Exhibit 10.1
PREFERRED STOCK PURCHASE AGREEMENT
This PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of the 20th day of November, 2001 by and between nStor Technologies,
Inc., a Delaware corporation (the "Company"), Halco Investments L.C., a Florida
limited liability company (the "Purchaser") and Xxxxxxx X. Xxxxxxxx, an
individual resident in the State of Florida and the managing member of the
Purchaser ("Halperin").
RECITALS
Purchaser desires to make an investment in the Company in the aggregate
amount of Eight Million Nine Hundred Sixty-Nine Thousand Eight Hundred
Ninety-Nine Dollars ($8,969,899) and in consideration therefore receive Eight
Thousand Nine Hundred Seventy (8,970) shares of Series K Convertible Preferred
Stock of the Company, par value $.01 per share (the "Series K Preferred Stock"),
which Series K Preferred Stock is convertible into 39,000,000 shares of the
Company's common stock, $.05 par value per share (the "Common Stock"), based on
a conversion price of $0.23 per share of Common Stock, in accordance with the
terms of this Agreement and the Certificate of Designation for the Series K
Preferred Stock in the form attached hereto as Exhibit A (the "Certificate of
Designation").
TERMS OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the parties agree as follows.
ARTICLE I
Purchase and Sale of Preferred Stock
Section 1.1 Authorization. The Company will authorize the sale and issuance of
Eight Thousand Nine Hundred Seventy (8,970) shares of Series K Preferred Stock
having the rights, privileges and preferences set forth in the Certificate of
Designation, all of which shares of Series K Preferred Stock (the "Purchased
Stock") shall be purchased by Purchaser pursuant to this Agreement. The
Purchased Stock shall be convertible into shares of Common Stock on the terms
and conditions set forth in the Certificate of Designation. The shares of Common
Stock into which the Purchased Stock will be convertible are referred to herein
as the "Conversion Shares."
Section 1.2 Purchased Stock. At the Closing (as defined in Section 1.5), upon
the terms and subject to the conditions of this Agreement, the Company shall
sell, transfer and deliver to Purchaser all of the shares of Purchased Stock.
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Section 1.3 Consideration. The total consideration (the "Consideration") to be
paid by Halco for the Purchased Stock is $8,969,899. The Consideration shall be
payable as follows:
(i) application of a total of $1,857,442 of promissory notes to the
purchase price for the Series K Preferred Stock, which promissory
notes are more particularly described as follows: (i) that certain 8%
Promissory Note dated as of September 10, 2001 issued by the Company
to Halco in the original principal amount of $1,275,000.00, (ii) that
certain 8% Promissory Note dated as of October 29, 2001 issued by the
Company to Halco in the original principal amount of $332,442.00 and
(iii) that certain 8% Promissory Note dated as of November 15, 2001
issued by the Company to Halco in the original principal amount of
$250,000.00 (collectively, the "Applied Notes");
(ii) at the Closing, Halco shall pay $1,000,000.00 (the "Cash
Consideration") in cash to the Company by wire transfer of immediately
available funds to an account designated by the Company;
(iii)at the Closing, Halco shall deposit the freely-tradeable, marketable
securities described on Schedule I hereto (the "Securities") which
have a value ("Value"), based on the closing market price for such
Securities on the business day immediately preceding the Closing Date
(as defined in Section 1.5), as reported on the national securities
exchange or inter-dealer quotation system on which the Securities are
traded, of $6,112,457, together with all stock powers and/or other
documentation necessary to transfer the Securities to the Company (the
" Securities Consideration" and together with the Cash Consideration,
the " Consideration") into a securities account (the "Securities
Account") in the name of the Company at UBS/Xxxxx Xxxxxx, Inc., 0000
Xxxx Xxxxxx Xxxxxx, Tower 11, 6th Floor, Xxxx Xxxxx, Xxxxxxx 00000,
which securities account will be controlled by two designated officers
of the Company. The contents of the Securities Account may be used
solely and exclusively for the benefit of the Company.
Section 1.4 Promissory Note. The Company has previously received five loans
totaling $4,957,442.00 from Halco represented by five promissory notes dated
August 14, 2001, August 14, 2001, September 10, 2001, October 29, 2001 and
November 15, 2001. Of that amount, $1,857,442.00 will be applied to the purchase
price for the Series K Preferred Stock at the Closing in accordance with Section
1.3(i) above and $3,100,000 which is evidenced by (i) that certain 8% Promissory
Note dated as of August 14, 2001 issued by the Company to Halco in the original
principal amount of $2,100,000 and (ii) that certain Revolving Credit Note dated
as of August 14, 2001 issued by the Company to Halco in the original principal
amount of $1,000,000 (collectively the "Old Notes"), will be canceled and
exchanged for a five-year promissory note issued by the Company to Halco in the
form attached hereto as Exhibit B (the "New Note").
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Section 1.5 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Akerman, Senterfitt
& Xxxxxx, P.A., Boca Raton, Florida, at 2:30 p.m., local time, on November 20,
2001, or at any other place, time or date as the parties designate in writing
(the "Closing Date"). Each party shall deliver all documents, instruments and
writings required to be delivered by such party pursuant to this Agreement at or
prior to the Closing.
ARTICLE II
Representations and Warranties
Section 2.1 Representation and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified and is in good standing as a
foreign corporation to do business in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify would not have a
material adverse effect on the Company's business or operations.
(b) Authorization; Enforcement. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, (ii) the execution, issuance and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors is required, and (iii)
this Agreement has been duly executed and delivered by the Company and at the
Closing shall constitute a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized capital stock of the Company consists of
(i) 75,000,000 shares of Common Stock of which 37,719,022 shares are issued and
outstanding, 6,347,714 shares are issuable upon the exercise of currently
outstanding options and warrants and, before giving effect to the transactions
contemplated in this Agreement, 20,877,432 shares are issuable upon conversion
of outstanding shares of the Company's preferred stock, $0.01 par value per
share (the "Preferred Stock") and (ii) 1,000,000 shares of Preferred Stock. The
Preferred Stock consists of:
Series Number of Shares Number of Shares Number of Shares of Common
Designated Issued and Outstanding Stock Issuable Upon Conversion
E 3,500 3,500 1,166,666
H 5,100 5,100 7,083,333
I 9,092 9,092 12,627,433
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In addition, upon stockholder approval, approximately 17,000,000 additional
shares of Common Stock (excluding the shares of Common Stock issuable to the
Purchaser upon conversion of the Series K Preferred Stock) will be issued to
persons other than the Purchaser upon consummation of the transactions
contemplated by this Agreement. All of the outstanding shares of the Company's
Common Stock and Preferred Stock have been duly and validly authorized and are
fully-paid and non-assessable. The Company has made available to the Purchaser
true and correct copies of the Company's Amended and Restated Certificate of
Incorporation as in effect on the date hereof (the "Certificate") and the
Company's Bylaws as in effect on the date hereof (the "Bylaws"). The principal
market for the Common Stock in the United States is the American Stock Exchange.
(d) Issuance of Purchased Stock and Conversion Shares. The Purchased Stock
to be issued under this Agreement has been duly authorized by all necessary
corporate action and, when paid for or issued in accordance with the terms
hereof and the Certificate and Bylaws, the Purchased Stock shall be validly
issued and outstanding, fully paid and non-assessable. Upon approval of the
Charter Amendment (as defined in Section 3.1 hereof) by the Company's
stockholders, the Conversion Shares will have been duly authorized and upon
issuance of the Conversion Shares in accordance with the terms of this Agreement
and the Certificate of Designation, such shares will be validly issued and
outstanding, fully paid and non-assessable.
(e) No Conflicts. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated herein do not and will not (i) violate any provision of the
Certificate or Bylaws, (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company is a
party, (iii) create or impose a lien, charge or encumbrance on any property of
the Company under any agreement or any commitment to which the Company is a
party or by which the Company is bound or by which any of its respective
properties or assets are bound, or (iv) result in a violation of any federal,
state, local or other foreign statute, rule, regulation, order, judgment or
decree (including any federal and state or securities laws and regulations)
applicable to the Company or by which any property or asset of the Company are
bound or affected, except, in all cases, for such conflicts, defaults,
termination, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a material adverse effect on the
Company's business or operations.
(f) Commission Documents. The Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, except as disclosed in documents filed by the Company with the
Securities and Exchange Commission ("Commission"), the Company has timely filed
all reports, schedules, forms, statements, exhibits and other documents required
to be filed by it with the Commission pursuant to the reporting requirements of
the Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of
the Exchange Act (all of the foregoing including filings incorporated by
reference therein being referred to herein as the "Commission Documents"). The
Company has delivered or made available to the Purchaser true and complete
copies of the Commission Documents filed with the Commission since December 31,
2000.
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(g) No Misstatements. The representations of the Company and the
information furnished by the Company contained in this Agreement, the exhibits
attached hereto and the Commission Documents do not contain any untrue statement
of a material fact, omit to state a material fact required to be disclosed or
omit to state any fact necessary to make the statements contained therein not
materially misleading.
Section 2.2 Representations and Warranties of the Purchaser and Halperin. The
Purchaser and Halperin, jointly and severally, hereby makes the following
representations and warranties to the Company:
(a) Intention. The Purchased Stock and Conversion Shares to be acquired by
the Purchaser pursuant to this Agreement will be acquired for the Purchaser's
own account and not with a view to, or intention of, distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act"), or
any applicable state securities laws, and the Purchased Stock and Conversion
Shares will not be disposed of in contravention of the Securities Act or any
applicable state securities laws.
(b) Organization. The Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Florida. Schedule II hereto lists the members and managers of the Purchaser.
(c) Authorization; Enforcement. (i) The Purchaser has the requisite power
and authority to enter into and perform its obligations under this Agreement,
(ii) the execution, issuance and delivery of this Agreement by the Purchaser and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Purchaser is required, and (iii) this Agreement has been
duly executed and delivered by the Purchaser and Halperin and at the Closing
shall constitute a valid and binding obligation of the Purchaser and Halperin
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(d) No Conflicts. The execution, delivery and performance of this Agreement
by the Purchaser and Halperin and the consummation by the Purchaser and Halperin
of the transactions contemplated herein do not and will not (i) violate any
provision of the Articles of Organization or Operating Agreement of the
Purchaser, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Purchaser or Halperin is a
party, (iii) create or impose a lien, charge or encumbrance on the Securities
under any agreement or any commitment to which the Purchaser or Halperin is a
party or by which the Purchaser or Halperin is bound, or (iv) result in a
violation of any federal, state, local or other foreign statute, rule,
regulation, order, judgment or decree (including any federal and state or
securities laws and regulations) applicable to the Purchaser or Halperin or to
which the Securities are bound or affected.
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(e) Capitalization. All of the issued and outstanding equity interests of
the Purchaser have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record and owned beneficially by Halperin.
(f) Title. The Purchaser holds of record and beneficially all of the
Securities, free and clear of any restrictions on transfer, taxes, security
interests, option, warrants, purchase rights, contracts, commitments, claims
and/or demands. The Purchaser is not a party to any option, warrant, purchase
right or other contract or commitment that could require the Purchaser to sell,
transfer or otherwise dispose of the Securities. The Purchaser is not a party to
any voting trust, proxy, shareholders agreement or other agreement or
understanding with respect to the Securities. The Securities are marketable and
freely-tradeable.
(g) Financial Risks. The Purchaser and Halperin acknowledge that they are able
to bear the financial risks associated with an investment in the Purchased Stock
and Conversion Shares and that the Company has made available to the Purchaser,
Halperin and their representatives, during the course of the negotiation of this
Agreement and prior to the issuance of the Purchased Stock, the opportunity to
ask questions of and receive answers from the officers and directors of the
Company concerning the terms and conditions of the transactions contemplated by
this Agreement, or otherwise relating to the financial data and business of the
Company, to the extent that the Company or its officers and directors possessed
such information or could acquire it without unreasonable effort or expense. The
Company has also made available for inspection, documents, records, books and
other information about the Company, its business and this investment. The
Purchaser and Halperin understand the speculative nature of and risks involved
in the proposed investment in the Company, and all matters relating to the
structure and the operations of the Company have been discussed and explained to
Purchaser's and Halperin's satisfaction. The Purchaser and Halperin are capable
of evaluating the risks and merits of an investment in the Purchased Stock and
Conversion Shares by virtue of their experience as investors and their
knowledge, experience, and sophistication in financial and business matters and
the Purchaser and Halperin are capable of bearing the entire loss of their
investment in the Purchased Stock and Conversion Shares. The Purchaser and
Halperin understand that the Purchaser must bear the economic risk of an
investment in the Purchased Stock and Conversion Shares for an indefinite period
of time because: (A) none of the Purchased Stock and Conversion Shares have been
registered under the Securities Act or applicable state securities laws, and (B)
until such time as the Purchased Stock and/or Conversion Shares are registered
for resale under the Securities Act and any applicable state securities laws,
the Purchased Stock and/or Conversion Shares may not be sold, transferred,
pledged, or otherwise disposed of without an opinion of counsel for or
satisfactory to the Company that registration under the Securities Act or any
applicable state securities laws is not required.
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(h) No Warranties. The Purchaser and Halperin are acquiring the Purchased
Stock and Conversion Shares without having been furnished any representations or
warranties of any kind whatsoever with respect to the business or financial
condition of the Company and its subsidiaries, other than the representations
contained in this Agreement.
(i) Accredited Investor. The Purchaser and Halperin are "accredited
investors" as defined in Regulation D promulgated under the Securities Act.
(j) Compliance With Law. The Purchaser's trading and distribution
activities with respect to the Purchased Stock and Conversion Shares will be in
compliance with all applicable state and federal securities laws, rules and
regulations and the rules and regulations of the American Stock Exchange or any
other securities exchange or securities market on which the Purchased Stock or
Conversion Shares are listed for trading.
(k) General. The Purchaser and Halperin have discussed with, and relied
upon, the advice of the Purchaser's and Halperin's legal counsel with regard to
the meaning and legal consequences of the Purchaser's representations and
warranties herein, and the Purchaser and Halperin understand that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser and Halperin set
forth herein in order to determine the suitability of the Purchaser to acquire
the Purchased Stock and Conversion Shares. The Purchaser and Halperin have
reviewed the Commission Documents, including the risk factors discussed therein.
ARTICLE III
Covenants
The Company covenants with the Purchaser as follows:
Section 3.1 Stockholder Meeting. Not later than the Closing Date, the Company
will establish a record date and schedule a meeting of its stockholders and
will, as soon as reasonably practicable following the Closing Date, give notice
of, convene and hold such meeting of its stockholders for the purpose of voting
upon, among other things, (i) an amendment to the Certificate to increase the
number of authorized shares of Common Stock in a sufficient number to permit the
issuance of the Conversion Shares (the "Charter Amendment"), (ii) consummation
of the transactions contemplated by this Agreement, including the issuance of
the Conversion Shares upon conversion of the Purchased Stock in accordance with
the Certificate of Designation and (iii) the election of directors.
Section 3.2 Charter Amendment. Upon approval of the Charter Amendment, the
Company will promptly file an amendment to its Certificate reflecting the
Charter Amendment with the Secretary of State of the State of Delaware.
Section 3.3 Access and Approval. So long as the Purchaser owns any shares of
Series K Preferred Stock or any Conversion Shares, the Company will provide the
Purchaser and its representatives with reasonable access on a daily basis during
normal business hours to all financial books and records and other financial
information with respect to the business, operations and properties of the
Company.
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Section 3.4 Registration Rights Agreement. The Company shall grant the Purchaser
the registration rights for the Conversion Shares set forth in the Registration
Rights Agreement in the form of Exhibit C hereto (the "Registration Right
Agreement").
Section 3.5 Voting Trust. Upon the issuance of the Conversion Shares to the
Purchaser, H. Xxxxx Xxxx ("Xxxx") shall cause that number of shares of Common
Stock as shall, when added to the number of shares of Common Stock owned of
record or beneficially by the Purchaser or Halperin, equal Fifty and One-Tenth
Percent (50.1%) of the issued and outstanding shares of Common Stock, to be
deposited in a voting trust the terms of which will be mutually agreed to
between the Purchaser and Levy.
ARTICLE IV
Conditions to Closing
Section 4.1 Conditions Precedent to the Obligation of the Company to Sell the
Purchased Stock. The obligation hereunder of the Company to issue and sell the
Purchased Stock to the Purchaser is subject to the satisfaction or waiver, at or
before the Closing, of each of the conditions set forth below. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser and Halperin set forth in this
Agreement shall be true and correct in all material respects as of the date when
made and as of the Closing as though made at that time, except for
representations and warranties that speak as of a particular date.
(b) Performance by the Purchaser. The Purchaser and Halperin shall have
performed, satisfied and complied in all material respects with all material
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Purchaser and Halperin at or prior to the
Closing.
(c) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.
(d) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Purchaser, Halperin or the Company or any subsidiary, or any of the
officers, directors or affiliates of the Company or any subsidiary seeking to
restrain, prevent or change the transactions contemplated by this Agreement, or
seeking damages in connection with such transactions.
(e) Consideration. Halco shall have delivered the Cash Consideration to the
Company and deposited the Securities Consideration into the Securities Account
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(f) Note Cancellation. The Company shall have received from Halco the
original Applied Notes and the original Old Notes marked "Cancelled."
(g) Registration Rights Agreement. The Purchaser shall have executed and
delivered to the Company the Registration Rights Agreement.
(h) Director Nominees. The Purchaser shall have delivered to the Company
the names of the persons Purchaser desires to nominate to the Company's Board of
Directors, at least two of whom will be "independent" within the meaning set
forth in Section 121 of the Listing Standards, Policies and Requirements of The
American Stock Exchange (the "Director Nominees").
Section 4.2 Conditions Precedent to the Obligation of the Purchaser and Halperin
to Close. The obligation hereunder of the Purchaser and Halperin to consummate
the transactions contemplated in this Agreement is subject to the satisfaction
or waiver, at or before the Closing, of each of the conditions set forth below.
These conditions are for the Purchaser's and Halperin's sole benefit and may be
waived by the Purchaser or Halperin at any time in their sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects as of the date when made and as of
the Closing as though made at that time (except for representations and
warranties that speak as of a particular date).
(b) Performance by the Company. The Company shall have performed, satisfied
and complied in all respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.
(d) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Purchaser or the Company or any subsidiary, or any of the officers,
directors or affiliates of the Company or any subsidiary seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.
(e) Proxies. The persons listed on Schedule III, which persons own the
number and percentage of shares of Common Stock set forth opposite their names,
shall have delivered proxies to H. Xxxxx Xxxx in the form attached hereto as
Exhibit D (the "Proxies") or shall otherwise have agreed to vote in favor of (i)
consummation of the transactions contemplated by this Agreement, including the
issuance of the Conversion Shares upon conversion of the Purchased Stock in
accordance with the Certificate of Designation, (ii) the Charter Amendment and
(iii) the election of the Director Nominees to the Company's Board of Directors
(the "Transactions").
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(f) Voting Agreement. H. Xxxxx Xxxx shall have executed and delivered to
the Purchaser, a letter agreement wherein he agrees to vote all of the shares of
Common Stock and Preferred Stock represented by the Proxies and all shares of
Common Stock and Preferred Stock owned or controlled by Xx. Xxxx or his
affiliates in favor of the Transactions.
(g) Levy Note Conversion. H. Xxxxx Xxxx shall have executed and delivered
to the Company, a letter agreement wherein he agrees that immediately upon
stockholder approval, he will convert $300,000 owed to him by the Company into
Common Stock.
(h) Conversion of Preferred Stock. All holders of shares of Preferred
Stock, other than W. Xxxxx Xxxxx or any affiliates of W. Xxxxx Xxxxx, shall have
executed and delivered a letter agreement in the form attached hereto as Exhibit
E.
(i) Registration Rights Agreement. The Company shall have executed and
delivered to the Purchaser the Registration Rights Agreement.
(j) Stock Certificates. The Company shall have delivered to the Purchaser
the certificates representing the Purchased Stock.
(k) Promissory Note. The Company shall have executed and delivered to the
Purchaser the Promissory Note.
ARTICLE V
Termination
Section 5.1 Termination by Mutual Consent. This Agreement may be terminated at
any time by mutual consent of the parties.
Section 5.2 Other Termination (a)By Purchaser. The Purchaser may terminate this
Agreement by giving written notice to the Company at any time prior to the
Closing (A) in the event the Company has breached any representation, warranty,
or covenant contained in this Agreement in any material respect, Purchaser has
notified the Company of the breach, and the breach has continued without cure
for a period of five (5) days after the notice of breach or such breach, by its
nature, cannot be cured prior to Closing or (B) if the Closing shall not have
occurred on or before November 20, 2001 by reason of the failure of any
condition precedent under Section 4.2 hereof, which failure was not caused by
the Purchaser; and
Section 5.3 By Company. The Company may terminate this Agreement by giving
written notice to Purchaser at any time prior to the Closing (A) in the event
Purchaser has breached any representation, warranty or covenant contained in
this Agreement in any material respect, the Company has notified Purchaser of
the breach, and the breach has continued without cure for a period of five (5)
days after the notice of breach or such breach, by its nature, cannot be cured
prior to Closing or (B) if the Closing shall not have occurred on or before
November 20, 2001 by reason of the failure of any condition precedent under
Section 4.1 hereof, which failure was not caused by the Company.
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Section 5.4 Effect of Termination. In the event of termination by the Company or
the Purchaser as provided in Section 5.1 or 5.2, the transactions contemplated
by this Agreement shall be terminated without further action by either party and
this Agreement shall become void and of no further force and effect, except for
Article VI and Sections 7.1, 7.2, 7.3, 7.4, 7.9 and 7.11 herein. Nothing in this
Section 7.3 shall be deemed to release the Company or the Purchaser from any
liability for any breach under this Agreement, or to impair the rights to the
Company and the Purchaser to compel specific performance by the other party of
its obligations under this Agreement.
ARTICLE VI
Indemnification
Section 6.1 General Indemnity. The Company agrees to indemnify and hold harmless
the Purchaser and Halperin (and his affiliates, agents, successors and assigns)
from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorney's fees, charges
and disbursements) incurred by the Purchaser or Halperin as a result of any
material inaccuracy in or breach of, the representations, warranties or
covenants made by the Company herein. The Purchaser and Halperin agree to
indemnify and hold harmless the Company and its directors, officers, affiliates,
agents, successors and assigns from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without limitation,
reasonable attorneys fees, charges and disbursements) incurred by the Company as
a result of any material inaccuracy in or breach of the representations,
warranties or covenants made by the Purchaser or Halperin in this Agreement,
other than Exhibit B.
Section 6.2 Limitation of Indemnity. Notwithstanding anything to the contrary
herein, the Purchaser and Halperin shall be liable under this Section 6.1 for
only specific performance or return of the Purchased Stock and any Conversion
Shares held by the Purchaser or Halperin and the Company's liability under this
Section 6.1 shall not exceed Eight Million Nine Hundred Sixty-Nine Thousand
Eight Hundred Ninety-Nine Dollars ($8,969,899).
Section 6.3 Indemnification Procedures. Promptly after receipt by an indemnified
party under Section 6.1 above of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a Claim in
respect thereof is to be made against any indemnifying party under Section 6.1
above, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying parties and the
indemnified party, provided however, that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable written opinion of counsel retained by
the indemnifying party, the representation by such counsel of the indemnified
party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party or other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to
the indemnified party under Section 6.1 above, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by Section 6.1 above shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
12
ARTICLE VII
Miscellaneous
Section 7.1 Fees and Expenses. Each party shall pay all fees and expenses
incurred by them in connection with the preparation, negotiation, execution and
delivery of this Agreement and the transactions contemplated hereunder.
Section 7.2 Specific Enforcement. The Company and the Purchaser acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.
Section 7.3 Entire Agreement; Amendment. This Agreement, including all exhibits
and schedules hereto and the Commission Documents, contain the entire
understanding of the parties with respect to the matters covered hereby and
supersedes any prior understandings, agreements by or among the parties, written
or oral, to the extent they relate in any way to the subject matter hereof.
Except as specifically set forth herein, neither the Company nor the Purchaser
or Halperin make any representations, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
Section 7.4 Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:
13
If to the Company: nStor Technologies, Inc.
000 Xxxxxxx Xxxx.
Xxxx Xxxx Xxxxx, XX 00000
Telephone Number: (000) 000-0000
Fax: (000) 000-0000
Attention: H. Xxxxx Xxxx
with copies to: Akerman, Senterfitt & Xxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxx., 00xx Xx.
Ft. Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esquire
If to Purchaser
or Halperin: Halco Investments, L.C.
c/o Xxxxxxx Xxxxxxxx
00000 Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Fax: (000) 000-0000
with copies to: Xxx Xxxxxx, Esquire
000 X. Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Fax: (000) 000-0000
Any party hereto may from time to time change its address for
notices by giving written notice of such changed address to the other party
hereto in accordance herewith.
Section 7.5 Waivers. No waiver by either party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provisions, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
Section 7.6 Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
14
Section 7.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. The
parties hereto may not amend this Agreement or any rights or obligations
hereunder without the prior written consent of each party to be affected by the
amendment. After Closing, the assignment by a party to this Agreement of any
rights hereunder shall not affect the obligations of such party under this
Agreement.
Section 7.8 No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Section 7.9 Governing Law/Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Florida, without giving effect to the choice of law provisions. Any dispute,
claim or controversy arising out of or related to this Agreement or the breach
thereof shall be resolved by litigation in Palm Beach County, Florida in a court
with proper jurisdiction. The prevailing party in any litigation shall be
entitled to reasonable attorneys' fees.
Section 7.10 Escrowed Securities. The parties agree that if a lawsuit is filed
in accordance with Section 7.9 above alleging a material breach of this
Agreement, any Securities that have not been sold or pledged by the Company as
of the date of the filing of such claim shall be transferred to Xxx Xxxxxx,
P.A., as Escrow Agent, to be held in escrow pursuant to the terms of an escrow
agreement to be mutually agreed to by the parties until such time as the claim
is resolved.
Section 7.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. Execution may be made by delivery or
facsimile.
Section 7.12 Publicity. Prior to the Closing, neither the Purchaser not Halperin
shall issue any press release or otherwise make any public statement or
announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement without the prior written approval of
the Company.
Section 7.13 Severability. The provisions of this Agreement are severable and,
in the event that any court of competent jurisdiction shall determine that any
one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.
15
Section 7.14 Further Assurances. From and after the date of this Agreement, upon
the request of the Purchaser or the Company, each of the Company and the
Purchaser shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorize officer as of the date first above
written.
nSTOR TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxx
---------------------------
Xxxx Xxxxxx, Vice President
HALCO INVESTMENTS L.C.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx, Managing Member
/s/ Xxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxx
16
Index to Exhibits and Schedules
Exhibit A Certificate of Designation for Series K Convertible Preferred Stock
Exhibit B Form of Promissory Note
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Proxy
Exhibit E Form of Letter Agreement re: Preferred Stock Conversion
Schedule I List of Securities
Schedule II List of Members/Managers of Halco
Schedule III List of Stockholders
