<PAGE>
As filed with the Securities and Exchange Commission on January 3, 1997.
Registration No. 333-17119
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NUMBER 1
TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SYQUEST TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2793941
(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
<TABLE>
<CAPTION>
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered (1) Offering Price Aggregate Registration Fee (3)
Per Share (2) Offering Price (2)
<S> <C> <C> <C> <C>
Common Stock $.001
par value............ 18,400,767 $4.03125 $74,178,091 $22,478.21
=======================================================================================================
</TABLE>
(1) Includes (i) a presently indeterminate number of shares issued or issuable
upon conversion of or otherwise in respect of Registrant's 7% Cumulative
Convertible Preferred Stock, Series 1, (ii) a presently indeterminate
number of shares issuable upon conversion of or otherwise in respect of
Registrant's Convertible Preferred Stock, Series 1, or pursuant to warrants
issuable upon such conversion, (iii) a presently indeterminate number of
shares issuable upon conversion of or otherwise in respect of Registrant's
5% Cumulative Convertible Preferred Stock, Series 2, or pursuant to
warrants issuable upon such conversion, (iv) 800,000 shares issuable upon
exercise of certain outstanding stock purchase warrants, and (v) 1,874,837
shares issued to four suppliers of Registrant as part of a restructuring by
Registrant of certain trade payables, as such numbers may be adjusted in
accordance with Rule 416.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c), based on the high and low prices
reported in the Nasdaq National Market on December 26, 1996.
(3) $23,700.38 was paid in connection with the December 2, 1996, filing of this
Registration Statement.
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.
<PAGE>
PROSPECTUS
SYQUEST TECHNOLOGY, INC.
18,400,767 SHARES
COMMON STOCK
(PAR VALUE $.001 PER SHARE)
________________
All of the shares of Common Stock, par value $.001 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 December 20, 1996, was $4.25 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 20,000 shares of the Company's 7%
Cumulative Convertible Preferred Stock, Series 1, par value $.001 (the "7%
Cumulative Preferred Stock"), (ii) a presently indeterminate number of shares
issuable upon conversion or otherwise in respect of 5,500 shares of the
Company's Convertible Preferred Stock, Series 1 (the "Convertible Preferred
Stock") or pursuant to warrants issuable upon such conversion, (iii) a presently
indeterminate number of shares issuable upon conversion or otherwise in respect
of 24,500 shares of the Company's 5% Cumulative Convertible Preferred Stock,
Series 2 (the "Series 2 Preferred Stock") or pursuant to warrants issuable upon
such conversion, (iv) up to 800,000 shares issuable upon exercise of certain
outstanding stock purchase warrants (the "Stock Purchase Warrants") and (v) up
to 1,874,837 shares issued to four 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 7% Cumulative Preferred Stock, the Convertible Preferred
Stock and the Series 2 Preferred Stock and the exercise of warrants issuable
upon the conversion of the Convertible Preferred Stock and the Series 2
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 $4.00 per
share, which price is below the closing sales price of the Common Stock as of
December 20, 1996 ($4.25 per share), and has been arbitrarily selected. The
shares offered hereby do not include 2,691,891 additional shares registered for
resale by holders of the 7% Cumulative Preferred Stock and another supplier of
the Company that received shares as part of a restructuring by the Company of
certain trade payables, which shares have been previously registered by the
Company pursuant to Registration Statement No. 333-7369. 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 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
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<PAGE>
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."
_______________________
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE
A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
AT PAGE 5 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.
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 $85,700.38. 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 date of this Prospectus is January 6, 1997
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
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 may 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 Madison 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
National 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 Prospectus
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 be 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 Commission under the
Exchange Act are hereby incorporated by reference into this Prospectus:
1) The Company's Annual Report on Form 10-K for 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, and December 30, 1996; and
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<PAGE>
3) The Company's Registration Statement on Form 8-A registering the
Common Stock under Section 12(g) of the Exchange Act.
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 by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently-filed document which 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, including any
beneficial owner, to whom this Prospectus is delivered, upon written 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 Montgomery, Executive Vice President, Finance and Chief Financial
Officer.
___________________
"SyQuest" is a registered trademark of the Company, "EZ135," and "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 removable 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 storage 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.
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<PAGE>
RISK FACTORS
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. THE FOLLOWING
RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE 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, AS WELL AS
FACTORS DISCUSSED ELSEWHERE IN THIS PROSPECTUS. THE CAUTIONARY STATEMENTS MADE
IN THIS PROSPECTUS SHOULD BE READ AS BEING APPLICABLE TO 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 September 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.
In June 1996, the Company closed the sale of 20,000 shares of 7% Cumulative
Preferred Stock for $20 million in gross proceeds. In July 1996, the Company
issued a $7.7 million 6% Convertible Subordinated Debenture (the "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 to notes payable reflecting extended repayment terms.
From late September 1996, through October 30, 1996, the Company exchanged with
four of these suppliers approximately $11.57 million of notes payable for
1,874,837 shares of Common Stock in the aggregate. In October 1996, the Company
sold 5,500 shares of Convertible Preferred Stock for $5.5 million in gross
proceeds and sold 24,500 shares of Series 2 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. 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, and November 11, 1996.
As of September 30, 1996, the Company had $3.2 million in unrestricted
cash and cash equivalents. During the fiscal year ended September 30, 1996, the
Company used approximately $50.7 million of cash in operating activities and
an additional $17.8 million of cash for the purchase of equipment and leasehold
improvements. The Company believes that, based on a number of events occurring,
the current sources of financing available to the Company will be sufficient to
fund the Company's operations only into the second quarter of fiscal 1997, and
the Company will need additional funds for new product introduction, for
production and working capital and to pay suppliers. Management's financial
plans for fiscal 1997 anticipate raising additional equity capital in order to
stimulate business and take advantage of market opportunities. Management is
currently pursuing other investment opportunities and expects to raise
additional financing during the second quarter of fiscal 1997. There can be no
assurance, however, that such financing would be available when needed, if at
all, or on favorable terms. If results of operations for fiscal 1997 do not meet
management's expectations, or additional capital is not available, management
has the 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,
5
<PAGE>
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 and 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 experience 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.
On September 16, 1996, the Company was given a temporary exception from the
net tangible asset and capital surplus listing requirements of the Nasdaq
National Market. The listing exception was conditioned on the Company's ability
to file a pro forma balance sheet as of September 30, 1996, indicating net
tangible assets of at least $2.0 million. On October 31, 1996, the Company filed
with Nasdaq and the Commission an unaudited pro forma balance sheet (the "Pro
Forma Balance Sheet") showing sufficient net tangible assets, based on the
Company's best estimate at that time of its losses for the fiscal year ended
September 30, 1996. There can be no assurance that the Company's estimate in
the Pro Forma Balance Sheet was accurate. Based on this filing, the National
Association of Securities Dealers approved the continued listing of the
Company's Common Stock on the Nasdaq National Market.
The Company has continued to incur losses, however, and there can be no
assurance that the Company will continue to meet the net tangible asset, capital
and surplus, or other listing requirements of the Nasdaq National Market in the
future. Should the Company fail to meet such listing standards, it may be
delisted from the Nasdaq Stock Market. Trading, if any, in the listed
securities would thereafter be conducted on the Electronic Bulletin Board or the
National Quotation Bureau's "pink sheets." As a result, an investor may find it
difficult to dispose of, or to obtain accurate quotations of the price of, the
Company's securities. This would likely 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 October 31, 1996, the Company had outstanding options and warrants to
purchase an aggregate of 3,448,938 shares of Common Stock, at a weighted average
exercise price of $7.127731164 per share. The Company is also obligated to issue
additional warrants to acquire up to 3,136,786 shares of Common Stock and up to
12,078,347 shares of Common Stock upon conversion of the 7% Cumulative Preferred
Stock, the Convertible Preferred Stock and the Series 2 Preferred Stock (the
"Preferred Stock"), based on the conversion prices of the Preferred Stock at
December 20, 1996. The exact number of shares of Common Stock issuable upon
conversion of Preferred Stock and exercise of warrants issued pursuant to such
conversion cannot be 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 shares of
Common Stock that may be issuable. The number of warrants and shares of Common
Stock issuable upon conversion of the Preferred Stock is also subject to various
adjustments to prevent dilution resulting from stock splits, stock dividends or
similar transactions. Further,
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<PAGE>
the Company may, at its election, choose to issue additional shares of Common
Stock in lieu of cash dividends due to the holders of the 7% Cumulative
Preferred Stock and the Series 2 Preferred Stock.
In addition, on November 13, 1996, SyQuest sold to an investor an
additional 1,500,000 shares of Common Stock that will become freely tradeable,
subject to compliance with applicable securities laws, on approximately February
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.
As of September 30, 1996, Warrants to purchase 100,000 shares of the
Company's Common Stock at an exercise price of $10.88 per share had been issued
as partial compensation for value received in the placement of the Company's 7%
Cumulative Convertible Preferred Stock. Those Warrants are exercisable at the
option of the holders on or before July 30, 1999.
To the extent that such options and warrants are exercised, shares of
Common Stock are issued in lieu of cash dividends or convertible securities are
converted (and the warrants issuable upon such conversion are exercised),
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, in 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 applicable 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,
certain of which are being offered pursuant to this Prospectus. Additional
shares of Common Stock issuable upon conversion of the 7% Cumulative Preferred
Stock are being offered pursuant to a prospectus included in Registration
Statement No. 333-7369. Such registered shares can be sold without any holding
period or sales volume limitations.
UNCERTAINTY OF MARKET ACCEPTANCE OF PRODUCTS.
The Company's future success will depend upon market acceptance of its new
products and upon the Company's ability to establish its new products as
industry standards. The Company introduced its EZ Flyer 230 in June 1996. The EZ
Flyer 230 is a newly designed product for the Company with 230 megabyte
capacity, which the Company began to ship in significant volume in July 1996.
While the Company believes that early indications of market acceptance of the EZ
Flyer 230 are favorable, the product has only recently been introduced and there
can be no assurance that the level of acceptance will continue or grow due to
uncertainties regarding the market for the EZ Flyer 230 and the competition it
is facing. The Company continues to refine the EZ Flyer 230 and there can be no
assurance that the Company will not experience problems or delays if and when it
attempts to manufacture and ship the EZ Flyer 230 in higher volumes.
On August 7, 1996, the Company announced that it had commenced taking
orders for its new 3.5 inch, 1.5 gigabyte SyJet system products. The Company has
begun limited production and made limited shipments in the first quarter of
fiscal 1997. The Company intends to increase production and shipments in the
second fiscal quarter of 1997; however, there can be no assurance that the
Company will be able to introduce this new product successfully and in a timely
manner or that the product will be accepted in the market. Limitations on cash
resources restricted the ability of the Company to increase SyJet production in
the first quarter of fiscal 1997 to the levels desired by the Company.
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<PAGE>
The SyQuest technology is different from the most widely used data 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 software
distribution. The failure of the Company's new products to achieve widespread
commercial acceptance would have a material adverse effect on the Company's
financial results and business.
INTRODUCTION OF EZ FLYER 230; DISCONTINUATION OF EZ135.
The Company's EZ135 products accounted for 16% of the Company's sales in
the last quarter of fiscal 1995, 42% in the first quarter of fiscal 1996, 46% in
the second quarter of fiscal 1996, 45% in the third quarter of fiscal 1996 and
approximately 16% in the fourth quarter of fiscal 1996. Although sales of EZ135
products contributed significantly to the Company's revenue during the last
quarter of the 1995 fiscal year and the majority of fiscal year 1996, the
Company sold EZ135 units at a significant loss due to cost issues which could
not be corrected as the Company had originally anticipated, and due to
competitive pressures requiring the selling price to continue to decline in the
market. The Company discontinued sales of the EZ135 during the fourth quarter
of fiscal 1996.
The Company introduced its EZ Flyer 230 on June 3, 1996. Commercial
shipments of the EZ Flyer 230 commenced in June 1996, and the Company began to
ship the EZ Flyer 230 in significant volume in July 1996. Revenue in the fourth
quarter of fiscal 1996 was $12.7 million for the EZ Flyer 230, representing 28%
of total revenue. There can be no assurance that early indications of market
acceptance of the EZ Flyer 230 will continue or that the level of acceptance
will grow.
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, the Company experienced disruption in its supply of
certain components for a number of reasons including the shortage of cash to pay
suppliers. Component shortages due to limited cash availability affected the
Company's ability to produce EZ Flyer 230 products and limited the Company's
ability to implement certain cost reduction and productivity improvement plans.
Moreover, the Company may continue to experience difficulty in the future in
obtaining 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 would have a material adverse affect on the Company's ability to
generate sales and the ability to successfully launch the SyJet products.
The Company recently completed the process of working out repayment terms
with its key suppliers. On July 15, 1996, the Company issued the Debenture to
one of its 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, the Company received
certain of those notes payable in exchange for an aggregate of 1,874,837 shares
of
8
<PAGE>
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 to time and has no
guaranteed supply arrangements. The inability to obtain 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 sufficient quantities of its products to satisfy market demand,
result in delays in 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 more readily available
component, and such design modifications may result in 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 announced 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 high 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 floppy
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.
9
<PAGE>
TECHNOLOGICAL CHANGE AND NEW PRODUCTS.
The Company operates in an industry that is subject both to rapid
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 1
gigabyte (GB) or more, while the market price per megabyte of a hard disk drive
has dramatically decreased. The Company's 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 (such as heads,
semiconductor devices and media). The Company has recently introduced its 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 storage 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 major 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 basis 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 by 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; NOMAI LAWSUITS.
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 with Nomai, S.A. ("Nomai") for cartridges and others
for manufacture and subassembly of components. The Company has filed lawsuits
against Nomai and Maxell in France alleging copyright and patent infringement
and in the United States regarding various related claims, including royalty
payments owed by Nomai under a previous arrangement. Although the Company did
not obtain the temporary injunction sought in the French lawsuit prohibiting the
sale and distribution of Nomai's 200 megabyte cartridges, that lawsuit
continues.
On November 18, 1996, the Company and Herve Frouin and Marc Frouin (the
"Frouins"), owners of a controlling interest in Nomai, announced the execution
of a letter of intent proposing a transaction (the "Proposed Transaction") in
which the Company would acquire a controlling interest in Nomai from the Frouins
in exchange for 3,422,968 shares of the Company's Common Stock, and would
commence a tender offer to acquire up to 100% of the publicly held shares of
Nomai. On November 25,
10
<PAGE>
1996, however, the Company announced that plans to acquire Nomai have been
terminated, adding that it intends to pursue vigorously all available causes of
action against Nomai.
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 have entered into a Memorandum of Understanding under which
Legend would invest up to $20 million in the Company. The definitive terms of
this investment are being negotiated, and the completion of any such investment
(currently proposed for the first quarter of 1997) may require approval of the
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 agreement 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
prosecuting its lawsuit against or in maintaining its manufacturing
relationships with Nomai, that the joint venture or financing agreement 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 that 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
11
<PAGE>
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.
From time to time the Company receives notices alleging that the 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 claims 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.
Patent and similar litigation frequently is complex and expensive 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 in 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's foreign currency
priced products could have a material adverse effect on 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 and the Executive Vice President-
Operations, have all just recently joined the Company. 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
12
<PAGE>
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 six 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 including the
securities of SyQuest have been volatile. The Company's Common Stock 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 operating performance may have material adverse effects on the
market price of the Common Stock. In the past, following periods of volatility
in the market 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 and Shareholder
Derivative Lawsuits."
In addition, the Company believes that electronic bulletin board 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.
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.
13
<PAGE>
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 could 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 September 30,
1996, the customers with the three highest outstanding accounts receivable
balances totaled $12.03 million, or 28.9%, 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 to 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 the Company's stockholders. To date, an
aggregate of 50,000 shares of preferred stock have been issued: 20,000 shares of
7% Cumulative Preferred Stock; 5,500 shares of Convertible Preferred Stock and
24,500 shares of Series 2 Preferred Stock. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the rights of the
holders of these preferred shares and any 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 class 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 May 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 and former officers and directors also
have been named as defendants in the Federal Lawsuit. Plaintiffs have petitioned
the Court to consolidate the foregoing complaints into one consolidated action.
That request, as well 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 misrepresentations 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
of 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,
14
<PAGE>
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, there 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 offered
hereby are solely for the account of the Selling Stockholders. Accordingly, the
Company will receive none of the proceeds from the sale 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 Company who
acquired Common Stock in exchange for cancellation of certain trade payables of
the Company, and (ii) certain persons who have provided equity financing to the
Company or transferees of such persons. 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 the past three years other than as a result
of the ownership of the Common Stock and other securities of the Company.
The following table sets forth the names of the Selling Stockholders, the
number of shares of Common Stock owned beneficially by each of the Selling
Stockholders as of December 20, 1996, 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, the number of shares of Common Stock calculated to be issuable in
connection with the conversion of the 7% Cumulative Preferred Stock, the
Convertible Preferred Stock and the Series 2 Preferred Stock is based on a
conversion price that is derived from the average closing market price of the
Common Stock on the five trading days preceding December 20, 1996 (which was
$4.60). 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
15
<PAGE>
on a hypothetical average closing market price of the Common Stock of $4.00 per
share on the five trading days preceding the date of such conversion, which
price is below the closing market price of the Common Stock as of December 20,
1996 (which was $4.25), and such estimate does not include the 2,291,891 shares
of Common Stock registered for resale by holders of the 7% Cumulative Preferred
Stock pursuant to Registration Statement No. 333-7369. The use of such
hypothetical average closing market price 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 provided by the
Selling Stockholders. Because the Selling Stockholders may offer 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 table has been prepared on the assumption that all
shares of Common Stock offered under this Prospectus will be sold.
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OF COMMON
STOCK BENEFICIALLY SHARES OF STOCK BENEFICIALLY
OWNED PRIOR TO COMMON STOCK OWNED AFTER
NAME OFFERING/(1)(2)/ BEING OFFERED OFFERING/(3)/
- ------------------------------------------ ----------------- ------------- ------------------
<S> <C> <C> <C>
GFL Performance Fund Ltd./(4)/ 2,881,554 2,159,098 0
GFL Advantage Fund Ltd./ (4)/ 1,347,636 892,689 0
GFL Portfolio B/(4)/ 1,345,474 889,935 0
Atmel Corporation/(5)/ 370,488 370,488 0
Freight Solutions, Int./(5)/ 293,210 293,210 0
Petronic International, Inc./(5)/ 218,422 218,422 0
SAE Magnetics/(5)/ 992,717 992,717 0
Nelson Partners/(6)/ 1,332,267 1,487,107 0
Olympus Securities, Ltd/(6)/ 888,179 991,405 0
Rose Glen Funding, Inc./(6)/ 222,044 247,851 0
CYGNI S.A./(7)/ 341,005 392,157 0
Pangaea Fund Limited/(7)/ 477,408 549,020 0
Rutgers Casualty Insurance Co./(7)/ 85,252 98,039 0
American European Group /(7)/ 34,100 39,216 0
United International Insurance Co./(7)/ 51,151 58,824 0
Combination Inc./(7)/ 1,402,813 1,613,235 0
Burnstein & Lindsay Securities 179,028 205,882 0
Corp./(7)/
Futures Brokerage Inc./(7)/ 281,330 323,529 0
Biscount Overseas Ltd./(7)/ 396,419 455,882 0
TULA Business, Inc./(7)/ 255,754 294,118 0
Gross Foundation Inc./(7)/ 127,877 147,059 0
Maslo Fund Ltd./(7)/ 67,775 77,941 0
Black Inc./(7)/ 38,363 44,118 0
IBNS Manufacturing Co./(7)/ 63,939 73,529 0
Millenco, L.P./(7)/ 127,877 147,059 0
Ashline Ltd./(7)/ 1,329,923 1,529,412 0
Karlin Investments, Inc./(7)/ 579,711 666,667 0
Timboom Ltd./(7)/ 170,503 196,079 0
Museum Assets Ltd./(7)/ 1,329,923 1,529,412 0
Wharton Capital Partners Ltd./(7)/ 34,100 39,216 0
Econor Investment Corp./(8)/ 980,393 1,127,451 0
Wharton Capital International/(9)/ 125,000 125,000 0
State Capital Market Group, Ltd./(9)/ 125,000 125,000 0
---------- ----------
TOTAL 18,496,635 18,400,767
</TABLE>
16
<PAGE>
- -------------------
(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 December 20, 1996. 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 the 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 certain Preferred Stock are
paid in Common Stock.
(3) Assumes the sale of all shares offered hereby and, in the case of GFL
Performance Fund Ltd., GFL Advantage Fund Ltd. and GFL Portfolio B, the
sale of all of such Selling Stockholders' shares of Common Stock registered
for resale by Registration Statement No. 333-7369 (respectively:
1,145,945; 572,973; and 572,973).
(4) The listed Selling Stockholders hold an aggregate of 15,560 shares of 7%
Cumulative Preferred Stock of the Company which are convertible into shares
of Common Stock. Each share of 7% Cumulative Preferred Stock is convertible
at a rate of (i) $1,000 divided by (ii) the lesser of (x) seventy-seven
percent (77%) of the average market price of the Common Stock for the five
consecutive trading days ending one day prior to the date a conversion
notice is received and (y) $11.00. The conversion price is adjusted, and
the number of shares beneficially owned by the Selling Stockholder will
vary accordingly, to reflect stock dividends, stock splits and in certain
other circumstances. The number of shares shown as being offered in the
table does not include 2,291,891 of such Selling Stockholders' shares of
Common Stock registered for resale by Registration Statement No. 333-7369
and is based on (i) the assumed conversion of the 15,560 shares of 7%
Cumulative Preferred Stock at hypothetical conversion price of $3.08 per
share (which is the conversion price based on a hypothetical average
closing price of $4.00 on the five trading days preceding the date of such
conversion, (ii) the actual conversion of 4,440 shares of 7% Cumulative
Preferred Stock into 1,069,285 shares of Common Stock -- 533,713 shares
held by GFL Advantage Fund, Ltd. and 535,572 shares held by GFL Portfolio
B, and (iii) shares received as dividends on the 7% Cumulative Preferred
Stock as of August 31, 1996, and November 30, 1996, as follows: 58,290
shares for GFL Performance Fund Ltd., 27,079 shares for GFL Advantage Fund
Ltd., and 27,011 shares for GFL Portfolio B. Notwithstanding the foregoing,
each listed Selling Stockholder can convert 7% Cumulative Preferred Stock
into, and receive dividends on such Preferred Stock paid in the form of,
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 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 7% Cumulative Preferred Stock, see the Corrected Certificate of
Designations, Preferences and Rights of 7% Cumulative Convertible Preferred
Stock, Series 1 and related Registration Rights Agreement filed as exhibits
to the Company's Current Report on Form 8-K dated June 14, 1996, the
contents of which are incorporated herein by this reference.
(5) 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 to the Company's Current
Report on Form 8-K/A dated October 31, 1996. Each of such Selling
Stockholders is a vendor of the Company.
(6) The listed Selling Stockholders hold outstanding Stock Purchase Warrants to
acquire a total of up to 550,000 shares of Common Stock at a price of $5.50
per share, and hold shares of Convertible Preferred Stock of the
17
<PAGE>
Company, which are convertible into shares of Common Stock and additional
warrants to be issued at the time of such conversion. Each share of
Convertible Preferred Stock may be converted after December 15, 1996, into
a number of shares of Common Stock equal to (i) $1,000 plus an additional
fifty dollars for each year (pro rated on a daily basis for partial years)
between October 15, 1996, and the conversion date, (ii) divided by a
conversion price which is the lesser of $6.50 per share or 85% of the
average closing market price of the Common Stock on the five trading days
preceding the date of the conversion. 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. Upon
conversion of the Convertible Preferred Stock, the holders of such stock
shall receive, for each three shares of Common Stock acquired through
conversion, a warrant to purchase an additional share of Common Stock at a
price which is the lesser of (a) $7.15 per share or (b) 110% of the average
closing market price of the Common Stock on the five trading days preceding
the date of the related conversion of the Convertible Preferred Stock. The
number of shares shown as being offered in the table is based on shares
issuable directly upon conversion, at a conversion price of $3.40 (which is
the conversion price based on a hypothetical average closing market price
of $4.00 on the five trading days preceding the date of such conversion),
upon exercise of the warrants to be issued on such conversion and upon
exercise of their outstanding Stock Purchase Warrants. Notwithstanding the
foregoing, each listed Selling Stockholder can convert Convertible
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 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 Convertible Preferred Stock, see
the Certificate of Designations, Preferences and Rights of Convertible
Preferred Stock, Series 1, and the related Securities Purchase Agreement
(with exhibits) filed as an exhibit to the Company's Current Report on Form
8-K/A dated October 31, 1996.
(7) The listed Selling Stockholders hold shares of Series 2 Preferred Stock of
the Company, which are convertible into shares of Common Stock and
additional warrants to be issued at the time of such conversion. Each share
of Series 2 Preferred Stock may be converted after December 15, 1996, into
a number of shares of Common Stock equal to (i) $1,000, (ii) divided by a
conversion price, which is the lesser of $6.50 per share or 85% of the
average closing market price of the Common Stock on the five trading days
preceding the date of the conversion. 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. On
conversion of the Series 2 Preferred Stock, the holders of such stock, or
their designees, provided such designees are "accredited investors," shall
receive, for each three shares of Common Stock acquired through conversion,
a warrant to purchase an additional share of Common Stock at a price which
is the lesser of (a) $7.15 per share or (b) 110% of the average closing
market price of the Common Stock on the five trading days preceding the
date of the related conversion of the Series 2 Preferred Stock. The number
of shares shown as being offered in the table is based on shares issuable
upon conversion, at a conversion price of $3.40 (which is the conversion
price based on a hypothetical average closing market price of $4.00 on the
five trading days preceding the date of such conversion) and upon exercise
of the warrants to be issued on such conversion. Notwithstanding the
foregoing, each listed Selling Stockholder can convert Series 2 Preferred
Stock into, and receive dividends on such Preferred Stock paid in the form
of, 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
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 2 Preferred Stock, see the Certificate of
Designations, Preferences and Rights of 5% Cumulative Convertible Preferred
Stock, Series 2, and the related Securities Purchase Agreement (with
exhibits) filed as an exhibit to the Company's Current Report on Form 8-K/A
dated October 31, 1996.
18
<PAGE>
(8) Each of Burnstein & Lindsay Securities Corp., Futures Brokerage, Inc.,
Discount Overseas Ltd., TULA Business, Gross Foundation Inc., Maslo Fund
Ltd., Black Inc., IBNS Manufacturing Co., and Millenco, L.P., each of which
holds shares of Series 2 Preferred Stock, has notified the Company of its
intent to assign to Econor Investment Corp. its rights to receive, on
conversion of its shares of Series 2 Preferred Stock, warrants to purchase
Common Stock.
(9) Each Listed Selling Stockholder has the right to acquire Common Stock
pursuant to certain Stock Purchase Warrants to purchase up to 50,000 shares
of Common Stock for $10.875 per share and up to 75,000 shares of Common
Stock for $7.15 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.
PLAN OF DISTRIBUTION
The Company is registering the shares of Common Stock offered by the
Selling Stockholders hereunder pursuant to contractual registration rights.
The shares of Common Stock offered hereunder may be sold from time to time
by the Selling Stockholders, or by pledgees, donees, transferees 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 prices 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, and 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 Common Stock
described above, whether effected by the Selling Stockholders, any 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.
19
<PAGE>
EXPERTS
The consolidated financial statements of SyQuest Technology, Inc.
appearing in the SyQuest Technology, Inc. Annual Report on Form 10-K for 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 consolidated 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.
_______________________________
20
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AVAILABLE INFORMATION.............................................. 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.................... 3
THE COMPANY........................................................ 4
RISK FACTORS....................................................... 5
USE OF PROCEEDS.................................................... 15
SELLING STOCKHOLDERS............................................... 15
PLAN OF DISTRIBUTION............................................... 19
LEGAL MATTERS...................................................... 19
EXPERTS............................................................ 20
</TABLE>
18,400,767 SHARES
SYQUEST TECHNOLOGY, INC.
COMMON STOCK
__________________________
PROSPECTUS
__________________________
January 6, 1997
___________________________________________
___________________________________________
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
OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, 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.
_______________________________
21
<PAGE>
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 commissions, 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.
<TABLE>
<S> <C>
Registration fee $23,700.38
Blue sky qualification fees and expenses -0-
Printing and engraving expenses 1,000.00
Legal fees and expenses 20,000.00
Accounting fees and expenses 40,000.00
Miscellaneous 1,000.00
----------
Total $85,700.38
==========
</TABLE>
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
II-1
<PAGE>
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.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
3.1 Restated Certificate of Incorporation of the Company. Incorporated by reference to
Exhibit 3.1 of 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.
4.1 Corrected Certificate of Designations, Preferences and Rights of 7% Cumulative
Convertible Preferred Stock, Series 1. Incorporated by reference to Exhibit 3.1 of the
Company's Current Report on Form 8-K, dated June 14, 1996.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
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 of the Company's Current Report on
Form 8-K dated June 14, 1996.
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 of the Company's Current Report on
Form 8-K dated June 14, 1996.
4.4 6% Convertible Subordinated Debenture dated July 15, 1996. Incorporated by
reference to Exhibit 10.3 of 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 of 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.
4.7 Certificate of Designations, Preferences and Rights of 5% Cumulative Preferred
Stock, Series 2. Incorporated by Reference to Exhibit 3.2 to the Company's Current
Report on Form 8-K/A dated October 31, 1996.
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 Company's Current Report on Form 8-K/A dated October 31,
1996.
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 Company's Current Report on Form 8-K/A dated October 31, 1996.
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 Company's Current Report on Form 8-K/A dated October 31, 1996.
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 Company's Current Report on Form 8-K/A dated October 31, 1996.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
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 Company's Current Report on Form 8-K/A dated October 31, 1996.
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 Company's Current
Report on Form 8-K/A dated October 31, 1996.
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 Company's Current
Report on Form 8-K/A dated October 31, 1996.
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 Company's Current
Report on Form 8-K/A dated October 31, 1996.
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 Company's Current
Report on Form 8-K/A dated October 31, 1996.
4.17 Warrant to Purchase Common Stock issued July 30, 1996, to State Capital
Market Group.
4.18 Warrant to Purchase Common Stock issued July 30, 1996, to Wharton
Capital International Corporation.
4.19 Warrant to Purchase Common Stock issued October 8, 1996, to Wharton
Capital International Corporation.
4.20 Warrant to Purchase Common Stock issued October 8, 1996, to State
Capital Market Group.
4.21 Warrant to Purchase Common Stock issued October 31, 1996, to Nelson
Partners.
4.22 Warrant to Purchase Common Stock issued October 31, 1996, to Olympus
Securities, Ltd.
4.23 Warrant to Purchase Common Stock issued October 31, 1996, to Rose Glen
Funding, Inc.
4.24 Subscription Agreement dated November 12, 1996, between SyQuest
Technology, Inc. and Fletcher International Limited, including the
Annex Warrant Certificate issued November 13, 1996. Incorporated by
Reference to Exhibit 4.18 to the Company's Annual Report on Form 10-K
for the fiscal period ended September 30, 1996.
5.1** Opinion of Shartsis, Friese & Ginsburg, LLP.
23.1 Consent of Ernst & Young LLP, independent auditors.
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.
</TABLE>
- -------------------
** Previously filed.
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.
II-4
<PAGE>
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:
(i) To include any prospectus required by Section 10(a)(3) of the Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided however, that 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 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.
II-5
<PAGE>
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 3rd day
of January, 1997.
SYQUEST TECHNOLOGY, INC.
By: /s/ Edwin L. Harper
----------------------------
Edwin L. Harper,
President and Chief Executive Officer
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Edwin L. Harper President, Chief Executive Officer and Director January 3, 1997
- -------------------------- (Principal Executive Officer)
Edwin L. Harper
/s/ Henry C. Montgomery Executive Vice President, Finance and Chief January 3, 1997
- -------------------------- Financial Officer (Principal Financial and
Henry C. Montgomery Accounting Officer)
/s/ Edward L. Marinaro Chairman of the Board and Director January 3, 1997
- --------------------------
Edward L. Marinaro
/s/ C. Richard Kramlich** Director January 3, 1997
- --------------------------
C. Richard Kramlich
/s/ David I. Caplan** Director January 3, 1997
- --------------------------
David I. Caplan
/s/ Joseph Baia** Director January 3, 1997
- --------------------------
Joseph Baia
**By Henry Montgomery his
attorney in fact
/s/ Henry Montgomery
- --------------------------
Henry Montgomery
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT PAGE NO.
- ------- ----------------------- ----------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of the Company. Incorporated
by reference to Exhibit 3.1 of 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.
4.1 Corrected Certificate of Designations, Preferences and Rights of 7%
Cumulative Convertible Preferred Stock, Series 1. Incorporated by
reference to Exhibit 3.1 of the Company's Current Report on
Form 8-K, dated June 14, 1996.
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 of
the Company's Current Report on Form 8-K dated June 14, 1996.
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 of
the Company's Current Report on Form 8-K dated June 14, 1996.
4.4 6% Convertible Subordinated Debenture dated July 15, 1996.
Incorporated by reference to Exhibit 10.3 of 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.BMP. Incorporated by reference to
Exhibit 10.4 of 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.
4.7 Certificate of Designations, Preferences and Rights of 5% Cumulative
Preferred Stock, Series 2. Incorporated by Reference to Exhibit 3.2 to
the Company's Current Report on Form 8-K/A dated October 31,
1996.
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 Company's Current Report on Form 8-K/A dated
October 31, 1996.
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT PAGE NO.
- ------- ----------------------- ----------
<C> <S>
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
Company's Current Report on Form 8-K/A dated October 31, 1996.
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
Company's Current Report on Form 8-K/A dated October 31, 1996.
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
Company's Current Report on Form 8-K/A dated October 31, 1996.
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
Company's Current Report on Form 8-K/A dated October 31, 1996.
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 Company's Current Report on Form 8-K/A dated
October 31, 1996.
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 Company's Current Report on Form 8-K/A dated
October 31, 1996.
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 Company's Current Report on Form 8-K/A dated
October 31, 1996.
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT PAGE NO.
- ------- ----------------------- ----------
<C> <S> <C>
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 Company's Current Report on Form 8-K/A dated
October 31, 1996.
4.17 Warrant to Purchase Common Stock issued July 30, 1996, to State Capital
Market Group.
4.18 Warrant to Purchase Common Stock issued July 30, 1996, to Wharton
Capital International Corporation.
4.19 Warrant to Purchase Common Stock issued October 8, 1996, to Wharton
Capital International Corporation.
4.20 Warrant to Purchase Common Stock issued October 8, 1996, to State
Capital Market Group.
4.21 Warrant to Purchase Common Stock issued October 31, 1996, to Nelson
Partners.
4.22 Warrant to Purchase Common Stock issued October 31, 1996, to Olympus
Securities, Ltd.
4.23 Warrant to Purchase Common Stock issued October 31, 1996, to Rose Glen
Funding, Inc.
4.24 Subscription Agreement dated November 12, 1996, between SyQuest
Technology, Inc. and Fletcher International Limited, including the
Annex Warrant Certificate issued November 13, 1996. Incorporated by
Reference to Exhibit 4.18 to the Company's Annual Report on Form 10-K
for the fiscal period ended September 30, 1996.
5.1** Opinion of Shartsis, Friese & Ginsburg, LLP.
23.1 Consent of Ernst & Young LLP, independent auditors.
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.
</TABLE>
- -------------------
** Previously filed.
iii
<PAGE>
EXHIBIT 4.17
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS
SPECIFIED IN SECTION 8 HEREOF. NEITHER THE RIGHTS REPRESENTED BY THIS WARRANT
NOR THE SHARES ISSUABLE UPON THE EXERCISE HEREOF (COLLECTIVELY, THE
"SECURITIES") HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE LAW, AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IF, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THIS
WARRANT, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SUCH ACT.
THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE IN WHOLE OR IN PART NOR THE
WARRANT EXERCISED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2 AND
SECTION 8 HEREOF.
SYQUEST TECHNOLOGY, INC.
WARRANT TO PURCHASE COMMON STOCK
SyQuest Technology, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, State Capital Market Group, Ltd. ("State
Capital"), the registered holder hereof, is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof but not after 5:00 P.M. San Francisco
time on the Expiration Date (as defined herein) fifty thousand (50,000) fully
paid nonassessable shares of Common Stock (as defined herein) of the Company (as
adjusted from time to time as provided in this Warrant) (the "Warrant Shares")
at an initial purchase price of U.S. $10.875 per share in lawful money of the
United States.
Section 1.
(a) DEFINITIONS. The following words and terms as used in this
-----------
Warrant shall have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any capital
------------
stock into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company which
----------------------
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
<PAGE>
"Expiration Date" means the date three years from the date of this Warrant
---------------
or, if such date falls on a Saturday, Sunday or other day on which banks are
required or authorized to be closed in the City of San Francisco or the State of
California (a "Holiday"), the next preceding date which is not a Holiday.
"Transfer" shall include any disposition of any Warrants or Warrant Shares,
--------
or of any interest in either thereof which would constitute a sale thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
laws of California or such other state or states as may be applicable.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
-------
transfer or replacement of any thereof.
"Warrant Exercise Price" shall initially be U.S. $10.875 per share and
----------------------
shall be adjusted and readjusted from time to time as provided in this Warrant.
(b) Other Definitional Provisions.
-----------------------------
(i) Except as otherwise specified herein, all references
herein (A) to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to herein,
shall be deemed references to such applicable law as the same may have been
or may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words "herein," "hereof,"
and "hereunder," and words of similar import, shall refer to this Warrant
as a whole and not to any provision of this Warrant, and the words
"Section," "Schedule," and "Exhibit" shall refer to Sections of, and
Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires the neuter gender
includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
Section 2. EXERCISE OF WARRANT.
-------------------
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised, in whole or in part, at any time during normal business hours on or
after the opening of business on the date hereof and prior to 5:00 P.M. San
Francisco time on the Expiration Date. The rights represented by this Warrant
may be exercised by the holder hereof then registered on the books of the
Company, in whole or from time to time in part (except that this Warrant shall
not be exercisable as to a fractional share) by (i) delivery of a written
notice, in the form of the Subscription Notice attached as Exhibit A hereto, of
such holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price multiplied by the number of Warrant
Shares as to which the Warrant is being exercised (plus any applicable issue or
transfer taxes) in cash or by certified or official bank check, for the number
of Warrant Shares as to which this Warrant shall have been exercised,
-2-
<PAGE>
and (iii) the surrender of this Warrant, properly endorsed, at the principal
office of the Company (or at such other agency or office of the Company as the
Company may designate by notice to the holder hereof); provided, that if such
Warrant Shares are to be issued in any name other than that of the registered
holder of this Warrant, such issuance shall be deemed a transfer and the
provisions of Section 8 shall be applicable. In the event of any exercise of
the rights represented by this Warrant in compliance with this Section 2(a), a
certificate or certificates for the Warrant Shares so purchased, registered in
the name of, or as directed by, the holder, shall be delivered to, or as
directed by such holder within a reasonable time, after such rights shall have
been so exercised.
(b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall issue a new Warrant
identical in all respects to the Warrant exercised except (i) it shall represent
rights to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant was exercised, and (ii) the holder thereof
shall be deemed to have become the holder of record of such Warrant Shares
immediately prior to the close of business on the date on which the Warrant was
surrendered and payment of the amount due in respect of such exercise and any
applicable taxes was made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such person
shall be deemed to have become the holder of such Warrant Shares at the opening
of business on the next succeeding date on which the stock transfer books are
open.
Section 3. COVENANTS AS TO COMMON STOCK. The Company covenants and
----------------------------
agrees that all Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable. The Company further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved a sufficient number
of shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. TAXES. The Company shall not be required to pay any tax
-----
or taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares of Common Stock in a name other than that of the registered
holder hereof or upon any permitted transfer of this Warrant.
Section 5. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. No holder, as
---------------------------------------
such, of this Warrant shall be entitled to vote or receive dividends or be
deemed the holder of shares of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise,
-3-
<PAGE>
prior to the issuance to the holder of this Warrant of the Warrant Shares which
he is then entitled to receive upon the due exercise of this Warrant.
Section 6. NO LIMITATION ON CORPORATE ACTION. No provisions of this
---------------------------------
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. REPRESENTATION OF HOLDER. The holder of this Warrant, by
------------------------
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment and not with a view to, or
sale in connection with, any distribution hereof or of any of the shares of
Common Stock or other securities issuable upon the exercise thereof, nor with
any present intention of distributing any of the same. The holder of this
Warrant further represents, by acceptance hereof, that, as of this date, such
holder is an "accredited investor" as such term is defined in Rule 501(a)(1) of
Regulation D as promulgated by the Securities and Exchange Commission under the
Securities Act (an "Accredited Investor") and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968
(an "Excluded Purchaser"). Upon exercise of this Warrant, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the shares of Warrant Stock so purchased are being acquired solely
for the holder's own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale and that such
holder is an Accredited Investor and an Excluded Purchaser. If such holder
cannot make such representations because they would be factually incorrect, it
shall be a condition to such holder's exercise of the Warrant that the Company
receive such other representations as shall be reasonably necessary to assure
the Company that the issuance of its securities upon exercise of the Warrant
shall not violate the United States' or any state's securities laws.
Section 8. TRANSFER; OPINIONS OF COUNSEL; RESTRICTIVE LEGENDS.
--------------------------------------------------
(a) Prior to any sale, transfer or other disposition of this Warrant
or the Warrant Shares, the holder thereof will give ten (10) days' notice to the
Company of such holder's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer and, if
such transfer is not registered under the Securities Act (below defined), shall
be accompanied by an opinion, addressed to the Company and reasonably
satisfactory in form and substance to it, of counsel (reasonably satisfactory to
the Company) for such holder, stating whether, in the opinion of such counsel,
such transfer will be a transaction exempt from registration under the
Securities Act.
(b) If such sale, transfer or other disposition may in the opinion of
such counsel be effected without registration under the Securities Act, such
holder shall thereupon be entitled to the terms of the notice delivered by such
holder to the Company. If in the opinion of such counsel such transfer may not
be effected without registration under the Securities Act, such holder shall not
be entitled to so transfer this Warrant, or the Warrant
-4-
<PAGE>
Shares unless the Company shall have filed a registration statement relating to
such proposed transfer and such registration statement has become effective
under the Securities Act.
(c) Any Warrant Shares issued pursuant to the exercise of this
Warrant may bear one or more of the legends in similar form to the legend set
forth on this Warrant.
Section 9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
--------------------------------------------
Warrant is lost, stolen, mutilated or destroyed, the Company shall, on such
terms as to indemnity or otherwise as it may in its discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed.
Section 10. NOTICE. All notices and other communications under this
------
Warrant shall (a) be in writing (which shall include communications by
telecopy), (b) be (i) sent by registered or certified mail, postage prepaid,
return receipt requested, by telecopier, or (ii) delivered by hand, (c) be given
at the following respective addresses and telecopier numbers and to the
attention of the following persons:
(i) if to the Company, to it at:
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, California 94538
Telephone: (510) 226-4000
Telecopier: (510) 226-4100
with a copy to:
Jackson Tufts Cole & Black, LLC
650 California Street, Suite 3200
San Francisco, California 94108
Attention: Gretchen D. Hug, Esq.
Telephone: (415) 433-1950
Telecopier: (415) 392-3494
(ii) if to State Capital, to it at the address set forth below
State Capital's signature on the signature page hereof.
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, on the fifth Business Day after such communication is deposited in the
mail, addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section and the appropriate answer back is received or receipt
is
-5-
<PAGE>
otherwise acknowledged, and (iii) if given by hand delivery, when left at the
address of the addressee addressed as above provided, except that notices of a
change of address, telecopier or telephone number, shall not be deemed
furnished, until received.
Section 11. MISCELLANEOUS. This Warrant and any term hereof may be
-------------
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of California.
Section 12. DATE. The date of this Warrant is July 30, 1996. This
----
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 12 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
SYQUEST TECHNOLOGY, INC.
By: /s/ John W. Luhtala
---------------------------------
Name: John W. Luhtala
---------------------------------
Title: Sr. VP & CFO
---------------------------------
ACCEPTED:
- --------
STATE CAPITAL MARKET GROUP, LTD.
By: /s/ Michael Arnouse
----------------------
Name: Michael M. Arnouse
----------------------
Title: President
----------------------
Address: 3 Edward Lane
-------------------
Syasset, N.Y. 11791
- -----------------------------
-6-
<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH REGISTERED HOLDER DESIRES TO
EXERCISE THIS WARRANT
SYQUEST TECHNOLOGY, INC.
The undersigned hereby exercises the right to purchase Warrant Shares
covered by this Warrant according to the conditions thereof and herewith makes
payment of U.S. $________, the aggregate Warrant Exercise Price of such Warrant
Shares in full.
The undersigned further certifies that:
1. It is acquiring the Warrant Shares for its own account and not as
nominee for any other party, for investment and not with a view to, or sale in
connection with, any distribution thereof, nor with any present intention of
distributing any of the same; and
2. As of this date, it is an "accredited investor" as such term is
defined in Rule 501(a)(1) of Regulation D as promulgated by the Securities and
Exchange Commission under the Securities Act and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968.
STATE CAPITAL MARKET GROUP, LTD.:
By: _______________________________
Name:
Title:
Address: ____________________________
____________________________________
____________________________________
Number of Warrant Shares Being Purchased:
___________________________________
Dated: ______________, 199___.
-7-
<PAGE>
EXHIBIT 4.18
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS
SPECIFIED IN SECTION 8 HEREOF. NEITHER THE RIGHTS REPRESENTED BY THIS WARRANT
NOR THE SHARES ISSUABLE UPON THE EXERCISE HEREOF (COLLECTIVELY, THE
"SECURITIES") HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE LAW, AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IF, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THIS
WARRANT, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SUCH ACT.
THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE IN WHOLE OR IN PART NOR THE
WARRANT EXERCISED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2 AND
SECTION 8 HEREOF.
SYQUEST TECHNOLOGY, INC.
WARRANT TO PURCHASE COMMON STOCK
SyQuest Technology, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Wharton Capital International Corporation
("Wharton"), the registered holder hereof, is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof but not after 5:00 P.M. San Francisco
time on the Expiration Date (as defined herein) fifty thousand (50,000) fully
paid nonassessable shares of Common Stock (as defined herein) of the Company
(the "Warrant Shares") at a purchase price of U.S. $10.875 per share in lawful
money of the United States.
Section 1.
(a) DEFINITIONS. The following words and terms as used in this
-----------
Warrant shall have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any capital
------------
stock into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company which
----------------------
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
<PAGE>
"Expiration Date" means the date three years from the date of this Warrant
---------------
or, if such date falls on a Saturday, Sunday or other day on which banks are
required or authorized to be closed in the City of San Francisco or the State of
California (a "Holiday"), the next preceding date which is not a Holiday.
"Transfer" shall include any disposition of any Warrants or Warrant Shares,
--------
or of any interest in either thereof which would constitute a sale thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
laws of California or such other state or states as may be applicable.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
-------
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $10.875 per share.
----------------------
(b) Other Definitional Provisions.
-----------------------------
(i) Except as otherwise specified herein, all references
herein (A) to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to herein,
shall be deemed references to such applicable law as the same may have been
or may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words "herein," "hereof,"
and "hereunder," and words of similar import, shall refer to this Warrant
as a whole and not to any provision of this Warrant, and the words
"Section," "Schedule," and "Exhibit" shall refer to Sections of, and
Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires the neuter gender
includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
Section 2. EXERCISE OF WARRANT.
-------------------
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised, in whole or in part, at any time during normal business hours on or
after the opening of business on the date hereof and prior to 5:00 P.M. San
Francisco time on the Expiration Date. The rights represented by this Warrant
may be exercised by the holder hereof then registered on the books of the
Company, in whole or from time to time in part (except that this Warrant shall
not be exercisable as to a fractional share) by (i) delivery of a written
notice, in the form of the Subscription Notice attached as Exhibit A hereto, of
such holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price multiplied by the number of Warrant
Shares as to which the Warrant is being exercised (plus any applicable issue or
transfer taxes) in cash or by certified or official bank check, for the number
of Warrant Shares as to which this Warrant shall have been exercised, and (iii)
the surrender of this Warrant, properly endorsed, at the principal office of the
-2-
<PAGE>
Company (or at such other agency or office of the Company as the Company may
designate by notice to the holder hereof); provided, that if such Warrant Shares
are to be issued in any name other than that of the registered holder of this
Warrant, such issuance shall be deemed a transfer and the provisions of Section
12 shall be applicable. In the event of any exercise of the rights represented
by this Warrant in compliance with this Section 2(a), a certificate or
certificates for the Warrant Shares so purchased, registered in the name of, or
as directed by, the holder, shall be delivered to, or as directed by such holder
within a reasonable time, after such rights shall have been so exercised.
(b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall issue a new Warrant
identical in all respects to the Warrant exercised except (i) it shall represent
rights to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant was exercised, and (ii) the holder thereof
shall be deemed to have become the holder of record of such Warrant Shares
immediately prior to the close of business on the date on which the Warrant was
surrendered and payment of the amount due in respect of such exercise and any
applicable taxes was made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such person
shall be deemed to have become the holder of such Warrant Shares at the opening
of business on the next succeeding date on which the stock transfer books are
open.
Section 3. COVENANTS AS TO COMMON STOCK. The Company covenants and
----------------------------
agrees that all Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable. The Company further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved a sufficient number
of shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. TAXES. The Company shall not be required to pay any tax or
-----
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares of Common Stock in a name other than that of the registered
holder hereof or upon any permitted transfer of this Warrant.
Section 5. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. No holder, as
---------------------------------------
such, of this Warrant shall be entitled to vote or receive dividends or be
deemed the holder of shares of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he is then
-3-
<PAGE>
entitled to receive upon the due exercise of this Warrant.
Section 6. NO LIMITATION ON CORPORATE ACTION. No provisions of this
---------------------------------
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. REPRESENTATION OF HOLDER. The holder of this Warrant, by
------------------------
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment and not with a view to, or
sale in connection with, any distribution hereof or of any of the shares of
Common Stock or other securities issuable upon the exercise thereof, nor with
any present intention of distributing any of the same. The holder of this
Warrant further represents, by acceptance hereof, that, as of this date, such
holder is an "accredited investor" as such term is defined in Rule 501(a)(1) of
Regulation D as promulgated by the Securities and Exchange Commission under the
Securities Act (an "Accredited Investor") and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968
(an "Excluded Purchaser"). Upon exercise of this Warrant, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the shares of Warrant Stock so purchased are being acquired solely
for the holder's own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale and that such
holder is an Accredited Investor and an Excluded Purchaser. If such holder
cannot make such representations because they would be factually incorrect, it
shall be a condition to such holder's exercise of the Warrant that the Company
receive such other representations as shall be reasonably necessary to assure
the Company that the issuance of its securities upon exercise of the Warrant
shall not violate the United States' or any state's securities laws.
Section 8. TRANSFER; OPINIONS OF COUNSEL; RESTRICTIVE LEGENDS.
--------------------------------------------------
(a) Prior to any sale, transfer or other disposition of this Warrant
or the Warrant Shares, the holder thereof will give ten (10) days' notice to the
Company of such holder's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer and, if
such transfer is not registered under the Securities Act (below defined), shall
be accompanied by an opinion, addressed to the Company and reasonably
satisfactory in form and substance to it, of counsel (reasonably satisfactory to
the Company) for such holder, stating whether, in the opinion of such counsel,
such transfer will be a transaction exempt from registration under the
Securities Act.
(b) If such sale, transfer or other disposition may in the opinion of
such counsel be effected without registration under the Securities Act, such
holder shall thereupon be entitled to the terms of the notice delivered by such
holder to the Company. If in the opinion of such counsel such transfer may not
be effected without registration under the Securities Act, such holder shall not
be entitled to so transfer this Warrant, or the Warrant Shares unless the
Company shall have filed a registration statement relating to such proposed
-4-
<PAGE>
transfer and such registration statement has become effective under the
Securities Act.
(c) Any Warrant Shares issued pursuant to the exercise of this
Warrant may bear one or more of the legends in similar form to the legend set
forth on this Warrant.
Section 9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
--------------------------------------------
Warrant is lost, stolen, mutilated or destroyed, the Company shall, on such
terms as to indemnity or otherwise as it may in its discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed.
Section 10. NOTICE. All notices and other communications under this
------
Warrant shall (a) be in writing (which shall include communications by
telecopy), (b) be (i) sent by registered or certified mail, postage prepaid,
return receipt requested, by telecopier, or (ii) delivered by hand, (c) be given
at the following respective addresses and telecopier numbers and to the
attention of the following persons:
(i) if to the Company, to it at:
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, California 94538
Telephone: (510) 226-4000
Telecopier: (510) 226-4100
with a copy to:
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, California 94538
Attn: Michael J. Field, Esq.
Telephone: (510) 226-4000
Telecopier: (510) 226-4091
(ii) if to Wharton, to it at the address set forth below
Wharton's signature on the signature page hereof.
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, on the fifth Business Day after such communication is deposited in the
mail, addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section and the appropriate answer back is received or receipt
is
-5-
<PAGE>
otherwise acknowledged, and (iii) if given by hand delivery, when left at the
address of the addressee addressed as above provided, except that notices of a
change of address, telecopier or telephone number, shall not be deemed
furnished, until received.
Section 11. MISCELLANEOUS. This Warrant and any term hereof may be
-------------
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of California.
Section 12. DATE. The date of this Warrant is July 30, 1996. This
----
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
SYQUEST TECHNOLOGY, INC.
By: /s/ John W. Luhtala
---------------------------------
Name: John W. Luhtala
---------------------------------
Title: Sr. VP & CFO
---------------------------------
ACCEPTED:
- --------
WHARTON CAPITAL INTERNATIONAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
Address:__________________________
__________________________________
__________________________________
-6-
<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH REGISTERED HOLDER DESIRES TO
EXERCISE THIS WARRANT
SYQUEST TECHNOLOGY, INC.
The undersigned hereby exercises the right to purchase Warrant Shares
covered by this Warrant according to the conditions thereof and herewith makes
payment of U.S. $_______________, the aggregate Warrant Exercise Price of such
Warrant Shares in full.
The undersigned further certifies that:
1. It is acquiring the Warrant Shares for its own account and not as
nominee for any other party, for investment and not with a view to, or sale in
connection with, any distribution thereof, nor with any present intention of
distributing any of the same; and
2. As of this date, it is an "accredited investor" as such term is
defined in Rule 501(a)(1) of Regulation D as promulgated by the Securities and
Exchange Commission under the Securities Act and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968.
WHARTON CAPITAL INTERNATIONAL
CORPORATION:
By: ____________________________________
Name:
Title:
Address: _______________________________
________________________________________
________________________________________
Number of Warrant Shares Being Purchased:
________________________________________
Dated: ______________, 199___.
-1-
<PAGE>
EXHIBIT 4.19
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO
COMPLY WITH APPLICABLE STATE SECURITIES LAWS.
SYQUEST TECHNOLOGY, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No. 7 Number of Shares 75,000
Date of Issuance October 8, 1996
SyQuest Technology, Inc., a Delaware corporation (the "Company"),
hereby certifies that, for value received, Wharton Capital International
Corporation ("Holder"), the registered holder hereof, is entitled, subject to
the terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof but not after 5:00
P.M. San Francisco time on the Expiration Date (as defined herein) seventy five
thousand (75,000) fully paid nonassessable shares of Common Stock (as defined
herein) of the Company (the "Warrant Shares") at a purchase price of U.S. $7.15
per share in lawful money of the United States.
Section 1.
(a) Definitions. The following words and terms as used in this
-----------
Warrant have the following meanings:
"Common Stock" means (a) the Company's common stock, par value $.001
------------
per share, and (b) any capital stock into which such common stock shall have
been changed or any capital stock resulting from a reclassification of such
common stock.
"Convertible Securities" mean any securities issued by the Company
----------------------
which are convertible into or exchangeable for, directly or indirectly, shares
of Common Stock.
<PAGE>
"Expiration Date" means the date three years from the date of this
---------------
Warrant or, if such date falls on a Saturday, Sunday or other day on which banks
are required or authorized to be closed in the City of San Francisco or the
State of California (a "Holiday"), the next preceding date that is not a
Holiday.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Transfer" shall include any disposition of any Warrants or
--------
Warrant Shares, or of any interest in either thereof which would constitute a
sale thereof within the meaning of the Securities Act of 1933, as amended, or
the securities laws of California or such other state or states as may be
applicable.
"Warrant" shall mean this Warrant and all Warrants issued in
-------
exchange, transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $7.15 per share.
----------------------
(b) Other Definitional Provisions.
-----------------------------
(i) Except as otherwise specified herein, all references herein (A) to
the Company shall be deemed to include the Company's successors and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.
(ii) When used in this Warrant, the words "herein," "hereof," and
"hereunder," and words of similar import, shall refer to this Warrant as a whole
and not to any provision of this Warrant, and the words "Section," "Schedule,"
and "Exhibit" shall refer to Sections of, and Schedules and Exhibits to, this
Warrant unless otherwise specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
-------------------
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised, as a whole or in part, at any time during normal business hours on or
after the opening of business on the date hereof and prior to 5:00 P.M. San
Francisco Time on the Expiration Date. The rights represented by this Warrant
may be exercised by the holder hereof then registered on the books of the
Company, as a whole or from time to time in part (except that this Warrant shall
not be exercisable as to a fractional share) by (i) delivery of a written
notice, in the form of the Subscription Notice attached as Exhibit A hereto, of
such holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price multiplied by the number of Warrant
Shares as to which the Warrant is being exercised (plus any applicable issue or
transfer
2
<PAGE>
taxes) in cash or by check, for the number of Warrant Shares as to which this
Warrant shall have been exercised, and (iii) the surrender of this Warrant,
properly endorsed, at the principal office of the Company (or at such other
agency or office of the Company as the Company may designate by notice to the
holder hereof); provided, that if such Warrant Shares are to be issued in any
name other than that of the registered holder of this Warrant, such issuance
shall be deemed a transfer and the provisions of Section 8 shall be applicable.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the holder,
shall be delivered to, or as directed by, such holder within a reasonable time
after such rights shall have been so exercised.
(b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall issue a new Warrant
identical in all respects to the Warrant exercised except (i) it shall represent
rights to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant is exercised, and (ii) the holder thereof
shall be deemed to have become the holder of record of such Warrant Shares
immediately prior to the close of business on the date on which the Warrant is
surrendered and payment of the amount due in respect of such exercise and any
applicable taxes is made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such person
shall be deemed to have become the holder of such Warrant Shares at the opening
of business on the next succeeding date on which the stock transfer books are
open.
Section 3. Covenants as to Common Stock. The Company covenants and agrees
----------------------------
that all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or
-----
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such,
---------------------------------------
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice
3
<PAGE>
of meetings, receive dividends or subscription rights, or otherwise, prior to
the issuance to the holder of this Warrant of the Warrant Shares which he or she
is then entitled to receive upon the due exercise of this Warrant.
Section 6. No Limitation on Corporate Action. No provisions of this
---------------------------------
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
-------------------------
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. The holder of this Warrant further
represents, by acceptance hereof, that, as of this date, such holder is an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
(an "Accredited Investor") and an "excluded purchaser" for purposes of Section
25102(f) of the California Corporate Securities Law of 1968 (an "Excluded
Purchaser"). Upon exercise of this Warrant, the holder shall, if requested by
the Company, confirm in writing, in a form satisfactory to the Company, that the
Warrant Shares so purchased are being acquired solely for the holder's own
account and not as a nominee for any other party, for investment, and not with a
view toward distribution or resale and that such holder is an Accredited
Investor and an Excluded Purchaser. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of the Warrant that the Company receive such
other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities upon exercise of the Warrant
shall not violate any United States or state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
--------------------------------------------------
(a) Prior to any sale, transfer or other disposition of this Warrant
or the Warrant Shares not pursuant to an effective registration statement, the
holder thereof will give ten (10) days' notice to the Company of such holder's
intention to effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer and, if such transfer is not
registered under the Securities Act, shall be accompanied by an opinion,
addressed to the Company and reasonably satisfactory in form and substance to
it, of counsel (reasonably satisfactory to the Company) for such holder, stating
that, in the opinion of such counsel, such transfer will be a transaction exempt
from registration under the Securities Act.
(b) If such sale, transfer or other disposition may in the opinion of
such counsel be effected without registration under the Securities Act, such
holder shall thereupon be entitled to the terms of the notice delivered by such
holder to the Company. If in the opinion
4
<PAGE>
of such counsel such transfer may not be effected without registration under the
Securities Act, such holder shall not be entitled to so transfer this Warrant or
the Warrant Shares unless the Company shall have filed a registration statement
relating to such proposed transfer and such registration statement shall have
become effective under the Securities Act.
(c) Any Warrant Shares issued upon exercise of this Warrant may bear
one or more of the legends in similar form to the legend set forth on this
Warrant.
Section 9. Adjustments.
-----------
(a) Reclassification and Reorganization. In case of any
-----------------------------------
reclassification, capital reorganization or other change of outstanding shares
of the Common Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock), the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased upon exercise of the Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation or merger. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The foregoing provisions shall
similarly apply to successive reclassifications, capital reorganizations and
other changes of outstanding shares of Common Stock and to successive
consolidations or mergers. If the consideration received by the holders of
Common Stock is other than cash, the value shall be as determined by the Board
of Directors of the Company acting in good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall
--------------------------
effect a stock dividend, a stock split, a stock combination, or a reverse stock
split of the Common Stock, the number of Warrant Shares purchasable hereunder
and the Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting in good faith. The number
of shares, as so adjusted, shall be rounded down to the nearest whole number and
the Warrant Exercise Price shall be rounded to the nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this
--------------------------------------------
Warrant is lost, stolen, mutilated or destroyed, the Company shall, on such
terms as to indemnity or otherwise as it may in its discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed.
Section 11. Notice. All notices and other communications under this
------
Warrant shall (a) be in writing (which shall include communications by
facsimile), (b) be (i) sent by registered
5
<PAGE>
or certified mail, postage prepaid, return receipt requested, or by facsimile,
or (ii) delivered by hand, and (c) be given at the following respective
addresses and facsimile numbers and to the attention of the following persons:
if to the Company, to it at:
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, California 94538
Telephone: (510) 226-4000
Facsimile: (510) 226-4114
Attention: President
if to Holder, to it at the address set forth below Holder's
signature on the signature page hereof,
or at such other address or facsimile number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, on the fifth Business Day after such communication is deposited in the
mail, addressed as above provided, (ii) if given by facsimile, when such
communication is transmitted to the appropriate number determined as above
provided in this Section and the appropriate answer back is received or receipt
is otherwise acknowledged, and (iii) if given by hand delivery, when left at the
address of the addressee addressed as above provided, except that notices of a
change of address, facsimile or telephone number, shall not be deemed furnished,
until actually received.
Section 12. Miscellaneous. This Warrant and any term hereof may be
-------------
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Delaware.
6
<PAGE>
Section 13. Date. The date of this Warrant is October 8, 1996. This
----
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
SYQUEST TECHNOLOGY, INC.
By: /s/ Edwin L. Harper
----------------------------
Edwin L. Harper
President
ACCEPTED:
- --------
WHARTON CAPITAL INTERNATIONAL CORPORATION
By:
--------------------------------------
Barry Minsky
President
Address: 545 Madison Avenue
New York, NY 10022
Facsimile: (212) 888-7054
7
<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
SYQUEST TECHNOLOGY, INC.
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by this Warrant specified below according to the
conditions thereof and herewith makes payment of U.S. $_______________, the
aggregate Warrant Exercise Price of such Warrant Shares in full. Capitalized
terms used herein have the meanings respectively ascribed to them in the
Warrant.
The undersigned further certifies that:
1. It is acquiring the Warrant Shares for its own account and not as
nominee for any other party, for investment and not with a view to, or sale in
connection with, any distribution thereof, nor with any present intention of
distributing any of the same except in compliance with all applicable securities
laws; and
2. As of this date, it is an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D as promulgated by the Securities and
Exchange Commission under the Securities Act and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968.
Dated: ______________, _____ [HOLDER]
By:
Name:
Title:
Address:
--------------------------------------
--------------------------------------
--------------------------------------
Number of Warrant Shares Being
Purchased:
8
<PAGE>
EXHIBIT 4.20
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO
COMPLY WITH APPLICABLE STATE SECURITIES LAWS.
SYQUEST TECHNOLOGY, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No. 8 Number of Shares 75,000
Date of Issuance October 8, 1996
SyQuest Technology, Inc., a Delaware corporation (the "Company"),
hereby certifies that, for value received, State Capital Market Group, Ltd.
("Holder"), the registered holder hereof, is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof but not after 5:00 P.M. San Francisco
time on the Expiration Date (as defined herein) seventy five thousand (75,000)
fully paid nonassessable shares of Common Stock (as defined herein) of the
Company (the "Warrant Shares") at a purchase price of U.S. $7.15 per share in
lawful money of the United States.
Section 1.
(a) Definitions. The following words and terms as used
-----------
in this Warrant have the following meanings:
"Common Stock" means (a) the Company's common stock,
------------
par value $.001 per share, and (b) any capital stock into which such common
stock shall have been changed or any capital stock resulting from a
reclassification of such common stock.
"Convertible Securities" mean any securities issued by
----------------------
the Company which are convertible into or exchangeable for, directly or
indirectly, shares of Common Stock.
<PAGE>
"Expiration Date" means the date three years from the date
---------------
of this Warrant or, if such date falls on a Saturday, Sunday or other day on
which banks are required or authorized to be closed in the City of San Francisco
or the State of California (a "Holiday"), the next preceding date that is not a
Holiday.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Transfer" shall include any disposition of any Warrants or
--------
Warrant Shares, or of any interest in either thereof which would constitute a
sale thereof within the meaning of the Securities Act of 1933, as amended, or
the securities laws of California or such other state or states as may be
applicable.
"Warrant" shall mean this Warrant and all Warrants issued in
-------
exchange, transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $7.15 per share.
----------------------
(b) Other Definitional Provisions.
-----------------------------
(i) Except as otherwise specified herein, all references herein
(A) to the Company shall be deemed to include the Company's successors and (B)
to any applicable law defined or referred to herein, shall be deemed references
to such applicable law as the same may have been or may be amended or
supplemented from time to time.
(ii) When used in this Warrant, the words "herein," "hereof,"
and "hereunder," and words of similar import, shall refer to this Warrant as a
whole and not to any provision of this Warrant, and the words "Section,"
"Schedule," and "Exhibit" shall refer to Sections of, and Schedules and Exhibits
to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.
Section 2. Exercise of Warrant.
-------------------
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised, as a whole or in part, at any time during normal business hours on or
after the opening of business on the date hereof and prior to 5:00 P.M. San
Francisco Time on the Expiration Date. The rights represented by this Warrant
may be exercised by the holder hereof then registered on the books of the
Company, as a whole or from time to time in part (except that this Warrant shall
not be exercisable as to a fractional share) by (i) delivery of a written
notice, in the form of the Subscription Notice attached as Exhibit A hereto, of
such holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price multiplied by the number of Warrant
Shares as to which the Warrant is being exercised (plus any applicable issue or
transfer
2
<PAGE>
taxes) in cash or by check, for the number of Warrant Shares as to which this
Warrant shall have been exercised, and (iii) the surrender of this Warrant,
properly endorsed, at the principal office of the Company (or at such other
agency or office of the Company as the Company may designate by notice to the
holder hereof); provided, that if such Warrant Shares are to be issued in any
name other than that of the registered holder of this Warrant, such issuance
shall be deemed a transfer and the provisions of Section 8 shall be applicable.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the holder,
shall be delivered to, or as directed by, such holder within a reasonable time
after such rights shall have been so exercised.
(b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall issue a new Warrant
identical in all respects to the Warrant exercised except (i) it shall represent
rights to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant is exercised, and (ii) the holder thereof
shall be deemed to have become the holder of record of such Warrant Shares
immediately prior to the close of business on the date on which the Warrant is
surrendered and payment of the amount due in respect of such exercise and any
applicable taxes is made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such person
shall be deemed to have become the holder of such Warrant Shares at the opening
of business on the next succeeding date on which the stock transfer books are
open.
Section 3. Covenants as to Common Stock. The Company covenants and agrees
----------------------------
that all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or
-----
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such,
---------------------------------------
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice
3
<PAGE>
of meetings, receive dividends or subscription rights, or otherwise, prior to
the issuance to the holder of this Warrant of the Warrant Shares which he or she
is then entitled to receive upon the due exercise of this Warrant.
Section 6. No Limitation on Corporate Action. No provisions of this
---------------------------------
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
-------------------------
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. The holder of this Warrant further
represents, by acceptance hereof, that, as of this date, such holder is an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
(an "Accredited Investor") and an "excluded purchaser" for purposes of Section
25102(f) of the California Corporate Securities Law of 1968 (an "Excluded
Purchaser"). Upon exercise of this Warrant, the holder shall, if requested by
the Company, confirm in writing, in a form satisfactory to the Company, that the
Warrant Shares so purchased are being acquired solely for the holder's own
account and not as a nominee for any other party, for investment, and not with a
view toward distribution or resale and that such holder is an Accredited
Investor and an Excluded Purchaser. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of the Warrant that the Company receive such
other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities upon exercise of the Warrant
shall not violate any United States or state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
--------------------------------------------------
(a) Prior to any sale, transfer or other disposition of this Warrant
or the Warrant Shares not pursuant to an effective registration statement, the
holder thereof will give ten (10) days' notice to the Company of such holder's
intention to effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer and, if such transfer is not
registered under the Securities Act, shall be accompanied by an opinion,
addressed to the Company and reasonably satisfactory in form and substance to
it, of counsel (reasonably satisfactory to the Company) for such holder, stating
that, in the opinion of such counsel, such transfer will be a transaction exempt
from registration under the Securities Act.
(b) If such sale, transfer or other disposition may in the opinion of
such counsel be effected without registration under the Securities Act, such
holder shall thereupon be entitled to the terms of the notice delivered by such
holder to the Company. If in the opinion
4
<PAGE>
of such counsel such transfer may not be effected without registration under the
Securities Act, such holder shall not be entitled to so transfer this Warrant or
the Warrant Shares unless the Company shall have filed a registration statement
relating to such proposed transfer and such registration statement shall have
become effective under the Securities Act.
(c) Any Warrant Shares issued upon exercise of this Warrant may bear
one or more of the legends in similar form to the legend set forth on this
Warrant.
Section 9. Adjustments.
-----------
(a) Reclassification and Reorganization. In case of any
-----------------------------------
reclassification, capital reorganization or other change of outstanding shares
of the Common Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock), the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased upon exercise of the Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation or merger. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The foregoing provisions shall
similarly apply to successive reclassifications, capital reorganizations and
other changes of outstanding shares of Common Stock and to successive
consolidations or mergers. If the consideration received by the holders of
Common Stock is other than cash, the value shall be as determined by the Board
of Directors of the Company acting in good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall
--------------------------
effect a stock dividend, a stock split, a stock combination, or a reverse stock
split of the Common Stock, the number of Warrant Shares purchasable hereunder
and the Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting in good faith. The number
of shares, as so adjusted, shall be rounded down to the nearest whole number and
the Warrant Exercise Price shall be rounded to the nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this
--------------------------------------------
Warrant is lost, stolen, mutilated or destroyed, the Company shall, on such
terms as to indemnity or otherwise as it may in its discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed.
Section 11. Notice. All notices and other communications under this
------
Warrant shall (a) be in writing (which shall include communications by
facsimile), (b) be (i) sent by registered
5
<PAGE>
or certified mail, postage prepaid, return receipt requested, or by facsimile,
or (ii) delivered by hand, and (c) be given at the following respective
addresses and facsimile numbers and to the attention of the following persons:
if to the Company, to it at:
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, California 94538
Telephone: (510) 226-4000
Facsimile: (510) 226-4114
Attention: President
if to Holder, to it at the address set forth below Holder's
signature on the signature page hereof,
or at such other address or facsimile number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, on the fifth Business Day after such communication is deposited in the
mail, addressed as above provided, (ii) if given by facsimile, when such
communication is transmitted to the appropriate number determined as above
provided in this Section and the appropriate answer back is received or receipt
is otherwise acknowledged, and (iii) if given by hand delivery, when left at the
address of the addressee addressed as above provided, except that notices of a
change of address, facsimile or telephone number, shall not be deemed furnished,
until actually received.
Section 12. Miscellaneous. This Warrant and any term hereof may be
-------------
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Delaware.
6
<PAGE>
Section 13. Date. The date of this Warrant is October 8, 1996. This
----
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
SYQUEST TECHNOLOGY, INC.
By: /s/ Edwin L. Harper
----------------------------
Edwin L. Harper
President
ACCEPTED:
- --------
STATE CAPITAL MARKET GROUP, LTD.
By:
-----------------------------
Barry Minsky
President
Address: 545 Madison Avenue
New York, NY 10022
Facsimile: (212) 888-7054
7
<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
SYQUEST TECHNOLOGY, INC.
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by this Warrant specified below according to the
conditions thereof and herewith makes payment of U.S. $_______________, the
aggregate Warrant Exercise Price of such Warrant Shares in full. Capitalized
terms used herein have the meanings respectively ascribed to them in the
Warrant.
The undersigned further certifies that:
1. It is acquiring the Warrant Shares for its own account and not as
nominee for any other party, for investment and not with a view to, or sale in
connection with, any distribution thereof, nor with any present intention of
distributing any of the same except in compliance with all applicable securities
laws; and
2. As of this date, it is an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D as promulgated by the Securities and
Exchange Commission under the Securities Act and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968.
Dated: ______________, _____ [HOLDER]
By:
Name:
Title:
Address:
--------------------------------------
--------------------------------------
--------------------------------------
Number of Warrant Shares Being
Purchased:
8
<PAGE>
EXHIBIT 4.21
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO
COMPLY WITH APPLICABLE STATE SECURITIES LAWS.
SYQUEST TECHNOLOGY, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No. 1 Number of Shares 300,000
Date of Issuance October 31, 1996
SyQuest Technology, Inc., a Delaware corporation (the "Company"),
hereby certifies that, for value received, Nelson Partners ("Holder"), the
registered holder hereof, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof but not after 5:00 P.M. San Francisco time on the
Expiration Date (as defined herein) up to an aggregate of three hundred thousand
(300,000) fully paid nonassessable shares of Common Stock (as defined herein) of
the Company (the "Warrant Shares") at a purchase price of U.S. $5.50 per share
in lawful money of the United States.
Section 1.
(a) Definitions.
-----------
The following words and terms as used in this Warrant shall have the following
meanings:
"Common Stock" means (a) the Company's common stock and (b) any
------------
capital stock into which such Common Stock shall have been changed or any
capital stock resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the
----------------------
Company which are convertible into or exchangeable for, directly or indirectly,
shares of Common Stock.
"Expiration Date" means the date three years from the date of
---------------
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or authorized to be closed in the City of San Francisco or
the State of California (a "Holiday"), the next preceding date that is not a
Holiday.
<PAGE>
"Securities Act means the Securities Act of 1933, as amended.
--------------
"Transfer" shall include any disposition of any Warrants or Warrant
--------
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or the
securities laws of California or such other state or states as may be
applicable.
"Warrant" shall mean this Warrant and all Warrants issued in
-------
exchange, transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $5.50 per share.
----------------------
(b) Other Definitional Provisions.
-----------------------------
(i) Except as otherwise specified herein, all references herein (A)
to the Company shall be deemed to include the Company's successors and (B) to
any applicable law defined or referred to herein, shall be deemed references to
such applicable law as the same may have been or may be amended or supplemented
from time to time.
(ii) When used in this Warrant, the words "herein," "hereof," and
"hereunder," and words of similar import, shall refer to this Warrant as a whole
and not to any provision of this Warrant, and the words "Section," "Schedule,"
and "Exhibit" shall refer to Sections of, and Schedules and Exhibits to, this
Warrant unless otherwise specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
-------------------
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised, as a whole or in part, at any time during normal business hours on or
after the opening of business on the date hereof and prior to 5:00 P.M. Pacific
Time on the Expiration Date. The rights represented by this Warrant may be
exercised by the holder hereof then registered on the books of the Company, as a
whole or from time to time in part (except that this Warrant shall not be
exercisable as to a fractional share) by (i) delivery of a written notice, in
the form of the Subscription Notice attached as Exhibit A hereto, of such
holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price multiplied by the number of Warrant
Shares as to which the Warrant is being exercised (plus any applicable issue or
transfer taxes) in cash or by check, for the number of Warrant Shares as to
which this Warrant shall have been exercised, and (iii) the surrender of this
Warrant, properly endorsed, at the principal office of the Company (or at such
other agency or office of the Company as the Company may designate by notice to
the holder hereof); provided, that if such Warrant Shares are to be issued in
any name other than that of the registered holder of this Warrant, such issuance
shall be
2
<PAGE>
deemed a transfer and the provisions of Section 8 shall be applicable. In the
event of any exercise of the rights represented by this Warrant in compliance
with this Section 2(a), a certificate or certificates for the Warrant Shares so
purchased, registered in the name of, or as directed by, the holder, shall be
delivered to, or as directed by, such holder within a reasonable time after such
rights shall have been so exercised.
(b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall issue a new Warrant
identical in all respects to the Warrant exercised except (i) it shall represent
rights to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant is exercised, and (ii) the holder thereof
shall be deemed to have become the holder of record of such Warrant Shares
immediately prior to the close of business on the date on which the Warrant is
surrendered and payment of the amount due in respect of such exercise and any
applicable taxes is made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such person
shall be deemed to have become the holder of such Warrant Shares at the opening
of business on the next succeeding date on which the stock transfer books are
open.
Section 3. Covenants as to Common Stock. The Company covenants and
----------------------------
agrees that all Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable. The Company further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved a sufficient number
of shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax
-----
or taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as
---------------------------------------
such, of this Warrant shall be entitled to vote or receive dividends or be
deemed the holder of shares of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he or she is then entitled to receive upon the due exercise
of this Warrant. Notwithstanding the foregoing, the Company will provide the
holder of this Warrant with copies of the same notices and other information
given
3
<PAGE>
to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
---------------------------------
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by
-------------------------
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment and not with a view to, or for
sale in connection with, any distribution hereof or of any of the shares of
Common Stock or other securities issuable upon the exercise thereof, and not
with any present intention of distributing any of the same. The holder of this
Warrant further represents, by acceptance hereof, that, as of this date, such
holder is an "accredited investor" as such term is defined in Rule 501(a)(1) of
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act (an "Accredited Investor") and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968
(an "Excluded Purchaser"). Upon exercise of this Warrant, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
holder's own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that such holder is an
Accredited Investor and an Excluded Purchaser. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of the Warrant that the Company receive such
other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities upon exercise of the Warrant
shall not violate any United States or state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
--------------------------------------------------
(a) The holder of this Warrant understands that (i) except as provided
in the Registration Rights Agreement, this Warrant and the Warrant Shares have
not been and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (a) subsequently registered thereunder, or (b) such holder shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration; (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the Securities Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the
4
<PAGE>
Securities Act or the rules and regulations of the Securities and Exchange
Commission thereunder; and (iii) neither the Company nor any other person is
under any obligation to register such securities (other than pursuant to the
Registration Rights Agreement) under the Securities Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.
(b) Any Warrant Shares issued upon exercise of this Warrant may bear
one or more of the legends in similar form to the legend set forth on this
Warrant.
Section 9. Adjustments.
-----------
(a) Reclassification and Reorganization. In case of any
-----------------------------------
reclassification, capital reorganization or other change of outstanding shares
of the Common Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock), the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased upon exercise of the Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation or merger. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The foregoing provisions shall
similarly apply to successive reclassifications, capital reorganizations and
other changes of outstanding shares of Common Stock and to successive
consolidations or mergers. If the consideration received by the holders of
Common Stock is other than cash, the value shall be as determined by the Board
of Directors of the Company acting in good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall
--------------------------
effect a stock dividend, a stock split, a stock combination, or a reverse stock
split of the Common Stock, the number of Warrant Shares purchasable hereunder
and the Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting in good faith. The number
of shares, as so adjusted, shall be rounded down to the nearest whole number and
the Warrant Exercise Price shall be rounded to the nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this
--------------------------------------------
Warrant is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed.
Section 11. Notice. Any notices required or permitted to be given
------
under the terms of this Warrant shall be sent by mail or delivered personally or
by courier and shall be
5
<PAGE>
effective five days after being placed in the mail, if mailed, certified or
registered, return receipt requested, or upon receipt, if delivered personally
or by courier or by facsimile, in each case properly addressed to the party to
receive the same. The addresses for such communications shall be:
If to the Company:
47071 Bayside Parkway
Fremont, CA 94538
Telephone: (510)226-4000
Facsimile: (510)226-4114
Attention: President
With copy to:
Shartsis, Friese & Ginsburg, LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
Telephone: (415)421-6500
Facsimile: (415)421-2922
Attention: Douglas L. Hammer, Esq.
If to Holder, to it at the address set forth below Holder's signature on
the signature page hereof.
Each party shall provide notice to the other party of any change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
-------------
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Delaware.
Section 13. Date. The date of this Warrant is October 30, 1996.
----
This Warrant, in all events, shall be wholly void and of no effect after the
close of business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of
6
<PAGE>
Section 8 shall continue in full force and effect after such date as to any
Warrant Shares or other securities issued upon the exercise of this Warrant.
SYQUEST TECHNOLOGY, INC.
BY: /s/ Edwin L. Harper
-------------------
Name: Edwin L. Harper
Title: President and Chief Executive
Officer
ACCEPTED:
- --------
NELSON PARTNERS
By:
Name:
Title:
Address:
7
<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
SYQUEST TECHNOLOGY, INC.
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by this Warrant specified below according to the
conditions thereof and herewith makes payment of U.S. $_______________, the
aggregate Warrant Exercise Price of such Warrant Shares in full.
The undersigned further certifies that:
1. It is acquiring the Warrant Shares for its own account and not as
nominee for any other party, for investment and not with a view to, or sale in
connection with, any distribution thereof, nor with any present intention of
distributing any of the same; and
2. As of this date, it is an "accredited investor" as such term is
defined in Rule 501(a)(1) of Regulation D as promulgated by the Securities and
Exchange Commission under the Securities Act and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968.
[HOLDER]
Dated: , 199 .
------------
By:
Name:
Title:
Address:
--------------------------------------
--------------------------------------
--------------------------------------
Number of Warrant Shares
Being Purchased:
--------------------
8
<PAGE>
EXHIBIT 4.22
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO
COMPLY WITH APPLICABLE STATE SECURITIES LAWS.
SYQUEST TECHNOLOGY, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No. 2 Number of Shares 200,000
Date of Issuance October 31, 1996
SyQuest Technology, Inc., a Delaware corporation (the "Company"),
hereby certifies that, for value received, Olympus Securities, Ltd. ("Holder"),
the registered holder hereof, is entitled, subject to the terms set forth below,
to purchase from the Company upon surrender of this Warrant, at any time or
times on or after the date hereof but not after 5:00 P.M. San Francisco time on
the Expiration Date (as defined herein) up to an aggregate of two hundred
thousand (200,000) fully paid nonassessable shares of Common Stock (as defined
herein) of the Company (the "Warrant Shares") at a purchase price of U.S. $5.50
per share in lawful money of the United States.
Section 1.
(a) Definitions.
-----------
The following words and terms as used in this Warrant shall have the following
meanings:
"Common Stock" means (a) the Company's common stock and (b) any
------------
capital stock into which such Common Stock shall have been changed or any
capital stock resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company
----------------------
which are convertible into or exchangeable for, directly or indirectly, shares
of Common Stock.
"Expiration Date" means the date three years from the date of this
---------------
Warrant or, if such date falls on a Saturday, Sunday or other day on which banks
are required or authorized to be closed in the City of San Francisco or the
State of California (a "Holiday"), the next preceding date that is not a
Holiday.
<PAGE>
"Securities Act means the Securities Act of 1933, as amended.
--------------
"Transfer" shall include any disposition of any Warrants or Warrant
--------
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or the
securities laws of California or such other state or states as may be
applicable.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
-------
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $5.50 per share.
----------------------
(b) Other Definitional Provisions.
-----------------------------
(i) Except as otherwise specified herein, all references herein (A)
to the Company shall be deemed to include the Company's successors and (B) to
any applicable law defined or referred to herein, shall be deemed references to
such applicable law as the same may have been or may be amended or supplemented
from time to time.
(ii) When used in this Warrant, the words "herein," "hereof," and
"hereunder," and words of similar import, shall refer to this Warrant as a whole
and not to any provision of this Warrant, and the words "Section," "Schedule,"
and "Exhibit" shall refer to Sections of, and Schedules and Exhibits to, this
Warrant unless otherwise specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
-------------------
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised, as a whole or in part, at any time during normal business hours on or
after the opening of business on the date hereof and prior to 5:00 P.M. Pacific
Time on the Expiration Date. The rights represented by this Warrant may be
exercised by the holder hereof then registered on the books of the Company, as a
whole or from time to time in part (except that this Warrant shall not be
exercisable as to a fractional share) by (i) delivery of a written notice, in
the form of the Subscription Notice attached as Exhibit A hereto, of such
holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price multiplied by the number of Warrant
Shares as to which the Warrant is being exercised (plus any applicable issue or
transfer taxes) in cash or by check, for the number of Warrant Shares as to
which this Warrant shall have been exercised, and (iii) the surrender of this
Warrant, properly endorsed, at the principal office of the Company (or at such
other agency or office of the Company as the Company may designate by notice to
the holder hereof); provided, that if such Warrant Shares are to be issued in
any name other than that of the registered holder of this Warrant, such issuance
shall be
2
<PAGE>
deemed a transfer and the provisions of Section 8 shall be applicable. In the
event of any exercise of the rights represented by this Warrant in compliance
with this Section 2(a), a certificate or certificates for the Warrant Shares so
purchased, registered in the name of, or as directed by, the holder, shall be
delivered to, or as directed by, such holder within a reasonable time after such
rights shall have been so exercised.
(b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall issue a new Warrant
identical in all respects to the Warrant exercised except (i) it shall represent
rights to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant is exercised, and (ii) the holder thereof
shall be deemed to have become the holder of record of such Warrant Shares
immediately prior to the close of business on the date on which the Warrant is
surrendered and payment of the amount due in respect of such exercise and any
applicable taxes is made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such person
shall be deemed to have become the holder of such Warrant Shares at the opening
of business on the next succeeding date on which the stock transfer books are
open.
Section 3. Covenants as to Common Stock. The Company covenants and
----------------------------
agrees that all Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable. The Company further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved a sufficient number
of shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax
-----
or taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as
---------------------------------------
such, of this Warrant shall be entitled to vote or receive dividends or be
deemed the holder of shares of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he or she is then entitled to receive upon the due exercise
of this Warrant. Notwithstanding the foregoing, the Company will provide the
holder of this Warrant with copies of the same notices and other information
given
3
<PAGE>
to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
---------------------------------
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by
-------------------------
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment and not with a view to, or for
sale in connection with, any distribution hereof or of any of the shares of
Common Stock or other securities issuable upon the exercise thereof, and not
with any present intention of distributing any of the same. The holder of this
Warrant further represents, by acceptance hereof, that, as of this date, such
holder is an "accredited investor" as such term is defined in Rule 501(a)(1) of
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act (an "Accredited Investor") and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968
(an "Excluded Purchaser"). Upon exercise of this Warrant, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
holder's own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that such holder is an
Accredited Investor and an Excluded Purchaser. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of the Warrant that the Company receive such
other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities upon exercise of the Warrant
shall not violate any United States or state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
--------------------------------------------------
(a) The holder of this Warrant understands that (i) except as provided
in the Registration Rights Agreement, this Warrant and the Warrant Shares have
not been and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (a) subsequently registered thereunder, or (b) such holder shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration; (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the Securities Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the
4
<PAGE>
Securities Act or the rules and regulations of the Securities and Exchange
Commission thereunder; and (iii) neither the Company nor any other person is
under any obligation to register such securities (other than pursuant to the
Registration Rights Agreement) under the Securities Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.
(b) Any Warrant Shares issued upon exercise of this Warrant may bear
one or more of the legends in similar form to the legend set forth on this
Warrant.
Section 9. Adjustments.
-----------
(a) Reclassification and Reorganization. In case of any
-----------------------------------
reclassification, capital reorganization or other change of outstanding shares
of the Common Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock), the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased upon exercise of the Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation or merger. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The foregoing provisions shall
similarly apply to successive reclassifications, capital reorganizations and
other changes of outstanding shares of Common Stock and to successive
consolidations or mergers. If the consideration received by the holders of
Common Stock is other than cash, the value shall be as determined by the Board
of Directors of the Company acting in good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall
--------------------------
effect a stock dividend, a stock split, a stock combination, or a reverse stock
split of the Common Stock, the number of Warrant Shares purchasable hereunder
and the Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting in good faith. The number
of shares, as so adjusted, shall be rounded down to the nearest whole number and
the Warrant Exercise Price shall be rounded to the nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this
--------------------------------------------
Warrant is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed.
Section 11. Notice. Any notices required or permitted to be given
------
under the terms of this Warrant shall be sent by mail or delivered personally or
by courier and shall be
5
<PAGE>
effective five days after being placed in the mail, if mailed, certified or
registered, return receipt requested, or upon receipt, if delivered personally
or by courier or by facsimile, in each case properly addressed to the party to
receive the same. The addresses for such communications shall be:
If to the Company:
47071 Bayside Parkway
Fremont, CA 94538
Telephone: (510) 226-4000
Facsimile: (510) 226-4114
Attention: President
With copy to:
Shartsis, Friese & Ginsburg, LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
Telephone: (415) 421-6500
Facsimile: (415) 421-2922
Attention: Douglas L. Hammer, Esq.
If to Holder, to it at the address set forth below Holder's signature on
the signature page hereof.
Each party shall provide notice to the other party of any change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
-------------
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Delaware.
Section 13. Date. The date of this Warrant is October 30, 1996.
----
This Warrant, in all events, shall be wholly void and of no effect after the
close of business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of
6
<PAGE>
Section 8 shall continue in full force and effect after such date as to any
Warrant Shares or other securities issued upon the exercise of this Warrant.
SYQUEST TECHNOLOGY, INC.
By: /s/ Edwin L. Harper
-------------------
Name: Edwin L. Harper
Title: President and Chief Executive
Officer
ACCEPTED:
- --------
OLYMPUS SECURITIES, LTD.
By:
Name:
Title:
Address:
7
<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
SYQUEST TECHNOLOGY, INC.
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by this Warrant specified below according to the
conditions thereof and herewith makes payment of U.S. $_______________, the
aggregate Warrant Exercise Price of such Warrant Shares in full.
The undersigned further certifies that:
1. It is acquiring the Warrant Shares for its own account and not as
nominee for any other party, for investment and not with a view to, or sale in
connection with, any distribution thereof, nor with any present intention of
distributing any of the same; and
2. As of this date, it is an "accredited investor" as such term is
defined in Rule 501(a)(1) of Regulation D as promulgated by the Securities and
Exchange Commission under the Securities Act and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968.
[HOLDER]
Dated: , 199 .
-------------
By:
Name:
Title:
Address:
--------------------------------------
--------------------------------------
--------------------------------------
Number of Warrant Shares
Being Purchased:
--------------------
8
<PAGE>
EXHIBIT 4.23
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO
COMPLY WITH APPLICABLE STATE SECURITIES LAWS.
SYQUEST TECHNOLOGY, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No. 3 Number of Shares 50,000
Date of Issuance October 31, 1996
SyQuest Technology, Inc., a Delaware corporation (the "Company"),
hereby certifies that, for value received, Rose Glen Funding, Inc. ("Holder"),
the registered holder hereof, is entitled, subject to the terms set forth below,
to purchase from the Company upon surrender of this Warrant, at any time or
times on or after the date hereof but not after 5:00 P.M. San Francisco time on
the Expiration Date (as defined herein) up to an aggregate of fifty thousand
(50,000) fully paid nonassessable shares of Common Stock (as defined herein) of
the Company (the "Warrant Shares") at a purchase price of U.S. $5.50 per share
in lawful money of the United States.
Section 1.
(a) Definitions. The following words and terms as used in this Warrant
-----------
shall have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any
------------
capital stock into which such Common Stock shall have been changed or any
capital stock resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company
----------------------
which are convertible into or exchangeable for, directly or indirectly, shares
of Common Stock.
"Expiration Date" means the date three years from the date of this
---------------
Warrant or, if such date falls on a Saturday, Sunday or other day on which banks
are required or authorized to be closed in the City of San Francisco or the
State of California (a "Holiday"), the next preceding date that is not a
Holiday.
<PAGE>
"Securities Act means the Securities Act of 1933, as amended.
--------------
"Transfer" shall include any disposition of any Warrants or
--------
Warrant Shares, or of any interest in either thereof which would constitute a
sale thereof within the meaning of the Securities Act of 1933, as amended, or
the securities laws of California or such other state or states as may be
applicable.
"Warrant" shall mean this Warrant and all Warrants issued in
-------
exchange or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $5.50 per share.
----------------------
(b) Other Definitional Provisions.
-----------------------------
(i) Except as otherwise specified herein, all references herein
(A) to the Company shall be deemed to include the Company's successors and (B)
to any applicable law defined or referred to herein, shall be deemed references
to such applicable law as the same may have been or may be amended or
supplemented from time to time.means the Securities Act of 1933, as amended.
(ii) When used in this Warrant, the words "herein," "hereof," and
"hereunder," and words of similar import, shall refer to this Warrant as a whole
and not to any provision of this Warrant, and the words "Section," "Schedule,"
and "Exhibit" shall refer to Sections of, and Schedules and Exhibits to, this
Warrant unless otherwise specified.
(iii) Whenever the context so requires the neuter gender includes
the masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
-------------------
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised, as a whole or in part, at any time during normal business hours on or
after the opening of business on the date hereof and prior to 5:00 P.M. Pacific
Time on the Expiration Date. The rights represented by this Warrant may be
exercised by the holder hereof then registered on the books of the Company, as a
whole or from time to time in part (except that this Warrant shall not be
exercisable as to a fractional share) by (i) delivery of a written notice, in
the form of the Subscription Notice attached as Exhibit A hereto, of such
holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price multiplied by the number of Warrant
Shares as to which the Warrant is being exercised (plus any applicable issue or
transfer taxes) in cash or by check, for the number of Warrant Shares as to
which this Warrant shall have been exercised, and (iii) the surrender of this
Warrant, properly endorsed, at the principal office of the Company (or at such
other agency or office of the Company as the Company may designate by notice to
the holder hereof); provided, that if such Warrant Shares are to be issued in
any name other than that of the registered holder of this Warrant, such issuance
shall be
2
<PAGE>
deemed a transfer and the provisions of Section 8 shall be applicable. In the
event of any exercise of the rights represented by this Warrant in compliance
with this Section 2(a), a certificate or certificates for the Warrant Shares so
purchased, registered in the name of, or as directed by, the holder, shall be
delivered to, or as directed by, such holder within a reasonable time after such
rights shall have been so exercised.
(b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall issue a new Warrant
identical in all respects to the Warrant exercised except (i) it shall represent
rights to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant is exercised, and (ii) the holder thereof
shall be deemed to have become the holder of record of such Warrant Shares
immediately prior to the close of business on the date on which the Warrant is
surrendered and payment of the amount due in respect of such exercise and any
applicable taxes is made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such person
shall be deemed to have become the holder of such Warrant Shares at the opening
of business on the next succeeding date on which the stock transfer books are
open.
Section 3. Covenants as to Common Stock. The Company covenants and
----------------------------
agrees that all Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable. The Company further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved a sufficient number
of shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax
-----
or taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as
---------------------------------------
such, of this Warrant shall be entitled to vote or receive dividends or be
deemed the holder of shares of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he or she is then entitled to receive upon the due exercise
of this Warrant. Notwithstanding the foregoing, the Company will provide the
holder of this Warrant with copies of the same notices and other information
given
3
<PAGE>
to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
---------------------------------
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by
-------------------------
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment and not with a view to, or for
sale in connection with, any distribution hereof or of any of the shares of
Common Stock or other securities issuable upon the exercise thereof, and not
with any present intention of distributing any of the same. The holder of this
Warrant further represents, by acceptance hereof, that, as of this date, such
holder is an "accredited investor" as such term is defined in Rule 501(a)(1) of
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act (an "Accredited Investor") and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968
(an "Excluded Purchaser"). Upon exercise of this Warrant, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
holder's own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that such holder is an
Accredited Investor and an Excluded Purchaser. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of the Warrant that the Company receive such
other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities upon exercise of the Warrant
shall not violate any United States or state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
--------------------------------------------------
(a) The holder of this Warrant understands that (i) except as provided
in the Registration Rights Agreement, this Warrant and the Warrant Shares have
not been and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (a) subsequently registered thereunder, or (b) such holder shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration; (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the Securities Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the
4
<PAGE>
Securities Act or the rules and regulations of the Securities and Exchange
Commission thereunder; and (iii) neither the Company nor any other person is
under any obligation to register such securities (other than pursuant to the
Registration Rights Agreement) under the Securities Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.
(b) Any Warrant Shares issued upon exercise of this Warrant may
bear one or more of the legends in similar form to the legend set forth on this
Warrant.
Section 9. Adjustments.
-----------
(a) Reclassification and Reorganization. In case of any
-----------------------------------
reclassification, capital reorganization or other change of outstanding shares
of the Common Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock), the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased upon exercise of the Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation or merger. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The foregoing provisions shall
similarly apply to successive reclassifications, capital reorganizations and
other changes of outstanding shares of Common Stock and to successive
consolidations or mergers. If the consideration received by the holders of
Common Stock is other than cash, the value shall be as determined by the Board
of Directors of the Company acting in good faith.
(b) Dividends and Stock Splits. If and whenever the Company
--------------------------
shall effect a stock dividend, a stock split, a stock combination, or a reverse
stock split of the Common Stock, the number of Warrant Shares purchasable
hereunder and the Warrant Exercise Price shall be proportionately adjusted in
the manner determined by the Company's Board of Directors acting in good faith.
The number of shares, as so adjusted, shall be rounded down to the nearest whole
number and the Warrant Exercise Price shall be rounded to the nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this
--------------------------------------------
Warrant is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed.
Section 11. Notice. Any notices required or permitted to be given
------
under the terms of this Warrant shall be sent by mail or delivered personally or
by courier and shall be
5
<PAGE>
effective five days after being placed in the mail, if mailed, certified or
registered, return receipt requested, or upon receipt, if delivered personally
or by courier or by facsimile, in each case properly addressed to the party to
receive the same. The addresses for such communications shall be:
If to the Company:
47071 Bayside Parkway
Fremont, CA 94538
Telephone: (510) 226-4000
Facsimile: (510) 226-4114
Attention: President
With copy to:
Shartsis, Friese & Ginsburg, LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
Telephone: (415) 421-6500
Facsimile: (415) 421-2922
Attention: Douglas L. Hammer, Esq.
If to Holder, to it at the address set forth below Holder's signature on
the signature page hereof.
Each party shall provide notice to the other party of any change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
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changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Delaware.
Section 13. Date. The date of this Warrant is October 30, 1996.
----
This Warrant, in all events, shall be wholly void and of no effect after the
close of business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of
6
<PAGE>
Section 8 shall continue in full force and effect after such date as to any
Warrant Shares or other securities issued upon the exercise of this Warrant.
SYQUEST TECHNOLOGY, INC.
By: /s/ Edwin L. Harper
-------------------
Name: Edwin L. Harper
Title: President and Chief Executive
Officer
ACCEPTED:
- --------
ROSE GLEN FUNDING, INC.
By:
Name:
Title:
Address:
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<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
SYQUEST TECHNOLOGY, INC.
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by this Warrant specified below according to the
conditions thereof and herewith makes payment of U.S. $_______________, the
aggregate Warrant Exercise Price of such Warrant Shares in full.
The undersigned further certifies that:
1. It is acquiring the Warrant Shares for its own account and not as
nominee for any other party, for investment and not with a view to, or sale in
connection with, any distribution thereof, nor with any present intention of
distributing any of the same; and
2. As of this date, it is an "accredited investor" as such term is
defined in Rule 501(a)(1) of Regulation D as promulgated by the Securities and
Exchange Commission under the Securities Act and an "excluded purchaser" for
purposes of Section 25102(f) of the California Corporate Securities Law of 1968.
[HOLDER]
Dated: , 199 .
-------------
By:
Name:
Title:
Address:
--------------------------------------
--------------------------------------
--------------------------------------
Number of Warrant Shares
Being Purchased:
---------------------
8
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of SyQuest Technology,
Inc. for the registration of 18,400,767 shares of its common stock and to the
incorporation by reference therein of our report dated December 11, 1996, with
respect to the consolidated financial statements and schedule of SyQuest
Technology, Inc. included in its Annual Report (Form 10-K) for the year ended
September 30, 1996, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
December 27, 1996
