SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
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REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1993
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SILVER STAR FOODS, INC.
(Name of Small Business Issuer in its Charter)
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NEW YORK 5140 11-3265942
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification #)
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7520 Avenue V
Brooklyn, New York 11234
Telephone: (718) 763-3000
Facsimile: (718) 763-6004
(Address and Telephone Number of Principal
Executive Offices and Principal Place of Business)
MICHAEL TROTTA
CHIEF EXECUTIVE OFFICER AND PRESIDENT
(Name, Address and Telephone Number of Agent for Service)
7520 Avenue V
Brooklyn, New York 11234
Telephone: (718) 763-3000
Facsimile: (718) 763-6004
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Copies to:
Richard I. Anslow, Esq. Leon B. Lipkin, Esq.
Richard I. Anslow & Associaes Gerardo Lapetina,
Freehold Office Plaza Two Grand Central Tower
4255 Route 9, Suite D 140 East 45th Street
Freehold, New Jersey 07728 New York, New York
10017
Telephone: (732) 409-1212 Telephone: (212) 986-6850
Facsimile: (732) 577-1188 Facsimile: (212) 986-6852
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes
effective.
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If this Form is filed to register additional securities for an
offering pursuant to Rule 462 (b) under the Securities of Act, check
the following box and list the Securities Act registration statement
number earlier effective registration statement for the same offering.
/ /
If this Form is a post-effective amendment filed pursuant to Rule 462
(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM OFFERING MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE PRICE PER AGGREGATE
OF SECURITIES TO BE REGISTERED SECURITY (1) OFFERING
REGISTERED PRICE
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Common Stock, par
value $0.0001 per 1,150,000 $5.25 $6,037,500
share (2)
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Redeemable Common
Stock Purchase A 2,300,000 $ .25 $ 575,000
Warrants (3)
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Common Stock, par
value $0.0001 per share
(4) (5) 2,300,000 $6.00 $13,800,000
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Total
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(1) Estimated solely for purposes of computation of the
registration fee pursuant to Rule 457.
(2) Includes 150,000 shares of Common Stock issuable upon exercise
of the Underwriters' over-allotment option.
(3) Includes 300,000 Redeemable Common Stock Purchase A Warrants
("Warrants") issuable upon exercise of the Underwriters' over-
allotment option.
(4) Represents shares of Common Stock issuable upon exercise of
the Warrants.
(5) Pursuant to Rule 416, there are also being registered such
additional securities as may become issuable pursuant to the anti-
dilution provisions of the Warrants.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
A DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1993 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A), MAY
DETERMINE.
SILVER STAR FOODS, INC.
CROSS REFERENCE SHEET
Showing Location in Prospectus of Part I Items of Form SB-2
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Item Number and Heading Location in Prospectus
in Form SB-2 Registration Statement
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1. Front of Registration Statement and
Outside Front Cover Page of Prospectus..... ....Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus.............................Inside Front Cover Page; Outside B
3. Summary Information and Risk Factors............Prospectus
Summary; Risk Factors
4. Use of Proceeds.................................Prospectus
Summary; Use of Proceeds.
5. Determination of Offering Price.................Outside Front
Cover Page;
Risk Factors
6. Dilution....................................... Risk Factors;
Dilution
7. Selling Security Holders........................Not Applicable
8. Plan of Distribution............................Outside Front
Cover Page;
Underwriter
9. Legal Proceedings...............................Not Applicable.
10. Directors, Executive Officers, Promoters
and Control Persons.............................Management;
Principal
Shareholders
11. Security Ownership of Certain Beneficial
Owners and Management...........................Management;
Principal
Shareholders
12. Description of Securities.......................Risk Factors;
Capitalization;
Manage the
Securities;
Shares Eligible
13. Interest of Named Experts and Counsel...........Legal Matters
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.....................................Management
15. Organization within Last Five Years............ Management;
Principal
Shareholders
Transaction.
16 Description of Business.........................Prospectus
Summary;Business
17. Management's discussion and Analysis or
Plan of Operation...............................Management's Plan
of Operation
18. Description of Property.........................Proposed Business
19. Certain relationships and Related Transaction Certain
Transactions
20. Market for Common Equity and Related
Stockholder Matters ............................Outside Front
Cover Page;
Risk Factors;
Description of
the Securities
21. Executive Compensations.........................Management;
Executive
Compensation
22 Financial Statements............................Financial
Statements
23. Change in and Disagreements with
Accountants on Accounting and Financial
Disclosure......................................Not Applicable
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR TO THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SILVER STAR FOODS, INC.
1,000,000 Shares of Common Stock,
2,000,000 Class A Warrants
OFFERING PRICE: $5.25 PER SHARE and $.25 PER A WARRANT
Silver Star Foods, Inc. (the "Company"), a New York corporation,
is offering hereby 1,000,000 shares of Common Stock, par value $.0001,
and 2,000,000 Class A Warrants, through Royal Hutton Securities Corp.
(the "Underwriter"). The shares of Common Stock and A Warrants may be
purchased separately and will be transferable separately upon
issuance.
Each of the A Warrants entitles the holder thereof to purchase
one share of Common Stock (the "Shares") at a price of $6.00 per
share, subject to adjustment in certain circumstances, at any time
commencing after issuance until the fifth anniversary of the effective
date of the registration statement of which this Prospectus is a part
(the "Effective Date").
The A Warrants are subject to redemption by the Company,
commencing on the first anniversary of the Effective Date at a price
of $0.01 per Warrant, upon notice of not less than thirty (30) days
mailed within ten (10) days after the average of the last bid prices
of the Common Stock, as listed on a national securities exchange, for
a period of ten (10) consecutive trading days that has equalled or
exceeded $7.00. See "Description of Securities."
Prior to this offering (the "Offering"), there has been no
public market for the Common Stock or A Warrants and there is no
assurance that such a public market will develop or be sustained after
the Completion of the Offering. The initial public offering prices of
the Common Stock and A Warrants and the exercise price and terms of
the A Warrants have been determined by negotiation between the Company
and the Underwriter and bear no relation to the Company's earnings,
assets, book value, net worth, or any other recognized criteria of
value. See "Underwriting." The Company is in the process of applying
for listing of the Common Stock and A Warrants for quotation on the
NASDAQ SmallCap Market ("NASDAQ") under the symbols "SILV" and
"SILVW," respectively.
See "Risk Factors" beginning on page 10 for a discussion of
certain factors to be considered by prospective investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<CAPTION> Price to Public Underwriting Proceeds to
Discounts and Company (2)
Commissions (1)
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Per Share $5.25 $0.525 $4.725
Per A Warrant $0.25 $0.025 $0.225
Total (3) $5,750,000 $575,000 $5,175,000
(Footnotes appear on page 2)
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(1) See "Underwriting" for additional compensation to the
Underwriter consisting of: (i) three (3%) percent of the gross
proceeds of the Offering ($172,500, or $192,019 if the Over-Allotment
Option (as defined below) is exercised in full) as a non-accountable
expense allowance; (ii) a $36,000 annual financial consulting fee.
(2) The Company has granted to the Underwriter a forty-five (45)
day option to purchase up to an additional 150,000 Shares and 300,000
A Warrants at the price to the public less Underwriting Discount of
ten (10%) percent, solely to cover Over-Allotments, if any (the
"Over-Allotment Option"). If the Over-Allotment Option is exercised
in full the total price to the public, underwriting discount and net
proceeds to the Company before Offering costs will be $6,612,500,
$661,250, $5,951,250 respectively (see "Underwriting").
The Common Stock and A Warrants are offered on a "firm
commitment" basis by the Underwriter, subject to prior sale, when, as,
and if delivered and accepted by it and subject to approval of certain
legal matters by the Underwriter's legal counsel and certain other
conditions. The Underwriter reserves the right to reject orders in
whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Common Stock and A
Warrants will be made at the offices of the Underwriter, 2255 Glades
Road, Boca Raton, Florida 33431, on or about November , 1997. The
Company will bear all costs relating to the registration of the
Shares, which are estimated to be approximately $100,000.
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ROYAL HUTTON SECURITIES CORP.
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The date of this Prospectus is , 1997.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE
SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY
TIME DOES NOT IMPLY THAT THE INFORMATION SET FORTH HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET
PRICE OF THE SHARES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE AFFECTED ON THE
OVER-THE-COUNTER ELECTRONIC BULLETIN BOARD OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Company intends to furnish its shareholders with annual
reports containing audited financial statements after the end of each
fiscal year, and make available such other periodic reports as the
Company may deem to be appropriate or as may be required by law. The
Company's fiscal year ends on March 31 of each year.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should
be read in conjunction with, the more detailed information, including
the financial statements and notes thereto, appearing elsewhere in
this Prospectus. Each prospective investor is therefore urged to read
this prospectus in its entirety. Unless the context otherwise requires,
the term "the Company" refers to Silver Star Foods, Inc., a New York
corporation. This Prospectus contains forward looking statements that
involve risks and uncertainties. The Company's actual results could
differ materially from those anticipated in these forward looking
statements as a result of certain factors in "Risk Factors."
The Company
After operating for over fifty years, the Silver Star Ravioli and
Macaroni Company, Inc. ("Silver Star") was dissolved in 1992.
Approximately three years later, on March 28, 1995, Mr. Michael
Trotta, who had been an employee at Silver Star, formed Silver Star
Ravioli Co., Inc. in New York and bought the "Silver Star" trade name
for a purchase price of $205,000 to distribute a select number of food
products under that label. After two years in operation, on July 28,
1997, Silver Star Ravioli Co., Inc. changed its name to Silver Star
Foods, Inc. (the "Company"). The Company is currently a distributor of
a wide range of pre-packaged pasta products. Assuming the successful
completion of this offering, the Company intends to undertake efforts
to increase sales by establishing manufacturing facilities. No
guarantee can be made regarding the success of this offering or
whether the Company's sales will increase as a result thereof. The
Company has a limited operating history.
The Company is a successor to a long tradition of family-run
pasta operations. In 1930, Vincent Aversa opened a pasta shop in
Brooklyn, New York called the Silver Star Ravioli & Macaroni Co., Inc.
("Silver Star"). During the next twenty years, Silver Star developed
an excellent reputation for its hand-made pasta around New York. In
the early 1950's, Silver Star expanded by opening a 25,000 square foot
factory with one of the first mechanized ravioli machines. With
increased production capabilities, Silver Star was able to supply
large supermarket chains, like Waldbaums, with its food products. By
the 1960's, Silver Star operated seven days a week to meet consumer
demand. During this time, Silver Star distributed its food products to
a number of grocery chains, including A&P, Key Food, Pathmark and
numerous independent stores in the five boroughs of New York and Long
Island. In addition to retail outlet stores, Silver Star opened
institutional accounts that included airlines and cruise ships.
Silver Star continued to grow despite the death of Mr. Aversa in
1969. Mr. Aversa's brother, Tony, became President of Silver Star; his
son-in-law, Vincente Trotta, was named Vice-president. By the early
1970's, Silver Star had annual sales of about $2.5 million. In 1979,
due to illness, Vincent Trotta left Silver Star and was replaced by
his son, Vincent Trotta, Jr.. Silver Star continued to perform well,
placing second in the New York and Long Island markets.
Silver Star's sales increased despite the increase in the number
of competitors. By 1982, sales had climbed to $3.5 million. The
company also expanded its geographic area and, with a select network
of brokers, tackled the tri-state area, in addition to upstate New
York, Philadelphia, Baltimore, Florida, Arizona and California. As a
result, sales increased to $9.2 million within four years. Over the
next five years, Silver Star experienced production problems and
business declined. Soon thereafter, in 1992, Silver Star dissolved its
corporate entity and ceased to operate.
In 1995, Michael Trotta formed the Company and acquired the right
to use the "Silver Star" trademark. Today, the Company is a
distributor of a variety of pre-packaged Italian stuffed pasta food
products, Including: ravioli, tortellini, cavatelli, gnocchi and
manicotti. The Company's current market share is around 7.5 percent.
Following the successful completion of this Offering, the Company
plans to establish a manufacturing plant which is expected to increase
the Company's market share and profits. No guarantee can be made,
however, that the establishment of manufacturing facilities will spur
an increase in the Company's market share and profits.
Currently, the Company has manufacturing agreements with Mount
Rose Ravioli and Macaroni, Inc. and Savignano Foods Corporation, which
produces Andrea's brand food products. Together, these companies are
responsible for producing the food products the Company sells under
its label. The Company believes that this arrangement hinders its
ability to offer attractive deals to supermarket chains and other food
retailers.
The Company maintains a customer list which is utilized by
appointed sales agents as well as the company. The Company's customers
fall into three distinct categories:
1. Food service or institutional customers who are major
distributors and sell to entities such as hotels, restaurants,
schools, jails, nursing homes and hospitals;
2. Small distributors who distribute to deli's, small
supermarkets and restaurants. Although this constitutes a relatively
small portion of the Company's business, the Company has distributors
in New York City, Maryland, Arizona and California who fill their
retailer's requests weekly; and
3. Retail supermarket business, whose demands are filled
either by direct store delivery, an arrangement whereby the Company's
delivers products directly to individual stores; or central warehouse
distribution, which involves the Company providing its products to a
warehouse which then fills the needs of different supermarket chains.
Today, retail pasta products sales in the United States total
$500 million. The Company expects that the "Silver Star" label, which
it believes is well-known to consumers, will attract a considerable
percentage of the market share. The key elements of the Company's
business strategy are to:
* lease, with the option to buy, factory space in which to
begin manufacturing its food products;
* lease and purchase manufacturing equipment;
* recruit qualified managerial staff and agents across the
country to sell its food product; and
* undertake advertisements and distribution efforts,
including buying permanent "shelf space" in a number of
regional and national supermarkets for its various food
products.
Consequently, the Company believes it will be able to target new
stores with high volume capacity and achieve between $10 and $20
million in sales annually. No assurance can be made that a market will
develop for the Company's products; that the Company will realize a
profit from its endeavors; or that the Company will be able to
implement the aforementioned business strategy.
The Offering
Securities Offered
1,000,000 shares of Common Stock, and 2,000,000 A
Warrants. The Common Stock and the Warrants may be
purchased separately upon issuance. See "Description
of Securities" and"Underwriting."
Exercise Price of Warrants
Each A Warrant is exercisable at an exercise price of
$6.00 per share. The exercise price of the Warrants is
subject to adjustment in certain circumstances. See
"Description of Securities -- Warrants."
Exercise Period
The A Warrants are exercisable at any time after the
Effective Date of the Registration Statement until
the fifth aniversary date of the Offering.
Redemption
The A Warrants are redeemable by the Company
commencing one year after the Effective Date of the
Registration Statement at at price of $0.01 per
Warrant, upon notice of not less than thirty (30) days
mailed within ten (10) days after the average of the
last bid prices of the Common Stock, as listed on a
national securities exchange, for a period of ten (10)
consective trading days that has equaled or exceeded
$7.00.
Offering Price
$5.25 per share of Common Stock and $.25 per A
Warrant.
Use of Proceeds
Opening of manufacturing facilities; purchase of
machinery and equipment; general administrative
expenses; and for general corporate purposes.
Risk Factors
An investment in the Shares offered hereby involves a
high degree of risk and therefore the Shares should
not be purchased by anyone who cannot afford the loss
of their entire investment. Prospective purchasers of
the Shares should carefully review and consider the
factors set forth under "Risk Factors" as well as
other information contained herein, before purchasing
any of the Shares. See "Risk Factors."
Summary Financial Information
The following table sets forth summary historical financial
information of the Company for the years ended March 31, 1996 and
March 31, 1997 and the five months ended August 31, 1996 and August
31, 1997.
The summary historical financial data should be read in conjunction
with the financial statements (and notes thereto) of the Company and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.
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For the Five
Months Ended For the Years Ended
August 31, March 31,
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1997 1996 1997 1996
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(Unaudited) (Unaudited)
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Statement of Operating Data
Revenues $613,928 $643,112 $1,450,438 $1,382,518
Net Income (Loss) ($90,773) ($80,340) $ 19,557 ($ 69,975)
Per Share Data:
Net Earnings (Loss)
Per Share ($ .03) ($ .03) $ .01 ($ .02)
Weighted Average Number
of Shares Outstanding 3,607,843 3,200,000 3,200,000 3,200,000
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August, 31 March 31,
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Balance Sheet Data 1997 1996 1997 1996
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(Unaudited) (Unaudited)
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Total Assets $431,181 $289,081 $258,134 $287,504
Working Capital (Deficiency) ($ 6,982) ($368,458) ($295,311) ($289,757)
Stockholders' Equity
(Deficiency) $259,129 ($149,995) ($50,098) ($69,655)
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RISK FACTORS
An investment in the Securities being offered hereby involves a
high degree of risk. Prior to making any investment decision,
prospective investors should carefully consider the following risk
factors together with the other information presented in this
Prospectus including the financial statements (and notes thereto).
Limited Operating History
The Company was incorporated in New York under the name Silver Star
Ravioli, Inc. in March 1995. In July 1997, the Company effectuated a
name change to Silver Star Foods, Inc. Accordingly, the Company has a
limited operating history upon which an evaluation of its business and
its prospects can be based. For at least the current fiscal year, the
Company may incur losses from operations as a result of, among other
things, its expansion strategy. There can be no assurance that the
Company's operations will achieve profitability at any time in the
future or, if achieved, sustain such profitability.
Success of Expansion Strategy
The Company's expansion strategy and the opening and success of
its proposed manufacturing facilities will depend on various factors,
including the availability of a manufacturing plant, equipment, real
estate, the negotiation of acceptable lease terms, licensing and
regulatory compliance, the ability to meet production and construction
schedules, the general ability to manage successfully its anticipated
growth (including monitoring its production facilities, controlling
costs, and maintaining effective quality control), the availability of
adequate capital and general economic and business conditions. Not all
of the foregoing factors are in control of the Company. Having
recently embarked on its expansion strategy, there can be no assurance
that the Company will successfully implement its strategy or that its
strategy will result in profitability. Consistent with its business
strategy, the Company anticipates entering into new geographic regions
in which it has no previous operating experience. No assurance can be
given that the Company will be successful in new geographic regions.
Additional Financing
The Company anticipates that the proceeds from the Offering,
together with projected cash flow from operations, will be sufficient
to fund its operations, including its proposed expansion, for at least
the next 12 months. Thereafter, the Company may need to raise
additional funds to continue to implement its expansion strategy.
Although the Company has previously been successful in obtaining
sufficient cash and capital funds in the past, there can be no
assurance that additional financing will be available or if available
will be on favorable terms.
The implementation of the Company's expansion strategy will
increase operating costs which, in turn, could adversely affect its
business, financial condition or results of operations. In addition,
factors such as inflation, increased food costs, construction cost
overruns, increased labor and employee benefit costs and the
retention of qualified management and hourly employees may increase
its operating costs.
The Company currently has its products manufactured by several
different manufacturers. The costs of such items, like other
commodities, is subject to fluctuations due to changes in economic
conditions, demand and other factors, many of which are beyond the
Company's control. The Company has historically been able to pass
significant price increases through to its customers. However, no
assurance can be given that it will be able to do so in the future.
The Company believes that alternative sources for its ingredients are
readily available and does not believe that the loss of any of its
current suppliers would have a material adverse effect on it business,
financial condition or results of operations. See "Business."
Dependence on Key Personnel
The Company is dependent to a great extent upon the experience,
abilities and continued services of Michael Trotta, the Company's
President and Chief Executive Officer and Louis Trotta, the Company's
Vice President. The loss of services of Mr. Michael Trotta or Mr.
Louis Trotta could have a material adverse effect on the Company's
business, financial condition or results of operation. The Company
intends to purchase key man life insurance on the life of each of the
aforementioned persons. See "Management."
Potential Liability; Availability of Insurance
The Company, from time to time, is subject to lawsuits as a result of
its business and currently maintains insurance relating to personal
injury in amounts that it considers adequate and customary for the
food industry. No assurance can be given that the Company will be able
to obtain insurance policies in the future. In addition, any
successful claim against the Company, in an amount exceeding its
insurance coverage, could have a material adverse effect on its
business, financial condition or results of operation.
Government Regulation; Maintenance of Licenses and Certification
The Company is subject to numerous state regulations relating to
the preparation and sale of food. It is also subject to federal and
state laws governing the Company's relationship with its employees,
including minimum wage requirements, overtime, working and safety
conditions, and citizenship requirements. The failure to obtain or
retain required food licenses or to be in compliance with applicable
governmental regulations, or any increase in the minimum wage rate,
employee benefits costs (including costs associated with mandated
health insurance coverage) or other costs associated with employees,
could adversely affect the business, results of operations or
financial condition of the Company. Proposals are under consideration
at the federal level to introduce a system of mandated health
insurance. This and other initiatives could adversely affect the
Company's operations as well as the food industry in general.
Quarterly Fluctuations; Seasonality; Possible Volatility of Stock
Price
The Company's business is somewhat seasonal. Although there exists a
steady market for the Company's products from September through June,
with sales rising during the Christmas holidays, sales usually decline
in July and August. Sales also usually climb during Columbus Day
weekend, Easter and the month of March, which is "Frozen Food Month."
Continuing Changes in the Food Industry
The results of operations in the food industry can be affected by,
among other things, changes in consumer tastes, national, regional and
local economic conditions, demographic trends and the type and number
of competition. The Company does not expect, however, that there will
be any sharp changes regarding the consumer demand for its food
products, although it can make no such assurance. Quarterly variations
could cause the market price of the Common Stock to fluctuate
substantially. In addition, the stock markets in the United States
have, from time to time, experienced significant price and volume
fluctuations that are unrelated or disproportionate to the operating
performance of individual companies. Such fluctuations may adversely
affect the price of the Company's Common Stock.
Competition
The food industry is highly competitive. The Company competes with,
and will compete with, many organizations in the New York, tri-state
and New England markets. Many of these competitors are larger and have
greater financial and other resources, including production and
distribution facilities, than the Company.
Determination of Offering Price; Absence of Public Market;
Relationship with Representative
Prior to this Offering, there has been no public trading market
for the Common Stock and there can be no assurance that an active
trading market will develop after this Offering or that, if developed,
will be sustained. The initial public offering price of the Common
Stock was determined through negotiations between the Company and the
Representative and may not necessarily bear any relationship to the
Company's assets, earnings, book value per share or other generally
accepted criteria of value. There can be no assurance that the initial
public offering price will be sustained after the Offering.
Additional Compensation to CEO and Other Key Employee
There are no immediate plans to offer the Company's officers or
directors any additional compensation at this time. The Company may,
at a future date, provide stock options to its employees.
Significant Outstanding Options And Warrants
As of ,1997, there were no outstanding stock options or
warrants to purchase shares of Common Stock.
Absence of Dividends
The Company has never declared or paid any cash dividends on its
Common Stock. The Company intends to retain its earnings, if any, to
finance the growth and development of its business and therefore does
not anticipate paying any cash dividends on its Common Stock in the
foreseeable future.
Current Prospectus and State Registration Required to Exercise
Warrants and Options
At such time as the Shares and Warrants become registered under
the Securities Act, holders of the Warrants will be able to exercise
the Warrants only if (i) a current Prospectus under the Securities Act
relating to the Shares is then in effect and (ii) the Shares are
qualified for sale or exempt from qualification under the applicable
securities laws of the state in which the various holders of Warrants
reside. Although the Company has agreed to use its best efforts to
maintain a current registration covering the Shares, there can be no
assurance that the Company will be able to do so. The value of the
Shares may be greatly reduced if a registration statement covering the
Shares is not kept current or if the Shares are not qualified, or
exempt from qualification, in the states in which the holders of
warrants reside. Persons holding warrants who reside in jurisdictions
in which the Shares are not qualified and in which there is no
exemption will be unable to exercise their Warrants and would either
have to sell their Warrants or allow them to expire unexercised.
Penny Stock Rule
Trading in the Company's securities is conducted on the NASDAQ's Small
Cap Companies. In the absence of the Common Stock being quoted on
Nasdaq, or the Company having $2,000,000 in net tangible assets,
trading in the Common Stock would be covered by Rule 15g-9 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") for non-Nasdaq and non-exchange listed securities. Under such
rule, broker-dealers who recommend such securities to persons other
than established customers and accredited investors must make a
special written suitability determination for the purchaser and
receive the purchaser's written agreement to a transaction prior to
sale. Securities are exempt from this rule if the market price is at
least $5.00 per share.
The Securities and Exchange Commission (the "Commission") has adopted
regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject
to certain exemptions. Such exemptions include an equity security
listed on Nasdaq and an equity security issued by an issuer that has
(i) net tangible assets of at least $2,000,000, if such issuer has
been in continuous operation for three (3) years, (ii) net tangible
assets of at least $5,000,000, if such issuer has been in continuous
operation for less than three (3) years, or (iii) average revenue of
at least $6,000,000 for the proceeding three (3) years. Unless an
exemption is available, the regulations require the delivery, prior to
any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated therewith.
The market liquidity for the common stock could be severely and
adversely affected due to the limitations on the ability of broker-
dealers to sell the common stock in the public market.
Shares Eligible for Future Sale
The Company has outstanding 4,800,000 shares of common stock. Of
these shares, none are presently freely tradable without restriction
or registration under the Act, except that any shares purchased by an
"affiliate" of the Company (as defined in the rules and regulations
promulgated under the Act) will be subject to the resale limitations
under Rule 144 under the Securities Act. The remaining 4,800,000
shares of outstanding common stock were issued and sold by the Company
in private transactions in reliance upon exemptions from registration
under the Securities Act. Such shares may be sold only pursuant to an
effective registration statement filed by the Company or an applicable
exemption, including the exemption contained in Rule 144 promulgated
under the Securities Act. In general, under Rule 144 as currently in
effect, a shareholder, including an affiliate of the Company, may sell
shares of common stock after at least one year has elapsed since such
shares were acquired from the Company or an affiliate of the Company.
The number of shares of common stock which may be sold within any
three-month period is limited to the greater of one percent of the
then outstanding common stock or the average weekly trading volume in
the common stock during the four calendar weeks preceding the date on
which notice of such sale was filed under Rule 144. Certain other
requirements of Rule 144 concerning availability of public
information, manner of sale and notice of sale must also be satisfied.
In addition, a shareholder who is not an affiliate of the Company (and
who has not been an affiliate of the Company for 90 days prior to the
sale) and who has beneficially owned shares acquired from the Company
or an affiliate of the Company for over two years may resell the
shares without compliance with the foregoing requirements under Rule
144.
No predictions can be made as to the effect, if any, that future
sales of shares, or the availability of shares for future sale, will
have on the market price of the common stock prevailing from time to
time. Nevertheless, sales of substantial amounts of common stock, or
the perception that such sales may occur, could have a material
adverse effect on prevailing market prices. See "Description of
Securities - Shares Eligible for Future Sale."
Forward Looking Statements
This prospectus and the information incorporated herein by
reference contains various "forward-looking statements" within the
meaning of Federal and state securities laws, including those
identified or predicated by the words "believes," "anticipates,"
"expects," "plans" or similar expressions. Such statements are subject
to a number of uncertainties that could cause the actual results to
differ materially from those projected. Such factors include, but are
not limited to, those described under "Risk Factors." Given these
uncertainties, prospective purchasers are cautioned not to place undue
reliance upon such statements.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock
and A Warrants and after deduction of underwriting discounts,
commissions and other Offering expenses will be approximately
$5,175,000, assuming a public offering of $5.25 per Share and $.25 per
A Warrant. The Company intends to use the net proceeds as follows: (i)
approximately 18 percent to fund the purchase or renting of a factory
building; (ii) approximately 57 percent on the buying and/or leasing
of equipment; (iii) approximately 10 percent on general and
administrative expenses; and (iv) approximately 15 percent for working
capital.
The foregoing uses of proceeds are estimates only and there may
be significant variations in the uses of the proceeds due to, among
other things, changes in the Company's business or financial condition
or economic circumstances. Accordingly, the Company reserves the right
to reallocate among the foregoing uses of proceeds upon any such
change.
The Company anticipates that the proceeds of this Offering,
together with projected cash flow from operations, will be sufficient
to fund its operations, including its proposed expansion, for at least
the next 12 months. Thereafter, the Company may need to raise
additional funds to continue to implement its expansion strategy.
There can be no assurance that additional financing will be available
or if available will be on favorable terms.
Pending application of the proceeds of this Offering, the Company
intends to invest the net proceeds in certificates of deposit, money
market accounts, United States government obligations or other short-
term interest bearing obligations of investment grade.
DIVIDEND POLICY
The Company has never paid dividends on its Common Stock and does
not anticipate paying such dividends in the foreseeable future. The
payment of future cash dividends by the Company on its Common Stock
will be at the discretion of the Board of Directors and will depend on
its earnings, financial condition, cash flows, capital requirements
and other considerations as the Board of Directors may consider
relevant, including any contractual prohibitions with respect to the
payment of dividends.
DILUTION
As of August 31, 1997, the pro forma net tangible book value of
the Company's Common Stock was ($1,727) or ($0.01) per share of the
Common Stock. The net tangible book value of the Company's Common
Stock is the tangible assets less total liabilities. The Company has
net intangible assets amounting to $260,856 at August 31, 1997.
Dilution per share represents the difference between the amount paid
per share by purchasers in this Offering and the proforma net tangible
book value per share after the Offering.
After giving effect to the sale by the Company of 1,000,000
shares of Common Stock and 2,000,000 A Warrants offered hereby and the
applications of the net proceeds thereof, the proforma net tangible
book value of the Company's Common Stock as of August 31, 1997 would
have been approximately $4,900,773 or $.84 per share. This represents
an increase in the net tangible book value per share of $.85 to the
Company's existing shareholders and an immediate dilution of $4.41 per
share to new stockholders purchasing Common Stock and Warrants in this
Offering.
<TABLE>
<CAPTION>
<S> <C> <C>
The following table illustrates this dilution on a per share basis:
Assumed public offering price per share.......................... $5.25
Pro forma net tangible book value per share before Offering....($.01)
Increase per share attributable to payments by new stockholders.$.85
Pro forma net tangible book value per share after Offering....... $0.84
Dilution per share............................................... $4.41
</TABLE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as
of August 31, 1997 and as adjusted to give effect to the sale by the
Company of 1,000,000 Common Shares and 2,000,000 A Warrants. The table
should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this Prospectus.
August 31, 1997 August 31, 1997
Actual As Adjusted
---------------- ----------------
(Unaudited)
[S] [C] [C]
Total current liabilities: $172,052 $ 172,052
---------- ----------
Long-term debt: -0- -0-
---------- ----------
Stockholder's equity:
Common Stock $.0001
par value, 15,000,000
shares authorized;
4,800,000 shares issued
and outstanding; 5,800,000
shares (2) outstanding
as adjusted $ 480 $ 580
Additional paid-in capital 399,840 5,302,240(1)(3)
Deficit (141,191) (141,191)
---------- -----------
Total Stockholders Equity 259,129 5,161,629
---------- -----------
Total Capitalization $431,181 $5,333,681
========== ===========
(1) Assumes sale of 1,000,000 shares of Common Stock at $5.25 per
share and 2,000,000 A Warrants at $.25 per A Warrant for gross
proceeds of $5,750,000, less the Underwriters Discount of $575,000 and
other expenses estimated to aggregate $272,500.
(2) Does not assume any sales of stock which may occur from exercise
of the Underwriters Over-Allotment Option.
(3) Does not assume exercise of the Underwriter's Over-Allotment
Option, the Underwriter's Warrant or any of the "A" Warrants.
SUMMARY FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Silver Star Foods, Inc. (the "Company") was incorporated under the
laws of the State of New York on March 28, 1995, under the name Silver
Star Ravioli Co., Inc. The Company is a manufacturer and wholesaler
of stuffed and other frozen pasta products, which it markets under the
"Silver Star" trade name.
The Silver Star name has been associated with quality pasta products
for over sixty years and, as such, management believes constitutes a
valuable property. The Company currently markets it's products in the
New York metropolitan area and presently controls approximately 7.5%
of the market share. The Company acquires it's products from two
local manufacturers.
The Company does not presently have its own manufacturing facilities,
but plans to construct one from the anticipated proceeds of the
Company's initial public offering of its securities. Management
believes that manufacturing its own product would enable the Company
to increase its profit margins and participate more fully in "price
competitive" marketing which is common in the retail marketplace.
Concurrent with the construction of a plant facility, the Company
anticipates that both its direct expenses and general and
administrative expenses will increase as the Company adds a full-time
work force. There can be no assurances that the Company will be more
profitable as a result of these expenditures.
Liquidity and Capital Resources
At August 31, 1997, the Company had cash and cash equivalents of
$115,000, an increase of $113,000 from the end of fiscal 1997. In
July 1997, the Company sold 1,600,000 shares of its Common Stock for
$400,000 in cash. Of the proceeds, $173,000 was used in operations,
$69,000 was used to pay down the notes incurred for the purchase of
the "Silver Star" trade name and $44,000 was spent on slotting fees
for the procurement of retail shelf space.
Cash at the end of fiscal 1997 was $2,000, a decrease of $3,000 from
the end of fiscal 1996. Cash flows from operations amounted to
$187,000. Proceeds from marketable securities amounted to $21,000.
These increases were offset primarily by expenditures for slotting
fees ($73,000), debt service on the trade name purchase ($111,000),
payments for stock margin purchases ($16,000) and repayments of loans
from a stockholder ($11,000).
Cash at the end of fiscal 1996, the Company's inaugural year, amounted
to $5,000. The Company generated $28,000 from operations and received
$12,000 in loans from a stockholder. The Company used $31,000 of the
funds for slotting fees and $5,000 for the purchase of marketable
securities.
The Company had working capital deficiencies of approximately $7,000,
$295,000 and $290,000 as of August 31, 1997 and March 31, 1997 and
1996, respectively. The Company has entered into a letter of intent
with an underwriter for the proposed initial Public Offering of its
stock. Should the offering be successful, the Company expects net
proceeds of approximately $4,800,000.
Management believes that the completion of this equity transaction
would give the Company sufficient working capital to fund its
operations and expansion plans for the next twelve months, although
there can be no assurance that the Company will be successful in
either or both of these transactions or that the funds so generated
will be sufficient to meet all the Company's working capital
requirements.
Results of Operations
Five months ended August 31, 1997 as compared
to August 31, 1996
The Company had net sales of $614,000 as compared to $643,000 for the
five months ended August 31, 1997 and 1996, respectively, a decrease
of $29,000 (5.0%). The decrease is attributed to the Company's
inability to participate in all store circulars and promotions for the
majority of the period.
Costs of sales increased during the same period to $486,000 from
$444,000, an increase of $42,000 (9.5%). The increased costs are
reflective of increases in prices charged by suppliers and the
Company's reduced selling prices in an effort to maintain its market
share while it seeks to raise expansion capital.
Operating expenses for the five months ended August 31, 1997 decreased
$74,000 to $195,000 from $269,000 in the comparable period for 1996.
The Company was forced to eliminate or reduce non-critical
expenditures and temporarily suspend certain consulting and other
relationships in order to preserve its working capital for the
production and promotion of its products.
Amortization expenses increased $13,000 (128%) to $23,000 for the
period as compared to the comparable period in 1996. This increase is
attributable to increased expenditures for slotting fees for the
procurement of retail shelf space.
The Company had a net loss of $91,000 for the period as compared to
$80,000 for the comparable period 1996. The Company believes that the
results for the period are not necessarily indicative of the results
to be expected for fiscal 1998. The Company believes that the planned
opening of its own plant would dramatically increase its volume and
profitability, although there can be no assurance of any of these
events.
The years ended March 31, 1997 as compared to 1996
The Company had net sales of $1,450,000 for fiscal 1997 as compared to
$1,383,000 for fiscal 1996, an increase of nearly $68,000 (4.9%). The
increase is directly attributable to the Company's substantial
investment in shelf space through the payment of slotting fees.
Costs of sales increased $69,000 (5.0%) to $972,000 in fiscal 1997 as
compared to $903,000 for fiscal 1996. The increase in the cost of
sales is commensurate with Company's increased volume.
Operating expenses decreased $119,000 (22.7%) to $407,000 for fiscal
1997 as compared to $527,000 for fiscal 1996, as a result of
management's decision to curtail or eliminate all non-essential
expenses thereby maximizing the benefits to be derived from its
available working capital.
Amortization expense increased to $26,000 (127%) to $47,000 for fiscal
1997 as compared to $21,000 for 1996. As described earlier, the
Company made significant investments in the procurement of retail
shelf space through the payment of slotting fees in fiscal 1997.
The Company had net income of $20,000 in fiscal 1997 as compared to a
net loss of ($70,000) in fiscal 1996, an improvement of approximately
$90,000. Management believes that the development of its own plant
facility will enable it to become more profitable in future periods
although there can be no assurance as to either event.
BUSINESS
The Company
After operating for over fifty years, the Silver Star Ravioli and
Macaroni Company, Inc. ("Silver Star") was dissolved in 1992.
Approximately three years later, on March 28, 1995, Mr. Trotta, who
had been an employee at Silver Star, formed Silver Star Ravioli Co.,
Inc. in New York and bought the "Silver Star" trade name for a
purchase price of $205,000 to distribute a select number of food
products under that label. After two years in operation, on July 28,
1997, Silver Star Ravioli Co., Inc. changed its name to Silver Star
Foods, Inc. (the "Company"). The Company is currently a distributor of
a wide range of pre-packaged pasta products. Assuming the successful
completion of this offering, the Company intends to undertake efforts
to increase sales by establishing manufacturing facilities. No
guarantee can be made regarding the success of this offering or
whether the Company's sales will increase as a result thereof. The
Company has a limited operating history.
Historical Background
The Company is a successor to a long tradition of family-run
pasta operations. In 1930, Vincent Aversa opened a pasta shop in
Brooklyn, New York under the name Silver Star Ravioli & Macaroni Co.,
Inc., ("Silver Star"). During the next twenty years, Silver Star
developed an excellent reputation for its hand-made pasta around New
York. In the early 1950's, Silver Star expanded by opening a 25,000
square foot factory with one of the first mechanized ravioli machines.
With increased production capabilities, Silver Star was able to supply
large supermarket chains, like Waldbaums, with its food products. By
the 1960's, Silver Star operated seven days a week to meet consumer
demand. During this time, Silver Star distributed its food products to
a number of grocery chains, including A&P, Key Food, Pathmark and
numerous independent stores in the five boroughs of New York and Long
Island. In addition to retail outlet stores, Silver Star opened
institutional accounts that included airlines and cruise ships. By the
early 1970's, Silver Star had annual sales of about $2.5 million.
Despite the increase in competition, Silver Star's sales
continued to rise. By 1982, sales had climbed to $3.5 million. The
company also expanded its geographic area and, with a select network
of brokers, began to distribute its food products to the tri-state
area, in addition to upstate New York, Philadelphia, Baltimore,
Florida, Arizona and California. Within four years, sales increased to
$9.2 million.
Despite the success, Silver Star's machinery soon became outdated
and the competition grew stronger. Over the next five years, Silver
Star experienced production problems and business declined. Soon
thereafter, in 1992, Silver Star filed for bankruptcy. In 1995,
Michael Trotta formed the Company and acquired the right to use the
"Silver Star" trademark. Today, the Company is a distributor of a
variety of Italian food products including stuffed pasta such as
ravioli, tortellini, cavatelli, gnocci and manicotti, all of which are
marketed under the "Silver Star" brand name. The Company's current
market share in New York, which is the largest market in the country
for the types of products the Company offers, is around 7.5%.
Company Strategy
The Company expects that the "Silver Star" label, which it
believes is known to consumers as a high-quality brand, will attract a
considerable percentage of the market share. The Company believes it
needs manufacturing facilities to expand its business and increase
profits. Thus, the key elements of the Company's growth strategy are
to:
1. lease, with the option to buy, factory space in which to begin
manufacturing its food products;
2. lease and purchase manufacturing equipment;
3. continue to recruit qualified managerial staff, agents and
brokers across the country to sell its food product; and
4. undertake advertisements and distribution efforts, including
buying shelf space in a select number of supermarkets for various
products.
Consequently, the Company believes it will be able to target new
stores with high volume capacity and achieve between $10 and $20
million in sales annually. No assurance can be made, however, that a
market will develop for the Company's products or that the Company
will realize a profit from its endeavors.
As of the date of this Prospectus, the Company has not identified
any specific site locations for its additional planned facilities.
Distribution, Sales and Marketing
The Company distributes and sells its products in a variety of
different ways:
1. Food service or institutional customers constitute major
distributors who sell the Company's food product to end users such as
hotels, restaurants, schools, major corporations, jails, nursing homes
and hospitals. Currently, this constitutes a small portion of the
Company's business.
2. Small distributors that provide the Company's products to
small delicatessen's, supermarkets, and restaurants. These
distributors operate by checking with their customers weekly to
determine the demand they have for the Company's products. The Company
has distributors that cover territories in New York's five boroughs,
Long Island, New Jersey, Maryland, Arizona and California.
3. Supermarket industry. This category is handled by either
D.S.D (Direct Store Delivery), where the Company's trucks deliver
products directly to each supermarket; or central warehouse purchasing
where the Company fills each particular order through a Company
representative or a sales agent or broker.
One highly effective way for the Company to advertise its
products is through circular advertising, which is advertising placed
within a supermarket. This allows supermarket customers to be informed
of any specials the Company is offering and offer coupons related to
its products.
Industry Overview
Today, retail pasta products sales in the United States total
over $500 million. The appeal of frozen pasta products to American
consumers has risen drastically since the 1980's and shows no sign of
abating. The Company's pasta products provide consumers with an easy,
quick and nutritious meal.
It should be noted that along with frozen pasta products, there
has been an increase in the number of different frozen food products
available to the American consumer. Furthermore, in certain sections
of the country, such as the Middle West, pasta products like ravioli
are not yet familiar to consumers or very popular.
The Company's Products
The Company specializes in stuffed pasta, a form of pasta that
includes stuffing such as ricotta, eggs and cheese, among others. The
products that the Company currently distributes are: jumbo round 13
oz. ravioli; mini round 16 oz. ravioli; mini square 16 oz. ravioli;
mini square meat 16 oz. ravioli; tortellini, including meat and
cheese, 16 oz.; cavatelli, 16 oz.; gnocchi 16 oz.; six count
manicotti, 16 oz.; and twelve count stuffed shells, 20 oz.
Ingredients and Principal Suppliers
The Company seeks to use only the highest quality ingredients
available. The Company has a policy of inspecting all raw ingredients
before their intended use.
The ingredients used by the Company are primarily flour, eggs and
water. Depending on the type of stuffed pasta the Company is
producing, the ingredients may include whole milk ricotta, eggs,
Romano cheese, mozzarella, parsley, salt, pepper, meat filling chopped
meat, onions and spices. The Company buys flour from Congra and
Ricotta from either Pollyo or Sorrento. Other ingredients come from
local distributors and manufactures.
Competition
The frozen food industry is a highly competitive and highly
fragmented industry. The Company competes with national, regional, and
local pasta shops and specialty stores. Many of these competitors are
larger, more established and have greater financial and other
resources than the Company. Competition in both the retail and
institutional frozen food industry is based on product quality, brand
name loyalty and price. Competitors with significant economic
resources in the frozen food industry or economic resources in the
frozen food industry or existing non-specialty and specialty pasta
businesses could, at any time, enter the pasta frozen food industry.
The category of products sold by Silver Star today generates $500
million in sales. Sales in the New York tri-state area, presently the
largest market are as follows:
Company Market share (%) Disc % Items
- -------- ---------------- ------- --------
Italian Village 26 100 12
Celantano 24 100 25
Andrea 8.5 100 9
Silver Star 7.5 80 3
Severoli 5 100 6
Mount Rose 4.5 50 8
Trademark
The Company purchased the "Silver Star" trademark for
consideration of $205,000 in July 1997. There can be no assurance as
to the degree of protection its registered trademark may afford the
Company.
Government Regulation
The Company is subject to numerous state regulations relating to
the preparation and sale of food. It is also subject to federal and
state laws governing the Company's relationship with its employees,
including minimum wage requirements, overtime, working and safety
conditions, and citizenship requirements. The failure to obtain or
retain required food licenses or to be in compliance with applicable
governmental regulations, or any increase in the minimum wage rate,
employee benefits costs (including costs associated with mandated
health insurance coverage) or other costs associated with employees,
could adversely affect the business, results of operations or
financial condition of the Company. Proposals are under consideration
at the federal level to introduce a system of mandated health
insurance. This and other initiatives could adversely affect the
Company's operations as well as the food industry in general.
Employees
As of , 1997, the Company had 2 full-time employees.
Legal Proceedings
The Company is not currently subject to any material legal
proceedings.
Properties
The Company has its principal executive offices in Brooklyn, New
York.
The Company's Existing Agreements
The Company has entered into two production agreements, with
Mount Rose Ravioli and Macaroni Co. and Savignano Foods Corporation.
Mount Rose Ravioli and Macaroni Co. On June 13, 1995, the Company
executed an agreement with Mount Rose Ravioli and Macaroni Co. ("Mount
Rose") which provides that Mount Rose will package private label
"Silver Star" products at the following prices:
Square Meat and Cheese Ravioli -- bag 16/24 oz. $16.50
Square Meat and Cheese Ravioli -- box 18/50 oz. $18.85
Round Cheese Ravioli 16/24 oz. $14.20
Cavatelli 16/24 oz. $ 9.72
Cheese and Meat Tortellini 16/24 oz. $12.82
Gnocchi 16 oz.
Six Count Manicotti
Twelve Count Stuffed Shells
The agreement provides that the product is to be paid for by either
cashiers or certified check at the time the order is placed. A cash
discount of two percent is available. The above prices, in accordance
with the agreement, are to be reviewed every six months with respect
to raw material and packaging costs. An increase or decrease in such
costs will be passed on to the Company. The agreement further provides
that in the event that the agreement is terminated the Company gives
Mount Rose permission to use such packaging in any way it chooses.
Savignano Food Corporation. Savignano Food Corporation, which
trades as "Andrea's," has agreed to manufacture the following products
for the Company:
13 oz. Large Round Cheese Ravioli -- 12/bag 24 Units $13.85/case
16 oz. Cavatelli -- 1 lb./bag 24 Units $ 9.95/case
Signed on June 12, 1995, the agreement provides that these prices
are contingent with the Company having monthly sales of 7,000 cases of
Ravioli and 3,000 cases of Cavatelli. In accordance with the
agreement, if the Company fails to purchase from Andrea's the above-
mentioned volume over a 52-week period, Andrea's has the right to
raise prices relative to the Company's lack of demand. As per the
agreement, the Company cannot order less than 250 cases of each of the
above products.
The agreement also provides that Andrea's is responsible for all
bags, labels and corrugated boxes needed to manufacture and package
the product at Andrea's sole expense. However, Andrea's is not
responsible for art work, plates, or dyes of any kind needed for
product packaging. The agreement further provides that either party
may terminate the agreement upon 120 days notice. The Company agreed
that Andrea's was to be the exclusive producer for the above products.
The agreement's prices are to be reviewed every three months.
MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information with respect
to the directors and executive officers of the company:
Name Age Position
--- --------
Michael Trotta 33
President/CEO/Secretary/Director
Louis Trotta 37 Vice President
The business experience of each of the directors and officers of
the Company is as follows:
Michael Trotta began working for Silver Star in 1987 and was exposed
to every facet of the pasta frozen food business. Initially, Mr.
Trotta was employed in the Shipping and Receiving department. Shortly
thereafter, Mr. Trotta was named Plant Manager where he supervised
over 30 employees and was responsible for all the plant's daily
operations. In 1990, Mr. Trotta became Silver Star's President,
managing all of the Company's financial and production activities. Mr.
Trotta, a high school graduate, attended Pace University for two
years.
Louis Trotta has been employed by Silver Star and the Company for
nearly fifteen years. In 1979, Mr. Trotta was hired in the Silver
Star's Shipping and Receiving department and soon became the Plant
Manager. In 1985, Mr. Trotta left Silver Star for less than two (2)
years to pursue other business interests. In 1986, Mr. Trotta returned
to Silver Star, in the Quality Control Unit, overlooking the Company's
products to ensure they met the Company's standards. In 1991, Mr.
Trotta administered the Silver Star's Food Service Sales Unit. Mr.
Trotta, who is a high school graduate, is Mr. Michael Trotta's
brother.
Advisory Board
The Company expects to name several individuals to serve on its
advisory board to advice and assist the Company. Members of the
advisory board will be indemnified from liability by the Company. The
experience of each of the Advisory Board's members are as follows:
Vincente Trotta will serve as a consultant to the Company. He has been
involved in the food business since 1949 when he became the Company's
production manager. Mr. Trotta has also served as Silver Star's Plant
Manager and President. He retired from Silver Star in 1979. Mr.
Trotta, who is a high school graduate, is the father of Mr. Louis and
Michael Trotta.
Barry Sherman will serve as a consultant to the Company. Mr. Sherman
has been involved in the retail sales and brokerage business for his
entire career. For 32 years, Mr. Sherman was employed by Waldbaums,
where he served as Vice President of Merchandising for 15 years. Mr.
Sherman is currently Vice President of Red Apple Supermarkets.
Executive Compensation
The following table sets forth the annual and long-term
compensation for services in all capabilities to the Company.
Name and
Principal Position Year Salary
- ------------------ ---- ------
President and CEO 1997 $35,000, plus $2,000 monthly for expenses.
The Company has no retirement, pension or profit sharing program
for the benefit of its directors, officers or other employees but the
Board of Directors may recommend one or more such programs for
adoption in the future.
Director Compensation
Directors of the Company who are not salaried officers will
receive no fee for attending each Board meeting or meeting of a
committee of the Board. All directors will be reimbursed for their
reasonable out-of-pocket expenses incurred in connection with
attending Board and committee meetings.
Employment Agreements
The Company has not executed any employment agreements.
Option Plan
The Company has not executed any option plans.
Certain Relationships and Related Transactions
In June 1997, two separate investors, Daniel Kodsi and K&V
Investments, each invested $200,000 in the Company, totalling
$400,000. In consideration of their investment, each received a 16.67%
percent share of the Company. As a result, 33 1/3% percent of the
Company is owned by the aforementioned individuals and entities.
Limitations on Personal Liability of Directors and Officers
The New York Business Corporation Law, in general, allows
corporations to indemnify their directors and officers against
expenses (including attorney's fees), judgments, fines and settlement
amounts actually and reasonably incurred by such person in connection
with suits or proceedings, if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the
best interests of the corporation. In the case of a criminal action,
the director or officer must have had no reasonable cause to believe
that person's conduct was unlawful. Under current law, no
indemnification may be made if in connection with a proceeding or in
the right of the corporation in which the director or officer was
adjudged to be liable to the corporation or that person derived an
improper personal benefit.
The Company's Certificate of Incorporation and By-Laws provided
that the Company shall indemnify its directors and officers to the
fullest extent permitted by New York Law. The Company will enter into
an indemnification agreement with each of its directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect
to the beneficial ownership of common stock, as of the date of this
Prospectus, by (i) each person who is known by the Company to
beneficially own more than 5% of the common stock, (ii) each director
of the Company, (iii) each of the Company's named executive officers
and (iv) all directors and executive officers of the Company as a
group.
Beneficial Ownership
---------------------
Beneficial Owner Shares Percent
- ---------------- ------ -------
Daniel Kodsi 800,000 16.67%
K&V Investments 800,000 16.67%
Michael Trotta 3,200,000 66.67%
CERTAIN TRANSACTIONS
Transactions with Executive Officers
PLAN OF DISTRIBUTION
The Company will receive gross proceeds from the issuance of
shares of Common Stock of $5.25 per share. If the Warrants are
exercised in full, the Company will receive $500,000 of gross proceeds
therefrom.
The Company will bear all of the expenses of registration of
the Shares under the Federal and State securities laws, including
filing fees. Such expenses payable by the Company are currently
estimated to be $100,000.00.
DESCRIPTION OF SECURITIES
The Company's authorized capital consists of 15,000,000 shares of
Common Stock, par value $.0001 per share and 2,000,000 A Warrants.
Common Stock
As of , 1997, the Company had outstanding 4,800,000
shares of common stock. Each share of common stock is entitled to one
vote at all meetings of shareholders. Shareholders are not permitted
to cumulate votes in the election of directors. All shares of common
stock are equal to each other with respect to liquidation rights and
dividend rights. There are no preemptive rights to purchase any
additional common stock. In the event of liquidation, dissolution or
winding up of the Company, holders of the common stock will be
entitled to receive on a pro rata basis all assets of the Company. The
outstanding shares of common stock are duly and validly issued, fully
paid and nonassessable.
Warrants
The following is a brief summary of certain provisions of the
Warrants, but such summary does not purport to be complete and is
qualified in all respects by reference to the actual text of the
Warrant Agreement filed as an Exhibit to the Registration Statement of
which this Prospectus is a part.
Exercise Price and Terms. Each Warrant entitles the holder
thereof to purchase, at any time commencing after the Effective Date
of this Prospectus through the fifth anniversary of the Effective Date
of this Prospectus, one share of Common Stock at a price of $6.00 per
share, subject to adjustment in accordance with the anti-dilution and
other provisions referred to below. The Warrants expire on the fifth
anniversary of the Effective Date unless extended at the sole option
of the Board of Directors of the Company. The holder of any Warrant
may exercise such Warrant by surrendering the certificate representing
the Warrant to the Warrant Agent, with the subscription form on the
reverse side of such certificate properly completed and executed,
together with payment of the exercise price. The Warrants may be
exercised at any time in whole or in part at the applicable exercise
price until the date of expiration of the Warrants. No fractional
shares will be issued upon the exercise of the Warrants.
Commencing on a date which shall be twelve months from the
Effective Date, the Warrants are subject to redemption at $0.01 per
Warrant upon written notice of not less than thirty (30) days;
provided, that in order for the Company to call the Warrants for early
redemption, the average of the closing bid price of the Company's
Common Stock, as then listed on Nasdaq or another national securities
exchange, over the 10 consecutive days ending within 10 days of the
notice of redemption, must equal or exceed $7.00. In the event the
Company exercises the right to redeem the Warrants, such Warrants will
be exercisable until the close of business on the date of redemption
fixed in such notice. If any Warrant called for redemption is not
exercised by such time, it will cease to be exercisable and the holder
will be entitled only to the redemption price.
The exercise price of the Warrants bears no relation to any
objective criteria of value and should in no event be regarded as an
indication of any future market price of the securities offered
hereby.
Adjustments. The exercise price and the number of shares of
Common Stock purchasable upon the exercise of the Warrants are subject
to adjustment upon the occurrence of certain events, including stock
dividends, stock splits, combinations or reclassification of the
Common Stock, or sale by the Company of shares of its Common Stock (or
other securities convertible into or exercisable for Common Stock) at
a price per share or share equivalent below the then-applicable
exercise price of the Warrants or the then-current market price of the
Common Stock. Additionally, an adjustment would be made in the case of
a reclassification or exchange of Common Stock, consolidation or
merger of the Company with or into another corporation, or sale of all
or substantially all of the assets of the Company, in order to enable
Warrant holders to acquire the kind and number of shares of stock or
other securities or property receivable in such event by a holder of
that number of shares of Common Stock that would have been issued upon
exercise of the Warrant immediately prior to such event. No
adjustments will be made until the cumulative adjustments in the
exercise price per share amount to $1.00 or more. No adjustment to the
exercise price of the shares subject to the Warrants will be made for
dividends (other than stock dividends), if any, paid on the Common
Stock or upon exercise of the Warrants, the Underwriter's Warrants or
any other warrants outstanding as of the date of this Prospectus.
Transfer, Exchange and Exercise. The Warrants are in registered
form and may be presented to the Transfer and Warrant Agent for
transfer, exchange or exercise at any time after the Effective Date
and prior to their expiration date five years from the date of this
Prospectus, at which time the Warrants become wholly void and of no
value. If a market for the Warrants develops, the holder may sell the
Warrants instead of exercising them. There can be no assurance,
however, that a market for the Warrants will develop or continue. If
the Company is unable to qualify for sale in particular states the
Common Stock underlying the Warrants, holders of the Warrants residing
in such states and desiring to exercise the Warrants will have no
choice but to sell such Warrants or allow them to expire. See
"Description of Securities -- Transfer and Warrant Agent."
Warrant holder Not a Shareholder. The Warrants do not confer upon
holders any voting or any other rights as stockholders of the Company.
SHARES ELIGIBLE FOR FUTURE SALE
All Shares of common stock being offered hereby will be immediately
tradable without restriction or further registration under the
Securities Act. The outstanding Shares of common stock include
4,800,000 Shares of common stock outstanding deemed to be "restricted
securities," as that term is defined under Rule 144 promulgated under
the Securities Act, in that such Shares were purchased or acquired by
such stockholders of the Company in transactions not involving a
public offering, and, as such, may only be sold pursuant to a
registration statement under the Securities Act, in compliance with
the exemption provisions of Rule 144, or pursuant to another exemption
under the Securities Act. Substantially all of such restricted Shares
of common stock are eligible for sale under Rule 144, subject to the
volume limitations prescribed by the Rule.
In general, under Rule 144 as currently in effect, a shareholder,
including an affiliate of the Company, may sell shares of Common Stock
after at least one year has elapsed since such shares were acquired
from the Company or an affiliate of the Company. The number of shares
of Common Stock which may be sold within any three-month period is
limited to the greater of one percent of the then outstanding Common
Stock or the average weekly trading volume in the Common Stock during
the four calendar weeks preceding the date on which notice of such
sale was filed under Rule 144. Certain other requirements of Rule 144
concerning availability of public information, manner of sale and
notice of sale must also be satisfied. In addition, a shareholder who
is not an affiliate of the Company (and who has not been an affiliate
of the Company for 90 days prior to the sale) and who has beneficially
owned shares acquired from the Company or an affiliate of the Company
for over two years may resell the shares of Common Stock without
compliance with the foregoing requirements under Rule 144.
No predictions can be made as to the effect, if any, that future sales
of shares, or the availability of shares for future sale, will have on
the market price of the Common Stock prevailing from time to time.
Nevertheless, sales of substantial amounts of Common Stock, or the
perception that such sales may occur, could have a material adverse
effect on prevailing market prices and could impair the Company's
ability to raise capital through the sale of its equity securities.
Transfer and Warrant Agent
Transfer and Warrant Agent
The Company has retained , as Transfer Agent for
its Common Stock.
UNDERWRITING
The Underwriter has agreed, subject to the terms of the
Underwriting agreement, to purchase from the Company 1,000,000 shares
of Common Stock and 2,000,000 A Warrants. The Underwriting Agreement
provides that the obligations of the Underwriter are subject to
certain conditions precedent. The Underwriter is committed to purchase
all of the securities offered hereby if any are purchased.
The Company has been advised by the Underwriter that the
Underwriter proposes initially to offer the Common Stock and Warrants
to the public at the public offering price per share of Common Stock
and per Warrant set forth on the cover of this Prospectus and to
certain dealers, who are members of the National Association of
Securities Dealers, Inc. ("NASD").
The Underwriter Agreement provides further that the Underwriter
will receive a non-accountable expense allowance of 3% of the
aggregate public offering price of the Common Stock and Warrants sold
hereunder, including any Common Stock and Warrants sold pursuant to
the Over-allotment Option (which allowance amounts to $172,500, or
$192,019 if the Over-allotment Option is exercised in full). The
Company has also agreed to pay all expenses in connection with
qualifying the Common Stock and Warrants offered hereby for sale under
the laws of such states the Underwriter may designate, including
expenses of counsel retained for such purpose by the Underwriter.
The Company has also granted the Over-allotment Option to the
Underwriter, exercisable during the 45-day period commencing on the
Effective Date, to purchase up to a maximum of 150,000 Shares of
Common Stock and 300,000 "A" Warrants at the public offering price
less the underwriting discounts, commissions and expense allowance.
The Underwriter may exercise this option only to cover over-allotments
in the sale of the Common Stock and Warrants, if any. The 150,000
shares of Common Stock included in such Over-allotment Option will be
purchased by the Underwriter for the account of the Company.
The Company has agreed to sell to the Underwriter, for nominal
consideration, the Underwriter's Warrants to purchase an amount equal
to 10% of the number of Shares of Common Stock and 10% of the A
Warrants sold to the public. The Underwriter's Warrants shall be
exercisable for a period of five (5) years commencing
at an exercise price equal to 120% of the offering price of the Shares
of Common Stock and A Warrants sold to the public in the offering.
The Underwriter's Warrants are not transferable prior to
, except to officers of the Underwriter, members of the
selling group and their officers, directors and partners.
The Company has also granted certain registration rights to
holders of the Underwriter's Warrants. These registration rights
generally provide that in the event the Company files a post-effective
amendment to the Registration Statement of which this Prospectus forms
a part, or any new registration statement covering any securities of
the Company, the Company will include in such registration statement
such information as may be required to permit a public offering of the
Underwriter's Warrant, the Warrant's issuable upon exercise of the
Underwriter's Warrant, and the Common Stock issuable upon the exercise
of the Underwriter's Warrant and upon exercise of the Warrants
underlying the Underwriter's Warrant and upon exercise of the Warrants
underlying the Underwriter's Warrant (the "Registrable Securities").
If the offering of the Company securities is underwritten, the number
of Registrable Securities to be included in the offering is subject to
limitation by the managing underwriter of the offering; provided,
however, in the event of such limitation, the Company shall file a new
registration statement covering the excluded Registrable Securities,
at the Company's expense, within six months after completion of the
underwritten offering. In addition, the Company is required to file a
post-effective amendment to the Registration Statement of which this
Prospectus forms a part or a new registration statement registering
the Registrable Securities upon the request of the holder(s) of at
least 50% of the Underwriter's Warrant and/or the Common Stock
underlying the Underwriter's Warrants and the Warrants issuable upon
exercise of the Underwriter's Warrant.
For the life of the Underwriter's Warrants, the holders thereof
are given, at nominal costs, the opportunity to profit from a rise in
the market price of the Company's securities with a resulting dilution
in the interest of other stockholders. Further, the holders may be
expected to exercise the Underwriter's Warrants at a time when the
Company would in all likelihood be able to obtain equity capital on
terms more favorable than those provided in the Underwriter's
Warrants.
The Company has agreed to retain the Underwriter as a financial
consultant to the Company for a period of three (3) years after the
Offering for an aggregate fee of $108,000 ($36,000 per year) payable
in full upon consummation of the Offering.
In addition, the Company has agreed to compensate the Underwriter
upon consummation of certain material transactions initiated by the
Underwriter during the three-year period commencing on the Effective
Date. These transactions include (i) any transaction originated by the
Underwriter, other than in the ordinary course of business, whereby,
directly or indirectly, control of, or a material interest in, the
Company or any of its businesses or assets is transferred for
consideration (stock, cash of other property), (ii) any transaction
originated by the Underwriter whereby the Company acquires any other
company or the assets of or interest in any other company, or (iii)
any joint venture or line of credit arranged by the Underwriter for
the benefit of the Company. In the event of the foregoing, the
Underwriter will be paid 5% of the first $4,000,000; 4% of the next
$1,000,000; 3% of the next $1,000,000; and 2% of the excess over
$6,000,000 of the consideration received by the Company in any of the
above-described transactions. In addition, in the event the
Underwriter originates a line of credit with a lender or a corporate
partner, or the Underwriter introduces the Company to a joint venture
partner or customer and sales develop as a result of the introduction,
the Company and the Underwriter will mutually agree on a satisfactory
fee and the terms of payment of such fee.
In addition, subject to the rules of the NASD, the Company has
agreed to engage the Underwriter as warrant solicitation agent, in
connection with which it would be entitled to a 5% fee upon exercise
of the Warrants. In accordance with the NASD Notice to Members 81-38,
no fee shall be paid: (i) upon the exercise where the market price of
the underlying Common Stock is lower than the exercise price; (ii) for
the exercise of the Warrants is held in any discretionary account;
(iii) upon the exercise of Warrants where the disclosure of
compensation arrangements has not been made and where documents have
not been provided to customers not as part of the original Offering
and at the time of exercise; or (iv) upon the exercise of Warrants in
a unsolicited transactions. Notwithstanding the foregoing, no fees
will be paid to the Underwriter or any other NASD member upon exercise
of the Warrants within the first twelve months after the Effective
Date. Unless granted an exemption by the Commission from Rule 10b-6
under the Securities Exchange Act of 1934, the Underwriter will be
prohibited from engaging in any market-making activities with regard
to the Company's securities for the period from nine business days (or
other such applicable periods as Rule 10b-6 may provide) prior to any
solicitation of the exercise of the Warrants until the later of the
termination of such termination of such solicitation activity or the
termination (by waiver or otherwise) of any right the Underwriter may
have to receive a fee. As a result, the Underwriter may be unable to
continue to provide a market for the Company's securities during
certain periods while the Warrants are exercisable. If the Underwriter
has engaged in any of the activities prohibited by Rule 10b-6 during
the periods described above, the Underwriter undertakes to waive
unconditionally its right to receive a commission on the exercise of
such warrants.
The Company has agreed, for a period of two years from the
Effective Date, not to issue any shares of Common Stock or Preferred
Stock or any warrants, options or other rights to purchase Common
Stock or Preferred Stock without the prior written consent of the
Underwriter. Notwithstanding the foregoing, the Company may, without
the consent of the Underwriter, issue shares of Common Stock upon
exercise of any warrants or options outstanding on the date hereof or
to be outstanding upon completion of the Offering pursuant to the
terms hereof.
The Underwriting Agreement provides for reciprocal
indemnification between the Company and the Underwriter against
liabilities in connection with the Offering, including liabilities
under the Securities Act.
The Company has agreed, if requested by the Underwriter at any
time within two years after consummation of the Offering, to nominate
and use its best efforts to elect a designee of the Underwriter as a
director of the Company, or, at the Underwriter's option, as a non-
voting advisor to the Company's Board of Directors. Such designee may
be a director, officer, partner, employee or affiliate of the
Underwriter. As of the Effective Date, the Underwriter has not
determined whether to exercise such right to designate a director, not
has it identified such individual, and the Underwriter has advised the
Company that it does not intend to designate a director immediately
following consummation of the Offering.
The foregoing is a brief summary of certain provisions of the
Underwriting Agreement and related agreements and does not purport to
be a complete statement of terms and conditions. Copies of the
Underwriting Agreement and the other documents described above are on
file with the Commission as exhibits to the Registration Statement of
which this Prospectus is a part. See "Additional Information."
Determination of Offering Price
Prior to this Offering, there has been no public market for the
Common Stock and Warrants. Accordingly, the offering or exercise price
of such securities being offered hereby was determined, in large part,
by negotiation between the Company and the Underwriter. Factors
considered in determining such prices, in additions to prevailing
market conditions, included the history of and the prospects for the
industries in which the Company competes, the prospects of the
Company, an assessment of the earnings, net worth and financial
conditions of the Company, and such other factors as were deemed
relevant, including an evaluation of management and the general
economic climate The prices should in no event, however, be regarded
as an indication of any future market price of the Common Stock or
Warrants.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for
the Company by Richard I. Anslow, Esq., Freehold Office Plaza, 4255
Route 9, Suite D, Freehold, New Jersey 07728. Certain legal matters
will be passed upon for the Underwriter by Leon B. Lipkin, Esq., Two
Grand Central Tower, 140 East 45th Street, New York, New York 10017.
Mr. Lipkin has previously acted as counsel to the Company. Mr. Anslow
has previously acted as counsel to the Underwriter.
EXPERTS
The audited balance sheets of the Company as at March 31, 1997 and
March 31, 1996 and the related Statements of Operations, Stockholders'
Equity and Cash Flows have been included herein and in the
Registration Statement in reliance upon the report, appearing
elsewhere herein, of Weinick Sanders Leventhal & Co., LLP,
independent certified public accountants, and upon the authority of
said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form SB-2 under
the Securities Act, with the Securities and Exchange Commission (the
"Commission"), with respect to the Shares offered hereby. This
Prospectus does not contain all of the information set forth in or
annexed as exhibits to the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company, the
and this Offering, reference is made to the Registration Statement,
including the financial statements, exhibits and schedules, copies of
which may be obtained at prescribed rates from the Commission at its
principal office at 450 Fifth Street, N.W. Washington D.C. 20549, or
at its New York regional office at 7 World Trade Center, Suite 1300,
New York, New York 10048. Statements contained in this Prospectus as
to the contents of any contract, agreement or other document filed as
an exhibit to the Registration Statement are not necessarily complete
and each such description is qualified by reference to such agreement,
contract or document.
Prior to this Offering, the Company has not been a reporting
company under the Securities Exchange Act of 1934, as amended. Reports
and other information filed by the Company may be inspected and copied
at the public reference facilities of the Commission at 450 Fifth
Street, N.W. Washington D.C. 20549 and at the regional offices
referred to above, and copies of such material can be obtained from
the public reference section of the Commission, Washington, D.C. 20549
at prescribed rates. Reports and other information concerning the
Company can also be inspected at The Nasdaq Stock Market, Inc., 1735 K
Street, Washington, D.C. 20006.
PART II
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The New York Business Corporation Law, in general, allows corporations
to indemnify their directors and officers against expenses (including
attorneys' fees), judgments, fines and settlement amounts actually and
reasonably incurred by such person in connection with suits or
proceedings, if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best
interests of the corporation. In the case of a criminal action, the
director or officer must have had no reasonable cause to believe that
person's conduct was unlawful. Under current law, no indemnification
may be made if in connection with a proceeding or in the right of the
corporation in which the director or officer was adjudged to be liable
to the corporation or that person derived an improper personal
benefit.
The Company's Certificate of Incorporation and By-Laws provide that
the Company shall indemnify its directors and officers to the fullest
extent permitted by New York Law. The Company will enter into an
indemnification agreement with each of its directors and officers.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be borne by
the Company (also referred to herein as the Registrant) in connection
with the issuance and distribution of the Units pursuant to the
Offering (other than underwriting discounts and commissions).
SEC registration fee
NASD filing fee
Nasdaq SmallCap Market fee
Legal fees and expenses
Accounting fees
Blue Sky fees and expenses
Printing and engraving expenses
Miscellaneous
Total fees and expenses
* To be completed by amendment.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following paragraphs set forth certain information with respect to
all securities sold by the Company within the past three years without
registration under the Securities Act of 1933, as amended (the
"Securities Act"). The information includes the names of the
purchasers, the date of issuance, the title and number of securities
sold and the consideration received by the Company for the issuance of
these shares.
The following securities were issued by the Company without
registration under the Securities Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, as
transactions by an issuer not involving a public offering:
Title and Number of
Name of Purchaser Date of Issuance of Securities Sold Consideration
- ----------------- ---------------- ------------------ -------------
K & V Investments July 23, 1997 Common Stock $200,000
800,000 Shares
Daniel Kodsi July 23, 1997 Common Stock $200,000
800,000 Shares
ITEM 27 EXHIBITS
(a) Exhibits
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation and Amended Articles of
Incorporation of Registrant
3.2 Bylaws of Registrant
4.1 Specimen Common Stock Certificate of Registrant
10.7 Form of Redeemable Common Stock Purchase Warrant
10.8 Underwriters Warrant (1)
23.1 Consent of Weinick Sanders Leventhal Co., L.L.P.
ITEM 28. UNDERTAKINGS
1. The Registrant will, during any period in which it offers or
sells securities, file a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)
(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration Statement.
(iii) Include any additional or changed material
information on the plan of distribution.
2. The Registrant will, for determining liability under the
Securities Act, treat each post-effective amendment as a new
registration statement of the securities offered, and the offering of
the securities at that time to be the initial bona fide offering.
3. The Registrant will file a post-effective amendment to
remove from registration any of the securities that remain unsold at
the end of the offering.
4. The Registrant will provide to the Underwriter at the
closing certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
5. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the small business issuer pursuant
to the foregoing provisions, or otherwise, the small business issuer
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
6. For purposes of determining any liability under the Act,
the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant under Rule 424(b)(1)
or (4) or 497(h) under the Act shall be deemed to be part of this
registration statement as of the time the Commission declared it
effective.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the
undersigned, in the City of New York, State of New York on the
day of December, 1997.
Silver Star Foods, Inc.
By: /s/
-------------------------
Michael Trotta, President
In accordance with the requirements of the Securities Act of 1933,
this registration statement was signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each director and officer
whose signature appears below constitutes and appoints Richard I.
Anslow, Esq. and Leon B. Lipkin, Esq. as such person's true and lawful
attorneys-in-fact and agents, with full powers of substitution and re-
substitution, for such person in name, place and stead, to sign in any
and all amendments (including post-effective amendments) to this
Registration Statement on Form SB-2, in any and all capacities, and to
file the same, with all exhibits thereto and all other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents, or any of them,
may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
- --------- ----- ----
/s/ Michael Trotta President November , 1997
SILVER STAR FOODS, INC.
(Formerly Silver Star Ravioli Co., Inc.)
FINANCIAL STATEMENTS
AUGUST 31, 1997
SILVER STAR FOODS, INC.
AUGUST 31, 1997
I N D E X
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Page No.
INDEPENDENT ACCOUNTANTS' REPORT F-2
FINANCIAL STATEMENTS:
Balance Sheets as at August 31, 1997 and 1996 (Unaudited)
and March 31, 1997 and 1996 F-3
Statements of Operations
For the Five Months Ended August 31, 1997 and 1996 (Unaudited)
and For the Years Ended March 31, 1997 and 1996 F-4
Statements of Stockholders' Equity
For the Five Months Ended August 31, 1997 (Unaudited)
and For the Years Ended March 31, 1997 and 1996 F-5
Statements of Cash Flows
For the Five Months Ended August 31, 1997 and 1996 (Unaudited)
and For the Years Ended March 31, 1997 and 1996 F-6 - F-7
NOTES TO FINANCIAL STATEMENTS F-8 - F-11
</TABLE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Silver Star Foods, Inc.
We have audited the accompanying balance sheets of Silver Star Foods,
Inc. (formerly Silver Star Ravioli Co., Inc.) as at March 31, 1997 and
1996, and the related statements of operations, stockholders' equity and
cash flows for the years then ended These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Silver Star
Foods, Inc. (formerly Silver Star Ravioli Co., Inc.), as at March 31,
1997 and 1996 and the results of its operations and its cash flows for
the years then ended, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the financial
statements, the Company has a working capital deficiency of $295,311 and
a stockholder's equity deficiency of $50,098 at March 31, 1997. Those
conditions raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
New York, N. Y.
July 2, 1997
(Except for Notes 1 and 2 as to which
the dates are July 23, 1997 and July
28, 1997, respectively)
<TABLE>
<CAPTION>
SILVER STAR FOODS, INC.
BALANCE SHEETS
August 31, March 31,
---------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Current assets:
Cash $115,495 $ 47,804 $ 2,312 $ 4,751
Marketable securities - - - 19,831
Accounts receivable 39,575 22,814 10,043 40,104
Other current assets 10,000 - 566 2,716
-------- -------- -------- ---------
Total current assets 165,070 70,618 12,921 67,402
-------- -------- -------- ---------
Other assets:
Tradename, less accumulated amortization
of $33,029, $19,362, $27,334 and
$13,667, respectively 171,971 185,638 177,666 191,333
Slotting fees, less accumulated
amortization of $58,319, $11,634,
$40,912 and $7,190, respectively 88,885 27,570 62,292 23,514
Deposits 5,255 5,255 5,255 5,255
-------- -------- -------- ---------
Total other assets 266,111 218,463 245,213 220,102
$431,181 $289,081 $258,134 $287,504
======== ======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $137,276 $227,572 $206,978 $124,250
Due to broker - - - 15,579
Accrued expenses 9,684 1,329 6,500 704
Stockholder's loan - 5,175 912 11,626
Note payable - tradename 25,092 205,000 93,842 205,000
-------- -------- -------- ---------
Total current liabilities 172,052 439,076 308,232 357,159
-------- -------- -------- ---------
Commitments and contingencies - - - -
Stockholder's equity (deficiency):
Common stock - $.0001 par value
Authorized - 15,000,000 shares
Issued and outstanding - 4,800,000,
3,200,000 3,200,000 and 3,200,000
shares, respectively 480 320 320 320
Paid-in capital 399,840 - - -
Deficit ( 141,191) ( 150,315) ( 50,418) ( 69,975)
-------- -------- -------- ---------
Total stockholder's equity
(deficiency) 259,129 ( 149,995) ( 50,098) ( 69,655)
-------- -------- -------- ---------
$431,181 $289,081 $258,134 $287,504
======== ======== ======== ========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
SILVER STAR FOODS, INC.
STATEMENTS OF OPERATIONS
For the Five
Months Ended For the Years Ended
August 31, March 31,
---------------------------- --------------------------
1997 1996 1997 1996
----------- ------------- --------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 613,928 $ 643,112 $1,450,438 $1,382,518
----------- ------------- --------- ------------
Costs and expenses:
Cost of sales 486,088 444,287 972,248 903,416
Operating expenses 194,886 269,148 407,381 526,769
Amortization 23,102 10,139 47,389 20,857
----------- ------------- --------- ------------
Total costs and expenses 704,076 723,574 1,427,018 1,451,042
----------- ------------- --------- ------------
Income (loss) from operations ( 90,148) ( 80,462) 23,420 ( 68,524)
----------- ------------- --------- ------------
Other income (expense):
Gain (loss) on investment
in securities - 798 798 ( 713)
Sundry expenses - ( 51) ( 51) ( 34)
----------- ------------- --------- ------------
Total other income (expense) - 747 747 ( 747)
----------- ------------- --------- ------------
Income (loss) before provision
for income taxes ( 90,148) ( 79,715) 24,167 ( 69,271)
Provision for income taxes 625 625 4,610 704
----------- ------------- --------- ------------
Net income (loss) ($ 90,773) ( 80,340) $ 19,557 ($ 69,975)
=========== ============= ========== ============
Net earnings (loss) per share ($.03) ($.03) $.01 ($.02)
=========== ============= ========== ============
Weighted average number
of shares outstanding 3,607,843 3,200,000 3,200,000 3,200,000
=========== ============= ========== ============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
SILVER STAR FOODS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE FIVE MONTHS ENDED AUGUST 31, 1997 (UNAUDITED)
AND THE YEARS ENDED MARCH 31, 1997 AND 1996
Total
Retained Stockholders'
Common Stock Paid-In Earnings Equity
Shares Value Capital (Deficit) (Deficiency)
---------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock at
par value retroactively
presented post-split 3,200,000 $ 320 $ - $ - $ 320
Net loss for the year
ended March 31, 1996 - - - ( 69,975) ( 69,975)
----------- -------- ---------- ------------ ----------
Balance at March 31, 1996 3,200,000 320 - ( 69,975) ( 69,655)
Net income for the year
ended March 31, 1997 - - - 19,557 19,557
----------- -------- ---------- ------------ ----------
Balance at March 31, 1997 3,200,000 320 - ( 50,418) ( 50,098)
Issuance of common stock
for cash 1,600,000 160 399,840 - 400,000
Net loss for the five
months ended August 31,
1997 - - - ( 90,773) ( 90,773)
----------- -------- ---------- ------------ ----------
Balance at August 31, 1997
(Unaudited) 4,800,000 $ 480 $399,840 ($141,191) $259,129
=========== ======== ========== ============ ==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
SILVER STAR FOODS, INC.
STATEMENTS OF CASH FLOWS
For The Five
Months Ended For the Years Ended
August 31, March 31,
-------------------------- -------------------------
1997 1996 1997 1996
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 90,773) ($ 80,340) $ 19,557 ($ 69,975)
---------- ----------- ----------- ------------
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Amortization 23,102 10,139 47,389 20,857
(Gain) loss on sale of securities - ( 798) ( 798) 177
Unrealized loss on tradeable securities - - - 536
Increase (decrease) in cash flows as
a result of changes in asset and
liability account balances:
Accounts receivable ( 29,532) 17,290 30,061 ( 40,104)
Other current assets ( 9,434) 2,716 2,150 ( 2,716)
Deposits - - - ( 5,255)
Accounts payable ( 69,702) 103,322 82,728 124,250
Accrued expenses 3,184 625 5,796 704
---------- ----------- ----------- ------------
Total adjustments ( 82,382) 133,294 167,326 98,449
---------- ----------- ----------- ------------
Net cash provided by (used in)
operating activities ( 173,155) 52,954 186,883 28,474
---------- ----------- ----------- ------------
Cash flows from investing activities:
Marketable securities - 20,629 20,629 ( 4,965)
Slotting fees ( 44,000) ( 8,500) ( 72,500) ( 30,704)
---------- ----------- ----------- ------------
Net cash provided by (used in) investing
activities ( 44,000) 12,129 ( 51,871) ( 35,669)
---------- ----------- ----------- ------------
Cash flows from financing activities:
Payments to brokers for margin purchases - ( 15,579) ( 15,579) -
Payments on notes payable - tradename ( 68,750) - ( 111,158) -
Stockholder's loan ( 912) ( 6,451 ) ( 10,714) 11,626
Proceeds from sale of common stock 400,000 - - 320
---------- ----------- ----------- ------------
Net cash provided by (used in)
financing activities 330,338 ( 22,030) ( 137,451) 11,946
---------- ----------- ----------- ------------
Net increase (decrease) in cash
and cash equivalents 113,183 43,053 ( 2,439) 4,751
Cash and cash equivalents
at beginning of period 2,312 4,751 4,751 -
---------- ----------- ----------- ------------
Cash and cash equivalents
at end of period $115,495 $ 47,804 $ 2,312 $ 4,751
========== =========== =========== ============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
SILVER STAR FOODS, INC.
STATEMENTS OF CASH FLOWS
For The Five
Months Ended For the Years Ended
August 31, March 31,
----------------------- ------------------------
1997 1996 1997 1996
---------- ------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Supplemental Disclosures of
Cash Flow Information:
Cash paid during the period:
Income taxes $ - $ - $ 814 $ -
========== ========== =========== ===========
Interest $ - $ 51 $ 51 $ 44
========== ========== =========== ===========
Supplemental Schedule of Non-Cash
Investing and Financing Transactions:
Acquisition of tradename resulting
in the following:
Investment in tradename $ - $ - $ - $205,000
========== ========== =========== ===========
Financing with note payable $ - $ - $ - $205,000
========== ========== =========== ===========
See notes to financial statements.
</TABLE>
SILVER STAR FOODS, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997 AND MARCH 31, 1997 AND 1996
(The Information As At And For The Five
Months Ended August 31, 1997 AND 1996 Is Unaudited)
NOTE 1 - GOING CONCERN.
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern. The Company
has a working capital deficiency of $295,311 and a stockholder's equity
deficiency of $50,098 as at March 31, 1997.
On July 23, 1997, the Board of Directors resolved to sell
1,600,000 shares of the Company's common stock to two investors for a
total of $400,000 in cash. The Company has also negotiated a letter of
intent with an underwriter for an initial public offering of its common
stock.
Based on these events, management believes that the Company
has the ability to continue operations during the subsequent fiscal year.
The accompanying financial statements do not include any adjustments
relating to the recoverability and classification of asset values or the
amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
NOTE 2 - DESCRIPTION OF BUSINESS.
Silver Star Foods, Inc. ("the Company") was incorporated in
the State of New York on March 28, 1995 under the name of Silver Star
Ravioli Co., Inc. On July 21, 1997, the Company filed a Certificate of
Amendment of Incorporation authorizing the Company to issue an aggregate
of up to 15,000,000 shares, $.0001 par value.
On July 23, 1997, the Board of Directors resolved to
approve a 75,000 to 1 stock split for all outstanding shares of common
stock prior to that date. The common stock presented in the accompanying
financial statements have been retroactively adjusted to reflect this
split.
On July 28, 1997, the Board of Directors resolved to change
the name of the Company to Silver Star Foods, Inc. and filed a Certificate
of Amendment of the Certificate of Incorporation to that effect.
The Company is presently a distributor of frozen pasta food
products which it markets under the "Silver Star" name. The Company
acquires its prepared pre-packaged products from two local manufacturers.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
(a) Uses of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
(b) Cash:
The Company places its temporary cash investments with high
credit quality financial institutions, which at times may be in excess of
the FDIC insurance limit.
(c) Marketable Securities:
Marketable securities held for short-term investment
purposes are trading securities and are presented at their fair values.
(d) Intangible Assets:
Intangible assets, consisting of a tradename and certain
slotting fees, are periodically reviewed by management to evaluate their
future economic benefits or potential impairments which may affect their
recorded values to the Company. The tradename and slotting fees are being
amortized on straight-line basis over 15 and 3 years, respectively.
(e) Income Taxes:
The Company has adopted Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes" at its
inception. Under SFAS 109, the deferred tax provision is determined under
the liability method. Under this method, deferred tax assets and
liabilities are recognized based on the differences between the financial
statement carrying amount and the tax basis of assets and liabilities
using presently enacted tax rates.
(f) Earnings Per Share:
The income (loss) per share for the five months ended
August 31, 1997 and 1996 and the years ended March 31, 1997 and 1996 has
been calculated based on the weighted average number of common shares
outstanding, giving effect retroactively for the 75,000 to 1 stock split
on July 23, 1997 to the beginning of all periods presented. As of August
31, 1997, the Company had no common stock equivalents issued or
outstanding.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)
(f) Unaudited Financial Statements:
The financial statements as at and for the five months
ended August 31, 1997 and 1996 and the information in notes to the
financial statements pertaining thereto are unaudited, but include all
adjustments, consisting only of normal recurring adjustments, and
disclosures which management of the Company considers necessary for a fair
presentation of its financial position as at August 31, 1997 and 1996 and
the results of its operations, statement of stockholders' equity and cash
flows for the five months then ended.
The results of operations for the five month periods ending
August 31, 1997 and 1996 are not necessarily indicative of the results
that may be expected for the full year.
NOTE 4 - ACCOUNTS RECEIVABLE.
Accounts receivable consist of trade receivables arising in
the ordinary course of business and are presented net of estimated
discounts and allowances of $3,500, $12,701, $21,651 and $12,701 as at
August 31, 1997 and 1996 and March 31, 1997 and 1996, respectively.
Management continually reviews its trade receivable credit risk and has
adequately allowed for potential losses.
NOTE 5 - TRADENAME.
The Company acquired the rights to the "Silver Star"
tradename from a related party of the principle stockholder pursuant to an
agreement which was formalized in July 1997 at a cost of $205,000. The
Company has been using the tradename since it's inception.
NOTE 6 - INCOME TAXES.
At March 31, 1996, the Company had a net operating loss
carryforward amounting to approximately $70,000 available to reduce future
taxable income which expires in the year 2011. The Company utilized
approximately $24,000 of this loss carryforward to eliminate federal
income tax obligations for the year ended March 31, 1997. Accordingly,
the Company has a net operating loss carryforward available for income tax
purposes of approximately $46,000 at March 31, 1997, which upon
recognition may result in future tax benefits of approximately $16,000.
At March 31, 1997, after giving effect for utilization of approximately
$8,000 of this tax asset, management is unable to determine if the
utilization of the future tax benefit is more likely than not and
accordingly, the remaining asset of approximately $16,000 has been fully
reserved.
A reconciliation of the statutory income tax effective rate
is as follows:
For the Five For the
Months Ended Years Ended
August 31, March 31,
----------------- ------------------
1997 1996 1997 1996
-------- -------- --------- --------
(Unaudited)
Federal statutory rate (34.0%) (34.0%) 15.0% (25.0%)
State and local taxes 1.0 1.0 19.1 1.0
Creating (utilization) of net
operating loss carryforward 34.0 34.0 (15.0) 25.0
----- ----- ------ -------
Effective tax rate 1.0% 1.0% 19.1% 1.0%
===== ===== ====== =======
49
UNDERWRITING AGREEMENT
, 1997
Royal Hutton Securities, Corp.
2255 Glades Rd., Suite 301E
Boca Raton, Florida 33431
Gentlemen:
Silver Star Foods, Inc. (the "Company"), a New York corporation,
proposes to issue and sell a maximum of 1,000,000 Shares of Common Stock
at $5.25 per Share ("Shares") and 2,000,000 Class A Warrants ("A
Warrrants") at $.25 per Warrant collectively, the Shares and A Warrant
shall be hereinafter referred to as the "Units"). The A Warrants may be
purchased separately and will be transferable separately upon issuance.
The Company hereby employs Royal Hutton Securities, Corp. (the
"Underwriter") as its exclusive agent in connection with the proposed
sale on a "firm commitment" basis. The offering of the Shares and A
Warrants is further described in the Registration Statement filed or to
be filed on Form SB-2 with the United States Securities and Exchange
Commission (the "Commission"). In addition, solely for the purpose of
covering over-allotments, if any, the Company proposes to grant the
Underwriters the option to purchase up to an additional 150,000 Shares
and 300,000 A Warrants.
1. Representations and Warranties of the Company. In order to
induce the Underwriter to enter into this Agreement, the Company
represents and warrants as follows:
(a) The Company has filed or will file a Registration Statement on
Form SB-2 relating to the Units with the Commission pursuant to the
Securities Act of 1933 (the "Securities Act"). The Company has
furnished to the Underwriter and to its legal counsel two signed and ten
conformed copies of the Registration Statement together with all
amendments and exhibits. As used in this Agreement, the term
"Registration Statement" means the Registration Statement, including the
Prospectus, the exhibits and the financial statements, and all
amendments including any amendments after the effective date of the
Registration Statement. The term "Prospectus" means the prospectus filed
as a part of Part I of the Registration Statement, including all pre-
effective and post-effective amendments and supplements thereto.
(b) The Registration Statement and all other documents filed or to
be filed or filed after the date hereof with the Commission conform and
will conform with all of the requirements of the Securities Act in all
material respects. Neither the Registration Statement, the Prospectus
nor the other material filed or to be filed with the Commission contains
nor will contain any untrue statements of material fact nor are there or
will there be any omissions of material facts required to be stated
therein or that are necessary to make the statements therein not
misleading, except that this warranty does not apply to any statements
or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by and with respect to you, or any
dealer through you, expressly for use in the Registration Statement or
Prospectus or any amendment or supplement thereto.
(c) The Company has obtained a CUSIP number for its Common Stock
and A Warrants and the Company has used its best efforts to qualify the
Units for offering in every state reasonably designated by the
Underwriter. The materials previously filed or filed after the date
hereof with any state do not and will not contain any untrue statements
of material fact nor are there or will there be any omissions of
material facts required to be stated therein or that are necessary to
make the statements therein not misleading.
(d) The authorized capital stock of the Company consists of
15,000,000 shares of Common Stock, par value $.0001 per share, and A
Warrants, of which 4,800,000 shares of Common Stock and no A Warrants
are outstanding as of the date hereof. Each outstanding share of Common
Stock is duly authorized, validly issued, fully paid, and nonassessable
without any personal liability attaching to the ownership thereof.
Except as set forth in the Registration Statement, there is no option,
or other right calling for the issuance of any instrument which by its
terms is convertible into, exercisable or exchangeable for, capital
stock of the Company.
(e) The Shares issuable upon the exercise of the Warrants (the
"Warrant Shares") have been duly authorized and when issued and
delivered in accordance with this Agreement and the Underwriter's
Warrants when issued and delivered upon exercise of the Underwriter's
Warrants, will all be validly issued, fully paid, and non-assessable,
without any personal liability attaching to the ownership thereof, and
will not be issued in violation of any preemptive rights of
stockholders, and the purchasers thereof will receive good title
thereof, free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements and voting trusts.
The Warrant Shares and the shares of Common Stock issuable upon
exercise of the Underwriter's Warrants are duly authorized and reserved
for issuance and, when issued and delivered in accordance with the
Warrant Agreement and the Warrants or the Underwriter's Warrants, as the
case may be, will be validly issued, fully paid and non-assessable and
will not be issued in violation of any preemptive rights of
stockholders, and the holders of the Warrants or the Underwriter's
Warrants, as the case may be, will receive good title to the securities
purchased by them, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements and voting
trusts. The Common Stock underlying the Underwriter's Warrants conform
to all statements relating thereto contained in the Registration
Statement and the Prospectus.
(f) The Company has been legally incorporated and is now, and
always during the period of the offering will be, a validly existing
corporation under the laws of the State of New York, lawfully qualified
to conduct the business for which it was organized and which it proposes
to conduct. The Company will always during the period of the offering
be qualified to conduct business as a foreign corporation in each
jurisdiction where the nature of its business requires such
qualification.
(g) During the period of the offering of the Shares and A Warrants
and for one year from the date the Commission declares the Registration
Statement to be effective ("Effective Date"), the Company will not sell
any securities without the Underwriter's prior written consent, which
will not be unreasonably withheld.
(h) The Company has caused each of its officers and directors and
has used its best efforts to cause each of its other shareholders to
enter into an agreement with the Underwriter pursuant to the terms of
which each such person has agreed not to sell any shares owned directly
or indirectly by such person for a period of twelve (12) months from the
Effective Date of the Registration Statement without the Underwriter's
prior written consent, which consent will not be unreasonably withheld.
Prior to the Effective Date, the Company will obtain such agreements
from shareholders owning a minimum of 66 2/3% of the Company's
outstanding common stock.
(i) The Company has no subsidiaries nor contemplates acquiring
subsidiaries or engaging in mergers with or the acquisition of any
companies.
(j) The financial statements, together with related schedules and
notes, included in the Registration Statement and Prospectus present
fairly the financial condition of the Company and are reported upon by
independent public accountants according to generally accepted
accounting principles and as required by the rules and regulations of
the Commission.
(k) Except as disclosed in the Registration Statement, the
Prospectus and financial statements included therein, the Company does
not have any contingent liabilities, obligations, or claims nor has it
received threats of claims or regulatory action. Further, except as
disclosed in the Registration Statement and the Prospectus, subsequent
to the date information is given in the Registration Statement and
definitive Prospectus, and prior to the close of the offering: (a) there
shall not be any material adverse change in the management or condition,
financial or otherwise, of the Company or in its business taken as a
whole; (b) there shall not have been any material transaction entered
into by the Company other than transactions in the ordinary course of
business; (c) the Company shall not have incurred any material
obligations, contingent or otherwise, which are not disclosed in the
Registration Statement and the Prospectus; (d) there shall not have been
nor will there be any change in the capital or long term debt (except
current payments) of the Company; and (e) the Company has not and will
not have paid or declared any dividends or other distributions on its
common shares.
(l) The Company's securities, however characterized, are not
subject to preemptive rights.
(m) The Company will have the legal right and authority to enter
into this Underwriting Agreement upon its execution, to effect the
proposed sale of the Shares and A Warrants, to execute and issue the
Underwriting Warrants and to effect all other transactions contemplated
by this Agreement.
(n) The Company knows of no person who rendered any services in
connection with the introduction of the Company to the Underwriter. No
broker's or other finder's fees are due and payable by the Company and
none will be paid by it.
(o) The Company is eligible to use Form SB-2 for the offering of
the Shares and A Warrants.
(p) The Company and its affiliates are not currently offering any
securities nor has the Company or its affiliates offered or sold any
securities except as required to be described in the Registration
Statement.
(q) The Company will not file any amendment or supplement to the
Registration Statement, Prospectus, or exhibits if the Underwriter and
its counsel have not been previously furnished a copy, or if the
Underwriter or its counsel have objected in writing to the filing of the
amendment or supplement.
(r) The Company possesses adequate certificates or permits issued
by the appropriate federal, state and local regulatory authorities
necessary to conduct its business and to retain possession of its
properties. The Company has not received any notice of any proceeding
relating to the revocation or modification of any of these certificates
or permits.
(s) The Company has filed all tax returns required to be filed and
except as set forth in the Registration Statement, Prospectus and
financial statements included therein, is not in default in the payment
of any taxes which have become due pursuant to any law or any
assessment.
(t) The Company has marketable title to all properties including
intellectual properties described in the Registration Statement as owned
by it. Except as set forth in the Registration Statement, Prospectus
and the financial statements included therein, the properties are free
and clear of all liens, charges, encumbrances, or restrictions, however
characterized. All of the contracts, leases, subleases, patents,
copyrights, licenses and agreements, however characterized, under which
the Company holds its properties as described in the Registration
Statement are in full force and effect. Except as set forth in the
Registration Statement, Prospectus and the financial statements included
therein, the Company is not in default under any of the material terms
or provisions of any contracts, leases, subleases, patents, copyrights,
licenses or agreements under which the Company holds its properties.
There are no known claims against the Company concerning the Company's
rights under the leases, subleases, patents, copyrights, licenses and
agreements and concerning its right to continued possession of its
properties. Further, the Company is not in material default in the
performance of any obligation, agreement or condition contained in any
debenture, note or other evidence of indebtedness or any indenture or
loan agreement of the Company.
(u) All original documents and other information relating to the
Company's affairs has and will continue to be made available upon
request to the Underwriter and to its counsel at the Underwriter's
office or at the office of the Underwriter's counsel and copies of any
such documents will be furnished upon request to the Underwriter and to
its counsel. Included within the documents made available have been at
least the Articles of Incorporation and any Amendments, Minutes of all
of the meetings of the Incorporators, Directors and Shareholders, all
financial statements and copies of all contracts, leases, patents,
copyrights, licenses or agreements to which the Company is a party or in
which the Company has an interest.
(v) The Company has appointed as its
transfer agent. The Company will make arrangements to have available at
the office of the transfer agent sufficient quantities of the Company's
common stock certificates as may be needed for the quick and efficient
transfer of the Shares and A Warrants.
(w) The Company will use the proceeds from the sale of the Shares
and A Warrants as set forth in the Registration Statement and
Prospectus.
(x) There are no contracts or other documents required to be
described in the Registration Statement and Prospectus.
(y) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and compliance with
the terms of this Agreement will not conflict with or result in a breach
of any of the material terms, conditions or provisions of, or constitute
a material default under, the Articles of Incorporation or Bylaws of the
Company, as amended, or any note, indenture, mortgage, deed of trust, or
other agreement or instrument to which the Company is a party or by
which it or any of its property is bound, or any existing law, order,
rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality, agency or body, arbitration tribunal or
court, domestic or foreign, having jurisdiction over the Company or its
property. The consent, approval, authorization, or order of any court
or governmental instrumentality, agency or body is not required for the
consummation of the transactions herein contemplated except such as may
be required under the Securities Act, under the Blue Sky or securities
laws of any state or jurisdiction, or the rules of the NASD (as defined
in paragraph 2(a) hereof).
(z) There are no contracts or other documents which are required to
be filed as exhibits to the Registration Statement by the Securities Act
or its rules and regulations which have not been so filed. Each
contract to which the Company is a party has been duly and validly
executed, is in full force and effect in all material respects in
accordance with its respective terms, and no contracts have been
assigned by the Company, except as disclosed in the Registration
Statement and Prospectus. The Company knows of no present situation,
condition or fact which would prevent compliance with the terms of such
contracts. Except for amendments or modifications of contracts in the
ordinary course of business and except as disclosed in the Registration
Statement and Prospectus, the Company has no intention of exercising any
right which would cancel any of its obligations under any contract, and
has no knowledge that any other party to any contract, in which the
Company has an interest, has any intention not to render full
performance under such contract.
(aa) The Company has not made any representation, whether oral or
in writing, to anyone, whether an existing shareholder or not, that any
of the Shares and A Warrants will be reserved for or directed to them
during the proposed public offering.
(bb) The Company has caused each of its current shareholders to
agree in writing with respect to shares of Common Stock acquired by them
prior to the Effective Date that they have acquired the said shares for
investment purposes only and they acknowledged that they are holding
"restricted securities" as defined in Rule 144.
(cc) Except as disclosed in the Registration Statement and
Prospectus, there is and prior to the close of the offering of the
Shares and A Warrants to the public there will be, no action, suit or
proceeding before any court or governmental agency, authority or body
pending or to the knowledge of the Company threatened which might result
in judgments against the Company not adequately covered by insurance or
which collectively might result in any material adverse change in the
condition (financial or otherwise), the business or the prospects of the
Company, or would materially affect the properties or assets of the
Company.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
2. Representations and Warranties of the Underwriter. The
Underwriter represents and warrants as follows:
(a) It is registered as a broker-dealer with the Commission, in
good standing, and is registered, to the extent registration is
required, with the appropriate governmental agency in each state in
which it intends to offer or sell the Shares and A Warrants and is a
member of the National Association of Securities Dealers, Inc. ("NASD")
and will use its best efforts to maintain such registrations,
qualifications and memberships throughout the term of the offering.
(b) Anything to the contrary in Section (a) above notwithstanding,
the Underwriter reserves the right to offer the Shares and A Warrants
through selected dealers in other states that it is not registered in,
provided that the selected dealers are so registered in such states.
(c) To the knowledge of the Underwriter, no action or proceeding is
pending against the Underwriter or any of its officers or directors
concerning the Underwriter's activities as a broker or dealer that would
affect the Company's offering of the Shares and A Warrants.
(d) The Underwriter will offer the Shares and A Warrants only in
those states and in the quantities that are identified in the Blue Sky
Memorandums from Underwriter's counsel to the Company that the offering
of the Shares and A Warrants has been qualified for sale under the
applicable state statutes and regulations. The Underwriter, however,
may offer the Shares and A Warrants in other states if (i) the
transaction is exempt from the registration requirements in that state,
(ii) the Company's counsel has received notice ten days prior to the
proposed sale, and (iii) the Company's counsel does not object within
said ten day period.
(e) The Underwriter, in connection with the offer and sale of the
Shares and A Warrants and in the performance of its duties and
obligations under this Agreement, agrees to use its best efforts to
comply with all applicable federal laws, the laws of the states or other
jurisdiction in which the Shares and A Warrants are offered and sold;
and the Rules and Regulations of the NASD.
(f) The Underwriter is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida
with all requisite power and authority to enter into this Agreement and
to carry out its obligations hereunder.
(g) This Agreement has been duly authorized, executed and delivered
by the Underwriter and is a valid agreement on the part of the
Underwriter.
(h) Neither the execution of this Agreement nor the consummation of
the transactions contemplated hereby will result in any breach of any of
the terms or conditions of, or constitute a default under, the
articles of incorporation or bylaws of the Underwriter or any indenture,
agreement or other instrument to which the Underwriter is a party or
violate any order directed to the Underwriter of any court or any
federal or state regulatory body or administrative agency having
jurisdiction over the Underwriter or its affiliates.
(i) The Underwriter knows of no person who rendered any services in
connection with the introduction of the Company to the Underwriter. No
person acting by, through or under the Underwriter will be entitled to
receive from the Underwriter or from the Company any finder's fees or
similar payments.
(j) The written information provided by the Underwriter for
inclusion in the Registration Statement and Prospectus consists of
certain information on the front and back Prospectus cover pages, and
that set forth under "Underwriting" in the Prospectus.
(k) The Underwriter will, promptly after the Closing date, supply
the Company with all information required from the Underwriter for the
completion of Form SR and such additional information as the Company may
reasonably request to be supplied to the securities commissions of such
states in which the Shares and A Warrants have been qualified for sale.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
3. Employment of the Underwriter. In reliance upon the
representations and warranties and subject to the terms and conditions
of this Agreement:
(a) The Company employs the Underwriter as its exclusive agent to
sell, on a firm committment basis the Shares and A Warrants, on a cash
basis only, at a price of $5.25 per Share and $.25 per A Warrant.
(b) The obligation of the Underwriter to offer the Shares and A
Warrants is subject to receipt by it of written advice from the
Commission that the Registration Statement is effective, is subject to
the Shares and A Warrants being qualified for offering under applicable
laws in the states as may be reasonably designated by the Underwriter,
is subject to the absence of any prohibitory action by any governmental
body, agency or official, and is subject to the terms and conditions
contained in this Agreement and in the Registration Statement covering
the offering to which this Agreement relates.
(c) Payment for the Shares and Warrants by the Underwriters shall
be made by certified or official bank check payable to the order of the
Company at the offices of Leon B. Lipkin, Esq., 140 East 45th Street,
New York, New York 10017 upon delivery of the Shares and A Warrants for
the respective accounts of the Underwriters (the "Closing"). Such
delivery and payment shall be made at 10:00 A.M. on the seventh business
day following the Effective Date (as defined in paragraph
herein).
(d) Certificates for the Representative's Shares shall be
registered in such name or names and in such authorized denominations as
you may request in writing at least two business days prior to the
Closing date.
(e) The Underwriter shall have the right to associate with other
underwriters and dealers as it may determine and shall have the right to
grant to such persons such concessions out of the commissions to be
received by the Underwriter as the Underwriter may determine, under and
pursuant to a Seclected Dealer Agreement.
(f) Subject to the sale of the minimum number of Shares and A
Warrants, the Company agrees to pay to the Underwriter an underwriting
commission computed at the rate of $. (10% of the public offering
price) for each of the Shares and A Warrants sold by the Underwriter at
the public offering price of $5.25 per Shares and $.25 per Warrant.
This commission shall be payable at closing of this Offering.
4. Expenses of the Underwriter.
(a) Subject to the sale of the Shares and A Warrants, the Company
shall reimburse the Underwriter for its expenses on a nonaccountable
basis in an amount equal to three (3%) of the gross proceeds of the
offering. The Underwriter acknowledges that it has received $ -0- as an
advance against the nonaccountable expenses allowance. The remaining
nonaccountable expense allowance is due at the closing of this Offering.
(b) If the proposed public offering is not completed because (i) of
any reason solely within the control of the Company, or its directors,
officers or stockholders, (ii) the Company unilaterally withdraws the
proposed public offering from the Underwriter, (iii) the Company does
not permit the Registration Statement to become effective for any reason
whatsoever, or (iv) of any discrepancy in any representation made to the
Underwriter, then the Company will be obligated to reimburse the
Underwriter for its actual accountable out of pocket expenses incurred
in connection herewith. The parties agree that such reimbursement shall
be inclusive of the sums paid pursuant to this paragraph. It is
understood and agreed by the parties hereto that any expenses incurred
by the Underwriter shall be deemed to be reasonable and unobjectionable
upon a reasonable showing by the Underwriter that such expenses were
incurred, directly or indirectly, in connection with the proposed
transaction and/or relationship of the parties hereto, as described
herein. The Underwriter agrees that out of its nonaccountable expense
allowance the Underwriter will pay all costs incurred or to be incurred
by the Underwriter or by its personnel in connection with the offering
of the Shares and A Warrants, except those to be paid by the Company as
described in Paragraph 5 hereof.
5. Expenses of the Company. The Company agrees that it will pay
the following fees and expenses:
(a) All fees and expenses of its legal counsel who will be engaged
to prepare certain information, documents and papers for filing with the
Commission and with state or local securities authorities;
(b) All fees and expenses of its accountants incurred in connection
with the offering of the Shares and A Warrants and the preparation of
all documents and filings made as part of the offering;
(c) All costs in issuing and delivering the Shares and A Warrants;
(d) All costs in printing and delivering to the Underwriter and
dealers as many copies of the Registration Statement and amendments,
preliminary Prospectuses and definitive Prospectuses as reasonably
requested by the Underwriter;
(e) All of the Company's mailing, telephone, travel, clerical and
other office costs incurred or to be incurred in connection with the
offering of the Shares and A Warrants;
(f) All fees and costs which may be imposed by the Commission, the
various state or local securities authorities and the NASD for review of
the offering of the Shares and A Warrants;
(g) All other expenses incurred by the Company in performance of
its obligations under this Agreement.
6. Underwriter's Warrants.
(a) The Company shall issue and sell at the Closing of the
proposed underwriting, to the Underwriter and/or its designees, warrants
to purchase from the Company up to Shares (one (1) Share
for every ten (10) Shares sold (the "Underwriter's Warrants) in the
offering at a price of $.0001 per Unit. The Underwriter's Warrants will
be exercisable at $ per Share (the "Exercise Price") with
the warrants comprising the Shares and A Warrants exercisable at
$???????? per Warrant. The Underwriter's Warrants are exercisable for a
period of four years, commencing one year from the date of the
prospectus. The Company agrees that, for a period of seven (7) years
from the Effective Date, if the Company intends to file a Registration
Statement for the public sale of securities (excluding a Registration
Statement in connection with mergers, acquisitions, or employee stock
option or share benefit plans), it will notify all of the holders of the
Underwriter's Warrants and/or the holders of the securities issuable
upon the exercise of the Underwriter's Warrants, and if so requested by
any holder of Underwriter's Warrants or the holder of the underlying
securities, the Company will include in such Registration Statement,
information to permit a public offering of the Underwriter's Warrants
and/or the underlying securities owned by such holders, at the expense
of the Company (excluding underwriting discounts, commissions, fees and
expenses of the holder's counsel). In addition, for a period of four
(4) years commencing one (1) year from the Effective Date of the
Registration Statement, upon the written demand of the Underwriter or
its specific duly authorized designees or, together with the Underwriter
or its specific duly authorized designee's consent, the holder(s) of at
least 50% of the Underwriter's Warrants and/or the securities underlying
the same, the Company agrees, on one occasion at the expense of the
Company (excluding underwriting discounts, commissions, fees and
expenses of the holder's counsel) and on a second occasion at the
expense of such holders, to promptly register the Underwriter's Warrants
and/or the underlying securities for purposes of a public offering.
(b) The Underwriter's Warrants will be evidenced by certificates
issued by the Company and delivered to the Underwriter, which shall
contain such terms and conditions as are required by the Underwriter,
including anti-dilution provisions reasonably acceptable to the
Underwriter relating to stock splits, stock dividends and other like
matters. Any transfer of the Underwriter's Warrants by the Underwriter
to any person must be made in compliance with the Securities Act.
(c) The Underwriter agrees that the Underwriter's Warrants and any
certificates representing the Warrant Shares will bear the following
legend:
"The securities represented by this certificate may not be
offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the
Securities Act of 1933 (the "Securities Act"), or pursuant
to an exemption from registration under the Securities Act,
the availability of which is to be established to the
satisfaction of the Company."
7. Threat of Regulatory Action. The Company and the Underwriter
agree to advise each other immediately and confirm in writing the
receipt of any threat of or the initiation of any steps or procedures
which would impair or prevent the right to offer the Shares and A
Warrants or the issuance of any "suspension orders" or other
prohibitions preventing or impairing the proposed offering of the Shares
and A Warrants. In the case of the happening of any such event, neither
the Company nor the Underwriter will acquiesce in such steps, procedures
or suspension orders if such acquiescence would adversely affect the
other party and, in such event, each party agrees to actively defend any
such actions or orders unless both parties agree in writing to acquiesce
in such actions or orders or unless counsel for each party advises the
parties that the probability of successfully defending against such
actions or orders is remote.
8. Further Agreements of the Company. The Company further agrees
with the Underwriter as follows:
(a) The Company will advise the Underwriter as soon as the Company
is advised of any comments by the Commission, of any request made by
the Commission for an amendment to the Registration Statement or
Prospectus or for supplemental information, and of any order or of the
institution of any adverse proceedings with respect to the offering of
the Shares and A Warrants. The Company will immediately deliver to the
Underwriter copies of any papers involved.
(b) The Company will use its best efforts to qualify the sale of
the Shares and A Warrants in such states as shall be reasonably
designated by the Underwriter. The officers, directors, promoters and
shareholders of the Company will comply with applicable state escrow
requirements, including those pertaining to the escrow of shares,
provided that the period of escrow shall not exceed two years from the
Effective Date and provided that the period of escrow shall only be
based upon the passage of time.
(c) The Company will provide the Underwriter and its counsel with
copies of all applications for the registration of Shares and A Warrants
filed with the various state authorities and will provide the
Underwriter and its counsel with copies of all comments and orders
received from these authorities.
(d) The Company will deliver to the Underwriter (and to other
broker-dealers as directed by the Underwriter) as many copies of
preliminary Prospectuses as the Underwriter may reasonably request
during the period following the filing of Amendment No. 1 to the
Registration Statement (unless the Registration Statement is not
reviewed by the Commission, in which event such copies shall be made
available by the Company as reasonably requested by the Underwriter) and
the Effective Date. The Company will deliver to the Underwriter and to
other broker-dealers as requested by the Underwriter as many copies of
the definitive Prospectus as the Underwriter may reasonably request
during the period of the offering and for 90 days after the Effective
Date.
(e) If the Company becomes a reporting company pursuant to Section
12(g) of the Exchange Act and/or is required to file reports pursuant to
Section 15(d) of the Exchange Act, and the Underwriter is a principal
market-maker in the Company's Common Stock, the Company shall furnish
the Underwriter for so long as the Company's common stock is registered
under the Exchange Act and/or the Company is required to file reports
under the Exchange Act, with:
(i) Within 90 days after the close of each fiscal year of the
Company, a financial report of the Company and its subsidiaries, if
any, on a consolidated basis, such report to include such information
in such form as the Company shall be required to include in reports for
that fiscal year to be filed with the Commission and such report to be
certified by independent public accountants;
(ii) Within 60 days after the end of each quarterly fiscal
period of the Company other than the last quarterly fiscal period in any
fiscal year, copies in printable form of the financial statements of the
Company and its subsidiaries, if any, on a consolidated basis, for that
period and as of the end of that period, which financial statements
shall include a narrative discussion of such financial statements and of
the business conducted by the Company and its subsidiaries, if any,
during such fiscal quarter and such information in such form as the
Company shall be required to include in reports for that period to be
filed with the Commission, all subject to year-end adjustment, signed by
the principal financial or accounting officer of the Company;
(iii) As soon as is available, a copy of each report of the
Company mailed to shareholders or filed with the Commission;
(iv) Copies of all news, press or public information releases
when made; and
(v) Upon request in writing from the Underwriter, such other
information as may reasonably be requested concerning the properties,
business and affairs of the Company and its subsidiaries, if any.
(f) The Company agrees to notify the Underwriter immediately within
the 90 day period after the Effective Date of any event that materially
affects the Company or its securities and that should be set forth in an
amendment or supplement to the Prospectus in order to make the
statements made therein not misleading. Similarly, the Company agrees
to as soon as possible thereafter prepare and furnish to the Underwriter
as many copies as the Underwriter may request of an amended Prospectus
or a supplement to the Prospectus in order that the Prospectus as
amended or supplemented will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or that is necessary in order to make the statements made
therein not misleading.
(g) The Company will file with the Commission the required reports
on Form SR and will file with the appropriate state securities
commissioners any sales and other reports required by the rules and
regulations of such agencies and will supply copies to the Underwriter.
(h) Except with the Underwriter's approval, the Company agrees that
the Company will not do the following until (a) the completion of the
offering of the Shares and A Warrants, or (b) the termination of this
Agreement, or (c) 90 days after the Effective Date, whichever occurs
later:
(i) Undertake or authorize any change in its capital structure
or authorize, issue, or permit any public or private offering of
additional securities;
(ii) Authorize, create, issue, or sell any funded obligations,
notes or other evidences of indebtedness, except in the ordinary course
of business and within 12 months of their creation;
(iii) Consolidate or merge with or into any other corporation;
or
(iv) Create any mortgage or any lien upon any of its
properties or assets except in the ordinary course of its
business.
(i) Within 30 days after the successful termination of the offering
of the Shares and A Warrants, the Company agrees to submit information
about the Company to be included in various securities manuals,
including Moody's Over-The-Counter Manual and Standard & Poor's,
Standard Corporation Records to facilitate secondary trading in the
Shares and A Warrants.
(j) The Company agrees to cause the stock certificates of all of
the current shareholders of the Company and of any future officers or
directors of the Company to be clearly legended as being restricted
against transfer without compliance with the Securities Act and to cause
the Company's transfer agent to put stop transfer instructions against
such stock certificates.
9. Company's Indemnification.
(a) The Company agrees to indemnify, defend and hold harmless the
Underwriter from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable legal or other expenses)
incurred by the Underwriter in connection with defending or
investigating any such claims or liabilities, whether or not resulting
in any liability to the Underwriter, which the Underwriter may incur
under the federal or state securities laws and regulations thereunder,
state statutes or at common law or otherwise, but only to the extent
that such losses, claims, damages, liabilities and expenses shall arise
out of or be based upon a violation or alleged violation of the federal
or state securities laws or regulations promulgated thereunder, a state
statute or the common law resulting from any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or in any application or other papers filed with the various
state securities authorities (hereinafter collectively called "Blue Sky
Applications") or shall arise out of or be based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided, however, that this indemnity agreement shall not apply to any
such losses, claims, damages, liabilities or expenses arising out of or
based upon any such violation based upon a statement or omission made in
reliance upon written information furnished for use in the Registration
Statement or in a Blue Sky Application by the Underwriter.
(b) The foregoing indemnity of the Company in favor of the
Underwriter shall not be deemed to protect the Underwriter against any
liability to which the Underwriter would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance
of the Underwriter's duties, or by reason of the Underwriter's reckless
disregard of the Underwriter's obligations and duties under the
Securities Act or this Agreement.
(c) The Underwriter agrees to give the Company an opportunity to
participate in the defense or preparation of the defense of any action
brought against the Underwriter to enforce any such claim or liability
and the Company shall have the right so to participate. The agreement
of the Company under the foregoing indemnity is expressly conditioned
upon notice of any such action having been sent by the Underwriter to
the Company, by letter or telegram (addressed as provided in this
Agreement), promptly after the receipt of written notice of such action
against the Underwriter such notice either being accompanied by copies
of papers served or filed in connection with such action or by a
statement of the nature of the action to the extent known to
Underwriter. Failure to notify the Company as herein provided shall not
relieve it from any liability which it may have to the Underwriter other
than on account of the indemnity agreement contained in this paragraph
9.
10. Underwriter's Indemnification.
(a) The Underwriter likewise agrees to indemnify, defend and hold
harmless the Company against any and all losses, claims, damages,
expenses and liabilities to which the Company may become subject,
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
in any Blue Sky Application or 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, resulting from the use of
written information furnished to the Company by the Underwriter for use
in the preparation of the Registration Statement or in any Blue Sky
Application.
(b) The Company agrees to give the Underwriter an opportunity to
participate in the defense or preparation of the defense of any action
brought against the Company to enforce any such claim or liability and
the Underwriter shall have the right so to participate. The
Underwriter's liability under the foregoing indemnity is expressly
conditioned upon notice of any such action having been sent by the
Company to the Underwriter by letter or telegram (addressed as provided
for in this Agreement), promptly after the receipt by the Company of
written notice of such action against the Company, such notice either
being accompanied by copies of papers served or filed in connection with
such action or by a statement of the nature of the action to the extent
known to the Company. Failure to notify the Underwriter as herein
provided shall not relieve the Underwriter from any liability which the
Underwriter may have to the Company other than on account of the
indemnity agreement contained in this paragraph 10.
(c) The provisions of paragraphs 9 and 10 shall not in any way
prejudice any right or rights which the Underwriter may have against the
Company or the Company may have against the Underwriter under any
statute, including the Securities Act, at common law or otherwise.
(d) The indemnity agreements contained in paragraphs 9 and 10 shall
survive the termination of this Agreement and shall inure to the benefit
of the Company, the Underwriter, their respective successors and the
persons specified in Section 16 below, and their respective heirs,
personal representatives and successors and shall be valid irrespective
of any investigation made by or on behalf of the Underwriter or the
Company.
11. Contribution. If the indemnification provided for in
paragraphs 9 and 10 is unavailable to or insufficient to hold harmless
an indemnified party under paragraphs 9 and 10 in respect of any losses,
claims, damages, expenses or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall in lieu of
indemnifying such indemnified party as a result of such losses, claims,
damages, expenses or liabilities (or actions in respect thereof)
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) in such proportion as is appropriate to
reflect not only (i) the relative benefits received by the Company on
the one hand and the Underwriter on the other from the offering of the
Shares and A Warrants, but also (ii) the relative fault of the Company
and the Underwriter in connection with the statements or omissions which
resulted in such losses, claims, damages, expenses or liabilities (or
action in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriter on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering of the
Shares and A Warrants (before deducting expenses other than the
nonaccountable expense allowance payable by the Company to the
Underwriter) received by the Company bear to the total underwriting
commissions and expense allowance received by the Underwriter in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information applied by the Company or the Underwriter and their parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriter agree that it would not be just and equitable if
contribution pursuant to this paragraph 11 were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
paragraph 11. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, expenses or liabilities (or
actions in respect thereof) referred to above in this paragraph 11 shall
be deemed to include any legal or other expenses to which such
indemnified party would be entitled if paragraphs 9 and 10 were applied.
Notwithstanding the provisions of this paragraph 11, the Underwriter
shall not be required to contribute any amount in excess of the amount
by which the total price which the Shares and A Warrants underwritten by
it and distributed to the public exceeds the amount of any damages which
the Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission plus
the Underwriter's proportionate share of such legal or other expenses;
and any punitive or exemplary damages if the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by or statements
made by the Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 of the Securities
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
12. Conditions Precedent to the Obligations of the Underwriter.
All obligations of the Underwriter under this Agreement are subject to
the following conditions precedent:
(a) Counsel for the Underwriter shall have completed a review of
the form and content of the Registration Statement and Prospectus, of
the organization and present legal status of the Company and of the
legality and validity of the authorization and issuance of the issued
and outstanding stock of the Company and of the Shares and A Warrants.
(b) The Company shall have performed all of its obligations under
this Agreement. All of the statements, representations and warranties
contained in this Agreement shall be complete and true.
(c) From the date of this Agreement until the completion of the
offering, no material adverse changes shall have occurred in the
business, properties and assets of the Company other than changes
occurring in the ordinary course of business.
(d) From the date of this Agreement until the completion of the
offering, no claims or litigation shall have been instituted or
threatened against the Company for substantial amounts or which would
materially adversely affect the Company, its business or its property
and no reasonable basis exists for such claims or threats. Further, no
proceeding shall have been instituted or threatened against the Company
before any regulatory body wherein an unfavorable ruling would have a
material adverse effect on the Company.
(e) From the date of this Agreement until the completion of the
offering of the Shares and A Warrants, no material adverse change shall
have occurred in the operation, financial condition, management or
credit of the Company or in any conditions affecting the prospects of
its business.
(f) From the date of this Agreement until the completion of the
offering, the Company shall not have sustained any loss on account of
fire, flood, accident or calamity of such character as materially
adversely affects its business or property, regardless of whether or not
the loss has been insured.
(g) The Underwriter shall have received from the independent public
accountants for the Company two letters addressed to the Underwriter,
one dated the Effective Date and one dated the date of closing of this
Offering to the effect that:
(i) With respect to the Company they are independent public
accountants within the meaning of the Securities Act and the published
rules and regulations.
(ii) In their opinion, the financial statements and supporting
schedules and notes examined by them of the Company at all dates and for
all periods referred to in their opinion included in the definitive
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
published rules and regulations.
(iii) Upon the basis of a reading of the related available
interim financial statements and the financial data and accounting
records of the Company, inquiries of officers of the Company responsible
for financial and accounting matters, a reading of the minute books of
the Company and other specified procedures and inquiries satisfactory to
the Underwriter, if any, nothing has come to their attention which
causes them to believe that during the period from the last audited
balance sheet included in the Registration Statement to a specified date
not more than five (5) days prior to the date of such letter (a) there
has been any change in the capital shares or other securities of the
Company or any payment or declaration of any dividend or other
distribution in respect thereof or exchange therefor from that shown in
its audited balance sheets or in the debt of the Company from that shown
or contemplated under "Capitalization" in the Registration Statement or
definitive Prospectus (other than as set forth in or contemplated by the
Registration Statement or definitive Prospectus); (b) there have been
any material decreases in net current assets or net assets as compared
with amounts shown in the last audited balance sheet included in the
definitive Prospectus (other than in the ordinary course of business),
except in all instances the changes disclosed in or contemplated by the
Registration Statement and definitive Prospectus; and (c) on the basis
of their examinations referred to in their opinion, report, and consent
included in the Registration Statement and definitive Prospectus and the
indicated procedures and discussions referred to above, nothing has come
to their attention which, in their judgment, would cause them to believe
or indicate that the financial statements and schedules set forth in the
Registration Statement and definitive Prospectus do not present fairly
the financial position and results of operations of the Company, for the
periods indicated, in conformity with generally accepted accounting
principles applied on a consistent basis, and are not in all material
respects a fair presentation of the information purported to be shown.
(h) On the date of the closing of this Offering the Underwriter
shall have received from the president or vice president of the Company
and the treasurer of the Company certificates dated as of such date, in
form satisfactory to the Underwriter to the effect that:
(i) The representations and warranties of the Company
contained in paragraph 1 of this Agreement are complete and true.
(ii) All of the conditions precedent in paragraphs 12(b)-12(f)
of this Agreement have been performed and the representations of these
conditions precedent are true.
(iii) No stop order or other proceedings have been instituted
or threatened by the Commission or any state authority which would
adversely affect the offering of the Shares and A Warrants.
(iv) This Agreement and the Underwriter's Warrants have been
duly authorized and executed and constitute valid agreements of the
Company and with respect to the Underwriter's Warrants are binding
agreements and are enforceable according to their terms.
(v) The respective signers have each carefully examined the
Registration Statements and definitive Prospectus and any amendments
and supplements, and to the best of their knowledge the Registration
Statement and definitive Prospectus and any amendments and supplements
contain all statements required to be stated therein. All statements
contained therein are true and correct, neither the Registration
Statement, definitive Prospectus or any amendment, supplement or
sticker thereto includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. Since the
Effective Date of the Registration Statement, there has occurred no
event required to be stated therein or necessary to make the statements
therein not misleading, and since the Effective Date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set forth.
(i) On the date of the closing of this Offering the Underwriter
shall have received a written opinion from the Company's counsel stating
that:
(i) The Company has filed a Registration Statement on Form SB-
2 relating to the Shares and A Warrants with the Commission pursuant to
the Securities Act, the Registration Statement has become effective
under the Securities Act and the Registration Statement, Prospectus and
all other documents filed with the Commission comply as to form with all
requirements of the Securities Act in all material respects (except for
the financial statements and other financial data included therein, as
to which counsel need express no opinion).
(ii) Counsel is unaware of any contracts or other documents
required to be described in the Registration Statement or in the
Prospectus or to be filed as exhibits to the Registration Statement
which have not been described or filed as required.
(iii) Counsel is unaware of any contracts or documents that
have not been disclosed in the Prospectus that are material to the
representations in the Prospectus and that would require disclosure in
order to make statements made not misleading.
(iv) Except as set forth in the Registration Statement
Prospectus and financial Statements included therein the best knowledge
of counsel and after reasonable investigation, the Company is not in
default of any of the contracts, leases or agreements to which it is a
party and the proposed offering of Shares and A Warrants will not
cause the Company to become in default of any of its contracts, leases
or agreements nor will it create a conflict between the Company and any
of the contracting parties to the contracts, leases and other agreements.
(v) To the best knowledge of counsel and after reasonable
investigation, and except as described in the Registration Statement,
Prospectus and financial statements included therein, the Company has
marketable title to all properties described in the Registration
Statement as owned by it. Except as reflected in the Registration
Statement and financial statements included therein, the properties are
free and clear of all liens, charges, encumbrances or restrictions; all
of the leases, subleases and other agreements under which the Company
holds its properties are in full force and effect; the Company is not
in default under any of the material terms or provisions of any of the
leases, subleases or other agreements; and there are no claims against
the Company concerning its rights under the leases, subleases and other
agreements and concerning its right to continued possession of its
properties.
(vi) This Agreement and the Underwriter's Warrants issued to
the Underwriter or its designees have been duly authorized and executed
by the Company and constitute valid agreements of the Company except
that no opinion need be expressed as to the validity of the
indemnification provisions insofar as they are or may be held to be
violative of public policy (under either state or federal law), the
availability of specific performance or other equitable remedies, the
effects of bankruptcy, insolvency, moratorium and all other similar
laws and decisions affecting the rights of creditors generally and as
to whether or not this Agreement may be an illusory contract.
(vii) Except as set forth in the Registration Statement,
Prosectus and fianncial statements included therein, to the best
knowledge of counsel and after reasonable investigation, no claim or
litigation has been instituted or threatened against the Company.
(viii) To the best knowledge of counsel and after reasonable
investigation, no stop order or other proceedings have been instituted
or threatened by the Commission or any state or local authority which
would adversely affect the offering of the Shares and A Warrants.
(ix) To the best knowledge of counsel and after reasonable
investigation, all documents and contracts relating to the Company's
affairs have been furnished to the Underwriter's counsel.
(x) To the best knowledge of counsel and after reasonable
investigation, the Company possesses adequate licenses, certificates,
authorizations or permits issued by the appropriate federal, state and
local regulatory authorities necessary to conduct its business as
described in the Registration Statement and to retain possession of its
properties. Counsel is unaware of any notice of any proceeding
relating to the revocation or modification of any of these certificates
or permits having been received by the Company.
(xi) To the best knowledge of counsel and after reasonable
investigation, neither the Company nor its affiliates is currently
offering any securities for sale except as described in the Registration
Statement.
(xii) No preemptive rights exist with respect to the Company's
securities.
(xiii) Except as set forth in the Registration Statement,
Counsel is unaware of any subsidiaries of the Company.
(xiv) Counsel has participated in the preparation of the
Registration Statement and Prospectus and no facts have come to the
attention of such counsel to lead counsel to believe that either the
Registration Statement or the Prospectus or any amendment or supplement
thereto (except for the financial statements and other financial data
included therein, as to which such counsel need express no opinion)
contain any 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 not misleading.
(xv) The Company has an authorized capitalization of
15,000,000 shares consisting of shares of common stock $.0001 par value
per share. Except as set forth in the Registration Statement, there are
no outstanding options, warrants or other rights to purchase shares of
the Company's common stock known to counsel other than as described in
the Registration Statement.
(xvi) The Company has been incorporated and is a validly
existing corporation under the laws of the State of New York and has
full corporate power and authority under such laws to own its
properties and to conduct its business as described in the Registration
Statement. To the best of counsel's knowledge, information and belief,
the Company is qualified to conduct business as a foreign corporation in
each jurisdiction where the nature of its business activities requires
such qualification except where failure to so qualify would not have a
material adverse effect upon the business or financial condition of the
Company.
(xvii) The Company's shares of common stock that are issued
and outstanding are fully paid and nonassessable and the Shares and A
Warrants and Warrant Shares when issued and paid for in accordance with
their terms will be fully paid and non-assessable. The Shares and A
Warrants conform to the description thereof contained in the
Registration Statement. The Company has authorized the issuance of the
Shares and A Warrants, the warrants included therein, the Underwriter's
Warrants and the Warrant Shares and has full power and authority to
issue and sell the Shares and A Warrants, terms and conditions herein
set forth. A sufficient number of common shares have been duly reserved
for issuance upon exercise of the Warrants and Underwriter's Warrants.
The foregoing opinion may be rendered in part by regular corporate
counsel and, in part, by securities counsel to the Company.
13. Termination.
(a) This Agreement may be terminated by the Underwriter by notice
to the Company in the event that the Company shall have failed or been
unable to comply with any of the terms, conditions or provisions of this
Agreement on the part of the Company to be performed, complied with or
fulfilled within the respective times herein provided for, unless
compliance therewith or performance or satisfaction thereof shall have
been expressly waived by the Underwriter in writing.
(b) This Agreement may be terminated by the Underwriter by notice
to the Company if the Underwriter believes in its sole judgment that any
adverse changes have occurred in the management of the Company, that
material adverse changes have occurred in the financial condition or
obligations of the Company or if the Company shall have sustained a loss
by strike, fire, flood, accident or other calamity of such a character
as, in the sole judgment of the Underwriter, may interfere materially
with the conduct of the Company's business and operations regardless of
whether or not such loss shall have been insured.
(c) This Agreement may be terminated by the Underwriter by notice
to the Company at any time if, in the sole judgment of the Underwriter,
payment for and delivery of the Shares and A Warrants is rendered
impracticable or inadvisable because (i) additional material
governmental restrictions not in force and effect on the date hereof
shall have been imposed upon the trading in securities generally, or
minimum or maximum prices shall have been generally established on the
New York or American Stock Exchange, or trading in securities generally
on either such exchange shall have been suspended, or a general
moratorium shall have been established by federal or state authorities,
or (ii) a war or other national calamity shall have occurred, or (iii)
substantial and material changes in the condition of the market (either
generally or with reference to the sale of the Shares and A Warrants to
be offered hereby) beyond normal fluctuations are such that it would be
undesirable, impracticable or inadvisable in the sole judgment of the
Underwriter to proceed with this Agreement or with the public offering
or (iv) of any matter materially adversely affecting the Company.
(d) In the event any action or proceeding shall be instituted or
threatened against the Underwriter, either in any court of competent
jurisdiction, before the Commission or any state securities commission
concerning its activities as a broker or dealer that would prevent the
Underwriter from acting as such, at any time prior to the effective date
hereunder, or in any court pursuant to any federal, state, local or
municipal statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of the
Underwriter's assets or if the Underwriter makes an assignment for the
benefit of creditors, the Company shall have the right on three days'
written notice to the Underwriter to terminate this Agreement without
any liability to the Underwriter of any kind except for the payment of
expenses as provided in Section 4(a) and 5 herein.
(e) Any termination of this Agreement pursuant to this Section 13
shall be without liability of any character (including, but not limited
to, loss of anticipated profits or consequential damages) on the part of
any party thereto, except that in such event (i) the Underwriter shall
provide the Company with a statement of its accountable expenses, which
shall include but are not limited to, the Underwriter's counsel fees,
consultants' fees, entertainment expenses, travel expenses, postage
expenses, office costs, advertising costs, clerical costs, due diligence
meeting expenses, duplication expenses, long-distance telephone
expenses, and general and administrative expenses incurred in connection
with the proposed offering and (ii) if such accountable expenses are
more than the amount of the nonaccountable expense payments the Company
has made to the Underwriter, the Underwriter shall bear such excess or
if such accountable expenses are less than the amount of the
nonaccountable expense payments the Underwriter has received from the
Company, the Underwriter shall return the difference to the Company.
14. Notices. All notices shall be in writing and shall be delivered
at or mailed to the following addresses or sent by telegram to the
following addresses with written confirmation thereafter:
To the Company:
Mr. Michael Trotta
Silver Star Foods, Inc.
Post Office Box 340487
Brooklyn, New York 11234
with a copy to:
Richard I. Anslow, Esq.
Freehold Office Plaza
4255 Route 9, Suite D
Freehold, NJ 07728
To the Underwriter:
Mr. Richard Scarsella
Royal Hutton Securities, Corp.
2255 Glades Road
Boca Raton, Florida 33431
with a copy to:
Leon B. Lipkin, Esq.
140 East 45th Street, 42nd Floor
New York, NY 10048
16. Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the Company and the Underwriter (including the
participating dealers as provided in paragraphs 9 and 10) and their
successors. Nothing expressed in this Agreement is intended to give
any person other than the persons mentioned in the preceding sentence
any legal or equitable right, remedy or claim under this Agreement.
However, the representations, warranties and indemnity and defense
obligations of the Company included in this Agreement also inure to the
benefit of any person who controls the Underwriter and participating
dealers within the meaning of Section 15 of the Securities Act and the
representations, warranties, indemnities and defense obligations of the
Underwriter and participating dealers inure to the benefit of each
officer who signs the Registration Statement, each director of the
Company and each person who controls the Company within the meaning of
Section 15 of the Securities Act.
17. Miscellaneous Provisions.
(a) Time shall be of the essence of this Agreement.
(b) This Agreement shall be construed according to the laws of the
State of New York.
(c) The representations and warranties made in this Agreement
shall survive the termination of this Agreement and shall continue in
full force and effect regardless of any investigation made by the party
relying upon any such representation or warranty.
(d) This Agreement is made solely for the benefit of the Company
and its officers, directors and controlling persons within the meaning
of Section 15 of the Securities Act and of the Underwriter and its
officers, directors and controlling persons within the meaning of
Section 15 of the Securities Act, and their respective successors, heirs
and personal representatives, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successor" as
used in this Agreement shall not include any purchaser, as such, of the
Shares and A Warrants.
(e) The Underwriter will provide upon closing a list of all the
names and addresses of all participating dealers and shall provide the
Company with such changes of the address or name of such participating
dealers as occur and of which the Underwriter is notified. Further, the
Underwriter shall use its best efforts to maintain the current name and
address of all participating dealers during the terms of this Agreement.
If this Agreement correctly sets forth our understanding,
please indicate your acceptance in the space provided below for that
purpose.
Very truly yours,
Silver Star Foods, Inc.
By:
-------------------------------------
Michael Trotta, President
Confirmed and accepted as of
the date of this Agreement:
Royal Hutton Securities Corp.
By:
-----------------------------
Richard Scarsella
CERTIFICATE OF INCORPORATION
OF
SILVER STAR RAVIOLI CO., INC.
Under Section 402 of the Business Corporation Law
The undersigned, for the purpose of forming a corporation pursuant
to the Business Corporation Law of the State of New York, does hereby
certify and set forth:
FIRST: The name of the corporation is:SILVER STAR RAVIOLI CO., INC.
SECOND: The purpose for which the corporation is formed are as
follows:
To engage in any lawful act or activity for which corporations may
be formed under the Business Corporation Law, provided that the
corporation is not formed to engage in any act or activity which
requires that consent or approval of any State official, department,
board, agency or other body, without such consent or approval first
being obtained.
For the accomplishment of the aforesaid purposes, and in further
hereof, the corporation shall have and may excerise all of the powers
conferred by the Business Corporation Law of the State of New York upon
corporations formed thereunder, subject to any limitations contained in
Article 2 of said law, or in accordance with the provisions of any other
statute of the State of New York.
THIRD: The office of the corporation within the State of New
York shall be located in the County of Kings.
FOURTH: The aggregate number of shares which the corporation
shall have the authority to issue is Two Hundred (200), all of which
shall be without par value.
FIFTH: The Secretary of State is designated as agent of the
corporation upon whom process against it may be served. The post office
address to which the Secretary of State shall mail a copy of any process
against the corporation served upon him is:
2446 East 73rd Street
Brooklyn, New York 11234
IN WITNESS WHEREOF, This Certificate of Incorporation has been
signed this 28th days of March, 1995, by the undersigned, who affirms
that the statements made herein are true under the penalties of perjury.
/s/ Fred Larison
- --------------------------
Fred Larison
307 Hamilton Street
Albany, New York 12210
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION OF
SILVER STAR RAVIOLI CO., INC.
Under Section 805 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the corporation is: SILVER STAR RAVIOLI CO., INC.
(2) The Certificate of Incorporation was filed at the Department
of State of the State of New York on the 28th day of March, 1995.
(3) The Certificate of Incorporation is hereby amended to effect
a change in the aggregate number of shares the corporation has the
authority to issue. The corporation is currently to issue 200 shares
with no par value, none of which are issued or outstanding. The
unissued shares shall be changed into 15,000,000 shares at a par value
of .0001 at a rate of 75,000 for 1.
Article THIRD of the Certificate is amended to read as
follows:
"THIRD: The Aggregate number of shares which the
corporation shall have the authority to issue is 15,000,000 shares, all
of which are to with .0001 par value."
(4) The amendment to the Certificate of Incorporation was
authorized by written consent of the Board of Directors and followed by
written consent of the sole incorporator there being no shareholders of
record, and no subscribers for shares whose subscriptions have been
accepted.
IN WITNESS WHEREOF, this certificate has been subscribed this 18th
day of July, 1997, by the undersigned. who affirm that the statements
made herein are true under the penalties of perjury.
/s/ Michael Trotta
- --------------------------
Michael Trotta, President
/s/ Michael Trotta
- --------------------------
Michael Trotta, Asst. Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SILVER STAR RAVIOLI CO., INC.
Under Section 805 of the Business Corporation Law
We, the undersigned, being respectfully the President and Secretary
of SILVER STAR RAVIOLI CO., INC. do hereby certify:
1. The name of the Corporation is:
SILVER STAR RAVIOLI CO.,INC.
2. The Certificate of Incorporation was filed by the Department
of State on the twenty-eighth day of March, 1995.
3. The Certificate of Incorporation is hereby amended to change
the corporations name.
Paragraph One of the Certificate of Incorporation is amended
to read as follows:
"1. The name of the corporation is: SILVER STAR FOODS, INC."
4. This amendment to the Certificate of Incorporation was
authorized by a vote of the Board of Directors followed by written
consent of the Sole Shareholder.
IN WITNESS WHEREOF, we have signed this Certificate of Amendment
this 28th day of July, 1997, and hereby affirm the truth of the
statements contained herein under the penalties of perjury.
/s/ Michael Trotta
- --------------------------
Michael Trotta, Sole Shareholder
2
BY-LAWS
ARTICLE I
The Corporation
Section 1. Name. The legal name of this corporation
(hereinafter called the "Corporation") is SILVER STAR FOODS, INC.
Section 2. Offices. The Corporation shall have its principal
office in the State of New York. The Corporation may also have
offices at such other places within and without the United States as
the Board of Directors may from time to time appoint or the business
of the Corporation may require.
Section 3. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, New York". One or more duplicate dies for
impressing such seal may be kept and used.
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meetings. All meetings of the shareholders
shall be held at the principal office of the Corporation in the State
of New York or at such other place, within or without the State of New
York, as is fixed in the notice of the meeting.
Section 2. Annual Meeting. An annual meeting of the
shareholders of the Corporation for the election of directors and the
transaction of such other business as may properly come before the
meeting shall be held on the 1st day of February in each year if not a
legal holiday, and if a legal holiday, then on the next secular day.
If for any reason any annual meeting shall not be held at the time
herein specified, the same may be held at any time thereafter upon
notice, as herein provided, or the business thereof may be transacted
at any special meeting called for the purpose.
Section 3. Special Meetings. Special meetings of shareholders
may be called by the President whenever he deems it necessary or
advisable. A special meeting of the shareholders shall be called by
the President whenever so directed in writing by a majority of the
entire Board of Directors or whenever the holders of one-third (1/3)
of the number of shares of the capital stock of the Corporation
entitled to vote at such meeting shall, in writing, request the same.
Section 4. Notice of Meetings. Notice of the time and place of
the annual and of each special meeting of the shareholders shall be
given to each of the shareholders entitled to vote at such meeting by
mailing the same in a postage prepaid wrapper addressed to each such
shareholders at his address as it appears on the books of the
Corporation, or by delivering the same personally to any such
shareholder in lieu of such mailing, at least ten (10) and not more
than fifty (50) days prior to each meeting. Meetings may be held
without notice if all of the shareholders entitled to vote thereat are
present in person or by proxy, or if notice thereof is waived by all
such shareholders not present in person or by proxy, before or after
the meeting. Notice by mail shall be deemed to be given when
deposited, with postage thereon prepaid, in the United States mail.
If a meeting is adjourned to another time, not more than thirty (30)
days hence, or to another place, and if an announcement of the
adjourned time or place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the Board of
Directors, after adjournment fix a new record date for the adjourned
meeting. Notice of the annual and each special meeting of the
shareholders shall indicate that it is being issued by or at the
direction of the person or persons calling the meeting, and shall
state the name and capacity of each such person. Notice of each
special meeting shall also state the purpose or purposes for which it
has been called. Neither the business to be transacted at nor the
purpose of the annual or any special meeting of the shareholders need
be specified in any written waiver of notice.
Section 5. Record Date for Shareholders. For the purpose of
determining the shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or for the
purpose of determining shareholders entitled to receive payment of any
dividend or other distribution or the allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion,
or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall
not be more than fifty (50) days nor less than ten (10) days before
the date of such meeting, nor more than fifty (50) days prior to any
other action. If no record date is fixed, the record date for
determining shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if no notice is given,
the day on which the meeting is held; the record date for determining
shareholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which the first written
consent is expressed; and the record date for determining shareholders
for any other purpose shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice of or to
vote at any meeting of shareholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a
new record date for the adjourned meeting.
Section 6. Proxy Representation. Every shareholder may
authorize another person or persons to act for him by proxy in all
matters in which a shareholder is entitled to participate, whether by
waiving notice of any meeting, voting or participating at a meeting,
or expressing consent or dissent without a meeting. Every proxy must
be signed by the shareholder or by his attorney-in-fact. No proxy
shall be voted or acted upon after eleven (11) months from its date
unless such proxy provides for a longer period. Every proxy shall be
revocable at the pleasure of the shareholder executing it, except as
otherwise provided in Section 608 of the New York Business Corporation
Law.
Section 7. Voting at Shareholders' Meetings. Each share of
stock shall entitle the holder thereof to one vote. In the election
of directors, a plurality of the votes cast shall elect. Any other
action shall be authorized by a majority of the votes cast except
where the New York Business Corporation Law prescribes a different
percentage of votes or a different exercise of voting power. In the
election of directors, and for any other action, voting need not be by
ballot.
Section 8. Quorum and Adjournment. Except for a special
election of directors pursuant to Section 603 of the New York Business
Corporation Law, the presence, in person or by proxy, of the holders
of a majority of the shares of the stock of the Corporation
outstanding and entitled to vote thereat shall be requisite and shall
constitute a quorum at any meeting of the shareholders. When a quorum
is once present to organize a meeting, it shall not be broken by the
subsequent withdrawal of any shareholders. If at any meeting of the
shareholders there shall be less than a quorum so present, the
shareholders present in person or by proxy and entitled to vote
thereat, may adjourn the meeting from time to time until a quorum
shall be present, but no business shall be transacted at any such
adjourned meeting except such as might have been lawfully transacted
had the meeting not adjourned.
Section 9. List of Shareholders. The officer who has charge of
the stock ledger of the Corporation shall prepare, make and certify,
at least ten (10) days before every meeting of shareholders, a
complete list of the shareholders, as of the record date fixed for
such meeting, arranged in alphabetical order, and showing the address
of each shareholder and the number of shares registered in the name of
each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city or other municipality or
community where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any shareholder who is
present. If the right to vote at any meeting is challenged, the
inspectors of election, if any, or the person presiding thereat, shall
require such list of shareholders to be produced as evidence of the
right of the persons challenged to vote at such meeting, and all
persons who appear from such list to be shareholders entitled to vote
thereat may vote at such meeting.
Section 10. Inspectors of Election. The Board of Directors, in
advance of any meeting, may, but need not, appoint one or more
inspectors of election to act at the meeting or any adjournment
thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, and at the request of any shareholder
entitled to vote thereat shall, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear
or act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to
execute the duties of the inspector at such meeting with strict
impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of stock
outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity
and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all shareholders. On
request of the person presiding at the meeting or any shareholder
entitled to vote thereat, the inspector or inspectors, if any, shall
make a report in writing of any challenge, question or matter
determined by him or them and execute a certificate of any fact found
by him or them. Any report or certificate made by the inspector or
inspectors shall be prima facie evidence of the facts stated and of
the vote as certified by them.
Section 11. Action of the Shareholders Without Meetings. Any
action which may be taken at any annual or special meeting of the
shareholders may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of all
outstanding shares entitled to vote thereon. Written consent thus
given by the holders of all outstanding shares entitled to vote shall
have the same effect as a unanimous vote of the shareholders.
ARTICLE III
Directors
Section 1. Number of Directors. The number of directors which
shall constitute the entire Board of Directors shall be at least one
(1) but not more than five (5). Subject to the foregoing limitation,
such number may be fixed from time to time by action of a majority of
the entire Board of Directors or of the shareholders at an annual or
special meeting, or, if the number of directors is not so fixed, the
number shall be three (3) or shall be equal to the number of
shareholders, but not less than one (1). No decrease in the number of
directors shall shorten the term of any incumbent director.
Section 2. Election and Term. The initial Board of Directors
shall be elected by the incorporator and each initial director so
elected shall hold office until the first annual meeting of
shareholders and until his successor has been elected and qualified.
Thereafter, each director who is elected at an annual meeting of
shareholders, and each director who is elected in the interim to fill
a vacancy or a newly created directorship, shall hold office until the
next annual meeting of shareholders and until his successor has been
elected and qualified.
Section 3. Filling Vacancies, Resignation and Removal. Any
director may tender his resignation at any time. Any director or the
entire Board of Directors may be removed, with or without cause, by
vote of the shareholders. In the interim between annual meetings of
shareholders or special meetings of shareholders called for the
election of directors or for the removal of one or more directors and
for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including
unfilled vacancies resulting from the resignation or removal of
directors for cause or without cause, may be filled by the vote of a
majority of the remaining directors then in office, although less than
a quorum, or by the sole remaining director.
Section 4. Qualifications and Powers. Each director shall be at
least eighteen (18) years of age. A director need not be a
shareholder, a citizen of the United States or a resident of the State
of New York. The business of the Corporation shall be managed by the
Board of Directors, subject to the provisions of the Certificate of
Incorporation. In addition to the powers and authorities by these By-
Laws expressly conferred upon it, the Board may exercise all such
powers of the Corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done exclusively by
the shareholders.
Section 5. Regular and Special Meetings of the Board. The Board
of Directors may hold its meetings, whether regular or special, either
within or without the State of New York. The newly elected Board may
meet at such place and time as shall be fixed by the vote of the
shareholders at the annual meeting, for the purpose of organization or
otherwise, and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting,
provided a majority of the entire Board shall be present; or they may
meet at such place and time as shall be fixed by the consent in
writing of all directors. Regular meetings of the Board may be held
with or without notice at such time and place as shall from time to
time be determined by resolution of the Board. Whenever the time or
place of regular meetings of the Board shall have been determined by
resolution of the Board, no regular meetings shall be held pursuant to
any resolution of the Board altering or modifying its previous
resolution relating to the time or place of the holding of regular
meetings, without first giving at least three (3) days written notice
to each director, either personally or by telegram, or at least five
(5) days written notice to each director by mail, of the substance and
effect of such new resolution relating to the time and place at which
regular meetings of the Board may thereafter be held without notice.
Special meetings of the Board shall be held whenever called by the
President, Vice-President, the Secretary or any director in writing.
Notice of each special meeting of the Board shall be delivered
personally to each director or sent by telegraph to his residence or
usual place of business at least three (3) days before the meeting, or
mailed to him to his residence or usual place of business at least
five (5) days before the meeting. Meetings of the Board, whether
regular or special, may be held at any time and place, and for any
purpose, without notice, when all the directors are present or when
all directors not present shall, in writing, waive notice of and
consent to the holding of such meeting, which waiver and consent may
be given after the holding of such meeting. All or any of the
directors may waive notice of any meeting and the presence of a
director at any meeting of the Board shall be deemed a waiver of
notice thereof by him. A notice, or waiver of notice, need not
specify the purpose or purposes of any regular or special meeting of
the Board.
Section 6. Quorum and Action. A majority of the entire Board of
Directors shall constitute a quorum except that when the entire Board
consists of one director, then one director shall constitute a quorum,
and except that when a vacancy or vacancies prevents such majority, a
majority of the directors in office shall constitute a quorum,
provided that such majority shall constitute at least one-third (1/3)
of the entire Board. A majority of the directors present, whether or
not they constitute a quorum, may adjourn a meeting to another time
and place. Except as herein otherwise provided, and except as
otherwise provided by the New York Business Corporation Law, the vote
of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board.
Section 7. Telephonic Meetings. Any member or members of the
Board of Directors, or of any committee designated by the Board, may
participate in a meeting of the Board, or any such committee, as the
case may be, by means of conference telephone or similar
communications equipment allowing all persons participating in the
meeting to hear each other at the same time, and participation in a
meeting by such means shall constitute presence in person at such
meeting.
Section 8. Action Without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of
any committee thereof, may be taken without a meeting if all members
of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
Section 9. Compensation of Directors. By resolution of the
Board of Directors, the directors may be paid their expenses, if any,
for attendance at each regular or special meeting of the Board or of
any committee designated by the Board and may be paid a fixed sum for
attendance at such meeting, or a stated salary as director, or both.
Nothing herein contained shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving
compensation therefor; provided, however, that directors who are also
salaried officers shall not receive fees or salaries as directors.
ARTICLE IV
Committees
Section 1. In General. The Board of Directors may, by
resolution or resolutions passed by the affirmative vote therefore of
a majority of the entire Board, designate an Executive Committee and
such other committees as the Board may from time to time determine,
each to consist of one (1) or more directors, and each of which, to
the extent provided in the resolution or in the Certificate of
Incorporation or in the By-Laws, shall have all the powers of the
Board, except that no such Committee shall have power to fill
vacancies in the Board, or to change the membership of or to fill
vacancies in any committee, or to make, amend, repeal or adopt By-Laws
of the Corporation, or to submit to the shareholders any action that
needs shareholder approval under these By-Laws or the New York
Business Corporation Law, or to fix the compensation of the directors
for serving on the Board or any committee thereof, or to amend or
repeal any resolution of the Board which by its terms shall not be so
amendable or repealable. Each committee shall serve at the pleasure
of the Board. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence
or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.
Section 2. Executive Committee. Except as otherwise limited by
the Board of Directors or by these By-Laws, the Executive Committee,
if so designated by the Board of Directors, shall have and may
exercise, when the Board is not in session, all the powers of the
Board of Directors in the management of the business and affairs of
the Corporation, and shall have power to authorize the seal of the
Corporation to be affixed to all papers which may require it. The
Board shall have the power at any time to change the membership of the
Executive Committee, to fill vacancies in it, or to dissolve it. The
Executive Committee may make rules for the conduct of its business and
may appoint such assistance as it shall from time to time deem
necessary. A majority of the members of the Executive Committee, if
more than a single member, shall constitute a quorum.
ARTICLE V
Officers
Section 1. Designation, Term and Vacancies. The officers of the
Corporation shall be a President, one or more Vice-Presidents, a
Secretary, a Treasurer, and such other officers as the Board of
Directors may from time to time deem necessary. Such officers may
have and perform the powers and duties usually pertaining to their
respective offices, the powers and duties respectively prescribed by
law and by these By-Laws, and such additional powers and duties as may
from time to time be prescribed by the Board. The same person may
hold any two or more offices, except that the offices of President and
Secretary may not be held by the same person unless all the issued and
outstanding stock of the Corporation is owned by one person, in which
instance such person may hold all or any combination of offices.
The initial officers of the Corporation shall be appointed by the
initial Board of Directors, each to hold office until the meeting of
the Board of Directors following the first annual meeting of
shareholders and until his successor has been appointed and qualified.
Thereafter, the officers of the Corporation shall be appointed by the
Board as soon as practicable after the election of the Board at the
annual meeting of shareholders, and each officer so appointed shall
hold office until the first meeting of the Board of Directors
following the next annual meeting of shareholders and until his
successor has been appointed and qualified. Any officer may be
removed at any time, with or without cause, by the affirmative note
therefor of a majority of the entire Board of Directors. All other
agents and employees of the Corporation shall hold office during the
pleasure of the Board of Directors. Vacancies occurring among the
officers of the Corporation shall be filled by the Board of Directors.
The salaries of all officers of the Corporation shall be fixed by the
Board of Directors.
Section 2. President. The President shall preside at all
meetings of the shareholders and at all meetings of the Board of
Directors at which he may be present. Subject to the direction of the
Board of Directors, he shall be the chief executive officer of the
Corporation, and shall have general charge of the entire business of
the Corporation. He may sign certificates of stock and sign and seal
bonds, debentures, contracts or other obligations authorized by the
Board, and may, without previous authority of the Board, make such
contracts as the ordinary conduct of the Corporation's business
requires. He shall have the usual powers and duties vested in the
President of a corporation. He shall have power to select and appoint
all necessary officers and employees of the Corporation, except those
selected by the Board of Directors, and to remove all such officers
and employees except those selected by the Board of Directors, and
make new appointments to fill vacancies. He may delegate any of his
powers to a Vice-President of the Corporation.
Section 3. Vice-President. A Vice-President shall have such of
the President's powers and duties as the President may from time to
time delegate to him, and shall have such other powers and perform
such other duties as may be assigned to him by the Board of Directors.
During the absence or incapacity of the President, the Vice-President,
or, if there be more than one, the Vice-President having the greatest
seniority in office, shall perform the duties of the President, and
when so acting shall have all the powers and be subject to all the
responsibilities of the office of President.
Section 4. Treasurer. The Treasurer shall have custody of such
funds and securities of the Corporation as may come to his hands or be
committed to his care by the Board of Directors. Whenever necessary
or proper, he shall endorse on behalf of the Corporation, for
collection, checks, notes, or other obligations, and shall deposit the
same to the credit of the Corporation in such bank or banks or
depositaries, approved by the Board of Directors as the Board of
Directors or President may designate. He may sign receipts or
vouchers for payments made to the Corporation, and the Board of
Directors may require that such receipts or vouchers shall also be
signed by some other officer to be designated by them. Whenever
required by the Board of Directors, he shall render a statement of his
cash accounts and such other statements respecting the affairs of the
Corporation as may be required. He shall keep proper and accurate
books of account. He shall perform all acts incident to the office of
Treasurer, subject to the control of the Board.
Section 5. Secretary. The Secretary shall have custody of the
seal of the Corporation and when required by the Board of Directors,
or when any instrument shall have been signed by the President duly
authorized to sign the same, or when necessary to attest any
proceedings of the shareholders or directors, shall affix it to any
instrument requiring the same and shall attest the same with his
signature, provided that the seal may be affixed by the President or
Vice-President or other officer of the Corporation to any document
executed by either of them respectively on behalf of the Corporation
which does not require the attestation of the Secretary. He shall
attend to the giving and serving of notices of meetings. He shall
have charge of such books and papers as properly belong to his office
or as may be committed to his care by the Board of Directors. He
shall perform such other duties as appertain to his office or as may
be required by the Board of Directors.
Section 6. Delegation. In case of the absence of any officer of
the Corporation, or for any other reason that the Board of Directors
may deem sufficient, the Board may temporarily delegate the powers or
duties, or any of them, of such officer to any other officer or to any
director.
ARTICLE VI
Stock
Section 1. Certificates Representing Shares. All certificates
representing shares of the capital stock of the Corporation shall be
in such form not inconsistent with the Certificate of Incorporation,
these By-Laws or the laws of the State of New York and shall set forth
thereon the statements prescribed by Section 508, and where
applicable, by Sections 505, 616, 620, 709 and 1002 of the Business
Corporation Law. Such shares shall be approved by the Board of
Directors, and shall be signed by the President or a Vice-President
and by the Secretary or the Treasurer and shall bear the seal of the
Corporation and shall not be valid unless so signed and sealed.
Certificates countersigned by a duly appointed transfer agent and/or
registered by a duly appointed registrar shall be deemed to be so
signed and sealed whether the signatures be manual or facsimile
signatures and whether the seal be a facsimile seal or any other form
of seal. All certificates shall be consecutively numbered and the
name of the person owning the shares represented thereby, his
residence, with the number of such shares and the date of issue, shall
be entered on the Corporation's books. All certificates surrendered
shall be cancelled and no new certificates issued until the former
certificates for the same number of shares shall have been surrendered
and cancelled, except as provided for herein.
In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been affixed to any such
certificate or certificates, shall cease to be such officer or
officers of the Corporation before such certificate or certificates
shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation, and may
be issued and delivered as though the person or persons who signed
such certificates, or whose facsimile signature or signatures shall
have been affixed thereto, had not ceased to be such officer or
officers of the Corporation.
Any restriction on the transfer or registration of transfer of
any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
Section 2. Fractional Share Interests. The Corporation, may,
but shall not be required to, issue certificates for fractions of a
share. If the Corporation does not issue fractions of a share, it
shall: (1) arrange for the disposition of fractional interests by
those entitled thereto; (2) pay in cash the fair value of fractions of
a share as of the time when those entitled to receive such fractions
are determined; or (3) issue scrip or warrants in registered or bearer
form which shall entitle the holder to receive a certificate for a
full share upon the surrender of such scrip or warrants aggregating a
full share. A certificate for a fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the
holder to exercise voting rights, to receive dividends thereon, and to
participate in any distribution of the assets of the Corporation in
the event of liquidation. The Board of Directors may cause scrip or
warrants to be issued subject to the conditions that they shall become
void if not exchanged for certificates representing full shares before
a specified date, or subject to the condition that the shares for
which scrip or warrants are exchangeable may be sold by the
Corporation and the proceeds thereof distributed to the holders of
scrip or warrants, or subject to any other conditions which the Board
of Directors may impose.
Section 3. Addresses of Shareholders. Every shareholder shall
furnish the Corporation with an address to which notices of meetings
and other notices may be served upon or mailed to him, and in default
thereof notices may be addressed to him at his last known post office
address.
Section 4. Stolen, Lost or Destroyed Certificates. The Board of
Directors may in its sole discretion direct that a new certificate or
certificates of stock be issued in place of any certificate or
certificates of stock theretofore issued by the Corporation, alleged
to have been stolen, lost or destroyed, and the Board of Directors
when authorizing the issuance of such new certificate or certificates,
may, in its discretion, and as a condition precedent thereto, require
the owner of such stolen, lost or destroyed certificate or
certificates or his legal representatives to give to the Corporation
and to such registrar or registrars and/or transfer agent or transfer
agents as may be authorized or required to countersign such new
certificate or certificates, a bond in such sum as the Corporation may
direct not exceeding double the value of the stock represented by the
certificate alleged to have been stolen, lost or destroyed, as
indemnity against any claim that may be made against them or any of
them for or in respect of the shares of stock represented by the
certificate alleged to have been stolen, lost or destroyed.
Section 5. Transfers of Shares. Upon compliance with all
provisions restricting the transferability of shares, if any,
transfers of stock shall be made only upon the books of the
Corporation by the holder in person or by his attorney thereunto
authorized by power of attorney duly filed with the Secretary of the
Corporation or with a transfer agent or registrar, if any, upon the
surrender and cancellation of the certificate or certificates for such
shares properly endorsed and the payment of all taxes due thereon.
The Board of Directors may appoint one or more suitable banks and/or
trust companies as transfer agents and/or registrars of transfers, for
facilitating transfers of any class or series of stock of the
Corporation by the holders thereof under such regulations as the Board
of Directors may from time to time prescribe. Upon such appointment
being made all certificates of stock of such class or series
thereafter issued shall be countersigned by one of such transfer
agents and/or one of such registrars of transfers, and shall not be
valid unless so countersigned.
ARTICLE VII
Dividends and Finance
Section 1. Dividends. The Board of Directors shall have power
to fix and determine and to vary, from time to time, the amount of the
working capital of the Corporation before declaring any dividends
among its shareholders, and to direct and determine the use and
disposition of any net profits or surplus, and to determine the date
or dates for the declaration and payment of dividends and to determine
the amount of any dividend, and the amount of any reserves necessary
in their judgment before declaring any dividends among its
shareholder, and to determine the amount of the net profits of the
Corporation from time to time available for dividends.
Section 2. Fiscal Year. The fiscal year of the Corporation
shall end on the last day of December in each year and shall begin on
the next succeeding day, or shall be for such other period as the
Board of Directors may from time to time designate with the consent of
the Department of Taxation and Finance, where applicable.
ARTICLE VIII
Miscellaneous Provisions
Section 1. Stock of Other Corporations. The Board of Directors
shall have the right to authorize any director, officer or other
person on behalf of the Corporation to attend, act and vote at
meetings of the shareholders of any corporation in which the
Corporation shall hold stock, and to exercise thereat any and all
rights and powers incident to the ownership of such stock, and to
execute waivers of notice of such meetings and calls therefor; and
authority may be given to exercise the same either on one or more
designated occasions, or generally on all occasions until revoked by
the Board. In the event that the Board shall fail to give such
authority, such authority may be exercised by the President in person
or by proxy appointed by him on behalf of the Corporation.
Any stocks or securities owned by this Corporation may, if so
determined by the Board of Directors, be registered either in the name
of this Corporation or in the name of any nominee or nominees
appointed for that purpose by the Board of Directors.
Section 2. Books and Records. Subject to the New York Business
Corporation Law, the Corporation may keep its books and accounts
outside the State of New York.
Section 3. Notices. Whenever any notice is required by these
By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if
given by depositing the same in a post office box in a sealed postpaid
wrapper, addressed to the person entitled thereto at his last known
post office address, and such notice shall be deemed to have been
given on the day of such mailing.
Whenever any notice whatsoever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation or these By-Laws a waiver in writing, signed by the
person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto.
Section 4. Amendments. Except as otherwise provided herein,
these By-Laws may be altered, amended or repealed and By-Laws may be
made at any annual meeting of the shareholders or at any special
meeting thereof if notice of the proposed alteration, amendment or
repeal, or By-Law or By-Laws to be made be contained in the notice of
such special meeting, by the holders of a majority of the shares of
stock of the Corporation outstanding and entitled to vote thereat; or
by a majority of the Board of Directors at any regular meeting of the
Board of Directors, or at any special meeting of the Board of
Directors, if notice of the proposed alteration, amendment or repeal,
or By-Law or By-Laws to be made, be contained in the notice of such
special meeting.
16
Consent of Independent Accountants
We consent to the inclusion in the Registration Statement of Silver Star
Foods, Inc. on Form SB-2 of our report dated July 2, 1997, except for
Notes 1 & 2 as to which the dates are July 23, and July 28, 1997
respectively, on our audits of Silver Star Foods, Inc. as at March 31,
1997 and 1996 and for the years then ended. We also consent to the
reference to our firm under the caption "Experts".
/s/ Weinick Sanders Leventhal & Co., LLP
- ----------------------------------------------------------
WEINICK SANDERS LEVENTHAL & CO., LLP
New York, New York
December 15, 1997
AGREEMENT BETWEEN VINCENT & MICHAEL TROTTA
AND MOUNT ROSE RAVIOLI AND MAC. CO., INC.
JUNE 13, 1995
Mount Rose Ravioli will package private label Silver Star products to be
sold to Vincent & Michael Trotta, prices to be as listed below:
Square Meat & Cheese Ravioli- Bag 24/16 oz $16.50
Square Meat & Cheese Ravioli- Box 18/50 ct $18.85
Round Cheese Ravioli 24/13 oz $14.20
Cavatelli 24/16 oz $ 9.72
Cheese & Meat Tortellini 24/16 oz $19.55
Gnocchi 24/16 oz $12.82
Product to be paid for with cashier's or certified check at time order
is placed. A 2% cash discount may be taken at this time.
The above prices will remain in place for six (6) months. At the end of
six (6) months, prices will be reviewed with respect to raw material and
packaging costs. If these costs have increased or decreased, the
changes will be passed on accordingly. Prices will be reviewed every
six (6) months thereafter, for as long as our relationship remains
intact.
In the event that this agreement should be terminated, and Mount Rose be
left with unused Silver Star packaging, Vincent and Michael Trotta
(Silver Star) do hereby give Mount Rose Ravioli permission to use the
packaging however they choose.
/s/ Sam Minuto
------------------------------
Sam Minuto, President
/s/ Michael Trotta
------------------------------
Michael Trotta, President
Silver Star Ravioli Co.,Inc.
MANUFACTURERS AGREEMENT FOR
PRIVATE LABEL COMPANIES
THIS CONTRACT made this Twelfth day of June, 1995 between SAVIGNANO
FOODS CORPORATION, a New Jersey Corporation, trading as Andrea's,
hereinafter referred to as the "Manufacturer", doing business at 107
South Jefferson Street, in the City of Orange, County of Essex and State
of New Jersey, on the one part, and; SILVER STAR RAVIOLI COMPANY, INC.,
P.O. Box 340487, Brooklyn, New York 11234, hereinafter called the
"Private Label Company", of the other part.
WITNESSETH, that the said party of the first part, for and in
consideration of the sum of FIVE THOUSAND ($5,000.00) DOLLARS to be paid
and satisfied as hereinafter mentioned, and also in consideration of the
covenants and agreements hereinafter mentioned, made and entered into by
the said party of the second part, agrees as follows:
The manufacturer shall make the following product lines to be
purchased by the Private Label Company for sale in the retail and/or
wholesale marketplace, by said Private Label Company:
1. Product (A) - 13 oz. Large Round Cheese Ravioli
Packed 12 Ravioli Per Bag -
24 Units Per Case, $13.85 Per Case.
2. Product (B) - 16 oz. Cavatelli
Packed One Pound Per Bag -
24 Units Per Case, $9.95 Per Case.
The prices listed in this Agreement are contingent upon the Private
Label Company's monthly sales of 7,000 cases of Product (A) and 3,000
cases of Product (B). If Private Label Company fails to purchase from
Manufacturer the above mentioned volume over a fifty-two (52) week
period, the Manufacturer reserves the right to raise prices according to
usage or lack there of.
No order by Private Label Company shall be less than 250 cases of
Product (A) or Product (B).
2. The Manufacturer shall pay for all bags, labels and
corrugated boxes as needed in its sole discretion, to manufacture and
package the product line set forth in Paragraph 1 above for the Private
Label Company, at the Manufacturer's sole cost and expense.
However, the Manufacturer shall not pay for or be responsible
for artworks, plates, dyes of any kind needed for the packaging of said
product lines. Manufacturer will not purchase more than sixteen (16)
weeks supply of packaging. The amount will initially be based on
projections made by Private Label Company. After a history of sales has
been established, the 16-week supply will be determined by the sales of
the Private Label Company.
3. If the Private Label Company "ceases to do business" for any
reason whatsoever with the Manufacturer, the Private Label Company shall
reimburse the Manufacturer for all costs and expenses incurred or
contracted for by the Manufacturer for purposes of fulfilling this
agreement such as, finished product, inventory of finished product, raw
material and supplies, paper products, manufacturing expenses, legal
fees, storage expenses, etc. "Ceases to do business" with Manufacturer
is hereby defined to be the failure by Private Label Company to purchase
7,000 cases of Product (A) and 3,000 cases of Product (B) within any one
(1) month period. If the Private Label Company "ceases to do business"
as defined herein, it shall constitute a default under this Agreement.
4. The Private Label Company shall pay the Manufacturer a
minimum retainer of Five Thousand ($5,000.00) Dollars to offset the
Manufacturer's start up costs to be put in an interest bearing account.
The interest will accumulate and paid in full yearly to Private Label
Company. If, prior to one (1) year from the date hereof, Private Label
Company elects to terminate this Agreement of Manufacture, the $5,000.00
will be returned to Private Label Company upon payment in full of all
end product, packaging, corrugated, etc. If Private Label Company does
not pay for the above mentioned costs, Manufacturer shall retain the
retainer fee in full. If the Manufacturer extends credit terms to the
Private Label Company, the $5,000.00 retainer shall be released to
Private Label Company.
5. In the event of a Default by the Private Label Company of
this Agreement, the Manufacturer shall be entitled to keep all deposit
monies paid as liquidated damages plus all other advances paid by the
Private Label Company on order given to date, plus the Private Label
Company agrees to be liable for all consequential damages resulting from
the default and/or breach of this Agreement including attorneys fees,
costs of suit and interest on amounts due and owing the Manufacturer
from the date of all open purchase orders. Damages shall also include
discharging, reloading, handling, storing or any other reasonable
services or expenses incurred in the manufacture, storage, preservation,
resale and distribution (where applicable) of the product line of the
Private Label Company. A Default by Private Label Company shall occur
upon the failure to (1) pay the orders as provided for hereunder; (2) to
make the minimum purchases; or (3) to comply with all other terms of
this Agreement.
6. The Manufacturer agrees to produce in accordance with Good
Manufacturing Practices and Federal and State Food Regulation, and will
deliver same to Private Label Company. However, the Manufacturer shall
not be liable for damages after the product has left its control or for
damages arising out of label misstatements or false advertising
statements. The Manufacturer will be liable for any short weight
product or improperly packaged product.
7. The Manufacturer disclaims any and all warranties either
express or implied warranties for a Particular Purpose or
Merchantability. The Manufacturer will provide the Private Label
Company with a certificate of insurance naming the Private Label Company
as an additional insured.
8. Payment shall be made by Private Label Company in cash,
certified check, bank check or wired to Manufacturer's bank account by
11:00 a.m. to the Manufacturer for the entire amount due and payable to
the Manufacturer one (1) day prior to shipment/pickup of end product.
This payment procedure will apply for twelve months from the first
invoice date. After six (6) months from the first invoice date, the
Manufacturer will review the payment procedure set forth in this
Agreement and will decide to alter or not alter the payment procedure.
9. The Manufacturer shall not be responsible for its failure to
meet any manufacturing product, packaging or distribution deadline
established by the Private Label Company if the Private Label Company
does not give the Manufacturer proper lead time on confirmed ads and
proper and reasonable sales projections of at least four (4) weeks in
advance.
10. All formulas and manufacturing procedures used by the
Manufacturer are proprietary to the Manufacturer and will be kept
confidential and not revealed to any party.
11. Either party may terminate this Agreement at any time by
giving the other party notice in writing of such desire of termination
at least one hundred twenty (120) days upon which date such termination
is to occur. A notice shall be supplied by certified mail return
receipt requested effective upon delivery or by hand delivery of said
notice. Effective upon termination of the Private Label Company shall
immediately pay the Manufacturer for any open outstanding invoices, if
any, and agrees to pay in full on all pending orders for said product
line.
12. During the term of this Agreement, the Private Label
Company agrees to make the Manufacturer its exclusive manufacturer and
packager of said product lines. The Private Label Company shall be
allowed, in emergent circumstances, to obtain product from any other
supplier or producer at any price, to satisfy its order requirements in
the event the Manufacturer cannot satisfy such requirements, upon
providing telephone notice to Manufacturer.
13. The decision of manufacturing and packaging of the Private
Label Company's private line of said product line shall be exclusively
that of the Manufacturer. The parties mutually agree and understand
that the price of manufacturing and packaging may escalate without
notice due to factors beyond the control of the Manufacturer. The
Private Label Company agrees to pay for any and all increases in
manufacturing and packaging costs incurred directly by the Manufacturer
upon Manufacturer giving ten (10) days written notice. Concurrently,
the Manufacturer will also pass along decreases in manufacturing and
packaging costs as they occur. The Manufacturer will review these
prices with the Private Label Company every three (3) months.
14. The Private Label Company agrees to place all outside
orders with Manufacturer . The Private Label Company agrees that the
Manufacturer shall not be responsible for the nonperformance of any
order that is not confirmed with a written acceptance of the purchase
order or be responsible for any penalties the Private Label Company may
incur as a result of nonperformance.
15. The Private Label Company represents that it is a New York
Corporation and that this contract was approved by duly authorized
corporate resolution.
16. The Private Label Company will arrange for all orders to be
picked up at the Manufacturer's plant address or its nearest storage
facility by Private Label customers. In the event that pick-up is not
made by Private Label customer, the Manufacturer will not be responsible
or liable for delivery and will not deliver product for Private Label
Company. Consequently, the Private Label Company will be solely
responsible to arrange for pick-up of product by any means necessary.
17. This Agreement shall be governed by the laws of New Jersey.
Private Label Company does hereby submit to the jurisdiction of the New
Jersey courts and agrees it may be served with a Complaint by certified
mail.
18. All Notices shall be in writing and shall be by certified
mail, return receipt requested, to the party at the addresses stated in
this Agreement, attention to the party signing the Agreement.
19. This Agreement sets forth the understanding of the parties
and there are no oral agreements. This Agreement may only be modified
by a written agreement signed by the parties.
20. This Agreement shall be binding on the parties and their
successors and assigns.
WITNESSETH: SAVIGNANO FOODS CORPORATION
A New Jersey Corporation,
Manufacturer
/s/ Rose Marie Savignano BY: /s/ Michael Savignano
- -------------------------- -----------------------------
ROSE MARIE SAVIGNANO MICHAEL SAVIGNANO,President
Assistant Secretary
WITNESSETH: SILVER STAR RAVIOLI COMPANY, INC.
/s/ Michael Trotta BY: /s/ Vincent Trotta Sr.
- ------------------------- ----------------------------
MICHAEL TROTTA, President VINCENT TROTTA SR., C.E.O.
5
Shares Exercisable
---------------
subject to the provisions
set forth below.
Warrant for Purchase
of Common Stock of
Silver Star Foods,
Inc. (a New York
Corporation)
THIS WARRANT WILL BE VOID AFTER , 199 .
This certifies that is
entitled to purchase at any time on or before , 199 ,
but not thereafter, shares, $.0001 par value, which
have been duly authorized and set aside for issuance, of the
common stock of Silver Star Foods, Inc., (the "Company"), a
corporation duly organized and existing under the laws of the
State of New York as such stock shall be constituted at the time
of purchase, at the price of $6.00 per share and the
surrender of this warrant with the subscription form on the
reverse side hereof, duly executed, at the office of American
Stock Transfer (the "Warrant Agent") in the City of New York,
State of New York, with payment in full for the stock purchased in
cash or by certified or bank cashiers check payable to the order
of the Company at the time of the surrender of this warrant, as
aforesaid.
This warrant is issued and subject to the terms and provisions of a
Warrant Agreement dated as of ,199 , between the
Company and the Warrant Agent, to all of which terms and provisions the
holder hereof assents by accepting this warrant. Anything herein or in
the said stock purchase Warrant Agreement contained to the contrary
notwithstanding, in case of consolidation or merger of the company with
or into any other corporation, or in case of sale by the Company of all
or substantially all its assets, as more particularly set forth in the
said stock purchase warrant agreement, or in case of issue by the
Company of additional shares of common stock at a lower price than the
price at which shares of common stock might have been purchased
hereunder immediately prior to the issue of such additional shares, the
number and character of the shares of stock or other securities or
assets which the holder hereof shall thereafter have the right to
purchase, and the price to be paid therefor, shall be adjusted and
determined as provided in the said warrant agreement. The holder of this
warrant, as such, shall have none of the preemptive or other rights of
a holder of common stock. This warrant is issued subject, also, to the
following terms and conditions, to all of which each and every holder
hereof assents by accepting this warrant; all rights under and by
virtue of this warrant shall pass and be transferred by the delivery
hereof by any person in possession of the same, however, such possession
may have been acquired, if properly assigned in blank or if properly
assigned to a specified person by delivery hereof to such person; shall
vest title thereto in the transferee to the same extent, for all intents
and purposes, as in the case of the delivery under similar circumstances
of a negotiable instrument payable to bearer. Subject to the foregoing,
the Company and the Warrant Agent shall be entitled to treat the bearer
of this warrant as the absolute owner hereof for all purposes and shall
not be affected by any notice to the contrary.
This warrant does not entitle any holder hereof to any of the
rights of a shareholder of the Company.
This warrant shall be wholly void and of no effect after
,199 .
Silver Star Foods, Inc.
/s/ Michael Trotta
-------------------------------------
Michael Trotta, President
Countersigned
Warrant Agent
Transfer Clerk
(Reverse Side)
In case, prior to the expiration of this warrant by exercise hereof
or by its term:
1. (a) The Company shall be recapitalized through the subdivision
of its outstanding shares of common stock into a greater number of
shares, or shall by exchange or substitution of or for its outstanding
common stock or otherwise, reduce the number of such shares, then in
each such case the number of shares deliverable upon the exercise of
this warrant shall be changed in proportion to such increase or decrease
of the outstanding shares of such common stock of the Company, without
any change in the payment by the warrant holder from the payment
specified on the faces of the warrant.
(b) A dividend shall be declared or paid at any time on the
common stock of the Company in its common stock or in securities
convertible into common stock of the corporation, then in each such case
the number of shares deliverable upon the exercise thereafter of this
warrant, shall, without requiring any payment by the warrant holder in
addition to the one specified on the face hereof, be increased in
proportion to the increase, through such dividend, in the number of
outstanding shares of common stock of the corporation. In the
computation of the increased number of shares deliverable upon the
exercise of this warrant, any dividend paid or distributed upon the
common stock in securities convertible into shares of common stock,
shall be treated as a dividend paid in common stock to the extent that
shares of stock are issuable upon the conversion thereof. The
obligations of the Company and the rights of the holder hereof shall
not be affected by the exercise of any conversion privileges heretofore
granted to the holders of any of the stock or securities of the Company
or of any other company.
(c) On or before , pm., , 199 the
Company shall offer any shares of common stock of any class, or
securities convertible into or evidencing the right to purchase common
stock of any class, of record on a date subsequent to the issue of this
warrant, the holder hereof will become entitled, provided this warrant
is not exercised on or before the record date of the common stockholders
entitled to such subscription rights, to subscribe for and purchase, at
the same price at which such stock or securities is offered to the
holders of the common stock, the amount of such stock or securities for
which he would have been entitled to subscribe if he had been the holder
of record on such record date of the number of shares of common stock
then purchasable under this warrant. The record date for determining the
warrant holders entitled to such subscription rights shall be the same
as the record date for determining the holders of the common stock
entitled thereto, and when notice of such subscription rights is given
to the common stockholders of record, notice thereof shall likewise be
given to the registered holders of warrants outstanding at the time, and
the warrant holders shall be given the same opportunity to exercise
such subscription rights as the holders of the common stock.
(d) The Company shall, at any time while any of the warrants
be outstanding, declare a dividend on its common stock (other than a
dividend not in excess of the regular dividend per share for any fiscal
year) and shall give notice thereof to the registered holder of this
warrant and such dividends so declared shall be made payable only to
the stockholders of record on a date at least ten days subsequent to
the exercise of such warrants prior to such record date.
(e) The Company shall be recapitalized by reclassifying its
outstanding common stock without par value into stock with par value, or
changing common stock of par value to stock without par value, or the
Company or a successor corporation shall consolidate or merge with, or
convey all, or substantially all, of its or any successor corporation's
property or assets to, any other corporation or corporations (any such
corporation being included within the meaning "successor corporation"
hereinbefore used in the event of any consolidation or merger of such
corporation with, or the sale of, all or substantially all of the
property of such corporation to another corporation or corporations)
then, as a condition to such recapitalization consolidation, merger, or
conveyance, lawful and adequate provision shall be made whereby the
holder of each warrant shall thereafter have the right to purchase, upon
the basis and upon the terms and conditions specified in this warrant,
in lieu of the shares of common stock of the corporation theretofore
purchasable upon the exercise of this warrant, such shares of stock,
security, or assets as may be issued or payment with respect to, or in
exchange for, the number of shares of common stock of the Company
theretofore purchasable upon the exercise of this warrant had such
recapitalization, consolidation, merger, or conveyance not taken place;
and in any such event the rights of the warrant holder to an adjustment
of the number of shares of common stock purchasable upon the exercise of
this warrant as hereinbefore provided, shall continue and be preserved
in respect of any stock which the warrant holder becomes entitled to
purchase. It shall be a condition of such consolidation, merger, or
conveyance that each successor corporation shall assume in manner and
form satisfactory to the transfer agent, the obligation to deliver to
the warrant holder, upon the exercise of this warrant, such shares of
stock, securities, or assets as, in accordance with the provisions of
this warrant, shall have been provided for the purpose. The said
transfer agent shall assume no liability for its exercise of discretion
hereunder other than willful wrongdoing.
2. This warrant shall be deemed to have been exercised, and the
person exercising the same to have become a common stockholder of record
of the corporation, for the purposes of receiving dividends and for all
other purposes whatsoever as of the date when he surrendered this
warrant accompanied by payment in cash, as herein provided. The
corporation agrees that, while this warrant shall remain valid and
outstanding, its stock transfer books shall not be closed for any
purpose whatsoever except under arrangements which shall insure to
persons exercising warrants or applying for transfer of stock within
three days after the books shall have been reopened all rights and
privileges which they might have had or received if the stock transfer
books had not been closed and they had exercised their warrants at any
time during which such transfer books shall have been closed.
3. Upon each increase of the number of shares of common stock of
the Company deliverable upon the exercise of this warrant, or in the
event of changes in the rights of the warrant holders by reason of other
events hereinbefore set forth, then in each such case the Company shall
forthwith file with the transfer agent a certificate executed by its
president or one of its vice-presidents, and attested by its secretary
or one of its assistant secretaries, stating the increased number of
shares so deliverable or specifying the other shares of stock,
securities or assets, and the amount thereof so deliverable and setting
forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
Upon each increase of the number of shares of common stock of the
Company, deliverable upon the exercise of this warrant, the increased
number of shares so deliverable shall be calculated only to the nearest
hundredth of one share. No fractions of shares shall be issued upon the
exercise of this warrant, but in lieu thereof the Company shall issue
fractional scrip certificates in bearer form and in denominations of
one-one-hundredth of one share, and multiples thereof, not entitling
the bearer to vote or receive dividends but which may be surrendered
with other similar scrip certificates so as to aggregate one or more
whole shares for a stock certificate or certificate representing the
number of whole shares so aggregated at any time on or before ten days
after the expiration date of this warrant.
4. The Company covenants, at all times when the warrants are
outstanding and in effect, to reserve unissued, sufficient common stock,
and to deliver stock pursuant to the exercise of this warrant, subject
to consolidation, merger, or sale, as above set @orth. The Company
covenants that in the event that stock or other securities of the
Company or subsidiaries are hereafter issued, carrying conversion
privileges or bearing stock purchase warrants for common stock of the
Company, then the rates of conversion, or the purchase prices provided
by such warrants, shall not be more favorable for any period than the
prices provided (for such period) by this warrant, unless the holder
hereof shall be entitled to exercise this warrant at prices at least as
favorable as the price so specified in such purchase warrants, or to an
increase in the number of shares purchasable so as to give to the holder
hereof equal rights with the holders of such conversion privileges. In
such case, the Company covenants to file with the transfer agent a
statement of the rights of the warrant holders as so modified.
5. Wherever the term "holder", "warrant holder", or "holder of
this warrant", is used herein, it shall be construedto mean the
registered holder and wherever notice is required by this warrant to be
given to the warrant holder it shall besufficient if mailed to the last
known address of said holderas same appears on the books of the Company.
Royal Hutton Securities Corp.
2255 Glades Road, Suite 301E
Boca Ratonon, Florida 33431
SELECTED DEALERS AGREEMENT
, l997
Gentlemen:
Royal Hutton Securities, Corp., as Underwriter, is offering for
sale 1,000,000 Shares of Common Stock ("Stock") and 2,000,000 Class A
Warrants ("A Warrants") of Silver Star Foods, Inc., a New York
corporation, (the "Company"). Such offer will be made pursuant to the
terms and conditions of the Underwriting Agreement between the Company
and the Underwriter. The shares to be offered for sale are more
particularly described in the enclosed Prospectus. We invite your
participation, as a Selected Dealer, on the terms and conditions stated
herein.
1. Offering Price. The Shares and A Warrants, which will be
offered to the public at a price of $5.25 per Share and $.25 per A
Warrant, shall not be directly or indirectly offered or sold to the
public by Selected Dealers at any other price during the period this
Agreement is in effect. The Company proposes to issue and sell
1,000,000 Shares and 2,000,000 A Warrants.
2. Selected Dealers. Members of the National Association of
Securities Dealers, Inc. (the "NASD") who shall agree to offer Shares
and A Warrants hereunder (hereinafter referred to as "Selected Dealers"
or "Participating Dealers") will be allowed a selling concession of
percent of the full ten percent (10%) commission and payable as
hereinafter provided. No concession shall be earned or paid unless
1,000,000 Shares and 2,000,000 A Warrants are sold within ninety days
from the effective date of the Registration Statement under the
Securities Act of 1933 filed by the Company with the Securities and
Exchange Commission ("Termination Date"), which date may be extended for
an additional sixty (60) days by mutual agreement of the Company and the
Underwriter.
3. Subscriptions The underwriter reserves the right to reject all
subscriptions, in whole or in part, to make allotments and to close the
subscription books at any time without notice. The Shares and A Warrants
allotted to you will be confirmed, subject to the terms and conditions
of this Agreement. Payments for Shares and A Warrants sold by you is to
be made by check or money order only and shall be made payable to
. In
respect of all Shares and A Warrants sold by you pursuant hereto, you
will promptly transmit (within three business days) to the Escrow Agent
all checks and money orders received in payment for the full amount of
the Public Offering Price for the number of Shares and A Warrants
purchased, without deduction for any commission or concession in
compliance with the Securities Exchange Act of 1934. Your transmittal
letter accompanying checks or money orders to the Escrow Agent shall set
forth the names and addresses, together with Social Security or
appropriate tax I.D. numbers, of the purchases with the number of Shares
and A Warrants purchased and a copy of said transmittal letter shall be
concurrently sent to us.
NO COMMISSIONS SHALL BE PAYABLE, AND ALL SUBSCRIPTIONS AND SUBJECT
TO REJECTION BY THE UNDERWRITER, UNLESS AND UNTIL THE SELECTED DEALER
HAS COMPLIED WITH THE ABOVE UNDERLINED PROVISION.
Each sale shall be contingent upon the sale of 1,000,000 Shares and
2,000,000 A Warrants being sold on or before the Termination Date (which
date may be extended for sixty (60) days), and upon the acceptance of
such sale by the undersigned. In the event any order submitted to you
is not accepted, the Escrow Agent will return all funds paid by the
purchases. Payment of the selling concessions in respect of each such
sale will be made to the Selected Dealer, by the Underwriter when and
only in the event that 1,000,000 Shares and 2,000,000 A Warrants are
sold by the Termination Date, (which date may be extended by sixty (60)
days), and the proceeds released by the Escrow Agent. The offering is
made subject to the issuance and delivery of the Shares and A Warrants
and the acceptance hereof by the Underwriter, to the approval of legal
matters by counsel, and to the terms and conditions herein set forth.
If an order is rejected or if a payment is received which proves
insufficient or worthless, any compensation paid to the Selected Dealer
shall be returned wither by the Selected Dealer's remittances in cash or
by a charge against the account of the Selected Dealer, as the
Underwriter may elect.
4. Offering to Public. Shares sold to the public by Dealers shall
be sold by the Selected Dealers as agents for the Company. Neither you
nor any other person is, or has been, authorized to give any information
or to make any representations in connection with the sale of the Shares
and A Warrants other than as contained in the Prospectus. The Selected
Dealer will not sell the Shares and A Warrants pursuant to this
Agreement unless the Prospectus is furnished to the purchaser at least
48 hours prior to the mailing of the confirmation of sale, or is sent to
the person under such circumstances that it would be received by him 48
hours prior to his receipt of a confirmation of the sale. The Dealer
understands that during the 90 day period after the first date upon
which the Shares and A Warrants of the Company are bona fide offered to
the public, all Dealers effecting transactions in the Shares and A
Warrants shall be required to deliver the Company's current Prospectus
to any purchasers thereof prior to or concurrent with the receipt of the
confirmation of sale. Additional copies of the then current Prospectus
will be supplied by the Underwriter in reasonable quantities upon
request. No Selected Dealer is authorized to act as agent for the
undersigned in any respect. No Selected Dealer is authorized to act as
agent for the Company except in offering the Shares and A Warrants to
the public pursuant to this Agreement.
5. Compliance with Securities Laws. Upon becoming a Selected
Dealer, and in offering and selling the Shares and A Warrants, you agree
to comply with all applicable requirements of the Securities Act of
1933, as amended (the "1933 Act"), the 1934 Act, any applicable state
securities or "Blue Sky" laws, and the Rules of Fair Practice of the
NASD, including, but not limited to, Article III, Section 1 thereof, and
the interpretations of said section promulgated by the Board of
Governors of such Association, including and "Interpretation with
respect to 'free-riding and withholding' dated November 1, 1970, and as
thereafter amended, and including information concerning the Board of
Governor's Interpretation thereof dated March 2, l979, to NASD members.
Upon application, you will be informed as to the states in which we have
been advised by counsel to the Company that the Shares and A Warrants
have been qualified for sale under the respective securities or Blue Sky
Laws of such states, but we assume no obligation or responsibility as to
the right of any Selected Dealer to sell the Shares and A Warrants in
any state or as to any sale therein.
By acceptance of this Agreement, you represent that you are a
member in good standing of the NASD.
By acceptance of this Agreement, each Selected Dealer has assumed
full responsibility for thorough and prior training of its
representatives concerning the selling methods to be used in connection
with the offer and sale of the Shares and A Warrants, giving special
emphasis to the NASD's principles of full and fair disclosure to
prospective investors, suitability standards and the prohibitions
against "Free-Riding and Withholding."
Each Selected Dealer agrees to indemnify and hold harmless the
Underwriter, the Company and the other Selected Dealers against and from
any liability, loss, damage, or expense arising out of any failure by
the Selected Dealer to comply with the 1933 Act, the 1934 Act,
applicable securities laws of any state, the rules and regulations of
the Securities and Exchange Commission and the Rules of Fair Practice of
the NASD, due to any act of omission by the Selected Dealer.
4. Prospectus and Offering. We have been advised by the Company
that the offering under the Registration Statement on Form SB-2 (File
No. )with respect to the subject Shares and A Warrants
commenced on , l998. By signing this Agreement, each
Selected Dealer acknowledges receipt of a copy of the Prospectus
included in said Registration Statement. Additional copies of the
Prospectus will be supplied to you in reasonable quantities upon
request.
7. Liability. Nothing will constitute the Selected Dealers, an
association or other separate entity or partners with us or with each
other, but you will be responsible for your share of any liability or
expense based upon any claim to the contrary. As the Underwriter, we
shall have full authority to take such action as we may deem advisable
in all matters pertaining to the offering or in respect of the value,
validity, or form of the Shares and A Warrants, or the delivery of the
certificates for the Shares and A Warrants, or the qualifications of the
Shares and A Warrants for sale under the laws of any jurisdiction, or
for or in respect of any matter connected with this Agreement, except
for lack of good faith obligations expressly assumed by using this
Agreement and any liability due to our act or omission arising under the
1933 Act.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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