-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UKCgpmspgg2km3+sidP8c25GimhP1aX9NI9a5gZPj5coA2AhRWW8b4v1pvTCzlhu v1LSw+MJGh++hlN6GTxfWw== 0000950136-04-001586.txt : 20040514 0000950136-04-001586.hdr.sgml : 20040514 20040514151113 ACCESSION NUMBER: 0000950136-04-001586 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20040511 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GSV INC CENTRAL INDEX KEY: 0001051591 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 133979226 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23901 FILM NUMBER: 04806983 BUSINESS ADDRESS: STREET 1: 191 POST ROAD WEST CITY: WESTPORT STATE: CT ZIP: 06880 BUSINESS PHONE: 2125323553 MAIL ADDRESS: STREET 1: 191 POST ROAD WEST CITY: WESTPORT STATE: CT ZIP: 06880 FORMER COMPANY: FORMER CONFORMED NAME: CYBERSHOP INTERNATIONAL INC DATE OF NAME CHANGE: 19971217 8-K 1 file001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 11, 2004 ------------ GSV, Inc. --------- (Exact name of registrant as specified in its charter) Delaware 0-23901 13-3979226 -------- ------- ---------- (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation) 191 Post Road, Westport, CT 06880 --------------------------------- (Address of principal executive offices, zip code) Registrant's telephone number, including area code: (203) 221-2690 -------------- N/A --- (Former name or former address, if changed since last report) Item 5. Other Events and Regulation FD Disclosure GSV, Inc. recently raised additional funds through the sale of a $200,000 convertible note to a foreign private investor. The note is convertible into common stock at a conversion price of $0.70 a share. GSV will use the proceeds to continue developing its oil and gas prospects in Texas. GSV also issued warrants to the investor to purchase up to 1,142,857 shares of common stock at a price of $0.70 a share, totaling if exercised in full $800,000. The warrants expire if not exercised within 12 months. The conversion price of the note and the exercise price of the warrants are subject to customary price adjustment for stock splits and similar events, and for future financing at prices lower than $.70 per share. GSV offered the convertible note and the warrants in reliance on an exemption from registration for offers and sales of securities that do not involve a public offering. This offering was not registered under the Securities Act of 1933, as amended, and neither the convertible note nor the warrants or the underlying common stock may be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This disclosure is neither an offer to purchase nor a solicitation of an offer to sell securities in any jurisdiction in which such an offer or sale would be unlawful. This document does not and will not constitute an offer to sell or the solicitation of an offer to buy shares and is being issued under Rule 135c under the Securities Act. Forward-Looking Statements - -------------------------- Some of the statements in this document are forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements about our plans, objectives, expectations, intentions and assumptions that are not statements of historical fact. You can identify these statements by the following words: - - "may" - - "will" - - "should" - - "estimates" - - "plans" - - "expects" - - "believes" - - "intends" and similar expressions. We cannot guarantee our future results, performance or achievements. Our actual results and the timing of corporate events may differ significantly from the expectations discussed in the forward-looking statements. You are cautioned not to place undue reliance on any forward- looking statements. Potential risks and uncertainties that could affect our future operating results include, but are not limited to, our limited operating history, history of losses, need to raise additional capital, and the high risk nature of our business, as well as other risks described in our most recent annual report on Form 10-KSB filed with the Securities and Exchange Commission. Item 7. Financial Statements and Exhibits. Exhibit No. Description 4.1 Convertible Promissory Note dated May 11, 2004. 4.2 Warrant to Purchase Stock dated May 11, 2004. 10.1 Form of Purchase Agreement, dated May 11, 2004. 10.2 Form of Guaranty dated as of May 11, 2004, by Polystick U.S. Corporation in favor of D. Emerald Investments Ltd. 10.3 Form of Pledge Agreement dated as of May 11, 2004, by and between Polystick U.S. Corporation and D. Emerald Investments Ltd. 10.4 Form of Voting Agreement dated May 11, 2004, by and between Polystick U.S. Corporation and D. Emerald Investments Ltd. 99.1 Press release dated May 13, 2004. -2- SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GSV, INC. --------- (Registrant) Dated: May 14, 2004 By: /s/Gilad Gat ------------ Gilad Gat Chief Executive Officer (Principal Executive Officer) -3- EX-4.1 2 file002.txt CONVERTIBLE PROMISSORY NOTE EXHIBIT 4.1 ----------- GSV, INC. CONVERTIBLE PROMISSORY NOTE THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF OR IN RESPECT OF INTEREST PAYMENTS HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE DISTRIBUTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS. $200,000 As of May 11, 2004 FOR VALUE RECEIVED, GSV, INC., a Delaware corporation ("Company"), with its principal office at 191 West Post Road, Westport, Connecticut 06880, hereby promises to pay to the order of D. EMERALD INVESTMENTS LTD., an Israeli corporation ("Holder"), with its principal office at 85 Medinat Ha-Yehudim Street, Herzeliya, Israel (the "Holder's Office"), or its assigns, on May 10, 2006 (the "Maturity Date"), the principal amount of TWO HUNDRED THOUSAND DOLLARS ($200,000) (the "Principal Amount"), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public or private debts, together with interest on the unpaid balance of said Principal Amount from time to time outstanding at the rate of eight percent (8%) per annum ("Contract Interest"). Accrued Contract Interest shall be payable quarterly in arrears on the last day of each calendar quarter commencing on June 30, 2004, and on the Maturity Date (the "Interest Payment Dates"). Unless the Note has been converted by the Holder prior to the Maturity Date pursuant to the terms of this Note, the unpaid Principal Amount, together with the then accrued unpaid Contract Interest and all other amounts owed hereunder, shall be due and payable on the Maturity Date. At the Holder's option, Contract Interest shall be payable either in cash or in shares of common stock, $.001 par value per share, of the Company ("Common Stock") (the number of shares to be calculated as set forth below). If the Holder elects to receive any Contract Interest payment in the form of shares of the Company's Common Stock, the Holder shall given the Company notice of such election at least fifteen (15) business days prior to the applicable interest Payment Date. The number of shares of Common Stock to be issued to the Holder shall be calculated by dividing the amount of Contract Interest payable for the applicable period by the Conversion Price (as defined below). Payment of the Principal Amount and Contract Interest hereunder shall be made by wire transfer of immediately available good funds, to such bank account as the Holder may designate by notice to the Company prior to any such payment, or, with respect to Contract Interest that the Holder has elected to receive in shares of Common Stock, by delivery of share certificates of Common Stock to the Holder at the Holder's Office, or at such other place as the Holder , by notice to the Company, may designate from time to time for that purpose. In the event that the outstanding Principal Amount and all accrued and unpaid Contract Interest are not paid in full on or before the Maturity Date, then the outstanding Principal Amount and all accrued and unpaid Contract Interest thereon shall thereafter bear a default interest ("Default Interest") at a rate per annum equal to twelve percent (12%) until the outstanding Principal Amount and all accrued and unpaid Contract Interest and Default Interest thereon shall have been paid in full by the Company to the Holder. This Note is subject to prepayment in whole or in part at any time and from time to time without penalty or premium, but with Contract Interest on the amount prepaid to the date of prepayment. All prepayments will first be applied to the repayment of accrued fees and expenses, then to Default Interest accrued on this Note through the date of such prepayment until all then outstanding accrued Default Interest has been paid, then to Contract Interest accrued on this Note through the date of such prepayment until all then outstanding accrued Contract Interest has been paid, and then shall be applied to the repayment of the Principal Amount. 1. Default. 1.1 Events of Default. Upon the occurrence of any of the following events (herein "Events of Default"): (i) The Company shall fail to pay the Principal Amount on the Maturity Date or any Contract Interest payment on the due date thereof; (ii) (A) The Company shall commence any proceeding or other action relating to it in bankruptcy or seek reorganization, arrangement, readjustment of its debts, receivership, dissolution, liquidation, winding-up, composition or any other relief under any bankruptcy law, or under any other insolvency, reorganization, liquidation, dissolution, arrangement, composition, readjustment of debt or any other similar act or law, of any jurisdiction, domestic or foreign, now or hereafter existing; or (B) the Company shall admit the material allegations of any petition or pleading in connection with any such proceeding; or (C) the Company shall apply for, or consent or acquiesce to, the appointment of a receiver, conservator, trustee or similar officer for it or for all or a substantial part of its property or admit generally an inability to pay its debts as they become due; or (D) the Company shall make a general assignment for the benefit of creditors; (iii) (A) The commencement of any proceedings or the taking of any other action against the Company in bankruptcy or seeking reorganization, arrangement, readjustment of its debts, liquidation, dissolution, arrangement, composition, or any other relief under any bankruptcy law or any other similar act or law of any jurisdiction, domestic or foreign, now or hereafter existing and the continuance of any of such event for thirty (30) days undismissed, unbonded or undischarged; or (B) the appointment of a receiver, conservator, trustee or similar officer for the Company for any of its property and the continuance of any of such event for thirty (30) days undismissed, unbonded or undischarged; or (C) the issuance of a warrant of attachment, execution or similar process against any of the property of the Company and the continuance of such event for thirty (30) days undismissed, unbonded and undischarged; (iv) Any of the Company's representations or warranties contained herein or in the Purchase Agreement (the "Purchase Agreement") between the Company and the Holder or the Warrant to Purchase Stock (the "Warrant") issued to the Holder, each such agreement dated the date hereof, is determined by a court of competent jurisdiction as false or misleading in any material respect; -2- (v) The Company shall breach or fail to perform or observe any obligation, covenant, term, condition, provision or agreement of the Company contained in this Note, the Purchase Agreement or the Warrant, after giving effect to any applicable notice provisions and cure periods; provided, however, that with respect to a failure to comply with any of the provisions of Sections 2.2(a) and (c) of this Note, such failure is not remedied within twenty (20) days after the Company's receipt of written notice of same; or (vi) Failure of the Company to ensure that any conversion of this Note or any Contract Interest hereon properly requested by the Holder is effected by the Company; then, and in any such event, the Holder, at its option and without written notice to the Company, may declare the entire Principal Amount of this Note then outstanding together with any accrued unpaid Contract Interest thereon (payable either in cash or shares of Common Stock) and Default Interest (if applicable) immediately due and payable, and the same shall forthwith become immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are expressly waived, and exercise any and all other legal or equitable rights resulting therefrom. The Events of Default listed herein are solely for the purpose of protecting the interests of the Holder of this Note. 1.2 Non-Waiver and Other Remedies. No course of dealing, delay or omission on the part of the Holder of this Note in exercising any right hereunder shall operate as a waiver or otherwise prejudice the right of the Holder of this Note. Holder shall not be deemed to have waived any of its rights under this Note unless such waiver is in writing and signed by Holder. A waiver in writing by Holder on one occasion shall not be construed as a consent to or a waiver of any right or remedy on any future occasion. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. 1.3 Collection Costs; Attorney's Fees. In the event this Note is turned over to an attorney for collection or the Holder otherwise seeks advice of an attorney in connection with the exercise of its rights hereunder upon the occurrence of an Event of Default, the Company agrees to pay all actual costs of collection, including reasonable attorney's fees and expenses and all out of pocket expenses incurred in connection with such collection efforts, which amounts may, at the Holder's option, be added to the Principal Amount hereof. 2. Obligation to Pay Principal and Interest; Covenants. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Principal Amount of, Contract Interest and Default Interest, if applicable, on this Note at the place, at the respective times, at the rates, and in the currency or securities herein prescribed. 2.1 In no event shall the amount or rate of interest due and payable under this Note exceed the maximum amount or rate of interest allowed by applicable law and, in the event any such excess payment is made by Company or received by Holder, such excess sum shall be credited as a payment of Principal Amount (or if no Principal Amount remains outstanding, shall be refunded to the Company). It is the express intent hereof that the Company shall not pay and Holder not receive, directly or indirectly or in any other manner, interest in excess of that which may be lawfully paid under applicable law. All interest (including all charges, fees or other amounts deemed to be interest) which is paid or charged under this Note shall, to the maximum -3- extent permitted by applicable law, be amortized, allocated and spread on a pro rata basis throughout the actual term of this Note. 2.2 Covenants. The Company covenants and agrees that, while this Note is outstanding, it shall: (a) Pay and discharge all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits, or upon any properties belonging to it before the same shall be in default; provided, however, that the Company shall not be required to pay any such tax, assessment, charge or levy that is being contested in good faith by proper proceedings and adequate reserves for the accrual of same are maintained if required by generally accepted accounting principles; (b) Preserve its corporate existence and continue to engage in business of the same general type as conducted as of the date hereof; (c) Comply in all respects with all statutes, laws, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations and requirements ("Requirement(s)") of all governmental bodies, departments, commissions, boards, companies or associations insuring the premises, courts, authorities, officials, or officers, that are applicable to the Company; except when the failure to comply would not have a material adverse effect on the Company; provided that nothing contained herein shall prevent the Company from contesting in good faith the validity or the application of any Requirements. 3. Conversion. 3.1 Right to Convert. At any time prior to May 10, 2005, the Holder may, at its option, by written notice to the Company ("Conversion Notice"), elect to convert this Note and all accrued and unpaid Contract Interest thereon, in whole but not in part, into Common Stock at the price of $.70 per share of Common Stock (the "Conversion Price"), as adjusted to reflect stock dividends, stock splits, recapitalizations and the like pursuant to Section 3.3 below. 3.2 Conversion Process. The Holder shall deliver to the Company the Conversion Notice in the form attached hereto as Exhibit A. Promptly after the receipt of such Conversion Notice, the Company shall issue and deliver to the Holder a certificate, registered in the name of the Holder, representing the number of shares of Common Stock to which the Holder is entitled upon such conversion. 3.3 Adjustments. (a) Stock Dividends, Splits, Etc. If the outstanding shares of the Company's Common Stock shall be subdivided or split into a greater number of shares or a dividend in Common Stock shall be paid in respect of the outstanding Common Stock, the Conversion Price in effect immediately prior to such subdivision or at the record date of such dividend shall, simultaneously with the effectiveness of such subdivision or split or immediately after the record date of such dividend (as the case may be), be proportionately decreased. If the outstanding shares of Common Stock shall be combined or reverse-split into a smaller number of shares, the Conversion Price in effect immediately prior to such combination or reverse split shall, -4- simultaneously with the effectiveness of such combination or reverse split, be proportionately increased. (b) Reclassification, Exchange or Substitution. Upon any reclassification, recapitalization, exchange, substitution, reorganization or other event that results in a change of the number and/or class of the Common Stock, lawful provision shall be made so that Holder shall be entitled thereafter to receive, upon conversion of this Note and/or any accrued Contract Interest hereon, the number and kind of securities and property that Holder would have been entitled to receive if the Principal Amount of and/or accrued Contract Interest, as the case may be, as to which conversion is requested, and as of the date conversion is requested, had been converted immediately before such reclassification, recapitalization, exchange, substitution, reorganization or other event. In any such case, appropriate adjustment (as reasonably determined by the Board of Directors of the Company) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of Holder such that the provisions set forth in this Section 3 (including provisions with respect to the Conversion Price) shall thereafter be applicable, as nearly as is reasonably practicable, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of this Note and/or any accrued interest hereon. The provisions of this Section 3.3(b) shall similarly apply to successive reclassifications, recapitalizations, exchanges, substitutions, reorganizations or other events. (c) Adjustments for Diluting Issuances. If the Company shall issue, after the date of this Note, any Equity Securities (as defined below) at a price per share or conversion price or exercise price lower than the Conversion Price in effect immediately before such Equity Securities are issued, in all such cases the Conversion Price shall be adjusted to equal the price per share or the conversion price or the exercise price of such Equity Securities, as applicable. The foregoing shall not apply to issuance of common stock or preferred stock the proceeds of which will be payable to the Company in immediately available funds upon issuance thereof. For purposes of this Note, the term "Equity Securities" shall mean any securities evidencing an ownership interest in the Company, or any securities having voting rights in the election of the Board of Directors of the Company not contingent upon default, or any securities convertible into or exercisable for any class of shares of the Company, or any agreement or commitment to issue any of the foregoing. (d) Fractional Shares. No fractional shares shall be issuable upon conversion of this Note and/or any accrued Contract Interest hereon and the number of shares to be issued shall be rounded up to the nearest whole share. (e) Certificate as to Adjustments. Upon each adjustment of the Conversion Price or number of shares, the Company at its expense, shall promptly compute such adjustment, and furnish the Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish the Holder with a certificate setting forth the new Conversion Price and/or number of shares of Common Stock or other securities and the series of adjustments leading thereto. (f) Price Adjustment. No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease in the Conversion Price of at least $0.01; provided, however, that any adjustments that by reason of this subsection are not required to -5- be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 3 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. 3.4 No Impairment. The Company shall not, by amendment of its Certificate of Incorporation, as amended, or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Note by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Section 3 and in taking all such action as may be necessary or appropriate to protect the Holder's rights under this Article against impairment. 4. Miscellaneous. 4.1 Required Consent. The Company may not modify any of the terms of this Note without the prior written consent of the Holder. 4.2 Lost Documents. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and (in the case of loss, theft or destruction) of indemnity satisfactory to it, and upon surrender and cancellation of such Note, if mutilated, the Company will make and deliver in lieu of such Note a new Note of like tenor and unpaid principal amount and dated as of the original date of the Note. 4.3 Legends. This Note and any Common Stock or other securities issued upon conversion of this Note and/or conversion of any accrued interest hereon shall be imprinted with a legend in substantially the following form: THIS SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE DISTRIBUTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS. 4.4 Benefit. This Note shall be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors and assigns. 4.5 Notices and Addresses. All notices, offers, acceptances and any other acts under this Note (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressee in person, by overnight courier service or similar receipted delivery, or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows: To the Holder: To the Holder's address on page 1 of this Note, Attn.: Roy Harel, Manager With a copy to: Kantor, Elhanani, Tal & Co. Law Offices 74 -76 Rothschild Blvd. -6- Tel-Aviv, Israel 65785 Attn: Dana Yagur, Adv. To the Company: To the Company's address on page 1 of this Note, Attn: Gilad Gat, Chief Executive Office and President With a copy to: Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attn: Ralph W. Norton, Esq. or to such other address as any party, by notice to the other parties, may designate from time to time. Time shall be counted to, or from, as the case may be, the delivery in person or five business days after mailing. 4.6 Governing Law and Jurisdiction. This Note will be deemed to have been made and delivered in New York City and will be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York. Each of the Company and the Holder hereby (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement will be instituted exclusively in New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York, (ii) waives any objection to the venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum for such suit, action or proceeding, (iii) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New York and the United States District Court for the Southern District of New York in any such suit, action or proceeding, (iv) agrees to accept and acknowledge service of any and all process that may be served in any such suit, action or proceeding in New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York and (v) agrees that service of process upon it mailed by certified mail to its address set forth in Section 4.4 above will be deemed in every respect effective service of process upon it in any suit, action or proceeding. 4.7 Section Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Note. 4.8 Interpretation. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. 4.9 Assignment. All rights of Holder under this Note may be assigned by Holder to any third party and all rights of Holder hereunder shall inure to the benefit of its transferees, successors and assigns. -7- 4.10 No Rights as Stockholder. Until the conversion of this Note or conversion of any accrued interest hereon, the Holder of this Note shall not have or exercise any rights by virtue hereof as a stockholder of the Company. IN WITNESS WHEREOF, this Note has been executed and delivered on the date specified above by the duly authorized representatives of the Company and the Holder. GSV, INC. By:/s/ Gilad Gat ------------- Gilad Gat Chief Executive Officer and President Accepted and Agreed: D. EMERALD INVESTMENTS LTD. By:/s/ Roy Harel ------------- Roy Harel Manager -8- EX-4.2 3 file003.txt WARRANT TO PURCHASE STOCK EXHIBIT 4.2 ----------- THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOTE BE SOLD OR OTHERWISE DISTRIBUTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS. WARRANT TO PURCHASE STOCK Issuer: GSV, Inc., a Delaware corporation Number of Shares: 1,142,857 subject to adjustment as set forth below Class of Stock: Common Stock, $.001 par value per share Exercise Price: $.70, subject to adjustment as set forth below Issue Date: As of May 11, 2004 Expiration Date: May 10, 2005 THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and valuable consideration, this Warrant is issued to D. Emerald Investments Ltd., a corporation organized and existing under the laws of Israel ("Holder") by GSV, Inc., a Delaware corporation (the "Company"). Subject to the terms of the Purchase Agreement dated as of May 11, 2004, by and between the Company and the Holder (the "Purchase Agreement") and subject to the terms and conditions hereinafter set forth below, the Holder is entitled upon surrender of this Warrant and the duly executed Notice of Exercise form annexed hereto as Appendix 1, at the office of the Company, 191 Post Road West, Westport, Connecticut 06880, or such other office as the Company shall notify the Holder of in writing (the "Principal Office"), to purchase from the Company One Million, One Hundred and Forty-Two Thousand and Eight Hundred and Fifty-Seven (1,142,857), duly authorized, validly issued, fully paid and non-assessable shares, free and clear of all liens, pledges, security interests, charges, and encumbrances (the "Shares") of the Company's common stock, $.001 par value per share ("Common Stock"). The purchase price per Share shall be the Exercise Price, subject to adjustment as set forth in Article 2 below. This Warrant may be exercised in whole or in part at any time and from time to time until 5:00 PM, Eastern time, on May 10, 2005 (the "Expiration Date"). Until such time as this Warrant is exercised in full or expires, the Exercise Price and the number of Shares shall be subject to adjustment as hereinafter provided ARTICLE 1 EXERCISE -------- 1.1 Method of Exercise. Holder may exercise this Warrant, in whole or in part, by delivering a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the Principal Office of the Company. Holder shall also deliver to the Company a certified check for the aggregate Exercise Price for the Shares being purchased. 1.2 Delivery of Certificate and New Warrant. Promptly after Holder exercises this Warrant, the Company shall issue to the Holder the Shares to which the Holder shall be entitled thereby, duly authorized, validly issued, fully paid, non assessable and free and clear of all liens, pledges, security interests, charges and encumbrances and shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised and has not expired, a new Warrant representing the right to purchase the balance of the Shares not yet so acquired. Upon receipt by the Company of the Notice of Exercise and the aggregate Exercise Price, the Holder shall be deemed to be the holder of the Shares issuable upon such exercise, notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to the Holder. 1.3 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor. The term "Warrant" as used herein shall include this Warrant and any warrants subsequently delivered in substitution or exchange therefore as provided herein. 1.4 Sale, Merger, or Consolidation of the Company. 1.4.1 "Acquisition". For the purpose of this Warrant, "Acquisition" means any sale, transfer, exclusive license, or other conveyance or disposition of all or substantially all of the assets or business of the Company, or any securities transaction, reorganization, consolidation or merger of the Company in which the holders of the Company's outstanding voting equity securities immediately prior to the transaction beneficially own less than 50.1% of the outstanding voting equity securities of the surviving or successor entity immediately after the transaction. 1.4.2 Assumption of Warrant. This Warrant shall automatically and immediately be binding upon any successor or surviving entity succeeding the Company as a result of an Acquisition(other than an Acquisition in which the consideration received by the Company or its stockholders, as the case may be, consists solely of cash). Upon the closing of any such Acquisition., this Warrant shall be exercisable for the same securities and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing. The Exercise Price shall be adjusted accordingly. ARTICLE 2 ADJUSTMENTS ----------- 2.1 Stock Dividends, Splits, Etc. If the outstanding shares of the Company's Common Stock at any time while this Warrant remains outstanding and unexpired shall be subdivided or split into a greater number of shares or a dividend in Common Stock shall be paid in respect of the outstanding Common Stock, the Exercise Price in effect immediately prior to such subdivision or at the record date of such dividend shall, simultaneously with the effectiveness of such subdivision or split or immediately after the record date of such dividend (as the case may be), -2- be proportionately decreased. If the outstanding shares of Common Stock shall be combined or reverse-split into a smaller number of shares, the Exercise Price in effect immediately prior to such combination or reverse split shall, simultaneously with the effectiveness of such combination or reverse split, be proportionately increased. When any adjustment is required to be made in the Exercise Price, the number of Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of Shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Exercise Price in effect immediately prior to such adjustment, by (ii) the Exercise Price in effect immediately after such adjustment. 2.2 Reclassification, Exchange or Substitution. Upon any reclassification, recapitalization, exchange, substitution, reorganization or other event that results in a change of the number and/or class of the Common Stock, lawful provision shall be made so that Holder shall be entitled thereafter to receive, upon exercise of this Warrant, the number and kind of securities and property that Holder would have been entitled to receive if this Warrant had been exercised immediately before such reclassification, exchange, substitution, reorganization or other event. In any such case, appropriate adjustment (as reasonably determined by the Board of Directors of the Company) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of Holder such that the provisions set forth in this Section 2 (including provisions with respect to the Exercise Price) shall thereafter be applicable, as nearly as is reasonably practicable, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, reorganizations or other events. 2.3 Price Adjustment. No adjustment in the per share Exercise Price shall be required unless such adjustment would require an increase or decrease in the Exercise Price of at least $0.01; provided, however, that any adjustments that by reason of this subsection are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 2 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. 2.4 No Impairment. The Company shall not, by amendment of its Certificate of Incorporation, as amended, or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms, covenants, stipulations or conditions to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder's rights under this Article against impairment. The Company further agrees that it will maintain and reserve at all times, free from pre-emptive rights, and after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of the Company, such number of authorized but unissued Shares to permit the exercise of this Warrant for the full number of Shares herein and so that this Warrant, and any subsequent Warrants issued to the Holder, may be exercised without additional authorization. The Company further covenants that the Shares, when issued pursuant to the exercise of this Warrant, will be dully authorized, validly issued, fully paid and non-assessable shares, free and clear of all liens, pledges, security interests, charges, and encumbrances. 2.5 Adjustments for Diluting Issuances. If the Company shall issue, after the Issue Date set forth on the face of this Warrant, any Equity Securities (as defined below) at a price -3- per share or conversion price or exercise price lower than the Exercise Price in effect immediately before such Equity Securities are issued, (as such Exercise Price may have been previously adjusted pursuant to the provisions of this Article 2), the Exercise Price for the Shares of Common Stock issuable hereunder shall be adjusted to equal the price per share or the conversion price or the exercise price of such Equity Securities, as applicable. The foregoing shall not apply to issuance of common stock or preferred stock the proceeds of which will be payable to the Company in immediately available funds upon issuance thereof. For purposes of this Warrant, the term "Equity Securities" shall mean any securities evidencing an ownership interest in the Company, or any securities having voting rights in the election of the Board of Directors of the Company not contingent upon default, or any securities convertible into or exercisable for any class of shares of the Company, or any agreement or commitment to issue any of the foregoing. 2.6 Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of the Warrant and the number of Shares to be issued shall be rounded up to the nearest whole Share. 2.7 Certificate as to Adjustments. Upon the occurrence of each event that results in an adjustment of the Exercise Price or number of Shares, the Company, at its sole cost and expense, shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Exercise Price and the number of Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. ARTICLE 3 COVENANTS OF THE COMPANY ------------------------ 3.1 Notice of Certain Events. If the Company proposes at any time (a) to declare any dividend or distribution upon its Common Stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or series or other rights; (c) to effect any reclassification, recapitalization, exchange or substitution of any of its securities; or (d) to merge or consolidate with or into any other corporation, or sell, lease, license, or convey all or substantially all of its assets or business, or to liquidate, dissolve or wind up; then, in connection with each such event, the Company shall give Holder (1) at least 15 days' prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of securities of the Company will be entitled to receive such dividend, distribution or subscription rights) or for determining rights to vote, if any, in respect of the matters referred to in (c) and (d) above; and (2) in the case of the matters referred to in (c) and (d) above at least 20 days' prior written notice of the date when the same will take place (and specifying the date on which the holders of securities of the Company will be entitled to exchange their securities of the Company for securities or other property deliverable upon the occurrence of such event). -4- ARTICLE 4 MISCELLANEOUS ------------- 4.1 Legends. This Warrant and the Shares shall be imprinted with a legend in substantially the following form: THIS SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE DISTRIBUTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS. 4.2 Compliance with Securities Laws on Transfer. This Warrant and the Shares may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder or if (i) there is no material question as to the availability of current information as referenced in Rule 144(c), (ii) Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, (iii) the selling broker represents that it has complied with Rule 144(f), and (iv) the Company is provided with a copy of Holder's notice of proposed sale. 4.3 Transfer Procedure. Subject to the provisions of Section 4.2, Holder may transfer all or part of this Warrant and/or the Shares issuable upon exercise of this Warrant at any time by giving the Company notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee, if applicable and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable in case of a partial transfer). 4.4 No Rights as Stockholder. Until the exercise of this Warrant, the registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of the Company. 4.5 Successors. The rights and obligations of the parties to this Warrant will inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, assigns, pledgees, transferees and purchasers 4.6 Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. 4.7 Governing Law and Jurisdiction. This Warrant will be deemed to have been made and delivered in New York City and will be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York. Each of -5- the Company and Holder hereby (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement will be instituted exclusively in New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York, (ii) waives any objection to the venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum for such suit, action or proceeding, (iii) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New York and the United States District Court for the Southern District of New York in any such suit, action or proceeding, (iv) agrees to accept and acknowledge service of any and all process that may be served in any such suit, action or proceeding in New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York and (v) agrees that service of process upon it mailed by certified mail to its address set forth in Section 4.6 below will be deemed in every respect effective service of process upon it in any suit, action or proceeding. 4.8 Notices. Any notice or other communications required or permitted hereunder shall be sufficiently given if delivered in person or sent by facsimile or certified mail, postage prepaid, if to the Company, to it at GSV, Inc., 191 Post Road West, Westport, Connecticut 06880, Attention: President, with a copy to Davis & Gilbert LLP, 1740 Broadway, New York, New York 10019, Attention: Ralph W. Norton, Esq., and if to Holder, to D. Emerald Investments Ltd., 85 Medinat Ha-Yehudim, Herzelia, Israel, Attention: Roy Harel, Manager, with a copy to Kantor, Elhanani, Tal & Co., Mozes House, 74-76 Rothschild Blvd., Tel-Aviv Israel 65785, Attention: Adv. Dana Yagur. 4.9 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. 4.10 Attorneys Fees. In the event of any dispute between the concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees. 4.11 Severability. In case any one or more of the provisions contained in this Warrant shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. GSV, INC. By:/s/ Gilad Gat ------------- Name: Gilad Gat Title: Chief Executive Officer and President -6- APPENDIX 1 ---------- NOTICE OF EXERCISE ------------------ 1. The undersigned hereby elects to purchase _____ shares of the ____________ stock of GSV, Inc. pursuant to Section 1.1 of the attached Warrant, and tenders herewith payment of the Exercise Price of such shares in full. 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: ------------------------------------------- (Name) ------------------------------------------- ------------------------------------------- (Address) 3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws. ------------------------------------ (Signature) - -------------------- (Date) -7- EX-10.1 4 file004.txt PURCHASE AGREEMENT EXHIBIT 10.1 ------------ PURCHASE AGREEMENT ------------------ PURCHASE AGREEMENT (this "Agreement"), dated as of May 11, 2004 (the "Effective Date"), by and between GSV, Inc., a Delaware corporation (the "Company"), and D. Emerald Investments Ltd., an Israeli corporation (the "Investor"). WITNESSETH: ----------- WHEREAS, the Investor desires to purchase (i) a two-year 8% convertible promissory note in the principal amount of $200,000 (the "Convertible Note"), and (ii) a warrant to purchase up to 1,142,857 shares ("Shares") of common stock, par value $.001 per share ("Common Stock"), of the Company, at a price of $.70 per share (the "Warrant"; and together with the Convertible Note, the "Securities") from the Company and the Company desires to sell the Securities to the Investor, subject to the terms and conditions set forth in this Agreement; and WHEREAS, the Convertible Note and the Warrant will have the terms and conditions set forth in the forms of Convertible Note and Warrant attached to this Agreement as Exhibit A and Exhibit B, respectively. NOW, THEREFORE, in consideration of the premises, the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Sale and Purchase; Closing (a) Effective as of the Effective Date, the Company hereby sells, transfers, conveys and delivers to the Investor, and the Investor hereby purchases and receives from the Company, the Securities. (b) Contemporaneously with the execution and delivery of this Agreement, (i) the Investor is delivering to the Company the sum of $200,000 as the full purchase price for the Convertible Note and the Warrant, by check or wire transfer, (ii) the Company and the Investor are executing the Convertible Note and delivering same to the Company, and (iii) the Company is executing and delivering the Warrant to the Investor. (c) To secure the Company's obligations under the Convertible Note, at the Closing (as defined below) the Investor shall receive the following security agreements (the "Security Agreements", which term shall include any modifications or replacements thereof) granting security interests in or other liens on the following collateral and all proceeds (the "Collateral"): (i) a Pledge Agreement from Polystick U.S. Corporation ("Polystick"), granting a security interest in 200,000 shares of Series B Convertible Preferred Stock, par value $.001 per share (the "Preferred Stock") (being 13.33 percent (13.33%) of the issued and outstanding Preferred Stock) of the Company, in the form attached hereto as Exhibit C; and (ii) a Guaranty Agreement from Polystick in the form attached hereto as Exhibit D. The Company shall file, or cause to be filed, at the Company's sole cost and expense, any and all financing statements and other similar documents as may be required under applicable law in order to perfect or maintain the perfection of the Investor's security interest in or other lien on the Collateral under the Security Agreements. (d) The closing for the purchase and sale of the Securities shall take place by email and regular mail on May 11, 2004 ("Closing"). All acts, deliveries and confirmations comprising the Closing regardless of chronological sequence shall be deemed to occur contemporaneously and simultaneously upon the occurrence of the last act, delivery or confirmation of the Closing and none of such acts, deliveries or confirmations shall be effective unless and until the last of same shall have occurred. (e) At the Closing the Company shall deliver to the Investor, among other things, the following documents: (i) Copy of a resolution of the Company's board of directors approving the Company's execution of this Purchase Agreement and the issuance of the Convertible Note and the Warrant to the Investor. (ii) Validly issued Convertible Note and the Warrant. (iii)Validly executed Security Agreements. (iv) Validly executed Voting Agreement pursuant to provisions of Section 4(b) below. 2. Representations and Warranties of the Company The Company hereby represents, warrants and agrees to and with the Investor as follows: (a) Organization and Good Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on its business or properties. The rights, preferences, privileges and restrictions granted to or imposed upon the Shares, and the holders thereof are as set forth in the Company's Certificate of Incorporation and Certificates of Amendment thereof, Certificate of Merger and Amended and Restated By-laws, true and complete copies of which have been delivered to Investor and are attached as Exhibit E hereto. (b) Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the Convertible Note and the -2- Warrant, and the performance of all obligations of the Company hereunder and thereunder, has been taken. This Agreement, the Convertible Note and the Warrant constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. (c) Capitalization. The authorized capital of the Company is as set forth in the Company's annual report on Form 10-KSB for the year ended December 31, 2003 attached hereto as Exhibit F. All of the outstanding shares of Common Stock have been duly and validly authorized and issued, are fully paid and nonassessable, and were issued in compliance with the registration or qualification provisions of the Securities Act of 1933, as amended (the "Act"), any applicable state securities laws, or in each case pursuant to valid exemptions therefrom. Except for the Warrant and the Convertible Note to be issued and delivered pursuant to this Agreement, since the date of filing of the Company's annual report on Form 10-KSB, the Company has not issued any options, warrants, rights (including conversion or preemptive rights) or agreements, orally or in writing, for the purchase or acquisition from the Company of any securities of the Company. (d) No Consents. The execution and delivery of this Agreement, the Convertible Note and the Warrant, and the issuance of the Shares upon the exercise of the Warrant and/or the conversion of the Convertible Note in accordance with the terms thereof, and the compliance by the Company with the provisions hereof or thereof (i) are not and will not be inconsistent with the Company's Certificate of Incorporation (as amended) or the Company's Amended and Restated Bylaws, (ii) do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and (iii) do not and will not contravene any provision of, or constitute a default under any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound, or require the consent or approval of, the giving of notice to, the registration with or the taking of any action in respect of or by, any federal, state or local government authority or agency or other person. (e) Common Stock. All shares of Common Stock that may be issued (i) upon the conversion of the Convertible Note; (ii) in respect of interest payments on the Convertible Note; and/or (iii) upon the exercise of the Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens, claims, encumbrances and rights whatsoever except for restrictions on transfer provided for in the Convertible Note and the Warrant and under applicable federal and state securities laws. (f) No Broker fees. No agent or broker or any person acting in similar capacity is or will be entitled to any broker's or finder's fee or any other similar commission or fee in connection with the transactions contemplated hereby. 3. Representations and Warranties of Investor The Investor hereby represents, warrants and agrees to and with the Company as follows: (a) Organization, Good Standing. The Investor is a corporation duly organized, validly existing and in good standing under the laws of Israel. (b) Authorization. All corporate action on the part of the Investor, its officers, directors and stockholders, necessary for the authorization, execution and delivery of this -3- Agreement, and for the authorization and execution of the Convertible Note and the performance of all obligations of the Investor hereunder and thereunder has been taken. The Agreement and the Convertible Note constitute valid and legally binding obligations of the Investor, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. (c) Disclosure of Information. The Investor has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities, as well as the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investor to rely thereon. (d) Accredited Investor. The Investor is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act"). The Investor is experienced in evaluating and investing in private placement transactions of securities of companies in a similar stage of development, is able to fend for itself, can bear the economic risk of this investment, is able, without materially impairing its financial condition, to hold the Securities and the Common Stock for an indefinite period of time and to suffer complete loss of its investment. (e) Purchase Entirely for Own Account. This Agreement is made with the Investor in reliance upon its representation to the Company, which by the Investor's execution of this Agreement, the Investor hereby confirms, that the Securities and the Common Stock (which may be issued upon conversion of the Convertible Note and/or in respect of interest payments thereon and/or upon exercise of the Warrant) to be acquired by it will be acquired for investment for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. (f) Information. The Investor has not received an offering memorandum or similar document in connection with the purchase of the Convertible Note and the Warrant and has not received, nor has it requested, nor does it need to receive, any such memorandum or similar document. The Investor is aware that the Company's Common Stock is registered under the Securities Exchange Act of 1934 (the "Exchange Act") and that Company's most recent filings with and submissions to the U.S. Securities and Exchange Commission (the "Commission") can be obtained at the Commission's website, http://www.sec.gov. The Convertible Note and the Warrant are not being acquired by the Investor as a result of receiving from the Company any material information concerning the Company that has not been publicly disclosed. (g) No Public Market. The Investor understands that no public market now exists for the Securities and that the Company has made no assurances that a public market will ever exist for the Securities. (h) Restricted Securities. The Company represents and the Investor understands that neither the Securities nor the underlying Common Stock have been, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Investor's representations as expressed herein. The Investor understands that the -4- Securities and the underlying Common Stock are "restricted securities" under applicable U.S. federal and state securities laws and regulations, and that pursuant to these laws, the Investor must hold the Securities and the underlying Common Stock indefinitely unless they are registered with the Commission and qualified by state securities authorities or an exemption from such registration and qualification requirements is available, including Regulation S under the Securities Act. The Investor acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities and/or Common Stock, and requirements relating to the Company that are outside of the Investor's control and that the Company is under no obligation, and may not be able, to satisfy. (i) Legends. It is understood that the Convertible Note, the Warrant and the Common Stock issuable upon conversion of the Convertible Note and/or in respect of interest payments on the Convertible Note and/or upon exercise of the Warrant, and any securities issued in respect thereof or exchange therefor, may bear the following legend and any legend required by the Blue Sky laws of any state of the United States to the extent such laws are applicable to the shares represented by the certificate so legended: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE DISTRIBUTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS." 4. Board of Directors. (a) Right to Board Seat. If the Investor exercises the Warrant in full and converts the Convertible Note in full, then, at the Investor's request, the Company shall cause its Board of Directors to appoint a person designated by the Investor to the Company's Board of Directors and, in addition, for so long as the Investor holds at least eighty-five percent (85%) of the Common Stock issued upon such exercise and conversion, to nominate such person (or a different person designated by the Investor) to be re-elected to the Company's Board of Directors in connection with any meeting of the stockholders of the Company at which directors are to be elected. (b) Voting Agreement. At the Closing, the Investor and Polystick will enter into a voting agreement in the form attached hereto as Exhibit G, pursuant to which Polystick will agree to vote its shares of the Preferred Stock in favor of a nominee designated by the Investor in any election of directors occurring while the Investor has a right to nominate a board member pursuant to Section 4(a) above. 5. Registration Rights. (a) Required Registration. Within One Hundred and Twenty (120) days of the exercise of the Warrant and/or conversion of the Convertible Note for an aggregate of at least 428,572 Shares (subject to adjustment for dilutive events as set forth in the Warrant and the -5- Convertible Note), the Company shall prepare and file with the Commission, on one occasion, at the sole cost and expense of the Company, a registration statement on an appropriate form covering the sale of the Shares (the "Registration Statement") and such other documents, including a prospectus, as may be necessary (in the opinion of both counsel for the Company and counsel for the Investor), in order to comply with the provisions of the Securities Act, so as to permit a public offering and sale of the Shares by the Investor. The Company shall use its best efforts to cause the Registration Statement to become effective under the Securities Act, so as to permit a public offering and sale of the Shares by the Investor thereof. Once effective, the Company will use its best efforts to maintain the effectiveness of the Registration Statement until the earlier of (i) the date that all of the Shares have been sold, or (ii) the date that the Investor receives an opinion of counsel to the Company that all of the Shares may be freely traded (without limitation or restriction as to quantity or timing and without registration under the Act) under Rule 144(k) promulgated under the Securities Act or otherwise. In connection with any registration under this Section 5(a), the Company shall file the Registration Statement as expeditiously as possible and shall use its commercially reasonable best efforts to have such Registration Statement declared effective at the earliest possible time. (b) Company Registration. If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for shareholders) any of its stock or other securities under the Securities Act in connection with a public offering of such securities solely for cash other than a registration on Form S-8 or S-4 (or successor forms), the Company shall, at such time, promptly give the Investor written notice of such registration. Upon the written request of the Investor given within twenty (20) days after receipt of such notice by the Investor, the Company shall, except as set forth below, use its best efforts to cause to be registered under the Securities Act all of the then-outstanding Shares that the Investor has requested to be registered and which are not already included in a Registration Statement filed with the Commission. In connection with any offering involving an underwriting, the Company shall not be required to include the Investor's Shares in such underwriting unless the Investor accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company. In the event that the underwriters advise the Company that marketing factors require a limitation of the number of shares to be underwritten, the Company and the underwriters shall allocate the number of securities requested to be registered by the Company, the Investor and any other holders of Company securities as follows: (i) first, to the Company; and (ii) second, to the Investor, and (iii) third, to the other holders of Company securities that have elected to participate in such offering, pro rata among such holders. The Company shall have no obligation under this Section 5(b) to make any offering of its securities, or to complete an offering of its securities that it proposes to make or to complete the registration of any of the Shares if it does not complete the offering of the securities it proposes to make, and shall incur no liability to the Investor for its failure to do so. (c) Company Obligations. The Company covenants and agrees as follows: in connection with any registration under this Section 5, (a) the Company shall furnish the Investor such number of prospectuses as shall reasonably be requested; (b) the Company shall pay all costs, fees, and taxes in connection with any Registration Statement filed pursuant to this Section 5, including, without limitation, the Company's legal and accounting fees, printing expenses, and blue sky fees and expenses, but excluding the Investor's legal and accounting fees and any underwriting discounts or commissions related to the Investor's Shares included in the Registration Statement; (c) the Company will take all necessary action which may be required in qualifying or registering the Shares included in the Registration Statement for offering and sale under the securities or blue sky -6- laws of such states of the United States as are reasonably requested by the Investor (provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such jurisdiction where it has not been qualified). (d) Investor Obligations. The Investor covenants and agrees as follows: (a) to cooperate with the Company in connection with the preparation and filing of any Registration Statement hereunder, and for so long as the Company is obligated to keep the Registration Statement effective, the Investor will provide to the Company, in writing, for use in the Registration Statement, all information regarding the Investor, the Shares held by it, the intended method of distribution of the Shares and such other information as may be reasonably necessary to enable the Company to prepare the Registration Statement and prospectus covering the Shares and to maintain the currency and effectiveness thereof, (b) to use reasonable efforts to cooperate with the Company in responding to comments of the staff of the Commission and state securities regulators relating to the Investor, (c) on notice from the Company that the Registration Statement or prospectus requires correction to avoid a potential misstatement or omission therein or that the Commission or a state securities regulator has issued a stop order suspending use of the prospectus, the Investor shall cease offering or distributing the Shares until such time as the Company notifies such the Investor that offering and distribution of the Shares may recommence. The Company will use its commercially reasonable best efforts to correct any such potential misstatement or omission or to cause the Commission or state regulator to lift the stop order. (e) Indemnification by the Company. The Company shall indemnify the Investor, upon determination by a court of competent jurisdiction against all loss, claim, damage, expense or liability (each a "Claim"), including all expenses reasonably incurred in investigating, preparing or defending against any Claim whatsoever, to which the Investor may become subject under the Securities Act, the Exchange Act, or otherwise, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement or prospectus. Notwithstanding anything to the contrary contained herein, the Company's indemnification obligation under this Section 5(e): (A) shall not apply with respect to (1) a Claim arising out of or based upon an untrue statement or omission contained in any Registration Statement or prospectus that was made in reliance upon and in conformity with written information provided by or on behalf of the Investor specifically for use or inclusion in the Registration Statement or any prospectus, (2) any prospectus used by the Investor after such time as the Company advised the Investor in writing that the filing of a post-effective amendment or supplement thereto was required, except the prospectus as so amended or supplemented, or (3) any prospectus used by the Investor after such time as the obligation of the Company hereunder to keep the Registration Statement effective and current has expired; and (B) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. (f) Indemnification by the Investor. The Investor shall indemnify the Company, upon determination by a court of competent jurisdiction against all Claims, including all expenses reasonably incurred in investigating, preparing or defending against any Claim whatsoever, to which the Company may become subject under the Securities Act, the Exchange Act, or otherwise, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement of a material fact contained in any Registration Statement or prospectus in each case to the extent (and only to the extent) that the misstatement or omission was included in -7- the Registration Statement or prospectus in reliance upon and in conformity with written information furnished to the Company by the Investor expressly for use in connection with such Registration Statement or is triggered by the failure by the Investor to give such written information to the Company; provided, however, that the indemnity agreement contained in this Section 5(f) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld. 6. Miscellaneous. (a) Expenses. The Company will pay the fees and expenses of its counsel and the Investor's counsel in connection with the transactions contemplated by this Agreement. Each of the Company and the Investor shall be responsible for their respective expenses relating to due diligence and any other expenses incurred by them in connection with the transactions contemplated by this Agreement, except as otherwise expressly provided in this Agreement, the Convertible Note, the Security Agreements and Exhibits thereto. (b) Further Assurances. The parties to this Agreement agree to execute and deliver any and all papers and documents that may be necessary to carry out the terms of this Agreement. (c) Entire Agreement. Except as otherwise provided in this Agreement, this Agreement, the Convertible Note and the Warrant contain the entire agreement among the parties hereto and there are no agreements, representations or warranties that are not set forth herein. This Agreement may not be amended, revised, terminated or waived except by an instrument in writing signed and delivered by the party to be charged therewith. (d) Binding Effect, Assignment. This Agreement shall be binding upon and inure to the benefit of the successors of the respective parties hereto. The Investor may assign and transfer all or part of its rights under this Agreement to any third party, provided that the Investor may not assign its rights under Section 4 hereof without the prior written consent of the Company, except to an affiliate of the Investor. (e) Governing Law and Jurisdiction. This Agreement will be deemed to have been made and delivered in New York City and will be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York. Each of the Company and the Investor hereby (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement will be instituted exclusively in New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York, (ii) waives any objection to the venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum for such suit, action or proceeding, (iii) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New York and the United States District Court for the Southern District of New York in any such suit, action or proceeding, (iv) agrees to accept and acknowledge service of any and all process that may be served in any such suit, action or proceeding in New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York and (v) agrees that service of process upon it mailed by certified mail to its address set forth in Section 6(f) below will be deemed in every respect effective service of process upon it in any suit, action or proceeding. (f) Notices. All notices, consents, requests, demands and other communications herein shall be in writing and shall be deemed duly given to any party or parties (a) upon delivery to -8- the address of the party or parties as specified below if delivered in person or any courier or if sent by certified or registered mail (return receipt requested); or (b) upon dispatch if transmitted by confirmed telecopy or other means of confirmed facsimile transmissions, in each case as addressed as follows: If to the Company: GSV, Inc. 191 Post Road West Westport, Connecticut 06880 Attn.: Mr. Gilad Gat Fax: (203) 221-2691 With a copy to: Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attn: Ralph W. Norton, Esq. Fax: (212) 974-6969 If to the Investor: D. Emerald Investments Ltd. 85 Medinat Ha-Yehudim Herzeliya, Israel Attn.: Mr. Roy Harel Fax: (972)-9-9589074 With a copy to: Kantor, Elhanani, Tal & Co. Mozes House 74-76 Rothschild Blvd. Tel-Aviv Israel 65785 Attention: Adv. Dana Yagur Fax: (972)-3-7140401 The parties hereto may designate such other address or facsimile number by written notice in the aforesaid manner. (g) Survival of Representations and Warranties. The representations, warranties and covenants of the Company and the Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing hereunder and shall in no way be affected by any investigation of the subject matter thereof by or on behalf of the Investor or the Company. (h) Severability. In the event any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, the remaining provisions of this -9- Agreement shall nevertheless be binding upon the parties with the same effect as though the void or unenforceable part had been severed and deleted. (i) Counterparts. This Agreement may be signed in two counterparts, each of which shall be an original and both of which together shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. [Signatures appear on following page] -10- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above. GSV, INC. By: ------------- Name: Gilad Gat Title: Chief Executive Officer and President D. EMERALD INVESTMENTS LTD. By: ------------- Name: Roy Harel Title: Manager -11- EX-10.2 5 file005.txt GUARANTY EXHIBIT 10.2 ------------ GUARANTY -------- THIS GUARANTY is made as of the 11th day of May, 2004, by POLYSTICK U.S. CORPORATION, a New York corporation (the "Guarantor") to and in favor of D. EMERALD INVESTMENTS LTD., an Israeli corporation ("Emerald"). WHEREAS, the Guarantor is a significant stockholder of GSV, Inc., a Delaware corporation ("GSV"); WHEREAS, pursuant to a Purchase Agreement of even date herewith (the "Purchase Agreement"), Emerald is purchasing from GSV (i) a two-year 8% convertible promissory note in the principal amount of $200,000 (the "Convertible Note"), and (ii) a warrant to purchase up to 1,142,857 shares of common stock, par value $.001 per share ("Common Stock"), of GSV, at a price of $.70 per share; WHEREAS, the Guarantor, as a significant stockholder of GSV, will derive substantial benefit from the consummation of the Purchase Agreement and the closing of the transactions contemplated therein, and WHEREAS, it is a condition precedent to the closing of the Purchase Agreement that the Guarantor executes and delivers this Guaranty to Emerald, pursuant to which the Guarantor will guarantee to Emerald and its successors and assigns that all of GSV's obligations under the Convertible Note that may become due and payable under the terms and conditions thereof will be promptly paid in full when due. NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor, intending to be legally bound, represents, warrants, covenants and agrees as follows: 1. Guaranty. (a) The Guarantor absolutely, irrevocably and unconditionally hereby guarantees to Emerald and its successors and assigns that all of GSV's obligations under the Convertible Note (the "Obligations"), as such instrument may be amended, modified or supplemented from time to time, will be paid promptly in full when due. This Guaranty shall be a guaranty of payment and not of collection, and the Guarantor hereby agrees that its obligations hereunder shall be primary and unconditional, irrespective of any action to enforce the same or any other circumstances that might otherwise constitute a legal or equitable discharge to the Guarantor. Guarantor further agrees to pay Emerald's expenses (including attorney's fees) paid or incurred in endeavoring to enforce this Guaranty or the payment of the Obligations. (b) The Guarantor hereby (i) waives diligence, presentment, dishonor, notice of dishonor, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of GSV, any right to receive notice of any change, amendment, modification or supplementation to the Convertible Note, any right to require demand for payment or a proceeding first against GSV, protest, notice and all other demands or notices whatsoever, all rights to subrogation or to demand any payment from GSV until the indefeasible payment in full of all the Obligations, and (ii) covenants that this Guaranty will not be discharged except by payment in full of the Obligations. This Guaranty shall be enforceable without Emerald having to proceed first against GSV (any right to require Emerald to take action against GSV being hereby expressly waived) or against any security for the payment of the Obligations. This Guaranty shall be binding upon and enforceable against Guarantor and the legal representatives, successors and assigns of Guarantor. The liability of Guarantor hereunder is primary and unconditional. This Guaranty shall be irrevocable, absolute and unconditional and shall remain in full force and effect as to Guarantor until such time as all of the Obligations shall have been paid and satisfied in full. No delay or failure on the part of Emerald in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by Emerald of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. This Guaranty shall remain in full force and effect, and Guarantor shall continue to be liable for the payment of the Obligations in accordance with the original terms of the documents and instruments evidencing and securing the same, notwithstanding the commencement of any bankruptcy, reorganization or other debtor relief proceeding by or against GSV, and notwithstanding any modification, discharge or extension of the Obligations, any modification or amendment of any document or instrument evidencing or securing any of the Obligations, or any stay of the exercise by Emerald of any of its rights and remedies against GSV with respect to any of the Obligations, which may be effected in connection with any such proceeding, whether permanent or temporary, and notwithstanding any assent thereto by Emerald. 2. Certain Rights. Emerald may at any time and from time to time without the consent of the Guarantor, without incurring any responsibility to the Guarantor and without impairing or releasing any of the obligations of the Guarantor hereunder, upon or without any terms or conditions and in whole or in part: (a) renew, alter or change the interest rate, manner, time, place or terms of payment or performance of any of the Obligations, or any liability incurred directly or indirectly in respect thereof, whereupon the Guaranty herein made shall apply to the Obligations as so changed, extended, renewed or altered, provided that Emerald provided the Guarantor a notice thereupon. In the event that Emerald failed to provide such notice to the Guarantor, the Guarantor shall continue being liable to the Obligations before such renewal, alteration or change was made; (b) exercise or refrain from exercising any rights against GSV or any other person (including the Guarantor) or otherwise act or refrain from acting with regard to the Convertible Note, the Obligations or this Guaranty; (c) settle or compromise any of the Obligations, any security thereof or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or subordinate the payment of all or any part thereof to the payment of any liability of GSV (whether or not then due) to creditors of GSV other than Emerald and the Guarantor. -2- 3. Assignments. This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and transferees. All obligations of the Guarantor hereunder shall be binding upon its legal representative, successors and assigns. 4. Representations of Guarantor. The Guarantor represents, warrants and agrees with Emerald as follows: (a) the execution, delivery and performance by the Guarantor of this Guaranty (i) are within the corporate powers of the Guarantor, (ii) have been duly authorized by all requisite corporate action on the part of the Guarantor, and (iii) will not violate any provisions of the Guarantor's Certificate of Incorporation (as amended), By-laws, any law now in effect, any order of any court or other agency of government, or any agreement or other instrument to which the Guarantor is a party or by which it or any of its property is bound, or be in conflict with or result in a breach of, or constitute (with or without the giving of notice or lapse of time, or both) a default under any such agreement or other instrument; (b) the Guarantor has received good, valuable and sufficient consideration for entering into and performing this Guaranty; (c) the Guarantor accepts the full range of risk encompassed within this Guaranty; and (d) the Guarantor is aware of the financial and other terms of the Convertible Note and accepts the risk that GSV may not be able to meet its obligations thereunder. 5. Modification of Guaranty. No amendment, modification, waiver or discharge of this Guaranty or any provision hereof shall be valid or effective unless (and only to the extent set forth) in writing and signed by the party against whom enforcement is sought. 6. Remedies Cumulative, etc. No right, power or remedy conferred upon or reserved to Emerald is exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent. 7. Severability. Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if one or more of the provisions contained herein shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Guaranty. 8. Limitation. Notwithstanding anything to the contrary herein, the sole recourse of Emerald or any of its successors or assigns against the Guarantor hereunder shall be limited to the exercise of its rights under that certain Pledge Agreement of even date herewith (the "Pledge Agreement") made by the Guarantor in favor of Emerald, and neither Emerald nor any of its successors or assigns shall look for recourse to any other asset or property of the Guarantor other than the collateral pledged to Emerald under the Pledge Agreement for satisfaction of any claim or cause of action it may have at law or in equity against the Guarantor under this Guaranty. 9. Jurisdiction. The Guarantor and Emerald each hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of New York and the courts of the United States of America each located in the Borough of Manhattan in the City of New York for any action, suit, or proceeding for the interpretation or enforcement arising out of or relating to this Guaranty (and agrees not to commence any litigation relating hereto except in these courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to its respective address set forth on the signature page hereof shall be effective service of process for any such action, suit, or proceeding for the interpretation or enforcement brought against it in any such court. -3- 10. Applicable Law. This Guaranty shall be construed in accordance with and governed by the laws of the State of New York without giving effect to the choice or conflict of law principles thereof. 11. Notices. All notices, consents, requests, demands and other communications herein shall be in writing and shall be deemed duly given to any party or parties (a) upon delivery to the address of the party or parties as specified below if delivered in person or any courier or if sent by certified or registered mail (return receipt requested); or (b) upon dispatch if transmitted by confirmed telecopy or other means of confirmed facsimile transmissions, in each case as addressed as follows: If to the Guarantor: Polystick U.S. Corporation c/o GSV, Inc. 191 Post Road West Westport, Connecticut 06880 Attn.: Mr. Sagi Matza Fax: (203) 221-2691 With a copy to: Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attn: Ralph W. Norton, Esq. Fax: (212) 974-6969 If to Emerald: D. Emerald Investments Ltd. 85 Medinat Ha-Yehudim Herzeliya, Israel Attn.: Mr. Roy Harel Fax: (972) (9) 9589074 With a copy to: Kantor, Elhanani, Tal & Co. Mozes House 74-76 Rothschild Blvd. Tel-Aviv Israel 65785 Attention: Adv. Dana Yagur Fax: (972) (3) 7140401 The parties hereto may designate such other address or facsimile number by written notice in the aforesaid manner. In WITNESS WHEREOF, the undersigned Guarantor has caused this Guaranty to be duly executed and delivered as of the date first written above. -4- POLYSTICK U.S. CORPORATION By: ---------------- Name: Sagi Matza Title: President Address: c/o GSV, Inc. 191 Post Road West Westport, Connecticut 06880 Agreed to and Accepted by: D. EMERALD INVESTMENTS LTD. By: ------------- Name: Roy Harel Title: Manager Address: 85 Medinat Ha-Yehudim Herzeliya, Israel -5- EX-10.3 6 file006.txt PLEDGE AGREEMENT EXHIBIT 10.3 ------------ PLEDGE AGREEMENT PLEDGE AGREEMENT (this "Agreement"), dated as of May 11, 2004, by and between POLYSTICK U.S. CORPORATION, a New York corporation with its address c/o GSV, Inc., 191 Post Road West, Westport, Connecticut 06880 ("Pledgor"), and D. EMERALD INVESTMENTS LTD., an Israeli corporation with its address at 85 Medinat Ha-Yehudim, Herzeliya, Israel ("Pledgee"). 1. Guaranty. Pledgor has executed a Guaranty of even date herewith (the "Guaranty") in favor of Pledgee, guaranteeing the timely payment and performance of all of the liabilities, indebtedness, duties and obligations of GSV, Inc., a Delaware corporation ("GSV"), under the Convertible Promissory Note of even date herewith given by GSV in favor of Pledgee (the "Convertible Note"). 2. Pledge. As collateral security for the timely fulfillment and performance of each and every covenant and obligation of Pledgor under the Guaranty as well as all of the liabilities, indebtedness, duties and obligations of GSV under the Convertible Note (the "Guaranteed Obligations"), Pledgor hereby pledges, mortgages, sets over and assigns to Pledgee, and grants to Pledgee a security interest in, (a) 200,000 shares of Series B Convertible Preferred Stock, par value $.001 per share ("Series B Preferred Stock"), of GSV (the "Pledged Shares"), held by Pledgor on the date hereof, being 13.33 percent (13.33%) of the issued and outstanding Series B Convertible Preferred Stock, par value $.001 per share, of GSV and all certificates or instruments representing or evidencing the Pledged Shares, (b) all substitutions for the Pledged Shares and replacements of the Pledged Shares, and all rights related thereto, including, without limitation, all warrants, options, appreciation rights and other rights, contractual or otherwise, in respect thereof and any and all dividends, cash dividends, cash, instruments, chattel paper and other rights, property, products or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares, and (c) any and all proceeds of any of the foregoing (collectively, the "Pledged Collateral"). 3. Events of Default. An event of default under this Agreement shall be deemed to exist upon the occurrence of any of the following event (each such event being herein called an "Event of Default"): (i) an Event of Default under the Convertible Note or the Guarantee; (ii) failure of Pledgor punctually and fully to perform, observe, discharge or comply with any of the other covenants set forth in this Agreement; or (iii) Pledgor makes an assignment for the benefit of creditors, or if any action is brought by or against Pledgor seeking its dissolution or liquidation of its assets or seeking the appointment of a trustee, interim trustee, receiver, conservator or other custodian for any of its property, or if Pledgor becomes the subject of a voluntary or involuntary case under the U.S. Bankruptcy Code, or if any reorganization or arrangement proceeding is instituted by or against Pledgor for the settlement, readjustment, composition or extension of any of its debts upon any terms, or if any action or petition is otherwise brought by Pledgor seeking similar relief or alleging that it is insolvent or unable to pay its debts as they mature. 4. Delivery of Pledged Collateral. Upon occurrence of an Event of Default, upon notice of such default by Pledgee to Pledgor, all certificates or instruments representing or evidencing the Pledged Collateral shall be delivered by Pledgor to Pledgee and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed undated instruments of transfer or assignment in blank, all in form and substance satisfactory to Pledgee. In addition, in the event that during the term of this Agreement Pledgor shall have become entitled to receive with respect to the Pledged Collateral any certificate, option or rights (including, without limitation, in connection with a dividend, distribution of capital, reclassification, reorganization, merger or other exchange of units), or any liquidating distributions, upon notice of any such default, Pledgor also agrees to immediately deliver the same to Pledgee, together with any appropriate endorsement or transfer instruments. 5. Additional Remedies on Default. Upon occurrence of an Event of Default, upon receipt of the Pledged Collateral as provided in paragraph 4 above, Pledgee, (i) without demand of performance or other demand or notice of any kind may forthwith declare any or all of the Guaranteed Obligations to be immediately due and payable and foreclose or otherwise enforce the Pledgee's security interest in the Pledged Collateral in any manner permitted by law or provided for in this Agreement, including, without limitation, to register the Pledged Collateral in its own name or its nominee and, subject to compliance with applicable state and U.S. Federal securities laws and rules, sell, assign, give options to purchase, or otherwise dispose of and deliver the Pledged Collateral, in whole or part, at public or private sale or sales, which sale or sales shall be held in a commercially reasonable manner within the meaning of the Uniform Commercial Code in effect under the laws of the State of New York, upon such terms and conditions as Pledgee may deem advisable and at such prices at it may deem best, with the right of Pledgee upon any such sale or sales to purchase the whole or any part of the Pledged Collateral, free of any right or equity of redemption in Pledgor, which right or equity is expressly waived or released, (ii) may recover from Pledgor all costs and expenses, including, without limitation, reasonable attorney's fees, incurred or paid by Pledgee in exercising or enforcing any right, power, or remedy with respect to any or all of the Collateral provided to it by this Agreement or by applicable law; and (iii) shall be entitled to immediately exercise all voting rights and other consensual rights pertaining to the Pledged Shares. All monies and other proceeds received by Pledgee upon any collection, sale or other disposition of any Collateral, together with all other monies and other proceeds received by Pledgee hereunder, shall be applied in the following order: (i) to the payment of the reasonable costs and expenses of such sale, collection or other disposition which may have been incurred by Pledgee, including without limitation attorney's fees as provided in clause (b) above and all other reasonable expenses, liabilities and advances made or incurred by Pledgee in connection therewith; (ii) to the payment of all other Guaranteed Obligations then due in such order as Pledgee may elect; and (iii) after payment in full of all Guaranteed Obligations then due, any surplus then remaining from such proceeds shall be paid to Pledgor. Pledgor shall remain liable to Pledgee for any deficiency owing on the Guaranteed Obligations after the application of the proceeds of the Pledged Collateral as provided above. The remedies provided herein in favor of Pledgee shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of Pledgee existing at law or in equity. 6. Representations and Covenants of Pledgor. Until the fulfillment of the Guaranteed Obligations, Pledgor represents, warrants and agrees as follows: Pledgor has the legal right and all requisite corporate power and authority and approvals required to execute and deliver this Agreement and to perform fully its obligations hereunder. This Agreement and the other documents and agreements being delivered in connection herewith to which Pledgor is a party have been duly authorized by all necessary corporate action and have been duly executed and delivered by Pledgor and (assuming the due authorization, execution and delivery hereof by Pledgee) are valid and binding obligations of Pledgor, as the case may be, enforceable against it in accordance with its terms. The execution, delivery and performance by Pledgor of this Agreement in -2- accordance with its terms (i) are not and will not be inconsistent with Pledgor's Certificate of Incorporation (as amended) or Pledgor's By laws, (ii) do not and will not require the approval or consent of any governmental body or any other person; (iii) do not and will not conflict with or result in any breach or violation of any of the terms and conditions of, or constitute (or with notice or lapse of time or both would constitute) a default under any law or order of any governmental body applicable to Pledgor, or any contract to which Pledgor is a party or by or to which Pledgor or any of its properties is bound or subject; or (iv) will not result in the creation of any lien on any of the properties of Pledgor. Promptly after the execution of this Agreement and the closing of the transactions contemplated by the Purchase Agreement (as defined in the Guaranty), the Pledgor shall take or cause to be taken all actions, and bear all costs, necessary to file any and all financing statements and other similar documents as may be required under applicable law in order to perfect or maintain the perfection of the Pledgee's security interest in the Pledged Collateral. The Pledged Collateral owned by Pledgor shall at all times be free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever created by or arising through it, except for the security interest granted to Pledgee hereunder. 7. Further Assurances. Pledgor hereby represents and warrants that it is the owner and holder of the Pledged Collateral, free and clear of any claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever. The Pledged Shares are duly authorized, validly issued, fully paid and non-assessable shares of Series B Preferred Stock of GSV. Pledgor will, from time to time, at Pledgor's expense, and upon Pledgee's request, promptly execute and deliver all further instruments and documents and take all further action that may be necessary or desirable, or that Pledgee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby, to enable Pledgee to exercise and enforce the rights and remedies of Pledgee hereunder with respect to any of the Pledged Collateral or to carry out the provisions and purposes hereof. Pledgor shall permit Pledgee (or any person designated by it) from time to time to inspect the Collateral and to inspect, audit and make copies of or extracts from all books and records maintained by or on behalf of Pledgor pertaining to the Pledged Collateral. So long as any of the Guaranteed Obligations shall be outstanding, the Pledgor shall not, without the express prior written consent of Pledgee, sell, assign, exchange, pledge or otherwise transfer, encumber, or grant any option, warrant or other right to purchase any Pledged Collateral which is pledged hereunder. In case of any adverse claims in respect to the Pledged Collateral or any portions thereof, arising out of any act done or suffered by Pledgor, the Pledgor promises and agrees to hold harmless and to indemnify Pledgee from and against any losses, liabilities, damages, expenses, costs, and reasonable attorneys' fees incurred in or about defending, protecting, or prosecuting the security interests hereby created. -3- 8. Voting Rights Prior to Default. Prior to the occurrence of an Event of Default in the performance of the Guaranteed Obligations, Pledgor shall be entitled to exercise all voting rights and other consensual rights pertaining to the Pledged Shares. 9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and transferees. All obligations of the Pledgor hereunder shall be binding upon its legal representatives, successors, and assigns. This Agreement and all security interests and other liens granted or conveyed hereunder shall remain in full force and effect and shall be irrevocable until such time as no Guaranteed Obligations are outstanding. At such time, any certificates or instruments representing the Pledged Collateral which are in Pledgee's possession shall be delivered by Pledgee to Pledgor. 10. Amendments. This Agreement may not be modified, amended, altered or supplemented, and no waiver or consent may be granted hereunder, except upon the execution and delivery of a written agreement executed by the parties hereto. 11. Notices. All notices, consents, requests, demands and other communications herein shall be in writing and shall be deemed duly given to any party or parties (a) upon delivery to the address of the party or parties as specified below if delivered in person or any courier or if sent by certified or registered mail (return receipt requested); or (b) upon dispatch if transmitted by confirmed telecopy or other means of confirmed facsimile transmissions, in each case as addressed as follows: If to the Pledgor: Polystick U.S. Corporation c/o GSV, Inc. 191 Post Road West Westport, Connecticut 06880 Attn.: Mr. Sagi Matza Fax: (203) 221-2691 With a copy to: Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attn: Ralph W. Norton, Esq. Fax: (212) 974-6969 If to the Pledgee: D. Emerald Investments Ltd. 85 Medinat Ha-Yehudim Herzeliya, Israel Attn.: Mr. Roy Harel Fax: (972)-9-9589074 With a copy to: Kantor, Elhanani, Tal & Co. Mozes House 74-76 Rothschild Blvd. Tel-Aviv Israel 65785 Attention: Adv. Dana Yagur Fax: (972)-3-7140401 The parties hereto may designate such other address or facsimile number by written notice in the aforesaid manner. 12. Governing Law. This Agreement shall be governed by, and interpreted, construed and enforced in accordance with, the internal laws of the State of New York. -4- 13. Counterparts; Severability. This Agreement may be executed with counterpart signature pages or in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. In the event that any provision of this Agreement shall prove to be invalid or unenforceable in any jurisdiction, such provision shall be deemed to be severable from the other provisions of this Agreement, which shall remain binding on all parties hereto in such jurisdiction and such provision shall, in any other jurisdiction, remain binding on all parties hereto. * * * * Signature Page Follows -5- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written. POLYSTICK U.S. CORPORATION By: -------------- Name: Sagi Matza Title: President D. EMERALD INVESTMENTS LTD. By: ------------- Name: Roy Harel Title: Manager -6- EX-10.4 7 file007.txt VOTING AGREEMENT LETTER EXHIBIT 10.4 ------------ POLYSTICK U.S. CORPORATION C/o GSV, Inc. 191 Post Road Westport, Connecticut 06880 May 11, 2004 D. Emerald Investments Ltd. 85 Medinat Ha-Yehudim Herzeliya, ISRAEL Attention: Roy Harel Manager Re: Voting Agreement ---------------- Gentlemen: Reference is made to the Purchase Agreement (the "Purchase Agreement") dated as of the date hereof, by and between GSV, Inc. (the "Company") and D. Emerald Investments Ltd. (the "Investor"). Any term used in this Voting Agreement without definition shall have the meaning ascribed to such term in the Purchase Agreement. Polystick U.S. Corporation ("Polystick" or "the undersigned") acknowledges that, pursuant to the Purchase Agreement, the Investor has a right, under certain terms and conditions contained in the Purchase Agreement, to request the Company to cause its Board of Directors to appoint a person designated by the Investor to the Company's Board of Directors and, in addition, for so long as the Investor holds at least eighty-five percent (85%) of the Common Stock issued upon the exercise of the Warrant and conversion of the Convertible Note, to nominate such person (or a different person designated by the Investor) to be re-elected to the Company's Board of Directors in connection with any meeting of the stockholders of the Company at which directors are to be elected. The undersigned, the guarantor of the Company's obligations to the Investor under the Convertible Note, has agreed to enter into this Voting Agreement and accordingly, for good and valuable consideration, the receipt and sufficiency is hereby acknowledged, hereby agrees as follows: Upon such time as the Investor exercises the Warrant in full and converts the Convertible Note in full, and the Company fails to fully and timely fulfill any of its obligations to the Investor under Section 4(a) of the Purchase Agreement, then, at the Investor's request upon written notice to the undersigned, the undersigned will vote its shares of the Company's Series B Convertible Preferred Stock, par value $.001 per share (the "Series B Preferred Stock"), in favor of a nominee designated by the Investor in any election of directors occurring during such time and for so long as the Investor holds at least 85% of the Common Stock issued upon such exercise and conversion. Provided that Polystick continues to have the right to designate and elect directors to the Company's board of directors, any such nominee shall count as one of such directors. In addition, the undersigned shall use all its power and authority as provided by the Company's amended and restated by-laws and the Certificate of Designations, Preferences and Rights of the Series B Preferred Stock to convene, at the Investor's request, meetings of stockholders as may be necessary, at the Investor's sole discretion, in order to elect a nominee designated by the Investor to the Company's Board of Directors. The Investor's rights under this Agreement may not be assigned without the prior written consent of Polystick. Please sign below to indicate acceptance of the terms contained in this Voting Agreement. Very truly yours, Polystick U.S. Corporation. By: -------------- Sagi Matza President ACCEPTED AND AGREED TO: D. Emerald Investments Ltd. By: ------------- Roy Harel Manager EX-99.1 8 file008.txt PRESS RELEASE EXHIBIT 99.1 ------------ GSV, Inc. FOR IMMEDIATE RELEASE: GSV, INC. ANNOUNCES FINANCING AT A SIGNIFICANT PREMIUM TO SHARE PRICE THROUGH SALE OF CONVERTIBLE NOTE Westport, CT, May 13, 2004. GSV, Inc. (OTCBB Symbol: GSVI) announced today that it had raised additional funds through the sale of a $200,000 convertible note to a foreign private investor. The note is convertible into common stock at a conversion price of $0.70 a share, representing a significant premium over the closing price of the common stock on May 10, 2004, of $0.12 a share. GSV will use the proceeds to continue developing its oil and gas prospects in Texas. GSV also issued warrants to the investor to purchase up to 1,142,857 shares of common stock at a price of $0.70 a share, totaling if exercised in full $800,000. The warrants expire if not exercised within 12 months. The conversion price of the note and the exercise price of the warrants are subject to customary price adjustment for stock splits and similar events, and for future financing. Gilad Gat, President and CEO of GSV, said, "We are all very excited about our new opportunities for revenue growth. This new investment, at a premium to our share price, demonstrates we are on the right path and that our efforts and potential are being recognized by sophisticated investors." In connection with the sale of these securities GSV agreed that if the investor exercises the warrant in full and converts the convertible note in full GSV will appoint a person designated by the investor to GSV's Board of Directors. GSV also granted the investor rights to register the common stock underlying the convertible note and warrant. GSV's principal stockholder, Polystick U.S. Corporation, pledged 200,000 shares of the Series B convertible preferred stock as collateral security for the note. Polystick also agreed that if GSV fails to appoint or nominate a representative for election to its board of directors, then, at the investor's request, Polystick will vote its shares of Series B convertible preferred stock in favor of a nominee designated by the investor. GSV offered the convertible note and the warrants in reliance on an exemption from registration for offers and sales of securities that do not involve a public offering. This offering was not registered under the Securities Act of 1933, as amended, and neither the convertible note nor the warrants or the underlying common stock may be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This disclosure is neither an offer to purchase nor a solicitation of an offer to sell securities in any jurisdiction in which such an offer or sale would be unlawful. This press release does not and will not constitute an offer to sell or the solicitation of an offer to buy shares and is being issued under Rule 135c under the Securities Act. About GSV Inc. GSV Inc is an oil and gas exploration company. Its recent acquisition of an interest in a Texas-based exploration company injected exciting prospects and opportunities into GSV and positioned it for future growth. In addition to managing its current assets, GSV is actively seeking new acquisition opportunities in this industry. Forward-Looking Statements Some of the statements in this press release are forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements about our plans, objectives, expectations, intentions and assumptions that are not statements of historical fact. You can identify these statements by the following words: - - "may" - - "will" - - "should" - - "estimates" - - "plans" - - "expects" - - "believes" - - "intends" and similar expressions. We cannot guarantee our future results, performance or achievements. Our actual results and the timing of corporate events may differ significantly from the expectations discussed in the forward-looking statements. You are cautioned not to place undue reliance on any forward- looking statements. Potential risks and uncertainties that could affect our future operating results include, but are not limited to, our limited operating history, history of losses, need to raise additional capital, and the high risk nature of our business, as well as other risks described in our most recent annual report on Form 10-KSB filed with the Securities and Exchange Commission. -2- -----END PRIVACY-ENHANCED MESSAGE-----