EXHIBIT 4.1
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
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THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of ___________,
1996 (the "Agreement"), is executed in reliance upon the exemption from
registration afforded by Regulation S ("Regulation S") as promulgated by the
Securities and Exchange Commission ("SEC"), under the Securities Act of 1933, as
amended. Capitalized terms used herein and not defined shall have the meanings
given to them in Regulation S.
This Agreement has been executed by the undersigned "Buyer" in connection
with the private placement of 8.0% Convertible Debentures of Silverado Foods,
Inc., a corporation organized under the laws of Oklahoma, with its principal
executive offices located at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000
(hereinafter referred to as "Seller"). Buyer hereby represents and warrants to,
and agrees with Seller:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S OF THE
1933 ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED
IN REGULATION S OF THE 1933 ACT) EXCEPT PURSUANT TO REGISTRATION UNDER OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
1. Agreement To Subscribe; Purchase Price.
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(a) Subscription. The undersigned Buyer hereby subscribes for and
agrees to purchase the Sellers 8.0% Convertible Debentures substantially in the
form of the Debentures attached as Exhibit A hereto and having an aggregate
original principal amount of U.S. $_____________ (singly, a "Debenture," and
collectively, the "Debentures"), at an aggregate purchase price as set forth in
subsection (b) herein.
(b) Payment. The aggregate Purchase Price for the Buyer's portion of
the Debentures shall be __________________________ United States Dollars (U.S.
$___________) (the "Purchase Price"), which shall be payable at each closing
pursuant to paragraph C herein by delivering immediately available funds in
United States Dollars by wire transfer to the designated depository Xxxxx X.
Xxxxxxxxx, Esq. as Escrow Agent ("Escrow Agent") for closing by delivery of
securities versus payment.
(c) Closing. Subject to the satisfaction of the conditions set forth
in Sections 7 and 8 hereof, the closing of the transactions contemplated by this
Agreement shall occur on or before January 6, 1997, or such earlier or later
date as is mutually agreed to in writing by Buyer and Seller.
2. Buyer Representations and Covenants; Access to Information.
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Offshore Transaction. In connection with the purchase and sale of the
Debentures, Buyer represents and warrants to, and covenants and agrees with
Seller as follows:
(i) Buyer is not a natural person and is not organized under the
laws of any jurisdiction within the United States, was not formed by
a U.S. Person (as defined in Section 902(o) of Regulation S) for the
purpose of investing in Regulation S securities and is not otherwise a
U.S. Person. Buyer is not, and on the closing date will not be, an
affiliate of Seller;
(ii) At the time the buy order was originated, Buyer was outside
the United States and is outside of the United States as of the date
of the execution and delivery of this Agreement;
(iii) No offer to purchase the Debentures or the common stock of
Seller issuable upon conversion of the Debentures (collectively, the
"Securities"), was made by Buyer in the United States;
(iv) Buyer is purchasing the Securities for its own account and
Buyer is qualified to purchase the Securities under the laws of its
jurisdiction of residence, and the offer and sale of the Securities
will not violate the securities or other laws of such jurisdiction;
(v) All offers and sales of any of the Securities by Buyer prior
to the end of the Restricted Period (as hereinafter defined) shall be
made in compliance with any applicable securities laws of any
applicable jurisdiction and in accordance with Rule 903 and 904, as
applicable, of Regulation S or pursuant to registration of securities
under the 1933 Act or pursuant to an exemption from registration. In
any case, none of the Securities have been and will be offered or
sold by Buyer to, or for the account or benefit of, a U.S. Person or
within the United States until after the end of the forty (40) day
period commencing on the later of (x) the date of closing of the
offering of the Securities or (y) the date of the first offer of the
Securities to persons other than distributors (the "Restricted
Period"), as certified by Buyer to Seller and thereafter only pursuant
to a Registration Statement or an applicable exemption therefrom;
(vi) The transactions contemplated by this Agreement (a) have not
been and will not be pre-arranged by Buyer with a purchaser located in
the United States or a purchaser which is a U.S. Person, and (b) are
not and will not be part of a plan or scheme by Buyer, to evade the
registration provisions of the 1933 Act;
(vii) Buyer understands that the Securities are not registered
under the 1933 Act and are being offered and sold to it in reliance on
specific exclusions from the registration requirements of Federal and
State securities laws, and that
Seller is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of Buyer
set forth herein in order to determine the applicability of such
exclusions and the suitability of Buyer and any purchaser from Buyer
to acquire the Securities;
(viii) Buyer shall take all reasonable steps to ensure its
compliance with Regulation S and shall promptly send to each purchaser
who acts as a distributor, dealer or a person receiving a selling
concession, fee or other remuneration in respect of any of the
Securities, who purchases prior to the expiration of the Restricted
Period referred to in subparagraph (v) above, a confirmation or other
notice to the purchaser stating that the purchaser is subject to the
same restrictions on offers and sales as Buyer pursuant to Section
901(c)(2)(iv) of Regulation S;
(ix) Buyer has not conducted and shall not conduct any "directed
selling efforts" as that term is defined in Rule 902(b) of Regulation
S; nor has Buyer conducted any general solicitation relating to the
offer and sale of any of the Securities in the United States or
elsewhere;
(x) This Agreement has been duly authorized, validly executed and
delivered on behalf of Buyer and is a valid and binding agreement in
accordance with its terms, subject to general principles of equity and
to bankruptcy or other laws affecting the enforcement of creditors'
rights generally;
(xi) The execution and delivery of this Agreement and the
consummation of the purchase of the Securities, and the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by Buyer of any of the terms of provisions of, or
constitute a default under, the articles of incorporation or by-laws
(or similar constitutive documents) of Buyer or any indenture,
mortgage, deed of trust, or other material agreement or instrument to
which Buyer is a party or by which it or any of its properties or
assets are bound, or any existing applicable law, rule or regulation
of the United States or any State thereof or any applicable decree,
judgment or order of any Federal or State court, Federal or State
regulatory body, administrative agency or other United States
governmental body having jurisdiction over Buyer or any of its
properties or assets;
(xii) All invitation, offers and sales of or in respect of, any
of the Securities, by Buyer and any distribution by Buyer of any
documents relating to any offer by it of any of the Securities will be
in compliance with applicable laws and regulations and will be made in
such a manner that no prospectus need be filed and no other filing
need be made by Seller with any regulatory authority or stock exchange
in any country or any political sub-division of any country;
(xiii) Buyer will not make any offer or sale of the Securities
by any means which would not comply with the laws and regulations of
the territory in which such offer or sale takes place or to which such
offer or sale is subject or
which would in connection with any such offer or sale impose upon
Seller any obligation to satisfy any public filing or registration
requirement or provide or publish any information of any kind
whatsoever or otherwise undertake or become obligated to do any act;
(xiv) Neither the Buyer nor any of its affiliates has entered,
has the intention of entering, or will during the Restricted Period
enter into any put option, short position or other similar instrument
or position with respect to any of the Securities or securities of the
same class as the Securities;
(xv) the Buyer (or others for whom it is contracting hereunder)
has been advised to consult its own legal and tax advisors with
respect to applicable resale restrictions and applicable tax
considerations and it (or others for whom it is contracting hereunder)
is solely responsible (and the Company is not in any way responsible)
for compliance with applicable resale restrictions and applicable tax
legislation;
(xvi) Buyer understands that no Federal or State or foreign
government agency has passed on or made any recommendation or
endorsement of the Securities;
(xvii) Buyer acknowledges that it and its advisors, if any,
have been furnished with all materials relating to the business,
finances and operations of Seller and all materials relating to the
offer and sale of the Securities which have been requested by Buyer.
Buyer further acknowledges that it and its advisors, if any, have
received complete and satisfactory answers to such inquiries;
(xviii) Buyer acknowledges that the purchase of the Securities
involves a high degree of risk, including the total loss of Buyer's
investment. Buyer is an accredited investor as defined in Regulation
D promulgated under the Securities Act of 1933. Buyer has such
knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of purchasing the
Securities; and
(xix) Buyer is not a "10-percent Shareholder" (as defined in
Section 871(h)(3)(B) of the U.S. Internal Revenue Code) of Seller.
(xx) Buyer is acquiring the securities for investment purposes
only, for its own account, and not with a view to, or for sale in
connection with, a distribution.
3. Seller Representations and Covenants.
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(a) Reporting Company Status. Seller is a "Reporting Issuer" as
defined by Rule 902 of Regulation S. Seller has registered its Common Stock,
$0.01 par value per share (the "Common Stock"), pursuant to Section 12 of the
Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Common Stock is listed and trades on the
American Stock Exchange ("AMEX"). Seller has filed all material required to be
filed pursuant to all reporting obligations under either Section 13(a) or 15(d)
of the Exchange Act for a period of at least twelve (12) months immediately
preceding the offer or sale of the Securities (or for such shorter period that
Seller has been required to file such material).
(b) Current Public Information. Seller has furnished Buyer with
copies of its most recent reports, as amended, filed under the Exchange Act and
other publicly available documents requested by Buyer.
(c) Offshore Transaction. Seller has not offered any of the
Securities to any person in the United States, any identifiable groups of U.S.
citizens abroad, or to any U.S. Person, as such terms are used in Regulation S.
(i) At the time the buy order was originated, Seller and/or its
agents reasonably believe the Buyer was outside of the United States
and was not a U.S. person, based on the representations of Buyer.
(ii) Seller and/or its agents reasonably believe that the
transaction has not been pre-arranged with a buyer in the United
States, based on the representations of Buyer.
(iii) No offer to buy or sell the Securities was or will be
made by Seller to any person in the United States.
(iv) The sale of the Securities by Seller pursuant to this
Agreement will be made in accordance with the provisions and
requirements of Regulation S provided that the representations and
warranties of Buyer in Section 2 hereof are true and correct.
(v) The transactions contemplated by this Agreement (a) have not
been and will not be pre-arranged by Seller with a purchaser located
in the United States or a purchaser which is a U.S. Person, and (b)
are not and will not be part of a plan or scheme by Seller to evade
the registration provisions of the 1933 Act.
(d) No Directed Selling Efforts. In regard to this transaction,
Seller has not conducted any "directed selling efforts" as that term is defined
in Rule 902 of Regulation S nor has Seller conducted any general solicitation
relating to the offer and sale of any of the Securities in the United States or
elsewhere.
(e) Concerning the Securities. The issuance, sale and delivery of the
Debentures have been duly authorized by all required corporate action on the
part of Seller, and when issued, sold and delivered in accordance with the terms
hereof and thereof for the consideration expressed herein and therein, will be
duly and validly issued, fully paid and non-assessable. The Common Stock
issuable upon conversion of the Debenture has been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Debentures,
shall be duly and validly issued, fully paid, and non-assessable and will not
subject the holders thereof, if such persons are non-U.S. persons, to personal
liability by reason of being such holders. There are no pre-emptive rights of
any shareholder of Seller.
(f) Subscription Agreement. This Agreement has been duly authorized,
validly executed and delivered on behalf of Seller and is a valid and binding
agreement in accordance with its terms, subject to general principles of equity
and to bankruptcy or other laws affecting the enforcement of creditors' rights
generally.
(g) Non-contravention. The execution and delivery of this Agreement
and the consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or result in a
breach by Seller of any of the terms or provisions of, or constitute a default
under, the articles of incorporation or by-laws of Seller, or any indenture,
mortgage, deed of trust, or other material agreement or instrument to which
Seller is a party or by which it or any of its properties or assets are bound,
or any existing applicable law, rule or regulation of the United States or any
State thereof or any applicable decree, judgment or order of any Federal or
State court, Federal or State regulatory body, administrative agency or other
United States governmental body having jurisdiction over Seller or any of its
properties or assets.
(h) Approvals. Seller is not aware of any authorization, approval or
consent of any governmental body which is legally required for the issuance and
sale of the Debentures and the Common Stock issuable upon conversion thereof to
persons who are non-U.S. Persons, as contemplated by this Agreement.
4. Exemption; Reliance on Representations. Buyer understands that the
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offer and sale of the Securities are not being registered under the 1933 Act.
Seller and Buyer are relying on the rules governing offers and sales made
outside the United States pursuant to Regulation S.
5. Transfer Agent Instructions.
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(a) Debentures. Upon the conversion of the Debentures, the holder
thereof shall submit such Debenture with a notice of conversion to the Seller
and the Seller shall instruct Seller's transfer agent to issue one or more
Certificates representing that number of shares of Common Stock into which the
Debenture or Debentures are convertible in accordance with the provisions
regarding conversion set forth in Exhibit A hereto. The Seller shall act as
Debenture Registrar and shall maintain an appropriate ledger containing the
necessary information with respect to each Debenture.
(b) Common Stock to be Issued Without Restrictive Legend. Upon the
conversion of any Debenture by a person who is a non-U.S. Person, Seller shall
instruct Seller's transfer agent to issue Stock Certificates without restrictive
legend in the name of Buyer (or its nominee (being a non-U.S. Person) or such
non-U.S. Persons as may be designated by Buyer prior to the closing) and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion, as applicable. Seller warrants that
no instructions other than these instructions and instructions to impose a "stop
transfer" instruction with respect to the certificates until the end of the
Restricted Period have been given or will be given to the transfer agent and
that the Common Stock shall otherwise be freely transferable on the books and
records of Seller. Nothing in this Section 5, however, shall affect in any way
Buyer's or such nominee's obligations and agreements to comply with all
applicable securities laws upon resale of the Securities.
6. Registration. If upon conversion of Debentures effected by the Buyer
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pursuant to the terms of this Agreement the Company fails to issue certificates
for shares of Common Stock issuable upon such conversion (the "Underlying
Shares") to the Buyer bearing no restrictive legend for any reason other than
the Company's reasonable good faith belief that the representations and
warranties made by the Buyer in this Agreement or the Notice of Conversion were
untrue when made, or if the restricted period under Regulation S is extended,
then the Company shall be required, at the request of the Buyer and at the
Company's expense, to effect the registration of the Underlying Shares issuable
upon conversion of the Debentures under the Act and relevant Blue Sky laws as
promptly as is practicable. The Company and the Buyer shall cooperate in good
faith in connection with the furnishing of information required for such
registration and the taking of such other actions as may be legally or
commercially necessary in order to effect such registration. The Company shall
file a registration statement within 15 days of Buyer's demand therefor and
shall use its best efforts to cause such registration statement to become
effective as soon as practicable thereafter and in any event within 60 days of
the date of the initial filing thereof. Such best efforts shall include, but
not be limited to, promptly responding to all comments received from the staff
of the Securities and Exchange Commission, providing Buyer's counsel with a
contemporaneous copy of all written communications from and to the staff of the
Securities and Exchange Commission with respect to such registration statement
and promptly preparing and filing amendments to such registration statement
which are responsive to the comments received from the staff of the Securities
and Exchange Commission. Once declared effective by the Securities and Exchange
Commission, the Company shall cause such registration statement to remain
effective until the earlier of (i) the sale by the Buyer of all Underlying
Shares registered or (ii) 120 days after the effective date of such registration
statement. In the event the Company undertakes to file a Registration Statement
on Form S-3 in connection with the Common Stock, upon the effectiveness of such
Registration, Buyer shall have the option to sell the Common Stock pursuant
thereto. The foregoing shall not in any way limit Buyer's rights in connection
with the Common Stock pursuant to Regulation S.
7. Delivery Instructions. The Debentures being purchased hereunder shall
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be delivered to the Buyer at such time and place as shall be mutually agreed by
Seller and Buyer.
8. Conditions To Seller's Obligation To Sell. Seller's obligation to
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sell the Debentures is conditioned upon:
(a) The receipt and acceptance by Buyer of this Agreement as evidenced
by execution of this Agreement by Buyer.
(b) Delivery into the closing depository of good funds by Buyer as
payment in full of the purchase price of the Debentures.
9. Conditions To Buyer's Obligation To Purchase. Buyer's obligation to
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purchase the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as
evidenced by execution of this Agreement by the duly authorized officer of
Seller.
(b) Delivery of the Debentures as described herein.
10. Offering Materials. All offering materials and documents used in
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connection with offers and sales of the Securities prior to the expiration of
the Restricted Period referred to in Section 2(a) hereof shall include
statements to the effect that the Securities have not been registered under the
1933 Act or applicable state securities laws, and that neither Buyer, nor any
direct or indirect purchaser of the Securities from Buyer, may directly or
indirectly offer or sell the Securities in the United States or to U.S. Persons
(other than distributors) unless that Securities are registered under the 1933
Act any applicable state securities laws, or any exemption from the registration
requirements of the 1933 Act or such state securities laws is available. Such
statements shall appear (1) on the cover of any prospectus or offering circular
used in connection with the offer or sale of the Securities, (2) in the
underwriting section of any prospectus or offering circular used in connection
with the offer or sale of the Securities, and (3) in any advertisement made or
issued by Seller, Buyer, any other distributor, any of their respective
affiliates, or any person acting on behalf of any of the foregoing.
11. No Shareholder Approval. Seller hereby agrees that from the Closing
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Date until the issuance of Common Stock upon the conversion of the Debentures,
Seller will not take any action which would require Seller to seek shareholder
approval of such issuance unless such shareholder approval is required by law or
regulatory body (including but not limited to the American Stock Exchange as a
result of the issuance of the Securities hereunder.
12. Miscellaneous.
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(a) Except as specifically referenced herein, this Agreement
constitutes the entire contract between the parties, and neither party shall be
liable or bound to the other in any manner by any warranties, representations or
covenants except as specifically set forth herein. Any previous agreement among
the parties related to the transactions described herein is superseded hereby.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or impled, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
(b) Buyer is an independent contractor, and is not the agent of
Seller. Buyer is not authorized to bind Seller, or to make any representations
or warranties on behalf of Seller.
(c) Seller makes no representations or warranty with respect to
Seller, its finances, assets, business prospects or otherwise. Buyer will advise
each purchaser, if any, and potential purchaser of the Securities, of the
foregoing sentence, and that such purchaser is relying
on its own investigation with respect to all such matters, and that such
purchaser will be given access to any and all documents and Seller personnel as
it may reasonably request for such investigation.
(d) All representations and warranties contained in this Agreement by
Seller and Buyer shall survive the closing of the transactions contemplated by
this Agreement.
(e) This Agreement shall be construed in accordance with the laws of
Oklahoma and shall be binding upon the successors and assigns of each party
hereto. This Agreement may be executed in counterparts, and the facsimile
transmission of an executed counterpart to this Agreement shall be effective as
an original.
(f) Buyer agrees to indemnify and hold Seller harmless from any and
all claims, damages and liabilities arising from Buyer's breach of its
representations and/or covenants set forth herein.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
Official Signatory of Seller:
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Silverado Foods, Inc.
By:
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Title:
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Official Signatory of Buyer:
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By:
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Title:
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Address of Buyer:
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