<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 31, 1997
--------------------------------
SILVERADO FOODS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 1-13260 73-1369218
------------------ ---------------- ------------------
(State or other (Commission File (I.R.S Employer
jurisdiction of Number) Identification No.)
incorporation)
6846 South Canton, Suite 110, Tulsa, Oklahoma 74136
- --------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 496-2400
-----------------------------
Not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
The following is a list of all exhibits filed as a part
of this Form 8-K.
4.1 Form of Regulation S Securities Subscription Agreement
4.2 Form of 8% Convertible Debenture Due January 31, 1999
4.3 Form of Common Stock Purchase Warrant
4.4 Form of Registration Rights Agreement
Item 9. Sales of Equity Securities Pursuant to Regulation S
---------------------------------------------------
On January 31, 1997, the Company issued its 8% Convertible
Debentures due January 31, 1999 (the "Debentures"), in the
aggregate original principal amount of $1,500,000. The Debentures
were issued at face value in offshore transactions pursuant to
Regulation S promulgated under the Securities Act of 1933, as
amended. The purchasers were accredited investors (as defined in
Regulation D promulgated under the Securities Act of 1933, as
amended). In connection with the sale of the Debentures, the
Company paid $25,000 to H. W. Finance L.P. as payment for certain
offering expenses and fees. Also in connection with the offering of
the Debentures, the Company granted to the purchasers of the
Debentures warrants (the "Warrants") to purchase a total of 125,000
shares of the Company's common stock, par value $0.01 per share
("Common Stock).
The Debentures are convertible at any time commencing 45 days
after issuance, into shares of the Company's Common Stock at a
conversion price for each share of Common Stock equal to the lower
of (a) $3.25 per share or (b) 70% of the average closing prices of
the Common Stock for the five business days immediately preceding
the conversion date as reported by the American Stock Exchange,
subject to anti-dilution provision. Assuming that the market price
of the Common Stock at the time of conversion is the same as the
market price at the time of subscription, based on a conversion
price of $ 1.8375 per share, the Debentures would be convertible
into 816,326 shares of Common Stock. In the event the number of
shares of Common Stock issuable upon conversion of the Debentures
together with the number of shares issuable upon exercise of the
Warrants is such that it would
<PAGE>
result in an issuance of 20% or more of the issued and outstanding
Common Stock of the Company, the Company may redeem a sufficient
portion of the Debentures so that such conversion would result in
an issuance of less than 20% of the Company's issued and
outstanding Common Stock. The Common Stock issuable on the
conversion of the Debentures (if not otherwise tradeable without
restriction) is subject to certain registration rights between the
Company and the purchasers of the Debentures.
The Debentures are due on January 31, 1999, and bear interest
at the rate of 8% per annum. Interest on the Debentures is payable
quarterly in cash or, at the option of the Company or the holder,
in Common Stock.
The Warrants are exercisable at $3.00 per share, subject to
anti-dilution provisions. The Warrants expire on January 31, 2001.
* * * * * * *
-3-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SILVERADO FOODS, INC.
By: /s/ Dorvin D. Lively
-------------------------------
Dorvin D. Lively
Vice President and Chief Financial Officer
Date: February 14, 1997
-4-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 Form of Regulation S Securities Subscription Agreement
4.2 Form of 8% Convertible Debenture Due January 31, 1999
4.3 Form of Common Stock Purchase Warrant
4.4 Form of Registration Rights Agreement
<PAGE>
The schedules and exhibits to the foregoing Regulation S Securities
Subscription Agreement which are listed below have been omitted. Copies of such
schedules and exhibits will be furnished supplementally to the Commission upon
request.
Schedule 1 Subscribers
Schedule 2.4 Capitalization
Schedule 2.6 SEC Reports: Financial Statements
Schedule 2.12 Litigation
Exhibit A 8% Convertible Debenture Due January 31, 1999
Exhibit B Transfer Agent Agreement
Exhibit C Definition of "U. S. Person"
Exhibit D Definition of "Accredited Investor"
Exhibit E Registration Rights Agreement
Exhibit H Common Stock Purchase Warrant
<PAGE>
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
BY AND BETWEEN
SILVERADO FOODS, INC.
AND
SEACREST CAPITAL LIMITED,
FAIRWAY CAPITAL LIMITED,
AND
INFINITY EMERGING OPPORTUNITIES, LIMITED,
AS SUBSCRIBERS
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY
STATE SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER REGULATION S ("REGULATION S") PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR
SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
<PAGE>
THIS REGULATION S SECURITIES SUBSCRIPTION AGREEMENT (the "Agreement" or the
"Subscription Agreement") is executed by each of the undersigned (each a
"Subscriber" and collectively, the "Subscribers") in connection with the
subscription by the Subscribers for Convertible Debentures of SILVERADO FOODS,
INC., an Oklahoma corporation (the "Company").
WHEREAS, the Company is offering for sale (the "Offering") pursuant to
Regulation S ("Regulation S") under the United States Securities Act of 1933, as
amended (the "Act") an aggregate principal amount of $1,500,000 of Convertible
Debentures, at an aggregate purchase price of $1,500,000 (the "Purchase Price"),
in the form attached hereto as Exhibit A (the "Convertible Debentures");
---------
WHEREAS, each Subscriber wishes to subscribe for the Convertible Debentures
set forth opposite such Subscriber's name on Schedule 1 hereto, in accordance
----------
with the terms and conditions of this Agreement; and
WHEREAS, in connection with the Offering, the Company shall grant to the
Subscribers a warrant to acquire shares of common stock of the Company, as
described in Section 9.1 hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Subscription and Closing; Escrow
1.1 Subscription. Subject to the terms and conditions of this Agreement,
------------
each Subscriber hereby subscribes for, and the Company hereby agrees to issue
and sell to each such Subscriber, Convertible Debentures in the principal amount
and at the aggregate price set forth opposite each Subscriber's name as
indicated on Schedule 1 to this Agreement.
1.2 Escrow Agreement. Contemporaneous herewith, each Subscriber, the
----------------
Company and Continental Stock Transfer & Trust Company serving as transfer agent
(the "Transfer Agent") shall enter into that certain Transfer Agent Agreement in
the form attached hereto as Exhibit B (the "Transfer Agent Agreement"). Payment
---------
of the Purchase Price for the Convertible Debentures by the Subscribers, and
delivery of the Convertible Debentures by the Company, shall be effected
pursuant to the procedures established in the Transfer Agent Agreement. The
date of delivery of the last of such items by the Subscribers and the Company to
the Escrow Agent shall be referred to herein as the "Closing" or "Closing Date".
The Transfer Agent shall also perform the "paying agent" and "book entry"
functions contemplated in the Transfer Agent Agreement.
1.3 Multiple Subscribers. This Agreement may be executed by one or more
--------------------
Subscribers. In the event that this Agreement pertains to a subscription by a
single Subscriber
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 1
(Silverado Foods, Inc.)
<PAGE>
only, all references to the "Subscribers" or "each Subscriber" shall be deemed
to refer to such single Subscriber.
2. Representations with Respect to the Company
The Company represents and warrants to and covenants with the Subscribers
as follows:
2.1 Organization, Good Standing, and Qualification.
----------------------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Oklahoma and has all
requisite corporate power and authority to carry on its business as now
conducted and as proposed to be conducted. The Company is duly qualified
to transact business and is in good standing in each jurisdiction in which
the failure to so qualify would have a material adverse effect on the
business or properties of the Company and its subsidiaries taken as a
whole.
(b) Each subsidiary of the Company is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to carry
on its business as now conducted and as proposed to be conducted. Each
such subsidiary is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have
a material adverse effect on the business or properties of such subsidiary.
2.2 Authorization. All corporate action on the part of the Company, its
-------------
officers, directors and shareholders have been taken necessary for the (i)
authorization, execution and delivery of this Agreement, the Convertible
Debentures, the Transfer Agent Agreement and the Warrant (as hereafter defined)
(the Agreement, together with each of such documents, being referred to
collectively as the "Transaction Documents"), (ii) performance of all
obligations of the Company under each Transaction Document and (iii)
authorization, issuance and delivery of shares of the common stock, par value
$.01 per share (the "Common Stock") of the Company issuable upon (x) conversion
of the Convertible Debentures (such shares of Common Stock are hereinafter
referred to as the "Debenture Shares"), and (y) exercise of the rights of the
Subscribers (the "Warrant Rights") under the Warrant (such shares of Common
Stock are hereinafter referred to as the "Warrant Shares"). The Debenture
Shares and Warrant Shares are hereinafter referred to as the "Shares", and the
Shares, together with the Convertible Debentures and Warrant are hereinafter
referred to as the "Securities".
2.3 Agreement. Each Transaction Document has been (or will be as of the
---------
Closing) duly executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by each Subscriber, is (or will be
as of the Closing) a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 2
(Silverado Foods, Inc.)
<PAGE>
2.4 Capital Stock. The Company has an authorized and outstanding
-------------
capitalization as set forth on Schedule 2.4. All outstanding shares of capital
stock of the Company have been duly authorized and are fully paid and non-
assessable. Other than as set forth in Section 2.4 or as disclosed in the SEC
Reports (as such term is defined in Section 2.6 below), there are no outstanding
options, warrants, rights, calls, commitments, conversion rights, rights of
exchange, plans or other agreements of any character providing for the purchase,
issuance or sale of any shares of capital stock of the Company.
2.5 Valid Issuance of Securities. When issued and delivered in accordance
----------------------------
with the terms of this Agreement, the Convertible Debentures and Warrant will
constitute legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, and will have been issued in compliance with all
applicable federal and state securities laws. Assuming the representations and
warranties of each Subscriber are accurate in all material respects, the
Debenture Shares, when issued upon conversion in accordance with the terms of
the Convertible Debentures, and the Warrant Shares, when issued upon exercise of
the Warrant Rights (assuming payment of the exercise price set forth in the
Warrant), shall be duly and validly issued and outstanding, fully paid and
nonassessable free and clear of any claims or preemptive rights, and will have
been issued in compliance with all applicable U.S. federal and state securities
laws.
2.6 SEC Reports; Financial Statements. The Company has timely filed all
---------------------------------
forms, reports and documents with the Securities and Exchange Commission (the
"Commission") since January 1, 1995, required to be filed by it under the
Securities Exchange Act of 1934, as amended (the "1934 Act") through the date
hereof (collectively, the "SEC Reports"). Such SEC Reports, at the time filed,
complied as to form in all material respects with the requirements of the 1934
Act. None of the SEC Reports, including without limitation any financial
statements or schedules included therein, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading. There have been no material adverse changes in the Company's
business, properties, results of operations or condition (financial or
otherwise) since the date of the Company's most recent Annual Report on Form 10-
K for the fiscal year ended December 31, 1995, which have not been disclosed to
the Subscribers in writing (either directly by the Company or by delivery by the
Company to the Subscribers) and except for matters disclosed in the SEC Reports
filed since the most recent Annual Report or as disclosed on Schedule 2.6
attached hereto. The audited and unaudited consolidated balance sheets of the
Company and its subsidiaries contained in the SEC Reports, and the related
consolidated statements of income, changes in stockholders' equity and changes
in cash flows for the periods then ended (the consolidated balance sheet of the
Company and its subsidiaries as of December 31, 1995 is hereinafter referred to
as the "Balance Sheet"), including the footnotes thereto, except as indicated
therein, have been prepared in accordance with generally accepted accounting
principles consistently followed throughout the periods indicated, except that
the unaudited financial statements do not contain notes and may be subject to
normal audit adjustments and normal annual adjustments. The Balance Sheet
fairly presents the financial condition of the Company and its subsidiaries at
the date thereof and, except as indicated therein, reflects all claims against
and all debts and liabilities of the Company and its subsidiaries, fixed or
contingent, as at the date thereof and the
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 3
(Silverado Foods, Inc.)
<PAGE>
related statements of income, stockholders' equity and changes in cash flows
fairly present the results of the operations of the Company and its subsidiaries
and the changes in their financial position for the period indicated. Since
December 31, 1995 (the "Balance Sheet Date"), except as disclosed in the SEC
Reports or as set forth on Schedule 2.6, there has been (x) no material adverse
change in the assets or liabilities, or in the business or condition, financial
or otherwise, or in the results of operations of the Company and its
subsidiaries, whether as a result of any legislative or regulatory change,
revocation of any license or rights to do business, fire, explosion, accident,
casualty, labor trouble, flood, drought, riot, storm, condemnation, act of God,
public force or otherwise and (y) no change in the assets or liabilities, or in
the business or condition, financial or otherwise, or in the results of
operations of the Company and its subsidiaries except in the ordinary course of
business; and no fact or condition exists or is contemplated or threatened which
might cause such a change in the future. Except as set forth on Schedule 2.6 and
as discussed in the SEC Reports, neither the Company nor any of its subsidiaries
has any debts, guarantees, liabilities or obligations required by generally
accepted accounting principles to be provided for in the Balance Sheet, whether
accrued or absolute, contingent or otherwise, and whether due or to become due,
and there is no basis for the assertion against the Company or any of its
subsidiaries of any such debt, guarantee, liability or obligation, that were not
accrued or reserved against in the financial statements included as part of the
SEC Reports.
2.7 Current Public Information. The Company is a "reporting issuer" as
--------------------------
defined in Rule 902(l) of Regulation S and it has a class of securities
registered under Section 12(b) or 12(g) of the 1934 Act. The Company has
delivered to the Subscribers copies of the Company's Form 10-K Annual Report
for the most recent fiscal year ended, Form 10-Q for the most recent fiscal
quarter ended, most recent proxy statement for its Annual Meeting of
Shareholders, and each interim report on Form 8-K filed by the Company since the
date of its most recent Annual Report on Form 10-K.
2.8 No Directed Selling Efforts in Regard to this Transaction; Compliance
---------------------------------------------------------------------
with Regulation S. The Company has not, and to the best of the Company's
- -----------------
knowledge no Subscriber nor any distributor, if any, participating in the
offering of the Securities nor any person acting for the Company or any such
distributor has conducted any "directed selling efforts" as that term is defined
in Rule 902 of Regulation S. The Company has not offered the Securities to the
Subscribers in the U.S. or to any person in the United States or any U.S.
person. The Company represents and warrants that the Offering by the Company of
the Securities to the Subscribers as contemplated in this Agreement is not part
of a plan or scheme to evade the registration provisions of the Act.
2.9 No Conflicts and Consents.
-------------------------
(a) The execution and delivery of each Transaction Document and the
consummation of the transactions contemplated by each Transaction Document
do not and will not conflict with or result in a breach by the Company of
any of the terms or provisions of, or constitute a default under, the
Certificate of Incorporation or Bylaws of the Company, or any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company is a party or by which it or any of its properties or
assets are bound, or any existing
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 4
(Silverado Foods, Inc.)
<PAGE>
applicable decree, judgment or order of any court, Federal or State
regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets.
(b) Neither the Company nor any subsidiary is required to obtain any
consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other person in connection with the execution,
delivery and performance by the Company of the Transaction Documents,
except for (i) the filing (if any) of the registration statements
contemplated by the Registration Rights Agreement with the Commission, (ii)
the applications for the listing of the Warrant Shares and the Debenture
Shares with the American Stock Exchange ("AMEX") (and with any other
national securities exchange or market on which the Common Stock is then
listed), and (iii) the filing, following the Closing, of a report on Form
8-K summarizing the terms of this Agreement (which report shall, to the
extent permitted by applicable law, refer to the Subscribers by
classification as "accredited investors" and without designation by name).
2.10 No Action. The Company has not taken and will not take any action
---------
that will affect in any way the running of the Restricted Period or Warrant
Restricted Period (each as hereafter defined) or the ability of any Subscriber
to resell freely the Securities in accordance with applicable securities laws
and this Agreement.
2.11 Compliance with Laws. As of the date hereof, the conduct of the
--------------------
business of the Company and each of its subsidiaries complies in all material
respects with all statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto, except for non compliance which would not
have a material adverse effect on the business, properties, condition (financial
or otherwise), results of operations or prospects of the Company and each of its
subsidiaries (a "Material Adverse Effect"). Neither the Company nor any
subsidiary has received notice of any alleged violation of any statute, law,
regulation, ordinance, rule, judgement, order or decree from any governmental
authority, which would have a Material Adverse Effect.
2.12 Litigation. Except as disclosed in the SEC Reports and as set forth
----------
in Schedule 2.12, there is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending or, to the
knowledge of the Company, threatened, against or affecting the Company or its
subsidiaries, or any of their properties, which could reasonably be expected to
result in any material adverse change in the business, properties, results of
operations, condition (financial or otherwise), or prospects of the Company or
its subsidiaries, or which could reasonably be expected to materially and
adversely affect the properties or assets of the Company or its subsidiaries or
which could reasonably be expected to interfere with the Company's ability to
consummate the transactions contemplated by this Agreement.
2.13 Disclosures. There is no fact known to the Company (other than
-----------
general economic conditions known to the public generally) that has not been
disclosed in writing to the Subscribers that (a) could reasonably be expected to
have a Material Adverse Effect or (b) could reasonably be
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 5
(Silverado Foods, Inc.)
<PAGE>
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement (and the issuance of the
Securities hereunder).
2.14 Prior Issuances under Regulation S; Private Placements. Except as set
------------------------------------------------------
forth in the SEC Reports or for prior issuances reflected in the capitalization
of the Company described on Schedule 2.4, the Company has not issued any shares
of its Common Stock (or securities convertible into or exercisable for shares of
Common Stock) (i) under Regulation S ("Regulation S Securities"), except for
shares of Common Stock issued as an adjustment to, or in connection with a
conversion or exercise of, Regulation S Securities or (ii) pursuant to any other
exemption from registration under the Act. Assuming that the representations of
the Subscribers are true and correct in all material respects, the offer and
sale of the Convertible Debentures and Warrant are exempt from registration
under Section 5 of the Act. Neither the Company nor any person acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Warrant and
Debentures or the shares of Common Stock issuable upon conversion or exercise
respectively thereof) which subject the offering or issuance or sale of the
Debentures and Warrant (or the shares of Common Stock issuable upon conversion
or exercise respectively thereof) to the registration requirements of Section 5
of the Act.
2.15 Commissions. No person, firm or corporation will be entitled to
-----------
receive any brokerage fee, commission or other similar payment from the Company
in connection with the consummation of the transactions contemplated hereby and
the Company shall not make any such payment to any person, firm or corporation;
provided, the Subscribers shall be paid, at the Closing, the Expense
- --------
Reimbursement (as hereinafter defined) and shall receive the Warrants.
3. Representations and Warranties of Subscriber; Access to Information;
Independent Information; Independent Investigation
Each Subscriber represents and warrants to the Company as follows:
3.1 Offshore Transaction.
--------------------
(a) no Subscriber is a "U.S. person" as that term is defined in Rule
902(o) of Regulation S (a copy of which definition is attached as
Exhibit C), and no Subscriber is an entity organized or incorporated under
---------
the laws of any foreign jurisdiction by any "U.S. person" principally for
the purpose of investing in securities not registered under the Act, unless
the Subscriber is or was organized or incorporated by "U.S. persons" who
are accredited investors (as defined in Rule 501(a) under the Act) and who
are not natural persons, estates or trusts;
(b) the Convertible Debentures and Warrant were not offered to any
Subscriber in the United States and at the time of execution of this
Subscription Agreement and the time
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 6
(Silverado Foods, Inc.)
<PAGE>
the buy order was originated, and of any offer to such Subscriber to
purchase the Convertible Debentures and Warrant hereunder, such Subscriber
was outside the United States;
(c) each Subscriber is purchasing the Securities for its own account
and not on behalf of or for the benefit of any U.S. person and the resale
of the Securities has not been prearranged with any buyer in the United
States;
(d) each Subscriber agrees that all offers and sales of the
Convertible Debentures and Debenture Shares prior to the expiration of a
period (the "Restricted Period") commencing on the Closing of this Offering
and ending forty (40) days after the Closing Date shall not be made to U.S.
persons or for the account or benefit of U.S. persons or within the United
States and shall otherwise be made in compliance with the provisions of
Regulation S. No Subscriber has been engaged or acted as or on behalf of a
distributor or dealer (and is not an affiliate of a distributor or dealer)
with respect to this transaction;
(e) each Subscriber agrees that all offers and sales of the Warrant
Shares prior to the expiration of a period commencing on the date of
issuance of the Warrant Shares under the Warrant following the exercise of
the Warrant Rights and ending forty (40) days thereafter (the "Warrant
Restricted Period") shall not be made to U.S. persons or for the account or
benefit of U.S. persons and shall otherwise be made in compliance with
provisions of Regulation S; and
(f) each Subscriber 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 or Warrant
Restricted Period, as applicable, a confirmation or other notice to the
purchaser stating that the purchaser is subject to the same restrictions on
offers and sales as the Subscriber pursuant to Section 901(c)(2)(iv) of
Regulation S.
3.2 Independent Investigation. Each Subscriber, in offering to subscribe
-------------------------
for the Securities hereunder, has, prior to the date hereof, been given access
to and the opportunity to examine all books and records of the Company, and all
material contracts and documents of the Company. In making its investment
decision to purchase the Securities, no Subscriber is relying on any oral or
written representations or assurances from the Company or any other person or
any representation of the Company or any other person other than as set forth in
this Agreement, the SEC Reports or in a document executed by a duly authorized
representative of the Company making reference to this Agreement. Each
Subscriber has such experience in business and financial matters that it is
capable of evaluating the risk of its investment and determining the suitability
of its investment. Each Subscriber is a sophisticated investor, as defined in
Rule 506(b)(2)(ii) of Regulation D under the Act, and an "accredited investor"
as defined in Rule 501 of Regulation D under the Act, a copy of which definition
is attached hereto as Exhibit D. Each Subscriber is qualified to purchase the
---------
Convertible Debentures and Warrants under the laws of the jurisdiction of its
residence. To the best of its
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 7
(Silverado Foods, Inc.)
<PAGE>
knowledge, no Subscriber is an affiliate of the Company and no Subscriber is a
"10 percent shareholder" (as defined in Section 871(h)(3)(B) of the U.S.
Internal Revenue Code) of the Company.
3.3 Economic Risk. Each Subscriber understands and acknowledges that an
-------------
investment in the Securities involves a high degree of risk, including a
possible total loss of investment. Each Subscriber represents that it is able
to bear the economic risk of an investment in the Securities.
3.4 No Government Recommendation or Approval. Each Subscriber understands
----------------------------------------
that no United States federal or state agency or similar agency of any other
country has passed upon or made any recommendation or endorsement of the
Company, this transaction or the subscription of the Securities.
3.5 No Directed Selling Efforts in Regard to this Transaction. No
---------------------------------------------------------
Subscriber has conducted any "directed selling efforts" as that term is defined
in Rule 902 of Regulation S. Such activity includes, without limitation, the
mailing of printed material to investors residing in the United States, the
holding of promotional seminars in the United States, the placement of
advertisements with radio or television stations broadcasting in the United
States or in publications with a general circulation in the United States, which
discuss the offering of the Securities.
3.6 No Registration. Each Subscriber understands that the Securities have
---------------
not been registered under the Act and are being offered and sold pursuant to an
exemption from registration contained in the Act based in part upon the
representations of such Subscriber contained herein. The Shares do, however,
carry certain registration rights as set forth in the Registration Rights
Agreement executed by the parties hereto in the form attached hereto as Exhibit
-------
E (the "Registration Rights Agreement").
- -
3.7 No Public Solicitation. Without conducting any independent
----------------------
investigation, no Subscriber knows of any public solicitation or advertisement
of an offer in connection with the proposed issuance and sale of the Securities.
3.8 Investment Intent. Each Subscriber is acquiring the Securities for
-----------------
such Subscriber's own account, for investment and not with a view to the
distribution thereof. Each Subscriber understands that except as set forth in
the Registration Rights Agreement, the Company has no present intention of
registering any such sale of the Shares. Each Subscriber represents and
warrants to the Company that it has no present plan or intention of selling the
Securities in the United States, has made no predetermined arrangements to sell
the Securities (other than the registration provisions contained in the
Registration Rights Agreement, which pertain only to a potential method of
disposing of the Shares) and that the Offering, together with any subsequent
resale by any Subscriber of the Securities, is not part of a plan or scheme to
evade the registration provisions of the Act. No Subscriber currently has a
short position in the Company's Common Stock, including any short call position
or any long put position or any contract or arrangement that has the effect of
eliminating
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 8
(Silverado Foods, Inc.)
<PAGE>
or substantially diminishing the risk of ownership of the Securities, nor has
any Subscriber engaged in any hedging transaction with respect to the
Securities.
3.9 Incorporation and Authority. Each Subscriber has the full power and
---------------------------
authority to execute, deliver and perform each Transaction Document to which it
is a party and to perform its obligations hereunder and thereunder. This
Agreement, and each other Transaction Document to which it is a party, has been
duly approved by all necessary action of each Subscriber, including any
necessary shareholder approval, has been executed by persons duly authorized by
each Subscriber, and constitutes a valid and legally binding obligation of each
Subscriber, enforceable in accordance with its terms.
3.10 No Reliance on Tax Advice. Each Subscriber has reviewed with his, her
-------------------------
or its own tax advisors the foreign, federal, state and local tax consequences
of this investment, where applicable, and the transactions contemplated by this
Agreement. Each Subscriber is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents and
understands that such Subscriber (and not the Company) shall be responsible for
the Subscriber's own income tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
3.11 Independent Legal Advice. Each Subscriber acknowledges that it has
------------------------
had the opportunity to review each Transaction Document and the transactions
contemplated by this Agreement with his, her or its own legal counsel. Each
Subscriber is relying solely on such counsel and not on any statements or
representations of the Company or any of its agents for legal advice with
respect to this investment or the transactions contemplated by this Agreement,
except for the representations, warranties and covenants set forth herein and on
the opinion provided for in Section 5.7 hereof.
4. Legends; Subsequent Transfer of Securities
4.1 Legends.
-------
(a) The Convertible Debentures shall bear a legend substantially as
set forth below and any other legend, if such legend or legends are
reasonably required to comply with state, federal or foreign law. Assuming
that there are no changes in the material facts represented in Section 3 of
this Agreement or applicable law from the date hereof until the date of
conversion, all certificates representing the Debenture Shares into which
the Convertible Debentures are converted after the Restricted Period shall
not bear a legend.
"The Convertible Debentures of Silverado Foods, Inc. ("Issuer") represented
hereby have been issued pursuant to Regulation S, promulgated under the
United States Securities Act of 1933, as amended (the "Act"), and have not
been registered under the Act or any applicable state securities laws.
These Securities may not be offered or sold within the United States or to
or for the account of a "U.S. Person" (as that
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 9
(Silverado Foods, Inc.)
<PAGE>
term is defined in Regulation S) during the period commencing on the sale
of these securities and ending on the fortieth (40th) day following
completion of the Regulation S offering of the Issuer pursuant to which
these securities have been issued (the "Restricted Period"). The Securities
represented by this certificate may first be converted into common stock of
the issuer on [45TH DAY AFTER CLOSING]. The Issuer will notify the transfer
agent of the date of completion of such offering and of the expiration of
such Restricted Period."
(b) The Warrant Shares, when issued, shall bear a legend substantially
as set forth below and any other legend, if such legend or legends are
reasonably required to comply with state, federal or foreign law (provided,
if as a result of any change in the applicable laws governing Regulation S
transactions, the Warrant Restricted Period is changed, the Company may
alter the legend set forth above for certificates representing Warrant
Shares issued after the effective date of such change such that the Warrant
Restricted Period conforms therewith).
"The shares of Common Stock of Silverado Foods, Inc. represented hereby
have been issued pursuant to Regulation S, promulgated under the United
States Securities Act of 1933, as amended (the "Act"), and have not been
registered under the Act or any applicable state securities laws. These
shares may not be offered or sold within the United States or to or for the
account of a "U.S. Person" (as that term is defined in Regulation S) during
the period commencing on the date of issuance hereof and ending forty (40)
days thereafter."
4.2 Transfers.
---------
(a) The Company agrees, and shall instruct its agents, that the
Convertible Debentures may be transferred to any person or entity who is
not an affiliate of the Company if such transfer occurs after the
Restricted Period, without (a) any further restriction on transfer
(provided the transfer is made in compliance with the Act) or (b) the entry
of a "stop transfer" order against such Convertible Debentures, and the
Convertible Debentures and Debenture Shares issued upon conversion thereof,
delivered to the transferee after the Restricted Period shall not bear a
legend. The Company may place a stop transfer order on any Convertible
Debentures or Debenture Shares during the Restricted Period for the
duration of the Restricted Period. Upon election by a Subscriber to
convert all or a portion of the Convertible Debentures into Debenture
Shares, such Subscriber shall deliver to the Transfer Agent, with a copy to
the Company, a duly completed Notice of Conversion (which shall include a
statement by the Subscriber of the continued accuracy of the material
representations and warranties set forth herein; provided, the Subscriber
shall not be required to make any representation concerning its investment
intent with respect to the Debenture Shares) substantially in the form
attached hereto as Exhibit F as contemplated by the Transfer Agent
---------
Agreement (a "Notice of Conversion").
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 10
(Silverado Foods, Inc.)
<PAGE>
(b) The Company agrees, and shall instruct its agents, that the
Warrant Shares issued upon exercise of the Warrant Rights under the Warrant
may be transferred to any person or entity who is not an affiliate of the
Company if such transfer occurs after the Warrant Restricted Period,
without (i) any further restriction on transfer (provided the transfer is
made in compliance with the Act), or (ii) the entry of a "stop transfer"
order against the Warrant Shares, and the Warrant Shares delivered to a
transferee after the Warrant Restricted Period shall not bear a legend. At
the request of a Subscriber, the Company shall promptly exchange following
the Warrant Restricted Period certificates representing the Warrant Shares
issued with the legend described in Section 4.1(b) above for certificates
representing the Warrant Shares issued without a legend. The Company may
place a stop transfer order on the Warrant Shares during the Warrant
Restricted Period for the duration of the Warrant Restricted Period. Upon
election by a Subscriber to exercise any Warrant Right, such Subscriber
shall deliver to the Company a duly completed Notice of Exercise (which
shall include a statement by the Subscriber of the continued accuracy of
the material representations and warranties set forth herein and that the
Subscriber shall not transfer the Warrant Shares to a U.S. Person during
the Warrant Restricted Period) substantially in the form attached hereto as
Exhibit G (a "Notice of Exercise").
---------
5. Covenants of the Company
5.1 Accountants. For as long as any Convertible Debentures and Warrant
-----------
remain outstanding, the Company shall maintain as its independent auditors an
accounting firm that is authorized to practice before the Commission.
5.2 Corporate Existence and Taxes. For as long as any Convertible
-----------------------------
Debentures and Warrant remain outstanding, the Company shall maintain its
corporate existence in good standing, and shall pay all its taxes when due
except for taxes which the Company disputes in good faith and for which adequate
reserves are established on the Company's books and records.
5.3 Reserved Shares and Listings. For so long as any Convertible
----------------------------
Debentures and Warrant remain outstanding:
(a) the Company will reserve from its authorized but unissued shares
of Common Stock a sufficient number of shares of Common Stock to permit the
conversion in full of the then outstanding Convertible Debentures and
exercise in full the Warrant Rights under the Warrant;
(b) the Company will maintain the listing of its Common Stock on the
AMEX;
(c) the Company will not repurchase or otherwise enter into any other
transaction (including stock split, recapitalization or other transaction),
which would cause a decrease in the number of its shares of Common Stock
issued and outstanding (other than transactions
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 11
(Silverado Foods, Inc.)
<PAGE>
that similarly decrease the number of shares of Common Stock into which the
Convertible Debentures are convertible and Warrant is exercisable); and
(d) the Company will (I) retain the Transfer Agent as the stock
transfer agent of the Company, and (II) if the Transfer Agent voluntarily
or involuntarily fails to so serve, select an independent, unaffiliated
replacement stock transfer agent willing to perform the duties of the
Transfer Agent under the Transfer Agent Agreement.
5.4 Issuance of Common Shares. Upon conversion of the Convertible
-------------------------
Debentures in accordance with their terms, and/or exercise of the Warrant
Rights, the Company will, and will use its best lawful efforts to cause the
Transfer Agent to, issue one or more certificates representing shares of Common
Stock in such name or names and in such denominations specified by a Subscriber
in a Notice of Conversion or Notice of Exercise, as applicable. The Shares of
Common Stock to be issued upon conversion of the Convertible Debentures or
exercise of the Warrant Rights shall not bear any restrictive legends (other
than the legend set forth in Section 4.1(b) for the Warrant Shares) and shall be
freely tradeable upon expiration of the Restricted Period or Warrant Restricted
Period, as applicable,, subject to compliance with Federal and state securities
laws and the terms of the Convertible Debentures and Warrant. The Company
further warrants that no instructions other than these instructions, and
instructions for a "stop transfer" until the end of the Restricted Period or
Warrant Restricted Period, as applicable, have been or will be given to the
Transfer Agent and also warrants that the Shares shall otherwise be freely
transferable by Subscriber on the books and records of the Company subject to
compliance with Federal and State securities laws and the terms of the
Convertible Debentures and Warrant. The Company will notify the Transfer Agent
of the date of Closing of this Offering and of the date of expiration of the
Restricted Period and of the Warrant Restricted Period upon exercise of any
Warrant Rights. Nothing in this section shall affect in any way a Subscriber's
obligations and agreement to comply with all applicable securities laws upon
resale of the Securities.
5.5 Copies of Information. The Company undertakes to furnish each
---------------------
Subscriber with copies of such other information as may be reasonably requested
by such Subscriber prior to consummation of this Offering. The Company will
provide the Subscribers with copies of all future filings under the 1934 Act for
so long as any Convertible Debentures and Warrant are outstanding.
5.6 Compliance with Laws. The Company shall comply with all applicable
--------------------
Federal and state securities laws with respect to the sale of the Securities,
including but not limited to the filing of all reports required to be filed in
connection therewith with the SEC or any stock exchange or the AMEX or any other
regulatory authority.
5.7 Opinion of Counsel. Contemporaneous with the execution of the
------------------
Transfer Agent Agreement, the Company will arrange for issuance of any legal
opinions required by the Transfer Agent in order to ensure that the Debenture
Shares are issued without restrictive legends upon receipt of a Notice of
Conversion, and the Warrant Shares are issued solely with the restrictive legend
set forth in Section 4.1(b) hereof upon receipt of a Notice of Exercise.
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 12
(Silverado Foods, Inc.)
<PAGE>
5.8 Consultation with Legal Counsel. The Company shall consult with its
-------------------------------
legal counsel regarding its 1934 Act filing requirements including, but not
limited to, the possible obligation of the Company to file Form 8-K in
connection with the Offering, and will timely make any and all such filings
deemed necessary by such counsel; provided, if permitted by applicable law, any
--------
such filing shall refer to the Subscribers merely as "accredited investors"
without designation by name.
5.9 Registration Rights. The Company will grant the Subscribers the
-------------------
registration rights covering the Shares on the terms of the Registration Rights
Agreement.
6. Covenants of the Subscribers.
6.1 Dealings in Common Shares. Each Subscriber covenants that neither it
-------------------------
nor any of its affiliates nor any person acting on its or their behalf has the
intention of entering, or will enter from the Closing through the end of the
Restricted Period applicable to the Convertible Debentures, into any put option,
short position or any hedging transaction or other similar instrument or
position with respect to the Company's Common Stock and neither it nor any of
its affiliates nor any person acting on its or their behalf will use at any time
the Company's Common Stock to settle any put option, short position or other
similar instrument or position that may have been entered into prior to the
execution of this Agreement.
6.2 No Sale in Violation of the Act. Each Subscriber further covenants
-------------------------------
that it will not make any sale, transfer or other disposition of the Securities
in violation of the Act (including Regulation S) or the rules and regulations of
the Commission promulgated thereunder. Each Subscriber acknowledges and agrees
that the Securities may and will only be resold (a) in compliance with
Regulation S; (b) pursuant to a Registration Statement under the Act; or (c)
pursuant to an exemption from registration under the Act.
7. Issuance of Further Securities
7.1 Right of First Refusal. The Company hereby grants to the Subscribers
----------------------
the right of first refusal to purchase all (or any part) of New Securities (as
defined in this Section) that the Company may, from time to time, propose to
sell and issue. "New Securities" shall mean any capital stock of the Company,
whether now authorized or not, and rights, options or warrants to purchase said
capital stock, and debt or equity securities of any type whatsoever that are, or
may become, convertible into said capital stock; provided, however, that the
term "New Securities" does not include securities issued in Excluded Financings.
"Excluded Financings" mean (i) non-convertible debt or non-convertible preferred
stock financings of any type, (ii) public offerings at the market price of the
Common Stock, (iii) private financings at a price, including conversion price,
at least equal to the then-current market price of the Common Stock (determined
as set forth in the Convertible Debentures), (iv) project financings, (v) bank
financings, (vi) the issuance and sale of, or the grant of options to purchase,
shares of Common Stock pursuant to any of the Company's existing employee or
director stock option, compensation, bonus or incentive plans, and (vii) the
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 13
(Silverado Foods, Inc.)
<PAGE>
issuance or sale of Common Stock and/or warrants for the acquisition by the
Company of operating assets to be owned and operated by the Company or a
subsidiary of the Company. In the event the Company proposes to undertake an
issuance of New Securities, it shall give the Subscribers written notice of its
intention, describing the type of New Securities, the price and the general
terms upon which the Company proposes to issue the same. Each Subscriber shall
have fifteen (15) business days from the date of receipt of any such notice to
agree to purchase all or less than all of the New Securities for the price and
upon the general terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased. If
any such Subscriber fails to exercise in full rights of first refusal within
such fifteen (15) business day period, then the Company shall have thirty (30)
days thereafter to sell the New Securities with respect to which the
Subscribers' rights stated herein were not exercised, at a price and upon
general terms no more favorable to the purchasers thereof than specified in the
Company's notice. In the event that the Company has not sold the New Securities
within such fifteen (15) day period, the Company shall not thereafter issue or
sell any New Securities without first offering such securities to the
Subscribers in the manner provided above. The right of first refusal granted
under this Section shall terminate upon the earlier of: (i) 180 days following
the Closing Date; or (ii) the date upon which the Subscribers cease to own at
least one-third of the Convertible Debentures or the shares of Common Stock
issuable upon conversion thereof.
8. Liquidated Damages for Late Conversion.
8.1 Liquidated Damages. As set forth in the Convertible Debentures and
------------------
Warrant, the Company shall issue and deliver, and use its best efforts to cause
the Transfer Agent to issue and deliver, within five (5) New York Stock Exchange
trading days after a Subscriber has fulfilled all conditions and submitted a
Notice of Conversion or Notice of Exercise, as applicable (the "Deadline"), to
such Subscriber or any party receiving the Convertible Debentures or Warrant by
transfer from such Subscriber (together with such Subscriber, a "Holder"), at
the address of the Holder set forth in the Notice of Conversion or Notice of
Exercise, as applicable, and in the absence thereof at such address as set forth
in the Transfer Agent Agreement, a certificate or certificates for the number of
shares of Common Stock to which the Holder shall be entitled. The Company
understands that a delay in the issuance of the shares of Common Stock after the
Deadline could result in economic loss to the Holder. If for any reason other
than (x) a failure of any material representation or warranty of any Subscriber
herein to be true and correct or (y) a change in law or administrative rules
governing Regulation S that would prevent the Company from issuing Debenture
Shares following the Restricted Period, without restrictive legend, or Warrant
Shares solely with the legend specified in Section 4.1(b), as applicable, the
Company fails to issue the shares of Common Stock, then as compensation to the
Holder for such loss, and not as a penalty, the Company agrees to pay liquidated
damages to the Holder for late issuance of shares of Common Stock upon
conversion in accordance with the following schedule (where "No. Business Days
Late" is defined as the number of business days after the Deadline):
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 14
(Silverado Foods, Inc.)
<PAGE>
<TABLE>
<CAPTION>
Aggregate
No. Business Days Late Liquidated Damages
---------------------- ------------------
(per each $100,000 Principal Amount
of Convertible Debenture
or Exercise Price of
Warrant Shares)
<S> <C>
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
>10 $1,000 + an additional $1,000
for each Business Day Late
beyond 10 days
</TABLE>
The Company shall pay the Holder any liquidated damages incurred under this
Section by wire transfer of immediately available funds to an account designated
by Holder upon the earlier to occur of (i) issuance of the shares of Common
Stock to the Holder of the required shares of Common Stock that were not issued,
or (ii) each monthly anniversary of the receipt by the Company of such Holder's
Notice of Conversion or Notice of Exercise, as applicable. Nothing herein shall
waive the Company's obligations to deliver shares of Common Stock upon a
conversion of the Convertible Debentures or exercise of the Warrant Rights or
limit any Subscriber's right to pursue actual damages for the Company's failure
to issue and deliver shares of Common Stock to such Subscriber in accordance
with the terms of the Convertible Debentures and Warrant.
8.2 Conversion Notice. The Company agrees that, in addition to any
-----------------
other remedies which may be available to the Subscribers, including, but not
limited to the remedies available under Section 8.1, in the event the Company
fails for any reason to effect delivery to a Subscriber of certificates
representing Common Stock on or prior to the Deadline, such Subscriber will be
entitled to revoke the Notice of Conversion or Notice of Exercise, as
applicable, by delivering a notice to such effect to the Company and Transfers
Agent whereupon the Company and the Subscriber shall each be restored to their
respective positions immediately prior to delivery of such Notice of Conversion
or Notice of Exercise, as applicable.
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 15
(Silverado Foods, Inc.)
<PAGE>
9. Additional Agreements.
9.1 Warrants. The Company shall grant the Subscribers warrants to
--------
purchase in the aggregate 125,000 shares of Common Stock at an exercise price
equal to the lesser of (i) $3.00 per share or (ii) the product of 120%
multiplied by the five day average closing bid price of the Company's Common
Stock immediately preceding the Closing Date, pursuant to the form of Warrant
attached hereto as Exhibit H (collectively, the "Warrant"), which shall be
---------
issued at the Closing and deposited with the Transfer Agent as contemplated by
Section 1.2 hereof. The shares of Common Stock issued upon exercise of the
Warrant rights ("Warrant Rights") under the Warrant (the "Warrant Shares") shall
be issued pursuant to Regulation S, and shall contain a legend upon issuance
solely in the form set forth in Section 4.1(b). Each Subscriber shall be
entitled to exercise the Warrant Rights for the Warrant Shares in accordance
with the proportionate amount of Convertible Debentures purchased by Subscribers
as set forth on Schedule 1 hereto.
----------
9.2 Subscriber Cost. At the Closing, the Company hereby agrees to
---------------
pay $25,000 to the Subscribers to reimburse the Subscribers for all costs and
expenses of the Subscribers in connection with this Offering, including, without
limitation, reasonable attorneys' fees borne by the Subscribers in connection
with the preparation, negotiation, and consummation of the Transaction Documents
(the "Expense Reimbursement"). Such reimbursement shall be paid as described in
the Transfer Agent Agreement.
10. Conditions to Closing; Deliveries at Closing.
10.1 Conditions to Subscribers' Obligations to Close. The
-----------------------------------------------
obligations of the Subscribers to effect the Closing are conditioned on the
fulfillment or waiver of the following:
(a) the execution and delivery of each Transaction Document by the
Company;
(b) the execution and delivery of the Transfer Agent Agreement by the
Transfer Agent;
(c) all the representations and warranties of the Company in this
Agreement as of the date hereof shall be true and correct at the Closing of
this Offering as if made on such date, and the Company shall have performed
all actions required hereunder;
(d) receipt of the opinion of legal counsel to the Company to the
effect set forth in Section 5.7; and
(e) receipt of evidence satisfactory to the Subscribers that Mr.
Lawrence Field, as the holder of $3.0 million principal amount of $3.5
million principal amount of the Company's existing convertible debentures
(the "Junior Notes") has agreed that all payments in cash of principal and
interest due to him (or any assignee of his interest therein) shall be
junior and subordinate to the repayment in full of the Convertible
Debentures to be issued
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 16
(Silverado Foods, Inc.)
<PAGE>
to the Subscribers hereunder; provided, such agreement shall not prevent
Mr. Field from exercising any conversion rights thereunder and receiving
shares of Common Stock of the Company in connection therewith.
10.2 Conditions to the Company's Obligation to Close. The obligation of
-----------------------------------------------
the Company to effect the Closing is conditioned on the fulfillment or waiver of
the following:
(a) the execution and delivery of this Agreement, the Registration
Rights Agreement and the Transfer Agent Agreement by the Subscribers;
(b) the execution and delivery of the Transfer Agent Agreement by the
Transfer Agent; and
(c) all the representations and warranties of each Subscriber made in
this Agreement as of the date hereof shall be true and correct at the
Closing of the Offering as if made on such date, and each Subscriber shall
have performed all actions required hereunder.
11. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, U.S.A., applicable to agreements made in and
wholly to be performed in that jurisdiction without regards to the choice of law
rules of such state, except for matters arising under the Act or the 1934 Act
which matters shall be construed and interpreted in accordance with such laws.
Any action brought to enforce, or otherwise arising out of, this Agreement shall
be heard and determined in either a Federal or state court sitting in the County
of Dallas, State of Texas, U.S.A.
12. Entire Agreement; Amendment
This Agreement, the Convertible Debentures, the Registration Rights
Agreement, the Escrow Agreement, the Warrant, the Transfer Agent Agreement and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
13. Notices, Etc.
Any notice, demand or request required or permitted to be given by either
the Company or any Subscriber pursuant to the terms of this Agreement shall be
in writing and shall be deemed given when delivered personally or by facsimile
to the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other in
writing.
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 17
(Silverado Foods, Inc.)
<PAGE>
14. Confidentiality.
The Subscribers will keep confidential all non-public information regarding
the Company that they receive from the Company unless disclosure of such
information is compelled by a court or other administrative body or otherwise
necessary, in the opinion of Subscribers' counsel, to comply with applicable
law. Neither party shall disclose any information regarding any of the
transactions contemplated hereby without the prior consent of the other party,
unless such disclosure is required by applicable law and consistent with
Sections 2.9(b) and 5.8 hereof.
15. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument. A facsimile
transmission of a signature hereto shall be valid as if an original and binding
on all parties.
16. Severability
In the event that any provision of this Agreement becomes or is declared by
a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it materially changes
the economic benefit of this Agreement to any party.
17. Titles and Subtitles
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
18. Parties in Interest Cited
This Agreement may not be transferred, assigned, pledged or hypothecated by
any party hereto, other than by operation of law. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
All representations, warranties, covenants and agreements of each party hereto
shall survive the closing contemplated herein and pursuant to the Exhibits
hereto.
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 18
(Silverado Foods, Inc.)
<PAGE>
The undersigned Subscribers acknowledge that this subscription shall not be
effective unless accepted by the Company as indicated below.
Dated this ___ day of January, 1997.
SEACREST CAPITAL LIMITED FAIRWAY CAPITAL LIMITED
27 Wellington Road 27 Wellington Road
Cork, Ireland Cork, Ireland
Telefax: 011-44-171-355-4975 Telefax: 011-44-171-355-4975
- ----------------------------------- -----------------------------------------
Signature Signature
Place of Execution: Place of Execution:
Great Britain Great Britain
INFINITY EMERGING
OPPORTUNITIES, LIMITED
27 Wellington Road
Cork, Ireland
Telefax: 011-44-171-355-4975
-----------------------------------------
Signature
Place of Execution:
Great Britain
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE ____ DAY OF JANUARY,
1997.
SILVERADO FOODS, INC.
6846 South Canton, Suite 110
Tulsa, Oklahoma 74136
Telefax: 918/491-6290
By:
--------------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
2
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT - Page 19
(Silverado Foods, Inc.)
<PAGE>
SCHEDULE 1
SUBSCRIBERS
<TABLE>
<CAPTION>
============================================================================
NAME PRINCIPAL BALANCE OF AGGREGATE PURCHASE PRICE
CONVERTIBLE DEBENTURES
<S> <C> <C>
Seacrest Capital Limited $ 500,000 $ 500,000
Fairway Capital Limited $ 500,000 $ 500,000
Infinity Emerging $ 500,000 $ 500,000
Opportunities, Limited
TOTALS $1,500,000 $1,500,000
============================================================================
</TABLE>
<PAGE>
SCHEDULE 2.4A
Capitalization (as of _____________, 1997)
Shares of Common Stock:
Authorized: __________
Issued/Outstanding: __________
Held in Treasury: __________
Shares of Preferred Stock:
Authorized: __________
Issued: __________
Outstanding: __________
Convertible Securities:
Options: __________
Warrants: __________
<PAGE>
SILVERADO FOODS, INC.
6846 SOUTH CANTON, SUITE 110
TULSA, OKLAHOMA 74136
January 31, 1997
Re: Convertible Debenture Private Placement - Letter Agreement Concerning
Potential Requirement For Shareholder Approval
Reference is hereby made to that certain Regulation S Securities
Subscription Agreement dated the date hereof between the parties to this letter
(the "Subscription Agreement"). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Subscription Agreement.
If, at any time, the aggregate number of Debenture Shares issuable upon
exercise of the Convertible Debentures together with the number of Warrant
Shares issuable upon exercise of the Warrants exceeds the Conversion Limit (as
hereafter defined) then in effect, (i) the Company shall deliver a notice to
that effect to the Subscribers and the Transfer Agent (the "Company Notice") and
(ii) the Company shall, at the option of the Subscribers, either (I) seek to
obtain shareholder approval within sixty days of the Company Notice to eliminate
the Conversion Limit and any other matters required by the American Stock
Exchange ("Amex") for the Company to maintain its designation as an Amex issuer
and upon such approval the Conversion Limit shall be eliminated or (II) convert
the portion of the Convertible Debentures which would result in the issuance of
Debenture Shares under the Conversion Limit and cause the Company to redeem, on
the fifth business day (the "Redemption Date") following delivery (including
delivery via facsimile) by the Subscribers of a redemption notice (the
"Redemption Notice"), the remaining unconverted portion of the Convertible
Debentures and the unexercised portion of the Warrants for the Redemption Price
(as hereafter defined). In the event the Subscribers request the Company to
obtain shareholder approval as provided above, and such approval is not obtained
within such sixty day limit, then the Company shall undertake the actions in
(II) above as if the Subscribers had delivered a Redemption Notice.
As used herein, the Conversion Limit shall mean twenty percent of the then
issued and outstanding shares of Common Stock of the Company as of the
applicable date of determination, which, as of the date hereof, is 1,446,250
shares of Common Stock, or such greater number of shares as the shareholders of
the Company may have previously approved.
<PAGE>
January 31, 1997
Page 2
The term Redemption Price shall mean the aggregate sum of the following:
1. With respect to the unconverted portion of the Convertible Debentures,
the sum of (i) the product of the remaining balance of the Convertible
--- --
Debentures multiplied by one hundred thirty percent and (ii) the Market
Differential (as hereafter described). The Market Differential shall mean the
product of the number of shares of Company Common Stock which would have been
issued at the Conversion Price (as defined in the Convertible Debentures) (as if
the date of the Redemption Notice was the date of the Notice of Conversion)
multiplied by an amount (if a positive number) equal to the difference between
the Closing Bid Price (as defined in the Convertible Debentures) on the business
day immediately preceding the Redemption Date and the Conversion Price (as if
the date of the Redemption Notice was the date of the Notice of Conversion.)
2. With respect to the unexercised portion of the Warrants, an amount
equal to the difference between (a) the product of the number of shares of
Common Stock issuable upon exercise in full of the unexercised portion of the
Warrants and the Fair Market Value of such shares (as hereafter described) and
(b) the exercise price relating to such shares as set forth in the Warrant that
the holder has not previously delivered to the Company. Fair Market Value of
such shares shall mean the average of the Closing Bid Price of the Company's
Common Stock (as defined in the Convertible Debentures) over the five trading
day period ending immediately preceding the Redemption Date.
This letter agreement supplements the Subscription Agreement, and each
document executed in connection therewith, and is binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. This letter may be executed in one or more counterparts and by
facsimile signature. The Subscribers hereby agree that they are obligated to
inform any transferees of the Convertible Debentures or Warrants of the terms of
this letter.
Sincerely,
SILVERADO FOODS, INC.
By:
- ---- -----------------------------
Name:
- ---- ---------------------------
Title:
- ---- --------------------------
<PAGE>
January 31, 1997
Page 3
ACKNOWLEDGED AND AGREED TO:
INFINITY EMERGING OPPORTUNITIES, LIMITED
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SEACREST CAPITAL LIMITED
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
FAIRWAY CAPITAL LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE>
EXHIBIT 4.2
THE CONVERTIBLE DEBENTURE OF SILVERADO FOODS, INC. ("ISSUER") REPRESENTED HEREBY
HAS BEEN ISSUED PURSUANT TO REGULATION S, PROMULGATED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND HAVE NOT BEEN REGISTERED
UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OF A "U.S.
PERSON" (AS THAT TERM IS DEFINED IN REGULATION S) DURING THE PERIOD COMMENCING
ON THE DATE HEREOF AND ENDING ON THE FORTIETH (40TH) DAY FOLLOWING THE DATE
HEREOF (THE "RESTRICTED PERIOD"). THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY FIRST BE CONVERTED INTO COMMON STOCK OF THE ISSUER ON THE 45TH DAY AFTER THE
DATE HEREOF. THE ISSUER WILL NOTIFY THE TRANSFER AGENT OF THE EXPIRATION OF SUCH
RESTRICTED PERIOD.
$500,000
SILVERADO FOODS, INC.
8% CONVERTIBLE DEBENTURE DUE JANUARY 31, 1999
THIS DEBENTURE, issued this 31st day of January, 1997, is one of a duly
authorized issue of Debentures of Silverado Foods, Inc., a corporation duly
organized and existing under the laws of the State of Oklahoma (the "Company"),
designated as its 8% Convertible Debentures Due January 31, 1999, in an
aggregate original principal amount not exceeding $1,500,000 (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to Infinity Emerging
Opportunities, Limited, a Nevis West Indies corporation, the registered holder
hereof (the "Holder"), the principal sum of Five Hundred Thousand Dollars
($500,000), on or prior to January 31, 1999 (the "Maturity Date"), and to pay
interest on the principal sum outstanding from time to time on the last day of
each March, June, September and December (each an "Interest Payment Date"),
commencing March 31, 1997, up to and including the Maturity Date, at the rate of
eight percent (8%) per annum, calculated based upon the actual number of days
elapsed during any interest period in a year comprised of 360 days. Accrual of
interest on this Debenture shall commence on the date of this Debenture and
shall continue to accrue until the next Interest Payment Date. The interest so
payable will be paid on each Interest Payment Date to the person in whose name
this Debenture (or one or more predecessor Debentures) is registered on the
records of the Company regarding registration and transfers of the Debentures
(the "Debenture Register") on the first business day prior to such Interest
Payment Date. All accrued and unpaid interest shall bear interest at the rate
of 8% per annum from the date hereof until the date of payment. At the option
of the Holder, interest may be paid in cash or in kind. If the Holder or the
Company determines to receive or pay, as applicable, interest in kind, the same
shall be added to the principal balance hereof on the Interest Payment Date on
which such interest is payable as provided herein ("PIK Interest"). Any such
election by the Company or the Holder may be effected by delivery of written
notice to the other at least two (2) business days prior to the Interest Payment
Date. All references to the principal balance or principal sum of this
Debenture shall include any PIK Interest so added to the principal balance
thereof. The principal of, and interest on, this Debenture are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts pursuant to the terms of
the Transfer Agent Agreement (as hereafter defined). The Debenture Register
shall represent the record of ownership and right to receive principal and
interest on this Debenture. Interest and principal shall be payable only to the
registered Holder as reflected in the Debenture Register. The right to receive
principal and interest under this Debenture shall be transferable only through
an appropriate entry in the Debenture Register as provided herein. The
forwarding of such payment pursuant to the Transfer Agent Agreement shall
constitute a payment of interest hereunder and shall satisfy and discharge the
liability for principal and interest on this Debenture to the extent of the sum
represented by such payment.
8% CONVERTIBLE DEBENTURE -Page 1
<PAGE>
This Debenture is subject to the following additional provisions:
1. Transfer Agent Agreement. The Debenture shall be held by Continental Stock
------------------------
Transfer & Trust Company (the "Transfer Agent") for the benefit of the Holder,
pursuant to the terms of a Transfer Agent Agreement (the "Transfer Agent
Agreement") between the Company, the Holder and the Transfer Agent dated the
date hereof. All payments of principal and interest hereunder shall be made to
the Transfer Agent, for the benefit of the Holder, as contemplated by the
Transfer Agent Agreement. The Transfer Agent shall maintain the Debenture
Register for the Company, and record all transfers of the Debenture pursuant to
the terms hereof and thereof.
2. Withholding. The Company shall be entitled to withhold from all payments of
-----------
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments. The Holder shall pay any
other taxes, charges, or levies in connection with the issuance or transfer
thereof. The Holder agrees to provide the Company a Form W-8, a Certification
Under Penalty of Perjury, or a certificate from a financial institution
described in Section 871(h)(4)(B) of the Internal Revenue Code of 1986
demonstrating that the Holder is not a United States person.
3. Transfer. This Debenture has been issued subject to investment
--------
representations of the original purchaser hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended (the
"Act"), including Regulation S promulgated thereunder. Any Holder of this
Debenture, by acceptance hereof, agrees to the representations, warranties and
covenants herein. Prior to due presentment to the Company for transfer of this
Debenture, the Company and any agent of the Company and the Transfer Agent may
treat the person in whose name this Debenture is duly registered on the
Company's Debenture Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this
Debenture be overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
4. Conversion. The record Holders of this Debenture shall have conversion
----------
rights as follows (the "Conversion Rights"):
(a) Right to Convert. The record Holder of this Debenture shall be
----------------
entitled, at the option of the Holder, to convert any or all of the aggregate
principal amount of Debentures held by such Holder at any time commencing forty
five (45) days after the date of this Debenture, in each case into that number
of fully-paid and non-assessable shares of common stock, par value $.01 per
share, of the Company (the "Common Stock") calculated in accordance with the
following formula: Number of shares issued upon conversion =
Principal/Conversion Price, where
. Principal = The principal amount of the Debenture(s) to be converted
(including any interest added thereto as provided in this Debenture).
. Conversion Price = the lesser of (x) the Fixed Conversion Price (as defined
below), or (y) the product of seventy percent (70%) multiplied by the average
Closing Bid Price (as defined below) of the Company's Common Stock for the five
(5) trading days immediately preceding the Date of Conversion, as defined below
(the "Floating Conversion Price"). For purposes hereof, the term "Closing Bid
Price" shall mean the closing bid price of the Company's Common Stock as
reported by the American Stock Exchange (or, if not reported by the American
Stock Exchange, as reported by such other exchange or market where traded) For
purposes hereof, the term "Fixed Conversion Price" shall equal Three Dollars and
Twenty Five Cents ($3.25) per share, subject to adjustment pursuant to
subsection (d) below.
(b) Mechanics of Conversion. No fractional shares of Common Stock shall be
-----------------------
issued upon conversion of this Debenture. In lieu of any fractional share to
which the Holder would otherwise be entitled, the Company shall pay cash to such
Holder in an amount equal to such fraction multiplied by the Conversion Price
then in effect. The Company shall also pay in cash to the Holder through the
date of conversion all accrued and unpaid interest, unless the Holder has
previously determined to receive PIK Interest for such sum. In order to convert
all or a portion of this Debenture into shares of Common Stock, the Holder shall
give written notice via facsimile to the Transfer Agent (with
8% CONVERTIBLE DEBENTURE -Page 2
<PAGE>
a copy to the Company) of the portion of this Debenture it elects to so convert
and a calculation of the number of shares of Common Stock to be issued upon
conversion. Notwithstanding the foregoing, the conversion right of the Holder
set forth above shall be limited, solely to the extent required, from time to
time, such that in no instance shall the maximum number of shares of Common
Stock which the Holder may receive in respect of any conversion of any portion
of this Debenture exceed, at any one time, an amount equal to the remainder of
(i) 4.99% of the then issued and outstanding shares of Common Stock of the
Company following such conversion, minus (ii) the number of shares of Common
-----
Stock of the Company then owned (beneficially or of record) by the Holder (the
"Limitation on Conversion"); provided, however, the Limitation on Conversion
-------- -------
shall not apply, and shall be of no further force or effect following the
occurrence of any Event of Default described in Section 9 below and for which
the Holder has provided written notice thereof and which is not cured within the
greater of the applicable time period specified in either (I) such written
notice of the Holder or (II) Section 9 below.
The Company shall issue, and shall use its best efforts to cause the
Transfer Agent to issue, within five (5) trading days after delivery to the
Transfer Agent (with a copy to the Company) of a Notice of Conversion of the
number of shares of Common Stock to which the Holder shall be entitled as
aforesaid. The date on which Notice of Conversion is given, including notice by
facsimile signature, shall be deemed to be the "Date of Conversion". The person
or persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on the Date of Conversion. If the shares of Common
Stock issuable upon such conversion are not received by the Holder within five
(5) trading days after the Date of Conversion, the Notice of Conversion shall
become, at the option of the Holder, null and void.
Following conversion of this Debenture, or a portion thereof, the principal
and, upon payment thereof in cash (unless the Holder determines to receive PIK
Interest), the interest owed on that Debenture or portion of the Debenture so
converted will be deemed paid in full and satisfied, and such Debenture or
portion thereof will no longer be outstanding.
(c) Reservation of Stock Issuable Upon Conversion. The Company shall at all
---------------------------------------------
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the
Debentures, such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all then outstanding Debentures; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding
Debentures, the Company will take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(d) Adjustment to Conversion Price.
------------------------------
(i) If, prior to the conversion of all of the Debentures, (x) the
number of outstanding shares of Common Stock is increased by a stock split,
stock dividend or other similar event, or, (y) if the Company issues shares of
Common Stock (or securities convertible into or exchangeable or exercisable for
shares of Common Stock), other than in an Excluded Transaction (as hereafter
defined), at a conversion, exchange or exercise price below the fair market
value thereof (as determined based upon an average trading price of not more
than 10 days preceding the issuance), then the Fixed Conversion Price shall be
adjusted so as to be equal to an amount determined by multiplying the Fixed
Conversion Price then in effect by a faction:
(a) the numerator of which shall be (i) the number of shares of all
classes of Common Stock outstanding immediately prior to the issuance of
such additional shares of Common Stock (or securities convertible into or
exchangeable or exercisable for shares of Common Stock) plus (ii) the number
of shares of Common Stock which the net aggregate consideration, if any, to
be received by the Company for the total number of such additional shares of
Common Stock (or securities convertible into or exchangeable or exercisable
or shares of Common Stock) so issued (including any such consideration that
would be payable on the subsequent issuance of Common Stock if such issuance
is of securities convertible into or exchangeable or exercisable for shares
of Common Stock) would purchase at the fair market value thereof
8% CONVERTIBLE DEBENTURE -Page 3
<PAGE>
in effect immediately prior to such issuance, and
(b) the denominator of which shall be (i) the number of shares of all
classes of Common Stock outstanding immediately prior to the issuance of such
additional shares of Common Stock (or securities convertible into or
exchangeable or exercisable for shares of Common Stock) plus (ii) the number
of such additional shares of Common Stock (including on the conversion,
exchange or exercise of securities convertible into or exchangeable or
exercisable for shares of Common Stock) to be so issued.
An Excluded Transaction means any issuance of shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares of Common
Stock) (i) pursuant to the acquisition by the Company of operating assets or
stock of entities from other than affiliates of the Company to be owned and
operated by the Company or a subsidiary of the Company following such
acquisition; (ii) upon the exercise of the currently outstanding options and
warrants listed in Schedule 2.4 of the Subscription Agreement (as hereafter
defined); (iii) upon the exercise of options issued pursuant to the Silverado
Foods, Inc. 1994 Stock Option Plan, and any amendments or substitutions thereof;
(iv) upon the exercise of the Common Stock Purchase Warrants issued pursuant to
the Subscription Agreement (as hereafter defined); (v) upon the issuance of
Common Stock pursuant to the Royalty Termination Agreement dated November 8,
1996, among the Company, Nonni's Inc., Steve Sirianni, Tim Soldati and Rich
Martin; (vi) upon the conversion of the Company's 8.0% Convertible Debentures
due December 31, 1998, in the original principal amount of $1,100,000; or (vii)
upon the conversion of the Company's 9% Convertible Subordinated Notes in the
original principal amount of $3,550,000.
(ii) If, prior to the conversion of all of the Debentures at a time
when conversion would be at the Floating Conversion Price, there is a stock
split, stock dividend or other similar event which occurs during the five-day
period utilized to compute the Conversion Price, then the Closing Bid Price used
to compute the Conversion Price shall be appropriately adjusted to reflect, as
deemed equitable and appropriate by the Company, such stock split, stock
dividend or other similar event.
(iii) No adjustment need be made if it would result in a change of less
than 1% of the Conversion Price (whether the Fixed Conversion Price or the
Floating Conversion Price). Any adjustments required to be made by this
subsection shall be rounded up to the right to acquire the nearest whole number
of shares of Common Stock.
5. No Prepayment. The Company shall have no right to prepay this Debenture, in
-------------
whole or in part, prior to the Maturity Date. Further, the Company shall not
make any payment in cash of principal and interest on or with respect to Junior
Note (as defined in the Subscription Agreement of Lawrence Field) until this
Debenture shall have been paid in full (in cash or by conversion into shares of
Common Stock).
6. No Impairment. Except as expressly provided herein, no provision of this
-------------
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, and interest on, this Debenture at
the time, place, and rate, and in the coin or currency, herein prescribed. This
Debenture and all other Debentures now or hereafter issued of similar terms are
direct obligations of the Company.
7. Protective Provisions. This Debenture may not be amended without the prior
---------------------
written consent of the Holder hereof.
8. Costs and Expenses. The Company agrees to pay all costs and expenses,
------------------
including reasonable attorneys' fees, which may be incurred by the Holder in
collecting any amount due under this Debenture.
9. Events of Default; Remedies. If one or more of the following described
---------------------------
"Events of Default" shall occur:
8% CONVERTIBLE DEBENTURE -Page 4
<PAGE>
(a) The Company shall default in the payment of principal or interest on
this Debenture (or any other Debentures issued pursuant to the terms of the
Subscription Agreement, and such failure shall continue uncured for one (1) day
after notice from the Holder of such failure; or
(b) Any of the representations or warranties made by the Company herein, in
the Regulation S Securities Subscription Agreement, dated as of the date hereof
relating to this Debenture (the "Subscription Agreement") or in any certificate
or financial or other written statements heretofore or hereafter furnished by or
on behalf of the Company in connection with the execution and delivery of this
Debenture or the Subscription Agreement shall be false or misleading in any
material respect at the time made; or
(c) The Company shall fail to perform or observe, in any material respect,
any other covenant term, provision, condition, agreement or obligation of the
Company under this Debenture, or under any of the other Debentures issued
pursuant to the Subscription Agreement, or under any other documents executed
and delivered in connection with the closing of the Subscription Agreement
(including, without limitation, the failure to deliver shares of Common Stock
upon conversion of all or any portion of this Debenture in accordance with the
terms hereof), and such failure shall continue uncured for a period of seven (7)
days after notice from Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an assignment for
the benefit of creditors or commence proceedings for its dissolution; or (4)
apply for or consent to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or (5) adopt a plan
of liquidation or dissolution; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or
for a substantial part of its property or business without its consent and shall
not be discharged within thirty (30) days after such appointments; or
(f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the whole
or any substantial portion of the properties or assets of the Company and shall
not be dismissed within thirty (30) days thereafter; or
(g) Any money judgment, writ or warrant of attachment, or similar process in
excess of Two Hundred Thousand ($200,000) Dollars in the aggregate shall be
entered or filed against the Company or any of its properties or other assets
and shall remain unpaid, unvacated, unbonded or unstayed for a period of thirty
(30) days or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the relief
of debtors shall be instituted by or against the Company and, if instituted
against the Company shall not be dismissed within sixty (60) days after such
instruction or if the Company shall by any action or answer approve of, consent
to, or acquiesce in any such proceedings or admit the material allegations of,
or default in answering a petition filed in any such proceeding; or
(i) The Common Stock shall (i) be delisted from the American Stock Exchange
without being listed on another exchange or over-the-counter market within two
(2) days of such delisting, or (ii) cease to trade on an exchange or over-the-
counter market for more than ten (10) successive trading days.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand protest or
notice of any kind, all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately, and with expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
8% CONVERTIBLE DEBENTURE -Page 5
<PAGE>
10. Mergers, Consolidations, Etc. The Company shall not consolidate or merge
-----------------------------
into, or transfer all or substantially all of its assets to, any person, unless
such person assumes the obligations of the Company under this Debenture and
immediately after such transaction no Event of Default exists. Any reference of
the Company shall refer to such surviving or transferee corporation and the
obligations of the Company shall terminate upon such assumption. If the Company
merges or consolidates with another corporation or sells or transfers all or
substantially all of its assets to another person and the holders of the Common
Stock of the Company are entitled to receive stock, securities or property in
respect of or in exchange for such Common Stock, then as a condition of such
merger, consolidation, sale or transfer, the Company and any such successor,
purchaser or transferee shall amend this Debenture to provide that it may
thereafter be converted at the option of the Holder on the terms and subject to
the conditions set forth above into the kind and amount of stock, securities or
property receivable upon such merger, consolidation, sale or transfer by a
Holder of the number of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or
transfer. The Conversion Price shall be the same as the applicable Conversion
Price defined in Section 4 above.
11. No Dividends. For so long as the Debenture remains outstanding, the Company
------------
will not, without the prior consent of a majority of the Holders, make any
distributions in cash to its holders of Common Stock, any preferred stock or
with respect to the Junior Note of Lawrence Field.
12. Lost or Destroyed Debenture. If this Debenture shall be mutilated, lost,
---------------------------
stolen or destroyed, the Company shall execute and deliver to the Transfer
Agent, in exchange and substitution for and upon cancellation of a mutilated
Debenture, or in lieu of or in substitution for a lost, stolen or destroyed
Debenture, a new Debenture for the principal amount of this Debenture so
mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
loss, theft or destruction of such Debenture, and of the ownership thereof, and
indemnity, if requested, all reasonably satisfactory to the Company.
13. Sales in Compliance with Applicable Law. Any Holder of this Debenture, by
---------------------------------------
acceptance hereof, agrees that such Holder will not offer, sell or otherwise
dispose of this Debenture or the shares of Common Stock issuable upon exercise
thereof except under circumstances which will not result in a violation of the
Act.
14. Governing Law. This Debenture shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of laws. Any action brought to enforce, or otherwise
arising out of this Debenture shall be heard and determined in either a federal
or state court sitting in the State of Texas.
15. Business Day and Trading Day Definition. For purposes hereof, the term
---------------------------------------
"business day" shall mean any day on which banks are generally open for business
in the State of New York, USA and excluding any Saturday and Sunday and a
"trading day" shall mean any business day in which the American Stock Exchange
or other automated quotation system or exchange on which the Common Stock is
traded is open for trading for at least four (4) hours.
16. Notices. Any notice, demand or request required or permitted to be given by
-------
either the Company or the Subscriber pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally, or by
facsimile, addressed to the Company at 6846 South Canton, Ste. 110, Tulsa,
Oklahoma 74136, Facsimile: 918/491-6290, Attn: President, or to the Subscriber
at 27 Wellington Road, Cork, Ireland, Facsimile: 011-44-71-355-4975, Attn: James
Loughran, with a copy to HW Finance Partners, L.P., 4000 Thanksgiving Tower,
1601 Elm Street, Dallas, Texas 75201, Facsimile: (214) 720-1662, Attn: Barrett
Wissman, or such other addresses as a party may request by notifying the other
in writing.
17. Waiver. Any waiver by the Company or the Holder hereof of a breach of any
------
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the Holder hereof to insist upon
strict adherence to any term of this Debenture on one or more occasions shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Debenture.
Any waiver must be in
8% CONVERTIBLE DEBENTURE -Page 6
<PAGE>
writing.
18. Unenforceable Provisions. If any provision of this Debenture is invalid,
------------------------
illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by an officer thereof duly authorized.
SILVERADO FOODS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
8% CONVERTIBLE DEBENTURE -Page 7
<PAGE>
EXHIBIT B
TRANSFER AGENT AGREEMENT
THIS TRANSFER AGENT AGREEMENT (this "Agreement"), dated January __, 1997,
between SILVERADO FOODS, an Oklahoma corporation (the "Company"), INFINITY
EMERGING OPPORTUNITIES, LIMITED, a Nevis West Indies corporation ("Infinity"),
FAIRWAY CAPITAL LIMITED, a Nevis West Indies corporation ("Fairway") and
SEACREST CAPITAL LIMITED, a Nevis West Indies corporation ("Seacrest")
(Infinity, Fairway and Seacrest being collectively being referred to as the
"Holders") and Continental Stock Transfer & Trust Company (the "Transfer
Agent").
R E C I T A L S:
WHEREAS, pursuant to that certain Regulation S Securities Subscription
Agreement dated the date hereof (the "Subscription Agreement") by and among the
Company and the Holders, the Company agreed to issue to the Holders of
Convertible Debentures (the "Convertible Debentures"), which are convertible, at
the option of the Holders, into shares of common stock, par value $.01 per
share, of the Company (the "Common Stock") (such shares issuable upon such
conversion being referred to as the "Shares"); and
WHEREAS, the Company and the Holders have agreed to enter into this
Agreement with the Transfer Agent to (i) provide for a system of accounting for
the Convertible Debentures and (ii) facilitate the conversion of the Convertible
Debentures and issuance of the Shares associated therewith.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree
as follows:
1. CLOSINGS. The Transfer Agent hereby agrees to act as an escrow agent
to facilitate the Closings as follows:
(a) On the date hereof, the Holders shall wire transfer to an account
designated by the Transfer Agent $1,500,000 in the aggregate (the "Purchase
Price"), and the Company shall deliver to the Transfer Agent the Convertible
Debentures in the names of the Holders and in the amounts as set forth on
Schedule 1 hereto; together with the Warrant(s) in the names of the holders as
- ----------
contemplated by the Subscription Agreement (the "Warrants").
(b) Immediately following such deliveries, together with a delivery
from the Company to the Transfer Agent of a fully executed copy of the
Subscription Agreement, the Transfer Agent shall wire transfer (i) the Purchase
Price less $25,000 (the "Expense
----
TRANSFER AGENT AGREEMENT - Page 1
(Silverado Foods, Inc.)
<PAGE>
Reimbursement Fee"), to the Company pursuant to wire transaction instructions as
provided by the Company and (ii) the Expense Reimbursement Fee to Infinity, care
of HW Partners L.P., at the wire transfer account set forth on Schedule 2
----------
attached hereto; and
(c) The Transfer Agent shall deliver the Convertible Debentures and
the Warrants to the Holders at the following address:
c/o Infinity Investors Limited
38 Hertford Street
London, W1Y 7TG, England
Attn: James A. Loughran
Following the termination of the Restricted Period (as defined in the
Subscription Agreement), the Holders shall direct Mr. Loughran to deliver the
Convertible Debentures to the Transfer Agent at the address specified in Section
9 below, and the Transfer Agent shall thereafter hold the Convertible Debentures
for the benefit of the Holders, as hereafter described.
2. OWNERSHIP OF CONVERTIBLE DEBENTURES. Record and beneficial ownership
of the Convertible Debentures shall remain in the name of the Holders (unless
and until transferred pursuant to the terms thereof, with written notice thereof
to the Transfer Agent). Any transfer or purported transfer of the Convertible
Debentures (1) not made pursuant to the terms of the Convertible Debentures or
(2) not properly noticed to the Transfer Agent shall be null and void ab initio
and shall not be given effect thereto by the Transfer Agent. The Transfer Agent
shall not be required to acknowledge any transfer of the Convertible Debentures
unless accompanied by written confirmation thereof from the Company and the
Holders.
3. PAYING AGENT. The Transfer Agent shall act as paying agent for the
Convertible Debentures. Accordingly, all payments of interest or principal
amounts required of the Company related to the Convertible Debentures shall be
made to the Transfer Agent for the account and benefit of the holders of such
Convertible Debentures as registered on the books of the Transfer Agent (each, a
"Registered Holder"). Upon the receipt of any such payment of interest or
principal amounts, in cash, the Transfer Agent shall promptly wire transfer such
sum to the account of the Registered Holders as set forth on Schedule 2 attached
----------
hereto.
ALL OTHER REGISTERED HOLDERS
----------------------------
Such account as is reflected on the books of the Transfer Agent.
4. ACCOUNTING AGENT. The Transfer Agent shall act as the accounting
agent of the Company and the Registered Holders and shall establish and maintain
an accounting ledger for the Convertible Debentures (the "Accounting Ledger").
The Transfer Agent shall credit (reduce) the outstanding balance of the
Convertible Debentures by all (i) payments of principal and interest
TRANSFER AGENT AGREEMENT - Page 2
(Silverado Foods, Inc.)
<PAGE>
in cash made by the Company to the Transfer Agent as paying agent as required
pursuant to Section 3 above, and (ii) by the appropriate amount upon delivery of
Shares to the applicable Registered Holder following receipt of a Notice of
Conversion (as defined in Section 5 below).
5. ISSUANCE OF CONVERTED SHARES.
(a) Consistent with Section 4(b) of each Convertible Debenture, in
order to convert all or a portion of a Convertible Debenture into shares of
Common Stock of the Company (the "Shares"), a Registered Holder shall deliver
written notice (each, a "Notice of Conversion") to the Transfer Agent of the
portion of the Convertible Debenture it elects to so convert and a calculation
of the number of Shares to be issued upon such conversion. Upon receipt by the
Transfer Agent of any such Notice of Conversion (including receipt via
facsimile) from any Registered Holder, the Transfer Agent shall immediately
deliver a copy thereof to the Company, via facsimile, requesting the Company to
confirm the number of Shares to be issued to such Registered Holder, without
restrictive legend, in connection therewith (provided the opinion described in
Section 5(d) below shall not have been withdrawn). The Company shall, upon
receipt thereof, promptly confirm or dispute the number of Shares to be issued
to the Registered Holder, providing written notice thereof via facsimile to the
Transfer Agent and the Registered Holder (the "Company Notice"). In the event
the Company confirms the number of Shares to be so issued, it shall, as part of
the Company Notice, direct the Transfer Agent to issue such Shares, without
restrictive legend, to the Registered Holder (provided the opinion described in
Section 5(d) hereof shall not have been withdrawn). In the event the Company
disputes the number of Shares to be so issued, the Company and the Registered
Holder shall immediately, in good faith, seek to resolve such dispute. In the
event the Company and the Registered Holder cannot resolve such dispute, each
party reserves all rights and remedies against the other associated with such
Notice of Conversion.
(b) The Transfer Agent shall not be required to issue Shares unless
and until receipt (including via facsimile) of written notice from either (i)
the Company, confirming the number of Shares to be issued or (ii) the Registered
Holder and the Company, setting forth the number of Shares to be issued.
(c) Each time a payment of principal is recorded in the Accounting
Ledger (whether by virtue or a cash payment or by virtue of a conversion into
Shares), the Transfer Agent may, at its option, deliver the Convertible
Debentures to the Company requiring the Company to reissue Convertible
Debentures in the names of the Registered Holders with new principal balances
reflecting such payment.
(d) Contemporaneously herewith, the Company's legal counsel shall
deliver to the Transfer Agent an opinion certifying that the certificates
representing the Shares may be issued in the name of the Registered Holder,
without restrictive legend, commencing after the Restricted Period. The Company
may rely on such opinion until notified in writing to the contrary by such
counsel.
TRANSFER AGENT AGREEMENT - Page 3
(Silverado Foods, Inc.)
<PAGE>
6. TERMINATION. This Agreement shall terminate promptly upon the earlier
to occur of written demand by (i) the Company and all Registered Holders or (ii)
no unpaid balance remains with respect to any of the Convertible Debentures.
Notwithstanding the foregoing, the Transfer Agent may terminate its obligations
under this Agreement at such time as the Transfer Agent no longer serves as the
Transfer Agent for the Company's Common Stock, by delivery of written notice
thereof to the Registered Holders and the Company. Upon delivery of such
notice, the Transfer Agent shall deliver the original Convertible Debentures to
Infinity, on behalf of all Registered Holders, together with a copy of the
Accounting Ledger (with corresponding copy delivered to the Company).
Immediately thereafter, Infinity and the Company shall, in good faith, attempt
to establish an agreement similar to this Agreement with the Company's new stock
transfer agent.
7. FEES. The Company hereby agrees to pay the Transfer Agent for all
services rendered hereunder.
8. NOTICES. Any notice or demand to be given or that may be given under
this Agreement shall be in writing and shall be (a) delivered by hand, or (b)
delivered through or by expedited mail or package service, or (c) transmitted by
telecopy, in each case with personal delivery acknowledged, addressed to the
parties as follows:
As to the Company: Silverado Foods, Inc.
6846 South Canton, Ste. 110
Tulsa, Oklahoma 74136
Fax: 918/491-6290
Attn: President
As to any Holder: 27 Wellington Road
Cork, Ireland
Telephone: 011-44-171-355-2051
Fax: 011-44-171-355-4975
Attn: James Loughran
With a copy to: HW Partners, L.P.
1601 Elm Street
4000 Thanksgiving Tower
Dallas, Texas 75201
Telephone: 214/720-1600
Fax: 214/720-1662
Attn: Barrett Wissman
As to any other As set forth on the books of
Registered Holder: the Transfer Agent.
TRANSFER AGENT AGREEMENT - Page 4
(Silverado Foods, Inc.)
<PAGE>
As to the Transfer
Agent: Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Fax: 212/509-5150
Attn: Michael Nelson
9. NONCONTRAVENTION. The Company agrees that it will not at any time
take any action or undertake any activity that would in any way impede, restrict
or limit the right and ability of the Registered Holders to convert the
Convertible Debentures and receive Shares pursuant to the terms and provisions
of this Agreement.
10. INDEMNIFICATION. The Company and each Holder agree to severally
indemnify and hold harmless the Transfer Agent, each officer, director, employee
and agent of the Transfer Agent, and each person, if any, who controls the
Transfer Agent within the meaning of the Securities Act of 1933, as amended (the
"Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act")
against any losses, claims, damages, or liabilities, joint or several, to which
it, they or any of them, or such controlling person, may become subject, under
the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
the performance by the Transfer Agent of its duties pursuant to the Agreement;
and will reimburse the Transfer Agent, and each officer, director, employee and
agent of the Transfer Agent, and each such controlling person for any legal or
other expenses reasonably incurred by it or any of them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company and each Holder will not be liable in any
- -------- -------
case if such loss, claim, damage or liability arises out of or is based upon any
action not taken in good faith, or any action or omission that constitutes gross
negligence or willful misconduct.
Promptly after receipt by an indemnified party under this Section of notice
of the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against the Company or any Holder under this
Section, notify in writing the Company or such Holder of the commencement
thereof, and failure so to notify the Company or such Holder will relieve the
Company or such Holder from any liability under this Section as to the
particular item for which indemnification is then being sought but not from any
other liability which it may have to any indemnified party. In case any such
action is brought against any indemnified party, and it notifies the Company or
such Holder of the commencement thereof, the Company or such Holder will be
entitled to assume the defense thereof, with counsel who shall be to the
reasonable satisfaction of such indemnified party. The Company or such Holder
shall not be liable to any such indemnified party on account of any settlement
of any claim of action effected without the consent of the Company or such
Holder.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of law rules
TRANSFER AGENT AGREEMENT - Page 5
(Silverado Foods, Inc.)
<PAGE>
of such jurisdiction. Any action brought to enforce, or otherwise arising out
of, this Agreement, shall be heard and determined in either a federal or state
court sitting in the State of Texas.
12. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, constitutes the full
and entire understanding of the parties with respect to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged, or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by facsimile signature.
[Signature page follows]
TRANSFER AGENT AGREEMENT - Page 6
(Silverado Foods, Inc.)
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
date first above written.
SILVERADO FOODS, INC.
By:
------------------------------------
Title:
---------------------------------
INFINITY EMERGING OPPORTUNITIES, LIMITED
By:
--------------------------------------
Title:
-----------------------------------
SEACREST CAPITAL LIMITED
By:
--------------------------------------
Title:
-----------------------------------
FAIRWAY CAPITAL LIMITED
By:
--------------------------------------
Title:
-----------------------------------
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By:
--------------------------------------
Title:
-----------------------------------
TRANSFER AGENT AGREEMENT - Page 7
(Silverado Foods, Inc.)
<PAGE>
EXHIBIT C
DEFINITION OF "U.S. PERSON"
Pursuant to Rule 902 (c), (o) and (p) of Regulation S, the terms "U.S. person"
and "United States" are defined as follows:
(o) U.S. Person.
-----------
(1) "U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated
under the laws of the United States;
(iii) Any estate of which any executor or administrator is a
U.S. person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the
United States;
(vi) Any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;
(vii) Any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized incorporated,
or (if an individual) resident in the United States; and
(viii) Any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B) formed by a
U.S. person principally for the purpose of investing in securities not
registered under the Securities Act of 1933, as amended (the "Act") unless it is
organized or incorporated, and owned, by accredited investors (as defined in
Rule 501(a) of the Act) who are not natural persons, estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this rule, any discretionary
account or similar account (other than an estate or trust) held for the benefit
or account of a non-U.S. person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "U.S. person".
DEFINITION OF "U.S. PERSON" - Page 1
<PAGE>
(3) Notwithstanding paragraph (o)(1), any estate of which any
professional fiduciary acting as executor or administrator is a U.S. person
shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is not a
U.S. person has sole or shared investment discretion with respect to the assets
of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1), any trust of which any
professional fiduciary acting as trustee is a U.S. person shall not be deemed a
U.S. person if a trustee who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. person.
(5) Notwithstanding paragraph (o)(1), an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. person.
(6) Notwithstanding paragraph (o)(1), any agency or branch of a U.S.
person located outside the United States shall not be deemed a "U.S. person" if:
(i) The agency or branch operates for valid business reasons;
and
(ii) The agency or branch is engaged in the business of
insurance or banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(7) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. persons".
(p) United States. "United States" means the United States of America, its
-------------
territories and possessions, any State of the United States, and the District of
Columbia.
DEFINITION OF "U.S. PERSON" - Page 2
<PAGE>
EXHIBIT D
DEFINITION OF "ACCREDITED INVESTOR"
Pursuant to Rule 501 (a) of Regulation D, the term "Accredited Investor" shall
mean any person who comes within any of the following categories, or who the
issuer reasonably believes comes within any of the following categories, at the
time of the sale of the Securities to that person:
1. Any bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended (the "Act"), or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Act whether acting in
its individual or fiduciary capacity; any broker dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934; any insurance company
as defined in Section 2(13) of the Act; any investment company registered
under the Investment Company Act of 1940 or a business development company
as defined in Section 2(a)(48) of that Act; any Small Business Investment
Company licensed by the U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of
$5,000,000; any employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is made
by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000, or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;
2. Any private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940;
3. Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000;
4. Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
5. Any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $1,000,000;
DEFINITION OF ACCREDITED INVESTOR - Page 1
<PAGE>
6. Any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
7. Any trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii); and
8. Any entity in which all of the equity owners are accredited investors.
DEFINITION OF ACCREDITED INVESTOR - Page 2
<PAGE>
EXHIBIT 4.3
THIS WARRANT HAS BEEN OFFERED AND SOLD OUTSIDE OF THE UNITED STATES IN A
TRANSACTION UNDER REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT. THIS WARRANT MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S) UNLESS THE WARRANT
IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH
OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO THE AVAILABLE EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
SILVERADO FOODS, INC.
COMMON STOCK PURCHASE WARRANT
- --------------------------------------------------------------------------------
No. 1
Number of Shares: 41,667 Holder: Infinity Emerging
Opportunities, Limited
Purchase Price: $3.00 per share 27 Wellington Road
Expiration Date: January 31, 2001 Cork, Ireland
For identification only. The governing terms of this Warrant
are set forth below.
- --------------------------------------------------------------------------------
Silverado Foods, Inc., an Oklahoma corporation (the "Company"), hereby
certifies that, for value received, Infinity Emerging Opportunities, Limited, or
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company at any time or from time to time after the date hereof and prior to the
fourth anniversary hereof (the "Exercise Period"), at the Purchase Price
hereinafter set forth, 41,667 shares of the fully paid and nonassessable Common
Stock of the Company. The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein.
The purchase price per share of Common Stock issuable upon exercise of this
Warrant (the "Purchase Price") shall initially be $3.00; provided, however, that
the Purchase Price shall be adjusted from time to time as provided in Section 5,
below.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include Silverado Foods, Inc. and any
corporation that shall succeed or assume the obligations of the Company
hereunder.
COMMON STOCK PURCHASE WARRANT - Page 1
(Silverado Foods, Inc - No.1)
<PAGE>
(b) The term "Common Stock" includes (a) the Company's common stock,
par value $.01 per share, (b) any other capital stock of any class or
classes (however designated) of the Company, authorized on or after such
date, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on
any shares entitled to preference, and the holders of which shall
ordinarily, in the absence of contingencies, be entitled to vote for the
election of a majority of directors of the Company (even though the right so
to vote has been suspended by the happening of such a contingency) and (c)
any other securities into which or for which any of the securities described
in (a) or (b) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) that the holder of this Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of this Warrant, in lieu of
or in addition to Common Stock, or that at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Section 4 or otherwise.
1. Exercise of Warrant.
-------------------
1.1 Method of Exercise. This Warrant may be exercised in whole or in
------------------
part (but not as to a fractional share of Common Stock), at any time and
from time to time during the Exercise Period, by the holder hereof by
surrender of this Warrant, with the form of subscription at the end hereof
duly executed by such holder, to the Company at its principal office,
accompanied by payment of the Purchase Price multiplied by the number of
shares of Common Stock for which this Warrant is being exercised (the
"Exercise Price"). Payment of the Exercise Price shall be made by check or
bank draft payable to the order of the Company or by wire transfer to the
account of the Company. If the amount of the payment received by the Company
is less than the Exercise Price, the holder will be notified of the
deficiency and shall make payment in that amount within five (5) business
days. In the event the payment exceeds the Exercise Price, the Company will
refund the excess to the holder within three (3) business days of receipt.
Upon exercise, the holder shall be entitled to receive, promptly after
payment in full, one or more certificates, issued in the holder's name or in
such name or names as the holder may direct, subject to the limitations on
transfer contained herein, for the number of shares of Common Stock so
purchased. The shares so purchased shall be deemed to be issued as of the
close of business on the date on which this Warrant shall have been
exercised (the "Exercise Date").
1.2 Regulation S Restrictions. Exercise of this Warrant and
-------------------------
acceptance of shares of Common Stock upon such exercise shall constitute an
agreement by the holder not to offer or sell such shares in the United
States, to a U.S. Person (as such term is defined in
COMMON STOCK PURCHASE WARRANT - Page 2
(Silverado Foods, Inc - No.1)
<PAGE>
Regulation S promulgated under the Securities Act of 1933, as amended
("Regulation S")) or for the account or benefit of a U.S. Person during the
period commencing on the date on which it exercises the Warrant and ending
on the day following any applicable restrictive period under Regulation S.
At the time this Warrant is exercised, the Company may require the holder to
restate in the Notice of Exercise the representations set forth in a
Subscription Agreement between the Company and the holder dated the date
hereof (the "Subscription Agreement"). All certificates for the shares of
Common Stock issuable upon exercise of this Warrant shall bear a legend
stating as follows:
"The shares of Common Stock of Silverado Foods, Inc. represented
hereby have been issued pursuant to Regulation S, promulgated under
the United States Securities Act of 1933, as amended (the "Act") and
have not been registered under the Act or any applicable state
securities laws. These shares may not be offered or sold within the
United States or to or for the account of a "U.S. Person" as that term
is defined Regulation S during the period commencing on the date of
issuance hereof and ending [ADD THEN APPLICABLE RESTRICTED PERIOD FOR
NONAFFILIATES] days thereafter."
1.3. Company Acknowledgment. The Company will, at the time of the
----------------------
exercise of this Warrant, upon the request of the holder hereof, acknowledge
in writing its continuing obligation to afford to such holder the
registration rights to which such holder shall continue to be entitled after
such exercise in accordance with the provisions of a Registration Rights
Agreement dated the date hereof. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
1.4 Limitation on Exercise. Notwithstanding the rights of the holder
----------------------
to exercise all or a portion of this Warrant as described herein, such
exercise rights shall be limited, solely to the extent required, from time
to time, such that in no instance shall the maximum number of shares of
Common Stock which the holder may receive in respect of any exercise of all
or a portion of this Warrant exceed, at any one time, an amount equal to the
remainder of (i) 4.99% of the then issued and outstanding shares of Common
Stock of the Company following such exercise, minus (ii) the number of
shares of Common Stock of the Company then owned (beneficially or of record)
by the holder (the "Limitation on Conversion"); provided, however, the
-------- -------
Limitation on Conversion shall not apply, and shall be of no further force
and effect following the occurrence of any Event or Default (as described in
Section 9 of the Convertible Debentures of the Company issued the date
hereof pursuant to the Subscription Agreement) pursuant to which this
Warrant is issued and for which the holder hereof has provided written
notice thereof and which is not cured within the greater of the applicable
time period specified in either (I) such written notice of the holder or
(II) such Convertible Debenture.
COMMON STOCK PURCHASE WARRANT - Page 3
(Silverado Foods, Inc - No.1)
<PAGE>
2. Delivery of Stock Certificates, etc., on Exercise. As soon as practicable
-------------------------------------------------
after the exercise of this Warrant, and in any event within five (5) business
days thereafter, the Company at its expense (including the payment by it of any
applicable issue, stamp or transfer taxes) will cause to be issued in the name
of and delivered to the holder thereof, or, to the extent permissible hereunder,
to such other person as such holder may direct, a certificate or certificates
for the number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then applicable Purchase Price,
together with any other stock or other securities and property (including cash,
where applicable) to which such holder is entitled upon such exercise pursuant
to Section 1 or otherwise.
The Company covenants that upon the expiration of the applicable restrictive
period relating to the shares of Common Stock underlying this Warrant, if any,
it will use its best lawful efforts to issue or cause the transfer agent of the
Company to issue one or more certificates representing such shares of Common
Stock (or Other Securities) without any restrictive legend such that such shares
shall be freely tradable, subject only to compliance with Federal and state
securities laws. The Company acknowledges that "best lawful efforts" as used
herein shall, among other things, require the Company to cooperate with the
holder hereof in obtaining an opinion of counsel satisfactory to the holder
regarding certain Federal securities law implications in connection with
removing the restrictive legend on the shares of Common Stock issuable upon
exercise of this Warrant.
3. Adjustment for Dividends in Other Stock Property, etc.; Reclassification,
-------------------------------------------------------------------------
etc. In case at any time or from time to time, the holders of Common Stock (or
- ----
Other Securities) shall have received, or (on or after the record date fixed for
the determination of shareholders eligible to receive) shall have become
entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock split (adjustments in respect of which are provided
for in Section 5), then and in each such case the holder of this Warrant, on the
exercise hereof as provided in Section 1, shall be entitled to receive the
amount of stock and other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3) that such holder
would hold on the date of such exercise if on the date hereof it had been the
holder of record of the number of shares of Common Stock called for on the face
of this Warrant and had thereafter, during the period from the date hereof
COMMON STOCK PURCHASE WARRANT - Page 4
(Silverado Foods, Inc - No.1)
<PAGE>
to and including the date of such exercise, retained such shares and all such
other or additional stock and other securities and property (including cash in
the cases referred to in subdivisions (b) and (c) of this Section 3) receivable
by him as aforesaid during such period, giving effect to all adjustments called
for during such period by Sections 4 and 5.
COMMON STOCK PURCHASE WARRANT - Page 5
(Silverado Foods, Inc - No.1)
<PAGE>
1. Adjustment for Reorganization, Consolidation, Merger, etc.
----------------------------------------------------------
1.1. Reorganization, etc. In case at any time or from time to time,
-------------------
the Company shall (a) effect a reorganization, (b) consolidate with or merge
into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, the
holder of this Warrant, on the exercise hereof as provided in Section 1 at
any time after the consummation of such reorganization, consolidation or
merger or the effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities) issuable on such
exercise prior to such consummation or such effective date, the stock and
other securities and property (including cash) to which such holder would
have been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such holder had so exercised this
Warrant, immediately prior thereto, all subject to further adjustment
thereafter as provided in Sections 3 and 5.
1.2. Dissolution. In the event of any dissolution of the Company
-----------
following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its expense deliver
or cause to be delivered the stock and other securities and property
(including cash, where applicable) receivable by the holder of this Warrant
after the effective date of such dissolution pursuant to this Section 4 to a
bank or trust company, as trustee for the holder or holders of this Warrant.
1.3. Continuation of Terms. Upon any reorganization, consolidation,
---------------------
merger or transfer (and any dissolution following any transfer) referred to
in this Section 4, this Warrant shall continue in full force and effect and
the terms hereof shall be applicable to the shares of stock and other
securities and property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may
be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms
of this Warrant as provided in Section 6.
2. Adjustment for Extraordinary Events. In the event that the Company shall
-----------------------------------
(i) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock, or (iii) combine its outstanding shares of the Common stock
into a smaller number of shares of the Common Stock, then, in each such event,
the Purchase Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 5. The holder
of this Warrant shall thereafter, on the exercise hereof as provided in Section
1, be entitled to receive that number of shares of Common Stock determined by
multiplying the number of shares of Common Stock that would otherwise (but for
the provisions of this Section 5) be issuable on such exercise by a fraction of
which (i) the numerator is the Purchase Price that would otherwise (but for the
provisions of this Section 5) be in effect, and
COMMON STOCK PURCHASE WARRANT - Page 6
(Silverado Foods, Inc - No.1)
<PAGE>
(ii) the denominator is the Purchase Price in effect on the date of such
exercise.
3. Adjustments to Conversion Price for Diluting Issues.
---------------------------------------------------
3.1.Special Definitions. For purposes of this Section 6, the following
-------------------
definitions shall apply:
(a) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(b) "Convertible Securities" shall mean any evidences of
indebtedness, shares of preferred stock or other securities directly
or indirectly convertible into or exchangeable for Common Stock.
(c) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued by the Company after the first day of the
Exercise Period, other than shares of Common Stock issued or issuable
to officers, employees or directors of the Company or any subsidiary
of the Company, pursuant to a stock purchase or option plan or other
employee stock bonus arrangement (collectively, the "Plans") approved
by the Board of Directors and shareholders of the Company.
3.2. Issuance of Additional Shares. In the event the Company shall
-----------------------------
issue Additional Shares of Common Stock (pursuant to an Option or otherwise)
other than in an Excluded Transaction (as hereafter defined) without
consideration or for a consideration per share less than the applicable fair
market value t hereof (as determined based upon an average trading price of
not more than 10 days preceding the issuance) in effect on the date of and
immediately prior to such issue, then and in such event, the Exercise Price
shall be reduced, concurrently with such issue, to a price (calculated to
the nearest cent) determined by multiplying such Exercise Price by a
fraction, the numerator of which shall be (i) the number of shares of Common
Stock outstanding immediately prior to such issue plus (ii) the number of
shares of Common Stock which the aggregate consideration received or deemed
to have been received by the Company for the total number of Additional
Shares of Common Stock so issued would purchase at the fair market value
thereof, and the denominator of which shall be (i) the number of shares of
Common Stock outstanding immediately prior to such issue plus (ii) the
number of Additional Shares of Common Stock so issued or deemed to be
issued. For the purposes of the foregoing calculation, the number of shares
of Common stock deemed to be outstanding immediately prior to the issuance
of any securities described in either clause of the preceding sentence shall
be the sum of (i) the total number of shares of Common Stock issued and
outstanding at such time, plus (ii) the total number of shares of Common
Stock issuable upon conversion in full of all Convertible Securities issued
and outstanding at such time, plus (iii) the total number of shares of
Common Stock issuable upon conversion in full of all Convertible Securities
issuable upon exercise of Options for Convertible Securities issued and
outstanding at such time. An Excluded Transaction means
COMMON STOCK PURCHASE WARRANT - Page 7
(Silverado Foods, Inc - No.1)
<PAGE>
any issuance of shares of Common Stock (or securities convertible into or
exchangeable or exercisable for shares of Common Stock) (i) pursuant to the
acquisition by the Company of operating assets or stock of entities from
other than affiliates of the Company to be owned and operated by the Company
or a subsidiary of the Company following such acquisition; (ii) upon the
exercise of the currently outstanding options and warrants listed in
Schedule 2.4 of the Subscription Agreement; (iii) upon the exercise of
options issued pursuant to the Silverado Foods, Inc. 1994 Stock Option Plan,
and any amendments or substitutions thereof; (iv) upon the exercise of the
Warrants issued pursuant to the Subscription Agreement; (v) upon the
issuance of Common Stock pursuant to the Royalty Termination Agreement dated
November 8, 1996, among the Company, Nonni's, Inc., Steve Sirianni, Tim
Soldati and Rich Martin; (vi) upon the conversion of the Company's 8.0%
Convertible Debentures due December 31, 1998, in the original principal
amount of $1,100,000; or (vii) upon the conversion of the Company's 9%
Convertible Subordinated Notes in the original principal amount of
$3,550,000.
4. No Impairment. The Company will not, by amendment of its Certificate of
-------------
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise, (b)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
stock on the exercise of this Warrant, and (c) will not transfer all or
substantially all of its properties and assets to any other person (corporate or
otherwise), or consolidate with or merge into any other person or permit any
such person to consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly assume in
writing and will be bound by all the terms of this Warrant.
5. Accountants' Certificate as to Adjustments. In each case of any
------------------------------------------
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable on the exercise of this Warrant, the Company at its expense will
promptly cause independent certified public accountants of national standing
selected by the Company to compute such adjustment or readjustment in accordance
with the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such issue or sale and as adjusted and readjusted
as provided in this Warrant. The Company will forthwith mail a copy of each such
certificate to the
COMMON STOCK PURCHASE WARRANT - Page 8
(Silverado Foods, Inc - No.1)
<PAGE>
holder of this Warrant, and will, on the written request at any time of the
holder of this Warrant, furnish to such holder a like certificate setting forth
the Purchase Price at the time in effect and showing how it was calculated.
6. Notices of Record Date, etc. In the event of
----------------------------
(a) any taking by the Company of a record of the holders of any
class or securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
holder of this Warrant a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, and
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date specified in such
notice on which any action is to be taken.
1. Reservation of Stock, etc. Issuable on Exercise of Warrant. The Company
----------------------------------------------------------
will at all times reserve and keep available, solely for issuance and delivery
on the exercise of this Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this Warrant.
2. Exchange of Warrant. On surrender for exchange of this Warrant, properly
-------------------
endorsed and in compliance with the restrictions on transfer set forth in the
legend on the face of this Warrant, to the Company, the Company at its expense
will issue and deliver to or on the order of the holder thereof a new Warrant of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face of the Warrant so surrendered.
COMMON STOCK PURCHASE WARRANT - Page 9
(Silverado Foods, Inc - No.1)
<PAGE>
3. Replacement of Warrant. On receipt of evidence reasonably satisfactory to
----------------------
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction of this Warrant, on delivery
of an indemnity agreement or security reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
4. Remedies. The Company stipulates that the remedies at law of the holder
--------
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
5. Negotiability, etc. This Warrant is issued upon the following terms, to
------------------
all of which each holder or owner hereof by the taking hereof consents and
agrees:
(a) title to this Warrant may be transferred by endorsement (by
the holder hereof executing the form of assignment at the end hereof)
and delivery in the same manner as in the case of a negotiable
instrument transferable by endorsement and delivery.
(b) Any person in possession of this Warrant properly endorsed
is authorized to represent himself as absolute owner hereof and is
empowered to transfer absolute title hereto by endorsement and
delivery hereof to a bona fide purchaser hereof for value; each prior
taker or owner waives and renounces all of his equities or rights in
this Warrant in favor of each such bona fide purchaser, and each such
bona fide purchaser shall acquire absolute title hereto and to all
rights represented hereby;
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to
the contrary; and
(d) notwithstanding the foregoing, this Warrant may not be
sold, transferred or assigned except pursuant to an effective
registration statement under the Securities Act of 1933, as amended
or, pursuant to an applicable exemption therefrom or in accordance
with Regulation S promulgated under such Act.
6. Notices, etc. All notices and other communications from the Company to
------------
the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder or, until any such holder furnishes to the
Company an address, then to, and at the address of, the last holder of this
Warrant who has so furnished an address to the Company.
7. Miscellaneous. This Warrant and any term hereof may be changed, waived,
-------------
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the internal laws of the State of Delaware. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms
COMMON STOCK PURCHASE WARRANT - Page 10
(Silverado Foods, Inc - No.1)
<PAGE>
hereof. This Warrant is being executed as an instrument under seal. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
[Signature Page Follows]
COMMON STOCK PURCHASE WARRANT - Page 11
(Silverado Foods, Inc - No.1)
<PAGE>
DATED as of January __, 1997.
SILVERADO FOODS, INC.
By:
- ---- ---------------------------------------
Name:
- ---- -------------------------------------
Title:
- ---- ------------------------------------
[Corporate Seal]
Attest:
By:
---------------------------
Secretary
COMMON STOCK PURCHASE WARRANT - Page 12
(Silverado Foods, Inc - No.1)
<PAGE>
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of
January __, 1997, by and among SILVERADO FOODS, INC., an Oklahoma corporation
(the "Company"), and INFINITY EMERGING OPPORTUNITIES, LIMITED, a Nevis West
Indies corporation ("Infinity") and SEACREST CAPITAL LIMITED, a Nevis West
Indies corporation ("Seacrest"), and FAIRWAY CAPITAL LIMITED, a Nevis West
Indies corporation ("Fairway") (Infinity, Seacrest and Fairway being singularly
referred to as an "Investor" and collectively as the "Investors").
R E C I T A L S:
----------------
WHEREAS, pursuant to a Subscription Agreement (the "Subscription
Agreement"), by and between the Company and the Investors, the Company have
agreed to sell and the Investors has agreed to purchase the Company's
Convertible Debentures (the "Debentures"), convertible into shares of the
Company's common stock, par value $.01 per share of the Company (the "Common
Stock"); and
WHEREAS, pursuant to the Subscription Agreement, the Company has agreed to
issue to the Investors one or more warrants (collectively, the "Warrant") to
purchase shares of Common Stock; and
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investors' agreement to enter into the Subscription Agreement, the Company has
agreed to provide the Investors with certain registration rights with respect to
the shares of Common Stock into which the Debentures may be converted, and
issued upon exercise of the Warrant from time to time (the shares of Common
Stock issued upon conversion of the Debentures or exercise of the Warrant being
hereinafter referred to as the "Shares").
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Agreement and this
Registration Rights Agreement, the Company and the Investors agree as follows:
AGREEMENT:
---------
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
REGISTRATION RIGHTS AGREEMENT - Page 1
(Silverado Foods, Inc.)
<PAGE>
"Commission" shall mean the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, par value $.01 per
share.
"Initiating Holders" shall mean holders of more than 50% of the outstanding
shares of Debentures or Warrant.
"Other Registrable Shares" shall mean those shares of Common Stock
heretofore or hereafter issued pursuant to one or more agreements granting the
purchasers of such securities the right to have the Company register such
securities or include such securities in any other registration of the Company's
equity securities.
"Registrable Shares" shall mean (i) the Shares, and (ii) any Common Stock
of the Company issued or issuable in respect of the Shares or upon any stock
split, stock dividend, recapitalization or similar event; provided, however,
-------- -------
that Registrable Shares or other securities shall no longer be treated as
Registrable Shares if (A) they have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, (B)
they have been sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act so that all transfer restrictions
and restrictive legends with respect thereto are removed upon consummation of
such sale, or (C) the Shares are available for sale under the Securities Act
(including Rule 144), in the opinion of counsel to the Company, without
compliance with the registration and prospectus delivery requirements of the
Securities Act so that all transfer restrictions and restrictive legends with
respect thereto may be removed upon the consummation of such sale.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company in
compliance with Section 2 hereof, including, without limitation all registration
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, reasonable fees and disbursements (not to
exceed $10,000) of one counsel for all the selling holders of Registrable Shares
for a limited "due diligence" examination of the Company incident to such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company, and excluding all
underwriting discounts and selling commissions applicable to the sale of the
Registrable Shares).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
REGISTRATION RIGHTS AGREEMENT - Page 2
(Silverado Foods, Inc.)
<PAGE>
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Shares and all fees and
disbursements of one counsel for the selling holders of Registrable Shares
(other than the fees and disbursements of such counsel included in Registration
Expenses).
2. REQUESTED REGISTRATION.
The following registration rights will apply if, and only if, at any time
prior to the termination of this Agreement, Regulation S promulgated under the
Securities Act is rescinded or modified so as to preclude Initiating Holders
from reselling in the United States public securities markets Shares received
from the Company upon conversion of the Debentures or exercise of the Warrant
following expiration of the Restricted Period or Warrant Restricted Period, as
applicable (as defined in the Subscription Agreement), or if, for any other
reason, the Company refuses or is unable to issue Shares at the times required
by the Subscription Agreement Debentures or Warrant bearing no restrictive
legend to Initiating Holders after expiration of the Restricted Period, or
Warrant Restricted Period, as applicable; provided, however, that no Investor
shall be entitled to request registration pursuant to this Agreement (and such
Investor shall not be considered an Initiating Holder pursuant to this
Agreement, and the securities held by such Investor shall not be considered
Registrable Shares pursuant to this Agreement) if a representation or warranty
of such Investor in the Subscription Agreement is inaccurate or was inaccurate
when made, or such Investor has failed to comply with the covenants and
agreements of such Investor set forth in the Subscription Agreement:
(a) REQUEST FOR REGISTRATION. If the Company shall receive from
Initiating Holders, at any time after ten (10) days and prior to sixty (60)
months following the final closing of the sale of the Debentures pursuant
to the Subscription Agreement, a written request that the Company effect a
registration with respect to all, but not less than all, of the Registrable
Shares held by such Initiating Holders (which notice shall specify the
intended method of disposition), the Company shall:
(i) promptly give written notice of the proposed registration to
all other holders of Registrable Shares; and
(ii) as soon as practicable (A) cause to be filed a Registration
Statement on Form S-3 under the Securities Act (or such other form as
is then appropriate for use by the Company under the Securities Act)
and (B) use its best efforts to cause such registration statement to
be declared effective by the Commission (including, without
limitation, undertaking the actions described in Section 4), all as
may be so requested by the Initiating Holders so as to permit or
facilitate the sale and distribution of all or such portion of such
Registrable Shares as are specified in such request, together with all
or such portion of the Registrable Shares of any holder or holders of
Registrable Shares joining in such request as are specified in
REGISTRATION RIGHTS AGREEMENT - Page 3
(Silverado Foods, Inc.)
<PAGE>
a written request given within fifteen (15) days after receipt of such
written notice from the Company; provided that the Company shall not
be obligated to effect, or to take any action to effect, any such
registration pursuant to this Section 2:
(A) after the Company has effected two (2) such
registrations pursuant to this Section 2(a) and each registration
has been declared or ordered effective by the Commission and
remained effective for a continuous period of 360 days; or
(B) within the period starting with the date sixty (60) days
prior to the Company's good faith estimated date of filing of,
and ending ninety (90) days following the effective date of, any
registered public offering of the Company's securities.
Subject to the foregoing limitations in clauses (A) and (B) above, the
Company shall file a registration statement covering the Registrable Shares
so requested to be registered as soon as practicable after receipt of the
request or requests of the Initiating Holders, but no later than forty-five
(45) days following receipt of such request or requests, except in the
event audited financial statements not previously prepared are required to
be prepared prior to the filing of such registration statement, in which
case such registration statement must be filed as soon as practicable, but
in any event within ninety (90) days following receipt of such request or
requests.
The registration statement filed pursuant to the request of the
Initiating Holders (the "Registration Statement") may, subject to the
provisions of Section 2(b) below, include Other Registrable Shares, other
securities of the Company which are held by officers or directors of the
Company or which are held by other holders of registration rights, and may
include securities of the Company being sold for the account of the
Company.
Notwithstanding the foregoing, the Initiating Holders agree that each
of the two (2) demands set forth herein shall be for at least 50% of the
Shares issuable upon conversion of the Debentures and exercise of the
Warrant, and a second demand shall not be made until at least 180 days
following the initial demand is so requested.
(b) UNDERWRITING. If the Initiating Holders intend to distribute the
Registrable Shares covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant
to Section 2 and the Company shall include such information in the written
notice referred to in Section 2(a)(i) above. The right of any holder of
Registrable Shares to registration pursuant to Section 2 shall be
conditioned upon such holder's participation in such underwriting and the
inclusion of such holder's Registrable Shares in such underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating
Holders and such holder with respect to such
REGISTRATION RIGHTS AGREEMENT - Page 4
(Silverado Foods, Inc.)
<PAGE>
participation and inclusion) to the extent provided herein. A holder of
Registrable Shares may elect to include in such underwriting all or a part
of the Registrable Shares it holds.
(i) If the Company shall request inclusion in any registration
pursuant to Section 2 of securities being sold for its own account, or
if officers or directors of the Company holding other securities of
the Company or other holders of registration rights, shall request
inclusion in any registration pursuant to Section 2, the Initiating
Holders shall, on behalf of all holders of Registrable Shares, offer
to include Other Registrable Shares and the securities of the Company,
such officers and directors and such other holders of registration
rights in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Agreement. The
Company shall (together with all holders of Registrable Shares,
officers and directors, other holders of registration rights and
holders of Other Registrable Shares proposing to distribute their
securities through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or representative of
the underwriters selected for such underwriting by the Company, which
underwriter(s) shall be reasonably acceptable to a majority in
interest of the Initiating Holders.
(ii) Notwithstanding any other provision of this Section 2, if
the representative of the underwriters advises the Company in writing
that marketing factors require a limitation on the number of shares to
be underwritten, the Company shall so advise all holders of
Registrable Shares and other shareholders whose securities would
otherwise be underwritten pursuant to such registration, and the
number of Registrable Shares and other securities that may be included
in the registration and underwriting shall be allocated in the
following manner: the securities to be offered by the Company and the
securities of the Company held by officers and directors of the
Company (other than Registrable Shares) shall be excluded from such
registration and underwriting to the extent required by such
limitation, and, if a limitation on the number of shares is still
required, the Other Registrable Shares shall be excluded pro rata with
Registrable Shares, unless another method of determining such
exclusion is specified in the agreements governing the Other
Registrable Shares, according to the relative number of Other
Registrable Shares requested to be included in such registration and
underwriting, from such registration and underwriting to the extent
required by such limitation, and, if a limitation on the number of
shares is still required, the number of Registrable Shares that may be
included in the registration and underwriting shall be allocated among
all holders of Registrable Shares in proportion, as nearly as
practicable, to the respective amounts of Registrable Shares which
they had requested to be included in such registration at the time of
filing the registration statement. No Registrable Shares or any other
securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall also be included in such
registration.
REGISTRATION RIGHTS AGREEMENT - Page 5
(Silverado Foods, Inc.)
<PAGE>
(iii) If the Company or any officer, director or holder of
Registrable Shares or Other Registrable Shares who has requested
inclusion in such registration and underwriting as provided above
disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to the Company, the underwriter
and the Initiating Holders. The securities so withdrawn shall also be
withdrawn from registration.
3. EXPENSES OF REGISTRATION. The Company shall bear all Registration
Expenses incurred in connection with any registration, qualification or
compliance of the Registrable Shares pursuant to this Agreement. All Selling
Expenses shall be borne by the holders of the securities so registered pro rata
on the basis of the number of their shares so registered (except for the fees
and disbursements of counsel to the Investors).
4. REGISTRATION PROCEDURES. Pursuant to this Agreement, the Company will
keep each holder of Registrable Shares advised in writing as to the initiation
of a registration under this Agreement and as to the completion thereof. At its
expense, the Company will:
(a) Use reasonable efforts to keep such registration effective for a
period of three hundred sixty (360) days or until the holder or holders of
Registrable Shares have completed the distribution described in the
registration statement relating thereto or until the securities registered
cease to be Registrable Shares, whichever first occurs;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of securities covered by such registration statement;
(c) Furnish such number of prospectuses and other documents incidental
thereto, including any amendment of or supplement to the prospectus, as a
holder of Registrable Shares from time to time may reasonably request;
(d) use reasonable efforts to (i) register and qualify the Registrable
Shares covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Investors who hold a majority in
interest of the Registrable Shares being offered reasonably request, (ii)
prepare and file in those jurisdictions such amendments (including post-
effective amendments) and supplements, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect
until such date set forth in clause (a) above and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Shares
for sale in such jurisdictions; provided, however, that the Company shall
-------- -------
not be required in connection therewith or as a condition thereto to (I)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to
general, taxation in any such jurisdiction, (III) file a general consent to
service of process in any such jurisdiction, (IV) provide any undertakings
REGISTRATION RIGHTS AGREEMENT - Page 6
(Silverado Foods, Inc.)
<PAGE>
that cause more than nominal expense or burden to the Company or (V) make
any change in its charter or by-laws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of
the Company and its stockholders;
(e) in the event Investors who hold a majority in interest of the
Registrable Shares being offered in the offering select underwriters for
the offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the managing
underwriter of such offering;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and use its best efforts
promptly to prepare a supplement or amendment to the Registration Statement
to correct such untrue statement or omission, and deliver a number of
copies of such supplement or amendment to each Investor as such Investor
may reasonably request;
(g) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Shares being sold (or, in the
event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of
effectiveness of the Registration Statement at the earliest possible time;
(h) permit a single firm of counsel designated as selling
stockholders' counsel by the Investors who hold a majority in interest of
the Registrable Shares being sold to review the Registration Statement and
all amendments and supplements thereto a reasonable period of time prior to
their filing with the Commission, and shall not file any document in a form
to which such counsel reasonably objects;
(i) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month
period beginning not later than the first day of the Company's fiscal
quarter next following the effective date of the Registration Statement;
(j) at the request of the Investors who hold a majority in interest of
the Registrable Shares being sold, furnish on the date that Registrable
Shares are delivered to an underwriter for sale in connection with the
Registration Statement (i) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to
underwriters in an
REGISTRATION RIGHTS AGREEMENT - Page 7
(Silverado Foods, Inc.)
<PAGE>
underwritten public offering, addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for
purposes of such Registration Statement, in form and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters and the Investors;
(k) make available for inspection by any Investor, any underwriter
participating in any disposition pursuant to the Registration Statement,
and any attorney, accountant or other agent retained by any such Investor
or underwriter (collectively, the "Inspectors"), all pertinent financial
and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
enable each Inspector to exercise its due diligence responsibility, and
cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such
due diligence; provided, however, that each Inspector shall hold in
-------- -------
confidence and shall not make any disclosure (except to an Investor) of any
Record or other information which the Company determines in good faith to
be confidential, and of which determination the Inspectors are so notified,
unless (i) the disclosure of such Records is necessary to avoid or correct
a misstatement or omission in any Registration Statement, (ii) the release
of such Records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction or (iii) the information
in such Records has been made generally available to the public other than
by disclosure in violation of this or any other agreement. The Company
shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered
into confidentiality agreements (in form and substance satisfactory to the
Company) with the Company with respect thereto, substantially in the form
of this Section 3(k). Each Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice
to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. The Company shall hold in
confidence and shall not make any disclosure of information concerning an
Investor provided to the Company pursuant to Section 4(e) hereof unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction or
(iv) such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such
information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt notice to such Investor, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information;
(l) use its best efforts either to (i) cause all the Registrable
Shares covered by the Registration Statement to be listed on a national
securities exchange and on each additional
REGISTRATION RIGHTS AGREEMENT - Page 8
(Silverado Foods, Inc.)
<PAGE>
national securities exchange on which similar securities issued by the,
Company are then listed, if any, if the listing of such Registrable Shares
is then permitted under the rules of such exchange or (ii) secure
designation of all the Registrable Shares covered by the Registration
Statement as an American Stock Exchange ("AMEX") security within the
meaning of Rule 11Aa2-1 of the Commission under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the quotation of the
Registrable Shares on the AMEX or, if, despite the Company's best efforts
to satisfy the preceding clause (i) or (ii) , the Company is unsuccessful
in satisfying the preceding clause (i) or (ii) , to secure listing on a
national securities exchange or AMEX authorization and quotation for such
Registrable Shares and, without limiting the generality of the foregoing,
to arrange for at least two market makers to register with the National
Association of Securities Dealers, Inc. ("NASD") as such with respect to
such Registrable Shares;
(m) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Shares not later than the effective date of the
Registration Statement;
(n) cooperate with the Investors who hold Registrable Shares being
offered and the managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing Registrable Shares to be offered pursuant
to the Registration Statement and enable such certificates to be in such
denominations or amounts as the case may be, as the managing underwriter or
underwriters, if any, or the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters, if
any, or the Investors may request; and
(o) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Shares pursuant
to the Registration Statement.
5. INDEMNIFICATION.
(a) The Company will indemnify each holder of Registrable Shares, each of
its officers, directors and partners, and each person controlling such holder of
Registrable Shares, with respect to which registration has been effected
pursuant to this Agreement, and each underwriter, if any and each person who
controls any underwriter, and their respective counsel against all claims,
losses, damages and liabilities (or actions, proceedings or settlements in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, or other
document incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable
to the Company in connection with any such registration and will reimburse each
such holder of Registrable Shares, each of its officers, directors and partners,
and each person controlling such holder of Registrable Shares, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses as they are reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or
REGISTRATION RIGHTS AGREEMENT - Page 9
(Silverado Foods, Inc.)
<PAGE>
action, provided, however, that the indemnity contained in this Section 5(a)
shall not apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent of the
Company; and provided further that the Company shall not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by such holder of Registrable Shares or
underwriter and stated to be specifically for use therein. The foregoing
indemnity agreement is further subject to the condition that insofar as it
relates to any untrue statement, alleged untrue statement, omission or alleged
omission made in a preliminary prospectus, such indemnity agreement shall not
inure to the benefit of the foregoing indemnified parties if copies of a final
prospectus correcting the misstatement, or alleged misstatement, omission or
alleged omission upon which such loss, liability, claim or damage is based is
timely delivered to such indemnified party and a copy thereof was not furnished
to the person asserting the loss, liability, claim or damage.
(b) Each holder of Registrable Shares will, if Registrable Shares held by
it are included in the securities as to which such registration is being
effected, indemnify the Company, each of its directors and officers and each
underwriter, if any, of the Company's securities covered by such a Registration
Statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act and the rules and regulations thereunder, each
other such holder of Registrable Shares and each of its officers, directors and
partners, and each person controlling such holder of Registrable Shares, and
their respective counsel (collectively, the "Company, Underwriters and Counsel")
against all claims, losses, damages and liabilities (or actions, proceedings or
settlements in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact relating to such Holder
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein relating to such holder or necessary
to make the statements therein relating to such holder not misleading or any
violation by such holder of any rule or regulation promulgated under the
Securities Act applicable to such holder and relating to action or inaction
required of such holder in connection with any such registration; and will
reimburse the Company, such holders of Registrable Shares, directors, officers,
partners, persons, underwriters or control persons for any legal or any other
expense reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) relating to such holder is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such holder of Registrable Shares and stated to be specifically for
use therein; provided, however, that such indemnification obligations shall not
apply if the Company modifies or changes to a material extent written
information furnished by such Holder. Each holder of Registrable Shares will,
if Registrable Shares held by it are included in the securities as to which such
registration is being effected, indemnify the Company, Underwriters and Counsel
against all claims, losses, damages and liabilities (or actions, proceedings or
settlements in respect thereof), arising out of or based on any sale of
Registrable Shares made by such holder following receipt by such holder of
written notice from the Company, Underwriters or Counsel that the registration
REGISTRATION RIGHTS AGREEMENT - Page 10
(Silverado Foods, Inc.)
<PAGE>
statement filed with respect to such Registrable Shares contains an untrue
statement of material fact or omits to state a material fact necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(c) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 5 to the fullest extent permitted by law; provided, however, that
-------- -------
(a) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 5, (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Shares who was
not guilty of such fraudulent misrepresentation and (c) contribution by any
seller of Registrable Shares shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Shares.
(d) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at such Indemnified Party's expense. No Indemnifying Party, in
the defense of any such claim or litigation, shall except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
6. AGREEMENTS OF HOLDERS OF REGISTRABLE SHARES. Each holder of
Registrable Shares shall furnish to the Company such information regarding such
holder of Registrable Shares and the distribution proposed by such holder of
Registrable Shares as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration referred to in this
Agreement.
7. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the Commission that may at any time permit
the Investors to sell securities of the Company to the public without
registration and without imposing restrictions arising under the federal
securities laws on the purchases thereof ("Rule 144") the Company agrees to:
REGISTRATION RIGHTS AGREEMENT - Page 11
(Silverado Foods, Inc.)
<PAGE>
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the Commission in a timely manner, all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Shares, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so
filed by the Company and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule
144 without registration.
8. MISCELLANEOUS.
A. GOVERNING LAW. This agreement shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
conflict of laws of such jurisdiction.
B. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
C. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
D. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered by hand or by messenger or courier delivery
service, addressed (a) if to an Investor at 27 Wellington Road, Cork, Ireland,
Attention: James O'Brien, with a copy to HW Finance Partners, L.P., 4000
Thanksgiving Tower, 1601 Elm Street, Dallas, Texas 75204, Attention: Barrett N.
Wissman, or at such other address as such Investor shall have furnished to the
Company in writing, or (b) if to the Company at 6846 South Canton Street, Ste.
110, Tulsa, Oklahoma 74136 or at such other address as the Company shall have
furnished to each Investor and each such other holder in writing.
E. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any holder of any Registrable Shares, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
thereafter occurring. Any waiver,
REGISTRATION RIGHTS AGREEMENT - Page 12
(Silverado Foods, Inc.)
<PAGE>
permit, consent or approval of any kind or character on
the part of any holder of any breach or default under this Agreement, or any
waiver on the part of any party of any provisions of conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
F. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
G. SEVERABILITY. In the case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
H. AMENDMENTS. The provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this Agreement may
be waived, with and only with an agreement or consent in writing signed by the
Company and by the Investors currently holding fifty percent (50%) of the
Registrable Shares as of the date of such amendment or waiver.
[Signature page follows]
REGISTRATION RIGHTS AGREEMENT - Page 13
(Silverado Foods, Inc.)
<PAGE>
The foregoing Registration Rights Agreement is hereby executed as of the
date first above written.
COMPANY:
SILVERADO FOODS, INC.
By:
------------------------------------
Title:
---------------------------------
INVESTORS:
INFINITY EMERGING OPPORTUNITIES, LIMITED
By:
------------------------------------
Title:
---------------------------------
SEACREST CAPITAL LIMITED
By:
------------------------------------
Title:
---------------------------------
FAIRWAY CAPITAL LIMITED
By:
------------------------------------
Title:
---------------------------------
REGISTRATION RIGHTS AGREEMENT - Page 14
(Silverado Foods, Inc.)
<PAGE>
EXHIBIT G
NOTICE OF EXERCISE
------------------
(To be executed only upon exercise or conversion
of the Warrant in whole or in part)
To Silverado Foods, Inc:
The undersigned registered holder of the accompanying Warrant hereby
exercises such Warrant or portion for, and purchases thereunder,_________/1/
shares of Common Stock (as defined in such Warrant) and herewith makes payment
therefor of $ ________. The Undersigned requests that the certificates for such
shares of Common Stock be issued in the name of, and delivered to_______________
___________________ whose address is __________________________________________.
The undersigned, as contemplated by Section 4.2(b) of the Subscription Agreement
pursuant to which this Warrant was issued, hereby states that the
representations and warranties of the undersigned set forth therein are true and
correct in all material respects.
Dated:________________________
- ---- -----------------------------------
(Name must conform to name of holder as
specified on the face of the Warrant)
By:
- ---- ---------------------------------
Name:
- ---- -------------------------------
Title:
- ---- ------------------------------
Address of holder:
- ---- ------------------------------------
- ---- ------------------------------------
- ---- ------------------------------------
- ----------------------
/1/ Insert the number of shares of Common Stock as to which this Warrant is
being exercised. In the case of a partial exercise, a new Warrant or Warrants
will be issued and delivered, representing the unexercised portion of this
Warrant, to the holder surrendering the same.
