SUBSCRIPTION AGREEMENT
EXHIBIT
10.1
This
Subscription Agreement (this “Agreement”) is made
by and between Wits Basin Precious Minerals Inc, a Minnesota corporation (the
“Company”),
and:
(hereinafter
referred to, whether individually or jointly, as the “Undersigned”) in
connection with the private placement offering (the “Offering”) of up to
an aggregate amount of $110,000 in units of the Company (the “Units”), each Unit
consisting of one share of the Company’s common stock, par value $0.01 per share
(the “Common
Stock”), and one warrant to purchase a share of Common Stock at an
exercise price of $0.03 per share, in the form attached hereto as Exhibit A (the “Warrants”), at a
price per Unit of $0.03. The Company has the right to reject any
subscription, in whole or in part, at any time and for any reason. If
the subscription is rejected or if the Offering is otherwise terminated, the
Company will promptly return the related funds delivered herewith, without
interest or deduction. The Offering will continue until August 31,
2010.
1. Subscription for
Units. Subject to the terms hereinafter set forth, the
undersigned hereby irrevocably subscribes for and agrees to purchase from the
Company Units
for an aggregate purchase price of $
(the “Purchase
Price”). Payment of the Purchase Price is being delivered
by:
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an
enclosed check payable to the order of Wits Basin Precious Minerals Inc
or
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¨ a
wire transfer of immediately available funds to:
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Bank
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Xxxxx
Fargo Bank, N.A. MAC: X0000-000, 0xx
& Xxxxxxxxx Xxx Xxxxxxxxxxx, XX 00000
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Routing
Number:
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000000000
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Account
Number:
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1889094940
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Account
Name:
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Upon
acceptance of this subscription and the closing of the Offering (or any part of
the Offering to which this subscription relates), the Company will record the
undersigned as the holder of the Common Stock and Warrants in the Company’s
records. The undersigned hereby authorizes the Company to record the
Common Stock and Warrants purchased hereunder as being held by the person(s)
having the mailing address set forth below.
2. Representations of the
Subscriber. In connection with, and in consideration of, the
sale of the Units, including the shares of common stock included therein and the
shares of common stock issuable upon exercise of the Warrants (collectively, the
“Securities”),
to the undersigned, the undersigned hereby represents and warrants to the
Company that the undersigned:
A. Has
received, carefully reviewed and is familiar with (i) the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009 filed with the
Securities and Exchange Commission (the “SEC”) on April 15, 2010; (ii) the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010,
filed with the SEC on May 17, 2010 (iii) the Company’s Current Report on Form
8-K filed with the SEC on December 18, 2009; and (iv) any other documents
specifically requested by the Investor (all such documents are collectively
referred to hereinafter as the “Disclosure
Documents”).
B. Has
been given access to full and complete information regarding the Company
(including the opportunity to meet with Company officers and review all
documents as the undersigned may have requested in writing and the opportunity
to ask any questions the undersigned may have had) and has utilized such access
to the undersigned’s satisfaction for the purpose of obtaining information in
addition to, or verifying information included in, the Disclosure Documents to
the extent reasonably available, necessary to verify the accuracy of information
provided in the Disclosure Documents.
C. The
undersigned further understands that the Securities have not been registered
under the Securities Act of 1933, as amended (the “Act”), and there
currently is no market for the Company’s common stock.
D. The
undersigned realizes that there are significant restrictions on the
transferability of the Securities and that for these and other reasons, the
undersigned may not be able to liquidate an investment in the Securities for an
indefinite period.
E. Can
bear the economic risk of an investment in the Securities for an indefinite
period of time, can afford to sustain a complete loss of such investment, has no
need for liquidity in connection with an investment in the Securities, and can
afford to hold the Securities indefinitely.
F. Realizes
that the Securities have not been registered for sale under the Act or
applicable state securities laws (the “State Laws”) and may
be sold only pursuant to registration under the Act (including Regulation S, if
applicable) and State Laws, or an opinion of counsel satisfactory to counsel for
the Company that such registration is not required.
G. Acknowledges
that no federal or state agency, including the Securities and Exchange
Commission (the “SEC”) or the
securities commission or authority of any state, has approved or disapproved the
Securities, passed upon or endorsed the merits of the Offering of the Securities
or the accuracy or adequacy of the Disclosure Documents, or made any finding or
determination as to the fairness or fitness of the Securities for public
sale.
H. Believes
that the investment in the Securities is suitable for the undersigned based upon
the undersigned’s investment objectives and financial needs, and the undersigned
has adequate means to provide for the undersigned’s current financial needs and
personal/business contingencies and has no need for liquidity of investment with
respect to the Securities.
I. Is
experienced and knowledgeable in financial and business matters, capable of
evaluating the merits and risks of investing in the Securities, and does not
need or desire the assistance of a knowledgeable representative to aid in the
evaluation of such risks (or, in the alternative, has a knowledgeable
representative who such investor intends to use in connection with a decision as
to whether to purchase the Securities and who together with such investor has
such knowledge and experience in financial and business matters that they are
together capable of evaluating the merits and risks of investing in the
Securities).
J. Has
relied upon the advice of the undersigned’s legal counsel and accountants or
other financial advisors with respect to tax and other considerations relating
to the purchase of Securities in the Offering. The undersigned is not
relying upon the Company with respect to the economic considerations involved to
make an investment decision in the Securities.
K. Acknowledges
that an investment in a private placement of securities, including the
Securities, is HIGHLY SPECULATIVE in nature. Accordingly, such an
investment may not be appropriate for Individual Retirement Accounts or other
retirement-type accounts that have conservative investment
objectives. If this investment is in fact purchased in a
retirement-type account, the undersigned represents and affirms that it
understands the risks of the investment and has decided that such risks are
consistent with the undersigned’s investment objectives for this
account.
3. Investment
Intent. The undersigned has been advised that the Securities
have not been registered under the Act or the relevant State Laws but are being
offered, and will be offered and sold pursuant to exemptions from the Act and
State Laws, and that the Company’s reliance upon such exemptions is predicated
in part on the undersigned’s representations contained herein. The
undersigned represents and warrants that the Securities are being purchased for
the undersigned’s own account and for long term investment and without the
intention of reselling or redistributing the Securities, that the undersigned
has made no agreement with others regarding any of the Securities, and that the
undersigned’s financial condition is such that it is not likely that it will be
necessary for the undersigned to dispose of any of the Securities in the
foreseeable future. The undersigned is aware that (i) in the view of
the SEC, a purchase of securities with an intent to resell by reason of any
foreseeable specific contingency or anticipated change in market values, or any
change in the liquidation or settlement of any loan obtained for the acquisition
of any of the Securities and for which the Securities were or may be pledged as
security would represent an intent inconsistent with the investment
representations set forth above and (ii) the transferability of the Securities
is restricted.
The
restrictions on transfer contained in this paragraph 3 shall be evidenced by a
legend placed on the certificate(s) representing the Securities containing
substantially the following language:
“The
securities represented by this certificate have not been registered under either
the Securities Act of 1933 or applicable state securities laws and may not be
sold, transferred, assigned, offered, pledged or otherwise distributed for value
unless there is an effective registration statement under such Act and such laws
covering such securities, or the Company receives an opinion of counsel
acceptable to the Company stating that such sale, transfer, assignment, offer,
pledge or other distribution for value is exempt from the registration and
prospectus delivery requirements of such Act and such laws.”
The
undersigned further represents and agrees that if, contrary to the undersigned’s
foregoing intentions, the undersigned should later desire to dispose of or
transfer any of the Securities in any manner, the undersigned shall not do so
without first obtaining (i) an opinion of counsel satisfactory to the Company
that such proposed disposition or transfer may be made lawfully without the
registration of such Securities pursuant to the Act and applicable State Laws,
or (ii) registration of such Securities (it being expressly understood that the
Company shall not have any obligation to register such Securities except as
specifically set forth herein).
4. Residence. The
undersigned represents and warrants that the undersigned is a bona fide resident
of (or, if an entity, is organized or incorporated under the laws of, and is
domiciled in) the state indicated on page 7 of this Agreement and that the
Securities are being purchased by the undersigned in the undersigned’s name
solely for the undersigned’s own beneficial interest and not as nominee for, on
behalf of, for the beneficial interest transfer to, any other person, trust, or
organization (except as specifically set forth in this Agreement).
Paragraph
5 is required in connection with the exemptions from the Act and state laws
being relied on by the Company with respect to the offer and sale of the
Securities. All of such information will be kept confidential and
will be reviewed only by the Company and its counsel. The undersigned
agrees to furnish any additional information which the Company or its legal
counsel deem necessary in order to verify the responses set forth
below.
5. Accredited
Status. The undersigned represents and warrants as follows
(check all that apply):
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A.
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The
undersigned is an individual with a net worth, or a joint net worth
together with his or her spouse, in excess of $1,000,000, excluding the
value of the undersigned’s primary residence. (In calculating net worth,
you may include equity in personal property and real estate (other than
your primary residence), cash, short term investments, stock and
securities. Equity in personal property and real estate should
be based on the fair market value of such property minus debt secured by
such property.)
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B.
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The
undersigned is an individual (not a partnership, corporation, etc.) with
income in excess of $200,000 in each of the prior two years and reasonably
expects an income in excess of $200,000 in the current
year.
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C.
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The
undersigned is an individual (not a partnership, corporation, etc.) who,
with his or her spouse, had joint income in excess of $300,000 in each of
the prior two years and reasonably expects joint income in excess of
$300,000 in the current year.
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D.
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The
undersigned is a director or executive officer of the
Company.
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E.
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The
undersigned, if other than an individual, is an entity all of whose equity
owners meet one of the tests set forth in (a) through (d) 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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The
undersigned is an entity, and is an “Accredited
Investor” as defined in Rule 501(a) of Regulation D under the
Act. This representation is based on the following (check one
or more, as applicable):
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1.
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The
undersigned (or, in the case of a trust, the undersigned trustee) is a
bank or savings and loan association as defined in Sections (a)(2) and
3(a)(5)(A), respectively, of the Act acting either in its individual or
fiduciary capacity.
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2.
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The
undersigned is an insurance company as defined in Section 2(13) of the
Act.
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3.
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The
undersigned is 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.
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4.
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The
undersigned is a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
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5.
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The
undersigned is an employee benefit plan within the meaning of Title I
of the Employee Retirement Income Security Act of 1974 (“ERISA”) and
either (check all that apply):
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a.
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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;
or
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b.
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the
plan has total assets in excess of $5,000,000;
or
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c.
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the
plan is a self directed plan with investment decisions made solely by
persons who are “Accredited Investors” as defined under the
Act.
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6.
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The
undersigned is a private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of
1940.
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7.
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The
undersigned has total assets in excess of $5,000,000, was not formed for
the specific purpose of acquiring shares of the Company and is one or more
of the following (check one or more, as
appropriate):
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a.
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an
organization described in Section 501(c)(3) of the Internal Revenue Code;
or
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b.
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a
corporation; or
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c.
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a
Massachusetts or similar business trust;
or
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d.
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a
partnership.
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8.
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The
undersigned is a trust with total assets exceeding $5,000,000 which was
not formed for the specific purpose of acquiring shares of the Company and
whose purchase is directed by a person who has such knowledge and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the investment in the
Securities.
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9.
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The
undersigned is not an accredited
investor.
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6. FINRA
Affiliation. The undersigned is affiliated or associated,
directly or indirectly, with a Financial Industry Regulatory Authority (“FINRA”) member firm
or person.
Yes ¨ No ¨
If yes,
list the affiliated member firm or person:
Your
relationship to such member firm or
person:
7. Entities. If
the undersigned is not an individual but an entity, the individual signing on
behalf of such entity and the entity jointly and severally agree and certify
that:
A. The
undersigned was not organized for the specific purpose of acquiring the
Securities; and
B.
This Agreement has been duly authorized by all necessary action on the part of
the undersigned, has been duly executed by an authorized officer or
representative of the undersigned, and is a legal, valid and binding obligation
of the undersigned enforceable in accordance with its terms.
8. Legal
Age. If the undersigned is an individual, the undersigned is
of legal age.
9. Miscellaneous.
A. Manner
in which title is to be held: (check one):
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Individual Ownership
___ Joint
Tenants with Right of Survivorship*
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Partnership*
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Tenants in Common*
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Corporation
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Trust
___ Other
(describe): _________________________________________
* Multiple
signatures required.
B. The
undersigned agrees that the undersigned understands the meaning and legal
consequences of the agreements, representations and warranties contained herein,
agrees that such agreements, representations and warranties shall survive and
remain in full force and effect after the execution hereof and payment for the
Securities, and further agrees to indemnify and hold harmless the Company, each
current and future officer, director, employee, agent and shareholder from and
against any and all loss, damage or liability due to, or arising out of, a
breach of any agreement, representation or warranty of the undersigned contained
herein.
C. This
Agreement shall be construed and interpreted in accordance with Minnesota law
without regard to conflict of law provisions.
D. The
undersigned agrees to furnish to the Company, upon request, such additional
information as may be deemed necessary to determine the undersigned’s
suitability as an investor.
Signature
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