fc_ex1026-80430.htm


    Exhibit
10.26

     

     

    Certificate
No. (Specimen)

     

     

     

     

    CONVERTIBLE
DEBENTURE

     

    OF

     

    FIRSTGOLD
CORP.

     

    ISSUE
OF CONVERTIBLE DEBENTURE

     

    OF
US $1,100,000 PRINCIPAL SUM

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
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      	No.                      	

              Principal
      Amount US
      $1,100,000

            


    

     

     

    UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT
TRADE THE SECURITIES BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER
OF (i) [DATE OF CLOSING] AND (ii) THE DATE THE ISSUER BECAME A REPORTING ISSUER
IN ANY PROVINCE OR TERRITORY.

     

    CONVERTIBLE
DEBENTURE

     

    FIRSTGOLD
CORP.

    A
Delaware Corporation

     

    NOW THEREFORE it is hereby
covenanted, agreed and declared as follows:

     

    ARTICLE
I

    INTERPRETATION

     

    
      	
              1.1

            	
              Definitions.  In
      this Debenture, including the preamble, unless there is something in the
      subject matter or context inconsistent therewith, the following
      expressions shall have the following meanings
  namely:

            


    

     

    
      	
               
      

            	
              (a)

            	
              "Business Day" means any
      day other than a Saturday, Sunday, legal holiday or a day on which banking
      institutions are closed in Toronto,
Ontario;

            


    

     

    
      	
                
      

            	
              (b)

            	
              "Common Shares" means the
      common shares of the Corporation as such shares are constituted on the
      date hereof;

            


    

     

    
      	
               
      

            	
              (c)

            	
              "Corporation" means
      Firstgold Corp., a Delaware corporation, and its successors and
      assigns;

            


    

     

    
      	
               

            	(d)  	"Conversion Notice" has
      the meaning ascribed to that term in Section 4.1
  hereof;


    

             

    
      	
               
      

            	
              (e)

            	
              "Conversion Price" means the price
      per Debenture Share at which the Principal Sum outstanding under this
      Debenture shall from time to time be convertible into Common Shares
      pursuant to a Holder Conversion, being US$0.80 per Debenture Share,
      subject to adjustment;

            


    

     

    
      	
               
      

            	
              (f)

            	
              "Debenture Shares" means
      the Common Shares issuable upon the due conversion of
      Debentures;

            


    

     

    
      
        
        

      

      
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              (g)

            	
              "this Debenture", the
      "Debenture",
      "herein", "hereby", "hereof", "hereto", "hereunder" and similar
      expressions mean or refer to this convertible, subordinated, unsecured
      debenture and any debenture, deed or instrument supplemental or ancillary
      thereto and any schedules hereto or thereto and not to any particular
      article, section, subsection, clause, subclause or other portion hereof;
      the "Debentures"
      means this Debenture together with all others, being part of a series of
      like debentures except as to principal amount
  thereof;

            


    

     

    
      	
               

            	(h)	"Event of
      Default" means any of the events specified in Section 5.1
      hereof;


    

     

    
      	
               
      

            	
              (i)

            	
              "Holder" or "Debentureholder" has the
      meaning ascribed hereto in Section 2.1
hereof;

            


    

     

    
      	
               
      

            	
              (j)

            	"Maturity Date" means
      January ●,
      2010;


    

    
       

    

    
      	
               
      

            	
              (k)

            	
              "person" means an
      individual, corporation, partnership, unincorporated syndicate,
      unincorporated organization, trust, trustee, executor, administrator, or
      other legal representative, or any group or combination
      thereof;

            


    

     

    
      	
               

            	(l)  	"Principal Sum" means $US
      1.1 million;


    

     

    
      	
               
      

            	
              (m)

            	
              "Redemption Amount" has
      the meaning ascribed to that term in Section 2.2
  hereof;

            


    

     

    
      	
               
      

            	
              (n)

            	
              "Redemption Date" has the
      meaning ascribed to that term in Section 2.2
  hereof.

            


    

     

    
      	
              1.2

            	
              Gender.  Whenever
      used in this Debenture, words importing the singular number only shall
      include the plural, and vice versa, and words importing the masculine
      gender shall include the feminine
gender.

            


    

     

    
      	
              1.3

            	
              Numbering
      of Articles, etc.  Unless otherwise stated, a reference
      herein to a numbered or lettered article, section, subsection, clause,
      subclause or schedule refers to the article, section, subsection, clause,
      subclause or schedule bearing that number or letter in this
      Debenture.

            


    

     

    
      	
              1.4

            	
              Day
      not a Business Day.  In the event that any day on or
      before which any action is required to be taken hereunder is not a
      Business Day, then such action shall be required to be taken on or before
      the requisite time on the next succeeding day that is a Business
      Day.  If the payment of any amount is deferred for any period,
      then such period shall be included for purposes of the computation of any
      interest payable hereunder.

            


    

     

    
      	
              1.5

            	
              Computation
      of Time Period.  Except to the extent otherwise provided
      herein, in the computation of a period of time from a specified date to a
      later specified date, the word "from" means "from and including" and the
      words "to" and "until" each mean "to but
  excluding".

            


    

     

    
      
        
        

      

      
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    ARTICLE
II

    PROMISE TO
PAY

     

    
      	
              2.1

            	
              Indebtedness.  The
      Corporation, for value received, and in consideration of the premises
      hereby acknowledges itself indebted and promises and covenants to pay to
      _____________________, the registered holder hereof for the time being
      (the "Holder"):

            


    

     

    
      (a)   That
amount of the Principal Sum outstanding on January ●,
2010 (the "Maturity
Date") or sooner in accordance with Section 2.2 or upon the occurrence of
an Event of Default or upon such other date as specified herein, subject to the
reduction of such Principal Sum from time to time upon the exercise of the
conversion rights set out in Article IV hereof, at the principal office of the
Corporation in Cameron Park, California;

    

     

    
      (b)   interest
on any monies owing by the Corporation to the Holder hereunder, all as
specifically calculated hereunder; and

    

     

    
      (c)   all other
monies which may be owing by the Corporation to the Holder pursuant to this
Debenture.

    

     

    
      	
              2.2

            	
              Early
      Redemption.  After six (6) months from the Closing Date,
      this Debenture may be prepaid in whole prior to the Maturity Date at the
      Corporation’s option by providing the Holder with at least five (5) days
      prior written notice, for an amount equal to the sum of the following: (i)
      the Principal Sum then outstanding, and (ii) accrued and unpaid interest
      to the date fixed for early redemption (the "Redemption Date"); and
      (iii) a premium of 10% of the Principal Sum (the “Redemption Premium”)
      (the sum of (i), (ii) and (iii) (being the "Redemption
      Amount").

            


    

     

    Notice of
redemption shall be sent to the Holder not less than five (5) days prior to the
Redemption Date and shall state:

     

    
      (a)   the
Redemption Date; and

    

     

    (b)   the place
where this Debenture is to be surrendered for payment of the Redemption Amount
thereof.

     

    Notice of
redemption having been given as aforesaid, this Debenture shall, on the
Redemption Date, become due and payable at the Principal Sum thereof and on and
after such date such Debentures shall only bear interest if the Corporation
shall default in the payment of the Redemption Amount on the Redemption
Date.  Upon surrender of this Debenture for redemption in accordance
with such notice, such Debenture shall be paid by the Corporation.  In
addition, and for greater certainty, until this Debenture has been redeemed in
accordance with this Section 2.2, the Holder retains the right to convert the
Principal Sum to Debenture Shares in accordance with Article IV
hereof.

     

    
      
        
        

      

      
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    This
Debenture may also be prepaid in part provided that any partial redemption is in
the minimum amount of US$350,000; and further provided that the Corporation pay
to the Holder the Redemption Premium on any amount so partially
redeemed.

     

    Notice of
partial redemption shall be sent to the Holder not less than five (5) days prior
to the date set for such partial redemption (the “Partial Redemption Date”) and
shall state:

     

    
      (a)   the
Partial Redemption Date;

    

     

    
      (b)   the
amount of such partial redemption (the “Partial Redemption Amount”);
and

    

     

    
      (c)   the place
where this Debenture is to be surrendered for payment of the partial redemption
amount thereof.

    

     

    Notice of
partial redemption having been given as aforesaid, this Debenture shall, on the
Partial Redemption Date, become due and payable as to the Partial Redemption
Amount thereof and on and after such date such Debenture shall only bear
interest on the remaining Principal Sum.  Upon surrender of this
Debenture for partial redemption in accordance with such notice, such Debenture
shall be replaced with a new Debenture evidencing the remaining Principal
Sum.

     

    ARTICLE
III

    INTEREST

     

    
      	
              3.1

            	
              Calculation
      and Payment of Interest, etc.  The Corporation shall pay
      interest on the Principal Sum at the rate of 10.00% per annum, calculated
      and payable monthly in arrears (less any tax required by law to be
      deducted or withheld).  Contemporaneous with the delivery of
      this Debenture to the Holder duly executed by the Corporation (the “Closing Date”), the
      Corporation shall prepay an amount equal to the aggregate interest payable
      (without compounding interest) for a period of six (6)
      months.  Subsequent interest payments shall commence on the
      first business day of the eighth (8th)
      month following the calendar month in which the Closing Date occurs and
      shall continue on the first business day of each subsequent month while
      any Principal Amount remains outstanding
  hereunder

            


    

     

    
      	
              3.2

            	
              Overdue
      Interest.  All interest payable hereunder on becoming
      overdue shall be forthwith treated, as to the payment of interest thereon,
      as principal and thereafter shall bear interest calculated at the same
      rate and in the same manner as if it were principal.  Overdue
      interest shall be payable forthwith without demand by the
      Holder.  Any interest amount added to the Principal Sum by
      operation of this section may only be converted into Common Shares upon
      receipt of all required regulatory approvals which approvals may or may
      not be granted and if not granted, such additional interest amount will
      only be payable in cash.

            


    

     

    
      	
              3.3

            	
              No
      Merger In Judgement.  The covenant of the Corporation to
      pay interest at the rate provided herein shall not merge in any judgement
      in respect of any obligation of the Corporation hereunder and such
      judgement shall bear interest in the manner set out in this Article III
      and be payable on the same days when interest (whether hereunder or
      otherwise) is payable hereunder.

            


    

     

    
      
        
        

      

      
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    ARTICLE
IV 

    CONVERSION OF
DEBENTURE

     

    
      	
              4.1

            	
              Conversion.  The
      Holder may, at its election, upon surrender (either in person, by mail
      (postage prepaid) or other means of delivery) of this Debenture along with
      a completed notice of conversion (the "Conversion Notice") in
      the form attached hereto as Schedule "A"
      at the principal office of the Corporation in the Cameron Park, California
      at any time prior to the close of business on the earlier of (a) the
      Redemption Date; and (b) January ●, 2010, convert
      that portion of the Principal Sum so surrendered into Debenture Shares
      (without adjustment for interest accrued but unpaid hereon or for
      dividends on Common Shares issuable upon conversion) ("Holder
      Conversion").  Debentures may be converted on or prior to
      the Maturity Date or the Redemption Date, as the case may be, at a
      conversion price equal to the Conversion Price per Debenture Share;
      provided, however, that the Holder shall not be entitled to a Holder
      Conversion if, upon issuance of the Debenture Shares, the Holder would
      own, either directly or beneficially, in excess of 4.99% of the
      outstanding Common Shares of the Corporation.  The delivery of
      the Conversion Notice duly executed by the Holder and the surrender of the
      Debenture shall be deemed to constitute a contract between the Holder and
      the Corporation whereby (i) the Holder subscribes for the number of
      Debenture Shares which he shall be entitled to receive upon such Holder
      Conversion, (ii) the Holder releases the Corporation from all
      liability thereon or from all liability with respect to the portion of the
      Principal Sum thereof to be converted, as the case may be, and
      (iii) the Corporation agrees that the surrender of the Debenture for
      Holder Conversion constitutes full payment of the subscription price for
      the Debenture Shares issuable on such Holder Conversion and that the
      Debenture Shares will be issued as fully paid and non-assessable Common
      Shares in the capital of the
Corporation.

            


    

     

    As
promptly as possible after receipt of the Conversion Notice and the Debenture
but subject to Section 4.3 hereto, the Corporation shall issue or cause to be
issued and deliver or cause to be delivered to the Holder a certificate or
certificates in the name or names of the person or persons specified in the
Conversion Notice for the number of Debenture Shares deliverable upon the Holder
Conversion. Upon completion of the conversion transaction, the rights of the
Holder to receive, in respect of the amount hereof so converted, the Principal
Sum and interest thereon, shall cease and the Holder or the other person or
persons in whose name or names any certificate or certificates for Common Shares
shall be deliverable upon such Holder Conversion shall be deemed to have become
on such date the holder or holders of record of such Common Shares represented
thereby.  Interest will be payable on the Principal Sum up to the date
of Holder Conversion.

     

    In the
event that only a portion of the Principal Sum is subject to Holder Conversion,
the Holder will be entitled to receive a replacement Debenture representing the
Principal Sum not subject to Holder Conversion on the same terms and provisions
contained herein.  In this event, interest shall continue to be
payable on the remainder of the Principal Sum.

     

    
      
        
        

      

      
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              4.2

            	
              Adjustment.

            


    

     

    
      	
               

            	(a)	
              If
      and whenever the Corporation shall (i) subdivide or redivide the
      outstanding Common Shares into a greater number of Common Shares;
      (ii) reduce, combine or consolidate the outstanding Common Shares
      into a smaller number of Common Shares; (iii) issue any Common Shares
      to the holders of all or substantially all of the outstanding Common
      Shares by way of a stock dividend, the number of Common Shares which may
      be acquired pursuant to this Article 4 on and at any time after the
      effective date of such subdivision, redivision, reduction, combination or
      consolidation or on the record date for such issue of Common Shares by way
      of a stock dividend, as the case may be, shall be increased, in the case
      of the events referred to in (i) and (iii) above, in the proportion which
      the number of Common Shares outstanding before such subdivision,
      redivision or dividend bears to the number of Common Shares outstanding
      after such subdivision, redivision or dividend, or shall be decreased, in
      the case of the events referred to in (ii) above, in the proportion which
      the number of Common Shares outstanding before such reduction,
      combination, or consolidation bears to the number of Common Shares
      outstanding after such reduction, combination or consolidation and in each
      case the price at which the Holder Conversion shall occur will be adjusted
      to reflect the change in the number of Common Shares that become issuable
      under this Article 4.  Any such issue of Common Shares by way of
      a stock dividend shall be deemed to have been made on the record date
      fixed for such stock dividend for the purpose of calculating the number of
      outstanding Common Shares under this Section 4.2(a) or Section
      4.2(c).

            


    

     

    
      	
                
      

            	(b)	
              In
      the case of any reclassification of, or other change in, the outstanding
      Common Shares other than a subdivision, redivision, reduction, combination
      or consolidation, subject to the approval of the Toronto Stock Exchange
      (if applicable), the Holder shall be entitled to receive upon conversion
      pursuant to Article IV, and shall accept in lieu of the number of Common
      Shares to which it was theretofore entitled upon such conversion, the kind
      and amount of shares and other securities or property which the Holder
      would have been entitled to receive as a result of such reclassification
      if, on the effective date thereof, it had been the registered holder of
      the number of Common Shares to which it was theretofore entitled upon
      conversion.  If necessary, appropriate adjustments shall be made
      in the application of the provisions set forth in this Article IV
      with respect to the rights and interests thereafter of the Holder to the
      end that the provisions set forth in this Article IV shall thereafter
      correspondingly be made applicable as nearly as may be possible in
      relation to any shares or other securities or property thereafter
      deliverable upon the conversion of any Debenture.  Any such
      adjustments shall be made by and set forth in a supplemental certificate
      approved by the directors of the Corporation and shall for all purposes be
      conclusively deemed to be an appropriate adjustment, after reasonable
      consultation with the Holder.

            


    

     

    
      
        
        

      

      
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            	(c)	
              
                If
      and whenever the Corporation shall issue or distribute to all or
      substantially all the holders of Common Shares (i) shares of the
      Corporation of any class; (ii) rights, options or warrants (that
      shall not have expired unexercised, unconverted or unexchanged at the time
      a Holder converts any Debenture, in whole or in part);
      (iii) evidences of indebtedness; or (iv) any other assets or
      securities and if such issuance or distribution does not result in an
      adjustment as provided for in Section 4.2(a) or Section 4.2(b), subject to
      the approval of the Toronto Stock Exchange (if applicable), the price at
      which the Principal Amount may be converted into Common Shares pursuant to
      Article IV shall be adjusted effective immediately before the record date
      at which the holders of Common Shares are determined for purposes of any
      such issuance or distribution as aforesaid in such manner as the directors
      of the Corporation determine to be appropriate on a basis consistent with
      this Section 4.3.

              

            


    

     

    
      	
                
      

            	(d)	If,
      at any time, the Holder exercises its conversion rights before the record
      date and before the occurrence of an event, for which this Section 4.2
      requires that an adjustment shall become effective immediately before the
      record date for such event, the Corporation may defer issuing to the
      Holder the additional Common Shares issuable upon such conversion, by
      reason of the adjustment required by such event, until the occurrence of
      such event.  In the event of such an adjustment, the Corporation
      shall deliver to the Holder an appropriate instrument evidencing the
      Holder's right to receive such additional Common Shares upon the
      occurrence of the event requiring such adjustment and the right to receive
      any distributions made on such additional Common Shares declared in favour
      of the holders of Common Shares on and before the date of conversion or
      such later date as such holder would, but for the provisions of this
      Section 4.2, have become the holder of record of such additional Common
      Shares.


    

     

    
      	
               
      

            	(e)	
              If
      a dispute shall at any time arise with respect to adjustments of the
      Conversion Price or the number of Common Shares issuable upon the
      conversion of this Debenture, such disputes shall be conclusively
      determined by the auditors of the Corporation or if they are unable or
      unwilling to act, by such other firm of independent chartered accountants
      accredited by the United States Public Company Accounting Oversight Board
      as may be selected by the directors and any such determination shall be
      conclusive evidence of the correctness of any adjustment made pursuant to
      this Section 4.2 hereof and shall be binding upon the Corporation and the
      Holder.

            


    

     

    
      
        
        

      

      
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              4.3

            	
              No
      Fractional Common Shares.  Notwithstanding anything
      herein contained, the Corporation shall in no case be required to issue
      fractional Common Shares or to pay any cash adjustment in lieu of any
      fractional Common Share upon the conversion of the
      Debenture.  Any fractions will be rounded to the nearest whole
      number with fractions of one-half or greater being rounded to the next
      higher whole number and fractions of less than one-half being rounded to
      the next lower whole number.

            


    

     

    
      	
              4.4

            	
              Reservation
      of Common Shares.  The Corporation shall at all times
      while the Debenture remains convertible into Debenture Shares as herein
      provided, reserve and keep available out of its authorized but unissued
      share capital, for the purpose of effecting the conversion of the
      Debenture, such number of Common Shares as shall from time to time be
      sufficient to effect the conversion of the Debenture.  In the
      event that the Corporation does not have available such number of Common
      Shares required to satisfy full conversion of this Debenture into
      Debenture Shares, the Corporation agrees to hold a special meeting of
      shareholders in order to increases the number of Common Shares authorized
      and reserved in order to meet its obligations
  hereunder.

            


    

     

    ARTICLE
V 

    DEFAULT

     

    
      	
              5.1

            	
              Acceleration
      of Maturity on Default.  Upon the happening of any one or
      more of the following events (herein sometimes called "Events of Default")
      namely:

            


    

     

    
       

      
        	
                 
      

              	(a)	
                if
      the Corporation does not pay on the Maturity Date any principal, interest
      or other amount payable by it under the Debenture at the place and in the
      currency in which such amount is expressed to be
  payable;

              


      

       

      
        	
                 
      

              	(b)	
                if
      the Corporation makes a general assignment for the benefit of creditors;
      or any proceeding is instituted by it seeking relief as debtor, or to
      adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up,
      reorganization, arrangement, adjustment or composition of it or its debts
      or for an order for similar relief under any law relating to bankruptcy,
      insolvency, reorganization or relief of debtors (including under any
      statutes relating to the incorporation of companies) or seeking
      appointment of a receiver or trustee, or other similar official for it or
      for any substantial part of its properties or assets; or any corporate or
      partnership action is taken to authorize any of the actions referred to in
      this Section 5.1(b);

              


      

       

      
        	
                 
      

              	(c)	if
      any proceedings are instituted against the Corporation seeking to
      adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up,
      reorganization, arrangement, adjustment or composition of it or its debts
      or an order for similar relief under any law relating to bankruptcy,
      insolvency, reorganization or relief of debtors (including under any
      statutes relating to the incorporation of companies) or seeking
      appointment of a receiver, trustee or other similar official for it or for
      any substantial part of its properties or assets and such proceeding is
      not dismissed within sixty (60) days of its service on the
      Corporation;


      

       

      
        
          
          

        

        
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              	(d)	if
      the Corporation takes any corporate proceedings for its dissolution,
      liquidation or if the corporate existence of the Corporation shall be
      terminated by expiration, forfeiture or otherwise, or if the Corporation
      ceases or threatens to cease, to carry on all or a substantial part of its
      business;


      

       

      
        	
                  
      

              	(e)	the
      date the Holder intends to convert this Debenture into Debenture Shares in
      accordance with the terms set out herein, the Corporation fails to have
      available out of its authorized but unissued share capital, for the
      purpose of effecting the conversion of this Debenture, such number of
      Common Shares as shall from time to time be sufficient to effect the
      conversion of this Debenture; and


      

       

      
        	
                 
      

              	(f)	
                if
      the Corporation is in material breach of the listing requirements of the
      Toronto Stock Exchange

              


      

       

    

    then in
each and every such event, and provided that the Corporation has been provided
with fifteen (15) days to cure such Event of Default (except for Subsection
5.1(c) which allows sixty (60) days to cure), the Principal Sum and interest on
the Debenture shall forthwith become immediately due and payable to the Holder,
anything herein contained to the contrary notwithstanding, and the Corporation
shall forthwith pay to the Holder of the Debenture the amount of the Principal
Sum and interest then accrued but unpaid on the Debenture and all other moneys
payable under the provisions hereof together with interest at the rate of
interest borne by the Debenture on such Principal Sum and interest from the date
of the said Event of Default until payment is received by the Holder, and any
moneys so received by the Holder shall be applied in the manner provided in
Section 8.1.  Notwithstanding the foregoing, the Holder shall
have the option, if it so chooses, at any time upon the occurrence of an Event
of Default that remains uncured at the conclusion of the applicable cure period
referenced herein, to convert this Debenture into Common Shares (the “Event of Default Conversion”)
at the lower of (i) US$0.80, or (ii) the volume weighted average trading price
of the Common Shares as indicated on the Toronto Stock Exchange, or if not then
listed on the Toronto Stock Exchange, then on the OTCBB for the ten (10)
consecutive trading days immediately preceding the date set for the Event of
Default Conversion, provided that such price will not be  less
than  $0.50 per share.

     

    
      	
              5.2

            	
              Waiver
      of Corporation's Rights.  To the full extent that it may
      lawfully do so, the Corporation for itself and its successors and assigns
      hereby waives and disclaims any benefit of, and shall not have or assert
      any right under, any statute or rule of law pertaining to the marshaling
      of assets, discussion, division or other matter whatever, to defeat,
      reduce or affect the rights of the Holder under the terms of this
      Debenture.

            


    

     

     

    
      
        
        

      

      
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    ARTICLE
VI

    SECURITY

     

    
      	
              6.1

            	
              Security. Payment
      of the Principal Sum and of any Interest is secured by a first lien on the
      assets of the Corporation and its subsidiaries, subject to permitted
      encumbrances (the “Secured Interest”). To
      this effect, the security interest provided to and granted in favour of
      the Holder hereunder shall be documented by the relevant instrument under
      the Uniform Commercial Code and be filed with all necessary regulatory
      authorities, and be registered in all necessary public registers, such
      that a legal, valid and enforceable security interest on the Security
      Interest be created exclusively in favour of the Holder. Such Secured
      Interest shall remain in full force and effect for so long as any
      obligation of the Corporation hereunder remains outstanding. Without
      limiting the foregoing, the Secured Interest shall include a pledge and
      assignment agreement as well as a general security agreement, both of
      which must be in recordable form acceptable to Holder’s counsel, acting
      reasonably.

            


    

     

    ARTICLE
VII

    WAIVER

     

    
      	
              7.1

            	
              Waiver.  The
      Holder may waive any breach of any of the provisions contained in this
      Debenture or any default by the Corporation in the observance or
      performance of any covenant, condition or obligation required to be
      observed or performed by it under the terms of this
      Debenture.  No waiver, consent, act or omission by the Holder
      shall extend to or be taken in any manner whatsoever to affect any other
      or subsequent breach or default or the rights resulting therefrom and no
      waiver or consent by the Holder shall bind the Holder unless it is in
      writing.  The inspection or approval by the Holder of any
      document or matter or thing done by the Corporation shall not be deemed to
      be a warranty or holding out of the adequacy, effectiveness, validity or
      binding effect of such document, matter or thing or a waiver of the
      Corporation's obligations.

            


    

     

    ARTICLE
VIII 

    OTHER RIGHTS OF THE
HOLDER

     

    
      	
              8.1

            	
              Rights
      of Set-Off.  The Corporation acknowledges and agrees that
      the Principal Sum and the other obligations hereunder shall be paid,
      satisfied and discharged to the Holder without regard to such dealings as
      may from time to time occur as between any one or more of the Holder, the
      Corporation and any other person and without regard to such equities or
      rights of set-off or counterclaim which may from time to time exist
      between any one or more of the Holder, the Corporation or any other
      person, and that the Principal Sum and other obligations hereof shall be
      paid without regard to any equities between the Corporation and the Holder
      hereof or any set-off or cross-claims and the receipt of the Holder for
      the payment of the Principal Sum will be a good discharge to the
      Corporation in respect thereof.

            


    

     

    
      	
              8.2

            	
              No
      Merger.  Neither the taking of any judgement nor the
      exercise of any rights hereunder shall operate to extinguish the
      obligation of the Corporation to pay the monies under this Debenture and
      shall not operate as a merger of any covenant in this Debenture, and the
      acceptance of any payment shall not constitute or create a novation, and
      the taking of a judgement or judgements under a covenant herein contained
      shall not operate as a merger of those covenants and affect the Holder's
      right to interest under this
Debenture.

            


    

     

    
      
        
        

      

      
        - 11
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    ARTICLE
IX

    ADMINISTRATIVE
PROVISIONS

     

    
      	
              9.1

            	
              Transfer
      of Debenture.  This Debenture may be transferred only by
      transfer in writing in the form attached hereto as Schedule
      "B", and will only be effective as regards the Corporation when
      delivered at the registered office of the Corporation in Cameron Park,
      California accompanied by this Debenture together with such evidence of
      identity or title as the Corporation may reasonably require and upon
      payment of all applicable transfer taxes.  Thereupon, the
      Corporation will record such transfer on its books and issue a new
      debenture to the transferee in exchange for this
  Debenture.

            


    

     

    
      	
              9.2

            	
              Registered
      Holders.  The person in whose name this Debenture shall
      be registered shall be deemed and regarded as the owner and holder hereof
      for all purposes, and the payment to and/or receipt of any Holder for any
      Principal Sum or interest hereby secured shall be a good discharge of the
      Corporation for the same, and the Corporation shall not be bound to enter
      in the register notice of any trust or to inquire into the title of any
      Holder or to recognize any trust or equity affecting the title hereof save
      as ordered by some court of competent jurisdiction or as required by
      statute.

            


    

     

    ARTICLE
X

    MISCELLANEOUS

     

    
      	
              10.1

            	
              Time.  Time
      shall be of the essence of this
Debenture.

            


    

     

    
      	
              10.2

            	
              Governing
      Law.  This Debenture shall be governed by, and construed
      in accordance with, the laws of the Province of Ontario and the laws of
      Canada applicable therein but the reference to such laws shall not, by
      conflict of laws rules or otherwise, require the application of the law of
      any jurisdiction other than the Province of Ontario.  The
      Corporation hereby irrevocably attorns to the jurisdiction of the Courts
      of the Province of Ontario except that US law shall apply to UCC
      matters.

            


    

     

    
      	
              10.3

            	
              Severability.  If
      any one or more of the provisions or parts thereof contained in this
      Debenture should be or become invalid, illegal or unenforceable, the
      remaining provisions or parts thereof contained herein shall be and shall
      be conclusively deemed to be, severable therefrom and the validity,
      legality or enforceability of such remaining provisions or parts thereof
      shall not in any way be affected or impaired by the severance of the
      provisions or parts thereof
severed.

            


    

     

    
      	
              10.4

            	
              Headings.  The
      headings of the articles, sections, subsections and clauses of this
      Debenture have been inserted for convenience and reference only and do not
      define, limit, alter or enlarge the meaning of any provision of this
      Debenture.

            


    

     

    
      	
              10.5

            	
              Binding
      Effect.  This Debenture and all of its provisions shall
      enure to the benefit of the Holder, its successors and assigns, and shall
      be binding upon the Corporation and its successors and permitted
      assigns.  The expression the "Holder" as used herein shall
      include the Holder's assigns whether immediate or
    derivative.

            


    

     

    
      
        
        

      

      
        - 12
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              10.6

            	
              Notices.  Any
      notice required or permitted to be given under any of this Debenture or
      any tender or delivery of documents may be given by personal delivery or
      by facsimile transmission to the parties at the following
      addresses:

            


    

     

    
      	
              (a)   
        

            	
              to
      the Holder at:

            


    

     

    l

     

    
      	
              (b)   
        

            	
              to
      the Corporation at:

            


    

     

    Firstgold
Corp.

    3108
Ponte Morino Drive, Suite 210

    Cameron
Park

    CA
95682

    


    Attention:
Mr. Steve Akerfeldt

    Fax:
(530) 698-4995

    


    Any
notice or delivery shall be given as herein provided or to such other addresses
or telecopier number or in care of such other person as a party may from time to
time advise by notice in writing as aforesaid.  The date of receipt of
such notice or delivery shall be the date of actual delivery to the address
specified if delivered or the date of actual transmission to the telecopier
number if telecopied, unless such date is not a Business Day, in which event the
date of receipt shall be the next Business Day immediately following the date of
such delivery or transmission.

     

    ARTICLE
XI

     

    
      	
              11.1 

            	
              Arranging
      Fee.  Upon Closing, the Corporation shall pay to the
      Holder or as the Holder may direct the amount of US$100,000, which amount
      will be netted out of the Principal Sum advanced at Closing
    .

            


    

     

    
      
        
        

      

      
        - 13
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    IN WITNESS WHEREOF the
Corporation has duly executed these presents as of the date first above by its
duly authorized officer.

     

    
      
        	 	
                FIRSTGOLD
      CORP.

              	 
	 	 	 	 
	
                 

              	
                Per:

              	/s/ Stephen
      Akerfeldt	 
	 	Name:	Stephen
      Akerfeldt	 
	 	Title:	Chief
      Executive Officer	 
	 	 	 	 


      

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        - 14
-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
"A"

     

    CONVERSION
FORM

     

    TO:           FIRSTGOLD
CORP. (the
"Corporation")

     

    The
undersigned registered holder of the convertible debenture (the "Debenture") represented by the
within certificate hereby subscribes for Debenture Shares of the Corporation
pursuant to the within Debenture certificate on the terms specified in the
within Debenture certificate, to the extent of US$______________ of Principal
Sum, which certificate is hereby tendered to the Corporation and which will,
upon due issuance of the Units aforesaid and, if required, any replacement
certificate for any portion of the Debenture not converted, be null and
void.

     

    The
Debenture Shares subscribed for will be issued as set forth below and will be
mailed to the address set forth below.

     

    DATED this                                           
day of                                ,
200    

     

    
      	
              If
      subscriber is a corporation:

            	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      


    

     

    
      	
              If
      subscriber is an individual:

            	 
      	 
      
	 
      	 
      	 
      
	
              Witness

            	 
      	
              Signature
      of Subscriber

            


    

     

    Signature
guaranteed:

     

    
      
        
        

      

      
        - 15
-

        
          

        

      

      
        
        

      

    

     

    The
signature must be guaranteed by a Canadian chartered bank or a member of a
recognized stock exchange or other entity acceptable to the
Trustee.

     

    Print
below the name and address in full of the Person in whose name the Debenture
Shares subscribed for are to be issued.  If the Debenture Shares
subscribed for are to be issued to more than one person, similar information
must be provided for each person, as well as the number of Debenture Shares to
be issued to each.  (If any of the Debenture Shares are to be issued
to a person or persons other than the holder of the within Debenture
certificate, the holder must pay to the Corporation all requisite
taxes.)

     

    
      	
              Name:

            	 
      
	
              Address:

            	 
      
	 
      	 
      
	
              Social
      Insurance Number

            	
              Postal
      Code

            


    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        - 16
-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
"B"

     

    TRANSFER
FORM

     

    FOR VALUE RECEIVED, the
undersigned hereby sells, assigns and transfers to (name of
transferee) US$                
      (indicate principal amount of debentures being
transferred) principal amount of convertible debentures of Firstgold Corp.
represented by certificate(s) no.             
          (indicate
number(s) of certificate(s) being transferred) and irrevocably constitutes and
appoints                      
         (indicate name of
transferee) attorney to transfer such debenture(s) on the securities register of
Firstgold Corp., with full power of substitution.

     

    DATED:         
                                                  

     

    
      	 
      	
              IF
      TRANSFEROR IS A CORPORATION:

            
	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      


    

    


     

    
      	
              If
      transferor is an individual:

            	 
      	 
      
	 
      	 
      	 
      
	
              Witness

            	 
      	
              Signature
      of Transferor

            


    

     

     

    Signature
guaranteed:

     

    The
signature must be guaranteed by a Canadian chartered bank or a member of a
recognized stock exchange or other entity acceptable to the
Trustee.

     

     

    - 17
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