Exhibit 10.7

 

INDIVIDUAL GUARANTY

March 19, 2008

To:

GCP O & G I LLC and the other Purchasers Identified on the Signature Pages of
the Securities Purchase Agreement Referred to Below

In consideration of the terms and conditions contained in this Agreement, and
other good and consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned, intending to be legally bound, agrees as follows:

1.          The Guaranty. For valuable consideration, the undersigned (the
“Guarantor”) hereby unconditionally guarantees and promises to pay promptly to
the purchasers identified on the signature pages to the Securities Purchase
Agreement, dated as of March 19, 2008 (the “Securities Purchase Agreement”),
among Silverstar Holdings, Ltd., a Bermuda corporation (the “Borrower”) and each
such purchaser (each, including its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”), in lawful money of the United States, any and
all Indebtedness (as defined below) of Borrower to each Purchaser when due,
whether at stated maturity, upon acceleration or otherwise, and at all times
thereafter. The liability of Guarantor is continuing and relates to any
Indebtedness, including that arising under successive transactions which shall
either continue the Indebtedness or from time to time renew it after it has been
satisfied. All payments made by Guarantor to or for the account of any Purchaser
hereunder shall be made by wire transfer of immediately available funds to the
account set forth on Schedule 1 to this Guaranty, or in such other manner as
Purchasers shall hereafter advise Guarantor.

 

2.

Definitions.  

 

(a)

“Borrower” shall mean the entity named in Paragraph 1 of this Guaranty.

 

(b)

“Guarantor” shall mean the individual signing this Guaranty.

(c)       “Indebtedness” shall mean the collective reference to all obligations
and undertakings of the Borrower of whatever nature, monetary or otherwise,
under the Debentures, the Securities Purchase Agreement, the Security
Agreements, the Warrants, the Registration Rights Agreements or any other
Transaction Document, together with all reasonable attorneys’ fees,
disbursements and all other costs and expenses of collection incurred by the
Purchasers in enforcing any of such obligations or this Guaranty.

(d)       Capitalized terms used in this Guaranty without definition have the
meanings ascribed to them in the Securities Purchase Agreement.

3.          Obligations Independent. The obligations hereunder are independent
of the obligations of Borrower or any other guarantor, and a separate action or
actions may be brought and prosecuted against Guarantor whether action is
brought against Borrower or any other guarantor or whether Borrower or any other
guarantor be joined in any such action or actions.

 

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4.          Rights of Purchasers. Guarantor authorizes Purchasers, without
notice or demand and without affecting its liability hereunder, from time to
time to:

(a)       subject to the terms of the Transaction Documents, renew, compromise,
extend, accelerate, or otherwise change the time for payment, or otherwise
change the terms, of the Indebtedness or any part thereof, including increase or
decrease of the rate of interest thereon, or otherwise change the terms of any
Transaction Document;

(b)       subject to the terms of the Transaction Documents, receive and hold
security for the payment of this Guaranty or any Indebtedness and exchange,
enforce, waive, release, fail to perfect, sell, or otherwise dispose of any such
security;

(c)       subject to the terms of the Security Agreements, apply such security
and direct the order or manner of sale thereof as Purchasers in their discretion
may determine; and

(d)       release or substitute the Guarantor or any one or more of any
endorsers or other guarantors of any of the Indebtedness.

All actions, notices, requests or demands that Purchasers or any Purchaser may
take or make pursuant to the provisions of this Guaranty, shall be taken or made
by and through GCP O & G I LLC.

5.          Guaranty to be Absolute. Guarantor agrees that until all the
Indebtedness has been indefeasibly paid in full and any commitments of any
Purchaser or facilities provided by any Purchaser with respect to the
Indebtedness have been terminated, Guarantor shall not be released by or because
of the taking, or failure to take, any action that might in any manner or to any
extent vary the risks of Guarantor under this Guaranty or that, but for this
paragraph, might discharge or otherwise reduce, limit, or modify Guarantor’s
obligations under this Guaranty. Guarantor waives and surrenders any defense to
any liability under this Guaranty based upon any such action, including but not
limited to any action of Purchasers described in the immediately preceding
paragraph of this Guaranty. It is the express intent of Guarantor that
Guarantor’s obligations under this Guaranty are and shall be absolute and
unconditional.

 

6.

Guarantor’s Waivers of Certain Rights and Certain Defenses. Guarantor waives:

(a)       any right to require Purchasers to proceed against Borrower, proceed
against or exhaust any security for the Indebtedness, or pursue any other remedy
in Purchaser’s power whatsoever;

(b)       any defense arising by reason of any disability or other defense of
Borrower, or the cessation from any cause whatsoever of the liability of
Borrower; and

(c)       any defense based on any claim that Guarantor’s obligations exceed or
are more burdensome than those of Borrower.

No provision or waiver in this Guaranty shall be construed as limiting the
generality of any other waiver contained in this Guaranty.

 

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7.          Subordination of Subrogation. Until all the Indebtedness has been
indefeasibly paid in full and any commitments of any Purchaser or facilities
provided by any Purchaser with respect to the Indebtedness have been terminated,
even though the Indebtedness may be in excess of Guarantor’s liability
hereunder, Guarantor agrees to subordinate to the rights of the Purchasers any
right of subrogation, reimbursement, indemnification, and contribution
(contractual, statutory, or otherwise) including, without limitation, any claim
or right of subrogation under the Bankruptcy Code (Title 11, United States Code)
or any successor statute, arising from the existence or performance of this
Guaranty, and until such time, Guarantor agrees to subordinate to the rights of
the Purchasers any right to enforce any remedy that any Purchaser now has or may
hereafter have against Borrower, and agrees to subordinate to the rights of the
Purchasers any benefit of, and any right to participate in, any security now or
hereafter held by any Purchaser. Such subordination of subrogation rights shall
end at such time as all Indebtedness has been indefeasibly paid in full.

8.          Waiver of Notices. Except as otherwise provided herein, Guarantor
waives all presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of intent to
accelerate, notices of acceleration, notices of any suit or any other action
against Borrower or any other person, any other notices to any party liable on
any Transaction Document (including Guarantor), notices of acceptance of this
Guaranty, notices of the existence, creation, or incurring of new or additional
Indebtedness to which this Guaranty applies or any other Indebtedness of
Borrower to any Purchaser, and notices of any fact that might increase
Guarantor’s risk.

9.          Subordination. Any obligations of Borrower to Guarantor, now or
hereafter existing, including but not limited to any obligations to Guarantor as
subrogee of the Purchasers or resulting from Guarantor’s performance under this
Guaranty, are hereby subordinated to the Indebtedness. Guarantor agrees that, if
Purchasers so request, Guarantor shall not demand, take, or receive from
Borrower, by setoff or in any other manner, payment of any other obligations of
Borrower to Guarantor until all the Indebtedness has been indefeasibly paid in
full and any commitments of any Purchaser or facilities provided by any
Purchaser with respect to the Indebtedness have been terminated. If any payments
are received by Guarantor in violation of such waiver or agreement, such
payments shall be received by Guarantor as trustee for Purchasers and shall be
paid over to Purchasers on account of the Indebtedness, but without reducing or
affecting in any manner the liability of Guarantor under the other provisions of
this Guaranty. Any security interest, lien, or other encumbrance that Guarantor
may now or hereafter have on any property of Borrower is hereby subordinated to
any security interest, lien, or other encumbrance that Purchasers may have on
any such property.

 

10.

Revocation of Guaranty.

(a)       This Guaranty may be revoked at any time by Guarantor in respect to
future transactions, unless there is a continuing consideration as to such
transactions that Guarantor does not renounce. Such revocation shall be
effective upon actual receipt by Purchasers, at the address shown below or at
such other address as may have been provided to Guarantor by Purchasers, of
written notice of revocation. Revocation shall not affect any of Guarantor’s
obligations or Purchaser’s rights with respect to transactions committed or
entered into prior to Purchaser’s receipt of such notice, regardless of

 

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whether or not the Indebtedness related to such transactions, before or after
revocation, has been incurred, renewed, compromised, extended, accelerated, or
otherwise changed as to any of its terms, including time for payment or increase
or decrease of the rate of interest thereon, and regardless of any other act or
omission of Purchasers authorized hereunder.

(b)       In the event of the death of Guarantor, the liability of the estate of
the deceased Guarantor shall continue in full force and effect the Indebtedness
existing at the date of death, and any renewals or extensions thereof.

(c)       Guarantor acknowledges and agrees that this Guaranty may be revoked
only in accordance with the foregoing provisions of this paragraph and shall not
be revoked simply as a result of any change in name, location, or composition or
structure of Borrower, the dissolution of Borrower, or the termination,
increase, decrease, or other change of any personnel or owners of Borrower.

11.        Reinstatement of Guaranty. If this Guaranty is revoked, returned, or
canceled, and subsequently any payment or transfer of any interest in property
by Borrower to any Purchaser is rescinded or must be returned by any Purchaser
to Borrower, this Guaranty shall be reinstated with respect to any such payment
or transfer, regardless of any such prior revocation, return, or cancellation.

12.        Stay of Acceleration. In the event that acceleration of the time for
payment of any of the Indebtedness is stayed upon the insolvency, bankruptcy, or
reorganization of Borrower or otherwise, all such Indebtedness guaranteed by
Guarantor shall nonetheless be payable by Guarantor immediately if requested by
Purchasers.

13.        Information Relating to Borrower. Guarantor acknowledges and agrees
that it shall have the sole responsibility for, and has adequate means of,
obtaining from Borrower such information concerning Borrower’s financial
condition or business operations as Guarantor may require, and that Purchasers
have no duty, and Guarantor is not relying on Purchasers, at any time to
disclose to Guarantor any information relating to the business operations or
financial condition of Borrower.

14.        Borrower’s Authorization. It is not necessary for Purchasers to
inquire into the powers of Borrower or of the officers, directors or agents
acting or purporting to act on its behalf, and any Indebtedness made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

 

15.

[RESERVED].

16.        Remedies. If Guarantor fails to fulfill its duty to pay all
Indebtedness guaranteed hereunder, Purchasers shall have all of the remedies of
a creditor under all applicable law. Without limiting the foregoing, Purchasers
may, at their option and without notice or demand:

 

(a)

declare any Indebtedness due and payable at once;

 

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(b)       take possession of any collateral pledged by Borrower pursuant to the
Security Agreements, wherever located, and sell, resell, assign, transfer, and
deliver all or any part of the collateral in accordance with the provisions of
the Transaction Documents; and

(c)       set off against any or all liabilities of Guarantor all money owed by
any Purchaser or any of its agents or affiliates in any capacity to Guarantor,
whether or not due, and also set off against all other liabilities of Guarantor
to any Purchaser all money owed by such Purchaser in any capacity to Guarantor.
If exercised by any Purchaser, such Purchaser shall be deemed to have exercised
such right of setoff and to have made a charge against any such money
immediately upon the occurrence of such default although made or entered on the
books subsequent thereto.

17.        Representations and Warranties. Guarantor represents and warrants to
the Purchasers that: (a) Guarantor has full power and capacity to execute and
deliver this Guaranty and each other Transaction Document to which he is a party
and to incur and perform the obligations and undertakings provided herein and
therein; (b) no consent or approval of any Governmental Authority or any third
party is or will be required as a condition to the enforceability of this
Guaranty and each other Transaction Document to which he is a party; (c) this
Guaranty and each other Transaction Document to which he is a party has been
duly executed and delivered by the Guarantor and is enforceable against the
Guarantor in accordance with the terms hereof and thereof; (d) there is no
litigation or proceeding involving the Guarantor pending or, to the knowledge of
the Guarantor, threatened before any court, tribunal or governmental authority,
which may in any way materially adversely affect the financial condition or
property of the Guarantor, except as previously disclosed to Purchasers; (e)
there is no law, rule, regulation or order pertaining to the Guarantor and no
provision of any agreement, mortgage or contract binding on the Guarantor or
affecting his property, which could conflict with, be breached by, be in default
or in any way prevent, the execution, delivery or carrying out of the terms of
this Guaranty and each other Transaction Document to which he is a party; and
(f) Guarantor has a substantial financial interest in the Borrower and is
receiving immediate, substantial and direct benefit from the transactions
contemplated by the Transaction Documents.

18.        Notices. All notices required under this Guaranty shall be personally
delivered or sent by first class mail, postage prepaid, or by overnight courier,
to the addresses on the signature page of this Guaranty, or sent by facsimile to
the fax numbers listed on the signature page, or to such other addresses as
Purchasers and Guarantor may specify from time to time in writing. Notices sent
by (a) first class mail shall be deemed delivered on the earlier of actual
receipt or on the fourth business day after deposit in the U.S. mail, postage
prepaid, (b) overnight courier shall be deemed delivered on the next business
day, and (c) telecopy shall be deemed delivered when transmitted.

19.        Entire Agreement. This Guaranty, together with the other Transaction
Documents and the exhibits and schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules. This Guaranty does not supersede, replace,
amend or modify any prior guaranty given by the Guarantor to DKR SoundShore
Oasis Holding Fund.

 

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20.        Amendments; Waivers. No provision of this Guaranty may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Guarantor and each Purchaser or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Guaranty shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of Purchasers to exercise any right hereunder in any
manner impair the exercise of any such right.

21.        Headings. The headings herein are for convenience only, do not
constitute a part of this Guaranty and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Guaranty will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

22.        Successors and Assigns. This Guaranty shall be binding upon Guarantor
and his heirs, representatives, estate and permitted assigns and shall inure to
the benefit of the Purchasers and their respective successors and permitted
assigns. The Guarantor may not assign this Guaranty or any rights or obligations
hereunder without the prior written consent of each Purchaser. Any Purchaser may
assign any or all of its rights under this Guaranty to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions of the Purchase Agreements that apply to the ‘Purchasers”.

23.        Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Guaranty shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof that would
defer to the substantive laws of another jurisdiction. Each party agrees that
all legal proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Guaranty and any other Transaction
Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of this Guaranty), and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Guaranty and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
The parties hereby waive all rights to a trial by jury. If either party shall
commence an action or proceeding to enforce any provisions of this Guaranty,
then the prevailing party in such action or proceeding shall be reimbursed by
the

 

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other party for its attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or proceeding.

24.        Execution. In the event that Guarantor’s signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the Guarantor with the same force and effect as if such facsimile
signature page were an original thereof.

25.        Severability. If any provision of this Guaranty is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Guaranty shall not in any way be affected
or impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Guaranty.

26.        Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise this Guaranty
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Guaranty or any amendments hereto.

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the Guarantor has duly executed this Guaranty as of the date
first indicated above.

Guarantor:

___________________________________________
George Karfunkel

 

Address for notices to Purchasers:

 

Address for notices to Guarantor:

 

 

 

 

 

 

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Facsimile:

 

 

Facsimile:

 

 

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Address of primary residence (if different than notice address):

 

 

 

 

 

 

 

 

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Schedule 1

(Wire Instructions for Payment)