<PAGE> 1
Registration No. 333-52787
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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nSTOR TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-2094565
(State of incorporation) (I.R.S. Employer I.D. #)
100 Century Blvd., West Palm Beach, FL 33417 - (561) 640-3103
(Address and telephone number of registrant's
principal executive offices)
Mark F. Levy
100 Century Blvd., West Palm Beach, FL 33417 - (561) 640-3103
(Agent's name, address and telephone number)
Copies of communications to:
Donn A. Beloff, Esq. Scott Goldstein, Esq.
Holland & Knight LLP Goldstein, Goldstein & Reis, LLP
One East Broward Boulevard 65 Broadway, 10th Floor
Ft. Lauderdale, Florida 33301 New York, New York 10006
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Aggregate Aggregate Amount of
Title of Securities Amount to be Price Offering Registration
to be Registered Registered (1) Per Share Price Fee (7)
- ------------------- -------------- --------- -------- -------------
<S> <C> <C> <C> <C>
Common Stock, par
Value $.05 per share (2) 8,233,276 $ 1.03(6) $8,480,274 $2,502
Common Stock, par
value $.05 per share (3) 280,000 $ 1.50 $ 420,000 $ 124
Common Stock, par
value $.05 per share (4) 400,000 $ 1.38 $ 552,000 $ 163
Common Stock, par
value $.05 per share (5) 1,000,000 $ 1.03(6) $1,030,000 $ 304
--------- ------
Total 9,913,276 $3,093
========= ======
</TABLE>
(1) In the event of a stock split, stock dividend, or similar transaction
involving the Common Stock of the Company, the number of shares
registered hereby shall be automatically increased pursuant to Rule 416
to cover the additional shares of Common Stock.
(2) Represents the shares issuable upon conversion of the Series B
Preferred Stock.
(3) Represents the shares issuable upon exercise of outstanding warrants
issued in connection with the original private placement of the
Company's Preferred Stock.
(4) Represents the shares issuable upon exercise of outstanding warrants
issued in connection with the acquisition of the common stock of Borg
Adaptive Technologies, Inc.
(5) Represents shares of Common Stock to be sold by a selling stockholder.
(6) Estimated solely for the purpose of calculating the registration fee
under Rule 457 based upon the average of the high and low prices
reported on the consolidated reporting system for the American Stock
Exchange on May 8, 1998 of $1.03.
(7) A fee of $467 is being paid herewith. The balance of $2,626 was
previously paid by the Registrant.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
SUBJECT TO COMPLETION DATED JUNE 19, 1998
<PAGE> 3
PROSPECTUS
9,913,276 SHARES
nSTOR TECHNOLOGIES, INC.
COMMON STOCK
------------------------------
This Prospectus relates to an aggregate of up to 9,913,276 shares (the
"Shares") of common stock, $.05 par value (the "Common Stock"), of nStor
Technologies, Inc. (the "Company"), being offered for sale from time to time by
the selling stockholders named in this Prospectus (the "Selling Stockholders")
as follows:
(i) up to 8,233,276 shares issuable upon the conversion (the "Conversion
Shares") from time to time of the Company's Series B 8% Convertible
Preferred Stock, $.01 par value (the "Series B Preferred Stock");
(ii) up to 280,000 shares issuable upon the exercise (the "Private Placement
Warrant Shares") of warrants issued in connection with the private
placement of the Company's Preferred Stock in April 1998 (the "Private
Placement Warrants");
(iii) up to 400,000 shares issuable upon the exercise (the "Borg Warrant
Shares"; the Private Placement Warrant Shares and the Borg Warrant
Shares sometimes collectively referred to as the "Warrant Shares") of
warrants issued in connection with the Company's acquisition of all of
the outstanding capital stock of Borg Adaptive Technologies, Inc. (the
"Borg Warrants"; the Private Placement Warrants and the Borg Warrants
sometimes collectively referred to as the "Warrants"); and
(iv) up to 1,000,000 shares of Common Stock to be sold by a Selling
Stockholder.
If all of the Warrants are exercised, the Company would receive
$970,000. See "USE OF PROCEEDS." The Company will not receive any funds upon the
conversion of the Series B Preferred Stock. All expenses of registration
incurred in connection with this offering are being borne by the Company, but
all brokerage commissions, discounts and other expenses incurred by individual
Selling Stockholders will be borne by the individual Selling Stockholders. The
Company will not be entitled to any of the proceeds from such sales.
The Common Stock is quoted on the American Stock Exchange under the
symbol "NSO". On June 18, 1998, the last reported sales price of the Common
Stock on the American Stock Exchange was $.75 per share.
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained or
incorporated by reference in this Prospectus in connection with the offering
described herein. If given or made, such information or representation must not
be relied upon as having been authorized by the Company or any Selling
Stockholder. Neither the delivery of this Prospectus nor any offer or sale made
hereunder shall, under any circumstances, imply that there has been no change in
the affairs or operations of the Company since the date of this Prospectus, or
that the information herein is correct as of any time subsequent to such date.
INVESTORS SHOULD CAREFULLY CONSIDER CERTAIN SPECIAL FACTORS RELATING TO
THE COMPANY. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------------------------------
The date of this Prospectus is June , 1998
---
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
("SEC") a Registration Statement on Form S-3 (together with any amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Shares offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in schedules and exhibits to the Registration
Statement as permitted by the rules of the SEC. For further information with
respect to the Company and the Shares, reference is made to the Registration
Statement and the exhibits thereto. Statements contained in this Prospectus as
to the contents of any contract or any document referred to are not necessarily
complete. With respect to each such contract or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matters involved, and each such statement shall
be deemed qualified in its entirety by such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the SEC. All
reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the SEC at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the
regional offices of the SEC located at 7 World Trade Center, Suite 1300, New
York, New York 10048, and the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained by mail
at prescribed rates from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The SEC maintains a web
site that contains reports, proxy and information statements, and other
information regarding registrants that file electronically with the SEC with a
web site address of http://www.sec.gov. All reports, proxy statements and other
information filed by the Company with the SEC will also be filed with the
American Stock Exchange ("Amex") and should be available for inspection at its
facility at 86 Trinity Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
ADDITIONAL INFORMATION
The following documents filed with the SEC by the Company are incorporated
herein by reference:
1. The Company's Annual Report filed on Form 10-K for the fiscal year
ended December 31, 1997, as amended by a Form 10-K/A filed on April 30, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998; and
3. The description of the Common Stock contained in the Company's
Registration Statement filed on Form 8-A, as filed with the SEC on
April 16, 1997, pursuant to Section 12(b) of the Exchange Act.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all remaining securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Prospectus and to be part
thereof from the date of filing of such documents
Any statement in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or replaces such statement. Any statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all information that
has been incorporated by reference in this Prospectus (not including exhibits to
the information that is
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incorporated by reference unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Such request
should be directed to the President, nStor Technologies, Inc., 100 Century
Boulevard, West Palm Beach, Florida 33417, telephone number (561) 640-3103.
FORWARD LOOKING STATEMENTS
From time to time, information provided by the Company or statements
made by its directors, officers or employees may constitute "forward-looking"
statements under the Private Securities Litigation Reform Act of 1995 and are
subject to numerous risks and uncertainties. Any statements made in this
Registration Statement, including any statements incorporated herein by
reference (See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE; ADDITIONAL
INFORMATION"), that are not statements of historical fact are forward-looking
statements (including, but not limited to, statements concerning the
characteristics and growth of the Company's market and customers, the Company's
objectives and plans for future operations and products and the Company's
expected liquidity and capital resources). Such forward-looking statements and
other forward-looking statements made by the Company or its representatives are
based on a number of assumptions and involve a number of risks and
uncertainties, and, accordingly, actual results could differ materially. Factors
that may cause such differences include, but are not limited to: the continued
and future acceptance of the Company's products; the rate of growth in the
industries to which the Company markets its products; the presence of
competitors with greater technical, marketing and financial resources; the
Company's ability to promptly and effectively respond to technological change to
meet evolving customer needs; capacity and supply constraints or difficulties;
and the Company's ability to successfully expand its operations. For a further
discussion of these and other significant factors to consider in connection with
forward-looking statements, reference is made to the discussion in this
Prospectus under the heading "RISK FACTORS."
THE COMPANY
Since 1996, the Company has been developing, manufacturing, and
marketing a full range of multi-platform storage solutions including advanced
external RAID (Redundant Array of Independent Disks) subsystems (the "RAID
Business"), tape backup systems, UNIX-based memory products, digital media
management products and enterprise resource planning software. The Company was
incorporated as a Delaware corporation in 1959.
In October 1992, the Company exchanged substantially all of the
operating assets of its previous business for securities issued by IMNET
Systems, Inc. ("IMNET"). In 1996, the Company sold its IMNET securities and in
June 1996, through its wholly owned subsidiary, nStor Corporation, Inc.
("nStor"), acquired the RAID Business from Seagate Technologies, Inc. In
December 1996, nStor acquired substantially all of the assets and assumed
certain liabilities of Parity Systems, Inc. ("Parity"). The assets acquired from
Parity are used in the design, manufacture and sale of computer storage
subsystems, memory devices and peripheral equipment, and the integration of
storage management solutions, digital index management, and client/server
systems for UNIX and Windows NT server environments. (UNIX and Windows NT are
computer operating systems.) On April 23, 1998, nStor acquired all of the
outstanding common stock of Borg Adaptive Technologies, Inc. ("Borg"). Borg is
the developer of Adaptive RAID, a patented next-generation RAID technology.
On June 15, 1998, the Company had 106 full-time employees. nStor's
operations are primarily conducted at a facility located in Lake Mary, Florida
(in the Orlando area). The Company's executive offices are located at 100
Century Boulevard, West Palm Beach, Florida 33417, its telephone number is (561)
640-3103.
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<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Common Stock outstanding as of June 15, 1998 18,670,477 shares
Shares offered by Selling Stockholders:
Conversion Shares issuable upon conversion of outstanding Minimum: 2,430,556 shares (1)
Series B Preferred Stock Maximum: 8,233,276 shares (2)
Warrant Shares issuable upon exercise of Warrants 680,000 shares
Shares to be sold by Selling Stockholder 1,000,000 shares
Risk Factors The Shares involve a high degree of
risk. Investors should carefully
consider the information set forth
under "Risk Factors."
Proceeds to Company if the Warrants are exercised in full $970,000
Use of Proceeds Other than the proceeds received from the
exercise of the Warrants, the Company will
not receive any proceeds from the sale of
the Shares. See "USE OF PROCEEDS."
Amex trading symbol NSO
</TABLE>
- ------------------
(1) Represents the number of Conversion Shares that would be issuable if
all 3,500 shares of Series B Preferred Stock outstanding were converted
at the maximum Conversion Price of $1.44. See "DESCRIPTION OF
SECURITIES - Series B Preferred Stock."
(2) Represents the number of Conversion Shares offered by this Prospectus.
This number could be more or less than the number of Conversion Shares
that are ultimately issued. The exact number of Conversion Shares
issuable will depend on, among other things, the market price of the
Common Stock prior to such conversion election. Specifically, the
number of Conversion Shares issuable upon any conversion election will
equal (i) the purchase price of the Series B Preferred Stock ($1,000
per share) divided by (ii) the Conversion Price, which is equal to the
lesser of $1.44, or seventy-seven percent (77%) of the average closing
bid price of the Common Stock for the three (3) trading days
immediately preceding the date of conversion, multiplied by (iii) the
number of shares of Series B Preferred Stock being converted.
Additional shares of Common Stock may from time to time be issued as
dividends on the Series B Preferred Stock. Pursuant to the listing
rules of Amex and the Subscription Agreement relating to the Series B
Preferred Stock (the "Subscription Agreement"), the stockholders of the
Company have approved the issuance of certain shares of Common Stock at
below market prices. The stockholders have also approved an amendment
to the Company's Restated Certificate of Incorporation to increase the
aggregate number of authorized shares of Common Stock (the "Charter
Amendment") such that a sufficient number of shares of Common Stock
will be available on any given date to effect the conversion of all
outstanding shares of Series B Preferred Stock.
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<PAGE> 7
RISK FACTORS
In addition to the other information in this Prospectus or incorporated
herein by reference, the following risk factors should be considered carefully
in evaluating the Company and its business before purchasing the shares offered
in this Prospectus.
Indefinite Number of Shares Issuable Upon Conversion of Preferred Stock and
Company's Right of Redemption
The number of Conversion Shares issuable will increase if the market
price of the Common Stock decreases and decrease if the market price of the
Common Stock increases. Therefore, if the market price of the Common Stock
decreases, there is no theoretical limit on the number of Conversion Shares
issuable. However, the Subscription Agreement contains a change in control
provision (the "5% Beneficial Owner Limit") that prohibits any holder of shares
of Series B Preferred Stock (except H. Irwin Levy) from converting any portion
of the Series B Preferred Stock if such conversion would result in such holder
being deemed the beneficial owner, in accordance with the provisions of Rule
13d-3 of the Exchange Act, of 4.99% or more of the then outstanding Common
Stock.
In addition, the Company has the right, at its sole option, to redeem
in whole or in part the Series B Preferred Stock (rather than convert it) if the
Conversion Price is $.77 or less when the holder of shares of the Series B
Preferred Stock seeks to convert such shares into Common Stock. If the Company
exercises its right to redeem shares of the Series B Preferred Stock, the
redemption price is payable in cash in an amount equal to 130% of the face
amount of such shares. See "DESCRIPTION OF SECURITIES - Series B Preferred
Stock." Such payment of the redemption price will reduce the amount of cash
available to the Company for other purposes. If the Company has insufficient
cash reserves to pay the redemption price, the Company may be unable to exercise
its right of redemption even if it otherwise desires to do so, and the holders
of shares of Series B Preferred Stock will convert such shares into Common Stock
at the applicable Conversion Price ($.77 or less) resulting in substantial
dilution to the holders of outstanding Common Stock.
Shares Eligible for Future Sale
Except as provided below, substantially all of the shares of the Common
Stock (18,670,477 shares as of the date of this Prospectus) are freely tradable
without restriction or further registration under the Securities Act, unless
such shares are held by "affiliates" of the Company as that term is defined in
Rule 144 promulgated under the Securities Act. Approximately 7,807,191 shares of
Common Stock are held by officers and directors and are deemed restricted
securities within the meaning of Rule 144. Restricted securities may be sold in
the public market only if they have been registered under the Securities Act or
if their sales qualify under the Rule 144 safe harbor or another available
exemption from the registration requirements of the Securities Act. All of the
Conversion Shares and Warrant Shares offered for sale pursuant to this
Prospectus will be freely tradable if sold pursuant to this Prospectus. R.
Daniel Smith, a director of the Company, is offering 1,000,000 shares of Common
Stock for sale pursuant to this Prospectus, and, therefore, such shares will no
longer be deemed restricted securities within the meaning of Rule 144. See
"SELLING STOCKHOLDERS."
New Products and Technological Changes
The markets for the Company's products are characterized by rapidly
changing technology, evolving industry standards and relatively short product
life cycles. The Company's ability to compete successfully will depend on its
ability to enhance its existing products and introduce new products on a timely
and cost-effective basis. There can be no assurance that the Company will be
successful in introducing such new products or enhancements. Delays in product
enhancements and developments or the failure of the Company's new products or
enhancements to gain market acceptance would have an adverse effect on the
Company's business and operating results. In addition, there can be no assurance
that new products or technologies developed by others, or the emergence of new
industry standards, will not render the Company's products or technologies
noncompetitive or obsolete. Despite testing, new products may be affected by
quality, reliability or interoperability problems, which could result in
returns, delays in collecting accounts receivable, unexpected service or
warranty expenses, reduced orders or a decline in the Company's competitive
position.
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<PAGE> 8
Competition
The market for the Company's products is highly competitive. The
Company's competitors may offer systems at lower prices than those offered by
the Company and the Company must compete on the basis of product performance in
specific applications. Some of these competitors have greater financial,
manufacturing and marketing resources than those of the Company.
The Company's ability to compete successfully depends upon its ability
to continue to develop high performance products that obtain market acceptance
and can be sold at competitive prices. Although the Company believes that its
products have certain significant competitive advantages, there can be no
assurance that the Company will be able to compete successfully in the future or
that other companies may not develop products with better performance and thus
reduce the demand for the Company's products. As more companies enter the
markets in which the Company sells its products, the Company may encounter
increased price competition for such products which could materially and
adversely affect the Company's operating results. The Company's original
equipment manufacturer customers and other manufacturers could develop their own
disk arrays or could integrate competitive RAID disk arrays into their systems
rather than the Company's products, which could materially and adversely affect
the Company's operating results.
Recent Acquisitions and Unproven Track Record
The Company has acquired all of its operating assets within the last
two years. The success of the Company's recent business combinations will depend
in large part on the Company's ability to consolidate its operations, integrate
departments, systems and procedures and obtain business efficiencies, economies
of scale and related cost savings. The significant management challenges
presented by such consolidation and integration may prevent the desired cost
savings. There can be no assurance that the Company will be able to successfully
consolidate its business operations or achieve returns that would justify the
Company's investment in its acquired businesses.
Litigation
In June and August 1996, the Company, two of its directors and nStor
were served with two separate complaints filed in the Supreme Court of the State
of New York, County of Nassau, in which the plaintiffs claim to have had
contractual and proprietary interests in the prospect of a transaction to
purchase certain net assets acquired by nStor. The plaintiffs seek compensatory
damages, punitive damages, and equitable relief for alleged interference with
the plaintiffs' alleged rights and for alleged breach of contract. Both cases
are in the preliminary stages. Counsel for the Company believes that the Company
has good defenses to both claims and that it will not incur any material
liability. The Company is unaware of any facts that would support any of the
plaintiff's claims and, accordingly, the Company believes that the claims are
without merit. An unfavorable outcome in such litigation could have an adverse
effect on the Company.
Customers
The Company has no long-term purchase commitments from its customers
and customers generally may cancel their orders on 30 days' notice. Accordingly,
there can be no assurance that orders from existing customers, including the
Company's principal customers, will continue at their historical levels, or that
the Company will be able to obtain orders from new customers. In addition, there
can be no assurance that existing customers, including the Company's principal
customers, will not develop their own storage solutions internally and as a
result reduce or eliminate purchases from the Company. Loss of one or more of
the Company's principal customers, or cancellation or rescheduling of material
orders already placed, could materially and adversely affect the Company's
operating results.
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Risks Related to Patents and Proprietary Technology
The Company currently holds one patent and has one patent pending on
its products. In addition, the Company relies on a combination of trade secrets,
copyrights and trademarks and employee and third-party nondisclosure agreements
to protect its intellectual property rights. There can be no assurance that the
steps taken by the Company to protect its rights will be adequate to prevent
misappropriation of the Company's technology or to preclude competitors from
developing products with features similar to the Company's products.
Furthermore, there can be no assurance that, in the future, third parties will
not assert infringement claims against the Company or with respect to its
products for which the Company has indemnification obligations to certain of its
customers. Asserting the Company's rights or defending against third-party
claims could involve substantial expense, which the Company may not be able to
afford and which could have a material adverse effect on the Company's operating
results. In the event a third party were successful in a claim that one of the
Company's products infringed the third party's proprietary rights, the Company
may have to pay substantial damages or royalties, remove that product from the
marketplace or expend substantial amounts in order to modify the product so that
it no longer infringes such proprietary rights, any of which could have a
material adverse effect on the Company's operating results.
Dependence on Suppliers
The Company depends heavily on its suppliers to provide high quality
materials on a timely basis and at reasonable prices. Although many of the
components for the Company's products are available from numerous sources at
competitive prices, certain of the components used in the Company's products are
presently available to the Company from a limited number of suppliers or from a
single supplier. Furthermore, because of increased industry demand for many of
those components, their manufacturers may, from time to time, not be able to
make delivery of orders on a timely basis. In addition, manufacturers of
components on which the Company relies may choose, for numerous reasons, not to
continue to make those components, or the next generation of those components,
available to the Company.
The Company has no long-term supply contracts. There can be no
assurance that the Company will be able to obtain, on a timely basis, all of the
components it requires. If the Company cannot obtain essential components as
required, the Company could be unable to meet demand for its products, thereby
materially adversely affecting its operating results and allowing competitors to
gain market share. In addition, scarcity of such components could result in cost
increases and adversely affect the Company's operating results.
Possible Volatility of Stock Price
The Common Stock has experienced in the past, and could experience in
the future, substantial price volatility as a result of a number of factors,
including quarter to quarter variations in the actual or anticipated financial
results of the Company, announcements by the Company, its competitors or its
customers, government regulations, and developments in the industry. In
addition, the stock market has experienced extreme price and volume fluctuations
which have affected the market price of many technology companies in particular
and which have at times been unrelated to the operating performance of the
specific companies whose stock is traded. Broad market fluctuations and general
economic conditions may adversely affect the market price of the Common Stock.
Future Capital Needs; Uncertainty of Additional Funding
The Company has expended and will continue to be required to expend
substantial funds to continue research and development, and for other aspects of
its business. Although the Company believes that it has or has access to
resources sufficient to fund the operations of the Company for at least the next
twelve months, the Company may need or elect to raise additional capital. The
Company's capital requirements will depend on many factors, including the
problems, delays, expenses and complications frequently encountered by
technology companies; the progress of the Company's research, development and
product testing programs; the success of the Company's sales and marketing
programs; costs in filing, prosecuting, defending and enforcing intellectual
property rights; the extent and terms of any collaborative research,
manufacturing, marketing or other arrangements; and changes in economic,
regulatory or competitive conditions or the Company's planned business.
Estimates about the
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adequacy of funding for the Company's activities are based on certain
assumptions, including the assumption that research, development and testing
relating to the Company's products under development can be conducted at
projected costs and within projected time frames and that such products can be
successfully marketed.
To satisfy its capital requirements, the Company may seek to raise
funds in the public or private capital markets. The Company's ability to raise
additional funds in the public or private markets will be adversely affected if
the results of the Company's ongoing or future research and development programs
are not favorable. The Company may seek additional funding through corporate
collaborations and other financing vehicles. There can be no assurance that any
such funding will be available to the Company, or if available, that it will be
available on acceptable terms. If adequate funds are not available, the Company
may be required to curtail its operations significantly, or it may be required
to obtain funds through arrangements with future collaborative partners or
others that may require the Company to relinquish rights to some or all of its
technologies or products under development. If the Company is successful in
obtaining additional financing, the terms of the financing may have the effect
of diluting or adversely affecting the holdings or the rights of the holders of
Common Stock.
Future Acquisitions
The Company may pursue acquisitions of complementary technologies,
product lines or businesses. Future acquisitions by the Company could result in
dilutive issuances of equity securities and the incurrence of additional debt
and amortization expenses related to goodwill and intangible assets that could
adversely affect the Company's operating results. In addition, gross margins of
acquired products, necessary product or technology development expenditures and
other factors that may be involved in any such acquired business could result in
dilution to the Company's earnings. Acquisitions also may involve numerous other
risks, including difficulties in the assimilation of the operations and products
of the acquired business, dependence on new products and processes, the
diversion of management's attention from other business concerns, risks of
entering markets in which the Company has no or limited direct prior experience,
the potential loss of key employees of the acquired business and difficulties in
attracting additional key employees necessary to absorb added management
responsibilities. No assurance can be given as to the effect of any future
acquisition on the Company's business or operating results.
Year 2000 Concerns
The Company is presently reviewing the potential impact of Year 2000
compliance issues on its information systems and business operations, and has
preliminarily determined that any costs, problems or uncertainties associated
with the potential consequences of Year 2000 issues are not expected to have a
material impact on its future operations or financial condition. However, there
can be no assurance that no Year 2000 related operating problems or expenses
will arise with the Company's computer systems and software or in their
interface with the computer systems and software of the Company's vendors.
Anti-Takeover Provisions
The Company's Restated Certificate of Incorporation authorizes the
issuance of 1,000,000 shares of preferred stock (the "Preferred Stock"). The
Company's Board of Directors has the power to issue any or all of the shares of
Preferred Stock, including the authority to establish one or more classes or
series and to fix the powers, preferences, rights and limitations of such class
or series, without seeking shareholder approval. See "DESCRIPTION OF SECURITIES
- - Preferred Stock." Furthermore, as a Delaware corporation, the Company is
subject to Section 203 of the Delaware General Corporation Law regarding
"business combinations." This statutory provision and the power to issue
Preferred Stock may, in certain circumstances, deter or discourage takeover
attempts and other changes in control of the Company not approved by management
and the Board of Directors. As a result, the Company's shareholders may lose
opportunities to dispose of their shares at the higher prices generally
available in takeover attempts or that may be available under a merger proposal.
In addition, the statutory provision and the existence of Preferred Stock may
have the effect of permitting the Company's current management to retain its
position and place it in a better position to resist changes that shareholders
may wish to make if they are dissatisfied with the conduct of the business.
7
<PAGE> 11
RECENT DEVELOPMENTS
On April 23, 1998, nStor acquired all of the outstanding common stock
of Borg Adaptive Technologies, Inc. ("Borg"), a privately owned company
headquartered in Boulder, Colorado, and the developer of Adaptive RAID, a
patented next-generation RAID technology. The purchase price of such common
stock consisted of approximately $336,000 (of which $311,000 was used for the
retirement of debt) and the issuance of the Borg Warrants to purchase 400,000
shares of Common Stock. See "DESCRIPTION OF SECURITIES - Warrants."
SELLING STOCKHOLDERS
The following table sets forth certain information with regard to the
beneficial ownership of Common Stock by the Selling Stockholders (where
indicated by footnote, on a pro forma basis as if all 3,500 shares of the Series
B Preferred Stock had been converted into Common Stock on May 8, 1998), and the
number of shares of Common Stock to be offered by the Selling Stockholders (also
on the same pro forma basis where indicated). The actual number of shares of
Common Stock beneficially owned or offered may vary and will be reflected in a
supplement to this Prospectus. See "THE OFFERING."
<TABLE>
<CAPTION>
Percentage of
Shares of Shares of Shares of Common Stock
Common Stock Common Stock Common Stock Owned After the
Selling Stockholder Stock Owned Offered Hereby Retained Offering
- ----------------------- ----------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
CPR (USA) Inc. 980,106(1) 980,106 0 0
LibertyView Plus Fund 980,106(1) 980,106 0 0
LibertyView Fund, LLC 251,236(2) 251,236 0 0
H. Irwin Levy (3) 3,722,099(4) 1,256,182(5) 3,642,099 18.9%
David Stallmo 128,000(6) 128,000 0 0
Randy K. Hall 96,000(6) 96,000 0 0
Gerald Hohenstein 96,000(6) 96,000 0 0
Ambex Venture Group LLC 80,000(6) 80,000 0 0
R. Daniel Smith (7) 1,205,000(8) 1,000,000 205,000 1.1%
</TABLE>
- ------------
(1) Represents the maximum number of Conversion Shares and Private
Placement Warrant Shares in the aggregate that could be issued if the
Selling Stockholder converted all of its shares of Series B Preferred
Stock into Common Stock as of May 8, 1998. This number reflects the 5%
Beneficial Owner Limit, which prevents certain of the Selling
Stockholders from converting any portion of the Series B Preferred
Stock if such conversion would result in such holder being deemed the
beneficial owner of 4.99% or more of the then issued and outstanding
Common Stock. See "RISK FACTORS - Indefinite Number of Shares Issuable
Upon Conversion of Preferred Stock and Company's Right of Redemption."
The actual number of Conversion Shares to be received by such Selling
Stockholder, which may be significantly more or less than the number
indicated, will be reflected in a supplement to (or amendment of) this
Prospectus following the conversion of such Series B Preferred Stock.
(2) Represents 235,236 shares issuable upon conversion of Series B
Preferred Stock as if all such shares were converted as of May 8, 1998
and 16,000 shares issuable upon exercise of Private Placement Warrants.
(3) Mr. Levy is a director of the Company.
(4) Includes 558,332 shares issuable upon the exercise of options which are
currently exercisable and includes 80,000 shares issuable upon exercise
of Private Placement Warrants. Does not include 1,176,182 shares
issuable upon conversion of Series B Preferred Stock held pursuant to a
lock-up period of six (6) months ending October 15, 1998.
(5) Represents 1,176,182 shares issuable upon conversion of Series B
Preferred Stock as if all such shares were converted as of May 8, 1998
and 80,000 shares issuable upon exercise of Private Placement Warrants.
(6) Represents shares issuable upon exercise of Borg Warrants.
(7) Mr. Smith is a former executive officer and a current director of the
Company.
(8) Includes 200,000 shares issuable upon the exercise of options which are
currently exercisable.
8
<PAGE> 12
USE OF PROCEEDS
If all of the Warrants are exercised, the Company will receive proceeds
in the amount of $970,000. Such proceeds will be contributed to the working
capital of the Company and used for general corporate purposes. The Company will
not receive any proceeds from the sale of the Shares by the Selling
Stockholders.
DESCRIPTION OF SECURITIES
The following description of the Company's capital stock is not
complete and is a subject in all respects to the Delaware General Corporation
Law and to the provisions of the Company's Restated Certificate of
Incorporation, as amended (the "Charter"), and Bylaws.
The authorized capital stock of the Company consists of 40,000,000
shares of Common Stock having a par value of $.05 per share and 1,000,000 shares
of Preferred Stock having a par value of $.01 per share.
Preferred Stock
The Board of Directors is permitted to issue shares of Preferred Stock
in one or more series and to fix the relative rights, preferences and
limitations of each series. Among such rights, preferences and limitations are
dividend rates, provisions of redemption, rights upon liquidation, conversion
privileges and voting powers. Should the Board of Directors elect to exercise
this authority, the rights and privileges of holders of shares of Common Stock
could be made subject to the rights and privileges of any such series of
Preferred Stock. The issuance of Preferred Stock could have the effect of making
it more difficult for a third party to acquire, or discouraging a third party
from acquiring, a majority of the outstanding voting stock of the Company.
Series B Preferred Stock
General. On or about April 16, 1998, the Company issued and sold in a
private placement to certain accredited investors a total of 3,500 shares of
Series A Preferred Stock at a purchase price of $1,000 per share, resulting in
gross proceeds to the Company of $3,500,000.
Exchange of Series A Preferred Stock for Series B Preferred Stock. On
June 1, 1998, the Company created a new class of Preferred Stock designated
Series B Preferred Stock, which is identical to the Series A Preferred Stock
originally issued with the single exception that the Series B Preferred Stock
may, under certain limited circumstances described below, be redeemed by the
Company for cash in the amount of 130% of the purchase price of the Series B
Preferred Stock. On June 9, 1998, each holder of the Series A Preferred Stock
exchanged one (1) share of Series B Preferred Stock for each share of Series A
Preferred Stock owned of record by such holder pursuant to a Share Exchange
Agreement dated June 9, 1998 between the Company and each holder. Upon such
exchange, the holders of shares of Series B Preferred Stock no longer have any
rights under the Series A Preferred Stock, and on June 12, 1998, the Company
filed a Certificate of Elimination with the Secretary of State of Delaware to
formally eliminate any reference to the Series A Preferred Stock from the
Company's Charter.
Conversion. Each holder of Series B Preferred Stock has the option to
convert any or all of such shares into Shares of Common Stock from time to time
beginning on the earlier to occur of: (i) the date upon which a registration
statement covering such shares of Common Stock is declared effective by the SEC,
or (ii) July 15, 1998. See "THE OFFERING," "SELLING STOCKHOLDERS," "PLAN OF
DISTRIBUTION," and "RISK FACTORS - Indefinite Number of Shares Issuable Upon
Conversion of Preferred Stock and Company's Right of Redemption."
On April 16, 2000, all shares of the Series B Preferred Stock then
outstanding will automatically be converted into Common Stock provided that all
shares of Common Stock issuable upon conversion of the Series B
9
<PAGE> 13
Preferred Stock are (i) authorized and reserved for issuance, (ii) registered
under the Securities Act for resale, and (iii) eligible to be traded on Amex or
another principal national securities market or system.
Other Rights and Preferences. Each holder of Series B Preferred Stock
is entitled to a dividend of eight percent (8%) on such Series B Preferred Stock
payable only on the conversion date in either (i) cash, or (ii) issuance of
additional shares of Common Stock at the discretion of the Board of Directors.
Each holder of shares of Series B Preferred Stock is entitled to a liquidation
preference equal to the amount per share of Series B Preferred Stock that would
have been payable had each share been converted into Common Stock immediately
prior to an event of liquidation, dissolution or winding up of the Company.
Except as otherwise provided by applicable law, each holder of shares of Series
B Preferred Stock shall be entitled to vote on all matters and shall be entitled
to that number of votes equal to the largest number of shares of Common Stock
into which such holder's shares of Series B Preferred Stock could be converted
at the record date for determining stockholders entitled to vote.
Conversion Price. The conversion price for the Series B Preferred Stock
is the lesser of (i) $1.44, or (ii) seventy-seven percent (77%) of the average
closing bid price of the Common Stock for the three (3) trading days immediately
preceding the date of conversion. The number of Conversion Shares issuable
equals the purchase price of the Series B Preferred Stock ($1,000 per share)
divided by the Conversion Price, multiplied by the number of shares of Series B
Preferred Stock converted. The number of Conversion Shares will increase if the
market price of the Common Stock decreases and will decrease if the market price
of the Common Stock increases. The table below illustrates how changes in the
market price of the Common Stock could affect the number of Conversion Shares
issuable without regard to the 5% Beneficial Owner Limit or the Company's right
of redemption:
<TABLE>
<CAPTION>
Assumed Conversion Number of Conversion As % of Common Stock
Price (1) Shares Issuable (2) Outstanding (3)
--------- ------------------- ---------------
<S> <C> <C>
$0.25 14,000,000 42.9%
$0.50 7,000,000 27.3%
$0.75 4,666,667 20.0%
$1.00 3,500,000 15.8%
$1.25 2,800,000 13.0%
$1.44 (4) 2,430,556 11.5%
</TABLE>
- ---------------
(1) The Conversion Price applicable to any conversion equals the lesser of
(i) $1.44 or (ii) seventy-seven percent (77%) of the average closing
bid price of the Common Stock for the three (3) trading days
immediately preceding the date of conversion.
(2) $1,000 divided by the Conversion Price, multiplied by the number of
shares of Series B Preferred Stock being converted (3,500).
(3) Assumes that the number of shares outstanding at the time of conversion
equals 18,670,477 shares of Common Stock issued and outstanding as of
the date of this Prospectus, plus the number of Conversion Shares
issuable at the Conversion Price indicated.
(4) The maximum Conversion Price under the terms of the Series B Preferred
Stock.
The Conversion Price is subject to adjustment for customary
anti-dilution events such as stock splits, stock dividends, reorganizations, and
certain mergers effecting the Common Stock. If a conversion occurs when the
Common Stock is involuntarily delisted from Amex or the Company receives a
delisting letter and cannot certify to the satisfaction of the holders of the
Series B Preferred Stock that the Company is in fact in compliance with the
listing requirements, the Conversion Price will equal the lesser of (i) $1.44,
or (ii) seventy-two percent (72%) of the average closing bid price for the last
three (3) trading days prior to the termination of trading.
Right of Redemption by Company. If the Company receives a notice of
conversion from a holder of shares of the Series B Preferred Stock when the
Conversion Price is $.77 or less, the Company, may, at its sole option, redeem
(rather than convert) all or a portion of the shares of Series B Preferred Stock
sought to be converted. If the Company exercises its right to redeem shares of
the Series B Preferred Stock, the redemption price is payable in cash in an
amount equal to the greater of (i) 130% of the purchase price of such shares, or
(ii) the closing bid price for the
10
<PAGE> 14
Common Stock on the date of the Company's receipt of the notice of conversion
multiplied by the number of shares of Common Stock that would be issuable upon
conversion of the shares of Series B Preferred Stock pursuant to such notice of
conversion.
Agreement with Director Relating to the Series B Preferred Stock. H.
Irwin Levy, a Director and principal stockholder of the Company and one of the
holders of shares of the Series B Preferred Stock, has agreed to a lockup period
of six (6) months during which he may not convert any of his shares of Series B
Preferred Stock.
Registration of Shares. Under a Registration Rights Agreement dated
April 14, 1998, the Company agreed to register under the Securities Act, 200% of
the number of shares of Common Stock issuable upon conversion of the Series B
Preferred Stock on May 8, 1998 (4,116,638 shares based upon a Conversion Price
of approximately $0.85). The Company cannot determine the exact number of
Conversion Shares that will ultimately be issued. The exact number of Conversion
Shares issuable will depend on the market price at the time of conversion. The
number of Conversion Shares will increase if the market price of the Common
Stock decreases and will decrease if the market price of the Common Stock
increases. Therefore, the number of Conversion Shares may be more or less than
the number offered by this Prospectus. The Company is obligated to maintain the
effectiveness of the registration of the Conversion Shares under the Securities
Act until the earlier of (i) the date that all of the Conversion Shares and
Private Placement Warrant Shares have been sold under such registration, (ii)
the date that the Conversion Shares and Private Placement Warrant Shares may be
sold under the provisions of Rule 144, or (iii) three (3) years after the
effective date of the Registration Statement.
Stockholder Approvals Obtained. Pursuant to the listing rules of Amex
and the Subscription Agreement, on June 8, 1998, at the Company's 1998 Annual
Meeting, the stockholders approved (i) the issuance at below market prices of
more than 20% of the Common Stock outstanding on April 16, 1998, (ii) the
issuance of more than 5% of the Common Stock to all officers, directors and key
employees, in the aggregate, in any one year, and (iii) the issuance of more
than 10% of the Common Stock to all officers, directors and key employees, in
the aggregate, in any five year period. The Company also obtained stockholder
approval of the Charter Amendment such that a sufficient number of shares of
Common Stock will be available on any given date to effect the conversion of all
outstanding shares of Series B Preferred Stock .
Warrants
In connection with the original private placement of the Company's
Preferred Stock, the Company issued Private Placement Warrants to acquire
280,000 shares of Common Stock to the holders of shares of the Company's
Preferred Stock (now holders of Series B Preferred Stock) at an exercise price
of $1.50 per share. The Private Placement Warrants are currently exercisable and
expire on April 14, 2001. The Company is obligated to maintain the effectiveness
of the registration of the Private Placement Warrant Shares under the Securities
Act until the earlier of (i) the date that all of the Conversion Shares and
Private Placement Warrant Shares have been sold under such registration, (ii)
the date that the Conversion Shares and Private Placement Warrant Shares may be
sold under the provisions of Rule 144, or (iii) three (3) years after the
effective date of the registration statement.
In connection with the Borg acquisition, the Company issued Borg
Warrants to acquire 400,000 shares of Common Stock to certain key employees and
principal stockholders of Borg at an exercise price of $1.38 per share.
The Borg Warrants are currently exercisable and expire on December 26, 2000.
11
<PAGE> 15
PLAN OF DISTRIBUTION
Conversion Shares
The Company will issue Conversion Shares upon the conversion, from time
to time, of the outstanding shares of Series B Preferred Stock pursuant to the
Subscription Agreement.
Warrant Shares
The Company will issue Warrant Shares, from time to time, upon the
exercise of the Warrants by the holders thereof. The Company will receive from
such holders the exercise price of the Warrants upon such exercise. See
"DESCRIPTION OF SECURITIES - Warrants."
General
The Company will not receive any proceeds from the resale of the
Shares. The Shares are being registered for reoffers and resales by the Selling
Stockholders for their own accounts. Such shares of Common Stock may be sold
from time to time by any of the Selling Stockholders or by pledges, donees,
transferees or other successors in interest, directly to purchasers, in one or
more transactions (which may involve one or more block transactions) on Amex, in
sales occurring in the public market outside of Amex in separately negotiated
transactions or in a combination of such transactions, at market prices
prevailing at the time of such sale, at prices related to such prevailing prices
or at prices otherwise negotiated.
The Selling Stockholders may effect such transactions by selling the
shares to or through broker-dealers and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of the shares for whom such
broker-dealers may act as agent (which compensation may be less than or in
excess of customary commissions). In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold in such jurisdictions only through registered
or licensed brokers or dealers.
The Selling Stockholders and any broker-dealers that participate in the
distribution of the shares may be deemed "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commissions received by them and any
profit on the resale of the shares sold by them may be deemed to be underwriting
discounts and commissions under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not simultaneously engage
in market making activities with respect to the Common Stock for a period of one
(1) business day prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M. These provisions may
limit the timing of purchases and sales of shares of Common Stock by the Selling
Stockholders.
Upon the Company being notified by a Selling Stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares of Common Stock through a block trade, a special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplemental prospectus will be filed, if required, pursuant to Rule 424(c) of
the Securities Act, disclosing (i) the name of each such Selling Stockholder and
of the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus and (vi) other facts
material to the transaction.
12
<PAGE> 16
The Company is required to maintain the effectiveness of the
Registration Statement until such time as all of the Shares have been disposed
of in accordance with the intended methods of disposition set forth in the
Registration Statement or the Shares are no longer subject to volume or manner
of sale restrictions under the securities laws. There can be no assurances that
any of the Selling Stockholders will sell any or all of the shares of Common
Stock offered by them hereunder.
LEGAL MATTERS
The validity of the issuance of the shares being offered hereby will be
passed upon for the Company by Holland & Knight LLP, One East Broward Boulevard,
Ft. Lauderdale, Florida 33301.
EXPERTS
The financial statements incorporated by reference in this Prospectus
have been audited by BDO Seidman, LLP, independent certified public accountants,
to the extent and for the periods set forth in their report incorporated herein
by reference, and are incorporated herein in reliance upon such report given
upon the authority of said firm as experts in auditing and accounting.
13
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
SEC registration fee $ 3,093
Amex listing fee 17,500
Legal fees and expenses 15,000
Accountants' fees 2,500
Miscellaneous 2,500
--------
Total $ 40,593
========
</TABLE>
- ---------------
Item 15. Indemnification of Directors and Officers.
The Company, a Delaware corporation, has included in its Certificate of
Incorporation and Bylaws provisions to (i) eliminate the personal liability of
its directors for monetary damages resulting from breaches of their fiduciary
duty, provided that such provision does not eliminate liability for breaches of
the duty of loyalty, acts or omissions not in good faith or which involves
intentional misconduct or a knowing violation of law, violations under Section
174 of the Delaware General Corporation Law or for any transaction from which
the director derived an improper personal benefit and (ii) indemnify its
directors and officers to the fullest extent permitted by the Delaware
corporation law. The Company believes that these provisions are necessary to
attract and retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company,
the Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Item 16. Exhibits.
The exhibits filed as part of this Registration Statement are as
follows:
<TABLE>
Exhibit
Number Description
------ -----------
<S> <C>
3.1 Restated Certificate of Incorporation, as amended, of
the Registrant (incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1997)
3.2 Certificate of Elimination of the Designation of the
Series A Preferred Stock of the Registrant
3.3 Certificate of Amendment to Restated Certificate of
Incorporation of the Registrant
3.4 Restated Bylaws of the Registrant (incorporated by
reference to the Registrant's Form 10-K for the
fiscal year ended December 31, 1997)
4.1 Subscription Agreement among the Registrant, CPR
(USA) Inc., LibertyView Plus Fund, LibertyView Fund,
LLC and H. Irwin Levy (incorporated by reference to
the Registrant's Form 10-K/A for the fiscal year
ended December 31, 1997)
</TABLE>
II-1
<PAGE> 18
<TABLE>
<S> <C>
4.2 Form of Stock Purchase Warrant issued in connection
with the Company's private placement of Preferred
Stock (incorporated by reference to the Registrant's
Form 10-K/A for the fiscal year ended December 31,
1997)
4.3 Registration Rights Agreement dated April 14, 1998
among the Registrant, CPR (USA) Inc., LibertyView
Plus Fund, LibertyView Fund, LLC and H. Irwin Levy
entered into in connection with the Registrant's
private placement of Preferred Stock (incorporated by
reference to the Registrant's Form 10-K/A for the
fiscal year ended December 31, 1997)
4.4 Stock Purchase Warrant between the Registrant and H.
Irwin Levy issued in connection with the Registrant's
private placement of Preferred Stock (incorporated by
reference to the Registrant's Form 10-K/A for the
fiscal year ended December 31, 1997)
4.5 Form of Share Exchange Agreement dated June 9, 1998
between the Registrant and holders of the Series A
Preferred Stock whereby such holders exchanged their
Series A Preferred Stock for Series B Preferred Stock
5.1 Form of opinion of Holland & Knight LLP
10.1 Escrow Agreement among the Registrant, Holland &
Knight LLP, CPR (USA) Inc., LibertyView Plus Fund,
LibertyView Fund, LLC and H. Irwin Levy entered into
in connection with the Registrant's private placement
of Preferred Stock (incorporated by reference to the
Registrant's Form 10-K/A for the fiscal year ended
December 31, 1997)
10.2 Agreement Among Optionholders entered into by all of
the directors of the Company in connection with the
Registrant's private placement of Preferred Stock
(incorporated by reference to the Registrant's Form
10-K/A for the fiscal year ended December 31, 1997)
10.3 Agreement Among Stockholders entered into by certain
stockholders of the Company who collectively own more
than 50% of the currently outstanding Common Stock in
connection with the Registrant's private placement of
Preferred Stock (incorporated by reference to the
Registrant's Form 10-K/A for the fiscal year ended
December 31, 1997)
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Holland & Knight LLP (included in opinion
filed as Exhibit 5.1)
24.1 Powers of Attorney (incorporated by reference to the
Registrant's Registration Statement previously filed
on Form S-3, Commission File No. 333-52787)
</TABLE>
- ---------------
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended;
II-2
<PAGE> 19
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof), which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended, that
are incorporated by reference in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, as amended, each filing of the Registrant's Annual
Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be
permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is,
therefore, unenforceable. In the even that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, nStor Technologies, Inc., certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of West Palm Beach, State of
Florida, on the 16th day of June, 1998.
nSTOR TECHNOLOGIES, INC.
By: /s/ Mark F. Levy
--------------------------------
Mark F. Levy, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed below by the following
persons in their capacities on June 16, 1998.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ H. Irwin Levy Chairman of the Board June 16, 1998
- --------------------------------------
H. Irwin Levy
/s/ Lawrence F. Steffann President (Principal Executive Officer) June 16, 1998
- --------------------------------------
Lawrence F. Steffann
/s/ Larry J. Calise Chief financial Officer and June 16, 1998
- -------------------------------------- Vice President (Principal
Larry J. Calise Financial and Accounting Officer)
/s/ Mark F. Levy Vice President and Director June 16, 1998
- --------------------------------------
Mark F. Levy
/s/ R. Daniel Smith Director June 16, 1998
- --------------------------------------
R. Daniel Smith
/s/ Michael L. Wise Director June 16, 1998
- --------------------------------------
Michael L. Wise
/s/ Bernard R. Green Director June 16, 1998
- --------------------------------------
Bernard R. Green
/s/ Richard Reiss, Jr. Director June 16, 1998
- --------------------------------------
Richard Reiss, Jr.
By:* /s/ Mark F. Levy June 16, 1998
-----------------------------------
Mark F. Levy, Attorney-in-Fact
</TABLE>
* Pursuant to Power of Attorney included on the signature page previously
filed with the Registrant's Registration Statement, Commission File No.
333-52787
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
3.2 Certificate of Elimination of the Designation of the Series A
Preferred Stock of the Registrant
3.3 Certificate of Amendment to Restated Certificate of
Incorporation of the Registrant
4.5 Form of Share Exchange Agreement dated June 9, 1998 between
the Registrant and holders of the Series A Preferred Stock
whereby such holders exchanged their Series A Preferred Stock
for Series B Preferred Stock
5.1 Form of opinion of Holland & Knight LLP
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Holland & Knight LLP (included in opinion filed as
Exhibit 5.1)
</TABLE>
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF ELIMINATION
OF THE DESIGNATION OF THE
SERIES A PREFERRED STOCK
OF NSTOR TECHNOLOGIES, INC.
<PAGE> 2
CERTIFICATE OF ELIMINATION OF THE
DESIGNATION OF THE
SERIES A PREFERRED STOCK
OF nSTOR TECHNOLOGIES, INC.
Pursuant to Section 151(g)
of the General Corporation Law
of the State of Delaware
NSTOR TECHNOLOGIES, INC., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), in accordance with the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, hereby certifies as follows:
1. That, pursuant to Section 151 of the General Corporation Law
of the State of Delaware and authority granted in the Certificate of
Incorporation of the Corporation, the Board of Directors of the Corporation, by
resolution duly adopted, authorized the issuance of a series of three thousand
five hundred (3,500) shares of Series A Preferred Stock, par value $.01 per
share (the "Series A Preferred Stock"), and established the voting powers,
designations, preferences and relative, participating and other rights, and the
qualifications, limitations or restrictions thereof, and, on April 15, 1998,
filed a Certificate of Designation with respect to such Series A Preferred Stock
in the office of the Secretary of State of Delaware.
2. That no shares of said Series A Preferred Stock are
outstanding and no shares thereof will be issued.
3. That, at a duly called meeting of the Board of Directors of
the Corporation, the following resolution was adopted;
IT IS HEREBY RESOLVED, THAT THE OFFICERS OF THE CORPORATION
ARE HEREBY AUTHORIZED AND DIRECTED TO FILE A CERTIFICATE WITH THE
OFFICE OF THE SECRETARY OF STATE OF DELAWARE SETTING FORTH A COPY OF
THIS RESOLUTION WHEREUPON ALL REFERENCE TO SUCH SERIES A PREFERRED
STOCK SHALL BE ELIMINATED FROM THE CERTIFICATE OF INCORPORATION, AS
AMENDED, OF THE CORPORATION.
<PAGE> 3
4. That, accordingly, all reference to the Series A Preferred
Stock be, and it hereby is, eliminated from the Certificate of Incorporation,
as amended, of the Corporation.
IN WITNESS WHEREOF, nStor Technologies, Inc. has caused this
Certificate to be signed by Mark Levy, its President, as of this 1st day of
June, 1998.
nSTOR TECHNOLOGIES, INC.
By: /s/ Mark Levy
-------------------------------------
Mark Levy, President
2
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
TO RESTATED CERTIFICATE OF INCORPORATION
OF NSTOR TECHNOLOGIES, INC.
<PAGE> 2
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
NSTOR TECHNOLOGIES, INC.
The Restated Certificate of Incorporation of nStor Technologies, Inc.
(the "Corporation") was filed with the Secretary of State of Delaware on July
21, 1987 under the name Communications & Cable Inc. A Certificate of Amendment
to the Restated Certificate of Incorporation was filed with the Secretary of
State of Delaware on March 21, 1989; an additional Certificate of Amendment was
filed on October 7, 1992; a Certificate of Renewal and Revival of Charter was
filed on November 8, 1995; and an additional Certificate of Amendment was filed
on November 5, 1996. The Corporation does hereby certify that the within
Certificate of Amendment to Restated Certificate of Incorporation was duly
adopted and approved by Unanimous Written Consent of the Board of Directors as
of April 13, 1998 and adopted and approved by the stockholders on June 8, 1998
in accordance with Section 242 of the Delaware General Corporation Law.
1. Paragraph 4(a) of Article 4 of the Restated Certificate of
Incorporation, as amended, is hereby deleted in its entirety and amended to read
as follows:
4. (a) The total number of shares which the Corporation is
authorized to issue is forty-one million (41,000,000). The Corporation
is authorized to issue two classes of shares to be designated,
respectively, "Preferred Stock" and Common Stock." The number of shares
of Preferred Stock authorized to be issued is one million (1,000,000)
and the number of shares of Common Stock authorized to be issued is
forty million (40,000,000). The Preferred Stock shall have a par value
of $.01 per share and the Common Stock shall have a par value of $.05
per share. The aggregate par value of all shares of Preferred Stock is
$10,000 and the aggregate par value of all shares of Common Stock is
$2,000,000.
2. All other provisions of the Restated Certificate of Incorporation,
as amended, shall remain in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of June,
1998.
nSTOR TECHNOLOGIES, INC.
By: /s/ Mark F. Levy
------------------------------------
Mark F. Levy, President
<PAGE> 1
EXHIBIT 4.5
FORM OF
SHARE EXCHANGE AGREEMENT
BETWEEN
NSTOR TECHNOLOGIES, INC.
AND
HOLDERS OF SERIES A PREFERRED STOCK
<PAGE> 2
NSTOR TECHNOLOGIES INC.
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement ("Agreement") is made by and between
nStor Technologies, Inc., a Delaware corporation ("NSO") and the undersigned
holder ("Holder"), who is one of the holders (collectively, the "Holders") of
the Series A, 8% Convertible Preferred Stock of NSO (the "Series A Stock").
RECITALS
A. The Holder is currently the record owner of that number of shares of
the Series A Stock as are set forth on Exhibit A hereto.
B. NSO has created a new class of preferred stock, designated Series B, 8%
Convertible Redeemable Preferred Stock (the "Series B Stock"), which is
identical to the Series A Stock with the single exception that the Series B
Stock may, under certain limited circumstances, be redeemed by NSO for cash in
an amount equal to 130% of the original purchase price for the Series B Stock.
C. By this Agreement, NSO desires to assign, convey, transfer and deliver
to the Holders of the Series A Stock an equal number of shares of the Series B
Stock.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Duration of Offer. This Exchange Offer will remain open until the
thirtieth (30th) day following the mailing hereof to the Holder via overnight
delivery (the "Termination Date"). If the Holder has not accepted this Exchange
Offer, in the manner provided in Paragraph 3 hereof, prior to the Termination
Date, NSO will assume that the Holder has rejected this Exchange Offer and that
the Holder wishes to continue to own the Series A Stock.
2. Exchange of Preferred Shares. NSO and the Holder agree that NSO shall
exchange one (1) share of Series B Stock with Holder for each share of Series A
Stock owned of record by Holder, the total number of which Series A shares is
listed on Exhibit A hereto opposite the name of the Holder. Upon surrender of
the Series A Stock in the manner provided in Paragraph 3 hereof, the Holder will
cease to have any right to receipt or payment of dividends, in whole or in part,
on the Series A Stock, but will begin the right to receipt or payment of
dividends on the Series B Stock.
3. Acceptance by Holder. Simultaneously with the delivery of the signature
page of this Agreement, Holder shall deliver to NSO stock certificates
evidencing ownership of the Series A Stock exchanged hereby, either duly
endorsed in blank for transfer or accompanied by an appropriate stock power duly
executed in blank, which stock power is attached hereto. As soon as practicable
after the receipt by NSO of the executed signature page of this Agreement
1
<PAGE> 3
and the certificates evidencing Holder's Series A Stock, NSO will issue a new
certificate to Holder evidencing Holder's ownership of an equal number of shares
of Series B Stock.
4. Authority to Transfer Shares. Holder does hereby irrevocably constitute
and appoint NSO as attorney to transfer the Series A Stock tendered hereby (as
evidenced by the tendered stock certificates) on the books of NSO with full
power of substitution.
5. Representations and Warranties of NSO and Holder.
5.1 NSO Representations and Warranties.
(a) Organization and Good Standing. NSO is a corporation duly formed,
validly existing and in good standing under the laws of the State of Delaware,
with the full authority to issue and exchange the Series B Stock and to carry
out the provisions hereof.
(b) Stock. The Series B Stock, when issued pursuant to the terms of
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(c) Capital Stock. The authorized capital stock of NSO consists of 24
million shares of common stock and 1 million shares of preferred stock. NSO has
proposed an amendment to its Restated Certificate of Incorporation which would
increase the number of shares of common stock which NSO is authorized to issue
from 24 million to 40 million. That proposal will be considered and voted upon
at NSO's annual meeting of stockholders on June 8, 1998.
(d) Registration Rights. The terms and conditions of the Registration
Rights Agreement between NSO and the Holder, dated April __, 1998, shall apply
to the Series B Stock to the same extent as such terms and conditions previously
applied to the Series A Stock.
5.2 Holder Representations and Warranties.
(a) Title. Holder is the owner, beneficially and of record, of all the
Series A Stock exchanged hereby, free and clear of all liens, encumbrances,
security agreements, equities, options, claims, charges and restrictions. Holder
has full power to transfer the Series A Stock exchanged hereby with NSO without
obtaining the consent or approval of any other person, entity or governmental
authority. The Series A Stock being exchanged hereby constitutes all of the
Series A Stock owned by Holder.
(b) Information True and Correct. All the information that is set forth
in this Agreement with respect to the Holder is correct and complete as of the
date of this Agreement.
(c) Applicable Securities Laws. Holder intends that the state
securities laws of the state listed in the residential address of Holder below,
together with the federal securities laws, govern this transaction.
2
<PAGE> 4
(d) Knowledge and Experience. Holder has such knowledge and experience
in financial and business matters that Holder, together with his representatives
and advisors, if any, is capable of evaluating the merits and risks of an
investment in the Series B Stock.
(e) Holder's Liquidity. Holder has adequate means of providing for his
current needs and personal contingencies and has no need for liquidity in
connection with the investment contemplated herein. Holder acknowledges that he
must bear the economic risk of investment in the Series B Stock for an
indefinite period of time, and that he could bear a loss of his entire
investment in the Series B Stock, without materially impairing his financial
wherewithal. Holder's overall commitment to investments which are not readily
marketable is not disproportionate to the net worth of the Holder, and the
Holder's investment in the Series B Stock will not cause such overall commitment
to become excessive.
(f) Securities Restrictions on Transfer. Holder acknowledges and
understands that the Series B Stock has not been registered under the Securities
Act of 1933, as amended (the " 1933 Act") or under any state securities laws and
agrees that the Series B Stock cannot be resold unless it is subsequently
registered under the 1933 Act or pertinent state securities laws unless an
exemption from such registration is available. The Holder agrees not to resell
or otherwise dispose of (collectively, "transfer") all or any part of the Series
B Stock except as permitted by law, and that the transfer of the Series B Stock
is restricted by the terms of this Agreement.
(g) Reliance Only on Published Documents. Holder acknowledges and
represents that he or she has made the decision to invest in the Series B Stock
solely on the basis of the publicly available information previously provided to
Holder by NSO in its Form 10-K for the fiscal year ended December 31, 1997 and
its Forms 10-Q for the fiscal quarter ended March 31, 1998, and that no officer,
director or other person affiliated with NSO has given any information or made
any representation, oral or written, other than as provided in such documents,
on which Holder has relied in deciding to invest in the Series B Stock,
including, without limitation, any information or representations with respect
to the future operations of NSO or to the economic returns which may accrue to
Holder as a result of the exchange of the Series A Stock for the Series B Stock.
(h) Recision Right for Florida Residents. Holder, if a Florida
resident, acknowledges that he or she may, at any time within three (3) days
after delivery of this Agreement and the stock certificates evidencing ownership
of the Series A Stock exchanged hereby, notify NSO of his intent to cancel this
Agreement. In such event, this Agreement shall be canceled and of no further
force or effect, and NSO shall promptly return the tendered stock certificates
to Holder.
(i) Execution of the Agreement. Holder has the full right, power and
authority to enter into and to perform this Agreement and all other agreements,
certificates and documents executed and delivered, or to be executed and
delivered, by Holder in connection herewith (collectively, with this Agreement,
the "Holder Documents"). This Agreement has been duly
3
<PAGE> 5
authorized, executed and delivered by Holder, and the Holder Documents are (or
when executed and delivered will be) legal, valid and binding obligations of
Holder, enforceable in accordance with their respective terms.
6. Share Certificates
6.1 Legend. Each certificate representing shares of Series B Stock
issued pursuant to the provisions hereof shall bear the following legend:
THESE SHARES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. NEITHER THE SHARES REPRESENTED BY THIS CERTIFICATE NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD PLEDGED OR
TRANSFERRED IN THE ABSENCE OF REGISTRATION OR QUALIFICATION OR
EXEMPTION THEREFROM UNDER SAID ACT OR STATE SECURITIES LAWS OR
THE RULES AND REGULATIONS PROMULGATED THEREUNDER, OR AN
OPINION OF COUNSEL ACCEPTABLE TO NSO THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH LAWS.
6.2 Removal of Legend. The transfer restrictions imposed by the
legend set forth in Section 6.1 hereof shall terminate as to some or all of the
Series B Stock when:
(a) Such Series B Stock shall have been effectively registered
under the Securities Act of 1933 and any applicable state law and sold by the
holder thereof in accordance with such registration; or
(b) Written opinions to the effect that such registration is no
longer required or necessary under any federal or state law or regulation or
governmental authority shall have been received from counsel for NSO.
Whenever the restrictions imposed by Section 6.1 hereof shall
terminate, as provided above, any holder of such Series B Stock as to which such
requirements shall have terminated shall be entitled to receive from NSO,
without expenses to such holder, a new stock certificate evidencing such Series
B Stock without the restrictive legend set forth in Section 6. 1.
7. Notices. All notices or other communications in connection with this
Agreement shall be in writing and shall be considered given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
return receipt requested, or when sent via commercial courier or telecopier,
directed as follows:
4
<PAGE> 6
If to NSO:
nStor Technologies, Inc.
100 Century Boulevard
West Palm Beach, Florida 33417
Att: Mark Levy
Telephone No. (561) 640-3103
Telecopier No. (561) 640-3160
with a copy to:
Donn Beloff, Esq.
Holland & Knight LLP
One East Broward Boulevard
Fort Lauderdale, Florida 33302
Telephone No. (954) 525-1000
Telecopier No. (954) 463-2030
If to the Holder:
to the address opposite such Holder's name on Schedule 1 hereof.
with a copy to:
Scott H. Goldstein, Esq.
Goldstein, Goldstein & Reis, LLP
65 Broadway
New York, New York 10006
Telephone No. (212) 809-4220
Telecopier No. (212) 809-4228
8. Choice of Law. This Agreement and all transactions contemplated by this
Agreement shall be governed by, and construed and enforced in accordance with,
the internal laws of the State of Delaware without regard to principles of
conflicts of laws.
9. Survival of Representations. All statements contained in any
certificate or instrument or conveyance delivered by or on behalf of the parties
pursuant to this Agreement or in connection with the transactions contemplated
hereby shall be deemed to be additional representations and warranties of the
parties making such disclosure. All representations and warranties shall survive
the exchange of the Series B Stock for the Series A Stock as contemplated
herein.
10. Assignment. Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by either party without the prior written consent of
the other party hereto. Subject
5
<PAGE> 7
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, and no other
person shall have any right, benefit or obligation hereunder.
11. Entire Agreement; Amendments and Waivers. This Agreement, together with
all exhibits, attachments and schedules hereto, constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, amendment, modification or waiver of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
12. Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein shall
for any reason be held invalid, illegal or unenforceable in any respect, then
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other instrument.
13. Further Assurances. The parties shall cooperate and take such actions,
and execute such other documents, in connection with the transactions
contemplated herein, as either may reasonably request in order to carry out the
provisions or purpose of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6
<PAGE> 8
IN WITNESS WHEREOF, the undersigned has duly executed this Agreement on
the __ day June, 1998.
HOLDER
--------------------------------------------
(Signature)
--------------------------------------------
(Signature of Joint Holder, if applicable)
Acknowledged and Agreed to as of the ____ day of June, 1998.
NSTOR TECHNOLOGIES INC.
By:
----------------------------------------
Mark Levy, President
7
<PAGE> 9
Stock Transfer and Assignment
(Preferred Stock)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, transfers,
conveys and delivers to nStor Technologies Inc., a Delaware corporation ("NSO"),
1,000 shares of the Series A, 8 % Convertible Preferred Stock, par value $.001
per share, of NSO, represented by certificate number 14, and irrevocably
constitutes and appoints NSO as my attorney to transfer such shares on the books
and records of the Corporation, with full power of substitution.
Dated: June __, 1998
Witness:
- ---------------------------------- -----------------------------------------
(Signature of Holder)
- ---------------------------------- -----------------------------------------
(Signature of Joint Holder, if applicable)
8
<PAGE> 10
Schedule 1
Series A Preferred Stockholders
<TABLE>
<CAPTION>
===============================================================================================================================
SUBSCRIBER Purchase Number of Number of State of
NAME AND ADDRESS Price Preferred Warrant Origination
Shares Shares
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CPR (USA) Inc. $1,500,000 1,500 120,000 Delaware
101 Hudson Street Corp.
37th Floor
Jersey City, NJ 07302
- -------------------------------------------------------------------------------------------------------------------------------
LibertyView Plus Fund 800,000 800 64,000 Bermuda Corp.
Hemisphere House
9 Church Street
Hamilton, Bermuda
HMDX
- -------------------------------------------------------------------------------------------------------------------------------
LibertyView Fund, LLC 200,000 200 16,000 Delaware LLC
101 Hudson Street
37th Floor
Jersey City, NJ 07302
- -------------------------------------------------------------------------------------------------------------------------------
H. Irwin Levy 1,000,000 1,000 80,000 Florida
100 Century Boulevard
West Palm Beach, FL 33417
===============================================================================================================================
</TABLE>
9
<PAGE> 1
EXHIBIT 5.1
OPINION OF HOLLAND & KNIGHT, LLP
<PAGE> 2
Law Offices
HOLLAND & KNIGHT LLP
Atlanta Northern Virginia
400 North Ashley Drive, Suite 2300 Boca Raton Orlando
P.O. Box 1288 (ZIP 33601-1288) Fort Lauderdale San Francisco
Tampa, Florida 33602-4300 Jacksonville St. Petersburg
Lakeland Tallahassee
813-227-8500 Miami Washington, D.C.
FAX 813-229-0134 New York West Palm Beach
http://www.hklaw.com
June 19, 1998
nStor Technologies, Inc.
100 Century Boulevard
West Palm Beach, FL 33417
Re: nStor Technologies, Inc. (the "Company") - Registration
Statement on Form S-3
Gentlemen:
You have requested our opinion in connection with the above-referenced
Registration Statement (the "Registration Statement"), under which certain
stockholders (the "Selling Stockholders") intend to offer and sell in a public
offering, from time to time, an aggregate of 9,913,276 shares (the "Shares") of
Common Stock, $.05 par value per share, of the Company, as follows:
(i) an aggregate of up to 8,233,276 shares issuable upon the conversion
(the "Conversion Shares") from time to time of the Company's Series B 8%
Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred
Stock");
(ii) up to 280,000 shares (the "Private Placement Warrant Shares")
issuable upon the exercise of outstanding warrants to purchase Common Stock
(the "Private Placement Warrants") issued by the Company in connection with a
private placement of preferred stock in April 1998;
(iii) up to 400,000 shares (the "Borg Warrant Shares;" the Private
Placement Warrant Shares and the Borg Warrant Shares sometimes collectively
referred to as the "Warrant Shares") issuable upon the exercise of warrants to
purchase Common Stock (the "Borg Warrants;" the Private Placement Warrants and
the Borg Warrants sometimes collectively referred to as the "Warrants") issued
in connection with the Company's acquisition of all of the outstanding common
stock of Borg Adaptive Technologies, Inc.; and
(iv) up to 1,000,000 shares of Common Stock to be sold by a selling
stockholder (the "Outstanding Shares").
In connection with this opinion, we have reviewed copies of the Restated
Certificate of Incorporation, as amended to date (the "Certificate"), the
Preferred Stock Subscription Agreement and related exhibits (the "Subscription
Agreement"), the Bylaws of the Company, the Warrants,
<PAGE> 3
nStor Technologies, Inc.
June 19, 1998
Page 2
the Amendment to the Certificate filed with the Delaware Secretary of
State that increased the number of authorized shares of Common Stock from
24,000,000 to 40,000,000, various resolutions of the board of directors of the
Company, and such agreements, instruments, certificates of corporate officers
and others, and such other documents, certificates and records, and have made
such investigations of law, as we have deemed necessary in order to render the
opinion hereinafter set forth.
Based upon and subject to the foregoing, we render the following opinion:
Assuming no change in the applicable facts or law, all of the Shares
will have been duly authorized for issuance upon the conversion of the
Series B Preferred Stock in accordance with the Certificate, or the
exercise of the Warrants in accordance with the terms thereof, as
applicable, and will, when so issued, be validly issued, fully paid and
non-assessable.
All of the Outstanding Shares have been duly authorized and are
validly issued, fully paid and non-assessable.
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Registration Statement and to use of this opinion as an
exhibit to the Registration Statement. In giving this consent, we do not hereby
admit that we come within a category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Sincerely yours,
HOLLAND & KNIGHT LLP
/s/ Holland & Knight LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF BDO SEIDMAN, LLP
<PAGE> 2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
nStor Technologies, Inc.
West Palm Beach, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated February
20, 1998 (except as to Notes 6 and 14, which are as of April 14, 1998) relating
to the consolidated financial statements of nStor Technologies, Inc. and
subsidiaries appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO SEIDMAN, LLP
BDO Seidman, LLP
Orlando, Florida
June 17, 1998
