EXHIBIT 10.2
THIS WARRANT AND THE SHARES PURCHASABLE HEREUNDER HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR QUALIFICATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
Dated: November 21, 2006
WARRANT TO PURCHASE
COMMON STOCK OF
MTI TECHNOLOGY CORPORATION
This certifies that The Canopy Group, Inc., a Utah corporation, or
assigns (collectively, the "HOLDER"), for value received, is entitled to
purchase, at the Stock Purchase Price (as defined below), from MTI Technology
Corporation, a Delaware corporation (the "COMPANY"), up to that number of fully
paid and nonassessable shares of the Company's common stock, par value $0.001
per share (the "COMMON STOCK"), equal to 125,000 (the "WARRANT SHARES").
This Warrant shall be exercisable at any time, or from time to time,
from and after the date hereof through the five-year anniversary of the date
hereof (the "EXPIRATION Date"), upon surrender to the Company at its principal
office (or at such other location as the Company may advise the Holder in
writing) of this Warrant properly endorsed with the Form of Subscription
attached hereto duly completed and executed, payment pursuant to Section 2 of
this Warrant of the aggregate Stock Purchase Price for the number of shares for
which this Warrant is being exercised determined in accordance with the
provisions hereof, and any documents reasonably requested by the Company to be
executed by the Holder, including without limitation a stock purchase agreement,
an investors' rights agreement, a right of first refusal and co-sale agreement,
and a voting agreement, thereby agreeing to be bound by all obligations and
receive all rights thereunder. The Stock Purchase Price and the number of shares
purchasable hereunder are subject to adjustment as provided in Section 4 of this
Warrant. For purposes of this Warrant, (a) the term "STOCK PURCHASE PRICE" shall
mean $0.73.
1. Exercise; Issuance of Certificates; Acknowledgement. This Warrant is
exercisable at the option of the holder of record hereof, at any time, or from
time to time, up to the Expiration Date for all or any part of the Warrant
Shares (but not for a fraction of a share) that may be purchased hereunder. The
Company agrees that the shares of Common Stock purchased under this Warrant
shall be and are deemed to be issued to the Holder hereof as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered, properly endorsed, the completed, executed Form of
Subscription delivered and payment made for such shares. Certificates for the
shares of the Common Stock so purchased, together with any other securities or
property to which the Holder hereof is entitled
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upon such exercise, shall be delivered to the Holder hereof by the Company at
the Company's expense within a reasonable time after the rights represented by
this Warrant have been so exercised. Each certificate so delivered shall be in
such denominations of the Warrant Shares as may be requested by the Holder
hereof and shall be registered in the name of that Holder. In case of a purchase
of less than all the Warrant Shares, the Company shall execute and deliver to
the Holder within a reasonable time an Acknowledgement in the form attached
hereto indicating the number of Warrant Shares which remain subject to this
Warrant, if any.
2. Payment for Shares. The aggregate purchase price for Warrant Shares
being purchased hereunder may be paid either (a) by cash or wire transfer of
immediately available funds, (b) by surrender of a number of Warrant Shares
which have a fair market value equal to the aggregate purchase price of the
Warrant Shares being purchased ("NET ISSUANCE") as determined herein, or (c) any
combination of the foregoing. If the Holder elects the Net Issuance method of
payment, the Company shall issue to Holder upon exercise a number of shares of
Warrant Shares determined in accordance with the following formula:
X= Y(A-B)
----------
A
where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of Warrant Shares with respect to
which the Holder is exercising its purchase rights
under this Warrant;
A = the fair market value of one (1) share of the Warrant
Shares on the date of exercise; and
B = the Stock Purchase Price.
No fractional shares arising out of the above formula for determining
the number of shares to be issued to the Holder shall be issued, and the Company
shall in lieu thereof make payment to the Holder of cash in the amount of such
fraction multiplied by the fair market value of one (1) share of the Warrant
Shares on the date of exercise. For purposes of the above calculation, the fair
market value of one (1) share of the Warrant Shares shall mean the closing bid
price of such Common Stock on the Nasdaq Stock Market on the date of exercise.
3. Shares to be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all shares of Common Stock that may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any stockholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription rights evidenced
by this Warrant, a sufficient number of shares of authorized but unissued shares
of Common Stock or other securities and property, when and as required to
provide for the exercise of the rights represented by this Warrant.
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4. Adjustment of Stock Purchase Price and Number of Shares. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 4. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.
4.1 Subdivisions, Combinations and Dividends. In case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares or pay a dividend in Common Stock in respect of
outstanding shares of Common Stock, the Stock Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend
shall be proportionately reduced, and conversely, in case the outstanding shares
of the Common Stock of the Company shall be combined into a smaller number of
shares, the Stock Purchase Price in effect immediately prior to such combination
shall be proportionately increased.
4.2 Reclassification. If any reclassification of the capital
stock of the Company shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, or other assets or
property, then, as a condition of such reclassification, lawful and adequate
provisions shall be made whereby the Holder hereof shall thereafter have the
right to purchase and receive (in lieu of the shares of the Common Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby) such shares of stock, securities or other assets or
property as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby. In any reclassification described
above, appropriate provision shall be made with respect to the rights and
interests of the Holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Stock Purchase
Price and of the number of shares purchasable and receivable upon the exercise
of this Warrant) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof.
4.3 Notice of Adjustment. Upon any adjustment of the Stock
Purchase Price or any increase or decrease in the number of shares purchasable
upon the exercise of this Warrant, the Company shall give written notice
thereof, by first class mail postage prepaid, addressed to the registered Holder
of this Warrant at the address of such Holder as shown on the books of the
Company. The notice shall state the Stock Purchase Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
4.4 Other Notices. If at any time:
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(1) the Company shall declare any cash dividend upon its
Common Stock;
(2) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation or other business entity; or
(3) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) at least ten (10) days'
prior written notice of the date on which the books of the Company shall close
or a record shall be taken for such dividend or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or public offering, at least ten (10) days' prior
written notice of the date when the same shall take place; provided, however,
that the Holder shall make a best efforts attempt to respond to such notice as
early as possible after the receipt thereof. Any notice given in accordance with
the foregoing clause (a) shall also specify, in the case of any such dividend,
the date on which the holders of Common Stock shall be entitled thereto. Any
notice given in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, conversion or public offering, as the case may be.
5. No Dividend Rights. No dividends or interest shall be payable or
accrued in respect of this Warrant or the interest represented hereby or the
shares purchasable hereunder until, and only to the extent that, this Warrant
shall have been exercised.
6. Warrant Transferable. Subject to compliance with applicable federal
and state securities laws and the transfer restrictions set forth in that
certain Amendment No. 2 to Second Waiver and Consent dated as of the date of
this Warrant, by and between the Company and the Holder (the "AGREEMENT"), under
which this Warrant was issued, this Warrant and all rights hereunder may be
transferred, in whole or in part, without charge to the holder hereof (except
for transfer taxes), upon the prior written consent of the Company and,
thereafter, upon surrender of this Warrant properly endorsed and in compliance
with the provisions of the Agreement. Each taker and holder of this Warrant, by
taking or holding the same, consents and agrees that this Warrant, when endorsed
in blank, shall be deemed negotiable, and that the holder hereof, when this
Warrant shall have been so endorsed, may be treated by the Company, at the
Company's option, and by all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books of
the Company and notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered owner hereof as the owner
for all purposes.
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7. Lost Warrant. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation
upon surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
8. Modification and Waiver. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance, and either retroactively or prospectively), only with the
written consent of the Company and the Holder.
9. Notices. Except as may be otherwise provided herein, all notices,
requests, waivers and other communications made pursuant to this Warrant shall
be made in writing.
10. Titles and Subtitles; Governing Law; Venue. The titles and subtitles
used in this Warrant are used for convenience only and are not to be considered
in construing or interpreting this Warrant. This Warrant is to be construed in
accordance with and governed by the internal laws of the State of Delaware
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Delaware to the rights and duties of the Company and the Holder. All disputes
and controversies arising out of or in connection with this Warrant shall be
resolved exclusively by the state and federal courts located in Orange County in
the State of California, and each of the Company and the Holder hereto agrees to
submit to the jurisdiction of said courts and agrees that venue shall lie
exclusively with such courts.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the date first above written.
MTI TECHNOLOGY CORPORATION
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President and Corporate Controller
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FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To:__________________________
The undersigned, the holder of a right to purchase shares of Common
Stock of MTI Technology Corporation (the "COMPANY") pursuant to that certain
Warrant to Purchase Common Stock of MTI Technology Corporation (the "WARRANT"),
dated as of November 21, 2006, hereby irrevocably elects to exercise the
purchase right represented by such Warrant for, and to purchase thereunder,
__________________________ (_________) shares of Common Stock of the Company and
herewith makes payment of _______________________ Dollars ($__________) therefor
by the following method:
(Check one of the following):
_______ (check if applicable) The undersigned hereby elects to make
payment of ______________ Dollars
($___________) therefor in cash.
_______ (check if applicable) The undersigned hereby elects to make
payment for the aggregate exercise price of
this exercise using the Net Issuance method
pursuant to Section 2 of the Warrant.
The undersigned represents that it is acquiring such securities for its
own account for investment and not with a view to or for sale in connection with
any distribution thereof and in order to induce the issuance of such securities
makes to the Company, as of the date hereof, the representations and warranties
set forth in the Amendment No. 2 to Second Waiver and Consent, dated as of
November 21, 2006, by and between the Company and The Canopy Group, Inc.
DATED: ________________
THE CANOPY GROUP, INC.
By:
-----------------------------------
Name:
Its:
ACKNOWLEDGMENT
To: ________________
The undersigned hereby acknowledges that as of the date hereof,
__________________ (_______) shares of Common Stock remain subject to the right
of purchase in favor of The Canopy Group, Inc., pursuant to that certain Warrant
to Purchase Common Stock of MTI Technology Corporation, dated as of November 21,
2006.
DATED: ________________
MTI TECHNOLOGY CORPORATION
By:
-----------------------------------
Name:
Its:
