EXHIBIT 4.1
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SUBSCRIPTION AGREEMENT
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Dear Subscriber:
Stonestreet Limited Partnership, a limited partnership formed under the
laws of Ontario, Canada (the "Subscriber") hereby agrees to purchase, and SBE,
Inc., a Delaware corporation (the "Company") hereby agrees to issue and to sell
to the Subscriber, 555,556 shares of the Company's $.001 par value common stock
(the "Company Shares") and common stock purchase warrants representing the right
to purchase 111,111 shares of the Company's $.001 par value common stock
("Warrants") for the aggregate consideration of $1,000,000.80 in the aggregate
("Purchase Price"). The form of Warrant is annexed hereto as EXHIBIT A. (The
Company Shares included in the Securities (as hereinafter defined) are sometimes
referred to herein as the "Shares", "Common Shares" or "Common Stock"). (The
Company Shares, Warrants, and the Common Stock issuable upon exercise of the
Warrants ("Warrant Shares") are collectively referred to herein as, the
"Securities"). Subject to the terms and conditions hereof and upon acceptance
of this agreement by the Subscriber, at the Closing Date, the Company shall
issue, sell and deliver the Company Shares and Warrants against payment, by
Subscriber of the Purchase Price, federal funds wire transfer of immediately
available funds.
The following terms and conditions shall apply to this subscription.
1. Subscriber's Representations and Warranties. The Subscriber hereby
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represents and warrants to and agrees with the Company that:
(a) Information on Company. The Subscriber has been furnished with
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the Company's Form 10-K for the year ended October 31, 2001 as filed with the
Securities and Exchange Commission (the "Commission") together with all
subsequently filed forms 10-Q and other publicly available filings made with the
Commission (hereinafter collectively referred to as the "Reports"). In
addition, the Subscriber has received from the Company such other information
concerning its operations, financial condition and other matters as the
Subscriber has requested (such information in writing annexed hereto is and
collectively referred to as the "Other Written Information"), and considered all
factors the Subscriber deems material in deciding on the advisability of
investing in the Securities.
(b) Information on Subscriber. The Subscriber is an "accredited
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investor", as such term is defined in Regulation D promulgated by the Commission
under the Securities Act of 1933, as amended (the "1933 Act"), is experienced in
investments and business matters, has made investments of a speculative nature
and has purchased securities of United States publicly-owned companies in
private placements in the past and, with its representatives, has such knowledge
and experience in financial, tax and other business matters as to enable the
Subscriber to utilize the information made available by the Company to evaluate
the merits and risks of and to make an informed investment decision with respect
to the proposed purchase, which represents a speculative investment. The
Subscriber has all necessary power and the authority under all applicable
provisions of law to execute and deliver this Agreement and the Escrow Agreement
referred to in Section 5 of this Agreement and to carry out their provisions and
is duly and legally qualified to purchase and own the Securities. Assuming due
execution and delivery by the other parties thereto, this Agreement and the
Escrow Agreement will be, valid and binding obligations of Subscriber,
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance reorganization, moratorium and similar laws
affecting client's rights and remedies generally. The Subscriber is able to
bear the risk of such investment for an indefinite period and to afford a
complete loss thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate.
(c) Purchase of Company Shares and Warrants. On the Closing Date, the
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Subscriber will purchase the Company Shares and Warrants for its own account and
not with a view to any distribution thereof.
(d) Compliance with Securities Act. The Subscriber understands and
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agrees that the Securities have not been registered under the 1933 Act, by
reason of their issuance in a transaction that does not require registration
under the 1933 Act (based in part on the accuracy of the representations and
warranties of Subscriber contained herein), and that such Securities must be
held indefinitely unless a subsequent disposition is registered under the 1933
Act or is exempt from such registration. Subscriber acknowledges and agrees
that the Common Shares, Warrant, and if issued, the Warrant Shares, are subject
to restrictions on transfer as set forth in this Agreement and the Warrant.
(e) Company Shares Legend. The Company Shares, and the Warrant Shares,
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shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO SBE, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
(f) Warrants Legend. The Warrants shall bear the following legend:
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"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THIS WARRANT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SBE, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
(g) Communication of Offer. The offer to sell the Securities was
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directly communicated to the Subscriber. At no time was the Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.
(h) Correctness of Representations. The Subscriber represents that the
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foregoing representations and warranties are true and correct as of the date
hereof and, unless the Subscriber otherwise notifies the Company prior to the
Closing Date (as hereinafter defined), shall be true and correct as of the
Closing Date. The foregoing representations and warranties shall survive the
Closing Date.
2. Company Representations and Warranties. The Company represents and
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warrants to and agrees with the Subscriber that, except as set forth (i) in the
Company's disclosure Schedule delivered to Subscriber contemporaneously with
this Agreement ("Other Written Information") or (ii) the Reports, the statement
confirmed in the following paragraphs of the Section 2 are true and correct:
(a) Due Incorporation. The Company is a corporation duly organized,
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validly existing and in good standing under the laws of the respective
jurisdictions of their incorporation and have the requisite corporate power to
own their properties and to carry on their business as now being conducted. The
Company and each of its subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction where the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those jurisdictions in which the failure to so qualify
would not have a material adverse effect on the business, operations or
financial condition of the Company ("Material Adverse Effect").
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(b) Outstanding Stock. All issued and outstanding shares of capital
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stock of the Company and each of its subsidiaries has been duly authorized and
validly issued and are fully paid and non-assessable.
(c) Authority; Enforceability. This Agreement, the Escrow Agreement,
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the Warrant and other agreements delivered together with this Agreement or in
connection herewith (collectively "Transaction Documents") have been duly
authorized, executed and delivered by the Company and are valid and binding
agreements enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights generally and
to general principles of equity; and the Company has full corporate power and
authority necessary to enter into the Transaction Documents and to perform its
obligations hereunder and under all other agreements entered into by the Company
relating hereto.
(d) Additional Issuances. There are no outstanding agreements or
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preemptive or similar rights affecting the Company's common stock or equity and
no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or understandings with
respect to the sale or issuance of any shares of common stock or equity of the
Company or other equity interest in any of the subsidiaries of the Company.
(e) Consents. No consent, approval, authorization or order of any
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court, governmental agency or body or arbitrator having jurisdiction over the
Company, or any of its affiliates, the National Association of Securities
Dealers, Inc. ("NASD"), NASDAQ, or the Company's Stockholders is required for
execution of the Transaction Documents, including, without limitation the
issuance and sale of the Securities, and the performance of the Company's
obligations hereunder and thereunder.
(f) No Violation or Conflict. Assuming the representations and
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warranties of the Subscriber in Paragraph 1 are true and correct and the
Subscriber complies with its obligations under this Agreement, neither the
issuance and sale of the Securities nor the performance of the Company's
obligations under this Agreement and all other agreements entered into by the
Company relating thereto by the Company will:
(i) violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse of time
or both would be reasonably likely to constitute a default) under (A) the
certificate of incorporation, charter or bylaws of the Company, (B) to the
Company's knowledge, any decree, judgment, order, law, treaty, rule,
regulation or determination applicable to the Company of any court,
governmental agency or body, or arbitrator having jurisdiction over the
Company or any of its affiliates or over the properties or assets of the
Company or any of its affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option
or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its affiliates is a party, by
which the Company or any of its affiliates is bound, or to which any of the
properties of the Company or any of its affiliates is subject, or (D) the
terms of any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company, or any of its affiliates is a party except
the violation, conflict, breach, or default of which would not have a
Material Adverse Effect on the Company; or
(ii) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company, its
subsidiaries or any of its affiliates.
(g) The Securities. The Securities, when issued against payment in
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compliance with the provisions of this Agreement or the Warrant, as the case may
be,
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(i) will be, free and clear of any security interests, liens, claims
or other encumbrances, subject to restrictions upon transfer under the 1933
Act and State laws;
(ii) will be, duly and validly authorized, duly and validly issued,
fully paid and nonassessable (and if registered pursuant to the 1933 Act,
and resold pursuant to an effective registration statement will be free
trading and unrestricted, provided that the Subscriber complies with the
Prospectus delivery requirements); and
(iii) will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the Company;
and will not subject the holders thereof to personal liability by reason of
being such holders.
(h) Litigation. There is no pending or, to the best knowledge of
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the Company, threatened action, suit, proceeding or investigation before any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company, or any of its affiliates that would affect the execution by the Company
or the performance by the Company of its obligations under the Transaction
Documents. There is no pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its affiliates which litigation if adversely determined would have a
Material Adverse Effect.
(i) Reporting Company. The Company is a publicly-held company
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subject to reporting obligations pursuant to Sections 15(d) and 13 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and its common
stock is registered pursuant to Section 12(g) of the 1934 Act. The Company's
common stock is listed for trading on the Nasdaq National Market System ("NMS").
Pursuant to the provisions of the 1934 Act, the Company has timely filed all
reports and other materials required to be filed by it with the Securities and
Exchange Commission during the preceding twelve months.
(j) No Market Manipulation. The Company has not taken, and will
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not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of its Common Stock to facilitate the sale or resale of the Securities
or affect the price at which the Securities may be issued or resold.
(k) Reports. Since the date of the financial statements included
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in the Reports, there has been no material adverse change in the Company's
business, financial condition or affairs not disclosed in the Reports. The
Reports do not contain any untrue statement of a material fact required to be
stated therein or necessary to make the statements therein not misleading.
(l) Stop Transfer. The Securities are restricted securities as of
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the date of this Agreement. The Company will not issue any stop transfer order
or other order impeding the sale, resale or delivery of the Securities, except
as may be required by federal securities laws.
(m) Defaults. The Company is not in violation of its Certificate
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of Incorporation or ByLaws. The Company is (i) not in default under or in
violation of any other material agreement or instrument to which it is a party
or by which it or any of its properties are bound or affected, which default or
violation would have a material adverse effect on the Company, (ii) not in
default with respect to any order of any court, arbitrator or governmental body
or subject to or party to any order of any court or governmental authority
arising out of any action, suit or proceeding under any statute or other law
respecting antitrust, monopoly, restraint of trade, unfair competition or
similar matters, or (iii) to its knowledge in violation of any statute, rule or
regulation of any governmental authority which violation would have a Material
Adverse Effect.
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(n) No Integrated Offering. Neither the Company, nor any of its
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affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offer of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the NMS, nor will the Company or any of its affiliates or subsidiaries take any
action or steps that would cause the offer of the Securities to be integrated
with other offerings. The Company has not conducted and will not conduct any
offering other than the transactions contemplated hereby that will be integrated
with the offer or issuance of the Securities.
(o) No General Solicitation. Neither the Company, nor any of its
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affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 1933 Act) in connection with the offer or sale
of the Securities.
(p) Listing. The Company's common stock is quoted on, and listed
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for trading on the NMS. The Company has not received any oral or written notice
that its Common Stock will be delisted from the NMS nor that its common stock
does not meet all requirements for the continuation of such listing. Upon
Closing and receipt of the proceeds of the Purchase Price, the Company will meet
the continued listing requirements of the Nasdaq SmallCap Market.
(q) No Undisclosed Liabilities. The Company has no liabilities or
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obligations which are material, individually or in the aggregate, which are not
disclosed in the Reports, other than those incurred in the ordinary course of
the Company's businesses since October 31, 2001 and which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(r) No Undisclosed Events or Circumstances. Since October 31,
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2001, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports.
(s) Capitalization. The authorized and outstanding capital
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stock of the Company immediately prior to the Closing Date consists of (i)
10,000,000 shares of Common Stock, 3,546,141 shares of which are issued and
outstanding, and (ii) 2,000,000 shares of Preferred Stock, none of which are
issued and outstanding. Except as set forth in the Reports and Other Written
Information, there are no options, warrants, or rights to subscribe to,
securities, rights or obligations convertible into or exchangeable for or giving
any right to subscribe for any shares of capital stock of the Company. All of
the outstanding shares of common stock of the Company have been duly and validly
authorized and issued and are fully paid and nonassessable.
(t) S-3 Eligibility. The Company currently meets, and will
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use its best efforts to take all necessary action to continue to meet, the
"registrant requirements" set forth in the general instruction 1A to Form S-3.
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(u) Correctness of Representations. The Company
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represents that the foregoing representations and warranties are true and
correct as of the date hereof in all material respects, will be true and correct
as of the Closing Date in all material respects, and, unless the Company
otherwise notifies the Subscriber prior to the Closing Date, shall be true and
correct in all material respects as of the Closing Date. The foregoing
representations and warranties shall survive the Closing Date for a period of
three years.
3. Regulation D Offering. This Offering is being made pursuant to the
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exemption from the registration provisions of the Securities Act of 1933, as
amended, afforded by Rule 506 of Regulation D promulgated thereunder. On the
Closing Date, the Company will provide an opinion reasonably acceptable to
Subscriber from the Company's legal counsel opining on the availability of the
Regulation D exemption as it relates to the offer and issuance of the
Securities. A form of the legal opinion is annexed hereto as EXHIBIT B. The
Company will provide, at the Company's expense, such other legal opinions in the
future as are reasonably necessary for the exercise of the Warrants.
4. Reissuance of Securities. The Company agrees to promptly reissue
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certificates representing the Securities without the legends set forth in
Sections 1(e) and 1(f) above at such time as (a) the holder thereof is permitted
to and disposes of such Securities pursuant to Rule 144(d) and/or Rule 144(k)
under the 1933 Act in the opinion of counsel reasonably satisfactory to the
Company, or (b) upon resale subject to an effective registration statement after
the Securities are registered under the 1933 Act and compliance with applicable
prospectus delivery requirements. The Company agrees to cooperate with the
Subscriber in connection with all resales pursuant to Rule 144(d) and Rule
144(k) and provide legal opinions necessary to allow such resales provided the
Company and its counsel receive reasonably requested written representations
from the Subscriber and selling broker, if reasonably appropriate. Provided
the Subscriber provides required certifications and representation letters, if
any, if the Company fails to remove any legend as required by this Section 4 (a
"Legend Removal Failure"), then beginning on the tenth (10th) day following the
date that the Subscriber has requested the removal of the legend and delivered
all items reasonably required by the Company to be delivered by the Subscriber,
the Company continues to fail to remove such legend, and deliver reissued
unlegended common stock certificates, except due to causes beyond the control of
the Company and its agents, the Company shall pay to each Subscriber or assignee
holding shares subject to a Legend Removal Failure an amount equal to one
percent (1%) of the Purchase Price of the shares subject to a Legend Removal
Failure per day that such failure continues. If during any twelve (12) month
period, the Company fails to remove any legend except due to causes beyond the
control of the Company and its agents as required by this Section 4 or fails to
deliver reissued unlegended common stock certificates for an aggregate of thirty
(30) days, each Subscriber or assignee holding Securities subject to a Legend
Removal Failure may, at its option, require the Company to purchase all or any
portion of the Securities subject to a Legend Removal Failure held by such
Subscriber or assignee at a price per share equal to 110% of the applicable
Purchase Price.
5. Finder's Fee/Legal Fee.
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(a) Finder. The Company agrees that it will pay the finder's fee
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due to Vintage Partners, LLC ("Finder") ("Finder's Fee"). The Company on the
one hand, and the Subscriber on the other hand, agree to indemnify the other
against and hold the other harmless from any and all liabilities to any other
persons claiming brokerage commissions or finder's fees other than the Finder on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby and arising out of such party's actions. The Company
represents that there are no other parties entitled to receive fees,
commissions, or similar payments in connection with the offering described in
the Subscription Agreement.
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(b) Legal Fee. The Company shall pay to Grushko & Mittman, P.C.,
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counsel to the Subscriber a fee of $25,000 ("Legal Fees") as reimbursement for
services rendered to Subscriber in connection with this Agreement and the
purchase and sale of the Securities (the "Offering") and acting as escrow agent
for the Offering. The Legal Fees will be payable out of funds held pursuant to
a funds escrow agreement ("Escrow Agreement") to be entered into by the Company,
Subscriber and Escrow Agent in connection with the Offering.
6. Covenants of the Company. The Company covenants and agrees with the
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Subscriber as follows:
(a) The Company will advise the Subscriber, promptly after it
receives notice of issuance by the Securities and Exchange Commission, any state
securities commission or any other regulatory authority of any stop order or of
any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.
(b) The Company shall promptly secure the listing of the Company
Shares, and Warrant Shares upon each national securities exchange, or automated
quotation system, if any, upon which shares of common stock are then listed
(subject to official notice of issuance) and shall use its reasonable best
efforts to maintain such listing so long as any such Company Shares or Warrant
Shares have not been transferred or sold by the Subscriber without further
restrictions on transfer. The Company will take all actions within its control
to comply in all material respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the National Association of
Securities Dealers ("NASD") in order to maintain its listing on the NMS or if
unable to comply with the requirements for the NMS to obtain and maintain a
listing of the Company Shares on the Nasdaq SmallCap Market ("SmallCap").
Subject to the execution of a confidentiality agreement, the Company will
provide the Subscriber copies of all notices it receives notifying the Company
of the threatened and actual delisting of the common stock from the NMS or
SmallCap.
(c) The Company shall notify the Commission, NASD, the Principal
Market and applicable state and United States authorities, in accordance with
their requirements, if any, of the transactions contemplated by this Agreement,
and shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscriber and promptly provide copies thereof
to Subscriber.
(d) From the Closing Date and until at least two (2) years after
the effectiveness of the Registration Statement on Form S-3 or such other
Registration Statement described in Section 10.1(iv) hereof, the Company will
(i) cause its common stock to continue to be registered under Section 12(g) of
the Exchange Act, (ii) comply in all material respects with its reporting and
filing obligations under the Exchange Act, (iii) comply in all material respects
with all reporting requirements that are applicable to an issuer with a class of
common stock registered pursuant to Section 12(g) of the Exchange Act, and (iv)
comply in all material respects with all material requirements related to any
registration statement filed pursuant to this Agreement. The Company will use
its best efforts not to take any action or file any document (whether or not
permitted by the 1933 Act or the Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said Acts until the later of two (2) years after
the actual effective date of the Registration Statement on Form S-3 or such
other Registration Statement described in Section 10.1(iv) hereof. Until the
earlier of the resale of the Company Shares by the Subscriber or at least two
(2) years after the Warrants have been exercised, the Company will use its best
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efforts to continue the listing of the common stock on the NMS or obtain and
maintain a listing of the common stock on the NMS or SmallCap, and will comply
in all material respects with the Company's material reporting, filing and other
obligations under the bylaws or rules of the NMS or SmallCap, as the case may
be.
(e) The Company undertakes to use the proceeds of the Subscriber's
funds for working capital. The Purchase Price may not and will not be used for
accrued and unpaid officer and director salaries, payment of financing related
debt, redemption of outstanding redeemable notes or equity instruments of the
Company nor non-trade obligations outstanding on the Closing Date.
(f) The Company undertakes to reserve, on behalf of each holder of
Company Shares and Warrant, at all times a sufficient number of shares of Common
Stock to be issued upon exercise of the Warrant.
7. Covenants of the Company and Subscriber Regarding Indemnification
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(a) The Company agrees to indemnify, hold harmless, reimburse and
defend Subscriber, Subscriber's officers, directors, agents, affiliates, control
persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon Subscriber or any such person which results
or arises out of breach of any warranty by Company in this Agreement or the
Transaction Documents; or (ii) after any applicable notice and/or cure periods,
any breach or default in performance by the Company of any covenant or
undertaking to be performed by the Company hereunder, or any other agreement
entered into by the Company and Subscribers relating hereto.
(b) Subscriber agrees to indemnify, hold harmless, reimburse and
defend the Company and each of the Company's officers, directors, agents,
affiliates, control persons against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company or any such person which results or
arises out of (i) any breach of any warranty made by Subscriber in this
Agreement or in the Transaction Documents; or (ii) after any applicable notice
and/or cure periods, any breach or default in performance by Subscriber of any
covenant or undertaking to be performed by Subscriber hereunder, or any other
agreement entered into by the Company and Subscribers relating hereto.
(c) The procedures set forth in Section 8.6 shall apply to the
indemnifications set forth in Sections 7(a) and 7(b) above.
8.1. Registration Rights. The Company hereby grants the following
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registration rights to holders of the Securities.
(i) On one occasion, for a period commencing 60 days
after the Closing Date, but not later than three years after the Closing Date
("Request Date"), the Company, upon a written request therefor from any record
holder or holders of more than 50% of the Company Shares (the Company Shares,
and one share of common stock for each share of common stock issued or issuable
upon exercise of the Warrants, collectively the "Registrable Securities"), shall
prepare and file with the Commission a registration statement under the 1933 Act
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covering the Registrable Securities which are the subject of such request,
unless such Registrable Securities are the subject of an effective registration
statement or included for registration in a pending registration statement. In
addition, upon the receipt of such request, the Company shall promptly give
written notice to all other record holders of the Registrable Securities that
such registration statement is to be filed and shall include in such
registration statement Registrable Securities for which it has received written
requests within 10 days after the Company gives such written notice. Such other
requesting record holders shall be deemed to have exercised their demand
registration right under this Section 8.1(i). As a condition precedent to the
inclusion of Registrable Securities, the holder thereof shall provide the
Company with such information as the Company reasonably requests. The
obligation of the Company under this Section 8.1(i) shall be limited to one
registration statement.
(ii) If the Company at any time proposes to register any
of its securities under the 1933 Act for sale to the public, whether for its own
account or for the account of other security holders or both, except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Registrable Securities for sale to the public,
provided the Registrable Securities are not otherwise registered for resale by
the Subscriber or Holder pursuant to an effective registration statement, each
such time it will give at least 25 days' prior written notice to the record
holder of the Registrable Securities of its intention so to do. Upon the written
request of the holder, received by the Company within 15 days after the giving
of any such notice by the Company, to register any of the Registrable
Securities, the Company will cause such Registrable Securities as to which
registration shall have been so requested to be included with the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent required to permit the sale or other disposition of the
Registrable Securities so registered by the holder of such Registrable
Securities (the "Seller"). In the event that any registration pursuant to this
Section 8.1(ii) shall be, in whole or in part, an underwritten public offering
of common stock of the Company, the number of shares of Registrable Securities
to be included in such an underwriting may be reduced by the managing
underwriter if and to the extent that the Company and the underwriter shall
reasonably be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold by the Company therein; provided,
however, that the Company shall notify the Seller in writing of any such
reduction. Notwithstanding the foregoing provisions, or Section 8.4 hereof, the
Company may withdraw or delay or suffer a delay of any registration statement
referred to in this Section 8.1(ii) without thereby incurring any liability to
the Seller.
(iii) Reserved.
(iv) The Company shall file with the Commission not later
than thirty-five (35) days after the Closing Date (the "Filing Date"), and use
its reasonable commercial efforts to cause to be declared effective within sixty
(60) days after the Closing Date assuming that the Company has been notified by
the SEC that the Registration Statement will not be reviewed (or 120 days after
the Closing Date in the event the SEC reviews the registration Statement) (the
"Effective Date"), a Form S-3 registration statement (the "Registration
Statement") (or such other form that it is eligible to use) in order to register
the Registrable Securities for resale and distribution under the 1933 Act. The
Company will register not less than a number of shares of common stock in the
aforedescribed registration statement that is equal to the number of Company
Shares and one share of common stock for each of the common shares issuable upon
exercise of the Warrants. The Registrable Securities shall be reserved and set
aside exclusively for the benefit of the Subscriber, and not issued, employed or
reserved for anyone other than the Subscriber. Such registration statement will
immediately be amended or additional registration statements will be immediately
filed by the Company as necessary to register additional Company Shares to allow
the public resale of all Common Stock included in and issuable by virtue of the
Registrable Securities. No securities of the Company other than the Registrable
Securities will be included in the registration statement described in this
10
Section 8.1(iv) or in any other registration prior to the actual effective date
of the registration statement described in this Section 8.1(iv) except as
disclosed in the Other Written Information, without the written consent of the
Subscriber, which consent will not be unreasonably withheld.
8.2. Registration Procedures. If and whenever the Company is required
------------------------
by the provisions hereof to effect the registration of any shares of Registrable
Securities under the 1933 Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
required by Section 8.1, with respect to such securities and use its best
efforts to cause such registration statement to become and remain effective for
the period of the distribution contemplated thereby (determined as herein
provided), and promptly provide to the holders of Registrable Securities
("Sellers") copies of all filings and Commission letters of comment;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the latest of: (i) until six months after all the Company Shares are
eligible for resale pursuant to Rule 144(k) of the 1933 Act; or (ii) until such
registration statement has been effective for a period of not less than 365
days, and comply with the provisions of the 1933 Act with respect to the
disposition of all of the Registrable Securities covered by such registration
statement in accordance with the Seller's intended method of disposition set
forth in such registration statement for such period;
(c) furnish to the Seller, such number of copies of the registration
statement and the prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to facilitate the
public sale or their disposition of the securities covered by such registration
statement;
(d) use its best efforts to register or qualify the Seller's
Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Seller, provided,
however, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;
(e) list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed;
(f) immediately notify the Seller when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of any
event of which the Company has knowledge as a result of which the prospectus
contained in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(g) provided same would not be in violation of the provision of
Regulation FD under the 1934 Act, make available for inspection by the Seller,
and any attorney, accountant or other agent retained by the Seller or
underwriter, all publicly available, non-confidential financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the seller,
attorney, accountant or agent in connection with such registration statement.
11
8.3. Provision of Documents. In connection with each registration
------------------------
described in this Section 8, the Seller will furnish to the Company in writing
such information and representation letters with respect to itself and the
proposed distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws. In connection
with each registration pursuant to Section 8.1(i) or 8.1(ii) covering an
underwritten public offering, the Company and the Seller agree to enter into a
written agreement with the managing underwriter in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature.
8.4. Non-Registration Events. The Company and the Subscriber
------------------------
agree that the Seller will suffer damages if any registration statement required
under Section 8.1(i) or 8.1(ii) above is not filed within 60 days after written
request by the Holder and not declared effective by the Commission within 120
days after such request [or the Filing Date and Effective Date, respectively, in
reference to the Registration Statement on Form S-3 or such other form described
in Section 8.1(iv)], and maintained in the manner and within the time periods
contemplated by Section 8 hereof, and it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, if (i) the Registration
Statement described in Sections 8.1(i) or 8.1(ii) is not filed within 60 days of
such written request, or is not declared effective by the Commission on or prior
to the date that is 120 days after such request, or (ii) the registration
statement on Form S-3 or such other form described in Section 8.1(iv) is not
filed on or before the Filing Date or not declared effective on or before the
sooner of the Effective Date, or within ten (10) business days of receipt by the
Company of a written or oral communication from the Commission that the
registration statement described in Section 8.1(iv) will not be reviewed, or
(iii) any registration statement described in Sections 8.1(i), 8.1(ii) or
8.1(iv) is filed and declared effective but shall thereafter cease to be
effective (without being succeeded immediately by an additional registration
statement filed and declared effective) for a period of time which shall exceed
30 days in the aggregate per year or more than 20 consecutive calendar days
(defined as a period of 365 days commencing on the date the Registration
Statement is declared effective) (each such event referred to in clauses (i),
(ii) and (iii) of this Section 8.4 is referred to herein as a "Non-Registration
Event"), then, for so long as such Non-Registration Event shall continue, the
Company shall pay in cash as Liquidated Damages to each holder of any
Registrable Securities an amount equal to one (1%) percent for the first thirty
(30) days or part thereof and two (2%) percent per month for each month or part
thereof thereafter, up to a maximum of twenty percent (20%) per year, in the
aggregate, during the pendency of such Non-Registration Event, of the Purchase
Price for the Registrable Securities owned of record by such holder as of or
subsequent to the occurrence of such Non-Registration Event. Payments to be
made pursuant to this Section 8.4 shall be due and payable within ten (10)
business days after demand in immediately available funds.
8.5. Expenses. All expenses incurred by the Company in
--------
complying with Section 8, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and costs
of insurance are called "Registration Expenses". All underwriting discounts and
selling commissions applicable to the sale of Registrable Securities, including
any fees and disbursements of any special counsel to the Seller, are called
"Selling Expenses". The Seller shall pay the fees of its own additional counsel,
if any. The Company will pay all Registration Expenses in connection with the
12
registration statement under Section 8. All Selling Expenses in connection with
each registration statement under Section 8 shall be borne by the Seller and may
be apportioned among the Sellers in proportion to the number of shares sold by
the Seller relative to the number of shares sold under such registration
statement or as all Sellers thereunder may agree.
8.6. Indemnification and Contribution.
----------------------------------
(a) In the event of a registration of any Registrable
Securities under the 1933 Act pursuant to Section 8, the Company will, to the
extent permitted by law, indemnify and hold harmless the Seller, each officer of
the Seller, each director of the Seller, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 8, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions of
Section 8.1(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Seller to the extent that any such damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller, or
any such controlling person in writing specifically for use in such registration
statement or prospectus.
(b) In the event of a registration of any of the Registrable
Securities under the 1933 Act pursuant to Section 8, the Seller will, to the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter
within the meaning of the 1933 Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Securities were registered under the 1933 Act
pursuant to Section 8, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished in
writing to the Company by such Seller specifically for use in such registration
statement or prospectus, and provided, further, however, that the liability of
the Seller hereunder shall be limited to the gross proceeds received by the
Seller from the sale of Registrable Securities covered by such registration
statement. 13
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 8.6(c) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 8.6(c), except and only if and to the extent the indemnifying party
is prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 8.6(c) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties shall have the right to select one separate
counsel and to assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(d) In order to provide for just and equitable contribution
in the event of joint liability under the 1933 Act in any case in which either
(i) the Seller, or any controlling person of the Seller, makes a claim for
indemnification pursuant to this Section 8.6 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 8.6 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
provided under this Section 8.6; then, and in each such case, the Company and
the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities offered by it
pursuant to such registration statement; and (z) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the 1933
Act) will be entitled to contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.
8.7. Delivery of Unlegended Shares.
--------------------------------
14
(a) Within three (3) business days (such third business day,
the "Delivery Date") after the business day on which the Company has received a
notice that Company Shares have been sold including a representation that the
prospectus delivery requirements, if applicable, have been satisfied (by
facsimile or other delivery) and the original Company Share certificate, the
Company at its expense, (i) shall deliver, and shall cause legal counsel
selected by the Company to deliver, to its transfer agent (with copies to
Subscriber) an appropriate instruction and opinion of such counsel, for the
delivery of unlegended Company Shares issuable pursuant to any effective and
current registration statement described in Section 8 of this Agreement (the
"Unlegended Shares"); and (ii) transmit the certificates representing the
Unlegended Shares, with a certificate representing the balance of the unsold
Company Shares to the Subscriber at the address specified in the notice of sale,
via express courier, by electronic transfer or otherwise on or before the
Delivery Date.
(b) In lieu of delivering physical certificates representing
the Unlegended Shares, if the Company's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer program,
upon request of the Subscriber and its compliance with the provisions contained
in this paragraph, so long as the certificates therefore do not bear a legend
and the Subscriber is not obligated to return such certificate for the placement
of a legend thereon, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Unlegended Shares by crediting the
account of Subscriber's prime Broker with DTC through its Deposit Withdrawal
Agent Commission system.
(c) The Company understands that a delay in the delivery of
the Unlegended Shares pursuant to Section 8 hereof beyond the Delivery Date
could result in economic loss to the Subscriber. As compensation to the
Subscriber for such loss, the Company agrees to pay late payments to the
Subscriber for late delivery of Unlegended Shares in the amount of $100 per
business day after the Delivery Date for each $10,000 of Purchase Price of the
Company Shares delivered to the Company for reissuance as Unlegended Shares. The
Company shall pay any payments incurred under this Section in immediately
available funds upon demand.
(d) In addition to any other rights available to the
Subscriber, if the Company fails to deliver to the Subscriber Unlegended Shares
within ten (10) calendar days after the Delivery Date and the Subscriber
purchases (in an open market transaction or otherwise) shares of common stock to
deliver in satisfaction of a sale by such Subscriber of the Company Shares which
the Subscriber anticipated receiving from the Company (a "Buy-In"), then the
Company shall pay in cash to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) the
Subscriber's total purchase price (including brokerage commissions, if any) for
the shares of common stock so purchased exceeds (B) the aggregate Purchase Price
of the Company Shares delivered to the Company for reissuance as Unlegended
Shares, together with interest thereon at a rate of 15% per annum, accruing
until such amount and any accrued interest thereon is paid in full (which amount
shall be paid as liquidated damages and not as a penalty). For example, if the
Subscriber purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to $10,000 of Purchase Price of Company
Shares delivered to the Company for reissuance as Unlegended Shares, the Company
shall be required to pay the Subscriber $1,000, plus interest. The Subscriber
shall provide the Company written notice indicating the amounts payable to the
Subscriber in respect of the Buy-In.
9. Miscellaneous.
-------------
(a) Notices. All notices, demands, requests, consents,
-------
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
15
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to SBE, Inc., 2305 Camino
Ramon, Suite 200, San Ramon, CA 94583, telecopier number: (925) 355-2041, with a
copy by telecopier only to: Cooley Godward LLP, One Maritime Plaza, 20th Floor,
San Francisco, CA 94111, Attn: Chris Westover, Esq., telecopier number: (415)
951-3699, and (ii) if to the Subscriber, to the name, address and telecopy
number set forth on the signature page hereto, with a copy by telecopier only to
Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
telecopier number: (212) 697-3575.
(b) Closing. The consummation of the transactions contemplated herein
-------
shall take place at the offices of Grushko & Mittman, P.C., 551 Fifth Avenue,
Suite 1601, New York, New York 10176, upon the satisfaction of all conditions to
Closing set forth in this Agreement. The closing date shall be the date that
subscriber funds representing the net amount due the Company from the Purchase
Price of the Offering is transmitted by wire transfer or otherwise to the
Company (the "Closing Date").
(c) Entire Agreement; Assignment. This Agreement and other Transaction
-----------------------------
Documents represent the entire agreement between the parties hereto with respect
to the subject matter hereof and may be amended only by a writing executed by
both parties. No right or obligation of either party shall be assigned by that
party without prior notice to and the written consent of the other party.
(d) Execution. This Agreement may be executed by facsimile
---------
transmission, and in counterparts, each of which will be deemed an original.
(e) Law Governing this Agreement. This Agreement shall be governed by
-----------------------------
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York or in the federal courts
located in the state of New York. Both parties and the individuals executing
this Agreement and other agreements on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
16
(f) Specific Enforcement, Consent to Jurisdiction. The Company and
-------------------------------------------------
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 9(e) hereof, each of the Company and Subscriber
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Nothing in this
Section shall affect or limit any right to serve process in any other manner
permitted by law.
(g) Confidentiality. The Company agrees that it will not disclose
---------------
publicly or privately the identity of the Subscriber unless expressly agreed
to in writing by the Subscriber or only to the extent required by law.
(h) Automatic Termination. This Agreement shall automatically
----------------------
terminate without any further action of either party hereto if the Closing shall
not have occurred by the tenth (10th) business day following the date this
Agreement is accepted by the Subscriber.
[THIS SPACE INTENTIONALLY LEFT BLANK]
17
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
SBE, INC.
A Delaware Corporation
By:/s/ William B. Heye
------------------------
Name: William B. Heye
Title: President and CEO
Dated: April 30, 2002
ACCEPTED: Dated as of April 30, 2002
STONESTREET LIMITED PARTNERSHIP - Subscriber
C/o Canaccord Capital Corporation
320 Bay Street, Suite 1300
Toronto, ON M5H 4A6, Canada
Fax: 416-956-8989
By: /s/ E.A. Leonard
------------------
Director
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LIST OF EXHIBITS
----------------
Exhibit A Form of Warrant
Exhibit B Form of Legal Opinion
19