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Exhibit 4.7    
  

THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION OF
THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER
EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR
(iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT. 

 
 

DOT HILL SYSTEMS CORP.
  
    WARRANT TO PURCHASE SHARES OF COMMON STOCK    
  

        THIS WARRANT CERTIFIES THAT, for value received, SUN MICROSYSTEMS, INC. and its assigns are entitled to subscribe for and purchase that number of shares of
the fully paid and nonassessable Common Stock of Dot Hill Systems Corp., a Delaware corporation (the "Company")(as adjusted pursuant to Section 4 hereof, the "Shares") equal to five percent
(5%) of the number of shares of Common Stock issued at any time during the term of this Warrant (as set forth in Section 1 below) (i) upon the conversion of shares of the Company's
Series A Redeemable Convertible Preferred Stock (the "Preferred Stock"), (ii) upon the exercise of the warrants issued to the purchasers of the Preferred Stock (the "Preferred
Investors") pursuant to that certain Securities Purchase Agreement dated December 18, 2002 (the "Purchase Agreement"), and (iii) upon the exercise of any rights granted to the Preferred
Investors in connection with the transactions contemplated in the Purchase Agreement, at the price of $3.25 per share (such price and such other price as shall result, from time to time, from the
adjustments specified in Section 4 hereof is herein referred to as the "Warrant Price"), subject to the provisions and upon the terms and conditions hereinafter set forth. As used herein, the
term "Date of Grant" shall mean the date set forth underneath the Company's signature hereto, and (b) the term "Other Warrants" shall mean any other warrants issued by the Company in connection
with the transaction with respect to which this Warrant was issued, and any warrant issued upon transfer or partial exercise of this Warrant. The term "Warrant" as used herein shall be deemed to
include Other Warrants unless the context clearly requires otherwise. 

        1.    Exercisability; Term.    This Warrant may be exercised, in whole or in part, at any time and from time to time
from the Date of Grant through five (5) years after the Date of Grant. 

        2.    Method of Exercise; Payment; Issuance of New Warrant.    The purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at the election of the holder hereof, by (a) delivery of a notice of exercise substantially in the form attached
hereto as Exhibit A-1 duly completed and executed at the principal office of the Company and payment to the Company, by certified or bank check, or by wire transfer to an account
designated by the Company (a "Wire Transfer") of an amount equal to the then applicable Warrant Price multiplied by the number of Shares then being purchased, or (b) if in connection with a
registered public offering of the Company's securities, the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A-2 duly completed and executed)
at the principal office of the Company together with notice of arrangements reasonably satisfactory to the Company for payment to the Company either by certified or bank check or by Wire Transfer from
the proceeds of the sale of shares to be sold by the holder in such public offering of an amount equal to the then applicable Warrant Price per share multiplied by the number of Shares then being
purchased or (c) exercise of the "net issuance" right provided for in Section 10.2 hereof. The person or persons in whose name(s) any certificate(s) representing the Shares shall be
issuable upon exercise of this Warrant shall be deemed to have 

 

become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately
prior to the close of business on the date or dates upon which this Warrant is exercised. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of stock
so purchased shall be delivered to the holder hereof as soon as practicable and, if requested by the holder of this Warrant, the Company shall cause its transfer agent to deliver the certificate
representing Shares issued upon exercise of this Warrant to a broker or other person (as directed by the holder exercising this Warrant) within the time period required to settle any trade made by the
holder after exercise of this Warrant. 

        3.    Stock Fully Paid; Reservation of Shares.    All Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance pursuant to the terms and conditions herein, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue
thereof. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise
of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. 

        4.    Adjustment of Warrant Price and Number of Shares.    The number and kind of securities purchasable upon the
exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: 

        (a)    Reclassification or Merger.    In case of any reclassification or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of
any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is the acquiring and the surviving corporation and which does not result
in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or
such successor or purchasing corporation, as the case may be, shall duly execute and deliver to the holder of this Warrant a new Warrant (in form and substance satisfactory to the holder of this
Warrant), or the Company shall make appropriate provision without the issuance of a new Warrant, so that the holder of this Warrant shall have the right to receive upon exercise of this Warrant, at a
total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by a holder of the number of shares of Common Stock then
purchasable under this Warrant. Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4. The
provisions of this subparagraph (a) shall similarly apply to successive reclassifications, changes, mergers and transfers. 

        (b)    Subdivision or Combination of Shares.    If the Company at any time while this Warrant remains outstanding and
unexpired shall subdivide or combine its outstanding shares of Common Stock, the Warrant Price shall be proportionately decreased and the number of Shares issuable hereunder shall be proportionately
increased in the case of a subdivision or and the Warrant Price shall be proportionately increased and the number of Shares issuable hereunder shall be proportionately decreased in the case of a
combination. 

        (c)    Stock Dividends and Other Distributions.    If the Company at any time while this Warrant is outstanding and
unexpired shall (i) pay a dividend with respect to its Common Stock payable in Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders
entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a 

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fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which
shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Common Stock (except any
distribution specifically provided for in Sections 4(a) and 4(b)), then, in each such case, provision shall be made by the Company such that the holder of this Warrant shall receive upon exercise of
this Warrant a proportionate share of any such dividend or distribution as though it were the holder of the Shares as of the record date fixed for the determination of the shareholders of the Company
entitled to receive such dividend or distribution. 

        (d)    Adjustment of Number of Shares.    Upon each adjustment in the Warrant Price, the number of Shares purchasable
hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Shares purchasable immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter. 

        5.    Notice of Adjustments.    Whenever the Warrant Price or the number of Shares purchasable hereunder shall be
adjusted pursuant to Section 4 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price and the number of Shares purchasable hereunder after giving effect to such adjustment, and shall
cause copies of such certificate to be mailed (without regard to Section 13 hereof, by first class mail, postage prepaid) to the holder of this Warrant at such holder's last known address. 

        6.    Fractional Shares.    No fractional shares of Common Stock will be issued in connection with any exercise
hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor based on the fair market value of the Common Stock on the date of exercise as reasonably determined in
good faith by the Company's Board of Directors. 

        7.    Compliance with Securities Act; Disposition of Warrant or Shares of Common Stock.    

        (a)    Compliance with Securities Act.    The holder of this Warrant, by acceptance hereof, agrees that this Warrant,
and the Shares to be issued upon exercise hereof are being acquired for investment and that such holder will not offer, sell or otherwise dispose of this Warrant, or any Shares except under
circumstances which will not result in a violation of the Securities Act of 1933, as amended (the "Act") or any applicable state securities laws. Upon exercise of this Warrant, unless the Shares being
acquired are registered under the Act and any applicable state securities laws or an exemption from such registration is available, the holder hereof shall confirm in writing that the Shares so
purchased are being acquired for investment and not with a view toward distribution or resale in violation of the Act and shall confirm such other matters related thereto as may be reasonably
requested by the Company. This Warrant and all Shares issued upon exercise of this Warrant (unless registered under the Act and any applicable state securities laws) shall be stamped or imprinted with
a legend in substantially the following form: 

"THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
(i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED,
(iii) RECEIPT OF NOACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THE 

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WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY." 

Said
legend shall be removed by the Company, upon the request of a holder, at such time as the restrictions on the transfer of the applicable security shall have terminated. In addition, in connection
with the issuance of this Warrant, the holder specifically represents to the Company by acceptance of this Warrant as follows: 

        (1)  The
holder is aware of the Company's business affairs and financial condition, and has acquired information about the Company sufficient to reach an informed and
knowledgeable decision to acquire this Warrant. The holder is acquiring this Warrant for its own account for investment purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof in violation of the Act. 

        (2)  The
holder understands that this Warrant has not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the holder's investment intent as expressed herein. 

        (3)  The
holder further understands that this Warrant must be held indefinitely unless subsequently registered under the Act and qualified under any applicable state
securities laws, or unless exemptions from registration and qualification are otherwise available. The holder is aware of the provisions of Rule 144, promulgated under the Act. 

        (4)  The
holder is an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under the Act. 

        (b)    Disposition of Warrant or Shares.    With respect to any offer, sale or other disposition, in whole or in part,
of this Warrant or of any Shares acquired pursuant to the exercise of this Warrant prior to registration of such Warrant or Shares, the holder hereof agrees to give written notice to the Company prior
thereto, describing briefly the manner thereof, together with a written opinion of such holder's counsel, or other evidence, if reasonably satisfactory to the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state securities law then in effect) of this Warrant, the Shares or
any portion thereof and indicating whether or not under the Act certificates for this Warrant, the Shares or any portion thereof to be sold or otherwise disposed of require any restrictive legend as
to applicable restrictions on transferability in order to ensure compliance with such law. Upon receiving such written notice and reasonably satisfactory opinion or other evidence, the Company, as
promptly as practicable but no later than fifteen (15) days after receipt of the written notice, shall take such steps as necessary for such holder to sell or otherwise dispose of this Warrant,
such Shares or any portion thereof, all in
accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this Section 7(b) that the opinion of counsel for the holder or other evidence is
not reasonably satisfactory to the Company, the Company shall so notify the holder promptly with details thereof after such determination has been made. Notwithstanding the foregoing, this Warrant,
such Shares or any portion thereof, may, as to such federal laws, be offered, sold or otherwise disposed of in accordance with Rule 144 or 144A under the Act, provided that the Company shall
have been furnished with such information as the Company may reasonably request to provide a reasonable assurance that the provisions of Rule 144 or 144A have been satisfied. Each certificate
representing this Warrant, the Shares or any portion thereof thus transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with such laws, unless in the aforesaid opinion of counsel for the holder, such legend is not required in order to ensure compliance with such laws. The
Company may issue stop transfer instructions to its transfer agent in connection with such restrictions. 

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        (c)    Applicability of Restrictions.    Neither any restrictions of any legend described in this Warrant nor the
requirements of Section 7(b) above shall apply to any transfer or grant of a security interest in, this Warrant (or the Common Stock obtainable upon exercise thereof) or any part hereof
(i) to a partner of the holder if the holder is a partnership or to a member of the holder if the holder is a limited liability company, (ii) to a partnership of which the holder is a
partner or a limited liability company of which the holder is a member, or (iii) to any affiliate of the holder if the holder is a corporation; provided, however, in any such transfer, if
applicable, the transferee shall on the Company's request agree in writing to be bound by the terms of this Warrant as if an original holder hereof. 

        8.    Rights as Shareholders; Information.    No holder of this Warrant, as such, shall be entitled to vote or receive
dividends or be deemed the holder of Common Stock or any other securities which may at any time be issuable upon the exercise hereof for any purpose, nor shall anything contained herein be construed
to confer upon the holder of this Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein. Notwithstanding the foregoing, the Company will transmit to the holder of this Warrant such information, documents and reports as are
generally distributed to the holders of any class or series of the securities of the Company concurrently with the distribution thereof to the shareholders. 

        9.    Registration Rights.    

        (a)    Registration.    

        (i)    On
or before the date six months after the Date of Grant, the Company shall, prepare and file with the Securities and Exchange Commission ("SEC") a registration
statement under Rule 415 of the Act to register the resale of the Common Stock issuable upon exercise of this Warrant (the "Registrable Shares") and shall thereafter use all reasonable efforts
to cause such registration statement to become effective as promptly as practicable. 

        (ii)  The
Company shall, until the date 30 months after the Date of Grant, keep such registration statement for the Registrable Shares in effect and current and from
time to time amend or supplement the registration statement and the prospectus in connection therewith in compliance with the Act to permit the sale or distribution of the Registrable Shares with
respect to which such registration statement shall have become effective. If at any time the SEC should institute or threaten to institute any proceedings for the purpose of issuing, or should issue a
stop order suspending the effectiveness of any such registration statement, the Company will promptly notify the holder of this Warrant (which term shall include any holder of the Shares) and will use
its reasonable best efforts to prevent the issuance of any such stop order or to obtain the withdrawal thereof as soon as possible. The Company will advise the holder of this Warrant promptly of any
order or communication of any public board or body addressed to the Company suspending or threatening to suspend the registration or qualification of any of the Registrable Shares for sale in any
jurisdiction. 

        (iii)  The
holder of this Warrant agrees, by acceptance of this Warrant, that, upon receipt of any notice from the Company of (A) the happening of any event which
makes any statements made in the registration statement or related prospectus filed pursuant to this Section 9, or any document incorporated or deemed to be incorporated therein by reference,
untrue in any material respect or which requires the making of any changes in such registration statement or prospectus so that, in the case of such registration statement, it will not contain any
untrue statement of a material fact or omit to state any material fact required 

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to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (B) that, in the judgment of
the Company's Board of Directors, it is advisable to suspend use of the prospectus for a discrete period of time due to pending corporate developments, public filings with the SEC or similar events,
the holder will forthwith discontinue, for a period not to exceed sixty (60) days, disposition of such Registrable Shares covered by such registration statement or prospectus until it is
advised in writing by the Company that use of the applicable prospectus may be resumed, and has received copies of any additional or supplemented filings that are incorporated or deemed to be
incorporated by reference in such prospectus. The Company shall use all reasonable efforts to insure that the use of the prospectus may be resumed as soon as practicable, and in any event shall not be
entitled to require the holder to suspend use of any prospectus for more than ninety (90) days in any twelve month period. 

        (b)    Company Obligations.    Whenever any Registrable Shares become subject to a registration statement pursuant to
this Section 9, the Company shall: 

        (i)    Promptly
notify the holder of this Warrant and confirm such advice in writing (i) when such registration statement becomes effective, (ii) when any
post-effective amendment to any such registration statement becomes effective and (iii) of any request by the SEC for any amendment or supplement to such registration statement or
any prospectus relating thereto or for additional information; 

        (ii)  Furnish
to the holder of this Warrant such number of copies of any registration statement or any amendment or supplement thereto, and any prospectus (including any
preliminary prospectus) contained therein in conformity with the requirements of the Act as the holder of this Warrant may reasonably request in order to effect the offering and sale of the
Registrable Shares being offered and sold by the holder of this Warrant, but only while the Company is required under the provisions hereof to cause the registration statement to remain current; 

        (iii)  Use
its reasonable best efforts to register or qualify not later than the effective date of such registration statement the Registrable Shares registered thereunder
under the "blue sky" laws of such states as the holder of this Warrant may reasonably request; provided, however, that the Company shall not be obligated to qualify as a foreign corporation or as a
dealer in securities or to execute or file any general consent to service of process under the laws of any such state where it is not at such time so qualified or subject; 

        (iv)  Immediately
notify the holder of this Warrant, at any time when a prospectus relating to a sale of Registrable Shares is required by law to be delivered in connection
with sales thereof, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading and promptly make available to the holder of this Warrant and to the underwriters any such amendment or supplement; 

        (v)  The
Company and the holder of this Warrant will enter into customary agreements (including an underwriting or indemnity agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the sale of the Registrable Shares; 

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        (vi)  In
the event of an underwritten offering (in the Company's sole discretion), the Company will use its reasonable best efforts to cause to be furnished to the holder of
this Warrant a signed counterpart, addressed to the holder of this Warrant or such underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or
comfort letters from the Company's independent accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters as the case may be, as the
holder of this Warrant reasonably requests; 

        (vii) In
the event of an underwritten offering (in the Company's sole discretion), the Company will make generally available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of twelve months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Act; and 

        (viii)
The Company will use its reasonably best efforts to cause all Common Stock to be listed on each securities exchange (or the Nasdaq National Market System) on which
similar securities issued by the Company are then listed. 

        (c)    Expenses.    The Company shall bear the out-of-pocket costs and expenses incurred in
connection with any registration pursuant to this Section 9. The costs and expenses of any such registration shall include, without limitation, the reasonable fees and expenses of the Company's
counsel and its accountants and all other out-of-pocket costs and expenses of the Company incident to the preparation, printing and filing under the Act of the registration
statement and all amendments and supplements thereto and the cost of furnishing copies of each preliminary prospectus, each final prospectus and each amendment or supplement thereto to underwriters,
dealers and other purchasers of the securities so registered, the costs and expenses incurred in connection with the qualification of such securities so registered under the "blue sky" laws of various
jurisdictions, the fees and expenses of the Company's transfer agent and all other costs and expenses of complying with the foregoing provisions of this Section 9. The holder of this Warrant
shall pay any underwriting fees, discounts or commissions attributable to the sale of Registrable Shares. The Company shall pay internal Company expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting duties). 

        (d)    Indemnification.    

        (i)    In
the case of any offering registered pursuant to Section 9(a), the Company hereby indemnifies and agrees to hold harmless the holder of this Warrant (or the
Registrable Shares) and each person, if any, who controls the holder of this Warrant (or the Registrable Shares) within the meaning of either Section 15 of the Act or Section 20 of the
Securities and Exchange Act of 1934, as amended. (the "Exchange Act") from and against any losses, claims, damages or liabilities, joint or several, to which any such persons may be subject, under the
Act, the Exchange Act or otherwise, and to reimburse any of such persons for any legal or other expenses reasonably incurred by them in connection with investigating any claims or defending against
any actions, insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration
statement under which such Registrable Shares were registered under the Act pursuant to this Section 9, any prospectus (including any preliminary prospectus) contained therein, if used during
the period appropriate for such prospectus, or any amendment or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were made, not misleading; provided that the indemnification agreement contained in this Section 9(d)(i) shall
not apply to such losses, claims, damages or liabilities which shall arise out of the sale of Registrable Shares to any 

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person to the extent such losses, claims, damages or liabilities arise out of or are based upon any such untrue statement or omission or alleged untrue statement or omission if such statement or
omission shall have been made (A) in reliance upon information furnished to the Company in writing by the holder of this Warrant specifically for use therein, or (B) in any preliminary
prospectus, and the prospectus contained in the registration statement as declared effective or in the form filed by the Company with the SEC pursuant to Rule 424 under the Act corrected such
statement or omission and a copy of such final prospectus shall not have been sent or otherwise delivered to such person at or prior to the confirmation of such sale to such person or to the holder of
this Warrant for delivery to such person. The Company also agrees to indemnify the underwriters (as defined in the Act) of the Registrable Shares, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the indemnification of the holder of this Warrant provided in this Section 9(d)(i). 

        (ii)  By
acceptance of this Warrant, the holder of this Warrant agrees, in the same manner and to the same extent as set forth in the preceding paragraph, to indemnify and to
hold harmless the Company and its directors and officers against any losses, claims, damages or liabilities, joint or several, to which any of such persons may be subject under the Act or otherwise,
and to reimburse any of such persons for any legal or other expenses incurred in connection with investigating or defending against any such losses, claims, damages or liabilities, but only to the
extent it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission of a material fact in any registration statement under which the Registrable
Shares were registered under the Act pursuant to this Section 9, any prospectus contained therein, or any amendment or supplement thereto, which was based upon and made in conformity with
information furnished to the Company in writing by the holder of this Warrant expressly for use therein. The holder of this Warrant also agrees to indemnify and hold harmless any underwriter (as
defined in the Act) of the Registrable Shares, its officers and directors and each person who controls such underwriter on substantially the same basis as that of the indemnification of the Company
provided in this Section 9(d)(ii). Provided however, that the obligations of the holder of this Warrant hereunder shall be limited to an amount equal to the net proceeds after expenses and
commissions to such holder of Registrable Shares sold as contemplated herein. 

        (iii)  Each
party indemnified under this Section 9 shall, promptly after receipt of notice of the commencement of any action against such indemnified party in respect
of which indemnity may be sought, notify the indemnifying party in writing of the commencement thereof. The omission of any indemnified party so to notify an indemnifying party of any such action
shall not relieve the indemnifying party from any liability in respect of such action which it may have to such indemnified party on account of the indemnity agreement contained in this
Section 9, unless the indemnifying party was materially prejudiced by such omission, and in no event shall relieve the indemnifying party from any other liability which it may have to such
indemnified party. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory
to the indemnified party. In any such action, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (A) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (B) the named parties to any such action
(including any impleaded parties) include both the indemnified party and the indemnifying party and representation of
both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It 

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is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred. 

        (iv)  If
the indemnification provided for in this Section 9 as between the holder of this Warrant and the Company is unavailable to the holder of this Warrant and each
person, if any, who controls the holder of this Warrant within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act or to the Company in respect of any losses,
claims, damages or liabilities referred to herein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the Company and of the holder of this Warrant in connection with
such statements or omissions, as well as other relevant equitable considerations. The relative fault of the Company on the one hand and of the holder of this Warrant on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue statement of material fact or the omission or alleged omission to state a material fact relates to information supplied by
such party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 

        (v)  The
Company and holder of this Warrant agree that it would not be just and equitable if contribution pursuant to this Section 9(d)(iv) were determined by
pro rata allocation (even if the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9(d)(iv), the holder of this Warrant shall not be required to contribute any amount in excess of the amount by which the net
proceeds of the offering (before deducting expenses) received by the holder of this Warrant exceeds the amount of any damages which the holder of this Warrant would have or has been required to pay by
reason of the relevant fault in connection with such untrue or alleged untrue statement or omission or alleged omission allocated to the holder of this Warrant. Notwithstanding the foregoing, the
obligations of the holder of this Warrant hereunder shall be limited to an amount equal to the net proceeds after expenses and commissions to such holder of Registrable Shares sold as contemplated
herein. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. 

        10.    Additional Rights.    

        10.1    Mergers.    The Company shall provide the holder of this Warrant with at least twenty (20) days'
written notice prior to the closing thereof of the terms and conditions of any of the following transactions (an "Acquisition"): (i) the sale, lease, exchange, conveyance or other disposition
of all or substantially all of the Company's property or business, or (ii) its merger into or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company), or
any transaction (including a merger or other reorganization) or series of related transactions, in which more than 50% of the voting power of the Company is disposed of. In the event of an
Acquisition, the purchase rights represented by this Warrant shall be fully exercisable. 

9

 

        10.2    Right to Convert Warrant into Stock: Net Issuance.    

        (a)    Right to Convert.    In addition to and without limiting the rights of the holder under the terms of this
Warrant, if at any time after the date one year from the Date of Grant there is no effective registration statement registering the resale of the Shares by the holder, then, the holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right") into shares of Common Stock as provided in this Section 10.2 at any time or from time to time the number of shares
of Common Stock for which this Warrant is exercisable pursuant to Section 1 and 10.1 above, during the term of this Warrant. Upon exercise of the Conversion Right with respect to a particular
number of shares subject to this Warrant (the "Converted Warrant Shares"), the Company shall deliver to the holder (without payment by the holder of any Warrant Price or any cash or other
consideration) that number of shares of fully paid and nonassessable Common Stock as is determined according to the following formula: 

        X = B-A

                  Y 

	

Where:	
 	

X =	
 	

the number of shares of Common Stock that may be issued to the holder
	 	 	Y =	 	the fair market value of one share of Common Stock
	 	 	A =	 	the aggregate Warrant Price of the specified number of Converted Warrant Shares immediately prior to the exercise of the Conversion Right (i.e., the number of Converted
Warrant Shares multiplied by the Warrant Price)
	 	 	B =	 	the aggregate fair market value of the specified number of converted Warrant Shares (i.e., the number of Converted Warrant Shares multiplied
by the fair market value of one Converted Warrant Shares)

No
fractional shares shall be issuable upon exercise of the Conversion Right, and, if the number of shares to be issued determined in accordance with the foregoing formula is other than a whole
number, the Company shall pay to the holder an amount in cash equal to the fair market value of the resulting fractional share on the Conversion Date (as hereinafter defined). For purposes of
Section 9 of this Warrant, shares issued pursuant to the Conversion Right shall be treated as if they were issued upon the exercise of this Warrant. 

        (b)    Method of Exercise.    The Conversion Right may be exercised by the holder by delivery of written notice in the
form of Exhibit A-1 or Exhibit A-2 hereto specifying that the holder thereby intends to exercise the Conversion Right and indicating the number of shares subject
to this Warrant which are being surrendered (referred to in Section 10.2(a) hereof as the Converted Warrant Shares) in exercise of the Conversion Right. Such conversion shall be effective upon
receipt by the Company of the aforesaid written notice, or on such later date as is specified therein (the "Conversion Date"), and, at the election of the holder hereof, may be made contingent upon
the closing of the sale of the Company's Common Stock to the public in a public offering pursuant to a Registration Statement under the Act (a "Public Offering"). Certificates for the shares issuable
upon exercise of the Conversion Right shall be issued as of the Conversion Date and shall be delivered to the holder within thirty (30) days following the Conversion Date. 

        (c)    Determination of Fair Market Value.    For purposes of this Section 10.2, "fair market value" of a share
of Common Stock as of a particular date (the "Determination Date") shall mean: 

        (i)    If
the Conversion Right is exercised in connection with and contingent upon a Public Offering, and if the Company's Registration Statement relating to such Public
Offering 

10

 

("Registration Statement") has been declared effective by the Securities and Exchange Commission, then the initial "Price to Public" specified in the final prospectus with respect to such offering. 

        (ii)  If
the Conversion Right is not exercised in connection with and contingent upon a Public Offering, then as follows: 

        (A)  If
traded on a securities exchange, the fair market value of the Common Stock shall be deemed to be the average of the closing prices of the Common Stock on such
exchange over the five trading days immediately prior to the Determination Date; 

        (B)  If
traded on the Nasdaq Stock Market or other over-the-counter system, the fair market value of the Common Stock shall be deemed to be the
average of the closing bid prices of the Common Stock over the five trading days immediately prior to the Determination Date; and 

        (C)  If
there is no public market for the Common Stock, then fair market value shall be determined by mutual agreement of the holder of this Warrant and the Company. 

If
closing prices or closing bid prices are no longer reported by a securities exchange or other trading system, the closing price or closing bid price shall be that which is reported by such
securities exchange or other trading system at 4:00 p.m. New York City time on the applicable trading day. 

        10.3    Exercise Prior to Expiration.    To the extent this Warrant is not previously exercised as to all of the
Shares subject hereto, and if the fair market value of one share of the Common Stock is greater than the Warrant Price then in effect, this Warrant shall be deemed automatically exercised pursuant to
Section 10.2 above (even if not surrendered) immediately before its expiration. For purposes of such automatic exercise, the fair market value of one share of the Series Preferred upon such
expiration shall be determined pursuant to Section 10.2(c). To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section 10.3, the Company
agrees to promptly notify the holder hereof of the number of Shares, if any, the holder hereof is to receive by reason of such automatic exercise. 

        11.    Representations and Warranties.    The Company represents and warrants to the holder of this Warrant as
follows: 

        (a)  This
Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject
to laws of general application relating to bankruptcy, insolvency and the relief of debtors and the rules of law or principles at equity governing specific performance, injunctive relief and other
equitable remedies; 

        (b)  The
Shares have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof will be validly issued, fully paid and
non-assessable; 

        (c)  The
execution and delivery of this Warrant are not, and the issuance of the Shares upon exercise of this Warrant in accordance with the terms hereof will not be,
inconsistent with the Company's Charter or by-laws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and
will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or
require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any Federal, state or local government authority or agency
or other person, 

11

 

except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby; and 

        (d)  There
are no actions, suits, audits, investigations or proceedings pending or, to the knowledge of the Company, threatened against the Company in any court or before any
governmental commission, board or authority which, if adversely determined, will have a material adverse effect on the ability of the Company to perform its obligations under this Warrant. 

        12.    Modification and Waiver.    This Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 

        13.    Notices.    Any notice, request, communication or other document required or permitted to be given or delivered
to the holder hereof or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to
the Company at the address indicated therefor on the signature page of this Warrant. 

        14.    Binding Effect on Successors.    This Warrant shall be binding upon any corporation succeeding the Company by
merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the obligations of the Company relating to the Shares issuable upon the exercise or conversion of
this Warrant shall survive the exercise, conversion and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of
the holder hereof. 

        15.    Lost Warrants or Stock Certificates.    The Company covenants to the holder hereof that, upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 

        16.    Descriptive Headings.    The descriptive headings of the several paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The language in this Warrant shall be construed as to its fair meaning without regard to which party drafted this Warrant. 

        17.    Governing Law.    This Warrant shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California. 

        18.    Survival of Representations, Warranties and Agreements.    All representations and warranties of the Company
and the holder hereof contained herein shall survive the Date of Grant, the exercise or conversion of this Warrant (or any part hereof) or the termination or expiration of rights hereunder. All
agreements of the Company and the holder hereof contained herein shall survive indefinitely until, by their respective terms, they are no longer operative. 

        19.    Remedies.    In case any one or more of the covenants and agreements contained in this Warrant shall have been
breached, the holders hereof (in the case of a breach by the Company), or the Company (in the case of a breach by a holder), may proceed to protect and enforce their or its rights either by suit in
equity and/or by action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement
contained in this Warrant. 

        20.    No Impairment of Rights.    The Company will not, by amendment of its Charter or through any other means, avoid
or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking 

12

 

of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment. 

        21.    Severability.    The invalidity or unenforceability of any provision of this Warrant in any jurisdiction shall
not affect the validity or enforceability of such provision in any other jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and effect. 

        22.    Recovery of Litigation Costs.    If any legal action or other proceeding is brought for the enforcement of this
Warrant, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Warrant, the successful or prevailing party or parties shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. 

[Remainder of page intentionally left blank] 

13

 

        23.    Entire Agreement; Modification.    This Warrant constitutes the entire agreement between the parties pertaining
to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and undertakings of the parties, whether oral or written, with respect to such subject
matter. 

	

 	
 	

DOT HILL SYSTEMS CORP.
	

 	
 	

/s/  PRESTON ROMM      

	

 	
 	

By:	

Preston Romm
	

 	
 	

Title:	

Vice President of Finance and Chief Financial Officer
	

 	
 	

Address:	

6305 El Camino Real

Carlsbad, California 92009
	

 	
 	

Date:	

February 14, 2003

14

 
 

EXHIBIT A-1    
    
    NOTICE OF EXERCISE    
  

To: DOT HILL SYSTEMS CORP. (the "Company")  

	1.
	The
undersigned hereby:

	o
	elects
to purchase            shares of Common Stock of the Company pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full, or

	o
	elects
to exercise its net issuance rights pursuant to Section 10.2 of the attached Warrant with respect to            shares
of Common Stock. 

	2.
	Please
issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below: 

	 	 	
 (Name)	 	 
	

 	
 	

 	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

 (Address)

	
 	

 

	3.
	The
undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, all except as in compliance with applicable securities laws. 

	 	 	SUN MICROSYSTEMS, INC.	 	 
	

 	
 	

 	
 	

 
	

 	
 	

 (Signature)	
 	

 

	
 (Date)

	 	 

 
 

EXHIBIT A-2    
    
    NOTICE OF EXERCISE    
  

To: DOT HILL SYSTEMS CORP. (the "Company")  

	1.
	Contingent
upon and effective immediately prior to the closing (the "Closing") of the Company's public offering contemplated by the Registration Statement on Form S, filed, 19,
the undersigned hereby:

	o
	elects
to purchase            shares of Common Stock of the Company (or such lesser number of shares as may be sold on behalf of the
undersigned at the Closing) pursuant to the terms of the attached Warrant, or

	o
	elects
to exercise its net issuance rights pursuant to Section 10.2 of the attached Warrant with respect to            Shares
of Common Stock. 

	2.
	Please
deliver to the custodian for the selling shareholders a stock certificate representing such shares.

	3.
	The
undersigned has instructed the custodian for the selling shareholders to deliver to the Company $                        or, if
less, the net proceeds due the undersigned from the sale of
shares in the aforesaid public offering. If such net proceeds are less than the purchase price for such shares, the undersigned agrees to deliver the difference to the Company prior to the Closing. 

	 	 	SUN MICROSYSTEMS, INC.	 	 
	

 	
 	

 	
 	

 
	

 	
 	

 (Name)	
 	

 
	

 	
 	

 	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

 (Address)

	
 	

 

	
 (Date)

	 	 

QuickLinks

Exhibit 4.7

DOT HILL SYSTEMS CORP. WARRANT TO PURCHASE SHARES OF COMMON STOCK

EXHIBIT A-1 NOTICE OF EXERCISE

EXHIBIT A-2 NOTICE OF EXERCISEQuickLinks
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Exhibit 4.8    
  

 
 

DOT HILL SYSTEMS CORP.
  COMMON STOCK WARRANT    
  

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. 

        This
certifies that, for good and valuable consideration, receipt of which is hereby acknowledged, Roth Capital Partners LLC ("Holder") is
entitled to purchase, subject to the terms and conditions of this Warrant (this "Warrant"), from Dot Hill Systems Corp., a Delaware corporation (the
"Company"), One Hundred Eighty Three Thousand (183,000) fully paid and nonassessable shares of the Company's common stock, $0.001 par value per share
("Common Stock"), in accordance with Section 2 hereof at any time beginning on March 14, 2003 (the "Commencement
Date") and ending at 5:00 p.m. Pacific Time on March 14, 2008 unless earlier terminated as provided herein (the "Exercise
Period"). The shares of Common Stock for which this Warrant is exercisable, as adjusted from time to time pursuant to the terms hereof, are hereinafter referred to as the
"Shares." 

        1.    Exercise Price.    The initial exercise price for the Shares shall be Four Dollars and 50/100 ($4.50) per share.
Such price shall be subject to adjustment pursuant to the terms hereof (such price, as adjusted from time to time, is hereinafter referred to as the "Exercise
Price"). 

        2.    Exercise and Payment.    

        (a)    Cash Exercise.    At any time during the Exercise Period, Holder may exercise this Warrant, in whole or in
part, from time to time, by delivering this Warrant and the Notice of Exercise annexed hereto (the "Notice of Exercise") duly completed and executed by
Holder to the Company at the principal executive offices of the Company, together with payment in the amount obtained by multiplying the Exercise Price then in effect by the number of Shares thereby
purchased, as designated in the Notice of Exercise. Payment may be made in cash or by check payable to the order of the Company. 

        (b)    Net Issuance.    In lieu of payment of the Exercise Price in cash as described in Section 2(a) hereof,
Holder may elect to receive, without the payment by Holder of any additional consideration, shares equal to the value (as determined below) of this Warrant or any portion hereof by the surrender of
this Warrant or such portion to the Company, with the Net Issuance Election Notice annexed hereto (the "Net Issuance Election") duly executed, at the
principal executive offices of the Company. Thereupon, the Company shall issue to Holder such number of fully paid and nonassessable Shares as is computed using the following formula: 

where:                                       
         X
= Y (A-B)

                                         
                               A 

        X
= the number of Shares to be issued to Holder pursuant to this Section 2. 

        Y
= the number of Shares covered by this Warrant in respect of which the Net Issuance Election is made pursuant to this Section 2(b). 

        A
= the fair market value of one share of Common Stock, as determined in accordance with the provisions of this Section 2(b). 

 

        B
= the Exercise Price in effect under this Warrant at the time the Net Issuance Election is made pursuant to this Section 2(b). 

For
purposes of this Section 2(b), the "fair market value" per share of the Common Stock shall mean: 

        (i)    If
the Common Stock is traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, or is listed on the National or SmallCap
Market of the National Association of Securities Dealers Automated Quotations System (the "Nasdaq National Market" and "Nasdaq
SmallCap Market," respectively) or other over-the-counter quotation system, the "fair market value" per share of Common Stock shall be the last reported
sale price of the Common Stock on such exchange, the Nasdaq National Market, the Nasdaq SmallCap Market or other over-the-counter quotation system on the last business day
before the date the Net Issuance Election is made or if no such sale is made on such day, the mean of the closing bid and asked prices such day on such exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market or other over-the-counter quotation system; and 

        (ii)  If
the Common Stock is not so listed or admitted to unlisted trading privileges and bid and ask prices are not reported, the "fair market value" shall be the price per
share which the Company could obtain from a willing buyer for shares sold by the Company for authorized but unissued shares, as determined by the Board of Directors (the
"Board") in good faith. 

        3.    Reservation of Shares.    The Company hereby agrees that at all times there shall be reserved for issuance and
delivery upon exercise of this Warrant such number of shares of Common Stock or other shares of capital stock of the Company as may be issuable from time to time upon exercise of this Warrant. All
such shares shall be duly authorized and, when issued in accordance with the terms and conditions of this Warrant, shall be validly issued, fully paid and nonassessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights. 

        4.    Delivery of Stock Certificate or Certificates.    Within a reasonable time after exercise of this Warrant, in
whole or in part, the Company shall issue in the name of and deliver to Holder a certificate or certificates representing the number of fully paid and nonassessable shares of Common Stock which Holder
shall have requested in the Notice of Exercise or Net Issuance Election, as applicable. If this Warrant is exercised in part, the Company shall cancel this Warrant in its entirety and shall deliver to
Holder a new warrant for the unexercised portion of this Warrant at the time of delivery of such stock certificate or certificates. 

        5.    No Fractional Shares.    No fractional shares or scrip representing fractional shares will be issued upon
exercise of this Warrant. If upon any exercise of this Warrant a fraction of a share results, the Company will, in lieu of issuance of any fractional share, pay Holder the difference between the fair
market value of the fractional share (as determined in accordance with Section 2(b) hereof) and the portion of the Exercise Price allocable to such fractional share. 

        6.    Listing.    Prior to the issuance of any shares of Common Stock upon exercise of this Warrant, the Company shall
secure the listing of such shares of Common Stock upon each national securities exchange or automated quotation system, if any, upon which the Common Stock is then listed (subject to official notice
of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable
upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as applicable, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if and so long 

2

 

as any shares of the same class shall be listed on such national securities exchange or automated quotation system, as applicable. 

        7.    Charges, Taxes and Expenses.    The Company shall pay all transfer taxes or other incidental charges, if any, in
connection with the transfer from the Company to Holder of the Shares issued pursuant to the exercise hereof; provided, however, that in the event that
any certificate or certificates for Shares are to be issued in a name other than the name of Holder, this Warrant, when surrendered for exercise, shall be accompanied by the Assignment Form attached
hereto duly executed by Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 

        8.    Loss, Theft, Destruction or Mutilation of Warrant.    Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the Company, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new warrant of like
tenor and dated as of such cancellation, in lieu of this Warrant. 

        9.    Saturdays, Sundays, Holidays, Etc.    If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding weekday that is
not a legal holiday. 

        10.    Adjustment of Exercise Price and Number of Shares.    The Exercise Price and the number of and kind of
securities purchasable upon exercise of this Warrant shall be subject to adjustment from time to time as follows: 

        (a)    Subdivisions, Combinations and Other Issuances.    If the Company shall at any time during the Exercise Period
subdivide its outstanding securities as to which purchase rights under this Warrant exist, by split-up or otherwise, or combine its outstanding securities as to which purchase rights under
this Warrant exist, the number of Shares as to which this Warrant is exercisable as of the date of such
subdivision, split-up or combination will be proportionately increased in the case of a subdivision, or proportionately decreased in the case of a combination. Appropriate adjustments also
will be made to the Exercise Price, but the aggregate purchase price payable for the total number of Shares purchasable under this Warrant as of such date shall remain unchanged. 

        (b)    Stock Dividend.    If at any time during the Exercise Period the Company declares a dividend or other
distribution on Common Stock payable in Common Stock or Convertible Securities (as defined below) without payment of any consideration by such holders for the additional shares of Common Stock or the
Convertible Securities (including any additional shares of Common Stock issuable pursuant to the terms of any Convertible Securities), then the number of Shares for which this Warrant may be exercised
shall be increased as of the record date (or the date of such dividend or other distribution if no record date is set) for determining which holders of Common Stock shall be entitled to receive such
dividend or other distribution, in proportion to the increase in the number of outstanding shares (and shares of Common Stock issuable pursuant to the terms of the Convertible Securities) of Common
Stock as a result of such dividend or other distribution, and the Exercise Price shall be adjusted so that the aggregate amount payable for the purchase of all the Shares issuable hereunder
immediately after the record date (or on the date of such distribution, if applicable) for such dividend or other distribution will equal the aggregate amount so payable immediately before such record
date (or on the date of such distribution, if applicable). As used herein, "Convertible Securities" means evidences of indebtedness, shares of stock or
other securities which are convertible into or exchangeable for, with or without payment 

3

 

of additional consideration, shares of Common Stock, either immediately or upon the arrival of a specified date or the happening of a specified event or both. 

        (c)    Other Distributions.    If at any time during the Exercise Period the Company distributes to holders of its
Common Stock, other than as part of its dissolution or liquidation or the winding up of its affairs, any shares of its capital stock, any evidence of indebtedness or any of its assets (other than cash
or a distribution of Common Stock or Convertible Securities for which an adjustment to the Exercise Price is made pursuant to Section 10(b) hereof), then the Company may, at its option, either
(i) decrease the Exercise Price of this Warrant by an appropriate amount based upon the value distributed on each share of Common Stock as determined in good faith by the Board or
(ii) provide by resolution of the Board that upon exercise of this Warrant, Holder hereof shall thereafter be entitled to receive, in addition to the Shares of Common Stock otherwise receivable
upon exercise hereof, the number of shares or other securities or property which would have been received had this Warrant been exercised in full at the time of such distribution. 

        (d)    Merger.    If at any time during the Exercise Period there shall be a merger or consolidation of the Company
with or into another corporation whereby the Company is not the surviving corporation, then Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified
herein and upon payment of the aggregate Exercise Price then in effect, the number of shares or other securities or property of the successor corporation resulting from such merger or consolidation,
which would have been received by Holder for the Shares subject to this Warrant had this Warrant been exercised at such time. 

        (e)    Reclassification, Etc.    If at any time during the Exercise Period there shall be a change or reclassification
of the securities as to which this Warrant is exercisable into the same or a different number of securities of any other class or classes, then Holder shall thereafter be entitled to receive upon
exercise of this Warrant, during the Exercise Period and upon payment of the Exercise Price then in effect, the number of shares or other securities or property resulting from such change or
reclassification, which would have been received by Holder for the Shares subject to this Warrant had this Warrant been exercised prior to such time. 

        (f)    Certain Issuances of Securities.    Except as expressly provided in Sections 10(b) and (c) hereof, if
the Company issues any Additional Stock (as defined below) for no consideration or for a consideration per share less than the Exercise Price in effect immediately prior to the time of such issuance,
then the Exercise Price shall be reduced to the price determined by dividing: 

        (i)    an
amount equal to the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issuance or sale multiplied by the then existing
Exercise Price, and (y) an amount equal to the aggregate "consideration actually received" (as defined below) by the Company upon such issuance or sale, by 

        (ii)  the
number of shares of Common Stock outstanding immediately after such issuance or sale. 

Upon
any adjustment of the Exercise Price pursuant to this Section 10(f), the number of shares of Common Stock issuable upon exercise of this Warrant shall equal the number of shares determined
by dividing (x) the aggregate Exercise Price payable for the purchase of all shares issuable upon exercise of this Warrant immediately prior to such adjustment by (y) the Exercise Price
per share in effect immediately after such adjustment. 

        For
purposes of adjusting the Exercise Price pursuant to this Section 10(f): 

        (A)  The
term "Additional Stock" shall mean any Common Stock, Convertible Securities or Options (as defined below) issued by
the Company after the Commencement Date, other than (1) Common Stock issuable upon the conversion of 

4

 

Convertible Securities issued by the Company on or before the Commencement Date; (2) Options issued by the Company to any of its officers, directors, employees, consultants or agents after the
Commencement Date pursuant to any compensation or benefit plan approved by the Board or, if not pursuant to such a plan, then pursuant to any other resolution of the Board, or the Common Stock
issuable upon exercise of such Options; (3) Common Stock issued in connection with the purchase of assets or businesses, whether by merger, consolidation, purchase of assets or stock or
otherwise; (4) shares of Common Stock issued in accordance with the terms of that certain Securities Purchase
Agreement dated March 11, 2003 (the "Purchase Agreement"); (5) shares of the Company's Preferred Stock, warrants or shares of Common Stock
issuable upon conversion or exercise of such Preferred Stock or warrants issued or issuable in accordance with the terms of that certain Securities Purchase Agreement dated December 19, 2002
(the "December Purchase Agreement"); (6) the warrant issued to Sun Microsystems, Inc.
("Sun") on December 19, 2002 in connection with Sun's consent to the transactions contemplated by the December Purchase Agreement and any shares
of Common Stock issued in connection with the exercise of such warrant; (7) securities issued in connection with a merger, consolidation, acquisition, strategic transaction, licensing
arrangement, business partnership or joint venture approved by the Board; or (8) securities issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement,
commercial credit arrangement or debt financing from a bank or similar financial institution approved by the Board. As used herein, the term "Option"
means any right, warrant, or option to subscribe for or purchase shares of Common Stock or Convertible Securities. 

        (B)  In
the case of an issuance or sale for cash of shares of Common Stock, the "consideration actually received" by the Company therefor shall be deemed to be the amount of
cash received, before deducting therefrom any commissions or expenses paid by the Company in connection with such issuance. 

        (C)  In
the case of the issuance (other than upon conversion or exchange of obligations or shares of stock of the Company) of shares of Common Stock for a consideration other
than cash or a consideration partly other than cash, the amount of the non-cash "consideration actually received" by the Company shall be deemed to be the fair market value of such
consideration as determined in good faith by the Board. 

        (D)  In
the case of the issuance by the Company in any manner of Options, all shares of Common Stock or Convertible Securities to which the holders of such Options shall be
entitled to subscribe for or purchase pursuant to such Options shall be deemed issued as of the date of the grant or sale of such Options, and the minimum aggregate consideration named in such Options
for the shares of Common Stock or Convertible Securities covered thereby, plus the consideration, if any, received by the Company for such Options, shall be deemed to be the "consideration actually
received" by the Company (as of the date of the granting or sale of such Options) for the issuance of such Options. 

        (E)  In
the case of the issuance by the Company in any matter of Convertible Securities, all shares of Common Stock issuable upon the conversion or exchange of such
Convertible Securities shall be deemed issued as of the date such Convertible Securities are issued, and the amount of the "consideration actually received" by the Company for such Convertible
Securities shall be deemed to be the sum of (1) the amount of consideration received by the Company upon the issuance of such Convertible Securities, plus (2) the minimum aggregate
consideration, if any, other than such Convertible 

5

 

Securities, receivable by the Company upon conversion or exchange of such Convertible Securities, except in adjustment of dividends. 

        (F)  The
amount of "consideration actually received" by the Company upon the issuance of any Options referred to in subparagraph (D) above or upon the issuance of
Convertible Securities as described in subparagraph (E) above, and the amount of the consideration, if any, other than Convertible Securities, receivable by the Company upon exercise,
conversion, or exchange thereof shall be determined in the same manner provided in subparagraphs (B) and (C) above with respect to the consideration received by the Company in the case
of the issuance of additional shares of Common Stock; provided, however, that if such Convertible Securities are issued in payment or satisfaction of
any dividend upon any stock of the Company other than Common Stock, the amount of the "consideration actually received" by the Company upon the original issuance of such Convertible Securities shall
be deemed to be the value of such obligations or shares of stock, as of the date of the adoption of the resolution declaring such dividend, as reasonably determined in good faith by the Board at or as
of that date. 

        (G)  On
the expiration of any Options referred to in subparagraph (D) above, or the termination of any right of conversion with respect to Convertible Securities
referred to in subparagraph (E) above, or any change in the number of shares of Common Stock deliverable upon the exercise of such Options or upon conversion or exchange of such Convertible
Securities, the Exercise Price then in effect shall be adjusted to such Exercise Price as would have been obtained had the adjustments made upon the issuance of such Options or Convertible Securities
been made upon the basis of the delivery of the adjusted number of shares of Common Stock actually delivered or to be delivered upon the exercise of such Options or upon the conversion or exchange of
such Convertible Securities. 

        11.    Notice of Adjustments; Notices.    Whenever the Exercise Price or number of Shares purchasable hereunder is
adjusted pursuant to Section 10 hereof, the Company must execute and deliver to Holder a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Exercise Price and number of and kind of securities purchasable hereunder after giving effect to such adjustment, and must cause
a copy of such certificate to be mailed (by first class mail, postage prepaid) to Holder. 

        12.    Rights as Stockholder; Notice to Holders.    Nothing contained in this Warrant will be construed as conferring
upon Holder or its permitted transferees the right to vote or to receive dividends or to consent or to receive notice as a stockholder in respect of any meeting of stockholders for the election of
directors of the Company or of any other matter, or any rights whatsoever as stockholders of the Company. The Company will notify Holder by registered mail if at any time prior to the expiration or
exercise in full of the Warrant, any of the following events occur: 

        (a)  a
dissolution, liquidation or winding up of the Company shall be proposed at a duly authorized meeting of the Board; 

        (b)  a
capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the
par value of the Common Stock) or any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation
and that
does not result in any reclassification or change of Common Stock outstanding) or in the case of any sale or conveyance to another corporation of the property of the Company as an entirety or
substantially as an entirety; or 

6

 

        (c)  a
taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any
other rights. 

        (d)  an
issuance by the Company of any Additional Stock, as defined in subsection (f) of Section 10. 

        Such
giving of notice will be simultaneous with the giving of notice to the holders of Common Stock or, with respect to (d) above, at least two (2) business days prior to
such event. Such notice must specify the record date or the date of closing the stock transfer books, as the case may be. Failure to provide such notice will not affect the validity of any action
taken in connection with such dividend, distribution or subscription rights, or proposed merger, consolidation, sale, conveyance, dissolution, liquidation or winding up. 

        13.    Restricted Securities.    Holder understands that this Warrant and, subject to the last sentence of this
Section 13, the Shares purchasable hereunder constitute "restricted securities" under the federal securities laws inasmuch as they have not been registered under the Securities Act of 1933, as
amended (the "Securities Act") and are, or will be, acquired from Company in transactions not involving a public offering and accordingly may not, under
such laws and applicable regulations, be resold or transferred without registration under the Securities Act or an applicable exemption from such registration. Unless the Shares are subsequently
registered pursuant to Section 16 of this Warrant, Holder further acknowledges that the securities legend on Exhibit A to the Notice of Exercise attached hereto shall be placed on any
Shares issued to Holder upon exercise of this Warrant. Notwithstanding the foregoing, if a Holder exercises a net issuance under Section 2(b) hereof, the Shares will be deemed to be purchased
under Section 3(a)(9) of the Securities Act and will not be "restricted securities" or subject to legend if the Warrant has been held for a period of one year or more. 

        14.    Certification of Investment Purpose.    Unless a current registration statement under the Securities Act shall
be in effect with respect to the securities to be issued upon exercise of this Warrant, Holder covenants and agrees that, at the time of exercise hereof, it will deliver to the Company a written
certification executed by Holder that the securities acquired by Holder upon exercise hereof are for the account of such Holder and acquired for investment purposes only and that such securities are
not acquired with a view to, or for sale in connection with, any distribution thereof. 

        15.    Disposition of Shares; Transferability.    

        (a)  Holder
hereby agrees not to make any disposition of any Shares purchased hereunder unless and until: 

        (i)    Holder
shall have notified the Company of the proposed disposition (by executing and delivering to the Company the Assignment Form attached hereto) and provided a
written summary of the terms and conditions of the proposed disposition; and 

        (ii)  Holder
shall have complied with all requirements of this Warrant applicable to the disposition of the Shares. 

        The
Company shall not be required to (i) transfer on its books any Shares which have been sold or transferred in violation of the
provisions of this Section 15 or (ii) treat as the owner of the Shares, or otherwise accord voting or dividend rights to, any transferee to whom the Shares have been transferred in
contravention of the terms of this Warrant. 

        (b)    Transfer.    This Warrant shall be transferable only on the books of the Company maintained at its principal
office at 6305 El Camino Real, Carlsbad, CA 92009, or wherever its principal office may then be located, upon delivery thereof duly endorsed by Holder or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment 

7

 

or authority to transfer. Upon any registration of transfer, the Company shall execute and deliver new warrants to the transferee entitled thereto. 

        (c)    Limitations on Transfer.    This Warrant may not be sold, transferred, assigned or hypothecated (any such
action, a "Transfer") by Holder except to (i) one or more persons, each of whom on the date of transfer is an officer of Holder; (ii) a
general partnership or general partnerships, the general partners of which are Holder and one or more persons, each of whom on the date of transfer is an officer of Holder; (iii) a successor to
Holder in any merger or consolidation; (iv) a purchaser of all or substantially all of Holder's assets; (v) any person receiving this Warrant from one or more of the persons listed in
this Section 15(c) at such person's death pursuant to will, trust or the laws of intestate succession, or (vi) after one year from the
date of this Warrant, any person receiving the Warrant from the persons listed in this Section 15. This Warrant may be divided or combined, upon
request to the Company by Holder, into a certificate or certificates representing the right to purchase the same aggregate number of Shares. If at the time of a Transfer, a Registration Statement is
not in effect to register this Warrant, the Company may require Holder and the transferee to make such representations, and may place such legends on certificates representing this Warrant, as may be
reasonably required in the opinion of counsel to the Company to permit a Transfer without such registration. 

        16.    Registration Rights.    

        (a)    Registration.    

        (i)    On
or before April    , 2003, the Company shall prepare and file with the Securities and Exchange Commission (the
"SEC") a registration statement under Rule 415 of the Securities Act to register the resale of the Common Stock issuable upon exercise of this
Warrant and shall thereafter use all reasonable efforts to cause such registration statement to become effective as promptly as possible after the filing thereof and shall use commercially reasonable
efforts to keep such Registration Statement continuously effective under the Securities Act until the date which is two (2) years after the date that such Registration Statement is declared
effective by the SEC or such earlier date when all Shares have been sold or may be sold without volume restrictions pursuant to Rule 144(k) of the Securities Act as determined by the counsel to
the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company's transfer agent and Holder (which term shall, for purposes of this
Section 16, include any holder of the Shares). 

        (ii)  If
at any time the SEC should institute or threaten to institute any proceedings for the purpose of issuing, or should issue a stop order suspending the effectiveness
of any such registration statement, the Company will promptly notify Holder (which term shall include any holder of the Shares) and will use its reasonable best efforts to prevent the issuance of any
such stop order or to obtain the withdrawal thereof as soon as possible. The Company will advise Holder promptly of any order or communication of any public board or body addressed to the Company
suspending or threatening to suspend the registration or qualification of any of the Shares for sale in any jurisdiction. 

        (iii)  Holder
agrees, by acceptance of this Warrant, that, upon receipt of any notice from the Company of (A) the happening of any event which makes any statements
made in the registration statement or related prospectus filed pursuant to this Section 16, or any document incorporated or deemed to be incorporated therein by reference, untrue in any
material respect or which requires the making of any changes in such registration statement or prospectus so that, in the case of such registration statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not
contain any untrue statement of a material fact or omit to state a 

8

 

material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (B) that, in the judgment
of the Board, it is advisable to suspend use of the prospectus for a discrete period of time due to pending corporate developments, public filings with the SEC or similar events, the holder will
forthwith discontinue, for a period not to exceed sixty (60) days, disposition of such Shares covered by such registration statement or prospectus until it is advised in writing by the Company
that use of the applicable prospectus may be resumed, and has received copies of any additional or supplemented filings that are incorporated or deemed to be incorporated by reference in such
prospectus. The Company shall use all reasonable efforts to insure that the use of the prospectus may be resumed as soon as practicable, and in any
event shall not be entitled to require the holder to suspend use of any prospectus for more than ninety (90) days in any twelve month period. 

        (b)    Company Obligations.    Whenever any Shares become subject to a registration statement pursuant to this
Section 16, the Company shall: 

        (i)    Promptly
notify Holder and confirm such advice in writing (i) when such registration statement becomes effective, (ii) when any post-effective
amendment to any such registration statement becomes effective and (iii) of any request by the SEC for any amendment or supplement to such registration statement or any prospectus relating
thereto or for additional information; 

        (ii)  Furnish
to Holder such number of copies of any registration statement or any amendment or supplement thereto, and any prospectus (including any preliminary prospectus)
contained therein in conformity with the requirements of the Securities Act as Holder may reasonably request in order to effect the offering and sale of the Shares being offered and sold by Holder,
but only while the Company is required under the provisions hereof to cause the registration statement to remain current; 

        (iii)  Use
its reasonable best efforts to register or qualify not later than the effective date of such registration statement the Shares registered thereunder under the
"blue sky" laws of such states as Holder may reasonably request; provided, however, that the Company shall not be obligated to qualify as a foreign
corporation or as a dealer in securities or to execute or file any general consent to service of process under the laws of any such state where it is not at such time so qualified or subject; 

        (iv)  Immediately
notify Holder, at any time when a prospectus relating to a sale of Shares is required by law to be delivered in connection with sales thereof, of the
occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Shares, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading and promptly make available to Holder and to the underwriters any such amendment or supplement; 

        (v)  The
Company and Holder will enter into customary agreements (including an underwriting or indemnity agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the sale of the Shares; 

        (vi)  In
the event of an underwritten offering (in the Company's sole discretion), the Company will use its reasonable best efforts to cause to be furnished to Holder a
signed counterpart, addressed to Holder or such underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company's
independent 

9

 

accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters as the case may be, as Holder reasonably requests; 

        (vii) In
the event of an underwritten offering (in the Company's sole discretion), the Company will make generally available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of twelve (12) months, beginning within three (3) months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act; and 

        (viii)  The
Company will use its reasonable best efforts to cause all Common Stock to be listed on each securities exchange (or the Nasdaq National Market
System or the Nasdaq SmallCap Market) on which similar securities issued by the Company are then listed. 

        (c)    Expenses.    The Company shall bear the out-of-pocket costs and expenses incurred in
connection with any registration pursuant to this Section 16. The costs and expenses of any such registration shall include, without limitation, the reasonable fees and expenses of the
Company's counsel and its accountants and all other out-of-pocket costs and expenses of the Company incident to the preparation, printing and filing under the Securities Act of
the registration statement and all amendments and supplements thereto and the cost of furnishing copies of each preliminary prospectus, each final prospectus and each amendment or supplement thereto
to underwriters, dealers and other purchasers of the securities so registered, the costs and expenses incurred in connection with the qualification of such securities so registered under the "blue
sky" laws of various jurisdictions, the fees and expenses of the Company's transfer agent and all other costs and expenses of complying with the foregoing provisions of this Section 16. Holder
shall pay any underwriting fees, discounts or commissions attributable to the sale of Shares. The Company shall pay internal Company expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties). 

        (d)    Indemnification.    In the event any Shares are included in a Registration Statement under this Agreement: 

        (i)    To
the extent permitted by law, the Company will indemnify and hold harmless each Holder who holds such Shares, the directors, if any, of such Holder, the officers, if
any, of such Holder, each person, if any, who controls any Holder within the meaning of the Securities Act, any underwriter (as defined in the Securities Act) for Holders, the directors, if any, of
such underwriter and the officers, if any, of such underwriter, and each person, if any, who controls any such underwriter within the meaning of the Securities Act (each, an
"Indemnified Person"), against any losses, claims, damages, or liabilities, joint or several (collectively,
"Claims"), to which any such persons may be subject under the Securities Act, the Securities Exchange Act of 1934 (the "Exchange
Act") or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement when it first became effective, or any related final prospectus contained therein, if used during the period appropriate for such prospectus, or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the
statements therein were made, not misleading (a "Violation"). The Company shall reimburse the Holders and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 16(f)(i) shall not apply in such case to the extent any such Claim
arising out of or based upon a Violation which occurs in reliance upon 

10

 

and in conformity with information furnished in writing to the Company by any Indemnified Person or underwriter for such Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, and shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. 

        (ii)  In
connection with any Registration Statement in which a Holder is participating, each such Holder agrees to indemnify and hold harmless, to the same extent and in the
same manner set forth in Section 16(f)(i), the Company, its directors and officers, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and
any other stockholder selling securities pursuant to the Registration Statement or any of its directors or officers or any person who controls such stockholder or underwriter within the meaning of the
Securities Act (collectively and together with an Indemnified Person, an "Indemnified Party"), against any Claims to which any of them may become
subject, under the Securities Act or otherwise, insofar as such Claims arises out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished to the Company by such Holder expressly for use in connection with such Registration Statement, and such Holder will reimburse any
legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claims; provided, however, that the indemnity
agreement contained in this Section 16(f)(ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Holder,
which consent shall not be unreasonably withheld. 

        (iii)  The
Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in
any distribution to the same extent as provided above, with respect to information furnished in writing by such persons expressly for inclusion in the Registration Statement. 

        (iv)  Promptly
after receipt by an Indemnified Party under this Section 16(f) of notice of the commencement of any action or proceeding (including any governmental
action or investigation), such Indemnified Party shall, if a Claim in respect thereof is made against any indemnifying party under this Section 16(f), deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying parties; provided, however,
that an Indemnified Party shall have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. The indemnifying party shall pay for
only one separate legal counsel for the Indemnified Parties; such legal counsel shall be selected by the Indemnified Parties holding a majority in interest of the Shares, or by the Company in the
event that the Company is seeking indemnification hereunder. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Party under this Section 16(f), except to the extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 16(f) shall be made by periodic payments of the amount thereof during the course of 

11

 

the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. 

        (v)  Notwithstanding
any of the foregoing, if, in connection with an underwritten public offering of Shares, the Company, the Holders and the underwriter(s) enter into an
underwriting or purchase agreement relating to such offering which contains provisions covering indemnification and contribution among the parties, the indemnification and contribution provisions of
this Section 16(f) shall be deemed inoperative for purposes of such offering. 

        (e)    Contribution.    To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 16(f) to the fullest extent permitted by law;  provided,
however, that (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 16(f), (ii) no seller of Shares guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Shares who was not guilty of such fraudulent misrepresentation, and (iii) contribution by any seller of Shares shall be limited in amount to
the net amount of proceeds received by such seller from the sale of such Shares. 

        17.    Miscellaneous.    

        (a)    Construction.    Unless the context indicates otherwise, the term "Holder" shall include any transferee or
transferees of this Warrant pursuant to Section 15(b), and the term "Warrant" shall include any and all warrants outstanding pursuant to this Warrant, including those evidenced by a certificate
or certificates issued upon division, exchange, substitution or transfer pursuant to Section 15 hereof. 

        (b)    Restrictions.    By receipt of this Warrant, Holder makes the same representations with respect to the
acquisition of this Warrant as Holder is required to make upon the exercise of this Warrant and
acquisition of the Shares purchasable hereunder as set forth in the Form of Investment Letter attached as Exhibit A to the Notice of Exercise attached hereto. 

        (c)    Notices.    Unless otherwise provided, any notice required or permitted under this Warrant shall be given in
writing and shall be deemed effectively given upon personal delivery to the party to be notified or three (3) days following deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified (or one (1) day following timely deposit with a reputable overnight courier with next day delivery instructions), or
upon confirmation of receipt by the sender of any notice by facsimile transmission, at the address indicated below or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties. 

	To Holder:	 	Roth Capital Partners LLC

24 Corporate Plaza

Newport Beach, California 92660

Attention: Gordon Roth, CFO
	

To the Company:	
 	

Dot Hill Systems Corp.

6305 El Camino Real

Carlsbad, CA 92009

Attention: Preston Romm, CFO

12

 

        (d)    Governing Law.    This Warrant shall be governed by and construed under the laws of the State of California as
applied to agreements among California residents entered into and to be performed entirely within California. 

        (e)    Entire Agreement.    This Warrant, the exhibits and schedules hereto, and the documents referred to herein,
constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings, whether
oral or written, between the parties hereto with respect to the subject matter hereof. 

        (f)    Binding Effect.    This Warrant and the various rights and obligations arising hereunder shall inure to the
benefit of and be binding upon the Company and its successors and assigns, and Holder and its successors and assigns. 

        (g)    Waiver; Consent.    This Warrant may not be changed, amended, terminated, augmented, rescinded or discharged
(other than by performance), in whole or in part, except by a writing executed by the parties hereto, and no waiver of any of the provisions or conditions of this Warrant or any of the rights of a
party hereto shall be effective or binding unless such waiver shall be in writing and signed by the party claimed to have given or consented thereto. 

        (h)    Severability.    If one or more provisions of this Warrant are held to be unenforceable under applicable law,
such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and the balance shall be enforceable in accordance with its
terms. 

        (i)    Counterparts.    This Warrant may be signed in several counterparts, each of which shall constitute an
original. 

13

 

IN WITNESS WHEREOF, the parties hereto have executed this Common Stock Warrant effective as of the date hereof. 

	DATED: March 14, 2003	 	THE COMPANY:
	

 	
 	

Dot Hill Systems Corp.,

a Delaware corporation
	

 	
 	

/s/ PRESTON ROMM

	 	 	By:	Preston Romm
	 	 	Its:	Vice President of Finance and Chief Financial Officer
	

 	
 	
HOLDER:
	

 	
 	

ROTH CAPITAL PARTNERS LLC,

a California limited liability company
	

 	
 	

	 	 	By:	 
	 	 	Its:	 

14

 
 

NOTICE OF EXERCISE    
  

To:    Dot
Hill Systems Corp. 

        1.    The
undersigned hereby elects to purchase                        shares of common stock, $0.001 par value per share ("Stock") of
Dot Hill Systems Corp., a Delaware corporation (the "Company") pursuant to the terms of the attached Warrant, and tenders herewith payment of the
purchase price pursuant to the terms of the Warrant. 

        2.    Attached
as Exhibit A is an investment representation letter addressed to the Company and executed by the undersigned as required by Section 14 of the
Warrant. 

        3.    Please
issue a certificate or certificates representing the shares of Stock purchased hereunder in the names and in the denominations indicated on Exhibit A
attached hereto. 

        4.    Please
issue a new Warrant for the unexercised portion of the attached Warrant, if any, in the name of the undersigned. 

	 	 	 	 	Holder:	 
	 	 	 	 	 	

	

Dated:	

 	

 	
 	

 	

 
	 	
	 	 	

	 	 	 	 	By:	 
	 	 	 	 	 	

	 	 	 	 	Its:	 
	 	 	 	 	 	

 
 

EXHIBIT A TO NOTICE OF EXERCISE    
    
    FORM OF INVESTMENT LETTER    
  

Dot
Hill Systems Corp.

6305 El Camino Real

Carlsbad, CA 92009 

Ladies
and Gentlemen: 

        The
undersigned hereby makes the following certifications and representations with respect to the                        
(                        ) shares (the "Shares") of Common Stock of  DOT HILL SYSTEMS CORP., a Delaware corporation (the "Company"), which are being acquired by the undersigned.
 

        The
undersigned represents and warrants that the undersigned is acquiring the Shares solely for the undersigned's account for investment and not with a view to or for sale or
distribution of the Shares or any part thereof. The undersigned also represents that the entire legal and beneficial interests of the Shares the undersigned is acquiring is being acquired for, and
will be held for, the undersigned's account only. 

        The
undersigned understands that the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), on the basis that no distribution or public
offering of the Shares is to be effected. The undersigned realizes that the basis for the exemption may not be present if, notwithstanding the undersigned's representations, the undersigned has in
mind merely acquiring the Shares for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The undersigned has no such intention. 

        The
undersigned recognizes that the Shares being acquired by the undersigned must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption
from such
registration is available. The undersigned recognizes that the Company has no obligation to register the Shares or to comply with any exemption from such registration. 

        The
undersigned is aware that the Shares may not be sold pursuant to Rule 144 adopted under the Securities Act ("Rule 144") unless certain conditions are met and until the
undersigned has held the Shares for at least one year. Among the conditions for use of the Rule is the availability of current information to the public about the Company. The undersigned understands
that the Company has not made such information available and has no present plans to do so. 

        The
undersigned further agrees not to make any disposition of all or any part of the Shares being acquired in any event unless and until: 

        1.    The
Shares are transferred pursuant to Rule 144, and the Company shall have received from the undersigned documentation acceptable to the Company that a sale of
the Shares has occurred in accordance with all of the provisions of Rule 144; or 

        2.    The
Company shall have received a letter secured by the undersigned from the Securities and Exchange Commission stating that no action will be recommended to the
Commission with respect to the proposed disposition; or 

        3.    There
is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said
registration statement; or 

        4.    (i) The
undersigned shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, (ii) the undersigned shall have furnished the Company with an opinion of counsel for the undersigned to the effect that such disposition will not require
registration of such Shares under the Securities Act, and (iii) such opinion of counsel for the undersigned shall have been concurred in by the Company's counsel and the Company shall have
advised the undersigned of such concurrence. 

 

        The
undersigned understands and agrees that all certificates evidencing the Shares to be issued to the undersigned may bear the following legend: 

        "THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED." 

Very
truly yours, 

	By:	 	 	 
	 	 	
	 
	

Its:	
 	

 	

 
	 	 	
	 

2

 
 

NET ISSUANCE ELECTION NOTICE    
  

	To: Dot Hill Systems Corp.	 	Date:	 	    
	 	 

        The
undersigned hereby elects under Section 2 of the attached Warrant to surrender the right to
purchase                        shares of Common Stock pursuant to the attached Warrant.
The Certificate(s) for the shares issuable upon such net issuance election shall be issued in the name of the undersigned or as otherwise indicated below. 

Signature: 

Name
for Registration: 

Mailing
Address: 

 
 

ASSIGNMENT FORM    
  

        (To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.) 

        FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to 

	 	whose address is	 
	
	 	 
	

 	

 	

..
	
	 
	

	

 	

 
	

	

 

	

Dated:	
 	

    
	
 	

,	
 	

    

	

 	
 	

Holder's Signature:	

 	
 	

 
	 	 	 	
	 	 
	 	 	Holder's Address:	 	 	 
	 	 	 	
	 	 
	Signature Guaranteed:	 	 	 	 	 
	 	 	

        NOTE:
The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must
be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing
Warrant. 

QuickLinks

Exhibit 4.8

DOT HILL SYSTEMS CORP. COMMON STOCK WARRANT

NOTICE OF EXERCISE

EXHIBIT A TO NOTICE OF EXERCISE FORM OF INVESTMENT LETTER

NET ISSUANCE ELECTION NOTICE

ASSIGNMENT FORM

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