EXHIBIT 10.8
LOAN AND SUBSCRIPTION AGREEMENT
This Loan and Subscription Agreement (this "Agreement") is made as of the
13th day of May, 2004 by and between the undersigned subscriber (the
"Subscriber") and YUKON GOLD CORPORATION, INC., a Delaware corporation (the
"Corporation").
RECITAL
The Subscriber desires to lend to the Corporation and the Corporation
desires to borrow from the Subscriber certain funds pursuant to a convertible
note (the "Convertible Note") in the form attached hereto as Exhibit B in
accordance with the terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the Corporation and the Subscriber hereby agree as
follows:
1. SUBSCRIPTION. The Subscriber shall lend to the Corporation $56,250.00
in consideration of the Convertible Note. The Convertible Note provides, among
other things, that it may be converted into units (the "Units") as described
herein and in the Convertible Note. Each Unit consists of 75,000 shares of
common stock of the Corporation at a price of $0.745 per share and 37,500
Warrants to purchase common stock of the Corporation at $0.01 per Warrant
representing a total conversion price of $56,250.00 per Unit. Each Warrant
entitles the holder thereof to purchase one share of common stock of the
Corporation at a price of $1.25 per share at any time on or before December 31,
2005. Except as required by law, subsequent to the delivery of this Agreement,
the subscription enclosed hereby is irrevocable.
2. LOAN AMOUNT. The Subscriber tenders herewith the full amount of the
loan in the form of a certified check or bank draft payable to Medallion Capital
Corp, as agent for the Corporation, in trust to be held pending the closing of
this convertible loan transaction (the "Closing") or termination of this
Agreement. In the event this Agreement is not accepted by the Corporation or
terminated for any other reason the full amount received by Medallion Capital
Corp. will be returned to the Subscriber without interest.
3. CLOSING. Closing shall take place on the acceptance of this Agreement
by the Corporation and Medallion Capital Corp. will release funds to the
Corporation on receipt of the Convertible Note duly executed by the Corporation
for delivery to the Subscriber.
4. REPRESENTATIONS BY SUBSCRIBER. The Subscriber represents and warrants
to the Corporation as follows:
(a) He is making the loan and acquiring the Convertible Note for his
own account as principal, for investment and not with a view to resale or
distribution. Immediately prior to making the loan and receiving the Convertible
Note and on conversion of the Convertible Note to Units:
1
(i) he is an "accredited investor" as that term is defined in
Rule 501(a) under the Securities Act of 1933, as amended (the "Securities Act")
and he has such knowledge and experience in financial and business matters that
he is capable of evaluating the merits and risks involved in making the loan and
purchasing the Units; and
(ii) he is able to bear the economic risk of making the loan
and purchasing the Units upon conversion (i.e., at the time of making the loan
under the Convertible Note he could afford a complete loss without having his
standard of living materially affected thereby).
(b) He has been informed as to, and is familiar with, the business
activities of the Corporation, and has had an opportunity and proceeded, or
waived the opportunity, to review the books and records of the Corporation and
to ask questions of, and receive answers from, appropriate representatives of
the Corporation concerning the Corporation and the terms and conditions of this
Agreement, that he deems necessary.
(c) He acknowledges receipt of the Corporation's draft Registration
Statement dated March 12, 2004 and filed with the Securities and Exchange
Commission (SEC) which is provided for informational purposes only and which is
subject to change. He acknowledges that no offer or sale of securities is made
pursuant to the draft Registration Statement and that the SEC has provided
substantial comments to the Corporation on the current draft registration
statement. He fully understands that this offering has not been registered under
the Securities Act and is a private placement, in reliance upon exemptions under
the Securities Act pursuant to Rule 506 of regulation D, accordingly, to the
extent that he is not supplied with the information which would have been
contained in an effective registration statement, filed under the Securities
Act, he must rely on his own access to such information.
(d) He has had an opportunity to obtain and has obtained a general
and complete understanding satisfactory to him of the Corporation, its
operations, finances, and manner of doing business sufficient to permit him to
evaluate (i) the Corporation and its prospects and (ii) the risks and merits of
making the loan pursuant to the Convertible Note.
(e) He (i) recognizes that making the loan pursuant to the
Convertible Note involves risk, (ii) has carefully considered whether making the
loan pursuant to the Convertible Note is appropriate for him, and (iii) has
obtained such individual financial, tax and legal advice as he deems necessary
or appropriate to fully understand the risks involved and to evaluate a loan and
investment in the Corporation.
(f) He recognizes that he must bear the economic risk involved in
making the loan pursuant to the Convertible Note for an indefinite period of
time because, among other reasons, the common shares forming part of the Units
and the common shares issued in exercise of the Warrants and the Warrants
themselves have not been registered under the Securities Act and therefore
cannot be sold, pledged, assigned or otherwise disposed of unless (i) they are
subsequently registered under the Securities Act or (ii) an exemption from such
registration is available and an opinion of counsel acceptable to the
Corporation that the transfer is not in violation of any federal securities act
or state securities law is provided to the Corporation. The Corporation has no
obligation to register the common shares or the Warrants purchased upon
conversion of the Convertible Note.
2
(g) All information which he has provided to the Corporation,
whether provided by him directly or indirectly, concerning himself, his
financial position, and his knowledge of financial and business matters is
correct and complete as of the date of this Agreement. He will notify the
Corporation immediately if, subsequent to the date of this Agreement, there is
any material change in any information provided to the Corporation by him.
(h) He recognizes that no federal or state agency has passed upon
the offering of the Convertible Notes or the Units to him or to any other person
or made any finding or determination regarding the fairness of such offering.
(i) He understands that neither the Corporation nor any associates
or affiliates thereof are guaranteeing the success of or any return from the
Corporation.
(j) He recognizes that there is no current market for the
Corporation's common stock; that there can be no assurances that such a market
will exist any time in the future and accordingly he may not be able to sell or
dispose of any of the common shares received on the conversion of the
Convertible Note or exercise of the Warrants even if he had held them for a
number of years; that his right to transfer the common shares will be restricted
by federal and state securities laws and a legend to this effect will be placed
on the certificates representing the common shares; that such laws impose strict
limitations upon such transfer; and that the Corporation is under no obligation
to register his common shares in connection with the subsequent transfer thereof
by him or to aid him in obtaining an exemption from such registration.
(l) He will cooperate with the Corporation in connection with any
filing requirements under the Securities Act and will provide such information
or documentation as may be required.
5. SHARES TO BE LEGENDED. A restrictive legend in substantially the
following form shall be contained on each certificate evidencing any of the
common shares issued upon conversion of the Convertible Note or received on
exercise of the Warrants:
The shares represented by this Certificate have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") or under any
applicable state securities laws (the "State Laws"). The shares have been
acquired for investment purposes and may not be sold, transferred, pledged
or otherwise disposed of except upon compliance with the registration
requirements of the Securities Act and applicable State Laws, or pursuant
to applicable exemptions from such registration requirements.
Any transfer of the common shares on the books and records of the Corporation
will only be affected in accordance with such legend.
6. APPLICABLE LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflict of laws. The offering of the Convertible Notes is made by
the Corporation pursuant to an exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, and pursuant to Rule 506 of
Regulation D promulgated under the Securities Act of 1933.
3
7. BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Corporation and the
Subscriber and their successors, heirs, executors, administrators, legal
representatives and assigns.
8. ASSIGNMENTS. This Agreement may not be assigned by any of the parties
hereto.
9. ENTIRE AGREEMENT. This Agreement, including exhibits, constitutes the
entire agreement between the parties pertaining to the subject matter hereof and
supersedes any prior understandings, oral or written. In the event of any
conflict between the terms of this Agreement and the terms of the Convertible
Note, in the form attached hereto as Exhibit B, the terms of the Convertible
Note shall be controlling.
10. NOTICES. Any notice required to be given in connection with this
Agreement will be in writing and delivered personally, by registered or
certified mail (return receipt requested), or sent by facsimile transmission
with a confirmation sent by way of one of the above methods, addressed to the
recipient at the address set forth below:
(a) If to the Subscriber, to the address set forth on the signature
page hereto.
(b) If to the Corporation, addressed to:
Yukon Gold Corporation, Inc.
Suite 408 - 000 Xxx Xxxxxx
Xxxxxxx, XX X0X 0X0
Telephone: (000) 000-0000 or (000) 000-0000
Facsimile: (000) 000-0000
4
YUKON GOLD CORPORATION, INC.
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
Total Amount Loaned: $56,250.00 pursuant to the Convertible Note
INFORMATION RE: OWNERSHIP OF THE CONVERTIBLE NOTE:
Check Appropriate Space:
/s/Xxxxx X. Xxxxxxxxxxx ____ Individual Ownership
-------------------------
(Signature of subscriber)
____ Joint Tenants with Right
of Survivorship
Xxxxx X. Xxxxxxxxxxx __X__ Tenants in Common
---------------------------
(Printed name of subscriber)
____ Community Property
/s/ Xxxxx X. Xxxxxxxxxxx Other: ________________________
-------------------------
(Signature of spouse, or
other joint tenant or
tenant-in-common, if any)
Xxxxx X. Xxxxxxxxxxx Dated: May 13, 2004
---------------------------
(Printed name of spouse, or
other joint tenant, if any)
______________________
.................................................................................
Subscription for Convertible Note in the amount of US$56,250.00 accepted as of
May 14, 2004.
YUKON GOLD CORPORATION, INC.
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------
5
EXHIBIT A
YUKON GOLD CORPORATION, INC.
PURCHASER QUESTIONNAIRE
The undersigned (the "Subscriber") understands that the purpose of this
Subscriber Questionnaire is to permit YUKON GOLD CORPORATION, INC., a Delaware
corporation (the "Corporation") to determine whether or not the undersigned is
an "accredited investor" within the meaning of Regulation D, as promulgated
under the Securities Act of 1933, as amended (the "Act"), since the securities
(the "Securities") being offered under the foregoing Subscription Agreement will
not be registered under the Act or under state securities laws.
The Subscriber understands that all answers will at all times be kept
strictly confidential. However, by signing this Subscriber Questionnaire, the
Subscriber agrees that the Corporation may present this Subscriber Questionnaire
to such parties as the Corporation deems appropriate if called upon under
applicable law to establish the availability under the Act or state securities
laws of an exemption from registration for the offering of the Securities.
Where the answer to any question is "None" or "Not Applicable", please so
state.
limited liability company or revocable trust, an individual authorized by
same should complete this Subscriber Questionnaire.
1. NAME:___________ Xxxxx X. Rittmueller_____________________ AGE:_____58_____
SOCIAL SECURITY NUMBER:_________000 00 0000_____________________
NAME OF SPOUSE:___Kathy_________ NO. OF DEPENDENTS ____1____
FEDERAL I.D. NUMBER (CORPORATIONS, TRUSTS, LIMITED LIABILITY COMPANIES,
AND PARTNERSHIPS): ____________________________________________________
2. HOME ADDRESS (INCLUDE STREET,
CITY, STATE, AND ZIP CODE):___________________________________________
____________3423 Hunters Run, San Antonio Texas 78230__________________
HOME TELEPHONE NUMBER: (AREA CODE) _______000-000-0000__________
3. BUSINESS ADDRESS (INCLUDE STREET,
CITY, STATE, and ZIP CODE):____________________________________________
____________N/A________________________________________________________
BUSINESS TELEPHONE NUMBER: (AREA CODE) ___000-000-0000
4. SEND CORRESPONDENCE TO: HOME ______________ OFFICE ______________
OTHER:__________ N/A__________________________________________
_____________________________________________________
EMAIL ADDRESS:_______________xxxxxxxxxxx@xxxx.xx.xxx__________
5. The Subscriber acknowledges that this offering of Securities in the
Corporation has not been registered under the Act because the Corporation
is relying in part upon an exemption from registration under the Act
available for offers and sales to "accredited investors". The Subscriber
also acknowledges that in accepting this subscription the Corporation will
rely upon the information contained herein. In order to qualify as an
"accredited investor", the Subscriber must meet one or more of the
following tests (the following references to dollar amounts shall be to
dollars in the lawful currency of the United States of America):
(a) $1,000,000 Net Worth Test (Natural Persons Only): The net worth of
the Subscriber (calculated individually or jointly with the
Subscriber's spouse, and including the value of home, furniture and
automobiles), is $1,000,000 or more; or
(b) Income Test (Natural Persons Only): The Subscriber's individual
income for each of the last two years and as projected for the
current year must be in excess of $200,000 or the Subscriber's
individual income (when combined with the individual income of the
Subscriber's spouse) for each of the last two years and as projected
for the current year must be in excess of $300,000; or
(c) the Subscriber is a partnership corporation, limited liability
company, or revocable trust with total assets in excess of
$5,000,000;
(d) the Subscriber is an entity (e.g., partnership, corporation, limited
liability company or revocable trust) each of the shareholders,
partners or equity owners (as appropriate) of which, or if a
revocable trust each of the grantors of which, meets the
requirements of any of categories (a), (b) or (c) above; or
(e) the Subscriber is a domestic bank or savings and loan association,
whether acting in its individual or fiduciary capacity; a
broker-dealer registered pursuant to the Securities Exchange Act of
1934; a domestic insurance company; an investment company registered
under the Investment Company Act of 1940; a business development
company; a Small Business Investment Company licensed by the United
States Small Business Administration; or an 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 that is either a bank, savings and loan association
insurance company or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000; or
6
(f) the Subscriber is a "private business development company" as
defined in the Investment Advisers Act of 1940; or
(g) the Subscriber is an organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, with total assets in
excess of $5,000,000; or
(h) the Subscriber is an individual who is a director or executive
officer of the Corporation.
A. Indicate whether the Subscriber qualifies as an "accredited investor":
under any of the tests described above. Yes _X_ No ____
B. If Yes, indicate under which of the tests set forth in paragraphs (a)
through (h)
above the Subscriber qualifies as an "accredited investor":
(a) _X_ (b) _____ (c) _____ (d) _____ (e) _____ (f) _____ (g) _____ (h) _____
6. The Subscriber represents that the information contained hereinabove is
complete and accurate and may be relied on by the Corporation in
determining whether this offering is exempt from registration under the
Act and in complying with applicable state securities laws; and the
Subscriber will notify the Corporation promptly of any material change in
any of such information.
IN WITNESS WHEREOF, the Subscriber has executed this Subscriber
Questionnaire this __13th __ day of __May___, 2004.
__________________________________________
Name of partnership, corporation, limited
liability company or revocable trust, if applicable
/s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------
Signature
Xxxxx X. Xxxxxxxxxxx
-------------------------------
Please print signature as signed, including
title(s), if applicable
/s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------
Additional signature, if applicable
Xxxxx X. Xxxxxxxxxxx
-------------------------------
Please print additional signature
as signed, including title(s), if applicable
7
EXHIBIT B
PROMISSORY NOTE
DATE OF ISSUANCE:
$56,250.00 May 14, 2004
FOR VALUE RECEIVED, YUKON GOLD CORPORATION, INC., a Delaware corporation
(the "Company"), hereby promises to pay to the order of the undersigned party
(the "Lender"), the principal sum of Fifty Six Thousand, Two Hundred and Fifty
and no/100 Dollars ($56,250.00), together with interest thereon from the date of
this Note. Interest shall accrue at a rate of 2 percent (2%) per annum,
provided, however, that upon the occurrence of an Event of Default (as defined
below), interest shall accrue at a default rate of interest of five percent (5%)
from (and including) the date such Event of Default occurs (following expiration
of any applicable cure period) until (but excluding) the date on which Company
cures such Event of Default, such Event of Default is waived or the default rate
of interest is waived. On the Maturity Date, the principal and any unpaid
accrued interest shall be due and payable by the Company.
1. PAYMENT. All payments shall be made in lawful money of the United
States of America at the principal office of the Company, or at such other place
as the holder hereof may from time to time designate in writing to the Company.
Payment shall be credited first to Costs (as defined below), if any, then to
accrued interest due and payable and any remainder applied to principal. The
Company hereby waives demand, notice, presentment, protest, and notice of
dishonor.
2. MATURITY DATE. "Maturity Date" shall mean July 1, 2005.
3. PREPAYMENT. This Note may be prepaid in full or part at any time. Upon
conversion of this Note, as provided below, the Company shall have no obligation
to repay principal or interest hereunder.
4. CONVERSION RIGHT. Upon the later to occur of: (a) the one-year
anniversary of the date hereof, or (b) the registration of the Company's common
stock under the Securities Act of 1933 and the Securities Exchange Act of 1934,
in each case as amended, Lender shall have the right to convert this Note into
such number of Units (as defined below) as are obtainable for the then
outstanding amount of principal and accrued but unpaid interest under this Note
at a Unit purchase price of $56,250 per Unit.
Each "Unit" shall consist of: (a) 75,000 shares of common stock of the
Company, par value $0.0001 per share and (b) 37,500 Warrants to purchase
common stock of the Company. Each Warrant entitles the holder to purchase
one share of common stock for $1.25 on or before December 31, 2005.
On conversion any amount of the outstanding principal plus accrued but
unpaid interest in excess of the multiples of $56,250 shall be paid at the
Company's option in cash or by the issuance of shares of common stock at
$0.75 per share.
8
5. EVENT OF DEFAULT. If any of the following events (hereinafter
collectively called "Events of Default") shall occur and be continuing:
(a) Any installment of principal or interest or any other sum
payable hereunder shall not be paid in full within fifteen (15) days after the
same shall become due and payable on the Maturity Date; or
(b) Any proceeding shall be instituted by or against the Company
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, provided, however, that no Event of Default shall have occurred as a
result of any petition of bankruptcy filed by a third party against the Company
if such petition is dismissed within ninety (90) days after filing against the
Company;
then, upon the said occurrence of any one or more of the Events of Default, the
entire unpaid principal balance and interest and all other sums payable
hereunder shall, at the election of the Lender, become and be due and payable at
once, without presentment, demand, protest, or further notice of any kind.
6. MANDATORY CONVERSION. Upon the later to occur of: (a) the one-year
anniversary of the date hereof, or (b) the registration of the Company's common
stock under the Securities Act of 1933 and the Securities Exchange Act of 1934,
in each case as amended, the Company shall have the right to require conversion
of this Note as provided in Section 4 above.
7. AMENDMENTS AND ASSIGNS. This Note may not be amended or assigned by the
undersigned Lender. This Note is non-transferable without the prior permission
of the Company, which permission shall be conditioned upon there being a valid
exemption from registration under the securities Act of 1933, and shall become
void if assigned in contravention hereof.
8. EXPENSES. The Company hereby agrees, subject only to any limitation
imposed by applicable law, to pay all expenses, including reasonable attorneys'
fees and legal expenses, incurred by the holder of this Note ("Costs") in
endeavoring to collect any amounts payable hereunder which are not paid when
due, whether by declaration or otherwise. The Company agrees that any delay on
the part of the Lender in exercising any rights hereunder will not operate as a
waiver of such rights. The Lender shall not by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies, and no waiver
of any kind shall be valid unless in writing and signed by the party or parties
waiving such rights or remedies.
9. GOVERNING LAW. This Note shall be governed by and construed under the
laws of the State of Delaware.
LENDER(S) YUKON GOLD CORPORATION, INC.
/s/ Xxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxxx Xxxxxx
------------------------ ---------------------------
Xxxxx X. Xxxxxxxxxxx Xxxxxxxx Xxxxxx
Secretary, Treasurer
/s/ Xxxxx X. Xxxxxxxxxxx
------------------------
Xxxxx X. Xxxxxxxxxxx
