SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 11, 1996
SYQUEST TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-19674 94-2793941
(Commission File Number) (IRS Employer Identification No.)
47071 Bayside Parkway, Fremont, California 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 226-4000
Not Applicable
(Former name or former address, if changed since last report.)
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events
Continuation of Nasdaq National Market Listing
By letter dated November 11, 1996, a copy of which is
attached hereto as Exhibit 99.1 and incorporated herein by
reference, The Nasdaq Stock Market, Inc. ("Nasdaq") advised Syquest
Technology, Inc. ("Registrant") that a determination had been made
that Registrant has met the terms of the exception set forth in the
Listing Qualifications Panel Decision dated September 16, 1996, and
that Registrant will continue to be listed on the Nasdaq National
Market. Registrant announced this event in a press release on
November 7, 1996, a copy of which is attached hereto as
Exhibit 99.2.
Letter of Intent to Acquire a Controlling Interest in Nomai
On November 18, 1996, Registrant and Herve Frouin and
Marc Frouin (the "Frouins"), owners of a controlling interest in
Nomai, S.A. ("Nomai"), announced the execution of a Letter of
Intent proposing a transaction to acquire approximately 605,835
shares of Nomai from the Frouins in exchange for 3,422,968 shares
of the Registrant's common stock. Registrant would then seek
approval of French and U.S. regulatory authorities to make a tender
offer for the remaining Nomai shares held by the French public.
This proposed transaction is more particularly described in the
press release attached as Exhibit 99.4 and the Letter of Intent
attached as Exhibit 99.5 (the number of shares to be
acquired/exchanged varies slightly from the number of shares set
forth in Exhibit 99.4, as more current information has become
available).
It is expected that the acquisition of the Frouins'
shares, which represent approximately two-thirds of the outstanding
Nomai shares, will close in early 1997 and that the tender offer to
the remaining Nomai shareholders will be completed shortly
afterward. The acquisition is subject to the negotiation and
execution of definitive agreements, as well as to customary closing
conditions, including approval by Registrant's shareholders.
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Item 7. Financial Statements and Exhibits
c) Exhibits
99.1 Letter from Nasdaq to Counsel for Registrant dated
November 11, 1996
99.2 Registrant's Press Release dated November 7, 1996
99.3 Registrant's Press Release dated November 15, 1996
99.4 Registrant's Press Release dated November 18, 1996
99.5 Letter of Intent dated November 18, 1996 by and
among the Registrant, Herve Frouin and Marc Frouin
Item 9. Sales of Equity Securities Pursuant to Regulation S
On November 13, 1996, pursuant to a Subscription
Agreement dated November 12, 1996 (the "Agreement"), Registrant
sold to Fletcher International Limited, a company organized under
the laws of the Cayman Islands ("Purchaser"), 1,500,000 newly
issued shares (the "Shares") of Registrant's common stock, par
value $.001 per share ("Common Stock"), at a price of $5.6875 per
Share, an aggregate price of $8,531,250. At the same time,
pursuant to the Agreement, Registrant also granted to Purchaser a
warrant (the "Warrant") to purchase additional shares of Common
Stock ("Warrant Shares") at the same price per share. The number
of Warrant Shares available for purchase under the Warrant will not
be less than 375,000 Warrant Shares or more than 1,875,000 Warrant
Shares. If Purchaser owns at least 750,000 shares of Common Stock
on July 12, 1997, or if, prior to July 12, 1997, Registrant enters
into a reorganization of a type specified in the Warrant, the
Warrant will entitle Purchaser to purchase any or all of 1,875,000
Warrant Shares. Otherwise, if Purchaser owns fewer than 750,000
shares of Common Stock on July 12, 1997, the number of Warrant
Shares may be reduced, according to a formula set forth in the
Warrant, based on the average of the daily volume-weighted average
prices of the Common Stock as reported by Bloomberg, L.P. for the
8-month period from November 13, 1996, through July 12, 1997. The
number of Warrant Shares is also subject to adjustment in certain
events and Registrant may be required to purchase the Warrant (to
the extent unexercised) at its Black-Scholes value if Registrant
enters into a reorganization transaction of a type specified in the
Warrant. The Warrant will expire, to the extent that it is not
exercised, on November 13, 2001. The Shares, the Warrant and the
Warrant Shares have not been registered under the Securities Act of
1933, as amended, in reliance on Regulation S promulgated by the
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Securities and Exchange Commission thereunder. Registrant
announced this transaction in a press release on November 15, 1996,
a copy of which is attached hereto as Exhibit 99.3.
SIGNATURES
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.
SYQUEST TECHNOLOGY, INC.
(Registrant)
Date: November 18, 1996 By /s/ Edwin L. Harper
Edwin L. Harper,
President and Chief
Executive Officer<PAGE>
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Exhibit 99.1
THE NASDAQ STOCK MARKET, INC. NASDAQ
DAVID A. DONOHOE, JR.
COUNSEL
November 11, 1996
Steven O. Gasser, Esquire
Shartsis, Friese & Ginsburg, LLP
Eighteenth Floor
One Maritime Plaza
San Francisco, CA 94111
Re: Syquest Technology, Inc.
Nasdaq Listing Qualifications Panel
Decision NQ 1364N-96
Dear Mr. Gasser:
Based upon a review of the Forms 8-K and 8-KA dated October 31,
1996 (including exhibits) and all other documentation provided to
Nasdaq, a determination has been made that the Company has met the
terms of the exception set forth in the Listing Qualifications
Panel Decision dated September 16, 1996. Accordingly, the Company
will continue to be listed on the Nasdaq National Market. If you
have any questions, please do not hesitate to contact me at (202)
496-2529.
Sincerely,
/s/ David A. Donohoe, Jr.
David A. Donohoe, Jr.
Counsel
Listing Qualifications Hearings
1735 K STREET, NW WASHINGTON, DC 20006-1500 202-496-2500 FAX 202-
496-2695
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Exhibit 99.2
FOR IMMEDIATE RELEASE:
SYQUEST EXCEEDS NASDAQ LISTING REQUIREMENTS
Company Receives Official Approval from National
Association of Securities Dealers
FREMONT, Calif., Nov. 7, 1996 - SyQuest Technology, Inc.
(NASDAQ:SYQT) a world leader in removable cartridge hard drives,
said today that it has exceeded the financial requirements of
NASDAQ and will maintain its National Market listing on the
exchange. Approval came from the National Association of
Securities Dealers (NASD) after the company provided detailed
information relating to its net tangible assets, capital and
surplus.
"We have taken major steps to stabilize and strengthen
SyQuest in the last several months," said Ed Marinaro, chairman of
the board. "This announcement represents an important milestone
and allows us to move ahead on aggressive corporate and product
plans that were set in motion earlier in the year."
SyQuest's new management team, installed in May, has been
working to establish business partnerships, rebuild the company's
balance sheet and resume profitable operations, Marinaro said.
Since mid-summer, the company has completed $61.5 million worth of
equity investments and restructured another $38.5 million of debt
into notes-payable ranging in duration from 12 to 36 months.
About SyQuest
SyQuest Technology, Inc., is a world leader in removable
cartridge hard drives. Founded in 1982, the company has an
installed base of more than three million drives and 15 million
cartridges worldwide. SyQuest is headquartered in Fremont,
California, and maintains manufacturing facilities in Fremont,
California, and Penang (Malaysia) with additional facilities in
Colorado, California, Europe and Asia. The company offers
removable cartridge hard drives for Apple, Windows, MS-DOS, UNIX,
SG and Sun OS platforms. SyQuest (SYQT) is publicly traded on
NASDAQ's National Market System. See SyQuest on the World Web at
hppt://www.syquest.com.
This news release contains forward-looking statements that involve
risks and uncertainties, including competition in the marketplace
for the company's products, other risks detailed from time to time
in the SEC reports filed by SyQuest, including the report on Form
10-Q filed by SyQuest for the quarter that ended June 30, 1996, <PAGE>
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Form S-3 filed August 29, 1996, as supplemented, Form 8-K/A filed
November 1, 1996, and completion of documentation necessary to
create the proposed joint venture with Legend Group.
SyQuest and the SyQuest logo are registered trademarks of SyQuest
Technology, Inc. All other brands or tradenames are the property
of their respective companies.<PAGE>
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Exhibit 99.3
FOR IMMEDIATE RELEASE:
SYQUEST ADDS $8.5 MILLION IN LATEST INVESTMENT
COMPANY CONTINUES TO BUILD EQUITY BASE; TOTAL REACHES $70 MILLION
FREMONT, Calif., November 15, 1996 - SyQuest Technology, Inc. -
(NASDAQ:SYQT), a world leader in removable cartridge hard drives,
has completed an $8.5 million offshore transaction with Fletcher
International Limited, an international investment firm. Under the
terms of the arrangement, Fletcher purchased 1,500,000 shares of
SyQuest common stock at $5.6785 per share, the price at close of
business on Tuesday, November 12.
SyQuest also granted to Fletcher five-year warrants to
purchase additional shares of common stock at the same price, the
maximum number of warrant shares ranging from 375,000 to 1,875,000,
depending on, among other things, the number of shares Fletcher
owns on July 12, 1997.
"SyQuest has now received a total of $70 million in
equity investments since mid-summer," said Ed Marinaro, chairman.
"This latest transaction of $8.5 million from Fletcher underscores
our continuing ability to attract investors as we rebuild our
balance sheet and aggressively move forward toward our objectives."
The company, as previously announced, has also
restructured $38.5 million of debt into notes-payable, ranging in
duration from 12 to 36 months, Marinaro said.
About SyQuest
SyQuest Technology, Inc., is a leading manufacturer of
removable cartridge hard drives, with an installed base of more
than three million drives and 15 million cartridges worldwide.
SyQuest is headquartered in Fremont, California, and maintains
manufacturing facilities in Fremont, California, and Penang
(Malaysia) with additional facilities in Colorado, California,
Europe and Asia. The company offers removable cartridge hard
drives for Apple, Windows, MS-DOS, UNIX, SG and Sun OS platforms.
SyQuest (SYQT) is publicly traded on NASDAQ's National Market
System. See SyQuest on the World Web at hppt://www.syquest.com.
This news release contains forward-looking statements that involve
risks and uncertainties, including competition in the marketplace
for the company's products, other risks detailed from time to time
in the SEC reports filed by SyQuest, including the report on Form
10-Q filed by SyQuest for the quarter that ended June 30, 1996,
Form S-3 filed August 29, 1996, as supplemented and Form 8-K/A
filed November 1, 1996.<PAGE>
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SyQuest and the SyQuest logo are registered trademarks of SyQuest
Technology, Inc. All other brands or tradenames are the property
of their respective companies.
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Exhibit 99.4
Contact:
Ed Marinaro Fred Hoar
SyQuest Technology Miller/Shandwick Technologies
(510) 226-4142 (415) 962-9550
FOR IMMEDIATE RELEASE:
SYQUEST SIGNS LETTER OF INTENT TO ACQUIRE NOMAI, S.A.,
FRENCH REMOVABLE CARTRIDGE DRIVE MANUFACTURER
FREMONT, CALIFORNIA, November 18, 1996 - SyQuest Technology
(NASDAQ-SYQT), a leading supplier of removable cartridge hard
drives, announced that it has signed a letter of intent to acquire
controlling interest in Nomai, S.A., a major French manufacturer of
removable hard drives and cartridges.
Under terms of the letter of intent, SyQuest would acquire
from Marc and Herve Frouin 674,735 shares of Nomai, representing
two-thirds of Nomai's outstanding capital stock, in exchange for
3,441,217 shares of SyQuest common stock. SyQuest would then seek
approval of French and U.S. regulatory authorities to make a tender
offer for the remaining Nomai shares held by the French public.
"We are excited to join forces with Nomai and believe that the
two companies will form anew competitive force in the removable
cartridge arena," said Ed Marinaro, SyQuest chairman. "This
acquisition not only adds depth to our strong product portfolio but
increases our share of a growing worldwide market. It is another
important step in the restoration of SyQuest as a global
competitor."
It is expected that the acquisition of the Frouins' shares
will close in early 1997 and that the tender offer to the remaining
Nomai shareholders will be completed shortly afterward. The
acquisition is subject to the negotiation and execution of
definitive agreements, as well as to customary closing conditions,
including approval by SyQuest's shareholders.
SyQuest Technology, founded in 1982, has an installed base of
more than three million removable cartridge hard drives and 15
million cartridges worldwide. Headquartered in Fremont,
California, the company maintains manufacturing plants in Fremont
and in Penang, Malaysia, with additional facilities in California,
Colorado, Europe and Asia. SyQuest offers removable cartridge hard
drives for Apple, Windows, MS-DOS, PC-DOS, UNIX, SGI and SunOS
platforms. SyQuest can be referenced on the World Wide Web at
http://www.syquest.com.
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This news release contains forward-looking statements that
involve risks and uncertainties, including competition in the
marketplace for the company's products; other risks detailed from
time to time in the SEC reports filed by SyQuest, including the
report on Form 10-Q filed for the quarter that ended June 30, 1996;
Form S-3 filed August 29, 1996, as supplemented, and Form 8K/A
filed November 1, 1996.
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Exhibit 99.5
November 18, 1996
Mr. Marc Frouin
Mr. Herve Frouin
188, rue de la Liberte - B.P. 141
50301 AVRANCHES cedex
FRANCE
Re: Acquisition by SyQuest Technology, Inc., a Delaware
Corporation ("Buyer") of up to 100% of the Capital
Stock of Nomai, a societe anonyme organized under
the laws of France ("Company")
Gentlemen:
This Letter of Intent ("Letter") states the interests of
Buyer and Messrs. Marc Frouin and Herve Frouin (the "Sellers") in
entering into a transaction (the "Share Acquisition") pursuant to
which Buyer will acquire all shares of capital stock of the Company
held by the Sellers. Buyer shall acquire the 609,108 shares (the
"Shares") of capital stock of the Company, representing 66% of the
Company's issued and outstanding capital stock, from Sellers in
exchange for unregistered common stock of the Buyer. Buyer would
conduct a separate tender offer (the "Tender Offer") as promptly as
possible for the remaining 315,186 shares of capital stock of the
Company (the "Minority Shares") held by the public, all on such
terms as may be required by French authorities. It is the
intention of the parties to this Letter that the terms and
conditions of the Share Acquisition described herein will be set
forth in one or more definitive agreements (the "Definitive
Agreements") to be negotiated and signed on or before midnight
November 24, 1996.
1. THE SHARE ACQUISITION FROM SELLERS.
1.1 Purchase and Sale of Shares. Sellers shall
sell to Buyer all of the Shares free and clear of any and all
liens, security interests, claims and encumbrances of any kind.
The closing (the "Closing") of the Share Acquisition shall occur
promptly after (i) the execution of Definitive Agreements, (ii) the
receipt of all required regulatory approvals, and (iii) the receipt
of any approval of stockholders of Buyer that may be required. On
the date of this Letter Marc Frouin and Herve Frouin own, and on
the date of the Closing they will own, respectively, 307,789 and
301,319 Shares.
1.2 Consideration for Purchase. At the Closing,
Buyer shall deliver an aggregate of 3,441,217 shares (the "Buyer <PAGE>
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Shares") of Buyer common stock, $.001 par value ("Buyer Common
Stock") as follows: (i) 1,738,885 Buyer Shares to Marc Frouin (the
"MF-Buyer Shares"), and (ii) 1,702,332 Buyer Shares to Herve Frouin
(the "HF-Buyer Shares"). The Buyer Shares shall bear appropriate
legends reflecting restrictions on resale imposed by law and the
Definitive Agreements.
2. SHAREHOLDERS AGREEMENT.
2.1 Resale Restrictions. The Buyer Shares shall be
restricted, and their resale shall be subject to applicable law and
to the terms of a Shareholders Agreement (the "Shareholders
Agreement") to be executed by the parties at the Closing. The
Shareholders Agreement shall provide that disposition of the Buyer
Shares shall be restricted as follows (the "Resale Restrictions"):
(a) Sellers shall be entitled to resell (i) no
more than 860,304 of the Buyer Shares in the aggregate prior to
June 30, 1997, and (ii) no more than an additional 860,304 of the
Buyer Shares prior to January 1, 1998. Of the Buyer Shares resold
in 1997 pursuant to the preceding sentence, Herve Frouin would have
priority to sell up to 80% of the total permitted to be resold.
(b) In addition to the restrictions in 2.1(a),
for a period of three years after the Closing (the "Resale
Period"), disposition of the Buyer Shares will be restricted to:
(i) bona fide, underwritten public
offerings providing for a wide distribution and, to the knowledge
of Sellers and the underwriter, no sales in such offerings will be
made to any person who, together with such person's associates and
affiliates, would beneficially own securities of the Buyer with
more than 4.9% of the Buyer's aggregate voting power (a "4.9%
Holder");
(ii) sales pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended (the
"Act"), upon delivery of customary opinions of counsel and subject
to the limitations on sales to 4.9% Holders described in clause (i)
above;
(iii) private sales to persons who
Sellers establish will not be 4.9% Holders and who agree to be
subject to the Standstill Provisions and Voting Provisions (defined
below); and
(iv) in tender or exchange offers on the
same terms extended to all shareholders of the Buyer, if such offer
is not opposed by the continuing directors of the Buyer.
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2.2 Registration Rights. The Shareholders
Agreement shall also include customary registration rights,
including the following terms:
(a) Seller shall be entitled to one demand
registration right for the period commencing on January 1, 1997,
and ending June 30, 1997, one demand registration right for the
period commencing July 1, 1997, and ending December 31, 1997, and
up to three additional demand registration rights for the period
from January 1, 1998 until the end of the Resale Period. The
Sellers shall be required to register for resale a minimum of
350,000 Buyer Shares pursuant to any demand registration. Buyer
shall keep such registration statement(s) effective up to 120 days
if necessary to effect the sale of the registered Buyer Shares.
Buyer shall use its best efforts to cause a registration statement
registering a permitted resale of Buyer Shares to be effective
within 75 days after the exercise of Sellers' first demand
registration right.
(b) The Sellers shall also have an unlimited
number of piggyback registration rights during the Resale Period.
If, however, the managing underwriter in any such offering
determines in good faith and advises Sellers that the inclusion in
the registration statement of all of the Buyer Shares proposed to
be included would interfere with the successful marketing of all
securities proposed to be registered thereby, then Sellers shall
agree to downward adjustment in the number of Buyer Shares to be
included in such underwriting sufficient to alleviate fully such
marketing concern (the "Cut Back"). Any such Cut Back shall be on
a pro rata basis with persons other than Buyer registering shares
for resale pursuant to such registration statement, subject to the
terms of existing registration rights agreements.
(c) Such registration rights shall be
transferable to permitted transferees who acquire at least 100,000
Buyer Shares in private resales, except that demand registration
rights will be exercised by holders of a majority of the
outstanding Buyer Shares.
(d) Without the consent of the managing
underwriter(s) in an underwritten offering of Buyer's securities,
Sellers shall not effect any sale or distribution of the Buyer
Shares (other than in connection with such Seller's own
registration permitted by paragraph (b) hereof), including a Rule
144 sale, during the ten (10) day period prior to, and during the
ninety (90) day period beginning on, the effective date of the
registration statement filed by the Company in respect of such
underwritten offering.
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(e) The registration rights provisions of the
Shareholders Agreement shall include standard indemnification and
contribution provisions, and shall require the Buyer to pay the
expenses of Sellers, including without limitation, the cost of
registration, blue sky clearance (if any), and listing, but not
including underwriting discounts and fees and the cost of legal
counsel to the Sellers.
2.3 Standstill Provisions. The Shareholders
Agreement shall also provide that, during the Resale Period, the
Sellers shall be subject to customary standstill provisions (the
"Standstill Provisions") including:
(a) a prohibition on acquisitions of
additional shares (other than pursuant to employee stock options
granted to Marc Frouin by Buyer) of the Buyer without written
authorization of the Board of Directors of Buyer;
(b) prohibitions against effecting, proposing,
publicly commenting upon or advising any other person to effect or
propose (i) any acquisitions of securities or assets of Buyer, or
(ii) any tender offer, merger, recapitalization, asset sale or
other extraordinary transactions involving Buyer or its
subsidiaries; and
(c) a prohibition against forming, joining or
in any way participating in a group ("group") within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, or
otherwise acting in concert with any other person for the purpose
of acquiring, holding, voting or disposing of Buyer's voting
securities.
2.4 Voting Provisions. The Shareholders Agreement
shall also provide that, during the Resale Period, Sellers shall
comply with the following voting provisions (the "Voting
Provisions"):
(a) for 275 days after the Closing, Sellers
shall grant the Board of Directors an irrevocable proxy coupled
with an interest to vote the Buyer Shares in the Board's
discretion; and
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(b) during the period beginning 276 days after
the Closing and continuing through the end of the Resale Period,
Sellers shall grant the Board of Directors an irrevocable proxy
coupled with an interest to vote the Buyer Shares in favor of the
slate of directors nominated by the Board of Directors, against any
transaction or stockholder proposal publicly opposed by the Board
of Directors of Buyer, and proportionally with all shares of the
Buyer (not including the votes of any stockholder that has publicly
proposed a transaction or made a stockholder proposal that is
opposed by the Board of Directors in the 18 months prior to the
vote in question) with respect to matters submitted for a
stockholder vote that relate to mergers, business combinations,
acquisition of other businesses or their stock or assets, joint
ventures or the issuance of equity securities (including
authorization of new shares).
2.5 Termination of Marc Frouin's Employment.
(a) Any termination by Buyer or Marc Frouin of
Marc Frouin's employment with Buyer shall require written notice of
termination (a "Termination Notice") by the terminating party. If
Buyer shall terminate Mr. Frouin's employment for a reason other
than "cause" as defined in his employment agreement to be entered
with Buyer, or if Mr. Frouin shall terminate his employment with
Buyer for "good reason" as defined in his employment agreement the
Company shall have a call right (the "Call Right") to acquire all
of the MF-Buyer Shares on the following terms. The Company may
exercise the Call Right by delivering written notice of exercise
(the "Call Notice") to Marc Frouin within 10 business days of
receipt or delivery by the Company of the relevant Termination
Notice. If the Call Right is not timely exercised by delivery of
a Call Notice, then the Resale Restrictions contained in
Section 2.1 above, the Standstill Provisions contained in
Section 2.3 above, and the Voting Provisions set forth in
Section 2.4 above shall immediately terminate with respect to the
MF-Buyer Shares held by Marc Frouin. The Resale Restrictions,
Standstill Provisions, and Voting Provisions shall continue to
apply in all respects to the HF-Buyer Shares.
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(b) If the Call Right is timely exercised,
then Buyer shall purchase all MF-Buyer Shares held, directly or
indirectly, by Marc Frouin for a price in U.S. Dollars equal to the
greater of: (i) the average of the closing sales price of the
Buyer Common Stock on the principal trading market for such
security for the 10 trading days ending immediately prior to the
date of delivery of the Termination Notice, (ii) the average of the
closing sales price of the Buyer Common Stock on the principal
trading market for such security for all trading days beginning on
the Closing date and ending on the date immediately prior to the
delivery of the Termination Notice, and (iii) U.S. $4.00 per share.
If such cash amount is not delivered to Marc Frouin within 30
calendar days of the date of delivery of the Termination Notice,
the Call Right shall terminate without prejudice to any remedies
Mr. Frouin may have and the Resale Restrictions, Standstill
Provisions and Voting Provisions shall terminate with respect to
the MF-Buyer Shares.
(c) Notwithstanding the foregoing, the
Company's Call Right shall terminate if Marc Frouin shall deliver
a written election to have all Resale Restrictions, Voting
Provisions and Standstill Provisions continue for the full Resale
Period. Such notice must be delivered within 3 business days of
delivery by Buyer of a Call Notice.
3. Tender Offer for Minority Shares.
3.1 Tender Offer. As soon as feasible after the
Closing of the Share Acquisition, subject to receipt of all
required regulatory approvals, the Company shall conduct a separate
tender offer ("the "Tender Offer") for the Minority Shares, with
Buyer offering to exchange shares of Buyer Common Stock on terms to
be proposed to and approved by the French authorities. The parties
understand that Buyer may be required to register the shares of
Buyer Common Stock to be offered in the Tender Offer (the "Tender
Shares") with the U.S. Securities and Exchange Commission prior to
commencing the Tender Offer.
3.2 Listing of Tender Shares. The Buyer will use
its reasonable best efforts to list the Tender Shares on the Nasdaq
National Market and on the second marche or the nouveau marche of
the Paris bourse prior to the closing of the Tender Offer.
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4. Filings.
(a) Upon the terms and subject to the
conditions set forth in this Letter, each of the Sellers and the
Buyer will, and the Sellers will use their best efforts to cause
the Company to, make all necessary filings with respect to the
Tender Offer and the transactions contemplated by this Letter under
the applicable United States, French, European Union or other
foreign securities laws, rules and regulations and will use their
reasonable best efforts to obtain any required approvals and
clearances with respect thereto under such securities laws, rules
and regulations. Notwithstanding the preceding sentence, if an
exemption from the registration requirements under the Act is
available on a basis that would not (A) impede, impair or delay the
Tender Offer, (B) prevent the listing of the Buyer Common Stock to
be delivered in the Tender Offer on the NASDAQ National Market or
the Paris bourse or (C) adversely affect the value of the Tender
Shares to be received by minority stockholders of the Company
pursuant to the Tender Offer due to restrictions on transfer, lack
of liquidity, limitations on marginability and similar limitations,
there shall be no requirement to prepare or file a registration
statement in the United States with respect to the Buyer Common
Stock.
(b) The Buyer and the Sellers will use their
best efforts and cooperate with one another (i) in promptly
determining what other filings are required to be made or consents,
approvals, permits or authorizations are required to be obtained
(or, which if not obtained, would result in an event of default,
termination or acceleration of any agreement) under any United
States or foreign law or regulation or from any governmental
authorities or third parties, including parties to loan agreements,
in connection with the transactions contemplated by this Letter and
(ii) to promptly make (or, in the case of the Sellers, cause the
Company to promptly make) any such filings, furnish information
required in connection therewith and in timely fashion seek to
obtain any such consents, approvals, permits or authorizations.
5. Stock Options. To the extent permitted by
applicable law, the Buyer will use reasonable efforts to convert at
the closing of the Tender Offer each outstanding option to purchase
shares of the Company's capital stock (a "Company Stock Option")
pursuant to the Company's current option plan (the "Company Stock
Plan") to the most nearly equivalent option to acquire Buyer common
stock as is possible under Buyer's existing option plans.
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6. Exclusivity. Each Seller agrees that, until the
earlier of the Closing date or February 7, 1997, he will not, and
will use his respective best efforts to cause the Company and the
affiliates, officers, employees, directors, representatives and
agents of the Company not to, (i) solicit, encourage, negotiate or
discuss, directly or indirectly, any inquiries, proposals or
offers, or to enter into any agreement or commitment, with any
person or entity (other than the Buyer and its advisors) concerning
any sale, pledge, encumbrance, assignment, disposition or issuance
of any capital stock or equity (including convertible securities)
of the Company or any merger, consolidation or other transaction
relating to the acquisition, licensing or purchase of all or any
material portion of the assets or equity of, or a business
combination or any similar transactions involving the Company, (ii)
grant any proxies, deposit any Shares in a voting trust or enter
into a voting agreement with respect to any Shares, or
(iii) disclose directly or indirectly to any person (other than the
Buyer and its advisors) considering a transaction described in
paragraphs (i) or (ii) any confidential information regarding the
Company, except that if the Buyer and the Sellers have not entered
into the Definitive Agreements by December 16, 1996, then,
notwithstanding anything in clause (i) of this paragraph to the
contrary, the Company may thereafter solicit, negotiate, discuss
and enter into transactions or commitments to issue and sell shares
of its capital stock to any person or entity for the purpose of
raising capital, entering into arrangements with its vendors and
customers, or otherwise, so long as the purchaser of such newly
issued capital stock in any such transaction is not a competitor of
the Company or the Buyer or a person directly or indirectly owned
or controlled by such a competitor.
7. Access to Information. Each Seller shall use
reasonable efforts to cause the Company to make available promptly
to (and allow copies to be made by) the Buyer and its agents and
representatives all available information relating to the Company
and its business and operations which the Buyer may request, and
shall permit the Buyer and its agents and representatives full
access to the Company's management, available financial data of
every kind, price lists, intellectual property of every kind,
employees, customers, records and facilities, and the Buyer shall
promptly make available to the Sellers all available information
relative to the Buyer's financial condition and business operations
as the Sellers may request. Information disclosed pursuant to this
Section 7 will be subject to the terms of the Mutual Nondisclosure
Agreement between the parties.
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8. Public Announcements. The parties shall promptly
issue the attached press release announcing this Letter and shall
agree on the text of a second press release to be issued at the
time of the execution of the Definitive Agreements. Thereafter,
except as may be required by applicable laws, court process or by
obligations pursuant to any listing agreement with a securities
exchange, no party shall issue any press release or make any public
filings relating to the transactions contemplated by this Letter
without affording the other parties an opportunity to review and
comment upon such release or filing.
9. Counterparts. This Letter may be executed in any
number of counterparts, each of which when so executed and
delivered shall be deemed an original, and such counterparts
together shall constitute only one original.
10. Definitive Agreements. The parties shall use their
respective best efforts to negotiate, prepare and execute the
Definitive Agreements on or before midnight on November 24, 1996.
If Definitive Agreements are executed they shall contain:
(a) Representations and warranties by the Sellers
customary to transactions of this type, including but not limited
to, representations and warranties as to the due organization and
capitalization of the Company, title to the Shares, the accuracy
and completeness of the financial statements and other disclosure
of the Company, disclosure of all contracts, commitments and
liabilities, absence of certain changes or events, absence of
affiliate transactions, the status of labor relations and benefit
plans, ownership of intellectual property rights, non infringement
of third party rights, absence of litigation, status of tax
matters, compliance with applicable laws, investment intent and
accredited investor status;
(b) Representations and warranties of Buyer
customary to transactions of this type, including but not limited
to, representations and warranties as to the due organization and
capitalization of the Company, validity of Buyer Shares,
authorization, binding agreement, and the accuracy and completeness
of the financial statements and the SEC filings of the Company; and
(c) Covenants of the Sellers customary to
transactions of this type, including without limitation covenants
to submit to jurisdiction of the California courts, and to operate
in the ordinary course until Closing; and
(d) Escrow provisions requiring escrow of the
Shares, until the Closing or the termination of the Definitive
Agreements, to the extent necessary to obtain specific performance
of the Definitive Agreements.
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11. Expenses; Break-Up Fee.
(a) In the event that the parties do not execute
Definitive Agreements, each party will bear its own expenses,
including without limitation accounting and legal expenses,
incurred in connection with this Letter and the transactions
contemplated hereby. If a Closing shall occur, each party will
bear its own expenses relating to this Letter and the transactions
contemplated hereby, except that the Buyer may bear reasonable out-
of-pocket expenses of the Sellers not to exceed $350,000.
(b) If at any time after the execution of this
Letter, the Sellers or the Company shall breach paragraphs 6 or 7
of this Letter, then the Sellers jointly and severally, will
promptly pay Buyer a fee of U.S. $2,000,000, which amount shall be
deemed liquidated damages and shall represent Buyer's sole and
exclusive remedy in such event.
(c) If the parties execute Definitive Agreements,
such agreements shall provide that, upon termination of such
agreements by either party following a knowing or intentional
breach of any representation, warranty, covenant or agreement by
Sellers or their failure to use best efforts to cure an inadvertent
breach that is curable in the time period provided (a "Termination
Event"), then the Sellers, jointly and severally, will promptly pay
Buyer a fee of U.S. $2,000,000. In addition, if prior to or within
nine (9) months after a Termination Event either Seller or the
Company shall sell or enter, directly or indirectly, an agreement
relating to a sale of any of the Shares and the sale of any of the
Shares shall thereafter be consummated, then each Seller shall pay
to Buyer, within one business day of such sale, all consideration
received in excess of FF 183.36 per Share, up to an aggregate of
U.S. $3,000,000.
12. Employment Agreement. At the Closing, Buyer will
enter into an agreement with Marc Frouin regarding the terms of his
employment with the Buyer. Buyer shall also offer employment
positions to all key management personnel of Company and shall
enter into mutually acceptable employment agreements with certain
key executives of the Company.
13. Entire Agreement. This Letter constitutes the
entire agreement between the parties relating to the terms hereof
and supersedes all other prior and contemporaneous agreements
(other than the Mutual Nondisclosure Agreement) and undertakings,
whether written or oral, among the parties with respect to the
subject matter hereof.
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14. Governing Law; Venue.
(a) THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW
THEREOF.
(b) The Sellers and the Buyer hereby agree that the
federal court of the Northern District of California or state court
in California shall have exclusive jurisdiction to hear and
determine any claims or disputes between the Seller and the Buyer
pertaining directly or indirectly to this Letter or to any matter
arising therefrom. The parties hereto further agree that the
parties will not bring suit with respect to any disputes arising
out of this Letter or the transactions contemplated hereby, except
as expressly set forth below for the execution or enforcement of
judgment, in any court or jurisdiction other than the above
specified court. The Sellers expressly submit and consent in
advance to such jurisdiction in any action or proceeding commenced
in such court. The foregoing shall not limit the rights of any
party to obtain execution of judgment in any other jurisdiction.
The parties further agree, to the extent permitted by law, that
final and unappealable judgment against any of them in any action
or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United
States by suit on the judgment, a certified or exemplified copy of
which shall be conclusive evidence of the fact and amount of such
judgment.
(c) To the extent that either Seller has or
hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the
Sellers hereby irrevocably waives such immunity in respect of its
obligations with respect to this Letter.
15. Halt Trading in Company Shares. Upon execution of
this Letter, Sellers shall cause their and the Company's investment
bankers in France to request that the SBF halt trading of the
Company's capital stock on the Paris bourse prior to announcement
of the Share Acquisition and request that trading remain suspended
until the earlier to occur of (i) the expiration of five trading
days and (ii) the execution of Definitive Agreements.
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16. Enforceability of Certain Provisions. The parties
to this letter understand and agree that no contract or agreement
providing for the Share Acquisition as contemplated by this Letter
shall be deemed to exist among the parties until Definitive
Agreements have been executed and delivered, and that only
Sections 6, 7, 8, 9, 11 (a) and (b), 13, 14, 15, the first sentence
of Section 10, and this Section 16 of this Letter shall be binding
on and enforceable by the parties. The other provisions of this
Letter reflect an expression of present intentions only and such
other provision shall have no legally binding or enforceable effect
whatsoever.
If this Letter satisfactorily evidences our present
understanding, please sign in the spaces provided below and return
to Buyer.
SYQUEST TECHNOLOGY, INC.
By: /s/ Edwin L. Harper
Edwin L. Harper
President and Chief Executive Officer
By: /s/ Marc Frouin
Marc Frouin, Individually
By: /s/ Herve Frouin
Herve Frouin, Individually
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