The shares of Nexsan Corporation issued hereunder have not been, and will not
be, registered under the Securities Act of 1933, as amended ("Securities Act"),
or under any state securities laws, and may not be offered or sold in the United
States or to U.S. persons unless such securities are registered under the
Securities Act, or an exemption from the registration requirements of the
Securities Act is available, and hedging transactions involving such securities
may not be conducted unless in compliance with the Securities Act.
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT ("Agreement") is made and entered into this 4th
day of January, 2001, by and among all of the shareholders (the "Shareholders")
of Nexsan Technologies, Ltd., an English corporation (the "Company"), and Nexsan
Corporation, a Delaware corporation (the "Acquiror").
RECITALS
WHEREAS, the Shareholders wish to transfer all of the issued and
outstanding capital stock of the Company to the Acquiror solely in exchange for
stock of the Acquiror; and
WHEREAS, the Shareholders intend that such exchange occur
simultaneously with the issuance and sale by the Acquiror of additional shares
of its capital stock to purchasers thereof pursuant to that certain Stock
Purchase Agreement, dated as of January 4, 2001 ("Stock Purchase Agreement"), a
copy of which is attached as Exhibit A hereto, and with the issuance and sale of
restricted stock to certain key executives of and consultants to Acquiror
pursuant to those certain Restricted Stock Purchase Agreements ("Restricted
Stock Purchase Agreements"), copies of which are attached as Exhibit B hereto,
such that the issuance of shares of stock by the Company to the Shareholders,
the parties to the Stock Purchase Agreement and such key executives and
consultants are part of a single transaction described in Section 351 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
EXCHANGE OF SHARES
Section 1.1. Transfer of the Shares. Subject to the terms and
conditions set forth herein, at the Closing (as defined in Section 1.3),
Acquiror shall acquire from the Shareholders, and the Shareholders shall assign
and transfer to Acquiror, all of their respective shares ("Shares") of the
capital stock of the Company, representing all issued and outstanding shares of
the capital stock of the Company, solely in exchange for the Consideration
shares (as defined in Section 1.2).
Section 1.2. Consideration Shares. The consideration for all of the
Shares will be the issuance of, and delivery of certificates representing, an
aggregate of 9,050,000 shares (the "Consideration Shares") of the common stock,
par value $.001 ("Common Stock") of the Acquiror. The Consideration Shares shall
be allocated among the Shareholders as set forth on Schedule A hereto.
Section 1.3. The Closing.
(a) The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of RubinBaum LLP, 30 Rockefeller
Plaza, New York, New York 10112 or such other place as the Shareholders and
Acquiror may mutually agree, contemporaneously with the closing of the
transactions contemplated by the Stock Purchase Agreement and the Restricted
Stock Purchase Agreements (the "Closing Date").
(b) At the Closing, (i) each Shareholder shall deliver to the
Acquirer one or more certificates representing all of his or her Shares of the
Company, accompanied by executed powers of attorney and executed stock transfer
forms in favor of the Acquiror against receipt of the Consideration Shares, (ii)
the Acquiror shall deliver the Consideration Shares, and (iii) the Shareholder
and the Acquiror shall execute, deliver and acknowledge, or cause to be
executed, delivered and acknowledged, such certificates and other documents
related to the consummation of the transactions contemplated hereby as may be
reasonably requested by the parties hereto.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING THE SHAREHOLDERS
Each of the Shareholders hereby represents, warrants and covenants,
severally and not jointly, to Acquiror and to each other, as follows:
Section 2.1. Ownership. The Shareholder owns of record and beneficially
the number of Shares set forth opposite his name on Schedule A hereto, free and
clear of any liens, subscriptions, options, warrants, calls, rights, commitments
or any other agreements. The Shareholder is not a party to any voting trust,
proxy or other agreement or understanding with respect to the voting of any of
the Shares.
Section 2.2. Authorization and Validity of Agreement. The Shareholder
has the requisite authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. This Agreement has been duly executed by the
-2-
Shareholder and constitutes the legal, valid and binding obligation of the
Shareholder, enforceable against him in accordance with its terms, except as may
be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors' fights
generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 2.3 Consents and Approvals. Neither the execution and delivery
of this Agreement by the Shareholder nor the consummation by the Shareholder of
the transactions contemplated hereby will require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
entity.
Section 2.4. No Conflict or Violation. Neither the execution, delivery
or performance of this Agreement by the Shareholder, nor the consummation by the
Shareholder of the transactions contemplated hereby, nor compliance by the
Shareholder with any of the provisions hereof, will (a) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation) under, any of the
terms, conditions or provisions of any material Contract to which the
Shareholder is a party or by which the Shareholder or any his properties or
assets are bound or (b) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Shareholder or any of his properties or
assets.
Section 2.5. Litigation. There is no suit, action, proceeding or
investigation (whether at law or equity, before or by any federal, state or
foreign commission, court, tribunal, board, agency or instrumentality, or before
any arbitrator) pending or, to the knowledge of the Shareholder, threatened
against or affecting the Shareholder, the outcome of which would in any manner
impair the Shareholder's ability to perform his obligations hereunder.
Section 2.6. Brokers and Finders. In connection with this Agreement, no
broker, finder or investment bank has acted directly or indirectly for the
Shareholder, and the Shareholder has not incurred any obligation to pay a
brokerage, finder's or other fee or commission to any person.
Section 2.7. Compliance with U.S. Securities Act. The Shareholder (a)
understands that, except as provided in any registration rights agreement to
which such Shareholder may be party, that the Consideration Shares have not
been, and will not be, registered under the Securities Act of 1933, as amended
("Securities Act"), or under any state securities laws, and may not be offered
or sold in the United States or to U.S. persons unless the securities are
registered under the Securities Act, or an exemption from the registration
requirements of the Securities Act is available, and hedging transactions
involving such securities may not be conducted unless in compliance with the
Securities Act, and are being offered and sold in reliance upon federal and
state exemptions for offshore transactions and transactions not involving any
public offering; (b) is a natural person who is not a resident of the U.S. and
is acquiring the Consideration Shares solely for his own account and not for the
account of any U.S. person (as defined in Rule 902 under the Securities Act);
(c) agrees to resell the Consideration Shares only in accordance with the
provisions of Regulation S
-3-
(Rule 901 through Rule 905, and Preliminary Note) promulgated under the
Securities Act, pursuant to registration under the Securities Act, or pursuant
to an available exemption from registration; and agrees not to engage in hedging
transactions with regard to the Consideration Shares unless in compliance with
the Securities Act; and (d) agrees that the certificates representing the
Consideration Shares will contain a legend to the effect that transfer is
prohibited except in accordance with the provisions of Regulation S (Rule 901
through Rule 905, and Preliminary Note) promulgated under the Securities Act ,
or pursuant to an available exemption from registration, and that hedging
transactions with regard to the Consideration Shares may not be conducted unless
in compliance with the Securities Act; and (e) acknowledges and agrees that the
Acquiror shall refuse to register any transfer of Consideration Shares not made
in accordance with the provisions of Regulation S (Rule 901 through Rule 905,
and Preliminary Note) promulgated under the Securities Act, pursuant to
registration under the Securities Act, or pursuant to an available exemption
from registration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Shareholders as follows:
Section 3.1. Organization. Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. Attached as
Exhibit C hereto are copies of the Certificate of Incorporation and By-Laws of
the Acquiror, as amended to date.
Section 3.2. Authorization and Validity of Agreement. Acquiror has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby in accordance with the
terms hereof. Acquiror's Board of Directors has duly authorized the execution,
delivery and performance of this Agreement by Acquiror, and no other corporate
proceedings on the part of Acquiror are necessary to authorize this Agreement or
the transactions contemplated hereby. The Agreement has been duly executed and
delivered by Acquiror and, assuming this Agreement constitutes the legal, valid
and binding obligation of the Shareholders, constitutes the legal, valid and
binding obligation of Acquiror, enforceable against Acquiror in accordance with
its terms, except as may be limited by any bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Section 3.3. Consents and Approvals. Neither the execution and delivery
of this Agreement by Acquiror nor the consummation by Acquiror of the
transactions contemplated hereby will require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
entity.
-4-
Section 3.4. No Conflict or Violation. Neither the execution, delivery
or performance of this Agreement by Acquiror, nor the consummation by Acquiror
of the transactions contemplated hereby, nor compliance by Acquiror any of the
provisions hereof, will (a) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation, vesting, payment, exercise,
acceleration, suspension or revocation) under, any of the terms, conditions or
provisions of any material note, bond, mortgage, deed of trust, security
interest, indenture, license, contract, agreement, plan or other instrument or
obligation to which Acquiror is a party or by which Acquiror, or any of its
properties or assets may be bound or affected, or (b) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Acquiror or any of
its properties or assets.
Section 3.5. Litigation. There is no suit, action, proceeding or
investigation (whether at law or equity, before or by any federal, state or
foreign commission, court, tribunal, board, agency or instrumentality, or before
any arbitrator) pending or threatened against or affecting Acquiror the outcome
of which would in any manner impair the ability of Acquiror to perform its
obligations hereunder or to consummate this Agreement.
Section 3.6. Brokers and Finders. In connection with this Agreement,
except for Beechtree Capital Ltd. and Direct Brokerage, Inc., no broker, finder
or investment bank has acted directly or indirectly for Acquiror, and Acquiror
has not incurred any obligation to pay a brokerage, finder's or other fee or
commission to any person.
Section 3.7. Investment Representation. Acquiror acknowledges that the
Company's Shares are not registered under the securities laws of any
jurisdiction and that it is acquiring the Company's Shares for its own account,
and not with a view to the distribution thereof.
Section 3.8. No Business Activities. Since its inception, the Acquiror
has not engaged in any business other than the negotiation and execution of this
Agreement, the Stock Purchase Agreement, the Restricted Stock Purchase
Agreements and related agreements.
ARTICLE IV
COVENANTS OF ACQUIROR, SHAREHOLDERS AND COMPANY
The parties hereto agree that:
Section 4.1. Efforts. Subject to the terms and conditions of this
Agreement and applicable law, each of the parties hereto shall act in good faith
and use commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated hereby
as soon as practicable, including such actions or things as the other party may
reasonably request in order to
-5-
cause any of the conditions to such other party's obligation to consummate the
transactions contemplated by this Agreement to be fully satisfied.
Section 4.2. Transfer Taxes. All transfer, documentary, sales, use,
registration and other such taxes, and any penalties, interest and additions to
such taxes, that are incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by Acquiror, except to the extent
that, under applicable law, such taxes are the sole obligation of the
Shareholders, in which event each of the Shareholders shall pay any such Tax
which is his responsibility. The parties to this Agreement shall cooperate in
the timely making of all filings, returns, reports and forms as may be required
in connection therewith.
Section 4.2. Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants, indemnities and agreements contained
herein and in any certificate, instrument or document furnished in connection
herewith are and will be deemed and construed to be continuing representations,
warranties, covenants, indemnities and agreements shall survive the Closing for
a period of three years after the Closing Date, except that the representations
and warranties contained in Sections 2.1, 2.2, 2.3 and 2.4 shall survive the
Closing indefinitely.
ARTICLE V
INDEMNITY
Section 5.1 In the event a Shareholder breaches (or in the event any
third party alleges facts that, if true, would mean the Shareholder has
breached) any of his representations, warranties, and covenants contained in
this Agreement, then the Shareholder agrees to indemnify the Acquiror from and
against the entirety of any Adverse Consequences the Acquiror may suffer through
and after the date of the claim for indemnification resulting from, arising out
of, relating to, in the nature of, or caused by the breach; provided, that the
maximum amount of Adverse Consequences against which the Acquiror shall be
indemnified in the case of any breach or alleged breach of Section 2.5 or
Section 2.6 shall not exceed the value of the Consideration Shares received by
such Shareholder. "Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
ARTICLE VI
TERMINATION
Section 6.1. Termination. This Agreement maybe terminated and may be
abandoned at any time prior to the Closing Date, by mutual written consent of
the Shareholders and Acquiror.
-6-
Section 6.2. Effect of Termination. In the event of any termination of
this Agreement pursuant to this Article, this Agreement forthwith shall become
void and of no further force or effect, and no party hereto (or any of its
affiliates, directors, officers, agents or representatives) shall have any
liability or obligation hereunder, except for any breach thereof prior to such
termination.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Entire Agreement. This Agreement (including the schedules,
exhibits and other documents referred to herein) constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior written or oral and all contemporaneous oral agreements
and undertakings between any of the parties hereto with respect to the subject
matter hereof
Section 7.2. Assignment; Binding Effect. Neither this Agreement nor any
of the rights, benefits or obligations hereunder may be assigned, in whole or in
part, by either party (whether by operation of law or otherwise) without the
prior written consent of the other party hereto. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
Section 7.3. Amendments. This Agreement may be amended by the parties
at any time prior to the Closing Date: provided, however, that this Agreement
may not be amended or modified except by an instrument, in writing signed on
behalf of each of the parties hereto.
Section 7.4. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated thereby is not affected in any manner
materially adverse to either party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
fullest extent possible.
Section 7.5. Captions. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 7.6. Counterparts; Facsimile. This Agreement may be executed in
counterparts, and by different parties on separate counterparts, each of which
shall be deemed to be an original, and all of which together shall be deemed to
be one and the same instrument, and this Agreement may be executed by facsimile
signature.
-7-
Section 7.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to any applicable principles of conflicts of law.
Section 7.8 Submission to Jurisdiction. Each of the parties submits to
the jurisdiction of any state or federal court sitting in New York County, State
of New York in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each Party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto. Any party may make service on any other party by sending or delivering
a copy of the process to the party to be served at the address and in the manner
provided for the giving of notices in Section 7.9. Nothing in this Section 7.8,
however, shall affect the right of any party to serve legal process in any other
manner permitted by law or in equity. Each party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law or in equity.
Section 7.9 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to a Shareholder: Copy to:
-------------------- --------
The address of such Shareholder
set forth on Schedule A
If to the Acquiror: Copy to:
------------------- --------
Nexsan Corporation RubinBaum LLP
c/o Beechtree Capital, LLC 30 Rockefeller Plaza
1 Rockefeller Plaza New York, New York 10112
New York, New York 10020 Attn: Michael J. Emont
Attn: Tyler Shubert
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address
-8-
to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Parties notice in the manner herein set
forth.
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IN WITNESS WHEREOF, the parties have executed this Exchange
Agreement as of the date first above written.
Nexsan Corporation
By: /s/ Martin Boddy
----------------------------------
Name:
Title:
By: /s/ Martin Boddy
----------------------------------
Martin Boddy
By: /s/ Kathryn Marie Boddy
----------------------------------
Kathryn Marie Boddy
By: /s/ Paul Skelton
----------------------------------
Paul Skelton
By: /s/ Gary Watson
----------------------------------
Gary Watson
By: /s/ Lynn Cox
----------------------------------
Lynn Cox
By: /s/ Olivind Martinsen
----------------------------------
Olivind Martinsen
By: /s/ Nicholas Smith
----------------------------------
Nicholas Smith
By: /s/ Barrie Vaughan
----------------------------------
Barrie Vaughan
SCHEDULE A
- --------------------------------------------------------------------------------
NAME & ADDRESS HOLDING OF ORDINARY SHARES CONSIDERATION
OF SHAREHOLDER OF(POUNDS STERLING)1.00 EACH SHARES
- --------------------------------------------------------------------------------
MARTIN BODDY 20,999 4,230,277
5 DUCK ISLAND
TAMWORTH STREET
DUFFIELD
DERBYSHIRE
DE56 4EZ
- --------------------------------------------------------------------------------
KATHRYN MARIE BODDY 1 200
5 DUCK ISLAND
TAMWORTH STREET
DUFFIELD
DERBYSHIRE
DE56 E4Z
- --------------------------------------------------------------------------------
PAUL SKELTON 4,000 805,805
ROSE COTTAGE
CROOPER LANE
THURVASTON
DERBYSHIRE
- --------------------------------------------------------------------------------
GARY WATSON 10,000 2,014,513
25 WHARFEDALE ROAD
LONG EATON
NOTTINGHAM
NG10 3HG
- --------------------------------------------------------------------------------
LYNN COX 2,000 402,903
CORNER COTTAGE
MAIN ROAD
PENTRICH
RIPLEY
DERBYSHIRE
DE5 3RE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME & ADDRESS HOLDING OF ORDINARY SHARES CONSIDERATION
OF SHAREHOLDER OF(POUNDS STERLING)1.00 EACH SHARES
- --------------------------------------------------------------------------------
OLVIND MARTINSEN 2,000 402,903
MEFJORDVEIEN 36
3234 SANDEFJORD
NORWAY
- --------------------------------------------------------------------------------
NICHOLAS SMITH 1,000 201,452
CROFT COTTAGE
FIRESTONE
HAZELWOOD
DERBYSHIRE
DE56 4AE
- --------------------------------------------------------------------------------
BARRIE VAUGHAN 4,444 895,250
21 WOODLANDS LANE
QUORNDON
DERBYSHIRE
DE22 5JU
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME OF SHAREHOLDER HOLDING OF 9% REDEEMABLE CONSIDERATION
PREFERENCE SHARES OF SHARES
(POUNDS STERLING)1.00 EACH
- --------------------------------------------------------------------------------
MARTIN BODDY 19,000 30,621
- --------------------------------------------------------------------------------
PAUL SKELTON 21,000 33,844
- --------------------------------------------------------------------------------
LYNN COX 8,000 12,893
- --------------------------------------------------------------------------------
OLVIND MARTINSEN 8,000 12,893
- --------------------------------------------------------------------------------
NICHOLAS SMITH 4,000 6,446
- --------------------------------------------------------------------------------