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): February 3, 1999
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
A. PLACEMENT OF DEBENTURES
On February 3, 1999, Zitel Corporation (the "Company") completed the
private placement of $5,000,000 in principal amount of 3% Convertible
Subordinated Debentures due February 2, 2000 (the "Debentures") and five year
Common Stock Purchase Warrants covering 75,000 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 the Conversion Price. The
Conversion Price will be equal to 90% of the average closing bid prices of
the Common Stock for each of the ten trading days immediately following, but
not including the February 3, 1999 closing date of the placement. There may
be an 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 twenty
consecutive trading days preceding but not including: (a) the 60 calendar day
anniversary of the closing date; or (b) the 45 calendar day anniversary of
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; there may be an interim adjustment of the Conversion Price
on the earlier to occur of the dates specified in clauses (a) and (b) above.
The Conversion Price and number of shares subject to the Debentures and
Warrants are subject to adjustment in the event of certain reorganizations
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 later of the 45 day anniversary of the closing date or the
effective date of a registration statement, 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 February 2, 2000 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 March 5, 1999.
The foregoing description does not purport to be complete and is
qualified by reference to the definitive agreements filed as Exhibits
herewith.
ITEM 7. EXHIBITS
(c) The following exhibits are furnished in accordance with the
provisions of Item 601 of Regulation S-K:
Exhibit Number Exhibit
2
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 Warrants and the rights of the holders. Reference is made to the Exhibits
filed with this report for the actual terms of the Debentures, Warrants and
such rights.
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: February 16, 1999 By: Henry C. Harris
----------------------------------
Henry C. Harris
Chief Financial 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
4