EXHIBIT 4.1
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR THE
SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"). THIS SUBSCRIPTION AGREEMENT SHALL NOT CONSTITUTE AN
OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES MAY NOT BE SOLD,
PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS
EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES
ACT AND UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS.
8% CONVERTIBLE PREFERRED STOCK SERIES A SUBSCRIPTION AGREEMENT
nSTOR TECHNOLOGIES, INC.
THIS AGREEMENT is executed in reliance upon the transaction
exemption afforded by Regulation D as promulgated by the
Securities and Exchange Commission ("SEC"), under the Securities
Act of 1933, as amended (the "Act").
This Agreement has been executed by the undersigned in connection
with the private placement of the 8% Convertible Preferred Stock
Series A (hereinafter referred to as the "Preferred Stock") of
nSTOR TECHNOLOGIES, INC. (Amex symbol "NSO"), located at 000
Xxxxxxx Xxxx., Xxxx Xxxx Xxxxx, XX 00000, a corporation organized
under the laws of Delaware, USA (hereinafter referred to as the
"Company"). The terms on which the Preferred Stock may be
converted into the common shares of the Company (the "Common
Stock") and the other terms of the Preferred Stock are set forth
in the Certificate of Designation of the 8% Convertible Preferred
Stock Series A (Exhibit A annexed hereto). In addition, the
Company will sell to the Subscribers listed on Schedule A annexed
hereto ("A Subscribers"), a warrant (the "Warrant") to purchase
Two Hundred Thousand (200,000) shares of Common Stock of the
Company (such number of shares of Common Stock underlying the
Warrants shall be pro rated as per each subscription amount) for
a period of three (3) years from the Closing Date (as defined
herein), as per the terms of a separate Stock Purchase Warrant
(Exhibit B annexed hereto). This Subscription and, if accepted
by the Company, the offer and sale of the Preferred Stock,
Warrants and the Common Stock underlying the Warrant and
Preferred Stock (collectively the "Securities"), are being made
in reliance upon the provisions of Regulation D under the Act.
The Closing Date shall be determined in accordance with Sections
1.1 and 15 herein.
The Entities, and/or Individuals listed on Schedule A and
Schedule B annexed hereto (hereinafter referred to as "A
Subscribers" and "B Subscribers," respectively, or collectively
referred to as the "Purchasers" or "Subscribers"), hereby
represent and warrant to, and agree with the Company as follows:
Section 1. Agreement to Subscribe; Purchase Price.
1.1 Closing. The Company will sell and the Subscribers will buy
Securities in reliance upon the representations and warranties of
the Company and Subscribers contained in this Agreement, upon the
terms and conditions hereinafter set forth that number of shares
of Preferred Stock set forth next to their names on Schedule A
and Schedule B for an aggregate purchase price of Three Million
Five Hundred Thousand ($3,500,000) U.S. Dollars based on U.S.
$1,000 per share (the "Purchase Price"). Dividends will accrue
and be paid at the rate of eight (8%) percent on the outstanding
principal amount of the Preferred Stock until the Preferred Stock
has been completely converted, provided, however, all interest
thereon shall be payable in common stock of the Company or in
cash as determined in the sole discretion of the Company at the
time of conversion. Dividends shall be calculated at the
Conversion Price as per the Certificate of Stock Designation on
the Conversion Date when converted.
1.2 Form of Payment. The A Subscribers shall pay the Purchase
Price by delivering good funds in United States Dollars by wire
transfer to Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP, the Escrow Agent,
against delivery of the original Preferred Stock and Warrants as
per a separate Escrow Agreement, annexed hereto as Exhibit C (the
A Subscribers Escrow Agreement), as payment in full for their
portion of the Securities.
1.3 Wire Instructions. Wire instructions for Xxxxxxxxx,
Xxxxxxxxx & Xxxx, LLP are as follows:
Chase Manhattan Bank, N.A.
ABA No. 000000000
For the Account of:
United States Trust Company of New York
Account No. 000-0-000000
In favor of:
Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP Attorney Escrow Account
Account No. 59-01383
1.4 The B Subscribers shall deposit the Purchase Price by
delivering good funds in United States Dollars by wire transfer
to Holland and Knight, the B Subscribers' Escrow Agent, against
delivery of the original Preferred Stock as per a separate Escrow
Agreement, annexed hereto as Exhibit F (the B Subscribers Escrow
Agreement), as payment in full for their portion of the
Securities.
Section 2. Representations and Warranties of the Subscribers.
Subscribers acknowledge, represent, warrant and agree as follows:
2.1 Organization and Authorization. The entity Subscribers are
duly incorporated or organized and validly existing in the state
or country of their incorporation or organization and have all
requisite power and authority to purchase and hold the
Securities. The decision to invest and the execution and
delivery of this Agreement by the Subscribers, the performance by
the Subscribers of their obligations hereunder and the
consummation by the Subscribers of the transactions contemplated
hereby have been duly authorized and requires no other
proceedings on the part of the Subscribers. The undersigned's
signatory has all right, power and authority to execute and
deliver this Agreement on behalf of the Subscribers. This
Agreement has been duly executed and delivered by the Subscribers
and, assuming the execution and delivery hereof and acceptance
thereof by the Company, will constitute the legal, valid and
binding obligations of the Subscribers, enforceable against the
Subscribers in accordance with its terms and the Subscribers can
afford the complete loss of their investment.
2.2 Evaluation of Risks. Subscribers have such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of, and bearing the economic
risks entailed by, an investment in the Company and of protecting
its interests in connection with this transaction. They
recognize that their investment in the Company involves a high
degree of risk and the Subscribers can afford the complete loss
of their investment.
2.3 Independent Counsel. Subscribers acknowledge that they have
been advised to consult with their own attorney regarding legal
matters concerning the Company and to consult with their tax
advisor regarding the tax consequences of acquiring the
Securities.
2.4 Disclosure Documentation. Subscribers have each received
and reviewed copies of the Company's reports filed under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the Act, including its 10-Ks, 10-Qs, 8-K's, and registration
statements, filed by the Company since April 1, 1997
(collectively, the "Reports"). Except for the Reports,
Subscribers are not relying on any other information relating to
the offer and sale of the Securities. Subscribers acknowledge
that the Company has offered to make available any additional
public information that the Subscribers may reasonably request,
including technical information, and other material information
about the Company and Subscribers have been offered Company's
full and unconditional cooperation in making such information
available to Subscribers and acknowledges that the Company has
recommended that the Subscribers request and review such
information prior to making an investment decision. No oral or
written representations have been made, or oral or written
information furnished to the undersigned or its advisors, if any,
in connection with the offering of the Securities which were or
are in any way inconsistent with the Reports.
2.5 Opportunity to Ask Questions. Subscribers have had a
reasonable opportunity to ask questions of and receive answers
from the Company concerning the Company and the offering, and all
such questions, if any, have been answered to the full
satisfaction of each of the Subscribers.
2.6 Reports Constitute Sole Representations. Except as set
forth in the Reports, no representations or warranties have been
made to Subscribers by (a) the Company or any agent, employee or
affiliate of the Company or (b) any other person, and in entering
into this transaction Subscribers are not relying upon any
information, other than that contained in the Reports and the
results of independent investigation by Subscribers.
2.7 Each of the Subscribers is Accredited Investor. The
undersigned is an "Accredited Investor" as defined below who
represents and warrants it is included within one or more of the
following categories of "Accredited Investors."
(i) Any bank as defined in Section 3(a)(2) of the Act, or any
savings and loan associated or other institution as defined in
Section 3(a)(5)A of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to
Section 15 of the 1934 Act; any insurance company as defined in
Section 2(13) of the Act; any investment company registered under
the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; any Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a
state or its political subdivision, for the benefits of its
employees if such plan has total assets in excess of $5,000,000;
and employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 if the investment
decision is made by a plan fiduciary, as defined in Section 3(21)
of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor,
or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions
made solely by persons that are accredited investors;
(ii) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(iii) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;
(iv) Any director, executive officer, or general partner of
the issuer of the securities being offered or sold, or any
director, executive officer, or general partner of a general
partner of that issuer;
(v) Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(vi) Any natural person who had an individual income in
excess of $200,000 in each of the two (2) most recent years or
joint income with that person's spouse in excess of $300,000 in
each of those years and has a reasonable expectation of reaching
that same income level in the current year;
(vii) Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as
described in Section 230.506(b)(2)(ii) of Regulation D under the
Act;
(viii) Any entity in which all of the equity owners are
accredited investors; and
(ix) Any self-directed employee benefit plan with investment
decisions made solely by persons that are accredited investors
within the meaning of Rule 501 of Regulation D promulgated under
the Act.
2.8 No Registration, Review or Approval. Subscribers
acknowledge and understand that the limited private offering and
sale of Securities pursuant to this Agreement has not been
reviewed or approved by the SEC or by any state securities
commission, authority or agency, and is not registered under the
Act or under the securities or "blue sky" laws, rules or
regulations of any state. Subscribers acknowledge, understand
and agree that the Securities are being offered and sold
hereunder pursuant to (i) a private placement exemption to the
registration provisions of the Act pursuant to Section 3(b) or
Section 4(2) of such Act and Regulation D promulgated under such
Act, and (ii) a similar exemption to the registration provisions
of applicable state securities laws. Subscribers understand that
the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of the Subscribers set forth herein in order to
determine the applicability of such exemptions and the
suitability of the Subscribers to acquire the Securities.
Subscribers will advise Company of the state of its residence
prior to executing this or any other agreement to enable the
Company to comply with applicable "blue sky" laws.
2.9 Investment Intent. Without limiting their ability to
resell the Securities pursuant to an effective registration
statement, Subscribers are acquiring the Securities solely for
their own account and not with a view to the distribution,
assignment or resale to others. Subscribers understand and agree
that they may bear the economic risk of its investment in the
Securities for an indefinite period of time. Subscribers does
not now have any short position or hedge position in the
Company's Common Stock nor will the Subscribers make any
promissory notes and/or pledges to that effect on the Company's
Common Stock.
2.10 No Advertisements. The Subscribers are not subscribing
for the Securities as a result of or subsequent to any
advertisement, article, notice or other communication published
in any newspaper, magazine, or similar media or broadcast over
television or radio, or presented at any seminar or meeting.
2.11 Registration Rights. The parties have entered into a
Registration Rights Agreement (Exhibit E).
2.12 B Subscribers; Disclosure. The B Subscriber hereby
represents that he is a director of the Company, and agree to
purchase that number of shares of Preferred Stock set forth
beside their names in Schedule B under the same terms and
condition as the other Subscribers, except as provided in
Sections 1.4 and 13(b) hereof.
2.13 Conversion Limitations. For purposes of compliance
with Rule 713(a) of the American Stock Exchange, Inc., the
Subscribers hereby represent that they will not convert Preferred
Stock that will result in the issuance of more than 3,734,095
Shares of Common Stock (which number of shares is equal to twenty
(20%) percent of the issued and outstanding common stock of the
Company) without shareholders approval as required in Section
3.21 herein. The Subscribers acknowledge that there are now
approximately 3,602,855 shares of Common Stock available for
issuance upon exercise of the Warrants and the conversion of the
Preferred Stock taking into account the number of shares of
Common Stock made available pursuant to the terms of that certain
Agreement Among Optionholders dated as of even date herewith (the
"Optionholders Agreement"). In the event that the Company does
not obtain Shareholders approval, the Subscribers may convert the
remainder of the Convertible Preferred Stock at market price and
the dividend paid shall be increased to Fifteen (15%) percent.
In the event that there are not enough Common Shares authorized
for the conversion, the Company shall offer redemption in
accordance with Section 10 herein.
Section 3. Representations and Warranties of the Company.
For so long as any Securities held by any of the Subscribers
remain outstanding, the Company acknowledges, represents,
warrants and agrees as follows:
3.1 Organization/Qualification. The Company is a corporation
duly organized and validly existing under the laws of the State
of Delaware and is in good standing under such laws. The Company
has all requisite corporate power and authority to own, lease and
operate its properties and assets, and to carry on its business
as presently conducted. The Company is qualified to do business
as a foreign corporation in each jurisdiction in which the
ownership of its property or the nature of its business requires
such qualification, except where failure to so qualify would not
have a material adverse effect on the Company.
3.2 Accuracy of Reports and Information. To the best knowledge
of the Company, the Company is in material compliance, to the
extent applicable, with all reporting obligations under either
Section 12(b), 12(g) or 15(d) of the 1934 Act, and shall maintain
such status on a timely basis. The Company has registered its
Common Stock pursuant to Section 12 of the 1934 Act and the
Common Stock is listed and trades on the American Stock Exchange,
Inc.
To the best knowledge of the Company, the Company has filed
all material documentation required to be filed pursuant to all
reporting obligations, under either Section 13(a) or 15(d) of the
1934 Act for a period of at least twelve (12) months immediately
preceding the offer and sale of the Securities (or for such
shorter period that the Company has been required to file such
material).
3.3 SEC Filings/Full Disclosure. For a period of at least
twelve (12) months immediately preceding this offer and sale, or
such shorter period that the Company has been required to file
such Reports as defined herein, to the best of the Company's
knowledge (i) none of the Company's filings with the Securities
and Exchange Commission contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in
light of the circumstances under which they were made, not
misleading, and (ii) the Company has timely filed all requisite
forms, reports and exhibits thereto with the Securities and
Exchange Commission.
To the best of the Company's knowledge, there is no fact
known to the Company (other than general economic conditions
known to the public generally) that has not been publicly
disclosed by the Company or disclosed in writing to the
Subscribers which (i) could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise)
or on earnings, business affairs, properties or assets of the
Company, or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement.
The Company shall make available to Subscribers any and all
documentation regarding the FINOVA asset based revolving credit
facility which is indexed to LIBOR upon request.
3.4 Authorization. The Company has all requisite corporate
right, power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. All
corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Securities and
the performance of the Company's obligations hereunder has been
taken except for the actions to be taken at the next annual
shareholders meeting as discussed in Section 3.2. This Agreement
has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and
to limitations of public policy as they may apply to the
indemnification provisions set forth in this Agreement. Upon
their issuance and delivery pursuant to this Agreement, the
Securities will be validly issued, fully paid and nonassessable
and will be free of any liens or encumbrances; provided, however,
that the Securities are subject to restrictions on transfer under
state and/or federal securities laws. The issuance and sale of
the Securities will not give rise to any preemptive right or
right of first refusal or right of participation on behalf of any
person.
3.5 No Conflict. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or
default, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to a loss of a
material benefit, under, any provision of the Articles of
Incorporation, and any amendments thereto, Bylaws, Stockholders
Agreements and any amendments thereto of the Company or any
material mortgage, indenture, lease or other agreement or
instrument, or to the best of the Company's knowledge, any
permit, concession, franchise, license, judgment, order, decree
statute, law, ordinance, rule or regulation applicable to the
Company, its properties or assets and which would have a material
adverse effect on the Company's business and financial condition.
3.6 No Undisclosed Liabilities or Events. To the best of the
Company's knowledge, the Company has no material liabilities or
obligations other than those disclosed in the Reports, this
Agreement or those incurred in the ordinary course of the
Company's business since April 1, 1997, and which individually or
in the aggregate, do not or would not have a material adverse
effect on the properties, business, condition (financial or
otherwise), results of operations or prospects of the Company.
To the best of the Company's knowledge, no event or circumstances
has occurred or exists with respect to the Company or its
properties, business, condition (financial or otherwise), results
of operations or prospects, which, under applicable law, rule or
regulation, requires public disclosure or announcement prior to
the date hereof by the Company but which has not been so publicly
announced or disclosed.
3.7 No Default. To the Company's knowledge, the Company is not
in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it is or its
property is bound, and neither the execution, nor the delivery by
the Company, nor the performance by the Company of its
obligations under this Agreement, including the conversion or
exercise provision of the Securities, will conflict with or
result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation
or imposition of any lien or charge on any assets or properties
of the Company under, any material indenture, mortgage, deed of
trust or other material agreement applicable to the Company or
instrument to which the Company is a party or by which it is
bound or the Certificate of Incorporation or by-laws of the
Company, or any decree, judgment, order, rule or regulation of
any court or governmental agency or body having jurisdiction over
the Company or its properties, or the Company's listing agreement
for its Common Stock.
3.8 Absence of Events of Default. Except as set forth in the
Reports and this Agreement, to the Company's knowledge, no
default, as defined in the respective agreement to which the
Company is a party, and no event which, with the giving of notice
or the passage of time or both, would become a default, has
occurred and is continuing, which would have a material adverse
effect on the Company's business, properties, prospects,
condition (financial or otherwise) or results of operations (as
"Event of Default").
3.9 Governmental Consent, etc. To the best knowledge of the
Company, no material consent, approval or authorization of or
designation, declaration or filing with any governmental
authority on the part of the Company is required in connection
with the valid execution and delivery of this Agreement, or the
offer, sale or issuance of the Securities, or the consummation of
any other transaction contemplated hereby, except as may be
required by applicable securities laws, except as provided in
Section 3.21 hereof.
3.10 Intellectual Property Rights. Except as disclosed in the
Reports, to the best knowledge of the Company, the Company has
sufficient trademarks, trade names, patent rights, copyrights and
licenses to conduct its business as presently conducted in the
Reports. To the Company's knowledge, neither the Company nor its
products is infringing or will infringe any trademark, trade
name, patent right, copyright, license, trade secret or other
similar right of others currently in existence; and there is no
claim being made against the Company regarding any trademark,
trade name, patent, copyright, license, trade secret or other
intellectual property right which could have a material adverse
effect on the business or financial condition of the Company.
3.11 Material Contracts. Except as set forth in the Reports, to
the best knowledge of the Company, the agreements to which the
Company is a party described in the Reports are valid agreements,
in full force and effect, and the Company is not in material
breach or material default under any of such agreements.
3.12 Litigation. Except as disclosed in the Reports, to the
Company's knowledge, there is no action, proceeding or
investigation pending, or threatened, against the Company which
might result, either individually or in the aggregate, in any
material adverse change in the business, prospects, conditions,
affairs or operations of the Company. To the Company's
knowledge, the Company is not a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality.
3.13 Title to Assets. Except as set forth in Reports, the
Company has good and marketable title to all properties and
material assets described in the Reports as owned by it, free and
clear of any pledge, lien, security interest, encumbrance, claim
or equitable interest other than such as are not material to the
business of the Company.
3.14 Subsidiaries. Except as disclosed in the Reports, the
Company does not presently own or control, directly or
indirectly, any interest in any other corporation, partnership,
association or other business entity.
3.15 Required Governmental Permits. To the Company's
knowledge, the Company is in possession of and operating in
material compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal
and other regulatory authorities which are material to the
conduct of its business, all of which are valid and in full force
and effect.
3.16 Listing. The Company will use its best efforts to
maintain the listing of its Common Stock on the American Stock
Exchange, Inc. or other organized United States market or
quotation system. The Company has not received any notice, oral
or written, regarding continued listing and, as long as the
Preferred Stock and Warrants are outstanding, the Company will
take no action which would materially or adversely impact their
continued listing or eligibility of the Company for such listing.
3.17 Other Outstanding Securities/Financing Restrictions.
Except as disclosed in the Reports, the Company has no
outstanding restricted shares, or shares of Common Stock sold
under Regulation S, Regulation D or outstanding under any other
exemption from registration, which are available for sale as
unrestricted ("free trading") stock.
3.18 Registration Alternative. The Company covenants and
agrees that for so long as any of the shares remain outstanding
and continue to be "restricted securities" within the meaning of
Rule 144 under the Act, the Company shall permit resales of the
underlying Common Stock pursuant to Rule 144 under the Act. The
Company and the Subscriber shall provide the Transfer Agent any
and all papers necessary to complete the transfer under Rule 144,
including, but not limited to, opinions of counsel to the
Transfer Agent, and the Company shall continue to file all
material required to be filed pursuant to Sections 13(a) or 15(d)
of the 0000 Xxx.
3.19 Capitalization. The outstanding capital stock of the
Company consists of 18,670,477 shares of Common Stock, $.05 par
value per share, of which 24,000,000 are authorized; 1,000,000
shares of voting Preferred Stock, $.01 par value per share, of
which 3,500 shares have been designated Series A Convertible
Preferred Stock, simultaneously with the execution of this
Agreement. All issued and outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid
and nonassessable.
3.20 Dilution. The Company is aware and acknowledges that
conversion of the Preferred Stock, and/or exercise of the
Warrant, would cause dilution to existing Shareholders and could
significantly increase the outstanding number of shares of Common
Stock.
3.21 Shareholders Approval. The Company covenants and agrees
that it will promptly, after the Closing Date, initiate proxy
solicitations to all Shareholders of the Company and call a
meeting of shareholders, within ninety (90) days after the
Closing Date for the purpose of having the shareholders approve
and vote an increase in the authorized shares of the Company to
40,000,000 shares and the approval by the shareholders permitting
the issuance of over twenty (20%) percent of the Company's
outstanding Common Stock at below market prices in accordance
with American Stock Exchange Rule 713(a) (the "Shareholder
Approvals").
3.22 The Company has no reason to believe that the FINOVA
financing will not be closed.
3.23 The Company will receive an unqualified opinion from their
auditors and will send a copy of same upon receive to the
Subscribers.
Section 4. Further Representations and Warranties of the
Company. For so long as any Securities held by any of the
Subscribers remain outstanding, the Company acknowledges,
represents, warrants and agrees as follows:
(i) Upon approval of the increase of authorized shares of common
stock as provided in Section 3.21 above, it will reserve from its
authorized but unissued shares of Common Stock a sufficient
number of shares of Common Stock to permit the conversion in full
of all of the outstanding Securities.
(ii) It will use its best efforts maintain the listing of its
Common Stock on the American Stock Exchange, Inc.
(iii) It will permit the Subscribers to exercise their
right to convert the Preferred Stock and/or exercise the Warrants
by telecopying an executed and completed Notice of Conversion
and/or Notice of Exercise to the Company and delivering the
original Notice of Conversion and/or original Notice of Exercise
and the certificate representing the Preferred Stock and/or the
original Warrant to the Company by express courier. Each
business date on which a Notice of Conversion and/or Notice of
Exercise is telecopied to and received by the Company along with
an copy of the originally executed Preferred Stock Certificates
and Warrants in accordance with the provisions hereof shall be
deemed a "Conversion Date" and/or "Exercise Date". The Company
will transmit, or instruct the Transfer Agent to transmit, the
certificates representing shares of Common Stock issuable upon
conversion of any Preferred Stock and/or exercise of any Warrants
(together with the certificates representing the Preferred Stock
not so converted and/or Warrants not so exercised) to the
Subscriber via express courier, by electronic transfer or
otherwise within three business days after the Conversion Date
and/or Exercise Date provided the Company has received the
original Notice of Conversion and Preferred Stock certificate
being so converted and/or the original Notice of Exercise and
Warrant being exercised on the Conversion Date. In addition to
any other remedies which may be available to the Subscribers, in
the event that the Company fails to deliver, or has failed to
contact its Transfer Agent to deliver, such shares of Common
Stock within such five (5) business day period, the Subscribers
will be entitled to revoke the relevant Notice of Conversion
and/or Notice of Exercise by delivering a notice to such effect
to the Company whereupon the Company and the Subscribers shall
each be restored to their respective positions immediately prior
to delivery of such Notice of Conversion and/or Notice of
Exercise. The Notice of Conversion and Preferred Stock and/or
the Notice of Exercise and Warrant representing the portion of
the Preferred Stock converted and/or Warrant exercised shall be
delivered as follows:
To the Company:
nSTOR TECHNOLOGIES, INC.
000 Xxxxxxx Xxxx.
Xxxx Xxxx Xxxxx, XX 00000
Fax: (000) 000-0000
In the event that the Common Stock issuable upon conversion of
the Preferred Stock and/or exercise of the Warrants is not
delivered by the Company, within three (3) business days of
receipt by the Company of a valid Notice of Conversion and the
Preferred Stock to be converted and/or Notice of Exercise and
Warrant to be exercised, the Company shall pay to the
Subscriber(s), in immediately available funds, upon demand, as
liquidated damages for such failure and not as a penalty, for
each $100,000 of Preferred Stock sought to be converted, $500 for
each of the first ten (10) days and $1,000 per day thereafter
that the Conversion Shares are not delivered, and for each
thousand (1,000) shares of Common Stock sought to be exercised
under the Warrant, $7.50 for each of the first ten (10) days and
$15 per day thereafter that the shares of Common Stock underlying
the Warrant are not delivered, which liquidated damages shall run
from the fourth business day after the Conversion Date and/or
Exercise Date. Any and all payments required pursuant to this
paragraph shall be payable only in shares of Common Stock and not
in cash. The number of such shares shall be determined by
dividing the total sum payable by the Conversion Price and/or
Exercise Price.
Section 5. Opinion of Counsel. Subscribers shall, upon the
Closing, receive an opinion letter from counsel to the Company
subject to reasonable and customary limitations and
qualifications and reliance on the certificates of the officers
of the Company, to the effect that:
(i) The Company is duly incorporated and validly existing under
the laws and jurisdiction of its incorporation. The Company
and/or its subsidiaries are duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions
where the Company and/or its subsidiaries owns or leases
properties, maintains employees or conducts business, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the Company, and has all requisite
corporate power and authority to own its properties and conduct
its business.
(ii) Except as set forth in the Reports there is no action, and
to counsel's knowledge, proceeding or investigation pending, or
threatened against the Company which might result, either
individually or in the aggregate, in any material adverse change
in the business or financial condition of the Company.
(iii) Except as set forth in the Reports, without an independent
investigation, the Company is not a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality.
(iv) Except as set forth in the Reports and to counsel's
knowledge, there is no action, suit, proceeding or investigation
by the Company currently pending.
(v) The Preferred Stock, which shall be issued at the Closing,
will be duly authorized and validly issued under the laws of the
Company's State of Incorporation, except for the Shareholder
Approvals referred to in Section 3.21 hereof.
(vi) This Subscription Agreement, the issuance of the Preferred
Stock and Warrants, and the issuance of Common Stock, upon
conversion of the Preferred Stock and/or exercise of the
Warrants, have been duly approved by all required corporate
action and that all such securities, upon delivery, shall be
validly issued and outstanding, fully paid and nonassessable,
except for the approvals referenced in Section 3.21 hereof.
(vii) The issuance of the Securities will not violate the
applicable listing agreement between the Company and any
securities exchange or market on which the Company's securities
are listed.
(viii) Assuming the accuracy of the representation and
warranties of the Company and the Subscribers set forth in this
Subscription Agreement, the offer, issuance and sale of the
Preferred Stock, Warrants and shares of Common Stock to be issued
upon exercise and/or conversion to the Subscriber pursuant to
this Agreement are exempt from the registration requirements of
the Act.
(ix) As more specifically described in the Reports, the
authorized capital stock of the Company consists of 24,000,000
shares of Common Stock, $.05 par value per share ("Common Stock")
and 1,000,000 shares of Preferred Stock, par value $.01 per
shares.
(x) The Common Stock is registered pursuant to Section 12(b) or
Section 12(g) of the 1934 Act and to the best of Counsel's
knowledge without an independent investigation, the Company has
timely filed all the material required to be filed pursuant to
Sections 13(a) or 15(d) of such Act for a period of at least
twelve months preceding the date hereof.
(xi) Except as provided in Section 3.21 hereof, the Company has
the requisite corporate power and authority to enter into the
Agreements and to sell and deliver the Securities and the Common
Stock to be issued upon the conversion of the Securities as
described in this Agreement; the Agreement has been duly and
validly authorized by all necessary corporate action by the
Company, to the best of our knowledge, no approval of any
governmental or other body is required for the execution and
delivery of each of the Agreements by the Company or the
consummation of the transactions contemplated thereby; the
Agreement has been duly and validly executed and delivered by and
on behalf of the Company, and is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other laws affecting creditors rights generally,
and except as to compliance with federal, state and foreign
securities laws, as to which no opinion is expressed.
(xii) To the knowledge of counsel, the execution, delivery
and performance of the Agreements by the Company and the
performance of its obligations thereunder do not and will not
constitute a breach or violation of any of the terms and
provisions of, or constitute a default under or conflict with or
violate any provision of (i) the Company's Certificate of
Incorporation or By-Laws, (ii) any indenture, mortgage, deed of
trust, agreement or other instrument to which the Company is a
party or by which it or any of its property is bound, (iii) any
applicable statute or regulation, (iv) or any judgment, decree or
other of any court or governmental body having jurisdiction over
the Company or any of its property.
(xiii) The issuance of the Preferred Stock and Warrants, to
A Subscribers and the issuance of the Preferred Stock to H. Xxxxx
Xxxx (Subscriber), a director of the Company, pursuant to the
terms and conditions set forth in this Agreement does not violate
any federal, state or foreign law.
Section 6. Opinion of Counsel Upon Conversion. The Company will
obtain for each Subscriber, at the Company's expense, any and all
opinions of counsel which may be reasonably required in order to
convert the Preferred Stock, including, but not limited to,
obtaining for each Subscriber an opinion of counsel, subject only
to receipt of a Notice of Conversion in the form of Exhibit D and
receipt by Counsel of such representations, warranties, and
documents as are determined to be necessary to comply with
applicable securities laws, duly executed by the Subscriber which
shall be satisfactory to the Transfer Agent, directing the
Transfer Agent to remove the legend from the certificate.
Section 7. Rule 144 Reporting. With a view to making available
the benefits of certain rules and regulations of the SEC which
may at any time permit the sale of the Securities to the public
without registration, the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Act, at all
times after the effective date on which the Company becomes
subject to the reporting requirements of the Act or the 1934 Act;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act;
(iii) furnish to each Subscriber forthwith, upon request, a
written statement by the Company as to its compliance with the
reporting requirements of said Rule 144, and of the Act and the
1934 Act, a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents of the Company
and other information in the possession of or reasonably
obtainable by the Company as each Subscriber may reasonably
request in availing itself of any rule or regulation of the SEC
allowing any Subscriber to sell any such Securities without
registration.
Section 8. Representations and Warranties of the Subscribers.
Each of the Subscribers represent to the other Subscribers and
the Company the following with respect to itself:
8.1 Subscription Agreement. The Subscription Agreement has been
duly authorized, validly executed and delivered on behalf of each
of the Subscribers and is a valid and binding agreement in
accordance with its terms, subject to general principles of
equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally.
8.2 No-Conflict. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation or acceleration
of any obligation or to a loss of a material benefit, under, any
provision of the Certificate of Incorporation, and any amendments
thereto, Bylaws and any amendments thereto of Subscribers or any
material mortgage, indenture, lease or other agreement or
instrument, permit, concession, franchise, license, judgment,
order, decree statute, law, ordinance, rule or regulation
applicable to Subscribers, its properties or assets.
8.3 Approvals. No Subscriber is aware of any authorization,
approval or consent of any governmental body which is legally
required for the issuance and sale of the Securities.
8.4 Indemnification. Each of the Company, and all key operating
subsidiaries, and each of the Subscribers agrees to indemnify the
other and to hold the other harmless from and against any and all
losses, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) which the other may sustain or incur
in connection with the breach by the indemnifying party of any
representation, warranty or covenant made by it in this
Agreement.
8.5 Transfer Restrictions/Conversion Holding Period. Refer to
Certificate of Stock Designation (Exhibit A).
8.6 Right of First Refusal. The Company agrees that should it
elect to seek funds from an investor or investors for a private
placement that would involve providing an equity position or a
right to acquire an equity position that could be exercised on or
before April 14, 1999, then the Investor will be notified of the
intention of the Company together with a written outline of the
proposed terms. The Investor shall have fifteen (15) days to
commit to provide the funds pursuant to the terms as outlined.
Should the Investor fail to do so within the time specified, then
the Company shall have the right to conclude a transaction with
another Investor or investors provided the transaction is not
materially different from that outlined to the Investor as
provided hereinabove.
This provision shall not be construed as a limitation on the
Company's ability or right without the consent of the Investor to
enter into strategic relationship agreements with other companies
that may involve investment of funds in the Company or public
offerings, mergers or acquisitions.
Section 9. Restrictions on Conversion of Preferred Stock. Each
Subscriber or any subsequent holder of the Preferred Stock (the
"Holder") shall be prohibited from converting any portion of the
Preferred Stock which would result in any Subscriber or Holder
being deemed the beneficial owner, in accordance with the
provisions of Rule 13d-3 of the 1934 Act, as amended, of 4.99% or
more of the then issued and outstanding Common Stock of the
Company.
Section 10. Mandatory Redemption. The Company and the
Subscribers acknowledge that pursuant to the B Subscribers'
Escrow Agreement, in the event, for any reason, a shareholders
meeting does not take place within ninety (90) days of the
Closing Date or a shareholders meeting takes place and the
shareholders do not approve both an increase in the authorized
shares to 40,000,000 shares and approval permitting the issuance
of over twenty (20%) percent of the Company's outstanding Common
Stock at below market prices in accordance with American Stock
Exchange Rule 713(a), the Company shall give the A Subscribers
the option to redeem One Million ($1,000,000) Dollars of the A
Subscribers' Preferred Stock immediately at the Redemption Price
as set forth in Section 10.1, plus accrued interest out of the
Escrow Account of Holland and Knight.
In the event that, for any reason, A Subscribers cannot
convert any portion of their Preferred Stock, the Company shall
be required to offer redemption of the A Subscribers' Preferred
Stock at the Redemption Price as set forth in Section 10.1.
10.1 Redemption Price. The Redemption Price shall be the face
amount of the Preferred Stock plus 23% or 28% as per this
Agreement, plus accrued interest as set forth in the Certificate
of Designation (Exhibit A annexed hereto).
Section 11. Mandatory Conversion. In the event the Preferred
Stock has not been converted two (2) years from the Closing Date,
the Preferred Stock shall automatically be converted, which
conversion shall be limited to the number of authorized shares of
Common Stock. In the event that there are not enough Common
Shares authorized for the conversion, the Company shall offer
redemption to the Subscribers in accordance with Section 10
herein (and all interest owed thereon shall be paid by the
Company) as if the Subscribers voluntarily elected such
conversion in accordance with the procedure, terms and conditions
set forth in this Agreement and the Certificate of Stock
Designation.
Section 12. Registration or Exemption Requirements. Subscribers
acknowledge and understand that the Securities may not be resold
or otherwise transferred except in a transaction registered under
the Act and any applicable state securities laws or unless an
exemption from such registration is available. Subscribers
understand that the Securities will be imprinted with a legend
that prohibits the transfer of the Securities unless (i) they are
registered or such registration is not required, and (ii) if the
transfer is pursuant to an exemption from registration other than
Rule 144 under the Act and, if the Company shall so request in
writing, an opinion of counsel reasonably satisfactory to the
Company is obtained to the effect that the transaction is so
exempt.
Section 13. Legend.
(a) The certificates representing the Securities shall be
subject to a legend restricting transfer under the Act, such
legend to be substantially as follows:
"THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). SUCH SECURITIES MAY NOT BE OFFERED OR SOLD OR
TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT WHICH, EXCEPT IN THE CASE OF AN EXEMPTION PURSUANT TO RULE
144 UNDER SAID ACT, IS CONFIRMED IN A LEGAL OPINION SATISFACTORY
TO THE COMPANY."
The certificates representing these Securities, and each
certificate issued in transfer thereof, will also bear any legend
required under any applicable state securities law.
(b) The certificates representing the Securities (for the B
Subscribers listed on Schedule A) shall be subject to a legend
restricting transfer under the Act, such legend to be
substantially as follows:
"THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). SUCH SECURITIES MAY NOT BE OFFERED OR SOLD OR
TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT WHICH, EXCEPT IN THE CASE OF AN EXEMPTION PURSUANT TO RULE
144 UNDER SAID ACT, IS CONFIRMED IN A LEGAL OPINION SATISFACTORY
TO THE COMPANY. THESE SECURITIES ARE SUBJECT TO A LOCKUP PERIOD
AND CANNOT BE OFFERED OR SOLD OR TRANSFERRED BEFORE ONE HUNDRED
AND EIGHTY (180) DAYS AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT TO BE FILED IN ACCORDANCE WITH THE 8%
CONVERTIBLE PREFERRED STOCK SERIES A SUBSCRIPTION AGREEMENT AND
ALL EXHIBITS AND ATTACHMENTS DATED APRIL 14, 1998 SPECIFICALLY,
BUT NOT LIMITED TO, THE REGISTRATION RIGHTS AGREEMENT DATED APRIL
14, 1998."
Section 14. Stock Delivery Instructions. The Preferred Stock
Certificate shall be delivered to Subscriber on a delivery versus
payment basis as set forth in the Escrow Agreement.
Section 15. Closing Date. The date the Escrow Agent receives
the Securities and the Purchase Price, and both the conditions
set forth in Sections 16 and 17 and the terms and conditions of
the Escrow Agreement (Exhibit C) herein are satisfied or waived
shall be the Closing (the "Closing Date"), and all acts,
deliveries and confirmations comprising the Closing Date
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 Date, and such
acts, deliveries, or confirmations shall not be effective unless
and until the last of same shall have occurred, and as shall be
mutually agreed upon as to time and place.
Section 16. Conditions to the Company's Obligation to Sell.
Subscribers understand that the Company's obligation to sell the
Preferred Stock, Warrants are conditioned upon:
(i) The receipt and acceptance by the Company of a duly executed
copy of this Subscription Agreement and all duly executed
Exhibits thereto by an authorized officer of the Company;
(ii) Delivery into the Company's account by Subscribers or
Escrow Agent of good cleared funds as payment in full for the
purchase of the Securities;
(iii) All representations and warranties of the Subscribers
contain herein shall remain true and correct as of the Closing
Date;
(iv) The Company shall have obtained all permits and
qualifications required by any state for the offer and sale of
the Preferred Stock and Warrants, or shall have the availability
of exemptions therefrom. At the Closing Date, the sale and
issuance of the Preferred Stock, Warrants, and the proposed
issuance of the Common Stock underlying the Preferred Stock, and
Warrants shall be legally permitted by all laws and regulations
to which the Subscribers and the Company are subject, except for
the approvals referred to in Section 3.21 hereof;
(v) The Certificate of Designation for the Preferred Stock shall
have been filed with the Delaware Secretary of State;
(vi) The receipt and acceptance by the Company of that certain
Agreement of Shareholders dated as of even date herewith (as
referred to in Section 3.21 hereof) and that certain Agreement
among Optionholders, dated as of even date herewith, each duly
executed by the parties thereto; and
(vii) The receipt and acceptance of a duly executed copy of the
A Subscribers Escrow Agreement.
Section 17. Conditions to Subscriber's Obligation to Purchase.
The Company understands that Subscriber's obligation to purchase
the Preferred Stock, and Warrant is conditioned upon:
(i) Acceptance by each of the Subscribers of a duly executed
Subscription Agreement and all duly executed Exhibits hereto for
the sale of the Securities;
(ii) Delivery of the original Securities as described herein;
(iii) All representations and warranties of the Company
contained herein shall remain true and correct as of the Closing
Date;
(iv) Receipt of opinion of counsel and proof of a filed
Certificate of Designation;
(v) The Company shall have obtained all permits and
qualifications required by any state for the offer and sale of
the Preferred Stock, and Warrants, or shall have the availability
of exemptions therefrom. At the Closing Date, the sale and
issuance of the Preferred Stock, and Warrants shall be legally
permitted by all laws and regulations to which the Company and
Subscribers are subject;
(vi) Receipt of a copy of that certain Agreement Among
Shareholders signed by shareholders representing over fifty (50%)
percent of the outstanding issued and outstanding Common Stock
agreeing to raise the authorized number of shares from 24,000,000
to 40,000,000 at the next annual meeting of the Shareholders and
approval permitting the issuance of over twenty (20%) percent of
the Company's outstanding securities at below market prices;
(vii) Receipt of a copy of that certain Agreement Among
Optionholders that postpones the exercise date of options and/or
Warrants to purchase the Company's Common Stock , which will
postpone the exercise date of the options and/or Warrants until
after the A Subscribers convert their Preferred Stock, or until
the number of issued and authorized shares have been increased to
40,000,000; and
(viii) Delivery of a letter from Holland & Knight LLP
representing that they are holding as Escrow Agent for the
Company One Million ($1,000,000) Dollars in an interest bearing
Escrow Account.
Section 18. Miscellaneous.
18.1 Governing Law/Jurisdiction. This Agreement will be
construed and enforced in accordance with and governed by the
laws of the State of Delaware, except for matters arising under
the Act, without reference to principles of conflicts of law.
Each party hereby agrees that if another party to this Agreement
obtains a judgment against it in such a proceeding, the party
which obtained such judgment may enforce same by summary judgment
in the courts of any state or country having jurisdiction over
the party against whom such judgment was obtained, and each party
hereby waives any defenses available to it under local law and
agrees to the enforcement of such a judgment. Each party to this
Agreement irrevocably consents to the service of process in any
such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set
forth herein. Nothing herein shall affect the right of any party
to serve process in any other manner permitted by law.
18.2 Facsimile/Counterparts/Entire Agreement. Except as
otherwise stated herein, in lieu of the original, a facsimile
transmission or copy of the original shall be as effective and
enforceable as the original. This Agreement may be executed in
counterparts which shall be considered an original document and
which together shall be considered a complete document. This
Agreement and Exhibits hereto constitute the entire agreement
between the Subscriber and the Company with respect to the
subject matter hereof. This Agreement may be amended only by a
writing executed by all parties.
18.3 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any
party.
18.4 Entire Agreement. This Agreement and Exhibits hereto
constitute the entire agreement between the Subscribers and the
Company with respect to the subject matter hereof. This
Agreement may be amended only by a writing executed by all
parties.
18.5 Reliance by Company. The Subscribers represent to the
Company that the representations and warranties of the Subscriber
contained herein are complete and accurate and may be relied upon
by the Company in determining the availability of an exemption
from registration under federal and state securities laws in
connection with a private offering of securities.
18.6 Confidentiality. Each of the Company and each of the
Subscriber agrees to keep confidential and not to disclose to or
use for the benefit of any third party the terms of this
Agreement or any other information which at any time is
communicated by or obtained from the other party as being
confidential without the prior written approval of the other
party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of
the public domain (except by breach of this Agreement) and
information which is required to be disclosed by law.
18.7 Legal Fees and Expenses. Each of the parties shall pay its
own fees and expenses (including the fees of any attorneys,
accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated
hereby. If for any reason the transactions contemplated by this
Agreement are not consummated, each of the parties hereto shall
promptly return to the other parties all schedules, documents,
instruments, work papers or other written information, without
retaining copies thereof, previously furnished by it as a result
of this Agreement or in connection herewith.
18.8 Authorization. Each of the parties hereto represents that
the individual executing this Agreement on its behalf has been
duly and appropriately authorized to execute the Agreement.
IN WITNESS WHEREOF, this Agreement was duly executed on the date
first written below.
Agreed to and Accepted on
this 14th day of April 1998
nSTOR TECHNOLOGIES, INC.
/s/ Xxxx Xxxx
By____________________________
Xxxx Xxxx, President
CPR (USA) INC.
/s/ Xxxxxx X. Xxxxxx
By_____________________________
"A" Subscriber
LIBERTYVIEW FUND, LLC
/s/ Xxxxxx X. Xxxxxx
By_____________________________
"A" Subscriber
LIBERTYVIEW PLUS FUND
/s/ Xxxxxx X. Xxxxxx
By_____________________________
"A" Subscriber
/s/ H. Xxxxx Xxxx
_____________________________
H. XXXXX XXXX, "B" Subscriber
SCHEDULE A
Subscriber Number of Number of State of
Name and Address Purchase Price Preferred Shares Warrant Shares Origination
CPR (USA) Inc. $1,500,000 1,500 120,000 Delaware Corp.
000 Xxxxxx Xx.,
00xx Xx.
Xxxxxx Xxxx, XX 00000
LibertyView Plus Fund 800,000 800 64,000 Bermuda Corp.
Xxxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx XXXX
XxxxxxxXxxx Fund, LLC 200,000 200 16,000 Delaware LLC
000 Xxxxxx Xx.,
00xx Xx.
Xxxxxx Xxxx, XX 00000
SCHEDULE B
Subscriber Number of
Name and Address Purchase Price Preferred Shares
H. Xxxxx Xxxx $1,000,000 1,000 Shares
c/o nStor Technologies, Inc.
000 Xxxxxxx Xxxx.
Xxxx Xxxx Xxxxx, XX 00000
EXHIBIT A
Certificate of Designation of Series A
Convertible Preferred Stock
of nStor Technologies, Inc.
It is certified that:
A. The name of the company is nStor Technologies, Inc., a Delaware
corporation (hereinafter the "Company").
B. The certificate of the incorporation of the Company, as amended,
authorizes the issuance of one million (1,000,000) shares of Preferred
Stock, $.01 par value per share, and expressly vests in the Board of
Directors of the Company the authority provided therein to issue all of
said shares in one or more series and by resolution or resolutions to
establish the designation and number and to fix the relative rights and
preferences of each series to be issued.
C. The Board of Directors of the Company, pursuant to the authority
expressly vested in it, has adopted the following resolutions creating a
class of Series A Preferred Stock:
RESOLVED, that a portion of the one million (1,000,000) authorized
shares of Preferred Stock of the Company shall be designated as a
separate series possessing the rights and preferences set forth below:
1. Designation and Amount. The shares of such series shall have a
par value of $.01 per share and shall be designated as Series A Preferred
Stock (the "Series A Preferred Stock") and the number of shares
constituting the Series A Preferred Stock shall be Three Thousand Five
Hundred (3,500). The Series A Preferred Stock shall be offered for sale
at a purchase price of One Thousand Dollars ($1,000) per share (the
"Purchase Price").
2. Dividends. The holders of the outstanding shares of Series A
Preferred Stock shall be entitled to receive, out of funds legally available
therefor, dividends at an annual rate of eight percent (8%) of the Purchase
Price. Such dividends shall be deemed to accrue on the Series A
Preferred Stock and be cumulative, whether or not there are profits,
surplus or other funds of the Company legally available for the payment of
dividends. If there shall not have been a sum sufficient for the payment
therefor set apart, the deficiency shall first be paid before any dividend or
other distribution shall be paid or declared and set apart with respect to
any other class of the Company's capital stock, now or hereafter
outstanding. All accrued dividends shall be immediately due and payable
on the outstanding shares of Series A Preferred Stock on the date such
shares of Series A Preferred Stock are converted into shares of common
stock par value $.05 per share ("Common Stock") in accordance with
Section 5 hereof, which date shall be the "Conversion Date". Dividends
may be paid in cash or additional shares of Common Stock of the
Company, as may be determined, from time to time, in the sole discretion
of the Board of Directors. The Company shall not be required to pay any
dividend on any outstanding shares of the Series A Preferred Stock prior
to the Conversion Date for such shares.
3. Liquidation, Dissolution or Winding Up
(a) Treatment at Liquidation, Dissolution or Winding Up. In the event of
any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, before any distribution may be made with
respect to the Common Stock or any other series of capital stock, holders
of each share of Series A Preferred Stock shall be entitled to be paid out
of the assets of the Company available for distribution to holders of the
Company's capital stock of all classes, whether such assets are capital,
surplus, or capital earnings, such amount per share of Series A Preferred
Stock as would have been payable had each such share been converted
into Common Stock immediately prior to such event of liquidation,
dissolution or winding up pursuant to the provisions of Section 5
(collectively, the "Liquidation Amount").
(b) If the assets of the Company available for distribution to its
shareholders shall be insufficient to pay the holders of shares of Series A
Preferred Stock the full amount of the Liquidation Amount to which they
shall be entitled, the holders of shares of Series A Preferred Stock shall
share ratably in any distribution of assets according to the amounts which
would be payable with respect to the shares of Series A Preferred Stock
held by them upon such distribution if all amounts payable on or with
respect to said shares were paid in full.
(c) After the payment of the Liquidation Amount shall have been made in
full to the holders of the Series A Preferred Stock or funds necessary for
such payment shall have been set aside by the Company in trust for the
account of holders of the Series A Preferred Stock so as to be available
for such payments, the holders of the Series A Preferred Stock shall be
entitled to no further participation in the distribution of the assets of the
Company, and the remaining assets of the Company legally available for
distribution to its shareholders shall be distributed among the holders of
other classes of securities of the Company in accordance with their
respective terms.
4. Voting Power. Except as otherwise expressly provided in Section 7
hereof, or as required by law, each holder of Series A Preferred Stock
shall be entitled to vote on all matters and shall be entitled to that number
of votes equal to the largest number of shares of Common Stock into
which such holder's shares of Series A Preferred Stock could be
converted, pursuant to the provisions of Section 5 hereof, at the record
date for the determination of shareholders entitled to vote on such matter
or, if no such record date is established, at the date such vote is taken or
any written consent of shareholders is solicited. Except as otherwise
expressly provided herein or as required by law, the holders of shares of
Series A Preferred Stock and Common Stock shall vote together as a
single class on all matters. The holders of the Common Stock shall not
take any action by written consent without the prior written consent of the
holders of a majority of the Series A Preferred Stock.
5. Conversion Rights for the Series A Preferred Stock. The holders of
Series A Preferred Stock shall have conversion rights as follows
("Conversion Rights"):
(a) Right to Convert. Each holder of Series A Preferred Stock shall be
entitled (at the times and in the amounts set forth below) to convert, in
whole or in part, in multiples of one hundred (100) shares, shares of
Series A Preferred Stock, at their option, as follows:
(i) Provided a registration statement (the "Registration Statement")
covering the shares of Commmon Stock issuable upon the conversion of
such shares of Series A Preferred Stock has been declared effective by the
Securities and Exchange Commission:
(A) up to one-third (1/3) of the shares of Series A Preferred Stock initially
issued to such holder at any time after the effective date of the
Registration Statement (the "Registration Date") and any time thereafter;
(B) up to an additional one-third (1/3) of the shares of Series A Preferred
Stock initially issued to such holder at any time beginning sixty (60) days
following the Registration Date, and at any time thereafter; and
(C) up to an additional one-third (1/3) of the shares of Series A Preferred
Stock initially issued to such holder at any time beginning ninety (90) days
following the Registration Date, and any time thereafter.
(ii) In the event no Registration Statement has been declared effective
within ninety (90) days from the date hereof, one hundred percent (100%)
of the shares of Series A Preferred Stock initially issued to such holder
ninety (90) days after the date hereof.
(b) Conversion Rate. Each share of Series A Preferred Stock may be
converted into the number of fully-paid and non-assessable shares of
Common Stock of the Company calculated in accordance with the
following formula ("Conversion Rate"):
The number of shares issuable upon conversion of one (1) share of
Series A Preferred Stock shall equal:
Purchase Price
Conversion Price
where,
(i) the Purchase Price is defined in Section 1 hereof;
(ii) the Conversion Price equals the lesser of (x) .77 times the average
Closing Bid Price as that term is defined below, of the Common Stock for
the three (3) trading days immediately preceding the date of conversion, as
defined below, or (y) $1.44;
(iii) for purposes hereof the term "Closing Bid Price" shall mean the
Closing Bid Price for the Common Stock on the American Stock
Exchange, or if the Common Stock is no longer traded on the American
Stock Exchange, the Closing Bid Price on the principle national securities
exchange on which the Common Stock is traded, or the Nasdaq National
Market System, and, if not available, the mean of the high and low prices
on such principle national securities exchange or the Nasdaq National
Market System.
(iv) In the event the Common Stock is involuntarily delisted from the
American Stock Exchange and continues to be so delisted on the
Conversion Date, or the Company receives a delisting letter and cannot
certify to the satisfaction of the holders of the Series A Preferred Stock
that the Company is in fact in compliance with the listing requirements of
the American Stock Exchange, the Conversion Price shall be equal to .72
times the average Closing Bid Price for the last three (3) trading days
prior to the termination of trading, or $1.44, whichever is less .
(v) Notwithstanding anything herein to the contrary, no holder of Series A
Preferred Stock who is an offficer, director or key employee (an
"Affiliate") of the Company may, prior to the approval by the holders of a
majority of the outstanding Common Stock of the sale of Series A
Preferred Stock to such Affiliate, convert any shares of Series A Preferred
Stock if such conversion would result in the issuance to all Affiliates in
the aggregate of more than 5% of shares of the outstanding Common
Stock in any one year, or the issuance to all Affiliates in the aggregate of
more than 10% of shares of the outstanding Common Stock in any five-year
period.
(c) Automatic Conversion. Each share of Series A Preferred Stock
outstanding two (2) years from the Registration Date shall automatically
convert into Common Stock on such date at the applicable Conversion
Rate above and such date shall be deemed the Conversion Date with
respect to such shares.
(d) Capital Reorganization or Reclassification. If the Common Stock
issuable upon the conversion of the Series A Preferred Stock shall be
changed into the same or different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, stock
split, stock dividend, or similar event, then and in each such event, the
holder of each share of Series A Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such capital
reorganization, reclassification or other change which such holder would
have received had its shares of Series A Preferred Stock been converted
immediately prior to such capital reorganization, reclassification or other
change.
(e) Capital Reorganization, Merger or Sale of Assets. If at any time or
from time to time there shall be a capital reorganization of the Common
Stock (other than a subdivision, combination, reclassification or exchange
of shares provided for in Section 5(d) above or a merger or consolidation
of the Company with or into another corporation, or the sale of all or
substantially all of the Company's properties and assets to any other
person, or any transaction or series of related transactions in which more
than fifty percent (50%) of the outstanding voting securities of the
Company (on an as converted basis) is sold or assigned (any of which
events is herein referred to as a "Reorganization"), then as a part of such
Reorganization, provision shall be made so that the holders of the Series A
Preferred Stock shall thereafter be entitled to receive upon conversion of
the Series A Preferred Stock, the number of shares of stock or other
securities or property of the Company, or of the successor corporation
resulting from such Reorganization, to which such holder would have been
entitled if such holder had converted its shares of Series A Preferred Stock
immediately prior to such Reorganization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this
Section 5 with respect to the rights of the holders of the Series A
Preferred Stock after the Reorganization, to the end that the provisions of
this Section 5 (including adjustment of the number of shares issuable upon
conversion of the Series A Preferred Stock) shall be applicable after that
event in as nearly equivalent a manner as may be practicable.
(f) Certificate as to Adjustments; Notice by Company. Upon the
occurrence of each adjustment or readjustment of the Conversion Price of
the Series A Preferred Stock, the Company, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of such Series A Preferred
Stock a certificate executed by the president and chief financial officer (or
in the absence of a person designated as the chief financial officer, by the
treasurer) setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment are based.
The Company shall, upon written request at any time of any holder of
Series A Preferred Stock, furnish or cause to be furnished to such holder a
certificate setting forth (A) the Conversion Price at the time in effect, and
(B) the number or shares of Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of
a share of Series A Preferred Stock.
(g) Exercise of Conversion Rights. Holders of Series A Preferred Stock
may exercise their right to convert the Series A Preferred Stock by
telecopying an executed and completed Notice of Conversion to the
Company and delivering the original Notice of Conversion and the
certificate representing the Series A Preferred Stock by express courier.
Each business date on which a Notice of Conversion is telecopied to and
received by the Company along with a copy of the originally executed
Series A Preferred Stock certificates in accordance with the provisions
hereof shall be deemed a "Conversion Date." The Company will
transmit, or instruct its transfer agent to transmit, the certificates
representing shares of Common Stock issuable upon conversion of any
share of Series A Preferred Stock (together with the certificates
representing the Series A Preferred Stock not so converted) to the holder
thereof via express courier, by electronic transfer or otherwise within
three (3) business days after the Conversion Date provided the Company
has received the original Notice of Conversion and Series A Preferred
Stock certificate being so converted on the Conversion Date. In addition
to any other remedies which may be available to the holders of shares of
Series A Preferred Stock, in the event that the Company fails to deliver,
or has failed to contact its transfer agent to deliver, such shares of
Common Stock within such three (3) business day period, the holder will
be entitled to revoke the relevant Notice of Conversion by delivering a
notice to such effect to the Company whereupon the Company and the
holder shall each be restored to their respective positions immediately
prior to delivery of such Notice of Conversion. The Notice of Conversion
and Series A Preferred Stock certificates representing the portion of the
Series A Preferred Stock converted shall be delivered as follows:
To the Company:
nSTOR TECHNOLOGIES, INC.
000 Xxxxxxx Xxxx.
Xxxx Xxxx Xxxxx, XX 00000
Fax: (000) 000-0000
In the event that shares representing the Common Stock issuable
upon conversion of the Series A Preferred Stock (the "Conversion
Shares") are not delivered by the Company, within three (3) business days
of receipt by the Company of a valid Notice of Conversion and the Series
A Preferred Stock certificates to be converted, the Company shall pay to
the holders thereof, in immediately available funds, upon demand, as
liquidated damages for such failure and not as a penalty, for each
$100,000 of Series A Preferred Stock sought to be converted, $500 for
each of the first ten (10) days and $1,000 per day thereafter that the
Conversion Shares are not delivered, which liquidated damages shall run
from the fourth business day after the Conversion Date. Any and all
payments required pursuant to this paragraph shall be payable only in
shares of Common Stock and not in cash.
(h) Lost or Stolen Certificates. Upon receipt by the Company of evidence
of the loss, theft, destruction or mutilation of any Series A Preferred
Stock certificate(s), and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon
the cancellation of the Series A Preferred Stock certificate(s), if mutilated,
the Company shall execute and deliver new certificates for Series A
Preferred Stock of like tenure and date. However, the Company shall not
be obligated to reissue such lost or stolen certificates for shares of Series
A Preferred Stock if the holder contemporaneously requests the Company
to convert such Series A Preferred Stock into Common Stock.
(i) Fractional Shares. The Company may, if it so elects, issue fractional
shares of Common Stock upon the conversion of shares of Series A
Preferred Stock. If the Company does not elect to issue fractional shares,
the Company shall pay to the holder of the shares of Series A Preferred
Stock which were converted a cash adjustment in respect of such fractional
shares in an amount equal to the same fraction of the market price per
share of the Common Stock (as determined in a reasonable manner
prescribed by the Board of Directors) as of the close of business on the
Conversion Date. The determination as to whether any fractional shares
are issuable shall be based upon the total number of shares of Series A
Preferred Stock being converted at any one time by any holder thereof,
not upon each share of Series A Preferred Stock being converted.
(j) Partial Conversion. In the event some but not all of the shares of
Series A Preferred Stock represented by a certificate or certificates
surrendered by a holder are converted, the Company shall execute and
deliver to or to the order of the holder, at the expense of the Company, a
new certificate representing the number of shares of Series A Preferred
Stock which were not converted.
(k) Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the
shares of the Series A Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient or as may be
available to effect the conversion of all outstanding shares of the Series A
Preferred Stock, and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of
all the then outstanding shares of the Series A Preferred Stock, the
Company shall use its best efforts to take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock
to such number of shares as shall be sufficient for such purpose.
6. No Reissuance of Series A Preferred Stock. Any share or shares of
Series A Preferred Stock acquired by the Company by reason of
redemption, purchase, conversion or otherwise shall be cancelled, shall
return to the status of authorized but unissued preferred stock of no
designated series, and shall not be reissuable by the Company as Series A
Perferred Stock.
7. Restrictions and Limitations.
(a) Corporate Securities Action. Except as expressly provided herein or
as required by law, so long as any shares of Series A Preferred Stock
remain outstanding, the Company shall not, and shall not permit any
subsidiary (which shall mean any corporation, association or other
business entity for which the Company and/or any of its other subsidiaries
directly or indirectly owns at the time more than fifty percent (50%) of
the outstanding voting shares, or more than 50% of the combined voting
power of the outstanding voting shares, of such corporation or trust),
without the approval by vote or written consent by the holders of at least a
majority of the then outstanding shares of Series A Preferred Stock, voting
as a separate class, to take any action, or fail to take any action, which
would adversely affect the rights of the holders of Series A Preferred
Stock.
(b) Amendments to Charter. Without limiting the generality of the
preceding paragraph, the Company shall not amend its articles of
incorporation without the approval by the holders of at least a majority of
the then outstanding shares of Series A Preferred Stock if such amendment
would:
(i) change the relative seniority rights of the holders of Series A Preferred
Stock as to the payment of dividends in relation to the holders of any
other capital stock of the Company, or create any other class or series of
capital stock entitled to seniority as to the payment of dividends in relation
to the holders of Series A Preferred Stock;
(ii) reduce the amount payable to the holders of Series A Preferred Stock
upon the voluntary or involuntary liquidation, dissolution or winding up of
the Company, or change the relative seniority of the liquidation
preferences of the holders of Series A Preferred Stock to the rights upon
liquidation of the holders of other capital stock of the Company, or change
the dividend rights of the holders of Series A Preferred Stock;
(iii) cancel or modify the conversion rights of the holders of Series A
Preferred Stock provided for in Section 5 herein;
(iv) cancel or modify the rights of the holders of the Series A Preferred
Stock provided for in this Section 7.
8. No Dilution or Impairment. The Company shall not, by amendment of
its articles of incorporation or through any 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 of the Series A Preferred Stock set forth
herein, but shall at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the holders of the Series A
Preferred Stock against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) shall not increase the par
value of any shares of stock receivable on the conversion of the Series A
Preferred Stock above the amount payable therefor on such conversion,
(b) shall take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully-paid and non-assessable
shares of stock on the conversion of all Series A Preferred
Stock from time to time outstanding, and (c) shall not consolidate with or
merge into any other person or permit any such person to consolidate with
or merge into the Company (if the Company is not the surviving person),
unless such other person shall expressly assume in writing and will be
bound by all of the terms of the Series A Preferred Stock set forth herein.
9. Notices of Record Date. In the event of:
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger of the
Company, or any transfer of all or substantially all of the assets of the
Company to any other corporation, or any other entity or person, or
(c) any voluntary or involuntary dissolution, liquidation or winding up of
the Company. Then and in each such event the Company shall mail or
cause to be mailed to each holder of Series A Preferred Stock a notice
specifying (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right and a description of such
dividend, distribution or right, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, merger,
dissolution, liquidation or winding up is expected to become effective and
(iii) the time, if any, that is to be fixed, as to when the holders of record
of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, merger, dissolution, liquidation or winding up.
Such notice shall be mailed at least ten (10) business days prior to the date
specified in such notice on which such action is to be taken.
Signed on __________________, 1998.
/s/ Xxxx Xxxx
______________________________________
Xxxx Xxxx, President
EXHIBIT 4.2
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES
MAY NOT BE OFFERED OR SOLD OR TRANSFERRED IN THE
UNITED STATES OR TO U.S. PERSONS IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT WHICH, EXCEPT IN THE CASE OF AN EXEMPTION
PURSUANT TO RULE 144 UNDER SAID ACT, IS CONFIRMED IN A
LEGAL OPINION SATISFACTORY TO THE COMPANY.
STOCK PURCHASE WARRANT
To Purchase _____ Shares of Common Stock of
nSTOR TECHNOLOGIES, INC.
THIS CERTIFIES that, for value received, _________ (the
"Investor"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time after the date hereof and on or prior to
April 15, 2001 (the "Termination Date") but not thereafter, to subscribe
for and purchase from nSTOR TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), ____________________ (_________) shares
of Common Stock (the "Warrant Shares"). The purchase price of one
share of Common Stock (the "Exercise Price") under this Warrant shall be
One Dollar and 50/100 ($1.50). The Exercise Price and the number of
shares for which the Warrant is exercisable shall be subject to adjustment
as provided herein. This Warrant is being issued in connection with the
8% Convertible Preferred Stock Series A Subscription Agreement dated
on or about April 14, 1998, in the amount of Three Million Five Hundred
Thousand ($3,500,000) Dollars (the "Agreement") between the Company
and Investor and certain other investors and is subject to its terms. In the
event of any conflict between the terms of this Warrant and the
Agreement, the Agreement shall control.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company
by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed
hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights represented
by this Warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
3. Exercise of Warrant. Exercise of the purchase rights represented by
this Warrant may be made at any time or times one day after the date
hereof, in whole or in part, before the close of business on the
Termination Date, or such earlier date on which this Warrant may
terminate as provided in paragraph 12 below, by the surrender of this
Warrant and the Notice of Exercise annexed hereto duly executed, at the
office of the Company located at 000 Xxxxxxx Xxxx., Xxxx Xxxx Xxxxx,
XX 00000 (or such other office or agency of the Company as it may
designate by notice in writing to the registered holder hereof at the address
of such holder appearing on the books of the Company) or its Transfer
Agent and upon payment of the Exercise Price of the shares thereby
purchased; whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares of Common Stock so
purchased. Certificates for shares purchased hereunder shall be delivered
by the Company, or the Company shall have instructed its Transfer Agent
to deliver to the holder hereof within five business days after the date on
which this Warrant shall have been exercised as aforesaid. Payment of
the Exercise Price of the shares may be by certified check or cashier's
check or by wire transfer to an account designated by the Company in an
amount equal to the Exercise Price multiplied by the number of shares
being purchased.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes
and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the holder of this Warrant or in such name or names
as may be directed by the holder of this Warrant; provided, however, that
in the event certificates for shares of Common Stock are to be issued in a
name other than the name of the holder of this Warrant, this Warrant
when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the holder hereof; and provided
further, that upon any transfer involved in the issuance or delivery of any
certificates for shares of Common Stock, the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. Restrictions on Transfer.
(a) This Warrant and any Warrant Shares may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except as follows: (i) to a
person who, in the opinion of counsel to the Company, is a person to
whom this Warrant or the Warrant Shares may legally be transferred
without registration and without the delivery of a current prospectus under
the Act with respect thereto, and then only against receipt of an agreement
of such person to comply with the provisions of this Section 6(a) with
respect to any resale or other disposition of such securities; or (ii) to any
person upon delivery of a prospectus then meeting the requirements of the
Act relating to such securities and the offering thereof for such sale or
disposition, and thereafter to all successive assignees.
(b) Unless the Warrant Shares have been registered under the Act, or
exempt from registration, upon exercise of any of the Warrant and the
issuance of any of the Warrant Shares, all certificates representing
Warrant Shares shall bear on the face thereof substantially the following
legend:
"THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES
MAY NOT BE OFFERED OR SOLD OR TRANSFERRED IN THE
UNITED STATES OR TO U.S. PERSONS IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT WHICH, EXCEPT IN THE CASE OF AN EXEMPTION
PURSUANT TO RULE 144 UNDER SAID ACT, IS CONFIRMED IN A
LEGAL OPINION SATISFACTORY TO THE COMPANY."
The holder of the Warrant agrees and acknowledges that the
Warrant is being purchased for the holder's own account, for investment
purposes only, and not for the account of any other person, and not with a
view to distribution, assignment, pledge or resale to others or to
fractionalization in whole or in part. The holder further represents,
warrants and agrees as follows: no other person has or will have a direct
or indirect beneficial interest in this Warrant and the holder will not sell,
hypothecate or otherwise transfer the Warrant except in accordance with
the Act thereunder and applicable state securities laws or unless, in the
opinion of counsel for the holder acceptable to the Company, an
exemption from the registration requirements of the Act and such laws is
available.
7. Closing of Books. The Company will at no time close its shareholder
books or records in any manner which interferes with the timely exercise
of this Warrant.
8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company prior to the exercise thereof. If, however, at
the time of the surrender of this Warrant and purchase the holder hereof
shall be entitled to exercise this Warrant, the shares so purchased shall be
and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall
have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be assigned
by the surrender of this Warrant and the Assignment Form annexed hereto
duly executed at the office of the Company (or such other office or agency
of the Company as it may designate by notice in writing to the registered
holder hereof at the address of such holder appearing on the books of the
Company); provided, however, that this Warrant may not be resold or
otherwise transferred except (i) in a transaction registered under the Act,
or (ii) in a transaction pursuant to an exemption, if available, from such
registration and whereby, if requested by the Company, an opinion of
counsel reasonably satisfactory to the Company is obtained by the holder
of this Warrant to the effect that the transaction is so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
represents and warrants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Warrant or stock certificate, and in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
12. Effect of Certain Events.
(a) If at any time the Company proposes to sell or otherwise convey all
or substantially all of its assets, a sale in which the consideration to be
received by the Company or its shareholders consists solely of cash, the
Company shall give the holder of this Warrant thirty (30) days' notice of
the proposed effective date of the transaction specifying that the Warrant
shall terminate if the Warrant has not been exercised by the effective date
of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or
its shareholders consists in part of consideration other than cash, the
holder of this Warrant shall have the right thereafter to purchase, by
exercise of this Warrant and payment of the aggregate Exercise Price in
effect immediately prior to such action, the kind and amount of shares and
other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this Warrant
been exercised immediately prior thereto.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock, the
number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the holder of this
Warrant shall be entitled to receive the kind and number of Warrant
Shares or other securities of the Company which he would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become
effective immediately after the effective date of such event retroactive to
the record date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
discretion, at any time during the term of this Warrant, reduce the then
current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
15. Notice of Adjustment. Whenever the number of Warrant shares or
number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein
provided, the Company shall promptly mail by registered or certified mail,
return receipt requested, to the holder of this Warrant notice of such
adjustment or adjustments setting forth the number of Warrant Shares (and
other securities or property) purchasable upon the exercise of this Warrant
and the Exercise Price of such Warrant Shares after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth computation by which such adjustment was made. Such
notice, in absence of manifest error, shall be conclusive evidence of the
correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant
shall constitute full authority to its officers who are charged with the duty
of executing stock certificates to execute and issue the necessary
certificates for shares of the Company's Common Stock upon the exercise
of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the American
Stock Exchange, Inc. or any domestic securities exchange upon which the
Common Stock may be listed.
17. Miscellaneous.
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall be
construed and shall be given effect in all respects as if it had been issued
and delivered by the Company on the date hereof. This Warrant shall be
binding upon any successors or assigns of the Company. This Warrant
shall constitute a contract under the laws and jurisdictions of Delaware and
for all purposes shall be construed in accordance with and governed by the
laws of said state without regard to its conflict of law, principles or rules.
(b) Restrictions. The holder hereof acknowledges that the Common
Stock acquired upon the exercise of this Warrant, if not registered, may
have restrictions upon its resale imposed by state and federal securities
laws.
(c) Modification and Waiver. This Warrant and any provisions hereof
may be changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of the same is
sought.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof of the Company
shall be delivered or shall be sent by certified or registered mail, postage
prepaid, to each such holder at its address as shown on the books of the
Company or to the Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
to be executed by its officers thereunto duly authorized.
Dated: April 14, 1998
nSTOR TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxx
Title: President
NOTICE OF EXERCISE
To: nSTOR TECHNOLOGIES, INC.
(1) The undersigned hereby elects to purchase _____
shares of Common Stock of nSTOR TECHNOLOGIES, INC. pursuant to
the terms of the attached Warrant, and tenders herewith payment of the
purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
(Name)
_______________________________
(Address)
_______________________________
Dated:
______________________________
Signature
NOTE: Signature must conform in all respects to holder's name as
specified on the face of the attached warrant.
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
_____________________________________________________________.
_____________________________________________________________
Dated: ______________, 1998
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank
or trust company. Officers of corporations and those acting in an
fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant.
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 14th day of
April, 1998, between the entities listed on Schedules A and B (the "A
Subscribers" and "B Subscribers" or collectively, the "Holders"), issued
pursuant to the 8% Convertible Preferred Stock Series A Subscription
Agreement of even date herewith (the "Subscription Agreement"), and
nSTOR TECHNOLOGIES, INC., a Delaware corporation having its
principal place of business at 000 Xxxxxxx Xxxx., Xxxx Xxxx Xxxxx, XX
00000 (the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are purchasing from the Company, pursuant to
the Subscription Agreement an aggregate of Three Thousand Five
Hundred (3,500) shares of Preferred Stock, and a Warrant to purchase an
aggregate of Two Hundred Thousand (200,000) shares of Common Stock.
The Common Stock of the Company underlying the Preferred Stock is
referred to as the "Conversion Shares", and the Common Stock of the
Company underlying the Warrants is referred to as the "Warrant Shares"
(capitalized terms defined in the Subscription Agreement and not otherwise
defined herein have the meanings specified in the Subscription
Agreement); and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term Registrable
Securities means the Conversion Shares, and the Warrant Shares;
provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of
the date of determination, (i) it has been effectively registered under the
Securities Act of 1933, as amended (the Securities Act) and disposed of
pursuant thereto, (ii) registration under the Securities Act is no longer
required for the immediate public distribution of such security as a result
of the provisions of Rule 144, or (iii) it has ceased to be outstanding. In
the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such
adjustment shall be made in the definition of Registrable Security as is
appropriate in order to prevent any dilution or enlargement of the rights
granted pursuant to this Section 1.
Section 2. Restrictions on Transfer. The Holders acknowledge and
understand that prior to the registration of the Securities as provided
herein, the Securities are "restricted securities" as defined in Rule 144
promulgated under the Securities Act. The Holders understand that no
disposition or transfer of the Securities may be made by Holder in the
absence of (i) an opinion of counsel reasonably satisfactory to the
Company that such transfer may be made or (ii) a registration statement
under the Securities Act is then in effect with respect thereto.
Section 3. Registration Rights.
The Company agrees that it will prepare and file with the Securities and
Exchange Commission ("SEC"), within thirty (30) days after the Closing
Date, a registration statement which shall include any and all amendments
thereto (the "Registration Statement"), or in the event more than one
Registration Statement is required to be filed to include such items as
newly authorized shares, such further Registration Statement shall be filed
thirty (30) days after the issuance of such newly authorized shares or other
event, as the case may be. In the event that such Registration Statement is
not effective in ninety (90) days, then Section 3(e) liquidated damages
shall apply, at the sole expense of the Company (except as provided in
Section 3(c) hereof), in respect of all holders of Registrable Securities, so
as to permit resale of the Registrable Securities under the Securities Act,
provided, the Company shall not be obligated to take any action to effect
any such registration, qualification or compliance pursuant to this Section
3(a) in any jurisdiction in which the Company would be required to
qualify as a dealer in securities, under the securities or blue sky laws of
such jurisdiction.
The Company agrees that it will cause the Registration Statement to
become effective within ninety (90) days after the Closing Date. The
number of Registrable Securities to be registered shall be two hundred
(200%) percent of the number of shares that would be required if all of
the Registrable Securities were converted in accordance with the
Certificate of Designation, on a date which is five (5) business days prior
to the filing of the Registration Statement.
(b) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 hereof current under
the Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the
date that the Registrable Securities may be sold under the provisions of
Rule 144 or (iii) three (3) years after the effective date of the Registration
Statement.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of
the Registration Statement under Section 3(a) and in complying with
applicable securities and Blue Sky laws (including, without limitation, all
attorneys' fees) shall be borne by the Company. The Holders shall bear
the cost of underwriting discounts and commissions, if any, applicable to
the Registrable Securities being registered and all of other the fees and
expenses of such registration, including of its counsel and such other
expenses as are necessary to qualify the sale of Securities in compliance
with any state Blue Sky laws. The Company shall use its best efforts to
qualify any of the securities for sale in such states as such Holders
reasonably designate and shall furnish indemnification in the manner
provided in Section 9 hereof. However, the Company shall not be
required to qualify in any state which will require an escrow or other
restriction relating to the Company and/or the sellers. The Company at its
expense will supply the Holders with copies of such Registration Statement
and the prospectus or offering circular included therein and other related
documents in such quantities as may be reasonably requested by the
Holders.
(d) The Company shall not be required by this Section 3 to include
Holder's Registrable Securities in the Amended Registration Statement
which is to be filed if, in the opinion of counsel for both the Holders and
the Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for the Holder
and the Company) the proposed offering or other transfer as to which such
registration is requested is exempt from applicable federal and state
securities laws and would result in all purchasers or transferees obtaining
securities which are not restricted securities, as defined in Rule 144 under
the Securities Act.
(e) In the event the Registration Statement to be filed by the Company
pursuant to Section 3(a) above is not filed by the Company by the thirtieth
(30th) day after the Closing Date, or if the Registration Statement is not
declared effective by the SEC by the ninetieth (90th) day after the Closing
Date (the Effective Date), then the Company will pay, in cash, to the
Holders on a pro-rata basis by wire transfer, as liquidated damages for
such failure and not as a penalty, two (2%) percent of the principal
amount of the Securities each month thereafter until the Registration
Statement has been filed and/or declared effective. The liquidated
damages shall be payable within seven (7) calendar days of written
demand by the Holder.
If the Company does not remit the damages to the Holder as set
forth above, the Company will pay the to the Holders the reasonable costs
of collection, including attorneys fees, in addition to the liquidated
damages. Such payment shall be made to the Holders in cash immediately
if the registration of the Securities are not effected; provided, however,
that the payment of such liquidated damages shall not relieve the Company
from its obligations to register the Securities pursuant to this Section. The
registration of the Securities pursuant to this provision shall not affect or
limit Holder's other rights or remedies as set forth in this Agreement.
(f) No provision contained herein shall preclude the Company from
selling securities pursuant to any registration statement in which it is
required to include Registrable Securities pursuant to this Section 3.
Section 4. Cooperation with Company. Holders will cooperate with the
Company in all respects in connection with this Agreement, including,
timely supplying all information reasonably requested by the Company and
executing and returning all documents reasonably requested in connection
with the registration and sale of the Registrable Securities.
Section 5. Registration Procedures. Whenever the Company is required
by the provisions of this Agreement to effect the registration of any of the
Registrable Securities under the Securities Act, the Company shall (except
as otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the Prospectus used in
connection therewith as may be necessary to keep such registration
statement effective as per Section 3(b) herein and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such registration statement when
the Holder or Holders of such securities shall desire to sell or otherwise
dispose of the same (including prospectus supplements with respect to the
sales of securities from time to time in connection with a registration
statement pursuant to Rule 415 under the Securities Act);
(b) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Holder may reasonably request in order to facilitate the public sale or
other disposition of the securities owned by such Holder;
(c) use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or blue sky laws of
such jurisdictions as the Holder, shall reasonably request, and do any and
all other acts and things which may be necessary or advisable to enable
each Holder to consummate the public sale or other disposition in such
jurisdiction of the securities owned by such Holder, except that the
Company shall not for any such purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified or to file therein any general consent to service of process;
(d) list such securities on the American Stock Exchange, Inc. or any
securities exchange on which any securities of the Company is then listed,
if the listing of such securities is then permitted under the rules of such
exchange;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and
customary form, with the managing underwriter or underwriters of such
underwritten offering;
(f) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under
the Securities Act, of the happening of any event of which it has
knowledge as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light
of the circumstances then existing.
Section 6. Assignment. The rights granted the Holders under this
Agreement shall not be assigned without the written consent of the
Company, which consent shall not be unnecessarily withheld. In the event
of a transfer of the rights granted under this Agreement, the Holders agree
that the Company may require that the transferee comply with reasonable
conditions as determined in the discretion of the Company. This
Agreement is binding upon and inures to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns.
Section 7. Termination of Registration Rights. The rights granted
pursuant to this Agreement shall terminate as to each Holder (and
permitted transferees or assignees ) upon the occurrence of any of the
following:
(a) all of that particular Holder's securities subject to this Agreement
have been registered;
(b) such Holder's securities subject to this Agreement may be sold
without such registration pursuant to Rule 144 promulgated by the SEC
pursuant to the Securities Act;
(c) such Holder's securities subject to this Agreement can be sold
pursuant to Rule 144(k).
Section 8. Indemnification.
(a) The Company and all key operating subsidiaries agree to indemnify
and hold harmless the Holders and each person, if any, who controls each
Holder within the meaning of the Securities Act (Distributing Holders)
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to,
all costs of defense and investigation and all attorneys' fees), to which the
Distributing Holders may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, or any related preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that neither the
Company nor all key operating subsidiaries will be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, preliminary
prospectus, final prospectus, offering circular, notification or amendment,
or supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by the Distributing Holders,
specifically for use in the preparation thereof. This Section shall not inure
to the benefit of any Distributing Holder with respect to any person
asserting such loss, claim, damage or liability who purchased the
Registrable Securities which are the subject thereof if the Distributing
Holder failed to send or give (in violation of the Securities Act or the
rules and regulations promulgated thereunder) a copy of the prospectus
contained in the Amended Registration Statement to such person at or
prior to the written confirmation to such person of the sale of such
Registrable Securities, where the Distributing Holder was obligated to do
so under the Securities Act or the rules and regulations promulgated
hereunder. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and hold
harmless the Company and all key operating subsidiaries, and each
officer, director of the Company or person, if any, who controls the
Company and all key operating subsidiaries within the meaning of the
Securities Act, against any losses, claims, damages or liabilities (which
shall, for all purposes of this Agreement, include, but not be limited to,
all costs of defense and investigation and all attorneys' fees) to which the
Company and all key operating subsidiaries or any such officer, director
or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses claims, damages or liabilities (or actions
in respect thereof); arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Amended
Registration Statement prepared by the Company and all key operating
subsidiaries, or any related preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the
extent that such untrue statement or alleged untrue statement or omission
or alleged omission was made in such Registration Statement, preliminary
prospectus, final prospectus, offering circular, notification or amendment
or supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company and all key operating subsidiaries
by such Distributing Holder, specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any liability
which the distributing Holders may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than as to the particular item as to which
indemnification is then being sought solely pursuant to this Section. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified,
assume the defense thereof, subject to the provisions herein stated and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action to
its final conclusion. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed
the defense of the action with counsel reasonably satisfactory to the
indemnified party; provided that if the indemnified party is the
Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel
has been specifically authorized in writing by the indemnifying party, or
(ii) the named parties to any such action (including any impleaded parties)
include both the Distributing Holder and the indemnifying party and the
Distributing Holder shall have been advised by such counsel that there
may be one or more legal defenses available to the indemnifying party
different from or in conflict with any legal defenses which may be
available to the Distributing Holder (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of
the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable only
for the reasonable fees and expenses of one separate firm of attorneys for
the Distributing Holder, which firm shall be designated in writing by the
Distributing Holder). No settlement of any action against an indemnified
party shall be made without the prior written consent of the indemnified
party, which consent shall not be unreasonably withheld.
Section 9. Contribution. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the
Distributing Holder, or the Company or all key operating subsidiaries,
makes a claim for indemnification, but is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of
appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of this Agreement
provide for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any Distributing Holder, or
the Company or all key operating subsidiaries, then the Company and all
key operating subsidiaries and the applicable Distributing Holder shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and all key operating
subsidiaries on the one hand or the applicable Distributing Holder, on the
other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and all key operating subsidiaries and the
Distributing Holder agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this Section shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
Section 10. "Piggy-Back" Registration. The Holders of this Registration
Rights Agreement shall have the right to include all of the shares of
Common Stock underlying this Warrant (the "Registrable Securities") as
part of any registration of securities filed by the Company (other than in
connection with a transaction contemplated by Rule 145(a) promulgated
under the Act or pursuant to Form S-8) and must be notified in writing of
such filing; provided, however, that the holder of this Warrant agrees it
shall not have any piggy-back registration rights pursuant to this
Agreement if the shares of Common Stock underlying this Warrant may
be sold in the United States pursuant to the provisions of Rule 144.
Holder shall have five (5) business days to notify the Company in writing
as to whether the Company is to include Holder or not include Holder as
part of the registration; provided, however, that if any registration
pursuant to this Section shall be underwritten, in whole or in part, the
Company may require that the Registrable Securities requested for
inclusion pursuant to this Section be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through
the underwriters. If in the good faith judgment of the underwriter
evidenced in writing of such offering only a limited number of Registrable
Securities should be included in such offering, or no such shares should be
included, the Holder, and all other selling stockholders, shall be limited to
registering such proportion of their respective shares as shall equal the
proportion that the number of shares of selling stockholders permitted to
be registered by the underwriter in such offering bears to the total number
of all shares then held by all selling stockholders desiring to participate in
such offering. Those Registrable Securities which are excluded from an
underwritten offering pursuant to the foregoing provisions of this Section
(and all other Registrable Securities held by the selling stockholders) shall
be withheld from the market by the Holders thereof for a period, not to
exceed one hundred eighty (180) days, which the underwriter may
reasonably determine is necessary in order to effect such underwritten
offering. The Company shall have the right to terminate or withdraw any
registration initiated by it under this Agreement prior to the effectiveness
of such registration whether or not any Warrant holder elected to include
securities in such registration. All registration expenses incurred by the
Company in complying with this Agreement shall be paid by the
Company, exclusive of underwriting discounts, commissions and legal fees
and expenses for counsel to the holders of the Warrants.
Section 11. Notices. Any notice pursuant to this Agreement by the
Company or by the Holder shall be in writing and shall be deemed to have
been duly given if delivered by (i) hand, (ii) by facsimile and followed by
mail delivery or (iii) if mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Holders, to its, his or her address set forth on Schedule A
attached to this Agreement.
(b) If to the Company, at the address set forth herein, or to such other
address as any such party may designate by notice to the other party.
Notices shall be deemed given at the time they are delivered personally or
five (5) days after they are mailed in the manner set forth above. If notice
is delivered by facsimile to the Company and followed by mail, delivery
shall be deemed given two (2) days after such facsimile is sent.
Section 12. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13. Headings. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14. Governing Law, Venue. This Agreement will be construed
and enforced in accordance with and governed by the laws of the State of
Delaware, except for matters arising under the Securities Act, without
reference to principles of conflicts of law. Each of the parties consents to
the jurisdiction of the federal courts whose districts encompass any part of
the State of Delaware or the state courts of the State of Delaware in
connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions. Each party hereby agrees that if another
party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any state or country having jurisdiction
over the party against whom such judgment was obtained, and each party
hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement
irrevocably consents to the service of process in any such proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to such party at its address set forth herein. Nothing herein shall
affect the right of any party to serve process in any other manner
permitted by law.
Section 14. Severability/Defined Terms. If any provision of this
Agreement shall for any reason be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof
and this Agreement shall be construed as if such invalid or unenforceable
provision had never been contained herein. Terms not otherwise defined
herein shall be defined in accordance with the 8% Convertible Preferred
Stock Series A Subscription Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, on the day and year first above written.
nSTOR TECHNOLOGIES, INC.
Attest:
/s/ Xxxxxx X. Xxxxx /s/ Xxxx Xxxx
By:______________________ By:_________________________
Name:Xxxxxx X. Xxxxx Name: Xxxx Xxxx
Title: Secretary Title: President
CPR (USA) INC.
/s/ Xxxxxx X. Xxxxxx
By_____________________________
"A" Subscriber
LIBERTYVIEW FUND, LLC
/s/ Xxxxxx X. Xxxxxx
By_____________________________
"A" Subscriber
LIBERTYVIEW PLUS FUND
/s/ Xxxxxx X. Xxxxxx
By_____________________________
"A" Subscriber
/s/ H. Xxxxx Xxxx
_____________________________
H. XXXXX XXXX, "B" Subscriber
EXHIBIT 4.4
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES
MAY NOT BE OFFERED OR SOLD OR TRANSFERRED IN THE
UNITED STATES OR TO U.S. PERSONS IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT WHICH, EXCEPT IN THE CASE OF AN EXEMPTION
PURSUANT TO RULE 144 UNDER SAID ACT, IS CONFIRMED IN A
LEGAL OPINION SATISFACTORY TO THE COMPANY.
STOCK PURCHASE WARRANT
To Purchase 80,000 Shares of Common Stock of
nSTOR TECHNOLOGIES, INC.
THIS CERTIFIES that, for value received, H. XXXXX XXXX (the
"Investor"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time after the date hereof and on or prior to
April 14, 2001 (the "Termination Date") but not thereafter, to subscribe
for and purchase from nSTOR TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), Eighty Thousand (80,000) shares of
Common Stock (the "Warrant Shares"). The purchase price of one share
of Common Stock (the "Exercise Price") under this Warrant shall be One
Dollar and 50/100 ($1.50). The Exercise Price and the number of shares
for which the Warrant is exercisable shall be subject to adjustment as
provided herein. This Warrant is being issued in connection with the 8%
Convertible Preferred Stock Series A Subscription Agreement dated on or
about April 14, 1998, in the amount of Three Million Five Hundred
Thousand ($3,500,000) Dollars (the "Agreement") between the Company
and Investor and certain other investors and is subject to its terms. In the
event of any conflict between the terms of this Warrant and the
Agreement, the Agreement shall control.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company
by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed
hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights represented
by this Warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
3. Exercise of Warrant. Exercise of the purchase rights represented
by this Warrant may be made at any time or times one day after the date
hereof, in whole or in part, before the close of business on the
Termination Date, or such earlier date on which this Warrant may
terminate as provided in paragraph 12 below, by the surrender of this
Warrant and the Notice of Exercise annexed hereto duly executed, at the
office of the Company located at 000 Xxxxxxx Xxxx., Xxxx Xxxx Xxxxx,
XX 00000 (or such other office or agency of the Company as it may
designate by notice in writing to the registered holder hereof at the address
of such holder appearing on the books of the Company) or its Transfer
Agent and upon payment of the Exercise Price of the shares thereby
purchased; whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares of Common Stock so
purchased. Certificates for shares purchased hereunder shall be delivered
by the Company, or the Company shall have instructed its Transfer Agent
to deliver to the holder hereof within five business days after the date on
which this Warrant shall have been exercised as aforesaid. Payment of
the Exercise Price of the shares may be by certified check or cashier's
check or by wire transfer to an account designated by the Company in an
amount equal to the Exercise Price multiplied by the number of shares
being purchased.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes
and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the holder of this Warrant or in such name or names
as may be directed by the holder of this Warrant; provided, however, that
in the event certificates for shares of Common Stock are to be issued in a
name other than the name of the holder of this Warrant, this Warrant
when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the holder hereof; and provided
further, that upon any transfer involved in the issuance or delivery of any
certificates for shares of Common Stock, the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
Restrictions on Transfer.
(a) This Warrant and any Warrant Shares may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except as follows: (i) to a
person who, in the opinion of counsel to the Company, is a person to
whom this Warrant or the Warrant Shares may legally be transferred
without registration and without the delivery of a current prospectus under
the Act with respect thereto, and then only against receipt of an agreement
of such person to comply with the provisions of this Section 6(a) with
respect to any resale or other disposition of such securities; or (ii) to any
person upon delivery of a prospectus then meeting the requirements of the
Act relating to such securities and the offering thereof for such sale or
disposition, and thereafter to all successive assignees.
(b) Unless the Warrant Shares have been registered under the Act, or
exempt from registration, upon exercise of any of the Warrant and the
issuance of any of the Warrant Shares, all certificates representing
Warrant Shares shall bear on the face thereof substantially the following
legend:
"THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES
MAY NOT BE OFFERED OR SOLD OR TRANSFERRED IN THE
UNITED STATES OR TO U.S. PERSONS IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT WHICH, EXCEPT IN THE CASE OF AN EXEMPTION
PURSUANT TO RULE 144 UNDER SAID ACT, IS CONFIRMED IN A
LEGAL OPINION SATISFACTORY TO THE COMPANY."
The holder of the Warrant agrees and acknowledges that the Warrant is
being purchased for the holder's own account, for investment purposes
only, and not for the account of any other person, and not with a view to
distribution, assignment, pledge or resale to others or to fractionalization
in whole or in part. The holder further represents, warrants and agrees as
follows: no other person has or will have a direct or indirect beneficial
interest in this Warrant and the holder will not sell, hypothecate or
otherwise transfer the Warrant except in accordance with the Act
thereunder and applicable state securities laws or unless, in the opinion of
counsel for the holder acceptable to the Company, an exemption from the
registration requirements of the Act and such laws is available.
7. Closing of Books. The Company will at no time close its
shareholder books or records in any manner which interferes with the
timely exercise of this Warrant.
8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company prior to the exercise thereof. If, however, at
the time of the surrender of this Warrant and purchase the holder hereof
shall be entitled to exercise this Warrant, the shares so purchased shall be
and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall
have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be
assigned by the surrender of this Warrant and the Assignment Form
annexed hereto duly executed at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing
to the registered holder hereof at the address of such holder appearing on
the books of the Company); provided, however, that this Warrant may not
be resold or otherwise transferred except (i) in a transaction registered
under the Act, or (ii) in a transaction pursuant to an exemption, if
available, from such registration and whereby, if requested by the
Company, an opinion of counsel reasonably satisfactory to the Company is
obtained by the holder of this Warrant to the effect that the transaction is
so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
represents and warrants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Warrant or stock certificate, and in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
12. Effect of Certain Events.
(a) If at any time the Company proposes to sell or otherwise convey
all or substantially all of its assets, a sale in which the consideration to be
received by the Company or its shareholders consists solely of cash, the
Company shall give the holder of this Warrant thirty (30) days' notice of
the proposed effective date of the transaction specifying that the Warrant
shall terminate if the Warrant has not been exercised by the effective date
of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or
its shareholders consists in part of consideration other than cash, the
holder of this Warrant shall have the right thereafter to purchase, by
exercise of this Warrant and payment of the aggregate Exercise Price in
effect immediately prior to such action, the kind and amount of shares and
other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this Warrant
been exercised immediately prior thereto.
13. Adjustments of Exercise Price and Number of Warrant Shares.
The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock, the
number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the holder of this
Warrant shall be entitled to receive the kind and number of Warrant
Shares or other securities of the Company which he would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become
effective immediately after the effective date of such event retroactive to
the record date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
discretion, at any time during the term of this Warrant, reduce the then
current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
15. Notice of Adjustment. Whenever the number of Warrant shares or
number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein
provided, the Company shall promptly mail by registered or certified mail,
return receipt requested, to the holder of this Warrant notice of such
adjustment or adjustments setting forth the number of Warrant Shares (and
other securities or property) purchasable upon the exercise of this Warrant
and the Exercise Price of such Warrant Shares after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth computation by which such adjustment was made. Such
notice, in absence of manifest error, shall be conclusive evidence of the
correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant
shall constitute full authority to its officers who are charged with the duty
of executing stock certificates to execute and issue the necessary
certificates for shares of the Company's Common Stock upon the exercise
of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the American
Stock Exchange, Inc. or any domestic securities exchange upon which the
Common Stock may be listed.
17. Miscellaneous.
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall be
construed and shall be given effect in all respects as if it had been issued
and delivered by the Company on the date hereof. This Warrant shall be
binding upon any successors or assigns of the Company. This Warrant
shall constitute a contract under the laws and jurisdictions of Delaware and
for all purposes shall be construed in accordance with and governed by the
laws of said state without regard to its conflict of law, principles or rules.
(b) Restrictions. The holder hereof acknowledges that the Common
Stock acquired upon the exercise of this Warrant, if not registered, may
have restrictions upon its resale imposed by state and federal securities
laws.
(c) Modification and Waiver. This Warrant and any provisions hereof
may be changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of the same is
sought.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof of the Company
shall be delivered or shall be sent by certified or registered mail, postage
prepaid, to each such holder at its address as shown on the books of the
Company or to the Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: April 14, 1998
nSTOR TECHNOLOGIES, NC.
By: /s/ Xxxx X. Xxxx
President
Title:_________________
NOTICE OF EXERCISE
To: nSTOR TECHNOLOGIES, INC.
(1) The undersigned hereby elects to purchase __________
shares of Common Stock of nSTOR TECHNOLOGIES, INC. pursuant to the
terms of the attached Warrant, and tenders herewith payment of the purchase
price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
(Name)
_______________________________
(Address)
_______________________________
Dated:
______________________________
Signature
NOTE: Signature must conform in all respects to holder's name as specified
on the face of the attached warrant.
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to ____________________________
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, 1998
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank
or trust company. Officers of corporations and those acting in an fiduciary
or other representative capacity should file proper evidence of authority to
assign the foregoing Warrant.
