SUBSCRIPTION AGREEMENT
Exhibit
99.3
This
Subscription
Agreement is
made
as of this 3rd
day of
April, 2007 between Industrial
Minerals, Inc.,
a
Delaware corporation having an address at 0 Xxxxxx Xxxxxx Xxxx, Xxxxx 0000,
Xxxxxxx, XX X0X 0X0 (the "Company") and the undersigned subscriber, Yukon
Gold Corporation, Inc.,
a
Delaware corporation having an address at 00 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
XX
X0X 0X0 (the "Subscriber").
The
Company is quoted on the NASDAQ
OTCBB under
the
trading symbol "IDSM.OB".
The
Subscriber desires to acquire registered Common Shares of the
Company.
NOW,
THEREFORE, for and in consideration of the promises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. Subscription
and Representations.
1.1 Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby
subscribes for and agrees to acquire from the Company and the Company hereby
agrees to issue and deliver to the Subscribers 5,000,000 fully paid and
nonassessable, registered (i.e. free trading) Common Shares of the Company
(hereinafter such fully paid and nonassessable registered Common Shares of
the
Company are called the "Shares") at a price of US$0.05 per Share. The Subscriber
tenders herewith the total subscription price of US$250,000.00 made payable
to
the Company as payment in full for the subscription.
1.2 The
Company hereby grants one warrant for each Share subscribed for by the
Subscriber, which warrant shall be in the form set out in Schedule 1 hereto
and
which warrant will be exercisable at the same price as that of the corresponding
Shares.
1.3 The
Subscriber recognizes that the acquisition of the Shares involves a high degree
of risk and is suitable only for persons of adequate financial means who have
no
need for liquidity in this investment in that (i) they may not be able to
liquidate their investment in the event of an emergency; (ii) transferability
is
extremely limited; and (iii) they could sustain a complete loss of their entire
investment. The Subscriber represents that the Subscriber is competent to
understand and does understand the nature of the investment and is able to
bear
the economic risk of this investment.
| 1.4 |
The
Subscriber is to check the appropriate
spaces:
|
| ____ |
The
Subscriber represents that he is an "accredited investor" as such
term is
defined in Rule 501 of Regulation D promulgated under the
Securities
Act of 1933,
as amended (the "Act").
|
| ____ | The Subscriber represents that he is not an accredited investor. |
| ____ | The Subscriber represents that he is not a resident of the United States. |
1
The
definition of an "accredited investor" includes the following:
| · |
An
individual having a net worth or a joint net worth with spouse at
the time
of purchase in excess of
$1,000,000.
|
| · |
An
individual whose net income was in excess of $200,000 in each of
the two
most recent years, or whose joint income with spouse was in excess
of
$300,000 in each of those years, and who reasonably expects his /
her net
income to reach such level in the current
year.
|
| · |
A
corporation, partnership, Massachusetts or similar business trust,
or
organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986,
as amended (tax exempt organization), not formed for the specific
purpose
of acquiring the Shares, having total assets in excess of
$5,000,000.
|
| · |
A
bank, savings and loan association or other similar institution (as
defined in Sections 3(a)(2) and 3(a)(5)(A) of the
Act).
|
| · |
An
insurance company (as defined in Section 213 of the
Act).
|
| · |
An
investment company registered under the
Investment Company Act of 1940
(the "Investment
Company Act").
|
| · |
A
business development company (as defined in Section 2(a)(48) of the
Investment
Company Act)
or a private business development company (as defined in Section
202(a)(22) of the Investment
Advisers Act of 1940).
|
| · |
A
Small Business Investment Company licensed by the U.S. Small Business
Administration under Sections 301 (c) or (d) of the Small
Business Investment Act of 1958.
|
| · |
A
broker or dealer registered pursuant to Section 15 of the
Act.
|
| · |
A
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, which plan has total assets in excess
of
$5,000,000.
|
| · |
An
employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 ("ERISA"),
if the investment decision is made by a "plan fiduciary", as defined
in
section 3(21) of ERISA, which is either a bank, savings and loan
association, insurance company or registered investment
adviser.
|
| · |
An
employee benefit plan within the meaning of ERISA having total assets
in
excess of $5,000,000.
|
| · |
A
self-directed employee benefit plan within the meaning of ERISA,
with
investment decisions made solely by persons who are accredited investors
as defined in Rule 501 (a) of Regulation
D.
|
| · |
A
trust with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the shares offered hereby, whose purchase
is
directed by a sophisticated person (i.e., a person who has such knowledge
and experience in financial and business matters that s/he is capable
of
evaluating the merits and risks of an investment in the
Shares).
|
| · |
Any
entity in which all of the equity owners are accredited
investors.
|
1.5 The
Subscriber acknowledges that he has significant prior investment experience,
including investment in non-listed and non-registered securities, and that
he
recognizes the highly speculative nature of this investment.
1.6 The
Subscriber acknowledges that he has been advised, as a prospective investor
in
connection with the Shares subscribed for, to conduct his own review of the
business, properties and affairs of the Company before subscribing for the
Shares. The Subscriber hereby represents that he has been furnished with all
information regarding the Company which Subscriber desired to know and that
he
has been afforded the opportunity to conduct his own due diligence and review
concerning the Company and the terms and conditions of this
Agreement.
2
1.7 The
Subscriber acknowledges and agrees that the Company is relying on the
Subscriber's representations contained in this Agreement in determining whether
to accept this subscription. The Subscriber agrees that the Company reserves
the
unrestricted right to reject or limit any subscription and to close the offer
at
any time.
1.8 The
Subscriber represents and warrants that all representations made by the
Subscriber hereunder are true and correct in all material respects as of the
date of execution hereof, and the Subscriber further agrees that until the
closing on the Shares subscribed for they shall inform the Company immediately
of any changes in any of the representations provided by the Subscriber
hereunder.
2. Company's
Representations.
2.1 The
Company represents and warrants to the Subscriber that: (a) the authorized
capital stock of the Company consists of 200,000,000 shares of Common Stock,
par
value $0.001 per share, of which, as of the date hereof, 118,043,776 shares
of
Common Stock are issued and outstanding; (b) all of the issued and outstanding
shares of the Company’s Common Stock are duly and validly issued and outstanding
and are fully paid and non-assessable and free of preemptive rights; and (c)
none of the outstanding shares of the Company’s Common Stock has been issued in
violation of any preemptive rights of the current or past shareholders of the
Company.
3. Taxes.
3.1 Subscriber
hereby agrees to be responsible for all of his taxes arising out of this
transaction, including any taxes from the issuance of the common stock of the
Company. If the Company has any obligation to withhold taxes on behalf of
Subscriber, Subscriber agrees to pay the taxes or indemnify and reimburse the
Company for any moneys paid on Subscriber's behalf by the Company. If Subscriber
fails to pay the taxes owed or indemnify or reimburse the Company for any
liability resulting from such failure, the Company has the power to stop the
transfer of its common stock to Subscriber or to reclaim common stock of the
Company from the Subscriber to satisfy the tax liability. Subscriber hereby
expressly appoints the President of the Company or its successor as his attorney
for purposes of enforcing this provision, with full power of substitution in
the
premises.
4. Miscellaneous.
4.1 Any
notice or other communication given hereunder shall be deemed sufficient if
in
writing and sent by registered or certified mail, return receipt requested,
addressed to the Company, and to the Subscriber at his address indicated on
the
last page of this Agreement. Notices shall be deemed to have been given on
the
date of mailing, except notices of change of address, which shall be deemed
to
have been given when received.
4.2 This
Agreement shall not be changed, modified, or amended except by a writing signed
by the parties to be charged, and this Agreement may not be discharged except
by
performance in accordance with its terms or by a writing signed by the party
to
be charged. The respective representations, warranties and covenants of the
parties set forth in this Agreement shall survive delivery of the Shares
contemplated hereunder.
3
4.3 This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and assigns.
This Agreement sets forth the entire agreement and understanding between the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among
them.
4.4 This
Agreement and its validity, construction and performance shall be governed
in
all respects by the laws of the State of Delaware, without giving effect to
the
choice of law rules thereof.
4.5 This
Agreement may be executed in counterparts. Upon the execution and delivery
of
this Agreement by the Subscriber, this Agreement shall become a binding
obligation of the Subscriber with respect to the purchase of Shares as herein
provided.
In
witness whereof
the
parties have executed this Agreement as of the day and year first written
above.
| Yukon Gold Corporation, Inc. | Industrial Minerals, Inc. | ||
| By: | By: |
| /s/ Xxxx X. Xxxxxx | /s/ Xxxx xxx Xxxx | ||
|
|
|
||
| Mr. Xxxx Xxxxxx, President | Xx. Xxxx xxx Xxxx, President |
4
Schedule
1
WARRANT
to PURCHASE SHARES of COMMON STOCK of
INDUSTRIAL
MINERALS, INC.
This
Warrant is issued to YUKON
GOLD CORPORATION, INC.,
a
Delaware corporation (the "Holder") by INDUSTRIAL
MINERALS, INC.,
a
Delaware corporation (the "Company"), on April 3, 2007 (the "Warrant Issue
Date"). This Warrant is issued pursuant to the terms of that certain
Subscription Agreement (the "Subscription Agreement") dated as of April 3,
2007.
1. Definitions. Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed
to
them in the Subscription Agreement.
2.
Purchase
Price; Number of Shares. Subject
to the exercise restriction provided for in Section 6 hereof, this Warrant
certifies that, for value received, the Holder of this Warrant is entitled
upon
written notice duly executed and delivered to the Company, as set out in Section
12, to purchase from the Company 5,000,000 fully paid and nonassessable
registered shares of Common Stock of the Company (the "Common Stock") at a
price
per share (the "Purchase Price") of U.S.$0.05, subject to adjustment pursuant
to
Sections 8 and 9 below.
3.
Payment
of Purchase Price. The
Purchase Price may be paid in cash or by certified check or wire transfer,
or by
the net exercise election set out in Section 4.
4.
Net
Exercise.
Notwithstanding
any provisions herein to the contrary, the Holder may elect to receive, without
the payment by the Holder of any additional consideration, shares of Common
Stock equal to the value (as determined below) of this Warrant by the surrender
of this Warrant to the Company, with a net issue election notice duly executed,
at the principal office of the Company. Thereupon, the Company shall issue
to
the Holder such number of fully paid and nonassessable registered shares of
Common Stock as is computed using the following formula:
|
X
=
Y(A-B)
|
|
|
------
|
|
|
A
|
|
Where:
|
|||
|
X
=
|
the number of shares of Common Stock to be issued to | ||
| the Holder pursuant to this Section 4; | |||
| Y = |
the number of shares of Common Stock covered
by
this
Warrant;
|
||
| A = | the listed market price of one share of Common Stock; and | ||
| B = | the Purchase Price in effect under this Warrant when the | ||
| net exercise election is made pursuant to this Section 4. |
5.
Fractional
Shares.
No
fractional shares shall be issued upon exercise of this Warrant. The Company
shall, in lieu of issuing any fractional share, pay the Holder entitled to
such
fraction a sum in cash equal to such fraction multiplied by the then effective
Purchase Price.
5
6.
Expiration
Date, Exercise and Delivery.
Holder's
rights under this Warrant expire at 5:00 p.m. Eastern Time on April 3, 2008
(the
"Expiration Date") and shall be void thereafter. Holder may exercise its rights
under this Warrant by written notice delivered to the Company. Upon the exercise
of the rights represented by this Warrant, the Company shall issue and deliver
to the Holder a certificate or certificates for the shares of Common Stock
issuable upon exercise of this Warrant so purchased, registered in the name
of
the Holder forthwith after the rights represented by this Warrant shall have
been so exercised, unless the Warrant has been fully exercised or expired,
and a
new warrant representing the remaining portion of the Warrant and the underlying
Common Stock, if any, with respect to which this Warrant shall not have been
exercised shall also be issued to the Holder as soon as possible.
7.
Reserved
Shares; Valid Issuance.
The
Company covenants that it will at all times from and after the date hereof
reserve and keep available such number of its authorized shares of Common Stock
of the Company, free from all preemptive or similar rights therein, as will
be
sufficient to permit the exercise of this Warrant in full. If at any time
between the date hereof and the Expiration Date, the number of authorized but
unissued shares of Common Stock shall not be sufficient to permit exercise
of
this Warrant, the Company will take such corporate and other action as may
be
necessary to increase its authorized but unissued shares of Common Stock to
such
number of shares as shall be sufficient for such purposes. The Company further
covenants that such Common Shares as may be issued pursuant to such exercise
will, upon issuance, be registered (and therefore have no restrictions),duly
and
validly issued, fully paid and nonassessable and free from all taxes, liens
and
charges.
8.
Stock
Splits and Dividends.
If
after
the date hereof the Company shall subdivide the Common Stock, by stock split
or
otherwise, or combine the Common Stock, or issue additional shares of Common
Stock in payment of a stock dividend on the Common Stock, the number of shares
of Common Stock issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and the Purchase Price
shall forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or increased proportionately in the case of a
combination.
9.
Mergers
and Reclassifications.
If
after
the date hereof the Company shall enter into any Reorganization (as hereinafter
defined), then, as a condition of such Reorganization, lawful provisions shall
be made, and duly executed documents evidencing the same from the Company or
its
successor shall be delivered to the Holder, so that the Holder shall thereafter
have the right to purchase, at a total price not to exceed that payable upon
the
exercise of this Warrant in full, the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization by a holder
of
the number of shares of Common Stock which might have been purchased by the
Holder immediately prior to such Reorganization, and in any such case
appropriate provisions shall be made with respect to the rights and interest
of
the Holder to the end that the provisions hereof (including without limitation,
provisions for the adjustment of the Purchase Price and the number of shares
issuable hereunder) shall thereafter be applicable inrelation to any shares
of
stock or other securities and property thereafter deliverable upon exercise
hereof. For the purposes of this Section 9, the term "Reorganization" shall
include without limitation any reclassification, capital reorganization or
change of the Common Stock (other than as a result of a subdivision, combination
or stock dividend provided for in Section 8 hereof), or any consolidation of
the
Company with, or merger of the Company into, another corporation or other
business organization (other than a merger in which the Company is the surviving
corporation and which does not result in any reclassification or change of
the
outstanding Common Stock), or any sale or conveyance to another corporation
or
other business organization of all or substantially all of the assets of the
Company.
6
10.
No
Voting or Dividend Rights.
Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder
of
the Company or any other matters or any rights whatsoever as a shareholder
of
the Company prior to the exercise of the Holder's rights to purchase shares
of
Common Stock as provided for herein. No dividends or interest shall be payable
or accrued in respect of this Warrant or the interest represented hereby or
the
shares purchasable hereunder until, and only to the extent that, this Warrant
shall have been exercised.
11.
Amendment.
The
terms
of this Warrant may be amended, modified or waived only with the prior written
consent of the Holder.
12.
Notices,
etc. Any
notice, request or other communication required or permitted hereunder shall
be
in writing and shall be deemed to have been duly given only upon receipt by
the
addressee, sent, if to Holder, to Mr. Xxxx Xxxxxx, at the address first set
out
above, or to such other address as Holder shall have furnished to Company in
writing; or if to Company, to: Xx. Xxxx xxx Xxxx, President, c/o 000 Xxxxx
Xxxxxx Xxxx, Xxxxxxxxxxx, XX X0X 0X0, or to such other address as the Company
shall have furnished to Holder in writing.
13.
Governing
Law.
This
Warrant and all actions arising out of or in connection with this Warrant shall
be governed by and construed in accordance with the laws in force in the
Province of Ontario.
14.
Successors
and Assigns.
The
rights and obligations of Company and Holder shall be binding upon and benefit
the successors, assigns, heirs, administrators and respective transferees of
the
parties.
| Industrial Minerals, Inc. | ||
| |
|
|
| Date: April 3, 2007 | By: | /s/ Xxxx xxx Xxxx |
|
Xx. Xxxx xxx Xxxx, President |
||
