Exhibit 4.14
SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
OF INNOPET BRANDS CORP.
THIS SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
(the "Agreement") is made and entered into as of this 23rd day of March, 1998,
by and between INNOPET BRANDS CORP., a Delaware corporation ("Seller"), with
offices at One East Broward Boulevard, Suite 1100, Ft. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and HSBC ▇▇▇▇▇ ▇▇▇▇▇ CANADA, INC., an Ontario company ("HSBC"), with offices at
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ West, Suite 1200, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
providing for the purchase and sale of shares of the common stock, par value
$.01 per share (the "Common Stock"), of Seller, by HSBC or its designated
affiliates (collectively with HSBC, the "Buyer"). Seller and Buyer hereby
represent and agree as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE; OPTION.
(i) For at least the twenty-four (24) month period beginning
on April 1, 1998, Buyer hereby subscribes for a total of Three Million,
Six Hundred Thousand Dollars ($3,600,000) of Common Stock, based upon
(a) the payment of One Hundred Fifty Thousand Dollars U.S. (US$150,000)
each month (the "Monthly Investment") and (b) a per share purchase
price equal to eighty percent (80%) of the lowest closing bid price for
a share of Common Stock for the twenty (20) trading days preceding each
respective Investment Date (as defined herein) (the "Purchase Price");
provided, however, that in the event the average closing bid price for
a share of Common Stock for the five (5) trading days preceding any
Investment Date falls below $2.00 per share, Buyer will forgo funding
the respective Monthly Investment; provided further, that in the event
that Buyer elects to fund any such Monthly Investment, Buyer shall
immediately notify Seller in writing of its election thereof. The
shares of Common Stock subscribed for by Buyer on each Investment Date
are referred to herein as the "Shares".
(ii) Buyer shall pay the Monthly Investment on the first
trading day of each month (the "Investment Date"), commencing on April
1, 1998, for a period of at least twenty-four (24) months thereafter
(each such monthly interval is referred to herein as the "Monthly
Period"), as the purchase price for the Shares subscribed for by it, in
exchange for such number of Shares as shall equal the Monthly
Investment divided by the Purchase Price for the respective Monthly
Period, as follows:
(a) On or before each Investment Date, Seller shall
deliver the Shares purchased by Buyer to The Depository Trust
Company ("DTC") on Buyer's behalf. Seller and Buyer shall
cause such Shares to be credited to the DTC
account designated by Buyer upon receipt by Seller of payment
for the Monthly Investment into an account designated by
Seller. The delivery of the shares of Common Stock into
Buyer's DTC account in exchange for payment therefor shall be
referred to herein as "Settlement". Buyer shall coordinate
Settlement with Seller through DTC.
(b) If Settlement is not effected within three (3)
business days of the respective Investment Date, then Seller
shall pay to Buyer a cash penalty at the rate of two percent
(2%) of the Monthly Investment for each day that such Shares
have not been delivered to Buyer.
(iii) For at least the twenty-four (24) month period beginning
on April 1, 1998, Buyer and Seller agree that Buyer has been granted an
option (the "Option") to purchase up to Fifty Million Dollars U.S.
(US$50,000,000) of Common Stock (the "Option Shares"), based upon a per
share purchase price equal to eighty-five percent (85%) of the lowest
closing bid price for a share of Common Stock for the five (5) trading
days preceding the date of each respective Option Notice (as defined
herein) (the "Option Purchase Price"). Buyer may exercise the Option on
one or more occasion during such twenty-four (24) month period, in One
Hundred Thousand Dollar (US$100,000) increments, as follows:
(a) Buyer shall deliver a written notice (the "Option
Notice") by facsimile to Seller at (▇▇▇) ▇▇▇-▇▇▇▇,
Attention Chief Financial Officer, stating (i) that
Buyer desires to exercise its Option to purchase
Option Shares, (ii) the Option Purchase Price, (iv)
the total dollar amount to be paid by Buyer for such
Option Shares, (v) the aggregate number of Option
Shares to be purchased by Buyer, and (vi)
instructions for delivery of the Option Shares to
Buyer's DTC account.
(b) Upon receipt of the Option Notice, Seller shall
deliver the Option Shares purchased by Buyer to DTC
on Buyer's behalf. Seller and Buyer shall cause the
Shares to be credited to the DTC account designated
by Buyer upon payment by Buyer for such Option
Shares. Buyer shall pay the purchase price for the
Option Shares subscribed for by it by wire transfer
of immediately available, federal funds in United
States dollars to the account designated by Seller.
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(c) If the Option Shares are not delivered to Buyer
within three (3) business days of Seller's receipt of
payment therefor, then Seller shall pay to Buyer a
cash penalty at the rate of two percent (2%) of the
total dollar amount paid by Buyer for such Option
Shares for each day that such Option Shares have not
been delivered to Buyer.
(iv) Buyer and Seller may extend the term of this Agreement
upon the mutual written consent of both parties.
2. BUYER'S REPRESENTATIONS AND COVENANTS.
Buyer represents, warrants and covenants to Seller as follows:
(i) This Agreement has been duly authorized, validly executed
and delivered on behalf of Buyer and is a valid and binding agreement
of Buyer enforceable in accordance with its terms, subject to general
principles of equity and of bankruptcy or other laws affecting the
enforcement of creditors' rights;
(ii) Buyer understands that the offer and sale of the Shares
and Option Shares (sometimes collectively referred to herein as the
"Securities") are being made only by means of a prospectus, together
with the final prospectus supplement, if any, relating to the offering
of the Securities (collectively, the "Prospectus"), filed by Seller
with the Securities and Exchange Commission (the "Commission") pursuant
to Rule 424 under the Securities Act of 1933 (the "1933 Act"). The sale
of the Securities, which are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the 1933 Act, are to be made solely
pursuant to the Prospectus;
(iii) Buyer has received and carefully reviewed copies of the
Public Documents (as defined herein). No representations or warranties
have been made to Buyer by Seller, the officers or directors or Seller,
or any agent, employee or affiliate of any of them, except as
specifically set forth herein or as set forth in documents referenced
herein. Buyer understands that no federal or state governmental
authority has made any finding or determination relating to the
fairness of an investment in the Securities and that no federal or
state governmental authority has recommended or endorsed, or will
recommend or endorse, the investment herein. Buyer, in making the
decision to purchase the Securities subscribed for, has relied upon
independent investigation made by it and has not relied on any
information or representations made by third parties;
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(iv) Buyer understands that the Securities are being offered
and sold to it in reliance on specific provisions of federal and state
securities laws and that Seller is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgements and
understandings of Buyer set forth herein;
(v) For as long as Buyer or any affiliate thereof is a holder
of securities of Seller, neither Buyer nor any affiliate shall,
directly or indirectly, bid for, purchase, contract to buy, acquire any
option to purchase or otherwise acquire any Common Stock, warrants or
other securities of the Company in the open market or otherwise, except
in accordance with this Agreement or directly from Seller;
(vi) Buyer is not a citizen or resident of the United States
of America, is not an entity organized under any laws of any state of
the United States of America and does not have offices in the United
States of America; and
(vii) Buyer is capable of evaluating the risks and merits of
this investment by virtue of its experience as an investor and its
knowledge, experience, and sophistication in financial and business
matters.
3. SELLER'S REPRESENTATIONS AND COVENANTS.
Seller represents, warrants and covenants to Buyer as follows:
(i) Seller has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties
and to conduct its business as currently conducted, and is duly
registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure to register or qualify is not
reasonably anticipated to have a material adverse effect on the
condition (financial or otherwise), business, properties, net worth or
results of operations of Seller;
(ii) Seller has registered shares of its Common Stock pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and is in full compliance with all reporting
requirements of the Exchange Act;
(iii) Seller has filed with the Commission a registration
statement (the "Registration Statement") including the Prospectus. The
sale of the Securities are to be made solely pursuant to the
Prospectus;
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(iv) Seller has furnished Buyer with copies of Seller's most
recent Annual Report on Form 10-KSB (the "Form 10-KSB") filed with the
Commission, its Form 10- QSB for the quarterly period ended September
30, 1997 (the "Form 10-QSB") and the Prospectus (collectively with the
Form 10-KSB and the Form 10-QSB, the "Public Documents"). The Public
Documents at the time of their filing did not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading;
(v) The Shares and Option Shares shall be duly authorized and
validly issued and when issued and delivered, each of them shall be
enforceable in accordance with their terms (subject to general
principles of equity and bankruptcy, fraudulent conveyance, preference
and other laws affecting creditors' rights generally);
(vi) Seller shall not issue a fractional share of Common Stock
upon the issuance of any Shares or Option Shares. Instead, Seller shall
round any fractional share to the next whole share of such security;
(vii) This Agreement has been duly authorized, validly
executed and delivered on behalf of Seller and is a valid and binding
agreement of Seller enforceable in accordance with its terms, subject
to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally, and Seller
has full power and authority to execute and deliver this Agreement and
the other agreements and documents contemplated hereby and to perform
its obligations hereunder and thereunder;
(viii) The execution and delivery of this Agreement, the
issuance of the Shares and the shares of Common Stock issuable upon
exercise of the Options and the consummation of the transactions
contemplated by this Agreement by Seller, will not conflict with or
result in a breach of or a default under any of the terms or provisions
of, Seller's certificate of incorporation or By-laws, or of any
material provision of any indenture, mortgage, deed of trust or other
material agreement or instrument to which Seller is a party or by which
it or any of its properties or assets is bound, any material provision
of any law, statute, rule, regulation, or any existing applicable
decree, judgment or order by any court, federal or state regulatory
body, administrative agency, or other governmental body having
jurisdiction over Seller, or any of its properties or assets or will
result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of Seller or any of its
subsidiaries pursuant to the terms of any agreement or instrument to
which any of them is a party or by which any of them may be bound or to
which any of their property or any of them is subject;
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(ix) Except as disclosed herein, no authorization, approval,
filing with or consent of any governmental body is required for the
issuance and sale of the Shares;
(x) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending
against or affecting Seller, or any of its properties, which would
reasonably be anticipated to result in any material adverse change in
the condition (financial or otherwise) or in the earnings, business
affairs, business prospects, properties or assets of Seller, except as
set forth in the Public Documents;
(xi) Subsequent to the dates as of which information is given
in the Public Documents, except as contemplated herein, Seller has not
incurred any material liabilities or material obligations, direct or
contingent, or entered into any material transactions not in the
ordinary course of business, and there has not been any change in its
capitalization or any material adverse change in its condition
(financially or other), net worth, results of operations or prospectus;
(xii) Seller has conducted, is conducting and will conduct its
business so as to comply in all material respects with all applicable
statutes and regulations, and Seller is not charged with and, to the
knowledge of Seller, is not under investigation with respect to any
violation of any statutes or regulations nor is it the subject of any
pending or threatened adverse proceedings by any regulatory authority
having jurisdiction over its business or operations except as disclosed
in the Public Documents;
(xiii) Except as set forth in the Public Documents, Seller has
good and marketable title to all properties and assets described
therein as owned by it, free and clear of all liens, charges,
encumbrances, or restrictions;
(xiv) Seller has filed all necessary federal and state income
and franchise tax returns and has paid all taxes shown as due thereon;
(xv) Seller has no knowledge of any tax deficiency that might
be asserted against it that might materially and adversely affect its
business or properties;
(xvi) Seller maintains insurance of the types and in amounts
generally deemed adequate for its business and consistent with
insurance coverage maintained by similar companies and businesses,
including, but not limited to, insurance covering all real and personal
property owned or leased by Seller against theft, damage, destruction,
acts of vandalism, products liability and all other risks customarily
insured against, all of which insurance is in full force and effect;
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(xvii) No labor disturbance by the employees of Seller exists
or is imminent that could reasonably be expected to have a material
adverse affect on the conduct of the business, operations, financial
condition or income of Seller;
(xviii) To the best of the knowledge of Seller's management,
neither Seller nor any employee or agent of Seller has made any payment
of funds of Seller or received or retained any funds in violation of
law;
(xix) Seller has sufficient title and ownership of all
trademarks, service marks, trade names, copyrights, patents, trade
secrets and other proprietary rights necessary for its business as now
conducted and as proposed to be conducted as described in the Public
Documents without any conflict with or infringement of the rights of
others. Except as set forth in the Public Documents, there are no
material outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is Seller bound by or party to any
material options, licenses or agreements of any kind with respect to
the trademarks, service marks, trade names, copyrights, patents, trade
secrets, licenses and other proprietary rights of any other person or
entity. Seller is not aware that any of its executive officers is
obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency that
would interfere with the use of his or her best efforts to promote the
interest of Seller or that would conflict with Seller's business as
proposed to be conducted; and
(xx) Except for agreements explicitly contemplated hereby or
set forth in the Public Documents, there are no other agreements
between Seller and any of its officers, directors, affiliates or any
affiliate thereof.
4. INDEMNIFICATION.
(i) Seller hereby agrees to indemnify and hold harmless Buyer
and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and
expenses incurred by each such person in connection with defending or
investigating any such claims or liabilities, whether or not resulting
in any liability to such person, to which any such indemnified party
may become subject under the 1933 Act, or under any other statute, at
common law or otherwise, insofar as such losses, claims, demands,
liabilities and expenses arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact made by
Seller, (ii) any omission or alleged omission of a material fact with
respect to Seller or (iii) any breach of any representation, warranty
or agreement made by Seller in this Agreement.
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(ii) Buyer hereby agrees to indemnify and hold harmless Seller
and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and
expenses incurred by each such person in connection with defending or
investigating any such claims or liabilities, whether or not resulting
in any liability to such person, to which any such indemnified party
may become subject under the 1933 Act, or under any other statute, at
common law or otherwise, insofar as such losses, claims, demands,
liabilities and expenses arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact made by Buyer,
(ii) any omission or alleged omission of a material fact with respect
to Buyer or (iii) any breach of any representation, warranty or
agreement made by Buyer in this Agreement.
5. MISCELLANEOUS.
(i) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware without giving effect
to the rules governing the conflicts of laws.
(ii) This Agreement may be executed by facsimile signature and
in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(iii) Each of the parties agrees to pay its own expenses
incident to this Agreement and the performance of its obligations
hereunder, including, but not limited to, the fees and expenses of each
such Party's legal counsel.
(iv) All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopier, initially to the address set forth below, and thereafter at
such other address, notice of which is given in accordance with the
provisions of this Section 6.
if to Seller:
InnoPet Brands Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: CEO
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
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if to Buyer:
HSBC ▇▇▇▇▇ ▇▇▇▇▇ Canada, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ Elishis
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally
delivered; three (3) business days after being deposited in
the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited
with a nationally recognized, overnight courier service; when
receipt is acknowledged, if telecopied.
(v) This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and
supersedes all prior oral or written proposals or agreements
relating thereto. This Agreement may not be amended or any
provision hereof waived in whole or in part, except by a
written amendment signed by both of the parties.
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IN WITNESS WHEREOF, this Agreement was duly executed on the
date first written above.
INNOPET BRANDS CORP.
By: _________________________________
Name: ▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
HSBC ▇▇▇▇▇ ▇▇▇▇▇ CANADA, INC.
By: _________________________________
Name: ▇. ▇▇▇▇▇
Title:
By: _________________________________
Name: ▇. ▇▇▇▇▇
Title:
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