EXHIBIT 4.2
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (the "Agreement") is entered into
as of June 7, 2002 by and among nStor Technologies, Inc. (the "Company"), H.
Xxxxx Xxxx ("Xxxx"), Hilcoast Development Corp. ("Hilcoast"), MLL Corp.
(together with Levy and Hilcoast, the "Levy Affiliates"), Xxxxxxx X. Xxxxxxxx
("Xxxxxxxx"), Halco Investments, L.C. (together with Halperin, the "Halperin
Affiliates," and together with the Levy Affiliates, the "Principal
Stockholders"), and Pacific Technology Group, Inc. ("PTG", and together with the
Principal Stockholders, the "Stockholders").
WHEREAS, the Principal Stockholders own shares of the Company's
Common Stock, $.05 par value per share (the "Common Stock") or the Company's
Preferred Stock, $.01 par value per share (the "Preferred Stock"), or other
securities convertible or exercisable for Common Stock (collectively, the
"Capital Stock") as set forth on Exhibit A attached hereto and the Stockholders
desire to place certain restrictions on the transfer of certain of the Capital
Stock of the Principal Stockholders; and
WHEREAS, the Stockholders desire to provide for the election of
certain directors designated by Pacific USA Holdings Corp., a Texas corporation
and the sole Shareholder of Pacific Technology Group, Inc. ("PUSA"), to the
Board of Directors of the Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. In addition to the definitions that appear elsewhere in
the Agreement, the following terms have the meanings specified:
"Affiliate" of a Stockholder means any other Person controlling,
controlled by or under common control with such Stockholder.
"Designated Shares" means (a) collectively, in the case of the
Levy Affiliates, 18,050,074 shares of Common Stock, and (b) collectively, in the
case of the Halperin Affiliates, 33,662,275 shares of Common Stock. The
Designated Shares constitute 80% of the shares of Common Stock held by the Levy
Affiliates and the Halperin Affiliates as of the date hereof. The Designated
Shares shall include, in the case of the Halperin Affiliates, 80% of the Common
Stock issuable upon conversion of that certain 8% Convertible Subordinated
Promissory Note dated the date hereof, to the extent such Note is converted
during the term hereof.
"Permitted Transferee" of a Stockholder means (a) such
Stockholder's spouse, siblings and descendants (whether or not adopted) and any
trust, family limited partnership or limited liability company solely for the
benefit of such Stockholder and/or such Stockholder's spouse, siblings and/or
descendants.
"Person" means any individual, corporation, partnership, trust or
other entity.
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"Securities Act" means the Securities Act of 1933, as amended.
"Voluntary Transfer" means any sale, pledge or other transfer of
Designated Shares by a Principal Stockholder, except (a) a transfer to a
Permitted Transferee of such Principal Stockholder, (b) a transfer to an
Affiliate of such Principal Stockholder, (c) a transfer by such Stockholder
pursuant to the laws of descent and distribution, or (d) a bona fide pledge to
secure a loan to such Principal Stockholder.
2. Voluntary Transfers. For a period of two (2) years from date hereof,
if any Principal Stockholder (the "Transferring Stockholder") intends to effect
a Voluntary Transfer, PTG will have the right to participate in such sale or
transfer on the following terms:
(a) At least five (5) days, but no less than three (3) business
days, prior to making any Voluntary Transfer, the Transferring Stockholder will
deliver a written notice (an "Offer Notice") to PTG (the "Offeree"). The Offer
Notice will disclose in reasonable detail the proposed number of Designated
Shares to be transferred (the "Offered Shares"), the proposed terms and
conditions of the transfer and the identity of the prospective transferee(s) (if
known). During the Offer Period, the Offeree may elect to purchase all, but not
less than all, of the Offered Shares at the price and on the terms specified in
the Offer Notice by delivering written notice of such election (the "Election
Notice") to the Transferring Stockholder as soon as practical but in any event
within three (3) business days after the delivery of the Offer Notice (the
"Election Period"). If the Offeree elects to purchase the Offered Shares from
the Transferring Stockholder, the transfer of such Shares shall be consummated
as soon as practical after the delivery of the Election Notice to the
Transferring Stockholder, but in any event within three (3) business days after
the expiration of the Election Period. To the extent that the Offeree has not
elected to purchase all of the Offered Shares within the Election Period, the
Transferring Stockholder may, within ninety (90) days after the expiration of
the Election Period, transfer such Offered Shares to one or more third parties
at a price no less than the price per share specified in the Offer Notice and on
other terms no more favorable to the transferees thereof than those specified in
the Offer Notice. Any Shares not transferred within such 90-day period shall be
reoffered to the Offeree under this Section 2 prior to any subsequent transfer.
(b) In the event that the Offeree elects to purchase the Offered
Shares, and, through no fault of the Transferring Stockholder, the Offeree fails
to purchase the Offered Shares within the time period specified in Section 2(a)
above, the Transferring Stockholder, in addition to any other rights and
remedies he or it may have at law or in equity, may effect any Voluntary
Transfer of the Offered Shares at any time to a third party without regard to
any restriction set forth herein.
(c) For the avoidance of doubt, this Section 2 shall not apply to
any transfer by any Principal Stockholder of any shares of Capital Stock owned
by such Stockholder other than a Voluntary Transfer by such Principal
Stockholder of Designated Shares.
3. Board of Directors. Each of the Principal Stockholders agrees that for so
long as such Principal Stockholder owns shares of Capital Stock, he or it will
vote to elect to the Board of Directors of the Company Xxxx Xxxxxx (or another
designee of PUSA reasonably acceptable to such Principal Stockholder) and
another designee of PUSA reasonably acceptable to such Principal Stockholder at
each of the Company's Annual Meetings of Stockholders. This obligation will
terminate on the date on which PUSA, PTG and/or their respective Affiliates
cease to own at least 5% of the Capital Stock.
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4. Miscellaneous.
(a) Notices: Any notice, request, demand, statement or consent
made hereunder shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally recognized commercial overnight delivery service with provisions for
a receipt, postage or delivery charges prepaid, and shall be deemed given when
postmarked or placed in the possession of such mail or delivery service and
addressed as follows:
If to nStor: nStor Technologies, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx
With copy to: Akerman, Senterfitt & Xxxxxx, P.A.
Las Olas Centre II, Suite 1600
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
If to Levy: H. Xxxxx Xxxx
Hilcoast Development Corp.
000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
If to Halperin or Halco Investments, X.X.
Xxxxx: c/o Xxxxxxx Xxxxxxxx
00000 Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
With copy to: Xxx Xxxxxx, Esquire
000 X. Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
If to PTG: Pacific USA Holdings Corp.
0000 X. Xxxxxx Xxxxxxx
Xxxxx, Xxxxx 00000
Attn: Xxxxxxx XxXxxx, President
Xxxx X. Xxxxxxx, General Counsel -
Business Development
With copy to: Xxxxxxxxxxx & Xxxxxxxx, LLP
0000 X. Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
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(b) Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any applicable law, then provision
will be deemed to be modified to the extent necessary to render it legal, valid
and enforceable, and if no such modification will render it legal, valid and
enforceable, then this Agreement will be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties will
be construed and enforced accordingly.
(c) Choice of Law; Jurisdiction. This Agreement will be
governed by and construed in accordance with the internal law, and not the law
of conflicts, of the State of Delaware. Exclusive jurisdiction and venue shall
be in the federal or state courts located in Miami-Dade County, Florida.
(d) Counterparts. This Agreement may be executed in any
number of counterparts, and all such counterparts will be deemed an original,
will be construed together and will constitute one and the same instrument.
(e) Complete Agreement/Amendment. This Agreement embodies the
complete agreement and understanding among the parties with respect to the
subject matter hereof and supersedes and preempts any prior written, or prior or
contemporaneous oral, understandings, agreements or representations by or among
any of the parties that may have related to the subject matter hereof in any
way. This Agreement may be amended by written agreement of the parties hereto.
(f) Attorneys' Fees and Costs. If any arbitration proceeding
or other action or proceeding at law or in equity is brought for (a) the
enforcement or interpretation of this Agreement, (b) because of an alleged
breach of this Agreement, or (c) in any way arising out of the transactions
contemplated by this Agreement, whether sounding in tort, contract or otherwise,
the prevailing party shall be entitled to recover arbitration costs and fees,
reasonable attorneys' fees and other costs incurred in connection with such
action or other proceeding (including, but not limited to, expenses and costs of
investigation, witness fees, professional fees and travel), in addition to any
other relief to which the prevailing party may be entitled.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered as of the date first above written.
nSTOR TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxx
---------------------
Name: Xxxx Xxxxxx
Title: Vice President
/s/ H. Xxxxx Xxxx
-----------------
H. Xxxxx Xxxx
HILCOAST DEVELOPMENT CORP.
By: /s/ H. Xxxxx Xxxx
-----------------------
Name: H. Xxxxx Xxxx
Title: CEO
MLL CORP.
By: /s/ H. Xxxxx Xxxx
------------------
Name: H. Xxxxx Xxxx
Title: President
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx Xxxxxxxx
HALCO INVESTMENTS, L.C.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Member/Manager
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PACIFIC TECHNOLOGY GROUP, INC.
By: /s/ Xxxx X. Xxxxx
------------------
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
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EXHIBIT A
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Principal Stockholder # of shares of Common Stock as of 5/31/02
-------------------------------------- -----------------------------------------
H. Xxxxx Xxxx 17,278,236
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Hilcoast Development Corp. 2,639,784
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MLL Corp. 2,644,573
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Xxxxxxx X Xxxxxxxx 3,077,844
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Halco Investments, L.C.1 39,000,000
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1 Does not include shares of Common Stock issuable upon conversion of that
certain 8% Convertible Subordinated Promissory Note dated the date hereof.
