EXHIBIT 1.1B
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
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June 16, 1998
ZITEL CORPORATION
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Common Stock Purchase Warrant
Zitel Corporation, a California corporation (the "COMPANY"), hereby
certifies that for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, [___________________________________________
_____________________________], having an address at [________________________
__________________________________________] ("PURCHASER") or any other Warrant
Holder is entitled, on the terms and conditions set forth below, to purchase
from the Company at any time beginning on the date hereof and ending on the
fifth anniversary of the Closing Date, as extended 1.5 times the number of days
between the 90th day following the Closing Date and such anniversary on which
there had been no Effective Registration, [150,000 IN THE AGGREGATE] fully paid
and nonassessable shares of Common Stock, no par value, of the Company (the
"COMMON STOCK"), at a purchase price per share of Common Stock equal to 130% of
the Conversion Price, as such term is defined in the Debenture and as such
Conversion Price may from time to time be adjusted pursuant to the terms of the
Debenture and the Agreement (the "PURCHASE PRICE"), as the same may be adjusted
pursuant to Section 5 herein.
1. DEFINITIONS.
(a) The term "AGREEMENT" shall mean the Convertible Debenture
Purchase Agreement dated as of June 16, 1998, between the Company and the
Investors signatory thereto.
(b) The term "APPROVED MARKET" shall mean the Nasdaq National
Market System, the American Stock Exchange or the New York Stock Exchange.
(c) The term "CLOSING BID PRICE" shall mean the last closing bid
price on the principal Approved Market as reported by Bloomberg Financial Market
or an equivalent reliable reporting service selected by the Warrant Holder and
the Company.
(d) The term "DEBENTURE" shall mean any of the Company's 3%
Convertible Subordinated Debentures due June 15, 1999.
(e) The term "EFFECTIVE REGISTRATION" shall have the meaning
specified in the Agreement.
(f) The term "CLOSING DATE" shall mean the Closing Date as defined
in Section 1.1 under the Agreement OR the date of the Section 3.14 closing under
the Agreement, as relevant.
(g) The term "REGISTRATION RIGHTS AGREEMENT" shall mean the
Registration Rights Agreement, dated as of June 16, 1998, between the Company
and the Investors signatory thereto.
(h) The term "WARRANT HOLDER" shall mean the Purchaser or any
assignee of all or any portion of this Warrant.
(i) The term "WARRANT SHARES" shall mean the Shares of Common
Stock or other securities issuable upon exercise of this Warrant.
Capitalized terms used but not defined in this Warrant shall have the
meanings specified in the Agreement or the Debentures.
2. EXERCISE OF WARRANT.
This Warrant may be exercised by the Warrant Holder, in whole or in part,
at any time and from time to time by either of the following methods:
(a) The Warrant Holder may surrender this Warrant, together with the
form of subscription at the end hereof duly executed by Warrant Holder
("SUBSCRIPTION NOTICE"), at the offices of the Company or any transfer agent for
the Common Stock; or
(b) The Warrant Holder may also exercise this Warrant, in whole or in
part, in a "cashless" or "net-issue" exercise by delivering to the offices of
the Company or any transfer agent for the Common Stock this Warrant, together
with a Subscription Notice specifying the number of Warrant Shares to be
delivered to such Warrant Holder ("DELIVERABLE SHARES") and the number of
Warrant Shares with respect to which this Warrant is being surrendered in
payment of the aggregate Purchase Price for the Deliverable Shares ("SURRENDERED
SHARES"); provided that the Purchase Price multiplied by the number of
Deliverable Shares shall not exceed the value of the Surrendered Shares; and
provided further that the sum of the number of Deliverable Shares and the number
of Surrendered Shares so specified shall not exceed the aggregate number of
Warrant Shares represented by this Warrant. For the purposes of this provision,
each Warrant Share as to which this Warrant is surrendered will be attributed a
value equal to the fair market value (as defined below) of the Warrant Share
minus the Purchase Price of the Warrant Share.
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares for which
this Warrant is exercised and/or surrendered, and the Company, at its expense,
shall within three (3) Trading Days (as defined below) issue and deliver or upon
the order of Warrant Holder a new Warrant of like tenor in the name of Warrant
Holder or as Warrant Holder (upon payment by Warrant Holder of any applicable
transfer taxes) may request, reflecting such adjusted Warrant Shares.
3. DELIVERY OF STOCK CERTIFICATES.
(a) Subject to the terms and conditions of this Warrant, as soon
as practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) Trading Days thereafter, the
Company shall transmit the certificates (together with any other stock or
other securities or property to which Warrant Holder is entitled upon
exercise) by messenger or overnight delivery service to reach the address
designated by such holder within three (3) Trading Days after the receipt of
the Subscription Notice ("T+3"). If such certificates are not received by
the Warrant Holder within T+3, then the Warrant Holder will be entitled to
revoke and withdraw its exercise of its Warrant at any time prior to its
receipt of those certificates.
In lieu of delivering physical certificates representing
the Warrant Shares deliverable upon exercise of Warrants, provided the
Company's transfer agent is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of
the Warrant Holder, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Warrant Shares issuable upon
exercise to the Warrant Holder, by crediting the account of Warrant Holder's
prime broker with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system. The time periods for delivery described above shall apply
to the electronic transmittals through the DWAC system. The parties agree to
coordinate with DTC to accomplish this objective. The exchange pursuant to
Section 3 shall be deemed to have been made immediately prior to the close of
business on the date of the Subscription Notice. The person or persons
entitled to receive the Warrant Shares issuable upon such exercise shall be
treated for all purposes as the record holder or holders of such Common
Shares at the close of business on the date of the Subscription Notice.
The term Trading Day means (x) if the Common Stock is listed
on the New York Stock Exchange or the American Stock Exchange, a day on which
there is trading on such stock exchange, (y) if the Common Stock is not listed
on either of such stock exchanges but sale prices of the Common Stock are
reported on an automated quotation system, a day on which trading is reported on
the principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the foregoing provisions are inapplicable, a day on which
quotations are reported by National Quotation Bureau Incorporated.
(b) This Warrant may not be exercised as to fractional shares of
Common Stock. In the event that the exercise of this Warrant, in full or in
part, would result in the issuance of any fractional share of Common Stock, then
in such event the Warrant Holder shall be entitled to cash equal to the fair
market value of such fractional share. For purposes of this Warrant, "FAIR
MARKET VALUE" shall equal the Closing Bid Price on the Approved Market which is
the principal trading exchange or market for the Common Stock (the "PRINCIPAL
MARKET") on the date of determination or, if the Common Stock is not listed or
admitted to trading on any Approved Market, the average of the closing bid and
asked prices on the over-the-counter market as furnished by any New York Stock
Exchange member firm reasonably selected from time to time by the Company for
that purpose and reasonably acceptable to the Warrant Holder, or, if the Common
Stock is not listed or admitted to trading on any Approved Market or traded
over-the-counter and the average price cannot be determined a contemplated
above, the fair market value of the Common Stock shall be as reasonably
determined in good faith by the Company's Board of Directors with the
concurrence of the Warrant Holder.
4. (A) REPRESENTATIONS AND COVENANTS OF THE COMPANY.
(a) The Company shall comply with its obligations under the
Registration Rights Agreement with respect to the Warrant Shares, including,
without limitation, the Company's obligation to have filed and declared and
maintained effective a registration statement registering the Warrant Shares
under the Securities Act of 1933, as amended (the "ACT").
(b) The Company shall take all necessary action and proceedings as
may be required and permitted by applicable law, rule and regulation, including,
without limitation, the notification of the Principal
Market, for the legal and valid issuance of this Warrant and the Warrant
Shares to the Warrant Holder under this Warrant.
(c) From the date hereof through the last date on which this
Warrant is exercisable, the Company shall take all steps necessary to insure
that the Common Stock remains listed on the Principal Market.
(d) The Warrant Shares, when issued in accordance with the terms
hereof, will be duly authorized and, when paid for or issued in accordance with
the terms hereof, shall be validly issued, fully paid and non-assessable. The
Company has authorized and reserved for issuance to Warrant Holder the requisite
number of shares of Common Stock to be issued pursuant to this Warrant.
(e) The Company shall at all times reserve and keep available,
solely for issuance and delivery as Warrant Shares hereunder the number of
shares specified in Section 3.10 of the Purchase Agreement.
(f) With a view to making available to the Warrant Holder the
benefits of Rule 144 promulgated under the Act and any other rule or regulation
of the Securities and Exchange Commission ("SEC") that may at any time permit
Warrant Holder to sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:
i) make and keep public information available, as
those terms are understood and defined in Rule 144, at all times;
ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT");
and
iii) furnish to any Warrant Holder forthwith upon
request a written statement by the Company that it has complied
with the reporting requirements of Rule 144 and of the Act and
the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so
filed by the Company as may be reasonably requested to permit
any such Warrant Holder to take advantage of any rule or
regulation of the SEC permitting the selling of any such
securities without registration.
(B) REPRESENTATIONS AND COVENANTS OF THE PURCHASER.
The Purchaser shall not resell this Warrant or the Warrant Shares,
unless such resale is pursuant to an effective registration statement under the
Act or pursuant to an applicable exemption from such registration requirements.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of
and kind of securities purchasable upon exercise of this Warrant and the
Purchase Price shall be subject to adjustment from time to time as follows:
(a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the
Company shall at any time after the date hereof but prior to the expiration of
this Warrant subdivide its outstanding securities as to which
purchase rights under this Warrant exist, by split-up, spin-off, or
otherwise, or combine its outstanding securities as to which purchase rights
under this Warrant exist, the number of Warrant Shares as to which this
Warrant is exercisable as of the date of such subdivision, split-up, spin-off
or combination shall forthwith be proportionately increased in the case of a
subdivision, or proportionately decreased in the case of a combination.
Appropriate proportional adjustments (decrease in the case of subdivision,
increase in the case of combination) shall also be made to the Purchase Price
payable per share, so that the aggregate Purchase Price payable for the total
number of Warrant Shares purchasable under this Warrant as of such date shall
remain the same as it would have been before such subdivision or combination.
(b) STOCK DIVIDEND. If at any time after the date hereof the
Company declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into or exchangeable for
Common Stock ("COMMON STOCK EQUIVALENTS") without payment of any consideration
by holders of Common Stock for the additional shares of Common Stock or the
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon exercise or conversion thereof), then the number of shares of
Common Stock for which this Warrant may be exercised shall be increased as of
the record date (or the date of such dividend distribution if no record date is
set) for determining which holders of Common Stock shall be entitled to receive
such dividends, in proportion to the increase in the number of outstanding
shares (and shares of Common Stock issuable upon conversion of all such
securities convertible into Common Stock) of Common Stock as a result of such
dividend, and the Purchase Price shall be proportionately reduced so that the
aggregate Purchase Price for all the Warrant Shares issuable hereunder
immediately after the record date (or on the date of such distribution, if
applicable), for such dividend shall equal the aggregate Purchase Price so
payable immediately before such record date (or on the date of such
distribution, if applicable).
(c) OTHER DISTRIBUTIONS. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any of its assets (other than
Common Stock), then the number of Warrant Shares for which this Warrant is
exercisable shall be increased to equal: (i) the number of Warrant Shares for
which this Warrant is exercisable immediately prior to such event, (ii)
multiplied by a fraction, (A) the numerator of which shall be the fair market
value per share of Common Stock on the record date for the dividend or
distribution, and (B) the denominator of which shall be the fair market value
per share of Common Stock on the record date for the dividend or distribution
minus the amount allocable to one share of Common Stock of the value (as
determined in good faith by the Board of Directors of the Company) of any and
all such evidences of indebtedness, shares of capital stock, other securities or
property, so distributed. If the value of the distribution exceeds 10% of the
value of the outstanding Common Stock, at the request of Warrant Holders holding
an aggregate of at least 100,000 Warrants , the valuation described in the
preceding sentence shall be determined, at the Company's expense, by a
nationally recognized investment banking firm or other nationally recognized
financial advisor retained by the Company with the approval of the Warrant
Holder. The Purchase Price shall be reduced to equal: (i) the Purchase Price in
effect immediately before the occurrence of any event (ii) multiplied by a
fraction, (A) the numerator of which is the number of Warrant Shares for which
this Warrant is exercisable immediately before the adjustment, and (B) the
denominator of which is the number of Warrant Shares for which this Warrant is
exercisable immediately after the adjustment.
(d) MERGER, ETC. If at any time after the date hereof there shall
be a merger or consolidation of the Company with or into or a transfer of all or
substantially all of the assets of the Company to another entity, then the
Warrant Holder shall be entitled to receive upon or after such transfer, merger
or consolidation becoming effective, and upon payment of the Purchase Price then
in effect, the number of shares
or other securities or property of the Company or of the successor
corporation resulting from such merger or consolidation, which would have
been received by Warrant Holder for the shares of stock subject to this
Warrant had this Warrant been exercised just prior to such transfer, merger
or consolidation becoming effective or to the applicable record date thereof,
as the case may be. The Company will not merge or consolidate with or into
any other corporation, or sell or otherwise transfer its property, assets and
business substantially as an entirety to another corporation, unless the
corporation resulting from such merger or consolidation (if not the Company),
or such transferee corporation, as the case may be, shall expressly assume,
by supplemental agreement, the due and punctual performance and observance of
each and every covenant and condition of this Warrant to be performed and
observed by the Company, as adjusted to preserve the economic benefits
receivable by the Warrant Holder upon exercise.
(e) RECLASSIFICATION, ETC. If at any time after the date hereof
there shall be a reorganization or reclassification of the securities as to
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the Purchase Price then in
effect, the number of shares or other securities or property resulting from such
reorganization or reclassification, which would have been received by the
Warrant Holder for the shares of stock subject to this Warrant had this Warrant
at such time been exercised.
(f) PURCHASE PRICE ADJUSTMENT. In the event that within twelve
(12) months of the Closing Date the Company issues or sells any Common Stock or
securities which are convertible into or exchangeable for its Common Stock or
any convertible securities, or any warrants or other rights to subscribe for or
to purchase or any options for the purchase of its Common Stock or any such
convertible securities (other than shares or options issued or which may be
issued pursuant to the Company's current employee or director option plans or
stock purchase plans, at prices consistent with past practice, or shares issued
upon exercise of options, warrants or rights outstanding on the date of the
Agreement and listed in Section 2(c) of the Company's Disclosure Schedule) at an
effective purchase price per share which is less than the greater of the
Purchase Price then in effect or the fair market value (as defined in Section
3(b) above) of the Common Stock on the trading day next preceding such issue or
sale, then in each such case, the Purchase Price in effect immediately prior to
such issue or sale shall be reduced effective concurrently with such issue or
sale to an amount determined by multiplying the Purchase Price then in effect by
a fraction, (x) the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issue or sale, plus
(2) the number of shares of Common Stock which the aggregate consideration
received by the Company for such additional shares would purchase at such fair
market value or, Purchase Price as the case may be, then in effect; and (y) the
denominator of which shall be the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of Common Stock
("CONVERTIBLE SECURITIES"), the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of such Convertible Securities
shall be deemed to be outstanding, provided that no further adjustment shall
be made upon the actual issuance of Common Stock upon exercise, exchange or
conversion of such Convertible Securities.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Purchase Price pursuant to this
paragraph 5(f), so that after such adjustments the aggregate Purchase Price
payable hereunder for the increased number of shares shall be the same as the
aggregate Purchase Price in effect just prior to such adjustments.
In the event of any such issuance for a consideration which is less
than such fair market value and also less than the Purchase Price then in
effect, than there shall be only one such adjustment by reason of such issuance,
such adjustment to be that which results in the greatest reduction of the
Purchase Price computed as aforesaid.
6. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Warrant Holder
against impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, and (b) will take all such action as
may be reasonably necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
7. NOTICE OF ADJUSTMENTS. Whenever the Purchase Price or number of
Shares purchasable hereunder shall be adjusted pursuant to Section 5 hereof, the
Company shall execute and deliver to the Warrant Holder a certificate setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated and the
Purchase Price and number of shares purchasable hereunder after giving effect to
such adjustment, and shall cause a copy of such certificate to be mailed (by
first class mail, postage prepaid) to the Warrant Holder.
8. RIGHTS AS STOCKHOLDER. Prior to exercise of this Warrant, the
Warrant Holder shall not be entitled to any rights as a stockholder of the
Company with respect to the Warrant Shares, including (without limitation) the
right to vote such shares, receive dividends or other distributions thereon or
be notified of stockholder meetings. However, in the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each Warrant Holder, at least 10 Trading Days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.
9. LIMITATION ON EXERCISE. Notwithstanding anything to the contrary
contained herein, this Warrant may not be exercised by the Warrant Holder to the
extent that, after giving effect to Warrant Shares to be issued pursuant to a
Subscription Notice, the total number of shares of Common Stock deemed
beneficially owned by such holder (other than by virtue of ownership of this
Warrant, or ownership of other securities that have limitations on the holder's
rights to convert or exercise similar to the limitations set forth herein),
together with all shares of Common Stock deemed beneficially owned by the
holder's "affiliates" (as defined in Rule 144 of the Act) that would be
aggregated for purposes of determining whether a group under Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") exists,
would exceed the Warrant Holder's Restricted Ownership Percentage specified on
Schedule I to the Agreement; PROVIDED that (w) each Warrant Holder shall have
the right at any time and from time to time to reduce its Restricted Ownership
Percentage immediately upon notice to the Company or in the event of a Change in
Control Transaction, (x) each Warrant Holder shall have the right at any time
and from time to time to increase its Restricted Ownership Percentage or
otherwise waive in whole or in part the restrictions of this Section 9 upon 61
days' prior notice to the Company or immediately in the event of a Change in
Control Transaction, (y) each Warrant Holder can
make subsequent adjustments pursuant to (w) or (x) any number of times from
time to time (which adjustment shall be effective immediately if it results
in a decrease in the Restricted Ownership Percentage or shall be effective
upon 61 days' prior written notice or immediately in the event of a Change in
Control Transaction if it results in an increase in the Restricted Ownership
Percentage) and (z) each Warrant Holder may eliminate or reinstate this
limitation at any time and from time to time (which elimination will be
effective upon 61 days' prior notice and which reinstatement will be
effective immediately). Without limiting the foregoing, in the event of a
Change in Control Transaction, any holder may reinstate immediately (in whole
or in part) the requirement that any increase in its Restricted Ownership
Percentage be subject to 61 days' prior written notice, notwithstanding such
Change in Control Transaction, without imposing such requirement on, or
otherwise changing such holder's rights with respect to, any other Change in
Control Transaction. For this purpose, any material modification of the
terms of a Change in Control Transaction will be deemed to create a new
Change in Control Transaction. The term "DEEMED BENEFICIALLY OWNED" as used
in this Warrant shall exclude shares that might otherwise be deemed
beneficially owned by reason of the convertibility of the Preferred Shares.
A "CHANGE IN CONTROL TRANSACTION" will be deemed to have occurred upon the
earlier of the announcement or consummation of a transaction or series of
transactions (other than the Merger) involving (x) any consolidation or
merger of the Company with or into any other corporation or other entity or
person (whether or not the Company is the surviving corporation), or any
other corporate reorganization or transaction or series of related
transactions in which in excess of 50% of the Company's voting power is
transferred through a merger, consolidation, tender offer or similar
transaction, or (y) in excess of 50% of the Corporation's Board of Directors
consists of directors not nominated by the prior Board of Directors of the
Company, or (z) any person (as defined in Section 13(d) of the Exchange Act,
together with its affiliates and associates (as such terms are defined in
Rule 405 under the Act), beneficially owns or is deemed to beneficially own
(as described in Rule 13d-3 under the Exchange Act without regard to the
60-day exercise period) in excess of 50% of the Company's voting power. The
delivery of a Subscription Notice by the Warrant Holder shall be deemed a
representation by such holder that it is in compliance with this paragraph.
10. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense promptly will execute and deliver, in lieu thereof a new Warrant of like
tenor.
11. SPECIFIC PERFORMANCE; CONSENT TO JURISDICTION; CHOICE OF LAW
(a) The Company and the Warrant Holder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Warrant were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall he entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Warrant and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) EACH OF THE COMPANY AND THE WARRANT HOLDER (I) HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT AND (II) HEREBY WAIVES,
AND AGREES NOT TO ASSERT IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT
IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF
THE SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH OF THE COMPANY AND THE WARRANT
HOLDER CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING
BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO
IT UNDER THIS WARRANT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH
SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY APPLICABLE LAW.
(c) THE COMPANY AND THE WARRANT HOLDER IRREVOCABLY WAIVE THEIR
RIGHT TO TRIAL BY JURY.
(d) THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
12. ENTIRE AGREEMENT; AMENDMENTS. This Warrant, the Exhibits hereto and
the provisions contained in the Agreement or the Registration Rights Agreement
or the Debentures contain the entire understanding of the parties with respect
to the matters covered hereby and thereby and, except as specifically set forth
herein and therein, neither the Company nor the Warrant Holder makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by a written
instrument signed by the party against whom enforcement of any such amendment or
waiver is sought.
13. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telex (with correct answer back received), telecopy or
facsimile at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
to the Company:
Zitel Corporation
47211 Bayside Parkway
Fremont, California 94538
Attention: Chief Financial Officer
Facsimile: (510) 440-8526
to the Warrant Holder:
Attention:
Facsimile:
with copies to:
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue, 18th Floor
New York, New York 10176
Attention: Stephen M. Schultz, Esq.
Facsimile: (212) 986-8866
Either party hereto may from time to time change its address for notices under
this Section 13 by giving at least 10 days' prior written notice of such changed
address to the other party hereto.
14. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
15. ASSIGNMENT. This Warrant may be transferred or assigned, in whole
or in part, at any time and from time to time by the then Warrant Holder upon
the consent of the Company (which consent shall not be unreasonably withheld) by
submitting this Warrant to the Company together with a duly executed Assignment
in substantially the form and substance of the Form of Assignment which
accompanies this Warrant and, upon the Company's receipt hereof, and in any
event, within three (3) business days thereafter, the Company shall issue a
Warrant to the Warrant Holder to evidence that portion of this Warrant, if any
as shall not have been so transferred or assigned. No consent of the Company
will be required for any transfer or assignment by the Warrant Holder to (i) an
affiliate or affiliates of the Warrant Holder or (ii) any person or entity whose
investments are managed by an investment adviser that is the same as, or an
affiliate of, the investment manager of the Warrant Holder.
[SIGNATURE PAGE FOLLOWS]
Dated: ZITEL CORPORATION
By:
------------------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
By:
-----------------------------------
Its
(SIGNATURE PAGE OF ZITEL CORPORATION COMMON STOCK PURCHASE WARRANT)
(SUBSCRIPTION NOTICE)
FORM OF WARRANT EXERCISE
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
TO: ZITEL CORPORATION
ATTN: SECRETARY
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant:
_____ (A) for, and to purchase thereunder, __________ shares of Common
Stock of Zitel Corporation, a California corporation (the
"COMMON STOCK"), and herewith, or by wire transfer, makes
payment of $_____________ therefor; or
_____ (B) in a "cashless" or "net-issue exercise" for, and to purchase
thereunder , ______ shares of Common Stock, and herewith
makes payment therefor with ___________ Surrendered
Warrant Shares.
The undersigned requests that the certificates for such shares be issued
in the name of, and
_____ (A) delivered to ______________, whose address is ______________
_________________________________; or
_____ (B) electronically transmitted and credited to the account of
_________________, undersigned's prime broker (Account No.
____________________) with Depository Trust Company through
its Deposit Withdrawal Agent Commission system.
The undersigned acknowledges and confirms that the Common Stock issued
pursuant to this notice of exercise has been sold or will be sold in accordance
with the prospectus delivery requirements of the Securities Act of 1933, as
amended, if applicable, or pursuant to an exemption under such Act.
Dated:
----------------
-----------------------------------------
(Signature must conform to name of holder
as specified on the face of the Warrant)
-----------------------------------------
(Address)
Tax Identification Number:
--------------
-----------------------------
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received, the undersigned hereby sells, assigns, and transfers unto
__________________ the right represented by the within Warrant to purchase
_________ shares of Common Stock of ZITEL CORPORATION, a California
corporation, to which the within Warrant relates, and appoints _______________
Attorney to transfer such right on the books of ZITEL CORPORATION, a
California corporation, with full power of substitution of premises.
Dated:
-------------------
-----------------------------------------
(Signature must conform to name of holder
as specified on the face of the Warrant)
-----------------------------------------
(Address)
Signed in the presence of:
- ---------------------------------------