Exhibit 1
WITS BASIN PRECIOUS MINERALS INC.
SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
UNITS OF COMMON STOCK AND WARRANTS
Wits Basin Precious Minerals Inc.
000 Xxxxxxxx Xxxx, Xxxxx 0000
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 $.01 per share (the "Common Stock") of Wits
Basin Precious Minerals Inc., a Minnesota corporation (the "Company"), and
one-half of a (1) one-year warrant to purchase one share of common stock at a
price of $0.75 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 5,000,000 Units (the "Minimum") and a maximum of
7,000,000 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 multiplied by $0.25 (the
"Purchase Price").
3. Payment Instructions:
Method of Payment for Canadian Purchasers:
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
"IBK Capital Corp., US Trust Account #1". 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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ACCOUNT NAME: IBK CAPITAL CORP, US TRUST ACCOUNT #1
Bank: TD Canada Trust
Toronto Dominion Centre Branch
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
TD's Swift Code: XXXXXXXX XXX
Transit #: 10202-004
Account Name Beneficiary: IBK Capital Corp., US Trust Account #1
US Trust Account #: 0690-7357673
Method of Payment for Non-Canadian Purchasers:
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
"Xxxxxx Xxxxxxx Xxxxxx & Brand". 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 Name: XX Xxxx, X.X., 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX 00000
Routing #: 000000000
Account #: 793400110
Account Name: Xxxxxx Xxxxxxx Xxxxxx & Brand Trust Account
Attention: WITS BASIN
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)
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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)
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.
(c) 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.
(d) 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, 2002
filed with the Securities and Exchange Commission (the "SEC") on
Xxxxx 00, 0000, (xx) the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 0000 (xxx "Xxxxx Xxxxxxx 00-X"), and
(iii) the Company's Amendment to Current Report on Form 8-K/A dated
March 14, 2003 and filed on May 27, 2003, and (iv) the Company's
Current Report on Form 8-K dated June 26, 2003 and filed on July 1,
2003; 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.
(e) 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 First Quarter 10-Q and those additional
Risk Factors attached hereto as Exhibit B.
(f) 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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___ (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.
___ (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).
(g) 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.
(h) I am not relying upon the Company with respect to the economic
considerations involved in determining to make an investment in the
Units.
(i) 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.
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(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.
(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.
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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."
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 Warrant, 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 one hundred twenty (120) days
following the termination of the Offering by the Company, the Company shall be
obligated to promptly pay the undersigned a penalty equal to 1/5 of a share of
Common Stock for each Unit purchased hereby. 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 Warrant shall be redeemable in whole at the option of
the Corporation for [$.01 per share] in the event that (i) the average of the
high and low trading prices is equal to or greater than $1.50 for at least 10
consecutive trading days during the term of the Warrant; 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
Corporation shall give the undersigned at least ten days prior written notice of
its intent to redeem the Warrant, at the address of the undersigned as last
recorded on the Corporation's records, which notice shall state the record date
fixed for the redemption and the place designated for the surrender of the
Warrant. Following any such redemption, the Warrant, 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.
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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.
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: ______________, 2003.
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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: __________________, 2003.
WITS BASIN PRECIOUS MINERALS INC.
By_____________________________________
Name:__________________________________
Title:_________________________________
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SUBSCRIBER INFORMATION
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Name Name
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Tax Identification or Social Security Tax Identification or Social Security
Number Number
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Residence Address
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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 |_| Tenants-in-Common (both parties
enclose authority) must sign)
|_| Other
(explain):
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EXHIBIT A
TERM SHEET
No securities commission or other similar regulatory authority has passed on the
merits of the securities offered herein nor has it reviewed this Term Sheet and
any representation to the contrary is an offence. This Term Sheet is not, and
under no circumstances is to be interpreted as, a prospectus, public information
or advertisement of the securities described herein. Reference should be made to
the subscription agreement, which terms shall govern.
Private Placement September 4, 2003
WITS BASIN PRECIOUS MINERALS INC.
PRIVATE PLACEMENT OF UNITS
Minimum Offering - US $1,250,000
Maximum Offering - US $1,750,000
Issuer: Wits Basin Precious Minerals Inc. (the "Company")
Issue: The Company intends to raise a minimum of
US$1,250,000 and a maximum of US$1,750,000
from the issuance of Units of the Company at
a price of US$0.25 per Unit, each Unit
consisting of one common share and one-half
of one common share purchase warrant. Each
whole common share purchase warrant (a
"Warrant") is exercisable on or before
August 31, 2004 for one common share upon
payment of US$0.75 per common share.
Outstanding Share Capital: The Company currently has 17,057,181 common shares
issued and outstanding. It has reserved 7,000,000
common shares for issuance of the Units, and a
further 3,750,000 common shares for issuance upon
exercise of the Warrants attached to the units. In
addition, there are currently 16,733,594 common
shares reserved for issuance on the exercise of
outstanding stock options and/or warrants.
Use of Proceeds: Proceeds from the issuance of
the Units will be used to fund exploration
on the Company's FSC Farm-In Project with
Kwagga Gold (Proprietary) Limited and for
general working capital purposes including
general and administrative expenses.
Commission: The Company may engage registered securities
dealers or finders ("Agents") to distribute
the Units. The total amount of commission
payable to the Agents will not exceed 10%.
The commission may be paid in cash from the
Company's working capital or common shares
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of the Company priced at US$0.25 per share
or any combination of the above, subject to
regulatory approval.
Offering Jurisdictions: The Units are being offered to residents of such
jurisdictions as the Company may approve
(collectively, the "Qualifying Jurisdictions").
Qualification for
Subscription: Subscribers must qualify as exempt
purchasers pursuant to the exemptions from
prospectus and/or registration requirements
of their respective jurisdictions of
residence. The Company reserves the right to
reject any subscriptions at its sole
discretion.
Resale Restrictions: The Units will be issued pursuant to exemptions
from prospectus requirements and will be subject
to resale restrictions under the securities laws
of the Qualifying Jurisdictions.
Registration Rights: The Company will use its best efforts to cause the
shares and the shares underlying the warrants to
be registered for resale within 90 days from the
Closing. The Company will pay each Subscriber a
penalty equal to 1/5 of a share for each Unit
purchased in the event such registration has not
occurred within 120 days of the final termination
of the Offering.
Costs and Expenses: Whether or not the Offering is completed,
offering costs and expenses are to be borne by
the Company, including the fees and disbursements
of its designated legal counsel, payable on
Closing.
Closing Date: All subscriptions must be received by
September 19, 2003, or such later date as
the Company determines and the closing will
take place on or before September 24, 2003
or such other date(s) as may be determined
by the Company.
Regulatory Approval: All terms contained herein are subject to
regulatory approvals where necessary.
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EXHIBIT B
ADDITIONAL RISK FACTORS
An investment in the Units involves certain risks. The following risk factors,
as well as the other information contained in the Term Sheet and in the
documents incorporated by reference herein, should be considered carefully by
prospective investors.
Fluctuations in Gold Prices
The Corporation's development efforts and the profitability of the Corporation's
operations once commenced, will be significantly affected by changes in the
market price of gold. Mine production and the willingness of third parties such
as central banks to sell or lease gold affect the supply of gold. Demand for
gold can be influenced by economic conditions, attractiveness as an investment
vehicle and the relative strength of the US dollar and local investment
currencies. Other factors include the level of interest rates, exchange rates,
inflation and political stability. The aggregate effect of these factors is
impossible to predict with accuracy. Gold prices are also affected by worldwide
production levels. In addition, the price of gold has on occasion been subject
to very rapid short-term changes due to speculative activities. Fluctuations in
gold prices may adversely affect the Corporation's financial performance and
results of operations.
Uncertainty of Reserve and Mineral Resource Estimates
The figures for proved and probable ore reserves and mineral resources presented
by the Corporation are estimates and no assurance can be given that the
anticipated tonnages and grades will be achieved or that the indicated level of
recovery will be realized. The ore grade actually recovered by the Corporation
may differ from the estimated grades of the reserves and mineral resources. Such
figures have been determined based upon assumed gold prices and operating costs.
Future production could differ dramatically from ore reserve estimates for,
among others, the following reasons:
o mineralization or formations could be different from those predicted
by drilling, sampling and similar examinations;
o increases in operating mining costs and processing costs could
adversely affect ore reserves;
o the grade of the ore reserves may vary significantly from time to
time and there is no assurance that any particular level of gold may
be recovered from the ore reserves; and
o declines in the market price of gold may render the mining of some
or all of the Corporation's ore reserves uneconomic.
Any of these factors may require the Corporation to reduce its ore reserves
estimates or increase its costs. Short term factors, such as the need for the
additional development of a deposit or the processing of new different grades,
may impair the Corporation's profitability. Should the market price of gold
fall, the Corporation could be required to materially write down its investment
in mining properties or delay or discontinue production or the development of
new projects.
Nature of Mineral Exploration and Mining
The exploration for and development of mineral deposits involves significant
financial risks which even a combination of careful evaluation, experience and
knowledge may not eliminate. While the discovery of an ore body may result in
substantial rewards, few properties which are explored are ultimately developed
into producing mines. Major expenses may be required to establish ore reserves,
to develop metallurgical processes and to construct mining and processing
facilities at a site. It is impossible to ensure that the current programs
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planned for the Corporation will result in a profitable commercial mining
operation.
The Corporation's operations are subject to all of the hazards and risks
normally incident to exploration, development and production of gold, any of
which could result in damage to life or property, environmental damage and
possible legal liability for any or all damage. The Corporation's activities may
be subject to prolonged disruptions due to weather conditions depending on the
location of operations in which the Corporation has interests. Hazards, such as
unusual or unexpected formations, rock bursts, pressures, cave-in, flooding or
other conditions may be encountered in the drilling and removal of material.
While the Corporation may obtain insurance against certain risks in such amounts
as it considers adequate, the nature of these risks are such that liabilities
could exceed policy limits or could be excluded from coverage. There are also
risks against which the Corporation cannot insure or against which it may elect
not to insure. The potential costs which could be associated with any
liabilities not covered by insurance or in excess of insurance coverage or
compliance with applicable laws and regulations may cause substantial delays and
require significant capital outlays, adversely affecting the Corporation's
earnings and competitive position in the future and, potentially, its financial
position and results of operation.
Whether a gold deposit will be commercially viable depends on a number of
factors, some of which are the particular attributes of the deposit, such as its
size and grade, proximity to infrastructure, financing costs and governmental
regulations, including regulations relating to prices, taxes, royalties,
infrastructure, land use, importing and exporting of gold and environmental
protection. The effect of these factors cannot be accurately predicted, but the
combination of these factors may result in the Corporation not receiving an
adequate return on invested capital.
Capital Investment
Mining exploration involves financial risk and capital investment. The
Corporation's only means of acquiring investment capital will be by the sale of
equity shares or the rights to acquire equity shares. It will have no source of
funds to engage in additional exploration and development which may be necessary
to exploit its properties other than interest earned on its short-term
investments, and further financing.
Additional Financing Needed for Joint Venture Investment
To maintain the Corporation's interest in the Joint Venture, additional
financing in excess of USD$2,000,000 will be required. If the additional
financing cannot be obtained, the Corporation will lose its initial investment
and any future investment. No assurance can be made that the Corporation will be
able to obtain such additional financing.
The Corporation's activities will be initially directed to the search for and
the development of new mineral deposits, and significant capital investment will
be required to achieve commercial production from successful exploration
efforts. There is no assurance that the Corporation will have, or be able to
raise, the required funds to continue these activities.
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