EXHIBIT 2.1
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is entered into as of the
16th day of December, 1999 by and between nStor Technologies, Inc., a Delaware
corporation ("nStor") and the persons listed on the signature page hereto (each
a "Noteholder" and collectively, the "Noteholders").
WHEREAS, nStor is the issuer of certain promissory notes issued to the
Noteholders on the days and in the amounts set forth on Schedule I hereto (the
"Notes");
WHEREAS, nStor and the Noteholders desire that the Notes should be
canceled without payment of principal or accrued interest in accordance with
their terms in exchange for the issuance by nStor to the Noteholders of the
aggregate number of shares of its common stock, par value $.05 per share ("nStor
Common Stock") set forth on Schedule I;
NOW THEREFORE, the parties hereto agree as follows:
1. Exchange of Notes for Stock
a. In lieu of cash, nStor agrees to pay the Noteholders the
principal amount of the Note in shares of nStor Common Stock based on a stock
price of $2.9545 per share, which is approximately 5% greater than the closing
price of one share of nStor Common Stock on the American Stock Exchange on the
date hereof.
b. nStor will file a Registration Statement or Form S-3 (the
"Registration Statement") covering the shares of nStor Common Stock issued to
the Noteholders pursuant to Section 1(a) above (the "Stock") as soon as
practicable after the date hereof. nStor shall notify the Noteholders
immediately upon the effectiveness of the Registration Statement, and the
Noteholders shall have the right to sell all or any part of the Stock subject to
any rules or regulations under the Securities Act of 1933, as amended (the
"Securities Act").
c. nStor will guarantee the Noteholders against loss with the
guarantee expiring at the close of business on the 20th day of trading after the
effective date of the Registration Statement or some later date as agreed to by
the parties. To compute the amount due under the guarantee, the value of any
Stock not sold will be based upon the closing price of one share of nStor Common
Stock on the 20th trading day after the effective date of the Registration
Statement or some later date as agreed to by the parties. nStor will be indebted
to the Noteholders for an amount equal to the original principal amount of the
Note, less the net proceeds received from the sale of any of the Stock plus the
value of any Stock not sold, at the close of business on the 20th trading day
after the effective date of the Registration Statement or some later date as
agreed to by the parties. The amount due under the guarantee, if any, will be
paid in cash or a subordinated promissory note, at nStor's sole discretion, and
if paid in a subordinated promissory note, the new note will have the same
interest rate and due date as the original Note.
2. Representations of nStor. nStor hereby represents and warrants to
the Noteholders the following:
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a. nStor is a corporation validly existing under the laws of
the State of Delaware.
b. The Stock, when delivered to the Noteholders in accordance
with the terms hereof, will be duly authorized, validly issued, fully paid, and
nonassessable.
3. Representations of the Noteholders. Each Noteholder hereby
represents and warrants to nStor the following:
a. Each Noteholder is the sole lawful holder of his or its
Note, possesses all right, title and interest therein, has the requisite legal
capacity and authority to transfer his or its Note, and has not transferred,
pledged, or hypothecated his or its Note or any interest therein to any third
party.
b. Each Noteholder understands and represents that (i) he or
it must bear the economic risk of this investment for an indefinite period of
time because the Stock has not been registered under the Securities Act, or
under any state securities laws and, therefore, cannot be resold unless its is
subsequently registered under the Securities Act and the pertinent state
securities laws or unless an exemption from such registration is available; and
(ii) he or it is purchasing the Stock for investment for his or its own account
and not for the account of any other person, and not with any present view
toward resale or other "distribution" thereof within that meaning of the
Securities Act.
c. The Noteholder has such knowledge and experience in
financial and business matters that he or it is capable of evaluating the merits
and risks of an investment in the Stock. The Noteholder is aware that an
investment in the Stock is highly speculative and subject to substantial risks.
The Noteholder is capable of bearing the high degree of economic risk and
burdens of this investment, including the possibility of a complete loss of his
investment. The financial condition of the Noteholder is such that he is under
no present or contemplated future need to dispose of any of the Stock to satisfy
any existing or contemplated undertaking, need or indebtedness.
d. nStor has made available to each Noteholder, or his
designated representative, during the course of this transaction and prior to
the issuance of any of the Stock, the opportunity to ask questions of and
receive answers from the officers and directors of nStor concerning the terms
and conditions of the offering or otherwise relating to the financial data and
business of nStor, to the extent that nStor or its officers and directors
possess such information or can acquire it without unreasonable effort or
expense. nStor has also made available to each Noteholder for inspection,
documents, records, books and other written information about nStor, its
business and this investment at nStor's principal executive office at 000
Xxxxxxx Xxxx., Xxxx Xxxx Xxxxx, XX 00000.
4. Restricted Stock and Legend. The Noteholders acknowledge that the
Stock offered hereunder are being offered pursuant to a private placement
exemption under the Securities Act, and that the Stock is deemed "restricted
securities" as defined in the Securities Act. Until the securities offered
hereunder become registered with the Securities and Exchange Commission (the
"Commission"), each certificate representing the Stock shall bear a legend in
substantially the following form:
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THE SHARE(S) REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS, AND THE CORPORATION HAS RELIED UPON AN EXEMPTION TO THE
REGISTRATION REQUIREMENT UNDER THE ACT FOR THE SALE OF THE SHARE(S)
REPRESENTED BY THIS CERTIFICATE TO ITS HOLDER. THEREFORE, THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED STOCK AND MAY NOT BE SOLD OR
TRANSFERRED TO ANY THIRD PARTY WITHOUT EITHER BEING REGISTERED UNDER THE
ACT OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED UNDER THE ACT.
5. Resales. The Noteholders agree not to resell or otherwise dispose of
all or any part of the Stock, except as permitted by law, including, without
limitation, any and all applicable provisions of this Agreement and any
regulations under the Securities Act.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
nSTOR TECHNOLOGIES, INC.
By:
Xxxx Xxxxxx
Vice President and Treasurer
NOTEHOLDERS:
H. Xxxxx Xxxx
MLL CORP.
By: ____________________________
Name: __________________________
Title: _________________________
XXXX CORP.
By: ____________________________
Name: __________________________
Title: _________________________
N&S CORP.
By: ____________________________
Name: __________________________
Title: _________________________
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Xxxxxxx Xxxxxxxxx
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