Exhibit 4.2
EXHIBIT B
This
Registration Rights Agreement (this “Agreement”) is made and entered into
as of October 19, 2006, among Silverstar Holdings, Ltd., a Bermuda corporation (the
“Company”), and the purchasers signatory hereto (each such purchaser is a
“Purchaser” and collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof among the Company and the Purchasers (the “Purchase Agreement”).
The
Company and the Purchasers hereby agree as follows:
1.
Definitions
Capitalized
terms used and not otherwise defined herein that are defined in the Purchase Agreement
shall have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
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“Advice”shall
have the meaning set forth in Section 6(d).
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“Effectiveness
Date” means, with respect to the initial Registration Statement required to be
filed hereunder, if the Company has not paid off the Debenture in full, the 150th calendar
day (180th calendar day in the event of a full review by the Commission)
following the date hereof and, with respect to any additional Registration Statements
which may be required pursuant to Section 3(c), the 60th calendar day
following the date on which the Company first knows, or reasonably should have known,
that such additional Registration Statement is required hereunder; provided, however,
in the event the Company is notified by the Commission that one of the above Registration
Statements will not be reviewed or is no longer subject to further review and comments,
the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day
following the date on which the Company is so notified if such date precedes the dates
required above.
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“Effectiveness
Period” shall have the meaning set forth in Section 2(a).
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“Event”shall
have the meaning set forth in Section 2(b).
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“Event
Date” shall have the meaning set forth in Section 2(b).
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“Filing
Date” means, with respect to the initial Registration Statement required
hereunder, if the Company has not paid off the Debenture in full, the 90thcalendar
day following the date hereof and, with respect to any additional Registration Statements
which may be required pursuant to Section 3(c), the 30th day following the
date on which the Company first knows, or reasonably should have known that such
additional Registration Statement is required hereunder.
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“Holder”or
“Holders” means the holder or holders, as the case may be, from time to
time of Registrable Securities.
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“Indemnified
Party” shall have the meaning set forth in Section 5(c).
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“Indemnifying
Party” shall have the meaning set forth in Section 5(c).
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“Losses”shall
have the meaning set forth in Section 5(a).
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“Plan
of Distribution” shall have the meaning set forth in Section 2(a).
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“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.
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“Prospectus”means
the prospectus included in a Registration Statement (including, without limitation, a
prospectus that includes any information previously omitted from a prospectus filed as
part of an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Securities covered
by a Registration Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
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“Registrable
Securities” means (i) all of the shares of Common Stock issuable upon conversion
in full of the Debentures, (ii) shares of Common Stock underlying the warrants issuable
pursuant to Section 6(c) of the Debentures, (iii) any securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing and (iv) any additional shares issuable in connection with any
anti-dilution provisions in the Debentures (without giving effect to any limitations on
conversion set forth in the Debenture).
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“Registration
Statement” means the registration statements required to be filed hereunder and
any additional registration statements contemplated by Section 3(c), including (in each
case) the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in such
registration statement.
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“Rule
415” means Rule 415 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 purpose and effect as
such Rule.
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“Rule
424” means Rule 424 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 purpose and effect as
such Rule.
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“Selling
Shareholder Questionnaire” shall have the meaning set forth in Section 3(a).
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2.
Shelf Registration
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(a)
Unless the Debenture is paid in full on or before December 19, 2006,
on or prior to each Filing Date, the Company shall prepare and file with
the Commission a “Shelf” Registration Statement covering the
resale of 130% of the Registrable Securities on such Filing Date for an
offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form S-3 (except if the Company is not
then eligible to register for resale the Registrable Securities on Form
S-3, in which case such registration shall be on another appropriate form
in accordance herewith) and shall contain (unless otherwise directed by
the Holders) substantially the “Plan of Distribution” attached
hereto as Annex A. Subject to the terms of this Agreement, the
Company shall use its best efforts to cause a Registration Statement to be
declared effective under the Securities Act as promptly as possible after
the filing thereof, but in any event prior to the applicable Effectiveness
Date, and shall use its best efforts to keep such Registration Statement
continuously effective under the Securities Act until all Registrable
Securities covered by such Registration Statement have been sold or may be
sold without volume restrictions pursuant to Rule 144(k) as determined by
the counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Company’s transfer agent and
the affected Holders (the “Effectiveness Period”). The
Company shall telephonically request effectiveness of a Registration
Statement as of 5:00 pm Eastern Time on a Trading Day. The Company shall
immediately notify the Holders via facsimile of the effectiveness of a
Registration Statement on the same Trading Day that the Company
telephonically confirms effectiveness with the Commission, which shall be
the date requested for effectiveness of a Registration Statement. The
Company shall, by 9:30 am Eastern Time on the Trading Day after the
Effective Date (as defined in the Purchase Agreement), file a Form
424(b)(5) with the Commission. Failure to so notify the Holder within 1
Trading Day of such notification shall be deemed an Event under Section
2(b).
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(b)
If: (i) a Registration Statement is not filed on or prior to its
Filing Date (if the Company files a Registration Statement without
affording the Holders the opportunity to review and comment on the same as
required by Section 3(a), the Company shall not be deemed to have
satisfied this clause (i)), or (ii) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act, within five Trading Days of the date
that the Company is notified (orally or in writing, whichever is earlier)
by the Commission that a Registration Statement will not be “reviewed,” or
not subject to further review, or (iii) prior to its Effectiveness Date,
the Company
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fails
to file a pre-effective amendment and otherwise respond in writing to comments made by
the Commission in respect of such Registration Statement within 10 Trading Days after the
receipt of comments by or notice from the Commission that such amendment is required in
order for a Registration Statement to be declared effective, or (iv) a Registration
Statement filed or required to be filed hereunder is not declared effective by the
Commission by its Effectiveness Date, or (v) after the Effectiveness Date, a Registration
Statement ceases for any reason to remain continuously effective as to all Registrable
Securities for which it is required to be effective, or the Holders are not permitted to
utilize the Prospectus therein to resell such Registrable Securities for 20 consecutive
Trading Days in any individual case but no more than an aggregate of 30 Trading Days
during any 12-month period (which need not be consecutive Trading Days) (any such failure
or breach being referred to as an “Event”, and for purposes of clause (i) or
(iv) the date on which such Event occurs, or for purposes of clause (ii) the date on
which such five Trading Day period is exceeded, or for purposes of clause (iii) the date
which such 10 Trading Day period is exceeded, or for purposes of clause (v) the date on
which such 20 or 30 Trading Day period, as applicable, is exceeded being referred to as
“Event Date”), then in addition to any other rights the Holders may have
hereunder or under applicable law, on each such Event Date and on each monthly
anniversary of each such Event Date (if the applicable Event shall not have been cured by
such date) until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as partial liquidated damages and not as a penalty, equal to 1.5% of the
aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any
Registrable Securities then held by such Holder. If the Company fails to pay any partial
liquidated damages pursuant to this Section in full within seven days after the date
payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such partial liquidated damages are due until such amounts, plus all
such interest thereon, are paid in full. The partial liquidated damages pursuant to the
terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to
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3. Registration
Procedures.
In
connection with the Company’s registration obligations hereunder, the Company shall:
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(a)
Not less than five Trading Days prior to the filing of each
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or
deemed to be incorporated therein by reference), the Company shall, (i)
furnish to each Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders,
and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities Act. The
Company shall not file a Registration Statement or any
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such
Prospectus or any amendments or supplements thereto to which the Holders of a majority of
the Registrable Securities shall reasonably object in good faith, provided that, the
Company is notified of such objection in writing no later than 5 Trading Days after the
Holders have been so furnished copies of such documents. Each Holder agrees to furnish to
the Company a completed Questionnaire in the form attached to this Agreement as Annex B
(a “Selling Shareholder Questionnaire”) not less than two Trading Days
prior to the Filing Date or by the end of the fourth Trading Day following the date on
which such Holder receives draft materials in accordance with this Section. |
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(b)
(i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep a Registration
Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the
Commission such additional Registration Statements in order to register
for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement (subject to the terms of this Agreement),
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible to any comments received from
the Commission with respect to a Registration Statement or any amendment
thereto and as promptly as reasonably possible provide the Holders true
and complete copies of all correspondence from and to the Commission
relating to a Registration Statement; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered by a
Registration Statement during the applicable period in accordance (subject
to the terms of this Agreement) with the intended methods of disposition
by the Holders thereof set forth in such Registration Statement as so
amended or in such Prospectus as so supplemented.
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(c)
If during the Effectiveness Period, the number of Registrable
Securities at any time exceeds 90% of the number of shares of Common Stock
then registered in a Registration Statement, then the Company shall file
as soon as reasonably practicable but in any case prior to the applicable
Filing Date, an additional Registration Statement covering the resale by
the Holders of not less than 130% of the number of such Registrable
Securities.
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(d)
Notify the Holders of Registrable Securities to be sold (which
notice shall, pursuant to clauses (ii) through (vi) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the requisite
changes have been made) as promptly as reasonably possible (and, in the
case of (i)(A) below, not less than five Trading Days prior to such
filing) and (if requested by any such Person) confirm such notice in
writing no later than one Trading Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to a
Registration Statement is proposed to be filed; (B) when the Commission
notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on
such Registration Statement (the Company shall provide true and complete
copies thereof and all written responses thereto to each of the Holders);
and (C) with respect to a
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Registration
Statement or any post-effective amendment, when the same has become effective; (ii)
of any request by the Commission or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or threatening
of any Proceeding for such purpose; (v) of the occurrence of any event or passage of time
that makes the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration Statement, Prospectus
or other documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading; and
(vi) the occurrence or existence of any pending corporate development with respect to the
Company that the Company believes may be material and that, in the determination of the
Company, makes it not in the best interest of the Company to allow continued availability
of a Registration Statement or Prospectus; provided that any and all of such information
shall remain confidential to each Holder until such information otherwise becomes public,
unless disclosure by a Holder is required by law; provided, further,
notwithstanding each Holder’s agreement to keep such information confidential, the
Holders make no acknowledgement that any such information is material, non-public
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(e)
Use its best efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, at the earliest practicable moment.
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(f)
Furnish to each Holder, without charge, at least one conformed copy
of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed
to be incorporated therein by reference to the extent requested by such
Person, and all exhibits to the extent requested by such Person (including
those previously furnished or incorporated by reference) promptly after
the filing of such documents with the Commission.
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(g)
Promptly deliver to each Holder, without charge, as many copies of
the Prospectus or Prospectuses (including each form of prospectus) and
each amendment or supplement thereto as such Persons may reasonably
request in connection with resales by the Holder of Registrable
Securities. Subject to the terms of this Agreement, the Company hereby
consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto, except after the giving on any notice
pursuant to Section 3(d).
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(h)
If NASDR Rule 2710 requires any broker-dealer to make a filing prior
to executing a sale by a Holder, the Company shall (i) make an Issuer
Filing with the NASDR, Inc. Corporate Financing Department pursuant to
NASDR Rule 2710(b)(10)(A)(i), (ii) respond within five Trading Days to any
comments received from NASDR in connection therewith, (iii) and pay the
filing fee required in connection therewith.
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(i)
Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with
the selling Holders in connection with the registration or qualification
(or exemption from the Registration or qualification) of such Registrable
Securities for the resale by the Holder under the securities or Blue Sky
laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to
do any and all other acts or things reasonably necessary to enable the
disposition in such jurisdictions of the Registrable Securities covered by
each Registration Statement; provided, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified, subject the Company to any material tax in any
such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.
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(j)
If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to
the extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may request.
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(k)
Upon the occurrence of any event contemplated by this Section 3, as
promptly as reasonably possible under the circumstances taking into
account the Company’s good faith assessment of any adverse
consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a
post-effective amendment, to a Registration Statement or a supplement to
the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading. If the Company notifies the Holders in
accordance with clauses (ii) through (vi) of Section 3(d) above to suspend
the use of any Prospectus until the requisite changes to such Prospectus
have been made, then the Holders shall suspend use of such Prospectus. The
Company will use its best efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable. The Company shall be
entitled to exercise its right under this Section 3(k) to suspend the
availability of a Registration Statement and Prospectus, subject to the
payment of partial liquidated damages pursuant to Section 2(b), for a
period not to exceed 60 days (which need not be consecutive days) in any
12 month period.
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(l)
Comply with all applicable rules and regulations of the Commission.
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(m)
The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the
person thereof that has voting and dispositive control over the Shares.
During any periods that the Company is unable to meet its obligations
hereunder with respect to the registration of the Registrable Securities
solely because any Holder fails to furnish such information within three
Trading Days of the Company’s request, any liquidated damages that
are accruing at such time as to such Holder only shall be tolled and any
Event that may otherwise occur solely because of such delay shall be
suspended as to such Holder only, until such information is delivered to
the Company.
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4. Registration
Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to
be made with the Trading Market on which the Common Stock is then listed for
trading, (B) in compliance with applicable state securities or Blue Sky laws
reasonably agreed to by the Company in writing (including, without limitation,
fees and disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders) and (C) if not previously paid
by the Company in connection with an Issuer Filing, with respect to any filing
that may be required to be made by any broker through which a Holder intends to
make sales of Registrable Securities with NASD Regulation, Inc. pursuant to the
NASD Rule 2710, so long as the broker is receiving no more than a customary
brokerage commission in connection with such sale, (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in a Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the
Holders.
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5.
Indemnification
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(a)
Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, agents, brokers (including brokers who offer and
sell Registrable Securities as principal as a result of a pledge or any
failure to perform under a margin call of Common Stock), investment
advisors and employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees
of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys’ fees)
and expenses (collectively, “Losses”), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in a Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading, except to the extent, but only
to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that
such information relates to such Holder or such Holder’s proposed
method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a
Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto (it being understood that the Holder
has approved Annex A hereto for this purpose) or (ii) in the case of an
occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the
Advice contemplated in Section 6(d). The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding arising
from or in connection with the transactions contemplated by this Agreement
of which the Company is aware.
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(b)
Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents
and employees, each Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling Persons,
to the fullest extent permitted by applicable law, from and against all
Losses, as incurred, to the extent arising out of or based solely upon:
(x) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any
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amendment
or supplement thereto or in any preliminary prospectus, or arising out of or relating to
any omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (i) to the extent, but only to
the extent, that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion in such
Registration Statement or such Prospectus or (ii) to the extent that (1) such untrue
statements or omissions are based solely upon information regarding such Holder furnished
in writing to the Company by such Holder expressly for use therein, or to the extent that
such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in a Registration Statement (it being understood that
the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence
of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 6(d). In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds received
by such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation. |
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(c)
Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall
promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the
right to assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities pursuant
to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
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An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the
named parties to any such Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense
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thereof
and the reasonable fees and expenses of one separate counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of
any such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the subject
matter of such Proceeding. |
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Subject
to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified
Party shall promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is not entitled to
indemnification hereunder, determined based upon the relative faults of the parties.
|
|
(d)
Contribution. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless for any Losses, then each Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among
other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and
the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be
deemed to include, subject to the limitations set forth in this Agreement,
any reasonable attorneys’ or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.
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The
parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in
the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, except in the case of fraud by such Holder.
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11
|
The
indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.
|
6.
Miscellaneous
|
(a) Remedies.
In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
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(b) No
Piggyback on Registrations. Except as set forth on Schedule 6(b) attached
hereto, neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of the Company
in the initial Registration Statement other than the Registrable Securities. No
Person has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company. The Company shall not file any
other registration statements until the initial Registration Statement required
hereunder is declared effective by the Commission, provided that this Section
6(b) shall not prohibit the Company from filing amendments to registration
statements already filed.
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(c) Compliance.
Each Holder covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to a Registration Statement.
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(d) Discontinued
Disposition. Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(d), such Holder will forthwith
discontinue disposition of such Registrable Securities under a Registration
Statement until such Holder’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement, or until it is advised in
writing (the “Advice”) by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company will use its best efforts to ensure that the use of the Prospectus may
be resumed as promptly as it practicable. The Company agrees and acknowledges
that any periods during which the Holder is required to discontinue the
disposition of the Registrable Securities hereunder shall be subject to the
provisions of Section 2(b).
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12
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(e) Piggy-Back
Registrations. If at any time during the Effectiveness Period there is not
an effective Registration Statement covering all of the Registrable Securities
and the Company shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of
such determination and, if within fifteen days after the date of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that, the
Company shall not be required to register any Registrable Securities pursuant
to this Section 6(e) that are eligible for resale pursuant to Rule 144(k)
promulgated under the Securities Act or that are the subject of a then
effective Registration Statement.
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(f) Amendments
and Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and each Holder of the then
outstanding Registrable Securities (assuming for such purpose only that all
Debentures have been converted). Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of all of
the Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
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(g) Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be delivered as set forth in the Purchase
Agreement.
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(h) Successors
and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties and shall
inure to the benefit of each Holder. The Company may not assign its rights or
obligations hereunder without the prior written consent of all of the Holders
of the then-outstanding Registrable Securities. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.
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(i) No
Inconsistent Agreements. Neither the Company nor any of its subsidiaries
has entered, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities, that would have the effect of impairing the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as set forth on Schedule 6(i), neither the Company nor
any of its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person that
have not been satisfied in full.
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13
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(j) Execution
and Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
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(k) Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be determined with the provisions of the
Purchase Agreement.
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(l) Cumulative
Remedies. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.
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(m) Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.
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(n) Headings.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.
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(o) Independent
Nature of Holders’ Obligations and Rights. The obligations of each
Holder hereunder are several and not joint with the obligations of any other
Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as
an additional party in any proceeding for such purpose.
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(p) Termination.
This Agreement shall terminate with no further action by the parties if and at
such time that the Debentures are paid in full prior to December 19, 2006.
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*********************
14
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.
|
SILVERSTAR HOLDINGS, LTD.
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
|
[SIGNATURE PAGE OF
HOLDERS FOLLOWS]
15
[SIGNATURE PAGE OF
HOLDERS TO SSTR RRA]
Name of Holder: DKR Sound Shore Oasis Holding Fund Ltd.
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx Xxxxxx
Name of Authorized Signatory: Xxxxxxx Xxxxxx
Title of Authorized Signatory: Director
[SIGNATURE PAGES
CONTINUE]
16
Plan of Distribution
Each
Selling Stockholder (the “Selling Stockholders”) of the common stock
(“Common Stock”) of Silverstar Holdings, Ltd., a Bermuda corporation (the
“Company”) and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares of Common
Stock on the Trading Market or any other stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the following methods
when selling shares:
|
• |
|
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
|
• |
|
block
trades in which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the transaction; |
|
• |
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
• |
|
an
exchange distribution in accordance with the rules of the applicable exchange; |
|
• |
|
privately
negotiated transactions; |
|
• |
|
settlement
of short sales entered into after the effective date of the registration statement of
which this prospectus is a part; |
|
• |
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number of such shares at a
stipulated price per share; |
|
• |
|
a
combination of any such methods of sale; |
|
• |
|
through
the writing or settlement of options or other hedging transactions, whether through an
options exchange or otherwise; or |
|
• |
|
any
other method permitted pursuant to applicable law. |
The
Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933,
as amended (the “Securities Act”), if available, rather than under this
prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate
in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of a customary brokerage
commission in compliance with NASDR Rule 2440; and in the case of a principal transaction
a markup or markdown in compliance with NASDR IM-2440.
17
In
connection with the sale of the Common Stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the Common Stock in the course of
hedging the positions they assume. The Selling Stockholders may also sell shares of the
Common Stock short and deliver these securities to close out their short positions, or
loan or pledge the Common Stock to broker-dealers that in turn may sell these securities.
The Selling Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more derivative
securities which require the delivery to such broker-dealer or other financial institution
of shares offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
The
Selling Stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities
Act in connection with such sales. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act. Each
Selling Stockholder has informed the Company that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to distribute the
Common Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).
The
Company is required to pay certain fees and expenses incurred by the Company incident to
the registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements of the
Securities Act. In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than
under this prospectus. Each Selling Stockholder has advised us that they have not entered
into any written or oral agreements, understandings or arrangements with any underwriter
or broker-dealer regarding the sale of the resale shares. There is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale shares by
the Selling Stockholders.
We
agreed to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the Selling Stockholders without registration and without regard
to any volume limitations by reason of Rule 144(e) under the Securities Act or any other
rule of similar effect or (ii) all of the shares have been sold pursuant to the prospectus
or Rule 144 under the Securities Act or any other rule of similar effect. The resale
shares will be sold only through registered or licensed brokers or dealers if required
under applicable state securities laws. In addition, in certain states, the resale shares
may not be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is available and
is complied with.
18
Under
applicable rules and regulations under the Exchange Act, any person engaged in the
distribution of the resale shares may not simultaneously engage in market making
activities with respect to the Common Stock for the applicable restricted period, as
defined in Regulation M, prior to the commencement of the distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of the Common Stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling Stockholders and
have informed them of the need to deliver a copy of this prospectus to each purchaser at
or prior to the time of the sale.
19
Annex B
SILVERSTAR HOLDINGS,
LTD.
Selling Securityholder
Notice and Questionnaire
The
undersigned beneficial owner of common stock, par value $0.01 per share (the
“Common Stock”), of Silverstar Holdings, Ltd., a Bermuda corporation (the
“Company”), (the “Registrable Securities”) understands
that the Company has filed or intends to file with the Securities and Exchange Commission
(the “Commission”) a registration statement on Form S-3 (the
“Registration Statement”) for the registration and resale under Rule 415
of the Securities Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities, in accordance with the terms of the Registration Rights Agreement,
dated as of October 19, 2006 (the “Registration Rights Agreement”), among
the Company and the Purchasers named therein. A copy of the Registration Rights Agreement
is available from the Company upon request at the address set forth below. All capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in the
Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling securityholder in the Registration
Statement and the related prospectus. Accordingly, holders and beneficial owners of
Registrable Securities are advised to consult their own securities law counsel regarding
the consequences of being named or not being named as a selling securityholder in the
Registration Statement and the related prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling Securityholder”) of
Registrable Securities hereby elects to include the Registrable Securities owned by it and
listed below in Item 3 (unless otherwise specified under such Item 3) in the Registration
Statement.
20
The undersigned hereby provides the
following information to the Company and represents and warrants that such information is
accurate:
QUESTIONNAIRE
|
(a) |
|
Full
Legal Name of Selling Securityholder |
DKR Sound Shore Oasis Holding Fund Ltd.
|
(b) |
|
Full
Legal Name of Registered Holder (if not the same as (a) above) through which
Registrable Securities Listed in Item 3 below are held: |
|
(c) |
|
Full
Legal Name of Natural Control Person (which means a natural person who directly
or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire): |
see attached
2. |
|
Address
for Notices to Selling Securityholder: |
0000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Contact Person: Xxxxx X. Xxxxxx
3. |
|
Beneficial
Ownership of Registrable Securities: |
|
(a) |
|
Type
and Principal Amount of Registrable Securities beneficially owned: |
In addition to securities purchased hereby $3.6 million convertible
bond and 791, 139 warrants
21
|
(a) |
|
Are
you a broker-dealer? |
Yes
No
|
(b) |
|
If
“yes” to Section 4(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company. |
Yes
No
|
Note: |
|
If
no, the Commission's staff has indicated that you should be identified as an
underwriter in the Registration Statement. |
|
(c) |
|
Are
you an affiliate of a broker-dealer? |
Yes
No
|
(d) |
|
If
you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of
the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the
Registrable Securities? |
Yes
No
|
Note: |
|
If
no, the Commission's staff has indicated that you should be identified as an
underwriter in the Registration Statement. |
5. |
|
Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Securityholder. |
|
Except
as set forth below in this Item 5, the undersigned is not the beneficial or registered
owner of any securities of the Company other than the Registrable Securities
listed above in Item 3. |
|
(a) |
|
Type
and Amount of Other Securities beneficially owned by the Selling
Securityholder: |
22
6. |
|
Relationships
with the Company: |
|
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years. |
|
State
any exceptions here: |
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof at any time while
the Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items 1 through 6 and the inclusion of such information in the
Registration Statement and the related prospectus and any amendments or supplements
thereto. The undersigned understands that such information will be relied upon by the
Company in connection with the preparation or amendment of the Registration Statement and
the related prospectus.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized
agent.
|
|
Dated: 10/18/06 |
Beneficial Owner: DKR Sound Shore Oasis Holding Fund Ltd. |
|
By: /s/ Xxxxxxx Xxxxxx |
|
Name: Xxxxxxx Xxxxxx |
|
Title: Director |
PLEASE FAX A COPY OF THE COMPLETED
AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO: