UFOOD RESTAURANT GROUP, INC. SUBSCRIPTION AND EXCHANGE AGREEMENT
Exhibit
10.3
| Name: | ||
000 Xxxxxxxxxx Xxxxxx |
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Xxxxxx, XX 00000 |
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Attention: Xxxx Xxxxxx |
Ladies and Gentlemen
| 1. | Subscription and Exchange. The undersigned (the “Investor”) subscribes for
and agrees to purchase that number of shares (each, a “Preferred Share,” and referred
to in the plural as the “Preferred Shares”) of Series A 8% Redeemable Convertible
Preferred Stock, $.0001 par value per share (the “Preferred Stock”), of UFood
Restaurant Group, Inc., a Nevada corporation (the “Company”), as equals the quotient
of (i) the “Amount of Indebtedness for Exchange” indicated above, divided by (ii) $100,
rounded to the nearest whole Preferred Share, in exchange for and in consideration of the
cancellation by the Investor of the Company’s indebtedness to the Investor under one or more
8% Senior Secured Convertible Debentures (the “Debentures”) in a principal amount
equal to the “Amount of Indebtedness for Exchange” set forth above. The Investor acknowledges
that upon acceptance of this subscription and exchange, any accrued an unpaid interest under
the Debentures shall be paid to the Investor by the Company is registered shares (the
“Common Shares” and together with the Preferred Shares, the “Shares”) of its
common stock, $.0001 par value per share (“Common Stock”) based on the average closing
bid prices of the Common Stock for the five trading days immediately prior to the closing date
of this subscription and exchange. The Investor further acknowledges that this subscription
and exchange: (i) is irrevocable; (ii) is subject to acceptance by the Company and may be
accepted or rejected in whole or in part by the Company in its sole discretion; (iii) must be
received by the Company no later than August 31, 2010 (unless extended by the Company at its
discretion until October 29, 2010); and (iv) will not be accepted by the Company unless (A)
the holders of at least 80% of the outstanding principal amount of all debentures issued by
the Company elect to exchange such debentures for Preferred Stock or otherwise approve of the
debenture exchange (the “Exchange Offering”), provided, that at least 50% of the
outstanding principal amount of all debentures issued by the Company elect to exchange such
debentures for Preferred Stock, and (B) the Company receives gross proceeds of at least
$2,500,000 from a concurrent private placement of Series B 8% Redeemable Convertible Preferred
Stock, $.0001 par value per share, of the Company (the “Private Placement”). The
Investor has delivered to the Company a fully completed and executed Investor Questionnaire.
The Investor Questionnaire in an integral part of this Subscription and Exchange Agreement and
shall be deemed incorporated by reference herein. The Investor has also delivered the
original Debenture(s) to the Company with this Subscription and Exchange Agreement. |
| 2. | Representations and Warranties of the Investor. To induce the Company to accept this
subscription and exchange, the Investor represents and warrants as follows: |
| (a) | Authorization. The Investor has full power and authority to execute,
deliver, and perform the Investor’s obligations under this Subscription and Exchange
Agreement and to own the Shares. |
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| (b) | Enforceability. This Subscription and Exchange Agreement has been duly
executed and delivered by the Investor, and, upon its execution by the Company, shall
constitute the legal, valid and binding obligation of the Investor, enforceable in
accordance with its terms, except to the extent that its enforcement is limited by
bankruptcy, insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors’ rights generally and by general principles of equity. |
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| (c) | No Violations. The execution, delivery and performance of this
Subscription and Exchange Agreement by the Investor do not and will not, with or
without the passage of time or the giving of notice, result in the breach of, or
constitute a default, cause the acceleration of performance, or require any consent
under, or result in the creation of any lien, charge or encumbrance upon any property
or assets of the Investor pursuant to, any material instrument or agreement to which
the Investor is a party or by which the Investor or the Investor’s properties may be
bound or affected. |
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| (d) | Purchase Entirely for Own Account. The Shares are being purchased by
the Investor for investment for the Investor’s own account and not with a view to the
distribution of any part thereof, and the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the Shares in a manner
contrary to the Securities Act of 1933, as amended (the “Securities Act”) or
applicable state securities laws. |
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| (e) | Disclosure of Information; Due Diligence. The Investor has had an
opportunity to ask questions of and receive answers from the Company’s management
regarding the Company and the terms and conditions of the offering of the Shares
hereunder and to obtain additional information necessary to verify the accuracy of the
information supplied or to which the Investor had access. Without limiting the
foregoing, the Investor has reviewed the following documents provided by the Company:
(i) Letter to Debenture Holders; (ii) Disclosure Statement; and (iii) Certificate of
Designation of Preferences, Rights and Limitations of Series A 8% Redeemable
Convertible Preferred Stock. |
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| (f) | Investment Experience; Accredited Investor Status. The Investor is and
has experience as an investor in securities of companies, and acknowledges that Shares
to be purchased hereunder are speculative and involve a high degree of risk. The
Investor can bear the economic risk of its investment, including possible complete loss
of such investment, for an indefinite period of time and has such knowledge and
experience in financial or business matters that it is capable of evaluating the merits
and risks of the investment in the securities purchased hereunder. The Investor
understands that the securities to be acquired hereunder have not been registered under
the Securities Act, or under the securities laws of any jurisdiction, by reason of
reliance upon certain exemptions, and that the reliance on such exemptions is
predicated upon the accuracy of the Investor’s representations and warranties in
this Subscription and Exchange Agreement. The Investor is familiar with Regulation
D promulgated under the Securities Act and is an “accredited investor” as defined in
Rule 501(a) of such Regulation D. |
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| (g) | Restricted Securities. The Investor understands that the Preferred
Shares to be acquired hereunder are characterized as “restricted securities” under the
federal securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the Securities Act
only in certain limited circumstances and in accordance with the terms and conditions
set forth in the legend described below. In this connection, the Investor represents
that the Investor is familiar with Securities and Exchange Commission, Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and by the
Securities Act. |
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| (h) | Legends. The Investor understands and acknowledges that the
certificates evidencing the Preferred Shares to be purchased hereunder may bear
substantially the following legends: |
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. |
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| (i) | The Investor was offered the Shares in the jurisdiction listed in the
Investor’s permanent address set forth on the first page of this Subscription and
Exchange Agreement and intends that the securities law of that jurisdiction govern the
Investor’s subscription. |
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| (j) | The Investor has not endorsed, pledged, sold, delivered, transferred or
assigned the Debenture(s) and continues to be the holder thereof. |
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| 3. | Representations and Warranties of the Company. To induce the Investor to make this
subscription and exchange, the Company represents and warrants that each of the following
statements on the closing date relating to the sale of the Shares to the Investor will be,
true and correct: |
| (a) | Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
corporate power and authority to execute and deliver this Subscription and Exchange
Agreement and to own its properties and carry on its business as currently conducted.
The
Company is duly authorized to do business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material adverse effect
on the Company. |
| (b) | Authorization. The Company has full corporate power and authority to
execute, deliver, and perform the its obligations under this Subscription and Exchange
Agreement. |
| (c) | Enforceability. This Subscription and Exchange Agreement has been duly
executed and delivered by the Company, and, upon its execution by the Investor, shall
constitute the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except to the extent that its enforcement is limited by
bankruptcy, insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors’ rights generally and by general principles of equity. |
| (d) | No Violations. The execution, delivery and performance of this
Subscription and Exchange Agreement by the Company do not and will not, with or without
the passage of time or the giving of notice, result in the breach of, or constitute a
default, cause the acceleration of performance, or require any consent under, or result
in the creation of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to, any material instrument or agreement to which the Company is a
party or by which the Company or the Company’s properties may be bound or affected. |
| (e) | Issuance of Shares. The issuance, sale and delivery of the Shares in
accordance with the Subscription and Exchange Agreement have been duly authorized by
all necessary corporate action on the part of the Company. Assuming (i) due
authorization, execution and delivery to the Company of this Subscription and Exchange
Agreement by the Investor, and (ii) the cancellation of the Debenture(s), the Shares to
be acquired by the Investor pursuant to this Subscription and Exchange Agreement will
be duly and validly issued, fully paid and non-assessable. |
| 4. | Cancellation of Debenture(s). Upon the Company’s acceptance of this subscription and
exchange and upon the issuance of the Shares, and, in consideration of such issuance, the
Debenture(s) shall be deemed to be fully satisfied and of no further force or effect. The
Debenture(s) are hereby, effective as of the issuance of the Shares, deemed to be cancelled in
their entirety. |
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| 5. | Waiver of Preemptive Rights. The Investor, being a party to that certain Securities
Purchase Agreement, dated as of March 19, 2009 (the “Purchase Agreement”), with the
Company and the other Purchasers (as defined in the Purchase Agreement), hereby waives,
pursuant to Section 5.5 of the Purchase Agreement, on behalf of all Purchasers, the right of
the Purchasers to participate, granted under Section 4.12 of the Purchase Agreement, in the
Exchange Offering and the Private Placement. |
| 6. | Warrant Amendment. The parties acknowledge that the Investor was issued one or more
Common Stock Purchase Warrants (the “Warrants”) in connection with purchase of the
Debentures. The Warrants have an Exercise Price (as defined in the Warrants) of $0.14 per
share of Common Stock and a Termination Date (as defined in the Warrants) which is
the five year anniversary of the Initial Exercise Date (as defined in the Warrants). In the
event that the Company accepts this subscription and exchange and counter-signs this
Subscription and Exchange Agreement: (i) the Exercise Price for the Warrants will be
automatically amended to $0.09 per share of Common Stock; (ii) the Termination date will be
automatically amended to the six year anniversary of the Initial Exercise Date; and (iii)
notwithstanding anything to the contrary contained in the Warrants, the Warrants will not be
exercisable until the one year anniversary of the closing of the subscription and exchange. |
| 7. | Further Advice and Assurances. All information that the Investor has provided to the
Company is correct and complete as of the date hereof, and the Investor agrees to notify the
Company immediately if any representation or warranty contained in this Subscription and
Exchange Agreement becomes untrue prior to the issuance of Shares to the Investor (if
applicable). The Investor agrees to provide such information and execute and deliver such
documents as the Company may reasonably request to verify the accuracy of the Investor’s
representations and warranties herein, to comply with any law or regulation to which the
Company may be subject or to make any filing or report which the Company deems necessary or
advisable. |
| 8. | Indemnity. The Investor understands that the information provided herein will be
relied upon by the Company for the purpose of determining the eligibility of the Investor to
purchase the Shares. The Investor agrees to provide, if requested, any additional information
that may reasonably be required to determine the eligibility of the Investor to purchase the
Shares in the Company. The Investor agrees to indemnify and hold harmless the Company and its
employees, agents, members and principals from and against any loss, damage or liability due
to or arising out of a breach of any representation, warranty or agreement of the Investor
contained in this Subscription and Exchange Agreement or in any other document executed by the
Investor in connection with the Investor’s investment in the Shares. Without limiting any
other rights and remedies available to the Company, in the event that the Company determines
that the Investor’s representation under Section 2(f) of this Subscription and Exchange
Agreement is not true, accurate and complete as and when made, the Company may, in its sole
discretion, repurchase from the Investor the Shares subscribed to by it hereby at the original
purchase price for such Shares, and the Investor hereby releases the Company and its officers,
directors, shareholders and agents from any claim, loss, liability or damages relating to such
repurchase. |
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| 9. | Miscellaneous. This Subscription and Exchange Agreement is not assignable by the
Investor without the consent of the Company. The representations and warranties made by the
Investor in this Subscription and Exchange Agreement shall survive the closing of the
transactions contemplated hereby and any investigation made by the Company. This Subscription
and Exchange Agreement may be executed in one or more counterparts, all of which together
shall constitute one instrument, and shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to principles of conflicts of
laws thereof). |
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned has executed this Subscription and Exchange Agreement on
the date set forth below.
| Date: __________ ___, 2010 | Amount of Indebtedness for Exchange: $ | |||||
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Address: |
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| INDIVIDUAL INVESTOR: | PARTNERSHIP, CORPORATION, TRUST, LIMITED LIABILITY COMPANY, CUSTODIAL ACCOUNT, OTHER INVESTOR: | |||||
| (Print Name) | ||||||
| (Print Name of Entity) | ||||||
| (Sign Name) | ||||||
| By: | ||||||
| (Print Name and Title) | ||||||
ACCEPTANCE OF SUBSCRIPTION
(to be filled out only by the Company)
(to be filled out only by the Company)
The Company hereby accepts the above application for subscription for Shares and cancellation of
Debentures.
By: |
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| Title: President |
Date: __________ ___, 2010
