SECURITIES EXCHANGE AND COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 16, 1998
ZITEL CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of incorporation)
0-12194 94-2566313
(Commission File No.) (IRS Employer Identification No.)
47211 BAYSIDE PARKWAY,
FREMONT, CALIFORNIA 94538-6517
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (510) 440-9600
ITEM 5. OTHER EVENTS
PLACEMENT OF DEBENTURES
On June 16, 1998, Zitel Corporation (the "Company") completed the
private placement of $10,000,000 in principal amount of 3% Convertible
Subordinated Debentures due June 15, 1999 (the "Debentures") and five year
Common Stock Purchase Warrants covering 150,000 shares of the Company's
Common Stock (the "Common Stock") to a small number of institutional
investors in a transaction exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"). The Debentures
are convertible into the number of shares of Common Stock equal to the amount
of principal and accrued interest being converted divided by $ 3.92625 (the
"Conversion Price"). The Conversion Price is equal to 90% of the average
closing bid prices of the Common Stock for each of the five trading days
immediately following, but not including the June 16, 1998 closing date of
the placement. There may be a one-time adjustment to the Conversion Price in
the event that the lesser of 90% of the average of the closing bid prices of
the Common Stock for the ten consecutive trading days preceding but not
including: (a) the 45-day anniversary of the closing price; or (b) the
effective date of a registration statement under the Securities Act
registering the resale of the shares of Common Stock issuable upon conversion
of the Debentures and exercise of the Warrants, is less than the Conversion
Price then that lesser price so calculated shall thereafter be the Conversion
Price. The Conversion Price and number of shares subject to the debentures
are subject to adjustment in the event of certain recapitalizations of and
distributions by the Company and to formula antidilution protection upon
certain sales of Common Stock or Common Stock equivalents at prices less than
the Conversion Price or then the current market of the Common Stock. The
Debentures also provide for certain additional rights in the event that prior
to the aforesaid 45-day anniversary or effective date the closing bid price
of the Common Stock for five consecutive trading days is less than 50% of
111.11% of the original Conversion Price. The exercise price of the Warrants
is equal to 130% of the Conversion Price.
All Debentures outstanding on June 16, 1999 will convert automatically,
provided certain conditions specified in the Debentures are satisfied. The
holders of the Debentures have registration rights with respect to the Common
Stock as set forth in a Registration Rights Agreement pursuant to which the
Company has agreed to register for resale under the Securities Act the Common
Stock issuable upon conversion of the Debentures, on or before September 14,
1998.
The foregoing description does not purport to be complete and is
qualified by reference to the definitive agreements filed as Exhibits
herewith.
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ITEM 7. EXHIBITS
(c) The following exhibits are furnished in accordance with the
provisions of Item 601 of Regulation S-K:
Exhibit Number Exhibit
4.1 Form of Convertible Subordinated Debenture
4.2 Form of Common Stock Purchase Warrant
4.3 Registration Rights Agreement
4.4 Securities Purchase Agreement
4.5 Placement Agency Agreement
The foregoing is a partial summary of certain terms of the Debentures
and the rights of the holders. Reference is made to the Exhibits filed with
this report for the actual terms of the Debentures and such rights.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ZITEL CORPORATION
Dated: June 25, 1998 By: /s/ Jack H. King
----------------------------------
Jack H. King
President and Director
Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 Form of Convertible Subordinated Debenture
4.2 Form of Common Stock Purchase Warrant
4.3 Registration Rights Agreement
4.4 Securities Purchase Agreement
4.5 Placement Agency Agreement
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