SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of
________, 2004 by and between Star Computing Limited, a Nevada corporation (the
"Company"), and the purchaser whose name and address are set forth on the
signature page hereto ("Purchaser").
RECITALS
WHEREAS, pursuant to that certain Subscription Application of Purchaser
dated _________, 2004 (the "Subscription Application"), an executed copy of
which is attached hereto as Exhibit A, the Company desires to sell to Purchaser
and Purchaser desires to purchase from the Company the number of shares of the
Company's restricted common stock set forth on the signature page hereto
(collectively, the "Common Stock") at a price of $1.50 per share and a warrant
to purchase additional shares of the common stock of the Company as set forth in
the form of warrant attached hereto as Exhibit B (the "Warrant'), subject to the
terms and conditions of this Agreement and the other documents or instruments
contemplated hereby.
NOW, THEREFORE, the parties hereto hereby agree as follows:
AGREEMENT
1. Sale and Issuance of Common Stock and Warrant.
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale and issuance (the "Issuance") to Purchaser of the Common
Stock and the Warrant. At the Closing (as defined in Section 2.1), the Company
shall sell to Purchaser, and Purchaser shall purchase from the Company, the
Common Stock at a purchase price of $1.50 per share, subject to the terms and
conditions of this Agreement. Additionally, the Company shall issue a warrant to
purchase the same amount of shares of the Company's Common Stock purchased by
the Purchaser pursuant to this Agreement at an exercise price of $3.00 per share
in the form of warrant attached hereto as Exhibit B.
2. The Closing; Contingency.
2.1 Subject to the contingency set forth in Section 2.3 hereof, the
closing of the Issuance to Purchaser (the "Closing") shall take place at the
principal office of the Escrow Agent as defined in that certain Escrow Agreement
dated of even date hereof executed by the Escrow Agent and all the parties to
this Agreement (the "Escrow Agreement").
2.2 At the Closing, (A) the Company shall have delivered to the Escrow
Agent a stock certificate representing the Common Stock purchased by the
Purchaser, the Warrant, an executed copy of this Agreement and an executed copy
of the Escrow Agreement; and (B) the Purchaser shall have delivered to the
Escrow Agent by wire transfer in an aggregate amount equal to the purchase price
therefor as set forth on the signature page hereto, an executed copy of this
Agreement and an executed copy of the Escrow Agreement.
2.3 The closing of the Issuance is contingent on the Company entering
into that certain Stock Purchase Agreement dated of even date hereof by and
among the Company and Xxxxx X. Poland, an individual stockholder of the Company,
on the one hand, and Hi-Tech Environmental Products, LLC, a Nevada limited
liability company d/b/a VitroCo, VitroCo Materials, LLC, a Nevada limited
liability company and all of the shareholders of VitroTech Corporation, a
Delaware corporation, on the other hand.
3. Representations and Warranties of the Company.
The Company hereby represents and warrants to Purchaser as follows:
3.1 Organization.
The Company is duly organized, validly existing and in good standing
under the laws of the State of Nevada and is qualified to conduct its business
as a foreign corporation in each jurisdiction where the failure to be so
qualified would have a material adverse effect on the Company.
3.2 Authorization of Agreement, Etc.
The execution, delivery and performance by the Company of this
Agreement and the Subscription Application and each other document or instrument
contemplated hereby or thereby (collectively, the "Financing Documents") have
been duly authorized by all requisite corporate action by the Company; and this
Agreement and each other Financing Document have been duly executed and
delivered by the Company. Each of the Financing Documents, when executed and
delivered by the Company, constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting creditors' rights and remedies
generally, and subject as to enforceability to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
4. Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to the Company as follows:
4.1 Authorization of the Documents.
Purchaser has all requisite power and authority (corporate or
otherwise) to execute, deliver and perform the Financing Documents and the
transactions contemplated thereby, and the execution, delivery and performance
by Purchaser of the Financing Documents have been duly authorized by all
requisite action by Purchaser and each such Financing Document, when executed
and delivered by Purchaser, constitutes a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
4.2 Investment Representations.
All of the representations, warranties and information of Purchaser
provided in the Subscription Application are incorporated herein and made a part
hereof by this reference and shall be true at the Closing with the same effect
as though made at the Closing.
4.3 U.S.A. Patriot Act Representations
(A) Purchaser represents, warrants and covenants that Purchaser:
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(i)(a) is subscribing for the Common Stock for Purchaser's own
account, own risk and own beneficial interest, (b) is not acting as an agent,
representative, intermediary, nominee or in a similar capacity for any other
person or entity, nominee account or beneficial owner, whether a natural person
or entity (each such natural person or entity, an "Underlying Beneficial Owner")
and no Underlying Beneficial Owner will have a beneficial or economic interest
in the Common Stock being purchased by Purchaser (whether directly or
indirectly, including without limitation, through any option, swap, forward or
any other hedging or derivative transaction), (c) if it is an entity, including,
without limitation, a fund-of-funds, trust, pension plan or any other entity
that is not a natural person (each, an "Entity"), has carried out thorough due
diligence as to and established the identities of such Entity's investors,
directors, officers, trustees, beneficiaries and grantors (to the extent
applicable, each a "Related Person" of such Entity), holds the evidence of such
identities, will maintain all such evidence for at least five years from the
date of Purchaser's resale or other disposition of all the Common Stock, will
request such additional information as the Company may require to verify such
identities as may be required by applicable law, and will make such information
available to the Company upon its request, and (d) does not have the intention
or obligation to sell, pledge, distribute, assign or transfer all or a portion
of the Common Stock to any Underlying Beneficial Owner or any other person; or
(check and initial one box)
(ii)(a) is subscribing for the Common Stock as a record owner and
will not have a beneficial ownership interest in the Common Stock, (b) is acting
as an agent, representative, intermediary, nominee or in a similar capacity for
one or more Underlying Beneficial Owners (as defined in (A)(i)(a) above), and
understands and acknowledges that the representations, warranties and agreements
made in the Financing Documents are made by Purchaser with respect to both
Purchaser and the Underlying Beneficial Owner(s), (c) has all requisite power
and authority from the Underlying Beneficial Owner(s) to execute and perform the
obligations under the Subscription Agreement, (d) has carried out thorough due
diligence as to and established the identities of all Underlying Beneficial
Owners (and, if an Underlying Beneficial Owner is not a natural person, the
identities of such Underlying Beneficial Owner's Related Persons (to the extent
applicable)), holds the evidence of such identities, will maintain all such
evidence for at least five years from the date of Purchaser's resale or other
disposition of all the Common Stock, and will make such information available to
the Company upon its request and (e) does not have the intention or obligation
to sell, pledge, distribute, assign or transfer all or a portion of the Common
Stock to any person other than the Underlying Beneficial Owner(s).
(B) Purchaser hereby represents and warrants that the proposed
investment in the Company that is being made on its own behalf or, if
applicable, on behalf of any Underlying Beneficial Owners does not directly or
indirectly contravene United States federal, state, local or international laws
or regulations applicable to Purchaser, including anti-money laundering laws (a
"Prohibited Investment").
(C) Federal regulations and Executive Orders administered by the U.S.
Treasury Department's Office of Foreign Assets Control ("OFAC") prohibit, among
other things, the engagement in transactions with, and the provision of services
to, certain foreign countries, territories, entities and individuals. The lists
of OFAC prohibited countries, territories, persons and entities can be found on
the OFAC website at xxx.xxxxx.xxx/xxxx. Purchaser hereby represents and warrants
that neither Purchaser nor, if applicable, any Underlying Beneficial Owner or
Related Person, is a country, territory, person or entity named on an OFAC list,
nor is Purchaser nor, if applicable, any Underlying Beneficial Owner or Related
Person, a natural person or entity with whom dealings are prohibited under any
OFAC regulations.
(D) Purchaser represents and warrants that neither Purchaser nor, if
applicable, any Underlying Beneficial Owner or Related Person, is a senior
foreign political figure, or any immediate family member or close associate of a
senior foreign political figure within the meaning of, and applicable guidance
issued by the Department of the Treasury concerning, the U.S. Bank Secrecy Act
(31 U.S.C. ss.5311 et seq.), as amended, and any regulations promulgated
thereunder.
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(E) Purchaser agrees promptly to notify the Company should
Purchaser become aware of any change in the information set forth in paragraphs
(A) through (D).
(F) Purchaser agrees to indemnify and hold harmless the
Company, its affiliates, their respective directors, officers, shareholders,
employees, agents and representatives (each, an "Indemnitee") from and against
any and all losses, liabilities, damages, penalties, costs, fees and expenses
(including legal fees and disbursements) (collectively, "Damages") which may
result, directly or indirectly, from Purchaser's misrepresentations or
misstatements contained herein or breaches hereof relating to paragraphs (A)
through (D).
(G) Purchaser understands and agrees that, notwithstanding
anything to the contrary contained in any document (including any side letters
or similar agreements), if, following Purchaser's investment in the Company, it
is discovered that the investment is or has become a Prohibited Investment, such
investment may immediately be redeemed by the Company or otherwise be subject to
the remedies required by law, and Purchaser shall have no claim against any
Indemnitee for any form of Damages as a result of such forced redemption or
other action.
(H) Upon the written request from the Company, Purchaser
agrees to provide all information to the Company to enable the Company to comply
with all applicable anti-money laundering statutes, rules, regulations and
policies, including any policies applicable to a portfolio investment held or
proposed to be held by the Company. Purchaser understands and agrees that the
Company may release confidential information about Purchaser and, if applicable,
any Underlying Beneficial Owner(s) or Related Person(s) to any person, if the
Company, in its sole discretion, determines that such disclosure is necessary to
comply with applicable statutes, rules, regulations and policies.
5. Brokers and Finders.
The Company shall not be obligated to pay any commission, brokerage fee
or finder's fee based on any alleged agreement or understanding between
Purchaser and a third person in respect of the transactions contemplated hereby.
Purchaser hereby agrees to indemnify the Company against any claim by any third
person for any commission, brokerage or finder's fee or other payment with
respect to this Agreement or the transactions contemplated hereby based on any
alleged agreement or understanding between Purchaser and such third person,
whether express or implied from the actions of Purchaser.
6. Indemnification.
Purchaser hereby agrees to indemnify and defend (with counsel
acceptable to the Company) the Company and its officers, directors, employees
and agents and hold them harmless from and against any and all liability, loss,
damage, cost or expense, including costs and reasonable attorneys' fees,
incurred on account of or arising from:
(i) Any breach of or inaccuracy in Purchaser's representations,
warranties or agreements herein or in the Subscription Application; and
(ii) Any action, suit or proceeding based on a claim that any of
Purchaser's representations and warranties in the Subscription Application were
inaccurate or misleading, or otherwise cause for obtaining damages or redress
from the Company or any officer, director, employee or agent of the Company
under the Securities Act.
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7. Piggy-Back Registration Rights.
If the Company at any time proposes for any reason to register its
restricted common stock under the Securities Act of 1933, as amended (the "Act")
(other than on Form S-4 or Form S-8 promulgated under the Act or any successor
forms thereto), it shall promptly give written notice to Purchaser of its
intention to so register such common stock and, upon Purchaser's written
request, given within 30 days after delivery of any such notice by the Company,
to include in such registration some or all of the Common Stock ("Registrable
Shares") (which request shall specify the number of shares proposed to be
included in such registration), the Company shall use its best efforts to cause
all such Registrable Shares to be included in such registration on the same
terms and conditions as the securities otherwise being sold in such
registration; provided, however, that if a managing underwriter advises the
Company that the inclusion of all Registrable Shares proposed to be included in
such registration would interfere with the successful marketing (including
pricing) of the common stock proposed to be registered by the Company, then the
number of Registrable Shares proposed to be included in such registration shall
be reduced accordingly.
8. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the Company,
Purchaser and their respective successors and assigns.
9. Entire Agreement.
This Agreement and the other writings and agreements referred to in
this Agreement or delivered pursuant to this Agreement contain the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the parties with
respect thereto.
10. Notices.
All notices, demands and requests of any kind to be delivered to any
party in connection with this Agreement shall be in writing and shall be deemed
to have been duly given if personally delivered or if sent by
internationally-recognized overnight courier or by registered or certified mail,
return receipt requested and postage prepaid, addressed as follows:
if to the Company, to:
Star Computing Limited (VitroTech Corporation)
0 Xxxxxx Xxxxxx Xxxxx Xxxxx 000
Xxxxx Xxx, XX 00000
Attn: Xxxx Xxx Xxxxx
with a copy to:
Xxxxxxxxxx & Xxxxx LLP
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
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if to Purchaser, to:
the address of Purchaser set forth on the signature
page hereto;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties to this Agreement in writing in accordance with
the provisions of this Section 10. Any such notice or communication shall be
deemed to have been received (i) in the case of personal delivery, on the date
of such delivery, (ii) in the case of internationally-recognized overnight
courier, on the next business day after the date when sent and (iii) in the case
of mailing, on the third business day following that on which the piece of mail
containing such communication is posted.
11. Amendments.
This Agreement may not be modified or amended, or any of the provisions
of this Agreement waived, except by written agreement of the Company and
Purchaser.
12. Governing Law; Waiver of Jury Trial.
All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of California without giving effect to any choice or
conflict of law provision or rule (whether in the State of California or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Nevada. In furtherance of the foregoing,
the internal law of the State of California will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of law
or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily or necessarily apply.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.
13. Submission to Jurisdiction.
Any legal action or proceeding with respect to this Agreement or the
other Financing Documents may be brought in the courts of the State of
California and the United States of America located in the City of Los Angeles,
California, U.S.A. and, by execution and delivery of this Agreement, the Company
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Purchaser hereby
irrevocably waives, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
Purchaser hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at its address
as set forth herein.
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14. Severability.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
15. Independence of Agreements, Covenants, Representations and Warranties.
All agreements and covenants hereunder shall be given independent
effect so that if a certain action or condition constitutes a default under a
certain agreement or covenant, the fact that such action or condition is
permitted by another agreement or covenant shall not affect the occurrence of
such default, unless expressly permitted under an exception to such covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of or a breach of a representation and warranty
hereunder. The exhibits and any schedules attached hereto are hereby made part
of this Agreement in all respects.
16. Counterparts.
This Agreement may be executed in any number of counterparts, and each
such counterpart of this Agreement shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.
17. Headings.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
18. Expenses.
Purchaser shall pay Purchaser's own fees and expenses incurred in
connection with the preparation, negotiation, execution and delivery of the
Financing Documents.
19. Preparation of Agreement.
The Company prepared this Agreement and the Subscription Application
solely on its behalf. Each party to this Agreement acknowledges that: (i) the
party had the advice of, or sufficient opportunity to obtain the advice of,
legal counsel separate and independent of legal counsel for any other party
hereto; (ii) the terms of the transactions contemplated by this Agreement are
fair and reasonable to such party; and (iii) such party has voluntarily entered
into the transactions contemplated by this Agreement without duress or coercion.
Each party further acknowledges that such party was not represented by the legal
counsel of any other party hereto in connection with the transactions
contemplated by this Agreement, nor was he or it under any belief or
understanding that such legal counsel was representing his or its interests.
Each party agrees that no conflict, omission or ambiguity in this Agreement, or
the interpretation thereof, shall be presumed, implied or otherwise construed
against any other party to this Agreement on the basis that such party was
responsible for drafting this Agreement.
* * * * *
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IN WITNESS WHEREOF, each of the undersigned has duly executed this
Securities Purchase Agreement as of the date first written above.
COMPANY:
STAR COMPUTING LIMITED
By: __________________________
Name:
Title:
PURCHASER:
------------------------------ --------------------------------
Name of Purchaser (Individual or Name of Individual representing
Institution) Purchaser (if an Institution)
------------------------------ --------------------------------
Title of Individual representing Signature of Individual Purchaser or
Purchaser (if an Institution) Individual representing Purchaser
Address:
--------------------------------
Telephone:
--------------------------------
Telecopier:
--------------------------------
Number of Shares Aggregate Purchase Price
--------------- $--------------------------
EXHIBIT A
EXECUTED SUBSCRIPTION APPLICATION
(see attached)
STAR COMPUTING LIMITED
SUBSCRIPTION APPLICATION
(for Accredited Investors Only)
Name of Subscriber................................. __________________________
Name of Co-Subscriber, if any...................... __________________________
Address of Subscriber(1)........................... __________________________
--------------------------
Address of Co-Subscriber (if different)(1)......... __________________________
--------------------------
Aggregate number of shares of Common Stock ___________________
subscribed to purchase.............................
Check enclosed (or wire transfer) in the amount of.
$------------------
(1) Permanent legal residence and domicile (other than Post Office Box) if
the Subscriber is an individual, or permanent principal legal executive
offices and place of business (other than Post Office Box) if the
Subscriber is an entity.
Personal and Confidential
The undersigned (the "Subscriber") hereby makes application to purchase
from STAR COMPUTING LIMITED., a Nevada corporation (the "Company"), _______
shares of the Company's Common Stock (the "Subscribed Shares") and a warrant to
purchase additional shares of the Company's Common Stock (the "Warrant"),
pursuant to a Securities Purchase Agreement in substantially the form attached
hereto as Exhibit A (the "Agreement"). The Subscriber understands and agrees
that this Subscription Application to purchase the Subscribed Shares is binding
and irrevocable on the Subscriber's part, and that acceptance by the Company
shall be in its sole discretion and otherwise in accordance with the terms set
forth in this Subscription Application and the Agreement (the Agreement and this
Subscription Application are sometimes referred to collectively herein as the
"Offering Materials").
[SUBSCRIBER QUESTIONNAIRE FOLLOWS]
1. CONFIDENTIAL SUBSCRIBER INFORMATION
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Name of Subscriber
--------------------------------------------------------------------------------------------------------------------------
If Subscriber is an Entity Provide Name Year Formed State of Formation
--------------------------------------------------------------------------------------------------------------------------
Street Address City Zip
--------------------------------------------------------------------------------------------------------------------------
Subscriber SS# or EIN/TIN Cell Phone Number Work Phone Number Home Phone Number
--------------------------------------------------------------------------------------------------------------------------
Subscriber's Age Date of Birth Married (Y/N)/Divorced # of Dependants
--------------------------------------------------------------------------------------------------------------------------
Name and Address of Subscriber's Current Employer
--------------------------------------------------------------------------------------------------------------------------
Type of Business of Subscriber Position/Title Number of Years
--------------------------------------------------------------------------------------------------------------------------
College/Degree Graduate School/Degree Professional Licenses
--------------------------------------------------------------------------------------------------------------------------
List Previous Investment Experience
Number of Years
--------------------------------------------------------------------------------------------------------------------------
List Previous Private Placement Investments Total Invested
--------------------------------------------------------------------------------------------------------------------------
List any Securities Currently Owned Total Value
--------------------------------------------------------------------------------------------------------------------------
How does Subscriber Know the Company?
--------------------------------------------------------------------------------------------------------------------------
Name of Primary Financial Institution Address Phone Number
---------------------------------------------------------------------------------
Name in which Subscribed Shares will be Held. (check one below)
|_| Individually |_| A married man(woman) as his(her) separate property |_| Community property
|_| JTWROS |_| Tenants in common |_| Other (Describe): ____________________________________
---------------------------------------------------------------------------------
Aggregate Number of Subscribed Shares Amount Invested ($)
---------------------------------------------------------------------------------
Subscriber's
Signature
Date
2. SUBSCRIBER'S ACCREDITED STATUS
(a) Accredited Investor (Regulation D). The Subscriber is an
"Accredited Investor" as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
as follows: [Please initial one or more of the following provisions describing
the Subscriber's Accredited Investor status as may be applicable.]
(b) Individuals. (Check all that apply)
|_| The Subscriber's individual net worth* or combined net
worth* with his or her spouse exceeds $1,000,000;
|_| The Subscriber's individual income,** exclusive of any
income attributable to his or her spouse, was in excess of $200,000 for the two
most recent calendar years preceding the calendar year of this Subscription
Application, and the Subscriber reasonably expects an income,** exclusive of any
income attributable to his or her spouse, in excess of $200,000 in the current
calendar year; and/or (3) the Subscriber's combined income** with his or her
spouse was in excess of $300,000 for the two most recent calendar years
preceding the calendar year of this Subscription Application and the Subscriber
and his or her spouse reasonably expect a combined income** in excess of
$300,000 in the current calendar year.
* For purposes of this Subparagraph, the term "net worth"
means the excess of total value (including principal residence, home furnishings
and automobiles at fair market value) over total liabilities. In computing net
worth, the fair market value of the principal residence of the Subscriber shall
be valued at cost, including cost of improvements, or at recently appraised
value by an institutional lender making a secured loan, net of encumbrances.
** The Subscriber may determine income by adding to his, her
or its adjusted gross income any amounts attributable to tax exempt income
received, losses claimed as a limited partner in any limited partnership,
deductions or claims for depletion, contributions to an XXX or Xxxxx retirement
plan, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
(c) Entities. (Check all that apply)
(i) |_| Entity With Value Exceeding $5 Million. The Subscriber
is a corporation, partnership (general or limited), limited liability company,
limited liability partnership or Massachusetts or similar business trust which:
(1) was not formed for the specific purpose of acquiring the Subscribed Shares,
and (2) has total assets in excess of $5,000,000.
(ii) |_| Entity Comprised of Accredited Investors. The
Subscriber is a corporation, partnership (general or limited), limited liability
company, limited liability partnership or Massachusetts or similar business
trust in which all of the Subscriber's equity owners are Accredited Investors.
(iii) |_| Revocable Trust. The Subscriber is a revocable trust
(also commonly known as a family or living trust) established to facilitate the
distribution of the estate of the settlors (grantors): (1) which may be revoked
or amended at any time by the settlors (grantors); (2) which passes all tax
benefits of investments made by such trust through to the settlors (grantors)
individually; and (3) in which all of the settlors (grantors) are Accredited
Investors.
(iv) |_| Trust Whose Assets Exceed $5 Million. The Subscriber
is a trust that has total assets in excess of $5,000,000, and the person making
the investment decision on behalf of the trust has such knowledge and experience
in financial and business matters that such person is capable of evaluating the
merits and risks of an investment in the Subscribed Shares.
(v) |_| Financial Institution as Trustee. The Subscriber is a
financial institution which: (1) is a bank, savings and loan association, or
other regulated financial institution; (2) is acting in its fiduciary capacity
as trustee; and (3) is subscribing for the purchase of the Subscribed Shares on
behalf of the subscribing trust.
(vi) |_| Employee Benefit Plan (including Xxxxx Plan) With
Self-Directed Investments and Segregated Accounts. The Subscriber is an employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and: (1) such plan is self directed and provides
for segregated accounts; (2) the investment decision to purchase the Subscribed
Shares is being made by a plan participant who is an Accredited Investor; and
(3) the investment in the Subscribed Shares is being made solely on behalf of
such Accredited Investor.
(vii) |_| Employee Benefit Plan (including Xxxxx Plan) With
Financial Institution As Trustee. The Subscriber is an employee benefit plan
within the meaning of ERISA, and the decision to invest in the Subscribed Shares
was made by a plan fiduciary (as defined in Section 3(21) of ERISA), which is
either a bank, savings and loan association, insurance company, or registered
investment adviser.
(viii) |_| Employee Benefit Plan (including Xxxxx Plan) With
Assets Exceeding $5 Million. The Subscriber is an employee benefit plan within
the meaning of ERISA and has total assets in excess of $5,000,000.
(ix) |_| Tax Exempt 501(c)(3) Organization. The Subscriber is
an organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, which organization was not formed for the specific purpose of
acquiring the Subscribed Shares, and which organization has total assets in
excess of $5,000,000.
(x) |_| Bank. The Subscriber is a bank as defined in
Section 3(a)(2) of the Securities Act.
(xi) |_| Savings and Loan Association. The Subscriber is a
savings and loan association or other institution as defined in Section
3(a)(5)(i) of the Securities Act.
(xii) |_| Insurance Company. The Subscriber is an insurance
company as defined in Section 2(14) of the Securities Act.
(xiii) |_| Investment Company. The Subscriber is an investment
company registered under the Investment Company Act of 1940.
(xiv) |_| Business Development Company. The Subscriber is a
business development company as defined in Section 2(a)(48) of the Investment
Company Act of 1940.
(xv) |_| Small Business Investment Company. The Subscriber is
a 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.
(xvi) |_| Private Business Development Company. The Subscriber
is a private business development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940.
(xvii) |_| Registered Broker or Dealer. The Subscriber is a
broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934.
3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER
The Subscriber and, if the Subscriber is an entity, each of its
officers, directors, partners, managers, members, trustees, beneficial owners,
principals and/or agents, hereby represent and warrant to the Company, each of
which is deemed to be a separate representation and warranty, as follows:
(a) Residence. The Subscriber's permanent legal residence and domicile,
if the Subscriber is an individual, or permanent legal executive offices and
principal place of business, if the Subscriber is an entity, was and is at the
address designated on the cover page of this Subscription Application at both
the time of the "offer" and the time of the "sale" of the Subscribed Shares to
the Subscriber.
(b) Age. The Subscriber, if a natural person, is age eighteen (18) or
over.
(c) Knowledge and Experience; Sophistication (Regulation D; Blue Sky).
The Subscriber (together with his, her and/or its Advisors (as defined in
subsection (f) below)) has such knowledge and experience in business, financial
and tax matters including, in particular, investing in private placements of
securities in companies similar to the Company, so as to enable them to utilize
the information made available to them in connection with this offering to: (i)
evaluate the merits and risks of an investment in the Company and to make an
informed investment decision with respect thereto; and (ii) to reasonably be
assumed to have the capacity to protect the Subscriber's own interests in
connection with the transaction contemplated by this Subscription Application.
(d) Minimum Net Worth (Blue Sky). An investment in the Subscribed
Shares will not exceed ten percent (10%) of the Subscriber's net worth if the
Subscriber is an entity, or joint net worth with his or her spouse if the
Subscriber is a natural person.
(e) Receipt and Review of Offering Materials. The Subscriber: (i) has
received the Offering Materials; and (ii) has read each of the Offering
Materials in its entirety and fully understands the matters discussed therein
and the terms of thereof.
(f) Independent Review of Investment Merits; Due Diligence. During the
course of the transactions contemplated by this offering, and before purchasing
the Subscribed Shares: (i) the Subscriber had the opportunity to engage such
investment professionals and advisors including, without limitation,
accountants, appraisers, investment, tax and legal advisors (collectively, the
"Advisors"), each of whom are independent of the Company and its advisors and
agents (including its legal counsel) to: (1) review the terms and conditions of
this Subscription Application, the Agreement, and the information and
disclosures contained herein and therein; (2) conduct such due diligence review
as the Subscriber and/or such Advisors deemed necessary or advisable, and (3) to
provide such opinions as to (A) the investment merits of a proposed investment
in the Subscribed Shares; (B) the tax consequences of the purchase of the
Subscribed Shares and the subsequent disposition of the Subscribed Shares; and
(C) the effect of same upon the Subscriber's personal financial circumstances,
as the Subscriber and/or such Advisors may deem advisable; and (ii) to the
extent the Subscriber availed himself, herself or itself of this opportunity,
received satisfactory information and answers from such Advisors.
(g) Opportunity to Ask Questions and to Review Documents, Books and
Records; Opportunity to Meet with Representatives of the Company; Full
Satisfaction. Without limiting the generality of subsections (e) and (f) above,
during the course of the transaction contemplated by this Subscription
Application, and before purchasing the Subscribed Shares, the Subscriber and/or
his, her or its Advisors had the opportunity, to the extent they determined to
be necessary or relevant in order to verify the accuracy of the information
contained in the Offering Materials and/or to evaluate the merits of an
investment in the Subscribed Shares: (i) to be provided with financial and other
written information about the Company (in addition to that contained in the
Offering Materials) to the extent the Company has such information in its
possession or could acquire it without unreasonable effort or expense; (ii) to
meet with representatives of the Company and to ask questions and receive
answers concerning the terms and conditions of the Offering Materials, an
investment in the Subscribed Shares, and the business of the Company and its
finances; (iii) to review all documents, books and records of the Company; and
(iv) to the extent the Subscriber and/or his, her or its Advisors availed
themselves of this opportunity, received satisfactory information and answers.
(h) Risk Factors. The Subscriber understands and acknowledges that the
purchase of the Subscribed Shares involves a number of significant risks and
that the Subscriber may lose the Subscriber's entire investment in the
Subscribed Shares.
(i) Acceptance of Investment Risks. The Subscriber understands and
acknowledges that: (i) an investment in the Subscribed Shares: (1) is a
speculative investment with a high degree of risk of loss and the Subscriber
must, therefore, be able to presently afford a complete loss of this investment;
(2) the Subscriber must be able to hold the Subscribed Shares indefinitely; and
(3) it may not be possible for the Subscriber to liquidate the Subscribed Shares
in the case of emergency and/or other need and the Subscriber must, therefore,
have adequate means of providing for the Subscriber's current and future needs
and personal contingencies, and have no need for liquidity in this investment;
and (ii) the Subscriber has evaluated the Subscriber's financial resources and
investment position in view of the foregoing, and is able to bear the economic
risk of an investment in the Subscribed Shares.
(j) Shares Purchased For Subscriber's Own Account. The Subscriber is
purchasing the Subscribed Shares: (i) as principal and not by any other person;
(ii) with the Subscriber's own funds and not with the funds of any other person;
and (iii) for the account of the Subscriber, and not as a nominee or agent and
not for the account of any other person. The Subscriber is purchasing the
Subscribed Shares for investment purposes only for an indefinite period, and not
with a view to the sale or distribution of any part or all thereof, by public or
private sale or other disposition. No person other than the Subscriber will have
any interest, beneficial or otherwise, in the Subscribed Shares, and the
Subscriber is not obligated to transfer the Subscribed Shares to any other
person nor does the Subscriber have any agreement or understanding to do so. The
Subscriber understands that the Company is relying in material part upon the
Subscriber's representations as set forth in the Agreement and herein for
purposes of claiming the "Federal Exemptions" or "Blue Sky Exemptions" (as those
are defined in subsection (l) below), and that the basis for such exemptions may
not be presented if, notwithstanding the Subscriber's representations, the
Subscriber has in mind merely acquiring the Subscribed Shares for resale of such
Subscribed Shares upon the occurrence or nonoccurrence of some predetermined
event, and the Subscriber has no such intention.
(k) Compliance With Investment Laws. The Subscriber has complied with
all applicable investment laws and regulations in force relating to the legality
of an investment in the Subscribed Shares by the Subscriber in any jurisdiction
in which he, she or it purchases the Subscribed Shares or is otherwise subject,
and has obtained any consent, approval or permission required of him, her or it
for the purchase of the Subscribed Shares under such investment laws and
regulations.
(l) Subscribed Shares Not Registered. The Subscriber understands and
acknowledges that: (i) the Subscribed Shares have not been, and when issued will
not be, registered with the Securities and Exchange Commission (the
"Commission") under Section 5 of the Securities Act in reliance upon one or more
exemptions afforded by the Securities Act and/or rules promulgated by the
Commission pursuant thereto which may be selected by the Company in its sole
discretion including, without limitation (collectively and severally, the
"Federal Exemptions"): (1) Section 4(2) of the Securities Act for private
offerings; and (2) Rule 506 of Regulation D promulgated under Section 4(2) of
the Securities Act for private offerings; and (ii) the Subscribed Shares have
not been, and when issued will not be, registered or qualified with any
applicable state or territorial securities regulatory agency in reliance upon
one or more exemptions afforded from registration or qualification afforded
under the securities laws of such state or territory (the "Blue Sky Laws") which
exemptions may be selected by the Company in its sole discretion (collectively
and severally, the "Blue Sky Exemptions").
(m) Resale Restrictions On Subscribed Shares Pursuant to Securities
Laws. The Subscriber understands and acknowledges that: (i) should the Company
elect to rely upon the exemptions afforded by Rule 506 under Regulation D, the
Subscribed Shares will be classified, pursuant to Rule 502(d) of Regulation D of
the Securities Act, as "restricted securities" acquired in a transaction under
Section 4(2) of the Securities Act, which cannot be sold without registration
under the Securities Act or an exemption therefrom such as, by way of example
and not limitation: (1) Section 4(1) of the Securities Act; (2) the so-called
"Section 4(1 1/2) Exemption" to the Securities Act which, pursuant to Section
4(1) of the Securities Act, exempts from the provisions of the Securities Act
requiring the registration of securities certain "private sales" which are
effectuated in a manner similar to private placements by issuers under Section
4(2) of the Securities Act; and (3) Rule 144 and/or Rule 144A to the Securities
Act; (ii) if the Subscriber is an "Affiliate" of the Company (as such term is
defined below), he, she or it generally will not be able to sell, transfer,
assign, or otherwise dispose of the Subscribed Shares except under Rule 144;
(iii) should the Company rely upon the exemption afforded by Section 3(a)(11) of
the Securities Act and Rule 147 promulgated pursuant thereto for intrastate
offerings, the Subscriber will not be able to sell, transfer, assign or
otherwise dispose of the Subscribed Shares for a period of at least nine (9)
months from the date of the last sale by the Company of its securities as part
of an offering, including the offering of the Subscribed Shares contemplated by
this Subscription Application, to any person who is not a resident of the state
where the Subscriber is domiciled; and (iv) the Subscribed Shares will also be
subject to applicable state securities laws that may require registration or
qualification of the Subscribed Shares in connection with their resale, unless
an exemption from such registration or qualification is available. In general,
an "Affiliate" is defined as a person who is a director or officer of a company,
or who directly or indirectly controls a company. As a rule of thumb, ownership
of 10% or more of a company's voting stock generally will be deemed to
constitute control, while ownership of less than 5% of a company's voting stock
will generally not be deemed to constitute control.
(n) Satisfaction of Counsel of Company As to Transfers of
Subscribed Shares. The Subscriber understands and acknowledges that: (i) prior
to any sale, transfer, assignment, pledge, hypothecation or other disposition of
the Subscribed Shares, the Subscriber must either: (1) furnish the Company with
a detailed explanation of the circumstances surrounding the proposed
disposition; furnish the Company with an opinion of legal counsel (which may be
the Company's), in form and substance reasonably satisfactory to the Company and
its legal counsel, to the effect that such disposition is exempted from the
registration and prospectus delivery requirements under the Securities Act and
the securities laws of the state in which the Subscriber is then resident; and
legal counsel for the Company shall have concurred in such opinion and the
Company shall have advised the Subscriber of such concurrence; or (2) satisfy
the Company that a registration statement on Form X-0, Xxxx XX-0, or Form SB-2
under the Securities Act (or any other form appropriate under the Securities
Act, or any form replacing any such form) with respect to the Subscribed Shares
proposed to be so disposed of shall then be effective, and that such disposition
shall have been appropriately qualified or registered in accordance with the
applicable Blue Sky Laws; and (ii) notwithstanding the foregoing, if in the
opinion of counsel for the Company, the Subscriber has acted in a manner
inconsistent with the representations and warranties in this Subscription
Application or the Agreement, the Company may refuse to transfer the Subscribed
Shares until such time as counsel for the Company is of the opinion that such
transfer: (1) will not require registration of the Shares under the Securities
Act, and registration or qualification of the Subscribed Shares under the
applicable Blue Sky Laws; or (2) will otherwise comply with the Securities Act
or the applicable Blue Sky Laws with respect to the sale or transfer of the
Subscribed Shares. The Subscriber understands and agrees that the Company may
refuse to acknowledge or permit any disposition of the Subscribed Shares that is
not in all respects in compliance with this Subscription Application, and the
Company intends to make an appropriate notation in its records to that effect.
(o) Legend on Certificates to Comply with Securities Laws. The
Subscriber understands and agrees that the certificates representing the
Subscribed Shares, when issued, shall bear such legend as the Company may deem
reasonably necessary or advisable to facilitate compliance with the Securities
Act and the securities laws of the state or territory of the Subscriber's
residence, including, without limitation, substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), IN RELIANCE UPON ONE OR MORE
EXEMPTIONS FROM REGISTRATION OR QUALIFICATION AFFORDED BY THE
SECURITIES ACT AND/OR RULES PROMULGATED BY THE COMMISSION PURSUANT
THERETO. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE ALSO NOT
BEEN REGISTERED OR QUALIFIED (AS THE CASE MAY BE) UNDER THE SECURITIES
LAWS OF ANY XXXXX XX XXXXXXXXX XX XXX XXXXXX XXXXXX (THE "BLUE SKY
LAWS"), IN RELIANCE UPON ONE OR MORE EXEMPTIONS FROM REGISTRATION OR
QUALIFICATION (AS THE CASE MAY BE) AFFORDED UNDER SUCH SECURITIES LAWS.
NEITHER THE COMMISSION NOR ANY SECURITIES REGULATORY AGENCY OF ANY
STATE OR TERRITORY OF THE UNITED STATES HAS REVIEWED OR PASSED UPON OR
ENDORSED THE MERITS OF THE OFFERING CONTEMPLATED BY THIS CERTIFICATE,
AND ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE
SECURITIES HAVE BEEN ACQUIRED FOR THE HOLDER'S OWN ACCOUNT FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW FOR RESALE OR
DISTRIBUTION.
THESE SECURITIES ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE
144 PROMULGATED UNDER THE SECURITIES ACT. THESE SECURITIES MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED, OR OFFERED FOR SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION, WITHIN THE UNITED STATES OR ANY
OF ITS TERRITORIES OR TO A UNITED STATES PERSON, UNLESS: (i) THE
SECURITIES ARE REGISTERED PURSUANT TO SECTION 5 OF THE SECURITIES ACT
AND/OR REGISTERED OR QUALIFIED PURSUANT TO ANY APPLICABLE BLUE SKY
LAWS; OR (ii) THE PROPOSED TRANSACTION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND THE
REGISTRATION AND QUALIFICATION PROVISIONS OF ANY APPLICABLE BLUE SKY
LAWS. AS A RESULT, THESE SECURITIES ARE SUITABLE ONLY FOR CERTAIN
SOPHISTICATED AND QUALIFIED INVESTORS WHO CAN BEAR THE FINANCIAL RISK
OF AN INVESTMENT IN THESE SECURITIES FOR AN INDEFINITE PERIOD OF TIME.
(p) Completeness and Accuracy of Information. All information which the
Subscriber has heretofore furnished or furnishes herewith to the Company or its
agents is complete and accurate and may be relied upon by the Company in
determining the availability of an exemption from registration under Federal and
state securities laws in connection with the offer and sale of the Subscribed
Shares to the Subscriber in particular.
(q) Material Changes in Information. The Subscriber will notify and
supply corrective information to the Company immediately upon the occurrence of
any material change(s) in any information provided by the Subscriber to the
Company occurring prior to the Closing, (as defined in the Agreement), of the
purchase by the Subscriber of the Subscribed Shares.
(r) Cooperation. Within five (5) days after receipt of a request from
the Company, the Subscriber will provide such information and deliver such
documents as may reasonably be necessary to comply with any and all laws and
ordinances to which the Company is subject.
(s) Offering Representations and Communications. No person has provided
any information (other than the Offering Materials) or made any oral or written
representations or warranties to the Subscriber and/or his, her or its Advisors,
if any, about the Company, the Subscribed Shares or this offering, other than as
stated in Section 3 of the Agreement.
(t) Reliance Upon Offering Materials and Information Provided. In
evaluating the suitability of an investment in the Subscribed Shares, the
Subscriber has not relied upon, and agrees that he/she/it may not rely upon, any
representation, warranty or other information (oral or written) other than as
stated in Section 3 of the Agreement.
(u) No Awareness of Public Advertising. The Subscriber is unaware of,
is in no way relying on, and did not become aware of this offering, through or
as a result of any form of public advertising including, without limitation, any
advertisement, article, notice, leaflet or other communication (whether
published in any newspaper, magazine, or similar media or broadcast over
television or radio, or otherwise generally disseminated or distributed).
(v) No General Solicitation. The Subscriber did not subscribe to
purchase the Subscribed Shares, or become aware of this offering, through or as
the result of any public or promotional seminar or meeting to which the
Subscriber was invited by, or any solicitation of a subscription by, a person
not previously known to the Subscriber in connection with investments in
securities generally.
(w) |_| Pre-Existing Relationship with Company. The Subscriber, by
initialing this box, represents that he, she or it has a pre-existing personal
or business relationship* with the Company or any of its managers, officers or
controlling persons.
* The term "pre-existing personal or business relationship"
includes any relationship consisting of personal or business contacts of a
nature and duration which would enable a reasonably prudent purchaser to be
aware of the character, business acumen and general business and financial
circumstances of the person with whom the relationship exists.
(x) Investment Knowledge. Does Subscriber believe that he/she/it has
sufficient knowledge and experience in financial and business matters so that
he/she/it is capable of evaluating the merits or risks of this investment?
|_|Yes |_|No
WHEREFORE, the Subscriber, as of the date set forth below, is deemed to
have executed this Industries International, Incorporated Subscription
Application in the City of _________________, County of _________________, State
of ________________________, Country of _____________________.
SUBSCRIBER:
By:
-----------------------------------------
(Signature)
Print Name:
---------------------------------
Print Title:
--------------------------------
Date:
---------------------------------------
EXHIBIT B
FORM OF WARRANT
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
COMMON STOCK PURCHASE WARRANT
To Purchase __________ Shares of Common Stock of
STAR COMPUTING LIMITED
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") CERTIFIES that, for
value received, _____________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after _______________ (the "Initial Exercise Date") and on or
prior to the close of business on the fifth anniversary of the Initial Exercise
Date (the "Termination Date") but not thereafter, to subscribe for and purchase
from Star Computing Limited, a corporation incorporated in the State of Nevada
(the "Company"), up to ____________ shares (the "Warrant Shares") of Common
Stock, par value $0.001 per share, of the Company (the "Common Stock"). The
purchase price of one share of Common Stock (the "Exercise Price") under this
Warrant shall be $3.00 subject to adjustment hereunder. The Exercise Price and
the number of Warrant Shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the "Purchase Agreement"), among the Company and
the purchasers signatory thereto.
1
1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.
2. Authorization of Shares. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue).
3. Exercise of Warrant.
(a) Exercise of the purchase rights represented by this Warrant
may be made at any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company of a duly executed
facsimile copy of the Notice of Exercise Form annexed hereto (or such other
office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of the
Company); provided, however, within 5 Trading Days of the date said Notice of
Exercise is delivered to the Company, the Holder shall have surrendered this
Warrant to the Company and the Company shall have received payment of the
aggregate Exercise Price of the shares thereby purchased by wire transfer or
cashier's check drawn on a United States bank. Certificates for shares purchased
hereunder shall be delivered to the Holder within 15 Trading Days from the
delivery to the Company of the Notice of Exercise Form by facsimile copy,
surrender of this Warrant and payment of the aggregate Exercise Price as set
forth above.
(b) If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
(c) Subject to the provisions of this Section 3, if the closing
price for each of any thirty consecutive Trading Days after the Effective Date
(the "Measurement Price") exceeds $5.00 (the "Threshold Price"), then the
Company may, within two Trading Days of such period, call for cancellation of
all or any portion of this Warrant for which a Notice of Exercise has not yet
been delivered (such right, a "Call"). To exercise this right, the Company must
deliver to the Holder an irrevocable notice (a "Call Notice") indicating therein
the portion of unexercised portion of this Warrant to which such notice applies.
If the conditions set forth below for such Call are satisfied from the period
from the date of the Call Notice through and including the Call Date (as defined
below), then any portion of this Warrant subject to such Call Notice for which a
Notice of Exercise and, within 3 Trading Days after the Call Date (as defined
below), payment of the aggregate Exercise Price of the shares thereby purchased
by wire transfer or cashier's check drawn on a United States bank shall not have
been received by the Company from and after the date of the Call Notice, will be
2
cancelled at 6:30 p.m. (Los Angeles time) on the 30th Trading Day after the date
the Call Notice is received by the Holder (such date, the "Call Date"). Any
unexercised portion of this Warrant to which the Call Notice does not pertain
will be unaffected by such Call Notice. In furtherance thereof, the Company
covenants and agrees that it will honor all Notices of Exercise with respect to
Warrant Shares subject to a Call Notice that are tendered from the time of
delivery of the Call Notice through 6:30 p.m. (Los Angeles time) on the Call
Date. The parties agree that any Notice of Exercise delivered following a Call
Notice shall first reduce to zero the number of Warrant Shares subject to such
Call Notice prior to reducing the remaining Warrant Shares available for
purchase under this Warrant. For example, if (x) this Warrant then permits the
Holder to acquire 100 Warrant Shares, (y) a Call Notice pertains to 75 Warrant
Shares, and (z) prior to 6:30 p.m. (New York City time) on the Call Date the
Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (1) on
the Call Date the right under this Warrant to acquire 25 Warrant Shares will be
automatically cancelled, (2) the Company, in the time and manner required under
this Warrant, will have issued and delivered to the Holder 50 Warrant Shares in
respect of the exercises following receipt of the Call Notice, and (3) the
Holder may, until the Termination Date, exercise this Warrant for 25 Warrant
Shares (subject to adjustment as herein provided and subject to subsequent Call
Notices). Subject again to the provisions of this Section 3, the Company may
deliver subsequent Call Notices for any portion of this Warrant for which the
Holder shall not have delivered a Notice of Exercise. Notwithstanding anything
to the contrary set forth in this Warrant, the Company may not deliver a Call
Notice or require the cancellation of this Warrant (and any Call Notice will be
void), unless, from the beginning of the 30 consecutive Trading Days used to
determine whether the Common Stock has achieved the Threshold Price through the
Call Date, (i) the Company shall have honored in accordance with the terms of
this Warrant all Notices of Exercise delivered by 6:30 p.m. (Los Angeles time)
on the Call Date, (ii) a registration statement filed with the Securities
Exchange Commission shall be effective as to all Warrant Shares and the
prospectus thereunder available for use by the Holder for the resale all such
Warrant Shares, and (iii) the Common Stock shall be listed or quoted for trading
on the Trading Market.
(d) The term: "Trading Day" means a day on which the Common Stock
is traded or quoted on a Trading Market, provided, that in the event that the
Common Stock is not listed or quoted on a Trading Market, then Trading Day shall
mean a business day. The term "Trading Market" means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the OTC Bulletin Board, the American Stock Exchange, the New York
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Closing of Books. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
7. Transfer, Division and Combination.
3
(a) Subject to compliance with any applicable securities laws and
the conditions set forth in Sections 1 and 7(e) hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books
for the registration and the registration of transfer of the Warrants.
(e) If, at the time of the surrender of this Warrant in connection
with any transfer of this Warrant, the transfer of this Warrant shall not be
registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions and reasonably
acceptable to the Company) to the effect that such transfer may be made without
registration under the Securities Act and under applicable state securities or
blue sky laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the Company and
(iii) that the transferee be an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act.
8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise),
the Warrant Shares so purchased shall be and be deemed to be issued to such
Holder as the record owner of such shares as of the close of business on the
later of the date of such surrender or payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
4
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
11. Stock Splits. The number and kind of securities purchasable upon
the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following. In case
the Company shall (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock, then the number of
Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which it
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the Holder shall thereafter be entitled to purchase the number of
Warrant Shares or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing by the number of Warrant Shares or other securities of the Company
resulting from such adjustment. An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
12. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of its property, assets or business to
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive, at the option of the
Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event or (b) cash equal to the value of
this Warrant as determined in accordance with the Black Scholes option pricing
formula. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of Warrant Shares for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this Section
12, "common stock of the successor or acquiring corporation" shall include stock
of such corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
5
13. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
14. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.
15. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon
which the Common Stock may be listed.
16. Miscellaneous.
(a) Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.
(b) Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.
6
(e) Limitation of Liability. No provision hereof, in the absence
of any affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
(f) Remedies. The Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(g) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
(h) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(i) Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(j) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
********************
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: _______, 2004
STAR COMPUTING LIMITED
By: ____________________________________
Name:
Title:
7
NOTICE OF EXERCISE
To: Star Computing Limited
(1) The undersigned hereby elects to purchase ________ Warrant Shares
of Star Computing Limited pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares
as is necessary, in accordance with the formula set
forth in subsection 3(d), to exercise this Warrant
with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise
procedure set forth in subsection 3(d).
(3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
-------------------------------
The Warrant Shares shall be delivered to the following:
-------------------------------
-------------------------------
-------------------------------
(4) Accredited Investor. The undersigned is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[PURCHASER]
By: ______________________________
Name:
Title:
Dated: ________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
---------------------------------------------------------------.
---------------------------------------------------------------
Dated: ______________, _______
Holder's Signature: __________________________
Holder's Address:_____________________________
--------------------------------------------
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
