SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
The
securities sold hereunder have been issued pursuant to an exemption from
registration under the Securities Act of 1933, as amended, pursuant to
Regulation S thereunder. The securities sold hereunder cannot be transferred,
offered, or sold in the United States or to U.S. Persons (as that term is
defined in Regulation S) except pursuant to registration under the Securities
Act of 1933, or pursuant to an available exemption from
registration.
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of August
3,
2006
among Bullion River Gold Corp., a Nevada corporation (the “Company”),
and
Xxxxx Participation Corp., a British Virgin Islands corporation (including
its
successors and assigns, a “Purchaser” and collectively the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Regulation S of the Securities Act of 1933, as amended (the “Securities
Act”),
the
Company desires to issue and sell to the Purchaser, and the Purchaser, severally
and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchaser agree as
follows:
ARTICLE
I -DEFINITIONS
1.1
Definitions.
In
addition to the terms defined elsewhere in this Agreement: (a) capitalized
terms
that are not otherwise defined herein have the meanings given to such terms
in
the Debentures (as defined herein), and (b) the following terms have the
meanings indicated in this Section 1.1:
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
“Closing”
means
the closing of the purchase and sale of the Securities pursuant to Section
2.1.
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to
(i)
the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities have been satisfied or
waived.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any other
class
of securities into which such securities may hereafter have been reclassified
or
changed into.
“Common
Stock Equivalents”
means
any securities of the Company or the Subsidiaries (excluding any securities
purchasable or issuable pursuant to this Agreement), which would entitle the
holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Debentures”
means,
the 10% Secured Convertible Debentures due, subject to the terms therein, on
August 3, 2008, issued by the Company to the Purchasers hereunder, in the form
of Exhibit
A.
“Effective
Date”
means
the date that the initial Registration Statement filed by the Company pursuant
to the Registration Rights Agreement is first declared effective by the
Commission.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Exempt
Issuance”
means
the issuance of (a) shares of Common Stock or options to employees, officers
or
directors of the Company pursuant to any stock or option plan duly adopted
by a
majority of the non-employee members of the Board of Directors of the Company
or
a majority of the members of a committee of non-employee directors established
for such purpose, (b) securities upon the exercise or exchange of or conversion
of any Securities issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have
not been amended since the date of this Agreement to increase the number of
such
securities or to decrease the exercise, exchange or conversion price of any
such
securities, (c) securities issued upon the conversion of the Debentures,
provided that the terms of such Debentures shall not have been amended since
the
date of this Agreement to reduce the conversion price below $0.05 (subject
to
adjustment for forward and reverse stock splits, recapitalizations and the
like)
and (d) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors, provided that (i) any
such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company
is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities and (ii) no registration
rights shall be granted in connection with such issuance.
“Liens”
means
a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“Material
Adverse Effect”
shall
have the meaning assigned to such term in Section 3.1(b).
“Maximum
Rate”
shall
have the meaning ascribed to such term in Section 5.15.
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Pledge
Agreement”
means
the Pledge Agreement in the form of the attached Exhibit C.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Required
Approvals”
shall
have the meaning ascribed to such term in Section 3.1(e).
2
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated the date hereof, among the Company
and
the Purchasers, in the form of Exhibit
D
attached
hereto.
“Regulation
S”
means
Regulation S promulgated by the Commission pursuant to the Securities Act,
as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities”
means
the Debentures, the Underlying Shares, the Warrants and the Warrant
Shares.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Short
Sales”
shall
include all “short sales” as defined in Rule 200 of Regulation SHO under the
Exchange Act (but shall not be deemed to include the location and/or reservation
of borrowable shares of Common Stock).
“Subscription
Amount”
means,
as to each Purchaser, the aggregate amount to be paid for Debentures purchased
hereunder as specified below such Purchaser’s name on the signature page of this
Agreement and next to the heading “Subscription Amount”, in United States
Dollars and in immediately available funds.
“Subsidiary”
means
any subsidiary of the Company.
“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: OTC Bulletin Board, the Nasdaq Capital
Market, the American Stock Exchange, the New York Stock Exchange or the Nasdaq
National Market.
“Transaction
Documents”
means
this Agreement, the Debentures, the Warrants,
the
Pledge Agreement,
and any
other documents or agreements executed in connection with the transactions
contemplated hereunder.
“Underlying
Shares”
means
the shares of Common Stock issued and issuable upon conversion of the Debentures
and issued and issuable in lieu of the cash payment of interest on the
Debentures in accordance with the terms of the Debentures.
“VWAP”
means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the Trading Market on which the Common Stock
is
then listed or quoted for trading as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time); (b) if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or
(d) in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Holder
and
reasonably acceptable to the Company, the fees and expenses of which shall
be
paid by the Company.
3
“Warrants”
means
the Common Stock Purchase Warrants in the form of the attached Exhibit
B.
“Warrant
Shares”
means
the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE
II - PURCHASE AND SALE
2.1 Closing.
On the
Closing Date, upon the terms and subject to the conditions set forth herein,
concurrent with the execution and delivery of this Agreement by the parties
hereto, the Company agrees to sell, and the Purchaser agrees to purchase
$2,000,000 in principal amount of the Debentures. The Purchaser shall deliver
to
the Company via wire transfer or a certified check immediately available funds
equal to the Subscription Amount and the Company shall deliver to the Purchaser
the Debenture as determined pursuant to Section 2.2(a) issuable at the Closing.
Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3, the
Closing shall occur at the offices of the Company, or such other location as
the
parties shall mutually agree.
2.2 Deliveries.
(a) On
the
Closing Date, the Company shall deliver or cause to be delivered to the
Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii) a
Debenture duly
executed by the Company with
a
principal amount equal to such Purchaser’s Subscription Amount, registered in
the name of such Purchaser;
(iii) the
Common
Stock Purchase Warrant,
duly
executed by the Company
in the
form of Exhibit B attached hereto;
(iv) the
Pledge Agreement, duly executed by the Company, in the form of Exhibit C
attached hereto, and the certificates representing the Pledged Stock
thereunder;
and
(v)
the
Registration Rights Agreement duly executed by the Company.
(b) On
the
Closing Date, the Purchaser shall deliver or cause to be delivered to the
Company the following:
(i) this
Agreement duly executed by such Purchaser;
(ii) the
Registration Rights Agreement duly executed by such Purchaser; and
(ii) such
Purchaser’s Subscription Amount by wire transfer to the account as specified in
writing by the Company
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
4
(i) the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Purchasers contained herein;
(ii) all
obligations, covenants and agreements of the Purchasers required to be performed
at or prior to the Closing Date shall have been performed; and
(iii) the
delivery by the Purchasers of the items set forth in Section 2.2(b) of this
Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects on the Closing Date of the representations
and
warranties of the Company contained herein;
(ii) all
obligations, covenants and agreements of the Company required to be performed
at
or prior to the Closing Date, as applicable, shall have been
performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement; and
(iv) there
shall have been no Material Adverse Effect with respect to the Company since
the
date hereof.
ARTICLE
III- REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company.
The
Company hereby makes the representations and warranties set forth below to
the
Purchaser.
(a) Subsidiaries.
The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all the issued
and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) Organization
and Qualification.
The
Company and each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and
to
carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material
Adverse Effect”)
and no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
5
(c) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents by the Company
and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, its board of directors or its stockholders
in
connection therewith other than in connection with the Required Approvals.
Each
Transaction Document has been (or upon delivery will have been) duly executed
by
the Company and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law
.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the other transactions contemplated
hereby and thereby do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse
of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt
or
otherwise) or other understanding to which the Company or any Subsidiary is
a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals, conflict with
or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which
the
Company or a Subsidiary is subject (including federal and state securities
laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii)
and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.
(e) Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) filings required pursuant to Form 8-K
promulgated under the Exchange Act and (ii) the filing with the Commission
of
the Registration Statement, (collectively, the “Required
Approvals”).
(f) Issuance
of the Securities.
The
Securities are duly authorized and, when issued and paid for in accordance
with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the Company
other
than restrictions on transfer provided for in the Transaction Documents. The
Underlying Shares, when issued in accordance with the terms of the Transaction
Documents, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company. The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock for issuance of
the
Underlying Shares.
6
(g) Capitalization.
The
capitalization of the Company is as set forth in its most recently filed
periodic
reports under the Exchange Act. The Company has not issued any capital stock
since its most recently filed periodic report under the Exchange Act, except
as
specified in Schedule 3.1(g) and other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, exercise of options by
consultants, the issuance of shares of Common Stock to employees under
employment agreements or pursuant to the Company’s employee stock purchase plan
and pursuant to the conversion or exercise of outstanding Common Stock
Equivalents. All of the outstanding shares of capital stock of the Company
are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for
the
issuance and sale of the Securities. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company’s
capital stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company’s stockholders.
The
shares of Common Stock currently issuable upon conversion of the Debentures
and
the Warrant Shares constitute two and seventy eight one-hundredth percent (2.78
%) and two and seventy eight one-hundredth percent (2.78 %), respectively,
of
the fully-diluted equity capital of the Company (assuming the grant of all
shares authorized for grant and issuance under the Company’s incentive plans and
the exercise thereof).
(h) Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(i) Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf
has
provided any of the Purchasers or their agents or counsel with any information
that constitutes or might constitute material, nonpublic information. The
Company understands and confirms that the Purchasers will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby furnished by or on behalf
of
the Company with respect to the representations
and warranties
made
herein are true and do not contain any untrue statement of a material fact
or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading
and to
the best knowledge, after due inquiry, of its directors and officers.
(j) General
Solicitation.
Neither
the Company nor any person acting on behalf of the Company has offered or sold
any of the Securities
by any
form of general solicitation or general advertising. The Company has offered
the
Securities
for sale
only to the Purchasers and certain other “accredited investors” within the
meaning of Rule 501 under the Securities Act.
(k)
Material
Changes or Liabilities.
Since
the date of the latest financial statements included within the Company’s
filings with the Securities and Exchange Commission (“SEC Reports”), except as
set forth on Schedule
3.1 (k)
or
specifically disclosed in a subsequent SEC Report filed prior to the date
hereof, (i) there has been no event, occurrence or development that has had
or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course
of
business consistent with past practice and (B) liabilities not required to
be
reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (iii) the Company has not altered its method
of accounting, and (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock.
7
(l)
The
Company owns all of the issued and outstanding shares of capital stock of French
Gulch free and clear with no Liens. Other than its common stock, French Gulch
has no other authorized classes of securities and no Common Stock Equivalents
outstanding. French Gulch is in the process of exercising an option agreement
with Washington Niagra Mining Partnership to purchase 28 patented and 27
unpatented claims. See schedule 3.1 (l) for current payment status. The option
is paid current to date. In addition the French Gulch owns 66 staked unpatented
claims. All claim filing fees are current.
Purchaser
acknowledges that the Company does not make or has not made any representations
or warranties with respect to the transactions contemplated other than those
specifically set forth in this Section 3.1.
3.2 Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or similar action on the
part of such Purchaser. Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser
in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
(b) Own
Account.
Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or any part
thereof in violation of the Securities Act or any applicable state securities
law, has no present intention of distributing any of such Securities in
violation of the Securities Act or any applicable state securities law and
has
no arrangement or understanding with any other persons regarding the
distribution of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state
securities law. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement
or
understanding, directly or indirectly, with any Person to distribute any of
the
Securities.
8
(c) Disclosure
of Information.
Purchaser carefully reviewed all filings made by the Company with the Commission
as of the date of this Agreement and has received and carefully reviewed any
information Purchaser has requested from the Company that Purchaser considers
necessary or appropriate for deciding whether to acquire the Securities,
including, without limitation, all material risk factors relating to the
Company. Purchaser further represents that Purchaser has had ample opportunity
to ask questions and receive answers from the Company concerning the information
and the terms and conditions of the offering of the Securities and to obtain
any
additional information necessary to verify the accuracy of the information
given
to Purchaser. Purchaser is making its investment in the Company after having
reviewed, analyzed, sought professional advice regarding, and fully
understanding the risk, uncertainties, and liabilities associated with the
Company.
(d) Regulation
S.
(i) Purchaser
either has been duly formed and is validly existing as a corporation or other
legal entity in good standing under the laws of its jurisdiction of
incorporation set forth on the signature page to this Agreement or is an
individual who is not a citizen or resident of the United States. Purchaser
is
not organized under the laws of the United States and is not a “U.S. Person” as
that term is defined in Rule 902(o) of Regulation S.
(ii) Purchaser
was not formed for the purpose of investing in Regulation S securities or for
the purpose of investing in the Securities sold under this Agreement. Purchaser
is not registered as an issuer under the Securities Act and is not required
to
be registered with the SEC under the Investment Company Act of 1940, as amended.
Purchaser is entering into this Agreement and is participating in the offering
of the Shares for its own account, and not on behalf of any U.S. Person as
defined in Rule 902(o) of Regulation S.
(iii) The
Company has not made an offer to enter into this Agreement to Purchaser in
the
United States other than as permitted in the case of an account managed by
a
professional fiduciary resident in the United States within the meaning of
Section 902(o)(2) of Regulation S. At the times of the offer and execution
of
this Agreement and, to the best knowledge of Purchaser, at the time the offering
originated, Purchaser was located and resident outside the United States, other
than as permitted in the case of an account managed by a professional fiduciary
resident in the United States within the meaning of Section 902(o)(2) of
Regulation S.
(iv) Neither
Purchaser, nor any of its Affiliates, nor any person acting on its behalf or
on
behalf of any Affiliate has engaged or will engage in any activity undertaken
for the purpose of, or that reasonably could be expected to have the effect
of,
conditioning the markets in the United States for the Shares or for any
securities that are convertible into or exercisable for the common stock of
the
Company, including, but not limited to, effecting any sale or short sale of
the
Company’s securities through Purchaser or any of its Affiliates before the
expiration of any restricted period contained in Regulation S. To the best
knowledge of Purchaser, this Agreement and the transactions contemplated by
it
are not part of a plan or scheme to evade the registration provisions of the
Securities Act, and Purchaser is purchasing the Shares for investment purposes.
Purchaser and, to the best knowledge of Purchaser, each distributor, if any,
participating in this offering of the Securities have agreed that they will
neither offer nor sell any Securities before the date hereof and through the
expiration of the any
restricted period set forth in Rule 903 of Regulation S
(as
amended from time to time) to U.S. Persons or for the account or benefit of
U.S.
Persons, and they will offer or sell any of the Securities only in compliance
with the provisions of Regulation S and any other applicable provisions of
the
Securities Act. Purchaser and its representatives have not conducted any
Directed Selling Effort as that term is used and defined in Rule 902 of
Regulation S and will not engage in any Directed Selling Effort within the
United States through the expiration of any restricted period set forth in
Rule
903 of Regulation S.
9
(v) Purchaser
acknowledges that following the expiration of any restricted period provided
by
Rule 903 of Regulation S, any interest in this Agreement or in the Securities
sold may be resold within the jurisdiction of the United States or to U.S.
Persons as defined in Rule 902(o) of Regulation S by or for the account of
the
parties only (i) pursuant to a registration statement under the Securities
Act,
or (ii) if applicable, pursuant to an exemption from registration for sales
by a
person other than an issuer, underwriter, or dealer as those terms are used
in
Section 4(1) and related provisions of the Securities Act and regulations or
pursuant to another exemption from registration, only following the expiration
of any restricted period (if applicable) required by Regulation S. Purchaser
acknowledges that this Agreement and the Securities have not been registered
under the Securities Act or qualified under state securities laws of the United
States and that their transferability within the jurisdiction of the United
States is restricted by the Securities Act as well as state laws. Purchaser
acknowledges it has received a copy of Regulation S, is familiar with and
understands its terms, and has had the opportunity to consult with its legal
counsel concerning this Agreement and Regulation S.
(e) Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
(f) General
Solicitation.
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(g) Short
Sales and Confidentiality Prior To The Date Hereof.
Other
than the transaction contemplated hereunder, such Purchaser has not directly
or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Purchaser, executed any disposition, including Short
Sales, in the securities of the Company during the period commencing from the
time that such Purchaser first received a term sheet from the Company or any
other Person setting forth the material terms of the transactions contemplated
hereunder until the date hereof. Notwithstanding the foregoing, in the case
of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser's assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser's assets, the
representation set forth above shall only apply with respect to the portion
of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement. Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality
of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).
The
Company acknowledges and agrees that each Purchaser does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
3.2.
10
ARTICLE
IV- OTHER AGREEMENTS OF THE PARTIES
4.1
Transfer
Restrictions.
(a)
The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement, Regulation S or Rule 144,
to
the Company or to an affiliate of a Purchaser, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected
by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have
the
rights of a Purchaser under this Agreement and the Registration Rights
Agreement.
(b)
The
Purchasers agree to the imprinting, so long as is required by this Section
4.1(b), of a legend on any of the Securities in the following form:
This
debenture has not been registered under the U.S. Securities Act of 1933, as
amended (the “Securities Act”), and, accordingly, may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. Persons,
except as set forth below. By its acquisition hereof, the holder (1) represents
that it is not a U.S. Person and is acquiring this debenture in an offshore
transaction, (2) agrees that it will not within two
years
after
the original issuance of this debenture resell or otherwise transfer this
debenture except (a) to the company or any subsidiary thereof, (b) pursuant
to
an effective registration statement under the Securities Act, (c) inside the
United States to a qualified institutional buyer in compliance with Rule 144a
under the Securities Act, (d) inside the United States to an accredited investor
that, prior to such transfer, furnishes (or has furnished on its behalf by
a
United States broker-dealer) to the Company
a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of this debenture (the form of which letter can be
obtained from the Company),
(e)
outside the United States in an offshore transaction in compliance with rule
904
under the Securities Act or (f) pursuant to any other exemption from
registration under the Securities Act (if available) and (3) agrees that it
will
give to each person to whom this debenture is transferred a notice substantially
to the effect of this legend. In connection with any transfer of this debenture
within two years after original issuance of this debenture, if the proposed
transferee is an accredited investor, the holder must, prior to such transfer,
furnish to the company
and the
Company such certifications, legal opinions or other information as either
of
them may reasonably require to confirm that such transfer is being made pursuant
to an exemption from or in a transaction not subject to the registration
requirements of the Securities Act. As used herein, the terms “offshore
transaction,” “United States” and “U.S. Person” have the meanings given to them
by Regulation S under the Securities Act.
11
(c)
Certificates evidencing the Underlying Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, or (ii) following
any sale of such Underlying Shares pursuant to Rule 144, or (iii) if such
Underlying Shares are eligible for sale under Rule 144(k), or (iv) if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff
of
the Commission).
If
all or
any portion of a Debenture is converted or exercised (as applicable) at a time
when there is an effective registration statement to cover the resale of the
Underlying Shares, or if such Underlying Shares may be sold under Rule 144(k)
or
if such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations thereof) then such Underlying
Shares shall be issued free of all legends.
The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 4.1(c), it will, no later than three
Trading Days following the delivery by a Purchaser to the Company or the
Company’s transfer agent of a certificate representing Underlying Shares, as
applicable, issued with a restrictive legend, deliver or cause to be delivered
to such Purchaser a certificate representing such shares that is free from
all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.
(d)
Each
Purchaser, severally and not jointly with the other Purchasers, agrees that
the
removal of the restrictive legend from certificates representing Securities
as
set forth in this Section 4.1 is predicated upon the Company’s reliance that the
Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom.
4.2 Conversion
Procedures.
The
form of Notice of Conversion included in the Debentures set forth the totality
of the procedures required of the Purchasers in order to convert the Debentures.
No additional legal opinion or other information or instructions shall be
required of the Purchasers to convert their Debentures. The Company shall honor
conversions of the Debentures and shall deliver Underlying Shares in accordance
with the terms, conditions and time periods set forth in the Transaction
Documents.
4.3 Non-Public
Information.
The
Company covenants and agrees that neither it nor any other Person acting on
its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
12
4.4 Use
of
Proceeds.
The
Company shall use the net proceeds from the sale of the Securities hereunder
substantially for the development of the French Gulch Mine.
4.5 Reservation
and Listing of Securities.
The
Company shall maintain a reserve from its duly authorized shares of Common
Stock
for issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction
Documents.
4.6 Equal
Treatment of Purchasers.
No
consideration shall be offered or paid to any person to amend or consent to
a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents. Further, the Company shall not make any payment of
principal or interest on the Debentures in amounts which are disproportionate
to
the respective principal amounts outstanding on the Debentures at any applicable
time. For clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers as a class
and shall not in any way be construed as the Purchasers acting in concert or
as
a group with respect to the purchase, disposition or voting of Securities or
otherwise.
4.7 Delivery
of Securities after Closing. The Company will deliver, or cause to be delivered,
the respective Shares and Warrants purchased by each Purchaser to the Purchaser
within 3 Trading Days of the Closing Date.
4.8Resale
by
Purchaser. Each Purchaser understands and acknowledges, severally and not
jointly with any other Purchaser, that the SEC takes the position that the
coverage of short sales of shares of the Common Stock “against the box” before
the Effective Date of the Registration Statement with the Shares is a violation
of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under
Section A, of the Manual of Publicly Available Telephone Interpretations, dated
July 1997, compiled by the Office of Chief Counsel, Division of Corporation
Finance. Accordingly, no Purchaser will use any of the Shares to cover any
short
sales made before the Effective Date. Further, each Purchaser will comply with
any obligations it may have under Regulation M with respect to the resale of
the
Securities.
4.9
Option
to Increase Debenture.
Within
the first 120 days after the Closing Date, the Purchaser may, at its discretion,
increase the debenture by up
to
$1,000,000
(but
not
less than $500,000) to
a
total of up
to
$3,000,000
under the same terms and conditions of the Transaction Documents
herein
(including without limitation, the issuance of an additional Warrant exercisable
into a proportional number of additional Warrant Shares).
4.10 Not
Future Indebtedness.
So long
as any Debenture is outstanding, the Company shall not, and shall not permit
any
of its subsidiaries to, directly or indirectly, without the prior approval
of
Purchaser, other than in the ordinary course of businees or pursuant to existing
obligations,
enter
into, create, incur, assume, guarantee or suffer to exist any indebtedness
for
borrowed money of any kind, including but not limited to, a guarantee, on or
with respect to any of its property or assets now owned or hereafter acquired
or
any interest therein or any income or profits therefrom;
ARTICLE
V - MISCELLANEOUS
5.1 Termination.
This
Agreement may be terminated only
by
mutual written agreement of the parties or by
any
Purchaser, as to such Purchaser’s obligations hereunder only and without any
effect whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing has not
been
consummated on or before August 31, 2006; provided,
however, that no such termination will affect the right of any party to xxx
for
any breach by the other party (or parties).
13
5.2 Entire
Agreement.
The
Transaction Documents, together with the exhibits and schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.
5.3 Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (with
receipt of successful transmission) at
the
facsimile number set forth on the signature pages attached hereto prior to
5:30
p.m. (Nevada time) on a Trading Day, (b) the next Trading Day after the date
of
transmission, if such notice or communication is delivered via
facsimile
(with
receipt of successful transmission)
at the
facsimile number set forth on the signature pages attached hereto on a day
that
is not a Trading Day or later than 5:30 p.m. (Nevada time) on any Trading Day,
(c) the 2nd Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt
by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.
5.4 Amendments;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each
Purchaser or, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
5.5 Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
5.6 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of each Purchaser. Any Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers
any Securities, provided such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions hereof that apply
to
the “Purchasers”.
5.7 No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Persons.
5.8 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents 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 this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively
in
the state and federal courts sitting in the City of Reno. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of Reno, State of Nevada 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, that such suit, action or
proceeding is improper or inconvenient venue for such proceeding.
14
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
Agreement 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.
The parties hereby waive all rights to a trial by jury. If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, 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.
5.9 Survival.
The
covenants
and other agreements of the parties shall survive the Closing. The representations
and warranties contained herein shall survive the Closing and the delivery,
exercise and/or conversion of the Securities for two
years.
5.10 Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
5.11 Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
5.12 Replacement
of Securities.
If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement
Securities.
5.13 Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Purchasers and the Company
will
be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
5.14 Payment
Set Aside.
To the
extent that the Company makes a payment or payments to any Purchaser pursuant
to
any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement
or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation,
any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
15
5.15 Usury.
To the
extent it may lawfully do so, the Company hereby agrees not to insist upon
or
plead or in any manner whatsoever claim, and will resist any and all efforts
to
be compelled to take the benefit or advantage of, usury laws wherever enacted,
now or at any time hereafter in force, in connection with any claim, action
or
proceeding that may be brought by any Purchaser in order to enforce any right
or
remedy under any Transaction Document. Notwithstanding any provision to the
contrary contained in any Transaction Document, it is expressly agreed and
provided that the total liability of the Company under the Transaction Documents
for payments in the nature of interest shall not exceed the maximum lawful
rate
authorized under applicable law (the “Maximum
Rate”),
and,
without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the effective date forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of
the
Maximum Rate is paid by the Company to any Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess shall be
applied by such Purchaser to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at such Purchaser’s election.
5.16 Independent
Nature of Purchasers’ Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out
of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents.
5.17 Construction.
The
parties agree that each of them and/or their respective counsel has reviewed
and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
BULLION
RIVER GOLD CORP. INC.
By:
/s/
Xxxxx X. Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
Chief Financial Officer
|
Address
for Notice:
0000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx,
Xxxxxx 00000
(775)
324-4881
|
With
a
copy to (which shall not constitute notice):
16
[PURCHASER
SIGNATURE PAGES TO BULLION RIVER GOLD CORP., INC. SECURITIES PURCHASE
AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name
of
Purchaser: Xxxxx Participation Corp.
Signature
of Authorized Signatory of Purchaser:
/s/
Xxxxx-Xxxx Xxxxxxx
Name
of
Authorized Signatory: Xxxxx-Xxxx Xxxxxxx
Title
of
Authorized Signatory: Secretary
Email
Address of Purchaser:
________________________________________________________________
Address
for Notice of Purchaser:
_____________________________________________________________
_____________________________________________________________________________________________________
Address
for Delivery of Securities for Purchaser (if not same as above):
________________________________
_____________________________________________________________________________________________________
Principal
Amount: $2,000,000.00
Warrant
Shares: 2,666,667
[SIGNATURE
PAGES CONTINUE]
17
|
Schedule
3.1.g
|
||
|
Common
Stock and Warrants
|
||
|
As
of July 31, 2006
|
|
Common
Stock
|
Warrants
|
||||||
|
As
of March 31, 2006
|
48,853,875
|
27,030,136
|
|||||
|
Granted
or sold since March 31,2006
|
7,916,391
|
7,350,009
|
|||||
|
Cancelled
since March 31, 2006
|
(166,667
|
)
|
(383,333
|
)
|
|||
|
Exercised
since March 31, 2006
|
1,173,960
|
(1,173,960
|
)
|
||||
|
Total
|
57,777,559
|
32,822,852
|
|||||
18
Schedule
3.1.k
Bullion
River Gold Debt and Lease Obligations
As
of June 30, 2006
Accounts
Payable and accruals of $841,028
Long
Term
Reclamation Obligations $106,070, changes as required by law
On
October 3, 2005, the Company entered into a third party agreement to lease
(2)
Caterpillar IT28G loaders for a period of 36 months in the amount of $5,736
per
month. This lease ends on October 3, 2008.
On
December 21, 2005, the Company entered into a third party agreement to lease
(1)
Skid Loader for the North Fork property. The term is 36 months ending December
2008 with a monthly payment of $938.
On
February 14, 2006, the Company entered into a third party agreement to lease
office space which commenced on April 1, 2006 and will end on March 31, 2009.
This agreement was sought out to accommodate the growing support needs of the
company and to reduce the rental cost per square foot. Payments under this
agreement are:
|
·
|
$6,000
per month from April 1 to June 30,
2006
|
|
·
|
$7,855
per month from July 1, 2006 to March 31,
2007
|
|
·
|
$8,091
per month from April 1, 2007 to March 31, 2008
|
|
·
|
$8,333
per month from April 1, 2008 to March 31,
2009
|
On
February 15, 2006, the Company entered into a third party agreement to lease
an
Elphinstone R-1300 loader for a period of 36 months ending in February 2009
in
the amount of $6,776 per month. This equipment will be used at French Gulch.
On
April
12, 2005, the Company entered into a lease agreement for a copier/printer for
a
48-month term ending April 30, 2009. Payment under this agreement is $221 per
month.
On
April
16, 2006, the Company entered a rental agreement for office/housing space for
the French Gulch property whereby the Company is committed to pay $1,550 per
month until April 15, 2007.
On
May 1,
2006, the Company extended a rental agreement for office/housing space for
the
North Fork property whereby the Company is committed to pay $1,030 per month
until October 2006.
Additional
leases up to $200,000 for leased vehicles
19
Schedule
3.1.l
|
French
Gulch Mine Purchase Schedule
|
|||
|
WASHINGTON-NIAGARA
PURCHASE OPTION
|
|||
|
Date
|
7/31/2006
|
||
|
Statement
|
Total
amount of Purchase
|
$
1,500,000.00
|
|
|
Remaining
Amount for purchase
|
$
896,084.00
|
||
|
Date
|
Description
|
Amount
|
Balance
Due
|
|
5/19/2005
|
French
Gulch exercises Option to purchase the Washington-Niagara
|
||
|
Property
and receives the following credits to the purchase price
|
|||
|
for
payments made on Washington-Niagara's behalf.
|
|||
|
Purchase
price
|
$
1,500,000.00
|
||
|
Initial
Purchase Option payment
|
(10,000.00)
|
||
|
Advance
for tax arrearages to Shasta County
|
(15,000.00)
|
||
|
Additional
overage of tax arrearages for Shasta County (paid
10/12/04)
|
(27,588.07)
|
||
|
Additional
overage of tax arrearages for Trinity County (paid
10/12/04)
|
(5,612.00)
|
||
|
2004-2005
claim maintenance fees paid to BLM and Counties
|
(3,416.00)
|
||
|
State
of CA Mining Operation Annual Reports for 2001, 2002, 2003 (paid
12/7/04)
|
(3,238.00)
|
$
1,435,145.93
|
|
|
5/19/2005
|
June
Option payment (less deductions), check #3075
|
(13,561.93)
|
1,421,584.00
|
|
|
|||
|
8/5/2005
|
August
Option payment, check #3146
|
(50,000.00)
|
1,371,584.00
|
|
10/28/2005
|
October
Option payment, check #3237
|
(50,000.00)
|
1,321,584.00
|
|
12/1/2006
|
December
Option payment, check #3270
|
(50,000.00)
|
1,271,584.00
|
|
2/1/2006
|
February
Option payment, check #3360
|
(50,000.00)
|
1,221,584.00
|
|
4/3/2006
|
April
Option payment, check #1721
|
(50,000.00)
|
1,171,584.00
|
|
5/26/2006
|
June
Option payment, check #2056
|
(50,000.00)
|
1,121,584.00
|
|
7/14/2006
|
Reduction
of Purchase Price for Investment
|
(175,500.00)
|
946,084.00
|
|
7/27/2006
|
August
Option payment, check #2508
|
(50,000.00)
|
896,084.00
|
|
Planned
Schedule of Payments
|
|||
|
9/27/2006
|
October
Payment
|
(175,000.00)
|
721,084.00
|
|
11/27/2006
|
December
Payment
|
(175,000.00)
|
546,084.00
|
|
1/27/2007
|
February
Payment
|
(175,000.00)
|
371,084.00
|
|
3/28/2007
|
April
Payment
|
(175,000.00)
|
196,084.00
|
|
5/27/2007
|
June
Payment
|
(175,000.00)
|
21,084.00
|
|
7/27/2007
|
August
Payment
|
(21,084.00)
|
-
|
20
