EXHIBIT 4.4
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.
----------------------------
ZITEL CORPORATION
----------------------------
Common Stock Purchase Warrant
February 2, 1999
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, _________
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 February 2, 1999, 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 February 1, 2000.
(e) The term "EFFECTIVE REGISTRATION" shall have the meaning
specified in the Agreement.
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(f) The term "CLOSING DATE" shall mean the Closing Date as defined
in Section 1.1 under the Agreement.
(g) The term "REGISTRATION RIGHTS AGREEMENT" shall mean the
Registration Rights Agreement, dated as of February 2, 1999, 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.
(j) The term "MATRIDIGM TRANSACTION" shall mean any transaction or
series of transactions whereby the Company acquires debt or equity securities
of Matridigm Corporation, a California corporation, or the business of the
Company and Matridigm are combined, and shall include, without limitation,
the issuance for cash of shares of the Common Stock of the Company with a
fair market value not to exceed $2,000,000, as determined as of the purchase
date and pursuant to one-time reset provisions agreed to between the Company
and the purchasers, with the proceeds used to procure the release of
obligations of the purchasers to guarantee obligations of Matridigm.
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.
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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
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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
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(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).
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(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 50,000 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) In addition to the foregoing, if the holders of shares of
Common Stock receive any non-publicly traded securities or other property or
cash as part or all of the consideration for such reorganization,
consolidation, merger or sale, then such distribution shall be treated to the
extent thereof as a distribution under Section 7(a) above and such Section
shall also apply to such distribution. To the extent that, pursuant to the
foregoing adjustments, (i) the Warrants become exercisable into securities of
an issuer with a greater number of outstanding shares of common stock than
the Company and (ii) on the date of the relevant merger agreement or the date
on which the terms of the restructuring are set, the fair market value of a
share of
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Common Stock is less than the Purchase Price, then the adjustments set forth
in Section 5(f) herein shall also be applied as if the additional shares were
issued after the effective date of the merger or reorganization.
(f) 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.
(g) 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, as amended consistent with the practice in the
high-technology sector, 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 or shares issued in a Matridigm Transaction) 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.
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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
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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 Company'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.
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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:
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to the Company:
Zitel Corporation
47211 Bayside Parkway
Fremont, California 94538
Attention: Chief Financial Officer
Facsimile: (510) 440-8526
to the Warrant Holder:
Halifax Fund, L.P.
c/o The Palladin Group, L.P.
Investment Manager
195 Maplewood Avenue
Maplewood, New Jersey 07040
Attention: Robert Chender
Facsimile: (973) 313-6941
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.
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Dated: ZITEL CORPORATION
-----------------------
By:
-------------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
By:
---------------------------
Its
(SIGNATURE PAGE OF ZITEL CORPORATION COMMON STOCK PURCHASE WARRANT)
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(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:
-------------
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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 a California corporation, to which the
within Warrant relates, and ZITEL CORPORATION, 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:
- ------------------------------------
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