As filed with the Securities and Exchange Commission
on July 7, 1995
Registration No. 33-60733
======================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________
SEEQ TECHNOLOGY INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 94-2711298
(State of Incorporation) (I.R.S. Employer
Identification No.)
47200 Bayside Parkway
Fremont, California 94538
(510) 226-7400
(Address and telephone number of principal executive offices)
PHILLIP J. SALSBURY
President and Chief Executive Officer
SEEQ Technology Incorporated
47200 Bayside Parkway
Fremont, California 94538
(510) 226-7400
(Name, address and telephone number of agent for service)
Copies to:
SCOTT D. LESTER, ESQ.
Brobeck, Phleger & Harrison
One Market
Spear Street Tower
San Francisco, California 94105
(415) 442-0900
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration
Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933,
check the following box and list the Securities Act of 1933
registration statement number of earlier effective registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and
list the Securities Act of 1933 registration statement number of the
earlier effective registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
_______________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
830,385 SHARES
SEEQ TECHNOLOGY INCORPORATED
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
_________________
This Prospectus relates to the public offering of 830,385
shares (the ``Shares'') of Common Stock of SEEQ Technology
Incorporated (``SEEQ'' or the ``Company''). The Shares may be offered
by the Silicon Valley Bank, the holder of two warrants to purchase an
aggregate of 250,000 shares of Common Stock of the Company; Rodman &
Renshaw, Inc., the holder of a warrant to purchase 36,115 shares of
Common Stock of the Company; Steven A. Rothstein, the holder of a
warrant to purchase 18,058 shares of the Common Stock of the Company;
Louis Lichtenfeld, the holder of a warrant to purchase 18,058 shares
of Common Stock of the Company; Gruntal & Co., Incorporated, the
holder of a warrant to purchase 48,154 shares of Common Stock of the
Company; Roger L. Batty, the holder of a warrant to purchase 92,000
shares of Common Stock of the Company; Jay Hayes, the holder of
92,000 shares of the Common Stock of the Company; and Brian G. Swift,
the holder of 276,000 shares of Common Stock of the Company
(collectively, the ``Selling Stockholders''). The Shares may be
offered from time to time in transactions in the over-the-counter
market, in negotiated transactions, or a combination of such methods
of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling the Shares to or through broker-
dealers, and such broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the Selling
Stockholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principals,
or both (which compensation as to a particular broker-dealer might be
in excess of customary commissions). To the extent required,
information regarding the specific Shares to be offered and sold, the
name of the Selling Stockholders, the public offering price, the
names of any such agent, dealer or underwriter, and any applicable
commission or discount with respect to any particular offer is set
forth herein or will be set forth in an accompanying Prospectus
Supplement. See ``Selling Stockholders'' and ``Sale of the Shares.''
None of the proceeds from the sale of the Shares by
the Selling Stockholders will be received by the Company; however, the
Company will receive the exercise price of the warrants.
______________________________
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE ``RISK FACTORS'' BEGINNING ON PAGE 7.
_______________________________
The Company's Common Stock is traded on the Nasdaq National
Market under the symbol ``SEEQ''. The last sale price of the
Company's Common Stock as reported on the Nasdaq National Market on
July 5, 1995 was $3.88 per share.
_______________________________
The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be ``underwriters''
within the meaning of Section 2(11) of the Securities Act of 1933, as
amended (the ``Securities Act''), and any commissions received by
them and any profit on the resale of the Shares purchased by them may
be deemed to be underwriting commissions or discounts under the
Securities Act. See ``Sale of the Shares'' herein for a description
of certain indemnification arrangements.
_______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_______________________________
THE DATE OF THIS PROSPECTUS IS ____________, 1995
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OTHER PERSON.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE THEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SHARES TO ANY PERSON OR BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT
LAWFULLY BE MADE.
AVAILABLE INFORMATION
SEEQ Technology Incorporated (``SEEQ'' or the
``Company'') is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the ``Exchange Act''),
and in accordance therewith files reports, proxy and information
statements and other information with the Securities and Exchange
Commission (the ``Commission''). Such reports, proxy and information
statements and other information filed by the Company may be inspected
and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices located at Seven
World Trade Center, Suite 1300, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can also be obtained from the Public Reference Branch
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
at prescribed rates.
The Company has filed with the Commission a
registration statement (herein, together with all amendments and
exhibits, referred to as the ``Registration Statement'') under the
Securities Act of 1933, as amended (the ``Securities Act''), with
respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. For further information with
respect to the Company and the Shares offered hereby, reference is
hereby made to the Registration Statement. Statements contained in
this Prospectus concerning the provisions of any documents referred to
are not necessarily complete, and each such statement is qualified in
its entirety by reference to the copy of such document filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission are incorporated in this Prospectus by reference: (1) the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1994, filed pursuant to Section 13 of the Exchange Act;
(2) the Company's Quarterly Report on Form 10-Q, as amended, for the
fiscal quarter ended December 31, 1994, filed pursuant to Section 13
of the Exchange Act; (3) the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1995, filed pursuant to
Section 13 of the Exchange Act; (4) the Company's Proxy Statement
dated February 15, 1995 for the 1995 Annual Meeting of Stockholders
of the Company, filed pursuant to Section 14 of the Exchange Act;
(5) the description of the Company's Common Stock contained in its
Registration Statement on Form 8-B filed with the Commission on June
2, 1987; (6) the description of the Company's common stock contained
in its Registration Statement on Form 8-A filed on May 2, 1995; and
(7) all other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act.
All documents subsequently filed by the Company with
the Commission pursuant to Sections 12, 13(a), 13(c), 14 and 15(d) of
the Exchange Act after the effective date of the Registration
Statement, but prior to the termination of the offering made hereby,
shall be deemed to be incorporated by reference into this Prospectus.
Each document incorporated into this Prospectus by reference shall be
deemed to be a part of this Prospectus from the date of the filing of
such document with the Commission. Any statement contained in a
document incorporated by reference, or deemed to be incorporated by
reference, herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained
herein, or in any subsequently filed document which is also
incorporated by reference herein, modifies or supersedes such
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statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person
to whom a copy of this Prospectus is delivered, upon the request of
any such person, a copy of any or all of the documents which are
incorporated herein by reference (other than exhibits to such
documents that are not specifically incorporated by reference
herein). Requests should be directed to SEEQ Technology
Incorporated, 47200 Bayside Parkway, Fremont, California 94538,
Attention: Secretary, telephone (510) 226-7400.
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THE COMPANY
SEEQ Technology Incorporated (herein ``SEEQ'' or the
``Company'') is a leading supplier of Ethernet data communications
products for networking applications. The Company was founded in
1981 to develop, manufacture and market products incorporating metal-
oxide-silicon (``MOS'') reprogrammable, nonvolatile memory integrated
circuit technology. In 1983, the Company successfully developed the
industry's first integrated Ethernet data communications controller
in cooperation with 3COM Corporation. The Company combines its
strengths in digital circuit and analog design with its
communications systems expertise to produce mixed-signal data
communication solutions that provide increased functionality and
greater reliability and that result in lower total system cost. In
February 1994, the Company sold its nonvolatile memory technology and
related assets to focus on the data communications market.
SEEQ has applied its advanced proprietary complementary
metal-oxide-silicon (``CMOS'') process technology to build media
signaling integrated circuits for data communication applications.
SEEQ's product development and marketing strategy is to target its
products for sale to rapidly growing systems manufacturers in the
high growth personal computer, workstation, printer, networking and
telecommunication markets. SEEQ intends to target new and existing
systems manufacturers who are performance and volume leaders in these
markets. SEEQ's complete product line includes Ethernet data
communication controllers, AutoDUPLEX TM Ethernet chip sets for
automatic full duplex switched Ethernet applications, encoders/
decoders, coaxial cable CMOS transceivers and unshielded twisted pair
cable CMOS transceivers, and networking modules. The Company also
designs media signaling integrated circuits for the emerging high
speed local area network (``LAN'') markets, including Fast Ethernet
and Asynchronous Transfer Mode (``ATM'').
The Company's more than 125 customers worldwide include
such personal computer, workstation and data communication industry
leaders as Apple Computer, Cisco Systems, Hewlett Packard, 3COM,
Cabletron, Compaq, and Silicon Graphics. SEEQ's Ethernet data
communications products are sold in market applications of Ethernet
adapter cards, workstations, MEDIA ATTACHMENT UNITS, print servers,
file servers, multiport repeaters, standard hubs, switching hubs,
bridges and routers.
The Company was originally incorporated in California
in 1981 and was reincorporated in Delaware in February 1987. Its
principal executive offices are located at 47200 Bayside Parkway,
Fremont, California 94538, and its telephone number is (510) 226-7400.
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RECENT DEVELOPMENTS
Pursuant to the Asset Purchase Agreement dated February 7, 1994
(the ``Asset Purchase Agreement''), by and between SEEQ and Atmel
Corporation (``Atmel''), Atmel purchased the assets of SEEQ related to
its electrically erasable programmable read only memory (``EEPROM'')
products (the ``EEPROM Asset Sale''). Under the terms of the Asset
Purchase Agreement, Atmel acquired all of SEEQ's rights in assets
related to SEEQ's EEPROM products, including intellectual property,
equipment, inventory and a portion of the accounts receivable. The
purchase price for such assets consisted of 135,593 shares of Atmel's
common stock and $481,632 in cash. In addition, Atmel assumed
certain liabilities under equipment leases for equipment used in
producing EEPROM products.
During the third quarter of fiscal 1994, SEEQ sold the 135,593
shares of Atmel common stock it received in the EEPROM Asset Sale for
total proceeds of $6,693,000, reflecting a gain on the sale of
$1,693,000. A significant portion of the proceeds from the stock
sale was deposited in two escrow accounts subject to claims of
indemnity by Atmel under the Asset Purchase Agreement. One escrow
account, which contained $600,000 (recorded as other current assets
at September 30, 1994), was subject to claims by Atmel with respect
to the equipment, inventory and accounts receivable sold to Atmel in
the EEPROM Asset Sale. Atmel asserted a claim for the full amount
deposited in this escrow account. On January 30, 1995 the Company
entered into an agreement with Atmel to settle Atmel's claim. Under
this agreement, out of the $600,000 in the escrow account, $250,000
has been distributed to Atmel and the remaining $350,000 has been
distributed to SEEQ. All interest earned on the funds in such escrow
account has been distributed proportionately between SEEQ and Atmel.
The second escrow account, which originally contained $4,329,000
(recorded as other assets), is subject to any future claims that may
be made by Atmel with respect to the EEPROM technology sold to Atmel
in the EEPROM Asset Sale. During the first quarter of fiscal 1995,
$300,000 was distributed to SEEQ from the second escrow account,
leaving approximately $4,200,000 (including interest earned thereon)
on deposit therein. Atmel has notified SEEQ that, based on certain
claims asserted by Hualon Microelectronics Corporation (``Hualon''),
one of SEEQ's former foundries and joint development partners, that
SEEQ previously granted Hualon certain license rights to the EEPROM
technology, Atmel
believes it may be entitled to assert a claim against this escrow
account, although Atmel has not done so to date. The funds in this
escrow account will remain in escrow until February 1999, or until a
determination is made that SEEQ is entitled to such funds under any
release condition in the escrow agreement, or if Atmel makes a claim
prior to February 1999 under such escrow, then until such claim is
resolved by a court.
In connection the EEPROM Asset Sale, Atmel acquired 3,614,701
shares of SEEQ's Common Stock pursuant to the Stock Purchase
Agreement dated February 7, 1994, representing approximately 14% of
SEEQ's outstanding shares of Common Stock as of such date. Such
shares were purchased at a price of $1.25 per share, for a total
purchase price of $4,518,376. The Company filed a registration
statement for these shares that became effective with the Securities
and Exchange Commission on March 24, 1995.
On March 30, 1994 the Company filed a lawsuit in the
United States District Court for the Northern District of California
against Hualon (``Hualon''), one of the Company's former foundries and
joint development partners. In the lawsuit, the Company originally
sought injunctive relief from the court to prevent Hualon from using
certain of the nonvolatile memory technology sold by the Company to
Atmel pursuant to the Asset Purchase Agreement, to which Hualon has
asserted certain license rights under an alleged license agreement.
In response to the Company's claims, Hualon asserted affirmative
defenses and counterclaims seeking a declaration by the court that
the alleged license agreement is valid and seeking specific
performance of the alleged license agreement and other agreements
previously entered into by the two parties. Hualon filed a motion
for summary judgment and the Company's initial claim was subsequently
dismissed by the court. Hualon has subsequently amended its counter
claims to include additional claims in the proceeding, including
claims for damages for breach of, and for money owed pursuant to,
other agreements between the Company and Hualon. The Company has
subsequently amended its original complaint to include a number of
additional claims
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against Hualon, including claims for damages for breach of, and
for money owed pursuant to, such other agreements. Under the
terms of one of the escrow agreements entered into with Atmel in
connection with the EEPROM Asset Sale, under which approximately
$4,200,000 (including interest earned thereon) is currently on
deposit in escrow, the Company will be entitled to receive such
funds if it is determined that the alleged license agreement is
invalid, or, if no such determination is made, to the extent that
any claims made by Atmel that Atmel has suffered damages as a
result of the alleged license agreement are unsuccessful, if
Atmel fails to make a claim to such funds by February 1999, or as
otherwise agreed by the Company and Atmel. The Company intends to
vigorously prosecute its claims in this lawsuit and to defend
claims made by Hualon. The Company believes that its claims and
defenses in this lawsuit are meritorious. However, there can be
no assurance as to the possible outcome of this proceeding. In
the event that the Company is not successful in invalidating the
alleged license agreement, Atmel may assert a claim against the
Company under the Asset Purchase Agreement, including a claim for
damages, if suffered by Atmel as a result of Hualon's use of any
of such technology, and, in the event any such claim by Atmel is
determined to be valid, Atmel may recover any such damages from
the escrow described above. The Company believes that, in the
event of any claim by Atmel, the amount of damages that may be
payable by the Company upon a resolution thereof will not have a
material adverse effect on the Company's cash flow, financial
position or results of operations. However, there can be no
assurance as to such matters.
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RISK FACTORS
In addition to the other information contained or
incorporated by reference in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the
Common Stock offered hereby.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE FINANCIAL RESULTS
The Company has incurred substantial operating losses
during each of the last five fiscal years. As of March 31, 1995, the
Company had an accumulated deficit of approximately $113,000,000.
The Company's revenues have also decreased substantially over the
last five fiscal years. In addition, as a result of the EEPROM Asset
Sale on February 7, 1994, the Company expects that its revenues will
be substantially lower in future fiscal periods as compared to
comparable periods in fiscal years prior to fiscal 1994. There can
be no assurance that the Company will be able to achieve and maintain
profitability or revenue growth in the future. The Company's ability
to achieve and maintain profitability will depend, among other
things, on its ability to successfully manufacture and sell its
products, to develop new products and to control its costs and
expenses. Failure by the Company to achieve revenue growth or
profitability would impair the Company's ability to sustain its
operations.
LIQUIDITY; FUTURE CAPITAL REQUIREMENTS
At March 31, 1995, the Company's unused sources of
liquidity consisted of approximately $1,204,000 in cash and cash
equivalents. As a result of the sale of assets and stock by the
Company to Atmel on February 7, 1994, the Company received cash
proceeds of approximately $5,000,000 and 135,593 shares of Atmel
Common Stock. As described under ``Recent Developments,''
approximately $4,200,000 (including interest earned thereon) of
remaining proceeds on the sale of the shares of Atmel Common
Stock received by the Company in the EEPROM Asset Sale were
placed in escrow pending any claims of indemnity by Atmel with
respect to the nonvolatile memory technology. This $4,200,000
(including interest earned thereon) has been classified by the
Company as long-term assets on the Company's balance sheet as of
March 31, 1995. In addition, the Company filed a lawsuit against
Hualon concerning claims by Hualon to certain license rights to
the nonvolatile memory technology acquired by Hualon from the
Company, which could potentially lead to a claim by Atmel against
the funds held in such escrow. See ``Recent Developments.'' In
November 1993, the Company entered into a two-year line of credit
agreement with the CIT Group Incorporated ("CIT") which provides
for borrowings of up to 80% of eligible accounts receivable not
to exceed $5,000,000. Interest on borrowings is charged at CIT's
prime lending rate plus 2-1/4% and is payable monthly. This
credit facility is secured by all of the Company's assets. There
can be no assurance that the Company will have adequate resources
to satisfy its operating and working capital requirements. In
addition, it may become necessary for the Company to raise
additional funds from debt and/or equity financing. There can be
no assurance that such funds will be available on terms
acceptable to the Company, if at all.
FACTORS AFFECTING OPERATING RESULTS
The Company believes that its future annual and
quarterly operating results will be subject to quarterly variations
based upon a wide variety of factors that could have a material
adverse effect on the Company's revenues and profitability, many of
which are outside the control of the Company. These factors include
fluctuations in manufacturing yields, the timing of introduction of
new products by the Company and its competitors, changes in the
markets addressed by the Company's products, market acceptance of the
Company's and its customers' products, the volume and timing of
orders received, changes in the Company's product mix and customer
base, the timing and extent of research and development expenditures,
the availability and cost of semiconductor wafers from outside
foundries, product obsolescence, price erosion, competitive factors,
cyclical semiconductor industry conditions and general economic
conditions. The Company's net revenue and cost of sales vary
depending upon the mix of products sold. Any unfavorable changes in
manufacturing yields or product mix, delays in new product
introductions, underutilization of manufacturing capacity, increased
price competition
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or other factors could have a material adverse effect on the
Company's operating results and financial condition.
Historically, average selling prices in the semiconductor
industry have decreased over the life of any particular product.
There can be no assurance that the average selling prices of the
Company's current or future products will not be subject to
significant pricing pressures in the future. In addition, the
Company's business is characterized by short-term orders and
shipment schedules, and customer orders typically can be canceled
or rescheduled without significant penalty to the customer. Due
to the absence of substantial noncancellable backlog, the Company
typically plans its production and inventory levels based on
internal forecasts of customer demand, which are highly
unpredictable and can fluctuate substantially. In addition, the
Company is limited in its ability to reduce costs quickly in
response to any revenue shortfalls, which could have a material
adverse effect on the Company's business, operating results and
financial condition.
DEPENDENCE ON NEW PRODUCT DEVELOPMENT AND TECHNOLOGICAL CHANGE
The average selling prices of the Company's products
historically have decreased over the products' lives and are expected
to continue to do so. To offset average selling price decreases
typically experienced over the life of any particular product, the
Company relies primarily on obtaining cost reductions in the
manufacture of those products and on introducing new, higher priced
products which incorporate advanced features or address new or
emerging markets. To the extent that such cost reductions and new
product introductions do not occur in a timely manner, the Company's
operating results will be adversely affected. As a result, the
Company's operating results will depend to a substantial extent on
its ability to continue to successfully introduce new products on a
timely basis that compete effectively on the basis of price and
performance and that address customer requirements. The success of
new product introductions is dependent upon several factors,
including proper new product definition, timely completion and
introduction of new product designs, availability of production
capacity, achievement of acceptable manufacturing yields and market
acceptance of such new products. The development cycle for new
products is generally one to two years, depending upon the complexity
of the product. In addition, because of the complexity of its
products, the Company has experienced delays from time to time in
completing the development and introduction of new products.
Accordingly, new product development requires a long-term forecast of
market trends and customers' needs and may be adversely affected by
competing technologies serving markets addressed by the Company's
products. Although the Company has successfully developed new
products in the past, there can be no assurance that it will continue
to be able to do so in the future. In this regard, as a result of
the Company's financial results in the past several years and other
factors, the Company has been unable to introduce new products as
fast as existing products become obsolete or as such product sales
decline, as reflected by the reductions in sales over such period.
There can be no assurance this will not occur in future periods. The
markets for the original equipment manufacturers who purchase the
Company's products are characterized by rapidly changing technology,
evolving industry standards and improvements in products and
services. If technologies or standards supported by the Company's
products become obsolete or fail to gain widespread commercial
acceptance, the Company's business may be materially adversely
affected. As a result, the Company believes that continued
significant expenditures for research and development will be
required in the future. If the Company were unable to design,
develop and introduce competitive products on a timely basis, its
future operating results would be materially adversely affected.
New products are generally incorporated into a
customer's products or systems at the design stage. However, design
wins, which can often require significant expenditures by the Company,
may precede the generation of volume sales, if any, by a year or more.
Moreover, the value of any design win will depend in large part on
the ultimate success of the customer's product and on the extent to
which the system's design accommodates components manufactured by the
Company's competitors. No assurance can be given that the Company
will achieve design wins or that any design win will result in
significant future revenue.
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CUSTOMER CONCENTRATION
During certain periods, a relatively small number of
the Company's customers have accounted for a significant portion of
the Company's revenues. Sales to Apple Computer, Hewlett-Packard and
Cisco Systems accounted for approximately 30%, 12% and 10%,
respectively, of the Company's revenues for the three months ended
March 31, 1995 and approximately 31%, 10% and 10%, respectively, for
the six months ended March 31, 1995. Sales to Apple Computer,
Hewlett-Packard and Cisco Systems accounted for approximately 22%,
10% and 16%, respectively, of the Company's revenues for the three
months ended March 31, 1994 and approximately 9%, 8% and 13%,
respectively, for the six months ended March 31, 1994. The
reduction, delay or cancellation of orders from one or more of the
Company's significant customers for any reason, including a reduction
in the demand for data communications products that include the
Company's products, could have a material adverse effect on the
Company's results of operations and financial condition. The
Company's sales to its customers, including Apple Computer, are made
under purchase orders and not pursuant to any long-term agreements.
In addition, the Company's products are often sole-sourced to its
customers, and the Company's operating results and financial
condition could be materially and adversely affected if one or more
of the Company's major customers were to develop other sources of
supply. Furthermore, in view of the short product life cycles, in
the market for data communications products, the Company's operating
results would be materially and adversely affected if one or more of
the Company's significant customers were to purchase integrated
circuits manufactured by one of the Company's competitors for
inclusion in new generations of products developed by its customers.
The Company is also dependent upon sales representatives and
distributors for the sales of its products to systems manufacturers.
There can be no assurance that the Company's current customers will
continue to place orders with the Company, that orders by existing
customers will continue at the levels of previous periods, or that
the Company will be able to obtain orders from new customers. The
loss of one or more of the Company's current customers could have
a material adverse effect on the Company's business, operating
results and financial condition. In this regard, the Company was
notified in fiscal 1995 by Apple Computer that the Company will
receive no additional orders for the Company's proprietary
transceiver products following the second quarter of fiscal 1995
as Apple Computer begins manufacturing its internally developed
product. As a result, the Company believes that revenues for the
third quarter of fiscal 1995 will be less than those reported in
the second quarter of fiscal 1995. The Company is actively
marketing its LAN integrated circuits to Apple Computer for the
transceiver products and other data communication applications.
Although the Company believes that, over the next few fiscal
quarters, it will be able to replace such sales with sales of LAN
integrated circuits to Apple Computer, additional sales of the
Company's existing product line to other customers, and sales of
new products, there can be no assurance that the Company will be
successful in doing so.
DEPENDENCE UPON INDEPENDENT MANUFACTURERS AND ASSEMBLY SUPPLIERS
All of the Company's products are currently
manufactured to the Company's specifications by independent
subcontractors, and the Company maintains no wafer manufacturing or
assembly operations of its own. The Company currently utilizes
semiconductor wafer manufacturing subcontractors located in South
Korea, Japan and the United States. The Company also contracts
with independent assembly suppliers located in Asia for the
assembly of all of its products, and relies principally on one
assembly contractor located in South Korea. As a result, all of
the Company's products are manufactured by independent foundries
and assembled by foreign assembly contractors. Consequently, the
Company currently relies exclusively on the manufacturing,
assembly and other resources of these independent manufacturers
and assembly suppliers. Currently, certain of these independent
manufacturers serve as the sole source for several of the
Company's products. The Company's reliance on subcontractors to
manufacture and assemble its products involves significant risks,
including reduced control over delivery schedules, the potential
lack of adequate capacity, reduced control over fluctuations in
manufacturing yields, discontinuation or phase-out of such
subcontractors' production processes, and potential
misappropriation of proprietary intellectual property. To date,
the process of transferring the Company's manufacturing
operations to these independent manufacturers has been
acceptable; however, there can be no assurance that problems will
not occur in the future, or that such manufacturers will be able
to produce wafers at acceptable yields and to deliver wafers to
the Company in a timely manner. There can be no assurance that
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the Company will not experience problems in timeliness, yields
and quality of wafer deliveries from its wafer manufacturing
subcontractors, each of which could have a material adverse
effect on the Company's operations and operating results. In
addition, although the Company has entered into manufacturing
agreements with each of these independent manufacturers, there
can be no assurance that such manufacturers will continue to
manufacture products for the Company.
The Company does not have long-term, non-cancelable
contracts with its wafer suppliers. Therefore, the Company's wafer
suppliers could choose to prioritize capacity for other uses or reduce
or eliminate deliveries to the Company on short notice. Accordingly,
there can be no assurance that the Company's foundries will allocate
sufficient wafer manufacturing capacity to the Company to satisfy the
Company's product requirements. In addition, the Company has been,
and expects to continue to be in the future, particularly dependent
on one or more foundries for its wafer manufacturing requirements.
Any sudden demand for an increased amount of wafers or sudden
reduction or elimination of any existing source or sources of wafers
could result in a material delay in the shipment of the Company's
products. There can be no assurance that material disruptions in
supply, which have occurred periodically in the past, will not occur
in the future. Any such disruption could have a material adverse
effect on the Company's operating results and financial condition.
In the event the Company were unable to qualify alternative
manufacturing sources for existing or new products in a timely manner
or such sources were unable to produce wafers with acceptable
manufacturing yields, the Company's business, operating results and
financial condition would be materially and adversely affected.
DEPENDENCE ON FOUNDRY MANUFACTURING
The manufacture of semiconductor wafers for the
Company's products is a highly complex process that requires a high
degree of technical skill, state-of-the-art equipment and effective
cooperation between the wafer foundry and the Company's engineering
staff to produce acceptable yields. Worldwide manufacturing capacity
for these products is limited. Therefore, significant interruptions
in supply from any of the Company's independent foundries could
adversely affect the Company and its results of operations. Other
unanticipated changes in the Company's wafer supply or assembly
arrangements could reduce product availability, increase cost, impair
quality and reliability or decrease yield. Many of the factors that
could result in such changes are beyond the Company's control. To a
considerable extent, the Company's ability to succeed in the future
will depend on its ability to maintain access to advanced wafer
fabrication technologies. Since the Company does not own or operate
its own wafer fabrication or process development facility, the
Company depends upon independent companies to provide access to such
technologies. In light of this dependency, and the intensely
competitive nature of the semiconductor industry, there is no
assurance that either technology advantages or timely product
introduction can be maintained in the future. In connection with
its arrangements with foreign independent wafer suppliers, it is
necessary for the Company to provide such suppliers with
proprietary information regarding its process and product
technologies. Although the Company has entered into
confidentiality and nondisclosure agreements with its foreign
suppliers, there can be no assurance that the Company will be
able to protect its rights under its patents, copyrights,
maskwork rights or such confidentiality and nondisclosure
agreements in foreign countries.
MANUFACTURING; VARIATION IN PRODUCTION YIELDS
The manufacture of semiconductor products is highly
complex, involving many precise and critical steps, and is sensitive
to a wide variety of factors, including the level of contaminants in
the manufacturing environment, impurities in the materials used and
the performance of sophisticated electronic equipment. Technical
problems which may arise in the manufacturing process at the
manufacturing facilities of any of the Company's independent
foundries can adversely affect manufacturing yields and the overall
profitability of the Company. Such technical problems may occur or
new problems may arise as the Company begins using new manufacturing
processes in connection with the introduction of new products. While
the Company is attempting to minimize the impact of such factors and
potential problems by developing several sources of wafer supply,
certain of the foundries utilized by the Company have experienced
lower than anticipated yields. No assurance
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can be given that the Company or its suppliers will not
experience yield problems in the future, which could have a
material adverse effect on the Company's results of operations.
RISKS ASSOCIATED WITH FOREIGN SUPPLIERS
A substantial number of the Company's products are
manufactured, and all of the Company's products are assembled, by
independent foundries and assembly suppliers located in foreign
countries, including Japan and South Korea. The Company is,
therefore, subject to certain risks generally associated with
contracting with foreign suppliers, including currency exchange
fluctuations, political instability, trade restrictions and changes
in tariff and freight rates.
THE SEMICONDUCTOR INDUSTRY
The semiconductor industry is subject to rapid
technological change, price erosion, occasional shortages of
materials, variations in manufacturing efficiencies, significant
expenditures for capital equipment and product development, and
cyclical market patterns. In recent years, the industry has
experienced intermittent significant economic downturns characterized
by diminished product demand, accelerated erosion of selling prices
and production overcapacity. Similar fluctuations may occur in the
future, and there can be no assurance that the Company will not be
materially and adversely affected in the future by such fluctuations
or by cyclical conditions in the semiconductor industry or slower
growth in any of the markets for the Company's products.
DEPENDENCE ON DATA COMMUNICATION MARKET
The Company anticipates that substantially all of the
Company's future revenues will be attributable to sales of data
communication products. The market for data communications products
is characterized by intense competition, relatively short product
life cycles and rapid technological change. In addition, the market
for data communications products has undergone a period of extremely
rapid growth and has experienced consolidation among the competitors
in the marketplace. The Company expects that substantially all of
its revenues for the foreseeable future will continue to consist of
sales of data communications products. The Company's results of
operations and financial condition would be materially adversely
affected in the event of any future slowdown or adverse events in the
market for data communications products.
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PRIOR RELIANCE UPON MILITARY SALES
Historically, a substantial proportion of the Company's
revenues and net income were attributable to products sold by the
Company for use in military applications. During fiscal 1991, 1992,
1993 and 1994, approximately 30%, 16%, 23% and 7%, respectively, of
the Company's revenues were attributable to products sold for use in
military applications. On average, these products contributed higher
profit margins than the Company's other products. Commencing in
fiscal 1992 and accelerating in fiscal 1993 and fiscal 1994, the
Company experienced a significant reduction in the demand for
products sold for use in military applications as compared with prior
periods. This reduction in such products had a material adverse
effect on the Company's results of operations and financial
condition. As a result of the Company's sale of assets related to
its nonvolatile memory products as part of the EEPROM Asset Sale in
February 1994, the Company anticipates that it will have no military
sales for the foreseeable future.
LITIGATION
On March 30, 1994 the Company filed a lawsuit in the
United States District Court for the Northern District of California
against Hualon (``Hualon''), one of the Company's former foundries and
joint development partners. In the lawsuit, the Company originally sought
injunctive relief from the court to prevent Hualon from using
certain of the nonvolatile memory technology sold by the Company
to Atmel pursuant to the Asset Purchase Agreement, to which
Hualon has asserted certain license rights under an alleged
license agreement. In response to the Company's claims, Hualon
asserted affirmative defenses and counterclaims seeking a
declaration by the court that the alleged license agreement is
valid and seeking specific performance of the alleged license
agreement and other agreements previously entered into by the two
parties. Hualon filed a motion for summary judgment and the
Company's initial claim was subsequently dismissed by the court.
Hualon has subsequently amended its counter claims to include
additional claims in the proceeding, including claims for damages
for breach of, and for money owed pursuant to, other agreements
between the Company and Hualon. The Company has subsequently
amended its original complaint to include a number of additional
claims against Hualon, including claims for damages for breach
of, and for money owed pursuant to, such other agreements. Under
the terms of one of the escrow agreements entered into with Atmel
in connection with the EEPROM Asset Sale, under which
approximately $4,200,000 (including interest earned thereon) is
currently on deposit in escrow, the Company will be entitled to
receive such funds if it is determined that the alleged license
agreement is invalid, or, if no such determination is made, to
the extent that any claims made by Atmel that Atmel has suffered
damages as a result of the alleged license agreement are
unsuccessful, if Atmel fails to make a claim to such funds by
February 1999, or as otherwise agreed by the Company and Atmel.
The Company intends to vigorously prosecute its claims in this
lawsuit and to defend claims made by Hualon. The Company believes
that its claims and defenses in this lawsuit are meritorious.
However, there can be no assurance as to the possible outcome of
this proceeding. In the event that the Company is not successful
in invalidating the alleged license agreement, Atmel may assert a
claim against the Company under the Asset Purchase Agreement,
including a claim for damages, if suffered by Atmel as a result
of Hualon's use of any of such technology, and, in the event any
such claim by Atmel is determined to be valid, Atmel may recover
any such damages from the escrow described above. The Company
believes that, in the event of any claim by Atmel, the amount of
damages that may be payable by the Company upon a resolution
thereof will not have a material adverse effect on the Company's
cash flow, financial position or results of operations. However,
there can be no assurance as to such matters.
COMPETITION
The semiconductor industry is intensely competitive and
is characterized by price erosion, rapid technological change, short
product life cycles, cyclical market patterns and heightened domestic
and international competition in many markets. The Company competes
with major domestic and international semiconductor companies, most
of which have substantially greater financial, technical,
manufacturing and marketing resources
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than the Company, as well as other substantial resources with
which to more effectively pursue engineering, manufacturing,
marketing and distribution of their products. In addition, many
of the Company's competitors maintain their own wafer fabrication
and manufacturing facilities, which the Company considers to be a
competitive advantage. Accordingly, the Company believes that it
is at a substantial competitive disadvantage in comparison to
larger companies with wafer fabrication and manufacturing
facilities, broader product lines, greater technical, financial
and other resources and a higher level of customer service and
support. New entrants may also increase their participation in
the semiconductor market. The ability of the Company to compete
successfully in the rapidly evolving area of high performance
integrated circuit technology depends on factors both within and
outside of its control, including success in designing and
subcontracting the manufacture of new products that implement new
technologies, adequate sources of raw materials, protection of
Company products by effective utilization of intellectual
property laws, product quality, reliability, price, efficiency of
production, the pace at which customers incorporate the Company's
integrated circuits into their products, success of competitors'
products and general economic conditions. Because the Company
does not currently manufacture its own semiconductor wafers, the
Company is vulnerable to process technology advances utilized by
competitors to manufacture higher performance or lower cost
products. There is no assurance that the Company will be able to
compete successfully in the future.
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PATENTS, LICENSES AND INTELLECTUAL PROPERTY CLAIMS
The Company's success depends in part on its ability to
obtain patents, licenses and other intellectual property rights
covering its products and manufacturing processes. To that end, the
Company has in the past acquired certain patents and patent licenses
and intends to continue to seek patents on its inventions and
manufacturing processes in appropriate circumstances. The process of
seeking patent protection can be long and expensive and there can be
no assurance that patents will issue from currently pending or future
applications or that existing patents or any new patents that may be
issued will be of sufficient scope or strength to provide meaningful
protection or any commercial advantage to the Company. The Company
may be subject to or may initiate interference proceedings in the
patent office, which can demand significant financial and management
resources. As is typical in the semiconductor industry, the Company
has from time to time received, and may in the future receive,
communications alleging possible infringement of patents or other
intellectual property rights of others. Based on industry practice,
the Company believes that any necessary licenses or other rights are
often obtainable on commercially reasonable terms, but no assurance
can be given that licenses would be available or that litigation
would not ensue. Litigation, which could result in substantial cost
to and diversion of effort by the Company, may be necessary to
enforce patents or other intellectual property rights of the Company
or to defend the Company against claimed infringement of the rights
of others. The failure to obtain necessary licenses or other rights
or litigation could have a material adverse effect on the Company's
operations.
ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATIONS
Certain of the Company's foundry and assembly
subcontractors are subject to a variety of government regulations
related to the discharge or disposal of toxic, volatile or otherwise
hazardous chemicals used in their manufacturing process. The failure
by the Company's subcontractors to comply with present or future
environmental regulations could result in fines, suspension of
production or cessation of operations. Such regulations could also
require the subcontractors to acquire equipment or to incur
substantial other expenses to comply with environmental regulations.
If substantial additional expenses were incurred by the Company's
subcontractors, product costs could significantly increase, thus
materially adversely affecting the Company's results of operations.
Additionally, the Company is subject to a variety of government
regulations relating to its operations, such as environmental, labor
and export control regulations. While the Company believes it has
all permits necessary to conduct its business, the failure to comply
with present or future regulations could result in fines being
imposed on the Company or suspension or cessation of operations. Any
failure by the Company or its subcontractors to control the use of,
or adequately restrict the discharge of hazardous substances could
subject it to future liabilities, and could have a material adverse
effect on the Company.
ATTRACTION AND RETENTION OF KEY PERSONNEL
The Company's future success is dependent upon its ability to
hire and retain qualified technical and management personnel,
particularly highly skilled design engineers involved in new
product development. The competition for such personnel is
intense and there can be no assurance that the Company will be
able to attract and retain skilled and experienced personnel in
the future. Any failure to attract or retain such personnel could
adversely affect the Company's future prospects and
profitability. In June 1995, the Company's Chief Financial
Officer resigned his position with the Company. The Company is
currently in the process of recruiting a replacement for the
Chief Financial Officer position.
TAX LOSS CARRYFORWARDS
At September 30, 1994, the Company had net operating
loss carryforwards of approximately $103,000,000 for federal tax
purposes, which expire in 1998 through 2008. Under Section 382 of the
Internal Revenue Code of 1986, as amended, utilization of prior net
operating loss carryforwards is limited after an ownership change, as
defined in Section 382, to an annual amount equal to the value of the
loss corporation's outstanding stock immediately before the date of
the ownership change multiplied by the federal long-term
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tax-exempt rate. This offering is not expected to limit the Company's
utilization of net operating loss carryforwards under Section 382.
However, there can be no assurance that the Company will not issue
additional shares to obtain necessary additional future financing or
that certain of the Company's major stockholders will not sell all of
their shares, in each case in a transaction that would trigger such
Section 382 limitation. In the event the Company achieves profitable
operations and triggers the Section 382 limitation, any significant
limitation on the utilization of net operating loss carryforwards
would have the effect of increasing the Company's tax liability and
reducing net income and available cash resources.
VOLATILITY OF STOCK PRICE
The Company's Common Stock has experienced substantial
price volatility and such volatility may occur in the future,
particularly as a result of quarter to quarter variations in the
actual or anticipated financial results of, or announcements by, the
Company, its competitors and other companies in the semiconductor
industry. In addition, the stock market has experienced extreme price
and volume fluctuations which have affected the market price of many
technology companies in particular and which have often been
unrelated to the operating performance of these companies. Broad
market fluctuations, as well as general economic and political
conditions, may adversely affect the market price of the Common
Stock.
EFFECT OF ANTITAKEOVER PROVISIONS
The Company's Board of Directors has the authority to
issue up to 1,000,000 shares of Preferred Stock and to determine the
price, rights, preferences, and privileges of those shares without any
further vote or action by the Company's stockholders. The rights of
the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that
may be issued in the future. While the Company has no present
intention to issue shares of Preferred Stock, such issuance, while
providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of
the outstanding voting stock of the Company. In addition, such
Preferred Stock may have other rights, including economic rights
senior to the Common Stock, and, as a result, the issuance thereof
could have a material adverse effect to the market value of the
Common Stock. Furthermore, the Company is subject to the anti-
takeover provisions of Section 203 of the Delaware General
Corporation Law, which prohibits the Company from engaging in a
``business combination'' with an ``interested stockholder'' for a
period of three years after the date of the transaction in which the
person became an interested stockholder, unless the business
combination is approved in a prescribed manner. The application of
Section 203 also could have the effect of delaying or preventing a
change of control of the Company. Certain other provisions of the
Company's Certificate of Incorporation may have the affect of
delaying or preventing changes in control or management of the
Company, which could adversely affect the market price of the
Company's Common Stock. See ``Description of Capital Stock.''
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USE OF PROCEEDS
To the extent the warrants are exercised for cash, the proceeds
will be used for working capital and general corporate purposes. To
the extent any convertible warrant is converted rather than
exercised, the Company will receive no proceeds from the issuance of
Shares pursuant to such warrant.
SELLING STOCKHOLDERS
All of the Shares being offered by the Selling Stockholders are
issuable to the Selling Stockholders pursuant to warrants to purchase
Common Stock as described below.
SILICON VALLEY BANK
A warrant exercisable for 150,000 Shares was issued to Silicon
Valley Bank on August 2, 1991 in connection with a loan from Silicon
Valley Bank to SEEQ. Such warrant is exercisable until August 1,
1996 and has an exercise price of $1.5625 per Share. A second
warrant exercisable until August 1, 1995 for 100,000 Shares was
issued to Silicon Valley Bank on March 19, 1992 in connection with
another loan to the Company. The exercise price for that warrant is
$3.125 per Share. Both warrants held by Silicon Valley Bank are
convertible in whole or in part, at the option of Silicon Valley
Bank, into Common Stock. In the event that Silicon Valley Bank
chooses to convert its warrants rather than exercise them, the
Company will not receive any proceeds from such warrants and Silicon
Valley Bank will receive that number of shares of Common Stock
determined by dividing (a) the aggregate fair market value of the
Common Stock otherwise issuable upon exercise minus the aggregate
exercise price for such Common Stock by (b) the fair market value of
one share of Common Stock. The fair market value of a share of
Common Stock would be the last sale price reported for the business
day immediately before Silicon Valley Bank delivers a notice of
exercise to the Company.
RODMAN & RENSHAW; GRUNTAL
In connection with an offering of the Company's Common Stock in
April 1993 in an offshore transaction pursuant to the exemption
provided by Regulation S under the Securities Act, Rodman & Renshaw,
Inc. ("Rodman") and Gruntal & Co., Incorporated ("Gruntal"), the
placement agents for such offering, were each issued a warrant on
April 27, 1993 exercisable for 72,231 Shares and 48,154 Shares
respectively. Rodman's warrant was subsequently replaced with three
separate warrants as follows: one warrant exercisable for 36,115
Shares issued to Rodman; one warrant exercisable for 18,058 Shares
issued to Steven A. Rothstein, an employee of Rodman; and one warrant
exercisable for 18,058 Shares issued to Louis Lichtenfeld, an
employee of Rodman. The warrants held by Gruntal, Rodman, Steven A.
Rothstein and Louis Lichtenfeld each expire on April 27, 1996 and
have an exercise price of $1.25 per share.
SECURITY RESEARCH ASSOCIATES
In connection with a public offering of the Company's Common
Stock in July 1993, a warrant exercisable for 460,000 Shares was
issued to Security Research Associates, Inc. ("Security Research"),
the underwriter for such offering. This warrant was subsequently
replaced with three separate warrants, as follows: one warrant
exercisable for 92,000 Shares issued to Roger L. Batty, an employee
of Security Research; one warrant exercisable for 92,000 Shares
issued to Jay Hayes, an employee of Security Research; and one
warrant exercisable for 276,000 Shares issued to Brian G. Swift, an
employee of Security Research. Such warrants expire on July 31, 1998
and have an exercise price of $1.0625 per Share. These warrants are
convertible, at the option of the warrant holder, into Common Stock.
In the event that a holder chooses to convert its warrant rather than
exercise them, the Company will not receive any proceeds from such
warrant and the holder will receive that number of shares of Common
Stock determined by dividing (a) the aggregate fair market value of
the Common
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Stock otherwise issuable upon exercise minus the aggregate exercise
price for such Common Stock by (b) the fair market value of one share
of Common Stock. The fair market value of a share of Common Stock
would be the last sale price reported for the business day
immediately before the holder delivers a notice of exercise to the
Company.
SALE OF THE SHARES
The Shares offered hereby are being offered directly by
the Selling Stockholders. The Company will receive no proceeds from
the sale of any of the Shares. However, the Company will receive the
exercise price paid upon exercise of the warrants covering any Shares
to be offered and sold pursuant to this Prospectus. The sale of the
Shares may be effected by the Selling Stockholders from time to time
in transactions in the over-the-counter market, in negotiated
transactions, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time
of sale, at prices related to prevailing market prices or at
negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of the Shares for whom such broker-dealers may
act as agents or to whom they sell as principals, or both (which
compensation as to a particular broker-dealer might be in excess of
customary commissions).
At the time a particular offer of Shares is made, to
the extent required, a Prospectus Supplement will be distributed which
will set forth the exact number of Shares being offered and the terms
of the offering, including the name or names or any underwriters,
dealers or agents, the purchase price paid by any underwriter for the
Shares purchased from Selling Stockholders, any discounts,
commissions and other items constituting compensation from the
Selling Stockholders, and any discounts, commissions or concessions
allowed or reallowed or paid to dealers.
In order to comply with the securities laws of certain
states, if applicable, the Shares will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition,
in certain states, the Shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is
available and is complied with.
The Selling Stockholders and any broker-dealers, agents
or underwriters that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be ``underwriters''
within the meaning of Section 2(11) of the Securities Act, and any
commissions received by them and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. The Company has agreed to
indemnify the Selling Stockholders against certain liabilities,
including liabilities under the Securities Act, as an underwriter or
otherwise.
Under applicable rules and regulations under the
Exchange Act, any person engaged in the distribution of the Shares may
not simultaneously engage in market making activities with respect to
the Common Stock of the Company for a period of two business days
prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6
and 10b-7, which provisions may limit the timing of purchases and
sales of shares of the Company's Common Stock by the Selling
Stockholders.
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LEGAL MATTERS
The validity of the securities offered hereby will be
passed upon for the Company by Brobeck, Phleger & Harrison, San
Francisco, California. Certain attorneys of Brobeck, Phleger &
Harrison beneficially own an aggregate of approximately 11,000 shares
of the Company's Common Stock.
EXPERTS
The consolidated financial statements (including
schedules incorporated by reference) of SEEQ Technology Incorporated
and its subsidiaries as of September 30, 1994 and 1993 and for each of
the three years in the period ended September 30, 1994, incorporated
by reference herein, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given upon
the authority of said firm as experts in auditing and accounting.
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830,385 SHARES
SEEQ TECHNOLOGY INCORPORATED
COMMON STOCK
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemized statement of
various expenses in connection with the sale and distribution of the
securities being registered other than underwriting discounts and
commissions. All of the amounts shown are estimates except for the
SEC registration fee.
SEC registration fee . . . . . . . . . . . . . . $ 1,048.00
Legal fees and expenses. . . . . . . . . . . . . 25,000.00
Accounting fees and expenses . . . . . . . . . . 5,000.00
Miscellaneous. . . . . . . . . . . . . . . . . . 3,952.00
----------
Total . . . . . . . . . . . . . . . . . $35,000.00
The Selling Stockholders will bear their own sales
commissions and related sales expenses in connection with this
offering. The Company will bear all other expenses listed above.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law
permits a corporation to grant indemnification to directors, officers
and other agents in terms sufficiently broad to permit indemnification
under certain circumstances for liabilities, including expenses,
arising in connection with the Securities Act of 1933, as amended.
Pursuant to the Certificate of Incorporation and the Bylaws of the
Company, directors and officers of the Company are indemnified to the
full extent permitted by law. In addition, the Company has entered
into indemnification agreements with its officers and directors that
indemnify such officers and directors to the full extent permitted by
law against all expenses (including attorneys' fees), judgments,
fines or settlement amounts incurred or paid by them in any action or
proceeding, including any action by or on behalf of the Company, on
account of their service as an officer or director of the Company.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
ITEM 16. EXHIBITS.
4.1 Certificate of Incorporation (incorporated by
reference to the Company's Form 8-B filed on June 2,
1987).
4.2 Bylaws (Incorporated by reference to the Company's
Form 8-B filed on June 2, 1987).
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4.3* Warrant Purchase Agreement by and between the
Company and Silicon Valley Bank dated as of
March 19, 1992.
4.4* Warrant Purchase Agreement by and between the
Company and Silicon Valley Bank dated as of
August 2, 1991.
4.5* Form of Warrant to Purchase Common Stock by and
between the Company and Gruntal & Co. Incorporated,
Rodman & Renshaw, Inc., Steven A. Rothstein and
Louis Lichtenfeld dated as of February 1,
1994.
4.6* Form of Warrant to Purchase Common Stock by and
between the Company and Roger L. Batty, Jay Hayes
and Brian G. Swift dated as of August 4, 1993.
5.1 Opinion of Brobeck, Phleger & Harrison.
23.1 Consent of Price Waterhouse LLP, independent
accountants.
23.2 Consent of Brobeck, Phleger & Harrison (included in
the Opinion of Counsel filed as Exhibit 5.1 hereto).
24.1* Power of Attorney.
___________________________________
* Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to this
Registration Statement: (i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in
the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the
``Calculation of Registration Fee'' table in the effective
Registration Statement; and (iii) to include any material information
with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information
in the Registration Statement; provided, however, that (i) and (ii)
do not apply if the Registration Statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a post-
effective amendment by (i) and (ii) is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the registration
II-2
<PAGE>
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3
and has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in Fremont, California on this 6th day of July, 1995.
SEEQ TECHNOLOGY INCORPORATED
By /S/PHILLIP J SALSBURY
Phillip J. Salsbury
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act
of 1933, this Amendment No. 1 to the Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE
/S/ PHILLIP J. SALSBURY President, Chief Executive July 6, 1995
(Phillip J. Salsbury) Officer and Director
(Principal Executive, Financial
and Accounting Officer)
/S/ ALAN V. GREGORY* Chairman of the July 6, 1995
(Alan V. Gregory) Board of Directors
/S/ CHARLES C. HARWOOD* Director July 6, 1995
(Charles C. Harwood)
_________________________ Director
(Peter C. Chen)
*By: /S/ PHILLIP J. SALSBURY July 6, 1995
Phillip J. Salsbury
Attorney-in-Fact
II-4
<PAGE>
SEEQ TECHNOLOGY INCORPORATED
INDEX TO EXHIBITS
EXHIBIT
NO. EXHIBIT PAGE
4.1 Certificate of Incorporation (incorporated by
reference to the Company's Form 8-B filed on
June 2, 1987).
4.2 Bylaws (Incorporated by reference to the
Company's Form 8-B filed on June 2, 1987).
4.3* Warrant Purchase Agreement by and between the
Company and Silicon Valley Bank dated as of
March 19, 1992.
4.4* Warrant Purchase Agreement by and between the
Company and Silicon Valley Bank dated as of
March 19, 1992.
4.5* Form of Warrant to Purchase Common Stock by and
between the Company and Gruntal & Co.
Incorporated, Rodman & Renshaw, Inc., Steven A.
Rothstein and Louis Lichtenfeld dated as of
February 1, 1994.
4.6* Form of Warrant to Purchase Common Stock by and
between the Company and Roger L. Batty, Jay
Hayes and Brian G. Swift dated as of August 4,
1993.
5.1 Opinion of Brobeck, Phleger & Harrison.
23.1 Consent of Price Waterhouse LLP, independent
accountants.
23.2 Consent of Brobeck, Phleger & Harrison (included
in the Opinion of Counsel filed as Exhibit 5.1
hereto).
24.1* Power of Attorney.
_____________________________________
* Previously filed.
Exhibit 5.1
July 6, 1995
SEEQ Technology Incorporated
47200 Bayside Parkway
Fremont, California 94538
Re: SEEQ Technology Incorporated
Registration Statement on Form S-3
(File No. 33-60733)
Ladies and Gentlemen:
We have acted as counsel for SEEQ Technology
Incorporated (the ``Company''), a Delaware corporation, in
connection with the authorization, issuance, and sale of
830,385 shares of common stock of the Company, par value
$0.01. (the ``Shares''), as described in the above-referenced
Registration Statement (the ``Registration Statement''), and
the preparation of the Registration Statement under the
Securities Act of 1933, as amended.
In this connection, we are familiar with the
corporate proceedings taken by the Company in connection with
the issuance and sale of the Shares. We have also reviewed
the Registration Statement and the exhibits thereto, and we
have made such other examinations of law and fact as we
considered necessary in order to form a basis for the opinion
hereafter expressed.
Based on the foregoing, we are of the opinion that
the Shares have been duly authorized, and upon effectiveness
of the Registration Statement and sale of the Shares as
contemplated by the Registration Statement, the Shares will
be legally issued, fully paid, and nonassessable.
We consent to the filing of this opinion as
Exhibit 5.1 to the Registration Statement and to the
reference to this firm under the caption ``Legal Matters'' in
the Prospectus which is part of the Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON
BROBECK, PHLEGER & HARRISON
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by
reference in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated
October 21, 1994, except for Note 12, which is as of
November 23, 1994, appearing on page 22 of SEEQ
Technology Incorporated's Annual Report on Form 10-K for
the fiscal year ended September 30, 1994. We also consent
to the reference to us under the heading "Experts" in such
Prospectus.
PRICE WATERHOUSE LLP
San Jose, California
July 6, 1995
