SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION UNITS OF COMMON STOCK AND WARRANTS
EXHIBIT
10.38
SUBSCRIPTION
AGREEMENT AND INVESTMENT REPRESENTATION
UNITS
OF COMMON STOCK AND WARRANTS
000
Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000
Ladies
and Gentlemen:
The
undersigned represents that, if an individual, he/she is of legal age, and
hereby subscribes for _________________ “Units,” each Unit consisting of one (1)
share of common stock, par value $0.01 per share (the “Common
Stock”) of
Wits
Basin Precious Minerals Inc., a Minnesota corporation (the “Company”), and
one-half (½) of one common stock purchase warrant (the “Warrants”). Each whole
common stock purchase warrant is exercisable on or before December 31, 2006
for
one (1) share of common stock at a price of $0.25 per share (the “Warrants” and
together with the Units, the “Securities”). The aggregate purchase price of the
Securities shall be $ _________________ (the “Purchase Price”). The shares of
Common Stock underlying the Units shall be referred to herein as the “Shares.”
Details of this Offering are in the Term Sheet, attached herewith as
Exhibit
A.
The
undersigned acknowledges that this Subscription Agreement and Letter of
Investment Representations is contingent upon the acceptance in whole or in
part
by the Company.
THE
UNDERSIGNED ACKNOWLEDGES THAT AN INVESTMENT IN THE COMPANY IS HIGHLY
SPECULATIVE, INVOLVES A HIGH DEGREE OF RISK AND IMMEDIATE DILUTION AND IS
SUITABLE ONLY FOR PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT.
This
subscription is made in connection with the Company’s offering (the “Offering”)
of a minimum of 1,000,000 Units (the “Minimum”) and a maximum of 20,000,000
Units (the “Maximum”) and is subject to the following terms and
conditions:
1. Right
of Rejection.
This
subscription is made subject to the right of the Company to reject any
subscription in whole or in part.
2. Purchase
Price.
In
payment for the Units, the undersigned hereby delivers the sum equal to the
number of Units purchased (must be purchased in even increments) multiplied
by
$0.10 (the “Purchase Price”).
| 3. |
Payment
Instructions:
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Payment
for the Units shall be made by bank wire transfer, certified cheque,
or
bank draft (without deduction of bank service charges or
otherwise)
payable to “Wits
Basin Precious Minerals Inc”
in
US Dollars. The entire subscription price for all Units must be paid
at
the time of subscription. In the case of a bank wire transfer, funds
should be wired to:
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1
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Bank:
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Xxxxx
Fargo Bank Minneapolis, N.A., 90 So. 0xx
Xxxxxx, Xxxxxxxxxxx, XX 00000
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Routing
#:
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000000000
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Account
#:
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XXXXXXXXXX
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Account
Name:
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Bank
Contact
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Xxxx
Xxxxx at 000.000.0000
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| 4. |
Registration
Instructions:
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The
undersigned hereby directs that the certificates representing the
Units
shall be delivered as indicated above at the time of the closing
and shall
be registered as follows:
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(Name)
(Address,
City, Postal Code, Country)
| 5. |
Delivery Instructions. The
Company is authorized to deliver the Units
to:
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(Name)
(Address,
City, Postal Code, Country)
Attention:
(Contact
and Phone Number)
6. Representations
and Warranties of Subscriber.
The
undersigned acknowledges, warrants, and represents as follows:
| (a) |
I
have, either alone or with the assistance of my professional advisor,
sufficient knowledge and experience in financial and business matters
that
I believe myself capable of evaluating the merits and risks of
the
prospective investment in the
Units.
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2
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(b)
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I
have obtained, to the extent I deem necessary, professional advice
with
respect to the risks inherent in investment in the Units, the suitability
of the investment in light of my financial condition and investment
needs,
and legal, tax and accounting
matters.
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(c)
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I
have been given access to full and complete information regarding
the
Company, including without limitation: (i) the Company’s Annual Report on
Form 10-K for the year ended December 31, 2003 filed with the Securities
and Exchange Commission (the “SEC”), (ii) the Company’s Quarterly Reports
on Form 10-QSB for the quarters ended March 31, 2004 and June 30,
2004,
and (iii) the Company’s Current Reports on Form 8-K: dated February 6,
2004 and filed on February 12, 2004; dated March 1, 2004 and filed
on
March 2, 2004; dated May 17, 2004 and filed on May 17, 2004; dated
May 28,
2004 and filed on June 4, 2004; dated June 10, 2004 and filed on
June 14,
2004; dated August 3, 2004 and filed on August 4, 2004; dated August
30,
2004 and filed on September 1, 2004; dated September 10, 2004 and
filed on
September 16, 2004; and dated October 13, 2004 and filed on October
15,
2004; and have utilized such access to my satisfaction to verify
any
information I may have sought relating to the Company and relevant
to my
investment decision. I have been given the opportunity to discuss
all
material aspects of this transaction with representatives of the
Company
and any questions asked have been answered to my full
satisfaction.
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(d)
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I
recognize that investment in the Units involves a high degree of
risk,
that the purchase of the Units is a long-term investment, that
transferability and sale of the Units are restricted in many ways,
and
that I could sustain a total loss of my investment. I have carefully
reviewed the Risk Factors in the Company’s Annual Report on Form 10-K, the
Company’s Quarter Reports on Form 10-QSB and the additional Risk Factors
attached hereto as Exhibit
B.
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(e)
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I
am an “Accredited Investor” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended (the “Securities
Act”). This representation is based on the following (check one or more,
as applicable):
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___
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(1)
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I
have had an individual income in excess of $200,000 in each of the
two
most recent years or joint income with my spouse in excess of $300,000
in
each of the two most recent fiscal years and reasonably expect reaching
the same income level in the current year;
or
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___
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(2)
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As
of the date hereof, I (either individually or with my spouse) have
a net
worth in excess of $1,000,000; or
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___
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(3)
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I
am a director or executive officer of the Company;
or
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___
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(4)
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The
undersigned is a corporation or partnership not formed for the specific
purpose of acquiring the Units and has total assets in excess of
$5,000,000.
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___
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(5)
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The
undersigned, if not an individual, is an entity all of whose equity
owners
meet one of the tests set forth in (1) through (4) above (if relying
on
this category alone, each equity owner must complete a separate copy
of
this Agreement).
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(f)
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I
have ____/have not _____ used the services of a purchaser representative
in connection with this investment. If I have used a purchaser
representative I have received a fully completed and executed Purchaser
Representative Questionnaire.
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(g)
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I
am not relying upon the Company with respect to the economic
considerations involved in determining to make an investment in the
Units.
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(h)
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I
have no need for immediate liquidity with respect to my investments
and
have sufficient income to meet my current and anticipated obligations.
The
total loss of the Purchase Price being paid herewith would not cause
financial hardship to me and would not adversely affect my current
standard of living. In addition, my overall commitment to investments
which are not readily marketable is not disproportionate to my net
worth
and my investment in the Units will not cause such overall commitment
to
become excessive.
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7.
Investment
Purpose of Subscriber.
I
represent and warrant that it is my intention to acquire the Units for my
own
account for investment purposes and not with a view
to
resale in connection with any distribution thereof.
In
order
to assure the Company that I have no present intention to resell or dispose
of
the Units, I hereby represent and warrant the following facts:
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(a)
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I
am domiciled in the State of _____________ or Country of ______________
and intend to receive and hold the Units for my personal
account.
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(b)
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I
have no contract, undertaking, agreement or arrangement with any
person or
company to sell or transfer the Units to any such person or company
or to
have any such person or company sell the Units on my
behalf.
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(c)
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I
am not aware of any occurrence, event, or circumstance upon the happening
of which I intend to transfer or sell the Units and I do not have
any
present intention to transfer or sell the Units after a lapse of
any
particular period of time.
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(d)
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I
have been informed that in the view of some state securities commissions,
a purchase now with an intent to resell, by reason of any foreseeable
specific contingency or anticipated change in market values, or any
change
in the condition of the Company, or that of the industry, or in connection
with a contemplated liquidation or settlement of any loan obtained
for the
acquisition of the Units, would represent a purchase with an intent
inconsistent with the representations set forth above, and that such
state
securities commissions might regard such sale or disposition as a
deferred
sale with regard to which an exemption from registration is not
available.
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(e)
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I
further represent and agree that if, contrary to the foregoing
representations and warranties, I should later desire to dispose
of or
transfer any of the Units in any manner, I shall not do so without
first
obtaining an opinion of counsel satisfactory to the Company that
such
proposed disposition or transfer may be made lawfully without the
registration of the Units pursuant to the Securities Act and applicable
state laws.
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8.
Registration
Status of Securities.
I
understand that the Units to be issued hereunder have not been registered under
the Securities Act or under applicable state securities acts, on the grounds
that the Units are being issued in a transaction involving a limited group
of
knowledgeable investors fully familiar with the affairs and proposed operations
of the Company and not involving a public offering and that, consequently,
such
transaction is exempt from registration under the Securities Act and state
securities acts.
In
that
regard, I understand that the Units may not be sold, transferred or otherwise
disposed of except pursuant to an effective registration statement or
appropriate exemption from registration under applicable state law and, as
a
result, I may be required to hold the Units for an indefinite period of time.
Except as described above, I understand that the Company has not agreed to
register the Units for distribution in accordance with the provisions of the
Act
or state law, and that the Company has not agreed to comply with any exemption
under the Act or state law for the resale of the Units.
I
understand that the Units have not been approved or disapproved by the
Securities and Exchange Commission or any state securities commission.
I
acknowledge that the Company will rely on my representations herein as a basis
for the exemption from registration. I agree to indemnify the Company for and
from any claim, liability, cost or expense, including reasonable attorneys’
fees, arising from any unlawful sale by me or offer by me to sell or transfer
any of the Units subscribed for hereby.
I
understand that no assurance can be made that any of the Units can be resold
at
any price. I understand that no representations or warranties of any kind are
intended nor should any be inferred with respect to the economic viability
of
this investment or with respect to any benefits, which may accrue to investment
in the Company. I understand that the Company, its directors, officers and
employees, do not in any way represent, guarantee or warrant any economic gain
or profit with regard to the business or that favorable income tax consequences
will flow therefrom.
9.
Legend
on Certificates to be Issued.
I
understand and acknowledge that the certificates representing the Shares and
Warrants subscribed for hereby and to be issued by the Company upon acceptance
of this Subscription Agreement, will contain substantially the following
legend:
“The
Shares represented by this Certificate has not been registered under the
Securities Act of 1933, as amended, or any state Blue Sky law. Such Shares
have
been acquired by the registered holder hereof for his or her own account for
investment purposes and may not be sold, transferred or otherwise disposed
of
for value, except pursuant to registration under all applicable securities
laws
or the receipt by the Company of an opinion of counsel, satisfactory in form
and
substance to the Company, that registration is not required under such
securities laws.”
10.
Registration
Rights.
The
Company agrees to file a “resale” registration statement (the "Registration
Statement") with the United States Securities and Exchange Commission (“SEC”) on
an appropriate form and to include therein the Common Stock included in the
Units and the Common Stock purchasable by the undersigned upon the exercise
of
the Warrants, to allow the resale of such Securities by the undersigned, and
to
use its best efforts to cause the Registration Statement to become effective
within ninety (90) days from the date of issuance of the Securities. In the
event the Registration Statement has not been declared effective by the SEC
within ninety (90) days following the termination of the Offering by the
Company, the Company shall be obligated to reduce the exercise price of the
Warrants from $0.25 per share to $0.10 per share. The
Company shall bear all expenses and fees incurred in connection with the
preparation, filing, and amendment of the Registration Statement with the
Commission, except that the undersigned shall pay all fees, disbursements and
expenses of any counsel or expert retained by the undersigned and all
underwriting discounts and commissions, filing fees and any transfer or other
taxes relating to the Securities included in the Registration Statement. The
undersigned agrees to cooperate with the Company in the preparation and filing
of any Registration Statement, and in the furnishing of information concerning
the undersigned for inclusion therein, or in any efforts by the Company to
establish that the proposed sale is exempt under the 1933 Act as to any proposed
distribution. The undersigned understands that if the Company has not received
such information requested by the Company in the Registration Notice within
20
days after undersigned’s receipt thereof, the Company shall have no obligation
to include any of undersigned’s Securities in the Registration
Statement.
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11.
Redemption.
The
Warrants
shall be redeemable in whole at the option of the Company for $0.01 per share
in
the event that (i) the average of the high and low trading prices is equal
to or
greater than $0.75 for at least 10 consecutive trading days during the term
of
the Warrants; and (ii) a registration statement enabling the resale of the
Shares (as described in paragraph 8 above) has been declared effective by the
Securities and Exchange Commission. The Company shall give the undersigned
at
least ten days prior written notice of its intent to redeem the Warrants, at
the
address of the undersigned as last recorded on the Company’s records, which
notice shall state the record date fixed for the redemption and the place
designated for the surrender of the Warrants. Following any such redemption,
the
Warrants, unless previously exercised, shall be null and void.
12.
Additional
Information Available.
I
acknowledge that the Company has provided me with access to such other
information as I have deemed necessary or important in my evaluation of the
investment in the Units.
13.
Binding
Effect.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and to the successors and assigns of the Company and to the personal
and
legal representatives, heirs, guardians, successors, and permitted assignees
of
the undersigned.
14.
Entire
Agreement.
This
instrument contains the entire agreement of the parties, and there are no
representations, covenants or other agreements except as stated or referred
to
herein.
15.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Minnesota.
Signature
and acceptance page follows
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I
further
acknowledge that I have determined that an investment in the Units is
appropriate for me, in view of my overall financial condition.
Dated:
______________, 2004.
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Signature |
Signature |
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Name Typed or Printed |
Name Typed or Printed |
ACCEPTANCE
On
behalf
of Wits Basin Precious Minerals Inc., the undersigned authorized officer hereby
accepts this Subscription and agrees to issue a certificate representing
_________________ Units consisting of Shares of Common Stock and Warrants to
the
foregoing subscriber.
Dated:
__________________, 2004.
By_____________________________________
Name:__________________________________
Title:___________________________________
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SUBSCRIBER
INFORMATION
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Name
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Name
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Tax
Identification or Social Security Number
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Tax
Identification or Social Security Number
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Residence Address |
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Mailing
Address (for registration
on
books of the Company)
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Type
of Ownership (Check One):
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o
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Individual
Ownership
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o
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Joint
Tenants with right of Survivorship
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o
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Trust
or Estate (Describe, and enclose authority)
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o
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Tenants-in-Common
(both parties must sign)
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o
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Other
(explain):________________
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____________________________
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