It will give the Lender prompt written notice of any
material adverse change in the condition or business of the
Borrower or GBEM, financial or other, or of any material loss,
destruction or damage of or to any property of the Borrower or
GBEM.
6.5 It will carry on and conduct the business of GBEM in a
proper and efficient manner so as to preserve and protect the
property and assets and the business and its earnings, incomes,
rents, issues and profits.
6.6 It will duly and punctually pay to the Lender, the
principal, accrued interest and all other moneys payable on the
dates, at the place, in the moneys and in the manner provided in
this agreement.
6.7 It will pay or reimburse the Lender for all costs, charges
and expenses (including legal fees) of or incurred by the Lender
in connection with the recovery or enforcement of payment of
moneys advanced under the Loan, together with interest at the
rate set out in Section 2.2 of this agreement.
6.8 It will maintain at all times proper records and books of
account and make true and correct entries in the records of all
dealings and transactions relating to its business.
6.9 It will do, observe and perform all of its obligations and
all matters and things necessary or expedient to be done,
observed or performed under any law or regulation of the United
States, the State of Nevada, or any other province where its
assets may be located, or any municipality, for the purpose of
creating and maintaining the security interest granted to the
Lender pursuant to this agreement.
6.10 It will do all acts that are necessary to maintain its
existence under the laws of the jurisdiction of its incorporation
and will obtain, renew and maintain in full force and effect all
authorizations, approvals, consents, licenses, permits and
exceptions as may be required to enable it to observe and perform
the obligations on its part to be performed under this agreement
and all agreements delivered and the security interest granted in
connection with or incidental to this agreement.
6.11 It will give Lender written notice of any Event of Default
immediately on the occurrence of such an event.
6.12 It will give the Lender written notice of the occurrence of
any material litigation, proceeding or dispute affecting the
Borrower or GBEM and will provide to the Lender all reasonable
information requested by the Lender concerning the status of any
such litigation, proceeding or dispute.
7. Negative Covenants
The Borrower covenants with the Lender that so long as any
amounts advanced under the Loan remain outstanding, that it will
not, and will cause GBEM to not, without the prior written
consent of the Lender:
7.1 Borrow money from any person other than the lender, directly
or indirectly, including lease-back arrangements and other such
financing arrangements.
7.2 Issue any share capital or options or other form of
contingent rights thereon.
7.3 Redeem, purchase or otherwise acquire, either directly or
indirectly, any of its shares, or declare or pay any dividend on
any of its shares of whatever class, or in any other manner make
payments to its shareholders except for usual remuneration or
reimbursement in respect of employment.
7.4 Lend money to, invest in, or become contingently liable by
guarantee or otherwise for the obligations of, any person, firm
or body corporate.
7.5 Consolidate, merge or otherwise combine with any other
corporation or acquire the shares or assets of any corporation,
firm or partnership, or sell, lease or transfer or otherwise
dispose of all or a substantial part of its assets.
7.6 Enter into or be a party to any contract for the purchase of
materials, supplies or other property if the contract requires
that payments for those materials, supplies or other property
shall be made regardless of whether or not delivery is ever made
of the materials, supplies or other property.
7.7 Make sales to an associated corporation except on a cash
basis and a price equal to a fair market price, provided that net
sixty days will be construed as a cash basis for the purposes of
this paragraph.
7.8 Enter into any partnership, joint venture or similar
agreement or arrangement with any other person, firm or
corporation.
7.9 Other than as disclosed herein, create, suffer or permit to
exist any mortgage, pledge, lien, charge, assignment by way of
security, hypothecation, security interest, security agreement,
trust or arrangement having the effect of security, any type of
preferential arrangement or other encumbrance of any kind whether
or not similar to the foregoing to exist on or with respect to
any asset.
7.10 Do any act which could adversely affect the ranking or
validity of the security interests created, granted or intended
to be created or granted to the Lender.
7.11 Change the general nature of the business of the Borrower or
GBEM.
8. Events of Default
The principal advanced under the Loan and all interest
payable together with all of the moneys payable pursuant to this
agreement shall, at the option of the Lender, become due and
payable and any security held by the Lender for the payment
thereof shall, at the option of the Lender, become enforceable in
each and every of the following events (an "Event of Default"),
upon demand after any such event:
8.1 If the Borrower does not apply the Loan Proceeds to the
Purposes or makes default in the repayment of any installment of
principal or interest under the Loan (or Note) when it becomes
due and payable.
8.2 If the Borrower fails to perform or observe any of the
covenants contained in this agreement or in any of the security
delivered pursuant to this agreement and any failure shall not be
remedied within ten (10) days following notice being given to the
Borrower.
8.3 If any representation, warranty, certificate, statement or
report made in connection with this agreement or in connection
with advances under the Loan is false or erroneous in any
material respect.
8.4 If any indebtedness of the Borrower for liabilities other
than to the Lender becomes due prior to the stated maturity date,
unless and to the extent that the same shall be contested in good
faith and by appropriate proceedings by the Borrower.
8.5 If the Borrower or GBEM becomes the subject of bankruptcy
proceedings or goes into liquidation, either voluntarily or under
an order of a court of competent jurisdiction, or makes a general
assignment for the benefit of its creditors.
8.6 If the Borrower or GBEM removes any part of its property and
assets out of their current location.
8.7 If the Borrower or GBEM abandons all or any part of its
property and assets or ceases or threatens to cease to carry on
its business, or threatens to file for bankruptcy.
8.8 If any execution, sequestration, extent, or any other
process of any court (including appointment of a receiver)
becomes enforceable against the Borrower or GBEM or if a distress
or analogous process is levied on the property and assets of the
Borrower or GBEM, and the execution, sequestration, extent,
distress or process, remains unsatisfied for a period as would
permit the property or a part of it to be sold.
8.9 If the Borrower or GBEM shall permit any amount which has
been admitted is due by the Borrower or GBEM or is not disputed
to be due by it and forms or is capable of being made a charge on
any part of the property and assets of the Borrower or GBEM to
remain unpaid for fifteen days after the amounts are due.
8.10 If the Lender in good faith believes that the ability of the
Borrower to pay any of its obligations to the Lender or to
perform any of the covenants contained in this agreement is
materially impaired from its current circumstances or the
security referred to in this agreement is impaired or is in
jeopardy.
9. General
9.1 The Borrower covenants that it will execute or cause to be
made, done or executed, all further and lawful acts, deeds,
things, devices, conveyances and assurances whatsoever for
effecting the purposes and intent of this agreement as counsel
for the Lender shall reasonably advise or request.
9.2 Notice to be given shall, save as otherwise specifically
provided, being writing addressed to the party for whom it is
intended and shall not be deemed received until actual receipt by
the other party except if sent by telex or facsimile, in which
case it shall be deemed received on the business day next
following the date of transmission. The mailing, telex and
facsimile addresses of the parties shall be:
(a) As to the Borrower: Great Basin Management Co., Inc.
3400 Kauai Court
Reno, NV 89509
Telephone: 702-689-7450
Facsimile: 702-689-7489
Attention: Dr. Anthony Taylor
(b) As to the Lender: Fischer-Watt Gold Company,Inc.
1410 Cherrywood Drive
Coeur d'Alene, ID 83814
Telephone: 208-664-6757
Facsimile: 208-667-6516
Attention: Mr. George Beattie
With copy to: Jones & Keller, P.C.
1625 Broadway, #1600
Denver, CO 80202
Telephone: 303-573-1600
Facsimile: 303-893-6506
Attention: Clifford R. Pearl,Esq.
or any other mailing, telex or facsimile addresses as the parties
from time to time may notify the other.
9.3 This agreement and all other agreements, security and
documents to be delivered in connection with this agreement shall
be governed by and construed in accordance with the laws of the
State of Nevada and the federal laws of the United States.
9.4 This agreement shall be binding on and enure to the benefit
of the Borrower, the Lender and their respective successors and
assigns, except that the Borrower shall not, without the prior
written consent of the Lender, assign any rights or obligations
with respect to this agreement.
9.5 Any provision of this agreement which is or becomes
prohibited or unenforceable in any jurisdiction shall not
invalidate or impair the remaining provisions of this agreement
which shall be deemed severable from the prohibited or
unenforceable provision and any prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable
that provision in any other jurisdiction.
9.6 No amendment, supplement or waiver of any provision of this
agreement or any other agreements provided for or contemplated,
nor any consent to any departure by the Borrower, shall in any
event be effective unless it shall be in writing and signed by
the Lender and then the waiver or consent shall be effective only
in the specific instance for the specific purpose for which it
has been given.
9.7 No waiver or act or omission of the Lender shall extend to
or be taken in any manner whatsoever to affect any subsequent
Event of Default or breach by the Borrower of any provision of
this agreement or the results of the rights resulting from it.
9.8 Time shall be of the essence for this agreement.
9.9 This agreement shall remain in full force and effect until
the payment and performance in full of all of the Borrower's
obligations under this agreement.
9.10 This agreement constitutes the entire agreement among the
parties and cancels and supersedes any prior agreements,
undertakings, declarations or representations, written or verbal
in respect of it.
IN WITNESS WHEREOF the parties have caused this Loan
Agreement to be executed by their respective officers duly
authorized.
FISCHER-WATT GOLD COMPANY, INC.
By: /s/ George Beattie
President
GREAT BASIN MANAGEMENT CO., INC.
By: /s/ Dr. Anthony Taylor
President
Fischer-Watt Gold Company, Inc.
Computation of Earnings Per Share
For the Six Months Ended July 31, 1995
Assumptions:
Three Months Six Months
Ended Ended
July 31, 1995 July 31, 1995
Net income for the period $ 569,000 $ 491,000
Common shares outstanding 12,344,000 12,344,000
Options outstanding to purchase
equivalent shares 2,713,000 2,713,000
20% limitation on assumed
repurchase 2,469,000 2,469,000
Average exercise price per share $.66 $.66
Average market value per quarter
per common share to be used $ .28 $ .17
Computations:
Application of assumed proceeds
($ 1,783,000)
Toward repurchase of outstanding
common shares at applicable
market value $ 691,000 $ 420,000
Reduction of debt 262,000 262,000
Purchase of U.S. Government
Securities 830,000 1,101,000
_________ _________
$ 1,783,000 $ 1,783,000
Adjustment of net income:
Actual net income $ 569,000 $ 491,000
Interest increase (5 3/4%)
less 9% tax effect 10,000 30,000
_________ _________
Adjusted net income $ 579,000 $ 521,000
Adjustment of shares outstanding:
Actual outstanding 12,344,000 12,344,000
Net additional shares issuable
(2,713,000 - 2,469,000) 244,000 244,000
_________ ________
Adjusted shares outstanding 12,588,000 12,588,000
Earnings per share:
Before adjustment $ .05 $ .04
After adjustment $ .05 $ .04
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED JULY 31, 1995 CONTAINED IN FORM 10-QSB FOR THE QUARTERLY
PERIOD ENDED JULY 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK>0000844788
<NAME> FISCHER-WATT GOLD COMPANY, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1995
<PERIOD-END> JUL-31-1995
<EXCHANGE-RATE> 1
<CASH> $ 124
<SECURITIES> 346
<RECEIVABLES> 2
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 477
<PP&E> 243
<DEPRECIATION> 36
<TOTAL-ASSETS> 827
<CURRENT-LIABILITIES> 162
<BONDS> 100
<COMMON> 12
0
0
<OTHER-SE> (553)
<TOTAL-LIABILITY-AND-EQUITY> 827
<SALES> 692
<TOTAL-REVENUES> 692
<CGS> 51
<TOTAL-COSTS> 345
<OTHER-EXPENSES> (230)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24
<INCOME-PRETAX> 502
<INCOME-TAX> 11
<INCOME-CONTINUING> 491
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 491
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
