SECURITIES PURCHASE
AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated as of July 2,
2007, among Silverstar Holdings, Ltd., a company incorporated under the laws of Bermuda
(the “Company”), and the investors listed on the Schedule of Buyers
attached hereto as Annex A and identified on the signature pages hereto (each, an
“Investor”and collectively, the “Investors”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section
4(2) of the Securities Act (as defined below) and Rule 506 of Regulation D as promulgated
by the Commission (as defined below) under the Securities Act, the Company desires to
issue and sell to each Investor, and each Investor, severally and not jointly, desires to
purchase from the Company certain securities of the Company, as more fully described in
this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Investors agree as follows:
ARTICLE 1.
DEFINITIONS
1.1. Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes
of this Agreement, the following terms shall have the meanings indicated in
this Section 1.1:
“Action”means
any action, suit, inquiry, notice of violation, proceeding (including any partial
proceeding such as a deposition) or investigation pending or threatened in writing
against or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency, regulatory
authority (federal, state, county, local or foreign), stock market, stock exchange or
trading facility.
“Affiliate”means
any Person that, directly or indirectly through one or more intermediaries, controls or
is controlled by or is under common control with a Person, as such terms are used in and
construed under Rule 144.
“Business
Day” means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of New York or Bermuda are
authorized or required by law or other governmental action to close.
“Buy-In”has
the meaning set forth in Section 4.1(c).
“Closing”means,
individually, either of the Initial Closing or the Second Closing, as the context
requires.
“Closings”means,
collectively, the Initial Closing and the Second Closing.
“Commission”means
the Securities and Exchange Commission.
“Common
Stock” means the Class A common stock of the Company, par value $0.01 per share,
and any securities into which such common stock may hereafter be reclassified.
“Common
Stock Equivalents” means any securities of the Company or any Subsidiary which
entitle the holder thereof to acquire Common Stock at any time, including without
limitation, any debt, preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock or other securities that entitle the holder to receive,
directly or indirectly, Common Stock.
“Company
Counsel” means Xxxxxxxx Xxxxxxx LLP.
“Disclosure
Materials”has the meaning set forth in Section 3.1(h).
“Effective
Date” means the date on which the registration of all Shares and Warrant Shares
has been declared effective by the Commission in one or more Registration Statements
under the Registration Rights Agreement (in the event that the conditions to the Second
Closing are not satisfied in accordance with Article 5, then such requirement shall only
apply to the Shares issued and Warrant Shares issuable at the Initial Closing).
“Evaluation
Date” has the meaning set forth in Section 3.1(s).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“First
Meeting” has the meaning set forth in Section 4.11(b).
“First
Warrants”means the Common Stock purchase warrants in the form of Exhibit A,
which are issuable to the Investors at the Initial Closing.
“GAAP”means
U.S. generally accepted accounting principles.
“Initial
Closing” means the initial closing of the purchase and sale of the Securities
pursuant to Article 2.
“Initial
Closing Date” means the Business Day immediately following the date on which all
of the conditions set forth in Sections 5.1 and 5.2 that are applicable to the Initial
Closing are satisfied, or such other date as the parties may agree.
“Initial
Company Deliverables” has the meaning set forth in Section 2.2(a).
“Intellectual
Property Rights” has the meaning set forth in Section 3.1(p).
“Investment
Amount” means, with respect to each Investor, the Investment Amount indicated on
such Investor’s signature page to this Agreement.
“Initial
Investor Deliverables” has the meaning set forth in Section 2.2(b).
“Investor
Party” has the meaning set forth in Section 4.7.
“Irrevocable
Transfer Agent Instructions” has the meaning set forth in Section 4.13.
“Lien”means
any lien, charge, encumbrance, security interest, right of first refusal or other
restrictions of any kind.
“Lockup
Agreements” means each of the Lockup Agreements, dated as of the date hereof, by
and between the Company and each Company-related Person signatory thereto, in the form
attached as Exhibit D hereto.
“Material
Adverse Effect” means any of (i) a material and adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material and adverse
effect on the results of operations, assets, prospects, business or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an adverse
impairment to the Company’s ability to perform on a timely basis its obligations
under any Transaction Document.
“New
York Courts” means the state and federal courts sitting in the City of New York,
Borough of Manhattan.
“Outside
Date” means the thirtieth day following the date of this Agreement.
“Per
Unit Purchase Price” equals $[1.45].
“Person”means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company, government
(or an agency or subdivision thereof) or other entity of any kind.
“Proceeding”means
an action, claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.
“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date
of this Agreement, among the Company and the Investors, in the form of Exhibit C hereto.
“Registration
Statement” means one or more registration statements meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the Investors
of the Shares and the Warrant Shares.
“Required
Approvals” has the meaning set forth in Section 3.1(e).
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such Rule.
“SEC
Reports” has the meaning set forth in Section 3.1(h).
“Second
Closing”means the second closing of the purchase and sale of the Securities
pursuant to Article 2.
“Second
Closing Date” means the Business Day immediately following the date on which all
of the conditions set forth in Sections 5.1 and 5.2 that are applicable to the Second
Closing are satisfied, or such other date as the parties may agree.
“Second
Company Deliverables” has the meaning set forth in Section 2.4(a).
“Second
Investor Deliverables” has the meaning set forth in Section 2.4(b).
“Second
Warrants”means the Common Stock purchase warrants in the form of Exhibit B,
which are issuable to the Investors at the Second Closing.
“Securities”means
the Shares, the Warrants and the Warrant Shares.
“Securities
Act” means the Securities Act of 1933, as amended.
“Share
Delivery Date” has the meaning set forth in Section 4.1(c).
“Shares”means
the shares of Common Stock issued or issuable to the Investors pursuant to this Agreement
and including collectively all Shares issuable at the Initial Closing and Second Closing.
“Short
Sales” include, without limitation, all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct
and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and
similar arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated brokers.
“Stockholder
Approval” has the meaning set forth in Section 4.11(a).
“Subsidiary”means
any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X
promulgated by the Commission under the Exchange Act.
“Trading
Day” means (i) a day on which the Common Stock is traded on a Trading Market
(other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a
Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if
the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar
organization or agency succeeding to its functions of reporting prices); provided, that
in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day.
“Trading
Market” means whichever of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on
the date in question.
“Transaction
Documents” means this Agreement, the Warrants, the Registration Rights
Agreement, the Lockup Agreements, the Irrevocable Transfer Agent Instructions and any
other documents or agreements executed in connection with the transactions contemplated
hereunder.
“Transfer
Agent” means American Stock Transfer & Trust Company, or any successor
transfer agent for the Company.
“Warrants”means,
collectively, the First Warrants and the Second Warrants.
“Warrant
Shares”means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE 2.
PURCHASE AND SALE
2.1.
Initial
Closing. The Initial Closing shall take place at the offices of Xxxxx Xxxx LLP,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 on the Initial Closing Date or
at such other location or time as the parties may agree.
2.2.
Initial
Closing Deliveries. (a) At the Initial Closing, the Company shall deliver or
cause to be delivered to each Investor the following (the “Initial Company
Deliverables”):
(i)
a facsimile of the stock certificate evidencing the number of Shares to be
delivered to such Investor at the Initial Closing as set forth opposite its
name on Annex A hereto, registered in the name of such Investor (the number of
Shares issuable to each Investor at the Initial Closing will equal 35% of such
Investor’s Investment Amount divided by the Per Unit Purchase Price) and
the Company shall instruct its Transfer Agent to deliver by overnight courier
to such Investor the original certificate evidencing the number of Shares to be
delivered to such Investor at the Initial Closing as set forth opposite its
name on Annex A hereto, registered in the name of such Investor;
(ii) a
First Warrant, registered in the name of such Investor, pursuant to which such
Investor shall have the right to acquire the number of shares of Common Stock
that equals 70% of the number of Shares issuable to such Investor pursuant to
Section 2.2(a)(i);
(iii) the
legal opinion of Company Counsel, in agreed form, addressed to the Investors;
(iv) the
legal opinion of special Bermuda counsel to the Company, in agreed form,
addressed to the Investors;
(v) the
Registration Rights Agreement, duly executed by the Company;
(vi) duly
executed Irrevocable Transfer Agent Instructions acknowledged in writing
by
the Transfer Agent; and
(vii) the
Lockup Agreements, duly executed by each party thereto.
(b) At
the Initial Closing, each Investor shall deliver or cause to be delivered to
the Company the following (the “Initial Investor Deliverables”):
(i) to
the Company, 35% of its Investment Amount (rounded up to the nearest whole
dollar) by wire transfer of immediately available funds per the Company’s
wiring instructions; and
(ii) the
Registration Rights Agreement, duly executed by such Investor.
2.3.
Second Closing. The Second Closing shall take place at the offices of Xxxxx Xxxx LLP,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 on the Second Closing Date or
at such other location or time as the parties may agree.
2.4.
Second
Closing Deliveries. (a) At the Second Closing, the Company shall
deliver or cause to be delivered to each Investor the following (the “Second
Company Deliverables”):
(i) a
facsimile of the stock certificate evidencing the number of Shares to be
delivered to such Investor at the Second Closing as set forth opposite its name
on Annex A hereto, registered in the name of such Investor (the number of
Shares issuable to each Investor at the Second Closing will equal 65% of such
Investor’s Investment Amount divided by the Per Unit Purchase Price) and
the Company shall instruct its Transfer Agent to deliver by overnight courier
to such Investor the original certificate evidencing the number of Shares to be
delivered to such Investor at the Second Closing as set forth opposite its name
on Annex A, registered in the name of such Investor;
(ii) a
Second Warrant, registered in the name of such Investor, pursuant to which such
Investor shall have the right to acquire the number of shares of Common Stock
that equals 70% of the number of Shares issuable to such Investor pursuant to
Section 2.4(a)(i);
(iii) the
legal opinion of Company Counsel, in agreed form, addressed to the
Investors;
(iv) the
legal opinion of special Bermuda counsel to the Company, in agreed form,
addressed to the Investors; and
(v) duly
executed Irrevocable Transfer Agent Instructions acknowledged in writing
by the Transfer Agent.
(b) At
the Second Closing, each Investor shall deliver or cause to be delivered to the
Company (the “Second Investor Deliverables”) 65% of its
Investment Amount (rounded up to the nearest whole dollar) by wire transfer of
immediately available funds per the Company’s wiring instructions.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
3.1.
Representations
and Warranties of the Company. The Company hereby makes the following
representations and warranties to each Investor:
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Schedule
3.1(a). Except as disclosed in Schedule 3.1(a), the Company owns,
directly or indirectly, all of the capital stock of each Subsidiary free and
clear of any and all Liens, and all the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
(b) Organization
and Qualification. The Company and each Subsidiary are duly incorporated or
otherwise organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business in all material respects as now being conducted. Neither
the Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company and each Subsidiary are duly
qualified to conduct its respective businesses and are in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations thereunder.
The execution and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary action on the part of the Company and no
further action is required by the Company in connection therewith except that
Shareholder Approval is required in order for the Shares and Second Warrants to
be issued and sold at the Second Closing. Each Transaction Document has been
(or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights
and remedies or (ii) equitable principles relating to the availability of
specific performance, injunctive relief and other equitable remedies.
(d) No
Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s
certificate or articles of
incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding
to which the Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than (i) the filing with the Commission of one or more Registration Statements
in accordance with the requirements of the Registration Rights Agreement, (ii)
filings required by state or “blue sky” securities laws, (iii) the
filing of a Notice of Sale of Securities on Form D with the Commission under
Regulation D of the Securities Act, (iv) such filings and approvals required in
connection with the Shareholder Approval, (v) the application contemplated in
Section 5.1(g), (vi) the filings required in accordance with Section 4.5 and
(vii) those that have been made or obtained prior to the date of this Agreement
(collectively, the “Required Approvals”).
(f) Issuance
of the Securities. On or prior to each of the Initial Closing Date or
Second Closing Date, as the case may be, the Shares and Warrants issuable on
such Initial Closing Date or Second Closing Date, as the case may be, shall
have been duly authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens. Upon exercise in accordance with
the Warrants, the Warrant Shares will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens. On or prior to each of the
Initial Closing Date or Second Closing Date, as the case may be, the Company
shall have reserved from its duly authorized capital stock the shares of Common
Stock issuable on such Initial Closing Date or Second Closing Date, as the case
may be, pursuant to this Agreement and the Warrants (as applicable) in order to
issue such Shares and such Warrant Shares.
(g) Capitalization.
The number of shares and type of all authorized, issued and outstanding capital
stock of the Company, and all shares of Common Stock reserved for issuance
under the Company’s various option and incentive plans, is specified in
the SEC Reports. Except as specified in the SEC Reports, no securities of the
Company are entitled to preemptive or similar rights, and no Person has any
right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the
Transaction Documents. Except as specified in the SEC Reports, there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever
relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the Securities will not,
immediately or with the passage of time, obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Investors) and will not result in
a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under such securities.
(h) SEC
Reports; Financial Statements. The Company has filed all reports required
to be filed by it under the Exchange Act (including pursuant to Section 13(a)
or 15(d) thereof) for the twelve months preceding the date hereof (the
foregoing materials and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein
being collectively referred to herein as the “SEC Reports” and,
together with the Schedules to this Agreement (if any), the “Disclosure
Materials”) on a timely basis or has timely filed a valid extension of
such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective filing dates, the SEC Reports
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective filing dates, the
financial statements of the Company included in the SEC Reports complied in all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except (i)
as may be otherwise specified in such financial statements or the notes thereto
and (ii) in the case of unaudited financial statements, to the extent they may
exclude footnotes or may be condensed or summary statements), and fairly
present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal year-end audit adjustments.
(i) Press
Releases. The press releases disseminated by the Company during the twelve
months preceding the date of this Agreement taken as a whole do not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made and when made, not
misleading.
(j) Material
Changes. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in the SEC Reports,
(i) there has been no event, occurrence or development that has had or that
could reasonably be expected to result in a Material Adverse Effect, (ii) the
Company has not incurred any liabilities (contingent or otherwise) other than
(A) trade payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past
practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or, except for the purchase by the Company on March 21, 2007 of 15,000 shares
of Common Stock in an open market transaction at a price of $1.66 per share, purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital stock, and
(v) the Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option plans. The Company does not
have pending before the Commission any request for confidential treatment of information.
(k) Litigation.
Subject to Schedule 3.1(k), there is no Action which (i) adversely
affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof (in his or her capacity as
such), is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty, except as specifically disclosed in the SEC Reports. There has
not been, and to the knowledge of the Company, there is not pending any
investigation by the Commission involving the Company or any current or former
director or officer of the Company (in his or her capacity as such). The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(l) Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is
imminent with respect to any of the employees of the Company which could be
expected to result in a Material Adverse Effect.
(m) Compliance.
Except as set forth on Schedule 3.1(m), neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default
under or that it is in violation of, any indenture, loan or credit agreement or
any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) except as set forth on Schedule 3.1(m), is
or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws relating to taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor matters, except in
each case as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. The Company is in compliance
with all effective requirements of the Xxxxxxxx-Xxxxx Act of 2002, as amended,
and the rules and regulations thereunder, that are applicable to it, except
where such noncompliance could not have or reasonably be expected to result in
a Material Adverse Effect.
(n) Regulatory
Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses
as described in the SEC Reports, except where the failure to
possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect, and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such permits.
(o) Title
to Assets. Except as set forth in Schedule 3.1(o), the Company and
the Subsidiaries have good and marketable title in fee simple to all real
property owned by them that is material to their respective businesses and good
and marketable title in all personal property owned by them that is material to
their respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries are
in compliance, except as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.
(p) Patents
and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar rights that
are necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so have
could, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any Person. Except as
set forth in the SEC Reports, to the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.
(q) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company and the
Subsidiaries are engaged. The Company has no reason to believe that it will not
be able to renew its and the Subsidiaries’ existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business on terms consistent with
market for the Company’s and such Subsidiaries’ respective lines of
business.
(r) Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none
of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
(s) Disclosure
Controls. The Company has established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its Subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company’s Form 10-K or 10-Q, as the case may be,
is being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures in accordance with
Item 307 of Regulation S-K under the Exchange Act for the Company’s most
recently ended fiscal quarter (such date, the “Evaluation Date”). The
Company presented in its most recently filed Form 10-Q the conclusions of the
certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no significant changes in the Company’s
internal controls (as such term is defined in Item 308(c) of Regulation S-K
under the Exchange Act) or, to the Company’s knowledge, in other factors
that could significantly affect the Company’s internal controls.
(t) Solvency.
Based on the financial condition of the Company as of the Initial Closing Date
and as of the Second Closing Date (and assuming that the Initial Closing or
Second Closing shall have occurred), to the best of the Company’s
knowledge, (i) the Company’s fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities)
as they mature, (ii) the Company’s assets do not constitute unreasonably
small capital to carry on its business for the current fiscal year as now
conducted and as proposed to be conducted including its capital needs taking
into account the particular capital requirements of the business conducted by
the Company, and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the
proceeds the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its debt when such amounts are required
to be paid. The Company does not intend to incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of its debt).
(u) Certain
Fees. Except as described in Schedule 3.1(u), no brokerage or finder’s
fees or commissions are or will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by this
Agreement. The Investors shall have no obligation with respect to any fees or
with respect to any claims (other than such fees or commissions owed by an
Investor pursuant to written agreements executed by such Investor which fees or
commissions shall be the sole responsibility of such Investor) made by or on
behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by this Agreement.
(v) Certain
Registration Matters. Assuming the accuracy of the Investors’ representations
and warranties set forth in Section 3.2(b)-(e), no registration under the
Securities Act is required for the offer and sale of the Shares and Warrants,
and the offer of the Warrant Shares, by the Company to the Investors under the
Transaction Documents. The Company is eligible to register its Common Stock for
resale by the Investors under Form S-3 promulgated under the Securities Act.
Except as granted under the Transaction Documents or as specified in Schedule
3.1(v), the Company has not granted or agreed to grant to any Person any
rights (including “piggy-back” registration rights) to have any
securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied.
(w) Listing
and Maintenance Requirements. Except as specified in the SEC Reports, the
Company has not, in the two years preceding the date hereof, received notice
from any Trading Market to the effect that the Company is not in compliance
with the listing or maintenance requirements thereof. The Company is, and has
no reason to believe that it will not in the foreseeable future continue to be,
in compliance with the listing and maintenance requirements for continued
listing of the Common Stock on the Trading Market on which the Common Stock is
currently listed or quoted. The issuance and sale of the Securities under the
Transaction Documents does not contravene the rules and regulations of the
Trading Market on which the Common Stock is currently listed or quoted, and
other than the Stockholder Approval, no approval of the shareholders of the
Company thereunder is required for the Company to issue and deliver to the
Investors the Securities contemplated by Transaction Documents.
(x) Investment
Company. The Company is not, and is not an Affiliate of, and immediately
following any such Closing will not have become, an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.
(y) Application
of Takeover Protections. The Company has taken all necessary action, if
any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Memorandum of
Association (or similar charter documents) or the laws of its jurisdiction of
incorporation that is or could become applicable to the Investors as a result
of the Investors and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation the
Company’s issuance of the Securities and the Investors’ ownership of
the Securities.
(z) No
Additional Agreements. The Company does not have any agreement or
understanding with any Investor with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.
(aa) Consultation
with Auditors. The Company has consulted its independent auditors
concerning the accounting treatment of the transactions contemplated by the
Transaction Documents, and in connection therewith has furnished such auditors
complete copies of the Transaction Documents.
(bb) Foreign
Corrupt Practices Act. Neither the Company nor any Subsidiary, nor to the
knowledge of the Company, any agent or other person acting on behalf of any of
the Company or any Subsidiary, has, directly or indirectly, (i) used any funds,
or will use any proceeds from the sale of the Securities, for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company or any Subsidiary (or made
by any Person acting on their behalf of which the Company is aware) which is in
violation of law, or (iv) has violated in any material respect any provision of
the Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder.
(cc) PFIC.
Neither the Company nor any Subsidiary is or intends to become a “passive
foreign investment company” within the meaning of Section 1297 of the U.S.
Internal Revenue Code of 1986, as amended.
(dd) OFAC.
Neither the Company nor any Subsidiary nor, to the knowledge of the Company,
any director, officer, agent, employee, Affiliate or Person acting on behalf of
the Company or any Subsidiary is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the Company will not directly or
indirectly use the proceeds of the sale of the Securities, or lend, contribute
or otherwise make available such proceeds to any Subsidiary, joint venture
partner or other Person or entity, towards any sales or operations in Cuba,
Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the
purpose of financing the activities of any Person currently subject to any U.S.
sanctions administered by OFAC.
(ee) Money
Laundering Laws. The operations of each of the Company and any Subsidiary
are and have been conducted at all times in compliance with the money
laundering statutes of applicable jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any applicable governmental agency (collectively,
the “Money Laundering Laws”) and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company and/or any Subsidiary with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
(ff) Indebtedness.
The Company has amended the terms and conditions of the Variable Rate Secured
Convertible Debenture, dated October 31, 2005, as amended, in the principal
amount of $5,000,000 and the Variable Rate Secured Convertible Debenture, dated
October 19, 2006, as amended, in the original principal amount of $1,400,000.
(gg) Disclosure.
The Company confirms that neither it nor any Person acting on its behalf has
provided any Investor or its respective agents or counsel with any information
that the Company believes constitutes material, non-public information except
insofar as the existence and terms of the proposed transactions hereunder may
constitute such information. The Company understands and confirms that the
Investors will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided to the
Investors regarding the Company, its business and the transactions contemplated
hereby, furnished by or on behalf of the Company (including the Company’s
representations and warranties set forth in this Agreement) are true and
correct and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
3.2.
Representations
and Warranties of the Investors. Each Investor hereby, for itself and for no
other Investor, represents and warrants to the Company as follows:
(a) Organization;
Authority. Such Investor is an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization with
the requisite corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the applicable Transaction
Documents and otherwise to carry out its obligations thereunder. The execution,
delivery and performance by such Investor of the transactions contemplated by
this Agreement has been duly authorized by all necessary corporate or, if such
Investor is not a corporation, such partnership, limited liability company or
other applicable like action, on the part of such Investor. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Investor, and when delivered by such Investor in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Investor, enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or
(ii) equitable principles relating to the availability of specific performance,
injunctive relief and other equitable remedies.
(b) Investment
Intent. Such Investor is acquiring the Securities as principal for its own
account for investment purposes only and not with a view to or for distributing
or reselling such Securities or any part thereof, without prejudice, however,
to such Investor’s right at all times to sell or otherwise dispose of all
or any part of such Securities in compliance with applicable federal and state
securities laws. Subject to the immediately preceding sentence, nothing
contained herein shall be deemed a representation or warranty by such Investor
to hold the Securities for any period of time. Such Investor is acquiring the
Securities hereunder in the ordinary course of its business. Such Investor does
not have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities.
(c) Investor
Status. At the time such Investor was offered the Securities, it was, and
at the date hereof it is, and on each date on which it exercises Warrants it
will be, either (i) an “accredited investor” as defined in Rule
501(a) under the Securities Act or (ii) a “qualified institutional buyer” as
defined in Rule 144A(a) under the Securities Act.
(d) General
Solicitation. Such Investor is not purchasing the Securities as a result of
any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(e) Access
to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Securities;
(ii) access to information about the Company and the Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information that the
Company possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Investor or its representatives or counsel shall modify,
amend or affect such Investor’s right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company’s representations
and warranties contained in the Transaction Documents.
(f) Certain
Trading Activities. From the time that such Investor was first contacted by
the Company or Xxxx Capital Partners, LLC regarding an investment in the
Company through the date of this Agreement, such employees of Investor that
have direct knowledge of this investment (“Key Employees”)
have not directly or indirectly, nor has any Person acting on behalf of or
pursuant to any understanding with such Key Employee, engaged in any
transactions in the securities of the Company (including, without limitations,
any Short Sales involving the Company’s securities). Such Investor
covenants that neither its Key Employees nor any Person acting on its Key
Employees behalf or pursuant to any understanding with it will engage in any
transactions in the securities of the Company (including Short Sales) prior to
the time that the transactions contemplated by this Agreement are first
publicly disclosed as contemplated in Section 4.5 following the Initial Closing
Date.
(g) Independent
Investment Decision. Such Investor has independently evaluated the merits
of its decision to purchase the Securities pursuant to the Transaction
Documents, and such Investor confirms that it has not relied on the advice of
any other Investor’s business and/or legal counsel in making such
decision. Such Investor has not relied on the business or legal advice of Xxxx
Capital Partners, LLC or any of its agents, counsel or Affiliates in making its
investment decision hereunder, and confirms that none of such Persons has made
any representations or warranties to such Investor in connection with the
transactions contemplated by the Transaction Documents.
(h) Limited
Ownership. The purchase by such Investor of the Securities issuable to it
at the Initial and Second Closings will not result in such Investor
(individually or together with any other Person with whom such Investor has
identified, or will have identified, itself as part of a “group” in a
public filing made with the Commission involving the Company’s securities)
acquiring, or obtaining the right to acquire, in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company on a post
transaction basis that assumes that such Closing shall have occurred. Such
Investor does not presently intend to, alone or together with others, make a
public filing with the Commission to disclose that it has (or that it together
with such other Persons have) acquired, or obtained the right to acquire, as a
result of such Closing (when added to any other securities of the Company that
it or they then own or have the right to acquire), in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company on a post
transaction basis that assumes that each Closing shall have occurred.
(i) Experience
of Such Buyer. Such Investor has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has
so evaluated the merits and risks of such investment. Such Investor is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(j) Reliance
on Exemptions. Such Investor understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and such Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire
the Securities.
(k) No
Governmental Review. Such Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(l) Residency.
Such Investor is a resident of that jurisdiction specified on the Schedule of
Buyers attached hereto as Annex A.
(m) Brokers
and Finders. Such Investor has not retained any finder, broker or like
agent in connection with the transactions contemplated by the Transaction
Documents.
(n) Acknowledgement.
Such Investor acknowledges and agrees that the foregoing representations,
warranties, covenants and acknowledgments are made by it with the intention
that they may be relied upon by the Company and its agents and legal counsel in
determining its eligibility or (if applicable) the eligibility of others on
whose behalf it is contracting hereunder to purchase the Securities under the
applicable securities legislation. Such Investor further agrees that by
accepting delivery of the Securities at the Initial Closing and the Second
Closing, if applicable, it shall be representing and warranting that the
foregoing representations and warranties are true and correct as at the date of
the Initial Closing and the Second Closing with the same force and effect as if
they had been made by such Investor at the Initial Closing and the Second
Closing and that they shall survive the purchase by such Investor of the
Securities and still continue in full force and effect notwithstanding any
subsequent disposition by such Investor of the Securities. The Company and its
counsel shall be entitled to rely on the representations and warranties of such
Investor contained in this paragraph.
The Company acknowledges and agrees
that no Investor has made or makes any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this Section
3.2.
ARTICLE 4.
OTHER AGREEMENTS OF THE PARTIES
4.1. (a)
The Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of the Securities other than
pursuant to an effective registration statement, to the Company, to an
Affiliate of an Investor or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Securities under the Securities Act.
(b) Certificates
evidencing the Securities will contain the following legend, until such time as
they are not required under Section 4.1(c):
|
[NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN
REGISTERED] [THESE SECURITIES HAVE NOT 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 TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. |
The
Company acknowledges and agrees that an Investor may from time to time pledge, and/or
grant a security interest in some or all of the Securities pursuant to a bona fide margin
agreement in connection with a bona fide margin account and, if required under the terms
of such agreement or account, such Investor may transfer pledged or secured Securities to
the pledgees or secured parties. Such a pledge or transfer would not be subject to
approval or consent of the Company and no legal opinion of legal counsel to the pledgee,
secured party or pledgor shall be required in connection with the pledge, but such legal
opinion may be required in
connection with a subsequent transfer
following default by the Investor transferee of the pledge. No notice shall be required of
such pledge. At the appropriate Investor’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities including the
preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder. Except as otherwise provided in Section
4.1(c), any Shares subject to a pledge or security interest as contemplated by this
Section 4.1(b) shall continue to bear the legend set forth in this Section 4.1(b) and be
subject to the restrictions on transfer set forth in Section 4.1(a).
(c) Certificates
evidencing Shares and Warrant Shares shall not contain any legend (including
the legend set forth in Section 4.1(b)): (i) if such Shares and Warrant Shares
are registered for resale under the Securities Act pursuant to an effective
registration statement, or (ii) following a sale or transfer of such Shares
pursuant to Rule 144 (assuming the transferee is not an Affiliate of the
Company), or (iii) while such Shares are eligible for sale under Rule 144(k).
The Company shall cause the legal opinion referred to in the Irrevocable
Transfer Agent Instructions to be issued to the Company’s Transfer Agent
on the Effective Date. Following the earlier of (I) the Effective Date and (II)
the sale or transfer of Shares or Warrant Shares pursuant to Rule 144, and in
each case in the event the Investor shall have delivered to the Company or the
Company’s Transfer Agent (A) a certificate representing Shares or Warrant
Shares which contains a restrictive legend and (B) if required by the Transfer
Agent, a representation letter in customary form (the date of delivery of such
Share or Warrant Share, as the case may be, being the “Share Delivery
Date”) (1) the Company shall fail to deliver or cause to be delivered
to such Investor a certificate representing such Shares or Warrant Shares that
is free from all restrictive or other legends by the third Trading Day
following the Share Delivery Date and (2) following such third Trading Day
after the Share Delivery Date and prior to the time such Shares or Warrant
Shares are received free from restrictive legends, the Investor, or any third
party on behalf of such Investor, purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Investor of such Shares or Warrant Shares (a “Buy-In”), then
the Company shall pay in cash to the Investor (for costs incurred either
directly by such Investor or on behalf of a third party) the amount by which
the total purchase price paid for Common Stock as a result of the Buy-In
(including brokerage commissions, if any) exceed the proceeds received by such
Investor as a result of the sale to which such Buy-In relates. The Investor
shall provide the Company written notice indicating the amounts payable to the
Investor in respect of the Buy-In.
(d) Acknowledgement.
Each Investor hereby covenants with the Company not to make any sale of the
Shares or Warrant Shares under the Registration Statement without complying
with the provisions of this Agreement and without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied. , The
Investor acknowledges that there may occasionally be times when the Company
must suspend the use of the Prospectus forming a part of the Registration
Statement (a “Suspension”) until such time as an amendment to
the Registration Statement has been filed by the Company and declared effective
by the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. The Investor hereby
covenants that it will not sell any of the Shares or Warrant Shares pursuant to
said Prospectus during the period commencing at the time at which the Company
gives the Investor written notice of the Suspension of the use of said
Prospectus and ending at the time the Company gives the Investor written notice
that the Investor may thereafter effect sales pursuant to said Prospectus.
4.2.
Furnishing
of Information. As long as any Investor owns the Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long as any
Investor owns Securities, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Investors and make
publicly available in accordance with Rule 144(c) such information as is
required for the Investors to sell the Shares and Warrant Shares under Rule
144. The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell the Shares and Warrant Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144.
4.3.
Integration.
The Company shall not, and shall use its best efforts to ensure that no
Affiliate of the Company shall, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Investors, or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market in a manner that would require stockholder
approval of the sale of the securities to the Investors.
4.4.
Subsequent
Registrations. Other than pursuant to the Registration Rights Agreement, prior
to the Effective Date of a registration statement resulting in registration
statement(s) being effected as to all Registrable Securities (as defined in the
Registration Rights Agreement), the Company may not file any registration
statement (other than on Form S-8) with the Commission with respect to any
securities of the Company.
4.5.
Securities
Laws Disclosure; Publicity. By 9:00 a.m. (New York time) on the Trading Day
following the execution of this Agreement, and by 9:00 a.m. (New York time) on
the Trading Day following each of the Initial Closing Date and the Second
Closing Date, as the case may be, the Company shall issue press releases
disclosing the transactions contemplated hereby and the applicable Closing. On
the Trading Day following the execution of this Agreement the Company will file
a Current Report on Form 8-K disclosing the material terms of the Transaction
Documents (and attach as exhibits thereto the Transaction Documents), and on
the Trading Day following both the Initial Closing Date and Second Closing
Date, as the case may be, the Company will file an additional Current Report on
Form 8-K to disclose the applicable Closing. In addition, the Company will make
such other filings and notices in the manner and time required by the
Commission and the Trading Market on which the Common Stock is listed.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Investor, or include the name of any Investor in any filing with the
Commission (other than the Registration Statement and any exhibits to filings
made in respect of this transaction in accordance with periodic filing
requirements under the Exchange Act) or any regulatory agency or Trading
Market, without the prior written consent of such Investor, except to the
extent such disclosure is required by law or Trading Market regulations.
4.6.
Limitation
on Issuance of Future Priced Securities. During the six months following each
of the Initial Closing Date or Second Closing Date, the Company shall not issue
any “Future Priced Securities” as such term is described by NASD
IM-4350-1, other than those in which the price of such securities are limited
by provisions in which the applicable purchase, conversion or exchange price
may not be less than the closing bid price of the Common Stock on the day prior
to the entering into of the transaction in which any such securities are
issued.
4.7.
Indemnification
of Investors. In addition to the indemnity provided in the Registration Rights
Agreement, the Company will indemnify and hold the Investors and their
directors, officers, shareholders, partners, employees and agents (each, an “Investor
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees
and costs of investigation (collectively, “Losses”) that any such
Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 4.7 shall be the same as those set forth in
Section 5 of the Registration Rights Agreement.
4.8.
Non-Public
Information. The Company covenants and agrees that neither it nor any other
Person acting on its behalf will provide any Investor or its agents or counsel
with any information that the Company believes constitutes material non-public
information, unless prior thereto such Investor shall have executed a written
agreement regarding the confidentiality and use of such information. The
Company understands and confirms that each Investor shall be relying on the
foregoing representations in effecting transactions in securities of the
Company.
4.9.
Listing
of Securities. The Company agrees, (i) if the Company applies to have the
Common Stock traded on any other Trading Market, it will include in such
application the Shares and Warrant Shares, and will take such other action as
is necessary or desirable to cause the Shares and Warrant Shares to be listed
on such other Trading Market as promptly as possible, and (ii) it will take all
action reasonably necessary to continue the listing and trading of its Common
Stock on a Trading Market and will comply in all material respects with the
Company’s reporting, filing and other obligations under the bylaws or
rules of the Trading Market.
4.10.
Use
of Proceeds. The Company will use the net proceeds from the sale of the
Securities hereunder for working capital purposes and not for the satisfaction
of any portion of the Company’s debt (other than payment of trade payables
and accrued expenses in the ordinary course of the Company’s business and
consistent with prior practices), or to redeem any Common Stock or Common Stock
Equivalents.
4.11.
Stockholder
Approval.
(a) The
Company covenants and agrees to use its best efforts to obtain as soon as
possible, but in any event by the 90th day following the Initial
Closing, the approval of its stockholders as required by the rules and
regulations of the Nasdaq Stock Market applicable to the Company in order to
issue the Shares and Second Warrants at the Second Closing and the Warrant
Shares issuable upon exercise of the Second Warrants and to otherwise perform
its respective obligations under the transactions contemplated by the
Transaction Documents, including approving (i) the issuance of in excess of
19.99% of the shares of Common Stock outstanding on the date of this Agreement
at a price less than the closing bid price of the Common Stock on the Trading
Day immediately preceding the date of this Agreement and (ii) any potential
change of control of the Company which may occur as a result of the
transactions contemplated by the Transaction Documents (the “Stockholder
Approval”).
(b) In
furtherance of the obligations of the Company under Section 4.11(a), the
Company shall use its best efforts to obtain Stockholder Approval in connection
with this Section 4.11, and in pursuit thereof (i) by the Initial Closing, the
Board of Directors of the Company shall adopt proper resolutions authorizing
the actions set forth in Section 4.11(a) above, (ii) the Board of Directors of
the Company shall recommend and the Company shall otherwise use its best
efforts to promptly and duly obtain stockholder approval, including, without
limitation, by filing any required proxy materials with NASDAQ and the
Commission by the 20th day following the Initial Closing Date, by
delivering proxy materials to its stockholders in furtherance thereof as soon
as practicable thereafter, by soliciting proxies from its stockholders in
connection therewith in the same manner as all other management proposals in
such proxy statement and having all management-appointed proxy-holders vote
their proxies in favor of such proposals to carry out such resolutions (and
hold a special meeting of the stockholders as soon as practicable, but in any
event not later than the 60th day after delivery of the proxy or
other applicable materials relating to such meeting) and (iii) within three
Business Days of obtaining such stockholder approval, take all actions
necessary to effectuate the actions set forth in Section 4.11(a) above. If the
Company does not obtain Stockholder Approval at the first meeting (the “First
Meeting”), the Company shall in addition to satisfying clauses (i),
(ii) and (iii) as contemplated above, call a special meeting of its
stockholders as soon as reasonably practicable but in no event later than
ninety (90) days following the First Meeting to seek Stockholder Approval until
the date Stockholder Approval is obtained. The Company shall use its reasonable
best efforts to hold the First Meeting as soon as possible, but in any event
the Company shall use its reasonable best efforts to hold the First Meeting
prior to the ninetieth (90th) day after the date of this Agreement.
The parties understand and agree that no votes may be cast in respect of any
Shares or Warrant Shares on any resolution to obtain Stockholder Approval
pursuant hereto.
4.12.
Conversion
of Class B Common Stock. Immediately following the Stockholder Approval, each
of Xxxxx Xxxxxxxxx and Xxxxxxx Xxxx, by their execution hereof, shall convert
the number of shares of Class B common stock, par value $0.01 per share, of the
Company set forth below such Person’s name on the signature page hereto to
Common Stock. The Company covenants and agrees to take all action reasonably
necessary to enforce and effectuate the foregoing.
4.13.
Irrevocable
Transfer Agent Instructions. At each Closing, the Company shall issue
irrevocable instructions to its Transfer Agent to issue certificates or credit
shares to the applicable balance accounts at the Depository Trust Company,
registered in the name of each Investor or its respective nominee(s), for the
Shares and the Warrant Shares issued at such Closing, in such amounts as
specified from time to time by each Investor to the Company in the form of
Exhibit E attached hereto (the “Irrevocable Transfer Agent
Instructions”). The Company represents and warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 4.13 will be given by the Company to its Transfer Agent in
connection with this Agreement, and that the Shares and the Warrant Shares
issued at each Closing shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
other Transaction Documents. The Company acknowledges that a breach by it of
its obligations under this Section 4.13 will cause irreparable harm to an
Investor. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 4.13 will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 4.13, that an Investor shall be entitled, in
addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
ARTICLE 5.
CONDITIONS PRECEDENT TO CLOSINGS
5.1.
Conditions
Precedent to the Obligations of the Investors to Purchase Securities. The
obligation of each Investor to acquire Securities at a Closing is subject to
the satisfaction or waiver by such Investor, at or before such Closing (except
Section 5.1(i) and Section 5.1(j), which are only a condition precedent to the
Second Closing), of each of the following conditions:
(a) Representations
and Warranties. The representations and warranties of the Company contained
herein shall be true and correct in all material respects as of the date when
made and as of such Closing as though made on and as of such date (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specified date);
(b) Performance.
The Company shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to such Closing;
(c) No
Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;
(d) Adverse
Changes. Since the date of execution of this Agreement, no event or series
of events shall have occurred that reasonably could have or result in a
Material Adverse Effect;
(e) No
Suspensions of Trading in Common Stock; Listing. Trading in the Common
Stock shall not have been suspended by the Commission or any Trading Market
(except for any suspensions of trading of not more than one Trading Day solely
to permit dissemination of material information regarding the Company) at any
time since the date of execution of this Agreement, and the Common Stock shall
have been at all times since such date listed for trading on a Trading Market;
(f) Company
Deliverables. The Company shall have delivered the Initial Company
Deliverables in accordance with Section 2.2(a) or the Second Company
Deliverables in accordance with Section 2.4(a), as applicable;
(g) Nasdaq
Listing. The Nasdaq Stock Market shall have waived application of the 15
day prior notice contained in NASD Marketplace Rule 4310(c)(17)(D) or such
timeframe shall have expired without objection;
(h) Termination.
This Agreement shall not have been terminated as to such Investor in accordance
with Section 6.5;
(i) Board
Resolutions. The Board of Directors of the Company shall adopt proper
resolutions (with a copy thereof provided to the Investors) authorizing the
actions set forth in Section 4.11(a) above; and
(j) Stockholder
Approval. The Company shall have obtained Stockholder Approval as set forth
in Section 4.11.
5.2.
Conditions
Precedent to the Obligations of the Company to sell Securities. The obligation
of the Company to sell Securities at each Closing is subject to the
satisfaction or waiver by the Company, at or before each Closing (except
Section 5.2(g), which only applies to the Second Closing), of each of the
following conditions:
(a) Representations
and Warranties. The representations and warranties of each Investor
contained herein shall be true and correct in all material respects as of the
date when made and as of such Closing as though made on and as of such date
(except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specified date);
(b) Performance.
Each Investor shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by such
Investor at or prior to such Closing;
(c) No
Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;
(d) Investors
Deliverables. Each Investor shall have delivered its Initial Investor
Deliverables in accordance with Section 2.2(b) or the Second Investor
Deliverables in accordance with Section 2.4(b), as applicable;
(e) Nasdaq
Listing. The Nasdaq Stock Market shall have waived application of the 15
day prior notice contained in NASD Marketplace Rule 4310(c)(17)(D) or such
timeframe shall have expired without objection;
(f) Termination.
This Agreement shall not have been terminated as to such Investor in accordance
with Section 6.5; and
(g) Stockholder
Approval. If the Company shall have complied with all requirements
hereunder with respect to obtaining such Stockholder Approval (including
adopting proper resolutions authorizing the actions set forth in Section
4.11(a) above), the Company shall have obtained Stockholder Approval as set
forth in Section 4.11.
ARTICLE 6.
MISCELLANEOUS
6.1.
Fees
and Expenses. Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of the Transaction Documents. The Company shall pay all stamp and
other taxes and duties levied in connection with the issuance of the
Securities.
6.2.
Entire
Agreement. The Transaction Documents, together with the Exhibits and Schedules
thereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements, understandings,
discussions and representations, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits
and schedules.
6.3.
Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 6:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 6:30
p.m. (New York City time) on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:
|
|
|
If to the Company: |
Silverstar Holdings, Ltd. |
|
|
Xxxxxxxxx Xxxxx |
|
Xxxxxx Xxxxxx, Xxxxxxxx XX CX, Bermuda |
|
Attn: President |
|
Facsimile: |
|
|
|
With a copy to: |
Silverstar Holdings, Ltd. |
|
0000 Xxxxxx Xxxx, Xxxxx 000 |
|
Xxxx Xxxxx, XX 00000 |
|
Attn: Xxxxx Xxxxxxxxx |
|
Facsimile: (000) 000 0000 |
|
|
and |
|
|
Xxxxxxxx Xxxxxxx LLP |
|
The Chrysler Building |
|
000 Xxxxxxxxx Xxxxxx |
|
Xxx Xxxx, XX 00000 |
|
Attn: Xxxxx X. Xxxxxxx |
|
Facsimile: (000) 000-0000 |
|
If to an Investor: |
To the address set forth under such Investor's name
on the signature pages hereof; |
or such other address as may be
designated in writing hereafter, in the same manner, by such Person.
6.4.
Amendments;
Waivers; No Additional Consideration. No provision of this Agreement may be
waived or amended except in a written instrument signed by the Company and the
Investors holding a majority of the Shares. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right. No consideration shall be
offered or paid to any Investor to amend or consent to a waiver or modification
of any provision of any Transaction Document unless the same consideration is
also offered to all Investors who then hold Shares. Without the written consent
or the affirmative vote of each Investor affected thereby, an amendment or
waiver under this Section 6.4 may not waive or amend any Transaction Document
the effect of which would be to permit the Company to (1) name any Investor as
an underwriter in a Registration Statement without such Investor’s
specific written consent thereto, or (2) not include any Registrable Securities
(as defined in the Registration Rights Agreement) of an Investor in a
Registration Statement due to their refusal to be named as an underwriter
therein.
6.5.
Termination.
This Agreement may be terminated prior to the Initial Closing:
(a) by
written agreement of the Investors and the Company; and
(b) by
the Company or an Investor (as to itself but no other Investor) upon written
notice to the other, if the Initial Closing shall not have taken place by 6:30
p.m. Eastern time on the Outside Date; provided, that the right to
terminate this Agreement under this Section 6.5(b) shall not be available
to any Person whose failure to comply with its obligations under this Agreement
has been the cause of or resulted in the failure of the Initial Closing to
occur on or before such time.
(c) by
an Investor (as to itself but no other Investor) upon written notice to the
Company, if the Second Closing shall not have taken place by 6:30 p.m. Eastern
time on the 150th day following the Initial Closing; provided,
that the right to terminate this Agreement under this Section 6.5(c) shall
not be available to any Person whose failure to comply with its obligations
under this Agreement has been the cause of or resulted in the failure of the
Second Closing to occur on or before such time.
In the event of a termination
pursuant to this Section, the Company shall promptly notify all non-terminating Investors.
Upon a termination in accordance with this Section 6.5, the Company and the terminating
Investor(s) shall not have any further obligation or liability (including as arising from
such termination) to the other with respect to the Closing applicable to such termination
and no Investor will have any liability to any other Investor under the Transaction
Documents as a result therefrom.
6.6.
Construction.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction Documents.
6.7.
Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. The Company may not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Investors. Any Investor may assign any or all of its
rights under this Agreement to any Person to whom such Investor assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof
that apply to the “Investors.”
6.8.
No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.7 (as to each Investor
Party).
6.9.
Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof that would defer to the
substantive laws of another jurisdiction. Each party agrees that all
Proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the New York Courts. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the New York
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court, or
that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If either party shall commence a
Proceeding to enforce any provisions of a Transaction Document, then the prevailing party
in such Proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding.
6.10.
Survival.
The representations, warranties, agreements and covenants contained herein
shall survive the Closings and the delivery of the Securities.
6.11.
Execution.
This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.
6.12.
Severability.
If any provision of this Agreement is held to be invalid or unenforceable in
any respect, the validity and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affected or impaired
thereby and the parties will attempt to agree upon a valid and enforceable
provision that is a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.
6.13.
Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents,
whenever any Investor exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Investor may rescind
or withdraw, in its sole discretion from time to time upon written notice to
the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.
6.14.
Replacement
of Securities. If any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof, or in
lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested. The
applicants for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the issuance of such
replacement Securities. If a replacement certificate or instrument evidencing
any Securities is requested due to a mutilation thereof, the Company may
require delivery of such mutilated certificate or instrument as a condition
precedent to any issuance of a replacement.
6.15.
Remedies.
In addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, each of the Investors and the Company
will be entitled to specific performance under the Transaction Documents. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.
6.16.
Payment
Set Aside. To the extent that the Company makes a payment or payments to any
Investor pursuant to any Transaction Document or an Investor enforces or
exercises its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
6.17.
Independent
Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under any
Transaction Document. The decision of each Investor to purchase Securities
pursuant to the Transaction Documents has been made by such Investor
independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no
Investor will be acting as agent of such Investor in connection with monitoring
its investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the
Investors has been provided with the same Transaction Documents for the purpose
of closing a transaction with multiple Investors and not because it was
required or requested to do so by any Investor.
6.18.
Limitation
of Liability. Notwithstanding anything herein to the contrary, the Company
acknowledges and agrees that the liability of an Investor arising directly or
indirectly, under any Transaction Document of any and every nature whatsoever
shall be satisfied solely out of the assets of such Investor, and that no
trustee, officer, other investment vehicle or any other Affiliate of such
Investor or any investor, shareholder or holder of shares of beneficial
interest of such a Investor shall be personally liable for any liabilities of
such Investor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated
above.
|
|
|
SILVERSTAR HOLDINGS, LTD.
By:_________________________
Name:
Title:
Only as to Section 4.12 herein:
____________________________
Xxxxx Xxxxxxxxx
Number of shares of Class B Common
Stock beneficially owned:
____________________________
Only as to Section 4.12 herein:
____________________________
Xxxxxxx Xxxx
Number of shares of Class B Common Stock
beneficially owned:
____________________________
|
[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR
INVESTORS FOLLOW]
IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.
|
|
|
NAME OF INVESTOR
____________________________
By:_________________________
Name:
Title:
Investment Amount: $________
Tax ID No.:_________________
ADDRESS FOR NOTICE
c/o:________________________
Street:_____________________
City/State/Zip:_____________
Attention:__________________
Tel:________________________
Fax:________________________
DELIVERY INSTRUCTIONS
(if different from above)
c/o:________________________
Street:_____________________
City/State/Zip:_____________
Attention:__________________
Tel:________________________
Fax:________________________
|
Annex A
SCHEDULE OF BUYERS
(1) |
(2) |
(3) |
(4) |
Buyer
|
Address and
Facsimile Number
|
Initial Closing Shares
|
Second Closing Shares
|
Basso Fund Ltd. |
Basso Fund |
50,241 |
94,587 |
|
0000 Xxxx Xxxx Xxxxxx |
|
|
|
Xxxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Basso Multi-Strategy |
Basso Fund |
284,701 |
535,988 |
Holding Fund Ltd |
0000 Xxxx Xxxx Xxxxxx |
|
|
|
Xxxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Vision Opportunity Master |
Vision Capital, 20 West 55th |
334,943 |
630,574 |
Fund, Ltd |
Street, 0xx Xxxxx |
|
|
|
Xxx Xxxx, XX 00000 212-867-1416 |
|
|
|
Credit Suisse Securities |
Credit Suisse |
239,245 |
450,410 |
(USA) LLC |
00 Xxxxxxx Xxxxxx, 0xx Xxxxx |
|
|
|
Xxx Xxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Enable Growth Partners LP |
Enable Growth Partners |
203,358 |
382,849 |
|
Xxx Xxxxx Xxxxxxxx, Xxxxx 000 |
|
|
|
Xxx Xxxxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Enable Opportunity Partners LP |
Enable Growth Partners |
23,942 |
45,042 |
|
Xxx Xxxxx Xxxxxxxx, Xxxxx 000 |
|
|
|
Xxx Xxxxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Xxxxxx Diversified Strategy |
Enable Growth Partners |
11,962 |
22,521 |
Master Fund LLC, Ena |
Xxx Xxxxx Xxxxxxxx, Xxxxx 000 |
|
|
|
Xxx Xxxxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Xxxxxx Capital Investments |
Xxxxxx Capital Investments |
173,452 |
326,548 |
|
000 X. Xxxxxxxx Xxx. |
|
|
|
Xxxxxxxxx Xxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
|
|
|
|
|
|
|
Xxxxxx Equity Partners, XX |
Xxxxxx Capital Management |
126,799 |
238,718 |
|
000 Xxxxx Xxx, 00xx Xxxxx |
|
|
|
Xxx Xxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Xxxxxx Equity Partners |
Xxxxxx Capital Management |
16,746 |
31,529 |
Offshore Fund Ltd. |
000 Xxxxx Xxx, 00xx Xxxxx |
|
|
|
Xxx Xxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Capital Ventures |
Heights Capital Management, Inc. |
119,682 |
225,318 |
International |
000 Xxxxxxxxxx Xx., Xxxxx 0000 |
|
|
|
Xxx Xxxxxxxxx, XX |
|
|
|
000-000-0000 |
|
|
|
Mara Gateway Associates, LP |
Mara Gateway Associates, LP |
69,381 |
130,619 |
|
00000 Xxxxxxx Xx XX |
|
|
|
Xxxxxxxxxx Xxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Xxxxxxx Family |
Xxxxxxx Family Irrevocable Trust |
12,141 |
22,859 |
Irrevocable Trust |
0000 Xxxxxxxxx Xx |
|
|
FBO Xxxxx X. Xxxxxxx |
Xxxxxxx Xxx XX 00000 |
|
|
|
Xxxxxxx Family Trust |
Xxxxxxx Family Irrevocable Trust |
26,017 |
48,983 |
|
0000 Xxxxxxxxx Xx |
|
|
|
Xxxxxxx Xxx XX 00000 |
|
|
|
Xxxxxxx Family Foundation |
Xxxxxxx Family Irrevocable Trust |
10,407 |
19,593 |
|
0000 Xxxxxxxxx Xx |
|
|
|
Xxxxxxx Xxx XX 00000 |
|
|
|
Xxxxxxx Family |
Irrevocable Xxxxxxx Family Trust |
12,141 |
22,859 |
Irrevocable Trust |
0000 Xxxxxxxxx Xx |
|
|
FBO Xxxxxxx X. Xxxxxxx |
Granite Bay CA 95746 |
|
|
|
Bristol Investment Fund, Ltd. |
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000 |
59,811 |
112,602 |
|
Xxx Xxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Truk Opportunity Fund, LLC |
Truk Opportunity Fund, LLC |
51,437 |
96,838 |
|
One E. 00xx Xx., 0xx Xxxxx |
|
|
|
Xxx Xxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
|
|
|
Truk International Fund, LLC |
Truk Opportunity Fund, LLC |
8,373 |
15,764 |
|
One E. 00xx Xx., 0xx Xxxxx |
|
|
|
Xxx Xxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
|
|
|
|
|
|
|
Xxxxxxx Xxxxxxxx |
Xxxxxxx Xxxxxxxx |
52,035 |
97,965 |
|
00 Xxxxx Xxx Xxxx |
|
|
|
Xxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Xxxxxxxx Investment Master |
Xxxxxxxx Capital LLC |
47,849 |
90,082 |
Fund Ltd. |
000 Xxxx 00xx Xxxxxx |
|
|
|
Xxx Xxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Xxxxx Xxxxxxxxx |
Xxxxx Xxxxxxxxx |
- |
137,931 |
|
0000 Xx. Xxxxxxx Xxx |
|
|
|
Xxxx Xxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Otago Partners, LLC |
Otago Partners, LLC |
35,886 |
67,562 |
|
000 0xx xxxx, 00xx Xxxxx |
|
|
|
Xxx Xxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Newport Micro Fund II, LLC |
Newport Micro Fund |
34,690 |
65,310 |
|
0000 X. Xxxxx Xxx #000 |
|
|
|
Xxxxxxx Xxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Xxxxxxx Xxxx |
Xxxxxxx Xxxx |
- |
68,965 |
|
0000 Xxxxxxxxx Xxxx |
|
|
|
Xxxxxxxx Xxxx, XX 00000 |
|
000-000-0000 |
|
|
|
|
|
Xxxxxx W & Xxxxxxxx X. |
Xxx Xxxxxx |
- |
34,482 |
Xxxxxx |
000 Xxxxxx Xxxxx Xxx |
|
Xxxxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
|
|
Xxxxxxx Xxxxxx |
Xxxxxxx Xxxxxx |
- |
17,241 |
|
000 Xxxxxx Xxxxx Xxx |
|
|
|
Xxxxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
Xxxxx Xxxxxx |
Xxxxx Xxxxxx |
- |
17,241 |
|
000 Xxxxxx Xxxxx Xxx |
|
|
|
Xxxxxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
RHP Master Fund, Ltd. |
Rock Hill Investment Management, L.P. |
52,274 |
98,415 |
|
Three Xxxx Xxxxx Xxxx |
|
|
|
Xxxxx 000 |
|
|
|
Xxxx Xxxxxx, XX 00000 |
|
|
|
000-000-0000 |
|
|
|
|
|
|
Schedule 3.1(a)
Subsidiaries
1. Silverstar Holdings, Ltd. – Bermuda
|
a. Silverstar
Holdings, Inc. – Delaware |
|
i. Fantasy Sports, Inc. – Delaware |
|
ii. First South Africa Management Corp – Delaware |
|
b. First
South African Holdings, Pty. Ltd. – South Africa |
|
c.
Strategy First, Inc. – Quebec |
|
d. Silverstar
Acquisitions, PLC – UK |
|
i. Empire Interactive, PLC – UK |
|
1. Empire
Interactive Europe, Ltd. – UK |
|
4. Empire
Interactive Holdings, Ltd. – UK |
|
a. Empire
Interactive, Inc. – US |
Schedule 3.1 (k)
Litigation
The information set
forth in Schedule 3.1(m) is incorporated by reference.
Schedule 3.1(m)
A. On
October 21, 2005, the Company issued to DKR Soundshore Oasis Holding Fund Ltd.
(the “Holder”) a Variable Rate Secured Convertible Debenture in the
original principal amount of $5,000,000 (the “2005 Debenture”) and on
October 19, 2006, the Company issued to the Holder another Variable Rate
Secured Convertible Debenture in the original principal amount of $1,400,000
(the “2006 Debenture, ” and collectively with the 2005 Debenture, the
“Debentures”). A portion of the Debentures was repaid and the
outstanding principal amount outstanding at this date is $5,000,000.
The
Company received a waiver of its obligation to (i) make the monthly amortization payments
required with resepct to the Debentures and (i) file and have declared effective a
registration statement covering the resale of 130% of the number of shares issuable upon
conversion of the 2006 Debenture.
The
Company and the Holder are currently negotiating an amendment to the Debentures which
will provide, among other things, that (i) the Company has no obligation to make monthly
amortization payments on the Debentures, (ii) the Company must file a registration
statement covering the resale of 130% of the number of shares issuable upon conversion of
the 2006 Debenture following the date that all of the shares of common stock and the
shares of common stock to be issued upon exercise of the warrants issued in the private
placement have been registered for resale and (iii) the maturity date of the Debentures
will be April 30, 2010.
B. In
April 2006, the Company’s subsidiary, First South African Holdings,
received a letter from the South African Revenue Service (“SARS”)
challenging certain tax treatment of dividends and operating loss carry
forwards for the years 2002 through 2004. On May 4, 2007, SARS agreed in
principle to drop the larger of its two assessments and on May 25 2007, SARS
formally approved this decision. The Company has access to approximately $1.7
million of its restricted cash.
The
Company conceded the principle of SARS second assessment but will continue to negotiate
the ultimate liability due under this assessment. The Company has recorded an estimated
liability of approximately $599,000 in this regard but may be forced to increase this
amount should it fail to negotiate a lower assessment amount.
Schedule 3.1(o)
The inventory receivables and
intellectual property (all assets) of Empire Interactive, PLC serves as security to a line
of credit from Barclays Bank, PLC.
Xxxxx Xxxxxxx and Xxx Xxxxxxx, as
Trustees for Note Holders of the Loan Note Instrument created upon the acquisition of
Empire Interactive, PLC and due October 31, 2007, have a charge over the shares of Empire
Interactive, PLC owned by the Company.
The shares of all other subsidiaries
except for Empire Interactive, plc are pledged as collateral for the Secured Convertible
Debentures held by DKR Soundshore Oasis Holding Fund, Ltd.
Schedule 3.1(u)
Certain Fees
The
Company has entered into a Placement Agency Agreement with Xxxx Capital Partners, LLC to
pay a fee of 8% of the total gross proceeds received in the private placement transaction
plus 3% warrants. Xxxx will also receive expense reimbursement.
Schedule 3.1(v)
The Company has granted to the
following shareholders piggyback registration rights for any registered offering other
than pursuant to a registration statement on Form S-4 or S-8:
|
|
Name of Shareholder |
Number of Shares |
Catacando Properties Limited |
37,453 |
Xxxxxx Xxxxxx XXX |
200,000 |
Xxxxx Xxxxx |
171,200 |
RPC International |
18,727 |
In
connection with any refinancing transaction in which some or all of the net proceeds are
used to pay any outstanding secured debt of Empire Interactive PLC owed to Barclays Bank,
whereby the Company may issue warrants to purchase its common stock.
EXHIBIT A
Form of First Warrant
EXHIBIT B
Form of Second Warrant
EXHIBIT C
Form of Registration
Rights Agreement
EXHIBIT D
Form of Lockup Agreement
EXHIBIT E
Form of Irrevocable
Transfer Agent Instructions
As of July 2, 2007
American Stock Transfer
& Trust Company6201
00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxx
Ladies and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement, dated as of July 2, 2007 (the
“Agreement”), by and among Silverstar Holdings, Ltd., a company
incorporated under the laws of Bermuda (the “Company”), and the
investors identified on the signature pages thereto (collectively, the “Holders”),
pursuant to which the Company is issuing to the Holders shares (the “Shares”)
of Class A common stock of the Company, par value $0.01 per share (the “Common
Stock”), and warrants (the “Warrants”), which are
exercisable into shares of Common Stock.
This
letter shall serve as our irrevocable authorization and direction to you (provided that
you are the transfer agent of the Company at such time and the conditions set forth in
this letter are satisfied), subject to any stop transfer instructions that we may issue
to you from time to time, if any:
(i)
to issue shares of Common Stock upon transfer or resale of the Shares; and
(ii) to
issue shares of Common Stock upon the exercise of the Warrants (the “Warrant Shares”)
to or upon the order of a Holder from time to time upon delivery to you of a properly
completed and duly executed Exercise Notice, in the form attached hereto as Annex I,
which has been acknowledged by the Company as indicated by the signature of a duly
authorized officer of the Company thereon together with indication of receipt of the
exercise price therefor.
You
acknowledge and agree that so long as you have previously received (a) written
confirmation from the Company’s legal counsel that a registration statement covering
resales of the Shares and the Warrant Shares has been declared effective by the
Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “Securities Act”), and (b) a
copy of such registration statement, then, unless otherwise required by law,
as soon as reasonably practicable
after your receipt of a notice of transfer of Shares or the Exercise
Notice, you shall issue the certificates representing the Shares and/or the Warrant
Shares, as the case may be, registered in the names of such Holders or transferees, as
the case may be, and such certificates shall not bear any legend restricting transfer of
the Shares or the Warrant Shares thereby and should not be subject to any stop-transfer
restriction; provided, however, that if such Shares and Warrant Shares are not registered
for resale under the Securities Act, then the certificates for such Shares and/or Warrant
Shares shall bear the following legend:
|
THESE
SECURITIES HAVE NOT 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 TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. |
A
form of written confirmation from the Company’s outside legal counsel that a
registration statement covering resales of the Shares and the Warrant Shares has been
declared effective by the Commission under the Securities Act is attached hereto as Annex II.
Please
be advised that the Holders are relying upon this letter as an inducement to enter into
the Agreement and, accordingly, each Holder is a third party beneficiary to these
instructions.
Please
execute this letter in the space indicated to acknowledge your agreement to act in
accordance with these instructions.
|
|
|
Very truly yours, |
|
|
SILVERSTAR HOLDINGS, LTD. |
|
|
|
By: __________________________________ |
|
Name: _________________________________ |
|
Title: _______________________________ |
Acknowledged and Agreed:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:__________________________________
Name: ________________________________
Title: ________________________________
Date: _________________, 2007
ANNEX I
EXERCISE NOTICE
SILVERSTAR HOLDINGS,
LTD.WARRANT
DATED ______________, 2007
The undersigned Holder hereby
irrevocably elects to purchase _____________ shares of Common Stock pursuant to the above
referenced Warrant. Capitalized terms used herein and not otherwise defined have the
respective meanings set forth in the Warrant.
|
(A) |
|
The
undersigned Holder hereby exercises its right to purchase _________________
Warrant Shares pursuant to the Warrant. |
|
(B) |
|
The
Holder intends that payment of the Exercise Price shall be made as (check one): |
|
|
____ |
|
“Cash
Exercise” under Section 11 |
|
|
____ |
|
“Cashless
Exercise” under Section 11 |
|
(C) |
|
If
the holder has elected a Cash Exercise, the holder shall pay the sum of
$____________ to the Company in accordance with the terms of the Warrant. |
|
(D) |
|
Pursuant
to this Exercise Notice, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the Warrant. |
|
(E) |
|
By
its delivery of this Exercise Notice, the undersigned represents and warrants
to the Company that in giving effect to the exercise evidenced hereby the
Holder will not beneficially own in excess of the number of shares of Common
Stock (determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 12 of this Warrant to which
this notice relates. |
|
|
Dated:________________,______ |
Name of Holder:________________________ |
|
(Print) |
|
|
By:____________________________________ |
|
Name:__________________________________ |
|
Title:_________________________________ |
|
|
(Signature must conform in all respects to name of |
|
holder as specified on the face of the Warrant) |
ANNEX II
FORM OF NOTICE OF
EFFECTIVENESS OF REGISTRATION STATEMENT
American Stock Transfer
& Trust Company6201
00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Re: Silverstar Holdings,
Ltd.
Ladies and Gentlemen:
We
have acted as special counsel to Silverstar Holdings, Ltd., a company incorporated under
the laws of Bermuda (the “Company”), in connection with the
registration of ___________shares (the “Shares”) of its Class A
common stock, par value $0.01 per share, with the Securities and Exchange Commission (the
“SEC”). We have not acted as your counsel. This opinion is given
at the request and with the consent of the Company.
In
rendering this opinion we have relied on the accuracy of the Company’s Registration
Statement on Form S-3, as amended (the “Registration Statement”),
filed by the Company with the SEC on ____________, 2007. The Company filed the
Registration Statement on behalf of certain selling stockholders (the “Selling
Stockholders”). This opinion relates solely to the Selling Stockholders
listed on Exhibit A hereto and number of Shares set forth opposite such Selling
Stockholders’ names. The SEC declared the Registration Statement effective on
_____________, 2007.
We
understand that the Selling Stockholders acquired the Shares in a private offering exempt
from registration under the Securities Act of 1933, as amended. Information regarding the
Shares to be sold by the Selling Stockholders is contained under the heading “Selling
Stockholders” in the Registration Statement, which information is incorporated
herein by reference. This opinion does not relate to the issuance of the Shares to the
Selling Stockholders. The opinions set forth herein relate solely to the sale or transfer
by the Selling Stockholders pursuant to the Registration Statement under the Federal laws
of the United States of America. We do not express any opinion concerning any law of any
state or other jurisdiction.
In
rendering this opinion we have relied upon the accuracy of the foregoing statements.
Based
on the foregoing, it is our opinion that the Shares have been registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended, and that
American Stock Transfer & Trust &Company (the “Transfer Agent”)
may remove the restrictive legends contained on the Shares. This opinion relates solely
to the number of Shares set forth opposite the Selling Stockholders listed on Exhibit A hereto.
In
issuing this opinion, we have assumed and relied upon without independent investigation
that: (i) the Registration Statement is and shall remain effective, (ii) the resale of
the Shares is not integrated with any other securities offering of the Company; (iii)
each Selling Stockholder shall resell its Shares only pursuant to the prospectus
contained in the effective Registration Statement; and (iv) the SEC has not issued a stop
order delaying or suspending the effectiveness of the Registration Statement or initiated
any proceeding for such purpose.
This
opinion is furnished to Transfer Agent specifically in connection with the sale or
transfer of the Shares, and solely for your information and benefit. This letter may not
be relied upon by the Transfer Agent in any other connection, and it may not be relied
upon by any other person or entity for any purpose without our prior written consent.
This opinion may not be assigned, quoted or used without our prior written consent. The
opinions set forth herein are rendered as of the date hereof and we will not supplement
this opinion with respect to changes in the law or factual matters subsequent to the date
hereof.
|
|
|
Very truly yours, |
|
|
|
[SPECIAL SECURITIES COUNSEL] |
Exhibit A
SELLING STOCKHOLDERS