SUBSCRIPTION AGREEMENT
▇▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
Organic Food Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: Private offering of unsecured
promissory notes by Organic Food
Products, Inc. (the "Company")
Dear ▇▇. ▇▇▇▇,
1. SUBSCRIPTION AND OFFERING. The undersigned hereby subscribes for and
agrees to purchase a promissory note (the "Note") issued by the Company in
the principal amount of $______. The Note is unsecured, bears interest at 10%
per annum and is payable in full, including interest, the earlier of one year
from the date of the Note or the effective date of an initial public offering
("IPO") of the Company's securities. As additional consideration for
purchasing the Note, the undersigned will receive ______ common stock
purchase warrants ("Warrants") (at the rate of one Warrant for each $3.00 of
Note purchased), each Warrant entitling the holder to purchase one share of
the Company's Common Stock at $3.00 per share at any time until December 31,
1999. The Warrants provide certain registration rights as set forth in the
form of Warrant attached hereto as Exhibit B.
Notwithstanding the payment date set forth above, if the Note is not
repaid by December 1, 1997, then each month thereafter for a period of five
months the Company will convert at no cost 20% of the Warrants issued to the
undersigned into an equal number of shares of its Common Stock. Accordingly,
after five months, all Warrants will be converted into Common Stock.
Additionally, at the undersigned's election, the Company will issue one
Warrant for each $30.00 of Note purchased in lieu of interest on the Note. A
copy of the Note is attached hereto as Exhibit A.
The undersigned understands that the Company is offering up to $600,000
of Notes (the "offering") to a group of not more than ten investors and that
the offering will close on May 30, 1997 or at such time as all of the Notes
are sold, whichever is sooner. The Company may extend the offering for an
additional 30-day period in its sole discretion.
2. ACCEPTANCE OR REJECTION; MINIMUM SUBSCRIPTION. The undersigned
understands that the Company, in it sole discretion and for any reason, may
accept or reject this subscription, in whole or in part. The undersigned
acknowledges that he or she must purchase a Note in the minimum amount of
$50,000, unless the minimum amount is reduced in the sole discretion of the
Company.
3. ACKNOWLEDGEMENT. The undersigned acknowledges that: (1) the offering
of Notes and Warrants as made only through direct personal communication
between the undersigned and a representative of Spelman & Co., Inc. (the
"Selling Agent"), who will receive a commission of 10% of the gross proceeds
of the Notes sold; (2) the undersigned has had the opportunity to obtain all
information concerning the Company, it operations, legal structure and any
other materials or documentation requested by the undersigned; (3) the
undersigned has reviewed the Company's preliminary prospectus dated March 7,
1997 filed with the Securities and Exchange Commission and is familiar with
its content; (4) the undersigned has been advised by the Company that (i) he
or she must be prepared to bear the economic risk of the investment in the
Notes for an indefinite period; (ii) the Notes and Warrants have not been
registered under the Securities Act of 1933, or applicable state securities
laws and hence cannot be sold unless they are subsequently registered or an
exemption from such registration is available; (iii) the Notes and Warrants
are highly speculative, involve a high degree of risk and should only be
purchased by individuals who can afford to lose their entire investment; and
(iv) the certificates for the Notes and Warrants will contain an appropriate
restrictive legend prohibiting their sale or transfer, except under certain
circumstances in substantially the following form:
"The securities represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
securities may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the availability
of which is to be established to the satisfaction of the Company."
4. EXECUTION OF AGREEMENT. When accepted by the Company, in whole or in
part, this subscription shall be valid and binding on the undersigned and the
Company for all purposes. The undersigned represents and warrants that the
undersigned has received, read and understands the contents hereof and has
consulted with his attorney, business advisor and/or accountant concerning
the offering of shares.
5. PERSONAL INVESTIGATION. The undersigned warrants and represents
that, prior to making a decision whether to invest herein through purchase of
the Note, he or she has conducted a personal investigation and has researched
and considered all factors that bear on the advisability of investing in the
Company, and that his or her investment decision has not been based solely
upon the representations of the Selling Agent. The undersigned has had the
opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering and the business, properties,
prospects and financial condition of the Company, and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to the undersigned.
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6. PURCHASE FOR OWN ACCOUNT. The undersigned warrants and represents
that the Notes and Warrants subscribed by the undersigned will be acquired
for the undersigned's own account and benefit and not for the account of any
other person or business entity, and the undersigned has no present intention
of selling or distributing the Notes or Warrants. The undersigned is not
acting as a nominee for any other person or entity. The undersigned
understands that the Notes and Warrants may not be sold, hypothecated,
pledged, transferred, assigned or disposed of except in accordance with the
substantial restrictions on transfer described herein.
7. INVESTMENT EXPERIENCE. The undersigned warrants and represents
that the undersigned is experienced in investments and business matters, has
made similar speculative investments in the past, has sufficient investment
acumen to analyze and evaluate the merits and risks of investing in the Notes
and Warrants and has sufficient financial resources to hold the Notes and
Warrants for an indefinite period of time.
8. SUITABILITY. The undersigned is an "accredited investor" as that
term is defined in Rule 501 of the 1933 Act and has either (i) a net worth
of at least $1,000,000 or (ii) individual income in excess of $200,000 in
each of the last two years (or joint income of $300,000 including the
undersigned's spouse's income) and a reasonable expectation of reaching the
same income level during the current year.
9. CONFIDENTIALITY. The undersigned understands that this
Subscription Agreement and all other documents delivered to the undersigned
in connection with this subscription are confidential documents prepared
solely for the benefit of a limited number of qualified investors associated
with the Company. The undersigned agrees that he or she will not reproduce
or distribute any of such documents in whole or in part.
10. INDEMNIFICATION. The undersigned recognizes that the sale of the
Notes and Warrants will be based upon his or her representations and
warranties set forth herein, and the undersigned hereby agrees to indemnify
and defend the Company and to hold each officer and/or director thereof
harmless from and against any and all loss, damage, liability or expense,
including costs and reasonable attorneys' fees, to which they may be put or
which they may incur by reason of, or in connection with, any misrepresentation
made by the undersigned in this Subscription Agreement or elsewhere, any
breach by the undersigned of his or her warranties and/or a failure to
fulfill any of the covenants or agreements set forth herein or elsewhere or
arising out of the sale or distribution of any Notes and Warrants by the
undersigned in violation of the Securities Act of 1933, as amended, (the
"1933 Act") and any other applicable state securities laws.
11. NASD AFFILIATIONS. The undersigned represents that he or she is
not directly or indirectly associated with any member of the National
Association of Securities Dealers, Inc. ("NASD").
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12. DELIVERY OF FUNDS. All investor checks must be payable to "Organic
Food Products, Inc." and delivered to the Selling Agent.
Dated at ____________, this _____ day of __________, 1997.
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Signature
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Print Name
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Residence Address
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City State Country
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Country Area Telephone
Code Code Number
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Name In Which Share Are To Be Issued
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Social Security or Tax Identification
Number
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Employer
ACCEPTED:
ORGANIC FOOD PRODUCTS, INC.
By
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▇▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
on
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Date
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
PROMISSORY NOTE
US$ Morgan Hill, California
------------ _________________, 1997
FOR VALUE RECEIVED, the undersigned Organic Food Products, Inc., a
California corporation ("Payor"), with offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ hereby promises to pay to the order of ____________________
("Payee") at such place as Payee may from time to time designate in writing,
the principal sum of ____________________, and to pay interest from the date
hereof on the unpaid principal balance at a rate of 10% per annum. The
principal balance and all accrued interest outstanding under this promissory
note ("Note"), are due and payable the earlier of (i) one year from the date
of this Note or (ii) the effective date of any initial public offering of the
securities of Payor.
Payor may, at its option, at any time and from time to time, prepay all or
any part of the principal balance of this Note, provided that concurrently with
each such prepayment Payor shall pay accrued interest on the principal so
prepaid to the date of such prepayment. The parties hereto hereby irrevocably
consent to the jurisdiction of the courts of the State of California in
connection with any action or proceeding arising out of or relating to this
Note. This Note shall be governed by California law, without reference to any
choice of law principles thereof.
Payor shall be entitled to reasonable attorney's fees and court costs if
legal proceedings are necessary to collect sums due under this Note.
ORGANIC FOOD PRODUCTS, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇,
Chief Executive Officer
EXHIBIT B
COMMON STOCK PURCHASE WARRANT
WARRANT NO. __________
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND ARE "REGISTERED SECURITIES" AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
FOR VALUE RECEIVED ____________________________________________________,
the registered holder (the "Holder"), is entitled to purchase from Organic
Food Products, Inc., a California corporation, (the "Company") up to ________
shares of the Company's Common Stock at $3.00 per share (the "Warrant Price")
at any time until December 31, 1999. The Holder will not have the rights or
privileges as a shareholder of the Company prior to exercise of the common
stock purchase warrant ("Warrant") represented by this certificate.
At any time after one year from the effective date of the Company's IPO
as defined in the accompanying subscription agreement ("Subscription
Agreement") upon the written request of the Holders, the Company will
register the shares issuable upon exercise of this Warrant. All expenses
incurred by the Company in connection with such registration, including
without limitation all registration and filing fees, listing fees, printing
expenses, costs of counsel for the Company, the expense of any special audits
incident to or required by any such registration and the expenses of
complying with the securities or Blue Sky laws of any jurisdiction shall be
paid by the Company. Holder shall pay all underwriting discounts or
commissions with respect to the Common Stock sold by Holder.
This Warrant may be exercised by presentation of this certificate and
simultaneous payment of the Warrant Price at the offices of the Company in
Morgan Hill, California, subject to applicable state and federal securities
laws. Payment shall be made in cash or by certified check, at the option of
the Holder.
The Warrant evidenced hereby is of a duly authorized issue of common
stock purchase warrants, is issued under and in accordance with the
Subscription Agreement and is subject to the terms and provisions contained
in the Subscription Agreement. The Holder consents by acceptance of the
certificate to all the terms and conditions of the Subscription Agreement.
This Warrant is exercisable in whole only and not in part. The issuance of
Common Stock upon exercise of this Warrant will be rounded to the nearest
whole share and no fractional shares will
be issued. The Holder of this certificate shall be treated by the Company as
the absolute owner hereof for all purposes and as the person entitled to
exercise the rights represented hereby. This Warrant does not contain
antidilution provisions.
IN WITNESS WHEREOF, the Company has signed this Warrant and deliverd it
in Morgan Hill, California as of __________________, 1997.
ORGANIC FOOD PRODUCTS, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
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