9
Exhibit 5
Form 10-KSB
Mountain Oil, Inc.
$5,000 No. 023
AMOUNT
MOUNTAIN OIL, INC.
7% Convertible Debenture
Due March 31, 2002
MOUNTAIN OIL, INC., a corporation duly organized and
existing under the laws of the state of Utah (hereinafter
referred to as the "Company"), for value received, hereby
promises to pay to __________________ or registered assigns, the
registered holder hereof, the principal sum of _______________
Dollars ($______) on March 31, 2002, upon presentation and
surrender of the Debenture at the offices of the Company at 0000
Xxxx 000 Xxxxx (Xxxx Xxxxxxx 00) Xxxxxxx, Xxxx 00000, in such
lawful money of the United States of America as at the time of
payment shall be legal tender for the payment of public and
private debt, and to pay monthly in like lawful tender interest
on the unpaid principal at a rate per annum (calculated on the
basis of the actual number of days elapsed in a 365-day year)
equal to 7% (subject to adjustment as provided below), from and
after the date of issuance or from the most recent interest
accrual date for which interest has been paid or duly provided
for, as the case may be.
This Debenture is subject to the following further terms and
material provisions:
1. Series. This Debenture is one of a duly authorized
issue of Debentures of the Company designated as its 7%
Convertible Debentures Due March 31, 2002 (herein called the
"Debentures"), limited in aggregate principal amount to One
Million Dollars ($1,000,000), issued and to be issued pursuant to
the terms contained herein (the "Series"). These Debentures
shall not be issued in amounts less than One Thousand Dollars
($1,000).
2. Term. The date of maturity of the Debenture shall be
March 31, 2002 (the "Maturity Date").
3. Payment. The principal on the Debenture shall be
payable at the offices of the Company. Each payment of accrued
interest shall be made on or before the thirtieth day following
the end of each calendar month after the date hereof until the
final payment of interest on the date the principal is paid or
made available for payment. The interest so payable will, as
provided below, be paid to the person in whose name this
Debenture is registered at the close of business on the regular
payment date for such interest. The interest will be paid by
check mailed to the last known address of the person in whose
name the Debenture is registered by the 30th day of the month
after which such interest payment is due or if no such address is
listed at the office of the Company.
4. Conversion. Subject to, and in compliance with, the
provisions contained herein, the holder of the Debenture is
entitled, at holder's option, at any time after September 1, 2000
and before the Maturity Date (or in case this Debenture or some
portion hereof shall be called for repayment prior to such date,
then until and including, but not after, the close of business
within 30 days of the date of notice of repayment), to convert
all or any portion of the principal amount of this
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Debenture into fully paid and non-assessable shares of common
stock, no par value ("Common Stock"), at a conversion ratio of
one share of Common Stock for each $1.50 of the principal amount
of the Debenture. Conversion shall be effected by surrender of
this Debenture, duly endorsed (if so required by the Company), to
the Company at its offices in Ballard, Utah, accompanied by
written notice of conversion specifying the amount of the
principal of the Debenture to be converted. On conversion, no
adjustment for interest is to be made, but if any holder
surrenders a Debenture for conversion after the end of a calendar
year and before the end of the then current year, the holder of
such Debenture when surrendered for conversion shall be entitled
to payment in cash of the interest accrued to the date of
conversion, which shall be paid on the next interest payment
date. No fractional shares will be issued upon conversion, but
if the conversion results in a fractional interest, an amount
equal to the market value of such fractional interest, will be
paid in cash. The conversion price and number of Shares issued
upon conversion of this Debenture may be subject to adjustment
from time to time as follows:
(a) If the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them
to receive a dividend in Common Stock, the conversion
ratio in effect immediately prior to such record date
shall be proportionately increased, such adjustment to
become effective immediately after the opening of
business on the date following such record date;
(b) If the Company shall subdivide the outstanding
Common Stock into a greater number of shares or combine
the outstanding shares into a smaller number of shares,
or issue by reclassification any of its shares of
Common Stock, the conversion ratio shall be adjusted so
that the holder of the Debenture thereafter surrendered
for conversion shall be entitled to receive after the
occurrence of any of the events described the number of
shares of Common Stock to which the holder would have
been entitled had such Debenture been converted
immediately prior to the occurrence of such event, such
adjustment to become effective immediately after the
opening of business on the date following the date upon
which such subdivision or combination or
reclassification, as the case may be, becomes
effective;
(c) Neither the purchase or other acquisition by the
Company of any shares of Common Stock, nor the sale or
other disposition by the Company of any Common Stock,
warrants, or other securities shall affect any
adjustment of the conversion price or be taken into
account in computing any subsequent adjustment of the
conversion price; and
(d) If at any time:
(i) The Company proposes to pay any dividend
payable in shares upon its Common Stock or make
any distribution, including a cash or property
dividend, out of earnings or earned surplus, to
the holders of its shares;
(ii) The Company proposes to enter into any
plan of capital reorganization or of
reclassification of the Common Stock of the
Company; or
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(iii) The Company proposes to merge,
consolidate or encumber or sell all or
substantially all of its assets other than in the
ordinary course of business,
then, in any one or more of said cases, the
Company shall cause notice to be mailed to the
registered holder of this Debenture at the address of
such holder set forth in the registration records of
the Company. Such notice shall be solely for the
convenience of such registered holder and shall not be
a condition precedent to, nor shall any defect therein
or failure in connection therewith affect the validity
of, the action proposed to be taken by the Company.
Such notice shall be mailed, at least 20 days prior to
which the books of the Company shall close, or a record
date shall be taken for such dividend, share split or
reclassification, consolidation, merger, or sale of
properties and assets, as the case may be. Such notice
shall specify such record date for the closing of the
transfer books.
5. Prepayment. The Debentures are subject to prepayment
at any time after the issue date, upon not less than 30 nor more
than 50 days' notice by mail, in whole or in part, at the
election of the Company. At any time prior to the date fixed for
prepayment set forth in the written notice, the holder may
convert the outstanding amount of the Debenture, or any portion
thereof, to Common Stock as provided in paragraph 4, above. On
the date fixed for prepayment, the Debentures shall cease to bear
interest. Upon surrender of the Debenture for repayment in
accordance with said notice of prepayment by the Company, the
amount of principal and interest due shall be paid in cash or
certified funds. Any Debenture that is prepaid only in part
shall be presented for notation thereon by the Company of such
partial prepayment. The obligation of the Company to redeem any
Debentures shall be evidenced by a resolution of the board of
directors.
6. Satisfaction and Discharge of Debenture. This
Debenture shall cease to be of further effect (except as to any
surviving rights of conversion, transfer or exchange of
Debentures herein expressly provided for) when,
(a) The Company has paid or caused to be paid all sums
payable hereunder by the Company, including all
principal amounts and interest accrued under the
Debenture; and
(b) All the conditions precedent herein provided for
relating to the satisfaction and discharge of this
Debenture have been complied with.
7. Events of Default. "Event of Default" when used
herein, whatever the reason for such event of default and whether
it shall be voluntary or involuntary or be effected by operation
of law pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or
governmental body or be caused by the provisions of any paragraph
herein means any one of the following events:
(a) Default in the payment of any interest of any Debenture in
this Series when it becomes due and payable, and continuance of
such default for a period of 60 days;
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(b) Default in the payment of the principal on any
Debentures in this Series when due, whether at
maturity, upon prepayment by declaration, or otherwise;
(c) Default in the performance or breach of any
covenant or warranty of the Company (other than a
covenant or warranty the default or breach of which is
elsewhere in this section specifically dealt with), and
continuation of such default or breach for a period of
60 days after there has been given, by registered or
certified mail, to the Company by the holders of 75% or
more in principal amount of the outstanding Debentures
in this Series, a written notice specifying such
default or breach and requiring it to be remedied and
stating that such notice is a notice of default
hereunder;
(d) The entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company a
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the
Company under the Federal Bankruptcy Act or any other
applicable federal or state law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Company or of any
substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the
continuance of any such decree or order not stayed and
in effect for a period of 60 consecutive days; or
(e) The institution by the Company of proceedings to
be adjudicated a bankrupt or insolvent, or the consent
by it to the institution of bankruptcy or insolvency
proceedings against it, or a filing by it of a petition
or answer or consent seeking reorganization or relief
under the Federal Bankruptcy Act or any other
applicable federal or state law; or the consent by it
to the filing of any such petition or the appointment
of a receiver, liquidator, assignee, trustee,
sequestrator, or other similar official of the Company
or of any substantial part of its property, or the
making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its
inability to pay its debts generally as they become
due, or the taking of corporate action by the Company
in furtherance of any such actions.
8. Acceleration of Maturity. If an event of default
occurs and is continuing then, in every such case, the holders of
75% in principal amount of the outstanding Debentures in this
Series may declare the principal of all the Debentures to be due
and payable immediately, by a notice in writing to the Company of
such default, and upon any such declaration, such principal shall
become immediately due and payable. At any time after such
declaration of acceleration has been made and before a judgment
or decree for payment of money due has been obtained by the
holders, the holders of 75% in principal amount of the Debentures
in this Series outstanding, by written notice to the Company, may
rescind and annul such declaration and its consequences if all
events of default, other than the non-payment of the principal of
Debentures which have become due solely by such acceleration,
have been cured or waived as provided below. No such rescission
shall affect any subsequent default or impair any right
consequent thereon.
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9. Suits for Enforcement. If an event of default occurs
and is continuing, the holders of 75% in principal amount of the
outstanding Debentures in this Series may, in their discretion,
proceed to protect and enforce their rights by such appropriate
judicial proceedings as the holders shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement under this Debenture or
in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
10. Limitation on Suits. No holder of any Debenture shall
have any right to institute any proceeding, judicial or
otherwise, with respect to this Debenture, or for the appointment
of a receiver or trustee, or for any remedy hereunder, except as
specifically provided herein. The holder understands and
acknowledges that no one or more holders of Debentures shall have
any right in any manner whatever by virtue of, or by availing of,
any provisions of this Debenture or otherwise to effect, disturb,
or prejudice the right of any other holders of Debentures, or to
obtain or to seek to obtain priority or preference over any other
holders or to enforce any right under this Debenture, except in
the manner herein provided and for the equal and ratable benefit
of all the holders of Debentures.
11. Unconditional Right of Holders to Receive Principal and
Interest. Notwithstanding any other provision in this Debenture,
the holder of any Debenture shall have the right which is
absolute and unconditional to receive payment of the principal of
and interest on such Debenture on the respective stated maturity
dates expressed in such Debenture (or, in the case of prepayment,
on the prepayment date) and, subject to the provisions hereof, to
institute suit for the enforcement of any such payment and the
right to convert such Debenture in accordance with paragraph 4,
and to institute suit for the enforcement of such right to
convert, and such right shall not be impaired without the consent
of such holder.
12. Corporate Obligation. No recourse under or upon any
obligation, covenant, or agreement contained in this Debenture,
or of any claim based thereon or otherwise in respect thereof,
shall be had against any officer, director, or controlling
shareholder of the Company, past or present, or of any subsidiary
corporation, either directly or through the Company or any
successor corporation, it being expressly understood that this
Agreement is solely a corporate obligation of the Company.
13. Acts of Holders. Any request, demand, authorization,
direction, notice, consent, waiver, or other action provided by
this Debenture to be given or taken by the holder hereof or by
the holders of the Debentures in this Series may be embodied in
and evidenced by one or more instruments of substantially similar
tenor signed by such holders in person or by their agent or
attorney-in-fact, duly appointed in writing; and, except as
otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to
the Company in the manner provided for giving notices herein.
Such instrument or instruments and the action embodied therein or
evidenced thereby, are herein sometimes referred to as the "act"
of the holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Debenture
if the fact and date of execution by any person of any such
instrument or writing is verified by the affidavit of a witness
of such execution or by the certificate of a notary public or
other officer authorized by law
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to take acknowledgements. Any request, demand, authorization,
direction, notice, consent, waiver, or other action by the holder
of any Debenture shall bind every Debenture holder of the same
Debenture and the holder of every Debenture issued upon the
transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or suffered to be done by any person in
reliance thereon, whether or not notation of such action is made
upon such Debenture.
14. Notices to Holders; Waiver. Where this Debenture
provides for notice to holders of any event, such notice shall be
sufficiently given if in writing and mailed, registered, postage
prepaid, to each holder affected by such event, at his address as
it appears in the Debenture register maintained by the Company,
not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case
where notice to holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any
particular holder shall affect the sufficiency of such notice
with respect to holders of other Debentures issued in this
Series. Where this Debenture provides for notice to the Company,
such notice shall be sufficiently given if in writing and mailed,
registered, postage prepaid, to the Company at its address set
forth above (or at such other address as shall be provided to the
holders of the Debentures of this Series in the manner for giving
notices set forth herein), not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of
such notice. Where this Debenture provides for notice, such
notice may be waived in writing by the person entitled to receive
such notice, either before or after the date on which the person
entitled to receive such notice and either before or after the
event, and such waiver shall be the equivalent of such notice.
15. Restrictions. The holder of this Debenture, by
acceptance hereof, both with respect to the Debenture and the
Common Stock issuable upon conversion of the Debenture, agrees
and acknowledges that:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER
COMPLIANCE UNDER THE ACT OR THE LAWS OF THE APPLICABLE
STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, AND ITS
COUNSEL, TO THE EFFECT THAT THE SALE OR TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE ACT AND SUCH STATE
STATUTES.
16. Modification. The Company, with the consent of the
holders of not less than the majority in aggregate principal
amount of the Debentures, may modify or amend the provisions of
the Debenture or any supplemental Debenture, or the rights of the
holders of the Debenture, provided, however:
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(a) That no such modification shall: extend the fixed
maturity of any Debentures; reduce the principal amount
thereof; reduce the rate or extend or accelerate the
time of payment of interest thereon; or reduce any
premium payable upon the redemption thereof; and
(b) That any provisions which would have an adverse
affect upon less than all the holders of Debentures
must be consented to by holders of not less than the
majority in aggregate principal amount of said
Debentures so affected.
In addition, the Company may execute, without the consent of any
Debenture holder, any supplemental Debenture: evidencing the
succession of another corporation to the Company; adding to the
covenants of the Company; curing ambiguities, defects, or
inconsistencies in the Debenture or any supplemental Debentures;
and issuing additional debentures in a different series.
17. Subordination. The Company covenants and agrees, and
each holder (and each person holding any Debenture, whether upon
original issue, or upon transfer, assignment or exchange thereof)
of the Debentures, by its acceptance thereof, likewise covenants
and agrees that: (i) the payment of the principal of, and
interest on, the Debentures by the Company shall be subordinated
and junior in right of payment to the prior payment in full, in
cash or cash equivalents, of all senior indebtedness now existing
or hereafter created; and (ii) the subordination is for the
benefit of, and shall be relied upon and be enforceable directly
by, the holders of senior indebtedness. The Company and each
holder hereby agree not to amend, modify or change in any manner
any provision of this Debenture so that the terms and conditions
hereof, as so amended, modified or changed, are less favorable to
the holders of the senior indebtedness than the terms hereof on
the issue date, without the prior written consent of the
necessary holders of senior indebtedness. For purposes of the
Debentures, "senior indebtedness" shall mean all indebtedness of
the Company now existing or hereafter incurred, whether secured
or unsecured, which by its terms is superior in right of payment
to the Debentures. Each of the holders of the Debentures by such
holders' acceptance thereof authorizes and expressly directs the
Company on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Debentures
and the holders of senior indebtedness, the subordination
provisions contained herein, and appoints the Company such
holders' attorney-in-fact for such purpose.
18. Severability. In case any provision in this Debenture
shall be invalid, illegal, or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
19. Governing Law. This Debenture shall be governed by and
construed and interpreted in accordance with the laws of the
state of Utah. The holder hereby irrevocably agrees that any
legal suit, action, or proceeding arising out of or relating to
this Debenture shall only be instituted in any state or federal
court in the state of Utah.
20. Legal Holidays. In any case where any date provided
herein shall not be a business day, then (notwithstanding any
other provision of this Debenture) the event required or
permitted on such date shall be required or permitted, as the
case may be, on the next succeeding business day with the same
force and effect as if made on the date upon which such event was
required or permitted pursuant hereto.
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21. Delay or Omission; No Waiver. No delay or omission of
any holder of any Debenture to exercise any right or remedy
accruing upon any event of default shall impair any such right or
remedy or constitute a waiver of any such event or default or an
acquiescence therein. Every right or remedy given hereby or any
law may be exercised from time to time, and as often as may be
deemed expedient.
DATED this ________ day of _______________________________,
2000.
MOUNTAIN OIL, INC.
By__________________________________
Duly Authorized Officer
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Conversion Form
The undersigned hereby irrevocable elects to convert
______________________________ in principal amount of the
Debenture represented by the within instrument to common Stock of
Mountain Oil, Inc., and requests that the certificate(s) for such
shares be delivered to:
_________________________________________________________________
______________
_________________________________________________________________
______________
_________________________________________________________________
______________
and if the principal amount of the Debenture converted shall not
be all of the principal amount represented by the within
instrument, that the instrument be returned to the undersigned
with notation of the conversion and resulting reduction in
principal at:
_________________________________________________________________
______________
_________________________________________________________________
______________
_________________________________________________________________
______________.
Dated _______________________________________,
_______________.
____________________________________
In presence of
_________________________________________
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