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EXHIBIT 10.10
SUBSCRIPTION AGREEMENT
THIS AGREEMENT MADE EFFECTIVE AS OF THE 22nd DAY OF SEPTEMBER, 1999 (the
"Effective Date")
BETWEEN:
WESTERN FOOD DISTRIBUTORS, INC.
000-0 Xxxxxxxx
Xxxxxxxx
Xxxxx 252 0815
(the "Company")
AND:
THE PARTY NAMED AS PURCHASER BELOW
(the "Purchaser")
WHEREAS:
A. The Purchaser wishes to subscribe for 933,300 units, where each unit consists
of one common share and one-half of one non-transferable share purchase warrant
of the Company (the "Securities");
B. It is the intention of the parties to this Agreement that this subscription
will be made pursuant to appropriate exemptions (the "Exemptions") from the
registration and prospectus or equivalent requirements of all rules, policies,
notices, orders and legislation of any kind whatsoever (collectively the
"Securities Rules") of all jurisdictions applicable to this subscription;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained, the receipt of which is hereby
acknowledged, the parties covenant and agree with each other (the "Agreement")
as follows:
1. Representative and Warranties of the Purchaser
1.1. The Purchaser represents and warrants to the Company, and acknowledges that
the Company is relying on these representations and warranties to, among other
things, ensure that it is complying with all of the applicable Securities Rules,
that:
(a) the Purchaser is purchasing a sufficient number of Securities such
that the aggregate acquisition cost to the Purchaser of such
Securities is not less than $97,000, if the Purchaser is a resident of
British Columbia, Alberta,
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Manitoba, New Brunswick, Xxxxxx Xxxxxx Island, Newfoundland or an
International Jurisdiction, or $150,000 if the Purchaser is a resident
of Saskatchewan, Ontario, Quebec or Nova Scotia and the Purchaser is:
(i) purchasing such Securities as principal for its own account
and not for the benefit of any other person; or
(ii) deemed to be acting as principal by virtue of it being:
A. a trust company or insurer which is authorized to carry
on business in B.C. under the Financial Institutions
Act (British Columbia) and which is acting as agent or
trustee for accounts that are fully managed by it
within the meaning of ss. 74(1)(a) of the Securities
Act (British Columbia (the "Act") and NIN #97/11 is
issued by the B.C. Securities Commission (the
"Commission")); or
B. a portfolio manager within the meaning of ss. 1(1) of
the Act which is carrying on business in B.C. and which
is registered or exempt from registration under the Act
and which is acting as agent for accounts that are
fully managed by it within the meaning of ss. 74(1)(b)
of the Act and NIN #97/11; or
C. a trust company, insurer or portfolio manager within
the meaning of BOR #97/4 issued by the Commission which
is acting, in the case of a trust company or insurer,
as agent or trustee or, in the case of a portfolio
manager, as agent, for accounts that are fully managed
by it within the meaning of BOR #97/4 and NIN #97/11;
and the Purchaser is also deemed to be acting as principal
under the analogous provisions of any other Securities Rules
having application;
(b) the Purchaser has not been formed, created, established or
incorporated for the purpose of permitting the purchase of the
Securities without a prospectus by groups of individuals whose
individual share of the aggregate acquisition cost for such Securities
is less than $97,000, if the beneficial purchaser is a resident of
British Columbia, Alberta, Manitoba, New Brunswick, Xxxxxx Xxxxxx
Island, Newfoundland or an International Jurisdiction, or $150,000 if
the beneficial purchaser is a resident of Saskatchewan, Ontario,
Quebec or Nova Scotia;
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(c) the Purchaser is resident of an "International Jurisdiction"
(which means a country other than Canada or the United States) and
the Purchaser further represents and warrants that:
(i) the Purchaser is knowledgeable of, or has been
independently advised as to, the applicable
Securities Rules of the International Jurisdiction
which would apply to this subscription, if there are
any;
(ii) the Purchaser is purchasing the Securities pursuant
to Exemptions under the Securities Rules of that
International Jurisdiction or, if such is not
applicable, the Purchaser is permitted to purchase
the Securities under the applicable Securities Rules
of the International Jurisdiction without the need
to rely on Exemptions; and
(iii) the applicable Securities Rules do not require the
Company to make any filings or seek any approvals of
any kind whatsoever from any regulatory authority of
any kind whatsoever in the International
Jurisdiction; and
the Purchaser will, if requested by the Company, deliver to the
Company a certificate or opinion of local counsel from the
International Jurisdiction which will confirm the matters referred
to in subparagraphs (ii) and (iii) above to the satisfaction of
the Company, acting reasonably;
(d) [intentionally left blank]
(e) the Purchaser acknowledges that the Company is relying on the
Exemptions in order to complete the trade and distribution of the
Securities and the Purchaser is aware of the criteria of the
Exemptions to be met by the Purchaser, and if applicable, the
Purchaser meets those criteria;
(f) the Purchaser acknowledges that because this subscription is being
made pursuant to the Exemptions:
(i) the Purchaser is restricted from using certain of
the civil remedies available under the applicable
Securities Rules;
(ii) the Purchaser may not receive information that might
otherwise be required to be provided to the
Purchaser under the applicable Securities Rule if
the Exemptions were not being used; and
(iii) the Company is relieved from certain obligations
that would otherwise apply under the applicable
Securities Rules if the Exemptions were not being
used;
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(iv) no securities commission, stock exchange or similar
regulatory authority has reviewed or passed on the
merits of the Securities;
(v) there is no government or other insurance covering
the Securities;
(vi) there are risks associated with the purchase of the
Securities;
(vii) there are restrictions on the Purchaser's ability to
resell the Securities and it is the responsibility
of the Purchaser to find out what those restrictions
are and to comply with them before selling the
Securities.
(g) the Securities are not being subscribed for by the Purchaser as a
result of any material information about the Company's affairs
that has not been publicly disclosed;
(h) the offer and sale of these Securities was not accompanied by an
advertisement and the Purchaser was not induced to purchase these
Securities as a result of any advertisement made by the Company;
(i) if the Purchaser is a corporation, the Purchaser is a valid and
subsisting corporation, has the necessary corporate capacity and
authority to execute and deliver this Agreement and to observe and
perform its covenants and obligations hereunder and has taken all
necessary corporate action in respect thereof, or, if the
Purchaser is a partnership, syndicate, trust or other form of
unincorporated organization, the Purchaser has the necessary legal
capacity and authority to execute and deliver this Agreement and
to observe and perform its covenants and obligations hereunder and
has obtained all necessary approvals in respect thereof, and, in
either case, upon the Company executing and delivering this
Agreement, this Agreement will constitute a legal, valid and
binding contract of the Purchaser enforceable against the
Purchaser in accordance with its terms and neither the agreement
resulting from such acceptance nor the completion of the
transactions contemplated hereby conflicts with, or will conflict
with, or results, or will result, in a breach or violation of any
law applicable to the Purchaser, any constating documents of the
Purchaser or any agreement to which the Purchaser is a party or by
which the Purchaser is bound;
(j) the Purchaser is not, and was not at any time that it purchased
the Securities or received an offer to purchase the Securities
pursuant to this subscription, a "U.S. Person" as defined in
Regulation S under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act"), which definition includes,
but is not limited to, an individual resident in
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the United States, an estate or trust of which any executor or
administrator or trustee, respectively, is a U.S. person, and any
partnership or corporation organized or incorporated under the
laws of the United States;
(k) the Purchaser did not receive any term sheet, subscription from or
other offering materials in connection with this subscription in
the United States, and did not execute or deliver any such
subscription form or other materials in the United States;
(l) no offers of Securities were made by any person to the Purchaser
while the Purchaser was in the United States; and
(m) the Purchaser is not acquiring Securities, directly or indirectly,
for the account or benefit of a U.S. Person or a person in the
United States.
1.2. The company represents and warrants to the Purchaser, and acknowledges that
the Purchaser is relying on these representations and warranties in entering
into this Agreement, that:
(a) the Company is a valid and subsisting corporation duly
incorporated and in good standing under the laws of Nevada;
(b) the Company is not a reporting issuer in British Columbia and any
Securities issued to the Purchaser that are or become subject to
the laws of British Columbia (if any) will be subject to an
indefinite hold period in British Columbia unless an exemption
from the registration and prospectus requirements of the
Securities Act is available. Such an exemption may not be
available;
(c) the Company's subsidiaries (the "Subsidiaries"), if any, are valid
and subsisting corporations and in good standing under the laws of
the jurisdiction in which they were incorporated;
(d) the common shares of the Company are eligible for quotation on the
N.A.S.D. OTC Bulletin Board ("OTC");
(e) upon their issuance, the Shares (as defined below) will be validly
issued and outstanding fully paid and non-assessable common shares
of the Company registered as directed by the Purchaser, free and
clear of all trade restrictions (except as may be imposed by
operation of the applicable Securities Rules) and, except as may
be created by the Purchaser, liens, charges or encumbrances of any
kind whatsoever;
(f) upon their issuance, the Warrants (as defined below) will be
validly created, issued and outstanding, registered as directed by
the Purchaser, and, upon their issuance, the shares issued on the
exercise of the Warrants will be validly issued and outstanding
fully paid and non-assessable common shares of the Company
registered as directed by the Purchaser,
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and both will be free and clear of all trade restrictions (except
as may be imposed by operation of the applicable Securities Rules)
and, except as may be created by the Purchaser, liens, charges or
encumbrances of any kind whatsoever;
(g) the Company and its Subsidiaries, if any, hold all licenses and
permits that are required for carrying on their business in the
manner in which such business has been carried on and the Company
and its Subsidiaries, if any, have the corporate power and
capacity to own the assets owned by them and to carry on the
business carried on by them and they are duly qualified to carry
on business in all jurisdictions in which they carry on business;
(h) all prospectuses, exchange offering prospectuses, offering
memorandums, filing statements, information circulars, material
change reports, shareholder communications, press releases and
other disclosure documents of the Company including, but not
limited to, financial statements, contain no untrue statement of a
material fact as at the date thereof nor do they omit to state a
material fact which, at the date thereof, was required to have
been stated or was necessary to prevent a statement that was made
from being false or misleading in the circumstances in which it
was made;
(i) to the best of its knowledge, and except as publicly disclosed,
there are no material actions, suits, judgments, investigations or
proceedings of any kind whatsoever outstanding, pending or
threatened against or affecting the Company or its Subsidiaries,
if any, at law or in equity or before or by any Federal,
Provincial, State, Municipal or other governmental department,
commission, board, bureau or agency of any kind whatsoever and, to
the best of the Company's knowledge, there is no basis therefor;
(j) the Company has good and sufficient right and authority to enter
into this Agreement and complete its transactions contemplated
under this Agreement on the terms and conditions set forth herein;
and
(k) to the best of its knowledge, the execution and delivery of this
Agreement, the performance of its obligations under this Agreement
and the completion of its transactions contemplated under this
Agreement will not conflict with, or result in the breach of or
the acceleration of any indebtedness under, or constitute default
under, the constating documents of the Company or any indenture,
mortgage, agreement, lease, license or other instrument of any
kind whatsoever to which the Company is a party or by which it is
bound, or any judgment or order of any kind whatsoever of any
Court or administrative body of any kind whatsoever by which it is
bound.
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2. Subscription
2.1. The Purchaser hereby subscribes the subscription funds (the "Subscription
Funds") referred to below for and agrees to take up the units (a "Unit" or the
"Units") referred to below, where each Unit consists of one common share with a
par value of U.S. $0.001 in the capital stock of the Company (a "Share" or the
"Shares") and one-half of one non-transferable share purchase warrant (a
"Warrant" or the "Warrants"), at a price of U.S. $5.63 per Unit. Each whole
Warrant will entitle the Purchaser to subscribe for one additional common share
of the Company at a price of U.S. $5.63 per share at any time up to 5:00 p.m.
local time in Seattle, Washington on the first anniversary of the Closing Date,
and thereafter at a price of U.S. $6.75 per share at any time up to 5:00 p.m.
local time on the second anniversary of the Closing Date.
2.2. The Purchaser has delivered the Subscription Funds for the Securities
subscribed for in the form of solicitor's trust cheque, certified cheque, bank
draft, money order or wire transfer payable to "Xxxxxxx & Xxxxxx In Trust" as
the solicitors for and on behalf of the Company. Xxxxxxx & Xxxxxx will be
entitled to release the Subscription Funds on the terms set forth in Article 5
of this Subscription Agreement.
3. Covenants, Agreements and Acknowledgments
3.1. The Purchaser covenants and agrees with the Company to hold and not sell,
transfer or in any manner dispose of the Shares comprising the Units or any
shares acquired on the exercise of the Warrants comprising the Units unless the
sale, transfer or disposition is made in accordance with all applicable
Securities Rules.
3.2. The Purchaser acknowledges and agrees that the Shares comprising the
Units and any shares acquired on the exercise of the Warrants comprising the
Units will be subject to such trade restrictions as may be imposed by operation
of the applicable Securities Rules, and the share certificate or certificates
representing the Shares comprising the Units and any shares acquired on the
exercise of the Warrants comprising the Units will bear such legends as may be
required by the applicable Securities Rules. The Purchaser further acknowledges
and agrees that it is the Purchaser's obligation to comply with the trade
restrictions in all of the applicable jurisdictions and the Company offers no
advice as to those trade restrictions.
3.3. The Purchaser acknowledges that:
(a) the Securities have not been registered under the U.S. Securities
Act and are "restricted securities" within the meaning of Rule 144
under the U.S. Securities Act and may only be resold in accordance
with the provisions of Regulation S under the U.S. Securities Act,
pursuant to registration under the U.S. Securities Act, or
pursuant to an available exemption from such registration. The
Purchaser understands that the Company has no obligation or
present intention of filing a registration statement under the
U.S. Securities Act in respect of the Securities;
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(b) hedging transactions involving the Securities may not be conducted
unless in compliance with the U.S. Securities Act;
(c) there may be material tax consequences to the Purchaser of an
acquisition or disposition of Securities. The Company gives no
opinion and makes no representation with respect to the tax
consequences to the Purchaser under United States, state, local or
foreign tax law of the Purchaser's acquisition or disposition of
such securities;
(d) the certificates evidencing the Securities issued in this
subscription will bear a legend in substantially the following
form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY STATE, AND
MAY BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED
ONLY (i) TO THE COMPANY; (ii) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH REGULATION S UNDER THE 1933 ACT; (iii) IN
ACCORDANCE WITH RULE 144 UNDER THE 1933 ACT; OR (iv) IN A
TRANSACTION THAT IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE
1933 ACT AND APPLICABLE STATE SECURITIES LAWS, PROVIDED, PRIOR TO
ANY SUCH SALE, TRANSFER OR ASSIGNMENT, THE COMPANY SHALL HAVE
RECEIVED AN OPINION OF COUNSEL IN FORM ACCEPTABLE TO THE COMPANY,
THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT
FROM ANY PROPOSED TRANSFER OR ASSIGNMENT. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.";
(e) the Company is required to refuse to register any transfer of the
Securities not made in accordance with the provisions of the
Regulation S under the U.S. Securities Act, pursuant to
registration under the U.S. Securities Act, or pursuant to an
available exemption from such registration; and
(f) any person who exercised a Warrant will be required to provide to
the Company either:
(i) written certification that it is not a U.S. Person
and that such Warrant is not being exercised within
the United States or on behalf of, or for the
account or benefit of, a U.S. Person; or
(ii) a written opinion of counsel or other evidence
satisfactory to the Company to the effect that the
Warrants and the
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common shares issuable on the exercise of the
Warrants have been registered under the 1933 Act and
applicable state securities laws or are exempt from
registration thereunder.
3.4. The Company covenants and agrees with the Purchaser to file any documents
necessary to be filed under the applicable Securities Rules with respect to this
subscription within the required time.
4. [Intentionally left blank]
5. Closing
5.1. The Completion of the subscription contemplated under this Agreement
shall occur on or before October 4, 1999 or such later date agreed to in writing
by the parties hereto (the "Closing Date").
No later than the Closing Date, the Company shall deliver a treasury order (the
"Treasury Order") to its transfer agent sufficient to cause the transfer agent
to issue to the Purchaser a share certificate or certificates representing the
Shares and the Company shall issue a warrant certificate or certificates
representing the Warrants comprising the Units as provided for below by the
Purchaser.
5.2. The Purchaser and the Company hereby mutually agree that upon the Company
advising Xxxxxxx & Xxxxxx that the Company is in a position to satisfy the
closing conditions set forth in paragraph 5.1 and upon:
(a) the Company's transfer agent giving written confirmation to
Xxxxxxx & Xxxxxx that it has received the Treasury Order, will
prepare the share certificates representing the Shares and will
deliver such certificates to Xxxxxxx & Xxxxxx for delivery to the
Purchaser, or to the direction of the Purchaser; and
(b) the Company advising Xxxxxxx & Xxxxxx that it is holding the
warrant certificate for immediate delivery to, or to the direction
of, the Purchaser;
Xxxxxxx & Xxxxxx is irrevocably authorized and directed by the parties hereto to
release and deliver the Subscription Funds, together with any accrued interest
thereon, to the Company or for use as directed by the Company without prior
notice to, consent of or action by the Purchaser or the Company and that Xxxxxxx
& Xxxxxx can rely and act on this irrevocable direction as if it was a party to
this Agreement.
6. General
6.1. For the purposes of this Agreement, time is of the essence.
6.2. The parties hereto shall execute and deliver all such further documents
and instruments and do all such acts and things as may, either before or after
the execution of
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this Agreement, be reasonably required to carry out the full intent and meaning
of this Agreement.
6.3. This Agreement shall be subject to, governed by and construed in
accordance with the laws of Nevada.
6.4. This Agreement may not be assigned by either party hereto.
6.5. This Agreement may be signed by the parties in as many counterparts as
may be deemed necessary, each of which so signed shall be deemed to be an
original, and all such counterparts together shall constitute one and the same
instrument. A copy of this Agreement transmitted by facsimile shall be treated
and relied upon for all purposes by any person as an originally signed copy.
IN WITNESS WHEREOF the parties have executed this written Agreement effective as
of the Effective Date.
WESTERN FOOD DISTRIBUTORS, INC.
Per: /s/ Xxxx XxXxxx
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Authorized Secretary
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TO BE COMPLETED BY THE PURCHASER:
A. Name and Address (Note: Cannot be a U.S. Address) The name and address (to
establish the Purchaser's jurisdiction of residence for the purpose of
determining the applicable Securities Rules) of the purchaser (the "Purchaser")
is as follows:
Savoy Holdings Limited
---------------------------------
Name
Xxxxx 0X - Xxxxxxx Xxxxx
---------------------------------
Xxxxxx Address
000 Xxxx Xxxxxx
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Gibraltar
---------------------------------
Country
B. Registration Instructions (Note: Cannot be a U.S. Address) The name and
address of the person in whose name the Purchaser's Securities are to be
registered is as follows (if the name and address is the same as was inserted in
paragraph A above, then insert "N/A"):
N/A
---------------------------------
Name
---------------------------------
Street Address
---------------------------------
City and Province
---------------------------------
Country
---------------------------------
Postal Code
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C. Delivery Instructions (Note: Cannot be a U.S. Address) The name and address
of the person to whom the certificates representing the Purchaser's Securities
referred to in paragraph A above are to be delivered is as follows (if the name
and address is the same as was inserted in paragraph A above, then insert
"N/A"):
N/A
---------------------------------
Name
---------------------------------
Street Address
---------------------------------
City and Province
---------------------------------
Country
---------------------------------
Postal Code
D. Subscription Amount. The Minimum is Cdn. $97,000 if the Purchaser is a
resident (as per the address inserted in paragraph A above) of British Columbia,
Alberta, Manitoba, New Brunswick, Xxxxxx Xxxxxx Island, Newfoundland or an
International Jurisdiction, or Cdn. $150,000 if the Purchaser is a resident of
Saskatchewan, Ontario, Quebec or Nova Scotia:
Subscription Funds: U.S. $5,254,479
Number of Units: 933,300 Units (where each Unit consists
of one share and one-half of one share
purchase warrant. Each whole share
purchase warrant will entitle the
Purchaser to subscribe for one
additional common share of the Company
on the terms set forth in paragraph 2.1
of this Subscription Agreement).
Note: The number of Units must equal the Subscription Funds
divided by price of U.S. $5.63 per Unit.
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TO BE COMPLETED AND SIGNED BY THE PURCHASER:
SAVOY HOLDINGS LIMITED
Name of the "Purchaser" - use the name inserted in paragraph A above.
Per:
/s/
---------------------------------
Signature of Purchaser
Director
---------------------------------
Title (if applicable)
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