EXHIBIT 4.31
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June
7, 2002 between nSTOR TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), and PACIFIC TECHNOLOGY GROUP, INC., a Nevada corporation (the
"Investor").
RECITALS
Pursuant to the terms of that certain Stock Purchase Agreement of even
date herewith by and among the Company, Stonehouse Technologies, Inc., a Texas
corporation ("Stonehouse"), the Investor and Pacific USA Holdings Corp., a Texas
corporation (the "Stock Purchase Agreement"), the Company has agreed to issue to
the Investor at the closing of the Stock Purchase Agreement (the "Closing"), as
consideration for the purchase by the Company from the Investor of all the
outstanding shares of capital stock of Stonehouse, shares of the Company's
common stock, par value $.05 per share ("Common Stock") and shares of the
Company's Series L Convertible Preferred Stock, par value $.01 per share
("Series L Preferred Stock"), which are convertible into shares of the Company's
Common Stock on the terms of and subject to the conditions set forth in the
Certificate of Designation for the Series L Preferred Stock. In addition, the
Investor may be entitled under the terms of the Stock Purchase Agreement to
certain additional shares of Common Stock or Series L Preferred Stock (the
"Earn-Out Shares"). In connection with the foregoing issuance of the Company's
capital stock, the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws with respect to (i) the Common Stock
to be issued to the Investor at the Closing pursuant to the terms of the Stock
Purchase Agreement (the "Common Stock Consideration"), (ii) the Common Stock
issuable upon conversion of the Series L Preferred Stock (collectively, the
"Conversion Shares"), (iii) the additional shares of Common Stock constituting
the Earn-Out Shares (or the Common Stock issuable upon conversion of the
additional shares of preferred stock of the Company, par value $.01 per share,
constituting the Earn-Out Shares, as the case may be), if any (the "Earn-Out
Consideration"), and (iv) the shares of the Company's Common Stock issuable to
Pacific Technology Services, Inc., an Affiliate of the Investor, upon the
exercise of the option granted to Pacific Technology Services, Inc. pursuant to
that certain Option One Agreement, dated as of March 1, 2002, between the
Company and Pacific Technology Services, Inc. (the "Option Shares").
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:
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1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Register", "registered" and "registration" refer
to a registration effected by preparing and filing a Registration Statement on
Form S-3 in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415") and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission ("SEC").
(ii) "Registration Statement" means a registration
statement under the Securities Act.
(iii) "Registrable Securities" means the Common Stock
Consideration, the Conversion Shares, the Earn-Out Consideration, if any, and
the Option Shares.
(b) Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Stock Purchase
Agreement.
2. Registration.
(a) Demand Registration. Subject to clause (i) below, the
Investor may request registration under the Securities Act (a "Demand
Registration") of all or any portion of the Registrable Securities on Form S-3
or any similar short-form registration (a "Short Form Registration"). The
Investor's request for a Demand Registration shall specify the approximate
number of Registrable Securities requested to be registered. Within ten days
after receipt of such request, the Company will give written notice of such
requested registration to all other security holders and will include in such
registration the Registrable Securities and such other securities with respect
to which the Company has received written requests for inclusion therein within
15 days after the receipt of the Company's notice.
(i) The Company shall not be required to effect the Demand
Registration contemplated by this Section 2(a) unless the Company and
the transaction proposed to be registered are eligible for Short Form
Registration providing for automatic incorporation by reference of
reports filed pursuant to the Exchange Act. The Company will use its
commercially reasonable efforts to make a Short-Form Registration
available for the sale of the Registrable Securities. After the Company
has qualified for the use of a Short-Form Registration and for so long
as the Investor owns any Registrable Securities, the Investor shall be
entitled to request one Short-Form Registration. The Company will use
its commercially reasonable efforts to maintain the effectiveness of
such Short Form Registration at all times until the earliest to occur of
(i) the sale of all of the Registrable Securities pursuant to the
Registration Statement, (ii) the date on which all of the Registrable
Securities become eligible for sale within a three (3) month period
pursuant to Rule 144 under the Securities Act and (iii) the date on
which the shares of Registrable Securities are transferred to any Person
other than an Affiliate of the Investor (the latest of which to occur to
be known as the "Termination Date").
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(ii) A registration pursuant to this Section 2 shall not
be deemed to have been effected for purposes of Section 2(a)(i) hereof
if:
(A) such registration does not become effective and remain
effective until the Termination Date, without interference by the
issuance by the SEC of any stop order with respect thereto or any
other order preventing or suspending the use of any preliminary
prospectus or prospectus;
(B) the registration or qualification for the offer or
sale of the Registrable Securities in any jurisdiction is
suspended for any reason or proceedings for any such purpose are
initiated or threatened;
(C) the Investor withdraws its request for registration in
its entirety at any time because the Investor reasonably believed
that the Registration Statement or any prospectus related thereto
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements made therein (in the case of any
prospectus, in light of the circumstances under which they were
made) not misleading, notified the Company of such fact and
requested that the Company correct such alleged misstatement or
omission, and the Company has refused to correct such alleged
misstatement or omission;
(E) the Company fails to comply with the provisions of
this Agreement or any other agreement, document or instrument
entered into in connection with such required registration, other
than by reason of some act or omission by the holders of the
Registrable Securities that were to have been registered and
sold; or
(F) such registration does not become effective within one
hundred eighty (180) days after filing with the SEC.
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(b) Piggyback Registration.
(i) If at any time following the issuance of the
Registrable Securities to the Investor, the Company proposes to register
any of its Common Stock (either on its own behalf or on behalf of
others) under the Securities Act (other than a transaction described
under Rule 145 of the Securities Act or pursuant to Forms X-0, X-0 or
their successor forms) and the registration form to be used may be used
for the registration of the Registrable Securities of the Investor (a
"Piggyback Registration"), the Company shall give prompt written notice
to the Investor of its intention to effect such a registration and will
include in such registration the Registrable Securities of the Investor
with respect to which the Company has received written requests for
inclusion therein within 20 days after the receipt of the Company's
notice.
(ii) If a Piggyback Registration is an underwritten
primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company shall include
in such registration (A) first, the securities the Company proposes to
sell, and (B) second, the Registrable Securities requested to be
included in such registration and any other shares of Common Stock for
which the Company has received a request for registration from the
holder thereof pursuant to an agreement between the Company and such
holder (the "Other Registrable Securities"), pro-rata among the holders
of such Registrable Securities and the Other Registrable Securities on
the basis of the number of shares of Registrable Securities and Other
Registrable Securities owned by each such holder.
(iii) If a Piggyback Registration is an underwritten
secondary registration on behalf of holders of the Company's securities,
and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the
Company shall include in such registration (A) first, the securities
requested to be included therein by the holder exercising its demand
registration rights and (B) second, the Registrable Securities requested
to be included in such registration and the Other Registrable
Securities, pro-rata among the holders of such Registrable Securities
and the Other Registrable Securities on the basis of the number of
shares of Registrable Securities and Other Registrable Securities owned
by each such holder.
(iv) In the event of any registration pursuant to this
Section 2(b) where the full amount of the Registrable Securities and/or
the Other Registrable Securities requested to be included in such
registration cannot be included in full, then the number of Registrable
Securities and Other Registrable Securities available for registration
shall be allocated among the members of each such group pro rata based
upon the number of Registrable Securities and Other Registrable
Securities requested to be included in such registration by each member
of the group. The obligation of the Company to include Registrable
Securities and Other Registrable Securities in a Piggyback Registration
shall be subject to the advice of the managing underwriter of such
underwritten offering, which may take into account the size of the
offering, market conditions and the appropriateness of the Investor's or
Other Registrable Securities holder's participation if such holder is an
employee, officer or director of the Company.
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(c) The Company will have the right to select the investment
banker(s) and manager(s) to administer any offerings pursuant to this Section 2,
subject in the case of an offering pursuant to Section 2(a) to the approval of
the Investor, which approval shall not be unreasonably withheld.
(d) Delay of Registration Statement. Notwithstanding anything to
the contrary contained in this Agreement, the Company may delay the filing,
delay the effectiveness or suspend the effectiveness of a Registration Statement
under Section 2(a) or require the Investor to suspend sales or other
dispositions of the Registrable Securities under an effective Registration
Statement filed pursuant to Section 2(a), in each case for such time as may be
reasonably required by the Company, if (i) the Company believes the sale of the
Registrable Securities thereunder would interfere with or be detrimental to a
planned offering by the Company of any of the Company's securities, (ii) the
Company believes the sale of the Registrable Securities thereunder would have a
material adverse effect on the business, prospects, operations, results of
operations, assets, liabilities, or condition (financial or otherwise) of the
Company; (iii) the Company is engaged in discussions concerning any possible
merger, acquisition, financing, business combination, restructuring or sale of
all or any substantial portion of the Company or its assets, or any similar
transaction or (iv) the Company would be required to disclose in such
Registration Statement material information that it would not otherwise be
required to disclose in its filings with the SEC pursuant to the Exchange Act
and that it has not then disclosed in such filings with the SEC (each an
"Allowed Delay"); provided, however, that the Company shall not delay for more
than ninety (90) days in any twelve (12) month period or more than once during
any twelve (12) month period. In the event of an Allowed Delay, the Company
shall promptly (x) notify the Investor in writing (a "Delay Notice") of the
existence (but not the substance) of the Allowed Delay and (y) advise the
Investor in writing to cease all sales or other dispositions under such
Registration Statement until the expiration of the period provided for in the
Delay Notice. Upon expiration of the Allowed Delay, the Company shall again
file, cause the effectiveness of, or permit the resumption of sales and
dispositions under the Registration Statement.
(e) Rule 144. Notwithstanding the registration of the resale of
the Registrable Securities in accordance with this Section 2, if at any time of
offer and sale of such Registrable Securities such securities can be sold
pursuant to Rule 144 promulgated under the Securities Act ("Rule 144") in the
manner, amount and on such terms as the Investor wishes to offer and sell such
securities, the Investor may endeavor to offer and sell such securities pursuant
to Rule 144.
(f) Other Registrations. The Company agrees that it will not
enter into any agreement or instrument with any Person which grants such Person
registration rights which are senior to the registration rights granted
hereunder without the approval of the Investor, which approval shall not be
unreasonably withheld or delayed.
3. Obligations of the Company. In connection with the registration
of the Registrable Securities, the Company shall:
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(a) Prepare and file with the SEC a Registration Statement or
Statements with respect to the Registrable Securities as provided herein, and
thereafter use its best efforts to cause the Registration Statement to become
effective and keep the Registration Statement effective for the period of
distribution contemplated thereby. In any case, the Registration Statement
(including any amendments or supplements thereto, prospectuses contained therein
and documents incorporated by reference therein) filed by the Company shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective for the time periods set
forth in Section 3(a) above;
(c) Furnish to the Investor (i) promptly after the same is
prepared and publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or supplement thereto
and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as the Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by the Investor;
(d) Use reasonable efforts to register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investor may reasonably
request, prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements, take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all
times that the Registration Statement is required to be effective under Section
3(a) hereof and take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (ii)
subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause more than nominal expense or burden to the Company or
(v) make any change in its charter or bylaws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of the
Company and its stockholders;
(e) As promptly as practicable after becoming aware of such
event, notify the Investor of the happening of any event of which the Company
has knowledge, as a result of which the prospectus included in the 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, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to the
Investor as the Investor may reasonably request;
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(f) As promptly as practicable after becoming aware of such
event, notify the Investor of the issuance by the SEC of any stop order or other
suspension of effectiveness of the Registration Statement;
(g) Permit a single firm of counsel designated as selling
stockholders' counsel by the Investor and other persons participating in the
offering to review the Registration Statement and all amendments and supplements
thereto a reasonable period of time prior to their filing with the SEC, and
shall not file any document in a form to which such counsel reasonably objects;
(h) Make available for inspection by the Investor, any
underwriter participating in any disposition pursuant to the Registration
Statement and any attorney, accountant or other agent retained by the Investor
or underwriter (collectively, the "Inspector"), all pertinent financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to enable each
Inspector to exercise its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided, however,
that each Inspector shall hold in confidence (making such confidential
information known only to officers, agents or employees thereof who have a need
to know), shall not use any information so obtained for any purpose other than
preparation or review of the Registration Statement, and shall not make any
disclosure (except to the Investor or underwriter) of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (ii) the release of such Records is requested
pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or (iii) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement. The Company shall not be required to disclose any
confidential information in such Records to any Inspector or the Investor until
and unless the Investor or Inspector shall have entered into confidentiality
agreements (in a form as is customary in similar circumstances) with the Company
with respect thereto, containing at a minimum the provisions contained in this
Section 3(h). The Investor agrees that it shall, upon learning that disclosure
of such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. The Company shall hold in confidence and shall not make any
disclosure of information concerning the Investor provided to the Company
pursuant to Section 4(a) hereof unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning the Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Investor, to undertake, at Investor's expense, appropriate action
to prevent disclosure of, or to obtain a protective order for, such information;
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(i) Use its best efforts either to cause all the Registrable
Securities covered by the Registration Statement to be listed on the American
Stock Exchange or other national securities exchange and on each additional
national securities exchange on which similar securities issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange or secure designation of all the
Registrable Securities covered by the Registration Statement as a National
Association of Securities Dealers Automated Quotations System ("NASDAQ")
"national market system security" within the meaning of Rule 11Aa2-1 of the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the quotation of the Registrable Securities on the NASDAQ National Market
System; or, if, despite the Company's best efforts, the Company is unsuccessful
in satisfying the immediately preceding portion of this clause (i), to arrange
for at least two market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities;
(j) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(k) Cooperate with the Investor to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be sold in the denominations or amounts
as the case may be, and registered in such names as the Investor may reasonably
request; and
(l) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.
4. Obligations of the Investor. In connection with the registration
of the Registrable Securities, the Investor shall have the following
obligations:
(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement that the
Investor shall furnish to the Company such information regarding itself and the
intended method of disposition of the Common Stock held by it as shall be
reasonably required to effect the registration of the Common Stock and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least fifteen (15) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify the Investor
of the information the Company requires (the "Requested Information").
(b) The Investor agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of the Registration Statement hereunder.
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(c) The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), the Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement until the Investor's receipt
of the copies of the supplemented or amended prospectus contemplated by
Section3(e) or 3(f) and, if so directed by the Company, the Investor shall
deliver to the Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in the Investor's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice.
(d) In the event the Investor determines to engage the services
of an underwriter, the Investor agrees to enter into and perform its obligations
under an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities.
5. Expenses of Registration. All expenses (other than brokerage
commissions or discounts) incurred in connection with registrations, filings or
qualifications pursuant to Section 2, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees and
the fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investor shall bear the fees and
out-of-pocket expenses of the one legal counsel selected pursuant to Section
3(g) hereof.
6. Indemnification.
(a) By the Company. To the extent permitted by law, the Company
will indemnify and hold harmless the Investor and its employees, agents and
attorneys, any underwriter (as defined in the Securities Act) for the Investor,
the directors, if any, of such underwriter and the officers, if any, of such
underwriter, and each person, if any, who controls any such underwriter within
the meaning of the Securities Act or the Exchange Act (each, an "Indemnified
Person"), against any losses, claims, damages, expenses or liabilities (joint or
several) (collectively "Claims") to which any of them become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-effective amendment
thereof, any prospectus included therein or any documents incorporated by
reference therein: (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any post-effective
amendment thereof or the omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission of any material fact
necessary to make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
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foregoing clauses (i) through (iii) being, collectively, "Violations"). The
Company shall reimburse the Investor and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and payable, for any
legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a) (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto;
(ii) with respect to any preliminary prospectus shall not inure to the benefit
of any such person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or supplemented; (iii) shall not be available to the extent such
Claim is based on a failure of the Investor to deliver or cause to be delivered
the prospectus made available by the Company; and (iv) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld.
(b) By the Investor. In connection with any Registration
Statement in which the Investor is participating, the Investor agrees to
indemnify and hold harmless, to the same extent and in the same manner set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement, and each of its employees, agents and
attorneys, and each person, if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act (each, an "Indemnified Party"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs (i) in reliance upon and in conformity with written
information furnished to the Company by the Investor expressly for use in
connection with such Registration Statement or (ii) the Investor's violation of
Regulation M; and the Investor will promptly reimburse any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
the Investor, which consent shall not be unreasonably withheld. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investor. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
(c) The Company and the Investor shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so furnished
in writing expressly for inclusion in the Registration Statement.
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(d) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, 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 Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or 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 Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or 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 Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 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.
(e) Contribution. To the extent any indemnification provided for
herein is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that no contribution shall be made under circumstances where
the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation and
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
7. Reports under Exchange Act. With a view to making available to the
Investor the benefits of Rule 144 or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without Registration, until such time as the Investor shall have
sold all the Registrable Securities pursuant to a Registration Statement or Rule
144, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
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(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to the Investor so long as the Investor owns
Registrable Securities, promptly upon request, a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and such other information as may be reasonably requested to permit
the Investor to sell such securities pursuant to Rule 144 without Registration.
8. Amendment of Registration Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment of waiver
effected in accordance with this Section 8 shall be binding upon the Investor
and the Company.
9. Miscellaneous.
(a) If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) 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 0000 Xx. Xxxxxx
Xxxxxxx, Xxxxx, Xxxxx 00000, Attn: Xxxx Xxxxxxx, or at such other address as
each such party furnishes by notice given in accordance with this Section 9(b),
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.
(c) Investor acknowledges that the Company has granted
registration rights to other holders of the Company's securities and that
nothing herein shall be deemed to alter such existing registration rights.
(d) 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.
(e) 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.
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(f) Any dispute, claim or controversy arising out of or related
to this Agreement or the breach thereof shall be resolved by litigation in a
court with jurisdiction in Miami-Dade County, Florida. The prevailing party in
any such litigation shall be entitled to attorneys fees.
(g) 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.
(h) This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties hereto.
(i) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(j) The headings in the Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(k) 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.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
nSTOR TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx
Vice President
INVESTOR:
PACIFIC TECHNOLOGY GROUP, INC.
By: /s/ Xxxx X. Xxxxx
