CONVERTIBLE DEBENTURE and CONVERTIBLE DEBENTURE AGREEMENT
This Convertible Debenture and Convertible Debenture Agreement are
made by and between GOLDEN EAGLE INTERNATIONAL, INC. (hereafter
the "Borrower") and Kevin Pfeffer, a resident of Florida, (the
"Lender"), on October 18, 2002, effective as of February 6, 2002
and is intended to supercede and replace all outstanding
agreements between the Borrower and the Lender, such agreements
(the "agreements") being for the following amounts:
-------- ---------- -------------- -----------------------------
Date Amount ($) Source of Aggregate Amount of Shares
Funds Beneficially Owned (Sole
Voting and Dispositive Power)
-------- ---------- -------------- -----------------------------
02/06/02 $750,000 Personal Funds 25,000,000
01/22/02 $80,000 Personal Funds 2,666,666.7
01/07/02 $75,000 Personal Funds 2,500,000
12/06/01 $150,000 Personal Funds 5,000,000
11/20/01 $40,000 Personal Funds 1,333,333.3
11/06/01 $100,000 Personal Funds 3,333,333.3
10/12/01 $30,000 Personal Funds 1,000,000
10/03/01 $60,000 Personal Funds 2,000,000
09/19/01 $60,000 Personal Funds 2,000,000
08/03/01 $150,000 Personal Funds 5,000,000
07/16/01 $75,000 Personal Funds 2,500,000
07/05/01 $75,000 Personal Funds 2,500,000
06/14/01 $75,000 Personal Funds 2,500,000
04/19/01 $150,000 Personal Funds 5,000,000
04/04/01 $35,000 Personal Funds 1,166,666.7
03/01/01 $30,000 Personal Funds 1,000,000
02/15/01 $30,000 Personal Funds 1,000,000
12/08/00 $200,000 Personal Funds 6,666,666.7
11/29/00 $45,000 Personal Funds 1,500,000
09/05/00 $200,000 Personal Funds 6,666,666.7
08/23/00 $50,000 Personal Funds 1,666,666.7
07/13/00 $40,000 Personal Funds 1,333,333.3
07/12/00 $30,000 Personal Funds 1,000,000
02/10/00 $200,000 Personal Funds 6,666,666.7
01/27/00 $100,000 Personal Funds 3,333,333.3
-------- ---------- -------------- -----------------------------
Total $2,830,000 94,333,333.3 shares of
common stock
WHEREAS, the Borrower has borrowed $2,830,000 from the Lender in
accordance with the terms and conditions set forth in the earlier
agreements and herein, and
WHEREAS, the Lender has loaned $2,830,000 to the Borrower in
accordance with the terms and conditions set forth in the earlier
agreements and herein.
WHEREAS, the amounts provided to the Borrower as described in the
preceding table have accrued unconverted interest from the date of
advancement to September 30, 2002, in the total amount of
$232,830.09 which interest the Borrower has not paid to the
Lender.
THEREFORE, the Lender and the Borrower agree that this Convertible
Debenture replaces in their entirety and supercedes in all
respects the earlier agreements (none of which have any further
force or effect) and further agree that the terms and conditions
applicable to this Convertible Debenture and the funds that the
Lender has advanced to the Borrower are as follows:
1. ACQUISITION OF CONVERTIBLE DEBENTURE. The Borrower hereby
agrees to sell and the Lender agrees to buy the Convertible
Debenture of the Borrower embodied in this Convertible Debenture
Agreement. This Convertible Debenture shall have the principal
amount of $3,062,830.09 (including the total amount advanced under
the earlier agreements plus unpaid or unconverted interest accrued
through September 30, 2002)("Principal"). The Borrower
acknowledges that it has received full payment of or benefit from
the Principal prior to the date hereof. In addition, a resolution
of the Board of Directors of the Borrower authorizing the
execution of this Convertible Debenture Agreement and Convertible
Debenture is marked as Exhibit "A," and by this reference is made
a part hereof.1ConConcond
2. CONVERTIBLE DEBENTURE TERM AND INTEREST RATE. The Principal
and accrued Interest ("Interest") shall be due and payable to the
holder thereof on January 2, 2004. The holder thereof may at its
election extend the term of the Convertible Debenture for
successive one (1) year periods upon written notice thereof to the
Borrower.
Interest on the Convertible Debenture shall accrue from
September 30, 2002 at the rate of ten percent (10%) per annum,
calculated monthly, until paid or converted. Interest and
Principal shall be due and payable to the Lender upon maturity or
earlier redemption or conversion. However, in the event of
default, interest shall accrue at the rate of twelve percent (12%)
per annum, calculated monthly, from the date of default.
3. REDEMPTION. The Borrower may only elect to redeem the
Convertible Debenture by paying the Principal and accrued Interest
of the Convertible Debenture five (5) days prior to final maturity
of the Convertible Debenture, unless the Lender shall have already
opted to convert. The foregoing notwithstanding, the Lender may
convert the Principal and accrued Interest into any securities of
the Borrower that are outstanding, or may be offered, pursuant to
Paragraph 5 below upon three (3) days written notice of conversion
("Notice of Conversion"), at any time, except that a conversion
into the common stock of the Borrower may not occur prior to
December 31, 2002.
4. NEGOTIABILITY. The Convertible Debenture shall be
saleable, transferable, assignable or otherwise negotiable, by
the holder thereof, upon written notification to Borrower of the
new holder and its address provided that the assignor and the
assignee comply with federal and all applicable state securities
laws in offering and in completing any such assignment. The Borrower
hereby makes an unconditional promise to repay the Principal and
accrued Interest of the Convertible Debenture on or before the date
due to any permitted transferee and acknowledges that repayment to a
transferee is not subject to any claims or defenses the Borrower
may have against prior holders. Furthermore, it is agreed that
all rights, benefits, representations and warranties made by the
Borrower shall survive any sale, transfer, assignment, or other
negotiation by Lender to a permitted transferee.
5. CONVERSION OF DEBT INTO BORROWER'S SECURITIES. The Holder
(which includes the Lender and any permitted transferee) may elect
at any time to convert the Principal and/or accrued Interest (to
the day prior to the date Notice of Conversion is given to the
Borrower), in whole or in part, except that a conversion into
common stock of the Borrower may not occur prior to December 31,
2002 and further a conversion may not occur unless at the time of
the conversion there exists an exemption from registration for the
conversion under federal and applicable state securities laws.
This conversion shall be made into as many securities (the
"Conversion Shares"), of whatever class of stock or other
securities of the Borrower outstanding, or which may be offered,
at the designation of the Holder, as equals the dollar amount to
be converted pursuant to the following:
If converted into the common stock of the Borrower, the
conversion shall be for the amount of stock as equals the
dollar amount converted divided by $.03.
As to any other class of stock, or other security outstanding
or offered by Borrower, then the conversion shall be made at
the amount as equals the dollar amount converted divided by
the average closing bid price for the class of stock or other
security being purchased as reported by the OTC Bulletin
Board (or such other public market on which the securities
are traded) for the three (3) most recent days on which
trading in the security takes place prior to the date of the
Lender's Notice of Conversion to the Borrower. However,
should the class of stock or security not be traded and
quoted on a public market, then the price shall be the price
per share or per security of the market value of such
securities as determined by an independent, financial
appraiser which is agreeable to both Borrower and Lender.
However, for any conversion with respect to accrued Interest
accruing after December 31, 2002, the conversion of such accrued
Interest will be pursuant to the following:
If converted into the common stock of the Borrower, or in the
election of the Holder any other class of stock, or other
security outstanding or offered by the Borrower, then the
conversion shall be made at the amount as equals the dollar
amount converted divided by ninety percent (90%) of the
average closing bid price for the class of stock or other
security being purchased as reported by the OTC Bulletin
Board (or such other public market on which the securities
are traded) for the three (3) most recent days on which
trading in the security takes place prior to the date of the
Lender's Notice of Conversion to the Borrower.
Should the class of stock or security not be traded and
quoted on a public market, then the price shall be ninety
percent (90%) of the price per share or per security of the
market value of such securities as determined by an
independent, financial appraiser which is agreeable to both
Borrower and Lender.
6. DEFAULT. Each of the following events shall be and shall
constitute an event of default under this Agreement, and Borrower
shall have a duty to inform Lender of the occurrence of any such
default within ten (10) calendar days of such occurrence
(a) Any default by the Borrower in the punctual payment of the
Principal and accrued Interest of the outstanding Convertible
Debenture when, and as, the same shall become due and payable.
(b) Any default by the Borrower under, or breach by the
Borrower in the performance of, any covenant, agreement,
warranty, representation or condition contained in this
Agreement or the Convertible Debenture;
(c) If the Borrower or its subsidiaries shall:
(i) apply for, or consent to, the appointment of a
receiver, trustee, or liquidator of the Borrower or
its subsidiaries for all or substantially all
assets of the Borrower or its subsidiaries;
(ii) file or be served with any petition for relief
under the Bankruptcy Code or any similar federal or
state law or admit in writing its inability to pay
its debts as they become due; or
(iii) make a general assignment to or for the
benefit of creditors;
(d) If any pleading shall be filed in any court or other
forum seeking the adjudication of the Borrower or its
subsidiaries as a bankrupt or insolvent, the appointment
of a receiver, trustee, or liquidator of the Borrower or
its subsidiaries or of all or substantially all of their
assets which pleading shall not be dismissed within
ninety (90) days; or a court shall have entered a decree
or order for relief in respect of the Borrower or its
subsidiaries in an involuntary case under applicable
bankruptcy, insolvency, or other similar law now or
hereafter in effect, or ordering the winding-up or
liquidation of its affairs; or
(e) The filing of any tax lien respecting any of the assets
of the Borrower or its subsidiaries;
(f) A default under any bond, debenture, note or other evidence
of indebtedness by the Borrower or any subsidiary under any
mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any indebtedness of
such type by the Borrower or any subsidiary with a principal
amount then outstanding in excess of $50,000, or any failure to
pay off when due, or extend without inducement to its guarantor,
the specific indebtedness to Frost Bank; or
(g) A final judgment for the payment or money shall be entered
against the Borrower or any subsidiary in an aggregate amount in
excess of $50,000 by a court of competent jurisdiction, which
judgment remains undischarged for a period of 45 days after the
right to appeal has expired; or
(i) The foregoing notwithstanding, the Borrower shall have
thirty (30) days from the date of such default to cure
said default, other than a default under Section 6(a).
Upon such cure the terms of the Convertible Debenture
shall continue in effect.
7. REMEDIES UPON DEFAULT. Upon the occurrence of any one or
more of the events of default described in Section 6 of this
Agreement and subject solely to the Borrower's actual cure of the
default pursuant to Section 6(i), the holder of the Convertible
Debenture at its option, and in its sole discretion, may declare
the unpaid balance of the Principal and accrued Interest, together
with any further amount as shall be sufficient to cover costs and
expenses of collection, including attorney's fees, immediately due
and payable as fully and as completely as if said aggregate sum
was originally agreed to be paid at such time, all without notice
or demand, which are hereby expressly waived by the Borrower. In
addition, thirty (30) days after the occurrence of any one or more
of such events of default, the holder may proceed to enforce
payment of the Principal and accrued Interest, together with any
further amount as shall be sufficient to cover costs and expenses
of collection, including attorney's fees, including conversion as
set out in paragraph 5 above, default Interest, as accelerated as
above provided, and any and all other duties, obligations and
liabilities secured by this Agreement and the Convertible
Debenture.
8. LOCATION OF TRANSACTION. The offer and acceptance of the
Convertible Debenture, and any subsequent election to convert any
portion of this Convertible Debenture into common stock or other
securities as provided by Section 5 above, shall be deemed
concluded at the office of the Borrower, 12401 South 450 East,
Bldg. D2, Suite A, Salt Lake City, Utah 84020.
9. EXEMPTION OF THIS DEBENTURE FROM REGISTRATION. The Borrower
and the Lender agree that the offer and acceptance of this
Convertible Debenture is exempt from the registration requirements
of Section 5 of the Securities Act of 1933, pursuant to an
exemption specified in Sections 4(2) and 4(6) of the Securities
Act and rules thereunder. The securities being offered by the
Borrower to the Lender, in the event that the Lender exercises its
conversion rights to purchase Borrower's common stock or other
securities pursuant to this Agreement, have not been registered
under the Securities Act of 1933 or applicable State blue sky or
securities laws and are offered under the exemptions from
registration discussed above. If Lender exercises its conversion
rights, the securities so purchased cannot be sold, transferred,
assigned or otherwise disposed of, except in compliance with this
Convertible Debenture Agreement and the applicable Federal and
State securities laws and regulations.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. The
Borrower represents, warrants and covenants to the Lender as
follows:
(a) The Borrower shall maintain accurate records and books of
account, in accordance with generally accepted accounting
principles, consistently applied throughout the periods included
therein, and the Lender shall have the right to receive and review
Borrower's SEC filings and financial statements contained therein;
(b) The Borrower shall pay and discharge when due all taxes,
levies and other charges which are or, if they remain unpaid, may
become a lien against its or its subsidiaries' properties or
assets;
(c) The Borrower shall maintain adequate insurance against loss
or damage to all of its or its subsidiaries' properties and assets
and will maintain insurance deemed by the Borrower to be adequate
against loss or damage to all of its or its subsidiaries'
properties and assets and liability for damage to the person or
property of others;
(d) The Borrower shall notify the Lender if, at any time, it
changes the address of the office where it keeps its books and
records.
(e) The Borrower shall maintain its and its subsidiaries'
corporate existence and comply with all valid and applicable
statutes, rules, ordinances, regulations or orders, federal, state
and local, maintain its and its subsidiaries' franchises, and
maintain its and its subsidiaries' properties in good operating
conditions;
(f) The Borrower shall at all times that the Convertible
Debenture is outstanding, maintain an adequate number of
authorized but un-issued shares of common stock necessary for the
conversion of the Principal and accrued Interest, such shares to
be issued free and clear of pre-emptive and similar rights, taxes,
liens, charges and interests.
(g) The Borrower, concurrent with the issuance hereof, shall
deliver a certified copy of a resolution of its board of directors
authorizing the Borrower's transfer agent to issue the fully paid
and non-assessable Conversion Shares upon Notice of Conversion,
directing the transfer agent to issue the Conversion Shares upon
Notice of Conversion, and granting the transfer agent full
irrevocable authority to act upon the Notice of Conversion upon
receipt, subject only to appropriate legal opinions regarding the
availability of any exemption from registration for such
conversion under federal and applicable state securities laws.
(h) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Colorado and is qualified or authorized to do business as a
foreign corporation and is in good standing in all jurisdictions
in which qualification or authorization may be required and has
all requisite corporate power and authority, licenses and permits
to own or lease and operate its properties and any of its business
as presently being conducted and to execute, deliver and perform
this Agreement, the Convertible Debenture, and consummate the
transactions contemplated hereby.
(i) The Borrower is a Reporting Company whose common stock is
registered with the U.S. Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934 as amended. The
Borrower represents and warrants that it will file all such
reports as required and that the information contained therein
does not and will not contain any misstatement of material
information or any omission of information necessary to make the
information provided not misleading.
(j) All covenants and agreements in this Agreement and the
Convertible Debenture by the Borrower shall bind its successors
and assigns, whether so expressed or not. No payment,
distribution or other action may be taken by any subsidiary of the
Borrower with respect to this Agreement or the Convertible
Debenture if the Borrower would be prohibited from taking such
action.
(k) Neither the Borrower nor any of its subsidiaries shall incur,
create, issue, assume, guarantee or otherwise become liable for
any indebtedness that is senior in any respect to the Convertible
Debenture without the prior written consent of the Lender.
11. REPRESENTATIONS AND WARRANTIES OF LENDER. The Lender
represents and warrants to the Borrower as follows:
(a) Lender is an accredited investor within the definition set
out in Section 2(a)(15) of the Securities Act, which definition
has been provided to Lender.
(b) The offer and acceptance of the Convertible Debenture, and
the Conversion Shares to be received upon conversion thereof,
shall have taken place only after a thorough review of all
information the Borrower has made publicly available, all
additional questions that the Lender has based on its review of
such information have been adequately addressed, and review and
execution by Lender of Borrower's current Subscription Agreement
that has been provided to Lender. In addition, the Lender
represents that he has consulted with his legal, financial, and
tax advisors regarding the advisability of this Agreement and the
Convertible Debenture to the extent the Lender has determined such
consultation to be necessary or appropriate in the circumstances.
(c) The Lender is aware that the Convertible Debenture and
Conversion Shares have not been and might not be registered with
the U.S. Securities and Exchange Commission, and may only be sold
in accordance with applicable law and regulations.
The Lender is acquiring the Convertible Debenture and
Conversion Shares received upon conversion thereof for
investment purposes only and not with a view to the further
distribution thereof, and the Lender has not entered into
any agreement or other arrangement or understanding with
any party regarding the resale of this Agreement, the
Convertible Debenture, the Conversion Shares, or any
interest or partial interest therein.
(d) The Lender will not sell, sell short or cause any trading
directly or indirectly to take place in the market for any of the
Borrower's securities into which Principal or accrued Interest of
the Convertible Debenture may be converted that would in any way
negatively affect the trading price of such securities until after
a Notice of Conversion is given to the Borrower.
12. RIGHTS AND REMEDIES. Each right, power or remedy of the
Lender or its assignee upon the occurrence of any event of default
as provided for herein, or now or hereafter existing at law or in
equity or by statute, shall be cumulative and concurrent and shall
be in addition to every other right, power or remedy provided for
herein or now or hereafter existing at law or in equity or by
statute, and the exercise or beginning of the exercise by the
Lender or its assignee of any one or more of such rights, powers
or remedies shall not preclude the simultaneous or later exercise
of any or all such other rights, powers or remedies. The Borrower
covenants that it will not at any time insist upon, or plead, or
in any manner whatsoever claim or take benefit or advantage of,
any stay, usury or extension law wherever enacted or now or at any
time hereafter in force, which may effect the covenants or
performance of this agreement.
13. FAILURE TO ACT AND WAIVER. No failure or delay by the holder
to insist upon the strict performance of any term hereof or to
exercise any right, power or remedy consequent upon an event of
default hereunder shall constitute a waiver of any such term or of
any such breach, or preclude the holder from exercising any such
right, power or remedy at any later time or times. By accepting
payment after the due date of any amount payable hereunder, the
holder shall not be deemed to waive the right either to require
payment when due of all other amounts payable hereunder, or to
declare an event of default hereunder for failure to effect such
payment of any such other amount.
14. REGISTRATION RIGHTS. If the Borrower proposes to register
under the Securities Act shares of its Common Stock, the Borrower
shall include in such registration all Conversion Shares that the
Lender desires to include therein. In addition, within 90 days of
the Borrower's receipt of a written request from the Lender
(provided such request is received after the Lender has filed the
Form 10-KSB for the period ended December 31, 2002), or as soon
after that filing as practical, the Borrower shall prepare and
file a registration statement under the Securities Act for the
purpose of effecting a registration of the Conversion Shares. The
Borrower shall use its reasonable best efforts to effect such
registration and to keep the registration continuously effective.
In either case, the Borrower shall enter into such agreements as
are customary and take such other actions as are reasonably
necessary in order to expedite or facilitate the disposition of
the Conversion Shares, including without limitation the listing of
all Conversion Shares on each securities exchange or other trading
market on which securities of the same class or series are then
listed. The Borrower shall also file the reports required to be
filed by it under the Securities Exchange Act of 1934, so as to
enable the Lender to sell Conversion Shares pursuant to Rule 144.
All reasonable costs of such registration and listing of
securities shall be borne by Lender. In addition, the Lender will
provide information necessary regarding the Lender and its
ownership of the Conversion Shares necessary for inclusion in any
such registration statement, and will enter into customary cross-
indemnification agreements with respect to the information
provided by the Lender.
15. ACCEPTANCE OF INVESTMENT INTENT AND ESTOPPEL. In reliance
upon the representations and warranties of the Lender, the
Borrower affirmatively accepts and acknowledges: the Lender's
investment intent; that the Lender is not an "underwriter" as
defined by Section 2(a)(11) of the Securities Act; and that the
Borrower shall be estopped from asserting as either a claim or
defense that the Lender is an underwriter as a result of the
purchase of the Convertible Debenture or conversion thereof.
16. BROKERAGE FEES AND OTHER EXPENSES. The Borrower and Lender
agree that there are no brokerage fees or commissions due related
to the execution or performance of the Convertible Debenture
Agreement or the Convertible Debenture. Each shall bear its own
incidental expenses of the transaction including any attorney's
fees. In addition, the Borrower and Lender agree that there is no
finder fee or other payment due to any third party as result of
this transaction.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
Representations and Warranties set forth above shall survive the
execution of this Agreement and may be relied upon by either Party
so long as the relying Party does not have actual knowledge of the
invalidity or inaccuracy of said Representations and Warranties.
18. INDEMNIFICATION. Borrower agrees to indemnify and hold
harmless Lender for any liability arising to Lender after closing
from Lender's reliance on Borrower's Representations and
Warranties. Lender also agrees to indemnify and hold harmless
Borrower for any liability arising to Borrower after closing from
Borrower's reliance on Lender's Representations and Warranties.
19. COUNTERPARTS/FACSIMILE SIGNATURES. This Agreement may be
executed in counterpart signatures and the Parties agree that a
facsimile signature transmitted from a known telephone number of
either Party shall be deemed to be an original signature.
20. GOVERNING LAW. This Agreement and Debenture shall be
construed and enforced in accordance with the laws of the United
States and the State of Utah, without regard to conflicts of law.
In the event that any dispute should arise pertaining to this
Agreement and Debenture, the parties agree that jurisdiction shall
vest only in the State or Federal Courts located in Salt Lake
City, Utah in order to resolve such dispute.
21. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed
to have been duly given (a) on date of delivery if delivered
personally or (b) on the fifth day after being sent by certified
mail, return receipt requested, with postage prepaid, or by
courier service, return receipt requested, as follows:
Borrower: Jennifer T. Evans, Corporate Secretary
GOLDEN EAGLE INTERNATIONAL, INC.
12401 South 450 East, Bldg. D2, Suite A
Salt Lake City, Utah 84020
Lender: Kevin Pfeffer
Pineland, FL 33945
22. ENTIRE AGREEMENT. This Agreement and the Convertible
Debenture constitute the entire agreement between the parties
hereto and supersede all prior agreements, understandings and
arrangements, oral or written, between the parties hereto with
respect to the subject matter hereof and thereof. This Agreement
may not be amended or modified, except by a written agreement
signed by all parties hereto.
EXECUTED AND ACKNOWLEDGED on the date first set out above.
GOLDEN EAGLE INTERNATIONAL, INC.
By: /s/ Terry C. Turner /s/ Kevin Pfeffer
--------------------------- -----------------------------
Terry C. Turner, President Kevin Pfeffer |
