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) May 30,
1997
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.)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5 Other Events
Filing of Registration Statement on Form S-3
On May 30, 1997, SyQuest Technology, Inc. ("Registrant"
Registration Statement on Form S-3 (the "Registration Statement"), rela
to the registration of Registrant's Common Stock for resale by certain
Stockholders (as described in the Registration Statement attached heret
99.1 and incorporated herein by this reference). As part of the Regist
, Registrant updated the risk factors relevant to a decision as to whet
in Registrant's Common Stock.
Item 7 Financial Statements and Exhibits
c) Exhibits
99.1 Registrant's Registration Statement on Form S-3, as filed
Securities and Exchange Commission on May 30, 1997.
SYQUEST TECHNOLOGY,INC
(Registrant)
Dated: June 10, 1997 By /s/ Edwin L. Harper
Edwin L. Harper,
President and Chief Executive
<PAGE>
Exhibit 99.1
As filed with the Securities and Exchange Commission on May 30,
1997.
Registration No. __________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
SYQUEST TECHNOLOGY, INC.
(Exact name of registrant as specified in its c
DELAWARE 94-2793
(State or other jurisdiction of (I.R.S.
Employer Identification
incorporation Number)
or organization)
47071 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
(510) 226-4000
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
-------------------------------
- --
EDWIN L. HARPER
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
SYQUEST TECHNOLOGY, INC.
47071 BAYSIDE PARKWAY
FREMONT, CA 94538
(510) 226-4000
(Name, address, including zip code and telephone number,
including area code of agent for service)
____________________________________
COPIES TO:
M. GREG ALLIO
BENJAMIN L. DOUGLAS
SHARTSIS, FRIESE & GINSBURG LLP
ONE MARITIME PLAZA, EIGHTEENTH
FLOOR
SAN FRANCISCO, CA 94111
(415) 421-6500
Approximate date of commencement of proposed sale to the
public:
As soon as practicable after the Registration Statement becomes
effective.
- ------------------------------------
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans please check the following box. [ ]
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities
Act, please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement of the same offering. [ ]
If this Form is a post-effective amendment filed pursuant
to Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Maximum Proposed Maximum
Securities to to be Offering Price Aggregate Offering
registered registered Per Share Price2
Common Stock 54,640,512 $2.03125 $110,988,540.00
0.0001 par
value
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL 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.
// Includes (i) a presently indeterminate number of shares issued
or issuable upon conversion of or otherwise in respect of the Registran
Cumulative Convertible Preferred Stock, Series 3, (ii) a presently inde
of shares issuable upon conversion of or otherwise in
respect of Registrant's 5% Cumulative Convertible Preferred
Stock, Series 4, (iii) 34,325,000 shares issuable upon exercise of
certain outstanding stock purchase warrants, and
(iv) 6,172,432 shares issued to six suppliers of Registrant
as part of restructuring by Registrant of certain trade
payables, as such numbers may be adjusted in accordance with Rule 416.
// Estimated solely for the purpose of calculating the amount
of the registration fee pursuant to Rule 457(c), based
on the average of the high and low prices of Common
Stock reported in the Nasdaq National Market on May 23, 1997.
PROSPECTUS
SYQUEST TECHNOLOGY, INC.
54,640,512 SHARES
COMMON STOCK
(PAR VALUE $.0001 PER SHARE)
All of the shares of Common Stock, par value $.0001 per
share ("Common Stock") of SyQuest Technology, Inc., a Delaware
corporation ("SyQuest" or the "Company"), offered hereby are being
offered for resale by certain stockholders of the Company (the
"Selling Stockholders") as described more fully herein. The
Company will not receive any proceeds from the sale of the shares
offered hereby. The Common Stock of the Company is quoted on the
Nasdaq National Market under the symbol "SYQT." The last reported
sales price of the Company's Common Stock on the Nasdaq National
Market on May 23, 1997, was $2.0625 per share.
The shares of Common Stock offered hereby by the Selling
Stockholders consist of (i) a presently indeterminate number of
shares issued or issuable upon conversion or otherwise in respect
of 50,000 shares of the Company's 5% Cumulative Convertible
Preferred Stock, Series 3, par value $.001 (the "Series 3
Preferred Stock"), (ii) a presently indeterminate number of shares
issuable upon conversion or otherwise in respect of 280,000 shares
of the Company's 5% Cumulative Convertible Preferred Stock, Series
4, par value .001 (the "Series 4 Preferred Stock"), (iv) up to
34,325,000 shares issuable upon exercise of certain outstanding
stock purchase warrants (the "Stock Purchase Warrants") and (v) up
to 6,172,432 shares issued to six suppliers of the Company as part
of a restructuring by the Company of certain trade payables. For
the purpose of determining the number of shares of Common Stock to
be registered hereby, the number of shares of Common Stock
calculated to be issuable in connection with the conversion of the
Series 3 Preferred Stock and the Series 4 Preferred Stock is based
on an average closing market price of the Common Stock on the five
trading days preceding the date of such conversion of $2.343 per
share, which price is above the closing sales price of the Common
Stock as of May 23, 1997 ($2.0625 per share), and has been
arbitrarily selected. The number of shares available for resale is
subject to adjustment and could be materially less or more than
such estimated amount depending on factors which cannot be
predicted by SyQuest at this time, including, among others, the
future market price of the Common Stock. This presentation is not
intended, and should in no way be construed, to constitute a
prediction as to the future market price of the Common Stock. See
"Risk Factors -- Convertible Securities, Warrants and Options;
Potential Dilution and Adverse Impact on Additional Financing" and
"Selling Stockholders."
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE
A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
AT PAGE 4 OF THIS PROSPECTUS
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 May 30, 1997
(Cover Page Continued On Next Page)
All expenses of this offering will be paid by the Company
except for commissions, fees and discounts of any underwriters,
brokers, dealers or agents retained by the Selling Stockholders.
Estimated expenses payable by the Company in connection with this
offering are approximately $115,632.89. See "Plan of
Distribution." The aggregate proceeds to the Selling Stockholders
from the Common Stock will be the purchase price of the Common
Stock sold less the aggregate agents' commissions and
underwriters' discounts, if any. The Company has agreed to
indemnify the Selling Stockholders and certain other persons
against certain liabilities, including liabilities under the Act.
The Selling Stockholders, directly or through agents,
broker-dealers or underwriters, may sell the Common Stock offered
hereby from time to time on terms to be determined at the time of
sale, in transactions on the Nasdaq National Market, in privately
negotiated transactions or otherwise. The Selling Stockholders
and any agents, broker-dealers or underwriters that participate in
the distribution of the Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Act"), and any commission received by them and
any profit on the resale of the Common Stock purchased by them may
be deemed to be underwriting discounts or commissions under the
Act. See "Use of Proceeds" and "Plan of Distribution."
(Cover Page, Cont.)
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordanc
therewith, files annual and quarterly reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information ma
be inspected and copied at the Commission's Regional Offices at 7 World
Trade Center, 13th Floor, New York, New York 10048; and 500 West Madiso
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Common Stock of the Company is quoted on the Nasdaq Nationa
Market. Reports and other information concerning the Company may be
inspected at the National Association of Securities Dealers, Inc. at
1735 K Street, N.W., Washington, D.C. 20006. The Commission also
maintains a World Wide Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information
regarding registrants, including the Company, that file electronically
with the Commission.
A registration statement on Form S-3 with respect to the Common
Stock offered hereby (the "Registration Statement") has been filed with
the Commission under the Act. This Prospectus does not contain all of
the information contained in such Registration Statement and the
exhibits and schedules thereto, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission. For
further information with respect to the Company and the Common Stock
offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectu
regarding the contents of any contract or any other document are not
necessarily complete and, in each instance, reference is hereby made to
the copy of such contract or document filed as an exhibit to the
Registration Statement. The Registration Statement, including exhibits
thereto, may be inspected without charge at the Commission's principal
office in Washington, D.C., and copies of all or any part thereof may b
obtained from the Public Reference Section, Securities and Exchange
Commission, Washington, D.C. 20549, upon payment of the prescribed fees
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed or to be filed with the Commissi
under the Exchange Act are hereby incorporated by reference into this
Prospectus:
1) The Company's Annual Report on Form 10-K, as Amended, f
the fiscal year ended September 30, 1996;
2) The Company's Current Reports on Form 8-K dated June 14
1996, October 31, 1996, as amended, November 11, 1996, November 25,
1996, December 2, 1996, December 30, 1996; January 23, 1997, February 3
1997, April 14, 1997, and May 30, 1997;
3) The Company's Registration Statement on Form 8-A regist
the Common Stock under Section 12(g) of the Exchange Act; and
4) The Company's Current Reports on Form 10-Q dated
February 14, 1997; and May 15, 1997.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering shall be deemed
to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents. Any statement contained in this
Prospectus or in a document incorporated or deemed to be incorporated b
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 also is or is deemed
to be incorporated by reference herein modifies or supersedes such
statement. Any such 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, includi
any beneficial owner, to whom this Prospectus is delivered, upon writte
or oral request of such person, a copy of any and all of the documents
that have been incorporated by reference herein (not including exhibits
to such documents unless such exhibits are specifically incorporated by
reference herein or into such documents). Such request may be directed
to SyQuest Technology, Inc., 47071 Bayside Parkway, Fremont, California
94538, telephone (510) 226-4000, Attn: Henry C. Montgomery, Executive
Vice President, Finance and Chief Financial Officer.
"SyQuest" is a registered trademark of the Company, "EZ135," an
"EZ Flyer" and "SyJet" are trademarks of the Company. This Prospectus
also includes trademarks of companies other than SyQuest Technology,
Inc.
THE COMPANY
The Company designs, develops, manufactures, and markets remova
hard disk cartridges, associated disk drives and free-standing storage
systems. The Company's products combine the advantages of fixed hard
disk drives with the benefits of removability, which include unlimited
incremental expansion of data storage capacity, transfer and sharing of
data and software among personal computers, and backup, archival storag
and physical security of data. The Company's principal products have
been 5.25 inch and 3.5 inch cartridges, drives and storage systems used
with personal computers and work stations manufactured and sold by
manufacturers of such products. These products are typically purchased
by distributors, mail order firms, national retail chains, value added
resellers, original equipment manufacturers ("OEMs") for integration
into their equipment, government contractors and others for resale to
the end users.
The Company's principal executive offices are located at 47071
Bayside Parkway, Fremont, California 94538, telephone (510) 226-4000.
RISK FACTORS
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. THE
FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO TH
OTHER INFORMATION IN THIS PROSPECTUS BEFORE PURCHASING THE SHARES OF
COMMON STOCK OFFERED HEREBY. THE DISCUSSION IN THIS PROSPECTUS CONTAINS
IN ADDITION TO HISTORICAL INFORMATION, CERTAIN FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS STATEMENTS OF
THE COMPANY'S PLANS, BELIEFS, EXPECTATIONS AND INTENTIONS. THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THE FOLLOWING RISK FACTORS, A
WELL AS FACTORS DISCUSSED ELSEWHERE IN THIS PROSPECTUS. THE CAUTIONARY
STATEMENTS MADE IN THIS PROSPECTUS SHOULD BE READ AS BEING APPLICABLE T
ALL RELATED FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS
PROSPECTUS.
NEED FOR ADDITIONAL FINANCING; FUTURE CAPITAL NEEDS.
The Company has incurred losses in its fiscal year ended Septem
30, 1995, and in its fiscal year ended September 30, 1996. To meet its
working capital needs, the Company has engaged in a series of financing
transactions during calendar 1996 and 1997.
In June 1996, the Company closed the sale of 20,000 shares of 7
Cumulative Convertible Preferred Stock, Series 1 (the "7% Cumulative
Preferred Stock") for $20 million in gross proceeds. In July 1996, the
Company issued a $7.7 million 6% Convertible Subordinated Debenture (th
"Debenture") to one of its suppliers, of which a portion is convertible
into up to 400,000 shares of the Company's Common Stock at a conversion
price of $6.9375 per share. Subsequently, the Company worked out
repayment schedules with other major suppliers and converted
approximately $43.1 million of accounts payable and other obligations t
notes payable reflecting extended repayment terms. From late September
1996, through October 30, 1996, and from late February 1997, through
late April 1997, the Company exchanged with ten of these suppliers
approximately $24.44 million of notes payable for 8,047,269 shares of
Common Stock in the aggregate. In October 1996, the Company sold 5,500
shares of Cumulative Convertible Preferred Stock, Series 1 ("Convertibl
Preferred Stock") for $5.5 million in gross proceeds and sold 24,500
shares of 5% Cumulative Convertible Preferred Stock, Series 2 ("Series
Preferred Stock") for $24.5 million in gross proceeds. In November
1996, the Company sold 1,500,000 shares of its Common Stock for
approximately $8.5 million to an international investment firm and
granted that investor warrants to purchase up to 1,875,000 shares of
Common Stock, depending on, among other things, the number of shares of
Common Stock owned by such investor on July 12, 1997. In March 1997,
the Company sold 50,000 shares of the Series 3 Preferred Stock for
$5 million in gross proceeds. In May 1997, the Company sold 280,000
shares of the Series 4 Preferred Stock for $28 million in gross
proceeds. The terms of these financings are described in three of the
Company's Current Reports on Form 8-K dated, respectively, June 14,
1996, October 31, 1996, November 11, 1996, April 14, 1997, and May 30,
1997.
As of March 31, 1997, the Company had $3.2 million in cash and cash
equivalents. For the six months ended , March 31, 1997, the Company
used approximately $41.0 million of cash in operating activities and an
additional $2.0 million in capital equipment purchases. The Company
believes that, based on a number of events occurring, the current
sources of financing available to the Company will be sufficient to fun
the Company's operations into the near future. There can be no
assurance, however, that additional financing will be available when
needed, if at all, or on favorable terms. The Company is in the process
of performing an extensive review of its operating cost structure and
will implement spending levels consistent with revenue expectations. I
results of operations for fiscal 1997 do not meet management's
expectations, or additional capital is not available, management has th
ability and intent to reduce certain expenditures so as not to require
additional capital resources. The precise amount and timing of the
Company's funding needs cannot be determined accurately at this time,
and will depend upon a number of factors, including the market demand
for the Company's products, the progress of the Company's product
development efforts, the availability of critical components, the
Company's strategic alliances, if any, for the manufacture of its
products, the Company's inventory and accounts receivable management an
whether key suppliers will grant payment terms for the purchase of
materials and services. If additional funds are raised through the
issuance of equity securities, the percentage ownership of the
stockholders of the Company will be reduced, stockholders may experienc
additional dilution, and such securities may have rights, preferences
and privileges senior to those of holders of the Company's Common Stock
See "Risk Factors -- Convertible Securities, Warrants and Options;
Potential Dilution and Adverse Impact on Additional Financing."
RISK OF LOSING NASDAQ LISTING.
Based on the Company's recently filed Report of Form 10-Q for t
quarter ending March 31, 1997, the Company received notification from
The Nasdaq Stock Market that the Company may no longer meet the
requirements for continued inclusion in The Nasdaq Stock Market as a
Nasdaq National Market issuer. The Company believes that with the
recent equity financing in the gross amount of approximately $33 millio
and the recent exchanges of debt-to-equity in the approximate amount of
$12.87 million, the Company satisfies the listing requirements of a
Nasdaq National Market issuer. However, the Company continues to incur
losses, and as such there can be no assurance that the Company will con
the listing requirements of The Nasdaq National Market in the future.
Company fail to meet such listing standards, it may be delisted from th
Nasdaq Stock Market. Trading, if any, in the listed securities would
thereafter be conducted on the Electronic Bulletin Board or the Nationa
Quotation Bureau's "pink sheets." As a result, should delisting occur,
an investor may find it difficult to dispose of, or to obtain accurate
quotations of the price of, the Company's securities. This would likel
have a material and adverse effect on the market price of the Company's
Common Stock and on the Company's ability to raise additional capital.
CONVERTIBLE SECURITIES, WARRANTS AND OPTIONS; POTENTIAL DILUTION AND
ADVERSE
IMPACT ON ADDITIONAL FINANCING.
As of May 23, 1997, the Company had outstanding options and
warrants to purchase an aggregate of 45,790,642 shares of Common Stock,
at a weighted average exercise price of $2.6590 per share. The exact
number of shares of Common Stock issuable upon conversion of the 5%
Cumulative Preferred Stock, the Series 3 Preferred Stock and the
Series 4 Preferred Stock (collectively, the "Preferred Stock") cannot b
estimated with certainty because, generally, such issuances of Common
Stock will vary inversely with the market price of the Common Stock at
the time of such conversion, and there is no cap on the number of share
of Common Stock that may be issuable. The number of shares of Common
Stock issuable upon conversion of the Preferred Stock is also subject t
various adjustments to prevent dilution resulting from stock splits,
stock dividends or similar transactions. Further, the Company may, at
its election, choose to issue additional shares of Series 3 Preferred
Stock or Series 4 Preferred Stock in lieu of cash dividends due to the
holders of the Series 3 Preferred Stock and the Series 4 Preferred
Stock, respectively.
In addition, on November 13, 1996, SyQuest sold to an investor
1,500,000 shares of Common Stock that became freely tradeable, subject
to compliance with applicable securities laws, on approximately Februar
12, 1997. As part of this same transaction, the Company issued a
warrant that will become exercisable for between 375,000 shares and
1,875,000 shares of Common Stock, depending on a number of factors.
To the extent that such options and warrants are exercised, sha
of Common Stock or Series 3 Preferred Stock or Series 4 Preferred Stock
are issued in lieu of cash dividends or convertible securities are
converted, substantial dilution of the interests of the Company's
stockholders is likely to result and the market price of the Common
Stock may be materially adversely affected. Such dilution will be
greater if the future market price of the Common Stock decreases. For
the life of such warrants, options and convertible securities the
holders will have the opportunity to profit from a rise in the price of
the underlying securities. The existence of such warrants, options and
convertible securities is likely to affect materially and adversely the
terms on which the Company can obtain additional financing, and the
holders of such warrants, options and convertible securities can be
expected to exercise them at a time when the Company would otherwise, i
all likelihood, be able to obtain additional capital by an offering of
its unissued capital stock on terms more favorable to the Company than
those provided by such warrants, options and convertible securities.
The Company has filed Registration Statements on Form S-8 under
the Act to register shares of Common Stock subject to stock options and
to the Company's employee stock purchase plan that will permit the
resale of such shares, subject to Rule 144 volume limitations applicabl
to affiliates of the Company and vesting restrictions. The Company has
also registered the Common Stock issuable upon exercise of the warrants
and conversion of the convertible securities pursuant to a prospectus
included in Registration Statement Nos. 333-7369 and 333-17119. Such
registered shares can be sold without any holding period or sales volum
limitations. The registration of the shares set forth in the Selling
Stockholders table set forth below is in addition to the shares
previously registered.
UNCERTAINTY OF MARKET ACCEPTANCE OF PRODUCTS.
The Company's future success will depend upon market acceptance
its new products and upon the Company's ability to establish its new
products as industry standards. In December 1996, the Company began
shipping its SyJet 1.5 Gigabyte Removable Cartridge Hard Drive (SyJet)
product line. During the quarter ended March 31, 1997, the Company
commenced volume sales of SyJet which accounted for approximately 46.4%
of the total Company sales for the quarter then ended. While the
Company believes that the SyJet product line has been favorably receive
by the marketplace, there can be no assurance that the level of
acceptance will continue or grow. Through March 31, 1997, SyJet
production was constrained by industry-wide shortages of critical
components and other production shortfalls. While the Company continues
its efforts to increase its manufacturing output for SyJet to meet the
sales demand there can be no assurances that the Company will be
successful in manufacturing the required unit volumes or that the
product will continue to be accepted in the marketplace.
The SyQuest technology is different from the most widely used d
storage devices today (hard disk drives, floppy disk drives and CD-ROM
drives). No new type of read/writable data storage device has achieved
widespread market acceptance in recent years and there can be no
assurance that the Company's new products will achieve market
acceptance. Whether the Company's new products will achieve significant
market acceptance will depend upon a number of factors, including the
price, performance and other characteristics of competing solutions
introduced by other vendors, the timing of the introduction of such
products, and the success of the Company in establishing OEM
arrangements for the Company's new products. See "Risk Factors -
Competition" and "- Shortages of Critical Components; Absence of Supply
Contracts; Supplier Workouts." There can be no assurance that the
Company will be successful in satisfying any of these factors. In
addition, the two formats of removable-media storage which have gained
widespread market acceptance to date--floppy disk drives and CD-ROM
drives--are both used by software manufacturers as a means of software
distribution. The Company's products are not currently used for softwar
distribution. The failure of the Company's new products to achieve
widespread commercial acceptance would have a material adverse effect o
the Company's financial results and business.
CONTINUED SALES OF THE EZ FLYER 230, AND; DISCONTINUATION OF EZ135.
Through the second quarter ended March 31, 1997, EZ Flyer 230
sales accounted for approximately 25.0% of the Company's revenue
compared to approximately 34.4% for the first quarter ended December 31
1996. While the Company believes that the EZ Flyer 230 will continue t
be an important contributor to the Company's revenue in the near future
there can be no assurances, in the face of increased competition and
higher capacity solutions, that the demand for the EZ Flyer 230 will
continue at current levels.
The Company's EZ135 products accounted for 4% of revenue for th
second quarter ended March 31, 1997, compared to 16.1%, 16.0%, 45.0%,
46.0%, and 42.0% for the quarters ended December 31, 1996, September 30
1996, June 30, 1996, March 31, 1996, and December 31, 1995,
respectively. The Company discontinued production of the EZ135 during
the fourth quarter of fiscal 1996. However, the Company continues to
sell available stock. While the EZ135 has made a contribution to
revenue during the quarter ended March 31, 1997, there can be no
assurances that sales of this product line will continue.
SHORTAGES OF CRITICAL COMPONENTS; ABSENCE OF SUPPLY CONTRACTS; SUPPLIER
WORKOUTS.
Many components incorporated in, or used in the manufacture of,
the Company's products are currently only available from sole source
suppliers. During the 1996 fiscal year and the first two quarters of
fiscal 1997, the Company experienced disruption in its supply of certai
components for a number of reasons including, industry wide shortages
and the shortage of cash to pay suppliers. During Fiscal 1996, Compone
shortages due to limited cash availability affected the Company's abili
to produce EZ Flyer 230 products and limited the Company's ability to i
certain cost reduction and productivity improvement plans. Moreover, th
Company may continue to experience difficulty in the future in obtainin
a sufficient supply of many key components due to the shortage of cash
to pay suppliers and other reasons. A disruption in the supply of key
components have had and may have a material adverse affect on the Compa
to generate sales and the ability to successfully produce SyJet product
necessary to meet demand. If such disruption continues, the Company's
generate sales and increase revenues will be materially adversely
effected.
On July 15, 1996, the Company issued the Debenture to one of it
suppliers pursuant to which up to 400,000 shares of Common Stock could
be issued to such supplier at a conversion price of $6.9375 per share.
Subsequently, the Company negotiated with other suppliers to extend the
payment dates on amounts owed. The Company conducted similar
negotiations with other suppliers, converting a total of approximately
$43.1 million of accounts payable and other obligations to those
suppliers, to notes payable to reflect extended repayment terms. In
September and October 1996, February, March and April 1997,the Company
received certain of those notes payable in exchange for an aggregate of
8,047,269 shares of Common Stock. As a result of the Company's
completion of recent financing transactions and other efforts by
management to improve SyQuest's balance sheet, a number of Company
suppliers have begun to transition from doing business with the Company
on a C.O.D. basis and are selling to the Company under more standard
commercial terms. Many of SyQuest's key suppliers are continuing to do
business with SyQuest on a C.O.D. basis only, however, which places
demands on the Company's available cash resources that may limit its
financial flexibility and its ability to meet market demand for its
products.
The Company purchases all of its sole and limited source
components and equipment pursuant to purchase orders placed from time t
time and has no guaranteed supply arrangements. The inability to obtai
sufficient components and equipment, to obtain or develop alternative
sources of supply at competitive prices and quality, or to avoid
manufacturing delays could prevent the Company from producing sufficien
quantities of its products to satisfy market demand, result in delays i
product shipments, increase the Company's material or manufacturing
costs, or cause an imbalance in the inventory level of certain
components. Moreover, difficulties in obtaining sufficient components
may cause the Company to modify the design of its products to use a mor
readily available component, and such design modifications may result i
increased costs and product performance problems. Any or all of these
problems could in turn result in the loss of customers, provide an
opportunity for competing products to achieve market acceptance and
otherwise adversely affect the Company's business and financial results
COMPETITION.
The data storage industry is highly competitive. The Company
believes that its products compete most directly with other
removable-media data storage devices, such as disk drives offered by
Iomega Corporation and magneto optical disk drives. Although the
Company believes that its products offer performance and certain other
advantages over most other removable-media storage devices available
today, the Company believes that the price/performance levels of
existing removable-media products will improve and that other companies
will introduce new removable-media storage devices. Accordingly, the
Company believes its products will face increasingly intense
competition. In particular, a consortium comprising Compaq Computer, 3M
Insite and Matsushita-Kotobuki Electronics Industries Ltd. has announce
and is selling the LS120, a high capacity floptical drive that is
compatible with conventional floppy disks. Each of Mitsubishi Electric
Corp. and Mitsumi has also announced that it plans to manufacture a hig
capacity, floppy drive that is downward compatible with existing floppy
diskettes. If successfully marketed, these drives would compete with
the Company's EZ products. The Iomega Zip drive, a high capacity flopp
disk drive, is a competitor to EZ Flyer 230. The JAZ drive is Iomega's
first removable hard drive and competes directly with SyQuest's
products. In addition, to the extent that SyQuest drives are used for
incremental primary storage capacity, they also compete with
conventional hard disk drives. In addition, the leading suppliers of
conventional hard disk drives could at any time determine to enter the
removable-media storage market.
As new and competing removable-media storage solutions are
introduced, it is possible that the first such solution to achieve a
significant market presence will emerge as an industry standard and
achieve a dominant market position. If such is the case, there can be
no assurance that the Company's products would achieve significant
market acceptance, particularly given the Company's size and market
position relative to its competitors.
TECHNOLOGICAL CHANGE AND NEW PRODUCTS.
The Company operates in an industry that is subject both to rap
technological change and rapid change in consumer demands. For example
over the last 10 years the typical hard disk drive included in a new
personal computer has increased in capacity from approximately 40
megabytes (Mbs) to 2 gigabytes (GB) or more, while the market price per
megabyte of a hard disk drive has dramatically decreased. The Company'
future success will depend in significant part on its ability
continually to develop and introduce, in a timely manner, new removable
disk drive products with improved features, and to develop and
manufacture those new products within a cost structure that enables the
Company to sell such products at lower prices than those of comparable
products today. In addition, the Company depends on technological
developments from other vendors for the components in its products (suc
as heads, semiconductor devices and media). The Company's
EZ Flyer 230 which is targeted for sale to the Company's
traditional customer base in the desktop publishing, prepress and
service bureau segments, as well as to a broad array of users in the
SOHO (Small Office/Home Office) market segment. The SyJet 1.5 GB
removable cartridge hard drive is targeted towards computer, audio and
video OEMs, as well as retail, the Company's traditional customer base
and the SOHO market segment. The Company believes that this product
will compete with the Iomega JAZ. There can be no assurance that the
Company will be successful in developing, manufacturing and marketing
cost effective products (including the EZ Flyer 230 and the SyJet 1.5
GB) that meet both the performance and price demands of the data storag
market.
DEPENDENCE ON STRATEGIC MARKETING ALLIANCES.
The Company's business strategy depends in significant part on
establishing successful strategic alliances with a variety of key
companies within the computer, audio and video industries. Among the
types of alliances contemplated by the Company's business strategy are:
OEM arrangements with personal computer, audio and video manufacturers
that will include SyQuest products as a standard feature or
factory-installed option in their personal computers; reseller
arrangements (including private and co-branding arrangements) with majo
vendors of computer products covering the resale of the Company's
products by such companies; and licensing arrangements under which the
Company grants certain computer manufacturers on a royalty-bearing basi
the right to manufacture and sell its drives or media. Moreover, the
Company believes that establishing strategic alliances (especially OEM
arrangements) is critical to the success of its business, and there can
be no assurance that the Company will be successful in doing so. In
addition, the Company's strategic alliances are generally not covered b
binding contracts and may be subject to unilateral termination by the
Company's strategic partners, and may also require the Company to share
control over its manufacturing and marketing programs and technologies.
RELIANCE ON MANUFACTURING RELATIONSHIPS;
The Company plans to continue to use independent parties to
manufacture for the Company a portion of the Company's components. The
Company currently has manufacturing relationships
for cartridges and others for manufacture and subassembly of components
In September 1996, the Company and Legend Group ("Legend"), the
largest computer systems manufacturer and distributor in the People's
Republic of China, announced an intention to form a joint venture
company for the manufacture and distribution of the Company's removable
cartridge hard drives and products in China and to make Legend the
exclusive distributor of the Company's products in the developing
Chinese market. The Company would provide the proposed joint venture
company with training and manufacturing know-how to insure that the
joint venture had the requisite skills to manufacture the Company's
removable cartridge hard drives and products. It is anticipated that
both Legend and the Company would contribute the capital required for
the joint venture. The Company and Legend entered into a
Memorandum of Understanding under which Legend would invest up to $20
million in the Company. Negotiations regarding such an equity investme
been deferred. The completion of any such investment may require appro
Company's stockholders pursuant to Nasdaq listing rules and may be
subject to a waiting period pursuant to the Hart-Scott-Rodino Act. In
December 1996, the Company and Legend announced a distribution agreemen
whereby Legend has become the exclusive distributor of the Company's
products in the developing Chinese market.
There can be no assurance that the Company will be successful in mainta
manufacturing relationships, that the joint venture or financing agreem
with Legend will be consummated or successful, or that the Company will
successfully establish additional relationships in the future or
successfully manage such manufacturing relationships. The lawsuit
against Nomai and either the completion of or failure to complete the
proposed transactions with Legend could have numerous consequences that
could affect the Company materially and adversely. The Company's
manufacturing relationships are generally not covered by binding
contracts and may be subject to unilateral termination by the Company's
manufacturing partners. Moreover, there can be no assurance that
third-party manufacturers will be willing or able to meet the Company's
quantity or quality requirements for manufactured products.
QUARTERLY FLUCTUATIONS IN OPERATING RESULTS.
The Company has experienced and in the future may continue to
experience significant fluctuations in its quarterly operating results.
Factors such as price reductions, the introduction and market
acceptance of new products, product returns, the availability of
critical components and the lower gross margins associated with the
Company's newly introduced products could contribute to this quarterly
variability. Moreover, the Company's expense levels are based in part
on expectations of future sales levels, and a shortfall in expected
sales could therefore result in a disproportionate decrease in the
Company's results of operations. As a result of these and other
factors, it is likely that the Company's operating results in some
future period will be below the expectations of investors, which would
be likely to result in a significant reduction in the market price of
the Common Stock.
DEPENDENCE ON PROPRIETARY TECHNOLOGY; INTELLECTUAL PROPERTY LITIGATION.
The Company's success depends heavily on the establishment and
maintenance of proprietary technologies. The Company relies on a
combination of patent, copyright and trade secret law to protect the
technology in its drives and cartridges. The Company holds numerous
U.S. and foreign patent applications relating to its drives and hard
disk cartridges. Many of these patents, however, do not pertain to the
Company's recent product generations, and there can be no assurance tha
additional patents will issue in the future. There can be no assurance
that the steps taken by the Company to protect its technology will be
adequate to prevent misappropriation of its technology by third parties
or that third parties will not be able independently to develop similar
technology. In particular, the Company's sales have been and will
continue to be materially adversely affected when parties develop
cartridges compatible with the Company's disk drives.
The Company filed suit against Nomai, S.A. (Nomai) and Maxell in
France for copyright and patent infringement. The Company
initiated an arbitration proceeding against Nomai seeking payment
of outstanding royalties of approximately $1 million. The
arbitration process began in May 1995, in San Jose, California and
is under way.
On January 27, 1997, the Company filed a suit against Nomai, S.A.,
Electronique d2 and La Cie Ltd. in Federal district court in San
Francisco for patent, trademark and copyright infringement, unfair
competition and breach of contract. The suit alleges that Nomai
and others have illegally used the Company's proprietary
technology in certain of Nomai's competing products. The suit
seeks to block further sales of such products along with damages
deriving from harm done to the Company by this conduct. Nomai has
filed a counter claim including claims for breach of contract,
misrepresentation, interference with contract and unfair
competition.
From time to time the Company receives notices alleging that th
Company's products infringe third party proprietary rights. A third
party notified the Company in June 1995, that such party believes the
Company infringes on six of its U.S. patents. It is the Company's
belief that the claims are without merit or that the infringement claim
relate to component parts purchased from vendors. The Company also
believes that if the third party prevails on its claims, the Company
will be indemnified by its vendor for any liability arising from the
alleged infringements and that this matter will not have a material
effect upon its financial condition or results of operations.
One company has notified the Company that it believes the
Company's products infringe six U.S. patents. It is the Company's
belief that the claims are without merit or that the infringement
claims relate to component parts purchased from vendors. The
Company also believes that in the event this company prevailed on
its claims, the Company would be indemnified by its vendors for
any liability arising from the alleged infringements and that this
matter will not have a material adverse effect upon its financial
condition or results of operations. Another company has notified
the Company that it believes a number of the Company's removable
cartridge hard drives products infringe several of its patents
relating to the use of spin motors in disc drives. The Company
believes that its removable cartridge hard drive products do not
infringe the claims of these patents and that some or all of the
asserted patents are invalid.
The Company, in the normal course of business, receives and makes
inquiries relating to other intellectual property matters
including alleged patent infringement. The Company may negotiate
licenses or other settlements when it considers such action
appropriate.
Patent and similar litigation frequently is complex and expensi
and its outcome can be difficult to predict. There can be no assurance
that the Company will prevail in any proceedings that may be commenced
against the Company. In addition, certain technology used in the
Company's products is licensed from third parties. The termination of
any such license arrangements could have a material adverse effect on
the Company's business and financial results.
INTERNATIONAL OPERATIONS.
International sales generated a significant portion of the
Company's revenues in fiscal years 1995 and 1996, and the Company
expects international sales to continue to constitute a significant
percentage of its total sales in the future. The international portion
of the Company's business is subject to a number of inherent risks,
including difficulties in building and managing foreign operations and
foreign reseller networks, the differing product needs of foreign
customers, fluctuations in the value of foreign currencies, import-
export duties and quotas, and regulatory, economic or political changes
Moreover, the Company relies on foreign companies for the supply of
certain critical components and is increasingly relying on foreign
companies for the manufacture of certain of its products, and these
relationships may be subject to some of the same risks affecting its
international sales. There can be no assurance that these factors will
not materially and adversely affect the Company's international sales
and its overall business and financial performance.
The Company's international sales are predominantly denominated
U.S. dollars. Accordingly, a significant increase in the valuation of
the U.S. dollar and the resultant increase in the price of the Company'
foreign currency priced products could have a material adverse effect o
the Company's sales.
MANAGEMENT CHANGES; DEPENDENCE ON KEY PERSONNEL.
The Chairman of the Board, the President and Chief Executive
Officer, the Executive Vice President and Chief Financial Officer, the
Executive Vice President-Sales, the Chief Technical Officer, the
Executive Vice President- Operations, the Executive Vice President - Ma
and the Vice President, General Council and Secretary have been with th
approximately one year or less. Syed Iftikar, the Company's former
Chairman of the Board, President and Chief Executive Officer, ceased to
be an officer of the Company on June 13, 1996, and resigned as a
director on August 15, 1996.
The Company's success will depend in large part upon the
capabilities of the new management team. The inability of such
individuals to become familiar with the widespread operations of the
Company and its subsidiaries and turn around the financial situation of
the Company could have a material adverse effect on the Company. The
Company's success will also depend in significant part upon its ability
to attract and retain highly-skilled management and other personnel.
Competition for such personnel in the computer industry is intense, and
the Company has from time to time experienced difficulty in finding
sufficient numbers of qualified professional and production personnel.
The Company has had a number of other executive officers leave the
Company over the last twelve months. There can be no assurance that the
Company will be successful in attracting and retaining the quantity and
quality of personnel that it needs.
VOLATILITY OF STOCK PRICE; ABSENCE OF DIVIDENDS.
The market prices for shares of high technology companies includin
the securities of SyQuest have been volatile. The Company's Common Stoc
has recently experienced substantial levels of short selling, which has
depressed the market price, and increased the volatility of the market
price, of the Company's Common Stock. Factors such as announcements of
technological innovations or new products by the Company or its
competitors, variations in the Company's quarterly operating results,
continued high levels of short selling of the Common Stock, or general
economic or stock market conditions unrelated to the Company's operatin
performance may have material adverse effects on the market price of th
Common Stock. In the past, following periods of volatility in the marke
price of a company's securities, securities class action litigation has
often been instituted against such a company. Such litigation, can
result and has resulted in substantial costs and a diversion of
management attention and resources. See "Risk Factors - Class Action an
Shareholder Derivative Lawsuits."
In addition, the Company believes that electronic bulletin boar
postings regarding the Company on America Online and other similar
services, certain of which have in the past contained false information
about Company developments, have in the past and may in the future
contribute to volatility in the market price of the Common Stock. Any
information concerning the Company, including projections of future
operating results, appearing in such on-line bulletin boards or
otherwise emanating from a source other than the Company should not be
relied upon as having been supplied or endorsed by the Company.
The Company has not paid any cash dividends since its inception
and it does not anticipate paying cash dividends in the foreseeable
future, except that certain cash dividends may be paid in connection
with the recent issuance of the Company's Series 3 Preferred Stock and
the Series 4 Preferred Stock.
CERTAIN MARKETING AND SALES RISKS.
As is common practice in its industry, the Company's arrangements
with its customers generally allow customers, in the event of a price
decrease, credit equal to the difference between the price originally
paid and the new decreased price on units in the customers' inventories
on the date of the price decrease. When a price decrease is anticipated
the Company establishes reserves for amounts it estimates will be
reimbursed to qualifying customers. There can be no assurance that
these reserves will be sufficient or that any future returns or price
protection charges will not have material adverse effects on the
Company's results of operations, particularly because future results
will depend heavily on recently introduced products for which the
Company has little or no operating history. In addition, customers
generally have stock rotation rights permitting them to return
slower-moving products in inventory within specified time periods in
return for compensating orders of other products. Any build-up of
inventory at the Company or in its distribution channels that does not
sell through to end users could have material adverse effects on the
Company's operating results and financial condition.
As is typical in the industry, from time to time the Company
experiences product defects and product returns. There can be no
assurance that the Company will not experience quality or reliability
problems in the future that have material adverse effects on the
Company's business and financial results.
The Company markets its products primarily through computer
product distributors and retailers. Distribution channels for personal
computers and accessories have been characterized by rapid change,
including consolidation and financial difficulties of distributors. The
loss or ineffectiveness of any of the Company's major distributors coul
have a material adverse effect on the Company's results of operations.
In addition, since the Company grants credit to its customers, a
substantial portion of outstanding accounts receivable are due from
computer product distributors and certain large retailers. At March 31,
1997, the customers with the ten highest outstanding accounts
receivable balances totaled $12.12 million, or 46.4%, of gross accounts
receivable at that date. The Company has no reason to believe these
receivable balances are uncollectible, but if any one or a group of
these customers' receivable balances should be deemed uncollectible, it
would have a material adverse effect on the Company's results of
operations and financial condition.
EFFECT OF ANTI-TAKEOVER PROVISIONS.
The Company's Board of Directors has the authority to issue up
4,000,000 shares of preferred stock and to determine the price, rights,
preferences and privileges of those shares, which, under certain
circumstances, could be issued without any further vote or action by th
Company's stockholders. To date, an aggregate of 380,000 shares of
preferred stock have been issued: 20,000 shares of 7% Cumulative
Preferred Stock; 5,500 shares of Convertible Preferred Stock, 24,500
shares of Series 2 Preferred Stock; 50,000 shares of Series 3 Preferred
Stock and 280,000 shares of Series 4 Preferred Stock. The rights of th
holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of these preferred shares and an
preferred stock that may be issued in the future. Such issuance, while
providing desirable flexibility in connection with possible financings
and acquisitions and other corporate purposes, could make it more
difficult for a third party to acquire a majority of the outstanding
voting stock of the Company. In addition, 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 on the market value of the Common Stock. The Company is also
subject to the anti-takeover provisions of Section 203 of the Delaware
General Corporation Law, which prohibit 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 first
becomes an "interested stockholder," unless the business combination is
approved in a prescribed manner. The application of Section 203 could
also have the effect of delaying or preventing a change of control of
the Company.
CLASS ACTION AND SHAREHOLDER DERIVATIVE LAWSUITS.
The Company has been named as a defendant in four putative clas
action lawsuits. Two of the actions, Ravens, et al. v. Iftikar, et al.
(filed April 2, 1996) and Bellezza, et al. v. Iftikar, et al. (filed Ma
24, 1996) have been brought in the United States District Court for the
Northern District of California and have been assigned to the Honorable
Vaughn Walker (collectively, the "Federal Lawsuit"). Certain current an
former officers and directors also have been named as defendants in the
Federal Lawsuit. Plaintiffs have petitioned the Court to consolidate th
foregoing complaints into one consolidated action. That request, as wel
as other procedural matters which arose during a July 18, 1996, case
management conference, is under consideration. The plaintiffs in the
Federal Lawsuit purport to represent a class of all persons who
purchased the Company's Common Stock between October 21,1994 and
February 1, 1996. The Federal Lawsuit alleges that the defendants
violated the federal securities laws through material misrepresentation
and omissions. The third suit is a purported class action entitled Gary
S. Kaufman v. SyQuest Technology Inc., et al. was filed on March 25,
1996, in the Superior Court of the State of California for the County o
Alameda (the "Kaufman Lawsuit"). Certain current and former executive
officers and directors of the Company are also named as defendants in
the Kaufman Lawsuit. The plaintiffs in the Kaufman Lawsuit purport to
represent a class of all persons who purchased the Company's Common
Stock between May 2, 1995, and February 2, 1996. The Kaufman Lawsuit,
which alleges that defendants violated various California laws through
material misrepresentations and omissions, seeks unspecified damages.
The fourth purported class action, entitled Ravens, et al. v. Iftikar,
et al., was filed on October 11, 1996, in the Superior Court of the
State of California for the County of Alameda (the "Ravens Lawsuit").
The Ravens Lawsuit, which alleges that the Company and certain of its
former officers and directors violated various California laws through
material representations and omissions between October 21, 1994, and
February 2, 1996, and is purportedly brought on behalf of persons who
purchased stock during that period, seeks unspecified damages. The
Ravens Lawsuit has been consolidated with the Kaufman Lawsuit discussed
above. Plaintiffs are preparing a consolidated complaint. The Company
intends to defend the cases vigorously.
On May 14, 1996, the Company was served with a shareholder's
derivative action filed in Alameda County, California, Superior Court
entitled John Nitti, et al. v. Syed Iftikar, et al. On July 22, 1996,
plaintiffs filed an amended complaint. The action seeks to recover
unspecified damages and punitive damages on behalf of the Company from
current and former officers and directors of the Company for alleged
breach of fiduciary duty, unjust enrichment and waste of corporate
assets. The Company is a nominal defendant in the action. The
complaint alleges that the officers and directors issued false and
misleading information and sold shares of the Company's stock at
artificially inflated prices. The allegations are essentially the same
as those in the putative class actions. The Company intends to defend
this case vigorously.
While the Company intends to vigorously defend the lawsuits, th
can be no assurance as to what financial effect the pending litigation
may have on the Company. From time to time, the Company is involved in
litigation that it considers to be in the normal course of its
business. Other than set forth in this prospectus, the Company is not
engaged in any legal proceedings as of the date hereof which the
Company expects individually or in the aggregate to have a material
adverse effect on the Company's financial condition or results of
operations.
USE OF PROCEEDS
The proceeds from the sale of the shares of Common Stock offere
hereby are solely for the account of the Selling Stockholders.
Accordingly, the Company will receive none of the proceeds from the sal
thereof. However, certain of the shares of Common Stock offered hereby
are issuable in the future upon the exercise of the outstanding or
issuable warrants, and the Company will receive the exercise prices
payable upon any exercise of the warrants. There can be no assurance
that all or any part of the warrants will be exercised.
SELLING STOCKHOLDERS
The Selling Stockholders are (i) certain creditors of the Compa
who acquired Common Stock in exchange for cancellation of certain trade
payables of the Company, (ii) certain persons who provided (or helped
facilitate) equity financing to the Company or designees of such
persons, and (iii) certain persons who provided (or are providing)
certain services to the Company. The shares of Common Stock covered by
this Prospectus are being registered so that the Selling Stockholders
may offer the shares for resale from time to time. See "Plan of
Distribution." Except as described below, none of the Selling
Stockholders has had a material relationship with the Company within th
past three years other than as a result of the ownership of the Common
Stock and other securities of the Company. C. Richard Kramlich, a
principal of New Enterprises Associates VII L.P. ("NEA"), is also a
director of the Company.
The following table sets forth the names of the Selling
Stockholders, the number of shares of Common Stock owned beneficially b
each of the Selling Stockholders as of May 6, 1997, and the number of
shares which may be offered for resale pursuant to this Prospectus. For
the purposes of calculating the number of shares of Common Stock
beneficially owned by the Selling Stockholders holding Series 3
Preferred Stock, the number of shares of Common Stock calculated to be
issuable in connection with the conversion of the Series 3 Preferred
Stock is based on a conversion price that is derived from the closing
market price of the Common Stock on first day that Series 3 Preferred
Stock was issued, which price is $2.25. For the purposes of calculating
the number of shares of Common Stock beneficially owned by the Selling
Stockholders holding Series 4 Preferred Stock, the number of shares of
Common Stock calculated to be issuable in connection with the conversio
of the Series 4 Preferred Stock is based on a conversion price that is
derived from the closing market price of the Common Stock on first day
that Series 4 Preferred Stock was issued, which price is $2.343. The
calculation of the total number of shares of Common Stock to be offered
by the holders of such convertible securities, however, is an estimate
based on a hypothetical conversion at the price stated, which price is
above the closing market price of the Common Stock as of May 23, 1997,
which price is $2.0625. If the $2.0625 per share price were used
instead of the per share prices listed above, the number of shares of
Common Stock issuable would increase. The use of such hypothetical
conversions prices is not intended, and should in no way be construed,
to constitute a prediction as to the future market price of the Common
Stock.
The information included below is based upon information provid
by the Selling Stockholders. Because the Selling Stockholders may offe
all, some or none of their Common Stock, no definitive estimate as to
the number of shares thereof that will be held by the Selling
Stockholders after such offering can be provided and the following tabl
has been prepared on the assumption that all shares of Common Stock
offered under this Prospectus will be sold.
Name Shares of Common Shares of Common
Beneficially owned Stock being offerred B
Prior to Offerring A
(1)(2)
Nidec Corporation/(4) 600,000 600,000
Jardine Matheson
& Co., Limited/(4) 564,582 564,582
A-Corn Enterprises/(4) 548,002 548,002
Silicon Systems/(4) 811,017 811,017
Tongkah Electronics,
Sdn Bhd/(4) 3,506,874 3,506,874
Seksun Precision
Engineering Limited/(4) 141,957 141,957
Fletcher International 8,634,016 8,634,016
/(5)
RGL International
Investors, LDC/(6) 4,280,409 4,280,409
New Enterprise
Associates VII L.P./(6) 7,134,016 7,134,016
Tail Wind Fund /(6)(7) 920,102 920,012
CC Investments, LDC/(6) 4,280,409 4,280,409
Capital Ventures
International/(6) 1,426,803 1,426,803
Southbrook International
Investments Ltd./(6) 1,783,504 1,783,504
Nelson Partners/(6) 3,759,177 3,759,177
Olympus Securities, 3,457,702 3,457,702
Ltd./(6)
Combination Inc./(6)(7) 3,627,828 3,627,828
Gross Foundation 925,412 925,412
Inc./(6)/
Millenco, L.P./(6)(7)/ 1,093,470 1,093,470
Biscount Overseas
Ltd./(7) 684,000 684,000
A. Zyskind/(7) 350,000 350,000
Joseph Bijou/(7) 42,500 42,500
Albert Bijou/(7) 42,500 42,500
Murray Dweck/(7) 42,500 42,500
Eli Dweck/(7) 42,500 42,500
Rutgers Casualty
Insurance Co./(7) 26,667 26,667
Kentucky National
Insurance Co./(7) 26,667 26,667
Mark Nordlicht/(7) 750,000 750,000
Jules Nordlicht/(7) 750,000 750,000
Simon Lerner/(7) 166,666 166,666
Joseph Hartman/(7) 26,666 26,666
Mark Rappaport/(7) 60,000 60,000
Leah Stern/(7) 900,000 900,000
Martin Stern/(7) 2,020,334 2,020,334
Samuel Rabinowitz/(7) 32,000 32,000
Irving Langer/(7) 26,667 26,667
Moshe Bodner/(7) 3,052,333 3,052,333
Wharton Capital
Partners Ltd./(8)/ 514,630 514,630
State Capital
Market Group, Ltd./(8)/ 620,000 620,000
David Stefansky/(8) 10,000 10,000
Bain & Company, Inc./(9) 320,000 320,000
Total 58,001,380 54,640,512
(1) Unless otherwise indicated in the footnotes to this table, the
persons and entities named in the table have sole voting and sole
investment power with respect to all shares beneficially owned, subject
to community property laws where applicable.
(2) As required by regulations of the Securities and Exchange
Commission, the number of shares shown as beneficially owned includes
shares which can be purchased within 60 days after May 23, 1997. The
actual number of shares of Common Stock beneficially owned is subject
to adjustment and could be materially less or more than the estimated
amount indicated depending upon factors which cannot be predicted by th
Company at this time, including, among others, the market price of the
Common Stock prevailing at the actual date of conversion of Preferred
Stock, and whether or to what extent dividends to the holders of certai
Preferred Stock are paid in Common Stock.
(3) Assumes the sale of all shares offered hereby.
(4) The listed Selling Stockholders hold shares of Common Stock
received from the Company in exchange for cancellation of certain trade
payables of the Company owed to such Selling Stockholder. Each of such
Selling Stockholders has executed a form of Securities Purchase
Agreement and related Registration Rights Agreement filed as exhibits t
the Company's Current Reports on Form 8-K dated April 14, 1997, and May
30, 1997. Each of such Selling Stockholders is a vendor of the
Company.
(5) The Selling Stockholder holds 1,500,000 shares of Common Stock,
and holds 50,000 shares of Series 3 Preferred Stock of the Company,
which are convertible into shares of Common Stock. Each share of Series
3 Preferred Stock may be converted into a number of shares of Common
Stock at a conversion price per share of Common Stock which is the
greater of the arithmetical average of the closing sale prices of the
Common Stock for the 5-day period preceding the conversion or 90% of th
closing sale price the day before the conversion, but not greater than
the closing sale price on April 2, 1997 ($2.25). The conversion price
is adjusted, and the number of shares beneficially owned by the Selling
Stockholder will vary accordingly, to reflect changes in the market
price of the Common Stock, stock dividends, stock splits and certain
other circumstances. The holders of Series 3 Preferred Stock also hold
warrant to purchase 5,000,000 shares of Common Stock at an exercise
price equal to the greater of the arithmetical average of the closing
sales price per share of common stock on the 5 consecutive trading days
preceding the delivery of the exercise notice and 90% of such closing
sale price on the day immediately prior to the delivery of the Exercise
Notice, but not greater than the closing sale price per share of the
Common Stock on April 2, 1997. The warrants issued to the Selling
Stockholder are not exercisable until the lapse of a period ending on
the sixty-fifth day after such Selling Stockholder delivers a notice to
the Company designating an aggregate number of warrant shares to be
purchased. Once such notice is given and the 65-day period has passed,
the Selling Stockholder may exercise its warrant up to the number of
shares designated in the 65-day notice by providing further notice to
the Company that such Selling Stockholder is exercising the warrant. Th
number of shares shown as being offered in the table is based on (i)
shares issuable directly upon conversion, at a conversion price of $2.2
(which is the conversion price based on the closing price of the Common
Stock on the day the Series 3 Preferred Stock was issued and (ii) the
warrant to acquire 5,000,000 shares issues in connection with the sale
of the Series 3 Preferred Stock. Notwithstanding the foregoing, the
Selling Stockholder can convert Series 3 Preferred Stock into shares of
Common Stock only to the extent that the number of shares issued
thereby, combined with the number of shares of Common Stock already hel
by such Selling Stockholder and its affiliates, would not exceed 4.9% o
the then outstanding Common Stock as determined in accordance with
Section 13(d) of the Exchange Act. For a further description of the
rights of holders of Series 3 Preferred Stock, see the Certificate of
Designations, Preferences and Rights of 5% Cumulative Convertible
Preferred Stock, Series 3, and the related Subscription Agreement (with
exhibits) filed as an exhibit to the Company's Current Report on Form
8-K dated April 14, 1997.
(6) The listed Selling Stockholders hold shares of Series 4 Preferr
Stock of the Company, which are convertible into shares of Common Stock
Each share of Series 4 Preferred Stock may be converted into a number o
shares of Common Stock at a conversion price which is the greater of th
arithmetical average of the closing sale prices of the Common Stock for
each of the five consecutive trading days preceding the conversion or
90% of the closing sale price the day before the conversion, but in any
event not greater than $2.3438. The holders of Series 4 Preferred Stoc
(or their designees) also hold a warrant to purchase shares of the
Company's Common Stock at an exercise price equal to the greater of the
arithmetical average of the closing sales price per share of common
stock on the five consecutive trading days preceding the delivery of th
exercise notice and 90% of such closing sale price on the day
immediately prior to the delivery of the Exercise Notice, but in any
event not greater than $3.0469. The number of shares of Common Stock
issued to the holders of Series 4 Preferred Stock (or their designees)
equals the purchase price for the Series 4 Preferred Shares. For
example, if a holder purchased $1 million of Series 4 Preferred Shares,
it would receive a warrant to acquire 1 million shares of Common Stock.
The warrants issued to the Selling Stockholder are not exercisable
until the lapse of a period ending on the sixty-fifth day after such
Selling Stockholder delivers a notice to the Company designating an
aggregate number of warrant shares to be purchased. Once such notice i
given and the 65-day period has passed, the Selling Stockholder may
exercise its warrant up to the number of shares designated in the 65-da
notice by providing further notice to the Company that such Selling
Stockholder is exercising the warrant. The number of shares shown as
being offered in the table is based on (i) shares issuable upon
conversion, at a conversion price of $2.343 (which is the conversion
price based on the price per share of the Common stock on the date of
the Series 4 Preferred Shares were first issued and (ii) the number of
warrant shares each Selling Stockholder (or its designee) acquired as
part of the purchase of Series 4 Preferred Shares. Notwithstanding the
foregoing and except for NEA, each listed Selling Stockholder can
convert Series 4 Preferred Stock into Common Stock only to the extent
that the number of shares issued thereby, combined with the number of
shares of Common Stock already held by such Selling Stockholder and its
affiliates, would not exceed 4.9% of the then outstanding Common Stock,
as determined in accordance with Section 13(d) of the Exchange Act. For
a further description of the rights of holders of Series 4 Preferred
Stock, see the Certificate of Designations, Preferences and Rights of 5
Cumulative Convertible Preferred Stock, Series 4, and the related
Securities Purchase Agreement (with exhibits) filed as an exhibit to th
Company's Current Report on Form 8-K dated May 30, 1997.
(7)Combination Inc., Tail Wind Fund, and Millenco, L.P., each of which
holds shares of Series 4 Preferred Stock, has notified the Company of
its intent to designate a party other than itself to receive certain
warrants to purchase Common Stock. The designees, each of whom is
listed as a Selling Stockholder, are: Biscount Overseas Ltd., A.
Zyskind, Joseph Bijou, Albert Bijou, Murray Dweck, Eli Dweck, Rutgers
Casualty Insurance Co., Kentucky National Insurance Co., Mark Nordlicht
Jules Nordlicht, Simon Lerner, Joseph Hartman, Mark Rappaport, Leah
Stern, Martin Stern, Samuel Rabinowitz, Irving Langer, and Moshe Bodner
Except for Tail Wind Fund's designation of Moishe Bodner to receive a
warrant to purchase 150,000 shares of Common Stock, and except for
Millenco, L.P.'s designation of Moishe Bodner to receive a warrant to
purchase 333,333 shares of Common Stock, the designation of the right t
receive warrants to the parties set forth in the previous sentence is t
come from Combination, Inc. The actual right of the designee to receiv
the warrants is subject to Company receiving written instruction and
representations from the designee and Combination, Inc., Tail Wind Fund
and Millenco, L.P., as the case may be, in a form acceptable to the
Company such that the issuance will be in compliance with all applicabl
laws, including the Securities Act of 1933, as amended.
(8) Each Listed Selling Stockholder has the right to acquire Common
Stock pursuant to certain Stock Purchase Warrants to purchase shares of
Common Stock for $3.0469 per share. The Company granted such Stock
Purchase Warrants as part of the Selling Stockholders' compensation for
their facilitation of certain financing for the Company.
(9) Bain & Company, Inc. ("Bain") received four warrants to purchas
total of 320,000 shares of the Company's Common Stock for services
provided to the Company. The warrants are dated as of January 16,
February 16, March 16, and April 16, 1997, and each is exercisable for
four years from the date of grant. Each warrant is for the purchase of
up to 80,000 shares of Common Stock. The exercise price per share of
Common Stock is equal to the greater of (a) the arithmetic average of
the closing sale price per share, or in the absence of a closing sale
price on any day, the closing bid price per share on that day, of the
Common Stock, as reported by the NASDAQ National Market for the five
consecutive trading days preceding the grant date with respect to such
warrant, and (b) the closing sale price per share, or in the absence of
a closing sale price, the closing bid price per share, of the Common
Stock, as so reported for the trading day preceding such grant date,
minus $0.10. The warrant exercise prices of each of the four warrants
relating to the dates of the warrant issuances were $3.06 for the
warrant issued January 16, 1997, $2.59 for the warrant issued February
16, 1997, $2.73 for the warrant issued March 16, 1997, and $2.34 for th
warrant issued April 16, 1997. The terms of these warrants and certain
registration rights granted to Bain in connection therewith, are more
fully described in the Report on Form 10-Q dated May 15, 1997.
PLAN OF DISTRIBUTION
The Company is registering the shares of Common Stock offered b
the Selling Stockholders hereunder pursuant to contractual registration
rights.
The shares of Common Stock offered hereunder may be sold from t
to time by the Selling Stockholders, or by pledgees, donees, transferee
or other successors in interest. Such sales may be made on the Nasdaq
National Market or in the over-the-counter market or otherwise at price
and on terms then prevailing or related to the then current market
price, or in negotiated transactions. The shares of Common Stock may
be sold to or through one or more broker-dealers, acting as agent or
principal in underwritten offerings, block trades, agency placements,
exchange distributions, brokerage transactions or otherwise, or in any
combination of transactions.
In connection with any transaction involving the Common Stock,
broker- dealers or others may receive from the Selling Stockholders, an
may in turn pay to other broker-dealers or others, compensation in the
form of commissions, discounts or concessions in amounts to be
negotiated at the time. Broker- dealers and any other persons
participating in a distribution of the Common Stock may be deemed to be
"underwriters" within the meaning of the Act in connection with such
distribution, and any such commissions, discounts or concessions may be
deemed to be underwriting discounts or commissions under the Act.
Any or all of the sales or other transactions involving the Com
Stock described above, whether effected by the Selling Stockholders, an
broker dealer or others, may be made pursuant to this Prospectus. In
addition, any shares of Common Stock that qualify for sale pursuant to
Rule 144 under the Act may be sold under Rule 144 rather than pursuant
to this Prospectus.
To comply with the securities laws of certain states, if
applicable, the Common Stock may be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, shares
of Common Stock may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with under applicable state
securities laws.
The Company and the Selling Stockholders have agreed, and
hereafter may further agree, to indemnify each other and certain
persons, including broker- dealers or others, against certain
liabilities in connection with any offering of the Common Stock,
including liabilities arising under the Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by
Shartsis, Friese & Ginsburg LLP, San Francisco, California.
EXPERTS
The consolidated financial statements of SyQuest Technology, In
appearing in the SyQuest Technology, Inc. Annual Report on Form 10-K fo
the fiscal year ended September 30, 1996, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidate
financial statements are incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in
accounting and auditing.
NO DEALER,
SALESPERSON OR OTHER
INDIVIDUAL HAS BEEN
AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT
CONTAINED IN THIS
PROSPECTUS IN CONNECTION
WITH THE OFFERING COVERED
BY THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH
INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL 54,640,512 SHARES
OR A SOLICITATION OF AN
OFFER TO BUY, THE COMMON SYQUEST TECHNOLOGY, I
STOCK IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO COMMON STOCK
WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS
NOR ANY SALE HEREUNDER PROSPECTUS
SHALL, UNDER ANY CIRCUM-
STANCES, CREATE ANY
IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE
AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.
TABLE OF CONTENTS
AVAILABLE INFORMATION
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
THE COMPANY
RISK FACTORS
USE OF PROCEEDS
SELLING STOCKHOLDERS
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS MAY 30, 1997
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other
than the underwriting discounts and commission, payable by the
Company in connection with the sale of the Common Stock being
registered. All the amounts shown are estimates except for the
registration fee.
Registration fee $3
Blue sky qualification fees and expenses
Printing
Legal fees and expenses
'7
Accounting fees and expenses
Miscellaneous
---
Total 11
===
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company has the power, pursuant to Section
102(7) of the Delaware General Corporation Law, to limit the
liability of directors of the Company for certain breaches of
fiduciary duty and, pursuant to Section 145 of the Delaware
General Corporation Law, to indemnify its officers and directors
and other persons for certain acts.
The Company's Restated Certificate of Incorporation
includes the following provisions:
The personal liability of the directors of the
corporation for monetary damages for breach of
fiduciary duty as a director shall be eliminated to
the fullest extent permissible under Delaware law
as the same exists or as may hereafter be amended.
Neither any amendment nor repeal of this Article,
nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this
Article, shall eliminate or reduce the effect of
this Article in respect of any matter occurring, or
any cause of action, suit or claim that, but for
this Article would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent
provision.
The corporation is authorized to provide
indemnification of officers, directors, employees
or agents of the corporation for breach of duty to
the corporation and its stockholders through By-law
provisions or through agreements with such
officers, directors, employees or agents, or both,
in excess of the indemnification otherwise
permitted by Section 145 of the Delaware General
Corporation Law, subject to the limits on such
excess indemnification set forth in Section
102(b)(7) of the Delaware General Corporation Law.
Pursuant to Section 145 of the Delaware General
Corporation Law, a corporation generally has the power to
indemnify its present and former directors, officers, employees
and agents against expenses incurred by them in connection with
any suit to which they are, or are threatened to be made, a party
by reason of their serving in such positions so long as they acted
in good faith and in a manner they reasonably believed to be in,
or not opposed to, the best interests of a corporation and with
respect to any criminal action, they had no reasonable cause to
believe their conduct was unlawful.
The Company believes that these provisions are
necessary to attract and retain qualified persons as directors and
officers. These provisions do not eliminate liability for breach
of the director's duty of loyalty to the Company or its
stockholders, for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, for any
transaction from which the director derived an improper personal
benefit or for any willful or negligent payment of any unlawful
dividend or any unlawful stock purchase agreement or redemption.
Section 145 of the Delaware General Corporation Law
authorizes a court to award, or a corporation's board of directors
to grant indemnification to directors and officers in terms
sufficiently broad to permit such indemnification under certain
circumstances for liabilities (including reimbursement for
expenses incurred) arising under the Securities Act.
Article VI of the Company's Bylaws provides that
the Company, by action of the Board of Directors, shall, to the
fullest extent permitted by the General Corporation Law of
Delaware, indemnify any and all persons who it shall have power to
indemnify against any and all of the expenses, liabilities or
other matters.
The Company has entered into indemnification
agreements with each of its directors and executive officers which
provide for mandatory indemnification and advancement of legal
expenses so long as the individual is entitled to indemnification
as determined in the manner provided in the agreement. The burden
is on the Company to establish the individual is not so entitled.
The Company has purchased and maintains an
insurance policy covering the officers and directors of the
Company with respect to certain liabilities arising under the Act
or otherwise. Under the terms of their registration rights
agreements, certain of the Selling Stockholders may be obligated
to indemnify the Company and its directors and officers under
certain circumstances for liabilities under the Act.
ITEM 16. EXHIBITS.
(a) Exhibits.
Exhibit
Number Description of Document
3.1 Restated Certificate of Incorporation of the Company.
Incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the fiscal
period ended September 30, 1995.
3.2 Amendment to Restated Certificate of Incorporation of the
Company. Incorporated by reference to Exhibit 3.2 of the
Company's Registration Statement on Form S-3 filed
December 2, 1996 (File No. 333-17119), as amended.
4.1 Corrected Certificate of Designations, Preferences
and Rights of 7% Cumulative Convertible Preferred Stock,
Series 1. Incorporated by reference to Exhibit 3.1 to the
Company's Current Report on Form 8-K dated June 14,
1996 (the "June 14, 1996, Form 8-K").
4.2 Securities Purchase Agreement, dated as of May 31,
1996, by and among the Company and holders of 7%
Cumulative Convertible Preferred Stock, Series 1. Incorporated
by reference to Exhibit 10.1 to the June 14, 1996, Form 8-K.
4.3 Registration Rights Agreement dated as of May 31,
1996, by and among the Company and holders of 7%
Cumulative Convertible Preferred Stock, Series 1. Incorporated
by reference to Exhibit 10.2 to the June 14, 1996, Form 8-K.
4.4 6% Convertible Subordinated Debenture dated July 15,
1996. Incorporated by reference to Exhibit 10.3 to
the Company's Form S-3 Registration Statement
No. 333-7369 ("Registration 333-7369").
4.5 Registration Agreement dated July 15, 1996, among the
Company and WISRS (Malaysia) SDN.BHD. Incorporated
by reference to Exhibit 10.4 to Registration 333-7369
4.6 Certificate of Designations, Preferences and Rights
of Convertible Preferred Stock, Series 1, as amended
and agreed to be amended. Incorporated by Reference
to Exhibit 3.1 to the Company's Current Report on
Form 8-K/A dated October 31, 1996 (the "October 31,
1996, Form 8-K/A").
4.7 Certificate of Designations, Preferences and Rights
of 5% Cumulative Preferred Stock, Series 2.
Incorporated by reference to Exhibit 3.2 to the
October 31, 1996, Form 8-K/A.
4.8 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. Incorporated by reference to
Exhibit 10.1 to the October 31, 1996, Form 8-K/A.
4.9 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 Escrow Agreement, Form of Warrant,
Form of Registration Rights Agreement and certain
Schedules to the representations. Incorporated by
reference to Exhibit 10.2 to the October 31, 1996,
Form 8-K/A.
4.10 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 Escrow Agreement, Form of Warrant,
Form of Registration Rights Agreement and certain
Schedules to the representations. Incorporated by
reference to Exhibit 10.3 to the October 31, 1996,
Form 8-K/A.
4.11 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 Escrow Agreement, Form of Warrant,
Form of Registration Rights Agreement and certain
Schedules to the representations. Incorporated by
reference to Exhibit 10.4 to the October 31, 1996,
Form 8-K/A.
4.12 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 Escrow Agreement, Form of Warrant,
Form of Registration Rights Agreement and certain
Schedules to the representations. Incorporated by
reference to Exhibit 10.5 to the October 31, 1996,
Form 8-K/A.
4.13 Securities Purchase Agreement dated as of
September 27, 1996, between the Company and Atmel
Corporation, including the exhibit Form of
Registration Rights Agreement. Incorporated by
reference to Exhibit 10.6 to the October 31, 1996,
Form 8-K/A.
4.14 Securities Purchase Agreement dated as of October 18,
1996, between the Company and Petronic International,
Inc., including the exhibit Form of Registration
Rights Agreement. Incorporated by reference to
Exhibit 10.7 to the October 31, 1996, Form 8-K/A.
4.15 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. Incorporated by reference to
Exhibit 10.8 to the October 31, 1996, Form 8-K/A.
4.16 Securities Purchase Agreement dated as of October 25,
1996, between the Company and Freight Solutions
International, including the exhibit Form of
Registration Rights Agreement. Incorporated by
reference to Exhibit 10.9 to the October 31, 1996,
Form 8-K/A.
4.17 Subscription Agreement dated March 31, 1997, between
the Company and Fletcher International Limited,
including as Annex B thereto the form of Warrant
Certificate issued pursuant thereto. Incorporated by
reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K dated February 28, 1997 (the
"February 28, 1997, Form 8-K").
4.18 Securities Purchase Agreement dated as of February
28, 1997, between the Company and A-Corn Enterprises
Company, Ltd., including the exhibit form of
Registration Rights Agreement. Incorporated by
reference to Exhibit 10.2 to the February 28, 1997,
Form 8-K.
4.19 Securities Purchase Agreement dated as of March 19,
1997, between the Company and Seksun Precision
Engineering Limited, including the exhibit form of
Registration Rights Agreement. Incorporated by
reference to Exhibit 10.3 to the February 28, 1997,
Form 8-K.
4.20 Securities Purchase Agreement dated as of March 26,
1997, between the Company and Tongkah SDN.BHD.,
including the exhibit form of Registration Rights
Agreement. Incorporated by reference to Exhibit 10.4
to the February 28, 1997, Form 8-K.
4.21 Securities Purchase Agreement dated as of March 26,
1997, between the Company and Silicon Systems, Inc.,
including the exhibit form of Registration Rights
Agreement. Incorporated by reference to Exhibit 10.5
to the February 28, 1997, Form 8-K.
4.22 Securities Purchase Agreement dated as of April 15,
1997, between the Company and Jardine Matheson &
Company, Ltd., including the exhibit form of
Registration Rights Agreement. Incorporated by
reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K dated April 15, 1997 (the "April
15, 1997, Form 8-K").
4.23 Securities Purchase Agreements dated May 1, 1997,
between the Company and New Enterprises Associates
VII L.P., including as Annex A thereto the
Certificate of Designations, Preferences and Rights
of 5% Cumulative Convertible Preferred Stock, Series
4, as Annex B thereto the form of Warrant Certificate
issued pursuant thereto, as Annex C thereto the form
of Delivery Letter, and as Annex D thereto the
corrections to be made to the Certificate of
Designations. Incorporated by reference to the April
15, 1997, Form 8-K.
5.1 Opinion of Shartsis, Friese & Ginsburg LLP to be filed in a subseq
23.1 Consent of Ernst & Young LLP, independent auditors to be filed in
amendment
23.2 Consent of Shartsis, Friese & Ginsburg LLP.
Reference is made to Exhibit 5.1.
24.1 Power of Attorney of certain officers and directors
(included in Part II of the Registration Statement).
INDEX TO EXHIBITS
Exhibit
Number Description of Document
3.1 Restated Certificate of Incorporation of the Company.
Incorporated by reference to Exhibit 3.1 to the Company's
Report on Form 10-K for the fiscal period ended September
3.2 Amendment to Restated Certificate of Incorporation of
the Company. Incorporated by reference to Exhibit 3.2
Company's Registration
Statement on Form S-3 filed December 2, 1996 (File
No. 333-17119),as amended.
4.1 Corrected Certificate of Designations, Preferences
and right of 7% Cumulative Convertible Preferred Stock,
Incorporated by reference to Exhibit 3.1 to the Company
Report on Form 8-K dated June 14, 1996 (the "June 14, 1
4.2 Securities Purchase Agreement, dated as of May 31,
1996, by and among
the Company and holders of 7% Cumulative Convertible
Preferred Stock,
Series 1. Incorporated by reference to Exhibit 10.1
to the June 14, 1996,
Form 8-K.
4.3 Registration Rights Agreement dated as of May 31,
1996, by and among
the Company and holders of 7% Cumulative Convertible
Preferred Stock,
Series 1. Incorporated by reference to Exhibit 10.2
to the June 14,
1996, Form 8-K.
4.4 6% Convertible Subordinated Debenture dated July 15,
1996. Incorporated
by reference to Exhibit 10.3 to the Company's Form S-
3 Registration
Statement No. 333-7369 ("Registration 333-7369").
4.5 Registration Agreement dated July 15, 1996, among the
Company and WISRS
(Malaysia) SDN.BHD. Incorporated by reference to
Exhibit 10.4 to
Registration 333-7369.
4.6 Certificate of Designations, Preferences and Rights
of Convertible
Preferred Stock, Series 1, as amended and agreed
be amended.
Incorporated by reference to Exhibit 3.1 to the
Company's Current
Report on Form 8-K/A dated October 31, 1996 (the
October 31, 1996,
Form 8-K/A").
4.7 Certificate of Designations, Preferences and Rights
of 5% Cumulative
Preferred Stock, Series 2. Incorporated by reference
to Exhibit 3.2
to the October 31, 1996, Form 8-K/A.
4.8 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. Incorporated by reference to
Exhibit 10.1 to the
October 31, 1996, Form 8-K/A.
4.9 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 Escrow Agreement,
Form of Warrant,
Form of Registration Rights Agreement and certain
Schedules to the
representations. Incorporated by reference to
Exhibit 10.2 to the
October 31, 1996, Form 8-K/A.
4.10 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 Escrow Agreement,
Form of Warrant,
Form of Registration Rights Agreement and certain
Schedules to the
representations. Incorporated by reference to
Exhibit 10.3 to the
October 31, 1996, Form 8-K/A.
4.11 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 Escrow Agreement,
Form of Warrant,
Form of Registration Rights Agreement and certain
Schedules to the
representations. Incorporated by reference to
Exhibit 10.4 to the
October 31, 1996, Form 8-K/A.
4.12 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 Escrow Agreement,
Form of Warrant,
Form of Registration Rights Agreement and certain
Schedules to the
representations. Incorporated by reference to
Exhibit 10.5 to the
October 31, 1996, Form 8-K/A.
4.13 Securities Purchase Agreement dated as of
September 27, 1996, between
the Company and Atmel Corporation, including the
exhibit Form of
Registration Rights Agreement. Incorporated by
reference to Exhibit
10.6 to the October 31, 1996, Form 8-K/A.
4.14 Securities Purchase Agreement dated as of October 18,
1996, between
the Company and Petronic International, Inc.,
including the exhibit
Form of Registration Rights Agreement. Incorporated
by reference to
Exhibit 10.7 to the October 31, 1996, Form 8-K/A.
4.15 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. Incorporated by
reference to Exhibit
10.8 to the October 31, 1996, Form 8-K/A.
4.16 Securities Purchase Agreement dated as of October 25,
1996, between
the Company and Freight Solutions International,
including the exhibit
Form of Registration Rights Agreement. Incorporated
by reference to
Exhibit 10.9 to the October 31, 1996, Form 8-K/A.
4.17 Subscription Agreement dated March 31, 1997, between
the Company and
Fletcher International Limited, including as Annex B
thereto the form
of Warrant Certificate issued pursuant thereto.
Incorporated by
reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K
dated February 28, 1997 (the "February 28, 1997, Form
8-K").
4.18 Securities Purchase Agreement dated as of February
28, 1997, between
the Company and A-Corn Enterprises Company, Ltd.,
including the exhibit
form of Registration Rights Agreement. Incorporated
by reference to
Exhibit 10.2 to the February 28, 1997, Form 8-K.
4.19 Securities Purchase Agreement dated as of March 19,
1997, between the
Company and Seksun Precision Engineering Limited,
including the exhibit
form of Registration Rights Agreement. Incorporated
by reference to
Exhibit 10.3 to the February 28, 1997, Form 8-K.
4.20 Securities Purchase Agreement dated as of March 26,
1997, between the
Company and Tongkah SDN.BHD., including the exhibit
form of Registration
Rights Agreement. Incorporated by reference to
Exhibit 10.4 to the
February 28, 1997, Form 8-K.
4.21 Securities Purchase Agreement dated as of March 26,
1997, between the
Company and Silicon Systems, Inc., including the
exhibit form of
Registration Rights Agreement. Incorporated by
reference to Exhibit
10.5 to the February 28, 1997, Form 8-K.
4.22 Securities Purchase Agreement dated as of April 15,
1997, between the
Company and Jardine Matheson & Company, Ltd.,
including the exhibit
form of Registration Rights Agreement. Incorporated
by reference to
Exhibit 10.1 to the Company's Current Report on Form
8-K dated April 15,
1997 (the "April 15, 1997, Form 8-K").
4.23 Securities Purchase Agreements dated May 1, 1997,
between the Company
and New Enterprises Associates VII L.P., including as
Annex A thereto
the Certificate of Designations, Preferences and
Rights of 5% Cumulative
Convertible Preferred Stock, Series 4, as Annex B
thereto the form of
Warrant Certificate issued pursuant thereto, as Annex
C thereto the form
of Delivery Letter, and as Annex D thereto the
corrections to be made to
the Certificate of Designations. Incorporated by
reference to the April
15, 1997, Form 8-K.
5.1 Opinion of Shartsis, Friese & Ginsburg LLP
To be filed in a subsequent amendment
23.1 Consent of Ernst & Young LLP, independent auditors
To be filed in a subsequent amendment
23.2 Consent of Shartsis, Friese & Ginsburg LLP.
Reference is made to
Exhibit 5.1.
24.1 Power of Attorney of certain officers and directors
(included in Part II
of the Registration Statement).
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended (the "Act"), may be
permitted to directors, officers, and controlling persons of the
Company pursuant to provisions described in Item 15, or otherwise,
the Company 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 Company of expenses
incurred or paid by a director, officer or controlling person of
the Company 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
Company 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.
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
To include any prospectus required by
Section 10(a)(3) of the Act;
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;
To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in
a post effective amendment by these paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any
liability under the Act, each post-effective amendment that
contains a form of prospectus 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.
(4) That, for purposes of determining any liability
under the Act, each filing of the Company's annual report pursuant
to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be
deemed to be the 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.
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, the Company certifies that it has reasonable grounds to
believe it meets all the requirements for filing on Form S-3 and
has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fremont, State of California, on the
30th day of May, 1997.
SYQUEST TECHNOLOGY, INC.
By: /s/ Edwin L. Harper
Edwin L. Harper,
President and Chief Exe
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Edwin L. Harper President, Chief Executive May 30,
Edwin L. Harper Officer and Director
(Principal Executive Officer)
/s/ Henry C. Montgomery Executive Vice President, May 30,
Finance and Chief Financial
Henry C. Montgomery' Officer
(Principal Financial and
Accounting Officer)
/s/ Edward L. Marinaro Chairman of the Board and May 30,
Edward L. Marinaro Director
/s/ C. Richard Kramlich** Director May 30,
C. Richard Kramlich
/s/ S. Joseph Baia** Director May 30,
S. Joseph Baia
**By Henry C. Montgomery his
attorney in fact
/s/ Henry C. Montgomery
Henry C. Montgomery
