<PAGE>
SECURITIES AND EXCHANGE 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): December 18, 1997
-----------------------------------
STORM TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-21449 77-0239305
(State or other (Commission File Number) (I.R.S. Employer)
jurisdiction of Identification No.)
incorporation or
organization)
1395 Charleston Road 94043
Mountain View, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 691-6600
<PAGE>
Item 2. Acquisition or Disposition of Assets.
(a) On December 18, 1997, pursuant to an Agreement for Purchase and
Sale of Assets attached as Exhibit 2.2 (the "Acquisition Agreement"), by and
-----------
among Storm Technology, Inc. ("Storm"), a Delaware corporation, Logitech, Inc.
("Logitech US"), a California corporation, Logitech Far East Ltd. ("Logitech
Asia"), a Taiwanese corporation, Logitech S.A. ("Logitech Swiss"), a Swiss
corporation, and Logitech Trading S.A. ("Logitech Trading"), a Swiss corporation
(Logitech US, Logitech Asia, Logitech Swiss and Logitech Trading collectively
referred to as "Logitech"), Storm acquired certain tangible and intangible
assets (the "Assets") related to the image scanning products of Logitech (the
"Products") (the "Acquisition"). Concurrent with the execution of the
Acquisition Agreement, Storm entered into (i) a Joint Sales and Marketing
Agreement (the "Joint Marketing Agreement") with Logitech Trading for the
marketing, sales and distribution by Logitech Trading of the Products and
Storm's own proprietary products (the "Storm Products") and (ii) a Manufacturing
Services Agreement with Logitech Asia for the manufacture of certain products
for Storm.
In accordance with the Acquisition Agreement, Storm (i) paid a
purchase price equal to US$9,000,000, US$5,000,000 payable in cash at the
Closing and the remaining US$4,000,000 payable pursuant to a promissory note
which, if not paid by March 27, 1998, will be convertible under certain
circumstances by Logitech into Storm's Common Stock; (ii) issued to Logitech
1,159,413 shares of Storm's Common Stock; (iii) will pay for certain inventory
of the Products pursuant to the Joint Marketing Agreement; and (iv) will pay for
distribution of the Products and Storm Products under the Joint Marketing
Agreement in the form of an "earn-out" based on the sales revenue generated by
such distribution. Storm also assumed certain contracts of Logitech related to
the Assets. The purchase price was arrived at by an arms' length negotiation and
was paid using funds from Storm's working capital obtained through sales of its
equity securities (see Item 5 below).
Storm will account for the Acquisition by the purchase method of
accounting, and expects to take a significant charge against earnings during its
fiscal quarter ending December 31, 1997 relating to the write-off of research
and development in-process obtained from Logitech.
Prior to the Acquisition, no material relationship existed between the
principal shareholders of Logitech and Storm, any affiliates of Storm, any
director or officer of Storm, or any associate of any such director or officer.
Item 5. Other Events.
(a) On December 18, 1997, Storm filed a Certificate of Designation
attached as Exhibit 3.1 (the "Certificate of Designation") with the Secretary of
-----------
State of Delaware prescribing the rights, preferences, privileges and
limitations of Series A 8.5% Convertible Preferred Stock (the "Series A
Preferred"). Immediately after such filing, the Company completed its offer and
sale to outside investors of (i) 30,000 shares of Series A Preferred at a price
of $100 per share; (ii) warrants to purchase an aggregate of 150,000 shares of
Common Stock at an exercise price of $3.00 per share; and (iii) warrants to
purchase shares of Common Stock upon conversion of the Series A Preferred
contingent on certain events as provided for in the Certificate of Designation
(collectively, the "Private Placement"). The aggregate proceeds of $3,000,000
were applied principally towards the cash portion of the purchase price for the
Acquisition (see Item 2 above).
A copy of the Subscription Agreement for each investor participating
in the Private Placement is attached as Exhibits 4.1 through 4.3 and is
------------------------
incorporated herein by reference.
<PAGE>
(b) On December 18, 1997, Storm completed an offer and sale to members
of Storm's management, including its President and Chief Technology Officer, of
(i) 1,094,665 shares of Common Stock at a price of $1.875 per share and (ii)
warrants to purchase an aggregate of 102,625 shares of Common Stock of Storm
with an exercise price of $1.90 per share, such warrant rights granted at a
price of $0.125 per warrant share (collectively, the "Management Private
Placement"). The aggregate proceeds of $2,065,325 were applied principally
towards the cash portion of the purchase price for the Acquisition (see Item 2
above).
A copy of the Common Stock and Warrant Purchase Agreement for each
investor participating in the Management Private Placement is attached as
Exhibits 4.10 through 4.13 and is incorporated herein by reference.
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) It is currently impracticable to provide audited financial data of the
Assets that would be required pursuant to Article 3 of Regulation S-X.
Storm intends to file the required audited financial data, if any, on
or before February 28, 1998.
(b) It is currently impracticable to provide any pro forma financial
information of the Assets that would be required pursuant to Article
11 of Regulation S-X. Storm intends to file required pro forma
financial information, if any, on or before February 28, 1998.
(c) The following exhibits are attached hereto and filed herewith:
2.2 Agreement for Purchase and Sale of Assets dated as of December
18, 1997 among Storm, Logitech US, Logitech Asia, Logitech Swiss
and Logitech Trading.
2.3 Joint Sales and Marketing Agreement dated as of December 18, 1997
by and between Storm and Logitech Trading.
2.4 Manufacturing Services Agreement dated as of December 18, 1997 by
and between Storm and Logitech Asia.
3.1 Certificate of Designation for Series A 8.5% Convertible
Preferred Stock filed December 18, 1997.
4.1 Series A 8.5% Convertible Stock Subscription Agreement dated as
of December 18, 1997 by and between Storm and CPR (USA) Inc.
4.2 Series A 8.5% Convertible Stock Subscription Agreement dated as
of December 18, 1997 by and between Storm and Libertyview Plus
Fund.
4.3 Series A 8.5% Convertible Stock Subscription Agreement dated as
of December 18, 1997 by and between Storm and Libertyview Fund,
LLC.
4.4 Stock Purchase Warrant to Purchase Shares of Common Stock issued
to CPR (USA) Inc.
4.5 Stock Purchase Warrant to Purchase Shares of Common Stock issued
to Libertyview Plus Fund.
<PAGE>
4.6 Stock Purchase Warrant to Purchase Shares of Common Stock issued
to Libertyview Fund, LLC.
4.7 Registration Rights Agreement dated as of December 18, 1997 by
and between Storm and CPR (USA) Inc.
4.8 Registration Rights Agreement dated as of December 18, 1997 by
and between Storm and Libertyview Plus Fund.
4.9 Registration Rights Agreement dated as of December 18, 1997 by
and between Storm and Libertyview Fund, LLC
4.10 Common Stock and Warrant Purchase Agreement dated as of December
18, 1997 by and between Storm and the L. William and L. Gay
Krause Trust under Agreement dated June 21, 1994.
4.11 Common Stock and Warrant Purchase Agreement dated as of December
18, 1997 by and between Storm and Adriaan Ligtenberg.
4.12 Common Stock and Warrant Purchase Agreement dated as of December
18, 1997 by and between Storm and Adolf Starreveld.
4.13 Common Stock and Warrant Purchase Agreement dated as of December
18, 1997 by and between Storm and Benjamin Yung.
4.14 Stock Purchase Warrant for Common Stock issued to L. William and
L. Gay Krause Trust under Agreement dated June 21, 1994.
4.15 Stock Purchase Warrant for Common Stock issued to Adriaan
Ligtenberg.
4.16 Stock Purchase Warrant for Common Stock issued to Adolf
Starreveld.
4.17 Stock Purchase Warrant for Common Stock issued to Benjamin Yung.
99.1 Press Release dated December 18, 1997 announcing the Closing
under the Acquisition Agreement.
99.2 Press Release dated December 18, 1997 announcing the Private
Placement.
<PAGE>
SIGNATURES
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 hereunto duly authorized.
STORM TECHNOLOGY, INC.
Date: January 2, 1998 /s/ Rick McConnell
---------------------------------------
Rick McConnell
Chief Financial Officer and Assistant
Secretary
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Document Numbered Page
- ------- -------- -------------
2.2 Agreement for Purchase and Sale of Assets dated as of
December 18, 1997 among Storm, Logitech US, Logitech
Asia, Logitech Swiss and Logitech Trading.
2.3 Joint Sales and Marketing Agreement dated as of December
18, 1997 by and between Storm and Logitech Trading.
2.4 Manufacturing Services Agreement dated as of December 18,
1997 by and between Storm and Logitech Asia.
3.1 Certificate of Designation for Series A 8.5% Convertible
Preferred Stock filed December 18, 1997.
4.1 Series A 8.5% Convertible Stock Subscription Agreement
dated as of December 18, 1997 by and between Storm and CPR
(USA) Inc.
4.2 Series A 8.5% Convertible Stock Subscription Agreement
dated as of December 18, 1997 by and between Storm and
Libertyview Plus Fund.
4.3 Series A 8.5% Convertible Stock Subscription Agreement
dated as of December 18, 1997 by and between Storm and
Libertyview Fund, LLC.
4.4 Stock Purchase Warrant to Purchase Shares of Common Stock
issued to CPR (USA) Inc.
4.5 Stock Purchase Warrant to Purchase Shares of Common Stock
issued to Libertyview Plus Fund.
4.6 Stock Purchase Warrant to Purchase Shares of Common Stock
issued to Libertyview Fund, LLC.
4.7 Registration Rights Agreement dated as of December 18,
1997 by and between Storm and CPR (USA) Inc.
4.8 Registration Rights Agreement dated as of December 18,
1997 by and between Storm and Libertyview Plus Fund.
4.9 Registration Rights Agreement dated as of December 18,
1997 by and between Storm and Libertyview Fund, LLC.
4.10 Common Stock and Warrant Purchase Agreement dated as of
December 18, 1997 by and between Storm and the L. William
and L. Gay Krause Trust under Agreement dated June 21,
1994.
4.11 Common Stock and Warrant Purchase Agreement dated as of
December 18, 1997 by and between Storm and Adriaan
Ligtenberg.
4.12 Common Stock and Warrant Purchase Agreement dated as of
December 18, 1997 by and between Storm and Adolf
Starreveld.
<PAGE>
4.13 Common Stock and Warrant Purchase Agreement dated as of
December 18, 1997 by and between Storm and Benjamin Yung.
4.14 Stock Purchase Warrant for Common Stock issued to L. William
and L. Gay Krause Trust under Agreement dated June 21, 1994.
4.15 Stock Purchase Warrant for Common Stock issued to Adriaan
Ligtenberg.
4.16 Stock Purchase Warrant for Common Stock issued to Adolf
Starreveld.
4.17 Stock Purchase Warrant for Common Stock issued to Benjamin
Yung.
99.1 Press Release dated December 18, 1997 announcing the
closing under the Acquisition Agreement.
99.2 Press Release dated December 18, 1997 announcing the
Private Placement.
<PAGE>
Exhibit 2.2
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
between
Storm Technology, Inc.
and
Logitech, Inc.
Logitech Far East Ltd.
Logitech S.A.
Logitech Trading S.A.
Date of Agreement: December 18, 1997
<PAGE>
TABLE OF CONTENTS
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Page
----
1. Definitions..............................................................1
1.1 "Affiliate".....................................................1
1.2 "Ancillary Agreements"..........................................2
1.3 "Assets"........................................................2
1.4 "Closing".......................................................2
1.5 "Closing Date"..................................................2
1.6 "Common Stock"..................................................2
1.7 "Conversion Stock"..............................................2
1.8 "Copyrights"....................................................2
1.9 "Damages".......................................................2
1.10 "Equity Financing"............................................. 2
1.11 "European Inventory"............................................2
1.12 "Indemnification Period"........................................2
1.13 "Industrial Designs"............................................2
1.14 "Joint Marketing Agreement".....................................3
1.15 "Legal Proceeding"..............................................3
1.16 "Logitech Indemnitees"..........................................3
1.17 "Manufacturing Agreement".......................................3
1.18 "Milestone Amount"..............................................3
1.19 "Patent Rights".................................................3
1.20 "Person"........................................................3
1.21 "Products"......................................................3
1.22 "Proprietary Rights"............................................3
1.23 "Representatives"...............................................3
1.24 "Sales Revenues"................................................3
1.25 "Stockholder Approval"......................................... 4
1.26 "Storm Closing Price"...........................................4
1.27 "Storm Indemnitees".............................................4
1.28 "Storm Outstanding Common Stock"................................4
1.29 "Storm Voting Number"...........................................4
1.30 "Third Party Contracts".........................................4
1.31 "Third Party Licenses"..........................................4
1.32 "Third Party Technology"........................................4
1.33 "Trade Secrets".................................................4
1.34 "Trademarks"....................................................4
2. Purchase of Assets; Consideration........................................5
2.1 Consideration from Logitech to Storm............................5
2.2 Consideration from Storm to Logitech............................5
-i-
<PAGE>
2.3 Allocation......................................................8
2.4 Sales and Other Taxes...........................................8
2.5 Designated Recipients...........................................9
3. Representations and Warranties of Logitech...............................9
3.1 Description.....................................................9
3.2 Rights in Proprietary Rights....................................9
3.3 Product Liability..............................................10
3.4 Sufficiency of Technology......................................10
3.5 Title to Tangible Assets.......................................11
3.6 Condition of Tangible Assets...................................11
3.7 Litigation.....................................................11
3.8 Third Party Contracts..........................................11
3.9 Compliance with Laws...........................................11
3.10 No Breach or Violation.........................................11
3.11 Complete Copies of Materials...................................12
3.12 Insurance......................................................12
3.13 Authority; Consents and Approvals..............................12
3.14 Organization and Good Standing.................................12
3.15 Absence of Undisclosed Liabilities.............................12
3.16 Taxes..........................................................12
3.17 No Brokers.....................................................12
3.18 Securities Representations.....................................12
4. Representations and Warranties of Storm.................................15
4.1 Litigation.....................................................15
4.2 No Breach or Violation.........................................15
4.3 Authority; Consents and Approvals..............................15
4.4 Organization and Good Standing.................................16
4.5 Capitalization.................................................16
4.6 SEC Filings; Financial Statements..............................16
4.7 Registration Rights ...........................................17
4.8 Broker's and Finders' Fees.....................................17
5. Covenants...............................................................17
5.1 Ordinary Course................................................17
5.2 Best Efforts...................................................17
5.3 No Other Negotiations..........................................18
5.4 Publicity......................................................18
5.5 Access to Information..........................................19
5.6 Confidentiality................................................19
5.7 Bulk Sales Laws................................................19
5.8 Noncompetition.................................................19
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<PAGE>
5.9 Closing Note...................................................19
5.10 Stockholder Approval...........................................20
5.11 Repayment of Notes.............................................20
5.12 Registration Rights............................................20
5.13 Nasdaq National Market.........................................20
5.14 Execution of Additional Documents..............................20
5.15 Third Party Consents...........................................20
5.16 Further Assurances.............................................20
5.17 Transition Support.............................................20
5.18 ScanBank Software License......................................20
5.19 Trade Dress....................................................22
5.20 Sand License...................................................22
5.21 Lockup.........................................................22
5.22 Board Observation Rights.......................................22
6. The Closing.............................................................23
6.1 Time and Place.................................................23
6.2 Logitech's Actions at the Closing..............................23
6.3 Storm Actions at the Closing...................................23
6.4 Passage of Title...............................................24
7. Indemnification.........................................................24
7.1 Survivial of Representations...................................24
7.2 Indemnification by Logitech....................................24
7.3 Indemnification by Storm.......................................25
7.4 Defense of Third Party Claims..................................25
8. Termination.............................................................26
8.1 Mutual Agreement...............................................26
8.2 Survival.......................................................26
9. General Provisions......................................................26
9.1 Assignment.....................................................26
9.2 Expenses.......................................................27
9.3 Notices and Representatives....................................27
9.4 Entire Agreement and Modification..............................28
9.5 Construction of Agreement......................................28
9.6 Relationship of the Parties....................................28
9.7 Waiver.........................................................29
9.8 Venue for Dispute Resolution...................................29
9.9 Governing Law..................................................29
9.10 Severability...................................................29
9.11 Parties in Interest............................................29
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<PAGE>
9.12 Further Instruments............................................29
9.13 Absence of Third Party Beneficiary Rights......................29
9.14 Counterparts...................................................29
-iv-
<PAGE>
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LIST OF EXHIBITS
----------------
Exhibit A Assets
Exhibit B Joint Marketing Agreement
Exhibit C Manufacturing Agreement
Exhibit D-1 Closing Note
Exhibit D-2 Monthly Note
Exhibit D-3 Quarterly Note
Exhibit E Logitech's Disclosure Schedule
Exhibit F Storm's Disclosure Schedule
Exhibit G Bill of Sale
Exhibit H Assignment Agreement
<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR PURCHASE AND SALE OF ASSETS (the "Agreement"), dated as
of December 18, 1997 (the "Effective Date"), is entered into by and among STORM
TECHNOLOGY, INC. ("Storm"), a Delaware corporation with a principal place of
business at 1395 Charleston Road, Mountain View, California 94043, and LOGITECH,
INC. ("Logitech US"), a California corporation with a principal place of
business at 6505 Kaiser Drive, Fremont, California 94555, LOGITECH FAR EAST LTD.
("Logitech Asia"), a Taiwanese corporation with a principal place of business at
#2 Creation Rd. IV, Science-Based Industrial Park, Hsinchu, Taiwan R.O.C.,
LOGITECH S.A. ("Logitech Swiss"), a Swiss corporation with a principal place of
business at Moulin du Choc, CH-1122 Romanel-sur-Morges, Switzerland, and
LOGITECH TRADING S.A. ("Logitech Trading"), a Swiss corporation with a principal
place of business at Moulin du Choc CH-1122 Romanel-sur-Morges, Switzerland
(Logitech US, Logitech Asia, Logitech Swiss and Logitech Trading collectively
referred to herein as "Logitech").
RECITALS
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A. Logitech has developed and/or distributes image scanning products.
B. The Board of Directors of each of the parties hereto believes it is in
the best interests of such party and its respective stockholders that Storm
purchase certain of the assets, and assume certain of the liabilities, of
Logitech.
C. Storm wishes to purchase from Logitech, and Logitech wishes to sell to
Storm, ownership and commercial exploitation rights in certain tangible and
intangible assets related to the Products as set forth in Exhibit A ("Assets").
---------
D. Concurrent with the consummation of the transactions contemplated by
this Agreement, Storm and Logitech will enter into a joint marketing and sales
agreement (the "Joint Marketing Agreement") whereby the parties will cooperate
with each other in the marketing, sales and distribution of the Products,
together with Storm's own proprietary products.
E. Concurrent with the consummation of the transactions contemplated by
this Agreement, Storm and Logitech will also enter into a manufacturing services
agreement (the "Manufacturing Agreement") whereby Logitech will manufacture
certain products for Storm.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms have
-----------
the meanings set forth in this Section 1 ("Definitions").
1.1 "Affiliate" of a party means any
1
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Person, domestic or foreign, including but not limited to, parents and
subsidiaries, which directly or indirectly possess the power to direct or cause
the direction of the management and operating policies of any of the foregoing
entities through ownership of a majority (more than fifty percent (50%)) of the
voting and/or equity securities of such entity.
1.2 "Ancillary Agreements" refers to the Joint Marketing Agreement,
the Manufacturing Agreement and the Notes (as defined in Section 2.2(c)),
collectively.
1.3 "Assets" ean the tangible and intangible assets listed and
described on Exhibit A ("Assets").
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1.4 "Closing" means the closing of the sale and transfer of the Assets
from Logitech to Storm.
1.5 "Closing Date" means December 18, 1997, or such other date as
Storm and Logitech may agree in writing.
1.6 "Common Stock" means the common stock of Storm.
1.7 "Conversion Stock" means shares of Common Stock issuable upon
conversion of any of the Notes (as defined in Section 2.2(c)).
1.8 "Copyrights" mean all worldwide rights and interests owned or
licensed by Logitech and existing on the date hereof or arising or acquired on
or prior to the Closing Date in and to all copyrights, including rights to
reproduce, listed on Exhibit A ("Assets"), and all registrations, applications
---------
for registrations therefor, together with all ancillary rights thereto,
including the right to sue for damages by reason of past infringement of any
such rights.
1.9 "Damages" shall include any loss, diminution in value, damage,
injury, liability, claim, demand, settlement, judgment, award, fine, penalty,
tax, fee (including reasonable attorneys' fees), charge, costs (including
reasonable costs of investigation) or reasonable expenses of any nature.
1.10 "Equity Financing" means any issuance or sale by Storm of its
equity securities or any securities convertible into or exchangeable therefor,
or any grant of rights to acquire its equity securities (excluding the grant and
exercise of employee, director, officer and consultant options).
1.11 "European Inventory" shall mean all inventory of the Products held
by Logitech Trading Netherlands Branch or committed to be delivered to such
branch as of December 29, 1997.
2
<PAGE>
1.12 "Indemnification Period" means the period commencing on the
Closing Date and ending at midnight, Pacific Standard Time, on the first
anniversary of the Closing Date.
1.13 "Industrial Designs" mean worldwide rights and interests owned or
licensed by Logitech and existing on the date hereof or arising or acquired on
or prior to the Closing Date in and to all industrial designs which are used in
the Products and all registrations, applications for registration thereof and
licenses therefor, together with all ancillary rights thereto, including the
right to sue for damages by reason of past infringement of any such rights.
1.14 "Joint Marketing Agreement" refers to the Joint Products Sales and
Marketing Agreement in substantially the form attached as Exhibit B hereto,
---------
which agreement the parties will enter into concurrently with the Closing.
1.15 "Legal Proceeding" means any action, suit, litigation, arbitration
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving any
court or other governmental body or any arbitrator or arbitration panel.
1.16 "Logitech Indemnitees" means the following Persons: (a) Logitech,
each of them; (b) Logitech's current wholly-owned subsidiaries and Affiliates;
(c) Logitech's Representatives; and (d) the successors and assigns of such
Persons.
1.17 "Manufacturing Agreement" refers to the Manufacturing Agreement in
substantially the form attached as Exhibit C hereto, which agreement the parties
---------
will enter into concurrently with the Closing.
1.18 "Milestone Amount" means an amount of Sales Revenues evenly
divisible by US$1,000,000 and falling between US$10,000,000 and US$30,000,001.
1.19 "Patent Rights" mean worldwide rights and interests owned or
licensed by Logitech and existing on the date hereof or arising or acquired on
or prior to the Closing Date in and to all issued or pending United States and
foreign patents listed on Exhibit A ("Assets"), and all registrations,
---------
applications for registration (including all reissues, divisions, continuations,
continuations-in-part, renewals and extensions thereof) and licenses therefor,
together with all ancillary rights thereto, including the right to sue for
damages by reason of past infringement of any such right.
1.20 "Person" shall mean any
3
<PAGE>
individual, entity or governmental body.
1.21 "Products" means all of the scanning products currently
distributed or marketed by Logitech under any of the following product names:
FreeScan, PageScan Parallel, PageScan USB and Dexxa FB .
1.22 "Proprietary Rights" mean Copyrights, Trade Secrets, Patent
Rights, Industrial Designs, Trademarks and other intellectual property rights
(if any) related to the Products which are owned or licensed by Logitech, all as
set forth on Exhibit A ("Assets") hereto.
---------
1.23 "Representatives" means officers, directors, employees and agents.
1.24 "Sales Revenues" means aggregate revenues as defined by US GAAP
(net of sales returns, price protection amounts, credits, rebates, discounts and
cooperative advertising allowances) attributable to sales made by Logitech
outside the United States and Canada for the period from January 1, 1998 up to
and including December 31, 1998 pursuant to the Joint Marketing Agreement.
1.25 "Stockholder Approval" means the vote of Storm's stockholders in
favor of the issuance to Logitech of the maximum aggregate number of shares of
Common Stock issuable to Logitech pursuant to this Agreement and upon conversion
of the Notes, as required pursuant to Section 4460(i)(1)(C)(ii) of the
Marketplace Rules of the Nasdaq National Market.
1.26 "Storm Closing Price" means the average of the closing prices on a
particular date and on the four (4) trading days immediately preceding such date
of one share of Common Stock on the Nasdaq National Market System.
1.27 "Storm Indemnitees" means the following Persons: (a) Storm; (b)
Storm's current and future wholly-owned subsidiaries and Affiliates; (c) Storm's
Representatives; and (d) the successors and assigns of such Persons.
1.28 "Storm Outstanding Common Stock" means the aggregate number of
shares of Common Stock outstanding as of a particular time, assuming full
conversion, exercise or exchange of all outstanding securities convertible into
or exchangeable or exercisable for shares of Common Stock, and assuming full
exercise of all other rights to acquire shares of Common Stock, except for such
of the foregoing as are not then convertible, exercisable or exchangeable
(excluding the grant and exercise of employee, director, officer and consultant
options).
1.29 "Storm Voting Number" means the total number of votes which could
be cast at a meeting of the stockholders of Storm held immediately prior to the
Closing.
4
<PAGE>
1.30 "Third Party Contracts" means the contracts, commitments,
agreements, and licenses related to the Products which are listed and described
in Exhibit A ("Assets").
---------
1.31 "Third Party Licenses" means all licenses and other agreements
with third parties for Proprietary Rights in Third Party Technology as set forth
on Exhibit A ("Assets").
---------
1.32 "Third Party Technology" means all software, technology, know-how
or processes of third parties that are used in the Products.
1.33 "Trade Secrets" means all non-public information, trade secret
rights and know-how in the possession of Logitech which are used in the
development or are embodied in the Products, together with all ancillary rights
thereto, including the right to sue for damages by reason of misappropriation of
any such rights.
1.34 "Trademarks" means all worldwide right and interest existing on
the date hereof or arising or acquired on or prior to the Closing Date in and to
the trademarks, common law trademarks, trade names, service marks, common law
service marks and service names listed on Exhibit A ("Assets"), together with
---------
all registrations, applications for registration and licenses therefor, and
together with all ancillary rights thereto, including the right to sue for
damages by reason of past infringement of any such rights, and together with the
goodwill of the business related to the Products from the earliest date of use
by Logitech.
2. Purchase of Assets; Consideration
---------------------------------
2.1 Consideration from Logitech to Storm. Subject to the terms and
------------------------------------
conditions set forth in this Agreement, on the Closing Date, Logitech shall
sell, convey, assign, transfer and deliver to Storm, and Storm shall acquire and
accept, all right, title and interest in and to the Assets, together with all of
the goodwill of Logitech in the business related to the Products.
2.2 Consideration from Storm to Logitech. Subject to the terms and
------------------------------------
conditions set forth in this Agreement, and in consideration for Logitech's
transfer of the Assets to Storm, Storm will pay the following:
(a) Payments at Closing.
-------------------
5
<PAGE>
(i) Cash Payment. On the Closing Date, Storm shall pay Five
------------
Million Dollars (US$5,000,000) by wire transfer of immediately available funds
to the following account of Logitech:
Union Bank of California
Mid Peninsula Banking Center
400 University Avenue
Palo Alto, California 94301
ABA No. 122000496
Account number: 6480132813
(ii) Note Issuance. On the Closing Date, Storm shall issue and
-------------
deliver a promissory note due March 27, 1998 (the "Original Maturity Date") in
the principal amount of Four Million Dollars (US$4,000,000), in the form
attached as Exhibit D-1 hereto (the "Closing Note"). In accordance with the
-----------
terms of the Closing Note, if such Closing Note is not paid in full on the
Original Maturity Date:
(A) The Closing Note shall become due and payable on March
26, 1999 (the "Second Maturity Date");
(B) The principal amount of the Closing Note shall be equal
to Four Million Dollars (US$4,000,000) less any portion of the principal amount
----
paid by Storm on or prior to the Original Maturity Date;
(C) The Closing Note shall begin to bear interest on March
27, 1998 at a rate of ten percent (10%) per annum on the outstanding principal
amount thereof, compounded annually; and
(D) The Closing Note shall become convertible, at the
option of the holder thereof, at any time after March 27, 1998, into a number of
shares of Common Stock equal to the outstanding principal amount of the Closing
Note, together with accrued and unpaid interest thereon, divided by the Storm
Closing Price on the Original Maturity Date pursuant to the terms of the Closing
Note.
(iii) Stock Issuance. At the Closing, Storm will issue a number of
--------------
shares of Common Stock equal to ten percent (10%) of the outstanding Common
Stock as of the time immediately prior to the Closing (the "Closing Stock").
(b) Earn-Out. If Sales Revenues exceed Ten Million Dollars
--------
(US$10,000,000) (the "Trigger Amount"), Storm shall pay additional consideration
to Logitech as follows:
(i) Monthly Cash Payments and/or Note Issuances. Within thirty
-------------------------------------------
(30) days after the end of each month beginning with the month in which Sales
Revenues first exceed the Trigger Amount, Storm shall either:
6
<PAGE>
(A) Make a cash payment to Logitech equal to (a) for the
first month in which such a payment is made, 40% (the "Measurement Percentage")
of the difference of (x) Sales Revenues attributable to sales made through that
month less (y) the Trigger Amount, and (b) for each month thereafter Sales
----
Revenues in that month multiplied by the Measurement Percentage; provided,
however, that after Sales Revenues reach Twenty Million Dollars (US$20,000,000),
the Measurement Percentage used in calculating such cash payment shall be 45%;
(B) If Storm elects not to make a cash payment equal to the
full amount due under Section 2.2(b)(i)(A) above, Storm shall issue and deliver
to Logitech a promissory note in the form attached as Exhibit D-2 hereto (each a
-----------
"Monthly Note") in a principal amount equal to the full amount due under Section
2.2(b)(i)(A) above less any amount actually paid in cash. The terms of each
Monthly Note shall be identical to those of the Closing Note, except that such
Monthly Note shall be (i) have a maturity date of September 30, 1999 and (ii)
shall become convertible, at the option of the holder thereof, into a number of
shares of Common Stock equal to the outstanding principal amount of such Monthly
Note, together with accrued and unpaid interest thereon, divided by the Storm
Closing Price on the last trading day of the month in which the sales giving
rise to the obligation to issue such Monthly Note were made.
(C) Notwithstanding the foregoing, with respect to any cash
payment due or Monthly Note issued before Storm has taken assignment of
Logitech's rights under the Logitech-Omron Sheet Fed Full Page Color Scanner
Purchase and License Agreement dated April 30, 1997 by and between Omron Corp.
and Logitech, Inc. or entered into a similar arrangement with Omron Corp., the
applicable Measurement Percentage used in calculating such cash payment or
principal amount of such Monthly Note under this Section 2.2(b)(i) shall be
reduced by ten percentage points.
(ii) Quarterly Stock Issuances and/or Note Issuances. Within
-----------------------------------------------
thirty (30) days of the end of each fiscal quarter beginning with the quarter in
which Sales Revenues first exceed the Trigger Amount, Storm shall issue shares
of Common Stock equal to 0.5% of the Storm Outstanding Common Stock as of
February 15, 1998 for each Milestone Amount reached due to sales made in that
quarter (the "Quarterly Stock"). In the event that any issuance of Quarterly
Stock would result in Logitech holding shares of Common stock which, together
with any other shares of Common Stock issued to Logitech pursuant to this
Agreement and the Notes, exceed 20% of the Storm Voting Number, Storm will issue
and deliver a promissory note in the form attached as Exhibit D-3 hereto (each a
-----------
"Quarterly Note") in a principal amount equal to the product of (A) 0.5% of the
Storm Outstanding Common Stock as of February 15, 1998 for each Milestone Amount
reached due to sales made in that quarter multiplied by (B) the Storm Closing
-------------
Price on the last trading day of that quarter. The terms of any Quarterly Note
shall be identical to those of the Monthly Notes, except that each Quarterly
Note shall be convertible into a number of shares of Common Stock equal to (A)
the outstanding principal amount of such Quarterly Note, together with accrued
and unpaid interest thereon, divided by (B) the Storm Closing Price on the last
----------
trading day of that quarter.
(c) Series of Notes, Limit on Convertibility. The Closing Note,
----------------------------------------
each Monthly Note and each Quarterly Note shall be a single series of notes
(together, the "Notes"),
7
<PAGE>
each subject to the terms of this Agreement. Notwithstanding anything in this
Section 2.2 to the contrary, and in accordance with the terms of each of the
Notes, before Stockholder Approval is obtained, the aggregate number of shares
of Common Stock into which the Notes may be converted shall not exceed 20% of
the difference of (i) the Storm Voting Number less (ii) the number of shares of
Closing Stock issued to Logitech pursuant to Section 2.2(a)(iii) above. After
Stockholder Approval is obtained, the limitation upon the convertibility of the
Notes contained in the preceding sentence shall terminate.
(d) Failure to Pay Closing Note on Second Maturity Date. If the
---------------------------------------------------
aggregate principal and accrued interest on the Closing Note is not paid in full
on or prior to the Second Maturity Date:
(i) All obligations of Logitech under Section 5.8 hereof
shall immediately terminate and be of no further force and effect; and
(ii) Logitech will have a worldwide, non-exclusive,
royalty-free, fully paid-up license to make, have made, use, offer for sale,
import and sell, lease or otherwise dispose of any product or part thereof
embodying or produced using the Patent Rights. The foregoing license shall be
subject to the following additional terms :
(A) The Patent Rights will be licensed to Logitech "AS
IS" AND WITHOUT ANY EXPRESS, IMPLIED OR STATUTORY WARRANTIES OF ANY KIND,
INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
(B) NEITHER PARTY SHALL HAVE ANY LIABILITY FOR
INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR DIRECT DAMAGES ARISING OUT OF
OR RELATED TO THE LICENSE OF THE PATENT RIGHTS HEREUNDER, WHETHER BASED IN
CONTRACT, TORT, STRICT LIABILITY OR ANY OTHER LEGAL THEORY, EVEN IF THE OTHER
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(C) The foregoing licenses shall include the right to
sublicense through multiple tiers of sublicenses provided that each such
sublicense shall be pursuant to a form of license agreement for its own
proprietary rights, and which include provisions which protect Storm's
proprietary rights in the Patent Rights in a manner consistent with protections
afforded to Logitech's other third party licensors.
(e) European Inventory. Storm will pay for the European
------------------
Inventory in accordance with the terms of the Joint Marketing Agreement.
(f) Assumption of Liabilities.
-------------------------
(i) Subject to the terms and conditions set forth in this
Agreement, on the Closing Date, Storm shall acquire and assume from Logitech,
and Logitech
8
<PAGE>
shall transfer and assign to Storm, all obligations and liabilities of Logitech
under the Third Party Contracts and the Third Party Licenses listed in Exhibit A
---------
("Assets"), along with all liabilities and obligations arising thereafter under
the Third Party Contracts and the Third Party Licenses (collectively, the
"Assumed Liabilities"). It is expressly understood and agreed that except as
expressly set forth in the Joint Marketing Agreement, Storm shall not be liable
for any of the liabilities or obligations of Logitech of any kind and nature
other than the Assumed Liabilities.
(ii) Nothing herein shall be deemed to deprive Storm of any
defenses, set-offs or counterclaims which Logitech may have had or which Storm
shall have with respect to any of the Assumed Liabilities (collectively, the
"Defenses and Claims"). Effective at the Closing, Logitech hereby transfers,
conveys and assigns to Storm all Defenses and Claims with respect to the Assumed
Liabilities and agrees to cooperate with Storm to maintain, secure, perfect and
enforce such Defenses and Claims, including the signing of any documents, the
giving of any testimony or the taking of any such other action as is reasonably
requested by Storm in connection with such Defenses and Claims.
2.3 Allocation. Each of the parties agrees to report this
----------
transaction for foreign and domestic state and federal tax purposes in
accordance with the allocations to be mutually agreed upon by the parties within
ninety (90) days after the Closing. Storm and Logitech agree to use the agreed
upon allocation in filing any applicable report, form or filing made with
applicable taxing authorities. If any taxing authority makes or proposes an
allocation different from that mutually agreed upon by the parties, Storm and
Logitech shall cooperate with each other in good faith to contest such taxing
authority's allocation (or proposed allocation); provided, however, that, after
consultation with all parties adversely affected by such allocation (or proposed
allocation), any other party hereto may file such protective claims or returns
as may reasonably be required to protect its interests. Each party requesting
cooperation shall reimburse the cooperating party for its reasonable out-of-
pocket expenses (including reasonable legal fees and expenses) incurred in
rendering such cooperation.
2.4 Sales and Other Taxes. Each of Storm and Logitech agrees to
---------------------
pay and discharge when due, one-half of any sales, use, transfer, excise and
other like taxes imposed or levied by any government or governmental agency in
the United States by reason of the sale and transfer of the Assets under this
Agreement (collectively, the "Transfer Taxes"). Logitech acknowledges that
Logitech may incur United States federal and state income tax liabilities as a
result of the transactions contemplated by this Agreement, all of which shall be
the obligation and responsibility of, and shall be paid by, Logitech. The
parties shall cooperate with each other to the extent reasonably requested and
legally permitted to minimize the Transfer Taxes.
2.5 Designated Recipients. Storm shall pay the cash
---------------------
consideration described in Section 2.2(a)(i) to Logitech US, for itself and as
agent for Logitech Asia, Logitech Trading or Logitech Swiss, to be disbursed in
accordance with the allocation as determined pursuant to Section 2.3
("Allocation") hereof. Storm shall issue the Closing Note and Closing Stock in
the name of Logitech US, for itself and as agent for Logitech Asia, Logitech
Trading or Logitech Swiss. Upon Logitech's request, Storm agrees to reissue the
Closing Note and Closing Stock in
9
<PAGE>
the name of the appropriate Logitech entity or entities, in the appropriate
denominations, in accordance with the allocation as determined pursuant to
Section 2.3 ("Allocation") hereof.
3. Representations and Warranties of Logitech. Except as disclosed in
------------------------------------------
Logitech's Disclosure Schedule attached as Exhibit E ("Logitech's Disclosure
---------
Schedule"), Logitech US, Logitech Asia, Logitech Swiss and Logitech Trading,
jointly and severally, hereby represent and warrant to Storm that as of the
Effective Date:
3.1 Description. Exhibit A ("Assets") sets forth a complete list of
----------- ---------
(i) Copyrights; (ii) Industrial Design Rights; (iii) Patent Rights; (iv)
Trademarks; and (v) Third Party Licenses used or necessary in the development,
reproduction, distribution and commercial exploitation of the Products as such
activities have been conducted by Logitech prior to the Closing.
3.2 Rights in Proprietary Rights.
----------------------------
(a) Ownership. Except with respect to Proprietary Rights
---------
covered by Third Party Licenses, Logitech has good and marketable title to the
Proprietary Rights, and the Proprietary Rights are free and clear of all
encumbrances, including, without limitation, security interests, licenses,
liens, charges or other restrictions.
(b) No Infringement. The Proprietary Rights (other than
---------------
Proprietary Rights covered by Third Party Licenses) are in full force and effect
and consummation of the transactions contemplated hereby will not alter or
impair any such rights. Following the Closing, the use, reproduction,
distribution and commercial exploitation of the Products or any other exercise
of full ownership rights in the Products, including the associated Proprietary
Rights, by Storm as such activities have been conducted by Logitech prior to the
Closing will not violate or constitute a misappropriation of the proprietary
rights of any third party.
(c) Third Party Technology. All Third Party Licenses are valid
----------------------
and enforceable and in full force and effect. Upon assignment to Storm of
Logitech's right, title and interest under the Third Party Licenses, Storm shall
have all rights to such Third Party Technology which had been granted to
Logitech pursuant to such Third Party Licenses.
(d) No Third Party Claims. Logitech has not received any notice
---------------------
of claims which have been, or will be, asserted against Logitech or to
Logitech's knowledge, any licensee of Logitech, and no claims are pending
against Logitech or to Logitech's knowledge, any licensee of Logitech, by any
person (i) regarding Logitech's or such licensee's right to use of any of the
Proprietary Rights or (ii) related to, challenging or questioning the validity
or effectiveness of any Third Party Licenses. To Logitech's knowledge, there is
no valid basis for any claim of the type specified in the immediately preceding
sentence which would have a material adverse effect on Logitech's
10
<PAGE>
business relating to the Products.
(e) Trade Secrets. Except as provided in Logitech's Disclosure
-------------
Schedule, Logitech has granted no licenses to the Proprietary Rights. Logitech
has at all times used commercially reasonable efforts to maintain the
confidential and proprietary nature of the Trade Secrets and has not disclosed
or otherwise dealt with such items in such a manner as to cause the loss of such
trade secrets by release into the public domain, including without limitation,
the use of commercially reasonable efforts to obtain confidentiality agreements
with all of its employees and consultants having access to any embodiments of
Proprietary Rights, and licenses with all individuals or entities provided
access to the embodiments of any Proprietary Rights containing provisions
restricting unauthorized use and copying and prohibiting decompiling or
disassembly of the embodiments of one or more of the Proprietary Rights.
Logitech has observed in all material respects all confidentiality obligations
concerning the Trade Secrets by which Logitech is bound and knows of no material
breach by any person of any such confidentiality obligation in favor of
Logitech.
(f) Third Party Rights. Logitech is not a party to any agreement
------------------
pursuant to which any third party has any right to manufacture, reproduce,
distribute, market or exploit any of the Products or any adaptations,
translations, or derivative works based on the Products or any portion thereof.
Except with respect to the rights of third parties to any Third Party
Technology, no third party has rights to manufacture, reproduce, distribute,
market or exploit any works or materials of any portion of the Products if such
portion of the Products constitutes a "derivative work" (as that term is defined
in the United States Copyright Act, Title 17, U.S.C. Section 101) of an
underlying work of authorship.
3.3 Product Liability. No product liability claims related to the
-----------------
Products have been communicated to or threatened against Logitech or to
Logitech's knowledge, its licensees, nor is there, to Logitech's knowledge, any
specific situation, set of facts or occurrence that provides a basis for such
claim. Logitech has implemented procedures whereby Logitech, either directly or
through third party vendors or services, addresses warranty claims which may be
made against the Products.
3.4 Sufficiency of Technology. The Assets include all computer
-------------------------
software, designs and reference materials which are needed by Logitech to sell
and market the Products as such activities were conducted by Logitech prior to
the Closing, except for generally available third-party in-bound software
licenses used by Logitech in the ordinary course of business.
3.5 Title to Tangible Assets. Logitech has good and marketable title
------------------------
to all of the tangible assets included in the Assets, all of such Assets are
free and clear of restrictions on or conditions to transfer or assignment and,
at the Closing, Logitech will sell, convey, assign, transfer and deliver to
Storm good and marketable title and all of Logitech's worldwide right, title and
interest in and to all of such tangible assets, free and clear of any mortgages,
liens, pledges, encumbrances, claims,
11
<PAGE>
conditions and restrictions, of any nature whatsoever, direct or indirect,
whether accrued, absolute, contingent or otherwise, except for (a) such of the
foregoing as arise out of taxes or general or special assessments not in default
and payable without penalty or interest or the validity of which is being
contested in good faith by appropriate proceedings and (b) such imperfections of
title and encumbrances, if any, which are not substantial in character, amount
or extent, and which do not materially detract from the value, or interfere with
the present use, of the tangible assets subject thereto or affected thereby.
3.6 Condition of Tangible Assets. All tangible personal property
----------------------------
included in the Assets is in reasonably good operating condition and repair,
ordinary wear and tear and routine maintenance excluded.
3.7 Litigation. Logitech has not received any notice of a claim,
----------
action, proceeding or investigation pending or threatened (a) against or by
Logitech involving the Assets or (b) which questions or challenges the validity
of this Agreement or the Ancillary Agreements or any action taken by Logitech
pursuant to this Agreement or in connection with the transactions contemplated
hereby or thereby. Logitech does not know of any valid basis for any such claim,
action, proceeding or investigation. Logitech is not subject to any judgment,
order or decree entered in any lawsuit or proceeding which has had or may have a
material adverse effect on Logitech's business relating to the Products.
3.8 Third Party Contracts. Logitech has performed in all material
---------------------
respects all obligations required to be performed by Logitech on or before the
Closing under any and all Third Party Contracts to which it is a party or to
which any of its property or assets is subject, and, to its knowledge, neither
it nor any other party thereto is in material default under any such agreement
and all such agreements are in full force and effect. Assuming that each of the
consents listed on Section 3.8 of Logitech's Disclosure Schedule has been
obtained prior to the Closing, the assignment to Storm of all of Logitech's
rights and obligations under the Third Party Contracts and the other
transactions contemplated by this Agreement will not be a basis for any party to
any such agreement to terminate that agreement or alter the basis on which it
will be doing business with Storm, as assignees from Logitech, under that
agreement.
3.9 Compliance with Laws. Logitech is not in violation of any US
--------------------
federal, state or local statute, law, rule or regulations with respect to the
Assets, except for such violations as would not have a material adverse effect
on the value, economic, commercial or otherwise, of the Assets. Logitech has
obtained all governmental licenses, orders, approvals, and authorizations
required in connection with the conduct of its business as it relates to the
Assets, except for such of the foregoing which, if not obtained, would not have
a material adverse effect on the value, economic, commercial or otherwise, of
the Assets.
3.10 No Breach or Violation. The execution, delivery and performance of
----------------------
this Agreement and the Ancillary Agreements by Logitech, and the consummation by
Logitech of the transactions contemplated
12
<PAGE>
hereby or thereby, will not result in or constitute any of the following: (i) a
material default, breach or violation or an event that, with notice or lapse of
time or both, would be a material default, breach or violation of the charter
documents of Logitech or any material agreement, instrument or arrangement which
would prevent the consummation of the transactions contemplated hereby or
thereby or by which the Assets are bound; (ii) the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the Assets; (iii) the
acceleration of Logitech's performance pursuant to any indenture, contract,
agreement or instrument related to the Assets; and (iv) the violation of any
applicable law, ordinance, rule, regulation, judgment, order or decree of any
court or other governmental body, department, instrumentality, agency or
subdivision having, asserting or claiming jurisdiction (which violation would
have a material adverse effect on the business of Logitech relating to the
Assets).
3.11 Complete Copies of Materials. Logitech has delivered to or made
----------------------------
available for inspection by Storm true and complete copies of each contract,
agreement, license, lease and similar document (or summaries of same) referred
to in any Exhibit hereunder or included in the Assets.
3.12 Insurance. Each existing insurance policy held by Logitech
---------
relating to the Assets is in full force and effect, is with responsible
insurance carriers and is in an amount and scope customary for companies engaged
in business and having assets similar to those of Logitech. All claims arising
under such policies with respect to the Assets and all premiums that are due and
payable thereunder have been paid in full.
3.13 Authority; Consents and Approvals. Logitech has all necessary
---------------------------------
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. This Agreement has been, and the
Ancillary Agreements will be, duly executed and delivered by Logitech and
constitutes the legal, valid and binding obligation of Logitech enforceable
against Logitech in accordance with its and their terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and available
equitable remedies, and except as the enforcement of the indemnification
provisions may in any way be limited by applicable securities laws or held to be
against public policy. No consent, approval or authorization of or designation,
declaration or filing with any third party or governmental authority on the part
of Logitech is required in connection with the valid execution, delivery and
performance of this Agreement or the Ancillary Agreements by Logitech, and the
consummation by Logitech of the transactions contemplated hereby or thereby,
except for the consents referenced in Sections 3.8 and 3.13 of Logitech's
Disclosure Schedule.
3.14 Organization and Good Standing. Logitech US, Logitech Asia,
------------------------------
Logitech Swiss and Logitech Trading are each corporations duly organized,
validly existing and in good standing under the laws of California, Taiwan,
Switzerland and Switzerland, respectively, and each has the requisite corporate
power to own and operate its properties and assets, and to carry on its business
as
13
<PAGE>
presently conducted. Logitech is qualified to do business in every jurisdiction
for which qualification is required unless the absence of qualification would
not have an adverse effect on Logitech's business as it relates to the Assets.
Nothing contained in any of the foregoing prevents the consummation of the
transactions contemplated by this Agreement or the Ancillary Agreements.
3.15 Absence of Undisclosed Liabilities. To the knowledge of Logitech,
----------------------------------
there are no liabilities of Logitech with respect to the Assets except as
described herein or in Logitech's Disclosure Schedule.
3.16 Taxes. There are no liens or similar encumbrances relating to or
-----
attributable to federal, state, provincial, local and other returns and reports
relating to any and all taxes or any other governmental charges, obligations or
fees for taxes and any related interest or penalties ("Tax" or "Taxes") on the
Assets, other than liens for Taxes not yet due. After giving effect to the
consummation of the transactions contemplated hereby, the Assets will not be
subject to, nor will Storm have, any liability in respect of any Taxes arising
from or relating to, the ownership, possession, operation or use of the Assets
by Logitech, or the operation of the business of Logitech related to the Assets,
prior to the Closing.
3.17 No Brokers. Logitech is not obligated for the payment of fees or
----------
expenses of any broker or finder in connection with the origin, negotiation or
execution of this Agreement or in connection with the transfer of the Assets.
3.18 Securities Representations.
--------------------------
(a) Investment Intent. The Company's agreement hereunder with
-----------------
respect to the issuance of the Closing Stock and the Notes (collectively, the
"Securities") to Logitech is made in reliance upon Logitech's representations to
the Company, evidenced by Logitech's execution of this Agreement, that Logitech
is or will be acquiring the Securities for investment for such Logitech's own
account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) Shares Not Registered. Logitech understands and acknowledges
---------------------
that the offering of the Securities pursuant to this Agreement will not be
registered under the Securities Act or qualified under the California securities
law (the "Law") on the grounds that the offering and sale of securities
contemplated by this Agreement and the Ancillary Agreements are exempt from
registration under the Securities Act and exempt from qualification pursuant to
Section 25102(f) of the Law, and that the Company's reliance upon such
exemptions is predicated upon Logitech's representations set forth in this
Section 3.18. Logitech acknowledges and understands that the Securities must be
held indefinitely unless the Securities are subsequently registered under the
Securities Act or an exemption from such registration and such qualification is
available.
14
<PAGE>
(c) No Transfer. Logitech covenants that in no event will
-----------
Logitech dispose of any of the Securities (other than in conjunction with an
effective registration statement for the Securities under the Securities Act or
in compliance with Rule 144 promulgated under the Securities Act) unless and
until (i) Logitech shall have notified the Company of the proposed disposition
and shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition, and (ii) if reasonably requested by the
Company, Logitech shall have furnished the Company with an opinion of counsel
reasonably satisfactory in form and substance to the Company to the effect that
(x) such disposition will not require registration under the Securities Act and
(y) appropriate action necessary for compliance with the Securities Act and any
applicable state, local or foreign law has been taken. It is agreed that the
Company will not require opinions of counsel for transactions made pursuant to
Rule 144.
(d) Permitted Transfers. Notwithstanding the provisions of
-------------------
subsection (c) above, no registration statement or opinion of counsel shall be
necessary for a transfer to or between a limited liability company or
corporation in which the interests or stock, as the case may be, is wholly-owned
by a Logitech party or an Affiliate thereof; provided, however that each
transferee agrees in writing to be bound by the terms of this Agreement to the
same extent as if he were an original purchaser of the Securities hereunder.
(e) Knowledge and Experience. Logitech (i) has such knowledge
------------------------
and experience in financial and business matters as to be capable of evaluating
the merits and risks of Logitech's prospective investment in the Securities;
(ii) has the ability to bear the economic risks of Logitech's prospective
investment; (iii) has been furnished with and has had access to such information
as Logitech has considered necessary to make a determination as to the purchase
of the Securities together with such additional information as is necessary to
verify the accuracy of the information supplied; (iv) has had all questions
which have been asked by Logitech satisfactorily answered by the Company; and
(v) has not been offered the Securities by any form of advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any such media.
(f) Not Organized to Purchase. Logitech has not been organized
-------------------------
for the purpose of purchasing the Securities.
(g) Accredited Investor. The Logitech is an accredited investor
-------------------
as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
(j) Federal Legend. Logitech understands that the certificates
--------------
evidencing the Securities will contain legends required by the Law or other
applicable state blue sky laws and a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") AND ARE "RESTRICTED SECURITIES" AS
15
<PAGE>
DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT
BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN
CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) IF SUCH
SALE, OFFER OR DISTRIBUTION WILL NOT REQUIRE REGISTRATION UNDER THE
ACT, AND, IF REASONABLY REQUESTED BY THE COMPANY, PURSUANT TO AN
OPINION OF COUNSEL TO SUCH EFFECT.
Logitech understands that the Company need not register a transfer of legended
Securities, and may also instruct its transfer agent not to register the
transfer of such Securities, unless the conditions specified in the foregoing
legend are satisfied.
4. Representations and Warranties of Storm. Except as disclosed in
---------------------------------------
Storm's Disclosure Schedule attached as Exhibit F ("Storm's Disclosure
---------
Schedule"), Storm hereby represents and warrants to Logitech that as of the
Effective Date and as of the Closing Date:
4.1 Litigation. Storm has not received any notice of a claim,
----------
action, proceeding or investigation pending or threatened (a) against or by
Storm which, if not resolved in favor of Storm, would have a material adverse
effect on the business, assets, financial condition or operating results of
Storm or (b) which questions or challenges the validity of this Agreement or the
Ancillary Agreements or any action taken by Storm pursuant to this Agreement or
in connection with the transactions contemplated hereby or thereby. Storm does
not know of any valid basis for any such claim, action, proceeding or
investigation. Storm is not subject to any judgment, order or decree entered
into any lawsuit or proceeding which has had or may have a material adverse
effect on Storm's business.
4.2 No Breach or Violation. The execution, delivery and performance
----------------------
of this Agreement or the Ancillary Agreements by Storm, and the consummation by
Storm of the transactions contemplated hereby and thereby, will not result in or
constitute any of the following: (i) a default, breach or violation or an event
that, with notice or lapse of time or both, would be a default, breach or
violation of the charter documents of Storm or any material agreement,
instrument or arrangement to which Storm is a party or by which Storm is bound
or (ii) the violation of any applicable law, ordinance, rule, regulation,
judgment, order or decree of any court or other governmental body, department,
instrumentality, agency or subdivision having, asserting or claiming
jurisdiction.
4.3 Authority; Consents and Approvals. Storm has all necessary
---------------------------------
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. This Agreement has been, and the
Ancillary Agreements will be, duly executed and delivered by Storm and
constitutes the legal, valid and binding obligation of Storm enforceable against
Storm in accordance with its and their terms, except as the same may be limited
by applicable bankruptcy, insolvency,
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<PAGE>
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and available equitable remedies, and except as the
enforcement of the indemnification provisions may in any way be limited by
applicable securities laws or held to be against public policy. No consent,
approval or authorization of or designation, declaration or filing with any
third party or governmental authority on the part of Storm is required in
connection with the valid execution, delivery and performance of this Agreement
by Storm, and the consummation by Storm of the transactions contemplated hereby.
4.4 Organization and Good Standing. Storm is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of Delaware, and
has the requisite corporate power to own and operate its properties and assets,
and to carry on its business as presently conducted.
4.5 Capitalization.
--------------
(a) Authorized Stock. The authorized capital stock of Storm
----------------
consists of 30,000,000 shares of Common Stock, $0.001 par value (the "Common
Stock"), and 500,000 shares of Preferred Stock, $0.001 par value (the "Preferred
Stock"), of which 30,000 shares have been designated Series A 8.5% Convertible
Preferred Stock. As of December 18, 1997, (i) 10,499,472 shares of Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable; (ii) 1,570,426 shares of Common Stock were reserved for issuance
pursuant to stock options under Storm's stock option plans (the "Storm Option
Plans") and rights under Storm's Employee Stock Purchase Plan (the "Storm
Purchase Plan"); and (iii) 30,000 shares of Series A 8.5% Convertible Preferred
Stock were issued and outstanding, all of which are validly issued, fully paid
and nonassessable. All shares of the Closing Stock and Earn-Out Stock, upon
issuance on the terms and conditions specified herein, will be duly authorized,
validly issued, fully paid and nonassessable, and will be free and clear of all
liens and encumbrances of any kind. There are no options, warrants, calls,
rights, commitments or agreements of any character to which Storm is a party or
by which it is bound obligating Storm to sell, repurchase or redeem, or cause to
be issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of Storm or obligating Storm to grant, extend, accelerate the vesting of,
change the price of, or otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement, and Storm is not currently planning to
issue or enter into any of the foregoing. Storm is not a party or subject to any
agreement or understanding which affects or relates to the voting or giving of
written consents with respect to any security of Storm or by a director of
Storm.
(b) Other Securities. Except as set forth in this Section 4.5,
----------------
or as reserved for future grants of options under the Storm Option Plans or the
Storm Purchase Plan (as more fully described in the Storm SEC Reports (as
defined in Section 4.6 ("SEC Filings; Financial Statements")), there are (i) no
equity securities of any class of Storm, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding and (ii) no outstanding subscriptions, options, warrants, puts,
calls, rights or other commitments or agreements of any character to which Storm
is a party or by which it is bound obligating Storm to issue, deliver, sell,
repurchase or redeem or cause to be issued, delivered, sold, repurchased or
redeemed any equity securities of Storm or obligating Storm to grant, extend,
accelerate the vesting of, change the exercise price of or otherwise amend or
enter into
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any such option, warrant, call, right, commitment or agreement.
4.6 SEC Filings; Financial Statements.
---------------------------------
(a) Filings. Storm has filed and made available to Logitech
-------
all forms, reports and documents required to be filed by Storm with the
Securities and Exchange Commission (the "SEC") since October 4, 1996 other than
registration statements on Form S-8 (collectively, the "Storm SEC Reports"). The
Storm SEC Reports (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Act and the Securities Exchange
Act, as the case may be, and (ii) did not at the time they were filed (or is
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Storm SEC Reports or
necessary in order to make the statements in such Storm SEC Reports, in the
light of the circumstances under which they were made, not misleading.
(b) Financial Statements. Each of the consolidated financial
--------------------
statements (including, in each case, any related notes) contained in the Storm
SEC Reports, including any Storm SEC Reports filed after the date of this
Agreement until the Closing, complied or will comply as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was or will be prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted on Form 10-Q
promulgated by the SEC) and presented fairly or will present fairly, in all
material respects, the consolidated financial position of Storm as at the
respective dates and the consolidated results of its operations and cash flows
for the period indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
4.7 Registration Rights. Except as set forth in Storm's Disclosure
-------------------
Schedule, Storm is not under any obligation to register any of its presently
outstanding securities or any securities that may be issued in respect thereof
or in exchange therefor.
4.8 Broker's and Finders' Fees. Storm has not incurred, and will not
--------------------------
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
5. Covenants. Storm and Logitech each agree (except as expressly
---------
contemplated by this Agreement or to the extent that both parties shall
otherwise consent in writing) that:
5.1 Ordinary Course. Until the Closing, Logitech (i) will not sell,
---------------
encumber, pledge, license or otherwise transfer or assign any of the Assets,
including the Proprietary Rights or other related tangible or intangible assets,
except in the ordinary course of its or their business and (ii) to the extent
related to the Assets, will use its best efforts to preserve intact its business
organization, preserve its relationships with its suppliers, customer and others
with whom it deals, and continue to develop
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<PAGE>
its business.
5.2 Best Efforts. Each party shall use its best efforts to take, or
------------
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, and to satisfy all conditions set forth in
Section 6 ("Conditions Precedent to Closing"). From and after the Effective Date
and until the Closing or the termination of this Agreement, whichever shall
first occur, each party will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on such party with
respect to the consummation of the transactions contemplated by this Agreement
and will promptly cooperate with and furnish information to the other party in
connection with any such requirements. On or before the Closing Date, each party
will use commercially reasonable efforts to obtain (and will cooperate with each
other in obtaining) any consent, approval, order or authorization from, and will
use commercially reasonable efforts to make any registration, declaration or
other filing with, any governmental entity, domestic or foreign, any contracting
party or any other person, required to be obtained or made by either Storm or
Logitech in connection with the taking of any action contemplated by this
Agreement. Further, Logitech agrees to provide to Storm all reasonably requested
assistance, at Storm's sole cost and expense, with respect to any audits or
filings required to be made by Storm with respect to its acquisition of the
Assets pursuant to the rules and regulations of the United States Securities and
Exchange Commission, the Securities Act of 1933, the Securities Exchange Act of
1934 or any applicable rules or regulations thereunder.
5.3 No Other Negotiations. Until the earlier of (i) December 17,
---------------------
1997 and (ii) the Closing (the "Expiration Date"), Logitech will not, except as
required by law, including fiduciary duties required by law, take any action to
solicit, initiate, seek, encourage or support any inquiry, proposal or offer
from, furnish any information to, or participate in any negotiations or enter
into any agreement with, any corporation, partnership, person or other entity or
group (other than discussions with Storm) regarding the sale of the Assets to
any party other than Storm or an affiliate of Storm. Logitech agrees that any
negotiations with respect to such a sale in progress as of the date hereof will
be terminated or suspended during such period. Logitech acknowledges and agrees
that it will direct and use its reasonable efforts to cause its officers,
directors, employees, affiliates, and attorneys, accountants, investment bankers
and other consultants, advisers and agents to agree to and abide by the
foregoing restrictions. Notwithstanding, the foregoing, Storm agrees that, if
the transaction under this Agreement is not consummated for any reason, Logitech
shall not be liable to Storm for any contacts prior to the Expiration Date, or
any agreement entered into after the Expiration Date, with respect to the Assets
with Visioneer, Inc.; provided, however, that Logitech shall not be entitled to
negotiate the substantive terms of the sale of the Assets prior to the
Expiration Date.
5.4 Publicity. Storm and Logitech agree to make no public
---------
announcement concerning the transactions contemplated by this Agreement or the
terms of this Agreement (other than to their respective employees or agents)
except as provided in this Section. The initial public announcement concerning
the transactions contemplated by this Agreement shall be made jointly with the
prior approval of both Storm and
19
<PAGE>
Logitech, which approval shall not be unreasonably withheld or delayed. Neither
party will disclose the financial terms or the terms of the representations and
warranties, indemnification obligations or similar provisions of this Agreement,
except as permitted below. A party may disclose the terms of this Agreement
where required by law, provided that such party makes every reasonable effort to
obtain confidential treatment or similar protection to the fullest extent
available to avoid public disclosure of the terms of this Agreement. A party
required by law to make disclosure of the terms of this Agreement will promptly
notify the other party and permit the other party to review and participate in
the application process seeking confidential treatment. Either party may
disclose, under confidentiality and use restrictions, such terms of this
Agreement as are reasonably necessary to disclose for purposes of seeking
financing, bank credit or the like. Both parties shall remain free to disclose
the existence of this Agreement and the origin and ownership of computer
software programs and related assets transferred under this Agreement. To the
extent reasonably required, Storm and Logitech may disclose limited information
concerning this Agreement to third parties whose consent is necessary in order
to terminate or assign the Third Party Contracts or assign the Proprietary
Rights.
5.5 Access to Information. Each of Logitech and Storm shall afford
---------------------
to the other and to the other's accountants, counsel and other representatives,
reasonable access during the period prior to the Closing to all of its
properties, books, contracts, commitments and records reasonably related to the
transactions contemplated by this Agreement. In addition, Logitech will
reasonably cooperate with Storm to permit Storm to discuss the Products and
related business matters with relevant customers, creditors, suppliers and other
business contacts. The requesting party will not use such information for
purposes other than those contemplated by this Agreement and will otherwise hold
such information in confidence (and the requesting party will cause its
consultants and advisors also to hold such information in confidence) and treat
such information as "Confidential Information" in accordance with Section 5.6
("Confidentiality") below.
5.6 Confidentiality. Storm and Logitech previously entered into a
---------------
Non-Disclosure Agreement dated November 18, 1997 (the "NDA"). The NDA is hereby
incorporated by reference into and made a part of this Agreement, and will
remain in full force and effect following execution of this Agreement. Except as
otherwise expressly provided in this Agreement, from and after the Closing all
Trade Secrets and other Confidential Information that is included in the Assets
will be deemed to be the Evaluation Material (as defined in the NDA) of Storm,
and Logitech will be deemed to be the receiving party with respect to such
Evaluation Material.
5.7 Bulk Sales Laws. Logitech and Storm hereby mutually agree to
---------------
waive compliance with any applicable bulk transfer laws of any applicable
jurisdiction in connection with the sale of Assets to Storm. Logitech will
indemnify and hold harmless Storm against any and all liabilities which may be
asserted by third parties against Storm as a result of any noncompliance with
any bulk transfer law applicable to the transactions contemplated by this
Agreement.
5.8 Noncompetition. Subject to the provisions of Section 2.2(d), a
--------------
period of thirty (30) months from the Closing Date, Logitech covenants that it
will not directly or indirectly
20
<PAGE>
distribute, market, advertise or otherwise promote or sell any scanning software
or hardware (excluding handheld scanners), either on its own behalf or on behalf
of a third party, anywhere in the world, except as necessary to fulfill
inventory commitments existing as of the Closing Date, and except as
contemplated by the Joint Marketing Agreement.
5.9 Closing Note. At least two weeks prior to the Original Maturity
------------
Date, Storm shall, at Logitech's request, (a) inform Logitech in writing as to
whether it will pay the principal amount of the Closing Note in full on the
Original Maturity Date, (b) deliver to Logitech its balance sheet as of February
28, 1998, and the related statements of operations, cash flows and changes in
stockholders' equity for the fiscal year to date period ended as of February 28,
1998; and/or (c) projected non-binding financial statements for the six (6)
months immediately following the Original Maturity Date.
5.10 Stockholder Approval. Upon the written request of Logitech,
--------------------
Storm agrees to use its best efforts to obtain Stockholder Approval at its next
annual stockholder meeting following Logitech's request.
5.11 Repayment of Notes. Storm shall use at least 50% of the
------------------
proceeds to Storm of each Equity Financing conducted after the Closing to reduce
the outstanding principal and accrued interest on any outstanding Notes.
5.12 Registration Rights. Storm will use its best efforts to amend
-------------------
the Fourth Amended and Restated Rights Agreement dated as of March 18, 1996, as
amended, to make Logitech a party thereof upon expiration of the lock-up period
set forth in Section 5.21 ("Lockup").
5.13 Nasdaq National Market. Storm shall not knowingly take any
----------------------
action which would result in disqualification of Storm for listing of its Common
Stock on the Nasdaq National Market.
5.14 Execution of Additional Documents. Storm agrees to execute any
---------------------------------
additional documents or instruments evidencing the retention or perfection of
security interests in favor of Logitech pursuant to the terms of the Joint
Marketing Agreement.
5.15 Third Party Consents. Immediately after the Closing, Logitech
--------------------
will commence best efforts to obtain consents to assignment to Storm of all
Third Party Contracts identified in Exhibit A ("Assets") as requiring such
---------
consent, but shall be under no obligations to pay any fees or amounts of any
kind with respect to any such assignments.
5.16 Further Assurances. From time to time after the Closing Date, at
------------------
Storm's request and expense but without further consideration, Logitech will
execute and deliver such further instruments of conveyance and transfer and will
take such other action as Storm may reasonably require in order more effectively
to vest in Storm and to put Storm in possession and control of the Assets and
its respective rights in the Assets.
5.17 Transition Support.
------------------
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For a period of three (3) months after the Closing, Logitech will provide Storm,
for no additional consideration, with all reasonably requested assistance to
transition the Products to Storm and integrate the Products into Storm's
business.
5.18 ScanBank Software License.
-------------------------
(a) Effective upon the Closing Date, and subject to the terms
and conditions of this Section 5.18, Logitech grants to Storm a worldwide, non-
exclusive, non-transferable, royalty-free, fully paid-up, perpetual license to
(a) use, reproduce, sublicense through multiple tiers of sublicenses and prepare
derivative works based upon the software in source code form (the "Source Code")
known as "ScanBank," as more particularly described in Exhibit A ("Assets")
---------
("ScanBank") and (b) use, reproduce, distribute and sublicense ScanBank through
multiple tiers of distribution and sublicenses, and all derivative works thereof
created by or under authority of Storm (the "Derivative Works"), in object code
form only (the "Object Code") provided that both the ScanBank Object Code and
Source Code are distributed and sublicensed by or under authority of Storm
bundled with hardware or software scanning products manufactured and distributed
by or under authority of Storm and not on a stand-alone basis.
(b) The foregoing license extends only to the version of
ScanBank in existence as of the Closing and not to any other versions, releases
or bug fixes of ScanBank which may be developed by or on behalf of Logitech from
and after the Closing.
(c) Storm acknowledges and agrees that the ScanBank Source Code
is confidential, proprietary and constitutes a trade secret of Logitech from and
after the Closing. Accordingly, Storm agrees to protect the confidential and
proprietary nature of the ScanBank Source Code in a manner consistent with or
more protective than those procedures implemented with respect to Storm's own
confidential and proprietary information but in no event will less than
reasonable care be used.
(d) All sublicenses of the ScanBank Object Code shall be
pursuant to a form of license agreement no less protective than Storm uses for
its own products, and which include provisions which protect Logitech's
proprietary rights in ScanBank in a manner consistent with protections afforded
to Storm's other third party software vendors.
(e) Storm shall own all right, title and interest in and to the
Derivative Works, subject to Logitech's ownership rights in the preexisting
ScanBank code. Notwithstanding the foregoing, upon completion of any Derivative
Work, Storm shall deliver a reproducible master copy of the Object Code and
Source Code of such Derivative Work and Storm hereby grants to Logitech a
worldwide, non-exclusive, non-transferable, royalty-free, fully paid-up,
perpetual license, with the right to grant and authorize sublicenses, to (a)
use, reproduce and prepare derivative works based upon such Derivative Work
Source Code and (b) use, reproduce, distribute and sublicense Derivative Work
Source Code and all other derivative works thereof in Object Code. All
sublicenses of the Derivative Work Object Code by Logitech shall be subject to
the same restrictions and obligations as those imposed on Storm pursuant to
5.18(d) above.
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(f) Except as set forth in Section 7.2 ("Indemnification by
Logitech"), ScanBank is licensed to Storm "AS IS" AND WITHOUT ANY EXPRESS,
IMPLIED OR STATUTORY WARRANTIES OF ANY KIND, INCLUDING BUT NOT LIMITED TO THE
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-
INFRINGEMENT OF THIRD PARTY RIGHTS.
(g) NEITHER PARTY SHALL HAVE ANY LIABILITY FOR INCIDENTAL,
CONSEQUENTIAL, SPECIAL, EXEMPLARY OR DIRECT DAMAGES ARISING OUT OF OR RELATED TO
THE LICENSE OF SCANBANK OR DERIVATIVE WORKS UNDER THIS SECTION 5.18, WHETHER
BASED IN CONTRACT, TORT, STRICT LIABILITY OR ANY OTHER LEGAL THEORY, EVEN IF THE
OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(h) Storm shall not remove any copyright, trademark or
proprietary rights notices of Logitech from ScanBank and shall reproduce all
such notices on all authorized copies of ScanBank. In addition, Storm shall
include applicable notices in the "About" or start-up screen of ScanBank, if
any, indicating that portions of the Storm product include technology under
license from Logitech, Inc.
(i) Any distribution of ScanBank by or on behalf of Logitech or
Storm to the U.S. Government or any branch or agency thereof shall identify
ScanBank as a "commercial item" as that term is defined at 48 C.F.R. 2.102.
Pursuant to 48 C.F.R. 12.212 of the Federal Acquisition Regulations ("FAR") and
its successors and 48 C.F.R. 227.7202 of the Department of Defense FAR
Supplement and its successors, U.S. government end users acquire no rights other
than those expressly set forth in the applicable end user agreement accompanying
the product containing ScanBank.
5.19 Trade Dress. Storm may, only in the distribution of Products
-----------
from the Closing through December 31, 1998, use that color and shade of gray and
purple used by Logitech in the distribution of its own products and Logitech
agrees that it will not allege any claims of infringement of trademark, trade
dress or other similar claims from such distributions by Storm. Storm agrees
that it will not use such color and shade of gray or purple in any products any
time after December 31, 1998.
5.20 Sand License. Logitech will, at Storm's request, render all
------------
necessary assistance to Storm in order that Storm may obtain the software
license from Sand Microelectronics, Inc. ("Sand") necessary for the continued
distribution by Storm of PageScan USB, including but not limited to making the
necessary introductions to Sand personnel and attending negotiations with or on
behalf of Storm. Logitech shall have no authority to enter into any license
agreement with Sand on Storm's behalf but in the event Storm is able to
consummate such license with Sand, Logitech agrees to pay all amounts required
to be paid thereunder, including without limitation, up-front license fees, non-
recurring engineering fees and royalties; provided, however, that Storm shall
give prior notice to Logitech of any such amounts in order to give Logitech the
opportunity to negotiate with Sand, on behalf of Storm, the payment of lesser
amounts, but notwithstanding the outcome of such negotiations (if any), Logitech
will pay the amounts ultimately agreed upon between Storm and Sand.
23
<PAGE>
5.21 Lockup. Logitech agrees that for the first eighteen (18) months
------
after the Closing, it will not directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase, pledge or otherwise transfer or dispose of any shares of the
Closing Stock or Common Stock issued upon conversion of any Note except to an
Affiliate.
5.22 Board Observation Rights. If at any time Logitech holds Common
------------------------
Stock which equals or exceeds fifteen percent (15%) of the then outstanding
Common Stock, Logitech shall be entitled to receive notice of all meetings of
the Board of Directors of the Company (the "Board") and at Logitech's option,
upon prior notice to the Company, may designate an individual (reasonably
acceptable to the Company) to attend any and all such meetings of the Board as
an observer. Such designated individual shall not be permitted to vote on any
matters under consideration by the Board and shall be bound by obligations of
confidentiality pursuant to a written nondisclosure agreement in a form
acceptable to the Company. The Company will provide such designated individual
with copies of all notices, minutes and other materials that it provides to its
directors in connection with such meetings at the time such information is
provided to the directors.
6. The Closing.
-----------
6.1 Time and Place. The Closing shall take place at the offices of
--------------
Gray Cary Ware & Freidenrich, A Professional Corporation, 400 Hamilton Avenue,
Palo Alto, California 94301, at 10:00 a.m., Pacific Standard Time, on the
Closing Date, or at such other place or time as Storm and Logitech may agree.
6.2 Logitech Actions at the Closing. At the Closing, Logitech will
-------------------------------
deliver or cause to be delivered to Storm the following:
(a) an original Bill of Sale in substantially the form of
Exhibit G ("Bill of Sale") executed by an authorized officer of Logitech;
- ---------
(b) such additional duly executed documents and instruments of
conveyance, assignment or transfer of title as may be necessary to transfer and
assign to Storm all right, title and interest in the Assets, including
assignments of any and all Proprietary Rights, to Storm;
(c) an original Assignment Agreement in substantially the form
of Exhibit H ("Assignment Agreement") executed by an authorized officer of
---------
Logitech by which Logitech assigns all of Logitech's rights and Storm assumes
all of Logitech's obligations under the Third Party Contracts to which Logitech
is a party or under which Logitech is bound on the Closing Date;
(d) an original Joint Marketing Agreement executed by an
authorized officer of Logitech;
24
<PAGE>
(e) an original Manufacturing Agreement executed by an
authorized officer of Logitech.
6.3 Storm Actions at the Closing. At the Closing, Storm will deliver
----------------------------
to Logitech the following instruments and documents against delivery of the
items specified in Section 6.2 ("Logitech Actions at the Closing"):
(a) Five Million Dollars (US$5,000,000) by wire transfer;
(b) an original Assignment Agreement in substantially the form
of Exhibit H ("Assignment Agreement") executed by an authorized officer of Storm
---------
by which Logitech assigns all of Logitech's rights and Storm assumes all of
Logitech's obligations under the Third Party Contracts to which Logitech is a
party or under which Logitech is bound on the Closing Date;
(c) an original Joint Marketing Agreement executed by an
authorized officer of Storm;
(d) an original Manufacturing Agreement executed by an
authorized officer of Storm; and
(e) the Closing Note; and
(f) a stock certificate(s) evidencing the Closing Stock.
6.4 Passage of Title. Legal and equitable title and risk of loss with
----------------
respect to all of the Assets shall pass to Storm on transfer of the Assets at
the Closing.
7. Indemnification.
---------------
7.1 Survival of Representations.
---------------------------
(a) The representations and warranties made by Logitech set
forth in Section 3 ("Representations and Warranties of Logitech") hereof shall
survive the Closing and shall remain in full force and effect and shall survive
until the end of the Indemnification Period and shall survive thereafter only
with respect to any claims made prior to the end of the Indemnification Period;
provided, however, that this Section 7 ("Indemnification") and the termination
hereunder of the representations and warranties made by Logitech shall not
terminate or limit in any manner whatsoever any rights Storm has or may have due
to fraud or knowing misrepresentation.
(b) The representations, warranties, covenants and obligations
of Logitech, and the rights and remedies that may be exercised by the Storm
Indemnitees, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any
25
<PAGE>
investigation made by or knowledge of, Storm, or any of its Representatives.
7.2 Indemnification by Logitech. During the Indemnification Period
---------------------------
(or a longer period as specified in this Section 7.2), Logitech shall hold
harmless, indemnify and pay for the defense of each of the Storm Indemnitees
from and against, and shall compensate and reimburse each of the Storm
Indemnitees for, any Damages which are directly or indirectly suffered or
incurred by any of the Storm Indemnitees or to which any of the Storm
Indemnitees may otherwise become subject and which arise from or as a result of,
or are directly or indirectly connected with: (i) any inaccuracy in or breach of
any representation or warranty set forth in Section 3 ("Representations and
Warranties of Logitech") hereunder or in any certificate delivered by Logitech
in connection with this Agreement; (ii) any breach of any covenant or obligation
of Logitech hereunder; (iii) any liability arising out of or relating to the
use, ownership or operation by Logitech of the Assets prior to the Closing or
the distribution or manufacture of the Products, or any portion thereof, by
Logitech through March 31, 1998 under either the Joint Marketing Agreement or
the Manufacturing Agreement, other than an Assumed Liability; (iv) for a period
of three (3) years after the Closing, any actual or alleged infringement by
ScanBank of any Proprietary Rights (except to the extent that any such claim
arises from a modification by Storm of ScanBank or the use of ScanBank in
conjunction with other hardware or software where such infringement would not
have occurred but for such use); (v) in perpetuity, any actual or alleged
infringement by the Assets of any patent identified in the letter from Xircom to
Logitech dated August 4, 1997; or (vi) any Legal Proceeding relating to any
inaccuracy, breach or expense of the type referred to in clauses (i), (ii),
(iii), (iv) or (v) above (including any Legal Proceeding commenced by any Storm
Indemnitee for the purpose of enforcing any of its rights under this Section 7.2
("Indemnification by Logitech") if such Storm Indemnitee is the prevailing party
in any such Legal Proceeding). If there is any failure to convey to Storm good
title and exclusive rights in the Assets to the extent otherwise represented
herein, or similar breaches of representation or warranty, whether because
conflicting rights are held by a third party or are in the public domain,
Damages may arise regardless of whether or not they relate to any third-party
claim. The foregoing indemnity obligation shall not extend to any third party
claims alleging infringement of proprietary rights where such claims arise or
relate solely to Storm's use of the Assets from and after the Closing.
7.3 Indemnification by Storm. From and after the Closing Date, Storm
------------------------
shall hold harmless, indemnify and pay for the defense of each of the Logitech
Indemnitees from and against, and shall compensate and reimburse each of the
Logitech Indemnitees for, any Damages which are directly suffered by incurred by
any of the Logitech Indemnitees or to which any of the Logitech Indemnitees may
otherwise become subject and which arise from or as a result of, or are directly
or indirectly connected with: (i) any inaccuracy in or breach of any
representation or warranty set forth in Section 4 ("Representations and
Warranties of Storm) hereunder or in any certificate delivered by Storm in
connection with this Agreement; (ii) any breach of any covenant or obligation of
Storm hereunder; (iii) any Assumed Liability; (iv) any third party claims
alleging infringement of proprietary rights where such claims arise or relate
solely to Storm's use (including modification and distribution) to the Assets
from and after the Closing (except as set forth in Section 7.2 ("Indemnification
by Logitech") above); or (v) any Legal Proceeding relating to any inaccuracy,
breach or expense of the type referred to in clauses (i), (ii) or (iii) above
(including any Legal Proceeding commenced by any Logitech Indemnitee for the
purpose of
26
<PAGE>
enforcing any of its rights under this Section 7.3 ("Indemnification by Storm")
if such Logitech Indemnitee is the prevailing party in any such Legal
Proceeding).
7.4 Defense of Third Party Claims. In the event of the assertion or
-----------------------------
commencement by any person (other than a Storm Indemnitee or Logitech
Indemnitee, as the case may be) of any Legal Proceeding (whether against Storm,
Logitech or against any other Person) with respect to which Logitech (or Storm,
as the case may be) may become obligated to hold harmless, indemnify, compensate
or reimburse any Storm Indemnitee (or Logitech Indemnitee, as the case may be)
pursuant to this Section 7 ("Indemnification"), the procedure set forth below
shall be followed:
(a) Notice. The party entitled to receive indemnity under this
------
Section 7 (the "Indemnified Party") shall give prompt written notice to the
party obligated to indemnify (the "Indemnifying Parties") of the commencement of
any such Legal Proceeding against the Indemnified Parties for which indemnity
may be sought under this Section 7 ("Indemnification"); provided, however, that
any failure on the part of an Indemnified Party to so notify the Indemnifying
Party shall not limit any of the obligations of the Indemnifying Party under
this Section 9 ("Indemnification") unless such failure to give prompt written
notice shall cause any actual harm to the Indemnifying Party. The
Indemnification Period shall be tolled solely with respect to a particular claim
for the period beginning on the date the Indemnifying Party receives written
notice of that claim until the final resolution of such claim so long as such
claim is made within the Indemnification Period.
(b) Defense. The Indemnifying Party shall have the right to
-------
control the defense and settlement of any Legal Proceeding, except that the
Indemnified Parties shall have the right to participate in such defense with its
own counsel provided that the Indemnified Parties pay the expense of such
counsel; provided, however, that in the event of any conflict of interest
arising from arising from Indemnifying Party's defense of any such claim,
Indemnified Parties shall have the right to employ counsel of its (their) own
choosing at Indemnifying Party's expense. Indemnifying Party shall have no
obligation to pay any Damages arising out of any settlement or compromise of a
Legal Proceeding entered into by an Indemnified Party without Indemnifying
Party's prior written consent.
(c) Cooperation. Indemnified Parties will provide Indemnifying
-----------
Parties with all reasonably requested assistance in the defense and settlement
of any Legal Proceeding, all at Indemnifying Party's sole cost and expense.
8. Termination.
-----------
8.1 Mutual Agreement. This Agreement may be terminated and abandoned
----------------
at any time prior to the Closing Date by the written consent of both Logitech
and Storm, in which case neither party shall have any obligation whatsoever
(other than under Sections 5.4 ("Publicity"), 5.6 ("Confidentiality") and 9.2
27
<PAGE>
("Expenses")) to the other with respect to this Agreement, the transactions
provided for in this Agreement, or expenses incurred in connection with or in
contemplation of such transactions.
8.2 Survival. Termination of this Agreement shall not relieve either
--------
party from any liability incurred for any breach of this Agreement prior to such
termination and the provisions of this Section and Sections 5.6
("Confidentiality") and 9.2 ("Expenses") shall survive any termination of this
Agreement.
9. General Provisions.
------------------
9.1 Assignment. Neither party shall directly or indirectly sell,
----------
assign, subcontract or otherwise transfer this Agreement or any of its rights or
obligations under this Agreement, without the prior written consent of the other
parties, except as permitted in this section. Any party may assign this
Agreement to any of its subsidiaries, provided that the assigning party remains
responsible for and guarantees the full performance of this Agreement after such
assignment. In addition, any party may, without the prior notice to or written
consent of the other parties, assign or transfer this Agreement as part of a
corporate reorganization, consolidation, merger or sale of substantially all of
its assets, provided that the successor entity assumes all of the assigning
party's obligations under this Agreement. This Agreement shall be binding upon
and inure to the benefit of the permitted successors and assigns of the parties.
9.2 Expenses. Except as otherwise provided in this Agreement, each
--------
of the parties shall each pay its own costs and expenses, including legal and
accounting fees, commissions and expenses, related to the transactions provided
for in this Agreement, irrespective of when incurred. Each party agrees to pay
(and to indemnify and to hold harmless the other parties from) any liability for
any commission or compensation in the nature of an advisor's or finder's fee to
any person or firm for which such party, or any of its employees or
representatives, is responsible.
9.3 Notices and Representatives. Any notice or reports required or
---------------------------
permitted to be given under this Agreement shall be given in writing and shall
be delivered by personal delivery, telegram, facsimile transmission or by
certified or registered mail, postage prepaid, return receipt requested. Notice
shall be deemed given upon actual receipt. Any party and any representative
designated below may, by notice to the others, change its address for receiving
such notices:
To Logitech US at: Logitech Inc.
6505 Kaiser Drive
Fremont, CA 94555
U.S.A.
Attention: Chief Financial Officer
Facsimile: (510) 795-7496
28
<PAGE>
To Logitech Asia: Logitech Far East Ltd.
#2 Creation Road IV
Science-Based Industrial Park
Hsinchu, Taiwan R.O.C.
Attention: General Manager
Facsimile: 011-886-35-77-8246
With a copy to Chief Financial Officer,
Logitech Inc.
To Logitech Swiss: Logitech S.A.
Moulin du Choc
CH-1122 Romanel-sur-Morges
Switzerland
Attention: General Manager
Facsimile: 011-41-21-863-5311
With a copy to Chief Financial Officer,
Logitech Inc.
To Logitech Trading: Logitech Trading S.A.
Moulin du Choc
CH-1122 Romanel-sur-Morges
Switzerland
Attention: General Manager
Facsimile: 011-41-21-863-5311
With a copy to Chief Financial Officer,
Logitech Inc.
with copy to: Wilson Sonsini Goodrich & Rosati, a
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
U.S.A.
Attention: Alan K. Austin
Facsimile: (650) 493-6811
To Storm at: Storm Technology, Inc.
1395 Charleston Road
Mountain View, CA 94043
Facsimile: (650) 691-6699
with copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
29
<PAGE>
Attention: James M. Koshland
Facsimile: (415) 327-3699
9.4 Entire Agreement and Modification. This Agreement (including
---------------------------------
its Exhibits, the Ancillary Agreements, the NDA and the letter agreement between
Storm and Logitech Swiss dated November 26, 1997) constitutes the entire
agreement of Storm and Logitech relating to the purchase and sale of the Assets
and supersedes any and all prior and contemporaneous negotiations,
correspondence, understandings, letters of intent and agreements in principle
between them, whether written or oral, relating to that subject matter. This
Agreement (including its Exhibits) may only be amended by a written instrument
signed by Storm and Logitech.
9.5 Construction of Agreement. This Agreement has been negotiated by
-------------------------
the respective parties and their attorneys, and its language shall not be
construed for or against any party. The titles and headings in this Agreement
are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole.
9.6 Relationship of the Parties. Nothing contained in this Agreement
---------------------------
shall be construed as creating any agency, partnership, or other form of joint
enterprise between the parties. The relationship between the parties shall at
all times be that of independent contractors. Neither party shall have authority
to contract for or bind the other in any manner whatsoever. This Agreement
confers no rights upon either party except those expressly granted herein.
9.7 Waiver. Delay or failure to exercise any right or remedy under
------
this Agreement shall not impair such right or remedy or be construed as a waiver
thereof or as acquiescence in a default. Waiver of any breach or failure of any
term or condition of this Agreement shall not be construed as a waiver of any
subsequent breach or failure of the same term or condition or a waiver of any
other term or condition of this Agreement. All waivers must be in writing signed
by the party to be charged.
9.8 Venue for Dispute Resolution. Any suit or action at law or in
----------------------------
equity initiated by either party to enforce or interpret this Agreement will be
brought in a court of competent jurisdiction in Santa Clara County, California.
9.9 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal substantive laws of the State of California,
without regard to its choice of law principles and excluding the United Nations
Convention on Contracts for the International Sale of Goods and any legislation
implementing such Convention, if otherwise applicable.
9.10 Severability. The provisions of this Agreement are severable,
------------
and if any one or more such provisions shall be
30
<PAGE>
determined to be invalid, illegal or unenforceable, in whole or in part, the
validity, legality and enforceability of any of the remaining provisions or
portions thereof shall not in any way be affected or impaired thereby and shall
nevertheless be binding between the parties. Any such invalid, illegal or
unenforceable provision or portion thereof shall be changed and interpreted so
as to best accomplish the objectives of such provision or portion thereof within
the limits of applicable law.
9.11 Parties in Interest. Nothing contained in this Agreement, whether
-------------------
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any person other than the parties to it and their
respective successors and permitted assigns, nor is anything contained in this
Agreement intended to relieve or discharge the obligation or liability of any
third person to any party to this Agreement, nor shall any provision of this
Agreement give any third person any right of subrogation or action over against
any party to this Agreement.
9.12 Further Instruments. Each party agrees to execute and deliver
-------------------
such further instruments and documents, and to take such further actions, as may
be reasonably requested by the other after the Closing to carry out the purposes
of this Agreement.
9.13 Absence of Third Party Beneficiary Rights. No provisions of this
-----------------------------------------
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
9.14 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
"Logitech US": "Storm":
Logitech Inc. Storm Technology, Inc.
By: By:
--------------------------- ---------------------------
Title: Title:
------------------------- -------------------------
31
<PAGE>
"Logitech Asia"
Logitech Far East Ltd.
By:
----------------------------
Title:
-------------------------
"Logitech Swiss"
Logitech S.A.
By:
----------------------------
Title:
-------------------------
"Logitech Trading"
Logitech Trading S.A.
By:
----------------------------
Title:
-------------------------
32
<PAGE>
Exhibit A
---------
Assets
<PAGE>
Exhibit B
---------
Joint Marketing Agreement
<PAGE>
Exhibit C
---------
Manufacturing Agreement
<PAGE>
Exhibit D-1
-----------
Closing Note
<PAGE>
Exhibit D-2
-----------
Monthly Note
<PAGE>
Exhibit D-3
-----------
Quarterly Note
<PAGE>
Exhibit E
---------
Logitech's Disclosure Schedule
<PAGE>
Exhibit F
---------
Storm's Disclosure Schedule
<PAGE>
Exhibit G
---------
Bill of Sale
<PAGE>
Exhibit H
---------
Assignment Agreement
<PAGE>
Exhibit 2.3
JOINT SALES AND MARKETING AGREEMENT
THIS JOINT SALES AND MARKETING AGREEMENT (the "Agreement"), effective as of
January 1, 1998 (the "Effective Date"), is entered into between STORM
TECHNOLOGY, INC. ("Storm"), a Delaware corporation with a principal place of
business at 1395 Charleston Road, Mountain View, California 94043, and LOGITECH
TRADING S.A. ("Logitech Trading"), a Swiss corporation with a principal place of
business at Moulin du Choc, CH-1122, Romanel-sur-Morges, Switzerland.
RECITALS
--------
A. This Agreement is an Ancillary Agreement as defined in the Asset
Purchase Agreement among Storm, Logitech Trading and its affiliates, pursuant to
which Storm is acquiring from Logitech Trading and its affiliates certain
tangible and intangible assets related to certain sheet-fed and flatbed scanning
products developed and/or distributed by Logitech Trading and its affiliates.
B. Storm desires to have Logitech Trading distribute, and Logitech
Trading is willing to distribute on Storm's behalf, the products acquired by
Storm pursuant to the Asset Purchase Agreement.
C. Storm also desires to have Logitech Trading distribute, and Logitech
Trading is willing to distribute on Storm's behalf, certain other image scanning
and image capturing products which have previously been developed and/or
distributed by Storm.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms have
-----------
the meanings set forth in this Section 1.
1.1 "Acquired Products" shall mean those sheet-fed and flatbed
scanning products set forth on Exhibit A acquired by Storm pursuant to the Asset
---------
Purchase Agreement.
1.2 "Acquired Trademarks" shall mean those trademarks, service marks,
trade names and logos set forth on Exhibit B acquired by Storm pursuant to the
---------
Asset Purchase Agreement.
1.3 "Asset Purchase Agreement" shall refer to the Agreement for
Purchase and Sale of Assets executed by and among Storm, Logitech Trading and
its affiliates.
1.4 "Confidential Information" shall mean the technical information,
know-how, technology, formulae, system designs, prototypes, ideas, inventions,
improvements,
<PAGE>
layouts, software, concepts, techniques, discoveries, data, files, supplier and
customer identities and lists, accounting records, forecasts, project management
plans, marketing plans and business plans relating to this Agreement to which a
party has proprietary rights, and all copies and tangible embodiments thereof
(in whatever form or medium) conspicuously indicated as proprietary information,
confidential information or a substantially similar legend that are not
generally known by the public. Information communicated orally shall be
considered Confidential Information if such information is designated as being
confidential or proprietary at the time of disclosure and is confirmed in
writing to the other party to be confidential within thirty (30) days of initial
disclosure. Any of the foregoing shall not be considered Confidential
Information if the party receiving it can show that it: (i) has become publicly
known through no wrongful act or breach of any obligation of confidentiality on
the receiving party's or any third party's part; (ii) was rightfully received by
the receiving party from a third party not in violation of any contractual,
legal or fiduciary obligation by such third party; (iii) was approved for
release by written authorization by the party having rights therein; or (iv) was
developed by the receiving party independently of the party having rights
therein without breach of any confidentiality or other obligations.
1.5 "Documentation" shall mean the user manuals, guides or other
written instructions generally made available with the Products to end users.
"Localized Documentation" shall mean the Documentation described in Section 3
below.
1.6 "Exclusive Territory" shall mean the territory consisting of
those countries set forth on Exhibit C.
---------
1.7 "Inventory" shall mean all inventory of the Acquired Products
owned by or within the control of Logitech Trading or its affiliates as of the
Effective Date as more fully described on Schedule 1, with such schedule to be
----------
completed within seven days following the Effective Date and attached to this
Agreement.
1.8 "Logitech Branded Products" shall mean (i) Exclusive Territory
Inventory (as defined in Section 4.1 below), (ii) units of the "PageScan USB"
Product manufactured by Logitech Far East Ltd. for Storm pursuant to that
certain Manufacturing Services Agreement of even date herewith between Storm and
Logitech Far East Ltd. and (iii) units of the "Freescan" Product manufactured by
Omron Corporation for Storm; provided that, in the case of Product units
described in (ii) and (iii) above, the design and specifications for such units
have not changed since the Effective Date.
1.9 "Net Sales" means the invoice price charged by Logitech Trading
and its affiliates on sales of Products to non-affiliate third parties less (i)
freight, packaging, handling, insurance and other shipment expenses; (ii) sales,
use, value-added, excise and other taxes; (iii) amounts deducted pursuant to the
promotional funding program described in Section 6.3 below; (iv) customs duties
and other governmental charges; (v) rebates, returns, credits and the like; and
(vi) reasonable reserves for uncollectible accounts.
1.10 "Products" means Acquired Products and Storm Products.
-2-
<PAGE>
1.11 "Storm Products" shall mean all image scanning and image
capturing products developed and/or distributed by or on behalf of Storm as of
the date hereof or during the term of this Agreement, including those set forth
on Exhibit A.
---------
1.12 "Storm Trademarks" means the Storm trademarks, service marks,
trade names, and logos set forth on Exhibit B.
---------
1.13 "Trademarks" means the Storm Trademarks and the Acquired
Trademarks.
2. Appointment.
-----------
2.1 Products.
--------
(a) Subject to the terms and conditions of this Agreement
(including but not limited to Section 4), effective as of the Effective Date,
Storm hereby appoints Logitech Trading as Storm's (i) exclusive distributor of
Products in the Exclusive Territory, and (ii) nonexclusive distributor of
Products in the rest of the world, except for the United States and Canada. For
purposes of this Agreement "exclusive" shall mean that Storm agrees not to
distribute directly in the Exclusive Territory, or to appoint or otherwise
authorize any third party, to sell or distribute in the Exclusive Territory or
to sell Products to any party that Storm knows or has reason to know may
directly or indirectly resell the Products in the Exclusive Territory. Logitech
Trading may appoint one or more third parties to act as a subdistributor, dealer
or reseller with respect to the Products; provided, however that each such
appointment is pursuant to a written agreement or other arrangement which
protects Storm's proprietary rights in the Products through means that are
customary and ordinary in the usual course of Logitech Trading's business and
consistent with industry practices. Notwithstanding any other provision of this
Agreement, during the term of this Agreement, Logitech Trading shall have the
right to distribute Logitech Branded Products to NEC Corporation in Japan and
Logitech Trading shall pay Storm a royalty of Five Dollars ($5.00) for each unit
of such Logitech Branded Products purchased by NEC Corporation.
(b) Notwithstanding the foregoing, Storm may authorize
original equipment manufacturers to sell Products bundled with computer systems,
where the Products may not be purchased by the customer separately from the
system and where the Product is not an optional accessory (i.e., the Product is
sold with, and only with, the computer system, and the computer system is not
sold without the Product).
2.2 Restrictions. All copies of the Documentation and Localized
------------
Documentation permitted to be made hereunder shall include all trademark,
copyright and other proprietary notices contained in the original.
3. Localizations and Translations. Storm shall use its best efforts to
------------------------------
promptly provide Logitech Trading with localized documentation ("Localized
Documentation") and localized packaging for the Storm Products for the following
languages: German, French, Italian,
-3-
<PAGE>
Spanish, Dutch, and if agreed, one Scandinavian language. Logitech Trading
reserves the right to review and approve the completed Localized Documentation,
including packaging. In the event Logitech Trading elects to exercise such
right, Logitech Trading shall notify Storm of such election, and shall submit a
written approval or rejection to Storm within thirty (30) days after Logitech
Trading reviews the Localized Documentation. Approval shall be based on
conformance of the documentation to the United States version of the
Documentation. Approval by Logitech Trading will not be arbitrarily or
unreasonably withheld. If Logitech Trading rejects the Localized Documentation,
Logitech Trading will provide Storm with written notice of the reason for the
rejection and permit Storm to redeliver the Localized Documentation. Logitech
Trading's waiver of the foregoing right to review and approve shall not prevent
Logitech Trading from subsequently exercising the foregoing right. Storm will
own all right, title and interest in and to the Localized Documentation.
4. Inventory.
---------
4.1 Territory Inventory. Logitech Trading's distribution of Products
-------------------
hereunder shall include that Inventory held by or committed to be delivered to
Logitech Trading, Netherlands Branch as of December 29, 1997 (the "Exclusive
Territory Inventory"). Through December 31, 1998, such Exclusive Territory
Inventory shall be distributed as Logitech Branded Products.
4.2 Non-Territory Inventory. It is understood that Logitech Trading
-----------------------
and its affiliates (solely for the purposes of this Section 4.2, "Logitech")
have retained title to all Inventory other than the Exclusive Territory
Inventory ("Other Inventory"). The parties agree that Logitech may distribute
such Other Inventory in the U.S. and Canada as Logitech Branded Products through
February 15, 1998, and any other country through January 31, 1998, and retain
for their own account all proceeds from sales of all such Other Inventory.
Logitech shall pay Storm twenty percent (20%) of Net Sales of any Other
Inventory that remains in inventory of Logitech's resellers in the U.S. and
Canada as of April 1, 1998, as evidenced by "sales out" reports received by
Logitech from such resellers. For any Other Inventory that is not in inventory
of Logitech's Resellers in the U.S. and Canada as of April 1, 1998, and of
Resellers in any other country as of April 1, 1998, Logitech may at its option
either (i) distribute such remaining Other Inventory through liquidation
channels, up to a maximum of five thousand (5,000) units, or (ii) destroy (or
make a charitable donation of) such remaining Other Inventory; it being
understood that the quantities described in (i) shall not be deemed to be in
inventory of Logitech's resellers, and that no payment shall be required to be
made to Storm under this Section 4.2 with respect to any quantities described in
(i) or (ii) above. Any units of Product sold directly or indirectly through a
retailer with more than two (2) store locations shall be deemed not to have been
sold through a liquidation channel.
5. Services by Logitech Trading. Logitech Trading agrees to use its
----------------------------
reasonable commercial efforts in the promotion, marketing and distribution of
the Products pursuant to this Agreement. Storm acknowledges, however, that
Logitech Trading does not warrant or covenant that any minimum sales of the
Products will be achieved. Notwithstanding the foregoing, Logitech Trading
agrees to provide the following:
-4-
<PAGE>
(i) Facilities. Logitech Trading shall maintain its own office
----------
space and facilities with the entire costs of these items and activities to be
borne solely by Logitech Trading.
(ii) Personnel. Logitech Trading shall provide and maintain, at
---------
its own expense, a competent and trained sales organization for the sales of the
Products in the Exclusive Territory.
(iii) Forecasts. By the fifteenth day of each month, Logitech
---------
Trading will provide Storm with written non-binding rolling six (6) month
forecasts ("Forecasts") of its Product requirements, itemized on a Product by
Product basis.
(iv) Activity Reports. On a monthly basis during the term of
----------------
this Agreement, Logitech Trading will provide Storm with a written summary of
its sales activities and other activities and efforts with respect to the
Products conducted during the reporting period.
5.1 Warranties. Logitech Trading shall have no right or authority,
----------
express or implied, directly or indirectly, to alter, enlarge or limit the
representations or guarantees expressly contained in Storm's most current
written Product warranty as distributed by Storm for the applicable Product.
Storm may, in its sole discretion, amend the Product warranty from time to time
upon thirty (30) days prior written notice to Logitech Trading. It is
understood that, unless so modified by Storm, the warranty for the Acquired
Products shall be the warranty offered by Logitech Trading for the Acquired
Products prior to the Effective Date. Logitech Trading will accept returns of
Products pursuant to Section 14.2 below.
6. Marketing.
---------
6.1 Efforts by Logitech Trading. Logitech Trading agrees to include
---------------------------
in all advertising of the Storm Products all applicable copyright and trademark
notices of Storm as they appear on or in the Storm Products. Storm, at its
expense, shall periodically provide Logitech Trading with reasonable quantities
of advertising and promotional materials, as requested by Logitech Trading, for
use in Logitech Trading's efforts to market the Products. Such materials shall
be localized by Logitech Trading, at Logitech Trading's expense.
6.2 Efforts by Storm. Storm agrees to use commercially reasonable
----------------
efforts to advertise, market and promote the Products. Storm agrees that it will
expend in the Exclusive Territory at least two percent (2.0%) of Net Sales of
the Products towards such efforts in the period from the Effective Date through
December 31, 1998; provided that regardless of the amount of Net Sales, in no
event shall Storm expend less than Five Hundred Thousand Dollars ($500,000) for
such purposes in the Exclusive Territory during such period. Storm shall consult
with Logitech Trading with respect to how the foregoing amounts are spent.
Logitech Trading shall have the same rights to audit Storm's financial records
to verify the foregoing minimum expenditures as are granted to Storm pursuant to
Section 11.4 below.
-5-
<PAGE>
6.3 Promotional Funding. Logitech Trading shall include the Products
-------------------
in its currently existing promotional funding program. Logitech Trading shall
have the right to expend funds received from the sale of Products hereunder
according to the terms of such program; provided that the amount of such expense
to be deducted from Net Sales shall not exceed five percent (5%) of Net Sales
(in the aggregate) over the term of this Agreement. Logitech agrees to provide
Storm on a periodic basis with information relating to such promotional funding.
Any such funds accrued by Logitech Trading during November and December of 1998
shall be paid to Storm pursuant to the Final Accounting (as defined in Section
17.2 below).
7. Trademarks.
----------
7.1 Grant. Storm hereby grants to Logitech Trading a nonexclusive,
-----
limited license (including the right to sublicense through multiple tiers of
subdistributors) to use the Trademarks solely in Logitech Trading's
distribution, advertising and promotion of the Products and subject to the
requirements of this Section 7. Logitech Trading's use shall be in accordance
with Storm's policies regarding advertising and trademark usage as established
from time to time and communicated to Logitech Trading with reasonable advance
notice. Logitech Trading further agrees not to affix any Trademark to products
other than the genuine Products.
7.2 Ownership. Logitech Trading agrees that whenever the Trademarks
---------
are used on packaging, in advertising or in any other manner, for Storm Products
they shall clearly indicate Storm as the trademark owner. Logitech Trading shall
not do or cause to be done any act or anything contesting or in any way
impairing or reducing Storm's right, title and interest in the Trademarks.
Logitech Trading understands and agrees that use of the Trademarks in connection
with the Products shall not create any right, title or interest in or to the use
of the Trademarks and that all such uses and goodwill associated with the
Trademarks will inure to the benefit of Storm.
7.3 Restriction. It is understood that Storm has acquired no rights
-----------
whatsoever in the Logitech Trading brand name, and, without limiting the
foregoing, Storm may not sell any Products under the Logitech Trading brand name
in any country, directly or indirectly.
7.4 Quality Control. Logitech Trading agrees to use reasonable
---------------
efforts to cooperate with Storm in facilitating Storm's monitoring and control
of the nature and quality of the products and services provided under the
Trademarks, and to supply Storm with specimens of use of the Trademarks upon
request.
7.5 Foreign Registrations. Logitech Trading shall, upon Storm's
---------------------
reasonable request and at Storm's sole expense, provide Storm with any
assistance that may be required for Storm to secure or maintain Trademark rights
in a country in which Logitech Trading is distributing or marketing Products.
8. Support. Unless the parties agree otherwise in writing, Logitech
-------
Trading shall provide or shall ensure that its designated support agents
provide, technical support for all Logitech Branded Products (including Other
Inventory sold pursuant to Section 4.2) sold by
-6-
<PAGE>
Logitech Trading hereunder, and Storm will provide, or will ensure that its
designated support agents provide, all technical support for all other Products,
regardless of the territory in which such Products are sold. Storm shall set up
and maintain local telephone support numbers for such Products in those
countries in the Exclusive Territory in which Storm currently maintains local
telephone support numbers for its other products. Logitech Trading shall be
compensated for such support services as provided in Section 11.1 below. At
Storm's request, Logitech Trading shall use reasonable efforts to introduce
Storm to Logitech Trading's agents that provide technical support.
9. Orders and Shipments.
--------------------
9.1 Order Procedure. The terms and conditions of this Agreement
---------------
shall apply to all orders for the Products and supersede any different or
additional terms on purchase orders, order acknowledgments, invoices or other
preprinted forms of the parties. Logitech Trading shall issue purchase orders
for Products at least twenty-four hours before the shipment date. All purchase
orders submitted within the foregoing time period for Products that are within
the Forecast shall be accepted by Storm. Storm shall use its best efforts to
ship Products by delivery dates stated on purchase orders submitted in
accordance with this Section 9.1. Notwithstanding the foregoing, however, in the
event that Storm is unable to supply the worldwide requirements of Products,
Storm shall not be deemed in breach of this Section 9.1 for failure to ship any
quantities as a result of such shortage, to the extent that Storm uses its best
efforts to produce the required quantities as soon as possible and provided that
Storm allocates to Logitech Trading at least one-third (1/3) of all supplies of
such Products continuously throughout the period of the shortage.
9.2 Storage/Shipment/Risk of Loss/Title.
-----------------------------------
(a) Products delivered pursuant to this Agreement shall be
assembled and suitably packed for shipment by Storm. Storm shall be responsible
for storing Products at a warehouse (the "Warehouse") located within close
proximity to the Logitech Trading distribution facility in the Netherlands. All
freight, insurance and other shipping expenses shall be paid by Storm until
Product arrives at the Warehouse. At Storm's request, Logitech Trading shall use
reasonable efforts to introduce Storm to its subcontractors that provide
packaging, warehousing and fulfillment services. Risk of loss on Products
shipped by Storm to Logitech Trading in accordance with Section 9.1 shall pass
to Logitech Trading upon delivery by Storm to the carrier agent from the
Warehouse for shipment pursuant to Logitech Trading's purchase order provided in
accordance with Section 9.1 above.
(b) If the parties mutually agree that Logitech shall be
responsible for managing the logistics of transporting Products from the port at
Nijmegan, the Netherlands to the Warehouse and managing such Products at the
Warehouse, Logitech shall do so only until December 31, 1998 at a charge to
Storm of one and one-half percent (1.5%) of Net Sales of the Products so
transported; provided that the foregoing charge does not include transportation
charges with respect to such Products (which charges remain the responsibility
of Storm); and
-7-
<PAGE>
provided further that Storm shall be responsible for any and all costs and
expenses associated with reverse logistics related to the Products.
(c) Logitech Trading will retain a security interest in, and
Storm hereby grants Logitech Trading a security interest in, the Exclusive
Territory Inventory until Storm has paid for such Exclusive Territory Inventory
in full pursuant to the terms of Section 11 below. Storm agrees to promptly
execute any documents requested by Logitech Trading to perfect and protect such
security interest.
9.3 Stock Balancing. Notwithstanding anything herein to the
---------------
contrary, Logitech Trading may return any Products (other than Inventory) which
are in their original unopened packaging to Storm for full credit (unless credit
has already been given pursuant to Section 11.1(c) below). Storm will pay all
transportation charges for returned Product.
10. Quality Control. Storm shall inspect all Products (excluding
---------------
Inventory) provided to Logitech Trading hereunder in accordance with Storm's
customary quality control process. If Logitech Trading requests further
inspections, Storm shall perform such further inspections at Logitech Trading's
expense. Storm shall provide Logitech Trading, as reasonably requested, copies
of reports reflecting the results of such inspections. Storm shall not provide
Logitech Trading with any Products that have not passed such process.
11. Payment Terms.
-------------
11.1 Prices.
------
(a) Exclusive Territory Inventory. Storm will pay for Exclusive
-----------------------------
Territory Inventory as follows: for each unit of Exclusive Territory Inventory
sold by Logitech Trading, Logitech Trading will retain (i) eighty percent (80%)
of Net Sales for such unit (eighty-six percent (86%) in the case of a Dexxa
Flatbed Product as described in Exhibit A), plus (ii) three percent (3%) of Net
---------
Sales for such unit for selling expenses, plus (iii) three percent (3%) of Net
Sales for such unit for technical support; Logitech Trading will remit the
remainder of fourteen percent (14%) (eight percent (8%) in the case of a Dexxa
Flatbed Product as described in Exhibit A) to Storm. For example, if Logitech
---------
Trading sells a unit of Exclusive Territory Inventory (which is a non-Dexxa
Flatbed Product) for a Net Sales price of $100, Logitech Trading will keep 80%
or $80, plus 3% or $3, plus $3 and will remit to Storm $14. Logitech Trading may
determine the selling price of the Inventory in its sole discretion.
(b) Non-Inventory Products. The price to be paid by Logitech
----------------------
Trading to Storm for each Storm Product and each additional unit of Acquired
Products purchased by Logitech Trading under Section 9.1 above (i.e.,
distributed by Logitech Trading after the distribution of Inventory pursuant to
Section 4 above) (collectively, "Non-Inventory Products"), shall be equal to the
Net Sales price for such Non-Inventory Product less (x) three percent (3%) of
Net Sales for such unit for selling expenses, and (y) in the case of Logitech
Branded Products, three percent (3%) of Net Sales for such unit for technical
support for such Logitech Branded Products, and (z) any other amount mutually
agreed to by the parties for additional services
-8-
<PAGE>
provided by Logitech Trading (e.g. technical support for Products other than
Logitech Branded Products). The actual prices to be paid to Storm by Logitech
Trading for each such Non-Inventory Product shall be determined and adjusted as
follows:
(i) Prior to the date Logitech Trading first orders such a Non-
Inventory Product hereunder for commercial sale, and prior to the beginning of
each calendar quarter thereafter (or as often as the parties otherwise agree),
Storm and Logitech Trading shall agree on a preliminary price at which such Non-
Inventory Product shall be delivered by Storm to Logitech Trading. Such price
shall be equal to (A) Logitech Trading's best estimate of its Net Sales price
for such Non-Inventory Product, less (B) the amounts described in (x), (y) and
(z) of this subsection (b) above (as applicable).
(ii) Promptly following the end of each calendar quarter in
which the Non-Inventory Products are distributed hereunder, the actual price for
each such Non-Inventory Product sold by Logitech Trading during such quarter
shall be determined retroactively, based on the actual Net Sales price of such
Non-Inventory Product during such quarter. Any difference between the actual
charges paid by Logitech Trading to Storm pursuant to Subsection (b)(i) above
and the charges that would have been payable, if the revised price calculated
under this Section b(ii) had been in effect, shall be the "Adjustment Amount."
Unless the parties agree otherwise, the Adjustment Amount due from one party to
the other party shall be paid in cash within thirty (30) days after the end of
such quarter.
(iii) In determining the Net Sales of Non-Inventory Products
under subsection (b)(ii) above, the price paid by Logitech Trading under
subsection (b)(i) above for samples and other reasonable demonstration
quantities that are delivered to customers other than in bona fide commercial
sales at full price during such quarter shall be deducted from the Net Sales in
such quarter.
(c) Subsequent Adjustments. It is understood that following the
----------------------
reconciliation of the transfer price under Section 11.1(b)(ii) above, further
adjustments may subsequently be made to Net Sales of Products sold in a prior
quarter, in accordance with the definition of "Net Sales" in Section 1.10 above.
Such adjustments may include, but are not limited to, credits for price
decreases given by Logitech Trading to third parties in accordance with Logitech
Trading's price protection policies and returns of Products. Any such
adjustments shall be deducted from the calculation of Net Sales under Section
11.1(b)(ii) for the quarter in which such adjustments accrue. Any amounts to be
deducted from Net Sales in a quarter that are not fully offset against Net Sales
in such quarter may be carried forward as a deduction to Net Sales in subsequent
quarters, or at Logitech Trading's election, any unused adjustments shall be
paid in cash by Storm to Logitech Trading within thirty (30) days after
receiving from Logitech Trading an invoice for such unused adjustments.
11.2 Taxes. Logitech Trading shall pay any sales, use or other similar
-----
taxes (including value added taxes) which are levied or based upon sales of
Products to or by Logitech Trading under Sections 4.2 and 11.1 of this
Agreement, except for taxes based on Storm's net income. If Logitech Trading is
required by law to withhold taxes from any payment to be made to
-9-
<PAGE>
Storm hereunder, Logitech Trading shall make the required deduction or
withholding and pay the full amount deducted or withheld to the relevant
taxation or other authority in accordance with applicable law. In such case,
Logitech Trading shall take all actions reasonably requested by Storm that are
necessary to ensure the lowest authorized percentage under applicable treaties
for the avoidance of double taxation and Logitech Trading shall furnish Storm
with a certified tax receipt immediately upon payment of such tax.
11.3 Payment. Unless otherwise specified in this Agreement, all
-------
payments hereunder shall be due by the thirtieth day of each month for payments
that accrued in the preceding month. All payments will be in U. S. dollars.
11.4 Reporting and Audit. All payments due by Logitech Trading to
-------------------
Storm shall be accompanied by a written statement reflecting the number of units
shipped and the calculation of the payments due to Storm therefor. Upon
reasonable prior written notice to Logitech Trading, Storm, through an
independent certified accountant reasonably acceptable to Logitech Trading, may
audit all of Logitech Trading's financial, distribution and other records
directly related to payments due to Storm hereunder. Such audit right shall be
exercisable no more than once per year, during regular business hours, in a
manner so as to not unreasonably interfere with Logitech Trading's usual conduct
of business, at Storm's own cost and expense and subject to the execution of a
confidentiality agreement in a form mutually agreeable to such accountant and
Logitech Trading. In the event any such audit reveals a deficiency in payments
due to Storm, Logitech Trading shall pay the amount of such deficiency within
thirty (30) days after completion of the audit. Furthermore, in the event any
such audit reveals a deficiency in payment due to Storm in excess of ten percent
(10%) of the actual amount due for the period audited, Logitech Trading shall
also pay the cost and expense of such audit.
12. Proprietary Rights. Except as expressly provided for in this
------------------
Agreement, Logitech Trading is not granted any rights to patents, copyrights,
trade secrets, trade names, trademarks (whether registered or unregistered), or
any other rights, franchises or licenses with respect to the Products or
Localized Documentation. All rights not expressly granted to Logitech Trading
hereunder are reserved to Storm.
13. Confidentiality.
---------------
13.1 Confidentiality of Agreement. Each party covenants to the other
----------------------------
party that it will not in any manner disclose or divulge the contents of the
Agreement or any of the material terms and conditions hereof to any third party,
except (i) as the other party may expressly consent in advance in writing, or
(ii) as may be required in obtaining any necessary governmental or regulatory
approval for the transactions contemplated hereby, or (iii) as may otherwise be
required by any applicable law, or (iv) to such party's legal, financial or
other business advisors or potential investors.
13.2 Treatment of Confidential Information. For a period of five (5)
-------------------------------------
years after receipt of any Confidential Information, each party shall keep and
maintain the other party's Confidential Information in strictest confidence and,
except as otherwise expressly provided
-10-
<PAGE>
herein, each party: (i) shall not use the other party's Confidential
Information, except as required to perform its obligations under this Agreement;
and (ii) shall not provide or otherwise make available, whether directly or
indirectly, any of the other party's Confidential Information to any party other
than: (A) to employees and officers of a party who require access to such
Confidential Information for performance of their duties and who have signed a
written nondisclosure agreement including the requirement to protect third party
proprietary information, or (B) to permitted sublicensees permitted under this
Agreement who shall enter into a nondisclosure agreement to protect Confidential
Information on terms no less restrictive than required in this Agreement, or (C)
as required by any applicable law, in response to a valid order by a court or
other governmental body or necessary to establish the rights of either party
under this Agreement; provided, however, that the party disclosing such
information shall provide prompt written notice thereof to the other party to
enable it to seek a protective order or otherwise prevent such disclosure. Each
party shall take all reasonable actions (by instruction, agreement or otherwise)
necessary to maintain the confidentiality of the other party's Confidential
Information. Notwithstanding the foregoing, each party shall be required to
protect the other party's Confidential Information consistent with the same
protections afforded its own Confidential Information in the ordinary conduct of
its business but in no event with less than reasonable care.
13.3 Return or Destruction. Upon termination of this Agreement, or
---------------------
at any other time if requested by a party, each party promptly shall return to
the other party all Confidential Information received by it or its
representatives by such other party unless the party provides assurances
reasonably satisfactory to such other party that such Confidential Information
has been destroyed.
14. Acceptance and Warranty.
-----------------------
14.1 Product Covenant. Storm agrees to ship to Logitech Trading only
----------------
Products that conform to their published specifications.
14.2 Product Warranty. Any warranty for the Products (excluding
----------------
Logitech Branded Products) shall run directly from Storm to the customer. Any
warranty for the Logitech Branded Products shall run directly from Logitech
Trading to the customer. Logitech Trading will be responsible for all costs of
shipping associated with return of Inventory units pursuant to the warranty and
all return shipping costs of repaired or replacement Inventory units. Storm will
be responsible for all costs of shipping associated with return of all Products
(excluding Inventory) pursuant to the warranty and all return shipping costs of
repaired or replacement Products. Storm hereby grants Logitech Trading the
authority to accept returned Products from customers. Prior to returning any
defective Products to Storm which Logitech Trading receives from its customers,
Logitech Trading shall obtain a Return Materials Authorization ("RMA") number
from Storm. Storm shall promptly issue such RMA numbers following notification
of a warranty claim by Logitech Trading.
14.3 Disclaimer. EXCEPT AS SET FORTH IN THIS SECTION 14, EACH PARTY
----------
MAKES NO WARRANTIES RELATING TO THE PRODUCTS, EXPRESSED,
-11-
<PAGE>
IMPLIED OR STATUTORY, AND EACH PARTY EXPRESSLY EXCLUDES ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY.
15. Indemnification.
---------------
15.1 Intellectual Property Indemnity by Storm. Subject to Section
----------------------------------------
15.4 below and Section 7.3 of the Asset Purchase Agreement, Storm agrees to
defend, indemnify and hold harmless Logitech Trading, its officers, directors,
employees and sublicensees against any claims, demands, damages or actions
(including Logitech Trading's reasonable attorneys' fees and costs) arising out
of an actual or alleged infringement by the Products (excluding Inventory) of
any copyrights, patent rights or trademarks or misappropriation of any trade
secret. Upon notice of an alleged infringement or if in Storm's opinion such a
claim is likely, Storm shall have the right, at its option, to obtain the right
to continue the distribution of such Products, substitute other functionally
equivalent products or modify such Products so that they are no longer
infringing. In the event that none of the above options are reasonably available
in Storm's opinion, Logitech Trading may terminate this Agreement. The foregoing
indemnity shall not apply to any infringement claim arising from any
modification of the Products not made by or for Storm or authorized by Storm or
use of such Products in conjunction with other software or hardware where such
infringement would not have occurred but for such use. THE FOREGOING STATES
LOGITECH TRADING'S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO CLAIMS OF
INFRINGEMENT OF THIRD PARTY PROPRIETARY RIGHTS OF ANY KIND. STORM DISCLAIMS ANY
IMPLIED WARRANTY OF NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
15.2 Warranty Indemnity by Storm. Subject to Section 15.4 below, and
---------------------------
except for claims for which Logitech Trading must indemnify Storm pursuant to
Section 15.3 below, Storm agrees to defend, indemnify and hold harmless Logitech
Trading, its officers, directors, employees and agents from any claims, demands,
damages or actions (including Logitech Trading's reasonable attorneys' fees and
costs) made against Logitech Trading as a result of any claimed breach of
warranty with respect to the Products (excluding Inventory).
15.3 Indemnity by Logitech Trading. Subject to Section 15.4 below,
-----------------------------
Logitech Trading agrees to defend, indemnify and hold harmless Storm, its
officers, directors, employees and agents from any claims, demands, damages or
actions (including Storm's reasonable attorneys' fees and costs) made against
Storm as a result of any claimed breach of warranty with respect to Inventory or
any claims, warranties or representations made by Logitech Trading or Logitech
Trading's employees or agents with respect to the Products which differ from
those authorized by Storm.
15.4 Indemnification Procedure. The above indemnities shall be
-------------------------
subject to the following procedures:
(i) The party receiving the indemnity ("Indemnitee")
will promptly notify the party with the indemnity obligation ("Indemnitor") of
any third party claim,
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<PAGE>
action or demand after the Indemnitee receives notice thereof; provided,
however, that failure or delay to provide such notification shall not reduce or
otherwise affect the obligations of the Indemnitor, except to the extent that
such failure or delay shall have materially prejudiced the Indemnitor's ability
to defend against, settle or satisfy such claim or materially increase the cost
thereof.
(ii) The Indemnitor, at its expense, shall pay,
compromise, settle or otherwise dispose of any such claim; provided, however,
that no compromise, settlement or disposal of such claim shall be entered into
without the prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld.
(iii) Indemnitor shall have sole control over the defense
and settlement of any such claim but in any action defended by Indemnitor,
Indemnitee shall at all times have the right to employ its own counsel;
provided, however that the fees and expenses of such counsel shall be
Indemnitee's own expense unless the employment of such counsel shall have been
authorized by Indemnitor in connection with the defense of such claims. In such
event, such fees and expenses shall be borne by Indemnitor.
16. Limitation of Liability. NEITHER PARTY SHALL BE LIABLE FOR ANY LOSS
-----------------------
OF USE, INTERRUPTION OF BUSINESS OR ANY SPECIAL, INCIDENTAL, EXEMPLARY OR
CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING LOST PROFITS) REGARDLESS OF THE
FORM OF ACTION WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT
LIABILITY OR ANY OTHER LEGAL THEORY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. TO THE EXTENT THAT THE FOREGOING EXCLUSION AND
LIMITATION OF DAMAGES IS NOT ENFORCEABLE IN A JURISDICTION, SUCH EXCLUSION AND
LIMITATION SHALL BE ENFORCED TO THE MAXIMUM EXTENT POSSIBLE IN SUCH
JURISDICTION.
17. Term and Termination.
--------------------
17.1 Term. This Agreement shall commence on the Effective Date and
----
continue through December 31, 1998 unless earlier terminated pursuant to this
Section 17. Thereafter, this Agreement will renew only upon the mutual written
agreement of the parties. Storm shall notify Logitech Trading in writing six (6)
months prior to the end of the term whether or not Storm desires to renew this
Agreement. Storm shall develop and put into place a plan to provide for smooth
transition of the distribution of the Products from Logitech Trading to Storm at
least four (4) months prior to the end of the term of this Agreement.
17.2 Accounting. Within thirty (30) days following expiration or
----------
termination of this Agreement, the parties shall perform a final accounting to
determine final payments due, taking into account, among other things, product
returns, price protection, promotional funding and any further adjustments
pursuant to Section 11.1 above (the "Final Accounting"). All payments due
pursuant to the Final Accounting shall be made within thirty (30) days of the
completion of the Final Accounting.
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<PAGE>
17.3 Termination. Either party may terminate this Agreement (i) in
-----------
the event the other party fails to cure a material breach of this Agreement
within sixty (60) days after receiving written notice thereof; (ii) immediately
if the other party becomes insolvent; or (iii) immediately upon any proceeding
being commenced by or against the other party under any law providing relief to
such party as a debtor, provided that such proceeding is not dismissed after a
period of thirty (30) days. Any breach by Storm of the Asset Purchase Agreement
shall be deemed a breach of this Agreement.
17.4 Effect of Termination or Expiration.
-----------------------------------
(a) After notice of termination but prior to the effective
termination date:
(i) Storm may, only in the event termination is due to a
breach by Logitech Trading, reject all or any part of purchase orders received
from Logitech Trading and with respect to such rejected purchase orders,
Logitech Trading shall compensate Storm for Products and material inventory as
follows: (1) the contract price of all finished Products in Storm's possession,
(2) the cost of material inventory (including handling charges), whether in raw
form or work in process, and not returnable to the vendor or usable for other
customers, (3) the cost of material on order (including handling charges) which
cannot be canceled, and (4) any vendor cancellation charges incurred with
respect to material canceled or returned to the vendor. Storm shall promptly
deliver such Products and material inventory to Logitech Trading following such
payment; or
(ii) Logitech Trading may, only in the event termination
is due to a breach by Storm, at Logitech Trading's sole election (x) cancel all
or part of any purchase order submitted to Storm without penalty (despite any
acceptance thereof) or (y) require Storm's completion of any outstanding
purchase orders for Products notwithstanding that delivery dates for such
purchase orders may extend beyond the effective termination date.
(b) As of the effective termination or expiration date:
(i) Logitech Trading shall immediately cease the use of
the Trademarks and discontinue all representations that it is a Storm
distributor;
(ii) Subject to Section 11.1(c), in the event of any
termination or expiration of this Agreement, Logitech Trading shall promptly
return to Storm any Non-Inventory Products in its possession as of the effective
termination or expiration date;
(iii) Neither party shall be entitled to any compensation,
damages or payments in respect to goodwill that has been established or for any
damages on account of prospective profits or anticipated sales as a result of
any termination of this Agreement, and neither party shall be entitled to
reimbursement in any amount for any training, advertising, market development,
investments or other costs that shall have been expended by
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either party prior to termination of this Agreement, regardless of the reason
for, or method of, termination;
(iv) Logitech Trading shall deliver to Storm its
customer lists, including contact names, if any, with respect to the Products;
and
(v) All monies due either party shall automatically be
accelerated so that they are due and payable within thirty (30) days of the
effective termination or expiration date, even if longer terms had been provided
previously.
17.5 Survival. The following sections of this Agreement will survive
--------
any termination or expiration of this Agreement: 8 (Support), 11 (Payment
Terms), 12 (Proprietary Rights), 13 (Confidentiality), 14.2 (Product Warranty),
14.3 (Disclaimer), 15 (Indemnification), 16 (Limitation of Liability), 17 (Term
and Termination) and 18 (General Provisions). Notwithstanding the foregoing,
Logitech Trading's obligations under Section 8 shall only survive for a period
of six (6) months following any termination or expiration of this Agreement, at
which time Storm shall provide the same level of support for the Logitech
Branded Products as Logitech Trading had provided for such Logitech Branded
Products pursuant to Section 8 above during the term of this Agreement.
18. General Provisions.
------------------
18.1 Assignment. Neither party shall directly or indirectly sell,
----------
assign, subcontract or otherwise transfer this Agreement or any of its rights or
obligations under this Agreement, without the prior written consent of the other
parties, except as permitted in this section. Either party may assign this
Agreement to any of its wholly-owned subsidiaries, provided that such party
remains responsible for and guarantees the full performance of this Agreement
after such assignment. In addition, either party may, without the prior notice
to or written consent of the other party, assign or transfer this Agreement as
part of a corporate reorganization, consolidation, merger or sale of
substantially all of its assets, provided that the successor entity assumes all
of such party's obligations under this Agreement and agrees in writing to be
bound by the terms of this Agreement. This Agreement shall be binding upon and
inure to the benefit of the permitted successors and assigns of the parties.
18.2 Approvals. Storm shall obtain all applicable governmental
---------
approvals and Underwriters' Laboratories approval for distribution of the
Products (excluding the Inventory) hereunder.
18.3 Notices and Representatives. Any notice or reports required or
---------------------------
permitted to be given under this Agreement shall be given in writing and shall
be delivered by personal delivery, telegram, facsimile transmission or by
certified or registered mail, postage prepaid, return receipt requested. Notice
shall be deemed given upon actual receipt. Any party and any representative
designated below may, by notice to the others, change its address for receiving
such notices:
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To Logitech Trading at: Logitech Trading S.A.
Moulin du Choc CH-1122
Romanel-sur-Morges, Switzerland
Attention: General Manager
Facsimile: 011-41-21-863-5311
with copy to: Logitech Inc.
6505 Kaiser Drive
Fremont, CA 94555
Attention: Chief Financial Officer
Facsimile: (510) 795-7496
To Storm at: Storm Technology, Inc.
1395 Charleston Road
Mountain View, CA 94043
Attention: Chief Financial Officer
Facsimile: (650) 691-6699
with copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention: James M. Koshland
Facsimile: (650) 327-3699
18.4 Entire Agreement and Modification. This Agreement (including
---------------------------------
its Exhibits and Schedule) constitutes the entire agreement of Storm and
Logitech Trading relating to the distribution of Products by Logitech Trading
and supersedes any and all prior and contemporaneous negotiations,
correspondence, understandings, letters of intent and agreements in principle
between them, whether written or oral, relating to that subject matter. This
Agreement (including its Exhibits and Schedules) may only be amended by a
written instrument signed by Storm and Logitech Trading.
18.5 Construction of Agreement. This Agreement has been negotiated
-------------------------
by the respective parties and their attorneys, and its language shall not be
construed for or against any party. The titles and headings in this Agreement
are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole.
18.6 Relationship of the Parties. Nothing contained in this Agreement
---------------------------
shall be construed as creating any agency, partnership, or other form of joint
enterprise between the parties. The relationship between the parties shall at
all times be that of independent contractors. Neither party shall have authority
to contract for or bind the other in any manner whatsoever. This Agreement
confers no rights upon either party except those expressly granted herein.
18.7 Waiver. Delay or failure to exercise any right or remedy under
------
this Agreement shall not impair such right or remedy or be construed as a waiver
thereof or as acquiescence in a default. Waiver of any breach or failure of any
term or condition of this
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<PAGE>
Agreement shall not be construed as a waiver of any subsequent breach or failure
of the same term or condition or a waiver of any other term or condition of this
Agreement. All waivers must be in writing signed by the party to be charged.
18.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal substantive laws of the State of
California, without regard to its choice of law principles and excluding the
United Nations Convention on Contracts for the International Sale of Goods and
any legislation implementing such Convention, if otherwise applicable.
18.9 Severability. The provisions of this Agreement are severable,
------------
and if any one or more such provisions shall be determined to be invalid,
illegal or unenforceable, in whole or in part, the validity, legality and
enforceability of any of the remaining provisions or portions thereof shall not
in any way be affected or impaired thereby and shall nevertheless be binding
between the parties. Any such invalid, illegal or unenforceable provision or
portion thereof shall be changed and interpreted so as to best accomplish the
objectives of such provision or portion thereof within the limits of applicable
law.
18.10 Parties in Interest. Nothing contained in this Agreement,
-------------------
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any person other than the parties to it and
their respective successors and permitted assigns, nor is anything contained in
this Agreement intended to relieve or discharge the obligation or liability of
any third person to any party to this Agreement, nor shall any provision of this
Agreement give any third person any right of subrogation or action over against
any party to this Agreement.
18.11 Absence of Third Party Beneficiary Rights. No provisions of
-----------------------------------------
this Agreement are intended, nor shall be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
18.12 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18.13 Force Majeure. Neither Logitech Trading nor Storm shall be in
-------------
default of any obligations under this Agreement if such default results from
governmental acts or directives (official or unofficial), strikes (legal or
illegal), acts of God, war (declared or undeclared), insurrection, riot or civil
commotion, fires, flooding, explosions, embargoes or delays in manufacturers' or
suppliers' furnishing products, or other event of force majeure not within the
reasonable control of the party affected.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the Effective Date.
LOGITECH TRADING S.A. STORM TECHNOLOGY, INC.
By: By:
------------------------------ -------------------------------
Name: Name:
---------------------------- -----------------------------
Title: Title:
--------------------------- ----------------------------
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Exhibit A
---------
Products
Acquired Products:
- ------------------
PageScan USB
PageScan Color Parallel
Freescan
Dexxa Flatbed
Storm Products:
- --------------
EasyPhoto SmartPage Pro
EasyPhoto SmartPage
EasyPhoto Reader
EasyPhoto Drive
EasyPhoto ImageWave
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Exhibit B
---------
Trademarks
Acquired Trademarks:
- --------------------
PageScan
Freescan
Storm Trademarks:
- -----------------
EasyPhoto
SmartPage
ImageWave
EasyPhoto Reader
EasyPhoto Drive
ClearScan
PhotoDrive
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Exhibit C
---------
Exclusive Territory
West European Countries:
Switzerland, France, Germany, Ireland, Italy, UK, Netherlands, Vatican, Austria,
Liechtenstein, Benelux (Belgium and Luxembourg), Denmark, Finland, Norway,
Sweden, Iceland, Greece, Monaco, Portugal, Spain
East European Countries (including former Soviet Union):
Albania, Bulgaria, Czech Republic, Slovak Republic, Hungary, Poland, Rumania,
Yugoslavia, Bosnia Herzegovina, Slovenia, Croatia, Turkey, Russia, Uzbekistan,
Byelorussia, Macedonia, Lithuania, Estonia, Ukraine, Latvia, Kirghizistan,
Moldavia, Armenia, Tadjikistan, Kazakstan, Turkmenistan, Azerbaijan
Middle East and Africa:
Egypt, Israel, Saudi Arabia, U.A.E., Bahrain, Kuwait, Oman, Tunisia, Morocco,
Algeria, South Africa, O.A.P.I.
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Schedule 1
----------
Inventory
[To be completed following the Effective Date]
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<PAGE>
EXHIBIT 2.4
MANUFACTURING SERVICES AGREEMENT
This Manufacturing Services Agreement (this "Agreement"), effective as of
January 1, 1998 ("Effective Date"), is entered into between Storm Technology,
Inc., a Delaware corporation, having its principal place of business at 1395
Charleston Road, Mountain View, California 94043, ("Buyer"), and Logitech Far
East Ltd., a Taiwanese corporation, having its principal place of business at #2
Creation Road IV, Science Based Industrial Park, Hsinchu, Taiwan R.O.C.
("Logitech Asia").
RECITALS
--------
A. This Agreement is an Ancillary Agreement as defined in the Agreement
for the Purchase and Sale of Assets entered into among Buyer, Logitech Asia and
Logitech Asia's affiliates pursuant to which Buyer is acquiring from Logitech
Asia and its affiliates certain tangible and intangible assets related to
certain sheet-fed and flatbed scanning products developed and/or distributed by
Logitech Asia and its affiliates (the "Asset Purchase Agreement").
B. Concurrent with the execution of this Agreement, the parties are
entering into a Joint Sales and Marketing Agreement for the distribution by
Logitech Asia of the products acquired by Buyer pursuant to the Asset Purchase
Agreement and certain other image scanning and image capturing products which
have previously been developed and/or distributed by Buyer (the "Joint Sales and
Marketing Agreement").
C. Logitech Asia desires to manufacture and sell to Buyer, and Buyer
desires to purchase from Logitech Asia, a certain component and a certain
product acquired by Buyer pursuant to the Asset Purchase Agreement as specified
herein in accordance with the terms and conditions stated in this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement, the parties agree as follows:
1. DEFINITIONS
The terms in the Agreement which are capitalized have the meanings set
forth in this Section 1 or are defined elsewhere in this Agreement.
1.1 Cost. "Cost" means all direct and indirect costs incurred by Logitech
----
Asia allocable to the manufacture, testing, storage and shipment of a Product,
including, but not limited to, the costs of labor, facilities, equipment,
materials and overhead, calculated in accordance with Logitech Asia's then-
prevailing standard cost accounting procedures, and adjusted for variances to
such cost, and with respect to units or portions acquired from a vendor, the
amounts paid to the vendor plus costs associated with the acquisition from such
vendor.
1.2 PageScan USB. "PageScan USB" means that certain image scanning
------------
product distributed by Logitech, Inc. or its affiliates prior to the Closing
under the Asset Purchase
<PAGE>
Agreement under the name "PageScan USB," in the form such product was so
distributed as of the Effective Date, with such modifications as Logitech Asia
and Buyer may mutually agree upon in writing pursuant to the terms of this
Agreement.
1.3 PPA. "PPA" means that certain parallel port adapter component of the
---
image scanning product distributed by Logitech, Inc. or its affiliates prior to
the Closing under the Asset Purchase Agreement under the name "Freescan," in the
form such product was so distributed as of the Effective Date, with such
modifications as Logitech Asia and Buyer may mutually agree upon in writing
pursuant to the terms of this Agreement.
1.4 Products. "Products" means PageScan USB and the PPA.
--------
1.5 Specifications. "Specifications" means the specifications for each
--------------
Product, attached hereto as Exhibit A.
2. PURCHASE OF PRODUCTS
2.1 Precedence. Buyer may purchase Products from Logitech Asia upon the
----------
terms and conditions set forth in this Agreement. It is the intent of the
parties that this Agreement and its Exhibits shall prevail over the terms and
conditions of any purchase order, acknowledgment form or other instrument.
2.2 Term.
----
(a) PageScan USB. In the case of PageScan USB, this Agreement shall
------------
continue in full force and effect until September 30, 1998 unless earlier
terminated as provided in this Agreement. Purchase orders for PageScan USB
accepted before the expiration of this Agreement (with respect to PageScan USB)
for delivery of Products to be taken within thirty (30) days after expiration
shall be honored by Logitech Asia.
(b) PPA. In the case of the PPA, this Agreement shall continue in
---
full force and effect until (i) the parties mutually agree to terminate this
Agreement in writing, or (ii) this Agreement is terminated as provided in
Section 9 below, or (iii) the third anniversary of the Effective Date, whichever
occurs first. Notwithstanding the foregoing, Logitech Asia agrees that it will
manufacture the PPA under this Agreement as necessary for Buyer to fulfill its
obligations under the Equipment Purchase Agreement dated June 1, 1996 between
Xerox Corporation and Logitech, Inc. (as predecessor in interest to Buyer);
provided, however, that any modifications to the PPA which may be requested by
Storm for the purposes of such Equipment Purchase Agreement shall be considered
and made, if at all, pursuant to the terms of Section 2.8 below.
2.3 Purchase Price for Products. The purchase prices for each of the
---------------------------
Products purchased under this Agreement are set forth in Exhibit B. Such
purchase prices are for unpackaged Products.
-2-
<PAGE>
2.4 Forecasts. Buyer shall provide Logitech Asia, on a monthly basis, a
---------
non-binding rolling six (6) month Product by Product forecast (the "Forecast").
2.5 Quantities, Delivery Schedules and Ordering Procedures. All orders
------------------------------------------------------
for Products submitted by Buyer shall be initiated by written purchase order.
Purchase orders shall provide for a delivery date not less than sixty (60) days
from the date of the purchase order. All purchase orders that conform to this
Section 2.5 that are within the Forecast shall be accepted by Logitech Asia.
Each purchase order shall be a firm purchase order and shall be reschedulable
and cancelable only in accordance with Sections 2.6 and 2.7 of this Agreement.
Purchase orders shall state the quantities of each Product being ordered.
Logitech Asia shall use its best efforts to ship Products by the delivery dates
stated on purchase orders submitted in accordance with this Section 2.5.
Notwithstanding the foregoing, however, in the event that Logitech Asia is
unable to supply the worldwide requirements of Products, Logitech Asia shall not
be deemed in breach of this Section 2.5 for failure to ship any quantities as a
result of such shortage, to the extent that Logitech Asia uses its best efforts
to produce the required quantities as soon as possible and provided that
Logitech Asia allocates to Buyer at least one-third (1/3) of all supplies of
such Products continuously throughout the period of the shortage.
2.6 Rescheduling of Orders. Buyer may upon prior written notice to
----------------------
Logitech Asia reschedule without penalty delivery of the following quantities of
the Products for which purchase orders have been submitted, provided that no
order may be rescheduled more than once and rescheduled delivery must occur
within sixty (60) days of the original scheduled delivery date.
If Rescheduling occurs: % of the units of the Products
(days prior to shipment date) which may be rescheduled
- ---------------------------------- ------------------------
61+ 100%
46 to 60 50%
31 to 45 25%
0 to 30 0%
2.7 Cancellation of Orders. Buyer may upon written notice to Logitech
----------------------
Asia cancel the following quantities of the Products for which purchase orders
have been issued:
If Cancellation occurs: % of the units of the Products
(days prior to original delivery) which may be canceled
- -------------------------------------- ---------------------
91+ 100%
61 to 90 50%
46 to 60 20%
31 to 45 10%
0 to 30 0%
2.8 Changes. Logitech Asia shall make no changes to the Products without
-------
the written consent of Buyer. Logitech Asia will consider, in good faith, any
request for modification proposed by Buyer, and if applicable, Buyer and
Logitech Asia will mutually agree in writing on any such modifications and the
corresponding changes in prices therefor as written amendments to
-3-
<PAGE>
Exhibits A and B of this Agreement, respectively. Logitech Asia shall have no
obligation to make any modifications to the Products or the Specifications.
3. DELIVERY TERMS
All Products manufactured in Hsinchu, Taiwan shall be delivered F.O.B. the
ocean ports located in Keelung or Kaoshiung or the airport located in Taipei, as
applicable. All Products manufactured in Suzhou, People's Republic of China
shall be delivered F.O.B. the ocean port or the airport located in Shanghai, as
applicable. All Products shall be suitably packed for shipment by Logitech
Asia. Title and risk of loss to the Products shall pass to Buyer upon delivery
to the F.O.B. point. All shipments shall be made by Logitech Asia in accordance
with shipping instructions provided from time to time by Buyer. Any special
packing expenses shall be paid by Buyer.
4. PAYMENTS
4.1 Payments for the Products, Credit. Full payment for Buyer's purchase
---------------------------------
price of the Products (including any freight, taxes or other applicable costs
initially paid by Logitech Asia but to be borne by Buyer) shall be paid in U.S.
dollars within thirty (30) days of the date of invoice. Logitech Asia shall not
issue any invoice prior to shipment of the Products. Logitech Asia shall not
issue any invoice prior to shipment of the Products. Logitech Asia may withhold
or suspend its performance under this Agreement in the event that Buyer (i)
fails to make timely payment of outstanding invoices, or (ii) otherwise fails to
fulfill its obligations under this Agreement, the Asset Purchase Agreement or
the Joint Sales and Marketing Agreement, or (iii) suffers a material adverse
change in financial condition. In addition, if any payment is late and is not
paid within thirty (30) days of its due date, or if Logitech Asia terminates
this Agreement pursuant to Sections 9.1 or 9.2 below, the due dates of all
outstanding invoices will automatically be accelerated and will become
immediately due and payable. Any invoiced amount not paid when due shall bear
interest at the rate of eighteen percent (18%) per annum or the maximum rate
permitted by applicable law, whichever is lower.
4.2 Taxes, Licenses. Buyer shall be responsible for all sales, use or
---------------
other similar taxes (including value added taxes), all import and export duties
and fees and all forwarder's or consular expenses arising from the purchase and
sale of the Products, or alternatively, Buyer shall establish its exemption
therefrom by furnishing a resale certificate number to Logitech Asia. Buyer
shall be solely responsible for obtaining any import or export licenses with
respect to the Products. Logitech Asia shall be responsible for all taxes and
fees of any kind levied by any government authorities based upon Logitech Asia's
net income.
5. PRODUCT WARRANTY, ACCEPTANCE AND SERVICE
5.1 Limited Warranty. Logitech Asia warrants to Buyer that all Products
----------------
delivered under this Agreement will be free from defects in materials or
workmanship and will perform substantially in conformance with the
Specifications for a period of fifteen (15) months from the date of manufacture
by Logitech Asia (the "Warranty Period"). This warranty shall apply to any
-4-
<PAGE>
Product which is or becomes defective during the Warranty Period and is returned
to Logitech Asia in accordance with Section 5.3 below. LOGITECH ASIA'S SOLE
LIABILITY AND BUYER'S EXCLUSIVE REMEDY FOR PRODUCTS THAT DO NOT CONFORM TO THE
FOREGOING WARRANTY SHALL BE LIMITED TO REPAIR, REPLACEMENT, CREDIT OR REFUND AT
LOGITECH ASIA'S SOLE OPTION. REPLACEMENT PRODUCTS SHALL BE RETURNED TO BUYER BY
LOGITECH ASIA AT BUYER'S EXPENSE. THE FOREGOING WARRANTY EXTENDS ONLY TO A
PRODUCT PROPERLY USED FOR THE PURPOSE INTENDED AND DOES NOT COVER PRODUCT
SUBJECTED TO UNUSUAL PHYSICAL OR ELECTRICAL STRESS, ABUSE, MISUSE, ACCIDENT,
ALTERATION, NEGLECT OR UNAUTHORIZED REPAIR.
5.2 Acceptance.
----------
(a) For each unit of Product, Buyer (or its designee) will have ten
(10) calendar days from the date such unit is received by Buyer (the "Acceptance
Period") to examine and test the Product for conformity to the Specifications.
During the Acceptance Period for each unit of Product, Buyer (or its designee)
may (i) accept the unit, or (ii) reject the unit by notifying Logitech Asia in
writing of the manner in which the unit fails to conform to the Specifications.
Any unit not rejected by Buyer (or its designee) within the Acceptance Period
will be deemed to be accepted as of the first day following the Acceptance
Period. In the event that a unit is rejected, Buyer (or its designee) may, at
Logitech Asia's expense and without cost to Buyer (or its designee), either, (y)
return the unit to Logitech Asia for replacement with a new conforming unit, or
(z) permit the modification of the unit to correct the nonconformity (e.g., by
providing replacement components and modification instructions). Units that are
replaced or modified pursuant to this Section 5.2(a) will be subject to a new
Acceptance Period.
(b) The following remedies for defective Products will only extend to
defects in Products caused by manufacturing errors and not design or development
errors:
(i) In addition to the rights of Buyer to reject units of
Products as set forth in subsection (a) above, Buyer may, in its sole and
absolute discretion, test any random sample of any Product shipment Buyer
receives pursuant to the provisions of this Section 5.2(b). Buyer and Logitech
Asia will mutually agree upon the testing procedures for each Product or modify
such procedures as reasonably required. A sample of each shipment to be tested
will be tested, and the corresponding shipment accepted or rejected according
the following guidelines:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Shipment Test Acceptance Rejection
Delivery Size Sample Size Criteria Criteria
- ------------- ----------- --------- --------
501-1,200 units 80 units 1 defective unit or less 2 defective units or more
1,201-3,200 125 units 2 defective units or less 3 defective units or more
3,201+ 200 units 3 defective units or less 4 defective units or more
</TABLE>
(ii) If a shipment is rejected according to the above procedures
and criteria, Buyer will immediately notify Logitech Asia of the rejection.
Logitech Asia will then provide all reasonably requested technical support to
test all units in such shipment and repair any
-5-
<PAGE>
defective units therein. Logitech Asia shall pay for all such testing and repair
of the units in such shipment, and any related costs or expenses thereof. If
Buyer is unable to complete the testing and repair of defective units in such
shipment within a reasonable period and with no more than reasonable efforts,
Buyer may return the entire shipment to Logitech Asia for testing and repair at
Logitech Asia's sole expense (including shipping costs to and from Buyer).
Neither Buyer nor any of its customers will be invoiced for or have any
obligation to pay for defective units of Product until and unless such defective
units are repaired or replaced and Buyer confirms their conformance with the
applicable Specifications.
(iii) The "Defect Rate" for each rolling four month period shall
be defined as the fraction (expressed in percentage form) whose numerator is the
number of total units of each specific Product which are both (y) returned to
Buyer from its end user customers, and (z) found by Buyer upon such return to be
defective according to the testing procedures established under subsection (i)
above, and whose denominator is equal to Buyer total unit shipments of Products
over the applicable four month period. If the Defect Rate exceeds three percent
(3%) for any month, Logitech Asia shall, at Buyer's sole option, reimburse Buyer
or credit Buyer on open invoices, an amount equal to all shipping expenses
incurred by Buyer during such four month period to repair or replace the number
of defective units in excess of the three percent (3%) Defect Rate.
(c) Rejected Products pursuant to this Section 5.2 will be shipped to
Logitech Asia, subject to Section 5.3 below.
5.3 Return Policy. No Products shall be returned to Logitech Asia except
-------------
(i) pursuant to Sections 5.1 or 5.2 above, and (ii) in accordance with Logitech
Asia's standard return policy. Logitech Asia shall be under no obligation to
accept any Products returned by Buyer unless Buyer shall have first contacted
Logitech Asia, described the nature of the problem, obtained a Return Material
Authorization ("RMA") number, and shipped the Products to Logitech Asia suitably
packed for shipment, with the RMA number conspicuously displayed on the outside
of the shipping carton, and with a packing slip which includes a problem report
describing the reason for return of the Products. All Products returned to
Logitech Asia for any reason shall be returned by Buyer at Logitech Asia's
expense, and Logitech Asia shall be under no obligation to accept returned
Products from Buyer's customers, agents or any other parties.
5.4 Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH ABOVE,
----------
LOGITECH ASIA GRANTS NO OTHER WARRANTIES, EITHER EXPRESS, IMPLIED OR STATUTORY.
LOGITECH ASIA HEREBY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH ANY
PRODUCT SOLD BY LOGITECH ASIA UNDER THIS AGREEMENT. THIS SECTION SHALL APPLY
EVEN IF THE FOREGOING LIMITED REMEDIES FAIL OF THEIR ESSENTIAL PURPOSE.
6. INDEMNIFICATION
-6-
<PAGE>
6.1 Indemnification of Logitech Asia. Subject to Section 6.3 below and
--------------------------------
Section 7.3 of the Asset Purchase Agreement, Buyer shall indemnify each of
Logitech Asia and its affiliates and the directors, officers, and employees of
Logitech Asia and such affiliates and the successors and assigns of any of the
foregoing (the "Logitech Asia Indemnitees"), and hold each Logitech Asia
Indemnitee harmless from and against any and all liabilities, damages,
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees and other expenses of
litigation) (any of the foregoing, a "Claim") incurred by any Logitech Asia
Indemnitee, arising from or occurring as a result of (a) product liability or
strict liability claims relating to any Products sold to Buyer under this
Agreement except to the extent such claim is caused by the gross negligence or
willful misconduct of a Logitech Asia Indemnitee or a manufacturing defect in
the Products; or (b) infringement claims brought by third parties with respect
to Logitech Asia's manufacture of Products hereunder; or (c) the gross
negligence or willful misconduct of Buyer.
6.2 Indemnification of Buyer. Subject to Section 6.3 below, Logitech Asia
------------------------
shall indemnify each of Buyer and its affiliates and the directors, officers,
and employees of Buyer and such affiliates and the successors and assigns of any
of the foregoing (the "Buyer Indemnitees"), and hold each Buyer Indemnitee
harmless from and against any and all liabilities, damages, settlements, claims,
actions, suits, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys' fees and other expenses of litigation) (any of
the foregoing, a "Claim") incurred by any Buyer Indemnitee, arising from or
occurring as a result of (a) the gross negligence or willful misconduct of
Logitech Asia, or (b) manufacturing defects in the Products.
6.3 Indemnification Procedure. The above indemnities shall be subject to
-------------------------
the following procedures:
(a) The party receiving the indemnity ("Indemnitee") will promptly
notify the party with the indemnity obligation ("Indemnitor") of any third party
claim, action or demand after the Indemnitee receives notice thereof; provided,
however, that failure or delay to provide such notification shall not reduce or
otherwise affect the obligations of the Indemnitor, except to the extent that
such failure or delay shall have materially prejudiced the Indemnitor's ability
to defend against, settle or satisfy such claim or materially increase the cost
thereof.
(b) The Indemnitor, at its expense, shall pay, compromise, settle or
otherwise dispose of any such claim; provided, however, that no compromise,
settlement or disposal of such claim shall be entered into without the prior
written consent of the Indemnitor, which consent shall not be unreasonably
withheld.
(c) Indemnitor shall have sole control over the defense and settlement
of any such claim but in any action defended by Indemnitor, Indemnitee shall at
all times have the right to employ its own counsel; provided, however that the
fees and expenses of such counsel shall be Indemnitee's own expense unless the
employment of such counsel shall have been authorized by Indemnitor in
connection with the defense of such claims. In such event, such fees and
expenses shall be borne by Indemnitor.
-7-
<PAGE>
7. CONFIDENTIALITY
7.1 Definition. "Confidential Information" shall mean the technical
----------
information, know-how, technology, formulae, system designs, prototypes, ideas,
inventions, improvements, layouts, software, concepts, techniques, discoveries,
data, files, supplier and customer identities and lists, accounting records,
forecasts, project management plans, marketing plans and business plans relating
to this Agreement to which a party has proprietary rights, and all copies and
tangible embodiments thereof (in whatever form or medium) conspicuously
indicated as proprietary information, confidential information or a
substantially similar legend that are not generally known by the public.
Information communicated orally shall be considered Confidential Information if
such information is designated as being confidential or proprietary at the time
of disclosure and is confirmed in writing to the other party to be confidential
within thirty (30) days of initial disclosure. Any of the foregoing shall not
be considered Confidential Information if the party receiving it can show that
it: (i) has become publicly known through no wrongful act or breach of any
obligation of confidentiality on the receiving party's or any third party's
part; (ii) was rightfully received by the receiving party from a third party not
in violation of any contractual, legal or fiduciary obligation by such third
party; (iii) was approved for release by written authorization by the party
having rights therein; or (iv) was developed by the receiving party
independently of the party having rights therein without breach of any
confidentiality or other obligations.
7.2 Confidentiality of Agreement. Each party covenants to the other party
----------------------------
that it will not in any manner disclose or divulge the contents of the Agreement
or any of the material terms and conditions hereof to any third party, except
(i) as the other party may expressly consent in advance in writing, or (ii) as
may be required in obtaining any necessary governmental or regulatory approval
for the transactions contemplated hereby, or (iii) as may otherwise be required
by any applicable law, or (iv) to such party's legal, financial or other
business advisors or potential investors.
7.3 Treatment of Confidential Information. For a period of five (5) years
-------------------------------------
after receipt of any Confidential Information, each party shall keep and
maintain the other party's Confidential Information in strictest confidence and,
except as otherwise expressly provided herein, each party: (i) shall not use
the other party's Confidential Information, except as required to perform its
obligations under this Agreement; and (ii) shall not provide or otherwise make
available, whether directly or indirectly, any of the other party's Confidential
Information to any party other than: (A) to employees and officers of a party
who require access to such Confidential Information for performance of their
duties and who have signed a written nondisclosure agreement including the
requirement to protect third party proprietary information, or (B) as required
by any applicable law, in response to a valid order by a court or other
governmental body or necessary to establish the rights of either party under
this Agreement; provided, however, that the party disclosing such information
shall provide prompt written notice thereof to the other party to enable it to
seek a protective order or otherwise prevent such disclosure. Each party shall
take all reasonable actions (by instruction, agreement or otherwise) necessary
to maintain the confidentiality of the other party's Confidential Information.
Notwithstanding the foregoing, each party shall be required to protect the other
party's Confidential Information consistent with the same protections afforded
-8-
<PAGE>
its own Confidential Information in the ordinary conduct of its business but in
no event with less than reasonable care.
7.4 Return or Destruction. Upon termination of this Agreement, or at any
---------------------
other time if requested by a party, each party promptly shall return to the
other party all Confidential Information received by it or its representatives
by such other party unless the party provides assurances reasonably satisfactory
to such other party that such Confidential Information has been destroyed.
8. LIMITATION OF LIABILITY
IN NO EVENT WILL LOGITECH ASIA BE LIABLE FOR COSTS OF PROCUREMENT OF
SUBSTITUTE PRODUCTS OR SERVICES, LOST PROFITS, OR ANY SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, ARISING IN ANY WAY OUT OF THE SALE OF PRODUCTS OR SERVICES TO BUYER,
INCLUDING CLAIMS BASED ON BREACH OF CONTRACT, BREACH OF WARRANTY, TORT
(INCLUDING NEGLIGENCE), PRODUCT LIABILITY, STRICT LIABILITY OR OTHERWISE. THIS
LIMITATION SHALL APPLY EVEN IF LOGITECH ASIA HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY.
9. TERMINATION
9.1 Termination for Breach. Either party may terminate this Agreement in
----------------------
the event the other party fails to cure a material breach of this Agreement
within sixty (60) days of receiving notice thereof.
9.2 Insolvency. Either party may terminate this agreement (i) immediately
----------
if the other party becomes insolvent, or (ii) immediately upon any proceeding
being commenced by or against the other party under any law providing relief to
such party as a debtor provided such proceeding is not dismissed after a period
of thirty (30) days.
9.3 Effect of Termination.
---------------------
(a) Upon termination of this Agreement by Logitech Asia pursuant to
Section 9.1 or 9.2 above, (i) Logitech Asia shall have no obligation to fulfill
orders following the date of termination, and (ii) Buyer shall compensate
Logitech Asia for Products and material inventory as follows: (1) the contract
price of all finished Products in Logitech Asia's possession, (2) the cost of
material inventory (including handling charges), whether in raw form or work in
process, and not returnable to the vendor or usable for other customers, (3) the
cost of material on order (including handling charges) which cannot be canceled,
and (4) any vendor cancellation charges incurred with respect to material
canceled or returned to the vendor; provided that subsection (ii) above shall
not apply to any contact image sensor materials purchased pursuant to that
certain Product Sales Agreement dated as of September 26, 1996 between Logitech,
Inc. and Mitsubishi
-9-
<PAGE>
Electronics America, Inc., as amended. Logitech Asia shall promptly deliver such
Products and material inventory to Buyer following such payment.
(b) Upon termination of this Agreement by Buyer pursuant to Section
9.1 or 9.2 above, Logitech Asia shall continue to fulfill all orders accepted by
Logitech Asia prior to the date of termination for delivery of Products to be
taken within thirty (30) days from the date of termination.
(c) In the event of termination by act of either party in accordance
with any of the provisions of this Agreement, neither party shall be liable to
the other because of such termination for compensation, reimbursement or damages
on account of the loss of prospective profits or anticipated sales or on account
of expenditures, investments, leases or commitments in connection with the
business or goodwill of Logitech Asia or Buyer.
9.4 Survival of Certain Provisions upon Expiration and Termination. The
--------------------------------------------------------------
provisions of Sections 2.2, 3, 4, 5, 6, 7, 8, 9 and 11 shall survive any
expiration or termination of this Agreement.
10. TRANSITION
Buyer shall identify, and notify Logitech Asia in writing, of a substitute
manufacturer of PageScan USB by September 1, 1998. Logitech Asia shall use
reasonable efforts to support the transition of the manufacture of PageScan USB
to such substitute manufacturer.
11. MISCELLANEOUS PROVISIONS
11.1 Assignment. Neither party shall directly or indirectly sell, assign,
----------
subcontract or otherwise transfer this Agreement or any of its rights or
obligations under this Agreement, without the prior written consent of the other
parties, except as permitted in this section. Either party may assign this
Agreement to any of its wholly-owned subsidiaries, provided that such party
remains responsible for and guarantees the full performance of this Agreement
after such assignment. In addition, either party may, without the prior notice
to or written consent of the other party, assign or transfer this Agreement as
part of a corporate reorganization, consolidation, merger or sale of
substantially all of its assets, provided that the successor entity assumes all
of such party's obligations under this Agreement and agrees in writing to be
bound by the terms of this Agreement. This Agreement shall be binding upon and
inure to the benefit of the permitted successors and assigns of the parties.
11.2 Notices and Representatives.Any notice or reports required or
---------------------------
permitted to be given under this Agreement shall be given in writing and shall
be delivered by personal delivery, telegram, facsimile transmission or by
certified or registered mail, postage prepaid, return receipt requested. Notice
shall be deemed given upon actual receipt. Any party and any representative
designated below may, by notice to the others, change its address for receiving
such notices:
To Logitech Trading at: Logitech Far East Ltd.
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<PAGE>
#2 Creation Road IV
Science-Based Industrial Park
Hsinchu, Taiwan R.O.C.
Facsimile: 011-886-35-77-8246
with copy to: Logitech Inc.
6505 Kaiser Drive
Fremont, CA 94555
Attention: Chief Financial Officer
Facsimile: (510) 795-7496
To Buyer at: Storm Technology, Inc.
1395 Charleston Road
Mountain View, CA 94043
Attention: Chief Financial Officer
Facsimile: (650) 691-6699
with copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention: James M. Koshland
Facsimile: (650) 327-3699
11.3 Entire Agreement and Modification.This Agreement (including its
---------------------------------
Exhibits) constitutes the entire agreement of Buyer and Logitech Asia relating
to the manufacture of Products by Logitech Asia and supersedes any and all prior
and contemporaneous negotiations, correspondence, understandings, letters of
intent and agreements in principle between them, whether written or oral,
relating to that subject matter. This Agreement (including its Exhibits) may
only be amended by a written instrument signed by Buyer and Logitech Asia.
11.4 Construction of Agreement. This Agreement has been negotiated by the
-------------------------
respective parties and their attorneys, and its language shall not be construed
for or against any party. The titles and headings in this Agreement are for
reference purposes only and shall not in any manner limit the construction of
this Agreement which shall be considered as a whole.
11.5 Relationship of the Parties. Nothing contained in this Agreement
---------------------------
shall be construed as creating any agency, partnership, or other form of joint
enterprise between the parties. The relationship between the parties shall at
all times be that of independent contractors. Neither party shall have
authority to contract for or bind the other in any manner whatsoever. This
Agreement confers no rights upon either party except those expressly granted
herein.
11.6 Waiver.Delay or failure to exercise any right or remedy under this
------
Agreement shall not impair such right or remedy or be construed as a waiver
thereof or as acquiescence in a default. Waiver of any breach or failure of any
term or condition of this Agreement shall not be construed as a waiver of any
subsequent breach or failure of the same term or condition or a
-11-
<PAGE>
waiver of any other term or condition of this Agreement. All waivers must be in
writing signed by the party to be charged.
11.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal substantive laws of the State of California,
without regard to its choice of law principles and excluding the United Nations
Convention on Contracts for the International Sale of Goods and any legislation
implementing such Convention, if otherwise applicable.
11.8 Severability.The provisions of this Agreement are severable, and if
------------
any one or more such provisions shall be determined to be invalid, illegal or
unenforceable, in whole or in part, the validity, legality and enforceability of
any of the remaining provisions or portions thereof shall not in any way be
affected or impaired thereby and shall nevertheless be binding between the
parties. Any such invalid, illegal or unenforceable provision or portion
thereof shall be changed and interpreted so as to best accomplish the objectives
of such provision or portion thereof within the limits of applicable law.
11.9 Parties in Interest.Nothing contained in this Agreement, whether
-------------------
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any person other than the parties to it and their
respective successors and permitted assigns, nor is anything contained in this
Agreement intended to relieve or discharge the obligation or liability of any
third person to any party to this Agreement, nor shall any provision of this
Agreement give any third person any right of subrogation or action over against
any party to this Agreement.
11.10 Absence of Third Party Beneficiary Rights.No provisions of this
-----------------------------------------
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
11.11 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.12 Force Majeure. Neither Logitech Asia nor Buyer shall be in default
-------------
of any obligations under this Agreement if such default results from
governmental acts or directives (official or unofficial), strikes (legal or
illegal), acts of God, war (declared or undeclared), insurrection, riot or civil
commotion, fires, flooding, explosions, embargoes or delays in manufacturers' or
suppliers' furnishing products, or other event of force majeure not within the
reasonable control of the party affected.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Effective Date.
LOGITECH FAR EAST, LTD. STORM TECHNOLOGY, INC.
By: By:
--------------------------------- --------------------------------
Name: Name:
------------------------------- ------------------------------
Title: Title:
------------------------------ -----------------------------
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<PAGE>
EXHIBIT A
PRODUCT SPECIFICATIONS
[See Attached]
-14-
<PAGE>
EXHIBIT B
PURCHASE PRICE
Product Price
PageScan USB Cost plus 10% of Cost
PPA Cost plus 15% of Cost
-15-
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF DESIGNATION
of
SERIES A 8.5% CONVERTIBLE PREFERRED STOCK
of
STORM TECHNOLOGY, INC.
(Pursuant to Section 151 of the Delaware General Corporation Law)
STORM TECHNOLOGY, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Company as required by Section 151 of the General Corporation Law by
unanimous written consent of the Board of Directors dated December 17, 1997:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Company (the "Board") in accordance with the
provisions of the Restated Certificate of Incorporation (the "Certificate of
Incorporation"), the Board hereby creates out of the 500,000 shares of Preferred
Stock, par value $.001 per share, of the Company authorized in Article Fourth of
the Restated Certificate of Incorporation (the "Preferred Stock"), a series of
the Preferred Stock of the Company, par value $0.001 per share, and hereby
states the designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series
-----------------------
shall be designated as "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 30,000. Such number of shares may be increased or decreased by
resolution of the Board; provided, however, no decrease shall reduce the number
of shares of Series A Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights, or warrants for, or upon the conversion
of any outstanding securities issued by the Company convertible into Series A
Preferred Stock.
Section 2. Dividends.
----------
(a) Subject to the limitations set forth below, the holders of
the Series A Preferred Stock shall be entitled to receive, from funds of the
Company legally available therefor pursuant to the General Corporation Law of
the State of Delaware (the "Legally Available Funds"), a cumulative dividend of
eight and one-half (8.5%) percent per annum on each share of
<PAGE>
Series A Preferred Stock ratably for the period that such share of the Series A
Preferred Stock is outstanding (the "Period"). Dividends are to be accrued from
the date of issuance of the Series A Preferred Stock (the "Closing Date") until
conversion, based upon a three hundred sixty (360) day year.
(b) Subject to the limitations set forth herein and by applicable
state law, dividends on each share of Series A Preferred Stock shall be due and
payable on or before the fifth NASDAQ trading day following each Conversion Date
(as defined in Section 3(a) below) with respect to such share, and shall paid to
the holder of record of such share as such holder appears on the stock register
of the Company on the Conversion Date or the Anniversary Date (as defined in
Section 3(b) below), whichever is applicable.
(c) Dividends on shares of Series A Preferred Stock shall be fully
cumulative and shall accrue without regard to whether or not such dividends have
been declared and whether or not there are any Legally Available Funds available
for the payment of dividends.
(d) Dividends on the shares of Series A Preferred Stock shall be
payable in common stock of the Company, $0.01 par value per share (the "Common
Stock"). Dividends shall be payable in fully registered shares of Common Stock
at the time of conversion at a price per share equal to the Conversion Price as
defined in Section 3(a) below.
(e) No share of Series A Preferred Stock shall be entitled to
participate with respect to any dividend (in any form) declared, accrued, or
paid on any other class, or series thereof, of the capital stock of the Company.
Section 3. Conversion.
----------
(a) The holder of any share or shares of Series A Preferred Stock
(a "Holder") shall have the right, without the payment of any additional
consideration, to convert any share of Series A Preferred Stock held by such
holder into that number of fully paid and non-assessable shares of Common Stock
as is determined by dividing the principal amount of US$100 per share (plus
accrued and unpaid dividends through the date of conversion, if the Holder so
elects) by the "Conversion Price," (such Common Stock to be referred to as the
"Conversion Shares") which shall be determined based on the following:
"Measurement Period Price" or "MPP" = a price per share equal to
the average of the closing bid price of the Common Stock as reported on the
NASDAQ (or on the principal national securities exchange on which the Common
Stock is admitted to trading or listed or, if not listed or admitted to trading
on NASDAQ or a national securities exchange, as reported by the National
Quotation Bureau, Inc. or other similar organization ("Other Exchanges")) for
the three (3) trading days immediately preceding the Conversion Date.
"Closing Price" or "CP" = the MPP on the Closing Date.
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<PAGE>
"Fixed Conversion Price" or "FCP" = US$2.50
"Profit Participation Percent" or "PPP" = 40%
"Starting Participation Price" of "SPP" = US$6.00
Conversions shall occur as follows:
1. If MPP (less than) CP then Conversion Price = MPP, and
the Holder shall be issued warrants ("Contingent Warrants" (the shares
of common Stock underlying the Contingent Warrants shall be referred to
as "Contingent Warrant Shares")), in the amount of fifteen (15%) percent
of the number of Conversion Shares.
2. If MPP (greater than or equal to) CP and MPP (less than)
CP/0.85 then Conversion Price = CP and the Holder shall be issued
Contingent Warrants in the amount of 15% -((MPP - Conversion
Price)/MPP) of the number of Conversion Shares. However, in no event
shall the number of Contingent Warrants issued in this instance be less
than 0% or greater than 15% of the number of shares of Common Stock
issued upon conversion.
3. If MPP (greater than) CP/0.85 and MPP (less than)
FCP/0.85, then Conversion Price = MPP x 0.85, in which case the Holder
will be issued no Contingent Warrants.
4. If MPP (greater than or equal to) FCP/0.85 and MPP (less
than) SPP then Conversion Price = FCP, in which case the Holder will
be issued no Contingent Warrants.
5. If MPP (greater than) SPP then Conversion Price = FCP +
((MPP -SPP) x PPP), in which case the Holder will be issued no
Contingent Warrants.
The Contingent Warrants issued hereunder, as applicable, will have
a term of seven (7) years from the Conversion Date and an exercise price equal
to seventy percent (70%) of the MPP as of the Conversion Date.
The Holder shall exercise its right to convert the Series A
Preferred Stock and/or exercising the Contingent Warrants by telecopying an
executed and completed written notice of conversion in a form designated by the
Company (the "Notice of Conversion") or Notice of Exercise to the Company and
delivering the original Notice of Conversion and/or Notice of Exercise and the
certificate representing the Series A Preferred Stock and/or Contingent Warrant
to the Company by express courier. Each business date on which a Notice of
Conversion is telecopied to the Company in accordance with the provisions hereof
shall be deemed a conversion date (the "Conversion Date"). Each business date on
which a Notice of Exercise is telecopied to the Company in accordance with the
provisions hereof shall be deemed an exercise date ("Exercise Date"). The
Company will use its best efforts to transmit the certificates representing
Conversion Shares and/or Contingent Warrant Shares (together with the
certificates representing the Series A Preferred Stock and/or Contingent Warrant
Shares not so converted or exercised) to
-3-
<PAGE>
the Holder via express courier, by electronic transfer or otherwise within three
(3) NASDAQ trading days after the Conversion Date or Exercise Date. In addition
to any other remedies which may be available to the Holder, in the event that
the Company fails to use its best efforts to effect delivery of such shares of
Common Stock within such three (3) NASDAQ trading day period, the Holder will be
entitled to revoke the relevant Notice of Conversion or Notice of Exercise by
delivering a notice to such effect to the Company whereupon the Company and the
Holder shall each be restored to their respective positions immediately prior to
delivery of such Notice of Conversion or Notice of Exercise.
In the event that the Common Stock issuable upon conversion of the
Series A Preferred Stock or exercise of the Contingent Warrants is not delivered
within five (5) NASDAQ trading days after the Conversion Date or Exercise Date,
the Company shall pay to the Holder, in immediately available funds, upon
demand, as liquidated damages for such failure and not as a penalty, for each
$100,000 of Series A Preferred Stock sought to be converted and for each 1,000
shares of Contingent Warrants to be exercised, $250 for each of the first ten
(10) days and $500 per day thereafter that the Conversion Shares and/or
Contingent Warrant Shares are not delivered, which liquidated damages shall run
from the sixth NASDAQ trading day after the Conversion Date and/or the Exercise
Date, respectively. Such amounts will accrue and be payable to the Holder in
cash upon demand.
(b) At any time after the second anniversary of the Closing Date
(the "Anniversary Date"), the Company may, at its option, convert any and all
then remaining outstanding shares of Series A Preferred Stock into Common Stock
on the same basis as the Holder of such shares of Series A Preferred Stock may
convert such shares pursuant to Section 3(a) above. The Company shall not be
obligated to deliver the certificate(s) evidencing such shares of Common Stock
unless the certificate(s) evidencing the Series A Preferred Stock so converted
are delivered to the Company.
(c) (1) If the Company shall, at any time or from time to time,
declare and pay to the holders of Common Stock a dividend in shares of Common
Stock, or the Company shall subdivide the outstanding shares of Common Stock
into a greater number of shares of Common Stock, or combine the outstanding
shares of Common Stock into a smaller number of shares of Common Stock then the
CP, FCP and SPP shall be adjusted to equal the price determined by multiplying
the CP, FCP and SPP by a fraction, the numerator of which shall be the number of
shares of Common Stock issued and outstanding immediately prior to the happening
of such event and the denominator of which shall be the number of shares of
Common Stock issued and outstanding immediately after the happening of such
event. Such adjustment shall become effective immediately after the opening of
business of the day following the record date, in the event of a stock dividend,
or the day upon which the subdivision or combination becomes effective, as the
case may be.
(2) If the Company shall, at any time or from time to time after
the date on which the Series A Preferred Stock was first issued by the Company,
make or issue, or fix a record date for the determination of holders of shares
of Common Stock entitled to receive a dividend or other distribution payable in
securities of the Company, including a distribution of
-4-
<PAGE>
evidence of indebtedness of the Company, other than shares of Common Stock,
then, and in each such event, provision shall be made by the Company so that the
holders of shares of Series A Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable
thereupon, the amount of those securities of the Company that such holders would
have received had their shares of Series A Preferred Stock been converted on the
date of such event and had they thereafter, during the period from the date of
such event to and including the date of conversion, retained such securities
receivable by them as aforesaid during such period.
(3) If the shares of Common Stock issuable upon the
conversion of shares of Series A Preferred Stock shall be changed into the same
or any different number of shares of any class or any series of any class of
capital stock, whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares or a stock dividend provided
for above, or a reorganization, merger, consolidation or sale of assets provided
for in Section 7 hereof), then, and in each such event, the holder of shares of
Series A Preferred Stock shall have the right thereafter to convert such shares
of Series A Preferred Stock into the kind and amount of shares of stock and
other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such shares of Series A Preferred Stock might have been
converted immediately prior to such reorganization, reclassification or change.
(d) At all times, the Company shall reserve and keep available
out of its authorized but unissued Common Stock solely for issuance upon the
conversion of shares of the Series A Preferred Stock as herein provided, such
number of shares of Common Stock as, from time to time, shall be issuable upon
the conversion of all the shares of the Series A Preferred Stock at the time
outstanding.
If at any time the number of authorized but unissued shares of
Common Stock shall be insufficient to satisfy the conversion or exercise rights
hereunder, in addition to such other remedies as shall be available to the
holder of Series A Preferred Stock or Warrants, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(e) No fractional shares of Common Stock shall be issued. In
lieu of the issuance of any fractional share of Common Stock that would, but for
the foregoing, be issued to a Holder of Series A Preferred Stock on the
conversion thereof, the Corporation shall pay to such Holder, in cash, the value
of such fractional share which value shall be based upon the closing bid price
of the Common Stock as reported on NASDAQ or an Other Exchange for the trading
day immediately preceding the Conversion Date.
(f) Upon any conversion of Series A Preferred Stock pursuant
to this Section 3, the shares of Series A Preferred Stock which are converted
shall not be reissued. Upon conversion of all of the then outstanding Series A
Preferred Stock pursuant to this Section 3 and upon the taking of any action
required by law, all matters set forth in this Certificate of
-5-
<PAGE>
Designation shall be eliminated from the Certificate of Incorporation, shares of
Series A Preferred Stock shall not be deemed outstanding for any purpose
whatsoever and all such shares shall revert to the status of authorized and
unissued shares of Preferred Stock.
(g) Any Holder of the Series A Preferred Stock or any subsequent
holder of (i) Series A Preferred Stock or (ii) a warrant to acquire Common Stock
(including a Contingent Warrant) (hereafter, a "Warrant") that obtained such
Series A Preferred Stock or Warrant from a Holder (hereafter for the purpose of
this paragraph (g), a "Holder") shall be prohibited from converting any portion
of the Series A Preferred Stock and/or exercise of any portion of the Warrants
which would result in the Holder being deemed the beneficial owner, in
accordance with the provisions of Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), of 4.99% or more of the then issued and
outstanding Common Stock of the Company. Such limitation will not be effective
on the tenth day following either (i) an Event of Default (as defined herein),
or (ii) notice from the Holder that the Company is in material breach of any of
its obligations with regard to such Holder. Notwithstanding the foregoing, no
Holder shall receive shares of Common Stock upon conversion of the Series A
Preferred Stock, or exercise of the Warrants, in the event that such conversion
or exercise, when aggregated with all prior or concurrent conversions or
exercises would result in the issuance to all such Holders a number of shares of
Common Stock in excess of 19.99% of the shares of Common Stock outstanding on
the Closing Date (the "Outstanding Closing Date Stock"); provided, however, a
Holder may receive additional shares of Common Stock upon conversion of the
Series A Preferred Stock which may exceed 19.99% of the Outstanding Closing Date
Stock without the issuance of any additional Warrants in the event that NASDAQ
finds that such additional shares of Common Stock with such additional Warrants
are subject to the 19.99% limit for the issuance of discounted securities (the
"Discounted Securities Limit"). To the extent that NASDAQ deems the issuance of
such additional shares of Common Stock subject to the Discounted Securities
Limit for the issuance of shares of Common Stock upon conversion of the Series A
Preferred Stock, or exercise of the Warrants; the Company shall use best efforts
to obtain the stockholder approval required pursuant to Section
4460(i)(1)(C)(ii) of the Marketplace Rules of the NASDAQ National Market.
Section 4. Voting Rights. Except as required by applicable
--------------
law, the Holders of shares of Series A Preferred Stock shall not have the right
or power to vote on any question or in any proceeding or to be represented at,
or to receive notice of, any meeting of the Company's stockholders.
Section 5. Reacquired Shares. Any shares of Series A Preferred
------------------
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Series A Preferred Stock and may be reissued as part of a new series of Series A
Preferred Stock subject to the conditions and restrictions on issuance set forth
herein, in the Certificate of Incorporation, or in any other Certificate of
Designation creating a series of Series A Preferred Stock or any similar stock
or as otherwise required by law.
-6-
<PAGE>
Section 6. Liquidation, Dissolution or Winding Up. In the
---------------------------------------
event of any liquidation, dissolution, or winding up of the Company, the Holders
of the Series A Preferred Stock are entitled to receive out of assets of the
Company available for distribution to stockholders, after satisfaction of
indebtedness, but before any distribution of assets is made to holders of Common
Stock or to holders of any other class of stock of the Company ranking junior to
the Series A Preferred Stock upon liquidation, liquidating distributions on each
share of Series A Preferred Stock held by such holder in the per share amount of
US$100.00 plus all dividends accrued and unpaid, if any, on each such share
pursuant to Section 2 hereof (the "Liquidation Preference"). If, upon any
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Series A Preferred Stock or any other shares of stock of the
Company ranking as to any such distribution on a parity with the Series A
Preferred Stock are not paid in full, the Holders of the Series A Preferred
Stock and of such other shares will share ratably in any such distribution of
assets of the Company in proportion to the full distributable amounts to which
they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the Holders of the Series A Preferred
Stock will not be entitled to any further participation in any distribution of
assets by the Company.
Section 7. Consolidation, Merger, etc. If the Company shall
---------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then, in any such case, the Company,
as a condition precedent to such transaction, shall cause effective provisions
to be made so that each Holder of Series A Preferred Stock then outstanding
shall have the right, by converting such share(s) of Series A Preferred Stock
into Common Stock pursuant to Section 3 hereof, to acquire the kind and amount
of shares of stock, securities, cash and/or other property receivable upon such
consolidation, merger, combination or other transaction by a holder of the
number of shares of Common Stock which might have been acquired upon conversion
of such Series A Preferred Stock immediately prior to such consolidation,
merger, combination, or other transaction.
Section 8. Redemption. The Company has the right to redeem the
-----------
Series A Preferred Stock, in whole or in part, at any time and from time to time
after issuance. Such redemption must be on at least ten (10) business days prior
written notice to the Holders of the Series A Preferred Stock (the date of such
notice referred to as the "Redemption Notice Date"). The redemption price (the
"Redemption Price") shall be equal to the greater of: (i) the number of
Conversion Shares calculated as if the Series A Preferred Stock to be redeemed
were converted on the Redemption Notice Date, multiplied by the greater of (x)
the MPP as of the Redemption Notice Date and (y) the closing bid price as of the
Redemption Notice Date, or (ii) one hundred fifteen (115%) percent of the
purchase price of the Series A Preferred Stock being called for redemption, plus
any and all accrued and unpaid dividends due thereon through and including the
Redemption Notice Date. The Company shall, within two (2) days after the end of
the ten (10) day notice period, wire transfer the appropriate amount of funds
into an escrow account, which shall be mutually agreed upon by both the Company
and Subscriber (such date referred to as the "Redemption Date"). On the
Redemption Date, the Holder's right to convert the Series A Preferred Stock
shall terminate and be canceled immediately. In the event the Company does not
wire transfer the appropriate amount of funds into the escrow account within the
two (2) day
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<PAGE>
period, then it shall have waived its right to redeem the Preferred Stock at any
time.
Notice of any redemption setting forth (i) the Redemption Notice
Date and the place fixed for redemption, (ii) the Redemption Price, (iii) a
statement that dividends on the shares of Series A Preferred Stock to be
redeemed will cease to accrue on such Redemption Notice Date, and (iv) a
statement of or reference to the conversion right set forth in Section 3 hereof
(including that the right to give a Notice of Conversion in respect of any
shares to be redeemed shall terminate on the Redemption Date), shall be mailed,
postage prepaid, at least ten (10) days prior to the Redemption Date to each
holder of record of the Series A Preferred Stock to be redeemed at their address
as the same shall appear on the books of the Company. If fewer than all the
shares of the Series A Preferred Stock owned by such holder are then to be
redeemed, the notice shall specify the number of shares thereof that are to be
redeemed and, if practicable, the numbers of the certificates representing such
shares.
At any time up to the date immediately prior to the Redemption
Date, the Holders shall have the right to convert the Series A Preferred Stock
into Common Stock as more fully provided in Section 3 hereof. Unless so
converted, at the close of business on the Redemption Date, subject to the
conditions described in this section, each share of Series A Preferred Stock to
be redeemed shall be automatically canceled and converted into a right to
receive the Redemption Price, and all rights of the Series A Preferred Stock,
including the right to conversion, shall cease without further action.
Immediately following the Redemption Date, Holders of the Series A Preferred
Stock shall surrender their certificates at the office of the Company or any
transfer agent therefor, duly endorsed and with signature guaranteed.
The Redemption Price shall be adjusted proportionally upon any
adjustment of the Conversion Price under Section 3(c) hereof.
Shares of Series A Preferred Stock redeemed, purchased or
otherwise acquired for value by the Company, including by redemption in
accordance with this Section hereof, shall after such acquisition, have the
status of authorized and unissued shares of Series A Preferred Stock and may be
reissued by the Company at any time as shares of any series of Series A
Preferred Stock other than as shares of Series A Preferred Stock.
Section 9. Notices.
--------
1. Upon the Company. Any notice pursuant to the terms thereof
-----------------
to be given or made by a Holder of Series A Preferred Stock to or upon the
Company shall be sufficiently given or made if sent by facsimile or by mail,
postage prepaid, addressed (until another address is sent by the Company to the
holder) as follows:
Storm Technology, Inc.
1395 Charleston Road
Mountain View, CA 94943
Attn: Chief Financial Officer
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<PAGE>
2. Upon Series A Preferred Stockholders. Any notice pursuant
-------------------------------------
to the terms hereof to be given or made by the Company to or upon any Holder of
Series A Preferred Stock shall be sufficiently given or made if sent by mail,
postage prepaid, addressed (until another address is sent by the holder to the
Company) to the address of such holder on the records of the Company.
Section 10. Amendment. This Certificate of Designation shall
----------
not be amended in any manner which should materially alter or change the powers,
preferences, or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Preferred Stock, voting together as a
single class.
RESOLVED, FURTHER, that the appropriate officers of the Company
hereby are authorized to execute and acknowledge a certificate setting forth
these resolution and to cause such certificate to be filed and recorded, all in
accordance with the requirements of Section 151 of the General Corporation Law
of the State of Delaware.
-9-
<PAGE>
IN WITNESS WHEREOF, Storm Technology, Inc., has caused this
Certificate to be signed by its President, and attested to by its Assistant
Secretary, this 17th day of December, 1997.
STORM TECHNOLOGY, INC.
By:
---------------------------------
Attest: President
- ----------------------------
Assistant Secretary
-10-
<PAGE>
Exhibit 4.1
THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED
THEREUNDER (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS SUBSCRIPTION
AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER
TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR
TRANSFERRED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
SERIES A 8.5% CONVERTIBLE PREFERRED STOCK
SUBSCRIPTION AGREEMENT
STORM TECHNOLOGY, INC.
THIS AGREEMENT is executed in reliance upon the transaction exemption
afforded by Regulation D as promulgated by the Securities and Exchange
Commission ("SEC"), under the Securities Act.
This Agreement has been executed by the undersigned in connection with
the private placement of the Convertible Preferred Stock Series A hereinafter
referred to as the "Preferred Stock" of STORM TECHNOLOGY INC. (NASDAQ symbol
"EASY"), located at 1395 Charleston Road, Mountain View, CA 94043, a corporation
organized under the laws of Delaware, USA (hereinafter referred to as the
"Company"). The terms on which the Preferred Stock may be converted into Common
Stock and the other terms of the Preferred Stock are set forth in the
Certificate of Designation of the Series A Convertible Preferred Stock set forth
in Exhibit A annexed hereto (the "Certificate of Designation"). As provided in
the Certificate of Designation, in certain circumstances, the Company will also
issue to Subscriber warrants to purchase Common Stock, as per the terms of the
Stock Purchase Warrant in the form of Attachment I annexed hereto (the
"Contingent Warrant"). In addition, subject to the terms and conditions set
forth below, the Company will sell to Subscriber Fifty Thousand (50,000)
warrants (the "Definitive Warrants") for each One Million (US$1,000,000) Dollars
invested (such number of Warrants shall be pro rated as per each Subscription
Amount) to purchase Common Stock, as per the terms of the Stock Purchase Warrant
in the form of Exhibit B annexed hereto (as amended, supplemented or otherwise
modified from time to time, the "Stock Purchase Warrant") (the Contingent
Warrants and the Definitive Warrants collectively referred to as the
"Warrants"). This Agreement and, if accepted by the Company, the offer and sale
of the Preferred Stock and Warrants, and the Common Stock underlying the
Preferred Stock and Warrants (the "Underlying Shares", and together with the
Preferred Stock and Warrants, collectively the "Securities"), are being made in
reliance upon the provisions of Regulation D under the Securities Act.
<PAGE>
The undersigned, CPR (USA) INC., located at 101 Hudson Street, Jersey
City, NJ 07302, a corporation organized under the laws of Delaware (hereinafter
referred to as "Subscriber"), hereby represents and warrants to, and agrees with
the Company as follows:
1. Agreement to Subscribe; Purchase Price.
--------------------------------------
(a) Purchase and Sale of Preferred Stock and Warrants. Upon the terms
--------------------------------------------------
and subject to the conditions set forth herein, the Company shall issue and sell
to Subscriber, and the Subscriber will buy for an aggregate purchase price of
Two Million, Five Hundred Thousand ($2,500,000) U.S. Dollars (the "Purchase
Price"), Twenty-Five Thousand (25,000) shares of Preferred Stock based on One
Hundred (U.S.$100) Dollars per share, and that number of Warrants to be issued
pursuant to the terms on the first page of this Agreement.
(b) Form of Payment. Subscriber shall pay the Purchase Price by
---------------
delivering good funds in United States Dollars by wire transfer to Goldstein,
Goldstein & Reis, LLP, Escrow Agent, in accordance with a separate Escrow
Agreement (Exhibit C), against delivery of the original Preferred Stock and
Warrants.
(c) Wire Instructions. Wire instructions for Gray Cary Ware &
-----------------
Freidenrich are as follows:
Union Bank of California
ABA No. 122000496
For the Account of:
Gray Cary Ware & Freidenrich
Account No.6470013298
2. Representation and Warranties of the Subscriber. Subscriber
-----------------------------------------------
acknowledges, represents, warrants and agrees as follows:
(a) Organization and Authorization. Subscriber is duly incorporated
------------------------------
or organized and validly existing in the jurisdiction of its incorporation or
organization and has all requisite power and authority to purchase and hold the
Securities. The decision to invest and the execution and delivery of this
Agreement by the Subscriber, the performance by the Subscriber of its
obligations hereunder and the consummation by the Subscriber of the transactions
contemplated hereby have been duly authorized and requires no other proceedings
on the part of the Subscriber. The undersigned signatory has all right, power
and authority to execute and deliver this Agreement on behalf of the Subscriber.
This Agreement has been duly authorized, validly executed and delivered by the
Subscriber and, assuming the execution and delivery hereof and acceptance
thereof by the Company, will constitute the legal, valid and binding
2
<PAGE>
obligations of the Subscriber, enforceable against the Subscriber in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and available equitable remedies.
(b) Evaluation of Risks. Subscriber has such knowledge and experience
-------------------
in financial and business matters as to be capable of evaluating the merits and
risks of, and bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this transaction. It
recognizes that its investment in the Company involves a high degree of risk and
the Subscriber can afford the complete loss of Subscriber's investment.
(c) Independent Counsel. Subscriber acknowledges that it has been
-------------------
advised to consult with its own attorney regarding legal matters concerning the
Company and to consult with its tax advisor regarding the tax consequences of
acquiring the Securities.
(d) Disclosure Documentation. Subscriber has received and reviewed
------------------------
copies of the Company's reports filed under the Securities Exchange Act of 1934,
as amended, together with the regulations promulgated thereunder (the "1934
Act"), including the Company's Form 10-K's, Form 10-Q's, and Form 8-K's filed by
the Company for at least the twelve month period preceding the Closing Date
(collectively, the "SEC Filings"). Subscriber acknowledges that the Company has
offered to make available any additional public information that the Subscriber
may reasonably request, including technical information, and other material
information about the Company and Subscriber has been offered Company's full
cooperation in making such information available to Subscriber and acknowledges
that the Company has recommended that the Subscriber request and review such
information prior to making an investment decision. No oral or written
representations have been made, or oral or written information furnished to the
undersigned or its advisors, if any, in connection with the offering of the
Securities which were or are in any way inconsistent with the SEC Filings.
(e) Opportunity to Ask Questions. Subscriber has had a reasonable
----------------------------
opportunity to ask questions of and receive answers from the Company concerning
the Company and the offering, and all such questions, if any, have been answered
to the full satisfaction of Subscriber.
(f) SEC Filings Constitute Sole Representations. Except as set forth
-------------------------------------------
in the SEC Filings, no representations or warranties in connection with the
offering of the Securities have been made to Subscriber by (i) the Company or
any agent, employee or affiliate of the Company, or (ii) any other person, and
in entering into this transaction Subscriber is not relying upon any
information, other than that contained in the SEC Filings and the results of
independent investigation by Subscriber.
(g) Subscriber is Accredited Investor. The undersigned represents and
---------------------------------
warrants it is included within one or more of the following categories of
"Accredited Investors."
3
<PAGE>
(i) Any bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan associated or other institution as defined in
Section 3(a)(5)A of the Securities Act whether acting in it individual or
fiduciary capacity; any broker or dealer registered pursuant to Section 15
of the 1934 Act; any insurance company as defined in Section 2(13) of the
Securities Act; any investment company registered under the Investment
Company Act of 1940 or a business development company as defined in Section
2(a)(48) of that Act; any Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivision, for the benefits of its employees if such plan has
total assets in excess of $5,000,000; and employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974
if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that
are accredited investors;
(ii) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(iii) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
(iv) Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer;
(v) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
(vi) Any natural person who had an individual income in excess
of $200,000 in each of the two (2) most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching that same income level in the current
year;
(vii) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Section
230.506(b)(2)(ii) of the regulations promulgated under the Securities Act;
(viii) Any entity in which all of the equity owners are accredited
investors; and
4
<PAGE>
(ix) Any self-directed employee benefit plan with investment
decisions made solely by persons that are accredited investors within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act.
(h) No Registration, Review or Approval. Subscriber acknowledges and
-----------------------------------
understands that the limited private offering and sale of Securities pursuant to
this Agreement has not been reviewed or approved by the SEC or by any state
securities commission, authority or agency, and is not registered under the
Securities Act or under the securities or "blue sky" laws, rules or regulations
of any state. Subscriber acknowledges, understands and agrees that the
Securities are being offered and sold hereunder pursuant to (i) a private
placement exemption to the registration provisions of the Securities Act
pursuant to Section 3(b) or Section 4(2) of such Act and Regulation D
promulgated under such Act, and (ii) a similar exemption to the registration
provisions of applicable state securities laws. Subscriber understands that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of Subscriber set
forth herein in order to determine the applicability of such exemptions and the
suitability of Subscriber to acquire the Securities.
(i) Investment Intent. Without limiting its ability to resell the
-----------------
Securities pursuant to an effective registration statement, Subscriber is
acquiring the Securities solely for its own account and not with a view to the
distribution, assignment or resale to others. Subscriber understands and agrees
that it may bear the economic risk of its investment in the Securities for an
indefinite period of time.
(j) Transfer Restrictions/Conversion Holding Period/Redemption.
----------------------------------------------------------
(i) No conversion of Preferred Stock shall be made from the
date hereof until ninety (90) days after the Closing Date (the
"Initial Holding Period"). In the thirty (30) days after the
expiration of the Initial Holding Period, up to thirty three and one-
third (33 1/3%) percent, and after such thirty (30) day period one
hundred (100%) percent, of the Preferred Stock shall be convertible
into Underlying Shares at the option of Subscriber in accordance with
the terms hereof and of the Certificate of Designation.
(ii) Stop transfer instructions have been or will be placed on
any certificates or other documents evidencing any Securities so as to
restrict the resale, pledge, hypothecation or other transfer thereof
in accordance with the provisions hereof and the provisions of
Regulation D.
(iii) The Company may, at its sole discretion, redeem the
Preferred Stock, in whole or in part, at any time by payment to the
Subscriber of the "Redemption Price" (as defined in the Certificate of
Designation) together with all, or a corresponding ratable portion of,
then-accrued dividends thereunder in accordance with terms of the
Certificate of Designation.
5
<PAGE>
(k) Transfer Restrictions Regarding Securities. Upon conversion of
------------------------------------------
any part or all of the Preferred Stock at any time after the Holding Period, if
the holder of the Preferred Stock being converted makes the certification,
pursuant to a Notice of Conversion in the form attached hereto as Exhibit D (a
"Notice of Conversion"), that such holder has complied with all of the
requirements of Regulation D and such other requirements as set forth herein,
and the registration statement required to be filed by the Company pursuant to
the Registration Rights Agreement in the form of Exhibit E (the "Registration
Rights Agreement") is not effective, then the Company shall cause the Transfer
Agent to deliver the Underlying Shares upon such conversion without a
restrictive legend or stop transfer instructions, otherwise the Underlying
Shares shall be considered restricted securities and certificates representing
such Underlying Shares shall contain restrictive legends and stop transfer
instructions will be placed with the Transfer Agent regarding such Underlying
Shares, including without limitation the legend in substantially the following
form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH THE REGULATIONS
PROMULGATED THEREUNDER, THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED
FOR SALE, OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
The certificates representing the Securities, and each certificate
issued in transfer thereof, will also bear any legend required under any
applicable state securities law.
(l) Registration Rights. The parties have entered into a Registration
-------------------
Rights Agreement (Exhibit E).
(m) No Advertisements. The Subscriber is not subscribing for the
-----------------
Securities as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
3. Representations and Warranties of the Company. The Company
---------------------------------------------
acknowledges, represents, warrants and agrees as follows, except to the extent
disclosed in the Schedule of Exceptions attached as Exhibit ___ hereto (the
"Schedule of Exceptions"):
(a) Organization and Authorization. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as currently conducted.
The Company is qualified to do business as a foreign corporation in each
jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the Company. The Company is not in
default or violation of any material term
6
<PAGE>
or provision of its Certificate of Incorporation, as amended, or By-laws nor
will the consummation of the transactions contemplated by this Agreement cause
any such default or violation. The Company has all requisite corporate power and
authority to enter into this Agreement, to sell the Securities hereunder and to
carry out and perform its obligations under the terms of this Agreement. This
Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and available equitable remedies.
This Agreement has been duly authorized, validly executed and delivered on
behalf of the Company and is a valid and binding agreement in accordance with
its terms, subject to general principles of equity and to bankruptcy or other
laws affecting the enforcement of creditors' rights generally. Upon their
issuance and delivery pursuant to this Agreement, the Underlying Shares will be
validly issued, fully paid and nonassessable and will be free of any liens or
encumbrances; provided, however, that the Underlying Shares are subject to
restrictions on transfer under state and/or federal laws.
(b) Reporting Issuer Company Status. The Company is in full
-------------------------------
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the 1934 Act, and shall use its best
efforts to maintain such status on a timely basis. The Company has registered
its Common Stock pursuant to Section 12 of the 1934 Act and the Common Stock
trades on the NASDAQ National Market System.
The Company has filed all material required to be filed pursuant to
all reporting obligations, under either Section 13(a) or 15(d) of the 1934 Act
for a period of at least twelve (12) months immediately preceding the offer to
sell the Securities (or for such shorter period that the Company has been
required to file such material).
(c) Capitalization. The authorized capital stock of the Company
--------------
consists of 30,000,000 of Common Stock, $0.001 par value, of which 10,493,972
shares of Common Stock have been issued as of September 30, 1997, and 500,000
shares of Preferred Stock, $0.001 par value, of which 30,000 Shares have been
designated Series A 8.5% Convertible Preferred Stock, $0.001 par value. All
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
(d) Company to Reserve Shares. The Company will reserve from its
--------------------------
authorized but unissued shares of Common Stock a sufficient number of shares of
Common Stock to permit the conversion and/or exercise in full of the outstanding
Securities. If at any time the number of authorized but unissued shares of
Common Stock shall be insufficient to satisfy the conversion or exercise rights
hereunder, in addition to such other remedies as shall be available to the
holder of Preferred Stock or Warrants, the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
(e) Listing. The Company will use best efforts to maintain the
-------
listing of its Common Stock on the NASDAQ National Market System. The Company
has not received any notice, oral or written, regarding continued listing and,
as long as the shares of Preferred Stock
7
<PAGE>
and Warrants are outstanding, the Company will take no action which would import
their continued listing or eligibility of the Company for such listing.
(f) Company to Honor Telecopied Notices. The Company will permit
-----------------------------------
Subscriber to exercise its right to convert the Preferred Stock and exercise the
Warrants by telecopying an executed and completed Notice of Conversion and/or
Notice of Exercise to the Company and delivering the original Notice of
Conversion and/or Notice of Exercise and the certificate representing the
Preferred Stock, and/or the original Warrant to the Company by express courier.
The Company will use all commercially reasonable efforts to transmit the
certificates representing Underlying Shares issuable upon conversion of any
Preferred Stock and/or exercise of any Warrants (together with the certificates
representing any then-remaining unconverted Preferred Stock and/or unexercised
Warrants) to Subscriber via express courier, at the address set forth herein, by
electronic transfer or otherwise within three (3) NASDAQ trading days after the
applicable Conversion Date (defined below) if the Company has received the
original Notice of Conversion and Preferred Stock certificate (and/or the
original Notice of Exercise and Warrant, if applicable) being so converted, or
exercised, by such date. In addition to any other remedies which may be
available to Subscriber, in the event that the Company fails for any reason to
transmit such shares of Common Stock within such three (3) NASDAQ trading day
period, Subscriber will be entitled to revoke the relevant Notice of Conversion
and/or Notice of Exercise by delivering a notice to such effect to the Company
whereupon the Company and Subscriber shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion and/or
Notice of Exercise.
In the event that the Common Stock issuable upon conversion of the
Preferred Stock, and/or upon exercise of the Warrants, is not delivered within
five (5) NASDAQ trading days of delivery of a Notice of Conversion and/or a
Notice of Exercise by the Company of a valid Notice of Conversion, and/or a
valid Notice of Exercise and the Preferred Stock, and/or Warrants to be
converted or exercised (such date of delivery referred to as the "Conversion
Date"), the Company shall pay to the Purchaser, in immediately available funds,
upon demand, as liquidated damages for such failure and not as a penalty, for
each $100,000 of Preferred Stock sought to be converted, and/or for each 1,000
Warrants to be exercised, $250 for each of the first ten (10) days and $500 per
day thereafter that the Underlying Shares are not delivered, which liquidated
damages shall run from the sixth (6th) NASDAQ trading day after the Conversion
Date. Any and all payments required pursuant to this paragraph shall be payable
in cash upon demand of the Subscriber.
(g) SEC Filings. For a period of at least twelve (12) months
-----------
immediately preceding this offer and sale, or such shorter period that the
Company has been required to file the SEC Filings, to the best of the Company's
knowledge (i) none of the Company's filings with the Securities and Exchange
Commission contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading, and (ii) the Company has timely filed all requisite forms, reports
and exhibits thereto with the Securities and Exchange Commission.
8
<PAGE>
(h) Full Disclosure. There is no fact known to the Company (other
---------------
than general economic conditions known to the public generally) that has not
been disclosed in writing to the Subscriber that (i) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise) or in the earnings, business affairs, business prospects, properties
or assets of the Company, or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations pursuant
to this Agreement.
(i) Other Convertible Interests. Except as described in the SEC
---------------------------
Filings, (i) there are no other outstanding debt or equity securities presently
convertible into shares of Common Stock or that could be convertible into shares
of Common Stock, and (ii) the Company has no outstanding restricted shares of
Common Stock, or shares of Common Stock sold under Regulation S or Regulation D
under the Securities Act or outstanding under any other exemption from
registration, which are available for sale as unrestricted free trading stock.
(j) No Undisclosed Liabilities or Events. The Company has no
------------------------------------
liabilities or obligations other than those disclosed in the SEC Filings, this
Agreement or those incurred in the ordinary course of the Company's business
since October 1, 1997, and which individually or in the aggregate, do not or
would not have a material adverse effect on the properties, business, condition
(financial or otherwise), results of operations or prospects of the Company. No
event or circumstances has occurred or exists with respect to the Company or its
properties, business, condition (financial or otherwise), results of operations
or prospects, which, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed.
(k) No Default. The Company is not in default in the performance or
----------
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it is or its property is bound,
and neither the execution, nor the delivery by the Company, nor the performance
by the Company of its obligations under this Agreement, including the conversion
provision of the Preferred Stock, and the exercise provision of the Warrants,
will conflict with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or imposition
of any lien or charge on any assets or properties of the Company under, any
material indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is a party or by
which it is bound or any statute or the Certificate of Incorporation, as
amended, or Bylaws, as amended, of the Company, or any decree, judgment, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, or the Company's listing
agreement for its Common Stock.
(l) Intellectual Property Rights. Except as disclosed in the SEC
----------------------------
Filings, the Company has sufficient trademarks, trade names, patent rights,
copyrights and licenses to conduct its business as presently conducted in the
SEC Filings. To the Company's knowledge, neither the Company nor its products
is infringing or will infringe any trademark, trade name, patent right,
copyright, license, trade secret or other similar right of others currently in
existence; and is not aware of any claim being made against it regarding any
trademark, trade name, patent, copyright,
9
<PAGE>
license, trade secret or other intellectual property right which could have a
material adverse effect on the business or financial condition of the Company.
(m) Litigation. Except as disclosed in the SEC Filings, there is no
----------
action, proceeding or investigation pending, or to the Company's knowledge
threatened, against the Company which might result, either individually or in
the aggregate, in any material adverse change in the business, prospects,
conditions, affairs or operations of the Company. The Company is not a party to
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality.
(n) Title to Assets. Except as set forth in SEC Filings, the Company
---------------
has good and marketable title to all properties and material assets described in
the SEC Filings as owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than such as are not
material to the business of the Company.
(o) Subsidiaries. Except as disclosed in the SEC Filings, the Company
------------
does not presently own or control, directly or indirectly, any interest in any
other corporation, partnership, association or other business entity.
(p) Required Governmental Permits. The Company is in possession of
-----------------------------
and operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the current conduct of its business, all of
which are valid and in full force and effect.
(q) Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the SEC which may at any time permit the
sale of the Securities 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 under the Securities Act, at all times
after the effective date on which the Company becomes subject to the reporting
requirements of the Securities Act or the 1934 Act;
(ii) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the 1934 Act;
(iii) to furnish to Purchaser forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144, and of the Securities Act and the 1934 Act, a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as Purchaser may reasonably request in
availing itself of any rule or regulation of the SEC allowing Purchaser to sell
any such Securities without registration.
(r) Dilution. The Company is aware and acknowledges that conversion
--------
of the
10
<PAGE>
Preferred Stock, and exercise of the Warrants, could cause dilution to existing
stockholders and could significantly increase the outstanding number of shares
of Common Stock.
(s) Right of First Refusal/Further Placements. In the event the
-----------------------------------------
Company wishes to obtain further equity or debt financing within nine (9) months
following the Closing Date, the Subscriber shall have the right of first refusal
to participate in such offering in an amount not to exceed the total amount
invested by Subscriber hereunder pursuant to the Company's terms and conditions
of such offer, and shall have three (3) business days to reply in writing after
receipt of such written notice from the Company. Such reply may be sent by
facsimile. In the event such written reply is not received by the Company
within such three (3) business day period, it will be deemed a refusal by the
Subscriber. Subscriber shall have the right to review all final documentation
regarding such placements and such documentation shall be delivered to
Subscriber within ten (10) days from the closing date of such transaction(s).
In the event that the Subscriber does not elect its right of first
refusal and the Company enters into any equity or debt financing through March
31, 1998, Subscriber shall be entitled to the benefit of any term, condition or
provision which it deems to be in any way more beneficial than the same term,
condition or provision applicable to it. Subscriber shall have the right to
review all final documentation regarding such placements and such documentation
shall be delivered to Subscriber within ten (10) days from the closing date of
such transaction(s).
No equity or debt financing, including the issuance of debt
convertible into equity, consummated in connection with the acquisition of
assets by the Company shall constitute a financing which would trigger the right
of first refusal hereunder in favor of Subscriber.
4. Representations and Warranties of the Company and Subscriber.
------------------------------------------------------------
Each of Subscriber and the Company represent to the other the following with
respect to itself:
(a) Non-contravention/No Conflict. The execution and delivery of this
-----------------------------
Agreement and the consummation of the issuance of the Securities and the
transaction contemplated by this Agreement do not and will not conflict with or
result in a breach by such party of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or by-laws of such
party, or any indenture, mortgage, deed of trust of other material agreement or
instrument to which such party is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule or
regulation or any applicable decree, judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental body having
jurisdiction over such party or any of its properties or assets. The execution,
delivery and performance of this Agreement and the consummation by such party of
the transactions contemplated hereby or relating hereto do not and will not (i)
result in a violation of such party's charter documents, by-laws, partnership
agreement, certificate of limited partnership or other governing documents, as
the case may be, or (ii) conflict with, or constitute a default (or an event
which with notice of lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such party is a
party, or result in a violation of any law, rule, or regulation, or any order,
judgment or decree of any court or governmental agency
11
<PAGE>
applicable to such party or any of its properties. Such party is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
transactions contemplated hereby; provided that for purposes of the
representation made in this sentence, each party is assuming and relying upon
the accuracy of the relevant representations and agreements of the other party
herein.
(b) Approvals. Neither the Company nor Subscriber is aware of any
---------
authorization, approval or consent of any governmental body which is legally
required for the issuance and sale of the Securities, other than filings to
comply with the Securities Act and applicable state securities or "blue sky"
laws.
(c) Indemnification. Each of the Company and the Subscriber agrees to
---------------
indemnify the other and to hold the other harmless from and against any and all
losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with the
breach by the indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Subscriber, the fees and expenses of such counsel shall be at the expense of
the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Subscriber and the indemnifying party and the Subscriber shall have been advised
by such counsel that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any legal defenses which
may be available to the Subscriber (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
Subscriber, it being understood, however, that the indemnifying party shall, in
connection with
12
<PAGE>
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the Subscriber, which firm shall be designated in
writing by the Subscriber). No settlement of any action against an indemnified
party shall be made without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld.
(d) Mandatory Conversion. In the event the Preferred Stock has not
---------------------
all been converted two (2) years from the Closing Date, the Company may, at its
option, convert any and all remaining outstanding Preferred Stock in accordance
with the procedure, terms and conditions set forth in the Certificate of
Designation.
(e) Time of Representations and Warranties. Each representation and
--------------------------------------
warranty made by each party hereunder shall be deemed made as of the date hereof
and as of the Closing Date, unless the context shall clearly require otherwise.
5. Restrictions on Conversion and Exercise. Restrictions on
---------------------------------------
Conversion and Exercise shall be subject to the Certificate of Designation.
6. Registration or Exemption Requirements. Subscriber acknowledges
--------------------------------------
and understands that the Securities may not be resold or otherwise transferred
except in a transaction registered under the Securities Act and any applicable
state securities laws or unless an exemption from such registration is
available. Subscriber understands that the Securities will be imprinted with a
legend that prohibits the transfer of the Securities unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the
Securities Act and, if the Company shall so request in writing, an opinion of
counsel reasonably satisfactory to the Company is obtained to the effect that
the transaction is so exempt.
7. Closing Date. The Closing Date (the "Closing Date") shall be
------------
mutually agreed upon as to time and place when the Escrow Agent receives the
Securities and Purchase Price, the conditions set forth in Sections 8 and 9 and
the terms and conditions of the Escrow Agreement herein are satisfied or waived.
8. Conditions to the Company's Obligation to Sell. Subscriber
----------------------------------------------
understands that the Company's obligation to sell the Preferred Stock and
Warrants are conditioned upon:
(a) The execution and delivery of this Subscription Agreement by the
Company; and
(b) Delivery into escrow by Subscriber of good cleared funds as
payment in full for the purchase of the Preferred Stock and Warrants, and
written notification to the
13
<PAGE>
Company by the Escrow Agent of receipt of payment in full for the Preferred
Stock and Warrants; and
(c) All representations and warranties of the Subscriber shall remain
true and correct as of the Closing Date.
9. Conditions to Subscriber's Obligation to Purchase. The Company
-------------------------------------------------
understands that Subscriber's obligation to purchase the Preferred Stock and
Warrants is conditioned upon:
(a) The execution and delivery of this Subscription Agreement,
including Exhibits, for the sale of the Preferred Stock and Warrants;
(b) Delivery of the original Preferred Stock and Warrants;
(c) All representations and warranties of the Company shall remain
true and correct as of the Closing Date; and
(d) Receipt of opinion of counsel in substantially the form of Exhibit
F hereto and a copy of the filed Certificate of Designation.
(e) The Company shall have its counsel provide, at the Company's
expense, any and all opinions of counsel pertaining to the Company which may be
reasonably required in order to issue the Preferred Stock or the Warrants.
(f) The Company shall have completed equity financing in the amount of
at least Two Million ($2,000,000) Dollars.
10. Miscellaneous.
-------------
(a) Governing Law/Jurisdiction. This Agreement will be construed and
--------------------------
enforced in accordance with and governed by the laws of the State of Delaware,
except for matters arising under the Securities Act, without reference to
principles of conflicts of law. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
State of Delaware or the state courts of the State of Delaware in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdiction.
Each party hereby agrees that if another party to this Agreement obtains a
judgment against it in such a proceeding, the party which obtained such judgment
may enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid,
14
<PAGE>
to such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law.
(b) Confidentiality. If for any reason the transactions contemplated
---------------
by this Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party's domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information, without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herewith.
Each of the Company and Subscriber agrees to keep confidential and not
to disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by the Exchange Act or other applicable law.
(c) Facsimile/Counterparts/Entire Agreement. In lieu of the original,
---------------------------------------
a facsimile transmission or copy of the original shall be as effective and
enforceable as the original. This Agreement may be executed in counterparts
which shall be considered an original document and which together shall be
considered a complete document. This Agreement and Exhibits hereto constitute
the entire agreement between the Subscriber and the Company with respect to the
subject matter hereof.
(d) Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
(e) Fees. Except as reflected in the Escrow Agreement, each of the
----
parties shall pay its own fees and expenses (including the fees of any
attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby.
(f) Notices. Each Notice of Conversion, Notice of Exercise and all
--------
other notices and communications delivered hereunder from time to time, and any
Preferred Stock representing the portion of the Preferred Stock remaining
unconverted, if applicable, or any Warrants representing the portion of Warrants
remaining unexercised, if applicable, shall be delivered as follows:
15
<PAGE>
If to the Company:
Storm Technology, Inc.
1395 Charleston Road
Mountain View, CA 94943
Attn: Chief Financial Officer
Fax: (650) 691-6699
If to Subscriber:
CPR (USA) Inc.
101 Hudson Street
Jersey City, NJ 07302
Attn: Steven Rogers, Esq.
fax: (201) 200-1140
Provided, that each party may specify an address for notices and
communications to such party different from the one then specified under this
Section by so notifying the other party at the address then operative under this
Section.
(g) Waivers and Amendments. With the written consent of the record
----------------------
holders of at least a majority of the Underlying Shares, the rights of
Subscribers under this Agreement may be waived or amended (either generally or
in a particular instance). Upon the effectuation of each such waiver or
amendment, the Company shall promptly give written notice thereof to the record
holders of the Underlying Shares who have not previously consented thereto in
writing.
(h) Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.
[Remainder of Page Intentionally Left Blank]
16
<PAGE>
IN WITNESS WHEREOF, this Subscription Agreement was duly executed on
the date first written below.
CPR (USA) INC.
By
---------------------------
Officer:
Title:
Executed this 18th day of December, 1997
Agreed to and Accepted on
this 18th day of December 1997
STORM TECHNOLOGY, INC.
By
----------------------------
Title:
17
<PAGE>
FULL NAME AND ADDRESS OF SUBSCRIBER FOR REGISTRATION PURPOSES:
NAME: CPR (USA) INC.
ADDRESS: 101 Hudson Street
Jersey City, NJ 07302
TEL NO:
FAX NO: (201) 200-1140
CONTACT
NAME: Steven Rogers, Esq.
DELIVERY INSTRUCTIONS (IF DIFFERENT FROM REGISTRATION NAME):
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
SPECIAL
INSTRUCTIONS:
----------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
18
<PAGE>
Exhibit 4.2
THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED
THEREUNDER (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS SUBSCRIPTION
AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER
TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR
TRANSFERRED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
SERIES A 8.5% CONVERTIBLE PREFERRED STOCK
SUBSCRIPTION AGREEMENT
STORM TECHNOLOGY, INC.
THIS AGREEMENT is executed in reliance upon the transaction exemption
afforded by Regulation D as promulgated by the Securities and Exchange
Commission ("SEC"), under the Securities Act.
This Agreement has been executed by the undersigned in connection with
the private placement of the Convertible Preferred Stock Series A hereinafter
referred to as the "Preferred Stock" of STORM TECHNOLOGY INC. (NASDAQ symbol
"EASY"), located at 1395 Charleston Road, Mountain View, CA 94043, a corporation
organized under the laws of Delaware, USA (hereinafter referred to as the
"Company"). The terms on which the Preferred Stock may be converted into Common
Stock and the other terms of the Preferred Stock are set forth in the
Certificate of Designation of the Series A Convertible Preferred Stock set forth
in Exhibit A annexed hereto (the "Certificate of Designation"). As provided in
the Certificate of Designation, in certain circumstances, the Company will also
issue to Subscriber warrants to purchase Common Stock, as per the terms of the
Stock Purchase Warrant in the form of Attachment I annexed hereto (the
"Contingent Warrant"). In addition, subject to the terms and conditions set
forth below, the Company will sell to Subscriber Fifty Thousand (50,000)
warrants (the "Definitive Warrants") for each One Million (US$1,000,000) Dollars
invested (such number of Warrants shall be pro rated as per each Subscription
Amount) to purchase Common Stock, as per the terms of the Stock Purchase Warrant
in the form of Exhibit B annexed hereto (as amended, supplemented or otherwise
modified from time to time, the "Stock Purchase Warrant") (the Contingent
Warrants and the Definitive Warrants collectively referred to as the
"Warrants"). This Agreement and, if accepted by the Company, the offer and sale
of the Preferred Stock and Warrants, and the Common Stock underlying the
Preferred Stock and Warrants (the "Underlying Shares", and together with the
Preferred Stock and Warrants, collectively the "Securities"), are being made in
reliance upon the provisions of Regulation D under the Securities Act.
<PAGE>
The undersigned, LIBERTYVIEW PLUS FUND, located at c/o Hemisphere
House, 9 Church Street, Hamilton, HM DX Bermuda, a corporation organized under
the laws of Bahamas (hereinafter referred to as "Subscriber"), hereby represents
and warrants to, and agrees with the Company as follows:
1. Agreement to Subscribe; Purchase Price.
--------------------------------------
(a) Purchase and Sale of Preferred Stock and Warrants. Upon the
--------------------------------------------------
terms and subject to the conditions set forth herein, the Company shall issue
and sell to Subscriber, and the Subscriber will buy for an aggregate purchase
price of Four Hundred Thousand ($400,000) U.S. Dollars (the "Purchase Price"),
Four Thousand (4,000) shares of Preferred Stock based on One Hundred (U.S.$100)
Dollars per share, and that number of Warrants to be issued pursuant to the
terms on the first page of this Agreement.
(b) Form of Payment. Subscriber shall pay the Purchase Price by
---------------
delivering good funds in United States Dollars by wire transfer to Goldstein,
Goldstein & Reis, LLP, Escrow Agent, in accordance with a separate Escrow
Agreement (Exhibit C), against delivery of the original Preferred Stock and
Warrants.
(c) Wire Instructions. Wire instructions for Gray Cary Ware &
-----------------
Freidenrich are as follows:
Union Bank of California
ABA No. 122000496
For the Account of:
Gray Cary Ware & Freidenrich
Account No.6470013298
2. Representation and Warranties of the Subscriber. Subscriber
-----------------------------------------------
acknowledges, represents, warrants and agrees as follows:
(a) Organization and Authorization. Subscriber is duly
------------------------------
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite power and authority to
purchase and hold the Securities. The decision to invest and the execution and
delivery of this Agreement by the Subscriber, the performance by the Subscriber
of its obligations hereunder and the consummation by the Subscriber of the
transactions contemplated hereby have been duly authorized and requires no other
proceedings on the part of the Subscriber. The undersigned signatory has all
right, power and authority to execute and deliver this Agreement on behalf of
the Subscriber. This Agreement has been duly authorized, validly executed and
delivered by the Subscriber and, assuming the execution and delivery hereof and
acceptance thereof by the Company, will constitute the legal, valid and binding
2
<PAGE>
obligations of the Subscriber, enforceable against the Subscriber in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and available equitable remedies.
(b) Evaluation of Risks. Subscriber has such knowledge and
-------------------
experience in financial and business matters as to be capable of evaluating the
merits and risks of, and bearing the economic risks entailed by, an investment
in the Company and of protecting its interests in connection with this
transaction. It recognizes that its investment in the Company involves a high
degree of risk and the Subscriber can afford the complete loss of Subscriber's
investment.
(c) Independent Counsel. Subscriber acknowledges that it has been
-------------------
advised to consult with its own attorney regarding legal matters concerning the
Company and to consult with its tax advisor regarding the tax consequences of
acquiring the Securities.
(d) Disclosure Documentation. Subscriber has received and reviewed
------------------------
copies of the Company's reports filed under the Securities Exchange Act of 1934,
as amended, together with the regulations promulgated thereunder (the "1934
Act"), including the Company's Form 10-K's, Form 10-Q's, and Form 8-K's filed by
the Company for at least the twelve month period preceding the Closing Date
(collectively, the "SEC Filings"). Subscriber acknowledges that the Company has
offered to make available any additional public information that the Subscriber
may reasonably request, including technical information, and other material
information about the Company and Subscriber has been offered Company's full
cooperation in making such information available to Subscriber and acknowledges
that the Company has recommended that the Subscriber request and review such
information prior to making an investment decision. No oral or written
representations have been made, or oral or written information furnished to the
undersigned or its advisors, if any, in connection with the offering of the
Securities which were or are in any way inconsistent with the SEC Filings.
(e) Opportunity to Ask Questions. Subscriber has had a reasonable
----------------------------
opportunity to ask questions of and receive answers from the Company concerning
the Company and the offering, and all such questions, if any, have been answered
to the full satisfaction of Subscriber.
(f) SEC Filings Constitute Sole Representations. Except as set forth
-------------------------------------------
in the SEC Filings, no representations or warranties in connection with the
offering of the Securities have been made to Subscriber by (i) the Company or
any agent, employee or affiliate of the Company, or (ii) any other person, and
in entering into this transaction Subscriber is not relying upon any
information, other than that contained in the SEC Filings and the results of
independent investigation by Subscriber.
(g) Subscriber is Accredited Investor. The undersigned represents
---------------------------------
and warrants it is included within one or more of the following categories of
"Accredited Investors."
3
<PAGE>
(i) Any bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan associated or other institution as defined in
Section 3(a)(5)A of the Securities Act whether acting in it individual or
fiduciary capacity; any broker or dealer registered pursuant to Section 15
of the 1934 Act; any insurance company as defined in Section 2(13) of the
Securities Act; any investment company registered under the Investment
Company Act of 1940 or a business development company as defined in Section
2(a)(48) of that Act; any Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivision, for the benefits of its employees if such plan has
total assets in excess of $5,000,000; and employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974
if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that
are accredited investors;
(ii) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(iii) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
(iv) Any director, executive officer, or general partner of
the issuer of the securities being offered or sold, or any director,
executive officer, or general partner of a general partner of that issuer;
(v) Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
(vi) Any natural person who had an individual income in excess
of $200,000 in each of the two (2) most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching that same income level in the current
year;
(vii) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Section
230.506(b)(2)(ii) of the regulations promulgated under the Securities Act;
(viii) Any entity in which all of the equity owners are
accredited investors; and
4
<PAGE>
(ix) Any self-directed employee benefit plan with investment
decisions made solely by persons that are accredited investors within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act.
(h) No Registration, Review or Approval. Subscriber acknowledges and
-----------------------------------
understands that the limited private offering and sale of Securities pursuant to
this Agreement has not been reviewed or approved by the SEC or by any state
securities commission, authority or agency, and is not registered under the
Securities Act or under the securities or "blue sky" laws, rules or regulations
of any state. Subscriber acknowledges, understands and agrees that the
Securities are being offered and sold hereunder pursuant to (i) a private
placement exemption to the registration provisions of the Securities Act
pursuant to Section 3(b) or Section 4(2) of such Act and Regulation D
promulgated under such Act, and (ii) a similar exemption to the registration
provisions of applicable state securities laws. Subscriber understands that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of Subscriber set
forth herein in order to determine the applicability of such exemptions and the
suitability of Subscriber to acquire the Securities.
(i) Investment Intent. Without limiting its ability to resell the
-----------------
Securities pursuant to an effective registration statement, Subscriber is
acquiring the Securities solely for its own account and not with a view to the
distribution, assignment or resale to others. Subscriber understands and agrees
that it may bear the economic risk of its investment in the Securities for an
indefinite period of time.
(j) Transfer Restrictions/Conversion Holding Period/Redemption.
----------------------------------------------------------
(i) No conversion of Preferred Stock shall be made from the
date hereof until ninety (90) days after the Closing Date (the
"Initial Holding Period"). In the thirty (30) days after the
expiration of the Initial Holding Period, up to thirty three and one-
third (33 1/3%) percent, and after such thirty (30) day period one
hundred (100%) percent, of the Preferred Stock shall be convertible
into Underlying Shares at the option of Subscriber in accordance with
the terms hereof and of the Certificate of Designation.
(ii) Stop transfer instructions have been or will be placed on
any certificates or other documents evidencing any Securities so as to
restrict the resale, pledge, hypothecation or other transfer thereof
in accordance with the provisions hereof and the provisions of
Regulation D.
(iii) The Company may, at its sole discretion, redeem the
Preferred Stock, in whole or in part, at any time by payment to the
Subscriber of the "Redemption Price" (as defined in the Certificate of
Designation) together with all, or a corresponding ratable portion of,
then-accrued dividends thereunder in accordance with terms of the
Certificate of Designation.
5
<PAGE>
(k) Transfer Restrictions Regarding Securities. Upon conversion of
------------------------------------------
any part or all of the Preferred Stock at any time after the Holding Period, if
the holder of the Preferred Stock being converted makes the certification,
pursuant to a Notice of Conversion in the form attached hereto as Exhibit D (a
"Notice of Conversion"), that such holder has complied with all of the
requirements of Regulation D and such other requirements as set forth herein,
and the registration statement required to be filed by the Company pursuant to
the Registration Rights Agreement in the form of Exhibit E (the "Registration
Rights Agreement") is not effective, then the Company shall cause the Transfer
Agent to deliver the Underlying Shares upon such conversion without a
restrictive legend or stop transfer instructions, otherwise the Underlying
Shares shall be considered restricted securities and certificates representing
such Underlying Shares shall contain restrictive legends and stop transfer
instructions will be placed with the Transfer Agent regarding such Underlying
Shares, including without limitation the legend in substantially the following
form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH THE REGULATIONS
PROMULGATED THEREUNDER, THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED
FOR SALE, OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
The certificates representing the Securities, and each certificate
issued in transfer thereof, will also bear any legend required under any
applicable state securities law.
(l) Registration Rights. The parties have entered into a
-------------------
Registration Rights Agreement (Exhibit E).
(m) No Advertisements. The Subscriber is not subscribing for the
-----------------
Securities as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
3. Representations and Warranties of the Company. The Company
---------------------------------------------
acknowledges, represents, warrants and agrees as follows, except to the extent
disclosed in the Schedule of Exceptions attached as Exhibit ___ hereto (the
"Schedule of Exceptions"):
(a) Organization and Authorization. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its properties and assets and to carry on its business as currently
conducted. The Company is qualified to do business as a foreign corporation in
each jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the Company. The Company is not in
default or violation of any material term
6
<PAGE>
or provision of its Certificate of Incorporation, as amended, or By-laws nor
will the consummation of the transactions contemplated by this Agreement cause
any such default or violation. The Company has all requisite corporate power and
authority to enter into this Agreement, to sell the Securities hereunder and to
carry out and perform its obligations under the terms of this Agreement. This
Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and available equitable remedies.
This Agreement has been duly authorized, validly executed and delivered on
behalf of the Company and is a valid and binding agreement in accordance with
its terms, subject to general principles of equity and to bankruptcy or other
laws affecting the enforcement of creditors' rights generally. Upon their
issuance and delivery pursuant to this Agreement, the Underlying Shares will be
validly issued, fully paid and nonassessable and will be free of any liens or
encumbrances; provided, however, that the Underlying Shares are subject to
restrictions on transfer under state and/or federal laws.
(b) Reporting Issuer Company Status. The Company is in full
-------------------------------
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the 1934 Act, and shall use its best
efforts to maintain such status on a timely basis. The Company has registered
its Common Stock pursuant to Section 12 of the 1934 Act and the Common Stock
trades on the NASDAQ National Market System.
The Company has filed all material required to be filed pursuant to
all reporting obligations, under either Section 13(a) or 15(d) of the 1934 Act
for a period of at least twelve (12) months immediately preceding the offer to
sell the Securities (or for such shorter period that the Company has been
required to file such material).
(c) Capitalization. The authorized capital stock of the Company
--------------
consists of 30,000,000 of Common Stock, $0.001 par value, of which 10,493,972
shares of Common Stock have been issued as of September 30, 1997, and 500,000
shares of Preferred Stock, $0.001 par value, of which 30,000 Shares have been
designated Series A 8.5% Convertible Preferred Stock, $0.001 par value. All
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
(d) Company to Reserve Shares. The Company will reserve from its
--------------------------
authorized but unissued shares of Common Stock a sufficient number of shares of
Common Stock to permit the conversion and/or exercise in full of the outstanding
Securities. If at any time the number of authorized but unissued shares of
Common Stock shall be insufficient to satisfy the conversion or exercise rights
hereunder, in addition to such other remedies as shall be available to the
holder of Preferred Stock or Warrants, the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
(e) Listing. The Company will use best efforts to maintain the
-------
listing of its Common Stock on the NASDAQ National Market System. The Company
has not received any notice, oral or written, regarding continued listing and,
as long as the shares of Preferred Stock
7
<PAGE>
and Warrants are outstanding, the Company will take no action which would import
their continued listing or eligibility of the Company for such listing.
(f) Company to Honor Telecopied Notices. The Company will permit
-----------------------------------
Subscriber to exercise its right to convert the Preferred Stock and exercise the
Warrants by telecopying an executed and completed Notice of Conversion and/or
Notice of Exercise to the Company and delivering the original Notice of
Conversion and/or Notice of Exercise and the certificate representing the
Preferred Stock, and/or the original Warrant to the Company by express courier.
The Company will use all commercially reasonable efforts to transmit the
certificates representing Underlying Shares issuable upon conversion of any
Preferred Stock and/or exercise of any Warrants (together with the certificates
representing any then-remaining unconverted Preferred Stock and/or unexercised
Warrants) to Subscriber via express courier, at the address set forth herein, by
electronic transfer or otherwise within three (3) NASDAQ trading days after the
applicable Conversion Date (defined below) if the Company has received the
original Notice of Conversion and Preferred Stock certificate (and/or the
original Notice of Exercise and Warrant, if applicable) being so converted, or
exercised, by such date. In addition to any other remedies which may be
available to Subscriber, in the event that the Company fails for any reason to
transmit such shares of Common Stock within such three (3) NASDAQ trading day
period, Subscriber will be entitled to revoke the relevant Notice of Conversion
and/or Notice of Exercise by delivering a notice to such effect to the Company
whereupon the Company and Subscriber shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion and/or
Notice of Exercise.
In the event that the Common Stock issuable upon conversion of the
Preferred Stock, and/or upon exercise of the Warrants, is not delivered within
five (5) NASDAQ trading days of delivery of a Notice of Conversion and/or a
Notice of Exercise by the Company of a valid Notice of Conversion, and/or a
valid Notice of Exercise and the Preferred Stock, and/or Warrants to be
converted or exercised (such date of delivery referred to as the "Conversion
Date"), the Company shall pay to the Purchaser, in immediately available funds,
upon demand, as liquidated damages for such failure and not as a penalty, for
each $100,000 of Preferred Stock sought to be converted, and/or for each 1,000
Warrants to be exercised, $250 for each of the first ten (10) days and $500 per
day thereafter that the Underlying Shares are not delivered, which liquidated
damages shall run from the sixth (6th) NASDAQ trading day after the Conversion
Date. Any and all payments required pursuant to this paragraph shall be payable
in cash upon demand of the Subscriber.
(g) SEC Filings. For a period of at least twelve (12) months
-----------
immediately preceding this offer and sale, or such shorter period that the
Company has been required to file the SEC Filings, to the best of the Company's
knowledge (i) none of the Company's filings with the Securities and Exchange
Commission contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading, and (ii) the Company has timely filed all requisite forms, reports
and exhibits thereto with the Securities and Exchange Commission.
8
<PAGE>
(h) Full Disclosure. There is no fact known to the Company (other
---------------
than general economic conditions known to the public generally) that has not
been disclosed in writing to the Subscriber that (i) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise) or in the earnings, business affairs, business prospects, properties
or assets of the Company, or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations pursuant
to this Agreement.
(i) Other Convertible Interests. Except as described in the SEC
---------------------------
Filings, (i) there are no other outstanding debt or equity securities presently
convertible into shares of Common Stock or that could be convertible into shares
of Common Stock, and (ii) the Company has no outstanding restricted shares of
Common Stock, or shares of Common Stock sold under Regulation S or Regulation D
under the Securities Act or outstanding under any other exemption from
registration, which are available for sale as unrestricted free trading stock.
(j) No Undisclosed Liabilities or Events. The Company has no
------------------------------------
liabilities or obligations other than those disclosed in the SEC Filings, this
Agreement or those incurred in the ordinary course of the Company's business
since October 1, 1997, and which individually or in the aggregate, do not or
would not have a material adverse effect on the properties, business, condition
(financial or otherwise), results of operations or prospects of the Company. No
event or circumstances has occurred or exists with respect to the Company or its
properties, business, condition (financial or otherwise), results of operations
or prospects, which, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed.
(k) No Default. The Company is not in default in the performance or
----------
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it is or its property is bound,
and neither the execution, nor the delivery by the Company, nor the performance
by the Company of its obligations under this Agreement, including the conversion
provision of the Preferred Stock, and the exercise provision of the Warrants,
will conflict with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or imposition
of any lien or charge on any assets or properties of the Company under, any
material indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is a party or by
which it is bound or any statute or the Certificate of Incorporation, as
amended, or Bylaws, as amended, of the Company, or any decree, judgment, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, or the Company's listing
agreement for its Common Stock.
(l) Intellectual Property Rights. Except as disclosed in the SEC
----------------------------
Filings, the Company has sufficient trademarks, trade names, patent rights,
copyrights and licenses to conduct its business as presently conducted in the
SEC Filings. To the Company's knowledge, neither the Company nor its products
is infringing or will infringe any trademark, trade name, patent right,
copyright,
9
<PAGE>
license, trade secret or other similar right of others currently in existence;
and is not aware of any claim being made against it regarding any trademark,
trade name, patent, copyright, license, trade secret or other intellectual
property right which could have a material adverse effect on the business or
financial condition of the Company.
(m) Litigation. Except as disclosed in the SEC Filings, there is no
----------
action, proceeding or investigation pending, or to the Company's knowledge
threatened, against the Company which might result, either individually or in
the aggregate, in any material adverse change in the business, prospects,
conditions, affairs or operations of the Company. The Company is not a party to
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality.
(n) Title to Assets. Except as set forth in SEC Filings, the Company
---------------
has good and marketable title to all properties and material assets described in
the SEC Filings as owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than such as are not
material to the business of the Company.
(o) Subsidiaries. Except as disclosed in the SEC Filings, the
------------
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, association or other business entity.
(p) Required Governmental Permits. The Company is in possession of
-----------------------------
and operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the current conduct of its business, all of
which are valid and in full force and effect.
(q) Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the SEC which may at any time permit the
sale of the Securities 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 under the Securities Act, at all
times after the effective date on which the Company becomes subject to the
reporting requirements of the Securities Act or the 1934 Act;
(ii) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the 1934 Act;
(iii) to furnish to Purchaser forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144, and of the Securities Act and the 1934 Act, a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as Purchaser may reasonably request in
availing itself of any rule or regulation of the SEC allowing Purchaser to sell
any such Securities without registration.
(r) Dilution. The Company is aware and acknowledges that conversion
--------
of the
10
<PAGE>
Preferred Stock, and exercise of the Warrants, could cause dilution to existing
stockholders and could significantly increase the outstanding number of shares
of Common Stock.
(s) Right of First Refusal/Further Placements. In the event the
-----------------------------------------
Company wishes to obtain further equity or debt financing within nine (9) months
following the Closing Date, the Subscriber shall have the right of first refusal
to participate in such offering in an amount not to exceed the total amount
invested by Subscriber hereunder pursuant to the Company's terms and conditions
of such offer, and shall have three (3) business days to reply in writing after
receipt of such written notice from the Company. Such reply may be sent by
facsimile. In the event such written reply is not received by the Company
within such three (3) business day period, it will be deemed a refusal by the
Subscriber. Subscriber shall have the right to review all final documentation
regarding such placements and such documentation shall be delivered to
Subscriber within ten (10) days from the closing date of such transaction(s).
In the event that the Subscriber does not elect its right of first
refusal and the Company enters into any equity or debt financing through March
31, 1998, Subscriber shall be entitled to the benefit of any term, condition or
provision which it deems to be in any way more beneficial than the same term,
condition or provision applicable to it. Subscriber shall have the right to
review all final documentation regarding such placements and such documentation
shall be delivered to Subscriber within ten (10) days from the closing date of
such transaction(s).
No equity or debt financing, including the issuance of debt
convertible into equity, consummated in connection with the acquisition of
assets by the Company shall constitute a financing which would trigger the right
of first refusal hereunder in favor of Subscriber.
4. Representations and Warranties of the Company and Subscriber.
------------------------------------------------------------
Each of Subscriber and the Company represent to the other the following with
respect to itself:
(a) Non-contravention/No Conflict. The execution and delivery of this
-----------------------------
Agreement and the consummation of the issuance of the Securities and the
transaction contemplated by this Agreement do not and will not conflict with or
result in a breach by such party of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or by-laws of such
party, or any indenture, mortgage, deed of trust of other material agreement or
instrument to which such party is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule or
regulation or any applicable decree, judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental body having
jurisdiction over such party or any of its properties or assets. The execution,
delivery and performance of this Agreement and the consummation by such party of
the transactions contemplated hereby or relating hereto do not and will not (i)
result in a violation of such party's charter documents, by-laws, partnership
agreement, certificate of limited partnership or other governing documents, as
the case may be, or (ii) conflict with, or constitute a default (or an event
which with notice of lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such party is a
party, or result in a violation of any law, rule, or regulation, or any order,
judgment or decree of any court or governmental agency
11
<PAGE>
applicable to such party or any of its properties. Such party is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
transactions contemplated hereby; provided that for purposes of the
representation made in this sentence, each party is assuming and relying upon
the accuracy of the relevant representations and agreements of the other party
herein.
(b) Approvals. Neither the Company nor Subscriber is aware of any
---------
authorization, approval or consent of any governmental body which is legally
required for the issuance and sale of the Securities, other than filings to
comply with the Securities Act and applicable state securities or "blue sky"
laws.
(c) Indemnification. Each of the Company and the Subscriber agrees to
---------------
indemnify the other and to hold the other harmless from and against any and all
losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with the
breach by the indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Subscriber, the fees and expenses of such counsel shall be at the expense of
the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Subscriber and the indemnifying party and the Subscriber shall have been advised
by such counsel that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any legal defenses which
may be available to the Subscriber (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
Subscriber, it being understood, however, that the indemnifying party shall, in
connection with
12
<PAGE>
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the Subscriber, which firm shall be designated in
writing by the Subscriber). No settlement of any action against an indemnified
party shall be made without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld.
(d) Mandatory Conversion. In the event the Preferred Stock has not
---------------------
all been converted two (2) years from the Closing Date, the Company may, at its
option, convert any and all remaining outstanding Preferred Stock in accordance
with the procedure, terms and conditions set forth in the Certificate of
Designation.
(e) Time of Representations and Warranties. Each representation and
--------------------------------------
warranty made by each party hereunder shall be deemed made as of the date hereof
and as of the Closing Date, unless the context shall clearly require otherwise.
5. Restrictions on Conversion and Exercise. Restrictions on
---------------------------------------
Conversion and Exercise shall be subject to the Certificate of Designation.
6. Registration or Exemption Requirements. Subscriber acknowledges
--------------------------------------
and understands that the Securities may not be resold or otherwise transferred
except in a transaction registered under the Securities Act and any applicable
state securities laws or unless an exemption from such registration is
available. Subscriber understands that the Securities will be imprinted with a
legend that prohibits the transfer of the Securities unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the
Securities Act and, if the Company shall so request in writing, an opinion of
counsel reasonably satisfactory to the Company is obtained to the effect that
the transaction is so exempt.
7. Closing Date. The Closing Date (the "Closing Date") shall be
------------
mutually agreed upon as to time and place when the Escrow Agent receives the
Securities and Purchase Price, the conditions set forth in Sections 8 and 9 and
the terms and conditions of the Escrow Agreement herein are satisfied or waived.
8. Conditions to the Company's Obligation to Sell. Subscriber
----------------------------------------------
understands that the Company's obligation to sell the Preferred Stock and
Warrants are conditioned upon:
(a) The execution and delivery of this Subscription Agreement by the
Company; and
(b) Delivery into escrow by Subscriber of good cleared funds as
payment in full for the purchase of the Preferred Stock and Warrants, and
written notification to the
13
<PAGE>
Company by the Escrow Agent of receipt of payment in full for the Preferred
Stock and Warrants; and
(c) All representations and warranties of the Subscriber shall remain
true and correct as of the Closing Date.
9. Conditions to Subscriber's Obligation to Purchase. The Company
-------------------------------------------------
understands that Subscriber's obligation to purchase the Preferred Stock and
Warrants is conditioned upon:
(a) The execution and delivery of this Subscription Agreement,
including Exhibits, for the sale of the Preferred Stock and Warrants;
(b) Delivery of the original Preferred Stock and Warrants;
(c) All representations and warranties of the Company shall remain
true and correct as of the Closing Date; and
(d) Receipt of opinion of counsel in substantially the form of
Exhibit F hereto and a copy of the filed Certificate of Designation.
(e) The Company shall have its counsel provide, at the Company's
expense, any and all opinions of counsel pertaining to the Company which may be
reasonably required in order to issue the Preferred Stock or the Warrants.
(f) The Company shall have completed equity financing in the amount
of at least Two Million ($2,000,000) Dollars.
10. Miscellaneous.
-------------
(a) Governing Law/Jurisdiction. This Agreement will be construed and
--------------------------
enforced in accordance with and governed by the laws of the State of Delaware,
except for matters arising under the Securities Act, without reference to
principles of conflicts of law. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
State of Delaware or the state courts of the State of Delaware in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdiction.
Each party hereby agrees that if another party to this Agreement obtains a
judgment against it in such a proceeding, the party which obtained such judgment
may enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid,
14
<PAGE>
to such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law.
(b) Confidentiality. If for any reason the transactions contemplated
---------------
by this Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party's domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information, without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herewith.
Each of the Company and Subscriber agrees to keep confidential and not
to disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by the Exchange Act or other applicable law.
(c) Facsimile/Counterparts/Entire Agreement. In lieu of the
---------------------------------------
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original. This Agreement may be executed in counterparts
which shall be considered an original document and which together shall be
considered a complete document. This Agreement and Exhibits hereto constitute
the entire agreement between the Subscriber and the Company with respect to the
subject matter hereof.
(d) Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
(e) Fees. Except as reflected in the Escrow Agreement, each of the
----
parties shall pay its own fees and expenses (including the fees of any
attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby.
(f) Notices. Each Notice of Conversion, Notice of Exercise and all
--------
other notices and communications delivered hereunder from time to time, and any
Preferred Stock representing the portion of the Preferred Stock remaining
unconverted, if applicable, or any Warrants representing the portion of Warrants
remaining unexercised, if applicable, shall be delivered as follows:
15
<PAGE>
If to the Company:
Storm Technology, Inc.
1395 Charleston Road
Mountain View, CA 94943
Attn: Chief Financial Officer
Fax: (650) 691-6699
If to Subscriber:
Libertyview Fund, LLC
c/o Hemisphere House
9 Church Street
Hamilton, HM DX Bermuda
Attn: Steven Rogers, Esq.
fax: (201) 200-1140
Provided, that each party may specify an address for notices and
communications to such party different from the one then specified under this
Section by so notifying the other party at the address then operative under this
Section.
(g) Waivers and Amendments. With the written consent of the record
----------------------
holders of at least a majority of the Underlying Shares, the rights of
Subscribers under this Agreement may be waived or amended (either generally or
in a particular instance). Upon the effectuation of each such waiver or
amendment, the Company shall promptly give written notice thereof to the record
holders of the Underlying Shares who have not previously consented thereto in
writing.
(h) Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.
[Remainder of Page Intentionally Left Blank]
16
<PAGE>
IN WITNESS WHEREOF, this Subscription Agreement was duly executed on
the date first written below.
LIBERTYVIEW PLUS FUND
By
---------------------------
Officer:
Title:
Executed this 18th day of December, 1997
Agreed to and Accepted on
this 18th day of December 1997
STORM TECHNOLOGY, INC.
By
----------------------------
Title:
17
<PAGE>
FULL NAME AND ADDRESS OF SUBSCRIBER FOR REGISTRATION PURPOSES:
NAME: LIBERTYVIEW PLUS FUND
ADDRESS: c/o Hemisphere House
9 Church Street
Hamilton, HMDX Bermuda
TEL NO:
FAX NO: (201) 200-1140
CONTACT
NAME: Steven Rogers, Esq.
DELIVERY INSTRUCTIONS (IF DIFFERENT FROM REGISTRATION NAME):
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
SPECIAL
INSTRUCTIONS:
-----------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
18
<PAGE>
Exhibit 4.3
THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED
THEREUNDER (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS SUBSCRIPTION
AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER
TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR
TRANSFERRED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
SERIES A 8.5% CONVERTIBLE PREFERRED STOCK
SUBSCRIPTION AGREEMENT
STORM TECHNOLOGY, INC.
THIS AGREEMENT is executed in reliance upon the transaction exemption
afforded by Regulation D as promulgated by the Securities and Exchange
Commission ("SEC"), under the Securities Act.
This Agreement has been executed by the undersigned in connection with
the private placement of the Convertible Preferred Stock Series A hereinafter
referred to as the "Preferred Stock" of STORM TECHNOLOGY INC. (NASDAQ symbol
"EASY"), located at 1395 Charleston Road, Mountain View, CA 94043, a corporation
organized under the laws of Delaware, USA (hereinafter referred to as the
"Company"). The terms on which the Preferred Stock may be converted into Common
Stock and the other terms of the Preferred Stock are set forth in the
Certificate of Designation of the Series A Convertible Preferred Stock set forth
in Exhibit A annexed hereto (the "Certificate of Designation"). As provided in
the Certificate of Designation, in certain circumstances, the Company will also
issue to Subscriber warrants to purchase Common Stock, as per the terms of the
Stock Purchase Warrant in the form of Attachment I annexed hereto (the
"Contingent Warrant"). In addition, subject to the terms and conditions set
forth below, the Company will sell to Subscriber Fifty Thousand (50,000)
warrants (the "Definitive Warrants") for each One Million (US$1,000,000) Dollars
invested (such number of Warrants shall be pro rated as per each Subscription
Amount) to purchase Common Stock, as per the terms of the Stock Purchase Warrant
in the form of Exhibit B annexed hereto (as amended, supplemented or otherwise
modified from time to time, the "Stock Purchase Warrant") (the Contingent
Warrants and the Definitive Warrants collectively referred to as the
"Warrants"). This Agreement and, if accepted by the Company, the offer and sale
of the Preferred Stock and Warrants, and the Common Stock underlying the
Preferred Stock and Warrants (the "Underlying Shares", and together with the
Preferred Stock and Warrants, collectively the "Securities"), are being made in
reliance upon the provisions of Regulation D under the Securities Act.
<PAGE>
The undersigned, LIBERTYVIEW FUND, LLC, located at 101 Hudson Street,
Jersey City, NJ 07302, a corporation organized under the laws of Delaware
(hereinafter referred to as "Subscriber"), hereby represents and warrants to,
and agrees with the Company as follows:
1. Agreement to Subscribe; Purchase Price.
--------------------------------------
(a) Purchase and Sale of Preferred Stock and Warrants. Upon the terms
--------------------------------------------------
and subject to the conditions set forth herein, the Company shall issue and sell
to Subscriber, and the Subscriber will buy for an aggregate purchase price of
One Hundred Thousand ($100,000) U.S. Dollars (the "Purchase Price"), One
Thousand (1,000) shares of Preferred Stock based on One Hundred (U.S.$100)
Dollars per share, and that number of Warrants to be issued pursuant to the
terms on the first page of this Agreement.
(b) Form of Payment. Subscriber shall pay the Purchase Price by
---------------
delivering good funds in United States Dollars by wire transfer to Goldstein,
Goldstein & Reis, LLP, Escrow Agent, in accordance with a separate Escrow
Agreement (Exhibit C), against delivery of the original Preferred Stock and
Warrants.
(c) Wire Instructions. Wire instructions for Gray Cary Ware &
-----------------
Freidenrich are as follows:
Union Bank of California
ABA No. 122000496
For the Account of:
Gray Cary Ware & Freidenrich
Account No.6470013298
2. Representation and Warranties of the Subscriber. Subscriber
-----------------------------------------------
acknowledges, represents, warrants and agrees as follows:
(a) Organization and Authorization. Subscriber is duly
------------------------------
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite power and authority to
purchase and hold the Securities. The decision to invest and the execution and
delivery of this Agreement by the Subscriber, the performance by the Subscriber
of its obligations hereunder and the consummation by the Subscriber of the
transactions contemplated hereby have been duly authorized and requires no other
proceedings on the part of the Subscriber. The undersigned signatory has all
right, power and authority to execute and deliver this Agreement on behalf of
the Subscriber. This Agreement has been duly authorized, validly executed and
delivered by the Subscriber and, assuming the execution and delivery hereof and
acceptance thereof by the Company, will constitute the legal, valid and binding
2
<PAGE>
obligations of the Subscriber, enforceable against the Subscriber in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and available equitable remedies.
(b) Evaluation of Risks. Subscriber has such knowledge and experience
-------------------
in financial and business matters as to be capable of evaluating the merits and
risks of, and bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this transaction. It
recognizes that its investment in the Company involves a high degree of risk and
the Subscriber can afford the complete loss of Subscriber's investment.
(c) Independent Counsel. Subscriber acknowledges that it has been
-------------------
advised to consult with its own attorney regarding legal matters concerning the
Company and to consult with its tax advisor regarding the tax consequences of
acquiring the Securities.
(d) Disclosure Documentation. Subscriber has received and reviewed
------------------------
copies of the Company's reports filed under the Securities Exchange Act of 1934,
as amended, together with the regulations promulgated thereunder (the "1934
Act"), including the Company's Form 10-K's, Form 10-Q's, and Form 8-K's filed by
the Company for at least the twelve month period preceding the Closing Date
(collectively, the "SEC Filings"). Subscriber acknowledges that the Company has
offered to make available any additional public information that the Subscriber
may reasonably request, including technical information, and other material
information about the Company and Subscriber has been offered Company's full
cooperation in making such information available to Subscriber and acknowledges
that the Company has recommended that the Subscriber request and review such
information prior to making an investment decision. No oral or written
representations have been made, or oral or written information furnished to the
undersigned or its advisors, if any, in connection with the offering of the
Securities which were or are in any way inconsistent with the SEC Filings.
(e) Opportunity to Ask Questions. Subscriber has had a reasonable
----------------------------
opportunity to ask questions of and receive answers from the Company concerning
the Company and the offering, and all such questions, if any, have been answered
to the full satisfaction of Subscriber.
(f) SEC Filings Constitute Sole Representations. Except as set forth
-------------------------------------------
in the SEC Filings, no representations or warranties in connection with the
offering of the Securities have been made to Subscriber by (i) the Company or
any agent, employee or affiliate of the Company, or (ii) any other person, and
in entering into this transaction Subscriber is not relying upon any
information, other than that contained in the SEC Filings and the results of
independent investigation by Subscriber.
(g) Subscriber is Accredited Investor. The undersigned represents and
---------------------------------
warrants it is included within one or more of the following categories of
"Accredited Investors."
3
<PAGE>
(i) Any bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan associated or other institution as defined in
Section 3(a)(5)A of the Securities Act whether acting in it individual or
fiduciary capacity; any broker or dealer registered pursuant to Section 15
of the 1934 Act; any insurance company as defined in Section 2(13) of the
Securities Act; any investment company registered under the Investment
Company Act of 1940 or a business development company as defined in Section
2(a)(48) of that Act; any Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivision, for the benefits of its employees if such plan has
total assets in excess of $5,000,000; and employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974
if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that
are accredited investors;
(ii) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(iii) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
(iv) Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer;
(v) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
(vi) Any natural person who had an individual income in excess
of $200,000 in each of the two (2) most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching that same income level in the current
year;
(vii) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Section
230.506(b)(2)(ii) of the regulations promulgated under the Securities Act;
(viii) Any entity in which all of the equity owners are accredited
investors; and
4
<PAGE>
(ix) Any self-directed employee benefit plan with investment
decisions made solely by persons that are accredited investors within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act.
(h) No Registration, Review or Approval. Subscriber acknowledges and
-----------------------------------
understands that the limited private offering and sale of Securities pursuant to
this Agreement has not been reviewed or approved by the SEC or by any state
securities commission, authority or agency, and is not registered under the
Securities Act or under the securities or "blue sky" laws, rules or regulations
of any state. Subscriber acknowledges, understands and agrees that the
Securities are being offered and sold hereunder pursuant to (i) a private
placement exemption to the registration provisions of the Securities Act
pursuant to Section 3(b) or Section 4(2) of such Act and Regulation D
promulgated under such Act, and (ii) a similar exemption to the registration
provisions of applicable state securities laws. Subscriber understands that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of Subscriber set
forth herein in order to determine the applicability of such exemptions and the
suitability of Subscriber to acquire the Securities.
(i) Investment Intent. Without limiting its ability to resell the
-----------------
Securities pursuant to an effective registration statement, Subscriber is
acquiring the Securities solely for its own account and not with a view to the
distribution, assignment or resale to others. Subscriber understands and agrees
that it may bear the economic risk of its investment in the Securities for an
indefinite period of time.
(j) Transfer Restrictions/Conversion Holding Period/Redemption.
----------------------------------------------------------
(i) No conversion of Preferred Stock shall be made from the date
hereof until ninety (90) days after the Closing Date (the "Initial
Holding Period"). In the thirty (30) days after the expiration of the
Initial Holding Period, up to thirty three and one-third (33 1/3%)
percent, and after such thirty (30) day period one hundred (100%)
percent, of the Preferred Stock shall be convertible into Underlying
Shares at the option of Subscriber in accordance with the terms hereof
and of the Certificate of Designation.
(ii) Stop transfer instructions have been or will be placed on
any certificates or other documents evidencing any Securities so as to
restrict the resale, pledge, hypothecation or other transfer thereof
in accordance with the provisions hereof and the provisions of
Regulation D.
(iii) The Company may, at its sole discretion, redeem the
Preferred Stock, in whole or in part, at any time by payment to the
Subscriber of the "Redemption Price" (as defined in the Certificate of
Designation) together with all, or a corresponding ratable portion of,
then-accrued dividends thereunder in accordance with terms of the
Certificate of Designation.
5
<PAGE>
(k) Transfer Restrictions Regarding Securities. Upon conversion of
------------------------------------------
any part or all of the Preferred Stock at any time after the Holding Period, if
the holder of the Preferred Stock being converted makes the certification,
pursuant to a Notice of Conversion in the form attached hereto as Exhibit D (a
"Notice of Conversion"), that such holder has complied with all of the
requirements of Regulation D and such other requirements as set forth herein,
and the registration statement required to be filed by the Company pursuant to
the Registration Rights Agreement in the form of Exhibit E (the "Registration
Rights Agreement") is not effective, then the Company shall cause the Transfer
Agent to deliver the Underlying Shares upon such conversion without a
restrictive legend or stop transfer instructions, otherwise the Underlying
Shares shall be considered restricted securities and certificates representing
such Underlying Shares shall contain restrictive legends and stop transfer
instructions will be placed with the Transfer Agent regarding such Underlying
Shares, including without limitation the legend in substantially the following
form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH THE REGULATIONS
PROMULGATED THEREUNDER, THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED
FOR SALE, OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
The certificates representing the Securities, and each certificate
issued in transfer thereof, will also bear any legend required under any
applicable state securities law.
(l) Registration Rights. The parties have entered into a Registration
-------------------
Rights Agreement (Exhibit E).
(m) No Advertisements. The Subscriber is not subscribing for the
-----------------
Securities as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
3. Representations and Warranties of the Company. The Company
---------------------------------------------
acknowledges, represents, warrants and agrees as follows, except to the extent
disclosed in the Schedule of Exceptions attached as Exhibit ___ hereto (the
"Schedule of Exceptions"):
(a) Organization and Authorization. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as currently conducted.
The Company is qualified to do business as a foreign corporation in each
jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the Company. The Company is not in
default or violation of any material term
6
<PAGE>
or provision of its Certificate of Incorporation, as amended, or By-laws nor
will the consummation of the transactions contemplated by this Agreement cause
any such default or violation. The Company has all requisite corporate power and
authority to enter into this Agreement, to sell the Securities hereunder and to
carry out and perform its obligations under the terms of this Agreement. This
Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and available equitable remedies.
This Agreement has been duly authorized, validly executed and delivered on
behalf of the Company and is a valid and binding agreement in accordance with
its terms, subject to general principles of equity and to bankruptcy or other
laws affecting the enforcement of creditors' rights generally. Upon their
issuance and delivery pursuant to this Agreement, the Underlying Shares will be
validly issued, fully paid and nonassessable and will be free of any liens or
encumbrances; provided, however, that the Underlying Shares are subject to
restrictions on transfer under state and/or federal laws.
(b) Reporting Issuer Company Status. The Company is in full
-------------------------------
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the 1934 Act, and shall use its best
efforts to maintain such status on a timely basis. The Company has registered
its Common Stock pursuant to Section 12 of the 1934 Act and the Common Stock
trades on the NASDAQ National Market System.
The Company has filed all material required to be filed pursuant to
all reporting obligations, under either Section 13(a) or 15(d) of the 1934 Act
for a period of at least twelve (12) months immediately preceding the offer to
sell the Securities (or for such shorter period that the Company has been
required to file such material).
(c) Capitalization. The authorized capital stock of the Company
--------------
consists of 30,000,000 of Common Stock, $0.001 par value, of which 10,493,972
shares of Common Stock have been issued as of September 30, 1997, and 500,000
shares of Preferred Stock, $0.001 par value, of which 30,000 Shares have been
designated Series A 8.5% Convertible Preferred Stock, $0.001 par value. All
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
(d) Company to Reserve Shares. The Company will reserve from its
--------------------------
authorized but unissued shares of Common Stock a sufficient number of shares of
Common Stock to permit the conversion and/or exercise in full of the outstanding
Securities. If at any time the number of authorized but unissued shares of
Common Stock shall be insufficient to satisfy the conversion or exercise rights
hereunder, in addition to such other remedies as shall be available to the
holder of Preferred Stock or Warrants, the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
(e) Listing. The Company will use best efforts to maintain the
-------
listing of its Common Stock on the NASDAQ National Market System. The Company
has not received any notice, oral or written, regarding continued listing and,
as long as the shares of Preferred Stock
7
<PAGE>
and Warrants are outstanding, the Company will take no action which would import
their continued listing or eligibility of the Company for such listing.
(f) Company to Honor Telecopied Notices. The Company will permit
-----------------------------------
Subscriber to exercise its right to convert the Preferred Stock and exercise the
Warrants by telecopying an executed and completed Notice of Conversion and/or
Notice of Exercise to the Company and delivering the original Notice of
Conversion and/or Notice of Exercise and the certificate representing the
Preferred Stock, and/or the original Warrant to the Company by express courier.
The Company will use all commercially reasonable efforts to transmit the
certificates representing Underlying Shares issuable upon conversion of any
Preferred Stock and/or exercise of any Warrants (together with the certificates
representing any then-remaining unconverted Preferred Stock and/or unexercised
Warrants) to Subscriber via express courier, at the address set forth herein, by
electronic transfer or otherwise within three (3) NASDAQ trading days after the
applicable Conversion Date (defined below) if the Company has received the
original Notice of Conversion and Preferred Stock certificate (and/or the
original Notice of Exercise and Warrant, if applicable) being so converted, or
exercised, by such date. In addition to any other remedies which may be
available to Subscriber, in the event that the Company fails for any reason to
transmit such shares of Common Stock within such three (3) NASDAQ trading day
period, Subscriber will be entitled to revoke the relevant Notice of Conversion
and/or Notice of Exercise by delivering a notice to such effect to the Company
whereupon the Company and Subscriber shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion and/or
Notice of Exercise.
In the event that the Common Stock issuable upon conversion of the
Preferred Stock, and/or upon exercise of the Warrants, is not delivered within
five (5) NASDAQ trading days of delivery of a Notice of Conversion and/or a
Notice of Exercise by the Company of a valid Notice of Conversion, and/or a
valid Notice of Exercise and the Preferred Stock, and/or Warrants to be
converted or exercised (such date of delivery referred to as the "Conversion
Date"), the Company shall pay to the Purchaser, in immediately available funds,
upon demand, as liquidated damages for such failure and not as a penalty, for
each $100,000 of Preferred Stock sought to be converted, and/or for each 1,000
Warrants to be exercised, $250 for each of the first ten (10) days and $500 per
day thereafter that the Underlying Shares are not delivered, which liquidated
damages shall run from the sixth (6th) NASDAQ trading day after the Conversion
Date. Any and all payments required pursuant to this paragraph shall be payable
in cash upon demand of the Subscriber.
(g) SEC Filings. For a period of at least twelve (12) months
-----------
immediately preceding this offer and sale, or such shorter period that the
Company has been required to file the SEC Filings, to the best of the Company's
knowledge (i) none of the Company's filings with the Securities and Exchange
Commission contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading, and (ii) the Company has timely filed all requisite forms, reports
and exhibits thereto with the Securities and Exchange Commission.
8
<PAGE>
(h) Full Disclosure. There is no fact known to the Company (other
---------------
than general economic conditions known to the public generally) that has not
been disclosed in writing to the Subscriber that (i) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise) or in the earnings, business affairs, business prospects, properties
or assets of the Company, or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations pursuant
to this Agreement.
(i) Other Convertible Interests. Except as described in the SEC
---------------------------
Filings, (i) there are no other outstanding debt or equity securities presently
convertible into shares of Common Stock or that could be convertible into shares
of Common Stock, and (ii) the Company has no outstanding restricted shares of
Common Stock, or shares of Common Stock sold under Regulation S or Regulation D
under the Securities Act or outstanding under any other exemption from
registration, which are available for sale as unrestricted free trading stock.
(j) No Undisclosed Liabilities or Events. The Company has no
------------------------------------
liabilities or obligations other than those disclosed in the SEC Filings, this
Agreement or those incurred in the ordinary course of the Company's business
since October 1, 1997, and which individually or in the aggregate, do not or
would not have a material adverse effect on the properties, business, condition
(financial or otherwise), results of operations or prospects of the Company. No
event or circumstances has occurred or exists with respect to the Company or its
properties, business, condition (financial or otherwise), results of operations
or prospects, which, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed.
(k) No Default. The Company is not in default in the performance or
----------
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it is or its property is bound,
and neither the execution, nor the delivery by the Company, nor the performance
by the Company of its obligations under this Agreement, including the conversion
provision of the Preferred Stock, and the exercise provision of the Warrants,
will conflict with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or imposition
of any lien or charge on any assets or properties of the Company under, any
material indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is a party or by
which it is bound or any statute or the Certificate of Incorporation, as
amended, or Bylaws, as amended, of the Company, or any decree, judgment, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, or the Company's listing
agreement for its Common Stock.
(l) Intellectual Property Rights. Except as disclosed in the SEC
----------------------------
Filings, the Company has sufficient trademarks, trade names, patent rights,
copyrights and licenses to conduct its business as presently conducted in the
SEC Filings. To the Company's knowledge, neither the Company nor its products
is infringing or will infringe any trademark, trade name, patent right,
copyright, license, trade secret or other similar right of others currently in
existence; and is not aware of any claim being made against it regarding any
trademark, trade name, patent, copyright,
9
<PAGE>
license, trade secret or other intellectual property right which could have a
material adverse effect on the business or financial condition of the Company.
(m) Litigation. Except as disclosed in the SEC Filings, there is no
----------
action, proceeding or investigation pending, or to the Company's knowledge
threatened, against the Company which might result, either individually or in
the aggregate, in any material adverse change in the business, prospects,
conditions, affairs or operations of the Company. The Company is not a party to
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality.
(n) Title to Assets. Except as set forth in SEC Filings, the Company
---------------
has good and marketable title to all properties and material assets described in
the SEC Filings as owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than such as are not
material to the business of the Company.
(o) Subsidiaries. Except as disclosed in the SEC Filings, the Company
------------
does not presently own or control, directly or indirectly, any interest in any
other corporation, partnership, association or other business entity.
(p) Required Governmental Permits. The Company is in possession of
-----------------------------
and operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the current conduct of its business, all of
which are valid and in full force and effect.
(q) Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the SEC which may at any time permit the
sale of the Securities 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 under the Securities Act, at all times
after the effective date on which the Company becomes subject to the reporting
requirements of the Securities Act or the 1934 Act;
(ii) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Securities Act
and the 1934 Act;
(iii) to furnish to Purchaser forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144, and of the Securities Act and the 1934 Act, a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as Purchaser may reasonably request in
availing itself of any rule or regulation of the SEC allowing Purchaser to sell
any such Securities without registration.
(r) Dilution. The Company is aware and acknowledges that conversion
--------
of the
10
<PAGE>
Preferred Stock, and exercise of the Warrants, could cause dilution to existing
stockholders and could significantly increase the outstanding number of shares
of Common Stock.
(s) Right of First Refusal/Further Placements. In the event the
-----------------------------------------
Company wishes to obtain further equity or debt financing within nine (9) months
following the Closing Date, the Subscriber shall have the right of first refusal
to participate in such offering in an amount not to exceed the total amount
invested by Subscriber hereunder pursuant to the Company's terms and conditions
of such offer, and shall have three (3) business days to reply in writing after
receipt of such written notice from the Company. Such reply may be sent by
facsimile. In the event such written reply is not received by the Company
within such three (3) business day period, it will be deemed a refusal by the
Subscriber. Subscriber shall have the right to review all final documentation
regarding such placements and such documentation shall be delivered to
Subscriber within ten (10) days from the closing date of such transaction(s).
In the event that the Subscriber does not elect its right of first
refusal and the Company enters into any equity or debt financing through March
31, 1998, Subscriber shall be entitled to the benefit of any term, condition or
provision which it deems to be in any way more beneficial than the same term,
condition or provision applicable to it. Subscriber shall have the right to
review all final documentation regarding such placements and such documentation
shall be delivered to Subscriber within ten (10) days from the closing date of
such transaction(s).
No equity or debt financing, including the issuance of debt
convertible into equity, consummated in connection with the acquisition of
assets by the Company shall constitute a financing which would trigger the right
of first refusal hereunder in favor of Subscriber.
4. Representations and Warranties of the Company and Subscriber.
------------------------------------------------------------
Each of Subscriber and the Company represent to the other the following with
respect to itself:
(a) Non-contravention/No Conflict. The execution and delivery of this
-----------------------------
Agreement and the consummation of the issuance of the Securities and the
transaction contemplated by this Agreement do not and will not conflict with or
result in a breach by such party of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or by-laws of such
party, or any indenture, mortgage, deed of trust of other material agreement or
instrument to which such party is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule or
regulation or any applicable decree, judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental body having
jurisdiction over such party or any of its properties or assets. The execution,
delivery and performance of this Agreement and the consummation by such party of
the transactions contemplated hereby or relating hereto do not and will not (i)
result in a violation of such party's charter documents, by-laws, partnership
agreement, certificate of limited partnership or other governing documents, as
the case may be, or (ii) conflict with, or constitute a default (or an event
which with notice of lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such party is a
party, or result in a violation of any law, rule, or regulation, or any order,
judgment or decree of any court or governmental agency
11
<PAGE>
applicable to such party or any of its properties. Such party is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
transactions contemplated hereby; provided that for purposes of the
representation made in this sentence, each party is assuming and relying upon
the accuracy of the relevant representations and agreements of the other party
herein.
(b) Approvals. Neither the Company nor Subscriber is aware of any
---------
authorization, approval or consent of any governmental body which is legally
required for the issuance and sale of the Securities, other than filings to
comply with the Securities Act and applicable state securities or "blue sky"
laws.
(c) Indemnification. Each of the Company and the Subscriber agrees to
---------------
indemnify the other and to hold the other harmless from and against any and all
losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with the
breach by the indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Subscriber, the fees and expenses of such counsel shall be at the expense of
the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Subscriber and the indemnifying party and the Subscriber shall have been advised
by such counsel that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any legal defenses which
may be available to the Subscriber (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
Subscriber, it being understood, however, that the indemnifying party shall, in
connection with
12
<PAGE>
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the Subscriber, which firm shall be designated in
writing by the Subscriber). No settlement of any action against an indemnified
party shall be made without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld.
(d) Mandatory Conversion. In the event the Preferred Stock has not
---------------------
all been converted two (2) years from the Closing Date, the Company may, at its
option, convert any and all remaining outstanding Preferred Stock in accordance
with the procedure, terms and conditions set forth in the Certificate of
Designation.
(e) Time of Representations and Warranties. Each representation and
--------------------------------------
warranty made by each party hereunder shall be deemed made as of the date hereof
and as of the Closing Date, unless the context shall clearly require otherwise.
5. Restrictions on Conversion and Exercise. Restrictions on
---------------------------------------
Conversion and Exercise shall be subject to the Certificate of Designation.
6. Registration or Exemption Requirements. Subscriber acknowledges
--------------------------------------
and understands that the Securities may not be resold or otherwise transferred
except in a transaction registered under the Securities Act and any applicable
state securities laws or unless an exemption from such registration is
available. Subscriber understands that the Securities will be imprinted with a
legend that prohibits the transfer of the Securities unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the
Securities Act and, if the Company shall so request in writing, an opinion of
counsel reasonably satisfactory to the Company is obtained to the effect that
the transaction is so exempt.
7. Closing Date. The Closing Date (the "Closing Date") shall be
------------
mutually agreed upon as to time and place when the Escrow Agent receives the
Securities and Purchase Price, the conditions set forth in Sections 8 and 9 and
the terms and conditions of the Escrow Agreement herein are satisfied or waived.
8. Conditions to the Company's Obligation to Sell. Subscriber
----------------------------------------------
understands that the Company's obligation to sell the Preferred Stock and
Warrants are conditioned upon:
(a) The execution and delivery of this Subscription Agreement by the
Company; and
(b) Delivery into escrow by Subscriber of good cleared funds as
payment in full for the purchase of the Preferred Stock and Warrants, and
written notification to the
13
<PAGE>
Company by the Escrow Agent of receipt of payment in full for the Preferred
Stock and Warrants; and
(c) All representations and warranties of the Subscriber shall remain
true and correct as of the Closing Date.
9. Conditions to Subscriber's Obligation to Purchase. The Company
-------------------------------------------------
understands that Subscriber's obligation to purchase the Preferred Stock and
Warrants is conditioned upon:
(a) The execution and delivery of this Subscription Agreement,
including Exhibits, for the sale of the Preferred Stock and Warrants;
(b) Delivery of the original Preferred Stock and Warrants;
(c) All representations and warranties of the Company shall remain
true and correct as of the Closing Date; and
(d) Receipt of opinion of counsel in substantially the form of Exhibit
F hereto and a copy of the filed Certificate of Designation.
(e) The Company shall have its counsel provide, at the Company's
expense, any and all opinions of counsel pertaining to the Company which may be
reasonably required in order to issue the Preferred Stock or the Warrants.
(f) The Company shall have completed equity financing in the amount of
at least Two Million ($2,000,000) Dollars.
10. Miscellaneous.
-------------
(a) Governing Law/Jurisdiction. This Agreement will be construed and
--------------------------
enforced in accordance with and governed by the laws of the State of Delaware,
except for matters arising under the Securities Act, without reference to
principles of conflicts of law. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
State of Delaware or the state courts of the State of Delaware in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdiction.
Each party hereby agrees that if another party to this Agreement obtains a
judgment against it in such a proceeding, the party which obtained such judgment
may enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid,
14
<PAGE>
to such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law.
(b) Confidentiality. If for any reason the transactions contemplated
---------------
by this Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party's domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information, without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herewith.
Each of the Company and Subscriber agrees to keep confidential and not
to disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by the Exchange Act or other applicable law.
(c) Facsimile/Counterparts/Entire Agreement. In lieu of the original,
---------------------------------------
a facsimile transmission or copy of the original shall be as effective and
enforceable as the original. This Agreement may be executed in counterparts
which shall be considered an original document and which together shall be
considered a complete document. This Agreement and Exhibits hereto constitute
the entire agreement between the Subscriber and the Company with respect to the
subject matter hereof.
(d) Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
(e) Fees. Except as reflected in the Escrow Agreement, each of the
----
parties shall pay its own fees and expenses (including the fees of any
attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby.
(f) Notices. Each Notice of Conversion, Notice of Exercise and all
--------
other notices and communications delivered hereunder from time to time, and any
Preferred Stock representing the portion of the Preferred Stock remaining
unconverted, if applicable, or any Warrants representing the portion of Warrants
remaining unexercised, if applicable, shall be delivered as follows:
15
<PAGE>
If to the Company:
Storm Technology, Inc.
1395 Charleston Road
Mountain View, CA 94943
Attn: Chief Financial Officer
Fax: (650) 691-6699
If to Subscriber:
Libertyview Fund, LLC
101 Hudson Street
Jersey City, NJ 07302
Attn: Steven Rogers, Esq.
fax: (201) 200-1140
Provided, that each party may specify an address for notices and
communications to such party different from the one then specified under this
Section by so notifying the other party at the address then operative under this
Section.
(g) Waivers and Amendments. With the written consent of the record
----------------------
holders of at least a majority of the Underlying Shares, the rights of
Subscribers under this Agreement may be waived or amended (either generally or
in a particular instance). Upon the effectuation of each such waiver or
amendment, the Company shall promptly give written notice thereof to the record
holders of the Underlying Shares who have not previously consented thereto in
writing.
(h) Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.
[Remainder of Page Intentionally Left Blank]
16
<PAGE>
IN WITNESS WHEREOF, this Subscription Agreement was duly executed on
the date first written below.
LIBERTYVIEW FUND, LLC
By
------------------------------
Officer:
Title:
Executed this 18th day of December, 1997
Agreed to and Accepted on
this 18th day of December 1997
STORM TECHNOLOGY, INC.
By
---------------------------
Title:
17
<PAGE>
FULL NAME AND ADDRESS OF SUBSCRIBER FOR REGISTRATION PURPOSES:
NAME: LIBERTYVIEW FUND, LLC
ADDRESS: 101 Hudson Street
Jersey City, NJ 07302
TEL NO:
FAX NO: (201) 200-1140
CONTACT
NAME: Steven Rogers, Esq.
DELIVERY INSTRUCTIONS (IF DIFFERENT FROM REGISTRATION NAME):
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
SPECIAL
INSTRUCTIONS:
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
18
<PAGE>
Exhibit 4.4
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF
OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase 125,000 of Common Stock of
STORM TECHNOLOGY, INC.
THIS CERTIFIES that, for value received, CPR (USA) Inc. (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after one day after the date hereof and on or prior
to December 18, 2002 (the "Termination Date") but not thereafter, to subscribe
for and purchase from STORM TECHNOLOGY, INC., a Delaware corporation (the
"Company"), One Hundred Twenty-Five Thousand (125,000) shares of Common Stock
(the "Warrant Shares"). The purchase price of one share of Common Stock (the
"Exercise Price") under this Warrant shall be Three (US $3.00) Dollars. The
Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. This Warrant is being issued
in connection with the Series A 8.5% Convertible Preferred Stock Subscription
Agreement dated on or about December 18, 1997, in the amount of Three Million
(US $3,000,000) Dollars (the "Agreement") between the Company and Investor and
is subject to its terms. In the event of any conflict between the terms of this
Warrant and the Agreement, the Agreement shall control. Unless otherwise
defined herein, all capitalized terms shall have meanings as provided for in the
Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
----------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, pursuant to paragraph 9 hereof.
2. Authorization of Shares. The Company covenants that all shares
-----------------------
of Common Stock which may be issued upon the exercise of rights represented by
this Warrant will, upon exercise of the rights represented by this Warrant, be
duly authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
<PAGE>
3. Exercise of Warrant. Exercise of the purchase rights represented
-------------------
by this Warrant may be made at any time or times after the date hereof, in whole
or in part, before the close of business on the Termination Date, or such
earlier date on which this Warrant may terminate as provided in paragraph 12
below, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly executed, at the office of the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered
Holder hereof at the address of such Holder appearing on the books of the
Company) and upon payment of the Exercise Price of the shares thereby purchased;
whereupon the Holder of this Warrant shall be entitled to receive a certificate
for the number of shares of Common Stock so purchased. Certificates for shares
of Common Stock purchased hereunder shall be delivered to the holder hereof
within five (5) NASDAQ trading days after the date on which this Warrant shall
have been exercised as aforesaid. Payment of the Exercise Price of the shares
may be by certified check or cashier's check or by wire transfer to an account
designated by the Company in an amount equal to the Exercise Price multiplied by
the number of shares of Common Stock being purchased.
4. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
---------------------------
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
-------- -------
shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and provided further, that upon any transfer involved in the issuance or
-------- -------
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Holder Representations. The Holder of the Warrant agrees and
----------------------
acknowledges that the Warrant is being purchased for the Holder's own account,
for investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, pledge or resale to others or to
fractionalization in whole or in part. The Holder further represents, warrants
and agrees as follows: no other person has or will have a direct or indirect
beneficial interest in this Warrant and the Holder will not sell, hypothecate or
otherwise transfer the Warrant except in accordance with the Securities Act and
Regulation D thereunder and applicable state securities laws or unless, in the
opinion of counsel for the Holder acceptable to the Company, an exemption from
the registration requirements of the Securities Act and such laws is available.
7. Closing of Books. The Company will at no time close its
----------------
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
-2-
<PAGE>
8. No Rights as Stockholder until Exercise. This Warrant does not
---------------------------------------
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise thereof. If, however, at the time of the
surrender of this Warrant and purchase the Holder hereof shall be entitled to
exercise this Warrant, the shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be assigned
----------------------------------
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company); provided,
however, that this Warrant may not be resold or otherwise transferred except
with the prior consent of the Company and (i) in a transaction registered under
the Securities Act, or (ii) in a transaction pursuant to an exemption, if
available, from such registration and whereby, if requested by the Company, an
opinion of counsel reasonably satisfactory to the Company is obtained by the
holder of this Warrant to the effect that the transaction is so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
-------------------------------------------------
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day
---------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
12. Effect of Certain Events.
------------------------
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets, or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction") in which
the consideration to be received by the Company or its stockholders consists
solely of cash, the Company shall give the Holder of this Warrant thirty (30)
days' notice of the proposed effective date of the transaction specifying that
the Warrant shall terminate if the Warrant has not been exercised by the
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
stockholders consists in part of consideration other than cash, the Holder of
this Warrant shall have the right thereafter to
-3-
<PAGE>
purchase, by exercise of this Warrant and payment of the aggregate Exercise
Price in effect immediately prior to such action, the kind and amount of shares
and other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this Warrant
been exercised immediately prior thereto.
(c) "Piggy-Back" Registration. The Holder of this Warrant shall have
-------------------------
the right to include all of the shares of Common Stock underlying this Warrant
(the "Registrable Securities") as part of any registration of securities filed
by the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8) and must be
notified in writing of such filing; provided, however, that the holder of this
Warrant agrees it shall not have any piggy-back registration rights pursuant to
this Section 12(c) if the shares of Common Stock underlying this Warrant are
freely tradeable in the United States pursuant to the provisions of Regulation
D. Holder shall have five (5) business days to notify the Company in writing as
to whether the Company is to include Holder or not include Holder as part of the
registration; provided, however, that if any registration pursuant to this
Section shall be underwritten, in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the underwriter evidenced in writing of such offering only a limited number of
Registrable Securities should be included in such offering, or no such shares
should be included, the Holder, and all other selling stockholders, shall be
limited to registering such proportion of their respective shares as shall equal
the proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. Those Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section (and all other
Registrable Securities held by he selling stockholders) shall be withheld from
the market by the Holders thereof for a period, not to exceed one hundred eighty
(180) days, which the underwriter may reasonably determine is necessary in order
to effect such underwritten offering. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 12(c)
prior to the effectiveness of such registration whether or not any Warrant
holder elected to include securities in such registration. All registration
expenses incurred by the Company in complying with this Section 12(c) shall be
paid by the Company, exclusive of underwriting discounts, commissions and legal
fees and expenses for counsel to the holders of the Warrants.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
----------------------------------------------------------
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, the number of Warrant Shares purchasable
upon exercise of this Warrant immediately prior thereto shall be adjusted so
that the
-4-
<PAGE>
holder of this Warrant shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
-----------------------------------
discretion, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
15. Notice of Adjustment. Whenever the number of Warrant Shares or
--------------------
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary
to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
NASDAQ (or on the principal national securities exchange on which the Common
Stock is admitted to trading or listed or, if not listed or admitted to trading
on NASDAQ or a national securities exchange, as reported by the National
Quotation Bureau, Inc. or other similar organization ("Other Exchanges")) for
the three (3) trading days immediately prior to the date such dividend is
payable.
17. Miscellaneous.
-------------
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall
------------------------
be construed and shall be given effect in all respects as if it had been issued
and delivered by the Company on the date hereof. This Warrant shall be binding
upon any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws and jurisdictions of Delaware and for all purposes shall
be construed in accordance with and governed by the laws of said state without
regard to its conflict of law, principles or rules.
-5-
<PAGE>
(b) Restrictions. The holder hereof acknowledges that the Common
------------
Stock acquired upon the exercise of this Warrant, if not registered, may have
restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver. This Warrant and any provisions hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: December 18, 1997
STORM TECHNOLOGY, INC.
By:
----------------------------------------
Title:
-------------------------------------
-6-
<PAGE>
NOTICE OF EXERCISE
------------------
To: STORM TECHNOLOGY, INC.
(1) The undersigned hereby elects to purchase ________ shares of
Common Stock of STORM TECHNOLOGY, INC. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full, together
with all applicable transfer taxes, if any.
(2) By signing below, the undersigned hereby certifies that the
shares of Common Stock to be issued upon exercise of this Warrant have been
registered under the Securities Act of 1933 (the "Act"), or that an exemption
from registration under the Securities Act is available for such shares of
Common Stock.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
-------------------------------
Signature
NOTE: Signature must conform in all respects to holder's name as specified on
the face of the attached warrant.
-7-
<PAGE>
ASSIGNMENT FORM
---------------
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, 199
Holder's Signature:
-------------------------------
Holder's Address:
-------------------------------
-------------------------------
Signature Guaranteed:
-------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-8-
<PAGE>
Exhibit 4.5
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF
OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase 20,000 of Common Stock of
STORM TECHNOLOGY, INC.
THIS CERTIFIES that, for value received, Libertyview Plus Fund (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after one day after the date hereof and on or prior
to December 18, 2002 (the "Termination Date") but not thereafter, to subscribe
for and purchase from STORM TECHNOLOGY, INC., a Delaware corporation (the
"Company"), Twenty Thousand (20,000) shares of Common Stock (the "Warrant
Shares"). The purchase price of one share of Common Stock (the "Exercise
Price") under this Warrant shall be Three (US $3.00) Dollars. The Exercise
Price and the number of shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. This Warrant is being issued in
connection with the Series A 8.5% Convertible Preferred Stock Subscription
Agreement dated on or about December 18, 1997, in the amount of Three Million
(US $3,000,000) Dollars (the "Agreement") between the Company and Investor and
is subject to its terms. In the event of any conflict between the terms of this
Warrant and the Agreement, the Agreement shall control. Unless otherwise
defined herein, all capitalized terms shall have meanings as provided for in the
Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
----------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, pursuant to paragraph 9 hereof.
2. Authorization of Shares. The Company covenants that all shares of
-----------------------
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
<PAGE>
3. Exercise of Warrant. Exercise of the purchase rights represented
-------------------
by this Warrant may be made at any time or times after the date hereof, in whole
or in part, before the close of business on the Termination Date, or such
earlier date on which this Warrant may terminate as provided in paragraph 12
below, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly executed, at the office of the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered
Holder hereof at the address of such Holder appearing on the books of the
Company) and upon payment of the Exercise Price of the shares thereby purchased;
whereupon the Holder of this Warrant shall be entitled to receive a certificate
for the number of shares of Common Stock so purchased. Certificates for shares
of Common Stock purchased hereunder shall be delivered to the holder hereof
within five (5) NASDAQ trading days after the date on which this Warrant shall
have been exercised as aforesaid. Payment of the Exercise Price of the shares
may be by certified check or cashier's check or by wire transfer to an account
designated by the Company in an amount equal to the Exercise Price multiplied by
the number of shares of Common Stock being purchased.
4. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
---------------------------
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
-------- -------
shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and provided further, that upon any transfer involved in the issuance or
-------- -------
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Holder Representations. The Holder of the Warrant agrees and
----------------------
acknowledges that the Warrant is being purchased for the Holder's own account,
for investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, pledge or resale to others or to
fractionalization in whole or in part. The Holder further represents, warrants
and agrees as follows: no other person has or will have a direct or indirect
beneficial interest in this Warrant and the Holder will not sell, hypothecate or
otherwise transfer the Warrant except in accordance with the Securities Act and
Regulation D thereunder and applicable state securities laws or unless, in the
opinion of counsel for the Holder acceptable to the Company, an exemption from
the registration requirements of the Securities Act and such laws is available.
7. Closing of Books. The Company will at no time close its
----------------
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
-2-
<PAGE>
8. No Rights as Stockholder until Exercise. This Warrant does not
---------------------------------------
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise thereof. If, however, at the time of the
surrender of this Warrant and purchase the Holder hereof shall be entitled to
exercise this Warrant, the shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be assigned
----------------------------------
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company); provided,
however, that this Warrant may not be resold or otherwise transferred except
with the prior consent of the Company and (i) in a transaction registered under
the Securities Act, or (ii) in a transaction pursuant to an exemption, if
available, from such registration and whereby, if requested by the Company, an
opinion of counsel reasonably satisfactory to the Company is obtained by the
holder of this Warrant to the effect that the transaction is so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
-------------------------------------------------
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day
---------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
12. Effect of Certain Events.
------------------------
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets, or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction") in which
the consideration to be received by the Company or its stockholders consists
solely of cash, the Company shall give the Holder of this Warrant thirty (30)
days' notice of the proposed effective date of the transaction specifying that
the Warrant shall terminate if the Warrant has not been exercised by the
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
stockholders consists in part of consideration other than cash, the Holder of
this Warrant shall have the right thereafter to
-3-
<PAGE>
purchase, by exercise of this Warrant and payment of the aggregate Exercise
Price in effect immediately prior to such action, the kind and amount of shares
and other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this Warrant
been exercised immediately prior thereto.
(c) "Piggy-Back" Registration. The Holder of this Warrant shall have
-------------------------
the right to include all of the shares of Common Stock underlying this Warrant
(the "Registrable Securities") as part of any registration of securities filed
by the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8) and must be
notified in writing of such filing; provided, however, that the holder of this
Warrant agrees it shall not have any piggy-back registration rights pursuant to
this Section 12(c) if the shares of Common Stock underlying this Warrant are
freely tradable in the United States pursuant to the provisions of Regulation D.
Holder shall have five (5) business days to notify the Company in writing as to
whether the Company is to include Holder or not include Holder as part of the
registration; provided, however, that if any registration pursuant to this
Section shall be underwritten, in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the underwriter evidenced in writing of such offering only a limited number of
Registrable Securities should be included in such offering, or no such shares
should be included, the Holder, and all other selling stockholders, shall be
limited to registering such proportion of their respective shares as shall equal
the proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. Those Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section (and all other
Registrable Securities held by he selling stockholders) shall be withheld from
the market by the Holders thereof for a period, not to exceed one hundred eighty
(180) days, which the underwriter may reasonably determine is necessary in order
to effect such underwritten offering. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 12(c)
prior to the effectiveness of such registration whether or not any Warrant
holder elected to include securities in such registration. All registration
expenses incurred by the Company in complying with this Section 12(c) shall be
paid by the Company, exclusive of underwriting discounts, commissions and legal
fees and expenses for counsel to the holders of the Warrants.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
----------------------------------------------------------
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, the number of Warrant Shares purchasable
upon exercise of this Warrant immediately prior thereto shall be adjusted so
that the
-4-
<PAGE>
holder of this Warrant shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
-----------------------------------
discretion, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
15. Notice of Adjustment. Whenever the number of Warrant Shares or
--------------------
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary
to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
NASDAQ (or on the principal national securities exchange on which the Common
Stock is admitted to trading or listed or, if not listed or admitted to trading
on NASDAQ or a national securities exchange, as reported by the National
Quotation Bureau, Inc. or other similar organization ("Other Exchanges")) for
the three (3) trading days immediately prior to the date such dividend is
payable.
17. Miscellaneous.
-------------
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall be
------------------------
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws and jurisdictions of Delaware and for all purposes shall
be construed in accordance with and governed by the laws of said state without
regard to its conflict of law, principles or rules.
-5-
<PAGE>
(b) Restrictions. The holder hereof acknowledges that the Common
------------
Stock acquired upon the exercise of this Warrant, if not registered, may have
restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver. This Warrant and any provisions hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: December 18, 1997
STORM TECHNOLOGY, INC.
By:
----------------------------------
Title:
-------------------------------
-6-
<PAGE>
NOTICE OF EXERCISE
------------------
To: STORM TECHNOLOGY, INC.
(1) The undersigned hereby elects to purchase ________ shares of
Common Stock of STORM TECHNOLOGY, INC. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full, together
with all applicable transfer taxes, if any.
(2) By signing below, the undersigned hereby certifies that the shares
of Common Stock to be issued upon exercise of this Warrant have been registered
under the Securities Act of 1933 (the "Act"), or that an exemption from
registration under the Securities Act is available for such shares of Common
Stock.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
------------------------------
Signature
NOTE: Signature must conform in all respects to holder's name as specified on
the face of the attached warrant.
-7-
<PAGE>
ASSIGNMENT FORM
---------------
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________
_______________________________________________________________
Dated: ______________, 199
Holder's Signature:
-----------------------------
Holder's Address:
-----------------------------
-----------------------------
Signature Guaranteed:
-------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-8-
<PAGE>
Exhibit 4.6
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF
OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase 5,000 of Common Stock of
STORM TECHNOLOGY, INC.
THIS CERTIFIES that, for value received, Libertyview Fund, LLC (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after one day after the date hereof and on or prior
to December 18, 2002 (the "Termination Date") but not thereafter, to subscribe
for and purchase from STORM TECHNOLOGY, INC., a Delaware corporation (the
"Company"), Five Thousand (5,000) shares of Common Stock (the "Warrant Shares").
The purchase price of one share of Common Stock (the "Exercise Price") under
this Warrant shall be Three (US $3.00) Dollars. The Exercise Price and the
number of shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. This Warrant is being issued in connection with
the Series A 8.5% Convertible Preferred Stock Subscription Agreement dated on or
about December 18, 1997, in the amount of Three Million (US $3,000,000) Dollars
(the "Agreement") between the Company and Investor and is subject to its terms.
In the event of any conflict between the terms of this Warrant and the
Agreement, the Agreement shall control. Unless otherwise defined herein, all
capitalized terms shall have meanings as provided for in the Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
----------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, pursuant to paragraph 9 hereof.
2. Authorization of Shares. The Company covenants that all shares of
-----------------------
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
<PAGE>
3. Exercise of Warrant. Exercise of the purchase rights represented
-------------------
by this Warrant may be made at any time or times after the date hereof, in whole
or in part, before the close of business on the Termination Date, or such
earlier date on which this Warrant may terminate as provided in paragraph 12
below, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly executed, at the office of the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered
Holder hereof at the address of such Holder appearing on the books of the
Company) and upon payment of the Exercise Price of the shares thereby purchased;
whereupon the Holder of this Warrant shall be entitled to receive a certificate
for the number of shares of Common Stock so purchased. Certificates for shares
of Common Stock purchased hereunder shall be delivered to the holder hereof
within five (5) NASDAQ trading days after the date on which this Warrant shall
have been exercised as aforesaid. Payment of the Exercise Price of the shares
may be by certified check or cashier's check or by wire transfer to an account
designated by the Company in an amount equal to the Exercise Price multiplied by
the number of shares of Common Stock being purchased.
4. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
---------------------------
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
-------- -------
shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and provided further, that upon any transfer involved in the issuance or
-------- -------
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Holder Representations. The Holder of the Warrant agrees and
----------------------
acknowledges that the Warrant is being purchased for the Holder's own account,
for investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, pledge or resale to others or to
fractionalization in whole or in part. The Holder further represents, warrants
and agrees as follows: no other person has or will have a direct or indirect
beneficial interest in this Warrant and the Holder will not sell, hypothecate or
otherwise transfer the Warrant except in accordance with the Securities Act and
Regulation D thereunder and applicable state securities laws or unless, in the
opinion of counsel for the Holder acceptable to the Company, an exemption from
the registration requirements of the Securities Act and such laws is available.
7. Closing of Books. The Company will at no time close its
----------------
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
-2-
<PAGE>
8. No Rights as Stockholder until Exercise. This Warrant does not
---------------------------------------
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise thereof. If, however, at the time of the
surrender of this Warrant and purchase the Holder hereof shall be entitled to
exercise this Warrant, the shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be assigned
----------------------------------
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company); provided,
however, that this Warrant may not be resold or otherwise transferred except
with the prior consent of the Company and (i) in a transaction registered under
the Securities Act, or (ii) in a transaction pursuant to an exemption, if
available, from such registration and whereby, if requested by the Company, an
opinion of counsel reasonably satisfactory to the Company is obtained by the
holder of this Warrant to the effect that the transaction is so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
-------------------------------------------------
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day
---------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
12. Effect of Certain Events.
------------------------
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets, or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction") in which
the consideration to be received by the Company or its stockholders consists
solely of cash, the Company shall give the Holder of this Warrant thirty (30)
days' notice of the proposed effective date of the transaction specifying that
the Warrant shall terminate if the Warrant has not been exercised by the
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
stockholders consists in part of consideration other than cash, the Holder of
this Warrant shall have the right thereafter to
-3-
<PAGE>
purchase, by exercise of this Warrant and payment of the aggregate Exercise
Price in effect immediately prior to such action, the kind and amount of shares
and other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this Warrant
been exercised immediately prior thereto.
(c) "Piggy-Back" Registration. The Holder of this Warrant shall have
-------------------------
the right to include all of the shares of Common Stock underlying this Warrant
(the "Registrable Securities") as part of any registration of securities filed
by the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8) and must be
notified in writing of such filing; provided, however, that the holder of this
Warrant agrees it shall not have any piggy-back registration rights pursuant to
this Section 12(c) if the shares of Common Stock underlying this Warrant are
freely tradable in the United States pursuant to the provisions of Regulation D.
Holder shall have five (5) business days to notify the Company in writing as to
whether the Company is to include Holder or not include Holder as part of the
registration; provided, however, that if any registration pursuant to this
Section shall be underwritten, in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the underwriter evidenced in writing of such offering only a limited number of
Registrable Securities should be included in such offering, or no such shares
should be included, the Holder, and all other selling stockholders, shall be
limited to registering such proportion of their respective shares as shall equal
the proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. Those Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section (and all other
Registrable Securities held by he selling stockholders) shall be withheld from
the market by the Holders thereof for a period, not to exceed one hundred eighty
(180) days, which the underwriter may reasonably determine is necessary in order
to effect such underwritten offering. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 12(c)
prior to the effectiveness of such registration whether or not any Warrant
holder elected to include securities in such registration. All registration
expenses incurred by the Company in complying with this Section 12(c) shall be
paid by the Company, exclusive of underwriting discounts, commissions and legal
fees and expenses for counsel to the holders of the Warrants.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
----------------------------------------------------------
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, the number of Warrant Shares purchasable
upon exercise of this Warrant immediately prior thereto shall be adjusted so
that the
-4-
<PAGE>
holder of this Warrant shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
-----------------------------------
discretion, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
15. Notice of Adjustment. Whenever the number of Warrant Shares or
--------------------
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary
to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
NASDAQ (or on the principal national securities exchange on which the Common
Stock is admitted to trading or listed or, if not listed or admitted to trading
on NASDAQ or a national securities exchange, as reported by the National
Quotation Bureau, Inc. or other similar organization ("Other Exchanges")) for
the three (3) trading days immediately prior to the date such dividend is
payable.
17. Miscellaneous.
-------------
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall be
------------------------
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws and jurisdictions of Delaware and for all purposes shall
be construed in accordance with and governed by the laws of said state without
regard to its conflict of law, principles or rules.
-5-
<PAGE>
(b) Restrictions. The holder hereof acknowledges that the Common
------------
Stock acquired upon the exercise of this Warrant, if not registered, may have
restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver. This Warrant and any provisions hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: December 18, 1997
STORM TECHNOLOGY, INC.
By:
----------------------------------
Title:
-------------------------------
-6-
<PAGE>
NOTICE OF EXERCISE
------------------
To: STORM TECHNOLOGY, INC.
(1) The undersigned hereby elects to purchase ________ shares of
Common Stock of STORM TECHNOLOGY, INC. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full, together
with all applicable transfer taxes, if any.
(2) By signing below, the undersigned hereby certifies that the shares
of Common Stock to be issued upon exercise of this Warrant have been registered
under the Securities Act of 1933 (the "Act"), or that an exemption from
registration under the Securities Act is available for such shares of Common
Stock.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
------------------------------
Signature
NOTE: Signature must conform in all respects to holder's name as specified on
the face of the attached warrant.
-7-
<PAGE>
ASSIGNMENT FORM
---------------
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________
_______________________________________________________________
Dated: ______________, 199
Holder's Signature:
-----------------------------
Holder's Address: -----------------------------
-----------------------------
Signature Guaranteed:
---------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-8-
<PAGE>
Exhibit 4.7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 18th day of
December, 1997, between CPR (USA) INC. (the "Holder" or "Holders") issued
pursuant to a Series A 8.5% Convertible Preferred Stock Subscription Agreement
of even date herewith, and STORM TECHNOLOGY, INC., a Delaware corporation,
having its principal place of business at 1395 Charleston Road, Mountain View,
CA 94043 (the "Company").
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Holders are purchasing from the Company, pursuant to a
Series A 8.5% Convertible Preferred Stock Subscription Agreement dated the date
hereof (the "Agreement"), upon conversion thereof, an aggregate of up to Three
Million ($3,000,000) Dollars face value of non-voting Series A 8.5% Convertible
Preferred Stock (the "Preferred Stock") and Warrants. Capitalized terms defined
in the Agreement and not otherwise defined herein shall have the meanings
specified in the Agreement; and
WHEREAS, the Company desires to grant to the Holders the
registration rights set forth herein with respect to the Securities.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
----------------------
"Registrable Security" means each of the Preferred Stock, Warrants and
Underlying Shares; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination, (i) it has been effectively registered
under the Securities Act and disposed of pursuant thereto, (ii) registration
under the Securities Act is no longer required for the immediate public
distribution of such security as a result of the provisions of Rule 144 or
Regulation D, or (iii) it has ceased to be outstanding. The term "Registrable
Securities" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Section 1.
Section 2. Restrictions on Transfer. The Holder acknowledges
------------------------
and understands that prior to the registration of the Securities as provided
herein, the Securities are "restricted securities" as defined in Rule 144
promulgated under the Securities Act. The Holder understands that no disposition
or transfer of the Securities may be made by Holder in the absence of (i) an
opinion of counsel reasonably satisfactory to the Company that such transfer may
be made, or (ii) a registration statement under the Securities Act is then in
effect with respect thereto.
<PAGE>
Section 3. Registration Rights.
-------------------
(a) The Company shall prepare and file a Registration
Statement with the Securities and Exchange Commission ("SEC"), on one occasion,
at the sole expense of the Company (except as provided in Section 3(c) hereof),
in respect of all holders of Registrable Securities, so as to permit a
non-underwritten public offering and sale of the Registrable Securities under
the Securities Act. The number of shares to be registered shall be two hundred
(200%) percent of the number of such shares that would be issued on conversion
of the non-voting Preferred Stock (the "Conversion Shares"), if all of the
Securities were converted on the filing date of the Registration Statement.
(b) The Company will maintain any Registration Statement or
post-effective amendment filed under this Section 3 hereof current under the
Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the holders thereof receive an opinion of counsel that the Registrable
Securities may be sold under the provisions of Rule 144, or (iii) the second
anniversary of the effective date of the Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and filing of
any Registration Statement under subparagraph 3(a) and in complying with
applicable securities and Blue Sky laws (including, without limitation, all
attorneys' fees) shall be borne by the Company. In addition, the Company shall
bear the cost of underwriting discounts and commissions, if any, applicable to
the Registrable Securities being registered and the fees and expenses of its
counsel. The Company shall use its best efforts to qualify any of the securities
for sale in such states as such Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 8 hereof. However, the Company
shall not be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the sellers. The Company at its
expense will supply the Holder with copies of such Registration Statement and
the prospectus or offering circular included therein and other related documents
in such quantities as may be reasonably requested by the Holder.
(d) The Company shall not be required by this Section 3 to
include a Holder's Registrable Securities in any Registration Statement which is
to be filed if, in the opinion of counsel for both the Holder and the Company
(or, should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would result in
all purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
(e) In the event the Registration Statement to be filed by the
Company pursuant to Section 3(a) above is not filed by the Company with the SEC
within forty five (45) days after the Closing Date, or is not declared effective
by the SEC within ninety (90) days from the Closing Date (the "Proposed
Effective Date"), then the Company will pay Holder by wire
2
<PAGE>
transfer, as liquidated damages for such failure and not as a penalty, two (2%)
percent of the outstanding principal amount of the Preferred Stock per month
thereafter, which amount will be increased to three (3%) percent of the
outstanding principal amount of the Preferred Stock in the event the
registration statement is not declared effective within thirty (30) days after
the Proposed Effective Date. In the event the registration statement is not
declared effective by the SEC within sixty (60) days after the Proposed
Effective Date, the Company will pay the Holders, in addition to the
aforementioned liquidated damages, additional liquidated damages in the amount
of one (1%) percent of the outstanding principal balance of the Preferred Stock
for each full thirty (30) day period thereafter during which the registration
statement is not declared effective. Payments as set forth in this section shall
be made in cash or stock at the Company's option (the first month shall be pro
rated on a weekly basis) until the Company procures registration of the Stock.
If the Company does not remit the damages to the Purchaser as set forth above,
the Company will pay the Purchaser reasonable costs of collection, including
attorneys fees, in addition to the liquidated damages. Such payment shall be
made to the Purchaser in cash immediately if the registration of the Securities
are not effected; provided, however, that the payment of such liquidated damages
shall not relieve the Company from its obligations to register the Securities
pursuant to this Section. The registration of the securities pursuant to this
provision shall not effect or limit Subscribers other rights or remedies as set
forth in this Registration Rights Agreement.
(f) No provision contained herein shall preclude the Company
from selling securities pursuant to any Registration Statement in which it is
required to include Registrable Securities pursuant to this Section 3.
(g) If at any time or from time to time after the effective
date of the Registration Statement, the Company notifies the Holder in writing
of the existence of a Potential Material Event, as defined in this Section 3(g)
herein, the Holder shall not offer or sell any Registrable Securities or engage
in any other transaction involving or relating to Registrable Securities, from
the time of the giving of notice with respect to a Potential Material Event
under such Holders receive written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event; provided, however, that the Company may not so
suspend the right to such holders of Conversion Shares for more than ten (10)
days during any 12-month period with at least a ten (10) business days advance
notice during which time such holder shall continue to have the right to convert
the shares of Preferred Stock. If a Potential Material Event shall occur prior
to the date the Registration Statement is filed, then the Company's obligation
to file the Registration Statement shall be delayed without penalty for not more
than ten (10) days.
In the event there are any blackout periods in effect for any
reason which extend beyond the time period allotted above, the Company shall pay
Holder on a pro rata basis by wire transfer, as liquidated damages for such
blackout periods, three (3%) percent of the principal amount of the Securities
for each month thereafter (or part thereof) until the blackout period is no
longer in effect. The Company must give Holder notice in writing at least two
(2) business days prior to the first day of the period and the Holder shall
continue to have the right to convert Shares during this blackout notice period.
3
<PAGE>
A "Potential Material Event" shall mean any of the following:
(a) the possession by the Company of material information not ripe for
disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Chief Executive Officer or the Board of
Directors of the Company that disclosure of such information in the Registration
Statement covering the resale of the Conversion Shares would be detrimental to
the business and affairs of the Company; or (b) any material engagement or
activity by the Company which would, in the good faith determination of the
Chief Executive Officer or the Board of Directors of the company, be adversely
affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination by the Chief
Executive Officer or the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information.
Section 4. Cooperation with Company. Holders will cooperate
------------------------
with the Company in all respects in connection with this Agreement, including,
timely supplying all information reasonably requested by the Company and
executing and returning all documents reasonably requested in connection with
the registration and sale of the Registrable Securities.
Section 5. Registration Procedures. If and whenever the
-----------------------
Company is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Securities Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the Prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
two (2) years and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such
registration statement when the Holder or Holders of such securities shall
desire to sell or otherwise dispose of the same (including prospectus
supplements with respect to the sales of securities from time to time in
connection with a registration statement pursuant to Rule 415 under the
Securities Act);
(b) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Securities Act, and such other documents, as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
securities owned by such Holder;
(c) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Holder, shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable each Holder to consummate the public sale or other disposition in such
jurisdiction of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any
<PAGE>
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(d) use its best efforts to list such securities on the NASDAQ
National Market System or any securities exchange on which any securities of the
Company is then listed, if the listing of such securities is then permitted
under the rules of such exchange or NASDAQ National Market System;
(e) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(f) notify each Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
Securities Act, of the happening of any event of which it has knowledge as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
Section 6. Assignment. The rights granted to the Holders under
----------
this Agreement shall not be assigned without the written consent of the Company,
which consent shall not be unreasonably withheld. In the event of a transfer of
the rights granted under this Agreement, the Holders agree that the Company may
require that the transferee comply with reasonable conditions as determined in
the discretion of the Company. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
Section 7. Termination of Registration Rights. The rights
----------------------------------
granted pursuant to this Registration Rights Agreement shall terminate as to
each Investor (and permitted transferees or assignees) upon the occurrence of
any of the following:
(a) all such Holder's securities subject to this Agreement
have been registered;
(b) such Holder's securities subject to this Agreement may be
sold without such registration pursuant to Rule 144 or Regulation D promulgated
by the SEC pursuant to the Securities Act; or
(c) such Holder's securities subject to this Agreement can be
sold pursuant to Rule 144(k).
5
<PAGE>
Section 8. Indemnification.
---------------
(a) In the event of the filing of any Registration Statement with respect
to Registrable Securities pursuant to this Agreement hereof, the Company agrees
to indemnify and hold harmless the Holder and each person, if any, who controls
the Holder within the meaning of the Securities Act ("Distributing Holders")
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees), to which the
Distributing Holders may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such Registration Statement, or
any related preliminary prospectus, final prospectus, offering circular,
notification or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by the Distributing Holders, specifically for use in the preparation
thereof. This Section shall not inure to the benefit of any Distributing Holder
with respect to any person asserting such loss, claim, damage or liability who
purchased the Registrable Securities which are the subject thereof if the
Distributing Holder failed to send or give (in violation of the Securities Act
or the rules and regulations promulgated thereunder) a copy of the prospectus
contained in such Registration Statement to such person at or prior to the
written confirmation to such person of the sale of such Registrable Securities,
where the Distributing Holder was obligated to do so under the Securities Act or
the rules and regulations promulgated hereunder. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and hold
harmless the Company, and each officer, director of the Company or person, if
any, who controls the Company within the meaning of the Securities Act, against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses claims, damages or liabilities (or actions in
respect thereof); arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a Registration Statement
requested by such Distributing Holder, or any related preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by such Distributing
6
<PAGE>
Holder, specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the distributing Holders
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 10. Contribution. In order to provide for just and equitable
------------
contribution under the Securities Act in any case in which (i) the Distributing
Holder makes a claim for indemnification, but is judically determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Agreement provide for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of any Distributing Holder, then the Company and the applicable
Distributing Holder shall contribute to the aggregate losses,
7
<PAGE>
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the applicable
Distributing Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Section 11. Notices. Any notice pursuant to this Agreement by the Company
-------
or by the Holder shall be in writing and shall be deemed to have been duly given
if delivered by (i) hand, (ii) by facsimile and followed by mail delivery, or
(iii) if mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the Holder, to its, his or her address set forth on the signature
page of the Agreement, with a copy to the person designated in the Agreement.
(b) If to the Company, at the address set forth herein, or to such other
address as any such party may designate by notice to the other party. Notices
shall be deemed given at the time they are delivered personally or five (5) days
after they are mailed in the manner set forth above. If notice is delivered by
facsimile to the Company and followed by mail, delivery shall be deemed given
two (2) days after such facsimile is sent.
Section 12. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Section 13. Headings. The headings in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 14. Governing Law, Venue. This Agreement will be construed and
--------------------
enforced in accordance with and governed by the laws of the State of Delaware,
except for matters arising under the Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the State of Delaware or
the state courts of the State of Delaware in connection with any dispute
8
<PAGE>
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a judgment against it in
such a proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law.
Section 15. Severability/Defined Terms. If any provision of this Agreement
--------------------------
shall for any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein. Terms not otherwise defined herein shall be defined in
accordance with the Series A 8.5% Convertible Preferred Stock Subscription
Agreement.
[Remainder of Page Intentionally Left Blank]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, on the day and year first above written.
Attest: STORM TECHNOLOGY, INC.
By: By:
--------------------- --------------------
Name: Name:
Title: Title:
------------------ -----------------
CPR (USA) INC.
By:
--------------------
Officer
10
<PAGE>
Exhibit 4.8
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 18th day of December,
1997, between LIBERTYVIEW PLUS FUND (the "Holder" or "Holders") issued pursuant
to a Series A 8.5% Convertible Preferred Stock Subscription Agreement of even
date herewith, and STORM TECHNOLOGY, INC., a Delaware corporation, having its
principal place of business at 1395 Charleston Road, Mountain View, CA 94043
(the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are purchasing from the Company, pursuant to a Series A
8.5% Convertible Preferred Stock Subscription Agreement dated the date hereof
(the "Agreement"), upon conversion thereof, an aggregate of up to Three Million
($3,000,000) Dollars face value of non-voting Series A 8.5% Convertible
Preferred Stock (the "Preferred Stock") and Warrants. Capitalized terms defined
in the Agreement and not otherwise defined herein shall have the meanings
specified in the Agreement; and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the Securities.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
----------------------
"Registrable Security" means each of the Preferred Stock, Warrants and
Underlying Shares; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination, (i) it has been effectively registered
under the Securities Act and disposed of pursuant thereto, (ii) registration
under the Securities Act is no longer required for the immediate public
distribution of such security as a result of the provisions of Rule 144 or
Regulation D, or (iii) it has ceased to be outstanding. The term "Registrable
Securities" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Section 1.
Section 2. Restrictions on Transfer. The Holder acknowledges and
------------------------
understands that prior to the registration of the Securities as provided herein,
the Securities are "restricted securities" as defined in Rule 144 promulgated
under the Securities Act. The Holder understands that no disposition or transfer
of the Securities may be made by Holder in the absence of (i) an opinion of
counsel reasonably satisfactory to the Company that such transfer may be made,
or (ii) a registration statement under the Securities Act is then in effect with
respect thereto.
<PAGE>
Section 3. Registration Rights.
-------------------
(a) The Company shall prepare and file a Registration Statement with
the Securities and Exchange Commission ("SEC"), on one occasion, at the sole
expense of the Company (except as provided in Section 3(c) hereof), in respect
of all holders of Registrable Securities, so as to permit a non-underwritten
public offering and sale of the Registrable Securities under the Securities Act.
The number of shares to be registered shall be two hundred (200%) percent of the
number of such shares that would be issued on conversion of the non-voting
Preferred Stock (the "Conversion Shares"), if all of the Securities were
converted on the filing date of the Registration Statement.
(b) The Company will maintain any Registration Statement or post-
effective amendment filed under this Section 3 hereof current under the
Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the holders thereof receive an opinion of counsel that the Registrable
Securities may be sold under the provisions of Rule 144, or (iii) the second
anniversary of the effective date of the Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of any
Registration Statement under subparagraph 3(a) and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees) shall be borne by the Company. In addition, the Company shall bear the
cost of underwriting discounts and commissions, if any, applicable to the
Registrable Securities being registered and the fees and expenses of its
counsel. The Company shall use its best efforts to qualify any of the securities
for sale in such states as such Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 8 hereof. However, the Company
shall not be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the sellers. The Company at its
expense will supply the Holder with copies of such Registration Statement and
the prospectus or offering circular included therein and other related documents
in such quantities as may be reasonably requested by the Holder.
(d) The Company shall not be required by this Section 3 to include a
Holder's Registrable Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Holder and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would result in
all purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
(e) In the event the Registration Statement to be filed by the
Company pursuant to Section 3(a) above is not filed by the Company with the SEC
within forty five (45) days after the Closing Date, or is not declared effective
by the SEC within ninety (90) days from the Closing Date (the "Proposed
Effective Date"), then the Company will pay Holder by wire
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<PAGE>
transfer, as liquidated damages for such failure and not as a penalty, two (2%)
percent of the outstanding principal amount of the Preferred Stock per month
thereafter, which amount will be increased to three (3%) percent of the
outstanding principal amount of the Preferred Stock in the event the
registration statement is not declared effective within thirty (30) days after
the Proposed Effective Date. In the event the registration statement is not
declared effective by the SEC within sixty (60) days after the Proposed
Effective Date, the Company will pay the Holders, in addition to the
aforementioned liquidated damages, additional liquidated damages in the amount
of one (1%) percent of the outstanding principal balance of the Preferred Stock
for each full thirty (30) day period thereafter during which the registration
statement is not declared effective. Payments as set forth in this section shall
be made in cash or stock at the Company's option (the first month shall be pro
rated on a weekly basis) until the Company procures registration of the Stock.
If the Company does not remit the damages to the Purchaser as set forth above,
the Company will pay the Purchaser reasonable costs of collection, including
attorneys fees, in addition to the liquidated damages. Such payment shall be
made to the Purchaser in cash immediately if the registration of the Securities
are not effected; provided, however, that the payment of such liquidated damages
shall not relieve the Company from its obligations to register the Securities
pursuant to this Section. The registration of the securities pursuant to this
provision shall not effect or limit Subscribers other rights or remedies as set
forth in this Registration Rights Agreement.
(f) No provision contained herein shall preclude the Company from
selling securities pursuant to any Registration Statement in which it is
required to include Registrable Securities pursuant to this Section 3.
(g) If at any time or from time to time after the effective date of
the Registration Statement, the Company notifies the Holder in writing of the
existence of a Potential Material Event, as defined in this Section 3(g) herein,
the Holder shall not offer or sell any Registrable Securities or engage in any
other transaction involving or relating to Registrable Securities, from the time
of the giving of notice with respect to a Potential Material Event under such
Holders receive written notice from the Company that such Potential Material
Event either has been disclosed to the public or no longer constitutes a
Potential Material Event; provided, however, that the Company may not so suspend
the right to such holders of Conversion Shares for more than ten (10) days
during any 12-month period with at least a ten (10) business days advance notice
during which time such holder shall continue to have the right to convert the
shares of Preferred Stock. If a Potential Material Event shall occur prior to
the date the Registration Statement is filed, then the Company's obligation to
file the Registration Statement shall be delayed without penalty for not more
than ten (10) days.
In the event there are any blackout periods in effect for any reason
which extend beyond the time period allotted above, the Company shall pay Holder
on a pro rata basis by wire transfer, as liquidated damages for such blackout
periods, three (3%) percent of the principal amount of the Securities for each
month thereafter (or part thereof) until the blackout period is no longer in
effect. The Company must give Holder notice in writing at least two (2) business
days prior to the first day of the period and the Holder shall continue to have
the right to convert Shares during this blackout notice period.
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<PAGE>
A "Potential Material Event" shall mean any of the following: (a) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by determinations in good faith
by the Chief Executive Officer or the Board of Directors of the Company that
disclosure of such information in the Registration Statement covering the resale
of the Conversion Shares would be detrimental to the business and affairs of the
Company; or (b) any material engagement or activity by the Company which would,
in the good faith determination of the Chief Executive Officer or the Board of
Directors of the company, be adversely affected by disclosure in a registration
statement at such time, which determination shall be accompanied by a good faith
determination by the Chief Executive Officer or the Board of Directors of the
Company that the Registration Statement would be materially misleading absent
the inclusion of such information.
Section 4. Cooperation with Company. Holders will cooperate with the
------------------------
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
Section 5. Registration Procedures. If and whenever the Company is
-----------------------
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Securities Act, the Company shall
(except as otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the Prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
two (2) years and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such
registration statement when the Holder or Holders of such securities shall
desire to sell or otherwise dispose of the same (including prospectus
supplements with respect to the sales of securities from time to time in
connection with a registration statement pursuant to Rule 415 under the
Securities Act);
(b) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Securities Act, and such other documents, as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
securities owned by such Holder;
(c) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holder, shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable each
Holder to consummate the public sale or other disposition in such jurisdiction
of the securities owned by such Holder, except that the Company shall not for
any such purpose be required to qualify to do business as a foreign corporation
in any
4
<PAGE>
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(d) use its best efforts to list such securities on the NASDAQ
National Market System or any securities exchange on which any securities of the
Company is then listed, if the listing of such securities is then permitted
under the rules of such exchange or NASDAQ National Market System;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(f) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.
Section 6. Assignment. The rights granted to the Holders under this
----------
Agreement shall not be assigned without the written consent of the Company,
which consent shall not be unreasonably withheld. In the event of a transfer of
the rights granted under this Agreement, the Holders agree that the Company may
require that the transferee comply with reasonable conditions as determined in
the discretion of the Company. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
Section 7. Termination of Registration Rights. The rights granted
----------------------------------
pursuant to this Registration Rights Agreement shall terminate as to each
Investor (and permitted transferees or assignees) upon the occurrence of any of
the following:
(a) all such Holder's securities subject to this Agreement have been
registered;
(b) such Holder's securities subject to this Agreement may be sold
without such registration pursuant to Rule 144 or Regulation D promulgated by
the SEC pursuant to the Securities Act; or
(c) such Holder's securities subject to this Agreement can be sold
pursuant to Rule 144(k).
5
<PAGE>
Section 8. Indemnification.
---------------
(a) In the event of the filing of any Registration Statement with
respect to Registrable Securities pursuant to this Agreement hereof, the Company
agrees to indemnify and hold harmless the Holder and each person, if any, who
controls the Holder within the meaning of the Securities Act ("Distributing
Holders") against any losses, claims, damages or liabilities, joint or several
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), to which
the Distributing Holders may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any such Registration
Statement, or any related preliminary prospectus, final prospectus, offering
circular, notification or amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by the Distributing Holders, specifically for use in the
preparation thereof. This Section shall not inure to the benefit of any
Distributing Holder with respect to any person asserting such loss, claim,
damage or liability who purchased the Registrable Securities which are the
subject thereof if the Distributing Holder failed to send or give (in violation
of the Securities Act or the rules and regulations promulgated thereunder) a
copy of the prospectus contained in such Registration Statement to such person
at or prior to the written confirmation to such person of the sale of such
Registrable Securities, where the Distributing Holder was obligated to do so
under the Securities Act or the rules and regulations promulgated hereunder.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and hold
harmless the Company, and each officer, director of the Company or person, if
any, who controls the Company within the meaning of the Securities Act, against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses claims, damages or liabilities (or actions in
respect thereof); arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a Registration Statement
requested by such Distributing Holder, or any related preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by such Distributing
6
<PAGE>
Holder, specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the distributing Holders
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 10. Contribution. In order to provide for just and equitable
------------
contribution under the Securities Act in any case in which (i) the Distributing
Holder makes a claim for indemnification, but is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Agreement provide for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of any Distributing Holder, then the Company and the applicable
Distributing Holder shall contribute to the aggregate losses,
7
<PAGE>
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the applicable
Distributing Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Section 11. Notices. Any notice pursuant to this Agreement by
-------
the Company or by the Holder shall be in writing and shall be deemed to have
been duly given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery, or (iii) if mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Holder, to its, his or her address set forth on the
signature page of the Agreement, with a copy to the person designated in the
Agreement.
(b) If to the Company, at the address set forth herein, or to such
other address as any such party may designate by notice to the other party.
Notices shall be deemed given at the time they are delivered personally or five
(5) days after they are mailed in the manner set forth above. If notice is
delivered by facsimile to the Company and followed by mail, delivery shall be
deemed given two (2) days after such facsimile is sent.
Section 12. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13. Headings. The headings in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14. Governing Law, Venue. This Agreement will be construed
--------------------
and enforced in accordance with and governed by the laws of the State of
Delaware, except for matters arising under the Act, without reference to
principles of conflicts of law. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the State of
Delaware or the state courts of the State of Delaware in connection with any
dispute
8
<PAGE>
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a judgment against it in
such a proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law.
Section 15. Severability/Defined Terms. If any provision of this
--------------------------
Agreement shall for any reason be held invalid or unenforceable, such invalidity
or unenforceablity shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein. Terms not otherwise defined herein shall be defined
in accordance with the Series A 8.5% Convertible Preferred Stock Subscription
Agreement.
[Remainder of Page Intentionally Left Blank]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, on the day and year first above written.
Attest: STORM TECHNOLOGY, INC.
By: By:
------------------------- -------------------------
Name: Name:
Title: Title:
---------------------- ----------------------
LIBERTYVIEW PLUS FUND
By:
-------------------------
Officer
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<PAGE>
Exhibit 4.9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 18th day of December, 1997,
between LIBERTYVIEW FUND, LLC (the "Holder" or "Holders") issued pursuant to a
Series A 8.5% Convertible Preferred Stock Subscription Agreement of even date
herewith, and STORM TECHNOLOGY, INC., a Delaware corporation, having its
principal place of business at 1395 Charleston Road, Mountain View, CA 94043
(the "Company").
WHEREAS, simultaneously with the execution and delivery of this Agreement,
the Holders are purchasing from the Company, pursuant to a Series A 8.5%
Convertible Preferred Stock Subscription Agreement dated the date hereof (the
"Agreement"), upon conversion thereof, an aggregate of up to Three Million
($3,000,000) Dollars face value of non-voting Series A 8.5% Convertible
Preferred Stock (the "Preferred Stock") and Warrants. Capitalized terms defined
in the Agreement and not otherwise defined herein shall have the meanings
specified in the Agreement; and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the Securities.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term "Registrable
----------------------
Security" means each of the Preferred Stock, Warrants and Underlying Shares;
provided, however, that with respect to any particular Registrable Security,
such security shall cease to be a Registrable Security when, as of the date of
determination, (i) it has been effectively registered under the Securities Act
and disposed of pursuant thereto, (ii) registration under the Securities Act is
no longer required for the immediate public distribution of such security as a
result of the provisions of Rule 144 or Regulation D, or (iii) it has ceased to
be outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Section 1.
Section 2. Restrictions on Transfer. The Holder acknowledges and
------------------------
understands that prior to the registration of the Securities as provided herein,
the Securities are "restricted securities" as defined in Rule 144 promulgated
under the Securities Act. The Holder understands that no disposition or transfer
of the Securities may be made by Holder in the absence of (i) an opinion of
counsel reasonably satisfactory to the Company that such transfer may be made,
or (ii) a registration statement under the Securities Act is then in effect with
respect thereto.
<PAGE>
Section 3. Registration Rights.
-------------------
(a) The Company shall prepare and file a Registration Statement with the
Securities and Exchange Commission ("SEC"), on one occasion, at the sole expense
of the Company (except as provided in Section 3(c) hereof), in respect of all
holders of Registrable Securities, so as to permit a non-underwritten public
offering and sale of the Registrable Securities under the Securities Act. The
number of shares to be registered shall be two hundred (200%) percent of the
number of such shares that would be issued on conversion of the non-voting
Preferred Stock (the "Conversion Shares"), if all of the Securities were
converted on the filing date of the Registration Statement.
(b) The Company will maintain any Registration Statement or post-
effective amendment filed under this Section 3 hereof current under the
Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the holders thereof receive an opinion of counsel that the Registrable
Securities may be sold under the provisions of Rule 144, or (iii) the second
anniversary of the effective date of the Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and costs incurred
by the Company in connection with the preparation and filing of any Registration
Statement under subparagraph 3(a) and in complying with applicable securities
and Blue Sky laws (including, without limitation, all attorneys' fees) shall be
borne by the Company. In addition, the Company shall bear the cost of
underwriting discounts and commissions, if any, applicable to the Registrable
Securities being registered and the fees and expenses of its counsel. The
Company shall use its best efforts to qualify any of the securities for sale in
such states as such Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 8 hereof. However, the Company
shall not be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the sellers. The Company at its
expense will supply the Holder with copies of such Registration Statement and
the prospectus or offering circular included therein and other related documents
in such quantities as may be reasonably requested by the Holder.
(d) The Company shall not be required by this Section 3 to include a
Holder's Registrable Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Holder and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would result in
all purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
(e) In the event the Registration Statement to be filed by the Company
pursuant to Section 3(a) above is not filed by the Company with the SEC within
forty five (45) days after the Closing Date, or is not declared effective by the
SEC within ninety (90) days from the Closing Date (the "Proposed Effective
Date"), then the Company will pay Holder by wire
2
<PAGE>
transfer, as liquidated damages for such failure and not as a penalty, two (2%)
percent of the outstanding principal amount of the Preferred Stock per month
thereafter, which amount will be increased to three (3%) percent of the
outstanding principal amount of the Preferred Stock in the event the
registration statement is not declared effective within thirty (30) days after
the Proposed Effective Date. In the event the registration statement is not
declared effective by the SEC within sixty (60) days after the Proposed
Effective Date, the Company will pay the Holders, in addition to the
aforementioned liquidated damages, additional liquidated damages in the amount
of one (1%) percent of the outstanding principal balance of the Preferred Stock
for each full thirty (30) day period thereafter during which the registration
statement is not declared effective. Payments as set forth in this section shall
be made in cash or stock at the Company's option (the first month shall be pro
rated on a weekly basis) until the Company procures registration of the Stock.
If the Company does not remit the damages to the Purchaser as set forth above,
the Company will pay the Purchaser reasonable costs of collection, including
attorneys fees, in addition to the liquidated damages. Such payment shall be
made to the Purchaser in cash immediately if the registration of the Securities
are not effected; provided, however, that the payment of such liquidated damages
shall not relieve the Company from its obligations to register the Securities
pursuant to this Section. The registration of the securities pursuant to this
provision shall not effect or limit Subscribers other rights or remedies as set
forth in this Registration Rights Agreement.
(f) No provision contained herein shall preclude the Company from selling
securities pursuant to any Registration Statement in which it is required to
include Registrable Securities pursuant to this Section 3.
(g) If at any time or from time to time after the effective date of the
Registration Statement, the Company notifies the Holder in writing of the
existence of a Potential Material Event, as defined in this Section 3(g) herein,
the Holder shall not offer or sell any Registrable Securities or engage in any
other transaction involving or relating to Registrable Securities, from the time
of the giving of notice with respect to a Potential Material Event under such
Holders receive written notice from the Company that such Potential Material
Event either has been disclosed to the public or no longer constitutes a
Potential Material Event; provided, however, that the Company may not so suspend
the right to such holders of Conversion Shares for more than ten (10) days
during any 12-month period with at least a ten (10) business days advance notice
during which time such holder shall continue to have the right to convert the
shares of Preferred Stock. If a Potential Material Event shall occur prior to
the date the Registration Statement is filed, then the Company's obligation to
file the Registration Statement shall be delayed without penalty for not more
than ten (10) days.
In the event there are any blackout periods in effect for any reason which
extend beyond the time period allotted above, the Company shall pay Holder on a
pro rata basis by wire transfer, as liquidated damages for such blackout
periods, three (3%) percent of the principal amount of the Securities for each
month thereafter (or part thereof) until the blackout period is no longer in
effect. The Company must give Holder notice in writing at least two (2) business
days prior to the first day of the period and the Holder shall continue to have
the right to convert Shares during this blackout notice period.
3
<PAGE>
A "Potential Material Event" shall mean any of the following: (a) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by determinations in good faith
by the Chief Executive Officer or the Board of Directors of the Company that
disclosure of such information in the Registration Statement covering the resale
of the Conversion Shares would be detrimental to the business and affairs of the
Company; or (b) any material engagement or activity by the Company which would,
in the good faith determination of the Chief Executive Officer or the Board of
Directors of the company, be adversely affected by disclosure in a registration
statement at such time, which determination shall be accompanied by a good faith
determination by the Chief Executive Officer or the Board of Directors of the
Company that the Registration Statement would be materially misleading absent
the inclusion of such information.
Section 4. Cooperation with Company. Holders will cooperate with the
------------------------
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
Section 5. Registration Procedures. If and whenever the Company is required
-----------------------
by any of the provisions of this Agreement to effect the registration of any of
the Registrable Securities under the Securities Act, the Company shall (except
as otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission such amendments and supplements
to such registration statement and the Prospectus used in connection therewith
as may be necessary to keep such registration statement effective for two (2)
years and to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all securities covered by such registration
statement when the Holder or Holders of such securities shall desire to sell or
otherwise dispose of the same (including prospectus supplements with respect to
the sales of securities from time to time in connection with a registration
statement pursuant to Rule 415 under the Securities Act);
(b) furnish to each Holder such numbers of copies of a summary prospectus
or other prospectus, including a preliminary prospectus or any amendment or
supplement to any prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as such Holder may reasonably request
in order to facilitate the public sale or other disposition of the securities
owned by such Holder;
(c) use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or blue sky laws of
such jurisdictions as the Holder, shall reasonably request, and do any and all
other acts and things which may be necessary or advisable to enable each Holder
to consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Holder, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation in any
4
<PAGE>
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(d) use its best efforts to list such securities on the NASDAQ National
Market System or any securities exchange on which any securities of the Company
is then listed, if the listing of such securities is then permitted under the
rules of such exchange or NASDAQ National Market System;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(f) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.
Section 6. Assignment. The rights granted to the Holders under this
----------
Agreement shall not be assigned without the written consent of the Company,
which consent shall not be unreasonably withheld. In the event of a transfer of
the rights granted under this Agreement, the Holders agree that the Company may
require that the transferee comply with reasonable conditions as determined in
the discretion of the Company. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
Section 7. Termination of Registration Rights. The rights granted pursuant
----------------------------------
to this Registration Rights Agreement shall terminate as to each Investor (and
permitted transferees or assignees) upon the occurrence of any of the following:
(a) all such Holder's securities subject to this Agreement have been
registered;
(b) such Holder's securities subject to this Agreement may be sold
without such registration pursuant to Rule 144 or Regulation D promulgated by
the SEC pursuant to the Securities Act; or
(c) such Holder's securities subject to this Agreement can be sold
pursuant to Rule 144(k).
5
<PAGE>
Section 8. Indemnification.
---------------
(a) In the event of the filing of any Registration Statement with respect
to Registrable Securities pursuant to this Agreement hereof, the Company agrees
to indemnify and hold harmless the Holder and each person, if any, who controls
the Holder within the meaning of the Securities Act ("Distributing Holders")
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees), to which the
Distributing Holders may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such Registration Statement, or
any related preliminary prospectus, final prospectus, offering circular,
notification or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by the Distributing Holders, specifically for use in the preparation
thereof. This Section shall not inure to the benefit of any Distributing Holder
with respect to any person asserting such loss, claim, damage or liability who
purchased the Registrable Securities which are the subject thereof if the
Distributing Holder failed to send or give (in violation of the Securities Act
or the rules and regulations promulgated thereunder) a copy of the prospectus
contained in such Registration Statement to such person at or prior to the
written confirmation to such person of the sale of such Registrable Securities,
where the Distributing Holder was obligated to do so under the Securities Act or
the rules and regulations promulgated hereunder. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and hold
harmless the Company, and each officer, director of the Company or person, if
any, who controls the Company within the meaning of the Securities Act, against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses claims, damages or liabilities (or actions in
respect thereof); arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a Registration Statement
requested by such Distributing Holder, or any related preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by such Distributing
6
<PAGE>
Holder, specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the distributing Holders
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 10. Contribution. In order to provide for just and equitable
------------
contribution under the Securities Act in any case in which (i) the Distributing
Holder makes a claim for indemnification, but is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Agreement provide for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of any Distributing Holder, then the Company and the applicable
Distributing Holder shall contribute to the aggregate losses,
7
<PAGE>
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the applicable
Distributing Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Section 11. Notices. Any notice pursuant to this Agreement by the Company
-------
or by the Holder shall be in writing and shall be deemed to have been duly given
if delivered by (i) hand, (ii) by facsimile and followed by mail delivery, or
(iii) if mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the Holder, to its, his or her address set forth on the
signature page of the Agreement, with a copy to the person designated in the
Agreement.
(b) If to the Company, at the address set forth herein, or to such other
address as any such party may designate by notice to the other party. Notices
shall be deemed given at the time they are delivered personally or five (5) days
after they are mailed in the manner set forth above. If notice is delivered by
facsimile to the Company and followed by mail, delivery shall be deemed given
two (2) days after such facsimile is sent.
Section 12. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 13. Headings. The headings in this Agreement are for reference
--------
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 14. Governing Law, Venue. This Agreement will be construed and
--------------------
enforced in accordance with and governed by the laws of the State of Delaware,
except for matters arising under the Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the State of Delaware or
the state courts of the State of Delaware in connection with any dispute
8
<PAGE>
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
----- --- ----------
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a judgment against it in
such a proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law.
Section 15. Severability/Defined Terms. If any provision of this Agreement
--------------------------
shall for any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein. Terms not otherwise defined herein shall be defined in
accordance with the Series A 8.5% Convertible Preferred Stock Subscription
Agreement.
[Remainder of Page Intentionally Left Blank]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, on the day and year first above written.
Attest: STORM TECHNOLOGY, INC.
By: By:
------------------------- ----------------------
Name: Name:
Title: Title:
---------------------- -------------------
LIBERTYVIEW FUND, LLC
By:
----------------------
Officer
10
<PAGE>
Exhibit 4.10
STORM TECHNOLOGY, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT is entered into as of
December 18, 1997, by and between Storm Technology, Inc., a Delaware corporation
(the "Company"), and the L. William and L. Gay Krause Trust under Agreement
dated June 21, 1994 (the "Purchaser").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto agree as follows:
1. Sale of the Shares. Subject to the terms and conditions hereof, upon
------------------
execution of this Agreement, the Company will issue and sell to the Purchaser,
and the Purchaser will purchase from the Company, (i) 1,066,666 shares of Common
Stock (the "Shares") and (ii) a warrant to purchase 100,000 shares of Common
Stock (the "Warrant Shares") at an exercise price of $1.90 in the form attached
hereto as Exhibit A. The aggregate purchase price payable by the Purchaser
---------
shall be $2,012,478.95. The parties agree that $1.875 of the purchase price
will be allocated to the each Share being purchased, and $0.125 will be
allocated to the right to buy one Warrant Share.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Purchaser that:
2.1 Organization and Standing; Articles and Bylaws. The Company is a
----------------------------------------------
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Delaware and is in good standing under such laws. The
Company has the requisite corporate power to own and operate its properties and
assets and to carry on its business as presently conducted and as proposed to be
conducted.
2.2 Corporate Power. The Company has all requisite corporate power
---------------
to enter into this Agreement, to sell the Shares and Warrants hereunder and to
carry out and perform its other obligations under the terms of this Agreement.
2.3 Capitalization. The authorized capital stock of the Company
--------------
consists of 30,000,000 shares of Common Stock, $0.001 par value (the "Common
Stock"), and 500,000 shares of Preferred Stock, $0.001 par value (the "Preferred
Stock"), of which 30,000 shares have been designated Series A 8.5% Convertible
Preferred Stock. As of September 30, 1997, (i) 10,493,972 shares of Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable; and (ii) 1,570,426 shares of Common Stock were reserved for
issuance pursuant to stock options under the Company's stock option plans (the
"The Company Option Plans") and rights under the Company's Employee Stock
Purchase Plan.
2.4 Authorization.
-------------
(a) All corporate action on the part of the Company, its
officers, directors and stockholders necessary for (i) the sale and issuance of
the Shares and Warrants
1
<PAGE>
pursuant hereto, (ii) the issuance of the Warrant Shares upon exercise of the
Warrants, and (iii) the execution, performance and delivery by the Company of
this Agreement has been taken. This Agreement is a valid and binding obligation
of the Company, enforceable against it in accordance with its respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and rules or laws concerning
equitable remedies.
(b) The Shares, when issued in compliance with the provisions
of this Agreement, and the Warrant Shares, when issued in accordance with the
Warrants, will be validly issued, fully paid and nonassessable; provided,
however, that the Shares, and the Warrant Shares may be subject to restrictions
on transfer under state and/or federal securities laws as set forth herein or
otherwise required by such laws at the time a transfer is proposed.
(c) No stockholder of the Company has any right of first
refusal or any preemptive rights in connection with the issuance and sale of the
Shares, the Warrants or the Warrant Shares.
2.5 Compliance with Other Instruments; None Burdensome, etc.
-------------------------------------------------------
The Company is not in violation of any term of Certificate of Incorporation or
its Bylaws, as amended, or any mortgage, indenture, contract, agreement,
instrument, judgment, decree or order by which the Company is bound or to which
its properties are subject or, to its knowledge, any statute, rule, or
regulation applicable to the Company where such violation would materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of the Company. The execution, delivery and performance
of and compliance with this Agreement and the transactions contemplated hereby
and thereby will not result in any such violation and will not be in conflict
with or constitute a default under any of the foregoing and will not result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company pursuant to any of the foregoing.
3. Representations and Warranties of the Purchasers and Restrictions on
--------------------------------------------------------------------
Transfer Imposed by the Securities Act of 1933 and the California Corporate
- ---------------------------------------------------------------------------
Securities Law of 1968.
- ----------------------
3.1 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
hereby represents and warrants to the Company as follows:
(a) The Shares, the Warrants, and the Warrant Shares (the
"Securities") are being acquired for the Purchaser's own account, for investment
and not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act or the
California Law.
(b) The Purchaser understands that the Securities have not
been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Regulation D promulgated thereunder, that the Company has no present
intention of registering the Securities, that the Securities must be held by the
Purchaser indefinitely, and that the Purchaser must therefore bear the economic
risk of the investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration. The
Purchaser further understands that the
2
<PAGE>
Securities have not been qualified under the California Law by reason of their
issuance in a transaction exempt from the qualification requirements of the
California Law pursuant to Section 25102(f) thereof, which exemption depends
upon, among other things, the bona fide nature of the Purchaser's investment
intent expressed above.
(c) The Purchaser will not sell, negotiate, pledge or
otherwise dispose of any of the Securities (other than in conjunction with an
effective registration statement for the Securities under the Securities Act) in
the United States, its territories and possessions or any area subject to its
jurisdiction, or to any person who is a national or resident of the United
States (including any estate of such person or any corporation, partnership or
other entity created or organized therein) unless and until (i) the Purchaser
shall have notified the Company of the proposed disposition, and (ii) the
Purchaser shall have furnished the Company with an opinion of counsel
satisfactory in form and substance to the Company to the effect that such
disposition will not require registration under the Securities Act.
(d) During the negotiation of the transactions contemplated
herein, the Purchaser and its counsel have been afforded full access to the
corporate books, records, documents, and other information concerning the
Company and have been afforded an opportunity to ask such questions of the
Company's officers and representatives concerning the Company's business,
operations, financial condition, assets, liabilities and other relevant matters
as they have deemed necessary or desirable, and have been given all such
information as has been requested, in order to evaluate the merits and risks of
the prospective investment contemplated herein.
(e) The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of the purchase of the Shares and the Warrants pursuant to the
terms of this Agreement.
(f) The Purchaser has the full right, power and authority to
enter into and perform the Purchaser's obligations under this Agreement. This
Agreement is q valid and binding obligation of the Purchaser enforceable in
accordance with its terms except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and rules or laws concerning equitable remedies.
(g) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the
Purchaser is required in connection with the valid execution and delivery of
this Agreement.
3.2 Legends. Each certificate representing the Shares, the Warrant
-------
Shares or the Warrant Shares may be endorsed with legends in substantially the
following form:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS
MADE IN
3
<PAGE>
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
(b) THE HOLDER WILL NOT SELL, HYPOTHECATE, PLEDGE, OR
OTHERWISE DISPOSE OF ANY INTEREST IN THE SHARES FOR A PERIOD OF TWELVE MONTHS
FROM DECEMBER 18, 1997.
4. Miscellaneous.
-------------
4.1 Governing Law. This Agreement shall be governed in all respects
-------------
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
California.
4.2 Entire Agreement. This Agreement constitutes the entire
----------------
understanding and agreement between the parties with regard to the subjects
hereof. This Agreement may only be amended by a written instrument signed by the
Company and the Purchaser.
4.3 Expenses. The Company and the Purchasers shall each bear their
--------
respective expenses and legal fees incurred with respect to this Agreement and
the transactions contemplated hereby.
4.4 Lockup. Purchaser agrees that for the first twelve (12) months
------
after the date of this Agreement, the Purchaser will not directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase, pledge or otherwise transfer or dispose of
any shares of the Shares or Warrant Shares.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
STORM TECHNOLOGY, INC.
By:
--------------------------------------
Its:
-------------------------------------
PURCHASER:
L. William and L. Gay Krause Trust under
Agreement dated June 21, 1994
By:
--------------------------------------
Its:
-------------------------------------
5
<PAGE>
Exhibit 4.11
STORM TECHNOLOGY, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT is entered into as of
December 18, 1997, by and between Storm Technology, Inc., a Delaware corporation
(the "Company"), and Adriaan Ligtenberg (the "Purchaser").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto agree as follows:
1. Sale of the Shares. Subject to the terms and conditions hereof, upon
------------------
execution of this Agreement, the Company will issue and sell to the Purchaser,
and the Purchaser will purchase from the Company, (i) 16,000 shares of Common
Stock (the "Shares") and (ii) a warrant to purchase 1,500 shares of Common Stock
(the "Warrant Shares") at an exercise price of $1.90 in the form attached hereto
as Exhibit A. The aggregate purchase price payable by the Purchaser shall be
---------
$30,187.50 The parties agree that $1.875 of the purchase price will be
allocated to the each Share being purchased, and $0.125 will be allocated to the
right to buy one Warrant Share.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Purchaser that:
2.1 Organization and Standing; Articles and Bylaws. The Company is a
----------------------------------------------
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Delaware and is in good standing under such laws. The
Company has the requisite corporate power to own and operate its properties and
assets and to carry on its business as presently conducted and as proposed to be
conducted.
2.2 Corporate Power. The Company has all requisite corporate power
---------------
to enter into this Agreement, to sell the Shares and Warrants hereunder and to
carry out and perform its other obligations under the terms of this Agreement.
2.3 Capitalization. The authorized capital stock of the Company
--------------
consists of 30,000,000 shares of Common Stock, $0.001 par value (the "Common
Stock"), and 500,000 shares of Preferred Stock, $0.001 par value (the "Preferred
Stock"), of which 30,000 shares have been designated Series A 8.5% Convertible
Preferred Stock. As of September 30, 1997, (i) 10,493,972 shares of Common
Stock were issued and outstanding, all of which are validly issued, fully paid
and nonassessable; and (ii) 1,570,426 shares of Common Stock were reserved for
issuance pursuant to stock options under the Company's stock option plans (the
"The Company Option Plans") and rights under the Company's Employee Stock
Purchase Plan.
2.4 Authorization.
-------------
(a) All corporate action on the part of the Company, its
officers, directors and stockholders necessary for (i) the sale and issuance of
the Shares and Warrants pursuant hereto, (ii) the issuance of the Warrant Shares
upon exercise of the Warrants, and (iii) the execution, performance and delivery
by the Company of this Agreement has been taken.
1
<PAGE>
This Agreement is a valid and binding obligation of the Company, enforceable
against it in accordance with its respective terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting enforcement of
creditors' rights and rules or laws concerning equitable remedies.
(b) The Shares, when issued in compliance with the provisions
of this Agreement, and the Warrant Shares, when issued in accordance with the
Warrants, will be validly issued, fully paid and nonassessable; provided,
however, that the Shares, and the Warrant Shares may be subject to restrictions
on transfer under state and/or federal securities laws as set forth herein or
otherwise required by such laws at the time a transfer is proposed.
(c) No stockholder of the Company has any right of first
refusal or any preemptive rights in connection with the issuance and sale of the
Shares, the Warrants or the Warrant Shares.
2.5 Compliance with Other Instruments; None Burdensome, etc. The
-------------------------------------------------------
Company is not in violation of any term of Certificate of Incorporation or its
Bylaws, as amended, or any mortgage, indenture, contract, agreement, instrument,
judgment, decree or order by which the Company is bound or to which its
properties are subject or, to its knowledge, any statute, rule, or regulation
applicable to the Company where such violation would materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company. The execution, delivery and performance of and
compliance with this Agreement and the transactions contemplated hereby and
thereby will not result in any such violation and will not be in conflict with
or constitute a default under any of the foregoing and will not result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company pursuant to any of the foregoing.
3. Representations and Warranties of the Purchasers and Restrictions on
--------------------------------------------------------------------
Transfer Imposed by the Securities Act of 1933 and the California Corporate
- ---------------------------------------------------------------------------
Securities Law of 1968.
- ----------------------
3.1 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
hereby represents and warrants to the Company as follows:
(a) The Shares, the Warrants, and the Warrant Shares (the
"Securities") are being acquired for the Purchaser's own account, for investment
and not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act or the
California Law.
(b) The Purchaser understands that the Securities have not
been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Regulation D promulgated thereunder, that the Company has no present
intention of registering the Securities, that the Securities must be held by the
Purchaser indefinitely, and that the Purchaser must therefore bear the economic
risk of the investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration. The
Purchaser further understands that the Securities have not been qualified under
the California Law by reason of their issuance in a transaction exempt from the
qualification requirements of the California Law pursuant to Section
2
<PAGE>
25102(f) thereof, which exemption depends upon, among other things, the bona
fide nature of the Purchaser's investment intent expressed above.
(c) The Purchaser will not sell, negotiate, pledge or
otherwise dispose of any of the Securities (other than in conjunction with an
effective registration statement for the Securities under the Securities Act) in
the United States, its territories and possessions or any area subject to its
jurisdiction, or to any person who is a national or resident of the United
States (including any estate of such person or any corporation, partnership or
other entity created or organized therein) unless and until (i) the Purchaser
shall have notified the Company of the proposed disposition, and (ii) the
Purchaser shall have furnished the Company with an opinion of counsel
satisfactory in form and substance to the Company to the effect that such
disposition will not require registration under the Securities Act.
(d) During the negotiation of the transactions contemplated
herein, the Purchaser and its counsel have been afforded full access to the
corporate books, records, documents, and other information concerning the
Company and have been afforded an opportunity to ask such questions of the
Company's officers and representatives concerning the Company's business,
operations, financial condition, assets, liabilities and other relevant matters
as they have deemed necessary or desirable, and have been given all such
information as has been requested, in order to evaluate the merits and risks of
the prospective investment contemplated herein.
(e) The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of the purchase of the Shares and the Warrants pursuant to the
terms of this Agreement.
(f) The Purchaser has the full right, power and authority to
enter into and perform the Purchaser's obligations under this Agreement. This
Agreement is q valid and binding obligation of the Purchaser enforceable in
accordance with its terms except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and rules or laws concerning equitable remedies.
(g) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the
Purchaser is required in connection with the valid execution and delivery of
this Agreement.
3.2 Legends. Each certificate representing the Shares, the Warrant
-------
Shares or the Warrant Shares may be endorsed with legends in substantially the
following form:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS
MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
3
<PAGE>
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
(b) THE HOLDER WILL NOT SELL, HYPOTHECATE, PLEDGE, OR
OTHERWISE DISPOSE OF ANY INTEREST IN THE SHARES FOR A PERIOD OF TWELVE MONTHS
FROM DECEMBER 17, 1997.
4. Miscellaneous.
-------------
4.1 Governing Law. This Agreement shall be governed in all respects
-------------
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
California.
4.2 Entire Agreement. This Agreement constitutes the entire
----------------
understanding and agreement between the parties with regard to the subjects
hereof. This Agreement may only be amended by a written instrument signed by the
Company and the Purchaser.
4.3 Expenses. The Company and the Purchasers shall each bear their
--------
respective expenses and legal fees incurred with respect to this Agreement and
the transactions contemplated hereby.
4.4 Lockup. Purchaser agrees that for the first twelve (12) months
------
after the date of this Agreement, the Purchaser will not directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase, pledge or otherwise transfer or dispose of
any shares of the Shares or Warrant Shares.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
STORM TECHNOLOGY, INC.
By:
--------------------------------------
Its:
-------------------------------------
PURCHASER :
-----------------------------------------
Adriaan Ligtenberg
4
<PAGE>
Exhibit 4.12
STORM TECHNOLOGY, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT is entered into as of
December 18, 1997, by and between Storm Technology, Inc., a Delaware corporation
(the "Company"), and Adolf Starreveld (the "Purchaser").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto agree as follows:
1. Sale of the Shares. Subject to the terms and conditions hereof, upon
------------------
execution of this Agreement, the Company will issue and sell to the Purchaser,
and the Purchaser will purchase from the Company, (i) 6,666 shares of Common
Stock (the "Shares") and (ii) a warrant to purchase 625 shares of Common Stock
(the "Warrant Shares") at an exercise price of $1.90 in the form attached hereto
as Exhibit A. The aggregate purchase price payable by the Purchaser shall be
---------
$12,576.87. The parties agree that $1.875 of the purchase price will be
allocated to the each Share being purchased, and $0.125 will be allocated to the
right to buy one Warrant Share.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Purchaser that:
2.1 Organization and Standing; Articles and Bylaws. The Company is a
----------------------------------------------
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Delaware and is in good standing under such laws. The
Company has the requisite corporate power to own and operate its properties and
assets and to carry on its business as presently conducted and as proposed to be
conducted.
2.2 Corporate Power. The Company has all requisite corporate power to
---------------
enter into this Agreement, to sell the Shares and Warrants hereunder and to
carry out and perform its other obligations under the terms of this Agreement.
2.3 Capitalization. The authorized capital stock of the Company
--------------
consists of 30,000,000 shares of Common Stock, $0.001 par value (the "Common
Stock"), and 500,000 shares of Preferred Stock, $0.001 par value (the "Preferred
Stock"), of which 30,000 shares have been designated Series A 8.5% Convertible
Preferred Stock. As of September 30, 1997, (i) 10,493,972 shares of Common
Stock were issued and outstanding, all of which are validly issued, fully paid
and nonassessable; and (ii) 1,570,426 shares of Common Stock were reserved for
issuance pursuant to stock options under the Company's stock option plans (the
"The Company Option Plans") and rights under the Company's Employee Stock
Purchase Plan.
2.4 Authorization.
-------------
(a) All corporate action on the part of the Company, its officers,
directors and stockholders necessary for (i) the sale and issuance of the Shares
and Warrants pursuant hereto, (ii) the issuance of the Warrant Shares upon
exercise of the Warrants, and (iii) the execution, performance and delivery by
the Company of this Agreement has been taken.
1
<PAGE>
This Agreement is a valid and binding obligation of the Company, enforceable
against it in accordance with its respective terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting enforcement of
creditors' rights and rules or laws concerning equitable remedies.
(b) The Shares, when issued in compliance with the provisions of
this Agreement, and the Warrant Shares, when issued in accordance with the
Warrants, will be validly issued, fully paid and nonassessable; provided,
however, that the Shares, and the Warrant Shares may be subject to restrictions
on transfer under state and/or federal securities laws as set forth herein or
otherwise required by such laws at the time a transfer is proposed.
(c) No stockholder of the Company has any right of first refusal
or any preemptive rights in connection with the issuance and sale of the Shares,
the Warrants or the Warrant Shares.
2.5 Compliance with Other Instruments; None Burdensome, etc. The
-------------------------------------------------------
Company is not in violation of any term of Certificate of Incorporation or its
Bylaws, as amended, or any mortgage, indenture, contract, agreement, instrument,
judgment, decree or order by which the Company is bound or to which its
properties are subject or, to its knowledge, any statute, rule, or regulation
applicable to the Company where such violation would materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company. The execution, delivery and performance of and
compliance with this Agreement and the transactions contemplated hereby and
thereby will not result in any such violation and will not be in conflict with
or constitute a default under any of the foregoing and will not result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company pursuant to any of the foregoing.
3. Representations and Warranties of the Purchasers and Restrictions on
--------------------------------------------------------------------
Transfer Imposed by the Securities Act of 1933 and the California Corporate
- ---------------------------------------------------------------------------
Securities Law of 1968.
- ----------------------
3.1 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
hereby represents and warrants to the Company as follows:
(a) The Shares, the Warrants, and the Warrant Shares (the
"Securities") are being acquired for the Purchaser's own account, for investment
and not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act or the
California Law.
(b) The Purchaser understands that the Securities have not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Regulation D promulgated thereunder, that the Company has no present intention
of registering the Securities, that the Securities must be held by the Purchaser
indefinitely, and that the Purchaser must therefore bear the economic risk of
the investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration. The
Purchaser further understands that the Securities have not been qualified under
the California Law by reason of their issuance in a transaction exempt from the
qualification requirements of the California Law pursuant to Section
2
<PAGE>
25102(f) thereof, which exemption depends upon, among other things, the bona
fide nature of the Purchaser's investment intent expressed above.
(c) The Purchaser will not sell, negotiate, pledge or otherwise
dispose of any of the Securities (other than in conjunction with an effective
registration statement for the Securities under the Securities Act) in the
United States, its territories and possessions or any area subject to its
jurisdiction, or to any person who is a national or resident of the United
States (including any estate of such person or any corporation, partnership or
other entity created or organized therein) unless and until (i) the Purchaser
shall have notified the Company of the proposed disposition, and (ii) the
Purchaser shall have furnished the Company with an opinion of counsel
satisfactory in form and substance to the Company to the effect that such
disposition will not require registration under the Securities Act.
(d) During the negotiation of the transactions contemplated
herein, the Purchaser and its counsel have been afforded full access to the
corporate books, records, documents, and other information concerning the
Company and have been afforded an opportunity to ask such questions of the
Company's officers and representatives concerning the Company's business,
operations, financial condition, assets, liabilities and other relevant matters
as they have deemed necessary or desirable, and have been given all such
information as has been requested, in order to evaluate the merits and risks of
the prospective investment contemplated herein.
(e) The Purchaser has such knowledge and experience in financial
and business matters that the Purchaser is capable of evaluating the merits and
risks of the purchase of the Shares and the Warrants pursuant to the terms of
this Agreement.
(f) The Purchaser has the full right, power and authority to enter
into and perform the Purchaser's obligations under this Agreement. This
Agreement is q valid and binding obligation of the Purchaser enforceable in
accordance with its terms except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and rules or laws concerning equitable remedies.
(g) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the
Purchaser is required in connection with the valid execution and delivery of
this Agreement.
3.2 Legends. Each certificate representing the Shares, the Warrant
-------
Shares or the Warrant Shares may be endorsed with legends in substantially the
following form:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE
3
<PAGE>
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
(b) THE HOLDER WILL NOT SELL, HYPOTHECATE, PLEDGE, OR OTHERWISE
DISPOSE OF ANY INTEREST IN THE SHARES FOR A PERIOD OF TWELVE MONTHS FROM
DECEMBER 18, 1997.
4. Miscellaneous.
-------------
4.1 Governing Law. This Agreement shall be governed in all
-------------
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
4.2 Entire Agreement. This Agreement constitutes the entire
----------------
understanding and agreement between the parties with regard to the subjects
hereof. This Agreement may only be amended by a written instrument signed by the
Company and the Purchaser.
4.3 Expenses. The Company and the Purchasers shall each bear
--------
their respective expenses and legal fees incurred with respect to this Agreement
and the transactions contemplated hereby.
4.4 Lockup. Purchaser agrees that for the first twelve (12)
------
months after the date of this Agreement, the Purchaser will not directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase, pledge or otherwise transfer or
dispose of any shares of the Shares or Warrant Shares.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
STORM TECHNOLOGY, INC.
By:
----------------------------------
Its:
---------------------------------
PURCHASER:
------------------------------
Adolf Starreveld
5
<PAGE>
EXHIBIT 4.13
STORM TECHNOLOGY, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT is entered into as of
December 18, 1997, by and between Storm Technology, Inc., a Delaware corporation
(the "Company"), and Benjamin Yung (the "Purchaser").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto agree as follows:
1. Sale of the Shares. Subject to the terms and conditions hereof, upon
------------------
execution of this Agreement, the Company will issue and sell to the Purchaser,
and the Purchaser will purchase from the Company, (i) 5,333 shares of Common
Stock (the "Shares") and (ii) a warrant to purchase 500 shares of Common Stock
(the "Warrant Shares") at an exercise price of $1.90 in the form attached hereto
as Exhibit A. The aggregate purchase price payable by the Purchaser shall be
---------
$10,061.88. The parties agree that $1.875 of the purchase price will be
allocated to the each Share being purchased, and $0.125 will be allocated to the
right to buy one Warrant Share.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Purchaser that:
2.1 Organization and Standing; Articles and Bylaws. The Company
-----------------------------------------------
is a corporation duly organized and validly existing under, and by virtue of,
the laws of the State of Delaware and is in good standing under such laws. The
Company has the requisite corporate power to own and operate its properties and
assets and to carry on its business as presently conducted and as proposed to be
conducted.
2.2 Corporate Power. The Company has all requisite corporate
----------------
power to enter into this Agreement, to sell the Shares and Warrants hereunder
and to carry out and perform its other obligations under the terms of this
Agreement.
2.3 Capitalization. The authorized capital stock of the Company
---------------
consists of 30,000,000 shares of Common Stock, $0.001 par value (the "Common
Stock"), and 500,000 shares of Preferred Stock, $0.001 par value (the "Preferred
Stock"), of which 30,000 shares have been designated Series A 8.5% Convertible
Preferred Stock. As of September 30, 1997, (i) 10,493,972 sharess of Common
Stock were issued and outstanding, all of which are validly issued, fully paid
and nonassessable; and (ii) 1,570,426 shares of Common Stock were reserved for
issuance pursuant to stock options under the Company's stock option plans (the
"The Company Option Plans") and rights under the Company's Employee Stock
Purchase Plan.
2.4 Authorization.
--------------
(a) All corporate action on the part of the Company, its
officers, directors and stockholders necessary for (i) the sale and issuance of
the Shares and Warrants pursuant hereto, (ii) the issuance of the Warrant Shares
upon exercise of the Warrants, and
1
<PAGE>
(iii) the execution, performance and delivery by the Company of this Agreement
has been taken. This Agreement is a valid and binding obligation of the Company,
enforceable against it in accordance with its respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or affecting
enforcement of creditors' rights and rules or laws concerning equitable
remedies.
(b) The Shares, when issued in compliance with the
provisions of this Agreement, and the Warrant Shares, when issued in accordance
with the Warrants, will be validly issued, fully paid and nonassessable;
provided, however, that the Shares, and the Warrant Shares may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein or otherwise required by such laws at the time a transfer is proposed.
(c) No stockholder of the Company has any right of first
refusal or any preemptive rights in connection with the issuance and sale of the
Shares, the Warrants or the Warrant Shares.
2.5 Compliance with Other Instruments; None Burdensome, etc. The
--------------------------------------------------------
Company is not in violation of any term of Certificate of Incorporation or its
Bylaws, as amended, or any mortgage, indenture, contract, agreement, instrument,
judgment, decree or order by which the Company is bound or to which its
properties are subject or, to its knowledge, any statute, rule, or regulation
applicable to the Company where such violation would materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company. The execution, delivery and performance of and
compliance with this Agreement and the transactions contemplated hereby and
thereby will not result in any such violation and will not be in conflict with
or constitute a default under any of the foregoing and will not result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company pursuant to any of the foregoing.
3. Representations and Warranties of the Purchasers and Restrictions on
--------------------------------------------------------------------
Transfer Imposed by the Securities Act of 1933 and the California Corporate
- ---------------------------------------------------------------------------
Securities Law of 1968.
- -----------------------
3.1 Representations and Warranties of the Purchaser. The
------------------------------------------------
Purchaser hereby represents and warrants to the Company as follows:
(a) The Shares, the Warrants, and the Warrant Shares (the
"Securities") are being acquired for the Purchaser's own account, for investment
and not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act or the
California Law.
(b) The Purchaser understands that the Securities have not
been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Regulation D promulgated thereunder, that the Company has no present
intention of registering the Securities, that the Securities must be held by the
Purchaser indefinitely, and that the Purchaser must therefore bear the economic
risk of the investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration. The
Purchaser further understands that the
2
<PAGE>
Securities have not been qualified under the California Law by reason of their
issuance in a transaction exempt from the qualification requirements of the
California Law pursuant to Section 25102(f) thereof, which exemption depends
upon, among other things, the bona fide nature of the Purchaser's investment
intent expressed above.
(c) The Purchaser will not sell, negotiate, pledge or
otherwise dispose of any of the Securities (other than in conjunction with an
effective registration statement for the Securities under the Securities Act) in
the United States, its territories and possessions or any area subject to its
jurisdiction, or to any person who is a national or resident of the United
States (including any estate of such person or any corporation, partnership or
other entity created or organized therein) unless and until (i) the Purchaser
shall have notified the Company of the proposed disposition, and (ii) the
Purchaser shall have furnished the Company with an opinion of counsel
satisfactory in form and substance to the Company to the effect that such
disposition will not require registration under the Securities Act.
(d) During the negotiation of the transactions
contemplated herein, the Purchaser and its counsel have been afforded full
access to the corporate books, records, documents, and other information
concerning the Company and have been afforded an opportunity to ask such
questions of the Company's officers and representatives concerning the Company's
business, operations, financial condition, assets, liabilities and other
relevant matters as they have deemed necessary or desirable, and have been given
all such information as has been requested, in order to evaluate the merits and
risks of the prospective investment contemplated herein.
(e) The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of the purchase of the Shares and the Warrants pursuant to the
terms of this Agreement.
(f) The Purchaser has the full right, power and authority
to enter into and perform the Purchaser's obligations under this Agreement. This
Agreement is q valid and binding obligation of the Purchaser enforceable in
accordance with its terms except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and rules or laws concerning equitable remedies.
(g) No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Purchaser is required in connection with the valid execution and delivery
of this Agreement.
3.2 Legends. Each certificate representing the Shares, the
--------
Warrant Shares or the Warrant Shares may be endorsed with legends in
substantially the following form:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT
3
<PAGE>
UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
(b) THE HOLDER WILL NOT SELL, HYPOTHECATE, PLEDGE, OR
OTHERWISE DISPOSE OF ANY INTEREST IN THE SHARES FOR A PERIOD OF TWELVE MONTHS
FROM DECEMBER 18, 1997.
4. Miscellaneous.
--------------
4.1 Governing Law. This Agreement shall be governed in all
--------------
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
4.2 Entire Agreement. This Agreement constitutes the entire
-----------------
understanding and agreement between the parties with regard to the subjects
hereof. This Agreement may only be amended by a written instrument signed by the
Company and the Purchaser.
4.3 Expenses. The Company and the Purchasers shall each bear
---------
their respective expenses and legal fees incurred with respect to this Agreement
and the transactions contemplated hereby.
4.4 Lockup. Purchaser agrees that for the first twelve (12)
-------
months after the date of this Agreement, the Purchaser will not directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase, pledge or otherwise transfer or
dispose of any shares of the Shares or Warrant Shares.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
STORM TECHNOLOGY, INC.
By:
-------------------------------------------
Its:
-------------------------------------------
PURCHASER :
---------------------------------------
Benjamin Young
5
<PAGE>
Exhibit 4.14
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF
OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase 100,000 Shares of Common Stock of
STORM TECHNOLOGY, INC.
THIS CERTIFIES that, for value received, the L. William and L. Gay
Krause Trust under Agreement dated June 21, 1994 (the "Holder"), is entitled,
upon the terms and subject to the conditions hereinafter set forth, at any time
on or after one day after the date hereof and on or prior to December 18, 2002
(the "Termination Date") but not thereafter, to subscribe for and purchase from
STORM TECHNOLOGY, INC., a Delaware corporation (the "Company"), One Hundred
Thousand (100,000) shares of Common Stock (the "Warrant Shares"). The purchase
price of one share of Common Stock (the "Exercise Price") under this Warrant
shall be One Dollar and Ninety Cents (US $1.90). The Exercise Price and the
number of shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. This Warrant is being issued in connection with
the Common Stock and Warrant Purchase Agreement dated on or about December 18,
1997, between the Company and Holder and is subject to its terms. In the event
of any conflict between the terms of this Warrant and the Agreement, the
Agreement shall control. Unless otherwise defined herein, all capitalized terms
shall have meanings as provided for in the Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
----------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, pursuant to paragraph 9 hereof.
2. Authorization of Shares. The Company covenants that all shares of
-----------------------
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
<PAGE>
3. Exercise of Warrant.
-------------------
(a) Procedure for Exercise. Exercise of the purchase rights
----------------------
represented by this Warrant may be made at any time or times after the date
hereof, in whole or in part, before the close of business on the Termination
Date, or such earlier date on which this Warrant may terminate as provided in
paragraph 12 below, by the surrender of this Warrant and the Notice of Exercise
annexed hereto duly executed, at the office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the
registered Holder hereof at the address of such Holder appearing on the books of
the Company) and upon payment of the Exercise Price of the shares thereby
purchased; whereupon the Holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. Certificates
for shares of Common Stock purchased hereunder shall be delivered to the holder
hereof within five (5) NASDAQ trading days after the date on which this Warrant
shall have been exercised as aforesaid. Payment of the Exercise Price of the
shares may be by certified check or cashier's check or by wire transfer to an
account designated by the Company in an amount equal to the Exercise Price
multiplied by the number of shares of Common Stock being purchased.
(b) Net Exercise Rights. Notwithstanding the payment provisions set
-------------------
forth in this Section 3, the holder may elect to receive the amount of Warrant
Shares equal to the value (as determined below) of this Warrant by surrender of
this Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number of
shares of Common Stock determined by use of the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
holder.
Y = the number of Warrant Shares subject to this Warrant.
A = the Fair Market Value (as defined below) of one (1) Warrant
Share.
B = the Exercise Price per share of the Warrant Shares.
For purposes of this Section 3, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be the closing price (the last reported sales price, of not so
reported, the average of the last reported bid and asked prices) of the
Company's stock as of the last business day immediately prior to the exercise of
this Warrant.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of
-2-
<PAGE>
the underwriting agreement between the Company and its underwriters relating to
such registration statement, then as determined in good faith by the Company's
Board of Directors upon a review of relevant factors.
4. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
---------------------------
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
-------- -------
shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and provided further, that upon any transfer involved in the issuance or
-------- -------
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Holder Representations. The Holder of the Warrant agrees and
----------------------
acknowledges that the Warrant is being purchased for the Holder's own account,
for investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, pledge or resale to others or to
fractionalization in whole or in part. The Holder further represents, warrants
and agrees as follows: no other person has or will have a direct or indirect
beneficial interest in this Warrant and the Holder will not sell, hypothecate or
otherwise transfer the Warrant except in accordance with the Securities Act and
Regulation D thereunder and applicable state securities laws or unless, in the
opinion of counsel for the Holder acceptable to the Company, an exemption from
the registration requirements of the Securities Act and such laws is available.
7. Closing of Books. The Company will at no time close its
----------------
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
8. No Rights as Stockholder until Exercise. This Warrant does not
---------------------------------------
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise thereof. If, however, at the time of the
surrender of this Warrant and purchase the Holder hereof shall be entitled to
exercise this Warrant, the shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be assigned
----------------------------------
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the
-3-
<PAGE>
Company); provided, however, that this Warrant may not be resold or otherwise
transferred except with the prior consent of the Company and (i) in a
transaction registered under the Securities Act, or (ii) in a transaction
pursuant to an exemption, if available, from such registration and whereby, if
requested by the Company, an opinion of counsel reasonably satisfactory to the
Company is obtained by the holder of this Warrant to the effect that the
transaction is so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
-------------------------------------------------
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day
---------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
12. Effect of Certain Events.
------------------------
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets, or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction") in which
the consideration to be received by the Company or its stockholders consists
solely of cash, the Company shall give the Holder of this Warrant thirty (30)
days' notice of the proposed effective date of the transaction specifying that
the Warrant shall terminate if the Warrant has not been exercised by the
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
stockholders consists in part of consideration other than cash, the Holder of
this Warrant shall have the right thereafter to purchase, by exercise of this
Warrant and payment of the aggregate Exercise Price in effect immediately prior
to such action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the happening
of such transaction had this Warrant been exercised immediately prior thereto.
(c) "Piggy-Back" Registration. The Holder of this Warrant shall have
-------------------------
the right to include all of the shares of Common Stock underlying this Warrant
(the "Registrable Securities") as part of any registration of securities filed
by the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8) and must be
notified in writing of such filing; provided, however, that the holder of this
Warrant agrees it shall not have any piggy-back registration rights pursuant to
-4-
<PAGE>
this Section 12(c) if the shares of Common Stock underlying this Warrant are
freely tradable in the United States pursuant to the provisions of Regulation D.
Holder shall have five (5) business days to notify the Company in writing as to
whether the Company is to include Holder or not include Holder as part of the
registration; provided, however, that if any registration pursuant to this
Section shall be underwritten, in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the underwriter evidenced in writing of such offering only a limited number of
Registrable Securities should be included in such offering, or no such shares
should be included, the Holder, and all other selling stockholders, shall be
limited to registering such proportion of their respective shares as shall equal
the proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. Those Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section (and all other
Registrable Securities held by he selling stockholders) shall be withheld from
the market by the Holders thereof for a period, not to exceed one hundred eighty
(180) days, which the underwriter may reasonably determine is necessary in order
to effect such underwritten offering. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 12(c)
prior to the effectiveness of such registration whether or not any Warrant
holder elected to include securities in such registration. All registration
expenses incurred by the Company in complying with this Section 12(c) shall be
paid by the Company, exclusive of underwriting discounts, commissions and legal
fees and expenses for counsel to the holders of the Warrants.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
----------------------------------------------------------
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, the number of Warrant Shares purchasable
upon exercise of this Warrant immediately prior thereto shall be adjusted so
that the holder of this Warrant shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which he would have owned
or have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
-----------------------------------
discretion, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
-5-
<PAGE>
15. Notice of Adjustment. Whenever the number of Warrant Shares or
--------------------
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary
to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the NASDAQ (or on the principal national securities exchange on which the Common
Stock is admitted to trading or listed or, if not listed or admitted to trading
on NASDAQ or a national securities exchange, as reported by the National
Quotation Bureau, Inc. or other similar organization ("Other Exchanges")) for
the three (3) trading days immediately prior to the date such dividend is
payable.
17. Miscellaneous.
-------------
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall be
------------------------
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws and jurisdictions of Delaware and for all purposes shall
be construed in accordance with and governed by the laws of said state without
regard to its conflict of law, principles or rules.
(b) Restrictions. The holder hereof acknowledges that the Common
------------
Stock acquired upon the exercise of this Warrant, if not registered, may have
restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver. This Warrant and any provisions hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
-6-
<PAGE>
(d) Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: December 18, 1997
STORM TECHNOLOGY, INC.
By:
----------------------------------
Title:
-------------------------------
-7-
<PAGE>
NOTICE OF EXERCISE
------------------
To: STORM TECHNOLOGY, INC.
(1) The undersigned hereby elects to purchase ________ shares of Common Stock
of STORM TECHNOLOGY, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price in full, together with all
applicable transfer taxes, if any.
(2) By signing below, the undersigned hereby certifies that the shares
of Common Stock to be issued upon exercise of this Warrant have been registered
under the Securities Act of 1933 (the "Act"), or that an exemption from
registration under the Securities Act is available for such shares of Common
Stock.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-------------------------
(Name)
-------------------------
(Address)
-------------------------
Dated:
--------------------------------
Signature
NOTE: Signature must conform in all respects to holder's name as specified on
the face of the attached warrant.
-8-
<PAGE>
ASSIGNMENT FORM
---------------
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________ whose address is
______________________________________________________________________
______________________________________________________________________
Dated: , 199
-----------------
Holder's Signature:
-----------------------------
Holder's Address:
-----------------------------
-----------------------------
Signature Guaranteed:
----------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-9-
<PAGE>
Exhibit 4.15
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF
OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase 1,500 Shares of Common Stock of
STORM TECHNOLOGY, INC.
THIS CERTIFIES that, for value received, Adriaan Ligtenberg (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after one day after the date hereof and on or prior
to December 18, 2002 (the "Termination Date") but not thereafter, to subscribe
for and purchase from STORM TECHNOLOGY, INC., a Delaware corporation (the
"Company"), One Thousand Five Hundred (1,500) shares of Common Stock (the
"Warrant Shares"). The purchase price of one share of Common Stock (the
"Exercise Price") under this Warrant shall be One Dollar and Ninety Cents (US
$1.90). The Exercise Price and the number of shares for which the Warrant is
exercisable shall be subject to adjustment as provided herein. This Warrant is
being issued in connection with the Common Stock and Warrant Purchase Agreement
dated on or about December 18, 1997, between the Company and Holder and is
subject to its terms. In the event of any conflict between the terms of this
Warrant and the Agreement, the Agreement shall control. Unless otherwise
defined herein, all capitalized terms shall have meanings as provided for in the
Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
----------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, pursuant to paragraph 9 hereof.
2. Authorization of Shares. The Company covenants that all shares of
-----------------------
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
<PAGE>
3. Exercise of Warrant.
-------------------
(a) Procedure for Exercise. Exercise of the purchase rights
----------------------
represented by this Warrant may be made at any time or times after the date
hereof, in whole or in part, before the close of business on the Termination
Date, or such earlier date on which this Warrant may terminate as provided in
paragraph 12 below, by the surrender of this Warrant and the Notice of Exercise
annexed hereto duly executed, at the office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the
registered Holder hereof at the address of such Holder appearing on the books of
the Company) and upon payment of the Exercise Price of the shares thereby
purchased; whereupon the Holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. Certificates
for shares of Common Stock purchased hereunder shall be delivered to the holder
hereof within five (5) NASDAQ trading days after the date on which this Warrant
shall have been exercised as aforesaid. Payment of the Exercise Price of the
shares may be by certified check or cashier's check or by wire transfer to an
account designated by the Company in an amount equal to the Exercise Price
multiplied by the number of shares of Common Stock being purchased.
(b) Net Exercise Rights. Notwithstanding the payment provisions set
-------------------
forth in this Section 3, the holder may elect to receive the amount of Warrant
Shares equal to the value (as determined below) of this Warrant by surrender of
this Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number of
shares of Common Stock determined by use of the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
holder.
Y = the number of Warrant Shares subject to this Warrant.
A = the Fair Market Value (as defined below) of one (1) Warrant
Share.
B = the Exercise Price per share of the Warrant Shares.
For purposes of this Section 3, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be the closing price (the last reported sales price, of not so
reported, the average of the last reported bid and asked prices) of the
Company's stock as of the last business day immediately prior to the exercise of
this Warrant.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of
-2-
<PAGE>
the underwriting agreement between the Company and its underwriters relating to
such registration statement, then as determined in good faith by the Company's
Board of Directors upon a review of relevant factors.
4. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
---------------------------
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
-------- -------
shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and provided further, that upon any transfer involved in the issuance or
-------- -------
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Holder Representations. The Holder of the Warrant agrees and
----------------------
acknowledges that the Warrant is being purchased for the Holder's own account,
for investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, pledge or resale to others or to
fractionalization in whole or in part. The Holder further represents, warrants
and agrees as follows: no other person has or will have a direct or indirect
beneficial interest in this Warrant and the Holder will not sell, hypothecate or
otherwise transfer the Warrant except in accordance with the Securities Act and
Regulation D thereunder and applicable state securities laws or unless, in the
opinion of counsel for the Holder acceptable to the Company, an exemption from
the registration requirements of the Securities Act and such laws is available.
7. Closing of Books. The Company will at no time close its
----------------
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
8. No Rights as Stockholder until Exercise. This Warrant does not
---------------------------------------
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise thereof. If, however, at the time of the
surrender of this Warrant and purchase the Holder hereof shall be entitled to
exercise this Warrant, the shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be assigned
----------------------------------
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the
-3-
<PAGE>
Company); provided, however, that this Warrant may not be resold or otherwise
transferred except with the prior consent of the Company and (i) in a
transaction registered under the Securities Act, or (ii) in a transaction
pursuant to an exemption, if available, from such registration and whereby, if
requested by the Company, an opinion of counsel reasonably satisfactory to the
Company is obtained by the holder of this Warrant to the effect that the
transaction is so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
-------------------------------------------------
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day
---------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
12. Effect of Certain Events.
------------------------
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets, or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction") in which
the consideration to be received by the Company or its stockholders consists
solely of cash, the Company shall give the Holder of this Warrant thirty (30)
days' notice of the proposed effective date of the transaction specifying that
the Warrant shall terminate if the Warrant has not been exercised by the
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
stockholders consists in part of consideration other than cash, the Holder of
this Warrant shall have the right thereafter to purchase, by exercise of this
Warrant and payment of the aggregate Exercise Price in effect immediately prior
to such action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the happening
of such transaction had this Warrant been exercised immediately prior thereto.
(c) "Piggy-Back" Registration. The Holder of this Warrant shall have
-------------------------
the right to include all of the shares of Common Stock underlying this Warrant
(the "Registrable Securities") as part of any registration of securities filed
by the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8) and must be
notified in writing of such filing; provided, however, that the holder of this
Warrant agrees it shall not have any piggy-back registration rights pursuant to
-4-
<PAGE>
this Section 12(c) if the shares of Common Stock underlying this Warrant are
freely tradable in the United States pursuant to the provisions of Regulation D.
Holder shall have five (5) business days to notify the Company in writing as to
whether the Company is to include Holder or not include Holder as part of the
registration; provided, however, that if any registration pursuant to this
Section shall be underwritten, in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the underwriter evidenced in writing of such offering only a limited number of
Registrable Securities should be included in such offering, or no such shares
should be included, the Holder, and all other selling stockholders, shall be
limited to registering such proportion of their respective shares as shall equal
the proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. Those Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section (and all other
Registrable Securities held by he selling stockholders) shall be withheld from
the market by the Holders thereof for a period, not to exceed one hundred eighty
(180) days, which the underwriter may reasonably determine is necessary in order
to effect such underwritten offering. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 12(c)
prior to the effectiveness of such registration whether or not any Warrant
holder elected to include securities in such registration. All registration
expenses incurred by the Company in complying with this Section 12(c) shall be
paid by the Company, exclusive of underwriting discounts, commissions and legal
fees and expenses for counsel to the holders of the Warrants.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
----------------------------------------------------------
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, the number of Warrant Shares purchasable
upon exercise of this Warrant immediately prior thereto shall be adjusted so
that the holder of this Warrant shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which he would have owned
or have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
-----------------------------------
discretion, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
-5-
<PAGE>
15. Notice of Adjustment. Whenever the number of Warrant Shares or
--------------------
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary
to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the NASDAQ (or on the principal national securities exchange on which the Common
Stock is admitted to trading or listed or, if not listed or admitted to trading
on NASDAQ or a national securities exchange, as reported by the National
Quotation Bureau, Inc. or other similar organization ("Other Exchanges")) for
the three (3) trading days immediately prior to the date such dividend is
payable.
17. Miscellaneous.
-------------
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall be
------------------------
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws and jurisdictions of Delaware and for all purposes shall
be construed in accordance with and governed by the laws of said state without
regard to its conflict of law, principles or rules.
(b) Restrictions. The holder hereof acknowledges that the Common
------------
Stock acquired upon the exercise of this Warrant, if not registered, may have
restrictions upon its resale imposed by state and federal securities laws.
-6-
<PAGE>
(c) Modification and Waiver. This Warrant and any provisions hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: December 18, 1997
STORM TECHNOLOGY, INC.
By:
---------------------------------
Title:
------------------------------
-7-
<PAGE>
NOTICE OF EXERCISE
------------------
To: STORM TECHNOLOGY, INC.
(1) The undersigned hereby elects to purchase ________ shares of Common Stock
of STORM TECHNOLOGY, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price in full, together with all
applicable transfer taxes, if any.
(2) By signing below, the undersigned hereby certifies that the shares
of Common Stock to be issued upon exercise of this Warrant have been registered
under the Securities Act of 1933 (the "Act"), or that an exemption from
registration under the Securities Act is available for such shares of Common
Stock.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
---------------------------
(Name)
---------------------------
(Address)
---------------------------
Dated:
--------------------------
Signature
NOTE: Signature must conform in all respects to holder's name as specified on
the face of the attached warrant.
-8-
<PAGE>
ASSIGNMENT FORM
---------------
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
__________________________________________________ whose address is
___________________________________________________________________
___________________________________________________________________
Dated: , 199
-----------
Holder's Signature:
--------------------------
Holder's Address:
--------------------------
--------------------------
Signature Guaranteed:
------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-9-
<PAGE>
EXHIBIT 4.16
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF
OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase 625 Shares of Common Stock of
STORM TECHNOLOGY, INC.
THIS CERTIFIES that, for value received, Adolf Starreveld (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after one day after the date hereof and on or prior
to December 18, 2002 (the "Termination Date") but not thereafter, to subscribe
for and purchase from STORM TECHNOLOGY, INC., a Delaware corporation (the
"Company"), Six Hundred Twenty Five (625) shares of Common Stock (the "Warrant
Shares"). The purchase price of one share of Common Stock (the "Exercise
Price") under this Warrant shall be One Dollar and Ninety Cents (US $1.90). The
Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. This Warrant is being issued
in connection with the Common Stock and Warrant Purchase Agreement dated on or
about December 18, 1997, between the Company and Holder and is subject to its
terms. In the event of any conflict between the terms of this Warrant and the
Agreement, the Agreement shall control. Unless otherwise defined herein, all
capitalized terms shall have meanings as provided for in the Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
----------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, pursuant to paragraph 9 hereof.
2. Authorization of Shares. The Company covenants that all shares of
-----------------------
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
<PAGE>
3. Exercise of Warrant.
-------------------
(a) Procedure for Exercise. Exercise of the purchase rights
----------------------
represented by this Warrant may be made at any time or times after the date
hereof, in whole or in part, before the close of business on the Termination
Date, or such earlier date on which this Warrant may terminate as provided in
paragraph 12 below, by the surrender of this Warrant and the Notice of Exercise
annexed hereto duly executed, at the office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the
registered Holder hereof at the address of such Holder appearing on the books of
the Company) and upon payment of the Exercise Price of the shares thereby
purchased; whereupon the Holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. Certificates
for shares of Common Stock purchased hereunder shall be delivered to the holder
hereof within five (5) NASDAQ trading days after the date on which this Warrant
shall have been exercised as aforesaid. Payment of the Exercise Price of the
shares may be by certified check or cashier's check or by wire transfer to an
account designated by the Company in an amount equal to the Exercise Price
multiplied by the number of shares of Common Stock being purchased.
(b) Net Exercise Rights. Notwithstanding the payment provisions set
-------------------
forth in this Section 3, the holder may elect to receive the amount of Warrant
Shares equal to the value (as determined below) of this Warrant by surrender of
this Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number of
shares of Common Stock determined by use of the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
holder.
Y = the number of Warrant Shares subject to this Warrant.
A = the Fair Market Value (as defined below) of one (1) Warrant
Share.
B = the Exercise Price per share of the Warrant Shares.
For purposes of this Section 3, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be the closing price (the last reported sales price, of not so
reported, the average of the last reported bid and asked prices) of the
Company's stock as of the last business day immediately prior to the exercise of
this Warrant.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of
-2-
<PAGE>
the underwriting agreement between the Company and its underwriters relating to
such registration statement, then as determined in good faith by the Company's
Board of Directors upon a review of relevant factors.
4. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
---------------------------
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
-------- -------
shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and provided further, that upon any transfer involved in the issuance or
-------- -------
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Holder Representations. The Holder of the Warrant agrees and
----------------------
acknowledges that the Warrant is being purchased for the Holder's own account,
for investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, pledge or resale to others or to
fractionalization in whole or in part. The Holder further represents, warrants
and agrees as follows: no other person has or will have a direct or indirect
beneficial interest in this Warrant and the Holder will not sell, hypothecate or
otherwise transfer the Warrant except in accordance with the Securities Act and
Regulation D thereunder and applicable state securities laws or unless, in the
opinion of counsel for the Holder acceptable to the Company, an exemption from
the registration requirements of the Securities Act and such laws is available.
7. Closing of Books. The Company will at no time close its
----------------
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
8. No Rights as Stockholder until Exercise. This Warrant does not
---------------------------------------
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise thereof. If, however, at the time of the
surrender of this Warrant and purchase the Holder hereof shall be entitled to
exercise this Warrant, the shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be assigned
----------------------------------
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the
-3-
<PAGE>
Company); provided, however, that this Warrant may not be resold or otherwise
transferred except with the prior consent of the Company and (i) in a
transaction registered under the Securities Act, or (ii) in a transaction
pursuant to an exemption, if available, from such registration and whereby, if
requested by the Company, an opinion of counsel reasonably satisfactory to the
Company is obtained by the holder of this Warrant to the effect that the
transaction is so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
-------------------------------------------------
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day
---------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
12. Effect of Certain Events.
------------------------
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets, or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction") in which
the consideration to be received by the Company or its stockholders consists
solely of cash, the Company shall give the Holder of this Warrant thirty (30)
days' notice of the proposed effective date of the transaction specifying that
the Warrant shall terminate if the Warrant has not been exercised by the
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
stockholders consists in part of consideration other than cash, the Holder of
this Warrant shall have the right thereafter to purchase, by exercise of this
Warrant and payment of the aggregate Exercise Price in effect immediately prior
to such action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the happening
of such transaction had this Warrant been exercised immediately prior thereto.
(c) "Piggy-Back" Registration. The Holder of this Warrant shall have
-------------------------
the right to include all of the shares of Common Stock underlying this Warrant
(the "Registrable Securities") as part of any registration of securities filed
by the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8) and must be
notified in writing of such filing; provided, however, that the holder of this
Warrant agrees it shall not have any piggy-back registration rights pursuant to
-4-
<PAGE>
this Section 12(c) if the shares of Common Stock underlying this Warrant are
freely tradable in the United States pursuant to the provisions of Regulation D.
Holder shall have five (5) business days to notify the Company in writing as to
whether the Company is to include Holder or not include Holder as part of the
registration; provided, however, that if any registration pursuant to this
Section shall be underwritten, in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the underwriter evidenced in writing of such offering only a limited number of
Registrable Securities should be included in such offering, or no such shares
should be included, the Holder, and all other selling stockholders, shall be
limited to registering such proportion of their respective shares as shall equal
the proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. Those Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section (and all other
Registrable Securities held by he selling stockholders) shall be withheld from
the market by the Holders thereof for a period, not to exceed one hundred eighty
(180) days, which the underwriter may reasonably determine is necessary in order
to effect such underwritten offering. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 12(c)
prior to the effectiveness of such registration whether or not any Warrant
holder elected to include securities in such registration. All registration
expenses incurred by the Company in complying with this Section 12(c) shall be
paid by the Company, exclusive of underwriting discounts, commissions and legal
fees and expenses for counsel to the holders of the Warrants.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
----------------------------------------------------------
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, the number of Warrant Shares purchasable
upon exercise of this Warrant immediately prior thereto shall be adjusted so
that the holder of this Warrant shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which he would have owned
or have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
-----------------------------------
discretion, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
-5-
<PAGE>
15. Notice of Adjustment. Whenever the number of Warrant Shares or
--------------------
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary
to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the NASDAQ (or on the principal national securities exchange on which the Common
Stock is admitted to trading or listed or, if not listed or admitted to trading
on NASDAQ or a national securities exchange, as reported by the National
Quotation Bureau, Inc. or other similar organization ("Other Exchanges")) for
the three (3) trading days immediately prior to the date such dividend is
payable.
17. Miscellaneous.
-------------
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall be
------------------------
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws and jurisdictions of Delaware and for all purposes shall
be construed in accordance with and governed by the laws of said state without
regard to its conflict of law, principles or rules.
(b) Restrictions. The holder hereof acknowledges that the Common
------------
Stock acquired upon the exercise of this Warrant, if not registered, may have
restrictions upon its resale imposed by state and federal securities laws.
-6-
<PAGE>
(c) Modification and Waiver. This Warrant and any provisions hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: December 18, 1997
STORM TECHNOLOGY, INC.
By:
----------------------------------------
Title:
-------------------------------------
-7-
<PAGE>
NOTICE OF EXERCISE
------------------
To: STORM TECHNOLOGY, INC.
(1) The undersigned hereby elects to purchase ________ shares of Common Stock
of STORM TECHNOLOGY, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price in full, together with all
applicable transfer taxes, if any.
(2) By signing below, the undersigned hereby certifies that the shares
of Common Stock to be issued upon exercise of this Warrant have been registered
under the Securities Act of 1933 (the "Act"), or that an exemption from
registration under the Securities Act is available for such shares of Common
Stock.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
------------------------------
Signature
NOTE: Signature must conform in all respects to holder's name as specified on
the face of the attached warrant.
-8-
<PAGE>
ASSIGNMENT FORM
---------------
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
whose address is
- -----------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Dated: ______________, 199
Holder's Signature:
-----------------------------
Holder's Address:
-----------------------------
-----------------------------
Signature Guaranteed:
-------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-9-
<PAGE>
EXHIBIT 4.17
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF
OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase 500 Shares of Common Stock of
STORM TECHNOLOGY, INC.
THIS CERTIFIES that, for value received, Benjamin Yung (the "Holder"),
is entitled, upon the terms and subject to the conditions hereinafter set forth,
at any time on or after one day after the date hereof and on or prior to
December 18, 2002 (the "Termination Date") but not thereafter, to subscribe for
and purchase from STORM TECHNOLOGY, INC., a Delaware corporation (the
"Company"), Five Hundred (500) shares of Common Stock (the "Warrant Shares").
The purchase price of one share of Common Stock (the "Exercise Price") under
this Warrant shall be One Dollar and Ninety Cents (US $1.90). The Exercise
Price and the number of shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. This Warrant is being issued in
connection with the Common Stock and Warrant Purchase Agreement dated on or
about December 18, 1997, between the Company and Holder and is subject to its
terms. In the event of any conflict between the terms of this Warrant and the
Agreement, the Agreement shall control. Unless otherwise defined herein, all
capitalized terms shall have meanings as provided for in the Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
----------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, pursuant to paragraph 9 hereof.
2. Authorization of Shares. The Company covenants that all shares of
-----------------------
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
<PAGE>
3. Exercise of Warrant.
-------------------
(a) Procedure for Exercise. Exercise of the purchase rights
----------------------
represented by this Warrant may be made at any time or times after the date
hereof, in whole or in part, before the close of business on the Termination
Date, or such earlier date on which this Warrant may terminate as provided in
paragraph 12 below, by the surrender of this Warrant and the Notice of Exercise
annexed hereto duly executed, at the office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the
registered Holder hereof at the address of such Holder appearing on the books of
the Company) and upon payment of the Exercise Price of the shares thereby
purchased; whereupon the Holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. Certificates
for shares of Common Stock purchased hereunder shall be delivered to the holder
hereof within five (5) NASDAQ trading days after the date on which this Warrant
shall have been exercised as aforesaid. Payment of the Exercise Price of the
shares may be by certified check or cashier's check or by wire transfer to an
account designated by the Company in an amount equal to the Exercise Price
multiplied by the number of shares of Common Stock being purchased.
(b) Net Exercise Rights. Notwithstanding the payment provisions set
-------------------
forth in this Section 3, the holder may elect to receive the amount of Warrant
Shares equal to the value (as determined below) of this Warrant by surrender of
this Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number of
shares of Common Stock determined by use of the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
holder.
Y = the number of Warrant Shares subject to this Warrant.
A = the Fair Market Value (as defined below) of one (1) Warrant
Share.
B = the Exercise Price per share of the Warrant Shares.
For purposes of this Section 3, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be the closing price (the last reported sales price, of not so
reported, the average of the last reported bid and asked prices) of the
Company's stock as of the last business day immediately prior to the exercise of
this Warrant.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of
-2-
<PAGE>
the underwriting agreement between the Company and its underwriters relating to
such registration statement, then as determined in good faith by the Company's
Board of Directors upon a review of relevant factors.
4. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
---------------------------
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
-------- -------
shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and provided further, that upon any transfer involved in the issuance or
-------- -------
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Holder Representations. The Holder of the Warrant agrees and
----------------------
acknowledges that the Warrant is being purchased for the Holder's own account,
for investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, pledge or resale to others or to
fractionalization in whole or in part. The Holder further represents, warrants
and agrees as follows: no other person has or will have a direct or indirect
beneficial interest in this Warrant and the Holder will not sell, hypothecate or
otherwise transfer the Warrant except in accordance with the Securities Act and
Regulation D thereunder and applicable state securities laws or unless, in the
opinion of counsel for the Holder acceptable to the Company, an exemption from
the registration requirements of the Securities Act and such laws is available.
7. Closing of Books. The Company will at no time close its
----------------
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
8. No Rights as Stockholder until Exercise. This Warrant does not
---------------------------------------
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise thereof. If, however, at the time of the
surrender of this Warrant and purchase the Holder hereof shall be entitled to
exercise this Warrant, the shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may be assigned
----------------------------------
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the
-3-
<PAGE>
Company); provided, however, that this Warrant may not be resold or otherwise
transferred except with the prior consent of the Company and (i) in a
transaction registered under the Securities Act, or (ii) in a transaction
pursuant to an exemption, if available, from such registration and whereby, if
requested by the Company, an opinion of counsel reasonably satisfactory to the
Company is obtained by the holder of this Warrant to the effect that the
transaction is so exempt.
10. Loss, Theft, Destruction or Mutilation of Warrant. The Company
-------------------------------------------------
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day
---------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
12. Effect of Certain Events.
------------------------
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets, or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction") in which
the consideration to be received by the Company or its stockholders consists
solely of cash, the Company shall give the Holder of this Warrant thirty (30)
days' notice of the proposed effective date of the transaction specifying that
the Warrant shall terminate if the Warrant has not been exercised by the
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
stockholders consists in part of consideration other than cash, the Holder of
this Warrant shall have the right thereafter to purchase, by exercise of this
Warrant and payment of the aggregate Exercise Price in effect immediately prior
to such action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the happening
of such transaction had this Warrant been exercised immediately prior thereto.
(c) "Piggy-Back" Registration. The Holder of this Warrant shall have
-------------------------
the right to include all of the shares of Common Stock underlying this Warrant
(the "Registrable Securities") as part of any registration of securities filed
by the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8) and must be
notified in writing of such filing; provided, however, that the holder of this
Warrant agrees it shall not have any piggy-back registration rights pursuant to
-4-
<PAGE>
this Section 12(c) if the shares of Common Stock underlying this Warrant are
freely tradable in the United States pursuant to the provisions of Regulation D.
Holder shall have five (5) business days to notify the Company in writing as to
whether the Company is to include Holder or not include Holder as part of the
registration; provided, however, that if any registration pursuant to this
Section shall be underwritten, in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the underwriter evidenced in writing of such offering only a limited number of
Registrable Securities should be included in such offering, or no such shares
should be included, the Holder, and all other selling stockholders, shall be
limited to registering such proportion of their respective shares as shall equal
the proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. Those Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section (and all other
Registrable Securities held by he selling stockholders) shall be withheld from
the market by the Holders thereof for a period, not to exceed one hundred eighty
(180) days, which the underwriter may reasonably determine is necessary in order
to effect such underwritten offering. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 12(c)
prior to the effectiveness of such registration whether or not any Warrant
holder elected to include securities in such registration. All registration
expenses incurred by the Company in complying with this Section 12(c) shall be
paid by the Company, exclusive of underwriting discounts, commissions and legal
fees and expenses for counsel to the holders of the Warrants.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
----------------------------------------------------------
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, the number of Warrant Shares purchasable
upon exercise of this Warrant immediately prior thereto shall be adjusted so
that the holder of this Warrant shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which he would have owned
or have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
14. Voluntary Adjustment by the Company. The Company may at its
-----------------------------------
discretion, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
-5-
<PAGE>
15. Notice of Adjustment. Whenever the number of Warrant Shares or
--------------------
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
16. Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary
to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the NASDAQ (or on the principal national securities exchange on which the Common
Stock is admitted to trading or listed or, if not listed or admitted to trading
on NASDAQ or a national securities exchange, as reported by the National
Quotation Bureau, Inc. or other similar organization ("Other Exchanges")) for
the three (3) trading days immediately prior to the date such dividend is
payable.
17. Miscellaneous.
-------------
(a) Issue Date; Jurisdiction. The provisions of this Warrant shall be
------------------------
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws and jurisdictions of Delaware and for all purposes shall
be construed in accordance with and governed by the laws of said state without
regard to its conflict of law, principles or rules.
(b) Restrictions. The holder hereof acknowledges that the Common
------------
Stock acquired upon the exercise of this Warrant, if not registered, may have
restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver. This Warrant and any provisions hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the
-6-
<PAGE>
books of the Company or to the Company at the address set forth in the
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: December 18, 1997
STORM TECHNOLOGY, INC.
By:
----------------------------------------
Title:
-------------------------------------
-7-
<PAGE>
NOTICE OF EXERCISE
------------------
To: STORM TECHNOLOGY, INC.
(1) The undersigned hereby elects to purchase ________ shares of Common Stock
of STORM TECHNOLOGY, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price in full, together with all
applicable transfer taxes, if any.
(2) By signing below, the undersigned hereby certifies that the shares
of Common Stock to be issued upon exercise of this Warrant have been registered
under the Securities Act of 1933 (the "Act"), or that an exemption from
registration under the Securities Act is available for such shares of Common
Stock.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
------------------------------
Signature
NOTE: Signature must conform in all respects to holder's name as specified on
the face of the attached warrant.
-8-
<PAGE>
ASSIGNMENT FORM
---------------
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
whose address is
- -----------------------------------------------
- ------------------------------------------------------------------
- -------------------------------------------------------------------
Dated: ______________, 199
Holder's Signature:
-----------------------------
Holder's Address:
-----------------------------
-----------------------------
Signature Guaranteed:
-------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-9-
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
<TABLE>
Contact:
<S> <C> <C> <C>
Lisa Varni Kevin Ota Betty Skov Sandra Bodmer
Storm Technology, Inc. Blanc & Otus Logitech-USA Logitech-Switzerland
650-960-4944 415-512-0500, ext. 258 510/713-4463 011+41-(0)21-863-5042
[email protected] [email protected] [email protected]
</TABLE>
Storm Technology Acquires Logitech Scanner Product Line
Industry Leaders in Personal Scanning Enter Strategic Partnership to Place Storm
in Top-Tier Domestic and International Market Position
Fremont, Calif. - December 18, 1997 - In a bold move that is designed to
significantly increase its share of the burgeoning scanner market, Storm
Technology, a leading supplier of affordable, high-quality color scanners
(NASDAQ:EASY), is joining forces with Logitech (NASDAQ:LOGIY), an international
market leader in control devices and imaging solutions, to create a major
worldwide scanner business under Storm's leadership.
Under the terms of an agreement signed today, Storm Technology will acquire
Logitech's scanner product line. The transaction is structured to encourage
rapid development of the European market. In consideration, Logitech receives a
10% equity position in Storm, plus $9 million in a combination of notes and
cash. In addition, Logitech may earn additional equity and cash based on its
success in establishing Storm in Europe over a period of 1998.
The Storm-Logitech partnership firmly positions Storm in the top tier of the
personal scanning market in the U.S., significantly extending its distribution
and broadening its product line. The move also boosts Storm's presence overseas,
and gives the company instant access to Europe, the world's second largest
market. Storm will partner with Logitech's European sales and marketing
organization of more than 100 people in 10 countries, providing access to 8,000
retail outlets. Storm and Logitech scanners will be sold under the Storm brand
in North America, and under both brand names in Europe.
<PAGE>
Storm Technology Acquires Logitech Scanner Product Line
Page 2
"This partnership offers Storm a tremendous opportunity for innovation in the
scanner market, as we combine resources and expertise," said Bill Krause,
president & CEO of Storm Technology. "By expanding our offering and broadening
our resources through this strategic partnership, Storm will have the critical
mass necessary to develop and provide a steady stream of innovative personal
scanners to more customers worldwide. We will also achieve higher economies of
scale, allowing Storm to pass our cost savings through to our customers.
"There is a great deal of synergy here," Krause added. "Storm will be able to
build on its strong position in the photo scanning segment and strengthen its
recent entry into flatbed scanners, while offering a broad range of additional
scanning choices to customers, including award-winning products such as the
Logitech(R) FreeScan(TM) compact multipurpose scanner and PageScan(TM) USB
scanner, the first Universal Serial Bus scanner on the market. The resulting
combination of product offerings is expected to increase our market share to
more than 15% of the overall personal scanner market."
"We are extremely enthusiastic about this partnership, which will allow both
companies to create and deliver better, more affordable products," commented
Daniel Borel, Logitech's chairman and CEO. "It will allow each of us to focus on
our core competencies. For Logitech, this means we can aggressively pursue our
control device business, where we hold a strong market position, and maintain
our commitment to imaging solutions as an important part of the computing
experience through our growing market presence in digital video.
"From a business perspective, we believe the new balance of product focus in our
revised business model will result in stronger margins and more efficient use of
internal engineering and marketing resources," Broad added.
Based on external research studies, Storm expects that scanner sales will reach
6.5 million units in 1997 and grow to more than 12 million by 1999.
<PAGE>
Storm Technology Acquires Logitech Scanner Product Line
Page 3
"As the personal scanning market heats up, this acquisition by Storm is a
positive step toward increasing its presence in the scanning market," said
Kristy Holch, principal of InfoTrends Research Group, Inc. "Just as Storm led
the way to flatbed scanners under $100 earlier this year, the company continues
to make aggressive moves in this competitive market."
About Logitech
Founded in 1981, Logitech (www.logitech.com) designs, manufactures and markets
Senseware Peripherals -- products that make the interface between people and
computers more intuitive and natural. Retail and OEM product offerings include
pointing devices such as mice and trackballs, control devices for entertainment
and professional use, and digital video cameras. Logitech maintains Silicon
Valley operational headquarters in Fremont, California, and regional
headquarters in Romanel, Switzerland, and Hsinchu, Taiwan, R.O.C. In addition,
the company maintains offices in major cities in North America, Europe and Asia
Pacific. Logitech International is traded publicly in Switzerland under the
symbols LOGN and LOGZ, and in the United States on the NASDAQ (LOGIY).
Storm Technology
Storm Technology, Inc. (www.stormtech.com), a market leader in personal scanners
that enable customers to input, organize, store and use digital images easily
with their computer, is committed to creating a steady stream of innovative new
products that offer customers the latest technology with the highest quality at
the most affordable prices. Storm's personal scanners and software are licensed
for inclusion with personal computers, digital cameras, scanners or color
printers from leading technology providers including Adobe, Canon, Epson,
Gateway, Hewlett-Packard, Intel, Kodak, Netscape and Nikon. Storm's current
scanner line, which now includes EasyPhoto Reader(TM) (the #1 selling snapshot
scanner), EasyPhoto SmartPage Pro(TM), EasyPhoto ImageWave(TM), FreeScan(TM),
and PageScan(TM) USB, is carried at major computer retailers in the U.S., Canada
and Europe. Founded in 1990, Storm is based in Mountain View, California.
# # #
All trademarks contained herein are the property of their respective owners.
This press release contains forward-looking statements which involve risks and
uncertainties. The Companies' actual performances could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under "Risk Factors" in Logitech's Annual
Report on Form 20-F dated June 27, 1997, and Quarterly Report on Form 6-K dated
August 15, 1997, and in the quarterly and annual reports of Storm Technology.
<PAGE>
EXHIBIT 99.2
FOR IMMEDIATE RELEASE, DECEMBER 18, 1997
Contact:
Rick M. McConnell
Storm Technology, Inc.
Chief Financial Officer and
Vice President, Finance &
Administration
650-691-6600
Storm Technology, Inc. Completes Over $5,000,000 in
Private Placement Financings
Mountain View, Calif. -- December 18, 1997 -- Storm Technology, Inc. (NASDAQ:
EASY) today announced the completion of the sale of $3,000,000 of two year 8.5%
convertible preferred stock and warrants to a single institutional investor in a
private placement. Under the terms of the financing agreement, the holder may
convert the preferred shares into common stock in the company at the then
current market price in the event of future declines in stock price or at
various discounts to market price in the event of future stock price increases.
The company has the option to redeem the preferred shares at a premium under
certain circumstances.
Additionally, Storm closed today a private placement of over $2,000,000 in the
sale of common shares and warrants at market price purchased entirely by
management of the company.
"These investments in Storm reflect both the investor's and management's
confidence in Storm and its position in the personal scanner market" stated L.
William Krause, President and CEO. "The funds were raised strategically to help
fund the purchase of Logitech's scanner business also announced today in a
separate release. The Storm-Logitech partnership firmly positions Storm in the
top tier of the personal scanning market enabling Storm to have the critical
mass necessary to develop and provide innovative personal scanners to more
customers worldwide."
About Storm Technology
(1 of 2)
<PAGE>
Storm Technology, Inc. (www.stormtech.com), a market leader in personal scanners
that enable customers to input, organize, store and use digital images easily
with their computers, is committed to creating a steady stream of innovative new
products that offers customers the latest technology with the highest quality at
the most affordable prices. Storm's personal scanners and software are licensed
for inclusion with personal computers, digital cameras, scanners or color
printers from leading technology providers including Adobe, Canon, Epson,
Gateway, Hewlett-Packard, Intel, Kodak, Netscape and Nikon. Storm's current
scanner line, which now includes EasyPhoto Reader(TM) (the #1 selling snapshot
scanner), EasyPhoto SmartPage Pro(TM), EasyPhoto ImageWave(TM) FreeScan and
PageScan USB, is carried at major computer retailers in the U.S., Canada and
Europe. Founded in 1990, Storm is based in Mountain View, California.
Note: Storm Technology, EasyPhoto, EasyPhoto Reader, EasyPhoto SmartPage Pro and
EasyPhoto ImageWave are trademarks of Storm Technology, Inc., which may be
registered in certain jurisdictions. All other trade names, products and
services are trademarks or registered trademarks of their respective holders.
(2 of 2)
