10% SECURED CONVERTIBLE DEBENTURE DUE August 3, 2008
Exhibit
10.5
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
Original
Issue Date: August 3,
2006
Conversion
Price $0.75
$2,000,000.00
10%
SECURED CONVERTIBLE DEBENTURE
DUE
August 3,
2008
This
10%
Secured Convertible Debentures of Bullion River Gold Corp., a Nevada
corporation, having a principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the “Company”),
designated as its 10% Secured Convertible Debenture, due August 3, 2008 (this
debenture, the “Debenture”
and
collectively with the other such series of debentures, the “Debentures”).
This
Debenture is secured as provided for in the Securities Purchase Agreement and
the Pledge Agreement referred to therein.
FOR
VALUE
RECEIVED, the Company promises to pay to ▇▇▇▇▇ Participation Corp. or its
registered assigns (each a “Holder”),
the
principal sum of $2,000,000.00 by August 3, 2008,
or such
earlier date as this Debenture is required or permitted to be repaid as provided
hereunder (the “Maturity
Date”),
and
to pay interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture in accordance with the provisions hereof.
This Debenture is subject to the following additional provisions:
Section
1. Definitions
For
the
purposes hereof, in addition to the terms defined elsewhere in this Debenture:
(a) capitalized terms not otherwise defined herein have the meanings given
to
such terms in the Purchase Agreement, and (b) the following terms shall have
the
following meanings:
“Alternate
Consideration”
shall
have the meaning set forth in Section 6.3.
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday in the United States or a day on which banking institutions in the
State
of Nevada are authorized or required by law or other government action to
close.
“Common
Stock”
means
the common stock, par value $0.001 per share, of the Company and stock of any
other class of securities into which such securities may hereafter have been
reclassified or changed into.
“Conversion
Date”
shall
have the meaning set forth in Section 4.1.
“Conversion
Price”
shall
have the meaning set forth in Section 4.3.
“Conversion
Shares”
means
the shares of Common Stock issuable upon conversion of this Debenture or as
payment of interest in accordance with the terms.
“Effectiveness
Period”
shall
have the meaning given to such term in the Registration Rights
Agreement.
“Event
of Default”
shall
have the meaning set forth in Section 8.
“Fundamental
Transaction”
shall
have the meaning set forth in Section 6.3.
“Interest
Conversion Rate”
means
$0.75 per share.
“Interest
Payment Date”
shall
have the meaning set forth in Section 2.2.
“Maturity
Date”
means
August 3 , 2008
“Nevada
Courts”
shall
have the meaning set forth in Section 9.4.
“Notice
of Conversion”
shall
have the meaning set forth in Section 4.1.
“Optional
Prepayment”
shall
have the meaning set forth in Section 7.
“Optional
Prepayment Amount”
shall
have the meaning set forth in Section 7
“Optional
Prepayment Date”
shall
have the meaning set forth in Section 7.
“Optional
Prepayment Notice”
shall
have the meaning set forth in Section 7.
“Original
Issue Date”
shall
mean the date of the first issuance of the Debentures regardless of the number
of transfers of any Debenture and regardless of the number of instruments which
may be issued to evidence such Debenture.
“Person”
means
a
corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.
“Purchase
Agreement”
means
the Securities Purchase Agreement, dated as of August 3,
2006, to
which the Company and the original Holder are parties, as amended, modified
or
supplemented from time to time in accordance with its terms.
“Trading
Day”
means
a
day on which the Common Stock is traded on a Trading Market.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: The Over The Counter Bulletin Board, the
Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange
or the Nasdaq National Market.
2
Section
2. Interest
2.1 Accrual
of Interest.
Interest
shall accrue on the principal balance of this Debenture at the rate of ten
percent (10%) per annum.
2.2 Payment
of Interest in Cash or Kind.
The
Company shall pay interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Debenture at the rate of 10% simple
interest per annum, payable quarterly on January 1, April 1, July 1 and October
1, beginning on October 1, 2006, and on the Maturity Date (except that, if
any
such date is not a Business Day, then such payment shall be due on the next
succeeding Business Day) (each such date, an “Interest
Payment Date”).
Interest may be paid in cash, or if by mutual consent of the Company and the
Holder,
by
shares of Common Stock at the “Interest
Conversion Rate”
or a
combination of shares and cash.
Section
3. Repayment of Principal
3.1 Repayment
in U.S. Dollars.
On or
before the Maturity Date, the Company shall repay the unpaid principal amount
of
this Debenture in U.S. Dollars.
3.2 The
Company and the Holder may before or at the Maturity Date mutually agree to
extend the Maturity Date for one year period(s).
Section
4.Conversion Into Shares of Common Stock
4.1 Voluntary
Conversion.
At any
time after the Original Issue date and until this Debenture is no longer
outstanding, this Debenture shall be convertible into shares of Common Stock
(“Conversion
Shares”)
at the
option of the Holder, in whole or in part,
at any
time and from time to time. The Holder shall effect conversions by delivering
to
the Company the form of Notice of Conversion attached hereto as
Annex
A
(a
“Notice
of Conversion”),
specifying therein the principal amount of this Debenture,
and
accrued interest thereon,
to be
converted and the date on which such conversion is to be effected (a
“Conversion
Date”).
If no
Conversion Date is specified in a Notice of Conversion, the Conversion Date
shall be the date that such Notice of Conversion is provided hereunder. To
effect conversions hereunder, the Holder shall not be required to physically
surrender this Debenture to the Company unless the entire principal amount
of
this Debenture plus all accrued and unpaid interest thereon has been so
converted. Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Debenture in an amount equal to the
applicable conversion. Any and all conversion hereunder shall be made in
amounts
of not less than $10,000 (and in increments
of $10,000)
unless
the balance of the outstanding debenture amount is less than $10,000 and then
in
such event, the entire amount of the debenture shall be converted into shares
of
Common Stock if Holder elects to convert
such
balance.
4.2 Conversion
Records.
The
Holder and the Company shall maintain records showing the principal amount
converted and the date of such conversions. The Company shall deliver a copy
of
its records as to Holder in a reasonable time following any conversion. If
▇▇▇▇▇▇ disagrees with the Company’s records, Holder shall provide notice of such
objection to the Company within twenty days following the Company’s mailing of
such record to holder. In the event of any dispute or discrepancy, the records
of the Company shall be controlling and determinative in the absence of manifest
error. The Holder and any assignee, by acceptance of this Debenture, acknowledge
and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Debenture, the unpaid and unconverted principal
amount of this Debenture may be less than the amount stated on the face hereof.
Notwithstanding anything herein to the contrary, the Holders right to convert
hereunder shall in no way excuse the Company from having to meet its obligation
to pay the outstanding principal and interest on this Debenture nor shall it
limit the Holder’s right to seek any other remedy against the Company for
failing to meet such obligations. The right to convert this Debenture into
Conversion Shares is in addition to any other rights or remedies the Holder
may
have hereunder or under law.
3
4.3 Conversion
Price.
The
conversion price in effect on any Conversion Date shall be $0.75 (subject to
adjustment
as
provided
herein)(the “Conversion
Price”).
4.4 Mechanics
of Conversion
(a) Conversion
Shares Issuable Upon Conversion of Principal Amount.
The
number of shares of Common Stock issuable upon a conversion hereunder shall
be
determined by the quotient obtained by dividing (x) the outstanding principal
amount of this Debenture to be converted by (y) the Conversion
Price.
(b) Delivery
of Certificate Upon Conversion.
Not
later than seven Trading Days after any Conversion Date, the Company will
deliver or cause to be delivered to the Holder (A) a certificate or certificates
representing the Conversion Shares which shall be free of restrictive legends
and trading restrictions (other than those required by the Purchase Agreement)
representing the number of shares of Common Stock being acquired upon the
conversion of this Debenture including payment of interest in shares of Common
Stock. The Company shall, if available and if allowed under applicable
securities laws, use its best efforts to deliver any certificate or certificates
required to be delivered by the Company under this Section electronically
through the Depository Trust Corporation or another established clearing
corporation performing similar functions.
(c) Failure
to Deliver Certificates.
If in
the case of any Notice of Conversion such certificate or certificates are not
delivered to or as directed by the applicable Holder by the third Trading Day
after a Conversion Date, the Holder shall be entitled by written notice to
the
Company at any time on or before its receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Company shall
immediately return the certificates representing the principal amount of this
Debenture tendered for conversion.
(d) Reservation
of Shares Issuable Upon Conversion.
The
Company covenants that it will at all times reserve and keep available out
of
its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of this Debenture and payment of interest on this
Debenture, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holder (and the
other holders of the Debentures), not less than such number of shares of the
Common Stock as shall (subject to the terms and conditions set forth in the
Purchase Agreement) be issuable (taking into account the adjustments and
restrictions of Section 6) upon the conversion of the outstanding principal
amount of this Debenture and payment of interest hereunder. The Company
covenants that all shares of Common Stock that shall be so issuable shall,
upon
issue, be duly and validly authorized, issued and fully paid, and
nonassessable.
(e) Fractional
Shares.
The
Holder shall be entitled to receive, in lieu of fractional shares, one whole
share of Common Stock.
(g). Transfer
Taxes.
The
issuance of certificates for shares of the Common Stock on conversion of this
Debenture shall be made without charge to the Holder hereof for any documentary
stamp or similar taxes that may be payable in respect of the issue or delivery
of such certificate, provided that the Company shall not be required to pay
any
tax that may be payable in respect of any transfer involved in the issuance
and
delivery of any such certificate upon conversion in a name other than that
of
the Holder of this Debenture so converted and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that
such
tax has been paid.
4
Section
5. Registration of Transfers and Exchanges
5.1 Different
Denominations.
This
Debenture is exchangeable for an equal aggregate principal amount of Debentures
of different authorized denominations, as requested by the Holder surrendering
the same. No service charge will be made for such registration of transfer
or
exchange.
5.2 Investment
Representations.
This
Debenture has been issued subject to certain investment representations of
the
original Holder set forth in the Purchase Agreement and may be transferred
or
exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.
5.3 Reliance
on Debenture Register.
Prior
to due presentment to the Company for transfer of this Debenture, the Company
and any agent of the Company may treat the Person in whose name this Debenture
is duly registered on the Debenture Register as the owner hereof for the purpose
of receiving payment as herein provided and for all other purposes, whether
or
not this Debenture is overdue, and neither the Company nor any such agent shall
be affected by notice to the contrary.
Section
6. Certain Adjustments
6.1 Stock
Dividends and Stock Splits.
If the
Company, at any time while this Debenture is outstanding: (A) pays a stock
dividend or otherwise makes a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company pursuant to this Debenture,
including as interest thereon), (B) subdivides outstanding shares of Common
Stock into a larger number of shares, (C) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (D) issues by reclassification of shares of the Common Stock any shares
of
capital stock of the Company, then the Conversion Price shall be multiplied
by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case
of a
subdivision, combination or re-classification.
6.2 Subsequent
Equity Issuances.
If the
Company or any subsidiary thereof, at any time while any Debenture is
outstanding, issues, sells or grants any option to purchase or issues, sells
or
grants any right to reprice its securities, or otherwise disposes of or issues
(or announces any sale, grant or any option to purchase or other disposition
of)
any Common Stock or Common Stock Equivalents entitling any Person to acquire
shares of Common Stock at an effective price per share that is lower than the
higher of (i) the then Conversion Price and (ii) 80% of the then VWAP (such
lower effective price price per share, the “Base
Conversion Price”
and
such issuances collectively, a “Dilutive
Issuance”)
(if a
holder of the Common Stock or Common Stock Equivalents so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which are issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance shall be deemed
to have occurred for less than the higher of the then Conversion Price or 80%
of
the then VWAP, as applicable, on such date of the Dilutive Issuance), then
the
Conversion Price shall be reduced, and only reduced, by multiplying the
Conversion Price by a fraction, the numerator of which is the number of shares
of Common Stock issued and outstanding (on a fully-diluted basis) immediately
prior to the Dilutive Issuance plus the number of shares of Common Stock which
the actual cash offering price for such Dilutive Issuance would purchase at
the
then Exercise Price, and the denominator of which shall be the sum of the number
of shares of Common Stock issued and outstanding (on a fully-diluted basis)
immediately prior to the Dilutive Issuance plus the number of shares of Common
Stock and Common Stock Equivalents so issued or issuable in connection with
the
Dilutive Issuance, but in no event shall such adjustment reduce the Conversion
Price to less than $0.05.
5
Notwithstanding
the foregoing, no adjustment will be made under this Section 6.2 in respect
of
an Exempt Issuance.
The
Company shall notify each Holder in writing, no later than the five (5) Business
Days prior to the issuance of any Common Stock or Common Stock Equivalents
subject to this Section 6.2, indicating therein the applicable issuance price,
or applicable reset price, exchange price, conversion price and other pricing
terms (such notice, the “Dilutive
Issuance Notice”).
For
purposes of clarification, whether or not the Company provides a Dilutive
Issuance Notice pursuant to this Section 6.2, upon the occurrence of any
Dilutive Issuance, each Holder is entitled to receive a number of Conversion
Shares based upon the Base Conversion Price on or after the date of such
Dilutive Issuance, regardless of whether such Holder accurately refers to the
Base Conversion Price in the Notice of Conversion.
6.3 Fundamental
Transaction.
If, at
any time while this Debenture is outstanding, (A) the Company effects any merger
or consolidation of the Company with or into another Person, (B) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (D) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental
Transaction”),
then
upon any subsequent conversion of this Debenture, the Holder shall have the
right to receive, for each Conversion Share that would have been issuable upon
such conversion immediately prior to the occurrence of such Fundamental
Transaction, the same kind and amount of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of one share of Common Stock (the “Alternate
Consideration”).
For
purposes of any such conversion, the determination of the Conversion Price
shall
be appropriately adjusted to apply to such Alternate Consideration based on
the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.
If
holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall
be
given the same choice as to the Alternate Consideration it receives upon any
conversion of this Debenture following such Fundamental Transaction. To the
extent necessary to effectuate the foregoing provisions, any successor to the
Company or surviving entity in such Fundamental Transaction shall issue to
the
Holder a new debenture consistent with the foregoing provisions and evidencing
the Holder’s right to convert such debenture into Alternate Consideration. The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (d) and insuring that this Debenture
(or
any such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
6.4 Calculations.
All
calculations under this Section 6 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section
6,
the number of shares of Common Stock deemed to be issued and outstanding as
of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
6
6.5 Notice
to the Holder.
(a) Adjustment
to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any of this Section 6,
the
Company shall promptly mail to each Holder a notice setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. If the Company issues a variable rate security,
despite the prohibition thereon in the Purchase Agreement, the Company shall
be
deemed to have issued Common Stock or Common Stock Equivalents at the lowest
possible conversion or exercise price at which such securities may be converted
or exercised in the case of a Variable Rate Transaction (as defined in the
Purchase Agreement).
(b) Notice
to Allow Conversion by ▇▇▇▇▇▇.
If (A)
the Company shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend on
or
a redemption of the Common Stock; (C) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection
with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of
the
assets of the Company, of any compulsory share exchange whereby the Common
Stock
is converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of
the affairs of the Company
or (F)
the Company shall authorize entering into any other type of Fundamental
Transaction;
then,
in each case, the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of this Debenture, and shall cause
to
be mailed to the Holder at its last addresses as it shall appear upon the stock
books of the Company, at least 20 calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined
or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange,
or
other Fundamental Transaction,
is
expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share
exchange,
or
other Fundamental Transaction;
provided, that the failure to mail such notice or any defect therein or in
the
mailing thereof shall not affect the validity of the corporate action required
to be specified in such notice. The Holder is entitled to convert this Debenture
during the 20-day period commencing the date of such notice to the effective
date of the event triggering such notice.
Section
7. Optional Prepayment Right
Prior
to
the later of (i) August 3, 2007 and (ii) the date on which the Conversion Shares
are registered pursuant to a registration statement filed with and declared
effective by the Commission, the Company may only prepay the Debenture with
the
approval of the holder thereof. Following August 3, 2007, upon the Conversion
Shares being registered pursuant to a registration statement filed with and
declared effective by the Commission, the Company may,
upon
five (5) Business Days prior written notice to the Holder, prepay
in
part or in full the Debenture in accordance with this Section 7.
The
prepayment amount must be $300,000 or a greater amount. Notice
of
any
proposed
prepayment hereunder (an “Optional
Prepayment”)
shall
be delivered to the Holder
of the
Debentures and shall state (1) that the Company wishes
to
prepay the Debentures issued on the Original Issue Date and (2) the date of
prepayment (the “Optional
Prepayment Notice”).
Subject
to receiving the written consent of the Holder, on
the date
fixed for prepayment (the “Optional
Prepayment Date”),
the
Company shall make payment of the Optional Prepayment Amount (as defined below)
to the Holder. If the Company prepays
a
Debenture, the Company shall make payment to the Holder of an amount in cash
equal to the
principal amount to
be
prepaid
plus any
amount of interest owed hereunder to the Holder (“Optional
Prepayment Amounts”).
The
Holder shall at all times prior to the Optional Prepayment Date maintain the
right to convert all or any portion of the Debenture (and,
thereafter, any unconverted portion) and
any
portion of Debenture so converted after receipt of an Optional Prepayment Notice
and prior to the Optional Prepayment Date set forth in such notice and payment
of the aggregate Optional Prepayment Amount shall be deducted from the principal
amount of Debenture which is otherwise subject to prepayment pursuant to such
notice.
7
Section
▇.▇▇▇▇▇▇ of Default.
8.1 “Event
of Default”.
Wherever used herein, an Event of Default means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of
any
court, or any order, rule or regulation of any administrative or governmental
body):
(a) any
default in the payment of (A) the principal amount of any Debenture, or (B)
interest on any Debenture, as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise) which default, solely in the case of an interest payment or other
default under clause (B) above, is not cured, within three
(3)
Trading
Days;
(b) the
Company shall fail to observe or perform any other material covenant or material
agreement contained in this Debenture or any other Debenture which failure
is
not cured, if possible to cure, within the earlier to occur of five
(5)
Trading
Days after notice of such default sent by the Holder or by any other
Holder;
(c) a
default
or event of default (subject to any grace or cure period provided for in the
applicable agreement, document or instrument) shall occur under any of the
Transaction Documents,
(d) any
representation or warranty or covenant made herein, in any other Transaction
Documents, in any written statement pursuant hereto or thereto, or in any other
report, financial statement or certificate made or delivered to the Holder
or
any other holder of Debentures shall be untrue or incorrect in any material
respect as of the date when made or deemed made;
(e) (i)
the
Company or any of its Subsidiaries shall commence a case, as debtor, under
any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Company or any Subsidiary commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief
of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or
any
Subsidiary thereof or (ii) there is commenced a case against the Company or
any
Subsidiary thereof, under any applicable bankruptcy or insolvency laws, as
now
or hereafter in effect or any successor thereto which remains undismissed for
a
period of 60 days; or (iii) the Company or any Subsidiary thereof is adjudicated
by a court of competent jurisdiction insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or
(iv)
the Company or any Subsidiary thereof suffers any appointment of any custodian
or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or (v) the Company or any
Subsidiary thereof makes a general assignment for the benefit of creditors;
or
(vi) the Company shall fail to pay, or shall state that it is unable to pay,
or
shall be unable to pay, any
of
its debts or its
debts
generally as they become due; or (vii) the Company or any Subsidiary thereof
shall call a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or (viii) the Company or any
Subsidiary thereof shall by any act or failure to act expressly indicate its
consent to, approval of or acquiescence in any of the foregoing; or (ix) any
corporate or other action is taken by the Company or any Subsidiary thereof
for
the purpose of effecting any of the foregoing; or
8
(f) the
Company or any Subsidiary shall default in any of its obligations under any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which
there
may be secured or evidenced,
any
indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Company in an amount exceeding $1,000,000, whether
such indebtedness now exists or shall hereafter,
be
created,
unless
otherwise approved in writing by the Holder.
8.2 Remedies
Upon Event of Default.
If any
Event of Default occurs, the Company
shall give Holder prompt notice thereof and the full
principal amount of this Debenture, together with interest and other amounts
owing in respect thereof, to the date of acceleration shall become, at the
Holder’s election, immediately due and payable in cash. Upon the payment in full
of the
principal and interest under
the
Debenture under this Section 8.2, the Holder shall promptly surrender this
Debenture to or as directed by the Company. The Holder need not provide and
the
Company hereby waives any presentment, demand, protest or other notice of any
kind, and the Holder may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such declaration may be rescinded and
annulled by ▇▇▇▇▇▇ at any time prior to payment hereunder and the Holder shall
have all rights as a Debenture holder until such time, if any, as the full
payment under this Section shall have been received by it. No such rescission
or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.
Section
9. Miscellaneous
9.1 Notices.
Any and
all notices or other communications or deliveries to be provided by the Holder
hereunder, including, without limitation, any Notice of Conversion, shall be
in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service, addressed to the Company, at the address set forth
above, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇ or such other address
or facsimile number as the Company may specify for such purposes by notice
to
the Holder delivered in accordance with this Section. Any and all notices or
other communications or deliveries to be provided by the Company hereunder
shall
be in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service addressed to each Holder at the facsimile
telephone number or address of such ▇▇▇▇▇▇ appearing on the books of the
Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication
or
deliveries hereunder shall be deemed given and effective on the earliest of
(i)
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior
to
5:30 p.m. (Nevada time), (ii) the date after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Section later than 5:30 p.m. (Nevada time) on any
date
and earlier than 11:59 p.m. (Nevada time) on such date, (iii) the second
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom
such
notice is required to be given.
9.2 Absolute
Obligation.
Except
as expressly provided herein, no provision of this Debenture shall alter or
impair the obligation of the Company, which is absolute and unconditional,
to
pay the principal of, interest and liquidated damages (if any) on, this
Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed. This Debenture is a direct debt obligation of the Company. This
Debenture ranks pari passu with all other Debentures now or hereafter issued
under the terms set forth herein.
9
9.3 Lost
or Mutilated Debenture.
If this
Debenture shall be mutilated, lost, stolen or destroyed, the Company shall
execute and deliver, in exchange and substitution for and upon cancellation
of a
mutilated Debenture, or in lieu of or in substitution for a lost, stolen or
destroyed Debenture, a new Debenture for the principal amount of this Debenture
so mutilated, lost, stolen or destroyed but only upon receipt of evidence of
such loss, theft or destruction of such Debenture, and of the ownership hereof,
and indemnity, if requested, all reasonably satisfactory to the
Company.
9.4 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Debenture shall be governed by and construed and enforced in accordance
with the internal laws of the State of Nevada, without regard to the principles
of conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting
in the City of Reno, State of Nevada (the “Nevada
Courts”).
Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Nevada Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any suit, action
or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, or such Nevada Courts are improper or inconvenient venue for
such proceeding.
Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under this
Debenture and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted
by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Debenture or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of this Debenture, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
9.5 Waiver.
Any
waiver by the Company or the Holder of a breach of any provision of this
Debenture shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not
be
considered a waiver or deprive that party of the right thereafter to insist
upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.
9.6 Severability.
If any
provision of this Debenture is invalid, illegal or unenforceable, the balance
of
this Debenture shall remain in effect, and if any provision is inapplicable
to
any person or circumstance, it shall nevertheless remain applicable to all
other
persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder violates applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered
to
equal the maximum permitted rate of interest. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of or interest
on
this Debenture as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of
this
indenture, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.
10
9.7 Next
Business Day.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day or Trading Day, such payment or obligation shall be made
or
performed on the next succeeding Business Day.
9.8 Headings.
The
headings contained herein are for convenience only, do not constitute a part
of
this Debenture and shall not be deemed to limit or affect any of the provisions
hereof.
9.9 Assumption.
Any
successor to the Company or surviving entity in a Fundamental Transaction shall
(i) assume in writing all of the obligations of the Company under this Debenture
and the other Transaction Documents pursuant to written agreements in form
and
substance satisfactory to the Holder (such approval not to be unreasonably
withheld or delayed) prior to such Fundamental Transaction and (ii) to issue
to
the Holder a new debenture of such successor entity evidenced by a written
instrument substantially similar in form and substance to this Debenture,
including, without limitation, having a principal amount and interest rate
equal
to the principal amounts and the interest rates of the Debentures held by the
Holder and having similar ranking to this Debenture, and satisfactory to the
Holder (any such approval not to be unreasonably withheld or delayed). The
provisions of this Section 9.9
shall
apply similarly and equally to successive Fundamental Transactions and shall
be
applied without regard to any limitations of this Debenture.
IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly executed
by a
duly authorized officer as of the date first above indicated.
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Chief Financial Officer
11
ANNEX
A
NOTICE
OF
CONVERSION
The
undersigned hereby elects to convert principal (and
accrued interest thereon) under
the
10% Secured Convertible Debenture of Bullion River Gold Corp., a Nevada
corporation (the “Company”),
due
on August 3,
2008
into
shares of common stock, par value $0.001 per share (the “Common
Stock”),
of
the Company according to the conditions hereof, as of the date written below.
If
shares are to be issued in the name of a person other than the undersigned,
the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested
by
the Company in accordance therewith. No fee will be charged to the holder for
any conversion, except for such transfer taxes, if any.
By
the
delivery of this Notice of Conversion the undersigned represents and warrants
to
the Company that its ownership of the Common Stock does not exceed the amounts
determined in accordance with Section 13(d) of the Exchange Act, specified
under
Section 4 of this Debenture.
The
undersigned agrees to comply with the prospectus delivery requirements under
the
applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.
Conversion
calculations:
Date
to
Effect Conversion:___________________
Principal
Amount of Debenture to be Converted:
$________
Payment
of Interest in Common Stock __ yes __ no
If
yes,
$_____ of Interest Accrued on Account of
Conversion
at Issue.
Number
of
shares of Common Stock to be issued:
_______________________________________
Signature:________________________________
Name:___________________________________
Address:
_________________________________
12