GOLDEN EAGLE
INTERNATIONAL, INC.
SERIES D CONTINGENT
CONVERTIBLE PREFERRED
STOCK SUBSCRIPTION
AGREEMENT
(Settlement of Debt)
THE
SERIES D STOCK BEING OFFERED BY GOLDEN EAGLE INTERNATIONAL, INC. HEREUNDER HAS NOT BEEN
REGISTERED UNDER THE SERIES A STOCK ACT OF 1933 OR APPLICABLE STATE BLUE SKY OR SECURITIES
LAWS AND IS OFFERED UNDER AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF SUCH LAWS.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER CONTAINED IN THIS STOCK SUBSCRIPTION
AGREEMENT AND APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
NOTE:
By considering accepting shares of Series D Contingent Convertible Preferred Stock
(“Series D Stock”) in full satisfaction of the debt Golden Eagle International,
Inc. (the “Company”) owes to you (described in greater detail below) as
described herein, you are representing, and by executing this Subscription Agreement, you
represent and warrant, that you are an “accredited investor” as that term is
defined in Section 2(a)(15) of the Federal Securities Act of 1933 (the “1933
Act”) and Rule 215 thereunder, and in Rule 501(a) of Regulation D under the 1933 Act,
as well as Regulation S for persons who are not U.S. Persons as that term is defined in
Regulation S.
This
Subscription Agreement (“Subscription Agreement” or “Agreement”) is
for the completion of an offering of securities (the “Offering”) by Golden Eagle
International, Inc. (the “Company”) to Golden Eagle Mineral Holding, Inc.
(“GEMH” or “you”) and to others (each of whom is an accredited
investor) for the satisfaction of certain indebtedness, which offering is being conducted
pursuant to Sections 4(2) and 4(6) of the 1933 Act and Rule 506 of Regulation D
thereunder. The following summarizes the Offering to the Investor:
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• |
Offering: 282,264
shares of the Series D Stock for a price of $1.00 per share, which will be paid through
the satisfaction and cancellation of all amounts due and owing to GEMH from the Company
(the “Debt”). |
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• |
Series
D Stock: Each share of the Company’s Series D Stock, is convertible into the
Company’s Common Stock in accordance with the provisions contained in the
Certificate of Designation of Preferences and Rights of the Series D Stock (“Designation”).
The Series D Stock has significant transferability restrictions imposed by SEC Rule 144. |
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• |
No
offering proceeds to the Company: The Company will receive no proceeds from the
satisfaction of the Debt in exchange for the issuance of the Series D Stock. As set forth
in the Company’s reports filed with the Securities and Exchange Commission, the
Company has significant working capital and cash flow shortages, and is dependent upon
financing from third parties and related parties to be able to conduct its operations. |
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• |
Lower
Priority: As an unsecured creditor GEMH has priority in liquidation over holders of
common and preferred stock and should be treated the same as other unsecured creditors.
As a holder of Series D Stock, GEMH will be treated as other holders of Series D Stock,
but will be junior to holders of unsecured indebtedness as well as holders of outstanding
shares of Series B Preferred Stock and Series C Preferred Stock (no shares of Series A or
Series D Preferred Stock are outstanding). |
This
Subscription Agreement is offered for the purpose of GEMH considering the ramifications of
its investment in the Offering as described above. If after reviewing this Agreement and
other relevant documents with the your legal, financial, tax and investment advisors as
you deem appropriate you elect to purchase Securities, please complete the following:
By
executing this Agreement and returning it to the Company, you further agree that your
investment is being made entirely on the terms and conditions stated herein and in the
documents attached hereto. You understand that this Subscription Agreement is not binding
until the Company accepts it in writing.
Caveat: Certain statements
contained herein and included in other documents which have been given to you (including
the Company’s reports filed pursuant to the requirements of the 0000 Xxx) using the
terms “may,” “expects to” and other terms denoting future
possibilities, are forward-looking statements. We cannot guarantee the accuracy of these
statements as they are subject to a variety of risks, which are beyond our ability to
predict or control. These risks may cause actual results to differ materially from the
projections or estimates given to you. These risks include, but are not limited to, the
possibility that the described operations or other activities will not be completed on
economic terms, if at all. Our contemplated operations are attendant with high risk. There
can be no assurance that we will succeed in operating our contemplated business, and it is
important that each person considering and investment pursuant to this Subscription
Agreement understands the significant risks, which accompany the proposed conduct of our
future operations.
AGREEMENT
| A. |
In full and complete satisfaction of the Debt, upon the Company creating the
Series D Stock by filing an amendment to the Company’s articles of
incorporation, the Company shall issue GEMH 282,264 shares of Series D Stock,
and GEMH, by executing and returning this Subscription Agreement to the Company,
hereby agrees to accept 282,264 shares of Series D Stock in full and complete
satisfaction of the Debt. |
| B. |
GEMH hereby warrants and represents to the Company that GEMH is the only party
with (or who can claim) an interest in the Debt, that GEMH has the power and
authority necessary to compromise the Debt in the manner contemplated herein,
and agrees that it will hold the Company harmless and defend the Company against
any other person that may claim any right, title, or interest in the Debt or any
portion thereof. |
| C. |
In connection with your acquisition of the Series D Stock in satisfaction of the
Debt, you further represent as follows: |
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1. |
You
understand that an investment in the Series D Stock is one of significant risk,
and there can be no assurance that the Series D Stock, or the common stock into
which it is convertible, will ever be valuable, or that the Company will ever
have available for issuance a sufficient amount of common stock available for
issuance upon the conversion of the Series D Stock. You understand that
currently the Company has only a limited amount of its authorized common stock
available for issuance, and many of those shares are reserved for issuance upon
the conversion of Series B Preferred Stock or upon exercise of outstanding
convertible debentures, convertible preferred stock, common stock purchase
warrants or options. You further understand that the Company will make its best
efforts to seek and receive the approval of a majority of its shareholders for
either an increase in its authorized common stock or a reorganization through a
reverse stock split in an amount sufficient to allow you to convert your Series
D Stock into common stock of the Company, but that the Company cannot guarantee
such an outcome. If the Company is unable to secure the approval of a majority
of its shareholders for either an increase in its authorized common stock or
for a reverse stock split, then you will remain the holder of Series D Stock
only. The risks associated with an investment of the Series D Stock are those
set out in this Subscription Agreement, as well as those that are set forth in
the Company’s 1934 Act Reports filed with the U.S. Securities and Exchange
Commission and available on its XXXXX electronic filing service, or also
available through the Company website, xxx.xxxx.xxx, or have been made
available to you from the Company upon request. By signing this Subscription
Agreement, you represent and warrant to the Company that you are familiar with,
and are willing to accept, all such risks. |
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2. |
You
acknowledge that you may lose your entire investment in the Series D Stock. You
hereby represent that an investment in the Series D Stock is a suitable
investment for you, taking into consideration the restrictions on
transferability and the other considerations affecting the Series D Stock and
the Company as described herein, and in the documents included with this
Subscription Agreement and in the due diligence investigation that you have
made. |
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3. |
You
will acquire the Series D Stock for your own account and not on behalf of any
other person or entity. You will acquire the Series D Stock for investment
purposes and not for resale or distribution to any other person. |
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4. |
You
are not aware of the payment of any commission or other remuneration to any
person in connection with the execution of this transaction or the purchase of
the Series D Stock. |
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5. |
We
have provided you with access to the Company’s 1934 Act Documents,
disclosure on the Company’s website, press releases, and updated
information. You are aware that, unless the Company is able to raise a
substantial amount of money, the Company may not be able to continue in
business. Currently the Company is not able to pay all of its debts as they
have become due. Your debt is an example of this problem. We have given you the
opportunity to ask questions of and to receive answers from us about the terms
and conditions of this Offering, and we also have given you the opportunity to
obtain any additional information regarding the Company, which we possess or
can acquire without unreasonable effort or expense including (without
limitation) all minutes of meetings of our Board of Directors or committees,
and other relevant documents you have requested. We have also given you the
opportunity to speak with our independent auditors, and you have done so to the
extent you have deemed it to be necessary or appropriate. In addition, you have
made such other financial or other inquiry as you have deemed necessary or
appropriate in the conduct of your due diligence investigation. You have not
relied on due diligence of any other party in connection herewith. |
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6. |
You
acknowledge and understand, however, that we have not authorized any person to
make any statements on our behalf, which would in any way contradict any of the
information that we have provided to you in writing, including the information
set forth in this Subscription Agreement or in the 1934 Act Documents. You
further represent to the Company that you have not relied upon any such
representations regarding the Company, its business or financial condition or
this transaction in making any decision to acquire the Series D Stock. If you
become aware of conflicting information, you will discuss this with us. |
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7. |
Your
present financial condition is such that it is unlikely that it would be
necessary for you to dispose of the Series D Stock in the foreseeable future.
You further understand and agree that: |
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a. |
Neither
the Series D Stock nor the shares of common stock issuable upon conversion of
the Series D Stock have been registered under the Series A Stock Act of 1933 or
any state or foreign securities laws and, consequently are and will continue to
be restricted securities within the meaning of Rule 144 promulgated under the
1933 Act and applicable state statutes; |
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b. |
You
cannot resell the Series D Stock or the shares of common stock issuable upon
conversion of the Series D Stock unless they are registered under the 1933 Act
and any applicable state securities laws or unless an exemption from the
registration requirements is available; |
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c. |
As
a result, you must bear the economic risks of the investment in the Series D
Stock and the shares of common stock issuable upon conversion of the Series D
Stock for an indefinite period of time; |
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d. |
The
Company is the only person that may register the Series D Stock or the shares
of common stock issuable upon conversion of the Series D Stock under the 1933
Act and state securities statutes, and we have not made any representations to
you regarding any possible future registration of the Series D Stock or
compliance some exemption under the 1933 Act; |
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e. |
You
will not sell or attempt to sell the Series D Stock or the shares of common
stock issuable upon conversion of the Series D Stock without registration under
the 1933 Act and any applicable state securities laws, unless exemptions from
such registration requirements are available and the undersigned has satisfied
the Company that an exemption is available for such sale; |
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f. |
The
Company has the right to issue instructions to its transfer agent to bar the
transfer of any of the certificates representing the Series D Stock and the
shares of common stock issuable upon conversion of the Series D Stock except in
accordance with the 1933 Act; and |
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g. |
You
consent to the placement of an appropriate restrictive legend or legends on any
certificates evidencing the Series D Stock and any certificates issued in
replacement or exchange therefor, as well as any certificates issued
representing the shares of common stock issuable upon conversion of the Series
D Stock. |
| 8. |
You have reviewed this Subscription Agreement and all information you have
obtained regarding the Company, its proposed business, assets, management,
financial condition, capitalization and share ownership and plan of operations
with your legal, financial, tax and investment advisors to the extent that you
have determined that it is appropriate or necessary for you to do so prior to
committing to make an investment herein. Your review has included (without
limitation) the following documents: |
| |
a. |
The
Company’s articles of incorporation, including amendments thereto, and
bylaws; |
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c. |
Minutes
of meetings or Statements of Consents of the Company’s Board of Directors; |
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d. |
The
Company’s 1934 Act Documents; and |
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e. |
Such
other documents as you or your advisors have determined appropriate. |
| 9. |
You represent and warrant that you have reviewed a the way in which your
original loan proceeds were used, which loan you are now exchanging for Series D
Stock in the Company, and are satisfied with the use of proceeds and have no
objections thereto. |
| 10. |
We may amend or modify this Agreement only in writing signed by both you and the
Company. No evidence shall be admissible in any court concerning any alleged
oral amendment hereof. |
| 11. |
This Agreement binds and inures to the benefit of our respective
representatives, successors and permitted assigns. |
| 12. |
Each of us hereto agrees for ourselves and our successors and permitted assigns
to execute any and all further instruments necessary for the fulfillment of the
terms of this Agreement. |
| 13. |
You acknowledge that the Company is relying on the accuracy of the
representations and warranties you are making in this Agreement, and you agree
to indemnify the Company, and to hold us harmless from and against any and all
liability that may result to us (including court costs and attorneys’ fees)
as a result of any of your representations or warranties being materially
inaccurate, incomplete or misleading. |
| 14. |
You acknowledge that you have reviewed the definition of the term
“accredited investor” as set forth following your signature and you
represent and warrant to us that you are an “accredited investor.” |
| 15. |
This Agreement is made under, shall be construed in accordance with and shall be
governed by the laws of the State of Colorado. |
| 16. |
This Agreement is not effective unless and until it is accepted in writing by
the Company, regardless whether the Company has received or deposited the
subscription amount. |
IN
WITNESS WHEREOF, subject to our acceptance, you have completed this Subscription Agreement
and tendered payment as set forth above to evidence your commitment to purchase the Series
D Stock on the terms, and with the representations and warranties set forth above.
|
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| Date: July 2, 2009 |
(Investor)
By:
J. Xxxxxx Xxxxxx, M.D.
Golden Eagle Mineral Holding, Inc.
Providenciales,
Turks and Caicos Islands |
|
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Name: J. Xxxxxx Xxxxxx,
M.D.
Address: Chancery Court, Leeward Highway |
Title: General Manager |
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Tax ID #: None
Form (circle one): individual
(corporation) partnership xxx.xxxx.xx. trust other_______________
SUBSCRIPTION ACCEPTED AND RECEIPT OF
CONSIDERATION ACKNOWLEDGED:
July 2, 2009
|
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GOLDEN
EAGLE INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxx
——————————————
Xxxxx X. Xxxxxx, President |
DEFINITION OF
“ACCREDITED INVESTOR”
Section 2(a)(15) of the
1933 Act:
(15)
The term “accredited investor” shall mean B
| (i) |
a bank as defined in section 3(a)(2) of the Act whether acting in its
individual or fiduciary capacity; an insurance company as defined in section
2(13) of the Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in section 2(a)(48) of
that Act; a Small Business Investment Company licensed by the Small Business
administration; or an employee benefit plan, including an individual retirement
account, which is subject to the provisions of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in section 3(21) of such Act, which is either a bank, insurance company,
or registered investment advisor; or |
| (ii) |
any person who, on the basis of such factors as financial sophistication, net
worth, knowledge, and experience in financial matters, or amount of assets under
management qualifies as an accredited investor under rules and regulations which
the Commission shall prescribe. |
Rule 215. Accredited
Investor
The
term “accredited investor” as used in section 2(a)(15)(ii) of the Securities Act
of 1933 shall include the following persons:
| (a) |
Any savings and loan association or other institution specified in section
3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to section 15 of the Securities and
Exchange Act of 1934; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in section 3(21) of
such Act, which is a savings and loan association, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors; |
| (b) |
Any private business development company as defined in section 202(a)(22) of
the Investment Advisors Act of 1940; |
| (c) |
Any organization described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000; |
| (d) |
Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or general
partner of a general partner of that issuer; |
| (e) |
Any natural person whose individual net worth, or joint net worth with that
person’s spouse, at the time of his purchase exceeds $1,000,000; |
| (f) |
Any natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person’s spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year; |
| (g) |
Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii); and |
| (h) |
Any entity in which all of the equity owners are accredited investors. |
Guidelines for
Calculating Net Worth:
Any
valuation of a residence included in the calculation of net worth must be based on an
appraisal obtained by the Investor in connection with obtaining a loan secured by such
residence.
Marketable
securities owned by the Investor included in the calculation of net worth must be based on
a recent market value, with appropriate discounts for lack of marketability if the
securities represent greater than a 10% interest in the issuer, if the securities are
“restricted shares” or subject to any contractual or other restriction, if the
securities are thinly traded, or for other appropriate reasons.
Any
valuation of any other asset with a value in excess of $100,000 must be based on an
independent valuation or appraisal.
Guidelines for
Calculating Net Income:
For
the purposes of determining whether an Investor is an “accredited investor,” net
income must be calculated based on its adjusted gross income as reported to the Internal
Revenue Service (for U.S. taxpayers) or other similar measure (for non-U.S. taxpayers).
Substantiation of Net
Worth and Net Income:
Golden
Eagle International, Inc. (the “Company”) is relying on the accuracy of each
Investor’s representations and warranties with respect to its status as an accredited
investor. The Company is aware that personal financial matters are private and
confidential, and will endeavor to maintain all information contained in the subscription
agreement or otherwise obtained confidential. In case of any question, however, the
Company may request substantiation of the Investor’s status by discussing the issue
with the Investor’s banker, attorney, accountant, or investment advisor. If questions
develop, the Company will contact the Investor before seeking any independent
confirmation.
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