UNDERWRITING AGREEMENT
Between
MFC MERCHANT BANK S.A.
and
EURO TRADE & FORFAITING, INC.
Dated
November 14, 2000
2
TABLE OF CONTENTS
UNDERWRITER'S FEE AND EXPENSES.........................................1
SUBSTITUTED PURCHASERS.................................................1
TERMS AND CONDITIONS...................................................2
1. Definitions.....................................................2
2. Representations and Warranties of the Company...................4
3. Covenants of the Company........................................6
4. Material Changes................................................7
5. Due Diligence...................................................8
6. Indemnity and Contribution......................................8
7. Conditions of Closing..........................................10
8. Closing Procedures. 11
9. Expenses of Issue..............................................12
10. Termination....................................................12
11. Underwriter's Obligations......................................12
12. Miscellaneous..................................................14
SCHEDULE 1...........................................................1-1
SCHEDULE 2...........................................................2-1
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UNDERWRITING AGREEMENT
November 14, 2000
EURO TRADE & FORFAITING, INC.
42 Brook Street
London, England
W1Y 1YB
Dear Sirs:
MFC Merchant Bank S.A. (the "Underwriter") hereby offers to purchase
from Euro Trade & Forfaiting, Inc. (the "Company") and the Company by its
acceptance hereof agrees to create, issue and sell to the Underwriter
securities underlying a total of 8,500,000 units (the "Units") for a
purchase price (the "Purchase Price") of $1.35 per Unit. Each Unit is
comprised of one common share in the capital of the Company (a "Share")
and one share purchase warrant (a "Warrant"). Each Warrant will entitle
the holder thereof to purchase one further Share for a purchase price of
$1.35 which Warrant shall be exercisable for a period of five years from
the date of issuance. The agreement made by the Company's acceptance
hereof is conditional upon and subject to the terms and conditions
described below. Unless otherwise noted, any reference to dollars herein
is to lawful currency of the United States.
Underwriter's Fee and Expenses
In consideration of the Underwriter's agreement to purchase the Units
and in return for the Underwriter's services in:
(a) acting as financial adviser to the Company; and
(b) purchasing and distributing the Units in accordance with this
Agreement,
the Company agrees to pay to the Underwriter at the Closing (as defined
below) and in the manner specified in section 8 hereof, a fee (the
"Underwriting Fee") per Unit purchased equal to $0.108 ($918,000 in
aggregate). The Company further agrees to pay to the Underwriter, in the
manner specified in section 8 hereof, a fee (the "Warrant Fee") per
Warrant exercised equal to $0.108 ($918,000 in aggregate if all Warrants
are exercised).
Whether or not the transactions contemplated herein are completed,
unless they are not completed by reason of a breach by the Underwriter of
its obligations hereunder, the Company will pay forthwith upon receiving
an account or accounts therefor, all expenses incurred by the Underwriter
in connection with the transactions and procedures contemplated by this
Agreement, including all legal fees incurred by the Underwriter.
Substituted Purchasers
Although this offer is made by the Underwriter as purchaser as herein
provided, the Underwriter will endeavour prior to the Closing Date (as
defined below) to arrange for qualified purchasers (which, together with
the Underwriter, are sometimes collectively referred to herein as the
"Substituted Purchasers") for the Units on a "private placement" basis.
Substituted Purchasers may include associates or affiliates of the
Underwriter (as such terms are defined under Rule 405 of the General Rules
and Regulations of the Securities Act (as defined below)).
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It is understood and agreed that the obligations of the Underwriter
hereunder will not be discharged or reduced by any substitution of
purchasers except in respect of payment of the Purchase Price for the
Units and then only to the extent that the Substituted Purchasers pay at
the Closing the Purchase Price for each Unit subscribed for by them.
It is further understood that the Underwriter (A) will offer to sell
the Units (the "Exempt Resales") only to, and will solicit offers to buy
the Units only from purchasers that the Underwriter reasonably believes
are Qualified Institutional Buyers or non U.S. Persons outside the United
States in reliance upon Regulation S provided that no Exempt Resales are
made in Canada (each, a "Regulation S Investor"), (B) acknowledges and
agrees that, in the case of such Qualified Institutional Buyers or
Regulation S Investors such Shares or Warrants underlying the Units, or
Shares underlying the Warrants, will not have been registered under the
Securities Act and may be resold, pledged or otherwise transferred only
(x)(I) to a person whom the seller reasonably believes is a Qualified
Institutional Buyer purchasing for its own account or for the account of a
Qualified Institutional Buyer in a transaction meeting the requirements of
Rule 144A, (II) in an offshore transaction (as defined in Rule 902 under
the Securities Act) meeting the requirements of Rule 904 under the
Securities Act, (III) in a transaction meeting the requirements of Rule
144 under the Securities Act, (IV) to an institutional "Accredited
Investor" as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act (an "Accredited Investor") that, prior to such
transfer, furnishes to the Company an opinion of counsel or other
documentation containing certain representations and agreements relating
to the registration or transfer of the Shares and Warrants underlying the
Units, or Shares underlying the Warrants, that such transfer is in
compliance with the Securities Act, or (V) in accordance with another
exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (y) to the
Company, (z) pursuant to an effective registration statement under the
Securities Act and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction and (C) that the holder will, and each subsequent holder is
required to, notify any purchaser of the security evidenced thereby of the
resale restrictions set forth in (B) above. Each Substituted Purchaser
will enter into a Subscription Agreement (as defined below) with the
Company. The Underwriter will notify the Company with respect to the
identities of Substituted Purchasers in sufficient time to allow the
Company to comply with all applicable regulatory requirements, all
requirements under the Securities Laws (as defined below) to be complied
with by the Company as a result of the offering and sale of the Units to
such Substituted Purchasers on a "private placement" basis.
The Company and the Underwriter shall use their best efforts to file
or cause to be filed all forms, documents and undertakings required to be
filed by the Company and the Substituted Purchasers, respectively, in
connection with the purchase and sale of the Units and the Underwriter
will use its best efforts to cause Substituted Purchasers to complete and
file any requisite forms. Neither the Company nor the Underwriter shall
provide to prospective Substituted Purchasers an "offering memorandum"
within the meaning of that term under the Securities Laws or do anything
which would require the Company or the Underwriter to provide such an
"offering memorandum" to them.
Terms and Conditions
The foregoing offer is subject to the following terms and conditions
which, by accepting this offer, the Company shall be deemed to have agreed
to fulfil and carry out insofar as such terms and conditions are required
to be complied with by the Company or which relate to matters within the
control of the Company:
1. Definitions.
As used in this Agreement, unless the context otherwise requires:
(a) "Closing" means the completion of the issue and sale by the
Company and the purchase by the Underwriter or Substituted
Purchasers of the Units pursuant to this Agreement;
(b) "Closing Date" means such date as the Company and the
Underwriter may agree but in any event no later than November
14, 2000;
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(c) "Closing Time" means 9:00 a.m. (Geneva, Switzerland time) on
the Closing Date or such other time on the Closing Date as
the Company and the Underwriter may agree;
(d) "material" means material in relation to the Company and its
subsidiary considered on a consolidated basis;
(e) "material change" means any change in the business,
operations, assets, liabilities, ownership or capital of the
Company and its subsidiary considered on a consolidated basis
that would reasonably be expected to have a significant
effect on the market price or value of the Shares underlying
the Units and includes a decision to implement such a change
made by the board of directors of the Company or by senior
management of the Company who believe that confirmation of
the decision by the board of directors is probable;
(f) "material fact" means any fact that significantly affects or
would reasonably be expected to have a significant effect on
the market price or value of the Shares underlying the Units;
(g) "misrepresentation" means an untrue statement of a material
fact or an omission to state a material fact that is required
to be stated or is necessary to prevent a statement that is
made from being false or misleading in the circumstances in
which it was made;
(h) "Qualified Institutional Buyer" shall have the meaning
attributed thereto in Rule 144A;
(i) "Regulation S" means Regulation S under the Securities Act;
(j) "Rule 144A" means Rule 144A under the Securities Act;
(k) "SEC" means the Securities and Exchange Commission of the
United States;
(l) "Securities Act" means the Securities Act of 1933, as
amended, of the United States;
(m) "Securities Laws" means the applicable securities laws of the
United States and the respective regulations, forms and rules
thereunder;
(n) "Shares" means the common shares in the capital of the
Company;
(o) "Subscription Agreement" means the agreement to be entered
into between each Substituted Purchaser and the Company
substantially in the form of Schedule 2 hereto;
(p) "subsidiary" has the meaning ascribed to it under Rule 405 of
the General Rules and Regulations of the Securities Act;
(q) "Term Sheet" means the term sheet in the form of Schedule 1
hereto;
(r) "United States" means the United States of America as that
term is defined in Regulation S;
(s) "Units" means the units of the Company being offered
hereunder and comprised of one Share and one Warrant;
(t) "U.S. Person" means a U.S. Person as that term is defined in
Regulation S; and
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(u) "Warrants" means the share purchase warrants of the Company
which entitle the holder thereof to purchase one Share for
each Warrant held at a purchase price of $1.35 for a period
of five years from their date of issuance.
2. Representations and Warranties of the Company.
By accepting this offer the Company represents and warrants to and
covenants and agrees with the Underwriter as follows:
(a) the Company's audited annual consolidated financial
statements and annual report on Form 10-K for the year ended
June 30, 2000, all material change reports and all quarterly
reports issued by the Company subsequent to June 30, 2000
were, at their respective dates of issue or publication, true
and correct in all material respects and were prepared in
accordance with and complied with the laws, regulations and
rules applicable thereto;
(b) no press release issued by the Company subsequent to June 30,
2000 contains a misrepresentation;
(c) there has been no adverse material change in relation to the
Company and its subsidiary since June 30, 2000 and no
material adverse fact exists in relation to the Shares
underlying the Units and Warrants which has not been
generally disclosed;
(d) the authorized capital of the Company consists of 50,000,000
common shares with a par value of $0.001 of which 16,945,224
Shares are issued and outstanding on the date hereof as fully
paid and non-assessable shares;
(e) Euro Trade & Forfaiting Company Limited is the only
subsidiary of the Company and is a wholly-owned subsidiary of
the Company and is organized pursuant to the laws of England;
(f) the shares of the subsidiary held directly or indirectly by
the Company are all owned free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances,
claims and demands whatsoever, except as previously disclosed
by the Company to the Underwriter;
(g) each of the Company and its subsidiary has been duly
incorporated and is validly subsisting and in good standing
under the laws of its jurisdiction of incorporation and has
all requisite corporate power and authority to carry on its
business as now conducted, to own, lease and operate its
properties and assets and to carry out the provisions hereof;
(h) each of the Company and its subsidiary is conducting its
usiness in material compliance with all applicable laws,
rules and regulations of each jurisdiction in which its
business is carried on that are material to the business of
the Company and the subsidiary taken as a whole, and is duly
licensed, registered or qualified in all jurisdictions in
which it owns, leases or operates its property or carries on
business to enable its business to be carried on as now
conducted and its property and assets to be owned, leased and
operated and all such licences, registrations and
qualifications are valid and subsisting and in good standing,
except in respect of matters which do not and will not result
in any material adverse change to the business, business
prospects or condition (financial or otherwise) of the
Company and the subsidiary, taken as a whole;
(i) the outstanding Shares are quoted on the OTC Bulletin Board
in the United States;
(j) except as previously disclosed by the Company to the
Underwriter, no person has any right, agreement or option,
present or future, contingent or absolute, or any right
capable of becoming a right, agreement
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or option, for the issue or allotment of any unissued Shares
or any other security convertible into or exchangeable for
any such Shares or to require the Company to purchase, redeem
or otherwise acquire any of the issued and outstanding
shares;
(k) none of the execution and delivery of this Agreement and the
Subscription Agreements, nor the fulfilment of the terms
hereof and thereof, nor the issue and sale of the Shares or
Warrants underlying the Units nor the issue, sale or
distribution thereof by the Company as provided for in this
Agreement conflicts with or will conflict with or results or
will result in a breach of any of the terms, conditions or
provisions of the constating documents of the Company,
resolutions of its shareholders and directors, or, any
material licence or permit issued to the Company or any
material agreement or instrument to which the Company is a
party;
(l) except as previously disclosed by the Company to the
Underwriter, there are no actions, suits, proceedings or
investigations, whether on behalf of or against the Company
or the subsidiary pending, or, to the knowledge of the
Company and its directors and officers, threatened, against
or affecting the Company or the subsidiary, at law or in
equity, before or by any federal, state, municipal or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which may in any way
materially adversely affect the Company or the subsidiary or
the condition (financial or otherwise) of the Company and the
subsidiary, taken as a whole, or which questions the validity
of the issuance and sale of the Shares or Warrants underlying
the Units, or any action taken or to be taken by the Company
pursuant to or in conjunction with this Agreement;
(m) the auditors of the Company who audited the annual
consolidated financial statements of the Company for the year
ended June 30, 2000 and delivered their report with respect
thereto are independent public accountants;
(n) each of the Company and its subsidiary has filed all federal,
state, local and foreign tax returns that are required to be
filed or has requested extensions therefor (except in any
case in which the failure so to file would not have a
material adverse effect on the assets and properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Company and the subsidiary,
taken as a whole) and has paid all taxes required to be paid
by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due
and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith;
(o) each of the Company and its subsidiary has established on its
books and records reserves that are adequate for the payment
of all taxes not yet due and payable and there are no liens
for taxes on the assets of the Company or the subsidiary,
except for taxes not yet due and there are no audits known by
the Company's management to be pending of the tax returns of
the Company or the subsidiary (whether federal, state, local
or foreign) and there are no claims which have been or may be
asserted relating to any such tax returns, which audits and
claims, if determined adversely, would result in the
assertion by any governmental agency of any deficiency that
would have a material adverse effect on the assets or
properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company or the
subsidiary;
(p) neither the Internal Revenue Service of the United States nor
any other foreign taxation authority has asserted or, to the
best of the Company's knowledge, threatened to assert any
assessment, claim or liability for taxes due or to become due
in connection with any review or examination of the tax
returns of the Company or the subsidiary (including, without
limitation, any predecessor companies) filed for any year
which would have a material adverse effect on the assets or
properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company or the
subsidiary; and
(q) neither the Company nor its subsidiary nor to the best of the
Company's knowledge any other party is in default in the
observance or performance of any term or obligation to be
performed by it under any
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material contract and no event has occurred which with notice
or lapse of time or both would constitute such a default, in
any case which default or event would have a material adverse
effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise)
of the Company or the subsidiary.
3. Covenants of the Company.
The Company covenants and agrees with the Underwriter as follows:
(a) the Company will enter into a Subscription Agreement with
each Substituted Purchaser who purchases Units;
(b) unless it would be unlawful to do so, the Company will accept
each duly executed Subscription Agreement within 3 business
days of the agreement being submitted to it by the
Underwriter;
(c) the Company will take all steps necessary to comply with all
regulatory requirements applicable to the offering and sale
of the Shares and Warrants underlying the Units to the
Underwriter and Substituted Purchasers on a "private
placement basis";
(d) on the Closing Date and upon receipt by the Company of
payment in full for the Purchase Price the Company will have
taken all necessary steps to duly and validly allot and issue
the Shares and Warrants underlying the Units to the persons
entitled thereto upon the terms described herein;
(e) the Company will advise the Underwriter if a Warrant has been
exercised as soon as practicable but in any event within
three days; and
(f) the Company will ensure that each certificate representing
the Shares and each certificate representing the Warrants to
be delivered to the persons entitled thereto upon the terms
described herein shall bear the following legend:
THE SECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITIES
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITIES EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITIES EVIDENCED HEREBY AGREES FOR THE BENEFIT OF EURO TRADE &
FORFAITING, INC. (THE "COMPANY") THAT (A) SUCH SECURITIES MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A
PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT, (OTHER THAN IN CANADA OR TO OR FOR THE BENEFIT
OF A RESIDENT OF CANADA PRIOR TO 90 DAYS FOLLOWING THE ORIGINAL ISSUE OF
THE SECURITIES, EXCEPT PURSUANT TO A PROSPECTUS QUALIFYING THE SECURITIES
FOR SALE UNDER THE SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF CANADA
OR AN EXEMPTION FROM THE PROSPECTUS REQUIREMENTS UNDER SUCH SECURITIES
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LAWS), (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT,
PRIOR TO SUCH TRANSFER FURNISHES THE COMPANY A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE SECURITIES (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE COMPANY), OR (e) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON THE OPINION OF COUNSEL TO THE COMPANY,
IF SO REQUESTED), (2) TO THE COMPANY, OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITIES
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
4. Material Changes.
Prior to the Closing Date the Company shall promptly notify the
Underwriter in writing if, prior to termination of the distribution of the
Units, there shall occur any material change or change in a material fact
(in either case whether actual, anticipated, contemplated or threatened
and other than a change or fact relating solely to the Underwriter) or any
event or development involving a prospective material change or a change
in a material fact or any other change in any or all of the business,
affairs, operations, assets (including information or data relating to the
estimated value or book value of assets), liabilities (contingent or
otherwise), capital, ownership, control, management or prospects of the
Company or its subsidiary. However, the Company shall not be required to
notify the Underwriter of external political, economic and social
developments, unless such developments will have an effect on the Company
which is uncharacteristic of its effect on other companies in the same
industry. Prior to the Closing Date the Company shall promptly notify the
Underwriter in writing with full particulars of any such actual,
anticipated, contemplated, threatened or prospective change and the
Company shall, to the reasonable satisfaction of the Underwriter, file
promptly and, in any event, within all applicable time limitation periods
with the SEC a material change report as may be required under all
applicable Securities Laws and shall comply with all other applicable
filing and other requirements under the Securities Laws and the laws of
such other jurisdictions. Prior to the Closing Date the Company shall not
file any such material change report without first obtaining the written
approval of the form and content thereof by the Underwriter, which
approval shall not be unreasonably withheld, and the Company's request for
such approval shall be considered and replied to by the Underwriter in
sufficient time to enable the Company to comply with any time period
required by law, provided that the Company shall not be required to file a
registration statement in the United States of America or otherwise
register or qualify the Shares underlying the Units or the Shares
underlying the Warrants for distribution and provided further that nothing
herein shall prevent the Company from complying fully with its disclosure
obligations under the Securities Laws. The Company shall in good faith
discuss with the Underwriter as promptly as possible any circumstance or
event which is of such a nature that there is or ought to be consideration
given as to whether there may be a material change or change in a material
fact or other change described in this section 4.
5. Due Diligence.
From the date hereof until the Closing Date, the Company shall at all
times allow the Underwriter and its representatives to conduct all due
diligence investigations and examinations which the Underwriter may
reasonably require in order to fulfil its obligations as underwriter.
6. Indemnity and Contribution.
6.1 By accepting this offer the Company agrees to indemnify and hold
harmless the Underwriter and its directors, officers, shareholders,
employees and agents (each an "Indemnified Party") against all losses
(other than a loss of profits in
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connection with the sale of the Units), payments, fees, claims, damages,
liabilities, costs and expenses (and claims, actions, suits or proceedings
in respect thereof) caused by or arising directly or indirectly from:
(a) any breach of or default under any representation, warranty,
covenant or agreement of the Company contained in this
Agreement;
(b) any order made or inquiry, investigation or proceeding
commenced or threatened by the SEC or other competent
authority which prevents or restricts trading in or the
distribution of the Shares or Warrants underlying the Units;
(c) the Company breaching any representation or warranty or not
complying with any covenant or agreement contained herein or
in the Subscription Agreements or not complying with any
requirement of applicable Securities Laws;
(d) the exercise by any Substituted Purchaser (other than the
Underwriter) of any contractual or statutory right of
rescission in connection with the purchase of Units; or
(e) any failure of the Company to pay any tax properly payable by
the Company in connection with the distribution of the Units.
6.2 If any action or claim shall be brought against any Indemnified Party
in respect of which indemnity is sought from the Company pursuant to the
provisions of this section 6, the Indemnified Party shall promptly notify
the Company in writing and the Company shall assume the defence thereof,
including the employment of counsel and the payment of all expenses. Each
Indemnified Party shall have the right to employ separate counsel in any
such action and participate in the defence thereof but the fees and
expenses of such counsel shall be at its expense unless:
(a) the employment thereof has been specifically authorized by the
Company in writing;
(b) the Company has failed within a reasonable time after receipt
of such written notice to assume the defence of such action on
behalf of the Indemnified Party and employ counsel therefor; or
(c) in the reasonable belief of the Indemnified Party there are
defences available to such Indemnified Party which are required
to be advanced by separate counsel because of an actual or
potential conflict of interest or any similar reason.
6.3 The Company waives all right of contribution by statute or common law
which it may have against any Indemnified Party in respect of losses,
payments, fees, claims, damages or liabilities (or claims, actions, suits
or proceedings in respect thereof) which it may sustain as a direct or
indirect consequence of any misrepresentation in respect of which the
Company has agreed to protect and indemnify such Indemnified Party as
provided in paragraph 6.1.
6.4 If for any reason the indemnification provided for in paragraph 6.1 is
unavailable, in whole or in part, to an Indemnified Party in respect of
any losses, payments, fees, claims, damages, liabilities, costs or
expenses (or claims, actions, suits or proceedings in respect thereof)
referred to in paragraph 6.1, and subject to the restrictions and
limitations referred to therein, the Company shall contribute to the
amount paid or payable (or, if such indemnity is unavailable only in
respect of a portion of the amount so paid or payable, such portion of the
amount so paid or payable) by such Indemnified Party as a result of such
losses (except for loss of profits in connection with the sale of the
Units), payments, fees, claims, damages, liabilities, costs or expenses
(or claims, actions, suits or proceedings in respect thereof):
(a) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the
Underwriter on the other hand from the sale of the Units; or
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(b) if the allocation provided by sub-paragraph (a) above is not
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in sub-paragraph (a) above but also the relative fault of
the Company on the one hand and the Underwriter on the other
hand in connection with the misrepresentation, breach, order,
non-compliance or other matter or thing referred to in
paragraph 6.1 which resulted in such losses, claims, damages,
liabilities, costs or expenses (or claims, actions, suits or
proceedings in respect thereof), as well as any other relevant
equitable considerations.
6.5 For the purpose of paragraph 6.4 above, the relative benefits
received by the Company on the one hand and the Underwriter on the
other hand shall be deemed to be in the same proportion as the
total proceeds from the sale of the Units (net of the fee payable
to the Underwriter but before deducting expenses) received by the
Company is to the underwriting fee received by the Underwriter
pursuant to this Agreement. The relative fault of the Company on
the one hand and the Underwriter on the other hand shall be
determined by reference to, among other things, whether the
misrepresentation, breach, order, non-compliance or other matter
or thing referred to in paragraph 6.1 which resulted in such
losses, payments, fees, claims, damages, liabilities, costs or
expenses (or claims, actions, suits or proceedings in respect
thereof) relate to information supplied by or steps or actions
taken or done by or on behalf of the Underwriter and the relative
intent, knowledge, access to information and opportunity to
correct or prevent such misrepresentation, breach, order, non-
compliance or other matter or thing referred to in paragraph 6.1.
The amount paid or payable by an Indemnified Party as a result of such
losses, payments, fees, claims, damages, liabilities, costs or expenses
(or claims, actions, suits or proceedings in respect thereof) referred to
above shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any such losses, payments, fees, claims, damages, liabilities,
costs or expenses (or claims, actions, suits or proceedings in respect
thereof), whether or not resulting in any such action, suit proceeding or
claim.
6.6 No admission of liability and no settlement of any claims, actions,
suits or proceedings in respect of any losses, payments, fees, claims,
damages, liabilities, costs or expenses referred to in this section 6
shall be made without the consent of the Indemnified Parties affected,
such consent not to be unreasonably withheld. No admission of liability
shall be made by an Indemnified Party without the consent of the Company
and the Company shall not be liable for any settlement of any such claim,
action, suit or proceeding made without its consent, such consent not to
be unreasonably withheld.
6.7 The Company acknowledges that the Underwriter will hold the rights of
an Indemnified Party hereunder, other than the Underwriter, in trust for
such Indemnified Party and that such rights may be enforced directly by
such Indemnified Party or by the Underwriter on its behalf.
6.8 If any proceeding shall be brought against any Indemnified Party in
respect of which indemnity is sought from the Company and the Underwriter
is required to testify in connection therewith or is required to respond
to procedures designed to discover information relating thereto, it will
have the right to employ its own counsel in connection therewith, and the
fees and disbursements of such counsel in connection therewith as well as
its reasonable fees at the normal per diem rate for its directors,
officers, employees and agents involved in preparation for and attendance
at such proceedings or in so responding and any other reasonable costs and
out-of-pocket expenses incurred by it in connection therewith will be paid
by the Company as they are incurred.
6.9 The obligations under this section 6 shall apply whether or not the
transactions contemplated by this Agreement are completed and shall
survive the completion of the transactions contemplated under this
Agreement and the termination of this Agreement.
-9-
12
7. Conditions of Closing.
The obligations of the Underwriter and any Substituted Purchasers to
complete the purchase of Units as contemplated hereby shall be conditional
upon the Underwriter being satisfied, acting reasonably, with the results
of its due diligence investigations relating to the Company and upon the
fulfilment at or before the Closing Time of the following conditions,
which conditions the Company covenants to use its best efforts to fulfil
or cause to be fulfilled prior to the Closing Time:
(a) the execution and delivery of this Agreement and the
Subscription Agreements and the creation and issuance of the
Shares and Warrants underlying the Units shall have been duly
authorized by all necessary corporate action;
(b) all necessary consents and approvals with respect to the sale
and issuance of the Shares and Warrants underlying the Units
shall have been obtained;
(c) the Underwriter shall have received certificates, in form and
substance satisfactory to the Underwriter, stating that the
Company is not in default under the Securities Laws;
(d) the Underwriter shall have received a certificate addressed
to it and to the Substituted Purchasers, dated as of the
Closing Date, signed by the President and Chief Executive
Officer and the Chief Financial Officer of the Company, or
such other officers of the Company as the Underwriter may
accept, certifying on behalf of the Company to the effect
that, except as has been generally disclosed at the date
thereof:
(i) there has not been any material adverse change since
June 30, 2000 in relation to the Company and its
subsidiary on a consolidated basis;
(ii) since June 30, 2000 there have been no material
transactions entered into by the Company or its
subsidiary other than transactions in the ordinary
course of business that would not constitute a material
change;
(iii) neither the Company nor any of its subsidiary has any
undisclosed contingent liability that is material to
the Company;
(iv) no event of default under any agreement or instrument
pursuant to which indebtedness of the Company or its
subsidiary has been created, and no event which with
the giving of notice or the passage of time, or both,
would constitute an event of default under any such
agreement or instrument, has occurred and is continuing
and no default under any agreement or instrument to
which the Company or its subsidiary is a party or
subject will occur as a result of the issue, sale and
distribution of the Shares and Warrants underlying the
Units, the entry into of this Agreement and the
Subscription Agreements or the performance by the
Company of its obligations hereunder and thereunder;
(v) there are no actions, suits or proceedings, whether on
behalf of or against the Company or its subsidiary,
pending or, to the knowledge of the Company, threatened
against or affecting the Company or its subsidiary at
law or in equity, before or by any court or federal,
state, municipal or governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign, which may in any way materially
adversely affect the Company and which are material to
the Company;
(vi) the representations and warranties of the Company
contained herein and in the Subscription Agreements are
true and correct and all the terms and conditions
relating to the Company
-10-
13
contained herein and required to be performed and
complied with by the Company at the time of such
certificate have been performed and complied with by
the Company; and
(vii) no order ceasing or suspending trading in securities of
the Company or prohibiting the sale and issuance or
distribution of the Shares or Warrants underlying the
Units has been issued and no proceedings for such
purpose are pending or, to the knowledge of the
Company, threatened; and
(e) as at the Closing Time, all covenants, agreements and
obligations of the Company hereunder and under the
Subscription Agreements required to be performed or complied
with on or before the Closing Time shall have been so
performed or complied with and all conditions required to be
complied with by the Company shall have been complied with.
The certificates described above required to be delivered at the
Closing Time will also be addressed and delivered to such persons to whom
the Underwriter may resell the Units after the Closing Time, provided they
are identified at the Closing Time.
8. Closing Procedures.
Subject to the foregoing and as hereinafter provided, delivery of the
definitive certificates representing the Share and Warrants underlying the
Units purchased by the Underwriter and the Substituted Purchasers shall be
made at Route de Malagnou, 53, 1211 Geneve 17, Switzerland, on the Closing
Date or such other place, time or date as may be agreed upon by the
Company and the Underwriter by delivery of a global certificate
representing the Shares and a global certificate representing the Warrants
each registered in the name of the Underwriter and, if so directed by the
Underwriter, the Substituted Purchasers, against payment in lawful funds
of the United States, by certified cheque, bank draft or wire transfer
payable to the Company in the amount of the Purchase Price therefor, and
at the same time and place and in the same manner payment shall be made by
the Company to the Underwriter of the Underwriting Fee and Warrant Fee
payable hereunder with payment of the Warrant Fee to be made within three
days of any exercise of a Warrant.
9. Expenses of Issue.
Whether or not the transactions herein contemplated shall be
completed and, subject as follows, all reasonable costs and expenses of
and incidental to the issuance of the Shares and Warrants underlying the
Units to the Substituted Purchasers and all other matters in connection
with the transactions herein set out shall be borne by the Company,
whether before or after Closing, including without limitation the cost of
preparation and printing of any material change report, all costs and
expenses in connection with translation of any document and of obtaining
or complying with any exemptions from distribution under applicable
Securities Laws, all costs and expenses in connection with the preparation
and issue of the certificates for the Shares and the Warrants underlying
the Units, the fees and disbursements of the Company's counsel, all local
counsel and the expenses of the Underwriter described herein under
"Underwriter's Fees and Expenses".
10. Termination.
10.1 If at any time prior to the Closing:
(a) there shall have occurred any material adverse change in
relation to the Company or a development that could result in
a material adverse change in relation to the Company; or
(b) there shall have occurred any change in the applicable
Securities Laws or any inquiry, investigation or other
proceeding is made or any order is issued under or pursuant to
any statute of the United States or any state thereof in
relation to the Company or any of its securities (except for
any inquiry, investigation
-11-
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or other proceeding or order based upon activities of the
Underwriter and not upon activities of the Company),
which, in the opinion of any Underwriter, prevents or restricts trading in
or the distribution of the Shares underlying the Units or adversely
affects or might reasonably be expected to adversely affect the investment
quality or marketability of the Shares underlying the Units; or
(c) if there should develop, occur or come into effect or
existence any event, action, state, condition or major
financial occurrence of national or international consequence
or any law or regulation, which, in the opinion of the
Underwriter, seriously adversely affects, or involves, or
will seriously adversely affect or involve, the financial
markets or the business, operations or affairs of the Company
and its subsidiary taken as a whole; or
(d) a cease trading order is made by the SEC or other competent
authority by reason of the fault of the Company or its
directors, officers and agents and such cease trading order
is not rescinded within 48 hours,
the Underwriter shall be entitled, to terminate and cancel its obligations
under this Agreement and the obligations of any Substituted Purchaser
under any Subscription Agreement by written notice to that effect given to
the Company at the address shown in this Agreement prior to the Closing
Time. In the event of any such termination, the Company's obligations
under this Agreement to the Underwriter shall be at an end except for any
liability of the Company provided for in sections 6 and 9 hereof.
11. Underwriter's Obligations.
11.1 The Underwriter represents, warrants and covenants to the Company
and agrees that:
(i) the Underwriter is a Qualified Institutional Buyer, with such
knowledge and experience in financial and business matters as
are necessary in order to evaluate the merits and risks of an
investment in the Units;
(ii) the Underwriter (A) is not acquiring the Units with a view to
any distribution thereof that would violate the Securities
Act or the securities laws of any state of the United States
or any other applicable jurisdiction (B) will be reoffering
and reselling the Shares and Warrants underlying the Units
only to (i) QIBs in reliance on the exemption from the
registration requirements of the Securities Act provided by
Rule 144A and (ii) to Regulation S Investors in offshore
transactions in reliance upon Regulation S under the
Securities Act; and
(iii) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Securiites Act)
has been or will be used by the Initial Purchaser or any of
its representatives in connection with the offer and sale of
the Units, including, but not limited to, articles, notices
or other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising or in any
manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
(iv) The Underwriter further (A) agrees that it will offer to sell
the Units only to, and will solicit offers to buy the Units
only from purchasers that the Underwriter reasonably believes
are Qualified Institutional Buyers or Regulation S Investors,
(B) acknowledges and agrees that, in the case of such
Qualified Institutional Buyers or Regulation S Investors such
Shares or Warrants underlying the Units or Shares underlying
the Warrants will not have been registered under the
Securities Act and may be resold, pledged or otherwise
transferred only (x)(I) to a person whom the seller reasonably
believes is a Qualified Institutional Buyer purchasing for its
own account or is purchasing for the account of a Qualified
Institutional Buyer in a transaction meeting the requirements
of Rule 144A, (II) in an offshore
-12-
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transaction (as defined in Rule 902 under the Securities Act)
meeting the requirements of Rule 904 under the Securities Act,
(III) in a transaction meeting the requirements of Rule 144
under the Securities Act, (IV) to an institutional "Accredited
Investor" as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act that, prior to such
transfer, furnishes the Company an opinion of counsel or other
documentation containing certain representations and agreements
relating to the registration or transfer of the Shares and
Warrants underlying the Units that such transfer is in
compliance with the Securities Act, (V) in accordance with
another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel if the
Company so requests), (y) to the Company, (z) pursuant to an
effective registration statement under the Securities Act and,
in each case, in accordance with any applicable securities laws
of any state of the United States or any other applicable
jurisdiction, and (C) that the holder will, and each subsequent
holder is required to, notify any purchaser of the security
evidenced thereby of the resale restrictions set forth in (B)
above.
(v) The Underwriter and its affiliates or any person acting on its
or their behalf have not engaged or will not engage in any directed
selling efforts within the meaning of Regulation S with respect to
the Units.
(vi) The sale of the Units offered and sold by the Underwriter
pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Securities Act.
(vii) The Units offered and sold by the Underwriter pursuant hereto
in reliance on Regulation S have been and will be offered and sold
only in offshore transactions and will not be offered in Canada or to
or for the benefit of a resident of Canada prior to 90 days following
the original issue of the Shares and Warrants underlying the Units
except pursuant to a prospectus qualifying the Shares and Warrants
underlying the Units for sale under the securities laws of any
province or territory of Canada or an exemption from the prospectus
requirements under such security laws.
(viii) The Underwriter agrees that (i) with respect to offers and
sales outside the United States, it has complied and will comply with
all applicable laws and regulations in each jurisdiction in which it
acquires, offers, sells or delivers the Shares and Warrants
underlying the Units or has in its possession any such other material
and (ii) it has not offered or sold and will not offer or sell the
Units in the United States or to, or for the benefit or account of, a
U.S. Person (other than a distributor), in each case, as defined in
Rule 902 under the Securities Act (A) as part of its distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Units pursuant hereto and the
Closing Date, other than in accordance with Regulation S or another
exemption from the registration requirements of the Securities Act.
The Underwriter agrees that, during such 40-day distribution
compliance period, it will not cause any advertisement with respect
to the Units (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public
place and will not issue any circular relating to the Units, except
such advertisements as permitted by and included in the statements
required by Regulation S.
(ix) The Underwriter agrees that, at or prior to confirmation of a
sale of Units by it to any distributor, dealer or person receiving a
selling concession, fee or other remuneration during the 40-day
distribution compliance period referred to in Rule 903(c)(2) under
the Securities Act, it will send to such distributor, dealer or
person receiving a selling concession, fee or other remuneration a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may
not be offered and sold within the United States or to, or for the
account or benefit of, U.S. Persons (i) as part of your distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S under the Securities Act (or
Rule 144A or to Accredited Institutions in transactions that are
exempt from the registration requirements of the Securities Act), and
in connection with any subsequent sale by you of the Securities
covered hereby in reliance on Regulation S during the period referred
to above to any distributor, dealer or person
-13-
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receiving a selling concession, fee or other remuneration, you must
deliver a notice to substantially the foregoing effect. Terms used
above have the meanings assigned to
them in Regulation S."
12. Miscellaneous.
12.1 All representations and warranties contained herein and all of the
covenants and agreements of the Company herein, to the extent that they
are required to be performed on or before Closing, shall be construed as
conditions and any breach or failure to comply with any thereof shall
entitle the Underwriter, at its option, in addition to and not in lieu of
any other remedies the Underwriter has in respect thereof, to terminate
and cancel its obligation to purchase the Units by written notice to that
effect given to the Company prior to the Closing Time. It is understood
that the Underwriter may waive in whole or in part or extend the time for
compliance with any of such terms and conditions without prejudice to its
rights in respect of any other of such terms and conditions or any other
or subsequent breach or non-compliance, provided that to be binding on the
Underwriter any such waiver or extension must be in writing and signed by
it.
12.2 Any notice or other communication hereunder shall be in writing and
shall unless herein otherwise provided be given by delivery to a
responsible officer of the addressee or by telex or telecopier, if to the
Company, addressed to its address appearing on the first page of this
Agreement (Attention: President) (telecopier: (604) 683 3205), and if to
the Underwriter addressed to: MFC Merchant Bank S.A., Route de Malagnou,
53, 1211 Geneve 17, Switzerland (Attention: Mr. Claudio Morandi)
(telecopier: (41 22) 818 2930); and shall be deemed to have been given
when actually delivered or when such notice should have reached the
addressee in the ordinary course.
12.3 Time shall be of the essence of the foregoing offer and of the
agreement resulting from the acceptance thereof.
12.4 The representations, warranties and agreements herein contained shall
survive the purchase by the Underwriter and the Substituted Purchasers of
the Units and shall continue in full force and effect unaffected by any
subsequent disposition by the Substituted Purchasers of the Units.
12.5 This Agreement may be executed in any number of counterparts, each of
which when delivered, either in original or facsimile form, shall be
deemed to be an original and all of which together shall constitute one
and the same document.
12.6 The provisions herein contained constitute the entire agreement
between the parties and supersede all previous communications,
representations, understandings and agreements between the parties with
respect to the subject matter hereof whether verbal or written.
If the foregoing is in accordance with your understanding, will you
please confirm your acceptance by signing the enclosed copies in the place
indicated and by returning the same to us.
Yours very truly,
MFC MERCHANT BANK S.A.
By: /s/ Peter Jessop
----------------
Peter Jessop
By: /s/ Jacques Frehner
-------------------
Jacques Frehner
The foregoing is in accordance with our understanding and is accepted and
agreed to by us this 14th day of November, 2000.
EURO TRADE & FORFAITING, INC.
By: /s/Slobodan Andjic
-------------------
Slobodan Andjic
-15-
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Schedule 1
TERM SHEET
Summary of the Principal Terms of the Offering of
Common Shares of Euro Trade & Forfaiting, Inc.
--------------------------------------------------
Issuer: Euro Trade & Forfaiting, Inc. (the "Company").
Issue: Units (the "Units") issued pursuant to private placement
exemptions with each Unit comprised of one common share
in the capital of the Company (a "Share") and one warrant
(a "Warrant") entitling the holder thereof to acquire one
further share for a purchase price of $1.35 which Warrant
shall be exercisable for a period of five years from the
date of issuance.
Size: 8,500,000 Units.
Amount: $11,475,000.
Price: $1.35 per Unit.
Commission: $0.108 per Unit (8% of the gross proceeds of the Issue)
payable upon closing of the Issue and $0.108 per Warrant
exercised payable upon exercise of the Warrant.
Net Proceeds
of the Issue: $1.242 per Unit.
Sales: United States and Europe.
Closing Date: Such date or time as may be mutually agreed but in any
event no later than November 14, 2000.
Use of Proceeds: The net proceeds of the Issue will be used to fund
working capital.
Transaction
Structure: Private placement of Units under applicable exemptions
from prospectus and registration requirements.
Due Diligence: The Underwriter will be given reasonable access to the
Company's corporate, financial and other records for the
purposes of conducting additional due diligence in
respect of the Issue. The Underwriter's obligation to
complete the purchase of the Units on the Closing Date is
conditional on the Underwriter being satisfied, acting
reasonably, with the results of its due diligence.
Underwriter: MFC Merchant Bank S.A.
Substituted
Purchasers: Although the offer is made by the Underwriter as
purchaser, the Underwriter will endeavour prior to the
Closing Date to arrange for qualified purchasers for the
Units on a "private placement" basis which qualified
purchasers may include associates and affiliates of the
Underwriter.
1-1
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Other
Provisions: The Underwriter's agreement to purchase the Shares is
subject to the Underwriter and the Company entering into
a definitive underwriting agreement relating to the
Shares in a form satisfactory to the Underwriter, such
agreement to include terms and conditions as are
customary in the circumstances including, without
limitation, a material change clause, disaster out clause
and an appropriate indemnity provision. The underwriting
agreement will also contain standard representations and
warranties by the Company and other terms and conditions
as are customary and appropriate in the circumstances.
1-2
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Schedule 2
SUBSCRIPTION AGREEMENT
Please return a completed and duly executed copy of this Subscription
Agreement to MFC Merchant Bank S.A., Route de Malagnou, 53, 1211 Geneve
17, Switzerland, Attention: Claudio Morandi (facsimile (41 22) 818 2930),
as soon as possible. To properly complete this Agreement, you must:
1. Complete this page.
2. Sign on page 13 and, if you are not an individual, be sure to clearly
print your name and title.
- --------------------------------------------------------------------------
Issuer: Euro Trade & Forfaiting, Inc. Issue: Units with each
Unit comprised of
one common share
and one common
share purchase
warrant
Number of Units:
--------------------------------------------
Total Subscription Price: $
--------------------------------------------
Name and Address of Subscriber:
Name: Address:
------------------------- ---------------------------------
(Street Address)
---------------------------------
(City and State or Country)
---------------------------------
(Postal Code)
Alternate Registration Instructions: (If other than in the name of the
Subscriber):
Name: Address:
------------------------- ---------------------------------
(Street Address)
---------------------------------
(City and State or Country)
---------------------------------
(Postal Code)
Delivery Instructions: The name and address (including contact name and
telephone number) of the person to whom the certificate representing the
Shares and Warrants is to be delivered, if other than the Subscriber:
Name: Address:
------------------------- ---------------------------------
(Street Address)
---------------------------------
(City and State or Country)
---------------------------------
(Postal Code)
2-1
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TO: Euro Trade & Forfaiting, Inc.
1. Subscription. The undersigned (the "Purchaser") hereby tenders to
Euro Trade & Forfaiting, Inc. (the "Company") this subscription offer
which, upon acceptance by the Company, will constitute an agreement (the
"Subscription Agreement") of the Purchaser to subscribe for, take up,
purchase and pay for and, on the part of the Company, to issue and sell to
the Purchaser, the number of Units set out on page 1 hereof (the
"Purchaser's Shares") at the price (the "Purchase Price") of $1.35 per
Unit (as hereinafter defined), all on the terms and subject to the
conditions set forth in this Subscription Agreement. Each Unit is
comprised of one common share and one common share purchase warrant.
Unless otherwise noted, any reference to dollars herein is to lawful
currency of the United States.
2. Underwriting Agreement. The Purchaser acknowledges that the
Purchaser's Units will be issued in connection with the sale of an
aggregate of 8,500,000 Units of the Company for an aggregate subscription
price of $11,475,000 to be sold by the Company by private placement
pursuant to an agreement (the "Underwriting Agreement") dated as of
November 14, 2000 between the Company and MFC Merchant Bank S.A. ( the
"Underwriter"). By its acceptance of this offer, the Company covenants,
agrees and confirms that the Purchaser will have the benefit of all of the
representations, warranties, covenants and conditions provided to or for
the benefit of the Purchaser under the Underwriting Agreement.
3. Definitions. In this Subscription Agreement, unless the context
otherwise requires:
(a) "Business Day" means a day on which the Underwriter is open for
business;
(b) "Closing" means the completion of the issue and sale by the
Company and the purchase by the Underwriter or Substituted
Purchasers of the Units pursuant to this Agreement;
(c) "Closing Date" means such date as the Company and the Underwriter
may agree but in any event no later than November 14, 2000;
(d) "Closing Time" means 9:00 a.m. (Geneva, Switzerland time) on the
Closing Date or such other time on the Closing Date as the
Company and the Underwriter may agree pursuant to the
Underwriting Agreement;
(e) "material" means material in relation to the Company and its
subsidiary considered on a consolidated basis;
(f) "material change" means any change in the business, operations,
assets, liabilities, ownership or capital of the Company and its
subsidiary considered on a consolidated basis that would
reasonably by expected to have a significant effect on the market
price or value of the Shares underlying the Units and includes a
decision to implement such a change made by the board of
directors of the Company or by senior management of the Company
who believe that confirmation of the decision by the board of
directors is probable;
(g) "material fact" means any fact that significantly affects or
would reasonably be expected to have a significant effect on the
market price or value of the Shares underlying the Units;
(h) "misrepresentation" means an untrue statement of a material fact
or an omission to state a material fact that is required to be
stated or is necessary to prevent a statement that is made from
being false or misleading in the circumstances in which it was
made;
(i) "Qualified Institutional Buyer" shall have the meaning attributed
thereto in Rule 144A;
(j) "Regulation S" means Regulation S under the Securities Act;
2-2
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(k) "Rule 144A" means Rule 144A under the Securities Act;
(l) "SEC" means the Securities and Exchange Commission of the United
States;
(m) "Securities Act" means the Securities Act of 1933, as amended, of
the United States;
(n) "Securities Laws" means the applicable securities laws of the
United States and the respective regulations, forms and rules
thereunder;
(o) "Shares" means common shares in the capital of the Company;
(p) "subsidiary" has the meaning ascribed to it under Rule 405 of the
General Rules and Regulations of the Securities Act;
(q) "Substituted Purchasers" means the persons who the Underwriter
has arranged to purchase Units from the Company at the Closing,
including the Purchaser and which may include associates or
affiliates of the Underwriter (as such terms are defined under
Rule 405 of the General Rules and Regulations of the Securities
Act);
(r) "Term Sheet" means the term sheet in the form of Schedule A
hereto;
(s) "United States" means the United States of America as that term
is defined in Regulation S;
(t) "Units" means the units of the Company being offered hereunder
and comprised of one Share and one Warrant;
(u) "U.S. Person" means a U.S. Person as that term is defined in
Regulation S; and
(v) "Warrants" means the share purchase warrants of the Company which
entitle the holder thereof to purchase one Share for each Warrant
held at a purchase price of $1.35 for a period of five years from
their date of issuance.
4. Representations and Warranties of the Company. By accepting this
offer the Company represents and warrants to the Purchaser as follows:
(a) the Company's audited annual consolidated financial statements
and annual report on Form 10-K for the year ended June 30, 2000,
all material change reports and all quarterly reports issued by
the Company subsequent to June 30, 2000 were, at their respective
dates of issue or publication, true and correct in all material
respects and were prepared in accordance with and complied with
the laws, regulations and rules applicable thereto;
(b) no press release issued by the Company subsequent to June 30,
2000 contains a misrepresentation;
(c) there has been no material adverse change in relation to the
Company and its subsidiary since June 30, 2000 and no adverse
material fact exists in relation to the Shares underlying the
Units and Warrants which has not been generally disclosed;
(d) the authorized capital of the Company consists of 50,000,000
common shares with par value of $0.001 of which 16,945,224 common
shares are issued and outstanding on the date hereof as fully
paid and non-assessable shares;
2-3
22
(e) Euro Trade & Forfaiting Company Limited is the only subsidiary of
the Company and is a wholly-owned subsidiary of the Company and
is organized pursuant to the laws of England;
(f) the shares of the subsidiary held directly or indirectly by the
Company are all owned free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances, claims and
demands whatsoever, except as previously disclosed by the Company
to the Underwriter;
(g) each of the Company and its subsidiary has been duly incorporated
and is validly subsisting and in good standing under the laws of
its jurisdiction of incorporation and has all requisite corporate
power and authority to carry on its business as now conducted, to
own, lease and operate its properties and assets and to carry out
the provisions hereof;
(h) each of the Company and its subsidiary is conducting its business
in material compliance with all applicable laws, rules and
regulations of each jurisdiction in which its business is carried
on that are material to the business of the Company and the
subsidiary taken as a whole, and is duly licensed, registered or
qualified in all jurisdictions in which it owns, leases or
operates its property or carries on business to enable its
business to be carried on as now conducted and its property and
assets to be owned, leased and operated and all such licences,
registrations and qualifications are valid and subsisting and in
good standing, except in respect of matters which do not and will
not result in any material adverse change to the business,
business prospects or condition (financial or otherwise) of the
Company and the subsidiary, taken as a whole;
(i) the outstanding Shares are quoted on the OTC Bulletin Board in
the United States;
(j) except as previously disclosed by the Company to the Underwriter,
no person has any right, agreement or option, present or future,
contingent or absolute, or any right capable of becoming a right,
agreement or option, for the issue or allotment of any unissued
Shares or any other security convertible into or exchangeable for
any such Shares or to require the Company to purchase, redeem or
otherwise acquire any of the issued and outstanding Shares;
(k) none of the execution and delivery of this Agreement and the
Underwriting Agreement, nor the fulfilment of the terms hereof
and thereof, nor the issue and sale of the Shares or Warrants
underlying the Units nor the issue, sale or distribution thereof
by the Company as provided for in this Agreement or the
Underwriting Agreement conflicts with or will conflict with or
results or will result in a breach of any of the terms,
conditions or provisions of the constating documents of the
Company, resolutions of its shareholders and directors, or, any
material licence or permit issued to the Company or any material
agreement or instrument to which the Company is a party;
(l) except as previously disclosed by the Company to the Underwriter,
there are no actions, suits, proceedings or investigations,
whether on behalf of or against the Company or the subsidiary
pending, or, to the knowledge of the Company and its directors
and officers, threatened, against or affecting the Company or the
subsidiary, at law or in equity, before or by any federal, state,
municipal or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which may in any
way materially adversely affect the Company or the subsidiary or
the condition (financial or otherwise) of the Company and the
subsidiary, taken as a whole, or which questions the validity of
the issuance and sale of the Shares or Warrants underlying the
Units, or any action taken or to be taken by the Company pursuant
to or in conjunction with this Agreement;
(m) the auditors of the Company who audited the annual consolidated
financial statements of the Company for the year ended June 30,
2000 and delivered their report with respect thereto are
independent public accountants;
(n) each of the Company and its subsidiary has filed all federal,
provincial, local and foreign tax returns that are required to be
filed or has requested extensions for the filing thereof (except
in any case in which the
2-4
23
failure so to file would not have a material adverse effect on
the assets and properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company
and the subsidiary, taken as a whole) and has paid all taxes
required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment,
fine or penalty that is currently being contested in good faith;
(o) each of the Company and its subsidiary has established on its
books and records reserves that are adequate for the payment of
all taxes not yet due and payable and there are no liens for
taxes on the assets of the Company or the subsidiary, except for
taxes not yet due and there are no audits known by the Company's
management to be pending of the tax returns of the Company or the
subsidiary (whether federal, provincial, local or foreign) and
there are no claims which have been or may be asserted relating
to any such tax returns, which audits and claims, if determined
adversely, would result in the assertion by any governmental
agency of any deficiency that would have a material adverse
effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Company or the subsidiary;
(p) neither the Internal Revenue Service of the United States or any
other foreign taxation authority has asserted or, to the best of
the Company's knowledge, threatened to assert any assessment,
claim or liability for taxes due or to become due in connection
with any review or examination of the tax returns of the Company
or the subsidiary (including, without limitation, any predecessor
companies) filed for any year which would have a material adverse
effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Company or the subsidiary; and
(q) neither the Company nor the subsidiary nor to the best of the
Company's knowledge any other party is in default in the
observance or performance of any term or obligation to be
performed by it under any material contract and no event has
occurred which with notice or lapse of time or both would
constitute such a default, in any case which default or event
would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Company or the subsidiary.
5. Covenants of the Company. The Company covenants and agrees with the
Purchaser as follows:
(a) the Company will enter into a Subscription Agreement with each
Substituted Purchaser who purchases Units;
(b) unless it would be unlawful to do so, the Company will accept
each duly executed Subscription Agreement within 3 business days
of the agreement being submitted to it by the Underwriter;
(c) the Company will take all steps necessary to comply with all
regulatory requirements and requirements of the Securities Laws
applicable to the offering and sale of Shares and Warrants
underlying the Units to the Underwriter and Substituted
Purchasers on a "private placement basis";
(d) on the Closing Date and upon receipt by the Company of payment in
full for the Purchase Price the Company will have taken all
necessary steps to duly and validly allot and issue the Shares
and Warrants underlying the Units to the persons entitled thereto
upon the terms described herein; and
(g) the Company will ensure that each certificate representing the
Shares and each certificate representing the Warrants to be
delivered to the persons entitled thereto upon the terms
described herein shall bear the following legend:
THE SECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITIES
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE
2-5
24
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE SECURITIES EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SHARES
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF EURO TRADE & FORFAITING, INC.
(THE "COMPANY") THAT (A) SUCH SECURITIES MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT
A U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT,
(OTHER THAN IN CANADA OR TO OR FOR THE BENEFIT OF A RESIDENT OF CANADA
PRIOR TO 90 DAYS FOLLOWING THE ORIGINAL ISSUE OF THE SECURITIES, EXCEPT
PURSUANT TO A PROSPECTUS QUALIFYING THE SECURITIES FOR SALE UNDER THE
SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF CANADA OR AN EXEMPTION
FROM THE PROSPECTUS REQUIREMENTS UNDER SUCH SECURITIES LAWS), (d) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH
TRANSFER FURNISHES TO THE COMPANY A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE SECURITIES (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE COMPANY), OR (e) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON THE OPINION OF COUNSEL TO THE COMPANY, IF SO REQUESTED),
(2) TO THE COMPANY, OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITIES EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
6. Closing of Purchase. The Purchaser acknowledges and agrees that the
Closing shall be completed at the place and in the manner set forth in the
Underwriting Agreement at the Closing Time. The Purchaser hereby appoints
the Underwriter to act as its agent to represent it with respect to all
matters relating to this Subscription Agreement, including representing
the Purchaser at the Closing for the purpose of all closing matters and
deliveries of documents and payment of funds, and the Purchaser hereby
authorizes the Underwriter to extend such time periods and modify or waive
such conditions as may be contemplated herein or in the Underwriting
Agreement as the Underwriter, in its absolute discretion, may deem
appropriate and to correct or rectify any ambiguities, errors or omissions
herein that the Underwriter in its absolute discretion may deem
appropriate and consents to the Underwriter making such amendments to the
Subscription Agreement and Underwriting Agreement as the Underwriter in
its judgment may deem appropriate, provided such amendments do not
detrimentally affect the rights of the holders of Shares or Warrants
underlying the Units. The Purchaser will take up, purchase and pay for
the Purchaser's Units at the Closing upon acceptance of this offer by the
Company and the satisfaction by the Company, or waiver on behalf of the
Purchaser by the Underwriter, of the conditions referred to in section 7
below.
7. Conditions of Closing. The obligations of the Purchaser to complete
the purchase of the Purchaser's Units as contemplated hereby shall be
conditional upon the fulfilment at or before the Closing Time of each of
the conditions of the Closing set forth in the Underwriting Agreement,
except those conditions that are waived by the Underwriter.
8. Payment and Delivery. The Purchaser acknowledges and agrees that
this offer and any other documents delivered in connection herewith will
be held by the Underwriter until such time as the conditions referred to
in section 7 hereof are satisfied by the Company or waived by the
Underwriter. Upon such satisfaction or waiver, at the Closing,
2-6
25
the Underwriter will, on behalf of the Purchaser, deliver this offer and
any other documents required to be delivered in connection herewith to the
Company and will pay to the Company an amount equal to the total Purchase
Price for the Purchaser's Units and, subject to section 9 below, the
Company will thereupon issue and sell the Purchaser's Units to the
Purchaser and cause to be issued and delivered to, upon the direction of
the Underwriter for delivery to the Purchaser in accordance with its
"Delivery Instructions" on page 1 above, definitive certificates
representing the Purchaser's Shares and Warrants underlying the Units
registered in the name of the Purchaser (or in such other name or names as
are set forth under "Alternate Registration Instructions" on page 1
above). The Purchaser acknowledges that the payment by the Underwriter,
on behalf of the Purchaser, of the Purchase Price to the Company will
constitute a loan made by the Underwriter to the Purchaser and the
Purchaser agrees to repay such loan to the Underwriter by delivering to
the Underwriter (or to such other person as the Underwriter may direct by
notice to the Purchaser), on the Closing Date, a certified cheque, bank
draft or wire transfer made payable on the Closing Date to or to the order
of "MFC Merchant Bank S.A." in an amount equal to the aggregate Purchase
Price or by making such other arrangements for the payment of such amount
as may be acceptable to the Underwriter against delivery to the
Underwriter of global certificates representing an aggregate of 8,500,000
Shares and 8,500,000 Warrants. The Underwriter will, within three
business days from receiving written direction from the Purchaser,
instruct the Company to have definitive certificates representing the
Purchaser's Shares and Warrants delivered to the Purchaser in accordance
with any delivery instructions received by the Underwriter. In the event
that this offer is not accepted by the Company or the conditions referred
to in section 7 above are not satisfied by the Company, or waived by the
Underwriter, within the time therein provided, this offer and any other
documents delivered in connection herewith will be returned to the
Purchaser at the address under "Name and Address of Purchaser" set forth
on page 1 above.
9. Acceptance or Rejection. The Company will have the right to accept
this offer at any time at or prior to the Closing Time, but will only be
entitled to reject this offer if, at the Closing Time, each of the
conditions referred to in section 7 above shall have been satisfied by the
Company or waived by the Underwriter and it would be unlawful for the
Company to accept this offer. Notwithstanding the foregoing, the
Purchaser acknowledges and agrees that the acceptance of this offer will
be conditional upon the sale of the Purchaser's Units to the Purchaser
being exempt from any prospectus or offering memorandum requirements of
all applicable Securities Laws. The Company will be deemed to have
accepted this offer upon the delivery at the Closing of the certificates
representing the Purchaser's Shares and Warrants underlying the Units
referred to in section 8 above to or upon the direction of the Underwriter
in accordance with the provisions hereof.
10. Information and Documents. The Purchaser will, as soon as
practicable, deliver or arrange to have delivered to the Underwriter, at
the address set forth on page 1 hereof (or to such other person or at such
other address as the Underwriter may direct by notice to the Purchaser) a
duly executed Subscription Agreement and will, promptly upon request by
the Company or the Underwriter, provide the Company or the Underwriter
with such information and execute and deliver to the Company or the
Underwriter such additional undertakings, questionnaires and other
documents as the Company or the Underwriter may request in connection with
the sale of the Units. The Purchaser acknowledges and agrees that such
forms, undertakings, questionnaires and other documents, when executed and
delivered by the Purchaser, will form part of and will be incorporated
into this Subscription Agreement with the same effect as if each
constituted a representation and warranty or covenant of the Purchaser
hereunder in favour of the Company and the Underwriter. The Purchaser
consents to the filing of such forms, undertakings, questionnaires and
other documents as may be required to be filed with any stock exchange or
securities regulatory authority in connection with the transactions
contemplated hereby.
11. Purchaser's Representations and Warranties. The Purchaser
represents and warrants to the Company and the Underwriter, as
representations and warranties that are true as of the date of this offer
and will be true as of the date of this Subscription Agreement and as of
the Closing Date, and the Purchaser acknowledges that such representations
and warranties will be relied on by the Company and the Underwriter in
deciding whether to accept this subscription for Units, that:
(a) No Registration in U.S. The Purchaser acknowledges and agrees
-----------------------
that:
(i) the Units, the Warrants and the Shares underlying the Units and
Warrants have not been and will not be registered under the
Securities Act or the securities laws of any state;
2-7
26
(ii) the sale contemplated hereby is being made in reliance on either
Rule 144A to Qualified Institutional Buyers or under Regulation
S to non U.S. Persons outside the United States in reliance upon
Regulation S (a "Regulation S Investor"); and
(iii) the Shares underlying the Units, the Warrants and the Shares
underlying the Warrants are deemed to be "restricted
securities" within the meaning of Rule 144 under the Securities
Act;
(b) Qualified Institutional Buyer. The Purchaser is a Qualified
------------------------------
Institutional Buyer or a Regulation S Investor and it is
acquiring the Shares and Warrants underlying the Units for its
own account or for the account of a Qualified Institutional Buyer
with respect to which it exercises sole investment discretion,
and not with a view to any resale, distribution or other
disposition of the Shares and Warrants underlying the Units in
violation of the Securities Laws;
(c) Adequate Information. The Purchaser has had access to all
---------------------
information, if any, concerning the Company as it has considered
necessary in connection with its investment decision to acquire
the Units;
(d) No Solicitation or Advertising. The Purchaser acknowledges that
-------------------------------
it has not purchased the Units as a result of any general
solicitation or general advertising, including advertisements,
articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio or
television, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising;
(e) Resales. The Purchaser understands that if it decides to offer,
--------
sell or otherwise transfer such Shares or Warrants underlying the
Units such securities may be offered, sold or otherwise
transferred only (x)(I) to a person whom the seller reasonably
believes is a Qualified Institutional Buyer purchasing for its
own account or is purchasing for the account of a Qualified
Institutional Buyer in a transaction meeting the requirements of
Rule 144A, (II) in an offshore transaction (as defined in Rule
902 under the Securities Act) meeting the requirements of Rule
904 under the Securities Act, (III) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (IV) to an
institutional "Accredited Investor" as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act that,
prior to such transfer, furnishes the Company an opinion of
counsel or other documentation containing certain representations
and agreements relating to the registration or transfer of the
Shares or Warrants underlying the Units that such transfer is in
compliance with the Securities Act, or (V) in accordance with
another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel if the
Company so requests), (y) to the Company, (z) pursuant to an
effective registration statement under the Securities Act and, in
each case, in accordance with any applicable securities laws of
any state of the United States or any other applicable
jurisdiction, and (C) that the holder will, and each subsequent
holder is required to, notify any purchaser of the security
evidenced thereby of the resale restrictions set forth in (B)
above;
(f) Legend on Certificates. The Purchaser understands that all
-----------------------
certificates representing the Shares or Warrants sold in the
United States as part of this offering, as well as all
certificates issued in exchange for or in substitution of the
foregoing securities, will bear the legend referred to in
subsection 5(f) hereof;
(g) Authorization and Effectiveness. 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 offer 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 or other form of unincorporated organization, the
Purchaser has the necessary legal capacity and authority to
execute and deliver this offer and to observe and perform its
covenants and obligations hereunder and has obtained all
necessary approvals in respect thereof, and, in either case, upon
acceptance by the
2-8
27
Company, this offer constitutes a legal, valid and binding
contract of the Purchaser enforceable against the Purchaser in
accordance with its terms;
(h) Non-U.S. Purchaser. If the Purchaser is resident outside of the
-------------------
United States, the sale of the Units to the Purchaser as
contemplated in this Agreement (including, without limitation, as
to the aggregate purchase amount payable) complies with or is
exempt from the applicable securities legislation of the
jurisdiction of residence of the Purchaser;
(i) Absence of Offering Memorandum. The offering and sale of the
-------------------------------
Purchaser's Units to the Purchaser were not made through an
advertisement of the Units in printed media of general and
regular paid circulation, radio or television or any other form
of advertisement and the Purchaser has not requested, nor does it
have need to receive, an offering memorandum or other document
prepared by the Company describing its business affairs, in order
to assist it in making an investment decision in respect of Units
and, except for this Subscription Agreement, the only documents,
if any, delivered or otherwise furnished to the Purchaser in
connection with such offering and sale were the Term Sheet,
copies of news releases issued by the Company and generally
available research reports, memoranda and other materials
concerning the Company, which documents the Purchaser
acknowledges do not, individually or collectively, constitute an
offering memorandum or similar document and have not been
independently verified by the Underwriter;
(j) No Undisclosed Information. The Purchaser's Units are not being
---------------------------
purchased by the Purchaser as a result of any material
information concerning the Company that has not been publicly
disclosed and the Purchaser's decision to tender this offer and
acquire the Purchaser's Units has not been made as a result of
any verbal or written representation as to fact or otherwise made
by or on behalf of the Company, the Underwriter or any other
person and is based entirely upon currently available public
information concerning the Company; and
(k) Investment Suitability. The Purchaser has such knowledge and
-----------------------
experience in financial and business affairs as to be capable of
evaluating the merits and risks of the investment hereunder in
the Purchaser's Units and is able to bear the economic risk of
loss of such investment.
12. No Investigation by Underwriter. The Purchaser acknowledges and
agrees that the Underwriter assumes no responsibility or liability of any
nature whatsoever for the accuracy or adequacy of any publicly available
information concerning the Company or as to whether all information
concerning the Company required to be disclosed by it has been generally
disclosed. The Purchaser further acknowledges and agrees that the
Underwriter has not engaged in or conducted any independent investigation
with respect to the Company or any such information.
13. No Revocation. The Purchaser agrees that this offer is made for
valuable consideration and may not be withdrawn, cancelled, terminated or
revoked by the Purchaser.
14. Indemnity. The Purchaser agrees to indemnify and hold harmless the
Company and the Underwriter and their respective directors, officers,
employees, agents, advisers and shareholders from and against any and all
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all fees, costs and expenses whatsoever reasonably
incurred in investigating, preparing or defending against any claim, law
suit, administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or warranty of
the Purchaser contained herein or in any document furnished by the
Purchaser to the Company or the Underwriter in connection herewith being
untrue in any material respect or any breach or failure by the Purchaser
to comply with any covenant or agreement made by the Purchaser herein or
in any document furnished by the Purchaser to the Company or the
Underwriter in connection herewith.
15. Modification. Subject to section 6 above, neither this Subscription
Agreement nor any provision hereof shall be modified, changed, discharged
or terminated except by an instrument in writing signed by the party
against whom any waiver, change, discharge or termination is sought.
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16. Assignment. This Subscription Agreement and any interest herein or
any of the rights arising hereunder may be assigned only together with a
transfer of the Shares or Warrants underlying the Units purchased
hereunder and in accordance with applicable Securities Laws, and any
applicable securities laws outside the United States in the jurisdiction
in which the Purchaser resides, and provided that the assignment is made
and the assignee resides either outside the United States or in one of the
states of the United States and agrees to be bound by the terms and
conditions of this Subscription Agreement by completing and executing an
assignment agreement in a form acceptable to the Company and by delivering
it to the Company.
17. Miscellaneous. The agreement resulting from the acceptance of this
offer by the Company contains the whole agreement between the Company, the
Underwriter and the Purchaser in respect of the subject matters hereof and
there are no warranties, representations, terms, conditions or collateral
agreements, express, implied or statutory, other than as expressly set
forth herein and in any amendments hereto. All representations,
warranties, agreements and covenants made or deemed to be made by the
Purchaser herein will survive the execution and delivery, and acceptance,
of this offer and the Closing. Time shall be of the essence of this
Subscription Agreement. This Subscription Agreement and the rights and
obligations of the parties hereunder will be governed by and construed
according to the laws of Switzerland. Each party irrevocably attorns to
the jurisdiction of the courts of Switzerland and all courts having
appellate jurisdictions thereover, and any proceedings commenced or
maintained in respect of or arising as a consequence of the Underwriting
Agreement will be commenced or maintained only in such of those courts as
is appropriate. This Subscription Agreement may be executed in any number
of counterparts, each of which when delivered, either in original or
facsimile form, shall be deemed to be an original and all of which
together shall constitute one and the same document.
18. Facsimile Signatures. The execution, delivery and acceptance of
this Subscription Agreement in either original or facsimile form shall be
deemed to be an original.
19. Language. The Purchaser acknowledges its consent and requests that
all documents evidencing or relating in any way to its purchase of Shares
be drawn up in the English language only.
IN WITNESS WHEREOF the undersigned has executed this Subscription
Agreement on this 14th day of November, 2000.
---------------------------------------
Name of Purchaser
Per:
-----------------------------------
Title
Per:
-----------------------------------
Title
A C C E P T A N C E
The foregoing is acknowledged, accepted and agreed to this 14th day
of November, 2000.
EURO TRADE & FORFAITING, INC.
Per:
-------------------------
Title
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29
Schedule A
TERM SHEET
Summary of the Principal Terms of the Offering of
Common Shares of Euro Trade & Forfaiting, Inc.
--------------------------------------------------
Issuer: Euro Trade & Forfaiting, Inc. (the "Company").
Issue: Units (the "Units") issued pursuant to private
placement exemptions with each Unit comprised
of one common share in the capital of the
Company (a "Share") and one warrant (a
"Warrant") entitling the holder thereof to
acquire one further share for a purchase price
of $1.35 which Warrant shall be exercisable
for a period of five years from the date of
issuance.
Size: 8,500,000 Units.
Amount: $11,475,000.
Price: $1.35 per Unit.
Commission: $0.108 per Unit (8% of the gross proceeds of
the Issue) payable upon closing of the Issue
and $0.108 per Warrant exercised payable upon
exercise of the Warrant.
Net Proceeds
of the Issue: $1.242 per Unit.
Sales: United States and Europe.
Closing Date: Such date or time as may be mutually agreed
but in any event no later than November 14,
2000.
Use of Proceeds: The net proceeds of the Issue will be used to
fund working capital.
Transaction
Structure: Private placement of Units under applicable
exemptions from prospectus and registration
requirements.
Due Diligence: The Underwriter will be given reasonable
access to the Company's corporate, financial
and other records for the purposes of
conducting additional due diligence in respect
of the Issue. The Underwriter's obligation to
complete the purchase of the Units on the
Closing Date is conditional on the Underwriter
being satisfied, acting reasonably, with the
results of its due diligence.
Underwriter: MFC Merchant Bank S.A.
Substituted Purchasers: Although the offer is made by the Underwriter
as purchaser, the Underwriter will endeavour
prior to the Closing Date to arrange for
qualified purchasers for the Units on a
"private placement" basis which qualified
purchasers may include associates and
affiliates of the Underwriter.
2-1
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Other Provisions: The Underwriter's agreement to purchase the
Shares is subject to the Underwriter and the
Company entering into a definitive
underwriting agreement relating to the Shares
in a form satisfactory to the Underwriter,
such agreement to include terms and conditions
as are customary in the circumstances
including, without limitation, a material
change clause, disaster out clause and an
appropriate indemnity provision. The
underwriting agreement will also contain
standard representations and warranties by the
Company and other terms and conditions as are
customary and appropriate in the
circumstances.