SUBSIDIARY GUARANTY
Exhibit
10.8
SUBSIDIARY
GUARANTY (this “Guaranty”) dated
September 28, 2007 made by the Persons listed on the signature pages hereof
under the caption “Subsidiary Guarantors” (each a “Subsidiary
Guarantor”), in favor of the Lenders whose names are set forth on Exhibit A hereto (the
“Lenders”).
WHEREAS,
Dirt Motor Sports, Inc. d/b/a World Racing Group, Inc., a Delaware corporation
(the “Company”)
and the Lenders are parties to a Note Purchase Agreement dated the date hereof
(the “Note Purchase
Agreement”; the terms defined therein and not otherwise defined herein
being used herein as therein defined);
WHEREAS,
each Subsidiary Guarantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Note Purchase Agreement;
and
WHEREAS,
it is a condition precedent to the Lenders making the loan evidenced by the
Notes to the Company that each Subsidiary Guarantor shall have executed and
delivered this Subsidiary Guaranty.
NOW,
THEREFORE, in consideration of the premises and in order to induce the Lenders
to make the loans under the Note Purchase Agreement, each Subsidiary Guarantor,
jointly and severally with each other Subsidiary Guarantor, hereby agrees as
follows:
1. No
Impairment. The Lenders may at any time and from time to time,
either before or after the maturity thereof, without notice to or further
consent of the undersigned, extend the time of payment of, exchange or surrender
any collateral for, renew or extend any of the obligations under the Transaction
Documents (the “Obligations”) or
increase or decrease the interest rate thereon, or any other agreement with the
Company or with any other party to or person liable on any of the Obligations,
or interested therein, for the extension, renewal, payment, compromise,
discharge or release thereof, in whole or in part, or for any modification of
the terms thereof or of any agreement between the Lenders and the Company or any
such other party or person, or make any election of rights the Lenders may deem
desirable under the United States Bankruptcy Code, as amended, or any other
federal or state bankruptcy, reorganization, moratorium or insolvency law
relating to or affecting the enforcement of creditors’ rights generally (any of
the foregoing, an “Insolvency Law”)
without in any way impairing or affecting this Guaranty. This
Guaranty shall be effective regardless of the subsequent incorporation, merger
or consolidation of the Company, or any change in the composition, nature,
personnel or location of the Company and shall extend to any successor entity to
the Company, including a debtor in possession or the like under any Insolvency
Law.
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2. Guaranty
Absolute. Each of the undersigned jointly and severally
guarantees that the Obligations will be paid strictly in accordance with the
terms of the Note Purchase Agreement, the Notes or the other Transaction
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Company
with respect thereto. The Subsidiary Guarantors hereby knowingly
accept the full range of risk encompassed within a contract of “continuing
guaranty” which risk includes the possibility that the Company will contract
additional obligations and liabilities for which the Subsidiary Guarantors may
be liable hereunder after the Company’s financial condition or ability to pay
its lawful debts when they fall due has deteriorated, whether or not the Company
has properly authorized incurring such additional obligations and
liabilities. The undersigned acknowledge that (i) no oral
representations, including any representations to extend credit or provide other
financial accommodations to the Company, have been made by the Lenders to induce
the undersigned to enter into this Guaranty and (ii) any extension of credit to
the Company shall be governed solely by the provisions of the Transaction
Documents. The liability of each of the undersigned under this
Guaranty shall be absolute and unconditional, in accordance with its terms, and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation: (a) any
waiver, indulgence, renewal, extension, amendment or modification of or
addition, consent or supplement to or deletion from or any other action or
inaction under or in respect of the Note Purchase Agreement, the Notes or the
other Transaction Documents or any assignment or transfer of any thereof, (b)
any lack of validity or enforceability of the Note Purchase Agreement, the Notes
or the other Transaction Documents or any assignment or transfer of any thereof,
(c) any furnishing of any additional security to the Lenders or its assignees or
any acceptance thereof or any release of any security by the Lenders or its
assignees, (d) any limitation on any party’s liability or obligation under the
Note Purchase Agreement, the Notes or the other Transaction Documents or any
assignment or transfer of any thereof or any invalidity or unenforceability, in
whole or in part, of any such document, instrument or agreement or any term
thereof, (e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to the
Company, or any action taken with respect to this Guaranty by any trustee or
receiver, or by any court, in any such proceeding, whether or not the
undersigned shall have notice or knowledge of any of the foregoing, (f) any
exchange, release or nonperfection of any collateral, or any release, or
amendment or waiver of or consent to departure from any guaranty or security,
for all or any of the Obligations or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the
undersigned. Any amounts due from the undersigned to the Lenders
shall bear interest until such amounts are paid in full at the highest rate then
applicable to the Obligations. Obligations include post-petition
interest whether or not allowed or allowable.
3. Waivers.
(a) This
Guaranty is a guaranty of payment and not of collection. The Lenders
shall be under no obligation to institute suit, exercise rights or remedies or
take any other action against the Company or any other person or entity liable
with respect to any of the Obligations or resort to any collateral security held
by it to secure any of the Obligations as a condition precedent to the
undersigned being obligated to perform as agreed herein and each of the
Subsidiary Guarantors hereby waives any and all rights which it may have by
statute or otherwise which would require the Lenders to do any of the
foregoing. Each of the Subsidiary Guarantors further consents and
agrees that the Lenders shall be under no obligation to marshal any assets in
favor of the Subsidiary Guarantor, or against or in payment of any or all of the
Obligations. The undersigned hereby waives all suretyship defenses
and any rights to interpose any defense, counterclaim or offset of any nature
and description which the undersigned may have or which may exist between and
among the Lenders, the Company and/or the undersigned with respect to the
undersigned’s obligations under this Guaranty, or which the Company may assert
on the underlying debt, including but not limited to failure of consideration,
breach of warranty, fraud, payment (other than cash payment in full of the
Obligations), statute of frauds, bankruptcy, infancy, statute of limitations,
accord and satisfaction, and usury.
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(b) Each of
the undersigned further waives (i) notice of the acceptance of this Guaranty, of
the extensions of credit, and of all notices and demands of any kind to which
the undersigned may be entitled, including, without limitation, notice of
adverse change in the Company’s financial condition or of any other fact which
might materially increase the risk of the undersigned and (ii) presentment to or
demand of payment from anyone whomsoever liable upon any of the Obligations,
protest, notices of presentment, non-payment or protest and notice of any sale
of collateral security or any default of any sort.
(c) Notwithstanding
any payment or payments made by the undersigned hereunder, or any setoff or
application of funds of the undersigned by the Lenders, the undersigned shall
not be entitled to be subrogated to any of the rights of the Lenders against the
Company or against any collateral or guarantee or right of offset held by the
Lenders for the payment of the Obligations, nor shall the undersigned seek or be
entitled to seek any contribution or reimbursement from the Company in respect
of payments made by the undersigned hereunder, until all amounts owing to the
Lenders by the Company on account of the Obligations are indefeasibly paid in
full. If, notwithstanding the foregoing, any amount shall be paid to
the undersigned on account of such subrogation rights at any time when all of
the Obligations shall not have been paid in full, such amount shall be held by
the undersigned in trust for the Lenders, segregated from other funds of the
undersigned, and shall forthwith upon, and in any event within two (2) business
days of, receipt by the undersigned, be turned over to the Lenders in the exact
form received by the undersigned (duly endorsed by the undersigned to the
Lenders, if required), to be applied against the Obligations pro rata among the
Lenders, whether matured or unmatured, in such order as the Lenders may
determine, subject to the provisions of the Transaction
Documents. Any and all present and future obligations and liabilities
of the Company to any of the undersigned are hereby waived and postponed in
favor of, and subordinated to the full payment and performance of, all
Obligations of the Company to the Lenders.
4. Representations and
Warranties. Each of the undersigned hereby jointly and
severally represents and warrants (all of which representations and warranties
shall survive until all Obligations are indefeasibly satisfied in full and the
Transaction Documents have been irrevocably terminated), that:
(a) Corporate
Status. It is a corporation, partnership or limited liability
company, as the case may be, duly formed, validly existing and in good standing
under the laws of its jurisdiction of formation indicated on the signature page
hereof and has full power, authority and legal right to own its property and
assets and to transact the business in which it is engaged.
(b) Authority and
Execution. It has full power, authority and legal right to
execute and deliver, and to perform its obligations under, this Guaranty and has
taken all necessary corporate, partnership or limited liability company, as the
case may be, action to authorize the execution, delivery and performance of this
Guaranty.
(c) Legal, Valid and Binding
Character. This Guaranty constitutes its legal, valid and
binding obligation enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting the
enforcement of creditor’s rights and general principles of equity that restrict
the availability of equitable or legal remedies.
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(d) Violations. The
execution, delivery and performance of this Guaranty will not violate any
requirement of law applicable to it or any contract, agreement or instrument to
which it is a party or by which it or any of its property is bound or result in
the creation or imposition of any mortgage, lien or other encumbrance other than
in favor of the Lenders on any of its property or assets pursuant to the
provisions of any of the foregoing, which, in any of the foregoing cases, could
reasonably be expected to have, either individually or in the aggregate, a
material adverse effect on the business, operations, properties, prospects, or
financial condition of any Subsidiary Guarantor and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Subsidiary Guarantor to perform any of its obligations
under this Guaranty in any material respect (a “Material Adverse
Effect”).
(e) Consents or
Approvals. No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty by it, except to the extent that the failure to
obtain any of the foregoing could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
(f) Litigation. No
litigation, arbitration, investigation or administrative proceeding of or before
any court, arbitrator or governmental authority, bureau or agency is currently
pending or, to the best of its knowledge, threatened (i) with respect to this
Guaranty or any of the transactions contemplated by this Guaranty or (ii)
against or affecting it, or any of its property or assets, which, in each of the
foregoing cases, if adversely determined, would reasonably be expected to have a
Material Adverse Effect.
(g) Financial
Benefit. It has derived or expects to derive a financial or
other advantage from each and every loan, advance or extension of credit made
under the Transaction Documents or other Obligation incurred by the Company to
the Lenders.
(h) Solvency. As
of the date of this Guaranty, (a) the fair saleable value of its assets exceeds
its liabilities and (b) it is meeting its current liabilities as they
mature.
5. Remedies upon an Event of
Default.
(a) If any
Event of Default shall occur and be continuing under any agreement made by the
Company or any of the undersigned to the Lenders, any and all Obligations shall
for purposes hereof, at the Lenders’ option, be deemed due and payable without
notice notwithstanding that any such Obligation is not then due and payable by
the Company.
(b) Each of
the undersigned will promptly notify each Lender of any default by such
undersigned in its respective performance or observance of any term or condition
of any agreement to which the undersigned is a party if the effect of such
default is to cause, or permit the holder of any obligation under such agreement
to cause, such obligation to become due prior to its stated maturity and, if
such an event occurs, the Lenders shall have the right to accelerate such
undersigned’s obligations hereunder.
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6. Payments from the Subsidiary
Guarantor. The Lenders, in their sole and absolute discretion,
with or without notice to the undersigned, may apply on account of the
Obligations any payment from the undersigned or any other guarantors, or amounts
realized from any security for the Obligations, or may deposit any and all such
amounts realized in a non-interest bearing cash collateral deposit account to be
maintained as security for the Obligations.
7. Costs. The
undersigned shall pay on demand, all costs, fees and expenses (including
expenses for legal services of every kind) relating or incidental to the
enforcement or protection of the rights of the Lenders hereunder or under any of
the Obligations.
8. No
Termination. This is a continuing irrevocable guaranty and
shall remain in full force and effect and be binding upon the undersigned, and
each of the undersigned’s successors and assigns, until all of the Obligations
have been indefeasibly paid in full. If any of the present or future
Obligations are guarantied by persons, partnerships, corporations or other
entities in addition to the undersigned, the death, release or discharge in
whole or in part or the bankruptcy, merger, consolidation, incorporation,
liquidation or dissolution of one or more of them shall not discharge or affect
the liabilities of any undersigned under this Guaranty.
9. Recapture. Anything
in this Guaranty to the contrary notwithstanding, if the Lenders receives any
payment or payments on account of the liabilities guaranteed hereby, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver, or any other party under any Insolvency Law, common law or
equitable doctrine, then to the extent of any sum not finally retained by the
Lenders, the undersigned’s obligations to the Lenders shall be reinstated and
this Guaranty shall remain in full force and effect (or be reinstated) until
payment shall have been made to the Lenders, which payment shall be due on
demand.
10. Books and
Records. The books and records of the Lenders showing the
account between the Lenders and the Company shall be admissible in evidence in
any action or proceeding, shall be presumptively correct for purposes of
establishing the items therein set forth and shall constitute prima facie proof
thereof.
11. No
Waiver. No failure on the part of the Lenders to exercise, and
no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Lenders of any
right, remedy or power hereunder preclude any other or future exercise of any
other legal right, remedy or power. Each and every right, remedy and
power hereby granted to the Lenders or allowed it by law or other agreement
shall be cumulative and not exclusive of any other, and may be exercised by the
Lenders at any time and from time to time.
12. Waiver of Jury Trial.
EACH OF THE UNDERSIGNED HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT,
TORT, OR OTHERWISE BETWEEN THE LENDERS, AND/OR ANY OF THE UNDERSIGNED ARISING
OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY, THE NOTE PURCHASE AGREEMENT, THE
NOTES OR THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO.
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13. Governing Law;
Jurisdiction. This Guaranty cannot be changed or terminated
orally, and shall be governed by and construed and enforced in accordance with
the laws of the State of New York applicable to contracts made and performed in
such state, without regard to principles of conflicts of laws which would result
in the application of the substantive law of another
jurisdiction. Each of the undersigned hereby consents and agrees that
the state or federal courts located in the County of New York, State of New York
shall have exclusive jurisdiction to hear and determine any claims or disputes
between any of the undersigned, on the one hand, and the Lenders, on the other
hand, pertaining to this Guaranty or any of the Transaction Documents or to any
matter arising out of or related to this Guaranty or any of the Transaction
Documents; provided, that each
of the undersigned acknowledges that any appeals from those courts may have to
be heard by a court located outside of the County of New York, State of New
York; and further provided, that
nothing in this Guaranty shall be deemed or operate to preclude the Lenders from
bringing suit or taking other legal action in any other jurisdiction to collect
the obligations, to realize on the collateral or any other security for the
obligations, or to enforce a judgment or other court order in favor of the
Lenders. Each of the undersigned expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court,
and each undersigned hereby waives any objection which it may have based upon
lack of personal jurisdiction, improper venue or forum non
conveniens. Each of the undersigned hereby waives personal
service of the summons, complaint and other process issued in any such action or
suit and agrees that service of such summons, complaint and other process may be
made by registered or certified mail addressed to such undersigned in accordance
with Section 17 and that service so made shall be deemed completed upon the
earlier of such undersigned’s actual receipt thereof or three (3) days after
deposit in the U.S. mail, proper postage prepaid.
14. Understanding With Respect
to Waivers and Consents. Each Subsidiary Guarantor warrants
and agrees that each of the waivers and consents set forth in this Guaranty is
made voluntarily and unconditionally after consultation with outside legal
counsel and with full knowledge of its significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Subsidiary
Guarantor otherwise may have against the Company, the Lenders or any other
person or entity or against any collateral. If, notwithstanding the
intent of the parties that the terms of this Guaranty shall control in any and
all circumstances, any such waivers or consents are determined to be
unenforceable under applicable law, such waivers and consents shall be effective
to the maximum extent permitted by law.
15. Severability. To
the extent permitted by applicable law, any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
16. Amendments,
Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the undersigned therefrom shall in any
event be effective unless the same shall be in writing executed by each of the
undersigned directly affected by such amendment and/or waiver and the
Lenders.
17. Notice. All notices
and other communications required or permitted hereunder shall be in writing and
shall be hand delivered or sent via facsimile, overnight courier service or
mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed or sent to the addresses listed on the signature page
hereto or at such other addresses as the parties shall have furnished to each
other in writing. Notices sent via hand delivery shall be effective
when received, notices sent facsimile shall be effective upon written
confirmation of transmission (if also sent by another form of notice permitted
hereunder within 24 hours of sending the facsimile), notices sent by overnight
courier shall be effective upon receipt, and notices mailed by certified or
registered mail, postage prepaid return receipt requested, shall be effective
five business days after deposit with the U.S. Postal Service.
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18. Successors. This
Guaranty shall (a) be binding upon each Subsidiary Guarantor, its
successors and assigns and (b) inure to the benefit of and be enforceable
by the Lenders and their successors, transferees and assigns. Without
limiting the generality of the foregoing clause (b), subject to Section
10(h) of the Note
Purchase Agreement, the Lenders may assign or otherwise transfer all or any
portion of its rights and obligations under the Note Purchase Agreement or other
Transaction Documents to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof of a Lender, in each case
as and to the extent provided in Section 10(h) of the Note Purchase
Agreement. No Subsidiary Guarantor shall have the right to assign its
obligations hereunder or any interest herein without the prior written consent
of the Lender.
19. Joinder. It
is understood and agreed that any person or entity that desires to become a
Subsidiary Guarantor hereunder, or is required to execute a counterpart of this
Guaranty after the date hereof pursuant to the requirements of the Transaction
Documents, shall become a Subsidiary Guarantor hereunder by (x) executing a
joinder agreement in form and substance satisfactory to the Lenders,
(y) delivering supplements to such exhibits and annexes to such Transaction
Documents as the Lenders shall reasonably request and/or as may be required by
such joinder agreement and (z) taking all actions as specified in this Guaranty
as would have been taken by such Subsidiary Guarantor had it been an original
party to this Guaranty, in each case with all documents required above to be
delivered to the Lenders and with all documents and actions required above to be
taken to the reasonable satisfaction of the Lenders.
20. Release. Nothing
except indefeasible payment in full of the Obligations shall release any of the
undersigned from liability under this Guaranty.
21. Remedies Not
Exclusive. The remedies conferred upon the Lenders in this
Guaranty are intended to be in addition to, and not in limitation of any other
remedy or remedies available to the Lenders under applicable law or
otherwise.
22. Limitation of Obligations
under this Guaranty. Each Subsidiary Guarantor and the Lenders
(by its acceptance of the benefits of this Guaranty) hereby confirms that it is
its intention that this Guaranty not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent
Conveyance Act of any similar Federal or state law. To effectuate the
foregoing intention, each Subsidiary Guarantor and the Lenders (by its
acceptance of the benefits of this Guaranty) hereby irrevocably agrees that the
Obligations guaranteed by such Subsidiary Guarantor shall be limited to such
amount as will, after giving effect to such maximum amount and all other
(contingent or otherwise) liabilities of such Subsidiary Guarantor that are
relevant under such laws and after giving effect to any rights to contribution
pursuant to any agreement providing for an equitable contribution among such
Subsidiary Guarantor (including this Guaranty), result in the Obligations of
such Subsidiary Guarantor under this Guaranty in respect of such maximum amount
not constituting a fraudulent transfer or conveyance.
23. Reference to Section 11(c)
of the Note Purchase Agreement. Notwithstanding anything
herein to the contrary, the rights of any Lender or any other Person to enforce
this Guaranty, or take action under this Guaranty or otherwise in respect of the
Obligations against any Subsidiary Guarantor, is subject to the restrictions set
forth in Section 11(c) of the Note Purchase Agreement.
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IN
WITNESS WHEREOF, this Guaranty has been executed by the undersigned as of the
date and year here above written.
SUBSIDIARY
GUARANTORS:
Dirt
Motorsports, Inc.
By: /s/
Xxxxx Xxxxxx
Name:
Xxxxx Xxxxxx
Title: Executive
Vice President
Address: 0000
Xxxx Xxxxx, Xxxxx X, Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
State of
Formation: New York
Volusia
Operations, LLC
By: /s/
Xxxxx Xxxxxx
Name:
Xxxxx Xxxxxx
Title: Executive
Vice President
Address: 0000
Xxxx Xxxxx, Xxxxx X, Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
State of
Formation: Florida
Xxxxxx
& Miracle Concessions, LLC
By: /s/
Xxxxx Xxxxxx
Name:
Xxxxx Xxxxxx
Title: Executive
Vice President
Address: 0000
Xxxx Xxxxx, Xxxxx X, Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
State of
Formation: Florida
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Boundless
Racing, Inc.
By: /s/
Xxxxx Xxxxxx
Name:
Xxxxx Xxxxxx
Title: Executive
Vice President
Address: 0000
Xxxx Xxxxx, Xxxxx X, Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
State of
Formation:
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EXHIBIT
A
LENDERS
North
Sound Legacy International, Ltd.
North
Sound Legacy Institutional Fund LLC
Vicis
Capital Master Fund, L.P.
C.E.
Unterberg, Towbin Capital Partners I, X.X.
Xxxxx
Fund Ltd.
Basso
Multi-Strategy Holding Fund Ltd.
Rock More
Investment Master Fund Ltd.
Trellus
Partners, LP
Trellus
Partners II, LP
Trellus
Offshore Fund Limited
Trellus
Small Cap Opportunity Fund, LP
Trellus
Small Cap Opporttmity Offshore Fund Limited
Iroquois
Master Fund Ltd.
