CUSIP No. 0002527901 Page 1 of 33 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
The Diana Corporation
_________________________________________________________________
(Name of Issuer)
Common Stock, $1.00 par value
_________________________________________________________________
(Title of Class of Securities)
0002527901
_________________________________________________________________
(CUSIP Number)
Richard L. Haydon
Strategic Restructuring Partnership L.P.
1114 Ave. of the Americas, 38th Floor
New York, New York 10036
Tel. (212) 536-9715
_________________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 17, 1997
_____________________________
(Date of Event Which Requires
Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
<PAGE>
CUSIP No. 0002527901 Page 2 of 33 Pages
________________________________________________________________
1) Name of Reporting Person Richard L. Haydon
S.S. or I.R.S. Identification
No. of Above Person
________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
________________________________________________________________
3) SEC Use Only
________________________________________________________________
4) Source of Funds WC
________________________________________________________________
5) Check if Disclosure of
Legal Proceedings is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
________________________________________________________________
6) Citizenship or Place
of Organization United States
________________________________________________________________
Number of 7) Sole Voting 1,263,000 shares of
Shares Beneficially Power Common Stock, $1.00
Owned by par value ("Common
Reporting Person Stock") (including
shares issuable upon
exercise of warrants)
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- 1,263,000 shares of
tive Power Common Stock (including
shares issuable upon
exercise of warrants)
_________________________________________
10) Shared Dis-
positive Power -0-
_________________________________________
11) Aggregate Amount Beneficially 1,263,000 shares of
Owned by Each Reporting Person Common Stock (including
shares issuable upon
exercise of warrants)
___________________________________________________________________
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CUSIP No. 0002527901 Page 3 of 33 Pages
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 16.2%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person IN
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CUSIP No. 0002527901 Page 4 of 33 Pages
_________________________________________________________________
1) Name of Reporting Person Strategic
S.S. or I.R.S. Identification Restructuring
No. of Above Person Partnership L.P.
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds WC
_________________________________________________________________
5) Check if Disclosure of
Legal Proceedings is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place
of Organization Delaware
_________________________________________________________________
Number of 7) Sole Voting 513,000 shares of
Shares Beneficially Power Common Stock, $1.00
Owned by par value ("Common
Reporting Person Stock") (including
shares issuable upon
exercise of warrants)
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- 513,000 shares of
tive Power Common Stock (including
shares issuable upon
exercise of warrants)
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially 513,000 shares of
Owned by Each Reporting Person Common Stock (including
shares issuable upon
exercise of warrants)
_________________________________________________________________
<PAGE>
CUSIP No. 0002527901 Page 5 of 33 Pages
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 6.9%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
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CUSIP No. 0002527901 Page 6 of 33 Pages
_________________________________________________________________
1) Name of Reporting Person Strategic
S.S. or I.R.S. Identification Restructuring
No. of Above Person Fund
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds WC
_________________________________________________________________
5) Check if Disclosure of
Legal Proceedings is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place British
of Organization Virgin Islands
_________________________________________________________________
Number of 7) Sole Voting 50,000 shares of
Shares Beneficially Power Common Stock, $1.00
Owned by par value ("Common
Reporting Person Stock") (including
shares issuable upon
exercise of warrants)
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Shared Disposi- 50,000 shares of
tive Power Common Stock (including
shares issuable upon
exercise of warrants)
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially 50,000 shares of
Owned by Each Reporting Person Common Stock (including
shares issuable upon
exercise of warrants)
_________________________________________________________________
<PAGE>
CUSIP No. 0002527901 Page 7 of 33 Pages
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 0.7%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
<PAGE>
CUSIP No. 0002527901 Page 8 of 33 Pages
Schedule 13D
_____________
Item 1. Security and Issuer.
___________________
This statement relates to the Common Stock, $1.00 par value (the
"Common Stock"), of The Diana Corporation, a Delaware corporation (the
"Issuer"). The principal executive offices of the Issuer are located at
26025 Mureau Road, Calabasas, California 91302.
Item 2. Identity and Background.
_______________________
(a) This statement is being filed by Richard L. Haydon, an
individual United States citizen ("Mr. Haydon"), Strategic Restructuring
Partnership L.P., a Delaware limited partnership ("SRP"), and Strategic
Restructuring Fund, a British Virgin Islands general partnership ("SRF").
Mr. Haydon, SRP and SRF may sometimes hereinafter be referred to as the
"Reporting Persons". The Reporting Persons are making this single, joint
filing pursuant to Rule 13d-1(f)(1)-(2) of Regulation 13D-G under the
Securities Exchange Act of 1934, as amended (the "Act"), because they may
be deemed to be a "group" within the meaning of Section 13(d)(3) of the
Act. The agreement among the Reporting Persons to file as a group (the
"Group Agreement") is attached as Exhibit A hereto.
(b) - (c) Mr. Haydon's present principal occupation is an
investment manager. SRP and SRF are private investment partnerships.
SRP's sole general partner is Strategic Restructuring Advisers L.P., a
Delaware limited partnership, of which Mr. Haydon is the sole general
partner. Mr. Haydon is also the sole general partner of SRF. The business
address of the Reporting Persons is 1114 Avenue of the Americas, 38th
Floor, New York, New York 10036.
(d) None of the Reporting Persons have, during the last five
years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of the Reporting Persons have, during the last five
years, been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
_________________________________________________
This statement relates to the acquisition by the Reporting
Persons of an aggregate 625,000 units of the Issuer, each unit consisting
of one share of Common Stock and one Warrant to Purchase Common Stock
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CUSIP No. 0002527901 Page 9 of 33 Pages
("Warrant") (the "Units") on July 17, 1997, in a private offering by Issuer
(the "Offering"), pursuant to a Stock and Warrant Purchase Agreement. A
Form of Stock and Warrant Purchase Agreement is attached as Exhibit B
hereto. The purchase price was $2.00 per Unit, or, in the aggregate,
$1,250,000. Each Warrant entitles its holder to purchase one share of
Common Stock at an exercise price of $3.00 per share. The Warrants are
exercisable immediately, and expire on July 17, 2002. A Form of Warrant is
attached as Exhibit C hereto.
In addition, on May 5, 1997 SRP purchased 13,000 shares of Common
Stock in the open market, at an average price of $2.26 per share.
The source of the funds for such acquisitions was the working
capital of the Reporting Persons.
Item 4. Purpose of Transaction.
______________________
The acquisitions described in Item 3 above were made for
investment purposes.
Item 5. Interest in Securities of the Issuer.
____________________________________
(a) Based on a total of 7,179,233 shares of Common Stock
outstanding after the completion of the Offering, and giving effect to the
exercise of all presently-exercisable Warrants, Mr. Haydon owns 1,263,000
shares of Common Stock, or approximately 16.2% of the Common Stock
outstanding. SRP owns 513,000 shares of Common Stock, or 6.9% of the
Common Stock outstanding. SRF owns 50,000 shares of Common Stock, or 0.7%
of the Common Stock outstanding.
The securities reported as beneficially owned by Mr. Haydon
include the securities owned by SRP and SRF. The balance is held in
various managed discretionary accounts with respect to which Mr. Haydon, or
an entity controlled by Mr. Haydon, has sole voting and investment power
over the securities of the Issuer held by such accounts.
(b) Mr. Haydon has sole power to vote or direct the voting of
and to dispose or to direct the disposition of the shares of Common Stock
referred to in paragraph (a) above.
(c) Except as described in this statement, none of the Reporting
Persons has effected any transaction in the Common Stock in the past 60
days.
(d) No other person has the power to direct the receipt of
dividends on, or the proceeds from sales of, the shares of Common Stock
owned by the Reporting Persons.
(e) Not applicable.
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CUSIP No. 0002527901 Page 10 of 33 Pages
Item 6. Contracts, Arrangements, Understandings
or Relationships with Respect to
Securities of the Issuer.
_______________________________________
The Reporting Persons have certain rights with respect to the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of the shares of Common Stock (and the shares of Common Stock
underlying the Warrants) purchased pursuant to the Stock and Warrant
Purchase Agreement, pursuant to a Registration Rights Agreement with the
Issuer. A Form of Registration Rights Agreement is attached as Exhibit D
hereto. As further described therein, the holders of at least fifty
percent of the stock registrable under the Registration Rights Agreement
may by written notice request the Issuer to register under the Securities
Act all or a portion of such stock for sale in open market or private
transactions.
Item 7. Material to be Filed as Exhibits.
________________________________
Exhibit A - Group Agreement
Exhibit B - Form of Stock and Warrant Purchase
Agreement
Exhibit C - Form of Warrant
Exhibit D - Form of Registration Rights Agreement
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CUSIP No. 0002527901 Page 11 of 33 Pages
Signature
_________
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
/s/ Richard L. Haydon
_________________________________
Richard L. Haydon
STRATEGIC RESTRUCTURING PARTNERSHIP L.P.
By: Strategic Restructuring Advisers, L.P.,
General Partner
By /s/ Richard L. Haydon
________________________________
General Partner
STRATEGIC RESTRUCTURING FUND
By /s/ Richard L. Haydon
________________________________
General Partner
Date: July 28, 1997
<PAGE>
CUSIP No. 0002527901 Page 12 of 33 Pages
EXHIBIT A
AGREEMENT
OF
RICHARD L. HAYDON,
STRATEGIC RESTRUCTURING PARTNERSHIP L.P.
AND
STRATEGIC RESTRUCTURING FUND
PURSUANT TO RULE 13D-1(F)
_________________________
The undersigned hereby agree that the Statement on Schedule 13D
to which this Agreement is annexed as Exhibit A is filed on behalf of each
of them in accordance with the provisions of Rule 13d-1(f) under the
Securities Exchange Act of 1934, as amended.
/s/ Richard L. Haydon
_________________________________
Richard L. Haydon
STRATEGIC RESTRUCTURING PARTNERSHIP L.P.
By: Strategic Restructuring Advisers, L.P.,
General Partner
By /s/ Richard L. Haydon
________________________________
General Partner
STRATEGIC RESTRUCTURING FUND
By /s/ Richard L. Haydon
________________________________
General Partner
Date: July 28, 1997
<PAGE>
CUSIP No. 0002527901 Page 13 of 33 Pages
EXHIBIT B
STOCK AND WARRANT PURCHASE AGREEMENT
THIS STOCK AND WARRANT PURCHASE AGREEMENT is made this _____ day of
June, 1997 by and between The Diana Corporation ("Diana") and the person
identified as "Buyer" on the signature page hereof ("Buyer").
1. PURCHASE AND SALE OF STOCK. Buyer hereby purchases, and Diana
hereby sells and issues to Buyer, ___________ shares of common stock, $1.00
par value, of Diana (the "Purchased Stock"), and a warrant (the "Warrant")
to purchase ________ shares of common stock (the "Warrant Stock") for an
aggregate purchase price of $_____________________ (the "Purchase Price").
The Warrant is being executed contemporaneously herewith. Diana represents
that each of the Purchased Stock and the Warrant Stock has been duly
authorized for issuance and, upon issuance of the Purchased Stock in
accordance herewith against payment of the Purchase Price, and upon
issuance of the Warrant Stock against payment of the exercise price of the
Warrant, will be validly issued, fully paid and nonassessable.
2. INVESTMENT REPRESENTATIONS AND COVENANTS. (a) Buyer represents
that it is an "accredited investor" within the meaning of Rule 501(a) under
the Securities Act of 1933, as amended (the "Securities Act"), and is a
financially sophisticated financial or institutional investor that
purchases equity securities in the ordinary course of business. Buyer is
acquiring the Purchased Stock for investment purposes only, for its own
account, and not with a view to the distribution thereof, other than
pursuant to Rule 144 under the Securities Act or other exemption from or
registration under the Securities Act. Buyer understands that the offer
and sale of the Purchased Stock and Warrant to Buyer have not been
registered under the Securities Act or under state securities laws and,
accordingly, may not be transferred unless so registered or exemptions from
such registration are available.
(b) Buyer has reviewed Diana's most recent Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K filed since the date of
the Form 10-K, and Diana's 1996 Annual Report to Stockholders and Proxy
Statement. Buyer understands that an investment in the Purchased Stock is
speculative and involves a high degree of risk. At this time, Diana is
experiencing a severe liquidity deficiency.
(c) Diana shall promptly deliver to Buyer a certificate representing
the Purchased Stock. The certificates representing the Purchased Stock
shall (unless registered under the Securities Act and applicable state
securities laws) have a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH LAWS OR (B) THE HOLDER HEREOF FURNISHES
<PAGE>
CUSIP No. 0002527901 Page 14 of 33 Pages
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE DIANA CORPORATION TO
THE EFFECT THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
(d) This Agreement shall not be effective unless there is a purchase
by James Fiedler, Chairman and Chief Executive Officer of Diana, of not
less than 175,000 shares of Common Stock and accompanying warrants of Diana
and aggregate purchases by all investors of at least 1,750,000 shares of
Common Stock and accompanying warrants of Diana, on substantially the same
terms and conditions set forth herein.
(e) Buyer acknowledges that it has, independently and without
reliance upon Superior Street Capital Advisors, L.L.C. ("Agent") or any
other investor and based solely on the financial statements received from
Diana and such other documents and information as it has deemed
appropriate, made its own investment analysis and decision to enter into
this Agreement.
(f) Buyer agrees to indemnify Agent (to the extent not reimbursed by
Diana), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising
out of this Agreement or any other agreement executed in connection
herewith, provided that Buyer shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. Without limitation of the foregoing,
Buyer agrees to reimburse Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advise in respect of rights or
responsibilities under, this Agreement and each other agreement executed in
connection herewith, to the extent that Agent is not reimbursed for such
expenses by Diana.
3. MISCELLANEOUS. (a) This Agreement constitutes the entire
agreement between the parties and all prior agreements, discussions and
understandings of the parties are merged and made a part of this Agreement.
(b) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of the which shall constitute
one and the same instrument.
(c) Any notice required or permitted to be given or made by either
party to the other hereunder shall be deemed delivered if hand delivered,
five days after being mailed postage prepaid, one business
day after being sent prepaid by overnight courier or delivery service, or
after being sent by facsimile transmission and received by receiving
equipment to the parties at their respective addresses set forth opposite
the signatures hereto or to such changed address as either party shall
<PAGE>
CUSIP No. 0002527901 Page 15 of 33 Pages
designate by proper notice to the other.
(d) This Agreement shall be governed by and construed in accordance
with the laws of Delaware without regard to the principles of conflicts of
law thereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
Address for Notice:
THE DIANA CORPORATION
26025 Mureau Road
Calabasas, California 91302
Fax No. (818) 878-7633 By:_____________________________________
Daniel W. Latham,
President and Chief Operating Officer
Address for Notice: BUYER
______________________________ __________________________________
______________________________ (print or type name)
Fax No._______________________
By: __________________________________
(signature)
__________________________________
(print or type name and title)
<PAGE>
CUSIP No. 0002527901 Page 16 of 33 Pages
EXHIBIT C
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. B-1 WARRANT ___________ Shares
To Purchase Shares of Common Stock of
The Diana Corporation
THIS CERTIFIES that, for value received,
____________________________________ is entitled, upon the terms and
subject to the conditions hereinafter set forth, to purchase from The Diana
Corporation, a Delaware corporation (the "Company"), that number of fully
paid and nonassessable shares of the Company's Common Stock, $1.00 par
value (the "Common Stock") at the purchase price per share as set forth in
Section 1 below ("Exercise Price"). The number of shares and Exercise Price
are subject to adjustment as provided in Section 10 hereof.
1. Number of Shares: Exercise Price; Term.
______________________________________
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for _______________ shares of Common Stock, at a purchase price
of $3.00 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof
and ending on the fifth anniversary of the date hereof and shall be void
thereafter.
2. TITLE TO WARRANT. This Warrant and all rights hereunder may be
transferred, in whole or in part, by the Warrant holder to any affiliate at
any time without the written consent of the Company, but may not be
transferred to any third party without the prior written consent of the
Company, which will not be unreasonably withheld. Transfers shall occur at
the office or agency of the Company by the holder hereof in person or by
duly authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.
3. EXERCISE OF WARRANT. The purchase rights represented by this
Warrant are exercisable by the registered holder hereof, in whole or in
part, at any time, or from time to time, during the term hereof as
described in Section 1 above, by the surrender of this Warrant and the
Notice of Exercise annexed hereto duly completed and executed on behalf of
<PAGE>
CUSIP No. 0002527901 Page 17 of 33 Pages
the holder hereof, at the office of the Company in Calabasas, California
(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), upon payment in cash or
check acceptable to the Company of the purchase price of the shares thereby
purchased whereupon the holder of this Warrant shall be entitled to receive
a certificate for the number of shares so purchased and, if this Warrant is
exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in
accordance with the terms hereof the shares so purchased shall 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.
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant
shall be delivered to the holder hereof as promptly as practicable after
the date on which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the
rights represented by this Warrant and payment of the Exercise Price, be
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 or otherwise specified herein).
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would
otherwise be entitled, such holder shall be entitled, at its option, to
receive either (i) a cash payment equal to the excess of fair market value
for such fractional share above the Exercise Price for such fractional
share (as mutually determined by the Company and the holder) or (ii) a
whole share if the holder tenders the Exercise Price for one whole share.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares
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 certificates, 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 (with the prior written
consent of the Company, which will not be unreasonably withheld); provided,
however, that in the event certificates for shares 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 an assignment document in
form and substance satisfactory to the Company duly executed by the holder
hereof and the Notice of Exercise duly completed and executed and stating
in whose name and certificates are to be issued; and provided further, that
such assignment shall be subject to applicable laws and regulations. Upon
any transfer involved in the issuance or delivery of any certificates for
shares of the Company's securities, the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer
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CUSIP No. 0002527901 Page 18 of 33 Pages
tax incidental thereto.
6. NO RIGHTS AS SHAREHOLDERS. This Warrant does not entitle the
holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.
7. EXCHANGE AND REGISTRY OF WARRANT. The Company shall maintain a
registry showing the name and address of the registered holder of this
Warrant. This Warrant may be surrendered for exchange, transfer or
exercise, in accordance with its terms, at the office of the Company, and
the Company shall be entitled to rely in all respects, prior to written
notice to the contrary, upon such registry.
8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, 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 this Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor
and dated as of such cancellation, in lieu of this Warrant.
9. 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 or a Sunday or shall be a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday or a Sunday or a legal holiday.
10. ADJUSTMENTS AND TERMINATION OF RIGHTS. The purchase price per
share and the number of shares purchasable hereunder are subject to
adjustment from time to time as follows:
(a) MERGER. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the
Company is not the surviving corporation, then, as part of such merger or
consolidation, lawful provision shall be made so that the holder of this
Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the
aggregate Exercise Price then in effect, the number of shares of stock or
other securities or property of the successor corporation resulting from
such merger or consolidation, to which a holder of the stock deliverable
upon exercise of this Warrant would have been entitled in such merger or
consolidation if this Warrant had been exercised immediately before such
merger or consolidation. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Warrant with respect to
the rights and interests of the holder after the merger or consolidation.
(b) RECLASSIFICATION, ETC. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class
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CUSIP No. 0002527901 Page 19 of 33 Pages
or classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the
result of such change with respect to the securities which were subject to
the purchase rights under this Warrant immediately prior to such
subdivision, combination, reclassification or other change.
(c) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company
at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the Common Stock as to which purchase rights
under this Warrant exist, the Exercise Price shall be proportionately
decreased in the case of a split or subdivision or proportionately
increased in the case of a combination.
(d) COMMON STOCK DIVIDENDS. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect
to Common Stock payable in, or make any other distribution with respect to
Common Stock of, shares of Common Stock, then the Exercise Price shall be
adjusted, from and after the date of determination of the shareholders
entitled to receive such dividend or distribution, to that price determined
by multiplying the Exercise Price in effect immediately prior to such date
of determination by a fraction (i) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which shall be
the total number of shares of the Common Stock outstanding immediately
after such dividend or distribution.
(e) OTHER DIVIDENDS. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than
dividends out of retained earnings), or make any other distribution with
respect to Common Stock payable in stock (other than Common Stock) or other
securities or property, then the Company may, at its option, either (i)
decrease the per share Exercise Price of this Warrant by an appropriate
amount based upon the value distributed on each share of Common Stock as
determined in good faith by the Company's Board of Directors or (ii)
provide by resolution of the Company's Board of Directors that on exercise
of this Warrant, the holder hereof shall receive, in addition to the shares
of Common Stock otherwise receivable on exercise hereof, the same number
and kind of stock, other securities and property which such holder would
have received had the holder held the shares of Common Stock receivable on
exercise hereof on and before the record date for such dividend or
distribution.
(f) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Exercise Price pursuant to 10(c) or 10(d) above, the number of shares of
Common Stock purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of shares
purchasable immediately prior to such adjustment in the Exercise Price by a
fraction (i) the numerator of which shall be the Exercise Price immediately
prior to such adjustment, and (ii) the denominator of which shall be the
Exercise Price immediately after such adjustment.
<PAGE>
CUSIP No. 0002527901 Page 20 of 33 Pages
11. NOTICE OF ADJUSTMENTS; NOTICES. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to
Section 10 hereof, the Company shall (within twenty days) issue a
certificate signed by its Chief Executive Officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the
Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this
Warrant. The Company shall notify the holder of this Warrant at least
twenty days prior to the date of any transaction referred to in Section
10(a) or (b) or of the sale of all or substantially all the assets of the
Company.
12. Miscellaneous.
_____________
(a) GOVERNING LAW. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of Delaware and for all purposes shall be construed
in accordance with and governed by the laws of said state, without giving
effect to the conflict of laws principles.
(b) RESTRICTIONS. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933.
(c) AMENDMENTS. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of
the Company and the holders hereof.
(d) NOTICE. Any notice required or permitted hereunder shall be
deemed effectively given upon personal delivery to the party to be notified
or three business days after deposit with the United States Post Office, by
certified mail, postage prepaid and addressed to the party to be notified
at the address indicated below for the Company, or at the address for a
holder set forth in the registry maintained by the Company pursuant to
Section 7, such party, or at such other address as such other party may
designate by ten-day advance written notice.
<PAGE>
CUSIP No. 0002527901 Page 21 of 33 Pages
IN WITNESS WHEREOF, The Diana Corporation has caused this Warrant
to be executed by its officer thereunto duly authorized.
Dated: June ____, 1997
THE DIANA CORPORATION
By: ____________________________________
Daniel W. Latham
President and Chief Operating Officer
Address: 26025 Mureau Road
Calabasas, California 91302
Acknowledged and Agreed:
________________________________
By: ____________________________
Name:
Title:
Address:________________________
<PAGE>
CUSIP No. 0002527901 Page 22 of 33 Pages
NOTICE OF EXERCISE
__________________
To: The Diana Corporation
1. The undersigned hereby elects to purchase _______ shares of
Common Stock ("Stock") of The Diana Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the
purchase price and any transfer taxes payable pursuant to the terms of the
Warrant, together with an investment Representation Statement in form and
substance satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon
exercise of the Warrant are being acquired for its own account, not as a
nominee or agent, and not with a view to resale or distribution of any part
thereof (unless registered under the Securities Act of 1933, as amended
(the "Act"); and the undersigned has no present intention of selling,
granting any participation in, or otherwise distributing the same in
violation of the Act. The undersigned further represents that it does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has
received all the information it considers necessary or appropriate for
deciding whether to purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Act, only in certain limited circumstances. In this connection, the
undersigned represents that it is familiar with SEC Rule 144, as presently
in effect, and understands the resale limitations imposed thereby and by
the Act.
4. The undersigned understands the instruments evidencing the Stock
may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE>
CUSIP No. 0002527901 Page 23 of 33 Pages
5. Please issue a certificate or certificates representing said
shares of Stock in the name of the undersigned:
____________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
____________________________________
[Name]
__________________________ ____________________________________
[Date] [Signature]
<PAGE>
CUSIP No. 0002527901 Page 24 of 33 Pages
NOTICE OF TRANSFER
__________________
(To transfer or 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 transferred and assigned to:
_______________________________________________________________
[Name of Transferee or Assignee]
_______________________________________________________________
[Address of Transferee or Assignee]
_______________________________________________________________
Dated: ________________________________________________________
Holder's Signature: ___________________________________________
Holder's Address: _____________________________________________
Signature Guaranteed: _________________________________________
NOTE: The signature to this Notice of Transfer must correspond
with the name as it appears on the face of the Warrant,
without alteration or enlargement or any change whatsoever.
Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of
authority to assign the foregoing Warrant.
<PAGE>
CUSIP No. 0002527901 Page 25 of 33 Pages
REGISTRATION RIGHTS AGREEMENT
_____________________________
AGREEMENT made as of the ______ day of June, 1997, by and among The
Diana Corporation, a Delaware corporation (the "Company"), and the
undersigned original holder of a portion of the Purchased Stock (as defined
below) and Warrants (as defined below).
W I T N E S S E T H:
WHEREAS, on this date, the Company has issued _________ shares of
Common Stock (the "Purchased Stock") and warrants (the "Warrants") to
purchase an aggregate of _________ shares of Common Stock;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. The following terms shall be used in this Agreement
with the following respective meanings:
"AFFILIATE" means (i) any Person directly or indirectly controlling,
controlled by or under common control with another Person; (ii) any Person
owning or controlling ten (10%) percent or more of the outstanding voting
securities of such other Person; (iii) any officer, director or partner of
such Person; and (iv) if such Person is an officer, director or partner,
any such company for which such Person acts in such capacity.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's Common Stock, $1.00 par value per
share.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or any
successor Federal statute, and the rules and regulations of the Commission
(or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"HOLDER" means any holder of Registrable Stock.
"NASD" means the National Association of Securities Dealers, Inc.
"PERSON" means any natural person, partnership, corporation or other
legal entity.
"REGISTRABLE STOCK" means (a) the Purchased Stock, (b) the Common
Stock issued or issuable upon exercise of the Warrants, and (c) any other
shares of Common Stock issued in respect of such shares by way of a stock
dividend, or stock split or in connection with a combination of shares,
<PAGE>
CUSIP No. 0002527901 Page 26 of 33 Pages
recapitalization, merger, consolidation, share exchange or reorganization;
provided, however, Common Stock will cease to be Registrable Stock (i)
following sale thereof pursuant to a Registration Statement or (ii) two
years or more have elapsed since exercise or expiration of all of the
Warrants.
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of
the Company (other than a registration statement on Form S-8, Form S-4, or
successor form).
"SECURITIES ACT" means the Securities Act of 1933, or any successor
Federal statute, and the rules and regulations of the Commission (or of any
other Federal agency then administering the Securities Act) thereunder, all
as the same shall be in effect at the time.
2. REQUIRED REGISTRATION. (a) The Holder or Holders of at least
fifty percent (50%) percent of all Registrable Stock may by notice in
writing to the Company request the Company to register under the Securities
Act all or any portion of shares of Registrable Stock held by or issuable
to such requesting Holder or Holders for sale in connection with
nonunderwritten open market or privately negotiated transactions.
Notwithstanding anything to the contrary contained herein, the Company
shall not be required to seek to cause a Registration Statement to become
effective pursuant to this Section 2: (A) within 120 days after the
effective date of a Registration Statement filed by the Company, provided
that the Company shall use its best efforts to achieve effectiveness of a
registration requested hereunder promptly following such 120-day period if
such request is made during such 120-day period; (B) if the Company shall
furnish to holders a certificate signed by the chief executive officer of
the Company stating that in the good faith judgment of the Company it would
be seriously detrimental to the Company or its shareholders for a
registration statement to be filed in the near future due to pending
Company events, or that it would require disclosure of material non-public
information relating to the Company which, in the reasonable opinion of the
Company, should not be disclosed, then the Company's obligation to comply
with this Section 2 shall be deferred for a period not to exceed ninety
(90) days from the date of receipt of written request from such Holders.
(b) Following receipt of any notice given under this Section 2 by
Holders of Registrable Stock, the Company shall promptly notify all Holders
from whom notice has not been received that such registration is to be
effected and shall use its reasonable best efforts to register under the
Securities Act the number of shares of Registrable Stock specified in such
notice (and in all notices received by the Company from other Holders
within twenty (20) days after the giving of such notice by the Company to
such other Holders). The Company shall be obligated to register
Registrable Stock pursuant to this Section 2 on one occasion only.
3. REGISTRATION PROCEDURES. If and whenever the Company is required
by the provisions of Section 2 hereof to effect the registration of shares
<PAGE>
CUSIP No. 0002527901 Page 27 of 33 Pages
of Registrable Stock under the Securities Act, the Company will, at the
expense of the Company, as expeditiously as reasonably possible:
(a) In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file with the Commission a
Registration Statement with respect to such securities and use its
reasonable best efforts to cause such Registration Statement of
Pagesto become and remain effective until the securities covered by
such Registration Statement have been sold, and prepare and file with
the Commission such amendments to such Registration Statement (and use
its reasonable best efforts to cause post-effective amendments to
become and remain effective) and supplements to the prospectus
contained therein as may be necessary to keep such Registration
Statement effective and such Registration Statement and prospectus
accurate and complete until the Registrable Stock covered by such
Registration Statement has been sold or the securities are no longer
Registrable Stock;
(b) Furnish to the participating Holders such reasonable number
of copies of the Registration Statement (including all exhibits
thereto), preliminary prospectus, final prospectus and such other
documents as such participating Holders may reasonably request in
order to facilitate the public offering of such securities;
(c) Use its reasonable best efforts to register or qualify the
securities covered by such Registration Statement under such state
securities or blue sky laws of such jurisdictions (i) as shall be
reasonably appropriate for the distribution of the securities covered
by such Registration Statement or (ii) as such participating Holders
may reasonably request within twenty (20) days following the original
filing of such Registration Statement, except that the Company shall
not for any purpose be required to execute a general consent to
service of process, to subject itself to taxation, or to qualify to do
business as a foreign corporation in any jurisdiction where it is not
so qualified;
(d) Notify the Holders participating in such registration,
promptly after it shall receive notice thereof, of the date and time
when such Registration Statement and each post-effective amendment
thereto has become effective or a supplement to any prospectus forming
a part of such Registration Statement has been filed;
(e) Notify the Holders participating in such registration
promptly of any request by the Commission or any state securities
commission or agency for the amending or supplementing of such
Registration Statement or prospectus or for additional information;
(f) Prepare and file within thirty days with the Commission, and
immediately notify such participating Holders of the need to file and
of the filing of, such amendments or supplements to such Registration
Statement or prospectus as may be necessary to correct any statements
<PAGE>
CUSIP No. 0002527901 Page 28 of 33 Pages
or omissions if, at the time when a prospectus relating to such securities
is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus
as then in effect would include an 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 not misleading;
(g) In case any of such participating Holders or any underwriter
for any such Holders is required to deliver a prospectus at a time
when the prospectus then in circulation is not in compliance with the
Securities Act or the rules and regulations of the Commission, prepare
promptly upon request such amendments or supplements to such
Registration Statement and such prospectus as may be necessary in
order for such prospectus to comply with the requirements of the
Securities Act and such rules and regulations;
(h) Advise such participating Holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any
stop order by the Commission or any state securities commission or
agency suspending the effectiveness of such Registration Statement or
the initiation or threatening of any proceeding for that purpose and
promptly use reasonable best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be
issued; and
(i) Use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission and shall make
generally available as soon as practicable after the effective date of
the applicable Registration Statement an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act.
4. EXPENSES.
(a) With respect to each registration effected pursuant to
Section 2 hereof, all fees, costs and expenses of the Company
incidental to such registration in connection therewith shall be borne
by the Company.
(b) The fees, costs and expenses of registration to be borne as
provided in paragraph (a) above, shall include, without limitation,
all registration, filing fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all
legal fees and disbursements and other expenses of complying with
state securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. The
Holders shall bear all of their own expenses, including without
limitation, brokerage expenses and their own usual and customary legal
fees and expenses.
5. INDEMNIFICATION AND CONTRIBUTION.
<PAGE>
CUSIP No. 0002527901 Page 29 of 33 Pages
(a) The Company will indemnify and hold harmless each Holder of shares of
Registrable Stock which are included in a Registration Statement pursuant
to the provisions of this Agreement, the directors, officers, employees and
agents of such Holder, and any Person who controls such Holder within the
meaning of the Securities Act or the Exchange Act, and each of their
successors, from and against any and all claims, actions, demands, losses,
expenses, damages or liabilities, joint or several, to which they or any of
them may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such claims, actions, demands, losses, expenses, damages or
liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such Registration
Statement (including all documents incorporated therein by reference) as
originally filed or in any amendment thereto, any preliminary or final
prospectus contained therein or any 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 claim,
action, demand, loss, expense, damage, or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in reliance upon and in conformity with
information furnished in writing by such Holder for use in the preparation
thereof; provided, further, that the foregoing indemnity shall not inure to
the benefit of any Holder and the officers, directors, agents, employees of
the Holder, and each Person who controls the Holder, if the Holder shall
have sold Registrable Stock in violation of Section 6 hereof.
(b) Each Holder of shares of the Registrable Stock which are
included in a registration pursuant to the provisions of this
Agreement will, severally and not jointly, indemnify and hold harmless
the Company, the directors, officers, employees and agents of the
Company and any person who controls the Company within the meaning of
the Securities Act or the Exchange Act from and against any and all
claims, actions, demands, losses, expenses, damages or liabilities,
joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as
such claims, actions, demands, losses, expenses, damages or
liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such
Registration Statement (including all documents incorporated therein
by reference) as originally filed or in any amendment thereto, any
preliminary or final prospectus contained therein or any 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, in each case to the extent, but only to the extent that
such untrue statement or alleged untrue statement or omission or
alleged omission was so made in reliance upon and in conformity with
information furnished in writing by such Holder for use in the
<PAGE>
CUSIP No. 0002527901 Page 30 of 33 Pages
(c) Promptly after receipt by a party to be indemnified pursuant
to the provisions of paragraph (a) or (b) of this Section 5 (an
"indemnified party") of notice of the commencement of any action
involving the subject matter of the foregoing indemnity provisions,
such indemnified party will, if a claim thereof is to be made against
the indemnifying party pursuant to the provisions of paragraph (a) or
(b), notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to an indemnified party otherwise
than under this Section 5 and shall not relieve the indemnifying party
from liability under this Section 5 unless such indemnifying party is
prejudiced by such omission. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any
action for which indemnification is sought (in which case the
indemnifying party shall not be responsible for the fees and expenses of
any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in
an action, the indemnified party shall have the right to employ separate
counsel, and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present
such counsel with a conflict of interest that would make such
representation inappropriate in the circumstances, (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
the institution of such action or (iii) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either
(i) any Holder exercising rights under this Agreement, or any
controlling Person of any such Holder, makes a claim for
indemnification pursuant to this Section 5 but it 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 this Section 5
provides for indemnification is such case, or (ii) contribution under
<PAGE>
CUSIP No. 0002527901 Page 31 of 33 Pages
the Securities Act may be required on the part of any such selling Holder
or any such controlling Person in circumstances for which indemnification
is provided under this Section 5; then, and in each such case, the Company
and such Holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (including legal and other
expenses reasonably incurred in connection with or defending same) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the
other. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the
other hand. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d),
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.
(e) The provisions of this Section 5 will remain in full force
and effect, regardless of any investigation made by or on behalf of
any Holder or the Company or any of the officers, directors, employees
or agents or controlling persons referred to in Section 5 hereof, and
will survive the sale by a Holder of securities covered by a
Registration Statement.
(f) The liability of a Holder under this Section 5 shall not
exceed an amount equal to the net proceeds received by a Holder from
the sale of Registrable Stock.
6. HOLDER COOPERATION. Prior to any offers or sales under the
Registration Statement, each Holder agrees to obtain prior confirmation
from the Company that no "Blackout Condition" exists. The Company shall
provide such confirmation (if true) within one business day of the request
from a Holder. "Blackout Condition" means (i) the existence of material,
nonpublic information, (ii) the unavailability of any required financial
information as the result of an actual or proposed acquisition or
disposition, or (iii) the existence of any financing or other transaction,
event or condition which would make it disadvantageous, in the Company's
reasonable opinion, for Registrable Stock to be sold under the Registration
Statement. In connection with the registration and sale of the Registrable
Stock, each Holder will (i) cooperate with the Company in preparing the
Registration Statement and provide the Company with all information,
documents and agreements that the Company may deem reasonably necessary,
(ii) discontinue offers and sales of the Registrable Stock under the
Registration Statement upon notification of a Blackout Condition or of any
stop order or suspension of effectiveness of the Registration Statement,
(iii) discontinue use of any prospectus following notice by the Company
that the prospectus must be amended or supplemented (iv) only use the most
recent prospectus included in the Registration Statement, (v) upon
presentation of the stock certificate representing any Registrable Stock
<PAGE>
CUSIP No. 0002527901 Page 32 of 33 Pages
sold under the Registration Statement, certify that the sale was made in
accordance with the terms hereof and the plan of distribution described in
the Registration Statement, and (vi) comply with applicable federal and
state securities laws including without limitation the prospectus delivery
requirements under the Securities Act and the applicable requirements of
Rule 10b-5 and Regulation M under the Exchange Act.
7. NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and shall be deemed to be properly given when sent by
registered or certified mail, return receipt requested, by Federal Express,
DHL or other guaranteed overnight delivery service or by facsimile
transmission, addressed as follows:
If to the Company: The Diana Corporation
26025 Mureau Road
Calabasas, California 91302
Telecopy: (818) 878-7633
Attention: Daniel W. Latham
If to a Holder: at the address set forth on the signature
page hereof
and if to any other Holder at such Holder's address for notice as set forth
in the register maintained by the Company, or, as to any of the foregoing,
to such other address as any such party may give the others notice of
pursuant to this Section, provided that a change of address shall only be
effective upon receipt.
8. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
9. WAIVERS; AMENDMENTS. No waiver of any right hereunder by any
party shall operate as a waiver of any other right, or of the same right
with respect to any subsequent occasion for its exercise. This Agreement
may not be amended except by a writing executed by the Company and the
Holders of at least two-thirds of the Registrable Stock.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the respective legal representatives,
successors and assigns of the parties hereto. A Holder may assign its
rights hereunder in connection with an assignment of a Warrant or
Registrable Stock, provided the disposition covers at least 50,000 shares
of Common Stock and the transferee agrees in writing to the terms hereof.
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.
12. PRIOR UNDERSTANDINGS. This Agreement represents the complete
agreement of the parties with respect to the transactions contemplated
hereby and supersedes all prior agreements and understandings.
<PAGE>
CUSIP No. 0002527901 Page 33 of 33 Pages
13. HEADINGS. Headings in this Agreement are included for reference
only and shall have no effect upon the construction or interpretation of
any part of this Agreement.
14. SEVERABILITY. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as if
any such illegal, invalid or unenforceable provision were not contained
herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above recited.
THE DIANA CORPORATION
By: __________________________________
Daniel W. Latham, President and
Chief Operating Officer
________________________________________
By: ___________________________________
Address: ______________________________
______________________________
______________________________
Telecopy: ______________________________
