Exhibit 10.2
SUBSCRIPTION AGREEMENT BY AND BETWEEN U.S. GOLD
CORPORATION
AND EXCALIBUR LIMITED PARTNERSHIP dated May 31, 2002
Name of Investor: Excalibur Limited Partnership
Number of Units Subscribed 857,143
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is
between U.S. GOLD CORPORATION (the "Company") and
EXCALIBUR LIMITED PARTNERSHIP (the "Investor") who
executes this Agreement as an investor in Units of the
Company, as defined below.
Section 1. General. This Agreement sets forth the
terms under which Investor will invest in Units of the
Company. The Investor's execution of this Agreement
constitutes an irrevocable agreement to purchase the
number of Units of the Company subscribed. Each Unit
consists of one share of US$0.10 par value common stock
of the Company (the "Share") and one half of one Share
purchase warrant (each whole Share Purchase Warrant, a
"Warrant") as set forth in this Agreement and the Common
Share Purchase Warrants to Purchase 428,572 Common
Shares of the Company as set forth as Exhibit "A"
hereto. Each Unit will be issued at a price of US$0.35
per Unit. Each Warrant entitles the holder to subscribe
for one additional Share (a "Warrant Share") at a price
of US$0.53 per Warrant Share at any time on or before
the day that is 24 months from the date of this
Agreement. The Company's execution of this Agreement
constitutes an irrevocable agreement to sell the number
of Units, Shares and the Warrant Shares of the Company
to Investor.
Section 2. Investor's Subscription. The Investor
hereby subscribes and agrees to pay for 857,143 Units of
the Company and hereby tenders the Subscription Amount
in United States dollars set forth on the signature page
hereof to IBK Capital Corp, as agent for the Company, in
cash, wire transfer or immediately available funds to
the bank account set forth in Schedule "A" hereto.
Section 3. Investor Representations and Warranties.
The Investor represents and warrants and agrees with the
Company that:
(a) Information on Company. The Investor has been
furnished with the Company's Form 10-KSB/A for the year
ended December 31, 2001 as filed with the Securities and
Exchange Commission (the "Commission") together with all
subsequently filed forms 10-QSB, 8-K, and other publicly
available filings made with the Commission. In
addition, the Investor has received from the Company
such other information concerning its operations,
financial condition and other matters as the Investor
has requested in writing, and considered all factors the
Investor deems material in deciding on the advisability
of investing in the Units. The Investor has also been
given the opportunity to ask questions of, and to
receive answers from, the Company concerning additional
information as the Investor desired in order to evaluate
an investment in the Company;
(b) Residence of Purchase. The Purchaser is a resident
of Canada and not a resident of the United States, and
was offered the Units outside of the United States and
inside of Canada and the Investor has no present
intention of becoming a resident of domiciliary of any
other country, state or jurisdiction;
(c) Information on Investor. The Investor is an
"accredited investor", as such term is defined in
Regulation D promulgated by the Commission under the
Securities Act of 1933, as amended (the "1933 Act"), is
experienced in investments and business matters, has
made investments of a speculative nature and has
purchased securities of United States publicly-owned
companies in private placements in the past and, with
its representatives, has such knowledge and experience
in financial, tax and other business matters as to
enable the Investor to utilize the information made
available by the Company to evaluate the merits and
risks of and to make an informed investment decision
with respect to the proposed purchase, which represents
a speculative investment. The Investor has the
authority and is duly and legally qualified to purchase
and own the Units. The Investor is able to bear the
risk of such investment for an indefinite period and to
afford a complete loss thereof. The information set
forth on the signature page hereto regarding the
Investor is accurate.
(d) Compliance with Securities Act. The Investor
understands and agrees that the Shares and Warrant
Shares have not been registered under the 1933 Act, by
reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part
on the accuracy of the representations and warranties of
Investor contained herein), and that such Shares and
Warrant Shares must be held unless a subsequent
disposition is registered under the 1933 Act or is
exempt from such registration.
(e) Company Shares Legend. The Company Shares shall
bear the following legend, unless same shall have been
included in an effective registration statement under
the 1933 Act:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES
ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(f) Communication of Offer. The offer to sell the
Shares and Warrant Shares were directly communicated to
the Investor. At no time was the Investor presented
with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other
form of general advertising or solicited or invited to
attend a promotional meeting otherwise than in
connection and concurrently with such communicated
offer;
(g) Investment Intent. The Shares and Warrant Shares
subscribed for in this Agreement are being acquired by
the Investor in good faith solely for the Investor's own
account, for investment purposes only, and are not being
purchased with a view to, or for the resale or
distribution thereof;
(h) Determination. The Investor understands that no
United State federal or state agency has made any
finding or determination as to the fairness for
investment, or any recommendation or endorsement, of the
Company or the Shares or Warrant Shares;
(i) Other Ownership. The Investor owns no Shares,
either of record or beneficially, of the Company or any
affiliate thereof;
(j) Correctness of Representations. The Investor
represents that the foregoing representations and
warranties are true and correct as of the date hereof.
In addition, the Investor undertakes to notify the
Company immediately of any changes in any
representation, warranty or other information related to
the Investor set forth in this Agreement. The foregoing
representations and warranties shall survive the Closing
Date.
If more than one person is executing this Agreement,
each representation, warranty and undertaking in this
Agreement shall be a joint and several representation,
warranty and undertaking of each such person. If the
Company is a partnership, corporation, trust or other
entity, the Investor further represents and warrants
that (a) the Investor has enclosed with this Agreement
appropriate evidence of the authority of the individual
executing this Agreement to act on behalf of the
Investor, and (b) the Investor was not specifically
formed to acquire the Shares or Warrant Shares
subscribed for in this Agreement.
Section 4. Company Representations and Warranties. The
Company represents and warrants and agrees with the
Investor that:
(a) Due Incorporation. The Company has been organized
under the laws of the State of Colorado, United States
of America. The Company and each of its subsidiaries,
if any, is a corporation or limited partnership or
limited liability company duly organized, validly
existing and in good standing under the laws of the
respective jurisdictions of their incorporation or
registration and have the requisite corporate or other
power to own their properties and to carry on their
business as now being conducted. The Company and each
of its subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in
each jurisdiction where the nature of the business
conducted or property owned by it makes such
qualification necessary, other than those jurisdictions
in which the failure to so qualify would not have a
material adverse effect on the business, operations or
financial condition of the Company.
(b) Outstanding Stock. All issued and outstanding
shares of common stock of the Company and each of its
subsidiaries has been duly authorized and validly issued
and are fully paid and non-assessable.
(c) Authority; Enforceability. This Agreement and other
agreements delivered together with this Agreement or in
connection herewith have been duly authorized, executed
and delivered by the Company and are valid and binding
agreements enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights
generally and to general principles of equity; and the
Company has full corporate power and authority necessary
to enter into this Agreement, and such other agreements
and to perform its obligations hereunder and under all
other agreements entered into by the Company relating
hereto.
(d) Additional Issuances. There are no outstanding
agreements or preemptive or similar rights affecting the
Company's common stock or equity and no outstanding
rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of
any shares of common stock or equity of the Company or
other equity interest in any of the subsidiaries of the
Company except as described in the public reports or
otherwise provided Investor.
(e) Consents. No consent, approval, authorization or
order of any court, governmental agency or body or
arbitrator having jurisdiction over the Company, or any
of its affiliates, the National Association of
Securities Dealers, Inc. ("NASD") or the Company's
Shareholders is required for execution of this
Agreement, and all other agreements entered into by the
Company relating thereto, including, without limitation,
the issuance and sale of the Shares and Warrants Shares,
and the performance of the Company's obligations
hereunder and under all such other agreements.
(f) No Violation or Conflict. Assuming the
representations and warranties of the Investor in this
Agreement are true and correct and the Investor complies
with its obligations under this Agreement, neither the
issuance and sale of the Shares and Warrant Shares nor
the performance of the Company's obligations under this
Agreement and all other agreements entered into by the
Company relating thereto by the Company will:
(i) violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving
of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (A) the
articles of incorporation, charter or bylaws of the
Company, (B) to the Company's knowledge, any decree,
judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court,
governmental agency or body, or arbitrator having
jurisdiction over the Company or any of its affiliates
or over the properties or assets of the Company or any
of its affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any
agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its affiliates
is a party, by which the Company or any of its
affiliates is bound, or to which any of the properties
of the Company or any of its affiliates is subject, or
(D) the terms of any "lock-up" or similar provision of
any underwriting or similar agreement to which the
Company, or any of its affiliates is a party except the
violation, conflict, breach, or default of which would
not have a material adverse effect on the Company; or
(ii) result in the creation or imposition of any lien,
charge or encumbrance upon the Shares or Warrant Shares
or any of the assets of the Company, its subsidiaries or
any of its affiliates.
(g) The Shares and Warrant Shares. The Shares and
Warrant Shares upon issuance:
(i) are, or will be, free and clear of any security
interests, liens, claims or other encumbrances, but are
subject to restrictions upon transfer under the 1933 Act
and State laws;
(ii) have been, or will be, duly and validly authorized
and on the date of issuance, and the date the exercise
of the Warrants, the Warrant Shares will be duly and
validly issued, fully paid and nonassessable (and if
registered pursuant to the 1933 Act, and resold pursuant
to an effective registration statement will be free
trading and unrestricted, provided that the Investor
complies with the Prospectus delivery requirements);
(iii) will not have been issued or sold in violation of
any preemptive or other similar rights of the holders of
any securities of the Company; and
(iv) will not subject the holders thereof to personal
liability by reason of being such holders.
(h) Litigation. There is no pending or, to the best
knowledge of the Company, threatened action, suit,
proceeding or investigation before any court,
governmental agency or body, or arbitrator having
jurisdiction over the Company, or any of its affiliates
that would affect the execution by the Company or the
performance by the Company of its obligations under this
Agreement, and all other agreements entered into by the
Company relating hereto. To the best knowledge of the
Company there are no threatened action, suit, proceeding
or investigation before any court, governmental agency
or body, or arbitrator having jurisdiction over the
Company, or any of its affiliates which litigation if
adversely determined could have a material adverse
effect on the Company.
(i) Reporting Company. The Company is a publicly-held
company subject to reporting obligations pursuant to
Sections 15(d) and 13 of the Securities Exchange Act of
1934, as amended (the "1934 Act") and has a class of
common shares registered pursuant to Section 12(g) of
the 1934 Act. The Company's common stock is listed for
trading on the OTC Bulletin Board ("Bulletin Board").
Pursuant to the provisions of the 1934 Act, the Company
has filed all public reports and other materials
required to be filed thereunder with the Securities and
Exchange Commission during the preceding twelve months.
(j) No Market Manipulation. The Company has not taken,
and will not take, directly or indirectly, any action
designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the
price of the common stock of the Company to facilitate
the sale or resale of the Securities or affect the price
at which the Shares and Warrants Shares may be issued or
resold.
(k) Information Concerning Company. The public reports
provided the Investor contain all material information
relating to the Company and its operations and financial
condition as of their respective dates which information
is required to be disclosed therein. Since the date of
the most recent financial statements included in public
documents, and there has been no material adverse change
in the Company's business, financial condition or
affairs not disclosed to the Investor. The public
reports do not contain any untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances
when made.
(l) Dilution. The Company's executive officers and
directors have studied and fully understand the nature
of the Shares and Warrant Shares being sold hereby and
recognize that they have a potential dilutive effect.
The board of directors of the Company has concluded, in
its good faith business judgment, that such issuance is
in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue
Warrant Shares upon exercise of the Warrants by Investor
is binding upon the Company and enforceable, except as
otherwise described in this Agreement, regardless of the
dilution such issuance may have on the ownership
interests of other shareholders of the Company.
(m) Stop Transfer. The Shares and Warrant Shares are
restricted securities as of the date of this Agreement.
The Company will not issue any stop transfer order or
other order impeding the sale, resale or delivery of the
Shares and Warrant Shares, except as may be required by
federal securities laws.
(n) Defaults. Neither the Company nor any of its
subsidiaries is in violation of its Articles of
Incorporation or ByLaws. Other than as disclosed in
public reports, neither the Company nor any of its
subsidiaries is (i) in default under or in violation of
any other material agreement or instrument to which it
is a party or by which it or any of its properties are
bound or affected, which default or violation would have
a material adverse effect on the Company except as
otherwise disclosed in documents provided or made
available to the Investor, (ii) in default with respect
to any order of any court, arbitrator or governmental
body or subject to or party to any order of any court or
governmental authority arising out of any action, suit
or proceeding under any statute or other law respecting
antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) to its
knowledge in violation of any statute, rule or
regulation of any governmental authority which violation
would have a material adverse effect on the Company.
(o) Intentionally left blank.
(p) No General Solicitation. Neither the Company, nor
any of its affiliates, nor to its knowledge, any person
acting on its or their behalf, has engaged in any form
of general solicitation or general advertising (within
the meaning of Regulation D under the Act) in connection
with the offer or sale of the Shares and Warrant Shares.
(q) Listing. The Company's common stock is quoted on,
and listed for trading on the Bulletin Board. The
Company has not received any oral or written notice that
its Common Stock will be delisted from the Bulletin
Board or that the Company's common stock does not meet
all requirements for the continuation of such listing.
(r) No Undisclosed Liabilities. The Company has no
liabilities or obligations which are material,
individually or in the aggregate, which are not
disclosed in public reports, other than those incurred
in the ordinary course of the Company's businesses since
March 31, 2002 and which, individually or in the
aggregate, would not reasonably be expected to have a
material adverse effect on the Company's financial
condition.
(s) No Undisclosed Events or Circumstances. Since March
31, 2002, no event or circumstance has occurred or
exists with respect to the Company or its businesses,
properties, operations or financial condition, that,
under applicable law, rule or regulation, requires
public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly
announced or disclosed in the documents provided or made
available to Investor.
(t) Capitalization. The authorized and outstanding
capital stock of the Company as of the date of this
Agreement is 18,000,000 common shares authorized of
which 14,026,390 common shares are outstanding at the
date of this Agreement and prior to the issuance of
Shares and Warrant Shares thereunder. Except as set
forth in public reports, there are no options, warrants,
or rights to subscribe to, securities, rights or
obligations convertible into or exchangeable for or
giving any right to subscribe for any shares of capital
stock of the Company. All of the outstanding shares of
Common Stock of the Company have been duly and validly
authorized and issued and are fully paid and
nonassessable.
(u) Correctness of Representations. The Company
represents that the foregoing representations and
warranties are true and correct as of the date hereof in
all material respects. The foregoing representations
and warranties shall survive during the course and
effectiveness of this Agreement.
Section 5. Regulation D Offering. This Offering is
being made pursuant to the exemption from the
registration provisions of the Securities Act of 1933,
as amended, afforded by Rule 506 of Regulation D
promulgated thereunder. The Company has provided an
opinion reasonably acceptable to Investor from the
Company's legal counsel opining on the availability of
the Regulation D exemption as it relates to the offer
and issuance of the Units. The Company will provide, at
the Company's expense, such other legal opinions in the
future as are reasonably necessary for the exercise of
the Warrants and issuance of the Shares and Warrant
Shares.
Section 6. Reissuance of Shares and Warrant Shares.
The Company agrees to reissue certificates representing
the Shares and Warrant Shares without the legends set
forth in Sections 3(e) above at such time as (a) the
holder thereof is permitted to and disposes of such
Shares and Warrant Shares pursuant to Rule 144(d) and/or
Rule 144(k) under the 1933 Act in the opinion of counsel
reasonably satisfactory to the Company, or (b) upon
resale subject to an effective registration statement
after the Shares and Warrant Shares are registered under
the 1933 Act. The Company agrees to cooperate with the
Investor in connection with all resales pursuant to Rule
144(d) and Rule 144(k) and provide legal opinions
necessary to allow such resales provided the Company and
its counsel receive reasonably requested written
representations from the Investor and selling broker, if
any. Provided the Investor provides required
certifications and representation letters, if any, if
the Company fails to remove any legend as required by
this Section 6 (a "Legend Removal Failure"), then
beginning on the tenth (10th) day following the date
that the Investor has requested the removal of the
legend and delivered all items reasonably required by
the Company to be delivered by the Investor, the Company
continues to fail to remove such legend, the Company
shall pay Investor, subject to a Legend Removal Failure,
as liquidated damages and not a penalty an amount equal
to one percent (1%) of the Purchase Price of the Shares
and/or Warrant Shares subject to a Legend Removal
Failure per day that such failure continues. If during
any twelve (12) month period, the Company fails to
remove any legend as required by this Section 6 for an
aggregate of thirty (30) days, Investor holding Units
subject to a Legend Removal Failure may, at its option,
require the Company to purchase all or any portion of
the Units subject to a Legend Removal Failure held by
Investor or assignee at a price per share equal to 120%
of the applicable Purchase Price.
Section 7. Covenants of the Company. The Company
covenants and agrees with the Investor as follows:
(a) The Company will advise the Investor, promptly after
it receives notice of issuance by the Securities and
Exchange Commission, any state securities commission or
any other regulatory authority of any stop order or of
any order preventing or suspending any offering of any
securities of the Company, or of the suspension of the
qualification of the Common Stock of the Company for
offering or sale in any jurisdiction, or the initiation
of any proceeding for any such purpose.
(b) The Company shall promptly secure the listing of the
Shares and Warrant Shares upon the exercise of the
Warrants upon each national securities exchange, or
automated quotation system, if any, upon which shares of
common stock are then listed (subject to official notice
of issuance) and shall maintain such listing so long as
any Warrants are outstanding. The Company will maintain
the listing of its Common Stock on the NASD OTC Bulletin
Board (whichever of the foregoing is at the time the
principal trading exchange or market for the Common
Stock (the "Principal Market")), and will comply in all
respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the National
Association of Securities Dealers ("NASD") and such
exchanges, as applicable. The Company will provide the
Investor copies of all notices it receives notifying the
Company of the threatened and actual delisting of the
Common Stock from any Principal Market.
(c) The Company shall notify the Commission, NASD, and
applicable state authorities, in accordance with their
requirements, if any, of the transactions contemplated
by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted
by applicable law, rule and regulation, for the legal
and valid issuance of the Shares and Warrant Shares to
the Investor and promptly provide copies thereof to
Investor.
(d) From the date of this Agreement and until at least
two (2) years after the effectiveness of the
Registration Statement on Form S-3 or such other
Registration Statement, the Company will (i) cause its
Common Stock, the Shares and the Warrant Shares to
continue to be registered under Sections 12(b) or 12(g)
of the Exchange Act, (ii) comply in all respects with
its reporting and filing obligations under the Exchange
Act, (iii) comply with all reporting requirements that
are applicable to an issuer with a class of Shares and
Warrant Shares registered pursuant to Section 12(g) of
the Exchange Act, and (iv) comply with all requirements
related to any registration statement filed pursuant to
this Agreement. The Company will use its best efforts
not to take any action or file any document (whether or
not permitted by the Act or the Exchange Act or the
rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting
and filing obligations under said Acts until two (2)
years after the actual effective date of the
Registration Statement on Form S-3. Until the resale of
the Shares and Warrant Shares by the Investor, the
Company will continue the listing of the Common Stock on
the Bulletin Board and will comply in all respects with
the Company's reporting, filing and other obligations
under the bylaws or rules of Bulletin Board.
(e) The Company undertakes to reserve on behalf of the
Investor, from its authorized but unissued common stock,
at all times that the Warrants are outstanding, a number
of common shares necessary to allow fully the exercise
of all such Warrant Shares.
Section 8. Covenants of the Company and Investor
Regarding Indemnification.
(a) The Company agrees to indemnify, hold harmless,
reimburse and defend Investor, Investor's officers,
directors, agents, affiliates, control persons, and
principal shareholders, against any claim, cost,
expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature,
incurred by or imposed upon Investor or any such person
which results, arises out of or is based upon (i) any
material misrepresentation by Company or breach of any
warranty by Company in this Agreement or in any Exhibits
or Schedules attached hereto, or other agreement
delivered pursuant hereto; or (ii) after any applicable
notice and/or cure periods, any breach or default in
performance by the Company of any covenant or
undertaking to be performed by the Company hereunder, or
any other agreement entered into by the Company and
Investor relating hereto.
(b) Investor agrees to indemnify, hold harmless,
reimburse and defend the Company and each of the
Company's officers, directors, agents, affiliates,
control persons against any claim, cost, expense,
liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or
imposed upon the Company or any such person which
results, arises out of or is based upon (i) any material
misrepresentation by Investor in this Agreement or in
any Exhibits or Schedules attached hereto, or other
agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or
default in performance by Investor of any covenant or
undertaking to be performed by Investor hereunder, or
any other agreement entered into by the Company and
Investors relating hereto.
(c) The procedures set forth in this Section 8 shall
apply to the indemnifications set forth in Sections 8(a)
and 8(b) above.
Section 9. Registration Rights. The Company hereby
grants to the Investor the registration rights as set
for in the Registration Rights Agreement, attached as
Exhibit B to this Agreement.
(a) In connection with each registration hereunder, the
Investor will furnish to the Company in writing such
information and representation letters with respect to
itself and the proposed distribution by it as reasonably
shall be necessary in order to assure compliance with
federal and applicable state securities laws. In
connection with each registration covering an
underwritten public offering, the Company and the
Investor agree to enter into a written agreement with
the managing underwriter in such form and containing
such provisions as are customary in the securities
business for such an arrangement between such
underwriter and companies of the Company's size and
investment stature.
(b) The Company and the Investor agree that the Investor
will suffer damages if any registration statement
required under this Section 9 and the Registration
Rights Agreement is not filed within 30 days of the date
of this Agreement and not declared effective by the
Commission within 90 days of the date of this Agreement,
and maintained in the manner and within the time periods
contemplated by this Section 9 and the Registration
Rights Agreement, and it would not be feasible to
ascertain the extent of such damages with precision.
Accordingly, (i) if the Registration Statement described
in this Sections 9 and the Registration Rights Agreement
is not filed within 30 days of the date of this
Agreement, or is not declared effective by the
Commission within 90 days of the date of this Agreement,
or (ii) is filed and declared effective but shall
thereafter cease to be effective (without being
succeeded immediately by an additional registration
statement filed and declared effective) for a period of
time which shall exceed more than thirty (30)
consecutive days per event and more than two events per
year (defined as a period of 365 days commencing on the
date the Registration Statement is declared effective)
(each such event referred to in clauses (i) and (ii) of
this Section 9 is referred to herein as a "Non-
Registration Event"), then, for so long as such Non-
Registration Event shall continue, the Company shall pay
the Investor, in cash, as Liquidated Damages an amount
equal to one percent (1%) per month for each month or
part thereof during the pendency of such Non-
Registration Event, of the purchase price of the Units
sold under this Agreement. Payments to be made pursuant
to this Section 9.2 shall be due and payable within ten
(10) business days after demand in immediately available
funds.
Section 10. First Right of Refusal.
For a period of twelve months from the date of this
Agreement, Company agrees to give Investor a first right
of refusal related only to the sale by the Company of
its securities (being preferred convertible stock if
authorized by the shareholders of the Company, common
stock and debt convertible into common stock) as
specifically provided in this Section 10. This first
right of refusal shall not apply to (i) currently
ongoing efforts by the Company to sell an additional
2,000,000 shares of common stock for cash; or (ii) to
any transactions with strategic industry investors,
being entities primarily active in the business of
exploration and mining for precious metals. The Company
is obligated to furnish Investor written notice of a
pending or contemplated sale of securities of the
Company in sufficient detail of the business terms to
allow the Investor to evaluate the notice. Within 24
hours of the receipt of such written notice, Investor
will notify Company in writing of Investor's binding
offer and agreement to purchase such securities of the
Company on the same terms and conditions as those set
forth in the written notice from the company. If the
Investor does not respond to the written notice from the
Company within the 24 hour period, or the Investor
declines during that period to exercise its first right
of refusal, the Company will be free to finalize and
close the contemplated transactions within 45 days from
the expiration date and time of the first right of
refusal.
Section 11. Miscellaneous.
(a) Notices. All notices, demands, requests, consents,
approvals, and other communications required or
permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally
served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with
charges prepaid, or (iv) transmitted by hand delivery,
telegram, or facsimile, addressed as set forth below or
to such other address as such party shall have specified
most recently by written notice. Any notice or other
communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand
delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if
delivered on a business day during normal business hours
where such notice is to be received), or the first
business day following such delivery (if delivered other
than on a business day during normal business hours
where such notice is to be received) or (b) on the
second business day following the date of mailing by
express courier service, fully prepaid, addressed to
such address, or upon actual receipt of such mailing,
whichever shall first occur.
(b) Entire Agreement; Assignment. This Agreement along
with Schedules and Exhibits thereto represents the
entire agreement between the parties hereto with respect
to the subject matter hereof and may be amended only by
a writing executed by both parties. No right or
obligation of either party shall be assigned by that
party without prior notice to and the written consent of
the other party.
(c) Execution. This Agreement may be executed by
facsimile transmission, and in counterparts, each of
which will be deemed an original.
(d) Law Governing this Agreement. This Agreement shall
be governed by and construed in accordance with the laws
of the State of Colorado without regard to principles of
conflicts of laws. Any action brought by either party
against the other concerning the transactions
contemplated by this Agreement shall be brought only in
the state courts of Colorado or in the federal courts
located in the state of Colorado. Both parties
executing this Agreement and other agreements on behalf
of the Company agree to submit to the jurisdiction of
such courts and waive trial by jury. The prevailing
party shall be entitled to recover from the other party
its reasonable attorney's fees and costs. In the event
that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be
deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the
validity or enforceability of any other provision of any
agreement.
(e) This Agreement may not be assigned by the Investor,
and any attempt by the Investor to assign this Agreement
shall make this Agreement voidable at the option of the
Company. Subject to the preceding sentence, this
Agreement shall be binding upon and inure to the benefit
of the heirs, executors, administrators, legal
representatives, successors and assigns of the Investor.
(f) All pronouns contained herein and any variation
thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity
of the parties hereto may require.
IN WITNESS WHEREOF, this Agreement has been executed by
the undersigned Investor on the date set forth below.
TOTAL SUBSCRIPTION
857,143 Units for the Purchase Price of US$.35/Unit for
Aggregate US$300,000.00
EXCALIBUR LIMITED PARTNERSIP
Date: May 30, 2002
By: Will Hechter
Title: General Partner
Address: c/o Excalibur Capital Management Inc.,
Attention Will Hechter
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
ACCEPTED BY THE COMPANY on this 30 day of May, 2002.
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President