SUBSCRIPTION AGREEMENT
This Subscription Agreement (hereinafter, the "Agreement") is dated as of
August 8th, 2007 and is made by and between Gold Run Inc., a Delaware
corporation (hereinafter, "Seller") and Xxxxxxxxxx X. xx-Xxxxxxxxxx
(hereinafter, "Buyer"), a natural person with the mailing address set forth
underneath his signature line.
WHEREAS, the Seller's initial public offering for an aggregate of
$8,000,000 worth of its common stock at a price of $1 per share was declared
effective by the Securities and Exchange Commission on May 14, 2007; and
WHEREAS, the Buyer received the Seller's Post-Effective Amendment No. 1
and subscribed for $500,000 worth of the Seller's stock after June 27, 2007.
WHEREAS, the Securities and Exchange Commission later compelled the Seller
to return all subscriptions from its initial public offering; and
WHEREAS, the Seller has requested written instructions from the Buyer
regarding where to send the refund of his $500,000 subscription; and
WHEREAS, the Seller has advised the Buyer that it intends to file a
Post-Effective Amendment No. 4 to its existing registration statement on Form
SB-2 that will reduce its minimum offering from $3,000,000 to $2,500,000, and
that will reduce the price per share of its initial public offering from $1.00
to $.75.
WHEREAS, the Buyer is now instructing the Seller and its escrow agent that
instead of physically transmitting to him his $500,000 refund in cancellation of
his subscription to the Seller's initial public offering, the Buyer wants to use
his refund to purchase 666,667 shares of the Seller's common stock for $500,000
in a private placement pursuant to Regulation S promulgated under the Securities
Act of 1933, as amended (hereinafter, the "Securities Act").
NOW, THEREFORE, the parties hereto agree as follows:
1. Number of Shares; Purchase Price; Payment. The Buyer agrees to purchase
from the Seller 666,667 shares of the Seller's common stock, par value $0.000001
per share (hereinafter, the "Common Stock"), for an aggregate purchase price of
$500,000 (hereinafter, the "Purchase Price"). Payment of the Purchase Price,
which shall give the Buyer a credit for any wiring charges incurred in
connection with the purchase and rescission of the subscription to the original
public offering, shall be made in accordance with the written instructions
annexed hereto as Exhibit A.
2. Use of Proceeds. The proceeds from the sale of Common Stock shall be
used by the Seller for urgently needed working capital until its Post-Effective
Amendment No. 4 is declared effective and until its initial public offering
closes. However, there is no guarantee that the Post-Effective Amendment No. 4
will be declared effective, or that the Seller will close on its initial public
offering. If either of these events do not occur, the Buyer will likely lose his
investment. Most of the proceeds from the sale of this Common Stock shall be
used by the Seller to make lease payments, make claim maintenance payments, and
continue funding its exploration program.
3. Registration Rights. Within sixty (60) days of the date of this
Agreement, the Seller shall prepare and file an amendment to its existing
registration statement on Form SB-2 which shall include the registration on
behalf of the Buyer of all 666,667 shares of Common Stock being purchased by the
Buyer hereunder. Except for the number of shares being registered, such
registration shall be substantially on the same terms as those afforded to the
other selling shareholders included in such amendment. The Seller shall use its
best efforts to cause such amendment to become effective as soon as possible and
shall file such further amendments and supplements to such amendment and any
prospectus used in connection therewith as may be necessary to maintain the
effectiveness of such amendment and to comply with the applicable provisions of
the Securities Act, with respect to the disposition of the securities covered by
such amendment. The Seller shall pay all expenses incident to such registration.
4. Seller's Representations and Warranties. The Seller hereby represents
and warrants to the Buyer as follows:
(a) Organization and Good Standing. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Delaware, has all requisite corporate power and authority to own
and operate its properties and assets and to carry on its business as now
conducted and as proposed to be conducted, to execute and deliver this
Agreement and carry out the provisions hereof, and to deliver the shares
of Common Stock that the Buyer is purchasing hereunder.
(b) Authorization. The execution, delivery and performance by Seller
of this Agreement and the transactions contemplated hereby, are (i) within
the power and authority of Seller, (ii) have been duly authorized by all
of Seller's necessary corporate, stockholder and other proceedings, as the
case may be, and (iii) do not and will not result in any breach of
Seller's charter or by-laws or any law, regulation, order, judgment, writ,
injunction, license, permit, agreement or instrument to which the Seller
is subject.
(c) Enforceability. The execution and delivery by the Seller of this
Agreement and the delivery by the Seller of the shares of Common Stock
that the Buyer is purchasing hereunder will result in legally binding
obligations that are enforceable against the Seller in accordance with the
terms and provisions of this Agreement.
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(e) Consents. The execution, delivery and performance by the Seller
of this Agreement does not and will not require the approval or consent
of, or any filing with, any governmental authority or agency other than
(i) those required by Regulation S as promulgated under the Securities
Act, and (ii) those required in connection with the Seller's registration
of the shares of Common Stock as set forth in Section 3 hereof.
5. Buyers' Representations and Warranties. The Buyer hereby represents and
warrants to the Seller as follows:
(a) Special Risks and Independent Investigation. The Buyer
acknowledges that he has relied solely upon his own independent
investigation in making a decision to purchase the Common Stock, and that
the Common Stock is a speculative investment which involves a substantial
degree of risk with no assurance of any income from such investment, and
that the Common Stock may become worthless. The Buyer acknowledges that
the Common Stock is not traded on any stock exchange and that there is no
market for the Common Stock. The Buyer further acknowledges that there is
no assurance that the Securities and Exchange Commission will declare any
post-effective amendment effective or that the Seller will be able to
raise the minimum $2,500,000 required for the proposed public offering to
initially close. The Buyer understands that he will likely lose his
investment if the Securities and Exchange Commission does not declare the
Seller's post-effective amendment effective, or if the Seller is unable to
raise the minimum required for the proposed public offering to initially
close.
(b) Compliance with Regulation S.
(i) The Buyer is Not a "U.S. person". The Buyer certifies that
he is not a "U.S. person" and is not acquiring the Common Stock for
the account or benefit of any "U.S. person", as such term is defined
in Rule 902(k) promulgated under the Securities Act.
(ii) Offshore Transaction. The Buyer is a citizen of Kuwait
and a resident of Kuwait. The Buyer was outside the United States
when this Agreement was negotiated, and he was outside of the United
States when he received this Agreement. This Agreement was executed
by the Buyer outside of the United States, and the Buyer shall be
outside of the United States when the instructions regarding
transmitting the Purchase Price to the Seller are transmitted.
(iii) Resale Restrictions. The Buyer agrees that the Common
Stock may be resold only in accordance with the provisions of
Regulation S (Rule 901 through Rule 905, and Preliminary Notes)
promulgated under the Securities Act, pursuant to registration under
the Securities Act, or pursuant to an available exemption from
registration under the Securities Act, the availability of which is
to be established to the satisfaction of the Seller.
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(iv) No Hedging Transactions. The Buyer agrees not to engage
in any hedging transactions with regard to the Common Stock unless
in compliance with the provisions of the Securities Act.
(v) Refusal to Register Transfer. The Buyer understands that
the Seller will refuse to register any transfer of the Common Stock
not made in accordance with the provisions of Section 5(b)(iii)
above. The Buyer understands that the Seller reserves all rights
pursuant to Rule 903 promulgated under the Securities Act.
(c) Accredited Investor. The Buyer is an accredited investor as
defined in Rule 501 promulgated under the Securities Act.
(d) Investment Intent. The Buyer is acquiring the Common Stock for
investment purposes only, for his own account, and not with a view towards
the distribution thereof. The Buyer has no contract, undertaking,
agreement or arrangement with any person to sell, transfer, pledge or
hypothecate the Common Stock to such person or to anyone else, and the
Buyer has no plans to enter into any such contract, undertaking, agreement
or arrangement.
(e) No Compensation. The Buyer is not purchasing the Common Stock in
exchange or as compensation for having done anything in the past or for
doing anything in the future, directly or indirectly relating to Gold Run
Inc. or to the offer or sale of Gold Run Inc. securities. The Buyer is not
receiving, and has never received, any compensation or commissions for
selling or placing, or agreeing to participate in the offer or placement
of, any Gold Run Inc. securities.
(f) Restricted Securities. The Buyer understands that until such
time as the Common Stock shall have been registered as set forth in
Section 3 hereof, the Common Stock are subject to the resale restrictions
set forth, without limitation, in Regulation S and Rule 144 promulgated
under the Securities Act. The Buyer understands that until such time as
the Common Stock shall have been registered as set forth in Section 3
hereof, the certificates evidencing the Common Stock shall bear a
restrictive legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"). BY PURCHASING SUCH SHARES, THE HOLDER HEREOF
AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SHARES MAY
NOT DIRECTLY OR INDIRECTLY BE OFFERED, SOLD, PLEDGED,
GIFTED, HYPOTHECATED, TRANSFERRED, ASSIGNED OR OTHERWISE
DEALT WITH OR DISPOSED OF UNLESS (A) IN ACCORDANCE WITH
THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE ACT;
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(B) PURSUANT TO REGISTRATION UNDER THE ACT, OR (C)
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE COMPANY. THE HOLDER HEREOF FURTHER
AGREES NOT TO ENGAGE IN HEDGING TRANSACTIONS WITH REGARD
TO THESE SECURITIES UNLESS CONDUCTED IN COMPLIANCE WITH
THE ACT, WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF
THE COMPANY.
The Buyer understands that until such time as the Common Stock shall have been
registered as set forth in Section 3 herein, he may not dispose of the Common
Stock received hereunder, or any part thereof, or any interest therein, until
and unless the Seller's legal counsel shall have determined that the intended
disposition does not violate the law of any jurisdiction.
(g) Registration Statement; Prospectus; Post-Effective Amendment;
Sticker Amendments. The Buyer has reviewed: 1) Gold Run Inc.'s
Post-Effective Amendment No. 1 to Form SB-2 dated June 27, 2007, 2) Gold
Run Inc.'s amended Prospectus dated June 27, 2007 relating to the
registration of 9,097,000 shares of Common Stock, 3) Gold Run Inc.'s
sticker amendment dated July 12, 2007, and 4) Gold Run Inc.'s sticker
amendment dated July 20, 2007. The Buyer has had the opportunity to
consult with its counsel and ask any questions of Gold Run Inc. regarding
the foregoing.
(h) Documents and Records; Professional Advice. The Buyer
acknowledges that the Seller has made available to it all requested
documents and records in its possession and has offered it the opportunity
to discuss this investment with its officers and representatives and
obtain any documents or information necessary to verify the accuracy of
any information furnished. The Buyer further acknowledges that no
documents or information furnished to it by the Seller constitute
investment, accounting, legal or tax advice, and that the Buyer is relying
solely upon himself and his professional advisors, if any, for such
advice.
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(i) Authorization. The execution, delivery and performance of this
Agreement by the Buyer does not and will not result in any breach of any
law, regulation, order, judgment, writ, injunction, license, permit,
agreement or instrument to which the Buyer is subject.
(j) Enforceability. The execution and delivery by the Buyer of this
Agreement, and the delivery by the Buyer of the purchase price for the
Common Stock, will result in legally binding obligations that are
enforceable against the Buyer in accordance with the terms and conditions
of this Agreement.
6. 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 each party's respective signature line 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. Notices to the Buyer shall be made in accordance with this
section and shall be sent to Xxxxxxxxxx X. xx-Xxxxxxxxxx, X.X. Xxx 0000, Xxxxx,
Xxxxxx 00000, facsimile: , e-mail: xxxxxxxxxxxx@xxxxx.xxx. Notices to the Seller
shall be made in accordance with this section and shall be sent to Gold Run
Inc., 000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0 Xxxxxx, facsimile:
(000) 000-0000, with a copy to Xxxxxxx X. Xxxxx, Esq., Xxxxx & Associates, P.C.,
000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile: (212)
490-3263.
7. Entire Agreement; Assignment. This Agreement represents the entire
agreement between the parties hereto with respect to the subject matter hereof.
No right or obligation of any party shall be assigned without the prior written
of the other party.
8. Counterparts/Execution. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed an original, but all of which
shall together constitute one and the same instrument.
9. Specific Enforcement. To the extent permitted by law, the Seller and
the Buyer each acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or are otherwise breached. It is
accordingly agreed that the parties shall be entitled to one or more preliminary
and final injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
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10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state or federal courts located in the County of New York, State of New
York. Both parties agree to submit to the jurisdiction of such courts. The
prevailing party shall be entitled to recover from the losing party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement is held 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 this Agreement. Nothing contained herein shall be deemed or operate
to preclude either party hereto from bringing suit or taking other legal action
against the other in any other jurisdiction to enforce a judgment of any court
located in New York County, City and State of New York, in favor of the
prevailing party.
11. Change or Waiver. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
12. Section Headings. The section headings in this Agreement are for the
convenience of the parties only, and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties hereto.
**THE NEXT PAGE IS THE SIGNATURE PAGE**
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EXECUTED as of the date first above written.
SELLER: GOLD RUN INC.
/s/ Xxxx X. Xxxxxxxxx
----------------------
Xxxx X. Xxxxxxxxx, CEO
BUYER: /s/ Xxxxxxxxxx X. xx-Xxxxxxxxxx
-------------------------------
Xxxxxxxxxx X. xx-Xxxxxxxxxx
X.X. Xxx 0000
Xxxxx, Xxxxxx 00000
Tel.: x000-000-0000
xxxxxxxxxxxx@xxxxx.xxx
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EXHIBIT A
Buyer's Instruction Letter
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