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SEC Filings

SEVEN STARS CLOUD GROUP, INC. filed this Form 8-K on 10/27/2017
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Item 1.01Entry into a Material Definitive Agreement.


On October 23, 2017, Seven Stars Cloud Group, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “SPA”) with Hong Kong Guo Yuan Group Capital Holdings Limited (the “Purchaser”). Pursuant to the terms of the SPA, the Company has agreed to sell and issue 5,494,505 shares of the Company’s common stock (the “Shares”), to the Purchaser for $1.82 per share, or a total purchase price of $10.0 million (the “Purchase Price”).


In addition, under the terms of the SPA, following the closing of the transaction, the Company’s Board of Directors (the “Board”) shall consist of at least 7 members and the Purchaser shall have the right to appoint one director to the Board. The Purchaser shall also have the following rights under the terms of the SPA, which shall be further established in a Stockholder Agreement, which the parties are working to finalize:


·Anti-Dilution: The Company has agreed to not issue or sell any shares of its common stock at a price lower than the Purchase Price without the prior written consent of the Purchaser;
·Share Transfer Restriction: Sun Seven Stars Media Group, the Company’s major shareholder (including its substantial shareholders and affiliates) (“SSSMG”), may not without consent of the Purchaser directly or indirectly, sell, transfer, liquidate, otherwise dispose of or encumber any of its shares of the Company’s common stock (the “SSSMG Shares”) except if transferred to its affiliates;
·Preemptive Rights: The Purchaser has consent rights and preemptive rights in preference to that of any other existing stockholder and any third parties to acquire the SSSMG Shares on terms no less favorable to those of the proposed purchaser;
·Tag-along Right: If SSSMG transfers Shares to a third party, Purchaser shall be entitled to tag-along rights with respect to such SSSMG transfer on the same terms;
·Liquidation Preference: Upon any liquidation, discontinuing operation or dissolution, or a sale of a substantial part of the assets or business of the Company, the Purchaser shall be entitled to, in preference to other shareholders of the Company, a liquidation preference equal to the Purchase Price;
·Preferential Treatment: If the Company grants to any holder of the Company’s common stock a right not contained in the SPA, then the Company shall provide Purchaser with the same right(s); and
·Affiliate Transactions: After the closing of the transaction contemplated by the SPA, if the Company enters into a related party transaction, the Company shall enter into such agreement on fair and equitable arms-length terms with applicable corporate approvals and make related required public disclosures.


The SPA also contains customary representations, warranties and covenants. The transaction is expected to close on November 3, 2017.


The foregoing description of the SPA is not purported to be complete and is qualified in its entirety by reference to the complete text of such agreement which will be filed as an exhibit to the Company’s next Quarterly Report on Form 10-Q.