SUBSCRIPTION AGREEMENT
Exhibit
10.23
00000-00X
Xxxxxx
Xxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0, Xxxxxx
Gentlemen:
1. Subscription.
The
undersigned (or
any
beneficial person for whom it is acting) (the
“Purchaser”,
which
term for greater certainty shall include any beneficial person for whom it
is
acting),
intending to be legally bound, hereby irrevocably agrees to purchase from UFood
Restaurant Group, Inc., a Nevada corporation (the “Company”), the number of
units (the “Units”) set forth on the signature page hereof at a purchase price
of $1.00 per Unit. Each Unit consists of one (1) share of Common Stock, par
value $0.001 per share (the “Common Stock”), and one half of one warrant
(“Warrants”), with each full warrant entitling the holder to purchase one share
of Common Stock (each a “Warrant Share”) for a five-year period at an exercise
price of $1.25 per share. This subscription is submitted to you in accordance
with and subject to the terms and conditions described in this Subscription
Agreement and the Confidential Private Placement Memorandum of the Company
dated
October 17, 2007, as amended or supplemented from time to time, including all
attachments, schedules and exhibits thereto (the “Memorandum”), relating to the
offering (the “Offering”) by the Company of a minimum (the “Minimum Amount”) of
5.5 million of its Units and a maximum (the “Maximum Amount”) of 8 million of
its Units (with an over-allotment of 5 million Units).
The
terms
of the Offering are more completely described in the Memorandum and such terms
are incorporated herein in their entirety.
2. Payment.
The
Purchaser encloses herewith a check payable to, or will immediately make a
wire
transfer payment to, “Signature Bank, Escrow Agent for UFood Restaurant Group,
Inc.” in the full amount of the purchase price of the Units being subscribed
for. Wire transfer instructions are set forth on page 12 hereof under the
heading “How to subscribe for Units in the private offering of UFood Restaurant
Group, Inc.” Such funds will be held for the Purchaser's benefit, and will be
returned promptly, without interest or offset if this Subscription Agreement
is
not accepted by the Company, the Offering is terminated pursuant to its terms
or
by the Company or Xxxxxxx Xxxxx Ventures, Inc. (in its capacity as the
“Placement Agent”), or the Minimum Amount is not sold. Together with a check
for, or wire transfer of, the full purchase price, the Purchaser is delivering
two
completed and executed Omnibus Signature Pages to this Subscription Agreement
and the Registration Rights Agreement, in the form of Annex
B
to the
Memorandum (the “Registration Rights Agreement”).
3. Deposit
of Funds.
All
payments made as provided in Section 2 hereof shall be deposited by the
Placement Agent as soon as practicable with Signature Bank (the “Escrow Agent”),
in a non-interest-bearing escrow account (the “Escrow Account”) until the
earliest to occur of (a) the closing of the sale of the Minimum Amount (the
“First Closing”), (b) the rejection of such subscription, and (c) the
termination of the Offering by the Company or the Placement Agent. The Company
and the Placement Agent may continue to offer and sell the Units and conduct
additional closings (each, a “Closing”) for the sale of additional Units after
the First Closing and until the termination of the Offering.
4. Acceptance
of Subscription.
The
Purchaser understands and agrees that the Company in its sole discretion
reserves the right to accept or reject this or any other subscription for Units,
in whole or in part, notwithstanding prior receipt by the Purchaser of notice
of
acceptance of this subscription. The Company shall have no obligation hereunder
until the Company shall execute and deliver to the Purchaser an executed copy
of
this Subscription Agreement. If this subscription is rejected in whole, or
the
offering of Units is terminated or the Minimum Amount is not raised, all funds
received from the Purchaser will be returned without interest or offset, and
this Subscription Agreement shall thereafter be of no further force or effect.
If this subscription is rejected in part, the funds for the rejected portion
of
this subscription will be returned without interest or offset, and this
Subscription Agreement will continue in full force and effect to the extent
this
subscription was accepted.
5. Representations
and Warranties.
The
Purchaser hereby acknowledges, represents, warrants, and agrees as
follows:
(a) None
of
the Units, shares of Common Stock, Warrants or Warrant Shares offered pursuant
to the Memorandum are registered under the Securities Act of 1933, as amended
(the “Securities Act”), or any state securities laws. The Purchaser understands
that the offering and sale of the Units is intended to be exempt from
registration under the Securities Act, by virtue of Section 4(2) thereof and
the
provisions of Regulation D (“Regulation
D”) and/or Regulation S (“Regulation S”) each as promulgated by the United
States Securities and Exchange Commission (the “SEC”) thereunder,
based, in part, upon the representations, warranties and agreements of the
Purchaser contained in this Subscription Agreement;
(b) The
Purchaser and the Purchaser's attorney, accountant, purchaser representative
and/or tax adviser, if any (collectively, the “Advisers”), have received the
Memorandum and all other documents requested by the Purchaser, have carefully
reviewed them and understand the information contained therein;
(c) Neither
the SEC nor any state securities commission has approved the Units, any of
the
shares of Common Stock, Warrants or Warrant Shares, or passed upon or endorsed
the merits of the offering of Units or confirmed the accuracy or determined
the
adequacy of the Memorandum. The Memorandum has not been reviewed by any federal,
state or other regulatory authority;
(d) All
documents, records, and books pertaining to the investment in the Units
(including, without limitation, the Memorandum) which have reasonably been
requested have been made available for inspection by such Purchaser and its
Advisers, if any;
2
(e) The
Purchaser and its Advisers, if any, have had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf
of
the Company concerning the offering of the Units and the business, financial
condition, results of operations of the Company, and all such questions have
been answered to the full satisfaction of the Purchaser and its Advisers, if
any;
(f) In
evaluating the suitability of an investment in the Company, the Purchaser has
not relied upon any representation or information (oral or written) other than
as stated in the Memorandum;
(g) The
Purchaser is unaware of, is in no way relying on, and did not become aware
of
the offering of the Units through or as a result of, any form of general
solicitation or general advertising including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio, in connection
with the offering and sale of the Units and is not subscribing for Units and
did
not become aware of the offering of the Units through or as a result of any
seminar or meeting to which the Purchaser was invited by, or any solicitation
of
a subscription by, a person not previously known to the Purchaser in connection
with investments in securities generally;
(h) The
Purchaser has taken no action that would give rise to any claim by any person
for brokerage commissions, finders' fees or the like relating to this
Subscription Agreement or the transactions contemplated hereby (other than
commissions to be paid by the Company to the Placement Agent or as otherwise
described in the Memorandum) and, in turn, to be paid to its selected
dealers;
(i) The
Purchaser, together with its Advisers, as the case may be, has such knowledge
and experience in financial, tax, and business matters, and, in particular,
investments in securities, so as to enable it to utilize the information made
available to it in connection with the Offering to evaluate the merits and
risks
of an investment in the Units and the Company and to make an informed investment
decision with respect thereto;
(j) The
Purchaser is not relying on the Company, the Placement Agent or any of their
respective employees or agents with respect to the legal, tax, economic and
related considerations of an investment in the Units, and the Purchaser has
relied on the advice of, or has consulted with, only its own
Advisers;
(k) The
Purchaser is acquiring the Units solely for such Purchaser's own account for
investment purposes only and not with a view to or intent of resale or
distribution thereof, in whole or in part. The Purchaser has no agreement or
arrangement, formal or informal, with any person to sell or transfer all or
any
part of the Units, the shares of Common Stock, the Warrants or the Warrant
Shares, and the Purchaser has no plans to enter into any such agreement or
arrangement;
(l) The
Purchaser must bear the substantial economic risks of the investment in the
Units indefinitely because none of the securities included in the Units may
be
sold, hypothecated or otherwise disposed of unless subsequently registered
under
the Securities Act and applicable state securities laws or an exemption from
such registration is available (including,
without limitation, under Regulation S).
Legends
to
the
following effect
shall be
placed on the securities included in the Units to the effect that they have
not
been registered under the Securities Act or applicable state securities
laws:
3
THE
SECURITIES REPRESENTED HEREBY [AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY
IN ACCORDANCE WITH (I) REGULATION S UNDER THE U.S. SECURITIES ACT, IF AVAILABLE,
(II) AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, IF AVAILABLE,
OR (III) UNDER AN EFFECTIVE REGISTRATION STATEMENT, AND, IN EACH CASE, IN
COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY [AND THE SECURITIES
ISSUABLE UPON THE EXERCISE HEREOF] MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.
Appropriate
notations
will be
made in the Company's stock books
to the
effect that the securities included in the Units have not been registered under
the Securities Act or applicable state securities laws.
Stop
transfer instructions will be placed with the transfer agent of the Units.
The
Company has agreed that purchasers of the Units will have, with respect to
the
shares of Common Stock and the Warrant Shares, the registration rights described
in the Registration Rights Agreement. Notwithstanding such registration rights,
there can be no assurance that there will be any market for resale of the Units,
the Common Stock, the Warrants or the Warrant Shares, nor can there be any
assurance that such securities will be freely transferable at any time in the
foreseeable future. In
addition, the Warrants issued to Purchasers purchasing Units in this offering
in
an offshore transaction outside the United States in reliance on Regulation
S
will bear an additional restrictive legend to the following effect:
THIS
WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A “U.S.
PERSON” OR A PERSON IN THE UNITED STATES UNLESS THE WARRANT AND THE UNDERLYING
SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE
SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY
REGULATION S UNDER THE U.S. SECURITIES ACT.
(m) The
Purchaser has adequate means of providing for such Purchaser's current financial
needs and foreseeable contingencies and has no need for liquidity of its
investment in the Units for an indefinite period of time;
4
(n) The
Purchaser is aware that an investment in the Units involves a number of very
significant risks and has carefully read and considered the matters set forth
under the caption “Risk Factors” in the Memorandum, and, in particular,
acknowledges that the Company has a limited operating history and limited assets
and is engaged in a highly competitive business;
(o) The
Purchaser either:
|
i)
|
meets
the requirements of at least one of the suitability standards for
an
“accredited investor” as that term is defined in Regulation D and as set
forth on the Accredited Investor Certification contained herein;
or
|
|
ii.)
|
is
not a "U.S. Person" as defined in Regulation S; and specifically
the
Purchaser is not (all
Purchasers who are not a U.S. Person must INITIAL
this section as indicated to confirm their careful review and
understanding of this Section 5(o)(ii))
Initial
_______:
|
|
A.
|
a
natural person resident in the United States of America, including
its
territories and possessions ("United
States");
|
|
B.
|
a
partnership or corporation organized or incorporated under the laws
of the
United States;
|
|
C.
|
an
estate of which any executor or administrator is a U.S.
Person;
|
|
D.
|
a
trust of which any trustee is a U.S.
Person;
|
|
E.
|
an
agency or branch of a foreign entity located in the United
States;
|
|
F.
|
a
non-discretionary account or similar account (other than an estate
or
trust) held by a dealer or other fiduciary for the benefit or account
of a
U.S. Person;
|
|
G.
|
a
discretionary account or similar account (other than an estate or
trust)
held by a dealer or other fiduciary organized, incorporated, or (if
an
individual) resident in the United States;
and
|
|
H.
|
a
partnership or corporation: (A) organized or incorporated under the
laws
of any foreign jurisdiction; and (B) formed by a U.S. Person principally
for the purpose of investing in securities not registered under the
Securities Act, unless it is organized or incorporated, and owned,
by
accredited investors (as defined in Rule 501(a) under the Act) who
are not
natural persons, estates or trusts.
|
And,
in
addition:
|
I.
|
the
Purchaser was not offered the Units in the United
States;
|
5
|
J.
|
at
the time the buy-order for the Units was originated, the Purchaser
was
outside the United States; and
|
|
K.
|
the
Purchaser is purchasing the Units for its own account and not on
behalf of
any U.S. Person (as defined in Regulation S) and a sale of the Units
has
not been pre-arranged with a purchaser in the United
States.
|
(p) The
Purchaser (i) if a natural person, represents that the Purchaser has reached
the
age of 21 and has full power and authority to execute and deliver this
Subscription Agreement and all other related agreements or certificates and
to
carry out the provisions hereof and thereof; (ii) if a corporation, partnership,
or limited liability company or partnership, or association, joint stock
company, trust, unincorporated organization or other entity, represents that
such entity was not formed for the specific purpose of acquiring the Units,
such
entity is duly organized, validly existing and in good standing under the laws
of the state of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such entity has
full
power and authority to execute and deliver this Subscription Agreement and
all
other related agreements or certificates and to carry out the provisions hereof
and thereof and to purchase and hold the securities constituting the Units,
the
execution and delivery of this Subscription Agreement has been duly authorized
by all necessary action, this Subscription Agreement has been duly executed
and
delivered on behalf of such entity and is a legal, valid and binding obligation
of such entity; or (iii) if executing this Subscription Agreement in a
representative or fiduciary capacity, represents that it has full power and
authority to execute and deliver this Subscription Agreement in such capacity
and on behalf of the subscribing individual, xxxx, partnership, trust, estate,
corporation, or limited liability company or partnership, or other entity for
whom the Purchaser is executing this Subscription Agreement, and such
individual, partnership, xxxx, trust, estate, corporation, or limited liability
company or partnership, or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the Company,
and represents that this Subscription Agreement constitutes a legal, valid
and
binding obligation of such entity. The execution and delivery of this
Subscription Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which the Purchaser
is a party or by which it is bound;
(q) The
Purchaser and its Advisers, if any, have had the opportunity to obtain any
additional information, to the extent the Company had such information in its
possession or could acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information contained in the Memorandum and all
documents received or reviewed in connection with the purchase of the Units
and
have had the opportunity to have representatives of the Company provide them
with such additional information regarding the terms and conditions of this
particular investment and the financial condition, results of operations,
business of the Company deemed relevant by the Purchaser or the Advisers, if
any, and all such requested information, to the extent the Company had such
information in its possession or could acquire it without unreasonable effort
or
expense, has been provided to the full satisfaction of the Purchaser and its
Advisers, if any;
6
(r) Any
information which the Purchaser has heretofore furnished or is furnishing
herewith the Company or the Placement Agent is complete and accurate and may
be
relied upon by the Company and the Placement Agent in determining the
availability of an exemption from registration under federal and state
securities laws in connection with the offering of securities as described
in
the Memorandum. The Purchaser further represents and warrants that it will
notify and supply corrective information to the Company and the Placement Agent
immediately upon the occurrence of any change therein occurring prior to the
Company's issuance of the securities contained in the Units;
(s) The
Purchaser has significant prior investment experience, including investment
in
non-listed and non-registered securities. The Purchaser is knowledgeable about
investment considerations in development-stage companies with limited operating
histories. The Purchaser has a sufficient net worth to sustain a loss of its
entire investment in the Company in the event such a loss should occur. The
Purchaser's overall commitment to investments which are not readily marketable
is not excessive in view of the Purchaser’s net worth and financial
circumstances and the purchase of the Units will not cause such commitment
to
become excessive. The investment is a suitable one for the
Purchaser;
(t) The
Purchaser is satisfied that the Purchaser has received adequate information
with
respect to all matters which it or its Advisers, if any, consider material
to
its decision to make this investment;
(u) The
Purchaser acknowledges that any estimates or forward-looking statements or
projections included in the Memorandum were prepared by the Company in good
faith but that the attainment of any such projections, estimates or
forward-looking statements cannot be guaranteed by the Company and should not
be
relied upon;
(v) No
oral
or written representations have been made, or oral or written information
furnished, to the Purchaser or its Advisers, if any, in connection with the
Offering which are in any way inconsistent with the information contained in
the
Memorandum;
(w) Within
five (5) days after receipt of a request from the Company or the Placement
Agent, the Purchaser will provide such information and deliver such documents
as
may reasonably be necessary to comply with any and all laws and ordinances
to
which the Company or the Placement Agent is subject;
(x) The
Purchaser's substantive relationship with the Placement Agent or subagent
through which the Purchaser is subscribing for Units predates the Placement
Agent's or such subagent's contact with the Purchaser regarding an investment
in
the Units;
(y) THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH
LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND
SUCH
LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY
STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY
OF
THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING
OR
THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL;
7
(z) The
Purchaser acknowledges that none of the Units, the shares of Common Stock,
the
Warrants or the Warrant Shares have been recommended by any federal or state
securities commission or regulatory authority. In making an investment decision
investors must rely on their own examination of the Company and the terms of
the
Offering, including the merits and risks involved. Furthermore, the foregoing
authorities have not confirmed the accuracy or determined the adequacy of this
Subscription Agreement or the Memorandum. Any representation to the contrary
is
a criminal offense. The Warrants, the Warrant Shares and the shares of Common
Stock, are subject to restrictions on transferability and resale and may not
be
transferred or resold except as permitted under the Securities Act, and the
applicable state securities laws, pursuant to registration or exemption
therefrom. The Purchaser should be aware that it will be required to bear the
financial risks of this investment for an indefinite period of time;
(aa)
(For Employee Retirement Income Security Act (“ERISA”) plans only.
The
fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been
informed of and understands the Company’s investment objectives, policies and
strategies, and that the decision to invest “plan assets” (as such term is
defined in ERISA) in the Company is consistent with the provisions of ERISA
that
require diversification of plan assets and impose other fiduciary
responsibilities. The Purchaser fiduciary or Plan (a) is responsible for the
decision to invest in the Company; (b) is independent of the Company or any
of
its affiliates; (c) is qualified to make such investment decision; and (d)
in
making such decision, the Purchaser fiduciary or Plan has not relied primarily
on any advice or recommendation of the Company or any of its
affiliates;
(bb) The
Purchaser should check the Office of Foreign Assets Control (“OFAC”) website at
<xxxx://xxx.xxxxx.xxx/xxxx> before making the following
representations.
The
Purchaser represents that the amounts invested by it in the Company in the
Offering were not and are not directly or indirectly derived from activities
that contravene federal, state or international laws and regulations, including
anti-money laundering laws and regulations. Federal regulations and Executive
Orders administered by OFAC prohibit, among other things, the engagement in
transactions with, and the provision of services to, certain foreign countries,
territories, entities and individuals. The lists of OFAC prohibited countries,
territories, persons and entities can be found on the OFAC website at
<xxxx://xxx.xxxxx.xxx/xxxx>. In addition, the programs administered by
OFAC (the “OFAC Programs”) prohibit dealing with individuals1
or
entities in certain countries regardless of whether such individuals or entities
appear on the OFAC lists;
1 These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.
8
(cc)
To
the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any
person controlling or controlled by the Purchaser; (3) if the Purchaser is
a
privately-held entity, any person having a beneficial interest in the Purchaser;
or (4) any person for whom the Purchaser is acting as agent or nominee in
connection with this investment is a country, territory, individual or entity
named on an OFAC list, or a person or entity prohibited under the OFAC Programs.
Please be advised that the Company may not accept any amounts from a prospective
investor if such prospective investor cannot make the representation set forth
in the preceding paragraph. The Purchaser agrees to promptly notify the Company
and the Placement Agent should the Purchaser become aware of any change in
the
information set forth in these representations. The Purchaser understands and
acknowledges that, by law, the Company may be obligated to “freeze the account”
of the Purchaser, either by prohibiting additional subscriptions from the
Purchaser, declining any redemption requests and/or segregating the assets
in
the account in compliance with governmental regulations, and the Placement
Agent
may also be required to report such action and to disclose the Purchaser’s
identity to OFAC. The Purchaser further acknowledges that the Company may,
by
written notice to the Purchaser, suspend the redemption rights, if any, of
the
Purchaser if the Company reasonably deems it necessary to do so to comply with
anti-money laundering regulations applicable to the Company and the Placement
Agent or any of the Company’s other service providers. These individuals include
specially designated nationals, specially designated narcotics traffickers
and
other parties subject to OFAC sanctions and embargo programs;
(dd)
To
the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any
person controlling or controlled by the Purchaser; (3) if the Purchaser is
a
privately-held entity, any person having a beneficial interest in the Purchaser;
or (4) any person for whom the Purchaser is acting as agent or nominee in
connection with this investment is a senior foreign political figure2 , or
any
immediate family3
member or
close
associate4 of
a
senior foreign political figure, as such terms are defined in the footnotes
below; and
(ee) If
the
Purchaser is affiliated with a non-U.S. banking institution (a “Foreign Bank”),
or if the Purchaser receives deposits from, makes payments on behalf of, or
handles other financial transactions related to a Foreign Bank, the Purchaser
represents and warrants to the Company that: (1) the Foreign Bank has a fixed
address, other than solely an electronic address, in a country in which the
Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank
maintains operating records related to its banking activities; (3) the Foreign
Bank is subject to inspection by the banking authority that licensed the Foreign
Bank to conduct banking activities; and (4) the Foreign Bank does not provide
banking services to any other Foreign Bank that does not have a physical
presence in any country and that is not a regulated affiliate.
2A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.
3“Immediate
family” of a senior foreign political figure typically includes the figure’s
parents, siblings, spouse, children and in-laws.
4
A “close associate” of a senior foreign political figure is a person who is
widely and publicly known to maintain an unusually close relationship with
the
senior foreign political figure, and includes a person who is in a position
to
conduct substantial domestic and international financial transactions on behalf
of the senior foreign political figure.
9
6. Indemnification.
The
Purchaser agrees to indemnify and hold harmless the Company, the Placement
Agent, and their respective officers, directors, employees, agents, control
persons and affiliates from and against all losses, liabilities, claims,
damages, costs, fees and expenses whatsoever (including, but not limited to,
any
and all expenses incurred in investigating, preparing or defending against
any
litigation commenced or threatened) based upon or arising out of any actual
or
alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Purchaser of any covenant
or agreement made by the Purchaser herein or in any other document delivered
in
connection with this Subscription Agreement.
7. Irrevocability;
Binding Effect.
The
Purchaser hereby acknowledges and agrees that the subscription hereunder is
irrevocable by the Purchaser, except as required by applicable law, and that
this Subscription Agreement shall survive the death or disability of the
Purchaser and shall be binding upon and inure to the benefit of the parties
and
their heirs, executors, administrators, successors, legal representatives,
and
permitted assigns. If the Purchaser is more than one person, the obligations
of
the Purchaser hereunder shall be joint and several and the agreements,
representations, warranties, and acknowledgments herein shall be deemed to
be
made by and be binding upon each such person and such person's heirs, executors,
administrators, successors, legal representatives, and permitted
assigns.
8. Modification.
This
Subscription Agreement shall not be modified or waived except by an instrument
in writing signed by the party against whom any such modification or waiver
is
sought.
9.
Immaterial
Modifications to the Registration Rights Agreement. The
Company may, at any time prior to the First Closing, amend the Registration
Rights Agreement if necessary to clarify any provision therein, or supplement
the Memorandum for events occurring after the date of the Memorandum, without
first providing notice or obtaining prior consent of the Purchaser, if, and
only
if, such modification is not material in any respect.
10. Notices.
Any
notice or other communication required or permitted to be given hereunder shall
be in writing and shall be mailed by certified mail, return receipt requested,
or delivered against receipt to the party to whom it is to be given (a) if
to
the Company, at the address set forth above, or (b) if to the Purchaser, at
the
address set forth on the signature page hereof (or, in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 10). Any notice or other communication given
by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given
at
the time of receipt thereof.
11. Assignability.
This
Subscription Agreement and the rights, interests and obligations hereunder
are
not transferable or assignable by the Purchaser and the transfer or assignment
of the Units, the shares of Common Stock, the Warrants or the Warrant Shares
shall be made only in accordance with all applicable laws.
10
12. Applicable
Law.
This
Subscription Agreement shall be governed by and construed in accordance with
the
laws of the State of New York, without reference to the principles thereof
relating to the conflict of laws.
13. Arbitration. The
parties agree to submit all controversies to arbitration in accordance with
the
provisions set forth below and understand that:
(a)
Arbitration
is final and binding on the parties.
(b) The
parties are waiving their right to seek remedies in court, including the right
to a jury trial.
(c) Pre-arbitration
discovery is generally more limited and different from court
proceedings.
(d) The
arbitrator's award is not required to include factual findings or legal
reasoning and any party's right to appeal or to seek modification of rulings
by
arbitrators is strictly limited.
(e)
The
panel
of arbitrators will typically include a minority of arbitrators who were or
are
affiliated with the securities industry.
(f)
All
controversies which may arise between the parties concerning this Subscription
Agreement shall be determined by arbitration pursuant to the rules then
pertaining to the Financial Industry Regulatory Authority (the “FINRA”) in New
York City, New York. Judgment on any award of any such arbitration may be
entered in the Supreme Court of the State of New York or in any other court
having jurisdiction of the person or persons against whom such award is
rendered.
Any
notice of such arbitration or for the confirmation of any award in any
arbitration shall be sufficient if given in accordance with the provisions
of
this Subscription Agreement. The parties agree that the determination of the
arbitrators shall be binding and conclusive upon them.
14. Blue
Sky Qualification.
The
purchase of Units under this Subscription Agreement is expressly conditioned
upon the exemption from qualification of the offer and sale of the Units from
applicable federal and state securities laws. The Company shall not be required
to qualify this transaction under the securities laws of any jurisdiction and,
should qualification be necessary, the Company shall be released from any and
all obligations to maintain its offer, and may rescind any sale contracted,
in
the jurisdiction.
15. Use
of Pronouns.
All
pronouns and any variations thereof used herein shall be deemed to refer to
the
masculine, feminine, neuter, singular or plural as the identity of the person
or
persons referred to may require.
11
16. Confidentiality.
The
Purchaser acknowledges and agrees that any information or data the Purchaser
has
acquired from or about the Company, not otherwise properly in the public domain,
including, without limitation, the Memorandum, was received in confidence.
The
Purchaser agrees not to divulge, communicate or disclose, except as may be
required by law or for the performance of this Agreement, or use to the
detriment of the Company or for the benefit of any other person or persons,
or
misuse in any way, any confidential information of the Company, including any
scientific, technical, trade or business secrets of the Company and any
scientific, technical, trade or business materials that are treated by the
Company as confidential or proprietary, including, but not limited to, ideas,
discoveries, inventions, developments and improvements belonging to the Company
and confidential information obtained by or given to the Company about or
belonging to third parties.
17. Miscellaneous.
(a) This
Subscription Agreement, together with the Registration Rights Agreement,
constitute the entire agreement between the Purchaser and the Company with
respect to the subject matter hereof and supersede all prior oral or written
agreements and understandings, if any, relating to the subject matter hereof.
The terms and provisions of this Subscription Agreement may be waived, or
consent for the departure therefrom granted, only by a written document executed
by the party entitled to the benefits of such terms or provisions.
(b) The
representations and warranties of the Company and the Purchaser made in this
Subscription Agreement shall survive the execution and delivery hereof and
delivery of the shares of Common Stock and the Warrants contained in the
Units.
(c) Each
of
the parties hereto shall pay its own fees and expenses (including the fees
of
any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Subscription Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are
consummated.
(d) This
Subscription Agreement may be executed in one or more counterparts each of
which
shall be deemed an original, but all of which shall together constitute one
and
the same instrument.
(e) Each
provision of this Subscription Agreement shall be considered separable and,
if
for any reason any provision or provisions hereof are determined to be invalid
or contrary to applicable law, such invalidity or illegality shall not impair
the operation of or affect the remaining portions of this Subscription
Agreement.
(f) Paragraph
titles are for descriptive purposes only and shall not control or alter the
meaning of this Subscription Agreement as set forth in the text.
(g) The
Purchaser understands and acknowledges that there may be multiple Closings
for
the Offering.
12
18. Omnibus
Signature Page.
This
Subscription Agreement is intended to be read and construed in conjunction
with
the Registration Rights Agreement pertaining to the issuance by the Company
of
the Units, the shares of Common Stock, the Warrants and the Warrant Shares
to
subscribers pursuant to the Memorandum. Accordingly, pursuant to the terms
and
conditions of this Subscription Agreement and such related agreements it is
hereby agreed that the execution by the Purchaser of this Subscription
Agreement, in the place set forth herein, shall constitute agreement to be
bound
by the terms and conditions hereof and the terms and conditions of the
Registration Rights Agreement, with the same effect as if each of such separate
but related agreement were separately signed.
[Remainder
of page intentionally left blank]
13
How
to subscribe for Units in the private offering of
| 1. |
Date
and Fill
in
the number of Units being purchased and Complete
and Sign
the Omnibus Signature Page.
|
| 2. |
Initial
the
Accredited Investor Certification page attached to this
letter.
|
| 3. |
Complete
and
return the Investor Profile and, if applicable, Wire Transfer
Authorization attached to this
letter.
|
| 4. |
Fax
all forms to XxXxx Xxxxx at (000)
000-0000 and
then send all signed original documents with check
to:
|
Xx.
XxXxx Xxxxx
Xxxxxxx
Xxxxx Ventures, Inc.
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
| 5. |
Please
make your subscription payment payable to the order of “Signature
Bank, Escrow Agent for UFOOD RESTAURANT GROUP,
INC.”
|
For
wiring funds directly to the escrow account,
see
the following instructions:
|
Bank
Name:
|
Signature
Bank
|
|
|
ABA
Number:
|
000000000
|
|
|
A/C
Name:
|
Signature
Bank, as Agent For
|
|
|
A/C
Number:
|
1500977449
|
|
|
FBO:
|
Investor
Name
|
|
|
Social
Security Number
|
||
|
Address
|
Thank
you
for your interest,
Xxxxxxx
Xxxxx Ventures, Inc.
14
ANTI
MONEY LAUNDERING REQUIREMENTS
|
The
USA PATRIOT Act
|
What
is money laundering?
|
How
big is the problem and why is it important?
|
||
|
The
USA PATRIOT Act is designed to detect, deter, and punish terrorists
in the
United States and abroad. The Act imposes new anti-money laundering
requirements on brokerage firms and financial institutions. Since
April
24, 2002 all brokerage firms have been required to have new, comprehensive
anti-money laundering programs.
To
help you understand these efforts, we want to provide you with some
information about money laundering and our steps to implement the
USA
PATRIOT Act.
|
Money
laundering is the process of disguising illegally obtained money
so that
the funds appear to come from legitimate sources or activities. Money
laundering occurs in connection with a wide variety of crimes, including
illegal arms sales, drug trafficking, robbery, fraud, racketeering,
and
terrorism.
|
The
use of the U.S. financial system by criminals to facilitate terrorism
or
other crimes could well taint our financial markets. According to
the U.S.
State Department, one recent estimate puts the amount of worldwide
money
laundering activity at $1 trillion a
year.
|
|
What
are we required to do to eliminate money
laundering?
|
||
|
Under
new rules required by the USA PATRIOT Act, our anti-money laundering
program must designate a special compliance officer, set up employee
training, conduct independent audits, and establish policies and
procedures to detect and report suspicious transaction and ensure
compliance with the new laws.
|
As
part of our required program, we may ask you to provide various
identification documents or other information. Until you provide
the
information or documents we need, we may not be able to effect any
transactions for you.
|
|
15
OMNIBUS
SIGNATURE PAGE TO
SUBSCRIPTION
AGREEMENT AND
REGISTRATION
RIGHTS AGREEMENT
Subscriber
hereby elects to subscribe under the Subscription Agreement for a total of
______ Units at a price of $1.00 per Unit (NOTE: to be completed by subscriber)
and executes the Subscription Agreement and the Registration Rights
Agreement.
Date
(NOTE: To be completed by subscriber): __________________, 2007
_______________________________________________________________________________________________________________
If
the
Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS IN
COMMON, or as COMMUNITY PROPERTY:
|
|
|
|
|
Print
Name(s)
|
Social
Security Number(s)
|
|
|
|
|
|
|
Signature(s)
of Subscriber(s)
|
Signature
|
|
|
|
|
|
|
Date
|
Address
|
If
the
Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or
TRUST:
|
|
|
||
|
Name
of Partnership,
|
Federal
Taxpayer
|
||
|
Corporation,
Limited
|
Identification
Number
|
||
|
Liability
Company or Trust
|
|||
|
By:
|
|
||
|
Name:
|
State
of Organization
|
||
|
Title:
|
|||
|
|
|
||
|
Date
|
Address
|
||
|
By:
|
|||
|
Authorized
Officer
|
Xxxxxxx
Xxxxx Ventures, Inc.
|
16
UFOOD
RESTAURANT GROUP,
INC.
ACCREDITED
INVESTOR CERTIFICATION
For
Individual Accredited Investors Only
(all
Individual Accredited Investors must INITIAL
where appropriate):
|
Initial
_______
|
I
have a net worth (including home, furnishings and automobiles)
in excess
of $1 million either individually or through aggregating my individual
holdings and those in which I have a joint, community property
or other
similar shared ownership interest with my
spouse.
|
|
Initial
_______
|
I
have had an annual gross income for the past two years of at least
$200,000 (or $300,000 jointly with my spouse) and expect my income
(or
joint income, as appropriate) to reach the same level in the current
year.
|
|
Initial
_______
|
I
am a director or executive officer of UFood Restaurant Group, Inc.
or
KnowFat Franchise Company, Inc.
|
For
Non-Individual Accredited Investors
(all
Non-Individual Accredited Investors
must INITIAL
where appropriate):
|
Initial
_______
|
The
investor certifies that it is a partnership, corporation, limited
liability company or business trust that is 100% owned by persons
who meet
at least one of the criteria for Individual Investors set forth
above.
|
|
Initial
_______
|
The
investor certifies that it is a partnership, corporation, limited
liability company or business trust that has total assets of at
least $5
million and was not formed for the purpose of investing in the
Company.
|
|
Initial
_______
|
The
investor certifies that it is an employee benefit plan whose investment
decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is
a bank, savings and loan association, insurance company or registered
investment adviser.
|
|
Initial
_______
|
The
investor certifies that it is an employee benefit plan whose total
assets
exceed $5,000,000 as of the date of this
Agreement.
|
|
Initial
_______
|
The
undersigned certifies that it is a self-directed employee benefit
plan
whose investment decisions are made solely by persons who meet
either of
the criteria for Individual
Investors.
|
|
Initial
_______
|
The
investor certifies that it is a U.S. bank, U.S. savings and loan
association or other similar U.S. institution acting in its individual
or
fiduciary capacity.
|
|
Initial
_______
|
The
undersigned certifies that it is a broker-dealer registered pursuant
to
§15 of the Securities Exchange Act of
1934.
|
|
Initial
_______
|
The
investor certifies that it is an organization described in §501(c)(3) of
the Internal Revenue Code with total assets exceeding $5,000,000
and not
formed for the specific purpose of investing in the
Company.
|
| Initial _______ |
The
investor certifies that it is a trust with total assets of at least
$5,000,000, not formed for the specific purpose of investing in
the
Company, and whose purchase is directed by a person with such knowledge
and experience in financial and business matters that he is capable
of
evaluating the merits and risks of the prospective investment.
|
|
Initial
_______
|
The
investor certifies that it is a plan established and maintained
by a state
or its political subdivisions, or any agency or instrumentality
thereof,
for the benefit of its employees, and which has total assets in
excess of
$5,000,000.
|
| Initial _______ |
The
investor certifies that it is an insurance company as defined in
§2(13) of
the Securities Act, or a registered investment company.
|
17
Investor
Profile
(Must
be completed by Investor)
Section
A – Personal Investor Information
Investor
Name(s):
______________________________________________________________________________
Individual
executing Profile or Trustee:
_____________________________________________________________
Social
Security Numbers / Federal I.D. Number:
______________________________________________________
|
Date
of Birth:
|
____________________ |
Marital
Status: _________________________
|
|
Joint
Party Date of Birth:
|
____________________ |
Investment
Experience (Years): ____________
|
|
Annual
Income:
|
____________________ |
Liquid
Net Worth: _______________________
|
|
Net
Worth:
|
____________________ |
Tax
Bracket: ______
15% or below _____ 25% -
27.5% _____ Over 27.5%
|
Investment
Objectives (circle
one or more):
|
Preservation
of Capital, Income, Capital Appreciation, Trading Profits, Speculation
or
Other (please specify) * See definitions on following
page
|
Home
Street Address:
_____________________________________________________________________________
Home
City, State & Zip Code:
_______________________________________________________________________
Home
Phone: ________________________ Home Fax: _____________________ Home Email:
__________________
Employer:
______________________________________________________________________________________
Employer
Street Address:
__________________________________________________________________________
Employer
City, State & Zip Code:
____________________________________________________________________
Bus.
Phone: __________________________ Bus. Fax: __________________________ Bus.
Email: _______________
Type
of
Business:
_______________________________________________________________________________
Xxxxxxx
Xxxxx Account Executive / Outside Broker/Dealer:
_________________________________________________
If
you
are a United
States citizen,
please
list the number and jurisdiction of issuance of any other government-issued
document evidencing residence and bearing a photograph or similar safeguard
(such as a driver’s license or passport), and provide
a photocopy
of each
of the documents you have listed.
______________________________________________________________________________________________
If
you
are NOT
a
United
States citizen,
for
each jurisdiction of which you are a citizen or in which you work or reside,
please list (i) your passport number and country of issuance or (ii) alien
identification card number AND
(iii)
number and country of issuance of any other government-issued document
evidencing nationality or residence and bearing a photograph or similar
safeguard, and provide a photocopy of each of these documents you have listed.
These photocopies must be certified by a lawyer as to authenticity.
______________________________________________________________________________________________
Section
B – Certificate Delivery Instructions
____
Please deposit certificate in my Xxxxxxx Xxxxx Account #
_____________________________________.
____
Please open a Xxxxxxx Xxxxx account and subsequently deposit my certificate
in
it.
____
Please deliver certificate to the Employer Address listed in Section
A.
____
Please deliver certificate to the Home Address listed in Section A.
____
Please deliver certificate to the following address:
___________________________________________.
Section
C – Form of Payment – Check or Wire Transfer
____
Check payable to Signature
Bank, as Escrow Agent for UFood Restaurant Group,
Inc.
____
Wire
funds from my outside account according to the "How to subscribe for Units"
Page.
____
Wire
funds from my Xxxxxxx Xxxxx Account - See Following Page.
____
The
funds for this investment are rolled over, tax deferred from __________ within
the allowed 60 day window.
Please
check if you are a FINRA member or affiliate of a FINRA member firm:
________
|
_________________________
|
______________________
|
|
|
Investor
Signature
|
Date
|
18
Investment
Objectives:
The
typical investment listed with each objective are only some examples of the
kinds of investments that have historically been consistent with the listed
objectives. However, neither UFood Restaurant Group, Inc. nor Xxxxxxx Xxxxx
Ventures, Inc. can assure that any investment will achieve your intended
objective. You must make your own investment decisions and determine for
yourself if the investments you select are appropriate and consistent with
your
investment objectives.
Neither
UFood Restaurant Group, Inc. nor Xxxxxxx Xxxxx Ventures, Inc. assume
responsibility to you for determining if the investments you selected are
suitable for you.
Preservation
of Capital:
An
investment objective of Preservation
of Capital
indicates you seek to maintain the principal value of your investments and
are
interested in investments that have historically demonstrated a very low degree
of risk of loss of principal value. Some examples of typical investments might
include money market funds and high quality, short-term fixed income
products.
Income:
An
investment objective of
Income indicates
you seek to generate from investments and are interested in investments that
have historically demonstrated a low degree of risk of loss of principal value.
Some examples of typical investments might include high quality, short and
medium-term fixed income products, short-term bond funds and covered call
options.
Capital
Appreciation:
An
investment objective of Capital
Appreciation
indicates you seek to grow the principal value of your investments over time
and
are willing to invest in securities that have historically demonstrated a
moderate to above average degree of risk of loss of principal value to pursue
this objective. Some examples of typical investments might include common
stocks, lower quality, medium-term fixed income products, equity mutual funds
and index funds.
Trading
Profits:
An
investment objective of Trading
Profits
indicates you seek to take advantage of short-term trading opportunities, which
may involve establishing and liquidating positions quickly. Some examples of
typical investments might include short-term purchases and sales of volatile
or
low priced common stocks, put or call options, spreads, straddles and/or
combinations on equities or indexes. This is a high-risk strategy.
Speculation:
An
investment objective of Speculation
indicates
you seek a significant increase in the principal value of your investments
and
are willing to accept a corresponding greater degree of risk by investing in
securities that have historically demonstrated a high degree of risk of loss
of
principal value to pursue this objective. Some examples of typical investments
might include lower quality, long-term fixed income products, initial public
offerings, volatile or low priced common stocks, the purchase of sale of put
or
call options, spreads, straddles and/or combinations on equities or indexes,
and
the use of short-term or day trading strategies.
Other:
Please
specify.
19
Memorandum
Wire
Transfer Authorization
|
TO:
|
Xxxxx
Xxxxx - Operations Manager
|
|
|
Xxxxxxx
Xxxxx Ventures, Inc.
|
||
|
RE:
|
Client
Wire Transfer Authorization
|
|
|
UFOOD
RESTAURANT GROUP,
INC.
|
||
|
DATE:
|
________________
|
This
memorandum authorizes the transfer of the following listed funds from my
Xxxxxxx
Xxxxx Brokerage Account as follows:
|
Xxxxxxx
Xxxxx Brokerage Account #
|
______________________
|
|
|
Wire
Amount
|
$______________________
|
|
BANK NAME:
|
SIGNATURE
BANK
|
|
|
ABA NUMBER:
|
000000000
|
|
|
A/C NAME:
|
SIGNATURE
BANK, AS AGENT FOR
|
|
|
UFOOD
RESTAURANT GROUP, INC.
|
||
|
A/C
Number:
|
1500977449
|
REFERENCE:
SUBSCRIBER
LEGAL NAME
______________________________________________________
TAX
ID NUMBER
______________________________________________________
SUBSCRIBER
ADDRESS
______________________________________________________
|
________________________________________________
|
|
|
Investment
Title:
|
________________________________________________
|
|
Signature:
|
________________________________________________
|
|
________________________________________________
|
|
|
(Joint
Signature)
|
20
