Exhibit 99.7
SUBSCRIPTION AGENT AGREEMENT
THIS AGREEMENT is entered into as of __________ __, 2003 between SmartDisk
Corporation, a Delaware corporation (the "Company"), and American Stock Transfer
& Trust Company (the "Subscription Agent").
RECITALS
WHEREAS, the Company intends to distribute to each stockholder that owns
shares of the Company's common stock, par value $.001 per share (the "Common
Shares") at the close of business on __________ __, 2003, rights to purchase one
Common Share for each Right held, plus additional Common Shares pursuant to the
"Over-Subscription Privilege" as defined below (the "Rights Offering"); and
WHEREAS, the Company desires the Subscription Agent to act on the
Company's behalf, and the Subscription Agent is willing so to act, in connection
with the issuance and distribution of the Rights, collection of funds from
Rights holders exercising Rights, and issuance and delivery of Common Shares
upon the exercise of the Rights.
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
(a) "Basic Subscription Privilege" means the right of Eligible
Rights Holders to subscribe for and purchase Common Shares through the exercise
of Rights at the rate of one Common Share for each Right held.
(b) "Eligible Rights Holders" means all Company stockholders that
own Common Shares at the close of business on __________ __, 2003.
(c) "Expiration Time" means 5:00 p.m., Eastern Standard Time on
________ __, 2003 or on such other date as the Company may determine.
(d) "Offering Period" means the period commencing on __________
__, 2003 and ending at the Expiration Time.
(e) "Over-Subscription Privilege" means the right to subscribe for
and purchase additional Common Shares not purchased by other stockholders,
provided that an Eligible Rights Holder may exercise the Over-Subscription
Privilege only if the Eligible Rights Holder exercises the Basic Subscription
Privilege in full.
(f) "Prospectus" means the Company's prospectus dated __________
__, 2003 pertaining to the Rights Offering, as the same may from time to time be
supplemented or amended.
(g) "Rights" means the subscription rights distributed by the
Company in an amount equal to 1.25 Rights for each Common Share owned, each of
which entitles Eligible Rights Holders to subscribe for and purchase one Common
Share for each Right held, at a Subscription Price of $0.32 per share.
(h) "Subscription Certificate" means the certificate evidencing
the Rights.
(i) "Subscription Price" means $0.32 per share, payable in cash or
by delivery of shares of the Company's Series A Redeemable Convertible Preferred
Stock, which shall be valued at $1.00 per share.
2. FORM OF SUBSCRIPTION CERTIFICATES. The Subscription Certificates
shall be substantially in the form attached as Exhibit A hereto. Each
Subscription Certificate shall be signed by duly authorized officers of the
Company, dated the date of issue (whether upon original issuance or in lieu of
transferred, exchanged, mutilated, destroyed, lost, or stolen Subscription
Certificates) and countersigned by the Subscription Agent. All signatures may be
facsimile signatures.
3. ISSUANCE OF SUBSCRIPTION CERTIFICATES. The Subscription Agent shall
issue and deliver (by first class United States mail, postage prepaid) to each
Eligible Rights Holder a Subscription Certificate evidencing such holder's
Rights. Each Eligible Rights Holder shall receive 1.25 Rights for each Common
Share held. The Subscription Agent shall not issue fractional Rights. Instead,
the number of Rights issued shall be aggregated based on the number of Common
Shares held by each stockholder on the record date and rounded down to the
nearest whole number. No Subscription Certificates shall be issued before or
after the Offering Period. All Subscription Certificates surrendered to the
Subscription Agent upon exercise shall be canceled by the Subscription Agent and
thereafter shall be retained by the Subscription Agent for a period of not less
than six years. Upon expiration of the retention period, the canceled
Subscription Certificates shall be destroyed by the Subscription Agent, as
directed by the Company.
4. DELIVERY OF PROSPECTUS AND OTHER DOCUMENTS. The Subscription Agent
shall deliver to each Eligible Rights Holder, along with originally issued
Subscription Certificates (i) a letter from the President and Chief Executive
Officer of the Company to all Eligible Rights Holders, (ii) a Prospectus, (iii)
Instructions as to Use of the Subscription Certificates, (iv) a return envelope
addressed to the Subscription Agent, and (v) such other documents and
information as the Company may provide. The Subscription Agent shall also
provide copies of the Prospectus and other documents prepared by the Company to
Eligible Rights Holders, and other persons upon request.
(a) The Company will provide the Subscription Agent with a
sufficient number of Prospectuses as the Subscription Agent may require.
(b) The Subscription Agent shall provide a sufficient number of
Subscription Certificates as required to distribute to Eligible Rights Holders
and to replace lost, destroyed, mutilated, or stolen Subscription Certificates.
(c) The Company shall provide to the Subscription Agent the
following documents that the Subscription Agent shall deliver to brokers,
dealers, commercial banks, trust companies, and other nominee holders of
Subscription Certificates: (i) a letter to Brokers, Dealers, Commercial Banks,
Trust Companies, and Other Nominees; (ii) a letter to the clients of nominee
holders described in clause (i); and (iii) a Notice of Guaranteed Delivery.
5. EXERCISE. Rights may be exercised at any time during the Offering
Period upon the terms and conditions set forth in the Prospectus and in this
Agreement.
(a) An Eligible Rights Holder may exercise its Basic Subscription
Privileges and, if desired, Over-Subscription Privileges by completing and
executing the exercise portion of the Subscription Certificate and delivering it
to the Subscription Agent along with payment of the Subscription Price for the
aggregate number of Common Shares subscribed for prior to the Expiration Time.
An Eligible Rights Holder must exercise such holder's Basic Subscription
Privilege in full in order to be eligible to exercise its Over-Subscription
Privilege. If an Eligible Rights Holder exercises its Basic Subscription
Privilege in full, the holder may exercise its Over-Subscription Privilege for
as many Common Shares as such Eligible Rights Holder indicates on its
Subscription Certificate and for which the holder pays the Subscription Price,
subject to the availability of such shares and allocation set forth in Section
5(b).
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(b) The Company will issue a maximum of 22,238,463 Common Shares
in the Rights Offering. The number of Common Shares available for
Over-Subscription Privileges will be 22,238,463 minus the number of Common
Shares purchased upon exercise of the Basic Subscription Privileges. Provided
that a sufficient number of Common Shares are available, the Subscription Agent
shall honor exercises of the Over-Subscription Privileges in full. If exercises
of the Over-Subscription Privileges exceed the number of Common Shares
available, the Subscription Agent shall allocate the available shares among the
Eligible Rights Holders that over-subscribed in proportion to the number of
Common Shares purchased by those over-subscribing Eligible Rights Holders
through the Basic Subscription Privileges. However, if an Eligible Rights
Holder's pro rata allocation exceeds the number of Common Shares the Eligible
Rights Holder requested, the Eligible Rights Holder will receive only the number
of Common Shares the Eligible Rights Holder requested, and the remaining shares
from the Eligible Rights Holder's pro rata allocation will be divided among
other Eligible Rights Holders exercising their Over-Subscription Privileges that
have subscribed for additional Common Shares in proportion to the number of
shares purchased by that group of over-subscribing Eligible Rights Holders
through the Basic Subscription Rights.
(c) The Subscription Agent shall accept any subscription if, prior
to the Expiration Time, the Subscription Agent has received (i) payment of the
full Subscription Price for the Common Shares subscribed for, and (ii) a Notice
of Guaranteed Delivery by facsimile (telecopy) or otherwise from a member firm
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States, guaranteeing delivery of
a properly completed and executed Subscription Certificate; provided, however,
that (1) a Notice of Guaranteed Delivery shall only be required by the
Subscription Agent in the event an Eligible Rights Holder exercises its
subscription rights and the Subscription Agent has not received or reasonably
believes that it will not receive the holder's Subscription Certificate prior to
the Expiration Time; and (2) if required, the Subscription Agent shall not honor
a Notice of Guaranteed Delivery unless a properly completed and executed
Subscription Certificate is received by the Subscription Agent by the close of
business on the third over-the-counter trading day after the Expiration Time
(the "Guaranteed Delivery Period").
(d) The Subscription Price shall be paid (i) by delivery to the
Subscription Agent of certificates representing that number of shares of the
Company's Series A Redeemable Convertible Preferred Stock, which shall be valued
at $1.00 per share, sufficient to equal the Subscription Price; (ii) in United
States dollars by check or draft drawn on a United States bank, or a postal,
telegraphic, or express money order payable to the Subscription Agent; or (iii)
in United States dollars by wire transfer of same day funds to an account
maintained by Subscription Agent for the purpose of accepting subscriptions, in
accordance with the following wire instructions:
X X Xxxxxx Xxxxx
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 021-000021
Credit Account # 323-053807
Account Name: American Stock Transfer & Trust Company
(e) Payment will be deemed to have been received by the
Subscription Agent only upon:
(i) clearance of any uncertified check; or
(ii) receipt by the Subscription Agent of any certified check
or bank draft drawn upon a U.S. bank or of any postal, telegraphic, or express
money order; or
(iii) receipt by the Subscription Agent of any funds
transferred by wire transfer;
(iv) receipt by the Subscription Agent of certificates
representing that number of shares of the Company's value of the Series A
Redeemable Convertible Preferred Stock, which shall be valued at $1.00 per
share, sufficient to equal the value of the Subscription Price; or
(v) receipt of funds by the Subscription Agent through an
alternative payment method approved by the Company.
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(f) Once an Eligible Rights Holder has exercised Rights, such
exercise may not be revoked or rescinded.
(g) If an Eligible Rights Holder exercises fewer than all of the
Rights evidenced by the Eligible Rights Holder's Subscription Certificate and
requests in writing that the Subscription Agent issue a Subscription Certificate
evidencing the unexercised Rights, the Subscription Agent shall immediately
issue to such holder a new Subscription Certificate evidencing the unexercised
Rights and deliver it to the Eligible Rights Holder at the address shown on such
Subscription Certificate.
(h) If an Eligible Rights Holder does not specify the number of
Rights being exercised on the Subscription Certificate, or if payment is not
sufficient to pay the total purchase price for all of the Common Shares that the
Eligible Rights Holder indicated that the holder wished to purchase, such holder
will be deemed to have exercised the maximum number of Rights that could be
exercised for the amount of the payment received by the Subscription Agent. If
payment exceeds the total purchase price for all of the Rights shown on the
Subscription Certificate, payment will be applied, until depleted, to subscribe
for Common Shares in the following order:
(i) to subscribe for the number of Common Shares, if any,
that the Eligible Rights Holder indicated on the Subscription Certificate that
such holder wished to purchase through the Basic Subscription Privilege;
(ii) to subscribe for Common Shares until the Basic
Subscription Privilege has been fully exercised;
(iii) to subscribe for additional Common Shares pursuant to
the Over-Subscription Privilege, but subject to any applicable proration.
Any excess payment remaining after the foregoing allocation will be
returned to the Eligible Rights Holder as soon as practicable by mail, without
interest or deduction.
6. POWER OF ATTORNEY. The Company hereby constitutes and appoints the
Subscription Agent as the Company's true and lawful attorney in-fact, with full
power in such capacity to endorse, deposit, and negotiate on behalf and for the
account of the Company, in accordance with the written instructions provided by
the Company, checks, drafts, money orders, wire transfers, or other payments
received by the Subscription Agent as a payment of the Subscription Price upon
the exercise of the Basic Subscription Privilege and, if desired, the
Over-Subscription Privilege.
7. ESCROW AND INVESTMENT OF FUNDS. The Subscription Agent shall:
(a) Maintain a record of the date, amount of each payment of the
Subscription Price received upon the exercise of Rights, and the name and
address of the Eligible Rights Holder by whom or on whose behalf payment was
made.
(b) Aggregate all payments received upon the exercise of Rights
and deposit such payments in one or more bank accounts, as soon as practicable
after receipt of such payments.
(c) Keep all funds deposited in interest-bearing accounts in the
name of the Subscription Agent for the benefit of the Company.
(d) Return as promptly as practicable to the Eligible Rights
Holder who made such payment, any payment of the Subscription Price for Common
Shares not accepted by the Company for any reason.
(e) Return as promptly as practicable to the Company any
certificates representing shares of the Company's Series A Redeemable
Convertible Preferred Stock received by the Subscription Agent as payment of the
Subscription Price.
8. PAYMENT OF FUNDS TO THE COMPANY. Funds representing payment of the
Subscription Price for Common Shares (including interest earned thereon) shall
be paid to the Company by wire transfer to such account and according to such
instructions as the Company may deliver to the
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Subscription Agent in writing. Unless changed by subsequent written
instructions, the Subscription Agent shall follow the wiring instructions
attached to this Agreement as Exhibit B. Such wire transfer of funds to the
Company shall be made promptly following the Guaranteed Delivery Period, at
which time all funds received by the Subscription Agent from Rights holders
shall be paid (together with interest thereon) to the Company.
9. REPORTS. The Subscription Agent shall deliver daily to the Company a
written report showing (a) the number of Rights exercised on such day, and the
aggregate number of Rights exercised through such date; and (b) the amount of
funds received on such day in payment of the Subscription Price for Common
Shares; and (c) the aggregate amount of funds on deposit or invested for the
account of the Company from payment of the Subscription Price for Common Shares
through such date; and (d) the aggregate number of shares of the Company's
Series A Redeemable Convertible Preferred Stock received on such day in payment
of the Subscription Price for Common Shares.
10. ISSUANCE OF COMMON SHARES. As soon as practicable after the
Expiration Time, the Subscription Agent, as Transfer Agent and Registrar for the
Common Shares, shall issue and deliver to each Eligible Rights Holder exercising
Rights a stock certificate evidencing the aggregate of the number of Common
Shares purchased by exercise of the Basic Subscription Privilege and, if
applicable, the Over-Subscription Privilege.
11. VALIDITY AND FORM OF SUBSCRIPTIONS. All questions concerning the
timeliness, validity, form, and eligibility of any exercise of Rights shall be
determined by the Company, whose determination shall be final and binding. The
Subscription Agent shall examine the Subscription Certificates it receives to
ascertain whether they appear to have been completed and executed in accordance
with the Prospectus and the instructions for exercise. In the event that the
Subscription Agent determines that the Subscription Certificate does not appear
to have been properly completed or executed, or where the Subscription
Certificates do not appear to be in proper form for subscription, or any other
irregularity in connection with the subscription appears to exist, the
Subscription Agent shall follow its regular procedures to attempt to cause such
irregularity to be corrected. The Subscription Agent shall promptly notify the
Company in writing of all defects in the exercise of any Rights that the
Subscription Agent is unable to cure through its regular procedures. The
Subscription Agent is not authorized to waive any irregularity in connection
with any subscription, unless it has received from the Company notification,
duly dated and signed by an authorized officer of the Company, indicating that
any irregularity in such subscription has been cured or waived and that such
subscription has been accepted by the Company. Subscription Certificates,
certificates representing shares of Series A Preferred, and funds received by
the Subscription Agent that are not properly executed or submitted, and as to
which all irregularities have not been timely waived or cured, shall be returned
by the Subscription Agent to the Eligible Rights Holder who submitted such
Subscription Certificate and/or certificate or payment. Such return shall be
made by either first class mail under a blanket surety bond or insurance
protecting the Subscription Agent and the Company from losses or liabilities
arising out of the non-receipt or nondelivery of such Subscription Certificates,
certificates representing shares of Series A Preferred, and funds or by
registered mail insured separately for the value of such Subscription
Certificates, certificates representing shares of Series A Preferred, and funds,
and if determined to be required by the Company, shall include a letter of
notice to be furnished by the Company explaining the reasons for the return of
the Subscription Certificates, certificates representing shares of Series A
Preferred, funds, and other documents.
12. AMENDMENT, EXTENSION OR TERMINATION OF THE RIGHTS OFFERING. The
Company reserves the right, in its sole discretion, to (a) terminate the Rights
Offering prior to delivery of the Common Shares for which Eligible Rights
Holders have subscribed pursuant to the exercise of Rights; (b) extend the
Expiration Time to a later date and time; or (c) amend or modify the terms of
the Rights. If the Company amends the terms of the Rights, an amended Prospectus
will be distributed to holders of record of Rights and to holders of Rights who
have previously exercised Rights. All holders of Rights who exercised Rights
prior to such amendment or within four business days after the mailing of the
amended Prospectus will be given the opportunity to confirm the exercise of
Rights by executing and delivering a consent form.
13. LOSS OR MUTILATION. Upon receipt by the Company and the Subscription
Agent of evidence, satisfactory to them, of the ownership and loss, theft,
destruction, or mutilation of any Subscription Certificate, and in the case of
loss, theft, or destruction, receipt of indemnity satisfactory to
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the Company and the Subscription Agent, and in the case of mutilation upon
surrender and cancellation of the mutilated Subscription Certificate, the
Subscription Agent shall deliver in place of such lost, stolen, destroyed, or
mutilated Subscription Certificate a new Subscription Certificate representing
an equal aggregate number of Rights. Eligible Rights Holders requesting such
substitute Subscription Certificates shall also comply with such other
reasonable regulations, requirements, or requests, as the Company or the
Subscription Agent may prescribe.
14. LIABILITY OF SUBSCRIPTION AGENT. The Subscription Agent shall not,
by issuing and delivering Subscription Certificates or stock certificates
evidencing Common Shares, or receiving or holding funds for the benefit of the
Company, or by any other act under this Agreement, be deemed to make any
representations as to the validity or value or authorization of the Subscription
Certificates or the Rights represented thereby or the Common Shares issued upon
the exercise of Rights, or whether the Common Shares issued upon the exercise of
Rights are fully paid and nonassessable. The Subscription Agent shall not be (a)
liable for any statement of fact, other than any statement of fact made by or on
behalf of Subscription Agent, made or contained in this Agreement or in the
Prospectus or in any documents prepared by the Company in connection with the
offer of Common Shares through the Rights, (b) liable for any action taken,
suffered, or omitted by it in reliance upon any Subscription Certificate or
other document or instrument believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties, (c) responsible
for any failure on the part of the Company to comply with any of its covenants
and obligations contained in this Agreement or in the Subscription Certificates,
or (d) liable for any act or omission in connection with the performance of its
duties, obligations, covenants, and agreements under this Agreement, except for
the Subscription Agent's own negligence, willful breach, or misconduct.
15. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
the Subscription Agent for, from, and against any and all losses, expenses, and
liabilities, including judgments, costs, and reasonable attorneys' fees, arising
out of any act or omission of the Subscription Agent in the execution or
performance of its duties, obligations, covenants, and agreements under this
Agreement, except for the Subscription Agent's own negligence, willful breach,
or misconduct.
16. COMPENSATION FOR SERVICES. The Company agrees to pay the
Subscription Agent pursuant to the terms in the proposal provided to the Company
by the Subscription Agent as set forth on Exhibit C attached hereto.
17. AMENDMENT; MODIFICATION; WAIVER. This Agreement may be amended,
waived, discharged, or terminated in whole or in part only by a written
instrument signed by the party against whom enforcement of such amendment,
waiver, discharge, or termination is sought. Notwithstanding the immediately
preceding sentence, the parties shall supplement or amend this Agreement to
conform to any amendments or changes that the Company may make to the terms and
conditions of the Rights and the offer of the Common Shares through the Rights.
18. NOTICES. All notices, requests, demands, and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made, and received (i) when delivered against
receipt; (ii) upon delivery by an overnight courier service or facsimile with
confirmation of receipt; or (iii) upon actual receipt of registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below:
(a) If to the Company:
SmartDisk Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
(000) 000-0000 (tel)
(000) 000-0000 (fax)
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with a copy to:
Xxxxxxxxx Xxxxxxx, LLP
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
(000) 000-0000 (tel)
(000) 000-0000 (fax)
(b) If to the Subscription Agent:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx, Xxxxx 0X
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
(000) 000-0000 (tel)
(000) 000-0000 (fax)
Any party may alter the address to which communications or copies are to
be sent by giving notice of such change of address in conformity with the
provisions of this paragraph for the giving of notice.
19. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to any party to this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power, or remedy; nor shall it be construed to be a waiver of, or an
acquiescence in any such breach or default or any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent, or approval of any kind or character, on
the part of any party, of any breach or default under this Agreement, or any
waiver, on the part of any party, of any provisions or conditions of this
Agreement, must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law and otherwise afforded to any party, shall be cumulative and
not alternative.
20. PROVISIONS SEPARABLE. The provisions of this Agreement are
independent and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any reason any
other or others of them may be invalid or unenforceable in whole or in part.
21. GENDER. Whenever appropriate in this Agreement, terms in the
singular form shall include the plural (and vice versa) and any gender form
shall include all others.
22. SECTION HEADINGS. Section headings are for the convenience of the
parties and do not form a part of this Agreement.
23. BINDING EFFECT; PARTIES. This Agreement shall be binding on the
Company, the Subscription Agent, and their respective successors and assigns;
and nothing in this Agreement shall confer upon any other person or entity any
right, remedy, or claim, or impose upon any other person any duty, liability, or
obligation.
24. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories. Any facsimile, photographic, or xerographic copy of this Agreement,
with all signatures reproduced on one or more sets of signature pages, shall be
considered for all purposes as if it were an executed counterpart of this
Agreement.
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25. EXHIBITS; ENTIRE AGREEMENT. All Exhibits referred to herein or
attached hereto are hereby incorporated by reference into, and made a part of,
this Agreement. This Agreement, together with the Exhibits hereto, contains the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
26. CONTROLLING LAW. THIS AGREEMENT AND ALL QUESTIONS RELATING TO ITS
VALIDITY, INTERPRETATION, PERFORMANCE AND ENFORCEMENT, SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, NOTWITHSTANDING ANY DELAWARE OR OTHER CONFLICT-OF-LAW PROVISIONS TO
THE CONTRARY.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SMARTDISK CORPORATION
By:_____________________________________
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
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