EXHIBIT 10.1
WITS BASIN PRECIOUS MINERALS INC.
SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
UNITS OF COMMON STOCK AND WARRANTS
Wits Basin Precious Minerals Inc.
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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 (1/2) 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").
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3. PAYMENT INSTRUCTIONS:
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:
Bank: ▇▇▇▇▇ Fargo Bank Minneapolis, N.A., 90 So. ▇▇▇ ▇▇▇▇▇▇,
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Routing #: ▇▇▇▇▇▇▇▇▇
Account #: 1007325812
Account Name: Wits Basin Precious Minerals Inc.
Bank Contact ▇▇▇▇ ▇▇▇▇▇ at ▇▇▇.▇▇▇.▇▇▇▇
4. REGISTRATION INSTRUCTIONS:
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)
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(Address, City, Postal Code, Country)
5. DELIVERY INSTRUCTIONS. The Company is authorized to deliver the
Units to:
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(Name)
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(Address, City, Postal Code, Country)
Attention:
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(Contact and Phone Number)
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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.
(b) 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.
(c) 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.
(d) 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.
(e) 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):
___ (1) 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
___ (2) As of the date hereof, I (either individually or with my
spouse) have a net worth in excess of $1,000,000; or
___ (3) I am a director or executive officer of the Company; or
___ (4) 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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___ (5) 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).
(f) 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.
(g) I am not relying upon the Company with respect to the economic
considerations involved in determining to make an investment
in the Units.
(h) 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.
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:
(a) I am domiciled in the State of _____________ or Country of
______________ and intend to receive and hold the Units for my
personal account.
(b) 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.
(c) 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.
(d) 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) 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.
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."
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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.
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.
_________________________________ ___________________________________
Signature Signature
_________________________________ ___________________________________
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.
WITS BASIN PRECIOUS MINERALS INC.
By_____________________________________
Name:________________________________
Title:_______________________________
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SUBSCRIBER INFORMATION
______________________________________ _____________________________________
Name Name
______________________________________ _____________________________________
Tax Identification or Social Security Tax Identification or Social Security
Number Number
_________________________________
_________________________________
_________________________________
Residence Address
_________________________________
_________________________________
_________________________________
Mailing Address (for registration
on books of the Company)
Type of Ownership (Check One):
|_| Individual Ownership |_| Joint Tenants with right of Survivorship
|_| Trust or Estate
(Describe, and enclose |_| Tenants-in-Common (both parties
authority) must sign)
|_| Other (explain):________________
________________________________
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