SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT, (this "Agreement") is entered into as of
April ___, 2001 between nSTOR TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), and WRS ADVISORS III, LLC (the "Investor").
RECITALS
The Investor desires, upon the terms and conditions set forth in this
Agreement, to purchase shares of the Company's Series I Preferred Stock, $.01
par value per share (the "Preferred Stock"), which is convertible into shares of
the Company's common stock, $.05 par value per share (the "Common Stock"), and
has such other powers, preferences and rights set forth in the Certificate of
Designation attached hereto as Exhibit A,. The Shares of Preferred Stock
purchased by the Investor hereunder are sometimes referred to as the "Preferred
Shares". The shares of Common Stock issuable upon conversion of the Preferred
Shares or otherwise pursuant to the Certificate of Designation are sometimes
referred to as the "Common Shares". The Preferred Shares and the Common Shares
are sometimes collectively referred to as the "Securities".
TERMS OF AGREEMENT
In consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Investor hereby agree as
follows:
1. Sale and Purchase of Shares.
(1) Subject to the prior approval of the Company's Board of Directors, the
Company agrees to issue to the Investor, and the Investor agrees to purchase
from the Company, on the terms and conditions set forth in this Subscription
Agreement (the "Agreement"), 250 Preferred Shares.
(2) The Company shall issue the Preferred Shares in consideration of, and
against payment by, the Investor of Two Hundred Fifty Thousand Dollars
($250,000.00).
(3) The closing shall take place at such time and place as shall be
mutually agreed to by the parties.
2. Certain Representations of the Investor.
The Investor hereby represents and warrants to the Company, its
officers and directors, as follows:
(1) The Investor is a Delaware limited liability company.
-
(2) The Investor has carefully read and understands this Agreement and has
consulted its own attorney or accountant with respect to the investment
contemplated hereby and its suitability for the Investor.
(3) The Company has made available to the Investor, or its designated
representatives, during the course of this transaction and prior to the purchase
of any of the securities referred to herein, the opportunity to ask questions of
and receive answers from the officers and directors of the Company concerning
the terms and conditions of the offering or otherwise relating to the financial
data and business of the Company, to the extent that the Company or its officers
and directors possess such information or can acquire it without unreasonable
effort or expense. The Company has also made available to the Investor for
inspection, documents, records, books and other written information about the
Company, its business and this investment at the office of the Company at 000
Xxxxxxx Xxxx., Xxxx Xxxx Xxxxx, XX 00000.
(4) The Investor understands and represents that: (i) the Investor must
bear the economic risk of this investment for an indefinite period of time
because the Securities have not been registered under the Securities Act of
1933, as amended (the "1933 Act"), or under any state securities laws and,
therefore, cannot be resold unless they are subsequently registered under the
1933 Act and the pertinent state securities laws or unless an exemption from
such registration is available; (ii) the Investor is purchasing the Securities
for investment for its own account and not for the account of any other person,
and not with any present view toward resale or other "distribution" thereof
within the meaning of the 1933 Act; and (iii) the Investor agrees not to resell
or otherwise dispose of all or any part of the Securities, except as permitted
by law, including, without limitation, any and all applicable provisions of this
Agreement and any regulations under the 0000 Xxx.
(5) The Investor has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Securities. The Investor represents, warrants and covenants
that he is an "Accredited Investor" within the meaning of Rule 501 of the 1933
Act. In particular, the Investor qualifies as such pursuant to Subsections
(a)(2) or (8) of Rule 501, which provides that an Accredited Investor shall
include:
(a) any ... (limited liability company), not formed for the
specific purpose of acquiring the securities offered, with
total assets in excess of $5,000,000; or
(b) any entity in which all of the equity owners are
accredited investors.
(6) The Investor is aware that an investment in the Securities is highly
speculative and subject to substantial risks. The Investor is capable of bearing
the high degree of economic risk and burdens of this investment, including the
possibility of a complete loss of its investment and the lack of a public market
and limited transferability of the Preferred Shares, which may make the
liquidation of this investment impossible for an indefinite period of time. The
financial condition of the Investor is such that he is under no present or
contemplated future need to dispose of any of the Securities to satisfy any
existing or contemplated undertaking, need or indebtedness.
(7) All of the information that either Investor has set forth or
represented in this Agreement, with respect to its financial position and
business and investment experience is correct and complete as of the date of
this Agreement and, if there should be any material change in such information
prior to the purchase of Preferred Shares, the Investor will immediately furnish
the revised or corrected information to the Company.
(8) The Investor agrees that he shall be bound by all of the terms,
conditions, duties and obligations of this Agreement insofar as such matters
affect the Company and/or the Investor.
3. Restricted Stock and Legend.
(1) The Investor acknowledges that the Preferred Shares offered hereunder
are being offered pursuant to a private placement exemption under the 1933 Act,
and that the Preferred Shares are deemed "restricted securities" as defined in
the 1933 Act. Until the Preferred Shares offered hereunder or the Common Shares
issuable upon the conversion, as the case may be, become registered with the
Securities and Exchange Commission, each certificate representing any such
security shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER ANY STATE SECURITIES LAWS, AND THE COMPANY HAS
RELIED UPON AN EXEMPTION TO THE REGISTRATION REQUIREMENT UNDER
THE ACT FOR THE SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE TO ITS HOLDER. THEREFORE, THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE RESTRICTED SECURITIES AND MAY NOT BE SOLD
OR TRANSFERRED TO ANY THIRD PARTY WITHOUT EITHER BEING REGISTERED
UNDER THE ACT OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT.
(2) Prior to any transfer or attempted transfer of any of the Preferred
Shares issued hereunder or the Common Shares issuable upon the conversion
thereof, as the case may be, or any interest therein, the Investor shall give
the Company written notice of its intention to make such transfer, describing
the manner of the intended transfer and the proposed transferee. Promptly after
receiving such written notice, the Company shall present copies thereof to
counsel for the Company and to any special counsel designated by such Investor
or by such holder. If in the opinion of each of such counsel the proposed
transfer may be effected without registration of the Securities under the
applicable federal or state securities laws, as promptly as practicable, the
Company shall notify the Investor of such opinions, whereupon the Securities
proposed to be transferred shall be transferred in accordance with the terms of
said notice. The Company shall not be required to effect any such transfer prior
to the receipt of such favorable opinion(s); provided, however, the Company may
waive the requirement that Investor obtain an opinion of counsel, in its sole
and absolute discretion. As a condition to such favorable opinion, counsel for
the Company may require an investment letter to be executed by the proposed
transferee.
4. No Assignment.
This Agreement is neither transferable nor assignable by the
Investor without the prior written consent of the Company.
5. General.
(1) This Agreement shall be binding upon the Investor and the Company and
their respective representatives, successors, and permitted assigns;
(2) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Florida applicable to the agreements
made and to be performed entirely within such state, without giving effect to
rules governing the conflict of laws. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
(3) All covenants, agreements, representations and warranties made herein
or otherwise made in writing by any party pursuant hereto shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(4) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
(5) Notices required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently given when personally delivered or when
sent by registered mail, return receipt requested, addressed if to the Company,
at nStor Technologies, Inc., 000 Xxxxxxx Xxxx., Xxxx Xxxx Xxxxx, XX 00000, Attn:
Xxxx Xxxxxx, and if to the Investor, at the address set forth under its name
below, or at such other address as each such party furnishes by notice given in
accordance with this Section 5(e), and shall be effective, when personally
delivered, upon receipt, and when so sent by certified mail, four business days
after deposit with the United States Postal Service.
(6) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(7) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
(8) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(9) The headings in the Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first written above.
nSTOR TECHNOLOGIES, INC. WRS ADVISORS III, LLC
a Delaware corporation a Delaware limited liability company
By: /s/ Xxxx Xxxxxx By: /s/ Willliam L Xxxx
_____________________ ______________________
Xxxx Xxxxxx Name Xxxxxxx X. Xxxx
Vice President Title:___________________
Address:_________________
Telephone:_______________
Facsimile:_______________
EXHIBIT A
Form of Certificate of Designation
