EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement') is dated as of May
4, 2000 by and between nStor Technologies, Inc., a Delaware corporation (the
"Company"), and Wishmasters Limited (the "Purchaser").
The parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Certain Definitions.
(a) "Average Daily Price" shall be the price based on the VWAP of the
Company on the American Stock Exchange or, if the American Stock Exchange
is not the Principal Market, on the Principal Market.
(b) "Draw Down" shall have the meaning assigned to such term in
Section 6.1(a) hereof.
(c) "Draw Down Exercise Date" shall have the meaning assigned to such
term in Section 6.1(b) hereof.
(d) "Draw Down Pricing Period" shall mean a period of twenty-two (22)
consecutive Trading Days preceding a Draw Down Exercise Date.
(e) "Effective Date" shall mean the date the Registration Statement of
the Company covering the Shares being subscribed for hereby is declared
effective.
(f) "Material Adverse Effect" shall mean any adverse effect on the
business, operations, properties or financial condition of the Company that
is material and adverse to the Company and its subsidiaries and affiliates,
taken as a whole and/or any condition, circumstance, or situation that
would prohibit or otherwise materially interfere with the ability of the
Company to perform any of its material obligations under this Agreement or
the Registration Rights Agreement or to perform its obligations under any
other material agreement.
(g) "Principal Market" shall mean initially the American Stock
Exchange, and shall include the Nasdaq National Market, the Nasdaq SmallCap
Market or the New York Stock Exchange if the Company is listed and trades
on such market or exchange. Principal Market shall not include the OTC
Bulletin Board without the express written consent of the Purchaser.
(h) "Registration Statement" shall mean the registration statement
under the Securities Act, to be filed with the Commission for the
registration of the Shares pursuant to the Registration Rights Agreement
attached hereto as Exhibit A.
(i) "SEC Documents" shall mean the Company's latest Form 10-K as of
the time in question, all Forms 10-Q and 8-K filed thereafter, and the
Proxy Statement for its latest fiscal year as of the time in question until
such time as the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.
(j) "Shares" shall mean, collectively, the shares of Common Stock of
the Company being subscribed for hereunder and those shares of Common Stock
issuable to the Purchaser upon exercise of the Warrants.
(k) "Threshold Price" is the lowest Average Daily Price at which the
Company will sell its Common Stock with respect to this Agreement.
(l) "Trading Day" shall mean any day on which the Principal Market is
open for business.
(m) "VWAP" shall mean the daily volume weighted average price of the
Company's Common Stock on the American Stock Exchange or on any Principal
Market as reported by Bloomberg Financial using the AQR function.
ARTICLE II
Purchase and Sale of Common Stock
Section 2.1 Purchase and Sale of Stock.
Subject to the terms and conditions of this Agreement, the
Company, at its sole and exclusive option, may issue and sell to the Purchaser
and the Purchaser shall purchase from the Company up to Fifteen Million Dollars
($15,000,000) of the Company's Common Stock, $0.05 par value per share (the
"Common Stock"), based on up to as many Draw Downs of up to Five Million Dollars
($5,000,000) per Draw Down as the Company, in its sole discretion, shall choose
to exercise until the aggregate amount purchased under this Agreement equals
Fifteen Million Dollars ($15,000,000).
Section 2.2 The Shares.
The Company has authorized and has reserved and covenants to continue to
reserve, free of preemptive rights and other similar contractual rights of
stockholders, a sufficient number of its authorized but unissued shares of its
Common Stock to cover the Shares to be issued in connection with all Draw Downs
requested under this Agreement. Anything in this Agreement to the contrary
notwithstanding, (i) at no time will the Company request a Draw Down which would
result in the issuance of a number of shares of Common Stock pursuant to this
Agreement which exceeds 19.9% of the number of shares of Common Stock issued and
outstanding on the Closing Date without obtaining stockholder approval of such
excess issuance, and (ii) the Company may not make a Draw Down to the extent
that, after such purchase by the Purchaser, the sum of the number of shares of
Common Stock beneficially owned by the Purchaser and its affiliates would result
in beneficial ownership by the Purchaser and its affiliates of more than the
lesser of (i) 9.9% of the then outstanding shares of Common Stock or (ii)
500,000 shares of Common Stock. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities and Exchange Act of 1934, as amended.
Section 2.3 Purchase Price and Closing.
The Company agrees to issue and sell to the Purchaser
and, in consideration of and in express reliance upon the representation,
warranties, covenants, terms and conditions of this Agreement, the Purchaser
agrees to purchase that number of the Shares to be issued in connection with
each Draw Down. The closing under this Agreement shall take place at the offices
of Xxxxxxx Xxxxxx & Green, P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Closing") within fifteen (15) days of the date hereof, or (ii) such other time
and place or on such date as the Purchaser and the Company may agree upon (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 III
Representations and Warranties
Section 3.1 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 and has all requisite corporate authority to own, lease and
operate its properties and assets and to carry on its business as now being
conducted. Except as set forth in the SEC Documents, the Company does not
have any subsidiaries and does not own more that fifty percent (50%) of or
control any other business entity. 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.
(b) Authorization, Enforcement.
(i) The Company has the requisite corporate power
and corporate authority to enter into and perform its obligations under
this Agreement, the Registration Rights Agreement, the Escrow Agreement and
to issue the Shares pursuant to their respective terms, (ii) the execution,
issuance and delivery of this Agreement, the Registration Rights Agreement
and the Escrow 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 or stockholders is required, and (iii) this
Agreement, the Registration Rights Agreement and the Escrow Agreement have
been duly executed and delivered by the Company and at the Closing shall
constitute valid and binding obligations of the Company enforceable against
the Company in accordance with their 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. The
Company has duly and validly authorized and reserved for issuance shares of
Common Stock sufficient in number for the issuance of the Draw Down Shares.
(c) Capitalization.
As of April 30, 2000, the authorized capital stock of the company
consists of 75,000,000 shares of Common Stock, $0.05 par value per share,
of which 31,703,024 shares are issued and outstanding and 1,000,000 shares
of preferred stock, $0.01 par value per share, of which 4,000 have been
designated as Series A Convertible Preferred Stock, none are issued and
outstanding, of which 4,000 have been designated as Series C Convertible
Preferred Stock, 3,000 of which are issued and outstanding, of which 6,000
have been designated as Series D Convertible Preferred Stock, 2,700 of
which are issued and outstanding, of which 3,500 have been designated as
Series E Convertible Preferred Stock, 3,500 of which are issued and
outstanding, of which 4,654 have been designated as Series F Convertible
Preferred Stock, 4,654 of which are issued and outstanding. All of the
outstanding shares of the Company's Common Stock have been duly and validly
authorized and are fully-paid and non-assessable. Except as set forth in
this Agreement and the Registration Rights Agreement and as set forth in
the SEC Documents, or on Schedule 3.1(c) hereto, no shares of Common Stock
are entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company.
Furthermore, except as set forth in this Agreement and as set forth in the
SEC Documents or on Schedule 3.1(c) hereto, there are no contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock of the Company
or options, securities or rights convertible into shares of capital stock
of the Company. Except as set forth in the SEC Documents or on Schedule
3.1(c) hereto, the Company is not a party to any agreement granting
registration rights to any person with respect to any of its equity or debt
securities. The Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the capital
stock of the Company. Except as set forth in the SEC Documents or on
Schedule 3.1(c) hereto, the offer and sale of all capital stock,
convertible securities, rights, warrants, or options of the Company issued
prior to the Closing complied with all applicable federal and state
securities laws, and no stockholder has a right of rescission or damages
with respect thereto which would have a Material Adverse Effect on the
Company's financial condition or operating results. The Company has made
available to the Purchaser true and correct copies of the Company's
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, and the Company has not received any
notice from such market questioning or threatening the continued inclusion
of the Common Stock on such market.
(d) Issuance of Shares.
The Shares to be issued under this Agreement have been duly
authorized by all necessary corporate action and, when paid for or issued
in accordance with the terms hereof, the Shares shall be validly issued and
outstanding, fully paid and non-assessable, and the Purchaser shall be
entitled to all rights accorded to a holder of Common Stock.
(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
Company's 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
or state securities laws and regulations) applicable to the Company or any
of its subsidiaries or by which any property or asset of the Company or any
of its subsidiaries 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. The business of the Company and its subsidiaries
is not being conducted in violation of any laws, ordinances or regulations
of any governmental entity, except for possible violations which singularly
or in the aggregate do not and will not have a Material Adverse Effect. The
Company is not required under any federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for
it to execute, deliver or perform any of its obligations under this
Agreement, or issue and sell the Shares in accordance with the terms hereof
(other than any filings which may be required to be made by the Company
with the Securities and Exchange Commission (the "Commission") or state
securities administrators subsequent to the Closing and any registration
statement which may be filed pursuant hereto); provided that, for purpose
of the representation made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and agreements of
the Purchaser herein.
(f) Commission Documents, Financial Statements.
The Common Stock of the Company is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and, except as disclosed in the SEC Documents
or on Schedule 3.1(f) hereto, the Company has timely filed all reports,
schedules, forms, statements 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, 1998. The Company has not provided to the Purchaser any
information which, according to applicable law, rule or regulation, should
have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this
Agreement. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder applicable to such
documents, and, as of their respective dates, none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in
the Commission Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the Commission or other applicable rules and regulations with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes
or may be condensed or summary statements), and fairly present in all
material respects the financial position of the Company and its
subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(g) Subsidiaries.
The SEC Documents or Schedule 3.1(g) hereto sets forth each
subsidiary of the Company, showing the jurisdiction of its incorporation or
organization and showing the percentage of each person's ownership of the
outstanding stock or other interests of such subsidiary. For the purposes
of this Agreement, "subsidiary" shall mean any corporation or other entity
of which at least a majority of the securities or other ownership interests
having ordinary voting power (absolutely or contingently) for the election
of directors or other persons performing similar functions are at the time
owned directly or indirectly by the Company and/or any of its other
subsidiaries. All of the outstanding shares of capital stock of each
subsidiary have been duly authorized and validly issued, and are fully paid
and non-assessable. There are no outstanding preemptive, conversion or
other rights, options, warrants or agreements granted or issued by or
binding upon any subsidiary for the purchase or acquisition of any shares
of capital stock of any subsidiary or any other securities convertible
into, exchangeable for or evidencing the rights to subscribe for any shares
of such capital stock. Neither the Company nor any subsidiary is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of the capital stock of any subsidiary or any
convertible securities, rights, warrants or options of the type described
in the preceding sentence. Neither the Company nor any subsidiary is a
party to, nor has any knowledge of, any agreement restricting the voting or
transfer of any shares of the capital stock of any subsidiary.
(h) No Material Adverse Effect.
Since December 31, 1999, no Material Adverse
Effect has occurred or exists with respect to the Company, except as
disclosed in the SEC Documents or on Schedule 3.1(h) hereof.
(i) No Undisclosed Liabilities.
Except as disclosed in the SEC Documents or on
Schedule 3.1(i) hereto, neither the Company nor any of its subsidiaries has
any liabilities, obligations, claims or losses (whether liquidated or
unliquidated, secured or unsecured, absolute, accrued, contingent or
otherwise) that would be required to be disclosed on a balance sheet of the
Company or any subsidiary (including the notes thereto) in conformity with
GAAP which are not disclosed in the Commission Documents, other than those
incurred in the ordinary course of the Company's or its subsidiaries
respective businesses since such date and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the
Company or its subsidiaries.
(j) No Undisclosed Events or Circumstances.
Since December 31, 1999, no event or circumstance
has occurred or exists with respect to the Company or its businesses,
properties, prospects, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been
so publicly announced or disclosed in the SEC Documents.
(k) Indebtedness.
The SEC Documents or Schedule 3.1(k) hereto sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the
Company or any subsidiary, or for which the Company or any subsidiary has
commitments. For the purposes of this Agreement, "Indebtedness" shall mean
(a) any liabilities for borrowed money or amounts owed in excess of
$250,000 (other than trade accounts payable incurred in the ordinary course
of business), (b) all guaranties, endorsements and contingent obligations
in respect of Indebtedness of others, whether or not the same are or should
be reflected in the Company's balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $250,000 due under
leases required to be capitalized in accordance with GAAP. Neither the
Company nor any subsidiary is in default with respect to any Indebtedness.
(l) Title to Assets.
Each of the Company and the subsidiaries has good and marketable
title to all of its real and personal property reflected in the Commission
Documents, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except for those indicated in the SEC
Documents or on Schedule 3.1(1) hereto or such that do not cause a Material
Adverse Effect on the Company's financial condition or operating results.
All said leases of the Company and each of its subsidiaries are valid and
subsisting and in full force and effect.
(m) Actions Pending.
There is no action, suit, claim, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company
or any subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken
pursuant hereto or thereto. Except as set forth in the SEC Documents or on
Schedule 3.1(m) hereto, there is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened, against
or involving the Company, any subsidiary or any of their respective
properties or assets. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any subsidiary.
(n) Compliance with Law.
The business of the Company and the subsidiaries has been and is
presently being conducted in accordance with all applicable federal, state
and local governmental laws, rules, regulations and ordinances, except as
set forth in the SEC Documents or on Schedule 3.1(n) hereto or such that do
not cause a Material Adverse Effect. The Company and each of its
subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of their respective businesses as now being conducted by them
unless the failure to possess such franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals,
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
(o) Taxes.
The Company and each subsidiary has filed all Tax Returns which it
is required to file under applicable laws; all such Tax Returns are true
and accurate in all material respects and have been prepared in material
compliance with all applicable laws; the Company has paid all Taxes due and
owing by it or any subsidiary (whether or not such Taxes are required to be
shown on a Tax Return) and have withheld and paid over to the appropriate
taxing authorities all Taxes which it is required to withhold from amounts
paid or owing to any employee, stockholder, creditor or other third
parties, except where the failure to make such payment or withholding would
not have a Material Adverse Effect; and since December 31, 1998, the
charges, accruals and reserves for Taxes with respect to the Company
(including any provisions for deferred income taxes) reflected on the books
of the Company are adequate to cover any Tax liabilities of the Company if
its current tax year were treated as ending on the date hereof.
To the Company's knowledge, no claim has been made by a taxing
authority in a jurisdiction where the Company does not file tax returns
that the Company or any subsidiary is or may be subject to taxation by that
jurisdiction. There are no foreign, federal, state or local tax audits or
administrative or judicial proceedings pending or being conducted with
respect to the Company or any subsidiary; no information related to Tax
matters has been requested by any foreign, federal, state or local taxing
authority; and, except as disclosed above, no written notice indicating an
intent to open an audit or other review has been received by the Company or
any subsidiary from any foreign, federal, state or local taxing authority.
There are no material unresolved questions or claims concerning the
Company's Tax liability. The Company (A) has not executed or entered into a
closing agreement pursuant to 7121 of the Internal Revenue Code or any
predecessor provision thereof or any similar provision of state, local or
foreign law; and (B) has not agreed to or is required to make any
adjustments pursuant to 481 (a) of the Internal Revenue Code or any similar
provision of state, local or foreign law by reason of a change in
accounting method initiated by the Company or any of its subsidiaries or
has any knowledge that the IRS has proposed any such adjustment or change
in accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or operations of the Company. The Company has not
been a United States real property holding corporation within the meaning
of 897(c)(2) of the Internal Revenue Code during the applicable period
specified in 897(c)(1)(A)(ii) of the Internal Revenue Code.
The Company has not made an election under 341(f) of the Internal
Revenue Code. The Company is not liable for the Taxes of another person
that is not a subsidiary of the Company under (A) Treas. Reg. 1.1502-6 (or
comparable provisions of state, local or foreign law), (B) as a transferee
or successor, (C) by contract or indemnity or (D) otherwise. The Company is
not a party to any tax sharing agreement. The Company has not made any
payments, is not obligated to make payments or is not a party to an
agreement that could obligate it to make any payments that would not be
deductible under 280G of the Internal Revenue Code.
For purposes of this Section 3.1(o):
"IRS" means the United States Internal Revenue Service.
"Tax" or "Taxes" means federal, state, county, local, foreign,
or other income, gross receipts, ad valorem, franchise, profits, sales or
use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license, payroll,
wage or other withholding, employment, social security, severance, stamp,
occupation, alternative or add-on minimum, estimated and other taxes of any
kind whatsoever (including, without limitation, deficiencies, penalties,
additions to tax, and interest attributable thereto) whether disputed or
not.
"Tax Return" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto and including
any amendment thereof.
(p) Certain Fees.
Except as set forth on Schedule 3.1(p) hereto, no brokers, finders
or financial advisory fees or commissions will be payable by the Company or
any subsidiary with respect to the transactions contemplated by this
Agreement.
(q) Disclosure.
To the best of the Company's knowledge, neither this Agreement or
the Schedules hereto nor any other documents, certificates or instruments
furnished to the Purchaser by or on behalf of the Company or any subsidiary
in connection with the transactions contemplated by this Agreement contain
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made herein or therein, in the
light of the circumstances under which they were made herein or therein,
not misleading.
(r) Operation of Business.
The Company and each of the subsidiaries owns or possesses all
patents, trademarks, service marks, trade names, copyrights, licenses and
authorizations as set forth in the SEC Documents and on Schedule 3.1(r)
hereto, and all rights with respect to the foregoing, which are necessary
for the conduct of its business as now conducted without, to the Company's
knowledge, any conflict with the rights of others.
(s) Regulatory Compliance.
The Company has all necessary licenses, registrations and permits to
conduct its business as now being conducted in all states where the Company
conducts its business, except where the failure to have such registrations
or permits would not have a Material Adverse Effect.
(t) Books and Records.
The records and documents of the Company and its subsidiaries
accurately reflect in all material respects the information relating to the
business of the Company and the subsidiaries, the location and collection
of their assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company or any subsidiary.
(u) Material Agreements.
The Company and each of its subsidiaries has in all material
respects performed all the obligations required to be performed by them to
date under the foregoing agreements, have received no notice of default
and, to the best of the Company's knowledge are not in default under any
material agreement now in effect, the result of which could cause a
Material Adverse Effect. Except as set forth in the SEC Documents or on
Schedule 3.1(u) hereto, no written or oral contract, instruments,
agreement, commitment, obligation, plan or arrangement of the Company or of
any subsidiary limits or shall limit the payment of dividends on the
Company's Common Stock.
(v) Transactions with Affiliates.
Except as set forth in the SEC Documents or on
Schedule 3.1(v) hereto, there are no loans, leases, agreements, contracts,
royalty agreements, management contracts or arrangements or other
continuing transactions exceeding $100,000 between (a) the Company, any
subsidiary or any of their respective customers or suppliers on the one
hand, and (b) on the other hand, any officer, employee, consultant or
director of the Company, or any of its subsidiaries, or any person owning
any capital stock of the Company or any subsidiary or any member of the
immediately family of such officer, employee, consultant, director or
stockholder or any corporation or other entity controlled by such officer,
employee, consultant, director or stockholder, or a member of the immediate
family of such officer, employee, consultant, director or stockholder.
(w) Securities Act of 1933.
The Company has complied and will comply with all applicable
federal and state securities laws in connection with the offer, issuance
and sale of the Shares hereunder. Neither the Company nor anyone acting on
its behalf, directly or indirectly, has or will sell, offer to sell or
solicit offers to buy the Shares or similar securities to, or solicit
offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any person (other than
the Purchaser), so as to bring the issuance and sale of the Shares and/or
Warrants under the registration provisions of the Securities Act and
applicable state securities laws. Neither the Company nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or
sale of the Shares.
(x) [INTENTIONALLY DELETED]
(y) Employees.
Neither the Company nor any subsidiary has any collective
bargaining arrangements or agreements covering any of its employees, except
as set forth in the SEC Documents or on Schedule 3(y) hereto. Except as set
forth in the SEC Documents or on Schedule 3(y) hereto, neither the Company
nor any subsidiary is in breach of any employment contract, agreement
regarding proprietary information, noncompetition agreement,
nonsolicitation agreement, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any officer,
employee or consultant to be employed or engaged by the Company or such
subsidiary. Since the date of the December 31, 1999, Form 10-K, no officer,
consultant or key employee of the Company or any subsidiary whose
termination, either individually or in the aggregate, could have a Material
Adverse Effect, has terminated or, to the knowledge of the Company, has any
present intention of terminating his or her employment or engagement with
the Company or any subsidiary.
(z) Absence of Certain Developments.
Except as provided in SEC Documents or in Schedule 3.1(z) hereto,
since December 31, 1999 neither the Company nor any subsidiary has:
(i) issued any stock, bonds or other corporate securities or any
rights, options or warrants with respect thereto;
(ii) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities incurred in
the ordinary course of business which are comparable in nature and amount
to the current liabilities incurred in the ordinary course of business
during the comparable portion of its prior fiscal year, as adjusted to
reflect the current nature and volume of the Company's or such subsidiary's
business;
(iii) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current
liabilities paid in the ordinary course of business;
(iv) declared or made any payment or distribution of cash or other
property to stockholders with respect to its stock, or purchased or
redeemed, or made any agreements so to purchase or redeem, any shares of
its capital stock;
(v) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business;
(vi) sold, assigned or transferred any patent rights, trademarks,
trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of
business or to the Purchaser or its representatives;
(vii) suffered any substantial losses or waived any rights of material
value, whether or not in the ordinary course of business, or suffered the
loss of any material amount of prospective business;
(viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(ix) made capital expenditures or commitments therefor in excess of
$500,000;
(x) entered into any other material transaction, whether or not in the
ordinary course of business;
(xi) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(xii) experienced any material problems with labor or management in
connection with the terms and conditions of their employment; or
(xiii) effected any two or more events of the foregoing kind which in
the aggregate would be material to the Company or its subsidiaries.
(bb) Use of Proceeds.
The proceeds from the sale of the Shares will be used by the
Company and its subsidiaries for general corporate purposes for
acquisitions.
(cc) Acknowledgment Regarding Purchaser's Purchase
of Shares.
Company acknowledges and agrees that Purchaser is acting solely in
the capacity of arm's length purchaser with respect to this Agreement and
the transactions contemplated hereunder. The Company further acknowledges
that the Purchaser is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereunder and any advice given by the Purchaser
or any of its representatives or agents in connection with this Agreement
and the transactions contemplated hereunder is merely incidental to the
Purchaser's purchase of the Shares. The Company further represents to the
Purchaser that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation by the Company and its own
representatives and counsel.
Section 3.2 Representations and Warranties of the Purchaser.
The Purchaser hereby makes the following representations and
warranties to the Company:
(a) Organization and Standing of the Purchaser.
The Purchaser is a corporation duly incorporated, validly existing and
in good standing under the laws of the British Virgin Islands.
(b) Authorization and Power.
The Purchaser has the requisite power and authority to enter into
and perform this Agreement and to purchase the Shares being sold to it
hereunder. The execution, delivery and performance of this Agreement by
Purchaser and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action.
(c) No Conflicts.
The execution, delivery and performance of this Agreement and the
consummation by the Purchaser of the transactions contemplated hereby or
relating hereto do not and will not (i) result in a violation of such
Purchaser's charter documents or bylaws or (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,
indenture or instrument to which the Purchaser is a party, or result in a
violation of any law, rule, or regulation, or any order, judgment or decree
of any court or governmental agency applicable to the Purchaser or its
properties (except for such conflicts, defaults and violations as would
not, individually or in the aggregate, have a Material Adverse Effect on
Purchaser). The Purchaser is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or to purchase the Shares in
accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, the Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the
Company herein.
(d) Financial Risks.
The Purchaser acknowledges that it is able to bear the financial
risks associated with an investment in the Shares and that it has been
given full access to such records of the Company and the subsidiaries and
to the officers of the Company and the subsidiaries as it has deemed
necessary or appropriate to conduct its due diligence investigation. The
Purchaser is capable of evaluating the risks and merits of an investment in
the Shares by virtue of its experience as an investor and its knowledge,
experience, and sophistication in financial and business matters and the
Purchaser is capable of bearing the entire loss of its investment in the
Shares.
(e) Accredited Investor.
The Purchaser is an "accredited investor" as defined in Regulation
D promulgated under the Securities Act.
(f) Compliance With Law.
The Purchaser's trading and distribution activities with respect
to the Shares will be in compliance with all applicable state and federal
securities laws, rules and regulations and the rules and regulations of the
Principal Market.
(g) General.
The Purchaser understands that the Company is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in
order to determine the suitability of the Purchaser to acquire the Shares.
ARTICLE IV
Covenants
The Company covenants with the Purchaser as follows:
Section 4.1 Securities Compliance.
The Company shall notify the American Stock
Exchange, in accordance with their rules and regulations, of the
transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of
the Shares and the Warrants to the Purchaser or subsequent holders.
Section 4.2 Registration and Listing.
The Company will cause its Common Stock to
continue to be registered under Sections 12(b) or 12(g) of the Exchange
Act, will comply in all respects with its reporting and filing obligations
under the Exchange Act, will comply with all requirements related to any
registration statement filed pursuant to this Agreement, and will not take
any action or file any document (whether or not permitted by the Securities
Act or the rules promulgated thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act, except as permitted
herein. The Company will take all action necessary to continue the listing
or trading of its Common Stock on the American Stock Exchange or another
Principal Market and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
NASD and the American Stock Exchange.
Section 4.3 Registration Statement.
The Company shall use its reasonable best efforts
to cause to be filed the Registration Statement, which Registration
Statement shall provide for the resale of the Shares by the Purchaser to
the public in accordance with this Agreement. The Company shall cause such
Registration Statement to be declared effective by the Commission as
expeditiously as practicable. Before the Purchaser shall be obligated to
accept a Draw Down request from the Company, the Company shall have caused
a sufficient number of shares of Common Stock to be registered to cover the
Shares to be issued in connection with such Draw Down.
Section 4.4 Escrow Arrangement.
The Company and the Purchaser shall enter into an escrow arrangement
with Xxxxxxx Xxxxxx & Green, P.C. (the "Escrow Agent") in the Form of
Exhibit B hereto respecting payment against delivery of the Shares.
Section 4.5 Compliance with Laws.
The Company shall comply, and cause each subsidiary to comply, with
all applicable laws, rules, regulations and orders, noncompliance with
which could have a Material Adverse Effect.
Section 4.6 Keeping of Records and Books of Account.
The Company shall keep and cause each subsidiary to keep adequate
records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied, reflecting all financial
transactions of the Company and its subsidiaries, and in which, for each
fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
Section 4.7 Amendments.
The Company shall not amend or waive any provision of its
Certificate of Incorporation or Bylaws of the Company in any way that would
adversely affect the dividend rights or voting rights of the holders of the
Shares.
Section 4.8 Other Agreements.
The Company shall not enter into any agreement the
terms of which such agreement would restrict or impair the right to perform
of the Company or any subsidiary under this Agreement or the Certificate of
Incorporation of the Company.
Section 4.9 Notice of Certain Events Affecting
Registration; Suspension of Right to Request a Draw Down.
The Company will immediately notify the Purchaser upon the
occurrence of any of the following events in respect of the Registration
Statement or related prospectus in respect of the Shares: (i) receipt of
any request for additional information from the Commission or any other
federal or state governmental authority during the period of effectiveness
of the Registration Statement the response to which would require any
amendments or supplements to the Registration Statement or related
prospectus; (ii) the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Shares
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in the Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes
in the Registration Statement, related prospectus or documents so that, in
the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that in the case of the related prospectus, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and (v) the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be
appropriate; and the Company will promptly make available to the Purchaser
any such supplement or amendment to the related prospectus. The Company
shall not deliver to the Purchaser any Draw Down Notice during the
continuation of any of the foregoing events.
Section 4.10 Consolidation; Merger.
The Company shall not, at any time after the date
hereof, effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument or by
operation of law the obligation to deliver to the Purchaser such shares of
stock and/or securities as the Purchaser may be entitled to receive
pursuant to this Agreement.
Section 4.11 Limitation on Future Financing.
The Company agrees that, except as set forth below,
it will not enter into any sale of its securities for cash at a discount to
the current market price until the earlier of (i) twelve (12) months from
the effective date of the Registration Statement (or eighteen (18) months
if this Agreement is extended by the Company pursuant to Section 7.1) or
(ii) thirty (30) days after the entire $15,000,000 of Shares has been
purchased by Purchaser or (iii) thirty (30) days after termination of this
Agreement pursuant to the provisions of Section 7.2(b) or 7.2(c) hereof.
The foregoing shall not prevent or limit the Company from engaging in any
sale of securities (i) in a registered public offering by the Company which
is underwritten by one or more established investment banks, (ii) in one or
more private placements where the purchasers do not have registration
rights, (iii) pursuant to any presently existing or future employee benefit
plan which plan has been or is approved by the Company's stockholders, (iv)
pursuant to any compensatory plan for a full-time employee or key
consultant, (v) in connection with a strategic partnership or other
business transaction, the principal purpose of which is not simply to raise
money or (vi) to which Purchaser gives its written approval.
ARTICLE V
Conditions to Closing and Draw Downs
Section 5.1 Conditions Precedent to the Obligation of the Company to
Sell the Shares.
The right hereunder of the Company to issue and sell the Shares 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 shall be true
and correct in all material respects as of the date when made and as of the
Closing and as of each Draw Down Exercise Date 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 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 at or prior to the Closing and as of each
Draw Down Exercise Date.
(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.
Section 5.2 Conditions Precedent to the Obligation of the Purchaser to
Close.
The obligation hereunder of the Purchaser to enter 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
sole benefit and may be waived by the Purchaser at any time in its sole
discretion.
(a) Accuracy of the Company's Representations and
Warranties.
Each of the representations and warranties of the Company 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) Opinion of Counsel, Etc.
At the Closing, the Purchaser shall have received an opinion of
counsel to the Company, dated the date of Closing, in the form of Exhibit C
hereto, and such other certificates and documents as the Purchaser or its
counsel shall reasonably require incident to the Closing.
(f) Warrants.
The Purchaser shall receive a warrant certificate to purchase up to
100,000 shares of Common Stock (the "Warrant"). The Warrant will have a
three (3) year term from its date of issuance. The Strike Price of the
Warrant shall be 120% of the average of the closing bid prices of the
Common Stock on the five (5) Trading Days immediately prior to the initial
closing date. The Common Stock underlying the Warrant will be registered in
the Registration Statement referred to in Section 4.3 hereof. The Warrant
shall be in the form of Exhibit E hereto.
Section 5.3 Conditions Precedent to the Obligation of the Purchaser to
Accept a Draw Down and Purchase the Shares.
The obligation hereunder of the Purchaser to accept a Draw Down
request and to acquire and pay for the Shares is subject to the
satisfaction or waiver, at or before each Draw Down Exercise Date, of each
of the conditions set forth below. The conditions are for the Purchaser's
sole benefit and may be waived by the Purchaser at any time in its sole
discretion.
(a) Satisfaction of Conditions to Closing.
The Company shall have satisfied, or the Purchaser shall have waived,
the conditions set forth in Section 5.2 hereof
(b) Effective Registration Statement.
The Registration Statement registering the Shares shall have been
declared effective by the Commission and shall remain effective on each
Draw Down Exercise Date.
(c) No Suspension.
Trading in the Company's Common Stock shall not have been suspended
by the Commission or the American Stock Exchange (except for any suspension
of trading of limited duration agreed to by the Company, which suspension
shall be terminated prior to each Draw Down request), and, at any time
prior to such request, trading in securities generally as reported on the
American Stock Exchange shall not have been suspended or limited, or
minimum prices shall not have been established on securities whose trades
are reported on the American Stock Exchange.
(d) Material Adverse Effect.
No Material Adverse Effect and no Consolidation
Event shall have occurred.
(e) Opinion of Counsel
The Purchaser shall have received a "down-to-date" letter from the
Company's counsel, confirming that there is no change from the counsel's
previously delivered opinion, or else specifying with particularity the
reason for any change.
ARTICLE VI
Draw Down Terms
Section 6.1 Draw Down Terms.
Subject to the satisfaction of the conditions set forth in this
Agreement, the parties agree as follows:
(a) The Company, may, in its sole discretion, issue a notice to the
Purchaser of the Company's intent to sell Shares to the Purchaser (a "Draw
Down") during each Draw Down Pricing Period, which Draw Down the Purchaser
will be obligated to accept.
(b) Only one Draw Down shall be allowed in each Draw Down Pricing
Period. The price per share paid by the Purchaser shall be based on the
Average Daily Price on each separate Trading Day during the Draw Down
Pricing Period. The number of shares of Common Stock purchased by the
Purchaser with respect to each Draw Down shall be determined on a daily
basis during each Draw Down Pricing Period and settled on a weekly basis.
In connection with each Draw Down Pricing Period, the Company may set an
Average Daily Price below which the Company will not sell any Shares (the
"Threshold Price"). If the Average Daily Price on any day within the Draw
Down Pricing Period is less than the Threshold Price, the Company shall not
sell and the Purchaser shall not be obligated to purchase the Shares
otherwise to be purchased for such day. The Company shall have the right to
issue and exercise a Draw Down of up to $5,000,000 of the Company's Common
Stock per Draw Down, subject to the limitations set forth immediately
below, until the aggregate amount purchased under this Agreement equals
Fifteen Million Dollars ($15,000,000).
(c) The minimum Draw Down shall be $250,000, unless otherwise agreed
by Purchaser.
(d) The maximum dollar amount of each Draw Down during any Draw Down
Pricing Period shall be limited pursuant to the following formula: Average
Stock Price: Average of the Average Daily Prices for the 22 Trading Days
prior to the Draw Down Notice date. Average Trading Volume: Average daily
trading volume for the 45 Trading Days prior to the Draw Down Notice date.
Maximum dollar amount of each Draw Down: 20% of (Average Stock Price x
(Average Trading Volume x 22)) the number of Shares of Common Stock to be
issued in connection with each Draw Down shall be equal to the sum of the
quotients (for each trading day within the Draw Down Pricing Period) of (x)
1/22nd of the Draw Down amount and (y) 93% of the Average Daily Price of
the Common Stock on each Trading Day within the Draw Down Pricing Period.
If the Average Daily Price on a given Trading Day is less than the
Threshold Price, then the Purchaser's Draw Down will be reduced by 1/22nd
and that day shall be withdrawn from the Draw Down Pricing Period.
(e) The Company must inform the Purchaser by delivering a Draw Down
Notice, in the form of Exhibit D hereto, via facsimile transmission as to
the amount of the Draw Down the Company wishes to exercise before the first
day of the Draw Down Pricing Period (the "Draw Down Notice"). The Company
may set the Threshold Price, if any, prior to each Draw Down request. At no
time shall the Purchaser be required to purchase more than the scheduled
Draw Down amount for a given Draw Down Pricing Period so that if the
Company chooses not to exercise the maximum permitted Draw Down in a given
Draw Down Pricing Period the Purchaser is not obligated to purchase more
than the scheduled maximum amount in a subsequent Draw Down Pricing Period.
(f) On or before three (3) Trading Days after each Draw Down Exercise
Date, the Shares purchased by the Purchaser shall be delivered to The
Depository Trust Company ("DTC") on the Purchaser's behalf. The Shares
shall be credited by the Company to the DTC account designated by the
Purchaser upon receipt by the Escrow Agent of payment for the Draw Down
into the Escrow Agent's trust account as provided in the Escrow Agreement.
The Escrow Agent shall be directed to pay 96% of the purchase price to the
Company, net of One Thousand Five Hundred Dollars ($1,500) per draw down as
escrow expenses to the Escrow Agent, and 4% of the Purchase Price to the
placement agent. The delivery of the Shares into the Purchaser's DTC
account in exchange for payment therefor shall be referred to herein as
"Settlement".
ARTICLE VII
Termination
Section 7.1 Termination by Mutual Consent.
The term of this Agreement shall be twelve (12)
months from the Effective Date, unless extended at the sole option of the
Company to eighteen (18) months upon notice to the Purchaser prior to the
end of the initial 12 month period. This Agreement may be terminated at any
time by mutual consent of the parties.
Section 7.2 Other Termination.
(a) (a) The Purchaser may terminate this Agreement upon one (1)
Trading Day's notice if (i) an event resulting in a Material Adverse Effect
has occurred, (ii) the Common Stock is de- listed from the American Stock
Exchange unless such de-listing is in connection with the listing of the
Common Stock on the Nasdaq National Market, Nasdaq SmallCap Market, or the
New York Stock Exchange, (iii) the Company files for protection from
creditors under any applicable law, (iv) the Company completes any
financing prohibited by Section 4.11, (v) the Registration Statement is not
effective by August 31, 2000 or (vi) or in the event that the officers and
directors of the Company shall own less than 10% of the outstanding Common
Stock of the Company.
(b) The Company may terminate this Agreement (i) upon one (1) Trading
Day's notice if the Purchaser shall fail to fund any properly noticed Draw
Down within three (3) Trading Days of the date payment for such Draw Down
is due or (ii) upon notice to the Purchaser that this Agreement is
terminated and payment to the Purchaser the sum of One Hundred Thousand
Dollars ($100,000).
Section 7.3 Effect of Termination.
In the event of termination by the company or the
Purchaser, written notice thereof shall forthwith be given to the other
party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If this Agreement is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall
become void and of no further force and effect, except for Sections 9.1 and
9.2, and Article VIII 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 VIII
Indemnification
Section 8.1 General Indemnity.
The Company agrees to indemnify and hold harmless
the Purchaser (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 attorney's fees, charges and disbursements) incurred by the
Purchaser as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein. The
Purchaser agrees 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 result of any inaccuracy in
or breach of the representations, warranties or covenants made by the
Purchaser herein. Notwithstanding anything to the contrary herein, the
Purchaser shall be liable under this Section 8.1 for only that amount as
does not exceed the net proceeds to such Purchaser as a result of the sale
of Shares pursuant to the Registration Statement.
Section 8.2 Indemnification Procedure.
Any party entitled to indemnification under this
Article VIII (an "indemnified party") will give written notice to the
indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Article VIII
except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any action, proceeding or claim is
brought against an indemnified party in respect of which indemnification is
sought hereunder, the indemnifying party shall be entitled to participate
in and, unless in the reasonable judgment of counsel to the indemnified
party a conflict of interest between it and the indemnifying party may
exist with respect of such action, proceeding or claim, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. In the event that the indemnifying party advises an indemnified
party that it will contest such a claim for indemnification hereunder, or
fails, within thirty (30) days of receipt of any indemnification notice to
notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim
(or discontinues its defense at any time after it commences such defense),
then the indemnified party may, at its option, defend, settle or otherwise
compromise or pay such action or claim. In any event, unless and until the
indemnifying party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the indemnified party's
costs and expenses arising out of the defense, settlement or compromise of
any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate fully with
the indemnifying party in connection with any settlement negotiations or
defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The
indemnifying party shall keep the indemnified party fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. If the indemnifying party elects to defend any such action
or claim, then the indemnified party shall be entitled to participate in
such defense with counsel of its choice at its sole cost and expense. The
indemnifying party shall not be liable for any settlement of any action,
claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article VIII to the contrary, the
indemnifying party shall not, without the indemnified party's prior written
consent, settle or compromise any claim or consent to entry of any judgment
in respect thereof which imposes any future obligation on the indemnified
party or which does not include, as an unconditional term thereof, the
giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such claim. The indemnification
required by this Article VIII shall be made by periodic payments of the
amount thereof during the course of investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred,
within ten (10) Trading Days of written notice thereof to the indemnifying
party so long as the indemnified party irrevocably agrees to refund such
moneys if it is ultimately determined by a court of competent jurisdiction
that such party was not entitled to indemnification. The indemnity
agreements contained herein shall be in addition to (a) any cause of action
or similar rights of the indemnified party against the indemnifying party
or others, and (b) any liabilities the indemnifying party may be subject
to.
ARTICLE IX
Miscellaneous
Section 9.1 Fees and Expenses. The Company shall pay all fees and
expenses related to the transactions contemplated by this Agreement. In
addition, the Company shall pay all reasonable fees and expenses incurred
by the Purchaser in connection with any amendments, modifications or
waivers of this Agreement by the Company or the Registration Rights
Agreement or incurred in connection with the enforcement of this Agreement
and the Registration Rights Agreement, including, without limitation, all
reasonable attorneys fees and expenses. The Company shall pay all stamp or
other similar taxes and duties levied in connection with issuance of the
Shares pursuant hereto.
Section 9.2 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. This provision shall not create any rights to specific
enforcement of any provision of this Agreement arising out of any
occurrence after the termination of this Agreement.
Section 9.3 Entire Agreement; Amendment.
This Agreement, together with the Registration
Rights Agreement and the Escrow Agreement contains the entire understanding
of the parties with respect to the matters covered hereby and, except as
specifically set forth herein, neither the Company nor the Purchaser makes
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 9.4 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:
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 Xxxxxx
If to Purchaser: c/o Dr. Xx. Xxxxxxxx & Partner
Xxxxxxxxxxxx 00
XX-0000 Xxxxx, Xxxxxxxxxxxxx
Tel: 000-000-000-0000
Fax: 000-000-000-0000
Attention: Xxxx Xxxxxxx
with copies to: Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
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 9.5 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 9.6 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.
Section 9.7 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 the Company and each Purchaser 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 9.8 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 9.9 Governing Law/Arbitration.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the choice of law provisions. Any dispute under this Agreement or
any Exhibit attached hereto shall be submitted to arbitration under the
American Arbitration Association (the "AAA") in New York City, New York,
and shall be finally and conclusively determined by the decision of a board
of arbitration consisting of three (3) members (hereinafter referred to as
the "Board of Arbitration") selected as according to the rules governing
the AAA. The Board of Arbitration shall meet on consecutive business days
in New York City, New York, and shall reach and render a decision in
writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In
connection with rendering its decisions, the Board of Arbitration shall
adopt and follow the laws of the State of New York. To the extent
practical, decisions of the Board of Arbitration shall be rendered no more
than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision
to be delivered to all parties involved in the dispute. The Board of
Arbitration shall be authorized and is directed to enter a default judgment
against any party refusing to participate in the arbitration proceeding
within thirty days of any deadline for such participation. Any decision
made by the Board of Arbitration (either prior to or after the expiration
of such thirty (30) calendar day period) shall be final, binding and
conclusive on the parties to the dispute, and entitled to be enforced to
the fullest extent permitted by law and entered in any court of competent
jurisdiction. The prevailing party shall be awarded its costs, including
attorneys' fees, from the non- prevailing party as part of the arbitration
award. Any party shall have the right to seek injunctive relief from any
court of competent jurisdiction in any case where such relief is available.
The prevailing party in such injunctive action shall be awarded its costs,
including attorney's fees, from the non-prevailing party.
Section 9.10 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 by
facsimile.
Section 9.11 Publicity.
Prior to the Closing, neither the Company nor the Purchaser 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. After the Closing,
the Company may issue a press release or otherwise make a public statement
or announcement with respect to this Agreement or the transactions
contemplated hereby or the existence of this Agreement; provided, that
prior to issuing any such press release, making any such public statement
or announcement, the Company obtains the prior consent of the Purchaser,
which consent shall not be unreasonably withheld or delayed.
Section 9.12 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.
Section 9.13 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.
Section 9.14 Effectiveness of Agreement. This Agreement shall become
effective only upon satisfaction of the conditions precedent to the Closing
in Article I of the Escrow Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorize officer as of
this 4th day of May, 2000.
NSTOR TECHNOLOGIES, INC.
By:/S/ H. Xxxxx Xxxx
------------------------------------
Xxxxx Xxxx, Chairman
WISHMASTERS LIMITED
By: /S/ Xxxx Xxxxxxx
------------------------------------
Xxxx Xxxxxxx,
Authorized Signatory
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of May 4, 2000, between
Wishmasters Limited ("Purchaser"), and nStor Technologies, Inc. (the
"Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, pursuant to a Common Stock Purchase Agreement dated the date
hereof (the "Purchase Agreement") the Purchaser has committed to purchase
up to $15,000,000 worth of the Company's Common Stock (terms not defined
herein shall have the meanings ascribed to them in the Purchase Agreement);
and
WHEREAS, the Company desires to grant to the Purchaser the
registration rights set forth herein with respect to the Shares and the
Shares issuable upon exercise of the Warrants from time to time (the
"Warrant Shares") (hereinafter referred to collectively as the "Stock" or
"Securities" of the Company).
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
"Registrable Security" means the Securities until (i) all Securities have
been disposed of pursuant to the Registration Statement, (ii) all
Securities have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force)
under the Securities Act ("Rule 144") are met, (iii) all Securities have
been otherwise transferred to persons who may trade such Securities without
restriction under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such Securities not bearing
a restrictive legend or (iv) such time as, in the opinion of counsel to the
Company, all Securities may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act. The term "Registrable Securities" means
any and/or all of the securities falling within the foregoing definition of
a "Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure
affecting the Common Stock, such adjustment shall be deemed to be made in
the definition of "Registrable Security" as is appropriate in order to
prevent any dilution or enlargement of the rights granted pursuant to this
Agreement.
Section 2. Restrictions on Transfer. The Purchaser acknowledges and
understands that in the absence of an effective Registration Statement
authorizing the resale of the Securities as provided herein, the Securities
are "restricted securities" as defined in Rule 144 promulgated under the
Act. The Purchaser understands that no disposition or transfer of the
Securities may be made by Purchaser in the absence of (i) an opinion of
counsel to the Purchaser, in form and substance reasonably satisfactory to
the Company, that such transfer may be made without registration under the
Securities Act or (ii) such registration.
With a view to making available to the Purchaser the benefits of Rule
144 under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Purchaser to sell securities of
the Company to the public without registration ("Rule 144"), the Company
agrees to:
(a) comply with the provisions of paragraph (c)(1) of
Rule 144; and
(b) file with the Commission in a timely manner all reports and other
documents required to be filed by the Company pursuant to Section 13 or
15(d) under the Exchange Act; and, if at any time it is not required to
file such reports but in the past had been required to or did file such
reports, it will, upon the request of any Purchaser, make available other
information as required by, and so long as necessary to permit sales of,
its Registrable Securities pursuant to Rule 144.
Section 3. Registration Rights With Respect to the
Securities.
(a) The Company agrees that it will prepare and file with the
Securities and Exchange Commission ("Commission"), within forty-five (45)
days after the date hereof, a registration statement (on Form S-3 and/or
S-1, or other appropriate form of registration statement) under the
Securities Act (the "Registration Statement"), at the sole expense of the
Company (except as provided in Section 3(c) hereof), in respect of
Purchaser, so as to permit a public offering and resale of the Securities
under the Act by Purchaser.
The Company shall use its best efforts to cause the Registration
Statement to become effective within five (5) days of SEC clearance by the
Commission to request acceleration of effectiveness. If the Registration
Statement is not declared effective by August 31, 2000 this Agreement and
the Purchase Agreement shall terminate. The Company will notify Purchaser
of the effectiveness of the Registration Statement within one Trading Day
of such event. If a Potential Material Event (as defined in Section 3
hereof) shall occur prior to the date the Registration Statement is filed,
then the Company's obligation to file the Registration Statement shall be
delayed without penalty for not more than thirty (30) days.
(b) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 hereof effective under
the Securities Act until the earlier of (the "Effectiveness Period") (i)
the date that none of the Securities are or may become issued and
outstanding, (ii) the date that all of the Securities have been sold
pursuant to the Registration Statement, (iii) all Securities have been
otherwise transferred to persons who may trade such shares without
restriction under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing
a restrictive legend, or (iv) the date the holders thereof receive an
opinion of counsel to the Company, which opinion shall be in form and
substance reasonably satisfactory to the Purchaser, that all Securities may
be sold without any time, volume or manner limitations pursuant to Rule
144(k) or any similar provision then in effect under the Securities Act.
The Purchaser shall not use or distribute the Registration Statement or the
Prospectus included in the Registration Statement at any time or for any
reason whatsoever, including in connection with the sale of the Purchaser's
Securities after the expiration of the Effectiveness Period.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of
the Registration Statement under subparagraph 3(a) and in complying with
applicable securities and Blue Sky laws (including, without limitation, all
attorneys' fees of the Company) shall be borne by the Company. The
Purchaser shall bear the cost of underwriting and/or brokerage discounts,
fees and commissions, if any, applicable to the Securities being registered
and the fees and expenses of its counsel. The Purchaser and its counsel
shall have a reasonable period, not to exceed ten (10) Trading Days, to
review the proposed Registration Statement or any amendment thereto, prior
to filing with the Commission, and the Company shall provide each Purchaser
with copies of any comment letters received from the Commission with
respect thereto within two (2) Trading Days of receipt thereof. The Company
shall make reasonably available for inspection by Purchaser, any
underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by such
Purchaser or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the Company's officers, directors and employees to
supply all information reasonably requested by such Purchaser or any such
underwriter, attorney, accountant or agent in connection with the
Registration Statement, in each case, as is customary for similar due
diligence examinations; provided, however, that all records, information
and documents provided by the Company shall be kept confidential by such
Purchaser and any such underwriter, attorney, accountant or agent (pursuant
to an appropriate confidentiality agreement in the case of any such
Purchaser or agent), unless such disclosure is made pursuant to judicial
process in a court proceeding (after first giving the Company an
opportunity promptly to seek a protective order or otherwise limit the
scope of the information sought to be disclosed) or is required by law, or
such records, information or documents become available to the public
generally or through a third party not in violation of an accompanying
obligation of confidentiality; and provided further that, if the foregoing
inspection and information gathering would otherwise disrupt the Company's
conduct of its business, such inspection and information gathering shall,
to the maximum extent possible, be coordinated on behalf of the Purchaser
and the other parties entitled thereto by one firm of counsel designed by
and on behalf of the majority in interest of Purchaser and other parties.
The Company shall qualify any of the Securities in such states as such
Purchaser reasonably designates and shall furnish indemnification in the
manner provided in Section 6 hereof. However, the Company shall not be
required to qualify any of the Securities in any state (i) which will
require an escrow or other restriction relating to the Company (ii) which
will require the Company to qualify to do business in such state (iii)
which will subject the Company to general taxation in any such state, (iv)
which will require the Company to file therein any general consent to
service of process (v) which will require the Company to provide any
undertakings that cause more than nominal expense or burden to the Company
or (vi) which will require the Company to make any change in its charter or
by- laws. The Company at its expense will supply the Purchaser with copies
of the Registration Statement and the prospectus included therein and other
related documents in such quantities as may be reasonably requested by the
Purchaser.
(d) The Company shall not be required by this Section 3 to include a
Purchaser's Securities in any Registration Statement which is to be filed
if, in the opinion of counsel for both the Purchaser and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Purchaser and the
Company) the proposed offering or other transfer as to which such
registration is requested is exempt from applicable federal and state
securities laws and would result in all purchasers or transferees obtaining
securities which are not "restricted securities", as defined in Rule 144
under the Securities Act.
(e) If during the effectiveness Period, the Company notifies the
Purchaser in writing of the existence of a Potential Material Event (as
defined in Section 3(f) below), the Purchaser shall not offer or sell any
Securities or engage in any other transaction involving or relating to
Securities, from the time of the giving of notice with respect to a
Potential Material Event until such Purchaser receives written notice from
the Company that such Potential Material Event either has been disclosed to
the public or no longer constitutes a Potential Material Event; provided,
however, that if the Company so suspends the right to such holders of
Securities for more than twenty (20) days in the aggregate during any
twelve month period, during the periods the Registration Statement is
required to be in effect then the Company must compensate the Purchaser for
any net decline in market value of the Shares (but not any Warrant Shares)
held by Purchaser at the beginning of such suspension through the end of
such suspension. If a Potential Material Event shall occur prior to the
date the Registration Statement is filed, then the Company's obligation to
file the Registration Statement shall be delayed without penalty for not
more than thirty (30) days. The Company must give Purchaser notice in
writing at least two (2) Trading Days prior to the first day of the
blackout period, if lawful to do so.
(f) "Potential Material Event" means any of the following: (a) the
possession by the Company of material information that is not ripe for
disclosure in a registration statement, as determined in good faith by the
Chief Executive Officer or the Board of Directors of the Company or that
disclosure of such information in the Registration Statement would be
detrimental to the business and affairs of the Company; or (b) any material
engagement or activity by the Company which would, in the good faith
determination of the Chief Executive Officer or the Board of Directors of
the Company, be adversely affected by disclosure in a registration
statement at such time, which determination shall be accompanied by a good
faith determination by the Chief Executive Officer or the Board of
Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information or (c) the
happening of an event 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 of
material fact required to be stated thereon or necessary to make the
statements therein, in light of the circumstances under which they were
made not misleading.
Section 4. Cooperation with Company. Purchaser will cooperate with the
Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company (which shall
include all information regarding the Purchaser and proposed manner of sale
of the Registrable Securities required to be disclosed in the Registration
Statement) and executing and returning all documents reasonably requested
in connection with the registration and sale of the Registrable Securities
and entering into and performing its obligations under any underwriting
agreement, if the offering is an underwritten offering, in usual and
customary form, with the managing underwriter or underwriters of such
underwritten offering. The Purchaser shall consent to be named as an
underwriter in the Registration Statement. Purchaser acknowledges that in
accordance with current Commission policy, the Purchaser will be named as
the underwriter of the Securities in the Registration Statement.
Section 5. Obligations of the Company. In connection with the
registration of the Registrable Securities under the Act, the Company
shall:
(a) (i) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Act with
respect to the sale or other disposition of all securities covered by such
registration statement whenever the Purchaser of such Registrable
Securities shall desire to sell or otherwise dispose of the same (including
prospectus supplements with respect to the sales of securities from time to
time in connection with a registration statement pursuant to Rule 415
promulgated under the Act) and (ii) take all lawful action such that each
of (A) the Registration Statement and any amendment thereto does not, when
it becomes effective, contain an 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, not misleading and (B) the Prospectus forming
part of the Registration Statement, and any amendment or supplement
thereto, does not at any time during the Registration Period include an
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 under which they were made, not misleading.
(b) (i) prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or
delivery of any prospectus (including any supplements thereto), provide
draft copies thereof to the Purchasers and reflect in such documents all
such comments as the Purchasers (and their counsel) reasonably may propose
and (ii) furnish to each Purchaser such numbers of copies of a prospectus
including a preliminary prospectus or any amendment or supplement to any
prospectus, as applicable, in conformity with the requirements of the Act,
and such other documents, as such Purchaser may reasonably request in order
to facilitate the public sale or other disposition of the securities owned
by such Purchaser;
(c) register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or blue sky laws of such
jurisdictions as the Purchaser shall reasonably request (subject to the
limitations set forth in Section 3(d) above), and do any and all other acts
and things which may be necessary or advisable to enable each Purchaser to
consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Purchaser, except that the Company shall not for
any such purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified or to file
therein any general consent to service of process;
(d) list such Registrable Securities on the Principal Market, and any
other exchange on which the Common Stock of the Company is then listed, if
the listing of such Registrable Securities is then permitted under the
rules of such exchange;
(e) notify each Purchaser at any time when a prospectus relating
thereto covered by the Registration Statement is required to be delivered
under the Act, of the happening of any event of which it 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 not misleading in the light of the circumstances
then existing, and the Company shall prepare and file a curative amendment
under Section 5(a) as quickly as commercially possible;
(f) as promptly as practicable after becoming aware of such event,
notify the Purchaser of the issuance by the Commission or any state
authority of any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time and take all lawful
action to effect the withdrawal, recession or removal of such stop order or
other suspension;
(g) cooperate with the Purchasers to facilitate the timely preparation
and delivery of certificates for the Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts, as the case
may be, as the Purchasers reasonably may request and registered in such
names as the Purchaser may request; and, within three (3) Trading Days
after a Registration Statement which includes Registrable Securities is
declared effective by the Commission, deliver and cause legal counsel
selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to the Purchasers whose Registrable
Securities are included in such Registration Statement) an appropriate
instruction and, to the extent necessary, an opinion of such counsel;
(h) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Purchasers of their
Registrable Securities in accordance with the intended methods therefor
provided in the prospectus which are customary for issuers to perform under
the circumstances;
(i) in the event of an underwritten offering, promptly include or
incorporate in a Prospectus supplement or post- effective amendment to the
Registration Statement such information as the managers reasonably agree
should be included therein and to which the Company does not reasonably
object and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after it is notified of the
matters to be included or incorporated in such Prospectus supplement or
post-effective amendment; and
(j) maintain a transfer agent and registrar for its
Common Stock.
Section 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Purchaser
and each person, if any, who controls the Purchaser within the meaning of
the Securities Act ("Distributing Purchaser") against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of
this Agreement, include, but not be limited to, all reasonable costs of
defense and investigation and all reasonable attorneys' fees), to which the
Distributing Purchaser may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, or any related preliminary prospectus, final
prospectus or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration
Statement, preliminary prospectus, final prospectus or amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by the Distributing Purchaser,
specifically for use in the preparation thereof. This Section 6(a) shall
not inure to the benefit of any Distributing Purchaser with respect to any
person asserting such loss, claim, damage or liability who purchased the
Registrable Securities which are the subject thereof if the Distributing
Purchaser failed to send or give (in violation of the Securities Act or the
rules and regulations promulgated thereunder) a copy of the prospectus
contained in such Registration Statement to such person at or prior to the
written confirmation to such person of the sale of such Registrable
Securities, where the Distributing Purchaser was obligated to do so under
the Securities Act or the rules and regulations promulgated thereunder.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Distributing Purchaser agrees that it will indemnify and hold
harmless the Company, and each officer and director of the Company or
person, if any, who controls the Company within the meaning of the
Securities Act, against any losses, claims, damages or liabilities (which
shall, for all purposes of this Agreement, include, but not be limited to,
all reasonable costs of defense and investigation and all reasonable
attorneys' fees) to which the Company or any such officer, director or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, or any related preliminary prospectus, final
prospectus or amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Distributing Purchaser, specifically for use in the preparation thereof or
(ii) any violation by Purchaser of Regulation M under the Securities Act of
1934, as amended. This indemnity agreement will be in addition to any
liability which the Distributing Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve the indemnifying party from any liability which it may have to any
indemnified party except to the extent of actual prejudice demonstrated by
the indemnifying party. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, assume the defense thereof, subject
to the provisions herein stated and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation, unless the indemnifying party
shall not pursue the action to its final conclusion. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel
reasonably satisfactory to the indemnified party; provided that if the
indemnified party is the Distributing Purchaser, the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by
the indemnifying party, or (ii) the named parties to any such action
(including any impleaded parties) include both the Distributing Purchaser
and the indemnifying party and the Distributing Purchaser shall have been
advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any
legal defenses which may be available to the Distributing Purchaser (in
which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of the Distributing Purchaser, it being
understood, however, that the indemnifying party shall, in connection with
any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable only for the reasonable fees and
expenses of one separate firm of attorneys for the Distributing Purchaser,
which firm shall be designated in writing by the Distributing Purchaser).
No settlement of any action against an indemnified party shall be made
without the prior written consent of the indemnified party, which consent
shall not be unreasonably withheld.
All fees and expenses of the indemnified party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
Section and all reasonable attorneys' fees and expenses) shall be paid to
the indemnified party, as incurred, within ten (10) Trading Days of written
notice thereof to the indemnifying party (regardless of whether it is
ultimately determined that an indemnified party is not entitled to
indemnification hereunder; provided, that the indemnifying party may
require such indemnified party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such
indemnified party is not entitled to indemnification hereunder).
Section 7. Contribution. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6
hereof but is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that the express
provisions of Section 6 hereof provide for indemnification in such case, or
(ii) contribution under the Securities Act may be required on the part of
any indemnified party, then the Company and the applicable Distributing
Purchaser shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of
this Agreement, include, but not be limited to, all reasonable costs of
defense and investigation and all reasonable attorneys' fees), in either
such case (after contribution from others) on the basis of relative fault
as well as any other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or the applicable Distributing Purchaser on the
other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Distributing Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
this Section 7. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
Notwithstanding any other provision of this Section 7, in no event
shall any (i) Purchaser be required to undertake liability to any person
under this Section 7 for any amounts in excess of the dollar amount of the
net proceeds to be received by such Purchaser from the sale of such
Purchaser's Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any Registration Statement
under which such Registrable Securities are to be registered under the
Securities Act and (ii) underwriter be required to undertake liability to
any person hereunder for any amounts in excess of the aggregate discount,
commission or other compensation payable to such underwriter with respect
to the Registrable Securities underwritten by it and distributed pursuant
to the Registration Statement.
Section 8. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall
be in writing and, unless otherwise specified herein, shall be delivered as
set forth in the Purchase Agreement.
Section 9. Assignment. Neither this Agreement nor any rights of the
Purchaser or the Company hereunder may be assigned by either party to any
other person. Notwithstanding the foregoing, (a) the provisions of this
Agreement shall inure to the benefit of, and be enforceable by, any
transferee of any of the Common Stock purchased by the Purchaser pursuant
to the Purchase Agreement other than through open-market sales, and (b)
upon the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed in the case of an assignment to an
affiliate of the Purchaser, the Purchaser's interest in this Agreement may
be assigned at any time, in whole or in part, to any other person or entity
(including any affiliate of the Purchaser) who agrees to be bound hereby.
Section 10. Counterparts/Facsimile. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but
all of which, when together shall constitute but one and the same
instrument, and shall become effective when one or more counterparts have
been signed by each party hereto and delivered to the other party. In lieu
of the original, a facsimile transmission or copy of the original shall be
as effective and enforceable as the original.
Section 11. Remedies. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto shall use their
best efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
Section 12. Conflicting Agreements. The Company shall not enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement
or otherwise prevents the Company from complying with all of its
obligations hereunder.
Section 13. Headings. The headings in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
Section 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable
to contracts made in New York by persons domiciled in New York City and
without regard to its principles of conflicts of laws. Any action may be
brought as set forth in the Purchase Agreement. Any party shall have the
right to seek injunctive relief from any court of competent jurisdiction in
any case where such relief is available. Any dispute under this Agreement
shall be submitted to arbitration under the American Arbitration
Association (the "AAA") in New York City, New York, and shall be finally
and conclusively determined by the decision of a board of arbitration
consisting of three (3) members (hereinafter referred to as the "Board of
Arbitration") selected as according to the rules governing the AAA. The
Board of Arbitration shall meet on consecutive business days in New York
City, New York, and shall reach and render a decision in writing (concurred
in by a majority of the members of the Board of Arbitration) with respect
to the amount, if any, which the losing party is required to pay to the
other party in respect of a claim filed. In connection with rendering its
decisions, the Board of Arbitration shall adopt and follow the laws of the
State of New York. To the extent practical, decisions of the Board of
Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. The Board of Arbitration shall be authorized and
is directed to enter a default judgment against any party refusing to
participate in the arbitration proceeding with thirty days of any deadline
for such participation. Any decision made by the Board of Arbitration
(either prior to or after the expiration of such thirty (30) calendar day
period) shall be final, binding and conclusive on the parties to the
dispute, and entitled to be enforced to the fullest extent permitted by law
and entered in any court of competent jurisdiction. The prevailing party
shall be awarded its costs, including attorneys' fees, from the
non-prevailing party as part of the arbitration award. Any party shall have
the right to seek injunctive relief from any court of competent
jurisdiction in any case where such relief is available. The prevailing
party in such injunctive action shall be awarded its costs, including
attorney's fees, from the non- prevailing party.
Section 15. Severability. If any provision of this Agreement shall for
any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid or unenforceable provision
had never been contained herein.
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, on this 4th day of May, 2000.
NSTOR TECHNOLOGIES, INC.
By: /s/ H. Xxxxx Xxxx
H. Xxxxx Xxxx, Chairman
WISHMASTERS LIMITED
By: /s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx,
Authorized Signature
EXHIBIT 10.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of May 4, 2000, by
and among nStor Technologies, Inc., a corporation incorporated under the laws of
Delaware, (the "Company"), Wishmasters Limited ("Purchaser"), and Xxxxxxx Xxxxxx
& Green, P.C., having an address at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 (the
"Escrow Agent"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Common Stock Purchase Agreement referred to in the
first recital.
WHEREAS, the Purchaser will from time to time as requested by the
Company, purchase shares of the Company's Common Stock from the Company as set
forth in that certain Common Stock Purchase Agreement (the "Purchase Agreement")
dated the date hereof between the Purchaser and the Company, which will be
issued as per the terms and conditions contained herein and in the Purchase
Agreement; and
WHEREAS, the Company and the Purchaser have requested that the Escrow
Agent hold in escrow and then distribute the initial documents and certain funds
which are conditions precedent to the effectiveness of the Purchase Agreement,
and have further requested that upon each exercise of a Draw Down, the Escrow
Agent hold the relevant documents and the applicable purchase price pending
receipt by Purchaser of certificates representing the securities issuable upon
such Draw Down;
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW FOR THE INITIAL CLOSING
1.1. The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds and documents which
are referenced in Section 5.2 of the Purchase Agreement.
1.2. At the Closing, the Company shall deliver to
the Escrow Agent:
(i) the original executed Registration
Rights Agreement in the form of Exhibit
A to the Purchase Agreement;
(ii) the original executed opinion of
Akerman, Senterfitt & Xxxxxx, P.A., in
the form of Exhibit C to the Purchase
Agreement;
(iii) the sum of $30,000 for the non-
accountable expenses of Ladenburg
Xxxxxxxx & Co. Inc.;
(iv) the sum of $5,000 for the fees and
expenses of the Purchaser's counsel;
(v) the original executed Company
counterpart of this Escrow Agreement;
(vi) the original executed Company
counterpart of the Purchase Agreement;
(vii) the original executed Warrant in the
form of Exhibit E to the Purchase
Agreement; and
(viii) a warrant certificate to purchase
up to 120,000 shares of the Company's
Common Stock issued to Ladenburg
Xxxxxxxx & Co. Inc. with a term and
exercise price identical to that of the
Warrant (the "LT Warrants").
1.3. Upon receipt of the foregoing, and receipt of executed
counterparts from Purchaser of the Purchase Agreement, the Registration Rights
Agreement and this Escrow Agreement, the Escrow Agent shall calculate the
exercise price and enter the exercise price, the issuance date and termination
date on the face of the Warrant and LT Warrant, as appropriate, and immediately
transfer the sum of Five Thousand Dollars ($5,000) to Xxxxxxx Xxxxxx & Green,
P.C. ("EB&G"), 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 for the Purchaser's
legal, administrative and escrow costs, the sum of Thirty Thousand Dollars
($30,000), as a non-accountable expense allowance, and deliver the LT Warrant to
Ladenburg Xxxxxxxx & Co. Inc. and the Escrow Agent shall then arrange to have
the Purchase Agreement, this Escrow Agreement, the Registration Rights
Agreement, the Warrant and the opinion of counsel delivered to the appropriate
parties.
ARTICLE 2
TERMS OF THE ESCROW FOR EACH DRAW DOWN
2.1. Each time the Company shall send a Draw Down Notice to the
Purchaser as provided in the Purchase Agreement, it shall send a copy, by
facsimile, to the Escrow Agent.
2.2. Each time the Purchaser shall purchase Shares pursuant to a Draw
Down, the Purchaser shall send the applicable purchase price for the Draw Down
Shares to the Escrow Agent, which shall advise the Company in writing that it
has received the purchase price for such Draw Down Shares. The Company shall
promptly, but no later than three (3) Trading Days after receipt of such funding
notice from the Escrow Agent, cause its transfer agent to issue the Draw Down
Shares to the Purchaser via DTC deposit to the account specified by the
Purchaser from time to time. Upon receipt of written confirmation from the
transfer agent or from the Purchaser that such Draw Down Shares have been so
deposited, the Escrow Agent shall within one (1) Trading Day wire 96% of the
purchase price per the written instructions of the Company, net of One Thousand
Five Hundred Dollars ($1,500) as escrow expenses to the Escrow Agent, and the
remaining 4% of the purchase price as directed by Ladenburg Xxxxxxxx & Co. Inc.
ARTICLE 3
MISCELLANEOUS
3.1. No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
3.2. All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as set forth in the Purchase
Agreement.
3.3. This Escrow Agreement shall be binding upon
and shall inure to the benefit of the permitted successors and
permitted assigns of the parties hereto.
3.4. This Escrow Agreement is the final expression of, and contains
the entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by their respective agents duly authorized in writing
or as otherwise expressly permitted herein.
3.5. Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.
3.6. The parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Except as expressly set forth herein,
any action to enforce, arising out of, or relating in any way to, any provisions
of this Escrow Agreement shall brought in the Federal or state courts of New
York, New York as is more fully set forth in the Purchase Agreement.
3.7. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, Purchaser and the
Escrow Agent.
3.8. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, excepting only its own gross negligence or willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent's attorneys-at-law (other than Escrow Agent itself)
shall be conclusive evidence of such good faith.
3.9. The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
3.10. The Escrow Agent shall not be liable in any respect on account
of the identity, authorization or rights of the parties executing or delivering
or purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder or hereunder.
3.11. The Escrow Agent shall be entitled to employ such legal counsel
and other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Purchaser, and may continue to act as legal counsel for the Purchaser, from time
to time, notwithstanding its duties as the Escrow Agent hereunder. The Company
consents to the Escrow Agent in such capacity as legal counsel for the Purchaser
and waives any claim that such representation represents a conflict of interest
on the part of the Escrow Agent. The Company understands that the Purchaser and
the Escrow Agent are relying explicitly on the foregoing provision in entering
into this Escrow Agreement.
3.12. The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Purchaser. In the event of any such resignation, the Purchaser
and the Company shall appoint a successor Escrow Agent.
3.13. If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
3.14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment or a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or (2)
to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the State and City of New York in accordance
with the applicable procedure therefor.
3.15. The Company and the Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Purchase
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as this 4th day of May, 2000.
NSTOR TECHNOLOGIES, INC.
/s/ H. Xxxxx Xxxx
By:_________________________
H. Xxxxx Xxxx, Chairman
WISHMASTERS LIMITED:
/s/ Xxxx Xxxxxxx
By:___________________________
Xxxx Xxxxxxx,
Authorized Signature
ESCROW AGENT:
Xxxxxxx Xxxxxx & Green, P.C.
/s/ Xxxxxx Xxxxxxx
By:___________________________
Xxxxxx Xxxxxxx
Authorized Signatory
