<PAGE>
Page 1 of 13 Pages
Exhibit Index is on page 11.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant of Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 1996
SYQUEST TECHNOLOGY, INC.
------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-19674 94-2793941
-------- ------- ----------
(State of Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
47071 Bayside Parkway, Fremont, California 94538
------------------------------------------------
(Address of Principal Executive Offices)
(510) 226-4000
--------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
--------------
(Former Name or Former Address, if Changed Since Last Report)
================================================================================
<PAGE>
ITEM 5. OTHER EVENTS
SPECIAL STOCKHOLDERS MEETING
- ----------------------------
On September 26, 1996, SyQuest Technology, Inc. (the "Company") held a
Special Meeting of Stockholders. All of the proposals submitted to the
stockholders at the meeting were approved.
The stockholders approved an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
20,000,000 to 60,000,000 by the following vote:
<TABLE>
<CAPTION>
<S> <C> <C>
For : 9,240,216
Against : 1,237,995
Abstain : 87,414
Broker Non-Vote : 0
</TABLE>
The amendment was filed with the Delaware Secretary of State on
September 27, 1996.
The stockholders approved the issuance by the Company of more than
2,291,891 shares of Common Stock to the holders of the Company's 7% Cumulative
Convertible Preferred Stock, Series 1, by the following vote:
<TABLE>
<CAPTION>
<S> <C> <C>
For : 4,100,593
Against : 832,417
Abstain : 113,801
Broker Non-Vote : 5,518,814
</TABLE>
The net proceeds from the sale of the 7% Cumulative Convertible
Preferred Stock, Series 1, will be treated as equity by the Registrant on its
balance sheet as a result of the vote of the stockholders to approve the sale
and to increase the number of available shares so that if the preferred
stockholders fully convert their preferred shares, there will be a sufficient
number of shares of common stock into which the preferred shares can be
converted.
The stockholders approved an increase in the number of shares issuable
under the Company's 1991 Stock Option Plan from 4,428,524 shares to 6,000,000
shares by the following vote:
<TABLE>
<CAPTION>
<S> <C> <C>
For : 2,854,778
Against : 2,123,841
Abstain : 121,442
Broker Non-Vote : 5,465,564
</TABLE>
The stockholders approved an increase in the number of shares issuable
under the Company's 1992 Non-Employee Director Stock Option Plan from 250,000
shares to 500,000 shares by the following vote:
2
<PAGE>
<TABLE>
<S> <C> <C>
For : 3,007,488
Against : 2,216,623
Abstain : 138,942
Broker Non-Vote : 5,202,572
</TABLE>
The stockholders approved other amendments to the Company's 1992 Non-
Employee Director Stock Option Plan to increase the annual grants of options to
the non-employee directors and to provide for a one-time option grant to
purchase 30,000 shares to new non-employee directors (which one-time grant will
also be made to each non-employee director as of the date of stockholder
approval of the amendments). The amendments were approved by the following
vote:
<TABLE>
<CAPTION>
<S> <C> <C>
For : 7,788,555
Against : 2,236,833
Abstain : 132,952
Broker Non-Vote : 407,285
</TABLE>
MAINTENANCE OF LISTING ON NASDAQ MARKET
- ---------------------------------------
The Company filed today with Nasdaq a pro forma balance sheet (the
"Pro Forma Balance Sheet") evidencing the Company's compliance with the net
tangible assets and capital and surplus listing requirements of the Nasdaq
National Market. Accordingly, the Company anticipates that its Common Stock
will continue to be listed on the Nasdaq National Market. A copy of the Pro
Forma Balance Sheet is attached as Exhibit 99.1 to this Form 8-K and is
incorporated herein by this reference.
On September 16, 1996, the Company was given a temporary exception
from the Nasdaq National Market listing requirements, conditioned on the
Company's ability to file a pro forma balance sheet as of September 30, 1996,
indicating net tangible assets of at least $2,000,000. The Pro Forma Balance
Sheet evidences approximately $7.454 million in net tangible assets. As
described in greater detail in the Pro Forma Balance Sheet, the Company's net
tangible assets increased primarily as a result of (i) the reclassification from
debt to equity, following the Special Meeting of Stockholders and the
elimination of certain redemption rights of the holders, of the Company's 7%
Cumulative Convertible Preferred Stock, Series 1 in the amount of $18.2 million;
(ii) conversion by certain vendors of the Company of approximately $2.3 million
of notes payable into equity during the fourth quarter of fiscal year 1996, and
the conversion of an additional $9.2 million of accounts payable and notes
payable into equity subsequent to September 30, 1996; and (iii) the issuance by
the Company, subsequent to September 30, 1996, of its Convertible Preferred
Stock, Series 1 and its 5% Cumulative Convertible Preferred Stock, Series 2, as
described below, from which the Company received net proceeds of $28.5 million.
The Pro Forma Balance Sheet is unaudited and includes a preliminary
estimate of retained earnings at September 30, 1996, as required by Nasdaq in
order for the Company to maintain its listing on the Nasdaq National Market.
There can be no assurance that the Company's audited consolidated balance sheet
as of September 30, 1996, and in particular its
3
<PAGE>
retained earnings following an audit of the Company's consolidated statements of
operations, will not be materially different from the information presented in
the Pro Forma Balance Sheet.
CONVERSION OF DEBT FOR EQUITY
- -----------------------------
From September 27, 1996, through October 30, 1996, the Company
exchanged approximately $11.57 million of its trade debt for shares of its
common stock, pursuant to Regulation D under the Securities Act of 1933, as
amended, as follows:
<TABLE>
<CAPTION>
Number
Name of Creditor Amount of Debt of Shares
- ---------------- -------------- ---------
<S> <C> <C>
Atmel Corporation $2,338,524.94 370,488
Petronic International, Inc. $1,392,440.30 218,422
Freight Solutions International $1,759,260.64 293,210
SAE Magnetics $6,080,397.22 992,717
</TABLE>
Each of the creditors has warranted to the Company that it is an
accredited investor. Each of the creditors was given a registration rights
agreement whereby the Company is required to register their for resale.
SALES OF PREFERRED STOCK
- ------------------------
CONVERTIBLE PREFERRED STOCK, SERIES 1
On October 8, 1996, in reliance on the exemption from securities
registration afforded by Section 4(2) of the Securities Act of 1933 as amended,
and related Rule 506 of Regulation D thereunder, the Company issued to certain
accredited investors 5,500 shares of its Convertible Preferred Stock, Series 1,
$0.001 par value per share (the "Convertible Preferred Stock"), at a price of
$1,000 per share. The net proceeds to the Company were approximately $5,225,000.
The proceeds were placed in escrow with AM Capital Management Group.
The terms of the Escrow Agreement provide generally that the monies in the
escrow account may be used by the Company solely for the Company's business
operations and product development, introduction and marketing after October 8,
1996, and to repay certain indebtedness. In order to withdraw monies from the
escrow account, the Company's Chief Executive Officer or Chief Financial Officer
must request the withdrawal and certify as to the use of the proceeds. The
escrow account shall terminate upon the earlier of the withdrawal of all of the
monies in the account or upon agreement between the Company and the holders of
the Convertible Preferred Stock.
The rights, preferences and privileges of the Convertible Preferred
Stock, as summarized below, are set forth in a Certificate of Designations,
Preferences and Rights of Convertible Preferred Stock, Series 1 filed with the
Delaware Secretary of State, a copy of which is attached as Exhibit 3.1 to this
Form 8-K and incorporated herein by this reference.
4
<PAGE>
Dividends. The holders of Convertible Preferred Stock are not
---------
entitled to dividends.
Conversion; Registration. The Convertible Preferred Stock is
------------------------
convertible into Common Stock (the "Conversion Shares"), at the option of the
holders, at any time after December 15, 1996. Each share of Convertible
Preferred Stock will be convertible into a number of shares of Common Stock
equal to: (x) $1,000 (the "Stated Value") plus an additional $50 for each year
(prorated on a daily basis for partial years) between October 25, 1996, and the
conversion date, (y) divided by a conversion price (the "Conversion Price")
which is the lesser of $6.50 per share (the "Fixed Conversion Price") or 85%
(the "Conversion Percentage") of the average market price of the Common Stock on
the five trading days prior to the conversion. The Convertible Preferred Stock
cannot be converted if the converting holder and its respective affiliates would
beneficially own more than 4.9% of the Company's Common Stock at the time of
conversion (excluding from the calculation shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock).
The Company has agreed to file a registration statement on Form S-3
(the "Registration Statement") covering the resale of the Conversion Shares and
shares issuable upon exercise of the warrants described below, to make its best
efforts to have such statement declared effective before January 15, 1997, and
to keep such statement effective until the earlier of (a) the date on which the
holders of the Convertible Preferred Stock may sell the Conversion Shares and
shares issuable upon exercise of the warrants without restriction or (b) the
date on which such holders have sold all of their shares of Common Stock and
there are no outstanding shares of Convertible Preferred Stock or related
warrants to purchase Common Stock.
If a Registration Statement registering the resale of the Common Stock
is not effective by January 15, 1997, or if after such Registration Statement is
declared effective by the SEC sales can not be made pursuant to the Registration
Statement, the Conversion Percentage shall be reduced 3% per month and the Fixed
Conversion Price shall be reduced by $0.195 per month for each month or partial
month of such delayed effectiveness of inability to sell.
Any Convertible Preferred Stock outstanding on October 31, 1998, will
automatically convert to Common Stock on that date.
Redemption -- By Company Upon Receipt of Conversion Notice. If the
----------------------------------------------------------
Company receives a notice of conversion and the Conversion Price is less than
three dollars and fifty cents ($3.50) per share, the Company will have the
option to redeem all or any portion (pro rated if less than all is redeemed) of
the Convertible Preferred Shares submitted for conversion, in lieu of
conversion. The redemption price ("Redemption Rate") to be paid per share of
Convertible Preferred Stock] is an amount equal to (x) the number of shares of
Common Stock that would otherwise be issuable on the date of conversion,
multiplied by (y) the closing bid price of the Common Stock on the conversion
date. Each holder of Convertible Preferred Stock shall have the right to
5
<PAGE>
require the Company to provide advance notice stating whether the Company will
elect to redeem such holder's Convertible Preferred Stock in cash should such
holder submit such shares for conversion.
Redemption--By Company at its Election. Commencing April 1, 1997, the
--------------------------------------
Company shall have the option to redeem, from time to time, any or all of the
Convertible Preferred Shares upon delivery of 30 days advance written notice,
provided that the Company shall only be entitled to redeem Convertible Preferred
Stock which together with Series 2 Preferred Stock being redeemed at the same
time has an aggregate Stated Value of at least $5,000,000. Stated Value shall
equal $1,000 per share of (the Series 2 Preferred Stock together with the
Convertible Preferred Stock, the "New Preferred Stock"). The redemption price
shall equal the greater of (x) the Redemption Rate calculated on the date the
Company delivers notice of redemption, and (y) a percentage of Stated Value of
such Convertible Preferred Stock, which percentage will vary depending upon the
date of redemption as follows:
<TABLE>
<CAPTION>
Date of Redemption at the Company's % of Stated
Election Value
----------------------------------- -----------
<S> <C>
April 1, 1997 to March 31, 1998 125%
April 1, 1998 to October 31, 1998 120%
</TABLE>
Notwithstanding the above, any holder of Convertible Preferred Stock may convert
such Convertible Preferred Stock into Common Stock, as described above, prior to
the close of business on the day prior to the date of redemption at the
Company's election, including Convertible Preferred Stock selected for
redemption at the Company's election; provided, however, that the Company shall
still be entitled, as described above, to exercise its right to redeem
Convertible Preferred Stock upon its receipt of a notice of conversion.
Redemption at Option of Holders. If Edward L. Marinaro and Edwin L.
-------------------------------
Harper shall both cease to be directors and officers of the Company (a "Change
of Control") other than as a result of the Company's consolidation with or
merger into any other corporation or the reclassification of the Company's
outstanding shares, holders of Convertible Preferred Stock shall have the option
to require the Company to redeem all or a portion of such Convertible Preferred
Stock at a price per share equal to the greater of: (x) 125% of Stated Value,
and (y) the Redemption Rate calculated as of the date such Change of Control
occurs.
Merger. If the Company merges or reclassifies its outstanding Common
------
Stock, the holders of Convertible Preferred Stock are entitled to receive the
greater of (x) their share of any consideration on an as-converted basis, or (y)
$1,250.00 per share of Convertible Preferred Stock. The Company must give at
least five (5) and not more than ten (10) days notice of a merger or
reclassification, but such notice is not required prior to public announcement
of any such transaction.
6
<PAGE>
Nonvoting. The Convertible Preferred Stock is nonvoting, except as
---------
required by law.
Warrants. Upon conversion of Convertible Preferred Stock, the holders
--------
of the Convertible Preferred Stock will receive, for each three shares of Common
Stock acquired through conversion of Convertible Preferred Stock, a warrant to
purchase one share of Common Stock at a price which is the lesser of (x) $7.15
per share or 110% of the average market price of the Common Stock on the five
trading days prior to the date of the related conversion of the Convertible
Preferred Stock. Such warrants will expire three years after the date of the
related conversion of the Convertible Preferred Stock.
Liquidation Preference. In liquidation, the holders of the
----------------------
Convertible Preferred Stock receive their Stated Value before the holders of
Common Stock receive any cash or assets on liquidation.
Other Preferred. The Company may issue or authorize preferred stock
---------------
that is junior to the Convertible Preferred Stock in respect of preferences as
to payments upon liquidation, dissolution and winding up, provided that the
Company may issue preferred stock of equal rank to Beijing Legend Group, Ltd. or
any of its affiliates or successors if such parties have entered into or agreed
to enter into a joint venture or other business relationship with the Company.
Vote to Amend Preferred. Holders of two-thirds of the outstanding
-----------------------
shares of Convertible Preferred Stock must approve any amendment to its terms.
Furthermore, if any material changes are made to the terms of the Series 2
Preferred Stock, holders of Convertible Preferred Stock shall be entitled, upon
approval of two-thirds of the outstanding shares of Convertible Preferred Stock,
to comparable changes.
SERIES 2 PREFERRED STOCK
On October 8, 1996, in reliance on the exemption from securities
registration afforded by Section 4(2) of the Securities Act of 1933, as amended
and related Rule 506 of Regulation D thereunder, the Company issued to various
accredited investors 24,500 shares of its 5% Cumulative Convertible Preferred
Stock, Series 2, $0.001 par value per share (the "Series 2 Preferred Stock"), at
a price of $1,000 per share. The net proceeds to the Company were approximately
$23,275,000. The proceeds were placed in escrow with AM Capital Management Group
pursuant to escrow agreements with generally the same terms described above with
respect to the escrow of the funds from the Convertible Preferred Stock sale.
The rights, preferences and privileges of the Series 2 Preferred
Stock, as summarized below, are set forth in a Certificate of Designations,
Preferences and Rights of 5% Cumulative Convertible Preferred Stock filed with
the Delaware Secretary of State, a copy of which is attached as Exhibit 3.2 to
this Form 8-K and incorporated herein by this reference.
7
<PAGE>
Dividends. The Series 2 Preferred Stock's dividends are 5%
---------
cumulative, payable quarterly in cash (or, at the Company's option, Common Stock
valued at the average market price of the Common Stock on the five trading days
prior to the dividend payment date ("Dividend Shares"), except when the number
of shares to be issued would cause the holders of the Series 2 Preferred Stock
to beneficially own a number of shares of Common Stock in excess of certain
numeric limits described below).
Conversion; Registration. The Series 2 Preferred Stock is convertible
------------------------
into Common Stock (the "Conversion Shares") at the option of the holders after
December 15, 1996, at a conversion price which is the lesser of $6.50 per share
(the "Fixed Conversion Price") or 85% (the "Conversion Percentage") of the
average market price of the Common Stock on the five trading days prior to the
conversion. The Series 2 Preferred Stock cannot be converted if the converting
holder and its respective affiliates would beneficially own more than 4.9% of
the Company's Common Stock at the time of conversion (excluding from the
calculation shares of Common Stock issuable upon conversion of the Series 2
Preferred Stock).
The Company has agreed to file a registration statement on Form S-3
(the "Registration Statement") covering the resale of the Conversion Shares, the
Dividend Shares and shares issued upon exercise of the warrants described below,
to make its best efforts to have such statement declared effective before
January 22, 1997, and to keep such statement effective until the earlier of (a)
the date on which the holders of the Series 2 Preferred Stock may sell the
Conversion Shares, the Dividend Shares and shares issuable upon exercise of the
warrants without restriction or (b) the date on which such holders have sold all
of their shares of Common Stock and there are no outstanding shares of Series 2
Preferred Stock or related warrants to purchase Common Stock.
If a Registration Statement registering the resale of the Common Stock
is not effective by January 22, 1997, then the Conversion Percentage and the
Fixed Conversion Rate are reduced at the rate of three percentage points per
month of delay.
At any time within the one hundred twenty (120) day period after the
Registration Statement is declared effective (the "First Redemption Period"),
the Company may redeem any or all of the Series 2 Preferred Stock if the average
market price for the Common Stock for any period of five consecutive trading
days is less than three dollars ($3.00) per share, or at any time after the
First Redemption Period so long as the average market price per share of the
Common Stock is three dollars ($3.00) or more. The redemption price will
be the greater of (x) the product of the average market price per share of the
Common Stock for the five trading days preceding a redemption notice multiplied
by the number of shares of Common Stock into which a Series 2 Preferred Share is
convertible on the trading day preceding the redemption notice, and (y)
$1,176.47. Notwithstanding the above, any holder may convert its Series 2
Preferred Stock into Common Stock prior to the close of business on the fifth
trading day prior to the date of redemption.
Merger. A holder of Series 2 Preferred Stock are entitled to
------
receive its share of consideration on an as-converted basis if the Company
merges or reclassifies its outstanding Common Stock. The Company must give
seventy-five days' notice of merger or reclassification.
8
<PAGE>
Nonvoting. The Series 2 Preferred Stock is nonvoting, except as
---------
required by law.
Warrants. Upon conversion of Series 2 Preferred Stock, the holders of
--------
the Series 2 Preferred Stock will receive, for each three shares of Common Stock
acquired through conversion of Series 2 Preferred Stock, a warrant to purchase
one share of Common Stock at a price which is the lesser of (x) $7.15 per share
or (y) 110% of the average market price of the Common Stock on the five trading
days prior to the date of the related conversion of the Series 2 Preferred
Stock. Such warrants will expire three years after the date of the related
conversion of the Series 2 Preferred Stock.
Liquidation Preference. In liquidation, the holders of the Series 2
----------------------
Preferred Stock receive their original purchase price plus any accrued but
unpaid dividends before the holders of Common Stock receive any cash or assets
on liquidation.
Other Preferred. The Company may issue or authorize preferred stock
---------------
that is junior to the Series 2 Preferred Stock in respect of preferences as to
payments upon liquidation, dissolution and winding up, provided that the Company
may issue preferred stock of equal rank to Beijing Legend Group, Ltd. or any of
its affiliates or successors if such parties have entered into or agreed to
enter into a joint venture or other business relationship with the Company.
Amendment of Convertible Preferred Stock; Additional Warrants. On
------------------------------------------------------------
October 31, 1996, the Company and the majority of Convertible Preferred
Stockholders agreed to amend the terms of the Convertible Preferred Stock to (i)
remove restrictions on certain common equity sales and (ii) provide that any
redemption upon a Change in Control shall be paid by the Company in shares of
Common Stock instead of cash. As part of this amendment, the Company granted
the holders of Convertible Preferred Stock warrrants to acquire 550,000 shares
of Common Stock at a price of $5.50 per share, which warrants have a three-year
term.
THE FOREGOING DESCRIPTION OF THE DEBT TO EQUITY CONVERSIONS AND THE
RIGHTS OF CONVERTIBLE PREFERRED STOCK AND SERIES 2 PREFERRED STOCK DOES NOT
PURPORT TO BE COMPLETE AND IS QUALIFIED IN IT ENTIRETY BY REFERENCE TO THE
EXHIBITS TO THIS FORM 8-K, EACH OF WHICH IS INCORPORATED HEREIN BY REFERENCE.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
--------
3.1 Certificate of Designations, Preferences and Rights of Convertible
Preferred Stock, Series 1
3.2 Certificate of Designations, Preferences and Rights of 5% Cumulative
Convertible Preferred Stock, Series 2
10.1 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and the buyers of the Convertible Preferred Stock, Series 1
including the following exhibits: Form of Warrant, Form of
Registration Rights Agreement, Form of Escrow Agreement and certain
Schedules to the representations.
10.2 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and certain buyers of the Series 2 Preferred Stock, including
the following exhibits: Form of Warrant, Form of Registration Rights
Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
9
<PAGE>
10.3 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and certain buyers of the Series 2 Preferred Stock, including
the following exhibits: Form of Warrant, Form of Registration Rights
Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
10.4 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and certain buyers of the Series 2 Preferred Stock, including
the following exhibits: Form of Warrant, Form of Registration Rights
Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
10.5 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and certain buyers of the Series 2 Preferred Stock, including
the following exhibits: Form of Warrant, Form of Registration Rights
Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
10.6 Securities Purchase Agreement dated as of September 27, 1996, between
the Company and Atmel Corporation, including the exhibit Form of
Registration Rights Agreement.
10.7 Securities Purchase Agreement dated as of October 18, 1996, between
the Company and Petronic International, Inc., including the exhibit
Form of Registration Rights Agreement.
10.8 Securities Purchase Agreement dated as of October 24, 1996, between
the Company and SAE Magnetics (HK) Ltd., including the exhibit Form of
Registration Rights Agreement.
10.9 Securities Purchase Agreement dated as of October 25, 1996, between
the Company and Freight Solutions International, including the exhibit
Form of Registration Rights Agreement.
99.1 Pro Forma Balance Sheet of the Company as of September 30, 1996.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATE: October 31, 1996 SYQUEST TECHNOLOGY, INC.
(Registrant)
By: /s/ Edwin L. Harper
----------------------------------
Edwin L. Harper, President and
Chief Executive Officer
10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NUMBER
- ------- ------
<C> <S> <C>
3.1 Certificate of Designations, Preferences and Rights of Convertible
Preferred Stock, Series 1
3.2 Certificate of Designations, Preferences and Rights of 5% Cumulative
Convertible Preferred Stock, Series 2
10.1 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and the buyers of the Convertible Preferred Stock, Series 1
including the following exhibits: Form of Warrant, Form of Registration
Rights Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
10.2 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and certain buyers of the Series 2 Preferred Stock, including the
following exhibits: Form of Warrant, Form of Registration Rights
Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
10.3 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and certain buyers of the Series 2 Preferred Stock, including the
following exhibits: Form of Warrant, Form of Registration Rights
Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
10.4 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and certain buyers of the Series 2 Preferred Stock, including the
following exhibits: Form of Warrant, Form of Registration Rights
Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
10.5 Securities Purchase Agreement dated as of October 8, 1996 among the
Company and certain buyers of the Series 2 Preferred Stock, including the
following exhibits: Form of Warrant, Form of Registration Rights
Agreement, Form of Escrow Agreement and certain Schedules to the
representations.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NUMBER
- ------- ------
<C> <S> <C>
10.6 Securities Purchase Agreement dated as of September 27, 1996, between the
Company and Atmel Corporation, including the exhibit Form of Registration
Rights Agreement.
10.7 Securities Purchase Agreement dated as of October 18, 1996, between the
Company and Petronic International, Inc., including the exhibit Form of
Registration Rights Agreement.
10.8 Securities Purchase Agreement dated as of October 24, 1996, between the
Company and SAE Magnetics (HK) Ltd., including the exhibit Form of
Registration Rights Agreement.
10.9 Securities Purchase Agreement dated as of October 25, 1996, between the
Company and Freight Solutions International, including the exhibit Form of
Registration Rights Agreement.
99.1 Pro Forma Balance Sheet of the Company as of September 30, 1996.
</TABLE>
12
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATE: October 31, 1996 SYQUEST TECHNOLOGY, INC.
(Registrant)
By: /s/ Edwin L. Harper
----------------------------------
Edwin L. Harper, President and
Chief Executive Officer
13
<PAGE>
EXHIBIT 99.1
SyQuest Technology, Inc.
Pro Forma Balance Sheet
-----------------------
(in thousands)
<TABLE>
<CAPTION>
Estimated Pro Forma Pro Forma
9/30/96 Adjustments 9/30/96
--------- ----------- ---------
<S> <C> <C> <C>
Assets
Current Assets
Cash and Cash equivalents $ 3,329 (6) $28,500 $ 31,829
Short Term Investments 200 200
Account Receivable 32,669 32,669
Inventories 12,508 12,508
Other Current Assets 2,741 2,741
--------- ------- ---------
Total Current Assets 51,447 28,500 79,947
Property, Equipment and Leasehold Improvements 58,004 58,004
Less: Accumulated Depreciation (30,176) (30,176)
--------- ------- ---------
Net Property and Equipment 27,828 27,828
Other Assets 1,938 1,938
--------- ------- ---------
Total Assets $ 81,213 $28,500 $ 109,713
========= ======= =========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable (1) $ 27,424 (5) $(4,224) $ 23,200
Accrued Liabilities 17,355 17,355
Notes Payable to Bank 19,881 19,881
Short Term Notes Payable (1) 20,173 (5) (4,125) 16,048
Convertible Subordinated Debenture, Current Portion 2,559 2,559
--------- ------- ---------
Total Current Liabilities 87,392 (8,349) 79,043
Short Term Notes Payable (1) 17,648 (5) (883) 16,765
Deferred Rent 192 192
Deferred Income Taxes 1,139 1,139
Convertible Subordinated Debenture 5,120 5,120
Stockholders' Equity
Preferred Stock (2) 18,233 (6) 28,500 46,733
Common Stock and Additional Paid in Capital (3) 84,454 (5) 9,232 93,686
Treasury Stock (12,855) (12,855)
Retained Earnings (4) (120,110) (120,110)
--------- ------- ---------
Total Stockholders' Equity (30,278) 37,732 7,454
Total Liabilities and Stockholders' Equity $ 81,213 $28,500 $ 109,713
========= ======= =========
</TABLE>
<PAGE>
Confidential
SyQuest Technology, Inc.
Unaudited Pro Forma Balance Sheet
The unaudited pro forma consolidated balance sheet for SyQuest Technology, Inc.
(the Company) presents the consolidated financial position for the Company after
giving effect to issuance of preferred stock, and conversion of notes payable
and convertible subordinated debentures to common stock subsequent to September
30, 1996. The financial position for the Company at September 30, 1996 is
unaudited, and the Company's management expects to file audited results in its
Form 10-K on or before December 29, 1996.
(1) As of September 30, $38.9 million of accounts payable had been converted
into notes payable, part of which is classified as short term notes payable and
part of which is classified as long term notes payable.
(2) As of September 30, $18.2 million of redeemable convertible preferred stock
was reclassified into preferred stock because it can no longer be redeemed by
the holder.
(3) As of September 30, a vendor of the Company exchanged $2.3 million of notes
payable into shares of common stock at a price of $6.30 per share.
(4) Includes an estimated loss of $10.4 million for fourth quarter Fiscal 1996.
(5) Subsequent to September 30, certain vendors exchanged an additional $9.2
million of notes payable to common stock. The number of shares, and the average
price per share, are as follows:
<TABLE>
<CAPTION>
Date of Note Shares Average
Exchange Exchange Received Price per Share
<S> <C> <C> <C>
10/23/96 $ 6,080,397 992,717 $ 6.13
10/25/96 1,759,261 293,210 6.00
10/18/96 1,392,440 218,422 6.37
----------- --------- ------
Total $ 9,232,098 1,504,349 $ 6.14
</TABLE>
(6) Subsequent to September 30, the Company issued an additional $30 million of
preferred stock. Net proceeds from the sale of preferred stock was $28.5
million. Preferred stock is convertible after December 15, 1996 into shares of
common stock at a price based on the market value at the time of conversion.
As of September 30, 1996, and as adjusted to reflect the exchanged of debt to
equity occuring thereafter (See Note 5, above) the total issued and outstanding
shares of Common Stock are 13,867,370.
