FORM OF SUBSCRIPTION AGREEMENT
This Agreement is entered into as of the __th day of March, 2001 by and
between nStor Technologies, Inc., a Delaware corporation ("nStor") and
__________________________ (the "Noteholder").
WHEREAS, the Noteholder made a loan (the "Loan") to nStor in the amount
of $________, which Loan is evidenced by an 8% convertible subordinated
promissory note issued by nStor to the Noteholder dated as of the date hereof in
the original principal amount of $________ (the "Note") which Note is
convertible into _________ shares of common stock, par value $.05 per share, of
nStor (the "nStor Common Stock") at a conversion price of $1.00; and
WHEREAS, in consideration for the Loan, nStor desires to issue to the
Noteholder a warrant (the "Warrant") to purchase _________ shares of nStor
Common Stock at a price of $1.20 (which represents 120% of the closing market
price for one share of nStor Common Stock on March 9, 2001), upon the terms and
conditions described to the Board.
NOW THEREFORE, the parties hereto agree as follows:
1. Delivery of Warrants. On the date hereof, nStor shall deliver the Warrant to
the Noteholder. The Warrant, the Note, the shares of nStor Common Stock issuable
upon the exercise of the Warrants (the "Warrant Shares") and the shares of nStor
Common Stock issuable upon conversion of the Note (the "Note Shares") are
collectively referred to herein as the "Securities".
2.Representations of nStor. nStor hereby represents and warrants to the
Noteholder the following:
a. nStor is a corporation validly existing under the laws of the State of
Delaware.
b. The Warrant Shares, when delivered to the Noteholder in accordance with the
terms of the Warrants, will be duly authorized, validly issued, fully paid,
and nonassessable.
c. The Note Shares, when delivered to the Noteholder in accordance with the
terms of the Note, will be duly authorized, validly issued, fully paid, and
nonassessable.
3. Representations of the Noteholder. The Noteholder hereby represents and
warrants to nStor the following:
a. The Noteholder understands and represents that: (i) he
must bear the economic risk of this investment for an indefinite period
of time because none of the Securities have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under any
state securities laws and, therefore, cannot be resold unless they are
subsequently registered under the Securities Act and the pertinent state
securities laws or unless an exemption from such registration is
available; and (ii) he is acquiring the Securities for investment for
his 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.
b. The Noteholder has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of an investment in the Securities. The Noteholder is
aware that an investment in the Securities 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 Securities to satisfy
any existing or contemplated undertaking, need or indebtedness.
c. nStor has made available to the Noteholder, or his designated
representative, during the course of this transaction and prior to the
issuance of any of the Securities, 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 the Noteholder for inspection, documents, records,
books and other written information about nStor, its business and this
investment at nStor's principal executive office at 00000 Xxxx Xxx
Xxxx, Xxx Xxxxx, Xxxxxxxxxx, 00000.
4. Restricted Stock and Legend. The Noteholder acknowledges that the Securities
offered hereunder are being offered pursuant to a private placement exemption
under the Securities Act, and that the Securities are deemed "restricted
securities" as defined in the Securities Act. Until the Warrant Shares and the
Note Shares become registered with the Securities and Exchange Commission (the
"Commission"), each certificate representing a Warrant Share or a Note Share
shall bear a legend in substantially the following form:
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 Noteholder agrees not to resell or otherwise dispose of all or
any part of the Securities, except as permitted by law, including, without
limitation, any and all applicable provisions of this Agreement and any
regulations under the Securities Act. Prior to any transfer or attempted
transfer of any of the Securities issued hereunder, or any interest therein, the
Noteholder shall give nStor written notice of his intention to make such
transfer, describing the manner of the intended transfer and the proposed
transferee. Promptly after receiving such written notice, nStor shall present
copies thereof to its counsel or to any special counsel designated by the
Noteholder or by such transferee which shall be reasonably acceptable to nStor.
If in the opinion of such counsel the proposed transfer may be effected without
registration of the Securities under the applicable federal or state securities
laws, as promptly as practicable, the Securities proposed to be transferred
shall be transferred in accordance with the terms of said notice. nStor shall
not be required to effect any such transfer prior to the receipt of such
favorable opinion(s); provided, however, nStor may waive the requirement that
the Noteholder obtain an opinion of counsel, in its sole and absolute
discretion. As a condition to such favorable opinion, counsel for nStor may
require an investment letter to be executed by the proposed transferee.
6. Indemnification. Each party hereto shall indemnify, defend and hold the other
harmless from and against all claims, losses, liabilities, costs, expenses,
obligations, damages, including, without limitation, litigation costs and
reasonable attorneys' fees , sustained, incurred or required to be paid by the
other that would not have been sustained, incurred or paid is all the
representations, warranties, agreements or covenants of the other party
hereunder had been true, correct and duly performed.
7. Investor Acknowledgment of Certain Risk Factors. The Investor understands
that in addition to the various risks ordinarily attendant upon investments in
entities in the technology industry, certain other material risk factors
relating to the Company and its business make an investment in the Company
subject to a particularly high degree of risk. THE INVESTOR HAS BEEN CAUTIONED
THAT AN INVESTMENT IN THE SECURITIES IS HIGHLY SPECULATIVE AND INVOLVES
SIGNIFICANT RISKS INCLUDING THE RISK OF LOSS OF THE ENTIRE INVESTMENT AND THAT
IT IS NOT POSSIBLE TO FORESEE AND DESCRIBE ALL OF THE BUSINESS, ECONOMIC AND
FINANCIAL RISK FACTORS WHICH MAY AFFECT THE COMPANY. THE INVESTOR UNDERSTANDS
THAT ADDITIONAL INFORMATION REGARDING THE COMPANY IS AVAILABLE FROM THE
COMPANY'S PUBLIC FILINGS WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE
"COMPANY FILINGS"). SUCH COMPANY FILINGS CONTAIN, AMONG OTHER INFORMATION, A
DISCUSSION OF CERTAIN RISKS INVOLVED IN AN INVESTMENT IN THE SECURITIES.
8. Miscellaneous.
a. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when
personally delivered or when sent by registered mail, return receipt
requested, addressed if to nStor, at nStor Technologies, Inc., 000
Xxxxxxx Xxxx., Xxxx Xxxx Xxxxx, XX 00000, attn: Xxxx Xxxxxx, with a copy
to Xxxxx Xxxxxxxxx, President of nStor, 00000 Xxxx Xxx Xxxx, Xxx Xxxxx,
Xxxxxxxxxx, 00000, and if to the Noteholder, at ____________________, or
at such other address as each such party furnishes by notice given in
accordance with this Section 7.a., and shall be effective, when
personally delivered, upon receipt, and when so sent by certified mail,
fits business days after deposit with the United States Postal Service.
b. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.
c. This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of Florida applicable
to the agreements made and to be performed entirely within such state,
without giving effect to rules governing the conflict of laws. In the
event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall
be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law.
Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other
provision hereof.
d. This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to
the subject matter hereof.
e. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties hereto.
f. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
g. The headings in the Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute
one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the
party so delivering this Agreement.
(SIGNATURES APPEAR ON FOLLOWING PAGE)
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:________________________________________
Name:
Title:
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Name:
Title:
