U.S. SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549 

FORM 10-KSB 

(Mark One) 

[X] 15, ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] 
For the fiscal year ended December 31, 1996 

[ ] 15, TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF 
THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] 

For the transition period from ________________ to _________________ 

Commission file 02-69494 

GLOBAL GOLD CORPORATION 

(Name of small business issuer in its charter) 

               Delaware                           13-3025550
- --------------------------------------------------------------------------------
   (State or other jurisdiction of             (I.R.S. Employer
    incorporation or organization)            Identification No.)

438 West 37th Street, Suite 5-G, New York, New York 10018 
(Address of principal executive offices) (Zip Code) 

Issuer's telephone number (212) 563-5933 

Securities registered under Section 12(b) of the Exchange Act: 

Title of each class           (Name of each exchange on which registered)
-------------------           -------------------------------------------

None
-------------------           -------------------------------------------

Securities registered under Section 12(g) of the Exchange Act: 

None 
(Title of Class) 

(Title of Class) 

Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_|. 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to be best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] 

The issuer's revenues for its most recent fiscal year ending December 31, 1996 were $389. 

The aggregate market value of the voting stock held by non-affiliates of the Company computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days was $219,807.(1) 

As of December 31, 1996 there were 2,198,074 Shares of the registrant's Common Stock outstanding.(2) 

(1) The Company's Common Stock is not publicly traded. However, the Board of Directors of the Company determined that fair market value of the Common Stock was $0.10 per share. 

(2) This number is computed after taking into account the 1 for 10 reverse split of the shares of Common Stock of the Company, effective as of December 31, 1996 (the "Reverse Split"). 

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ITEM 1. DESCRIPTION OF BUSINESS 

(A) General Overview 

The Company is presently engaged in the development of a gold mining project in Armenia, and is currently considering pursuing a gold and copper mining project in Georgia (both of which countries are members of Commonwealth of Independent States). The Company is currently in the pre-development stage and has not received any revenues from mining activities. Prior thereto, the Company did not engage in any substantial business activities, except as described in the section 1(D) entitled "Prior History of the Company." 

(B) Armenian Mining Project 

(a) Armenian Joint Venture Agreement 

The Company, the Ministry of Industry of Armenia and Armgold, S.E., the Armenian state gold enterprise, executed and delivered the Armenian Joint Venture Agreement, dated as of May 1, 1996. The Company thereafter assigned its rights and obligations thereunder to Global Gold Armenia Limited, its wholly-owned Cayman Islands subsidiary ("GGA"). The Armenian Joint Venture Agreement contemplates the formation of the Armenian Gold Recovery Joint Venture Co. Ltd., a limited liability company under Armenian law ("AGRC"), which will construct, operate and market the gold production and provide capital and financing in a multistage development of the Armenian gold industry. Stage 1 of the Armenian Joint Venture Agreement involves the processing of an estimated 12 million tonnes of tailings from the Ararat processing plant, which the Company believes average 1 gram of gold per tonne (based on the independent metallurgical study obtained by the Company) (the "Tailings Project") and the completion of a comprehensive feasibility study and business plans for the development of the Zod mine. Based on the business plans to be approved by all parties, Stage 2 will consist of engineering and building a gold processing plant at the Zod mine, and Stage 3 will consist of engineering and building a gold processing plant at the Meghradzor mine. 

As an additional measure of legal authority, the Company requested that the Government issue a decree confirming the right of the joint venture to export gold and the power of the Ministry of Industry of Armenia and Armgold to make the undertakings set forth in the Armenian Joint Venture Agreement, including, without limitation, that such Armenian parties have good title and unencumbered ownership of all property to be transferred to such joint venture and the power to enter into the Armenian Joint Venture Agreement. The Armenian Government issued such decree on June 29, 1996 requiring the Company to post a $250,000 guaranty in favor of the Ministry of Finance insuring that it invests at least $5,000,000 into the project within eight months of such date, and the Company delivered such guaranty, which the Armenian Government advised counsel to the Company orally and later in a letter from the Minister of Finance was acceptable to it. Pursuant to the Joint Venture Agreement, the Ministry of Industry and Armgold are responsible for obtaining all further permits or decrees needed in connection with the project. 

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Under the Armenian Joint Venture Agreement: 

1. The profits or products of the AGRC will initially be used to pay any applicable debt service and thereafter will be distributable to GGA and the Armenian parties based on a sliding scale correlated to the percentage of gold extracted from the tailings from 50% - 50% to 66 2/3% - 33 1/3%. By virtue of the test results concerning the tailings ore, GGA anticipates that it will be entitled to 66 2/3% of the profits of AGRC, while Armgold will be entitled to 33 1/3% thereof; 

2. AGRC was granted a two-year tax holiday, followed by eight years at half tax (which is equivalent to a 15% tax at current rates), as permitted under Armenian law for foreign investment. 

3. Each of GGA and Armgold owns 50% of the equity of the AGRC. 

4. GGA has rights to participate in the development of the Zod and Meghradzor mines, construction of a possible new refinery, the Ararat mill and exploration work, in each case subject to certain conditions. However, GGA rights in these projects depend on the approval of proposed business plans and the conclusion of additional agreements with the Armenian authorities. In the event that GGA does not conclude such agreements, it shall have a right of first refusal with respect to each such project. 

5. GGA was required to provide $5,000,000 of equipment for the project at the Ararat tailings site and to provide through December 31, 1996 an additional $4,500,000 in connection with the operation of the tailings processing plan. 

6. In addition thereto, GGA has to provide a number of additional services for the project, including management, modern western technology, engineering and design services, marketing, trading and other ancillary services as set forth in the Armenian Joint Venture Agreement. 

(b) Tailings Project 

The parties have begun to implement the Tailings Project. On October 7, 1996, the Armenian Government issued a license for a five-year period in implementation of the development plan at the Ararat tailings site, effective after the registration of the joint venture entity, AGRC, with the appropriate Armenian governmental authorities in accordance with applicable Armenian law. The registration of such entity occurred on November 8, 1996. In addition, the mining engineering firm retained in connection with the project obtained bulk ore samples from the tailings site for testing in Canada. An independent laboratory, which analyzed such samples, advised the Company, in its written report in February, 1997, that the test results showed that approximately one and one-tenth gram of gold exists in each metric tonne of the ore at the site covered by the Tailings Project and recovery of gold could be approximately .55 grams per tonne, although there can be no assurance thereof. 

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Pursuant to the decree issued in connection with the Armenian Joint Venture Agreement, GGA was required to invest $5,000,000 in the Tailings Project on or before February 1, 1997. Such requirement was met on or before such date, and the Armenian Joint Venture Agreement's different financial requirements (reflected in item 5 above) were waived by the parties. Thus, as of February 1, 1997, GGA had a definitive agreement authorized by an Armenian government decree granting it fixed rights to process tailings from the Ararat site. 

Pursuant to the Armenian Joint Venture Agreement, AGRC is now engaged in the final engineering and initial construction for the Tailings Project. AGRC entered into a Tailings Dam Construction Contract with Armhydro for $640,000 on January 31, 1997. AGRC also retained a Canadian engineering firm, under a contract for Engineering, Procurement and Construction Management Services Agreement dated January 31, 1997, under which the compensation payable to the contractor under Phase I of the project is $4,500,000. Operation of the tailings processing plant is planned for September, 1997, although construction and other contingencies exist which may delay meeting such target date. 

While the Company has been advised that proven reserves exist in the Tailings Project and that the mining thereof can be done on a profitable basis, there can be no assurance of such result. 

(c) Financing of the Armenian Mining Project - First Dynasty Mines Ltd. 

Throughout 1996 and into January, 1997, the Company had discussions with many unrelated parties in connection with arranging for the financing of the Tailings Project. As of January 31, 1997, the Company and GGA reached an agreement with First Dynasty Mines Ltd. ("First Dynasty"), a Canadian public company whose shares are traded on the Toronto Stock Exchange and on NASDAQ. 

The Company, GGA and First Dynasty entered into a preliminary agreement dated January 27, 1997 whereby First Dynasty has the right, subject to certain conditions, to advance funds in stages necessary for the implementation of the Tailings Project and the preparation of engineering and business plan materials for the remaining Armenian mining projects (the "First Dynasty Agreement"). The principal terms of the First Dynasty Agreement are set forth below: 

1. All funds advanced by First Dynasty will be advanced to GGA as debt, which is convertible into stock of GGA, at First Dynasty's option, as follows: 

(a) The first $6,480,000 of debt is convertible into 25% of the capital stock of GGA. 

(b) The next $3,520,000 of debt, together with the advance described in 1(a) above, is convertible into 51% of the capital stock of GGA. 

(c) For every additional $.5 million invested for expenditures advanced in respect 

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of the development of the Zod and Meghradzor mines (excluding the $10 million Tailings Project expenditure) as a loan to GGA, such debt is convertible into an additional 1% of the capital stock of GGA, up to a maximum of 80% of the issued and outstanding shares of capital stock of GGA. Thus, upon advancing a total of $24,500,000 in the Armenian mining projects, First Dynasty would be entitled to acquire 80% of the shares of GGA, if First Dynasty elects to convert all of its debt into equity. 

2. Upon obtaining 80% of the capital stock of GGA, First Dynasty would be entitled to acquire the remaining 20% of the outstanding of capital stock of GGA by issuance of $10,000,000 value of its common stock based on the market price of such shares at a deemed price of $2.50 per share, except that such $10,000,000 value of such shares will be increased proportionately to the extent that the mineable reserves at the Zod and Meghradzor mines (which are established after drilling at a depth at a particular time as agreed) exceed five million ounces (such that the $10,000,000 value is based on mineable reserves of 5 million ounces). 

3. Appropriate employment arrangements would be entered into between GGA and Messrs. Gallagher and Garrison on mutually agreeable terms. 

4. The parties agreed to enter into a shareholders agreement (which will be designed to govern the ongoing affairs of GGA) to provide, among other things, that (i) from the date of the release of the escrow of the Initial Commitments (as defined below), First Dynasty will be entitled to appoint two of the five directors of GGA with the right to designate three of the five directors if First Dynasty acquires 51% to 80% of the capital stock of GGA and thereafter increase its representation of directors proportionate to its ownership; (ii) GGA would appoint one representative of First Dynasty to the AGRC board initially, increasing to two of three appointed by GGA if First Dynasty acquires ownership of at least 51% of the capital stock of GGA; and 
(iii) there would be certain matters requiring joint approval of the shareholders of GGA, subject to the Company's entitlement to one representative on the AGRC board for so long as it holds at least 20% of the capital stock of GGA. 

5. The Company, GGA and First Dynasty agreed to enter into definitive agreements with respect to the financing of the Armenian mining projects as soon as reasonably practicable after the end of First Dynasty's due diligence period. Such due diligence period lasts until March 30, 1997 or such other mutually agreeable date (but not beyond April 15, 1997 unless otherwise agreed by the parties). Such definitive agreement will incorporate the terms and conditions of the First Dynasty Agreement together with certain representation of warranties and covenants related thereto. 

Pursuant to the First Dynasty Agreement, First Dynasty carried out certain initial commitments described below (collectively the "Initial Commitments"): 

a. First Dynasty loaned $675,000 to GGA to repay 50% of the outstanding payables of $1,350,000 incurred by the Company and GGA. 

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b. Upon the signing of the $640,000 Tailings Dams construction contract with Armhydro, First Dynasty funded $5,000, and on or before February 10, 1997, advanced an additional $91,000, and, thereafter, First Dynasty has agreed to fund the balance. 

c. First Dynasty agreed to guarantee or co-sign for up to $3,500,000 of the equipment purchase contract and up to $1,000,000 of the engineering, procurement, construction management agreement between AGRC and a Canadian engineering firm. Also, First Dynasty agreed to advance funding for expenditures thereunder as jointly agreed by the Company and First Dynasty from time to time, subject to certain cancellation provisions agreed to by First Dynasty. 

d. First Dynasty further agreed to loan $675,000 to GGA, to cover the balance of the outstanding payables, on March 31, 1997 (if sufficient outstanding warrants to purchase First Dynasty common stock were exercised prior to the first expiration date thereof of March 13, 1997) or 90 days after the signing of the First Dynasty Agreement. 

The initial payment of $675,000 was in fact advanced by First Dynasty and disbursed according to the agreement. 

The Company and GGA are now negotiating the terms of the definitive agreement by and among them. While the Company believes that a definitive agreement will be executed and delivered by such parties, there can be no assurance of such result. 

(d) Mining Plans 

GGA, in conjunction with First Dynasty, is currently negotiating with the Armenian Government to obtain for AGRC, or separate, similar joint venture companies, rights to mine and process gold at the Zod and Meghradzor mines on a schedule which is faster than anticipated by the May 1, 1996 Joint Venture Agreement, although there can be no assurance of the outcome thereof. 

The gold mine in Zod, one of the world's larger gold mines, has been in operation since about 1975. The mine has a structure of over 5 kilometers in length; only 2 kilometers of the gold structure has been explored and tested, and reserves have been established by Armenia and Russian geologists. Zod is located in eastern Armenia within fifteen kilometers of the Soviet border between Armenia and Azerbaijan according to various maps. The de facto border is substantially farther away and the Armenian Government has represented that it has good title to the mine. The Azerbaijan Government has recently stated that it had sent notes of protest to the U.S. Embassy in Armenia questioning the appropriateness of an American company carrying on activities so close to occupied territories at the Zod mine. The U.S. Embassy has no record of receipt of such protests. Engineering studies undertaken by the Government Armenia state that there are proven gold reserves of approximately 5,000,000 ounces of gold. However, these reserve figures have not been independently confirmed by the Company at this time and there can be no assurance that reserves in such amount exist, or, if they exist, can be mined on a profitable basis. 

The ore at Zod has been mined historically by open pit and underground methods. The ore from the mine site has been shipped to the Ararat processing plant located approximately 275 kilometers from the mine site. Mining had been conducted at the Zod mine site at an average annual 

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rate before 1996 of approximately 60,000 tonnes of ore per year by both underground and open-cut operations, but such mining operations ceased in November, 1996 due to lack of funding. The Company believes that such average tonnage constitutes less than the mine's capacity. 

The Meghradzor mine is situated in Central Armenia some 75 kilometers north of Yerevan. The mine has produced approximately 300,000 tonnes of ore since commencing production in 1987. The ore produced by the mine is hauled by railroad approximately 100 kilometers to the Ararat treatment plant. Like Zod, Meghradzor has the benefit of excellent regional infrastructure including sealed road and railroad access to the site and connection to the Armenian Power Grid. Current production levels are less than 2,000 metric tonnes per month due to many similar issues which face the Zod mine including low re-investment, poor equipment availability, lack of consumables and the high costs associated with railing of crude ore to Ararat. 

As with Zod, underground exploration has been accomplished by extensive underground mine development in addition to drilling, with the result that over 60 kilometers of underground workings exist. 

Engineering studies undertaken by the Government of Armenia state that there are proven gold reserves of approximately 700,000 ounces of gold. However, these reserve figures have not been independently confirmed by the Company at this time and there can be no assurance that reserves in such amount exist, or, if they exist, can be mined on a profitable basis. 

Based on projections furnished by independent engineering firms, the Company believes that approximately $10,000,000 is needed in the first phase of the project, $80,000,000 in the second phase of the project and $100,000,000 in the third phase of the project. The funds for the first phase would be used primarily to construct a new tailings processing plant. The funds for the second phase would be used to construct a new processing plant at the Zod mine site with a capacity of processing 1,000,000 metric tonnes per year and to redesign the mine. Of the sum of $100,000,000 for the third phase, $60,000,000 would be used to increase the capacity of the Zod processing plant to 2,500,000 metric tonnes per year. The additional $35,000,000 in phase three is proposed to be used to construct a processing plant at the Meghradzor mine with a capacity of processing 200,000 metric tonnes per year. Also, an additional $5,000,000 on phase three is proposed to be used to build a gold refinery in Armenia with a capacity of refining 300,000 ounces of gold annually. However, since the Company has not conducted any feasibility study with respect to these projects, the ultimate financing needs for these projects might vary substantially from that set forth above. 

(C) Georgia Mining Project 

(a) Existing Agreements 

1. Current Status 

Pursuant to the Asset Purchase Agreement between Eyre Resources N.L. ("Eyre") and the 

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Company dated as of June 30, 1995 (the "Agreement"), the Company, through its wholly-owned subsidiary, Global Gold Georgia Limited, succeeded by an assignment dated December 1, 1995 to all of Eyre's rights in the Georgian Project (as defined therein, as further described in Item 12 hereof). 

Eyre signed a Foundation Agreement(3), dated April 22, 1995, together with the charter of the 

(3) The Foundation Agreement provided that: 

1. Eyre was to have a 50% interest in the GJV Co. 

2. RCPA was to contribute buildings and equipment and certain rights under its license for development of the Madneuli deposit and pay the expenses of formation of the GJV Co. and provide and guarantee access to ore material and relevant information. 

3. The Company or its wholly-owned subsidiary, upon the assignment of Eyre's interest in the Foundation Agreement, was to provide capital investments, management, control, engineering, construction and other technical, marketing and other services. 

4. Contributions to the Charter Fund were to be $10,000, to be made by the Company or its wholly-owned subsidiary upon the assignment by Eyre of its joint venture interest to it and be deemed to be a contribution of 50% by the parties to the Foundation Agreement. 

5. The Foundation Agreement provided for management of the GJV Co. pursuant to a Board of Directors of four individuals, two of which were to be designated by each party, with the Chairman to be appointed by the majority shareholder. 

6. Prior to recovery of capital by the non-Georgian party, net profits of the GJV Co. after expenses were to be distributed as follows: 

(i) RCPA - 9.75% 

(ii) The Company - 9.75% 

(iii) Panquest - .25% 

(iv) Sinking Fund - .25%, and 

(v) Capital Repayments - 80%. 

7. After recovery of capital, the net profits were to be distributed as follows: 

(i) RCPA - according to shareholdings (i.e. share of the Foundation Fund, which shares could be changed only by unanimous vote of the participants), less 2.5% to the Sinking Fund, and 

(ii) The Company (or its wholly-owned subsidiary) - according to shareholdings less 2.5% to Panquest. 

8. The GJV Co. was to be entitled to certain tax concessions provided to certain foreign investments. 

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limited liability company to be formed (the "Foundation Agreement"), with Research-Cum-Production Amalgamation "Madneuli" ("RCPA"), a legal entity formed under Georgian legislation, pursuant to which the parties agreed to the formation of a joint venture limited liability company called "Madneuli Copper Gold J.V." (the "GJV Co.") under Georgian law to carry out the mining of the Madneuli deposits and apply modern mining techniques in Georgia, including carrying out prospecting activities, together with certain unrelated activities that the Company currently has no plans to implement. 

Legislation enacted by the Government of Georgia in 1995 required that the license under which certain rights will be granted to the GJV Co. pursuant to the Foundation Agreement to be re-registered with a newly-created licensing bureau of the Ministry of Environmental Protection. The bureau in question reviews the prior license and determines whether it was legally issued. If the license holder fails to re-register, the license will be suspended until re-registration occurs, which may result in the permanent suspension of the license. However, no application for the re-registration of the license in question was filed by Eyre. The director of RCPA who signed the Foundation Agreement was removed from his position. Moreover, under newly enacted law, in connection with re-registration of licenses, concessions may have to be obtained from the Government of Georgia. Such concessions would be the subject of a concessional contract requiring certain terms required under the new law. 

As of the date hereof, neither the Company or Global Gold Georgia Limited has any rights to the Madneuli mining project. The Company recently learned that the Georgian Government is planning to privatize the development of the Madneuli mine through a public bidding process which is slated to end on April 15, 1997. Since the structure of the Madneuli mining project under the public tender differs markedly from that contemplated under the Asset Purchase Agreement between the Company and Eyre dated as of June 30, 1995, the Company has decided not to submit a bid for the development of the Madneuli mining project. Thus, there can be no assurance that the Company will be successful in acquiring any rights or concluding any definitive agreements with respect to the Madneuli mining project, or, if so, on terms acceptable to it. Furthermore, if the Company does acquire any rights to the Madneuli mining project, there can be no assurance that it will be able to obtain financing for the acquisition or development thereof, or, if so, on terms acceptable to the Company. 

(b) Madneuli Mine 

The Madneuli deposit has been in operation since about 1975, and is located approximately 75 kilometers to the southwest of Tiblisi, the capital of Georgia. The ore body at Madneuli was discovered in 1952 and exploration continued until production commenced in 1975. The mine currently employs approximately 1400 people. 

9. Disputes arising under the Foundation Agreement were to be subject to arbitration at the Arbitration Court in Stockholm, Sweden. 

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The mine is an open-pit operation. Engineering studies undertaken by the Government of Georgia indicate that there are proved and probable reserves of 26,000,000 metric tonnes of ore with copper of 1% and .7% of gram of gold per tonne at the Madneuli mine. However, these reserve figures have not been independently confirmed by the Company at this time, and there can be no assurance that reserves in such amount exist, or, if they exist, can be mined on a profitable basis. The Company believes that the mine is operating at substantially less than its planned capacity. 

(D) Recent Activities 

(a) Investment in Jet-Line Environmental Services, Inc.; Restructuring of Investment 

Jet-Line Environmental Services, Inc. ("Jet-Line") is a privately-held Delaware corporation organized in 1970, and is engaged in providing various environmental clean-up services for a variety of customers, including fuel service, laboratory services, disposable services, transportation and safety and compliance services. A copy of Jet-Line's compiled and unaudited financial statement for the calendar year ended December 31, 1996 showed a loss of approximately $377,000 for such year. 

On April 21, 1993, the Company loaned $300,000 to Jet-Line, which is evidenced by Jet-Line's promissory note that originally was convertible into 20% of Jet-Line's common stock, and 25% of its common stock upon the payment (upon conversion) to Jet-Line of $75,000, at the option of the Company, as provided therein (the "Jet-Line Note"). The Jet-Line Note, which matured on April 21, 1996 and which was restructured on May 13, 1996, is secured by a pledge of transportation equipment and machinery and equipment used in Jet-Line's business and a Jet-Line owned warehouse and office laboratory building totalling 22,500 square feet located on one acre of land. The total appraisal value of the assets when made in part in December, 1992 and in part in early 1993 was in excess of a total of $1,500,000, but the Company does not know the appraised value of such collateral at present since no updated appraisal of such assets has been made. Prior to such transaction, Jet-Line had no affiliation of any kind with the Company or its stockholders. 

The Jet-Line note is subordinated to an SBA loan from the Business Loan Center to Jet-Line in the original principal amount of $550,000 (the "SBA Loan"), which has been reduced to approximately $500,000 as of the date hereof. Payments are permitted to be made on the Jet-Line Note to the Company to the extent permitted under the United States Small Business Administration Authorization and Loan Agreement for the SBA Loan made. However, if Jet-Line has a default under the SBA Loan or suffers an adverse change in its financial condition, assets or business, Jet-Line will not then be permitted to make payments of the Company on the Jet-Line Note. Thus, since Jet-Line is currently in default on the SBA Loan, the Company is not receiving any payment on the Jet-Line Note. Moreover, since the inception of the Jet-Line Note, the Company has not received any interest or principal payments thereunder and has merely accrued interest thereunder. 

On May 13, 1996, the Company and Jet-Line executed and delivered an agreement (the "Loan Extension Agreement") with respect to the Jet-Line Note under which 

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(a) the parties extended the maturity of the Jet-Line Note until December 31, 1996, including all unpaid interest, except for the interim interest payments described in (b) below; 

(b) Jet-Line agreed to pay $2,000 a month in interest commencing with June, 1996 through December, 1996 and, in addition, make an additional interest payment equal to 5% of its earnings before income taxes and without regard to depreciation and amortization, up to a ceiling amount of $7,500 per month, each month during the above seven-month period; 

(c) the parties recognized that the Jet-Line Note is convertible in whole or in part at any time, unconditionally into 20% of common stock of Jet-Line issued and outstanding after such conversion; 

(d) the Company would have the right to convert the Jet-Line Note into an additional five percent of the issued and outstanding common stock of Jet-Line outstanding after its conversion (thereby bringing its interest to 25% of such stock) upon payment of $37,500 (instead of $75,000) at the time of such exercise; and 

(e) the Company also obtained the right to convert the Jet-Line Note into an additional five percent of the Jet-Line common stock issued and outstanding after such conversion (thereby potentially bringing its interest to 30% of such stock) upon the payment of an additional $100,000 in cash at the time of such exercise. 

However, in June, 1996, Jet-Line advised the Company that the Business Loan Center, which issued a U.S. Small Business Administration guaranteed loan to Jet-Line, objected to the implementation of any payments required to be made under the Loan Extension Agreement on the ground that Jet-Line was in default under its SBA-guaranteed loan. Accordingly, Jet-Line has not made any of the monthly payments required under the Loan Extension Agreement. 

Since Jet-Line has been experiencing operating losses, and lacks adequate liquid resources, it is highly unlikely that Jet-Line will be able to pay the full amount of the principal and accrued interest on the Jet-Line Note. In addition, Jet-Line advised the Company in early March, 1997 that it received a notice of the revocation of its license to operate its business in Massachusetts, and of a $100,000 fine, from the Massachusetts environmental authorities, and Jet-Line contested such revocation and fine in the Massachusetts state courts unsuccessfully. As a result, Jet-Line has been requested by such authorities to sell its facility in Massachusetts, and Jet-Line is now engaged in negotiations with a potential buyer with respect to such sale. The Company sent Jet-Line a written notice of default and demand for payment on March 14, 1997, and a further demand letter on April 2, 1997, and is considering whether to sell the assets in which it holds a first security interest. The Company has also requested Jet-Line to seek an additional financing and to use part of the proceeds therefrom to satisfy the Jet-Line Note in full. However, there can be no assurance that Jet-Line will be able to consummate such sale or obtain such a financing. Thus, there can be no assurance that the Company will ultimately be paid the full principal amount of, and accrued interest on, the Jet-Line Note. 

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(b) Loan to Envirotherm 

The Company made a loan of $25,000 to Envirotherm on October 17, 1994. Such loan was guaranteed by Jeffrey Aspacher and B. Ryland Wiggs, two shareholders of Envirotherm, who in 1996 and 1995 filed bankruptcy proceedings, respectively. In addition, such loan was secured by an interest in certain patent rights held by Mr. Wiggs. Also, the Company provided certain administrative services to Envirotherm, including the furnishing of office space to one of its officers. Under the parties' agreement, the sum of $27,500 was due and payable on November 17, 1995, the sum of $30,000 was due and payable on December 17, 1994, the sum of $37,500 on January 17, 1995, $50,000 on April 17, 1995, and, in the event of a default, the sum of $100,000 would be payable on October 17, 1995. The loan was not repaid despite the Company's attempts to collect the same. 

Envirotherm is a Delaware corporation organized in September, 1994 and was engaged in manufacturing and selling geothermal heating and cooling units and other products. The Company began its first shipment of the products in July, 1995, experienced operating losses and went out of business in early 1996. As of March 1, 1996, Envirotherm was dissolved under Delaware law by virtue of its non-payment of Delaware franchise taxes. 

As a result of Envirotherm's dissolution and inability to pay the loan, the Company treated such loan as worthless as of December 31, 1996. 

Mr. Gallagher owns 4% of the common stock of Envirotherm, which he received for consulting services rendered by him subsequent to and independent of the loan transaction described above. 

(c) Offering of Convertible Notes of the Company 

Pursuant to the Confidential Private Offering Memorandum dated May 17, 1995, as amended, the Company sold the maximum of $500,000 principal amount of its 10% Convertible Notes, which had a maturity date of September 30, 1996 (the "Offering"). The Offering of Convertible Notes, Warrants and Common Stock was offered pursuant to the Memorandum solely to persons who are "accredited investors" as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act"), in a transaction exempt from registration thereunder. The final date of the closing of the Offering was December 31, 1995. 

The Company undertook the Offering in order to raise additional funds for the Company to enable it to engage in the development and commercial exploitation of the Armenian and Georgian Mining projects, in an attempt to generate a potential and substantial asset base and potential future profitability for the Company as part of the Company's long-term strategy to develop profitable mining operations abroad. 

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All of the $500,000 principal amount of Convertible Notes was automatically converted pursuant to their terms into an aggregate of 2,000,000 shares of Common Stock (prior to the Reverse Split) and warrants to purchase 4,000,000 shares of the Company's Common Stock (prior to the Reverse Split), at an exercise price of $0.50 per share, which warrants will expire on December 31, 1997 after the several amendments made thereto extending the expiration date thereof (the "Warrants"). Since all of the automatic conversion conditions were satisfied in 1995, there were no Convertible Notes of the Company outstanding as of December 31, 1995 or thereafter. 

(d) Transaction with London & International Mercantile Limited. 

On July 18, 1996, the Company, London & International Mercantile Limited ("LIM"), a financial institution organized under the laws of England and Wales in 1980, and HCL Communications Ltd. ("HCL"), a newly formed corporation organized under the laws of England and Wales in 1996, executed and delivered two agreements with respect to the financing of the Company, which are summarized below: 

(1) Under Agreement 1, LIM issued a guarantee in the amount of $250,000 in favor of the Ministry of Industry of Armenia guaranteeing the performance of the Company's obligation with respect to the ordering of $5,000,000 of equipment with respect to the Tailings Project. 

(2) Under Agreement 2, LIM issued a guarantee in the amount of $250,000 in favor of Kilborn SNC/Lavalin Inc. ("Kilborn") guaranteeing the payment by the Company of any of its obligations to Kilborn in connection with its performance of services related to the Company's implementation of the Armenian Joint Venture Agreement. 

(3) (x) As collateral security for undertaking each such guarantee, the Company issued to LIM the following security for each guarantee: (a) 1,000,000 shares of the Company's Common Stock and (b) three warrants to purchase 666,667, 666,667 and 666,666 shares of the Company's Common Stock, respectively, or a total of 2,000,000 shares, at an exercise price of $3.00 per share, (all computed prior to the Reverse Split) . The first warrant was to expire on the earlier of (a) June 15, 1997, or (b) 60 days after the receipt by the Company of the feasibility study from Kilborn reflecting that the Zod mine in Armenia has proven reserves in excess of $1,000,000,000. The second warrant was to expire on the earlier of (a) December 15, 1997 or (b) 60 days after the receipt by the Company of the feasibility study from Kilborn reflecting that the Zod mine in Armenia has proven reserves in excess of $1,000,000,000 (all computed prior to the Reverse Split). The third warrant was to expire on the earlier of (a) June 15, 1998 or (b) 60 days after the receipt by the Company of the feasibility study from Kilborn reflecting that the Zod mine in Armenia has proven reserves in excess of $1,000,000,000. Thus, the Company issued a total of 2,000,000 shares of its Common Stock and warrants to purchase 4,000,000 shares of its Common Stock at an exercise price of $3 per share. 

(y) Under each of the two Agreements, LIM was required to return all of the shares of Common Stock of the Company and warrants to purchase such stock issued to it as collateral if no payment was made under the respective guarantees or, if HCL exercised its option to purchase a 

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portion of such shares and warrants, the portion of such shares and warrants as to which HCL did not exercise its option. If LIM made any payment under its guarantees, the Company would be liable to pay such amount, and, in the event it failed to do so, LIM would be entitled to use the collateral security held by it to satisfy the amount due it. In such circumstances, the number of shares of Common Stock of the Company and warrants LIM would be entitled to retain or sell to satisfy the Company's obligations to it would be determined in accordance with applicable English law. 

(z) As a condition to LIM's issuance of its two Company guarantees, LIM required Drury J. Gallagher, the Company's President, and Robert 
A. Garrison, the Company's Vice President to guarantee personally, on a joint and several basis, the repayment of any amount paid by LIM pursuant to its guarantees.**** 

(4) The collateral security issued by the Company with respect to the guarantee issued by LIM in favor of the Ministry of Industry of Armenia was held in escrow by an English attorney, subject to the receipt of the written acceptance by the Ministry of Industry of Armenia of the guarantee issued by LIM which is a condition only between LIM and the Company. Since there had never been any such written acceptance of such guarantee, such property was held in escrow, although the Tailings Project had been implemented by the Armenian Government as discussed previously and oral acceptance of such guarantee was given. 

(5) The Company also paid LIM fees of $23,750 for issuing such guarantees, and owes LIM $5,657.50 for its legal fees and other expenses related to the issuance of such guarantees. 

(6) LIM, in turn, granted HCL Communications Ltd. an option for 61 days from July 18, 1996 to purchase the 2,000,000 shares of the Company's Common Stock at $1.50 per share and the warrants to purchase 4,000,000 shares of the Company's Common Stock at $3 per share held as collateral security by it (all computed prior the Reverse Split). Under the Agreements by and among the Company, LIM and HCL, any proceeds received by LIM upon the exercise of such option by HCL were to be held by it as additional collateral security until the release of the guarantees without any payments being made by LIM thereunder. 

(7) The Company gave LIM the right to arrange a lease-purchase rental, borrowing or other facility for the Company to acquire the equipment needed for the Tailings Project, and the 

**** In consideration therefor, the Company on July 19, 1996 granted non-qualified options to each of Messrs. Gallagher and Garrison to purchase 250,000 shares of the Company's Common Stock (computed prior to the Reverse Split) at an exercise price of $1.00 per share, which expire on July 18, 1999, under the Company's 1995 Stock Option Plan. On November 4, 1996, the Company amended such exercise price to $0.50 per share because of the Company's failure to obtain the anticipated financing of the Tailings Project from LIM by such date. Such options were cancelled as of January 3, 1997. See Item 12(A) for a description of the transaction covering such cancellation. 

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Company undertook to accept such offer if the terms were commercially competitive both as to the price of such equipment and the lease terms with respect thereto. 

(8) The Company also agreed, among other things, to use its best efforts to arrange for the commencement of the public trading of its Common Stock on the NASDAQ electronic bulletin board within 60 days from July 18, 1996 and to seek a NASDAQ Small Cap listing within 90 days of such date, provided that the Company met the NASDAQ equity requirements in the latter case. However, since the Company did not meet such NASDAQ equity requirements, it never sought to have its stock traded on NASDAQ. 

LIM advised the Company in October, 1996 that HCL would not exercise the option described herein, that LIM had no intention to purchase any of the Company's Common Stock or warrants to purchase such stock and that LIM did not intend to arrange any financing or lease for the equipment needed in the Tailings Project. Moreover, LIM's guaranty to Kilborn expired in error on October 27, 1996. The Company decided not to implement the corrected extension thereof for an additional three months, and instead obtained the return and cancellation, pursuant to the applicable provisions of Agreement 2, of the 1,000,000 shares of the Company's Common Stock and warrants to purchase 2,000,000 shares of its Common Stock held as collateral security for such guaranty by LIM (computed prior to the Reverse Split). 

Moreover, since the Company and GGA met the terms of the decree issued by the Armenian Government of the Armenian Joint Venture Agreement on or before February 1, 1997, LIM had no liability under its second $250,000 guarantee. As a result, the Company obtained the return and surrender, pursuant to the provisions of Agreement 1, of the 1,000,000 shares of the Company's Common Stock and warrants to purchase 2,000,000 shares of its Common Stock held as collateral security by LIM for such guarantee (computed prior to the Reverse Split). 

Thus, all shares of the Company's Common Stock and warrants to purchase such stock issued to LIM as collateral security have been cancelled. 

(e) Reverse Split 

Various prospective investment banking firms and potential investors who expressed an interest in providing funding for the Company's projects in 1996 requested that the Company undertake a reverse split of its Common Stock to decrease the number of shares outstanding and thereby facilitate possible future financings. Accordingly, the Company effected a 1 for 10 reverse split of its common stock effective as of December 31, 1996. Such step was taken by the written consent of the holders of a majority of the Company's issued and outstanding shares of Common Stock. By virtue of the Reverse Split, each stockholder's number of shares of Common Stock became 1/10th of the number previously held. The Company filed its Certificate of Amendment to the Certificate of Corporation with respect to the reverse split with the Delaware Secretary of State on December 31, 1996. 

(f) Employees. 

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As of December 31, 1996, the Company had two employees, one of whom was in charge of the overall business of the Company on a part-time basis, and one who is principally involved in overseeing the Company's proposed mining activities on a part-time basis, and two independent contractors who provide administrative and clerical services on a part-time basis. 

(E) Special Considerations 

The following risk factors should be considered in connection with an evaluation of the business of the Company: 

No Prior Operating History; Failure to File Reports with the SEC 

The Company was incorporated on February 21, 1980, and closed a public offering of the Common Stock in January, 1981. Several months after the closing of such offering, the Company withdrew the listing of the Common Stock for trading on NASDAQ because of the theft of substantially all of the cash funds of the Company derived from the proceeds of the public offering by its then president, Samuel McNell in July, 1981. After the consummation of the public offering, the Company failed to file any further annual or periodic reports required under the Exchange Act. While the Company filed its Form 10-KSB for the calendar years 1994 and 1995 and its Form 10-QSB commencing with the quarter ended ended March 31, 1995 and each quarter thereafter through and including September 30, 1996 and filed audited financial statements with the Form 10-KSB for calendar year 1994 covering calendar years 1987, 1988, 1989, 1990, 1992, 1993 and 1994, and covering calendar year 1995 with the Form 10-KSB filed for such year, there can be no assurance that the SEC might not assert claims against the Company and its present and former directors and officers, which actions might adversely affect the future conduct of the Company's business or prevent the future trading of the Company's stock on public markets. Furthermore, the Company's past failure to file reports with the SEC may have an adverse impact on the Company's ability to have the shares of Common Stock listed for trading on NASDAQ in the event that the Company is otherwise able to meet the NASDAQ Stock Market listing standards in the future. 

Development Stage Company 

Since the Company never engaged in the active of conduct of a trade or business, it has not generated any revenues to date, with the exception of interest income on the funds recovered by the Company it in the lawsuits prosecuted by it as a result of the theft of the Company's funds. The Company may encounter problems, delays, expenses and difficulties typically encountered in the development stage, many of which may be outside of the Company's control. These include, without limitation, unanticipated problems and additional cost relating to the development, production, marketing, and competition. The Company expects to incur operating losses for the near term future and, in any event, until such time as it derives substantial revenues from the sale of concentrates containing gold and copper, if any. There can be no assurance that the Company will develop successful operations. 

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If, as anticipated, the Company, GGA and First Dynasty sign definitive agreement covering the development of the contemplated Armenian mining projects, the Company believes that it, in conjunction with First Dynasty, should be able to obtain the financing needed for the development of such projects. However there can be no assurance that the Company and GGA will be able to enter into a definitive agreement with First Dynasty. Furthermore, even if such definitive agreement is signed, there can be no assurance that such parties will be able to obtain the requisite full financing needed for the projects, or, if so, on terms acceptable to them. 

Need for Additional Cash 

The Company needs substantial additional funds to develop the mining projects in Armenia (and Georgia as well if it obtains any definitive rights to any mining project there) and to fund the operations thereof. If the Company raises no additional financing either through First Dynasty or otherwise, the Company still may be able to exploit certain opportunities to develop gold projects in Armenia through the sale thereof. Although the Company believes that such an opportunity is a valuable asset, there can be no assurance of such result. If the Company and GGA do not enter into a definitive agreement with First Dynasty, the Company and GGA may not be able to benefit in any significant way from such project, and may be forced to sell its interest in such project to other potentially interested parties. In addition, while the Company does not intend to bid in the public tender concerning the Madneuli mining project, it, in any event, does not have any financing for such purpose. Moreover, there can be no assurance that any financing for the Armenian or Georgian projects will be available for such purposes or that such financing, if available, would be on terms favorable or acceptable to the Company. 

Lack of Definitive Nature of the Company's Contracts for the Armenian Mining Projects and Absence of Any Agreements with respect to any Georgian Mining Project 

At present, the Company and GGA, in conjunction with First Dynasty, is negotiating for AGRC to develop the Zod and Meghradzor mines on definitive terms acceptable to all parties. While the Company anticipates that a definitive agreement will be obtained covering such development, there can be no assurance of each result. 

At present, neither the Company or its subsidiary, GGA, has any rights to the Madneuli mining project in Georgia. Also, the Company has decided not to submit a bid in the public auction thereof. Moreover, any agreement relating to the Madneuli project may be subject to the approval of the various governmental agencies and/or the legislature of Georgia. Furthermore, there can be no assurance that any definitive agreements with the Government of Georgia will be executed and delivered by the appropriate parties, or if so, will be approved by all the required authorities or that, if approved, would be on terms and conditions acceptable to the Company or GGA. 

Lack of Adequate Insurance Protection of the Company's Potential Investments in Georgia and Armenia 

The Company plans to obtain insurance from Multilateral Investment Guarantee Agency 

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("MIGA") or other like organization to insure any ownership it may have in the Armenian (and possible Georgian) mining projects against three risks: 
expropriation, inconvertibility of currency and acts of war, unrest or riots in the country. MIGA typically issues insurance commitments equal to the amount representing the original investment, debt on the project and retained earnings with respect thereto. If obtained, such insurance will not provide complete and adequate protection for any investment the Company may make in such countries. Moreover, there can be no assurance that such insurance will be available, or, if so, will be available on terms and conditions satisfactory to the Company. 

Prices of Materials 

Since the Company's future projected revenues will be derived almost entirely from the sale of concentrates containing gold, the Company's future earnings, if any, will be directly related to market prices for gold. The prices for such commodity has historically fluctuated widely and are affected by numerous factors beyond the Company's control. There can be no assurance that the Company can enter into any price protection program adequate to prevent any potential loss from such fluctuation. 

Reserves 

While the Company believes that, based on geology reports and mine engineering data made available by Armenian state enterprises, there are substantial proved reserves in the Armenian mining projects, it should be noted that any such quantities may not actually be realized by the Company. Moreover, except in the case of the provable reserves verified in the case of the Tailings Project, any reserves pertaining to the other contemplated Armenian mining projects have not yet been independently verified by the Company, although an engineering firm is in the process of preparing a feasibility report with respect to the Zod mine. The deposits from which such reserves are presently being or are expected to be produced or developed may not conform to geological or other expectations, with the result that the volume and grade of reserves recovered and the rates of production may be more or less than anticipated. Further, market price fluctuations in gold and changes in operating and capital costs may render certain ore reserves uneconomical to develop. No assurance can be given that any reserves proved or estimated will actually be produced. 

Location and Industry Risks 

The Company's proposed mining operations will be subject to a variety of potential engineering, seismic and other risks, some of which can not be predicted. Such factors may cause personal injury to personnel at the projects or critical property damage or significant interruptions to production, and may not be covered by insurance. The mines may also be subject to the usual risks encountered in the mining industry, including unexpected geological conditions resulting in cave-ins, flooding and rock-bursts and unexpected changes in rock stability conditions. While it is contemplated that customary insurance will be obtained, there can be no assurance that such insurance will provide adequate protection against any or all of the risks in question. Also, the Company's proposed mining operations may encounter problems in transporting any concentrates to potential markets (including obtaining requisite governmental approvals and licenses) and conducting mining activities as a result of lack of 

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fuel, electricity, water, equipment, spare parts or other necessary items. 

Environmental Matters 

While the Company intends to conduct its foreign mining operations in compliance with all relevant environmental laws, rules and regulations of the host countries, there can be no assurance that such laws, rules and regulations will not be violated. Moreover, such operations are subject to the risk of any future environmental laws, rules and regulations that the foreign countries or subdivisions therein might impose, which could involve potentially onerous restrictions on mining operations and significant increased operating and engineering costs. The impact of any such possible changes cannot be predicted. 

Holding Company Structure 

The Company is a holding company which will conduct its business through subsidiaries. As a result, the Company's cash flow and consequent ability to make dividend payments and meet its debt obligations are primarily dependent upon the earnings of its subsidiaries and on dividends and other payments therefrom. Any right of the Company to participate in any distribution of the assets of its subsidiaries upon the liquidation, reorganization or insolvency of such subsidiaries would, with certain exceptions, be subject to the claims of the creditors (including trade creditors) and preferred stockholders, if any, of such subsidiaries, or may otherwise be restricted by virtue of a stockholder agreement with respect thereto. 

Competition 

There is intense competition in the mining industry. If the Company does engage in its proposed mining activities, it will be competing with larger mining companies, many of which have substantially greater financial strength, capital, marketing and personnel resources than those possessed by the Company. 

Need for Key Personnel 

The Company presently only has one employee intimately familiar with the operation of mining projects or the development of such projects. While the Company originally intended to rely on the management services to be provided by a newly-formed mining management corporation, which has no history of operations, Autosport (Asia) Pte. Ltd., a Singapore corporation controlled by Eyre, to supervise the mining development services on behalf of the Company pursuant to a mining supervision contract signed at the Eyre Closing, such agreement was cancelled pursuant to the terms of the Initial Restructuring Agreement. Accordingly, the Company now intends to rely on the services of independent mining enterprises which will have a future interest in the development of any mining project. There can be no assurance that any such management corporation will have adequate resources or personnel to perform such function. Although the Company believes that such management services which may be provided by such independent mining company will be adequate to protect the Company's 

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interest in, and oversee the day-to-day operation of, the mining projects, there can be no assurance of such result. While the Company does not believe the loss of its president or any other director or officer of the Company will materially and adversely affect its long-term business prospects, the loss of any of the Company's senior personnel might potentially adversely affect the Company until a suitable replacement could be found. While the Company has employment agreements with two of its officers, Drury J. Gallagher and Robert A. Garrison, such agreements are for only three-year terms which expire on June 30, 1998. There can be no assurance that such agreements will be renewed or, if renewed, will be on terms mutually acceptable to all parties. 

Failure to Satisfy Nasdaq Listing Rules 

Effective in August, 1991, the SEC approved the adoption by the NASDAQ Stock Market of new maintenance standards for companies whose securities are traded on NASDAQ. Under these new standards, among other things, a corporation must have $4 million in total assets and $2 million in capital and surplus and a minimum bid price of $3.00 per share in order to be eligible for a Nasdaq listing. At December 31, 1996, the Company had total assets of approximately $2,042,322 and stockholders' equity of $571,603. Without increases in assets and capital surplus, the Company may not be able to be eligible to have its securities traded on NASDAQ. Moreover, recent regulations issued by NASDAQ have increased the thresholds that have to be met in order for a security to be traded initially on the NASDAQ Small Cap and National Markets, which may adversely the Company's ability to have its common stock traded on the NASDAQ Small Cap or National Markets. Furthermore, the Company could experience difficulties in commencing the trading of its securities on NASDAQ. If the Company is unable to have its securities traded on NASDAQ, its securities will continue to be eligible for trading on the NASDAQ bulletin board, although the market for shares of the Company's Common Stock may be reduced and, hence, the liquidity of the shares of Common Stock and/or the Warrants may be reduced. 

Restrictions on Transfer 

Pursuant to the Stockholders Agreement, the current five principal holders of the Company's Common Stock, Messrs. Gallagher, Hayman, Hayman, and Ryan and the Seitz Family Limited Partnership have agreed not to sell the shares of Common Stock owned by them for a period of 24 months following the date of the final closing of the Offering (i.e., until December 31, 1997), except they each have the right to pledge a portion of their shares and to make transfers within their family or to certain family-controlled entities. In addition, Eyre and the Parry-Beaumont Trust have also agreed not to sell, pursuant to the Stockholders Agreements, the 600,000 and 400,000 shares of the Company's Common Stock owned by them (after implementation of the Initial Restructuring Agreement) for a period of 24 months from the date of the final closing of the Offering (i.e., until December 31, 1997), except that they each have the right to sell 150,000 shares to non-United States persons (as defined under the Act) (all of which numbers have been computed after the Reverse Split). Moreover, each purchaser of Convertible Notes pursuant to the Offering also agreed not to sell the Common Stock issuable upon the conversion of the Convertible Notes or upon the exercise of the Warrants issued pursuant to such conversion for a period of 24 months from the date of the final closing of the Offering 

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(i.e., until December 31, 1997). Upon expiration of such agreements, up to 367,048 shares of Common Stock held by the five major existing shareholders, 600,000 shares of Common Stock held by the purchasers of the Convertible Notes (assuming all the Warrants issued upon the prior automatic conversion thereof are exercised in full) and 1,000,000 shares issued to Eyre and the Parry-Beaumont Trust or a total of 1,967,048 (all computed after the Reverse Split), may potentially be available for sale under Rule 144, subject in some cases to a certain volume limitation. No prediction can be made as to the effect, if any, that future sales of Common Stock or the availability of such shares for sale will have on the market price of the Common Stock or the Warrants prevailing from time to time. Sales of substantial shares of the Common Stock or the Warrants, or the perception that such sales might occur, could adversely affect the prevailing market price of the Common Stock or the Warrants. 

No Dividends 

The Company currently anticipates that it will retain all of its future earnings, if any, for use in the expansion and operation of its proposed mining business, and does not anticipate paying any cash dividends for the near term future. There can be no assurance that the Company will pay cash dividends at any time, or that the failure to pay dividends for period of time will not adversely affect the market price for the Company's Common Stock. 

Control of the Company 

Drury J. Gallagher, the Chairman Chief Executive Officer, and Robert A. Garrison, the President and Secretary, currently own 1,108,451 and 1,000,000 shares, respectively, or a total of 2,108,451 shares of the Company's Common Stock issued and outstanding as of January 31, 1996. In addition, Eyre and the Parry-Beaumont Trust own 600,000 and 400,000 shares of Common Stock, respectively, as of such date. As a result, if Messrs. Gallagher and Garrison act in concert, they will be able to effectively determine the vote on any matter being voted on by the Company's stockholders, including the election of directors and any merger, sale of assets or other change in control of the Company, since they will control together 2,108,451 of the 4,198,074 shares of Common Stock outstanding as of February 3, 1997, or 50.2% of the issued and outstanding shares of the Company's Common Stock. The same result wold follow if Messrs. Gallagher and Garrison acted in concert with Eyre and the Parry-Beaumont Trust. 

Disagreement Among Significant Shareholders 

In February, March and April, 1997, Eyre and the Parry-Beaumont Trust questioned the validity of the issuance by the Company of 1,000,000 shares of its Common Stock to each of Messrs. Drury J. Gallagher and Robert A. Garrison. In addition, in February, March and April, 1997, Eyre and the Parry-Beaumont Trust questioned the validity of the Second Restructuring Agreement (as defined in Item 12(B)), including, without limitation, the waiver of their Acquisition Warrants to purchase 400,000 shares of the Company's Common Stock (computed after the Reverse Split). For a further description of the Second Restructuring Agreement and such transfers, see Item 12(B) hereof. 

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However, the Company believes that the Company properly issued the shares of its Common Stock to Messrs. Gallagher and Garrison in exchange for valuable consideration and that the claim of invalidity of such action has no merit. Furthermore, the Company believes that the Second Restructuring Agreement is valid, that Eyre and the Parry-Beaumont Trust waived their rights covered thereby and that any claim of invalidity with respect thereto has no merit. Moreover, the Company does not believe that any legal proceeding will be commenced by Eyre and/or the Parry-Beaumont Trust with respect to these claims, because, among other things, of the existence of certain claims which the Company may have against one or more of such parties. However, there can be no assurance that no such legal proceedings will be commenced, or, if so, the outcome thereof, although the Company believes that any of the above claims by Eyre and the Parry-Beaumont Trust are without merit. 

Political, Economic and Other Factors 

(a) General. 

The value of the Company's assets may be adversely affected by political, economic, social factors and changes in law or regulations of Armenia or Georgia or other nearby countries and the status of foreign relations of those countries. Developments in the respective regions of operations may also affect the value of the Company's assets. Despite privatization programs that have been implemented in Armenia and Georgia, the Governments of these countries have exercised and continue to exercise significant influence over many aspects of the local economies, and the number of public sector enterprises in these countries is substantial. Governments and their economic policies may have an unpredictable impact on the economies of these countries and the mining projects proposed to be undertaken there. Future actions by the Governments of Armenia or Georgia could have a significant effect on the market conditions, the mining projects proposed to be undertaken by the Company and the local economies. 

The economies of Armenia and Georgia were tightly controlled by a Communist government and composed almost exclusively of state-owned enterprises until 1991. Since then, the Governments of Armenia and Georgia implemented economic structural reform programs with the objective of liberalizing their exchange and trade policies, privatizing state-owned companies, controlling inflation, promoting sound monetary and fiscal policy, reforming the financial sector, and placing greater reliance on market mechanisms to direct economic activity. A significant component of the program is the promotion of foreign investment in key areas of the economy and the further development of the private sector. There can be no assurance that the economic reforms will persist, and any reversal thereof by the current or any future Government of these countries could adversely affect the Company's proposed mining projects there. 

Adverse developments in one major sector of the economies of Armenia or Georgia could adversely affect the economy as a whole. In addition, the Armenia and Georgia economies generally are dependent upon international trade and have been and may continue to be adversely affected by trade barriers and other protectionist measures, exchange controls and relative currency values. These economies may also be adversely affected by economic or political developments in or controversies 

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with neighboring countries and major trading partners. The economies of Armenia and Georgia countries are heavily dependent on Russia and other neighboring members of the Commonwealth of Independent States. Political or economic difficulties in these states continue to result in difficulties in Armenia and Georgia, which adversely affect the economic stability of those countries and, consequently, the Company's proposed mining projects. 

(b) Political Instability, Civil Unrest, Expropriation and Inconvertibility of Currency 

At present, Armenia and Georgia are experiencing civil unrest in regions, which could adversely affect the mining projects proposed to be undertaken by the Company in those countries. The continuing armed conflicts in the regions may hinder, delay or make commercially impractical or impossible the development and production of mining in those countries. Conflicts in the region exist, particularly over the disputed territory of Nagorno-Karabakh for more than eight years, over Abkhazia in Georgia more than three years, and over Chechnya more than two years, and have occasionally resulted in attacks on and damage to transportation corridors and gas and oil pipelines. Due to the significant risks surrounding the volatile political situation and the shipment of goods to both countries, investors bear the risk of project delays, including the commencement of the further development of potential commercial operations. 

In addition, there can be no assurance that the Armenia or Georgia will not adopt policies adversely affecting the Company's proposed mining projects. Lastly, there can be no assurance that the Company's proposed investments would not be expropriated, nationalized or otherwise confiscated or that the currencies of those countries would not become inconvertible or that unanticipated taxes or other export duties would not be imposed, such as those investors experienced by foreign-owned oil and gas projects in Russia. 

(c) Exchange Controls; Export Restrictions 

The ability of the Company to repatriate investment income, capital and proceeds of sales realized from gold and copper concentrates or from its investments in Armenia and Georgia is subject to regulation by government authorities of those countries. There can be no assurance that the Governments of these countries will not, whether for purposes of managing their respective balance of payments or for other reasons, impose additional restrictions in the future on foreign capital remittances abroad or otherwise modify the exchange control regime applicable to foreign investors in such a way that may adversely affect the ability of the Company to repatriate its income and capital or to sell and/or refine the mined materials outside of those countries. The Company could be adversely affected by delays in obtaining or the failure to obtain any required government or central bank approval for repatriation of capital, or proceeds from the sale of concentrates, as well as by the application to the Company of any restrictions on investments. 

(d) Financial Information and Standards; Regulatory Matters 

Disclosure and regulatory standards in Armenia and Georgia are substantially less 

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stringent than United States standards. Issuers there are subject to accounting, auditing and financial standards and requirements that differ significantly from those applicable to United States issuers. Moreover, by virtue of significant differences between the accounting practice in those countries and those in the United States, the assets and profits appearing on a company's financial statements in such countries may not reflect their financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance with United States generally accepted accounting principles. Accordingly, the Company may experience delay and significant costs in having financial statements prepared covering its proposed operations in these countries. 

(e) Governmental Concessions, Licenses and Permits Not Yet Received 

While the Government of Armenia has granted various approvals and licenses, and issued a decree, with respect to the Tailings Project, such Government has not yet taken such action with respect to the Zod, Meghradzor and exploration projects contemplated to be undertaken by the Company. The Company cannot assure that the Governments of Armenia and Georgia will grant various approvals, licenses, permits or concessions on a timely basis, and failure of the Governments of Armenia and Georgia to do so could materially and adversely affect the Company's investments. Moreover, the operations in such countries may encounter other regulatory problems that could materially and adversely affect the Company's operations there. 

Withholding and Other Taxes 

The Company's proposed mining operations in Armenia (and Georgia, if the Company undertakes any project there) are subject to the income taxes of those countries. Upon the repatriation of earnings from such operations, if any, such income is subject to United States income tax. In addition, dividends distributions of earnings from those countries may also be subject to withholding taxes. The imposition of such taxes and the rates imposed are subject to change. The income tax treaty with Russia may potentially reduce the possible risks of double taxation in each of those countries and the United States. Both Armenia and Georgia are currently negotiating separate income tax treaties with the United States. While foreign income taxes paid or incurred by the Company may be eligible for credit or deduction against the Company's United States income tax, such benefits are subject to certain limitations and restrictions. Although the Company expects that such foreign income taxes will be available for credit for United States income tax purposes, there can be no assurance of such result. 

United States Income Tax Consequences Arising Out of the Agreement 

The Company neither received a tax opinion nor sought a private letter ruling from the Internal Revenue Service (the "Service") regarding the United States income tax consequences arising out of the closing under the Asset Purchase Agreement between the Company and Eyre on December 1, 1995 (see Item 
12(B)). It is possible that the Service may contend that the Company and/or its subsidiaries recognized substantial gain in such transaction, and there can be no assurance of the outcome of such challenge. If the Service successfully asserted such result, the amount due could have a material adverse impact on the Company's business, assets and financial position. 

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While the Company had a net operating loss carry forward as of December 31, 1994 of approximately $2,500,000 expiring in 1996, the closing of the transaction under the Agreement and the Offering eliminated almost the entire amount thereof as of December 31, 1995. Thus, if a substantial amount of gain arose upon the closing under the Agreement, the Company's net operating loss carry forward would not be available, in all likelihood, to offset such gain in a material way. 

ITEM 2. DESCRIPTION OF PROPERTIES 

The Company occupies office space of approximately 1,000 square feet, on a month-to-month at-will tenancy basis, without the payment of any rent, on premises owned by Penn-Med Consultants, Inc., whose sole stockholders are the three largest stockholders of the Company, other than Eyre, the Parry-Beaumont Trust and Robert A. Garrison. The Company has accrued rental payments of $3,000 a month, commencing as of January 1, 1996, for lease of space at the premises and the provision of various administrative services, including telephone, fax and xerox. There is no written agreement covering such arrangement. 

ITEM 3. LEGAL PROCEEDINGS 

There are no material pending legal proceedings to which the Company is a party or to which any of its property is subject. However, Eyre and the Parry-Beaumont Trust have questioned, in writing in February, March and April, 1997, the validity of the Second Restructuring Agreement (as defined in Item 
12(B)) and the validity of the issuance by the Company of 1,000,000 shares of its Common Stock to each of Messrs. Gallagher and Garrison. The Company believes that the Second Restructuring Agreement is valid and that Eyre and the Parry-Beaumont have waived the rights covered thereby. The Company further believes that the Company properly issued the shares of its Common Stock to Messrs. Gallagher and Garrison in exchange for valuable consideration and that the claim of invalidity of such action has no merit. For a further description of the Second Restructuring Agreement and such transfers, see Item 12 hereof. 

The Company has also received requests from Panquest Lte. and from Eyre relating to amounts alleged to be due to Panquest Lte. relating to the Company's acquisition of rights from Eyre relating to the Armenian and Georgian projects. No evidence has yet been supplied to the Company in this regard. 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 

The Company's stockholders approved the Reverse Split of Company's Common Stock on the basis of one share of the Company's Common Stock for each 10 shares of the Company's Common Stock issued and outstanding on December 31, 1996. Such action was approved by a vote of the holders of more than a majority of its issued and outstanding shares of Common Stock by a written consent executed by such stockholders, effective as of December 23, 1996. 

As a result, the number of the Company's issued and outstanding shares of its Common Stock was reduced from 21,980,742 to 2,198,074, effective as of December 31, 1996. The Company filed a Certificate of Amendment to the Certificate of Incorporation with respect to the Reverse Split with the 

26 

Delaware Secretary of State on December 31, 1996. 

PART II. 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTER 

(a) The Company's Common Stock is not publicly traded on any market. 

(b) As of December 31, 1996, there were approximately 1,100 holders of record of the Company's Common Stock. 

(c) The Company did not pay or declare any cash dividends on its Common Stock during its last two fiscal years ended December 31, 1995 and December 31, 1996. 

(d) As of December 31, 1996, the Company was not prohibited from paying any dividends on its Common Stock. 

(e) The Company's transfer agent is American Registrar and Transfer Company, with offices at 10 Exchange Place, Salt Lake City, Utah 84111. 

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION 

As at December 31, 1996, the Company's had net assets of $571,603, of which $369 consisted of cash or cash equivalents. 

The Company's plan of operation for calendar year 1997 is: 

(a) To enter into definitive agreements with First Dynasty with respect to all of the Armenian mining projects contemplated under the Armenian Joint Venture Agreement, including, without limitation, completing any financing needed for the Tailings Project; 

(b) To commence the mining of gold pursuant to the Tailings Project; 

(c) To earn the right to mine production and process gold at the Zod mine in Armenia in accordance with the terms of the Armenian Joint Venture Agreement and, in preparation therefor, conclude an engineering feasibility study on the Zod mine; 

(d) To collect payments of accrued interest and principal on and/or restructure the $300,000 convertible note issued by Jet-Line to the Company; and 

(e) To commence the public trading of the Company's Common Stock. 

As of December 31, 1996, the Company had liquid assets consisting of cash of approximately 

27 

$369. It is anticipated that First Dynasty will provide or arrange for all of the financing needed in connection with the Tailings Project and such initial financing as is needed in connection with the development of the Zod and Meghradzor mines (assuming GGA successfully negotiate rights to participate in the development of such projects). However, without the additional financing as described below, the Company would be unable to meet its monthly administrative expenses which average approximately $10,000 per month (exclusive of accrued officers' compensation), plus additional amounts for legal and accounting costs. The Company expects to receive additional financing in 1997 from several sources to cover the latter types of costs (and for general corporate purposes) and its contemplated financing sources are as follows: 

(i) Pursuant to the Offering of $500,000 principal amount of the Convertible Notes of the Company, the Company issued Warrants to purchase 4,000,000 shares of its Common Stock at an exercise price of $0.50 per share. By virtue of the Reverse Split, the Warrants were converted into Warrants to purchase 400,000 shares of the Company's Common Stock at an exercise price of $5 per share. On January 23, 1997, the Company amended the Warrants to reduce the exercise price to $1 per share and to extend the expiration date until December 31, 1997. If the Warrants were exercised in full, the Company would receive $400,000 in gross proceeds. While the Company does not know with certainty whether the Warrants will be exercised, it does anticipate that a substantial amount thereof will be exercised, although there can be no assurance of such result. 

(ii) The Company anticipates that it will receive some payments or interest on the Jet-Line Note, although there can be no assurance of such result. 

Nevertheless, there can be no assurance that any one or more of the above financings will be provided, or, if so, on terms acceptable to the Company. In the event that no contemplated financing is consummated, the Company does not have sufficient financial resources to meet its obligations as of June 30, 1997. 

Based on the Company's needs for additional financing of its operations, Mr. Gallagher agreed to continue to advance funds to the Company for such purpose through June 30, 1997 if he was paid in full by such date or earlier out of the proceeds of any financing received by the Company in excess of $500,000 and provided that the Company also secured his loan with the Jet-Line Note, which the Company agreed to do. 

The Company does not intend to engage in any project research and development during 1997 and does not expect to purchase or sell any plant or significant equipment, except as contemplated in connection with the Tailings Project and as additionally provided in the Armenian Joint Venture Agreement. 

The Company does not expect to hire any additional full-time employees in 1997. 

ITEM 7. FINANCIAL STATEMENTS 

28 

The audited financial statements, notes thereto and reports of independent certified public accountants thereon for the fiscal years of the Company ended December 31, 1996 and December 31, 1995 (by Marks Shron & Company, LLP) are attached hereto as part of, and at the end of, this report. 

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNT AND FINANCIAL DISCLOSURE 

Not applicable. 

PART III. 

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 

The directors* and executive officers of the Company are as follows: 

Name                          Age         Officer
----                          ---         -------

Drury J. Gallagher            58          Chairman, Chief Executive Officer,
                                          Treasurer and Director

Robert A. Garrison            56          President, Chief Operating Officer,
                                          Secretary and Director

Each Director is elected for a period of one year at the Company's annual meeting of stockholders and serves until his successor is duly elected and qualified. Each director who is not a full time employee of the Company receives no remuneration for his services as a director. Officers are appointed by the Board of Directors. 

The Board of Directors has not appointed any audit, compensation or any other committee. Instead, the Board acts as a whole in all matters. 

Mr. Gallagher has served as a director since 1981 and as Chairman, President and Treasurer of the Company from 1982 until February 1, 1997 and as Chairman, Chief Executive Officer and Treasurer since that date. Mr. Gallagher is the general partner, owner and operator of 20 nursing homes in Pennsylvania, and has served as Executive Vice President and Treasurer of Penn-Med Consultants, Inc., which is engaged in the business of providing long-term health care management, since 1992. From 1986 to 1991, he served as Vice President of Pennsylvania Health and Nursing Care Corporation. He also served as a member of the Board of Directors of Power Spectra, Inc., a public company specializing in commercial and defense electronics from April, 1990 through July, 

* Howard G. Seitz, Esq., resigned as a director of the Company, effective June 15, 1996. 

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1996. 

Mr. Garrison has served as a director and Vice President of the Company from June 26, 1995 until February 1, 1997, and became the President and Chief Operating Officer on February 1, 1997 and was appointed its Secretary on February 1, 1996. Mr. Garrison is co-founder, owner and President of INFISCO, Inc., a financial advisory corporation that structures financings, including project financing principally in foreign countries, since 1992. He was also the President of AEGIS Commodities Corporation, a packager of commodity export supported financing programs, serving as such from 1990 to 1992. He also served as a Director and President and Chief Executive Officer of Sogam Holdings Inc., one of the world's largest mining corporations, and a business of Societe General de Belgique, since 1985. Prior thereto, Mr. Garrison was the Vice President and Treasurer of Pechiney Trading International Division of Pechiney Engine Khulman, in Paris, France, and had been employed by AMAX, Inc., a major mining enterprise, in various financial capacities. Mr. Garrison has also written articles on financing in the mining industry and has structured foreign asset-based financings. 

ITEM 10. EXECUTIVE COMPENSATION 

(a) The summary compensation table below indicates the cash or accrued compensation by the Company as well as other compensation paid or accrued to the President (the Company's chief executive officer) and the next highest compensated executive officer at December 31, 1996 for services rendered in all capacities during calendar years 1996, 1995 and 1994: 

30 

SUMMARY COMPENSATION TABLE 

                          Annual Compensation                                         Long Term Compensation Awards
- -----------------------------------------------------------------   ----------------------------------------------------------------
Name and                                             Other Annual   Restricted     Underlying              LTIP           All Other
Principal Position     Year      Salary      Bonus   Compensation   Stock Awards   Options/SARs(#)         Payout       Compensation
- ------------------     ----      ------      -----   ------------   ------------   ---------------         ------      -------------

Drury J. Gallagher,    1996    $100,000(1)    -0-        -0-(2)         -0-         250,000 shares           -0-          -0-
Chairman, Chief        1995    $ 50,000(1)    -0-        -0-(2)         -0-         1,500,000/ 500,000
Executive Officer                                                                    shares      units
and Treasurer          1994    $    -0-       -0-        -0-            -0-           -0-                    -0-          -0-
(the Company's Chief
Executive Officer)

Robert A. Garrison,    1996    $100,000(1)    -0-        -0-(2)         -0-         250,000 shares           -0-          -0-
President, Chief       1995    $ 50,000(1)    -0-        -0-(2)         -0-         500,000/500,000          -0-
Operating Officer                                                                   shares    units
and Secretary          1994    $    -0-       -0-        -0-            -0-           -0-                    -0-          -0-

(1) Under the Company's employment agreements with Messrs. Gallagher and Garrison (as amended),which commenced as of July 1, 1995, such officers were to be paid an annual salary of $100,000, in equal monthly installments. However, since the Company was unable to pay any of such salaries in 1995 and 1996, all such amounts accrued, which totalled $150,000 per person, or an aggregate of $300,000 as of December 31, 1996. The Company and the officers orally agreed in July, 1995 to postpone the payment of such accrued salaries and any additional amounts due under the employment agreements until the Company receives additional funding of at least $2,000,000. All compensation numbers reflect the compensation payable for the period from July 1, 1995 to December 31, 1996. For the cancellation of $100,000 of such accrued compensation and options and stock appreciation rights by each officer as of January 3, 1997, see Item 12(A) hereof. 

Mr. Gallagher entered into a three-year employment agreement with the Company as of July 1, 1995. Under such agreement, Mr. Gallagher agreed to spend up to one-half of his business time as President and be in charge of the Company's day-to-day operations at an annual salary of $100,000. The agreement also provides for the reimbursement of expenses incurred by him in the performance of his duties. 

The Company entered into a three-year employment agreement with Mr. Garrison dated as July 1, 1995 under which he was to receive a salary from the Company totalling $85,000 and be entitled to the stock options and stock appreciation rights as described in Item 12(A). Under the agreement, Mr. Garrison agreed to spend up to one-half of his business time as Vice President and be in charge of the Company's day-to-day mining and Project financing operations. The agreement also provides for the reimbursement of expenses incurred by him in connection with the performance of his duties thereunder. 

Mr. Garrison also entered into a substantially identical employment agreement with Autosport under which he was to be paid an annual salary of $15,000. However, since Autosport (as defined in Item 12(B)) terminated its Mining Management Agreement with the Company pursuant to the Initial Restructuring Agreement (as defined in Item 12(B)), Mr. Garrison's employment with Autosport was also terminated. Thereafter, on April 12, 1996 the Board of Directors decided to amend Mr. Garrison's employment agreement with the Company to increase his annual salary thereunder from $85,000 to $100,000. Pursuant to such Board action, the parties executed and delivered an amendment to Mr. Garrison's employment agreement with the Company to such effect. 

(2) Perquisites and other personal benefits paid or accrued to each of the above-named officers were less than 10% of the total of their respective annual salaries in 1996, and the same was true in 1995 in the case of Mr. Gallagher. Mr. Garrison first joined the Company as of July 1, 1995. 

31 

(b) Stock Options and Awards 

The following table sets forth information with regard to grants of stock options and awards during the year ended December 31, 1996 to each of the named executive officers of the Company, all of which grants were made under the Company's 1995 Stock Option Plan: 

                                          % of Total
                  Number of Securities    Options Granted
                  Underlying Options/     to Employees in   Exercise or         Expiration
                     SARs Granted (#)      Fiscal Year      Base Price ($/Sh)      Date
                  --------------------    ----------------  -----------------   ----------
Drury J. Gallagher      250,000(1)              50%              $0.50            7/18/99

Robert A. Garrison      250,000(1)              50%              $0.50            7/18/99

(c) 1995 Stock Option Plan 

The description of the Stock Option Plan is set forth herein and is qualified in its entirety by reference thereto. 

Terms of the Stock Option Plan 

A maximum of 500,000 shares of Common Stock (computed after the Reverse Split and subject to adjustment as described below) has been reserved for issuance by the Company pursuant to options to be granted under the Stock Option Plan. 

The Stock Option Plan will be administered by the Company's Board of Directors unless and until the Board of Directors shall appoint the members of the Stock Option Committee (the "Committee") who may also be the members of the Compensation Committee. The composition of such Committee at present does not satisfy the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. During the 10- year period ending in 2005, the Committee will have authority, subject to the terms of the Stock Option Plan, to determine when and to whom to make grants under the plan, the number of shares 
(1) On July 19, 1996, the Board of Directors granted each of Messrs. Gallagher and Garrison a non-qualified option to purchase 250,000 shares of the Company's Common Stock at an exercise price of $1.00 per share expiring on July 18, 1999, which exercise price was reduced to $0.50 per share on November 4, 1996. As stated under Item 12(A) hereof, these options were cancelled as of January 3, 1997. 

32 

to be covered by the grants, the types and terms of options and stock appreciation rights ("SARs") to be granted and the exercise prices of options and SARs, to interpret and implement the Plan, and to prescribe, amend and rescind rules and regulations relating to the Stock Option Plan. The Committee's determinations under the Stock Option Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Stock Option Plan (whether or not such persons are similarly situated). 

The Company's Board of Directors may amend, suspend or discontinue the Stock Option Plan at any time except that, unless an amendment is approved (at a meeting held within 12 months before or after the date of such amendment) by the holders of a majority of the issued and outstanding shares of Common Stock entitled to vote, no such amendment may (i) materially increase the maximum number of shares as to which awards may be granted under the Stock Option Plan, except for adjustments to reflect stock dividends or other recapitalization affecting the number or kind of outstanding shares, (ii) materially increase the benefits accruing to Stock Option Plan participants, or (iii) materially change the requirements as to eligibility for participation in the Stock Option Plan. 

Under the terms of the Stock Option Plan, "incentive stock options" ("ISOs") within the meaning of section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), "non-qualified stock options" ("NQSOs") and SARs may be granted to officers, key employees, consultants, employees of consultants, and advisors of the Company and any of its subsidiaries (as defined in the Stock Option Plan), except that ISOs may be granted only to employees of the Company and its subsidiaries. The Stock Option Plan limits the number of shares with respect to which options or SARs may be granted to an individual over the term of the Stock Option Plan to 100,000 (computed after the Reverse Split), but permits exceptions thereto in the case of the option to be granted to Autosport and the options and SARs granted to Messrs. Gallagher and Garrison. 

To the extent that the aggregate fair market value (as defined in the Stock Option Plan), determined as of the date of grant of an ISO, of Common Stock with respect to which ISOs granted under the Stock Option Plan and all other option plans of the Company or its subsidiaries exercisable for the first time by an individual during any calendar year exceeds $100,000, such options shall be treated as options which are not ISOs. The foregoing limitation does not apply to NQSOs. 

Initially, each ISO will be exercisable over a period, determined by the Committee in its discretion, but not to exceed 10 years from the date of grant, as required by the Code. In addition, in the case of an ISO granted to an individual who, at the time such ISO is granted, owns shares possessing 10% or more of the total combined voting power of all classes of stock of the Company or its subsidiary corporations (a "10% Stockholder"), the exercise period for an ISO may not exceed five years from the date of grant. In the case of NQSOs, the exercise period, not to exceed 10 years from the date of grant, shall in all cases be determined by the Committee. Options may be exercisable during the option period at such times, in such amounts, in accordance with such terms and conditions, and subject to such restrictions, as are set forth in the option agreement evidencing the grant of such options. The Committee may, in its discretion, with the grantee's consent, cancel any award of options or SARs and issue a new award in substitution therefor or accelerate the 

33 

exercisability of any award granted under the Stock Option Plan or extend the scheduled expiration of an award. 

The exercise price of an ISO or an NQSO (the "Option Price') may not be less than the fair market value of the shares of Common Stock on the date of grant, except that, in the case of an ISO granted to a 10% Stockholder, the Option Price may not be less than 110% of such fair market value. The Option Price of, and the number of shares covered by, each option will not change during the life of the option, except for adjustments to reflect stock dividends, splits, other recapitalization or reclassifications or changes affecting the number or kind of outstanding shares. 

The shares purchased upon the exercise of an option are to be paid for in cash or, with the Committee's consent, in its discretion, by delivery of the optionee's promissory note, upon such terms and conditions as the Committee may prescribe, or, if so provided in the applicable option agreement, by delivery of previously acquired shares of Common Stock with a fair market value equal to the total Option Price, or in a combination of such methods. 

Options and SARs may be transferred by an optionee or grantee only by will or by the laws of descent and distribution and may be exercised only by the optionee or grantee during his lifetime. Except as otherwise provided in the applicable plan agreement, all of an optionee's or a grantee's outstanding awards shall terminate upon his termination of employment or service for any reason. 

The Committee may grant SARs in conjunction with all or part of an option or independently thereof. Upon the exercise of a SAR, a holder will generally be entitled, without payment to the Company, to receive cash, shares of Common Stock or any combination thereof, as determined by the Committee, in an amount equal to the excess of the fair market value of one share of Common Stock on the exercise date over the exercise price of the related option, multiplied by the number of shares in respect of which the SAR is exercised, except in the case of the SARs granted to Messrs. Gallagher and Garrison. 

(ii) Tax Aspects of the Stock Option Plan. 

The following are the principal Federal income tax consequences generally applicable to awards granted under the Stock Option Plan. The grant of an option or SAR will create no Federal income tax consequences for the recipient or the Company or a subsidiary employing the recipient (the "employer") at the time of grant. The holder of an ISO will have no taxable income upon exercising an ISO (except that the holder may have income for alternative minimum tax purposes), and the employer generally will receive no deduction when an ISO is exercised. In general, upon exercising a stock option other than an ISO, the optionee must recognize ordinary income equal to the excess of the fair market value of the stock acquired on the date of exercise over the option price, and the employer generally will then be entitled to a deduction for the same amount. In general, upon exercising an SAR, the amount of any cash received and the fair market value on the exercise date of any shares or other property received are taxable to the recipient as ordinary income and deductible by the employer. The tax treatment to an optionee of a disposition of shares acquired 

34 

through the exercise of an option will depend on how long the shares have been held and on whether such shares were acquired by exercising an ISO, an SAR or an option other than an ISO. Generally, there will be no Federal income tax consequences to the employer in connection with a disposition of shares acquired under an option except that the employer may be entitled to a deduction in the case of a disposition of shares acquired under an ISO if the applicable ISO two-year holding period has not been satisfied. 

With respect to awards granted under the Stock Option Plan that are settled either in cash or in stock or other property that is either transferable or not subject to substantial risk of forfeiture, the participant must recognize ordinary income equal to the excess of (a) the cash or the fair market value of the shares received (determined as of the date of settlement) over (b) any amount paid for such shares by the holder of the award; and the employer generally will be entitled to a deduction at the same time and for the same amount. With respect to awards that are settled in stock or other property that is restricted as to transferability and subject to substantial risk of forfeiture, the participant must recognize ordinary income equal to the excess of (a) the fair market value of the shares or other property received determined at the first time the shares or other property becomes transferable or not subject to substantial risk of forfeiture, whichever occurs earlier over (b) any amount paid for such shares or other property by the participant; and the employer generally will be entitled to a deduction for the same amount at the time that the employee recognizes the income. Different tax rules may apply with respect to participants who are subject to Section 16 of the Securities Exchange Act of 1934, as amended. 

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 

(a) Set forth below is information as of December 31, 1996 pertaining to ownership of the Company's Common Stock, determined in accordance with Rule 
13(d)(3) under the Securities and Exchange Act of 1934, by persons known to the Company who own more than 5% of the Company's Common Stock: 

35 

                  Name and Address of            Number of
Title of Class    Beneficial Owner               Shares(1)     Percent of Class

                                                 Common
                                                 ------
Common Stock      Drury J. Gallagher             282,451(2)           11.92
                  c/o Global Gold Corporation
                  438 West 37th Street
                  New York, NY  10018

Common Stock      Eyre Resource N.L.             600,000(3)           27.33
                  Crest House - Suite 5
                  7 Havelock Street
                  West Perth WA 6005
                  Australia

Common Stock      Jeffrey Beaumont, Trustee
                  of the Parry-Beaumont Trust    400,000(3)           18.23
                  18, Pioneer Sector 1
                  Jurong, Singapore 2262

(1) For purposes of this table, a person or group is deemed to have "beneficial ownership of any shares which such person has the right to acquire within 60 days after December 31, 1996. For purposes of calculating the percentage of outstanding shares held by each person named herein, any shares which such person has the right to acquire within 60 days after December 31, 1996 are deemed to be outstanding, but not for the purpose of calculating the percentage ownership of any other person. 

(2) This amount includes 150,000 shares of Common Stock issuable on the exercise of options granted to Mr. Gallagher on July 21, 1995 pursuant to the Company's 1995 Stock Option Plan adopted on such date, and 24,000 shares of Common Stock issuable upon the exercise of the Warrants issued to Mr. Gallagher pursuant to the Offering. However, on January 3, 1997, Mr. Gallagher cancelled all his options in partial consideration for the transfer of 1,000,000 shares of Common Stock (after the Reverse Split) to him. See Item 12(A) hereof for a further description of such transaction and the resulting beneficial ownership of the Company's Common Stock by him. 

Mr. Gallagher disclaims any beneficial interest in the 20,000 shares of the Company's Common Stock and 40,000 shares of Common Stock issuable upon the exercise of the Warrants acquired by Francis L. Gallagher, Jr., (Mr. Gallagher's brother) as trustee of the Drury J. Gallagher Trust F/B/O Children dated March 1, 1985. 

(3) The shares owned by each of Eyre and the Parry-Beaumont reflects the surrender of 6,000,000 and 4,000,000 shares of the Company's Common Stock, respectively (prior to the Reverse Split), and the surrender of Acquisition Warrants to purchase 3,600,000 (prior to the Reverse Split) and 2,400,000 (prior to the Reverse Split) shares of Common Stock, respectively, as well as the surrender by Autosport of its options to purchase 2,000,000 shares of the Company's Common Stock (prior to the Reverse Split), all pursuant to the Initial Restructuring Agreement. Under the Second Restructuring Agreement, Eyre and the Parry-Beaumont surrendered their Acquisition Warrants to acquire 2,400,000 (prior to the Reverse Split) and 1,600,000 shares (prior to the Reverse Split) of the Company's Common Stock, respectively. 

36 

(b) Set forth below is information as of December 31, 1996 pertaining to ownership of the Company's Common Stock by all directors and executive officers of the Company: 

                  Name and Address of            Number of
Title of Class    Beneficial Owner               Shares(1)      Percent of Class

Common            Drury J. Gallagher             282,451(2)          11.9(2)
                  c/o Global Gold Corporation
                  438 West 37th Street
                  New York, New York  10018

Common            Robert A. Garrison              61,660(3)          27.3(3)
                  44 Lords Highway East
                  Weston, Connecticut  06883     -------            ------
                                    Total        344,111             14.63

(c) As of December 31, 1996, except as described in Item 12 hereof, there were no arrangements in effect which may result in a change of control of the Company, after taking into account the effects of the Restructuring Agreements discussed above. 

(1) For purposes of this table, a person or group is deemed to have "beneficial ownership of any shares which such person has the right to acquire within 60 days after December 31, 1996. For purposes of calculating the percentage of outstanding shares held by each person named herein, any shares which such person has the right to acquire within 60 days after December 31, 1996 are deemed to be outstanding, but not for the purpose of calculating the percentage ownership of any other person. 

(2) This amount includes 150,000 shares of Common Stock issuable on the exercise of options granted to Mr. Gallagher on July 21, 1995 pursuant to the Company's 1995 Stock Option Plan adopted on such date, and 24,000 shares of Common Stock issuable upon the exercise of the Warrants issued to Mr. Gallagher pursuant to the Offering. However, on January 3, 1997, Mr. Gallagher cancelled all his options in partial consideration for the transfer of 1,000,000 shares of Common Stock (after the Reverse Split) to him. See Item 12(A) hereof for a further description of such transaction and the resulting beneficial ownership of the Company's Common Stock by him. 

Mr. Gallagher disclaims any beneficial interest in the 20,000 shares of the Company's Common Stock and 40,000 shares of Common Stock issuable upon the exercise of the Warrants acquired by Francis L. Gallagher, Jr., (Mr. Gallagher's brother) as trustee of the Drury J. Gallagher Trust F/B/O Children dated March 1, 1985. 

(3) This amount includes 61,660 shares of Common Stock issuable on the exercise of options granted to Mr. Garrison on July 21, 1995 pursuant to the Company's 1995 Stock Option Plan and reflects all such options which are exercisable within 60 days after December 31, 1996. However, on January 3, 1997, Mr. Garrison cancelled all his options in partial consideration for the transfer of 1,000,000 shares of the Common Stock (after the Reverse Split) to him. See Item 12(A) hereof for a further description of such transaction and the resulting beneficial ownership of the Company's Common Stock by him. 

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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 

(A) Transactions with Officers 

As described in Item 1(D)4(c) hereof, the Company made a loan of $25,000 to Envirotherm Heating and Cooling Systems, Inc. on October 17, 1994. Mr. Gallagher owns 4% of the common stock of Envirotherm, which he received for consulting services rendered by him subsequent to and independent of the loan transaction described above. The Company treated such loan as worthless as of December 31, 1996. 

As described in Item 6 hereof, Mr. Gallagher agreed to advance funds to the Company to cover its administrative expenses and legal and accounting expenses through June 30, 1997, if he was paid in full by such date or earlier out of the proceeds of any financing received by the Company in excess of $500,000 and provided that the Company also secured his loan with the Jet-Line Note, which the Company agreed to do. 

As of December 31, 1996, Mr. Gallagher loaned $191,000 to the Company, which loan is evidenced by a new consolidated note which the Company issued to him as of such date and cancelled the earlier consolidated note dated November 12, 1996. 

On January 3, 1997, the Board of Directors of the Company approved the transfer of 1,000,000 shares of its Common Stock (computed after the Reverse Split) to each of Messrs. Gallagher and Garrison in exchange for, (a) in Mr. Gallagher's case, the cancellation of $100,000 of accrued salary, and the cancellations of his options to acquire 175,000 shares of the Common Stock of the Company (computed after the Reverse Split) and the cancellation of his stock appreciation rights (the "SARs") which, under certain circumstances, could have resulted in the issuance to him of up to 37,500 shares of the Company's Common Stock (computed after the Reverse Split)1 and (b) 

1 The Board of Directors granted each of Messrs. Gallagher and Garrison a SAR for 500,000 units of the Company's Common Stock, with the base price thereof of $0.20 per share (the "Base Price") on the date of grant, July 21, 1995 (based on the Board's determination of the fair market value of the Company's Common Stock on that date). If the value of the units increases over the Base Price during the period of six years after the grant, and if the market capitalization of the Company (determined by multiplying the number of shares of Common Stock outstanding over the mean of the publicly-traded fair market value of the Common Stock in the over-the-counter market, Nasdaq or elsewhere) exceeds the formula price as set forth below for a consecutive period of three months, the holder of the SAR shall be entitled to be paid such excess by the Company in cash, or shares of Common Stock, or a combination thereof, in one or more annual installments over a period not in excess of three years, as the Board of Directors determines in its sole discretion, but such payment shall cause the holder of the SAR to forfeit options to purchase 12,500 shares of the Company's Common Stock under the option described in (1)(iii) and (2)(ii) above. The formula price is set forth below: 

38 

in Mr. Garrison's case, the cancellation of $100,000 of accrued salary, the cancellation of his options to buy 75,000 shares of the Company's Common Stock and the cancellation of his SARs. The Company made such transfer to reward each of them for their efforts to secure financing for the Company and/or the Armenian mining project, for maintaining the Company's existence in the face of the Company's potential insolvency, and to increase their proprietary stake as the day-to-day management of the Company at the request of prospective investment banking firms and potential investors with whom the Company was then seeking to obtain funding. 

Since July, 1995, Messrs. Gallagher and Garrison had deferred the payment of their salaries due them under their employment agreements and continued such deferral from July 1, 1996 through December 31, 1996. Since July, 1996, they undertook to keep the Company alive financially, by Mr. Gallagher's further advances to the Company of $191,000, by Mr. Garrison's payment of his own travel and travel-related expenses totally over $50,000, by their undertaking joint and several guarantees of $500,000 to LIM and their constant fund-raising activities including frequent trips to London, Toronto, Vancouver and various places in the United States for such purpose. Without such efforts, the Company's activities would have ceased in substantially all respects. No financial assistance of this type, or any guaranty, was provided by Eyre or its officers, directors or shareholders or by the Parry-Beaumont Trust (except for $100), despite the Company's written requests to them for such assistance. Furthermore, when the holders of the Warrants acquired in the Offering were asked to exercise them at the reduced exercise price of $0.25 per share during the 30-day period ended December 15, 1996, none of the holders exercised them (except for one holder, Mr. Ian Darragh, an Eyre director, who purchased 400 shares for a total of $100, computed prior to the Reverse Split). 

As a result of such transfers of Common Stock to Messrs. Gallagher and Garrison, Mr. Gallagher increased his beneficial ownership of Common Stock to 26.4% and Mr. Garrison became the beneficial owner of 23.8% of the Common Stock, and, taken together as a group, they now own 50.2% of the issued and outstanding shares of the Company's Common Stock (excluding their Warrants and options to buy the Company's Common Stock). Consequently, if Messrs. Gallagher and Garrison act in concert, they will be able to effectively determine the vote on any matter voted by the Company's stockholders, including the election of directors and any merger, sale of assets or other significant corporate action. 

                                    Percentage of Excess of Value of Award
Market Capitalization           over Base Price to which Recipient is Entitled
- ---------------------           ----------------------------------------------
   $100,000,000                                  50%
   $200,000,000                                  66 2/3%
   $300,000,000                                  75%

Thus, each holder became potentially entitled to receive a maximum of 375,000 shares of the Company's Common Stock payable under the SARs awarded to him. 

39 

(B) Relationship with Eyre Resources and the Parry-Beaumont Trust 

(1) Asset Purchase Agreement with Eyre Resources1 

In January, 1995 the Company entered into a letter of intent with Eyre Resources N.L., an Australian corporation ("Eyre"), with respect to certain foreign mining projects. Thereafter, the Company entered into a definitive Asset Purchase Agreement with Eyre, dated as of June 30, 1995 (the "Agreement"), with respect to the Armenian, Georgian and Australian Mining projects described herein, and closed the transactions contemplated thereunder on December 1, 1995. 

The Agreement between the Company and Eyre provided as follows: 

1. (a) The Company caused to be delivered to Eyre (i) 12,000,000 shares of its Common Stock, (ii) warrants (the "Acquisition Warrants") to purchase 6,000,000 shares of Common Stock, at an exercise price of $0.50 per share (subject to adjustment as provided therein), which expire three years after the closing of the Eyre transaction (the "Closing") and (iii) $300,000, of which $100,000 was deemed paid at the Closing (by offsetting the $100,000 amount loaned by the Company to Eyre prior thereto) and an additional $100,000 was evidenced by an interest-bearing note of the Company payable in six equal monthly installments) and an additional note of the Company for $100,000 payable to Eyre if and when the Company consummated a future financing of at least $2,000,000. The notes bore interest at the lowest rate to avoid the imputation of interest at a higher rate under the Internal Revenue Code of 1986, as amended (the "Code"). In addition, the Company agreed to assume and discharge all liabilities of Eyre (other than Armenian, Georgian or Australian income or local taxes or other than specified amounts currently due under certain Australian licenses described below) existing at the Closing with respect to the assets transferred, and to assume and perform all obligations with respect to its share of the assets after the Closing. 

(b) In exchange therefor, Eyre sold (i) an undivided 20% interest in Eyre's interest in two Australian exploration licenses in an Australian lead/zinc mining prospect known as Ediacara described herein to Global Gold Australia Limited, the Company's wholly-owned Cayman Islands subsidiary; (ii) all of Eyre's potential interest in the Armenian gold mining project described herein to Global Gold Armenia Limited, the Company's wholly-owned Cayman Islands subsidiary; and (iii) all of Eyre's potential interest in the Georgian gold and copper mining project described herein to Global Gold Georgia Limited, the Company's wholly-owned Cayman Islands subsidiary (individually, a "Project" and collectively, the "Projects"). 

(c) The Company caused to be delivered to the Parry-Beaumont Trust 8,000,000 shares of its Common Stock and Acquisition Warrants to acquire 4,000,000 shares of Common Stock for consulting services rendered by the Parry-Beaumont Trust in connection with the Projects and for arranging for the sale of the above-mentioned assets in question to the Company's subsidiaries. 

1 All of the share numbers reflected in Item 12(B) do not reflect the Reverse Split. 

40 

(d) The Company issued to Autosport (Asia) Pte. Ltd. options under the Company's 1995 Stock Option Plan to acquire 2,000,000 shares of Common Stock, at an exercise price of $0.20 per share. 

(e) The loan made by the Company to Eyre of $100,000 (described in "Loan Transaction" below) was applied at the Closing against the $200,000 amount due to Eyre at the Closing under the Agreement. 

2. Pursuant to the Agreement, the Company designated, prior to the Closing, that each of its newly-formed subsidiaries would be a direct transferee of the interests in the Projects so that each Project was owned initially and directly by a separate subsidiary of the Company. However, by virtue thereof and pursuant to the Agreement, the Company agreed to guarantee the full performance of all of the obligations undertaken by any such subsidiary designated for such purposes by the Company. Under such guaranty, Eyre is first required to give notice to the subsidiary in question of any default and the opportunity to cure such default within a 10 day period. In the event that such subsidiary does not cure such default within such period, then Eyre may proceed directly against the Company for any violation thereof. 

3. Autosport (Asia) Pte. Ltd., a Singapore corporation controlled by Eyre ("Autosport"), entered into a mining supervision contract with the Company at the Closing under which it was to provide mining supervisory services for all of the Projects (the "Mining Supervision Contract") and consult regularly with the Company thereunder. Under the Mining Supervision Contract, Autosport was entitled to be paid, solely out of Project revenues or financings relating thereto, (a) all of its direct and indirect costs in providing services in connection with the Projects plus 10% thereof, and (b) all of the costs of acquiring equipment in connection with the Projects plus 10% thereof. The Company agreed to indemnify Autosport against certain claims arising out of its performances of services, but the Company's liability thereunder was limited solely to Project revenues and financings related to the Projects. Autosport had the right to assign its rights under the Agreement, with the Company's prior written consent, which was not to be unreasonably withheld or delayed. The Company had the right to approve the construction and operating budgets for each Project. 

4. Pursuant to the Agreement, Eyre, the Parry-Beaumont Trust and the current five principal stockholders of the Company (Messrs. Gallagher, John J. Hayman, Francis A. Hayman, Jr., George L. Ryan and the Seitz Family Limited Partnership) entered into a stockholders agreement (the "Stockholders Agreement") at the Closing providing for, among other things, the following: 

(a) Eyre had the right to designate three of the five directors of the Company, including Stephen Parry (one of Mr. Kevin Parry's sons), Jaap Poll and one other person, and the parties agreed to elect Messrs. Gallagher and Garrison as directors. If the size of the Board was changed thereafter, Eyre had the right to designate such additional persons as comprise 60% of the members of the Board of Directors, and Messrs. Gallagher and Garrison (or their successors) had the right to designate such additional persons as comprise 40% thereof. As a result of this provision, Eyre controlled the Board of Directors of the Company after the Closing. 

41 

(b) The parties agreed to use their best efforts to vote to cause the election of Mr. Gallagher as President, Mr. Garrison as Vice President, and Stephen Parry as Vice President. 

(c) (i) Each party cannot sell, transfer or pledge his shares of Common Stock, except to family members, or a trust or estate for their benefit, or a charitable organization qualified under Section 501(c)(3) of the Code, or a corporation, partnership or limited liability company, controlled by the stockholder or members of his family and except as provided in (ii) below. Furthermore, if a stockholder receives a bona fide offer to buy his or its shares of Common Stock (other than pursuant to a public offering), the Company, and thereafter the non-selling stockholders (on a pro-rata basis), have the right to purchase the stock in question at the offered price. If such right of first refusal is exercised, the purchaser is required to pay (A) the lesser of 
(i) the full purchase price or (ii) the greater of 20% of the purchase price or $100,000 and (B) the balance in 24 equal consecutive monthly installments after the closing thereof (including interest at the lowest rate to avoid the imputation of interest at a higher rate under the Code). If such right of first refusal is not exercised, then the seller may sell his or its shares of Common Stock to the offeror on the terms described in the offer, but such offeror must then become a party to the Stockholders Agreement. 

(ii) All of the seven stockholders, including Eyre and the Parry-Beaumont Trust, agreed not to sell any of the shares of the Company's Common Stock owned by them for a period of 24 months from the date of the final closing of the Offering (as defined herein) (i.e., two years from December 31, 1995), except that (A) each of Eyre and the Parry-Beaumont Trust has the right to transfer 2,000,000 shares of Common Stock to one or more any persons or persons who is not a United States person within the meaning of the Securities Act, or to any other person in the United States and (B) the other five shareholders (other than Eyre and the Parry-Beaumont Trust) each has the right to pledge up to 60% of the shares of the Company's Common Stock owned by them to one pledgee only each, subject to applicable restrictions under the Act. 

(d) In the event that the Company's undertakes an offering of its securities (exclusive of any registrations on Form S-8 for shares issuable under the 1995 Stock Option Plan), the stockholders who are parties to the Stockholders Agreement will have piggyback registration rights which would enable them to sell a portion of their shares of Common Stock, together with those offered by the Company, subject to the approval thereof by the underwriter undertaking the offering in question. Commencing on or after the date which is 18 months after the final closing date of the Offering (which closing date was December 31, 1995), Eyre, the Parry-Beaumont Trust or any other three of the other stockholders acting jointly, who desire to sell their shares of Common Stock, but at least 1,000,000 shares of Common Stock collectively, can cause the Company, two times only, to file a registration statement which shall be effective on and after the expiration of the 24-month lock-up period specified above. 

5. At the Closing, there were a number of items that required future action. The assignment made by Eyre to Global Gold Australia Limited of its undivided 20% interest in the Ediacara project required the written consent of the Ministry of Mines of South Australia. Although such documents were submitted for approval shortly after the closing, no such consent was ever obtained, since the 

42 

Company, prior thereto, caused Global Gold Australia Limited to surrender its interest in the Australian Project under the Initial Restructuring Agreement. Moreover, Global did not receive certain legal opinions from Eyre's Australian and New York counsel which were required to be delivered at the closing under the Agreement, although such opinions were ultimately delivered. 

(2) Restructuring Agreements 

(a) Initial Restructuring Agreement 

After the closing of the transaction under the Agreement, the Company, Eyre and the Parry-Beaumont Trust decided to restructure the transaction pursuant to the Restructuring Agreement by and among such parties dated as of December 1, 1995 (the "Initial Restructuring Agreement"). Such a step was undertaken in order to facilitate the Company's proposed financing of the contemplated gold mining projects in Armenia and Georgia by enabling the Company to qualify for political risk insurance from the Overseas Private Investment Corporation ("OPIC") as a credit enhancement by and possible financing from OPIC. Under the rules applicable to such insurance, OPIC provides insurance for U.S. entities which are at least 50% beneficially owned by United States persons, determined on a fully diluted basis. By virtue of the stock ownership of the Company arising under the Agreement, the Company would not qualify for such insurance. Moreover, such restructuring was undertaken at the recommendation of a major United States accounting firm (which has not been retained by the Company). 

The Initial Restructuring Agreement provided as follows: 

1. (a) Eyre and the Parry-Beaumont Trust agreed to surrender to the Company 6,000,000 and 4,000,000 shares of Common Stock, respectively, and to surrender Acquisition Warrants to purchase 3,600,000 and 2,400,000 shares of Common Stock, respectively. Thus, after the Restructuring Agreement, Eyre and the Parry-Beaumont Trust continued to own 6,000,000 and 4,000,000 shares of Common Stock, respectively, and Acquisition Warrants to purchase 2,400,000 shares of Common Stock and 1,600,000 shares of Common Stock, respectively. 

(b) Autosport agreed to surrender the option to purchase 2,000,000 shares of the Common Stock of the Company. 

2. In consideration for the above surrender of securities, the Company 

(a) caused Global Gold Australia Limited to surrender its undivided 20% interest in the Australian Project, 

(b) released to Eyre any rights with respect to the agreement between the Company and the Armenian Ministry of Environment and Natural Resources dated December 1, 1995 ( which was not executed), provided that such agreement does not provide for any rights in Eyre inconsistent with, or in contravention of, the Company's rights in the Armenian Project, and 

43 

(c) granted Eyre a 2% overriding production royalty (subject to adjustment) from the Company's or its subsidiary's interest in the joint venture or ventures to be created pursuant to the Armenian Project (excluding the Tailings Project as defined herein) and the Georgian Project and a 1% overriding production royalty (subject to adjustment) in the Company's or its subsidiary's interest in each joint venture for other projects undertaken in Armenia and Georgia by the Company or its subsidiaries. 

3. In addition, the parties agreed to cancel the Operating Agreement between Eyre and the Company dated as of December 1, 1995 and the Mining Supervision Agreement, between the Company and Autosport dated as of December 1, 1995. 

4. (a) The Acquisition Warrants were amended to provide that they could not be exercised unless, concurrently with the exercise thereof, the Company issued a number of shares of Common Stock to persons or entities other than Eyre, the Parry-Beaumont Trust or their affiliates equal to the number of shares of Common Stock issued upon the exercise of the Acquisition Warrants. 

(b) Furthermore, in the event that the Company sells or otherwise transfers additional shares of its Common Stock or securities convertible into shares of its Common Stock to entities or persons not deemed United States persons under the applicable rules of OPIC, the Company is required to give Eyre and the Parry-Beaumont Trust at least 15 days notice prior to the closing of such sale or transfer. During such period, Eyre and the Parry-Beaumont Trust shall have the right to sell the Acquisition Warrants in a transaction exempt under the applicable securities laws of the United States or other applicable jurisdictions. However, if Eyre and the Parry-Beaumont Trust do not sell such number of Acquisition Warrants as aforesaid, then Eyre and the Parry-Beaumont Trust are required to surrender to the Company a number of Acquisition Warrants equal to the number of shares of Common Stock to be sold or transferred or issuable upon such conversion by the Company, at the time of the closing of such sale or transfer by the Company. 

(c) In the event that Eyre and the Parry-Beaumont Trust are required to surrender a portion of their Acquisition Warrants as described immediately above, then the 2% and 1% overriding production royalties specified above shall be adjusted upward, but not in excess of 1 percentage point, by multiplying 1% times a fraction the numerator of which is the number of Acquisition Warrants surrendered and the denominator of which is 4,000,000. 

5. (a) The Stockholders Agreement was changed to eliminate the control thereof by Eyre and the Parry-Beaumont Trust. As a result, the Company five-person Board of Directors will consist of (a) Drury J. Gallagher, (b) Robert A. Garrison, (c) Jaap Poll, (d) Stephen Parry and (e) a fifth member selected by Mr. Gallagher. The amendment to the Stockholders Agreement further provided that (i) in the event of the death of Robert A. Garrison, Drury J. Gallagher would designate his designee or (ii) in the case of an enlargement of the Board, Mr. Gallagher would have the right to designate additional persons to constitute 60% of the members of the Board, provided that such designee has demonstrable experience and expertise in the extractive or financial industry or in a region in which the Company or a subsidiary intends to operate or is operating. 

44 

(b) Furthermore, the Stockholders Agreement was changed to reduce the amount of shares of Common Stock that Eyre and the Parry-Beaumont Trust could transfer to non-United States persons in transactions not subject to the Act from 2,000,000 each to 1,500,000 each. 

6. In addition, Eyre, the Parry-Beaumont Trust, Autosport and Kevin Parry agreed to restrictions, for the purpose of obtaining independent accountants as auditors for the Company, which prevent Eyre, the Parry-Beaumont Trust and their affiliates from holding or controlling 50% or more of total stockholder votes or 50% or more of the votes of the members of the Board of Directors of the Company and precluding Kevin Parry's direct role with the Company. The Company agreed to review the above mentioned restrictions on or after January 1, 2001 and to consider, without obligation, eliminating them. 

7. In connection with the Agreement and the Initial Restructuring Agreement, Global Gold Armenia Limited and Global Gold Georgia Limited issued promissory notes dated as of December 1, 1995 to the Company in the amounts of $802,740 and $47,260, respectively, which bear interest at the rate of 6.36% per annum and mature on November 30, 1998, for the purchase of the Company's Common Stock issued to Eyre and the Parry-Beaumont Trust pursuant to such Agreements. 

(b) Second Restructuring Agreement 

Various prospective investment banking firms and potential investors who expressed an interest in providing funding for the Company's projects in the Fall of 1996 requested that the Company undertake a reverse split of its Common Stock to decrease the number of shares outstanding and to reduce the equity stake of certain shareholders who received shares pursuant to the Agreement essentially in their capacity as finders in order to facilitate possible future financings. In response thereto, by letter dated December 4, 1996, Eyre and the Parry-Beaumont Trust (i) surrendered their Acquisition Warrants to purchase 2,400,000 and 1,600,000 shares of the Company's Common Stock (a total of 4,000,000 shares) (prior to the Reverse Split) (ii) surrendered their right to designate two members of the Board of Directors of the Company and, in addition, Eyre agreed (iii) to waive its overriding royalties in the Armenian mining projects and (iv) to waive the approximately $146,000 due it under the promissory notes received at the Closing (the "Second Restructuring Agreement"). While Eyre had 2% overriding royalty on the Armenian mining projects (other than the Tailings Project), the Second Restructuring Agreement referred to the waiver of a overriding royalty of 1.5% on the Armenian mining projects in reliance on Eyre's earlier agreement to reduce such royalty to 1.5% by virtue of its failure to secure financing from a designated mining company in November, 1996. Accordingly, the Company believes that all overriding royalties on the Armenian mining projects have been validly waived. 

(c) Effect of the Agreement and the Restructuring Agreements 

As a result of the Agreement, Eyre, together with the Parry-Beaumont Trust, became the controlling stockholders of the Company and, as such, they were able to determine effectively the vote on any matter being voted on by the Company's stockholders, including the election of directors, and 

45 

any merger, sale of assets or other change or control of the Company. Furthermore, pursuant to the Stockholders Agreement, Eyre had the right to designate 60% of the members of the Board of Directors, thereby gaining control thereof. 

However, by virtue of the Initial Restructuring Agreement, Eyre and the Parry-Beaumont Trust reduced their ownership to only 47.66% of the Company's issued and outstanding shares of Common Stock as of December 31 1995, and agreed not to control the votes of 50% or more of the stock of the Company or 50% or more of the members of the Board of Directors of the Company. 

Moreover, under the Initial Restructuring Agreement, the Company retained its rights with respect to both the Armenian Project and the Georgian Project, but relinquished all of its interest in the Australian Project. 

Also, by virtue of the Second Restructuring Agreement, Eyre and the Parry-Beaumont Trust surrendered Acquisition Warrants to acquire 4,000,000 shares of the Company's Common Stock (computed prior to the Reverse Split), thereby eliminating any Acquisition Warrants held by them, and their right to designate two members of the Board of Directors of the Company. Such action, together with the transfer of 2,000,000 shares of the Common Stock (after the Reverse Split) to Messrs. Gallagher and Garrison, described in detail above, diminished substantially the combined equity position formerly held by Eyre and the Parry-Beaumont Trust. 

(3) Eyre 

Eyre, which was organized in 1993, is an Australian public company registered with the Australian Securities Commission in Canberra, Australia. Eyre has not applied for listing on the Australian Stock Exchange. 

Eyre is engaged in the development of mining projects in Australia with a view toward the commercial exploitation thereof. Eyre currently owns a 100% interest in the lead/zinc mining prospect licenses in Ediacara, real estate and several additional assets. 

Eyre had 21 holders of all of its common stock as of May 1, 1995. Jeffrey Beaumont owns approximately 17.5% thereof, separate trusts for two other officers own about 11.75% thereof each; a trust for the benefit of Kevin Parry and the members of his family owns about 35% thereof, and the balance is owned by 17 other stockholders. 

Eyre's operating office is its own office building, Crest House, located at 7 Havelock Street, West Perth 6005, Western Australia. Its telephone number is 011619322-3988. 

The Australian Securities Commission brought a court action against Mr. Kevin Parry for the alleged criminal violation of Australian securities law arising out of his alleged breach of fiduciary duties while serving as a director of two corporations. Mr. Parry was found guilty of such violation in late 1994, paid a fine of $15,000 and was barred from serving as a director of a corporation for five years. In addition, the Company learned for the first time in February, 1996 that a criminal 

46 

action had been initiated against Mr. Parry in late 1994 for the alleged misappropriation of property from an entity, but such action was subsequently dismissed by the court in question. 

(4) Parry-Beaumont Trust 

The Parry-Beaumont Trust is a trust primarily for the benefit of Kevin Parry and the members of his respective family, and Cameron Parry, one of Mr. Parry's sons, and Jeffrey Beaumont are the co-trustees thereof. The Trust's office is c/o Jeffrey Beaumont, Polymer Composites (Asia) Pte. Ltd., 18, Pioneer Sector 1, Jurong, Singapore 2262. Mr. Beaumont's telephone number is 01165862- 4824, and Mr. Parry's telephone number is the same as that of Eyre. 

(5) Loan Transaction between the Company and Eyre 

Prior to the signing of the definitive agreement between the Company and Eyre, but before the closing thereof, the Company loaned Eyre the sum of $100,000 on an unsecured basis, which amount was offset against the $200,000 purchase price owed to Eyre under the Agreement. Pursuant to the Second Restructuring Agreement, the balance of approximately $146,000 owed by the Company to Eyre under its promissory notes delivered at the Closing was cancelled. 

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K. 

1. The following documents are filed as part of this report: Financial Statements of the Company, including reports of independent certified public accountants, Balance Sheets, Statements of Income, Statements of Stockholders Equity, Statements of Cash Flow and Notes to Financial Statements: as at and for the periods ended December 31, 1996 and December 31, 1995. 

2. The Exhibits which are listed on the Exhibit Index attached hereto. 

3. No reports on Form 8-K were filed by the registrant during the last quarter of the period covered by this report. 

47 

                                  EXHIBIT INDEX

EXHIBIT NO.               DESCRIPTION OF EXHIBIT
- -----------               ----------------------

    1                     Certificate of Incorporation, as amended.(1)

    2                     By-laws(1)

    3                     Certificate of Merger between the Registrant
                          and Everest Petroleum Inc.(1)

    4                     Agreement of Merger between the
                          Registrant and Everest Petroleum Inc.(1)

    5                     Asset Purchase Agreement between the
                          Registrant and Eyre Resources N.L. dated as
                          of June 30, 1995(1)

    6                     Form of 1995 Stock Option Plan+(1)

    7                     Letter Agreement between Registrant, Eyre
                          Resources N.L. and Robert A. Garrison+(1)

    8                     Employment Agreement between the
                          Registrant and Drury J. Gallagher dated as of
                          July 1, 1995+(2)

    9                     Employment Agreement between the
                          Registrant and Robert A. Garrison dated as
                          of July 1, 1995+(2)

    10                    Employment Agreement between Autosport
                          (Asia) Pte. Ltd. and Robert A. Garrison
                          dated as of July 1, 1996+(2)

* Filed herewith. 

+ Management contract or compensatory plan or arrangement. 

(1) Filed with 10-KSB for period ended December 31, 1994. 

(2) Filed with 10-KSB for period ended December 31, 1995. 

11                    Stock Option Agreement between the
                      Registrant and Drury J. Gallagher dated as of
                      July 1, 1995 with respect to the grant of
                      1,000,000 shares of the Company's Common
                      Stock+(2)

12                    Stock Option Agreement between the
                      Registrant and Drury J. Gallagher dated as of
                      July 1, 1995 with respect to the grant of
                      487,500 shares of the Company's Common
                      Stock+(2)

13                    Stock Option Agreement between the
                      Registrant and Drury J. Gallagher dated as of
                      July 1, 1995 with respect to the grant of
                      12,500 shares of the Company's Common
                      Stock+(2)

14                    Stock Option Agreement between the
                      Registrant and Robert A. Garrison dated as
                      of July 1, 1995 with respect to the grant of
                      487,500 shares of the Company's Common
                      Stock+(2)

15                    Stock Option Agreement between the
                      Registrant and Robert A. Garrison dated as
                      of July 1, 1995 with respect to the grant of
                      12,500 shares of  the Company's Common
                      Stock+(2)

16                    Stock Appreciation Rights Agreement
                      between the Registrant and Drury J.
                      Gallagher dated July 21, 1995+(2)

17                    Stock Appreciation Rights Agreement
                      between the Registrant and Robert A.
                      Garrison dated July 21, 1995+(2)

18                    Assignment and Assumption Agreement
                      between Eyre Resources N.L. and Global
                      Gold Armenia Limited dated December 1,
                      1995(2)

	

19                    Assignment and Assumption Agreement
                      between Eyre Resources N.L. and Global
                      Gold Georgia Limited dated December 1,
                      1995(2)

20                    Assignment and Assumption Agreement
                      between Eyre Resources N.L. and Global
                      Gold Australia Limited dated December 1,
                      1995(2)

21                    Promissory Note of the Registrant dated
                      December 1, 1995 in the principal amount of
                      $100,000(2)

22                    Promissory Note of the Registrant dated as
                      of December 1, 1995 in the principal amount
                      of  $100,000(2)

23                    Stockholders Agreement by and among the
                      Registrant, Eyre Resources N.L., the Parry-
                      Beaumont Trust, Drury J. Gallagher, Francis
                      A. Hayman, John Hayman. Howard G. Seitz
                      and George L. Ryan dated December 1,
                      1995(2)

24                    Guarantee and Indemnification Agreement of
                      the Registrant dated December 1, 1995(2)

25                    Warrant Agreement to purchase 20,000
                      shares of the Registrant's Common Stock
                      dated December 1, 1995 issued to David
                      Steadly(2)

26                    Warrant Agreement to purchase 20,000
                      shares of the Registrant's Common Stock
                      dated December 1, 1995 issued to Karekin
                      Arzoomanian(2)

27                    Form of Warrant Agreement issued to 20
                      purchasers of the Registrant's 10%
                      Convertible Notes pursuant to the
                      Confidential Private Placement Memorandum
                      dated May 17, 1995, as amended(2)

	

28                    Restructuring Agreement dated as of
                      December 1, 1995 by and among the
                      Registrant, Global Gold Armenia Ltd.,
                      Global Gold Georgia Ltd., Global Gold
                      Australia Ltd., Eyre Resources N.L., and the
                      Parry-Beaumont Trust (2)

29                    Promissory Note of Global Gold Armenia
                      Limited dated as of December 1, 1995 in the
                      principal amount of $802,740(2)

30                    Promissory Note of Global Gold Georgia
                      Limited dated as of December 1, 1995 in the
                      principal amount of $47,260(2)

31                    Amended Employment Agreement between
                      the Registrant and Robert A. Garrison dated
                      as of April 11, 1996+(2)

32                    Agreement No. 1 by and between the
                      Registrant, London & International
                      Mercantile Limited and HCL
                      Communications Ltd.*

33                    Agreement No. 2 by and between the
                      Registrant, London & International
                      Mercantile Limited and HCL
                      Communications Ltd.*

34                    Warrant Agreements to purchase 2,000,000
                      shares of the Registrant's Common Stock
                      issued to London & International Mercantile
                      Limited and HCL Communications Ltd.
                      under Agreement No. 1 with such party*

35                    Warrant Agreements to purchase 2,000,000
                      shares of the Registrant's Common Stock
                      issued to London & International Mercantile
                      Limited and HCL Communications Ltd.
                      under Agreement No. 2 with such party*

36                    Assignment and Assumption Agreement
                      between the Registrant and Global Gold
                      Armenia Limited dated as of July 30, 1996*

37                    Stock Option Agreement between the
                      Registrant and Drury J. Gallagher dated as
                      of July 19, 1996, as amended on
                      November 4, 1996+*

38                    Stock Option Agreement between the
                      Registrant and Robert A. Garrison dated as
                      of July 19, 1996, as amended on
                      November 4, 1996+*

39                    Restructuring Agreement dated December
                      4, 1996 by and among the Registrant,
                      Eyre Resources N.L. and the
                      Parry-Beaumont Trust*

40                    Certificate of Amendment to the Certificate
                      of Incorporation of the Registrant filed
                      with the Delaware Secretary of State on
                      December 31, 1996*

41                    Unanimous Written Consent of the Board
                      of Directors of the Registrant dated as of
                      January 3, 1997, approving the transfer of
                      1,000,000 shares of the Registrant's
                      Common Stock to each of Drury J.
                      Gallagher and Robert A. Garrison.+*

42                    Letter Agreement by and among the
                      Registrant, Global Gold Armenia Limited
                      and First Dynasty Mines Ltd.*

43                    Debenture of Global Gold Armenia Limited
                      issued to First Dynasty Mines Ltd. dated
                      February 3, 1997, including Guarantee
                      thereof by the Registrant*

44                    Global Gold Armenia Limited Charge Over
                      Shares issued to First Dynasty Mines Ltd.
                      dated February 3, 1997*

45                    Form of Amendments No. 2, 3 and 4 to
                      Warrant Agreement issued to the
                      purchasers of the Registrant's 10%
                      Convertible Notes pursuant to the
                      Confidential Private Placement
                      Memorandum dated May 17, 1995,
                      as amended*

                                   SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities

Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. 

GLOBAL GOLD CORPORATION 
(Registrant) 

By: /s/ Drury J. Gallagher
    ----------------------------------
    Drury J. Gallagher, Chairman, Chief
    Executive Officer and Treasurer

	

Dated: April 11, 1997 

48 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 

     Name                             Title                       Date
     ----                             -----                       ----

/s/ Drury J. Gallagher   Chairman, Chief Executive Officer,    April 11, 1997
----------------------   Treasurer and Director (Principal
    Drury J. Gallagher   Executive and Financial Officer)

/s/ Robert A. Garrison    President, Chief Operating
----------------------   Officer Secretary and Director        April 11, 1997
    Robert A. Garrison

	

49 

AGREEMENT 1 

This agreement made the 18th day of July 1996. 

Between 

Global Gold Corporation 

and 

London & International Mercantile Ltd. 

and 

HCL Communications Ltd. 

Whereas: 

Global Gold Corporation (GGC) is a Delaware Corporation with mining interests in the Republic of Armenia comprising the Armenian Gold Recovery Company (AGR) as set out in a Joint Venture Agreement between GGC and the Armenian Government dated 1st May 1996 (JV) (as exhibited in the First Schedule hereto). In accordance with the terms and conditions of the decree issued by the Armenian Government in covenant with the JV, GGC requires the delivery of a Guarantee in the amount of US$250,000.00 (a draft of which is set out in the Second Schedule hereto), (the "Guarantee"), to be delivered to the Ministry of Industry of the Government of Armenia (the "Armenian Government") and is willing to secure the delivery of same by issuing 1,000,000 shares of its common stock (the "Shares") together with warrants to purchase 2,000,000 Shares of GGC (the "Warrants") (as set out in the Seventh Schedule hereto) to the provider of the Guarantee and other security set out herebelow. 

London & International Mercantile Ltd. (LIM) is a financial company which is internationally recognised and is of good reputation. LIM is ready, willing and able to issue the Guarantee to the Armenian Government subject to the terms herein. 

HCL Communications Ltd. (HCL) is the holder of an Option (the "Option") to purchase the Shares and Warrants. HCL has introduced the other parties to each other, has negotiated this Agreement and is prepared to allow the Shares and Warrants held by HCL under the Option to be used as collateral to secure the issue and delivery of the Guarantee. 

Now Therefore: 

As collateral security to cover any payment made to the Armenian Government pursuant to the Guarantee after a default under the JV by GGC, GGC hereby issues as a pledge to LIM or to 
its order or to its assigns 1,000,000 shares of common stock of GGC (the "Shares") which the parties agree are of value equivalent to US$1,500,000.00 valued at US$1.50 per share and the 

1 

Warrants (as set out in the Seventh Schedule hereto) as security against delivery of a Guarantee from LIM to the value of US$250,000.00 which shall be made payable to the Armenian Government in substantially the form attached hereto in the Second Schedule. 

The Guarantee is payable in the event that GGC fails to acquire the Equipment (the "Equipment") as set out in the Third Schedule hereto by February 1, 1997. Further in any event the Guarantee shall be valid for up to twelve (12) months only. 

A. In Consideration of the delivery of the Guarantee GGC shall simultaneously deliver the following documentation to LIM. 

1.    (a)   A certificate for 1,000,000 Shares of GGC with the Warrants attached
            free of any charge, encumbrance or lien, subject only to the Option
            in favour of HCL as set out in the Fifth Schedule hereto, pledged as
            collateral security to cover any payment made to the Armenian
            Government pursuant to the Guarantee after a default under the JV by
            GGC.

      (b)   A letter confirming a right to LIM to arrange a lease-purchase
            rental, borrowing or other facility to enable GGC to acquire the
            Equipment (to a value of not less than US$5 million) and an
            undertaking that the terms offered by LIM with respect thereto will
            not be refused if such terms are commercially competitive both on
            the price of the Equipment and the lease terms. In the event that
            such offer by LIM is not accepted by GGC then GGC shall without
            protest or deduction pay LIM a penalty of US$250,000.

      (c)   The Personal Pledges of Drury Gallagher and Robert A. Garrison the
            Directors of GGC as set out in the Eight Schedule.

2. A letter signed by Patterson Belknap, Webb & Tyler, Attorneys ("PBW&T") or the Law Offices of Stephen R. Field, general counsel to GGC, confirming that: 

(a) GGC has the lawful authority to issue the Shares and Warrants to LIM. 

(b) GGC will promptly arrange the issued of the Shares and Warrants to LIM pledged as security for the Guarantee. 

(c) The Guarantee is required by the Armenian Government under the terms of the decree issued by the Armenian Government in connection with the execution and delivery of the JV and the draft set out in the Second Schedule is in a form and manner acceptable to the Armenian Government. 

2 

(d) To the best of attorney's knowledge attorneys do not know of any condition or restriction which would prevent the granting of a NASDAQ Electronic Bulletin Board listing of the common stock of GGC within a reasonable period of time after the issue and delivery of the Guarantee although attorneys cannot predict the actual date thereof because the processing, of the appropriate documentation to be filed, by NASDAQ in connection therewith varies from case to case. A letter signed by Stephen R. Filed General Counsel to GGC dated July 1996, setting out the options open to GGC is attached hereto in the Ninth Schedule. 

(e) In the event of a default by GGC either before or after NASDAQ quotation there are no restrictions on the sale by LIM or other holder who is resident outside the USA of shares of common stock of GGC for the full market value thereof without being subject to US income tax, provided that LIM or such other holder is not engaged in a trade or business in the United States and the income from such sale is not effectively connected with the conduct of any such business for US income tax purposes. 

(f) GGC is lawfully able to make the warranties and undertakings given by it in Clause 3. herein. 

3. GGC hereby undertakes, warrants and agrees as follows: 

(a) GGC will issue 1,000,000 shares of common stock (the Shares) together with the Warrants in GGC to LIM as security for the issue by LIM of the Guarantee subject to the terms and conditions of this Agreement which Shares and Warrants will be delivered upon the execution and delivery hereof to M. Slattery who will hold same as agent of GGC until receipt by LIM of confirmation of the acceptance of the Guarantee by the Armenian Government and thereafter he will deliver same to LIM. 

(b) GGC will purchase, lease or lease purchase the Equipment to a value of at least US$5 million as set out in the Third Schedule hereto from LIM subject only to the terms of Clause A. 1. (b) and deliver same to Armenia, subject to the terms and conditions of this Agreement. A letter undertaking to accept such offer of finance for the Equipment by GGC is set out in the Tenth Schedule. 

(c) GGC will cause the Equipment to be delivered into Armenia by the 31st December 1996 and will be in operation on site in Armenia within six (6) months of crossing the Armenian Border, subject to the absence of any force majeure conditions (such as war, civil unrest, strikes, riots, border closings, natural disasters or any similar factor beyond the control of GGC in which circumstance the Armenian Government will not seek payment under the Guarantee. 

3 

(d) The Equipment will be subject to a fixed charge in favour of LIM and will not be sold either in whole or in part to any third party and will remain in the sole and exclusive possession and ownership of GGC, or its wholly-owned subsidiary thereof or the AGR until after LIM has been discharged from its obligations under the Guarantee and LIM has been paid all its fees specified in the twelfth Schedule hereto. 

(e) GGC will at all times maintain full insurance coverage over the Equipment to a value to cover the full cost of its replacement in the event of its damage or loss for reasons of theft, seizure, explosion, riot or other civil commotion, war, insurrection or assault or from fire, earthquake, flood or other natural hazard and LIM as holder of a charge over the Equipment as set out in Clause A. 
3. (d) shall be named as an additional insured party in said coverage. 

(f) GGC will use its best efforts to acquire further insurance to cover any loss incurred as a result of late delivery or late putting into operation of the Equipment, to the extent available on terms reasonably acceptable to GGC and LIM, and LIM shall be named as an additional insured party in said coverage. 

(g) GGC expects to have a NASDAQ Bulletin Board quotation within sixty 
(60) days of the date of issue of the Guarantee and in any event will seek a Full NASDAQ Small Cap Listing within ninety (90) days provided GGC meets the NASDAQ equity test. 

(h) That in the event that LIM, after sale of the Shares and other recovery as set out herein, is not fully refunded its outlay and fees from HCL as set out in the Fifth Schedule herein, LIM shall be paid any shortfall by the two above mentioned directors of GGC. 

(i) GGC represents that it expects to receive an offer to purchase its shares from Mr. Franco Boule or his assigns within thirty days which if accepted by GGC would raise a sum in excess of US$5,000,000 for the use of GGC. 

(j) All legal fees, charges, and validity fees charged by LIM as are set out in the Twelfth Schedule hereto will be paid for by GGC as and when set out in said Twelfth Schedule. 

(k) GGC has no knowledge of any condition of restriction which would prevent the granting of a NASDAQ Electronic Bulletin Board listing for its common stock within a period of sixty (60) days of the date of issue and delivery of the Guarantee. 

4. GGC exhibits herewith: 

(a) A copy of the JV in the First Schedule hereto. 

4 

(b) A copy of the GGC 10-KSB for the year ended December 31, 1995 in the Fourth Schedule hereto. 

5. GGC will honour the Option in favour of HCL after release by LIM of the Shares and Warrants from the pledge in consideration for HCL hereby agreeing to allow the Optioned Shares to be so pledged. 

B. In consideration of which LIM shall: 

(a) Issue the Guarantee within one (1) business day and deliver the Guarantee to the Armenian Government within three (3) business days after execution and delivery of this Agreement. 

(b) Offer financial terms for the acquisition of the Equipment as described in clause A.1. (b) hereof. 

(c) Enter into a Subsidiary Agreement with HCL as set out in the Fifth Schedule hereto. 

(d) Return the certificate for 1,000,000 shares of common stock (the Shares) and the Warrants of GGC to GGC within ten (10) business days after the expiration of the Guarantee if no payment has been made to the Armenian Government and if HCL has not exercised the Option or return such remaining unsold Shares if HCL has exercised its Option in part. Upon expiration of the Guarantee without any payment made thereunder by LIM, all of LIM's rights with respect to the Shares and the Warrants as collateral security shall terminate without any further action on the part of LIM and simultaneously therewith LIM's charge over the Equipment under Clause A. 3. (d) hereof shall terminate in full without any further action on LIM's part. 

C. Miscellaneous 

(a) It is agreed that the terms and conditions, warrants and undertakings given herein are separate, distinct and independent from terms and conditions, warrants and undertakings given in the Agreement 2 dated 18th July 1996 (Kilborn Agreement). 

(b) No Party shall, without the prior consent in writing of the other Parties, assign, transfer or otherwise part with control of its benefits or burdens hereunder. 

(c) This Agreement shall be binding on the successors and assigns of the Parties hereto. 

(d) The Parties and arbitrators are charged to apply this Agreement in good faith as it is written taking into account the fair and reasonable expectations of the Parties as expressed herein. 

5 

(e) The Parties agree to refer all unsettled disputes arising out of this Agreement to the International Chamber of Commerce, under the Rules of Conciliation and Arbitration, for arbitration by a panel of three arbitrators. LIM may appoint one Arbitrator and GGC shall appoint another, HCL shall appoint a third arbitrator; provided that if all three arbitrators have not been appointed within thirty days after the party submitting the matter in dispute has notified the other Parties of such submission, any Party may apply to the International Chamber of Commerce, London England to appoint the remaining arbitrators. This Agreement shall be interpreted in accordance with and be governed by English Law. The place of arbitration of any matter to be settled shall be London, England. 

(f) No Party shall be in breach of the Agreement if there is any total or partial failure of performance by it of its duties and obligations under this Agreement occasioned by any act of God, fire, act of Government, or State, war, civil commotion, insurrection, embargo, prevention from, or hindrance in, obtaining raw materials, energy or other supplies, labour disputes of whatever nature and any other reason beyond the control of either Party. If a Party is unable to perform its duties and obligations under the Agreement as a direct result of the effect of one of those reasons that Party shall give written notice to the others of the inability stating the reason in question. The operation of this Agreement shall be suspended during the period in which the reason continues. Forthwith upon the reason ceasing to exist the Party relying upon it shall give written advice to the others of this fact. If the reason continues for more than one year and substantially affects the commercial basis of this Agreement the Party not claiming relief under this clause shall have the right to terminate this Agreement upon giving twenty days written notice of such termination to the non-performing Party. 

(g) If any provision or term of this Agreement or any part thereof shall become or be declared illegal, invalid or unenforceable for any reason in one or more jurisdictions it shall be deemed to be deleted from this Agreement in the jurisdiction or jurisdictions in question provided always that if any such deletion substantially affects or alters the commercial basis of this Agreement the Parties shall negotiate in good faith to amend and modify the provisions and terms of this Agreement as may be necessary to give effect to the true desire of the Parties herein or otherwise may be desirable in the circumstances. 

(h) Each Party shall be responsible for its own taxes, duties and other government charges. 

(i) This Agreement together with the Schedules embodies the entire agreement and understanding of the Parties with respect to the subject matter hereof and supersedes all prior oral or written agreements understandings or arrangements with respect to the subject matter hereof. 

6 

(j) This Agreement may be amended, modified, varied or supplanted by the Parties mutually agreeing to do so in writing. 

(k) No failure or delay by any Party to exercise any right of remedy under this Agreement shall be construed as a waiver thereof nor shall any single or partial exercise of any right or remedy be construed as a waiver as the case may be. The rights and remedies provided in this Agreement are cumulative and are not exclusive of any rights or remedies provided by law. 

(l) Each of the Parties hereto shall be responsible for its own legal and other advisory costs incurred in the preparation of this Agreement. This Clause is without prejudice to and does not affect LIM's right to collect all fees set out in the Twelfth Schedule. 

(m) Any notice or other document to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered or sent to the principal place of business of the recipient by hand (and receipt acknowledged), or by an internationally recognised overnight delivery service (such as Federal Express). 

(n) The Parties may expressly agree to accept notice or other document by telex, facsimile, computer transmission or other electronic media at the principal place of business or other stated address of the receiving Party. 

(o) In the event that HCL executes the purchase of 2,000,000 shares of GGC common stock together with the warrants (to purchase 4,000,000 shares of GGC common stock attached) pursuant to the Stock Purchase Agreement hereto attached and set out in the Seventh Schedule the Shares and Warrants (issued hereunder) as collateral security, but which are returned to GGC hereunder, shall be part of the total package of shares and warrants that are made available to HCL by GGC (by Stock Purchase Agreement dated 1996 in accordance with said Stock Purchase Agreement. 
IN WITNESS WHEREOF the undersigned duly authorised representatives of the Parties hereto have hereunto executed and sealed this Agreement on the day and year first above written. 

Global Gold Corporation 

By       /s/  Drury J. Gallagher
         -----------------------
Name:    Drury J. Gallagher
Title:    President

Witness: /s/  Robert Garrison
         ------------------------

	

London & International Mercantile Ltd. 

By        /s/  Roy A. Woodward
         ------------------------
Name:    Roy A. Woodward
Title:   Director

Witness: /s/ Niall Taylor
         ------------------------

	

HCL Communications Ltd. 

By       /s/  Alec Trustram Eve
         ------------------------
Name:    Alec Trustram Eve
Title:   Executive

Witness: /s/ Niall Taylor
         ------------------------

	

FIFTH SCHEDULE 

Subsidiary Agreement dated 18th July 1996 

London & International Mercantile Ltd. (LIM) 

HCL Communications Ltd. (HCL) 

and 

Global Gold Corporation (GGC) 

Whereas in Agreement 1. (the "Agreement") between LIM, GGC and HCL, LIM has agreed to deliver a Guarantee to the Armenian Government and GGC has agreed to issue as a pledge 1,000,000 shares of common stock (the "Shares") and 2,000,000 warrants (the "Warrants"), in GGC held by HCL under an option agreement (the "Option") to LIM. 

HCL under the Option may at any time up to sixty one (61) days after the date of execution and delivery hereof offer to by all or part of the Shares and Warrants pursuant to the Stock Purchase Agreement set out in the Seventh Schedule and LIM agrees to allow HCL to exercise the Option by making payment for the Shares for the sum of US$1.50 per Share and the Warrants at the price set forth in the Stock Purchase Agreement, to LIM during the continuance of the Guarantee and thereafter, if there is no payment made by LIM under the Guarantee, to GGC. 

LIM and GGC agree to honour the Option and GGC agrees that HCL may purchase all or part of the Shares and Warrants for the said sum of US$1.50 per Share and the Warrants at the price set out in the Stock Purchase Agreement in the Seventh Schedule. 

Now therefore 

In consideration of the Option granted by GGC to HCL to buy all or part of the Shares and Warrants to HCL by GGC and which grant is accepted and approved by LIM, HCL agrees to do as follows: 

(a) If HCL offers to buy all or part of the Shares HCL shall promptly pay US$1.50 per share for the Shares and the Warrants. Any payment thus made during the continuance of the Guarantee will be received by LIM as replacement security for the issue of the Guarantee and LIM's fees as set out in the Twelfth Schedule hereto and held in escrow by LIM until release of the Guarantee, in the same manner as the Shares and Warrants were held until purchase by HCL. 

(b) If HCL fails to offer to purchase all or part of the Shares within a period of sixty one (61) days from the date of execution and delivery hereof then HCL shall forfeit its Option. 

(c) The Miscellaneous provisions in Clause C. of the Agreement apply to this Subsidiary Agreement where appropriate. 
IN WITNESS WHEREOF the undersigned duly authorised representatives of the Parties hereto have hereunto executed and sealed this Subsidiary Agreement on the day and year first above written. 

London & International Mercantile Ltd. 

By        /s/  Roy A. Woodward
          ------------------------
Name:     Roy A. Woodward
Title:    Director

Witness:  /s/  Niall Taylor
          ------------------------

	

HCL Communications Ltd. 

By        /s/  Alec Trustram Eve
          ------------------------
Name:     Alec Trustram Eve
Title:    Executive

Witness:  /s/  Niall Taylor
          ------------------------

	

Global Gold Corporation 

By        /s/  Drury J. Gallagher
          ------------------------
Name:     Drury J. Gallagher
Title:    President

Witness:  /s/  Robert Garrison
          ------------------------

	

SIXTH SCHEDULE 

Personal undertaking of Alec Trustram Eve 

I Alec Trustram Eve hereby undertake as follows 

That in consideration of the signing by all parties of the Agreement and the Subsidiary Agreement in the Fifth Schedule I will 

(a) Establish and register HCL Communications Ltd. as a Private Limited Company registered in England. 

(b) Transfer to and bind HCL to honour the Subsidiary Agreement as set out in the Fifth Schedule to the Agreement. 

Signed:      /s/  Alec Trustram Eve
             ------------------------

Witnessed:   /s/  Niall Taylor
             ------------------------

Dated:       18 July 1996
             ------------------------

	

EIGHT SCHEDULE 

Personal Pledge by Directors of GGC 

We being two of the directors of GGC as part of the security given to LIM under the Principal Agreement herewith, hereby personally, jointly and severally pledge, commit, promise and undertake that: 

In the event that the Guarantee issued by LIM in accordance with the terms of the Agreement is called upon by the Armenian Government and LIM makes payment of the sum of US$250,000 to the Armenian Government; 

should LIM after sale of the Shares and Warrants (held as pledge) not have realised, from the proceeds of said sale, sufficient funds to recover the principal sum of US$250,000 paid under the Guarantee together with the costs, charges and fees as set out in the Twelfth Schedule hereto and all other reasonable fees and costs incurred by LIM in issuing the Guarantee and perfecting the Shares and Warrants as security and the recovery, safekeeping, offer and sale of the Shares and Warrants 

we will jointly and severally without protest or deduction pay to LIM an amount to cover the difference between all moneys due to LIM and the actual moneys recovered by LIM from the sale as herein set out. 

Signed:      /s/  Drury J. Gallagher
             ------------------------
                  Drury J. Gallagher

Signed:      /s/  Robert Garrison
             ------------------------
                  Robert A. Garrison

	

Dated: July 18, 1996 

TENTH SCHEDULE 

GGC Letterhead 

As an inducement for London & Mercantile Ltd. and HCL Communications Ltd. to enter into Agreement 1. with Global Gold Corporation (GGC) to which this Schedule is attached: 

GGC will purchase, lease or lease purchase, or by other mutually agreed means, acquire the Equipment as set out in the Third Schedule to the Principal Agreement, to a value of at least US$5 million from LIM. 

The terms offered by LIM with respect thereto will not be refused if such terms are commercially competitive both as to price of the Equipment and the lease terms. This offer shall be made by LIM on or before the 1st November 1996, conditional upon receipt by 1st October 1996 from GGC of a full list of Equipment required. 

In the event either (a) GGC does not provide a full list of Equipment required by 1st October 1996 and consequently LIM is not able to make an offer or (b) after receipt of said list of Equipment and the making of an offer by LIM that such offer by commercially competitive as to price of Equipment and the lease terms the GGC shall pay LIM on February 1st 1997, a penalty of US$250,000. 

Global Gold Corporation 

Signed:      /s/  Drury J. Gallagher
             ------------------------

Dated:       July 18, 1996

	

TWELFTH SCHEDULE 

Payable by GGC as and when set out herein 

(a) 1.75% per US$250,000 ($4,375) payable upon confirmation by LIM that it is about to deliver the Guarantee to the Armenian Government. 

(b) Validity cost 0.5% per month (minimum period of six months) therefore cost is $7,500 for the Guarantee payable upon the signing hereof. 

(c) Reasonable legal fees (not to exceed US$3,000) in reviewing this Agreement invoiced by LIM payable as and when invoiced. 

AGREEMENT 2 

This Agreement made the 18 day of July 1996. 

Between 

Global Gold Corporation 

and 

London & International Mercantile Ltd. 

and 

HCL Communications Ltd. 

Whereas: 

Global Gold Corporation (GGC) is a Delaware Corporation with mining interests in the Republic of Armenia comprising the Armenian Gold Recovery Company (AGR) as set out in a Joint Venture Agreement between GGC and the Armenian Government dated 1st May 1996 (JV) (as exhibited in the First Schedule hereto). To facilitate the development of the AGR, GGC requires the delivery of a Guarantee in the amount of US$250,000.00 (a draft of which is set out in the Second Schedule hereto) (the "Guarantee") to be delivered to Kilborn Inc. of 2200 Lake Shore Blvd. W. Toronto, Ontario M8V 1A4 and is willing to secure the delivery of same by issuing 1,000,000 shares of its common stock (the "Shares") together with warrants to purchase 2,000,000 Shares of GGC (the "Warrants") (as set out in the Seventh Schedule hereto) to the provider of the Guarantee and other security set out herebelow. 

London & International Mercantile Ltd. (LIM) is a financial company which is internationally recognised and is of good reputation. LIM is ready, willing and able to issue the Guarantee to Kilborn Inc. subject to the terms and conditions herein. 

HCL Communications Ltd. (HCL) is the holder of an Option (the "Option") to purchase the Shares and Warrants. HCL has introduced the other parties to each other, has negotiated this Agreement and is prepared to allow the Shares and Warrants held by HCL under the Option to be used as collateral to secure the issue and delivery of the Guarantee. 

Now Therefore: 

As collateral security to cover any payment made to Kilborn pursuant to the Guarantee after a default in payment by GGC, GGC hereby issues as a pledge to LIM or to its order or to its 
assigns 1,000,000 shares of common stock of GGC (the "Shares") which the parties agree is of value equivalent to US$1,500,000.00 valued at US$1.50 per share and the Warrants (as set out in the Sixth Schedule hereto) ( the "Warrants") against delivery of a Guarantee from LIM to 

1 

the value of US$250,000.00 which shall be made payable to Kilborn Inc. in substantially the form attached hereto in the Second Schedule. 

The Guarantee is payable in the event that GGC fails to pay the sum of US$250,000.00 within 120 days of the delivery to Kilborn Inc. of the Guarantee. Further in any event the Guarantee shall be valid for up to six (6) months only. 

A. In Consideration of the delivery of the Guarantee GGC shall simultaneously deliver the following documentation to LIM. 

1.    (a)   A certificate for 1,000,000 Shares of GGC with the Warrants attached
            free of any charge, encumbrance or lien subject only to the option
            in favour of HCL as set out in the Fourth Schedule hereto, pledged
            as collateral security to cover any payment made to Kilborn pursuant
            to the Guarantee after a default in payment to Kilborn by GGC.

      (c)   The Personal Pledges of Drury J. Gallagher and Robert A. Garrison
            the Directors of GGC as set out in the Seventh Schedule.

2. A letter signed by Patterson Belknap, Webb & Tyler Attorneys ("PBW&T") or the Law Offices of Stephen R. Field, general counsel to GGC, confirming that: 

(a) GGC has the lawful authority to issue the Shares and Warrants to LIM. 

(b) GGC will promptly arrange the issue of the Shares and Warrants to LIM pledged as security for the Guarantee. 

(c) The Guarantee is required by Kilborn Inc. and the draft set out in the Second Schedule is in a form and manner acceptable to Kilborn Inc. 

(d) To the best of attorney's knowledge attorneys do not know of any condition or restriction which would prevent the granting of a NASDAQ Electronic Bulletin Board listing of the common stock of GGC within a reasonable period of time after the issue and delivery of the Guarantee although attorneys cannot predict the actual date thereof because the processing, of the appropriate documentation to be filed, by NASDAQ in connection therewith varies from case to case. A letter signed by Stephen R. Field General Counsel to GGC dated July 1996, setting out the options open to GGC is attached hereto in the Eight Schedule. 

(e) In the event of a default by GGC either before or after NASDAQ quotation there are no restrictions on the sale by LIM or other holder who is resident outside the USA of shares of common stock of GGC for the full market value thereof without being subject to US income tax, provided that LIM or such other holder is not engaged in a trade or business in the USA and the income 

2 

from such sale is not effectively connected with the conduct of any such business for US income tax purposes. 

(f) GGC is lawfully able to made the warranties and undertakings given by it in Clause 3. herein. 

3. GGC hereby undertakes, warrants and agrees as follows: 

(a) GGC will issue 1,000,000 shares of common stock (the Shares) together with the Warrants in GGC to LIM as security for the issue by LIM of the Guarantee subject to the terms and conditions of this Agreement which Shares and Warrants will be delivered upon the execution and delivery hereof. 

(b) GGC expects to have a NASDAQ Bulletin Board quotation within sixty 
(60) days of the date of issue of the Guarantee and in any event will seek a Full NASDAQ Small Cap Listing within ninety (90) days provided GGC meets the NASDAQ equity test. 

(c) That in the event that LIM, after sale of the shares and other recovery as set out herein, is not fully refunded its outlay and fees from HCL as set out in Subsidiary Agreement in the Fourth Schedule herein, LIM shall be paid any shortfall by the two above named directors of GGC. 

(d) GGC represents that it expects to receive an offer to purchase its shares from Mr. Franco Boule or his assigns within thirty days which if accepted by GGC would raise a sum in excess of US$5,000,000 for the use of GGC. 

(e) All legal fees, charges, and validity fees charged by LIM as are set out in the Tenth Schedule hereto will be paid for by GGC as and when set out in said Tenth Schedule. 

(f) GGC has no knowledge of any condition or restriction which would prevent the granting of a NASDAQ Electronic Bulletin Board listing for its common stock within a period of sixty (60) days of the date of issue and delivery of the Guarantee. 

4. GGC exhibits herewith: 

(a) A copy of the JV in the First Schedule hereto. 

(b) A copy of the GGC 10-KSB for the year ended December 31, 1995 in the Third Schedule hereto. 

5. GGC will honour the Option in favour of HCL after release by LIM of the Shares and Warrants from the pledge in consideration for HCL hereby agreeing to allow the Optioned Shares to be so pledged. 

3 

B. In consideration of which LIM shall: 

(a) Issue the Guarantee within one (1) business day and deliver the Guarantee to Kilborn Inc. within three (3) business days after the execution and delivery of this Agreement. 

(b) enter into a Subsidiary Agreement with HCL as set out in the Fourth Schedule hereto. 

(c) Return the certificate for 1,000,000 shares of common stock (the Shares) and the Warrants of GGC to GGC within ten (10) business days after the expiration of the Guarantee if no payment has been made to or claimed by the Armenian Government and if HCL has not exercised the Option, or return such remaining unsold Shares if HCL has exercised its Option in part. Upon expiration of the Guarantee without any payment made thereunder by LIM, all of LIM's rights with respect to the Shares and the Warrants as collateral security shall terminate without any further action on the part of LIM. 

C. Miscellaneous 

(a) It is agreed that the terms and conditions, warrants and undertakings given herein are separate, distinct and independent from terms and conditions, warrants and undertakings given in the Agreement 1 dated 18th July 1996 (Armenian Government Agreement). 

(b) No Party shall, without the prior consent in writing of the other Parties, assign, transfer or otherwise part with control of its benefits or burdens hereunder. 

(c) This Agreement shall be binding on the successors and assigns of the Parties hereto. 

(d) The Parties and arbitrators are charged to apply this Agreement in good faith as it is written taking into account the fair and reasonable expectations of the Parties as expressed herein. 

(e) The Parties agree to refer all unsettled disputes arising out of this Agreement to the International Chamber of Commerce, under the Rules of Conciliation and Arbitration, for arbitration by a panel of three arbitrators. LIM may appoint one Arbitrator and GGC shall appoint another, HCL shall appoint a third arbitrator; provided that if all three arbitrators have not been appointed within thirty days after the party submitting the matter in dispute has notified the other Parties of such submission, any Party may apply to the International Chamber of Commerce, London England to appoint the remaining arbitrators. This Agreement shall be interpreted in accordance with and governed by English 

4 

Law. The place of arbitration of any matter to be settled shall be London, England. 

(f) No Party shall be in breach of this Agreement if there is any total or partial failure of performance by it of its duties and obligations under this Agreement occasioned by any act of God, fire, act of Government, or State, war, civil commotion, insurrection, embargo, prevention from, or hindrance in, obtaining raw materials, energy or other supplies, labour disputes or whatever nature and any other reason beyond the control of either Party. If a Party is unable to perform its duties and obligations under this Agreement as a direct result of the effect of one of those reasons that Party shall give written notice to the others of the inability stating the reason in question. The operation of this Agreement shall be suspended during the period in which the reason continues. Forthwith upon the reason ceasing to exist the Party relying upon it shall give written advice to the others of this fact. If the reason continues for more than one year and substantially affects the commercial basis of this Agreement the Party not claiming relief under this clause shall have the right to terminate this Agreement upon giving twenty days written notice of such termination to the non-performing Party. 

(g) If any provision or term of this Agreement or any part thereof shall become or be declared illegal, invalid or unenforceable for any reason in one or more jurisdictions it shall be deemed to be deleted from this Agreement in the jurisdiction or jurisdictions in question provided always that if any such deletion substantially affects or alters the commercial basis of this Agreement the Parties shall negotiate in good faith to amend and modify the provisions and terms of this Agreement as may be necessary to give effect to the true desire of the Parties herein or otherwise may be desirable in the circumstances. 

(h) Each Party shall be responsible for its own taxes, duties and other government charges. 

(i) This Agreement together with the Schedules embodies the entire agreement and understanding of the Parties with respect to the subject matter hereof and supersedes all prior oral or written agreements understandings or arrangements with respect to the subject matter hereof. 

(j) This Agreement may be amended, modified, varied or supplanted by the Parties mutually agreeing to do so in writing. 

(k) No failure or delay by any Party to exercise any right of remedy under this Agreement shall be constured as a waiver thereof nor shall any single or partial exercise of any right or remedy be construed as a waiver as the case may be. The rights and remedies provided in this Agreement are cumulative and are not exclusive of any rights or remedies provided by law. 

5 

(l) Each of the Parties hereto shall be responsible for its own legal and other advisory costs incurred in the preparation of this Agreement. This Clause is without prejudice to and does not affect LIM's right to collect all fees set out in the Tenth Schedule. 

(m) Any notice or other document to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered or sent to the principal place of business of the recipient by hand (and receipt acknowledged), by facsimile (where receipt is acknowledged) or by an internationally recognized overnight delivery service (such as Federal Express). 

(n) The Parties may expressly agree to accept notice or other document by telex, facsimile, computer transmission or other electronic media at the principal place of business or other stated address of the receiving Party. 

(o) In the event that HCL executes the purchase of 2,000,000 shares of GGC common stock together with the warrants (to purchase 4,000,000 shares of GGC common stock attached) pursuant to the Stock Purchase Agreement hereto attached and set out in the Seventh Schedule the Shares and Warrants (issued hereunder) as collateral security, but which are returned to GGC hereunder, shall be part of the total package of shares and warrants that are made available to HCL by GGC (by Stock Purchase Agreement dated 1996) in accordance with said Stock Purchase Agreement. 

6 

IN WITNESS WHEREOF the undersigned duly authorized representatives of the Parties hereto have hereunto executed and sealed the Agreement on the day and year first above written. 

Global Gold Corporation 

By        /s/ Drury J. Gallagher
          ---------------------
Name:     Drury J. Gallagher
Title:    President

Witness:  /s/ Robert Garrison
          ---------------------

	

London & International Mercantile Ltd. 

By        /s/ Roy A. Woodward
          ---------------------
Name:     Roy A. Woodward
Title:    Director

Witness:  /s/ Niall Taylor
          ---------------------

	

HCL Communications Ltd. 

By        /s/ Alec Trustram Eve
          ---------------------
Name:     Alec Trustram Eve
Title:    Executive

Witness:  /s/ Niall Taylor
          ---------------------

	

7 

FOURTH SCHEDULE 

Subsidiary Agreement dated 18 July 1996 

London & International Mercantile Ltd. (LIM) 

HCL Communciations Ltd. (HCL) 

and 

Global Gold Corporation (GGC) 

Whereas in Agreement 2 (the "Agreement") between LIM, GGC and HCL, LIM has agreed to deliver a Guarantee to the Armenian Government and GGC has agreed to issue as a pledge 1,000,000 shares of common stock (the "Shares") and 2,000,000 warrants (the "Warrants"), in GGC held by HCL under an option agreement (the "Option") to LIM. 

HCL under the Option may at any time up to sixty one (61) days after the date of execution and delivery hereof offer to buy all or part of the Shares and Warrants pursuant to the Stock Purchase Agreement set out in the Sixth Schedule and LIM agrees to allow HCL to exercise the Option by making payment for the Shares for the sum of US$1.50 per Share and the Warrants at the price set forth in the Stock Purchase Agreement, to LIM during the continuance of the Guarantee and thereafter, if there is no payment made by LIM under the Guarantee, to GGC. 

LIM and GGC agree to honour the Option and GGC agrees that HCL may purchase all or part of the Shares and Warrants for the said sum of US$1.50 per Share and the Warrants at the price set out in the Stock Purchase Agreement in the Sixth Schedule. 

Now therefore 

In consideration of the Option granted by LIM and GGC to HCL to buy all or part of the Shares and Warrants to HCL by GGC, HCL agrees to do as follows: 

(a) If HCL offers to buy all or part of the Shares HCL shall promptly pay US$1.50 per share for the Shares and the Warrants. Any payment thus made during the continuance of the Guarantee will be received by LIM as replacement security for the issue of the Guarantee and LIM's fees as set out in the Tenth Schedule hereto and held in escrow by LIM until release of the Guarantee, in the same manner as the Shares and Warrants were held until purchase by HCL. 

(b) If HCL fails to offer to purchase all or part of the Shares within a period of sixty one (61) days from the date of execution and delivery hereof then HCL shall forfied its Option. 

(c) The Miscellaneous provisions in Clause C. of the Principal Agreement apply to this Subsidiary Agreement where appropriate. 

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IN WITNESS WHEREOF the undersigned duly authorised representatives of the Parties hereto have hereunto executed and sealed this Subsidiary Agreement on the day and year first above written. 

London & International Mercantile Ltd. 

By        /s/  Roy A. Woodward
          ---------------------
Name:     Roy A. Woodward
Title:    Director

Witness:  /s/  Niall Taylor
          ---------------------

	

HCL Communcations Ltd. 

By        /s/  Alec Trustram Eve
          -----------------------
Name:     Alec Trustram Eve
Title:    Executive

Witness:  /s/  Niall Taylor
          -----------------------

	

Global Gold Corporation 

By        /s/  Drury J. Gallagher
          -----------------------
Name:     Drury J. Gallagher
Title:    President

Witness:  /s/  Robert Garrison
          -----------------------

	

9 

FIFTH SCHEDULE 

Personal undertaking of Alec Trustram Eve 

I Alec Trustram Eve hereby undertake as follows 

That in consideration of the signing by all parties of the Principal Agreement and the Subsidiary Agreement in the Fifth Schedule I will 

(a) Establish and register HCL Communications Ltd. as a Private Limited Company registered in England. 

(b) Transfer to and bind HCL to honour the Agreement as set out in the Fourth Schedule to the Principal Agreement. 

Signed:      /s/  Alec Trustram Eve
             -----------------------

Witnessed:   /s/  Niall Taylor
             -----------------------

Dated:       18 July 1996
             -----------------------

	

10 

SEVENTH SCHEDULE 

Personal Pledge by Directors of GGC 

We being two of the directors of GGC as part of the security given to LIM under the Principal Agreement herewith, hereby personally, jointly and severally pledge, commit, promise and undertake that: 

In the event that the Guarantee issued by LIM in accordance with the terms of the Agreement is called upon by Kilborn Inc. and LIM makes payment of the sum of US$250,000 to Kilborn Inc; 

should LIM after sale of the Shares and Warrants (held as pledge) not have realised, from the proceeds of said sale, sufficient funds to recover the principal sum of US$250,000 paid under the Guarantee together with the costs, charges and fees set out in the Tenth Schedule hereto and all other reasonable fees and costs incurred by LIM in issuing the Guarantee and perfecting the Shares and Warrants as security and the recovery, safekeeping, offer and sale of the Shares and Warrants. 

we will jointly and severally without protest or deduction pay to LIM an amount to cover the difference between all moneys due to LIM and the actual moneys recovery by LIM from the sale as herein set out. 

Signed:     /s/  Drury J. Gallagher
            -----------------------
                Drury J. Gallagher

Signed:     /s/  Robert Garrison
            -----------------------
               Robert A. Garriosn

	

Dated: July 18, 1996 

11 

TENTH SCHEDULE 

Payable by GGC as and when set out herein 

(a) 1.75% per US$250,000 ($4,375) payable upon confirmation by LIM that it is about to deliver the Guarante to Kilborn Inc. 

(b) Validity cost 0.5% per month (minimum period of six months) therefore cost is $7,500 for the Guarantee payalbe upon the signing hereof. 

(c) Reasonable legal fees (not to exceed US$3,000) in reviewing this Agreement invoiced by LIM payable as and when invoiced. 

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND NO SALE OR TRANSFER THEREOF MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

No. W-B1 Right to Purchase 666,667 Shares of Common Stock of Global Gold Corporation 

GLOBAL GOLD CORPORATION 

Common Stock Purchase Warrant 

Global Gold Corporation, a Delaware corporation (the "Company"), hereby certifies that, for value received, London & International Mercantile Limited, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on June 15, 1997 (subject to earlier expiration as provided in Section 17 hereof) 666,667 fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $3.00 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. 

This Warrant is one of a series of Common Stock Purchase Warrants (the "Warrants") evidencing the right to purchase shares of Common Stock of the Company, issued pursuant to the Stock Purchase Agreement between the Company and the holder hereof dated as of June __, 1996, a copy of which is on file at the principal office of the Company. 

As used herein the following terms, unless the context otherwise requires. have the following respective meanings: 

(a) The term "Company" shall include Global Gold Corporation and any corporation which shall succeed or assume the obligations of the Company hereunder. 

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(b) The term "Common Stock" includes the Company's Common Stock, $.001 par value per share, as authorized on the date of the Agreement and any other securities into which or for which any of such Common Stock may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 

1. Exercise of Warrant. 

1.1 Full Exercise. This Warrant may be exercised in full by the holder hereof by surrender of this Warrant, with the form of subscription at the end hereof duly executed by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. 

1.2. Partial Exercise. This Warrant may be exercised in part by surrender of this Warrant in the manner and at the place provided in Section 1. 1 except that the amount payable by the holder on such partial exercise shall be the amount obtained by multiplying (a) the number of shares of Common Stock designated by the holder in the subscription at the end hereof by (b) the Purchase Price then in effect. On any such partial exercise the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock for which such Warrant or Warrants may still be exercised. 

1.3. Trustee for Warrantholders. In the event that a bank or trust company shall have been appointed as trustee for the holders of the Warrants pursuant to 
Section 4.2, such bank or trust company shall have all the powers and duties of a warrant agent appointed pursuant to Section 12 and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 

2. Delivery of Stock Certificates. etc. on Exercise. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which such holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value of one full share, together with any other stock or other securities and property (including cash, where applicable) 

2 

to which such holder is entitled upon such exercise pursuant to Section 1 or otherwise. 

3. Adjustment for Dividends in Other Stock, Property, etc.; Reclassification, etc. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, without payment therefor, 

(a) other or additional stock or other securities or property (other than cash) by way of dividend, or 

(b) any cash (excluding cash dividends payable solely out of earnings or earned surplus of the Company), or 

(c) other or additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, recapitalization, combination of shares or similar corporate rearrangement, 

other than additional shares of Common Stock issued as a stock dividend or in a stock-split (adjustments in respect of which are provided for in Section 5.3), then and in each such case the holder of this Warrant, on the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) which such holder would hold on the date of such exercise if on the date hereof he had been the holder of record of the number of shares of Common Stock called for on the face of this Warrant and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and all such other or additional stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period by Sections 4 and 5. 

4. Adjustment for Reorganization, Consolidation, Merger, etc. 

4.1 Reorganization. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, the holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution as the case may be, shall receive, in lieu of the Common Stock issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such holder had so exercised this Warrant immediately prior thereto, all subject to further adjustment thereafter as provided in Sections 3 and 5. 

3 

4.2 Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the holders of the Warrants after the effective date of such dissolution pursuant to this Section 4 to a bank or trust company having its principal office in New York, New York, as trustee for the holder or holders of the Warrants. 

4.3 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this 
Section 4, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 6. 

5. Adjustment for Issue or Sale of Common Stock at Less Than The Purchase Price in Effect. 

5.1 General. If the Company shall, at any time or from time to time, issue any additional shares of Common Stock (other than shares of Common Stock excepted from the provisions of this Section 5 by Section 5.4) without consideration or for a Net Consideration Per Share less than the Purchase Price in effect immediately prior to such issuance, then, and in each such case: 

(a) the Purchase Price shall be lowered to an amount determined by multiplying such Purchase Price then in effect by a fraction: 

(1) the numerator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon the exercise of any warrant to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of shares of Common Stock which the net aggregate consideration, if any, received by the Company for the total number of such additional shares of Common Stock so issued would purchase at the Purchase Price in effect immediately prior to such issuance, and 

(2) the denominator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of such additional shares of 

4 

Common Stock so issued; and 

(b) the holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5. 1) be issuable on such exercise by the fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5. 1) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.2 Definitions, etc. For purposes of this Section 5 and Section 7: 

The issuance of any warrants, options or other subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable securities) shall be deemed an issuance at such time of such Common Stock if the Net Consideration Per Share which may be received by the Company for such Common Stock (as hereinafter determined) shall be less than the Purchase Price at the time of such issuance and, except as hereinafter provided, an adjustment in the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made upon each such issuance in the manner provided in Section 5. 1. Any obligation, agreement or undertaking to issue warrants, options, or other subscription or purchase rights at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made under Section 5.1 upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities if any adjustment shall previously have been made upon the issuance of any such warrants, options or other rights or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as above provided. Any adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant with respect to this Section 5.2 which relates to warrants, options or other subscription or purchase rights with respect to shares of Common Stock shall be disregarded if, as, and to the extent that such warrants, options or other subscription or purchase rights expire or are canceled without being exercised, so that the Purchase Price effective immediately upon such cancellation or expiration shall be equal to the Purchase Price that otherwise would have been in effect at the time of the issuance of the expired or canceled warrants, options or other subscriptions or purchase rights, with such additional adjustments as would have been made to that Purchase Price had the expired or cancelled warrants, options or other subscriptions or purchase rights not been issued. 

For purposes of this Section 5.2, the "Net Consideration Per Share" which may be received by the Company shall be determined as follows: 

5 

(A) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Company for the issuance of such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Company upon exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities were exercised, exchanged or converted. 

(B) The "Net Consideration Per Share" which may be received by the Company shall be determined in each instance as of the date of issuance of warrants, options, subscriptions or other purchase rights, or convertible or exchangeable securities without giving effect to any possible future price adjustments or rate adjustments which may be applicable with respect to such warrants, options, subscriptions or other purchase rights or convertible securities. 

For purposes of this Section 5, if a part or all of the consideration received by the Company in connection with the issuance of shares of the Common Stock or the issuance of any of the securities described in this Section 5 consists of property other than cash, such consideration shall be deemed to have the same value as shall be determined in good faith by the Board of Directors of the Company. 

This Section 5.2 shall not apply under any of the circumstances described in Section 5.4. 

5.3. Extraordinary Events. In the event that the Company shall (i) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 5.3. The holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive that number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5.3) be issuable on such exercise by a fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5.3) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.4. Excluded Shares. Section 5. 1 shall not apply to the (i) issuance of shares of Common Stock, or options therefor, to directors, officers, employees, advisors and consultants of 

6 

the Company pursuant to any stock option, stock purchase, stock ownership or compensation plan approved by the compensation committee of the Company's Board of Directors, and (ii) issuance of shares of Common Stock upon the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants. 

6. No Dilution or Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable on the exercise of the Warrants above the amount payable therefor on such exercise, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock on the exercise of all Warrants from time to time outstanding, and (c) will not transfer all or substantially all of its properties and assets to any other person (corporate or otherwise), or consolidate with or merge into any other person or permit any such person to consolidate with or merge into the Company (if the Company is not the surviving person), unless such other person shall expressly assume in writing and will be bound by all the terms of the Warrants. 

7. Accountants' Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Treasurer or Chief Financial Officer or, if the holder of a Warrant so requests, independent certified public accountants selected by the Company to compute such adjustment or readjustment in accordance with the terms of the Warrants and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such issue or sale and as adjusted and readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the Purchase Price at the time in effect and showing how it was calculated. 

7 

8. Notices of Record Date, etc. In the event of 

(a) any taking by the Company of a record of the holders of any class or securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or 

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person, or 

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, or 

(d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than the issue of Common Stock on the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the warrants), then and in each such event the Company will mail or cause to be mailed to each registered holder of a Warrant a notice specifying 
(i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up, and 
(iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least 20 days prior to the date specified in such notice on which any such action is to be taken. 

9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock from time to time issuable on the exercise of the Warrants. 

10. Exchange of Warrants. On surrender for exchange of any Warrant, properly endorsed, to the Company, the Company at its expense will issue and deliver to or on the order of the holder thereof a new Warrant or warrants of like tenor, in the name of such holder or as such holder 

8 

(upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. 

11. Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 

12. Warrant Agent. The Company hereby appoints American Registrar and Transfer Company, with offices in Salt Lake City, Utah, as its agent for the purpose of issuing Common Stock on the exercise of the Warrants pursuant to Section 1, exchanging Warrants pursuant to Section 10, and replacing Warrants pursuant to 
Section 11, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. The Company may change such agent and designate a new agent in the United States for the above-described purposes by written notice to each holder of a Warrant. 

13. Remedies. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that a holder of this Warrant may suffer irreparable harm and that such terms may be specifically enforced by a decree by a court of competent jurisdiction for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 

14. Negotiability. This Warrant is issued upon the following terms, to all of which each holder or owner hereof by the taking hereof consents and agrees: 

(a) subject to compliance with all applicable securities laws, title to this Warrant may be transferred by endorsement (by the holder hereof executing the form of assignment at the end hereof) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery; 

(b) any person in possession of this Warrant properly endorsed is authorized to represent himself as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all of his equities or rights in this Warrant in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and 

9 

(c) until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 

15. Notices. All notices and other communications from the Company to the holder of this Warrant shall be in writing and shall be considered as duly given on (a) the date of delivery if delivered in person or delivered by nationally recognized overnight delivery service or (b) three days after mailing if mailed within the continental United States, sent by certified or mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company. 

16. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seal. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

17. Expiration. The right to exercise this Warrant shall expire at 5:30 P.M., New York time, upon the earlier of (a) June 15, 1997 or (b) the 60th day after the receipt by the Company of a feasibility report from Kilborn Inc. or another qualified engineering firm reflecting that the Zod mine in Armenia has proven reserves in excess of US $1,000,000,000. 

18. Restrictions on Transferability. In addition to any other restriction under applicable Federal and state securities laws, the holder agrees not to sell the Company's Common Stock received upon the exercise of this Warrant until after the later of (a) December 31, 1997 or (b) one year after the date of the full exercise of the Warrants. 

Dated: July 18, 1996 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    -----------------------------
    Drury J. Gallagher, President

	

10 

FORM OF SUBSCRIPTION 

(To be signed only on exercise of Warrant) 

TO: Global Gold Corporation 

The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder shares of Common Stock of Global Gold Corporation and herewith makes payment of $ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to whose address is 

(Street Address) 

(City, State and Zip Code) 

Dated:_________________ 

(Signature) 
(Signature must conform to name of holder 
as specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

11 

FORM OF ASSIGNMENT 

(To be signed only on transfer of warrant) 

For value received, the undersigned hereby sells, assigns, and transfers unto _________________________________ the right represented by the within Warrant to purchase shares of Common Stock of Global Gold Corporation to which the within Warrant relates, and appoints ____________________________as its attorney to transfer such right on the books of Global Gold Corporation with full power of substitution in the premises. 

Dated:________________ 

(Signature) 
(Signature must conform to name of holder as 
specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

Signed in the presence of: 

12 

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND NO SALE OR TRANSFER THEREOF MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

No. W-B2 Right to Purchase 666,667 Shares of Common Stock of Global Gold Corporation 

GLOBAL GOLD CORPORATION 

Common Stock Purchase Warrant 

Global Gold Corporation, a Delaware corporation (the "Company"), hereby certifies that, for value received, London & International Mercantile Limited, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on December 15, 1997 (subject to earlier expiration as provided in Section 17 hereof) 666,667 fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $3.00 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. 

This Warrant is one of a series of Common Stock Purchase Warrants (the "Warrants") evidencing the right to purchase shares of Common Stock of the Company, issued pursuant to the Stock Purchase Agreement between the Company and the holder hereof dated as of June __, 1996, a copy of which is on file at the principal office of the Company. 

As used herein the following terms, unless the context otherwise requires. have the following respective meanings: 

(a) The term "Company" shall include Global Gold Corporation and any corporation which shall succeed or assume the obligations of the Company hereunder. 

1 

(b) The term "Common Stock" includes the Company's Common Stock, $.001 par value per share, as authorized on the date of the Agreement and any other securities into which or for which any of such Common Stock may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 

1. Exercise of Warrant. 

1.1 Full Exercise. This Warrant may be exercised in full by the holder hereof by surrender of this Warrant, with the form of subscription at the end hereof duly executed by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. 

1.2. Partial Exercise. This Warrant may be exercised in part by surrender of this Warrant in the manner and at the place provided in Section 1. 1 except that the amount payable by the holder on such partial exercise shall be the amount obtained by multiplying (a) the number of shares of Common Stock designated by the holder in the subscription at the end hereof by (b) the Purchase Price then in effect. On any such partial exercise the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock for which such Warrant or Warrants may still be exercised. 

1.3. Trustee for Warrantholders. In the event that a bank or trust company shall have been appointed as trustee for the holders of the Warrants pursuant to 
Section 4.2, such bank or trust company shall have all the powers and duties of a warrant agent appointed pursuant to Section 12 and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 

2. Delivery of Stock Certificates. etc. on Exercise. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which such holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value of one full share, together with any other stock or other securities and property (including cash, where applicable) 

2 

to which such holder is entitled upon such exercise pursuant to Section 1 or otherwise. 

3. Adjustment for Dividends in Other Stock, Property, etc.; Reclassification, etc. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, without payment therefor, 

(a) other or additional stock or other securities or property (other than cash) by way of dividend, or 

(b) any cash (excluding cash dividends payable solely out of earnings or earned surplus of the Company), or 

(c) other or additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, recapitalization, combination of shares or similar corporate rearrangement, 

other than additional shares of Common Stock issued as a stock dividend or in a stock-split (adjustments in respect of which are provided for in Section 5.3), then and in each such case the holder of this Warrant, on the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) which such holder would hold on the date of such exercise if on the date hereof he had been the holder of record of the number of shares of Common Stock called for on the face of this Warrant and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and all such other or additional stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period by Sections 4 and 5. 

4. Adjustment for Reorganization, Consolidation, Merger, etc. 

4.1 Reorganization. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, the holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution as the case may be, shall receive, in lieu of the Common Stock issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such holder had so exercised this Warrant immediately prior thereto, all subject to further adjustment thereafter as provided in Sections 3 and 5. 

3 

4.2 Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the holders of the Warrants after the effective date of such dissolution pursuant to this Section 4 to a bank or trust company having its principal office in New York, New York, as trustee for the holder or holders of the Warrants. 

4.3 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this 
Section 4, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 6. 

5. Adjustment for Issue or Sale of Common Stock at Less Than The Purchase Price in Effect. 

5.1 General. If the Company shall, at any time or from time to time, issue any additional shares of Common Stock (other than shares of Common Stock excepted from the provisions of this Section 5 by Section 5.4) without consideration or for a Net Consideration Per Share less than the Purchase Price in effect immediately prior to such issuance, then, and in each such case: 

(a) the Purchase Price shall be lowered to an amount determined by multiplying such Purchase Price then in effect by a fraction: 

(1) the numerator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon the exercise of any warrant to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of shares of Common Stock which the net aggregate consideration, if any, received by the Company for the total number of such additional shares of Common Stock so issued would purchase at the Purchase Price in effect immediately prior to such issuance, and 

(2) the denominator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of such additional shares of 

4 

Common Stock so issued; and 

(b) the holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5. 1) be issuable on such exercise by the fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5. 1) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.2 Definitions, etc. For purposes of this Section 5 and Section 7: 

The issuance of any warrants, options or other subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable securities) shall be deemed an issuance at such time of such Common Stock if the Net Consideration Per Share which may be received by the Company for such Common Stock (as hereinafter determined) shall be less than the Purchase Price at the time of such issuance and, except as hereinafter provided, an adjustment in the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made upon each such issuance in the manner provided in Section 5. 1. Any obligation, agreement or undertaking to issue warrants, options, or other subscription or purchase rights at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made under Section 5.1 upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities if any adjustment shall previously have been made upon the issuance of any such warrants, options or other rights or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as above provided. Any adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant with respect to this Section 5.2 which relates to warrants, options or other subscription or purchase rights with respect to shares of Common Stock shall be disregarded if, as, and to the extent that such warrants, options or other subscription or purchase rights expire or are canceled without being exercised, so that the Purchase Price effective immediately upon such cancellation or expiration shall be equal to the Purchase Price that otherwise would have been in effect at the time of the issuance of the expired or canceled warrants, options or other subscriptions or purchase rights, with such additional adjustments as would have been made to that Purchase Price had the expired or cancelled warrants, options or other subscriptions or purchase rights not been issued. 

For purposes of this Section 5.2, the "Net Consideration Per Share" which may be received by the Company shall be determined as follows: 

5 

(A) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Company for the issuance of such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Company upon exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities were exercised, exchanged or converted. 

(B) The "Net Consideration Per Share" which may be received by the Company shall be determined in each instance as of the date of issuance of warrants, options, subscriptions or other purchase rights, or convertible or exchangeable securities without giving effect to any possible future price adjustments or rate adjustments which may be applicable with respect to such warrants, options, subscriptions or other purchase rights or convertible securities. 

For purposes of this Section 5, if a part or all of the consideration received by the Company in connection with the issuance of shares of the Common Stock or the issuance of any of the securities described in this Section 5 consists of property other than cash, such consideration shall be deemed to have the same value as shall be determined in good faith by the Board of Directors of the Company. 

This Section 5.2 shall not apply under any of the circumstances described in Section 5.4. 

5.3. Extraordinary Events. In the event that the Company shall (i) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 5.3. The holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive that number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5.3) be issuable on such exercise by a fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5.3) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.4. Excluded Shares. Section 5. 1 shall not apply to the (i) issuance of shares of Common Stock, or options therefor, to directors, officers, employees, advisors and consultants of 

6 

the Company pursuant to any stock option, stock purchase, stock ownership or compensation plan approved by the compensation committee of the Company's Board of Directors, and (ii) issuance of shares of Common Stock upon the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants. 

6. No Dilution or Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable on the exercise of the Warrants above the amount payable therefor on such exercise, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock on the exercise of all Warrants from time to time outstanding, and (c) will not transfer all or substantially all of its properties and assets to any other person (corporate or otherwise), or consolidate with or merge into any other person or permit any such person to consolidate with or merge into the Company (if the Company is not the surviving person), unless such other person shall expressly assume in writing and will be bound by all the terms of the Warrants. 

7. Accountants' Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Treasurer or Chief Financial Officer or, if the holder of a Warrant so requests, independent certified public accountants selected by the Company to compute such adjustment or readjustment in accordance with the terms of the Warrants and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such issue or sale and as adjusted and readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the Purchase Price at the time in effect and showing how it was calculated. 

7 

8. Notices of Record Date, etc. In the event of 

(a) any taking by the Company of a record of the holders of any class or securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or 

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person, or 

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, or 

(d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than the issue of Common Stock on the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the warrants), then and in each such event the Company will mail or cause to be mailed to each registered holder of a Warrant a notice specifying 
(i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up, and 
(iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least 20 days prior to the date specified in such notice on which any such action is to be taken. 

9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock from time to time issuable on the exercise of the Warrants. 

10. Exchange of Warrants. On surrender for exchange of any Warrant, properly endorsed, to the Company, the Company at its expense will issue and deliver to or on the order of the holder thereof a new Warrant or warrants of like tenor, in the name of such holder or as such holder 

8 

(upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. 

11. Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 

12. Warrant Agent. The Company hereby appoints American Registrar and Transfer Company, with offices in Salt Lake City, Utah, as its agent for the purpose of issuing Common Stock on the exercise of the Warrants pursuant to Section 1, exchanging Warrants pursuant to Section 10, and replacing Warrants pursuant to 
Section 11, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. The Company may change such agent and designate a new agent in the United States for the above-described purposes by written notice to each holder of a Warrant. 

13. Remedies. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that a holder of this Warrant may suffer irreparable harm and that such terms may be specifically enforced by a decree by a court of competent jurisdiction for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 

14. Negotiability. This Warrant is issued upon the following terms, to all of which each holder or owner hereof by the taking hereof consents and agrees: 

(a) subject to compliance with all applicable securities laws, title to this Warrant may be transferred by endorsement (by the holder hereof executing the form of assignment at the end hereof) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery; 

(b) any person in possession of this Warrant properly endorsed is authorized to represent himself as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all of his equities or rights in this Warrant in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and 

9 

(c) until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 

15. Notices. All notices and other communications from the Company to the holder of this Warrant shall be in writing and shall be considered as duly given on (a) the date of delivery if delivered in person or delivered by nationally recognized overnight delivery service or (b) three days after mailing if mailed within the continental United States, sent by certified or mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company. 

16. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seal. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

17. Expiration. The right to exercise this Warrant shall expire at 5:30 P.M., New York time, upon the earlier of (a) December 15, 1997 or (b) the 60th day after the receipt by the Company of a feasibility report from Kilborn Inc. or another qualified engineering firm reflecting that the Zod mine in Armenia has proven reserves in excess of US $1,000,000,000. 

18. Restrictions on Transferability. In addition to any other restriction under applicable Federal and state securities laws, the holder agrees not to sell the Company's Common Stock received upon the exercise of this Warrant until after the later of (a) December 31, 1997 or (b) one year after the date of the full exercise of the Warrants. 

Dated: July 18, 1996 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    -----------------------------
    Drury J. Gallagher, President

	

10 

FORM OF SUBSCRIPTION 

(To be signed only on exercise of Warrant) 

TO: Global Gold Corporation 

The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder shares of Common Stock of Global Gold Corporation and herewith makes payment of $ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to whose address is 

(Street Address) 

(City, State and Zip Code) 

Dated:_________________ 

(Signature) 
(Signature must conform to name of holder 
as specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

11 

FORM OF ASSIGNMENT 

(To be signed only on transfer of warrant) 

For value received, the undersigned hereby sells, assigns, and transfers unto _________________________________ the right represented by the within Warrant to purchase shares of Common Stock of Global Gold Corporation to which the within Warrant relates, and appoints ____________________________as its attorney to transfer such right on the books of Global Gold Corporation with full power of substitution in the premises. 

Dated:________________ 

(Signature) 
(Signature must conform to name of holder as 
specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

Signed in the presence of: 

12 

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND NO SALE OR TRANSFER THEREOF MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

No. W-B3 Right to Purchase 666,666 Shares of Common Stock of Global Gold Corporation 

GLOBAL GOLD CORPORATION 

Common Stock Purchase Warrant 

Global Gold Corporation, a Delaware corporation (the "Company"), hereby certifies that, for value received, London & International Mercantile Limited, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on June 15, 1998 (subject to earlier expiration as provided in Section 17 hereof) 666,666 fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $3.00 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. 

This Warrant is one of a series of Common Stock Purchase Warrants (the "Warrants") evidencing the right to purchase shares of Common Stock of the Company, issued pursuant to the Stock Purchase Agreement between the Company and the holder hereof dated as of June __, 1996, a copy of which is on file at the principal office of the Company. 

As used herein the following terms, unless the context otherwise requires. have the following respective meanings: 

(a) The term "Company" shall include Global Gold Corporation and any corporation which shall succeed or assume the obligations of the Company hereunder. 

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(b) The term "Common Stock" includes the Company's Common Stock, $.001 par value per share, as authorized on the date of the Agreement and any other securities into which or for which any of such Common Stock may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 

1. Exercise of Warrant. 

1.1 Full Exercise. This Warrant may be exercised in full by the holder hereof by surrender of this Warrant, with the form of subscription at the end hereof duly executed by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. 

1.2. Partial Exercise. This Warrant may be exercised in part by surrender of this Warrant in the manner and at the place provided in Section 1. 1 except that the amount payable by the holder on such partial exercise shall be the amount obtained by multiplying (a) the number of shares of Common Stock designated by the holder in the subscription at the end hereof by (b) the Purchase Price then in effect. On any such partial exercise the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock for which such Warrant or Warrants may still be exercised. 

1.3. Trustee for Warrantholders. In the event that a bank or trust company shall have been appointed as trustee for the holders of the Warrants pursuant to 
Section 4.2, such bank or trust company shall have all the powers and duties of a warrant agent appointed pursuant to Section 12 and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 

2. Delivery of Stock Certificates. etc. on Exercise. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which such holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value of one full share, together with any other stock or other securities and property (including cash, where applicable) 

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to which such holder is entitled upon such exercise pursuant to Section 1 or otherwise. 

3. Adjustment for Dividends in Other Stock, Property, etc.; Reclassification, etc. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, without payment therefor, 

(a) other or additional stock or other securities or property (other than cash) by way of dividend, or 

(b) any cash (excluding cash dividends payable solely out of earnings or earned surplus of the Company), or 

(c) other or additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, recapitalization, combination of shares or similar corporate rearrangement, 

other than additional shares of Common Stock issued as a stock dividend or in a stock-split (adjustments in respect of which are provided for in Section 5.3), then and in each such case the holder of this Warrant, on the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) which such holder would hold on the date of such exercise if on the date hereof he had been the holder of record of the number of shares of Common Stock called for on the face of this Warrant and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and all such other or additional stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period by Sections 4 and 5. 

4. Adjustment for Reorganization, Consolidation, Merger, etc. 

4.1 Reorganization. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, the holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution as the case may be, shall receive, in lieu of the Common Stock issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such holder had so exercised this Warrant immediately prior thereto, all subject to further adjustment thereafter as provided in Sections 3 and 5. 

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4.2 Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the holders of the Warrants after the effective date of such dissolution pursuant to this Section 4 to a bank or trust company having its principal office in New York, New York, as trustee for the holder or holders of the Warrants. 

4.3 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this 
Section 4, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 6. 

5. Adjustment for Issue or Sale of Common Stock at Less Than The Purchase Price in Effect. 

5.1 General. If the Company shall, at any time or from time to time, issue any additional shares of Common Stock (other than shares of Common Stock excepted from the provisions of this Section 5 by Section 5.4) without consideration or for a Net Consideration Per Share less than the Purchase Price in effect immediately prior to such issuance, then, and in each such case: 

(a) the Purchase Price shall be lowered to an amount determined by multiplying such Purchase Price then in effect by a fraction: 

(1) the numerator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon the exercise of any warrant to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of shares of Common Stock which the net aggregate consideration, if any, received by the Company for the total number of such additional shares of Common Stock so issued would purchase at the Purchase Price in effect immediately prior to such issuance, and 

(2) the denominator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of such additional shares of 

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Common Stock so issued; and 

(b) the holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5. 1) be issuable on such exercise by the fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5. 1) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.2 Definitions, etc. For purposes of this Section 5 and Section 7: 

The issuance of any warrants, options or other subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable securities) shall be deemed an issuance at such time of such Common Stock if the Net Consideration Per Share which may be received by the Company for such Common Stock (as hereinafter determined) shall be less than the Purchase Price at the time of such issuance and, except as hereinafter provided, an adjustment in the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made upon each such issuance in the manner provided in Section 5. 1. Any obligation, agreement or undertaking to issue warrants, options, or other subscription or purchase rights at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made under Section 5.1 upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities if any adjustment shall previously have been made upon the issuance of any such warrants, options or other rights or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as above provided. Any adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant with respect to this Section 5.2 which relates to warrants, options or other subscription or purchase rights with respect to shares of Common Stock shall be disregarded if, as, and to the extent that such warrants, options or other subscription or purchase rights expire or are canceled without being exercised, so that the Purchase Price effective immediately upon such cancellation or expiration shall be equal to the Purchase Price that otherwise would have been in effect at the time of the issuance of the expired or canceled warrants, options or other subscriptions or purchase rights, with such additional adjustments as would have been made to that Purchase Price had the expired or cancelled warrants, options or other subscriptions or purchase rights not been issued. 

For purposes of this Section 5.2, the "Net Consideration Per Share" which may be received by the Company shall be determined as follows: 

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(A) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Company for the issuance of such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Company upon exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities were exercised, exchanged or converted. 

(B) The "Net Consideration Per Share" which may be received by the Company shall be determined in each instance as of the date of issuance of warrants, options, subscriptions or other purchase rights, or convertible or exchangeable securities without giving effect to any possible future price adjustments or rate adjustments which may be applicable with respect to such warrants, options, subscriptions or other purchase rights or convertible securities. 

For purposes of this Section 5, if a part or all of the consideration received by the Company in connection with the issuance of shares of the Common Stock or the issuance of any of the securities described in this Section 5 consists of property other than cash, such consideration shall be deemed to have the same value as shall be determined in good faith by the Board of Directors of the Company. 

This Section 5.2 shall not apply under any of the circumstances described in Section 5.4. 

5.3. Extraordinary Events. In the event that the Company shall (i) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 5.3. The holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive that number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5.3) be issuable on such exercise by a fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5.3) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.4. Excluded Shares. Section 5.1 shall not apply to the (i) issuance of shares of Common Stock, or options therefor, to directors, officers, employees, advisors and consultants of 

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the Company pursuant to any stock option, stock purchase, stock ownership or compensation plan approved by the compensation committee of the Company's Board of Directors, and (ii) issuance of shares of Common Stock upon the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants. 

6. No Dilution or Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable on the exercise of the Warrants above the amount payable therefor on such exercise, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock on the exercise of all Warrants from time to time outstanding, and (c) will not transfer all or substantially all of its properties and assets to any other person (corporate or otherwise), or consolidate with or merge into any other person or permit any such person to consolidate with or merge into the Company (if the Company is not the surviving person), unless such other person shall expressly assume in writing and will be bound by all the terms of the Warrants. 

7. Accountants' Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Treasurer or Chief Financial Officer or, if the holder of a Warrant so requests, independent certified public accountants selected by the Company to compute such adjustment or readjustment in accordance with the terms of the Warrants and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such issue or sale and as adjusted and readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the Purchase Price at the time in effect and showing how it was calculated. 

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8. Notices of Record Date, etc. In the event of 

(a) any taking by the Company of a record of the holders of any class or securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or 

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person, or 

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, or 

(d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than the issue of Common Stock on the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the warrants), then and in each such event the Company will mail or cause to be mailed to each registered holder of a Warrant a notice specifying 
(i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up, and 
(iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least 20 days prior to the date specified in such notice on which any such action is to be taken. 

9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock from time to time issuable on the exercise of the Warrants. 

10. Exchange of Warrants. On surrender for exchange of any Warrant, properly endorsed, to the Company, the Company at its expense will issue and deliver to or on the order of the holder thereof a new Warrant or warrants of like tenor, in the name of such holder or as such holder 

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(upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. 

11. Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 

12. Warrant Agent. The Company hereby appoints American Registrar and Transfer Company, with offices in Salt Lake City, Utah, as its agent for the purpose of issuing Common Stock on the exercise of the Warrants pursuant to Section 1, exchanging Warrants pursuant to Section 10, and replacing Warrants pursuant to 
Section 11, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. The Company may change such agent and designate a new agent in the United States for the above-described purposes by written notice to each holder of a Warrant. 

13. Remedies. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that a holder of this Warrant may suffer irreparable harm and that such terms may be specifically enforced by a decree by a court of competent jurisdiction for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 

14. Negotiability. This Warrant is issued upon the following terms, to all of which each holder or owner hereof by the taking hereof consents and agrees: 

(a) subject to compliance with all applicable securities laws, title to this Warrant may be transferred by endorsement (by the holder hereof executing the form of assignment at the end hereof) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery; 

(b) any person in possession of this Warrant properly endorsed is authorized to represent himself as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all of his equities or rights in this Warrant in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and 

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(c) until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 

15. Notices. All notices and other communications from the Company to the holder of this Warrant shall be in writing and shall be considered as duly given on (a) the date of delivery if delivered in person or delivered by nationally recognized overnight delivery service or (b) three days after mailing if mailed within the continental United States, sent by certified or mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company. 

16. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seal. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

17. Expiration. The right to exercise this Warrant shall expire at 5:30 P.M., New York time, upon the earlier of (a) June 15, 1998 or (b) the 60th day after the receipt by the Company of a feasibility report from Kilborn Inc. or another qualified engineering firm reflecting that the Zod mine in Armenia has proven reserves in excess of US $1,000,000,000. 

18. Restrictions on Transferability. In addition to any other restriction under applicable Federal and state securities laws, the holder agrees not to sell the Company's Common Stock received upon the exercise of this Warrant until after the later of (a) December 31, 1997 or (b) one year after the date of the full exercise of the Warrants. 

Dated: July 18, 1996 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    -----------------------------
    Drury J. Gallagher, President

	

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FORM OF SUBSCRIPTION 

(To be signed only on exercise of Warrant) 

TO: Global Gold Corporation 

The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder shares of Common Stock of Global Gold Corporation and herewith makes payment of $ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to whose address is 

(Street Address) 

(City, State and Zip Code) 

Dated:_________________ 

(Signature) 
(Signature must conform to name of holder 
as specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

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FORM OF ASSIGNMENT 

(To be signed only on transfer of warrant) 

For value received, the undersigned hereby sells, assigns, and transfers unto _________________________________ the right represented by the within Warrant to purchase shares of Common Stock of Global Gold Corporation to which the within Warrant relates, and appoints ____________________________as its attorney to transfer such right on the books of Global Gold Corporation with full power of substitution in the premises. 

Dated:________________ 

(Signature) 
(Signature must conform to name of holder as 
specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

Signed in the presence of: 

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THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND NO SALE OR TRANSFER THEREOF MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

No. W-B4 Right to Purchase 666,667 Shares of Common Stock of Global Gold Corporation 

GLOBAL GOLD CORPORATION 

Common Stock Purchase Warrant 

Global Gold Corporation, a Delaware corporation (the "Company"), hereby certifies that, for value received, London & International Mercantile Limited, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on June 15, 1997 (subject to earlier expiration as provided in Section 17 hereof) 666,667 fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $3.00 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. 

This Warrant is one of a series of Common Stock Purchase Warrants (the "Warrants") evidencing the right to purchase shares of Common Stock of the Company, issued pursuant to the Stock Purchase Agreement between the Company and the holder hereof dated as of June __, 1996, a copy of which is on file at the principal office of the Company. 

As used herein the following terms, unless the context otherwise requires. have the following respective meanings: 

(a) The term "Company" shall include Global Gold Corporation and any corporation which shall succeed or assume the obligations of the Company hereunder. 

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(b) The term "Common Stock" includes the Company's Common Stock, $.001 par value per share, as authorized on the date of the Agreement and any other securities into which or for which any of such Common Stock may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 

1. Exercise of Warrant. 

1.1 Full Exercise. This Warrant may be exercised in full by the holder hereof by surrender of this Warrant, with the form of subscription at the end hereof duly executed by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. 

1.2. Partial Exercise. This Warrant may be exercised in part by surrender of this Warrant in the manner and at the place provided in Section 1. 1 except that the amount payable by the holder on such partial exercise shall be the amount obtained by multiplying (a) the number of shares of Common Stock designated by the holder in the subscription at the end hereof by (b) the Purchase Price then in effect. On any such partial exercise the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock for which such Warrant or Warrants may still be exercised. 

1.3. Trustee for Warrantholders. In the event that a bank or trust company shall have been appointed as trustee for the holders of the Warrants pursuant to 
Section 4.2, such bank or trust company shall have all the powers and duties of a warrant agent appointed pursuant to Section 12 and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 

2. Delivery of Stock Certificates. etc. on Exercise. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which such holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value of one full share, together with any other stock or other securities and property (including cash, where applicable) 

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to which such holder is entitled upon such exercise pursuant to Section 1 or otherwise. 

3. Adjustment for Dividends in Other Stock, Property, etc.; Reclassification, etc. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, without payment therefor, 

(a) other or additional stock or other securities or property (other than cash) by way of dividend, or 

(b) any cash (excluding cash dividends payable solely out of earnings or earned surplus of the Company), or 

(c) other or additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, recapitalization, combination of shares or similar corporate rearrangement, 

other than additional shares of Common Stock issued as a stock dividend or in a stock-split (adjustments in respect of which are provided for in Section 5.3), then and in each such case the holder of this Warrant, on the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) which such holder would hold on the date of such exercise if on the date hereof he had been the holder of record of the number of shares of Common Stock called for on the face of this Warrant and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and all such other or additional stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period by Sections 4 and 5. 

4. Adjustment for Reorganization, Consolidation, Merger, etc. 

4.1 Reorganization. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, the holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution as the case may be, shall receive, in lieu of the Common Stock issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such holder had so exercised this Warrant immediately prior thereto, all subject to further adjustment thereafter as provided in Sections 3 and 5. 

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4.2 Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the holders of the Warrants after the effective date of such dissolution pursuant to this Section 4 to a bank or trust company having its principal office in New York, New York, as trustee for the holder or holders of the Warrants. 

4.3 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this 
Section 4, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 6. 

5. Adjustment for Issue or Sale of Common Stock at Less Than The Purchase Price in Effect. 

5.1 General. If the Company shall, at any time or from time to time, issue any additional shares of Common Stock (other than shares of Common Stock excepted from the provisions of this Section 5 by Section 5.4) without consideration or for a Net Consideration Per Share less than the Purchase Price in effect immediately prior to such issuance, then, and in each such case: 

(a) the Purchase Price shall be lowered to an amount determined by multiplying such Purchase Price then in effect by a fraction: 

(1) the numerator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon the exercise of any warrant to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of shares of Common Stock which the net aggregate consideration, if any, received by the Company for the total number of such additional shares of Common Stock so issued would purchase at the Purchase Price in effect immediately prior to such issuance, and 

(2) the denominator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of such additional shares of 

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Common Stock so issued; and 

(b) the holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5. 1) be issuable on such exercise by the fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5. 1) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.2 Definitions, etc. For purposes of this Section 5 and Section 7: 

The issuance of any warrants, options or other subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable securities) shall be deemed an issuance at such time of such Common Stock if the Net Consideration Per Share which may be received by the Company for such Common Stock (as hereinafter determined) shall be less than the Purchase Price at the time of such issuance and, except as hereinafter provided, an adjustment in the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made upon each such issuance in the manner provided in Section 5. 1. Any obligation, agreement or undertaking to issue warrants, options, or other subscription or purchase rights at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made under Section 5.1 upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities if any adjustment shall previously have been made upon the issuance of any such warrants, options or other rights or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as above provided. Any adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant with respect to this Section 5.2 which relates to warrants, options or other subscription or purchase rights with respect to shares of Common Stock shall be disregarded if, as, and to the extent that such warrants, options or other subscription or purchase rights expire or are canceled without being exercised, so that the Purchase Price effective immediately upon such cancellation or expiration shall be equal to the Purchase Price that otherwise would have been in effect at the time of the issuance of the expired or canceled warrants, options or other subscriptions or purchase rights, with such additional adjustments as would have been made to that Purchase Price had the expired or cancelled warrants, options or other subscriptions or purchase rights not been issued. 

For purposes of this Section 5.2, the "Net Consideration Per Share" which may be received by the Company shall be determined as follows: 

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(A) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Company for the issuance of such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Company upon exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities were exercised, exchanged or converted. 

(B) The "Net Consideration Per Share" which may be received by the Company shall be determined in each instance as of the date of issuance of warrants, options, subscriptions or other purchase rights, or convertible or exchangeable securities without giving effect to any possible future price adjustments or rate adjustments which may be applicable with respect to such warrants, options, subscriptions or other purchase rights or convertible securities. 

For purposes of this Section 5, if a part or all of the consideration received by the Company in connection with the issuance of shares of the Common Stock or the issuance of any of the securities described in this Section 5 consists of property other than cash, such consideration shall be deemed to have the same value as shall be determined in good faith by the Board of Directors of the Company. 

This Section 5.2 shall not apply under any of the circumstances described in Section 5.4. 

5.3. Extraordinary Events. In the event that the Company shall (i) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 5.3. The holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive that number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5.3) be issuable on such exercise by a fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5.3) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.4. Excluded Shares. Section 5. 1 shall not apply to the (i) issuance of shares of Common Stock, or options therefor, to directors, officers, employees, advisors and consultants of 

6 

the Company pursuant to any stock option, stock purchase, stock ownership or compensation plan approved by the compensation committee of the Company's Board of Directors, and (ii) issuance of shares of Common Stock upon the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants. 

6. No Dilution or Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable on the exercise of the Warrants above the amount payable therefor on such exercise, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock on the exercise of all Warrants from time to time outstanding, and (c) will not transfer all or substantially all of its properties and assets to any other person (corporate or otherwise), or consolidate with or merge into any other person or permit any such person to consolidate with or merge into the Company (if the Company is not the surviving person), unless such other person shall expressly assume in writing and will be bound by all the terms of the Warrants. 

7. Accountants' Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Treasurer or Chief Financial Officer or, if the holder of a Warrant so requests, independent certified public accountants selected by the Company to compute such adjustment or readjustment in accordance with the terms of the Warrants and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such issue or sale and as adjusted and readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the Purchase Price at the time in effect and showing how it was calculated. 

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8. Notices of Record Date, etc. In the event of 

(a) any taking by the Company of a record of the holders of any class or securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or 

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person, or 

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, or 

(d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than the issue of Common Stock on the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the warrants), then and in each such event the Company will mail or cause to be mailed to each registered holder of a Warrant a notice specifying 
(i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up, and 
(iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least 20 days prior to the date specified in such notice on which any such action is to be taken. 

9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock from time to time issuable on the exercise of the Warrants. 

10. Exchange of Warrants. On surrender for exchange of any Warrant, properly endorsed, to the Company, the Company at its expense will issue and deliver to or on the order of the holder thereof a new Warrant or warrants of like tenor, in the name of such holder or as such holder 

8 

(upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. 

11. Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 

12. Warrant Agent. The Company hereby appoints American Registrar and Transfer Company, with offices in Salt Lake City, Utah, as its agent for the purpose of issuing Common Stock on the exercise of the Warrants pursuant to Section 1, exchanging Warrants pursuant to Section 10, and replacing Warrants pursuant to 
Section 11, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. The Company may change such agent and designate a new agent in the United States for the above-described purposes by written notice to each holder of a Warrant. 

13. Remedies. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that a holder of this Warrant may suffer irreparable harm and that such terms may be specifically enforced by a decree by a court of competent jurisdiction for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 

14. Negotiability. This Warrant is issued upon the following terms, to all of which each holder or owner hereof by the taking hereof consents and agrees: 

(a) subject to compliance with all applicable securities laws, title to this Warrant may be transferred by endorsement (by the holder hereof executing the form of assignment at the end hereof) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery; 

(b) any person in possession of this Warrant properly endorsed is authorized to represent himself as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all of his equities or rights in this Warrant in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and 

9 

(c) until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 

15. Notices. All notices and other communications from the Company to the holder of this Warrant shall be in writing and shall be considered as duly given on (a) the date of delivery if delivered in person or delivered by nationally recognized overnight delivery service or (b) three days after mailing if mailed within the continental United States, sent by certified or mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company. 

16. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seal. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

17. Expiration. The right to exercise this Warrant shall expire at 5:30 P.M., New York time, upon the earlier of (a) June 15, 1997 or (b) the 60th day after the receipt by the Company of a feasibility report from Kilborn Inc. or another qualified engineering firm reflecting that the Zod mine in Armenia has proven reserves in excess of US $1,000,000,000. 

18. Restrictions on Transferability. In addition to any other restriction under applicable Federal and state securities laws, the holder agrees not to sell the Company's Common Stock received upon the exercise of this Warrant until after the later of (a) December 31, 1997 or (b) one year after the date of the full exercise of the Warrants. 

Dated: July 18, 1996 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    ----------------------------------
    Drury J. Gallagher, President

	

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FORM OF SUBSCRIPTION 

(To be signed only on exercise of Warrant) 

TO: Global Gold Corporation 

The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder shares of Common Stock of Global Gold Corporation and herewith makes payment of $ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to whose address is 

(Street Address) 

(City, State and Zip Code) 

Dated:_________________ 

(Signature) 
(Signature must conform to name of holder 
as specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

11 

FORM OF ASSIGNMENT 

(To be signed only on transfer of warrant) 

For value received, the undersigned hereby sells, assigns, and transfers unto _________________________________ the right represented by the within Warrant to purchase shares of Common Stock of Global Gold Corporation to which the within Warrant relates, and appoints ____________________________as its attorney to transfer such right on the books of Global Gold Corporation with full power of substitution in the premises. 

Dated:________________ 

(Signature) 
(Signature must conform to name of holder as 
specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

Signed in the presence of: 

12 

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND NO SALE OR TRANSFER THEREOF MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

No. W-B5 Right to Purchase 666,667 Shares of Common Stock of Global Gold Corporation 

GLOBAL GOLD CORPORATION 

Common Stock Purchase Warrant 

Global Gold Corporation, a Delaware corporation (the "Company"), hereby certifies that, for value received, London & International Mercantile Limited, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on December 15, 1997 (subject to earlier expiration as provided in Section 17 hereof) 666,667 fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $3.00 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. 

This Warrant is one of a series of Common Stock Purchase Warrants (the "Warrants") evidencing the right to purchase shares of Common Stock of the Company, issued pursuant to the Stock Purchase Agreement between the Company and the holder hereof dated as of June __, 1996, a copy of which is on file at the principal office of the Company. 

As used herein the following terms, unless the context otherwise requires. have the following respective meanings: 

(a) The term "Company" shall include Global Gold Corporation and any corporation which shall succeed or assume the obligations of the Company hereunder. 

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(b) The term "Common Stock" includes the Company's Common Stock, $.001 par value per share, as authorized on the date of the Agreement and any other securities into which or for which any of such Common Stock may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 

1. Exercise of Warrant. 

1.1 Full Exercise. This Warrant may be exercised in full by the holder hereof by surrender of this Warrant, with the form of subscription at the end hereof duly executed by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. 

1.2. Partial Exercise. This Warrant may be exercised in part by surrender of this Warrant in the manner and at the place provided in Section 1. 1 except that the amount payable by the holder on such partial exercise shall be the amount obtained by multiplying (a) the number of shares of Common Stock designated by the holder in the subscription at the end hereof by (b) the Purchase Price then in effect. On any such partial exercise the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock for which such Warrant or Warrants may still be exercised. 

1.3. Trustee for Warrantholders. In the event that a bank or trust company shall have been appointed as trustee for the holders of the Warrants pursuant to 
Section 4.2, such bank or trust company shall have all the powers and duties of a warrant agent appointed pursuant to Section 12 and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 

2. Delivery of Stock Certificates. etc. on Exercise. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which such holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value of one full share, together with any other stock or other securities and property (including cash, where applicable) 

2 

to which such holder is entitled upon such exercise pursuant to Section 1 or otherwise. 

3. Adjustment for Dividends in Other Stock, Property, etc.; Reclassification, etc. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, without payment therefor, 

(a) other or additional stock or other securities or property (other than cash) by way of dividend, or 

(b) any cash (excluding cash dividends payable solely out of earnings or earned surplus of the Company), or 

(c) other or additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, recapitalization, combination of shares or similar corporate rearrangement, 

other than additional shares of Common Stock issued as a stock dividend or in a stock-split (adjustments in respect of which are provided for in Section 5.3), then and in each such case the holder of this Warrant, on the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) which such holder would hold on the date of such exercise if on the date hereof he had been the holder of record of the number of shares of Common Stock called for on the face of this Warrant and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and all such other or additional stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period by Sections 4 and 5. 

4. Adjustment for Reorganization, Consolidation, Merger, etc. 

4.1 Reorganization. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, the holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution as the case may be, shall receive, in lieu of the Common Stock issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such holder had so exercised this Warrant immediately prior thereto, all subject to further adjustment thereafter as provided in Sections 3 and 5. 

3 

4.2 Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the holders of the Warrants after the effective date of such dissolution pursuant to this Section 4 to a bank or trust company having its principal office in New York, New York, as trustee for the holder or holders of the Warrants. 

4.3 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this 
Section 4, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 6. 

5. Adjustment for Issue or Sale of Common Stock at Less Than The Purchase Price in Effect. 

5.1 General. If the Company shall, at any time or from time to time, issue any additional shares of Common Stock (other than shares of Common Stock excepted from the provisions of this Section 5 by Section 5.4) without consideration or for a Net Consideration Per Share less than the Purchase Price in effect immediately prior to such issuance, then, and in each such case: 

(a) the Purchase Price shall be lowered to an amount determined by multiplying such Purchase Price then in effect by a fraction: 

(1) the numerator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon the exercise of any warrant to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of shares of Common Stock which the net aggregate consideration, if any, received by the Company for the total number of such additional shares of Common Stock so issued would purchase at the Purchase Price in effect immediately prior to such issuance, and 

(2) the denominator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of such additional shares of 

4 

Common Stock so issued; and 

(b) the holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5. 1) be issuable on such exercise by the fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5. 1) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.2 Definitions, etc. For purposes of this Section 5 and Section 7: 

The issuance of any warrants, options or other subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable securities) shall be deemed an issuance at such time of such Common Stock if the Net Consideration Per Share which may be received by the Company for such Common Stock (as hereinafter determined) shall be less than the Purchase Price at the time of such issuance and, except as hereinafter provided, an adjustment in the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made upon each such issuance in the manner provided in Section 5. 1. Any obligation, agreement or undertaking to issue warrants, options, or other subscription or purchase rights at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made under Section 5.1 upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities if any adjustment shall previously have been made upon the issuance of any such warrants, options or other rights or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as above provided. Any adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant with respect to this Section 5.2 which relates to warrants, options or other subscription or purchase rights with respect to shares of Common Stock shall be disregarded if, as, and to the extent that such warrants, options or other subscription or purchase rights expire or are canceled without being exercised, so that the Purchase Price effective immediately upon such cancellation or expiration shall be equal to the Purchase Price that otherwise would have been in effect at the time of the issuance of the expired or canceled warrants, options or other subscriptions or purchase rights, with such additional adjustments as would have been made to that Purchase Price had the expired or cancelled warrants, options or other subscriptions or purchase rights not been issued. 

For purposes of this Section 5.2, the "Net Consideration Per Share" which may be received by the Company shall be determined as follows: 

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(A) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Company for the issuance of such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Company upon exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities were exercised, exchanged or converted. 

(B) The "Net Consideration Per Share" which may be received by the Company shall be determined in each instance as of the date of issuance of warrants, options, subscriptions or other purchase rights, or convertible or exchangeable securities without giving effect to any possible future price adjustments or rate adjustments which may be applicable with respect to such warrants, options, subscriptions or other purchase rights or convertible securities. 

For purposes of this Section 5, if a part or all of the consideration received by the Company in connection with the issuance of shares of the Common Stock or the issuance of any of the securities described in this Section 5 consists of property other than cash, such consideration shall be deemed to have the same value as shall be determined in good faith by the Board of Directors of the Company. 

This Section 5.2 shall not apply under any of the circumstances described in Section 5.4. 

5.3. Extraordinary Events. In the event that the Company shall (i) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 5.3. The holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive that number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5.3) be issuable on such exercise by a fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5.3) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.4. Excluded Shares. Section 5. 1 shall not apply to the (i) issuance of shares of Common Stock, or options therefor, to directors, officers, employees, advisors and consultants of 

6 

the Company pursuant to any stock option, stock purchase, stock ownership or compensation plan approved by the compensation committee of the Company's Board of Directors, and (ii) issuance of shares of Common Stock upon the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants. 

6. No Dilution or Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable on the exercise of the Warrants above the amount payable therefor on such exercise, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock on the exercise of all Warrants from time to time outstanding, and (c) will not transfer all or substantially all of its properties and assets to any other person (corporate or otherwise), or consolidate with or merge into any other person or permit any such person to consolidate with or merge into the Company (if the Company is not the surviving person), unless such other person shall expressly assume in writing and will be bound by all the terms of the Warrants. 

7. Accountants' Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Treasurer or Chief Financial Officer or, if the holder of a Warrant so requests, independent certified public accountants selected by the Company to compute such adjustment or readjustment in accordance with the terms of the Warrants and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such issue or sale and as adjusted and readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the Purchase Price at the time in effect and showing how it was calculated. 

7 

8. Notices of Record Date, etc. In the event of 

(a) any taking by the Company of a record of the holders of any class or securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or 

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person, or 

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, or 

(d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than the issue of Common Stock on the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the warrants), then and in each such event the Company will mail or cause to be mailed to each registered holder of a Warrant a notice specifying 
(i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up, and 
(iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least 20 days prior to the date specified in such notice on which any such action is to be taken. 

9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock from time to time issuable on the exercise of the Warrants. 

10. Exchange of Warrants. On surrender for exchange of any Warrant, properly endorsed, to the Company, the Company at its expense will issue and deliver to or on the order of the holder thereof a new Warrant or warrants of like tenor, in the name of such holder or as such holder 

8 

(upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. 

11. Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 

12. Warrant Agent. The Company hereby appoints American Registrar and Transfer Company, with offices in Salt Lake City, Utah, as its agent for the purpose of issuing Common Stock on the exercise of the Warrants pursuant to Section 1, exchanging Warrants pursuant to Section 10, and replacing Warrants pursuant to 
Section 11, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. The Company may change such agent and designate a new agent in the United States for the above-described purposes by written notice to each holder of a Warrant. 

13. Remedies. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that a holder of this Warrant may suffer irreparable harm and that such terms may be specifically enforced by a decree by a court of competent jurisdiction for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 

14. Negotiability. This Warrant is issued upon the following terms, to all of which each holder or owner hereof by the taking hereof consents and agrees: 

(a) subject to compliance with all applicable securities laws, title to this Warrant may be transferred by endorsement (by the holder hereof executing the form of assignment at the end hereof) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery; 

(b) any person in possession of this Warrant properly endorsed is authorized to represent himself as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all of his equities or rights in this Warrant in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and 

9 

(c) until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 

15. Notices. All notices and other communications from the Company to the holder of this Warrant shall be in writing and shall be considered as duly given on (a) the date of delivery if delivered in person or delivered by nationally recognized overnight delivery service or (b) three days after mailing if mailed within the continental United States, sent by certified or mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company. 

16. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seal. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

17. Expiration. The right to exercise this Warrant shall expire at 5:30 P.M., New York time, upon the earlier of (a) December 15, 1997 or (b) the 60th day after the receipt by the Company of a feasibility report from Kilborn Inc. or another qualified engineering firm reflecting that the Zod mine in Armenia has proven reserves in excess of US $1,000,000,000. 

18. Restrictions on Transferability. In addition to any other restriction under applicable Federal and state securities laws, the holder agrees not to sell the Company's Common Stock received upon the exercise of this Warrant until after the later of (a) December 31, 1997 or (b) one year after the date of the full exercise of the Warrants. 

Dated: July 18, 1996 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    ----------------------------------
    Drury J. Gallagher, President

	

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FORM OF SUBSCRIPTION 

(To be signed only on exercise of Warrant) 

TO: Global Gold Corporation 

The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder shares of Common Stock of Global Gold Corporation and herewith makes payment of $ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to whose address is 

(Street Address) 

(City, State and Zip Code) 

Dated:_________________ 

(Signature) 
(Signature must conform to name of holder 
as specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

11 

FORM OF ASSIGNMENT 

(To be signed only on transfer of warrant) 

For value received, the undersigned hereby sells, assigns, and transfers unto _________________________________ the right represented by the within Warrant to purchase shares of Common Stock of Global Gold Corporation to which the within Warrant relates, and appoints ____________________________as its attorney to transfer such right on the books of Global Gold Corporation with full power of substitution in the premises. 

Dated:________________ 

(Signature) 
(Signature must conform to name of holder as 
specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

Signed in the presence of: 

12 

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND NO SALE OR TRANSFER THEREOF MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

No. W-B6 Right to Purchase 666,666 Shares of Common Stock of Global Gold Corporation 

GLOBAL GOLD CORPORATION 

Common Stock Purchase Warrant 

Global Gold Corporation, a Delaware corporation (the "Company"), hereby certifies that, for value received, London & International Mercantile Limited, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on June 15, 1998 (subject to earlier expiration as provided in Section 17 hereof) 666,666 fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $3.00 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. 

This Warrant is one of a series of Common Stock Purchase Warrants (the "Warrants") evidencing the right to purchase shares of Common Stock of the Company, issued pursuant to the Stock Purchase Agreement between the Company and the holder hereof dated as of June __, 1996, a copy of which is on file at the principal office of the Company. 

As used herein the following terms, unless the context otherwise requires. have the following respective meanings: 

(a) The term "Company" shall include Global Gold Corporation and any corporation which shall succeed or assume the obligations of the Company hereunder. 

1 

(b) The term "Common Stock" includes the Company's Common Stock, $.001 par value per share, as authorized on the date of the Agreement and any other securities into which or for which any of such Common Stock may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 

1. Exercise of Warrant. 

1.1 Full Exercise. This Warrant may be exercised in full by the holder hereof by surrender of this Warrant, with the form of subscription at the end hereof duly executed by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. 

1.2. Partial Exercise. This Warrant may be exercised in part by surrender of this Warrant in the manner and at the place provided in Section 1. 1 except that the amount payable by the holder on such partial exercise shall be the amount obtained by multiplying (a) the number of shares of Common Stock designated by the holder in the subscription at the end hereof by (b) the Purchase Price then in effect. On any such partial exercise the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock for which such Warrant or Warrants may still be exercised. 

1.3. Trustee for Warrantholders. In the event that a bank or trust company shall have been appointed as trustee for the holders of the Warrants pursuant to 
Section 4.2, such bank or trust company shall have all the powers and duties of a warrant agent appointed pursuant to Section 12 and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 

2. Delivery of Stock Certificates. etc. on Exercise. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which such holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value of one full share, together with any other stock or other securities and property (including cash, where applicable) 

2 

to which such holder is entitled upon such exercise pursuant to Section 1 or otherwise. 

3. Adjustment for Dividends in Other Stock, Property, etc.; Reclassification, etc. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, without payment therefor, 

(a) other or additional stock or other securities or property (other than cash) by way of dividend, or 

(b) any cash (excluding cash dividends payable solely out of earnings or earned surplus of the Company), or 

(c) other or additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, recapitalization, combination of shares or similar corporate rearrangement, 

other than additional shares of Common Stock issued as a stock dividend or in a stock-split (adjustments in respect of which are provided for in Section 5.3), then and in each such case the holder of this Warrant, on the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) which such holder would hold on the date of such exercise if on the date hereof he had been the holder of record of the number of shares of Common Stock called for on the face of this Warrant and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and all such other or additional stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) of this Section 3) receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period by Sections 4 and 5. 

4. Adjustment for Reorganization, Consolidation, Merger, etc. 

4.1 Reorganization. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, the holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution as the case may be, shall receive, in lieu of the Common Stock issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such holder had so exercised this Warrant immediately prior thereto, all subject to further adjustment thereafter as provided in Sections 3 and 5. 

3 

4.2 Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the holders of the Warrants after the effective date of such dissolution pursuant to this Section 4 to a bank or trust company having its principal office in New York, New York, as trustee for the holder or holders of the Warrants. 

4.3 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this 
Section 4, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 6. 

5. Adjustment for Issue or Sale of Common Stock at Less Than The Purchase Price in Effect. 

5.1 General. If the Company shall, at any time or from time to time, issue any additional shares of Common Stock (other than shares of Common Stock excepted from the provisions of this Section 5 by Section 5.4) without consideration or for a Net Consideration Per Share less than the Purchase Price in effect immediately prior to such issuance, then, and in each such case: 

(a) the Purchase Price shall be lowered to an amount determined by multiplying such Purchase Price then in effect by a fraction: 

(1) the numerator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon the exercise of any warrant to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of shares of Common Stock which the net aggregate consideration, if any, received by the Company for the total number of such additional shares of Common Stock so issued would purchase at the Purchase Price in effect immediately prior to such issuance, and 

(2) the denominator of which shall be (a) the number of shares of Common Stock outstanding (excluding treasury shares, but including for this purpose shares of Common Stock issuable upon exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants) immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of such additional shares of 

4 

Common Stock so issued; and 

(b) the holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5. 1) be issuable on such exercise by the fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5. 1) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.2 Definitions, etc. For purposes of this Section 5 and Section 7: 

The issuance of any warrants, options or other subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable securities) shall be deemed an issuance at such time of such Common Stock if the Net Consideration Per Share which may be received by the Company for such Common Stock (as hereinafter determined) shall be less than the Purchase Price at the time of such issuance and, except as hereinafter provided, an adjustment in the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made upon each such issuance in the manner provided in Section 5. 1. Any obligation, agreement or undertaking to issue warrants, options, or other subscription or purchase rights at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be made under Section 5.1 upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities if any adjustment shall previously have been made upon the issuance of any such warrants, options or other rights or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as above provided. Any adjustment of the Purchase Price and the number of shares of Common Stock issuable upon exercise of this Warrant with respect to this Section 5.2 which relates to warrants, options or other subscription or purchase rights with respect to shares of Common Stock shall be disregarded if, as, and to the extent that such warrants, options or other subscription or purchase rights expire or are canceled without being exercised, so that the Purchase Price effective immediately upon such cancellation or expiration shall be equal to the Purchase Price that otherwise would have been in effect at the time of the issuance of the expired or canceled warrants, options or other subscriptions or purchase rights, with such additional adjustments as would have been made to that Purchase Price had the expired or cancelled warrants, options or other subscriptions or purchase rights not been issued. 

For purposes of this Section 5.2, the "Net Consideration Per Share" which may be received by the Company shall be determined as follows: 

5 

(A) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Company for the issuance of such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Company upon exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities were exercised, exchanged or converted. 

(B) The "Net Consideration Per Share" which may be received by the Company shall be determined in each instance as of the date of issuance of warrants, options, subscriptions or other purchase rights, or convertible or exchangeable securities without giving effect to any possible future price adjustments or rate adjustments which may be applicable with respect to such warrants, options, subscriptions or other purchase rights or convertible securities. 

For purposes of this Section 5, if a part or all of the consideration received by the Company in connection with the issuance of shares of the Common Stock or the issuance of any of the securities described in this Section 5 consists of property other than cash, such consideration shall be deemed to have the same value as shall be determined in good faith by the Board of Directors of the Company. 

This Section 5.2 shall not apply under any of the circumstances described in Section 5.4. 

5.3. Extraordinary Events. In the event that the Company shall (i) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 5.3. The holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive that number of shares of Common Stock determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this Section 5.3) be issuable on such exercise by a fraction of which (i) the numerator is the Purchase Price which would otherwise (but for the provisions of this Section 5.3) be in effect, and (ii) the denominator is the Purchase Price in effect on the date of such exercise. 

5.4. Excluded Shares. Section 5.1 shall not apply to the (i) issuance of shares of Common Stock, or options therefor, to directors, officers, employees, advisors and consultants of 

6 

the Company pursuant to any stock option, stock purchase, stock ownership or compensation plan approved by the compensation committee of the Company's Board of Directors, and (ii) issuance of shares of Common Stock upon the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the Warrants. 

6. No Dilution or Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable on the exercise of the Warrants above the amount payable therefor on such exercise, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock on the exercise of all Warrants from time to time outstanding, and (c) will not transfer all or substantially all of its properties and assets to any other person (corporate or otherwise), or consolidate with or merge into any other person or permit any such person to consolidate with or merge into the Company (if the Company is not the surviving person), unless such other person shall expressly assume in writing and will be bound by all the terms of the Warrants. 

7. Accountants' Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Treasurer or Chief Financial Officer or, if the holder of a Warrant so requests, independent certified public accountants selected by the Company to compute such adjustment or readjustment in accordance with the terms of the Warrants and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such issue or sale and as adjusted and readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the Purchase Price at the time in effect and showing how it was calculated. 

7 

8. Notices of Record Date, etc. In the event of 

(a) any taking by the Company of a record of the holders of any class or securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or 

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person, or 

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, or 

(d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than the issue of Common Stock on the exercise of any warrants to purchase Common Stock issued and outstanding prior to the date of the issuance of the warrants), then and in each such event the Company will mail or cause to be mailed to each registered holder of a Warrant a notice specifying 
(i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up, and 
(iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least 20 days prior to the date specified in such notice on which any such action is to be taken. 

9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock from time to time issuable on the exercise of the Warrants. 

10. Exchange of Warrants. On surrender for exchange of any Warrant, properly endorsed, to the Company, the Company at its expense will issue and deliver to or on the order of the holder thereof a new Warrant or warrants of like tenor, in the name of such holder or as such holder 

8 

(upon payment by such holder of any applicable transfer taxes and, if requested by the Company, demonstration by such holder of compliance with applicable securities laws) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. 

11. Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 

12. Warrant Agent. The Company hereby appoints American Registrar and Transfer Company, with offices in Salt Lake City, Utah, as its agent for the purpose of issuing Common Stock on the exercise of the Warrants pursuant to Section 1, exchanging Warrants pursuant to Section 10, and replacing Warrants pursuant to 
Section 11, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. The Company may change such agent and designate a new agent in the United States for the above-described purposes by written notice to each holder of a Warrant. 

13. Remedies. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that a holder of this Warrant may suffer irreparable harm and that such terms may be specifically enforced by a decree by a court of competent jurisdiction for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 

14. Negotiability. This Warrant is issued upon the following terms, to all of which each holder or owner hereof by the taking hereof consents and agrees: 

(a) subject to compliance with all applicable securities laws, title to this Warrant may be transferred by endorsement (by the holder hereof executing the form of assignment at the end hereof) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery; 

(b) any person in possession of this Warrant properly endorsed is authorized to represent himself as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all of his equities or rights in this Warrant in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and 

9 

(c) until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 

15. Notices. All notices and other communications from the Company to the holder of this Warrant shall be in writing and shall be considered as duly given on (a) the date of delivery if delivered in person or delivered by nationally recognized overnight delivery service or (b) three days after mailing if mailed within the continental United States, sent by certified or mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company. 

16. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seal. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

17. Expiration. The right to exercise this Warrant shall expire at 5:30 P.M., New York time, upon the earlier of (a) June 15, 1998 or (b) the 60th day after the receipt by the Company of a feasibility report from Kilborn Inc. or another qualified engineering firm reflecting that the Zod mine in Armenia has proven reserves in excess of US $1,000,000,000. 

18. Restrictions on Transferability. In addition to any other restriction under applicable Federal and state securities laws, the holder agrees not to sell the Company's Common Stock received upon the exercise of this Warrant until after the later of (a) December 31, 1997 or (b) one year after the date of the full exercise of the Warrants. 

Dated: July 18, 1996 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    ----------------------------------
    Drury J. Gallagher, President

	

10 

FORM OF SUBSCRIPTION 

(To be signed only on exercise of Warrant) 

TO: Global Gold Corporation 

The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder shares of Common Stock of Global Gold Corporation and herewith makes payment of $ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to whose address is 

(Street Address) 

(City, State and Zip Code) 

Dated:_________________ 

(Signature) 
(Signature must conform to name of holder 
as specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

11 

FORM OF ASSIGNMENT 

(To be signed only on transfer of warrant) 

For value received, the undersigned hereby sells, assigns, and transfers unto _________________________________ the right represented by the within Warrant to purchase shares of Common Stock of Global Gold Corporation to which the within Warrant relates, and appoints ____________________________as its attorney to transfer such right on the books of Global Gold Corporation with full power of substitution in the premises. 

Dated:________________ 

(Signature) 
(Signature must conform to name of holder as 
specified on the face of the Warrant) 

(Print Name) 

(Street Address) 

(City, State and Zip Code) 

(Person's Social Security Number 
or Tax Identification Number) 

Signed in the presence of: 

12 

ASSIGNMENT AND ASSUMPTION AGREEMENT 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT made as of the 30st day of July, 1996 by and between Global Gold Corporation, a Delaware corporation, having an office at 538 West 37th Street, Suite 5G, New York, New York 10017, ("Assignor") and Global Gold Armenia Limited, a Caymans Island corporation, having an office at W.S. Walker & Company, Caledonian House, P.O. Box 265, Georgetown, Grand Cayman, Cayman Islands ("Assignee"). 

WHEREAS, Assignor is a party to the Armenian Joint Venture Agreement by and among Assignor, the Ministry of Industry of Armenia and Armgold, which was executed and delivered on May 1, 1996 (the "Armenian Agreement"); and 

WHEREAS, Assignor has agreed to assign and transfer to Assignee all of Assignor's right, title and interest in and under the Armenian Agreement, and Assignee has agreed to assume all of Assignor's obligations under the Armenian Agreement; 

NOW, THEREFORE, in consideration of the sum of Ten ($10.00) dollars and other good and valuable consideration paid by Assignee to Assignor, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 

1. Assignor hereby grants, bargains, sells, conveys, assigns, transfers and sets over unto Assignee all of Assignor's right, title and interest in and to the Armenian Agreement, TO HAVE AND TO HOLD the same unto the Assignee, its successors and assigns, from the date hereof and for the balance of the term of the Armenian Agreement. 

2. Assignor represents and warrants that: (a) the Armenian Agreement is in full force and effect; (b) Assignor is not in default under the Armenian Agreement and no condition exists and no event has occurred which, or with the giving of notice or passage of time, or both, would constitute a default under, or termination of, the Armenian Agreement; (c) Assignor has received no notice of any default under the Armenian Agreement; (d) Assignor has incurred no liability of any kind thereunder except as contemplated under the Armenian Agreement; and (e) the transfer made hereunder does not constitute a breach of any provision of the Armenian Agreement and all requisite consents thereto have been duly given. 

3. Assignee hereby irrevocably assumes all of Assignor's obligations under the Armenian Agreement. 

4. This Agreement is made under and by virtue of duly adopted resolutions of the respective Boards of Directors of Assignor and Assignee. 
5. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 

6. This Agreement and the rights of the parties hereunder shall be governed by the laws of the State of New York. 

IN WITNESS WHEREOF, the parties have signed and delivered this Agreement on the date first written. 

GLOBAL GOLD CORPORATION, ASSIGNOR 

By: /s/ Drury J. Gallagher
    ---------------------------------
        Drury J. Gallagher, President

	

GLOBAL GOLD ARMENIA LTD., ASSIGNEE 

By: /s/ Drury J. Gallagher
    ----------------------------------
        Drury J. Gallagher, President

	

2 

STATE OF NEW YORK   )
                    ) ss.:
COUNTY OF NEW YORK  )

On the 31st day of July, 1996 before me personally came Drury J. Gallagher, known to me to be the person whose name is subscribed to the foregoing instrument, and known to me to be the President of Global Gold Corporation, a Delaware corporation, and acknowledged to me that he executed said instrument for the purposes and consideration therein expressed, and as the act of said corporation. 

 /s/ Stephen R. Field
--------------------------------
         Notary Public

	

STEPHEN R. FIELD 

                                                Notary Public State of New York
                                                        No. 31-6286310
                                                 Qualified in New York Country
                                               Commission Expires June 30, 1998

STATE OF NEW YORK   )
                    ) ss.:
COUNTY OF NEW YORK  )

On the 31st day of July, 1996 before me personally came Drury J. Gallagher, known to me to be the person whose name is subscribed to the foregoing instrument, and known to me to be the President of Global Gold Armenia Ltd., a Cayman Islands corporation, and acknowledged to me that he executed said instrument for the purposes and consideration therein expressed, and as the act of said corporation. 

 /s/ Stephen R. Field
--------------------------------
         Notary Public

	

STEPHEN R. FIELD 
Notary Public State of New York 
No. 31-6286310 
Qualified in New York Country 
Commission Expires June 30, 1998 

GLOBAL GOLD CORPORATION 

STOCK OPTION AGREEMENT 

(NON-QUALIFIED STOCK OPTION) 

THIS AGREEMENT made as of this 19th day of July, 1996 between GLOBAL GOLD CORPORATION, a Delaware corporation, with offices at 438 West 37th Street, Suite 5G, New York, New York 10018 (the "Company") and Drury J. Gallagher, residing at 107 Eakins Road, Manhasset, New York 11030 (the "Holder"). 

The Company has adopted the 1995 Stock Option Plan (the "Plan"). The Plan, as it may hereafter be amended and continued, is incorporated herein by reference and made part of this Agreement. 

The Committee, which is charged with the administration of the Plan pursuant to Section 3 thereof, has determined that it would be to the advantage and interest of the Company to grant the option provided for herein to the Holder as an inducement to remain in the service of the Company or one of its subsidiaries, and as an incentive for increased efforts during such service. 

NOW, THEREFORE, the parties agree as follows: 

1. Pursuant to the Plan, the Company with the approval of the Committee, hereby grants to the Holder as of the date hereof an option to purchase all or any part of 250,000 shares of Common Stock of the Company (the "Option") at a price per share of $1.00, and upon the terms and conditions set forth herein. 

2. The Option shall continue in force through July 18, 1999 (the "Expiration Date"), unless sooner terminated as provided herein and in the Plan. Subject to the provisions of the Plan, and except as otherwise provided in 
Section 2(c) hereof, the Option shall become fully exercisable on the date of the grant of the Option. 

(a) Except as provided hereinbelow, the Option may not be exercised unless the Holder is then an employee (including any officer who is an employee), consultant, employee of a consultant, advisor, agent or independent representative of the Company or any subsidiary of the Company or any combination thereof and unless the Holder has remained in the continuous employ or service thereof from the date of this grant. 

(b) The Option is designated as a non-qualified stock option pursuant to the Internal Revenue Code of 1986, as amended (the "Code") and the regulations promulgated thereunder. 

(c) Notwithstanding anything contained in this Agreement to the contrary: 

(i) after the exercise of the Option, no sale or transfer of the shares purchased thereunder may be effected without an effective registration statement 

1 

or an opinion of counsel for the Company that such registration is not required under the Securities Act of 1933, as amended, and any applicable state securities law; and 

(ii) (A) if, during the term of his Agreement, there shall occur a Change of Control of the Company (as defined in Section 
2(c)(iv)(B), the Holder may, at such time, in the exercise of the Holder's sole discretion, surrender the Option for cash equal to the excess of the fair market value of the Common Stock of the Company that he would have received upon the exercise of the previously unexercised shares of Common Stock of the Company subject to the Option over the exercise price thereof; and 

(B) for purposes hereof, the term "Change of Control" shall mean an event or series of events that would be required to be described as a change in control of the Corporation in a proxy or information statement distributed by the Corporation pursuant to 
Section 14 of the Securities Exchange Act of 1934 in response to Item 6(e) of Schedule 14A promulgated thereunder, or any substitute provision which may hereafter be promulgated thereunder or otherwise adopted. The determination of whether and when a Change in Control has occurred or is about to occur shall be made by the Board of Directors of the Company in office immediately prior to the occurrence of the event or series of events constituting such change in control. 

3. In the event that the employment or service of the Holder shall be terminated prior to the Expiration Date (otherwise than by reason of death or disability), the Option may, subject to the provisions of the Plan, be exercised (to the extent that the Holder was entitled to do so at the termination of his employment or service) at any time within three months after such termination, but not after the Expiration Date, provided, however, that if such termination shall have been for cause or voluntarily by the Holder and without the consent of the Company or any subsidiary corporation thereof, the Option and all rights of the Holder hereunder, to the extent not theretofore exercised, shall forthwith terminate immediately upon such termination. Nothing in this Agreement shall confer upon the Holder any right to continue in the employ or service of the Company or any consultant of the Company or affect the right of the Company or any subsidiary to terminate his employment or service at any time. 

4. If the Holder shall (a) die while he is employed by or serving the Company or a corporation which is a subsidiary thereof or within three months after the termination of such employment (other than termination for cause, or voluntarily on his part and without the consent of the Company or subsidiary corporation thereof) or (b) become permanently and totally disabled within the meaning of Section 22 (e)(3) of the Code while employed by or serving the Company or such subsidiary, then, notwithstanding anything contained in this Agreement to the contrary, such Option shall become fully exercisable upon the occurrence of any such event, and the Option may be exercised as set forth herein by the Holder or by the person or persons to 

2 

whom the Holder's rights under the Option pass by will or applicable law, or if no such person has such right, by his executors or administrators, at any time within one year after the date of death of the original Holder, or one year after the date of permanent or total disability, but in either case, not later than the Expiration Date. 

5. (a) The Holder may exercise the Option with respect to all or any part of the shares then purchasable hereunder by giving the Company written notice of such exercise in the form annexed as Exhibit A, as provided in Section 9 hereof. Such notice shall specify the number of shares as to which the Option is being exercised and shall be accompanied by payment in full in cash of an amount equal to the exercise price of such shares multiplied by the number of shares as to which the Option is being exercised; provided that, if permitted by the Board of Directors of the Company, the purchase price may be paid, in whole or in part, by surrender or delivery to the Company of securities of the Company having a fair market value on the date of the exercise equal to the portion of the purchase price being so paid, and in such event, the fair market value shall be determined pursuant to Section 5 of the Plan. 

(b) Prior to or concurrently with delivery by the Company to the Holder of a certificate representing such shares, the Holder shall, upon notification of the amount due, pay promptly any amount necessary to satisfy applicable Federal, state or local income tax requirements. In the event such amount is not paid promptly, the Company shall have the right to apply from the purchase price paid any taxes required by law to be withheld by the Company with respect to such payment and the number of shares to be issued by the Company will be reduced accordingly. 

6. Notwithstanding any other provision of the Plan, in the event of a change in the outstanding Common Stock of the Company by reason of a stock dividend, split-up, split-down, reverse split, recapitalization, merger, consolidation, combination or exchange of shares, spin-off, reorganization, liquidation or the like, then the aggregate number of shares and price per share subject to the Option shall be appropriately adjusted by the Board of Directors of the Company, whose determination shall be conclusive. 

7. No options granted hereunder shall be transferable other than by will or by the laws of descent and distribution. Options may be exercised, during the lifetime of the Holder, only by the Holder, or by his guardian or legal representative. In the event of any attempt by the Holder to transfer, assign, pledge, hypothecate or otherwise dispose of the Option or of any right hereunder, except as provided for herein, or in the event of the levy or any attachment, execution or similar process upon the rights or interest hereby conferred, the Company may terminate the Option by notice to the Holder, and it shall thereupon become null and void. 

8. Neither the Holder nor, in the event of his death, any person entitled to exercise his rights, shall have any of the rights of a stockholder with respect to the shares subject to the Option until share certificates have been issued and registered in the name of the Holder or his estate, as the case may be. 

3 

9. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or by facsimile or (b) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested, to the party entitled to receive the same, if to the Company, Global Gold Corporation, 438 West 37th Street, Suite 5G, New York, New York 10036, facsimile number (212) 967-3018, with a copy to Law Offices of Stephen R. Field, 750 Lexington Avenue, New York, New York 10022, facsimile number (212) 980-4525, and if to the Holder, c/o Global Gold Corporation, 438 West 37th Street, Suite 5G, New York, New York 10036, facsimile number (212) 967-3018. Any party may change its or his address by giving notice to the other party stating its or his new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. 

10. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. The parties agree that any action to enforce this Agreement shall be brought solely in any Federal or state court of competent jurisdiction in the State of New York in the City of New York, and each party hereby consents to personal jurisdiction in any action and waives any right to contest to such jurisdiction on the grounds of forum non-conveniens, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. Each party agrees that service of process upon it or him may be made in any manner permitted by the laws of the State of New York and hereby agrees that service will be deemed sufficient over it or him if service is made by registered or certified mail to the address set forth herein for the Holder and the Company. 

11. In the event that any question or controversy shall arise with respect to the nature, scope or extent of any one or more rights conferred by this Agreement, the determination by the Committee (as constituted at the time of such determination) of the rights of the Holder shall be conclusive, final and binding upon the Holder and upon any other person who shall assert any right pursuant to this Agreement. 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    -----------------------------
    Drury J. Gallagher, President

	

ACCEPTED AND AGREED: 

/s/ Drury J. Gallagher
- -----------------------
    Drury J. Gallagher

	

4 

EXHIBIT A 

FORM OF NOTICE OF EXERCISE 

TO: GLOBAL GOLD CORPORATION 
438 West 37th Street, Suite 5G 
New York, New York 10036 

The undersigned hereby exercises his option to purchase _______ shares of Common Stock of Global Gold Corporation (the "Company"), as provided in the Stock Option Agreement dated as of July 19, 1996 at $1.00 per share or a total of $ __________, and makes payment therefor as follows: 

(a) To the extent of $________ of the purchase price, the undersigned hereby surrenders to the Company certificates for shares of its Common Stock, which, valued at $_______ per share, the fair market value thereof, equals such portion of the purchase price. 

(b) To the extent of the balance of the purchase price, the undersigned has enclosed a certified or bank check payable to the order of the Company for $__________. A stock certificate or certificate for the shares shall be delivered in person or mailed to the undersigned at the address shown below. 

The undersigned hereby represents and warrants that it is his present intention to acquire and hold the aforesaid shares of Common Stock of the Company for his own account for investment, and not with a view to the distribution of any thereof, and agrees that he will make no sale thereof except in compliance with the applicable provisions of the Securities Act of 1933, as amended. 

Signature 

Print Name 

Street Address 

City, State and Zip Code 

Dated: 

5 

AMENDMENT TO GLOBAL GOLD CORPORATION STOCK OPTION AGREEMENT 

(NON-QUALIFIED OPTION) 

THIS AMENDMENT dated as of November 4, 1996 between Global Gold Corporation, a Delaware corporation (the "Company") and Drury J. Gallagher (the "Holder"). 

W I T N E S S E T H: 

WHEREAS, the Company granted to the Holder a non-qualified option to purchase 250,000 shares of the Company's common stock at an exercise price of $1.00 per share by an agreement dated as of July 19, 1996 (the "Option Agreement"); 

WHEREAS, the Company desires to amend the Option Agreement; 

NOW, THEREFORE, the parties agree as follows: 

1. Section 1 of the Option Agreement is hereby amended by substituting the exercise price of "$0.50 per share" in lieu of the exercise price of "$1.00 per share" now appearing therein. 

2. Except as otherwise set forth herein, all of the other terms and conditions of the Option Agreement shall remain in full force and effect. 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. 

Global Gold Corporation 

By: /s/ Drury J. Gallagher
    -----------------------------
    Drury J. Gallagher, President

    /s/ Drury J. Gallagher
    -----------------------------
    Drury J. Gallagher, President

	

GLOBAL GOLD CORPORATION 

STOCK OPTION AGREEMENT 

(NON-QUALIFIED STOCK OPTION) 

THIS AGREEMENT made as of this 19th day of July, 1996 between Global Gold Corporation, a Delaware corporation, with offices at 438 West 37th Street, Suite 5G, New York, New York 10018 (the "Company") and Robert A. Garrison, 44 Lords Highway East, Weston, Connecticut 06883 (the "Holder"). 

The Company has adopted the 1995 Stock Option Plan (the "Plan"). The Plan, as it may hereafter be amended and continued, is incorporated herein by reference and made part of this Agreement. 

The Committee, which is charged with the administration of the Plan pursuant to Section 3 thereof, has determined that it would be to the advantage and interest of the Company to grant the option provided for herein to the Holder as an inducement to remain in the service of the Company or one of its subsidiaries, and as an incentive for increased efforts during such service. 

NOW, THEREFORE, the parties agree as follows: 

1. Pursuant to the Plan, the Company with the approval of the Committee, hereby grants to the Holder as of the date hereof an option to purchase all or any part of 250,000 shares of Common Stock of the Company (the "Option") at a price per share of $1.00, and upon the terms and conditions set forth herein. 

2. The Option shall continue in force through July 18, 1999 (the "Expiration Date"), unless sooner terminated as provided herein and in the Plan. Subject to the provisions of the Plan, and except as otherwise provided in 
Section 2(c) hereof, the Option shall become fully exercisable on the date of the grant of the Option. 

(a) Except as provided hereinbelow, the Option may not be exercised unless the Holder is then an employee (including any officer who is an employee), consultant, employee of a consultant, advisor, agent or independent representative of the Company or any subsidiary of the Company or any combination thereof and unless the Holder has remained in the continuous employ or service thereof from the date of this grant. 

(b) The Option is designated as a non-qualified stock option pursuant to the Internal Revenue Code of 1986, as amended (the "Code") and the regulations promulgated thereunder. 

(c) Notwithstanding anything contained in this Agreement to the contrary: 

(i) after the exercise of the Option, no sale or transfer of the shares purchased thereunder may be effected without an effective registration statement 

1 

or an opinion of counsel for the Company that such registration is not required under the Securities Act of 1933, as amended, and any applicable state securities law; and 

(ii) (A) if, during the term of his Agreement, there shall occur a Change of Control of the Company (as defined in Section 
2(c)(iv)(B), the Holder may, at such time, in the exercise of the Holder's sole discretion, surrender the Option for cash equal to the excess of the fair market value of the Common Stock of the Company that he would have received upon the exercise of the previously unexercised shares of Common Stock of the Company subject to the Option over the exercise price thereof; and 

(B) for purposes hereof, the term "Change of Control" shall mean an event or series of events that would be required to be described as a change in control of the Corporation in a proxy or information statement distributed by the Corporation pursuant to 
Section 14 of the Securities Exchange Act of 1934 in response to Item 6(e) of Schedule 14A promulgated thereunder, or any substitute provision which may hereafter be promulgated thereunder or otherwise adopted. The determination of whether and when a Change in Control has occurred or is about to occur shall be made by the Board of Directors of the Company in office immediately prior to the occurrence of the event or series of events constituting such change in control. 

3. In the event that the employment or service of the Holder shall be terminated prior to the Expiration Date (otherwise than by reason of death or disability), the Option may, subject to the provisions of the Plan, be exercised (to the extent that the Holder was entitled to do so at the termination of his employment or service) at any time within three months after such termination, but not after the Expiration Date, provided, however, that if such termination shall have been for cause or voluntarily by the Holder and without the consent of the Company or any subsidiary corporation thereof, the Option and all rights of the Holder hereunder, to the extent not theretofore exercised, shall forthwith terminate immediately upon such termination. Nothing in this Agreement shall confer upon the Holder any right to continue in the employ or service of the Company or any consultant of the Company or affect the right of the Company or any subsidiary to terminate his employment or service at any time. 

4. If the Holder shall (a) die while he is employed by or serving the Company or a corporation which is a subsidiary thereof or within three months after the termination of such employment (other than termination for cause, or voluntarily on his part and without the consent of the Company or subsidiary corporation thereof) or (b) become permanently and totally disabled within the meaning of Section 22 (e)(3) of the Code while employed by or serving the Company or such subsidiary, then, notwithstanding anything contained in this Agreement to the contrary, such Option shall become fully exercisable upon the occurrence of any such event, and the Option may be exercised as set forth herein by the Holder or by the person or persons to 

2 

whom the Holder's rights under the Option pass by will or applicable law, or if no such person has such right, by his executors or administrators, at any time within one year after the date of death of the original Holder, or one year after the date of permanent or total disability, but in either case, not later than the Expiration Date. 

5. (a) The Holder may exercise the Option with respect to all or any part of the shares then purchasable hereunder by giving the Company written notice of such exercise in the form annexed as Exhibit A, as provided in Section 9 hereof. Such notice shall specify the number of shares as to which the Option is being exercised and shall be accompanied by payment in full in cash of an amount equal to the exercise price of such shares multiplied by the number of shares as to which the Option is being exercised; provided that, if permitted by the Board of Directors of the Company, the purchase price may be paid, in whole or in part, by surrender or delivery to the Company of securities of the Company having a fair market value on the date of the exercise equal to the portion of the purchase price being so paid, and in such event, the fair market value shall be determined pursuant to Section 5 of the Plan. 

(b) Prior to or concurrently with delivery by the Company to the Holder of a certificate representing such shares, the Holder shall, upon notification of the amount due, pay promptly any amount necessary to satisfy applicable Federal, state or local income tax requirements. In the event such amount is not paid promptly, the Company shall have the right to apply from the purchase price paid any taxes required by law to be withheld by the Company with respect to such payment and the number of shares to be issued by the Company will be reduced accordingly. 

6. Notwithstanding any other provision of the Plan, in the event of a change in the outstanding Common Stock of the Company by reason of a stock dividend, split-up, split-down, reverse split, recapitalization, merger, consolidation, combination or exchange of shares, spin-off, reorganization, liquidation or the like, then the aggregate number of shares and price per share subject to the Option shall be appropriately adjusted by the Board of Directors of the Company, whose determination shall be conclusive. 

7. No options granted hereunder shall be transferable other than by will or by the laws of descent and distribution. Options may be exercised, during the lifetime of the Holder, only by the Holder, or by his guardian or legal representative. In the event of any attempt by the Holder to transfer, assign, pledge, hypothecate or otherwise dispose of the Option or of any right hereunder, except as provided for herein, or in the event of the levy or any attachment, execution or similar process upon the rights or interest hereby conferred, the Company may terminate the Option by notice to the Holder, and it shall thereupon become null and void. 

8. Neither the Holder nor, in the event of his death, any person entitled to exercise his rights, shall have any of the rights of a stockholder with respect to the shares subject to the Option until share certificates have been issued and registered in the name of the Holder or his estate, as the case may be. 

3 

9. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or by facsimile or (b) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested, to the party entitled to receive the same, if to the Company, Global Gold Corporation, 438 West 37th Street, Suite 5G, New York, New York 10036, facsimile number (212) 967-3018, with a copy to Law Offices of Stephen R. Field, 750 Lexington Avenue, New York, New York 10022, facsimile number (212) 980-4525, and if to the Holder, c/o Global Gold Corporation, 438 West 37th Street, Suite 5G, New York, New York 10036, facsimile number (212) 967-3018. Any party may change its or his address by giving notice to the other party stating its or his new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. 

10. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. The parties agree that any action to enforce this Agreement shall be brought solely in any Federal or state court of competent jurisdiction in the State of New York in the City of New York, and each party hereby consents to personal jurisdiction in any action and waives any right to contest to such jurisdiction on the grounds of forum non-conveniens, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. Each party agrees that service of process upon it or him may be made in any manner permitted by the laws of the State of New York and hereby agrees that service will be deemed sufficient over it or him if service is made by registered or certified mail to the address set forth herein for the Holder and the Company. 

11. In the event that any question or controversy shall arise with respect to the nature, scope or extent of any one or more rights conferred by this Agreement, the determination by the Committee (as constituted at the time of such determination) of the rights of the Holder shall be conclusive, final and binding upon the Holder and upon any other person who shall assert any right pursuant to this Agreement. 

GLOBAL GOLD CORPORATION 

By:  /s/ Drury J. Gallagher
     -----------------------------------
        Drury J. Gallagher, President

	

ACCEPTED AND AGREED: 

/s/ Robert A. Garrison
- -------------------------------
      Robert A. Garrison

	

4 

EXHIBIT A 

FORM OF NOTICE OF EXERCISE 

TO: GLOBAL GOLD CORPORATION 
438 West 37th Street, Suite 5G 
New York, New York 10036 

The undersigned hereby exercises his option to purchase _______ shares of Common Stock of Global Gold Corporation (the "Company"), as provided in the Stock Option Agreement dated as of July 19, 1996 at $1.00 per share or a total of $ __________, and makes payment therefor as follows: 

(a) To the extent of $________ of the purchase price, the undersigned hereby surrenders to the Company certificates for shares of its Common Stock, which, valued at $_______ per share, the fair market value thereof, equals such portion of the purchase price. 

(b) To the extent of the balance of the purchase price, the undersigned has enclosed a certified or bank check payable to the order of the Company for $__________. A stock certificate or certificate for the shares shall be delivered in person or mailed to the undersigned at the address shown below. 

The undersigned hereby represents and warrants that it is his present intention to acquire and hold the aforesaid shares of Common Stock of the Company for his own account for investment, and not with a view to the distribution of any thereof, and agrees that he will make no sale thereof except in compliance with the applicable provisions of the Securities Act of 1933, as amended. 

Signature 

Print Name 

Street Address 

City, State and Zip Code 

Dated: 

5 

AMENDMENT TO GLOBAL GOLD CORPORATION STOCK OPTION AGREEMENT 

(NON-QUALIFIED OPTION) 

THIS AMENDMENT dated as of November 4, 1996 between Global Gold Corporation, a Delaware corporation (the "Company") and Robert A. Garrison (the "Holder") 

W I T N E S S E T H: 

WHEREAS, the Company granted to the Holder a non-qualified option to purchase 250,000 shares of the Company's common stock at an exercise price of $1.00 per share by an agreement dated as of July 19, 1996 (the "Option Agreement"); 

WHEREAS, the Company desires to amend the Option Agreement; 

NOW, THEREFORE, the parties agree as follows: 

1. Section 1 of the Option Agreement is hereby amended by substituting the exercise price of "$0.50 per share" in lieu of the exercise price of "$1.00 per share" now appearing therein. 

2. Except as otherwise set forth herein, all of the other terms and conditions of the Option Agreement shall remain in full force and effect. 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. 

Global Gold Corporation 

By: /s/ Drury J. Gallagher
    -----------------------------
    Drury J. Gallagher, President

    /s/ Robert A. Garrison
    -----------------------------
    Robert A. Garrison

	

GLOBAL GOLD CORPORATION 
438 West 37th Street, Suite 5G 
New York, NY 10018 

December 4, 1996 

VIA TELECOPY 
Eyre Resources N.L. 
Crest House 
7 Havelock Street 
West Perth WA 6005 Australia 
Attn: Messrs. Kevin Parry, Jaap Poll, Ian Darragh, P-B Trust PB Trust: Attn: Cameron Parry, Jeffrey Beaumont and Kevin Parry 

Gentlemen: 

As a follow up to our recent discussions and an implementation of our further understandings, it is absolutely crucial that I have you confirm your agreement with respect to the points described below. The transaction we are currently negotiating requires that these steps must be taken and, if they are not, we believe no transaction will eventuate and we will all collectively be left with a valueless investment. 

The points are as follows: 

1. The warrants to purchase 2,400,000 shares of Global common stock held by Eyre and the warrants to purchase 1.4 million shares of Global common stock held by the P-B Trust must be cancelled. In accordance with my recent discussions with you, Kevin, and in accordance with your fax of last week, since Homestake did not come in to do a deal last week, we regard this as reflecting our agreement. 

2. The overriding royalty of 1.5% on the Armenian projects must be cancelled. 

3. In light of Kevin's regulatory problems in Australia the full extent of which was not previously disclosed, we must request that you agree not to play any part in the control of the Board of Directors of the corporation, and hence, Eyre must surrender the two board seats [although one representative of Eyre can be invited to attend board meetings or be an advisor to the Board.] In our fund raising efforts, this point has been repeatedly thrown in our faces and has been a total hindrance to a successful consummation of a 
Page Two 
Eyre/PB Trust 
December 4, 1996 

transaction. Also I enclose a copy of an article that shows that the Alberta Securities Commission in a similar situation required that the ownership of the shares of the party in question be returned to the company, which reflects the severity of this problem and the way others view it. 

4. The unpaid amount on the notes of approximately $146,000 must be cancelled as well. 

We again request your written agreement of this restructured arrangement by 5:00 p.m. tomorrow by your signing below and returning your signed copy to us with the original being sent by overnight mail. 

For all of the reasons previously discussed, there can be no delay or sitting back since everything else will be lost. 

Very truly yours, 

/s/ Drury J. Gallagher

Drury J. Gallagher
President

	

AGREED: 

Eyre Resources N.L. 

By:   /s/  Jaap Poll
     --------------------------------
           Jaap Poll, Director

By:   /s/  Ian Darragh
     --------------------------------
           Ian Darragh, Director

	

PB Trust 

By:   /s/  Cameron Parry
     --------------------------------
           Cameron Parry

By:   /s/  Jeffrey Beaumont
     --------------------------------
           Jeffrey Beaumont

By:   /s/  Kevin Parry
     --------------------------------
           Kevin Parry

	

PAGE 1 

State of Delaware 

Office of the Secretary of State 

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "GLOBAL GOLD CORPORATION", FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF DECEMBER, A.D., 1996, AT 9 O'CLOCK A.M. 

A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE 
COUNTY RECORDER OF DEEDS FOR RECORDING. 

[SEAL] 

                                     [SEAL]    /s/ Edward J. Freel
                                             -----------------------------------
                                             Edward J. Freel, Secretary of State

0887407 6100                                 AUTHENTICATION:  8271477

971000766                                              DATE:  01-04-97

	

CERTIFICATE OF AMENDMENT 

OF 

CERTIFICATE OF INCORPORATION 

OF 

GLOBAL GOLD CORPORATION 

Global Gold Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY: 

FIRST: The name of the corporation is Global Gold Corporation. 

SECOND: Article Fourth of the Certificate of Incorporation of the Corporation is hereby amended to read as follows: 

"FOURTH: The total number of shares of stock which the Corporation is authorized to issue is one hundred million (100,000,000) shares of common stock, par value $.001 per share. Each of the Corporation's issued and outstanding shares of Common Stock, par value $.001 per share as of the date of this Certificate of Amendment, shall be converted and reclassified into one-tenth of one share of Common Stock, par value $.001 per share; no change shall be made to the par value of the Corporation's Common Stock; and fractional shares shall be rounded up to the nearest whole share." 

THIRD: The above amendment to the Certificate of Incorporation of the Corporation was approved by the stockholders owning an absolute majority of the issued and outstanding shares of common stock of the Corporation by written consent on December 19, 1996 and by all members of the Board of Directors pursuant to a Unanimous Written Consent adopted on December 19, 1996. 

FOURTH: Such amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. 

FIFTH: The capital of the Corporation shall not be reduced under or by reason of such amendment. 

IN WITNESS WHEREOF, the undersigned caused the corporate seal to be hereunto affixed and this certificate to be signed by its President and Secretary as of the 19th day of December, 1996. 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    -----------------------------
    Drury J. Gallagher, President

By: /s/ Robert A. Garrison
    -----------------------------
    Robert A. Garrison, Secretary

	

STATE OF NEW YORK       )
                        ) ss.:
COUNTY OF NEW YORK      )

On the ____ day of November, 1995, before me personally came DRURY J. GALLAGHER, known to me to be the person whose name is subscribed to the foregoing instrument, and known to me to be the President of Global Gold Corporation, a Delaware corporation, and acknowledged to me that he executed said instrument for the purposes therein expressed, and as the act of said corporation. 

Notary Public 

STATE OF NEW YORK       )
                        ) ss.:
COUNTY OF NEW YORK      )

On the _____ day of November, 1995, before me personally came Robert 
A. Garrison known to me to be the person whose name is subscribed to the foregoing instrument, and known to me to be the Secretary of Global Gold Corporation, a Delaware corporation, and acknowledged to me that he executed said instrument for the purposes and consideration therein expressed, and as the act of said corporation. 

Notary Public 

UNANIMOUS WRITTEN CONSENT 

OF 

THE BOARD OF DIRECTORS 

OF 

GLOBAL GOLD CORPORATION 

The undersigned, being all of the directors of GLOBAL GOLD CORPORATION, a Delaware corporation, (the "Corporation"), hereby consent, pursuant to Section 
141(f) of the Delaware General Corporation Law, to the adoption of the following resolutions in lieu of meeting: 

RESOLVED, that the issuance of a certificate to Drury J. Gallagher for 1,000,000 shares of the Corporation's common stock in consideration of the cancellation by Mr. Gallagher of the debt owed to him by the Corporation of $100,000 representing the compensation due him for the period from July 1, 1995 through June 30, 1996 and cancellation of all of his outstanding stock options and stock appreciation rights granted to him by the Corporation (other than the warrants acquired by him pursuant to the offer made by the Corporation under the Confidential Private Placement Memorandum dated May 17, 1995, as amended), be, and it is hereby, approved, ratified and confirmed; and be it further 

RESOLVED, that the issuance of a certificate to Robert A. Garrison for 1,000,000 shares of the Corporation's common stock in consideration of the cancellation by Mr. Garrison of the debt owed to him by the Corporation of $100,000 representing the compensation due him for the period from July 1, 1995 through June 30, 1996 and cancellation of all of his outstanding stock option and stock appreciation rights granted to him by the Corporation be, and it is hereby, approved, ratified and confirmed; and be it further 

RESOLVED, that the appropriate officers of the Corporation be, and they hereby are, authorized and directed to take any and all action and to execute and deliver any and all instruments required in connection with the transactions contemplated by the foregoing resolutions. 

IN WITNESS WHEREOF, the undersigned have executed this instrument, effective as of the 3rd day of January, 1997. 

/s/ Drury J. Gallagher
-----------------------------
    Drury J. Gallagher

/s/ Robert A. Garrison
-----------------------------
    Robert A. Garrison

	

FIRST DYNASTY MINES LTD. 
No. 1 Temasek Avenue 
37th Floor, Millenia Tower 
Singapore 039192 

January 27, 1997 

Global Gold Corporation 
Global Gold Armenia Limited 
438 West 37th Street 
New York, New York 
10018 

Dear Sirs: 

This letter is intended to set out the material terms upon which First Dynasty Mines Ltd. ("FDM") proposes to acquire an interest in Global Gold Armenia Ltd. ("Global Armenia"). 

We confirm our preliminary agreement as follows: 

1. Initial Commitments 

Subject to the terms and conditions set forth herein and in the Term Sheet attached as a Schedule hereto, FDM will make the Initial Commitments set forth in the Term Sheet in consideration for the issuance by Global Armenia to FDM of a convertible grid promissory note, guaranteed by Global Gold Corporation ("Global Gold"), and secured by a pledge of the outstanding shares of Global Armenia. Pending satisfactory completion of FDM's due diligence, unless otherwise agreed by FDM, FDM shall not be obligated to make any investments or commitments in excess of the Initial Commitments. 

2. Due Diligence 

As of and from the date hereof until March 30, 1997 or such other date as may be mutually agreed (the "Due Diligence Period"), FDM will be entitled to conduct thorough evaluations and investigations respecting Global Gold and Global Armenia (collectively "Global") and their respective ownership, assets, liabilities (actual and contingent) including, without limitation, Global Armenia's interest in mining projects in Armenia and all related books and records, financial statements, agreements, licenses, permits, concessions and authorizations, of every nature and other documentation, if any, relating to each or all of them. For this purpose, Global will grant access to its duly authorized directors, officers, employees, agents and advisors in a timely manner to all documents (and copies thereof), information and personnel relevant to such investigations and will cooperate fully and in a timely manner with all reasonable requests by FDM, its directors, officers, employees, agents and advisors in 

-2- 

respect of such evaluations and investigations. For greater certainty, at the reasonable request of FDM, its duly authorized directors, officers, employees, agents or advisors, Global will consent in writing in a timely manner to all inquiries and searches made of relevant governmental authorities which FDM, acting reasonably, deems desirable in the context of this transaction. 

3. Representations and Warranties of Global Gold 

Each of Global Gold Armenia, jointly and severally, represents and warrants to FDM as follows (and recognize that FDM is relying upon these representations and warranties in making the Initial Commitments): 

(a) Global Gold is a corporation duly incorporated under the laws of Delaware with full corporate power and capacity to own its assets and conduct its business as presently conducted; 

(b) Global Armenia is a corporation duly incorporated under the laws of the Cayman Islands with full corporate power and capacity to own its assets and conduct its business as presently conducted; 

(c) Each of Global Gold and Global Armenia has the corporate power and authority to enter into this Agreement and to perform its obligations hereunder in accordance with the terms hereof; 

(d) neither the execution and delivery of this Agreement nor the fulfillment of the terms hereof conflicts with or will conflict with or result in a breach of the constating documents of Global Gold or Global Armenia; 

(e) Global Gold owns, directly, all of the issued and outstanding shares of the Global Armenia; 

(f) no person has any right, present or future, contingent or absolute, to acquire any shares or other securities of Global Armenia; 

(g) there is no litigation or regulatory investigation, actual or threatened, in respect of Global or its assets; 

(h) all necessary permits and licences under the Joint Venture Agreement have been received and AGRC owns all necessary title to the Tailings project thereunder. The terms of the Joint Venture Agreement are being complied with and Global has received no notice of non-compliance thereunder; 

-3- 

(i) All of Global Gold's assets in respect of the Joint Venture Agreement in respect of the Armenian Gold Recovery and related assets (the "Armenian Project") have been validly transferred to Global Armenia; 

(j) Global has made full disclosure to FDM of the assets and liabilities of Global Armenia pursuant to the Global Armenia balance sheet provided by accountants prior to the date hereof and there are no contingent liabilities or material contracts relating to Global Armenia that have not been disclosed in writing to FDM. Except for accounts payable in the amount of approximately $1,350,000 incurred by Global Gold, there are no outstanding amounts payable by Global Gold or Global Armenia. Global Armenia has no actual or contingent liabilities in favour of Eyre Resources N.L. nor any other party having an original interest in Global Armenia or the Armenian Project, except for the engagement letter dated May 5, 1995 from Patterson, Belknap, Webb & Tyler LLP; 

(k) each of Global Gold and Global Armenia is in material compliance with applicable corporate, securities and other laws and regulations and no proceedings have been taken or authorized by any person with respect to bankruptcy, insolvency, liquidation, dissolution or winding up of Global Gold or Global Armenia; 

(l) no exemption, consent, filing or approval is required from any third party by, or with respect to, the execution and delivery of this agreement by Global Gold or Global Armenia; and 

(m) only one share in the capital of Global Armenia has been issued. 

FDM acknowledges that the foregoing representations and warranties in (c), (d), 
(h), and (l) are subject to: (i) consent of applicable authorities to the pledging of Global Armenia shares to FDM and conversion of promissory notes by FDM; (ii) satisfaction of the bond requirements under the Decree dated June 29, 1996 and the $5 million investment requirement under the Joint Venture Agreement; such matters being the subject of satisfaction of the escrow conditions set forth in the Term Sheet. 

4. Representations and Warranties of FDM 

FDM hereby represents and warrants to Global Gold as follows: 

(a) FDM is a corporation duly incorporated under the laws of the Yukon Territory with full corporate power and capacity to own its assets and conduct its business as presently conducted; 

-4- 

(b) FDM has the corporate power and authority to enter into this Agreement and to perform its obligations hereunder in accordance with the terms hereof; 

(c) neither the execution and delivery of this Agreement nor the fulfilment of the terms hereof conflicts with or will conflict with or result in a breach of the constating documents of FDM; and 

(d) FDM is in material compliance with applicable corporate, securities and other laws and regulations and no proceedings have been taken or authorized by any person with respect to bankruptcy, insolvency, liquidation, dissolution or winding up of FDM. 

5. Covenants of Global 

Global Gold and Global Gold Armenia jointly covenant and agree with FDM as follows: 

(a) unless, prior to entering into the Definitive Agreement, FDM notifies Global in writing that it does not intend to proceed with further investments in accordance with the terms hereof, Global will not perform any act or enter into any transaction or negotiation which would interfere or be inconsistent with the completion of the Term Sheet transactions; 

(b) Global will promptly notify FDM upon becoming aware that any of the representations and warranties of Global contained herein are no longer true and correct in any respect; 

(c) Global will promptly obtain the consents of the appropriate Armenian authorities and parties to the Joint Venture Agreement, as required, to the secured interests of FDM hereunder, the proposed equity ownership of FDM in Global Armenia, and all other matters in connection with the Term Sheet transactions, under the terms of the Joint Venture Agreement or otherwise; 

(d) Global shall not enter into any material commitment in respect of the Armenian project without the consent of FDM, which shall not be unreasonably withheld or delayed; and 

(e) During the Due Diligence period, Global Armenia shall not alter its share capital nor issue any additional shares or options on shares without the consent of FDM except as set forth in the Escrow conditions in the Term Sheet. 

-5- 
6. Conditions 

In addition to completion of due diligence by the parties hereto, completion of the Term Sheet transactions (other than the Initial Commitments upon satisfaction of the Escrow Conditions) will be subject to the mutual conditions that: 

(a) there is not then in force any order or decree of a court of competent jurisdiction or any governmental authority restraining, interfering with or enjoining the consummation of the transactions contemplated in this Agreement; 

(b) Global and FDM will have obtained all requisite governmental, regulatory and any other required third party consents and approvals necessary to complete the Term Sheet transactions (including, without limitation, all necessary approvals by The Toronto Stock Exchange by FDM and all necessary approvals of the Armenian authorities for the Term Sheet transactions); and 

(c) Global and FDM will have entered into the Definitive Agreement, on substantially the terms described in the Term Sheet. 

7. Definitive Agreement 

FDM will enter into the Definitive Agreement as soon as reasonably practicable after the end of the Due Diligence Period (and not later than April 15, 1997 unless otherwise agreed by the parties) and the Definitive Agreement will incorporate the terms and conditions of this Agreement, together with such representations and warranties and additional covenants, terms and conditions respecting the Term Sheet transactions and all related matters as are usual and customary in transactions of a similar size and character. The Definitive Agreement will, when executed and delivered, replace this Agreement and the Term Sheet. 

8. Convertible Notes 

Pending conversion to equity of convertible notes issued to FDM in accordance with the Term Sheet, investments made by FDM hereunder (and all further amounts advanced by FDM in respect of the Term Sheet transactions) shall be evidenced by grid promissory notes of Global Armenia, guaranteed by Global Gold, in substantially the form attached hereto as Schedule "A" (the "Notes"). Advances under the Notes will be used for the purposes set forth in the Term Sheet, and shall be convertible into stock of Global Armenia and have the other terms and conditions set forth in the Term Sheet. 

-6- 
9. General Provisions 

FDM and Global hereby agree that: 

(a) time is and will be of the essence of this Agreement; 

(b) each of the parties hereto will execute and deliver all such further documents and instruments, give all such further assurances and do all such acts and things as may reasonably be required to give full effect to the terms of this Agreement; 

(c) this Agreement will enure to the benefit of, and be binding upon, the parties and their respective successors and permitted assigns; 

(d) no party may assign any of its right, title, interest or obligation under this Agreement without the prior written consent of the other party hereto, such consent not to be unreasonably withheld; 

(e) this Agreement may be executed in counterparts and all such counterparts together will constitute a single fully executed instrument and any facsimile signature on any such counterpart will, in the absence of evidence to the contrary, constitute an original signature. 

(f) all amounts in this Agreement and the Term Sheet are in United States dollars; and 

(g) governing law for the definitive contract will be New York. 

If the foregoing accurately reflects your understanding of our agreement, please so indicate by signing below and returning a copy of this letter to FDM. 

Yours truly, 

FIRST DYNASTY MINES LTD. 

Per: 

     /s/ [ILLEGIBLE]
     --------------------------

Agreed this 27th day of January, 1997.

	

-7- 
GLOBAL GOLD CORPORATION 

Per: /s/ Drury J. Gallahger
     --------------------------
     Authorized Signatory

	

Agreed this 27th day of January, 1997. 

GLOBAL GOLD ARMENIA LIMITED 

Per: /s/ Drury J. Gallahger
     --------------------------
     Authorized Signatory

	

SCHEDULE 

TERM SHEET 
(all amounts U.S. $) 

Parties: First Dynasty Mines Ltd. ("FDM"), Global Gold Corporation ("Global Gold") and Global Gold Armenia Limited ("Global Armenia). 

Initial Commitments: 

FDM to loan $675,000 to Global Armenia to repay one half of the outstanding accounts payable incurred by Global Gold and Global Armenia. Accounts payable to be satisfied in the following priority: 1. direct Armenia project costs (technical reports); 2. legal fees; and 3. other. 

AGRC to sign $640,000 Tailings Dam Construction Contract with Armhydro: 1. Upon signing FDM to fund $5,000 and 2. on or before February 10, 1997, FDM to fund $96,000; and 3. thereafter FDM to fund the balance as due. 

FDM to guarantee or co-sign for up to $3.5 million equipment purchase contract and up to $1 million engineering procurement and construction management contract between AGRC and Kilborn SNC Lavelin Inc. (the "Kilborn Contract") and FDM to advance funding for expenditures thereunder as jointly agreed by FDM and Global from time to time, subject to cancellation provisions agreed to by FDM. 

Initial Documents to be Delivered by Global: 

Convertible grid promissory note evidencing Initial Commitments secured by a pledge of all of the outstanding shares of Global Armenia. 

Letters from Van Krikorian, counsel to Global, confirming status of Armenian joint venture as reasonably requested by FDM or its counsel. 

Legal opinions of Cayman and Armenian counsel as to legal status of Global Armenia and the joint venture and its assets, and as to the registration and enforceability of the security, as reasonably requested to FDM or its counsel. 

Escrow letter regarding payment of initial $675,000. 

-2- 
Escrow Arrangements 

Initial Commitments of $675,000 to be advanced by FDM to the law offices of Patterson, Belknap, Webb & Tyler by January 27, 1997 to be held in escrow pending satisfaction of escrow conditions. 

Tailings Dam Construction Contract and Kilborn Contract to be executed and held in escrow pending satisfactory of Escrow Conditions and initial funds to be available from FDM ($5,000 upon signing and $96,000 on February 10, 1997)-to be wire transferred to AGRC account in Yerevan. 

Convertible note and pledge of Global Armenia share to be executed and held in escrow pending satisfaction of escrow conditions. 

Escrow Conditions: Confirmation from Armenian joint venture partners and/or applicable Armenian authorities in form satisfactory to FDM and Global that (1) the Initial Commitments together funds already advanced by Global satisfy the $5 million investment criteria under the Joint Venture Agreement, Government Decree and L.I.M. guarantee and that AGRC has title to the Tailings project; (2) Consent is given for FDM to invest in Global Armenia as contemplated by this Agreement and the Term Sheet (initial pledge, convertibility into equity, additional investments); (3) Global Armenia to have issued 99,999 additional shares to Global Gold. Release of escrow to be effected upon faxed written directions to release from FDM and Global Gold. 

Further Terms to be Incorporated into Definitive Agreement: 

Upon advancing an aggregate of $6,480,000, in respect of Armenian project expenses consisting of: 

1. Initial $675,000 loan to fund accounts receivables repayment; 
2. $640,000 advanced under the Tailings Dam Construction Contract; 
3. $4,500,000 advanced under the Kilborn Contract; and 
4. $675,000 loan to Global Armenia (balance of outstanding payables) on March 31, 1997 (if sufficient outstanding FDM warrants are exercised at first expiry date of March 31, 1997) or 90 days after signing hereof; 

FDM to be entitled to convert its promissory note(s) in the amount of $6,480,000 into shares of Global Armenia representing 25% of the outstanding stock of Global Armenia. FDM to be entitled to convert such notes at any time prior to completion of the foregoing investments, for a pro-rated percentage of Global Armenia's equity. 

-3- 

Convertible notes, guaranteed by Global Gold, evidencing all advances will be secured, at the option of FDM, by one or more of: (1) a pledge of Global Armenia stock; (2) a security interest in the Joint Venture Agreement; (3) a security interest in tailings assets under the Joint Venture Agreement. FDM may request security in Global Gold Shares (up to a maximum 25% Global Gold stock fully diluted) if the foregoing security is insufficient. Global to obtain any necessary consents or approvals required under the Joint Venture Agreement to faciliate this security, and to provide FDM with evidence of registration and opinions as to enforceability as reasonably requested by FDM. 

If FDM does not elect to proceed with additional investments or does not elect to convert its notes to equity, FDM to be entitled to be repaid over four years in equal quarterly principal installments of 1/12 principal, commencing on March 31, 1998 with outstanding balance from time to time bearing interest at 10%, calculated and paid quarterly from January 1, 1998. 

FDM will be entitled to increase its interest in Global Armenia to 51% if FDM makes payments totalling $10 million (inclusive of the $5,480,000) and the tailings project has become operational in respect of the Tailings project. Additional funds advanced to be evidenced on grid promissory notes and secured by the security substantially similar to the aforesaid promissory note and security. 

FDM will be entitled to increase its interest in Global Armenia to 80% if joint venture arrangement in respect of Zod mine under joint venture agreement are not concluded by the time the tailings project has reached production or on January 1, 1998, whichever is later, provided that FDM has advanced $10 million in respect of the Tailings project which amount has not been repaid. 

FDM to be entitled to increase its interest in Global Armenia by 1% for each $500,000 invested for expenditures advanced in respect of development of Zod and Megrahdzor mines (excluding $10 million tailings expenditures) up to a maximum 80% of Global Armenia. 

Upon obtaining 80% of Global Armenia, FDM will be entitled to acquire the remaining 20% of Global Armenia by issuance of $10 million value of FDM common shares based on the market price of FDM shares at deemed price of $2.50; $10 million value of FDM shares to be increased proportionate to extent the mineable reserves at Zod and Megrahdzar mines (established after a drilling at depth at a particular time as agreed) exceed 5 million ounces (such that $10 million value is based on a mineable reserve of 5 million ounces; $12 million value is based on 6 

-4- 

million ounces and so on). Formulation subject to the Toronto Stock Exchange approval. 

Definitive agreement to contain an expanded schedule of representations and warranties of Global Gold and Global Armenia as to legal and financial status of Global Armenia and the joint venture and other appropriate representations reasonably requested by counsel to FDM. 

Shareholders agreement (to be entered into to govern ongoing affairs of Global Armenia at time of definitive document) to provide, among other things, that (1) from the date of the release of escrow of the Initial Commitments, FDM to be entitled to appoint 2 of 5 directors of Global Armenia, increasing to 3 of 5 if FDM acquires 51% to 80% of Global Armenia and thereafter increasing proportionate to ownership; (2) Global Armenia shall appoint one FDM representative on the AGRC board initially, increasing to two of three appointed by Global Armenia if FDM acquires ownership of 51% of Global Armenia; and (3) providing for certain matters requiring joint approval of the shareholders of Global Armenia subject to Global Gold's entitlement to one representative on the AGRC board for so long as it holds at least 20% of Global Armenia shares. 

Appropriate employment arrangements between Global Armenia and Messrs. 
Gallagher and Garrison to be agreed. 

FDM to consider feasibility of holding its investment in a United States subsidiary. 

DATED February 3, 1997 

DEBENTURE 

made between 

GLOBAL GOLD ARMENIA LIMITED 
(the "Company") 

and 

FIRST DYNASTY MINES LTD. 
(the "Lender") 

W.S. Walker & Company 
Caledonian House 
P.O. Box 265 
George Town 
Grand Cayman 

THIS DEBENTURE is made the 3rd day of February 1997 

BETWEEN: 

(1) GLOBAL GOLD ARMENIA LIMITED, a company incorporated and existing under the laws of the Cayman Islands (the "Company") which expression shall include the permitted successors in title transferees and assigns of the Company 

OF THE ONE PART 

AND: 

(2) FIRST DYNASTY MINES LTD., a corporation having its registered office at Temasek Avenue, #37-02 Millenia Tower, Singapore 039 192 (the "Lender") which expression shall include the successors in title transferees and assigns of the Lender 

OF THE OTHER PART 

W H E R E A S: 

The Lender has agreed to grant a loan to the Company of the amount of US$5,480,000 upon the terms and conditions hereinafter appearing. 

NOW THIS DEBENTURE WITNESSETH as follows: 

1.    (a)   Words importing the masculine gender shall include the feminine and
            neuter genders and vice versa and words importing the singular
            number only shall include the plural number and vice versa and words
            importing persons and all reference to persons shall include
            corporations and firms; and

      (b)   "the Principal Sum" shall mean the sum of US$5,480,000 or, if less,
            the unpaid balance of the amount paid by Lender pursuant to that
            certain letter agreement, dated 27th January, 1997, among the
            Company, Lender and Global Gold Corporation. Each advance and
            payment under this Debenture shall be noted on the Advance Grid
            attached hereto as Exhibit A and shall be binding upon the parties,
            absent fraud or mistake.

2. In consideration of the Lender having agreed to grant the loan of the Principal Sum as aforesaid, the Company hereby covenants to repay on March 31, 1998, June 30, 1998, September 30, 1998 

-1- 

and December 31 thereafter in 12 equal installments (each a "Payment") to the Lender the Principal Sum outstanding on 31st March, 1998 and interest thereon (or on the outstanding balance thereof) at the rate of 10 per centum simple interest per annum calculated on a 360 day year ("the applicable interest rate") (as well after as before any judgement). 

3.    (a)   At any time (i) upon and following an event described in Clause 4
            below or (ii) following the Maturity Date but prior to repayment in
            full of the Principal Sum the Lender shall be entitled by notice in
            writing addressed to the Company to require the Company to allot and
            issue to him in exchange for and in satisfaction of the Principal
            Sum (or such part thereof as the notice may specify) fully paid
            ordinary shares of the Company at the rate ("the Conversion Rate")
            of one ordinary share of a nominal value of US$0.01 in exchange for
            every US$164.40 of the Principal Sum (or such part thereof as is
            being converted) and the Company shall forthwith issue to the Lender
            so many shares as are properly specified in the said notice, and
            shall pay to the Lender a proportionate part of the current interest
            due upon the Principal Sum calculated up to the date of such issue.
            The forgoint Conversion Rate assumes 100,000 ordinary shares of the
            Company issued and outstanding. The sole outstanding ordinary share
            of the Company is currently held by the Company's parent, Global
            Gold Corporation, a Delaware corporation ("Global"). The Company
            will promptly issue 99,999 ordinary shares to Global in order to
            coincide with the aforesaid Conversion Rate and such issue shall not
            give rise to any adjustment in the Conversion Rate.

      (b)   The shares issued on conversion shall carry the right to participate
            in full in all dividends and (unless adjustment has been made
            pursuant to sub-paragraph (c) hereof) other distributions declared
            after the date of conversion; in all other respects such share
            capital will rank pari passu and form one class with the ordinary
            shares of the Company in issue on the date of conversion.

      (c)   Upon any sub-division or consolidation of ordinary shares, the
            Conversion Rate shall be adjusted correspondingly and notice of such
            adjustment shall be given to the Lender by the Company.

      (d)   If any offer or invitation to subscribe for or purchase ordinary
            shares is made to the shareholders of the Company, the Company shall
            at the same time make, or so far as it is able, procure to be made,
            the same offer or invitation to the Lender as if immediately before
            the record date of such offer or invitation the Principal Sum had
            been converted into ordinary shares at the Conversion Rate then
            applicable.

      (e)   The Company hereby covenants with the Lender that at all times until
            the Principal Sum is repaid in full it will maintain sufficient
            ordinary shares in its authorised but unissued share capital to
            allow it to immediately give effect to the conversion rights hereby
            conferred.

4. Notwithstanding any other provisions of this Debenture any sums owing hereunder shall become payable immediately and all unpaid interest and any other monies owing hereunder shall become immediately owing and payable as follows:- 

-2- 

(a) If the Company shall default in the payment of any monies due and owing hereunder; or 

(b) If any representation or warranty made in or in connection with this Debenture or the execution and delivery thereof or in any document or certificate furnished pursuant hereto shall prove at any time to have been incorrect in any material respect; or 

(c) If the Company shall default in the performance or observance of any agreement covenant stipulation or obligation contained or implied in this Debenture whether negative or otherwise (other than obligations in respect of the payment of any monies hereunder); or 

(d) If by or under the authority of any Government the management of the Company or its authority to conduct its business is curtailed to the point of making it effectively inoperative by any seizure or intervention or proceedings of any nature; or 

(e) If a distress or execution shall be levied or enforced upon or against any of the Chattels or property of the Company and shall not be satisfied within seven (7) days of the levy or enforcement of such distress or execution; or 

(f) If the Company makes or attempts to make any alteration to the provisions of its Memorandum or Articles of Association which might in the opinion of the Lender affect its interests hereunder or shall fail or neglect to comply with any or all of the provisions of the Companies Law Cap. 22 or any statutory modification or re-enactment thereof or any other of the laws of the Cayman Islands in so far as the same way relate to it; or 

(g) If an order is made or an effective resolution is passed for the winding up of the Company except for the purpose of a reconstruction or amalgamation the terms of which have been previously approved in writing by the Lender; or 

(h) If an encumbrancer takes possession or a receiver is appointed of any part of the assets of the Company; or 

(i) If the Company ceases or threatens to cease to carry on its business or substantially the whole of its business; or 

(j) If the Company shall have sold or agreed to sell the whole of its undertaking or any substantial part thereof otherwise than with the previous written convent of the Lender; or 

(k) If the Company is unable to pay its debts within the meaning of 
Section 92 of the Companies Law Cap. 22 or any statutory modification or re-enactment thereof; or 

5. The Company hereby represents and warrants to the Lender that it is a corporation duly organised, validly existing and in good standing under the Laws of the Cayman Islands and that it is duly qualified to do business wherever necessary to carry on its present operations and that the making and performance of this Debenture is within its powers having been duly authorised 

-3- 

by all necessary governmental and corporate approvals and does not contravene any law or any contractual restriction binding on the Company and that this Debenture is a legal valid and binding obligation of the Company enforceable against the Company in accordance with its terms and that there are no pending or threatened actions or proceedings before any court or administrative agency which may materially adversely affect the Company or its financial conditions and operations. 

6. the Company hereby further covenants with the Lender at all times during the continuance of this Debenture as follows: 

(a) At all times during the continuance of this Debenture to keep up and maintain and preserve all the property of the Company in good and merchantable order and condition; 

(b) To pay to the Lender on demand all costs charges and expenses incurred or to be incurred by the Lender in relation to these presents or any default hereunder or the protection or enforcement of any of the rights of the Lender hereunder together with the stamp duty and recording fees hereon; 

(c) To carry on its business in a proper and efficient manner; and 

(d) To observe and perform all the covenants agreements and provisions contained in or implied hereby. 

7. It shall be lawful for but not obligatory on the Lender to advance and pay all sums of money necessary for the purpose of remedying any breach or breaches of covenants or obligations whether imposed on the Company under the provisions of this Debenture or implied by law and all monies so paid and shall bear interest at the applicable interest rate computed from the time or respective times of paying or advancing the same. 

8. No neglect omission or forbearance on the part of the Lender to take advantage of or enforce any right or remedy arising out of any breach or non-observance of any covenant or condition herein contained or implied shall be deemed to be or operate as a general waiver of such covenant or condition or the right to enforce or take advantage of the same in respect of any breach or non-observance thereof either original or recurring. 

9. Any notice required to be given to or served on the Company or the Lender under these presents shall be in writing and shall be deemed to be sufficiently given by personal service at the respective places of business of the Company or the Lender or if posted shall be deemed to be sufficiently given to and served respectively seventy-two hours after the time of posting it posted by registered post and addressed to the Lender or the Company at the address stated above. 

10. This Debenture shall be governed and construed solely according to the Laws of the Cayman Islands. 

-4- 

IN WITNESS WHEREOF each of the Company and the Lender has executed this Debenture as a Deed by its duly authorised persons the day and year first above written. 

Signed for and on behalf of  )
GLOBAL GOLD ARMENIA          )
LIMITED by:                  )
/s/ Robert A. Garrison,      )        Per: /s/ Robert A. Garrison
Director                     )             --------------------------
                             )             Director
in the presence of:          )
/s/ John E. Schmeltzer, III. )
- -----------------------------
witness and thereby executed
by GLOBAL GOLD ARMENIA
LIMITED as its Deed

Signed for and on behalf of  )
FIRST DYNASTY MINES          )
LTD. by:                     )
                             )        Per:___________________________
     ,Director               )            Director
                             )
in the presence of:          )
                             )
_____________________________
witness, and thereby executed
by FIRST DYNASTY MINES
LTD. as its Deed

	

GUARANTEE 

Payment by, and performance of the obligations of Global Gold Armenia Limited a wholly owned subsidiary of Global Gold Corporation under the forgoing Debenture dated February 3, 1997 is hereby unconditionally and irrevocably guaranteed by Global Gold Corporation. 

-5- 

IN WITNESS WHEREOF Global Gold Corporation has executed this Guarantee as a Deed on the 3rd day of February, 1997 

Signed for and on behalf of   )
GLOBAL GOLD                   )
CORPORATION by:               )
/s/ Drury J. Gallagher,       )      Per: /s/ Drury J. Gallagher
       ,Director              )           --------------------------
                              )           Director
in the presence of:           )
/s/ John E. Schmeltzer, III.  )
- ------------------------------
witness, and thereby executed
by GLOBAL GOLD CORPORATION
as its Deed

	

-6- 

CHARGE OVER SHARES 

THIS DEED is dated February 3, 1997 

AND MADE BETWEEN: 

(1) GLOBAL GOLD CORPORATION, a Delaware Corporation whose registered office is 438 West 37th Street, Suite 5H, New York, New York 10038, U.S.A. (the "Chargor"); and 

IN FAVOUR OF 

(2) FIRST DYNASTY MINES LTD. whose registered office is at Temasek Avenue, #37-02 Millenia Tower, Singapore 039 192 ("FDM"). 

WITNESSES as follows: 

1 Definitions and Interpretation 

1.1 In this Charge unless the context otherwise requires: 

"Borrowed Money" means amounts advances by FDM to Global Gold Armenia Limited ("Global Armenia") pursuant to a convertible debenture issued dated 1997 by Global Armenia and guaranteed by the charger (the "Debenture") together without interest thereon. 

"Charged Property" means the property and rights of the Chargor which are the subject of any security created or purported to be created by this Charge 

"Derivative Assets" means all stocks shares warrants or other securities rights dividends interest or other property whether of a capital or income nature accruing offered issued or deriving at any time by way of dividend bonus redemption exchange purchase substitution conversion consolidation subdivision preference option or otherwise attributable to any of the Shares and Securities or any Derivative Assets previously described 

"Encumbrance" means any mortgage charge pledge lien assignment hypothecation security interest title retention preferential right or trust arrangement or other security arrangement or agreement or any right conferring a priority of payment 

"Enforcement Event" means any event set out in the Debenture. 

"Secured Liabilities" means all monies obligations and liabilities whatsoever whether for principal interest or otherwise in whatever currency which may now or at any time 

- 1 - 

in the future be due owing or incurred by the Chargor to FDM under the terms of the Debenture and/or this Charge whether actual or contingent and whether alone severally or jointly as principal guarantor surety or otherwise and in whatever name or style and whether on any current or other account or in any other manner whatsoever. 

"Shares and Securities" means all stocks shares and other securities: 

(i) listed in the Schedule for which the stock or share certificates or other documents of title have been deposited by the Chargor with FDM; or 

(ii) for which the stock or share certificates or other documents of title have been deposited by the Chargor with FDM or its agents or nominees or are held to the order of FDM. 

in each case whether held in the Cayman Islands or elsewhere and irrespective of whether in any such case the deposit was made or the certificates or other documents were received by FDM or its agents or nominees for the purposes of creating security, safe custody, collection or otherwise. 

1.2 Reference to Clauses and Schedules are to the clauses and schedules to this Charge. 

1.3 Clause headings are inserted for ease of reference only and are not to affect the interpretation of this Charge. 

1.4 Except to the extent the context otherwise requires any reference in this document to "this Charge" and any other document referred to in it includes any document expressed to be supplemental to or collateral with or which is entered into pursuant to or in accordance herewith or therewith and shall be deemed to include any instruments amending varying supplementing novating or replacing the terms of any such documents from time to time. 

1.5 References to a person are to be construed to include corporations firms companies partnerships individuals associations states and administrative and governmental and other entities whether or not a separate legal entity. 

1,6 References to any person are to be construed to include references to that person's successors transferees and assigns whether direct or indirect. 

1.7 References to any statutory provision are to be construed as references to that statutory provision as amended supplemented re-enacted or replaced from time to time (whether before or after the date of this Charge) and are to include any orders regulations instruments or other subordinated legislation made under or deriving validity from that statutory provision. 

- 2 - 

1.8 The words "other" and "otherwise" are not to be construed ejusdem generis with any foregoing words where a wider construction is possible. 

1.9 The words "including" and "in particular" are to be construed as being by way of illustration or emphasis only and are not to be construed as, nor shall they take effect as, limiting the generality of any foregoing words. 

2 Covenant to Pay 

2.1 The Chargor covenants with FDM that it will pay and discharge the Secured Liabilities when due to FDM. 

2.2 The Chargor shall pay interest to the date of payment or discharge (notwithstanding any demand or any judgment obtained by FDM or the liquidation or administration of or any arrangement or composition with creditors by the Chargor) at the rate or rates applicable under the agreements or arrangements giving rise to the relevant obligations or liabilities. Such interest shall be compounded in the event of it not being punctually paid in accordance with the usual practice of banks in the Cayman Islands but without prejudice to the right of FDM to require payment of such interest. 

2.3 All sums payable by the Chargor under this Charge shall be paid without any set-off counterclaim withholding or deduction whatsoever unless required by law in which even the Chargor will simultaneously with making the relevant payment under this Charge pay to FDM such additional amount as will result in the receipt by FDM of the full amount which would otherwise have been receivable and will supply FDM promptly with evidence satisfactory to FDM that the Chargor has accounted to the relevant authority for the sum withheld or deducted. 

3 Charge 

3.1 The Chargor as beneficial owner (with the intent that the security so constituted shall extend to all beneficial interests of the Chargor in the Charged Property and to any proceeds of sale or other realisation of the Charged Property or any part of it) and as continuing security for the payment and discharge of the Secured Liabilities charges the Shares and Securities and the Derivative Assets to FDM. 

4 Deposit of Title Documents and Further Assurance 

4.1 The Chargor shall on the execution of this Charge deposit with FDM (at its office in Vancouver or as otherwise directed by FDM) all stock or share certificates or other documents of title to or representing the Charged Property together with such duly executed transfers or assignments with the name of the transferee date and consideration left blank as FDM may require to enable FDM to vest the same in FDM or its nominees or, after the occurrence of an Enforcement Event, any purchaser to the intent that FDM 

- 3 - 

may at any time after the occurrence of an Enforcement Event without notice present them for registration. 

4.2 The Chargor shall subject to clause 4.3 upon the accrual offer issue or receipt of any Derivative Assets deliver or pay to FDM or procure the delivery or payment to FDM of all such Derivative Assets or the stock or share certificates or other documents of title to or representing them together with such duly executed transfers or assignments with the name of the transferee date and consideration left blank as FDM may require to enable FDM to vest the same in FDM or its nominees or, after the occurrence of an Enforcement Event, any purchaser to the intent that FDM may at any time after the occurrence of an Enforcement Event without notice present them for registration. 

4.3 For so long as no Enforcement Event has occurred the Chargor will receive all dividends interest and other income deriving from and received by it in respect of the Charged Property for the account of the Chargor and will promptly pay such dividends interest and other income to the Chargor on receipt. 

4.4 Without prejudice to anything else contained in this Charge the Chargor shall at any time at the request of FDM but at the cost of the Chargor promptly sign seal execute deliver and do all deeds instruments transfers renunciations proxies notices documents acts and things in such form as FDM may from time to time require for perfecting or protecting the security over the Charged Property or any part of it or for facilitating its realisation. 

5 Representations Warranties and Covenants by the Chargor 

5.1 The Chargor represents and warrants to FDM and undertakes that: 

(a) it is and will be the sole absolute and beneficial owner and the registered holder of all of the Charged Property free from Encumbrances and will not create or attempt to create or permit to arise or subsist any Encumbrance (other than this Charge) on or over the Charged Property; 

(b) it has not sold or otherwise disposed of or agreed to sell or otherwise dispose of or granted or agreed to grant any option in respect of all or any of its right title and interest in and to the Charged Property or any part of it and will not do any of the foregoing at any time during the subsistence of this Charge; 

(c) except as disclosed in writing approved by FDM the Shares and Securities are and will at all times be fully paid and there are and will be no monies or liabilities outstanding in respect of any of the Charged Property; 

(d) the Charged Property has been and will at all times be duly authorised and validly issued and is and will at all times be free from any restriction on transfer or rights of pre-emption; 

- 4 - 

(e) it has and will at all times have the necessary power to enter into and perform its obligations under this Charge; 

(f) this Charge constitutes its legal valid binding and enforceable obligations and is a security over all and every part of the Charged Property effective in accordance with its terms; 

(g) this Charge does not and will not conflict with or result in any breach or constitute a default under any agreement instrument or obligation to which the Chargor is a party or by which it is bound; 

(h) all necessary authorisations and consents to enable or entitle it to enter into this Charge have been obtained and will remain in full force and effect at all times during the subsistence of the security constituted by this Charge; and 

(i) it will procure due compliance with its obligations in this Charge by all nominees in whose name or names any Charged Property is registered or holding any certificates or other documents of title relating to any Charged Property. 

5.2 The Chargor undertakes to FDM to provide a copy of any report accounts circular or notice received in respect of or in connection with any of the Charged Property to FDM forthwith upon the receipt by the Chargor. 

5.3 The Chargor shall promptly pay all calls or other payments due and will discharge all other obligations in respect of any part of the Charged Property and if the Chargor fails to fulfil any such obligations FDM may, but shall not be obliged to, make such payments on behalf of the Chargor in which event any sums so paid shall be reimbursed on demand by the Chargor to FDM together with interest as provided for in the Debenture from the date of payment by FDM until repayment whether before or after judgment. 

5.4 The Chargor shall indemnify FDM on a full indemnity basis against calls or other payments relating to the Charged Property and any defect in the Chargor's title to the Charged Property and against all actions proceedings losses costs claims and demands suffered or incurred in respect of anything done or omitted in any way relating the the Charged Property or in the exercise or purported exercise of the powers contained in this Charge by FDM. 

5.5 The Chargor shall not do or cause or permit anything to be done which may adversely affect the security created or purported to be created by this Charge or which is a variation or abrogation of the rights attaching to or conferred by all or any part of the Charged Property without the prior written consent of FDM and shall take such action as FDM may in its discretion direct in relation to any proposed compromise arrangement reorganisation conversion repayment offer or scheme of arrangement 

-5- 

affecting all or any part of the Charged Property. 

6 Rights of FDM 

6.1 FDM may at its discretion (in the name of the Chargor or otherwise subject to clause 4.3 after the occurrence of any Enforcement Event and without any consent or authority on the part of the Chargor) exercise any voting rights and any powers or rights which may be exercised by the person or persons in whose name or names the Charged Property is registered. 

6.2 Following the occurrence of an Enforcement Event all dividends interest and other income forming part of the Charged Property shall, unless otherwise agreed between FDM and the Chargor, be paid without any set-off or deduction whatsoever to an interest bearing suspense account and retained by FDM until applied as hereinafter provided as part of the Charged Property and any such monies which may be received by the Chargor shall pending such payment be held in trust for FDM. 

6.3 The powers conferred on FDM by this Charge are solely to protect its interests in the Charged Property and shall not impose any duty on it to exercise any such powers. FDM shall not have any duty as to any Charged Property and shall incur no liability for: 

(a) ascertaining or taking action in respect of any calls instalments conversions exchanges maturities tenders or other matters in relation to any Charged Property or the nature or sufficiency of any payment whether or not FDM has or is deemed to have knowledge of such matters; or 

(b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Charged Property. 

6.4 FDM shall not be liable to account as mortgagee in possession in respect of all or any of the Charged Property and shall not be liable for any loss upon realisation or for any failure to present any interest coupon or any bond or stock drawn for repayment or for any failure to pay any call or installments or to accept any offer or to notify the Chargor of any such matter or for any failure to ensure that the correct amounts (if any) are paid or received in respect of the Charged Property or for any negligence or default by its nominees or agents or for any other loss of any nature whatsoever in connection with the Charged Property. 

7. Enforcement 

7.1 If any Enforcement Event shall occur and be continuing then: 

(a) FDM shall cease to be under any further financial commitment to the Chargor and may at any time thereafter declare the Secured Liabilities (or such of them as FDM may specify) immediately due and payable forthwith on 

-6- 

demand; and 

(b) the security constituted by this Charge shall become immediately enforceable and the power of sale shall become immediately exercisable. 

8 Power of Sale 

8.1 At any time after the security constituted by this Charge has become enforceable FDM may without further notice to the Chargor exercise the power to sell or otherwise dispose of the whole or any part of the Charged Property, in such manner and on such terms and for such consideration (whether payable immediately or by instalments) as FDM shall in its absolute discretion think fit and without liability for loss whatsoever, and may (without prejudice to any right which it may have under any other provision of this Charge) treat such part of the Charged property as consists of money as if it were the proceeds of such a sale or other disposal. FDM shall after the payment of any claims having priority to the security created by this Charge apply the proceeds without prejudice to the right of FDM to recover any shortfall from the Chargor in paying the costs of sale or other disposal and in or towards the discharge of the Secured Liabilities in such order as FDM in its absolute discretion thinks fit and the surplus (if any) of such proceeds shall be paid to the person or persons entitled to it including without limitation the Chargor. 

9 Protection of Third Parties 

9.1   No purchaser mortgagee or other person dealing with FDM shall be concerned
      to enquire whether the Secured Liabilities have become payable or whether
      any power which it is purporting to exercise has become exercisable or
      whether any money is due under this Charge or as to the application of any
      money paid raised or borrowed or as to the propriety or regularity of
      any sale by or other dealing with FDM.

10 Power of Attorney

10.1  The Chargor by way of security irrevocably appoints FDM to be the attorney
      of the Chargor (with full powers of substitution and delegation) for the
      Chargor and in its name or otherwise and on its behalf and as its act and
      deed to sign seal execute deliver protect and do all deeds instruments
      transfers renunciations proxies notices documents acts and things which
      the Chargor may or ought to do under the covenants and provisions
      contained in this Charge and generally in its name and on its behalf to
      exercise all or any of the powers authorities and discretions conferred by
      or pursuant to this Charge on FDM and to execute and deliver and otherwise
      protect any deed assurance agreement instrument or act which it may deem
      proper in the exercise of all or any of the powers authorities or
      discretions conferred on FDM pursuant to this Charge.

10.2  The Chargor ratifies and confirms and agrees to ratify and confirm
      anything such

-7- 

      attorney shall lawfully and properly do or purport to do by virtue of
      clause 10.1 and all money expended by any such attorney shall be deemed to
      be expenses incurred by FDM under this Charge.

10.3  The Chargor undertakes to procure that all registered holders from time to
      time of any of the Charged Property shall forthwith grant FDM a power of
      attorney on the terms set out in clause 10.1 in respect of such Charged
      Property.

11 Discharge of Security

11.1  The security constituted by this Charge shall be continuing and shall not
      be considered as satisfied or discharged by any intermediate payment or
      settlement of the whole or any part of the Secured Liabilities or any
      other matter or thing whatsoever including the insolvency liquidation or
      administration of the Chargor and shall be binding until all the Secured
      Liabilities have been unconditionally and irrevocably paid and discharged
      in full.

11.2  Upon the irrevocable payment or discharge in full of the Secured
      Liabilities FDM will or will procure that its nominees will (as the case
      may be) at the request and cost of the Chargor retransfer to the Chargor
      all FDM's right title and interest in or to the Charged Property freed
      from this Charge.

11.3  Upon any release of the Charged Property FDM or its nominees (as the case
      may be) shall not be bound to release or transfer to the Chargor the
      identical stocks shares or securities which were deposited with or
      transferred to it or them and the Chargor shall accept shares and
      securities of the same class and denomination or such other securities as
      then represent the Charged Property.

12 Avoidance of Payments

12.1  No assurance security or payment which may be avoided or adjusted under
      any enactment relating to bankruptcy or insolvency and no release
      settlement or discharge given or made by FDM on the faith of any such
      assurance security or payment shall prejudice or affect the right of FDM
      to recover from the Chargor (including the right to recover any monies
      which it may have been compelled by due process of law to refund and any
      costs payable by it pursuant to otherwise incurred in connection with such
      process) or to enforce the security created by or pursuant to this Charge
      to the full extent of the Secured Liabilities.

13 Communications

13.1  Every notice demand or other communication under this Charge shall be in
      writing and may be delivered personally or by letter telex or facsimile
      transmission despatched by FDM to the Chargor to its address specified at
      the head of this Charge or to the

-8- 

      following numbers:

      Chargor
      c/o Global Gold Corporation
      438 West 37th Street

      Attn:  Mr. Drury Gallagher, President

      Fax no:  (212) 967-3018

      or to such other address and or telex number or facsimile number as may be
      notified in accordance with this Clause by the relevant party to the other
      party for such purpose.

13.2  Every notice demand or other communication shall be deemed to have been
      received (if sent by post) 5 working days after being posted prepaid
      airmail (if posted from or to an address outside the Cayman Islands) and
      (if delivered personally or despatched by telex subject to receiving the
      correct telex answerback or by facsimile transmission) at the time of
      delivery or despatch if during normal business hours in the place of
      intended receipt on a working day in the place of intended receipt and
      otherwise at the opening of business in that place on the next succeeding
      such working day.

14 Currency Indemnity

14.1  If under any applicable law or regulation or pursuant to a judgment or
      order being made or registered against the Chargor or the liquidation of
      the Chargor or without limitation for any other reason any payment under
      or in connection with this Charge is made or falls to be satisfied in a
      currency (the "payment currency") other than the currency in which such
      payment is expressed to be due under or in connection with this Charge
      (the "contractual currency") then to the extent that the amount of such
      payment actually received by FDM when converted into the contractual
      currency at the rate of exchange falls short of the amount due under or in
      connection with this Charge the Chargor as a separate and independent
      obligation shall indemnify and hold harmless FDM against the amount of
      such shortfall. For the purposes of this Clause "rate of exchange" means
      the rate at which FDM is able on or about the date of such payment to
      purchase, in accordance with its normal practice, the contractual currency
      with the payment currency and shall take into account (and the Chargor
      shall be liable for) any premium and other costs of exchange including any
      taxes or duties incurred by reason of any such exchange.

15 Miscellaneous

15.1  No delay or omission on the party of FDM in exercising any right or remedy
      under this Charge shall impair that right or remedy or operate as or be
      taken to be a waiver of it nor shall any single partial or defective
      exercise of any such right or remedy preclude

-9- 

      any other or further exercise under this Charge or that or any other right
      or remedy.

15.2  FDM's rights under this Charge are cumulative and not exclusive of any
      rights provided by law and may be exercised from time to time and as often
      as FDM deems expedient.

15.3  Any waiver by FDM of any terms of this Charge or any consent or approval
      given by FDM under it shall only be effective if given in writing and then
      only for the purpose and upon the terms and conditions if any on which it
      is given.

15.4  The security constituted by this Charge shall be in addition to and shall
      not be prejudiced determined or affected by nor operate so as in any way
      to determine prejudice or affect any Encumbrance which FDM amy now or at
      any time in the future hold for or in respect of the Secured Liabilities
      or any part of them and shall not be prejudiced by time or indulgence
      granted to any person or any abstention by FDM in perfecting or enforcing
      any remedies securities guarantees or rights it may now or in the future
      have from or against the Chargor or any other person or any waiver release
      variation act omission forbearance unenforceability indulgence or
      invalidity of any such remedy security guarantee or right.

15.5  If at any time any one or more of the provisions of this Charge is or
      becomes illegal invalid or unenforceable in any respect under any law of
      any jurisdiction neither the legality validity or enforceability of the
      remaining provisions of this Charge nor the legality validity or
      enforceability of such provision under the law of any other jurisdiction
      shall be in any way affected or impaired as a result.

15.6  Any statement certificate or determination of FDM as to the Secured
      Liabilities or without limitation any other matter provided for in this
      Charge shall be in the absence of manifest error be conclusive and binding
      on the Chargor.

15.7  The parties agree that if requested by FDM United States UCC fiduciary
      statements will be filed in such jurisdictions as required by it, such
      fiduciary statements to be signed solely by Chargor.

16 Law and Jurisdiction

16.1  This Charge is governed by and shall be construed in accordance with the
      laws of the Cayman Islands.

-10- 

IN WITNESS whereof the Chargor and FDM have executed and delivered this Charge as a Deed the day and year first before written. 

Executed as a Deed by GLOBAL     )
GOLD CORPORATION                 )
by:                              )
                                 )
                                 )
/s/ Robert Gain                  )
Director                         )
- ------------------------------   )
Witnessed in the presence of:

/s/ [ILLEGIBLE]

Executed as a Deed by FIRST     )
DYNASTY MINES LTD.              )
by:                             )
                                )
                                )
______________________________  )
Witnessed in the presence of:   )

	

Consented to by Global Gold Armenia Limited. 

Dated: 1997 

-11- 

SCHEDULE 

Number of shares                                 Description of shares

100,000                                         Ordinary Shares in the
                                                capital of Global Gold
                                                Armenia Limited, a Cayman
                                                Islands exempted, company
                                                of a par value of US$0.01
                                                each registered in the
                                                name of Global Gold Corporation

-12- 

AMENDMENT TO WARRANT NO. W-____ 

ISSUED BY 

GLOBAL GOLD CORPORATION 

In order to give the holder of Warrant No. ___ issued by Global Gold Corporation (formerly known as Triad Energy Corp.) (the "Warrant") additional time within which to exercise the same, from its current expiration date of December 31, 1996 until September 30, 1997, the Warrant is hereby amended as follows: 

1. The first paragraph of the Warrant is amended to substitute the date "September 30, 1997" in lieu of the date "December 31, 1996" appearing therein. 

2. Section 17 of the Warrant is revised to read as follows: 

"17. Expiration. The right to exercise this Warrant shall expire at 5:30 P.M., New York time, on September 30, 1997." 

3. Except as otherwise set forth herein, all of the other terms and conditions of the Warrant shall remain in full force and effect. 

Dated:  April 16, 1996                    GLOBAL GOLD CORPORATION

                                          By: /s/ Drury J. Gallagher
                                              -----------------------------
                                              Drury J. Gallagher, President

	

AMENDMENT TO WARRANT NO. W-____ 

ISSUED BY 

GLOBAL GOLD CORPORATION 

Warrant No. ___ issued by Global Gold Corporation (formerly known as Triad Energy Corp.) (the "Warrant") pursuant to the Confidential Private Placement Memorandum dated May 17, 1995, as amended, is hereby amended as follows: 

1. The first paragraph of the Warrant is hereby amended to substitute the following paragraph in lieu of the paragraph appearing therein: 

"Global Gold Corporation (formerly known as Triad Energy Corp.) a Delaware corporation (the "Company"), hereby certifies that, for value received, _________________________________________________, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on September 30, 1997, _______ fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $0.50 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"), provided that the Purchase Price during the period from November 15, 1996 through December 14, 1996 shall be $0.25 per share for those shares acquired upon the exercise of this Warrant during such period. The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein." 

2. Section 2 of the Warrant is hereby amended by the addition of a new last sentence thereof to read as follows: 

"Notwithstanding anything contained in this Warrant to the contrary, if this Warrant is exercised in whole or in part by the Holder during the period from November 15, 1996 through December 14, 1996, the Holder will receive, upon such exercise thereof, an additional warrant (the "Additional Warrant") to purchase one-half share of the Common Stock for each share of Common Stock purchased upon such exercise, which will identical to this Warrant in all respects, except that the Additional Warrant will have an exercise price of $0.50 per share and shall expire on December 31, 1996, or, if later, the date of commencement of the trading of the Common Stock on NASDAQ or a national securities exchange." 

3. Except as otherwise set forth herein, all of the other terms and conditions of the Warrant shall remain in full force and effect. 

Dated:  November 15, 1996                 GLOBAL GOLD CORPORATION

                                         By: /s/ Drury J. Gallagher
                                             -----------------------------
                                             Drury J. Gallagher, President

	

EXHIBIT A 

AMENDMENT TO WARRANT NO. W-____ 

ISSUED BY 

GLOBAL GOLD CORPORATION 

Warrant No. ___ issued by Global Gold Corporation (formerly known as Triad Energy Corp.) (the "Warrant") pursuant to the Confidential Private Placement Memorandum dated May 17, 1995, as amended, is hereby amended as follows: 

1. The first paragraph of the Warrant is hereby amended to substitute the following paragraph in lieu of the paragraph appearing therein: 

"Global Gold Corporation (formerly known as Triad Energy Corp.) a Delaware corporation (the "Company"), hereby certifies that, for value received, __________________________________________________, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on December 31, 1997, _______ fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $1.00 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein." 

2. Section 17 of the Warrant is hereby amended to read as follows: 

"The right to exercise this Warrant shall expire at 5:30 p.m., New York time, on December 31, 1997." 

3. Except as otherwise set forth herein, all of the other terms and conditions of the Warrant shall remain in full force and effect. 

Dated:  January 23, 1997                 GLOBAL GOLD CORPORATION

                                         By: /s/ Drury J. Gallagher
                                             -----------------------------
                                             Drury J. Gallagher, President

	

End of Filing